Admissibility (Rule 128, Section 3)

EN BANC
VIRGILIO O. GARCILLANO,
Petitioner,
- versus THE HOUSE OF REPRESENTATIVES COMMITTEES
ON PUBLIC INFORMATION, PUBLIC ORDER AND
SAFETY, NATIONAL DEFENSE AND SECURITY,
INFORMATION AND COMMUNICATIONS
TECHNOLOGY, and SUFFRAGE AND ELECTORAL
REFORMS,
Respondents.
X----------------------X
SANTIAGO JAVIER RANADA and OSWALDO D.
AGCAOILI,
Petitioners,
- versus THE SENATE OF THE REPUBLIC OF THEPHILIPPINES,
REPRESENTED BY THE SENATE PRESIDENT THE
HONORABLE MANUEL VILLAR,
Respondent.
X----------------------X
MAJ. LINDSAY REX SAGGE,
Petitioner-in-Intervention.
X----------------------X
AQUILINO Q. PIMENTEL, JR., BENIGNO NOYNOY C.
AQUINO, RODOLFO G. BIAZON, PANFILO M.
LACSON, LOREN B. LEGARDA, M.A. JAMBY A.S.
MADRIGAL, and ANTONIO F. TRILLANES,
Respondents-Intervenors.

1|Page

DECISION
NACHURA, J.:
G.R. No. 170338

More than three years ago, tapes ostensibly

containing a wiretapped conversation
purportedly between the President of
the Philippines and a high-ranking official of the
Commission on Elections (COMELEC)
surfaced. They captured unprecedented public
attention and thrust the country into a
controversy that placed the legitimacy of the
present administration on the line, and resulted
in the near-collapse of the Arroyo
government. The tapes, notoriously referred to
as the Hello Garci tapes, allegedly contained
the Presidents instructions to COMELEC
Commissioner Virgilio Garcillano to manipulate
in her favor results of the 2004 presidential
elections. These recordings were to become the
subject of heated
G.R. No.legislative
179275 hearings conducted
separately by committees of both Houses of
Congress.[1]
In the House of Representatives (House), on
June 8, 2005, then Minority Floor Leader Francis
G. Escudero delivered a privilege speech, Tale
of Two Tapes, and set in motion a
Present:
congressional investigation jointly conducted by
the Committees
on C.J.,
Public Information, Public
PUNO,
Order and Safety,
National
QUISUMBING, Defense and
Security, YNARES-SANTIAGO,
Information and Communications
Technology, and
Suffrage and Electoral Reforms
CARPIO,
AUSTRIA-MARTINEZ,
(respondent
House Committees). During the
*
CORONA,
inquiry, several
versions of the wiretapped
CARPIO
MORALES,
conversation
emerged.
But on July 5, 2005,
AZCUNA,
National Bureau of Investigation (NBI) Director
TINGA,
Reynaldo Wycoco, Atty. Alan Paguia and the
CHICO-NAZARIO,
lawyer of former
NBI Deputy Director Samuel
VELASCO, JR.,
Ong submitted
to
the respondent House
NACHURA,
Committees seven
alleged original tape
REYES,
recordings
of the supposed
three-hour taped
LEONARDO-DE
CASTRO, and
conversation.BRION,
After prolonged
and impassioned
JJ.
debate by the committee members on the
admissibilityPromulgated:
and authenticity of the recordings,
the tapes were eventually played in the
[2]
23, 2008
chambersDecember
of the House.

On August 3, 2005, the respondent House

Committees decided to suspend the hearings
indefinitely. Nevertheless, they decided to
prepare committee reports based on the said
recordings and the testimonies of the resource
persons.[3]
Alarmed by these developments, petitioner
Virgilio O. Garcillano (Garcillano) filed with this
Court a Petition for Prohibition and Injunction,
with Prayer for Temporary Restraining Order
and/or Writ of Preliminary
Injunction[4] docketed as G.R. No. 170338. He
prayed that the respondent House Committees
be restrained from using these tape recordings
of the illegally obtained wiretapped
conversations in their committee reports and
for any other purpose. He further implored
that the said recordings and any reference
thereto be ordered stricken off the records of
the inquiry, and the respondent House
Committees directed to desist from further
using the recordings in any of the House
proceedings.[5]
Without reaching its denouement, the House
discussion and debates on the Garci tapes
abruptly stopped.
After more than two years of quiescence,
Senator Panfilo Lacson roused the slumbering
issue with a privilege speech, The Lighthouse
That Brought Darkness. In his discourse,
Senator Lacson promised to provide the public
the whole unvarnished truth the whats,
whens, wheres, whos and whys of the
alleged wiretap, and sought an inquiry into the
perceived willingness of telecommunications
providers to participate in nefarious
wiretapping activities.
On motion of Senator Francis Pangilinan,
Senator Lacsons speech was referred to the
Senate Committee on National Defense and
Security, chaired by Senator Rodolfo Biazon,
who had previously filed two bills[6] seeking to
regulate the sale, purchase and use of
2|Page

wiretapping equipment and to prohibit the

Armed Forces of the Philippines (AFP) from
performing electoral duties.[7]
In the Senates plenary session the following
day, a lengthy debate ensued when Senator
Richard Gordon aired his concern on the
possible transgression of Republic Act (R.A.) No.
4200[8] if the body were to conduct a legislative
inquiry on the matter. On August 28, 2007,
Senator Miriam Defensor-Santiago delivered a
privilege speech, articulating her considered
view that the Constitution absolutely bans the
use, possession, replay or communication of the
contents of the Hello Garci tapes. However,
she recommended a legislative investigation
into the role of the Intelligence Service of the
AFP (ISAFP), the Philippine National Police or
other government entities in the alleged illegal
wiretapping of public officials.[9]
On September 6, 2007, petitioners Santiago
Ranada and Oswaldo Agcaoili, retired justices of
the Court of Appeals, filed before this Court a
Petition for Prohibition with Prayer for the
Issuance of a Temporary Restraining Order
and/or Writ of Preliminary
Injunction,[10] docketed as G.R. No. 179275,
seeking to bar the Senate from conducting its
scheduled legislative inquiry. They argued in the
main that the intended legislative inquiry
violates R.A. No. 4200 and Section 3, Article III
of the Constitution.[11]
As the Court did not issue an injunctive writ, the
Senate proceeded with its public hearings on
the Hello Garci tapes on September
7,[12] 17[13] and October 1,[14]2007.
Intervening as respondents,[15] Senators
Aquilino Q. Pimentel, Jr., Benigno Noynoy C.
Aquino, Rodolfo G. Biazon, Panfilo M. Lacson,
Loren B. Legarda, M.A. Jamby A.S. Madrigal and
Antonio F. Trillanes filed their Comment[16] on
the petition on September 25, 2007.
The Court subsequently heard the case on oral
argument.[17]

On October 26, 2007, Maj. Lindsay Rex Sagge, a

member of the ISAFP and one of the resource
persons summoned by the Senate to appear
and testify at its hearings, moved to intervene
as petitioner in G.R. No. 179275.[18]
On November 20, 2007, the Court resolved to
consolidate G.R. Nos. 170338 and 179275.[19]
It may be noted that while both petitions
involve the Hello Garci recordings, they have
different objectivesthe first is poised at
preventing the playing of the tapes in the House
and their subsequent inclusion in the
committee reports, and the second seeks to
prohibit and stop the conduct of the Senate
inquiry on the wiretapped conversation.
The Court dismisses the first petition, G.R. No.
170338, and grants the second, G.R. No.
179275.
-IBefore delving into the merits of the case, the
Court shall first resolve the issue on the parties
standing, argued at length in their pleadings.
In Tolentino v. COMELEC,[20] we explained that
*l+egal standing or locus standi refers to a
personal and substantial interest in a case such
that the party has sustained or will sustain
direct injury because of the challenged
governmental act x x x, thus,
generally, a party will be allowed to litigate only
when (1) he can show that he has personally
suffered some actual or threatened injury
because of the allegedly illegal conduct of the
government; (2) the injury is fairly traceable to
the challenged action; and (3) the injury is likely
to be redressed by a favorable action.[21]

The gist of the question of standing is whether a

party has alleged such a personal stake in the
outcome of the controversy as to assure that
3|Page

concrete adverseness which sharpens the

presentation of issues upon which the court so
largely depends for illumination of difficult
constitutional questions.[22]
However, considering that locus standi is a
mere procedural technicality, the Court, in
recent cases, has relaxed the stringent direct
injury test. David v. MacapagalArroyo[23] articulates that a liberal policy has
been observed, allowing ordinary citizens,
members of Congress, and civic organizations to
prosecute actions involving the constitutionality
or validity of laws, regulations and
rulings.[24] The fairly recent Chavez v.
Gonzales[25] even permitted a non-member of
the broadcast media, who failed to allege a
personal stake in the outcome of the
controversy, to challenge the acts of the
Secretary of Justice and the National
Telecommunications Commission. The majority,
in the said case, echoed the current policy that
this Court has repeatedly and consistently
refused to wield procedural barriers as
impediments to its addressing and resolving
serious legal questions that greatly impact on
public interest, in keeping with the Courts duty
under the 1987 Constitution to determine
whether or not other branches of government
have kept themselves within the limits of the
Constitution and the laws, and that they have
not abused the discretion given to them.[26]
In G.R. No. 170338, petitioner Garcillano
justifies his standing to initiate the petition by
alleging that he is the person alluded to in the
Hello Garci tapes. Further, his was publicly
identified by the members of the respondent
committees as one of the voices in the
recordings.[27] Obviously, therefore, petitioner
Garcillano stands to be directly injured by the
House committees actions and charges of
electoral fraud. The Court recognizes his
standing to institute the petition for prohibition.
In G.R. No. 179275, petitioners Ranada and
Agcaoili justify their standing by alleging that
they are concerned citizens, taxpayers, and

members of the IBP. They are of the firm

conviction that any attempt to use the Hello
Garci tapes will further divide the country.
They wish to see the legal and proper use of
public funds that will necessarily be defrayed in
the ensuing public hearings. They are worried
by the continuous violation of the laws and
individual rights, and the blatant attempt to
abuse constitutional processes through the
conduct of legislative inquiries purportedly in
aid of legislation.[28]
Intervenor Sagge alleges violation of his right to
due process considering that he is summoned
to attend the Senate hearings without being
apprised not only of his rights therein through
the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of
Legislation, but also of the intended legislation
which underpins the investigation. He further
intervenes as a taxpayer bewailing the useless
and wasteful expenditure of public funds
involved in the conduct of the questioned
hearings.[29]
Given that petitioners Ranada and Agcaoili
allege an interest in the execution of the laws
and that intervenor Sagge asserts his
constitutional right to due process,[30] they
satisfy the requisite personal stake in the
outcome of the controversy by merely being
citizens of the Republic.
Following the Courts ruling in Francisco, Jr. v.
The House of Representatives,[31] we find
sufficient petitioners Ranadas and Agcaoilis
and intervenor Sagges allegation that the
continuous conduct by the Senate of the
questioned legislative inquiry will necessarily
involve the expenditure of public funds.[32] It
should be noted that inFrancisco, rights
personal to then Chief Justice Hilario G. Davide,
Jr. had been injured by the alleged
unconstitutional acts of the House of
Representatives, yet the Court granted standing
to the petitioners therein for, as in this case,
they invariably invoked the vindication of their
own rightsas taxpayers, members of
4|Page

Congress, citizens, individually or in a class suit,

and members of the bar and of the legal
professionwhich were also supposedly
violated by the therein assailed unconstitutional
acts.[33]
Likewise, a reading of the petition in G.R. No.
179275 shows that the petitioners and
intervenor Sagge advance constitutional issues
which deserve the attention of this Court in
view of their seriousness, novelty and weight as
precedents. The issues are of transcendental
and paramount importance not only to the
public but also to the Bench and the Bar, and
should be resolved for the guidance of all.[34]
Thus, in the exercise of its sound discretion and
given the liberal attitude it has shown in prior
cases climaxing in the more recent case
of Chavez, the Court recognizes the legal
standing of petitioners Ranada and Agcaoili and
intervenor Sagge.
- II The Court, however, dismisses G.R. No. 170338
for being moot and academic. Repeatedly
stressed in our prior decisions is the principle
that the exercise by this Court of judicial power
is limited to the determination and resolution of
actual cases and controversies.[35] By actual
cases, we mean existing conflicts appropriate or
ripe for judicial determination, not conjectural
or anticipatory, for otherwise the decision of
the Court will amount to an advisory opinion.
The power of judicial inquiry does not extend to
hypothetical questions because any attempt at
abstraction could only lead to dialectics and
barren legal questions and to sterile conclusions
unrelated to actualities.[36] Neither will the
Court determine a moot question in a case in
which no practical relief can be granted. A case
becomes moot when its purpose has become
stale.[37] It is unnecessary to indulge in academic
discussion of a case presenting a moot question
as a judgment thereon cannot have any
practical legal effect or, in the nature of things,
cannot be enforced.[38]

In G.R. No. 170338, petitioner Garcillano

implores from the Court, as aforementioned,
the issuance of an injunctive writ to prohibit the
respondent House Committees from playing the
tape recordings and from including the same in
their committee report. He likewise prays that
the said tapes be stricken off the records of the
House proceedings. But the Court notes that
the recordings were already played in the
House and heard by its members.[39] There is
also the widely publicized fact that the
committee reports on the Hello Garci inquiry
were completed and submitted to the House in
plenary by the respondent
committees.[40] Having been overtaken by these
events, the Garcillano petition has to be
dismissed for being moot and academic. After
all, prohibition is a preventive remedy to
restrain the doing of an act about to be done,
and not intended to provide a remedy for an act
already accomplished.[41]
- III As to the petition in G.R. No. 179275, the Court
grants the same. The Senate cannot be allowed
to continue with the conduct of the questioned
legislative inquiry without duly published rules
of procedure, in clear derogation of the
constitutional requirement.
Section 21, Article VI of the 1987 Constitution
explicitly provides that *t+he Senate or the
House of Representatives, or any of its
respective committees may conduct inquiries in
aid of legislation in accordance with its duly
published rules of procedure. The requisite of
publication of the rules is intended to satisfy the
basic requirements of due
process.[42] Publication is indeed imperative, for
it will be the height of injustice to punish or
otherwise burden a citizen for the transgression
of a law or rule of which he had no notice
whatsoever, not even a constructive
one.[43] What constitutes publication is set forth
in Article 2 of the Civil Code, which provides
that *l+aws shall take effect after 15 days
5|Page

following the completion of their publication

either in the Official Gazette, or in a newspaper
of general circulation in the Philippines.[44]
The respondents in G.R. No. 179275 admit in
their pleadings and even on oral argument that
the Senate Rules of Procedure Governing
Inquiries in Aid of Legislation had been
published in newspapers of general circulation
only in 1995 and in 2006.[45] With respect to the
present Senate of the 14th Congress, however,
of which the term of half of its members
commenced on June 30, 2007, no effort was
undertaken for the publication of these rules
when they first opened their session.
Recently, the Court had occasion to rule on this
very same question. In Neri v. Senate
Committee on Accountability of Public Officers
and Investigations,[46] we said:
Fourth, we find merit in the argument of the
OSG that respondent Committees likewise
violated Section 21 of Article VI of the
Constitution, requiring that the inquiry be in
accordance with the duly published rules of
procedure. We quote the OSGs explanation:
The phrase duly published rules of procedure
requires the Senate of every Congress to
publish its rules of procedure governing
inquiries in aid of legislation because every
Senate is distinct from the one before it or after
it. Since Senatorial elections are held every
three (3) years for one-half of the Senates
membership, the composition of the Senate
also changes by the end of each term. Each
Senate may thus enact a different set of rules as
it may deem fit. Not having published its Rules
of Procedure, the subject hearings in aid of
legislation conducted by the 14th Senate, are
therefore, procedurally infirm.

Justice Antonio T. Carpio, in his Dissenting and

Concurring Opinion, reinforces this ruling with
the following rationalization:

The present Senate under the 1987 Constitution

is no longer a continuing legislative body. The
present Senate has twenty-four members,
twelve of whom are elected every three years
for a term of six years each. Thus, the term of
twelve Senators expires every three years,
leaving less than a majority of Senators to
continue into the next Congress. The 1987
Constitution, like the 1935 Constitution,
requires a majority of Senators to constitute a
quorum to do business. Applying the same
reasoning in Arnault v. Nazareno, the Senate
under the 1987 Constitution is not a continuing
body because less than majority of the Senators
continue into the next Congress. The
consequence is that the Rules of
Procedure must be republished by the Senate
after every expiry of the term of twelve
Senators.[47]

The subject was explained with greater lucidity

in our Resolution[48] (On the Motion for
Reconsideration) in the same case, viz.:
On the nature of the Senate as a continuing
body, this Court sees fit to issue a
clarification. Certainly, there is no debate that
the Senate as an institution is continuing, as it
is not dissolved as an entity with each national
election or change in the composition of its
members. However, in the conduct of its dayto-day business the Senate of each Congress
acts separately and independently of the Senate
of the Congress before it. The Rules of the
Senate itself confirms this when it states:
RULE XLIV
UNFINISHED BUSINESS

Undeniably from the foregoing, all pending

matters and proceedings, i.e., unpassed bills
and even legislative investigations, of the
Senate of a particular Congress are
considered terminatedupon the expiration of
that Congress and it is merely optional on the
Senate of the succeeding Congress to take up
such unfinished matters, not in the same status,
but as if presented for the first time. The logic
and practicality of such a rule is readily
apparent considering that the Senate of the
succeeding Congress (which will typically have a
different composition as that of the previous
Congress) should not be bound by the acts and
deliberations of the Senate of which they had
no part. If the Senate is a continuing body even
with respect to the conduct of its business, then
pending matters will not be deemed terminated
with the expiration of one Congress but will, as
a matter of course, continue into the next
Congress with the same status.
This dichotomy of the continuity of the Senate
as an institution and of the opposite nature of
the conduct of its business is reflected in its
Rules. The Rules of the Senate (i.e. the Senates
main rules of procedure) states:
RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE
RULES
SEC. 136. At the start of each session in which
the Senators elected in the preceding elections
shall begin their term of office, the President
may endorse the Rules to the appropriate
committee for amendment or revision.

SEC. 123. Unfinished business at the end of the

session shall be taken up at the next session in
the same status.

The Rules may also be amended by means of a

motion which should be presented at least one
day before its consideration, and the vote of the
majority of the Senators present in the session
shall be required for its approval.

All pending matters and proceedings shall

terminate upon the expiration of one (1)
Congress, but may be taken by the succeeding
Congress as if present for the first time.

RULE LII
DATE OF TAKING EFFECT

6|Page

SEC. 137. These Rules shall take effect on the

date of their adoption and shall remain in force
until they are amended or repealed.
Section 136 of the Senate Rules quoted above
takes into account the new composition of the
Senate after an election and the possibility of
the amendment or revision of the Rules at the
start ofeach session in which the newly elected
Senators shall begin their term.
However, it is evident that the Senate has
determined that its main rules are intended to
be valid from the date of their adoption until
they are amended or repealed. Such language
is conspicuously absent from
the Rules. The Rules simply state (t)hese Rules
shall take effect seven (7) days after publication
in two (2) newspapers of general
circulation. The latter does not explicitly
provide for the continued effectivity of such
rules until they are amended or repealed. In
view of the difference in the language of the
two sets of Senate rules, it cannot be presumed
that the Rules (on legislative inquiries) would
continue into the next Congress. The Senate of
the next Congress may easily adopt different
rules for its legislative inquiries which come
within the rule on unfinished business.
The language of Section 21, Article VI of the
Constitution requiring that the inquiry be
conducted in accordance with the duly
published rules of procedure is categorical. It is
incumbent upon the Senate to publish the rules
for its legislative inquiries in each Congress or
otherwise make the published rules clearly
state that the same shall be effective in
subsequent Congresses or until they are
amended or repealed to sufficiently put public
on notice.
If it was the intention of the Senate for its
present rules on legislative inquiries to be
effective even in the next Congress, it could
have easily adopted the same language it had
used in its main rules regarding effectivity.

7|Page

Respondents justify their non-observance of the

constitutionally mandated publication by
arguing that the rules have never been
amended since 1995 and, despite that, they are
published in booklet form available to anyone
for free, and accessible to the public at the
Senates internet web page.[49]
The Court does not agree. The absence of any
amendment to the rules cannot justify the
Senates defiance of the clear and unambiguous
language of Section 21, Article VI of the
Constitution. The organic law instructs, without
more, that the Senate or its committees may
conduct inquiries in aid of legislation only in
accordance with duly published rules of
procedure, and does not make any distinction
whether or not these rules have undergone
amendments or revision. The constitutional
mandate to publish the said rules prevails over
any custom, practice or tradition followed by
the Senate.
Justice Carpios response to the same argument
raised by the respondents is illuminating:
The publication of the Rules of Procedure in the
website of the Senate, or in pamphlet form
available at the Senate, is not sufficient under
the Taada v. Tuvera ruling which requires
publication either in the Official Gazette or in a
newspaper of general circulation. The Rules of
Procedure even provide that the rules shall
take effect seven (7) days after publication in
two (2) newspapers of general circulation,
precluding any other form of
publication. Publication in accordance
with Taada is mandatory to comply with the
due process requirement because theRules of
Procedure put a persons liberty at risk. A
person who violates the Rules of
Procedure could be arrested and detained by
the Senate.

The invocation by the respondents of the

provisions of R.A. No. 8792,[50] otherwise known

as the Electronic Commerce Act of 2000, to

support their claim of valid publication through
the internet is all the more incorrect. R.A. 8792
considers an electronic data message or an
electronic document as the functional
equivalent of a written document only
for evidentiary purposes.[51] In other words, the
law merely recognizes the admissibility in
evidence (for their being the original) of
electronic data messages and/or electronic
documents.[52] It does not make the internet a
medium for publishing laws, rules and
regulations.

the Philippines and/or any of its committees

from conducting any inquiry in aid of legislation
centered on the Hello Garci tapes.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:

REYNATO S. PUNO
Given this discussion, the respondent Senate
Chief Justice
Committees, therefore, could not, in violation
of the Constitution, use its unpublished rules in
the legislative inquiry subject of these
consolidated cases. The conduct of inquiries in
LEONARDO A. QUISUMBING
aid of legislation by the Senate has to be
Associate Justice
deferred until it shall have caused the
publication of the rules, because it can do so ANTONIO T. CARPIO
only in accordance with its duly published rules
Associate Justice
of procedure.
Very recently, the Senate caused the
(On Leave)
publication of the Senate Rules of Procedure RENATO C. CORONA
Governing Inquiries in Aid of Legislation in Associate Justice
the October 31, 2008 issues of Manila
Bulletin and Malaya. While we take judicial ADOLFO S. AZCUNA
notice of this fact, the recent publication doesAssociate Justice
not cure the infirmity of the inquiry sought to
be prohibited by the instant petitions. InsofarMINITA
as
V. CHICO-NAZARIO
the consolidated cases are concerned, the Associate Justice
legislative investigation subject thereof still
could not be undertaken by the respondent RUBEN T. REYES
Senate Committees, because no published rules
Associate Justice
governed it, in clear contravention of the
Constitution.
ARTURO D. BRION
With the foregoing disquisition, the Court finds
Associate Justice
it unnecessary to discuss the other issues raised
in the consolidated petitions.
CERTIFICATION
WHEREFORE, the petition in G.R. No. 170338
is DISMISSED, and the petition in G.R. No.
179275 is GRANTED. Let a writ of prohibition be
issued enjoining the Senate of the Republic of
8|Page

Pursuant to Section 13, Article VIII of the

Constitution, I certify that the conclusions in the
above decision had been reached in

CONSUELO YN
Associate Just

MA. ALICIA AU
Associate Just

CONCHITA CA
Associate Just

DANTE O. TING
Associate Just

PRESBITERO J.
Associate Just

TERESITA J. LE
Associate Just

consultation before the case was assigned to

the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
*

On leave.
Rollo (G.R. No. 179275), p. 168.
[2]
Rollo (G.R. No. 170338), pp. 7-9.
[3]
Id. at 9.
[4]
Id. at 1-38.
[5]
Id. at 36-38.
[6]
Rollo (G.R. No. 179275), pp. 215-220.
[7]
Id. at 169.
[8]
An Act to Prohibit and Penalize Wire
Tapping and Other Related Violations of the
Privacy of Communications and for Other
Purposes.
[9]
Rollo (G.R. No. 179275), pp. 169-170.
[10]
Id. at 3-17.
[11]
Id. at 7-13.
[12]
Id. at 24.
[13]
Id. at 44.
[14]
Memorandum of RespondentsIntervenors, p. 6.
[15]
Rollo (G.R. No. 179275), pp. 68-70.
[16]
Id. at 71-90.
[17]
Id. at 62. The Court identified the
following issues for discussion in the October 2,
2007 Oral Argument:
1.
Whether the petitioners have locus
standi to bring this suit.
2.
Whether the Rules of Procedure of
the Senate and the Senate Committees
governing the conduct of inquiries in aid of
legislation have been published, in accordance
with Section 21, Article VI of the Constitution.
Corollarily:
(a) Whether these Rules must be published
by every Congress.
(b) What mode/s of publication will comply
with the constitutional requirement.
3.
Whether the inquiry, which is
centered on the so-called Garci tapes, violates
Section 3, Article III of the Constitution and/or
Republic Act No. 4200. (Id. at 66.)
[1]

9|Page

[18]

Motion for Leave to Intervene and

Petition-in-Intervention filed on October 26,
2007.
[19]
Resolution dated November 20, 2007.
[20]
465 Phil. 385, 402 (2004).
[21]
Tolentino v. Commission on Elections,
id.
[22]
Province of Batangas v. Romulo, G.R.
No. 152774, May 27, 2004, 429 SCRA 736, 755.
[23]
G.R. Nos. 171396, 171409, 171485,
171483, 171400, 171489 and 171424, May 3,
2006, 489 SCRA 160.
[24]
David v. Macapagal-Arroyo, id. at 218.
[25]
G.R. No. 168338, February 15, 2008,
545 SCRA 441.
[26]
Id.
[27]
Reply in G.R. No. 170338, pp. 36-37.
[28]
Rollo (G.R. No. 179275), p. 4.
[29]
Petition-in-Intervention, p. 3.
[30]
David v. Macapagal-Arroyo, supra
note 23, at 223.
[31]
460 Phil. 830 (2003).
[32]
Francisco, Jr. v. The House of
Representatives, id. at 897.
[33]
Francisco, Jr. v. The House of
Representatives, supra note 31, at 895.
[34]
Kilosbayan, Inc. v. Guingona, Jr., G.R.
No. 113375, May 5, 1994, 232 SCRA 110, 139.
[35]
Dumlao v. COMELEC, 184 Phil. 369,
377 (1980). This case explains the standards
that have to be followed in the exercise of the
power of judicial review, namely: (1) the
existence of an appropriate case; (2) an interest
personal and substantial by the party raising the
constitutional question; (3) the plea that the
function be exercised at the earliest
opportunity; and (4) the necessity that the
constitutional question be passed upon in order
to decide the case.
[36]
La Bugal-Blaan Tribal Association, Inc.
v. Ramos, 465 Phil. 860, 889-890 (2004).
[37]
Rufino v. Endriga, G.R. Nos. 139554
and 139565, July 21, 2006, 496 SCRA 13, 46.
[38]
Lanuza, Jr. v. Yuchengco, G.R. No.
157033, March 28, 2005, 454 SCRA 130, 138.
[39]
Rollo (G.R. No. 170338), p. 9.
[40]
See news article Separate findings,
no closure by Michael Lim Umbac published

in The Philippine Daily Inquirer on March 29,

2006; News item 5 House committees in
Garci probe file report on Monday published
in The Manila Bulletin on March 25, 2006.
[41]
Simon, Jr. v. Commission on Human
Rights, G.R. No. 100150, January 5, 1994, 229
SCRA 117, 135-136; Agustin v. De la Fuente, 84
Phil. 515, 517 (1949).
[42]
Bernas, The 1987 Constitution of
the Philippines, A Commentary, 1996 ed., p.
679.
[43]
Taada v. Tuvera, 220 Phil. 422, 432433 (1985).
[44]
As amended on June 18, 1987 by
Executive Order No. 200 entitled Providing for
the Publication of Laws Either in the Official
Gazette or in a Newspaper of General
Circulation in the Philippines as a Requirement
for their Effectivity.
[45]
Rollo (G.R. No. 179275), p. 179;
Memorandum of Respondents-Intervenors, pp.
9-10.
[46]
G.R. No. 180643, March 25, 2008, 549
SCRA 77, 135-136.
[47]
Id. at 297-298.
[48]
Dated September 4, 2008.
[49]
TSN, Oral Arguments, March 4, 2008,
(G.R. No. 179275), pp. 413-414.
[50]
Entitled An Act Providing for the
Recognition and Use of Electronic Commercial
and Non-Commercial Transactions and
Documents, Penalties for Unlawful Use Thereof
and For Other Purposes, approved on June 14,
2000.
[51]
MCC Industrial Sales Corporation v.
Ssangyong Corporation, G.R. No. 170633,
October 15, 2007, 536 SCRA 408. (Emphasis
supplied.)
[52]
Sections 6, 7 and 10 of R.A. No. 8792
read:
Sec. 6. Legal Recognition of Data Messages. Information shall not be denied legal effect,
validity or enforceability solely on the grounds
that it is in the data message purporting to give
rise to such legal effect, or that it is merely
referred to in that electronic data message.
Sec. 7. Legal Recognition of Electronic
Documents. Electronic documents shall have
10 | P a g e

the legal effect, validity or enforceability as any

other document or legal writing, and
(a) Where the law requires a document to be in
writing, that requirement is met by an
electronic document if the said electronic
document maintains its integrity and reliability,
and can be authenticated so as to be usable for
subsequent reference, in that
(i) The electronic document has remained
complete and unaltered, apart from the
addition of any endorsement and any
authorized change, or any change which arises
in the normal course of communication, storage
and display; and
(ii) The electronic document is reliable in the
light of the purpose for which it was generated
and in the light of all the relevant
circumstances.
(b) Paragraph (a) applies whether the
requirement therein is in the form of an
obligation or whether the law simply provides
consequences for the document not being
presented or retained in its original form.
(c) Where the law requires that a document be
presented or retained in its original form, that
requirement is met by an electronic document
if
(i) There exists a reliable assurance as to the
integrity of the document from the time when it
was first generated in its final form; and
(ii) That document is capable of being displayed
to the person to whom it is to be
presented: Provided, That no provision of this
Act shall apply to vary any and all requirements
of
existing laws on formalities required in
the execution of documents for their validity.
For evidentiary purposes, an electronic
document shall be the functional equivalent of
a written document under existing laws.
This Act does not modify any statutory rule
relating to the admissibility of electronic data
messages or electronic documents, except the
rules relating to authentication and best
evidence.
Sec. 10. Original Documents. (1) Where the
law requires information to be presented or
retained in its original form, that requirement is

met by an electronic data message or electronic

document if:
(a) The integrity of the information from the
time when it was first generated in its final
form, as an electronic data message or
electronic document is shown by
evidence aliunde or otherwise; and
(b) Where it is required that information be
presented, that the information is capable of
being displayed to the person to whom it is to
be presented.
(2) Paragraph (1) applies whether the
requirement therein is in the form of an
obligation or whether the law simply provides
consequences for the information not being
presented or retained in its original form.
(3) For the purposes of subparagraph (a) of
paragraph (1):
(a) the criteria for assessing integrity shall be
whether the information has remained
complete and unaltered, apart from the
addition of any endorsement and any change
which arises in the normal course of
communication, storage and display; and
(b) the standard of reliability required shall be
assessed in the light of the purpose for which
the information was generated and in the light
of all relevant circumstances.

SECOND DIVISION

G.R. No. 186228

PEOPLE OF THE
PHILIPPINES,
Plaintiff-Appellee,

Present:

-versus-

CARPIO, J.,
Chairperson,
BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

Promulgated:
ANTONIO LAUGA Y
PINA ALIASTERIO,
Accused-Appellant.

