Anda di halaman 1dari 252

G.R. No.

158253 March 2, 2007

REPUBLIC OF THE PHILIPPINES, represented by the


DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
COMMISSION ON AUDIT and THE NATIONAL
TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name and style
CARWIN CONSTRUCTION AND CONSTRUCTION
SUPPLY, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45


of the Revised Rules of Court assailing the Decision1 dated April 28,
2003 of the Court of Appeals (CA) in CA-G.R. CV No. 56345 which
affirmed with modification the Decision2 of the Regional Trial Court,
Branch 41, San Fernando, Pampanga (RTC) in Civil Case No. 10538,
granting the complaint for Specific Performance and Damages filed
by Carlito Lacap (respondent) against the Republic of the Philippines
(petitioner).

The factual background of the case is as follows:

The District Engineer of Pampanga issued and duly published an


"Invitation To Bid" dated January 27, 1992. Respondent, doing
business under the name and style Carwin Construction and
Construction Supply (Carwin Construction), was pre-qualified
together with two other contractors. Since respondent submitted the
lowest bid, he was awarded the contract for the concreting
of Sitio 5 Bahay Pare.3 On November 4, 1992, a Contract Agreement
was executed by respondent and petitioner.4 On September 25,
1992, District Engineer Rafael S. Ponio issued a Notice to Proceed
with the concreting of Sitio 5 Bahay Pare.5 Accordingly, respondent
undertook the works, made advances for the purchase of the
materials and payment for labor costs.6
On October 29, 1992, personnel of the Office of the District Engineer
of San Fernando, Pampanga conducted a final inspection of the
project and found it 100% completed in accordance with the
approved plans and specifications. Accordingly, the Office of the
District Engineer issued Certificates of Final Inspection and Final
Acceptance.7

Thereafter, respondent sought to collect payment for the completed


project.8 The DPWH prepared the Disbursement Voucher in favor of
petitioner.9 However, the DPWH withheld payment from respondent
after the District Auditor of the Commission on Audit (COA)
disapproved the final release of funds on the ground that the
contractor’s license of respondent had expired at the time of the
execution of the contract. The District Engineer sought the opinion
of the DPWH Legal Department on whether the contracts of Carwin
Construction for various Mount Pinatubo rehabilitation projects
were valid and effective although its contractor’s license had already
expired when the projects were contracted.10

In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director


III of the DPWH Legal Department opined that since Republic Act
No. 4566 (R.A. No. 4566), otherwise known as the Contractor’s
License Law, does not provide that a contract entered into after the
license has expired is void and there is no law which expressly
prohibits or declares void such contract, the contract is enforceable
and payment may be paid, without prejudice to any appropriate
administrative liability action that may be imposed on the contractor
and the government officials or employees concerned.11

In a Letter dated July 4, 1994, the District Engineer requested


clarification from the DPWH Legal Department on whether Carwin
Construction should be paid for works accomplished despite an
expired contractor’s license at the time the contracts were
executed.12

In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director


III of the Legal Department, recommended that payment should be
made to Carwin Construction, reiterating his earlier legal
opinion.13 Despite such recommendation for payment, no payment
was made to respondent.

Thus, on July 3, 1995, respondent filed the complaint for Specific


Performance and Damages against petitioner before the RTC.14

On September 14, 1995, petitioner, through the Office of the


Solicitor General (OSG), filed a Motion to Dismiss the complaint on
the grounds that the complaint states no cause of action and that
the RTC had no jurisdiction over the nature of the action since
respondent did not appeal to the COA the decision of the District
Auditor to disapprove the claim.15

Following the submission of respondent’s Opposition to Motion to


Dismiss,16 the RTC issued an Order dated March 11, 1996 denying
the Motion to Dismiss.17 The OSG filed a Motion for
Reconsideration18 but it was likewise denied by the RTC in its Order
dated May 23, 1996.19

On August 5, 1996, the OSG filed its Answer invoking the defenses
of non-exhaustion of administrative remedies and the doctrine of
non-suability of the State.20

Following trial, the RTC rendered on February 19, 1997 its Decision,
the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing consideration, judgment is


hereby rendered in favor of the plaintiff and against the defendant,
ordering the latter, thru its District Engineer at Sindalan, San
Fernando, Pampanga, to pay the following:

a) ₱457,000.00 – representing the contract for the concreting project


of Sitio 5 road, Bahay Pare, Candaba, Pampanga plus interest at
12% from demand until fully paid; and

b) The costs of suit.

SO ORDERED.21
The RTC held that petitioner must be required to pay the contract
price since it has accepted the completed project and enjoyed the
benefits thereof; to hold otherwise would be to overrun the long
standing and consistent pronouncement against enriching oneself at
the expense of another.22

Dissatisfied, petitioner filed an appeal with the CA. 23 On April 28,


2003, the CA rendered its Decision sustaining the Decision of the
RTC. It held that since the case involves the application of the
principle of estoppel against the government which is a purely legal
question, then the principle of exhaustion of administrative remedies
does not apply; that by its actions the government is estopped from
questioning the validity and binding effect of the Contract Agreement
with the respondent; that denial of payment to respondent on purely
technical grounds after successful completion of the project is not
countenanced either by justice or equity.

The CA rendered herein the assailed Decision dated April 28, 2003,
the dispositive portion of which reads:

WHEREFORE, the decision of the lower court is hereby AFFIRMED


with modification in that the interest shall be six percent (6%) per
annum computed from June 21, 1995.

SO ORDERED.24

Hence, the present petition on the following ground:

THE COURT OF APPEALS ERRED IN NOT FINDING THAT


RESPONDENT HAS NO CAUSE OF ACTION AGAINST PETITIONER,
CONSIDERING THAT:

(a) RESPONDENT FAILED TO EXHAUST ADMINISTRATIVE


REMEDIES; AND

(b) IT IS THE COMMISSION ON AUDIT WHICH HAS THE PRIMARY


JURISDICTION TO RESOLVE RESPONDENT’S MONEY CLAIM
AGAINST THE GOVERNMENT.25
Petitioner contends that respondent’s recourse to judicial action was
premature since the proper remedy was to appeal the District
Auditor’s disapproval of payment to the COA, pursuant to Section
48, Presidential Decree No. 1445 (P.D. No. 1445), otherwise known
as the Government Auditing Code of the Philippines; that the COA
has primary jurisdiction to resolve respondent’s money claim against
the government under Section 2(1),26 Article IX of the 1987
Constitution and Section 2627 of P.D. No. 1445; that non-observance
of the doctrine of exhaustion of administrative remedies and the
principle of primary jurisdiction results in a lack of cause of action.

Respondent, on the other hand, in his Memorandum28 limited his


discussion to Civil Code provisions relating to human relations. He
submits that equity demands that he be paid for the work
performed; otherwise, the mandate of the Civil Code provisions
relating to human relations would be rendered nugatory if the State
itself is allowed to ignore and circumvent the standard of behavior it
sets for its inhabitants.

The present petition is bereft of merit.

The general rule is that before a party may seek the intervention of
the court, he should first avail of all the means afforded him by
administrative processes.29 The issues which administrative
agencies are authorized to decide should not be summarily taken
from them and submitted to a court without first giving such
administrative agency the opportunity to dispose of the same after
due deliberation.30

Corollary to the doctrine of exhaustion of administrative remedies is


the doctrine of primary jurisdiction; that is, courts cannot or will not
determine a controversy involving a question which is within the
jurisdiction of the administrative tribunal prior to the resolution of
that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring
the special knowledge, experience and services of the administrative
tribunal to determine technical and intricate matters of fact.31
Nonetheless, the doctrine of exhaustion of administrative remedies
and the corollary doctrine of primary jurisdiction, which are based
on sound public policy and practical considerations, are not
inflexible rules. There are many accepted exceptions, such as: (a)
where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction; (c) where there is
unreasonable delay or official inaction that will irretrievably
prejudice the complainant; (d) where the amount involved is
relatively small so as to make the rule impractical and oppressive;
(e) where the question involved is purely legal and will ultimately
have to be decided by the courts of justice;32 (f) where judicial
intervention is urgent; (g) when its application may cause great and
irreparable damage; (h) where the controverted acts violate due
process; (i) when the issue of non-exhaustion of administrative
remedies has been rendered moot;33 (j) when there is no other plain,
speedy and adequate remedy; (k) when strong public interest is
involved; and, (l) in quo warranto proceedings.34Exceptions (c) and
(e) are applicable to the present case.

Notwithstanding the legal opinions of the DPWH Legal Department


rendered in 1993 and 1994 that payment to a contractor with an
expired contractor’s license is proper, respondent remained unpaid
for the completed work despite repeated demands. Clearly, there was
unreasonable delay and official inaction to the great prejudice of
respondent.

Furthermore, whether a contractor with an expired license at the


time of the execution of its contract is entitled to be paid for
completed projects, clearly is a pure question of law. It does not
involve an examination of the probative value of the evidence
presented by the parties. There is a question of law when the doubt
or difference arises as to what the law is on a certain state of facts,
and not as to the truth or the falsehood of alleged facts.35 Said
question at best could be resolved only tentatively by the
administrative authorities. The final decision on the matter rests not
with them but with the courts of justice. Exhaustion of
administrative remedies does not apply, because nothing of an
administrative nature is to be or can be done.36 The issue does not
require technical knowledge and experience but one that would
involve the interpretation and application of law.

Thus, while it is undisputed that the District Auditor of the COA


disapproved respondent’s claim against the Government, and, under
Section 4837 of P.D. No. 1445, the administrative remedy available to
respondent is an appeal of the denial of his claim by the District
Auditor to the COA itself, the Court holds that, in view of exceptions
(c) and (e) narrated above, the complaint for specific performance
and damages was not prematurely filed and within the jurisdiction
of the RTC to resolve, despite the failure to exhaust administrative
remedies. As the Court aptly stated in Rocamora v. RTC-Cebu
(Branch VIII):38

The plaintiffs were not supposed to hold their breath and wait until
the Commission on Audit and the Ministry of Public Highways had
acted on the claims for compensation for the lands appropriated by
the government. The road had been completed; the Pope had come
and gone; but the plaintiffs had yet to be paid for the properties
taken from them. Given this official indifference, which apparently
would continue indefinitely, the private respondents had to act to
assert and protect their interests.39

On the question of whether a contractor with an expired license is


entitled to be paid for completed projects, Section 35 of R.A. No.
4566 explicitly provides:

SEC. 35. Penalties. Any contractor who, for a price, commission, fee
or wage, submits or attempts to submit a bid to construct, or
contracts to or undertakes to construct, or assumes charge in a
supervisory capacity of a construction work within the purview of
this Act, without first securing a license to engage in the business of
contracting in this country; or who shall present or file the license
certificate of another, give false evidence of any kind to the Board, or
any member thereof in obtaining a certificate or license, impersonate
another, or use an expired or revoked certificate or license, shall be
deemed guilty of misdemeanor, and shall, upon conviction, be
sentenced to pay a fine of not less than five hundred pesos but not
more than five thousand pesos. (Emphasis supplied)

The "plain meaning rule" or verba legis in statutory construction is


that if the statute is clear, plain and free from ambiguity, it must be
given its literal meaning and applied without interpretation.40 This
rule derived from the maxim Index animi sermo est (speech is the
index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its
intention or will and preclude the court from construing it
differently. The legislature is presumed to know the meaning of the
words, to have used words advisedly, and to have expressed its
intent by use of such words as are found in the statute.41 Verba legis
non est recedendum, or from the words of a statute there should be
no departure.42

The wordings of R.A. No. 4566 are clear. It does not declare,
expressly or impliedly, as void contracts entered into by a contractor
whose license had already expired. Nonetheless, such contractor is
liable for payment of the fine prescribed therein. Thus, respondent
should be paid for the projects he completed. Such payment,
however, is without prejudice to the payment of the fine prescribed
under the law.

Besides, Article 22 of the Civil Code which embodies the maxim


Nemo ex alterius incommode debet lecupletari (no man ought to be
made rich out of another’s injury) states:

Art. 22. Every person who through an act of performance by


another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground,
shall return the same to him.

This article is part of the chapter of the Civil Code on Human


Relations, the provisions of which were formulated as "basic
principles to be observed for the rightful relationship between
human beings and for the stability of the social order, x x x designed
to indicate certain norms that spring from the fountain of good
conscience, x x x guides human conduct [that] should run as golden
threads through society to the end that law may approach its
supreme ideal which is the sway and dominance of justice."43 The
rules thereon apply equally well to the Government.44 Since
respondent had rendered services to the full satisfaction and
acceptance by petitioner, then the former should be compensated for
them. To allow petitioner to acquire the finished project at no cost
would undoubtedly constitute unjust enrichment for the petitioner
to the prejudice of respondent. Such unjust enrichment is not
allowed by law.

WHEREFORE, the present petition is DENIED for lack of merit. The


assailed Decision of the Court of Appeals dated April 28, 2003 in
CA-G.R. CV No. 56345 is AFFIRMED. No pronouncement as to
costs.

SO ORDERED.

ELPIDIO S. UY, doing business G.R. Nos. 147925-


under the name and style 26
EDISON DEVELOPMENT &
CONSTRUCTION, Present:
Petitioner,
YNARES-
SANTIAGO, J.,
- versus - Chairperson,
CORONA,*
VELASCO, JR.,**
NACHURA, and
PUBLIC ESTATES AUTHORITY PERALTA, JJ.
and the HONORABLE COURT
OF APPEALS, Promulgated:
Respondents.
June 8, 2009

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

DECISION
NACHURA, J.:

Petitioner Elpidio S. Uy (Uy) appeals by certiorari the Joint


Decision[1] dated September 25, 2000 and the Joint
Resolution[2] dated April 25, 2001 of the Court of Appeals (CA) in the
consolidated cases CA-G.R. SP Nos. 59308 and 59849.

Respondent Public Estates Authority (PEA) was designated as project


manager by the Bases Conversion Development Authority (BCDA),
primarily tasked to develop its 105-hectare demilitarized lot
in Fort Bonifacio, Taguig City into a first-class memorial park to be
known as Heritage Park. PEA then engaged the services
of Makati Development Corporation (MDC) to undertake the
horizontal works on the project; and Uy, doing business under the
name and style Edison Development and Construction (EDC), to do
the landscaping.

For a contract price of Three Hundred Fifty-Five Million Eighty


Thousand One Hundred Forty-One and 15/100 Pesos
(P355,080,141.15), PEA and EDC signed the Landscaping and
Construction Agreement[3] on November 20, 1996. EDC undertook to
complete the landscaping works in four hundred fifty (450) days
commencing on the date of receipt of the notice to proceed.

EDC received the notice to proceed on December 3, 1996; [4] and


three (3) days after, or on December 6, 1996,[5] it commenced the
mobilization of the equipment and manpower needed for the
project. PEA, however, could not deliver any work area to EDC
because the horizontal works of MDC were still ongoing. EDC
commenced the landscaping works only on January 7, 1997 when
PEA finally made an initial delivery of a work area.

PEA continuously incurred delay in the turnover of work


areas. Resultantly, the contract period of 450 days was extended to
693 days. PEA also failed to turn over the entire 105-hectare work
area due to the presence of squatters. Thus, on March 15, 1999, the
PEA Project Management Office (PEA-PMO) issued Change Order No.
2-LC,[6]excluding from the contract the 45-square-meter portion of the
park occupied by squatters.

In view of the delay in the delivery of work area, EDC claimed


additional cost from the PEA-PMO amounting
to P181,338,056.30. Specifically, Uy alleged that he incurred
additional rental costs for the equipment, which were kept on
standby, and labor costs for the idle manpower. He added that the
delay by PEA caused the topsoil at the original supplier to be depleted;
thus, he was compelled to obtain the topsoil from a farther source,
thereby incurring extra costs. He also claims that he had to mobilize
water trucks for the plants and trees which had already been delivered
to the site. Furthermore, it became necessary to construct a nursery
shade to protect and preserve the young plants and trees prior to
actual transplanting to the landscaped area. The PEA-PMO evaluated
the EDCs claim and arrived at a lesser amount
of P146,484,910. The evaluation of PEA-PMO was then referred to
[7]

the Heritage Park Executive Committee (ExCom) for approval.

On November 12, 1999, the Performance Audit Committee (PAC)


reviewed the progress report submitted by the works engineer and
noted that the EDCs landscaping works were behind schedule by
twenty percent (20%). The PAC considered this delay unreasonable
and intolerable, and immediately recommended to BCDA the
termination of the landscaping contract.[8] The BCDA adopted PACs
recommendation and demanded from PEA the termination of the
contract with EDC. In compliance, PEA terminated the agreement on
November 29, 1999.

PEA fully paid all the progress billings up to August 26, 1999,
but it did not heed EDCs additional claims. Consequently, Uy filed a
Complaint[9] with the Construction Industry Arbitration Commission
(CIAC), docketed as CIAC Case No. 02-2000.
On May 16, 2000, the CIAC rendered a Decision,[10] the
dispositive portion of which reads:

WHEREFORE, Judgment is hereby rendered in favor of


the [Petitioner] Contractor ELPIDIO S. UY and Award is
hereby made on its monetary claims as follows:

Respondent PUBLIC ESTATES AUTHORITY is


directed to pay the [petitioner] the following amounts:

P19,604,132.06 --- for the cost of idle time of


equipment.
2,275,721.00 --- for the cost of idled manpower.
6,050,165.05 --- for the construction of the nursery
shade net
area.
605,016.50 --- for attorneys fees.

Interest on the amount of P6,050,165.05 as cost for


the construction of the nursery shade net area shall be paid
at the rate of 6% per annum from the date the Complaint
was filed on 12 January 2000. Interest on the total amount
of P21,879,853.06 for the cost of idled manpower and
equipment shall be paid at the same rate of 6% per annum
from the date this Decision is promulgated. After finality of
this Decision, interest at the rate of 12% per annum shall
be paid on the total of these 3 awards amounting
to P27,930,018.11 until full payment of the awarded
amount shall have been made, this interim period being
deemed to be at that time already a forbearance of credit
(Eastern Shipping Lines, Inc. v. Court of Appeals, et al., 243
SCRA 78 [1994];Keng Hua Paper Products Co., Inc. v. Court
of Appeals, 286 SCRA 257 [1998]; Crismina Garments, Inc. v.
Court of Appeals, G.R. No. 128721, March 9, 1999).

SO ORDERED.[11]
Uy received the CIAC decision on June 7, 2000. On June 16,
2000, Uy filed a motion for correction of computation, [12] followed by
an amended motion for correction of computation,[13] on July 21,
2000. The CIAC, however, failed to resolve Uys motion and amended
motion within the 30-day period as provided in its rules, and Uy
considered it as denial of the motion.

Hence, on July 24, 2000, Uy filed a petition for review[14] with the
CA, docketed as CA-G.R. SP No. 59849. Uys petition was consolidated
with CA-G.R. SP No. 59308, the earlier petition filed by PEA, assailing
the same CIAC decision.

On August 1, 2000, the CIAC issued an Order[15] denying Uys


motion for correction of computation.

On September 25, 2000, the CA rendered the now assailed Joint


Decision dismissing both petitions on both technical and substantive
grounds. PEAs petition was dismissed because the verification thereof
was defective. Uys petition, on the other hand, was dismissed upon a
finding that it was belatedly filed. Further, the CA found no sufficient
basis to warrant the reversal of the CIAC ruling, which it held is based
on clear provisions of the contract, the evidence on record and
relevant law and jurisprudence.

The CA disposed thus:

WHEREFORE, premises considered, the petitions in


CA-G.R. SP No. 59308, entitled Public Estates Authority v.
Elpidio S. Uy, doing business under the name and style
of Edison [D]evelopment & Construction, and CA-G.R. SP
No. 59849, Elpidio S. Uy, doing business under the name
and style of Edison [D]evelopment & Construction v.
Public Estates Authority,are both hereby DENIED DUE
COURSE and accordingly DISMISSED, for lack of merit.
Consequently, the Award/Decision issued by the
Construction Industry Arbitration Commission on May 16,
2000 in CIAC Case No. 02-2000, entitled Elpidio S. Uy,
doing business under the name and style of Edison
[D]evelopment & Construction v. Public Estates
Authority, is hereby AFFIRMED in toto.

No pronouncement as to costs.

SO ORDERED.[16]

PEA and Uy filed motions for reconsideration. Subsequently, PEA


filed with the CA an Urgent Motion for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction,[17] seeking
to enjoin the CIAC from proceeding with CIAC Case No. 03-2001,
which Uy had subsequently filed. PEA alleged that the case involved
claims arising from the same Landscaping and Construction
Agreement, subject of the cases pending with the CA.

On April 25, 2001, the CA issued the assailed Joint Resolution,


thus:

WHEREFORE, the present Motion/s for


Reconsideration in CA-G.R. SP No. 59308 and CA-G.R. SP
No. 59849 are hereby both DENIED, for lack of merit.

Accordingly, let an injunction issue permanently


enjoining the Construction Industry Arbitration
Commission from proceeding with CIAC CASE NO. 03-
2001, entitled ELPIDIO S. UY, doing business
under the name and style of EDISON DEVELOPMENT &

CONSTRUCTION v. PUBLIC ESTATES AUTHORITY


and/or HONORABLE CARLOS P. DOBLE.
SO ORDERED.[18]

PEA and Uy then came to us with their respective petitions for


review assailing the CA ruling. PEAs petition was docketed as G.R.
Nos. 147933-34, while that of Uy was docketed as G.R. Nos. 147925-
26. The petitions, however, were not consolidated.

On December 12, 2001, this Court resolved G.R. Nos. 147933-34


in this wise:

WHEREFORE, in view of the foregoing, the petition for


review is DENIED. The Motion to Consolidate this petition
with G.R. No. 147925-26 is also DENIED.

SO ORDERED.[19]

Thus, what remains for us to resolve is Uys petition, raising the


following issues:

WHETHER OR NOT RESPONDENT COURT OF APPEALS


HAS DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS IN DISMISSING
PETITIONER UYS PETITION IN CA-G.R. SP NO. 59849 ON
THE ALLEGED GROUND OF NON-COMPLIANCE WITH THE
REGLEMENTARY PERIOD IN FILING AN APPEAL

II

WHETHER OR NOT THE RESPONDENT COURT OF


APPEALS, IN AFFIRMING THE DECISION OF THE CIAC
ARBITRAL TRIBUNAL INSOFAR AS IT DENIED CERTAIN
CLAIMS OF PETITIONER UY, HAS DECIDED A QUESTION
OF SUBSTANCE NOT IN ACCORDANCE WITH LAW AND
THE APPLICABLE DECISIONS OF THE HONORABLE
COURT

III

WHETHER OR NOT THE RESPONDENT COURT OF


APPEALS ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT ENJOINED THE PROCEEDINGS IN CIAC CASE
NO. 03-2001 IN ITS JOINT RESOLUTION DATED 25 APRIL
2000, WHICH CASE IS TOTALLY DIFFERENT FROM THE
CASE A QUO[20]

We will deal first with the procedural issue.

Appeals from judgment of the CIAC shall be taken to the CA by


filing a petition for review within fifteen (15) days from the receipt of
the notice of award, judgment, final order or resolution, or from the
date of its last publication if publication is required by law for its
effectivity, or of the denial of petitioners motion for new trial or
reconsideration duly filed in accordance with the governing law of the
court or agency a quo.[21]

Admittedly, Uy received the CIAC decision on June 7, 2000; that


instead of filing a verified petition for review with the CA, Uy filed a
motion for correction of computation on June 16, 2000, pursuant to
Section 9, Article XV of the Rules of Procedure Governing
Construction Arbitration:

Section 9. Motion for Reconsideration. As a matter of policy,


no motion for reconsideration shall be allowed. Any of the
parties may, however, file a motion for correction within
fifteen (15) days from receipt of the award upon any of the
following grounds:
a. An evident miscalculation of figures, a typographical
or arithmetical error;

b. An evident mistake in the description of any party,


person, date, amount, thing or property referred to in the
award.

The filing of the motion for correction shall interrupt the


running of the period for appeal.

With the filing of the motion for correction, the running of the period
to appeal was effectively interrupted.

CIAC was supposed to resolve the motion for correction of


computation within 30 days from the time the comment or opposition
thereto was submitted. In Uys case, no resolution was issued despite
the lapse of the 30-day period, and Uy considered it as a denial of his
motion. Accordingly, he elevated his case to the CA on July 24,
2000. But not long thereafter, or on August 1, 2000, the CIAC issued
an Order[22] denying the motion for correction of computation.

Obviously, when Uy filed his petition for review with the CA, the
period to appeal had not yet lapsed; it was interrupted by the
pendency of his motion for computation.There is no basis, therefore,
to conclude that the petition was belatedly filed.

The foregoing notwithstanding, inasmuch as the CA resolved the


petition on the merits, we now confront the substantive issue the
propriety of the CAs affirmance of the CIAC decision.

Uy cries foul on the award granted by CIAC, and affirmed by the


CA. He posits that PEA already admitted its liability, pegged
at P146,484,910.10, in its memorandum dated January 6,
2000. Thus, he faults the CA for awarding a lesser amount.

We meticulously reviewed the records before us and failed to


discern any admission of liability on the part of PEA.
The PEA-PMO evaluation dated January 6, 2000,[23] where PEA
allegedly admitted its liability, reads in full:

MEMORANDUM

For : Mr. Jaime R. Millan


Project Manager
Heritage Park Project

Subject: EDCs Various Claim


Landscape Development Works

Revision shall be made on our evaluation dated 28


December 1999 concerning various claims of contractor
EDC-Landscape Development Works (Package IV),
particularly on the claim on Project Equipment on Standby
(item a of the earlier evaluation).

Reference to item 4 of the Terms and Conditions of 1998


ACEL Rate Equipment Guidebook, the CMO inadvertently
did not consider are the wages and salaries of standby
operator/driver corresponding to the equipment standby
being claimed.

Thus, the corresponding gross amount to be


incorporated shall be P4,925,600.00 computed based on the
total man-months of each standby equipment being claimed.

A tabulation of the claims is shown hereinbelow:

Nature of EDC Claim Works PMO


Claim Engineer Evaluation
Evaluation
a. Project
Equipment P95,740,834.3 67,422,840.4 81,851,396.0
on Standby 0 0 8
Equipment 4,925,600.00
Operator/Driv
er
b. Manpower 28,165,022.00 2,275,721.00 2,275,721.00
on Standby
c. Topsoil Addl 37,780,200.00
Hauling 37,780,200.0 37,780,200.0
Distance 0 0

d. Water 19,652,000.00
Truck 15,467,800.00 19,652,000.00
Operatin
g Cost
---------------------------------------------------------------------------
---------------------------------
Total P181,338,056.3 122,946,561.4 146,484,917.[08
0 0 ]

Further, it is being specified that the PMO maintains the


earlier notes of the CMO in its memo of 18 October 1999 and
that legal interpretations on each item of claims is likewise
enjoined.

Attached are pertinent documents for your review and


reference
(Sgd.) (Sgd.)
ROGELIO H. IGNACIO FLORO C. URCIA
PMO-B Asst. Project Manager

By no stretch of the imagination can we consider this


memorandum an admission of liability on the part of PEA. First,
nowhere in the memorandum does it say that PEA is admitting its
liability. The evaluation contained in the above memorandum is
merely a verification of the accuracy of EDCs claims. As a matter of
fact, the evaluation is still subject for review by the project manager,
whose decision on the matter requires the approval of the Heritage
Park ExCom. Second, Messrs. Ignacio and Urcia had no legal
authority to make admissions on behalf of PEA. Thus, even assuming
that the evaluation contained in the memorandum was in the nature
of an admission, the same cannot bind PEA. Third, Uy filed his
complaint with the CIAC because PEA did not act on EDCs various
claims. This supports our conclusion that PEA never admitted, but
on the contrary denied, whatever additional liabilities were claimed by
Uy under the landscaping contract.

Neither do we find any admission of liability on the part of PEA


during the proceedings before the CIAC. What was admitted by PEA
was that PMO evaluated the claim at the lesser amount
of P146,484,910 (Exh. S).[24] The admission of the evaluation made by
PEA cannot translate to an admission of liability. There is simply no
basis for Uy to claim that PEA had admitted its liability.

This issue disposed of, we now resolve Uys claims on the basis of the
evidence presented.

Uy claims P95,740,834.30 as the standby equipment cost. CIAC,


however, did not agree and granted only P19,604,132.06 as the cost
of standby equipment using its so-called equitable method:

[Uy] had mobilized manpower and equipment sufficient


to do the landscaping works for the entire 105 hectares. The
unilateral reduction in scope of work made by [PEA] thus
laid idle the men and equipment of [Uy] in direct proportion
to said reduction. In effect, therefore, Uy had on hand
manpower and equipment amounting to 42.85% in excess of
that necessary to perform the landscaping works for the
reduced scope of work. [Uy] thus suffered costs in terms of
excess manpower and equipment in proportion to the
reduced scope of work.

xxxx

The total contract period original extensions to complete


the landscaping works for the entire 105 hectares is 693
days. The reduction in scope of work 42.85% laid idle his
equipment by the same percentage of 42.85[%] or 296.95
days. Since [Uy] calculated his claim for idled equipment on
a per month basis, it is necessary to convert this into
months. 296.95 days is equivalent of 9.89
months. Multiplied by the rate of P1,982,217.60 per
month of delay, this would translate to P19,604,132.06 as
the cost of idle time for equipment by reason of the [delay].[25]

Upon review of the records before us, we find a need to modify,


by increasing, the award for standby equipment cost.

CIAC found that PEA incurred delays in the turnover of work


areas:

The first delay was the turn-over of a portion of Area 1 A


that was made on 17 April 1997. The start of work on that
area was scheduled for March, 1997. There was, therefore,
a delay of about one month. The second delay was the turn-
over of a portion of Area 2 A that was made on 20 October
1997. The start of work on that area was scheduled for May,
1997. There was, therefore, adelay of about five
months. The third delay was the turn-over of a portion of
Area 2 B that was made on 05 March 1998. The start of work
on that area was scheduled for mid-February 1997.There
was, therefore, a delay of more than one (1) year. Altogether,
the several periods of delayed turn-over of work areas total
one year and six months or 546 days.[26]

Surely, on the days that EDC was waiting for the turn over of
additional work areas, it was paying rentals for the equipment on
standby. Yet, CIAC completely ignored these delays in determining the
cost of equipment on standby, reasoning that:
It must be pointed out, however, that the division of the vast
area to be landscaped into distinct work areas with different
start of work schedules under the PERT-CPM, [Uy] could
easily have shifted his equipment from an area where the
delivery was delayed to the area where there was an
advanced turn-over.[27]

This is wrong.

Records establish that EDC promptly commenced the


landscaping work on every area that was turned over. EDC, in fact,
shifted its equipment where there was an advance delivery, if only to
minimize the additional expenses incurred by reason of the long
delays in the turnover of the other work areas. Thus, in addition to
the award of P19,604,132.06 for cost of idle time for equipment by
reason of the reduction of scope of work,

Uy is entitled to the cost of idle time for equipment by reason of the


delay incurred in the delivery of work areas.

The period of owner-caused delay was 546 days or 18.2


months. The rate given by the Association of Carriers and Equipment
Lessors (ACEL), Inc., and which was also used as basis by CIAC in
granting the costs for equipment on standby, was P1,982,271.60 per
month of delay. Considering that PEA was in delay for 564 days or
18.2 months, Uy is entitled to an additional award
of P36,076,360.32. Accordingly, he is entitled to an aggregate amount
of P55,680,492.38 for the equipment rentals on standby.

As to the awards of P2,275,721.00, for the cost of idle manpower,


and P6,050,165.05, for the construction of the nursery shade net
area, we find no reason to disturb the same, as Uy never raised this
issue in his petition.

Next, we resolve Uys claims for costs for additional hauling


distance of topsoil and for mobilization of water truck.
The approved hauling cost of topsoil was only P12.00/kilometer
or P120.00 for the 10 kms original source. Uy, however, claims that
due to the delay in delivery of work areas, the original source became
depleted; hence, he was constrained to haul topsoil from another
source located at a much farther distance of 40 kms. Uy insists that
the exhaustion of topsoil at the original source was solely attributable
to the delay in the turnover of the project site. Thus, he claims from
PEA the increased cost of topsoil amounting to P37,780,200.00.

Article 1724 of the Civil Code provides:

ART. 1724. The contractor who undertakes to build a


structure or any other work for a stipulated price, in
conformity with plans and specifications agreed upon with
the land-owner, can neither withdraw from the contract nor
demand an increase in the price on account of the higher
cost of labor or materials, save when there has been a
change in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in
writing; and

(2) The additional price to be paid to the contractor has been


determined in writing by both parties.

By this article, a written authorization from the owner is required


before the contractor can validly recover his claim. The evident
purpose of the provision is to avoid litigation for added costs incurred
by reason of additions or changes in the original plan. Undoubtedly,
it was adopted to serve as a safeguard or a substantive condition
precedent to recovery.[28]

This provision is echoed in the Landscaping Contract, viz.:

ARTICLE IX
CHANGE OF WORK

xxxx

9.3. Under no circumstances shall PEA be held


liable for the payment of change of work undertaken without
the written approval of the PEA General Manager x x x.

ARTICLE X
EXTRA WORK
xxxx

10.3. Under no circumstances shall PEA be held liable for


the payment of extra work undertaken without the written
approval of the PEA General Manager to perform the said
work.[29]

Admittedly, EDC did not secure the required written approval of


PEAs general manager before obtaining the topsoil from a farther
source. As pointed out by the CIAC:

There is no change order authorizing payment for the


increased cost upon which this claim is based. There is,
therefore, no legal right based upon contract (the
landscaping agreement or a change order) that would
impose such a liability upon [PEA]. In a lump sum contract,
as that entered into by the parties, the matter of how the
contractor had made [a] computation to arrive at [a] bid that
he submits is completely irrelevant. The contract amount of
delivered topsoil is P780.00 per truckload of 5.5 cubic
meters sourced from a distance of [10] km. or 100
[meters]. There is nothing in Exhibit L or in the landscaping
contract (Exhibit A) that would indicate an agreement of
[PEA] to pay for the increase in hauling cost if the source of
topsoil exceeds 10 kilometers.Corollarily, there is also
nothing therein to show that [PEA] would also be entitled to
decrease said costs by paying less if the distance would have
been less than 10 kilometers. Had there been such a
counterpart provision, there might have been more arguable
claim for [Uy]. Unfortunately, no such provision exists.[30]

In Powton Conglomerate, Inc. v. Agcolicol,[31] we emphasized:

The written consent of the owner to the increased costs


sought by the respondent is not a mere formal requisite, but
a vital precondition to the validity of a subsequent contract
authorizing a higher or additional contract price. Moreover,
the safeguards enshrined in the provisions of Article 1724
are not only intended to obviate future misunderstandings
but also to give the parties a chance to decide whether to
bind ones self to or withdraw from a contract.

By proceeding to obtain topsoil up to a 40-kilometer radius without


written approval from the PEA general manager, Uy cannot claim the
additional cost he incurred.

Uy further claims P19,625,000.00 for cost of mobilization of


water trucks. He asserts that PEA completely failed to provide the
generator sets necessary to undertake the watering and/or irrigation
works for the landscaping and construction activities. [32]

Uy, however, admitted that MDC had already installed a deep


well in the project site, and EDC used it in its landscaping and
construction activities.[33] Under the contract, the operational costs of
the deep well and its appurtenant accessories, including the generator
sets, shall be borne by EDC:

The CONTRACTOR shall shoulder all cost of electricity,


maintenance, repairs, replacement of parts, when needed,
and all costs of operation of the deepwell/s, and its
appurtenant accessories, i.e. generator sets, etc. (which are
already existing at the project site, constructed by another
Contractor) while such deepwell/s are being used by
CONTRACTOR herein for its landscaping and construction
activities. These [deepwells] shall be turned over to PEA by
CONTRACTOR in good operating/usable condition as when
it was first used by CONTRACTOR.[34]

Thus, Uy cannot claim additional cost for providing generator sets.

Uy also attempts to justify his claim for cost of mobilization of water


trucks by alleging that the water from the deep well provided by MDC
and PEA was grossly insufficient to undertake the watering works for
the project; hence, he was constrained to mobilize water trucks to
save the plants from dying.

Indisputably, Uy mobilized water trucks for the landscaping


projects and, certainly, incurred additional costs. But like his claim
for additional cost of topsoil, such additional expenses were incurred
without prior written approval of PEAs general manager. Thus, he
cannot claim payment for such cost from PEA.

As aptly said by the CIAC:

Since [Uy] had presumably intended all along to charge


[PEA] for the water truck operating costs, considering the
very substantial amount of his claim, the prudence that he
presumably has, as an experienced general contractor of the
highest triple A category, should have dictated that he
negotiate with the [PEA] for a change order or an extra work
order before continuing to spend the huge amounts that he
claims to have spent. [Uy] did just that in relation to his
much smaller claim for the construction of the nursery
shade x x x. He, however, made no effort to negotiate with
the PEA for a similar change order or extra work order to
safeguard his even bigger additional costs to operate the
water trucks. No explanation was offered for such a
mystifying differential treatment. He cannot, therefore, pass
on without any contractual basis, such additional costs to
the [PEA].

Neither can we hold PEA liable based on solutio indebiti, the legal
maxim that no one should enrich itself at the expense of another. As
we explained in Powton Conglomerate, Inc. v. Agcolicol,[35]

the principle of unjust enrichment cannot be validly invoked


by the respondent who, through his own act or omission,
took the risk of being denied payment for additional costs by
not giving the petitioners prior notice of such costs and/or
by not securing their written consent thereto, as required by
law and their contract.

Uy cannot, therefore, claim from PEA the costs of the additional


hauling distance of topsoil, and of the mobilization of water trucks.

Uy also assails the grant of attorneys fees equivalent to 10% of the


total amount due. Citing paragraph 24.4 of the Landscaping and
Construction Agreement, Uy asserts entitlement to attorneys fees of
twenty percent (20%) of the total amount claimed. He ascribes error
to the CIAC and the CA for reducing the stipulated attorneys fees from
20% to 10% of the total amount due.

Paragraph 24.4 of the agreement provides:

Should the PEA be constrained to resort to judicial or quasi-


judicial relief to enforce or safeguard its rights and interests
under this Agreement, the CONTRACTOR if found by the
court or [the] quasi-judicial body, as the case [may be], to
have been at fault, shall be liable to PEA for attorneys fees
in an amount equivalent to twenty percent (20%) of the total
[amount] claimed in the complaint, exclusive of [any]
damages and costs of suit.[36]
Clearly, the cited provision cannot support Uys insistence. Paragraph
24.4 on stipulated attorneys fees is applicable only in complaints filed
by PEA against the contractor. The provision is silent on the amount
of attorneys fees that can be recovered from PEA.

Besides, even assuming that Paragraph 24.4 is applicable, the


amount of attorneys fees may be reduced if found to be iniquitous or
unconscionable. Thus:

Articles 1229 and 2227 of the Civil Code empower the


courts to reduce the penalty if it is iniquitous or
unconscionable. The determination of whether the penalty
is iniquitous or unconscionable is addressed to the sound
discretion of the court and depends on several factors such
as the type, extent, and purpose of the penalty, the nature
of the obligation, the mode of breach and its
consequences.[37]

The Court finds Uys claim for attorney's fees equivalent to 20% of
whatever amount is due and payable to be exorbitant. The CIAC and
the CA, therefore, correctly awarded 10% of the total amount due and
payable as reasonable attorneys fees.

Finally, on the propriety of the writ of injunction.

Uy asserts that the CA acted without or in excess of jurisdiction


when it enjoined the proceedings in CIAC Case No. 03-2001, despite
the fact that the said case is totally different from the instant case.

By grave abuse of discretion is meant such capricious and whimsical


exercise of judgment equivalent to lack of jurisdiction. Mere abuse of
discretion is not enough. It must be grave, as when it is exercised
arbitrarily or despotically by reason of passion or personal hostility;
and such abuse must be so patent and so gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law.[38]
The CA granted PEAs prayer for the injunctive writ not without
reason. We quote its Joint Resolution, viz.:

[T]here is no question that Elpidio S. Uys amended


complaint is based on the same Landscaping and
Construction Agreement, as he himself admits. The claims
pertinent thereto had already been arbitrated and passed
upon in CIAC CASE NO. 02-2000 and the decision therein
was already elevated to Us for review and, in view of Our
joint decision in the instant petitions, a reconsideration
thereof.

Based on the foregoing, We are inclined to grant the prayer


of PEA to enjoin the CIAC from further proceeding with CIAC
CASE NO. 03-2001, considering that the allegations therein
constrain Us to apply the doctrine of litis pendentia, which
has for its requisites: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two (2) cases
is such that any judgment that may be rendered in the
pending case, regardless of which party is successful, would
amount to res judicata in the other case. Forum shopping
exists where the elements of litis pendentiaare present or
where a final judgment in one case will amount to res
judicata in the other. The principle of bar by prior judgment
raised by the PEA, i.e., res judicata, finds application only
upon a showing of a final judgment as one of its requisites,
which is not yet present under the present circumstances.

At this juncture, it bears stressing that the essence of forum


shopping is the filing of multiple suits involving the same
parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable
judgment. Accordingly, based on Our holding that the final
resolution of the instant petitions takes precedence as it is
the appropriate vehicle for litigating the issues between the
parties, now that the instant petitions before Us have come
full circle with this joint resolution and, if the parties herein
so choose, may seek further relief to the High Tribunal
afterwards. We cannot allow CIAC CASE NO. 03-2001 to
proceed because to do so would render inutile the
proscriptions against forum shopping which is frowned
upon in Our jurisdiction. Hence, the grant of injunctive
relief. This must be done, or else a travesty of the efficient
administration of justice would lamentably result.[39]

Indeed, the assailed resolution shows no patent or gross error


amounting to grave abuse of discretion. Neither does it show an
arbitrary or despotic exercise of power arising from passion or
hostility.

At this point, it should be stated that the Court is not convinced


by Uys argument that the claims under CIAC Case No. 03-2001 are
different from his claims in CIAC Case No. 02-2000. There is only one
cause of action running through Uys litigious undertakings his
alleged right under the Landscaping and Construction
Agreement. Therefore, the landscaping agreement is indispensable in
prosecuting his claims in both CIAC Cases Nos. 02-2000 and 03-
2001.

As we held in Villanueva v. Court of Appeals:[40]

A party, by varying the form or action or by bringing


forward in a second case additional parties or arguments,
cannot escape the effects of the principle of res
judicata when the facts remain the same at least where such
new parties or matter could have been impleaded or pleaded
in the prior action.
WHEREFORE, the petition is PARTIALLY GRANTED. The
assailed Joint Decision and Joint Resolution of the Court of Appeals
in CA-G.R. SP Nos. 59308 and 59849
are AFFIRMED with MODIFICATIONS. Respondent Public Estates
Authority is ordered to pay Elpidio S. Uy, doing business under the
name and style Edison Development and
Construction, P55,680,492.38 for equipment rentals on
standby; P2,275,721.00 for the cost of idle manpower;
and P6,050,165.05 for the construction of the nursery shade net
area; plus interest at 6% per annum to be computed from the date of
the filing of the complaint until finality of this Decision and 12% per
annum thereafter until full payment. Respondent PEA is further
ordered to pay petitioner Uy 10% of the total award as attorneys fees.

SO ORDERED.

LIWAYWAY VINZONS- G.R. No. 141309


CHATO,
Petitioner,
Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,*
CARPIO MORALES,
- versus - AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
REYES,
LEONARDO-DE
CASTRO, and
BRION, JJ.
FORTUNE TOBACCO Promulgated:
CORPORATION,
Respondent. December 23, 2008
x----------------------------------------------------------------------------------
-------x
RESOLUTION

NACHURA, J.:

It is a fundamental principle in the law of public officers that a duty


owing to the public in general cannot give rise to a liability in favor of
particular individuals.[1] The failure to perform a public duty can
constitute an individual wrong only when a person can show that, in
the public duty, a duty to himself as an individual is also involved,
and that he has suffered a special and peculiar injury by reason of its
improper performance or non-performance.[2]

By this token, the Court reconsiders its June 19, 2007 Decision[3] in
this case.

As culled from the said decision, the facts, in brief, are as follows:

On June 10, 1993, the legislature enacted Republic Act


No. 7654 (RA 7654), which took effect on July 3, 1993. Prior
to its effectivity, cigarette brands Champion, Hope, and
More were considered local brands subjected to an ad
valorem tax at the rate of 20-45%. However, on July 1, 1993,
or two days before RA 7654 took effect, petitioner issued
RMC 37-93 reclassifying Champion, Hope, and More as
locally manufactured cigarettes bearing a foreign
brand subject to the 55% ad valorem tax. RMC 37-93 in
effect subjected Hope, More, and Champion cigarettes to the
provisions of RA 7654, specifically, to Sec. 142, (c)(1) on
locally manufactured cigarettes which are currently
classified and taxed at 55%, and which imposes
an ad valorem tax of 55% provided that the minimum tax
shall not be less than Five Pesos (P5.00) per pack.

