Spec Pro

G.R. No.
171124 February 13, 2008

ALEJANDRO NG WEE, petitioner,
vs.
MANUEL TANKIANSEE, respondent.
D E C I S I O N
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the September 14, 2005 Decision
1
of the Court of
Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 Resolution
2

denying the motion for reconsideration thereof.
The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of
Westmont Bank (now United Overseas Bank), made several money
placements totaling P210,595,991.62 with the bank's affiliate, Westmont
Investment Corporation (Wincorp), a domestic entity engaged in the
business of an investment house with the authority and license to extend
credit.
3

Sometime in February 2000, petitioner received disturbing news on
Wincorp's financial condition prompting him to inquire about and
investigate the company's operations and transactions with its borrowers.
He then discovered that the company extended a loan equal to his total
money placement to a corporation [Power Merge] with a subscribed
capital of only P37.5M. This credit facility originated from another loan of
about P1.5B extended by Wincorp to another corporation [Hottick
Holdings]. When the latter defaulted in its obligation, Wincorp instituted a
case against it and its surety. Settlement was, however, reached in which
Hottick's president, Luis Juan L. Virata (Virata), assumed the obligation of
the surety.
4

Under the scheme agreed upon by Wincorp and Hottick's president,
petitioner's money placements were transferred without his knowledge
and consent to the loan account of Power Merge through an agreement
that virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same to
Virata/Power Merge.
5

Finding that Virata purportedly used Power Merge as a conduit and
connived with Wincorp's officers and directors to fraudulently obtain for
his benefit without any intention of paying the said placements, petitioner
instituted, on October 19, 2000, Civil Case No. 00-99006 for damages with
the Regional Trial Court (RTC) of Manila.
6
One of the defendants impleaded
in the complaint is herein respondent Manuel Tankiansee, Vice-Chairman
and Director of Wincorp.
7

On October 26, 2000, on the basis of the allegations in the complaint and
the October 12, 2000 Affidavit
8
of petitioner, the trial court ordered the
issuance of a writ of preliminary attachment against the properties not
exempt from execution of all the defendants in the civil case subject,
among others, to petitioner's filing of a P50M-bond.
9
The writ was,
consequently, issued on November 6, 2000.
10

Arguing that the writ was improperly issued and that the bond furnished
was grossly insufficient, respondent, on December 22, 2000, moved for the
discharge of the attachment.
11
The other defendants likewise filed similar
motions.
12
On October 23, 2001, the RTC, in an Omnibus Order,
13
denied
all the motions for the discharge of the attachment. The defendants,
including respondent herein, filed their respective motions for
reconsideration
14
but the trial court denied the same on October 14,
2002.
15

Incidentally, while respondent opted not to question anymore the said
orders, his co-defendants, Virata and UEM-MARA Philippines Corporation
(UEM-MARA), assailed the same via certiorari under Rule 65 before the CA
[docketed as CA-G.R. SP No. 74610]. The appellate court, however, denied
the certiorari petition on August 21, 2003,
16
and the motion for
reconsideration thereof on March 16, 2004.
17
In a petition for review on
certiorari before this Court, in G.R. No. 162928, we denied the petition and
affirmed the CA rulings on May 19, 2004 for Virata's and UEM-MARA's
failure to sufficiently show that the appellate court committed any
reversible error.
18
We subsequently denied the petition with finality on
August 23, 2004.
19

On September 30, 2004, respondent filed before the trial court another
Motion to Discharge Attachment,
20
re-pleading the grounds he raised in his
first motion but raising the following additional grounds: (1) that he was
not present in Wincorp's board meetings approving the questionable
transactions;
21
and (2) that he could not have connived with Wincorp and
the other defendants because he and Pearlbank Securities, Inc., in which
he is a major stockholder, filed cases against the company as they were
also victimized by its fraudulent schemes.
22

Ruling that the grounds raised were already passed upon by it in the
previous orders affirmed by the CA and this Court, and that the additional
grounds were respondent's affirmative defenses that properly pertained to
the merits of the case, the trial court denied the motion in its January 6,
2005 Order.
23

With the denial of its motion for reconsideration,
24
respondent filed a
certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On
September 14, 2005, the appellate court rendered the assailed Decision
25

reversing and setting aside the aforementioned orders of the trial court
and lifting the November 6, 2000 Writ of Preliminary Attachment
26
to the
extent that it concerned respondent's properties. Petitioner moved for the
reconsideration of the said ruling, but the CA denied the same in its
January 6, 2006 Resolution.
27

Thus, petitioner filed the instant petition on the following grounds:
A.
IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS
SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR
CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED
ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING
JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF
CERTIORARI.
B.
MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING
FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS
PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY
ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO THE
MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING
JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR
DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.
C.
LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT
ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED
BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH
ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED
WITH FINALITY BY THE LOWER COURT.
28

For his part, respondent counters, among others, that the general and
sweeping allegation of fraud against respondent in petitioner's affidavit-
respondent as an officer and director of Wincorp allegedly connived with
the other defendants to defraud petitioner-is not sufficient basis for the
trial court to order the attachment of respondent's properties. Nowhere in
the said affidavit does petitioner mention the name of respondent and any
specific act committed by the latter to defraud the former. A writ of
attachment can only be granted on concrete and specific grounds and not
on general averments quoting perfunctorily the words of the Rules.
Connivance cannot also be based on mere association but must be
particularly alleged and established as a fact. Respondent further contends
that the trial court, in resolving the Motion to Discharge Attachment, need
not actually delve into the merits of the case. All that the court has to
examine are the allegations in the complaint and the supporting affidavit.
Petitioner cannot also rely on the decisions of the appellate court in CA-
G.R. SP No. 74610 and this Court in G.R. No. 162928 to support his claim
because respondent is not a party to the said cases.
29

We agree with respondent's contentions and deny the petition.
In the case at bench, the basis of petitioner's application for the issuance
of the writ of preliminary attachment against the properties of respondent
is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:
Section 1. Grounds upon which attachment may issue.-At the
commencement of the action or at any time before entry of
judgment, a plaintiff or any proper party may have the property of
the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases:
x x x x
(d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof.
For a writ of attachment to issue under this rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from the debtor's mere non-payment
of the debt or failure to comply with his obligation.
30
The applicant must
then be able to demonstrate that the debtor has intended to defraud the
creditor.
31
In Liberty Insurance Corporation v. Court of Appeals,
32
we
explained as follows:
To sustain an attachment on this ground, it must be shown that
the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. The fraud must relate to the
execution of the agreement and must have been the reason
which induced the other party into giving consent which he would
not have otherwise given. To constitute a ground for attachment
in Section 1 (d), Rule 57 of the Rules of Court, fraud should be
committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor
has a preconceived plan or intention not to pay, as it is in this
case. Fraud is a state of mind and need not be proved by direct
evidence but may be inferred from the circumstances attendant
in each case.
33

In the instant case, petitioner's October 12, 2000 Affidavit
34
is bereft of any
factual statement that respondent committed a fraud. The affidavit
narrated only the alleged fraudulent transaction between Wincorp and
Virata and/or Power Merge, which, by the way, explains why this Court, in
G.R. No. 162928, affirmed the writ of attachment issued against the latter.
As to the participation of respondent in the said transaction, the affidavit
merely states that respondent, an officer and director of Wincorp,
connived with the other defendants in the civil case to defraud petitioner
of his money placements. No other factual averment or circumstance
details how respondent committed a fraud or how he connived with the
other defendants to commit a fraud in the transaction sued upon. In other
words, petitioner has not shown any specific act or deed to support the
allegation that respondent is guilty of fraud.
The affidavit, being the foundation of the writ,
35
must contain such
particulars as to how the fraud imputed to respondent was committed for
the court to decide whether or not to issue the writ.
36
Absent any
statement of other factual circumstances to show that respondent, at the
time of contracting the obligation, had a preconceived plan or intention
not to pay, or without any showing of how respondent committed the
alleged fraud, the general averment in the affidavit that respondent is an
officer and director of Wincorp who allegedly connived with the other
defendants to commit a fraud, is insufficient to support the issuance of a
writ of preliminary attachment.
37
In the application for the writ under the
said ground, compelling is the need to give a hint about what constituted
the fraud and how it was perpetrated
38
because established is the rule that
fraud is never presumed.
39
Verily, the mere fact that respondent is an
officer and director of the company does not necessarily give rise to the
inference that he committed a fraud or that he connived with the other
defendants to commit a fraud. While under certain circumstances, courts
may treat a corporation as a mere aggroupment of persons, to whom
liability will directly attach, this is only done when the wrongdoing has
been clearly and convincingly established.
40

Let it be stressed that the provisional remedy of preliminary attachment is
harsh and rigorous for it exposes the debtor to humiliation and
annoyance.
41
The rules governing its issuance are, therefore, strictly
construed against the applicant,
42
such that if the requisites for its grant
are not shown to be all present, the court shall refrain from issuing it, for,
otherwise, the court which issues it acts in excess of its jurisdiction.
43

Likewise, the writ should not be abused to cause unnecessary prejudice. If
it is wrongfully issued on the basis of false or insufficient allegations, it
should at once be corrected.
44

Considering, therefore, that, in this case, petitioner has not fully satisfied
the legal obligation to show the specific acts constitutive of the alleged
fraud committed by respondent, the trial court acted in excess of its
jurisdiction when it issued the writ of preliminary attachment against the
properties of respondent.
We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et
al.,
45
that
[t]he merits of the main action are not triable in a motion to
discharge an attachment otherwise an applicant for the
dissolution could force a trial of the merits of the case on his
motion.
46

However, the principle finds no application here because petitioner has
not yet fulfilled the requirements set by the Rules of Court for the issuance
of the writ against the properties of respondent.
47
The evil sought to be
prevented by the said ruling will not arise, because the propriety or
impropriety of the issuance of the writ in this case can be determined by
simply reading the complaint and the affidavit in support of the
application.
Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of
attachment is properly issued insofar as it concerns the properties of
Virata and UEM-MARA, does not affect respondent herein, for, as correctly
ruled by the CA, respondent is "never a party thereto."
48
Also, he is not in
the same situation as Virata and UEM-MARA since, as aforesaid, while
petitioner's affidavit detailed the alleged fraudulent scheme perpetrated
by Virata and/or Power Merge, only a general allegation of fraud was
made against respondent.
We state, in closing, that our ruling herein deals only with the writ of
preliminary attachment issued against the properties of respondent-it
does not concern the other parties in the civil case, nor affect the trial
court's resolution on the merits of the aforesaid civil case.
WHEREFORE, premises considered, the petition is DENIED. The September
14, 2005 Decision and the January 6, 2006 Resolution of the Court of
Appeals in CA-G.R. SP No. 90130 are AFFIRMED.
SO ORDERED.
G.R. No. 161417 February 8, 2007
MA. TERESA CHAVES BIACO, Petitioner,
vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
D E C I S I O N
TINGA, J.:
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision
1
of the
Court of Appeals in CA-G.R. No. 67489 dated August 27, 2003, which
denied her petition for annulment of judgment, and the Resolution
2
dated
December 15, 2003 which denied her motion for reconsideration.
The facts as succinctly stated by the Court of Appeals are as follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While
employed in the Philippine Countryside Rural Bank (PCRB) as branch
manager, Ernesto obtained several loans from the respondent bank as
evidenced by the following promissory notes:
Feb. 17, 1998 P 65,000.00
Mar. 18, 1998 30,000.00
May 6, 1998 60,000.00
May 20, 1998 350,000.00
July 30, 1998 155,000.00
Sept. 8, 1998 40,000.00
Sept. 8, 1998 120,000.00
As security for the payment of the said loans, Ernesto executed a real
estate mortgage in favor of the bank covering the parcel of land described
in Original Certificate of Title (OCT) No. P-14423. The real estate mortgages
bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date,
respondent bank through counsel sent him a written demand on
September 28, 1999. The amount due as of September 30, 1999 had
already reached ONE MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY
SIX AND FIFTY CENTAVOS (P1,080,676.50).
The written demand, however, proved futile.
On February 22, 2000, respondent bank filed a complaint for foreclosure of
mortgage against the spouses Ernesto and Teresa Biaco before the RTC of
Misamis Oriental. Summons was served to the spouses Biaco through
Ernesto at his office (Export and Industry Bank) located at Jofelmor Bldg.,
Mortola Street, Cagayan de Oro City.
Ernesto received the summons but for unknown reasons, he failed to file
an answer. Hence, the spouses Biaco were declared in default upon
motion of the respondent bank. The respondent bank was allowed to
present its evidence ex parte before the Branch Clerk of Court who was
then appointed by the court as Commissioner.
Arturo Toring, the branch manager of the respondent bank, testified that
the spouses Biaco had been obtaining loans from the bank since 1996 to
1998. The loans for the years 1996-1997 had already been paid by the
spouses Biaco, leaving behind a balance of P1,260,304.33 representing the
1998 loans. The amount being claimed is inclusive of interests, penalties
and service charges as agreed upon by the parties. The appraisal value of
the land subject of the mortgage is only P150,000.00 as reported by the
Assessors Office.
Based on the report of the Commissioner, the respondent judge ordered
as follows:
WHEREFORE, judgment is hereby rendered ordering defendants spouses
ERNESTO R. BIACO and MA. THERESA [CHAVES] BIACO to pay plaintiff bank
within a period of not less than ninety (90) days nor more than one
hundred (100) days from receipt of this decision the loan of ONE MILLION
TWO HUNDRED SIXTY THOUSAND THREE HUNDRED FOUR PESOS and
THIRTY THREE CENTAVOS (P1,260,304.33) plus litigation expenses in the
amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS (P7,640.00) and
attorneys fees in the amount of TWO HUNDRED FIFTY TWO THOUSAND
THIRTY PESOS and FORTY THREE CENTAVOS (P252,030.43) and cost of this
suit.
In case of non-payment within the period, the Sheriff of this Court is
ordered to sell at public auction the mortgaged Lot, a parcel of registered
land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}), located at
Gasi, Laguindingan, Misamis Oriental and covered by TCT No. P-14423 to
satisfy the mortgage debt, and the surplus if there be any should be
delivered to the defendants spouses ERNESTO and MA. THERESA [CHAVES]
BIACO. In the event however[,] that the proceeds of the auction sale of the
mortgage[d] property is not enough to pay the outstanding obligation, the
defendants are ordered to pay any deficiency of the judgment as their
personal liability.
SO ORDERED.
On July 12, 2000, the sheriff personally served the above-mentioned
judgment to Ernesto Biaco at his office at Export and Industry Bank. The
spouses Biaco did not appeal from the adverse decision of the trial court.
On October 13, 2000, the respondent bank filed an ex parte motion for
execution to direct the sheriff to sell the mortgaged lot at public auction.
The respondent bank alleged that the order of the court requiring the
spouses Biaco to pay within a period of 90 days had passed, thus making it
necessary to sell the mortgaged lot at public auction, as previously
mentioned in the order of the court. The motion for execution was granted
by the trial court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of execution to
the spouses Biaco at their residence in #92 9th Street, Nazareth, Cagayan
de Oro City. The writ of execution was personally received by Ernesto. By
virtue of the writ of execution issued by the trial court, the mortgaged
property was sold at public auction in favor of the respondent bank in the
amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).
The amount of the property sold at public auction being insufficient to
cover the full amount of the obligation, the respondent bank filed an "ex
parte motion for judgment" praying for the issuance of a writ of execution
against the other properties of the spouses Biaco for the full settlement of
the remaining obligation. Granting the motion, the court ordered that a
writ of execution be issued against the spouses Biaco to enforce and satisfy
the judgment of the court for the balance of ONE MILLION THREE
HUNDRED SIXTY NINE THOUSAND NINE HUNDRED SEVENTY FOUR PESOS
AND SEVENTY CENTAVOS (P1,369,974.70).
The sheriff executed two (2) notices of levy against properties registered
under the name of petitioner Ma. Teresa Chaves Biaco. However, the
notices of levy were denied registration because Ma. Teresa had already
sold the two (2) properties to her daughters on April 11, 2001.
3

Petitioner sought the annulment of the Regional Trial Court decision
contending that extrinsic fraud prevented her from participating in the
judicial foreclosure proceedings. According to her, she came to know about
the judgment in the case only after the lapse of more than six (6) months
after its finality. She claimed that extrinsic fraud was perpetrated against
her because the bank failed to verify the authenticity of her signature on
the real estate mortgage and did not inquire into the reason for the
absence of her signature on the promissory notes. She moreover asserted
that the trial court failed to acquire jurisdiction because summons were
served on her through her husband without any explanation as to why
personal service could not be made.
The Court of Appeals considered the two circumstances that kept
petitioner in the dark about the judicial foreclosure proceedings: (1) the
failure of the sheriff to personally serve summons on petitioner; and (2)
petitioners husbands concealment of his knowledge of the foreclosure
proceedings. On the validity of the service of summons, the appellate court
ruled that judicial foreclosure proceedings are actions quasi in rem. As
such, jurisdiction over the person of the defendant is not essential as long
as the court acquires jurisdiction over the res. Noting that the spouses
Biaco were not opposing parties in the case, the Court of Appeals further
ruled that the fraud committed by one against the other cannot be
considered extrinsic fraud.
Her motion for reconsideration having been denied, petitioner filed the
instant Petition for Review,
4
asserting that even if the action is quasi in
rem, personal service of summons is essential in order to afford her due
process. The substituted service made by the sheriff at her husbands
office cannot be deemed proper service absent any explanation that
efforts had been made to personally serve summons upon her but that
such efforts failed. Petitioner contends that extrinsic fraud was
perpetrated not so much by her husband, who did not inform her of the
judicial foreclosure proceedings, but by the sheriff who allegedly connived
with her husband to just leave a copy of the summons intended for her at
the latters office.
Petitioner further argues that the deficiency judgment is a personal
judgment which should be deemed void for lack of jurisdiction over her
person.
Respondent PCRB filed its Comment,
5
essentially reiterating the appellate
courts ruling. Respondent avers that service of summons upon the
defendant is not necessary in actions quasi in rem it being sufficient that
the court acquire jurisdiction over the res. As regards the alleged
conspiracy between petitioners husband and the sheriff, respondent
counters that this is a new argument which cannot be raised for the first
time in the instant petition.
We required the parties to file their respective memoranda in the
Resolution
6
dated August 18, 2004. Accordingly, petitioner filed her
Memorandum
7
dated October 10, 2004, while respondent filed its
Memorandum for Respondent
8
dated September 9, 2004.
Annulment of judgment is a recourse equitable in character, allowed only
in exceptional cases as where there is no available or other adequate
remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil
Procedure (Rules of Court) provide that judgments may be annulled only
on grounds of extrinsic fraud and lack of jurisdiction or denial of due
process.
9

Petitioner asserts that extrinsic fraud consisted in her husbands
concealment of the loans which he obtained from respondent PCRB; the
filing of the complaint for judicial foreclosure of mortgage; service of
summons; rendition of judgment by default; and all other proceedings
which took place until the writ of garnishment was served.
10

Extrinsic fraud exists when there is a fraudulent act committed by the
prevailing party outside of the trial of the case, whereby the defeated
party was prevented from presenting fully his side of the case by fraud or
deception practiced on him by the prevailing party.
11
Extrinsic fraud is
present where the unsuccessful party had been prevented from exhibiting
fully his case, by fraud or deception practiced on him by his opponent, as
by keeping him away from court, a false promise of a compromise; or
where the defendant never had knowledge of the suit, being kept in
ignorance by the acts of the plaintiff; or where an attorney fraudulently or
without authority assumes to represent a party and connives at his defeat;
or where the attorney regularly employed corruptly sells out his clients
interest to the other side. The overriding consideration is that the
fraudulent scheme of the prevailing litigant prevented a party from having
his day in court.
12

With these considerations, the appellate court acted well in ruling that
there was no fraud perpetrated by respondent bank upon petitioner,
noting that the spouses Biaco were co-defendants in the case and shared
the same interest. Whatever fact or circumstance concealed by the
husband from the wife cannot be attributed to respondent bank.
Moreover, petitioners allegation that her signature on the promissory
notes was forged does not evince extrinsic fraud. It is well-settled that the
use of forged instruments during trial is not extrinsic fraud because such
evidence does not preclude the participation of any party in the
proceedings.
13

The question of whether the trial court has jurisdiction depends on the
nature of the action, i.e., whether the action is in personam, in rem, or
quasi in rem. The rules on service of summons under Rule 14 of the Rules
of Court likewise apply according to the nature of the action.
An action in personam is an action against a person on the basis of his
personal liability. An action in rem is an action against the thing itself
instead of against the person. An action quasi in rem is one wherein an
individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the
property.
14

In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. In a proceeding
in rem or quasi in rem, jurisdiction over the person of the defendant is not
a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Jurisdiction over the res is acquired
either (1) by the seizure of the property under legal process, whereby it is
brought into actual custody of the law; or (2) as a result of the institution
of legal proceedings, in which the power of the court is recognized and
made effective.
15

Nonetheless, summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the
due process requirements.
16

A resident defendant who does not voluntarily appear in court, such as
petitioner in this case, must be personally served with summons as
provided under Sec. 6, Rule 14 of the Rules of Court. If she cannot be
personally served with summons within a reasonable time, substituted
service may be effected (1) by leaving copies of the summons at the
defendants residence with some person of suitable age and discretion
then residing therein, or (2) by leaving the copies at defendants office or
regular place of business with some competent person in charge thereof in
accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent
PCRB undoubtedly vested the trial court with jurisdiction over the res. A
judicial foreclosure proceeding is an action quasi in rem. As such,
jurisdiction over the person of petitioner is not required, it being sufficient
that the trial court is vested with jurisdiction over the subject matter.
There is a dimension to this case though that needs to be delved into.
Petitioner avers that she was not personally served summons. Instead,
summons was served to her through her husband at his office without any
explanation as to why the particular surrogate service was resorted to. The
Sheriffs Return of Service dated March 21, 2000 states:
x x x x
That on March 16, 2000, the undersigned served the copies of Summons,
complaint and its annexes to the defendants Sps. Ernesto R. & Ma. Teresa
Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled case at
his office EXPORT & INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St.,
Cagayan de Oro City and he acknowledged receipt thereof as evidenced
with his signature appearing on the original copy of the Summons.
17

[Emphasis supplied]
Without ruling on petitioners allegation that her husband and the sheriff
connived to prevent summons from being served upon her personally, we
can see that petitioner was denied due process and was not able to
participate in the judicial foreclosure proceedings as a consequence. The
violation of petitioners constitutional right to due process arising from
want of valid service of summons on her warrants the annulment of the
judgment of the trial court.
There is more, the trial court granted respondent PCRBs ex-parte motion
for deficiency judgment and ordered the issuance of a writ of execution
against the spouses Biaco to satisfy the remaining balance of the award. In
short, the trial court went beyond its jurisdiction over the res and rendered
a personal judgment against the spouses Biaco. This cannot be
countenanced.1awphil.net
In Sahagun v. Court of Appeals,
18
suit was brought against a non-resident
defendant, Abelardo Sahagun, and a writ of attachment was issued and
subsequently levied on a house and lot registered in his name. Claiming
ownership of the house, his wife, Carmelita Sahagun, filed a motion to
intervene. For failure of plaintiff to serve summons extraterritorially upon
Abelardo, the complaint was dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by
publication upon Abelardo. The trial court granted the motion. Plaintiff
later filed an amended complaint against Abelardo, this time impleading
Carmelita and Rallye as additional defendants. Summons was served on
Abelardo through publication in the Manila Evening Post. Abelardo failed
to file an answer and was declared in default. Carmelita went on certiorari
to the Court of Appeals assailing as grave abuse of discretion the
declaration of default of Abelardo. The Court of Appeals dismissed the
petition and denied reconsideration.
In her petition with this Court, Carmelita raised the issue of whether the
trial court acquired jurisdiction over her husband, a non-resident
defendant, by the publication of summons in a newspaper of general
circulation in the Philippines. The Court sustained the correctness of
extrajudicial service of summons by publication in such newspaper.
The Court explained, citing El Banco Espaol-Filipino v. Palanca,
19
that
foreclosure and attachment proceedings are both actions quasi in rem. As
such, jurisdiction over the person of the (non-resident) defendant is not
essential. Service of summons on a non-resident defendant who is not
found in the country is required, not for purposes of physically acquiring
jurisdiction over his person but simply in pursuance of the requirements of
fair play, so that he may be informed of the pendency of the action against
him and the possibility that property belonging to him or in which he has
an interest may be subjected to a judgment in favor of a resident, and that
he may thereby be accorded an opportunity to defend in the action,
should he be so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et.
al.
20
and Perkins v. Dizon, et al.
21
that in a proceeding in rem or quasi in
rem, the only relief that may be granted by the court against a defendant
over whose person it has not acquired jurisdiction either by valid service of
summons or by voluntary submission to its jurisdiction, is limited to the
res.
Similarly, in this case, while the trial court acquired jurisdiction over the
res, its jurisdiction is limited to a rendition of judgment on the res. It
cannot extend its jurisdiction beyond the res and issue a judgment
enforcing petitioners personal liability. In doing so without first having
acquired jurisdiction over the person of petitioner, as it did, the trial court
violated her constitutional right to due process, warranting the annulment
of the judgment rendered in the case.
WHEREFORE, the instant petition is GRANTED. The Decision dated August
27, 2003 and the Resolution dated December 15, 2003 of the Court of
Appeals in CA-G.R. SP No. 67489 are SET ASIDE. The Judgment dated July
11, 2000 and Order dated February 9, 2001 of the Regional Trial Court of
Cagayan de Oro City, Branch 20, are likewise SET ASIDE.
SO ORDERED.
BIAN STEEL CORPORATION, petitioner, vs. HON. COURT OF APPEALS,
MYLENE C. GARCIA and MYLA C. GARCIA, respondents.
[G.R. No. 148430. October 15, 2002]
MYLENE C. GARCIA and MYLA C. GARCIA, petitioners, vs. HON. ENRICO A.
LANZANAS, Presiding Judge, RTC, Branch 7, Manila and RUFO J.
BERNARDO, Sheriff-In-Charge, for the Ex-Officio Sheriff of Manila,
respondents.
D E C I S I O N
CORONA, J.:
Before us are two consolidated petitions: (1) G.R. No. 142013, a special
civil action for certiorari and mandamus seeking to annul and set aside the
Resolutions1[1] of the Court of Appeals dated October 21, 1999 and
January 31, 2000, denying petitioner Bian Steel Corporations motion for
intervention and motion for reconsideration, and (2) G.R. No. 148430,
seeking to set aside the decision2[2] and resolution of the Court of Appeals
dated February 10, 2000 and May 31, 2001, respectively, dismissing the

petition of petitioners Mylene C. Garcia and Myla C. Garcia for violating the
rules on forum-shopping.
Stripped of the non-essentials, the facts of the case are as follows:
On July 22, 1998, Bian Steel Corporation (BSC) filed with the Regional Trial
Court of Manila a complaint against Joenas Metal Corporation and spouses
Ng Ley Huat and Leticia Dy Ng (the spouses Ng) for collection of a sum of
money with damages, docketed as Civil Case No. 98-89831.
On July 24, 1998, the trial court3[3] issued a Writ of Preliminary
Attachment after BSC filed an attachment bond. Pursuant thereto, on July
27, 1998, the sheriff of Branch 7 of the RTC of Manila, Manuelito P. Viloria,
levied on the property registered in the names of the spouses Ng and
covered by TCT No. 11387 of the Registry of Deeds of Quezon City. This
property under preliminary attachment was in fact mortgaged to the Far
East Bank and Trust Company (FEBTC), now Bank of the Philippine Islands
(BPI), and consisted of a 268-square-meter lot located at 14 Tulip Road,
Gardenville Town and Country Homes, Congressional Avenue, Project 8,
Quezon City.
On August 5, 1998, a sheriffs return was filed by Viloria, stating that, as of
that date, summons was not served upon the defendant spouses Ng
because they could not be located. BSC caused the filing of a motion to
serve the summons by publication which was granted. Summons by
publication thereafter ensued.
In the meantime, defendant-spouses Ng sold the property to petitioners
(in G.R. No. 148430) Mylene and Myla Garcia by means of a deed of sale
dated June 29, 1998. Said transaction was registered only about a month-
and-a-half later, on August 12, 1998, after the mortgagee FEBTC gave its
approval to the sale. On August 19, 1998, TCT No. 11387 in the name of

the spouses Ng was cancelled and, in lieu thereof, TCT No. 194226 in the
names of Mylene and Myla Garcia was issued. The annotation of the
preliminary attachment made earlier on July 27, 1998 by sheriff Viloria on
the old title, TCT No. 11387, was transferred to TCT No. 194226.
On August 28, 1998, the Garcias filed a complaint-in-intervention in Civil
Case No. 98-89831 pending at Branch 7 of the Manila RTC, alleging that
they were the registered owners of the property covered by TCT No.
194226 which was the subject of BSCs writ of preliminary attachment.
Said complaint-in-intervention was denied by the trial court for lack of
merit.
On April 14, 1999, the trial court rendered judgment by default in favor of
BSC, the dispositive portion of which was:
WHEREFORE, decision is hereby rendered in favor of plaintiff Bian Steel
Corporation, and against defendants Joenas Metal Corporation, Ng Ley
Huat and Leticia Dy Ng, ordering the latter to jointly and severally:
1. pay the plaintiff the amount of FIVE MILLION EIGHT HUNDRED FIFTY SIX
THOUSAND PESOS (P5,856,000.00) as actual damages;
2. pay the plaintiff the amount of ONE MILLION PESOS (P1,000,000.00) as
and for consequential damages;
3. pay the plaintiff the amount equivalent to 25% of the total amount due
the plaintiff from the defendant as and for attorneys fees; and
4. to pay the costs of suit.
SO ORDERED.4[4]

On June 14, 1999, a Notice of Sale of Execution on Real Property was
issued by respondent sheriff Rufo J. Bernardo. It scheduled the public
auction of the property on July 7, 1999.
Meanwhile, on February 18, 1999, in view of the dismissal of their
complaint-in-intervention, the Garcias filed an action against BSC, sheriff
Manuelito P. Viloria, the Register of Deeds of Quezon City and FEBTC (now
BPI) for cancellation of the notice of levy annotated on TCT No. 194226
before Branch 98 of the Regional Trial Court of Quezon City,5[5] docketed
as Civil Case No. 99-36804. The Garcias claimed that they were the
registered owners of the property in dispute, having acquired the same on
June 29, 1998 by means of a deed of sale with assumption of mortgage
from spouses Ng Ley Huat and Leticia Dy Ng.
In said case in the Quezon City RTC, the Garcias were able to secure a
temporary restraining order enjoining sheriff Rufo J. Bernardo or any
person acting in his behalf from continuing with the public auction sale of
the subject property initially scheduled on July 7, 1999. This TRO was
disregarded by the Manila RTC.
Acting on the ex-parte manifestation with motion to proceed with the
execution sale filed by BSC, Judge Enrico Lanzanas of Branch 7, RTC, Manila
affirmed, on July 8, 1999, his previous order and directed the public
auction of the attached property, unless otherwise enjoined by the Court
of Appeals or this Court. Thereafter, the public auction was rescheduled
from July 7, 1999 to August 6, 1999.
On August 4, 1999, the Garcias filed another case with the Court of
Appeals for the issuance of a writ of preliminary injunction with prayer for
temporary restraining order which sought to perpetually enjoin Judge
Lanzanas and sheriff Bernardo from proceeding with the public auction on
August 6, 1999. Their petition did not implead BSC as private respondent.

In a resolution dated August 5, 1999, the Third Division of the Court of
Appeals6[6] temporarily restrained public respondents Judge Lanzanas and
Bernardo from proceeding with the public auction of the subject property.
Hence, the scheduled public sale on August 6, 1999 did not transpire. This
prompted petitioner BSC to file a motion for intervention on August 16,
1999, praying that it be allowed to intervene and be heard in the case as
private respondent, and to comment and oppose the petition filed by the
Garcias. Likewise, said motion sought to oppose the prayer for preliminary
injunction with urgent request for the issuance of the temporary
restraining order.
On October 21, 1999, the First Division of the Court of Appeals, in its
resolution,7[7] denied BSCs motion for intervention on the ground that its
rights could be protected in a separate proceeding, particularly in the
cancellation case filed by the Garcias. BSC's motion for reconsideration
was likewise denied on January 31, 2000. Thus, on March 13, 2000, BSC
filed with this Court a special civil action for certiorari and mandamus,
docketed as G.R. No. 142013, seeking to annul and set aside the
Resolutions of the Court of Appeals dated October 21, 1999 and January
31, 2000. BSC is invoking the following issues:
I
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION IN DENYING PETITIONERS MOTION FOR INTERVENTION FOR
BEING IMPROPER AS INTERVENORS RIGHTS MAY BE PROTECTED IN A
SEPARATE PROCEEDING IN CIVIL CASE NO. 99-36804 OF THE RTC, BRANCH

98, QUEZON CITY, FOR CANCELLATION OF THE NOTICE OF LEVY
ANNOTATED ON TCT NO. 194226.
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN
HOLDING THAT TO ENTERTAIN PETITIONERS INTERVENTION WOULD
NECESSARY (SIC) PRE-EMPT THE ADJUDICATION OF ISSUES IN CIVIL CASE
NO. 99-36804 BECAUSE EVIDENCE AND COUNTER-EVIDENCE WILL BE
PRODUCED BY THE PARTIES IN THE INJUNCTION SUIT, AND THIS WILL
UNDULY DELAY OR PREJUDICE THE ADJUDICATION OF THE RIGHTS OF THE
PRINCIPAL PARTIES.
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN
RULING THAT THE ALLOWANCE OR DISALLOWANCE OF A MOTION TO
INTERVENE IS ADDRESSED TO THE SOUND DISCRETION OF THE COURT,
OVERLOOKING THE FACT THAT IN THE INSTANT CASE, THE APPELLATE
COURT DID NOT EXERCISE WISELY ITS SOUND DISCRETION WHEN IT
DENIED PETITIONERS MOTION FOR INTERVENTION.
Similarly, the Fifteenth Division of the Court of Appeals, in its decision8[8]
dated February 10, 2000, dismissed the petition of the Garcias for violating
the rules on forum-shopping. It denied their motion for reconsideration on
May 31, 2001.
The Garcias thus filed with this Court a petition for review on certiorari,
docketed as G.R. No. 148430, seeking to set aside the February 10, 2000

decision of the Court of Appeals as well as its resolution dated May 31,
2001 denying their motion for reconsideration, raising the following errors:
I
WHETHER OR NOT PETITIONERS WERE GUILTY OF VIOLATING THE RULES
ON FORUM-SHOPPING.
II
WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A
WRIT OF INJUNCTION.
Subsequently, G.R. No. 142013 and G.R. No. 148430 were consolidated
pursuant to this Court's Resolution dated February 27, 2002.
In the meantime, on August 4, 2001, the Garcias were again served by the
sheriff of the Manila RTC with a notice of sale of execution of the disputed
property scheduled for August 7, 2001. Because no TRO was issued by this
Court, the public auction ordered by the Manila RTC was held as scheduled
and the property was awarded to BSC as the highest bidder.
On August 15, 2001, a little too late, this Court9[9] issued the TRO sought
by the Garcias in a resolution which partially stated that:
Acting on the Petitioners Urgent Motion for the Issuance of a temporary
restraining order and/or writ of preliminary injunction dated August 6,
2001, praying that public respondents be enjoined from proceeding with
the conduct of the public auction sale involving Petitioners property,
registered under TCT No. 194226 of the Registry of Deeds of Quezon City,

the Court Resolved to ISSUE the TEMPORARY RESTRAINING ORDER prayed
for, effective immediately until further orders from this Court.10[10]
A year after the public auction, on August 6, 2002, the Garcias, fearful of
the impending consolidation of title in favor of BSC, filed before this Court
an urgent ex-parte motion for the issuance of an order maintaining the
status quo ante. They wanted to prevent the consolidation of the title and
possession by BSC until such time as the rights and interests of both sets
of petitioners in the two cases before us shall have been determined and
finally resolved.
Acting on the said motion, on August 9, 2002, the Court11[11] resolved to
grant the motion and directed the parties to maintain the status quo as of
August 6, 2002.
Going over the merits of the petitions, the Court deems it essential to
resolve two pivotal issues: (1) who, between BSC and the Garcias, has a
better right to the disputed property, and (2) whether the Garcias violated
the rule against forum- shopping.
It should be noted that, at the time of the attachment of the property on
July 27, 1998, the spouses Ng were still the registered owners of said
property. It should also be observed that the preliminary attachment in
favor of petitioner BSC was annotated and recorded in the Registry of
Deeds of Quezon City on July 27, 1998 in accordance with the provisions of

the Property Registration Decree (PD 1529). This annotation produced all
the effects which the law gives to its registration or inscription.12[12]
This Court has always held that attachment is a proceeding in rem. It is
against the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property which
ripens into a judgment against the res when the order of sale is made.
Such a proceeding in effect means that the property attached is an
indebted thing and a virtual condemnation of it to pay the owners
debt.13[13] This doctrine was validated by this Court in the more recent
case of Republic vs. Saludares14[14]:
xxx.
The law does not provide the length of time an attachment lien shall
continue after the rendition of the judgment, and it must therefore
necessarily continue until the debt is paid, or sale is had under execution
issued on the judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner provided by law. Thus,
if the property attached is subsequently sold, the purchaser of the
attached property acquires it subject to an attachment legally and validly
levied thereon.
xxx.

In the instant case, the records reveal that the levy on attachment covering
the subject property was annotated on TCT No. 11387 on July 27, 1998.
The deed of sale executed on June 29, 1998 in favor of the Garcias was
approved by FEBTC only on August 12, 1998 which was also the date when
the sale was registered. From the foregoing, it can be seen that, when the
Garcias purchased the property in question, it was already under a duly
registered preliminary attachment. In other words, there was already
notice to said purchasers (and the whole world) of the impending
acquisition by BSC, as the judgment creditor, of a legal lien on the title of
the Ng spouses as judgment debtors in case BSC won its case in the
Manila RTC.
The Garcias claim they acquired the subject property by means of a deed
of sale with assumption of mortgage dated June 29, 1998, meaning, they
purchased the property ahead of the inscription of the levy on attachment
thereon on July 27, 1998. But, even if consensual, not all contracts of sale
became automatically and immediately effective.15[15] In Ramos vs. Court
of Appeals16[16] we held:
In sales with assumption of mortgage, the assumption of mortgage is a
condition precedent to the sellers consent and therefore, without
approval of the mortgagee, the sale is not perfected.
Apart therefrom, notwithstanding the approval of the sale by mortgagee
FEBTC (BPI), there was yet another step the Garcias had to take and it was
the registration of the sale from the Ngs to them. Insofar as third persons

are concerned, what validly transfers or conveys a person's interest in real
property is the registration of the deed.17[17]
Thus, when the Garcias bought the property on June 29, 1998, it was, at
that point, no more than a private transaction between them and the Ngs.
It needed to be registered before it could become binding on all third
parties, including BSC. It turned out that the Garcias registered it only on
August 12, 1998, after FEBTC (now BPI) approved the sale. It was too late
by then because, on July 27, 1998, the levy in favor of BSC, pursuant to the
preliminary attachment ordered by the Manila RTC, had already been
annotated on the original title on file with the Registry of Deeds. This
registration of levy (or notice, in laymans language) now became binding
on the whole world, including the Garcias. The rights which had already
accrued in favor of BSC by virtue of the levy on attachment over the
property were never adversely affected by the unregistered transfer from
the spouses Ng to the Garcias.
We sympathize with the Garcias but, had they only bothered to check first
with the Register of Deeds of Quezon City before buying the property as
a prudent buyer would have done they would have seen the warning
about BSCs superior rights over it. This alone should have been sufficient
reason for them to back out of the deal.
It is doctrinal that a levy on attachment, duly registered, has preference
over a prior unregistered sale and, even if the prior unregistered sale is
subsequently registered before the sale on execution but after the levy is
made, the validity of the execution sale should be upheld because it
retroacts to the date of levy. The priority enjoyed by the levy on
attachment extends, with full force and effect, to the buyer at the auction
sale conducted by virtue of such levy.18[18] The sale between the spouses

Ng and the Garcias was undoubtedly a valid transaction between them.
However, in view of the prior levy on attachment on the same property,
the Garcias took the property subject to the attachment. The Garcias, in
buying registered land, stood exactly in the shoes of their vendors, the Ngs,
and their title ipso facto became subject to the incidents or results of the
pending litigation19[19] between the Ngs and BSC.
Even the alleged lack of actual and personal knowledge of the existence of
the levy on attachment over the subject property by the Garcias cannot be
sustained by this Court on the ground that one who deals with registered
land is charged with notice of the burdens on the property which are duly
noted on the certificate of title. On this specific point, we are concerned
not with actual or personal knowledge but constructive notice through
registration in the Registry of Deeds. Otherwise stated, what we should
follow is the annotation (or lack thereof) on the original title on file with
the Registry of Deeds, not on the duplicate title in the hands of the private
parties.
When a conveyance has been properly recorded, such record is
constructive notice of its contents and all interests, legal and equitable,
included therein. Under the rule on notice, it is presumed that the
purchaser has examined every instrument on record affecting the title.
Such presumption is irrefutable and cannot be overcome by any claim of
innocence or good faith. Therefore, such presumption cannot be defeated
by proof of lack of knowledge of what the public record contains any more
than one may be permitted to show that he was ignorant of the provisions
of the law. The rule that all persons must take notice of the facts which
the public record contains is a rule of law. The rule must be absolute. Any
variation would lead to endless confusion and useless litigation.20[20]

Otherwise, the very purpose and object of the law requiring public
registration would be for naught.
Pertinent to the matter at hand is Article 1544 of the New Civil Code which
provides:
If the same thing should have been sold to different vendees, x x x should
it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
x x x
Because of the principle of constructive notice to the whole world, one
who deals with registered property which is the subject of an annotated
levy on attachment cannot invoke the rights of a purchaser in good faith.
As between two purchasers, the one who registers the sale in his favor has
a preferred right over the other who has not registered his title even if the
latter is in actual possession of the immovable property.21[21] And, as
between two purchasers who both registered the respective sales in their
favor, the one who registered his sale ahead of the other would have
better rights than the other who registered later.
Applying said provision of the law and settled jurisprudence to the instant
case, when the disputed property was consequently sold on execution to
BSC, this auction sale retroacted to the date of inscription of BSC's notice
of attachment on July 27, 1998. The earlier registration thus gave BSC
superior and preferential rights over the attached property as against the
Garcias22[22] who registered their purchase of the property at a later

date. Notably, the Garcias were not purchasers for value in view of the
fact that they acquired the property in payment of the loan earlier
obtained from them by the Spouses Ng.23[23]
All told, the purchaser of a property subject to an attachment legally and
validly levied thereon is merely subrogated to the rights of the vendor and
acquires the property subject to the rights of the attachment creditor. An
attaching creditor who registers the order of attachment and the sale by
public auction of the property to him as the highest bidder acquires a
superior title to the property as against a vendee who previously bought
the same property from the registered owner but who failed to register his
deed of sale.24[24]
Petitioners Garcias failed to show that BSC acted in bad faith which would
have impelled this Court to rule otherwise.
The foregoing considerations show that the Garcias are not entitled to the
issuance of a writ of preliminary injunction from this Court. For the
issuance of the writ to be proper, it must be shown that the invasion of the
right sought to be protected is material and substantial, that the right of
the Garcias is clear and unmistakable and that there is an urgent and
paramount necessity for the writ to prevent serious damage.25[25] Such
requirements are all wanting in the case at bar. Thus, in view of the clear

and unmistakable absence of any legal basis for the issuance thereof, the
same must be denied.
On the second question whether the Garcias violated the rule against
forum-shopping we answer in the affirmative.
The Court of Appeals, in dismissing the Garcias' petition on the ground of
forum-shopping, explained:
A party is guilty of forum-shopping where he repetitively availed of several
judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential
facts and circumstances, and all raising substantially the same issues either
pending in, or already resolved adversely by some other court (Gatmaytan
vs. Court of Appeals, 267 SCRA 487).
The test to determine whether a party violated the rule against forum-
shopping is where the elements of litis pendentia are present or where a
final judgment in one case will amount to res judicata in another (Solid
Homes, Inc. vs. Court of Appeals, 271 SCRA 157).
What is truly important to consider in determining whether forum-
shopping exists or not is the vexation caused the courts and parties-
litigants by a party who asks different courts and/or administrative
agencies to rule on the same or related causes and/or grant the same or
substantially the same reliefs, in the process creating possibility of
conflicting decisions being rendered by the different fora upon the same
issues (Golangco vs. Court of Appeals, 283 SCRA 493).
The above jurisprudence instructs us the various indicia of forum-
shopping. The more important of these are: when the final judgment in
one case will amount to res judicata in another, or where the cases filed
are substantially founded on the same transactions and the same essential
facts and circumstances, or raising substantially the same issues, or more
importantly, where there exists the possibility of conflicting decisions
being rendered by different fora upon the same issues.
If we take a look closely on the instant Petition for Injunction, forum-
shopping is evident. In Civil Case No. 99-36804 raffled to Branch 98 of RTC-
Quezon City, petitioners therein prayed for the cancellation of the notice
of levy in their title. They are claiming that the controverted property is
owned by them such that the respondent therein has no right to levy on
their property, petitioners not being the respondents debtor. In the
present petition, petitioners seek that the scheduled auction sale of the
same property be perpetually enjoined, claiming that the property is
owned by them and that the same is erroneously made to answer for
liability not owing by them. Ultimately, the two actions involve the same
essential facts and circumstances, and are raising the same issues.
x x x The propriety of the issuance of injunction would depend on the
finding that the petitioners have a clear legal right over the property - a
right in esse or the existence of a right to be protected. Thus, this court
must make a categorical finding of fact. This very same issue of fact who
as between the two contending parties have a better right to the property
is the very issue presented before the RTC of Quezon City. Clearly
therefore, this Court and that of RTC Quezon City are called upon to
decide on the same issues based on the same essential facts and
circumstances. Hence, the possibility of these two courts rendering or
coming up with different or conflicting decisions is very much real.
Needless to say, the decision in one case would constitute res judicata in
the other. The instant petition for injunction obviously violates the rule on
forum-shopping.
We agree with the Court of Appeals.
As clearly demonstrated, the willful attempt by the Garcias to obtain a
preliminary injunction in another court (the Court of Appeals) after they
filed a case seeking the same relief from the original court (the Quezon City
RTC) constitutes grave abuse of the judicial process. Such contemptuous
act is penalized by the summary dismissal of both actions as mandated by
paragraph 17 of the Interim Rules and Guidelines issued by this Court on
January 11, 1983 and Supreme Court Circular No. 28-91, to wit:
x x x
SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE
SUPREME COURT AND THE COURT OF APPEALS TO PREVENT FORUM-
SHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS.
The attention of the Court has been called to the filing of multiple petitions
and complaints involving the same issues in the Supreme Court, the Court
of Appeals or different Divisions thereof, or any other tribunal or agency,
with the result that said tribunals or agency have to resolve the same
issues.
x x x.
3. Penalties.
(a) Any violation of this Circular shall be a cause for the summary dismissal
of the multiple petition or complaint;
x x x.
In Bugnay Construction & Development Corporation vs. Laron,26[26] we
declared:
Forum-shopping, an act of malpractice, is proscribed and condemned as
trifling with the courts and abusing their processes. It is improper conduct
that degrades the administration of justice. The rule has been formalized in
Paragraph 17 of the Interim Rules and Guidelines issued by this Court of
January 11, 1983, in connection with the implementation of the Judiciary
Reorganization Act x x x. The Rule ordains that (a) violation of the rule shall
constitute a contempt of court and shall be a cause for the summary
dismissal of both petitions, without prejudice to the taking of appropriate
action against the counsel or party concerned.

The rule against forum-shopping has been further strengthened by the
issuance of Supreme Court Administrative Circular No. 04-94. Said circular
formally established the rule that the deliberate filing of multiple
complaints to obtain favorable action constitutes forum-shopping and shall
be a ground for summary dismissal thereof.
Accordingly, the Garcias cannot pursue simultaneous remedies in two
different fora. This is a practice which degrades the judicial process,
messes up the orderly rules of procedure and is vexatious and unfair to the
other party in the case.
We rule therefore that the execution sale in favor of BSC was superior to
the sale of the same property by the Ngs to the Garcias on August 12,
1998. The right of petitioner BSC to the ownership and possession of the
property, the surrender of the owner's duplicate copy of TCT No. 194226
covering the subject property for inscription of the certificate of sale, the
cancellation of TCT No. 194226 and the issuance of a new title in favor of
BSC, is affirmed without prejudice to the right of the Garcias to seek
reimbursement from the spouses Ng.
In view of our disposition of the first issue resulting in the denial of the
Garcias petition, the petition of BSC praying that it be allowed to intervene
therein has been rendered moot. The Court thus finds it unnecessary to
discuss it.
WHEREFORE, the petitions are DENIED. The Resolution dated August 9,
2002 issued by this Court directing the parties to maintain the status quo
as of August 6, 2002 is hereby lifted and set aside. The Registry of Deeds
of Quezon City is hereby ordered to cancel TCT No. 194226 in the names of
Myla and Mylene Garcia and issue a new title in favor of BSC without
further delay.
SO ORDERED.
G.R. No. 178618 : October 11, 2010
MINDANAO SAVINGS AND LOAN ASSOCIATION, INC., represented by its
Liquidator, THE PHILIPPINE DEPOSIT INSURANCE CORPORATION,
Petitioner, v. EDWARD WILLKOM; GILDA GO; REMEDIOS UY; MALAYO
BANTUAS, in his capacity as the Deputy Sheriff of Regional Trial Court,
Branch 3, Iligan City; and the REGISTER OF DEEDS of Cagayan de Oro City,
Respondent.cralaw
D E C I S I O N
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court filed by Mindanao Savings and Loan Association, Inc. (MSLAI),
represented by its liquidator, Philippine Deposit Insurance Corporation
(PDIC), against respondents Edward R. Willkom (Willkom); Gilda Go (Go);
Remedios Uy (Uy); Malayo Bantuas (sheriff Bantuas), in his capacity as
sheriff of the Regional Trial Court (RTC), Branch 3 of Iligan City; and the
Register of Deeds of Cagayan de Oro City. MSLAI seeks the reversal and
setting aside of the Court of Appeals
1
cra1aw (CA) Decision
2
cra1aw dated
March 21, 2007 and Resolution
3
cra1aw dated June 1, 2007 in CA-G.R. CV
No. 58337.
The controversy stemmed from the following
facts:chanroblesvirtualawlibrary
The First Iligan Savings and Loan Association, Inc. (FISLAI) and the Davao
Savings and Loan Association, Inc. (DSLAI) are entities duly registered with
the Securities and Exchange Commission (SEC) under Registry Nos. 34869
and 32388, respectively, primarily engaged in the business of granting
loans and receiving deposits from the general public, and treated as
banks.
4
chanroblesvirtuallawlibrary
Sometime in 1985, FISLAI and DSLAI entered into a merger, with DSLAI as
the surviving corporation.
5
cra1aw The articles of merger were not
registered with the SEC due to incomplete documentation.
6
cra1aw On
August 12, 1985, DSLAI changed its corporate name to MSLAI by way of an
amendment to Article 1 of its Articles of Incorporation, but the
amendment was approved by the SEC only on April 3,
1987.
7
Meanwhile, on May 26, 1986, the Board of Directors of FISLAI passed and
approved Board Resolution No. 86-002, assigning its assets in favor of
DSLAI which in turn assumed the formers
liabilities.
8
The business of MSLAI, however, failed. Hence, the Monetary Board of the
Central Bank of the Philippines ordered its closure and placed it under
receivership per Monetary Board Resolution No. 922 dated August 31,
1990. The Monetary Board found that MSLAIs financial condition was one
of insolvency, and for it to continue in business would involve probable
loss to its depositors and creditors. On May 24, 1991, the Monetary Board
ordered the liquidation of MSLAI, with PDIC as its
liquidator.
9
It appears that prior to the closure of MSLAI, Uy filed with the RTC, Branch
3 of Iligan City, an action for collection of sum of money against FISLAI,
docketed as Civil Case No. 111-697. On October 19, 1989, the RTC issued a
summary decision in favor of Uy, directing defendants therein (which
included FISLAI) to pay the former the sum of P136,801.70, plus interest
until full payment, 25% as attorneys fees, and the costs of suit. The
decision was modified by the CA by further ordering the third-party
defendant therein to reimburse the payments that would be made by the
defendants. The decision became final and executory on February 21,
1992. A writ of execution was thereafter
issued.
10
On April 28, 1993, sheriff Bantuas levied on six (6) parcels of land owned by
FISLAI located in Cagayan de Oro City, and the notice of sale was
subsequently published. During the public auction on May 17, 1993,
Willkom was the highest bidder. A certificate of sale was issued and
eventually registered with the Register of Deeds of Cagayan de Oro City.
Upon the expiration of the redemption period, sheriff Bantuas issued the
sheriffs definite deed of sale. New certificates of title covering the subject
properties were issued in favor of Willkom. On September 20, 1994,
Willkom sold one of the subject parcels of land to
Go.
11
On June 14, 1995, MSLAI, represented by PDIC, filed before the RTC,
Branch 41 of Cagayan de Oro City, a complaint for Annulment of Sheriffs
Sale, Cancellation of Title and Reconveyance of Properties against
respondents.
12
cra1aw MSLAI alleged that the sale on execution of the
subject properties was conducted without notice to it and PDIC; that PDIC
only came to know about the sale for the first time in February 1995 while
discharging its mandate of liquidating MSLAIs assets; that the execution of
the RTC decision in Civil Case No. 111-697 was illegal and contrary to law
and jurisprudence, not only because PDIC was not notified of the execution
sale, but also because the assets of an institution placed under
receivership or liquidation such as MSLAI should be deemed in custodia
legis and should be exempt from any order of garnishment, levy,
attachment, or execution.
13
In answer, respondents averred that MSLAI had no cause of action against
them or the right to recover the subject properties because MSLAI is a
separate and distinct entity from FISLAI. They further contended that the
"unofficial merger" between FISLAI and DSLAI (now MSLAI) did not take
effect considering that the merging companies did not comply with the
formalities and procedure for merger or consolidation as prescribed by the
Corporation Code of the Philippines. Finally, they claimed that FISLAI is still
a SEC registered corporation and could not have been absorbed by
petitioner.
14
On March 13, 1997, the RTC issued a resolution dismissing the case for lack
of jurisdiction. The RTC declared that it could not annul the decision in Civil
Case No. 111-697, having been rendered by a court of coordinate
jurisdiction.
15
On appeal, MSLAI failed to obtain a favorable decision when the CA
affirmed the RTC resolution. The dispositive portion of the assailed CA
Decision reads:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the instant appeal is DENIED. The
decision assailed is AFFIRMED.
We REFER Sheriff Malayo B. Bantuas violation of the Supreme Court
Administrative Circular No. 12 to the Office of the Court Administrator for
appropriate action. The Division Clerk of Court is hereby DIRECTED to
furnish the Office of the Court Administrator a copy of this decision.
SO ORDERED.
16
The appellate court sustained the dismissal of petitioners complaint not
because it had no jurisdiction over the case, as held by the RTC, but on a
different ground. Citing Associated Bank v. CA,
17
cra1aw the CA ruled that
there was no merger between FISLAI and MSLAI (formerly DSLAI) for their
failure to follow the procedure laid down by the Corporation Code for a
valid merger or consolidation. The CA then concluded that the two
corporations retained their separate personalities; consequently, the claim
against FISLAI is warranted, and the subsequent sale of the levied
properties at public auction is valid. The CA went on to say that even if
there had been a de facto merger between FISLAI and MSLAI (formerly
DSLAI), Willkom, having relied on the clean certificates of title, was an
innocent purchaser for value, whose right is superior to that of MSLAI.
Furthermore, the alleged assignment of assets and liabilities executed by
FISLAI in favor of MSLAI was not binding on third parties because it was not
registered. Finally, the CA said that the validity of the auction sale could
not be invalidated by the fact that the sheriff had no authority to conduct
the execution sale.
18
Petitioners motion for reconsideration was denied in a Resolution dated
June 1, 2007. Hence, the instant petition anchored on the following
grounds:chanroblesvirtualawlibrary
THE HONORABLE COURT OF APPEALS, CAGAYAN DE ORO COMMITTED
GRAVE AND REVERSIBLE ERROR WHEN:chanroblesvirtualawlibrary
(1)
IT PASSED UPON THE EXISTENCE AND STATUS OF DSLAI (now MSLAI) AS
THE SURVIVING ENTITY IN THE MERGER BETWEEN DSLAI AND FISLAI AS A
DEFENSE IN AN ACTION OTHER THAN IN A QUO WARRANTO PROCEEDING
UPON THE INSTITUTION OF THE SOLICITOR GENERAL AS MANDATED
UNDER SECTION 20 OF BATAS PAMBANSA BLG. 68.
(2)
IT REFUSED TO RECOGNIZE THE MERGER BETWEEN F[I]SLAI AND DSLAI
WITH DSLAI AS THE SURVIVING CORPORATION.
(3)
IT HELD THAT THE PROPERTIES SUBJECT OF THE CASE ARE NOT IN
CUSTODIA LEGIS AND THEREFORE, EXEMPT FROM GARNISHMENT, LEVY,
ATTACHMENT OR EXECUTION.
19
To resolve this petition, we must address two basic questions: (1) Was the
merger between FISLAI and DSLAI (now MSLAI) valid and effective; and (2)
Was there novation of the obligation by substituting the person of the
debtor?
We answer both questions in the negative.
Ordinarily, in the merger of two or more existing corporations, one of the
corporations survives and continues the combined business, while the rest
are dissolved and all their rights, properties, and liabilities are acquired by
the surviving corporation.
20
cra1aw Although there is a dissolution of the
absorbed or merged corporations, there is no winding up of their affairs or
liquidation of their assets because the surviving corporation automatically
acquires all their rights, privileges, and powers, as well as their
liabilities.
21
The merger, however, does not become effective upon the mere
agreement of the constituent corporations.
22
cra1aw Since a merger or
consolidation involves fundamental changes in the corporation, as well as
in the rights of stockholders and creditors, there must be an express
provision of law authorizing them.
23
The steps necessary to accomplish a merger or consolidation, as provided
for in Sections 76,
24
cra1aw 77,
25
cra1aw 78,
26
cra1aw and 79
27
cra1aw of the
Corporation Code, are:chanroblesvirtualawlibrary
(1) The board of each corporation draws up a plan of merger or
consolidation. Such plan must include any amendment, if necessary, to the
articles of incorporation of the surviving corporation, or in case of
consolidation, all the statements required in the articles of incorporation
of a corporation.
(2) Submission of plan to stockholders or members of each corporation for
approval. A meeting must be called and at least two (2) weeks notice must
be sent to all stockholders or members, personally or by registered mail. A
summary of the plan must be attached to the notice. Vote of two-thirds of
the members or of stockholders representing two-thirds of the
outstanding capital stock will be needed. Appraisal rights, when proper,
must be respected.
(3) Execution of the formal agreement, referred to as the articles of merger
o[r] consolidation, by the corporate officers of each constituent
corporation. These take the place of the articles of incorporation of the
consolidated corporation, or amend the articles of incorporation of the
surviving corporation.
(4) Submission of said articles of merger or consolidation to the SEC for
approval.
(5) If necessary, the SEC shall set a hearing, notifying all corporations
concerned at least two weeks before.
(6) Issuance of certificate of merger or
consolidation.
28
Clearly, the merger shall only be effective upon the issuance of a certificate
of merger by the SEC, subject to its prior determination that the merger is
not inconsistent with the Corporation Code or existing laws.
29
cra1aw
Where a party to the merger is a special corporation governed by its own
charter, the Code particularly mandates that a favorable recommendation
of the appropriate government agency should first be
obtained.
30
In this case, it is undisputed that the articles of merger between FISLAI and
DSLAI were not registered with the SEC due to incomplete documentation.
Consequently, the SEC did not issue the required certificate of merger.
Even if it is true that the Monetary Board of the Central Bank of the
Philippines recognized such merger, the fact remains that no certificate
was issued by the SEC. Such merger is still incomplete without the
certification.
The issuance of the certificate of merger is crucial because not only does it
bear out SECs approval but it also marks the moment when the
consequences of a merger take place. By operation of law, upon the
effectivity of the merger, the absorbed corporation ceases to exist but its
rights and properties, as well as liabilities, shall be taken and deemed
transferred to and vested in the surviving
corporation.
31
The same rule applies to consolidation which becomes effective not upon
mere agreement of the members but only upon issuance of the certificate
of consolidation by the SEC.
32
cra1aw When the SEC, upon processing and
examining the articles of consolidation, is satisfied that the consolidation
of the corporations is not inconsistent with the provisions of the
Corporation Code and existing laws, it issues a certificate of consolidation
which makes the reorganization official.
33
cra1aw The new consolidated
corporation comes into existence and the constituent corporations are
dissolved and cease to exist.
34
There being no merger between FISLAI and DSLAI (now MSLAI), for third
parties such as respondents, the two corporations shall not be considered
as one but two separate corporations. A corporation is an artificial being
created by operation of law. It possesses the right of succession and such
powers, attributes, and properties expressly authorized by law or incident
to its existence.
35
cra1aw It has a personality separate and distinct from the
persons composing it, as well as from any other legal entity to which it may
be related.
36
cra1aw Being separate entities, the property of one cannot be
considered the property of the other.
Thus, in the instant case, as far as third parties are concerned, the assets of
FISLAI remain as its assets and cannot be considered as belonging to DSLAI
and MSLAI, notwithstanding the Deed of Assignment wherein FISLAI
assigned its assets and properties to DSLAI, and the latter assumed all the
liabilities of the former. As provided in Article 1625 of the Civil Code, "an
assignment of credit, right or action shall produce no effect as against third
persons, unless it appears in a public instrument, or the instrument is
recorded in the Registry of Property in case the assignment involves real
property." The certificates of title of the subject properties were clean and
contained no annotation of the fact of assignment. Respondents cannot,
therefore, be faulted for enforcing their claim against FISLAI on the
properties registered under its name. Accordingly, MSLAI, as the successor-
in-interest of DSLAI, has no legal standing to annul the execution sale over
the properties of FISLAI. With more reason can it not cause the
cancellation of the title to the subject properties of Willkom and Go.
Petitioner cannot also anchor its right to annul the execution sale on the
principle of novation. While it is true that DSLAI (now MSLAI) assumed all
the liabilities of FISLAI, such assumption did not result in novation as would
release the latter from liability, thereby exempting its properties from
execution. Novation is the extinguishment of an obligation by the
substitution or change of the obligation by a subsequent one which
extinguishes or modifies the first, either by changing the object or principal
conditions, by substituting another in place of the debtor, or by
subrogating a third person in the rights of the
creditor.
37
It is a rule that novation by substitution of debtor must always be made
with the consent of the creditor.
38
cra1aw Article 1293 of the Civil Code is
explicit, thus:chanroblesvirtualawlibrary
Art. 1293. Novation which consists in substituting a new debtor in the
place of the original one, may be made even without the knowledge or
against the will of the latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights mentioned in Articles
1236 and 1237.
In this case, there was no showing that Uy, the creditor, gave her consent
to the agreement that DSLAI (now MSLAI) would assume the liabilities of
FISLAI. Such agreement cannot prejudice Uy. Thus, the assets that FISLAI
transferred to DSLAI remained subject to execution to satisfy the judgment
claim of Uy against FISLAI. The subsequent sale of the properties by Uy to
Willkom, and of one of the properties by Willkom to Go, cannot, therefore,
be questioned by MSLAI.
The consent of the creditor to a novation by change of debtor is as
indispensable as the creditors consent in conventional subrogation in
order that a novation shall legally take place.
39
cra1aw Since novation
implies a waiver of the right which the creditor had before the novation,
such waiver must be express.
40
WHEREFORE, premises considered, the petition is DENIED. The Court of
Appeals Decision dated March 21, 2007 and Resolution dated June 1, 2007
in CA-G.R. CV No. 58337 are AFFIRMED.
SO ORDERED.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision
1
of the Court of
Appeals in CA-G.R. CV No. 78200 affirming the August 30, 2000 Decision
2

of the Regional Trial Court of Makati, which granted respondent Joseph
Anthony M. Alejandros claim for damages arising from petitioner
Philippine Commercial International Banks (PCIB) invalid garnishment of
respondents deposits.
On October 23, 1997, petitioner filed against respondent a complaint
3
for
sum of money with prayer for the issuance of a writ of preliminary
attachment. Said complaint alleged that on September 10, 1997,
respondent, a resident of Hong Kong, executed in favor of petitioner a
promissory note obligating himself to pay P249,828,588.90 plus interest. In
view of the fluctuations in the foreign exchange rates which resulted in the
insufficiency of the deposits assigned by respondent as security for the
loan, petitioner requested the latter to put up additional security for the
loan. Respondent, however, sought a reconsideration of said request
pointing out petitioners alleged mishandling of his account due to its
failure to carry out his instruction to close his account as early as April
1997, when the prevailing rate of exchange of the US Dollar to Japanese
yen was US$1.00:JPY127.50.
4
It appears that the amount of
P249,828,588.90 was the consolidated amount of a series of yen loans
granted by petitioner to respondent during the months of February and
April 1997.
5