March 15, 2010

DECISION
PEREZ, J.:
Before Us for final review is the trial courts
conviction of the appellant for the rape of his
thirteen-year old daughter.
Consistent with the ruling of this Court
in People v. Cabalquinto,[1] the real name and
the personal circumstances of the victim, and
any other information tending to establish or
compromise her identity, including those of her
immediate family or household members, are
not disclosed in this decision.
The Facts
In an Information dated 21 September
2000,[2] the appellant was accused of the crime
of QUALIFIED RAPE allegedly committed as
follows:
That on or about the 15th day of March 2000, in
the evening, at Barangay xxx, municipality of
xxx, province of Bukidnon, Philippines, and
within the jurisdiction of this Honorable Court,

11 | P a g e

the above-named accused, being the father of

AAA with lewd design, with the use of force and
intimidation, did then and there, willfully,
unlawfully and criminally have carnal
knowledge with his own daughter AAA, a 13
year[s]old minor against her will.[3]
On 12 October 2000, appellant entered a plea
of not guilty.[4] During the pre-trial conference,
the prosecution and the defense stipulated and
admitted: (a) the correctness of the findings
indicated in the medical certificate of the
physician who examined AAA; (b) that AAA was
only thirteen (13) years old when the alleged
offense was committed; and (c) that AAA is the
daughter of the appellant.[5] On trial, three (3)
witnesses testified for the prosecution, namely:
victim AAA;[6] her brother BBB;[7] and one
Moises Boy Banting,[8] a bantay bayan in
the barangay. Their testimonies revealed the
following:
In the afternoon of 15 March 2000, AAA was
left alone at home.[9] AAAs father, the
appellant, was having a drinking spree at the
neighbors place.[10] Her mother decided to
leave because when appellant gets drunk, he
has the habit of mauling AAAs mother.[11] Her
only brother BBB also went out in the company
of some neighbors.[12]
At around 10:00 oclock in the evening,
appellant woke AAA up;[13] removed his pants,
slid inside the blanket covering AAA and
removed her pants and underwear;[14] warned
her not to shout for help while threatening her
with his fist;[15] and told her that he had a knife
placed above her head.[16] He proceeded to
mash her breast, kiss her repeatedly, and
inserted his penis inside her vagina.[17]
Soon after, BBB arrived and found AAA
crying.[18] Appellant claimed he scolded her for
staying out late.[19] BBB decided to take AAA
with him.[20] While on their way to their
maternal grandmothers house, AAA recounted
her harrowing experience with their
father.[21] Upon reaching their grandmothers
12 | P a g e

house, they told their grandmother and uncle of

the incident,[22] after which, they sought the
assistance of Moises Boy Banting.[23]
Moises Boy Banting found appellant in his
house wearing only his underwear.[24] He
invited appellant to the police station,[25] to
which appellant obliged. At the police outpost,
he admitted to him that he raped AAA because
he was unable to control himself.[26]
The following day, AAA submitted herself to
physical examination.[27] Dra. Josefa Arlita L.
Alsula, Municipal Health Officer of x x x,
Bukidnon, issued the Medical Certificate, which
reads:
hyperemic vulvae with 4 oclock & 6
oclock freshly lacerated hymen; (+) minimal to
moderate bloody discharges 2 to an alleged
raping incident[28]
On the other hand, only appellant testified for
the defense. He believed that the charge
against him was ill-motivated because he
sometimes physically abuses his wife in front of
their children after engaging in a heated
argument,[29] and beats the children as a
disciplinary measure.[30] He went further to
narrate how his day was on the date of the
alleged rape.
He alleged that on 15 March 2000, there was no
food prepared for him at lunchtime.[31] Shortly
after, AAA arrived.[32] She answered back when
confronted.[33] This infuriated him that he
kicked her hard on her buttocks.[34]
Appellant went back to work and went home
again around 3 oclock in the
afternoon.[35] Finding nobody at home,[36] he
prepared his dinner and went to sleep.[37]
Later in the evening, he was awakened by the
members of the Bantay Bayan headed by
Moises Boy Banting.[38] They asked him to go
with them to discuss some matters.[39] He later

learned that he was under detention because

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

Admissibility in Evidence of an
Extrajudicial Confession before
a Bantay Bayan

Appellant argues that even if he, indeed,

confessed to Moises Boy Banting, a
bantay bayan, the confession was
inadmissible in evidence because he was not
assisted by a lawyer and there was no valid
waiver of such requirement.[54]
The case of People v. Malngan[55] is the
authority on the scope of the Miranda doctrine
provided for under Article III, Section
12(1)[56] and (3)[57] of the
Constitution. In Malngan, appellant questioned
the admissibility of her extrajudicial confessions
given to the barangay chairman and a neighbor
of the private complainant. This Court
distinguished. Thus:
Arguably, the barangay tanods, including
the Barangay Chairman, in this particular
instance, may be deemed as law enforcement
officer for purposes of applying Article III,
Section 12(1) and (3), of the
Constitution. When accused-appellant was
brought to the barangay hall in the morning of 2
January 2001, she was already a suspect,
actually the only one, in the fire that destroyed
several houses x x x. She was, therefore,
already under custodial investigation and the
rights guaranteed by x x x [the] Constitution
should have already been observed or applied
to her. Accused-appellants confession to
Barangay Chairman x x x was made in response
to the interrogation made by the latter
admittedly conducted without first informing
accused-appellant of her rights under the
Constitution or done in the presence of
counsel. For this reason, the confession of
accused-appellant, given to Barangay Chairman
x x x, as well as the lighter found x x x in her bag
are inadmissible in evidence against her x x x.

[But such does] not automatically lead to her

acquittal. x x x [T]he constitutional safeguards
during custodial investigations do not apply to
those not elicited through questioning by the
police or their agents but given in an ordinary
manner whereby the accused verbally admits
x x x as x x x in the case at bar when accusedappellant admitted to Mercedita Mendoza, one
of the neighbors x x x [of the private
complainant].[58] (Emphasis supplied)

Following the rationale behind the ruling

in Malngan, this Court needs to ascertain
whether or not a bantay bayan may be
deemed a law enforcement officer within the
contemplation of Article III, Section 12 of the
Constitution.
In People of the Philippines v. Buendia,[59] this
Court had the occasion to mention the nature
of a bantay bayan, that is, a group of male
residents living in [the] area organized for the
purpose of keeping peace in their
community[,which is] an accredited auxiliary of
the x x x PNP.[60]

the bantay bayan, are recognized by the local

government unit to perform functions relating
to the preservation of peace and order at
the barangay level. Thus, without ruling on the
legality of the actions taken
byMoises Boy Banting, and the specific scope of
duties and responsibilities delegated to a
bantay bayan, particularly on the authority to
conduct a custodial investigation, any inquiry he
makes has the color of a state-related function
and objective insofar as the entitlement of a
suspect to his constitutional rights provided for
under Article III, Section 12 of the Constitution,
otherwise known as the Miranda Rights, is
concerned.
We, therefore, find the extrajudicial confession
of appellant, which was taken without a
counsel, inadmissible in evidence.
Be that as it may, We agree with the Court of
Appeals that the conviction of the appellant
was not deduced solely from the assailed
extrajudicial confession but from the
confluence of evidence showing his guilt
beyond reasonable doubt.[63]

Also, it may be worthy to consider that

pursuant to Section 1(g) of Executive Order No.
309 issued on 11 November 1987, as amended,
a Peace and Order Committee in
each barangay shall be organized to serve as
implementing arm of the City/Municipal Peace
and Order Council at
the Barangay level.[61] The composition of the
Committee includes, among others: (1)
the Punong Barangay as Chairman; (2) the
Chairman of the Sangguniang Kabataan; (3) a
Member of the Lupon Tagapamayapa; (4)
a BarangayTanod; and (5) at least three (3)
Members of existing Barangay-Based AntiCrime or neighborhood Watch Groups or a Non
Government Organization Representative wellknown in his community.[62]

Credibility of the Witnesses for the Prosecution

This Court is, therefore, convinced

that barangay-based volunteer organizations in
the nature of watch groups, as in the case of

The principle, however, is not applicable in the

case at bar. In Bartocillo, the two testimonies
could not simply stand together because:

14 | P a g e

Appellant assails the inconsistencies in the

testimonies of AAA and her brother BBB. AAA
testified that BBB accompanied her to the
house of their grandmother. Thereafter, they,
together with her relatives, proceeded to look
for a bantay bayan. On the other hand, BBB
testified that he brought her sister to the house
of their bantay bayan after he learned of the
incident.
Citing Bartocillo v. Court of Appeals,[64] appellant
argues that where the testimonies of two key
witnesses cannot stand together, the inevitable
conclusion is that one or both must be telling a
lie, and their story a mere concoction.[65]

On one hand, if we are to believe

Susan, Orlando could not have possibly seen the
hacking incident since he had accompanied
Vicente home. On the other hand, if we are to
accept the testimony of Orlando, then Susan
could not have possibly witnessed the hacking
incident since she was with Vicente at that
time.
Here, the testimony of AAA does not run
contrary to that of BBB. Both testified that they
sought the help of a bantay bayan. Their
respective testimonies differ only as to when
the help was sought for, which this Court could
well attribute to the nature of the testimony of
BBB, a shortcut version of AAAs testimony that
dispensed with a detailed account of the
incident.

crime was not in fact committed.[70] No person,

much less a woman, could attain such height of
cruelty to one who has sired her, and from
whom she owes her very existence, and for
which she naturally feels loving and lasting
gratefulness.[71] Even when consumed with
revenge, it takes a certain amount of
psychological depravity for a young woman to
concoct a story which would put her own father
to jail for the most of his remaining life and drag
the rest of the family including herself to a
lifetime of shame.[72] It is highly improbable for
[AAA] against whom no proof of sexual
perversity or loose morality has been shown to
fake charges much more against her own
father. In fact her testimony is entitled to
greater weight since her accusing words were
directed against a close relative.[73]
Elements of Rape

At any rate, the Court of Appeals is correct in

holding that the assailed inconsistency is too
trivial to affect the veracity of the
testimonies.[66] In fact, inconsistencies which
refer to minor, trivial or inconsequential
circumstances even strengthen the credibility of
the witnesses, as they erase doubts that such
testimonies have been coached or rehearsed.[67]
Appellants contention that AAA charged him of
rape only because she bore grudges against him
is likewise unmeritorious. This Court is not
dissuaded from giving full credence to the
testimony of a minor complainant by motives of
feuds, resentment or revenge.[68] As correctly
pointed out by the Court of Appeals:
Indeed, mere disciplinary chastisement is not
strong enough to make daughters in a Filipino
family invent a charge that would not only bring
shame and humiliation upon them and their
families but also bring their fathers into the
gallows of death.[69] The Supreme Court has
repeatedly held that it is unbelievable for a
daughter to charge her own father with rape,
exposing herself to the ordeal and
embarrassment of a public trial and subjecting
her private parts to examination if such heinous
15 | P a g e

Having established the credibility of the

witnesses for the prosecution, We now examine
the applicability of the Anti-Rape Law of
1997[74] to the case at bar.
The law provides, in part, that rape is
committed, among others, *b+y a man who
shall have carnal knowledge of a woman
through force, threat or intimidation.[75] The
death penalty shall be imposed if it is
committed with aggravating/qualifying
circumstances, which include, *w+hen the
victim is under eighteen (18) years of age and
the offender is a parent.[76]
The consistent and forthright testimony of AAA
detailing how she was raped, culminating with
the penetration of appellants penis into her
vagina, suffices to prove that appellant had
carnal knowledge of her. When a woman states
that she has been raped, she says in effect all
that is necessary to show that rape was
committed.[77] Further, when such testimony
corresponds with medical findings, there is
sufficient basis to conclude that the essential
requisites of carnal knowledge have been
established.[78]

The Court of Appeals pointed out that the

element of force or intimidation is not essential
when the accused is the father of the victim,
inasmuch as his superior moral ascendancy or
influence substitutes for violence and
intimidation.[79] At any rate, AAA was actually
threatened by appellant with his fist and a knife
allegedly placed above AAAs head.[80]
It may be added that the self-serving defense of
appellant cannot prevail over the positive and
straightforward testimony of AAA. Settled is
the rule that, alibi is an inherently weak
defense that is viewed with suspicion because it
is easy to fabricate.[81] Alibi and denial must
be supported by strong corroborative evidence
in order to merit credibility.[82] Moreover, for
the defense of alibi to prosper, the accused
must establish two elements (1) he was not at
the locus delicti at the time the offense was
committed; and (2) it was physically impossible
for him to be at the scene at the time of its
commission.[83] Appellant failed in this wise.
Aggravating/Qualifying Circumstances
The presence of the qualifying circumstances of
minority and relationship with the offender in
the instant case has likewise been adequately
established. Both qualifying circumstances were
specifically alleged in the Information,
stipulated on and admitted during the pre-trial
conference, and testified to by both parties in
their respective testimonies. Also, such
stipulation and admission, as correctly pointed
out by the Court of Appeals, are binding upon
this Court because they are judicial admissions
within the contemplation of Section 4, Rule 129
of the Revised Rules of Court. It provides:
Sec. 4. Judicial admissions. - An admission,
verbal or written, made by a party in the course
of the proceedings in the same case, does not
require proof. The admission may be
contradicted only by showing that it was made
through palpable mistake or that no such
admission was made.
16 | P a g e

Penalty
Finally, in increasing the amount of civil
indemnity and damages each
from P50,000.00 to P75,000.00, the Court of
Appeals correctly considered controlling
jurisprudence to the effect that where, as here,
the rape is committed with any of the
qualifying/aggravating circumstances
warranting the imposition of the death penalty,
the victim is entitled to P75,000.00 as civil
indemnity ex delicto[84] and P75,000.00 as moral
damages.[85] However, the award of exemplary
damages should have been increased
from P25,000.00to P30,000.00.[86] Also, the
penalty of reclusion perpetua in lieu of death
was correctly imposed considering that the
imposition of the death penalty upon appellant
would have been appropriate were it not for
the enactment of Republic Act No. 9346, or An
Act Prohibiting the Imposition of Death Penalty
in the Philippines.[87] We further affirm the
ruling of the Court of Appeals on appellants
non-eligibility for parole. Sec. 3 of Republic Act
No. 9346 clearly provides that persons
convicted of offenses punished
withreclusion perpetua, or whose sentences will
be reduced to reclusion perpetua by reason of
the law, shall not be eligible for parole.
WHEREFORE, the Decision of the Court of
Appeals dated 30 September 2008 in CA-G.R. CR
HC No. 00456-MIN is
hereby AFFIRMED. Appellant
Antonio Lauga isGUILTY beyond reasonable
doubt of qualified rape, and is hereby
sentenced to suffer the penalty of reclusion
perpetua without eligibility for parole and to
pay AAAP75,000.00 as civil
indemnity, P75,000.00 as moral damages,
and P30,000.00 as exemplary damages.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice

[4]

ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
C. DEL CASTILLO
Associate
Justice

MARIANO

Associate Justice

ROBERTO A. ABAD
Associate Justice

ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before
the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairpersons
Attestation, it is hereby certified that the
conclusions in the above Decision were reached
in consultation before the case was assigned to
the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice

[1]

G.R. No. 167693, 19 September 2006,

502 SCRA 419.
[2]
Records, p. 27.
[3]
Id.
17 | P a g e

Id. at 32.
Id. at 36.
[6]
TSN, 12 November 2001.
[7]
TSN, 11 March 2002.
[8]
TSN, 5 June 2003.
[9]
TSN, 12 November 2001, p. 4.
[10]
Id. at 5.
[11]
Id. at 4.
[12]
Id. at 4-5.
[13]
Id. at 5; TSN, 11 March 2002, p. 4.
[14]
Id. at 6.
[15]
Id.
[16]
Id.
[17]
Id. at 7.
[18]
Id. at 8; TSN, 11 March 2002, pp. 4-5.
[19]
TSN, 12 November 2001, p. 10.
[20]
Id. at 8-9.
[21]
Id. at 9.
[22]
Id. at 11-12.
[23]
Id. at 12; TSN, 11 March 2002, p. 6.
[24]
Id. at 13.
[25]
Id. at 15.
[26]
Id. at 13.
[27]
Records, p. 5.
[28]
Id.
[29]
TSN, 12 November 2001, pp. 6-8.
[30]
Id. at 10.
[31]
Id. at 12-13.
[32]
Id. at 13.
[33]
Id. at 13-14.
[34]
Id. at 15.
[35]
Id. at 16.
[36]
Id.
[37]
Id. at 17.
[38]
Id. at 18.
[39]
Id. at 19.
[40]
Id. at 21.
[41]
Penned by
Judge Pelagio B. Estopia. Records, pp. 95-104.
[42]
Id. at 104.
[43]
Id.
[44]
Id. at 79.
[45]
Penned by Associate
Justice Elihu A. Ybaez with Associate Justices
Romulo V. Borja and Mario V. Lopez
concurring. CA rollo, pp. 56-79.
[46]
Id.
[47]
Id. at 92.
[5]

WE CONCUR:

[48]

Rollo, p. 31.
Id. at 40-43 and 46-48.
[50]
Id. at 17.
[51]
Id. at 18.
[52]
Id. at 18-19.
[53]
Id. at 19-21.
[54]
Id. at 18-19.
[55]
G.R. No. 170470, 26 September 2006,
503 SCRA 294.
56
(1) Any person under investigation for
the commission of an offense shall have the
right to be informed of his right to remain silent
and to have competent and independent
counsel preferably of his own choice. If the
person cannot afford the services of counsel, he
must be provided with one. These rights cannot
be waived except in writing and in the presence
of counsel.
[57]
(3) Any confession or admission
obtained in violation of this Section or Section
17 hereof shall be inadmissible in evidence
against him.
[58]
People v. Malngan, supra note 55 at
324-325.
[59]
432 Phil. 471 (2002).
[60]
Id. at 476.
[61]
Executive Order No. 309, Sec. 1(g), as
amended, quoted in Memorandum Circular No.
2008-114 dated 17 July 2008 of the Department
of the Interior and Local Government.
[62]
Id.
[63]
Rollo, p. 19.
[64]
420 Phil. 50 (2001).
[65]
Id. at 59-60.
[66]
Rollo, p. 17.
[67]
People v. Villadares, 406 Phil. 530, 540
(2001), citing People v. Gargar, 360 Phil. 729,
741 (1998).
[68]
People v. Aycardo, G.R. No. 168299, 6
October 2008, 567 SCRA 523, 535-536.
[69]
Rollo, p. 19, citing People
v. Mascarias, 432 Phil. 96, 102 (2002), further
citing People v. Tabugoca, 349 Phil. 236, 253
(1998).
[70]
Id., citing People v. Sangil, Sr., 342
Phil. 499, 508-509 (1997), further citing People
v. Mabunga, G.R. No. 96441, 13 November
1992, 215 SCRA 694, 704.
[49]

18 | P a g e

[71]

Id. at 19-20, citing People v. Sangil,

Sr., id. at 509.
[72]
Id. at 20, citing People v. Melivo, 323
Phil. 412, 428 (1996).
[73]
Id., citing People v. Sangil, Sr., supra
note 70 at 509.
[74]
Republic Act No. 8353.
[75]
Id., Article 266-A, Paragraph 1(a).
[76]
Id., Article 266-B.
[77]
People v. Jacob, G.R. No. 177151, 22
August 2008, 563 SCRA 191, 207.
[78]
People v. Tuazon, G.R. No. 168102, 22
August 2008, 563 SCRA 124, 135.
[79]
Rollo, pp. 20-21.
[80]
TSN, 11 March 2002, p. 6.
[81]
People v. Jacob, supra note 77 at 203.
[82]
Id.
[83]
People v. Aycardo, supra note 68 at
534.
[84]
People v. Sia, G.R. No. 174059, 27
February 2009, 580 SCRA 364, 367-368.
[85]
Id.
[86]
Id.
[87]
Id.

Judicial Notice (Rule 129)

Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

CORINTHIAN GARDENS
ASSOCIATION, INC.,
Petitioner,

- versus -

SPOUSES REYNALDO and

MARIA LUISA TANJANGCO, and SPOUSES FRANK and
TERESITA CUASO,
Respondents.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review

on Certiorari[1] under Rule 45 of the Rules of
Civil Procedure seeking the reversal of the Court
of Appeals (CA) Decision[2]dated January 31,
2003 in CA-G.R. CV No. 43217, which reversed
and set aside the Decision[3] of the Regional
Trial Court (RTC) of Quezon City, dated March
30, 1993.

The Antecedents:

19 | P a g e

Respondents-spouses Reynaldo and Maria Luisa

Tanjangco (the Tanjangcos) own Lots 68 and 69
covered by Transfer Certificates of Title (TCT)
No. 242245[4] and 282961[5] respectively,
located at Corinthian Gardens Subdivision,
Quezon City, which is managed by petitioner
Corinthian Gardens Association, Inc.
(Corinthian). On the other hand, respondentsspouses Frank and Teresita Cuaso (the Cuasos)
own Lot 65 which is adjacent to the Tanjangcos
lots.
G.R. No. 160795
Before the Cuasos constructed their house
on Present:
Lot 65, a relocation survey was
necessary. As Geodetic Engineer Democrito De
Dios
YNARES-SANTIAGO,
(Engr. De Dios), operating
J.,
under the
business
Chairperson,
name D.M. De Dios Realty and
Surveying,
AUSTRIA-MARTINEZ,
conducted all the previous surveys
for CHICO-NAZARIO,
the subdivision's developer, Corinthian
referred
NACHURA,
Engr. and
De Dios to the Cuasos. Before,
during
REYES,
andJJ.after the construction of the said
house, Corinthian conducted periodic ocular
inspections
Promulgated:
in order to determine compliance
with the approved plans pursuant to the
Manual
June 27,
of Rules
2008and Regulations of
Corinthian.[6] Unfortunately, after the Cuasos
constructed their house employing the services
of C.B. Paraz & Construction Co., Inc. (C.B.
Paraz) as builder, their perimeter fence
encroached on the Tanjangcos Lot 69 by 87
square meters.
No amicable settlement was reached between
the parties. Thus, the Tanjangcos demanded
that the Cuasos demolish the perimeter fence
but the latter failed and refused, prompting the
Tanjangcos to file with the RTC a suit against
the Cuasos for Recovery of Possession with
Damages.[7]
Eventually, the Cuasos filed a Third-Party
Complaint[8] against Corinthian, C.B. Paraz and
Engr. De Dios. The Cuasos ascribed negligence
to C.B. Paraz for its failure to ascertain the
proper specifications of their house, and to
Engr. De Dios for his failure to undertake an
accurate relocation survey, thereby, exposing
them to litigation. The Cuasos also faulted

Corinthian for approving their relocation survey

and building plans without verifying their
accuracy and in making representations as to
Engr. De Dios' integrity and competence. The
Cuasos alleged that had Corinthian exercised
diligence in performing its duty, they would not
have been involved in a boundary dispute with
the Tanjangcos. Thus, the Cuasos opined that
Corinthian should also be held answerable for
any damages that they might incur as a result of
such construction.
On March 30, 1993, the RTC rendered a
Decision in favor of the Tanjangcos. It ruled
that the Cuasos perimeter wall encroached on
the land of the Tanjangos by 87 square
meters. It, however, ruled that the Cuasos
were builders in good faith, and gave the
Tanjangcos the option to sell and the Cuasos
the option to buy the encroaching portion of
the land, at a price to be agreed upon by the
parties within sixty (60) days from receipt of the
said Decision. In the event that the Cuasos
were unable and unwilling to purchase the said
portion, the perimeter wall should be
demolished at the latters expense. The RTC
also ordered the Cuasos to pay monthly rentals
of P2,000.00 commencing from the time of the
filing of the complaint. The RTC likewise held
that C.B. Paraz was grossly negligent in not
taking into account the correct boundaries of
Cuasos lot when it constructed the house. It,
thus, ordered C.B. Paraz to pay moral and
exemplary damages as well as attorneys fees to
the Tanjangcos and the Cuasos. The third-party
complaint against Corinthian and Engr. De Dios,
on the other hand, was dismissed for lack of
cause of action.
The Tanjangcos filed a Motion for
Reconsideration[9] of the said RTC Decision
which the RTC, however, denied in its
Order[10] dated June 28, 1993.
Dissatisfied with the RTC ruling, the Tanjangcos,
the Cuasos, and C.B. Paraz all appealed to the
CA.

20 | P a g e

On appeal, the CA reversed and set aside the

RTC Decision. It held that the Cuasos acted in
bad faith in land-grabbing the 87 square meterportion of Lot 69 as ofApril 5, 1989.
Correlatively, the CA allowed the Tanjangcos to
exercise the rights granted under Articles 449,
450, 451 and 549 of the New Civil Code, which
include the right to demand the demolition of
the offending perimeter wall after reimbursing
the Cuasos the necessary expenses for the
preservation of the encroached area. The
Cuasos were ordered to pay monthly rentals
of P10,000.00 for the use, enjoyment and
occupancy of the lot from 1989 up to the time
they vacate the property considering the
location and category of the same. They were,
likewise, ordered to pay the
Tanjangcos P100,000.00, as moral
damages, P50,000.00 as exemplary damages,
and P150,000.00 as attorneys fees. The CA also
imposed six percent (6%) interest per annum on
all the awards. The Cuasos appeal against the
Tanjangcos, on the other hand, was dismissed
for lack of merit. On the third-party complaints,
Corinthian, C.B. Paraz and Engr. De Dios were all
found negligent in performing their respective
duties and so they were ordered to contribute
five percent (5%) each, or a total of fifteen
percent (15%) to all judgment sums and
amounts that the Cuasos shall eventually pay
under the decision, also with interest of six
percent (6%) per annum.
Only Corinthian filed a Motion for
Reconsideration[11] of the CA Decision within
the 15-day reglementary period. No motion for
reconsideration was filed by the Cuasos, C.B.
Paraz and/or Engr. De Dios.
About six (6) months later, or on August 12,
2003, the Cuasos filed a
Comment/Manifestation[12] praying that they be
allowed to adopt Corinthians Motion for
Reconsideration.
In its Resolution[13] dated November 14, 2003,
the CA denied Corinthians Motion for
Reconsideration.

Hence, Corinthian filed the instant Petition for

Review on Certiorari assailing the CA Decision
and Resolution, and impleading the Cuasos as
one of the respondents being the third-party
plaintiffs in the RTC.
This Court gave due course to Corinthians
petition and required the parties to submit their
respective memorandum.[14] In compliance, the
Cuasos submitted their Memorandum[15] and
Supplement to Memorandum,[16] which were
both noted by this Court in its Resolutions
dated January 10, 2005[17] and February 2,
2005, [18]respectively.
In the meantime, the Tanjangcos moved for
partial entry of judgment of the CA Decision
which was granted by the CA in its
Resolution[19] dated May 26, 2006, directing the
issuance of an Entry of Judgment and a
Certification that its Decision dated January 31
2003 has become final and executory with
respect to the Cuasos, C.B. Paraz and Engr. De
Dios for their failure to file an appeal assailing
the said Decision before this Court.
The Tanjangcos then moved for the execution
of the judgment against the Cuasos, specifically
the demolition of the perimeter fence,[20] which
was also granted by the RTC in its
Order[21] dated December 18, 2006.
Other than the filing of an Opposition[22] and a
Motion for Reconsideration[23] before the RTC,
the Cuasos prayed for the issuance of a
temporary restraining order (TRO) and/or
preliminary injunction before this Court to
enjoin the demolition of the perimeter fence.
They averred that the premature demolition of
the alleged encroaching perimeter wall and
other improvements will cause grave and
irreparable damage to them, because what is
sought to be demolished is part of their
residence. They claimed that no amount of
money will compensate for the damage they
stand to suffer should any demolition
subsequently prove to be wrongful. They
21 | P a g e

argued that before any execution can be carried

out, it is necessary to first determine whether
or not Corinthian was negligent in approving
the building plan and whether or not it acted in
good faith in doing so. Such determination,
according to the Cuasos, will in turn determine
whether or not they were in good faith in
constructing the house.[24]
The Tanjangcos opposed the Cuasos'
application for TRO. They countered that the
only pending matter with this Court is the
appeal by Corinthian; hence, the
implementation of the January 31, 2003
Decision of the CA against the Cuasos will not
preempt the outcome of the said pending
incidents. Also, any action taken by this Court
on Corinthians petition would not benefit the
Cuasos for they did not appeal the adverse
decision against them. Accordingly, they cannot
obtain affirmative relief from this Court by
reason or on account of the appeal taken by
Corinthian. The appeal, they added, is personal
to Corinthian. Finally, they argued that the
Cuasos are now estopped from questioning the
enforcement of the CA Decision since they
issued a managers check to pay the money
judgment.[25]
In this Court's Resolution dated July 18, 2007,
we denied the Cuasos' application for TRO
and/or writ of preliminary injunction for lack of
merit.
The denial was based on sound legal
principles. It is axiomatic that to be entitled to
the injunctive writ, one must show that there
exists a right to be protected which is directly
threatened by the act sought to be enjoined.
Furthermore, there must be a showing that the
invasion of the right is material and substantial,
that the right of complainant is clear and
unmistakable, and that there is an urgent and
paramount necessity for the writ to issue in
order to prevent serious damage.[26]
In the Cuasos case, their right to injunctive
relief had not been clearly and unmistakably

demonstrated. They failed to show proof that

there is material and substantial invasion of
their right to warrant the issuance of an
injunctive writ. Indeed, the enforcement of the
writ of execution, which would demolish the
Cuasos perimeter fence, is manifestly
prejudicial to their interest. However, they
possess no clear and unmistakable legal right
that merits protection through the writ of
preliminary injunction.[27] Their right to maintain
the said fence had been declared inferior to the
Tanjangcos right to the demolition of the fence,
after the CA judgment had become final and
executory as to the Cuasos.
It bears stressing that the Cuasos failed to
appeal the ruling of the CA. This failure to
contest the CA decision before this Court was
fatal to their cause. It had the effect of an
admission that they indeed acted in bad faith,
as they accepted the CA ruling. The decision
of the CA, therefore, became binding and final
as to them.[28] As a matter of fact, the CA
already issued a partial entry of judgment
against the Cuasos.
An injunction to stay a final and executory
decision is unavailing except only after a
showing that facts and circumstances exist
which would render execution unjust or
inequitable, or that a change in the situation of
the parties occurred. Here, no such exception
exists as shown by the facts earlier narrated.[29]
While it is true that this Court noted the
Memorandum and Supplemental Memorandum
filed by the Cuasos, such notation was made
only insofar as Corinthian made them
respondents in this petition. This Court cannot
grant to the Cuasos any affirmative relief as
they did not file a petition questioning the CA
ruling. Consequently, the Decision of the CA
holding that the Cuasos acted in bad faith and
that the perimeter fence may now be
demolished cannot be put in issue by the
Cuasos. It is a fundamental principle that a
party who does not appeal, or file a petition
for certiorari, is not entitled to any affirmative
relief.[30] An appellee who is not an appellant
22 | P a g e

may assign errors in his brief where his purpose

is to maintain the judgment, but he cannot seek
modification or reversal of the judgment or
claim affirmative relief unless he has also
appealed.[31] This applies to C.B. Paraz and
Engr. De Dios who likewise failed to assail the
aforementioned CA Decision.
With this matter put to rest, we now go to the
main issues raised by Corinthian, the sole
petitioner in this case, to wit:
a) Whether or not there is legal basis for the
Court of Appeals to hold
petitioner
Corinthian Gardens Association, Inc. liable to
pay 5% of the judgment money to Sps.
Tanjangco on account of
the
encroachment
made by Sps. Cuaso[;
and]

b)
Whether or not the Court of Appeals has
legal basis to increase unilaterally and without
proof the amount prayed for in the
Complaint, i.e., P2,000.00, as reasonable
compensation for the use and enjoyment of the
portion of the lot encroached upon,
to P10,000.00.[32]
Corinthian claims that the approval of the
building plan of the Cuasos was not tainted with
negligence as it did not approve the survey
relocation plan but merely the architectural,
structural and sanitary plans for Cuasos' house;
that the purpose of the said approval is not to
ensure that the house to be erected on a
particular lot is constructed within its
boundaries but only to ensure compliance with
the Manual of Rules and Regulations; that while
Corinthian conducts actual site inspections, the
inspection and approval of the building plans
are limited to table inspection only; that the
survey relocation plan was never submitted for
Corinthian's approval; that the acceptance of
the builder's bond did not make Corinthian
automatically liable for the encroachment and
for damages; and that Corinthian approved the
building plan with the good faith and due

diligence required under the circumstances. It,

thus, concludes that it cannot be held liable
to pay five percent (5%) of the money
judgment
to the Tanjangcos on account of the encroa
chment made by the Cuasos. Likewise, it finds
no legal basis for the CA to unilaterally increase
the amount of the adjudged rent
from P2,000.00 to P10,000.00 which was not
prayed for by the Tanjangcos in their complaint
and in the absence of evidence adduced by the
parties.[33]

done. Such fault or negligence, if there is no

pre-existing contractual relation between the
parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
In every tort case filed under this provision,
plaintiff has to prove by a preponderance of
evidence: (1) the damages suffered by the
plaintiff; (2) the fault or negligence of the
defendant or some other person for whose act
he must respond; and (3) the connection of
cause and effect between the fault or
negligence and the damages incurred.[35]

On the other hand, the Tanjangcos stand by the

ruling of the CA and opine that Corinthian was
negligent in approving the building plan of the
Cuasos. They submit that Corinthian's claim that
it merely conducts table inspections of
buildings further bolsters their argument that
Corinthian was negligent in conveniently and
unilaterally restricting and limiting the coverage
of its approval, contrary to its own Manual of
Rules and Regulations; that the acceptance of a
builder's bond does not automatically make
Corinthian liable but the same affirms the fact
that a homeowner can hold it liable for the
consequences of the approval of a building
plan; and that Corinthian, by regularly
demanding and accepting membership dues,
must be wary of its responsibility to protect the
rights and interests of its members. Lastly, the
Tanjangcos contend that a court can take
judicial notice of the general increase in the
rentals of real estate, as in this case, where the
CA considered the value of their lot in the
posh-and-swank Corinthian Gardens
Subdivision and the fact that they were
deprived of it for almost two decades. The
Tanjangcos pray that this Court sustain the
ruling of the CA.[34]

Undeniably, the perimeter fence of the Cuasos

encroached on Lot 69 owned by the Tanjangcos
by 87 square meters as duly found by both the
RTC and the CA in accordance with the evidence
on record. As a result, the Tanjangcos suffered
damage in having been deprived of the use of
that portion of their lot encroached
upon. Thus, the primordial issue to be resolved
in this case is whether Corinthian was negligent
under the circumstances and, if so, whether
such negligence contributed to the injury
suffered by the Tanjangcos.