On July 2, 1993, at about 5:50 p.m., BIR Deputy


Commissioner Victor A. Deoferio, Jr. sent via telefax a copy
of RMC 37-93 to Fortune Tobacco but it was addressed to
no one in particular. On July 15, 1993, Fortune Tobacco
received, by ordinary mail, a certified xerox copy of RMC 37-
93. On July 20, 1993, respondent filed a motion for
reconsideration requesting the recall of RMC 37-93, but was
denied in a letter dated July 30, 1993. The same letter
assessed respondent for ad valorem tax deficiency
amounting to P9,598,334.00 (computed on the basis of RMC
37-93) and demanded payment within 10 days from receipt
thereof. On August 3, 1993, respondent filed a petition for
review with the Court of Tax Appeals (CTA), which
on September 30, 1993, issued an injunction enjoining the
implementation of RMC 37-93. In its decision dated August
10, 1994, the CTA ruled that RMC 37-93 is defective, invalid,
and unenforceable and further enjoined petitioner from
collecting the deficiency tax assessment issued pursuant to
RMC No. 37-93. This ruling was affirmed by the Court of
Appeals, and finally by this Court in Commissioner of
Internal Revenue v. Court of Appeals. It was held, among
others, that RMC 37-93, has fallen short of the requirements
for a valid administrative issuance.

On April 10, 1997, respondent filed before the RTC a


complaint for damages against petitioner in her private
capacity. Respondent contended that the latter should be
held liable for damages under Article 32 of the Civil Code
considering that the issuance of RMC 37-93 violated its
constitutional right against deprivation of property without
due process of law and the right to equal protection of the
laws.

Petitioner filed a motion to dismiss contending that: (1)


respondent has no cause of action against her because she
issued RMC 37-93 in the performance of her official function
and within the scope of her authority. She claimed that she
acted merely as an agent of the Republic and therefore the
latter is the one responsible for her acts; (2) the complaint
states no cause of action for lack of allegation of malice or
bad faith; and (3) the certification against forum shopping
was signed by respondents counsel in violation of the rule
that it is the plaintiff or the principal party who should sign
the same.

On September 29, 1997, the RTC denied petitioners


motion to dismiss holding that to rule on the allegations of
petitioner would be to prematurely decide the merits of the
case without allowing the parties to present evidence. It
further held that the defect in the certification against forum
shopping was cured by respondents submission of the
corporate secretarys certificate authorizing its counsel to
execute the certification against forum shopping. x x x x

xxxx

The case was elevated to the Court of Appeals via a


petition for certiorari under Rule 65. However, same was
dismissed on the ground that under Article 32 of the Civil
Code, liability may arise even if the defendant did not act
with malice or bad faith. The appellate court ratiocinated
that Section 38, Book I of the Administrative Code is the
general law on the civil liability of public officers while Article
32 of the Civil Code is the special law that governs the
instant case. Consequently, malice or bad faith need not be
alleged in the complaint for damages. It also sustained the
ruling of the RTC that the defect of the certification against
forum shopping was cured by the submission of the
corporate secretarys certificate giving authority to its
counsel to execute the same.[4] [Citations and underscoring
omitted.]
In the aforesaid June 19, 2007 Decision, we affirmed the disposition
of the Court of Appeals (CA) and directed the trial court to continue
with the proceedings in Civil Case No. 97-341-MK.[5]

Petitioner, on July 20, 2007, subsequently moved for the


reconsideration of the said decision.[6] After respondent filed its
comment, the Court, in its April 14, 2008 Resolution,[7] denied with
finality petitioners motion for reconsideration.

Undaunted, petitioner filed, on April 29, 2008 her Motion to Refer [the
case] to the Honorable Court En Banc.[8] She contends that the
petition raises a legal question that is novel and is of paramount
importance. The earlier decision rendered by the Court will send a
chilling effect to public officers, and will adversely affect the
performance of duties of superior public officers in departments or
agencies with rule-making and quasi-judicial powers. With the said
decision, the Commissioner of Internal Revenue will have reason to
hesitate or refrain from performing his/her official duties despite the
due process safeguards in Section 228 of the National Internal
Revenue Code.[9] Petitioner hence moves for the reconsideration of
the June 19, 2007 Decision.[10]

In its June 25, 2008 Resolution,[11] the Court referred the case to
the En Banc. Respondent consequently moved for the reconsideration
of this resolution.

We now resolve both motions.

There are two kinds of duties exercised by public officers: the duty
owing to the public collectively (the body politic), and the duty owing
to particular individuals, thus:

1. Of Duties to the Public. The first of these classes


embraces those officers whose duty is owing primarily to the
public collectively --- to the body politic --- and not to any
particular individual; who act for the public at large, and
who are ordinarily paid out of the public treasury.
The officers whose duties fall wholly or partially within
this class are numerous and the distinction will be readily
recognized. Thus, the governor owes a duty to the public to
see that the laws are properly executed, that fit and
competent officials are appointed by him, that unworthy and
ill-considered acts of the legislature do not receive his
approval, but these, and many others of a like nature, are
duties which he owes to the public at large and no one
individual could single himself out and assert that they were
duties owing to him alone. So, members of the legislature
owe a duty to the public to pass only wise and proper laws,
but no one person could pretend that the duty was owing to
himself rather than to another. Highway commissioners owe
a duty that they will be governed only by considerations of
the public good in deciding upon the opening or closing of
highways, but it is not a duty to any particular individual of
the community.

These illustrations might be greatly extended, but it is


believed that they are sufficient to define the general
doctrine.

2. Of Duties to Individuals. The second class above


referred to includes those who, while they owe to the public
the general duty of a proper administration of their
respective offices, yet become, by reason of their employment
by a particular individual to do some act for him in an official
capacity, under a special and particular obligation to him as
an individual. They serve individuals chiefly and usually
receive their compensation from fees paid by each individual
who employs them.

A sheriff or constable in serving civil process for a


private suitor, a recorder of deeds in recording the deed or
mortgage of an individual, a clerk of court in entering up a
private judgment, a notary public in protesting negotiable
paper, an inspector of elections in passing upon the
qualifications of an elector, each owes a general duty of
official good conduct to the public, but he is also under a
special duty to the particular individual concerned which
gives the latter a peculiar interest in his due performance.[12]

In determining whether a public officer is liable for an improper


performance or non-performance of a duty, it must first be determined
which of the two classes of duties is involved. For, indeed, as the
eminent Floyd R. Mechem instructs, [t]he liability of a public officer to
an individual or the public is based upon and is co-extensive with
his duty to the individual or the public. If to the one or the other he
owes no duty, to that one he can incur no liability. [13]

Stated differently, when what is involved is a duty owing to the public


in general, an individual cannot have a cause of action for damages
against the public officer, even though he may have been injured by
the action or inaction of the officer. In such a case, there is damage
to the individual but no wrong to him. In performing or failing to
perform a public duty, the officer has touched his interest to his
prejudice; but the officer owes no duty to him as an individual.[14] The
remedy in this case is not judicial but political.[15]

The exception to this rule occurs when the complaining


individual suffers a particular or special injury on account of the
public officers improper performance or non-performance of his
public duty. An individual can never be suffered to sue for an injury
which, technically, is one to the public only; he must show a wrong
which he specially suffers, and damage alone does not constitute a
wrong.[16] A contrary precept (that an individual, in the absence of a
special and peculiar injury, can still institute an action against a
public officer on account of an improper performance or non-
performance of a duty owing to the public generally) will lead to a
deluge of suits, for if one man might have an action, all men might
have the likethe complaining individual has no better right than
anybody else.[17] If such were the case, no one will serve a public
office. Thus, the rule restated is that an individual cannot have a
particular action against a public officer without a particular injury, or
a particular right, which are the grounds upon which all actions are
founded.[18]
Juxtaposed with Article 32[19] of the Civil Code, the principle may now
translate into the rule that an individual can hold a public officer
personally liable for damages on account of an act or omission that
violates a constitutional right only if it results in a particular wrong or
injury to the former. This is consistent with this Courts
pronouncement in its June 19, 2007 Decision (subject of petitioners
motion for reconsideration) that Article 32, in fact, allows a damage
suit for tort for impairment of rights and liberties. [20]

It may be recalled that in tort law, for a plaintiff to maintain an action


for damages for the injuries of which he complains, he must establish
that such injuries resulted from a breach of duty which the defendant
owed the plaintiff, meaning a concurrence of injury to the plaintiff and
legal responsibility by the person causing it. Indeed, central to an
award of tort damages is the premise that an individual was injured
in contemplation of law.[21] Thus, in Lim v. Ponce de Leon,[22] we
granted the petitioners claim for damages because he, in fact, suffered
the loss of his motor launch due to the illegal seizure
thereof. In Cojuangco, Jr. v. Court of Appeals,[23] we upheld the right of
petitioner to the recovery of damages as there was an injury sustained
by him on account of the illegal withholding of his horserace prize
winnings.

In the instant case, what is involved is a public officers duty owing to


the public in general. The petitioner, as the then Commissioner of the
Bureau of Internal Revenue, is being taken to task for Revenue
Memorandum Circular (RMC) No. 37-93 which she issued without the
requisite notice, hearing and publication, and which, in Commissioner
of Internal Revenue v. Court of Appeals,[24] we declared as having fallen
short of a valid and effective administrative issuance. [25] A public
officer, such as the petitioner, vested with quasi-legislative or rule-
making power, owes a duty to the public to promulgate rules which
are compliant with the requirements of valid administrative
regulations. But it is a duty owed not to the respondent alone, but to
the entire body politic who would be affected, directly or indirectly, by
the administrative rule.

Furthermore, as discussed above, to have a cause of action for


damages against the petitioner, respondent must allege that it
suffered a particular or special injury on account of the non-
performance by petitioner of the public duty. A careful reading of the
complaint filed with the trial court reveals that no particular injury is
alleged to have been sustained by the respondent. The phrase
financial and business difficulties[26] mentioned in the complaint is a
vague notion, ambiguous in concept, and cannot translate into a
particular injury. In contrast, the facts of the case eloquently
demonstrate that the petitioner took nothing from the respondent, as
the latter did not pay a single centavo on the tax assessment levied
by the former by virtue of RMC 37-93.

With no particular injury alleged in the complaint, there is, therefore,


no delict or wrongful act or omission attributable to the petitioner that
would violate the primary rights of the respondent. Without such
delict or tortious act or omission, the complaint then fails to state a
cause of action, because a cause of action is the act or omission by
which a party violates a right of another.[27]

A cause of action exists if the following elements are present: (1) a


right in favor of the plaintiff by whatever means and under whatever
law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of defendant to
plaintiff for which the latter may maintain an action for recovery of
damages.[28]

The remedy of a party whenever the complaint does not allege a cause
of action is to set up this defense in a motion to dismiss, or in the
answer. A motion to dismiss based on the failure to state a cause of
action in the complaint hypothetically admits the truth of the facts
alleged therein. However, the hypothetical admission is limited to the
relevant and material facts well-pleaded in the complaint and
inferences deducible therefrom. The admission does not extend to
conclusions or interpretations of law; nor does it cover allegations of
fact the falsity of which is subject to judicial notice.[29]

The complaint may also be dismissed for lack of cause of action


if it is obvious from the complaint and its annexes that the plaintiff is
not entitled to any relief.[30]

The June 19, 2007 Decision and the dissent herein reiterates that
under Article 32 of the Civil Code, the liability of the public officer may
accrue even if he/she acted in good faith, as long as there is a violation
of constitutional rights, citing Cojuangco, Jr. v. Court of
Appeals,[31] where we said:

Under the aforecited article, it is not necessary that the


public officer acted with malice or bad faith. To be liable, it
is enough that there was a violation of the constitutional
rights of petitioners, even on the pretext of justifiable
motives or good faith in the performance of duties. [32]

The complaint in this case does not impute bad faith on the
petitioner. Without any allegation of bad faith, the cause of action in
the respondents complaint (specifically, paragraph 2.02 thereof) for
damages under Article 32 of the Civil Code would be premised on the
findings of this Court in Commissioner of Internal Revenue v. Court of
Appeals (CIR v. CA),[33] where we ruled that RMC No. 37-93, issued by
petitioner in her capacity as Commissioner of Internal Revenue,
had fallen short of a valid and effective administrative issuance. This
is a logical inference. Without the decision in CIR v. CA, the bare
allegations in the complaint that respondents rights to due process of
law and to equal protection of the laws were violated by the petitioners
administrative issuance would be conclusions of law, hence not
hypothetically admitted by petitioner in her motion to dismiss.
But in CIR v. CA, this Court did not declare RMC 37-93
unconstitutional; certainly not from either the due process of law or
equal protection of the laws perspective. On due process, the majority,
after determining that RMC 37-93 was a legislative rule, cited an
earlier Revenue Memorandum Circular (RMC No. 10-86) requiring
prior notice before RMCs could become operative. However, this Court
did not make an express finding of violation of the right to due process
of law. On the aspect of equal protection, CIR v. CA said: Not
insignificantly, RMC 37-93 might have likewise infringed on uniformity
of taxation; a statement that does not amount to a positive indictment
of petitioner for violation of respondents constitutional right. Even if
one were to ascribe a constitutional infringement by RMC 37-93 on
the non-uniformity of tax provisions, the nature of the constitutional
transgression falls under Section 28, Article VInot Section 1, Article
IIIof the Constitution.

This Courts own summation in CIR v. CA: All taken, the Court is
convinced that the hastily promulgated RMC 37-93 has fallen short of
a valid and effective administrative issuance, does not lend itself to an
interpretation that the RMC is unconstitutional. Thus, the complaints
reliance on CIR v. CAwhich is cited in, and a copy of which is annexed
to, the complaintas suggestive of a violation of due process and equal
protection, must fail.

Accordingly, from the foregoing discussion, it is obvious that


paragraph 2.02 of respondents complaint loses the needed crutch to
sustain a valid cause of action against the petitioner, for what is left
of the paragraph is merely the allegation that only respondents
Champion, Hope and More cigarettes were reclassified.

If we divest the complaint of its reliance on CIR v. CA, what


remains of respondents cause of action for violation of constitutional
rights would be paragraph 2.01, which reads:

2.01. On or about July 1, 1993, defendant issued


Revenue Memorandum Circular No. 37-93 (hereinafter
referred to as RMC No. 37-93) reclassifying specifically
Champion, Hope and More as locally manufactured
cigarettes bearing a foreign brand. A copy of the aforesaid
circular is attached hereto and made an integral part hereof
as ANNEX A. The issuance of a circular and its
implementation resulted in the deprivation of property of
plaintiff. They were done without due process of law and in
violation of the right of plaintiff to the equal protection of the
laws. (Italics supplied.)

But, as intimated above, the bare allegations, done without due


process of law and in violation of the right of plaintiff to the equal
protection of the laws are conclusions of law.They are not
hypothetically admitted in petitioners motion to dismiss and, for
purposes of the motion to dismiss, are not deemed as facts.

In Fluor Daniel, Inc. Philippines v. EB. Villarosa & Partners Co.,


Ltd.,[34] this Court declared that the test of sufficiency of facts alleged
in the complaint as constituting a cause of action is whether or not,
admitting the facts alleged, the court could render a valid verdict in
accordance with the prayer of the complaint. In the instant case, since
what remains of the complaint which is hypothetically admitted, is
only the allegation on the reclassification of respondents cigarettes,
there will not be enough facts for the court to render a valid judgment
according to the prayer in the complaint.

Furthermore, in an action for damages under Article 32 of the Civil


Code premised on violation of due process, it may be necessary to
harmonize the Civil Code provision with subsequent legislative
enactments, particularly those related to taxation and tax
collection. Judicial notice may be taken of the provisions of the
National Internal Revenue Code, as amended, and of the law creating
the Court of Tax Appeals. Both statutes provide ample remedies to
aggrieved taxpayers; remedies which, in fact, were availed of by the
respondentwithout even having to pay the assessment under
protestas recounted by this Court in CIR v. CA, viz.:

In a letter, dated 19 July 1993, addressed to the


appellate division of the BIR, Fortune Tobacco requested for
a review, reconsideration and recall of RMC 37-93. The
request was denied on 29 July 1993. The following day, or
on 30 July 1993, the CIR assessed Fortune Tobacco for ad
valorem tax deficiency amounting to P9,598,334.00.

On 03 August 1993, Fortune Tobacco filed a petition for


review with the CTA.[35]

The availability of the remedies against the assailed administrative


action, the opportunity to avail of the same, and actual recourse to
these remedies, contradict the respondents claim of due process
infringement.

At this point, a brief examination of relevant American jurisprudence


may be instructive.

42 U.S. Code 1983, a provision incorporated into the Civil Rights Act
of 1871, presents a parallel to our own Article 32 of the Civil Code, as
it states:

Every person who, under color of any statute,


ordinance, regulation, custom, usage, or any State or
Territory, subjects, or causes to be subjected, any citizen of
the United States or other person within the jurisdiction
thereof to the deprivation of any rights, privileges or
immunities secured by the Constitution and laws, shall be
liable to the party injured in an action at law, suit in equity
or other proper proceeding for redress.

This provision has been employed as the basis of tort suits by many
petitioners intending to win liability cases against government officials
when they violate the constitutional rights of citizens.

Webster Bivens v. Six Unknown Named Agents of Federal Bureau of


Investigation,[36] has emerged as the leading case on the victims
entitlement to recover money damages for any injuries suffered as a
result of flagrant and unconstitutional abuses of administrative
power. In this case, federal narcotics officers broke into Bivens home
at 6:30 a.m.without a search warrant and in the absence of probable
cause. The agents handcuffed Bivens, searched his premises,
employed excessive force, threatened to arrest his family, subjected
him to a visual strip search in the federal court house, fingerprinted,
photographed, interrogated and booked him. When Bivens was
brought before a United States Commissioner, however, charges
against him were dismissed. On the issue of whether violation of the
Fourth Amendment by a federal agent acting under color of authority
gives rise to a cause of action for damages consequent upon his
constitutional conduct, the U.S. Supreme Court held that Bivens is
entitled to recover damages for injuries he suffered as a result of the
agents violation of the Fourth Amendment.

A number of subsequent decisions have upheld Bivens. For instance,


in Scheuer v. Rhodes,[37] a liability suit for money damages was
allowed against Ohio Governor James Rhodes by petitioners who
represented three students who had been killed by Ohio National
Guard troops at Kent State University as they protested
against U.S. involvement in Vietnam. In Wood v. Strickland,[38] local
school board members were sued by high school students who argued
that they had been deprived of constitutional due process rights when
they were expelled from school for having spiked a punch bowl at a
school function without the benefit of a full hearing. In Butz v.
Economou,[39] Economou, whose registration privilege as a
commodities futures trader was suspended, without prior warning, by
Secretary of Agriculture Earl Butz, sued on a Bivens action, alleging
that the suspension was aimed at chilling his freedom of expression
right under the First Amendment. A number of other cases[40] with
virtually the same conclusion followed.

However, it is extremely dubious whether a Bivens action against


government tax officials and employees may prosper, if we consider
the pronouncement of the U.S. Supreme Court in Schweiker v.
Chilicky,[41] that a Bivens remedy will not be allowed when other
meaningful safeguards or remedies for the rights of persons situated
as (is the plaintiff) are available. It has also been held that
a Bivens action is not appropriate in the civil service system[42] or in
the military justice system.[43]

In Frank Vennes v. An Unknown Number of Unidentified Agents of


the United States of America,[44] petitioner Vennes instituted
a Bivens action against agents of the Internal Revenue Service (IRS)
who alleged that he (Vennes) owed $250,000 in tax liability, instituted
a jeopardy assessment, confiscated Vennes business, forced a total
asset sale, and put Vennes out of business, when in fact he owed not
a dime. The U.S. Court of Appeals, Eighth Circuit, ruled:

The district court dismissed these claims on the ground


that a taxpayers remedies under the Internal Revenue Code
preclude such a Bivens action. Vennes cites to us no
contrary authority, and we have found none. Though the
Supreme Court has not addressed this precise question, it
has strongly suggested that the district court correctly
applied Bivens:

When the design of a Government program


suggests that Congress has provided what it
considers adequate remedial mechanisms for
constitutional violations that may occur in the
course of its administration, we have not created
additional Bivens remedies.

xxxx

Congress has provided specific and meaningful


remedies for taxpayers who challenge overzealous tax
assessment and collection activities. A taxpayer may
challenge a jeopardy assessment both administratively and
judicially, and may sue the government for a tax refund, and
have authorized taxpayer actions against the United
States to recover limited damages resulting from specific
types of misconduct by IRS employees. These carefully
crafted legislative remedies confirm that, in the politically
sensitive realm of taxation, Congresss refusal to permit
unrestricted damage action by taxpayers has not been
inadvertent. Thus, the district court correctly dismissed
Venness Bivens claims against IRS agents for their tax
assessment and collection activities.

In still another Bivens action, instituted by a taxpayer against IRS


employees for alleged violation of due process rights concerning a tax
dispute, the U.S. District Court of Minnesota said:

In addition, the (Tax) Code provides taxpayers with


remedies, judicial and otherwise, for correcting and
redressing wrongful acts taken by IRS employees in
connection with any collection activities. Although these
provisions do not provide taxpayers with an all-
encompassing remedy for wrongful acts of IRS personnel,
the rights established under the Code illustrate that it
provides all sorts of rights against the overzealous
officialdom, including, most fundamentally, the right to sue
the government for a refund if forced to overpay taxes, and
it would make the collection of taxes chaotic if a taxpayer
could bypass the remedies provided by Congress simply by
bringing a damage suit against IRS employees.[45]

American jurisprudence obviously validates the contention of the


petitioner.

Finally, we invite attention to Section 227, Republic Act No. 8424 (Tax
Reform Act of 1997), which provides:

Section 227. Satisfaction of Judgment Recovered


Against any Internal Revenue Officer. When an action is
brought against any Internal Revenue officer to recover
damages by reason of any act done in the performance of
official duty, and the Commissioner is notified of such action
in time to make defense against the same, through the
Solicitor General, any judgment, damages or costs recovered
in such action shall be satisfied by the Commissioner, upon
approval of the Secretary of Finance, or if the same be paid
by the person sued shall be repaid or reimbursed to him.

No such judgment, damages or costs shall be paid or


reimbursed in behalf of a person who has acted negligently
or in bad faith, or with willful oppression.

Because the respondents complaint does not impute negligence or


bad faith to the petitioner, any money judgment by the trial court
against her will have to be assumed by the Republic of the Philippines.
As such, the complaint is in the nature of a suit against the State. [46]

WHEREFORE, premises considered, we GRANT petitioners motion


for reconsideration of the June 19, 2007 Decision
and DENY respondents motion for reconsideration of the June 25,
2008 Resolution. Civil Case No. CV-97-341-MK, pending with
the Regional Trial Court of Marikina City, is DISMISSED.

SO ORDERED.

PEOPLE OF THE PHILIPPINES, appellee, vs. ANTONIO ABES y


YAMBOT @ TONY (deceased), SALDO YBAEZ y ACEBES,
ROBERTO BONTO y MENDOZA @ BERT, RICARTE BUMAGAT
y ORDONA, RAUL YBAEZ y ACEBES and SIMEON SILVANO,
JR., y GUTIERREZ @ JHUN, appellants.

DECISION
QUISUMBING, J.:

For automatic review is the decision[1] of the Regional Trial Court


of Bacoor, Cavite, Branch 89, dated September 30, 1998, in Criminal
Case No. B-94-293. Its fallo reads:
ACCORDINGLY, finding all the accused (ANTONIO ABES y YAMBOT
@ TONY, SALDO YBAEZ y ACEBES, ROBERTO BONTO y MENDOZA
@ BERT, RICARTE BUMAGAT y ORDONA, RAUL YBAEZ y ACEBES
and SIMEON SILVANO, JR., y GUITERREZ @ JHUN) GUILTY beyond
reasonable doubt for (sic) Robbery with Homicide, they are each
hereby sentenced to die by lethal injection one year after this
decision becomes final. They are hereby ordered, jointly and
severally, to indemnify the private complainant the amounts
of P320,300.00 as compensatory damages; P240,000.00 as loss of
earning capacity of her husband; P50,000.00 as moral
damages; P50,000.00 as exemplary damages and P50,000.00 as and
for attorneys fees.

Let the entire records of this case be transmitted to the Supreme


Court for automatic review.

SO ORDERED.[2]

The appellants in the present case were all long-time residents of


the town of General Mariano Alvarez (GMA), Cavite. All had previously
been employed in various capacities by the GMA Water District. Their
alleged victims, the late Antonio Calaycay and his wife, Catalina
Calaycay, were also residents of GMA and owners of a grocery and a
retail store.
On July 11, 1994, the Office of the Provincial Prosecutor of Cavite
charged the appellants with the special complex crime of robbery with
homicide (robo con homicidio) allegedly committed as follows:

That on or about the 20th day of March 1994 at around 7:30 oclock
in the evening at Lot 3, Block 35, Carillo Teachers Village,
Municipality of Gen. Mariano Alvarez, Province of Cavite, Philippines
and within the jurisdiction of this Honorable Court, the above-
named accused, conspiring, confederating and mutually helping and
aiding one another, with intent to gain, by means of force, violence
and intimidation, being then armed with a deadly weapon and an
unlicensed firearm, taking advantage of their superior strength, and
against the will and consent of the owners thereof, did, then and
there, willfully, unlawfully and feloniously, take, steal, rob and carry
away from Spouses Antonio Calaycay and Catalina Calaycay the
following, to wit:

1. Cash money amounting to P90,000.00;

2. Wallet containing P1,000.00 cash money, a Far East Bank


ATM card and a drivers license; and

3. Check Booklet of the Bank of the Philippine Islands,

and during the commission of the crime of Robbery and/or


subsequent thereto and by reason or on the occasion thereof, the
above-named accused, with intent to kill, being then armed with the
aforementioned deadly weapon and unlicensed firearm and again
conspiring, confederating and mutually helping and aiding one
another, with treachery and evident premeditation and with abuse of
superior strength, did then and there, wilfully, unlawfully and
feloniously, stab and fire upon the person of Antonio Calaycay
causing his subsequent death, and also shoot and fire upon the
person of Catalina Calaycay hitting her in the abdomen, the above-
named accused, having thus performed all the acts of execution
which should have produced the crime of Murder as a consequence
thereof but which nevertheless did not produce it by reason of
causes independent of the will of the accused, that is, by reason of
the timely and able medical attendance rendered to the said victim
which prevented her death, to the damage and prejudice of said
Catalina Calaycay and to the legal heirs of Antonio Calaycay.

CONTRARY TO LAW.[3]

When arraigned, all of the appellants pleaded not


guilty. Thereafter, trial proceeded.
The prosecutions version of the incident established that:
The spouses Antonio and Catalina Calaycay owned and operated a
grocery store at the public market of GMA, Cavite.[4] They also had a
retail store at their residence at Block 3, Lot 35, Teachers Village,
GMA, which was directly managed by Antonio.[5]
At around 7:30 p.m. of Sunday, March 20, 1994, Antonio and
Catalina were on their way home from their grocery store in the
market aboard their jeep driven by Antonio.
When they reached home and were about to park their jeep, they
noticed appellants Antonio Abes, Raul Ybaez, his brother Saldo Ybaez,
and Roberto Bonto standing in front of their house, while appellants
Simeon Silvano, Jr., and Ricarte Bumagat were at the corner of the
street near their house.[6] The faces of the Ybaez brothers, Bumagat,
Abes, and Bonto were familiar to Catalina because they were frequent
customers of their store. She also knew Silvano, Jr., for he was a
former member of the police force of GMA. [7]
Before the Calaycay spouses could disembark from their jeep, Abes
and Raul Ybaez approached her, while Saldo Ybaez and Bonto
approached Antonio. All were carrying short firearms. Suddenly, Abes
announced a hold-up and warned Catalina not to move. At the same
time, he grabbed Catalinas bag, which contained the P90,000.00
sales for the day from their grocery and her wallet
containing P1,000.00, her automated teller machine (ATM) card, a
check booklet and her drivers license.[8] Catalina resisted and tried to
hold on to her bag. Raul Ybaez pistol-whipped her while Abes fired at
her three times at close range, [9] but only succeeded in grazing her.
Antonio tried to come to her assistance, but was stabbed thrice by
Saldo Ybaez and shot three times by Bonto.[10] After Abes grabbed
possession of Catalinas bag, he passed it to Silvano, who then told his
companions, Hali kayo bilis, sunod kayo sa akin, doon tayo sa likod
dadaan (come quick, follow me, and lets pass at the back). [11] The
incident was witnessed by prosecution witnesses Salvador
Arcenal[12] and Catalino Mutya, Jr.[13]
Antonio was first brought by Catalina and responding neighbors to
the Medicare Community Hospital in GMA, where he was pronounced
dead on arrival. Hoping that her husband could still be revived,
Catalina brought him to the De La Salle University Medical Center in
Dasmarias, Cavite. Efforts were made to revive Antonio, but in vain.
The autopsy conducted later by the National Bureau of Investigation
(NBI) showed that Antonio died of Wounds, gunshot and stab,
multiple.[14] Catalina was treated for hematoma and contusions of the
right shoulder.
The incident was reported by Catalina to the NBI and, after an
investigation, an NBI team composed of some twenty (20) agents and
operatives accompanied Catalina to GMA. There all the appellants
were apprehended.
At the trial, the appellants interposed the defense of denial and
alibi.
Appellant Abes testified that at the time that the Calaycay spouses
were held up, he was at his house at Area D, Lot 2, Block 22,
Barangay Malia, GMA, Cavite, conversing with his neighbor,
Godofredo Inciong. Abes said he never left his house.[15] This was
corroborated by Inciong[16] and Laarni Abes,[17] appellants daughter.
For his part, appellant Bonto declared that he was at his house at
Lot 39, Block 17, Poblacion H, GMA, attending to the relatives,
neighbors, and friends who came for the interment of his daughter,
Ma. Lourdes Bonto-Egante, who died on March 14, 1994 and was
buried on March 20, 1994.[18] He presented a neighbor, Herminio
Vival, to support his alibi.[19] He also presented a written statement
executed by at least fifteen (15) of his neighbors for the same purpose.
Further, Bonto proferred in evidence a certification from the Barangay
Captain of Poblacion, GMA, attesting to his good moral character.
Appellant Bumagat testified that at the time of the incident he was
at his house in Lot 37, Block 3, Area D, GMA, together with his wife
and children cooking food for supper.[20] This was corroborated by
Mrs. Virginia Gabriel, a high school teacher, who claimed that she
was at the Bumagat residence from 6:00 to 8:30 p.m. of March 20,
1994, conversing with the Bumagats and she saw Ricarte Bumagat at
his house the whole time, preparing the familys evening meal.[21] Mrs.
Gabriel admitted that she and her husband were close friends of
Bumagat.[22]
Appellant Simeon Silvano, Jr., and Saldo Ybaez both testified that
they attended the burial of their co-appellants deceased daughter,
Maria Lourdes Bonto-Egante, who was buried at the GMA cemetery
on March 20, 1994. After the interment, they proceeded to the house
of Reynaldo Silvano, the brother of Simeon, to attend Reynaldos
birthday party. With them was Adelfa Silvano, Simeons wife. They
arrived at Reynaldos party at around 6:40 p.m. and stayed until 7:40
p.m., after which they left for home.[23] Their attendance at Reynaldos
birthday fete was witnessed by appellant Simeons sister, Zenaida
Brion;[24] his neighbor, David Sebastian;[25] and his mother, Mrs.
Caridad Silvano.[26]
Appellant Saldo Ybaez further testified that at the time of the
alleged incident, he was already at home, having just arrived from
Reynaldo Silvanos birthday party, which he attended with appellant
Silvano, Jr.[27]
Appellant Raul Ybaez stated under oath that at the time of the
occurrence complained of, he was at the house of his neighbor, Divina
Inciong, at Lot 6, Block 7, Barangay Elises, GMA, watching TV. He
was with his common-law wife, Josephine and their
child. [28] Afterwards, he said he went home with his family and went
to sleep. To buttress his alibi, he presented Divina Inciong to
corroborate his statement.[29]
The defense presented its eyewitness, one Susan Purihin, who
testified that she saw the incident. She said no one among the
appellants had a hand in perpetrating the crime. The culprits,
according to her, were one Erning Taga and his companions.[30]
The trial court disbelieved the defense, but found the prosecutions
version credible. Accordingly, it convicted the appellants of robbery
with homicide. In view of the imposition of the death penalty upon all
the appellants, the records of the case were elevated to this Court for
automatic review.
During the pendency of this automatic review, we were informed
by Assistant Director Joselito A. Fajardo of the Bureau of Corrections
that appellant Antonio Abes died at the National Bureau of Prisons
Hospital on March 6, 2002.[31] The initial certificate of death presented
showed that the death of Abes was due to undetermined
causes.[32] But on July 15, 2003, the Court was informed by Assistant
Director Reinerio F. Albano of the Bureau of Corrections that Abes
died on March 6, 2002 due to myocardial infarction, old and
recent[33] as indicated by the postmortem findings in the
accompanying certificate of death.[34]
In our resolution of August 5, 2003, we dismissed the case as to
appellant Antonio Abes y Yambot by reason of his death.[35] Hence this
review will focus now only on the remaining five appellants, namely:
Saldo Ybaez, Roberto Bonto, Ricarte Bumagat, Raul Ybaez, and
Simeon Silvano, Jr.
The records show that on August 29, 2000, Atty. Alfredo C. Medina
manifested to us his wish to be relieved as counsel for appellant
Simeon Silvano, Jr.[36] He was replaced by one Atty. Jose L. Sineneng,
Jr., who entered his appearance for Silvano, Jr., on September 20,
2000. Atty. Sineneng also moved for an extension of thirty (30) days
to file an appellants brief for Silvano, Jr.[37] In our resolution of
October 24, 2000, we granted Atty. Medinas prayer to be allowed to
withdraw as counsel for Silvano, Jr., and granted the motion of Atty.
Sineneng, Jr., for an extension of thirty (30) days or until October 25,
2000 to file an appellants brief for Silvano, Jr.
On October 24, 2000, Atty. Sineneng filed a second motion for
extension of time of fifteen (15) days to file appellants brief, which we
granted in our resolution of November 14, 2000 with warning that
this would definitely be the last extension to be given by the Court.
On November 13, 2000, Atty. Sineneng filed a Final Motion for
Extension of Time to File Appellants Brief for another thirty (30) days
or until December 8, 2000, which we granted with final warning that
no more extensions would be granted.
It then came to our notice that a copy of our resolution of July 9,
2002 addressed to Atty. Jose L. Saneneng was returned unserved,
with the notation moved out. In our resolution of September 24, 2002,
we directed Atty. Luzviminda D. Puno, Clerk of Court of the Supreme
Court, to verify from the Integrated Bar of the Philippines (IBP) the
current address of Atty. Jose L. Saneneng and to resend the
resolution of July 9, 2002 at such address. On November 25, 2002,
the Court was informed by the IBP, through Atty. Jaime M. Vibar, the
IBP National Secretary, that the name Atty. Jose L. Saneneng does not
appear in the list of our members.
On January 14, 2003, we resolved to direct Atty. Jose L. Sineneng,
Jr., to show cause why no disciplinary action should be taken against
him for his failure to file an appellants brief for Silvano, Jr., and to
comply with the resolution requiring the filing of the brief. We also
directed appellant Silvano, Jr., to inform us whether he was interested
in securing the services of a new counsel or if he desired us to appoint
a counsel for him. We likewise resolved to refer the letter of Atty. Vibar
to the Bar Confidant for verification of the Bar membership of Atty.
Jose L. Sineneng, Jr.
On February 24, 2003, we resolved that the copy of the resolution
of 10 December 2002 addressed to Atty. Jose L. Saneneng, counsel for
appellant S. Silvano, Jr., Rm. 504 J & T Building, Magsaysay Blvd.,
Sta. Mesa, Manila be deemed served and to require the Bar Confidant
to submit a written report on Atty. Jose L. Sanenengs membership in
the Bar.
In her report dated March 3, 2003, Atty. Maria Cristina B. Layusa,
the Bar Confidant, reported to us as follows:

Per verification, the name JOSE L. SANENENG does not appear in


the Roll of Attorneys. What appears therein is the name JOSE L.
SINENENG, JR. of Sta. Isabel, Malolos, Bulacan who was admitted
in the Philippine Bar on April 27, 1989.[38]