In praying for the issuance of a writ of preliminary attachment under
Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner
alleged that (1) respondent fraudulently withdrew his unassigned deposits
notwithstanding his verbal promise to PCIB Assistant Vice President
Corazon B. Nepomuceno not to withdraw the same prior to their
assignment as security for the loan; and (2) that respondent is not a
resident of the Philippines. The application for the issuance of a writ was
supported with the affidavit of Nepomuceno.
6

On October 24, 1997, the trial court granted the application and issued the
writ ex parte
7
after petitioner posted a bond in the amount of
P18,798,734.69, issued by Prudential Guarantee & Assurance Inc., under
Bond No. HO-46764-97. On the same date, the bank deposits of
respondent with Rizal Commercial Banking Corporation (RCBC) were
garnished. On October 27, 1997, respondent, through counsel, filed a
manifestation informing the court that he is voluntarily submitting to its
jurisdiction.
8

Subsequently, respondent filed a motion to quash
9
the writ contending
that the withdrawal of his unassigned deposits was not fraudulent as it was
approved by petitioner. He also alleged that petitioner knew that he
maintains a permanent residence at Calle Victoria, Ciudad Regina, Batasan
Hills, Quezon City, and an office address in Makati City at the Law Firm
Romulo Mabanta Buenaventura Sayoc & De los Angeles,
10
where he is a
partner. In both addresses, petitioner regularly communicated with him
through its representatives. Respondent added that he is the managing
partner of the Hong Kong branch of said Law Firm; that his stay in Hong
Kong is only temporary; and that he frequently travels back to the
Philippines.
On December 24, 1997, the trial court issued an order quashing the writ
and holding that the withdrawal of respondents unassigned deposits was
not intended to defraud petitioner. It also found that the representatives
of petitioner personally transacted with respondent through his home
address in Quezon City and/or his office in Makati City. It thus concluded
that petitioner misrepresented and suppressed the facts regarding
respondents residence considering that it has personal and official
knowledge that for purposes of service of summons, respondents
residence and office addresses are located in the Philippines. The
dispositive portion of the courts decision is as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is
hereby GRANTED, and the ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT OF attachment of the same is
hereby DISCHARGED.
SO ORDERED.
11

With the denial
12
of petitioners motion for reconsideration, it elevated the
case to the Court of Appeals (CA-G.R. SP No. 50748) via a petition for
certiorari. On May 10, 1999, the petition was dismissed for failure to prove
that the trial court abused its discretion in issuing the aforesaid order.
13

Petitioner filed a motion for reconsideration but was denied on October
28, 1999.
14
On petition with this Court, the case was dismissed for late
filing in a minute resolution (G.R. No. 140605) dated January 19, 2000.
15

Petitioner filed a motion for reconsideration but was likewise denied with
finality on March 6, 2000.
16

Meanwhile, on May 20, 1998, respondent filed a claim for damages in the
amount of P25 Million
17
on the attachment bond (posted by Prudential
Guarantee & Assurance, Inc., under JCL(4) No. 01081, Bond No. HO-46764-
97) on account of the wrongful garnishment of his deposits. He presented
evidence showing that his P150,000.00 RCBC check payable to his counsel
as attorneys fees, was dishonored by reason of the garnishment of his
deposits. He also testified that he is a graduate of the Ateneo de Manila
University in 1982 with a double degree of Economics and Management
Engineering and of the University of the Philippines in 1987 with the
degree of Bachelor of Laws. Respondent likewise presented witnesses to
prove that he is a well known lawyer in the business community both in
the Philippines and in Hong Kong.
18
For its part, the lone witness presented
by petitioner was Nepomuceno who claimed that she acted in good faith in
alleging that respondent is a resident of Hong Kong.
19

On August 30, 2000, the trial court awarded damages to respondent in the
amount of P25 Million without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly
established his claim in the amount of P25,000,000.00, judgment is hereby
rendered ordering Prudential Guarantee & [Assurance] Co., which is
solidarily liable with plaintiff to pay defendant the full amount of bond
under Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No.
HO-46764-97], dated 24 October 1997 in the amount of P18,798,734.69.
And, considering that the amount of the bond is insufficient to fully satisfy
the award for damages, plaintiff is hereby ordered to pay defendant the
amount of P6,201,265.31.
SO ORDERED.
20

The trial court denied petitioners motion for reconsideration on October
24, 2000.
21

Petitioner elevated the case to the Court of Appeals which affirmed the
findings of the trial court. It held that in claiming that respondent was not a
resident of the Philippines, petitioner cannot be said to have been in good
faith considering that its knowledge of respondents Philippine residence
and office address goes into the very issue of the trial courts jurisdiction
which would have been defective had respondent not voluntarily appeared
before it.
The Court of Appeals, however, reduced the amount of damages awarded
to petitioner and specified their basis. The dispositive portion of the
decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed
from is hereby MODIFIED. The award of damages in the amount of
P25,000,000.00 is deleted. In lieu thereof, Prudential Guarantee &
[Assurance, Inc.], which is solidarily liable with appellant [herein
petitioner], is ORDERED to pay appellee [herein respondent] P2,000,000.00
as nominal damages; P5,000,000.00 as moral damages; and P1,000,000.00
as attorneys fees, to be satisfied against the attachment bond under
Prudential Guarantee & Assurance, Inc. JCL (4) No. 01081.
SO ORDERED.
22

Both parties moved for reconsideration. On November 21, 2006, the Court
of Appeals denied petitioners motion for reconsideration but granted that
of respondents by ordering petitioner to pay additional P5Million as
exemplary damages.
23

Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that
petitioner is not entitled to a writ of attachment because respondent is a
resident of the Philippines and that his act of withdrawing his deposits with
petitioner was without intent to defraud, can no longer be passed upon by
this Court. More importantly, the conclusions of the court that petitioner
bank misrepresented that respondent was residing out of the Philippines
and suppressed the fact that respondent has a permanent residence in
Metro Manila where he may be served with summons, are now beyond
the power of this Court to review having been the subject of a final and
executory order. Said findings were sustained by the Court of Appeals in
CA-G.R. SP No. 50784 and by this Court in G.R. No. 140605. The rule on
conclusiveness of judgment, which obtains under the premises, precludes
the relitigation of a particular fact or issue in another action between the
same parties even if based on a different claim or cause of action. The
judgment in the prior action operates as estoppel as to those matters in
issue or points controverted, upon the determination of which the finding
or judgment was rendered. The previous judgment is conclusive in the
second case, as to those matters actually and directly controverted and
determined.
24
Hence, the issues of misrepresentation by petitioner and the
residence of respondent for purposes of service of summons can no longer
be questioned by petitioner in this case.
The core issue for resolution is whether petitioner bank is liable for
damages for the improper issuance of the writ of attachment against
respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of
misrepresentation and suppression of a material fact, the latter contends
that it acted in good faith. Petitioner also contends that even if respondent
is considered a resident of the Philippines, attachment is still proper under
Section 1, paragraph (f), Rule 57 of the Rules of Court since he
(respondent) is a resident who is temporarily out of the Philippines upon
whom service of summons may be effected by publication.
Petitioners contentions are without merit.
While the final order of the trial court which quashed the writ did not
categorically use the word "bad faith" in characterizing the representations
of petitioner, the tenor of said order evidently considers the latter to have
acted in bad faith by resorting to a deliberate strategy to mislead the
court. Thus
In the hearings of the motion, and oral arguments of counsels before the
Court, it appears that plaintiff BANK through its contracting officers Vice
President Corazon B. Nepomuceno and Executive Vice President Jose
Ramon F. Revilla, personally transacted with defendant mainly through
defendants permanent residence in METRO-MANILA, either in
defendants home address in Quezon City or his main business address at
the Romulo Mabanta Buenaventura Sayoc & Delos Angeles in MAKATI and
while at times follow ups were made through defendants temporary
home and business addresses in Hongkong. It is therefore clear that
plaintiff could not deny their personal and official knowledge that
defendants permanent and official residence for purposes of service of
summons is in the Philippines. In fact, this finding is further confirmed by
the letter of Mr. JOHN GOKONGWEI, JR. Chairman, Executive Committee of
plaintiff BANK, in his letter dated 6 October 1997 on the subject loan to
defendant of the same law firm was addressed to the ROMULO LAW FIRM
in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that the
amount withdrawn was not part of defendants peso deposits assigned
with the bank to secure the loan and as proof that the withdrawal was not
intended to defraud plaintiff as creditor is that plaintiff approved and
allowed said withdrawals. It is even noted that when the Court granted the
prayer for attachment it was mainly on the first ground under Section 1(f)
of Rule 57 of the 1997 Rules of Civil Procedure, that defendant resides out
of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the
beginning the deficiency of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his creditors, and therefore
plaintiff had to resort to this misrepresentation that defendant was
residing out of the Philippines and suppressed the fact that defendants
permanent residence is in METRO MANILA where he could be served with
summons.
On the above findings, and mainly on the misrepresentations made by
plaintiff on the grounds for the issuance of the attachment in the verified
complaint, the Court concludes that defendant has duly proven its grounds
in the MOTION and that plaintiff is not entitled to the attachment.
25

Petitioner is therefore barred by the principle of conclusiveness of
judgment from again invoking good faith in the application for the issuance
of the writ. Similarly, in the case of Hanil Development Co., Ltd. v. Court of
Appeals,
26
the Court debunked the claim of good faith by a party who
maliciously sought the issuance of a writ of attachment, the bad faith of
said party having been previously determined in a final decision which
voided the assailed writ. Thus
Apropos the Application for Judgment on the Attachment Bond, Escobar
claims in its petition that the award of attorneys fees and injunction bond
premium in favor of Hanil is [contrary] to law and jurisprudence. It
contends that no malice or bad faith may be imputed to it in procuring the
writ.
Escobars protestation is now too late in the day. The question of the
illegality of the attachment and Escobars bad faith in obtaining it has long
been settled in one of the earlier incidents of this case. The Court of
Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-
14512, voided the challenged writ, having been issued with grave abuse of
discretion. Escobars bad faith in procuring the writ cannot be doubted. Its
Petition for the Issuance of Preliminary Attachment made such damning
allegations that: Hanil was already able to secure a complete release of its
final collection from the MPWH; it has moved out some of its heavy
equipments for unknown destination, and it may leave the country
anytime. Worse, its Ex Parte Motion to Resolve Petition alleged that "after
personal verification by (Escobar) of (Hanils) equipment in Cagayan de Oro
City, it appears that the equipments were no longer existing from their
compound." All these allegations of Escobar were found to be totally
baseless and untrue.
Even assuming that the trial court did not make a categorical
pronouncement of misrepresentation and suppression of material facts on
the part of petitioner, the factual backdrop of this case does not support
petitioners claim of good faith. The facts and circumstances omitted are
highly material and relevant to the grant or denial of writ of attachment
applied for.
Finally, there is no merit in petitioners contention that respondent can be
considered a resident who is temporarily out of the Philippines upon
whom service of summons may be effected by publication, and therefore
qualifies as among those against whom a writ of attachment may be issued
under Section 1, paragraph (f), Rule 57 of the Rules of Court which
provides:
(f) In an action against a party x x x on whom summons may be served by
publication.
In so arguing, petitioner attempts to give the impression that although it
erroneously invoked the ground that respondent does not reside in the
Philippines, it should not be made to pay damages because it is in fact
entitled to a writ of attachment had it invoked the proper ground under
Rule 57. However, even on this alternative ground, petitioner is still not
entitled to the issuance of a writ of attachment.
The circumstances under which a writ of preliminary attachment may be
issued are set forth in Section 1, Rule 57 of the Rules of Court, to wit:
SEC. 1. Grounds upon which attachment may issue. At the
commencement of the action or at any time before entry of judgment, a
plaintiff or any proper party may have the property of the adverse party
attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
(a) In an action for the recovery of a specified amount of money
or damages, other than moral and exemplary, on a cause of action
arising from law, contract, quasi-contract, delict or quasi-delict
against a party who is about to depart from the Philippines with
intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an
officer of a corporation or an attorney, factor, broker, agent, or
clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty;
(c) In an action to recover the possession of personal property
unjustly or fraudulently taken, detained, or converted, when the
property, or any part thereof, has been concealed, removed, or
disposed of to prevent its being found or taken by the applicant or
an authorized person;
(d) In an action against a party who has been guilty of a fraud in
contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of
his property, or is about to do so, with intent to defraud his
creditors;
(f) In an action against a party who resides out of the Philippines,
or on whom summons may be served by publication.
The purposes of preliminary attachment are: (1) to seize the property of
the debtor in advance of final judgment and to hold it for purposes of
satisfying said judgment, as in the grounds stated in paragraphs (a) to (e)
of Section 1, Rule 57 of the Rules of Court; or (2) to acquire jurisdiction
over the action by actual or constructive seizure of the property in those
instances where personal or substituted service of summons on the
defendant cannot be effected, as in paragraph (f) of the same provision.
27

Corollarily, in actions in personam, such as the instant case for collection of
sum of money,
28
summons must be served by personal or substituted
service, otherwise the court will not acquire jurisdiction over the
defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be
effected), the remedy of the plaintiff in order for the court to acquire
jurisdiction to try the case is to convert the action into a proceeding in rem
or quasi in rem by attaching the property of the defendant.
29
Thus, in order
to acquire jurisdiction in actions in personam where defendant resides out
of and is not found in the Philippines, it becomes a matter of course for the
court to convert the action into a proceeding in rem or quasi in rem by
attaching the defendants property. The service of summons in this case
(which may be by publication coupled with the sending by registered mail
of the copy of the summons and the court order to the last known address
of the defendant), is no longer for the purpose of acquiring jurisdiction but
for compliance with the requirements of due process.
30

However, where the defendant is a resident who is temporarily out of the
Philippines, attachment of his/her property in an action in personam, is not
always necessary in order for the court to acquire jurisdiction to hear the
case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an action is
commenced against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service may, by leave of court,
be also effected out of the Philippines, as under the preceding section.
The preceding section referred to in the above provision is Section 15
which provides for extraterritorial service (a) personal service out of the
Philippines, (b) publication coupled with the sending by registered mail of
the copy of the summons and the court order to the last known address of
the defendant; or (c) in any other manner which the court may deem
sufficient.
In Montalban v. Maximo,
31
however, the Court held that substituted
service of summons (under the present Section 7, Rule 14 of the Rules of
Court) is the normal mode of service of summons that will confer
jurisdiction on the court over the person of residents temporarily out of
the Philippines. Meaning, service of summons may be effected by (a)
leaving copies of the summons at the defendants residence with some
person of suitable discretion residing therein, or (b) by leaving copies at
the defendants office or regular place of business with some competent
person in charge thereof.
32
Hence, the court may acquire jurisdiction over
an action in personam by mere substituted service without need of
attaching the property of the defendant.
The rationale in providing for substituted service as the normal mode of
service for residents temporarily out of the Philippines, was expounded in
Montalban v. Maximo,
33
in this wise:
A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to which any
inquiry about him may be directed and where he is bound to return.
Where one temporarily absents himself, he leaves his affairs in the hands
of one who may be reasonably expected to act in his place and stead; to do
all that is necessary to protect his interests; and to communicate with him
from time to time any incident of importance that may affect him or his
business or his affairs. It is usual for such a man to leave at his home or
with his business associates information as to where he may be contacted
in the event a question that affects him crops up.
Thus, in actions in personam against residents temporarily out of the
Philippines, the court need not always attach the defendants property in
order to have authority to try the case. Where the plaintiff seeks to attach
the defendants property and to resort to the concomitant service of
summons by publication, the same must be with prior leave, precisely
because, if the sole purpose of the attachment is for the court to acquire
jurisdiction, the latter must determine whether from the allegations in the
complaint, substituted service (to persons of suitable discretion at the
defendants residence or to a competent person in charge of his office or
regular place of business) will suffice, or whether there is a need to attach
the property of the defendant and resort to service of summons by
publication in order for the court to acquire jurisdiction over the case and
to comply with the requirements of due process.
In the instant case, it must be stressed that the writ was issued by the trial
court mainly on the representation of petitioner that respondent is not a
resident of the Philippines.
34
Obviously, the trial courts issuance of the
writ was for the sole purpose of acquiring jurisdiction to hear and decide
the case. Had the allegations in the complaint disclosed that respondent
has a residence in Quezon City and an office in Makati City, the trial court,
if only for the purpose of acquiring jurisdiction, could have served
summons by substituted service on the said addresses, instead of
attaching the property of the defendant. The rules on the application of a
writ of attachment must be strictly construed in favor of the defendant.
For attachment is harsh, extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to humiliation and
annoyance.
35
It should be resorted to only when necessary and as a last
remedy.
It is clear from the foregoing that even on the allegation that respondent is
a resident temporarily out of the Philippines, petitioner is still not entitled
to a writ of attachment because the trial court could acquire jurisdiction
over the case by substituted service instead of attaching the property of
the defendant. The misrepresentation of petitioner that respondent does
not reside in the Philippines and its omission of his local addresses was
thus a deliberate move to ensure that the application for the writ will be
granted.
In light of the foregoing, the Court of Appeals properly sustained the
finding of the trial court that petitioner is liable for damages for the
wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not awarding
the same inasmuch as the respondent failed to establish the amount
garnished by petitioner. It is a well settled rule that one who has been
injured by a wrongful attachment can recover damages for the actual loss
resulting therefrom. But for such losses to be recoverable, they must
constitute actual damages duly established by competent proofs, which
are, however, wanting in the present case.
36

Nevertheless, nominal damages may be awarded to a plaintiff whose right
has been violated or invaded by the defendant, for the purpose of
vindicating or recognizing that right, and not for indemnifying the plaintiff
for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right.
Indeed, nominal damages are damages in name only and not in fact.
37
They
are recoverable where some injury has been done but the pecuniary value
of the damage is not shown by evidence and are thus subject to the
discretion of the court according to the circumstances of the case.
38

In this case, the award of nominal damages is proper considering that the
right of respondent to use his money has been violated by its garnishment.
The amount of nominal damages must, however, be reduced from P2
million to P50,000.00 considering the short period of 2 months during
which the writ was in effect as well as the lack of evidence as to the
amount garnished.1wphi1
Likewise, the award of attorneys fees is proper when a party is compelled
to incur expenses to lift a wrongfully issued writ of attachment. The basis
of the award thereof is also the amount of money garnished, and the
length of time respondents have been deprived of the use of their money
by reason of the wrongful attachment.
39
It may also be based upon (1) the
amount and the character of the services rendered; (2) the labor, time and
trouble involved; (3) the nature and importance of the litigation and
business in which the services were rendered; (4) the responsibility
imposed; (5) the amount of money and the value of the property affected
by the controversy or involved in the employment; (6) the skill and the
experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the
results secured, it being a recognized rule that an attorney may properly
charge a much larger fee when it is contingent than when it is not.
40

All the aforementioned weighed, and considering the short period of time
it took to have the writ lifted, the favorable decisions of the courts below,
the absence of evidence as to the professional character and the social
standing of the attorney handling the case and the amount garnished, the
award of attorneys fees should be fixed not at P1 Million, but only at
P200,000.00.
The courts below correctly awarded moral damages on account of
petitioners misrepresentation and bad faith; however, we find the award
in the amount of P5 Million excessive. Moral damages are to be fixed upon
the discretion of the court taking into consideration the educational, social
and financial standing of the parties.
41
Moral damages are not intended to
enrich a complainant at the expense of a defendant.
42
They are awarded
only to enable the injured party to obtain means, diversion or amusements
that will serve to obviate the moral suffering he has undergone, by reason
of petitioners culpable action. Moral damages must be commensurate
with the loss or injury suffered. Hence, the award of moral damages is
reduced to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment, we
sustain the award of exemplary damages by way of example or correction
for public good. This should deter parties in litigations from resorting to
baseless and preposterous allegations to obtain writs of attachments.
While as a general rule, the liability on the attachment bond is limited to
actual (or in some cases, temperate or nominal) damages, exemplary
damages may be recovered where the attachment was established to be
maliciously sued out.
43
Nevertheless, the award of exemplary damages in
this case should be reduced from P5M to P500,000.00.
Finally, contrary to the claim of petitioner, the instant case for damages by
reason of the invalid issuance of the writ, survives the dismissal of the
main case for sum of money. Suffice it to state that the claim for damages
arising from such wrongful attachment may arise and be decided
separately from the merits of the main action.
44

WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006
Decision of the Court of Appeals in CA-G.R. CV No. 78200 is AFFIRMED with
MODIFICATIONS. As modified, petitioner Philippine Commercial
International Bank is ordered to pay respondent Joseph Anthony M.
Alejandro the following amounts: P50,000.00 as nominal damages,
P200,000.00 as attorneys fees; and P500,000.00 as moral damages, and
P500,000.00 as exemplary damages, to be satisfied against the attachment
bond issued by Prudential Guarantee & Assurance Inc.,
45
under JCL (4) No.
01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
MUNICIPALITY OF SAN MIGUEL, BULACAN, petitioner,
vs.
HONORABLE OSCAR C. FERNANDEZ, in his capacity as the Presiding
Judge, Branch IV, Baliuag, Bulacan, The PROVINCIAL SHERIFF of Bulacan,
MARGARITA D. VDA. DE IMPERIO, ADORACION IMPERIO, RODOLFO
IMPERIO, CONRADO IMPERIO, ERNESTO IMPERIO, ALFREDO IMPERIO,
CARLOS IMPERIO, JR., JUAN IMPERIO and SPOUSES MARCELO PINEDA
and LUCILA PONGCO, respondents.
Pascual C. Liatchko for petitioner.
The Solicitor General and Marcelo Pineda for respondents.

RELOVA, J.:
In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al. vs.
Municipal Government of San Miguel, Bulacan, et al.", the then Court of
First Instance of Bulacan, on April 28, 1978, rendered judgment holding
herein petitioner municipality liable to private respondents, as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs and against the
defendant Municipal Government of San Miguel Bulacan,
represented by Mayor Mar Marcelo G. Aure and its
Municipal Treasurer:
1. ordering the partial revocation of the Deed of
Donation signed by the deceased Carlos Imperio in favor
of the Municipality of San Miguel Bulacan, dated October
27, 1947 insofar as Lots Nos. 1, 2, 3, 4 and 5, Block 11 of
Subdivision Plan Psd-20831 are concerned, with an
aggregate total area of 4,646 square meters, which lots
are among those covered and described under TCT No. T-
1831 of the Register of Deeds of Bulacan in the name of
the Municipal Government of San Miguel Bulacan,
2. ordering the defendant to execute the corresponding
Deed of Reconveyance over the aforementioned five lots
in favor of the plaintiffs in the proportion of the
undivided one-half () share in the name of plaintiffs
Margarita D. Vda. de Imperio, Adoracion, Rodolfo,
Conrado, Ernesto, Alfredo, Carlos, Jr. and Juan, all
surnamed Imperio, and the remaining undivided one-half
() share in favor of plaintiffs uses Marcelo E. Pineda and
Lucila Pongco;
3. ordering the defendant municipality to pay to the
plaintiffs in the proportion mentioned in the immediately
preceding paragraph the sum of P64,440.00
corresponding to the rentals it has collected from the
occupants for their use and occupation of the premises
from 1970 up to and including 1975, plus interest
thereon at the legal rate from January 1970 until fully
paid;
4. ordering the restoration of ownership and possession
over the five lots in question in favor of the plaintiffs in
the same proportion aforementioned;
5. ordering the defendant to pay the plaintiffs the sum of
P3,000.00 for attomey's fees; and to pay the cost of suit.
The counterclaim of the defendant is hereby ordered
dismissed for lack of evidence presented to substantiate
the same.
SO ORDERED. (pp. 11-12, Rollo)
The foregoing judgment became final when herein petitioner's appeal was
dismissed due to its failure to file the record on appeal on time. The
dismissal was affirmed by the then Court of Appeals in CA-G.R. No. SP-
12118 and by this Court in G.R. No. 59938. Thereafter, herein private
respondents moved for issuance of a writ of execution for the satisfaction
of the judgment. Respondent judge, on July 27, 1982, issued an order, to
wit:
Considering that an entry of judgment had already been
made on June 14, 1982 in G. R. No. L-59938 and;
Considering further that there is no opposition to
plaintiffs' motion for execution dated July 23, 1983;
Let a writ of execution be so issued, as prayed for in the
aforestated motion. (p. 10, Rollo)
Petitioner, on July 30, 1982, filed a Motion to Quash the writ of execution
on the ground that the municipality's property or funds are all public funds
exempt from execution. The said motion to quash was, however, denied
by the respondent judge in an order dated August 23, 1982 and the alias
writ of execution stands in full force and effect.
On September 13, 1982, respondent judge issued an order which in part,
states:
It is clear and evident from the foregoing that defendant
has more than enough funds to meet its judgment
obligation. Municipal Treasurer Miguel C, Roura of San
Miguel, Bulacan and Provincial Treasurer of Bulacan
Agustin O. Talavera are therefor hereby ordered to
comply with the money judgment rendered by Judge
Agustin C. Bagasao against said municipality. In like
manner, the municipal authorities of San Miguel, Bulacan
are likewise ordered to desist from plaintiffs' legal
possession of the property already returned to plaintiffs
by virtue of the alias writ of execution.
Finally, defendants are hereby given an inextendible
period of ten (10) days from receipt of a copy of this
order by the Office of the Provincial Fiscal of Bulacan
within which to submit their written compliance, (p. 24,
Rollo)
When the treasurers (provincial and municipal) failed to comply with the
order of September 13, 1982, respondent judge issued an order for their
arrest and that they will be release only upon compliance thereof.
Hence, the present petition on the issue whether the funds of the
Municipality of San Miguel, Bulacan, in the hands of the provincial and
municipal treasurers of Bulacan and San Miguel, respectively, are public
funds which are exempt from execution for the satisfaction of the money
judgment in Civil Case No. 604-B.
Well settled is the rule that public funds are not subject to levy and
execution. The reason for this was explained in the case of Municipality of
Paoay vs. Manaois, 86 Phil. 629 "that they are held in trust for the people,
intended and used for the accomplishment of the purposes for which
municipal corporations are created, and that to subject said properties and
public funds to execution would materially impede, even defeat and in
some instances destroy said purpose." And, in Tantoco vs. Municipal
Council of Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the
law that not only the public property but also the taxes and public
revenues of such corporations Cannot be seized under execution against
them, either in the treasury or when in transit to it. Judgments rendered
for taxes, and the proceeds of such judgments in the hands of officers of
the law, are not subject to execution unless so declared by statute." Thus,
it is clear that all the funds of petitioner municipality in the possession of
the Municipal Treasurer of San Miguel, as well as those in the possession
of the Provincial Treasurer of Bulacan, are also public funds and as such
they are exempt from execution.
Besides, Presidential Decree No. 477, known as "The Decree on Local Fiscal
Administration", Section 2 (a), provides:
SEC. 2. Fundamental Principles. Local government
financial affairs, transactions, and operations shall be
governed by the fundamental principles set forth
hereunder:
(a) No money shall be paid out of the treasury except in
pursuance of a lawful appropriation or other specific
statutory authority.
xxx xxx xxx
Otherwise stated, there must be a corresponding appropriation in the form
of an ordinance duly passed by the Sangguniang Bayan before any money
of the municipality may be paid out. In the case at bar, it has not been
shown that the Sangguniang Bayan has passed an ordinance to this effect.
Furthermore, Section 15, Rule 39 of the New Rules of Court, outlines the
procedure for the enforcement of money judgment:
(a) By levying on all the property of the debtor, whether
real or personal, not otherwise exempt from execution,
or only on such part of the property as is sufficient to
satisfy the judgment and accruing cost, if he has more
than sufficient property for the purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much of the
proceeds as will satisfy the judgment and accruing costs;
and
(d) By delivering to the judgment-debtor the excess, if
any, unless otherwise, directed by judgment or order of
the court.
The foregoing has not been followed in the case at bar.
ACCORDINGLY, the petition is granted and the order of respondent judge,
dated July 27, 1982, granting issuance of a writ of execution; the alias writ
of execution, dated July 27, 1982; and the order of respondent judge,
dated September 13, 1982, directing the Provincial Treasurer of Bulacan
and the Municipal Treasurer of San Miguel, Bulacan to comply with the
money judgments, are SET ASIDE; and respondents are hereby enjoined
from implementing the writ of execution.
SO ORDERED.
VICENTE B. CHUIDIAN, petitioner,
vs.
SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES,
respondents.
YNARES-SANTIAGO, J.:
The instant petition arises from transactions that were entered into by the
government in the penultimate days of the Marcos administration.
Petitioner Vicente B. Chuidian was alleged to be a dummy or nominee of
Ferdinand and Imelda Marcos in several companies said to have been
illegally acquired by the Marcos spouses. As a favored business associate of
the Marcoses, Chuidian allegedly used false pretenses to induce the
officers of the Philippine Export and Foreign Loan Guarantee Corporation
(PHILGUARANTEE), the Board of Investments (BOI) and the Central Bank,
to facilitate the procurement and issuance of a loan guarantee in favor of
the Asian Reliability Company, Incorporated (ARCI) sometime in September
1980. ARCI, 98% of which was allegedly owned by Chuidian, was granted a
loan guarantee of Twenty-Five Million U.S. Dollars
(US$25,000,000.00).1wphi1.nt
While ARCI represented to Philguarantee that the loan proceeds would be
used to establish five inter-related projects in the Philippines, Chuidian
reneged on the approved business plan and instead invested the proceeds
of the loan in corporations operating in the United States, more
particularly Dynetics, Incorporated and Interlek, Incorporated. Although
ARCI had received the proceeds of the loan guaranteed by Philguarantee,
the former defaulted in the payments thereof, compelling Philguarantee to
undertake payments for the same. Consequently, in June 1985,
Philguarantee sued Chuidian before the Santa Clara County Superior
Court,
1
charging that in violation of the terms of the loan, Chuidian not
only defaulted in payment, but also misused the funds by investing them in
Silicon Valley corporations and using them for his personal benefit.
For his part, Chuidian claimed that he himself was a victim of the
systematic plunder perpetrated by the Marcoses as he was the true owner
of these companies, and that he had in fact instituted an action before the
Federal Courts of the United States to recover the companies which the
Marcoses had illegally wrested from him.
2

On November 27, 1985, or three (3) months before the successful people's
revolt that toppled the Marcos dictatorship, Philguarantee entered into a
compromise agreement with Chuidian whereby petitioner Chuidian shall
assign and surrender title to all his companies in favor of the Philippine
government. In return, Philguarantee shall absolve Chuidian from all civil
and criminal liability, and in so doing, desist from pursuing any suit against
Chuidian concerning the payments Philguarantee had made on Chuidian's
defaulted loans.
It was further stipulated that instead of Chuidian reimbursing the
payments made by Philguarantee arising from Chuidian's default, the
Philippine government shall pay Chuidian the amount of Five Million Three
Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five
Hundred Thousand Dollars (US$500,000.00) was actually received by
Chuidian, as well as succeeding payment of Two Hundred Thousand Dollars
(US$200,000.00). The remaining balance of Four Million Six Hundred
Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable
Letter of Credit (L/C) from which Chuidian would draw One Hundred
Thousand Dollars (US$100,000.00) monthly.
3
Accordingly, on December
12, 1985, L/C No. SSD-005-85 was issued for the said amount by the
Philippine National Bank (PNB). Subsequently, Chuidian was able to make
two (2) monthly drawings from said L/C at the Los Angeles branch of the
PNB.
4

With the advent of the Aquino administration, the newly-established
Presidential Commission on Good Government (PCGG) exerted earnest
efforts to search and recover money, gold, properties, stocks and other
assets suspected as having been illegally acquired by the Marcoses, their
relatives and cronies.
Petitioner Chuidian was among those whose assets were sequestered by
the PCGG. On May 30, 1986, the PCGG issued a Sequestration Order
5

directing the PNB to place under its custody, for and in behalf of the PCGG,
the irrevocable L/C (No. SSD-005-85). Although Chuidian was then residing
in the United States, his name was placed in the Department of Foreign
Affairs' Hold Order list.
6

In the meantime, Philguarantee filed a motion before the Superior Court of
Santa Clara County of California in Civil Case Nos. 575867 and 577697
seeking to vacate the stipulated judgment containing the settlement
between Philguarantee and Chuidian on the grounds that: (a)
Philguarantee was compelled by the Marcos administration to agree to the
terms of the settlement which was highly unfavorable to Philguarantee
and grossly disadvantageous to the government; (b) Chuidian blackmailed
Marcos into pursuing and concluding the settlement agreement by
threatening to expose the fact that the Marcoses made investments in
Chuidian's American enterprises; and (c) the Aquino administration had
ordered Philguarantee not to make further payments on the L/C to
Chuidian. After considering the factual matters before it, the said court
concluded that Philguarantee "had not carried its burden of showing that
the settlement between the parties should be set aside."
7
On appeal, the
Sixth Appellate District of the Court of Appeal of the State of California
affirmed the judgment of the Superior Court of Sta. Clara County denying
Philguarantee's motion to vacate the stipulated judgment based on the
settlement agreement.
8

After payment on the L/C was frozen by the PCGG, Chuidian filed before
the United States District Court, Central District of California, an action
against PNB seeking, among others, to compel PNB to pay the proceeds of
the L/C. PNB countered that it cannot be held liable for a breach of
contract under principles of illegality, international comity and act of state,
and thus it is excused from payment of the L/C. Philguarantee intervened
in said action, raising the same issues and arguments it had earlier raised in
the action before the Santa Clara Superior Court, alleging that PNB was
excused from making payments on the L/C since the settlement was void
due to illegality, duress and fraud.
9

The Federal Court rendered judgment ruling: (1) in favor of PNB excusing
the said bank from making payment on the L/C; and (2) in Chuidian's favor
by denying intervenor Philguarantee's action to set aside the settlement
agreement.
10

Meanwhile, on February 27, 1987, a Deed of Transfer
11
was executed
between then Secretary of Finance Jaime V. Ongpin and then PNB
President Edgardo B. Espiritu, to facilitate the rehabilitation of PNB, among
others, as part of the government's economic recovery program. The said
Deed of Transfer provided for the transfer to the government of certain
assets of PNB in exchange for which the government would assume certain
liabilities of PNB.
12
Among those liabilities which the government assumed
were unused commercial L/C's and Deferred L/C's, including SSD-005-85
listed under Dynetics, Incorporated in favor of Chuidian in the amount of
Four Million Four Hundred Thousand Dollars (US$4,400,000.00).
13

On July 30, 1987, the government filed before the Sandiganbayan Civil
Case No. 0027 against the Marcos spouses, several government officials
who served under the Marcos administration, and a number of individuals
known to be cronies of the Marcoses, including Chuidian. The complaint
sought the reconveyance, reversion, accounting and restitution of all forms
of wealth allegedly procured illegally and stashed away by the defendants.
In particular, the complaint charged that Chuidian, by himself and/or in
conspiracy with the Marcos spouses, engaged in "devices, schemes and
stratagems" by: (1) forming corporations for the purpose of hiding and
avoiding discovery of illegally obtained assets; (2) pillaging the coffers of
government financial institutions such as the Philguarantee; and (3)
executing the court settlement between Philguarantee and Chuidian which
was grossly disadvantageous to the government and the Filipino people.
In fine, the PCGG averred that the above-stated acts of Chuidian
committed in unlawful concert with the other defendants constituted
"gross abuse of official position of authority, flagrant breach of public trust
and fiduciary obligations, brazen abuse of right and power, unjust
enrichment, violation of the Constitution and laws" of the land.
14

While the case was pending, on March 17, 1993, the Republic of the
Philippines filed a motion for issuance of a writ of attachment
15
over the
L/C, citing as grounds therefor the following:
(1) Chuidian embezzled or fraudulently misapplied the funds of
ARCI acting in a fiduciary capacity, justifying issuance of the writ
under Section 1(b), Rule 57 of the Rules of Court;
(2) The writ is justified under Section 1(d) of the same rule as
Chuidian is guilty of fraud in contracting the debt or incurring the
obligation upon which the action was brought, or that he
concealed or disposed of the property that is the subject of the
action;
(3) Chuidian has removed or disposed of his property with the
intent of defrauding the plaintiff as justified under Section 1(c) of
Rule 57; and
(4) Chuidian is residing out of the country or one on whom
summons may be served by publication, which justifies the writ of
attachment prayed for under Section 1(e) of the same rule.
The Republic also averred that should the action brought by Chuidian
before the U.S. District Court of California to compel payment of the L/C
prosper, inspite of the sequestration of the said L/C, Chuidian can ask the
said foreign court to compel the PNB Los Angeles branch to pay the
proceeds of the L/C. Eventually, Philguarantee will be made to shoulder
the expense resulting in further damage to the government. Thus, there
was an urgent need for the writ of attachment to place the L/C under the
custody of the Sandiganbayan so the same may be preserved as security
for the satisfaction of judgment in the case before said court.
Chuidian opposed the motion for issuance of the writ of attachment,
contending that:
(1) The plaintiff's affidavit appended to the motion was in form
and substance fatally defective;
(2) Section 1(b) of Rule 57 does not apply since there was no
fiduciary relationship between the plaintiff and Chuidian;
(3) While Chuidian does not admit fraud on his part, if ever there
was breach of contract, such fraud must be present at the time
the contract is entered into;
(4) Chuidian has not removed or disposed of his property in the
absence of any intent to defraud plaintiff;
(5) Chuidian's absence from the country does not necessarily
make him a non-resident; and
(6) Service of summons by publication cannot be used to justify
the issuance of the writ since Chuidian had already submitted to
the jurisdiction of the Court by way of a motion to lift the freeze
order filed through his counsel.
On July 14, 1993, the Sandiganbayan issued a Resolution ordering the
issuance of a writ of attachment against L/C No. SSD-005-85 as security for
the satisfaction of judgment.
16
The Sandiganbayan's ruling was based on its
disquisition of the five points of contention raised by the parties. On the
first issue, the Sandiganbayan found that although no separate affidavit
was attached to the motion, the motion itself contained all the requisites
of an affidavit, and the verification thereof is deemed a substantial
compliance of Rule 57, Section 3 of the Rules of Court.
Anent the second contention, the Sandiganbayan ruled that there was no
fiduciary relationship existing between Chuidian and the Republic, but only
between Chuidian and ARCI. Since the Republic is not privy to the fiduciary
relationship between Chuidian and ARCI, it cannot invoke Section 1(b) of
Rule 57.
On the third issue of fraud on the part of Chuidian in contracting the loan,
or in concealing or disposing of the subject property, the Sandiganbayan
held that there was a prima facie case of fraud committed by Chuidian,
justifying the issuance of the writ of attachment. The Sandiganbayan also
adopted the Republic's position that since it was compelled to pay,
through Philguarantee, the bank loans taken out by Chuidian, the proceeds
of which were fraudulently diverted, it is entitled to the issuance of the
writ of attachment to protect its rights as creditor.
Assuming that there is truth to the government's allegation that Chuidian
has removed or disposed of his property with the intent to defraud, the
Sandiganbayan held that the writ of attachment is warranted, applying
Section 1(e) of Rule 57. Besides, the Rules provide for sufficient security
should the owner of the property attached suffer damage or prejudice
caused by the attachment.
17

Chuidian's absence from the country was considered by the
Sandiganbayan to be "the most potent insofar as the relief being sought is
concerned."
18
Taking judicial notice of the admitted fact that Chuidian was
residing outside of the country, the Sandiganbayan observed that:
"x x x no explanation whatsoever was given by him as to his absence from
the country, or as to his homecoming plans in the future. It may be added,
moreover, that he has no definite or clearcut plan to return to the country
at this juncture given the manner by which he has submitted himself to
the jurisdiction of the court."
19

Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily
resides in the Philippines, but is temporarily living outside, he is still subject
to the provisional remedy of attachment.
Accordingly, an order of attachment
20
was issued by the Sandiganbayan on
July 19, 1993, ordering the Sandiganbayan Sheriff to attach PNB L/C No.
SSD-005-85 for safekeeping pursuant to the Rules of Court as security for
the satisfaction of judgment in Sandiganbayan Civil Case No. 0027.
On August 11, 1997, or almost four (4) years after the issuance of the order
of attachment, Chuidian filed a motion to lift the attachment based on the
following grounds:
First, he had returned to the Philippines; hence, the Sandiganbayan's
"most potent ground" for the issuance of the writ of preliminary
attachment no longer existed. Since his absence in the past was the very
foundation of the Sandiganbayan's writ of preliminary attachment, his
presence in the country warrants the immediate lifting thereof.
Second, there was no evidence at all of initial fraud or subsequent
concealment except for the affidavit submitted by the PCGG Chairman
citing mere "belief and information" and "not on knowledge of the facts."
Moreover, this statement is hearsay since the PCGG Chairman was not a
witness to the litigated incidents, was never presented as a witness by the
Republic and thus was not subject to cross-examination.
Third, Chuidian denies that he ever disposed of his assets to defraud the
Republic, and there is nothing in the records that support the
Sandiganbayan's erroneous conclusion on the matter. Fourth, Chuidian
belied the allegation that he was also a defendant in "other related
criminal action," for in fact, he had "never been a defendant in any
prosecution of any sort in the Philippines."
21
Moreover, he could not have
personally appeared in any other action because he had been deprived of
his right to a travel document by the government.
Fifth, the preliminary attachment was, in the first place, unwarranted
because he was not "guilty of fraud in contracting the debt or incurring the
obligation". In fact, the L/C was not a product of fraudulent transactions,
but was the result of a US Court-approved settlement. Although he was
accused of employing blackmail tactics to procure the settlement, the
California Supreme Court ruled otherwise. And in relation thereto, he cites
as a sixth ground the fact that all these allegations of fraud and
wrongdoing had already been dealt with in actions before the State and
Federal Courts of California. While it cannot technically be considered as
forum shopping, it is nevertheless a "form of suit multiplicity over the
same issues, parties and subject matter."
22
These foreign judgments
constitute res judicata which warrant the dismissal of the case itself.
Chuidian further contends that should the attachment be allowed to
continue, he will be deprived of his property without due process. The L/C
was payment to Chuidian in exchange for the assets he turned over to the
Republic pursuant to the terms of the settlement in Case No. 575867. Said
assets, however, had already been sold by the Republic and cannot be
returned to Chuidian should the government succeed in depriving him of
the proceeds of the L/C. Since said assets were disposed of without his or
the Sandiganbayan's consent, it is the Republic who is fraudulently
disposing of assets.
Finally, Chuidian stressed that throughout the four (4) years that the
preliminary attachment had been in effect, the government had not set
the case for hearing. Under Rule 17, Section 3, the case itself should be
dismissed for laches owing to the Republic's failure to prosecute its action
for an unreasonable length of time. Accordingly, the preliminary
attachment, being only a temporary or ancillary remedy, must be lifted
and the PNB ordered to immediately pay the proceeds of the L/C to
Chuidian.
Subsequently, on August 20, 1997, Chuidian filed a motion to require the
Republic to deposit the L/C in an interest bearing account.
23
Annex "D";
Rollo, pp. 77-79.23 He pointed out to the Sandiganbayan that the face
amount of the L/C had, since its attachment, become fully demandable
and payable. However, since the amount is just lying dormant in the PNB,
without earning any interest, he proposed that it would be to the benefit
of all if the Sandiganbayan requires PNB to deposit the full amount to a
Sandiganbayan trust account at any bank in order to earn interest while
awaiting judgment of the action.
The Republic opposed Chuidian's motion to lift attachment, alleging that
Chuidian's absence was not the only ground for the attachment and,
therefore, his belated appearance before the Sandiganbayan is not a
sufficient reason to lift the attachment. Moreover, allowing the foreign
judgment as a basis for the lifting of the attachment would essentially
amount to an abdication of the jurisdiction of the Sandiganbayan to hear
and decide the ill gotten wealth cases lodged before it in deference to the
judgment of foreign courts.
In a Resolution promulgated on November 13, 1998, the Sandiganbayan
denied Chuidian's motion to lift attachment.
24

On the same day, the Sandiganbayan issued another Resolution denying
Chuidian's motion to require deposit of the attached L/C in an interest
bearing account.
25

In a motion seeking a reconsideration of the first resolution, Chuidian
assailed the Sandiganbayan's finding that the issues raised in his motion to
lift attachment had already been dealt with in the earlier resolution dated
July 14, 1993 granting the application for the writ of preliminary
attachment based on the following grounds:
First, Chuidian was out of the country in 1993, but is now presently
residing in the country.
Second, the Sandiganbayan could not have known then that his absence
was due to the non-renewal of his passport at the instance of the PCGG.
Neither was it revealed that the Republic had already disposed of
Chuidian's assets ceded to the Republic in exchange for the L/C. The
foreign judgment was not an issue then because at that time, said
judgment had not yet been issued and much less final. Furthermore, the
authority of the PCGG Commissioner to subscribe as a knowledgeable
witness relative to the issuance of the writ of preliminary attachment was
raised for the first time in the motion to lift the attachment. Finally, the
issue of laches could not have been raised then because it was the
Republic's subsequent neglect or failure to prosecute despite the passing
of the years that gave rise to laches.
26

Chuidian also moved for a reconsideration of the Sandiganbayan resolution
denying the motion to require deposit of the L/C into an interest bearing
account. He argued that contrary to the Sandiganbayan's pronouncement,
allowing the deposit would not amount to a virtual recognition of his right
over the L/C, for he is not asking for payment but simply requesting that it
be deposited in an account under the control of the Sandiganbayan. He
further stressed that the Sandiganbayan abdicated its bounden duty to
rule on an issue when it found "that his motion will render nugatory the
purpose of sequestration and freeze orders over the L/C." Considering that
his assets had already been sold by the Republic, he claimed that the
Sandiganbayan's refusal to exercise its fiduciary duty over attached assets
will cause him irreparable injury. Lastly, the Sandiganbayan's position that
Chuidian was not the owner but a mere payee-beneficiary of the L/C issued
in his favor negates overwhelming jurisprudence on the Negotiable
Instruments Law, while at the same time obliterating his rights of
ownership under the Civil Code.
27

On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for
the attached L/C to be deposited in an interest-bearing account, on the
ground that it will redound to the benefit of both parties.
The Sandiganbayan declared the national government as the principal
obligor of the L/C even though the liability remained in the books of the
PNB for accounting and monitoring purposes.
The Sandiganbayan, however, denied Chuidian's motion for
reconsideration of the denial of his motion to lift attachment, agreeing in
full with the government's apriorisms that:
x x x (1) it is a matter of record that the Court granted the application for
writ of attachment upon grounds other than defendant's absence in the
Philippine territory. In its Resolution dated July 14, 1993, the Court found a
prima facie case of fraud committed by defendant Chuidian, and that
defendant has recovered or disposed of his property with the intent of
defrauding plaintiff; (2) Chuidian's belated presence in the Philippines
cannot be invoked to secure the lifting of attachment. The rule is specific
that it applies to a party who is about to depart from the Philippines with
intent to defraud his creditors. Chuidian's stay in the country is uncertain
and he may leave at will because he holds a foreign passport; and (3)
Chuidian's other ground, sufficiency of former PCGG Chairman
Gunigundo's verification of the complaint, has been met fairly and squarely
in the Resolution of July 14, 1993.
28

Hence, the instant petition for certiorari contending that the respondent
Sandiganbayan committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it ruled that:
1) Most of the issues raised in the motion to lift attachment had
been substantially addressed in the previous resolutions dated
July 14, 1993 and August 26, 1998, while the rest were of no
imperative relevance as to affect the Sandiganbayan's disposition;
and
2) PNB was relieved of the obligation to pay on its own L/C by
virtue of Presidential Proclamation No. 50.
The Rules of Court specifically provide for the remedies of a defendant
whose property or asset has been attached. As has been consistently ruled
by this Court, the determination of the existence of grounds to discharge a
writ of attachment rests in the sound discretion of the lower courts.
29

The question in this case is: What can the herein petitioner do to quash the
attachment of the L/C? There are two courses of action available to the
petitioner:
First. To file a counterbond in accordance with Rule 57, Section 12, which
provides:
SEC. 12. Discharge of attachment upon giving counterbond. At anytime
after an order of attachment has been granted, the party whose property
has been attached, or the person appearing on his behalf, may, upon
reasonable notice to the applicant, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an
order discharging the attachment wholly or in part on the security given.
The judge shall, after hearing, order the discharge of the attachment if a
cash deposit is made, or a counterbond executed to the attaching creditor
is filed, on behalf of the adverse party, with the clerk or judge of the court
where the application is made, in an amount equal to the value of the
property attached as determined by the judge, to secure the payment of
any judgment that the attaching creditor may recover in the action. Upon
the filing of such counter-bond, copy thereof shall forthwith be served on
the attaching creditor or his lawyer. Upon the discharge of an attachment
in accordance with the provisions of this section the property attached, or
the proceeds of any sale thereof, shall be delivered to the party making the
deposit or giving the counter-bond, or the person appearing on his behalf,
the deposit or counter-bond aforesaid standing in place of the property so
released. Should such counterbond for any reason be found to be, or
become, insufficient, and the party furnishing the same fail to file an
additional counter-bond, the attaching creditor may apply for a new order
of attachment.1wphi1.nt
or
Second. To quash the attachment on the ground that it was irregularly or
improvidently issued, as provided for in Section 13 of the same Rule:
SEC. 13. Discharge of attachment for improper or irregular issuance. - The
party whose property has been attached may also, at any time either
before or after the release of the attached property, or before any
attachment shall have been actually levied, upon reasonable notice to the
attaching creditor, apply to the judge who granted the order, or to the
judge of the court in which the action is pending, for an order to discharge
the attachment on the ground that the same was improperly or irregularly
issued. If the motion be made on affidavits on the part of the party whose
property has been attached, but not otherwise, the attaching creditor may
oppose the same by counter-affidavits or other evidence in addition to
that on which the attachment was made. After hearing, the judge shall
order the discharge of the attachment if it appears that it was improperly
or irregularly issued and the defect is not cured forthwith.
It would appear that petitioner chose the latter because the grounds he
raised assail the propriety of the issuance of the writ of attachment. By his
own admission, however, he repeatedly acknowledged that his
justifications to warrant the lifting of the attachment are facts or events
that came to light or took place after the writ of attachment had already
been implemented.
More particularly, petitioner emphasized that four (4) years after the writ
was issued, he had returned to the Philippines. Yet while he noted that he
would have returned earlier but for the cancellation of his passport by the
PCGG, he was not barred from returning to the Philippines. Then he
informed the Sandiganbayan that while the case against him was pending,
but after the attachment had already been executed, the government lost
two (2) cases for fraud lodged against him before the U.S. Courts, thus
invoking res judicata. Next, he also pointed out that the government is
estopped from pursuing the case against him for failing to prosecute for
the number of years that it had been pending litigation.
It is clear that these grounds have nothing to do with the issuance of the
writ of attachment. Much less do they attack the issuance of the writ at
that time as improper or irregular. And yet, the rule contemplates that the
defect must be in the very issuance of the attachment writ. For instance,
the attachment may be discharged under Section 13 of Rule 57 when it is
proven that the allegations of the complaint were deceptively framed,
30
or
when the complaint fails to state a cause of action.
31
Supervening events
which may or may not justify the discharge of the writ are not within the
purview of this particular rule.
In the instant case, there is no showing that the issuance of the writ of
attachment was attended by impropriety or irregularity. Apart from
seeking a reconsideration of the resolution granting the application for the
writ, petitioner no longer questioned the writ itself. For four (4) long years
he kept silent and did not exercise any of the remedies available to a
defendant whose property or asset has been attached. It is rather too late
in the day for petitioner to question the propriety of the issuance of the
writ.
Petitioner also makes capital of the two foreign judgments which he claims
warrant the application of the principle of res judicata. The first judgment,
in Civil Case Nos. 575867 and 577697 brought by Philguarantee before the
Santa Clara Country Superior Court, denied Philguarantee's prayer to set
aside the stipulated judgment wherein Philguarantee and Chuidian agreed
on the subject attached L/C. On March 14, 1990, the Court of Appeal of the
State of California affirmed the Superior Court's judgment. The said
judgment became the subject of a petition for review by the California
Supreme Court. There is no showing, however, of any final judgment by
the California Supreme Court. The records, including petitioner's pleadings,
are bereft of any evidence to show that there is a final foreign judgment
which the Philippine courts must defer to. Hence, res judicata finds no
application in this instance because it is a requisite that the former
judgment or order must be final.
32