The instant case is obviously one for tort, as

governed by Article 2176 of the Civil Code,
which provides:
ART. 2176. Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the damage
23 | P a g e

A negligent act is an inadvertent act; it may be

merely carelessly done from a lack of ordinary
prudence and may be one which creates a
situation involving an unreasonable risk to
another because of the expectable action of the
other, a third person, an animal, or a force of
nature. A negligent act is one from which an
ordinary prudent person in the actor's position,
in the same or similar circumstances, would
foresee such an appreciable risk of harm to
others as to cause him not to do the act or to do
it in a more careful manner.[36]
The test to determine the existence of
negligence in a particular case may be stated as
follows: Did the defendant in committing the
alleged negligent act use that reasonable care
and caution which an ordinary person would
have used in the same situation? If not, then he
is guilty of negligence. The law, in effect, adopts
the standard supplied by the imaginary conduct
of the discreet paterfamilias in Roman law. The

existence of negligence in a given case is not

determined by reference to the personal
judgment of the actor in the situation before
him. The law considers what would be reckless,
blameworthy, or negligent in a man of ordinary
intelligence and prudence, and determines
liability according to that standard.[37]
By this test, we find Corinthian negligent.
While the issue of Corinthian's alleged
negligence is factual in character,[38] a review by
this Court is proper because the CA's factual
findings differ from those of the RTC's.[39] Thus,
after a meticulous review of the evidence on
record, we hold that the CA committed no
reversible error when it deviated from the
findings of fact of the RTC. The CA's findings and
conclusions are substantiated by the evidence
on record and are more in accord with law and
reason. Indeed, it is clear that Corinthian failed
to exercise the requisite diligence in insuring
that the Cuasos abide by its Manual of Rules
and Regulations, thereby resulting in the
encroachment on the Tanjangcos property.

Association will not allow the entry of

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

We agree with the CA when it aptly held:

Corinthian cannot and should not be allowed to
justify or excuse its negligence by claiming that
its approval of the Cuasos building plans was
only limited to a so-called table inspection;
and not actual site measurement. To accept
some such postulate is to put a premium on
negligence. Corinthian was not organized solely
for the defendants Cuasos. It is also the
subdivision of the plaintiffs-spouses Tanjangcos
- and of all others who have their dwelling units
or abodes therein. Pertinently, its Manual of
Rules and Regulations stipulates in Section 3
thereof (under the heading Construction), thus:

And then again third party defendantappellee Corinthian Garden required the
posting of a builders cash bond (Exh. 5Corinthian) from the defendants-appellants
Cuasos and the third-party defendant C.B. Paraz
Construction to secure the performance of their
undertaking. Surely, Corinthian does not imply
that while it may take the benefits from the
Builders cash bond, it may, Pilate-like, wash its
hands of any responsibility or liability that
would or might arise from the construction or
building of the structure for which the cash
bond was in the first place posted. That is not
only unjust and immoral, but downright
unchristian and iniquitous.

A. Rules and Regulations

No new construction can be started unless the
building plans are approved by the
Association and the appropriate Builders cash
bond and pre-construction fees are paid. The
24 | P a g e

Under the same parity of reasoning, the

payment by the appellants-Cuasos to the
appellee Corinthian of pre-construction and
membership fees in the Association must
necessarily entail the creation of certain

obligations on the part of Corinthian. For duties

and responsibilities always go hand in hand with
rights and privileges. That is the law of life - and
that is the law of every civilized society. It is an
axiom of equity that he who receives the
benefits must share the burdens.[40]

By its Manual of Rules and Regulations, it is

reasonable to assume that Corinthian, through
its representative, in the approval of building
plans, and in the conduct of periodic
inspections of on-going construction projects
within the subdivision, is responsible in insuring
compliance with the approved plans, inclusive
of the construction of perimeter walls, which in
this case is the subject of dispute between the
Tanjangcos and the Cuasos.[41] It is not just or
equitable to relieve Corinthian of any liability
when, by its very own rules, it imposes its
authority over all its members to the end that
no new construction can be started unless the
plans are approved by the Association and the
appropriate cash bond and pre-construction
fees are paid. Moreover, Corinthian can
impose sanctions for violating these rules. Thus,
the proposition that the inspection is merely a
table inspection and, therefore, should
exempt Corinthian from liability, is
unacceptable. After all, if the supposed
inspection is merely a table inspection and
the approval granted to every member is a
mere formality, then the purpose of the rules
would be defeated. Compliance therewith
would not be mandatory, and sanctions
imposed for violations could be disregarded.
Corinthian's imprimatur on the construction of
the Cuasos' perimeter wall over the property of
the Tanjangcos assured the Cuasos that
everything was in order.
In sum, Corinthians failure to prevent the
encroachment of the Cuasos perimeter wall
into Tanjangcos property despite the
inspection conducted constitutes negligence
and, at the very least, contributed to the injury
suffered by the Tanjangcos.

25 | P a g e

On the second issue, our ruling in Spouses

Badillo v. Tayag[42] is instructive:
Citing Sia v. Court of Appeals [272 SCRA 141,
May 5, 1997], petitioners argue that the MTC
may take judicial notice of the reasonable rental
or the general price increase of land in order to
determine the amount of rent that may be
awarded to them. In that case, however, this
Court relied on the CA's factual findings, which
were based on the evidence
presented before the trial court. In
determining reasonable rent,
the RTC therein took account of the following
factors: 1) the realty assessment of the land, 2)
the increase in realty taxes, and 3) the
prevailing rate of rentals in the vicinity. Clearly,
the trial court relied, not on mere judicial
notice, but on the evidence presented before it.
Indeed, courts may fix the reasonable amount
of rent for the use and occupation of a disputed
property. However, petitioners herein erred in
assuming that courts, in determining the
amount of rent, could simply rely on their own
appreciation of land values without considering
any evidence. As we have said earlier, a court
may fix the reasonable amount of rent, but it
must still base its action on the evidence
adduced by the parties.
In Herrera v. Bollos [G.R. No. 138258, January
18, 2002], the trial court awarded rent to the
defendants in a forcible entry case. Reversing
the RTC, this Court declared that the reasonable
amount of rent could be determined not by
mere judicial notice, but by supporting
evidence:
x x x A court cannot take judicial notice of a
factual matter in controversy. The court may
take judicial notice of matters of public
knowledge, or which are capable of
unquestionable demonstration, or ought to be
known to judges because of their judicial
functions. Before taking such judicial notice, the
court must allow the parties to be heard

thereon. Hence, there can be no judicial notice

on the rental value of the premises in question
without supporting evidence.

Truly, mere judicial notice is inadequate,

because evidence is required for a court to
determine the proper rental value. But
contrary to Corinthian's arguments, both
the RTC and the CA found that indeed rent was
due the Tanjangcos because they were deprived
of possession and use of their property. This
uniform factual finding of the RTC and the CA
was based on the evidence presented below.
Moreover, in Spouses Catungal v. Hao,[43] we
considered the increase in the award of rentals
as reasonable given the particular
circumstances of each case. We noted therein
that the respondent denied the petitioners the
benefits, including rightful possession, of their
property for almost a decade.
Similarly, in the instant case, the Tanjangcos
were deprived of possession and use of their
property for more than two decades through no
fault of their own. Thus, we find no cogent
reason to disturb the monthly rental fixed by
the CA.
All told, the CA committed no reversible error.
WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals
is AFFIRMED. Costs against petitioner.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

26 | P a g e

MA. ALICIA AUSTRIAMARTINEZ

Associate Justice

MINITA V. CHICONAZARIO
Associate Justice

RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before
the case was assigned to the writer of the
opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the
above Decision had been reached in
consultation before the case was assigned to
the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice
[1]

Rollo, pp. 8-53.

Penned by Associate Justice Renato C.
Dacudao (now retired), with Associate Justices
Eugenio S. Labitoria (now retired) and Danilo B.
Pine (now retired), concurring; id. at 56-108.
[3]
Particularly docketed as Civil Case No.
Q-89-2706; id. at 172-199.
[4]
Rollo, pp. 148-149.
[5]
Id. at 150.
[6]
Id. at 119-139.
[7]
Id. at 143-147.
[8]
Id. at 153-164.
[9]
Id. at 200-207.
[10]
Id. at 208.
[11]
Id. at 209-216.
[12]
Id. at 225-227.
[2]

[13]

Id. at 110-115.
Resolution dated September 15, 2004;
id. at 308.
[15]
Rollo, pp. 310-325.
[16]
Id. at 419-433.
[17]
Id. at 450.
[18]
Id. at 452.
[19]
Penned by Associate Justice Renato C.
Dacudao (now retired), with Associate Justices
Celia C. Librea-Leagogo and Mariflor PunzalanCastillo, concurring; id. at 457-460.
[20]
Motion for Execution dated July 10,
2006; id. at 493-501.
[21]
Rollo, pp. 509-511.
[22]
Id. at 502-508.
[23]
Id. at 517-529.
[24]
Application for a Temporary
Restraining Order and/or Writ of Preliminary
Injunction dated May 4, 2007; id. at 465-491.
[25]
Opposition dated May 17, 2007; id. at
556-574.
[26]
Almeida v. Court of Appeals, G.R. No.
159124, January 17, 2005, 448 SCRA 681, 694.
[27]
Philippine School of Business
Administration-Quezon City v. Tolentino-Genilo,
G.R. No. 159277, December 21, 2004, 447 SCRA
442, 448.
[28]
In GSIS v. Court of Appeals, 368 Phil.
36, 50 (1999), citing Firestone Tire and Rubber
Company of the Philippines v. Tempongko, 27
SCRA 418, 424 (1969) and Singapore Airlines
Limited v. Court of Appeals, 243 SCRA 143, 148
(1995), this Court held: The decision of the trial
court as affirmed by the Court of Appeals not
having been appealed by the insurer (MIGC) of
the Toyota Tamaraw, the same is now final as
far as that entity is concerned, and may not be
modified by this Court. Failure of any parties to
appeal the judgment as against him makes such
judgment final and executory. By the same
token, an appeal by one party from such
judgment does not inure to the benefit of the
other party who had not appealed nor can it be
deemed to be an appeal of such other party
from the judgment against him.
[29]
Philippine Sinter Corporation v.
Cagayan Electric Power and Light Co., Inc., 431
Phil. 324, 333 (2002).
[14]

27 | P a g e

[30]

Alauya, Jr. v. COMELEC, 443 Phil. 893,

907 (2003).
[31]
Acebedo Optical Company, Inc. v.
Court of Appeals, 385 Phil. 956, 976 (2000).
[32]
Corinthian's Memorandum
dated December 6, 2004, rollo, pp. 384-385.
[33]
Id. at 363-407.
[34]
Tanjangcos' Memorandum
dated November 29, 2004; id. at 331-361.
[35]
Child Learning Center, Inc. v. Tagorio,
G.R. No. 150920, November 25, 2005, 476 SCRA
236, 242.
[36]
Capili v. Cardaa, G.R. No. 157906,
November 2, 2006, 506 SCRA 569, 575, citing 65
C.J.S. 1(14), p. 462.
[37]
Fernando v. Court of Appeals, G.R. No.
92087, May 8, 1992, 208 SCRA 714, 718,
citing Picart v. Smith, 37 Phil. 809, 813 (1992).
[38]
Pestao v. Sumayang, 400 Phil. 740,
749 (2000).
[39]
Manila Electric Company v. Court of
Appeals, 413 Phil. 338, 354 (2001).
[40]

Rollo, pp. 104-105 (Citations omitted).

Art. IV, Section 3(d) of Corinthian's
Manual of Rules and Regulations provides:
All on-going construction shall be subject to
inspection of the Association's representative
for the purpose of determining compliance to
the approved plans. It shall be considered a
violation if the contractor/lot owner does not
permit entry of the Association representative
doing inspection works. Such violation will be
subject to the sanctions available to the
Association such as (a) denial of entry of
construction materials (b) renovation of ID's of
construction workers and (c) cutting-off of
water service. The schedule of inspection shall
be as follows:
A. For original construction
xxx
2. When the perimeter walls are being
constructed.
xxx
[42]
448 Phil. 606, 623 (2003).
[43]
407 Phil. 309, 323 (2001).
[41]

FIRST DIVISION
SOCIAL JUSTICE SOCIETY
G.R. No.
156052
(SJS), VLADIMIR ALARIQUE T.
CABIGAO and BONIFACIO S.
TUMBOKON,
Petitioners,
Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
-versusCORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.
HON. JOSE L. ATIENZA, JR.,
in his capacity as Mayor of the
City of Manila,
Respondent.
CHEVRON PHILIPPINES INC.,
PETRON CORPORATION and
PILIPINAS SHELL PETROLEUM
CORPORATION,
Movants-Intervenors.
DEPARTMENT OF ENERGY,
Movant-Intervenor.
Promulgated:
February 13, 2008
RESOLUTION
CORONA, J.:

After we promulgated our decision in this case

on March 7, 2007, Chevron Philippines Inc.
(Chevron), Petron Corporation (Petron) and
Pilipinas Shell Petroleum Corporation (Shell)
(collectively, the oil companies) and the
Republic of the Philippines, represented by the
Department of Energy (DOE), filed their
respective motions for leave to intervene and
for reconsideration of the decision.

Shell and Petron are engaged in the business of

manufacturing, refining and likewise importing,
distributing and marketing of petroleum
products in the Philippines.[2] The DOE is a
governmental agency created under Republic
Act (RA) No. 7638[3] and tasked to prepare,
integrate, coordinate, supervise and control all
plans, programs, projects and activities of the
government relative to energy exploration,
development, utilization, distribution and
conservation.[4]
The facts are restated briefly as follows:
Petitioners Social Justice Society, Vladimir
Alarique T. Cabigao and Bonifacio S. Tumbokon,
in an original petition for mandamus under Rule
65 of the Rules of Court, sought to compel
respondent Hon. Jose L. Atienza, Jr., then mayor
of the City of Manila, to enforce Ordinance No.
8027. This ordinance was enacted by
the Sangguniang Panlungsod of Manila on
November 20, 2001,[5] approved by respondent
Mayor on November 28, 2001,[6] and became
effective on December 28, 2001 after
publication.[7] Sections 1 and 3 thereof state:
SECTION 1. For the purpose of promoting
sound urban planning and ensuring health,
public safety, and general welfare of the
residents of Pandacan and Sta. Ana as well as its
adjoining areas, the land use of [those] portions
of land bounded by the Pasig River in the north,
PNR Railroad Track in the east, Beata St. in the
south, Palumpong St. in the southwest, and
Estero de Pandacan in the west[,] PNR Railroad
in the northwest area, Estero de Pandacan in
the [n]ortheast, Pasig River in the southeast and
Dr. M.L. Carreon in the southwest. The area of
Punta, Sta. Ana bounded by the Pasig River,
Marcelino Obrero St., Mayo 28 St., and F.
Manalo Street, are hereby reclassified from
Industrial II to Commercial I.
xxx

Chevron[1] is engaged in the business of

importing, distributing and marketing of
petroleum products in the Philippines while
28 | P a g e

xxx

xxx

SEC. 3. Owners or operators of industries and

other businesses, the operation of which are no

longer permitted under Section 1 hereof, are

hereby given a period of six (6) months from the
date of effectivity of this Ordinance within
which to cease and desist from the operation of
businesses which are hereby in consequence,
disallowed.
Ordinance No. 8027 reclassified the area
described therein from industrial to commercial
and directed the owners and operators of
businesses disallowed under the reclassification
to cease and desist from operating their
businesses within six months from the date of
effectivity of the ordinance. Among the
businesses situated in the area are the so-called
Pandacan Terminals of the oil companies.
On June 26, 2002, the City of Manila and the
Department of Energy (DOE) entered into a
memorandum of understanding (MOU)[8] with
the oil companies. They agreed that the scaling
down of the Pandacan Terminals [was] the most
viable and practicable option.
The Sangguniang Panlungsod ratified the MOU
in Resolution No. 97.[9] In the same resolution,
the Sanggunian declared that the MOU was
effective only for a period of six months starting
July 25, 2002.[10] Thereafter, on January 30,
2003, the Sanggunian adopted Resolution No.
13[11] extending the validity of Resolution No. 97
to April 30, 2003 and authorizing the mayor of
Manila to issue special business permits to the
oil companies.[12]
This was the factual backdrop presented to the
Court which became the basis of our March 7,
2007 decision. We ruled that respondent had
the ministerial duty under the Local
Government Code (LGC) to enforce all laws
and ordinances relative to the governance of
the city,[13]including Ordinance No. 8027. We
also held that we need not resolve the issue of
whether the MOU entered into by respondent
with the oil companies and the subsequent
resolutions passed by the Sanggunian could
amend or repeal Ordinance No. 8027 since the
resolutions which ratified the MOU and made it
binding on the City of Manila expressly gave it
29 | P a g e

full force and effect only until April 30, 2003.

We concluded that there was nothing that
legally hindered respondent from enforcing
Ordinance No. 8027.
After we rendered our decision on March 7,
2007, the oil companies and DOE sought to
intervene and filed motions for reconsideration
in intervention on March 12, 2007 and March
21, 2007 respectively. On April 11, 2007, we
conducted the oral arguments in Baguio City to
hear petitioners, respondent and movantsintervenors oil companies and DOE.
The oil companies called our attention to the
fact that on April 25, 2003, Chevron had filed a
complaint against respondent and the City of
Manila in the Regional Trial Court (RTC) of
Manila, Branch 39, for the annulment of
Ordinance No. 8027 with application for writs of
preliminary prohibitory injunction and
preliminary mandatory injunction.[14] The case
was docketed as civil case no. 03-106377. On
the same day, Shell filed a petition for
prohibition and mandamus likewise assailing
the validity of Ordinance No. 8027 and with
application for writs of preliminary prohibitory
injunction and preliminary mandatory
injunction.[15] This was docketed as civil case
no. 03-106380. Later on, these two cases were
consolidated and the RTC of Manila, Branch 39
issued an order dated May 19, 2003 granting
the applications for writs of preliminary
prohibitory injunction and preliminary
mandatory injunction:
WHEREFORE, upon the filing of a total bond of
TWO MILLION (Php 2,000,000.00) PESOS, let a
Writ of Preliminary Prohibitory Injunction be
issued ordering [respondent] and the City of
Manila, their officers, agents, representatives,
successors, and any other persons assisting or
acting in their behalf, during the pendency of
the case, to REFRAIN from taking steps to
enforce Ordinance No. 8027, and let a Writ of
Preliminary Mandatory Injunction be issued
ordering [respondent] to issue [Chevron and

Shell] the necessary Business Permits to

operate at the Pandacan Terminal.[16]

Petron likewise filed its own petition in the RTC

of Manila, Branch 42, also attacking the validity
of Ordinance No. 8027 with prayer for the
issuance of a writ of preliminary injunction
and/or temporary restraining order (TRO). This
was docketed as civil case no. 03-106379. In an
order dated August 4, 2004, the RTC enjoined
the parties to maintain the status quo.[17]
Thereafter, in 2006, the city council of Manila
enacted Ordinance No. 8119, also known as the
Manila Comprehensive Land Use Plan and
Zoning Ordinance of 2006.[18] This was approved
by respondent on June 16, 2006.[19]
Aggrieved anew, Chevron and Shell filed a
complaint in the RTC of Manila, Branch 20,
asking for the nullification of Ordinance No.
8119.[20] This was docketed as civil case no. 06115334. Petron filed its own complaint on the
same causes of action in the RTC of Manila,
Branch 41.[21] This was docketed as civil case
no. 07-116700.[22] The court issued a TRO in
favor of Petron, enjoining the City of Manila and
respondent from enforcing Ordinance No.
8119.[23]
Meanwhile, in civil case no. 03-106379, the
parties filed a joint motion to withdraw
complaint and counterclaim on February 20,
2007.[24]In an order dated April 23, 2007, the
joint motion was granted and all the claims and
counterclaims of the parties were withdrawn.[25]
Given these additional pieces of information,
the following were submitted as issues for our
resolution:
1. whether movants-intervenors should be
allowed to intervene in this case;[26]
2. whether the following are impediments to
the execution of our March 7, 2007 decision:

30 | P a g e

(a)
Ordinance No. 8119, the enactment and
existence of which were not previously brought
by the parties to the attention of the Court and
(b) writs of preliminary prohibitory injunction
and preliminary mandatory injunction and
status quo order issued by the RTC of Manila,
Branches 39 and 42 and
3. whether the implementation of Ordinance
No. 8027 will unduly encroach upon the DOEs
powers and functions involving energy
resources.
During the oral arguments, the parties
submitted to this Courts power to rule on the
constitutionality and validity of Ordinance No.
8027 despite the pendency of consolidated
cases involving this issue in the RTC.[27] The
importance of settling this controversy as fully
and as expeditiously as possible was
emphasized, considering its impact on public
interest. Thus, we will also dispose of this issue
here. The parties were after all given ample
opportunity to present and argue their
respective positions. By so doing, we will do
away with the delays concomitant with
litigation and completely adjudicate an issue
which will most likely reach us anyway as the
final arbiter of all legal disputes.
Before we resolve these issues, a brief review of
the history of the Pandacan Terminals is called
for to put our discussion in the proper context.

HISTORY OF THE PANDACAN

OIL TERMINALS
Pandacan (one of the districts of the City of
Manila) is situated along the banks of the Pasig
river. At the turn of the twentieth century,
Pandacan was unofficially designated as the
industrial center of Manila. The area, then
largely uninhabited, was ideal for various
emerging industries as the nearby river
facilitated the transportation of goods and
products. In the 1920s, it was classified as an
industrial zone.[28] Among its early industrial
settlers were the oil companies. Shell

established its installation there on January 30,

1914.[29] Caltex (now Chevron) followed suit in
1917 when the company began marketing its
products in the country.[30] In 1922, it built a
warehouse depot which was later converted
into a key distribution terminal.[31] The
corporate presence in the Philippines of Esso
(Petrons predecessor) became more keenly felt
when it won a concession to build and operate
a refinery in Bataan in 1957.[32] It then went on
to operate a state-of-the-art lube oil blending
plant in the Pandacan Terminals where it
manufactures lubes and greases.[33]
On December 8, 1941, the Second World War
reached the shores of the Philippine
Islands. Although Manila was declared an open
city, the Americans had no interest in
welcoming the Japanese. In fact, in their zealous
attempt to fend off the Japanese Imperial Army,
the United States Army took control of the
Pandacan Terminals and hastily made plans to
destroy the storage facilities to deprive the
advancing Japanese Army of a valuable logistics
weapon.[34] The U.S. Army burned unused
petroleum, causing a frightening conflagration.
Historian Nick Joaquin recounted the events as
follows:
After the USAFFE evacuated the City late in
December 1941, all army fuel storage dumps
were set on fire. The flames spread, enveloping
the City in smoke, setting even the rivers ablaze,
endangering bridges and all riverside buildings.
For one week longer, the open city
blazeda cloud of smoke by day, a pillar of fire
by night.[35]
The fire consequently destroyed the Pandacan
Terminals and rendered its network of depots
and service stations inoperative.[36]
After the war, the oil depots were
reconstructed. Pandacan changed as Manila
rebuilt itself. The three major oil companies
resumed the operation of their depots.[37] But
the district was no longer a sparsely populated
industrial zone; it had evolved into a bustling,
31 | P a g e

hodgepodge community. Today, Pandacan has

become a densely populated area inhabited by
about 84,000 people, majority of whom are
urban poor who call it home.[38] Aside from
numerous industrial installations, there are also
small businesses, churches, restaurants,
schools, daycare centers and residences
situated there.[39] Malacaang Palace, the
official residence of the President of the
Philippines and the seat of governmental
power, is just two kilometers away.[40] There is a
private school near the Petron depot. Along the
walls of the Shell facility are shanties of
informal settlers.[41] More than 15,000 students
are enrolled in elementary and high schools
situated near these facilities.[42] A university
with a student population of about 25,000 is
located directly across the depot on the banks
of the Pasig river.[43]
The 36-hectare Pandacan Terminals house the
oil companies distribution terminals and depot
facilities.[44] The refineries of Chevron and Shell
in Tabangao and Bauan, both in Batangas,
respectively, are connected to the Pandacan
Terminals through a 114kilometer[45]underground pipeline
system.[46] Petrons refinery in Limay, Bataan,
on the other hand, also services the
depot.[47] The terminals store fuel and other
petroleum products and supply 95% of the fuel
requirements of Metro Manila,[48] 50% of
Luzons consumption and 35%
nationwide.[49] Fuel can also be transported
through barges along the Pasig river or tank
trucks via the South Luzon Expressway.
We now discuss the first issue: whether
movants-intervenors should be allowed to
intervene in this case.
INTERVENTION OF THE OIL COMPANIES AND THE DOE
SHOULD BE ALLOWED IN THE INTEREST OF JUSTICE
Intervention is a remedy by which a third party,
not originally impleaded in the proceedings,
becomes a litigant therein to enable him, her or
it to protect or preserve a right or interest

which may be affected by such

proceedings.[50] The pertinent rules are Sections
1 and 2, Rule 19 of the Rules of Court:

(g)The motion to intervene may be filed at any

time before rendition of judgment by the trial
court.

SEC. 1.
Who may intervene. A person
who has a legal interest in the matter in
litigation, or in the success of either of the
parties, or an interest against both, or is so
situated as to be adversely affected by a
distribution or other disposition of property in
the custody of the court or of an officer thereof
may, with leave of court, be allowed to
intervene in the action. The court shall consider
whether or not the intervention will unduly
delay or prejudice the adjudication of the rights
of the original parties, and whether or not the
intervenors rights may be fully protected in a
separate proceeding.

For both the oil companies and DOE, the last

requirement is definitely absent. As a rule,
intervention is allowed before rendition of
judgment as Section 2, Rule 19 expressly
provides. Both filed their separate motions after
our decision was promulgated. In Republic of
the Philippines v. Gingoyon,[52] a recently
decided case which was also an original action
filed in this Court, we declared that the
appropriate time to file the motions-inintervention was before and not after
resolution of the case.[53]

SEC. 2. Time to intervene. The motion to

intervene may be filed at any time before
rendition of judgment by the trial court. A copy
of the pleading-in-intervention shall be
attached to the motion and served on the
original parties.

Thus, the following are the requisites for

intervention of a non-party:
(1)
Legal interest
(a)
in the matter in controversy; or
(b)
in the success of either of the parties; or
I
against both parties; or
(d)
person is so situated as to be adversely
affected by a distribution or other disposition of
property in the custody of the court or of an
officer thereof;
(2)
Intervention will not unduly delay or
prejudice the adjudication of rights of original
parties;
(3)
Intervenors rights may not be fully
protected in a separate proceeding[51] and

32 | P a g e

The Court, however, has recognized exceptions

to Section 2, Rule 19 in the interest of
substantial justice:
The rule on intervention, like all other rules of
procedure, is intended to make the powers of
the Court fully and completely available for
justice. It is aimed to facilitate a comprehensive
adjudication of rival claims overriding
technicalities on the timeliness of the filing
thereof.[54]
The oil companies assert that they have a legal
interest in this case because the
implementation of Ordinance No. 8027 will
directly affect their business and property
rights.[55]
[T]he interest which entitles a person to
intervene in a suit between other parties must
be in the matter in litigation and of such direct
and immediate character that the intervenor
will either gain or lose by direct legal operation
and effect of the judgment. Otherwise, if
persons not parties to the action were allowed
to intervene, proceedings would become
unnecessarily complicated, expensive and
interminable. And this would be against the
policy of the law. The words an interest in the
subject means a direct interest in the cause of

action as pleaded, one that would put the

intervenor in a legal position to litigate a fact
alleged in the complaint without the
establishment of which plaintiff could not
recover.[56]

transcendental importance of this case, we will

also allow DOEs intervention.

We agree that the oil companies have a direct

and immediate interest in the implementation
of Ordinance No. 8027. Their claim is that they
will need to spend billions of pesos if they are
compelled to relocate their oil depots out of
Manila. Considering that they admitted
knowing about this case from the time of its
filing on December 4, 2002, they should have
intervened long before our March 7, 2007
decision to protect their interests. But they did
not.[57] Neither did they offer any worthy
explanation to justify their late intervention.

Under Rule 65, Section 3[59] of the Rules of

Court, a petition for mandamus may be filed
when any tribunal, corporation, board, officer
or person unlawfully neglects the performance
of an act which the law specifically enjoins as a
duty resulting from an office, trust or
station. According to the oil companies,
respondent did not unlawfully fail or neglect to
enforce Ordinance No. 8027 because he was
lawfully prevented from doing so by virtue of
the injunctive writs and status quo order issued
by the RTC of Manila, Branches 39 and 42.

Be that as it may, although their motion for

intervention was not filed on time, we will allow
it because they raised and presented novel
issues and arguments that were not considered
by the Court in its March 7, 2007 decision. After
all, the allowance or disallowance of a motion
to intervene is addressed to the sound
discretion of the court before which the case is
pending.[58] Considering the compelling reasons
favoring intervention, we do not think that this
will unduly delay or prejudice the adjudication
of rights of the original parties. In fact, it will be
expedited since their intervention will enable us
to rule on the constitutionality of Ordinance No.
8027 instead of waiting for the RTCs decision.