On May 6, 2003, we again resolved to require Atty. Sineneng to


show cause why no disciplinary action should be taken against him
for failure to file appellants brief for Silvano, Jr., and to file said brief
within ten (10) days from notice.
On June 3, 2003, Atty. Vibar informed us that there is an IBP
member by the name of Atty. Jose L. Sineneng, Jr., and furnished us
with both the office and home addresses of said Atty. Sineneng.[39] On
August 5, 2003, we directed the Clerk of Court to send all prior notices
to both the residential and office addresses of Atty. Sineneng as
furnished by the IBP.[40] To date, however, no appellants brief has
been filed by Atty. Sineneng on behalf of his client, Simeon Silvano,
Jr., nor has the latter manifested that he wishes to engage the services
of another lawyer or that he desires to have the Court appoint a
counsel de oficio for him.
It has been over three (3) years since counsel for Silvano, Jr., last
moved for an extension of time to file the required brief. We have
granted every extension of time prayed for, but to no avail. Were this
an ordinary appeal, we would not have hesitated to apply Section
8,[41] Rule 124 of the 2000 Rules of Criminal Procedure in relation to
Section 1,[42] Rule 125. However, it is settled that Section 8 of Rule
124 has no application to cases where the death penalty has been
imposed.[43] In the leading case of US v. Laguna, 17 Phil. 533 (1910),
we laid down the rule that the power of this Court to review a decision
imposing the death penalty cannot be waived either by the accused or
by the court. We are well aware that for several years now, the
appellants herein have been languishing in death row, with the
possibility of execution by lethal injection dangling over their heads
like the sword of Damocles. This anguish has been prolonged by the
delay in the filing of the appellants brief for Silvano, Jr., which has
caused this case to remain stagnant in the Courts docket. Without
prejudice to the imposition of proper disciplinary action on counsel
for the accused, we can no longer permit that this case suffer further
delay. Hence, we shall proceed to discharge our task by carefully
reviewing the judgment of the trial court, based on its findings of fact
and application of the law thereon, and thereby determining the
propriety of its imposition of the death penalty[44] which appellants
now challenge.
In their joint brief, appellants Roberto Bonto and Antonio Abes
attribute to the RTC the following errors:
I
THE TRIAL COURT ERRED IN FINDING ACCUSED-
APPELLANTS ANTONIO ABES AND ROBERTO BONTO GUILTY
OF THE CRIME OF ROBBERY WITH HOMICIDE.
II
THE TRIAL COURT LIKEWISE ERRED IN DISREGARDING THE
DEFENSE INTERPOSED BY THE ACCUSED-APPELLANTS
ANTONIO ABES AND ROBERTO BONTO.
III
ASSUMING THAT ACCUSED-APPELLANTS ANTONIO ABES
AND ROBERTO BONTO WERE GUILTY OF THE CRIME
CHARGED, THE TRIAL COURT ERRED IN IMPOSING THE
DEATH PENALTY UPON THEM, SINCE THE AGGRAVATING
CIRCUMSTANCE OF BAND WAS NOT ALLEGED IN THE
INFORMATION.[45]
In his separate brief, appellant Bumagat assigns the following
errors:
I
THE TRIAL COURT GRAVELY ERRED IN FINDING ACCUSED-
APPELLANT RICARTE BUMAGAT y ORDOA GUILTY OF THE
CRIME OF ROBBERY WITH HOMICIDE DESPITE THE FACT
THAT THE EVIDENCE PRESENTED BY THE PROSECUTION
AGAINST HIM IS INSUFFICIENT TO PROVE HIS GUILT
BEYOND REASONABLE DOUBT.
II
THE TRIAL COURT ERRED IN FINDING THAT THERE WAS
CONSPIRACY IN THE COMMISSION OF THE CRIME
CHARGED.[46]
In their brief, the brothers Saldo and Raul Ybaez assign as errors
the following:
I
THE TRIAL COURT ERRED IN FINDING THE ACCUSED-
APPELLANTS SALDO AND RAUL YBAEZ GUILTY OF THE
CRIME OF ROBBERY WITH HOMICIDE NOTWITHSTANDING
THE FACT THAT THEIR GUILT HAS NOT BEEN PROVEN
BEYOND REASONABLE DOUBT.
II
THE TRIAL COURT ERRED IN FINDING THAT ACCUSED-
APPELLANT RAUL YBAEZ IS A CO-CONSPIRATOR IN THE
CRIME CHARGED.[47]
The assigned errors by the appellants present pertinent issues
concerning (1) the identification of appellants as the culprits and the
sufficiency of the prosecutions evidence to sustain a conviction for the
offense charged; (2) the correctness of the trial courts finding that
appellants acted in conspiracy and holding them liable as co-
conspirators; and (3) the propriety of the penalty imposed on each of
the appellants.
Appellants question the identification of the malefactors made by
Catalina Calaycay and the other prosecution witnesses on the ground
that inadequate lighting at the locus criminismade positive
identification impossible or, at best, unreliable. Appellants contend
that in view of the poor illumination at the crime scene, the trial court
should not have accepted the identification of the appellants as the
malefactors by the prosecution witnesses hook, line, and sinker.
Appellants submit that in view of the possible doubts as to their
identification by the prosecution witnesses, the prosecution failed to
overcome the presumption of innocence in their favor.
For the appellee, the Office of the Solicitor General (OSG) counters
that the prosecution duly established that Catalina Calaycay clearly
saw the perpetrators whom she identified as the appellants herein by
the light of a fluorescent light in front of the Calaycay residence. The
OSG argues that the defense likewise failed to controvert the fact that
the headlights of the Calaycays jeep were on, prior to and at the time
of the incident, adding further illumination to the crime scene, thus
making identification even easier. Furthermore, the OSG claims that
as duly established by witnesses, the headlights of the many passing
vehicles afforded illumination for good visibility thus making
Catalinas identification of the appellants as the persons responsible
for the crime highly credible.
In our view, appellants arguments lack merit. We sustain the OSGs
submission.
First, in assailing the positive identification made by Catalina
Calaycay, the appellants conveniently overlook her testimony that she
was familiar with them even before the incident complained of had
occurred. Recall that Catalina declared that moments before the
incident, she recognized the Ybaez brothers, Bumagat, Abes, and
Bonto because they were frequent customers of their store, while she
knew Silvano, Jr., as he was a former member of the GMA police force.
As against this positive declaration of Catalinas, the most appellants
could offer were only denials that they knew her, or that they
patronized her store or grocery in the public market. Only Bumagat
admitted to knowing her by face and that she had a store in the public
market.[48]
Catalinas testimony on appellants identification must stand,
taking into consideration that most of the parties to this case are long-
time residents of the same municipality, residing not too far from each
other.[49] Plainly said, the parties are not strangers to one other.
Catalina testified that she has been residing in GMA since
1972.[50] Abes admitted on cross-examination that he had been
staying in his house in said town for more or less twenty-five (25)
years.[51] Bonto testified that he had been working as a plumber in
GMA for twenty (20) years.[52] A witness for Bonto testified that Bonto
has been his neighbor in GMA since 1975.[53] A witness presented by
Silvano, Jr., to corroborate his alibi, declared that he and Silvano, Jr.,
had been neighbors in GMA since 1975.[54] Only the Ybaez brothers
had been residents in said town for less than a year.
Over the span of time that the parties hereto had been living in the
same town, they have become acquainted with each others faces. In
the rural areas, people tend to be more familiar with their town mates.
As a rule, familiarity with the physical features, particularly those of
the face, is actually the best way to identify the person. [55] It was
precisely this familiarity with the faces of the appellants that led
Catalina to positively identify them as the malefactors.
Second, as found by the trial court, the robbery took place at a very
close range, in front of the Calaycay store, whose immediate frontage
was lighted by a fluorescent lamp, as well as by the headlights of the
jeep owned by the Calaycays, and the lights of passing vehicles. Thus
we agree that Catalina was afforded the opportunity to look fully at
the faces of the persons who robbed her and fired a gun at her as well
as their companions who shot and stabbed her husband to death. The
conditions of visibility that fateful evening were, in our view, sufficient
for identification of the malefactors. The illumination from a
fluorescent lamp, the headlights of a parked jeep, and the lights of
passing vehicles suffice for such identification.
Moonlight,[56]starlight,[57] kerosene lamps,[58] a flashlight,[59]and lights
of passing vehicles[60] have been declared adequate to provide
illumination sufficient for purposes of recognition and identification.
The illumination provided by a fluorescent lamp, the headlights of a
jeep, and the lights of passing vehicles altogether made identification
easier. But even where the circumstances were less favorable, witness
Catalinas familiarity with faces of appellants considerably reduced
any error in identifying the culprits. Appellants contentions on this
score show neither a valid reason nor a sufficient cause why we
should reject Catalinas testimony identifying appellants as the
culprits.
Appellants advance not a single reason why Catalina would falsely
accuse them or implicate them in so terrible a wrong. Where there is
nothing to indicate that a witness was actuated by improper motives,
his or her positive declarations on the witness stand, made under
solemn oath, deserve full faith and credence.[61]
Positive identification of the accused where categorical and
consistent, and without any showing of ill motive on the part of the
eyewitness testifying, should prevail over the alibi and denial of
appellants whose testimonies are not substantiated by clear and
convincing evidence. Such denial and alibi are negative and self-
serving evidence undeserving of any weight in law.[62]
In this case, we find the evidence proffered by the appellants in
support of their respective alibis extremely weak. For alibi to prosper,
it is not enough for the accused to prove that he was somewhere else
when the crime was committed. He must likewise prove that he could
not have been physically present at the scene of the crime or its
immediate vicinity at the time of its commission.[63] In this case, we
note the following:
a) Appellant Abes declared on cross-examination that his house
was but two (2) kilometers away from the place where the Calaycay
spouses resided.[64]
b) Appellant Bonto testified that his house was a mere seven
hundred (700) meters away from the crime scene.[65]
c) Appellant Bumagat admitted that the distance from his
residence to the place of the incident is but four (4) kilometers.[66]
d) Appellant Silvano, Jr., stated that his residence is located but
two (2) kilometers away from the situs of the incident, a distance
which could be negotiated by jeepney travel in just 15 to 20
minutes.[67]
e) Appellant Raul Ybaez candidly stated that he resided in
Barangay Elises, GMA, Cavite,[68] and that at the time of the incident,
he was at a neighbors house.[69]
f) Appellant Saldo Ybaez testified that he lived just across Silvano,
Jr.[70] The house of Reynaldo Silvano, where appellants Silvano, Jr.,
and Ybaez allegedly attended a birthday party at the time of the
occurrence of the offense charged is roughly one (1) kilometer away
from the residence of Silvano, Jr., as per his own admission. [71]
From the foregoing, it is clear that there was no physical
impossibility for any and all of the appellants to be at the scene of the
crime when it happened. Hence, their defense of alibi must fail.
In the special complex crime of robbery with homicide, a crime
primarily classified as one against property and not against persons,
the prosecution is tasked to establish the following elements: (a) the
taking of personal property with the use of violence or intimidation
against a person; (b) the property thus taken belongs to another; (c)
the taking is characterized by animus lucrandi; and (d) on the
occasion of the robbery or by reason thereof, the crime of homicide,
which is therein used in a generic sense, was committed.[72] In this
case, we find that the prosecution had amply established those
elements.
But did the prosecution sufficiently establish conspiracy among
the appellants?
Appellants Bumagat and Raul Ybaez question the finding of the
trial court that there was conspiracy among all the appellants to
commit the crime. Bumagat reiterates that since he was not positively
identified at the crime scene, he cannot be deemed a conspirator. Raul
Ybaez points out since all he did, as per the prosecutions own
testimony, was to club Catalina on the shoulder with his firearm,
there is no definite showing from his acts that he assented to the
killing of Antonio. Instead, all that can be inferred from his act,
assuming the prosecution witnesses testified correctly, was the intent
to take part in the robbery and nothing more. Thus, he argues that
only the actual killers of Antonio should be held liable.
There is conspiracy when two or more persons agree to commit a
felony and decide to commit it.[73] Conspiracy as a mode of committing
a crime must be proved separately from and with the same quantum
of proof as the offense itself, but from its essential features of secrecy
and concealment, it need not be proved by direct evidence. Instead, it
is sufficient for conspiracy to be inferred from the conduct of the
accused before, during, and after the commission of the felony,
showing they had acted with a common purpose and design.[74] Stated
differently, the rule is that conviction is proper upon proof that the
accused acted in concert, each of them doing his part to fulfill the
common unlawful design, each doing a part so that their combined
acts, though apparently independent of each other, were, in fact,
connected and cooperative, indicating a closeness of personal
association and a concurrence of sentiment.[75] In such a case, the act
of one becomes the act of all and each of the accused will be deemed
equally guilty of the crime committed.[76]
In the present case, Catalina saw Abes, Bonto, and the Ybaez
brothers standing in front of the Calaycays store just as she and
Antonio arrived from the public market on board their jeep. At the
street corner stood Silvano, Jr., and Bumagat. All six were armed with
short firearms. Abes and Raul Ybaez approached Catalinas side of the
jeep, while Bonto and Saldo Ybaez went over to Antonios side. Abes
declared the hold-up and grabbed Catalinas bag. When Catalina
resisted, Abes fired at her, while Raul Ybaez struck her with the
handgun he was carrying. When Antonio tried to go to her assistance,
Bonto shot him, while Saldo Ybaez stabbed him several times in the
back. All the while, Silvano, Jr., and Bumagat acted as look-outs in
the street corner. After the robbery was accomplished, with Antonio
Calaycay lying dying on the ground from his injuries, Silvano, Jr., told
Abes to hurry up and follow him and all the appellants left together.
Given this factual backdrop, it cannot be said that appellants
Bumagat and Raul Ybaez just happened to be at the scene of the
crime. It taxes ones credulity to say they did not share the common
purpose of their co-accused in the commission of an offense. In
striking Catalina with his handgun, while Abes was grabbing her bag,
Raul Ybaez clearly cooperated in and labored towards the same
purpose as the rest of the appellants, which is to rob their victims of
cash and valuables. Appellant Bumagat acted as one of two look-outs
before and while the robbery was in progress. He facilitated the gangs
getaway. Both Raul Ybaez and Bumagat fled the crime scene together
with the other appellants, leaving as they did together. All these prove
beyond reasonable doubt the existence of conspiracy among all the
appellants.
As a rule, whenever homicide has been committed as a
consequence of or on the occasion of the robbery, all those who took
part as principals in the robbery will also be held guilty as principals
of the special complex crime of robbery with homicide although they
did not actually take part in the homicide, unless it clearly appears
that they endeavored to prevent the homicide.[77] In the case at bar,
there is absolutely no showing that either Raul Ybaez or Bumagat
tried to prevent the fatal stabbing and shooting of Antonio Calaycay
while Catalina Calaycay was being divested of her bag containing
money and other valuables. Thus, the trial court did not err in holding
that the cooperative acts of the appellants, pursuing their common
criminal purpose render them equally liable as conspirators in the
offense of robbery with homicide.
However, we cannot agree that the death penalty be imposed on
appellants.
Appellant Bonto contends that it was error for the trial court to
sentence them to capital punishment, considering that the generic
aggravating circumstance of band was not alleged in the Information.
The Solicitor General agrees, and submits that aggravating
circumstances not alleged in the charge sheet could not be
appreciated so as to raise the imposable penalty to death.
We find merit in their contention and submission.
The crime of robbery with homicide is punishable
by reclusion perpetua to death under Article 294 (1) of the Revised
Penal Code. Absent any aggravating or mitigating circumstance, the
lower penalty, which is reclusion perpetua, should be imposed.[78]
As to damages awarded by the trial court, modification is in
order. Civil indemnity ought to be awarded to the heirs of the
deceased Antonio Calaycay. For when death occurs as a result of a
crime, the heirs of the deceased are entitled to the amount
of P50,000.00 as indemnity ex delicto for the death of the victim,
without need of further evidence or proof of damages.[79]
The amount of P320,300.00 was awarded by the trial court as
actual damages, which include: the hospital bill from the De La Salle
University Medical Center for P1,300.00, the funeral service for the
victim in the amount of P40,000.00, a memorial lot for the victim
at P180,000.00, and expenses for the wake in the sum of P8,000.00.
However, the record discloses that only the amount of P40,000.00 for
the funeral services of the deceased is supported by a receipt. [80] To
be entitled to an award of actual damages, it is necessary to prove the
actual amount of the loss with a reasonable degree of certainty,
premised upon competent proof and on the best evidence obtainable
by the injured party,[81] which usually means official or valid
receipts.Hence, we agree that the award of actual damages here
should be reduced to P131,000.00 only, consisting of the P91,000.00
cash lost during the robbery and the P40,000.00 incurred for funeral
services.
In addition, however, we find it proper that temperate damages be
awarded. Where the Court finds that some pecuniary loss has been
incurred but the amount cannot be proved with certainty, [82] such as
for medical services and the wake, temperate damages are
appropriately given. Thus, in People v. Solamillo,[83] which
involved robo con homicidio, the computation in People v.
Abrazaldo,[84] fixing temperate damages at P25,000.00, which is half
the amount of the indemnity ex delicto, was affirmed.
We sustain also the award of P240,000.00 for loss of earning
capacity, based on the trial courts computation. The award
of P50,000.00 as exemplary damages is likewise justified, to stress
the need for deterrence against the use of firearms, particularly
unlicensed ones. Finally, it follows that the award of attorneys fees
must also be affirmed.
WHEREFORE, the decision of the Regional Trial Court of Bacoor,
Cavite, Branch 89, dated September 30, 1998, in Criminal Case No.
B-94-293 finding appellants Roberto Bonto y Mendoza, Ricarte
Bumagat y Ordoa, Simeon Silvano, Jr. y Gutierrez, Raul Ybaez y
Acebes, and Saldo Ybaez y Acebes GUILTY beyond reasonable doubt
of Robbery with Homicide is AFFIRMED with MODIFICATION. The
death penalty imposed on them is hereby REDUCED TO RECLUSION
PERPETUA. They are jointly and severally ORDERED to pay private
complainant CATALINA CALAYCAY, widow of the late Antonio
Calaycay, the sums of P131,000.00 as actual damages, P240,000.00
for loss of earning capacity, P50,000.00 as civil
indemnity, P50,000.00 as moral damages, P25,000.00 as temperate
damages and P50,000.00 as attorneys fees, as well as the costs.
SO ORDERED.

Leonides C. Dio, G.R. No. 145871


Petitioner,
Present:

PANGANIBAN, C.J.
- versus - (Chairperson)
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

Lina Jardines, Promulgated:


Respondent. January 31, 2006
x----------------------------------------------
x

DECISION
AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking to set aside the
Decision[1] of the Court of Appeals (CA) dated June 9, 2000 dismissing the
appeal in CA-G.R. CV No. 56118 and the Resolution dated October 25,
2000 denying the motion for reconsideration.

The antecedent facts are as follows.

On December 14, 1992, Leonides C. Dio (petitioner) filed a Petition for


Consolidation of Ownership with the Regional Trial Court of Baguio City,
Branch 7 (RTC). She alleged that: on January 31,
1987, Lina Jardines (respondent) executed in her favor a Deed of Sale
with Pacto de Retro over a parcel of land with improvements thereon
covered by Tax Declaration No. 44250, the consideration for which
amounted to P165,000.00; it was stipulated in the deed that the period for
redemption would expire in six months or on July 29, 1987; such period
expired but neither respondent nor any of her legal representatives were
able to redeem or repurchase the subject property; as a consequence,
absolute ownership over the property has been consolidated in favor of
petitioner.[2]

Respondent countered in her Answer that: the Deed of Sale with Pacto de
Retro did not embody the real intention of the parties; the transaction
actually entered into by the parties was one of simple loan and the Deed
of Sale with Pacto de Retro was executed just as a security for the loan; the
amount borrowed by respondent during the first week of January 1987
was only P50,000.00 with monthly interest of 9% to be paid within a period
of six months, but since said amount was insufficient to buy construction
materials for the house she was then building, she again borrowed an
additional amount of P30,000.00; it was never the intention of respondent
to sell her property to petitioner; the value of respondents residential
house alone is over a million pesos and if the value of the lot is added, it
would be around one and a half million pesos; it is unthinkable that
respondent would sell her property worth one and a half million pesos for
only P165,000.00; respondent has even paid a total of P55,000.00 out of
the amount borrowed and she is willing to settle the unpaid amount, but
petitioner insisted on appropriating the property of respondent which she
put up as collateral for the loan; respondent has been the one paying for
the realty taxes on the subject property; and due to the malicious suit filed
by petitioner, respondent suffered moral damages.
On September 14, 1993, petitioner filed an Amended Complaint adding
allegations that she suffered actual and moral damages. Thus, she prayed
that she be declared the absolute owner of the property and/or that
respondent be ordered to pay her P165,000.00 plus the agreed monthly
interest of 10%; moral and exemplary damages, attorneys fees and
expenses of litigation.

Respondent then filed her Answer to the Amended Complaint reiterating


the allegations in her Answer but increasing the alleged valuation of the
subject property to more than two million pesos.

After trial, the RTC rendered its Decision dated November 20, 1996,
the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby


rendered as follows:

a) Declaring the contract (Exh. A) entered into by the


contending parties as one of deed of sale with right to repurchase
or pacto de retro sale;
b) Declaring the plaintiff Dio to have acquired
whatever rights Jardines has over the parcel of land involved it
being that Jardines has no torrens title yet over said land;

c) Declaring the plaintiff Dio the owner of the


residential house and other improvements standing on the parcel
of land in question;

d) Ordering the consolidation of ownership of Dio over


the residential house and other improvements, and over the
rights, she (Dio) acquired over the parcel of land in question; and
ordering the corresponding government official (The City
Assessor) of Baguio City to undertake the consolidation by
putting in the name of plaintiff Dio the ownership and/or rights
which she acquired from the defendant Jardines in the
corresponding document (Tax Declarations) on file in his/her
office; after the plaintiff has complied with all the requirements
and has paid the fees necessary or incident to the issuance of a
new tax declaration as required by law;

e) Ordering the cancellation of Tax Declaration 44250;

f) Ordering defendant Jardines to pay actual and/or


compensatory damages to the plaintiff as follows:

1) P3,000.00 representing expenses in going to and


from Jardines place to collect the redemption money;

2) P1,000.00 times the number of times Dio came


to Baguio to attend the hearing of the case as evidenced by
the signatures of Dio appearing on the minutes of the
proceedings found in the Rollo of the case;

3) P10,000.00 attorneys fee.

Costs against defendant Jardines.

SO ORDERED.[3]

Respondent then appealed to the CA which reversed the RTC


judgment. The CA held that the true nature of the contract between herein
parties is one of equitable mortgage, as shown by the fact that (a)
respondent is still in actual physical possession of the property; (b)
respondent is the one paying the real property taxes on the property; and (c)
the amount of the supposed sale price, P165,000.00, earns monthly
interest. The dispositive portion of the CA Decision promulgated on June 9,
2000 reads:

WHEREFORE, foregoing premises considered, we find that the


Regional Trial Court, First Judicial Region, Branch
07, Baguio City, committed reversible errors in rendering its
decision dated 20 November 1996 in Civil Case No. 2669-R,
entitled Leonides G. Dio, etc. vs. Lina Jardines. The appeal at
bar is herby GRANTED and the assailed decision is
hereby REVERSED and SET ASIDE.Let a new judgment
be entered as follows:

1. Declaring that the true nature of the contract


entered into by the contending parties as one of equitable
mortgage and not a pacto de retro sale;
2. Ordering the defendant-appellant to pay plaintiff-
appellee legal interest on the amount of P165,000.00 from July
29, 1987, the time the said interest fell due, until fully paid;

3. No pronouncement as to cost.

SO ORDERED.[4]

Petitioner moved for reconsideration of said decision, but the same was
denied per Resolution dated October 25, 2000.

Hence, herein petition for review on certiorari alleging that:

1. THE LOWER COURT COMMITTED AN ERROR IN


DECLARING THAT THE TRUE NATURE OF THE CONTRACT
ENTERED INTO BY THE PARTIES AS ONE EQUITABLE
MORTGAGE AND NOT A PACTO DE RETRO SALE;

2. THE LOWER COURT COMMITTED AN ERROR IN


ORDERING THE RESPONDENT TO PAY PETITIONER LEGAL
INTEREST DESPITE THE CONFLICTING ADMISSIONS OF THE
PARTIES THAT THE AGREED INTERESTS WAS EITHER 9% OR
10%;

3. THE FINDINGS OF FACTS OF THE LOWER


COURT ARE CONTRARY TO EVIDENCE AND THE ADMISSIONS
OF THE PARTIES;
4. THE LOWER COURT COMMITTED AN ERROR IN
GOING BEYOND THE ISSUES OF THE CASE BY DELETING THE
AWARD FOR DAMAGES DESPITE THE FACT THAT THE SAME
WAS NOT RAISED AS AN ISSUE IN THE APPEAL; [5]

The petition lacks merit.

The Court finds the allegations of petitioner that the findings of fact
of the CA are contrary to evidence and admissions of the parties and that
it erred in declaring the contract between the parties as an equitable
mortgage to be absolutely unfounded.

A close examination of the records of this case reveals that the


findings of fact of the CA are all based on documentary evidence and on
admissions and stipulation of facts made by the parties. The CAs finding
that there was no gross inadequacy of the price of respondents residential
house as stated in the contract, was based on respondents own evidence,
Tax Declaration No. 44250, which stated that the actual market value of
subject residential house in 1986 was only P93,080.00. The fact that
respondent has remained in actual physical possession of the property in
question, and that respondent has been the one paying the real property
taxes on the subject property was established by the admission made by
petitioner during the pre-trial conference and embodied in the Pre-Trial
Order[6] dated May 25, 1994. The finding that the purchase price in the
amount of P165,000.00 earns monthly interest was based on petitioners
own testimony and admission in her appellees brief that the amount
of P165,000.00, if not paid on July 29, 1987, shall bear an interest of 10%
per month.
The Court sees no reversible error with the foregoing findings of fact
made by the CA. The CA correctly ruled that the true nature of the contract
entered into by herein parties was one of equitable mortgage.

Article 1602 of the Civil Code enumerates the instances when a


purported pacto de retro sale may be considered an equitable mortgage, to
wit:
Art. 1602. The contract shall be presumed to be an

equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase

is unusually inadequate;

(2) When the vendor remains in possession as

lessee or otherwise;

(3) When upon or after the expiration of the right to

repurchase another instrument extending the period of

redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the

purchase price;
(5) When the vendor binds himself to pay the taxes on

the thing sold;

(6) In any other case where it may be fairly inferred that the

real intention of the parties is that the transaction shall

secure the payment of a debt or the performance of any

other obligation.

In any of the foregoing cases, any money, fruits, or

other benefit to be received by the vendee as rent or

otherwise shall be considered as interest which shall be

subject to the usury laws. (Emphasis supplied)

In Legaspi vs. Ong,[7] the Court further explained that:


The presence of even one of the above-mentioned
circumstances as enumerated in Article 1602 is sufficient basis
to declare a contract of sale with right to repurchase as one of
equitable mortgage. As stated by the Code Commission which
drafted the new Civil Code, in practically all of the so-called
contracts of sale with right of repurchase, the real intention of
the parties is that the pretended purchase price is money loaned
and in order to secure the payment of the loan, a contract
purporting to be a sale with pacto de retro is drawn up.[8]

In the same case, the Court cited Article 1603 of the Civil Code, which
provides that in case of doubt, a contract purporting to be a sale with right
to repurchase shall be construed as an equitable mortgage. [9]

In the instant case, the presence of the circumstances provided for


under paragraphs (2) and (5) of Article 1602 of the Civil Code, and the fact
that petitioner herself demands payment of interests on the purported
purchase price of the subject property, clearly show that the intention of
the parties was merely for the property to stand as security for a loan. The
transaction between herein parties was then correctly construed by the CA
as an equitable mortgage.

The allegation that the appellate court should not have deleted the award
for actual and/or compensatory damages is likewise unmeritorious.

Section 8, Rule 51 of the Rules of Court provides as follows:

Sec. 8. Questions that may be decided. No error which does


not affect the jurisdiction over the subject matter or the validity
of the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely
related to or dependent on an assigned error and properly argued
in the brief, save as the court may pass upon plain errors and
clerical errors.
Clearly, the appellate court may pass upon plain errors even if they are
not stated in the assignment of errors. In Villegas vs. Court of
Appeals,[10] the Court held:

[T]he Court is clothed with ample authority to review matters,


even if they are not assigned as errors in the appeal, if it finds
that their consideration is necessary in arriving at a just decision
of the case.[11]
In the present case, the RTCs award for actual damages is a plain
error because a reading of said trial courts Decision readily discloses that
there is no sufficient evidence on record to prove that petitioner is entitled
to the same. Petitioners only evidence to prove her claim for actual
damages is her testimony that she has spent P3,000.00 in going to and
from respondents place to try to collect payment and that she
spent P1,000.00 every time she travels from Bulacan, where she
resides, to Baguio in order to attend the hearings.

In People vs. Sara,[12] the Court held that a witness testimony cannot
be considered as competent proof and cannot replace the probative value
of official receipts to justify the award of actual damages, for jurisprudence
instructs that the same must be duly substantiated by receipts.[13] Hence,
there being no official receipts whatsoever to support petitioners claim for
actual or compensatory damages, said claim must be denied.

The appellate court was also correct in ordering respondent to pay


legal interest on the amount of P165,000.00.

Both parties admit that they came to an agreement whereby


respondent shall pay petitioner interest, at 9% (according to respondent)
or 10% (according to petitioner) per month, if she is unable to pay the
principal amount of P165,000.00 on July 29, 1987.

In the Pre-Trial Order[14] dated May 25, 1994, one of the issues for
resolution of the trial court was whether or not the interest to be paid
under the agreement is 10% or 9% or whether or not this amount of
interest shall be reduced equitably pursuant to law.[15]

The factual milieu of Carpo vs. Chua[16] is closely analogous to the


present case. In the Carpo case, petitioners therein contracted a loan in
the amount of P175,000.00 from respondents therein, payable within
six months with an interest rate of 6% per month. The loan was not paid
upon demand. Therein petitioners claimed that following the Courts ruling
in Medel vs. Court of Appeals,[17] the rate of interest of 6% per month or
72% per annum as stipulated in the principal loan agreement is null and
void for being excessive, iniquitous, unconscionable and exorbitant. The
Court then held thus:
In a long line of cases, this Court has invalidated similar
stipulations on interest rates for being excessive, iniquitous,
unconscionable and exorbitant. In Solangon v. Salazar, we
annulled the stipulation of 6% per month or 72% per annum
interest on a P60,000.00 loan. In Imperial v. Jaucian, we reduced
the interest rate from 16% to 1.167% per month or 14% per
annum. In Ruiz v. Court of Appeals, we equitably reduced the
agreed 3% per month or 36% per annum interest to 1% per
month or 12% per annum interest. The 10% and 8% interest
rates per month on a P1,000,000.00 loan were reduced to 12%
per annum in Cuaton v. Salud. Recently, this Court,
in Arrofo v. Quino, reduced the 7% interest per month on
a P15,000.00 loan amounting to 84% interest per annum to 18%
per annum.
There is no need to unsettle the principle affirmed
in Medel and like cases. From that perspective, it is apparent
that the stipulated interest in the subject loan is excessive,
iniquitous, unconscionable and exorbitant. Pursuant to the
freedom of contract principle embodied in Article 1306 of the Civil
Code, contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs,
public order, or public policy. In the ordinary course,
the codal provision may be invoked to annul the excessive
stipulated interest.
In the case at bar, the stipulated interest rate is 6% per
month, or 72% per annum. By the standards set in the above-
cited cases, this stipulation is similarly invalid. x x x.[18]
Applying the afore-cited rulings to the instant case, the inescapable
conclusion is that the agreed interest rate of 9% per month or 108% per
annum, as claimed by respondent; or 10% per month or 120% per annum,
as claimed by petitioner, is clearly excessive, iniquitous, unconscionable
and exorbitant. Although respondent admitted that she agreed to the
interest rate of 9%, which she believed was exorbitant, she explained that
she was constrained to do so as she was badly in need of money at that
time. As declared in the Medelcase[19] and Imperial
vs. Jaucian,[20] [i]niquitous and unconscionable stipulations on interest
rates, penalties and attorneys fees are contrary to morals. Thus, in the
present case, the rate of interest being charged on the principal loan
of P165,000.00, be it 9% or 10% per month, is void. The CA correctly
reduced the exhorbitant rate to legal interest.

In Trade & Investment Development Corporation of the Philippines


vs. Roblett Industrial Construction Corporation,[21] the Court held that:
In Eastern Shipping Lines, Inc. v. Court of Appeals, this
Court laid down the following rules with respect to the
manner of computing legal interest:

I. When an obligation, regardless of its source,


i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be
held liable for damages. The provisions under Title
XVIII on 'Damages' of the Civil Code govern in
determining the measure of recoverable damages.

II. With regard particularly to an award of


interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
1. When the obligation is breached,
and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money,
the interest due should be that which may
have been stipulated in
writing. Furthermore, the interest due shall
itself earn legal interest from the time it is
judicially demanded. In the absence of
stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of
the Civil Code. [22] (Underscoring supplied)

Applied to the present case, since the agreed interest rate is void, the
parties are considered to have no stipulation regarding the interest
rate. Thus, the rate of interest should be 12% per annum to be computed
from judicial or extrajudicial demand, subject to the provisions of Article
1169 of the Civil Code, to wit:

Art. 1169. Those obliged to deliver or to do something incur


in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment of the
obligation.
However, the demand by the creditor shall not be necessary
in order that delay may exist:
(1) When the obligation or the law expressly so
declares; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the
contract; or
(3) When demand would be useless, as when the obligor
has rendered it beyond his power to perform.
xxxx

The records do not show any of the circumstances enumerated


above. Consequently, the 12% interest should be reckoned from the date
of extrajudicial demand.

Petitioner testified that she went to respondents place several times


to try to collect payment, but she (petitioner) failed to specify the dates on
which she made such oral demand.The only evidence which clearly shows
the date when petitioner made a demand on respondent is the demand
letter dated March 19, 1989 (Exh. C), which was received by respondent
or her agent on March 29, 1989 per the Registry Return Receipt (Exh. C-
1). Hence, the interest of 12% per annum should only begin to run
from March 29, 1989, the date respondent received the demand letter from
petitioner.

WHEREFORE, the petition is hereby DENIED. The Decision of the


Court of Appeals dated June 9, 2000 is AFFIRMED with
the MODIFICATION that the legal interest rate to be paid by respondent
on the principal amount of P165,000.00 is twelve (12%) percent per
annum from March 29, 1989 until fully paid.

SO ORDERED.

SECOND DIVISION
B.F. METAL (CORPORATION), G.R. No. 170813
Petitioner,
Present:
QUISUMBING, J.,
- versus - Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
SPS. ROLANDO M. LOMOTAN
and LINAFLOR LOMOTAN and
RICO UMUYON, Promulgated:
Respondents.
April 16, 2008

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

DECISION

TINGA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of


the 1997 Rules of Civil Procedure, assailing the award of damages
against petitioner in the Decision[1] and Resolution[2] of the Court of
Appeals in CA-G.R. CV No. 58655. The Court of Appeals affirmed with
modification the Decision of the Regional Trial Court (RTC), Branch
72, Antipolo, Rizal in Civil Case No. 1567-A, which found petitioner
corporation and its driver, Onofre V. Rivera, solidarily liable to
respondents for damages.

The following factual antecedents are not disputed.

In the morning of 03 May 1989, respondent Rico Umuyon (Umuyon)


was driving the owner-type jeep owned by respondents, Spouses
Rolando and Linaflor Lomotan (Spouses Lomotan). The jeep was
cruising along Felix Avenue in Cainta, Rizal at a moderate speed of 20
to 30 kilometers per hour. Suddenly, at the opposite lane, the
speeding ten-wheeler truck driven by Onofre Rivera overtook a car by
invading the lane being traversed by the jeep and rammed into the
jeep. The jeep was a total wreck while Umuyonsuffered blunt thoracic
injury with multiple rib fracture, fractured scapula (L),
with pneumohemothorax, which entailed his hospitalization for 19
days. Also in view of the injuries he sustained, Umuyon could no
longer drive, reducing his daily income from P150.00 to P100.00.

On 27 October 1989, respondents instituted a separate and


independent civil action for damages against petitioner BF Metal
Corporation (petitioner) and Rivera before the Regional Trial Court
(RTC) of Antipolo, Rizal. The complaint essentially alleged that
defendant Riveras gross negligence and recklessness was the
immediate and proximate cause of the vehicular accident and that
petitioner failed to exercise the required diligence in the selection and
supervision of Rivera. The complaint prayed for the award of actual,
exemplary and moral damages and attorneys fees in favor of
respondents.

In the Answer, petitioner and Rivera denied the allegations in the


complaint and averred that respondents were not the proper parties-
in-interest to prosecute the action, not being the registered owner of
the jeep; that the sole and proximate cause of the accident was the
fault and negligence of Umuyon; and that petitioner exercised due
diligence in the selection and supervision of its employees.

During the trial, respondents offered the testimonies of Umuyon,


SPO1 Rico Canaria, SPO4 Theodore Cadaweg and Nicanor Fajardo,
the auto-repair shop owner who gave a cost estimate for the repair of
the wrecked jeep. Among the documentary evidence presented were
the 1989 cost estimate of Pagawaan Motors, Inc.,[3] which pegged the
repair cost of the jeep at P96,000.00, and the cost estimate
of Fajardo Motor Works[4] done in 1993, which reflected an increased
repair cost at P130,655.00. They also presented in evidence a copy of
the Decision of the RTC, Assisting Branch 74, Cainta, Rizal in
Criminal Case No. 4742, entitled People of the Philippines v. Onofre V.
Rivera, finding Rivera guilty of reckless imprudence resulting in
damage to property with physical injuries.
For its part, petitioner presented at the hearing Rivera himself
and Habner Revarez, petitioners production control
superintendent. Included in its documentary evidence were written
guidelines in preventive maintenance of vehicles and safety driving
rules for drivers.

On 21 April 1997, the trial court rendered its Decision, the


dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby


rendered ordering defendants to pay jointly and severally to
herein plaintiffs the following sums:

(a) Actual Damages --- i. P96,700.00 for cost of the


owner-type jeep
ii. P15,000.00 medical expenses
iii. P50,000.00 for loss of earnings
(b) Moral Damages --- P100,000.00
(c) Exemplary Damages --- P100,000.00
(d) Attorneys Fees --- P25,000.00 plus P1,000.00 for every
Court appearance

Costs of Suit.

SO ORDERED.[5]

The trial court declared Rivera negligent when he failed to


determine with certainty that the opposite lane was clear before
overtaking the vehicle in front of the truck he was driving. It also
found petitioner negligent in the selection and supervision of its
employees when it failed to prove the proper dissemination of safety
driving instructions to its drivers.

Petitioner and Rivera appealed the decision to the Court of


Appeals.
On 13 April 2005, the Court of Appeals rendered the assailed
Decision. It affirmed the trial courts finding that Riveras negligence
was the proximate cause of the accident and that petitioner was liable

under Article 2180[6] of the Civil Code for its negligence in the selection
and supervision of its employees. However, the appellate court
modified the amount of damages awarded to respondents. The
dispositive portion of the Decision reads:

WHEREFORE, the decision appealed from is AFFIRMED


with MODIFICATION to read as follows:

WHEREFORE, premises considered, judgment is


hereby rendered ordering defendants to pay jointly
and severally to herein plaintiffs the following
sums:
(a) Actual Damages --- i. P130,655.00, for cost of
repairing the owner-type jeep.
ii. P10,167.99 in medical expenses.
iii. P2,850.00 for lost earnings
during medical treatment.
(b) Moral Damages --- P100,000.00
(c) Exemplary Damages --- P100,000.00
(d) Attorneys Fees --- P25,000.00

Costs of suit.
SO ORDERED.[7]

On 12 December 2005, the Court of Appeals denied the motion for


reconsideration of its Decision. Only petitioner filed the instant
petition, expressly stating that it is assailing only the damages
awarded by the appellate court.

The instant petition raises the following issues: (1) whether the
amount of actual damages based only on a job estimate should be
lowered; (2) whether Spouses Lomotanare also entitled to moral
damages; and (3) whether the award of exemplary damages and
attorneys is warranted. For their part, respondents contend that the
aforementioned issues are factual in nature and therefore beyond the
province of a petitioner for review under Rule 45.

This is not the first instance where the Court has given due
course to a Rule 45 petition seeking solely the review of the award of
damages.[8] A partys entitlement to damages is ultimately a question
of law because not only must it be proved factually but also its legal
justification must be shown. In any case, the trial court and the
appellate court have different findings as to the amount of damages
to which respondents are entitled. When the factual findings of the
trial and appellate courts are conflicting, the Court is constrained to
look into the evidence presented before the trial court so as to resolve
the herein appeal.[9]
The trial court split the award of actual damages into three items,
namely, the cost of the wrecked jeep, the medical expenses incurred
by respondent Umuyon and the monetary value of his earning
capacity. On appeal, the Court of Appeals reduced the amount of
medical expenses and loss of earning capacity to which
respondent Umuyon is entitled but increased from P96,700.00
to P130,655.00 the award in favor of Spouses Lomotan for the cost of
repairing the wrecked jeep.

The instant petition assails only the modified valuation of the


wrecked jeep. Petitioner points out that the alleged cost of repairing
the jeep pegged at P130,655.00 has not been incurred but is only a
job estimate or a sum total of the expenses yet to be incurred for its
repair. It argues that the best evidence obtainable to prove with a
reasonable degree of certainty the value of the jeep is the acquisition
cost or the purchase price of the jeep minus depreciation for one year
of use equivalent to 10% of the purchase price.

Petitioners argument is partly meritorious.


Except as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered by him
as he has duly proved. Such compensation is referred to as actual or
compensatory damages.[10] Actual damages are such compensation or
damages for an injury that will put the injured party in the position
in which he had been before he was injured. They pertain to such
injuries or losses that are actually sustained and susceptible of
measurement. To justify an award of actual damages, there must be
competent proof of the actual amount of loss. Credence can be given
only to claims which are duly supported by receipts.[11]

In People v. Gopio,[12] the Court allowed the reimbursement of


only the laboratory fee that was duly receipted as the rest of the
documents, which the prosecution presented to prove the actual
expenses incurred by the victim, were merely a doctors prescription
and a handwritten list of food expenses.[13] In Viron Transportation
Co., Inc. v. Delos Santos,[14] the Court particularly disallowed the
award of actual damages, considering that the actual damages
suffered by private respondents therein were based only on a job
estimate and a photo showing the damage to the truck and no
competent proof on the specific amounts of actual damages suffered
was presented.

In the instant case, no evidence was submitted to show the


amount actually spent for the repair or replacement of the wrecked
jeep. Spouses Lomotan presented two different cost estimates to
prove the alleged actual damage of the wrecked jeep. Exhibit B, is a
job estimate by Pagawaan Motors, Inc., which pegged the repair cost
of the jeep at P96,000.00, while Exhibit M, estimated the cost of repair
at P130,655.00. Following Viron, neither estimate is competent to
prove actual damages. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and amount of
damages.[15]
As correctly pointed out by petitioner, the best evidence to prove
the value of the wrecked jeep is reflected in Exhibit I, the Deed of Sale
showing the jeeps acquisition cost at P72,000.00. However, the
depreciation value of equivalent to 10% of the acquisition cost cannot
be deducted from it in the absence of proof in support thereof.

Petitioner also questions the award of moral and exemplary


damages in favor of Spouses Lomotan. It argues that the award of
moral damages was premised on the resulting physical injuries
arising from the quasi-delict; since only respondent Umuyon suffered
physical injuries, the award should pertain solely to him.
Correspondingly, the award of exemplary damages should pertain
only to respondent Umuyon since only the latter is entitled to moral
damages, petitioner adds.

In the case of moral damages, recovery is more an exception


rather than the rule. Moral damages are not punitive in nature but
are designed to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar harm
unjustly caused to a person. In order that an award of moral damages
can be aptly justified, the claimant must be able to satisfactorily prove
that he has suffered such damages and that the injury causing it has
sprung

from any of the cases listed in Articles 2219[16] and 2220[17] of the Civil
Code. Then, too, the damages must be shown to be the proximate
result of a wrongful act or omission.The claimant must establish the
factual basis of the damages and its causal tie with the acts of the
defendant. In fine, an award of moral damages would require, firstly,
evidence of besmirched reputation or physical, mental or
psychological suffering sustained by the claimant; secondly, a
culpable act or omission factually established; thirdly, proof that the
wrongful act or omission of the defendant is the proximate cause of
the damages sustained by the claimant; and fourthly, that the case is
predicated on any of the instances expressed or envisioned by Article
2219 and Article 2220 of the Civil Code.[18]

In culpa aquiliana, or quasi-delict, (a) when an act or omission


causes physical injuries, or (b) where the defendant is guilty of
intentional tort, moral damages may aptly be recovered. This rule also
applies, as aforestated, to breaches of contract where the defendant
acted fraudulently or in bad faith. In culpa criminal, moral damages
could be lawfully due when the accused is found guilty of physical
injuries, lascivious acts, adultery or concubinage, illegal or arbitrary
detention, illegal arrest, illegal search, or defamation. [19]

Undoubtedly, petitioner is liable for the moral damages suffered


by respondent Umuyon. Its liability is based on a quasi-delict or on its
negligence in the supervision and selection of its driver, causing the
vehicular accident and physical injuries to respondent Umuyon.
Rivera is also liable for moral damages to respondent Umuyon based
on either culpa criminal or quasi-delict. Since the decision in the
criminal case, which found Rivera guilty of criminal negligence, did
not award moral damages, the same may be awarded in the instant
civil action for damages.

Jurisprudence show that in criminal offenses resulting to the


death of the victim, an award within the range of P50,000.00
to P100,000.00 as moral damages has become the trend.[20] Under the
circumstances, because respondent Umuyon did not die but had
become permanently incapacitated to drive as a result of the accident,
the award of P30,000.00 for moral damages in his favor is justified.[21]
However, there is no legal basis in awarding moral damages to
Spouses Lomotan whether arising from the criminal negligence
committed by Rivera or based on the negligence of petitioner under
Article 2180.[22] Article 2219[23] speaks of recovery of moral damages
in case of a criminal offense resulting in physical injuries or quasi-
delictscausing physical injuries, the two instances where Rivera and
petitioner are liable for moral damages to respondent Umuyon. Article
2220[24] does speak of awarding moral damages where there is injury
to property, but the injury must be willful and the circumstances
show that such damages are justly due. There being no proof that the
accident was willful, Article 2220 does not apply.

Exemplary or corrective damages are imposed, by way of example


or correction for the public good, in addition to moral, temperate,
liquidated or compensatory damages.[25] Exemplary damages cannot
be recovered as a matter of right; the court will
decide whether or not they should be adjudicated.[26] In quasi-delicts,

exemplary damages may be granted if the defendant acted with gross


negligence.[27] While the amount of the exemplary damages need not
be proved, the plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the court may consider
the question of whether or not exemplary damages should be
awarded.[28]

As correctly pointed out by the Court of Appeals,


Spouses Lomotan have shown that they are entitled to compensatory
damages while respondent Umuyon can recover both compensatory
and moral damages. To serve as an example for the public good, the
Court affirms the award of exemplary damages in the amount
of P100,000.00 to respondents. Because exemplary damages are
awarded, attorneys fees may also be awarded in consonance with
Article 2208 (1).[29] The Court affirms the appellate courts award of
attorneys fees in the amount of P25,000.00.
WHEREFORE, the instant petition for certiorari is PARTIALLY
GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No.
58655 is AFFIRMED with MODIFICATION. The award of actual
damages for the cost of repairing the owner-type jeep
is hereby REDUCED to P72,000.00 while the moral damages of

P30,000.00 is awarded solely to respondent Umuyon. All other


awards of the Court of Appeals are AFFIRMED. Following
jurisprudence,[30] petitioner is ordered to PAY legal interest of 6% per
annum from the date of promulgation of the Decision dated 21 April
1997 of the Regional Trial Court, Branch 72, Antipolo, Rizal and 12%
per annum from the time the Decision of this Court attains finality,
on all sums awarded until their full satisfaction.

SO ORDERED.

THE HEIRS OF REDENTOR G.R. No. 172200


COMPLETO and ELPIDIO
ABIAD, Present:
Petitioners,
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
- versus - ABAD, and
MENDOZA, JJ.

Promulgated:

SGT. AMANDO C. ALBAYDA, July 6, 2010


JR.,
Respondent.
x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45


of the Rules of Court, assailing the Decision[1] dated January 2,
2006 and the Resolution[2] dated March 30, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 68405.

The Facts

The facts of the case are as follows:

Respondent Amando C. Albayda, Jr. (Albayda) is a Master Sergeant of


the Philippine Air Force, 527th Base Security Squadron,
520th Airbase, Philippine Air Force, located at Villamor Air Base
(VAB), Pasay City. Petitioner Redentor Completo (Completo), now
represented by his heirs, was the taxi driver of a Toyota Corolla,
bearing Plate No. PYD-128, owned and operated by co-petitioner
Elpidio Abiad (Abiad).[3] Albayda and Completo figured in an accident
along the intersection of 8th and 11th Streets, VAB. Albayda filed a
complaint for damages before the Regional Trial Court (RTC)
of Pasay City. The case was docketed as Civil Case No. 98-1333.[4]

The amended complaint alleged that, on August 27, 1997, while


Albayda was on his way to the office to report for duty, riding a bicycle
along 11th Street, the taxi driven by Completo bumped and sideswiped
him, causing serious physical injuries. Albayda was brought to the
Philippine Air Force General Hospital (PAFGH) inside VAB. However,
he was immediately transferred to the Armed Forces of the Philippines
Medical Center (AFPMC) on V. Luna Road, Quezon City, because
there was a fracture in his left knee and there was no orthopedic
doctor available at PAFGH. From August 27, 1997 until February 11,
1998, he was confined therein. He was again hospitalized at PAFGH
from February 23, 1998 until March 22, 1998.[5]
Conciliation between the parties before the barangay failed. Thus,
Albayda filed a complaint for physical injuries through reckless
imprudence against Completo before the Office of the City Prosecutor
of Pasay City. On the other hand, Completo filed a counter-charge of
damage to property through reckless imprudence against Albayda. On
January 13, 1998, the Office of the City Prosecutor issued a
resolution,[6] recommending the filing of an information for reckless
imprudence resulting in physical injuries against Completo. The
counter-charge of damage to property was recommended dismissed.[7]

The case was raffled to the Metropolitan Trial Court of Pasay City,
Branch 45, where Albayda manifested his reservation to file a
separate civil action for damages against petitioners Completo and
Abiad.[8]

Albayda alleged that the proximate cause of the incident which


necessitated his stay in the hospital for approximately seven (7)
months was the negligence of Completo who, at the time of the
accident, was in the employ of Abiad. The pain he suffered required
him to undergo medical physiotherapy for a number of years to regain
normality of his left knee joint, and he claimed that he incurred actual
damages totaling Two Hundred Seventy-Six Thousand Five Hundred
Fifty Pesos (P276,550.00), inclusive of his anticipated operations.[9]

He further stated that aggravating the physical sufferings, mental


anguish, frights, serious anxiety, besmirched reputation, wounded
feelings, moral shock, and social humiliation resulting from his
injuries, his wife abandoned him in May 1998, and left their children
in his custody. He thus demanded the amount of Six Hundred
Thousand Pesos (P600,000.00) as moral damages. He likewise asked
for exemplary damages in the amount of Two Hundred Thousand
Pesos (P200,000.00) and attorneys fees of Twenty-Five Thousand
Pesos (P25,000.00), plus One Thousand Pesos (P1,000.00) per court
appearance.[10]

In his answer to the amended complaint, Completo alleged that, on


August 27, 1997, he was carefully driving the taxicab along 8th Street,
VAB, when suddenly he heard a strange sound from the rear right
side of the taxicab. When he stopped to investigate, he found Albayda
lying on the road and holding his left leg. He immediately rendered
assistance and brought Albayda to PAFGH for emergency
treatment.[11]

Completo also asserted that he was an experienced driver who, in


accordance with traffic rules and regulations and common courtesy
to his fellow motorists, had already reduced his speed to twenty (20)
kilometers per hour even before reaching the intersection of 8 th and
11th Streets. In contrast, Albayda rode his bicycle at a very high speed,
causing him to suddenly lose control of the bicycle and hit the rear
door on the right side of the taxicab.[12]

The deep indentation on the rear right door of the taxicab was caused
by the impact of Albaydas body that hit the taxicab after he had lost
control of the bicycle; while the slight indentation on the right front
door of the taxicab was caused by the impact of the bike that hit the
taxicab after Albayda let go of its handles when he had lost control of
it.[13]

Completo maintained that Albayda had no cause of action. The


accident and the physical injuries suffered by Albayda were caused
by his own negligence, and his purpose in filing the complaint was to
harass petitioners and unjustly enrich himself at their expense.[14]
After submission of the parties respective pleadings, a pretrial
conference was held. On December 8, 1998, the RTC issued a pretrial
order. Thereafter, trial on the merits ensued.[15]

Albayda presented himself, Michael Navarro (Navarro), Dr. Rito


Barrosa, Jr. (Dr. Barrosa), Dr. Armando Sta. Ana, Jr., Dr. Ranny
Santiago, (Dr. Santiago), and Dr. Manuel Fidel Magtira (Dr. Magtira)
as witnesses in open court.[16]
On direct examination, Navarro testified that, on August 27, 1997, at
around 1:45 p.m., he saw a taxicab, with Plate No. PYD-128, coming
from 11th Street, running at an unusual speed. The normal speed
should have been twenty-five (25) kilometers per hour. He was at the
corner of 9th and 8th Streets when the taxicab passed by him. The side
of the bicycle was hit by the taxicab at the intersection of 11th and
8th Streets. He saw Albayda fall to the ground, grimacing in pain. The
taxicab at that moment was about ten (10) meters away from Albayda.
On cross-examination, Navarro reiterated that the taxicab was
running quite fast. The bicycle ridden by Albayda reached the
intersection of 8th and 11th Streets before the taxicab hit it.[17]

Dr. Santiago, the orthopedic surgeon who treated Albayda when the
latter was admitted at AFPMC, testified that the cause of the injury
was hard impact, and recommended an operation to alleviate the
suffering. On cross-examination, he said that there was a separation
of the fragments of the proximal leg, the injured extremity, called
levia. They placed the victim on knee traction or calcaneal
traction,[18] in order to avoid further swelling. They bore the calcanean
bone with a stainless steel pin so that they could put five percent (5%)
of the body weight of the patient to cool down the leg. He treated
Albayda for three (3) months. He recommended surgery, but the
victim had other medical problems, like an increase in sugar level,
and they were waiting for the availability of the implant. The implant
was supposed to be placed on the lateral aspect of the proximal leg or
the levia, the part with the separation. It was a long implant with
screws.[19]

Dr. Magtira testified that Albayda was readmitted at AFPMC on


January 25, 1999 because of complaints of pain and limitation of
motion on the knee joint. Upon evaluation, the pain was caused by
traumatic arthritis brought about by malunion of the lateral trivial
condial. An operation of the soft tissue release was conducted for him
to mobilize his knee joint and attain proper range of motion. After the
operation, Albayda attained functional range of motion, but because
of subsisting pain, they had to do osteoplasty[20] of the malunion,
which was another operation. On cross-examination, Dr. Magtira
testified that he rendered free medical service at AFPMC. [21]

Albayda testified that he was thirty-six (36) years old and a soldier of
the Armed Forces of the Philippines. On August 27, 1997, at around
1:40 p.m., he was riding his bike on his way to the office, located on
916 Street, VAB. He had to stop at the corner of 11 th and 8th Streets
because an oncoming taxicab was moving fast. However, the taxicab
still bumped the front tire of his bike, hit his left knee and threw him
off until he fell down on the road. The taxicab stopped about ten
meters away, and then moved backwards. Its driver, Completo, just
stared at him. When somebody shouted to bring him to the hospital,
two (2) persons, one of whom was Dr. Barrosa, helped him and carried
him into the taxicab driven by Completo, who brought him to
PAFGH.[22]

Upon examination, it was found that Albayda suffered fracture in his


left knee and that it required an operation. No orthopedic doctor was
available at PAFGH. Thus, he was transferred that same afternoon to
AFPMC, where he was confined until February 11, 1998.[23]

At AFPMC, Albaydas left leg was drilled on and attached to traction.