Second, petitioner cites the judgment of the United States District Court in
Civil Case 86-2255 RSWL brought by petitioner Chuidian against PNB to
compel the latter to pay the L/C. The said Court's judgment, while it ruled
in favor of petitioner on the matter of Philguarantee's action-in-
intervention to set aside the settlement agreement, also ruled in favor of
PNB, to wit:
Under Executive Order No. 1, the PCGG is vested by the Philippine
President with the power to enforce its directives and orders by contempt
proceedings. Under Executive Order No. 2, the PCGG is empowered to
freeze any, and all assets, funds and property illegally acquired by former
President Marcos or his close friends and business associates.
On March 11, 1986, PNB/Manila received an order from the PCGG ordering
PNB to freeze any further drawings on the L/C. The freeze order has
remained in effect and was followed by a sequestration order issued by
the PCGG. Subsequently, Chuidian's Philippine counsel filed a series of
challenges to the freeze and sequestration orders, which challenges were
unsuccessful as the orders were found valid by the Philippine Supreme
Court. The freeze and sequestration orders are presently in effect. Thus,
under the PCGG order and Executive Orders Nos. 1 and 2, performance by
PNB would be illegal under Philippine Law. Therefore PNB is excused from
performance of the L/C agreement as long as the freeze and sequestration
orders remain in effect. (Underscoring ours)
x x x x x x x x x
Chuidian argues that the fact that the L/C was issued pursuant to a
settlement in California, that the negotiations for which occurred in
California, and that two of the payments were made at PNB/LA, compels
the conclusion that the act of prohibiting payment of the L/C occurred in
Los Angeles. However, the majority of the evidence and Tchacosh and
Sabbatino compel the opposite conclusion. The L/C was issued in Manila,
such was done at the request of a Philippine government instrumentality
for the benefit of a Philippine citizen, the L/C was to be performed in the
Philippines, all significant events relating to the issuance and
implementation of the L/C occurred in the Philippines, the L/C agreement
provided that the L/C was to be construed according to laws of the
Philippines, and the Philippine government certainly has an interest in
preventing the L/C from being remitted in that it would be the release of
funds that are potentially illgotten gains. Accordingly, the Court finds that
the PCGG orders are acts of state that must be respected by this Court, and
thus PNB is excused from making payment on the L/C as long as the freeze
and sequestration orders remain in effect.
33
(Underscoring ours)
Petitioner's own evidence strengthens the government's position that the
L/C is under the jurisdiction of the Philippine government and that the U.S.
Courts recognize the authority of the Republic to sequester and freeze said
L/C. Hence, the foreign judgments relied upon by petitioner do not
constitute a bar to the Republic's action to recover whatever alleged ill-
gotten wealth petitioner may have acquired.
Petitioner may argue, albeit belatedly, that he also raised the issue that
there was no evidence of fraud on record other than the affidavit of PCGG
Chairman Gunigundo. This issue of fraud, however, touches on the very
merits of the main case which accuses petitioner of committing fraudulent
acts in his dealings with the government. Moreover, this alleged fraud was
one of the grounds for the application of the writ, and the Sandiganbayan
granted said application after it found a prima facie case of fraud
committed by petitioner.
In fine, fraud was not only one of the grounds for the issuance of the
preliminary attachment, it was at the same time the government's cause of
action in the main case.
We have uniformly held that:
x x x when the preliminary attachment is issued upon a ground which is at
the same time the applicant's cause of action; e.g., "an action for money or
property embezzled or fraudulently misapplied or converted to his own
use by a public officer, or an officer of a corporation, or an attorney, factor,
broker, agent, or clerk, in the course of his employment as such, or by any
other person in a fiduciary capacity, or for a willful violation of duty," or
"an action against a party who has been guilty of fraud in contracting the
debt or incurring the obligation upon which the action is brought," the
defendant is not allowed to file a motion to dissolve the attachment under
Section 13 of Rule 57 by offering to show the falsity of the factual
averments in the plaintiff's application and affidavits on which the writ was
based and consequently that the writ based thereon had been
improperly or irregularly issued the reason being that the hearing on
such a motion for dissolution of the writ would be tantamount to a trial of
the merits of the action. In other words, the merits of the action would be
ventilated at a mere hearing of a motion, instead of at the regular trial.
34

(Underscoring ours)
Thus, this Court has time and again ruled that the merits of the action in
which a writ of preliminary attachment has been issued are not triable on a
motion for dissolution of the attachment, otherwise an applicant for the
lifting of the writ could force a trial of the merits of the case on a mere
motion.
35

It is not the Republic's fault that the litigation has been protracted. There is
as yet no evidence of fraud on the part of petitioner. Petitioner is only one
of the twenty-three (23) defendants in the main action. As such, the
litigation would take longer than most cases. Petitioner cannot invoke this
delay in the proceedings as an excuse for not seeking the proper recourse
in having the writ of attachment lifted in due time. If ever laches set in, it
was petitioner, not the government, who failed to take action within a
reasonable time period. Challenging the issuance of the writ of attachment
four (4) years after its implementation showed petitioner's apparent
indifference towards the proceedings before the Sandiganbayan.
In sum, petitioner has failed to convince this Court that the Sandiganbayan
gravely abused its discretion in a whimsical, capricious and arbitrary
manner. There are no compelling reasons to warrant the immediate lifting
of the attachment even as the main case is still pending. On the other
hand, allowing the discharge of the attachment at this stage of the
proceedings would put in jeopardy the right of the attaching party to
realize upon the relief sought and expected to be granted in the main or
principal action. It would have the effect of prejudging the main case.
The attachment is a mere provisional remedy to ensure the safety and
preservation of the thing attached until the plaintiff can, by appropriate
proceedings, obtain a judgment and have such property applied to its
satisfaction.
36
To discharge the attachment at this stage of the proceedings
would render inutile any favorable judgment should the government
prevail in the principal action against petitioner. Thus, the Sandiganbayan,
in issuing the questioned resolutions, which are interlocutory in nature,
committed no grave abuse of discretion amounting to lack or excess of
jurisdiction. As long as the Sandiganbayan acted within its jurisdiction, any
alleged errors committed in the exercise of its jurisdiction will amount to
nothing more than errors of judgment which are reviewable by timely
appeal and not by special civil action of certiorari.
37

Moreover, we have held that when the writ of attachment is issued upon a
ground which is at the same time the applicant's cause of action, the only
other way the writ can be lifted or dissolved is by a counterbond, in
accordance with Section 12 of the same rule.
38
This recourse, however,
was not availed of by petitioner, as noted by the Solicitor General in his
comment.
39

To reiterate, there are only two ways of quashing a writ of attachment: (a)
by filing a counterbond immediately; or (b) by moving to quash on the
ground of improper and irregular issuance.
40
These grounds for the
dissolution of an attachment are fixed in Rule 57 of the Rules of Court and
the power of the Court to dissolve an attachment is circumscribed by the
grounds specified therein.
41
Petitioner's motion to lift attachment failed to
demonstrate any infirmity or defect in the issuance of the writ of
attachment; neither did he file a counterbond.
Finally, we come to the matter of depositing the Letter of Credit in an
interest-bearing account. We agree with the Sandiganbayan that any
interest that the proceeds of the L/C may earn while the case is being
litigated would redound to the benefit of whichever party will prevail, the
Philippine government included. Thus, we affirm the Sandiganbayan's
ruling that the proceeds of the L/C should be deposited in an interest
bearing account with the Land Bank of the Philippines for the account of
the Sandiganbayan in escrow until ordered released by the said Court.
We find no legal reason, however, to release the PNB from any liability
thereunder. The Deed of Transfer, whereby certain liabilities of PNB were
transferred to the national government, cannot affect the said L/C since
there was no valid substitution of debtor. Article 1293 of the New Civil
Code provides:
Novation which consists in substituting a new debtor in the place of the
original one, may be made without the knowledge or against the will of the
latter, but not without the consent of the creditor. Payment by the new
debtor gives him the rights mentioned in Articles 1236 and 1237.
Accordingly, any substitution of debtor must be with the consent of the
creditor, whose consent thereto cannot just be presumed. Even though
Presidential Proclamation No. 50 can be considered an "insuperable
cause", it does not necessarily make the contracts and obligations affected
thereby exceptions to the above-quoted law, such that the substitution of
debtor can be validly made even without the consent of the creditor.
Presidential Proclamation No. 50 was not intended to set aside laws that
govern the very lifeblood of the nation's commerce and economy. In fact,
the Deed of Transfer that was executed between PNB and the government
pursuant to the said Presidential Proclamation specifically stated that it
shall be deemed effective only upon compliance with several conditions,
one of which requires that:
(b) the BANK shall have secured such governmental and creditors'
approvals as may be necessary to establish the consummation, legality and
enforceability of the transactions contemplated hereby."
The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped
from denying its liability thereunder considering that neither the PNB nor
the government bothered to secure petitioner's consent to the
substitution of debtors. We are not unmindful that any effort to secure
petitioner's consent at that time would, in effect, be deemed an admission
that the L/C is valid and binding. Even the Sandiganbayan found that:
36
Sta.
Ines Melale Forest Products Corp. v. Macaraig, Jr., 299 SCRA 491, 515
(1998).
x x x Movant has basis in pointing out that inasmuch as the L/C was issued
in his favor, he is presumed to be the lawful payee-beneficiary of the L/C
until such time that the plaintiff successfully proves that said L/C is ill-
gotten and he has no right over the same.
42

In Republic v. Sandiganbayan,
43
we held that the provisional remedies,
such as freeze orders and sequestration, were not "meant to deprive the
owner or possessor of his title or any right to the property sequestered,
frozen or taken over and vest it in the sequestering agency, the
Government or other person."
Thus, until such time that the government is able to successfully prove that
petitioner has no right to claim the proceeds of the L/C, he is deemed to be
the lawful payee-beneficiary of said L/C, for which any substitution of
debtor requires his consent. The Sandiganbayan thus erred in relieving
PNB of its liability as the original debtor.
WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The
Resolutions of the Sandiganbayan dated November 6, 1998 and July 2,
1999 are AFFIRMED. The PNB is DIRECTED to remit to the Sandiganbayan
the proceeds of Letter of Credit No. SFD-005-85 in the amount of U.S. $4.4
million within fifteen (15) days from notice hereof, the same to be placed
under special time deposit with the Land Bank of the Philippines, for the
account of Sandiganbayan in escrow for the person or persons, natural or
juridical, who shall eventually be adjudged lawfully entitled thereto, the
same to earn interest at the current legal bank rates. The principal and its
interest shall remain in said account until ordered released by the Court in
accordance with law.1wphi1.nt
No costs.
SO ORDERED.
SPOUSES GREGORIO and JOSEFA YU, Petitioners,
vs.
NGO YET TE, doing business under the name and style, ESSENTIAL
MANUFACTURING, Respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court assailing the March 21, 2001 Decision
1
of the Court of Appeals
(CA) in CA-G.R. CV No. 52246
2
and its October 14, 2002 Resolution.
3

The antecedent facts are not disputed.
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te
(Te) bars of detergent soap worth P594,240.00, and issued to the latter
three postdated checks
4
as payment of the purchase price. When Te
presented the checks at maturity for encashment, said checks were
returned dishonored and stamped "ACCOUNT CLOSED".
5
Te demanded
6

payment from Spouses Yu but the latter did not heed her demands. Acting
through her son and attorney-in-fact, Charry Sy (Sy), Te filed with the
Regional Trial Court (RTC), Branch 75, Valenzuela, Metro Manila, a
Complaint,
7
docketed as Civil Case No. 4061-V-93, for Collection of Sum of
Money and Damages with Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te attached to her
Complaint an Affidavit executed by Sy that Spouses Yu were guilty of fraud
in entering into the purchase agreement for they never intended to pay
the contract price, and that, based on reliable information, they were
about to move or dispose of their properties to defraud their creditors.
8

Upon Tes posting of an attachment bond,
9
the RTC issued an Order of
Attachment/Levy
10
dated March 29, 1993 on the basis of which Sheriff
Constancio Alimurung (Sheriff Alimurung) of RTC, Branch 19, Cebu City
levied and attached Spouses Yus properties in Cebu City consisting of one
parcel of land (known as Lot No. 11)
11
and four units of motor vehicle,
specifically, a Toyota Ford Fierra, a jeep, a Canter delivery van, and a
passenger bus.
12

On April 21, 1993, Spouses Yu filed an Answer
13
with counterclaim for
damages arising from the wrongful attachment of their properties,
specifically, actual damages amounting to P1,500.00 per day; moral
damages, P1,000,000.00; and exemplary damages, P50,000.00. They also
sought payment of P120,000.00 as attorneys fees and P80,000.00 as
litigation expenses.
14
On the same date, Spouses Yu filed an Urgent Motion
to Dissolve Writ of Preliminary Attachment.
15
They also filed a Claim
Against Surety Bond
16
in which they demanded payment from Visayan
Surety and Insurance Corporation (Visayan Surety), the surety which issued
the attachment bond, of the sum of P594,240.00, representing the
damages they allegedly sustained as a consequence of the wrongful
attachment of their properties.
While the RTC did not resolve the Claim Against Surety Bond, it issued an
Order
17
dated May 3, 1993, discharging from attachment the Toyota Ford
Fierra, jeep, and Canter delivery van on humanitarian grounds, but
maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed
a Motion for Reconsideration
18
which the RTC denied.
19

Dissatisfied, they filed with the CA a Petition for Certiorari,
20
docketed as
CA-G.R. SP No. 31230, in which a Decision
21
was rendered on September
14, 1993, lifting the RTC Order of Attachment on their remaining
properties. It reads in part:
In the case before Us, the complaint and the accompanying affidavit in
support of the application for the writ only contains general averments.
Neither pleading states in particular how the fraud was committed or the
badges of fraud purportedly committed by the petitioners to establish that
the latter never had an intention to pay the obligation; neither is there a
statement of the particular acts committed to show that the petitioners
are in fact disposing of their properties to defraud creditors. x x x.
x x x x
Moreover, at the hearing on the motion to discharge the order of
attachment x x x petitioners presented evidence showing that private
respondent has been extending multi-million peso credit facilities to the
petitioners for the past seven years and that the latter have consistently
settled their obligations. This was not denied by private respondent.
Neither does the private respondent contest the petitioners allegations
that they have been recently robbed of properties of substantial value,
hence their inability to pay on time. By the respondent courts own
pronouncements, it appears that the order of attachment was upheld
because of the admitted financial reverses the petitioner is undergoing.
This is reversible error. Insolvency is not a ground for attachment
especially when defendant has not been shown to have committed any act
intended to defraud its creditors x x x.
For lack of factual basis to justify its issuance, the writ of preliminary
attachment issued by the respondent court was improvidently issued and
should be discharged.
22

From said CA Decision, Te filed a Motion for Reconsideration but to no
avail.
23

Te filed with us a Petition for Review on Certiorari
24
but we denied the
same in a Resolution dated June 8, 1994 for having been filed late and for
failure to show that a reversible error was committed by the CA.
25
Entry of
Judgment of our June 8, 1994 Resolution was made on July 22, 1994.
26

Thus, the finding of the CA in its September 14, 1993 Decision in CA-G.R. SP
No. 31230 on the wrongfulness of the attachment/levy of the properties of
Spouses Yu became conclusive and binding.
However, on July 20, 1994, the RTC, apparently not informed of the SC
Decision, rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Court finds that the plaintiff has
established a valid civil cause of action against the defendants, and
therefore, renders this judgment in favor of the plaintiff and against the
defendants, and hereby orders the following:
1) Defendants are hereby ordered or directed to pay the plaintiff
the sum of P549,404.00, with interest from the date of the filing
of this case (March 3, 1993);
2) The Court, for reasons aforestated, hereby denies the grant of
damages to the plaintiff;
3) The Court hereby adjudicates a reasonable attorneys fees and
litigation expenses of P10,000.00 in favor of the plaintiff;
4) On the counterclaim, this Court declines to rule on this,
considering that the question of the attachment which allegedly
gave rise to the damages incurred by the defendants is being
determined by the Supreme Court.
SO ORDERED.
27
(Emphasis ours)
Spouses Yu filed with the RTC a Motion for Reconsideration
28
questioning
the disposition of their counterclaim. They also filed a Manifestation
29

informing the RTC of our June 8, 1994 Resolution in G.R. No. 114700.
The RTC issued an Order dated August 9, 1994, which read:
x x x x
(2) With regard the counter claim filed by the defendants against
the plaintiff for the alleged improvident issuance of this Court
thru its former Presiding Judge (Honorable Emilio Leachon, Jr.),
the same has been ruled with definiteness by the Supreme Court
that, indeed, the issuance by the Court of the writ of preliminary
attachment appears to have been improvidently done, but
nowhere in the decision of the Supreme Court and for that
matter, the Court of Appeals decision which was in effect
sustained by the High Court, contains any ruling or directive or
imposition, of any damages to be paid by the plaintiff to the
defendants, in other words, both the High Court and the CA,
merely declared the previous issuance of the writ of attachment
by this Court thru its former presiding judge to be improvidently
issued, but it did not award any damages of any kind to the
defendants, hence, unless the High Court or the CA rules on this,
this Court coud not grant any damages by virtue of the
improvident attachment made by this Court thru its former
presiding judge, which was claimed by the defendants in their
counter claim.
(3) This Court hereby reiterates in toto its Decision in this case
dated July 20, 1994.
30
(Emphasis ours)
The RTC also issued an Order dated December 2, 1994,
31
denying the
Motion for Reconsideration of Spouses Yu.
32

In the same December 2, 1994 Order, the RTC granted two motions filed
by Te, a Motion to Correct and to Include Specific Amount for Interest and
a Motion for Execution Pending Appeal.
33
The RTC also denied Spouses
Yus Notice of Appeal
34
from the July 20, 1994 Decision and August 9, 1994
Order of the RTC.
From said December 2, 1994 RTC Order, Spouses Yu filed another Notice of
Appeal
35
which the RTC also denied in an Order
36
dated January 5, 1995.
Spouses Yu filed with the CA a Petition
37
for Certiorari, Prohibition and
Mandamus, docketed as CA-G.R. SP No. 36205, questioning the denial of
their Notices of Appeal; and seeking the modification of the July 20, 1994
Decision and the issuance of a Writ of Execution. The CA granted the
Petition in a Decision
38
dated June 22, 1995.
Hence, Spouses Yu filed with the CA an appeal
39
docketed as CA-G.R. CV
No. 52246, questioning only that portion of the July 20, 1994 Decision
where the RTC declined to rule on their counterclaim for damages.
40

However, Spouses Yu did not dispute the specific monetary awards
granted to respondent Te; and therefore, the same have become final and
executory.
Although in the herein assailed Decision
41
dated March 21, 2001, the CA
affirmed in toto the RTC Decision, it nonetheless made a ruling on the
counterclaim of Spouses Yu by declaring that the latter had failed to
adduce sufficient evidence of their entitlement to damages.
Spouses Yu filed a Motion for Reconsideration
42
but the CA denied it in the
herein assailed Resolution
43
dated October 14, 2002.
Spouses Yu filed the present Petition raising the following issues:
I. Whether or not the appellate court erred in not holding that the
writ of attachment was procured in bad faith, after it was
established by final judgment that there was no true ground
therefor.
II. Whether or not the appellate court erred in refusing to award
actual, moral and exemplary damages after it was established by
final judgment that the writ of attachment was procured with no
true ground for its issuance.
44

There is one preliminary matter to set straight before we resolve the
foregoing issues.
According to respondent Te,
45
regardless of the evidence presented by
Spouses Yu, their counterclaim was correctly dismissed for failure to
comply with the procedure laid down in Section 20 of Rule 57. Te contends
that as Visayan Surety was not notified of the counterclaim, no judgment
thereon could be validly rendered.
Such argument is not only flawed, it is also specious.
As stated earlier, Spouses Yu filed a Claim Against Surety Bond on the same
day they filed their Answer and Urgent Motion to Dissolve Writ of
Preliminary Attachment.
46
Further, the records reveal that on June 18,
1993, Spouses Yu filed with the RTC a Motion to Give Notice to Surety.
47

The RTC granted the Motion in an Order
48
dated June 23, 1993.
Accordingly, Visayan Surety was notified of the pre-trial conference to
apprise it of a pending claim against its attachment bond. Visayan Surety
received the notice on July 12, 1993 as shown by a registry return receipt
attached to the records.
49

Moreover, even if it were true that Visayan Surety was left in the
proceedings a quo, such omission is not fatal to the cause of Spouses Yu. In
Malayan Insurance Company, Inc. v. Salas,
50
we held that "x x x if the
surety was not given notice when the claim for damages against the
principal in the replevin bond was heard, then as a matter of procedural
due process the surety is entitled to be heard when the judgment for
damages against the principal is sought to be enforced against the suretys
replevin bond."
51
This remedy is applicable for the procedures governing
claims for damages
on an attachment bond and on a replevin bond are the same.
52

We now proceed to resolve the issues jointly.
Spouses Yu contend that they are entitled to their counterclaim for
damages as a matter of right in view of the finality of our June 8, 1994
Resolution in G.R. No. 114700 which affirmed the finding of the CA in its
September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te
had wrongfully caused the attachment of their properties. Citing Javellana
v. D.O. Plaza Enterprises, Inc.,
53
they argue that they should be awarded
damages based solely on the CA finding that the attachment was illegal for
it already suggests that Te acted with malice when she applied for
attachment. And even if we were to assume that Te did not act with
malice, still she should be held liable for the aggravation she inflicted when
she applied for attachment even when she was clearly not entitled to it.
54

That is a rather limited understanding of Javellana. The counterclaim
disputed therein was not for moral damages and therefore, there was no
need to prove malice. As early as in Lazatin v. Twao,
55
we laid down the
rule that where there is wrongful attachment, the attachment defendant
may recover actual damages even without proof that the attachment
plaintiff acted in bad faith in obtaining the attachment. However, if it is
alleged and established that the attachment was not merely wrongful but
also malicious, the attachment defendant may recover moral damages and
exemplary damages as well.
56
Either way, the wrongfulness of the
attachment does not warrant the automatic award of damages to the
attachment defendant; the latter must first discharge the burden of
proving the nature and extent of the loss or injury incurred by reason of
the wrongful attachment.
57

In fine, the CA finding that the attachment of the properties of Spouses Yu
was wrongful did not relieve Spouses Yu of the burden of proving the
factual basis of their counterclaim for damages.
To merit an award of actual damages arising from a wrongful attachment,
the attachment defendant must prove, with the best evidence obtainable,
the fact of loss or injury suffered and the amount thereof.
58
Such loss or
injury must be of the kind which is not only capable of proof but must
actually be proved with a reasonable degree of certainty. As to its amount,
the same must be measurable based on specific facts, and not on
guesswork or speculation.
59
In particular, if the claim for actual damages
covers unrealized profits, the amount of unrealized profits must be
estalished and supported by independent evidence of the mean income of
the business undertaking interrupted by the illegal seizure.
60

Spouses Yu insist that the evidence they presented met the foregoing
standards. They point to the lists of their daily net income from the
operation of said passenger bus based on used ticket stubs
61
issued to
their passengers. They also cite unused ticket stubs as proof of income
foregone when the bus was wrongfully seized.
62
They further cite the
unrebutted testimony of Josefa Yu that, in the day-to-day operation of
their passenger bus, they use up at least three ticket stubs and earn a
minimum daily income of P1,500.00.
63

In ruling that Spouses Yu failed to adduce sufficient evidence to support
their counterclaim for actual damages, the CA stated, thus:
In this case, the actual damages cannot be determined. Defendant-
appellant Josefa Yu testified on supposed lost profits without clear and
appreciable explanation. Despite her submission of the used and unused
ticket stubs, there was no evidence on the daily net income, the routes
plied by the bus and the average fares for each route. The submitted basis
is too speculative and conjectural. No reports regarding the average actual
profits and other evidence of profitability necessary to prove the amount
of actual damages were presented. Thus, the Court a quo did not err in not
awarding damages in favor of defendants-appellants.
64

We usually defer to the expertise of the CA, especially when it concurs
with the factual findings of the RTC.
65
Indeed, findings of fact may be
passed upon and reviewed by the Supreme Court in the following
instances: (1) when the conclusion is a finding grounded entirely on
speculations, surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) where there is a grave
abuse of discretion in the appreciation of facts; (4) when judgment is based
on a misapprehension of facts; (5) when the lower court, in making its
findings, went beyond the issues of the case and such findings are contrary
to the admissions of both appellant and appellee; (6) when the factual
findings of the CA are contrary to those of the trial court; (7) when the
findings of fact are themselves conflicting; (8) when the findings of fact are
conclusions made without a citation of specific evidence on which they are
based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondents;
(10) when the findings of fact of the lower court are premised on the
supposed absence of evidence and are contradicted by the evidence on
record.
66
However, the present case does not fall under any of the
exceptions. We are in full accord with the CA that Spouses Yu failed to
prove their counterclaim.
Spouses Yus claim for unrealized income of P1,500.00 per day was based
on their computation of their average daily income for the year 1992. Said
computation in turn is based on the value of three ticket stubs sold over
only five separate days in 1992.
67
By no stretch of the imagination can we
consider ticket sales for five days sufficient evidence of the average daily
income of the passenger bus, much less its mean income. Not even the
unrebutted testimony of Josefa Yu can add credence to such evidence for
the testimony itself lacks corroboration.
68

Besides, based on the August 29, 1994 Manifestation
69
filed by Sheriff
Alimurung, it would appear that long before the passenger bus was placed
under preliminary attachment in Civil Case No. 4061-V-93, the same had
been previously attached by the Sheriff of Mandaue City in connection
with another case and that it was placed in the Cebu Bonded Warehousing
Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were
unreasonably deprived of the use of the passenger bus by reason of the
subsequent wrongful attachment issued in Civil Case No. 4061-V-93. Nor
can they also attribute to the wrongful attachment their failure to earn
income or profit from the operation of the passenger bus.
Moreover, petitioners did not present evidence as to the damages they
suffered by reason of the wrongful attachment of Lot No. 11.
Nonetheless, we recognize that Spouses Yu suffered some form of
pecuniary loss when their properties were wrongfully seized, although the
amount thereof cannot be definitively ascertained. Hence, an award of
temperate or moderate damages in the amount of P50,000.00 is in order.
70

As to moral and exemplary damages, to merit an award thereof, it must be
shown that the wrongful attachment was obtained by the attachment
plaintiff with malice or bad faith, such as by appending a false affidavit to
his application.
71

Spouses Yu argue that malice attended the issuance of the attachment
bond as shown by the fact that Te deliberately appended to her application
for preliminary attachment an Affidavit where Sy perjured himself by
stating that they had no intention to pay their obligations even when he
knew this to be untrue given that they had always paid their obligations;
and by accusing them of disposing of their properties to defraud their
creditors even when he knew this to be false, considering that the location
of said properties was known to him.
72

The testimony of petitioner Josefa Yu herself negates their claim for moral
and exemplary damages. On cross-examination she testified, thus:
Q: Did you ever deposit any amount at that time to fund the check?
A: We requested that it be replaced and staggered into smaller amounts.
COURT: Did you fund it or not?
Atty. Ferrer: The three checks involved?
Atty. Florido: Already answered. She said that they were not able to fund
it.
Atty. Ferrer: And as a matter of fact, you went to the bank to close your
account?
A: We closed account with the bank because we transferred the account to
another bank.
Q: How much money did you transfer from that bank to which the three
checks were drawn to this new bank?
A: I dont know how much was there but we transferred already to the
Solid Bank.
Q: Who transferred?
A: My daughter, sir.
73
(Emphasis ours)
Based on the foregoing testimony, it is not difficult to understand why Te
concluded that Spouses Yu never intended to pay their obligation for they
had available funds in their bank but chose to transfer said funds instead of
cover the checks they issued. Thus, we cannot attribute malice nor bad
faith to Te in applying for the attachment writ. We cannot hold her liable
for moral and exemplary damages.
As a rule, attorneys fees cannot be awarded when moral and exemplary
damages are not granted, the exception however is when a party incurred
expenses to lift a wrongfully issued writ of attachment.1awphi1.net
74

Without a doubt, Spouses Yu waged a protracted legal battle to fight off
the illegal attachment of their properties and pursue their claims for
damages. It is only just and equitable that they be awarded reasonable
attorneys fees in the amount of P30,000.00.
In sum, we affirm the dismissal of the counterclaim of petitioners Spouses
Yu for actual, moral, and exemplary damages. However, we grant them
temperate damages and attorneys fees.
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision
of the Court of Appeals is AFFIRMED with the MODIFICATION that
petitioners counterclaim is PARTLY GRANTED. Gregorio Yu and Josefa Yu
are awarded P50,000.00 temperate damages and P30,000.00 attorneys
fees.
No costs.
SO ORDERED.
ANITA MANGILA, petitioner,
vs.
COURT OF APPEALS and LORETA GUINA, respondents.
CARPIO, J.:
The Case
This is a petition fore review on certiorari under Rule 45 of the Rules of
Court, seeking to set aside the Decision
1
of the Court of Appeals affirming
the Decision
2
of the Regional Trial Court, Branch 108, Pasay City. The trial
court upheld the writ of attachment and the declaration of default on
petitioner while ordering her to pay private respondent P109,376.95 plus
18 percent interest per annum, 25 percent attorneys fees and costs of
suit.
The Facts
Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea
foods and doing business under the name and style of Seafoods Products.
Private respondent Loreta Guina ("private respondent" for brevity) is the
President and General Manager of Air Swift International, a single
registered proprietorship engaged in the freight forwarding business.
Sometime in January 1988, petitioner contracted the freight forwarding
services of private respondent for shipment of petitioners products, such
as crabs, prawns and assorted fishes, to Guam (USA) where petitioner
maintains an outlet. Petitioner agreed to pay private respondent cash on
delivery. Private respondents invoice stipulates a charge of 18 percent
interest per annum on all overdue accounts. In case of suit, the same
invoice stipulates attorneys fees equivalent to 25 percent of the amount
due plus costs of suit.
3

On the first shipment, petitioner requested for seven days within which to
pay private respondent. However, for the next three shipments, March 17,
24 and 31, 1988, petitioner failed to pay private respondent shipping
charges amounting to P109, 376.95.
4

Despite several demands, petitioner never paid private respondent. Thus,
on June 10, 1988, private respondent filed Civil Case No. 5875 before the
Regional Trial Court of Pasay City for collection of sum of money.
On August 1, 1988, the sheriff filed his Sheriffs Return showing that
summons was not served on petitioner. A woman found at petitioners
house informed the sheriff that petitioner transferred her residence to Sto.
Nio, Guagua, Pampanga. The sheriff found out further that petitioner had
left the Philippines for Guam.
5

Thus, on September 13, 1988, construing petitioners departure from the
Philippines as done with intent to defraud her creditors, private
respondent filed a Motion for Preliminary Attachment. On September 26,
1988, the trial court issued an Order of Preliminary Attachment
6
against
petitioner. The following day, the trial court issued a Writ of Preliminary
Attachment.
The trial court granted the request of its sheriff for assistance from their
counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo
San Miguel of RTC Pampanga served on petitioners household help in San
Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and
Bond.
7

On November 7, 1988, petitioner filed an Urgent Motion to Discharge
Attachment
8
without submitting herself to the jurisdiction of the trial
court. She pointed out that up to then, she had not been served a copy of
the Complaint and the summons. Hence, petitioner claimed the court had
not acquired jurisdiction over her person.
9

In the hearing of the Urgent Motion to Discharge Attachment on
November 11, 1988, private respondent sought and was granted a re-
setting to December 9, 1988. On that date, private respondents counsel
did not appear, so the Urgent Motion to Discharge Attachment was
deemed submitted for resolution.
10

The trial court granted the Motion to Discharge Attachment on January 13,
1989 upon filing of petitioners counter-bond. The trial court, however, did
not rule on the question of jurisdiction and on the validity of the writ of
preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons,
which the trial court issued on January 19, 1989.
11
It was only on January
26, 1989 that summons was finally served on petitioner.
12

On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on
the ground of improper venue. Private respondents invoice for the freight
forwarding service stipulates that "if court litigation becomes necessary to
enforce collection xxx the agreed venue for such action is Makati, Metro
Manila."
13
Private respondent filed an Opposition asserting that although
"Makati" appears as the stipulated venue, the same was merely an
inadvertence by the printing press whose general manager executed an
affidavit
14
admitting such inadvertence. Moreover, private respondent
claimed that petitioner knew that private respondent was holding office in
Pasay City and not in Makati.
15
The lower court, finding credence in private
respondents assertion, denied the Motion to Dismiss and gave petitioner
five days to file her Answer. Petitioner filed a Motion for Reconsideration
but this too was denied.
Petitioner filed her Answer
16
on June 16, 1989, maintaining her contention
that the venue was improperly laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for
July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial
briefs. Meanwhile, private respondent filed a Motion to Sell Attached
Properties but the trial court denied the motion.
On motion of petitioner, the trial court issued an Order resetting the pre-
trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..
On August 24, 1989, the day of the pre-trial, the trial court issued an
Order
17
terminating the pre-trial and allowing the private respondent to
present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order
stated that when the case was called for pre-trial at 8:31 a.m., only the
counsel for private respondent appeared. Upon the trial courts second call
20 minutes later, petitioners counsel was still nowhere to be found. Thus,
upon motion of private respondent, the pre-trial was considered
terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of
the Order terminating the pre-trial. Petitioner explained that her counsel
arrived 5 minutes after the second call, as shown by the transcript of
stenographic notes, and was late because of heavy traffic. Petitioner claims
that the lower court erred in allowing private respondent to present
evidence ex-parte since there was no Order considering the petitioner as in
default. Petitioner contends that the Order of August 24, 1989 did not
state that petitioner was declared as in default but still the court allowed
private respondent to present evidence ex-parte.18
On October 6, 1989, the trial court denied the Motion for Reconsideration
and scheduled the presentation of private respondents evidence ex-parte
on October 10, 1989.1wphi1.nt
On October 10, 1989, petitioner filed an Omnibus Motion stating that the
presentation of evidence ex-parte should be suspended because there was
no declaration of petitioner as in default and petitioners counsel was not
absent, but merely late.
On October 18, 1989, the trial court denied the Omnibus Motion.
19

On November 20, 1989, the petitioner received a copy of the Decision of
November 10, 1989, ordering petitioner to pay respondent P109,376.95
plus 18 percent interest per annum, 25 percent attorneys fees and costs
of suit. Private respondent filed a Motion for Execution Pending Appeal but
the trial court denied the same.
The Ruling of the Court of Appeals
On December 15, 1995, the Court of Appeals rendered a decision affirming
the decision of the trial court. The Court of Appeals upheld the validity of
the issuance of the writ of attachment and sustained the filing of the
action in the RTC of Pasay. The Court of Appeals also affirmed the
declaration of default on petitioner and concluded that the trial court did
not commit any reversible error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the
Court of Appeals denied the same in a Resolution dated May 20, 1996.
Hence, this petition.
The Issues
The issues raised by petitioner may be re-stated as follows:
I.
WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT
THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND
SERVED;
II.
WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;
III.
WHETHER THERE WAS IMPROPER VENUE.
IV.
WHETHER RESPONDENT COURT ERRED IN DECLARING THAT
PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS
FEES.
20

The Ruling of the Court
Improper Issuance and Service of Writ of Attachment
Petitioner ascribes several errors to the issuance and implementation of
the writ of attachment. Among petitioners arguments are: first, there was
no ground for the issuance of the writ since the intent to defraud her
creditors had not been established; second, the value of the properties
levied exceeded the value of private respondents claim. However, the crux
of petitioners arguments rests on the question of the validity of the writ of
attachment. Because of failure to serve summons on her before or
simultaneously with the writs implementation, petitioner claims that the
trial court had not acquired jurisdiction over her person and thus the
service of the writ is void.
As a preliminary note, a distinction should be made between issuance and
implementation of the writ of attachment. It is necessary to distinguish
between the two to determine when jurisdiction over the person of the
defendant should be acquired to validly implement the writ. This
distinction is crucial in resolving whether there is merit in petitioners
argument.
This Court has long settled the issue of when jurisdiction over the person
of the defendant should be acquired in cases where a party resorts to
provisional remedies. A party to a suit may, at any time after filing the
complaint, avail of the provisional remedies under the Rules of Court.
Specifically, Rule 57 on preliminary attachment speaks of the grant of the
remedy "at the commencement of the action or at any time thereafter."
21

This phrase refers to the date of filing of the complaint which is the
moment that marks "the commencement of the action." The reference
plainly is to a time before summons is served on the defendant, or even
before summons issues.
In Davao Light & Power Co., Inc. v. Court of Appeals,
22
this Court clarified
the actual time when jurisdiction should be had:
"It goes without saying that whatever be the acts done by the
Court prior to the acquisition of jurisdiction over the person of
defendant - issuance of summons, order of attachment and writ
of attachment - these do not and cannot bind and affect the
defendant until and unless jurisdiction over his person is
eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to
the courts authority. Hence, when the sheriff or other proper
officer commences implementation of the writ of attachment, it is
essential that he serve on the defendant not only a copy of the
applicants affidavit and attachment bond, and of the order of
attachment, as explicitly required by Section 5 of Rule 57, but also
the summons addressed to said defendant as well as a copy of the
complaint xxx." (Emphasis supplied.)
Furthermore, we have held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting
the application; second, the writ of attachment issues pursuant to the
order granting the writ; and third, the writ is implemented. For the initial
two stages, it is not necessary that jurisdiction over the person of the
defendant be first obtained. However, once the implementation of the
writ commences, the court must have acquired jurisdiction over the
defendant for without such jurisdiction, the court has no power and
authority to act in any manner against the defendant. Any order issuing
from the Court will not bind the defendant.
23

In the instant case, the Writ of Preliminary Attachment was issued on
September 27, 1988 and implemented on October 28, 1988. However, the
alias summons was served only on January 26, 1989 or almost three
months after the implementation of the writ of attachment.
The trial court had the authority to issue the Writ of Attachment on
September 27 since a motion for its issuance can be filed "at the
commencement of the action." However, on the day the writ was
implemented, the trial court should have, previously or simultaneously
with the implementation of the writ, acquired jurisdiction over the
petitioner. Yet, as was shown in the records of the case, the summons was
actually served on petitioner several months after the writ had been
implemented.
Private respondent, nevertheless, claims that the prior or
contemporaneous service of summons contemplated in Section 5 of Rule
57 provides for exceptions. Among such exceptions are "where the
summons could not be served personally or by substituted service despite
diligent efforts or where the defendant is a resident temporarily absent
therefrom x x x." Private respondent asserts that when she commenced
this action, she tried to serve summons on petitioner but the latter could
not be located at her customary address in Kamuning, Quezon City or at
her new address in Guagua, Pampanga.
24
Furthermore, respondent claims
that petitioner was not even in Pampanga; rather, she was in Guam
purportedly on a business trip.
Private respondent never showed that she effected substituted service on
petitioner after her personal service failed. Likewise, if it were true that
private respondent could not ascertain the whereabouts of petitioner after
a diligent inquiry, still she had some other recourse under the Rules of Civil
Procedure.
The rules provide for certain remedies in cases where personal service
could not be effected on a party. Section 14, Rule 14 of the Rules of Court
provides that whenever the defendants "whereabouts are unknown and
cannot be ascertained by diligent inquiry, service may, by leave of court,
be effected upon him by publication in a newspaper of general circulation
x x x." Thus, if petitioners whereabouts could not be ascertained after the
sheriff had served the summons at her given address, then respondent
could have immediately asked the court for service of summons by
publication on petitioner.
25

Moreover, as private respondent also claims that petitioner was abroad at
the time of the service of summons, this made petitioner a resident who is
temporarily out of the country. This is the exact situation contemplated in
Section 16,
26
Rule 14 of the Rules of Civil Procedure, providing for service
of summons by publication.
In conclusion, we hold that the alias summons belatedly served on
petitioner cannot be deemed to have cured the fatal defect in the
enforcement of the writ. The trial court cannot enforce such a coercive
process on petitioner without first obtaining jurisdiction over her person.
The preliminary writ of attachment must be served after or simultaneous
with the service of summons on the defendant whether by personal
service, substituted service or by publication as warranted by the
circumstances of the case.
27
The subsequent service of summons does not
confer a retroactive acquisition of jurisdiction over her person because the
law does not allow for retroactivity of a belated service.
Improper Venue
Petitioner assails the filing of this case in the RTC of Pasay and points to a
provision in private respondents invoice which contains the following:
"3. If court litigation becomes necessary to enforce collection, an
additional equivalent (sic) to 25% of the principal amount will be
charged. The agreed venue for such action is Makati, Metro
Manila, Philippines."
28

Based on this provision, petitioner contends that the action should have
been instituted in the RTC of Makati and to do otherwise would be a
ground for the dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not
for the reason stated by petitioner.
The Rules of Court provide that parties to an action may agree in writing
on the venue on which an action should be brought.
29
However, a mere
stipulation on the venue of an action is not enough to preclude parties
from bringing a case in other venues.
30
The parties must be able to show
that such stipulation is exclusive. Thus, absent words that show the parties
intention to restrict the filing of a suit in a particular place, courts will allow
the filing of a case in any venue, as long as jurisdictional requirements are
followed. Venue stipulations in a contract, while considered valid and
enforceable, do not as a rule supersede the general rule set forth in Rule 4
of the Revised Rules of Court.
31
In the absence of qualifying or restrictive
words, they should be considered merely as an agreement on additional
forum, not as limiting venue to the specified place.
32

In the instant case, the stipulation does not limit the venue exclusively to
Makati. There are no qualifying or restrictive words in the invoice that
would evince the intention of the parties that Makati is the "only or
exclusive" venue where the action could be instituted. We therefore agree
with private respondent that Makati is not the only venue where this case
could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in
personal actions is "where the defendant or any of the defendants resides
or may be found, or where the plaintiff or any of the plaintiffs resides, at
the election of the plaintiff."
33
The exception to this rule is when the
parties agree on an exclusive venue other than the places mentioned in
the rules. But, as we have discussed, this exception is not applicable in this
case. Hence, following the general rule, the instant case may be brought in
the place of residence of the plaintiff or defendant, at the election of the
plaintiff (private respondent herein).
In the instant case, the residence of private respondent (plaintiff in the
lower court) was not alleged in the complaint. Rather, what was alleged
was the postal address of her sole proprietorship, Air Swift International. It
was only when private respondent testified in court, after petitioner was
declared in default, that she mentioned her residence to be in Better Living
Subdivision, Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc.,
34
the reverse happened.
The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned
and managed by Dominador Ti. The complaint, however, did not allege the
office or place of business of the corporation, which was in Binondo,
Manila. What was alleged was the residence of Dominador Ti, who lived in
San Juan, Rizal. The case was filed in the Court of First Instance of Rizal,
Pasig. The Court there held that the evident purpose of alleging the
address of the corporations president and manager was to justify the filing
of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that
there was no question that venue was improperly laid in that case and held
that the place of business of Tyson Enterpises, Inc. is considered as its
residence for purposes of venue. Furthermore, the Court held that the
residence of its president is not the residence of the corporation because a
corporation has a personality separate and distinct from that of its officers
and stockholders.
In the instant case, it was established in the lower court that petitioner
resides in San Fernando, Pampanga
35
while private respondent resides in
Paraaque City.
36
However, this case was brought in Pasay City, where the
business of private respondent is found. This would have been permissible
had private respondents business been a corporation, just like the case in
Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in
her Complaint
37
in the lower court, her business is a sole proprietorship,
and as such, does not have a separate juridical personality that could
enable it to file a suit in court.
38
In fact, there is no law authorizing sole
proprietorships to file a suit in court.
39

A sole proprietorship does not possess a juridical personality separate and
distinct from the personality of the owner of the enterprise.
40
The law
merely recognizes the existence of a sole proprietorship as a form of
business organization conducted for profit by a single individual and
requires its proprietor or owner to secure licenses and permits, register its
business name, and pay taxes to the national government.
41
The law does
not vest a separate legal personality on the sole proprietorship or
empower it to file or defend an action in court.
42

Thus, not being vested with legal personality to file this case, the sole
proprietorship is not the plaintiff in this case but rather Loreta Guina in her
personal capacity. In fact, the complaint in the lower court acknowledges
in its caption that the plaintiff and defendant are Loreta Guina and Anita
Mangila, respectively. The title of the petition before us does not state,
and rightly so, Anita Mangila v. Air Swift International, but rather Anita
Mangila v. Loreta Guina. Logically then, it is the residence of private
respondent Guina, the proprietor with the juridical personality, which
should be considered as one of the proper venues for this case.
All these considered, private respondent should have filed this case either
in San Fernando, Pampanga (petitioners residence) or Paraaque (private
respondents residence). Since private respondent (complainant below)
filed this case in Pasay, we hold that the case should be dismissed on the
ground of improper venue.
Although petitioner filed an Urgent Motion to Discharge Attachment in the
lower court, petitioner expressly stated that she was filing the motion
without submitting to the jurisdiction of the court. At that time, petitioner
had not been served the summons and a copy of the complaint.
43

Thereafter, petitioner timely filed a Motion to Dismiss
44
on the ground of
improper venue. Rule 16, Section 1 of the Rules of Court provides that a
motion to dismiss may be filed "[W]ithin the time for but before filing the
answer to the complaint or pleading asserting a claim." Petitioner even
raised the issue of improper venue in his Answer
45
as a special and
affirmative defense. Petitioner also continued to raise the issue of
improper venue in her Petition for Review
46
before this Court. We thus
hold that the dismissal of this case on the ground of improper venue is
warranted.
The rules on venue, like other procedural rules, are designed to insure a
just and orderly administration of justice or the impartial and evenhanded
determination of every action and proceeding. Obviously, this objective
will not be attained if the plaintiff is given unrestricted freedom to choose
where to file the complaint or petition.
47

We find no reason to rule on the other issues raised by
petitioner.1wphi1.nt
WHEREFORE, the petition is GRANTED on the grounds of improper venue
and invalidity of the service of the writ of attachment. The decision of the
Court of Appeals and the order of respondent judge denying the motion to
dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby
dismissed without prejudice to refiling it in the proper venue. The attached
properties of petitioner are ordered returned to her immediately.
SO ORDERED.
FORT BONIFACIO DEVELOPMENT CORPORATION petitioner,
vs.
YLLAS LENDING CORPORATION and JOSE S. LAURAYA, in his official
capacity as President, respondents.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition for review on certiorari
1
of the Orders issued on 7 March
2003
2
and 3 July 2003
3
by Branch 59 of the Regional Trial Court of Makati
City (trial court) in Civil Case No. 01-1452. The trial court's orders dismissed
Fort Bonifacio Development Corporation's (FBDC) third party claim and
denied FBDC's Motion to Intervene and Admit Complaint in Intervention.
The Facts
On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc.
(Tirreno) over a unit at the Entertainment Center - Phase 1 of the Bonifacio
Global City in Taguig, Metro Manila. The parties had the lease contract
notarized on the day of its execution. Tirreno used the leased premises for
Savoia Ristorante and La Strega Bar.
Two provisions in the lease contract are pertinent to the present case:
Section 20, which is about the consequences in case of default of the
lessee, and Section 22, which is about the lien on the properties of the
lease. The pertinent portion of Section 20 reads:
Section 20. Default of the Lessee
20.1 The LESSEE shall be deemed to be in default within the
meaning of this Contract in case:
(i) The LESSEE fails to fully pay on time any rental, utility and
service charge or other financial obligation of the LESSEE under
this Contract;
x x x
20.2 Without prejudice to any of the rights of the LESSOR under
this Contract, in case of default of the LESSEE, the lessor shall
have the right to:
(i) Terminate this Contract immediately upon written notice to the
LESSEE, without need of any judicial action or declaration;
x x x
Section 22, on the other hand, reads:
Section 22. Lien on the Properties of the Lessee
Upon the termination of this Contract or the expiration of the
Lease Period without the rentals, charges and/or damages, if any,
being fully paid or settled, the LESSOR shall have the right to
retain possession of the properties of the LESSEE used or situated
in the Leased Premises and the LESSEE hereby authorizes the
LESSOR to offset the prevailing value thereof as appraised by the
LESSOR against any unpaid rentals, charges and/or damages. If
the LESSOR does not want to use said properties, it may instead
sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.
Tirreno began to default in its lease payments in 1999. By July 2000,
Tirreno was already in arrears by P5,027,337.91. FBDC and Tirreno entered
into a settlement agreement on 8 August 2000. Despite the execution of
the settlement agreement, FBDC found need to send Tirreno a written
notice of termination dated 19 September 2000 due to Tirreno's alleged
failure to settle its outstanding obligations. On 29 September 2000, FBDC
entered and occupied the leased premises. FBDC also appropriated the
equipment and properties left by Tirreno pursuant to Section 22 of their
Contract of Lease as partial payment for Tirreno's outstanding obligations.
Tirreno filed an action for forcible entry against FBDC before the Municipal
Trial Court of Taguig. Tirreno also filed a complaint for specific
performance with a prayer for the issuance of a temporary restraining
order and/or a writ of preliminary injunction against FBDC before the
Regional Trial Court (RTC) of Pasig City. The RTC of Pasig City dismissed
Tirreno's complaint for forum-shopping.
On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in his
official capacity as President, (respondents) caused the sheriff of Branch 59
of the trial court to serve an alias writ of seizure against FBDC. On the same
day, FBDC served on the sheriff an affidavit of title and third party claim.
FBDC found out that on 27 September 2001, respondents filed a complaint
for Foreclosure of Chattel Mortgage with Replevin, docketed as Civil Case
No. 01-1452, against Tirreno, Eloisa Poblete Todaro (Eloisa), and Antonio
D. Todaro (Antonio), in their personal and individual capacities, and in
Eloisa's official capacity as President. In their complaint, respondents
alleged that they lent a total of P1.5 million to Tirreno, Eloisa, and Antonio.
On 9 November 2000, Tirreno, Eloisa and Antonio executed a Deed of
Chattel Mortgage in favor of respondents as security for the loan. The
following properties are covered by the Chattel Mortgage:
a. Furniture, Fixtures and Equipment of Savoia Ristorante and La
Strega Bar, a restaurant owned and managed by [Tirreno],
inclusive of the leasehold right of [Tirreno] over its rented building
where [the] same is presently located.
b. Goodwill over the aforesaid restaurant, including its business
name, business sign, logo, and any and all interest therein.
c. Eighteen (18) items of paintings made by Florentine Master,
Gino Tili, which are fixtures in the above-named restaurant.
The details and descriptions of the above items are specified in
Annex "A" which is hereto attached and forms as an integral part
of this Chattel Mortgage instrument.
4

In the Deed of Chattel Mortgage, Tirreno, Eloisa, and Antonio made the
following warranties to respondents:
1. WARRANTIES: The MORTGAGOR hereby declares and warrants
that:
a. The MORTGAGOR is the absolute owner of the above named
properties subject of this mortgage, free from all liens and
encumbrances.
b. There exist no transaction or documents affecting the same
previously presented for, and/or pending transaction.
5

Despite FBDC's service upon him of an affidavit of title and third party
claim, the sheriff proceeded with the seizure of certain items from FBDC's
premises. The sheriff's partial return indicated the seizure of the following
items from FBDC:
A. FIXTURES
(2) - Smaller Murano Chandeliers
(1) - Main Murano Chandelier
B. EQUIPMENT
(13) - Uni-Air Split Type 2HP Air Cond.
(2) - Uni-Air Split Type 1HP Air Cond.
(3) - Uni-Air Window Type 2HP Air Cond.
(56) - Chairs
(1) - Table
(2) - boxes - Kitchen equipments [sic]
6

The sheriff delivered the seized properties to respondents. FBDC
questioned the propriety of the seizure and delivery of the properties to
respondents without an indemnity bond before the trial court. FBDC
argued that when respondents and Tirreno entered into the chattel
mortgage agreement on 9 November 2000, Tirreno no longer owned the
mortgaged properties as FBDC already enforced its lien on 29 September
2000.
In ruling on FBDC's motion for leave to intervene and to admit complaint in
intervention, the trial court stated the facts as follows:
Before this Court are two pending incidents, to wit: 1) [FBDC's]
Third-Party Claim over the properties of [Tirreno] which were
seized and delivered by the sheriff of this Court to [respondents];
and 2) FBDC's Motion to Intervene and to Admit Complaint in
Intervention.
Third party claimant, FBDC, anchors its claim over the subject
properties on Sections 20.2(i) and 22 of the Contract of Lease
executed by [FBDC] with Tirreno. Pursuant to said Contract of
Lease, FBDC took possession of the leased premises and
proceeded to sell to third parties the properties found therein and
appropriated the proceeds thereof to pay the unpaid lease rentals
of [Tirreno].
FBDC, likewise filed a Motion to Admit its Complaint-in-
Intervention.
In Opposition to the third-party claim and the motion to
intervene, [respondents] posit that the basis of [FBDC's] third
party claim being anchored on the aforesaid Contract [of] Lease is
baseless. [Respondents] contend that the stipulation of the
contract of lease partakes of a pledge which is void under Article
2088 of the Civil Code for being pactum commissorium.
x x x
By reason of the failure of [Tirreno] to pay its lease rental and fees
due in the amount of P5,027,337.91, after having notified
[Tirreno] of the termination of the lease, x x x FBDC took
possession of [Tirreno.'s] properties found in the premises and
sold those which were not of use to it. Meanwhile, [respondents],
as mortgagee of said properties, filed an action for foreclosure of
the chattel mortgage with replevin and caused the seizure of the
same properties which [FBDC] took and appropriated in payment
of [Tirreno's] unpaid lease rentals.
7

The Ruling of the Trial Court
In its order dated 7 March 2003, the trial court stated that the present case
raises the questions of who has a better right over the properties of
Tirreno and whether FBDC has a right to intervene in respondents'
complaint for foreclosure of chattel mortgage.
In deciding against FBDC, the trial court declared that Section 22 of the
lease contract between FBDC and Tirreno is void under Article 2088 of the
Civil Code.
8
The trial court stated that Section 22 of the lease contract
pledges the properties found in the leased premises as security for the
payment of the unpaid rentals. Moreover, Section 22 provides for the
automatic appropriation of the properties owned by Tirreno in the event
of its default in the payment of monthly rentals to FBDC. Since Section 22
is void, it cannot vest title of ownership over the seized properties.
Therefore, FBDC cannot assert that its right is superior to respondents,
who are the mortgagees of the disputed properties.
The trial court quoted from Bayer Phils. v. Agana
9
to justify its ruling that
FBDC should have filed a separate complaint against respondents instead
of filing a motion to intervene. The trial court quoted from Bayer as
follows:
In other words, construing Section 17 of Rule 39 of the Revised
Rules of Court (now Section 16 of the 1997 Rules on Civil
Procedure), the rights of third-party claimants over certain
properties levied upon by the sheriff to satisfy the judgment may
not be taken up in the case where such claims are presented but
in a separate and independent action instituted by the
claimants.
10

The dispositive portion of the trial court's decision reads:
WHEREFORE, premises considered, [FBDC's] Third Party Claim is
hereby DISMISSED. Likewise, the Motion to Intervene and Admit
Complaint in Intervention is DENIED.
11

FBDC filed a motion for reconsideration on 9 May 2003. The trial court
denied FBDC's motion for reconsideration in an order dated 3 July 2003.
FBDC filed the present petition before this Court to review pure questions
of law.
The Issues
FBDC alleges that the trial court erred in the following:
1. Dismissing FBDC's third party claim upon the trial court's
erroneous interpretation that FBDC has no right of ownership
over the subject properties because Section 22 of the contract of
lease is void for being a pledge and a pactum commissorium;
2. Denying FBDC intervention on the ground that its proper
remedy as third party claimant over the subject properties is to
file a separate action; and
3. Depriving FBDC of its properties without due process of law
when the trial court erroneously dismissed FBDC's third party
claim, denied FBDC's intervention, and did not require the posting
of an indemnity bond for FBDC's protection.
12

The Ruling of the Court
The petition has merit.
Taking of Lessee's Properties
without Judicial Intervention
We reproduce Section 22 of the Lease Contract below for easy reference:
Section 22. Lien on the Properties of the Lessee
Upon the termination of this Contract or the expiration of the
Lease Period without the rentals, charges and/or damages, if any,
being fully paid or settled, the LESSOR shall have the right to
retain possession of the properties of the LESSEE used or situated
in the Leased Premises and the LESSEE hereby authorizes the
LESSOR to offset the prevailing value thereof as appraised by the
LESSOR against any unpaid rentals, charges and/or damages. If
the LESSOR does not want to use said properties, it may instead
sell the same to third parties and apply the proceeds thereof
against any unpaid rentals, charges and/or damages.
Respondents, as well as the trial court, contend that Section 22 constitutes
a pactum commissorium, a void stipulation in a pledge contract. FBDC, on
the other hand, states that Section 22 is merely a dacion en pago.
Articles 2085 and 2093 of the Civil Code enumerate the requisites essential
to a contract of pledge: (1) the pledge is constituted to secure the
fulfillment of a principal obligation; (2) the pledgor is the absolute owner
of the thing pledged; (3) the persons constituting the pledge have the free
disposal of their property or have legal authorization for the purpose; and
(4) the thing pledged is placed in the possession of the creditor, or of a
third person by common agreement. Article 2088 of the Civil Code
prohibits the creditor from appropriating or disposing the things pledged,
and any contrary stipulation is void.
On the other hand, Article 1245 of the Civil Code defines dacion en pago,
or dation in payment, as the alienation of property to the creditor in
satisfaction of a debt in money. Dacion en pago is governed by the law on
sales. Philippine National Bank v. Pineda
13
held that dation in payment
requires delivery and transmission of ownership of a thing owned by the
debtor to the creditor as an accepted equivalent of the performance of the
obligation. There is no dation in payment when there is no transfer of
ownership in the creditor's favor, as when the possession of the thing is
merely given to the creditor by way of security.
Section 22, as worded, gives FBDC a means to collect payment from
Tirreno in case of termination of the lease contract or the expiration of the
lease period and there are unpaid rentals, charges, or damages. The
existence of a contract of pledge, however, does not arise just because
FBDC has means of collecting past due rent from Tirreno other than direct
payment. The trial court concluded that Section 22 constitutes a pledge
because of the presence of the first three requisites of a pledge: Tirreno's
properties in the leased premises secure Tirreno's lease payments; Tirreno
is the absolute owner of the said properties; and the persons representing
Tirreno have legal authority to constitute the pledge. However, the fourth
requisite, that the thing pledged is placed in the possession of the
creditor, is absent. There is non-compliance with the fourth requisite even
if Tirreno's personal properties are found in FBDC's real property. Tirreno's
personal properties are in FBDC's real property because of the Contract of
Lease, which gives Tirreno possession of the personal properties. Since
Section 22 is not a contract of pledge, there is no pactum commissorium.
FBDC admits that it took Tirreno's properties from the leased premises
without judicial intervention after terminating the Contract of Lease in
accordance with Section 20.2. FBDC further justifies its action by stating
that Section 22 is a forfeiture clause in the Contract of Lease and that
Section 22 gives FBDC a remedy against Tirreno's failure to comply with its
obligations. FBDC claims that Section 22 authorizes FBDC to take whatever
properties that Tirreno left to pay off Tirreno's obligations.
We agree with FBDC.
A lease contract may be terminated without judicial intervention. Consing
v. Jamandre upheld the validity of a contractually-stipulated termination
clause:
This stipulation is in the nature of a resolutory condition, for upon
the exercise by the [lessor] of his right to take possession of the
leased property, the contract is deemed terminated. This kind of
contractual stipulation is not illegal, there being nothing in the law
proscribing such kind of agreement.
x x x
Judicial permission to cancel the agreement was not, therefore
necessary because of the express stipulation in the contract of
[lease] that the [lessor], in case of failure of the [lessee] to comply
with the terms and conditions thereof, can take-over the
possession of the leased premises, thereby cancelling the contract
of sub-lease. Resort to judicial action is necessary only in the
absence of a special provision granting the power of
cancellation.
14