First, we note that while Chevron and Shell still

have in their favor the writs of preliminary
injunction and preliminary mandatory
injunction, the status quo order in favor of
Petron is no longer in effect since the court
granted the joint motion of the parties to
withdraw the complaint and counterclaim.[60]

The DOE, on the other hand, alleges that its

interest in this case is also direct and immediate
as Ordinance No. 8027 encroaches upon its
exclusive and national authority over matters
affecting the oil industry. It seeks to intervene
in order to represent the interests of the
members of the public who stand to suffer if
the Pandacan Terminals operations are
discontinued. We will tackle the issue of the
alleged encroachment into DOEs domain later
on. Suffice it to say at this point that, for the
purpose of hearing all sides and considering the
33 | P a g e

THE INJUNCTIVE WRITS ARE NOT IMPEDIMENTS TO THE

ENFORCEMENT OF ORDINANCE NO. 8027

Second, the original parties failed to inform the

Court about these injunctive writs. Respondent
(who was also impleaded as a party in the RTC
cases) defends himself by saying that he
informed the court of the pendency of the civil
cases and that a TRO was issued by the RTC in
the consolidated cases filed by Chevron and
Shell. It is true that had the oil companies only
intervened much earlier, the Court would not
have been left in the dark about these facts.
Nevertheless, respondent should have updated
the Court, by way of manifestation, on such a
relevant matter.
In his memorandum, respondent mentioned
the issuance of a TRO. Under Section 5 of Rule
58 of the Rules of Court, a TRO issued by the
RTC is effective only for a period of 20 days. This
is why, in our March 7, 2007 decision, we
presumed with certainty that this had already

lapsed.[61] Respondent also mentioned the grant

of injunctive writs in his rejoinder which the
Court, however, expunged for being a
prohibited pleading. The parties and their
counsels were clearly remiss in their duties to
this Court.
In resolving controversies, courts can only
consider facts and issues pleaded by the
parties.[62] Courts, as well as magistrates
presiding over them are not omniscient. They
can only act on the facts and issues presented
before them in appropriate pleadings. They may
not even substitute their own personal
knowledge for evidence. Nor may they take
notice of matters except those expressly
provided as subjects of mandatory judicial
notice.
We now proceed to the issue of whether the
injunctive writs are legal impediments to the
enforcement of Ordinance No. 8027.
Section 3, Rule 58 of the Rules of Court
enumerates the grounds for the issuance of a
writ of preliminary injunction:
SEC. 3. Grounds for issuance of preliminary
injunction. A preliminary injunction may be
granted when it is established:
(a)
That the applicant is entitled to the relief
demanded, and the whole or part of such
relief consists in restraining the
commission
or continuance of the act or acts complained
of,
or in requiring the performance of an act
or acts, either for a limited period or
perpetually;
(b)
That the commission, continuance or
nonperformance of the act or acts
complained of during the litigation would
probably
work injustice to the applicant; or
(g)
IThat a party, court, agency or a
person is doing, threatening, or is attempting
to do, or is procuring or suffering to be
done,
some act or acts probably in
34 | P a g e

violation of the rights of the applicant

respecting the subject of the action or
proceeding, and tending to render the
judgment ineffectual.

There are two requisites for the issuance of a

preliminary injunction: (1) the right to be
protected exists prima facie and (2) the acts
sought to be enjoined are violative of that right.
It must be proven that the violation sought to
be prevented will cause an irreparable injustice.
The act sought to be restrained here was the
enforcement of Ordinance No. 8027. It is a
settled rule that an ordinance enjoys the
presumption of validity and, as such, cannot be
restrained by injunction.[63] Nevertheless, when
the validity of the ordinance is assailed, the
courts are not precluded from issuing an
injunctive writ against its
enforcement. However, we have declared that
the issuance of said writ is proper only when:
... the petitioner assailing the ordinance has
made out a case of unconstitutionality strong
enough to overcome, in the mind of the judge,
the presumption of validity, in addition to a
showing of a clear legal right to the remedy
sought....[64] (Emphasis supplied)
Judge Reynaldo G. Ros, in his order dated May
19, 2003, stated his basis for issuing the
injunctive writs:
The Court, in resolving whether or not a Writ of
Preliminary Injunction or Preliminary
Mandatory Injunction should be issued, is
guided by the following requirements: (1) a
clear legal right of the complainant; (2) a
violation of that right; and (3) a permanent and
urgent necessity for the Writ to prevent serious
damage. The Court believes that these
requisites are present in these cases.
There is no doubt that the plaintiff/petitioners
have been legitimately operating their business
in the Pandacan Terminal for many years and

they have made substantial capital investment

therein. Every year they were issued Business
Permits by the City of Manila. Its operations
have not been declared illegal or contrary to
law or morals. In fact, because of its vital
importance to the national economy, it was
included in the Investment Priorities Plan as
mandated under the Downstream Oil Industry
Deregulation Act of 1988 (R.A. 8479). As a
lawful business, the plaintiff/petitioners have a
right, therefore, to continue their operation in
the Pandacan Terminal and the right to protect
their investments. This is a clear and
unmistakable right of the plaintiff/petitioners.
The enactment, therefore, of City Ordinance
No. 8027 passed by the City Council of Manila
reclassifying the area where the Pandacan
Terminal is located from Industrial II to
Commercial I and requiring the
plaintiff/petitioners to cease and desist from
the operation of their business has certainly
violated the rights of the plaintiff/petitioners to
continue their legitimate business in the
Pandacan Terminal and deprived them of their
huge investments they put up therein. Thus,
before the Court, therefore, determines
whether the Ordinance in question is valid or
not, a Writ of Preliminary Injunction and a Writ
of Mandatory Injunction be issued to prevent
serious and irreparable damage to
plaintiff/petitioners.[65]
Nowhere in the judges discussion can we see
that, in addition to a showing of a clear legal
right of Chevron and Shell to the remedy
sought, he was convinced that they had made
out a case of unconstitutionality or invalidity
strong enough to overcome the presumption of
validity of the ordinance. Statutes and
ordinances are presumed valid unless and until
the courts declare the contrary in clear and
unequivocal terms.[66] The mere fact that the
ordinance is alleged to be unconstitutional or
invalid will not entitle a party to have its
enforcement enjoined.[67] The presumption is
all in favor of validity. The reason for this is
obvious:
35 | P a g e

The action of the elected representatives of the

people cannot be lightly set aside. The
councilors must, in the very nature of things, be
familiar with the necessities of their particular
municipality and with all the facts and
circumstances which surround the subject and
necessitate action. The local legislative body, by
enacting the ordinance, has in effect given
notice that the regulations are essential to the
well being of the people . . . The Judiciary
should not lightly set aside legislative action
when there is not a clear invasion of personal or
property rights under the guise of police
regulation.[68]
X x x
...[Courts] accord the presumption of
constitutionality to legislative enactments, not
only because the legislature is presumed to
abide by the Constitution but also because the
judiciary[,] in the determination of actual cases
and controversies[,] must reflect the wisdom
and justice of the people as expressed through
their representatives in the executive and
legislative departments of the government.[69]
The oil companies argue that this presumption
must be set aside when the invalidity or
unreasonableness appears on the face of the
ordinance itself.[70] We see no reason to set
aside the presumption. The ordinance, on its
face, does not at all appear to be
unconstitutional. It reclassified the subject area
from industrial to commercial. Prima facie, this
power is within the power of municipal
corporations:
The power of municipal corporations to divide
their territory into industrial, commercial and
residential zones is recognized in almost all
jurisdictions inasmuch as it is derived from the
police power itself and is exercised for the
protection and benefit of their inhabitants.[71]
X x x
There can be no doubt that the City of Manila
has the power to divide its territory into
residential and industrial zones, and to
prescribe that offensive and unwholesome

trades and occupations are to be established

exclusively in the latter zone.
Xxx
xxx
xxx
Likewise, it cannot be denied that the City of
Manila has the authority, derived from the
police power, of forbidding the appellant to
continue the manufacture oftoyo in the zone
where it is now situated, which has been
declared residential....[72]

judicial notice under Section 1, Rule 129 of the

Rules of Court.[73]
Although, Section 50 of RA 409[74] provides that:

Courts will not invalidate an ordinance unless it

clearly appears that it is unconstitutional. There
is no such showing here. Therefore, the
injunctive writs issued in the Manila RTCs May
19, 2003 order had no leg to stand on.

This cannot be taken to mean that this Court,

since it has its seat in the City of Manila, should
have taken steps to procure a copy of the
ordinance on its own, relieving the party of any
duty to inform the Court about it.

We are aware that the issuance of these

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

Even where there is a statute that requires a

court to take judicial notice of municipal
ordinances, a court is not required to take
judicial notice of ordinances that are not before
it and to which it does not have access. The
party asking the court to take judicial notice is
obligated to supply the court with the full text
of the rules the party desires it to have notice
of.[75] Counsel should take the initiative in
requesting that a trial court take judicial notice
of an ordinance even where a statute requires
courts to take judicial notice of local
ordinances.[76]
The intent of a statute requiring a court to take
judicial notice of a local ordinance is to remove
any discretion a court might have in
determining whether or not to take notice of an
ordinance. Such a statute does not direct the
court to act on its own in obtaining evidence for
the record and a party must make the
ordinance available to the court for it to take
notice.[77]

ORDINANCE NO. 8027 WAS NOT SUPERSEDED BY

ORDINANCE NO. 8119

The March 7, 2007 decision did not take into

consideration the passage of Ordinance No.
8119 entitled An Ordinance Adopting the
Manila Comprehensive Land Use Plan and
Zoning Regulations of 2006 and Providing for
the Administration, Enforcement and
Amendment thereto which was approved by
respondent on June 16, 2006. The simple
reason was that the Court was never informed
about this ordinance.
While courts are required to take judicial notice
of the laws enacted by Congress, the rule with
respect to local ordinances is
different. Ordinances are not included in the
enumeration of matters covered by mandatory
36 | P a g e

SEC. 50 Judicial notice of ordinances. - All

courts sitting in the city shall take judicial notice
of the ordinances passed by the [Sangguniang
Panglungsod].

In its defense, respondent claimed that he did

not inform the Court about the enactment of
Ordinance No. 8119 because he believed that it
was different from Ordinance No. 8027 and that
the two were not inconsistent with each
other.[78]
In the same way that we deem the intervenors
late intervention in this case unjustified, we find

the failure of respondent, who was an original

party here, inexcusable.

THE RULE ON JUDICIAL ADMISSIONS IS NOT APPLICABLE

AGAINST RESPONDENT
The oil companies assert that respondent
judicially admitted that Ordinance No. 8027 was
repealed by Ordinance No. 8119 in civil case no.
03-106379 (where Petron assailed the
constitutionality of Ordinance No. 8027) when
the parties in their joint motion to withdraw
complaint and counterclaim stated that the
issue ...has been rendered moot and academic
by virtue of the passage of [Ordinance No.
8119+.[79] They contend that such admission
worked as an estoppel against the respondent.
Respondent countered that this stipulation
simply meant that Petron was recognizing the
validity and legality of Ordinance No. 8027 and
that it had conceded the issue of said
ordinances constitutionality, opting instead to
question the validity of Ordinance No.
8119.[80] The oil companies deny this and
further argue that respondent, in his answer in
civil case no. 06-115334 (where Chevron and
Shell are asking for the nullification of
Ordinance No. 8119), expressly stated that
Ordinance No. 8119 replaced Ordinance No.
8027:[81]
... Under Ordinance No. 8027, businesses whose
uses are not in accord with the reclassification
were given six months to cease [their]
operation. Ordinance No. 8119, which in effect,
replaced Ordinance [No.] 8027, merely took
note of the time frame provided for in
Ordinance No. 8119.... Ordinance No. 8119 thus
provided for an even longer term, that is[,]
seven years;[82] (Emphasis supplied)
Rule 129, Section 4 of the Rules of Court
provides:
Section 4.
Judicial admissions. An
admission, verbal or written, made by a party in
37 | P a g e

the course of the proceedings in the same case,

does not require proof. The admission may be
contradicted only by showing that it was made
through palpable mistake or that no such
admission was made. (Emphasis supplied)
While it is true that a party making a judicial
admission cannot subsequently take a position
contrary to or inconsistent with what was
pleaded,[83] the aforestated rule is not
applicable here. Respondent made the
statements regarding the ordinances in civil
case nos. 03-106379 and 06-115334 which are
not the same as this case before us.[84] To
constitute a judicial admission, the admission
must be made in the same case in which it is
offered.
Hence, respondent is not estopped from
claiming that Ordinance No. 8119 did not
supersede Ordinance No. 8027. On the
contrary, it is the oil companies which should be
considered estopped. They rely on the
argument that Ordinance No. 8119 superseded
Ordinance No. 8027 but, at the same time, also
impugn its (8119s) validity. We frown on the
adoption of inconsistent positions and distrust
any attempt at clever positioning under one or
the other on the basis of what appears
advantageous at the moment. Parties cannot
take vacillating or contrary positions regarding
the validity of a statute[85] or ordinance.
Nonetheless, we will look into the merits of the
argument of implied repeal.

ORDINANCE NO. 8119 DID NOT IMPLIEDLY REPEAL

ORDINANCE NO. 8027
Both the oil companies and DOE argue that
Ordinance No. 8119 repealed Ordinance No.
8027. They assert that although there was no
express repeal[86] of Ordinance No. 8027,
Ordinance No. 8119 impliedly repealed it.
According to the oil companies, Ordinance No.
8119 reclassified the area covering the
Pandacan Terminals to High Density

Residential/Mixed Use Zone (R3/MXD)[87] whereas Ordinance No. 8027

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

Moreover, Ordinance No. 8119 provides for a

phase-out of seven years:
SEC. 72. Existing Non-Conforming Uses and
Buildings. - The lawful use of any building,
structure or land at the time of the adoption of
this Ordinance may be continued, although
such use does not conform with the provision of
the Ordinance, provided:
xxx
xxx
xxx
(g) In case the non-conforming use is an
industrial use:
xxx
xxx
xxx
d. The land use classified as non-conforming
shall program the phase-out and relocation of
the non-conforming use within seven (7) years
from the date of effectivity of this
Ordinance. (Emphasis supplied)

This is opposed to Ordinance No. 8027 which

compels affected entities to vacate the area
within six months from the effectivity of the
ordinance:
38 | P a g e

SEC. 3. Owners or operators of industries and

other businesses, the operation of which are no
longer permitted under Section 1 hereof, are
hereby given a period of six (6) months from the
date of effectivity of this Ordinance within
which to cease and desist from the operation of
businesses which are hereby in consequence,
disallowed.
Ordinance No. 8119 also designated the
Pandacan oil depot area as a Planned Unit
Development/Overlay Zone (O-PUD):
SEC. 23. Use Regulations in Planned Unit
Development/Overlay Zone (O-PUD). O-PUD
Zones are identified specific sites in the City of
Manila wherein the project site is
comprehensively planned as an entity via
unitary site plan which permits flexibility in
planning/ design, building siting,
complementarily of building types and land
uses, usable open spaces and the preservation
of significant natural land features, pursuant to
regulations specified for each particular
PUD. Enumerated below are identified PUD:
xxx
xxx
xxx
6. Pandacan Oil Depot Area
xxx
xxx
xxx
Enumerated below are the allowable uses:
1.
all uses allowed in all zones where it
is located
2.
the [Land Use Intensity Control
(LUIC)] under which zones are located shall, in
all instances be complied with
3.
the validity of the prescribed LUIC
shall only be [superseded] by the development
controls and regulations specified for each PUD
as provided for each PUD as provided for by the
masterplan of respective PUDs.[88] (Emphasis
supplied)
Respondent claims that in passing Ordinance
No. 8119, the Sanggunian did not intend to
repeal Ordinance No. 8027 but meant instead
to carry over 8027s provisions to 8119 for the
purpose of making Ordinance No. 8027
applicable to the oil companies even after the

passage of Ordinance No. 8119.[89] He quotes

an excerpt from the minutes of the July 27,
2004 session of the Sanggunian during the first
reading of Ordinance No. 8119:
Member GARCIA: Your Honor, iyong patungkol
po roon sa oil depot doon sa amin sa Sixth
District sa Pandacan, wala pong nakalagay eith
sa ordinansa rito na taliwas o kakaiba roon sa
ordinansang ipinasa noong nakaraang Konseho,
iyong Ordinance No. 8027. So kung ano po ang
nandirito sa ordinansa na ipinasa ninyo last
time, iyon lang po ang ni-lift eithe at inilagay
eith. At eith eith ordinansang iyong naipasa
ng huling Konseho, niri-classify [ninyo] from
Industrial II to Commercial C-1 ang area ng
Pandacan kung nasaan ang oil depot. So ini-lift
lang po [eithe] iyong definition, density, at saka
po yon pong ng noong ordinansa ninyo na
siya eith naming inilagay eith, iniba lang po
naming iyong title. So wala po kaming binago
na taliwas o nailagay na taliwas doon sa
ordinansang ipinasa ninyo, ni-lift lang po [eithe]
from Ordinance No. 8027.[90] (Emphasis
supplied)
We agree with respondent.
Repeal by implication proceeds on the premise
that where a statute of later date clearly reveals
the intention of the legislature to abrogate a
prior act on the subject, that intention must be
given effect.[91]
There are two kinds of implied repeal. The first
is: where the provisions in the two acts on the
same subject matter are irreconcilably
contradictory, the latter act, to the extent of
the conflict, constitutes an implied repeal of the
earlier one.[92] The second is: if the later act
covers the whole subject of the earlier one and
is clearly intended as a substitute, it will operate
to repeal the earlier law.[93] The oil companies
argue that the situation here falls under the first
category.
Implied repeals are not favored and will not be
so declared unless the intent of the legislators is
39 | P a g e

manifest.[94] As statutes and ordinances are

presumed to be passed only after careful
deliberation and with knowledge of all existing
ones on the subject, it follows that, in passing a
law, the legislature did not intend to interfere
with or abrogate a former law relating to the
same subject matter.[95] If the intent to repeal
is not clear, the later act should be construed as
a continuation of, and not a substitute for, the
earlier act.[96]
These standards are deeply enshrined in our
jurisprudence. We disagree that, in enacting
Ordinance No. 8119, there was any indication of
the legislative purpose to repeal Ordinance No.
8027.[97] The excerpt quoted above is proof that
there was never such an intent. While it is true
that both ordinances relate to the same subject
matter, i.e. classification of the land use of the
area where Pandacan oil depot is located, if
there is no intent to repeal the earlier
enactment, every effort at reasonable
construction must be made to reconcile the
ordinances so that both can be given effect:
The fact that a later enactment may relate to
the same subject matter as that of an earlier
statute is not of itself sufficient to cause an
implied repeal of the prior act, since the new
statute may merely be cumulative or a
continuation of the old one. What is necessary
is a manifest indication of legislative purpose to
repeal.[98]

For the first kind of implied repeal, there must

be an irreconcilable conflict between the two
ordinances. There is no conflict between the
two ordinances. Ordinance No. 8027
reclassified the Pandacan area from Industrial II
to Commercial I. Ordinance No. 8119, in
Section 23, designated it as a Planned Unit
Development/Overlay Zone (O-PUD). In its
Annex C which defined the zone
boundaries,[99] the Pandacan area was shown to
be within the High Density Residential/Mixed
Use Zone (R-3/MXD). These zone classifications
in Ordinance No. 8119 are not inconsistent with

the reclassification of the Pandacan area from

Industrial to Commercial in Ordinance No. 8027.
The O-PUD classification merely made
Pandacan a project site ... comprehensively
planned as an entity via unitary site plan which
permits flexibility in planning/design, building
siting, complementarity of building types and
land uses, usable open spaces and the
preservation of significant natural land
features....[100] Its classification as R-3/MXD
means that it should be used primarily for
high-rise housing/dwelling purposes and limited
complementary/supplementary trade, services
and business activities.[101] There is no conflict
since both ordinances actually have a common
objective, i.e., to shift the zoning classification
from industrial to commercial (Ordinance No.
8027) or mixed residential/commercial
(Ordinance No. 8119).
Moreover, it is a well-settled rule in statutory
construction that a subsequent general law
does not repeal a prior special law on the same
subject unless it clearly appears that the
legislature has intended by the latter general
act to modify or repeal the earlier special
law. Generalia specialibus non derogant (a
general law does not nullify a specific or special
law).[102] This is so even if the provisions of the
general law are sufficiently comprehensive to
include what was set forth in the special
act.[103] The special act and the general law
must stand together, one as the law of the
particular subject and the other as the law of
general application.[104] The special law must be
taken as intended to constitute an exception to,
or a qualification of, the general act or
provision.[105]
The reason for this is that the legislature, in
passing a law of special character, considers and
makes special provisions for the particular
circumstances dealt with by the special law.
This being so, the legislature, by adopting a
general law containing provisions repugnant to
those of the special law and without making any
mention of its intention to amend or modify
such special law, cannot be deemed to have
40 | P a g e

intended an amendment, repeal or modification

of the latter.[106]
Ordinance No. 8027 is a special law[107] since it
deals specifically with a certain area described
therein (the Pandacan oil depot area) whereas
Ordinance No. 8119 can be considered a
general law[108] as it covers the entire city of
Manila.
The oil companies assert that even if Ordinance
No. 8027 is a special law, the existence of an allencompassing repealing clause in Ordinance
No. 8119 evinces an intent on the part of
the Sanggunian to repeal the earlier ordinance:
Sec. 84. Repealing Clause. All ordinances,
rules, regulations in conflict with the provisions
of this Ordinance are hereby
repealed; PROVIDED, That the rights that are
vested upon the effectivity of this Ordinance
shall not be impaired.

They cited Hospicio de San Jose de Barili, Cebu

City v. Department of Agrarian Reform:[109]
The presence of such general repealing clause
in a later statute clearly indicates the legislative
intent to repeal all prior inconsistent laws on
the subject matter, whether the prior law is a
general law or a special law... Without such a
clause, a later general law will ordinarily not
repeal a prior special law on the same
subject. But with such clause contained in the
subsequent general law, the prior special law
will be deemed repealed, as the clause is a clear
legislative intent to bring about that result.[110]
This ruling in not applicable here. The repealing
clause of Ordinance No. 8119 cannot be taken
to indicate the legislative intent to repeal all
prior inconsistent laws on the subject matter,
including Ordinance No. 8027, a special
enactment, since the aforequoted minutes (an
official record of the discussions in
the Sanggunian) actually indicated the clear

intent to preserve the provisions of Ordinance

No. 8027.

original action formandamus before this Court

is undeniably allowed by the Constitution.[114]

To summarize, the conflict between the two

ordinances is more apparent than real. The two
ordinances can be reconciled. Ordinance No.
8027 is applicable to the area particularly
described therein whereas Ordinance No. 8119
is applicable to the entire City of Manila.

ORDINANCE NO. 8027 IS CONSTITUTIONAL AND VALID

MANDAMUS LIES TO COMPEL RESPONDENT MAYOR TO

ENFORCE ORDINANCE NO. 8027

The tests of a valid ordinance are well

established. For an ordinance to be valid, it
must not only be within the corporate powers
of the LGU to enact and be passed according to
the procedure prescribed by law, it must also
conform to the following substantive
requirements: (1) must not contravene the
Constitution or any statute; (2) must not be
unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and
consistent with public policy and (6) must not
be unreasonable.[115]

The oil companies insist that mandamus does

not lie against respondent in consideration of
the separation of powers of the executive and
judiciary.[111] This argument is
misplaced. Indeed,
[the] Courts will not interfere
by mandamus proceedings with the legislative
[or executive departments] of the government
in the legitimate exercise of its powers, except
to enforce mere ministerial acts required by law
to be performed by some officer
thereof.[112] (Emphasis Supplied)
since this is the function of a writ of mandamus,
which is the power to compel the performance
of an act which the law specifically enjoins as a
duty resulting from office, trust or station.[113]
They also argue that petitioners had a plain,
speedy and adequate remedy to compel
respondent to enforce Ordinance No. 8027
which was to seek relief from the President of
the Philippines through the Secretary of the
Department of Interior and Local Government
(DILG) by virtue of the Presidents power of
supervision over local government units. Again,
we disagree. A party need not go first to the
DILG in order to compel the enforcement of an
ordinance. This suggested process would be
unreasonably long, tedious and consequently
injurious to the interests of the local
government unit (LGU) and its constituents
whose welfare is sought to be
protected. Besides, petitioners resort to an

41 | P a g e

Having ruled that there is no impediment to the

enforcement of Ordinance No. 8027, we now
proceed to make a definitive ruling on its
constitutionality and validity.

THE CITY OF MANILA HAS THE POWER TO ENACT

ORDINANCE NO. 8027
Ordinance No. 8027 was passed by
the Sangguniang Panlungsod of Manila in the
exercise of its police power. Police power is the
plenary power vested in the legislature to make
statutes and ordinances to promote the health,
morals, peace, education, good order or safety
and general welfare of the people.[116] This
power flows from the recognition that salus
populi est suprema lex (the welfare of the
people is the supreme law).[117] While police
power rests primarily with the national
legislature, such power may be
delegated.[118] Section 16 of the LGC, known as
the general welfare clause, encapsulates the
delegated police power to local
governments:[119]
Section 16. General Welfare. Every local
government unit shall exercise the powers
expressly granted, those necessarily implied

therefrom, as well as powers necessary,

appropriate, or incidental for its efficient and
effective governance, and those which are
essential to the promotion of the general
welfare. Within their respective territorial
jurisdictions, local government units shall
ensure and support, among other things, the
preservation and enrichment of culture,
promote health and safety, enhance the right of
the people to a balanced ecology, encourage
and support the development of appropriate
and self-reliant scientific and technological
capabilities, improve public morals, enhance
economic prosperity and social justice, promote
full employment among their residents,
maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
LGUs like the City of Manila exercise police
power through their respective legislative
bodies, in this case, the Sangguniang
Panlungsod or the city council. Specifically,
the Sanggunian can enact ordinances for the
general welfare of the city:
Section. 458. Powers, Duties, Functions and
Compensation. (a) The sangguniang
panglungsod, as the legislative branch of the
city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare
of the city and its inhabitants pursuant to
Section 16 of this Code xxxx

This police power was also provided for in RA

409 or the Revised Charter of the City of Manila:
Section 18. Legislative powers. The [City
Council] shall have the following legislative
powers:
xxx
xxx
xxx
(g)
To enact all ordinances it may deem
necessary and proper for the sanitation and
safety, the furtherance of the prosperity, and
the promotion of the morality, peace, good
order, comfort, convenience, and general
welfare of the city and its inhabitants, and such
42 | P a g e

others as may be necessary to carry into effect

and discharge the powers and duties conferred
by this chapter xxxx[120]

Specifically, the Sanggunian has the power to

reclassify land within the jurisdiction of the
city.[121]
THE ENACTMENT OF ORDINANCE NO. 8027 IS A
LEGITIMATE EXERCISE OF POLICE POWER
As with the State, local governments may be
considered as having properly exercised their
police power only if the following requisites are
met: (1) the interests of the public generally, as
distinguished from those of a particular class,
require its exercise and (2) the means employed
are reasonably necessary for the
accomplishment of the purpose and not unduly
oppressive upon individuals. In short, there
must be a concurrence of a lawful subject and a
lawful method.[122]
Ordinance No. 8027 was enacted for the
purpose of promoting sound urban planning,
ensuring health, public safety and general
welfare[123] of the residents of
Manila. The Sanggunian was impelled to take
measures to protect the residents of Manila
from catastrophic devastation in case of a
terrorist attack on the Pandacan
Terminals. Towards this objective,
the Sanggunian reclassified the area defined in
the ordinance from industrial to commercial.
The following facts were found by the
Committee on Housing, Resettlement and
Urban Development of the City of Manila which
recommended the approval of the ordinance:
(1) the depot facilities contained 313.5 million
liters of highly flammable and highly volatile
products which include petroleum gas, liquefied
petroleum gas, aviation fuel, diesel, gasoline,
kerosene and fuel oil among others;
(2) the depot is open to attack through land,
water or air;

(3) it is situated in a densely populated place

and near Malacaang Palace and
(4) in case of an explosion or conflagration in
the depot, the fire could spread to the
neighboring communities.[124]
The ordinance was intended to safeguard the
rights to life, security and safety of all the
inhabitants of Manila and not just of a
particular class.[125] The depot is perceived,
rightly or wrongly, as a representation of
western interests which means that it is a
terrorist target. As long as it there is such a
target in their midst, the residents of Manila are
not safe. It therefore became necessary to
remove these terminals to dissipate the
threat. According to respondent:
Such a public need became apparent after the
9/11 incident which showed that what was
perceived to be impossible to happen, to the
most powerful country in the world at that, is
actually possible. The destruction of property
and the loss of thousands of lives on that fateful
day became the impetus for a public need. In
the aftermath of the 9/11 tragedy, the threats
of terrorism continued [such] that it became
imperative for governments to take measures
to combat their effects.[126]

Wide discretion is vested on the legislative

authority to determine not only what the
interests of the public require but also what
measures are necessary for the protection of
such interests.[127] Clearly, the Sanggunian was
in the best position to determine the needs of
its constituents.
In the exercise of police power, property rights
of individuals may be subjected to restraints
and burdens in order to fulfill the objectives of
the government.[128] Otherwise stated, the
government may enact legislation that may
interfere with personal liberty, property, lawful
businesses and occupations to promote the
general welfare.[129] However, the
interference must be reasonable and not
43 | P a g e

arbitrary. And to forestall arbitrariness, the

methods or means used to protect public
health, morals, safety or welfare must have a
reasonable relation to the end in view.[130]
The means adopted by the Sanggunian was the
enactment of a zoning ordinance which
reclassified the area where the depot is situated
from industrial to commercial. A zoning
ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes,
defines and apportions a given political
subdivision into specific land uses as present
and future projection of needs.[131] As a result
of the zoning, the continued operation of the
businesses of the oil companies in their present
location will no longer be permitted. The power
to establish zones for industrial, commercial
and residential uses is derived from the police
power itself and is exercised for the protection
and benefit of the residents of a
locality.[132] Consequently, the enactment of
Ordinance No. 8027 is within the power of
the Sangguniang Panlungsod of the City of
Manila and any resulting burden on those
affected cannot be said to be unjust:
There can be no doubt that the City of Manila
has the power to divide its territory into
residential and industrial zones, and to
prescribe that offensive and unwholesome
trades and occupations are to be established
exclusively in the latter zone.
The benefits to be derived by cities adopting
such regulations (zoning) may be summarized
as follows: They attract a desirable and assure a
permanent citizenship; they foster pride in and
attachment to the city; they promote happiness
and contentment; they stabilize the use and
value of property and promote the peace,
[tranquility], and good order of the city. We do
not hesitate to say that the attainment of these
objects affords a legitimate field for the exercise
of the police power. He who owns property in
such a district is not deprived of its use by such
regulations. He may use it for the purposes to
which the section in which it is located is

dedicated. That he shall not be permitted to use

it to the desecration of the community
constitutes no unreasonable or permanent
hardship and results in no unjust burden.
Xxx
xxx
xxx
The 14th Amendment protects the citizen in his
right to engage in any lawful business, but it
does not prevent legislation intended to
regulate useful occupations which, because of
their nature or location, may prove injurious or
offensive to the public.[133]
We entertain no doubt that Ordinance No. 8027
is a valid police power measure because there is
a concurrence of lawful subject and lawful
method.