When his leg was drilled, it was so painful that he had to shout. After
his release from the hospital, he continued to suffer pain in his leg.
He underwent reflexology and therapy which offered temporary relief
from pain. But after some time, he had to undergo therapy and
reflexology again.[24]

On January 25, 1999, Albayda was readmitted at AFPMC and


operated on. On June 24, 1999, he was operated on again. Wire and
screw were installed so that he could bend his knee. Nonetheless, he
continued to suffer pain. As of the date of his testimony in court, he
was scheduled for another operation in January 2000, when the steel
that would be installed in his leg arrives.[25]

For his food, Albayda spent Thirty Pesos (P30.00) each day during his
six (6) months of confinement; for his bed pan, One Thousand Pesos
(P1,000.00); for his twice weekly reflexology, Three Hundred Pesos
(P300.00) every session since April 1997; for his caretaker, P300.00
per day for six months. He also asked for P600,000.00 in moral
damages because Completo did not lend him a helping hand, and he
would be suffering deformity for the rest of his life. He
demanded P25,000.00 as attorneys fees and P1,000.00 for every
court appearance of his lawyer.[26]

On cross-examination, Albayda testified that, on the date of the


incident, he was the base guard at VAB, and his duty was from 2 p.m.
to 8 p.m. That afternoon, he was not in a hurry to go to his place of
work because it was only about 1:45 p.m., and his place of work was
only six (6) meters away. After the accident, he was brought to PAFGH,
and at 3:00 p.m., he was brought to the AFPMC. When he was
discharged from the hospital, he could no longer walk.[27]

Dr. Barrosas testimony during cross-examination emphasized that he


was with 2 other persons when he carried Albayda into the taxicab
driven by Completo. He was certain that it was not Completo who
carried the victim into the taxicab. It was only a matter of seconds
when he rushed to the scene of the accident. The taxicab backed up
fifteen (15) seconds later. Albayda lay 2 meters away from the corner
of 8th and 11th Streets.[28]

Completo, Abiad, and Benjamin Panican (Panican) testified for the


defense.[29]

Completo alleged that he had been employed as taxi driver of FOJS


Transport, owned by Abiad, since February 1997. On August 27,
1997, he was driving the taxicab, with Plate No. PYD-128, from 10:00
a.m. At around 1:45 p.m., he was on his way home when a bicycle
bumped his taxicab at the intersection of 8th and 11th Streets, VAB.
The bicycle was travelling from south to north, and he was going east
coming from the west. The bicycle was coming from 11th Street, while
he was travelling along 8th Street.[30]
On cross-examination, Completo testified that when Albayda hit the
rear right door of the taxicab, the latter fell to the ground. When he
heard a noise, he immediately alighted from the taxicab. He denied
that he stopped about 10 meters away from the place where Albayda
fell. He carried Albayda and drove him to the hospital.[31]

Panican testified that he worked as an airconditioner technician in a


shop located on 8th Street corner 11th Street. On the date and time of
the incident, he was working in front of the shop near the roadside.
He saw a bicycle bump the rear right side of the taxicab. Then, the
driver of the taxicab alighted, carried Albayda, and brought him to the
hospital.[32]

When questioned by the trial court, Panican testified that the bicycle
was running fast and that he saw it bump the taxicab. The taxicab
already passed the intersection of 11th and 8th Streets when the
bicycle arrived.[33]

Abiad testified that, aside from being a soldier, he was also a franchise
holder of taxicabs and passenger jeepneys. When Completo applied
as a driver of the taxicab, Abiad required the former to show his bio-
data, NBI clearance, and drivers license. Completo never figured in a
vehicular accident since the time he was employed in February 1997.
Abiad averred that Completo was a good driver and a good man. Being
the operator of taxicab, Abiad would wake up early and personally
check all the taxicabs.[34]

On July 31, 2000, the trial court rendered a decision, [35] the
dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the


plaintiff [Albayda] and against the defendants [Completo and
Abiad]. Accordingly, the defendants [Completo and Abiad]
are hereby ordered to pay the plaintiff [Albayda] the following
sum:

1. P46,000.00 as actual damages;


2. P400,000.00 as moral damages; [and]

3. P25,000.00 as attorneys fees.

Costs against the defendants [Completo and Abiad].

SO ORDERED.[36]

Completo and Abiad filed an appeal. The CA affirmed the trial court
with modification in a Decision[37] dated January 2, 2006, viz.:

WHEREFORE, premises considered, the appeal


is DENIED for lack of merit. The assailed Decision dated 31
July 2000 rendered by
the Regional Trial Court of Pasay City, Branch 117, in Civil
Case No. 98-1333 is hereby AFFIRMED with the
following MODIFICATIONS:

1. the award of Php 46,000.00 as actual damages


is DELETED;

2. temperate damages in the amount of Php 40,000.00 is


awarded in favor of appellee;

3. moral damages in favor of appellee is REDUCED to Php


200,000.00;

4. appellants Redentor Completo and Elpidio Abiad are


solidarily liable to pay appellee Amando C. Albayda, Jr. said
temperate and moral damages, as well as the attorneys fees
in the amount of Php 25,000.00 awarded by the trial court;

5. the temperate and moral damages shall earn legal interest


at 6% per annum computed from the date of promulgation of
Our Decision;
6. upon finality of Our Decision, said moral and temperate
damages shall earn legal interest at the rate of
12% per annum, in lieu of 6% per annum, until full payment.
Costs against appellants.

SO ORDERED.[38]

Hence, this petition.

The Issues

Petitioners presented the following issues for resolution: (1) whether


the CA erred in finding that Completo was the one who caused the
collision;
(2) whether Abiad failed to prove that he observed the diligence of a
good father of the family; and (3) whether the award of moral and
temperate damages and attorneys fees to Albayda had no basis. [39]

The Ruling of the Court

The petition is bereft of merit.

I. On Negligence

The issues raised by petitioners essentially delve into factual matters


which were already passed upon by the RTC and the CA. Conclusions
and findings of fact of the trial court are entitled to great weight on
appeal and should not be disturbed unless for strong and cogent
reasons, because the trial court is in a better position to examine real
evidence, as well as to observe the demeanor of the witnesses while
testifying in the case. The fact that the CA adopted the findings of
fact of the trial court makes the same binding upon this Court. Well-
settled is the rule that the Supreme Court is not a trier of facts. [40] To
be sure, findings of fact of lower courts are deemed conclusive and
binding upon the Supreme Court, save only for clear and exceptional
reasons,[41] none of which is present in the case at bar.

The instant case involved a collision between a taxicab and a bicycle


which resulted in serious physical injuries to the bicycle rider,
Albayda. It is a rule in negligence suits that the plaintiff has the
burden of proving by a preponderance of evidence the motorists
breach in his duty of care owed to the plaintiff, that the motorist was
negligent in failing to exercise the diligence required to avoid injury to
the plaintiff, and that such negligence was the proximate cause of the
injury suffered.[42]

Article 2176 of the Civil Code provides that whoever by act or omission
causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no
preexisting contractual relation between the parties, is called a quasi-
delict. In this regard, the question of the motorist's negligence is a
question of fact.
It was proven by a preponderance of evidence that Completo failed to
exercise reasonable diligence in driving the taxicab because he was
over-speeding at the time he hit the bicycle ridden by Albayda. Such
negligence was the sole and proximate cause of the serious physical
injuries sustained by Albayda. Completo did not slow down even when
he approached the intersection of 8th and 11th Streets of VAB. It was
also proven that Albayda had the right of way, considering that he
reached the intersection ahead of Completo.

The bicycle occupies a legal position that is at least equal to that of


other vehicles lawfully on the highway, and it is fortified by the fact
that usually more will be required of a motorist than a bicyclist in
discharging his duty of care to the other because of the physical
advantages the automobile has over the bicycle.[43]

At the slow speed of ten miles per hour, a bicyclist travels almost
fifteen feet per second, while a car traveling at only twenty-five miles
per hour covers almost thirty-seven feet per second, and split-second
action may be insufficient to avoid an accident. It is obvious that a
motor vehicle poses a greater danger of harm to a bicyclist than vice
versa. Accordingly, while the duty of using reasonable care falls alike
on a motorist and a bicyclist, due to the inherent differences in the
two vehicles, more care is required from the motorist to fully discharge
the duty than from the bicyclist.[44] Simply stated, the physical
advantages that the motor vehicle has over the bicycle make it more
dangerous to the bicyclist than vice versa.[45]

Under Article 2180 of the Civil Code, the obligation imposed by Article
2176 is demandable not only for ones own acts or omissions, but also
for those persons for whom one is responsible. Employers shall be
liable for the damages caused by their employees, but the employers
responsibility shall cease upon proof that they observed all the
diligence of a good father of the family in the selection and supervision
of their employees.

When an injury is caused by the negligence of an employee, a legal


presumption instantly arises that the employer was negligent. This
presumption may be rebutted only by a clear showing on the part of
the employer that he exercised the diligence of a good father of a family
in the selection and supervision of his employee. If the employer
successfully overcomes the legal presumption of negligence, he is
relieved of liability. In other words, the burden of proof is on the
employer.[46]

The trial courts finding that Completo failed to exercise reasonable


care to avoid collision with Albayda at the intersection of 11 th and
8th Streets of VAB gives rise to liability on the part of Completo, as
driver, and his employer Abiad. The responsibility of two or more
persons who are liable for quasi-delict is solidary.[47] The civil liability
of the employer for the negligent acts of his employee is also primary
and direct, owing to his own negligence in selecting and supervising
his employee.[48] The civil liability of the employer attaches even if the
employer is not inside the vehicle at the time of the collision. [49]
In the selection of prospective employees, employers are required to
examine them as to their qualifications, experience, and service
records. On the other hand, with respect to the supervision of
employees, employers should formulate standard operating
procedures, monitor their implementation, and impose disciplinary
measures for breaches thereof. To establish these factors in a trial
involving the issue of vicarious liability, employers must submit
concrete proof, including documentary evidence.[50]
Abiad testified that before he hired Completo, he required the latter to
show his bio-data, NBI clearance, and drivers license. Abiad likewise
stressed that Completo was never involved in a vehicular accident
prior to the instant case, and that, as operator of the taxicab, he would
wake up early to personally check the condition of the vehicle before
it is used.

The protestation of Abiad to escape liability is short of the diligence


required under the law. Abiads evidence consisted entirely of
testimonial evidence, and the unsubstantiated and self-serving
testimony of Abiad was insufficient to overcome the legal presumption
that he was negligent in the selection and supervision of his driver.

II. On Damages

The CA rightfully deleted the award of actual damages by the RTC


because Albayda failed to present documentary evidence to establish
with certainty the amount that he incurred during his hospitalization
and treatment for the injuries he suffered. In the absence of
stipulation, actual damages are awarded only for such pecuniary loss
suffered that was duly proved.[51]

While the amount of actual damages was not duly established with
certainty, the Court recognizes the fact that, indeed, Albayda incurred
a considerable amount for the necessary and reasonable medical
expenses, loss of salary and wages, loss of capacity to earn increased
wages, cost of occupational therapy, and harm from conditions
caused by prolonged immobilization. Temperate damages, more than
nominal but less than compensatory damages, may be recovered
when the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be proved with
certainty.[52] Temperate damages must be reasonable under the
circumstances.[53] Thus, the Court finds the award of One Hundred
Thousand Pesos (P100,000.00) as temperate damages reasonable
under the circumstances.

Doubtless, Albayda suffered immeasurable pain because of the


incident caused by petitioners negligence. The CA explained:

The court vicariously feels the pain the plaintiff [Albayda]


suffered a number of times. After he was bumped by
defendants cab, he cried in pain. When the doctors bore
holes into his left knee, he cried in pain. When he was
tractioned, when he was subjected to an operation after
operation he suffered pain. When he took the witness stand
to testify, he walked with crutches, his left knee in bandage,
stiff and unfuctional. Pain was written [on] his face. He does
deserve moral damages.[54]

Moral damages are awarded in quasi-delicts causing physical


injuries. The permanent deformity and the scar left by the wounds
suffered by Albayba will forever be a reminder of the pain and
suffering that he had endured and continues to endure because of
petitioners negligence. Thus, the award of moral damages in the
amount of Five Hundred Thousand Pesos (P500,000.00) is proper.

Finally, an interest rate of six percent (6%) per annum is due on the
amount of P100,000.00, as temperate damages, and P500,000.00, as
moral damages, which we have awarded. The 6% per annum interest
rate on the temperate and moral damages shall commence to run from
the date of the promulgation of this Decision. Upon finality of the
Decision, an interest rate of twelve percent (12%) per annum shall be
imposed on the amount of the temperate and moral damages until full
payment thereof.[55]
The award of attorneys fees is hereby deleted for failure to prove that
petitioners acted in bad faith in refusing to satisfy respondents just
and valid claim.

WHEREFORE, in view of the foregoing, the Decision dated January


2, 2006 and the Resolution dated March 30, 2006 of the Court of
Appeals in CA-G.R. CV No. 68405 are hereby AFFIRMED with
MODIFICATION, viz.:

(1) The estate of the late Redentor Completo and Elpidio Abiad are
solidarily liable to pay One Hundred Thousand Pesos (P100,000.00),
as temperate damages, and Five Hundred Thousand Pesos
(P500,000.00), as moral damages;

(2) The temperate and moral damages hereby awarded shall earn legal
interest at the rate of six percent (6%) per annum from the date of the
promulgation of this Decision. Upon finality of this Decision, an
interest rate of twelve percent (12%) per annum shall be imposed on
the amount of the temperate and moral damages until full payment
thereof.

Costs against petitioners.

SO ORDERED.

VINCENT PAUL G. MERCADO a.k.a. VINCENT G.


MERCADO, petitioner, vs. CONSUELO TAN, respondent.

DECISION
PANGANIBAN, J.:

A judicial declaration of nullity of a previous marriage is necessary


before a subsequent one can be legally contracted. One who enters
into a subsequent marriage without first obtaining such judicial
declaration is guilty of bigamy. This principle applies even if the
earlier union is characterized by statute as void.
The Case

Before us is a Petition for Review on Certiorari assailing the July


14, 1998 Decision of the Court of Appeals (CA) [1] in CA-GR CR No.
19830 and its January 4, 1999 Resolution denying
reconsideration. The assailed Decision affirmed the ruling of the
Regional Trial Court (RTC) of Bacolod City in Criminal Case No.
13848, which convicted herein petitioner of bigamy as follows:

WHEREFORE, finding the guilt of accused Dr. Vincent Paul G.


Mercado a.k.a. Dr. Vincent G. Mercado of the crime of Bigamy
punishable under Article 349 of the Revised Penal Code to have been
proven beyond reasonable doubt, [the court hereby renders]
judgment imposing upon him a prison term of three (3) years, four
(4) months and fifteen (15) days of prision correccional, as minimum
of his indeterminate sentence, to eight (8) years and twenty-one (21)
days of prision mayor, as maximum, plus accessory penalties
provided by law.

Costs against accused.[2]

The Facts

The facts are quoted by Court of Appeals (CA) from the trial courts
judgment, as follows: From the evidence adduced by the parties, there
is no dispute that accused Dr. Vincent Mercado and complainant Ma.
Consuelo Tan got married on June 27, 1991 before MTCC-Bacolod
City Br. 7 Judge Gorgonio J. Ibaez [by reason of] which a Marriage
Contract was duly executed and signed by the parties. As entered in
said document, the status of accused was single. There is no dispute
either that at the time of the celebration of the wedding with
complainant, accused was actually a married man, having been in
lawful wedlock with Ma. Thelma Oliva in a marriage ceremony
solemnized on April 10, 1976 by Judge Leonardo B. Caares, CFI-Br.
XIV, Cebu City per Marriage Certificate issued in connection
therewith, which matrimony was further blessed by Rev. Father
Arthur Baur on October 10, 1976 in religious rites at the Sacred Heart
Church, Cebu City. In the same manner, the civil marriage between
accused and complainant was confirmed in a church ceremony on
June 29, 1991 officiated by Msgr. Victorino A. Rivas, Judicial Vicar,
Diocese of Bacolod City. Both marriages were consummated when out
of the first consortium, Ma. Thelma Oliva bore accused two children,
while a child, Vincent Paul, Jr. was sired by accused with complainant
Ma. Consuelo Tan.

On October 5, 1992, a letter-complaint for bigamy was filed by


complainant through counsel with the City Prosecutor of Bacolod
City, which eventually resulted [in] the institution of the present
case before this Court against said accused, Dr. Vincent G. Mercado,
on March 1, 1993 in an Information dated January 22, 1993.

On November 13, 1992, or more than a month after the bigamy case
was lodged in the Prosecutors Office, accused filed an action for
Declaration of Nullity of Marriage against Ma. Thelma V. Oliva in
RTC-Br. 22, Cebu City, and in a Decision dated May 6, 1993 the
marriage between Vincent G. Mercado and Ma. Thelma V. Oliva was
declared null and void.

Accused is charged [with] bigamy under Article 349 of the Revised


Penal Code for having contracted a second marriage with herein
complainant Ma. Consuelo Tan on June 27, 1991 when at that time
he was previously united in lawful marriage with Ma. Thelma V.
Oliva on April 10, 1976 at Cebu City, without said first marriage
having been legally dissolved. As shown by the evidence and
admitted by accused, all the essential elements of the crime are
present, namely: (a) that the offender has been previously legally
married; (2) that the first marriage has not been legally dissolved or
in case the spouse is absent, the absent spouse could not yet be
presumed dead according to the Civil Code; (3) that he contract[ed] a
second or subsequent marriage; and (4) that the second or
subsequent marriage ha[d] all the essential requisites for validity. x
xx

While acknowledging the existence of the two marriage[s], accused


posited the defense that his previous marriage ha[d] been judicially
declared null and void and that the private complainant had
knowledge of the first marriage of accused.
It is an admitted fact that when the second marriage was entered
into with Ma. Consuelo Tan on June 27, 1991, accuseds prior
marriage with Ma. Thelma V. Oliva was subsisting, no judicial action
having yet been initiated or any judicial declaration obtained as to
the nullity of such prior marriage with Ma. Thelma V. Oliva. Since
no declaration of the nullity of his first marriage ha[d] yet been made
at the time of his second marriage, it is clear that accused was a
married man when he contracted such second marriage with
complainant on June 27, 1991.He was still at the time validly
married to his first wife.[3]

Ruling of the Court of Appeals

Agreeing with the lower court, the Court of Appeals stated:

Under Article 40 of the Family Code, the absolute nullity of a


previous marriage may be invoked for purposes of remarriage on the
basis solely of a final judgment declaring such previous marriage
void. But here, the final judgment declaring null and void accuseds
previous marriage came not before the celebration of the second
marriage, but after, when the case for bigamy against accused was
already tried in court. And what constitutes the crime of bigamy is
the act of any person who shall contract a second subsequent
marriage before the former marriage has been legally dissolved.[4]

Hence, this Petition.[5]

The Issues

In his Memorandum, petitioner raises the following issues:

Whether or not the element of previous legal marriage is present in


order to convict petitioner.

B
Whether or not a liberal interpretation in favor of petitioner of Article
349 of the Revised Penal Code punishing bigamy, in relation to
Articles 36 and 40 of the Family Code, negates the guilt of petitioner.

Whether or not petitioner is entitled to an acquittal on the basis of


reasonable doubt.[6]

The Courts Ruling

The Petition is not meritorious.

Main Issue:Effect of Nullity of Previous Marriage

Petitioner was convicted of bigamy under Article 349 of the Revised


Penal Code, which provides:

The penalty of prision mayor shall be imposed upon any person who
shall contract a second or subsequent marriage before the former
marriage has been legally dissolved, or before the absent spouse has
been declared presumptively dead by means of a judgment rendered
in the proper proceedings.

The elements of this crime are as follows:

1. That the offender has been legally married;

2. That the marriage has not been legally dissolved or, in case his or
her spouse is absent, the absent spouse could not yet be presumed
dead according to the Civil Code;

3. That he contracts a second or subsequent marriage;

4. That the second or subsequent marriage has all the essential


requisites for validity.[7]

When the Information was filed on January 22, 1993, all the
elements of bigamy were present. It is undisputed that petitioner
married Thelma G. Oliva on April 10, 1976 in Cebu City.While that
marriage was still subsisting, he contracted a second marriage, this
time with Respondent Ma. Consuelo Tan who subsequently filed the
Complaint for bigamy.
Petitioner contends, however, that he obtained a judicial
declaration of nullity of his first marriage under Article 36 of the
Family Code, thereby rendering it void ab initio. Unlike voidable
marriages which are considered valid until set aside by a competent
court, he argues that a void marriage is deemed never to have taken
place at all.[8] Thus, he concludes that there is no first marriage to
speak of. Petitioner also quotes the commentaries[9] of former Justice
Luis Reyes that it is now settled that if the first marriage is void from
the beginning, it is a defense in a bigamy charge. But if the first
marriage is voidable, it is not a defense.
Respondent, on the other hand, admits that the first marriage was
declared null and void under Article 36 of the Family Code, but she
points out that that declaration came only after the Information had
been filed. Hence, by then, the crime had already been
consummated. She argues that a judicial declaration of nullity of a
void previous marriage must be obtained before a person can marry
for a subsequent time.
We agree with the respondent.
To be sure, jurisprudence regarding the need for a judicial
declaration of nullity of the previous marriage has been characterized
as conflicting.[10] In People v. Mendoza,[11] a bigamy case involving an
accused who married three times, the Court ruled that there was no
need for such declaration. In that case, the accused contracted a
second marriage during the subsistence of the first. When the first
wife died, he married for the third time. The second wife then charged
him with bigamy. Acquitting him, the Court held that the second
marriage was void ab initio because it had been contracted while the
first marriage was still in effect. Since the second marriage was
obviously void and illegal, the Court ruled that there was no need for
a judicial declaration of its nullity. Hence, the accused did not commit
bigamy when he married for the third time. This ruling was affirmed
by the Court in People v. Aragon,[12] which involved substantially the
same facts.
But in subsequent cases, the Court impressed the need for a
judicial declaration of nullity. In Vda de Consuegra v. GSIS,[13] Jose
Consuegra married for the second time while the first marriage was
still subsisting. Upon his death, the Court awarded one half of the
proceeds of his retirement benefits to the first wife and the other half
to the second wife and her children, notwithstanding the manifest
nullity of the second marriage. It held: And with respect to the right
of the second wife, this Court observes that although the second
marriage can be presumed to be void ab initio as it was celebrated
while the first marriage was still subsisting, still there is need for
judicial declaration of such nullity.
In Tolentino v. Paras,[14] however, the Court again held that judicial
declaration of nullity of a void marriage was not necessary. In that
case, a man married twice. In his Death Certificate, his second wife
was named as his surviving spouse. The first wife then filed a Petition
to correct the said entry in the Death Certificate. The Court ruled in
favor of the first wife, holding that the second marriage that he
contracted with private respondent during the lifetime of the first
spouse is null and void from the beginning and of no force and
effect. No judicial decree is necessary to establish the invalidity of a
void marriage.
In Wiegel v. Sempio-Diy,[15] the Court stressed the need for such
declaration. In that case, Karl Heinz Wiegel filed an action for the
declaration of nullity of his marriage to Lilia Olivia Wiegel on the
ground that the latter had a prior existing marriage. After pretrial,
Lilia asked that she be allowed to present evidence to prove, among
others, that her first husband had previously been married to another
woman. In holding that there was no need for such evidence, the
Court ruled: x x x There is likewise no need of introducing evidence
about the existing prior marriage of her first husband at the time they
married each other, for then such a marriage though void still needs,
according to this Court, a judicial declaration of such fact and for all
legal intents and purposes she would still be regarded as a married
woman at the time she contracted her marriage with respondent Karl
Heinz Wiegel; x x x.
Subsequently, in Yap v. CA,[16] the Court reverted to the ruling
in People v. Mendoza, holding that there was no need for such
declaration of nullity.
In Domingo v. CA,[17] the issue raised was whether a judicial
declaration of nullity was still necessary for the recovery and the
separation of properties of erstwhile spouses. Ruling in the
affirmative, the Court declared: The Family Code has settled once and
for all the conflicting jurisprudence on the matter. A declaration of the
absolute nullity of a marriage is now explicitly required either as a
cause of action or a ground for defense; in fact, the requirement for a
declaration of absolute nullity of a marriage is also for the protection
of the spouse who, believing that his or her marriage is illegal and
void, marries again. With the judicial declaration of the nullity of his
or her first marriage, the person who marries again cannot be charged
with bigamy.[18]
Unlike Mendoza and Aragon, Domingo as well as the other cases
herein cited was not a criminal prosecution for
bigamy. Nonetheless, Domingo underscored the need for a judicial
declaration of nullity of a void marriage on the basis of a new provision
of the Family Code, which came into effect several years after the
promulgation of Mendoza and Aragon.
In Mendoza and Aragon, the Court relied on Section 29 of Act No.
3613 (Marriage Law), which provided:

Illegal marriages. Any marriage subsequently contracted by any


person during the lifetime of the first spouse shall be illegal and void
from its performance, unless:

(a) The first marriage was annulled or dissolved;


(b) The first spouse had been absent for seven consecutive years
at the time of the second marriage without the spouse present
having news of the absentee being alive, or the absentee being
generally considered as dead and believed to be so by the
spouse present at the time of contracting such subsequent
marriage, the marriage as contracted being valid in either case
until declared null and void by a competent court."
The Court held in those two cases that the said provision plainly
makes a subsequent marriage contracted by any person during the
lifetime of his first spouse illegal and void from its performance,
and no judicial decree is necessary to establish its invalidity, as
distinguished from mere annulable marriages.[19]
The provision appeared in substantially the same form under
Article 83 of the 1950 Civil Code and Article 41 of the Family
Code. However, Article 40 of the Family Code, a new provision,
expressly requires a judicial declaration of nullity of the previous
marriage, as follows:

ART. 40. The absolute nullity of a previous marriage may be invoked


for purposes of remarriage on the basis solely of a final judgment
declaring such marriage void.

In view of this provision, Domingo stressed that a final judgment


declaring such marriage void was necessary. Verily, the Family Code
and Domingo affirm the earlier ruling in Wiegel.Thus, a Civil Law
authority and member of the Civil Code Revision Commitee has
observed:

[Article 40] is also in line with the recent decisions of the Supreme
Court that the marriage of a person may be null and void but there
is need of a judicial declaration of such fact before that person can
marry again; otherwise, the second marriage will also be void (Wiegel
v. Sempio-Diy, Aug. 19/86, 143 SCRA 499, Vda. De Consuegra v.
GSIS, 37 SCRA 315). This provision changes the old rule that where a
marriage is illegal and void from its performance, no judicial decree is
necessary to establish its validity (People v. Mendoza, 95 Phil. 843;
People v. Aragon, 100 Phil. 1033).[20]

In this light, the statutory mooring of the ruling


in Mendoza and Aragon that there is no need for a judicial declaration
of nullity of a void marriage -- has been cast aside by Article 40 of the
Family Code. Such declaration is now necessary before one can
contract a second marriage. Absent that declaration, we hold that one
may be charged with and convicted of bigamy.
The present ruling is consistent with our pronouncement in Terre
v. Terre,[21] which involved an administrative Complaint against a
lawyer for marrying twice. In rejecting the lawyers argument that he
was free to enter into a second marriage because the first one was
void ab initio, the Court ruled: for purposes of determining whether a
person is legally free to contract a second marriage, a judicial
declaration that the first marriage was null and void ab
initio is essential. The Court further noted that the said rule was cast
into statutory form by Article 40 of the Family Code. Significantly, it
observed that the second marriage, contracted without a judicial
declaration that the first marriage was void, was bigamous and
criminal in character.
Moreover, Justice Reyes, an authority in Criminal Law whose
earlier work was cited by petitioner, changed his view on the subject
in view of Article 40 of the Family Code and wrote in 1993 that a
person must first obtain a judicial declaration of the nullity of a void
marriage before contracting a subsequent marriage:[22]

It is now settled that the fact that the first marriage is void from the
beginning is not a defense in a bigamy charge. As with a voidable
marriage, there must be a judicial declaration of the nullity of a
marriage before contracting the second marriage. Article 40 of the
Family Code states that x x x. The Code Commission believes that
the parties to a marriage should not be allowed to assume that their
marriage is void, even if such is the fact, but must first secure a
judicial declaration of nullity of their marriage before they should be
allowed to marry again. x x x.

In the instant case, petitioner contracted a second marriage


although there was yet no judicial declaration of nullity of his first
marriage. In fact, he instituted the Petition to have the first marriage
declared void only after complainant had filed a letter-complaint
charging him with bigamy. By contracting a second marriage while
the first was still subsisting, he committed the acts punishable under
Article 349 of the Revised Penal Code.
That he subsequently obtained a judicial declaration of the nullity
of the first marriage was immaterial. To repeat, the crime had already
been consummated by then. Moreover, his view effectively encourages
delay in the prosecution of bigamy cases; an accused could simply file
a petition to declare his previous marriage void and invoke the
pendency of that action as a prejudicial question in the criminal
case. We cannot allow that.
Under the circumstances of the present case, he is guilty of the
charge against him.

Damages

In her Memorandum, respondent prays that the Court set aside


the ruling of the Court of Appeals insofar as it denied her claim of
damages and attorneys fees.[23]
Her prayer has no merit. She did not appeal the ruling of the CA
against her; hence, she cannot obtain affirmative relief from this
Court.[24] In any event, we find no reason to reverse or set aside the
pertinent ruling of the CA on this point, which we quote hereunder:

We are convinced from the totality of the evidence presented in this


case that Consuelo Tan is not the innocent victim that she claims to
be; she was well aware of the existence of the previous marriage
when she contracted matrimony with Dr. Mercado. The testimonies
of the defense witnesses prove this, and we find no reason to doubt
said testimonies.

xxxxxxxxx

Indeed, the claim of Consuelo Tan that she was not aware of his
previous marriage does not inspire belief, especially as she had seen
that Dr. Mercado had two (2) children with him. We are convinced
that she took the plunge anyway, relying on the fact that the first
wife would no longer return to Dr. Mercado, she being by then
already living with another man.

Consuelo Tan can therefore not claim damages in this case where
she was fully conscious of the consequences of her act. She should
have known that she would suffer humiliation in the event the truth
[would] come out, as it did in this case, ironically because of her
personal instigation. If there are indeed damages caused to her
reputation, they are of her own willful making. [25]

WHEREFORE, the Petition is DENIED and the assailed


Decision AFFIRMED. Costs against petitioner.
SO ORDERED.

BANK OF THE G.R. No. 167750


PHILIPPINE ISLANDS,
Petitioner, Present:

CARPIO, J., Chairperson,


- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

REYNALD R. SUAREZ, Promulgated:


Respondent. March 15, 2010
x----------------------------------------------------------------------------------
-------x

DECISION

CARPIO, J.:
The Case

This petition for review[1] assails the Decision dated 30 November


2004[2] and Resolution dated 11 April 2005 of the Court of Appeals in
CA-G.R. CV No. 76988, affirming the trial court's decision of 18
October 2002 and denying reconsideration.

The Facts

Respondent Reynald R. Suarez (Suarez) is a lawyer who used to


maintain both savings and current accounts with petitioner Bank of
the Philippine Islands (BPI) Ermita Branch from 1988 to 1997.

Sometime in 1997, Suarez had a client who planned to purchase


several parcels of land in Tagaytay City, but preferred not to deal
directly with the land owners. In accordance with his clients
instruction, Suarez transacted with the owners of the Tagaytay
properties, making it appear that he was the buyer of the lots. As
regards the payment of the purchase money, Suarez and his client
made an arrangement such that Suarezs client would deposit the
money in Suarezs BPI account and then, Suarez would issue checks
to the sellers. Hence, on 16 June 1997, Suarezs client deposited a
Rizal Commercial Banking Corporation (RCBC) check with a face
value of P19,129,100, representing the total consideration of the
sales, in BPI Pasong Tamo Branch to be credited to Suarezs current
account in BPI Ermita Branch.

Aware of the banking systems 3-day check clearing policy,[3] Suarez


instructed his secretary, Petronila Garaygay (Garaygay), to confirm
from BPI whether the face value of the RCBC check was already
credited to his account that same day of 16 June 1997. According to
Garaygay, BPI allegedly confirmed the same-day crediting of the
RCBC check.Relying on this confirmation, Suarez issued on the same
day five checks of different amounts totaling P19,129,100 for the
purchase of the Tagaytay properties.[4]

The next day, Suarez left for the United States (U.S.) for a
vacation. While Suarez was in the U.S., Garaygay informed him that
the five checks he issued were all dishonored by BPI due to
insufficiency of funds and that his current account had been debited
a total of P57,200 as penalty for the dishonor. Suarezs secretary
further told him that the checks were dishonored despite an
assurance from RCBC, the drawee bank for the sum of P19,129,100,
that this amount had already been debited from the account of the
drawer on 16 June 1997 and the RCBC check was fully funded.

On 19 June 1997, the payees of the five BPI checks that Suarez
issued on 16 June 1997 presented the checks again. Since the
RCBC check (which Suarezs client issued) had already been cleared
by that time, rendering Suarezs available funds sufficient, the
checks were honored by BPI.

Subsequently, Suarez sent a letter to BPI demanding an apology and


the reversal of the charges debited from his account. Suarez received
a call from Fe Gregorius, then manager of the BPI Ermita Branch,
who requested a meeting with him to explain BPIs side. However,
the meeting did not transpire.
Suarez sent another letter to BPI addressed to its president, Xavier
Loinaz. Consequently, BPI representatives asked another meeting
with Suarez. During the meeting, the BPI officers handed Suarez a
letter, the relevant text of which reads:

Dear Atty. Suarez:

Your letter to our President, Xavier P. Loinaz dated 02 July 1997


was referred to us for investigation and reply.

Our investigation discloses that when the checks you issued against
your account were received for clearing, the checks you deposited
were not yet cleared. Hence, the dishonor of the your checks.

We do not see much in your allegation that you have suffered


damages just because the reason for the return was DAIF and not
DAUD. In both instances, there is a dishonor nonetheless.[5]

Upon Suarezs request, BPI delivered to him the five checks which he
issued on 16 June 1997. Suarez claimed that the checks were
tampered with, specifically the reason for the dishonor, prompting
him to send another letter informing BPI of its act of falsification by
making it appear that it marked the checks with drawn against
uncollected deposit (DAUD) and not drawn against insufficient fund
(DAIF). In reply, BPI offered to reverse the penalty charges which were
debited from his account, but denied Suarezs claim for
damages. Suarez rejected BPIs offer.
Claiming that BPI mishandled his account through
negligence, Suarez filed with the Regional Trial Court a complaint for
damages, docketed as Civil Case No. 98-574.

The Regional Trial Court, Makati City, Branch 136 rendered


judgment in favor of Suarez, thus:

WHEREFORE, judgment is hereby rendered ordering


defendant bank to pay the following amounts:

1. The amount of P57,200.00, with


interest from date of first demand
until full payment as actual damages;
2. The sum of P3,000,000.00 by way of
moral damages;
3. The amount of P1,000,000.00 as
and for exemplary damages;
4. The sum of P1.00 as attorneys fees, and
The costs of litigation.

SO ORDERED.[6]

BPI appealed to the Court of Appeals, which affirmed the trial courts
decision. The dispositive portion of the 30 November 2004 Decision of
the Court of Appeals reads:

WHEREFORE, premises considered, the instant appeal is


DISMISSED. The decision dated 18 October 2002 of the
Regional Trial Court, Branch 136, of Makati is AFFIRMED in
toto.

SO ORDERED.[7]

The Court of Appeals denied BPIs motion for reconsideration in its 11


April 2005 Resolution.

Hence, this petition.

The Court of Appeals Ruling

In affirming the trial courts decision, the Court of Appeals ruled as


follows:

Contrary to its contention, plaintiff-appellees evidence


convincingly established the latters entitlement to damages,
which was the direct result of defendant-appellants
negligence in handling his account. It was duly proven that
after his client deposited a check in the amount
of P19,129,100.00 on 16 June 1997, it was confirmed
through plaintiff-appellees secretary by an employee of
defendant-appellant bank that the aforesaid amount was, on
the same day, already credited to his account. It was on the
basis of this confirmation which made plaintiff-appellee
issue five (5) checks in the amount of P19,129,100.00 to
different payees. And despite RCBCs assurance that the
aforementioned amount had already been debited from the
account of the drawer bank, defendant-appellant bank still
dishonored the five (5) checks for DAIF as reason when the
various payees presented them for payment on 17 June
1997.

It was also proven that defendant-appellant bank through its


employee inadvertently marked the dorsal sides of the checks as
DAIF instead of DAUD. A closer look at the checks would indicate
that intercalations were made marking the acronym DAIF thereon to
appear as DAUD. Although the intercalation was obvious in the P12
million check, still the fact that there was intercalation made in the
said check cannot be denied. It bears to stress that there lies a big
difference between a check dishonored for reasons of DAUD and a
check dishonored for DAIF. A check dishonored for reasons of DAIF
would unduly expose herein plaintiff-appellee to criminal
prosecution for violation of B.P. 22 while a check dishonored for
reasons of DAUD would not. Thus, it was erroneous on the part of
defendant-appellant bank to surmise that plaintiff-appellee would
not suffer damages anyway for the dishonored checks for reasons of
DAUD or DAIF because there was dishonor nonetheless.

While plaintiff-appellee had been spared from any criminal


prosecution, his reputation, however, was sullied on account of the
dishonored checks by reason of DAIF. His transaction with the
would be sellers of the property in Tagaytay was aborted because the
latter doubted his capacity to fulfill his obligation as buyer of their
[properties.] As the agent of the true buyers, he had a lot of
explaining to do with his client. In short, he suffered humiliation.
Defendant-appellant bank also contends that plaintiff-appellee is
liable to pay the charges mandated by the Philippine Clearing House
Rules and Regulations (PCHRR).
If truly these charges were mandated by the PCHRR, defendant-
appellant bank should not have attempted to renege on its act of
debiting the charges to plaintiff-appellees account. In its letter dated
28 July 1997 addressed to plaintiff-appellee, the former has offered
to reverse these charges in order to mitigate the effects of the
returned checks on the latter. This, to the mind of the court, is
tantamount to an admission on their (defendant-appellant banks
employees) part that they have committed a blunder in handling
plaintiff-appellees account. Perforce, defendant-appellant bank
should return the amount of the service charges debited to plaintiff-
appellee. It is basic in the law governing human relations that no
one shall be unjustly enriched at the expense of others.[8]

The Issues

In its Memorandum, BPI raised the following issues:

A. WHETHER [BPI] WAS NEGLIGENT IN HANDLING THE


ACCOUNT OF [SUAREZ];

B. WHETHER [SUAREZ] IS LIABLE TO PAY THE SERVICE


CHARGES IMPOSED BY THE PHILIPPINE CLEARING
HOUSE CORPORATION; and
C. WHETHER [BPI] IS LIABLE TO PAY [SUAREZ] MORAL AND
EXEMPLARY DAMAGES, ATTORNEYS FEES AND COSTS OF
LITIGATION.[9]

The Courts Ruling

The petition is partly meritorious.

As a rule, this Court is not a trier of facts. However, there are well-
recognized exceptions to this rule, one of which is when certain
relevant facts were overlooked by the lower court, which facts, if
properly appreciated, would justify a different conclusion from the
one reached in the assailed decision.[10] Reviewing the records, we find
that the lower courts misappreciated the evidence in this case.

Suarez insists that BPI was negligent in handling his account when
BPI dishonored the checks he issued to various payees on 16
June 1997, despite the RCBC check deposit made to his account on
the same day to cover the total amount of the BPI checks.

Negligence is defined as the omission to do something which a


reasonable man, guided upon those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of
something which a prudent man and reasonable man could not
do.[11] The question concerning BPI's negligence,
however, depends on whether BPI indeed confirmed the same-day
crediting of the RCBC checks face value to Suarezs BPI account.
In essence, Suarez impresses upon this Court that BPI is
estopped[12] from dishonoring his checks since BPI confirmed the
same-day crediting of the RCBC check deposit and assured the
adequacy of funds in his account. Suarez points out that he relied
on this confirmation for the issuance of his checks to the owners of
the Tagaytay properties. In other words, Suarez claims that BPI
made a representation that he had sufficient available funds to cover
the total value of his checks.

Suarez is mistaken.

Based on the records, there is no sufficient evidence to show that BPI


conclusively confirmed the same-day crediting of the RCBC check
which Suarezs client deposited late on 16 June 1997.[13] Suarezs
secretary, Garaygay, testified that she was able to talk to a BPI male
employee about the same-day crediting of the RCBC
check.[14] However, Garaygay failed to (1) identify and name the
alleged BPI employee, and (2) establish that this particular male
employee was authorized by BPI either to disclose any information
regarding a depositors bank account to a person other than the
depositor over the telephone, or to assure Garaygay that Suarez could
issue checks totaling the face value of the RCBC check. Moreover, a
same-day clearing of a P19,129,100 check requires approval of
designated bank official or officials, and not any bank official can
grant such approval. Clearly, Suarez failed to prove that BPI
confirmed the same-day crediting of the RCBC check, or that BPI
assured Suarez that he had sufficient available funds in his
account.Accordingly, BPI was not estopped from dishonoring the
checks for inadequacy of available funds in Suarezs account since the
RCBC check remained uncleared at that time.

While BPI had the discretion to undertake the same-day crediting of


the RCBC check,[15] and disregard the banking industrys 3-day check
clearing policy, Suarez failed to convincingly show his entitlement to
such privilege. As BPI pointed out, Suarez had no credit or bill
purchase line with BPI which would qualify him to the exceptions to
the 3-day check clearing policy.[16]

Considering that there was no binding representation on BPIs part as


regards the same-day crediting of the RCBC check, no negligence can
be ascribed to BPIs dishonor of the checks precisely because BPI was
justified in dishonoring the checks for lack of available funds in
Suarezs account.[17]

However, BPI mistakenly marked the dishonored checks with drawn


against insufficient funds (DAIF), instead of drawn against
uncollected deposit (DAUD). DAUD means that the account has, on
its face, sufficient funds but not yet available to the drawer because
the deposit, usually a check, had not yet been cleared. [18] DAIF, on
the other hand, is a condition in which a depositors balance is
inadequate for the bank to pay a check.[19] In other words, in the
case of DAUD, the depositor has, on its face, sufficient funds in his
account, although it is not available yet at the time the check was
drawn, whereas in DAIF, the depositor lacks sufficient funds in his
account to pay the check. Moreover, DAUD does not expose the
drawer to possible prosecution for estafa and violation of BP 22,
while DAIF subjects the depositor to liability for such offenses. [20] It
is clear therefore that, contrary to BPIs contention, DAIF differs from
DAUD. Now, does the erroneous marking of DAIF, instead of DAUD,
give rise to BPIs liability for damages?