A lease contract may contain a forfeiture clause. Country Bankers
Insurance Corp. v. Court of Appeals upheld the validity of a forfeiture
clause as follows:
A provision which calls for the forfeiture of the remaining deposit
still in the possession of the lessor, without prejudice to any other
obligation still owing, in the event of the termination or
cancellation of the agreement by reason of the lessee's violation
of any of the terms and conditions of the agreement is a penal
clause that may be validly entered into. A penal clause is an
accessory obligation which the parties attach to a principal
obligation for the purpose of insuring the performance thereof by
imposing on the debtor a special prestation (generally consisting
in the payment of a sum of money) in case the obligation is not
fulfilled or is irregularly or inadequately fulfilled.
15

In Country Bankers, we allowed the forfeiture of the lessee's advance
deposit of lease payment. Such a deposit may also be construed as a
guarantee of payment, and thus answerable for any unpaid rent or charges
still outstanding at any termination of the lease.
In the same manner, we allow FBDC's forfeiture of Tirreno's properties in
the leased premises. By agreement between FBDC and Tirreno, the
properties are answerable for any unpaid rent or charges at any
termination of the lease. Such agreement is not contrary to law, morals,
good customs, or public policy. Forfeiture of the properties is the only
security that FBDC may apply in case of Tirreno's default in its obligations.
Intervention versus Separate Action
Respondents posit that the right to intervene, although permissible, is not
an absolute right. Respondents agree with the trial court's ruling that
FBDC's proper remedy is not intervention but the filing of a separate
action. Moreover, respondents allege that FBDC was accorded by the trial
court of the opportunity to defend its claim of ownership in court through
pleadings and hearings set for the purpose. FBDC, on the other hand,
insists that a third party claimant may vindicate his rights over properties
taken in an action for replevin by intervening in the replevin action itself.
We agree with FBDC.
Both the trial court and respondents relied on our ruling in Bayer Phils. v.
Agana
16
to justify their opposition to FBDC's intervention and to insist on
FBDC's filing of a separate action. In Bayer, we declared that the rights of
third party claimants over certain properties levied upon by the sheriff to
satisfy the judgment may not be taken up in the case where such claims
are presented, but in a separate and independent action instituted by the
claimants. However, both respondents and the trial court overlooked the
circumstances behind the ruling in Bayer, which makes the Bayer ruling
inapplicable to the present case. The third party in Bayer filed his claim
during execution; in the present case, FBDC filed for intervention during
the trial.
The timing of the filing of the third party claim is important because the
timing determines the remedies that a third party is allowed to file. A third
party claimant under Section 16 of Rule 39 (Execution, Satisfaction and
Effect of Judgments)
17
of the 1997 Rules of Civil Procedure may vindicate
his claim to the property in a separate action, because intervention is no
longer allowed as judgment has already been rendered. A third party
claimant under Section 14 of Rule 57 (Preliminary Attachment)
18
of the
1997 Rules of Civil Procedure, on the other hand, may vindicate his claim
to the property by intervention because he has a legal interest in the
matter in litigation.
19

We allow FBDC's intervention in the present case because FBDC satisfied
the requirements of Section 1, Rule 19 (Intervention) of the 1997 Rules of
Civil Procedure, which reads as follows:
Section 1. Who may intervene. - A person who has a legal interest
in the matter in litigation, or in the success of either of the parties,
or an interest against both, or is so situated as to be adversely
affected by a distribution or other disposition of property in the
custody of the court or of an officer thereof may, with leave of
court, be allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties, and
whether or not the intervenor's rights may be fully protected in a
separate proceeding.
Although intervention is not mandatory, nothing in the Rules proscribes
intervention. The trial court's objection against FBDC's intervention has
been set aside by our ruling that Section 22 of the lease contract is not
pactum commissorium.
Indeed, contrary to respondents' contentions, we ruled in BA Finance
Corporation v. Court of Appeals that where the mortgagee's right to the
possession of the specific property is evident, the action need only be
maintained against the possessor of the property. However, where the
mortgagee's right to possession is put to great doubt, as when a
contending party might contest the legal bases for mortgagee's cause of
action or an adverse and independent claim of ownership or right of
possession is raised by the contending party, it could become essential to
have other persons involved and accordingly impleaded for a complete
determination and resolution of the controversy. Thus:
A chattel mortgagee, unlike a pledgee, need not be in, nor
entitled to, the possession of the property, unless and until the
mortgagor defaults and the mortgagee thereupon seeks to
foreclose thereon. Since the mortgagee's right of possession is
conditioned upon the actual default which itself may be
controverted, the inclusion of other parties, like the debtor or the
mortgagor himself, may be required in order to allow a full and
conclusive determination of the case. When the mortgagee seeks
a replevin in order to effect the eventual foreclosure of the
mortgage, it is not only the existence of, but also the mortgagor's
default on, the chattel mortgage that, among other things, can
properly uphold the right to replevy the property. The burden to
establish a valid justification for that action lies with the plaintiff [-
mortgagee]. An adverse possessor, who is not the mortgagor,
cannot just be deprived of his possession, let alone be bound by
the terms of the chattel mortgage contract, simply because the
mortgagee brings up an action for replevin.
20
(Emphasis added)
FBDC exercised its lien to Tirreno's properties even before respondents
and Tirreno executed their Deed of Chattel Mortgage. FBDC is adversely
affected by the disposition of the properties seized by the sheriff.
Moreover, FBDC's intervention in the present case will result in a complete
adjudication of the issues brought about by Tirreno's creation of multiple
liens on the same properties and subsequent default in its obligations.
Sheriff's Indemnity Bond
FBDC laments the failure of the trial court to require respondents to file an
indemnity bond for FBDC's protection. The trial court, on the other hand,
did not mention the indemnity bond in its Orders dated 7 March 2003 and
3 July 2003.
Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over
to respondents the properties subject of this case in view of respondents'
failure to file a bond. The bond in Section 14 of Rule 57 (proceedings
where property is claimed by third person) is different from the bond in
Section 3 of the same rule (affidavit and bond). Under Section 14 of Rule
57, the purpose of the bond is to indemnify the sheriff against any claim by
the intervenor to the property seized or for damages arising from such
seizure, which the sheriff was making and for which the sheriff was directly
responsible to the third party. Section 3, Rule 57, on the other hand, refers
to the attachment bond to assure the return of defendant's personal
property or the payment of damages to the defendant if the plaintiff's
action to recover possession of the same property fails, in order to protect
the plaintiff's right of possession of said property, or prevent the
defendant from destroying the same during the pendency of the suit.
Because of the absence of the indemnity bond in the present case, FBDC
may also hold the sheriff for damages for the taking or keeping of the
properties seized from FBDC.
WHEREFORE, we GRANT the petition. We SET ASIDE the Orders dated 7
March 2003 and 3 July 2003 of Branch 59 of the Regional Trial Court of
Makati City in Civil Case No. 01-1452 dismissing Fort Bonifacio
Development Corporation's Third Party Claim and denying Fort Bonifacio
Development Corporation's Motion to Intervene and Admit Complaint in
Intervention. We REINSTATE Fort Bonifacio Development Corporation's
Third Party Claim and GRANT its Motion to Intervene and Admit Complaint
in Intervention. Fort Bonifacio Development Corporation may hold the
Sheriff liable for the seizure and delivery of the properties subject of this
case because of the lack of an indemnity bond.
SO ORDERED.
CHINA BANKING CORPORATION, petitioner,
vs.
ASIAN CONSTRUCTION and DEVELOPMENT CORPORATION, respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court filed by petitioner China Banking Corporation (China Bank)
seeking to annul the Resolution
1
dated October 14, 2002 and the
Resolution
2
dated May 16, 2003 of the Court of Appeals (CA) in CA-G.R. CV
No. 72175.
The facts of the case:
On July 24, 1996, China Bank granted respondent Asian Construction and
Development Corporation (ACDC) an Omnibus Credit Line in the amount of
P90,000,000.00.
3

On April 12, 1999, alleging that ACDC failed to comply with its obligations
under the Omnibus Credit Line, China Bank filed a Complaint
4
for recovery
of sum of money and damages with prayer for the issuance of writ of
preliminary attachment before the Regional Trial Court (RTC) of Makati,
Branch 138, docketed as Civil Case No. 99-796. In the Complaint, China
Bank claimed that ACDC, after collecting and receiving the proceeds or
receivables from the various construction contracts and purportedly
holding them in trust for China Bank under several Deeds of Assignment,
misappropriated, converted, and used the funds for its own purpose and
benefit, instead of remitting or delivering them to China Bank.
5

On April 22, 1999, the RTC issued an Order
6
granting China Banks prayer
for writ of preliminary attachment. Consequently, as shown in the Sheriffs
Report
7
dated June 14, 1999, the writ of preliminary attachment was
implemented levying personal properties of ACDC, i.e., vans, dump trucks,
cement mixers, cargo trucks, utility vehicles, machinery, equipment and
office machines and fixtures.
On March 27, 2000, upon motion of China Bank, the RTC issued a Summary
Judgment
8
in favor of China Bank. ACDC filed its Notice of Appeal
9
dated
April 24, 2000.
On June 15, 2000, China Bank filed a Motion to Take Custody of Attached
Properties with Motion for Grant of Authority to Sell to the Branch Sheriff
10

with the RTC, praying that it be allowed to take custody of ACDCs
properties for the purpose of selling them in an auction.
11
On June 20,
2000, ACDC filed its Opposition
12
to the June 15, 2000 Motion arguing that
there can be no sale of the latters attached properties in the absence of a
final and executory judgment against ACDC.
On August 25, 2000, China Bank partially appealed the Summary Judgment
for not awarding interest on one of its promissory notes.
13
Records of the
case were elevated to the CA.
14

On April 18, 2002, China Bank filed a Motion for Leave for Grant of
Authority to Sell Attached Properties
15
which the CA denied in the herein
assailed Resolution dated October 14, 2002.
According to the CA, selling the attached properties prior to final judgment
of the appealed case is premature and contrary to the intent and purpose
of preliminary attachment for the following reasons: first, the records
reveal that the attached properties subject of the motion are not
perishable in nature; and second, while the sale of the attached properties
may serve the interest of China Bank, it will not be so for ACDC. The CA
recognized China Banks apprehension that by the time a final judgment is
rendered, the attached properties would be worthless. However, the CA
also acknowledged that since ACDC is a corporation engaged in a
construction business, the preservation of the properties is of paramount
importance; and that in the event that the decision of the lower court is
reversed and a final judgment rendered in favor ACDC, great prejudice will
result if the attached properties were already sold.
China Bank filed a Motion for Reconsideration
16
which was denied in the
herein assailed CA Resolution
17
dated May 16, 2003.
Hence, the present petition for review on certiorari, on the following
ground:
THE HONORABLE COURT OF APPEALS RENDERED THE
QUESTIONED RESOLUTIONS (ANNEXES "A" and "B") IN A MANNER
NOT IN ACCORD WITH THE PROVISIONS OF SECTION 11, RULE 57
OF THE RULES OF CIVIL PROCEDURE, AS IT SHELVED THE
DEMANDS OF EQUITY BY ARBITRARILY DISALLOWING THE SALE OF
THE ATTACHED PROPERTIES, UPHOLDING ONLY THE INTEREST OF
RESPONDENT, IN UTTER PARTIALITY.
18

Considering that the herein assailed CA Resolutions are interlocutory in
nature as they do not dispose of the case completely but leave something
to be done upon the merits,
19
the proper remedy should have been by way
of petition for certiorari under Rule 65, as provided for in Section 1 (b),
Rule 41 of the Rules of Court, as amended by A.M. No. 07-7-12-SC,
20
which
provides:
Section 1. Subject of appeal. - An appeal may be taken from a
judgment or final order that completely disposes of the case, or of
a particular matter therein when declared by these Rules to be
appealable.
No appeal may be taken from:
x x x x
(b) An interlocutory order;
x x x x
In any of the foregoing instances, the aggrieved party may file an
appropriate special civil action as provided in Rule 65. (Emphasis
supplied).
The present petition for review on certiorari should have been dismissed
outright. However, in many instances, the Court has treated a petition for
review on certiorari under Rule 45 as a petition for certiorari under Rule 65
of the Rules of Court, such as in cases where the subject of the recourse
was one of jurisdiction, or the act complained of was perpetrated by a
court with grave abuse of discretion amounting to lack or excess of
jurisdiction.
21
The present petition does not involve any issue on
jurisdiction, neither does it show that the CA committed grave abuse of
discretion in denying the motion to sell the attached property.
Section 11, Rule 57 of the Rules of Court provides:
Sec. 11. When attached property may be sold after levy on
attachment and before entry of judgment.- Whenever it shall be
made to appear to the court in which the action is pending, upon
hearing with notice to both parties, that the property attached is
perishable, or that the interests of all the parties to the action
will be subserved by the sale thereof, the court may order such
property to be sold at public auction in such manner as it may
direct, and the proceeds of such sale to be deposited in court to
abide the judgment in the action. (Emphasis supplied)
Thus, an attached property may be sold after levy on attachment and
before entry of judgment whenever it shall be made to appear to the court
in which the action is pending, upon hearing with notice to both parties,
that the attached property is perishable or that the interests of all the
parties to the action will be subserved by the sale of the attached
property.
In its Memorandum,
22
China Bank argues that the CAs notion of perishable
property, which pertains only to those goods which rot and decay and lose
their value if not speedily put to their intended use,
23
is a strict and
stringent interpretation that would betray the purpose for which the
preliminary attachment was engrafted.
24
Citing Witherspoon v. Cross,
25

China Bank invokes the definition of "perishable property" laid down by
the Supreme Court of California as goods which decay and lose their value
if not speedily put to their intended use; but where the time contemplated
is necessarily long, the term may embrace property liable merely to
material depreciation in value from other causes than such decay.
As stated in the Sheriffs Report
26
and Notices of Levy on Properties,
27
all of
ACDCs properties which were levied are personal properties consisting of
used vehicles, i.e., vans, dump trucks, cement mixers, cargo trucks, utility
vehicles, machinery, equipment and office machines and fixtures. China
Bank insists that the attached properties, all placed inside ACDCs
stockyard located at Silang, Cavite and the branch office in Mayamot,
Antipolo City, are totally exposed to natural elements and adverse weather
conditions.
28
Thus, China Bank argues, that should the attached properties
be allowed to depreciate, perish or rot while the main case is pending, the
attached properties will continue losing their worth thereby rendering the
rules on preliminary attachment nugatory.
The issue hinges on the determination whether the vehicles, office
machines and fixtures are "perishable property" under Section 11, Rules 57
of the Rules of Court, which is actually one of first impression. No local
jurisprudence or authoritative work has touched upon this matter. This
being so, an examination of foreign laws and jurisprudence, particularly
those of the United States where some of our laws and rules were
patterned after, is in order.
29

In Mossler Acceptance Co. v. Denmark,
30
an order of the lower court in
directing the sale of attached properties, consisting of 20 automobiles and
2 airplanes, was reversed by the Supreme Court of Louisiana. In support of
its contention that automobiles are perishable, Mossler offered testimony
to the effect that automobile tires tend to dry-rot in storage, batteries to
deteriorate, crankcases to become damaged, paint and upholstery to fade,
that generally automobiles tend to depreciate while in storage.
31
Rejecting
these arguments, the Supreme Court of Louisiana held that while there
might be a depreciation in the value of a car during storage, depending
largely on existing economic conditions, there would be no material
deterioration of the car itself or any of its appurtenances if the car was
properly cared for, and therefore it could not be said that automobiles
were of a perishable nature within the intendment of the statute, which
could only be invoked when the property attached and seized was of a
perishable nature.
32

With respect to the determination of the question on whether the
attached office furniture, office equipment, accessories and supplies are
perishable properties, the Supreme Court of Alabama in McCreery v.
Berney National Bank
33
discussed the "perishable" nature of the attached
properties, consisting of shelving, stock of drygoods and a complete set of
store fixtures, consisting of counters iron safe, desk and showcases, to be
within the meaning of "perishable" property under the Alabama Code
which authorizes a court, on motion of either party, to order the sale, in
advance of judgment, of perishable property which had been levied on by
a writ of attachment.
34

In McCreery, the Supreme Court of Alabama rejected the argument that
the sale of the attached property was void because the term "perishable"
property, as used in the statute, meant only such property as contained in
itself the elements of speedy decay, such as fruits, fish, fresh meats, etc.
35

The Supreme Court of Alabama held that whatever may be the character
of the property, if the court is satisfied that, either by reason of its
perishable nature, or because of the expense of keeping it until the
termination of the litigation, it will prove, or be likely to prove, fruitless to
the creditor, and that the purpose of its original seizure will probably be
frustrated, the sale of the attached property is justified.
McCreery applied the doctrine in Millards Admrs. v. Hall
36
where the
Supreme Court of Alabama held that an attached property is perishable "if
it is shown that, by keeping the article, it will necessarily become, or is
likely to become, worthless to the creditor, and by consequence to the
debtor, then it is embraced by the statute. It matters not, in our opinion,
what the subject matter is. It may be cotton bales, live stock, hardware
provisions or dry goods." Although the statute under which Millards was
decided used the words "likely to waste or be destroyed by keeping,"
instead of the word "perishable," the reasons given for the construction
placed on the statute apply equally to the Alabama Code which uses the
term "perishable."
37

In the Motion for Leave for Grant of Authority to Sell Attached Properties
38

filed before the CA, China Bank alleged that the attached properties are
placed in locations where they are totally exposed to the natural elements
and adverse weather conditions since their attachment in 1999;
39
that as a
result, the attached properties have gravely deteriorated with corrosions
eating them up, with weeds germinating and growing thereon and their
engines and motors stock up;
40
and that the same holds true to the office
furniture, office equipment, accessories and supplies.
41
No evidence,
however, were submitted by China Bank to support and substantiate these
claims before the CA.
Notably, in the Petition filed before the Court, China Bank, for the first
time, included as annexes,
42
photographs of the attached properties which
were alleged to be recently taken, in an attempt to convince the Court of
the deteriorated condition of the attached properties.
The determination on whether the attached vehicles are properly cared
for, and the burden to show that, by keeping the attached office furniture,
office equipment and supplies, it will necessarily become, or is likely to
become, worthless to China Bank, and by consequence to ACDC, are
factual issues requiring reception of evidence which the Court cannot do in
a petition for certiorari. Factual issues are beyond the scope of certiorari
because they do not involve any jurisdictional issue.
43

As a rule, only jurisdictional questions may be raised in a petition for
certiorari, including matters of grave abuse of discretion which are
equivalent to lack of jurisdiction.
44
The office of the writ of certiorari has
been reduced to the correction of defects of jurisdiction solely and cannot
legally be used for any other purpose.
45

Certiorari is truly an extraordinary remedy and, in this jurisdiction, its use is
restricted to truly extraordinary cases - cases in which the action of the
inferior court is wholly void; where any further steps in the case would
result in a waste of time and money and would produce no result
whatever; where the parties, or their privies, would be utterly deceived;
where a final judgment or decree would be nought but a snare and
delusion, deciding nothing, protecting nobody, a judicial pretension, a
recorded falsehood, a standing menace. It is only to avoid such results as
these that a writ of certiorari is issuable; and even here an appeal will lie if
the aggrieved party prefers to prosecute it.
46

Moreover, the Court held in JAM Transportation Co., Inc. v. Flores
47
that it
is well-settled, too well-settled to require a citation of jurisprudence, that
this Court does not make findings of facts specially on evidence raised for
the first time on appeal.
48
The Court will not make an exception in the case
at bar. Hence, the photographs of the attached properties presented
before the Court, for the first time on appeal, cannot be considered by the
Court.
China Bank argues that if the CA allowed the attached properties to be
sold, whatever monetary value which the attached properties still have will
be realized and saved for both parties.
49
China Bank further claims that
should ACDC prevail in the final judgment
50
of the collection suit, ACDC can
proceed with the bond posted by China Bank.
51
The Court finds said
arguments to be specious and misplaced.
Section 4, Rule 57 of the Rules of Court provides:
Section 4. Condition of applicants bond. - The party applying for
the order must thereafter give a bond executed to the adverse
party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all the
damages which he may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was not entitled
thereto.
It is clear from the foregoing provision that the bond posted by China Bank
answers only for the payment of all damages which ACDC may sustain if
the court shall finally adjudge that China Bank was not entitled to
attachment. The liability attaches if "the plaintiff is not entitled to the
attachment because the requirements entitling him to the writ are
wanting," or "if the plaintiff has no right to the attachment because the
facts stated in his affidavit, or some of them are untrue."
52
Clearly, ACDC
can only claim from the bond for all the damages which it may sustain by
reason of the attachment and not because of the sale of the attached
properties prior to final judgment.
Sale of attached property before final judgment is an equitable remedy
provided for the convenience of the parties and preservation of the
property.
53
To repeat, the Court finds that the issue of whether the sale of
attached properties is for the convenience of the parties and that the
interests of all the parties will be subserved by the said sale is a question of
fact. Again, the foregoing issue can only be resolved upon examination of
the evidence presented by both parties which the Court cannot do in a
petition for certiorari under Rule 65 of the Rules of Court.
WHEREFORE, the petition is DENIED. The assailed Resolutions of the Court
of Appeals dated October 14, 2002 and May 16, 2003 in CA-G.R. CV No.
72175 are hereby AFFIRMED.
SO ORDERED.
EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional
Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA,
respondents.
G.R. No. 107491 February 21, 1994
BRUNNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional
Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA,
respondents.
Florante A. Bautista for petitioner in G.R. No. 107303.
Andin & Andin Law Offices for Brunner Development Corporation.
Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life Assurance
Company of Canada.

NOCON, J.:
These are separate petitions for certiorari with a prayer for temporary
restraining order filed by Emmanuel C. Oate and Econ Holdings
Corporation (in G.R. No. 107303), and Brunner Development Corporation
(in G.R. No. 107491), both of which assail several orders issued by
respondent Judge Zues C. Abrogar in Civil Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent Sun
Life Assurance Company of Canada (Sun Life, for brevity) filed a complaint
for a sum of money with a prayer for the immediate issuance of a writ of
attachment against petitioners, and Noel L. Dio, which was docketed as
Civil Case No. 91-3506 and raffled to Branch 150 of the RTC Makati,
presided over by respondent Judge. The following day, December 24,
1991, respondent Judge issued an order granting the issuance of a writ of
attachment, and the writ was actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life's ex-parte motion, the trial court
amended the writ of attachment to reflect the alleged amount of the
indebtedness. That same day, Deputy Sheriff Arturo C. Flores,
accompanied by a representative of Sun Life, attempted to serve summons
and a copy of the amended writ of attachment upon petitioners at their
known office address at 108 Aguirre St., Makati but was not able to do so
since there was no responsible officer to receive the same.
1
Nonetheless,
Sheriff Flores proceeded, over a period of several days, to serve notices of
garnishment upon several commercial banks and financial institutions, and
levied on attachment a condominium unit and a real property belonging to
petitioner Oate.
Summons was eventually served upon petitioners on January 9, 1992,
while defendant Dio was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to
Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed an
ex-parte motion to examine the books of accounts and ledgers of
petitioner Brunner Development Corporation (Brunner, for brevity) at the
Urban Bank, Legaspi Village Branch, and to obtain copies thereof, which
motion was granted by respondent Judge. The examination of said account
took place on January 23, 1992. Petitioners filed a motion to nullify the
proceedings taken thereat since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a
memorandum in support of the motion to discharge attachment. Also on
that same day, Sun Life filed another motion for examination of bank
accounts, this time seeking the examination of Account No. 0041-0277-03
with the Bank of Philippine Islands (BPI) which, incidentally, petitioners
claim not to be owned by them and the records of Philippine National
Bank (PNB) with regard to checks payable to Brunner. Sun Life asked the
court to order both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying
petitioners' and the co-defendants' motion to discharge the amended writ
of attachment, (2) approving Sun Life's additional attachment, (3) granting
Sun Life's motion to examine the BPI account, and (4) denying petitioners'
motion to nullify the proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the
February 6, 1992 order. On September 6, 1992, respondent Judge denied
the motion for reconsideration.
Hence, the instant petitions. Petitioners' basic argument is that respondent
Judge had acted with grave abuse of discretion amounting to lack or in
excess of jurisdiction in (1) issuing ex parte the original and amended writs
of preliminary attachment and the corresponding notices of garnishment
and levy on attachment since the trial court had not yet acquired
jurisdiction over them; and (2) allowing the examination of the bank
records though no notice was given to them.
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun Life's
prayer for a writ of preliminary attachment on the ground that the trial
court had not acquired jurisdiction over them. This argument is clearly
unavailing since it is well-settled that a writ of preliminary attachment may
be validly applied for and granted even before the defendant is summoned
or is heard from.
2
The rationale behind this rule was stated by the Court in
this wise:
A preliminary attachment may be defined, paraphrasing
the Rules of Court, as the provisional remedy in virtue of
which a plaintiff or other proper party may, at the
commencement of the action or any time thereafter,
have the property of the adverse party taken into the
custody of the court as security for the satisfaction of any
judgment that may be recovered. It is a remedy which is
purely statutory in respect of which the law requires a
strict construction of the provisions granting it. Withal no
principle, statutory or jurisprudential, prohibits its
issuance by any court before acquisition of jurisdiction
over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter."
The phrase "at the commencement of the action,"
obviously refers to the date of the filing of the complaint
which, as abovepointed out, its the date that marks
"the commencement of the action;" and the reference
plainly is to a time before summons is served on the
defendant or even before summons issues. What the rule
is saying quite clearly is that after an action is properly
commenced by the filing of the complaint and the
payment of all requisite docket and other fees the
plaintiff may apply for and obtain a writ of preliminary
attachment upon fulfillment of the pertinent requisites
laid down by law, and that he may do so at any time,
either before or after service of summons on the
defendant. And this indeed, has been the immemorial
practice sanctioned by the courts: for the plaintiff or
other proper party to incorporate the application for
attachment in the complaint or other appropriate
pleading (counterclaim, cross-claim, third-party claim)
and for the Trial Court to issue the writ ex-parte at the
commencement of the action if it finds the application
otherwise sufficient in form and substance.
3

Petitioners then contended that the writ should have been discharged
since the ground on which it was issued fraud in contracting the
obligation was not present. This cannot be considered a ground for
lifting the writ since this delves into the very complaint of the Sun Life. As
this Court stated in Cuatro v. Court of Appeals:
4

Moreover, an attachment may not be dissolved by a
showing of its irregular or improper issuance if it is upon
a ground which is at the same time the applicant's cause
of action in the main case since an anomalous situation
would result if the issues of the main case would be
ventilated and resolved in a mere hearing of the motion
(Davao Light and Power Co., Inc. vs. Court of Appeals,
supra, The Consolidated Bank and Trust Corp. (Solidbank)
vs. Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegation in petitioner's
complaint below is that the defendant spouses induced
the plaintiff to grant the loan by issuing postdated checks
to cover the installment payments and a separate set of
postdated checks for payment of the stipulated interest
(Annex "B"). The issue of fraud, then, is clearly within the
competence of the lower court in the main action.
5

The fact that a criminal complaint for estafa filed by Sun Life against the
petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati
on April 21, 1992 and was upheld by the Provincial Prosecutor on July 13,
1992 is of no moment since the same can be indicative only of the absence
of criminal liability, but not of civil liability. Besides, Sun Life had elevated
the case for review to the Department of Justice, where the case is
presently pending.
Finally, petitioners argue that the enforcement of the writ was invalid since
it undisputedly preceded the actual service of summons by six days at
most. Petitioners cite the decisions in Sievert vs. Court of Appeals, et al.
6

and BAC Manufacturing and Sales Corp. vs. Court of Appeals, et al.,
7

wherein this Court held that enforcement of the writ of attachment can
not bind the defendant in view of the failure of the trial court to acquire
jurisdiction over the defendant through either summons or his voluntary
appearance.
We do not agree entirely with petitioners. True, this Court had held in a
recent decision that the enforcement of writ of attachment may not validly
be effected until and unless proceeded or contemporaneously
accompanied by service of summons.
8

But we must distinguish the case at bar from the Sievert and BAC
Manufacturing cases. In those two cases, summons was never served upon
the defendants. The plaintiffs therein did not even attempt to cause
service of summons upon the defendants, right up to the time the cases
went up to this Court. This is not true in the case at bar. The records reveal
that Sheriff Flores and Sun Life did attempt a contemporaneous service of
both summons and the writ of attachment on January 3, 1992, but we
stymied by the absence of a responsible officer in petitioners' offices. Note
is taken of the fact that petitioners Oate and Econ Holdings admitted in
their answer
9
that the offices of both Brunner Development Corporation
and Econ Holdings were located at the same address and that petitioner
Oate is the President of Econ Holdings while petitioner Dio is the
President of Brunner Development Corporation as well as a stockholder
and director of Econ Holdings.
Thus, an exception to the established rule on the enforcement of the writ
of attachment can be made where a previous attempt to serve the
summons and the writ of attachment failed due to factors beyond the
control of either the plaintiff or the process server, provided that such
service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a possibility
that a defendant, having been alerted of plaintiffs action by the attempted
service of summons and the writ of attachment, would put his properties
beyond the reach of the plaintiff while the latter is trying to serve the
summons and the writ anew. By the time the plaintiff may have caused the
service of summons and the writ, there might not be any property of the
defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six
days later. To nullify the notices of garnishment issued prior thereto would
again open the possibility that petitioners would transfer the garnished
monies while Sun Life applied for new notices of garnishment.
Third, the ease by which a writ of attachment can be obtained is counter-
balanced by the ease by which the same can be discharged: the defendant
can either make a cash deposit or post a counter-bond equivalent to the
value of the property attached.
10
The petitioners herein tried to have the
writ of attachment discharged by posting a counter-bond, the same was
denied by respondent Judge on the ground that the amount of the
counter-bond was less than that of Sun Life's bond.
II.
Petitioners' second ground assail the acts of respondent Judge in allowing
the examination of Urban Banks' records and in ordering that the
examination of the bank records of BPI and PNB as invalid since no notice
of said examinations were ever given them. Sun Life grounded its requests
for the examination of the bank accounts on Section 10, Rule 57 of the
Rules of Court, which provided, to wit:
Sec. 10. Examination of party whose property is attached
and persons indebted to him or controlling his property;
delivery of property to officer. Any person owing debts
to the party whose property is attached or having in his
possession or under his control any credit or other
personal property belonging to such party, may be
required to attend before the court in which the action is
pending, or before a commissioner appointed by the
court and be examined on oath respecting the same. The
party whose property is attached may also be required to
attend for the purpose of giving information respecting
his property, and may be examined on oath. The court
may, after such examination, order personal property
capable of manual delivery belonging to him, in the
possession of the person so required to attend before
the court, to be delivered to the clerk or court, sheriff, or
other proper officer on such terms as may be just, having
reference to any lien thereon or claim against the same,
to await the judgment in the action.
It is clear from the foregoing provision that notice need only be given to
the garnishee, but the person who is holding property or credits belonging
to the defendant. The provision does not require that notice be furnished
the defendant himself, except when there is a need to examine said
defendant "for the purpose of giving information respecting his property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No.
1405, as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits
With Any Banking Institution and Providing Penalty Therefore," for Section
2 therefore provides an exception "in cases where the money deposited or
invested is the subject matter of the litigation."
The examination of the bank records is not a fishing expedition, but rather
a method by which Sun Life could trace the proceeds of the check it paid to
petitioners.
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary
restraining order issued on June 28, 1993 is hereby lifted.
SO ORDERED.

THOMAS PEPPERELL, Plaintiff-Appellee, v. B.F. TAYLOR, Defendant-
Appellant.

P.Q. Rothrock, for Appellant.

T.L. McGirr and C.H. Gest, for Appellee.

SYLLABUS
1. CIVIL PROCEDURE; ATTACHMENT. An affidavit for attachment which
states that the defendant has disposed of his property or is about to
dispose of it with intent to defraud his creditors, is not defective.

2. ID.; ID. Section 426 of the Code of Civil Procedure, which prohibits an
attachment when there is other sufficient security, had no application to a
case where the attachment is levied upon the property upon which the
security exists and in an action to recover the debt so secured.

3. ID.; ID. Section 510 of the Code of Civil Procedure, relating to interest
on judgments, does not apply to a case where the obligations sued on
bears interest. In such a case a judgment which provides for interest from
the maturity of the obligation until final payment is proper.

D E C I S I O N

WILLARD, J. :

This is an ordinary action on a promissory note to recover the sum of
$1,150, United States currency, with interest thereon at the rate of 25 per
cent annum from September 14, 1903, the date of the note, until its
payment. The action was commenced on the 21st of April, 1904, and on
the 25th of April the plaintiff procured an attachment of the property of
the defendant under the provisions of section 424 and following sections
of the Code of Civil Procedure.

The affidavit for attachment stated that the defendant had disposed of his
property or is about to dispose of his property with intent to defraud his
creditors. By virtue of the writ of attachment the sheriff levied upon the
launch Scotia, the property of the defendant. The defendant moved in the
court below to dissolve the attachment, which motion was denied, and to
the order denying it he took an exception. The case was tried in the court
below, and judgment entered for the plaintiff for the face of the note with
interest at the rate of 25 per cent annum from the 14th day of September,
1903, until the debt was paid. The defendant has brought the case here by
bill of exceptions, and makes two assignments of errors.

The first relates to the sufficiency of the affidavit upon which the
attachment was granted. The claim of the defendant is that the affidavit
was insufficient because the allegation as to the transfer of property was in
the alternative.

An affidavit which stated in the alternative two reasons for the
attachment, one of which was by the statute a ground therefore and the
other was not, would be bad, because, while it stated that one or the other
ground existed, it did not state which one, and the one that did in fact exist
might be the one which was not sufficient to authorize the issuance of the
writ. In such a case it could be truthfully said that the affidavit did not state
the existence of any ground for attachment. That, however, can not be
said where the affidavit states in the alternative, as it does in this case, two
grounds, either one of which would justify the attachment. If one does not
exist the other must. It therefore states positively the existence of a
ground for attachment. The objection that could be made to such an
affidavit is not that it does not state a ground for attachment, but that it is
indefinite in not stating positively which one of several grounds alleged
exists. This ought not to be sufficient to render the attachment void. In
some cases, as in this, it might be impossible to state truthfully which one
of the two grounds did in fact exist. The plaintiff might have information
that the defendant was attempting to dispose of his property with intent
to defraud his creditors. At the time when he swears to the affidavit, which
must necessarily be some time after he acquires the information, he can
not know just how far the defendant has proceeded in his attempt. At that
precise time the fraudulent sale contemplated may have been actually
consummated, without the plaintiff knowing it. In such a case he would be
justified in making the affidavit in the alternative. In some, perhaps in a
majority, of the States of the United States such an affidavit as the one in
this case would be held had. There are other courts of the United States,
however, in which it would be held good.

With the motion to dissolve the attachment the defendant presented his
affidavit to the effect that he had not disposed of and did not intend to
dispose of his property for the purpose of defrauding his creditors. Upon
this question of fact we do not think that the preponderance of the
evidence is against the decision of the trial court. At the hearing of this
motion plaintiff, in addition to the affidavit on which the attachment was
granted, presented a supporting affidavit in which he gave the source of
his information as to the proposed sale.

Section 426 of the Code of Civil Procedure provides, among other things,
that the judge shall grant an order of attachment when it appears "that the
case is one of those mentioned in section four hundred and twenty-four,
and that there is no other sufficient security for the claim sought to be
enforced by the action."cralaw virtua1aw library

It appears that the plaintiff at the time that the launch Scotia was attached
in this proceeding had what is known in the United States as a chattel
mortgage on the said launch to secure the note sued on in this case, and
other notes. The claim of the appellant is that this so-called chattel
mortgage constituted other security within the meaning of section 426,
and that the attachment was therefore void. The plaintiffs answer to this
claim is that his so-called chattel mortgage was void under the laws in
force in these Islands, and therefore there was no security at all.

We do not find it necessary to pass upon the validity of this instrument.
The object of the statute was to prevent the creditor, who already had
security on certain goods, from attaching other goods to secure the same
debt. It was not, in our opinion, intended to apply to a case where the
plaintiff caused his attachment to be levied upon the very article upon
which the security existed, and in an action to recover the debt which was
so secured. In fact, under the Spanish law of civil procedure, in an action to
recover a debt thus secured the property first to be attached is that upon
which the security rested. What the effect of this attachment upon the
security is we do not decide. We simply hold that section 426 does not
prevent an attachment of the article upon which the security rests for the
debt this secured.

The question raised by the assignment of error in regard to the interest has
been decided adversely to the appellant in the case of the Banco Espaol
Filipino v. Donaldson Sim & Co., No. 2422. 1 On motion for a rehearing in
that case it was held that a judgment of a Court of First Instance which
directed the payment of interest from the date of default until the final
payment of the judgment was authorized by the law, and that section 510
of the Code of Civil Procedure did not apply to such a case.

The judgment of the court below is affirmed, with the costs of this instance
against the appellant, and after the expiration of twenty days judgment
should be entered in accordance herewith and the case remanded to the
court below for execution of said judgment. So ordered.

RICARDO CUARTERO, petitioner,
vs.
COURT OF APPEALS, ROBERTO EVANGELISTA and FELICIA EVANGELISTA,
respondents.
Abesamis, Medialdea & Abesamis for petitioner.
Eufemio Law Offices for private respondent.

GUTIERREZ, JR., J.:
This is a petition for review on certiorari seeking to annul the decision of
the Court of Appeals promulgated on June 27, 1991 as well as the
subsequent resolution dated October 22, 1991 denying the motion for
reconsideration in CA-G.R. SP No. 23199 entitled "Spouses Roberto and
Felicia Evangelista v. Honorable Cezar C. Peralejo, Presiding Judge Regional
Trial Court of Quezon City, Branch 98, and Ricardo Cuartero," which
nullified the orders of the trial court dated August 24, 1990 and October 4,
1990 and cancelled the writ of preliminary attachment issued on
September 19, 1990.
Following are the series of events giving rise to the present controversy.
On August 20, 1990, petitioner Ricardo Cuartero filed a complaint before
the Regional Trial Court of Quezon City against the private respondents,
Evangelista spouses, for a sum of money plus damages with a prayer for
the issuance of a writ of preliminary attachment. The complaint was
docketed as Civil Case No. Q-90-6471.
On August 24, 1990, the lower court issued an order granting ex-parte the
petitioner's prayer for the issuance of a writ of preliminary attachment.
On September 19, 1990, the writ of preliminary attachment was issued
pursuant to the trial court's order dated August 24, 1990. On the same
day, the summons for the spouses Evangelista was likewise prepared.
The following day, that is, on September 20, 1990, a copy of the writ of
preliminary attachment, the order dated August 24, 1990, the summons
and the complaint were all simultaneously served upon the private
respondents at their residence. Immediately thereafter, Deputy Sheriff
Ernesto L. Sula levied, attached and pulled out the properties in
compliance with the court's directive to attach all the properties of private
respondents not exempt from execution, or so much thereof as may be
sufficient to satisfy the petitioner's principal claim in the amount of
P2,171,794.91.
Subsequently, the spouses Evangelista filed motion to set aside the order
dated August 24, 1990 and discharge the writ of preliminary attachment
for having been irregularly and improperly issued. On October 4, 1990, the
lower court denied the motion for lack of merit.
Private respondents, then, filed a special civil action for certiorari with the
Court of Appeals questioning the orders of the lower court dated August
24, 1990 and October 4, 1990 with a prayer for a restraining order or writ
of preliminary injunction to enjoin the judge from taking further
proceedings below.
In a Resolution dated October 31, 1990, the Court of Appeals resolved not
to grant the prayer for restraining order or writ of preliminary injunction,
there being no clear showing that the spouses Evangelista were entitled
thereto.
On June 27, 1991, the Court of Appeals granted the petition for certiorari
and rendered the questioned decision. The motion for reconsideration
filed by herein petitioner Cuartero was denied for lack of merit in a
resolution dated October 22, 1991. Hence, the present recourse to this
Court.
The petitioner raises the following assignment of errors:
I
THE COURT OF APPEALS ERRED AND COMMITTED A
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF
JURISDICTION WHEN IT HELD THAT THE REGIONAL TRIAL
COURT DID NOT ACQUIRE JURISDICTION OVER
RESPONDENT SPOUSES.
II
THE COURT OF APPEALS ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION WHEN IT HELD THAT THE
REGIONAL TRIAL COURT COULD NOT VALIDLY ISSUE THE
SUBJECT WRIT OF PRELIMINARY ATTACHMENT WHICH IS
AN ANCILLARY REMEDY. (Rollo, p. 13)
The Court of Appeals' decision is grounded on its finding that the trial court
did not acquire any jurisdiction over the person of the defendants (private
respondents herein). It declared that:
. . . the want of jurisdiction of the trial court to proceed
in the main case as well as the ancillary remedy of
attachment is quite clear. It is not disputed that neither
service of summons with a copy of the complaint nor
voluntary appearance of petitioners was had in this case
before the trial court issued the assailed order dated
August 24, 1990, as well as the writ of preliminary
attachment dated September 19, 1990. This is reversible
error and must be corrected on certiorari. (Rollo, p. 24)
The appellate tribunal relied on the case of Sievert v. Court of Appeals, 168
SCRA 692 (1988) in arriving at the foregoing conclusion. It stated that:
Valid service of summons and a copy of the complaint
vest jurisdiction in the court over the defendant both for
the purpose of the main case and for purposes of the
ancillary remedy of attachment and a court which has
not acquired jurisdiction over the person of defendant,
cannot bind the defendant whether in the main case or
in any ancillary proceeding such as attachment
proceedings (Sievert v. Court of Appeals, 168 SCRA 692).
(Rollo, p. 24)
The private respondents, in their comment, adopted and reiterated the
aforementioned ruling of the Court of Appeals. They added that aside from
the want of jurisdiction, no proper ground also existed for the issuance of
the writ of preliminary attachment. They stress that the fraud in
contracting the debt or incurring the obligation upon which the action is
brought which comprises a ground for attachment must have already been
intended at the inception of the contract. According to them, there was no
intent to defraud the petitioner when the postdated checks were issued
inasmuch as the latter was aware that the same were not yet funded and
that they were issued only for purposes of creating an evidence to prove a
pre-existing obligation.
Another point which the private respondents raised in their comment is
the alleged violation of their constitutionally guaranteed right to due
process when the writ was issued without notice and hearing.
In the later case of Davao Light and Power Co., Inc. v. Court of Appeals,
G.R. No. 93262, November 29, 1991, we had occasion to deal with certain
misconceptions which may have arisen from our Sievert ruling. The
question which was resolved in the Davao Light case is whether or not a
writ of preliminary attachment may issue ex-parte against a defendant
before the court acquires jurisdiction over the latter's person by service of
summons or his voluntary submission to the court's authority. The Court
answered in the affirmative. This should have clarified the matter but
apparently another ruling is necessary.
A writ of preliminary attachment is defined as a provisional remedy issued
upon order of the court where an action is pending to be levied upon the
property or properties of the defendant therein, the same to be held
thereafter by the sheriff as security for the satisfaction of whatever
judgment might be secured in said action by the attaching creditor against
the defendant (Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v.
Aquino, 53 SCRA 30-31 [1973]).
Under section 3, Rule 57 of the Rules of Court, the only requisites for the
issuance of the writ are the affidavit and bond of the applicant. As has
been expressly ruled in BF Homes, Inc. v. Court of Appeals, 190 SCRA 262
(1990), citing Mindanao Savings and Loan Association, Inc. v. Court of
Appeals, 172 SCRA 480 (1989), no notice to the adverse party or hearing of
the application is required inasmuch as the time which the hearing will
take could be enough to enable the defendant to abscond or dispose of his
property before a writ of attachment issues. In such a case, a hearing
would render nugatory the purpose of this provisional remedy. The ruling
remains good law. There is, thus, no merit in the private respondents'
claim of violation of their constitutionally guaranteed right to due process.
The writ of preliminary attachment can be applied for and granted at the
commencement of the action or at any time thereafter (Section 1, Rule 57,
Rules of Court). In Davao Light and Power, Co., Inc. v. Court of Appeals,
supra, the phrase "at the commencement of the action" is interpreted as
referring to the date of the filing of the complaint which is a time before
summons is served on the defendant or even before summons issues. The
Court added that
. . . after an action is properly commenced by filing of
the complaint and the payment of all requisite docket
and other fees the plaintiff may apply and obtain a
writ of preliminary attachment upon the fulfillment of
the pertinent requisites laid down by law, and that he
may do so at any time, either before or after service of
summons on the defendant. And this, indeed, has been
the immemorial practice sanctioned by the courts: for
the plaintiff or other proper party to incorporate the
application for attachment in the complaint or other
appropriate pleading (counter-claim, cross-claim, third-
party-claim) and for the Trial Court to issue the writ ex-
parte at the commencement of the action if it finds the
application otherwise sufficient in form and substance.
The Court also pointed out that:
. . . It is incorrect to theorize that after an action or
proceeding has been commenced and jurisdiction over
the person of the plaintiff has been vested in the Court,
but before acquisition of jurisdiction over the person of
the defendant (either by service of summons or his
voluntary submission to the Court's authority), nothing
can be validly done by the plaintiff or the Court. It is
wrong to assume that the validity of acts done during the
period should be dependent on, or held in suspension
until, the actual obtention of jurisdiction over the
defendants person. The obtention by the court of
jurisdiction over the person of the defendant is one
thing; quite another is the acquisition of jurisdiction over
the person of the plaintiff or over the subject matter or
nature of the action, or the res or object thereof.
It is clear from our pronouncements that a writ of preliminary attachment
may issue even before summons is served upon the defendant. However,
we have likewise ruled that the writ cannot bind and affect the defendant.
However, we have likewise ruled that the writ cannot bind and affect the
defendant until jurisdiction over his person is eventually obtained.
Therefore, it is required that when the proper officer commences
implementation of the writ of attachment, service of summons should be
simultaneously made.
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues the
order granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is implemented.
For the initial two stages, it is not necessary that jurisdiction over the
person of the defendant should first be obtained. However, once the
implementation commences, it is required that the court must have
acquired jurisdiction over the defendant for without such jurisdiction, the
court has no power and authority to act in any manner against the
defendant. Any order issuing from the Court will not bind the defendant.
In Sievert v. Court of Appeals, supra, cited by the Court of Appeals in its
questioned decision, the writ of attachment issued ex-parte was struck
down because when the writ of attachment was being implemented, no
jurisdiction over the person of the defendant had as yet been obtained.
The court had failed to serve the summons to the defendant.
The circumstances in Sievert are different from those in the case at bar.
When the writ of attachment was served on the spouses Evangelista, the
summons and copy of the complaint were also simultaneously served.
It is appropriate to reiterate this Court's exposition in the Davao Light and
Power case cited earlier, to wit:
. . . writs of attachment may properly issue ex-parte
provided that the Court is satisfied that the relevant
requisites therefore have been fulfilled by the applicant,
although it may, in its discretion, require prior hearing on
the application with notice to the defendant, but that
levy on property pursuant to the writ thus issued may
not be validly effected unless preceded, or
contemporaneously accompanied by service on the
defendant of summons, a copy of the complaint (and of
the appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in but
submitted separately from the complaint), the order of
attachment, and the plaintiff's attachment bond.
The question as to whether a proper ground existed for the issuance of the
writ is a question of fact the determination of which can only be had in
appropriate proceedings conducted for the purpose (Peroxide Philippines
Corporation V. Court of Appeals, 199 SCRA 882 [1991]). It must be noted
that the spouses Evangelista's motion to discharge the writ of preliminary
attachment was denied by the lower court for lack of merit. There is no
showing that there was an abuse of discretion on the part of the lower
court in denying the motion.
Moreover, an attachment may not be dissolved by a showing of its
irregular or improper issuance if it is upon a ground which is at the same
time the applicant's cause of action in the main case since an anomalous
situation would result if the issues of the main case would be ventilated
and resolved in a mere hearing of a motion (Davao Light and Power Co.,
Inc. v. Court of Appeals, supra, The Consolidated Bank and Trust Corp.
(Solidbank) v. Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegations in petitioner's complaint below
is that the defendant spouses induced the plaintiff to grant the loan by
issuing postdated checks to cover the installment payments and a separate
set of postdated cheeks for payment of the stipulated interest (Annex "B").
The issue of fraud, then, is clearly within the competence of the lower
court in the main action.
WHEREFORE, premises considered, the Court hereby GRANTS the petition.
The challenged decision of the Court of Appeals is REVERSED, and the
order and writ of attachment issued by Hon. Cezar C. Peralejo, Presiding
Judge of Branch 98, Regional Trial Court of Quezon City against spouses
Evangelista are hereby REINSTATED. No pronouncement as to costs.
SO ORDERED.
PHILIPPINE ECONOMIC ZONE AUTHORITY, represented herein by
DIRECTOR GENERAL LILIA B. DE LIMA, Petitioner,
vs.
JOSEPH JUDE CARANTES, ROSE CARANTES, and all the other HEIRS OF
MAXIMINO CARANTES, Respondents.
D E C I S I O N
VILLARAMA, JR., J.:
This petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, seeks to reverse and set aside the Decision
1

dated October 26, 2007 of the Court of Appeals (CA) in CA-G.R. CV No.
73230. The Court of Appeals had affirmed the Order
2
dated October 2,
2001 of the Regional Trial Court (RTC), Branch 5, Baguio City in Civil Case
No. 4339-R, granting the respondents Petition
3
for injunction.
The facts are gathered from the records of the case.
Respondents Joseph Jude Carantes, Rose Carantes and the heirs of
Maximino Carantes are in possession of a 30,368-square meter parcel of
land located in Loakan Road, Baguio City. On June 20, 1997, they obtained
Certificate of Ancestral Land Claim (CALC) No. CAR-CALC-022
4
over the land
from the Department of Environment and Natural Resources (DENR). On
the strength of said CALC, respondents secured a building permit
5
and a
fencing permit
6
from the Building Official of Baguio City, Teodoro G.
Barrozo. Before long, they fenced the premises and began constructing a
residential building thereon.
Soon, respondents received a letter
7
dated February 9, 1999 from Digna D.
Torres, the Zone Administrator of the Philippine Economic Zone Authority
(PEZA), informing them that the house they built had overlapped PEZAs
territorial boundary. Torres advised respondents to demolish the same
within sixty (60) days from notice. Otherwise, PEZA would undertake its
demolition at respondents expense.
Without answering PEZAs letter, respondents filed a petition for
injunction, with prayer for the issuance of a temporary restraining order
(TRO) and writ of preliminary injunction before the RTC of Baguio City. By
Order
8
dated April 8, 1999, the RTC of Baguio City issued a TRO, which
enjoined PEZA to cease and desist from threatening respondents with the
demolition of their house before respondents prayer for a writ of
preliminary injunction can be heard. On September 19, 2001, the RTC
likewise issued an Order,
9
which directed the parties to maintain the status
quo pending resolution of the case.
On October 2, 2001, the RTC granted respondents petition and ordered
the issuance of a writ of injunction against PEZA, thus:
WHEREFORE, the petition is herein GRANTED and a writ of injunction is
hereby issued enjoining the respondents, their agents, representatives or
anybody acting in their behalf from dispossessing, notifying or disturbing in
any [manner] the peaceful possession and occupation of the land by the
petitioners.
SO ORDERED.
10

The trial court ruled that respondents are entitled to possess, occupy and
cultivate the subject lots on the basis of their CALC. The court a quo
explained that by the very definition of an ancestral land under Republic
Act (R.A.) No. 8371
11
or the Indigenous Peoples Rights Act of 1997, said lots
have been segregated from lands of the public domain. As such, the rights
of respondents to the land are already vested in them and cannot be
disturbed by Proclamation No. 1825,
12
which included said land within the
export processing zone of Baguio City.
On appeal, the CA affirmed the RTC ruling. In the assailed Decision dated
October 26, 2007, the appellate court echoed the trial courts declaration
that the subject lots have been set aside from the lands of the public
domain.
On February 1, 2008, the Office of the Solicitor General (OSG), as counsel
for petitioner PEZA, filed a Motion to Admit
13
petition, with the present
Petition
14
attached. Petitioner challenges the CA decision on two (2) issues:
I.
WHETHER OR NOT IT IS THE PETITIONER OR THE CITY ENGINEER OF
BAGUIO CITY WHO HAS THE LEGAL AUTHORITY TO ISSUE BUILDING AND
FENCING PERMITS FOR CONSTRUCTIONS WITHIN THE PEZA-BCEZ.
II.
WHETHER OR NOT RESPONDENTS CALC IS SUFFICIENT TO DISREGARD THE
PROVISIONS OF THE NATIONAL BUILDING CODE OF THE PHILIPPINES.
15

Amplified, the issue for our determination is whether petitioner can
require respondents to demolish the structures they had built within the
territory of PEZA-BCEZ (Baguio City Economic Zone).
The OSG, at the outset, explains the delay in appealing the CA decision. It
attributes the delay to the inadvertence of Senior State Solicitor Rodolfo
Geronimo M. Pineda, the temporarily-designated officer-in-charge (OIC) of
Division XV, who took over the case when State Solicitor Maricar S.A.
Prudon-Sison went on maternity leave. Pineda allegedly merely noted
receipt of the CA decision without noticing that it was adverse to PEZA. The
OSG adds that the sparse complement of three (3) lawyers left at the time
could not tackle at once the horde of cases assigned to the division.
On substantive grounds, petitioner claims exclusive authority to issue
building and fencing permits within ecozones under Section 6
16
of
Presidential Decree (P.D.) No. 1716,
17
amending P.D. No. 66.
18
Alongside,
petitioner asserts concurrent authority to require owners of structures
without said permits to remove or demolish such structures under Section
14 (i)
19
of R.A. No. 7916.
20

For their part, respondents rely on CAR-CALC-022 for their right to fence
the lots and build a house thereon. They insist that the function of issuing
building and fencing permits, even within the Baguio City Economic Zone,
pertains to the Office of the City Mayor and the Building Official of Baguio
City, respectively. Respondents likewise assail the petition for being filed
late, stressing that it was filed only after almost three (3) months from
petitioners receipt of the CA decision.
We grant the petition.
It is settled that an appeal must be perfected within the reglementary
period provided by law; otherwise, the decision becomes final and
executory.
21
Before the Supreme Court, a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure, as amended, must be
filed within fifteen (15) days from notice of the judgment or final order or
resolution appealed from, or of the denial of the petitioners motion for
new trial or reconsideration filed in due time after notice of the judgment.
Even then, review is not a matter of right, but of sound judicial discretion,
and may be granted only when there are special and important reasons
therefor.
In the case at bar, the Docket Division of the OSG received a copy of the CA
decision on November 7, 2007. It was not until February 1, 2008 or almost
three (3) months however, that the OSG, for petitioner, filed a petition for
review on certiorari with this Court. The OSG pleads for understanding
considering the scarcity of its lawyers and the inadvertence of the
temporarily-designated OIC of Division XV in overlooking that the CA
decision was adverse to PEZA.
While the Court realizes the OSGs difficulty in having only three (3)
lawyers working full time on its cases, the OSG could have easily asked for
an extension of time within which to file the petition. More importantly, as
the government agency tasked to represent the government in litigations,
the OSG should perform its duty with promptness and utmost diligence.
However, upon careful consideration of the merits of this case, the Court is
inclined to overlook this procedural lapse in the interest of substantial
justice. Although a party is bound by the acts of its counsel, including the
latters mistakes and negligence, a departure from this rule is warranted
where such mistake or neglect would result in serious injustice to the
client. Indeed, procedural rules may be relaxed for persuasive reasons to
relieve a litigant of an injustice not commensurate with his failure to
comply with the prescribed procedure.
22
More so, when to allow the
assailed decision to go unchecked would set a precedent that will sanction
a violation of substantive law. Such is the situation in this case.
Injunction is a judicial writ, process or proceeding whereby a party is
directed either to do a particular act, in which case it is called a mandatory
injunction or to refrain from doing a particular act, in which case it is called
a prohibitory injunction. As a main action, injunction seeks to permanently
enjoin the defendant through a final injunction issued by the court and
contained in the judgment. Section 9, Rule 58 of the 1997 Rules of Civil
Procedure, as amended, provides,
SEC. 9. When final injunction granted. If after the trial of the action it
appears that the applicant is entitled to have the act or acts complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or
continuance of the act or acts or confirming the preliminary mandatory
injunction.
Two (2) requisites must concur for injunction to issue: (1) there must be a
right to be protected and (2) the acts against which the injunction is to be
directed are violative of said right.
23
Particularly, in actions involving realty,
preliminary injunction will lie only after the plaintiff has fully established
his title or right thereto by a proper action for the purpose. To authorize a
temporary injunction, the complainant must make out at least a prima
facie showing of a right to the final relief. Preliminary injunction will not
issue to protect a right not in esse.
24
These principles are equally relevant
to actions seeking permanent injunction.
At the onset, we must stress that petitioner does not pose an adverse
claim over the subject land. Neither does petitioner dispute that
respondents hold building and fencing permits over the lots. For
petitioner, the question that must be answered is whether respondents
may build structures within the Baguio City Economic Zone on the basis of
their CAR-CALC-022, and the building and fencing permits issued by the
City Building Official.
We rule in the negative.
In the parallel case of Philippine Economic Zone Authority (PEZA) v.
Borreta,
25
Benedicto Carantes invoked CAR-CALC-022, the same CALC
invoked by respondents in this case, to put up structures in the land
subject of said case. The Court, speaking through Justice Angelina
Sandoval-Gutierrez, refused to recall the writ of demolition issued by the
trial court therein. We held that Carantes is a mere applicant for the
issuance of a certificate of ownership of an ancestral land who has yet to
acquire a vested right as owner thereof so as to exclude the land from the
areas under PEZA. We perceive no good reason to depart from this ruling
as we find respondents herein to be similarly situated.
As holders of a CALC, respondents possess no greater rights than those
enumerated in Par. 1, Section 2, Article VII of DENR Department
Administrative Order (DAO) No. 02, Series of 1993:
SECTION 2. Rights and Responsibilities of Ancestral Land Claimants
1. Rights
1. The right to peacefully occupy and cultivate the land, and utilize
the natural resources therein, subject to existing laws, rules and
regulations applicable thereto;
2. The right of the heirs to succeed to the claims subject to
existing rules and regulations;
3. The right to exclude from the claim any other person who does
not belong to the family or clan; and
4. The right to utilize trees and other forest products inside the
ancestral land subject to these rules as well as customary laws.
(Emphasis supplied.)
Respondents being holders of a mere CALC, their right to possess the
subject land is limited to occupation in relation to cultivation. Unlike No.
1,
26
Par. 1, Section 1, Article VII of the same DENR DAO, which expressly
allows ancestral domain claimants to reside peacefully within the domain,
nothing in Section 2 grants ancestral land claimants a similar right, much
less the right to build permanent structures on ancestral lands an act of
ownership that pertains to one (1) who has a recognized right by virtue of
a Certificate of Ancestral Land Title. On this score alone, respondents
action for injunction must fail.
Yet, even if respondents had established ownership of the land, they
cannot simply put up fences or build structures thereon without complying
with applicable laws, rules and regulations. In particular, Section 301 of
P.D. No. 1096, otherwise known as the National Building Code of the
Philippines mandates:
SECTION 301. Building Permits
No person, firm or corporation, including any agency or instrumentality of
the government shall erect, construct, alter, repair, move, convert or
demolish any building or structure or cause the same to be done without
first obtaining a building permit therefor from the Building Official assigned
in the place where the subject building is located or the building work is to
be done.
Supplementary to a building permit, a fencing permit must also be secured
from the Building Official concerned before fences may be installed in the
premises.
In the present case, petitioner refuses to honor the building and fencing
permits issued by the City Building Official to respondents. Petitioner PEZA
maintains that the function of administering and enforcing the provisions
of P.D. No. 1096 within the areas owned and administered by it, pertains
to PEZA. Hence, it is PEZA, and not the local Building Official of Baguio City,
which may properly issue building and fencing permits within PEZA.
On this point, Section 205 of P.D. No. 1096 is pertinent:
SECTION 205. Building Officials
Except as otherwise provided herein, the Building Official shall be
responsible for carrying out the provisions of this Code in the field as well
as the enforcement of orders and decisions made pursuant thereto.
Due to the exigencies of the service, the Secretary may designate
incumbent Public Works District Engineers, City Engineers and Municipal
Engineers to act as Building Officials in their respective areas of
jurisdiction.
The designation made by the Secretary under this Section shall continue
until regular positions of Building Official are provided or unless sooner
terminated for causes provided by law or decree.1avvphi1
The position of Building Official is a regular item in the organizational
structure of the local government. Only in case of urgent necessity may the
Secretary of Public Works designate the incumbent District Engineer,
Municipal Engineer or City Engineer, as the case may be. This was the
applicable law even for areas covered by the Export Processing Zone
Authority (EPZA) until P.D. No. 1716 was enacted on August 21, 1980.
P.D. No. 1716 further amended P.D. No. 66,
27
the law creating the EPZA, by
creating the PEZA. Section 11 of R.A. No. 7916 provides that the existing
EPZA created under P.D. No. 66 shall evolve into and be referred to as the
PEZA in accordance with the guidelines and regulations set forth in an
executive order issued for the purpose.
Thus, on October 30, 1995, Executive Order No. 282
28
was enacted. Under
Section 1 thereof, all the powers, functions and responsibilities of EPZA
under P.D. No. 66, as amended, insofar as they are not inconsistent with
the powers, functions and responsibilities of the PEZA, under R.A. No.
7916, shall be assumed and exercised by PEZA.
Among such powers is the administration and enforcement of the National
Building Code of the Philippines in all zones and areas owned or
administered by EPZA, as expressly provided in Section 6 of P.D. No. 1716:
SEC. 6. The administration and enforcement of the provisions of
Presidential Decree No. 1096, otherwise known as the National Building
Code of the Philippines in all zones and areas owned or administered by
the Authority shall be vested in the Administrator or his duly authorized
representative. He shall appoint such EPZA qualified personnel as may be
necessary to act as Building Officials who shall be charged with the duty of
issuing Building Permits in the different zones. All fees and dues collected
by the Building Officials under the National Building Code shall accrue to
the Authority. (Emphasis supplied.)
This function, which has not been repealed and does not appear to be
inconsistent with any of the powers and functions of PEZA under R.A. No.
7916, subsists. Complimentary thereto, Section 14 (i) of R.A. No. 7916
states:
SEC. 14. Powers and Functions of the Director General. - The director
general shall be the overall [coordinator] of the policies, plans and
programs of the ECOZONES. As such, he shall provide overall supervision
over and general direction to the development and operations of these
ECOZONES. He shall determine the structure and the staffing pattern and
personnel complement of the PEZA and establish regional offices, when
necessary, subject to the approval of the PEZA Board.
In addition, he shall have the following specific powers and responsibilities:
x x x x
(i) To require owners of houses, buildings or other structures constructed
without the necessary permit whether constructed on public or private
lands, to remove or demolish such houses, buildings, structures within
sixty (60) days after notice and upon failure of such owner to remove or
demolish such house, building or structure within said period, the director
general or his authorized representative may summarily cause its removal
or demolition at the expense of the owner, any existing law, decree,
executive order and other issuances or part thereof to the contrary
notwithstanding; (Emphasis supplied.)
By specific provision of law, it is PEZA, through its building officials, which
has authority to issue building permits for the construction of structures
within the areas owned or administered by it, whether on public or private
lands. Corollary to this, PEZA, through its director general may require
owners of structures built without said permit to remove such structures
within sixty (60) days. Otherwise, PEZA may summarily remove them at the
expense of the owner of the houses, buildings or structures.
As regards the issuance of fencing permits on ancestral lands, particularly
within Baguio City and the rest of the Cordilleras, DENR-Circular No. 03-90
(Rules on the Acceptance, Identification, Evaluation, and Delineation of
Ancestral Land Claims by the Special Task Force Created by the Virtue of
DENR Special Order Nos. 31 and 31-A both Series of 1990) prescribes in
Section 12:
SEC. 12. The Regional Land Management Services or the CENROs, through
their respective Provincial Environment and Natural Resources Officer
(PENRO), shall prepare and submit to the Special Task Force a report on
each and every application surveyed and delineated. Thereafter, the
Special Task Force after evaluating the reports, shall endorse valid
ancestral land claims to the Secretary through the Indigenous Community
Affairs Division, Special Concerns Office for the issuance of a Certificate of
Ancestral Land Claim. As soon as ancestral land claim is found to be valid
and in meritorious cases, the Special Task Force may recommend to the
City/Municipal Mayors Office the issuance of a fencing permit to the
applicant over areas actually occupied at the time of filing. (Emphasis
supplied.)
This is the general rule. Considering, however, that in this case, a fencing
permit is issued complementary to a building permit and that within the
premises of PEZA, it is the Authority that may properly issue a building
permit, it is only fitting that fencing permits be issued by the Authority.
From the foregoing disquisition, it clearly appears that respondents
likewise failed to satisfy the second requisite in order that an injunction
may issue: that the acts against which the injunction is to be directed, are
violative of said right. PEZA acted well within its functions when it
demanded the demolition of the structures which respondents had put up
without first securing building and fencing permits from the Authority.
WHEREFORE, the Petition is GRANTED. The Decision dated October 26,
2007 of the Court of Appeals in CA-G.R. CV No. 73230 affirming the Order
dated October 2, 2001 of the court a quo in Civil Case No. 4339-R is
REVERSED and SET ASIDE. Respondents are hereby DIRECTED to demolish
the residential building they had built within the premises of PEZA within
sixty (60) days from notice.
No costs.
SO ORDERED.
ROMAN CATHOLIC ARCHBISHOP OF SAN
FERNANDO, PAMPANGA represented herein
by the incumbent Archbishop,
Petitioner,

- versus -

G.R. No. 153829

EDUARDO SORIANO, JR., EDNA YALUN,
EVANGELINA ABLAZA, FELICIDAD Y. URBINA,
FELIX SALENGA, REYNALDO I. MALLARI,
MARCIANA B. BARCOMA, BIENVENIDO
PANGANIBAN, BRIGIDA NAVARRO,
EUFRANCIA T. FLORES, VICTORIA B. SUDSOD,
EUFRONIO CAPARAS, CRISANTO
MANANSALA, LILY MASANGCAY, BENJAMIN
GUINTO, JR., MARTHA G. CASTRO and LINO
TOLENTINO,

Respondents.