ORDINANCE NO. 8027 IS NOT UNFAIR, OPPRESSIVE OR

CONFISCATORY WHICH AMOUNTS TO TAKING WITHOUT
COMPENSATION
According to the oil companies, Ordinance No.
8027 is unfair and oppressive as it does not only
regulate but also absolutely prohibits them
from conducting operations in the City of
Manila. Respondent counters that this is not
accurate since the ordinance merely prohibits
the oil companies from operating their
businesses in the Pandacan area.
Indeed, the ordinance expressly delineated in
its title and in Section 1 what it pertained
to. Therefore, the oil companies contention is
not supported by the text of the
ordinance. Respondent succinctly stated that:
The oil companies are not forbidden to do
business in the City of Manila. They may still
very well do so, except that their oil storage
facilities are no longer allowed in the Pandacan
area. Certainly, there are other places in the
City of Manila where they can conduct this
specific kind of business. Ordinance No. 8027
did not render the oil companies illegal. The
assailed ordinance affects the oil companies

44 | P a g e

business only in so far as the Pandacan area is

concerned.[134]

The oil companies are not prohibited from

doing business in other appropriate zones in
Manila. The City of Manila merely exercised its
power to regulate the businesses and industries
in the zones it established:
As to the contention that the power to regulate
does not include the power to prohibit, it will
be seen that the ordinance copied above does
not prohibit the installation of motor engines
within the municipality of Cabanatuan but only
within the zone therein fixed. If the municipal
council of Cabanatuan is authorized to establish
said zone, it is also authorized to provide what
kind of engines may be installed therein. In
banning the installation in said zone of all
engines not excepted in the ordinance, the
municipal council of Cabanatuan did no more
than regulate their installation by means of
zonification.[135]

The oil companies aver that the ordinance is

unfair and oppressive because they have
invested billions of pesos in the depot.[136] Its
forced closure will result in huge losses in
income and tremendous costs in constructing
new facilities.
Their contention has no merit. In the exercise
of police power, there is a limitation on or
restriction of property interests to promote
public welfare which involves no compensable
taking. Compensation is necessary only when
the states power of eminent domain is
exercised. In eminent domain, property is
appropriated and applied to some public
purpose. Property condemned under the
exercise of police power, on the other hand, is
noxious or intended for a noxious or forbidden
purpose and, consequently, is not
compensable.[137] The restriction imposed to
protect lives, public health and safety from
danger is not a taking. It is merely the

prohibition or abatement of a noxious use

which interferes with paramount rights of the
public.
Property has not only an individual function,
insofar as it has to provide for the needs of the
owner, but also a social function insofar as it
has to provide for the needs of the other
members of society.[138] The principle is this:

Police power proceeds from the principle that

every holder of property, however absolute and
unqualified may be his title, holds it under the
implied liability that his use of it shall not be
injurious to the equal enjoyment of others
having an equal right to the enjoyment of their
property, nor injurious to the right of the
community. Rights of property, like all other
social and conventional rights, are subject to
reasonable limitations in their enjoyment as
shall prevent them from being injurious, and to
such reasonable restraints and regulations
established by law as the legislature, under the
governing and controlling power vested in them
by the constitution, may think necessary and
expedient.[139]

In the regulation of the use of the property,

nobody else acquires the use or interest
therein, hence there is no compensable
taking.[140] In this case, the properties of the oil
companies and other businesses situated in the
affected area remain theirs. Only their use is
restricted although they can be applied to other
profitable uses permitted in the commercial
zone.
ORDINANCE NO. 8027 IS NOT
PARTIAL AND DISCRIMINATORY

The oil companies take the position that the

ordinance has discriminated against and singled
out the Pandacan Terminals despite the fact
that the Pandacan area is congested with
buildings and residences that do not comply

45 | P a g e

with the National Building Code, Fire Code and

Health and Sanitation Code.[141]
This issue should not detain us for long. An
ordinance based on reasonable classification
does not violate the constitutional guaranty of
the equal protection of the law.[142] The
requirements for a valid and reasonable
classification are: (1) it must rest on substantial
distinctions; (2) it must be germane to the
purpose of the law; (3) it must not be limited to
existing conditions only and (4) it must apply
equally to all members of the same class.[143]
The law may treat and regulate one class
differently from another class provided there
are real and substantial differences to
distinguish one class from another.[144] Here,
there is a reasonable classification. We
reiterate that what the ordinance seeks to
prevent is a catastrophic devastation that will
result from a terrorist attack. Unlike the depot,
the surrounding community is not a high-value
terrorist target. Any damage caused by fire or
explosion occurring in those areas would be
nothing compared to the damage caused by a
fire or explosion in the depot itself. Accordingly,
there is a substantial distinction. The
enactment of the ordinance which provides for
the cessation of the operations of these
terminals removes the threat they
pose. Therefore it is germane to the purpose of
the ordinance. The classification is not limited
to the conditions existing when the ordinance
was enacted but to future conditions as well.
Finally, the ordinance is applicable to all
businesses and industries in the area it
delineated.
ORDINANCE NO. 8027 IS NOT INCONSISTENT WITH RA
7638 AND RA 8479
The oil companies and the DOE assert that
Ordinance No. 8027 is unconstitutional because
it contravenes RA 7638 (DOE Act of
1992)[145] and RA 8479 (Downstream Oil
Industry Deregulation Law of 1998).[146] They
argue that through RA 7638, the national

legislature declared it a policy of the state to

ensure a continuous, adequate, and economic
supply of energy[147] and created the DOE to
implement this policy. Thus, under Section 5 I,
DOE is empowered to establish and administer
programs for the exploration, transportation,
marketing, distribution, utilization,
conservation, stockpiling, and storage of energy
resources. Considering that the petroleum
products contained in the Pandacan Terminals
are major and critical energy resources, they
conclude that their administration, storage,
distribution and transport are of national
interest and fall under DOEs primary and
exclusive jurisdiction.[148]
They further assert that the terminals are
necessary for the delivery of immediate and
adequate supply of oil to its recipients in the
most economical way.[149] Local legislation such
as Ordinance No. 8027 (which effectively calls
for the removal of these terminals) allegedly
frustrates the state policy of ensuring a
continuous, adequate, and economic supply of
energy expressed in RA 7638, a national
law.[150] Likewise, the ordinance thwarts the
determination of the DOE that the terminals
operations should be merely scaled down and
not discontinued.[151] They insist that this should
not be allowed considering that it has a
nationwide economic impact and affects public
interest transcending the territorial jurisdiction
of the City of Manila.[152]
According to them, the DOEs supervision over
the oil industry under RA 7638 was
subsequently underscored by RA 8479,
particularly in Section 7 thereof:
SECTION 7. Promotion of Fair Trade Practices.
The Department of Trade and Industry (DTI)
and DOE shall take all measures to promote fair
trade and prevent cartelization, monopolies,
combinations in restraint of trade, and any
unfair competition in the Industry as defined in
Article 186 of the Revised Penal Code, and
Articles 168 and 169 of Republic Act No. 8293,
otherwise known as the Intellectual Property
46 | P a g e

Rights Law. The DOE shall continue

to encourage certain practices in the Industry
which serve the public interest and
are intended to achieve efficiency and cost
reduction, ensure continuous supply of
petroleum products, and enhance
environmental protection. These practices may
include borrow-and-loan agreements,
rationalized depot and manufacturing
operations, hospitality agreements, joint tanker
and pipeline utilization, and joint actions on oil
spill control and fire prevention. (Emphasis
supplied)
Respondent counters that DOEs regulatory
power does not preclude LGUs from exercising
their police power.[153]
Indeed, ordinances should not contravene
existing statutes enacted by Congress. The
rationale for this was clearly explained
in Magtajas vs. Pryce Properties Corp., Inc.:[154]
The rationale of the requirement that the
ordinances should not contravene a statute is
obvious. Municipal governments are only
agents of the national government. Local
councils exercise only delegated legislative
powers conferred on them by Congress as the
national lawmaking body. The delegate cannot
be superior to the principal or exercise powers
higher than those of the latter. It is a heresy to
suggest that the local government units can
undo the acts of Congress, from which they
have derived their power in the first place, and
negate by mere ordinance the mandate of the
statute.
Municipal corporations owe their origin to, and
derive their powers and rights wholly from the
legislature. It breathes into them the breath of
life, without which they cannot exist. As it
creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some
constitutional limitation on the right, the
legislature might, by a single act, and if we can
suppose it capable of so great a folly and so
great a wrong, sweep from existence all of the

municipal corporations in the State, and the

corporation could not prevent it. We know of
no limitation on the right so far as to the
corporation themselves are concerned. They
are, so to phrase it, the mere tenants at will of
the legislature.
This basic relationship between the national
legislature and the local government units has
not been enfeebled by the new provisions in
the Constitution strengthening the policy of
local autonomy. Without meaning to detract
from that policy, we here confirm that Congress
retains control of the local government units
although in significantly reduced degree now
than under our previous Constitutions. The
power to create still includes the power to
destroy. The power to grant still includes the
power to withhold or recall. True, there are
certain notable innovations in the Constitution,
like the direct conferment on the local
government units of the power to tax, which
cannot now be withdrawn by mere statute. By
and large, however, the national legislature is
still the principal of the local government units,
which cannot defy its will or modify or violate
it.[155]

The question now is whether Ordinance No.

8027 contravenes RA 7638 and RA 8479. It
does not.
Under Section 5 I of RA 7638, DOE was given
the power to establish and administer
programs for the exploration, transportation,
marketing, distribution, utilization,
conservation, stockpiling, and storage of energy
resources. On the other hand, under Section 7
of RA 8749, the DOE shall continue to
encourage certain practices in the Industry
which serve the public interest and are
intended to achieve efficiency and cost
reduction, ensure continuous supply of
petroleum products. Nothing in these statutes
prohibits the City of Manila from enacting
ordinances in the exercise of its police power.

47 | P a g e

The principle of local autonomy is enshrined in

and zealously protected under the
Constitution. In Article II, Section 25 thereof,
the people expressly adopted the following
policy:
Section 25. The State shall ensure the
autonomy of local governments.
An entire article (Article X) of the Constitution
has been devoted to guaranteeing and
promoting the autonomy of LGUs. The LGC was
specially promulgated by Congress to ensure
the autonomy of local governments as
mandated by the Constitution:
Sec. 2. Declaration of Policy. (a) It is hereby
declared the policy of the State that the
territorial and political subdivisions of the State
shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest
development as self-reliant communities and
make them more effective partners in the
attainment of national goals. Toward this end,
the State shall provide for a more responsive
and accountable local government structure
instituted through a system of decentralization
whereby local government units shall be given
more powers, authority, responsibilities, and
resources. The process of decentralization shall
proceed from the National Government to the
local government units. (Emphasis supplied)

We do not see how the laws relied upon by the

oil companies and DOE stripped the City of
Manila of its power to enact ordinances in the
exercise of its police power and to reclassify the
land uses within its jurisdiction. To guide us, we
shall make a brief survey of our decisions where
the police power measure of the LGU clashed
with national laws.
In Tan v. Perea,[156] the Court ruled that
Ordinance No. 7 enacted by the municipality of
Daanbantayan, Cebu allowing the operation of
three cockpits was invalid for violating PD 449

(or the Cockfighting Law of 1974) which

permitted only one cockpit per municipality.
In Batangas CATV, Inc. v. Court of
Appeals,[157] the Sangguniang Panlungsod of
Batangas City enacted Resolution No. 210
granting Batangas CATV, Inc. a permit to
operate a cable television (CATV) system in
Batangas City. The Court held that the LGU did
not have the authority to grant franchises to
operate a CATV system because it was the
National Telecommunications Commission
(NTC) that had the power under EO Nos. 205
and 436 to regulate CATV operations. EO 205
mandated the NTC to grant certificates of
authority to CATV operators while EO 436
vested on the NTC the power to regulate and
supervise the CATV industry.
In Lina, Jr. v. Pao,[158] we held
that Kapasiyahan Bilang 508, Taon 1995 of
the Sangguniang Panlalawigan of Laguna could
not be used as justification to prohibit lotto in
the municipality of San Pedro, Laguna because
lotto was duly authorized by RA 1169, as
amended by BP 42. This law granted a franchise
to the Philippine Charity Sweepstakes Office
and allowed it to operate lotteries.
In Magtajas v. Pryce Properties Corp.,
Inc.,[159] the Sangguniang Panlungsod of
Cagayan de Oro City passed Ordinance Nos.
3353 and 3375-93 prohibiting the operation of
casinos in the city. We ruled that these
ordinances were void for contravening PD 1869
or the charter of the Philippine Amusements
and Gaming Corporation which had the power
to operate casinos.
The common dominator of all of these cases is
that the national laws were clearly and
expressly in conflict with the
ordinances/resolutions of the LGUs. The
inconsistencies were so patent that there was
no room for doubt. This is not the case here.
The laws cited merely gave DOE general powers
to establish and administer programs for the
48 | P a g e

exploration, transportation, marketing,

distribution, utilization, conservation,
stockpiling, and storage of energy resources
and to encourage certain practices in the *oil+
industry which serve the public interest and are
intended to achieve efficiency and cost
reduction, ensure continuous supply of
petroleum products. These powers can be
exercised without emasculating the LGUs of the
powers granted them. When these ambiguous
powers are pitted against the unequivocal
power of the LGU to enact police power and
zoning ordinances for the general welfare of its
constituents, it is not difficult to rule in favor of
the latter. Considering that the powers of the
DOE regarding the Pandacan Terminals are not
categorical, the doubt must be resolved in favor
of the City of Manila:
SECTION 5. Rules of Interpretation. In the
interpretation of the provisions of this Code,
the following rules shall apply:
(a) Any provision on a power of a local
government unit shall be liberally interpreted in
its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution
of powers and of the lower local government
unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in
favor of the local government unit concerned;
xxx
xxx
xxx
(g) IThe general welfare provisions in this
Code shall be liberally interpreted to give more
powers to local government units in
accelerating economic development and
upgrading the quality of life for the people in
the community xxxx

The least we can do to ensure genuine and

meaningful local autonomy is not to force an
interpretation that negates powers explicitly
granted to local governments. To rule against
the power of LGUs to reclassify areas within
their jurisdiction will subvert the principle of
local autonomy guaranteed by the
Constitution.[160] As we have noted in earlier

decisions, our national officials should not only

comply with the constitutional provisions on
local autonomy but should also appreciate the
spirit and liberty upon which these provisions
are based.[161]

THE DOE CANNOT EXERCISE THE POWER OF CONTROL

OVER LGUS
Another reason that militates against the DOEs
assertions is that Section 4 of Article X of the
Constitution confines the Presidents power
over LGUs to one of general supervision:
SECTION 4. The President of the Philippines
shall exercise general supervision over local
governments. Xxxx
Consequently, the Chief Executive or his or her
alter egos, cannot exercise the power of control
over them.[162] Control and supervision are
distinguished as follows:
[Supervision] means overseeing or the power or
authority of an officer to see that subordinate
officers perform their duties. If the latter fail or
neglect to fulfill them, the former may take
such action or step as prescribed by law to
make them perform their duties. Control, on
the other hand, means the power of an officer
to alter or modify or nullify or set aside what a
subordinate officer ha[s] done in the
performance of his duties and to substitute the
judgment of the former for that of the latter.[163]
Supervisory power, when contrasted with
control, is the power of mere oversight over an
inferior body; it does not include any restraining
authority over such body.[164] It does not allow
the supervisor to annul the acts of the
subordinate.[165] Here, what the DOE seeks to
do is to set aside an ordinance enacted by local
officials, a power that not even its principal, the
President, has. This is because:

49 | P a g e

Under our present system of government,

executive power is vested in the President. The
members of the Cabinet and other executive
officials are merely alter egos. As such, they are
subject to the power of control of the President,
at whose will and behest they can be removed
from office; or their actions and decisions
changed, suspended or reversed. In contrast,
the heads of political subdivisions are elected
by the people. Their sovereign powers emanate
from the electorate, to whom they are directly
accountable. By constitutional fiat, they are
subject to the Presidents supervision only, not
control, so long as their acts are exercised
within the sphere of their legitimate powers. By
the same token, the President may not
withhold or alter any authority or power given
them by the Constitution and the law.[166]
Thus, the President and his or her alter egos,
the department heads, cannot interfere with
the activities of local governments, so long as
they act within the scope of their
authority. Accordingly, the DOE cannot
substitute its own discretion for the discretion
exercised by thesanggunian of the City of
Manila. In local affairs, the wisdom of local
officials must prevail as long as they are acting
within the parameters of the Constitution and
the law.[167]

ORDINANCE NO. 8027 IS NOT INVALID FOR FAILURE TO

COMPLY WITH RA 7924 AND EO 72
The oil companies argue that zoning ordinances
of LGUs are required to be submitted to the
Metropolitan Manila Development Authority
(MMDA) for review and if found to be in
compliance with its metropolitan physical
framework plan and regulations, it shall
endorse the same to the Housing and Land Use
Regulatory Board (HLURB). Their basis is
Section 3 (e) of RA 7924:[168]

SECTION 3. Scope of MMDA Services. Metrowide services under the jurisdiction of the
MMDA are those services which have metro-

wide impact and transcend local political

boundaries or entail huge expenditures such
that it would not be viable for said services to
be provided by the individual [LGUs] comprising
Metropolitan Manila. These services shall
include:
xxx
xxx
xxx
(g)
Urban renewal, zoning, and land use
planning, and shelter services which include the
formulation, adoption and implementation of
policies, standards, rules and regulations,
programs and projects to rationalize and
optimize urban land use and provide direction
to urban growth and expansion, the
rehabilitation and development of slum and
blighted areas, the development of shelter and
housing facilities and the provision of necessary
social services thereof. (Emphasis supplied)
Reference was also made to Section 15 of its
implementing rules:
Section 15. Linkages with HUDCC, HLURB, NHA,
LGUs and Other National Government Agencies
Concerned on Urban Renewal, Zoning and Land
Use Planning and Shelter Services. Within the
context of the National Housing and Urban
Development Framework, and pursuant to the
national standards, guidelines and regulations
formulated by the Housing and Land Use
Regulatory Board [HLURB] on land use planning
and zoning, the [MMDA] shall prepare a
metropolitan physical framework plan and
regulations which shall complement and
translate the socio-economic development plan
for Metro Manila into physical or spatial terms,
and provide the basis for the preparation,
review, integration and implementation of local
land use plans and zoning, ordinance of cities
and municipalities in the area.
Said framework plan and regulations shall
contain, among others, planning and zoning
policies and procedures that shall be observed
by local government units in the preparation of
their own plans and ordinances pursuant to
Section 447 and 458 of RA 7160, as well as the
identification of sites and projects that are
50 | P a g e

considered to be of national or metropolitan

significance.
Cities and municipalities shall prepare their
respective land use plans and zoning
ordinances and submit the same for review and
integration by the [MMDA] and indorsement to
HLURB in accordance with Executive Order No.
72 and other pertinent laws.
In the preparation of a Metropolitan Manila
physical framework plan and regulations, the
[MMDA] shall coordinate with the Housing and
Urban Development Coordinating Council,
HLURB, the National Housing Authority,
Intramuros Administration, and all other
agencies of the national government which are
concerned with land use and zoning, urban
renewal and shelter services. (Emphasis
supplied)
They also claim that EO 72[169] provides that
zoning ordinances of cities and municipalities of
Metro Manila are subject to review by the
HLURB to ensure compliance with national
standards and guidelines. They cite Section 1,
paragraphs I, (e), (f) and (g):
SECTION 1. Plan formulation or updating.
xxx
xxx
xxx
(g) Cities and municipalities of Metropolitan
Manila shall continue to formulate or update
their respective comprehensive land use plans,
in accordance with the land use planning and
zoning standards and guidelines prescribed by
the HLURB pursuant to EO 392, S. of 1990, and
other pertinent national policies.
Xxx
xxx
xxx
(e) Pursuant to LOI 729, S. of 1978, EO 648, S. of
1981, and RA 7279, the comprehensive land use
plans of provinces, highly urbanized cities and
independent component cities shall be
reviewed and ratified by the HLURB to ensure
compliance with national standards and
guidelines.

(f) Pursuant to EO 392, S. of 1999,

the comprehensive land use plans of cities and
municipalities of Metropolitan Manila shall be
reviewed by the HLURB to ensure compliance
with national standards and guidelines.
(g) Said review shall be completed within
three (3) months upon receipt thereof
otherwise, the same shall be deemed consistent
with law, and, therefore, valid. (Emphasis
supplied)

They argue that because Ordinance No. 8027

did not go through this review process, it is
invalid.
The argument is flawed.
RA 7942 does not give MMDA the authority to
review land use plans and zoning ordinances of
cities and municipalities. This was only found in
its implementing rules which made a reference
to EO 72. EO 72 expressly refers to
comprehensive land use plans (CLUPs)
only. Ordinance No. 8027 is admittedly not a
CLUP nor intended to be one. Instead, it is a
very specific ordinance which reclassified the
land use of a defined area in order to prevent
the massive effects of a possible terrorist
attack. It is Ordinance No. 8119 which was
explicitly formulated as the Manila *CLUP+ and
Zoning Ordinance of 2006. CLUPs are the
ordinances which should be submitted to the
MMDA for integration in its metropolitan
physical framework plan and approved by the
HLURB to ensure that they conform with
national guidelines and policies.
Moreover, even assuming that the MMDA
review and HLURB ratification are necessary,
the oil companies did not present any evidence
to show that these were not complied with. In
accordance with the presumption of validity in
favor of an ordinance, its constitutionality or
legality should be upheld in the absence of
proof showing that the procedure prescribed by
law was not observed. The burden of proof is
51 | P a g e

on the oil companies which already had notice

that this Court was inclined to dispose of all the
issues in this case. Yet aside from their bare
assertion, they did not present any certification
from the MMDA or the HLURB nor did they
append these to their pleadings. Clearly, they
failed to rebut the presumption of validity of
Ordinance No. 8027.[170]
CONCLUSION
Essentially, the oil companies are fighting for
their right to property. They allege that they
stand to lose billions of pesos if forced to
relocate. However, based on the hierarchy of
constitutionally protected rights, the right to life
enjoys precedence over the right to
property.[171]The reason is obvious: life is
irreplaceable, property is not. When the state
or LGUs exercise of police power clashes with a
few individuals right to property, the former
should prevail.[172]
Both law and jurisprudence support the
constitutionality and validity of Ordinance No.
8027. Without a doubt, there are no
impediments to its enforcement and
implementation. Any delay is unfair to the
inhabitants of the City of Manila and its leaders
who have categorically expressed their desire
for the relocation of the terminals. Their power
to chart and control their own destiny and
preserve their lives and safety should not be
curtailed by the intervenors warnings of
doomsday scenarios and threats of economic
disorder if the ordinance is enforced.
Secondary to the legal reasons supporting the
immediate implementation of Ordinance No.
8027 are the policy considerations which drove
Manilas government to come up with such a
measure:
... [The] oil companies still were not able to allay
the apprehensions of the city regarding the
security threat in the area in general. No
specific action plan or security measures were
presented that would prevent a possible large-

scale terrorist or malicious attack especially an

attack aimed at Malacaang. The measures
that were installed were more directed towards
their internal security and did not include the
prevention of an external attack even on a
bilateral level of cooperation between these
companies and the police and military.
Xxx

xxx

xxx

It is not enough for the city government to be

told by these oil companies that they have the
most sophisticated fire-fighting equipments and
have invested millions of pesos for these
equipments. The city government wants to be
assured that its residents are safe at any time
from these installations, and in the three public
hearings and in their position papers, not one
statement has been said that indeed the
absolute safety of the residents from the
hazards posed by these installations is
assured.[173]

We are also putting an end to the oil

companies determination to prolong their stay
in Pandacan despite the objections of Manilas
residents. As early as October 2001, the oil
companies signed a MOA with the DOE obliging
themselves to:
... undertake a comprehensive and comparative
study ... [which] shall include the preparation of
a Master Plan, whose aim is to determine the
scope and timing of the feasible location of the
Pandacan oil terminals and all associated
facilities and infrastructure including
government support essential for the relocation
such as the necessary transportation
infrastructure, land and right of way acquisition,
resettlement of displaced residents and
environmental and social acceptability which
shall be based on mutual benefit of the Parties
and the public.[174]
Now that they are being compelled to
discontinue their operations in the Pandacan
Terminals, they cannot feign unreadiness

52 | P a g e

considering that they had years to prepare for

this eventuality.
Just the same, this Court is not about to
provoke a crisis by ordering the immediate
relocation of the Pandacan Terminals out of its
present site. The enforcement of a decision of
this Court, specially one with far-reaching
consequences, should always be within the
bounds of reason, in accordance with a
comprehensive and well-coordinated plan, and
within a time-frame that complies with the
letter and spirit of our resolution. To this end,
the oil companies have no choice but to obey
the law.
A WARNING TO PETITIONERS COUNSEL
We draw the attention of the parties to a
matter of grave concern to the legal profession.
Petitioners and their counsel, Atty. Samson
Alcantara, submitted a four-page memorandum
that clearly contained either substance nor
research. It is absolutely insulting to this Court.
We have always tended towards judicial
leniency, temperance and compassion to those
who suffer from a wrong perception of what
the majesty of the law means. But for a
member of the bar, an officer of the court, to
file in this Court a memorandum of such
unacceptable quality is an entirely different
matter.
It is indicative less of a personal shortcoming or
contempt of this Court and more of a lawyers
sorry descent from a high sense of duty and
responsibility. As a member of the bar and as an
officer of the court, a lawyer ought to be keenly
aware that the chief safeguard of the body
politic is respect for the law and its magistrates.
There is nothing more effective than the written
word by which counsel can persuade this Court
of the righteousness of his cause. For if truth
were self-evident, a memorandum would be
completely unnecessary and superfluous.

The inability of counsel to prepare a

memorandum worthy of this Courts
consideration is an ejemplo malo to the legal
profession as it betrays no genuine interest in
the cause he claims to espouse. Or did counsel
think he can earn his moment of glory without
the hard work and dedication called for by his
petition?
A FINAL WORD
On Wednesday, January 23, 2008, a defective
tanker containing 2,000 liters of gasoline and
14,000 liters of diesel exploded in the middle of
the street a short distance from the exit gate of
the Pandacan Terminals, causing death,
extensive damage and a frightening
conflagration in the vicinity of the
incident. Need we say anthing about what will
happen if it is the estimated 162 to 211 million
liters[175] of petroleum products in the terminal
complex which blow up?

period of ninety (90) days, submit to the

Regional Trial Court of Manila, Branch 39, the
comprehensive plan and relocation schedule
which have allegedly been prepared. The
presiding judge of Manila RTC, Branch 39 will
monitor the strict enforcement of this
resolution.
Atty. Samson Alcantara is hereby ordered to
explain within five (5) days from notice why he
should not be disciplined for his refusal, or
inability, to file a memorandum worthy of the
consideration of this Court.
Treble costs against petitioners counsel, Atty.
Samson Alcantara.
SO ORDERED.
Sgd.
RENATO C. CORONA
Associate Justice

WHEREFORE, the motions for leave to intervene

WE CONCUR:
of Chevron Philippines Inc., Petron Corporation
and Pilipinas Shell Petroleum Corporation, and
Sgd.
the Republic of the Philippines, represented by
REYNATO S. PUNO
the Department of Energy, are
Chief Justice
hereby GRANTED. Their respective motions for
Chairperson
reconsideration are hereby DENIED. The
Regional Trial Court, Manila, Branch 39
Sgd.
is ORDERED to DISMISS the consolidated cases ANGELINA SANDOVALof Civil Case No. 03-106377 and Civil Case No. GUTIERREZ
03-106380.
Associate Justice
We reiterate our order to respondent Mayor of
the City of Manila to enforce Ordinance No.
8027. In coordination with the appropriate
agencies and other parties involved, respondent
Mayor is hereby ordered to oversee the
relocation and transfer of the Pandacan
Terminals out of its present site.
To ensure the orderly transfer, movement and
relocation of assets and personnel, the
intervenors Chevron Philippines Inc., Petron
Corporation and Pilipinas Shell Petroleum
Corporation shall, within a non-extendible
53 | P a g e

Sgd.
ADOLFO S. AZCUNA
Associate Justice

Sgd.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the
above resolution had been reached in
consultation before the case was assigned to
the writer of the opinion of the Courts Division.
Sgd.

REYNATO S. PUNO
Chief Justice
[1]

Formerly known as Caltex

(Philippines), Inc.
[2]
Rollo, p. 192.
[3]
Entitled An Act Creating the
Department of Energy, Rationalizing the
Organization and Functions of Government
Agencies Related to Energy, and for Other
Purposes also known as the DOE Act of 1992
and approved on December 9, 1992. Prior to
RA 7638, a Department of Energy was
established under Presidential Decree No. 1206,
Creating the Department of Energy, approved
on October 6, 1977.
[4]
RA 7638, Section 4.
[5]
Entitled Ordinance Reclassifying the
Land Use of [Those] Portions of Land Bounded
by the Pasig River In The North[,] PNR Railroad
Track in the East, Beata St. in the South,
Palumpong St. in the Southwest and Estero De
Pandacan in the West, PNR Railroad in the
Northwest Area, Estero of Pandacan in the
Northeast, Pasig River in the Southeast and Dr.
M. L. Carreon in the Southwest; the Area of
Punta, Sta. Ana Bounded by the Pasig River,
Marcelino Obrero St.[,] Mayo 28 St. and the F.
Manalo Street from Industrial II to Commercial
I.
[6]
Rollo, p. 12.
[7]
Id., p. 6.
[8]
Id., pp. 16-18. This MOU modified
the Memorandum of Agreement (MOA)
executed on October 12, 2001 by the oil
companies and the DOE. This MOA called for
close coordination among the parties with a
view of formulating appropriate measures to
arrive at the best possible option to ensure,
maintain and at the same time harmonize the
interests of both government and the oil
companies; id., pp. 413-415.
[9]
Entitled Resolution Ratifying the
Memorandum of Understanding (MOU) Entered
into by and among the Department of Energy,
the City of Manila, Caltex (Philippines), Inc.,
Petron Corporation and Pilipinas Shell
54 | P a g e

Petroleum Corporation on 26 June 2002, and

Known as Document No. 60, Page No. 12, Book
No. 1, Series of 2002 in the Notarial Registry of
Atty. Neil Lanson Salcedo, Notary Public for and
in the City of Manila; id., p. 36.
[10]
Id.
[11]
Entitled Resolution Extending the
Validity of Resolution 97, Series of 2002, to April
30, 2003, Thereby Authorizing his Honor Mayor
Jose L. Atienza, Jr., to Issue Special Business
Permits to Caltex Phil., Inc., Petron Corporation
and Pilipinas Shell Petroleum Corporation
Situated within the Pandacan Oil Terminal
Covering the said Period; id., p. 38.
[12]
Id.
[13]
Section 455 (b) (2).
[14]
Rollo, p. 280.
[15]
Id., p. 333.
[16]
Penned by Judge Reynaldo G. Ros, id.,
p. 388.
[17]
Penned by Judge Guillermo G.
Purganan, id., p. 423.
[18]
Id., p. 458.
[19]
Id., p. 493.
[20]
Id., p. 495.
[21]
Petron tried to intervene in civil case
no. 06-115334 but the court denied its motion;
id., pp. 692-694.
[22]
Memorandum of oil companies, p. 25.
[23]
Rollo, p. 238.
[24]
Id., p. 698.
[25]
Footnote no. 50 of memorandum of
oil companies, id., p. 26.
[26]
According to the oil companies, they
were informed that their and the DOE's motions
to intervene had already been granted
(Memorandum of oil companies, p.
28). However, this contention is not supported
by the records.
[27]
Transcript of April 11, 2007 Oral
Arguments, pp. 125, 192-195.
[28]
G. B. Bagayaua, Pandacan's Ring of
Fire, NEWSBREAK 3(4): 12 (March 3, 2003).
[29]
Pandacan Installation Profile,
<http://www.shell.com/home/framework?siteI
d=ph-en&FC2=/phen/thml/iwgen/about_shell/> (visited March
11, 2007).

[30]

History: More than 85 years of

Philippine Partnership,
<http://www.caltex.com/ph/en/ph_history.
asp> (visited March 11, 2007).
[31]
Rollo, p. 300.
[32]
<http://www.fundinguniverse.com/co
mpany-histories/Petron-Corporation-CompanyHistory.html> (visited May 15, 2007).
[33]
<http://www.petron.com/aboutleading.asp> (visited May 15, 2007).
[34]
United States v. Caltex, Phils., et. al.,
344 U.S. 149 (1952).
[35]
N. JOAQUIN, ALMANAC FOR MANILEOS
97 (1979).
[36]
Supra note 30.
[37]
Pandacan oil depots: A disaster
waiting to
happen <http://www.foe.co.uk/resource/report
s/behind_shine.pdf> (visited May 15, 2007).
[38]
Id.
[39]
Safety and health risks in the
Philippines <http://www.foe.co.uk/resource/re
ports/failing_challenge.pdf> (visited May 15,
2007).
[40]
Supra note 37.
[41]
Supra note 28.
[42]
Supra note 37.
[43]
Id.
[44]
Rollo, p. 221.
[45]
Supra note 28 at 13.
[46]
Supra note 44.
[47]
Id., p. 223.
[48]
Id., p. 222.
[49]
Id., p. 731.
[50]
Hi-Tone Marketing Corporation v.
Baikal Realty Corporation, G.R. No. 149992, 20
August 2004, 437 SCRA 121, 139, citing Manalo
v. Court of Appeals, G.R. No. 141297, 8 October
2001, 366 SCRA 752, 766 (2001), which in turn
cited First Philippine Holdings Corporation v.
Sandiganbayan, 253 SCRA 30 (1996).
[51]
See Ortega v. Court of Appeals, 359
Phil. 126, 139 (1998), citing the 1997 Rules of
Civil Procedure by Feria, pp. 71-72.
[52]
G.R. No. 166429, 1 February 2006,
481 SCRA 457.
[53]
Id., p. 470.

55 | P a g e

[54]

Pinlac v. Court of Appeals, 457 Phil.

527, 534 (2003), citing Director of Lands v. Court
of Appeals, G.R. No. L-45168, 25 September
1979, 93 SCRA 238, 246.
[55]
Rollo, p. 203.
[56]
Alfelor v. Halasan, G.R. No. 165987,
31 March 2006, 486 SCRA 451, 461,
citing Nordic Asia Ltd. v. Court of Appeals, 451
Phil. 482, 492-493 (2003).
[57]
To justify their late intervention, the
oil companies explained that [they] were aware
of this Petition before the Honorable Court but
they opted not to intervene then because they
believed that it was more proper to directly
attack the validity of Ordinance No. 8027
(Memorandum, p. 22). They also said that they
did not deem it necessary to intervene then
because they relied in good faith that
respondent [Mayor] would, as a conscientious
litigant, interpose a fitting defense of the
instant Petition. (Footnote no. 2, id., p. 3)
[58]
Hi-Tone Marketing Corporation v.
Baikal Realty Corporation, supra note 50 at 140.
[59]
The full text reads:
SEC. 3. Petition for Mandamus. When any
tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act
which the law specifically enjoins as a duty
resulting from an office, trust, or station, or
unlawfully excludes another from the use and
enjoyment of a right or office to which such
other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby
may file a verified petition in the proper court,
alleging the facts with certainty and praying
that judgment be rendered commanding the
respondent, immediately or at some other time
to be specified by the court, to do the act
required to be done to protect the rights of the
petitioner, and to pay the damages sustained by
the petitioner by reason of the wrongful acts of
the respondent. xxx
[60]
Supra note 25.
[61]
Footnote no. 24, p. 9 of the decision.
[62]
Logronio v. Taleseo, 370 Phil. 907, 910
(1999).