THE FOLLOWING ARE THE CONDITIONS FOR THE AWARD OF


MORAL DAMAGES: (1) THERE IS AN INJURY WHETHER PHYSICAL,
MENTAL OR PSYCHOLOGICAL CLEARLY SUSTAINED BY THE
CLAIMANT; (2) THE CULPABLE ACT OR OMISSION IS FACTUALLY
ESTABLISHED; (3) THE WRONGFUL ACT OR OMISSION OF THE
DEFENDANT IS THE PROXIMATE CAUSE OF THE INJURY
SUSTAINED BY THE CLAIMANT; AND (4) THE AWARD OF
DAMAGES IS PREDICATED ON ANY OF THE CASES STATED IN
ARTICLE 2219[21] OF THE CIVIL CODE.[22]

IN THE PRESENT CASE, SUAREZ FAILED TO ESTABLISH THAT HIS


CLAIMED INJURY WAS PROXIMATELY CAUSED BY THE
ERRONEOUS MARKING OF DAIF ON THE CHECKS. PROXIMATE
CAUSE HAS BEEN DEFINED AS ANY CAUSE WHICH, IN NATURAL
AND CONTINUOUS SEQUENCE, UNBROKEN BY ANY EFFICIENT
INTERVENING CAUSE, PRODUCES THE RESULT COMPLAINED OF
AND WITHOUT WHICH WOULD NOT HAVE OCCURRED.[23] THERE
IS NOTHING IN SUAREZS TESTIMONY WHICH CONVINCINGLY
SHOWS THAT THE ERRONEOUS MARKING OF DAIF ON THE
CHECKS PROXIMATELY CAUSED HIS ALLEGED PSYCHOLOGICAL
OR SOCIAL INJURIES. SUAREZ MERELY TESTIFIED THAT HE
SUFFERED HUMILIATION AND THAT THE PROSPECTIVE
CONSOLIDATION OF THE TITLES TO THE TAGAYTAY PROPERTIES
DID NOT MATERIALIZE DUE TO THE DISHONOR OF HIS
CHECKS,[24]NOT DUE TO THE ERRONEOUS MARKING OF DAIF ON
HIS CHECKS. HENCE, SUAREZ HAD ONLY HIMSELF TO BLAME
FOR HIS HURT FEELINGS AND THE UNSUCCESSFUL
TRANSACTION WITH HIS CLIENT AS THESE WERE DIRECTLY
CAUSED BY THE JUSTIFIED DISHONOR OF THE CHECKS. IN
SHORT, SUAREZ CANNOT RECOVER COMPENSATORY DAMAGES
FOR HIS OWN NEGLIGENCE.[25]

WHILE THE ERRONEOUS MARKING OF DAIF, WHICH BPI


BELATEDLY RECTIFIED, WAS NOT THE PROXIMATE CAUSE OF
SUAREZS CLAIMED INJURY, THE COURT REMINDS BPI THAT ITS
BUSINESS IS AFFECTED WITH PUBLIC INTEREST. IT MUST AT ALL
TIMES MAINTAIN A HIGH LEVEL OF METICULOUSNESS AND
SHOULD GUARD AGAINST INJURY ATTRIBUTABLE TO
NEGLIGENCE OR BAD FAITH ON ITS PART.[26] SUAREZ HAD A
RIGHT TO EXPECT SUCH HIGH LEVEL OF CARE AND DILIGENCE
FROM BPI. SINCE BPI FAILED TO EXERCISE SUCH DILIGENCE,
SUAREZ IS ENTITLED TO NOMINAL DAMAGES[27] TO VINDICATE
SUAREZS RIGHT TO SUCH HIGH DEGREE OF CARE AND
DILIGENCE. THUS, WE AWARD SUAREZ P75,000.00 NOMINAL
DAMAGES.

ON THE AWARD OF ACTUAL DAMAGES, WE FIND THE SAME


WITHOUT ANY BASIS. CONSIDERING THAT BPI LEGALLY
DISHONORED THE CHECKS FOR BEING DRAWN AGAINST
UNCOLLECTED DEPOSIT, BPI WAS JUSTIFIED IN DEBITING THE
PENALTY CHARGES AGAINST SUAREZS ACCOUNT, PURSUANT TO
THE RULES OF THE PHILIPPINE CLEARING HOUSE
CORPORATION,[28] TO WIT:

Sec. 27. PENALTY CHARGES ON RETURNED ITEMS

27.1 A SERVICE CHARGE OF P600.00


FOR EACH CHECK SHALL BE LEVIED AGAINST
THE DRAWER OF ANY CHECK OR CHECKS
RETURNED FOR ANY REASON, EXCEPT FOR THE
FOLLOWING:
A) ACCOUNT CLOSED
B) NO ACCOUNT
C) UNDER GARNISHMENT
D) SPURIOUS CHECK
E) DOCUMENTARY STAMPS MISSING (FOR FOREIGN
CHECKS/DRAFTS ONLY)
F) POST-DATED/STALE-DATED
G) VALIDITY RESTRICTED
H) MISCLEARED ITEMS
I) DECEASED DEPOSITOR
J) VIOLATION OF CLEARING RULES AND/OR PROCEDURES
K) LOST BY PRESENTING BANK WHILE IN TRANSIT TO CLEARING

AS WELL AS OTHER EXCEPTIONS WHICH MAY BE


DEFINED/CIRCULATED BY PCHC FROM TIME TO TIME.[29]

IN VIEW OF THE FOREGOING, THE COURT DEEMS IT


UNNECESSARY TO RESOLVE THE OTHER ISSUES RAISED IN THIS
CASE.

WHEREFORE, THE COURT GRANTS THE PETITION IN PART. THE


COURT SETS ASIDE THE 30 NOVEMBER 2004 DECISION AND 11
APRIL 2005 RESOLUTION OF THE COURT OF APPEALS IN CA-G.R.
CV NO. 76988, AND DELETES THE AWARD OF ALL DAMAGES AND
FEES. THE COURT AWARDS TO RESPONDENT REYNALD R.
SUAREZ NOMINAL DAMAGES IN THE SUM OF P75,000.00.

SO ORDERED.

EQUITABLE PCI BANK G.R. No. 156207


(the Banking Entity into
Present:
which Philippine
Commercial PANGANIBAN, C.J.
International Bank was Chairperson,
merged), YNARES-
Petitioner, SANTIAGO,
AUSTRIA-
MARTINEZ,
CALLEJO, SR. and
- versus - CHICO-
NAZARIO, JJ.

ROWENA ONG, Promulgated:


Respondent.

September 15, 2006


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

DECISION

CHICO-NAZARIO, J.:

On 29 November 1991, Warliza Sarande deposited in her account at


Philippine Commercial International (PCI) Bank Magsaysay Avenue,
Santa Ana District, Davao City Branch, under Account No. 8502-
00347-6, a PCI Bank General Santos City Branch, TCBT[1] Check No.
0249188 in the amount of P225,000.00. Upon inquiry by Serande at
PCI Bank on 5 December 1991 on whether TCBT Check No. 0249188
had been cleared, she received an affirmative answer. Relying on this
assurance, she issued two checks drawn against the proceeds of
TCBT Check No. 0249188. One of these was PCI Bank Check No.
073661 dated 5 December 1991 for P132,000.00
which Sarande issued to respondent Rowena Ong Owing to a
business transaction. On the same day, Ong presented to PCI
Bank Magsaysay Avenue Branch said Check No. 073661, and instead
of encashing it, requested PCI Bank to convert the proceeds thereof
into a managers check, which the PCI Bank
obliged. Whereupon, Ong was issued PCI Bank Managers Check No.
10983 dated 5 December 1991 for the sum of P132,000.00, the value
of Check No. 073661.

The next day, 6 December 1991, Ong deposited PCI Bank Managers
Check No. 10983 in her account with Equitable Banking
Corporation Davao City Branch. On 9 December 1991, she received a
check return-slip informing her that PCI Bank had stopped the
payment of the said check on the ground of irregular
issuance. Despite several demands made by her to PCI Bank for the
payment of the amount in PCI Bank Managers Check No. 10983, the
same was met with refusal; thus, Ong was constrained to file a
Complaint for sum of money, damages and attorneys fees against PCI
Bank.[2]

From PCI Banks version, TCBT-General Santos City Check No.


0249188 was returned on 5 December 1991 at 5:00 pm on the
ground that the account against which it was drawn was already
closed. According to PCI Bank, it immediately gave notice
to Sarande and Ong about the return of Check No. 0249188 and
requested Ong to return PCI Bank Managers Check No. 10983
inasmuch as the return of Check No. 0249188 on the ground that the
account from which it was drawn had already been closed resulted in
a failure or want of consideration for the issuance of PCI Bank
Managers Check No. 10983.[3]

After the pre-trial conference, Ong filed a motion for summary


judgment.[4] Though they were duly furnished with a copy of the
motion for summary judgment, PCI Bank and its counsel failed to
appear at the scheduled hearing.[5] Neither did they file any written
comment or opposition thereto. The trial court thereafter
ordered Ong to formally offer her exhibits in writing, furnishing copies
of the same to PCI Bank which was directed to file its comment or
objection.[6]
Ong complied with the Order of the trial court, but PCI Bank failed to
file any comment or objection within the period given to it despite
receipt of the same order.[7] The trial court then granted the motion
for summary judgment and in its Order dated 2 March 1995, it held:

IN THE LIGHT OF THE FOREGOING, the motion for


summary judgment is GRANTED, ordering defendant
Philippine Commercial International Bank to pay the
plaintiff the amount of ONE HUNDRED THIRTY-TWO
THOUSAND PESOS (P132,000.00) equivalent to the amount
of PCIB Managers Check No. 10983.

Set the reception of the plaintiffs evidence with respect to the


damages claimed in the complaint.[8]

PCI Bank filed a Motion for Reconsideration which the trial court
denied in its Order dated 11 April 1996.[9] After the reception
of Ongs evidence in support of her claim for damages, the trial court
rendered its Decision[10] dated 3 May 1999 wherein it ruled:

IN LIGHT OF THE FOREGOIN CONSIDERATION, and as


plaintiff has preponderantly established by competent
evidence her claims in the Complaint, judgment in hereby
rendered for the plaintiff against the defendant-bank
ordering the latter:

1. To pay the plaintiff the sum of


FIFTY THOUSAND PESOS (P50,000.00) in the concept
of moral damages;
2. To pay the plaintiff the sum of TWENTY THOUSAND
PESOS (P20,000.00) as exemplary damages;

3. To pay the plaintiff the sum of THREE THOUSAND


FIVE HUNDRED PESOS (P3,500.00)
representing actual expenses;

4. To pay the plaintiff the sum of TWENTY THOUSAND


PESOS (P20,000.00) as and for attorneys fees; and

5. To pay the costs.[11]

From this decision, PCI Bank sought recourse before the Court of
Appeals. In a Decision[12] dated 29 October 2002, the appellate court
denied the appeal of PCI Bank and affirmed the orders and decision
of the trial court.

Unperturbed, PCI Bank then filed the present petition for review
before this Court and raised the following issues:

1. WHETHER OR NOT THE COURT OF APPEALS


COMMITTED A GRAVE AND REVERSIBLE ERROR WHEN
IT SUSTAINED THE LOWER COURTS ORDER DATED 2
MARCH 1999 GRANTING RESPONDENTS MOTION FOR
SUMMARY JUDGMENT NOTWITHSTANDING THE
GLARING FACT THAT THERE ARE GENUINE, MATERIAL
AND FACTUAL ISSUES WHICH REQUIRE THE
PRESENTATION OF EVIDENCE.
2. WHETHER OR NOT THE COURT OF APPEALS WAS IN
ERROR WHEN IT SUSTAINED THE LOWER COURTS
DECISION DATED 3 MAY 1999 GRANTING THE RELIEFS
PRAYED FOR IN RESPONDENT ONGS COMPLAINT INSPITE
OF THE FACT THAT RESPONDENT ONG WOULD BE
UNJUSTLY ENRICHED AT THE EXPENSE OF PETITIONER
BANK, IF PETITIONER BANK WOULD BE REQUIRED TO
PAY AN UNFUNDED CHECK.

3. WHETHER OR NOT THE COURT OF APPEALS


COMMITTED REVERSIBLE ERRORS WHEN IT AFFIRMED
THE COURT A QUOS DECISIION DATED 3 MAY
1999AWARDING DAMAGES TO RESPONDENT ONG AND
HOLDING THAT RESPONDENT ONG HAD
PREPONDERANTLY ESTABLISHED BY COMPETENT
EVIDENCE HER CLAIMS IN THE COMPLAINT INSPITE OF
THE FACT THAT THE EVIDENCE ON RECORD DOES NOT
JUSTIFY THE AWARD OF DAMAGES.

4. WHETHER OR NOT THE COURT OF APPEALS


COMMITTED A REVERSIBLE ERROR WHEN IT AFFIRMED
THE LOWER COURTS FACTUAL FINDING IN ITS DECISION
DATED 3 MAY 1999 HOLDING RESPONDENT ONG A
HOLDER IN DUE COURSE INSPITE OF THE FACT THAT
THE REQUISITE OF GOOD FAITH AND FOR VALUE IS
LACKING AND DESPITE THE ABSENCE OF A PROPER
TRIAL TO DETERMINE SUCH FACTUAL ISSUE.

5. WHETHER OR NOT THE COURT OF APPEALS


COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD
THE LOWER COURTS DECISION DATED 3 MAY
1999 DENYING PETITIONER EPCI BANKS COUNTERCLAIM
INSPITE OF THE FACT THAT IT WAS SHOWN THAT
RESPONDENT ONGS COMPLAINT LACKS MERIT.[13]

We affirm the Decision of the trial court and the Court of Appeals.

The provision on summary judgment is found in Section 1, Rule 35 of


the 1997 Rules of Court:

SECTION 1. Summary judgment for claimant. A party


seeking to recover upon a claim, counterclaim, or cross-
claim or to obtain a declaratory relief may, at any time after
the pleading in answer thereto has been served, move with
supporting affidavits, depositions or admissions for a
summary judgment in his favor upon all or any part thereof.

Thus, it has been held that a summary judgment is proper where,


upon a motion filed after the issues had been joined and on the basis
of the pleadings and papers filed, the court finds that there is no
genuine issue as to any material fact to except as to the amount of
damages. A genuine issue has been defined as an issue of fact which
calls for the presentation of evidence, as distinguished from an issue
which is sham, fictitious, contrived and patently unsubstantial so as
not to constitute a genuine issue for trial.[14]

A court may grant summary judgment to settle expeditiously a case


if, on motion of either party, there appears from the pleadings,
depositions, admissions, and affidavits that no important issues of
fact are involved, except the amount of damages.[15] Rule 35, Section
3, of the Rules of Court provides two requisites for summary judgment
to be proper: (1) there must be no genuine issue as to any material
fact, except for the amount of damages; and (2) the party presenting
the motion for summary judgment must be entitled to a judgment as
a matter of law.[16]

Certainly, when the facts as pleaded appear uncontested or


undisputed, then theres no real or genuine issue or question as to the
facts, and summary judgment is called for.[17]

By admitting it committed an error, clearing the check of Sarande and


issuing in favor of Ong not just any check but a managers check for
that matter, PCI Banks liability is fixed.Under the circumstances, we
find that summary judgment was proper and a hearing would serve
no purpose. That summary judgment is appropriate was incisively
expounded by the trial court when it made the following observation:

[D]efendant-bank had certified plaintiffs PCIB Check No.


073661 and since certification is equivalent to acceptance,
defendant-bank as drawee bank is bound on the instrument
upon certification and it is immaterial to such liability in
favor of the plaintiff who is a holder in due course whether
the drawer (Warliza Sarande) had funds or not with the
defendant-bank (Security vs. State Bank, 154 N.W. 282) or
the drawer was indebted to the bank for more than the
amount of the check (Nat. Bank vs. Schmelz, Nat. Bank, 116
S.E. 880) as the certifying bank as all the liabilities under
Sec. 62 of the Negotiable Instruments Law which refers to
liability of acceptor (Title Guarantee vs. Emadee Realty
Corp., 240 N.Y. 36).

It may be true that plaintiffs PCIB Check No. 073661


for P132,000.00 which was paid to her
by Warliza Sarande was actually not funded but since
plaintiff became a holder in due course, defendant-bank
cannot interpose a defense of want or lack of consideration
because that defense is equitable or personal and cannot
prosper against a holder in due course pursuant to Section
28 of the Negotiable Instruments Law. Therefore, when the
aforementioned check was endorsed and presented by the
plaintiff and certified to and accepted by defendant-bank in
the purchase of PCIB Managers Check No. 1983 in the
amount of P132,000.00, there was a valid consideration.[18]

The property of summary judgment was further explained by this


Court when it pronounced that:

The theory of summary judgment is that although an answer


may on its face appear to tender issues requiring trial yet if
it is demonstrated by affidavits, depositions, or admissions
that those issues are not genuine, but sham or fictitious, the
Court is unjustified in dispensing with the trial and
rendering summary judgment for plaintiff. The court is
expected to act chiefly on the basis of the affidavits,
depositions, admissions submitted by the movant, and
those of the other party in opposition thereto. The hearing
contemplated (with 10-day notice) is for the purpose of
determining whether the issues are genuine or not, not to
receive evidence on the issues set up in the pleadings. A
hearing is not thus de riguer. The matter may be resolved,
and usually is, on the basis of affidavits, depositions,
admissions. This is not to say that a hearing may be
regarded as a superfluity. It is not, and the Court has
plenary discretion to determine the necessity therefore. [19]

The second and fourth issues are inter-related and so they shall be
resolved together. The second issue has reference to PCI Banks claim
of unjust enrichment on the part of Ong if it would be compelled to
make good the managers check it had issued. As asserted by PCI
Bank under the fourth issue, Ong is not a holder in due course
because the managers check was drawn against a closed account;
therefore, the same was issued without consideration.

On the matter of unjust enrichment, the fundamental doctrine of


unjust enrichment is the transfer of value without just cause or
consideration. The elements of this doctrine are: enrichment on the
part of the defendant; impoverishment on the part of the plaintiff; and
lack of cause. The main objective is to prevent one to enrich himself
at the expense of another.[20] It is based on the equitable postulate
that it is unjust for a person to retain benefit without paying for it. [21] It
is well to stress that the check of Sarande had been cleared by the
PCI Bank for which reason the former issued the check to Ong. A
check which has been cleared and credited to the account of the
creditor shall be equivalent to a delivery to the creditor of cash in an
amount equal to the amount credited to his account.[22]

Having cleared the check earlier, PCI Bank, therefore, became liable
to Ong and it cannot allege want or failure of consideration between
it and Sarande. Under settled jurisprudence, Ong is a stranger as
regards the transaction between PCI Bank and Sarande.[23]

PCI Bank next insists that since there was no consideration for the
issuance of the managers check, ergo, Ong is not a holder in due
course. This claim is equally without basis.Pertinent provisions of the
Negotiable Instruments Law are hereunder quoted:

SECTION 52. What constitutes a holder in due course. A


holder in due course is a holder who has taken the
instrument under the following conditions:
(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue, and


without notice it had been previously dishonored, if such
was the fact;

(c) That he took it in good faith and for value;

(d) That at the time it was negotiated to him, he had no


notice of any infirmity in the instrument or defect in the title
of the person negotiating it.

The same law provides further:

Sec. 24. Presumption of consideration. Every negotiable


instrument is deemed prima facie to have been issued for a
valuable consideration; and every person whose signature
appears thereon to have become a party thereto for value.

Sec. 26. What constitutes holder for value. Where value has
at any time been given for the instrument, the holder is
deemed a holder for value in respect to all parties who
become such prior to that time.
Sec. 28. Effect of want of consideration. Absence or failure of
consideration is a matter of defense as against any person
not a holder in due course; and partial failure of
consideration is a defense pro tanto, whether the failure is
an ascertained and liquidated amount or otherwise.

Easily discernible is that what Ong obtained from PCI Bank was not
just any ordinary check but a managers check. A managers check is
an order of the bank to pay, drawn upon itself, committing in effect
its total resources, integrity and honor behind its issuance. By its
peculiar character and general use in commerce, a managers check
is regarded substantially to be as good as the money it represents. [24]

A managers check stands on the same footing as a certified


check.[25] The effect of certification is found in Section 187, Negotiable
Instruments Law.

Sec. 187. Certification of check; effect of. Where a check is


certified by the bank on which it is drawn, the certification
is equivalent to an acceptance.[26]

The effect of issuing a managers check was incontrovertibly


elucidated when we declared that:

A managers check is one drawn by the banks manager upon


the bank itself. It is similar to a cashiers check both as to
effect and use. A cashiers check is a check of the banks
cashier on his own or another check. In effect, it is a bill of
exchange drawn by the cashier of a bank upon the bank
itself, and accepted in advance by the act of its issuance. It
is really the banks own check and may be treated as a
promissory note with the bank as a maker. The check
becomes the primary obligation of the bank which issues it
and constitutes its written promise to pay upon demand.The
mere issuance of it is considered an acceptance thereof.
x x x.[27]

In the case of New Pacific Timber & Supply Co., Inc. v. Seneris[28]:

[S]ince the said check had been certified by


the drawee bank, by the certification, the funds represented
by the check are transferred from the credit of the maker to
that of the payee or holder, and for all intents and purposes,
the latter becomes the depositor of the drawee bank, with
rights and duties of one in such situation. Where a check is
certified by the bank on which it is drawn, the certification
is equivalent to acceptance. Said certification implies that
the check is drawn upon sufficient funds in the hands of
the drawee, that they have been set apart for its satisfaction,
and that they shall be so applied whenever the check is
presented for payment. It is an understanding that the
check is good then, and shall continue good, and this
agreement is as binding on the bank as its notes circulation,
a certificate of deposit payable to the order of depositor, or
any other obligation it can assume. The object of certifying a
check, as regards both parties, is to enable the holder to use
it as money. When the holder procures the check to be
certified, the check operates as an assignment of a part of
the funds to the creditors. Hence, the exception to the rule
enunciated under Section 63 of the Central Bank Act to the
effect that a check which has been cleared and credited to
the account of the creditor shall be equivalent to a delivery
to the creditor in cash in an amount equal to the amount
credited to his account shall apply in this case x x x.

By accepting PCI Bank Check No. 073661 issued


by Sarande to Ong and issuing in turn a managers check in exchange
thereof, PCI Bank assumed the liabilities of an acceptor under Section
62 of the Negotiable Instruments Law which states:

Sec. 62. Liability of acceptor. The acceptor by accepting the


instruments engages that he will pay it according to the
tenor of his acceptance; and admits

(a) The existence of the drawer, the genuineness of his


signature, and his capacity and authority to draw the
instrument; and

(b) The existence of the payee and his then capacity to


indorse.

With the above jurisprudential basis, the issues on Ong being not a
holder in due course and failure or want of consideration for PCI
Banks issuance of the managers check is out of sync.
Section 2, of Republic Act No. 8791, The General Banking Law of 2000
decrees:
SEC. 2. Declaration of Policy. The State recognizes the vital
role of banks in providing an environment conducive to the
sustained development of the national economy and the
fiduciary nature of banking that requires high standards of
integrity and performance. In furtherance thereof, the State
shall promote and maintain a stable and efficient banking
and financial system that is globally competitive, dynamic
and responsive to the demands of a developing economy.

In Associated Bank v. Tan,[29] it was reiterated:

x x x the degree of diligence required of banks is more than


that of a good father of a family where the fiduciary nature
of their relationship with their depositors is
concerned. Indeed, the banking business is vested with the
trust and confidence of the public; hence the appropriate
standard of diligence must be very high, if not the highest
degree of diligence.

Measured against these standards, the next question that needs to be


addressed is: Did PCI Bank exercise the requisite degree of diligence
required of it? From all indications, it did not. PCI Bank distinctly
made the following uncontested admission:
1. On 29 November 1991, one Warliza Sarande deposited to
her savings account with PCI Banks Magsaysay Avenue
Branch, TCBT-General Santos Branch Check No. 0249188
for P225,000.00. Said check, however, was inadvertently
sent by PCI Bank through local clearing when it should
have been sent through inter-regional clearing since the
check was drawn at TCBT-General Santos City.

2. On 5 December 1991, Warliza Sarande inquired whether


TCBT Check No. 0249188 had been cleared. Not having
received any advice from the drawee bank within the regular
clearing period for the return of locally cleared checks, and
unaware then of the error of not having sent the check
through inter-regional clearing, PCI Bank advised her
that Check No. 024188 is treated as cleared.
x x x.[30] (Emphasis supplied.)

From the foregoing, it is palpable and readily apparent that PCI Bank
failed to exercise the highest degree of care[31] required of it under the
law.

In the case of Philippine National Bank v. Court of Appeals,[32] we


declared:

The banking system has become an indispensable


institution in the modern world and plays a vital role in the
economic life of every civilized society. Whether as mere
passive entities for the safe-keeping and saving of money or
as active instruments of business and commerce, banks
have attained an ubiquitous presence among the people,
who have come to regard them with respect and even
gratitude and, most of all, confidence.

Having settled the other issues, we now resolve the question on the
award of moral and exemplary damages by the trial court to the
respondent.

Moral damages include physical suffering, mental anguish, fright,


serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury.Though incapable of
pecuniary computation, moral damages may be recovered if they are
the proximate result of the defendants wrongful act or
omission.[33] The requisites for an award of moral damages are well-
defined, thus, firstly, evidence of besmirched reputation or physical,
mental or psychological suffering sustained by the
claimant; secondly, a culpable act or omission factually
established; thirdly, proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the
claimant; and fourthly, that the case is predicated on any of the
instances expressed or envisioned by Article 2219[34] and Article
2220[35] of the Civil Code. All these elements are present in the instant
case.[36]

In the first place, by refusing to make good the managers check it has
issued, Ong suffered embarrassment and humiliation arising from
the dishonor of the said check.[37]Secondly, the culpable act of PCI
Bank in having cleared the check of Serande and issuing the
managers check to Ong is undeniable. Thirdly, the proximate cause
of the loss is attributable to PCI Bank. Proximate cause is defined as
that cause which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without
which the result would not have occurred.[38] In this case, the
proximate cause of the loss is the act of PCI Bank in having cleared
the check of Sarande and its failure to exercise that degree of diligence
required of it under the law which resulted in the loss to Ong.

On exemplary damages, Article 2229 of the Civil Code states:

Art. 2229. Exemplary or corrective damages are imposed, by


way of example or correction for the public good, in addition
to the moral, temperate, liquidated or compensatory
damages.

The law allows the grant of exemplary damages to set an example for
the public good. The banking system has become an indispensable
institution in the modern world and plays a vital role in the economic
life of every civilized society. Whether as mere passive entities for the
safe-keeping and saving of money or as active instruments of business
and commerce, banks have attained an ubiquitous presence among
the people, who have come to regard them with respect and even
gratitude and most of all, confidence. For this reason, banks should
guard against injury attributable to negligence or bad faith on its
part.[39] Without a doubt, it has been repeatedly emphasized that
since the banking business is impressed with public interest, of
paramount importance thereto is the trust and confidence of the
public in general. Consequently, the highest degree of diligence is
expected, and high standards of integrity and performance are even
required of it.[40] Having failed in this respect, the award of exemplary
damages is warranted.

Article 2216 of the Civil Code provides:

ART. 2216. No proof of pecuniary loss is necessary in order


that moral, nominal, temperate, liquidated or exemplary
damages may be adjudicated. The assessment of such
damages, except liquidated ones, is left to the discretion of
the court, according to the circumstances of each case.

Based on the above provision, the determination of the amount to be


awarded (except liquidated damages) is left to the sound discretion of
the court according to the circumstances of each case.[41] In the case
before us, we find that the award of moral damages in the amount
of P50,000.00 and exemplary damages in the amount of P20,000.00
is reasonable and justified.

With the above disquisition, there is no necessity of further discussing


the last issue on the PCI Banks counterclaim based on the supposed
lack of merit of Ongs complaint.

WHEREFORE, premises considered, the Petition is DENIED and the


Decision of the Court of Appeals dated 29 October 2002 in CA-G.R.
CV No. 65000 affirming the Decision dated 3 may 1999, of
the Regional Trial Court of Davao City, Branch 14, in Civil Case No.
21458-92, are AFFIRMED.

SO ORDERED.

REPUBLIC OF G.R. No. 160379


THE PHILIPPINES
THROUGH THE
DEPARTMENT
OF PUBLIC WORKS AND
HIGHWAYS,
Petitioner, Present:

PUNO, C.J.,
Chairperson,
CARPIO,

- versus - CORONA,
LEONARDO-DE
CASTRO, and
BERSAMIN, JJ.
COURT OF APPEALS and Promulgated:
ROSARIO RODRIGUEZ
REYES,
Respondents. August 14, 2009
x----------------------------------------------------------------------
-------------------x

DECISION

CARPIO, J.:

The Case
This is a petition for review[1] of the Court of Appeals
Decision[2] dated 15 November 2002 and Resolution dated 17
September 2003 in CA-G.R. CV No. 50358. The Court of Appeals
affirmed with modifications the Amended Decision of the Regional
Trial Court of Cagayan de Oro City, Branch 19 (RTC).
The Antecedent Facts

Private respondent Rosario Rodriguez Reyes is the absolute owner of


a parcel of land identified as Lot 849-B and covered by TCT No. T-
7194. The 1,043-square meter lot is situated on Claro M. Recto and
Osmea Streets, Cagayan de Oro City.

On 6 November 1990, private respondent received a letter from


petitioner Republic of the Philippines, through the Department of
Public Works and Highways (DPWH), requesting permission to enter
into a portion of private respondents lot consisting of 663 square
meters, and to begin construction of the Osmea Street extension
road. On 20 December 1990, petitioner took possession of private
respondents property without initiating expropriation proceedings.
Consequently, on 4 and 7 January 1991, private respondent sent
letters to the DPWH stating her objection to the taking of her
property. On 16 May 1991, private respondent sent a letter to the
City Appraisal Committee (CAC) rejecting the latters appraisal of the
subject property, to wit:[3]

Declared Tax Market Recommended Description


Owner Declaration Value 1981 Appraised
No. Schedule Value
Rosario 90066 P400/sq.m. P4,000/sq.m. 1 to 20
Reyes meters from
Claro M.
Recto Super
Highway
P3,200/sq.m. 21 to 40
meters from
Claro M.
Recto Super
Highway
P2,400/sq.m. 41 to 60
meters from
Claro M.
Recto Super
Highway

In the same letter, private respondent requested the City Assessor


for a reappraisal of her property, but said request was denied. [4]

On 17 March 1992 , private respondent filed with the Regional Trial


Court (RTC) of Cagayan de Oro City a complaint claiming just
compensation and damages against petitioner.

On 30 June 1993, the RTC appointed three commissioners[5] to


determine the subject propertys fair market value, as well as the
consequential benefits and damages of its expropriation. On 15
September 1993, one of the three commissioners, Provincial
Assessor Corazon Beltran, submitted to the RTC a separate report,
the dispositive portion of which reads:

WHEREFORE, the undersigned deems it only to be just, fair


and reasonable to adopt the market value of FOUR
THOUSAND PESOS (P4,000.00) per square meter as the
highest price obtaining and prevailing in 1990, the time of
the taking of the property subject of the above entitled case,
and fairly reasonable also to impose an additional value
equivalent to 5% of the market value as fixed for severance
fee.[6]
On 13 April 1994, the scheduled hearing was reset to 19 May 1994,
to give private respondent (plaintiff) time to consider the offer of
petitioner (defendant) to amicably settle the case and to accept the
just compensation of P3,200 per square meter, or a total
of P2,212,600, for the 663-square meter portion of private
respondents lot.[7]

On 16 May 1994, private respondent filed with the RTC an Urgent


Motion to Deposit The Amount of P2,121,600 in Court, alleging that
petitioners counsel previously manifested in open court that the
amount of P2,121,600 was ready for release should the amount be
acceptable to private respondent, and praying that said amount
of P2,121,600 be deposited by petitioner with the trial court.[8] The
RTC granted the motion in an Order dated 16 June
1994.[9] However, it was only on 21 October 1994 that petitioner
deposited with the RTC Clerk of Court a Landbank check amounting
to P2,121,600 as just compensation.[10]

On 16 June 1994, the RTC ordered the commissioners to submit


their report as soon as possible, but until the scheduled hearing on
15 July 1994, the commissioners still failed to submit their
report. Upon motion of private respondent, the RTC issued an order
appointing a new set of commissioners.[11]

On 11 October 1994, the new commissioners submitted their report,


the pertinent portions of which provide, thus:

COMMISSIONERS REPORT
xxx

The property litigated upon is strategically located along Recto


Avenue (National Highway) which is a commercial district. Fronting
it across the national highway is the Cagayan Coca Cola Plant and
the Shell Gasoline Station. It adjoins an establishment known as the
Palana Grocery Store and after it is the Northern Mindanao
Development Bank. Three Hundred (300) meters to the west of
plaintiffs property is the gigantic structure of the Gaisano City
department store along Recto Avenue and Corrales Avenue
Extension. Towards the eastern direction of the property are
banking institution buildings and the Ororama Superstore along the
national highway (Recto Avenue) and the Limketkai Commercial
Complex.

For purpose of affording a fair assessment of the market value of


plaintiffs property, the herein Commissioners have divided the whole
parcel of land into three parts, viz:

1. Front portion along Recto Avenue


measuring 21.52 meters from south to north -
------------ 347.66 SQM

2. Middle portion with a measurement of


21.52 meters ---------------------------------------
------- 347.66 SQM

3. Rear/back portion with a measurement of


21.52 meters ------------------------------------
- 347.66 SQM
TOTAL AREA: ------- 1,043 SQM

Taking into consideration, among others, the location of


the property and a research of the prevailing prices of lots
proximate to and/or near the vicinity of plaintiff's property,
the undersigned Commissioners respectfully recommend to
the Honorable Court the following valuation, to wit:

(CURRENT VALUE)

1. Front portion along Recto Avenue with a


measurement of 21.52 meters from south to
north with an area of 347.66 square meters
at P18,000.00 to P20,000.00 per square
meter;

2. Middle portion with a measurement of


21.52 meters containing an area of 347.66
square meters at P16,000.00 to P18,000.00
per square meter;

3. Rear/back portion measuring 21.52


meters with an area of 347.66 square meters
at P14,000.00 to P16,000.00 per square
meter;

VALUATION AS OF 1990

1. Front Portion - P10,000.00 to P12,000.00


per square meter;
2. Middle Portion- P8,000.00 to P10,000.00
per square meter;

3. Rear Portion - P6,000.00 to P8,000.00 per


square meter;

The undersigned Commissioners would however like to bring to the


attention of the Honorable Court that in the subdivision plan
prepared by the City Engineers Office, the whole of plaintiffs
property was subdivided into three (3) lots designated as follows:

Lot 849-B-1 (Road Lot)-83 square meters;

Lot 849-B-2 (Road Lot traversed by the RCDP Osmea


Extension Street)-663 SQM;

Lot 849-B-3 remaining portion with an area of 297 square meters;

In effect, what has been taken over and used by the defendant is not
only 663 square meters but 746 square meters, more or less, which
includes Lot No. 849-B-1.
On the other hand, the remaining portion left to the plaintiff, Lot No.
849-B-3 will not actually be 297 square meters. If we deduct the
setback area from Osmea Extension Street, the usable/buildable
area left to the plaintiff would only be a little over 50 square
meters. This portion would not command a good price if
sold. Neither is it ideal for purposes of any building construction
because aside from its being a very small strip of land, the shape is
triangular.[12]

The Trial Courts Ruling

On 2 June 1995, the RTC rendered a Decision, the dispositive portion


of which reads:

WHEREFORE, judgment is hereby rendered in favor of the


plaintiff and against the defendants, declaring the former as
having the right to retain 590 square meters of the property
covered by TCT No. T-7194, and ordering the latter to return
210 square meters of the 663 square meters taken; that
defendants are solidarily liable to pay the sum
of P5,526,000.00, the fair market value of 1990 (sic), as just
compensation for the 536 square meters taken for the
Osmea street extension; to pay P185,000.00 representing
damages for 37 months computed at the rate of P5,000.00
per month from the filing of this case; and Attorneys fees
of P10,000.00 plus costs of suit.

Plaintiff herein is ordered to forthwith defray the expenses to be


incurred in undertaking the road construction of the 210 square
meters which the defendants will later on provide along the right
portion of her property.

SO ORDERED.[13]
On 15 June 1995, the RTC rendered an Amended Decision with the
following dispositive portion, thus:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff and against the defendants, declaring the former as
having the right to retain 590 square meters of the property
covered by TCT No. T-7194, and ordering the latter to return
293 square meters of the 746 square meters taken; that
defendants are solidarily liable to pay the sum
of P4,696,000.00, the fair market value of 1990 (sic), as just
compensation for the 453 square meters taken for the
Osmea Street extension; to pay P185,000.00 representing
damages for 37 months computed at the rate of P5,000.00
per month from the filing of this case; and Attorneys fees
of P10,000.00 plus costs of suit.

Plaintiff herein is ordered to forthwith defray the expenses to be


incurred in undertaking the road construction of the 293 square
meters which the defendants will later on provide along the right
portion of her property.

SO ORDERED.[14]

The Court of Appeals Ruling

On appeal by petitioner, the Court of Appeals rendered


judgment,[15] affirming with modifications the decision of the
RTC. The Court of Appeals found that the commissioners
recommendations on just compensation were not supported by valid
documents. Also, it was unclear in the RTC decision whether the trial
court merely adopted the commissioners recommendations or the
court made its own independent valuation of the subject
property. Thus, the Court of Appeals held that a reconvening of the
commissioners or an appointment of new commissioners to determine
just compensation was necessary. The appellate court further held
that the trial courts order for petitioners return of the 293-square
meter lot had no legal basis and was no longer feasible since the lot
was already part of the completed Sergio Osmea extension road.
Moreover, consequential damages should be awarded in lieu of actual
damages for private respondents alleged loss of income from the
remaining 297-square meter lot. We quote the dispositive portion of
the Court of Appeals decision below.

WHEREFORE , the appealed judgment is


hereby MODIFIED.

1. The case is REMANDED to the trial court which is


ordered to reconvene the commissioners or appoint new
commissioners to determine, in accordance with this
Decision, the amount of just compensation due to plaintiff-
appellee Rosario Rodriguez Reyes for the 746 square meters
of land taken from her and consequential damages to the
297-square meter portion left.

2. Defendant-appellant DWPH[16] is ordered to pay


plaintiff-appellee the following amounts:

a. the balance, if any, of just compensation to be finally


determined after deducting the amount
of P2,161,600.00[17] DPWH previously advanced and
deposited with the trial court;

b. 6% legal interest per annum on the amount it


provisionally deposited from the time of taking up to the
time it is deposited with the trial court on October 21,
1994; and on the balance, if any, from the time of taking
on December 20, 1990 until fully paid;

c. attorneys fees of P20,000.00.

3. Defendant-appellant City Government of Cagayan de Oro is


relieved from any liability;

4. The award of P185,000.00 as actual damages is deleted;


5. No pronouncement as to costs.

SO ORDERED.[18]

Petitioner filed a Motion for Reconsideration, but this was denied by


the Court of Appeals in its Resolution of 17 September 2003. [19]

Hence, this appeal.

The Issues

Petitioner raises the following issues:

1. Whether the Court of Appeals erred in ordering the


remand of the case to the trial court, to order the
reconvening of the commissioners or appointment of new
commissioners to determine the consequential damages for
the remaining 297- square meter lot; and

2. Whether the Court of Appeals erred in ordering petitioner to


pay attorneys fees.

The Courts Ruling

We find the appeal unmeritorious.

On whether the Court of Appeals erred in ordering the


remand of the case to the trial court to order the reconvening
of the commissioners or appointment of new commissioners
to determine the consequential damages for the remaining
297-square meter lot

Eminent domain is the authority and right of the State, as sovereign,


to take private property for public use upon observance of due process
of law and payment ofjust compensation.[20] The Constitution
provides that, [p]rivate property shall not be taken for public use
without just compensation.[21]
Just compensation is the full and fair equivalent of the property
sought to be expropriated.[22] Among the factors to be considered in
arriving at the fair market value of the property are the cost of
acquisition, the current value of like properties, its actual or potential
uses, and in the particular case of lands, their size, shape, location,
and the tax declarations thereon.[23] The measure is not the takers
gain but the owners loss.[24] To be just, the compensation must be fair
not only to the owner but also to the taker. [25]

J ust compensation is based on the price or value of the property at


the time it was taken from the owner and appropriated by the
government.[26] However, if the government takes possession before
the institution of expropriation proceedings, the value should be fixed
as of the time of the taking of said possession, not of the filing of the
complaint.The value at the time of the filing of the complaint should
be the basis for the determination of the value when the taking of the
property involved coincides with or is subsequent to the
commencement of the proceedings.[27]

The procedure for determining just compensation is set forth in Rule


67 of the 1997 Rules of Civil Procedure. Section 5 of Rule 67 partly
states that [u]pon the rendition of the order of expropriation, the court
shall appoint not more than three (3) competent and disinterested
persons as commissioners to ascertain and report to the court the
just compensation for the property sought to be taken. However, we
held in Republic v. Court of Appeals[28] that Rule 67 presupposes a
prior filing of complaint for eminent domain with the appropriate
court by the expropriator. If no such complaint is filed, the
expropriator is considered to have violated procedural requirements,
and hence, waived the usual procedure prescribed in Rule 67,
including the appointment of commissioners to ascertain just
compensation.[29] In National Power Corporation v. Court of
Appeals,[30] we clarified that when there is no action for expropriation
and the case involves only a complaint for damages or just
compensation, the provisions of the Rules of Court on ascertainment
of just compensation (i.e., provisions of Rule 67) are no longer
applicable, and a trial before commissioners is dispensable, thus:
In this case, NPC appropriated Pobres Property without
resort to expropriation proceedings. NPC dismissed its own
complaint for the second expropriation. At no point did NPC
institute expropriation proceedings for the lots outside the
5,554 square-meter portion subject of the second
expropriation. The only issues that the trial court had to
settle were the amount of just compensation and damages
that NPC had to pay Pobre.

This case ceased to be an action for expropriation when NPC


dismissed its complaint for expropriation. Since this case
has been reduced to a simple case of recovery of damages,
the provisions of the Rules of Court on the ascertainment of
the just compensation to be paid were no longer applicable.
A trial before commissioners, for instance, was
dispensable.[31]

In this case, petitioner took possession of the subject property


without initiating expropriation proceedings. Consequently, private
respondent filed the instant case for just compensation and
damages. To determine just compensation, the trial court appointed
three commissioners pursuant to Section 5 of Rule 67 of the 1997
Rules of Civil Procedure.None of the parties objected to such
appointment.

The trial courts appointment of commissioners in this particular case


is not improper. The appointment was done mainly to aid the trial
court in determining just compensation, and it was not opposed by
the parties. Besides, the trial court is not bound by the commissioners
recommended valuation of the subject property. The court has the
discretion on whether to adopt the commissioners valuation or to
substitute its own estimate of the value as gathered from the
records.[32]
However, we agree with the appellate court that the trial courts
decision is not clear as to its basis for ascertaining just
compensation. The trial court mentioned in its decision the
valuations in the reports of the City Appraisal Committee and of the
commissioners appointed pursuant to Rule 67. But whether the trial
court considered these valuations in arriving at the just
compensation, or the court made its own independent valuation
based on the records, was obscure in the decision. The trial court
simply gave the total amount of just compensation due to the
property owner without laying down its basis. Thus, there is no way
to determine whether the adjudged just compensation is based on
competent evidence. For this reason alone, a remand of the case to
the trial court for proper determination of just compensation is in
order. In National Power Corporation v. Bongbong,[33]we held that
although the determination of just compensation lies within the trial
courts discretion, it should not be done arbitrarily or capriciously.
The decision of the trial court must be based on all established
rules, correct legal principles, and competent evidence.[34] The court
is proscribed from basing its judgment on speculations and
surmises.[35]

Petitioner questions the appellate courts decision to remand the


case to determine the consequential damages for the remaining 297-
square meter lot of private respondent. Petitioner contends that no
consequential damages may be awarded as the remaining lot was
not actually taken by the DPWH, and to award consequential
damages for the lot which was retained by the owner is tantamount
to unjust enrichment on the part of the latter.

Petitioners contention is unmeritorious.