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

BENJAMIN GUINTO, JR.,27[1]
Petitioner,

- versus -
G.R. No. 160909

Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
ROMAN CATHOLIC ARCHBISHOP OF SAN
FERNANDO, PAMPANGA represented
herein by the incumbent Archbishop,

Respondent.

Promulgated:

August 17, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:
Before this Court are two petitions for resolution: the first, a
Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, filed by the Roman Catholic Archbishop (RCA) of
San Fernando, Pampanga, assailing the March 18, 2002 Decision
28[2]
and
the May 30, 2002 Resolution
29[3]
of the Court of Appeals (CA) in CA-G.R. SP
No. 66974; and the second, a Petition for Injunction under Rule 58, filed by
Benjamin Guinto, Jr. (Guinto), seeking to enjoin the implementation of the

Writ of Execution
30[4]
dated October 14, 2003, issued by the Municipal
Circuit Trial Court (MCTC) of Macabebe-Masantol, Pampanga in Civil Case
No. 2000(23).
The facts follow:
The RCA of San Fernando, Pampanga, represented by Most Rev.
Paciano B. Aniceto, D.D., claimed that it is the owner of a vast tract of land
located near the Catholic Church at Poblacion, Macabebe, Pampanga and
covered by Original Certificate of Title (OCT) No. 17629 issued by the
Registry of Deeds of San Fernando on February 21, 1929.
31[5]
The RCA
alleged that several individuals unlawfully occupied the subject land and
refused to vacate despite repeated demands. Having no other recourse,
the RCA filed an ejectment case, docketed as Civil Case No. 2000(23),
before the MCTC of Macabebe-Masantol, Pampanga against the alleged
intruders, namely, Leocadio and Rufina Reyes, Jose Balagtas, Marcial and
Victoria Balagtas, Levita Naluz, Dionisio Barcoma, Felicidad Urbina,
Justiniano Reyes, Lawrence Muniz, Eduardo Soriano, Cosmer Vergara,
Perlita Bustos, Brigida Navarro, Leonoda Cruz, Leonida Manansala,

Angelito Juliano, Eduardo Ibay, Edna Yalung, Reynaldo Mallari, Lily
Masangcay, Evangelina Ablaza, Crisanto Manansala, Feliza Esguerra, Gloria
Manansala, Bienvenido and Felicisima Panganiban, Ofroneo Caparas, Tino
Enriquez, Elizabeth and Benjamin Guinto, Felix Salenga, Eleno and Rosala
Salenga, Luisa and Domingo Sison, Francia Flores, Eduardo and Rosita
Gutierrez, Zosima and Ener Basilio, Andy and Loreto Bonifacio, Peter and
Felicisima Villajuan.
32[6]

On the other hand, defendants countered that the RCA has no
cause of action against them because its title is spurious. They contended
that the subject land belonged to the State, but they have already acquired
the same by acquisitive prescription as they and their predecessors-in-
interest have been in continuous possession of the land for more than
thirty (30) years.
After considering the pleadings submitted by the parties, the
MCTC rendered decision on September 28, 2001 in favor of the RCA. The
trial court held that OCT No. 17629 in the name of the RCA remains valid
and binding against the whole world until it is declared void by a court of
competent jurisdiction. Thus, defendants were ordered to vacate the

premises and to pay reasonable monthly rentals from August 15, 2000
until they shall have finally vacated the premises.
33[7]

Defendants appealed to the Regional Trial Court (RTC). However,
the appeal was dismissed because of their failure to file the appeal
memorandum. When defendants elevated the case to the CA, their
petition for certiorari was not given due course for failure to file the same
within the extended period. Hence, the decision ejecting the defendants
from the premises became final.
Pursuant to Section 21,
34[8]
Rule 70 of the 1997 Rules of Civil
Procedure, as amended, the RCA filed an Urgent Motion for Immediate
Issuance of a Writ of Execution, which the MCTC granted in an Order
35[9]

dated February 10, 2003, as follows:
WHEREFORE, on the basis of the rules and
jurisprudence aforecited, the Motion for Execution filed

by plaintiff is hereby granted. Let a writ of execution be
issued in connection with this case which is a ministerial
duty of the Court.
Defendants Motion for Inhibition is denied for
lack of merit.
SO ORDERED.
36[10]

Thereafter, the MCTC issued another Order dated October 6,
2003, the pertinent portion of which states:
Let a writ of execution be issued to implement
the Decision dated September 28, 2001.
No further defendants motion to stay execution
shall be entertained.
SO ORDERED.
37[11]

Accordingly, a writ of execution
38[12]
was issued commanding the
sheriff or his deputies to implement the MCTC Decision. Thus, Sheriff

Edgar Joseph C. David sent the defendants a Notice to Vacate
39[13]
dated
December 8, 2003.
Seeking to enjoin the implementation of the writ of execution and
the notice to vacate, Guinto filed the instant Petition for Injunction with
Prayer for Issuance of a Temporary Restraining Order (TRO),
40[14]
docketed
as G.R. No. 160909.
Meanwhile, during the pendency of the ejectment case at the MCTC,
some of the defendants therein, namely, Eduardo Soriano, Jr., Edna Yalun,
Evangelina Ablaza, Felicidad Y. Urbina, Felix Salenga, Reynaldo I. Mallari,
Marciana B. Barcoma, Bienvenido Panganiban, Brigida Navarro, Eufrancia T.
Flores, Victoria B. Sodsod, Eufronio Caparas, Crisanto Manansala, Lily
Masangcay, Benjamin Guinto, Jr., Martha G. Castro and Lino Tolentino filed
Civil Case No. 01-1046(M) against the RCA for Quieting of Title and Declaration
of Nullity of Title before the RTC of Macabebe, Pampanga.41[15] They claimed

that they are in actual possession of the land in the concept of owners and
alleged that OCT No. 17629 in the name of RCA is spurious and fake.
Before filing its Answer, the RCA moved to dismiss the case on
grounds of noncompliance with a condition precedent, laches, and for
being a collateral attack on its title. The RCA likewise later filed a
supplement to its motion to dismiss.
In an Order42[16] dated June 4, 2001, the RTC denied the motion
to dismiss reasoning that when the rules speak of noncompliance with a
condition precedent, it could refer only to the failure of a party to secure
the appropriate certificate to file action under the Local Government Code,
or the failure to exert earnest efforts towards an amicable settlement
when the suit involves members of the same family. The RTC also found
that plaintiffs have a cause of action. Furthermore, the trial court held that
RCAs argument that the property cannot be acquired by prescription
because it has title over it is a matter of evidence which may be
established during the trial on the merits.

Aggrieved, the RCA filed a motion for reconsideration, which the
trial court denied in an Order
43[17]
dated July 24, 2001. Thereafter, the RCA
filed with the CA a petition for certiorari with prayer for preliminary
injunction.
44[18]

On March 18, 2002, the CA promulgated the assailed
Decision,45[19] the dispositive portion of which reads:
WHEREFORE, for lack of merit, the petition is
hereby DISMISSED.
SO ORDERED.46[20]
A motion for reconsideration47[21] of the Decision was filed by
the RCA. However, in the Resolution48[22] dated May 30, 2002, the CA

denied the motion for lack of merit. Hence, the RCA filed the present
petition for review on certiorari,49[23] docketed as G.R. No. 153829,
assailing the Decision of the CA, as well as its Resolution denying the
motion for reconsideration.
On January 14, 2004, we resolved to consolidate G.R. Nos. 160909
and 153829.
50[24]
Subsequently, the Court resolved to treat the petition for
injunction with prayer for the issuance of a TRO in G.R. No. 160909 as a
motion for the issuance of a TRO and/or writ of preliminary injunction in
G.R. No. 153829.
51[25]

The RCA raises the following issues:
(A) WHETHER OR NOT CIVIL CASE NO. 01-1046(M)
FOR QUIETING OF TITLE AND DECLARATION OF
NULLITY OF TITLE IS LEGALLY DISMISSIBLE FOR
VIOLATION OF THE VARIOUS PROVISIONS OF
THE RULES OF COURT;
and
(B) WHETHER OR NOT THE CIVIL ACTION (THE ABOVE
MENTIONED CIVIL CASE NO. 01-1046[M]) FILED
BY PRIVATE RESPONDENTS CONSTITUTES A
COLLATERAL ATTACK ON PETITIONER'S
TITLE.
52[26]

Essentially, the issue before us is whether the CA erred in not
holding that the RTC committed grave abuse of discretion in denying the
motion to dismiss filed by the RCA.
We affirm the ruling of the CA.
Well-entrenched in our jurisdiction is the rule that the trial courts
denial of a motion to dismiss cannot be questioned in a certiorari
proceeding under Rule 65 of the 1997 Rules of Civil Procedure, as
amended. This is because a certiorari writ is a remedy designed to correct
errors of jurisdiction and not errors of judgment. The appropriate course of

action of the movant in such event is to file an answer and interpose as
affirmative defenses the objections raised in the motion to dismiss. If,
later, the decision of the trial judge is adverse, the movant may then
elevate on appeal the same issues raised in the motion.
53[27]

The only exception to this rule is when the trial court gravely
abused its discretion in denying the motion.
54[28]
This exception is,
nevertheless, applied sparingly, and only in instances when there is a clear
showing that the trial court exercised its judicial power in an arbitrary or
despotic manner by reason of passion or personal hostility.
55[29]
Further,
the abuse of the court's discretion must be so patent and gross as to
amount to an evasion of a positive duty or a virtual refusal to perform the
duty enjoined by, or to act at all in contemplation of, law.
56[30]

Here, in dismissing the petition for certiorari, the CA did not find
grave abuse of discretion on the part of the RTC. The appellate court was
not convinced with the RCAs argument that plaintiffs failed to comply with
the condition precedent provided in Article 477
57[31]
of the Civil Code
because they allegedly did not have legal or equitable title to, or interest in
the real property. The CA explained that the requirement stated in Article
477 is not a condition precedent before one can file an action for quieting
of title. Rather, it is a requisite for an action to quiet title to prosper and
the existence or nonexistence of the requisite should be determined only
after trial on the merits. The CA also agreed with the trial court in ruling
that the RCA cannot raise in a motion to dismiss the ground that the
complaint is already barred by laches for it still remains to be established
during trial how long the plaintiffs have slept on their rights, if such be the
case. Evidently, the CA is correct in finding that the denial by the RTC of
the RCAs motion to dismiss is not tainted with grave abuse of discretion.
Next, the RCA submits that an action for quieting of title is a
special civil action covered by Rule 63, while an action for declaration of
nullity of title is governed by ordinary rules. Thus, it contends that these
cases should have been dismissed for violation of the rule on joinder of
actions under Section 5, Rule 2 of the 1997 Rules of Civil Procedure, as
amended, which requires that the joinder shall not include special civil

actions governed by special rules. Such contention, however, is utterly
bereft of merit and insufficient to show that the CA erred in upholding the
trial courts decision. Section 6 of Rule 2 explicitly provides that misjoinder
of causes of action is not a ground for dismissal of an action.
The RCA likewise asserts that the case for quieting of title is a
collateral attack on its title which is prohibited by law. However, we agree
with the CA in holding that the complaint against the RCA does not amount
to a collateral attack because the action for the declaration of nullity of
OCT No. 17629 is a clear and direct attack on its title.
An action is deemed an attack on a title when its objective is to
nullify the title, thereby challenging the judgment pursuant to which the
title was decreed. The attack is direct when the objective is to annul or set
aside such judgment, or enjoin its enforcement. On the other hand, the
attack is indirect or collateral when, in an action to obtain a different relief,
an attack on the judgment is nevertheless made as an incident
thereof.
58[32]

The complaint filed with the RTC pertinently alleged that the claim
of ownership by the RCA is spurious as its title, denominated as OCT No.
17629, is fake for the following reasons: (1) that the erasures are very

apparent and the title itself is fake; (2) it was made to appear under
Memorandum of Encumbrance Entry No. 1007 that the title is a
reconstituted title when in truth, it is not; and (3) the verification reveals
that there was no petition filed before any court where an order was
issued for the reconstitution and re-issuance of an owners duplicate
copy.59[33] It is thus clear from the foregoing that the case filed
questioning the genuineness of OCT No. 17629 is a direct attack on the
title of the RCA.
As regards the petition docketed as G.R. No. 160909 which this
Court treated as motion for the issuance of a TRO and/or writ of
preliminary injunction, Guinto insists that there is a need to enjoin the
sheriff from enforcing the writ of execution as it would cause grave and
irreparable damage to Guinto, while the RCA would not suffer any damage
if it would later be proved that indeed its title is genuine.
We disagree.
Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as
amended, enumerates the grounds for the issuance of preliminary
injunction, viz:

SEC. 3. Grounds for issuance of preliminary
injunction. A preliminary injunction may be granted
when it is established:
(a) That the applicant is entitled to the relief
demanded, and the whole or part of such relief consists
in restraining the commission or continuance of the act
or acts complained of, or in requiring the performance of
an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or
nonperformance of the act or acts complained of during
the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is
doing, threatening, or is attempting to do, or is procuring
or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to
render the judgment ineffectual.
And as clearly explained in Ocampo v. Sison Vda. de
Fernandez:
60[34]

To be entitled to the injunctive writ, the
applicant must show that there exists a right to be
protected which is directly threatened by an act sought
to be enjoined. Furthermore, there must be a showing
that the invasion of the right is material and substantial
and that there is an urgent and paramount necessity for

the writ to prevent serious damage. The applicants right
must be clear and unmistakable. In the absence of a clear
legal right, the issuance of the writ constitutes grave
abuse of discretion. Where the applicants right or title is
doubtful or disputed, injunction is not proper. The
possibility of irreparable damage without proof of an
actual existing right is not a ground for injunction.
A clear and positive right especially calling for
judicial protection must be shown. Injunction is not a
remedy to protect or enforce contingent, abstract, or
future rights; it will not issue to protect a right not in esse
and which may never arise, or to restrain an act which
does not give rise to a cause of action. There must exist
an actual right. There must be a patent showing by the
applicant that there exists a right to be protected and
that the acts against which the writ is to be directed are
violative of said right.
In this case, the defendants in the ejectment case possess no such
legal rights that merit the protection of the courts through the writ of
preliminary injunction. The MCTC has already rendered a decision in favor
of the RCA and ordered the defendants therein to vacate the premises.
Their appeal to the RTC was dismissed and the decision has become final.
Evidently, their right to possess the property in question has already been
declared inferior or inexistent in relation to the right of the RCA in the
MCTC decision which has already become final and executory.
61[35]

WHEREFORE, the petition in G.R. No. 153829 is DENIED. The
Decision dated March 18, 2002 and the Resolution dated May 30, 2002 of
the Court of Appeals in CA-G.R. SP No. 66974 are AFFIRMED. The motion
for the issuance of a TRO and/or writ of preliminary injunction to enjoin
the sheriff from enforcing the writ of execution in Civil Case No. 2000(23) is
likewise DENIED for lack of merit.
No costs.
CHINA BANKING CORPORATION, Petitioner,
vs.
SPS. HARRY CIRIACO and ESTHER CIRIACO, Respondents.
D E C I S I O N
BRION, J.:
We resolve the petition for review on certiorari
1
filed by China Banking
Corporation (petitioner) to challenge the April 15, 2005 decision
2
and the
October 10, 2005 resolution
3
of the Court of Appeals (CA) in CA-G.R. SP No.
64349. The CA decision denied the petitioners petition for certiorari for
lack of merit. The CA resolution denied the petitioners subsequent motion
for reconsideration.
FACTUAL BACKGROUND
On March 11, 1996, Spouses Harry and Esther Ciriaco (respondents)
obtained a P1,500,000.00 loan
4
from the petitioner, secured by a real
estate mortgage
5
over their 526-square meter land in La Trinidad, Benguet,
covered by Transfer Certificate of Title (TCT) No. T-21710.
6

When the respondents defaulted in the payment of their loan, the
petitioner extrajudicially foreclosed
7
the mortgaged property and sold it at
public auction where the petitioner emerged as the highest bidder. The
Sheriff executed a Certificate of Sale
8
in the petitioners favor on March 11,
1998. The Register of Deeds annotated the Certificate of Sale on TCT No. T-
21710 on March 24, 1998.
9

On March 23, 1999, a day before the expiration of the redemption period,
the respondents filed a complaint with the Regional Trial Court (RTC) of La
Trinidad, Benguet, Branch 8, for Injunction to enjoin the consolidation of
title in the petitioners favor, assailing the redemption price of the
foreclosed property.
10

On July 26, 1999, the RTC dismissed the complaint for being moot due to
the consolidation of title in the petitioners favor on March 31, 1999,
"without prejudice to the filing of an appropriate action."
11

On August 17, 1999, the respondents filed a complaint with the RTC of La
Trinidad, Benguet, Branch 63, for Cancellation of Consolidation of
Ownership over a Real Property, Specific Performance, and Damages.
12

They again questioned the redemption price of the foreclosed property.
On September 23, 1999, the petitioner filed its Answer with Compulsory
Counterclaim, denying the allegations of the respondents complaint.
13

On March 16, 2000, the respondents filed an Omnibus Motion for Leave to
Amend Complaint and to Admit Attached Amended Complaint as well as
Motion for Hearing on the Issuance of a Writ of Preliminary Injunction
and/or Temporary Restraining Order (TRO), with a notice of hearing on the
omnibus motion scheduled on March 22, 2000.
14
The respondents sought
to amend the complaint to allege further that fraud attended the
consolidation of title in the petitioners favor and to include a prayer for
the issuance of a writ of preliminary injunction and/or TRO to enjoin the
petitioner from disposing of the foreclosed property or taking possession
thereof.
At the March 22, 2000 hearing, the RTC gave the petitioner ten (10) days
within which to file its comment to the respondents omnibus motion, and
set the hearing on the omnibus motion on April 24, 2000.
15

The petitioner subsequently filed its Opposition to the omnibus motion,
16

arguing that the respondents further allegation of fraud changes the
theory of the case which is not allowed, and that the respondents failed to
show that they have a clear right in esse that should be protected by an
injunctive relief.
At the April 24, 2000 hearing on the omnibus motion, the RTC gave the
respondents ten (10) days to file their comment to the petitioners
opposition, and gave the petitioner ten (10) days to file its reply to the
respondents comment.
17
The respondents did not file a reply to the
petitioners opposition.
THE RTCs RULING
In its August 1, 2000 order, the RTC admitted the amended complaint and
directed the petitioner to file an answer. It noted that the 1997 Rules of
Civil Procedure relaxed the rule on amendments to pleadings, subject only
to the limitation that they are not dilatory. It also granted the respondents
application for the issuance of a writ of preliminary injunction and/or TRO,
since the respondents were entitled to prove their claim of fraud, and their
claim that the interests and penalty charges imposed by the bank had no
factual basis.
18

The RTC denied
19
the petitioners subsequent motion for reconsideration.
20

On August 24, 2000, the RTC issued a writ of preliminary injunction,
restraining the petitioner from disposing of the foreclosed property or
taking possession thereof.
21

The petitioner then filed a Rule 65 petition for certiorari with the CA,
arguing that the RTC gravely abused its discretion in precipitately granting
the respondents application for the issuance of a writ of preliminary
injunction without any hearing.
22

THE CAs RULING
In its April 15, 2005 decision, the CA denied the petition. It found that the
RTC did not commit any grave abuse of discretion since it gave the parties
ample opportunity to present their respective positions on the propriety of
an injunctive writ during the hearings on March 22, 2000 and
April 24, 2000, and that the petitioner was also heard on its motion for
reconsideration of the August 1, 2000 order.
23

When the CA denied
24
the petitioners motion for reconsideration,
25
the
latter filed the present petition.
26

THE PETITION
The petitioner argues that the RTC granted the respondents application
for the issuance of a writ of preliminary injunction and/or TRO, despite the
lack of a hearing thereon; the RTC conducted hearings on the respondents
omnibus motion only, not on the respondents application for the issuance
of a writ of preliminary injunction and/or TRO, which has not yet been set
for hearing.
THE CASE FOR THE RESPONDENTS
The respondents submit that the RTC gave the petitioner ample
opportunity to be heard on his opposition to the respondents application
for the issuance of a writ of preliminary injunction and/or TRO at the
March 22, 2000 and April 24, 2000 hearings, and on the petitioners
motion for reconsideration of the August 1, 2000 order.
THE ISSUE
The core issue boils down to whether the CA erred in finding that the RTC
did not commit any grave abuse of discretion in granting the respondents
application for the issuance of a writ of preliminary injunction and/or TRO.
OUR RULING
We find merit in the petition.
A preliminary injunction is an order granted at any stage of an action prior
to the judgment or final order requiring a party or a court, agency or a
person to refrain from a particular act or acts.
27
It is the "strong arm of
equity,"
28
an extraordinary peremptory remedy that must be used with
extreme caution,
29
affecting as it does the respective rights of the parties.
30

Sections 3 and 5, Rule 58 of the 1997 Rules of Civil Procedure on
preliminary injunction, pertinent to this case, provide the requirements for
the issuance of a writ of preliminary injunction or a TRO:
SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission
or continuance of the act or acts complained of, or in requiring
the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the
act or acts complained of during the litigation would probably
work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or
is attempting to do, or is procuring or suffering to be done, some
act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to
render the judgment ineffectual.
SEC. 5. Preliminary injunction not granted without notice; exception. - No
preliminary injunction shall be granted without hearing and prior notice to
the party or persons sought to be enjoined. If it shall appear from facts
shown by affidavits or by the verified application that great or irreparable
injury would result to the applicant before the matter can be heard on
notice, the court to which the application for preliminary injunction was
made, may issue ex parte a temporary restraining order to be effective
only for a period of twenty (20) days from service on the party or person
sought to be enjoined, except as herein provided. Within the twenty-day
period, the court must order said party or person to show cause at a
specified time and place, why the injunction should not be granted. The
court shall also determine, within the same period, whether or not the
preliminary injunction shall be granted, and accordingly issue the
corresponding order.
However, subject to the provisions of the preceding sections, if the matter
is of extreme urgency and the applicant will suffer grave injustice and
irreparable injury, the executive judge of a multiple-sala court or the
presiding judge of a single-sala court may issue ex parte a temporary
restraining order effective for only seventy-two (72) hours from issuance
but shall immediately comply with the provisions of the next preceding
section as to service of summons and the documents to be served
therewith. Thereafter, within the aforesaid seventy-two (72) hours, the
judge before whom the case is pending shall conduct a summary hearing
to determine whether the temporary restraining order shall be extended
until the application for preliminary injunction can be heard. In no case
shall the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours provided
herein.
31

From the provisions, it appears clearly that before a writ of preliminary
injunction may be issued, a clear showing must be made that there exists a
right to be protected and that the acts against which the writ is to be
directed are violative of an established right.
32
The holding of a hearing,
where both parties can introduce evidence and present their side, is also
required before the courts may issue a TRO or an injunctive writ.
33

Generally, an RTC's decision to grant or to deny injunctive relief will not be
set aside on appeal, unless the trial court abused its discretion. In granting
or denying injunctive relief, a court abuses its discretion when it lacks
jurisdiction; fails to consider and make a record of the factors relevant to
its determination; relies on clearly erroneous factual findings; considers
clearly irrelevant or improper factors; clearly gives too much weight to one
factor; relies on erroneous conclusions of law or equity; or misapplies its
factual or legal conclusions.
34

In this case, we find that the RTC abbreviated the proceedings and
precipitately granted the respondents application for injunctive relief. The
RTC did not conduct a hearing for reception of a "sampling" of the parties
respective evidence to give it an idea of the justification for its issuance
pending the decision of the case on the merits.
35
It failed to make any
factual finding to support the issuance of the writ of preliminary injunction
since it did not conduct any hearing on the application for the issuance of
the writ of preliminary injunction or TRO. The RTC conducted the March
22, 2000 and April 24, 2000 hearings on the respondents omnibus motion
only whether to admit the amended complaint and whether to hold a
hearing on the respondents application for a writ of preliminary
injunction.1wphi1
In fact, a perusal of the August 1, 2000 order shows that the RTC granted
the respondents application for a writ of preliminary injunction based only
on the respondents unsubstantiated allegations, thus:
Going now to the application for a writ of preliminary injunction and/or
temporary restraining order, the plaintiffs aver that a writ should issue
forbidding the defendant bank from taking possession of the subject
property and disposing of the same beyond recovery by them tending to
make any favorable judgment in their favor ineffective.
The Complaint alleges that had defendant bank not committed fraud,
plaintiffs could have redeemed the property subject matter hereof.
Furthermore, considering that the redemption price of the property
foreclosed appears to have been bloated, thereby making it difficult for
plaintiffs to redeem their property, to deny the application would in effect
be condoning the act of the defendant bank in imposing interests and
penalty charges which plaintiffs claim as not having been agreed upon by
them.
In view of the foregoing, plaintiffs are entitled to prove their claim of fraud
and their claim that the interests and penalty charges imposed by the bank
have no factual basis.
36

Clearly, the respondents right to injunctive relief has not been clearly and
unmistakably demonstrated. The respondents have not presented
evidence, testimonial or documentary, other than the bare allegations
contained in their pleadings, to support their claim of fraud that brings
about the irreparable injury sought to be avoided by their application for
injunctive relief. Thus, the RTCs grant of the writ of preliminary injunction
in favor of the respondents, despite the lack of any evidence of a clear and
unmistakable right on their part, constitutes grave abuse of discretion
amounting to lack of jurisdiction.
Every court should remember that an injunction is a limitation upon the
freedom of the defendants action and should not be granted lightly or
precipitately. It should be granted only when the court is fully satisfied that
the law permits it and the emergency demands it;
37
no power exists whose
exercise is more delicate, which requires greater caution and deliberation,
or is more dangerous in a doubtful case, that the issuance of an
injunction.
38

WHEREFORE, the petition is GRANTED. The April 15, 2005 decision and the
October 10, 2005 resolution of the Court of Appeals in CA-G.R. SP No.
64349 are REVERSED and SER ASIDE. The August 1, 2000 and March 7,
2001 orders of the Regional Trial Court of La Trinidad, Benguet, Branch 63
are MODIFIED. The Writ of Preliminary Injunction issued in Civil Case No.
99-CV-1395 is declared VOID and is therefore SET ASIDE.
Costs against the respondents.
SO ORDERED.
DOLMAR REAL ESTATE DEVELOPMENT CORPORATION, MARIANO K. TAN,
SR., MARIANO JOHN L. TAN, JR. and PHILIP L. TAN, petitioners,
vs.
COURT OF APPEALS, FIFTH DIVISION, REGIONAL TRIAL COURT, BRANCH
211, MANDALUYONG CITY, and SPOUSES PHILIP & NANCY YOUNG,
respondents.
D E C I S I O N
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for certiorari (with an application for a temporary
restraining order [TRO] and a writ of preliminary injunction)
1
assailing the
Resolution dated January 25, 2006
2
and Resolution dated April 24, 2006
3
of
the Court of Appeals (Fifth Division) in CA-G.R. SP No. 91869.
On June 1, 2005, spouses Philip and Nancy Young, respondents, filed with
the Regional Trial Court, Branch 211, Mandaluyong City a complaint for
specific performance and damages against Dolmar Real Estate
Development Corporation, Mariano K. Tan, Sr., Mariano John L. Tan, Jr.,
and Philip L. Tan, petitioners, docketed as SEC Case No. MC05-093. The
complaint also prayed that a TRO and a preliminary injunction be issued
ordering petitioners to: (a) cease and desist from further violating the
provisions of the Memorandum of Agreement (MOA) dated March 4, 2003
and the Shareholders' Agreement dated May 16, 2003 executed by the
parties; (b) comply with their obligations and duties stipulated in the said
agreements by restoring to respondents-spouses Young their authority to
manage the corporation; (c) abide by the quorum and consensus rules
established in the said agreements governing the exercise of corporate
acts and powers; and (d) desist from holding the meeting of the Board of
Directors of the corporation scheduled on June 3, 2005.
On June 2, 2005, the trial court issued a 72-hour restraining Order
preventing the holding of the Board of Directors' meeting on June 3, 2005.
4

On June 17, 2005, after a summary hearing, the trial court issued the TRO
prayed for by respondents-spouses Young and set the hearing on the
prayer for a writ of preliminary injunction on June 21, 2005. The trial court
likewise approved the bond in the amount of P100,000.00 posted by said
respondents.
5

On October 14, 2005, the trial court issued an Order
6
directing inter alia
that: (1) the status quo ante, meaning the situation of the contending
parties prior to December 13, 2004, must be maintained; (2) there is a
need to observe the four-director quorum and consensus rules; (3) it is
necessary to observe the rule on counter-signature by spouses Young on
the checks issued by Festive Foods International, Inc. and in banking
transactions of the corporation; and (4) the parties shall mutually comply
with their respective duties and responsibilities under the MOA and
Shareholders' Agreement.
7
The dispositive portion of the Order reads:
FOREGOING CONSIDERED and in the interest of justice and equity,
the court hereby declares a status quo ante and the temporary
restraining order bond shall remain in full force for the purpose
stated therein.
The Sheriff of this Court is hereby designated to enforce
compliance thereof.
SO ORDERED.
Petitioners then filed with the Court of Appeals a petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure, as amended, assailing
the status quo ante Order for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction.
On November 15, 2005, the appellate court issued a Resolution
8
dismissing
the petition for being "fatally defective" as it does not contain the
certification of non-forum shopping; its verification merely refers to an
answer with counterclaim and not to the petition itself; and the material
portions of the record referred to in the petition are not attached to the
said petition.
However, upon petitioners' filing of a Motion for Reconsideration with
Motion to Admit Attached Amended Petition (with an application for a
TRO and a writ of preliminary injunction) dated November 21, 2005,
9
the
appellate court, in its Resolution dated December 7, 2005,
10
granted the
motion and reinstated the case.
On January 25, 2006, the Court of Appeals issued a Resolution denying
petitioners' application for a writ of preliminary injunction, thus:
This is a petition x x x to nullify the Order of the RTC x x x which
declared a status quo among the parties to mutually observe and
comply with their respective duties under their MOA and
Shareholders' Agreement during the pendency of the case before
it. The case is one for specific performance filed by the private
respondents to compel the petitioners to comply with their
obligations under the said agreements. Dolmar has filed an
application for preliminary injunction with us to enjoin the
respondents from implementing the Order of October 14, 2005. In
effect, it would like to disturb what the lower court has found to
be the status quo ante. A comment was filed stating in essence
that a writ of preliminary injunction may be resorted to only when
there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation.
The lower court's assailed Order of October 14, 2005 has the
effect of allowing the company to be run in accordance with the
existing agreements of the parties during the pendency of the
case below. We find no compelling reason to interfere with the
prevailing state of affairs as ordered by the trial court. None of
the grounds mentioned in Section 3 of Rule 58 for the issuance
of a preliminary injunction exists. The application is denied.
SO ORDERED. (Underscoring supplied)
Petitioners filed a motion for reconsideration but it was denied for lack of
merit in a Resolution dated April 24, 2006.
Hence, the instant petition.
Petitioners contend that the Court of Appeals, in issuing the assailed
Resolutions, acted with grave abuse of discretion amounting to lack or
excess of jurisdiction. They bewail the appellate court's simplistic manner
of resolving their application for a TRO or a writ of preliminary injunction
by "simply stating that the respondent appellate court 'found no
compelling reason to interfere with the prevailing state of affairs as
ordered by the trial court. None of the grounds mentioned in Section 3 of
Rule 58 for the issuance of a preliminary injunction exists.' On the other
hand, the Resolution denying their motion for reconsideration simply
stated that the said motion lacked merit."
11

In their comment, respondents countered that the petition be denied for
lack of merit.
The petition must fail.
The sole object of a writ of preliminary injunction, whether prohibitory or
mandatory, is to preserve the status quo and prevent further injury on the
applicant until the merits of the main case can be heard. The status quo is
the last actual peaceable uncontested status which preceded the
controversy. The injunctive writ may only be resorted to by a litigant for
the preservation and protection of his rights or interests during the
pendency of the principal action. The grant or denial of an application for a
writ of preliminary injunction rests upon the sound discretion of the
issuing court.
12

For grave abuse of discretion to exist as a valid ground for the nullification
of the grant or denial of the injunctive writ, as contemplated by Rule 65 of
the 1997 Rules of Civil Procedure, as amended, there must be capricious
and whimsical exercise of judgment as is equivalent to lack or excess of
jurisdiction, or where the power is exercised in an arbitrary manner by
reason of passion, prejudice or personal hostility, and it must be so
patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law.
13

Here, the appellate court upheld the trial court's exercise of sound
discretion in issuing the status quo ante Order because it found "no
compelling reason to interfere with the prevailing state of affairs as
ordered by the trial court." It further ruled that petitioners failed to
establish the existence of any of the grounds mentioned in Section 3 of
Rule 58 to justify the issuance of the injunctive writ, namely, that they
have a clear and unmistakable right to be entitled to the relief demanded,
and that the acts sought to be enjoined would probably work injustice to
them during the pendency of the case.
We find nothing capricious, whimsical or arbitrary in the Court of Appeals'
challenged Resolution denying petitioners' application for a writ of
preliminary injunction. We are not impressed by petitioners' contention
that it is too simplistic or insufficient as it does not contain a full discussion
of its findings and the applicable rule or law in support of its conclusion. It
bears stressing that there is no definite or stringent rule on how a
Resolution denying an application for a TRO or a writ of preliminary
injunction is framed. The manner the Resolution was written did not
diminish the legal significance of the denial so decreed by the appellate
court. What is clear from the challenged Resolution is that the Court of
Appeals stated the proper basis for its ruling.
In United Coconut Planters Bank v. United Alloy Philippines Corporation,
14

we held:
An order granting a preliminary injunction, whether mandatory or
prohibitory, is interlocutory and unappealable. However, it may
be challenged by a petition for certiorari under Rule 65 of the
Rules of Court. Being preliminary, such an order need not strictly
follow Section 5 of Rule 51 requiring that "every decision of final
resolution of the Court in appealed cases shall clearly and
distinctly state the findings of fact and conclusions of law on
which it is based x x x."
x x x
x x x, the Resolution issued below was merely interlocutory, not
a final resolution or decision disposing of the case. It was based
on a preliminary determination of the status quo and
petitioner's entitlement to the Writ.
x x x. After a hearing on an application for a writ of preliminary
injunction, the findings of fact and the opinions of a court have an
interlocutory nature, and vital facts that may not have been
presented during the trial. Thus, the Rules as regards the form of
decisions are not applicable to that of resolutions disposing of
application for an injunctive writ.
Note that even this Court issues status quo or temporary
restraining orders without narrating at length the complete facts
and applicable laws required by the Rules on the issuance of
decisions and final orders. x x x. (Underscoring supplied)
Indeed, we cannot disturb the sound discretion exercised by the Court of
Appeals sustaining the trial court's status quo ante Order, unless there is a
patent abuse of discretion, which is not present here. As this Court stated
in Land Bank of the Philippines v. Continental Watchman Agency,
Incorporated:
15

Significantly, the rule is well-entrenched that the issuance of the
writ of preliminary injunction rests upon the sound discretion of
the trial court. It bears reiterating that Section 4 of Rule 58 gives
generous latitude to the trial courts in this regard for the reason
that conflicting claims in an application for a provisional writ more
often that not involve a factual determination which is not the
function of the appellate courts. Hence, the exercise of sound
judicial discretion by the trial court in injunctive matters must not
be interfered with except when there is manifest abuse, which is
wanting in the present case.
In fine, the Court of Appeals, in issuing the assailed Resolutions, did not act
with grave abuse of discretion.
WHEREFORE, we DISMISS the instant petition for lack of merit. Costs
against petitioners.
SO ORDERED.
EDUARDO F. HERNANDEZ, MA. ENCARBACION R. LEGASPI, JAIME
BLANCO, JR., ENRIQUE BELO, CARLOS VIAPLANA, CARL FURER, VIVENCIO
TINIO, MICHAEL BRIGGS, ROSA CARAM, FAUSTO PREYSLER, ROBERT KUA,
GEORGE LEE, GUILLERMO LUCHANGCO, PETER DEE, LUISA MARQUEZ,
ANGELITA LILLES, JUAN CARLOS, HOMER GO, AMADEO VALENZUELA,
EMILIO CHING, ANTONIO CHAN, MURLI SABNANI, MARCOS ROCES,
RAYMUNDO FELICIANO, NORMA GAFFUD, ALF HOLST, LOURDES P.
ROQUE, MANUEL DY, RAUL FERNANDEZ, VICTORIA TENGCO, CHI MO
CHENG, BARANGAY DASMARIAS, and HON. FRANCISCO B. IBAY,
petitioners
vs.
NATIONAL POWER CORPORATION, respondent
D E C I S I O N
CHICO-NAZARIO, J.:
Although Presidential Decree No. 1818 prohibits any court from issuing
injunctions in cases involving infrastructure projects, the prohibition
extends only to the issuance of injunctions or restraining orders against
administrative acts in controversies involving facts or the exercise of
discretion in technical cases. On issues clearly outside this dimension and
involving questions of law, this Court declared that courts could not be
prevented from exercising their power to restrain or prohibit
administrative acts.
1
In such cases, let the hammer fall and let it fall hard.
With health risks linked to exposure to electromagnetic radiation as their
battle cry, petitioners, all residents of Dasmarias Village, are clamoring for
the reversal of the decision
2
dated 3 May 2000 of the Court of Appeals in
CA-G.R. SP No. 57849 as well as the resolution dated 27 September 2000,
denying their motion for reconsideration.
The assailed decision
3
of the Court of Appeals reversed the order of the
Regional Trial Court of Makati, issuing a writ of preliminary injunction
against respondent National Power Corporation (NAPOCOR) to stay the
latter from energizing and transmitting high voltage electric current
through its cables erected from Sucat, Paraaque to Araneta Ave., Quezon
City.
But, first, the facts:
Sometime in 1996, NAPOCOR began the construction of 29 decagon-
shaped steel poles or towers with a height of 53.4 meters to support
overhead high tension cables in connection with its 230 Kilovolt Sucat-
Araneta-Balintawak Power Transmission Project. Said transmission line
passes through the Sergio Osmea, Sr. Highway (South Superhighway), the
perimeter of Fort Bonifacio, and Dasmarias Village proximate to Tamarind
Road, where petitioners homes are.
Said project later proved to be petitioners bane of existence.
Alarmed by the sight of the towering steel towers, petitioners scoured the
internet on the possible adverse effects that such a structure could cause
to their health and well-being. Petitioners got hold of published articles
and studies linking the incidence of a fecund of illnesses to exposure to
electromagnetic fields. These illnesses range from cancer to leukemia.
Petitioners left no stones unturned to address their malady. They aired this
growing concern to the NAPOCOR, which conducted a series of meetings
with them.
NAPOCOR received flak from Representative Francis Joseph G. Escudero,
who in his Privilege Speech dated 10 May 1999, denounced the cavalier
manner with which Napocor ignored safety and consultation requirements
in the questioned project.
Petitioners brought their woes to the attention of Rep. Arnulfo
Fuentebella, Chairman of the House Committee on Energy, wherein
NAPOCOR was asked to shed light on the petitioners problem. In a letter
dated 8 November 1999, Napocor President Federico Puno stated that
NAPOCOR was still in the process of coming up with a "win-win" solution
to the concerns of the Dasmarias Village and Forbes Park residents.
4

In a letter dated 10 August 1999 addressed to Congressman Arnulfo P.
Fuentebella, NAPOCORs President wrote:
We have discussed the matter with the Dasmarias and Forbes residents
and we have come up with four (4) options on how to address the
problem, to wit:
Option Cost
Option 1: Transfer the line to Lawton Avenue P 111.84 million
(proposal of Dasmarias/Forbes)
Option 2: Maintain 12 meters distance along P 77.60 million the
village
Option 3: Construct an underground line P 482.00 million
Option 4: Reroute along C-5 and South Luzon P 1,018.83 million
Expressway (combination of overhead and underground)
5

Negotiations between petitioners and the NAPOCOR reached an impass,
with petitioners vying for the relocation of the transmission lines to Fort
Bonifacio on one hand, and the NAPOCOR insisting on a 12-meter
easement widening, on the other.
6

Thus, petitioners, on 9 March 2000 filed a Complaint
7
for Damages with
Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of
Preliminary Injunction against NAPOCOR. Harping on the hazardous effects
of exposure to electromagnetic radiation to the health and safety to
themselves and their families, petitioners, through the instant case, sought
what they had failed to achieve through amicable means with NAPOCOR
and prayed, inter alia, for damages and the relocation of the transmission
lines to Lawton Avenue, Fort Bonifacio.
On 13 March 2000, Judge Francisco B. Ibay issued an order
8
in Civil Case
No. 00-352, which temporarily restrained the respondent from energizing
and transmitting high voltage electric current through the said project. The
pertinent portion of the said order reads:
Acting on the plaintiffs "Urgent Omnibus Motion," it appearing that the
subject area will be energized by midnight tonight based on a report taken
from Representative Joker P. Arroyo by plaintiffs counsel, so as not to
render moot and academic the instant case, as prayed for, defendant
National Power Corporation is ordered to maintain the status quo and/or
be enjoined from energizing and transmitting high voltage electric current
through its cables for forty eight (48) hours starting 4 oclock in the
afternoon today and ending 4 oclock in the afternoon of 15 March 2000.
9

By order
10
of 15 March 2000, the trial court extended the restraining order
for 18 more days.
NAPOCOR filed a Petition for Certiorari with Prayer for Temporary
Restraining Order and Preliminary Injunction with the Court of Appeals
assailing the above order by the trial court. Alluding to Presidential Decree
No. 1818 (1981), "Prohibiting Courts from Issuing Restraining Orders or
Preliminary Injunctions in Cases Involving Infrastructure and Natural
Resource Development Projects of, and Public Utilities Operated by, the
Government," particularly Sec. 1, NAPOCOR stalwartly sought the dismissal
of the case on the ground of lack jurisdiction. Presidential Decree No. 1818
provides:
Section 1. No Court in the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction or preliminary mandatory
injunction in any case, dispute, or controversy involving an infrastructure
project, or a mining, fishery, forest or other natural resource development
project of the government, or any public utility operated by the
government, including among other public utilities for transport of the
goods or commodities, stevedoring and arrastre contracts, to prohibit any
person or persons, entity or government official from proceeding with or
continuing the execution or implementation of any such project, or the
operation of such public utility or pursuing any lawful activity necessary for
such execution, implementation or operation.
In the interregnum, by order dated 3 April 2000, the trial court ordered the
issuance of a writ of preliminary injunction against NAPOCOR.
11
The trial
court articulated that an injunction was necessary to stay respondent
NAPOCORs activation of its power lines due to the possible health risks
posed to the petitioners. Asserting its jurisdiction over the case, the trial
court was of the view that Presidential Decree No. 1818 and jurisprudence
proscribing injunctions against infrastructure projects do not find
application in the case at bar because of the health risks involved.
The trial court, thus, enjoined the NAPOCOR from further preparing and
installing high voltage cables to the steel pylons erected near petitioners
homes and from energizing and transmitting high voltage electric current
through said cables while the case is pending final adjudication, upon
posting of the bond amounting to P5,000,000.00 executed to the effect
that petitioners will pay all the damages the NAPOCOR may sustain by
reason of the injunction if the Court should finally decide that the
petitioners are not entitled thereto.
12

In light of the foregoing order of the trial court, the petition which
NAPOCOR filed with the Court of Appeals was later amended to include
the prayer for the nullification and injunction of the Order dated 3 April
2000 of the trial court.
In the challenged decision of 3 May 2000, the Court of Appeals reversed
the trial courts order, with the following fallo:
WHEREFORE, premises considered, the instant petition for certiorari is
hereby GRANTED. The assailed orders of the respondent court, dated
March 13, 2000 and April 3, 2000, are hereby REVERSED and SET ASIDE.
13

In the Court of Appeals rationale, the proscription on injunctions against
infrastructure projects of the government is clearly mandated by the
above-quoted Section 1 of Presidential Decree No. 1818, as reiterated by
the Supreme Court in its Circulars No. 2-91 and No. 13-93, dated 15 March
1991 and 5 March 1993, respectively.
As their motion for reconsideration was met with similar lack of success,
petitioners, in a last attempt at vindication, filed the present petition for
review on the following arguments:
I.
Temporary restraining orders and preliminary injunctions were purposely
designed to address matters of extreme urgency where there is probability
of grave injustice and irreparable injury.
14

II.
The rule on preliminary injunction merely requires that unless restrained,
the act complained of will probably work injustice to the applicant or
probably violate his rights and tends to render the judgment ineffectual.
15

(Emphasis in the original.)
Fundamental to the resolution of the instant petition is the issue of
whether or not the trial court may issue a temporary restraining order and
preliminary injunction to enjoin the construction and operation of the 29
decagon-shaped steel poles or towers by the NAPOCOR, notwithstanding
Presidential Decree No. 1818.
Petitioners clutch on their stand that Presidential Decree No. 1818 could
not be construed to apply to cases of extreme urgency as in the present
case when no less than the rights of the petitioners to health and safety
hangs on the balance.
We find the petition to be imbued with merit.
Presidential Decree No. 1818 was issued on 16 January 1981, prohibiting
judges from issuing restraining orders against government infrastructure
projects. In part, the decree says, "No court in the Philippines shall have
jurisdiction to issue any restraining order, preliminary injunction or
preliminary order, preliminary mandatory injunction in any case, dispute or
controversy involving an infrastructure project." Realizing the importance
of this decree, this Tribunal had issued different circulars to implement this
particular law.
Presidential Decree No. 1818
16
prohibits courts from issuing injunctions
against government infrastructure projects. In Garcia v. Burgos,
17

Presidential Decree No. 1818 was held to prohibit courts from issuing an
injunction against any infrastructure project in order not to disrupt or
hamper the pursuit of essential government projects or frustrate the
economic development effort of the nation.
While its sole provision would appear to encompass all cases involving the
implementation of projects and contracts on infrastructure, natural
resource development and public utilities, this rule, however, is not
absolute as there are actually instances when Presidential Decree No. 1818
should not find application. In a spate of cases, this Court declared that
although Presidential Decree No. 1818 prohibits any court from issuing
injunctions in cases involving infrastructure projects, the prohibition
extends only to the issuance of injunctions or restraining orders against
administrative acts in controversies involving facts or the exercise of
discretion in technical cases. On issues clearly outside this dimension and
involving questions of law, this Court declared that courts could not be
prevented from exercising their power to restrain or prohibit
administrative acts.
18

In the case at bar, petitioners sought the issuance of a preliminary
injunction on the ground that the NAPOCOR Project impinged on their
right to health as enshrined in Article II, Section 15 of the 1987
Constitution, which provides:
Sec. 15. The State shall protect and promote the right to health of the
people and instill consciousness among them.
To boot, petitioners, moreover, harp on respondents failure to conduct
prior consultation with them, as the community affected by the project, in
stark violation of Section 27 of the Local Government Code which provides:
"no project or program shall be implemented by government authorities
unless the consultations mentioned are complied with, and prior approval
of the Sanggunian concerned is observed."
From the foregoing, whether there is a violation of petitioners
constitutionally protected right to health and whether respondent
NAPOCOR had indeed violated the Local Government Code provision on
prior consultation with the affected communities are veritable questions of
law that invested the trial court with jurisdiction to issue a TRO and
subsequently, a preliminary injunction. As such, these questions of law
divest the case from the protective mantle of Presidential Decree No.
1818.
Moreover, the issuance by the trial court of a preliminary injunction finds
legal support in Section 3 of Rule 58 of the Rules of Court which provides:
Sec. 3. Grounds for issuance of preliminary injunction. - A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission
or continuance of the act or acts complained of, or in requiring
the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the
act or acts complained of during the litigation would probably
work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or
is attempting to do, or is procuring or suffering to be done, some
act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to
render the judgment ineffectual. (3a) (Emphasis supplied.)
The rule on preliminary injunction merely requires that unless restrained,
the act complained of will probably violate his rights and tend to render
the judgment ineffectual.
Here, there is adequate evidence on record to justify the conclusion that
the project of NAPOCOR probably imperils the health and safety of the
petitioners so as to justify the issuance by the trial court of a writ of
preliminary injunction.
Petitioners adduced in evidence copies of studies linking the incidence of
illnesses such as cancer and leukemia to exposure to electromagnetic
fields. The records bear out, to boot, a copy of a brochure of NAPOCOR
regarding its Quezon Power Project from which will be supplying NAPOCOR
with the power which will pass through the towers subject of the
controversy. The NAPOCOR brochure provides that because of the danger
concomitant with high voltage power, Philippine laws mandate that the
power lines should be located within safe distances from residences. And
the Quezon Power Project mandates an easement of 20 meters to the
right and 20 meters to the left which falls short of the 12-meter easement
that NAPOCOR was proposing to petitioners.
Likewise on record, are copies of letters of Napocor President Federico
Puno to Rep. Arnulfo Fuentebella, Chairman of the House Committee on
Energy, stating updates on the negotiations being undertaken by the
NAPOCOR and the Dasmarias Village and Forbes Park residents. Also on
file is the Privilege Speech dated 10 May 1999 of Representative Francis
Joseph G. Escudero, who denounced the cavalier manner with which
Napocor ignored safety and consultation requirements in the questioned
project.
With a member of Congress denouncing the subject project of NAPOCOR
because of the very same health and safety ills that petitioners now hew to
in this petition, and with documents on record to show that NAPOCOR
made representations to petitioners that they are looking into the
possibility of relocating the project, added to the fact that there had been
series of negotiations and meetings between petitioners and NAPOCOR as
well as related agencies, there is ample indicia to suggest to the mind of
the court that the health concerns of the petitioners are, at the very least,
far from imaginary.
Indeed, if there is no cause for concern, NAPOCOR would not have been
stirred to come up with options to address the woes of petitioners, nor
would Congressman Escudero have fired away those strong words of
censure, assailing what to Congressman Escudero smacks of a "cavalier
manner by which the NAPOCOR has responded to earnest pleas for a
review of its practice of installing massive pylons supporting high tension
cables in densely populated areas."
19