[63]

Vera v. Hon. Judge Arca, 138 Phil. 369,

384 (1969).
[64]
Filipino Metals Corporation v.
Secretary of Department of Trade and
Industry, G.R. No. 157498, 15 July 2005, 463
SCRA 616, 624 citing Valley Trading Co., Inc. v.
CFI of Isabela, Br. II, G.R. No. 49529, 31 March
1989, 171 SCRA 501, 508, in turn citing Tablarin
v. Gutierrez, G.R. No. L-78104, 31 July 1987, 52
SCRA 731, 737.
[65]
Rollo, pp. 387-388.
[66]
Valley Trading Co., Inc. v. CFI of
Isabela, Br. II, supra note 64.
[67]
Id., citations omitted.
[68]
Ermita-Malate Hotel and Motel
Operators Association, Inc. v. Hon. City Mayor
of Manila, 127 Phil. 306, 314-315 (1967),
citing US v. Salaveria, 39 Phil. 102, 111 (1918).
[69]
Angara v. Electoral Commission, 63
Phil. 139, 158-159 (1936).
[70]
Memorandum of oil companies, p. 38,
citing City of Manila v. Laguio, Jr., G.R. No.
118127, 12 April 2005, 455 SCRA 308, 358-359.
[71]
People v. De Guzman, et al., 90 Phil.
132, 135 (1951), citations omitted.
[72]
Seng Kee & Co. v. Earnshaw and Piatt,
56 Phil. 204, 212-213 (1931).
[73]
Sec. 1. Judicial notice, when
mandatory. - A court shall take judicial notice,
without introduction of evidence, of the
existence and territorial extent of states, their
political history, forms of government and
symbols of nationality, the law of nations, the
admiralty and maritime courts of the world and
their seals, the political constitution and history
of the Philippines, the official acts of the
legislative, executive and judicial departments
of the Philippines, the laws of nature, the
measure of time and the geographical divisions.
[74]
Revised Charter of the City of Manila.
[75]
29 AmJur 2d 156, Evidence, Section
126 citing Faustrum v. Board of Fire & Police
Commrs, (2d Dist) 240 III App 3d 947, 181 Ill
Dec 567, 608 NE2d 640, app den 151 III 2d 563,
186 III Dec 380, 616 NE2d 333.
[76]
Id., citing Dream Mile Club, Inc. v.
Tobyhanna Township Bd. of Supervisors, 150 Pa
Cmwlth 309, 615 A2d 931.
56 | P a g e

[77]

Id.
Transcript of April 11, 2007 Oral
Arguments, p. 244.
[79]
Rollo, p. 698.
[80]
Memorandum of respondent, pp. 3031.
[81]
Memorandum of oil companies, p. 26.
[82]
Answer, paragraphs 20.1 and 20.3, pp.
20-21.
[83]
Alfelor v. Halasan, supra note 56 at
460, citing Cunanan v. Amparo, 80 Phil. 227,
232 (1948), in turn citing McDaniel v. Apacible,
44 Phil. 248 (1922).
[84]
Republic Glass Corporation v. Qua,
G.R. No. 144413, 30 July 2004, 435 SCRA 480,
492.
[85]
Republic of the Philippines v. Court of
Appeals, 359 Phil. 530, 582 (1998), Romero, J.,
separate opinion.
[86]
Sec. 84 of Ordinance No. 8119
provides:
Repealing Clause. - All ordinances, rules or
regulations in conflict with the provisions of
this
Ordinance are hereby
repealed; PROVIDED, That the rights that are
vested upon the effectivity
of this
Ordinance shall not be impaired. (Rollo, p.
493.)
[87]
Memorandum of oil companies, pp.
44-45, citing Annex C of Ordinance No. 8119.
Annex C (Zone Boundaries) of Ordinance No.
8119 enumerates and specifies the areas
covered by the different zones:
High Density Residential/Mixed Use Zone
R-3/MXD
Color: Yellow
District I
1.
area covered by Smokey Mountain
Development and Reclamation Project.
2.
area bounded on the N by Manila
Navotas boundary, on the SW by Estero de
Maypajo, on the NW by Malaya, on the NE by
Simeon de Jesus, and on the NW by Taliba
3.
area bounded on the N by Estero de
Maypajo, on the SW by Estero de Sunog
Apog/Rodriguez, on the NW by Younger, and on
the NE by Estaro de Maypajo
[78]

4.
area occupied by a portion in Vitas
Complex (as indicated in the Zoning Map)
5.
area bounded on the SE by F. Varona, on
the SW by Lallana, on the NW by Roxas, and on
the NE by Jacinto
6.
area bounded on the E by Estero de Vitas,
on the SW by C-2 Road, on the NW by
Velasquez, and on the NE by Osorio
7.
area bounded on the SE by Varona, on
the NW by Pitong Gatang, on the SW by Lacson,
on the S by Chesa, on the W by Quezon, on the
NW by Liwayway, on the W by Garcia, and on
the NE by Harbosa (except the area covered by
C-2/MXD Zone area bounded on the N by
Bulacan, on the E by Magsaysay, on the S by
Dandan, and on the W by Garcia)
8.
area bounded on the SE by Estero de
Vitas, on the SW by Zamora, on the NW by
Herbosa, on the SW by Franco, on the NW by
Concha/Nolasco, on the SE by Pavia, on the NE
Sta. Maria, on the SW by Perla, on the W by
Varona, on the NE by Herbosa on the NW by
Velasquez, and on the NE by Inocencio (except
the area covered by INS-G bounded on the SE
by Dandan, on the SW by Sta. Maria, and on the
NW by Pealosa/Sta. Maria)
9.
area bounded on the SE by
Corcuera/Estero dela Reina, on the NW by
Pavia, and on the NE by J. Luna
10. area bounded on the SE by a line
parallel/extending from Arqueros, on the SW by
Dist. 1/Dist. II boundary on the NW by a line
parallel/extending from Ricafort, and on the NE
by Dagupan Ext.
11. area bounded on the E by Dama de
Noche, on the SW by Lakandula, on the SE by
Asuncion, on the SW by C.M. Recto, on the W
by Del Pan, on the S by Zaragosa, on the W by
Kagitingan, and on the N/NE by Tuazon
Distinct II
1.
area bounded on the N by ManilaKalookan boundary, and on the E/S/W by Estero
de Maypajo
2.
area bounded ion the N by ManilaKalookan boundary, on the SW by J. Luna, on

57 | P a g e

the NW by Antipolo, and on the NE by Estero de

Sunog Apog
3.
area bounded on the SE by Avellana, on
the SW by Dagupan, on the NW by Bualcan, and
on the NE by J. Luna
4.
area bounded on the SE by ManilaKalookan boundary, on the SW buy Rizal
Avenue, on the NW by Teodoro/Tabora/Estero
de Maypajo and on the N/NW/NE by ManilaKalookan boundary
5.
area bounded on the SE by Laguna, on
the SW by Estero de San Lazaro, on the S by
Herrera, and on the NE by J. Abad Santos
6.
area bounded on the SE by a line
parallel/extending from Arqueros, on the SW by
A. Rivera, on the NW by a line
parallel/extending from La Torre, and on the NE
by Dist. I Dist. II boundary
District III
1.
area bounded on the SE by Chu Chin
Road, on the E by L. Rivera, on the NW by
Aurora Blvd., and on the NE by Liat Su
2.
area bounded on the N by Laguna, on the
E by T. Mapua, on the S by S. Herrera, and on
the W by Dist II Dist. III boundary
District IV
1. area bounded on the SE by Manila-Quezon
City boundary, on the SW by Piy Margal, on the
NW by Casaas, on the SW by Dapitan, on the
NW by Ibarra, and on the NE by Simoun
2. area bounded on the SE by PNR Railway, on
the SW by Lardizabal, on the SE by M. dela
Fuente, on the NW by a lien parallel/extending
from San Jose II, on the NW by Loreto, on the
NE by Tuazon, on the NW by M. dela Fuente,
and on the NE by Espaa
3. area bounded on the SE by
Matimyas/Blumentritt, on the SE by Sobriedad
Ext., on the NW by Antipolo, and on the NE by
S. Loyola, (except the area covered by Legarda
Elem. School)
4. area bounded on the SE Manila-Quezon City
boundary, on the SW/NW by Blumentritt, and
on the NE by Matimyas
5. area bounded on the SE by Blumentritt, on
the SW by Tuazon, on the NW by Antipolo, and

on the NE by Sobriedad (except the area

bounded by Most Holy Trinity Parish
Church/Holy Trinity Academy)
6. area bounded on the SE by Manila-Quezon
City boundary, on the S by Sociego, on the E by
Santol, on the S by one (1) block south of
Escoda, on the W by one (1) block west of
Santol, on the S by one (10 block south of
Tuazon, on the SE by Pia, on the S by Vigan, on
the E by Santiago, on the NW by PNR Railway,
and on the NE by G. Tuazon (except the area
occupied by a portion of Burgos Elem. School)
District V
1.
area occupied by an area in Baseco
Compound (as indicated in the Zoning Map
2.
area occupied by Engineering Island
3.
area bounded on the SE by Estero de
Pandacan, on the SW by Quirino Avenue, on the
S by Plaza Dilao, on the NW by Pres. Quirino
Avenue, on the NE by the property line of
Grayline Phils. Inc. (except the area occupied by
Plaza dela Virgen/M.A. Roxas High School)
4.
area bounded on the SE by Estero de
Pandacan, on the SW by Estero Tripa de
Gallina/Pedro Gil, on the E by Onyx, on the SW
by Estero Tripa de Gallina, on the NW/NE by
PNR Railway (except the area occupied by
Concordia College)
5.
area bounded on the NE by Pedro Gil,
on the SE by Pasig Line, on the SW buy F.
Torres, and on the NW/W by Onyx
6.
area bounded on the SE by one (1)
block northwest of Tejeron, on the SW by F.
Torres, on the SE by Pasig Line, on the SW by
Estrada, on the NW by Onyx, and on the SW by
A. Francisco
7.
area bounded on the SE by Jimenez, on
the SW by Franco, on the SE by Alabastro, on
the NE by road parallel/extending to Jade, on
the SE by Topacio, on the SW by Estrada, on the
NW by PNR Railway, and on the NE by Estero
Tripa de Gallina
8.
area bounded on the SE by PNR
Railway, on the SW by Estrada, on the SE by del
Pilar, on the SW by Don Pedro, on the SE by A.
Aquino, on the SW by P. Ocampo, Sr., and on
the NW by Diamante
58 | P a g e

9.
area bounded on the NE by San Andres,
on the SW by Diamante, on the S by Zapanta,
on the NW by Singalong, on the NE by Cong. A.
Francisco, and on the NE by Linao.
District VI
1.
area bounded on the SE/SW by ManilaQuezon City boundary/San Juan River, on the
NW by PNR Railway, and on the N/NE by R.
Magsaysay Blvd. (except the area occupied by
C-3/MXD area bounded by R. Magsaysay and
Santol Ext./area bounded by R. Magsaysay
Baldovino, Hintoloro, Road 2, Buenviaje, and V.
Mapa)
2.
area bounded on the SE by PNR Railway,
on the SW by San Juan River, on the NE by
Dalisay, on the NW by Lubiran, and on the NE
by Cordeleria
3.
area bounded on the SE by San Juan
River, on the SW by Manila-Mandaluyong
boundary/Panaderos, and on the NW/SW/NE
by Pasig River
4.
area bounded on the E/SW by Pres.
Quirino Avenue, and on the NW/NE by Estero
de Pandacan
5.
area bounded on the SE/E by Estero de
Pandacan, on the W by Pres. Quirino Avenue,
and on the NE by Pasig River
6.
area bounded on the SE by Pasig River, on
the SW by PNR Railway, on the NW/SW by
Estero de Pandacan,/PNR rail tracks, on the NW
by Pres. Quirino Avenue, and on the NE by
Estero de Pandacan
7.
area bounded on the N by Estero de
Pandacan, on the SW by PNR rail tracks, and on
the NW by Estero de Pandacan
8.
area bounded on the SW by
Kahilum/Felix, on the NW by Pedro Gil, on the
NW by Pedro Gil, on the NE by Estero Tripa de
Gallina, on the NW by Estero de Pandacan, and
on the NE By Pres. Quirino Avenue
9.
area bounded on the SE by Estero de
Pandacan, on the SW/SE by Pasig River, on the E
by a line parallel/extending form Vista on the
south side, on the SW by Pedro Gil, on the NW
by M. L. Carreon, and on the NE by PNR Railway
10. area bounded on the SE/SW by Pasig
River/Manila-Makati boundary on the NW by

Tejeron, and on the NE by Pedro Gil/New

Panaderos.
Section 12 of Ordinance No. 8119 states
the allowable uses of an R-3/MXD zone:
Sec. 12. Use Regulations in *R-3/MXD]. - An R3/MXD shall be used primarily for highrise
housing/dwelling purposes and
limited complementary/supplementary trade,
services and business activities. Enumerated
below are the allowable uses:
xxx
xxx
xx
x
[88]
Rollo, pp. 742-744.
[89]
Memorandum of oil companies, p. 28.
[90]
Memorandum of respondent, p. 27.
[91]
Mecano v. Commission on Audit, G.R.
No. 103982, 11 December 1992, 216 SCRA 500,
505, citation omitted.
[92]
Delfino v. St. James Hospital, Inc., G.R.
No. 166735, 5 September 2006, 501 SCRA 97,
112, citing Mecano v. Commission on Audit, id.,
p. 506.
[93]
Id.
[94]
Tan v. Perea, G.R. No. 149743, 18
February 2005, 452 SCRA 53, 68, citations
omitted.
[95]
Id.
[96]
Supra note 91.
[97]
See Villegas, etc., et al. v. Subido, 148B Phil. 668, 676 (1971), citations omitted.
[98]
Supra note 91 at 507.
[99]
See Section 9; rollo, p. 460.
[100]
Section 23.
[101]
Section 12.
[102]
Leynes v. Commission on Audit, G.R.
No. 143596, 11 December 2003, 418 SCRA 180,
196.
[103]
Supra note 97.
[104]
Philippine National Oil Company v.
Court of Appeals, G.R. No. 109976, 26 April
2005, 457 SCRA 32, 80, citing Ex Parte United
States, 226 U. S., 420; 57 L. ed., 281; Ex Parte
Crow Dog, 109 U. S., 556; 27 L. ed., 1030; Partee
v. St. Louis & S. F. R. Co., 204 Fed. Rep., 970.
[105]
Id., citing Crane v. Reeder and Reeder,
22 Mich., 322, 334; University of Utah vs.
Richards, 77 Am. St. Rep., 928.
59 | P a g e

[106]

Supra note 102, citing De Villa v.

Court of Appeals, 195 SCRA 722 (1991).
[107]
A special law is one which relates to
particular persons or things of a class, or to a
particular portion or section of the state
only; Leynes v. Commission on Audit, supra note
102, footnote no. 21, citing U.S. v. Serapio, 23
Phil 584 [1912].
[108]
A general law is one which affects all
people of the state or all of a particular class of
persons in the state or embraces a class of
subjects or places and does not omit any
subject or place naturally belonging to such
class; id., footnote no. 22, citing U.S. v. Serapio,
id; Valera v. Tuason, 80 Phil 823 (1948)
and Villegas v. Subido, supra note 97.
[109]
G.R. No. 140847, 23 September 2005,
470 SCRA 609.
[110]
Id., p. 623, citing R.
AGPALO, STATUTORY CONSTRUCTION (2003), p. 411,
in turn citing Gaerlan v. Catubig, G.R. No.
23964, 1 June 1966, 17 SCRA 376.
[111]
Memorandum, p. 39, citing Mama, Jr.
v. Court of Appeals, G.R. No. 86517, 30 April
1991, 196 SCRA 489, 496.
[112]
Suanes v. Chief Accountant of the
Senate, 81 Phil. 877, 879 (1948), citing 55 C. J.,
S; sec. 130, p. 215; see also 34 Am. Jur., pp. 910911; 95 A. L. R. 273, 277-278.
[113]
Rule 65, Section 3 of the Rules of
Court.
[114]
Section 5 (1), Article VIII.
[115]
City of Manila v. Laguio,
Jr., supra note 70 at 326, citing Tatel v.
Municipality of Virac, G.R. No. 40243, 11 March
1992, 207 SCRA 157, 161; Solicitor General v.
Metropolitan Manila Authority, G.R. No.
102782, 11 December 1991, 204 SCRA 837,
845; Magtajas v. Pryce Properties Corp., Inc.,
G.R. No. 111097, 20 July 1994, 234 SCRA 255,
268-267.
[116]
Metropolitan Manila Development
Authority v. Viron Transportation Co., Inc., G.R.
No. 170656, 15 August 2007, citing Binay v.
Domingo, G.R. No. 92389, September 11, 1991,
201 SCRA 508, 514; Presidential Commission on
Good Government v. Pea, G.R. No. L-77663,

April 12, 1988, 159 SCRA 556, 574; Rubi v.

Provincial Board of Mindoro, 39 Phil. 660, 708.
[117]
Id.
[118]
Id., citing Pangasinan Transportation
Co., Inc. v. The Public Service Commission, 70
Phil. 221, 229 (1940) and Eastern Shipping Lines,
Inc. v. Philippine Overseas Employment
Administration, G.R. No. L-76633, October 18,
1988, 166 SCRA 533, 544.
[119]
Roble Arrastre, Inc. v. Villaflor, G.R.
No. 128509, 22 August 2006, 499 SCRA 434,
448.
[120]
Article III, Section 18 (kk).
[121]
Section 458 (a) (2) (viii).
[122]
Lucena Grand Central Terminal, Inc. v.
Jac Liner, Inc., G.R. No. 148339, 23 February
2005, 452 SCRA 174, 185, citing Department of
Education, Culture and Sports v. San Diego, G.R.
No. 89572, 21 December 1989, 180 SCRA 533,
537.
[123]
Section 1 thereof.
[124]
Rollo, pp. 982-985.
[125]
Id., p. 1004.
[126]
Id., p. 1006.
[127]
Fabie v. City of Manila, 21 Phil. 486,
492 (1912).
[128]
Didipio Earth-Savers' Multi-purpose
Association, Incorporated (DESAMA) v. Gozun,
G.R. No. 157882, 30 March 2006, 485 SCRA 586,
604.
[129]
Patalinghug v. Court of Appeals, G.R.
No. 104786, 27 January 1994, 229 SCRA 554,
559, citing Sangalang v. Intermediate Court,
G.R. Nos. 71169, 76394, 74376 and 82281,
December 22, 1988, 168 SCRA 634; Ortigas &
Co. Ltd. Partnership v. Feati Bank and Trust Co.,
No. L-24670, December 14, 1989, 94 SCRA 533.
[130]
Balacuit v. Court of First Instance of
Agusan del Norte and Butuan City, Branch II,
G.R. No. L-38429, 30 June 1988 163 SCRA 182,
191.
[131]
Sta. Rosa Realty Development
Corporation v. Court of Appeals, G.R. No.
112526, 12 October 2001, 367 SCRA 175, 193,
citing PD 449, Section 4 (b).
[132]
Tan Chat v. Municipality of Iloilo, 60
Phil. 465, 473 (1934).
[133]
Supra note 72.
60 | P a g e

[134]

Rollo, pp. 1010-1011.

People v. Cruz, 54 Phil. 24, 28 (1929).
[136]
Rollo, p. 300.
[137]
Association of Small Landowners in
the Philippines, Inc. v. Secretary of Agrarian
Reform, G.R. No. 78742, 14 July 1989, 343 SCRA
175, 370.
[138]
Chief Justice Reynato S. Puno, The
Right to Property: Its Philosophical and Legal
Bases, The Court Systems Journal, vol. 10, no.
4, December 2005, p. 6.
[139]
Telecommunications and Broadcast
Attorneys of the Philippines, Inc. v. Comelec, 352
Phil. 153 (1998), Dissenting Opinion of J.
Romero, citing Cooley, Thomas II Constitutional
Limitations, 8th Ed., p. 1224 (1927). This is
further reinforced by Section 6, Article XII of the
Constitution: The use of property bears a social
function xxxx
[140]
Didipio Earth-Savers' Multi-Purpose
Association v. Gozun, supra note 128 at 605.
[141]
Rollo, p. 305.
[142]
Article III, Section 1 states:
[135]

Section 1. No person shall be deprived of life,

liberty or property without due process of law,
nor shall any person be denied the equal
protection of the laws.
[143]
Government Service Insurance System
v. Montesclaros, G.R. No. 146494, 14 July 2004,
434 SCRA 441, 452.
[144]
Id., citations omitted.
[145]
Entitled An Act Creating the
Department of Energy, Rationalizing the
Organization and Functions of Government
Agencies Related to Energy, and for Other
Purposes approved on December 9, 1992.
[146]
Entitled An Act Deregulating the
Downstream Oil Industry, and for Other
Purposes approved on February 10, 1998.
[147]
Section 1.
[148]
Rollo, p. 1443.
[149]
Id., p. 1444.
[150]
Id., p. 1470.
[151]
Id., p. 1480.
[152]
Id., p. 730.
[153]
Id., p. 1023.
[154]
Supra note 115.

[155]

Id., pp. 272-273, citation omitted.

G.R. No. 149743, 18 February 2005,
452 SCRA 53.
[157]
G.R. No. 138810, 29 September 2004,
439 SCRA 326.
[158]
416 Phil. 438 (2001).
[159]
Supra note 115.
[160]
Leynes v. Commission on
Audit, supra note 102 at 199, citing Section 25,
Article II and Section 2, Article X of the
Constitution.
[161]
Province of Batangas v. Romulo, G.R.
No. 152774, 27 May 2004, 429 SCRA 736, 772,
citing San Juan v. Civil Service Commission, G.R.
No. 92299, 19 April 1991, 196 SCRA 69.
[162]
National Liga ng mga Barangay v.
Paredes, G.R. Nos. 130775 and 131939, 27
September 2004, 439 SCRA 130.
[163]
Mondano v. Silvosa, 97 Phil. 143, 147148 (1955).
[164]
Taule v. Santos, G.R. No. 90336, 12
August 1991, 200 SCRA 512, 522, citing Hebron
v. Reyes, 104 Phil. 175 (1958).
[165]
Municipality of Malolos v. Libangang
Malolos, Inc., G.R. No. L-78592, 11
August 1988, 164 SCRA 290, 298 citing Hee
Acusar v. IAC, G.R. Nos. L-72969-70, 17
December 1986, 146 SCRA 294, 300.
[166]
Pimentel, Jr. v. Aguirre, G.R. No.
132988, 19 July 2000, 336 SCRA 201, 215, citing
Sec. 1, Art. VII, 1987 Constitution and Joaquin G.
Bernas, SJ, The 1987 Constitution of the
Republic of the Philippines: A Commentary,
1996 ed., p. 739.
[167]
See Dadole v. Commission on Audit,
G.R. No. 125350, 3 December 2002, 393 SCRA
262, 271.
[168]
Entitled An Act Creating the
[MMDA], Defining its Powers and Functions,
Providing Funds therefor and for Other
Purposes.
[169]
Entitled Providing for the
Preparation and Implementation of the
Comprehensive Land Use Plans of Local
Government Units Pursuant to the Local
Government Code of 1991 and Other Pertinent
Laws issued on March 25, 1993.
[156]

61 | P a g e

[170]

Figuerres v. Court of Appeals, 364

Phil. 683, 692-693 (1999); Reyes v. Court of
Appeals, 378 Phil. 232, 239 (1999).
[171]
Secretary of Justice v. Hon. Lantion,
379 Phil. 165, 201 (2000).
[172]
Vda. de Genuino v. Court of Agrarian
Relations, No. L-25035, 26 February 1968, 22
SCRA 792, 797.
[173]
Report of Committee on Housing,
Resettlement and Urban Development of the
City of Manila's Sangguniang
Panlungsod recommending the approval of
Ordinance No. 8027; rollo, pp. 985, 989.
[174]
Even if this MOU was modified by the
June 26, 2002 MOA; id., pp. 601-602.
[175]
Id., p. 1109. See also footnote 35.
THIRD DIVISION
G HOLDINGS, INC.,
Petitioner,

- versus -

NATIONAL MINES AND

ALLIED WORKERS UNION
Local 103 (NAMAWU); SHERIFFS
RICHARD H. APROSTA and
ALBERTO MUNOZ, all acting
Sheriffs; DEPARTMENT OF
LABOR AND EMPLOYMENT,
Region VI, Bacolod District Office,Bacolod City,
Respondents.

DECISION
NACHURA, J.:
Before this Court is a petition for review
on certiorari under Rule 45 of the Rules of Court
assailing the October 14, 2003 Decision[1] of the
Court of Appeals (CA) in CA-G.R. SP No. 75322.
The Facts

CA
C
A

The petitioner, G Holdings, Inc. (GHI), is a

domestic corporation primarily engaged in the
business of owning and holding shares of stock
of different companies.[2] It was registered with
the Securities and Exchange Commission on
August 3, 1992. Private respondent, National
Mines and Allied Workers Union Local 103
(NAMAWU), was the exclusive bargaining agent
of the rank and file employees of Maricalum
Mining Corporation (MMC),[3] an entity
operating a copper mine and mill complex at
Sipalay, Negros Occidental.[4]
MMC was incorporated by the Development
Bank of the Philippines (DBP) and the Philippine
National Bank (PNB) on October 19, 1984, on
account of their foreclosure of Marinduque
Mining and Industrial Corporations
assets. MMC started its commercial operations
in August 1985. Later, DBP and PNB transferred
it to the National Government for disposition or
privatization because it had become a nonperforming asset.[5]
On October 2, 1992, pursuant to a Purchase and
Sale Agreement[6] executed between GHI and
Asset Privatization Trust (APT), the former
bought ninety percent (90%) of MMCs shares
and financial claims.[7] These financial claims
were converted into three Promissory
Notes[8] issued by MMC in favor of GHI
totaling P500M and secured by mortgages over
MMCs properties. The notes, which were
similarly worded except for their amounts, read
as follows:
PROMISSORY NOTE
AMOUNT Php114,715,360.00 [Php186,550,560.00 in t
he second
note, and Php248,734,080.00 in the
third note.]
MAKATI, METRO MANILA, PHILIPPINES, October
2, 1992

62 | P a g e

For Value Received, MARICALUM MINING

CORPORATION (MMC) with postal address at
4th Floor, Manila Memorial Park Bldg., 2283
Pasong Tamo Extension, Makati, Metro Manila,
Philippines, hereby promises to pay G
HOLDINGS, INC., at its office at Phimco
Compound, F. Manalo Street, Punta, Sta. Ana,
Manila, the amount of PESOS ONE HUNDRED
FOURTEEN MILLION, SEVEN HUNDRED FIFTEEN
THOUSAND AND THREE HUNDRED SIXTY
(Php114,715,360.00) *PESOS ONE HUNDRED
EIGHTY SIX MILLION FIVE HUNDRED FIFTY
THOUSAND FIFE HUNDRED AND SIXTY
(Php186,550,560.00) in the second note, and
PESOS TWO HUNDRED FORTY EIGHT MILLION,
SEVEN HUNDRED THIRTY FOUR THOUSAND
AND EIGHTY (Php248,734,080.00) in the third
note], PHILIPPINE CURRENCY, on or before
October 2, 2002. Interest shall accrue on the
amount of this Note at a rate per annum equal
to the interest of 90-day Treasury Bills
prevailing on the Friday preceding the maturity
date of every calendar quarter.
As collateral security, MMC hereby establishes
and constitutes in favor of G HOLDINGS, INC.,
its successors and/or assigns:
1.
A mortgage over certain parcels of
land, more particularly listed and described in
the Sheriffs Certificate of Sale dated September
7, 1984 issued by the Ex-Officio Provincial
Sheriff of Negros Occidental, Rolando V.
Ramirez, with office at Bacolod City following
the auction sale conducted pursuant to the
provisions of Act 3135, a copy of which
certificate of sale is hereto attached as Annex
A and made an integral part hereof;
2.
A chattel mortgage over assets and
personal properties more particularly listed and
described in the Sheriffs Certificate of Sale
dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental,
Rolando V. Ramirez, with office at Bacolod City
following the auction conducted pursuant to
the provisions of Act 1508, a copy of which

Certificate of Sale is hereto attached as Annex

B and made an integral part hereof.
3.
Mortgages over assets listed in APT
Specific Catalogue GC-031 for MMC, a copy of
which Catalogue is hereby made an integral
part hereof by way of reference, as well as
assets presently in use by MMC but which are
not listed or included in paragraphs 1 and 2
above and shall include all assets that may
hereinafter be acquired by MMC.
MARICALUM MINING CORPORATION
(Maker)

this Court, we sustained the validity of the

Quisumbing Order, which became final and
executory on January 26, 2000.[13]
On May 11, 2001, then Acting Department of
Labor and Employment (DOLE) Secretary, now
also an Associate Justice of this Court, Arturo D.
Brion, on motion of NAMAWU, directed the
issuance of a partial writ of execution (Brion
Writ), and ordered the DOLE sheriffs to proceed
to the MMC premises for the execution of the
same.[14] Much later, in 2006, this Court, in G.R.
Nos. 157696-97, entitled Maricalum Mining
Corporation v. Brion and NAMAWU,[15] affirmed
the propriety of the issuance of the Brion Writ.

x x x x[9]

Upon the signing of the Purchase and Sale

Agreement and upon the full satisfaction of the
stipulated down payment, GHI immediately
took physical possession of the mine site and its
facilities, and took full control of the
management and operation of MMC.[10]
Almost four years thereafter, or on August 23,
1996, a labor dispute (refusal to bargain
collectively and unfair labor practice) arose
between MMC and NAMAWU, with the latter
eventually filing with the National Conciliation
and Mediation Board of Bacolod City a notice of
strike.[11] Then Labor Secretary, now Associate
Justice of this Court, Leonardo A. Quisumbing,
later assumed jurisdiction over the dispute and
ruled in favor of NAMAWU. In his July 30, 1997
Order in OS-AJ-10-96-014 (Quisumbing Order),
Secretary Quisumbing declared that the lay-off
(of workers) implemented on May 7, 1996 and
October 7, 1996 was illegal and that MMC
committed unfair labor practice. He then
ordered the reinstatement of the laid-off
workers, with payment of full backwages and
benefits, and directed the execution of a new
collective bargaining agreement (CBA)
incorporating the terms and conditions of the
previous CBA providing for an annual increase
in the workers daily wage.[12] In two separate
casesG.R. Nos. 133519 and 138996filed with
63 | P a g e

The Brion Writ was not fully satisfied because

MMCs resident manager resisted its
enforcement.[16] On motion of NAMAWU, then
DOLE Secretary Patricia A. Sto. Tomas ordered
the issuance of the July 18, 2002 Alias Writ of
Execution and Break-Open Order (Sto. Tomas
Writ).[17] On October 11, 2002, the respondent
acting sheriffs, the members of the union, and
several armed men implemented the Sto.
Tomas Writ, and levied on the properties of
MMC located at its compound in Sipalay,
Negros Occidental.[18]
On October 14, 2002, GHI filed with the
Regional Trial Court (RTC) of Kabankalan City,
Negros Occidental, Special Civil Action (SCA) No.
1127 for Contempt with Prayer for the Issuance
of a Temporary Restraining Order (TRO) and
Writ of Preliminary Injunction and to Nullify the
Sheriffs Levy on Properties.[19] GHI contended
that the levied properties were the subject of a
Deed of Real Estate and Chattel Mortgage,
dated September 5, 1996[20] executed by MMC
in favor of GHI to secure the aforesaid P550M
promissory notes; that this deed was registered
on February 24, 2000;[21] and that the
mortgaged properties were already
extrajudicially foreclosed in July 2001 and sold
to GHI as the highest bidder on December 3,
2001, as evidenced by the Certificate of Sale
dated December 4, 2001.[22]

The trial court issued ex parte a TRO effective

for 72 hours, and set the hearing on the
application for a writ of injunction.[23] On
October 17, 2002, the trial court ordered the
issuance of a Writ of Injunction (issued on
October 18, 2002)[24] enjoining the DOLE sheriffs
from further enforcing the Sto. Tomas Writ and
from conducting any public sale of the levied-on
properties, subject to GHIs posting of a P5M
bond.[25]
Resolving, among others, NAMAWUs separate
motions for the reconsideration of the
injunction order and for the dismissal of the
case, the RTC issued its December 4, 2002
Omnibus Order,[26] the dispositive portion of
which reads:
WHEREFORE, premises considered, respondent
NAMAWU Local 103s Motion for
Reconsideration dated October 23, 2002 for the
reconsideration of the Order of this Court
directing the issuance of Writ of Injunction
prayed for by petitioner and the Order dated
October 18, 2002 approving petitioners
Injunction Bond in the amount of P5,000,000.00
is hereby DENIED.
Respondents Motion to Dismiss as embodied in
its Opposition to Extension of Temporary
Restraining Order and Issuance of Writ of
Preliminary Injunction with Motion to Dismiss
and Suspend Period to File Answer dated
October 15, 2002 is likewise DENIED.
Petitioners Urgent Motion for the return of the
levied firearms is GRANTED. Pursuant thereto,
respondent sheriffs are ordered to return the
levied firearms and handguns to the petitioner
provided the latter puts [up] a bond in the
amount of P332,200.00. Respondents lawyer,
Atty. Jose Lapak, is strictly warned not to resort
again to disrespectful and contemptuous
language in his pleadings, otherwise, the same
shall be dealt with accordingly.
[27]

SO ORDERED.