No actual taking of the remaining portion of the real property is
necessary to grant consequential damages. If as a result of the
expropriation made by petitioner, the remaining lot (i.e., the 297-
square meter lot) of private respondent suffers from an impairment or
decrease in value, consequential damages may be awarded to private
respondent. On the other hand, if the expropriation results to benefits
to the remaining lot of private respondent, these consequential
benefits[36] may be deducted from the awarded consequential
damages, if any, or from the market value of the expropriated
property. We held in B.H. Berkenkotter & Co. v. Court of
Appeals[37] that:

To determine just compensation, the trial court should first


ascertain the market value of the property, to which should
be added the consequential damages after deducting
therefrom the consequential benefits which may arise from
the expropriation. If the consequential benefits exceed the
consequential damages, these items should be disregarded
altogether as the basic value of the property should be paid
in every case.

Section 6 of Rule 67 of the Rules of Civil Procedure provides:

x x x The commissioners shall assess the consequential


damages to the property not taken and deduct from such
consequential damages the consequential benefits to be
derived by the owner from the public use or purpose of the
property taken, the operation of its franchise by the
corporation or the carrying on of the business of the
corporation or person taking the property. But in no case
shall the consequential benefits assessed exceed the
consequential damages assessed, or the owner be deprived
of the actual value of his property so taken.

An award of consequential damages for property not taken is not


tantamount to unjust enrichment of the property owner. There is
unjust enrichment when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good
conscience.[38]Article 22 of the Civil Code provides that [e]very person
who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him. The
principle of unjust enrichment under Article 22 requires two
conditions: (1) that a person is benefited without a valid basis or
justification, and (2) that such benefit is derived at anothers expense
or damage.[39] There is no unjust enrichment when the person who
will benefit has a valid claim to such benefit.[40]

As stated, consequential damages are awarded if as a result of the


expropriation, the remaining property of the owner suffers from an
impairment or decrease in value. Thus, there is a valid basis for the
grant of consequential damages to the property owner, and no unjust
enrichment can result therefrom.

On whether the Court of Appeals erred


in ordering petitioner to pay attorneys fees.
The Court of Appeals did not err in granting attorneys fees to private
respondent. Article 2208(2) of the New Civil Code provides that
attorneys fees may be awarded:

xxx

(2) When the defendants act or omission has compelled the


plaintiff to litigate with third persons or to incur expenses to
protect his interest.

xxx

Attorneys fees may be awarded by a court if one who claims it is


compelled to litigate with third persons or to incur expenses to protect
ones interest by reason of an unjustified act or omission on the part
of the party from whom it is sought.[41] In this case, petitioner took
possession of private respondents real property without initiating
expropriation proceedings, and over the latters objection. As a result,
private respondent was compelled to litigate and incur expenses to
protect her interests over her property. Thus, the appellate courts
award of attorneys fees is proper, viz:

We find, however, the award of attorneys fees in plaintiff-


appellees favor justified. x x x It is admitted that defendant-
appellant DPWH neglected to file the appropriate
expropriation proceedings before taking over plaintiff-
appellees land. That their road contractor no longer has any
portion to work on except on plaintiff-appellees property is
no justification for the precipitate taking of her lot. It is
incumbent upon defendant-appellant DPWH to foresee
whether private lands will be affected by their project and to
file appropriate expropriation proceedings if necessary. They
did not do so. Thus, plaintiff-appellee was constrained to
institute the instant suit to protect her rights. [42]
WHEREFORE, we DENY the petition. We AFFIRM the Court of
Appeals Decision dated 15 November 2002 and Resolution dated 17
September 2003 in CA-G.R. CV No. 50358.

SO ORDERED.

A.C. No. 5499. August 16, 2005

WILSON PO CHAM, Complainant,


vs.
ATTY. EDILBERTO D. PIZARRO, Respondent.

DECISION

CARPIO MORALES, J.:

Before this Court is an administrative complaint for disbarment filed


by Wilson Po Cham (complainant) against Atty. Edilberto D. Pizarro
(respondent) for commission of falsehood and misrepresentations in
violation of a lawyer’s oath.

Complainant gives the following account of the facts that spawned


the filing of the present administrative complaint.

Sometime in July 1995, Emelita Cañete (Cañete), Elenita Alipio


(Alipio), and now deceased Mario Navarro (Navarro) who was then
the Municipal Assessor of Morong, Bataan, offered for sale to him a
parcel of land with an area of approximately forty (40) hectares,
identified as Lot 1683 of Cad. Case No. 262, situated at Sitio Gatao,
Nagbalayong, Morong, Bataan (the property).

He having expressed interest in the offer, Cañete and Navarro


arranged a meeting between him and respondent at the latter’s
residence in Balanga, Bataan1 where respondent categorically
represented to him that the property being offered for sale was
alienable and disposable.2 Respondent in fact presented to him 1)
Real Property Tax Order of Payment3 dated July 10, 1995 covering
the property signed by Edna P. Pizarro as Municipal Treasurer and
Navarro as Municipal Assessor; 2) a Deed of Absolute Sale 4 dated
July 25, 1995 purportedly executed by the alleged previous actual
occupant of the property, one Jose R. Monzon (Monzon), transferring
all his rights, interest and possession thereover in favor of Virgilio
Banzon (Banzon), Rolando B. Zabala (Zabala) and respondent for an
agreed consideration of ₱500,000.00; and 3) Special Power of
Attorney5 dated July 25, 1995 executed by Banzon and Zabala
authorizing him (respondent) to:

1. x x x offer to sell [their] rights over a certain parcel of land, which


is more particularly described as follows:

AREA: 40 has. more or less

situated at Pook Batangas, Nagbalayong, Morong, Bataan covered by


Tax Declaration No. 6066 PIN #108-08-044-05-126

2. x x x negotiate and enter into a contract for the


consumation (sic) of sale of the subject property; and to sign the
same.

3. x x x receive proceeds thereof with obligation to distribute the


corresponding share of each co-owner;

x x x6 (Underscoring supplied)

On July 25, 1995, he as buyer and respondent as seller executed an


Option to Buy,7 the pertinent portions of which provide:

WHEREAS, the SELLER is the owner and Attorney-In-Fact of his co-


owners of rights with planted trees (improvements) containing an
area of FORTY THREE (43) hectares, situated in Pook Batangas,
Nagbalayong, Morong, Bataan; (Portion of Lot 1683, Cad. 262,
Morong Cadastre), covered by Tax Declaration 6066.

WHEREAS, the BUYER is interested to buy the same for a total price
of THREE MILLION AND SEVEN HUNDRED THOUSAND PESOS
(₱3,700,000.00) payable in two (2) gives (sic), as follows:
a) Earnest money of ₱10,000.00 upon signing of this contract and
the balance of full payment within three (3) weeks from date hereof
which offer the SELLER accepts;

NOW THEREFORE, for and in consideration of the foregoing


premises and the terms and conditions hereunder specified the
parties have agreed on the following:

1) That the Buyer shall give an option money and earnest (sic) of
₱10,000.00 upon signing of this contract, which shall form part of
the contract price if and when the buyer comply (sic) with his
obligation to pay in full within three (3) weeks from date hereof,
otherwise should the BUYER fails (sic) to comply with his obligation
to pay in full on the scheduled period the ₱10,000.00 earnest money
shall be forfeited in favor of the SELLER and the Option to Buy is
automatically cancelled.

2) That the SELLER upon full payment of the price shall execute a
final Deed of Sale and shall surrender all documents, plans and
paper relative to the properties subject of sale;

3) That the SELLER shall warrants (sic) their rights and claims over
the above stated properties including the trees planted on it as
against the rights of third party except that of the
government.8 (Emphasis and underscoring supplied)

In accordance with the terms of the Option to Buy, he paid


respondent the amount of ₱10,000.00 for which respondent issued
the corresponding Receipt9 reading:

Received the sum of TEN THOUSAND PESOS (₱10,000.00) from MR.


WILSON CHAM, representing earnest/option money for Lot 1683 of
Cad. Case No. 262 situated at Boundaries:

NORTH : Right of Catalino Agujo

SOUTH : National Road-Bagac-Morong

WEST : Right of Nicasio Canta


EAST : Sapang Batang Panao

including the trees and improvement situated thereon.

Full payment shall be paid within three (3) weeks from date
hereof.10 (Underscoring supplied)

On August 21, 1995, respondent executed a Deed of Absolute


Sale11 over the property in his favor, the pertinent portions of which
read as follows:

For and in consideration of the sum of THREE MILLION THREE


HUNDRED SEVENTY TWO THOUSAND FIVE HUNDRED THIRTY
THREE (₱3,372,533.00), Philippine Currency, the receipt whereof is
hereby acknowledged from the BUYER to the entire satisfaction of
the SELLERS, the said SELLERS do by these presents SELL,
TRANSFER and CONVEY, in manner absolute and irrevocable, in
favor of the said BUYER, his heirs and assigns, all their rights,
interest and participation over that certain real estate destined for,
and in actual use as fruit land, situated at Pook Batangas,
Nagbalayong, Morong, Bataan and more particularly described as
follows:

Location : Pook Batangas, Nagbalayong, Morong, Bataan

Area : That portion of Lot 1683, Cad. 262, Morong Cadastre,


containing an area of 392,155 square meters more or less.

Boundaries : North : Right of Catalino Agujo

South : National Road, Bagac-Morong

West : Right of Nicasio Canta

East : Sapang Batang Panao

The SELLERS do hereby declare that the boundaries of the foregoing


land are visible by means of monuments, creeks and trees; that the
land including the permanent improvements existing thereon
consist of fruit-bearing trees assessed for the current year at TWO
HUNDRED SIXTY TWO THOUSAND FOUR HUNDRED ₱262,400.00
as per Tax Declaration No. 5010; and that the property is presently
in the possession of the SELLERS.

The SELLERS hereby agree with the BUYER that they are the
absolute owners of the rights over the said property; that they have
the perfect right to convey the same; that they acquired their rights
over the said property by absolute deed of sale from Jose R. Monzon
who acquired his rights over the property from Marianito Holgado;
that Marianito Holgado acquired his right from Pedro de Leon who,
in turn, acquired his right from Julian Agujo who was the original
owner who cleared the land and who was in possession of the same
immediately after the Second World War.

The SELLERS warrant their rights and claims over the


aforedescribed real estate including the trees planted thereon and
they undertake to defend the same unto said Vendee, his heirs and
assigns against the claims of any third person
whomsoever.12 (Emphasis and underscoring supplied)

Respondent thereafter furnished him with a copy of Tax Declaration


No. 501013 with Property Index No. 018-08-004-05-126 issued in his
(respondent’s) name and his alleged co-owners, and Real Property
Tax Receipt No. 02520114dated August 17, 1995 issued in his
(respondent’s) name.

He thus gave respondent two checks dated August 21, 1995


representing the purchase price of the rights over the property,
Asian Bank Corporation Check No. GA06321015 in the amount of
₱168,627.00 payable to respondent, and Asian Bank Manager’s
Check No. 004639GA16 in the amount of ₱3,193,906.00 payable to
respondent, Banzon and Zabala.

He subsequently took possession of the property and installed a


barbed wire fence at its front portion. Soon after, however, a forest
guard approached him and informed him that the property could
not be fenced as it was part of the Bataan National Park.17

Upon investigation, he discovered that the property is not an


alienable or disposable land susceptible of private ownership. He
thus secured a Certification18 from the Community Environment and
Natural Resources Office (CENR) in Bagac, Bataan of the
Department of Environment and Natural Resources (DENR) dated
July 2, 1998, signed by CENR Officer Laurino D. Macadangdang,
reading:

This pertains to your request for a certification as to the status of


land claimed by spouses Perfecto and Purificacion, Jose Monson, et.
al, Virgilio Banzon and Edilberto Pizarro, all located at Nagbalayong,
Morong, Bataan.

Please be informed that per verification conducted by the personnel


of this Office, said lands fall within the Bataan Natural Park per L.C.
Map/N.P. Map No. 34 as certified on December 1, 1945. Under the
Public Land Law, lands within this category are not subject for
disposition.19 (Underscoring supplied)

He also obtained a Letter-directive20 dated August 31, 1995 issued


by Officer-in-Charge Ricardo R. Alarcon of the Provincial
Environment and Natural Resources Office (PENR) of Balanga,
Bataan to the Municipal Assessor, the pertinent portions of which
read:

Please be informed that it comes to our attention that there


are some forest occupants that are securing land tax
declarations from your office in (sic) the pretext that the area
they occupied (sic) were (sic) within alienable and disposable
lands. Presently, this tax declaration is being used in the illegal
selling of right [of] possession within the Bataan Natural Park
which is prohibited under our laws.

xxx

In this regard, I would like to request for your assistance by way of


informing us and in controlling this land rush and massive selling
and buying of rights of possession within prohibited areas as stated
above.21 (Emphasis and underscoring supplied)

Upon his request, the PENR issued a Certification22 dated March 14,
1996 stating that those named by respondent as prior owners of
rights over the property from whom respondent and his alleged co-
owners acquired their alleged rights were not among those
inventoried as occupants per the PENR’s 1978 to 1994 Forest
Occupancy Census (IFO) Survey.

Despite repeated demands, respondent refused to return the


purchase price of the rights over the property.23

In his present complaint24 dated September 10, 2001, complainant


charges respondent to have violated his oath as a member of the Bar
in committing manifest falsehood and evident misrepresentation by
employing fraudulent means to lure him into buying rights over the
property which property he represented to be disposable and
alienable.25

In his Comment26 dated January 12, 2002, respondent denied


having employed deceit or having pretended to co-own rights over
the property or having represented that it was alienable and
disposable. He claimed that complainant, being engaged in
speculation in the purchase of property, knew exactly the character
and nature of the object of his purchase;27 and that despite
complainant’s awareness that he was merely "buying rights to forest
land," he just the same voluntarily entered into the transaction
because of the property’s proximity to the Subic Bay Economic Zone.

Respondent surmised that complainant bought the rights over the


property in the hope that lands belonging to the public domain in
Morong "would be eventually declared alienable and disposable to
meet the rising demand for economic zones."28

By Resolution29 of February 6, 2002, this Court referred the case to


the Integrated Bar of the Philippines (IBP) for investigation, report
and recommendation or decision within ninety (90) days from notice.

On May 6, 2002, complainant filed before the IBP his Reply 30 to


respondent’s Comment, maintaining that the sale of rights over the
property was attended with deceit as respondent deliberately did not
disclose that the property was within the confines of the Bataan
National Park.31 And he denied being engaged in speculation, he
claiming that with his purchase of the property, he would venture
into low-cost housing for the employees of the nearby Subic Bay
area.32

To complainant’s Reply, respondent filed his Rejoinder on June 21,


2002.33

Complainant later filed his Affidavit34 and Position Paper35 on June


21, 2002 and September 17, 2001, respectively, reiterating his
assertions in his previous pleadings.

The record shows that complainant filed a criminal complaint for


estafa against respondent, Banzon, Zabala, Cañete, Alipio and
Navarro in 199936 arising from the questioned sale of rights. The
complaint was twice dismissed by the City Prosecutor of Quezon
City. On petition for review, however, the Department of Justice,
through then Secretary Hernando B. Perez, by Resolution37 of March
6, 2002, reversed the dismissal of the complaint as it found probable
cause to indict respondent et al. in court. An information for estafa
was thereupon filed against respondent et al. before the Regional
Trial Court (RTC) of Quezon City, docketed as Criminal Case No. Q-
00-94232.

By Report and Recommendation of April 20, 2004, the IBP


Commission on Bar Discipline (CBD), through Commissioner Lydia
A. Navarro, finding respondent to have violated his oath as a
member of the Bar to do no falsehood and misrepresentations,
recommended his suspension from the practice of law for three (3)
months, subject to the approval of the members of the Board of
Governors. Pertinent portions of the Report and Recommendation
read:

. . . [I]t is evident that as early as of (sic) 1992, the Implementing


Rules and Regulations of NIPAS ACT38 prohibited the illegal selling of
rights or possession of the areas occupied within the Bataan Natural
Park, the subject property not excluded as per letter of OIC CENRO
Laurino D. Mapadanig [illegible], Bagac, Bataan per L.C. map/N.P.
Map No. 34 to the Municipal Assessor therein and certified on
December 1, 1945 that subject property which is within this
category was not subject for disposition; a fact supposed to be
known by the respondent being a resident of Balanga, Bataan and
was in the practice of his profession also in said area.

Aside from the fact that the alleged original owner Monzon was not
among those inventoried occupants as per Forest Occupancy (IFO)
Survey since 1978 up to the latest census in 1994 from whom
respondent allegedly bought the subject property; the Absolute Deed
of Sale executed between the complainant Wilson Po Cham and the
respondent relative to the same subject property was not
notarized which partook the nature of a private and not official
document.

Although respondent furnished complainant the foregoing


documents to prove their rights, interest and possession to the
subject property, respondent and his co-owners failed to show a
permit from the government conferring upon them rights or
concessions over the subject property, which formed part of the
Bataan Natural Park classified as public and not subject to
disposition, therefore respondent and his co-owners have no rights
and interests whatsoever over the subject property and
their representations to complainant were simply not true but a
falsehood.

Respondent being extensively conversant and knowledgeable about


the law took advantage of his versatility in the practice of law and
committed misrepresentations that he and his co-owners have
irrevocable rights, interests and possession over the subject property
which convinced complainant into purchasing subject property
unmindful that the same is not alienable or disposable being a
portion of the public domain; whereby respondent violated his
solemn oath as member of the Philippine Bar for having committed
such falsehood and misrepresentations to the
complainant.39 (Underscoring supplied).

By CBD Resolution No. XVI-2004-407 of October 7, 2004, the IBP


Board of Governors adopted and approved the April 20, 2004
Committee Report and Recommendation.
The case was forwarded to this Court for final action pursuant to
Rule 139-B of the Rules of Court.40

The IBP findings are well-taken.

The Bar is enjoined to maintain a high standard of not only legal


proficiency but of honesty and fair dealing.41 Thus, a member should
refrain from doing any act which might lessen in any degree the
confidence and trust reposed by the public in the fidelity, honesty
and integrity of the legal profession.42

The misconduct of a lawyer, whether in his professional or private


capacity, which shows him to be wanting in moral character,
honesty, probity and good demeanor to thus render him unworthy of
the privileges which his license and the law confer upon him, may
be sanctioned with disbarment or suspension.43

Thus, under Section 27, Rule 138 of the Revised Rules of Court, a
member of the Bar may be disbarred or suspended from his office as
attorney on the following grounds: 1) deceit; 2) malpractice or other
gross misconduct in office; 3) grossly immoral conduct; 4) conviction
of a crime involving moral turpitude; 5) violation of the lawyer’s oath;
6) willful disobedience to any lawful order of a superior court; and 7)
willfully appearing as an attorney for a party without authority.

And he may be faulted under Canon 1 of the Code of Professional


Responsibility which mandates a member of the Bar to obey the
laws of the land and promote respect for the law. Rule 1.01 of the
Code specifically enjoins him not to engage in unlawful, dishonest,
immoral or deceitful conduct. "Conduct," as used in this rule, is not
limited to conduct exhibited in connection with the performance of
professional duties.44

In the case at bar, as reflected above, complainant presented


certifications from the DENR that the property is part of the public
domain and not disposable as it is within the Bataan National Park.
Indeed, by virtue of Proclamation No. 2445 issued on December 1,
1945, all properties of the public domain therein designated as part
of the Bataan National Park were withdrawn from sale, settlement or
other disposition, subject to private rights.

On the other hand, respondent has utterly failed to substantiate his


documented claim of having irrevocable rights and interests over the
property which he could have conveyed to complainant. E.g., he
could have presented any document issued by the government
conferring upon him and his alleged co-owners, or even upon his
alleged predecessors-in-interest, with any such right or interest, but
he presented none. He merely presented a Deed of Absolute Sale
purportedly executed by a certain Jose R. Monzon in his, Banzon’s
and Zabala’s favor on July 25, 1995, a month shy of the execution
on August 21, 1995 of the Deed of Absolute Sale in favor of
complainant.

The tax declaration and receipt which respondent presented do not


help his cause any as neither tax receipts nor realty tax declarations
are sufficient evidence of the right of possession over realty unless
supported by other effective proof.46 The presentation of a tax
declaration must indeed have been a "pretext," as observed by the
PENR in its earlier-quoted portion of its letter-directive to the
Balanga Municipal Assessor "that the area occupied . . . [is] within
alienable and disposable land."

Respondent must thus be faulted for fraudulently inducing


complainant to purchase, for ₱3,372,533.00, non-existent
"irrevocable rights, interest and participation" over an inalienable
property.

In Lizaso v. Amante47 where therein respondent lawyer enticed the


therein complainant to invest in the casino business with the
proposition that her investment would yield her substantial profit,
but therein respondent not only failed to deliver the promised return
on the investment but also the principal thereof, this Court took
occasion to expound on sanctioning lawyers for committing fraud,
deceit or falsehood in their private dealings:

It is true, of course, that there was no attorney-client relationship


between respondent Amante and complainant Cuyugan-Lizaso. The
transaction that complainant entered into with respondent did not
require respondent to perform professional legal services for
complainant nor did that transaction relate to the rendition of
professional services by respondent to any other person.

As early as 1923, however, the Court laid down in In Re Vicente


Pelaez the principle that it can exercise its power to discipline
lawyers for causes which do not involve the relationship of an
attorney and client. x x x

"x x x [A]s a general rule, a court will not assume jurisdiction to


discipline one of its officers for misconduct alleged to have been
committed in his private capacity. But this is a general rule with
many exceptions. The courts sometimes stress the point that the
attorney has shown, through misconduct outside of his professional
dealings, a want of such professional honesty as render him
unworthy of public confidence, and an unfit and unsafe person to
manage the legal business of others. The reason why such a
distinction can be drawn is because it is the court which admits an
attorney to the bar, and the court requires for such admission the
possession of a good moral character.

x x x"

The rationale of the rule that misconduct, indicative of moral


unfitness, whether relating to professional or non-professional
matters, justifies suspension or disbarment, was expressed by Mr.
Chief Justice Prentice in In Re Disbarment of Peck, with eloquence
and restraint:

"As important as it is that an attorney be competent to deal with the


oftentimes intricate matters which may be intrusted to him, it is
infinitely more so that he be upright and trustworthy. Unfortunately,
it is not easy to limit membership in the profession to those who
satisfy the standard of test of fitness. But scant progress in that
direction can be hoped for if, in the determination of the
qualification of professional fitness, non-professional dishonor and
dishonesty in whatsoever path of life is to be ignored. Professional
honesty and honor are not to be expected as the accompaniment of
dishonesty and dishonor in other relations. x x x misconduct,
indicative of moral unfitness for the profession, whether it be
professional or non-professional, justifies dismission as well as
exclusion from the bar."

The rule in this jurisdiction was stated by Mr. Justice Malcolm


in Piatt v. Abordo x xx:

"The courts are not curators of the morals of the bar. At the same
time the profession is not compelled to harbor all persons whatever
their character, who are fortunate enough to keep out of prison. As
good character is an essential qualification for admission of an
attorney to practice, when the attorney’s character is bad in such
respects as to show that he is unsafe and unfit to be entrusted with
the powers of an attorney, the courts retain the power to discipline
him."48 (Italics in the original)

This Lizaso ruling was reiterated in Co v. Bernardino49 and Lao v.


Medel.50

To be sure, complainant is not entirely blameless. Had he exhibited


a modicum of prudence before entering into the transaction with
respondent, he would have spared himself from respondent’s sham.

It is jurisprudentially established though that in a disbarment


proceeding, it is immaterial that the complainant is not blameless or
is in pari delicto as this is not a proceeding to grant relief to the
complainant, but one to purge the law profession of unworthy
members to protect the public and the courts.51

The record does not disclose the status of the estafa case against
respondent. His conviction or acquittal is not, however, essential
insofar as the present administrative case against him is
concerned.52

Administrative cases against lawyers belong to a class of their own.


They are distinct from and they may proceed independently of x x x
criminal cases.
The burden of proof for these types of cases differ. In a criminal
case, proof beyond reasonable doubt is necessary; in an
administrative case for disbarment or suspension, "clearly
preponderant evidence" is all that is required. Thus, a criminal
prosecution will not constitute a prejudicial question even if the
same facts and circumstances are attendant in the administrative
proceedings.

It should be emphasized that a finding of guilt in the criminal case


will not necessarily result in a finding of liability in the
administrative case. Conversely, respondent’s acquittal does not
necessarily exculpate him administratively.53(Emphasis supplied)

It is not thus sound judicial policy to await the final resolution of a


criminal case before a complaint against a lawyer may be acted
upon; otherwise, this Court will be rendered helpless from vigorously
applying the rules on admission to and continuing membership in
the legal profession during the whole period that the criminal case is
pending final disposition when the objectives of the two proceedings
are vastly disparate.54

While the facts and circumstances of the case do not warrant the
imposition of so severe a penalty as disbarment, the inherent power
of this Court to discipline an errant member of the Bar must,
nonetheless, be exercised as it cannot be denied that respondent
violated his solemn oath as a lawyer not to engage in unlawful,
dishonest or deceitful conduct.55

The penalty of suspension for three (3) months recommended by the


IBP is not, however, commensurate to the gravity of the wrong
committed by respondent. This Court finds that respondent’s
suspension from the practice of law for One (1) Year is warranted.

WHEREFORE, respondent, Atty. Edilberto D. Pizarro, is


SUSPENDED from the practice of law for One (1) Year and STERNLY
WARNED that a repetition of the same or similar offense will merit a
more severe penalty.
Let copies of this Decision be entered in the personal record of
respondent as a member of the Bar and furnished the Office of the
Bar Confidant, the Integrated Bar of the Philippines, and the Court
Administrator for circulation to all courts of the country.

SO ORDERED.

AC ENTERPRISES, INC., PETITIONER, VS. FRABELLE


PROPERTIES CORPORATION, RESPONDENT.

DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari of the
Decision[1] of the Court of Appeals (CA) in CA G.R. SP No. 82166,
affirming the Order[2] of the Regional Trial Court (RTC) of Malabon
City in Civil Case No. 3742-MH, which denied the Motion to Dismiss
of petitioner AC Enterprises, Inc. (ACEI), as well as the Resolution of
the CA denying the motion for reconsideration thereof.

Petitioner, a corporation duly organized under domestic laws doing


business in the Philippines, owns the 10-storey Feliza Building
located along Herrera Street, Legaspi Village, Makati City. The
building was subdivided into commercial/office units which were
leased to private persons and entities. There are 36 blowers from 18
air-cooled type airconditioning units in the building, four blowers on
each floor, from the 2nd to the 10th floors. The blowers are
aesthetically covered by vertical concrete type baffles.

Respondent Frabelle Properties Corporation (FPC), formerly FTL &


Sons Development Corporation,[3] is the developer of Frabella I
Condominium (Frabella I), a 29-storey commercial/residential
condominium located at 109 Rada Street, Legaspi Village, Makati
City. It owned some units in the condominium which it leased to its
tenants. The building is managed by the Frabella I Condominium
Corporation (FCC).
Rada and Herrera streets lie parallel to each other such that Feliza
Building is situated at the back of Frabella I. Feliza Building is at the
back of Frabella I and is separated by Rodriguez Street, a two-lane
road approximately 12 meters wide[4] The street is bounded by the
Thailand Embassy on the side of the street of Frabella I. The
exhaust of the blowers from the airconditioning units at the Feliza
Building were directed towards the rear of Frabella I.

On April 11, 1995, respondent wrote petitioner demanding that the


latter abate the daily continuous, intense and ''unbearable noise"
and the hot air blast coming from the 36 blowers in the Feliza
Building. Petitioner rejected the demand in a letter dated May 15,
1995. Respondent reiterated its demand for ACEI to abate the
nuisance in a letter dated June 6, 1995.

On June 29, 1995, respondent requested that the 36 blowers of


Feliza Building be tested by the NCR Environmental Management
Bureau (EMB) of the Department of Environment and Natural
Resources (DENR). On August 11, 1995, it received a report from the
EMB that the noise generated by the blowers of Feliza Building is
beyond the legal allowable level under Section 78(b) of Presidential
Decree (P.D.) No. 984, as amended. FPC had the blowers tested
anew by the EMB on December 8, 1995 and July 1, 1996 with the
same results. Despite repeated demands, petitioner refused to act on
the matter.

On August 14, 2000, respondent again wrote petitioner, demanding


that it abate the nuisance. Petitioner ignored the letter anew.
Respondent then had the blowers tested again by the EMB with
same results as evidenced by its report dated August 29, 2000 and
November 4, 2000.

On March 11, 2001, Frabelle I Condominum Corporation, through


counsel, Ang & Associates, as complainant, filed a complaint against
petitioner with the Pollution Adjudication Board (PAB) for the
abatement of noise and/or air pollution and damages with a plea for
injunctive relief. The complainant alleged therein that it managed
the Frabella 1 and that its members own units in the condominium.
It alleged, inter alia, that:

6. Feliza Building's airconditioning system is served by some 36


blowers, installed 4 blowers to each floor, all located on the
same sidedirectly facing Frabella I.

7. Everytime the Feliza Building's airconditioning system is turned


on, all or a good number of the 36 blowers operate at the same
time. As a direct result of the operation of the blowers,
unbearable hot air is generated and blown towards Frabella I.

8. Apart from the hot air, the blowers also generate a continuous,
deafening, intolerable and irritating, vibrating noise which
makes normal conversation across the street and at the
Frabella I difficult if not impossible.

9. As a consequence of such hot air, vibrating and intolerable


noise, the occupants of Frabella I have been, and still are,
prevented from enjoying peaceful and comfortable use of their
property thereby forcing them to vacate and/or transfer
elsewhere.

10. Such intolerable noise, hot air, and vibration constitute


noise and/or air pollution violative of P.D. 984, the Clean Air
Act and other related environmental laws.

11. In all good faith without any desire to cause any


unnecessary inconvenience or trouble, the complainant, for the
last several years, has written and made numerous contacts
with the respondent complaining about this pollution, even
soliciting the help and intercession of the Makati Commercial
Estate Association, Inc. (MACEA) and the Metro Manila
Development Authority (MMDA) to try to settle the matter
amicably.
12. On the other hand, the DENR, over a span of several years,
has conducted several tests. As shown by the results, the noise
and vibration generated by the Feliza Building blowers exceeds
the DENR and Local Government ambient noise standards
hence, it undoubtedly constitutes pollution.[5]

The complainant prayed that judgment be rendered in its favor,


thus:
WHEREFORE, it is respectfully prayed that after notice and hearing,
a Decision be rendered in favor of complainant and against the
respondent:

1. Declaring the intolerable noise, hot air and vibration generated


by the Feliza Building blowers as a noise and/or air pollution
and ordering the respondent to abate the same and in case of
failure to do so, that the establishment be closed or ordered to
cease operations.

2. After arbitration, ordering the respondent to indemnify the


complaint for actual damages at not less thanP5,000,000.00
and to reimburse it for attorney's fees and expenses of litigation
at not less than P400,000.00.

3. Condemning the respondent to pay the corresponding fines and


other administrative penalties for each day of continuing
pollution.

Complainant prays for other relief just and equitable in the


premises.[6]
While the case was pending, respondent, through its Vice-President,
wrote Dr. Maria Leonor B. Soledad, City Health Officer of Makati
City, requesting her intervention to order petitioner to abate the
noise and hot air coming from the blowers of the Feliza Building. On
March 5, 2002, Dr. Soledad replied that a panel must be formed to
settle the matter.

In a letter dated March 7, 2002, respondent requested Makati City


Mayor Jejomar C. Binay not to renew or to cancel the Mayor's
License and Business Permits of Feliza Building and to compel
petitioner to comply with the law.[7] Copies of the letter were
forwarded to Engr. Nelson B. Morales, the City Building Official, and
Atty. Enrico Lainez, City Attorney.

Engr. Morales acted on the letter and wrote the EMB on April 30,
2002, requesting the investigation of the complaint relative to the
noise from the airconditioning units of the Feliza Building.[8] A panel
from the EMB conducted tests on the 36 blowers of Feliza Building
from 10:30 a.m. to 12:50 p.m. on May 24, 2002. On June 28, 2002,
the Panel submitted its Investigation Report, stating that the
passing of vehicles along the street and the blowers of nearby
building contributed to the ambient noise quality in the area. The
report stated that since DENR Administrative Order No. 30 devolved
the functions of the DENR on the abatement of noise nuisance to
the Local Government Unit, the case should be endorsed to the City
Government of Makati for appropriate action.[9]

Regional Director Sixto E. Tolentino, Jr. of the EMB forwarded the


report to Engr. Morales on July 2, 2002.[10] In a letter dated July 19,
2002, Engr. Morales informed respondent that based on the result of
investigation conducted by the DENR Management Bureau on
Sound Pressure Levels (SPL) measured on the different sampling
stations, the excess in the noise quality standard within the vicinity
does not come from the airconditioning system with 36 blowers of
Feliza Building alone; there were other prevailing factors to
consider," which is beyond the control of said building and since the
final result has been rendered and resolved by the concerned
government agency, it is properly advised that further inquiry or
anything involving a sound environment process which is not
sanctioned by this office, be addressed directly to the said
agency. "[11]

Copies of the letter were furnished to the City Mayor, the City
Attorney and petitioner. Respondent then wrote Engr. Morales
seeking clarification, wanting to find out why the matter should be
referred to the EMB when the latter had already endorsed the matter
to the City of Makati. A conference was held between the executives
of respondent and Engr. Morales. The latter insisted on the report of
the EMB and his July 19, 2002 letter and dared it to go to court if it
was not satisfied with the report and his resolution of the matter.

Respondent then wrote another letter to the EMB relative to the May
24, 2002 Report of the Panel. The EMB conducted SPL
measurements anew on February 4, 2003. Per its Report submitted
on November 24, 2003, the EMB declared that, from the table, it is
evident that the SPL measurements were high when the doors were
opened compared to the readings when the doors were closed.
However, the EMB emphasized that the standards in Section 78 (b)
of the Implementing Rules and Regulations of P.D. No. 984 could not
be applied since the provisions were for ambient noise. It pointed
out that the SPL measurements were taken inside the building. The
EMB opined that since the nature of complaint is regarding noise
nuisance generated from the firm's blowers, the SPL measurements
were not the critical factor in the resolution of the issue. It stated
that the noise needs not to be high or low to annoy or cause
nuisance to the receptor, for as long as the complainant is disturbed
with the level of sound coming from the firm, it was considered a
nuisance.[12]

On July 1, 2003, respondent filed a complaint for the abatement of


nuisance with damages with prayer for the issuance of a writ of
preliminary and permanent injunction before the RTC of Malabon
City against petitioner. The complaint alleged the following:

6. The Feliza Building's airconditioning units are served by some


36 blowers, 4 blowers to each floor located outside the windows
of the building facing directly towards the Frabella I
Condominium. The 36 blowers were installed from the 2nd floor
to the 10th floor of the building and these blowers are
aesthetically covered by a vertical concrete sun baffles.

7. [Every time] the Feliza Building's airconditioning system is


turned on, all or a good number of the 36 blowers are made to
operate simultaneously. The operation of the Feliza's blowers
generates a continuous deafening unbearable vibrating and
stressful noise affecting the tenants of the Frabella I
Condominium. Hot air is also blasted from the [Feliza]
Building's blowers to the direction of the Frabella
1Condominium.

8. The tenants occupying the 5th to the 16th floors of the Frabella
I Condominium facing Feliza Building are directly subjected to a
daily continuous intense noise and hot air blast coming from
the blowers of the[10-storey] Feliza Building. Some are tenants
of plaintiff, who have complained to plaintiff about the matter.
Tenants who could not bear the nuisance any longer have
vacated their units, and as a result, many units of plaintiff have
remained vacant, and unoccupied or uninhabitable, thereby
depriving plaintiff with rental income that it should have
otherwise be receiving.

9. In all good faith, without any desire to cause any unnecessary


inconvenience or trouble, plaintiff has written and made
numerous contacts with defendant to complain about this
nuisance, even soliciting the help and intercession of the
Barangay San Lorenzo, Makati Commercial Estate Association,
Inc. (MACEA), Metro Manila Development Authority (MMDA),
Makati City Government, Makati Pollution Office and
Department of Environment and Natural Resources(DENR), to
try to settle the matter amicably. Several meetings have taken
place, as well as many correspondences made by plaintiff to
defendant. But reasonable and lawful demands by plaintiff to
abate the nuisance have been repeatedly ignored/refused by
defendant. The demand letters, and the response of defendant
to these letters, are herein attached and made integral part of
this Complaint as follows:
Date Remarks
Annex
11 April 1995
Demand letter to abate nuisance
"A"
15 May 1995
Response to demand letter
"B"
06 June 1995
Follow-up demand letter
"C"
14 August
2000 Follow-up demand letter
"D"

10.
11. There [are] more letters that were exchanged between
plaintiff and defendant and/or their lawyers, but they will not
be attached to this Complaint at this time to simplify the facts.

12. Even the Metro Manila Development Authority (MMDA) and


Makati Commercial Estate Association, Inc. (MACEA) wrote
defendant letters urging it to rectify and abate the nuisance.
Copies of the letters of the MMDA dated 29 April 1996 and the
MACEA dated 10 October 1996 are herein attached and marked
as Annexes - "E" and "F"[,] respectively.

13. On the other hand, the DENR, over a span of 7 years, has
conducted several noise sampling tests. As shown by the
results, the unbearable noise generated by the Feliza's blowers
is beyond the legally allowable level under Sec. 78(b) of P.D.
984, as indicated in their reports, hence[,] it undoubtedly
constitutes nuisance. Copies of the test results are herein
attached and made an integral part of this Complaint as
follows:

Date Annex
29 June 1995 "G"
11 August 1995 "H"
08 December 1995 "I"
01 July 1996 "J"
04 November 1996 "K"
29 August 2000 "L"

14.
15. Please note that the testing done on 08 December 1995
(Annex - "I") was even requested by defendant.

16. On 04 February 2003, another test by the DENR was


conducted, and a copy of the results are herein attached and
marked as Annex -"M." Although the latest test would seem to
indicate that there was a reduction in the decibel readings as
compared with the previous tests, this is actually misleading.
For one, 28 blowers were operational at the time of the testing,
as opposed to the previous testing done when all 36 blowers
were functioning. This is rather exceptional because ordinarily,
all 36 blowers of the Feliza Building are in operation. The fact
that only 28 blowers were operational at the time of the testing
resulted in the lower decibel reading.

17. Plaintiff will also demonstrate by expert testimony during


the course of the trial that there were lapses committed during
the latest testing that materially influenced the results. But be
that as it may, defendant did not perform any remedial or
rectification works to lower the noise being generated by the
blowers, hence[,| it was not responsible for any imagined or
actual reduction in the decibel readings.

18. As a consequence of such unbearable, hot air and stressful


noise, the occupants of the Frabella I, including the tenants of
plaintiff, have been and still are, prevented from enjoying
peaceful and comfortable use of their property thereby forcing
them to vacate and or to transfer elsewhere.

19. Notwithstanding the foregoing results, repeated


requests/demands from the plaintiff and recommendations of
the DENR, MACEA and MMDA to abate the pollution and
nuisance, the defendant has ignored and still continues to
ignore such requests/demands/ recommendation.[13]

Respondent prayed for injunction and the following other reliefs,


thus:
WHEREFORE, premises considered, it is respectfully prayed that
upon the filing of this Complaint, after notice and hearing, and after
the payment of a bond in an amount to be fixed by the Honorable
Court, a Writ of Preliminary Injunction be issued enjoining
defendant from operating the airconditioning system of the Feliza
Building and/or turning on the blowers subject matter of this suit
while the instant case remains pending.

After trial and hearing, judgment be rendered against the defendant


and for the plaintiff, ordering the former:

1. To abate the noise and air pollution being generated by all the
blowers of the airconditioning system of Feliza Building, and/or
to make the Writ of Preliminary Injunction permanent;

2. To pay plaintiff the amount of P1,000,000.00 in temperate or


moderate damages[;]

3. To pay the plaintiff the amount of P1,000,000.00 as and by way


of exemplary damages;

4. To pay the plaintiff the amount of P500,000.00 as and by way of


attorney's fees; and

5. [To pay] the cost of the suit.[14]

Petitioner moved for the dismissal of the complaint on the following


grounds: (1) lack of jurisdiction of the court over the subject matter
of the complaint; (2) the complaint does not state a cause of action;
and (3) the action is barred by res judicata, litis pendentia, and
forum shopping.[15]

Petitioner averred that it was the Makati City Government that had
jurisdiction over the complaint pursuant to Republic Act (R.A.) No.
7160. It also pointed out that DENR Administrative Order (A.O.) No.
30 issued on June 30, 1992 devolved to the local government units
the power to determine matters pertaining to environmental
management such as: (a) enforcement of pollution control and
environmental protection laws, rules and regulations; (b) abatement
of noise and other forms of nuisance; and (c) implementation of
cease and desist orders issued by the PAB. It maintained that
respondent had filed a similar action before the Makati City
Government concerning the same issues presented in the complaint
and that the City Building Official, Engr. Morales, had ruled in his
letter dated July 19, 2002 that the excess in the noise quality
standard within the vicinity was caused not only by the air-
conditioning system of Feliza Building but also by other prevailing
factors which were beyond its control. Respondent had failed to
appeal the resolution; hence, the resolution of the City Building
Official barred the complaint.

Petitioner further averred that, aside from the action brought before
the City Government, the Frabella Condominium Corporation (FCC)
filed a case for Abatement of Noise and/or Air Pollution and
Damages with Prayer for Interim Cease and Desist Order, docketed
as PAB Case No. 01-0009-NCR. As gleaned from the material
averments of the two complaints, both involved the same set of facts
and issues. Consequently, the petition is barred by litis pendentia,
and respondent was guilty of violating Section 5, Rule 7 of the Rules
of Court for failure to include in its certification against forum-
shopping of the pendency of the PAB case or the prior resolution by
the City Government of the complaint before the City Building
Official/City Engineer.
Petitioner further claimed that the complaint stated no cause of
action because it failed to allege any right of respondent which it
was obliged to respect, and any act or omission of defendant in
violation of such right. As gleaned from the EMB's report to the City
Engineer on May 24, 2002, the passing of vehicles along the street
and blowers in the nearby building contributed to the ambient noise
quality in the area.[16]

In compliance with the order of the court, the parties submitted


their respective Position Papers. Respondent averred that the
provisions of R.A. No. 7160 cited by petitioner apply not to
abatements of nuisance but to pollution control cases.[17] The local
government units (LGUs) are only granted administrative and
executive powers, not judicial or quasi-judicial functions to abate a
nuisance. While admitting that DENR A.O. No. 30 devolved to the
LGUs the function of abating noise and other forms of nuisance as
defined by law, plaintiff posited that said A.O. is not a law and the
DENR cannot deprive the court of its jurisdiction over the abatement
of nuisance.

Respondent alleged that in filing a motion to dismiss, petitioner


hypothetically admitted the factual allegations in the complaint and,
thus, only questions of law remained; hence, the doctrine of primary
jurisdiction and the need for exhaustion of administrative remedies
do not apply. Moreover, petitioner itself had even admitted that
respondent had tried to seek administrative relief before the Makati
City Government, but the City Building Official denied the same. It
insisted that to require the further exhaust of administrative
remedies beyond what it had tried in the past years would be an
injustice. It claimed that the proper application of P.D. No. 984 was
in issue, specifically Section 78(b) of the Rules and Regulations of
the National Pollution Control Commission (NPCC) which were
adopted and promulgated pursuant to Section 6 of P.D. No. 984 and
Title VIII of the Civil Code. Respondent maintained that Engr.
Morales' letter to it could not be considered as final as to
constitute res judicata between the parties. It was only a reply-letter.
Besides, the City Engineer/Building Official could not exercise
quasi-judicial functions. Due process was not also observed because
no proceedings were conducted. It insisted that it wrote follow-up
letters to know the basis of his findings and to confirm the fact that
the Makati City Government did not issue a permit to operate its
airconditioning unit. However, Engr. Morales refused to acknowledge
the same and did not reply thereto.

Respondent asserted that it did not engage in forum shopping as the


complainant in the PAB case was FCC, a corporation of unit owners
of Frabella I. ft is a totally different corporate entity, the
stockholders and officers of which are not similar to FPC. On
petitioner's claim that there was no cause of action for the
abatement of nuisance, it declared that the material allegations of its
complaint and the answer thereto show otherwise. Petitioner had the
obligation to abate the nuisance caused by the blowers of Feliza
Building. Although under the DENR Report on May 24, 2002, the
DENR conducted noise sampling, and noted that the passing
vehicles along the street and blowers of nearby building contributed
to the noise, the basis of its complaint was the noise generated by
the blowers of Feliza Building.