True, the issue of whether or not the transmission lines are safe is
essentially evidentiary in nature, and pertains to the very merits of the
action below. In fact, petitioners recognize that the conclusiveness of their
life, health and safety concerns still needs to be proved in the main case
below and they are prepared to do so especially in the light of some
studies cited by respondent that yield contrary results in a disputed
subject. Despite the parties conflicting results of studies made on the
issue, the possibility that the exposure to electromagnetic radiation causes
cancer and other disorders is still, indeed, within the realm of scientific
scale of probability.
Equally important, we take judicial notice that the area alluded to as
location of the NAPOCOR project is a fragile zone being proximate to local
earthquake faults, particularly the Marikina fault, among other zones. This
is not to mention the risks of falling structures caused by killer tornadoes
and super typhoons, the Philippines, especially Central Luzon, being
situated along the typhoon belt.
Moreover, the Local Government Code, requires conference with the
affected communities of a government project. NAPOCOR, palpably, made
a shortcut to this requirement. In fact, there appears a lack of exhaustive
feasibility studies on NAPOCORs part before making a go with the project
on hand; otherwise, it should have anticipated the legal labyrinth it is now
caught in.
These are facts, which the trial court could not ignore, and form as
sufficient basis to engender the cloud of doubt that the NAPOCOR project
could, indeed, endanger the lives of the petitioners. A preliminary
injunction is likewise justified prior to a final determination of the issues of
whether or not NAPOCOR ignored safety and consultation requirements in
the questioned project. Indeed, the court could, nay should, grant the writ
of preliminary injunction if the purpose of the other party is to shield a
wrongdoing. A ruling to the contrary would amount to an erosion of
judicial discretion.
After all, for a writ of preliminary injunction to be issued, the Rules do not
require that the act complained of be in violation of the rights of the
applicant. Indeed, what the Rules require is that the act complained of be
probably in violation of the rights of the applicant. Under the Rules of
Court, probability is enough basis for injunction to issue as a provisional
remedy, which is different from injunction as a main action where one
needs to establish absolute certainty as basis for a final and permanent
injunction.
Pending the final determination of the trial court on the main case for
damages, of whether or not the NAPOCOR Project infringes on petitioners
substantive right to health and pending determination of the question of
whether there was non-observance of the prior-consultation proviso under
the Local Government Code, it is prudent to preserve the status quo. In
Phil. Ports Authority v. Cipres Stevedoring & Arrastre, Inc.,
20
we held:
A preliminary injunction is an order granted at any stage of an action prior
to judgment of final order, requiring a party, court, agency, or person to
refrain from a particular act or acts. It is a preservative remedy to ensure
the protection of a partys substantive rights or interests pending the final
judgment in the principal action. A plea for an injunctive writ lies upon the
existence of a claimed emergency or extraordinary situation which should
be avoided for otherwise, the outcome of a litigation would be useless as
far as the party applying for the writ is concerned.
At times referred to as the "Strong Arm of Equity," we have consistently
ruled that there is no power the exercise of which is more delicate and
which calls for greater circumspection than the issuance of an injunction. It
should only be extended in cases of great injury where courts of law
cannot afford an adequate or commensurate remedy in damages; "in cases
of extreme urgency; where the right is very clear; where considerations of
relative inconvenience bear strongly in complainants favor; where there is
a willful and unlawful invasion of plaintiffs right against his protest and
remonstrance, the injury being a continuing one, and where the effect of
the mandatory injunction is rather to reestablish and maintain a
preexisting continuing relation between the parties, recently and
arbitrarily interrupted by the defendant, than to establish a new relation."
(Emphasis supplied.)
What is more, contrary to respondents assertion, there is not a single
syllable in the circulars issued by this Court enjoining the observance of
Presidential Decree No. 1818, which altogether and absolutely, ties the
hands of the courts from issuing a writ of preliminary injunction. What
Circular 2-91
21
dated 15 March 1991 seeks to enjoin is the indiscriminate
issuance of court injunctions. The same holds for Circular 13-93
22
dated 5
March 1993 and Circular 68-94.
23
And, in Circular No. 7-99, judges are
enjoined to observe utmost caution, prudence and judiciousness in the
issuance of temporary restraining order and in the grant of writs of
preliminary injunction to avoid any suspicion that its issuance or grant was
for consideration other than the strict merits of the case.
24

There is not a hint from the foregoing circulars suggesting an unbridled
prohibition against the issuance of temporary restraining orders or
preliminary injunctions.
In sum, what Presidential Decree No. 1818 aims to avert is the untimely
frustration of government infrastructure projects, particularly by
provisional remedies, to the detriment of the greater good by disrupting
the pursuit of essential government projects or frustrate the economic
development effort of the nation. Presidential Decree No. 1818, however,
was not meant to be a blanket prohibition so as to disregard the
fundamental right to health, safety and well-being of a community
guaranteed by the fundamental law of the land.
25

Lest we be misconstrued, this decision does not undermine the purpose of
the NAPOCOR project which is aimed towards the common good of the
people. But, is the promotion of the general welfare at loggerheads with
the preservation of the rule of law? We submit that it is not.
26

In the present case, the far-reaching irreversible effects to human safety
should be the primordial concerns over presumed economic benefits per
se as alleged by the NAPOCOR.
Not too long ago, the Court, in Metropolitan Manila Development
Authority (MMDA) v. Bel-Air Village Association, Inc.,
27
upheld the validity
of the writ of preliminary injunction issued by the Court of Appeals
enjoining the implementation of the Metropolitan Manila Development
Authoritys proposed action of opening of the Neptune Street to public
vehicular traffic. We were categorical -
Not infrequently, the government is tempted to take legal shortcuts to
solve urgent problems of the people. But even when government is armed
with the best of intention, we cannot allow it to run roughshod over the
rule of law. Again, we let the hammer fall and fall hard on the illegal
attempt of the MMDA to open for public use a private road in a private
subdivision. While we hold that the general welfare should be promoted,
we stress that it should not be achieved at the expense of the rule of law.
28

In hindsight, if, after trial, it turns out that the health-related fears that
petitioners cleave on to have adequate confirmation in fact and in law, the
questioned project of NAPOCOR then suffers from a paucity of purpose, no
matter how noble the purpose may be. For what use will modernization
serve if it proves to be a scourge on an individuals fundamental right, not
just to health and safety, but, ostensibly, to life preservation itself, in all of
its desired quality?
WHEREFORE, the petition is granted. The decision dated 3 May 2000 of the
Court of Appeals in CA-G.R. SP No. 57849 is REVERSED as well as the
resolution dated 27 September 2000. The Order dated 3 April 2000 of the
Regional Trial Court of Makati in Civil Case No. 00-352 is hereby
REINSTATED. No pronouncement as to costs
SO ORDERED.
JAIME HERNANDEZ, petitioner-appellant,
vs.
DELFIN ALBANO, HERMOGENES CONCEPCION, JR., City Fiscal of Manila
and CARLOS C. GONZALES, Second Assistant City Fiscal of Mania,
respondents-appellees.
San Juan, Africa & Benedicto for petitioner-appellant.
City Fiscal Hermogenes Concepcion, Jr. and Assistant Fiscal E. S. Arguelles
for and in their own behalf.
Valera Law Office for respondent-appellee Albano.
SANCHEZ, J.:
This case has its roots in a complaint lodged with the Office of the City
Fiscal of Manila, by respondent Delfin Albano, quondam Congressman for
the lone district of Isabela, against petitioner Jaime Hernandez, then the
Secretary of Finance and Presiding Officer of the Monetary Board of the
Central Bank for violation of Article 216 of the Revised Penal Code,
Commonwealth Act 626
1
or Republic Act 265.
2
The complaint revolves
around petitioner's alleged shareholdings in the University of the East,
Bicol Electric Co., Rural Bank of Nueva Caceres, DMG inc., and University of
Nueva Caceres and the claim that said corporations obtained dollar
allocations from the Central Bank, through the Monetary Board, during
petitioner's incumbency as presiding officer thereof. The charges involved
were docketed in the City Fiscal's Office, as
I.S. No. 11379 re petitioner's holdings in Rural Bank of Nueva
Caceres;
I.S. No. 11380 re petitioner's holdings in the University of
Nueva Caceres;
I.S. No. 11381 re petitioner's holdings in the Bicol Electric Co.;
I.S. No. 11382 re petitioner's holdings in the University of the
East; and
I.S. No. 11383 re petitioner's holdings in the DMG, Inc.
At the joint investigation of the foregoing charges before respondent
Carlos C. Gonzales, the investigating Fiscal, complainant moved to exclude
therefrom the alleged violation of Article 216 of the Revised Penal Code
because the applicability of this statute was in issue of Solidum, et al. vs.
Hernandez, L-16570, at the time pending before this Court, but which had
since been resolved by us February 28, 1963 adversely to Hernandez.
Fiscal Gonzales granted the motion.
Then, petitioner sought the dismissal of the remaining charges upon the
averment that (a) violation of Article VII, Section 11, subsection (2) of the
Constitution, punishable under Commonwealth Act 626, should be
prosecuted at the domicile of the private enterprises affected there by;
and that (b) violation of Section 13 of Republic Act 265 is not criminal in
nature. Dismissal was denied; reconsideration thereof failed.
To restrain the respondent Fiscals from continuing the investigation,
petitioner went to the Court of First Instance of Manila on certiorari and
prohibition with a prayer for preliminary injunction.
3
The decision dated
October 13, 1961, reached upon a stipulation of facts, dismissed the
petition, with costs.
Petitioner appealed.
1. Stripped of inconsequential issues, the forefront question thrust upon us
is whether the prosecuting arm of the City of Manila should be restrained
from proceeding with the investigation of the charges levelled against
petitioner.
By statute, the prosecuting officer of the City of Manila and his assistants
are empowered to investigate crimes committed within the city's
territorial jurisdiction. Not a mere privilege, it is the sworn duty of a Fiscal
to conduct an investigation of a criminal charge filed with his office. The
power to investigate postulates the other obligation on the part of the
Fiscal to investigate promptly and file the case of as speedily. Public
interest the protection of society so demands. Agreeably to the
foregoing, a rule now of long standing and frequent application was
formulated that ordinarily criminal prosecution may not be blocked by
court prohibition or injunction.
4
Really, if at every turn investigation of a
crime will be halted by a court order, the administration of criminal justice
will meet with an undue setback.
5
Indeed, the investigative power of the
Fiscal may suffer such a tremendous shrinkage that it may end up in hollow
sound rather than as a part and parcel of the machinery of criminal justice.
We are not to be understood, however, as saying that the heavy hand of a
prosecutor may not be shackled under all circumstances. The rule is not
an invariable one. Extreme cases may, and actually do, exist where relief in
equity may be availed of to stop a purported enforcement of a criminal law
where it is necessary (a) for the orderly administration of justice; (b) to
prevent the use of the strong arm of the law in an oppressive and
vindictive manner; (c) to avoid multiplicity of actions;
6
(d) to afford
adequate protection to constitutional rights;
7
and (e) in proper cases,
because the statute relied upon is unconstitutional, or was "held invalid."
8

With the foregoing guidelines, we come to grips with the legal problems of
whether
a. Violation of Art. VII, Section 11, Subsection (2) of the
Constitution punishable under C.A. 626, should be prosecuted at
the domicile of the private enterprise affected by the violation;
and
b. Violation of Section 13 of Republic Act 265 is criminal in nature.
2. The constitutional prescription allegedly violated, Article VII, Section
11(2), reads:
(2) The heads of departments and chiefs of bureaus or offices and
their assistants shall not, during their continuance engage in the
practice of any profession, or intervene, directly or indirectly, in
the management or control of any private which in any way may
be affected by the function of their office; nor shall they directly
or indirectly, be financially interested in any contract with the
Government, or any subdivision or instrumentality thereof.
Commonwealth Act 626 provides the penal sanction for a violation of this
constitutional precept, i.e., a fine of not than P5,000 or imprisonment of
not more than 2 years, or both.
The legal mandate in Section 14, Rule 110 of the Rules of the Court is that
"[i]n all criminal prosecutions the action shall be instituted and tried in the
court of the municipality or province wherein the offense was committed
or any one of the essential ingredients thereof took place."
9
This principle
is fundamental.
10
Thus, where an offense is wholly committed outside the
territorial limits wherein the court operates, said court is powerless to try
the case. For, "the rule is that one cannot be held to answer for any crime
committed by him except in the jurisdiction where it was committed."
11

Similarly, the City Fiscal of Manila and his assistants as such may not
investigate a crime committed within the exclusive confines of, say,
Camarines Norte. This proposition offers no area for debate. Because, said
prosecuting officers would then be overreaching the territorial limits of
their jurisdiction, and, in the process, step on the shoes of those who, by
statute, are empowered and obligated to perform that task. They cannot
unlawfully encroach upon powers and prerogatives of the Fiscals of the
province aforesaid.
Petitioner seeks to bar respondent Fiscals from investigating the
constitutional violation charged. His claim is that except for his holdings
in Manila's University of the East the Manila Fiscals are powerless to
investigate him. His reason is that the essence of the crime is his
possession of prohibited interests in corporations domiciled in Naga City
(Rural Bank of Nueva Caceres, University of Nueva Caceres and Bicol
Electric Co.,) and in Mandaluyong, Rizal (DMG Inc.); and that the place
where the crime is to be prosecuted is "the situs of such shares."
In effect, petitioner asks us to carve out an exception to the rule that said
Fiscals may not be enjoined from conducting the inquiry aforesaid. We
would not hesitate to state that, if it clearly appears that the crime or any
essential ingredient thereof was committed outside the boundaries of the
City of Manila, petitioner's argument should merit serious consideration.
For, orderly administration of justice so demands; multiplicity of criminal
actions is to be obviated; the long arm of the law cannot be used in an
oppressive or vindictive manner.
But let us take a look at the admitted facts of this case. Petitioner himself
concedes that he stands "charged with allegedly having shareholdings in
the Bicol Electric Co., Rural Bank of Nueva Caceres, University of Nueva
Caceres, DMG Inc., and the University of the East, and a that the said
corporations purportedly obtained doll or allocations from the Central
Bank thru the Monetary Board during the incumbency of respondent as
presiding officer thereof."
12

Petitioner relies on Black Eagle Mining Co. vs. Conroy et al., 221 Pac. 425,
426, thus
Shares of stock are a peculiar kind of personal property, and are
unlike other classes of personal property in that the property right
of shares of stock can only be exercised or enforced where the
corporation is organized and has its place of business and can
exist only as an incident to and connected with the corporation,
and this class of property is inseparable from the domicile of the
corporation itself.
By no stretch can the cited case be taken as germane to the controversial
point here. It speaks of property right to shares of stock which can only be
enforced in the corporation's domicile. In the case at bar, the charges are
not directed against the corporations. Not mere ownership of or title to
shares is involved. Possession of prohibited interests is but one of the
essential components of the offense. As necessary an ingredient thereof is
the fact that petitioner was head of a department Secretary of Finance.
So also, the fact that while head of department and chairman of the
Monetary Board he allegedly was financially interested in the corporations
aforesaid which so the dollar allocations, and that he had to act officially,
in his dual capacity, not in Camarines Sur, but in Manila where he held his
office.
Since criminal action must be instituted and tried in the place where the
crime or an essential ingredient there of, took place, it stands to reason to
say that the Manila under the facts obtained here, have jurisdiction to
investigate the violation complained of.
3. The other argument pressed upon us that a violation of Section 13 of
Republic Act 265 is not criminal in nature furnishes no better
foundation.
Section 13 of Republic Act 265, allegedly violated by petitioner, recites:
SEC. 13. Withdrawal of persons having a personal interest.
Whenever any person attending a meeting of the Monetary Board
has a personal interest of any sort in the discussion or resolution
of any given matter, or any of his business associates or any of his
relatives within the fourth degree of consanguinity or second
degree of affinity has such an interest, said person may not
participate in the discussion or resolution of the matter and must
retire from the meeting during the deliberations thereon. The
minutes of the meeting shall note the withdrawals of the member
concerned.
The gravamen of petitioner's argument is that for a violation of Section 13
of the law aforesaid, Section 15 of the same statute provides "only for a
civil sanction." "not a criminal sanction." Said Section 15 reads:
SEC. 15. Responsibility. Any member of the Monetary Board or
officer or employee of the Central Bank who willfully violates this
Act or who is guilty of gross negligence in the performance of his
duties shall be held liable for any loss or injury suffered by the
Bank as a result of such violation or negligence. ...
The nonsequitur is at once apparent. For, Section 34 of the same Republic
Act 265, in terms clear and certain and free from the taint of ambiguity,
provides the penal sanction.
13
thus
SEC. 34. Proceedings upon violation of laws and regulations.
Whenever any person or entity willfully violates this Act or any
order, instruction, rule or regulation legally issued by the
Monetary Board, the person or persons responsible for such
violation shall be punished by a fine of not more than twenty
thousand pesos and by imprisonment of not more than five years.
...
But, petitioner draws attention to the fact that Sections 13 and 15 both fall
under "Article II The Monetary Board," of Chapter 1. "Establishment
and Organization of the Central Bank of the Philippines," whereas Section
34 comes under the heading "B. Department Supervision and
Examination" of "Article IV. Departments of the Central Bank." From
this, petitioner puts forth the claim that the penal provisions in Section 34
are "to be restricted to the matters encompassed in that topic, that is, the
supervision of banking institutions."
14
We are unable to join petitioner in
this ipse dixit pronouncement. And, for a number of reasons. First, because
while Section 15 provides for the civil liability "for any loss or injury
suffered by the (Central) Bank as a result of such violation," Section 34
prescribes the penalty for the willful violation of "this Act," irrespective of
whether the bank suffered any loss or not. Second, the entire statute is not
in piecemeal style but as a whole. Effort be exerted "to make every part
effective, harmonious sensible."
15
And so construing we find that the one
refers to the civil liability at the same time that the other specifies a
separate criminal liability. Indeed, it could well be said that the penal
sanction in Section 34 is an "additional incentive toward obedience of the
mandates of the law."
16
One does not preclude the other. Third, We
observe that the penal provisions of Republic Act 265 were placed in three
successive sections thereof, Sections 32, 33 and 34. Section 32 penalizes
any owner, agent, manager or other officers in charge of any banking who
willfully refuses to file the required reports to have the bank's affairs
examined. Section 33 penalizes the making of a false statement to the
Monetary Board. Section 34 provides for the penalty to be imposed upon
any person who violates, among others, the provisions of said Act. This
grouping of penalties obviously was intended to present a clearer picture
of the liabilities which the Central Bank Act specifies, and thus avoid
confusion.
17

All else failing, petitioner summons to his aid the Congressional Record on
the deliberations on House Bill 1704 (which later became Republic Act
265), to wit:
Mr. Topacio Nueno. On page 6, Section 13 - prohibiting relatives
from transacting business. I should like to insert a punishment, a
penal clause. On line 11, add the following: "Violation of this
section is punishable by dismissal and fine of from five thousand
to ten thousand pesos."
The Speaker. What does the Committee say?
Mr. Roy. We cannot accept the amendment.
The Speaker. When we come to the provision with regard to the
penalties, the gentleman from Manila may propose that
amendment, in order that they may be included in the same
section.
Mr. Topacio Nueno I reserve that amendment later on.
x x x x x x x x x
Mr. Laurel. May we be informed which of the three offenses
mentioned in Sections 32, 33, and 34 is regarded to be the most
serious? I am asking this question because I notice that the
penalties imposed are not the same. Which of the three offenses
covered by the three sections I have mentioned is the most
serious?
Mr. Roy. Under Section 32, the offenses intended to be
punishable are specified. It is in Section 34 where the law is very
broad. It provides: 'Whenever any person or entity willfully
violates this Act or any order, instruction, rule or regulation legally
issued by the Monetary Board, ....' I think the court will determine
the gravity of the offense. Mr. Speaker, because there are many
provisions of law; and the rules and regulations of the Monetary
Board will vary in their importance and in the seriousness of the
consequences of the violation. So we will leave to the Court the
determination of the gravity of the offense. That is why the range
of penalties provided under Section 34 is not more than ten
thousand pesos and by imprisonment of not more than five years.
...
Congressional Record, First Congress, Third Session, Vol. 3, pp. 1259, 1281.
Petitioner notes the failure of Congressman Topacio Nueno to reiterate his
proposed amendment to Section 13 by providing therein a penal clause.
Paying full respect to the congressional intent as it may be reflected in the
debates, nonetheless it seems to us that nothing in the quoted transcript
of the congressional record may be reasonably deemed as foreclosing
criminal action. That the announced amendment was not submitted, is
perfectly understandable. There was no need therefor. For, as
Congressman Roy aptly puts it (in the aforesaid record), "Under Section 32
the offenses intended to be punishable are specified. It is under section 34
where the law is very broad, which simply means that any person and
this includes the Chairman of the Monetary Board who "wilfully violates
this Act," shall be punished.
The respondent Fiscals, indeed justifiably relied or Section 34 in pursuing
their investigation for a violation Section 13. For Section 15 is not intended
to write off from the said Section 34. To do so is to sanction pointless
rigidity in statutory construction.
In the light of the considerations, we vote to affirm the judgment under
review. Costs against petitioner. So ordered.
WILLELMO C. FORTUN, petitioner,
vs.
RUFINO O. LABANG, in his capacity as City Fiscal of Pagadian City;
Attorney MARTIN VERA CRUZ; and Attorneys ANDRES BERSALES,
PABLITO PIELAGO GLICERIO CARPIO, SANTIAGO EISMA, and LEONARDO
ZULUETA, as President, Vice-President, Secretary, Treasurer, and
Director, respectively, of the Zamboanga del Sur and Pagadian City
Chapter of the Integrated Bar of the Philippines, respondents.

FERNANDO, C.J.:1wph1.t
The decisive issue in this prohibition and certiorari proceeding, filed on
March 20, 1974 by Judge Willelmo C. Fortun, then the incumbent District
Judge of the Court of First Instance of Zamboanga del Sur and Pagadian
City, Branch III, is the applicability of the basic principle that while this
Tribunal in the exercise of its equitable powers will not restrain any action
taken in the enforcement of a criminal statute, an exception is made, and
prohibition lies, as set forth in the leading case of Dimayuga and Fajardo v.
Fernandez,
1
"where it is necessary for the orderly administration of
justice, or to prevent the use of the strong arm of the law in an oppressive
or vindictive manner, or a multiplicity of actions."
2
As was pointed out in
the opinion, this doctrine is traceable to the earlier decision of Kwong Sing
v. City of Manila,
3
with Justice Malcolm as ponente , In brief, petitioner
Judge was accused by a member of the bar
4
and a former employee
5
in a
letter complaint of a possible irregularity in his claim for gasoline
allowance, originally considered by them sufficing to hold him liable
administratively. Five of the nine members of the Board of Directors of the
provincial chapter of the Integrated Bar endorsed such administrative
charge to the Board of Governors of the Integrated Bar of the Philippines,
retired Justice J. B. L. Reyes being the President at that time. After four
months, such letter-complaint with the affidavit was endorsed to the City
Fiscal, respondent Rufino O. Labang.
6
Then came these crucial allegations:
" 10. On February 16, 1974, respondent City Fiscal, acting with precipitate
haste and without exercising the utmost care and prudence which the case
required, considering the seriousness of the charge and the sensitive
nature of petitioner's office, and without bothering to comply with the
mandatory provisions of Section 1 (a) of Presidential Decree No. 77, dated
December 6, 1972, namely, that the statement of the complainant or his
witnesses should be sworn to before him as investigating fiscal, and
without taking into account Paragraphs 2 and 6 of Executive Order No.
264, dated October 6, 1970 in conjunction with Rule 140 of the Revised
Rules of Court, which require that complaints against CFI Judges should be
filed with the Supreme Court, peremptorily gave due course to said
complaint and its supporting papers by immediately issuing a subpoena
(I.S. Nos. 392-403-74) requiring petitioner to file and serve his answer or
counter-affidavits and other supporting papers thereto. 11. On the
morning of February 18, 1974, just as petitioner was about to ascend the
rostrum to start the first session in his Court, after 6 months absence
therefrom due to his detail as CFI Judge of Tarlac, Branch I, said subpoena
was served upon him in a jampacked courtroom, filled with practitioners
and spectators who were not there for any case but to witness the
reaction of petitioner to the service of said subpoena, in further disregard
of the spirit behind Section 6 of Rule 140, Revised Rules of Court, on the
confidentiality of proceedings against judges."
7
Petitioner Judge contested
the legality of the issuance of said subpoena and asked for the dismissal of
the complaint, but he was unsuccessful. Hence, this petition before this
Tribunal.
The petition on its face being indicative of a possible harrassment to which
Judge Fortun was subjected by reason of his official action, the letter-
complaint coming from a member of the bar who had lost six of the nine
cases in petitioner's sala
8
and the supporting affidavit coming from a
disgruntled former employee,
9
this Court issued a temporary restraining
order, and, in the same resolution of March 25, 1974, require comment
from the respondents. Only respondent City Fiscal filed a comment on May
6, 1974. There was no explicit denial of certain allegations indicative of the
hostility manifested towards petitioner Judge. Instead, the ten-page
comment relied on what was considered to be applicable decisions. There
was no effort to refute the allegation that there was a failure to abide by
the requirements of Presidential Decree No. 77, but, it was argued that
there was substantial compliance. Also, there was a misreading of the
opinion of this Court in Tecson v. Salas,
10
concerning the broad scope of
the power of the President over executive officials. It certainly lacks the
necessary persuasiveness to justify the lifting of the restraining order.
Petitioner Judge saw the opportunity to file a reply, and on June 27, 1974,
did so. After noting that the other private respondents failed to contest the
petition, the reply stressed that the pattern of harrassment was quite
obvious. Thus "Under date of September 17th, 1973, Atty. Martin Vera
Cruz, a disgruntled barrister who lost 6 out of the 9 cases he filed before
petitioner's sala, sent a letter, not to the City Fiscal, but to Atty. Andres
Bersales, President of the Zamboanga del Sur Chapter of the Integrated
Bar, asking, in effect, that administrative charges be initiated against
petitioner for alleged misuse of his travel allowances. What did Atty.
Bersales do? He convened the Board of Directors of the local IBP chapter
and out of its 9-man membership, 5 attended, as follows: 1) Atty. Andres
Bersales, its President and the Provincial Board Secretary, who lost all his
cases before petitioner's sala. 2) Atty. Pablito Pielago, who works with
Atty. Bersales in the Governor's Office. 3) Atty. Glicerio Carpio, who works
also with Atty. Bersales in the Governor's Office. 4) Atty. Santiago Eisma
Provincial Treasurer who, in the first place, officially approved in such
capacity payment of all the disbursements of petitioner now being
questioned. 5) Atty. Leonardo Zulueta, who lost all except one of the cases
he handles before petitioner's sala. The five of them, without the
concurrence or attendance of the remaining 4 members of the 9-man
Board of Directors of the Integrated Bar Chapter of Zamboanga del Sur on
so important a subject, peremptorily passed resolution no. 7 resolving to
file not only administrative but criminal charges against petitioner. The
resolution discloses 2 things: first, it is not reflective of the collective will of
the IBP Chapter concerned because it was a divided Board that acted on it
and, second, the five members who voted for it without the participation
of the 4 others have 'axes to grind' against petitioner. Two of them, Atty.
Bersales and Zulueta, invariably lost their cases before petitioner's sala
while Atty. Pielago and Carpio are subordinates of Atty. Bersales in the
Governor's Office."
11

To indicate that the complaint was filed as a manifestation of
vindictiveness and for the humiliation of petitioner judge, the reply
characterized the resolution of the Integrated Bar of the Philippines
chapter as having been "railroaded," petitioner not having been given a
chance to explain his side contrary to procedural due process. He
strengthened his petition by quoting the full text of the answer of retired
Justice J. B. L. Reyes, then President of the Integrated Bar of the Philippines
rejecting the plea of such chapter to support the criminal case filed with
the respondent City Fiscal.
12
Such letter of Justice J. B. L. Reyes should be
quoted in full: "We have just received copy of Resolution No. 10 of your
Chapter, recommending that administrative and criminal charges be filed
against Judge Willelmo Fortun of the Court of First Instance of Zamboanga
del Sur and Pagadian City and requesting the preventive suspension of said
Judge. One thing that immediately attracted our attention is that nowhere
in the resolution is there any indication that the respondent Judge was
informed of the charges studied by the Grievance Committee, nor does it
appear that said respondent was given an opportunity to present his side
before the Grievance Committee or the Board of Officers adopted said
Resolution No. 10. It is thus manifest that the action of the Chapter officers
violated the cardinal principles of fairness and due process that underlie
the Rule of Law. Not only this, but the Chapter's action in this case has
disregarded the fact that the integration of the Bar sought to make it
possible not only to protect lawyers and litigants and to discipline and/or
remove incompetent and unworthy judges, but also to '(4) Shield the
judiciary which traditionally cannot defend itself except within its own
forum, from the assaults that politics and self-interest may level at it, and
assist it to maintain its integrity, impartiality and independence.' ... The
unseemly haste with which the Chapter appears to have acted, referring
the charges to the City Fiscal's office, without notice to the respondent nor
giving him opportunity to present his side before taking action, precludes
this national office from supporting the aforesaid Resolution No. 10. Not
only this, but in the absence of adequate explanation for such one-sided
action on the part of your Chapter, it will become the unavoidable duty of
this Office to oppose the suspension asked for. It is unfortunate that
lawyers who have taken an oath to support and defend the law and the
Constitution should choose to ignore the fundamental principle of due
process. It is therefore requested that you remit to this Office a full report
of the proceedings of the Grievance Committee and the adoption of its
recommendations by the Board of Officers, as soon as possible. Pending
receipt thereof, we have asked the Honorable Supreme Court to withhold
action on your Chapter's request for preventive suspension. The Board of
Governors of the Integrated Bar is due to meet on March 23, 1974. It
would be best if your report is received by this Office before said date."
13

No effort was made either by respondent City Fiscal or any of the private
respondents to dispel in any way the grave doubts raised as to the bona
fides in the filing of this complaint against petitioner. A memorandum was
submitted by petitioner. Respondents maintained their silence. The only
explanation appears to be their realization that the petition is meritorious.
So we find. Prohibition lies.
1. At the outset, reference was made to the invocation by petitioner-judge
of the leading Dimayuga decision. Seven years after its promulgation, in
1930 to be precise, it was relied upon in Tong v. Santamaria & Standard Oil
Co.
14
Justice Villamor as ponente stressed that "the remedy of prohibition
is somewhat sui generis, and is one more or less of legal discretion, and is
intended to prevent the oppressive exercise of legal authority."
15
Such
categorical enunciation of one of the most highly valued principles of
equity ought to have cautioned respondent City Fiscal against, in the
language of then President of the Integrated Bar of the Philippines, retired
Justice J. B. L. Reyes, acting with "unseemly haste." This is one occasion
then that calls for the exercise of the equitable powers of this Court to
repudiate what was clearly an "oppressive exercise of legal authority." It
only remains to be added that Dimayuga has been cited with approval in a
number of cases subsequent to Tong v. Santamaria.
16

2. The sad and lamentable spectacle that this case presents, a judge being
subjected to harrassment and humiliation, fortunately is not typical. It can
diminish public confidence in the courts. At the very least, it minimizes the
respect properly owing an occupant of the bench. Whatever be the motive
of respondent City Fiscal, the impression yielded is that such excessive zeal
was not prompted solely by obedience to his oath of office. The
appearance, hopefully not the reality, could only be that of sheer
vindictiveness or oppressive exercise of state authority. He was oblivious of
the fact that the judiciary and the prosecution service are both essential
agencies in the enforcement of penal statutes, not antagonists. At times it
has been said, and with reason, that the rights of an accused person could
be emasculated even rendered nugatory, if a judge and the prosecuting
fiscal are on the most amicable terms. Respondent City Fiscal in this case
erred on the other extreme. He was the first to lend himself to a scheme
that could have no other purpose than to place petitioner-judge in
contempt and disrepute. Such conduct calls for vigorous condemnation.
The Constitution cannot be any more explicit: "Public office is a public
trust."
17
A public official must keep uppermost in his mind that the sole
guide in the performance of his duties is the paramount need of the public
service.
3. The petition made reference to an Executive Order outlining the
procedure on complaints charging government officials and employees
with commission of irregularities.
18
It is therein provided that complaints
against presidential appointees, and judges are included among them,
"shall be filed with the Office of the President or the Department Head
having direct supervision or control over the official involved."
19
At
present, the department head is the Supreme Court, the Constitution
having expressly vested the power of supervision over all courts to this
Tribunal.
20
The removal of such power in the Department of Justice in
1973, now the Ministry of Justice, is a recognition of the need to preserve
unimpaired the independence of the judiciary, especially so at present,
where to all intents and purposes, there is a fusion between the executive
and the legislative branches. Many are the ways by which such
independence could be eroded. While the present instance is a rare
aberration, it could happen again. When such a case occurs, this Court
must act and promptly to set matters right. This is what the Court did in
its resolution immediately issuing a temporary restraining order upon the
petition being filed. It cannot be too strongly emphasized that a judge of
an inferior court is deserving of the full protection of this 'Tribunal against
any form of vexation, inconvenience, or harrassment, the more so when,
as is quite evident, haste and recklessness marked the conduct of
respondent City Fiscal. Let there be no misunderstanding. Our ruling does
not signify that this Tribunal is averse to a judge facing charges against
him, if presented in the manner provided for by law and with bona fides.
The power of administrative supervision precisely has been granted to this
Court to assure that malefactors on the bench suffer for their misdeeds.
Conversely, however, when, as did happen here, a complaint was utilized
to embarrass and humiliate a member of the judiciary, it is broad enough
to include such remedial action in aid of a judge, who, to all the
appearances is the victim of a deliberate attempt to impugn his good name
and reputation. The judicial power constitutionally granted to this Court,
independently of the grant of supervisory authority, justifies the
intervention of this Court in a case like to present.
4. The characterization by retired Justice J. B. L. Reyes, then President of
the Integrated Bar of the Philippines, of the "unseemly haste" that marked
the actuation of respondent members of the Board of Directors of the
Integrated Bar Chapter of Zamboanga del Sur, Pagadian City Chapter,
appears to be rather mild all things considered. He pointed out that there
was a violation of the cardinal principles of fairness and due process that
underlie the Rule of Law. Petitioner-Judge was not heard; he was denied
the opportunity to defend himself against the accusation. There was, on
the part of private respondents then, a failure to abide by a Resolution of
the Integrated Bar stressing that precisely integration could shield "the
judiciary which traditionally cannot defend itself except within its own
forum, from the assaults that politics and self- interest may level at it, and
assist it to maintain its integrity impartiality and independence.'"
21
A
greater sense of responsibility, not to say a more adequate grasp of the
cardinal requirements of due process as well as of the applicable
procedural rules, ought to have been displayed by private respondents.
Moreover, they did not even make any effort to dispute the accuracy of
the imputation of being disgruntled members of the bar with a record of
losing cases. That apparently was the motive for their accusation. They
paid no attention to the norm of conduct that lawyers should observe as
officers of the Court. The then officers of the Integrated Bar, included as
private respondents, have an even greater responsibility. Clearly, they
were recreant to the trust reposed on them. The penalty of censure is
imposed on each and everyone of the private respondents.
WHEREFORE, the writ of prohibition is granted restraining respondent City
Fiscal or any one acting in his place from enforcing the subpoena dated
February 16, 1974 in I.S. Nos. 392- 403-74 and from proceeding with the
preliminary investigation based on the letter-complaint of respondent
Martin Vera Cruz to the President of the Integrated Bar of the Philippines
of Zamboanga del Sur Chapter and Pagadian City. The writ of certiorari is
likewise granted annulling the order of February 22, 1974 issued by
respondent City Fiscal denying the motion to dismiss filed by petitioner.
The complaint against petitioner is dismissed. The restraining order is
hereby made permanent. Let a copy of this decision be spread on the
record of private respondents Martin Vera Cruz, Andres Bersales, Pablito
Pielago, Glicerio Carpio, Santiago Eisma and Leonardo Zulueta. This
decision is without prejudice to a bona fide investigation of the charges
against petitioner, Judge Willelmo C. Fortun, who has since then been
appointed to the Court of First Instance of Lingayen, Branch I. Let a copy of
this decision be furnished the Ministry of Justice and the Tanodbayan Costs
against respondents.
CARMEN PLANAS, Petitioner, v. JOSE GIL, Commissioner of Civil Service,
Respondent.

Juan Sumulong, Vicente Sotto, Godofredo Reyes, Wenceslao Q. Vinzons,
Lorenzo Sumulong and Jose de Leon for Petitioner.
LAUREL, J.:

This is an original action of prohibition instituted in this court by which the
petitioner seeks to enjoin the respondent Commissioner of Civil Service
from conducting the investigation ordered by authority of the President of
the Philippines. The case arose as a result of the publication in one of the
local dailies of a statement in which the petitioner, then and now a
member of the municipal board of the City of Manila, criticized the acts of
certain government officials in connection with the general election for
Assemblymen held on November 8, 1938. The statement as published in
the issue of La Vanguardia of November 17, 1938, is translated as
follows:jgc:chanrobles.com.ph

"All opposition efforts in the country are useless just as all movement
toward the unification of the opposition as long as in the opposition group
there are people who present their candidacies and then speculate on
these candidacies, offering them to the highest bidder. In Manila, the
opposition should have won the November 8 elections, but lost instead
because of a disastrous division due to people who commercialized their
candidacies.

"The Constitution prohibits the reelection of the President precisely so that
the President may devote all his time to the administration of public affairs
for the welfare of the people, but the President was the first to play
politics, publicly expressing his preference for candidates of his liking; and
with the President all other officials of the government also moved, taking
part in electoral campaigns.

"With the government machinery feverishly functioning to flatten the
opposition and prevent candidates supported by the people from going to
the National Assembly, and with frauds and violations of all rules of the
civil service to push to victory the candidates of the Nacionalista Party and
the administration. all constructive opposition in the country is useless. In
past elections, all the municipal an l city mayors have been mobilized to
insure the victory of the candidates of the administration, depriving the
people of their right to vote for the candidates of their own choosing.

"Even members of the cabinet moved, one of them, the Hon. Eulogio
Rodriguez going to the extent of speaking at meetings in the Province of
Rizal to counteract the avalanche, of votes for the opposition, instead of
staying in his office in the government. The opposition is struggling within
the law, but the party in power uses means that are not worthy of
gentlemen in order that it may predominate in the government forever;
never has it tried to fight fairly.

"It may be said that the President of the United States is also making
electoral campaigns, but the situation in the United States is different.
There the President is allowed to run for reelection while in the Philippines
the Constitution wisely provides against the reelection of the President. It
is reasonable to believe that the President i8 from this moment paving the
way for his reelection. It is to be feared that the new National Assembly
will change this wise provision of our Constitution to permit the reelection
of President Manuel L. Quezon."cralaw virtua1aw library

On November 18, 1938, the day following the publication of the foregoing
statement, the petitioner received a letter, Annex A, signed as follows: "By
authority of the President: Jorge B. Vargas, Secretary to the President," in
which letter the statement is quoted in full and the petitioner is informed
thus:jgc:chanrobles.com.ph

"In the above statement, you appear to make the following charges: (1)
That the President of the Philippines has violated the Constitution in that
he has taken part in politics, expressing his preference for the candidates
of the Nacionalista Party; (2) That the whole government machinery has
been put in action to prevent the election to the National Assembly of the
candidates of the people; (3) That the candidates of the Nacionalista Party
and of the administration have won the election through frauds and
violations of the civil service rules; (4) That the administration does not
permit the people to freely elect the candidates of their choice.

"You are hereby directed to appear before the Commissioner of Civil
Service, either alone or accompanied by counsel, at 9 oclock a. m., on
November the 22nd, to prove the statements made by you. Failure to
sustain your charges or to prove that they have been made in, good faith
will be considered sufficient cause for your suspension or removal from
office."cralaw virtua1aw library

At the appointed time, the petitioner, accompanied by her counsel,
appeared at the office of the respondent and delivered to him a letter,
Annex B, in which she voiced objection to the authority of the respondent
to conduct the investigation. The respondent Commissioner did not desist
from proceeding with the investigation, but announced before adjourning
the hearing of November 22nd that he would decide the question raised as
to his jurisdiction on November 26, 1938. It was at this state of the
investigation that the petitioner filed in this court her original petition for
prohibition of November 25, 1938, in which she at the same time prayed
for the issuance of a writ of preliminary injunction enjoining the
respondent commissioner from continuing with the investigation. The
petition for the issuance of a writ of preliminary injunction was denied by
resolution of this court dated November 25,1938. The next day the
petitioner requested the respondent, in writing (Annex D), to refrain from
making any ruling on the question of his jurisdiction to investigate the
petitioner and to abstain from taking any further step in connection with
said investigation until the jurisdictional issue could be finally passed upon
by this court. On the same day, the request of the petitioner was denied
and the respondent ruled that he had jurisdiction to proceed with the
investigation (Annex E.) The respondent also notified the petitioner to
appear before him on Saturday, December 3, 1938, and to testify in her
behalf and produce such other evidence as she might desire to present in
support of the charges contained in her statement of November 17, 1938.
The original petition of November 25th was amended by another of
December 2nd. The amendent was allowed by this court. The Solicitor-
General filed his amended answer accordingly.

Petitioner contends in her amended petition:jgc:chanrobles.com.ph

"(a) That the respondent is absolutely without jurisdiction to investigate
petitioner with a view to her suspension or removal in connection with her
statement of November 17th;

"(b) That the said investigation with a view to petitioners suspension or
removal is against Article VII, sec. 11 (1) of the Constitution of the
Philippines and is not warranted by any statutory provision;

"(c) That even under the statutes in force before the approval of the
Constitution of the Philippines, Petitioner, as Councilor of the City of
Manila, cannot be investigated administratively with a view to her
suspension or removal except for acts or conduct connected with the
discharge of her official functions;

"(d) That petitioner, as an elective official, is accountable for her political
acts to her constituency alone, unless such acts constitute offenses
punishable under our penal laws, and not to executive officials belonging
to a party opposed to that to which petitioner is affiliated;"

(e) That petitioners statement of November 17th made by her as a private
citizen and in the exercise of her right to discuss freely political questions
cannot properly be the subject of an administrative investigation had with
a view to her suspension or removal, and is only cognizable by our courts
of justice in case the contents of said statement infringe any provision of
our Penal Code;

"(f) That if petitioners statement of November 17th, as asserted in the
Vargas letter of November 21st Annex C, constitute sedition or any other
criminal offense in that said statement tends to create general discontent,
and hatred among the people against their government, to make them
lose faith in the effectiveness of lawful processes to secure a change in the
control of the government, and to present the next National Assembly as
an illegal body, constituted by men who have been elected through
wholesale frauds and violations of the civil service rules, then petitioners
responsibility is a matter that should be heard and decided by the
competent courts in a trial publicly and impartially conducted, and should
not be the subject of an administrative investigation with a view to
suspension or removal held behind closed doors, with the power of final
decision resting in the hands of the very officials imputing seditious or
other criminal utterances to the petitioner;

"(g) That the authority sought to be conferred on respondent by means of
the two letters Annexes A and C both signed By authority of the President:
Jorge B. Vargas, Secretary. to the President is without any force or effect,
since the powers and prerogatives vested in the President of the
Philippines by our Constitution and by our laws can be exercised by the
President alone, and cannot be delegated to Mr. Jorge B. Vargas or to any
other person;

"(h) That the proposed investigation with a view to petitioners suspension
or removal by this Honorable Court, would constitute an exercise of
arbitrary, inquisitorial, an- lawful, and oppressive powers on the part of
respondent, tending to the suppression of the constitutional right of
petitioner, as a citizen, to express freely and without fear of political
persecution her honest opinions concerning the policies and political
conduct of government officials."cralaw virtua1aw library

Petitioner prays:jgc:chanrobles.com.ph

"(1) That a writ of preliminary injunction be forthwith issued directing the
respondent Commissioner of Civil Service to desist from the investigation
sought to be conducted by him of petitioner, with a view to her suspension
or removal, in connection with her statement published November 17th,
until further orders of this Honorable Court;

"(2) That upon due hearing the respondent be permanently prohibited
from proceeding further in connection with said investigation;

"(3) That the orders contained in the two letters of Mr. Jorge B. Vargas
(Annexes A and C) and the respondents resolution dated November 26,
1938 (Annex E), under which respondent seeks to undertake the
investigation 80 many times referred to herein, be declared arbitrary and
unconstitutional, and therefore without any force or effect;

"(4) For costs of the petitioner and for such other remedy as to this
Honorable Court may seem just and equitable."cralaw virtua1aw library

Upon the other hand, the Solicitor-General contends in his amended
answer:chanrob1es virtual 1aw library

(a) That respondent not only has jurisdiction but is in duty bound to
investigate the charges contained in the petitioners statement published
on November 17, 1938, by virtue of and pursuant to the order of His
Excellency, the President of the Philippines (par. 3);

(b) That the power to order an investigation is vested in the President of
the Philippines by section 11 (1) of Article VII of the Constitution and
section 64 (c) of the Revised Administrative Code (Id.);

(c) That the question of whether or not the good of the public service
requires the investigation in question is a matter on which the opinion of
the Chief Executive is Conclusive and not subject to review by the courts
(par. 4, [b]);

(d) That an administrative investigation of any act or conduct of any person
in the government service is independent and exclusive of any judicial
action that the interested parties may institute arising from the same act
or conduct (par. 4, [c]);

(e) That petitioners theory that an elected provincial or municipal official
is accountable to his or her constituency alone and is not subject to any
administrative investigation but only to a criminal prosecution in court, has
no basis either in law or in precedent (par. 5, [a]);

(f) That such investigation is neither arbitrary nor unlawful nor inquisitorial
because sanctioned by the Constitution and statutory provisions (par. 5,
[b]);

(g) That the petition does not state a cause of action nor does it appear
that petitioner has suffered any grievance that calls for the courts
intervention, for it is not alleged that petitioner has been removed or
suspended from office or that she has in any way been deprived of any civil
or political right (par. 7, [a]);

(h) That the present action is premature and that there is no justification
for the court to entertain the same (par 9); and

(i) That this court has no jurisdiction over the case under the doctrine of
separation of powers (par. 10).

The Solicitor-General, under the last paragraph (par. 10) of his amended
answer, raises the question of jurisdiction of this court over the acts of the
Chief Executive. He contends that "under the separation of powers marked
by the Constitution, the court has no jurisdictions to review the orders of
the Chief Executive, evidenced by Annex A and Annex C of the petition,
which are of purely administrative character." Reliance is had on the
previous decisions of this court: Severino v. Governor-General ([1910], 16
Phil., 366); Abueva v. Wood ([1924], 45 Phil., 612); and Alejandrino v.
Quezon ([1924], 46 Phil., 83). Although this is the last point raised by the
Government in its answer, it should, for reasons that are apparent, be first
to be considered. If this court does not have jurisdiction to entertain these
proceedings, then, the same should be dismissed as a matter of course;
otherwise, the merits of the controversy should be passed upon and
determined.

It must be conceded that the acts of the Chief Executive performed within
the limits of his jurisdiction are his official acts and courts will neither
direct nor restrain executive action in such cases. The rule is non-
interference. But from this legal premise, it does not necessarily follow
that we are precluded from making an inquiry into the validity or
constitutionality of his acts when these are properly challenged in an
appropriate legal proceeding. The classical separation of governmental
powers, whether viewed in the light of the political philosophy of Aristotle,
Locke, or contesquieu, or of the postulations of Mabini, Madison, or
Jefferson, is a relative theory of government. There is more truism and
actuality in interdependence than in independence and separation of
powers, for as observed by Justice Holmes in a case of Philippine origin, we
cannot lay down "with mathematical precision and divide the branches
into watertight compartments" not only because "the great ordinances of
the Constitution do not establish and divide fields of black and white" but
also because "even the more specific of them are found to terminate in a
penumbra shading gradually from one extreme to the other." (Springer vs
Government [1928], 277 U. S., 189; 72 Law. ed., 845, 852.) As far as the
judicially is concerned, while it holds neither the sword nor the purse" it is
by constitutional placement the organ called upon to allocate
constitutional boundaries, and to the Supreme court is entrusted expressly
or by necessary implication the obligation of determining in appropriate
cases the constitutionality or validity of any treaty, law, ordinance, or
executive order or regulation. (Sec. 2 [1], Art. VIII, Constitution of the
Philippines.) In this sense and to this extent, the judiciary restrains the
other departments of the government and this result is one of the
necessary corollaries of the "system of checks and balances" of the
government established.

In the present case, the President is not a party to the proceeding. He is
neither compelled nor restrained to act in a particular way. The
Commissioner of Civil Service is the party respondent and the theory is
advanced by the Government that because an investigation undertaken by
him is directed by authority of the President of the Philippines, this court
has no jurisdiction over the present proceedings instituted by the
petitioner, Carmen Planas. The argument is farfetched. A mere plea that a
subordinate officer of the government is acting under orders from the
Chief Executive may be an important averment, but is neither decisive nor
conclusive upon this court. Like the dignity of his high office, the relative
immunity of the Chief Executive from judicial interference is not in the
nature of a sovereign passport for all the subordinate official and
employees of the executive Department to the extent that at the mere
invocation of the authority that it purports the jurisdiction of this court to
inquire into the validity or legality of an executive order is necessarily
abated or suspended. The facts in Severino v. Governor-General, supra,
Abueva v. Wood, supra, and Alejandrino v. Quezon, supra, are different,
and the doctrines laid down therein must be confined to the facts and legal
environment involved and whatever general observations night have been
made in elaboration of the views therein expressed but which are not
essential to the determination of the issues presented are mere abiter
dicta.

While generally, prohibition as an extraordinary legal writ will not issue to
restrain or control the performance of other judicial or quasi-judicial
functions (50 C. J., 658), its issuance and enforcement are regulated by
statute and in this jurisdiction it may issue to any inferior tribunal,
corporation, board, or person, whether exercising functions judicial or
ministerial, whose acts are without or in excess of jurisdiction. (Secs. 516
and 226, Code of Civil Procedure.) The terms "judicial" and "ministerial"
used with reference to "functions" in the statute are undoubtedly
comprehensive and include the challenged investigation by the respondent
commissioner of Civil Service, which investigation if unauthorized and is
violative of the Constitution as contended is a fortiori without or in excess
of jurisdiction. The statutory rule in this jurisdiction is that the writ of
prohibition is not confined exclusively to courts or tribunals to keep them
within the limits of their own jurisdiction and to prevent them from
encroaching upon the jurisdiction of other tribunals, but will issue, in
appropriate cases, to an officer or person whose acts are without or in
excess of his authority. Not infrequently, "the writ is granted, where it is
necessary for the orderly administration of justice, or to prevent the use of
the strong arm of the law in an oppressive or vindictive manner, or a
multiplicity of actions." (Dimayuga and Fajardo v. Fernandez [1922], 43
Phil., 304, 307; Aglipay v. Ruiz [1937], 35 Off. Gaz., 2164.) This court,
therefore, has jurisdiction over the instant proceedings and will
accordingly proceed to determine the merits of, the present controversy.

As is seen from the foregoing relation of facts various legal questions are
propounded. Reducing, however, the issues to what is considered is the
fundamental legal proposition presented, we are asked in these
proceedings to prohibit the respondent Commissioner of Civil Service from
conducting or continuing with the investigation ordered by authority of the
President of the Philippines. It is not denied that the President did
authorize the issuance of the order, but it is contended "that the said
investigation with a view to petitioners suspension or removal is against
Article VII, sec. 11 (1) of the Constitution of the Philippines and is not
warranted by any statutory provision." (Par. XV [b], amended petition.) It,
therefore, becomes necessary to inquire into the constitutional and legal
authority of the President to order the investigation which has given rise to
the present controversy.

A perusal of our Constitution will show that extensive authority over the
public service is granted the President of the Philippines. Article VII of the
Constitution begins in its section 1 with the declaration that "The Executive
power shall be vested in a President of the Philippines." All executive
authority is thus vested in him, and upon him devolves the constitutional
duty of seeing that the laws are "faithfully executed." (Art. VII, sec. 11,
subsec. 1, last clause.) In the fulfillment of this duty which he cannot
evade, he is granted specific and express powers and functions. (Art. VII,
sec. 11.) In addition to these specific and express powers and functions, he
may also exercise those necessarily implied and included in them. (Myers
v. United States [1926], 272 U. S., 52; 71 Law. ed., 160; 47 Sup. Ct. Rep., 21;
Willoughby, Constitution of the United States, sec. 953, citing Tafts Our
Chief Magistrate and His Powers, p. 139.) The National Assembly may not
enact laws which either expressly or impliedly diminish the authority
conferred upon the President of the Constitution. (Cf. Concepcion v.
Paredes [1921], 42 Phil., 599.) The Constitution provides that the President
"shall have control of all the executive departments, bureaus, and offices"
(Art. VII, sec. 11 [1], first clause) and shall "exercise general supervision
over all local governments as may be provided by law" (Ibid, second
clause). This power of control and supervision is an important
constitutional grant. The President in the exercise of the executive power
under the Constitution may act through the heads of the executive
departments. The heads of the executive departments are his authorized
assistants and agents in the performance of his executive duties, and their
official acts, promulgated in the regular course of business, are
presumptively his acts. (Runkle v. United States [1887], 122 U. S., 543; 30
Law. ed., 1167; 7 Sup. Ct. Rep., 1141. See also U. S. v. Eliason [1839], 16
Pet., 291; 10 Law. ed., 968; Jones v. U. S. [1890], 137 U. S., 202; 34 Law.
ed., 691; 11 Sup. Ct., Rep., 80; Wolsey v. Chapman [1880], 101 U. S., 755;
25 Law. ed., 915; Wilcox v. Jackson [1836], 13 Pet., 498; 10 Law. ed., 264.)
The power of removal which the President may exercise directly and the
practical necessities of efficient government brought about by
administrative centralization easily make the President the head of the
administration. (Willoughby, Constitution of the United States, Vol. II, 2nd
ed., sec. 959.) Independently of any statutory provision authorizing the
President to conduct an investigation of the nature involved in this
proceeding, and in view of the nature and character of the executive
authority with which the President of the Philippines is invested, the
constitutional grant to him of power to exercise general supervision over
all local governments and to take care that the laws be faithfully executed
must be construed to authorize him to order an investigation of the act or
conduct of the petitioner herein. Supervision is not a meaningless thing. It
is an active power. It is certainly not without limitation, but it at least
implies authority to inquire into facts and conditions in order to render the
power real and effective. If supervision is to be conscientious and rational,
and not automatic and brutal, it must be founded upon a knowledge of
actual facts and conditions disclosed after careful study and investigation.

Viewed from the totality of powers conferred upon the Chief Executive by
our Constitution, we should be reluctant to yield to the proposition that
the President of the Philippines who is endowed with broad and
extraordinary powers by our Constitution, and who is expected to govern
with a firm and steady hand without vexatious or embarrassing
interference and much less dictation from any source, is yet devoid of the
power to order the investigation of the petitioner in this case. We should
avoid that result.

Our attention has been directed to the fact that, with reference to local
governments, the Constitution speaks of general supervision which is
distinct from the control given to the President over executive
departments, bureaus and offices. This is correct. But, aside from the fact
that this distinction is not important insofar as the power of the President
to order the investigation is concerned, as hereinabove indicated, the
deliberations of the Constitutional Convention show. that the grant of the
supervisory authority to Chief Executive in this regard was in the nature of
a compromise resulting from the conflict of views in that body, mainly
between the historical view which recognizes the right of local self-
government (People ex rel. Le Roy v. Hurlbut [1871], 24 Mich., 44) and the
legal theory which sanctions the possession by the state of absolute
control over local governments (Booten v. Pinson, L. R. A. [N. S., 1917-A],
1244; 77 W. Va., 412 [1915]) The result was the recognition of the power
of supervision and all its implications and the rejection of what otherwise
would be an imperium in imperio to the detriment of a strong national
government.

Apart from the constitutional aspect, we find that section 64 of the
Administrative Code of 1917 provides as follows:jgc:chanrobles.com.ph

"In addition to his general supervisory authority, the Governor-General
(President) shall have such specific powers and duties as are expressly
conferred or imposed on him by law and also, in particular, the powers and
duties set forth in this chapter.

"Among such special powers and duties shall be:chanrob1es virtual 1aw
library
x x x

"(c) To order, when in his opinion the good of the public service so
requires, an investigation of any action or the conduct of any person in the
Government service, and in connection therewith to designate the official,
committee, or person by whom such investigation shall be
conducted."cralaw virtua1aw library

This provision of the law, in existence before the taking effect of the
Constitution, still subsists. It is not inconsistent with the Constitution and
has not been abrogated or repealed by the National Assembly. (See sec. 2,
Art. XV, Constitution.)

It is next urged that assuming the power of the President to order the
investigation, that investigation should be in accordance with law; that the
petitioner as an elective official can be proceeded against administratively
only on the grounds specifically stated in the law, namely, disloyalty,
dishonesty, oppression, misconduct, or maladministration in office; and
that as an elective official she is responsible for her political acts to her
constituency alone. At the risk of repetition, it should be observed that in
the letter addressed by Secretary Vargas, by authority of the President, to
Miss Planas, the latter is informed as follows: "In the above statement, you
appear to make the following charges: (1) That the President of the
Philippines has violated the Constitution in that he has taken part in
politics, expressing his preference for the candidates of the Nacionalista
Party; (2) That the whole government machinery has been put in action to
prevent the election to the National Assembly of the candidates of the
people; (3) That the candidates of the Nacionalista Party and of the
administration have won the election through frauds and violations of the
civil service rules; (4) That the administration does not permit the people
to freely elect the candidates of their choice" ; and in that letter she is
directed to appear before the Commissioner of Civil service to prove the
statement made by her. In the letter designating the respondent
commissioner as investigator of the petitioner, it is stated: "The charges
contained in the foregoing statement tend to create general discontent,
and hatred among the people against their government, to make them
lose faith in the effectiveness of lawful processes to secure a change in the
control of the government, and to present the next National Assembly as
an illegal body, constituted by men who have been elected through
wholesale frauds and violations of the civil service rules. The interest of the
public service requires that these charges be investigated, so that, if found
to be true, appropriate action may be taken against the parties alleged to
have been guilty of illegal acts, and if found untrue and made without
justifiable motives, the party making them may be proceeded against in
accordance with section 2440, in connection, with section, 2078, of the
Revised Administrative Code." Assuming that this is not one of the grounds
provided by law for which the petitioner may be investigated
administratively (sec. 2078, Rev. Adm. Code), there is weight in the
argument that the investigation would still be in order if for no other
purpose than to cause a full and honest disclosure of all the facts so that, if
found proper and justified, appropriate action may be taken against the
parties alleged to have been guilty of the illegal acts charged. This is
essential to render effective the authority vested in the President by the
Constitution to "take care that the laws be faithfully executed." (Sec. 11,
par. 1, Art. VII.) The enforcement of the law and the maintenance of peace
and order are primarily an executive obligation. The declaration that the
President should "take care that the laws be faithfully executed" is more
an imposition of an obligation than a conferment of power. His oath
requires him to "faithfully and conscientiously fulfill" his duties as
President, "preserve and defend" the Constitution and "execute" the law.
This duty of the Executive to see that the laws be faithfully executed is not
limited to the enforcement of legislative acts or the express terms of the
Constitution but also includes the due enforcement of rights, duties,
obligations, prerogatives and immunities growing out of the Constitution
itself and of the protection implied by the nature of the government under
the Constitution. (Cunningham v. Neagle, 135 U. S., 1; 34 Law. ed., 55.)