64 | P a g e

Aggrieved, NAMAWU filed with the CA a

petition for certiorari under Rule 65, assailing
the October 17, 18 and December 4, 2002
orders of the RTC.[28]
After due proceedings, on October 14, 2003,
the appellate court rendered a Decision setting
aside the RTC issuances and directing the
immediate execution of the Sto. Tomas
Writ. The CA ruled, among others, that the
circumstances surrounding the execution of the
September 5, 1996 Deed of Real Estate and
Chattel Mortgage yielded the conclusion that
the deed was sham, fictitious and fraudulent;
that it was executed two weeks after the labor
dispute arose in 1996, but surprisingly, it was
registered only on February 24, 2000,
immediately after the Court affirmed with
finality the Quisumbing Order. The CA also
found that the certificates of title to MMCs real
properties did not contain any annotation of a
mortgage lien, and, suspiciously, GHI did not
intervene in the long drawn-out labor
proceedings to protect its right as a mortgagee
of virtually all the properties of MMC.[29]
The CA further ruled that the subsequent
foreclosure of the mortgage was irregular,
effected precisely to prevent the satisfaction of
the judgment against MMC. It noted that the
foreclosure proceedings were initiated in July
2001, shortly after the issuance of the Brion
Writ; and, more importantly, the basis for the
extrajudicial foreclosure was not the failure of
MMC to pay the mortgage debt, but its failure
to satisfy any money judgment against it
rendered by a court or tribunal of competent
jurisdiction, in favor of any person, firm or
entity, without any legal ground or
reason.[30] Further, the CA pierced the veil of
corporate fiction of the two
corporations.[31] The dispositive portion of the
appellate courts decision reads:
WHEREFORE, in view of the foregoing
considerations, the petition is GRANTED. The
October 17, 2002 and the December 4, 2002

Order of the RTC, Branch 61 of Kabankalan City,

Negros Occidental are hereby ANNULLED and
SET ASIDE for having been issued in excess or
without authority. The Writ of Preliminary
Injunction issued by the said court is lifted, and
the DOLE Sheriff is directed to immediately
enforce the Writ of Execution issued by the
Department of Labor and Employment in the
case In re: Labor Dispute in Maricalum Mining
Corporation docketed as OS-AJ-10-96-01
(NCMB-RB6-08-96).[32]

The Issues

Dissatisfied, GHI elevated the case to this

Court via the instant petition for review
on certiorari, raising the following issues:

INJUNCTION AGAINST THE

UNLAWFUL EXECUTIOIN ON GHIS PROPERTIES.
V
WHETHER OR NOT THE VALIDITY OF THE DEED
OF REAL AND CHATTEL MORTGAGE OVER THE
SUBJECT PROPERTIES BETWEEN MMC AND GHI
MAY BE COLLATERALLY ATTACKED.
VI
WHETHER OR NOT,
ASSUMING ARGUENDO THAT THE VALIDITY OF
THE SAID REAL AND CHATTEL MORTGAGE MAY
BE COLLATERALLY ATTACKED, THE SAID
MORTGAGE IS SHAM, FICTITIOUS AND
FRAUDULENT.
VII

I
WHETHER OR NOT GHI IS A PARTY TO THE
LABOR DISPUTE BETWEEN NAMAWU AND
MMC.
II
WHETHER OR NOT,
ASSUMING ARGUENDO THAT THE PERTINENT
DECISION OR ORDER IN THE SAID LABOR
DISPUTE BETWEEN MMC AND NAMAWU MAY
BE ENFORCED AGAINST GHI, THERE IS ALREADY
A FINAL DEETERMINATION BY THE SUPREME
COURT OF THE RIGHTS OF THE PARTIES IN SAID
LABOR DISPUTE CONSIDERING THE PENDENCY
OF G.R. NOS. 157696-97.
III
WHETHER OR NOT GHI IS THE ABSOLUTE
OWNER OF THE PROPERTIES UNLAWFULLY
GARNISHED BY RESPONDENTS SHERIFFS.
IV
WHETHER OR NOT THE HONORABLE HENRY D.
ARLES CORRECTLY ISSUED A WRIT OF
65 | P a g e

WHETHER OR NOT GHI IS A DISTINCT AND

SEPARATE CORPORATE ENTITY FROM MMC.
VIII
WHETHER OR NOT GHI CAN BE PREVENTED
THROUGH THE ISSUANCE OF A RESTRAINING
ORDER OR INJUNCTION FROM TAKING
POSSESSION OR BE DISPOSSESSED OF ASSETS
PURCHASED BY IT FROM APT.[33]
Stripped of non-essentials, the core issue is
whether, given the factual circumstances
obtaining, the RTC properly issued the writ of
injunction to prevent the enforcement of the
Sto. Tomas Writ. The resolution of this principal
issue, however, will necessitate a ruling on the
following key and interrelated questions:
1. Whether the mortgage of the MMCs
properties to GHI was a sham;
2. Whether there was an effective levy by the
DOLE upon the MMCs real and personal
properties; and

3. Whether it was proper for the CA to pierce

the veil of corporate fiction between MMC and
GHI.

Our Ruling
Before we delve into an extended discussion of
the foregoing issues, it is essential to take
judicial cognizance of cases intimately linked to
the present controversy which had earlier been
elevated to and decided by this Court.
Judicial Notice.
Judicial notice must be taken by this Court of its
Decision in Maricalum Mining Corporation v.
Hon. Arturo D. Brion and NAMAWU,[34] in which
we upheld the right of herein private
respondent, NAMAWU, to its labor
claims. Upon the same principle of judicial
notice, we acknowledge our Decision
in Republic of the Philippines, through its
trustee, the Asset Privatization Trust v. G
Holdings, Inc.,[35] in which GHI was recognized
as the rightful purchaser of the shares of stocks
of MMC, and thus, entitled to the delivery of
the company notes accompanying the said
purchase. These company notes, consisting of
three (3) Promissory Notes, were part of the
documents executed in 1992 in the privatization
sale of MMC by the Asset Privatization Trust
(APT) to GHI. Each of these notes uniformly
contains stipulations establishing
and constituting in favor of GHImortgages over
MMCs real and personal properties. The
stipulations were subsequently formalized in a
separate document denominated Deed of Real
Estate and Chattel Mortgage on September 5,
1996. Thereafter, the Deed was registered on
February 4, 2000.[36]
We find both decisions critically relevant to the
instant dispute. In fact, they should have
guided the courts below in the disposition of
the controversy at their respective levels. To
repeat, these decisions respectively confirm the
right of NAMAWU to its labor claims[37] and
affirm the right of GHI to its financial and
66 | P a g e

mortgage claims over the real and personal

properties of MMC, as will be explained
below. The assailed CA decision apparently
failed to consider the impact of these two
decisions on the case at bar. Thus, we find it
timely to reiterate that: courts have also taken
judicial notice of previous cases to determine
whether or not the case pending is a moot one
or whether or not a previous ruling is applicable
to the case under consideration.[38]
However, the CA correctly assessed that the
authority of the lower court to issue the
challenged writ of injunction depends on the
validity of the third partys (GHIs) claim of
ownership over the property subject of the writ
of execution issued by the labor
department. Accordingly, the main inquiry
addressed by the CA decision was whether GHI
could be treated as a third party or a stranger to
the labor dispute, whose properties were
beyond the reach of the Writ of Execution
dated December 18, 2001.[39]
In this light, all the more does it become
imperative to take judicial notice of the two
cases aforesaid, as they provide the necessary
perspective to determine whether GHI is such a
party with a valid ownership claim over the
properties subject of the writ of
execution. In Juaban v. Espina,[40] we held that
in some instances, courts have also taken
judicial notice of proceedings in other cases
that are closely connected to the matter in
controversy. These cases may be so closely
interwoven, or so clearly interdependent, as to
invoke a rule of judicial notice. The two cases
that we have taken judicial notice of are of such
character, and our review of the instant case
cannot stray from the findings and conclusions
therein.
Having recognized these crucial Court rulings,
situating the facts in proper perspective, we
now proceed to resolve the questions identified
above.
The mortgage

was not a sham.

Republic etc., v. G Holdings,
Inc. acknowledged the existence of the
Purchase and Sale Agreement between the APT
and the GHI, and recounts the facts attendant
to that transaction, as follows:
The series of negotiations between
the petitioner Republic of the Philippines,
through the APT as its trustee, and G Holdings
culminated in the execution of a purchase and
sale agreement on October 2, 1992. Under the
agreement, the Republic undertook to sell and
deliver 90% of the entire issued and
outstanding shares of MMC, as well as
its company notes, to GHoldings in
consideration of the purchase price
of P673,161,280. It also provided for a down
payment of P98,704,000 with the balance
divided into four tranches payable in
installment over a period of ten years.[41]

The company notes mentioned therein were

actually the very same three (3) Promissory
Notes amounting to P550M, issued by MMC in
favor of GHI. As already adverted to above,
these notes uniformly contained stipulations
establishing and constituting mortgages over
MMCs real and personal properties.
It may be remembered that APT acquired the
MMC from the PNB and the DBP. Then, in
compliance with its mandate to privatize
government assets, APT sold the aforesaid
MMC shares and notes to GHI. To repeat, this
Court has recognized this Purchase and Sale
Agreement in Republic, etc., v. G Holdings,
Inc. The participation of the Government,
through APT, in this transaction is significant.
Because the Government had actively
negotiated and, eventually, executed the
agreement, then the transaction is imbued with
an aura of official authority, giving rise to the
presumption of regularity in its execution. This
presumption would cover all related
transactional acts and documents needed to
67 | P a g e

consummate the privatization sale, inclusive of

the Promissory Notes. It is obvious, then, that
the Government, through APT, consented to
the establishment and constitution of the
mortgages on the assets of MMC in favor of
GHI, as provided in the notes. Accordingly, the
notes (and the stipulations therein) enjoy the
benefit of the same presumption of regularity
accorded to government actions. Given the
Government consent thereto, and clothed with
the presumption of regularity, the mortgages
cannot be characterized as sham, fictitious or
fraudulent.
Indeed, as mentioned above, the three (3)
Promissory Notes, executed on October 2,
1992, established and constituted in favor of
GHI the following mortgages:
1.
A mortgage over certain parcels of land,
more particularly listed and described in the
Sheriffs Certificate of Sale dated September 7,
1984 issued by the Ex-Officio Provincial Sheriff
of Negros Occidental, Rolando V. Ramirez, with
office at Bacolod City following the auction sale
conducted pursuant to the provisions of Act
3135, a copy of which certificate of sale is
hereto attached as Annex A and made an
integral part hereof;
2.
A chattel mortgage over assets and
personal properties more particularly listed and
described in the Sheriffs Certificate of Sale
dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental,
Rolando V. Ramirez, with office at Bacolod City
following the auction conducted pursuant to
the provision of Act 1508, a copy of which
Certificate of Sale is hereto attached as Annex
B and made an integral part hereof.
3.
Mortgages over assets listed in APT
Specific catalogue GC-031 for MMC, a copy of
which Catalogue is hereby made an integral
part hereof by way of reference, as well as
assets presently in use by MMC but which are
not listed or included in paragraphs 1 and 2

above and shall include all assets that may

hereinafter be acquired by MMC.[42]

complaint was docketed as Civil Case No. 9576132.

It is difficult to conceive that these mortgages,

already existing in 1992, almost four (4) years
before NAMAWU filed its notice of strike, were
a fictitious arrangement intended to defraud
NAMAWU. After all, they were agreed upon
long before the seeds of the labor dispute
germinated.

During the pre-trial, the respective counsels of

the parties manifested that the issue involved in
the case was one of law and submitted the case
for decision. On June 11, 1996, the trial court
rendered its decision. It ruled in favor of G
Holdings and held:

While it is true that the Deed of Real Estate and

Chattel Mortgage was executed only on
September 5, 1996, it is beyond cavil that this
formal document of mortgage was merely a
derivative of the original mortgage stipulations
contained in the Promissory Notes of October 2,
1992. The execution of this Deed in 1996 does
not detract from, but instead reinforces, the
manifest intention of the parties to establish
and constitute the mortgages on MMCs real
and personal properties.
Apparently, the move to execute a formal
document denominated as the Deed of Real
Estate and Chattel Mortgage came about after
the decision of the RTC of Manila in Civil Case
No. 95-76132 became final in mid-1996. This
conclusion surfaces when we consider the
genesis of Civil Case No. 95-76132 and
subsequent incidents thereto, as narrated
in Republic, etc. v. G Holdings, Inc., viz:
Subsequently, a disagreement on the matter of
when installment payments should commence
arose between the parties. The Republic
claimed that it should be on the seventh month
from the signing of the agreement while G
Holdings insisted that it should begin seven
months after the fulfillment of the closing
conditions.
Unable to settle the issue, G Holdings filed a
complaint for specific performance and
damages with the Regional Trial Court of
Manila, Branch 49, against the Republic to
compel it to close the sale in accordance with
the purchase and sale agreement. The
68 | P a g e

In line with the foregoing, this Court having

been convinced that the Purchase and Sale
Agreement is indeed subject to the final closing
conditions prescribed by Stipulation No. 5.02
and conformably to Rule 39, Section 10 of the
Rules of Court, accordingly orders that the Asset
Privatization Trust execute the corresponding
Document of Transfer of the subject shares and
financial notes and cause the actual delivery of
subject shares and notes to G Holdings, Inc.,
within a period of thirty (30) days from receipt
of this Decision, and after G Holdings Inc.,
shall have paid in full the entire balance, at its
present value of P241,702,122.86, computed
pursuant to the prepayment provisions of the
Agreement. Plaintiff shall pay the balance
simultaneously with the delivery of the Deed of
Transfer and actual delivery of the shares and
notes.
SO ORDERED.

The Solicitor General filed a notice of appeal on

behalf of the Republic on June 28,
1996. Contrary to the rules of procedure,
however, the notice of appeal was filed with the
Court of Appeals (CA), not with the trial court
which rendered the judgment appealed from.
No other judicial remedy was resorted to until
July 2, 1999 when the Republic, through the
APT, filed a petition for annulment of judgment
with the CA. It claimed that the decision should
be annulled on the ground of abuse of
discretion amounting to lack of jurisdiction on
the part of the trial court. x x x

Finding that the grounds necessary for the

annulment of judgment were inexistent, the
appellate court dismissed the petition. x x x x[43]

With the RTC decision having become final

owing to the failure of the Republic to perfect
an appeal, it may have become necessary to
execute the Deed of Real Estate and Chattel
Mortgage on September 5, 1996, in order to
enforce the trial courts decision of June 11,
1996. This appears to be the most plausible
explanation for the execution of the Deed of
Real Estate and Chattel Mortgage only in
September 1996. Even as the parties had
already validly constituted the mortgages in
1992, as explicitly provided in the Promissory
Notes, a specific deed of mortgage in a separate
document may have been deemed necessary
for registration purposes. Obviously, this
explanation is more logical and more sensible
than the strained conjecture that the mortgage
was executed on September 5, 1996 only for
the purpose of defrauding NAMAWU.
It is undeniable that the Deed of Real Estate and
Chattel Mortgage was formally documented
two weeks after NAMAWU filed its notice of
strike against MMC on August 23,
1996. However, this fact alone cannot give rise
to an adverse inference for two
reasons. First, as discussed above, the
mortgages had already been established and
constituted as early as October 2, 1992 in the
Promissory Notes, showing the clear intent of
the parties to impose a lien upon MMCs
properties. Second, the mere filing of a notice
of strike by NAMAWU did not, as yet, vest in
NAMAWU any definitive right that could be
prejudiced by the execution of the mortgage
deed.
The fact that MMCs obligation to GHI is not
reflected in the formers financial statementsa
circumstance made capital of by NAMAWU in
order to cast doubt on the validity of the
mortgage deedis of no moment. By itself, it
does not provide a sufficient basis to invalidate
69 | P a g e

this public document. To say otherwise, and to

invalidate the mortgage deed on this pretext,
would furnish MMC a convenient excuse to
absolve itself of its mortgage obligations by
adopting the simple strategy of not including
the obligations in its financial statements. It
would ignore our ruling in Republic, etc. v. G
Holdings, Inc., which obliged APT to deliver the
MMC shares and financial notes to
GHI. Besides, the failure of the mortgagor to
record in its financial statements its loan
obligations is surely not an essential element
for the validity of mortgage agreements, nor
will it independently affect the right of the
mortgagee to foreclose.
Contrary to the CA decision, Tanongon v.
Samson[44] is not on all fours with the instant
case. There are material differences between
the two cases. At issue inTanongon was a thirdparty claim arising from a Deed of Absolute Sale
executed between Olizon and Tanongon on July
29, 1997, after the NLRC decision became final
and executory on April 29, 1997. In the case at
bar, what is involved is a loan with mortgage
agreement executed on October 2, 1992, well
ahead of the unions notice of strike on August
23, 1996. No presumption of regularity inheres
in the deed of sale in Tanongon, while the
participation of APT in this case clothes the
transaction in 1992 with such a presumption
that has not been successfully
rebutted. In Tanongon, the conduct of a fullblown trial led to the findingduly supported by
evidencethat the voluntary sale of the assets
of the judgment debtor was made in bad
faith. Here, no trial was held, owing to the
motion to dismiss filed by NAMAWU, and the
CA failed to consider the factual findings made
by this Court in Republic, etc. v. G Holdings,
Inc. Furthermore, in Tanongon, the claimant
did not exercise his option to file a separate
action in court, thus allowing the NLRC Sheriff
to levy on execution and to determine the
rights of third-party claimants.[45] In this case, a
separate action was filed in the regular courts
by GHI, the third-party claimant. Finally, the
questioned transaction in Tanongon was a

plain, voluntary transfer in the form of a sale

executed by the judgment debtor in favor of a
dubious third-party, resulting in the inability of
the judgment creditor to satisfy the
judgment. On the other hand, this case
involves an involuntary transfer (foreclosure of
mortgage) arising from a loan obligation that
well-existed long before the commencement of
the labor claims of the private respondent.
Three other circumstances have been put
forward by the CA to support its conclusion that
the mortgage contract is a sham. First, the CA
considered it highly suspect that the Deed of
Real Estate and Chattel Mortgage was
registered only on February 4, 2000, three
years after its execution, and almost one month
after the Supreme Court rendered its decision
in the labor dispute.[46] Equally suspicious, as
far as the CA is concerned, is the fact that the
mortgages were foreclosed on July 31, 2001,
after the DOLE had already issued a Partial Writ
of Execution on May 9, 2001.[47] To the
appellate court, the timing of the registration of
the mortgage deed was too coincidental, while
the date of the foreclosure signified that it was
effected precisely to prevent the satisfaction
of the judgment awards.[48] Furthermore, the
CA found that the mortgage deed itself was
executed without any consideration, because at
the time of its execution, all the assets of MMC
had already been transferred to GHI.[49]
These circumstances provided the CA with
sufficient justification to apply Article 1387 of
the Civil Code on presumed fraudulent
transactions, and to declare that the mortgage
deed was void for being simulated and
fictitious.[50]
We do not agree. We find this Courts ruling
in MR Holdings, Ltd. v. Sheriff Bajar[51] pertinent
and instructive:
Article 1387 of the Civil Code of
the Philippines provides:

70 | P a g e

Art. 1387. All contracts by virtue of which the

debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of
creditors, when the donor did not reserve
sufficient property to pay all debts contracted
before the donation.
Alienations by onerous title are also presumed
fraudulent when made by persons against
whom some judgment has been rendered in
any instance or some writ of attachment has
been issued. The decision or attachment need
not refer to the property alienated, and need
not have been obtained by the party seeking
rescission.
In addition to these presumptions, the design to
defraud creditors may be proved in any other
manner recognized by law and of evidence.

This article presumes the existence of fraud

made by a debtor. Thus, in the absence of
satisfactory evidence to the contrary, an
alienation of a property will be held fraudulent
if it is made after a judgment has been rendered
against the debtor making the alienation. This
presumption of fraud is not conclusive and may
be rebutted by satisfactory and convincing
evidence. All that is necessary is to establish
affirmatively that the conveyance is made in
good faith and for a sufficient and valuable
consideration.
The Assignment Agreement and the Deed of
Assignment were executed for valuable
considerations. Patent from the Assignment
Agreement is the fact that petitioner assumed
the payment of US$18,453,450.12 to ADB in
satisfaction of Marcoppers remaining debt as
of March 20, 1997. Solidbank cannot deny this
fact considering that a substantial portion of the
said payment, in the sum of US$13,886,791.06,
was remitted in favor of the Bank of Nova
Scotia, its major stockholder.
The facts of the case so far show that the
assignment contracts were executed in good
faith. The execution of the Assignment
Agreement on March 20, 1997 and the Deed
of Assignment on December 8,1997 is not

the alpha of this case. While the execution of

these assignment contracts almost coincided
with the rendition on May 7, 1997 of the Partial
Judgment in Civil Case No. 96-80083 by
the Manila RTC, however, there was no
intention on the part of petitioner to defeat
Solidbanks claim. It bears reiterating that as
early as November 4, 1992, Placer Dome had
already bound itself under a Support and
Standby Credit Agreement to provide
Marcopper with cash flow support for the
payment to ADB of its obligations. When
Marcopper ceased operations on account of
disastrous mine tailings spill into the Boac River
and ADB pressed for payment of the loan,
Placer Dome agreed to have its subsidiary,
herein petitioner, pay ADB the amount of
US$18,453,450.12.
Thereupon, ADB and Marcopper executed,
respectively, in favor of petitioner an
Assignment Agreement and a Deed of
Assignment. Obviously, the assignment
contracts were connected with transactions
that happened long before the rendition in
1997 of the Partial Judgment in Civil Case No.
96-80083 by the Manila RTC. Those contracts
cannot be viewed in isolation. If we may add, it
is highly inconceivable that ADB, a reputable
international financial organization, will connive
with Marcopper to feign or simulate a contract
in 1992 just to defraud Solidbank for its claim
four years thereafter. And it is equally
incredible for petitioner to be paying the huge
sum of US$18,453,450.12 to ADB only for the
purpose of defrauding Solidbank of the sum
of P52,970,756.89.
It is said that the test as to whether or not a
conveyance is fraudulent is does it prejudice
the rights of creditors? We cannot see how
Solidbanks right was prejudiced by the
assignment contracts considering that
substantially all of Marcoppers properties were
already covered by the registered Deed of Real
Estate and Chattel Mortgage executed by
Marcopper in favor of ADB as early as
November 11, 1992. As such, Solidbank cannot
assert a better right than ADB, the latter being a
preferred creditor. It is basic that mortgaged
71 | P a g e

properties answer primarily for the mortgaged

credit, not for the judgment credit of the
mortgagors unsecured creditor. Considering
that petitioner assumed Marcoppers debt to
ADB, it follows that Solidbanks right as
judgment creditor over the subject properties
must give way to that of the former.[52]
From this ruling in MR Holdings, we can draw
parallel conclusions. The execution of the
subsequent Deed of Real Estate and Chattel
Mortgage on September 5, 1996 was simply the
formal documentation of what had already
been agreed in the seminal transaction (the
Purchase and Sale Agreement) between APT
and GHI. It should not be viewed in isolation,
apart from the original agreement of October 2,
1992. And it cannot be denied that this original
agreement was supported by an adequate
consideration. The APT was even ordered by
the court to deliver the shares and financial
notes of MMC in exchange for the payments
that GHI had made.
It was also about this time, in 1996, that
NAMAWU filed a notice of strike to protest nonpayment of its rightful labor claims.[53] But, as
already mentioned, the outcome of that labor
dispute was yet unascertainable at that time,
and NAMAWU could only have hoped for, or
speculated about, a favorable ruling. To
paraphrase MR Holdings, we cannot see how
NAMAWUs right was prejudiced by the Deed of
Real Estate and Chattel Mortgage, or by its
delayed registration, when substantially all of
the properties of MMC were already mortgaged
to GHI as early as October 2, 1992. Given this
reality, the Court of Appeals had no basis to
conclude that this Deed of Real Estate and
Chattel Mortgage, by reason of its late
registration, was a simulated or fictitious
contract.

The importance of registration and its binding

effect is stated in Section 51 of the Property
Registration Decree or Presidential Decree
(P.D.) No. 1529,[54] which reads:

SECTION 51. Conveyance and other dealings by

registered owner.An owner of registered land
may convey, mortgage, lease, charge or
otherwise deal with the same in accordance
with existing laws. He may use such forms,
deeds, mortgages, leases or other voluntary
instrument as are sufficient in law. But no deed,
mortgage, lease or other voluntary instrument,
except a will purporting to convey or effect
registered land, shall take effect as a
conveyance or bind the land, but shall operate
only as a contract between the parties and as
evidence of authority to the Registry of Deeds
to make registration.
The act of registration shall be the operative act
to convey or affect the land insofar as third
persons are concerned, and in all cases under
this Decree, the registration shall be made in
the Office of the Register of Deeds for the
province or the city where the land lies.[55]
Under the Torrens system, registration is the
operative act which gives validity to the transfer
or creates a lien upon the land. Further,
entrenched in our jurisdiction is the doctrine
that registration in a public registry creates
constructive notice to the whole
world.[56] Thus, Section 51 of Act No. 496, as
amended by Section 52 of P.D. No. 1529,
provides:
SECTION 52. Constructive notice upon
registration.Every conveyance, mortgage,
lease, lien, attachment, order, judgment,
instrument or entry affecting registered land
shall, if registered, filed or entered in the Office
of the Register of Deeds for the province or city
where the land to which it relates lies, be
constructive notice to all persons from the time
of such registering, filing or entering.

But, there is nothing in Act No. 496, as

amended by P.D. No. 1529, that imposes a
period within which to register annotations of
conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting
72 | P a g e

registered land. If liens were not so

registered, then it shall operate only as a
contract between the parties and as evidence of
authority to the Registry of Deeds to make
registration. If registered, it shall be the
operative act to convey or affect the land
insofar as third persons are concerned. The
mere lapse of time from the execution of the
mortgage document to the moment of its
registration does not affect the rights of a
mortgagee.
Neither will the circumstance of GHIs
foreclosure of MMCs properties on July 31,
2001, or after the DOLE had already issued a
Partial Writ of Execution on May 9, 2001 against
MMC, support the conclusion of the CA that
GHIs act of foreclosing on MMCs properties
was effected to prevent satisfaction of the
judgment award. GHIs mortgage rights,
constituted in 1992, antedated the Partial Writ
of Execution by nearly ten (10) years. GHIs
resort to foreclosure was a legitimate
enforcement of a right to liquidate a bona
fide debt. It was a reasonable option open to a
mortgagee which, not being a party to the labor
dispute between NAMAWU and MMC, stood to
suffer a loss if it did not avail itself of the
remedy of foreclosure.
The well-settled rule is that a mortgage lien is
inseparable from the property
mortgaged.[57] While it is true that GHIs
foreclosure of MMCs mortgaged properties
may have had the effect to prevent satisfaction
of the judgment award against the specific
mortgaged property that first answers for a
mortgage obligation ahead of any subsequent
creditors, that same foreclosure does not
necessarily translate to having been effected to
prevent satisfaction of the judgment
award against MMC.
Likewise, we note the narration of subsequent
facts contained in the Comment of the Office of
the Solicitor General. Therein, it is alleged that
after the Partial Writ of Execution was issued on
May 9, 2001, a motion for reconsideration was

filed by MMC; that the denial of the motion was

appealed to the CA; that when the appeal was
dismissed by the CA on January 24, 2002, it
eventually became the subject of a review
petition before this Court, docketed as G.R. No.
157696; and that G.R. No. 157696 was decided
by this Court only on February 9, 2006.

This chronology of subsequent events shows

that February 9, 2006 would have been the
earliest date for the unimpeded enforcement of
the Partial Writ of Execution, as it was only then
that this Court resolved the issue. This
happened four and a half years after July 31,
2001, the date when GHI foreclosed on the
mortgaged properties. Thus, it is not accurate
to say that the foreclosure made on July 31,
2001 was effected [only] to prevent
satisfaction of the judgment award.
We also observe the error in the CAs finding
that the 1996 Deed of Real Estate and Chattel
Mortgage was not supported by any
consideration since at the time the deed was
executed, all the real and personal property of
MMC had already been transferred in the hands
of G Holdings.[58] It should be remembered
that the Purchase and Sale Agreement between
GHI and APT involved large amounts (P550M)
and even spawned a subsequent court action
(Civil Case No. 95-76132, RTC of Manila). Yet,
nowhere in the Agreement or in the RTC
decision is there any mention of real and
personal properties of MMC being included in
the sale to GHI in 1992. These properties
simply served as mortgaged collateral for the
1992 Promissory Notes.[59] The Purchase and
Sale Agreement and the Promissory Notes
themselves are the best evidence that there
was ample consideration for the mortgage.
Thus, we must reject the conclusion of the CA
that the Deed of Real Estate and Chattel
Mortgage executed in 1996 was a simulated
transaction.
On the issue of whether there
73 | P a g e

had been an effective levy upon

the properties of GHI.