Before the RTC court could resolve the motion to dismiss of


petitioner, the PAB resolved, on July 29, 2003[18] to dismiss the
complaint filed by Frabelle. The matter was then endorsed to the
LGU concerned in accordance with Section IV, Rule III of PAB
Resolution 1-C, Series of 1997, as amended. It noted that based on
the pleadings of the parties, and the testimonial evidence, the case is
more of a nuisance, and "[e]xcept where such would constitute a
pollution case, local government units shall have the power to abate
nuisance within their respective areas pursuant to the Republic Act
No. 386 (Civil Code of the Philippines), Republic Act 7160 (the Local
Government Code), Presidential Decree 856 (the Code of Sanitation of
the Philippines), DENR Department Administrative Order No. 30,
Series of 1992 and other pertinent laws, rules and regulations"
without prejudice to the institution of a pollution case, upon proof
that respondent had failed to comply with DENR standards and the
presentation of other evidence that would warrant the PAB to take
cognizance of and assert jurisdiction over the case.[19]

Thereafter, the RTC denied petitioner's motion to dismiss in an


Order[20] dated September 15, 2003. It ruled that the doctrine of
primary jurisdiction simply calls for the determination of
administrative questions, which are ordinarily questions of facts and
not of law. Likewise, the trial court is not divested of its jurisdiction
simply because of plaintiff's failure to observe the doctrine of
exhaustion of administrative remedies. Moreover, as gleaned from
the averments of the complaint, there was an urgency of abating the
noise and air pollution generated by the blowers of petitioner's
airconditioning system such that respondent prayed for injunctive
relief. The RTC took note of the allegations of respondent that it
would suffer great and irreparable injury; hence, to require it to
exhaust further administrative remedies would be, in effect, a
nullification of its claim.

According to the RTC, the doctrine of res judicata applies only to


judicial and quasi-judicial proceedings and not to the exercise of
administrative powers. Thus, no forum shopping was also
committed. Since the findings of the City Building Official appear to
be a complete disavowal of the previous results gathered from the
numerous tests conducted by the EMB, the court could not be
deprived of its inherent power to review the factual findings of the
administrative official in order to determine the regularity of the
procedure used.

On the merits of the complaint, the RTC declared that the factual
allegations were sufficient in themselves to constitute a cause of
action against respondent and, if admitting the facts, the court can
render valid judgment on the basis thereof in accordance with the
relief prayed for:
Undeniably, the instant complaint is one for abatement of nuisance.
Plaintiff alleges that the operation of defendant's blowers generates a
continuous, deafening, unbearable, vibrating and stressful noise
affecting its tenants. Some have already vacated their units while
others refused to pay rents and threaten plaintiff to be sued because
of the unabated nuisance. Plaintiff has been deprived of rental
income. It had written and made numerous contacts with the
defendant to complain about the nuisance and further solicited
intervention from government agencies including the Government of
Makati City. Defendant allegedly failed or refused to abate the
nuisance which is in total disregard of the right of the plaintiff over
its property. Contested findings of the EMB and City Building
Official of Makati City are, likewise, put in issue. These are sufficient
to constitute a cause of action against the defendant and, if
admitting the facts, this Court can render valid judgment upon the
same in accordance with the relief prayed for.[21]
The court denied the motion for reconsideration filed by
petitioner[22] and the latter sought: relief from the CA via a petition
for certiorari. Petitioner averred that:
THE PUBLIC RESPONDENT ACTED WITHOUT JURISDICTION, OR
WITH GRAVE ABUSE OF DISCRETION SO GRAVE AS TO LOSE
JURISDICTION IN ASSUMING AND EXERCISING ITS
JURISDICTION IN CIVIL CASE NO. 03-3745-MN, CONSIDERING
THAT:

A. THE HONORABLE COURT HAS NO JURISDICTION OVER THE


SUBJECT MATTER OF THE COMPLAINT. JURISDICTION IS
VESTED WITH THE MAKATI CITY GOVERNMENT, THE LOCAL
GOVERNMENT UNIT CONCERNED.

B. THE COMPLAINT IS BARRED BY RES JUDICATA. THE MAKATI


CITY GOVERNMENT HAS ALREADY DECIDED A COMPLAINT
FILED BY FRABELLE. FRABELLE DID NOT ELEVATE THE
SAME ON APPEAL, OR, IN ANY WAY, QUESTION SUCH
DECISION. THUS, THE DECISION BY THE MAKATI CITY
GOVERNMENT IS NOW FINAL AND EXECUTORY.

C. AT THE TIME THE COMPLAINT WAS FILED, IT WAS BARRED


BY LITIS PENDENTIA. A SIMILAR ACTION WAS PENDING WITH
THE POLLUTION ADJUDICATION BOARD (PAB) WHICH,
SUBSEQUENTLY, FOUND NO LIABILITY ON THE PART OF AC.
FRABELLE IS CLEARLY AND UNDENIABLY GUILTY OF
FORUM-SHOPPING.

D.PLAINTIFF FRABELLE HAS NO CAUSE OF ACTION AND THE


COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST
AC ENTERPRISES.[23]

Petitioner asserted that, by express provision of law, the City of


Makati has primary jurisdiction over the complaint and is the
competent authority to determine the existence of any incidence of
pollution, the special standards and regulations controlling the
same and the resolution whether a party has complied with the
regulations. The complaint does not fall under any of the exceptions
to the rule on exhaustion of administrative remedies. Respondent is
guilty of short-circuiting the whole process without requisite
justification. Contrary to the contention of respondent, the
proceedings before the City Government are quasi-judicial in nature.
It pointed out that the City Government had already made its
findings, which respondent did not contest in the proper tribunal
within the reglementary period. It did not appeal the decision of the
City Building Official conformably with DENR Administrative Order
No. 37-45 (General Manual of Operations for Devolved Functions
from the Department of Environment and Natural Resources to the
Local Government Units); hence, the resolution became final and
executory. It insisted that the complaint is but a desperate attempt
to revive what is otherwise a dead issue.
On September 21, 2004, the CA rendered judgment denying the
petition.[24] The fallo of the decision reads:
WHEREFORE, premises considered, the petition is DISMISSED for
lack of merit. Accordingly, the dismissal of the petition rendered the
application for a temporary restraining order or writ of preliminary
injunction moot and academic.

SO ORDERED.[25]
The CA ruled that the action of respondent was one for the
abatement of a nuisance within the exclusive jurisdiction of the
RTC. It agreed with respondents' contention that, under R.A. No.
7160, the LGUs are not divested of its jurisdiction over an action for
the abatement of a nuisance. Section 17, sub-paragraphs (b)(3)(iii) in
relation to (b)(4) of the law pertain to the enforcement of pollution
control law and not to the abatement of nuisance. While DENR A.O.
No. 30 devolved to the LGUs the abatement of noise and other forms
of nuisance as defined by law, this does not necessarily deprive the
courts to hear and decide actions pertaining thereon. It was thus
proper for respondent to bring the case before the court since it had
already sought the intercession of Barangay San Lorenzo, Makati
Commercial Estate Corporation (MACEA), DENR, and the Makati
City Government to no avail.

Further, the doctrine of primary jurisdiction and the principle of


exhaustion of administrative remedies need not be adhered to when
the question between the parties is purely legal. In this case,
petitioner, in filing a motion to dismiss, is deemed to have
hypothetically admitted all the factual averments of respondent.
Hence, what is left for the court to adjudicate is only the application
of laws dealing with nuisance. The CA also declared that the filing of
the case below was not barred by res judicata for the reason that the
decision adverted to by petitioner was only a letter of the City
Building Official to respondent; no adversarial proceedings or
submission of evidence and position papers took place before said
office. At best, the letter is only an exercise of the City Government's
administrative powers, not judicial or quasi-judicial functions which
the City Building Official does not possess. Respondent's filing of the
complaint before the Malabon RTC is also not barred by litis
pendentia. FCC, as complainant, initiated the action before the PAB,
while the respondent filed the pending case before the court; there is
no identity of parties since FCC has a personality separate and
distinct from that of respondent.

Finally, the CA held that all the requisites for the existence of a
cause of action were present in the case at bar. Due to the
unbearable noise and hot air allegedly produced by the blowers
installed at petitioner's building, tenants of respondent have been
complaining, forcing them to vacate their units while others refused
to pay their rent and threatened to take legal action. Respondent
had the right to abate such nuisance in order to avert future
business losses. Since petitioner refused to heed its demands,
respondent was well within its right to file a case protecting its
property and proprietary rights.

On January 18, 2005, the appellate court resolved to deny


petitioner's motion for reconsideration[26] for lack of merit.[27]

Petitioner forthwith filed the instant petition for review on certiorari,


praying for the reversal of the CA decision and resolution on the
following grounds:
I.

THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE


LOWER COURT HAS JURISDICTION OVER THE INSTANT CASE,
CONSIDERING THAT THE EXCLUSIVE AUTHORITY TO
DETERMINE THE ISSUES INVOLVED IN THE CASE A QUOLIES
WITH THE CITY OF MAKATI.
A.
THE COURT OF APPEALS ERRED IN NOT RULING THAT THE
POWER TO ABATE NUISANCES AND CONTROL NOISE POLLUTION
HAS BEEN DEVOLVED TO THE LOCAL GOVERNMENT UNIT
CONCERNED IN ACCORDANCE WITH REPUBLIC ACT 7160
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE.
II.

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE


ISSUES INVOLVED IN THE INSTANT CASE NECESSARILY INVOLVE
A QUESTION OF FACT, AND, THEREFORE, THE DOCTRINE OF
PRIMARY JURISDICTION AND THE DOCTRINE OF EXHAUSTION
OF ADMINISTRATIVE REMEDIES ARE BOTH APPLICABLE.

III.

THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE


COMPLAINT IS NOT BARRED BY (1) LITIS PENDENTIA; (2) RES
JUDICATA; AND (3) FORUM-SHOPPING.

IV.

THE COURT OF APPEALS ERRED IN RULING THAT


RESPONDENT'S COMPLAINT STATES A CAUSE OF ACTION.[28]
Petitioner insists that, under Section 17(b)(4) in relation to Section
17(b)(3)(III) of R.A. No. 7160, the City of Makati is obliged to enforce
the Pollution Control Law, and under Section 458(4)(I) of the said
law, the Sanggnniang Panghmgsod is empowered to declare, prevent
or abate any nuisance. Thus, the City of Makati has exclusive
jurisdiction over respondent's complaint for the abatement of the
noise from the blowers of the airconditioning unit of the Feliza
Building and of the hot air generated by the said blowers. Petitioner
avers that the issues before the trial court were factual in nature. By
its motion to dismiss the complaint, it did not hypothetically admit
the allegations of respondent in its complaint that the noise and hot
air emitted by the blowers of the Feliza Building constitute a
nuisance or air pollution because the allegations are mere
conclusions of law and not mere statements of facts. Respondent's
complaint before the trial court and its several complaints against
petitioner before quasi-judicial bodies is an implied admission of the
availability of administrative remedies under the law. Since
respondent failed to pursue and exhaust all administrative remedies
before filing its complaint below, its action was premature. While
there were exceptions to the requirement of exhaustion of
administrative remedies, nevertheless, respondent failed to establish
any of them. Moreover, respondent's action before the RTC was
barred by the letter of the City Engineer's Office of Makati City on
July 19, 2002 which ruled that there was no factual basis for
respondent's complaint; hence, respondent's complaint was barred
by res judicata. The complainant in PAB Case No. 01-0009-NCR
involved the same set of issues and circumstances, and the
complainant therein and respondent represented the same interests,
alleged the same rights and prayed for the same reliefs.
Consequently, the RTC erred in denying its motion to dismiss the
complaint on the ground of res judicata, litis pendentia and forum
shopping.

Finally, respondent had no cause of action against petitioner


because, as shown by the tests conducted by the EMB on May 24,
2002, based on noise sampling tests, the noise and air pollution did
not emanate from Feliza Building but from passing cars.

In its comment on the petition, respondent maintained that the


assailed orders of the RTC and decision of the CA are in accord with
law and the rulings of this Court. Respondent maintains that the
only issue before the trial court was how to apply P.D. No. 984 and
Section 78(b) and the Rules and Regulations of the NPCC and the
provisions of the New Civil Code governing the abatement of
nuisance. By filing a motion to dismiss the complaint on the ground
that it stated no cause of action, the petitioner thereby
hypothetically admitted the factual allegations therein. The court
must hear the case to be able to finally resolve the factual issues
that may be raised in the Answer of the petitioner after the denial of
its motion to dismiss.

Respondent avers that it was not obliged to first exhaust all


administrative remedies. It pointed out that the Building Official of
Makati City ignored its right to due process when he dismissed its
complaint without conducting an investigation based solely on the
July 2, 2002 Report of the EMB Panel. The issues between the
parties are legal, that is, whether there is irreparable injury. It
likewise points out that to require exhaustion of administrative
remedies would be unreasonable as the rule does not provide a
plain, speedy and adequate remedy. It insists that it could not have
appealed the letters of the City Mayor and the Building Official of
Makati because there are no rules promulgated by the City
governing appeals from said letters. It points out that the City
Engineer and City Mayor did not grant its letter requesting for a
clarification of petitioner's letters denying its letter-complaint.

The petition is denied for lack of merit.

The Order of the RTC dated September 15, 2003 denying the motion
to dismiss of petitioner (as defendant below) is interlocutory in
nature. The general rule is that an order denying a motion to
dismiss a complaint cannot be questioned via a special civil action
forcertiorari until a final judgment on the merits of the case is
rendered. A party must exhaust all remedies available before
resorting to certiorari. A writ for certiorari is not intended to correct
every controversial interlocutory ruling. It is resorted only to correct
a grave abuse of discretion or a whimsical exercise of judgment
equivalent to lack of jurisdiction. It is a remedy narrow in scope,
limited only to keeping an inferior court within its jurisdiction and to
relieve persons from arbitrary acts which courts have no power or
authority to perform.[29] The remedy of petitioner was to go to trial
and appeal from an adverse decision.

Moreover, the CA correctly ruled that the RTC did not commit grave
abuse of its discretion in denying the motion to dismiss filed by
respondent. Indeed, the assailed orders of the RTC are in accord
with the law and rulings of this Court, taking into account the
averments of the complaint and the answer appended thereto and
the other pleadings of the parties.

The RTC Has Jurisdiction


Over the Action of the
Respondent for Abatement
Of Nuisance

It is axiomatic that the nature of an action and whether the tribunal


has exclusive jurisdiction over such action are to be determined
from the material allegations of the complaint, the law in force at the
time the complaint is filed, and the character of the relief sought
irrespective of whether plaintiff is entitled to all or some of the
claims averred. Jurisdiction is not affected by the pleas or the
theories set up by defendant in an answer to the complaint or a
motion to dismiss the same. Otherwise, jurisdiction would be
dependent almost entirely upon the whims of defendants.[30]

We agree with the ruling of the RTC, as affirmed by the CA, that as
gleaned from the material averments of the complaint as well as the
character of the relief prayed for by respondent in its complaint
before the RTC, the petition is one for the judicial abatement of a
private nuisance, more specifically the noise generated by the
blowers of the airconditioning system of the Feliza Building owned
by petitioner, with a plea for a writ of preliminary and permanent
injunction, plus damages. Such action of respondent is incapable of
pecuniary estimation because the basic issue is something other
than the right to recover a sum of money. Although respondent
prayed for judgment for temperate or moderate damages and
exemplary damages, such claims are merely incidental to or as a
consequence of, the principal relief sought by respondent. An action
incapable of pecuniary estimation is within the exclusive jurisdiction
of the RTC as provided in Batas Pambansa Bilang (B.P. Blg.) 129, as
amended by R.A. No. 7691.[31] In Tatel v. Municipality of Virac,[32] the
Court ruled that a simple suit for abatement of a nuisance is within
the exclusive jurisdiction of the Court of First Instance, now the
RTC.

Article 694 of the New Civil Code defines a nuisance as follows:


Art. 694. A nuisance is any act., omission, establishment, business,
condition of property, or anything else which:
(1) Injures or endangers the health or safety of others; or

(2) Annoys or offends the senses; or

(3) Shocks, defies or disregards decency or morality; or

(4) Obstructs or interferes with the free passage of any public


highway or street, or any body of water; or

(5) Hinders or impairs the use of property.


The term "nuisance" is so comprehensive that it has been applied to
almost all ways which have interfered with the rights of the citizens,
either in person, property, the enjoyment of his property, or his
comfort.[33] According to Article 695 of the Civil Code, a nuisance
may be either public or private:
Art. 695. Nuisance is either public or private. A public nuisance
affects a community or neighborhood or any considerable number of
persons, although the extent of the annoyance, danger or damage
upon individuals may be unequal. A private nuisance is one that is
not included in the foregoing definition.
A private nuisance has been defined as one which violates only
private rights and produces damages to but one or a few
persons.[34] A nuisance is public when it interferes with the exercise
of public right by directly encroaching on public property or by
causing a common injury.[35] It is an unreasonable interference with
the right common to the general public.[36]

Under Article 705 of the New Civil Code, a party aggrieved by a


private nuisance has two alternative remedies: (1) a civil action; or
(2) abatement, without judicial proceedings. A person injured by a
private nuisance may abate it as provided in Article 706:
Art. 706. Any person injured by a private nuisance may abate it by
removing, or if necessary by destroying the thing which constitutes
the nuisance, without committing a breach of the peace or doing
unnecessary injury. However, it is indispensable that the procedure
for extrajudicial abatement of a public nuisance by a private person
be followed.
A private nuisance action is the remedy for an invasion of a property
right. On the other hand, the action for the abatement of a public
nuisance should be commenced by the city or municipality.[37] A
private person may institute an action for the abatement of a public
nuisance in cases wherein he suffered a special injury of a direct
and substantial character other than that-which the general public
shares.[38] The district health officer shall determine whether or not
abatement, without judicial proceedings, is the best remedy against
a public nuisance.[39]

In the present case, respondent opted to file an action in the RTC for
abatement of the private nuisance complained of and damages
under Article 697 of the New Civil Code for its past existence.

One has an action to recover personal damages arising from a


private nuisance. The gist of the action is the unreasonable
interference by the defendant with the use and enjoyment of
properties. Indeed, petitioner may be compelled to adopt the
necessary measures to reduce or deaden the nuisance emanating
from the blowers of the airconditioning system at the Feliza
Building.

The PAB has no primary jurisdiction over the noise complained of by


ihe respondent. The resolution of the issue before the RTC, which is
whether the noise complained of is actionable nuisance, does not
require any special technical knowledge, expertise and experience of
the PAB or even of Makati City requiring the determination of
technical and intricate matters of fact. Indeed, the PAB dismissed
the complaint of the Frabelle I Condominium Corporation declaring
that, based on the pleadings before it and the evidence of the
parties, the case is more of an abatement of a nuisance under the
New Civil Code and DENR Order No. 30, Series of 1992. It declared
that it was not a pollution case. The Resolution reads:
After considering the evidence adduced and the arguments of both
parties in their pleadings, the Board, likewise giving due importance
to the technical findings giving rise to the conclusion that the nature
of the case is more of a nuisance, hereby resolves toDISMISS the
pending complaint of pollution in accordance with Rule III, Section
IV of PAB Resolution 1-C, Series of 1997 as amended, which
categorically states that "Except where such would constitute a
pollution case, local government units shall have the power to abate a
nuisance within their respective areas pursuant to the Republic Act
No. 386 (Civil Code of the Philippines), Republic Act 7160 (the Local
Government Code), Presidential Decree 856 (the Code on Sanitation of
the Philippines), DENR Department Administrative Order No. 30,
Series of 1992 and other pertinent laws, rules and regulations. "
(underscoring supplied)

Accordingly, the issues raised by the complainant are hereby


endorsed to the Local Government Unit concerned for appropriate
action consistent with above cited laws, and without prejudice to the
institution of a pollution case upon definite findings that herein
respondent had failed to comply with the DENR Standards, and
presentation of other evidence that would warrant the Board to take
cognizance of the matter as a pollution case.[40]
The power of the NPCC to resolve pollution cases under Section 6,
paragraphs (e), (f), (g), (j), (k) and (p) of P.D. No. 984 is vested in the
Pollution Adjudication Board (PAB) under Title XIV, Chapter 2,
Section 13 of the 1987 Administrative Code, which reads:
SEC. 13. Pollution Adjudication Board. - The Pollution Adjudication
Board, under the Office of the Secretary, shall be composed of the
Secretary as Chairman, two Undersecretaries as may be designated
by the Secretary, the Director of Environmental Management, and
three others to be designated by the Secretary as members. The
Board shall assume the powers and functions of the Commission
Commissioners of the National Pollution Control Commission with
respect to the adjudication of pollution cases under Republic Act 3931
and Presidential Decree 984, particularly with respect to Section 6
letters (e), (f), (g), (j), (k) and (p) of P.D. 984. The Environment
Management Bureau shall serve as the Secretariat of the Board.
These powers and functions may be delegated to the regional officers
of the Department in accordance with the rules and regulations to be
promulgated by the Board.
The cases referred to in Section 6 of P.D. No. 984 are as follows:
(e) Issue orders or decisions to compel compliance with the
provisions of this Decree and its implementing rules and regulations
only after proper notice and hearing.

(f) Make, alter or modify orders requiring the discontinuance of


pollution specifying the conditions and the time within such
discontinuance must be accomplished.

(g) Issue, renew or deny permits, under such conditions as it may


determine to be reasonable, for the prevention and abatement of
pollution, for the discharge of sewage, industrial waste, or for the
installation or operation of sewage works and industrial disposal
system or parts thereof: Provided, however, That the Commission, by
rules and regulations, may require subdivisions, condominium,
hospitals, public buildings and other similar human settlements to
put up appropriate central sewerage system and sewage treatment
works, except that no permits shall be required of any new sewage
works or changes to or extensions of existing works that discharge
only domestic or sanitary wastes from a single residential building
provided with septic tanks or their equivalent. The Commission may
impose reasonable fees and charges for the issuance or renewal of
all permits herein required.

xxx

(j) Serve as arbitrator for the determination of reparations, or


restitution of the damages and losses resulting from pollution.

(k) Deputize in writing or request assistance of appropriate


government agencies or instrumentalities for the purpose of
enforcing this Decree and its implementing rules and regulations
and the orders and decision of the Commission.

xxx

(p) Exercise such powers and perform such other functions as may
be necessary to carry out its duties and responsibilities under this
Decree.
Section 2(a) of P.D. No. 984 defines pollution as:
(a) "Pollution" means any alteration of the physical, chemical and
biological properties of any water, air and/or land resources of the
Philippines, or any discharge thereto of any liquid, gaseous or solid
wastes as will or is likely to create or to render such water, air and
land resources harmful, detrimental or injuries to public health,
safety or welfare or which will adversely affect their utilization for
domestic, commercial, industrial, agricultural, recreational or other
legitimate purposes.
We agree with petitioner's contention that, under Section 447(a)(3)(i)
of R.A. No. 7160, otherwise known as the Local Government Code,
the Sangguniang Panglungsod is empowered to enact ordinances
declaring, preventing or abating noise and other forms of nuisance.
It bears stressing, however, that the Sangguniang Bayan cannot
declare a particular thing as a nuisance per se and order its
condemnation. It does not have the power to find, as a fact, that a
particular thing is a nuisance when such thing is not a nuisance per
se; nor can it authorize the extrajudicial condemnation and
destruction of that as a nuisance which in its nature, situation or
use is not such. Those things must be determined and resolved in
the ordinary courts of law. If a thing be in fact, a nuisance due to
the manner of its operation, that question cannot be determined by
a mere resolution of the Sangguniang Bayan.[41]

Section 17 of R.A. No. 7160 provides that local government units


shall discharge the functions and responsibilities of national
agencies and offices devolved to them pursuant to the law; and such
other powers, functions and responsibilities as are necessary,
appropriate or incidental to efficient and effective provisions of the
basic services and facilities in the Code. Devolution refers to the act
by which the national government confers powers and authority
upon the various local government units to perform specific
functions and responsibilities.

What were devolved by the DENR to the LGUs under DENR


Administrative Order No. 30 dated June 30, 1992, in relation to R.A.
No. 7160, were the regulatory functions/duties of the National
Pollution Control Commission (NPCC) which were absorbed and
integrated by the EMB, as provided in Title No. XIV, Chapter 2,
Section 17 of the 1987 Administrative Code. However, the DENR
exercises administrative supervision and control over the LGUs.
Enumerated in Chapter IV, Article 1, Sections 74 to 79 of the Rules
and Regulations promulgated by the NPCC implementing P.D.
984 are the regulations relative to noise control, specifically, the noise
quality standards.

Under Section 78 of said Rules, as amended by NPCC Memorandum


Circular No. 002, dated May 12, 1980, the Environmental Quality
Standards for Noise in General Areas are:melo

Category Morning&
Daytime Nighttime
Of Area Evening
AA 50 dB 45 dB 40 dB
A 55 " 50 " 45 "
B 65 " 60 " 55 "
C 70 " 65 " 60 "
D 75 " 70 " 65 "

Class ''A" area refers to that section or contiguous area which is


primarily used for residential purposes, while Class "B" refers to that
section or contiguous area which is primarily a commercial area.
Frabelle I and Feliza Buildings are located in Makati City, an area
which is classified as a commercial district.

The division of the 24-hour period shall be as follows:


Morning..............5:00 A.M. to 9:00 A.M.
Daytime............. 8:00 A.M. to 10:00 P.M.
Evening.............. 6:00 P.M. to 10:00 P.M.
Nighttime......... 10:00 P.M. to 5:00 P.M.
The LGUs may conduct inspections, at all reasonable times, without
doing damage, after due notice to the owners of buildings to
ascertain compliance with the noise standards under the law; and to
order them to comply therewith if they fail to do so; or suspend or
cancel any building permits or clearance certificates issued by it for
said units/buildings after due hearing as required by P.D. No. 984.

However, the LGUs have no power to declare a particular thing as a


nuisance unless such as thing is a nuisance per se; nor can they
effect the extrajudicial abatement of that as a nuisance which in its
nature or use is not such. Those things must be resolved by the
courts in the ordinary course of law.

Whether or not noise emanating from a blower of the airconditioning


units of the Feliza Building is nuisance is to be resolved only by the
court in due course of proceedings. The plaintiff must prove that the
noise is a nuisance and the consequences thereof. Noise is not a
nuisance per se. It may be of such a character as to constitute a
nuisance, even though it arises from the operation of a lawful
business, only if it affects injuriously the health or comfort of
ordinary people in the vicinity to an unreasonable extent. Injury to a
particular person in a peculiar position or of especially sensitive
characteristics will not render the noise an actionable nuisance. In
the conditions of present living, noise seems inseparable from the
conduct of many necessary occupations. Its presence is a nuisance
in the popular sense in which that word is used, but in the absence
of statute, noise becomes actionable only when it passes the limits of
reasonable adjustment to the conditions of the locality and of the
needs of the maker to the needs of the listener. What those limits are
cannot be fixed by any definite measure of quantity or quality; they
depend upon the circumstances of the particular case. They may be
affected, but are not controlled, by zoning ordinances. The
delimitation of designated areas to use for manufacturing, industry
or general business is not a license to emit every noise profitably
attending the conduct of any one of them.

The test is whether rights of property, of health or of comfort are so


injuriously affected by the noise in question that the sufferer is
subjected to a loss which goes beyond the reasonable limit imposed
upon him by the condition of living, or of holding property, in a
particular locality in fact devoted to uses which involve the emission
of noise although ordinary care is taken to confine it within
reasonable bounds; or in the vicinity of property of another owner
who, though creating a noise, is acting with reasonable regard for
the rights of those affected by it.[42]

Commercial and industrial activities which are lawful in themselves


may become nuisances if they are so offensive to the senses that
they render the enjoyment of life and property uncomfortable. The
fact that the cause of the complaint must be substantial has often
led to expressions in the opinions that to be a nuisance the noise
must be deafening or loud or excessive and unreasonable. The
determining factor when noise alone is the cause of complaint is not
its intensity or volume. It is that the noise is of such character as to
produce actual physical discomfort and annoyance to a person of
ordinary sensibilities, rendering adjacent property less comfortable
and valuable. If the noise does that it can well be said to be
substantial and unreasonable in degree; and reasonableness is a
question of fact dependent upon all the circumstances and conditions.
There can be no fixed standard as to what kind of noise constitutes a
nuisance.[43]

The courts have made it clear that in every case the question is one
of reasonableness. What is a reasonable use of one's property and
whether a particular use is an unreasonable invasion of another's
use and enjoyment of his property so as to constitute a nuisance
cannot be determined by exact rules, but must necessarily depend
upon the circumstances of each case, such as locality and the
character of the surroundings, the nature, utility and social value of
the use, the extent and nature of the harm involved, the nature,
utility and social value of the use or enjoyment invaded, and the
like.[44]

Persons who live or work in thickly populated business districts


must necessarily endure the usual annoyances and of those trades
and businesses which are properly located and carried on in the
neighborhood where they live or work. But these annoyances and
discomforts must not be more than those ordinarily to be expected
in the community or district, and which are incident to the lawful
conduct of such trades and businesses. If they exceed what might be
reasonably expected and cause unnecessary harm, then the court
will grant relief.[45]

A finding by the LGU that the noise quality standards under the law
have not been complied with is not a prerequisite nor constitutes
indispensable evidence to prove that the defendant is or is not liable
for a nuisance and for damages. Such finding is merely
corroborative to the testimonial and/or other evidence to be
presented by the parties. The exercise of due care by the owner of a
business in its operation does not constitute a defense where,
notwithstanding the same, the business as conducted, seriously
affects the rights of those in its vicinity.[46]

We reject petitioner's contention that respondent's complaint does


not state a cause of action for abatement of a private nuisance and
for damages. Under Section 1(g), Rule 16 of the Rules of Court, a
complaint may be dismissed upon motion if the complaint states no
cause of action, or that a condition precedent for filing the claim has
not been complied with.[47]

A cause of action is the act or omission by which a party violates a


right of another.[48] A cause of action exists if the following elements
are present: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on
the part of the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such defendant
violative of the right of plaintiff or constituting a breach of the
obligation of defendant to plaintiff for which the latter may maintain
an action for recovery of damages.[49]
The fundamental test for failure to state a cause of action is
whether, admitting the veracity of what appears on the face and
within the four corners of the complaint, plaintiff is entitled to the
relief prayed for. Stated otherwise, may the court render a valid
judgment upon the facts alleged therein?[50] Indeed, the inquiry is
into the sufficiency, not the veracity of the material allegations. [51] If
the allegations in the complaint furnish sufficient basis on which it
can be maintained, it should not be dismissed regardless of the
defenses that may be presented by defendants.[52] As the Court
emphasized:
In determining whether allegations of a complaint are sufficient to
support a cause of action, it must be borne in mind that the
complaint does not have to establish or allege facts proving the
existence of a cause of action at the outset; this will have to be done
at the trial on the merits of the case. To sustain a motion to dismiss
for lack of cause of action, the complaint must show that the claim
for relief does not exist, rather than that a claim has been defectively
stated, or is ambiguous, indefinite or uncertain.

Equally important, a defendant moving to dismiss a complaint on


the ground of lack of cause of action is regarded as having
hypothetically admitted all the averments thereof.[53]
The general rule is that the facts asserted in the complaint must be
taken into account without modification although with reasonable
inferences therefrom.[54] However, all the pleadings filed may be
considered, including annexes, motions and the other evidence on
record, to wit:
However, in so doing, the .trial court does not rule on the truth or
falsity of such documents. It merely includes such documents in the
hypothetical admission. Any review of a finding of lack of cause of
action based on these documents would not involve a calibration of
the probative value of such pieces of evidence but would only limit
itself to the inquiry of whether the law was properly applied given
the facts and these supporting documents. Therefore, what would
inevitably arise from such a review are pure questions of law, and
not questions of fact.[55]
Section 2, Rule 3, of the Revised Rules of Civil Procedure provides
that every action must be prosecuted or defended in the name of the
real party-in-interest.
SEC. 2. Parties in interest. - A real party in interest is the party who
stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit. Unless otherwise authorized
by law or these Rules, every action must be prosecuted or defended
in the name of the real party in interest. (2a)
"Interest" within the meaning of the rule means material interest, an
interest in essence to be affected by the judgment as distinguished
from mere interest in the question involved, or a mere incidental
interest. By real interest is meant a present substantial interest, as
distinguished from a mere expectancy or a future, contingent,
subordinate or consequential interest.[56] A real party in interest-
plaintiff is one who has a legal right while a real party defendant is
one who has a correlative legal obligation whose act or omission
violate the legal right of the former.[57]

A person injured by a nuisance may bring an action in his own


name and in behalf of others similarly affected to abate the
same.[58] One who has an interest in the property affected such as
the owner thereof or fix interest therein are proper parties as
plaintiffs.[59] Possession alone of real estate is sufficient to sustain an
action to recover damages from the maintenance of a nuisance by
the adjoining property in such manner as to injure the enjoyment of
the former.

In the present case, respondent made the following allegations in its


complaint below:
[Every time] the Feliza Building's airconditioning system is turned
on, all or a good number of the 36 blowers are made to operate
simultaneously. The operation of the Feliza's blowers generates a
continuous defeaning unbearable vibrating and stressful noise
affecting the tenants of Frabella I Condominium. Hot air is also
blasted from the [Feliza Building's blowers to the direction of the
Frabella 1 Condominium.

xxxx

The tenants occupying the 5th to the 16th floors of the Frabella 1
Condominium facing Feliza Building are directly subjected to a daily
continuous intense noise and hot air blast coming from the blowers
of the [10-storey] Feliza Building. Some are tenants of plaintiff, who
have complained to plaintiff about the matter. Tenants who could
not bear the nuisance any longer have vacated their units, and as a
result, many units of plaintiff have remained vacant, and
unoccupied or uninhabitable thereby depriving plaintiff with rental
income that it should have otherwise be receiving.

xxxx

Defendant did not perform any remedial or rectification works to


lower the noise being generated by the blowers;

As a consequence of such unbearable, hot air and stressful noise,


the occupants of the Frabella I, including the tenants of plaintiff,
have been and still are, prevented from enjoying peaceful and
comfortable use of their property thereby forcing them to vacate and
or to transfer elsewhere.

Notwithstanding the foregoing results, repeated requests/demands


from the plaintiff and recommendation of the DENR, MACEA and
MMDA to abate nuisance, the defendant has ignored and still
continues to ignore such requests/demands/recommendation.
Appended to respondent's complaint are its letters of demand to the
petitioner for the latter to abate the nuisance complained of, as well
as the results of the tests conducted by the DENR showing that the
noise generated by the blowers of the Feliza Building is beyond the
legally allowable level standards under Section 78 of P.D. No. 984.

By filing a motion to dismiss the complaint on the ground that the


complaint does not state a sufficient cause of action for abatement
of nuisance and damages, petitioner hypothetically admitted the
material allegations of the complaint. A plain reading of the material
averments therein and its appendages will readily show that
respondent had a cause of action for abatement of a private
nuisance and for damages.

Respondent is the real party-in-interest as party plaintiff in the


complaint below because it owned several units in Frabelle I and, as
a result of the defeaning and unbearable noise from the blowers of
the airconditioning units of the Feliza Building owned by petitioner,
many tenants of the respondent vacated their units. The units
remained unoccupied, thereby depriving respondent of income.
Some of the tenants even threatened to sue respondent on account
of the noise from the Feliza Building. In fine, respondent is obliged
to maintain its tenants in the peaceful and adequate enjoyment of
the units.[60]

Under Article 697 of the New Civil Code, the aggrieved party is
entitled to damages for the present and past existence of a
nuisance.[61] He is entitled to actual or compensatory damages[62] or
indemnification for damages inclusive of the value of the loss
suffered and profits which respondent failed to obtain.

Liability for nuisance may be imposed upon one who sets in motion
the force which entirely caused the tortuous act; upon one who sets
in motion a force or a chain of events resulting in the nuisance. In
an action for damages resulting from a nuisance, responsibility
arises not only from the creator of the nuisance but from its
continued maintenance as well[63]. One is entitled to damages on
account of the conduct by another of his business which
unreasonably and substantially interferes with the quiet enjoyment
of his premises by himself or of his tenants.[64] It is sufficient to
maintain an action for abatement of a nuisance if his buildings is
rendered valueless for the purpose it was devoted.

A negligent act may constitute a nuisance. An intentional act may


also constitute a nuisance. A nuisance may be formed from a
continuous, known invasion, where, after complaint, and notice of
damage, the defendant continues to offend and refuses to correct or
discontinue the nuisance. In such a case, the nuisance is deemed
intentional.[65] An unreasonable use, perpetrated and uncorrected
even after complaint and notice of damage is deemed intentional. [66]

In this case, as alleged in the complaint, the subject nuisance had


been existing continuously since 1995 and, despite repeated
demands by respondent, petitioner intransigently refused to abate
the same.

We reject petitioner's contention that considering the Report of the


EMB Team dated July 2, 2002 that the noise complained of by the
respondent did not necessarily come from the blowers but also from
passing cars, it follows that respondent has no cause of action
against it for abatement of nuisance. As gleaned from the Report,
the panel of investigators found that the passing of vehicles along
the street and blowers of nearby buildings were merely
contributory to the ambient noise quality in the area. To what
extent the passing of vehicles contributed to the noise is not
indicated in the Report, nor is it stated that the noise coming from
the blowers of the airconditioning unit of the Feliza Building were at
par with or lower than the Level Standards under the property Rules
and regulations of P.D. No. 984.
The July 2, 2002 Report of the EMB Panel should not be considered
in isolation of other Reports of the EMB since 1995 up to 2000,
showing that the noise level from the blowers of the Feliza Building
exceeded the allowable level under P.D. No. 984. The July 2, 2002
Report is not decisive on the issue of whether petitioner had abated
the nuisance complained of by respondent or that the nuisance does
not exist at all. Indeed, in Velasco v. Manila Electric Company,[67] this
Court cited the ruling in Kentucky & West Virginia Power Co. v.
Anderson,[68] thus:
xxx The determinating factor when noise alone is the cause of
complaint is not its intensity or volume. It is that the noise is of
such character as to produce actual physical discomfort and
annoyance to a person of ordinary sensibilities, rendering adjacent
property less comfortable and valuable. If the noise does that it can
well be said to be substantial and unreasonable in degree; and
reasonableness is a question of fact dependent upon all the
circumstances and conditions. 20 R.C.L. 445, 453; Wheat Culvert
Company v. Jenkins, supra. There can be no fixed standard as to
what kind of noise constitutes a nuisance. xxx
Besides, even if it is assumed for the nonce that petitioner had
abated the nuisance in 2002, still the complaint of the respondent
states a cause of action for damages based upon the past existence
of the nuisance, from 1995. Where the injury from the alleged
nuisance is temporary in its nature; or is of a continuing or
recurring character, the damages are ordinarily regarded as
continuing and one recovery against the wrongdoer is not a bar to
sanction an action for damages thereafter accruing from the same
wrong.[69]

The Complaint of the


Respondent Not Premature

Admittedly, respondent did not appeal the July 19, 2002 letter of
Engr. Morales. However, the letter was not appealable. It bears
stressing that the letter-complaint of the respondent to Mayor
Jejomar Binay against petitioner was referred to Engr. Morales for
investigation of the complaint; the latter was required to submit his
Report thereon to the City Mayor for final disposition. Engr. Morales
did secure the July 2, 2002 Report of the EMB but failed to make a
Report on his findings. Until after the City Mayor shall have acted on
the findings and recommendation of Engr. Morales an appeal
therefrom would be premature.

Obviously, Engr. Morales gave respondent another chance to have


the EMB reverse or revise its July 2, 2002 Report. However, when
the officials of respondent sought a clarification of his Order, Engr.
Morales was piqued and even dared them to go to court if they were
not satisfied with the EMB Report. Respondent then sought another
test by the EMB. In its November 24, 2003, Report, the EMB
confirmed that the SPL was higher when the doors were open; as it
was, the SPL readings were taken from inside the Frabelle I. The
EMB added that the noise quality standards in Section 78 of the
Implementing Rules and Regulations of P.D. No. 984 could not be
applied since it is for ambient noise. It even emphasized that the
SPL are not the actual factors in the resolution of the issues.
Conformably with case law, the EMB opined, noise need not be high
or low to annoy or cause nuisance to the receptor; as long as the
complainant is disturbed with the level of sound coming from the
firm, the same is a nuisance. Clearly, the EMB was of the view that
the EMB Reports are not decisive on the issue between petitioner
and respondent, and that said issue is one beyond the competence
of the LGUs, by implying that the issue is a matter to be presented
to and resolved by the ordinary courts. By returning the records to
Makati City, the EMB expected the City to dismiss the complaint
and just allow respondent, as complainant, to seek relief from the
courts. Respondent then took its cue from the EMB Report and filed
its complaint in the RTC. There is, thus, no basis for the contention
of petitioner that respondent failed to exhaust all administrative
remedies before filing its complaint with the RTC.
Also barren of merit are the petitioner's contention that the action of
respondent was barred by the decision of the PAB AM No. 01-0009-
FLC. While it is true that the Frabella 1 Condominium Corporation
filed its complaint against petitioner before the PAB for and in behalf
of the tenants/owners of units of Frabella I, including those owned
by respondent, however, the PAB dismissed the complaint on the
ground of lack of jurisdiction and without prejudice. The PAB ruled
that respondent's action was for abatement of a nuisance which was
already devolved to the local government.

As gleaned from the Resolution, the dismissal was without


prejudice. Since the PAB had no jurisdiction over the complaint and
the dismissal was without prejudice, respondent's action before the
RTC was not barred by res judicata or litis pendentia[70]. The decision
of the PAB was not a decision on the merits of the
case.[71] Consequently, the contention of petitioner that respondent
is guilty of forum shopping has no factual basis.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for


lack of merit. Costs against the petitioner.

SO ORDERED.
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City
of Manila, HON. JOSELITO L. ATIENZA, in his capacity as
Vice-Mayor of the City of Manila and Presiding Officer of the
City Council of Manila, HON. ERNESTO A. NIEVA, HON.
GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON.
ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON.
HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR.,
HON. ROMUALDO S. MARANAN, HON. NESTOR C. PONCE,
JR., HON. HUMBERTO B. BASCO, HON. FLAVIANO F.
CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL
M. ZARCAL, HON. PEDRO S. DE JESUS, HON. BERNARDITO
C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ,
HON. CHIKA G. GO, HON. VICTORIANO A. MELENDEZ, HON.
ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. NIETO,
HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR.,
HON. MA. PAZ E. HERRERA, HON. JOEY D. HIZON, HON.
FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, HON.
ROGELIO P. DELA PAZ, HON. BERNARDO D. RAGAZA, HON.
MA. CORAZON R. CABALLES, HON. CASIMIRO C. SISON,
HON. BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M.
ISIP, HON. ALEXANDER S. RICAFORT, HON. ERNESTO F.
RIVERA, HON. LEONARDO L. ANGAT, and HON. JOCELYN B.
DAWIS, in their capacity as councilors of the City of
Manila, petitioners, vs. HON. PERFECTO A.S. LAGUIO, JR.,
as Presiding Judge, RTC, Manila and MALATE TOURIST
DEVELOPMENT CORPORATION, respondents.

DECISION
TINGA, J.:

I know only that what is moral is what you feel good after and what
is immoral is what you feel bad after.

Ernest Hermingway
Death in the Afternoon, Ch. 1

It is a moral and political axiom that any dishonorable act, if


performed by oneself, is less immoral than if performed by someone
else, who would be well-intentioned in his dishonesty.

J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Courts commitment to the protection of morals is secondary to
its fealty to the fundamental law of the land. It is foremost a guardian
of the Constitution but not the conscience of individuals. And if it
need be, the Court will not hesitate to make the hammer fall, and
heavily in the words of Justice Laurel, and uphold the constitutional
guarantees when faced with laws that, though not lacking in zeal to
promote morality, nevertheless fail to pass the test of
constitutionality.
The pivotal issue in this Petition[1] under Rule 45 (then Rule 42) of
the Revised Rules on Civil Procedure seeking the reversal of
the Decision[2] in Civil Case No. 93-66511 of the Regional Trial Court
(RTC) of Manila, Branch 18 (lower court),[3] is the validity of Ordinance
No. 7783 (the Ordinance) of the City of Manila.[4]
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation
(MTDC) is a corporation engaged in the business of operating hotels,
motels, hostels and lodging houses.[5] It built and opened Victoria
Court in Malate which was licensed as a motel although duly
accredited with the Department of Tourism as a hotel.[6] On 28 June
1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ
of Preliminary Injunction and/or Temporary Restraining
Order[7] (RTC Petition) with the lower court impleading as defendants,
herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon.
Joselito L. Atienza, and the members of the City Council of Manila
(City Council). MTDC prayed that the Ordinance, insofar as it includes
motels and inns as among its prohibited establishments, be declared
invalid and unconstitutional.[8]
Enacted by the City Council[9] on 9 March 1993 and approved by
petitioner City Mayor on 30 March 1993, the said Ordinance is
entitled

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR


OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF
AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN
THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR
VIOLATION THEREOF, AND FOR OTHER PURPOSES.[10]

The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the


contrary notwithstanding, no person, partnership, corporation or
entity shall, in the Ermita-Malate area bounded by Teodoro M.
Kalaw Sr. Street in the North, Taft Avenue in the East, Vito Cruz
Street in the South and Roxas Boulevard in the West, pursuant to
P.D. 499 be allowed or authorized to contract and engage in, any
business providing certain forms of amusement, entertainment,
services and facilities where women are used as tools in
entertainment and which tend to disturb the community, annoy
the inhabitants, and adversely affect the social and moral
welfare of the community, such as but not limited to:

1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in
behalf of the said officials are prohibited from issuing permits,
temporary or otherwise, or from granting licenses and accepting
payments for the operation of business enumerated in the
preceding section.