Petitioner contends that she has not abused the right of free speech, and
in this connection directs our attention to the provisions of section 1 (pars.
1 and 8) of the Bill of Rights. She also urges that "in the supposition that
the statement in question is libelous . . ., the corresponding criminal or civil
action should be brought in the courts of justice at the initiative, not of the
government, but of the individuals claiming to have been defamed by the
statement." (P. 11, printed memorandum of the petitioner.) We are
vigilantly alive to the necessity of maintaining and protecting the
constitutional guaranty of freedom of speech and of the press, no less than
the right of assembly and petition which, according to Stimson (The
American Constitution As It Protects Private Rights, 152), is its origin rather
than its derivation. We do not forget that when repression of political and
religious discussion became intense when censorship of the press was
resorted to most vigorously by the Long Parliament in England John
Milton, that great historiographer of Cromwell, in his Areopagitica,
denounced the suppression of truth and appealed for "the liberty to know,
to utter, and to argue freely according to conscience, above all liberties"
("Areopagitica", 73, 74, Amblers Reprint). And this court has had occasion
to vindicate this right, and it is now a settled doctrine that the official
conduct and the policies of public officials can be criticized (U. S. v. Bustos,
37 Phil., 731), and that criticism of the constitution and legislation, of
government measures or policies cannot be suppressed or prevented (U. S.
v. Perfecto, 43 Phil., 225), unless the intention be to incite rebellion and
civil war (Cooley, Constitutional Limitations, 614). In the present case,
however, the petitioner is not denied the right, nor is she being
investigated because she had exercised that right. She has a perfect right
to criticize the Government, its administration, its policies and officials, but
she may not, on the plea of freedom of speech and of the press, impute
violations of law and the commission of frauds and thereafter fold her
arms and decline to face an investigation conducted to elicit the truth or
falsity of the charges formulated by her. Otherwise, the guarantee which,
in the language of Wendell Phillips, is "at once the instrument, and the
guarantee, and the bright consummate flower of all liberty" would
degenerate into an unbridled license, and render the Government
powerless to act.

The petition is hereby dismissed, with costs against the petitioner. So
ordered.

YU CONG ENG et al. v. TRINIDAD, Collector of Internal Revenue, et al.
This case comes here on a writ of certiorari to review a decision of the
Supreme Court of the Philippine Islands denying an original petition for
prohibition against the enforcement by criminal prosecution of Act No.
2972 of the Philippine Legislature, known as the Chinese Bookkeeping Act,
on the ground of its invalidity. The petitioner, Yu Cong Eng, was charged by
information in the court of first instance of Manila, with its violation. He
was arrested, his books were seized, and the trial was about to proceed,
when he and the other petitioner, Co Liam, on their own behalf, and on
behalf of all the other Chinese merchants in the Philippines, filed the
petition against the fiscal, or prosecuting attorney of Manila, and the
collector of internal revenue engaged in the prosecution, and against the
judge presiding.
By the Code of Civil Procedure of the Philippine Islands, 516, the
Philippine Supreme Court is granted concurrent jurisdiction in prohibition
with courts of first instance over inferior tribunals or persons, and original
jurisdiction over courts of first instance, when such courts are exercising
functions without or in excess of their jurisdiction. It has been held by that
court that the question of the validity of a criminal statute must usually be
raised by a defendant in the trial court and be carried regularly in review to
the Supreme Court. Cadwallader-Gibson Lumber Company v. Del Rosario,
26 Philippine Reports, 192. But in this case, where a new act seriously
affected numerous persons and extensive property rights, and was likely to
cause a multiplicity of actions, the Supreme Court exercised its discretion
to bring the issue of the act's validity promptly before it and decide it in
the interest of the orderly administration of justice. The court relied by
analogy upon the cases of Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L.
Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764, Truax v. Raich, 239 U. S.
33, 36 S. Ct. 7, 60 L. Ed. 131, L. R. A. 1916D, 545, Ann. Cas. 1917B, 283, and
Wilson v. New, 243 U. S. 332, 37 S. Ct. 298, 61 L. Ed. 755, L. R. A. 1917E,
938, Ann. Cas. 1918A, 1024. Although objection to the jurisdiction was
raised by demurrer to the petition, this is now disclaimed on behalf of the
respondents, and both parties ask a decision on the merits. In view of
broad powers in prohibition granted to that court under the Island Code,
we acquiesce in the desire of the parties.
Act No. 2972, the validity of which is attacked, was passed by the
Philippine Legislature, and approved February 21, 1921. It reads as follows:
'No. 2972. An act to provide in what languages account books shall be
kept, and to establish penalties for its violation.
'Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the same:
'Section 1. It shall be unlawful for any person, company, or partnership or
corporation engaged in commerce, industry or any other activity for the
purpose of profit in the Philippine Islands, in accordance with existing law,
to keep its account books in any language other than English, Spanish or
any local dialect.
'Sec. 2. Any person violating the provisions of this act shall, upon
conviction, be punished by a fine of not more than ten thousand pesos, or
by imprisonment for not more than two years, or both.
'Sec. 3. This act shall take effect on November 1st, nineteen hundred and
twenty-one.'
This was amended as to its date by a subsequent act and it did not take
effect until January 1, 1923. Various efforts were made to repeal the act or
amend it, but they were defeated.
The petition, after setting out the prosecution in the court of first instance,
and the text of the act, avers that the petitioner Yu Cong Eng is a chinese
merchant engaged in the wholesale lumber business in Manila; that he
neither reads, writes nor understands the English or Spanish language or
any local dialect; that he keeps the books of account of his business in
Chinese characters; that by reason of his ignorance of the English and
Spanish languages and of all local dialects he is unable to keep his books in
any other language than his own; that, even if he should employ a
bookkeeper capable of keeping his books in the English or Spanish
language, he would have no means of personally revising or ascertaining
the contents or correctness of the books thus kept; that the employment
of such a bookkeeper, unless he should be a linguist, would entail as a
necessary consequence the employment of a translator or interpreter
familiar with the Chinese language and the language or dialect in which
such books might be kept, in order to enable the petitioner to ascertain by
hearsay the contents thereof; that he would be completely at the mercy of
such employees, who, if dishonest, might cheat and defraud him of the
proceeds of his business, and involve him in criminal or civil liability in its
conduct; that under the provisions of the act he is prohibited from even
keeping a duplicate set of accounts in his own language, and would, in the
event of the enforcement of the law, be compelled to remain in total
ignorance of the status of his business; and that the enforcement of the
act would drive the petitioner and many other Chinese merchants in the
Philippines who do 60 per cent. of the business of the Islands and who are
in like circumstance, out of business.
The petition avers that the other petitioner in this case, Co Liam, is a
Chinese person and conducts a small general merchandise business in
Manila, commonly known in the Philippines as a Chinese tienda; that he
carries a stock of goods of about 10,000 pesos, or $5,000; that his sales
taxes amount to from 40 to 60 pesos per quarter; that he neither reads,
writes, nor understands the English or Spanish language or any local
dialect; that he keeps books of account of his small business in Chinese,
the only language known to him, without the assistance of a bookkeeper;
that he has been losing money for some time in the operation of his
business, but that even in prosperous times his profits could never be
sufficient to justify the employment of a Filipino bookkeeper, and that
without the opportunity to keep Chinese books, be would be kept
completely ignorant of the changing condition of his business, were he
compelled to keep his books in English, Spanish, or a local dialect; and that
the enforcement of the act would drive him and all the small merchants or
tienda keepers in the Islands who are Chinese out of business.
The petitioners aver that the act, if enforced, will deprive the petitioners,
and the 12,000 Chinese merchants whom they represent, of their liberty
and property without due process of law, and deny them the equal
protection of the laws, in violation of the Philippine Autonomy Act of
Congress of August 29, 1916, c. 416, 3, 39 Stat. 546 (Comp. St. 3810).
An amendment to the petition set up the rights of the petitioners under
the treaty now in force between the United States and China, alleging that
under it the petitioners are entitled to the same rights, privileges, and
immunities as the citizens and subjects of Great Britain and Spain, and that
the treaty has the force and effect of a law of Congress, which this law
violates.
An answer was filed by the fiscal, which is a general denial of the
averments of the petition as to the effect of the law. He avers that the law
is valid and necessary, and is only the exercise of proper legislative power,
because the government of the Philippine Islands depends upon the taxes
and imposts which it may collect in order to carry out its functions, and the
determination of whether the mercantile operations of the merchants are
or are not subject to taxation, as well as the fixing of its amount, cannot
and ought not to be left to the mercy of those who are to bear it; that due
to the inability of the officials of the internal revenue to revise and check
up properly the correctness of the books of account which the Chinese
merchants keep in their own language, the public treasury loses every year
very large sums.
Evidence was taken on the issues made. A majority of the Supreme Court
held that, if the act were construed and enforced literally, it would
probably be invalid, but by giving it an interpretation different from the
usual meaning of the words employed it could stand. Two of the justices
dissented, on the ground that the court had exceeded its powers and by
legislation made it a different act.
There are two tax laws from which a substantial part of the revenue of the
Islands is derived. There is a sales tax of 1 1/2 per cent. on the gross sales
of businesses and occupations for which a quarterly return is required.
Administrative Code, 1453, et seq., Act 3065. There is also an income tax.
The annual revenue accruing from the sales tax is roughly 10,000,000
pesos, and that from the income tax about 2,000,000 pesos.
Another statute is the so-called Code of Commerce, brought over from the
Spanish Code, the thirty-third article of which provides that all merchants
shall keep a book of inventories and balances, a day book, a ledger, a copy
book of telegrams, letters, etc., and such other books as may be required
by special laws. Under the provisions of that Code and the internal revenue
law, the colector of internal revenue is authorized to require the keeping
of daily records of sales, and makes regulations prescribing the manner in
which the proper books, invoices and other papers should be kept and
entries made therein by the persons subject to the sales tax. R. 1164, Act
No. 2339, 5, 6; Administrative Code, 1424(j).
Chinese merchants are said to have been in the Philippines even before
the arrival of the Spaniards in 1520. The Chinese written language is an
ancient language, with a literature and with characters quite different from
those used in European languages. There are many different native
dialects in the Philippines. Forty-three is said to be the number; but there
are less than a dozen of these which may be regarded as important-the
Tagalog, the Visayan, with two distinct main dialects, the Ilocano, the Bical,
the Pampangan, the Ibanag, the Pangasananian, and the Moro. Perhaps
from 7 to 10 per cent. of the Filipinos speak Spanish. A great many (how
large the percentage one cannot tell) of the younger people in the Islands
speak English. It is a polygot situation, and presents many difficulties in
government. Comparatively few of the Chinese speak English or Spanish,
or the native dialects, with any facility at all, and less are able to write or to
read either. But with capacity and persistence in trade, by signs and by a
patois, they communicate with the Filipinos and others with whom they do
business, making their calculations with the abacus, an instrument for
mechanical calculation, and keeping their books in Chinese characters in
ink, applied by a brush to strong paper, securely bound. They have a
scientific system of double entry bookkeeping.
There are 85,000 merchants in the Philippines to whom the bookkeeping
law applies. Of these, 71,000 are Filipinos, who may use their own dialects;
1,500 are Americans, or British or Spanish subjects; 500 are of other
foreign nationalities, most of whom know the Spanish or English language.
The remainder, some 12,000 in number, are Chinese. The aggregate
commercial business transacted by these is about 60 per cent. of the total
business done by all the merchants in the Islands. The total amount of
their sales in 1923 was more than 320 millions of pesos, distributed among
3,335 wholesale merchants, of whom 50 did a business of 1,000,000 pesos
each, 150 of 500,000 each, 400 of 100,000 each, and 2,735 of 40,000 each.
There were 8,445 retail merchants, whose annual incomes on the average
would not exceed 500 pesos each. In 1913, certain revenue statistics were
reported by the then collector of internal revenue to the court of first
instance in the case of Young v. Rafferty, 33 Philippine Reports, 556, in
which the validity of an order by the collector requiring the keeping of
certain books by taxpayers in Spanish and English was at issue. The figures
given above are based on this report. The report showed that Chinese
merchants paid about 60 per cent. of the taxes, but this is now in dispute,
and evidence was introduced by the present collector to show that the
proportion of taxes paid by them in 1918 and 1922 was much less, and
that examination of the books of 400 Chinese taxpayers showed a very
considerable loss, probably due to evasion and fraud.
The evidence of the president of the largest company in the Philippine
Islands, an American who has been 21 years in business in the Philippines,
as to the business activities of the Chinese, was accepted by the court
below as reliable. He says that the Chinese system of distribution covers
the Philippine Islands through the medium of middlemen in the principal
centers, and then by the small Chinese storekeepers, throughout the
Islads, extending even to the remotest barrios or small settlements. The
Chinese are the principal distributing factors in the Philippines of imported
goods, and the principal gatherers of goods for exportation in the same
remote places. He said that if they were driven out of business there would
be no other system of distribution available throughout the Islands, for the
reason that there are not Filipino merchants sufficiently numerous, with
resources and experience, to provide a substitute.
The Chinese consul general testified that not more than eight Chinese
merchants in the Islands can read or write proficiently in any other
language than Chinese, and that the great majority of them could not
comply with the act. The merchants' establishments are made up of young
Chinese persons, who come from China, begin at the beginning, and are
promoted from time to time to become the head of the business. The
books are always kept in the Chinese language, and each Chinese
establishment is completely separated from the native mode of living.
Apparently there has always been some complaint in respect to the
avoidance of taxes by the Chinese, because of the difficulty of determining
what their sales tax should be. There has always been a sales tax in the
Philippines. It is a method of taxation to which the people are used. Dr.
Pardo de Tavera, the Philippine librarian and historian, testified in this case
that efforts to enforce such a law as this in the Spanish times against the
Chinese failed and became a dead letter. Governor General Harrison made
a general recommendation looking to a law requiring the Chinese to keep
books in other than Chinese language, so that their business might be
investigated, saying that, until it was done, taxes would be evaded. Since
the passage of the law in 1921, as already said, its enforcement has been
postponed. Governor General Wood has sought to have the law repealed
or changed in such a way that exceptions might be made to it, or that the
books of the Chinese should be kept on stamped paper with the pages
registered, for the purpose of making it difficult for the Chinese taxpayer to
change the records of his business. Protests from the Chinese government,
from members of the insular committee of the House of Representatives,
from Chambers of Commerce in the United States and elsewhere, were
brought to the attention of the Philippine Legislature, and the repeal or
modification of the law came up for discussion, but all proposed changes
were defeated. The great weight of the evidence sustains the view that the
enforcement by criminal punishment of an inhibition against the keeping
of any Chinese books of account by Chinese merchants in the Islands
would seriously embarrass all of them and would drive out of business a
great number.
Nor is there any doubt that the act as a fiscal measure was chiefly directed
against the Chinese merchants. The discussion over its repeal in the
Philippine Legislature leaves no doubt on this point. So far as the other
merchants in the Islands are concerned, its results would be negligible and
would operate without especial burden on other classes of foreign
residents. The Supreme Court in its opinion in this case refers to the act as
popularly known as the Chinese Bookkeeping Act.
Evidence was introduced on behalf of the defendants to show the difficulty
of securing competent Chinese bookkeepers who could act as inspectors of
Chinese books for the tax collecting authorities, and while the failure of the
government to employ a sufficient number was charged to the fact that
sufficient salaries were not paid to secure them, it is undoubtedly true that
a lack of proper and reliable Chinese accountants presents a real difficulty
in the examination of Chinese merchants' books.
The majority of the Philippine court in its opinion, after quoting a number
of authorities showing the duty of a court in determining whether a law is
unconstitutional or not, first to give every intendment possible to its
validity, and second to reach a reasonable construction by which it may be
preserved, said:
'We come to the last question suggested, a construction of Act No. 2972
which allows the court legally to approve it.
'A literal application of the law would make it unlawful for any Chinese
merchant to keep his account books in any language other than English,
Spanish, or a local dialect. The petitioners say the law is susceptible of that
interpretation. But such interpretation might, and probably would, cause
us to hold the law unconstitutional.
'A second interpretation is that the Chinese merchant, while permitted to
keep his books of account in Chinese, must also keep another set of books
in either English, Spanish, or a native dialect. The respondents claim the
law is susceptible of such construction. It occurs to us, however, that this
construction might prove as unsatisfactory as the first. Fraud is possible in
any language. As approximation to governmental convenience and an
approximation to equality in taxation is the most which may be expected.
'A third construction, which is permissible in view of the history of the
legislation and the wording of the statute, is that the law only intended to
require the keeping of such books as were necessary in order to facilitate
governmental inspection for tax purposes. It has not escaped our notice
that the law does not specify what books shall be kept. It is stated by
competent witnesses that a cash book, a journal, and a ledger are
indispensable books of account for an efficient system of accounting, and
that, in the smaller shops, even simpler entries showing merely the daily
records of sales and record of purchases of merchandise would be
sufficient. The keeping of records of sales, and possibly further records of
purchases, in English, Spanish, or a native dialect, and the filling out of the
necessary forms would serve the purpose of the government while not
being oppressive. Actually, notations in English, Spanish, or a dialect of all
sales in sales books, and of data in other specified forms are insisted upon
by the Bureau of Internal Revenue, although as appears from Exhibit 2, it is
doubtful if all Chinese merchants have complied with these regulations.
The faithful observance of such rules by the Chinese is not far removed
from the offer of co-operation oft made for them by the petitioners of the
'translation of the account books' oft mentioned and explained by the
respondents.
'The law, in speaking of any person, company, partnership or corporation,
makes use of the expression 'its account books.' Does the phrase 'its
account books' mean that all the account books of the person, company,
partnership or corporation must be kept exclusively in English, Spanish, or
any local dialect? The petitioners argue that the law has this meaning. Or
does the phrase 'its account books' mean that the persons, company,
partnership, or corporation shall keep duplicate sets of account books, one
set in Chinese and the other a translation into English, Spanish or any local
dialect? Counsel for the respondents urge this construction of the law
upon the court.
Or does the phrase 'its account books' mean that the person, company,
partnership, or corporation must keep such account books as are
necessary for taxation purposes? This latter interpretation occurs to us as a
reasonable one, and as best safeguarding the rights of the accused.'
The court in effect concludes that what the Legislature meant to do was to
require the keeping of such account books in English, Spanish, or the
Filipino dialects as would be reasonably adapted to the needs of the taxing
officers in preventing and detecting evasion of taxes, and that this might
be determined from the statutes and regulations then in force. What the
court really does is to change the law from one which by its plain terms
forbids the Chinese merchants to keep their account books in any language
except English, Spanish, or the Filipino dialects, and thus forbids them to
keep account books in the Chinese, into a law requiring them to keep
certain undefined books in the permitted languages. This is to change a
penal prohibitive law to a mandatory law of great indefiniteness, to
conform to what the court assumes was, or ought to have been, the
purpose of the Legislature, and which in the change would avoid a conflict
with constitutional restriction.
It would seem to us, from the history of the legislation and the efforts for
its repeal or amendment, that the Philippine Legislature knew the meaning
of the words it used, and intended that the act as passed should be
prohibitory, and should forbid the Chinese merchants from keeping the
account books of their business in Chinese. Had the Legislature intended
only what the Supreme Court has construed it to mean, why should it not
have amended it accordingly? Apparently the Legislature thought the
danger to the revenue was in the secrecy of the Chinese books, and
additional books in the permitted languages would not solve the difficulty.
We fully concede that it is the duty of a court in considering the validity of
an act to give it such reasonable construction as can be reached to bring it
within the fundamental law. But it is very clear that amendment may not
be substituted for construction, and that a court may not exercise
legislative functions to save the law from conflict with constitutional
limitation.
One of the strongest reasons for not making this law a nose of wax, to be
changed from that which the plain language imports, is the fact that it is a
highly penal statute authorizing sentence of one convicted under it to a
fine of not more than 10,000 pesos, or by imprisonment for not more than
two years, or both. If we change it to meet the needs suggested by other
laws and fiscal regulations and by the supposed general purpose of the
legislation, we are creating by construction a vague requirement, and one
objectionable in a criminal statute. We are likely thus to trespass on the
provision of the Bill of Rights that the accused is entitled to demand the
nature and cause of the accusation against him, and to violate the principle
that a statute which requires the doing of an act so indefinitely described
that men must guess at its meaning, violates due process of law. Connally
v. Construction Co., (decided January 4, 1926) 269 U. S. 385, 46 S. Ct. 126,
70 L. Ed. 322; United States v. Cohen Grocery Co., 255 U. S. 81, 41 S. Ct.
298, 65 L. Ed. 516, 14 A. L. R. 1045; International Harvester Co. v. Kentucky,
234 U. S. 216, 34 S. Ct. 853, 58 L. Ed. 1284; United States v. Reese, 92 U. S.
214, 219, 23 L. Ed. 563.
The main objection to the construction given to the act by the court below
is that in making the act indefinitely mandatory instead of broadly
prohibitory it creates a restriction upon its operation to make it valid that
is not in any way suggested by its language. In several cases this court has
pointed out that such strained construction, in order to make a law
conform to a constitutional limitation, cannot be sustained.
In United States v. Reese, 92 U. S. 214, 23 L. Ed. 563, the question for
decision arose on a demurrer to an indictment against inspectors of
municipal election for refusing to receive and count the vote of a colored
man. The power of Congress to forbid such an act was confined under the
Fifteenth Amendment to a refusal to receive such a vote from a colored
man on account of his race, color, or previous condition of servitude, but
the section under which the indictment was brought did not specifically
confine the offense to a refusal for such a reason or to such discrimination,
although in previous sections of the act there was a general purpose
disclosed in the act to enforce the Fifteenth Amendment. The demurrer
was sustained on the ground that the section was invalid.
Chief Justice Waite, in delivering the opinion of the court, said at page 221:
'We are therefore directly called upon to decide whether a penal statute
enacted by Congress, with its limited powers, which is in general language
broad enough to cover wrongful acts without as well as within the
constitutional jurisdiction, can be limited by judicial construction so as to
make it operate only on that which Congress may rightfully prohibit and
punish. For this purpose, we must take these sections of the statute as
they are. We are not able to reject a part which is unconstitutional, and
retain the remainder, because it is not possible to separate that which is
unconstitutional, if there be any such, from that which is not. The
proposed effect is not to be attained by striking out or disregarding words
that are in the section, but by inserting those that are not now there. Each
of the sections must stand as a whole, or fall altogether. The language is
plain. There is no room for construction, unless it be as to the effect of the
Constitution. The question then to be determined is whether we can
introduce words of limitation into a penal statute, so as to make it specific,
when, as expressed, it is general only. It would certainly be dangerous if
the Legislature could set a net large enough to catch all possible offenders,
and leave it to the courts to step inside and say who could be rightfully
detained, and who should be set at large. This would, to some extent,
substitute the judicial for the legislative department of the government.'
And again the Chief Justice said:
'To limit this statute in the manner now asked for would be to make a new
law, not to enforce an old one. This is no part of our duty.'
The same principle was laid down, and this language approved by this
court in the Trade-Mark Cases, 100 U. S. 82, 25 L. Ed. 550, in which, to save
the validity of a general statute providing for trade-marks, the court was
asked to construe the statute to apply only to trade-marks in interstate
commerce. It was held this could not be done. Mr. Justice Miller, speaking
for the court, at page 98, said:
'It has been suggested that, if Congress has power to regulate trade-marks
used in commerce with foreign nations and among the several states,
these statutes shall be held valid in that class of cases, if no further. To this
there are two objections: First, the indictments in these cases do not show
that the trade-marks which are wrongfully used were trade-marks used in
that kind of commerce; secondly, while it may be true that when one part
of a statute is valid and constitutional, and another part is unconstitutional
and void, the court may enforce the valid part where they are distinctly
separable so that each can stand alone, it is not within the judicial province
to give to the words used by Congress a narrower meaning than they are
manifestly intended to bear in order that crimes may be punished which
are not described in language that brings them within the constitutional
power of that body.'
The case of Butts v. Merchants' & Miners' Transportation Co., 230 U. S.
126, 33 S. Ct. 964, 57 L. Ed. 1422, concerned the application of the Civil
Rights Act of March 1, 1875 (Comp. St. 3926-3930), to vessels of the
United States engaged in the coastwise trade. In the Civil Rights Cases, 109
U. S. 3, 3 S. Ct. 18, 27 L. Ed. 835, it was held that the Civil Rights Act of
1875, to protect all citizens in their civil and legal rights, and in accordance
with the terms of which a defendant was indicted for denying the
privileges and accommodations of a theater in a state to a person on
account of her color, was unconstitutional because power to enact and
enforce such legislation in a state was in the state legislature only. The
declaration in the Butts Case was brought to recover penalties for violation
of the act against a corporation engaged in the transportation of
passengers and freight between Boston, Mass., and Norfolk, Va., and the
discrimination occurred on the high seas and in the jurisdiction of the
United States, and not within any state. It was contended that the federal
Civil Rights Act could, therefore, apply in such a case. The court pointed
out the all-inclusive words of the act of Congress and held that they could
not be cut down to include only what was strictly within the federal
jurisdiction. The court said:
'Only by reason of the general words indicative of the intended uniformity
can it be said that there was a purpose to embrace American vessels upon
the high seas, the District of Columbia and the territories. But how can the
manifest purpose to establish an uniform law for the entire jurisdiction of
the United States be converted into a purpose to create a law for only a
small fraction of that jurisdiction? How can the use of general terms
denoting an intention to enact a law which should be applicable alike in all
places within that jurisdiction be said to indicate a purpose to make a law
which should be applicable to a minor part of that jurisdiction and
inapplicable to the major part? Besides, it is not to be forgotten that the
intended law is both penal and criminal'-citing the case of United States v.
Reese, and the Trade-Mark Cases, supra, as well as United States v. Harris,
106 U. S. 629, 642, 1 S. Ct. 601, 27 L. Ed. 290; Baldwin v. Franks, 120 U. S.
678, 685, 7 S. Ct. 656, 763, 30 L. Ed. 766; James v. Bowman, 190 U. S. 127,
140, 23 S. Ct. 678, 47 L. Ed. 979; United States v. Ju Toy, 198 U. S. 253, 262,
25 S. Ct. 644, 49 L. Ed. 1040; Illinois Central Railroad Co. v. McKendree, 203
U. S. 514, 529-530, 27 S. Ct. 153, 51 L. Ed. 298; Karem v. United States, 121
F. 250, 259, 57 C. C. A. 486, 61 L. R. A. 437.
The effect of the authorities we have quoted is clear to the point that we
may not in a criminal statute reduce its generally inclusive terms so as to
limit its application to only that class of cases which it was within the
power of the Legislature to enact, and thus save the statute from
invalidity. What it is proposed to do here is much more radical, for it is to
ignore and hold for naught a plain prohibition of the keeping of account
books in Chinese and insert in the act an affirmative requirement that
account books not definitely determined which are adapted to the needs
of the taxing officials be kept in the permitted languages. This is quite
beyond the judicial power.
The suggestion has been made in argument that we should accept the
construction put upon a statute of the Philippine Islands by their Supreme
Court as we would the construction of a state court in passing upon the
federal constitutionality of a state statute. The analogy is not complete.
The Philippines are within the exclusive jurisdiction of the United States
government, with complete power of legislation in Congress over them,
and when the interpretation of a Philippine statute comes before us for
review, we may, if there be need therefor, re-examine it for ourselves as
the court of last resort on such a question. It is very true that with respect
to questions turning on questions of local law, or those properly affected
by custom inherited from the centuries of Spanish control, we defer much
to the judgment of the Philippine or Porto Rican courts. Cami v. Central
Victoria, Ltd., 268 U. S. 469, 45 S. Ct. 570, 69 L. Ed. 1056; Diaz v. Gonzales,
261 U. S. 102, 43 S. Ct. 286, 67 L. Ed. 550. But on questions of statutory
construction, as of the Philippine Code of Procedure adopted by the United
States Philippine Commission, this court may exercise an independent
judgment. In Philippine Sugar Co. v. Philippine Islands, 247 U. S. 385, at
page 390, 38 S. Ct. 513, 515 (62 L. Ed. 1177), involving the effect of section
285 of that Code, this court said:
'It is also urged that, since the construction of section 285 is a matter of
purely local concern, we should not disturb the decision of the Supreme
Court of the Philippine Islands. This court is always disposed to accept the
construction which the highest court of a territory or possession has placed
upon a local statute. Phoenix Ry. Co. v. Landis, 231 U. S. 578 (34 S. Ct. 179,
58 L. Ed. 377). But that disposition may not be yielded to, where the lower
court has clearly erred. Carrington v. United States, 208 U. S. 1 (28 S. Ct.
203, 52 L. Ed. 367).'
The question of applying American constitutional limitations to a Philippine
or Porto Rican statute, dealing, with the rights of persons living under the
government established by the United States, is not a local one, especially
when the persons affected are subjects of another sovereignty, with which
the United States has made a treaty promising to make every effort to
protect their rights. The fundamental law we administer in the Philippine
bill of rights was a marked change from that which prevailed in the Islands
before we took them over, and is to be enforced in the light of the
construction by this court of such limitations as it has recognized them
since the foundation of our own government. In its application here, we
must determine for ourselves the necessary meaning of a statute officially
enacted in English and its conformity with fundamental limitations. We
cannot give any other meaning to the Bookkeeping Act than that which its
plain language imports, making it a crime for any one in the Philippine
Islands engaged in business to keep his account books in Chinese. This
brings us to the question whether the law thus construed to mean what it
says is invalid.
The Philippine Bill of Rights, already referred to, provides that:
'No law shall be enacted in said Islands which shall deprive any person of
life, liberty, or property without due process of law, or deny to any person
therein the equal protection of the laws.'
In Serra v. Mortiga, 204 U. S. 470, at page 474, 27 S. Ct. 343, 345 (51 L. Ed.
571), this court said:
'It is settled that by virtue of the Bill of Rights, enacted by Congress for the
Philippine Islands ( 32 Stat. 691, 692), that guaranties equivalent to the due
process and equal protection of the law clause of the Fourteenth
Amendment, the twice in jeopardy clause of the Fifth Amendment, and the
substantial guaranties of the Sixth Amendment, exclusive of the right to
trial by jury, were extended to the Philippine Islands. It is further settled
that the guaranties which Congress has extended to the Philippine Islands
are to be interpreted as meaning what the like provisions meant at the
time when Congress made them applicable to the Philippine Islands.
Kepner v. United States, 195 U. S. 100 (24 S. Ct. 797, 49 L. Ed. 114, 1 Ann.
Cas. 655).
'For the purpose, therefore, of passing on the errors assigned we must test
the correctness of the action of the court below by substantially the same
criteria which we would apply to a case arising in the United States and
controlled by the bill of rights expressed in the amendments to the
Constitution of the United States.'
In view of the history of the Islands and of the conditions there prevailing,
we think the law to be invalid, because it deprives Chinese persons
situated as they are, with their extensive and important business long
established, of their liberty and property without due process of law, and
denies them the equal protection of the laws.
Of course the Philippine government may make every reasonable
requirement of its taxpayers to keep proper records of their business
transactions in English or Spanish or Filipino dialect by which an adequate
measure of what is due from them in meeting the cost of government can
be had. How detailed those records should be we need not now discuss,
for it is not before us. But we are clearly of opinion that it is not within the
police power of the Philippine Legislature, because it would be oppressive
and arbitrary, to prohibit all Chinese merchants from maintaining a set of
books in the Chinese language, and in the Chinese characters, and thus
prevent them from keeping advised of the status of their business and
directing its conduct. As the petitioner, Yu Cong Eng, well said in his
examination, the Chinese books of those merchants who know only
Chinese and do not know English and Spanish (and they constitute a very
large majority of all of them in the Islands,) are their eyes in respect of
their business. Without them such merchants would be a prey to all kinds
of fraud and without possibility of adopting any safe policy. It would
greatly and disastrously curtail their liberty of action, and be oppressive
and damaging in the preservation of their property. We agree with the
Philippine Supreme Court in thinking that the statute construed as we
think it must be construed is invalid.
In Lawton v. Steele, 152 U. S. 133, 137, 14 S. Ct. 499, 501 (38 L. Ed. 385),
the court said:
'To justify the state in thus interposing its authority in behalf of the public,
it must appear, first, that the interests of the public generally, as
distinguished from those of a particular class, requires such interference;
and, second, that the means are reasonably necessary for the
accomplishment of the purpose, and not unduly oppressive upon
individuals. The Legislature may not, under the guise of protecting the
public interests, arbitrarily interfere with private business, or impose
unusual and unnecessary restrictions upon lawful occupations. In other
words, its determination as to what is a proper exercise of its police
powers is not final or conclusive, but is subject to the supervision of the
courts.'
In Holden v. Hardy, 169 U. S. 366, 398, 18 S. Ct. 383, 390 (42 L. Ed. 780),
the court said:
'The question in each case is whether the legislature has adopted the
statute in exercise of a reasonable discretion, or whether its action be a
mere excuse for an unjust discrimination, or the oppression or spoliation
of a particular class.'
In the case of Meyer v. Nebraska, 262 U. S. 390, 43 S. Ct. 625, 67 L. Ed.
1042, 29 A. L. R. 1446, this court considered the validity of state legislation
making it unlawful to teach a foreign language to children, adopted on the
theory that the state had the right to protect children likely to become
citizens from study of a particular language, in which they might read and
learn doctrine inimical to the Constitution of the United States and to the
nation, and forbidding the teachers of the language from pursuing their
occupation on this account, and held it invalid. The court said:
'While this court has not attempted to define with exactness the liberty
thus guaranteed, the term has received much consideration and some of
the included things have been definitely stated. Without doubt, it 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 recognized at common law as
essential to the orderly pursuit of happiness by free men. * * * The
established doctrine is that this liberty may not be interfered with, under
the guise of protecting the public interest, by legislative action which is
arbitrary or without reasonable relation to some purpose within the
competency of the state to effect. Determination by the Legislature of
what constitutes proper exercise of police power is not final or conclusive
but is subject to supervision by the courts.'
The same principle is laid down in Pierce v. Society of Sisters, 268 U. S. 510,
45 S. Ct. 571, 69 L. Ed. 1070, 39 A. L. R. 468, in Truax v. Raich, 239 U. S. 33,
36 S. Ct. 7, 60 L. Ed. 131, L. R. A. 1916D, 545, Ann. Cas. 1917B, 283, and in
Adams v. Tanner, 244 U. S. 590, 37 S. Ct. 662, 61 L. Ed. 1336, L. R. A. 1917F,
1163, Ann. Cas. 1917D, 973, in which this court has held legislative
attempts arbitrary and oppressively to interfere with the liberty of the
individual in the pursuit of lawful occupations to involve a lack of due
process.
In Adams v. Tanner, supra, an act to restrict the maintenance of
employment agencies by forbidding the collection of fees from those
seeking work, to avoid the extortion to which such workers were often
subjected, was held unconstitutional. The court said at page 594 (37 S. Ct.
664):
'Because abuses may, and probably do, grow up in connection with this
business, is adequate reason for hedging it about by proper regulations.
But this is not enough to justify destruction of one's right to follow a
distinctly useful calling in an upright way. Certainly there is no profession,
possibly no business, which does not offer peculiar opportunities for
reprehensible practices; and as to every one of them, no doubt, some can
be found quite ready earnestly to maintain that its suppression would be in
the public interest. Skillfully directed agitation might also bring about
apparent condemnation of any one of them by the public. Happily for all,
the fundamental guaranties of the Constitution cannot be freely
submerged if and whenever some ostensible justification is advanced and
the police power invoked.'
In Truax v. Raich, supra, the people of the state of Arizona adopted an act,
entitled 'An act to protect the citizens of the United States in their
employment against noncitizens of the United States,' and provided that
an employer of more than five workers at any one time in that state should
not employ less than 80 per cent. qualified electors or native-born citizens,
and that any employer who did so should be subject upon conviction to
the payment of a fine and imprisonment. It was held that such a law
denied aliens an opportunity of earning a livelihood and deprived them of
their liberty without due process of law, and denied them the equal
protection of the laws. As against the Chinese merchants of the
Philippines, we think the present law which deprives them of something
indispensable to the carrying on of their business, and is obviously
intended chiefly to affect them as distinguished from the rest of the
community, is a denial to them of the equal protection of the laws.
We hold the law in question to be invalid.
Judgment reversed.
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LAUREANO SANGALANG, accused-appellant.
Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General
Octavio R. Ramirez and Solicitor Ma. Rosario Quetulio Losa for plaintiff-
appellee.
Narciso V. Cruz, Jr. for accused-appellant.

AQUINO, J.:p
This is a murder case. The testimonies of the two prosecution
eyewitnesses disclose that at around six o'clock in the morning of June 9,
1968 Ricardo Cortez left his nipa hut located at Sitio Adlas, Barrio Biluso,
Silang, Cavite to gather tuba from a coconut tree nearby. Flora Sarno, his
wife, was left inside the hut. While he was on top of the tree gathering
tuba, he was struck by a volley of shots. He fell to the ground at the base of
the coconut tree.
His wife Flora heard three successive shot coming south of the hut. She
went outside the hut. From a distance of about twenty-five meters, she
saw five men, each armed with a long firearm, firing at her husband. He
was already wounded and was lying on the ground at the foot of the
coconut tree. His assailants were about five meters away from him.
She recognized Laureano Sangalang as one of the five armed men who
were firing at her husband. She and her brother Ricardo had known
Sangalang since their childhood. She also recognized Conrado Gonzales,
Irineo Canuel, Perino Canuel and Eleuterio Cuyom as the other
malefactors.
Flora ran towards the place where her husband had fallen. She shouted,
"Bakit ninyo pinagbabaril ang aking asawa". The five persons fired at her.
She was then about twenty meters away from them. She retreated to the
hut for cover. She heard some more shots. After the lapse of about five
minutes, Laureano Sangalang and his companions left the place. When
Flora returned to the spot where her husband was prostrate, he was
already dead.
On the occasion already described, Ricardo Sarno, twenty-seven years old,
a brother of Flora, was inside his own nipa hut which was about ten meters
away from Flora's hut. He was drinking coffee. His wife and children were
eating breakfast. He heard several shots. He came out of his hut. He saw
his brother-in-law being shot by Laureano Sangalang, Eleuterio Cuyom,
Perino Canuel, Irineo Canuel and Conrado Gonzales. He saw Sangalang
using a Garand carbine in shooting his brother-in-law. The latter fell from
the top of the coconut tree after he was shot (10 tsn). His sister Flora was
trying to approach her husband but she had to flee to her hut when
Sangalang and his companions fired at her. He wanted to join her but he
was likewise fired upon by the five men. So, he retired and took refuge in
his own hut.
Later, Sarno saw his sister Flora, sitting inside her hut. He followed her
after she left the hut and went to see her dead husband, who was lying on
the ground, face up, at the base of the coconut tree. When he noticed that
his brother-in-law was already dead, he gathered his children and brought
them to Sitio Biga, which was more or less thirty meters away from his hut
in Sitio Adlas. Ricardo reported the killing to the chief of police who went
to the scene of the crime with some policemen and Constabularymen.
The necropsy report shows that the twenty-five-year-old Cortez sustained
twenty-three gunshot wounds on the different parts of the body, fourteen
of which were entrance-wounds, and nine were exit-wounds (Exh. A and
B). He died due to the multiple gunshot wounds (Exh. C).
On June 10, 1968 or on the day following the killing, Flora and Ricardo
were interrogated by the Silang police. They executed sworn statements
before the Municipal Judge pointing to Laureano Sangalang, Conrado
Gonzales, Irineo Canuel, Perino Canuel and Eleuterio Cuyom as the
assassins of Ricardo Cortez. Flora said in her statement that she knew
those persons because from time to time they used to pass by her place.
They resided at Barrio Capitula, Dasmarias, which is near Barrio Adlas. On
the basis of those statements, the police filed on June 10 in the Municipal
Court a complaint for murder against the five aforenamed persons.
Sangalang was arrested. He posted bail in the sum of P50,000 on June 13.
He waived the second stage of the preliminary investigation. The other
accused have not been apprehended. On August 8, 1968 the Provincial
Fiscal filed an information for murder against Sangalang.
After trial, the Court of First Instance of Cavite, Tagaytay City Branch,
rendered a judgment convicting Sangalang of murder, sentencing him to
reclusion perpetua and ordering him to pay the heirs of Ricardo Cortez an
indemnity of twelve thousand pesos and to pay his widow moral damages
in the sum of ten thousand pesos (Criminal Case No. TG-162). Sangalang
appealed.
The appellant, a fifty-six-year old farmer, admitted that he knew Cortez
and that he knows his wife, Flora Sarno. He pleaded an alibi. He declared
that in the afternoon of June 8, 1968 he and Crispulo Mendoza went to the
house of Julian Gatdula at Dapitan Street, Sampaloc, Manila. He arrived at
Gatdula's place at six o'clock. He wanted to borrow money from Gatdula to
defray the matriculation fees of his children.
As Gatdula had no money at that time, he advised Sangalang to wait until
morning. He would try to raise the sum of two hundred pesos which
Sangalang desired to borrow. Sangalang and Mendoza agreed. They
allegedly slept in Gatdula's house on the night of June 8th. The next
morning, they breakfasted in that house. At about ten o'clock on June 9,
Gatdula delivered the two hundred pesos to Sangalang. He and Mendoza
then went to the Central Market in Manila and then to Quiapo. They
returned to Cavite and arrived at seven o'clock in the evening of June 9 in
Barrio Capdula. Gatdula and Mendoza corroborated Sangalang's alibi.
In this appeal Sangalang insists on his alibi and impugns the credibility of
the prosecution eyewitnesses, Mrs. Cortez and the victim's brother-in-law,
Ricardo Sarno. The basic issue is whether their eyewitness-testimony that
they saw appellant Sangalang as one of the five armed persons, who
riddled Cortez with fourteen gunshot wounds of entry, is sufficient to
overcome his alibi. In essence, the case projects the ever recurring conflict
in criminal jurisprudence between positive identification and alibi.
The trial court rejected appellant's alibi. It noted that although his
witnesses, Mendoza and Gatdula, learned of his arrest, and Mendoza even
visited him in the municipal jail, Sangalang and his witnesses did not
interpose the defense of alibi when he was investigated by the police and
when he was summoned at the preliminary investigation.
Sangalang points to certain discrepancies in the declarations of Mrs. Cortez
and her brother Ricardo Sarno. Those inconsistencies, which are not
glaring, strengthen their credibility and show that their testimonies were
not coached nor rehearsed. The discrepancies may be attributed to
deficiencies in observation and recollection, or misapprehension of the
misleading and confusing questions during cross-examination, or to the
defective translation of the questions and answers but they do not
necessarily indicate a wilful attempt to commit falsehood (People vs.
Selfaison, 110 Phil. 839; People vs. Resayaga, L-23234, December 26, 1973,
54 SCRA 350).
The controlling fact is that Mrs. Cortez and Sarno clearly and consistently
testified that they saw Sangalang, a person already well-known to them,
among the five armed persons who shot Ricardo Cortez. That unwavering
identification negates appellant's alibi.
The prosecution did not prove the motive for the killing. On the other
hand, Sangalang did not show that Mrs. Cortez and Sarno were impelled by
a malicious desire to falsely incriminate him. .
Counsel de oficio meticulously examined the contradictions and
deficiencies in the evidence for the prosecution. He made a spirited
defense of the appellant. However, his efforts failed to cast any reasonable
doubt on Sangalang's complicity in the killing.
The victim was shot while he was gathering tuba on top of a coconut tree.
He was unarmed and defenseless. He was not expecting to be assaulted.
He did not give any immediate provocation. The deliberate, surprise attack
shows that Sangalang and his companions employed a mode of execution
which insured the killing without any risk to them arising from any defense
which the victim could have made. The qualifying circumstance of
treachery (alevosia), which was alleged in the information, was duly
established (See art. 14[16], Revised Penal Code). Hence, the killing can be
categorized as murder (See People vs. Sedenio, 94 Phil. 1046). Treachery
absorbs the aggravating circumstance of band(U. S. vs. Abelinde, 1 Phil.
568). Evident premeditation, which was alleged in the information, was not
proven.
The trial court correctly imposed the penalty of reclusion perpetua on
Sangalang (Arts. 64[1] and 248, Revised Penal Code).
Finding no error in its judgment, the same is affirmed with costs against
the appellant.
SO ORDERED.
ANGELINA MEJIA LOPEZ, AURORA MEJIA VILLASOR, ROY P. VILLASOR,
petitioners,
vs.
THE CITY JUDGE, CESAR L. PARAS, TRINIDAD T. LAZATIN, and TERRA
DEVELOPMENT CORPORATION, respondents.
San Juan, Africa and Benedicto and Antonio C. Amor and Associates for
petitioners.
Quasha, Asperilla, Blanco, Zafra and Tayag for respondents.
DIZON, J.:
In the month of February 1964, petitioners Roy P. Villasor, as administrator
of the intestate estate of the spouses Manuel M. Mejia and Gloria Lazatin
(Special Proceedings No. 48181 of the Court of First Instance of Manila),
together with his co-petitioners Angelina Mejia Lopez and Aurora Mejia
Villasor and other heirs of said spouses, entered into a contract with
respondent Trinidad T. Lazatin for the development and subdivision of
three parcels of land belonging to said intestate estate. Subsequently
Lazatin transferred his rights under the contract to the Terra Development
Corporation. Months later, petitioners and other co-heirs filed an action in
the Court of First Instance of Quezon City (Civil Case No. Q-8344) for the
rescission of said contract for alleged gross and willful violation of its
terms. Thereafter, Lazatin and the Terra Development Corporation, in turn,
filed with the Fiscal's Office of the City of Angeles a complaint against
petitioners for an alleged violation of the provisions of Article 172 in
relation to those of Article 171, paragraph 4, of the Revised Penal Code.
After conducting a preliminary examination in connection therewith, the
City Fiscal of Angeles filed with the Court of said City an information
charging petitioners with the crime of falsification of a private document
upon the allegation that they made it appear in the contract mentioned
heretofore that Aurora M. Villasor was the "guardian" of the minor George
L. Mejia and that Angelina M. Lopez was similarly the "guardian" of the
minor Alexander L. Mejia, when in truth and in fact they knew that they
were not the guardians of said minors on the date of the execution of the
document (Criminal Case No. C-2268).
Upon petition of the parties thus charged, the City Fiscal of Angeles
reinvestigated the case on March 7, 1965 to give them an opportunity to
present exculpatory evidence, and after the conclusion of the
reinvestigation the parties charged moved for the dismissal of the case
mainly on the ground that the City Court of Angeles had no jurisdiction
over the offense because the private document that contained the alleged
false statement of fact was signed by them outside the territorial limits of
said city. As the resolution of this motion to dismiss was delayed and in the
meantime the City Court had set Criminal Case No. C-2268 for
arraignment, the defendants secured from said court several
postponements of the arraignment.
Finally, in view of the City Fiscal's continued failure to act on the motion to
dismiss the case, petitioners filed on November 26, 1965 with the City
Court a motion to quash upon the ground that said court had no
jurisdiction over the offense charged. The complainants in the case with
the conformity of the City Fiscal filed an opposition thereto, and on
February 3, 1966 the respondent judge denied said motion to quash and
reset the arraignment of all the defendants on March 5 of the same year.
In view thereof, petitioners filed the present action for certiorari and
prohibition.
Upon the foregoing facts the only question to be resolved is whether or
not the City Court of Angeles City has jurisdiction to try and decide
Criminal Case No. C-2268 for alleged falsification of a private document by
the parties named in the information.
It is clear that petitioners are not charged with having used a falsified
document, in violation of the last paragraph of Article 172 of the Revised
Penal Code. The charge against them is that of having falsified a private
document by knowingly and willfully stating therein that Aurora M. Villasor
and Angelina M. Lopez were the "guardians" of their minor brothers
George and Alexander, respectively, when in fact they knew that, at the
time they made such written statement, it was Carolina M. de Castro who
was the judicial guardian of said minors.
It is settled law in criminal actions that the place where the criminal
offense was committed not only determines the venue of the action but is
an essential element of jurisdiction (U.S. vs. Pagdayuman 5 Phil. 265). Thus,
under the provisions of Section 86 of the Judiciary Act of 1948, municipal
courts have original jurisdiction only over criminal offenses committed
within their respective territorial jurisdiction.
In the present case, it is the claim of petitioners a claim supported by
the record that Angelina M. Lopez and Aurora M. Villasor signed the
private document wherein they are alleged to have made a false
statement of fact, the first within the territorial jurisdiction of Makati, and
the second within the territorial jurisdiction of Quezon City, both within
the province of Rizal.
We now come to consider the question of when and where is the offense
of falsification of a private document deemed consummated or
committed. Upon this point, We have ruled clearly and definitely in U.S. vs.
Infante, 36 Phil. 146, that the crime of falsification of a private document
defined and penalized by Article 304 of the Penal Code (now paragraph 2,
Article 172 of the Revised Penal Code) is consummated when such
document is actually falsified with the intent to prejudice a third person,
whether such falsified document is or is not thereafter put to the illegal
use for which it was intended.
Again in U.S. vs. Barretto, 36 Phil. p. 207, We said:
. . . The contention of counsel would seem to be that the
information was defective, in that it fails to set forth expressly the
place where improper and illegal use was made of the falsified
document, an allegation which counsel for appellant insists was
absolutely essential for the proper determination of the court
clothed with jurisdiction over the alleged offense. But under the
definition of the crime of falsification of a private document as set
forth in Article 304 of the Penal Code, the offense is
consummated at the time when and at the place where the
document is falsified to the prejudice of or with the intent to
prejudice a third person, and this whether the falsified document
is or is not put to the improper or illegal use for which it was
intended. It is evident, therefore, that the place where the crime
is committed is the place where the document is actually falsified,
and that the improper or illegal use of the document thereafter is
in no wise a material or essential element of the crime of
falsification of a private document; . . . .
Applying the above ruling to the facts before Us, it would appear that if the
private document subject of the information was falsified by the persons
therein charged, the act of falsification the signing of the document and
the coetaneous intent to cause damage was committed and
consummated outside the territorial jurisdiction of the City of Angeles, and
that whether the falsified private document was thereafter put or not put
to the illegal use for which it was intended, or was signed by the other
contracting party within the territorial jurisdiction of the City of Angeles is
in no wise a material or essential element of the crime of falsification of
the private document, nor could it in any way change the fact that the act
of falsification charged was committed outside the territorial jurisdiction of
Angeles City. Thus, that the City Court of Angeles has, no jurisdiction over
the offense charged is beyond question.
Respondents, however, contend that the motion to quash filed by the
defendants necessarily assumes the truth of the allegation of the
information to the effect that the offense was committed within the
territorial jurisdiction of Angeles City and that they may not be allowed to
disprove this at this early stage of the proceedings. This is not exactly the
law on the matter at present. It was the law applicable to a demurrer
now obsolete to an information. The motion to quash now provided for
in Rule 117 of the Rules of Court is manifestly broader in scope than the
demurrer, as it is not limited to defects apparent upon the face of the
complaint or information but extends to issues arising out of extraneous
facts, as shown by the circumstance that, among the grounds for a motion
to quash, Section 2 of said Rule provides for former jeopardy or acquittal,
extinction of criminal action or liability, insanity of the accused etc., which
necessarily involve questions of fact in the determination of which a
preliminary trial is required.
In the present case, the portion of the record of the reinvestigation which
was submitted to the respondent judge for consideration in connection
with the resolution of the motion to quash filed by the defendants shows
beyond question that the offense charged was committed far beyond the
territorial jurisdiction of Angeles City.
On the propriety of the writs prayed for, it may be said that, as a general
rule, a court of equity will not issue a writ of certiorari to annul an order of
a lower court denying a motion to quash, nor issue a writ of prohibition to
prevent said court from proceeding with the case after such denial, it being
the rule that upon such denial the defendant should enter his plea of not
guilty and go to trial and, if convicted, raise on appeal the same legal
questions covered by his motion to quash. In this as well as in other
jurisdictions however, this is no longer the hard and fast rule.
The writs of certiorari and prohibition, as extra-ordinary legal remedies,
are, in the ultimate analysis, intended to annul void proceedings; to
prevent the unlawful and oppressive exercise of legal authority and to
provide for a fair and orderly administration of justice. Thus, in Yu Kong
Eng vs. Trinidad, 47 Phil. 385, We took cognizance of a petition for
certiorari and prohibition although the accused in the case could have
appealed in due time from the order complained of, our action in the
premises being based on the public welfare and the advancement of public
policy. In Dimayuga vs. Fajardo, 43 Phil. 304, We also admitted a petition
to restrain the prosecution of certain chiropractors although, if convicted,
they could have appealed. We gave due course to their petition for the
orderly administration of justice and to avoid possible oppression by the
strong arm of the law. And in Arevalo vs. Nepomuceno, 63 Phil. 627, the
petition for certiorari challenging the trial court's action admitting an
amended information was sustained despite the availability of appeal at
the proper time.
More recently, We said the following in Yap vs. the Hon. D. Lutero, etc.,
G.R. No. L-12669, April 30, 1959:
Manifestly, the denial, by respondent herein, of the motion to
quash the information in case No. 16443, may not be
characterized as "arbitrary" or "despotic", or to be regarded as
amounting to "lack of jurisdiction". The proper procedure, in the
event of denial of a motion to quash, is for the accused, upon
arraignment, to plead not guilty and reiterate his defense of
former jeopardy, and, in case of conviction, to appeal therefrom,
upon the ground that he has been twice put in jeopardy of
punishment, either for the same offense, or for the same act, as
the case may be. However, were we to require adherence to this
pretense, the case at bar would have to be dismissed and
petitioner required to go through the inconvenience, not to say
the mental agony and torture, of submitting himself to trial on the
merits in case No. 16443, apart from the expenses incidental
thereto, despite the fact that his trial and conviction therein
would violate one of his constitutional rights, and that, on appeal
to this Court, we would, therefore, have to set aside the judgment
of conviction of the lower court. This would, obviously, be most
unfair and unjust. Under the circumstances obtaining in the
present case, the flaw in the procedure followed by petitioner
herein may be overlooked, in the interest of a more enlightened
and substantial justice.
Indeed, the lack of jurisdiction of the City Court of Angeles over the
criminal offense charged being patent, it would be highly unfair to compel
the parties charged to undergo trial in said court and suffer all the
embarrassment and mental anguish that go with it.
WHEREFORE, judgment is hereby rendered declaring that the offense
charged in the information filed in Criminal Case No. C-2268 of the City
Court of Angeles City is not within the jurisdiction of said court and that,
therefore, said court is hereby restrained and prohibited from further
proceedings therein. Costs against the private respondents.
THE PEOPLE OF THE PHILIPPINE ISLANDS, through the complainant and
offended party J. S. RUSTIA, petitioner,
vs.
BUENAVENTURA OCAMPO, accused,
and C. M. VILLA-REAL and SOTERO RODAS, Judges of the Court of First
Instance of Bulacan, respondents.
The petitioner in his own behalf.
E. P. Revilla for accused Ocampo.
No appearance for the respondent Judges.
VILLA-REAL, J.:
This is an original petition for mandamus instituted by the petitioner J. S.
Rustia against C. M. Villareal and Sotero Rodas, Judges of the Court of First
Instance of Bulacan, Seventh Judicial District, praying that said respondent
judges be ordered to immediately forward to this court the record of the
proceedings and the evidence in criminal case No. 6717 of the Court of
First Instance of Bulacan, entitled "The People of the Philippine Islands vs.
Buenaventura Ocampo", by virtue of the appeal taken by said petitioner J.
S. Rustia; that upon receipt thereof, the orders denying the appeal and the
motions for reconsideration of October 23, and December 28, 1935,
respectively, be reviewed and annulled; and that said appeal be allowed in
accordance with law until the final determination thereof, with costs to the
respondent Buenaventura Ocampo.
The pertinent facts necessary for the determination of the question raised
in this petition are as follows:
On September 30, 1935, the herein petitioner, as offended party, filed a
sworn criminal complaint for dereliction of duty ( prevaricacion) against
the respondent Buenaventura Ocampo, docketed as criminal case No.
6717 in the Court of First Instance of Bulacan, copy of which is made an
integral part of the petition and marked Exhibit A.
On October 7, 1935, the respondent Judge C. M. Villareal, having been
designated to receive the preliminary evidence in support of the
petitioner's complaint, prior to the issuance of the warrant for the arrest of
the accused in conformity with section 13 of General Orders, No. 58,
proceeded in open court to receive said evidence, oral and documentary,
and an affidavit of the clerk of this court, Vicente Albert.
On October 15, 1935, said respondent judge, as investigator, entered a
resolution to the effect that "the warrant of arrest is denied and the
complaint dismissed", of which the herein petitioner was notified on the
17th of said month and year, and copy of which is attached to this petition
and marked Exhibit B.
On said date, October 17, 1935, the petitioner excepted to the resolution
in question and filed an application for an appeal. Said respondent Judge C.
M. Villareal, in his order of October 23, 1935, denied the appeal interposed
by the offended-petitioner and refused to forward the record of the
proceedings to this court.
For the purposes of this petition, the petitioner, on October 26, 1935, filed
a motion for reconsideration of the order denying the appeal, which
motion was denied by other respondent Judge Sotero Rodas to which
denial the petitioner excepted on the 30th of the said month and year.
The only question to be decided in this petition is whether or not appeal
lies from the resolution of the respondent Judge C. M. Villareal refusing to
issue the warrant of arrest and dismissing the complaint filed against
Buenaventura Ocampo.
The English text of section 13 of General Orders, No. 58 is as follows:
SEC. 13. When a complaint or information alleging the
commission of a crime is laid before a magistrate, he must
examine, on oath, the informant or prosecutor and the witnesses
produced, and take their depositions in writing, causing them to
be subscribed by the parties making them. If the magistrate be
satisfied from the investigation that the crime complained of has
been committed, and that there is reasonable ground to believe
that the party charged has committed it, he must issue an order
for his arrest. If the offense be bailable, and the defendant offers
a sufficient security, he shall be admitted to bail; otherwise he
shall be committed to prison.
It will be seen that the above quoted section requires the justice of the
peace, before issuing a warrant of arrest, to examine, on oath, the
complaint and his witnesses, taking their depositions in writing and causing
them to subscribe the same. Said section provides no appeal from an order
of the justice of the peace court denying the issuance of a warrant of
arrest. Appeal is provided for by section 14 of said General Orders, No. 58
in case the justice of the peace, after hearing the evidence presented at
the preliminary investigation conducted by him after the arrest of the
accused, should declare that the crime has not been committed and
should order the release of the accused.
In the case at bar, the complaint was not filed in the justice of the peace
court but in the Court of First Instance, under the provisions of section 37
of Act No. 1627, from whose decision, in preliminary investigations of
crimes denounced to it, no appeal to this court is provided. The appeal
provided for in section 14 is from resolutions of justices of the peace
ordering the release of an accused after conducting the corresponding
preliminary investigation, but not from resolutions of Courts of First
Instance ordering said release. Inasmuch as the right to appeal is not
inherent in every accused, but granted by the constitution of law, appeal
does not lie from a resolution of a Court of First Instance refusing to issue a
warrant of arrest and dismissing a complaint.
For the foregoing considerations, we are of the opinion and so hold that
the appeal does not lie from a resolution of a judge of a Court of First
Instance denying the issuance of a warrant of arrest and dismissing the
complaint, after having heard the statements of the complainant and his
witnesses, as provided by section 13 of General Orders, No. 58.
Wherefore, the petition for mandamus is denied and the same dismissed,
with costs to the petitioner. So ordered.
TEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, and TERESITA SANTOS,
petitioners,
vs.
THE CITY FISCAL OF MANILA, HON. JOSE B. FLAMINIANO, ASST. CITY
FISCAL FELIZARDO N. LOTA and CLEMENT DAVID, respondents.