SEC. 3. Owners and/or operator of establishments engaged in, or


devoted to, the businesses enumerated in Section 1 hereof are
hereby given three (3) months from the date of approval of this
ordinance within which to wind up business operations or to
transfer to any place outside of the Ermita-Malate area or
convert said businesses to other kinds of business allowable
within the area,such as but not limited to:

1. Curio or antique shop


2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-
defined activities for wholesome family entertainment that
cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of
motion pictures but also of cultural shows, stage and
theatrical plays, art exhibitions, concerts and the like.
11. Businesses allowable within the law and medium
intensity districts as provided for in the zoning ordinances for
Metropolitan Manila, except new warehouse or open-storage
depot, dock or yard, motor repair shop, gasoline service
station, light industry with any machinery, or funeral
establishments.

SEC. 4. Any person violating any provisions of this ordinance,


shall upon conviction, be punished by imprisonment of one (1)
year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at
the discretion of the Court, PROVIDED, that in case of juridical
person, the President, the General Manager, or person-in-charge of
operation shall be liable thereof; PROVIDED FURTHER, that in case
of subsequent violation and conviction, the premises of the
erring establishment shall be closed and padlocked
permanently.

SEC. 5. This ordinance shall take effect upon approval.

Enacted by the City Council of Manila at its regular session today,


March 9, 1993.

Approved by His Honor, the Mayor on March 30, 1993. (Emphasis


supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously


and improperly included in its enumeration of prohibited
establishments, motels and inns such as MTDCs Victoria Court
considering that these were not establishments for amusement or
entertainment and they were not services or facilities for
entertainment, nor did they use women as tools for entertainment,
and neither did they disturb the community, annoy the inhabitants
or adversely affect the social and moral welfare of the community. [11]
MTDC further advanced that the Ordinance was invalid and
unconstitutional for the following reasons: (1) The City Council has
no power to prohibit the operation of motels as Section 458 (a) 4
(iv)[12] of the Local Government Code of 1991 (the Code) grants to the
City Council only the power to regulate the establishment, operation
and maintenance of hotels, motels, inns, pension houses, lodging
houses and other similar establishments; (2) The Ordinance is void as
it is violative of Presidential Decree (P.D.) No. 499[13] which specifically
declared portions of the Ermita-Malate area as a commercial zone
with certain restrictions; (3) The Ordinance does not constitute a
proper exercise of police power as the compulsory closure of the motel
business has no reasonable relation to the legitimate municipal
interests sought to be protected; (4) The Ordinance constitutes an ex
post facto law by punishing the operation of Victoria Court which was
a legitimate business prior to its enactment; (5)
The Ordinance violates MTDCs constitutional rights in that: (a) it is
confiscatory and constitutes an invasion of plaintiffs property rights;
(b) the City Council has no power to find as a fact that a particular
thing is a nuisance per se nor does it have the power to extrajudicially
destroy it; and (6) The Ordinance constitutes a denial of equal
protection under the law as no reasonable basis exists for prohibiting
the operation of motels and inns, but not pension houses, hotels,
lodging houses or other similar establishments, and for prohibiting
said business in the Ermita-Malate area but not outside of this
area.[14]
In their Answer[15] dated 23 July 1993, petitioners City of Manila
and Lim maintained that the City Council had the power to prohibit
certain forms of entertainment in order to protect the social and moral
welfare of the community as provided for in Section 458 (a) 4 (vii) of
the Local Government Code,[16] which reads, thus:

Section 458. Powers, Duties, Functions and Compensation. (a) The


sangguniang panlungsod, as the legislative body of the city, shall
enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:

....

(4) Regulate activities relative to the use of land, buildings and


structures within the city in order to promote the general welfare
and for said purpose shall:

....

(vii) Regulate the establishment, operation, and maintenance of


any entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools,
public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other
events or activities for amusement or entertainment,
particularly those which tend to disturb the community or
annoy the inhabitants, or require the suspension or
suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and
moral welfare of the community.

Citing Kwong Sing v. City of Manila,[17] petitioners insisted that the


power of regulation spoken of in the above-quoted provision included
the power to control, to govern and to restrain places of exhibition and
amusement.[18]
Petitioners likewise asserted that the Ordinance was enacted by the
City Council of Manila to protect the social and moral welfare of the
community in conjunction with its police power as found in Article III,
Section 18(kk) of Republic Act No. 409,[19] otherwise known as the
Revised Charter of the City of Manila (Revised Charter of
Manila)[20] which reads, thus:

ARTICLE III
THE MUNICIPAL BOARD

...
Section 18. Legislative powers. The Municipal Board shall have
the following legislative powers:

...

(kk) To enact all ordinances it may deem necessary and proper


for the sanitation and safety, the furtherance of the prosperity,
and the promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its
inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this
chapter; and to fix penalties for the violation of ordinances
which shall not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment, for a
single offense.

Further, the petitioners noted, the Ordinance had the presumption


of validity; hence, private respondent had the burden to prove its
illegality or unconstitutionality.[21]
Petitioners also maintained that there was no inconsistency
between P.D. 499 and the Ordinance as the latter simply
disauthorized certain forms of businesses and allowed the Ermita-
Malate area to remain a commercial zone.[22] The Ordinance, the
petitioners likewise claimed, cannot be assailed as ex post facto as it
was prospective in operation.[23] The Ordinance also did not infringe
the equal protection clause and cannot be denounced as class
legislation as there existed substantial and real differences between
the Ermita-Malate area and other places in the City of Manila. [24]
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr.
(Judge Laguio) issued an ex-parte temporary restraining order against
the enforcement of the Ordinance.[25] And on 16 July 1993, again in
an intrepid gesture, he granted the writ of preliminary injunction
prayed for by MTDC.[26]
After trial, on 25 November 1994, Judge Laguio rendered the
assailed Decision, enjoining the petitioners from implementing
the Ordinance. The dispositive portion of said Decisionreads:[27]
WHEREFORE, judgment is hereby rendered declaring Ordinance No.
778[3], Series of 1993, of the City of Manila null and void, and
making permanent the writ of preliminary injunction that had been
issued by this Court against the defendant. No costs.

SO ORDERED.[28]

Petitioners filed with the lower court a Notice of Appeal[29] on 12


December 1994, manifesting that they are elevating the case to this
Court under then Rule 42 on pure questions of law. [30]
On 11 January 1995, petitioners filed the present Petition, alleging
that the following errors were committed by the lower court in its
ruling: (1) It erred in concluding that the subject ordinance is ultra
vires, or otherwise, unfair, unreasonable and oppressive exercise of
police power; (2) It erred in holding that the
questioned Ordinance contravenes P.D. 499[31] which allows
operators of all kinds of commercial establishments, except those
specified therein; and (3) It erred in declaring the Ordinance void and
unconstitutional.[32]
In the Petition and in its Memorandum,[33] petitioners in essence
repeat the assertions they made before the lower court. They contend
that the assailed Ordinance was enacted in the exercise of the
inherent and plenary power of the State and the general welfare clause
exercised by local government units provided for in Art. 3, Sec. 18 (kk)
of the Revised Charter of Manila and conjunctively, Section 458 (a) 4
(vii) of the Code.[34] They allege that the Ordinance is a valid exercise
of police power; it does not contravene P.D. 499; and that it enjoys the
presumption of validity.[35]
In its Memorandum[36] dated 27 May 1996, private respondent
maintains that the Ordinance is ultra vires and that it is void for being
repugnant to the general law. It reiterates that the
questioned Ordinance is not a valid exercise of police power; that it is
violative of due process, confiscatory and amounts to an arbitrary
interference with its lawful business; that it is violative of the equal
protection clause; and that it confers on petitioner City Mayor or any
officer unregulated discretion in the execution of
the Ordinance absent rules to guide and control his actions.
This is an opportune time to express the Courts deep sentiment
and tenderness for the Ermita-Malate area being its home for several
decades. A long-time resident, the Court witnessed the areas many
turn of events. It relished its glory days and endured its days of
infamy. Much as the Court harks back to the resplendent era of the
Old Manila and yearns to restore its lost grandeur, it believes that
the Ordinance is not the fitting means to that end. The Court is of the
opinion, and so holds, that the lower court did not err in declaring
the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that
almost every sentence thereof violates a constitutional provision. The
prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to
shelter these rights from attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of
decisions has held that for an ordinance to be valid, it must not only
be within the corporate powers of the local government unit to enact
and must be passed according to the procedure prescribed by law, it
must also conform to the following substantive requirements: (1) must
not contravene the Constitution or any statute; (2) must not be unfair
or oppressive; (3) must not be partial or discriminatory; (4) must not
prohibit but may regulate trade; (5) must be general and consistent
with public policy; and (6) must not be unreasonable.[37]
Anent the first criterion, ordinances shall only be valid when they
are not contrary to the Constitution and to the
laws.[38] The Ordinance must satisfy two requirements: it must pass
muster under the test of constitutionality and the test of consistency
with the prevailing laws. That ordinances should be constitutional
uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives
stress to the precept that local government units are able to legislate
only by virtue of their derivative legislative power, a delegation of
legislative power from the national legislature. The delegate cannot be
superior to the principal or exercise powers higher than those of the
latter.[39]
This relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. The national
legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it.[40]
The Ordinance was passed by the City Council in the exercise of its
police power, an enactment of the City Council acting as agent of
Congress. Local government units, as agencies of the State, are
endowed with police power in order to effectively accomplish and carry
out the declared objects of their creation.[41] This delegated police
power is found in Section 16 of the Code, known as the general welfare
clause, viz:

SECTION 16. General Welfare.Every local government unit shall


exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right
of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.

Local government units exercise police power through their


respective legislative bodies; in this case, the sangguniang
panlungsod or the city council. The Code empowers the legislative
bodies to enact ordinances, approve resolutions and appropriate
funds for the general welfare of the province/city/municipality and its
inhabitants pursuant to Section 16 of the Code and in the proper
exercise of the corporate powers of the province/city/ municipality
provided under the Code.[42] The inquiry in this Petition is concerned
with the validity of the exercise of such delegated power.
The Ordinance contravenes
the Constitution

The police power of the City Council, however broad and far-
reaching, is subordinate to the constitutional limitations thereon; and
is subject to the limitation that its exercise must be reasonable and
for the public good.[43] In the case at bar, the enactment of
the Ordinance was an invalid exercise of delegated power as it is
unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life,


liberty, and property, and the promotion of the general welfare are
essential for the enjoyment by all the people of the blessings of
democracy.[44]

SEC. 14. The State recognizes the role of women in nation-building,


and shall ensure the fundamental equality before the law of women
and men.[45]

SEC. 1. No person shall be deprived of life, liberty or property


without due process of law, nor shall any person be denied the equal
protection of laws.[46]

Sec. 9. Private property shall not be taken for public use without
just compensation.[47]

A. The Ordinance infringes


the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat


(N)o person shall be deprived of life, liberty or property without due
process of law. . . .[48]
There is no controlling and precise definition of due process. It
furnishes though a standard to which governmental action should
conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. This standard is aptly described as a
responsiveness to the supremacy of reason, obedience to the dictates
of justice,[49] and as such it is a limitation upon the exercise of the
police power.[50]
The purpose of the guaranty is to prevent governmental
encroachment against the life, liberty and property of individuals; to
secure the individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private
rights and distributive justice; to protect property from confiscation
by legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice
and the benefit of the general law.[51]
The guaranty serves as a protection against arbitrary regulation,
and private corporations and partnerships are persons within the
scope of the guaranty insofar as their property is concerned.[52]
This clause has been interpreted as imposing two separate limits
on government, usually called procedural due process and
substantive due process.
Procedural due process, as the phrase implies, refers to the
procedures that the government must follow before it deprives a
person of life, liberty, or property. Classic procedural due process
issues are concerned with what kind of notice and what form of
hearing the government must provide when it takes a particular
action.[53]
Substantive due process, as that phrase connotes, asks whether
the government has an adequate reason for taking away a persons
life, liberty, or property. In other words, substantive due process looks
to whether there is a sufficient justification for the governments
action.[54] Case law in the United States (U.S.) tells us that whether
there is such a justification depends very much on the level of scrutiny
used.[55] For example, if a law is in an area where only rational basis
review is applied, substantive due process is met so long as the law is
rationally related to a legitimate government purpose. But if it is an
area where strict scrutiny is used, such as for protecting fundamental
rights, then the government will meet substantive due process only if
it can prove that the law is necessary to achieve a compelling
government purpose.[56]
The police power granted to local government units must always be
exercised with utmost observance of the rights of the people to due
process and equal protection of the law. Such power cannot be
exercised whimsically, arbitrarily or despotically[57] as its exercise is
subject to a qualification, limitation or restriction demanded by the
respect and regard due to the prescription of the fundamental law,
particularly those forming part of the Bill of Rights. Individual rights,
it bears emphasis, may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or
public welfare.[58] Due process requires the intrinsic validity of the law
in interfering with the rights of the person to his life, liberty and
property.[59]

Requisites for the valid exercise


of Police Power are not met

To successfully invoke the exercise of police power as the rationale


for the enactment of the Ordinance, and to free it from the imputation
of constitutional infirmity, not only must it appear that the interests
of the public generally, as distinguished from those of a particular
class, require an interference with private rights, but the means
adopted must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals.[60] It must be
evident that no other alternative for the accomplishment of the
purpose less intrusive of private rights can work. A reasonable
relation must exist between the purposes of the police measure and
the means employed for its accomplishment, for even under the guise
of protecting the public interest, personal rights and those pertaining
to private property will not be permitted to be arbitrarily invaded. [61]
Lacking a concurrence of these two requisites, the police measure
shall be struck down as an arbitrary intrusion into private rights[62] a
violation of the due process clause.
The Ordinance was enacted to address and arrest the social ills
purportedly spawned by the establishments in the Ermita-Malate
area which are allegedly operated under the deceptive veneer of
legitimate, licensed and tax-paying nightclubs, bars, karaoke bars,
girlie houses, cocktail lounges, hotels and motels. Petitioners insist
that even the Court in the case of Ermita-Malate Hotel and Motel
Operators Association, Inc. v. City Mayor of Manila[63] had already
taken judicial notice of the alarming increase in the rate of
prostitution, adultery and fornication in Manila traceable in great part
to existence of motels, which provide a necessary atmosphere for
clandestine entry, presence and exit and thus become the ideal haven
for prostitutes and thrill-seekers.[64]
The object of the Ordinance was, accordingly, the promotion and
protection of the social and moral values of the community. Granting
for the sake of argument that the objectives of the Ordinance are
within the scope of the City Councils police powers, the means
employed for the accomplishment thereof were unreasonable and
unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of
Manila to make all reasonable regulations looking to the promotion of
the moral and social values of the community. However, the worthy
aim of fostering public morals and the eradication of the communitys
social ills can be achieved through means less restrictive of private
rights; it can be attained by reasonable restrictions rather than by an
absolute prohibition. The closing down and transfer of businesses or
their conversion into businesses allowed under the Ordinance have
no reasonable relation to the accomplishment of its purposes.
Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the
community; it will not in itself eradicate the alluded social ills of
prostitution, adultery, fornication nor will it arrest the spread of
sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with
houses of ill-repute and establishments of the like which the City
Council may lawfully prohibit,[65] it is baseless and insupportable to
bring within that classification sauna parlors, massage parlors,
karaoke bars, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns. This is not warranted under
the accepted definitions of these terms. The enumerated
establishments are lawful pursuits which are not per se offensive to
the moral welfare of the community.
That these are used as arenas to consummate illicit sexual affairs
and as venues to further the illegal prostitution is of no moment. We
lay stress on the acrid truth that sexual immorality, being a human
frailty, may take place in the most innocent of places that it may even
take place in the substitute establishments enumerated under
Section 3 of the Ordinance. If the flawed logic of the Ordinance were
to be followed, in the remote instance that an immoral sexual act
transpires in a church cloister or a court chamber, we would behold
the spectacle of the City of Manila ordering the closure of the church
or court concerned. Every house, building, park, curb, street or even
vehicles for that matter will not be exempt from the prohibition.
Simply because there are no pure places where there are impure men.
Indeed, even the Scripture and the Tradition of Christians churches
continually recall the presence and universality of sin in mans
history.[66]
The problem, it needs to be pointed out, is not the establishment,
which by its nature cannot be said to be injurious to the health or
comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While
a motel may be used as a venue for immoral sexual activity, it cannot
for that reason alone be punished. It cannot be classified as a house
of ill-repute or as a nuisance per se on a mere likelihood or a naked
assumption. If that were so and if that were allowed, then the Ermita-
Malate area would not only be purged of its supposed social ills, it
would be extinguished of its soul as well as every human activity,
reprehensible or not, in its every nook and cranny would be laid bare
to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the
core issues of morality. Try as the Ordinance may to shape morality,
it should not foster the illusion that it can make a moral man out of
it because immorality is not a thing, a building or establishment; it is
in the hearts of men. The City Council instead should regulate human
conduct that occurs inside the establishments, but not to the
detriment of liberty and privacy which are covenants, premiums and
blessings of democracy.
While petitioners earnestness at curbing clearly objectionable
social ills is commendable, they unwittingly punish even the
proprietors and operators of wholesome, innocent establishments. In
the instant case, there is a clear invasion of personal or property
rights, personal in the case of those individuals desirous of owning,
operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein
employed. If the City of Manila so desires to put an end to prostitution,
fornication and other social ills, it can instead impose reasonable
regulations such as daily inspections of the establishments for any
violation of the conditions of their licenses or permits; it may exercise
its authority to suspend or revoke their licenses for these
violations;[67] and it may even impose increased license fees. In other
words, there are other means to reasonably accomplish the desired
end.

Means employed are


constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage


parlors, karaoke bars, beerhouses, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns in the
Ermita-Malate area. In Section 3 thereof, owners and/or operators of
the enumerated establishments are given three (3) months from the
date of approval of the Ordinancewithin which to wind up business
operations or to transfer to any place outside the Ermita-Malate area
or convert said businesses to other kinds of business allowable within
the area. Further, it states in Section 4 that in cases of subsequent
violations of the provisions of the Ordinance, the premises of the
erring establishment shall be closed and padlocked permanently.
It is readily apparent that the means employed by
the Ordinance for the achievement of its purposes, the governmental
interference itself, infringes on the constitutional guarantees of a
persons fundamental right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice
Malcolm to include the right to exist and the right to be free from
arbitrary restraint or servitude. The term cannot be dwarfed into mere
freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which
he has been endowed by his Creator, subject only to such restraint as
are necessary for the common welfare.[68] In accordance with this
case, the rights of the citizen to be free to use his faculties in all lawful
ways; to live and work where he will; to earn his livelihood by any
lawful calling; and to pursue any avocation are all deemed embraced
in the concept of liberty.[69]
The U.S. Supreme Court in the case of Roth v. Board of
Regents,[70] sought to clarify the meaning of liberty. It said:

While the Court has not attempted to define with exactness the
liberty. . . guaranteed [by the Fifth and Fourteenth Amendments],
the term denotes not merely freedom from bodily restraint but also
the right of the individual to contract, to engage in any of the
common occupations of life, to acquire useful knowledge, to marry,
establish a home and bring up children, to worship God according to
the dictates of his own conscience, and generally to enjoy those
privileges long recognizedas essential to the orderly pursuit of
happiness by free men. In a Constitution for a free people, there can
be no doubt that the meaning of liberty must be broad indeed.

In another case, it also confirmed that liberty protected by the due


process clause includes personal decisions relating to marriage,
procreation, contraception, family relationships, child rearing, and
education. In explaining the respect the Constitution demands for the
autonomy of the person in making these choices, the U.S. Supreme
Court explained:

These matters, involving the most intimate and personal choices a


person may make in a lifetime, choices central to personal dignity
and autonomy, are central to the liberty protected by the Fourteenth
Amendment. At the heart of liberty is the right to define ones own
concept of existence, of meaning, of universe, and of the mystery of
human life. Beliefs about these matters could not define the
attributes of personhood where they formed under compulsion of the
State.[71]
Persons desirous to own, operate and patronize the enumerated
establishments under Section 1 of the Ordinance may seek autonomy
for these purposes.
Motel patrons who are single and unmarried may invoke this right
to autonomy to consummate their bonds in intimate sexual conduct
within the motels premisesbe it stressed that their consensual sexual
behavior does not contravene any fundamental state policy as
contained in the Constitution.[72] Adults have a right to choose to forge
such relationships with others in the confines of their own private
lives and still retain their dignity as free persons. The liberty protected
by the Constitution allows persons the right to make this
choice.[73] Their right to liberty under the due process clause gives
them the full right to engage in their conduct without intervention of
the government, as long as they do not run afoul of the law. Liberty
should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from
unlawful government restraint; it must include privacy as well, if it is
to be a repository of freedom. The right to be let alone is the beginning
of all freedomit is the most comprehensive of rights and the right most
valued by civilized men.[74]
The concept of liberty compels respect for the individual whose
claim to privacy and interference demands respect. As the case
of Morfe v. Mutuc,[75] borrowing the words of Laski, so very aptly
stated:

Man is one among many, obstinately refusing reduction to unity. His


separateness, his isolation, are indefeasible; indeed, they are so
fundamental that they are the basis on which his civic obligations
are built. He cannot abandon the consequences of his isolation,
which are, broadly speaking, that his experience is private, and the
will built out of that experience personal to himself. If he surrenders
his will to others, he surrenders himself. If his will is set by the will
of others, he ceases to be a master of himself. I cannot believe that a
man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized


in Morfe, the invasion of which should be justified by a compelling
state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully
deserving of constitutional protection. Governmental powers should
stop short of certain intrusions into the personal life of the citizen. [76]
There is a great temptation to have an extended discussion on
these civil liberties but the Court chooses to exercise restraint and
restrict itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for
adults to engage in criminal conduct. The reprehensibility of such
conduct is not diminished. The Court only reaffirms and guarantees
their right to make this choice. Should they be prosecuted for their
illegal conduct, they should suffer the consequences of the choice they
have made. That, ultimately, is their choice.

Modality employed is
unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it


substantially divests the respondent of the beneficial use of its
property.[77] The Ordinance in Section 1 thereof forbids the running of
the enumerated businesses in the Ermita-Malate area and in Section
3 instructs its owners/operators to wind up business operations or to
transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of
property that it can not be used for any reasonable purpose goes
beyond regulation and must be recognized as a taking of the property
without just compensation.[78] It is intrusive and violative of the
private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that
private property shall not be taken for public use without just
compensation. The provision is the most important protection of
property rights in the Constitution. This is a restriction on the general
power of the government to take property. The constitutional
provision is about ensuring that the government does not confiscate
the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a persons property to benefit
society, then society should pay. The principal purpose of the
guarantee is to bar the Government from forcing some people alone
to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole.[79]
There are two different types of taking that can be identified. A
possessory taking occurs when the government confiscates or
physically occupies property. A regulatory taking occurs when the
governments regulation leaves no reasonable economically viable use
of the property.[80]
In the landmark case of Pennsylvania Coal v. Mahon,[81] it was held
that a taking also could be found if government regulation of the use
of property went too far. When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of
eminent domain and compensation to support the act. While property
may be regulated to a certain extent, if regulation goes too far it will
be recognized as a taking.[82]
No formula or rule can be devised to answer the questions of what
is too far and when regulation becomes a taking. In Mahon, Justice
Holmes recognized that it was a question of degree and therefore
cannot be disposed of by general propositions. On many other
occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the
facts in each case. The Court asks whether justice and fairness
require that the economic loss caused by public action must be
compensated by the government and thus borne by the public as a
whole, or whether the loss should remain concentrated on those few
persons subject to the public action.[83]
What is crucial in judicial consideration of regulatory takings is
that government regulation is a taking if it leaves no reasonable
economically viable use of property in a manner that interferes with
reasonable expectations for use.[84] A regulation that permanently
denies all economically beneficial or productive use of land is, from
the owners point of view, equivalent to a taking unless principles of
nuisance or property law that existed when the owner acquired the
land make the use prohibitable.[85] When the owner of real property
has been called upon to sacrifice all economically beneficial uses in
the name of the common good, that is, to leave his property
economically idle, he has suffered a taking.[86]
A regulation which denies all economically beneficial or productive
use of land will require compensation under the takings clause.
Where a regulation places limitations on land that fall short of
eliminating all economically beneficial use, a taking nonetheless may
have occurred, depending on a complex of factors including the
regulations economic effect on the landowner, the extent to which the
regulation interferes with reasonable investment-backed expectations
and the character of government action. These inquiries are informed
by the purpose of the takings clause which is to prevent the
government from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as a
whole.[87]
A restriction on use of property may also constitute a taking if not
reasonably necessary to the effectuation of a substantial public
purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.[88]
The Ordinance gives the owners and operators of the prohibited
establishments three (3) months from its approval within which to
wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area. The directive to wind up business
operations amounts to a closure of the establishment, a permanent
deprivation of property, and is practically confiscatory. Unless the
owner converts his establishment to accommodate an allowed
business, the structure which housed the previous business will be
left empty and gathering dust. Suppose he transfers it to another
area, he will likewise leave the entire establishment idle.
Consideration must be given to the substantial amount of money
invested to build the edifices which the owner reasonably expects to
be returned within a period of time. It is apparent that
the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for
use.
The second and third options to transfer to any place outside of the
Ermita-Malate area or to convert into allowed businessesare
confiscatory as well. The penalty of permanent closure in cases of
subsequent violations found in Section 4 of the Ordinance is also
equivalent to a taking of private property.
The second option instructs the owners to abandon their property
and build another one outside the Ermita-Malate area. In every sense,
it qualifies as a taking without just compensation with an additional
burden imposed on the owner to build another establishment solely
from his coffers. The proffered solution does not put an end to the
problem, it merely relocates it. Not only is this impractical, it is
unreasonable, onerous and oppressive. The conversion into allowed
enterprises is just as ridiculous. How may the respondent convert a
motel into a restaurant or a coffee shop, art gallery or music lounge
without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that
should be compensated by the government. The burden on the owner
to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the
public as this end benefits them as a whole.
Petitioners cannot take refuge in classifying the measure as a
zoning ordinance. A zoning ordinance, although a valid exercise of
police power, which limits a wholesome property to a use which can
not reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor
intended for noxious purposes may not, by zoning, be destroyed
without compensation. Such principle finds no support in the
principles of justice as we know them. The police powers of local
government units which have always received broad and liberal
interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity
and eminent domain. It needs restating that the property taken in the
exercise of police power is destroyed because it is noxious or intended
for a noxious purpose while the property taken under the power of
eminent domain is intended for a public use or purpose and is
therefore wholesome.[89] If it be of public benefit that a wholesome
property remain unused or relegated to a particular purpose, then
certainly the public should bear the cost of reasonable compensation
for the condemnation of private property for public use. [90]
Further, the Ordinance fails to set up any standard to guide or limit
the petitioners actions. It in no way controls or guides the discretion
vested in them. It provides no definition of the establishments covered
by it and it fails to set forth the conditions when the establishments
come within its ambit of prohibition. The Ordinance confers upon the
mayor arbitrary and unrestricted power to close down
establishments. Ordinances such as this, which make possible
abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of
the city authorities as the touchstone by which its validity is to be
tested, are unreasonable and invalid. The Ordinance should have
established a rule by which its impartial enforcement could be
secured.[91]
Ordinances placing restrictions upon the lawful use of property
must, in order to be valid and constitutional, specify the rules and
conditions to be observed and conduct to avoid; and must not admit
of the exercise, or of an opportunity for the exercise, of unbridled
discretion by the law enforcers in carrying out its provisions.[92]
Thus, in Coates v. City of Cincinnati,[93] as cited in People v.
Nazario,[94] the U.S. Supreme Court struck down an ordinance that
had made it illegal for three or more persons to assemble on any
sidewalk and there conduct themselves in a manner annoying to
persons passing by. The ordinance was nullified as it imposed no
standard at all because one may never know in advance what annoys
some people but does not annoy others.
Similarly, the Ordinance does not specify the standards to
ascertain which establishments tend to disturb the community,
annoy the inhabitants, and adversely affect the social and moral
welfare of the community. The cited case supports the nullification of
the Ordinance for lack of comprehensible standards to guide the law
enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated
establishments without infringing the due process clause. These
lawful establishments may be regulated, but not prevented from
carrying on their business. This is a sweeping exercise of police power
that is a result of a lack of imagination on the part of the City Council
and which amounts to an interference into personal and private rights
which the Court will not countenance. In this regard, we take a
resolute stand to uphold the constitutional guarantee of the right to
liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable
regulation which is a far cry from the ill-
considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas,[95] the city of Dallas adopted a
comprehensive ordinance regulating sexually oriented businesses,
which are defined to include adult arcades, bookstores, video stores,
cabarets, motels, and theaters as well as escort agencies, nude model
studio and sexual encounter centers. Among other things, the
ordinance required that such businesses be licensed. A group of motel
owners were among the three groups of businesses that filed separate
suits challenging the ordinance. The motel owners asserted that the
city violated the due process clause by failing to produce adequate
support for its supposition that renting room for fewer than ten (10)
hours resulted in increased crime and other secondary effects. They
likewise argued than the ten (10)-hour limitation on the rental of
motel rooms placed an unconstitutional burden on the right to
freedom of association. Anent the first contention, the U.S. Supreme
Court held that the reasonableness of the legislative judgment
combined with a study which the city considered, was adequate to
support the citys determination that motels permitting room rentals
for fewer than ten (10 ) hours should be included within the licensing
scheme. As regards the second point, the Court held that limiting
motel room rentals to ten (10) hours will have no discernible effect on
personal bonds as those bonds that are formed from the use of a motel
room for fewer than ten (10) hours are not those that have played a
critical role in the culture and traditions of the nation by cultivating
and transmitting shared ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated
the targeted businesses. It imposed reasonable restrictions; hence, its
validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association,
Inc. v. City Mayor of Manila,[96] it needs pointing out, is also different
from this case in that what was involved therein was a measure which
regulated the mode in which motels may conduct business in order
to put an end to practices which could encourage vice and immorality.
Necessarily, there was no valid objection on due process or equal
protection grounds as the ordinance did not prohibit motels.
The Ordinance in this case however is not a regulatory measure but
is an exercise of an assumed power to prohibit.[97]
The foregoing premises show that the Ordinance is an unwarranted
and unlawful curtailment of property and personal rights of citizens.
For being unreasonable and an undue restraint of trade, it cannot,
even under the guise of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly
situated should be treated alike, both as to rights conferred and
responsibilities imposed. Similar subjects, in other words, should not
be treated differently, so as to give undue favor to some and unjustly
discriminate against others.[98] The guarantee means that no person
or class of persons shall be denied the same protection of laws which
is enjoyed by other persons or other classes in like
circumstances.[99] The equal protection of the laws is a pledge of the
protection of equal laws.[100] It limits governmental discrimination.
The equal protection clause extends to artificial persons but only
insofar as their property is concerned.[101]
The Court has explained the scope of the equal protection clause
in this wise:

What does it signify? To quote from J.M. Tuason & Co. v. Land
Tenure Administration: The ideal situation is for the laws benefits to
be available to all, that none be placed outside the sphere of its
coverage. Only thus could chance and favor be excluded and the
affairs of men governed by that serene and impartial uniformity,
which is of the very essence of the idea of law. There is recognition,
however, in the opinion that what in fact exists cannot approximate
the ideal. Nor is the law susceptible to the reproach that it does not
take into account the realities of the situation. The constitutional
guarantee then is not to be given a meaning that disregards what is,
what does in fact exist. To assure that the general welfare be
promoted, which is the end of law, a regulatory measure may cut
into the rights to liberty and property. Those adversely affected may
under such circumstances invoke the equal protection clause only if
they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the
spirit of hostility, or at the very least, discrimination that finds no
support in reason. Classification is thus not ruled out, it being
sufficient to quote from the Tuason decision anew that the laws
operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same
manner, the conditions not being different, both in the privileges
conferred and the liabilities imposed. Favoritism and undue
preference cannot be allowed. For the principle is that equal
protection and security shall be given to every person under
circumstances which, if not identical, are analogous. If law be looked
upon in terms of burden or charges, those that fall within a class
should be treated in the same fashion, whatever restrictions cast on
some in the group equally binding on the rest.[102]

Legislative bodies are allowed to classify the subjects of legislation.


If the classification is reasonable, the law may operate only on some
and not all of the people without violating the equal protection
clause.[103] The classification must, as an indispensable requisite, not
be arbitrary. To be valid, it must conform to the following
requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.[104]
In the Courts view, there are no substantial distinctions between
motels, inns, pension houses, hotels, lodging houses or other similar
establishments. By definition, all are commercial establishments
providing lodging and usually meals and other services for the public.
No reason exists for prohibiting motels and inns but not pension
houses, hotels, lodging houses or other similar establishments. The
classification in the instant case is invalid as similar subjects are not
similarly treated, both as to rights conferred and obligations imposed.
It is arbitrary as it does not rest on substantial distinctions bearing a
just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business
and operation of motels in the Ermita-Malate area but not outside of
this area. A noxious establishment does not become any less noxious
if located outside the area.
The standard where women are used as tools for entertainment is
also discriminatory as prostitutionone of the hinted ills
the Ordinance aims to banishis not a profession exclusive to women.
Both men and women have an equal propensity to engage in
prostitution. It is not any less grave a sin when men engage in it. And
why would the assumption that there is an ongoing immoral activity
apply only when women are employed and be inapposite when men
are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government
objectives.[105] Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed
to pass the test of consistency with prevailing laws.

C. The Ordinance is repugnant


to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely
empowers local government units to regulate, and not prohibit, the
establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the
establishment, operation, and maintenance of motels, hotels and
other similar establishments is found in Section 458 (a) 4 (iv), which
provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall
enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:

...

(4) Regulate activities relative to the use of land, buildings and


structures within the city in order to promote the general welfare
and for said purpose shall:

...

(iv) Regulate the establishment, operation and maintenance of cafes,


restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses, and other similar establishments, including tourist
guides and transports . . . .

While its power to regulate the establishment, operation and


maintenance of any entertainment or amusement facilities, and to
prohibit certain forms of amusement or entertainment is provided
under Section 458 (a) 4 (vii) of the Code, which reads as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The


sangguniang panlungsod, as the legislative body of the city, shall
enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:

...

(4) Regulate activities relative to the use of land, buildings and


structures within the city in order to promote the general welfare
and for said purpose shall:

...
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools,
public dance halls, sauna baths, massage parlors, and other places
for entertainment or amusement; regulate such other events or
activities for amusement or entertainment, particularly those which
tend to disturb the community or annoy the inhabitants, or require
the suspension or suppression of the same; or, prohibit certain
forms of amusement or entertainment in order to protect the social
and moral welfare of the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels,


motels, inns, pension houses, lodging houses, and other similar
establishments, the only power of the City Council to legislate relative
thereto is to regulate them to promote the general welfare. The Code
still withholds from cities the power to suppress and prohibit
altogether the establishment, operation and maintenance of such
establishments. It is well to recall the rulings of the Court in Kwong
Sing v. City of Manila[106] that:

The word regulate, as used in subsection (l), section 2444 of the


Administrative Code, means and includes the power to control, to
govern, and to restrain; but regulate should not be construed as
synonymous with suppress or prohibit. Consequently, under the
power to regulate laundries, the municipal authorities could make
proper police regulations as to the mode in which the employment or
business shall be exercised.[107]

And in People v. Esguerra,[108] wherein the Court nullified an


ordinance of the Municipality of Tacloban which prohibited the
selling, giving and dispensing of liquor ratiocinating that the
municipality is empowered only to regulate the same and not prohibit.
The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given


authority or power to regulate or to license and regulate the liquor
traffic, power to prohibit is impliedly withheld.[109]
These doctrines still hold contrary to petitioners assertion[110] that
they were modified by the Code vesting upon City Councils prohibitory
powers.
Similarly, the City Council exercises regulatory powers over public
dancing schools, public dance halls, sauna baths, massage parlors,
and other places for entertainment or amusement as found in the first
clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and
suspend such other events or activities for amusement or
entertainment, particularly those which tend to disturb the
community or annoy the inhabitants and to prohibit certain forms of
amusement or entertainment in order to protect the social and moral
welfare of the community are stated in the second and third clauses,
respectively of the same Section. The several powers of the City
Council as provided in Section 458 (a) 4 (vii) of the Code, it is pertinent
to emphasize, are separated by semi-colons (;), the use of which
indicates that the clauses in which these powers are set forth are
independent of each other albeit closely related to justify being put
together in a single enumeration or paragraph. [111] These powers,
therefore, should not be confused, commingled or consolidated as to
create a conglomerated and unified power of regulation, suppression
and prohibition.[112]
The Congress unequivocably specified the establishments and
forms of amusement or entertainment subject to regulation among
which are beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments (Section 458 (a) 4 (iv)),
public dancing schools, public dance halls, sauna baths, massage
parlors, and other places for entertainment or amusement (Section
458 (a) 4 (vii)). This enumeration therefore cannot be included as
among other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants or certain forms of amusement or entertainment which
the City Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are
expressly granted to it and those which are necessarily implied or
incidental to the exercise thereof. By reason of its limited powers and
the nature thereof, said powers are to be construed strictissimi
juris and any doubt or ambiguity arising out of the terms used in
granting said powers must be construed against the City
Council.[113] Moreover, it is a general rule in statutory construction
that the express mention of one person, thing, or consequence is
tantamount to an express exclusion of all others. Expressio unius est
exclusio alterium. This maxim is based upon the rules of logic and the
natural workings of human mind. It is particularly applicable in the
construction of such statutes as create new rights or remedies,
impose penalties or punishments, or otherwise come under the rule
of strict construction.[114]
The argument that the City Council is empowered to enact
the Ordinance by virtue of the general welfare clause of the Code and
of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People v.
Esguerra,[115] is instructive. It held that:

The powers conferred upon a municipal council in the general


welfare clause, or section 2238 of the Revised Administrative Code,
refers to matters not covered by the other provisions of the same
Code, and therefore it can not be applied to intoxicating liquors, for
the power to regulate the selling, giving away and dispensing thereof
is granted specifically by section 2242 (g) to municipal councils. To
hold that, under the general power granted by section 2238, a
municipal council may enact the ordinance in question,
notwithstanding the provision of section 2242 (g), would be to make
the latter superfluous and nugatory, because the power to prohibit,
includes the power to regulate, the selling, giving away and
dispensing of intoxicating liquors.

On the second point, it suffices to say that the Code being a later
expression of the legislative will must necessarily prevail and override
the earlier law, the Revised Charter of Manila. Legis posteriores priores
contrarias abrogant, or later statute repeals prior ones which are
repugnant thereto. As between two laws on the same subject matter,
which are irreconcilably inconsistent, that which is passed later
prevails, since it is the latest expression of legislative will. [116] If there
is an inconsistency or repugnance between two statutes, both relating
to the same subject matter, which cannot be removed by any fair and
reasonable method of interpretation, it is the latest expression of the
legislative will which must prevail and override the earlier. [117]
Implied repeals are those which take place when a subsequently
enacted law contains provisions contrary to those of an existing law
but no provisions expressly repealing them. Such repeals have been
divided into two general classes: those which occur where an act is so
inconsistent or irreconcilable with an existing prior act that only one
of the two can remain in force and those which occur when an act
covers the whole subject of an earlier act and is intended to be a
substitute therefor. The validity of such a repeal is sustained on the
ground that the latest expression of the legislative will should
prevail.[118]
In addition, Section 534(f) of the Code states that All general and
special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof
which are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly. Thus, submitting to
petitioners interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the
Charter stating such must be considered repealed by the Code as it
is at variance with the latters provisions granting the City Council
mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under
the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a nuisance per se,
or one which affects the immediate safety of persons and property and
may be summarily abated under the undefined law of necessity. It can
not be said that motels are injurious to the rights of property, health
or comfort of the community. It is a legitimate business. If it be a
nuisance per accidens it may be so proven in a hearing conducted for
that purpose. A motel is not per se a nuisance warranting its
summary abatement without judicial intervention.[119]
Notably, the City Council was conferred powers to prevent and
prohibit certain activities and establishments in another section of the
Code which is reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall
enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an


efficient and effective city government, and in this connection, shall:

...

(v) Enact ordinances intended to prevent, suppress and impose


appropriate penalties for habitual drunkenness in public places,
vagrancy, mendicancy, prostitution, establishment and maintenance
of houses of ill repute, gambling and other prohibited games of
chance, fraudulent devices and ways to obtain money or property,
drug addiction, maintenance of drug dens, drug pushing, juvenile
delinquency, the printing, distribution or exhibition of obscene or
pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;

...

If it were the intention of Congress to confer upon the City Council


the power to prohibit the establishments enumerated in Section 1 of
the Ordinance, it would have so declared in uncertain terms by adding
them to the list of the matters it may prohibit under the above-quoted
Section. The Ordinance now vainly attempts to lump these
establishments with houses of ill-repute and expand the City Councils
powers in the second and third clauses of Section 458 (a) 4 (vii) of the
Code in an effort to overreach its prohibitory powers. It is evident that
these establishments may only be regulated in their establishment,
operation and maintenance.
It is important to distinguish the punishable activities from the
establishments themselves. That these establishments are recognized
legitimate enterprises can be gleaned from another Section of the
Code. Section 131 under the Title on Local Government Taxation
expressly mentioned proprietors or operators of massage clinics,
sauna, Turkish and Swedish baths, hotels, motels and lodging houses
as among the contractors defined in paragraph (h) thereof. The same
Section also defined amusement as a pleasurable diversion and
entertainment, synonymous to relaxation, avocation, pastime or fun;
and amusement places to include theaters, cinemas, concert halls,
circuses and other places of amusement where one seeks admission
to entertain oneself by seeing or viewing the show or performances.
Thus, it can be inferred that the Code considers these establishments
as legitimate enterprises and activities. It is well to recall the maxim
reddendo singula singulis which means that words in different parts
of a statute must be referred to their appropriate connection, giving
to each in its place, its proper force and effect, and, if possible,
rendering none of them useless or superfluous, even if strict
grammatical construction demands otherwise. Likewise, where words
under consideration appear in different sections or are widely
dispersed throughout an act the same principle applies.[120]
Not only does the Ordinance contravene the Code, it likewise runs
counter to the provisions of P.D. 499. As correctly argued by MTDC,
the statute had already converted the residential Ermita-Malate area
into a commercial area. The decree allowed the establishment and
operation of all kinds of commercial establishments except warehouse
or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral
establishment. The rule is that for an ordinance to be valid and to
have force and effect, it must not only be within the powers of the
council to enact but the same must not be in conflict with or
repugnant to the general law.[121] As succinctly illustrated in Solicitor
General v. Metropolitan Manila Authority:[122]

The requirement that the enactment must not violate existing law
explains itself. Local political subdivisions are able to legislate only
by virtue of a valid delegation of legislative power from the national
legislature (except only that the power to create their own sources of
revenue and to levy taxes is conferred by the Constitution itself).
They are mere agents vested with what is called the power of
subordinate legislation. As delegates of the Congress, the local
government units cannot contravene but must obey at all times the
will of their principal. In the case before us, the enactment in
question, which are merely local in origin cannot prevail against the
decree, which has the force and effect of a statute. [123]

Petitioners contend that the Ordinance enjoys the presumption of


validity. While this may be the rule, it has already been held that
although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must
nevertheless be set aside when the invalidity or unreasonableness
appears on the face of the ordinance itself or is established by proper
evidence. The exercise of police power by the local government is valid
unless it contravenes the fundamental law of the land, or an act of
the legislature, or unless it is against public policy or is unreasonable,
oppressive, partial, discriminating or in derogation of a common
right.[124]

Conclusion

All considered, the Ordinance invades fundamental personal and


property rights and impairs personal privileges. It is constitutionally
infirm. The Ordinance contravenes statutes; it is discriminatory and
unreasonable in its operation; it is not sufficiently detailed and
explicit that abuses may attend the enforcement of its sanctions. And
not to be forgotten, the City Council under the Code had no power to
enact the Ordinance and is therefore ultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of
motives and shares the concern of the public for the cleansing of the
Ermita-Malate area of its social sins. Police power legislation of such
character deserves the full endorsement of the judiciary we reiterate
our support for it. But inspite of its virtuous aims, the enactment of
the Ordinance has no statutory or constitutional authority to stand
on. Local legislative bodies, in this case, the City Council, cannot
prohibit the operation of the enumerated establishments under
Section 1 thereof or order their transfer or conversion without
infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of
the Regional Trial Court declaring the Ordinance void is AFFIRMED.
Costs against petitioners.
SO ORDERED.