MAKASIAR, Actg. C.J.:+.wph!1
This is a petition for prohibition and injunction with a prayer for the
immediate issuance of restraining order and/or writ of preliminary
injunction filed by petitioners on March 26, 1982.
On March 31, 1982, by virtue of a court resolution issued by this Court on
the same date, a temporary restraining order was duly issued ordering the
respondents, their officers, agents, representatives and/or person or
persons acting upon their (respondents') orders or in their place or stead
to refrain from proceeding with the preliminary investigation in Case No.
8131938 of the Office of the City Fiscal of Manila (pp. 47-48, rec.). On
January 24, 1983, private respondent Clement David filed a motion to lift
restraining order which was denied in the resolution of this Court dated
May 18, 1983.
As can be gleaned from the above, the instant petition seeks to prohibit
public respondents from proceeding with the preliminary investigation of
I.S. No. 81-31938, in which petitioners were charged by private respondent
Clement David, with estafa and violation of Central Bank Circular No. 364
and related regulations regarding foreign exchange transactions
principally, on the ground of lack of jurisdiction in that the allegations of
the charged, as well as the testimony of private respondent's principal
witness and the evidence through said witness, showed that petitioners'
obligation is civil in nature.
For purposes of brevity, We hereby adopt the antecedent facts narrated by
the Solicitor General in its Comment dated June 28,1982, as
follows:t.hqw
On December 23,1981, private respondent David filed I.S.
No. 81-31938 in the Office of the City Fiscal of Manila,
which case was assigned to respondent Lota for
preliminary investigation (Petition, p. 8).
In I.S. No. 81-31938, David charged petitioners (together
with one Robert Marshall and the following directors of
the Nation Savings and Loan Association, Inc., namely
Homero Gonzales, Juan Merino, Flavio Macasaet, Victor
Gomez, Jr., Perfecto Manalac, Jaime V. Paz, Paulino B.
Dionisio, and one John Doe) with estafa and violation of
Central Bank Circular No. 364 and related Central Bank
regulations on foreign exchange transactions, allegedly
committed as follows (Petition, Annex "A"):t.hqw
"From March 20, 1979 to March, 1981,
David invested with the Nation Savings
and Loan Association, (hereinafter
called NSLA) the sum of P1,145,546.20
on nine deposits, P13,531.94 on savings
account deposits (jointly with his sister,
Denise Kuhne), US$10,000.00 on time
deposit, US$15,000.00 under a receipt
and guarantee of payment and
US$50,000.00 under a receipt dated
June 8, 1980 (au jointly with Denise
Kuhne), that David was induced into
making the aforestated investments by
Robert Marshall an Australian national
who was allegedly a close associate of
petitioner Guingona Jr., then NSLA
President, petitioner Martin, then NSLA
Executive Vice-President of NSLA and
petitioner Santos, then NSLA General
Manager; that on March 21, 1981 N LA
was placed under receivership by the
Central Bank, so that David filed claims
therewith for his investments and
those of his sister; that on July 22, 1981
David received a report from the
Central Bank that only P305,821.92 of
those investments were entered in the
records of NSLA; that, therefore, the
respondents in I.S. No. 81-31938
misappropriated the balance of the
investments, at the same time violating
Central Bank Circular No. 364 and
related Central Bank regulations on
foreign exchange transactions; that
after demands, petitioner Guingona Jr.
paid only P200,000.00, thereby
reducing the amounts misappropriated
to P959,078.14 and US$75,000.00."
Petitioners, Martin and Santos, filed a joint counter-
affidavit (Petition, Annex' B') in which they stated the
following.t.hqw
"That Martin became President of NSLA
in March 1978 (after the resignation of
Guingona, Jr.) and served as such until
October 30, 1980, while Santos was
General Manager up to November
1980; that because NSLA was urgently
in need of funds and at David's
insistence, his investments were
treated as special- accounts with
interest above the legal rate, an
recorded in separate confidential
documents only a portion of which
were to be reported because he did not
want the Australian government to tax
his total earnings (nor) to know his
total investments; that all transactions
with David were recorded except the
sum of US$15,000.00 which was a
personal loan of Santos; that David's
check for US$50,000.00 was cleared
through Guingona, Jr.'s dollar account
because NSLA did not have one, that a
draft of US$30,000.00 was placed in
the name of one Paz Roces because of
a pending transaction with her; that
the Philippine Deposit Insurance
Corporation had already reimbursed
David within the legal limits; that
majority of the stockholders of NSLA
had filed Special Proceedings No. 82-
1695 in the Court of First Instance to
contest its (NSLA's) closure; that after
NSLA was placed under receivership,
Martin executed a promissory note in
David's favor and caused the transfer
to him of a nine and on behalf (9 1/2)
carat diamond ring with a net value of
P510,000.00; and, that the liabilities of
NSLA to David were civil in nature."
Petitioner, Guingona, Jr., in his counter-affidavit
(Petition, Annex' C') stated the following:t.hqw
"That he had no hand whatsoever in
the transactions between David and
NSLA since he (Guingona Jr.) had
resigned as NSLA president in March
1978, or prior to those transactions;
that he assumed a portion o; the
liabilities of NSLA to David because of
the latter's insistence that he placed his
investments with NSLA because of his
faith in Guingona, Jr.; that in a
Promissory Note dated June 17, 1981
(Petition, Annex "D") he (Guingona, Jr.)
bound himself to pay David the sums of
P668.307.01 and US$37,500.00 in
stated installments; that he (Guingona,
Jr.) secured payment of those amounts
with second mortgages over two (2)
parcels of land under a deed of Second
Real Estate Mortgage (Petition, Annex
"E") in which it was provided that the
mortgage over one (1) parcel shall be
cancelled upon payment of one-half of
the obligation to David; that he
(Guingona, Jr.) paid P200,000.00 and
tendered another P300,000.00 which
David refused to accept, hence, he
(Guingona, Jr.) filed Civil Case No. Q-
33865 in the Court of First Instance of
Rizal at Quezon City, to effect the
release of the mortgage over one (1) of
the two parcels of land conveyed to
David under second mortgages."
At the inception of the preliminary investigation before
respondent Lota, petitioners moved to dismiss the
charges against them for lack of jurisdiction because
David's claims allegedly comprised a purely civil
obligation which was itself novated. Fiscal Lota denied
the motion to dismiss (Petition, p. 8).
But, after the presentation of David's principal witness,
petitioners filed the instant petition because: (a) the
production of the Promisory Notes, Banker's Acceptance,
Certificates of Time Deposits and Savings Account
allegedly showed that the transactions between David
and NSLA were simple loans, i.e., civil obligations on the
part of NSLA which were novated when Guingona, Jr. and
Martin assumed them; and (b) David's principal witness
allegedly testified that the duplicate originals of the
aforesaid instruments of indebtedness were all on file
with NSLA, contrary to David's claim that some of his
investments were not record (Petition, pp. 8-9).
Petitioners alleged that they did not exhaust available
administrative remedies because to do so would be futile
(Petition, p. 9) [pp. 153-157, rec.].
As correctly pointed out by the Solicitor General, the sole issue for
resolution is whether public respondents acted without jurisdiction when
they investigated the charges (estafa and violation of CB Circular No. 364
and related regulations regarding foreign exchange transactions) subject
matter of I.S. No. 81-31938.
There is merit in the contention of the petitioners that their liability is civil
in nature and therefore, public respondents have no jurisdiction over the
charge of estafa.
A casual perusal of the December 23, 1981 affidavit. complaint filed in the
Office of the City Fiscal of Manila by private respondent David against
petitioners Teopisto Guingona, Jr., Antonio I. Martin and Teresita G.
Santos, together with one Robert Marshall and the other directors of the
Nation Savings and Loan Association, will show that from March 20, 1979
to March, 1981, private respondent David, together with his sister, Denise
Kuhne, invested with the Nation Savings and Loan Association the sum of
P1,145,546.20 on time deposits covered by Bankers Acceptances and
Certificates of Time Deposits and the sum of P13,531.94 on savings
account deposits covered by passbook nos. 6-632 and 29-742, or a total of
P1,159,078.14 (pp. 15-16, roc.). It appears further that private respondent
David, together with his sister, made investments in the aforesaid bank in
the amount of US$75,000.00 (p. 17, rec.).
Moreover, the records reveal that when the aforesaid bank was placed
under receivership on March 21, 1981, petitioners Guingona and Martin,
upon the request of private respondent David, assumed the obligation of
the bank to private respondent David by executing on June 17, 1981 a joint
promissory note in favor of private respondent acknowledging an
indebtedness of Pl,336,614.02 and US$75,000.00 (p. 80, rec.). This
promissory note was based on the statement of account as of June 30,
1981 prepared by the private respondent (p. 81, rec.). The amount of
indebtedness assumed appears to be bigger than the original claim
because of the added interest and the inclusion of other deposits of
private respondent's sister in the amount of P116,613.20.
Thereafter, or on July 17, 1981, petitioners Guingona and Martin agreed to
divide the said indebtedness, and petitioner Guingona executed another
promissory note antedated to June 17, 1981 whereby he personally
acknowledged an indebtedness of P668,307.01 (1/2 of P1,336,614.02) and
US$37,500.00 (1/2 of US$75,000.00) in favor of private respondent (p. 25,
rec.). The aforesaid promissory notes were executed as a result of deposits
made by Clement David and Denise Kuhne with the Nation Savings and
Loan Association.
Furthermore, the various pleadings and documents filed by private
respondent David, before this Court indisputably show that he has indeed
invested his money on time and savings deposits with the Nation Savings
and Loan Association.
It must be pointed out that when private respondent David invested his
money on nine. and savings deposits with the aforesaid bank, the contract
that was perfected was a contract of simple loan or mutuum and not a
contract of deposit. Thus, Article 1980 of the New Civil Code provides
that:t.hqw
Article 1980. Fixed, savings, and current deposits of-
money in banks and similar institutions shall be governed
by the provisions concerning simple loan.
In the case of Central Bank of the Philippines vs. Morfe (63 SCRA 114,119
[1975], We said:t.hqw
It should be noted that fixed, savings, and current
deposits of money in banks and similar institutions are
hat true deposits. are considered simple loans and, as
such, are not preferred credits (Art. 1980 Civil Code; In re
Liquidation of Mercantile Batik of China Tan Tiong Tick
vs. American Apothecaries Co., 66 Phil 414; Pacific Coast
Biscuit Co. vs. Chinese Grocers Association 65 Phil. 375;
Fletcher American National Bank vs. Ang Chong UM 66
PWL 385; Pacific Commercial Co. vs. American
Apothecaries Co., 65 PhiL 429; Gopoco Grocery vs. Pacific
Coast Biscuit CO.,65 Phil. 443)."
This Court also declared in the recent case of Serrano vs. Central Bank of
the Philippines (96 SCRA 102 [1980]) that:t.hqw
Bank deposits are in the nature of irregular deposits.
They are really 'loans because they earn interest. All
kinds of bank deposits, whether fixed, savings, or current
are to be treated as loans and are to be covered by the
law on loans (Art. 1980 Civil Code Gullas vs. Phil. National
Bank, 62 Phil. 519). Current and saving deposits, are
loans to a bank because it can use the same. The
petitioner here in making time deposits that earn
interests will respondent Overseas Bank of Manila was in
reality a creditor of the respondent Bank and not a
depositor. The respondent Bank was in turn a debtor of
petitioner. Failure of the respondent Bank to honor the
time deposit is failure to pay its obligation as a debtor
and not a breach of trust arising from a depositary's
failure to return the subject matter of the deposit
(Emphasis supplied).
Hence, the relationship between the private respondent and the Nation
Savings and Loan Association is that of creditor and debtor; consequently,
the ownership of the amount deposited was transmitted to the Bank upon
the perfection of the contract and it can make use of the amount
deposited for its banking operations, such as to pay interests on deposits
and to pay withdrawals. While the Bank has the obligation to return the
amount deposited, it has, however, no obligation to return or deliver the
same money that was deposited. And, the failure of the Bank to return the
amount deposited will not constitute estafa through misappropriation
punishable under Article 315, par. l(b) of the Revised Penal Code, but it will
only give rise to civil liability over which the public respondents have no-
jurisdiction.
WE have already laid down the rule that:t.hqw
In order that a person can be convicted under the above-
quoted provision, it must be proven that he has the
obligation to deliver or return the some money, goods or
personal property that he received Petitioners had no
such obligation to return the same money, i.e., the bills
or coins, which they received from private respondents.
This is so because as clearly as stated in criminal
complaints, the related civil complaints and the
supporting sworn statements, the sums of money that
petitioners received were loans.
The nature of simple loan is defined in Articles 1933 and
1953 of the Civil Code.t.hqw
"Art. 1933. By the contract of loan,
one of the parties delivers to another,
either something not consumable so
that the latter may use the same for a
certain time- and return it, in which
case the contract is called a
commodatum; or money or other
consumable thing, upon the condition
that the same amount of the same kind
and quality shall he paid in which case
the contract is simply called a loan or
mutuum.
"Commodatum is essentially
gratuitous.
"Simple loan may be gratuitous or with
a stipulation to pay interest.
"In commodatum the bailor retains the
ownership of the thing loaned while in
simple loan, ownership passes to the
borrower.
"Art. 1953. A person who receives a
loan of money or any other fungible
thing acquires the ownership thereof,
and is bound to pay to the creditor an
equal amount of the same kind and
quality."
It can be readily noted from the above-quoted provisions
that in simple loan (mutuum), as contrasted to
commodatum the borrower acquires ownership of the
money, goods or personal property borrowed Being the
owner, the borrower can dispose of the thing borrowed
(Article 248, Civil Code) and his act will not be considered
misappropriation thereof' (Yam vs. Malik, 94 SCRA 30, 34
[1979]; Emphasis supplied).
But even granting that the failure of the bank to pay the time and savings
deposits of private respondent David would constitute a violation of
paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any
incipient criminal liability was deemed avoided, because when the
aforesaid bank was placed under receivership by the Central Bank,
petitioners Guingona and Martin assumed the obligation of the bank to
private respondent David, thereby resulting in the novation of the original
contractual obligation arising from deposit into a contract of loan and
converting the original trust relation between the bank and private
respondent David into an ordinary debtor-creditor relation between the
petitioners and private respondent. Consequently, the failure of the bank
or petitioners Guingona and Martin to pay the deposits of private
respondent would not constitute a breach of trust but would merely be a
failure to pay the obligation as a debtor.
Moreover, while it is true that novation does not extinguish criminal
liability, it may however, prevent the rise of criminal liability as long as it
occurs prior to the filing of the criminal information in court. Thus, in
Gonzales vs. Serrano ( 25 SCRA 64, 69 [1968]) We held that:t.hqw
As pointed out in People vs. Nery, novation prior to the
filing of the criminal information as in the case at bar
may convert the relation between the parties into an
ordinary creditor-debtor relation, and place the
complainant in estoppel to insist on the original
transaction or "cast doubt on the true nature" thereof.
Again, in the latest case of Ong vs. Court of Appeals (L-58476, 124 SCRA
578, 580-581 [1983] ), this Court reiterated the ruling in People vs. Nery (
10 SCRA 244 [1964] ), declaring that:t.hqw
The novation theory may perhaps apply prior to the
filling of the criminal information in court by the state
prosecutors because up to that time the original trust
relation may be converted by the parties into an ordinary
creditor-debtor situation, thereby placing the
complainant in estoppel to insist on the original trust.
But after the justice authorities have taken cognizance of
the crime and instituted action in court, the offended
party may no longer divest the prosecution of its power
to exact the criminal liability, as distinguished from the
civil. The crime being an offense against the state, only
the latter can renounce it (People vs. Gervacio, 54 Off.
Gaz. 2898; People vs. Velasco, 42 Phil. 76; U.S. vs.
Montanes, 8 Phil. 620).
It may be observed in this regard that novation is not one
of the means recognized by the Penal Code whereby
criminal liability can be extinguished; hence, the role of
novation may only be to either prevent the rise of
criminal habihty or to cast doubt on the true nature of
the original basic transaction, whether or not it was such
that its breach would not give rise to penal responsibility,
as when money loaned is made to appear as a deposit, or
other similar disguise is resorted to (cf. Abeto vs. People,
90 Phil. 581; U.S. vs. Villareal, 27 Phil. 481).
In the case at bar, there is no dispute that petitioners Guingona and Martin
executed a promissory note on June 17, 1981 assuming the obligation of
the bank to private respondent David; while the criminal complaint for
estafa was filed on December 23, 1981 with the Office of the City Fiscal.
Hence, it is clear that novation occurred long before the filing of the
criminal complaint with the Office of the City Fiscal.
Consequently, as aforestated, any incipient criminal liability would be
avoided but there will still be a civil liability on the part of petitioners
Guingona and Martin to pay the assumed obligation.
Petitioners herein were likewise charged with violation of Section 3 of
Central Bank Circular No. 364 and other related regulations regarding
foreign exchange transactions by accepting foreign currency deposit in the
amount of US$75,000.00 without authority from the Central Bank. They
contend however, that the US dollars intended by respondent David for
deposit were all converted into Philippine currency before acceptance and
deposit into Nation Savings and Loan Association.
Petitioners' contention is worthy of behelf for the following reasons:
1. It appears from the records that when respondent David was about to
make a deposit of bank draft issued in his name in the amount of
US$50,000.00 with the Nation Savings and Loan Association, the same had
to be cleared first and converted into Philippine currency. Accordingly, the
bank draft was endorsed by respondent David to petitioner Guingona, who
in turn deposited it to his dollar account with the Security Bank and Trust
Company. Petitioner Guingona merely accommodated the request of the
Nation Savings and loan Association in order to clear the bank draft
through his dollar account because the bank did not have a dollar account.
Immediately after the bank draft was cleared, petitioner Guingona
authorized Nation Savings and Loan Association to withdraw the same in
order to be utilized by the bank for its operations.
2. It is safe to assume that the U.S. dollars were converted first into
Philippine pesos before they were accepted and deposited in Nation
Savings and Loan Association, because the bank is presumed to have
followed the ordinary course of the business which is to accept deposits in
Philippine currency only, and that the transaction was regular and fair, in
the absence of a clear and convincing evidence to the contrary (see
paragraphs p and q, Sec. 5, Rule 131, Rules of Court).
3. Respondent David has not denied the aforesaid contention of herein
petitioners despite the fact that it was raised. in petitioners' reply filed on
May 7, 1982 to private respondent's comment and in the July 27, 1982
reply to public respondents' comment and reiterated in petitioners'
memorandum filed on October 30, 1982, thereby adding more support to
the conclusion that the US$75,000.00 were really converted into Philippine
currency before they were accepted and deposited into Nation Savings and
Loan Association. Considering that this might adversely affect his case,
respondent David should have promptly denied petitioners' allegation.
In conclusion, considering that the liability of the petitioners is purely civil
in nature and that there is no clear showing that they engaged in foreign
exchange transactions, We hold that the public respondents acted without
jurisdiction when they investigated the charges against the petitioners.
Consequently, public respondents should be restrained from further
proceeding with the criminal case for to allow the case to continue, even if
the petitioners could have appealed to the Ministry of Justice, would work
great injustice to petitioners and would render meaningless the proper
administration of justice.
While as a rule, the prosecution in a criminal offense cannot be the subject
of prohibition and injunction, this court has recognized the resort to the
extraordinary writs of prohibition and injunction in extreme cases,
thus:t.hqw
On the issue of whether a writ of injunction can restrain
the proceedings in Criminal Case No. 3140, the general
rule is that "ordinarily, criminal prosecution may not be
blocked by court prohibition or injunction." Exceptions,
however, are allowed in the following
instances:t.hqw
"1. for the orderly administration of
justice;
"2. to prevent the use of the strong arm
of the law in an oppressive and
vindictive manner;
"3. to avoid multiplicity of actions;
"4. to afford adequate protection to
constitutional rights;
"5. in proper cases, because the statute
relied upon is unconstitutional or was
held invalid" ( Primicias vs. Municipality
of Urdaneta, Pangasinan, 93 SCRA 462,
469-470 [1979]; citing Ramos vs.
Torres, 25 SCRA 557 [1968]; and
Hernandez vs. Albano, 19 SCRA 95, 96
[1967]).
Likewise, in Lopez vs. The City Judge, et al. ( 18 SCRA 616, 621-622 [1966]),
We held that:t.hqw
The writs of certiorari and prohibition, as extraordinary
legal remedies, are in the ultimate analysis, intended to
annul void proceedings; to prevent the unlawful and
oppressive exercise of legal authority and to provide for a
fair and orderly administration of justice. Thus, in Yu
Kong Eng vs. Trinidad, 47 Phil. 385, We took cognizance
of a petition for certiorari and prohibition although the
accused in the case could have appealed in due time
from the order complained of, our action in the premises
being based on the public welfare policy the
advancement of public policy. In Dimayuga vs. Fajardo,
43 Phil. 304, We also admitted a petition to restrain the
prosecution of certain chiropractors although, if
convicted, they could have appealed. We gave due
course to their petition for the orderly administration of
justice and to avoid possible oppression by the strong
arm of the law. And in Arevalo vs. Nepomuceno, 63 Phil.
627, the petition for certiorari challenging the trial
court's action admitting an amended information was
sustained despite the availability of appeal at the proper
time.
WHEREFORE, THE PETITION IS HEREBY GRANTED; THE TEMPORARY
RESTRAINING ORDER PREVIOUSLY ISSUED IS MADE PERMANENT. COSTS
AGAINST THE PRIVATE RESPONDENT.
SO ORDERED.
JOVITO R. SALONGA, petitioner,
vs.
HON. ERNANI CRUZ PAO, Presiding Judge of the Court of First Instance
of Rizal Branch XVIII (Quezon City), HON. JUDGE RODOLFO ORTIZ,
Presiding Judge of the Court of First Instance of Rizal, Branch XXXI
(Quezon City) CITY FISCAL SERGIO APOSTOL of Quezon City; COL.
BALBINO DIEGO and COL. ROMAN MADELLA, respondents.

GUTIERREZ, JR., J.:
The petitioner invokes the constitutionally protected right to life and
liberty guaranteed by the due process clause, alleging that no prima facie
case has been established to warrant the filing of an information for
subversion against him. Petitioner asks this Court to prohibit and prevent
the respondents from using the iron arm of the law to harass, oppress, and
persecute him, a member of the democratic opposition in the Philippines.
The background of this case is a matter of public knowledge.
A rash of bombings occurred in the Metro Manila area in the months of
August, September and October of 1980. On September 6, 1980, one
Victor Burns Lovely, Jr., a Philippine-born American citizen from Los
Angeles, California, almost killed himself and injured his younger brother,
Romeo, as a result of the explosion of a small bomb inside his room at the
YMCA building in Manila. Found in Lovely's possession by police and
military authorities were several pictures taken sometime in May, 1980 at
the birthday party of former Congressman Raul Daza held at the latter's
residence in a Los Angeles suburb. Petitioner Jovito R. Salonga and his wife
were among those whose likenesses appeared in the group pictures
together with other guests, including Lovely.
As a result of the serious injuries he suffered, Lovely was brought by
military and police authorities to the AFP Medical Center (V. Luna Hospital)
where he was placed in the custody and detention of Col. Roman P.
Madella, under the over-all direction of General Fabian Ver, head of the
National Intelligence and Security Authority (NISA). Shortly afterwards, Mr.
Lovely and his two brothers, Romeo and Baltazar Lovely were charged with
subversion, illegal possession of explosives, and damage to property.
On September 12, 1980, bombs once again exploded in Metro Manila
including one which resulted in the death of an American lady who was
shopping at Rustan's Supermarket in Makati and others which caused
injuries to a number of persons.
On September 20, 1980, the President's anniversary television radio press
conference was broadcast. The younger brother of Victor Lovely, Romeo,
was presented during the conference. In his interview, Romeo stated that
he had driven his elder brother, Victor, to the petitioner's house in
Greenhills on two occasions. The first time was on August 20, 1980. Romeo
stated that Victor did not bring any bag with him on that day when he
went to the petitioner's residence and did not carry a bag when he left.
The second time was in the afternoon of August 31, 1980 when he brought
Victor only to the gate of the petitioner's house. Romeo did not enter the
petitioner's residence. Neither did he return that day to pick up his
brother.
The next day, newspapers came out with almost Identical headlines stating
in effect that petitioner had been linked to the various bombings in Metro
Manila.
Meanwhile, on September 25, 1980, Lovely was taken out of the hospital's
intensive care unit and transferred to the office of Col. Madella where he
was held incommunicado for some time.
On the night of October 4, 1980, more bombs were reported to have
exploded at three big hotels in Metro Manila, namely: Philippine Plaza,
Century Park Sheraton and Manila Peninsula. The bombs injured nine
people. A meeting of the General Military Council was called for October 6,
1980.
On October 19, 1980, minutes after the President had finished delivering
his speech before the International Conference of the American Society of
Travel Agents at the Philippine International Convention Center, a small
bomb exploded. Within the next twenty-four hours, arrest, search, and
seizure orders (ASSOs) were issued against persons who were apparently
implicated by Victor Lovely in the series of bombings in Metro Manila. One
of them was herein petitioner. Victor Lovely offered himself to be a "state
witness" and in his letter to the President, he stated that he will reveal
everything he knows about the bombings.
On October 21, 1980, elements of the military went to the hospital room
of the petitioner at the Manila Medical Center where he was confined due
to his recurrent and chronic ailment of bronchial asthma and placed him
under arrest. The arresting officer showed the petitioner the ASSO form
which however did not specify the charge or charges against him. For some
time, the petitioner's lawyers were not permitted to visit him in his
hospital room until this Court in the case of Ordoez v. Gen. Fabian Ver, et
al., (G.R. No. 55345, October 28, 1980) issued an order directing that the
petitioner's right to be visited by counsel be respected.
On November 2, 1980, the petitioner was transferred against his
objections from his hospital arrest to an isolation room without windows in
an army prison camp at Fort Bonifacio, Makati. The petitioner states that
he was not informed why he was transferred and detained, nor was he
ever investigated or questioned by any military or civil authority.
Subsequently, on November 27, 1980, the petitioner was released for
humanitarian reasons from military custody and placed "under house
arrest in the custody of Mrs. Lydia Salonga" still without the benefit of any
investigation or charges.
On December 10, 1980, the Judge Advocate General sent the petitioner a
"Notice of Preliminary Investigation" in People v. Benigno Aquino, Jr., et al.
(which included petitioner as a co-accused), stating that "the preliminary
investigation of the above-entitled case has been set at 2:30 o'clock p.m.
on December 12, 1980" and that petitioner was given ten (10) days from
receipt of the charge sheet and the supporting evidence within which to
file his counter-evidence. The petitioner states that up to the time martial
law was lifted on January 17, 1981, and despite assurance to the contrary,
he has not received any copies of the charges against him nor any copies of
the so-called supporting evidence.
On February 9, 1981, the records of the case were turned over by the
Judge Advocate General's Office to the Ministry of Justice.
On February 24, 1981, the respondent City Fiscal filed a complaint accusing
petitioner, among others of having violated Republic Act No. 1700, as
amended by P.D. 885 and Batas Pambansa Blg. 31 in relation to Article 142
of the Revised Penal Code. The inquest court set the preliminary
investigation for March 17, 1981.
On March 6, 1981, the petitioner was allowed to leave the country to
attend a series of church conferences and undergo comprehensive medical
examinations of the heart, stomach, liver, eye and ear including a possible
removal of his left eye to save his right eye. Petitioner Salonga almost died
as one of the principal victims of the dastardly bombing of a Liberal Party
rally at Plaza Miranda on August 20, 1971. Since then, he has suffered
serious disabilities. The petitioner was riddled with shrapnel and pieces still
remain in various parts of his body. He has an AV fistula caused by a piece
of shrapnel lodged one millimeter from his aorta. The petitioner has
limited use of his one remaining hand and arms, is completely blind and
physical in the left eye, and has scar like formations in the remaining right
eye. He is totally deaf in the right ear and partially deaf in the left ear. The
petitioner's physical ailments led him to seek treatment abroad.
On or around March 26, 1981, the counsel for petitioner was furnished a
copy of an amended complaint signed by Gen. Prospero Olivas, dated
March 12, 1981, charging the petitioner, along with 39 other accused with
the violation of R.A. 1700, as amended by P.D. 885, Batas Pambansa Blg.
31 and P.D. 1736. Hearings for preliminary investigation were conducted.
The prosecution presented as its witnesses Ambassador Armando
Fernandez, the Consul General of the Philippines in Los Angeles, California,
Col. Balbino Diego, PSC/NISA Chief, Investigation and Legal Panel of the
Presidential Security Command and Victor Lovely himself.
On October 15, 1981, the counsel for petitioner filed a motion to dismiss
the charges against petitioner for failure of the prosecution to establish a
prima facie case against him.
On December 2, 1981, the respondent judge denied the motion. On
January 4, 1982, he issued a resolution ordering the filing of an information
for violation of the Revised Anti-Subversion Act, as amended, against forty
(40) people, including herein petitioner.
The resolutions of the respondent judge dated December 2, 1981 and
January 4, 1982 are now the subject of the petition. It is the contention of
the petitioner that no prima facie case has been established by the
prosecution to justify the filing of an information against him. He states
that to sanction his further prosecution despite the lack of evidence
against him would be to admit that no rule of law exists in the Philippines
today.
After a painstaking review of the records, this Court finds the evidence
offered by the prosecution utterly insufficient to establish a prima facie
case against the petitioner. We grant the petition.
However, before going into the merits of the case, we shall pass upon a
procedural issue raised by the respondents.
The respondents call for adherence to the consistent rule that the denial of
a motion to quash or to dismiss, being interlocutory in character, cannot
be questioned by certiorari; that since the question of dismissal will again
be considered by the court when it decides the case, the movant has a
plain, speedy and adequate remedy in the ordinary course of law; and that
public interest dictates that criminal prosecutions should not be enjoined.
The general rule is correctly stated. However, the respondents fail to
appreciate or take into account certain exceptions when a petition for
certiorari is clearly warranted. The case at bar is one such exception.
In the case of Mead v. Angel (115 SCRA 256) the same contentions were
advanced by the respondents to wit:
xxx xxx xxx
... Respondents advert to the rule that when a motion to
quash filed by an accused in a criminal case shall be
denied, the remedy of the accused-movant is not to file a
petition for certiorari or mandamus or prohibition, the
proper recourse being to go to trial, without prejudice to
his right to reiterate the grounds invoked in his motion to
quash if an adverse judgment is rendered against him, in
the appeal that he may take therefrom in the manner
authorized by law. (Mill v. People, et al., 101 Phil. 599;
Echarol v. Purisima, et al., 13 SCRA 309.)
On this argument, we ruled:
There is no disputing the validity and wisdom of the rule
invoked by the respondents. However, it is also
recognized that, under certain situations, recourse to the
extraordinary legal remedies of certiorari, prohibition or
mandamus to question the denial of a motion to quash is
considered proper in the interest of "more enlightened
and substantial justice", as was so declared in "Yap v.
Lutero, G.R. No. L-12669, April 30, 1969."
Infinitely more important than conventional adherence to general rules of
criminal procedure is respect for the citizen's right to be free not only from
arbitrary arrest and punishment but also from unwarranted and vexatious
prosecution. The integrity of a democratic society is corrupted if a person
is carelessly included in the trial of around forty persons when on the very
face of the record no evidence linking him to the alleged conspiracy exists.
Ex-Senator Jovito Salonga, himself a victim of the still unresolved and
heinous Plaza Miranda bombings, was arrested at the Manila Medical
Center while hospitalized for bronchial asthma. When arrested, he was not
informed of the nature of the charges against him. Neither was counsel
allowed to talk to him until this Court intervened through the issuance of
an order directing that his lawyers be permitted to visit him (Ordonez v.
Gen. Fabian Ver, et al., G.R. No. 55345, October 28, 1980). Only after four
months of detention was the petitioner informed for the first time of the
nature of the charges against him. After the preliminary investigation, the
petitioner moved to dismiss the complaint but the same was denied.
Subsequently, the respondent judge issued a resolution ordering the filing
of an information after finding that a prima facie case had been
established against an of the forty persons accused.
In the light of the failure to show prima facie that the petitioner was
probably guilty of conspiring to commit the crime, the initial disregard of
petitioner's constitutional rights together with the massive and damaging
publicity made against him, justifies the favorable consideration of this
petition by this Court. With former Senator Benigno Aquino, Jr. now
deceased, there are at least 38 other co-accused to be tried with the
petitioner. The prosecution must present proof beyond reasonable doubt
against each and every one of the 39 accused, most of whom have varying
participations in the charge for subversion. The prosecution's star witness
Victor Lovely and the only source of information with regard to the alleged
link between the petitioner and the series of terrorist bombings is now in
the United States. There is reason to believe the petitioner's citation of
international news dispatches * that the prosecution may find it difficult if
not infeasible to bring him back to the Philippines to testify against the
petitioner. If Lovely refused to testify before an American federal grand
jury how could he possibly be made to testify when the charges against the
respondent come up in the course of the trial against the 39 accused.
Considering the foregoing, we find it in the interest of justice to resolve at
this stage the issue of whether or not the respondent judge gravely abused
his discretion in issuing the questioned resolutions.
The respondents contend that the prosecution will introduce additional
evidence during the trial and if the evidence, by then, is not sufficient to
prove the petitioner's guilt, he would anyway be acquitted. Yes, but under
the circumstances of this case, at what cost not only to the petitioner but
to the basic fabric of our criminal justice system?
The term "prima facie evidence" denotes evidence which, if unexplained or
uncontradicted, is sufficient to sustain the proposition it supports or to
establish the facts, or to counter-balance the presumption of innocence to
warrant a conviction. The question raised before us now is: Were the
evidences against the petitioner uncontradicted and if they were
unexplained or uncontradicted, would they, standing alone, sufficiently
overcome the presumption of innocence and warrant his conviction?
We do not think so.
The records reveal that in finding a case against the petitioner, the
respondent judge relied only on the testimonies of Col. Balbino Diego and
Victor Lovely. Ambassador Armando Fernandez, when called upon to
testify on subversive organizations in the United States nowhere
mentioned the petitioner as an organizer, officer or member of the
Movement for Free Philippines (MFP), or any of the organizations
mentioned in the complaint. Col. Diego, on the other hand, when asked
what evidence he was able to gather against the petitioner depended only
on the statement of Lovely "that it was the residence of ex-Senator
Salonga where they met together with Renato Taada, one of the brains of
the bombing conspiracy ... and the fact that Sen. Salonga has been meeting
with several subversive personnel based in the U.S.A. was also revealed to
me by Victor Burns Lovely; 11 and on the group pictures taken at former
Congressman Raul Daza's birthday party. In concluding that a conspiracy
exists to overthrow by violent means the government of the Philippines in
the United States, his only bases were "documentary as well as physical
and sworn statements that were referred to me or taken by me
personally," which of course negate personal knowledge on his part. When
asked by the court how he would categorize petitioner in any of the
subversive organizations, whether petitioner was an organizer, officer or a
member, the witness replied:
A. To categorize former Senator Salonga if he were an
organizer, he is an officer or he is a member, your Honor,
please, we have to consider the surrounding
circumstances and on his involvement: first, Senator
Salonga wanted always to travel to the United States at
least once a year or more often under the pretext of to
undergo some sort of operation and participate in some
sort of seminar. (t.s.n., April 21, 1981, pp- 14-15)
Such testimony, being based on affidavits of other persons and purely
hearsay, can hardly qualify as prima facie evidence of subversion. It should
not have been given credence by the court in the first place. Hearsay
evidence, whether objected to or not, -has no probative value as the
affiant could not have been cross-examined on the facts stated therein.
(See People v. Labinia, 115 SCRA 223; People v. Valero, 112 SCRA 661).
Moreover, as Victor Lovely, himself, was personally examined by the court,
there was no need for the testimony of Col. Diego. Thus, the inquest judge
should have confined his investigation to Victor Burns Lovely, the sole
witness whose testimony had apparently implicated petitioner in the
bombings which eventually led to the filing of the information.
Lovely's account of the petitioner's involvement with the former's bombing
mission is found in his sworn statement made before Col. Diego and Lt.
Col. Madella and taken on October 17, 1980 at the AFP Medical Center.
Lovely was not presented as a prosecution or state witness but only as a
defense witness for his two younger brothers, Romeo and Baltazar, who
were both included in the complaint but who were later dropped from the
information. Victor Lovely was examined by his counsel and cross-
examined by the fiscal. In the process, he Identified the statement which
he made before Col. Diego and Lt. Col. Madella. After Lovely's testimony,
the prosecution made a manifestation before the court that it was
adopting Lovely as a prosecution witness.
According to Lovely's statement, the following events took place:
36. Q. Did Psinakis tell you where to
stay?
A. Yes, at first he told me to check-in at
Manila Hotel or the Plaza Hotel where
somebody would come to contact me
and give the materials needed in the
execution of my mission. I thought this
was not safe so I disagreed with him.
Mr. Psinakis changed the plan and
instead told me to visit the residence of
Ex-Sen. Jovito Salonga as often as I can
and someone will meet me there to
give the materials I needed to
accomplish my mission
37. Q. Did you comply as instructed?
A. Yes, I arrived in Manila on August 20,
1980 and stayed at the residence of
Mr. Johnny Chua, husband of my
business partner, then I went to the
Hospital where I visited my mother and
checked-in at Room 303 of the YMCA at
Concepcion Street, Manila.
38. Q. Did you visit the residence of
former Senator Jovito Salonga as
directed by Psinakis?
A. I visited Sen. Salonga's place three
(3) times, the first visit was August 20
or 21, and the last was 4:00 P.M. of
August 31, 1980. In addition to these
visits, I TALKED to him on the phone
about three or four times. On my first
visit, I told him "I am expecting an
attache case from somebody which will
be delivered to your house," for which
Sen. Salonga replied "Wala namang
nagpunta dito at wala namang attache
case para sa iyo." However, if your
attache case arrives, I'll just call you." I
gave him my number. On my second
visit, Salonga said, "I'll be very busy so
just come back on the 31st of August at
4 P.M." On that date, I was with friends
at Batulao Resort and had to hurry back
to be at Salonga's place for the
appointment. I arrived at Salonga's
place at exactly 4 P.M.
39. Q. What happened then?
A. I was ushered to the sala by Mrs.
Salonga and after five minutes, Sen.
Salonga joined me in the sala. Sen.
Salonga informed me that somebody
will be coming to give me the attache
case but did not tell me the name.
40. Q. Are there any subject matters
you discuss while waiting for that
somebody to deliver your materials?
A. Yes, Salonga asked if Sen. Aquino
and I have met, I explained to him the
efforts of Raul Daza in setting up that
meeting but I have previous business
commitments at Norfolk, Virginia. I told
him, however, that through the efforts
of Raul Daza, I was able to talk with
Ninoy Aquino in the airport telephone
booth in San Francisco. He also asked
about Raul Daza, Steve Psinakis and the
latest opposition group activities but it
seems he is well informed.
41. Q. How long did you wait until that
somebody arrived?
A. About thirty (30) minutes.
41. Q. What happened when the man
arrived?
A. This man arrived and I was greatly
surprised to see Atty. Renato Taada
Jovy Salonga was the one who met him
and as I observed parang nasa sariling
bahay si Taada nung dumating. They
talked for five (5) minutes in very low
tones so I did not hear what they talked
about. After their whispering
conversations, Sen. Salonga left and at
this time Atty. "Nits" Taada told me
"Nasa akin ang kailangan mo, nasa
kotse."
43. Q. Were the materials given to you?
A. When Sen. Salonga came back, we
asked to be permitted to leave and I
rode in Atty. "Nits" Taadas old Pontiac
car colored dirty brown and proceeded
to Broadway Centrum where before I
alighted, Atty. Taada handed me a
"Puma" bag containing all the materials
I needed.
xxx xxx xxx
45. Q. What were the contents of the
Puma bag?
A. Ten (10) pieces of Westclox pocket
watch with screw and wirings, ten (10)
pieces electrical blasting caps 4" length,
ten (10) pieces non-electrical blasting
caps 1 " length, nine (9) pieces volts dry
cell battery, two (2) improvised
electrical testers. ten (10) plastic packs
of high explosive about 1 pound weight
each.
However, in his interview with Mr. Ronnie Nathanielz which was aired on
Channel 4 on November 8, 1980 and which was also offered as evidence by
the accused, Lovely gave a different story which negates the above
testimony insofar as the petitioner's participation was concerned:
xxx xxx xxx
Q. Who were the people that you
contacted in Manila and for what
purpose?
A. Before I left for the Philippines, Mr.
Psinakis told me to check in at the
Manila Hotel or the Plaza Hotel, and
somebody would just deliver the
materials I would need. I disapproved
of this, and I told him I would prefer a
place that is familiar to me or who is
close to me. Mr. Psinakis suggested the
residence of Sen. Salonga.
And so, I arrived in Manila on August
20, 1980, 1 made a call to Sen. Salonga,
but he was out. The next day I made a
call again. I was able to contact him. I
made an appointment tsee him. I
went to Sen. Salonga's house the
following day. I asked Sen. Salonga if
someone had given him an attache
case for me. He said nobody.
Afterwards, I made three calls to Sen.
Salonga. Sen. Salonga told me "call me
again on the 31st of August. I did not
call him, I just went to his house on the
31st of August at 4 P.M. A few minutes
after my arrival Atty. Renato Taada
arrived. When he had a chance to be
near me, he (Atty. Tanada) whispered
to me that he had the attache case and
the materials I needed in his car. These
materials were given to me by Atty.
Tanada When I alighted at the
Broadway Centrum. (Emphasis
supplied)
During the cross-examination, counsel for petitioner asked Lovely about
the so-called destabilization plan which the latter mentioned in his sworn
statement:
Q. You mentioned in your statement
taken on October 17, 1980, marked
Exhibit "G" about the so-called
destabilization plan of Aquino. When
you attended the birthday party of Raul
Daza wherein Jovito Salonga was also
present, was this destabilization plan as
alleged by you already formulated?
WITNESS:
A. Not to my knowledge.
COURT TO WITNESS:
Q. Mr. Witness, who invited you to the
party?
A. Raul Daza, your Honor.
Q. Were you told that Mr. Salonga
would be present in the party.
A. I am really not quite sure, your
Honor.
Q. Alright. You said initially it was social
but then it became political. Was there
any political action taken as a result of
the party?
A. Only political discussion, your Honor.
(TSN, July 8, 1981, pp. 69-84).
Counsel for petitioner also asked Lovely whether in view of the latter's
awareness of the physical condition of petitioner, he really implicated
petitioner in any of the bombings that occurred in Metro Manila. The fiscal
objected without stating any ground. In sustaining the objection, the Court
said:
Sustained . . . The use of the word 'implicate' might
expand the role of Mr. Salonga. In other words, you are
widening the avenue of Mr. Salonga's role beyond the
participation stated in the testimony of this witness
about Mr. Salonga, at least, as far as the evidence is
concerned, I supposed, is only being in the house of Mr.
Salonga which was used as the contact point. He never
mentions Mr. Salonga about the bombings. Now these
words had to be put in the mouth of this witness. That
would be unfair to Mr. Salonga. (TSN. July 8, 1981, p. 67)
Respondent judge further said:
COURT:
As the Court said earlier, the parts or
portions affecting Salonga only refers
to the witness coming to Manila
already then the matter of . . . I have
gone over the statement and there is
no mention of Salonga insofar as
activities in the United States is
concerned. I don't know why it
concerns this cross-examination.
ATTY. YAP:
Because according to him, it was in
pursuance of the plan that he came to
Manila.
COURT:
According to him it was Aquino, Daza,
and Psinakis who asked him to come
here, but Salonga was introduced only
when he (Lovely) came here. Now, the
tendency of the question is also to
connect Salonga to the activities in the
United States. It seems to be the thrust
of the questions.
COURT:
In other words, the point of the Court
as of the time when you asked him
question, the focus on Salonga was
only from the time when he met
Salonga at Greenhills. It was the first
time that the name of Salonga came
up. There was no mention of Salonga in
the formulation of the destabilization
plan as affirmed by him. But you are
bringing this up although you are only
cross-examining for Salonga as if his
(Lovely's) activities in the United States
affected Salonga. (TSN. July 8, 1981, pp.
73-74).
Apparently, the respondent judge wanted to put things in proper
perspective by limiting the petitioner's alleged "participation" in the
bombing mission only to the fact that petitioner's house was used as a
"contact point" between Lovely and Taada, which was all that Lovely
really stated in his testimony.
However, in the questioned resolution dated December 2, 1981, the
respondent judge suddenly included the "activities" of petitioner in the
United States as his basis for denying the motion to dismiss:
On the activities of Salonga in the United States, the
witness, Lovely, in one of his statements declared: 'To
the best of my recollection he mentioned of some kind of
violent struggle in the Philippines being most likely
should reforms be not instituted by President Marcos
immediately.
It is therefore clear that the prosecution's evidence has
established facts and circumstances sufficient for a
finding that excludes a Motion to Dismiss by respondent
Salonga. The Movement for Free Philippines is
undoubtedly a force born on foreign soil it appears to
rely on the resources of foreign entities, and is being (sic)
on gaining ascendancy in the Philippines with the use of
force and for that purpose it has linked itself with even
communist organizations to achieve its end. It appears to
rely on aliens for its supporters and financiers.
The jump from the "contact point" theory to the conclusion of involvement
in subversive activities in the United States is not only inexplicable but
without foundation.
The respondents admit that no evidence was presented directly linking
petitioner Salonga to actual acts of violence or terrorism. There is no proof
of his direct participation in any overt acts of subversion. However, he is
tagged as a leader of subversive organizations for two reasons-
(1) Because his house was used as a "contactpoint"; and
(2) Because "he mentioned some kind of violent struggle in the Philippines
being most likely should reforms be not instituted by President Marcos
immediately."
The "contact point" theory or what the petitioner calls the guilt by visit or
guilt by association" theory is too tenuous a basis to conclude that Senator
Salonga was a leader or mastermind of the bombing incidents. To indict a
person simply because some plotters, masquerading as visitors, have
somehow met in his house or office would be to establish a dangerous
precedent. The right of citizens to be secure against abuse of
governmental processes in criminal prosecutions would be seriously
undermined.
The testimony of Victor Lovely against petitioner Salonga is full of
inconsistencies. Senator Salonga and Atty. Renato Taada could not have
whispered to one another because the petitioner is almost totally deaf.
Lovely could not have met Senator Salonga at a Manglapus party in
Washington, D.C. in 1977 because the petitioner left for the United States
only on November, 1978. Senator Salonga denies having known Mr. Lovely
in the United States or in the Philippines. He states that he has hundred of
visitors from week to week in his residence but cannot recall any Victor
Lovely.
The presence of Lovely in a group picture taken at Mr. Raul Daza's birthday
party in Los Angeles where Senator Salonga was a guest is not proof of
conspiracy. As stated by the petitioner, in his many years in the turbulent
world of politics, he has posed with all kinds of people in various groups
and various places and could not possibly vouch for their conduct.
Commenting on the matter, newspaper columnist Teodoro Valencia stated
that Filipinos love to pose with important visitors and the picture proves
nothing.
It is likewise probable that a national figure and former politician of
Senator Salonga's stature can expect guests and visitors of all kinds to be
visiting his home or office. If a rebel or subversive happens to pose with
the petitioner for a group picture at a birthday party abroad, or even visit
him with others in his home, the petitioner does not thereby become a
rebel or subversive, much less a leader of a subversive group. More
credible and stronger evidence is necessary for an indictment.
Nonetheless, even if we discount the flaws in Lovely's testimony and
dismiss the refutations and arguments of the petitioner, the prosecution
evidence is still inadequate to establish a prima facie finding.
The prosecution has not come up with even a single iota of evidence which
could positively link the petitioner to any proscribed activities of the
Movement for Free Philippines or any subversive organization mentioned
in the complaint. Lovely had already testified that during the party of
former Congressman Raul Daza which was alleged to have been attended
by a number of members of the MFP, no political action was taken but only
political discussion. Furthermore, the alleged opinion of the petitioner
about the likelihood of a violent struggle here in the Philippines if reforms
are not instituted, assuming that he really stated the same, is nothing but a
legitimate exercise of freedom of thought and expression. No man
deserves punishment for his thoughts. Cogitationis poenam memo
meretur. And as the late Justice Oliver W. Holmes stated in the case of U.S.
v. Schwimmer, 279 U.S. 644, " ... if there is any principle of the Constitution
that more imperatively calls for attachment than any other it is the
principle of free thought not free thought for those who agree with us but
freedom for the thought that we hate."
We have adopted the concept that freedom of expression is a "preferred"
right and, therefore, stands on a higher level than substantive economic or
other liberties. The primacy, the high estate accorded freedom of
expression is a fundamental postulate of our constitutional system.
(Gonzales v. Commission on Elections, 29 SCRA 835). As explained by
Justice Cardozo in Palko v. Connecticut (302 U.S. 319) this must be so
because the lessons of history, both political and legal, illustrate that
freedom of thought and speech is the indispensable condition of nearly
every other form of freedom. Protection is especially mandated for
political discussions. This Court is particularly concerned when allegations
are made that restraints have been imposed upon mere criticisms of
government and public officials. Political discussion is essential to the
ascertainment of political truth. It cannot be the basis of criminal
indictments.
The United States Supreme Court in Noto v. United States (367 U.S. 290)
distinguished between the abstract teaching of the moral propriety or
even moral necessity for a resort to force and violence and speech which
would prepare a group for violent action and steel it to such action. In
Watts v. United States (394 U.S. 705), the American court distinguished
between criminal threats and constitutionally protected speech.
It stated:
We do not believe that the kind of political hyperbole
indulged in by petitioner fits within that statutory term.
For we must interpret the language Congress chose
against the background of a profound national
commitment to the principle that debate on public issues
should be uninhibited, robust, and wide open and that it
may well include vehement, caustic, and sometimes
unpleasantly sharp attacks on government and public
officials. New York Times Co. v. Sullivan (376 U.S. 254).
The language of the political arena, like the language
used in labor disputed is often vituperative abusive, and
inexact. We agree with petitioner that his only offense
was a kind of very crude offensive method of stating a
political opposition to the President.
In the case before us, there is no teaching of the moral propriety of a
resort to violence, much less an advocacy of force or a conspiracy to
organize the use of force against the duly constituted authorities. The
alleged remark about the likelihood of violent struggle unless reforms are
instituted is not a threat against the government. Nor is it even the
uninhibited, robust, caustic, or unpleasantly sharp attack which is
protected by the guarantee of free speech. Parenthetically, the American
case of Brandenburg v. Ohio (395 U.S. 444) states that the constitutional
guarantees of free speech and free press do not permit a State to forbid or
proscribe advocacy of the use of force or of law violation except where
such advocacy is directed to inciting or producing imminent lawless action
and is likely to incite or produce such action. The words which petitioner
allegedly used according to the best recollections of Mr. Lovely are light
years away from such type of proscribed advocacy.
Political discussion even among those opposed to the present
administration is within the protective clause of freedom of speech and
expression. The same cannot be construed as subversive activities per se
or as evidence of membership in a subversive organization. Under
Presidential Decree No. 885, Section 3, paragraph 6, political discussion
will only constitute, prima facie evidence of membership in a subversive
organization if such discussion amounts to:
(6) Conferring with officers or other members of such
association or organization in furtherance of any plan or
enterprise thereof.
As stated earlier, the prosecution has failed to produce evidence that
would establish any link between petitioner and any subversive
organization. Even if we lend credence to Lovely's testimony that a political
discussion took place at Daza's birthday party, no proof whatsoever was
adduced that such discussion was in furtherance of any plan to overthrow
the government through illegal means. The alleged opinion that violent
struggle is likely unless reforms are instituted by no means shows either
advocacy of or incitement to violence or furtherance of the objectives of a
subversive organization.
Lovely also declared that he had nothing to do with the bombing on August
22, 1980, which was the only bombing incident that occurred after his
arrival in Manila on August 20, and before the YMCA explosion on
September 6, 1980. (See TSN, pp. 63-63, July 8, 1981). He further testified
that:
WITNESS:
Actually, it was not my intention to do
some kind of bombing against the
government. My bombing mission was
directed against the particular family
(referring to the Cabarrus family [TSN,
p. 11, July 9, 1981] [Rollo, p. 10].
Such a statement wholly negates any politically motivated or subversive
assignment which Lovely was supposed to have been commissioned to
perform upon the orders of his co- accused and which was the very reason
why they answer charged in the first place. The respondent judge also
asked Lovely about the possible relation between Cabarrus and petitioner:
COURT:
Q. Did you suspect any relation
between Cabarrus and Jovito Salonga,
why did you implicate Jovito Salonga?
A. No, your Honor. I did not try to
implicate Salonga.
It should be noted that after Lovely's testimony, the prosecution
manifested to the court that it was adopting him as a prosecution witness.
Therefore, the prosecution became irreversively bound by Lovely's
disclaimers on the witness stand, that it was not his intention "to do some
kind of bombing against the government" and that he "did not try to
implicate Salonga", especially since Lovely is the sole witness adopted by
the prosecution who could supposedly establish the link between the
petitioner and the bombing incidents.
The respondent court should have taken these factors into consideration
before concluding that a prima facie case exists against the petitioner.
Evidence must not only proceed from the mouth of a credible witness but
it must be credible in itself such as the common experience and
observation of mankind can approve as probable under the circumstances.
(People v. Dayad, 56 SCRA 439). In the case at bar, the prosecution cannot
even present a credible version of the petitioner's role in the bombings
even if it ignores the subsequent disclaimers of Lovely and without relying
on mere affidavits including those made by Lovely during his detention.
The resolution dated January 4, 1982 suffers from the same defect. In this
resolution, Lovely's previous declarations about the bombings as part of
the alleged destabilization plan and the people behind the same were
accorded such credibility by the respondent judge as if they had already
been proved beyond reasonable doubt.
The purpose of a preliminary investigation is to secure the innocent against
hasty, malicious and oppressive prosecution, and to protect him from an
open and public accusation of crime, from the trouble, expense and
anxiety of a public trial, and also to protect the state from useless and
expensive trials. (Trocio v. Manta, 118 SCRA 241; citing Hashim v. Boncan,
71 Phil. 216). The right to a preliminary investigation is a statutory grant,
and to withhold it would be to transgress constitutional due process. (See
People v. Oandasa, 25 SCRA 277) However, in order to satisfy the due
process clause it is not enough that the preliminary investigation is
conducted in the sense of making sure that a transgressor shall not escape
with impunity. A preliminary investigation serves not only the purposes of
the State. More important, it is a part of the guarantees of freedom and
fair play which are birthrights of all who live in our country. It is, therefore,
imperative upon the fiscal or the judge as the case may be, to relieve the
accused from the pain of going through a trial once it is ascertained that
the evidence is insufficient to sustain a prima facie case or that no
probable cause exists to form a sufficient belief as to the guilt of the
accused. Although there is no general formula or fixed rule for the
determination of probable cause since the same must be decided in the
light of the conditions obtaining in given situations and its existence
depends to a large degree upon the finding or opinion of the judge
conducting the examination, such a finding should not disregard the facts
before the judge nor run counter to the clear dictates of reasons (See La
Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 391). The judge or fiscal,
therefore, should not go on with the prosecution in the hope that some
credible evidence might later turn up during trial for this would be a
flagrant violation of a basic right which the courts are created to uphold. It
bears repeating that the judiciary lives up to its mission by vitalizing and
not denigrating constitutional rights. So it has been before. It should
continue to be so. Mercado v. Court of First Instance of Rizal, 116 SCRA
93).
The Court had already deliberated on this case, a consensus on the Court's
judgment had been arrived at, and a draft ponencia was circulating for
concurrences and separate opinions, if any, when on January 18, 1985,
respondent Judge Rodolfo Ortiz granted the motion of respondent City
Fiscal Sergio Apostol to drop the subversion case against the petitioner.
Pursuant to instructions of the Minister of Justice, the prosecution
restudied its evidence and decided to seek the exclusion of petitioner
Jovito Salonga as one of the accused in the information filed under the
questioned resolution.
We were constrained by this action of the prosecution and the respondent
Judge to withdraw the draft ponencia from circulating for concurrences
and signatures and to place it once again in the Court's crowded agenda
for further deliberations.
Insofar as the absence of a prima facie case to warrant the filing of
subversion charges is concerned, this decision has been rendered moot
and academic by the action of the prosecution.
Respondent Fiscal Sergio Apostol correctly points out, however, that he is
not precluded from filing new charges for the same acts because the
petitioner has not been arraigned and double jeopardy does not apply. in
that sense, the case is not completely academic.
Recent developments in this case serve to focus attention on a not too well
known aspect of the Supreme Court's functions.
The setting aside or declaring void, in proper cases, of intrusions of State
authority into areas reserved by the Bill of Rights for the individual as
constitutionally protected spheres where even the awesome powers of
Government may not enter at will is not the totality of the Court's
functions.
The Court also has the duty to formulate guiding and controlling
constitutional principles, precepts, doctrines, or rules. It has the symbolic
function of educating bench and bar on the extent of protection given by
constitutional guarantees.
In dela Camara v. Enage (41 SCRA 1), the petitioner who questioned a
P1,195,200.00 bail bond as excessive and, therefore, constitutionally void,
escaped from the provincial jail while his petition was pending. The
petition became moot because of his escape but we nonetheless rendered
a decision and stated:
The fact that the case is moot and academic should not
preclude this Tribunal from setting forth in language
clear and unmistakable, the obligation of fidelity on the
part of lower court judges to the unequivocal command
of the Constitution that excessive bail shall not be
required.
In Gonzales v. Marcos (65 SCRA 624) whether or not the Cultural Center of
the Philippines could validly be created through an executive order was
mooted by Presidential Decree No. 15, the Center's new charter pursuant
to the President's legislative powers under martial law. Stan, this Court
discussed the constitutional mandate on the preservation and
development of Filipino culture for national Identity. (Article XV, Section 9,
Paragraph 2 of the Constitution).
In the habeas corpus case of Aquino, Jr., v. Enrile, 59 SCRA 183), during the
pendency of the case, 26 petitioners were released from custody and one
withdrew his petition. The sole remaining petitioner was facing charges of
murder, subversion, and illegal possession of firearms. The fact that the
petition was moot and academic did not prevent this Court in the exercise
of its symbolic function from promulgating one of the most voluminous
decisions ever printed in the Reports.
In this case, the respondents agree with our earlier finding that the
prosecution evidence miserably fails to establish a prima facie case against
the petitioner, either as a co-conspirator of a destabilization plan to
overthrow the government or as an officer or leader of any subversive
organization. They have taken the initiative of dropping the charges
against the petitioner. We reiterate the rule, however, that this Court will
not validate the filing of an information based on the kind of evidence
against the petitioner found in the records.
WHEREFORE, the petition is DISMISSED for having become moot and
academic.
SO ORDERED.

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G.R. No.

171124 February 13, 2008

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