The well-settled principle is that the rights of a

mortgage creditor over the mortgaged
properties are superior to those of a
subsequent attaching creditor. In Cabral v.
Evangelista,[60] this Court declared that:
Defendants-appellants purchase of the
mortgaged chattels at the public sheriff's sale
and the delivery of the chattels to them with a
certificate of sale did not give them a superior
right to the chattels as against plaintiffsmortgagees. Rule 39, Section 22 of the old Rules
of Court (now Rule 39, Section 25 of the Revised
Rules), cited by appellants precisely provides
that the sale conveys to the purchaser all the
right which the debtor had in such property on
the day the execution or attachment was
levied. It has long been settled by this Court
that The right of those who so acquire said
properties should not and can not be superior
to that of the creditor who has in his favor an
instrument of mortgage executed with the
formalities of the law, in good faith, and
without the least indication of fraud. This is all
the more true in the present case, because,
when the plaintiff purchased the automobile in
question on August 22, 1933, he knew, or at
least, it is presumed that he knew, by the mere
fact that the instrument of mortgage, Exhibit 2,
was registered in the office of the register of
deeds of Manila, that said automobile was
subject to a mortgage lien. In purchasing it, with
full knowledge that such circumstances existed,
it should be presumed that he did so, very much
willing to respect the lien existing thereon, since
he should not have expected that with the
purchase, he would acquire a better right than
that which the vendor then had. In another
case between two mortgagees, we held that
As between the first and second mortgagees,
therefore, the second mortgagee has at most
only the right to redeem, and even when the
second mortgagee goes through the formality
of an extrajudicial foreclosure, the purchaser

acquires no more than the right of redemption

from the first mortgagee. The superiority of
the mortgagee's lien over that of a subsequent
judgment creditor is now expressly provided in
Rule 39, Section 16 of the Revised Rules of
Court, which states with regard to the effect of
levy on execution as to third persons that The
levy on execution shall create a lien in favor of
the judgment creditor over the right, title and
interest of the judgment debtor in such
property at the time of the levy, subject to liens
or encumbrances then existing. Even in the
matter of possession, mortgagees over chattel
have superior, preferential and paramount
rights thereto, and the mortgagor has mere
rights of redemption.[61]
Similar rules apply to cases of mortgaged real
properties that are registered. Since the
properties were already mortgaged to GHI, the
only interest remaining in the mortgagor was its
right to redeem said properties from the
mortgage. The right of redemption was the only
leviable or attachable property right of the
mortgagor in the mortgaged real properties.
We have held that
The main issue in this case is the nature of the
lien of a judgment creditor, like the petitioner,
who has levied an attachment on the judgment
debtor's (CMI) real properties which had been
mortgaged to a consortium of banks and were
subsequently sold to a third party, Top Rate.
xxxx
The sheriff's levy on CMI's properties, under the
writ of attachment obtained by the petitioner,
was actually a levy on the interest only of the
judgment debtor CMI on those properties. Since
the properties were already mortgaged to the
consortium of banks, the only interest
remaining in the mortgagor CMI was its right to
redeem said properties from the mortgage. The
right of redemption was the only leviable or
attachable property right of CMI in the
mortgaged real properties. The sheriff could not
have attached the properties themselves, for
74 | P a g e

they had already been conveyed to the

consortium of banks by mortgage (defined as a
conditional sale), so his levy must be
understood to have attached only the
mortgagor's remaining interest in the
mortgaged property the right to redeem it
from the mortgage.[62]
xxxx

There appears in the record a factual

contradiction relating to whether the
foreclosure by GHI on July 13, 2001[63] over
some of the contested properties came ahead
of the levy thereon, or the reverse. NAMAWU
claims that the levy on two trucks was effected
on June 22, 2001,[64] which GHI disputes as a
misstatement because the levy was attempted
on July 18, 2002, and not 2001[65] What is
undisputed though is that the mortgage of GHI
was registered on February 4, 2000,[66] well
ahead of any levy by NAMAWU. Prior
registration of a lien creates a preference, as
the act of registration is the operative act that
conveys and affects the land,[67] even against
subsequent judgment creditors, such as
respondent herein. Its registration of the
mortgage was not intended to defraud
NAMAWU of its judgment claims, since even
the courts were already judicially aware of its
existence since 1992. Thus, at that moment in
time, with the registration of the mortgage,
either NAMAWU had no properties of MMC to
attach because the same had been previously
foreclosed by GHI as mortgagee thereof; or by
virtue of the DOLEs levy to enforce NAMAWUs
claims, the latters rights are subject to the
notice of the foreclosure on the subject
properties by a prior mortgagees right. GHIs
mortgage right had already been registered by
then, and it is basic that mortgaged properties
answer primarily for the mortgaged credit, not
for the judgment credit of the mortgagors
unsecured creditor.[68]
On the issue of piercing the
veil of corporate fiction.

The CA found that:

Ordinarily, the interlocking of directors and
officers in two different corporations is not a
conclusive indication that the corporations are
one and the same for purposes of applying the
doctrine of piercing the veil of corporate
fiction. However, when the legal fiction of the
separate corporate personality is abused, such
as when the same is used for fraudulent or
wrongful ends, the courts have not hesitated to
pierce the corporate veil (Francisco vs. Mejia,
362 SCRA 738). In the case at bar, the Deed of
Real Estate and Chattel Mortgage was entered
into between MMC and G Holdings for the
purpose of evading the satisfaction of the
legitimate claims of the petitioner against
MMC. The notion of separate personality is
clearly being utilized by the two corporations to
perpetuate the violation of a positive legal duty
arising from a final judgment to the prejudice of
the petitioners right.[69]
Settled jurisprudence[70] has it that
(A) corporation, upon coming into existence, is
invested by law with a personality separate and
distinct from those persons composing it as well
as from any other legal entity to which it may
be related. By this attribute, a stockholder may
not, generally, be made to answer for acts or
liabilities of the said corporation, and vice versa.
This separate and distinct personality is,
however, merely a fiction created by law for
convenience and to promote the ends of
justice. For this reason, it may not be used or
invoked for ends subversive to the policy and
purpose behind its creation or which could not
have been intended by law to which it owes its
being. This is particularly true when the fiction
is used to defeat public convenience, justify
wrong, protect fraud, defend crime, confuse
legitimate legal or judicial issues, perpetrate
deception or otherwise circumvent the
law. This is likewise true where the corporate
75 | P a g e

entity is being used as an alter ego, adjunct, or

business conduit for the sole benefit of the
stockholders or of another corporate entity. In
all these cases, the notion of corporate entity
will be pierced or disregarded with reference to
the particular transaction involved.

Given this jurisprudential principle and the

factual circumstances obtaining in this case, we
now ask: Was the CA correct in piercing the veil
of corporate identity of GHI and MMC?
In our disquisition above, we have shown that
the CAs finding that there was a simulated
mortgage between GHI and MMC to justify a
wrong or protect a fraud has struggled vainly to
find a foothold when confronted with the ruling
of this Court in Republic v. G Holdings, Inc.
The negotiations between the GHI and the
Government--through APT, dating back to 1992-culminating in the Purchase and Sale
Agreement, cannot be depicted as a contrived
transaction. In fact, in the said Republic, etc., v.
G Holdings, Inc., this Court adjudged that GHI
was entitled to its rightful claims not just to
the shares of MMC itself, or just to the financial
notes that already contained the mortgage
clauses over MMCs disputed assets, but also to
the delivery of those instruments. Certainly, we
cannot impute to this Courts findings on the
case any badge of fraud. Thus, we reject the
CAs conclusion that it was right to pierce the
veil of corporate fiction, because the foregoing
circumstances belie such an
inference. Furthermore, we cannot ascribe to
the Government, or the APT in particular, any
undue motive to participate in a transaction
designed to perpetrate fraud. Accordingly, we
consider the CA interpretation unwarranted.
We also cannot agree that the presumption of
fraud in Article 1387 of the Civil Code relative to
property conveyances, when there was already
a judgment rendered or a writ of attachment
issued, authorizes piercing the veil of corporate
identity in this case. We find that Article 1387

finds less application to an involuntary

alienation such as the foreclosure of mortgage
made before any final judgment of a court. We
thus hold that when the alienation is
involuntary, and the foreclosure is not
fraudulent because the mortgage deed has
been previously executed in accordance with
formalities of law, and the foreclosure is
resorted to in order to liquidate a bona
fide debt, it is not the alienation by onerous title
contemplated in Article 1387 of the Civil Code
wherein fraud is presumed.

Since the factual antecedents of this case do

not warrant a finding that the mortgage and
loan agreements between MMC and GHI were
simulated, then their separate personalities
must be recognized. To pierce the veil of
corporate fiction would require that their
personalities as creditor and debtor be
conjoined, resulting in a merger of the
personalities of the creditor (GHI) and the
debtor (MMC) in one person, such that the debt
of one to the other is thereby extinguished. But
the debt embodied in the 1992 Financial Notes
has been established, and even made subject of
court litigation (Civil Case No. 95-76132, RTC
Manila). This can only mean that GHI and MMC
have separate corporate personalities.
Neither was MMC used merely as an alter ego,
adjunct, or business conduit for the sole benefit
of GHI, to justify piercing the formers veil of
corporate fiction so that the latter could be held
liable to claims of third-party judgment
creditors, like NAMAWU. In this regard, we
find American jurisprudence persuasive. In a
decision by the Supreme Court of New
York[71] bearing upon similar facts, the Court
denied piercing the veil of corporate fiction to
favor a judgment creditor who sued the parent
corporation of the debtor, alleging fraudulent
corporate asset-shifting effected after a prior
final judgment. Under a factual background
largely resembling this case at bar, viz:

In this action, plaintiffs seek to recover the

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

The trial evidence showed that LGV was

incorporated in November 1985. Defendant's
principal, Francesco Galesi, initially held 90% of
the stock and all of the stock was ultimately
transferred to defendant. Initial project funding
was provided through a $2.5 million loan from
Chemical Bank, secured by defendant's
guarantee of repayment of the loan and
completion of the project. The loan proceeds
were utilized to purchase the real property
upon which the project was to be established.
Chemical Bank thereafter loaned an additional
$3.5 million to LGV, again guaranteed by
defendant, and the two loans were
consolidated into a first mortgage loan of $6
million. In 1989, the loan was modified by
splitting the loan into a $1.9 term note on which
defendant was primary obligor and a $4.1
million project note on which LGV was the
obligor and defendant was a guarantor.

Due to LGV's lack of success in marketing the

project's townhouses and in order to protect
76 | P a g e

itself from the exercise of Chemical Bank's

enforcement remedies, defendant was forced
to make monthly installments of principal and
interest on LGV's behalf. Ultimately, defendant
purchased the project note from Chemical Bank
for $3.1 million, paid the $1.5 million balance
on the term note and took an assignment of the
first mortgage on the project's realty. After LGV
failed to make payments on the indebtedness
over the course of the succeeding two years,
defendant brought an action
to foreclose its mortgage. Ultimately, defendant
obtained a judgment of foreclosure and sale in
the amount of $6,070,246.50. Defendant bid in
the property at the foreclosure sale and
thereafter obtained a deficiency judgment in
the amount of $3,070,246.50.
Following the foreclosure sale, LGV transferred
to defendant all of the shares of Top of the
World Water Company, a separate entity that
had been organized to construct and operate
the water supply and delivery system for the
project, in exchange for a $950,000 reduction in
the deficiency judgment.

entire $3 million deficiency judgment, the fact

remains that subordinate mortgages totaling
nearly an additional $2 million have priority
over plaintiffs' judgments.
As properly concluded by Supreme
Court, absent a finding of any inequitable
consequence to plaintiffs, both causes of action
pleaded in the amended complaint must fail.
Fundamentally, a party seeking to pierce the
corporate veil must show complete domination
and control of the subsidiary by the parent and
also that such domination was used to commit
a fraud or wrong against the plaintiff that
resulted in the plaintiff's injury ( 252 A.D.2d
609, 610, 675 N.Y.S.2d 234, supra; see, Matter
of Morris v. New York State Dept. of Taxation &
Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623
N.E.2d 1157). Notably, *e+vidence of
domination alone does not suffice without an
additional showing that it led to inequity, fraud
or malfeasance (TNS Holdings v. MKI Sec.
Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891,
703 N.E.2d 749).
xxxx

the U.S. Supreme Court of New York held

Based on the foregoing, and accepting that

defendant exercised complete domination and
control over LGV, we are at a loss as to how
plaintiffs perceive themselves to have been
inequitably affected by defendant's foreclosure
action against LGV, by LGV's divestiture of the
water company stock or the sports complex
property, or by defendant's transfer to LGV of a
third party's uncollectible note, accomplished
solely for tax purposes. It is undisputed that
LGV was, and for some period of time had been,
unable to meet its obligations and, at the time
of the foreclosure sale, liens against its property
exceeded the value of its assets by several
million dollars, even including the water
company and sports complex at the values
plaintiffs would assign to them. In fact, even if
plaintiffs' analysis were utilized to eliminate the
77 | P a g e

In reaching that conclusion, we specifically

reject a number of plaintiffs' assertions,
including the entirely erroneous claims that our
determination on the prior appeal (252 A.D.2d
609, 675 N.Y.S.2d 234, supra) set forth a
roadmap for the proof required at trial and
mandated a verdict in favor of plaintiffs upon
their production of evidence that supported the
decision's listed facts. To the contrary, our
decision was predicated upon the existence of
such evidence, absent which we would have
granted summary judgment in favor of
defendant. We are equally unpersuaded by
plaintiffs' continued reliance upon defendant's
December 1991 unilateral conversion of its
intercompany loans with LGV from debt to
equity, which constituted nothing more than a
bookkeeping transaction and had no apparent
effect on LGV's obligations to defendant or
defendant's right to foreclose on
its mortgage.[72]

This doctrine is good law under Philippine

jurisdiction.
In Concept Builders, Inc. v. National Labor
Relations Commission,[73] we laid down the test
in determining the applicability of the doctrine
of piercing the veil of corporate fiction, to wit:
1.
Control, not mere majority or complete
control, but complete domination, not only of
finances but of policy and business practice in
respect to the transaction attacked so that the
corporate entity as to this transaction had at
the time no separate mind, will or existence of
its own.
2.
Such control must have been used by the
defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other
positive legal duty, or dishonest and, unjust act
in contravention of plaintiffs legal rights; and,

3.
The aforesaid control and breach of duty
must proximately cause the injury or unjust loss
complained of.
Time and again, we have reiterated that mere
ownership by a single stockholder or by another
corporation of all or nearly all of the capital
stock of a corporation is not, by itself, a
sufficient ground for disregarding a separate
corporate personality.[74] It is basic that a
corporation has a personality separate and
distinct from that composing it as well as from
that of any other legal entity to which it may be
related. Clear and convincing evidence is
needed to pierce the veil of corporate fiction.[75]
In this case, the mere interlocking of directors
and officers does not warrant piercing the
separate corporate personalities of MMC and
GHI. Not only must there be a showing that
there was majority or complete control, but
complete domination, not only of finances but
of policy and business practice in respect to the
78 | P a g e

transaction attacked, so that the corporate

entity as to this transaction had at the time no
separate mind, will or existence of its own. The
mortgage deed transaction attacked as a basis
for piercing the corporate veil was a transaction
that was an offshoot, a derivative, of the
mortgages earlier constituted in the Promissory
Notes dated October 2, 1992. But these
Promissory Notes with mortgage were executed
by GHI with APT in the name of MMC, in a full
privatization process. It appears that if there
was any control or domination exercised over
MMC, it was APT, not GHI, that wielded
it. Neither can we conclude that the
constitution of the loan nearly four (4) years
prior to NAMAWUs notice of strike could have
been the proximate cause of the injury of
NAMAWU for having been deprived of MMCs
corporate assets.
On the propriety of injunction
to prevent execution by the
NLRC on the properties
of third-party claimants

It is settled that a Regional Trial Court can

validly issue a Temporary Restraining Order
(TRO) and, later, a writ of preliminary injunction
to prevent enforcement of a writ of execution
issued by a labor tribunal on the basis of a thirdpartys claim of ownership over the properties
levied upon.[76] While, as a rule, no temporary
or permanent injunction or restraining order in
any case involving or growing out of a labor
dispute shall be issued by any court--where the
writ of execution issued by a labor tribunal is
sought to be enforced upon the property of a
stranger to the labor dispute, even upon a
mere prima facie showing of ownership of such
claimant--a separate action for injunctive relief
against such levy may be maintained in court,
since said action neither involves nor grows out
of a labor dispute insofar as the third party is
concerned.[77] Instructively,National Mines and
Allied Workers Union v. Vera[78]

Petitioners' reliance on the provision of Art. 254

of the New Labor Code (herein earlier quoted)
which prohibits injunctions or restraining orders
in any case involving or growing out of a 'labor
dispute' is not well-taken. This has no
application to the case at bar. Civil Case No.
2749 is one which neither "involves" nor "grows
out" of a labor dispute. What 'involves' or
'grows out' of a labor dispute is the NLRC case
between petitioners and the judgment debtor,
Philippine Iron Mines. The private respondents
are not parties to the said NLRC case. Civil Case
No. 2749 does not put in issue either the fact or
validity of the proceeding in theNLRC case nor
the decision therein rendered, much less the
writ of execution issued thereunder. It does not
seek to enjoin the execution of the decision
against the properties of the judgment debtor.
What is sought to be tried in Civil Case No. 2749
is whether the NLRC's decision and writ of
execution, above mentioned, shall be permitted
to be satisfied against properties of private
respondents, and not of the judgment debtor
named in the NLRC decision and writ of
execution. Such a recourse is allowed under the
provisions of Section 17, Rule 39 of the Rules of
Court.
To sustain petitioners' theory will inevitably
lead to disastrous consequences and lend
judicial imprimatur to deprivation of property
without due process of law. Simply because a
writ of execution was issued by the NLRC does
not authorize the sheriff implementing the
same to levy on anybody's property. To deny
the victim of the wrongful levy, the recourse
such as that availed of by the herein private
respondents, under the pretext that no court of
general jurisdiction can interfere with the writ
of execution issued in a labor dispute, will be
sanctioning a greater evil than that sought to be
avoided by the Labor Code provision in
question. Certainly, that could not have been
the intendment of the law creating the NLRC.
For well-settled is the rule that the power of a
court to execute its judgment extends only over
properties unquestionably belonging to the
judgment debtor.
79 | P a g e

Likewise, since the third-party claimant is not

one of the parties to the action, he cannot,
strictly speaking, appeal from the order denying
his claim, but he should file a separate
reivindicatory action against the execution
creditor or the purchaser of the property after
the sale at public auction, or a complaint for
damages against the bond filed by the judgment
creditor in favor of the sheriff.[79]
A separate civil action for recovery of
ownership of the property would not constitute
interference with the powers or processes of
the labor tribunal which rendered the judgment
to execute upon the levied properties. The
property levied upon being that of a stranger is
not subject to levy. Thus, a separate action for
recovery, upon a claim andprima facie showing
of ownership by the petitioner, cannot be
considered as interference.[80]
Upon the findings and conclusions we have
reached above, petitioner is situated squarely
as such third-party claimant. The questioned
restraining order of the lower court, as well as
the order granting preliminary injunction, does
not constitute interference with the powers or
processes of the labor department. The
registration of the mortgage document
operated as notice to all on the matter of the
mortgagees prior claims. Official proceedings
relative to the foreclosure of the subject
properties constituted a prima facie showing of
ownership of such claimant to support the
issuance of injunctive reliefs.
As correctly held by the lower court:
The subject incidents for TRO and/or Writ of
Injunction were summarily heard and in
resolving the same, the Court believes, that the
petitioner has a clear and unmistakable right
over the levied properties. The existence of the
subject Deed of Real Estate and Chattel
Mortgage, the fact that petitioner initiated a
foreclosure of said properties before the Clerk

of Court and Ex-Officio Sheriff, RTC Branch 61,

Kabankalan City on July 13, 2001, the fact that
said Ex-Officio Sheriff and the Clerk of Court
issue a Notice of Foreclosure, Possession and
Control over said mortgaged properties on July
19, 2001 and the fact that a Sheriffs Certificate
of Sale was issued on December 3, 2001 are the
basis of its conclusion. Unless said mortgage
contract is annulled or declared null and void,
the presumption of regularity of transaction
must be considered and said document must be
looked [upon] as valid.

Notably, the Office of the Solicitor General also

aptly observed that when the respondent
maintained that the Deed of Real Estate and
Chattel mortgage was entered into in fraud of
creditors, it thereby admitted that the
mortgage was not void, but merely rescissible
under Article 1381(3) of the Civil Code; and,
therefore, an independent action is needed to
rescind the contract of mortgage.[81] We,
however, hold that such an independent action
cannot now be maintained, because the
mortgage has been previously recognized to
exist, with a valid consideration, in Republic,
etc., v. G Holdings, Inc.
A final word
The Court notes that the case filed with the
lower court involves a principal action for
injunction to prohibit execution over properties
belonging to a third party not impleaded in the
legal dispute between NAMAWU and
MMC. We have observed, however, that the
lower court and the CA failed to take judicial
notice of, or to consider, our Decisions
in Republic, etc., v. G Holdings,
Inc., and Maricalum Mining Corporation v. Brion
and NAMAWU, in which we respectively
recognized the entitlement of GHI to the shares
and the company notes of MMC (under the
Purchase and Sale Agreement), and the rights of
NAMAWU to its labor claims. At this stage,
therefore, neither the lower court nor the CA,
nor even this Court, can depart from our
80 | P a g e

findings in those two cases because of the

doctrine of stare decisis.
From our discussion above, we now rule that
the trial court, in issuing the questioned orders,
did not commit grave abuse of discretion,
because its issuance was amply supported by
factual and legal bases.
We are not unmindful, however, of the fact that
the labor claims of NAMAWU, acknowledged by
this Court in Maricalum, still awaits final
execution. As success fades from NAMAWUs
efforts to execute on the properties of MMC,
which were validly foreclosed by GHI, we see
that NAMAWU always had, and may still have,
ample supplemental remedies found in Rule 39
of the Rules of Court in order to protect its
rights against MMC. These include the
examination of the judgment obligor when
judgment is unsatisfied,[82] the examination of
the obligors of judgment obligors,[83] or even
the resort to receivership.[84]
While, theoretically, this case is not ended by
this decision, since the lower court is still to try
the case filed with it and decide it on the merits,
the matter of whether the mortgage and
foreclosure of the assets that are the subject of
said foreclosure is ended herein, for the third
and final time. So also is the consequential
issue of the separate and distinct personalities
of GHI and MMC. Having resolved these
principal issues with certainty, we
find no more need to remand the case to t
he lower court, only for the purpose of
resolving again the matter of whether GHI owns
the properties that were the subject of the
latters foreclosure.
WHEREFORE, the Petition is GRANTED. The
Decision of the Court of Appeals dated October
14, 2003 is SET ASIDE. The Omnibus Order
dated December 4, 2002 of the Regional Trial
Court, Branch 61 of Kabankalan City, Negros
Occidental is AFFIRMED. No costs.
SO ORDERED.

**

ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:
CONCHITA CARPIO MORALES
Associate Justice
MINITA V. CHICONAZARIO
Acting Chairperson
ROBERTO A. ABAD
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before
the case was assigned to the writer of the
opinion of the Courts Division.

MINITA V. CHICO-NAZARIO
Associate Justice
Acting Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the
above Decision had been reached in
consultation before the case was assigned to
the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
*

Additional member vice Justice

Antonio T. Carpio per Special Order No. 744
dated October 13, 2009.

81 | P a g e

Acting Chairperson vice Justice Antonio

T. Carpio per Special Order No. 743 dated
October 13, 2009.
***
Additional member vice Justice
Presbitero J. Velasco, Jr. per Special Order No.
753 dated October 13, 2009.
[1]

Penned by Associate Justice Jose L.

Sabio, Jr., with Associate Justices Delilah
Vidallon Magtolis (retired) and Hakim S.
Abdulwahid concurring. CA rollo, pp. 12681283.
[2]
Rollo, Vol. 1, p. 574. The companys
primary purpose, stated in the Articles of
Incorporation, is as follows:
To own and hold shares of stock of different
companies such as but not limited to mining,
manufacturing, trading and industrial concerns,
and to deal, engage and transact directly or
indirectly (sic) all forms of business and
mercantile acts (sic) the transactions concerning
all kinds of real or personal property, movable,
semi-movable, goods, wares (sic) chattels,
choses in action, tangible and intangible
property (sic) technical and industrial
equipments (sic) and machineries, personal and
real rights and documents, securities, evidence
of indebtedness or representative of value or
other forms of obligations, services and all
things, including future ones, which are not
excluded from the commerce of man or which
are not contrary to law or good morals. (Id.)
[3]
CA rollo, p. 5.
[4]
Rollo, Vol. 1, p. 604.
[5]
Id.
[6]
Id. at 157-174.
[7]
Id. at 158.
[8]
Id. at 175-177.
[9]
Id.
[10]
Id. at 170 and 574.
[11]
Records, p. 320.
[12]
CA rollo, p. 7. The dispositive portion
of the Quisumbing Order reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the lay-offs implemented on
May 7, 1996 and October 7, 1996 as illegal;
2. Ordering that all workers, whether union
members or not, who were laid-off on May 7,

1996 and October 7, 1996 be immediately

reinstated without gap in service, loss of
seniority, and that their full backwages and
benefits from the time of termination until
actual reinstatement be paid;
3. Declaring the Company to have violated
the Labor Code provisions on Unfair Labor
Practice for negotiating in bad faith and later
refusing to negotiate; and
4. Ordering the parties to enter into a new
collective bargaining agreement incorporating
all the terms and conditions of the previous
collective bargaining agreement between the
Company and the NFL, except the name of the
exclusive bargaining agent, and providing for an
annual across-the-board increase in the daily
wage of all rank and file workers in the amount
of P60.00 per day from February, 1996 until
January, 1998 and another P50.00 increase
annually effective February 1, 1998 until
January 31, 2000.
SO ORDERED.
[13]
Rollo, Vol. 1, p. 1099; see Maricalum
Mining Corporation v. Brion and NAMAWU, G.R.
Nos. 157696-97, February 9, 2006, 482 SCRA 87,
93-94.
[14]
Id. at 1099.
[15]
Supra note 13.
[16]
Records, p. 15.
[17]
Id. at 15-18.
[18]
Id. at 2.
[19]
Id. at 1-11.
[20]
Id. at 19-39.
[21]
Id. at 19, CA rollo, pp. 992-993.
[22]
Records, pp. 45-47.
[23]
Id. at 70-71.
[24]
Id. at 90.
[25]
Id. at 85D-89.
[26]
Id. at 344-364.
[27]
Id. at 164.
[28]
Supra notes 24, 25 and 26.
[29]
Rollo, Vol. 1, pp. 111-112.
[30]
Id. at 112.
[31]
Id. at 115-116.
[32]
Id. at 116.
[33]
Id. at 1093-1094.
[34]
Supra note 13.

82 | P a g e

[35]

G.R. No. 141241, November 22, 2005,

475 SCRA 608.
[36]
Rollo, Vol. 1, pp. 19-39.
[37]
The Quisumbing Order was affirmed
by this Court in Maricalum Mining Corp. v. Brion
and NAMAWU, supra note 13.
[38]
Baguio v. Teofila L. Vda. de Jalagat, et
al. 149 Phil. 436, 440 (1971).
[39]
Rollo, Vol. 1, p. 110.
[40]
G.R. No. 170049, March 14, 2008, 548
SCRA 588, 611; citing Bongato v. Sps.
Malvar, 436 Phil. 109, 117-118 (2002).
[41]
Supra note 35, at 613; emphasis
supplied.
[42]
Rollo, Vol. 1, pp. 175-177.
[43]
Supra note 35, at 613-615; emphasis
supplied. It may be added that when the
Republic, through the APT, elevated the case to
the Court, we sustained the CAs dismissal of
the Republics petition, and as already adverted
to, effectively upheld the right of GHI to the
transfer and delivery of the shares and the
financial notes.
[44]
431 Phil. 729 (2002).
[45]
In Lim v. Court of Appeals, G.R. No.
149748, November 16, 2006, 507 SCRA 38, 50,
this Court ruled that (t)he power of the sheriff
to rule on the issue of ownership is settled.
[46]
Rollo, Vol. 1, p. 111
[47]
Id. at 112.
[48]
Id.
[49]
Id. at 113.
[50]
Id. at 114.
[51]
430 Phil. 443, 467-469 (2002).
[52]
Emphasis supplied.
[53]
The Notice of Strike was filed on
August 23, 1996.
[54]
Talusan. v. Tayag, 408 Phil. 373, 390
(2001).
[55]
Underscoring supplied.
[56]
Olizon v. Court of Appeals, G.R. No.
107075, September 1, 1994, 236 SCRA 148, 159.
[57]
Consolidated Bank and Trust
Corporation v. Court of Appeals, G.R. No. 78771,
January 23, 1991, 193 SCRA 158, 176;
citing Philippine National Bank v. Mallorca, No.
L-22538, October 31, 1967, 21 SCRA 694, 698.
[58]
Rollo, Vol. 1, p. 113.

[59]

Under the Representations and

Warranties clause of the Purchase and Sale
Agreement dated October 2, 1992, paragraph
(k) Asset Catalogue GC 031 briefly
describes all movable and immovable
properties owned by or leased to MMC (id. at
165).
[60]
Cabral, et al. v. Evangelista, et al., 139
Phil. 300, 306-307 (1969).
[61]
In Northern Motors, Inc. v. Judge
Coquia, 160 Phil. 1091, 1095 (1975), in cases of
chattel of mortgages, this Court pronounced:
We hold, under the facts of this case, that
Northern Motors, Inc., as chattel mortgagee
and unpaid vendor, should not be required to
vindicate in a separate action its claims for the
seven mortgaged taxicabs and for the proceeds
of the execution sale of the other eight
mortgaged taxicabs.
Inasmuch as the condition of the chattel
mortgages had already been broken and
Northern Motors, Inc. had in fact instituted an
action for replevin so that it could take
possession of the mortgaged taxicabs (Civil Case
No. 20536, Rizal CFI) it has a superior,
preferential and paramount right to have
possession of the mortgaged taxicabs and to
claim the proceeds of the execution sale
(See Bachrach Motor Co. v. Summer, 42 Phil.
3; Northern Motors, Inc. v. Herrera, L-32674,
February 22, 1973, 49 SCRA 392).
Respondent sheriff wrongfully levied upon the
mortgaged taxicabs and erroneously took
possession of them. He could have levied only
upon the right or equity of
redemption pertaining to the Manila Yellow
Taxicab Co., Inc. as chattel mortgagor and
judgment debtor, because that was the only
leviable or attachable property right of the
company in the mortgaged taxicabs (Manila
Mercantile Co. v. Flores, 50 Phil. 759; Levy
Hermanos, Inc. v. Ramirez and Casimiro, 60 Phil.
978, 981). After a chattel mortgage is
executed, there remains in the mortgagor a

83 | P a g e

mere right of redemption (citing Tizon

v. Valdez and Morales, 48 Phil. 910, 916.
[62]
Quezon Bearing & Parts Corporation
v. Court of Appeals, G.R. No. 76537, August 28,
1989, 176 SCRA 825, 829-830.
[63]
Rollo, Vol 1, p. 105
[64]
Id.
[65]
Id. at 47.
[66]
February 24, 2000, as per the
allegation of NAMAWU, cited in the Decision of
RTC Br. 61, Negros Occidental, dated December
4, 2002.
[67]
Macadangdang. v. Martinez, G.R. No.
158682, January 31, 2005, 450 SCRA 363, 369.
[68]
MR Holdings, Ltd. v. Sheriff
Bajar, supra note 51, at 469.
[69]
Rollo, Vol. 1, pp. 115-116.
[70]
Land Bank of the Philippines v. Court
of Appeals, 416 Phil. 774, 782-783. emphasis
supplied.
[71]
George REBH et al. v. ROTTERDAM
VENTURES INC., Doing Business as Galesi
Group, 277 A.D.2d 659, 716 N.Y.S.2d 457
(2000).
[72]
Emphasis supplied.
[73]
G.R. No. 108734, May 29, 1996, 257
SCRA 149, 159.
[74]
Francisco v. Mejia, G.R. No. 141617,
August 14, 2001, 362 SCRA 738, 753.
[75]
Manila Hotel Corp. v. NLRC, 397 Phil.,
1, 19 (2000).
[76]
Penalosa v. Villanueva, G.R. No. 75305,
September 26, 1989, 177 SCRA 778, 786.
[77]
Id.
[78]
L-44230, November 19, 1984, 133
SCRA 259, 269-270.
[79]
Yupangco Cotton Mills, Inc. v. Court of
Appeals, 424 Phil. 469, 480 (2002).
[80]
Id. at 481.
[81]
Rollo, Vol. 1, p. 785.
[82]
Rules of Court, Rule 39, Sec. 36.
[83]
Rules of Court, Rule 39, Sec 37.
[84]
Rules of Court, Rule 39, Sec. 41.

THIRD DIVISION
SPOUSES OMAR and MOSHIERA LATIP,
Petitioners,
versus ROSALIE PALAA CHUA,
Respondent.

DECISION
NACHURA, J.:
Challenged in this petition for review
on certiorari is the Court of Appeals (CA)
Decision in CA-G.R. SP No. 89300:[1] (1)
reversing the decision of the Regional Trial
Court (RTC), Branch 274, Paraaque City in Civil
Case No. 04-0052;[2] and (2) reinstating and
affirming in toto the decision of the
Metropolitan Trial Court (MeTC), Branch 78, of
the same city in Civil Case No. 2001-315.[3]

The contract of lease reads:

G.R. No. 177809
CONTRACT OF LEASE
Present:
KNOW ALL MEN BY THESE PRESENTS:
CARPIO MORALES, J.,*
*
This Contract
CHICO-NAZARIO,
of Lease is entered
into by and
between: Acting Chairperson,
NACHURA,
ROSALIE PALAA
PERALTA,
CHUA, and
Filipino, of legal age,
married with office
ABAD,
at*2/FJJ.JOFERXAN
Building, F.B. Harrison St., Brgy.
Baclaran, Paraaque
Promulgated:
City, and hereinafter
referred to as the LESSOR,
October 16, 2009
- and OMAR LATIEF marriage to MOSHIERA
LATIEF, also both Filipino, of legal age with
address at 24 Anahan St. RGV Homes
Paraaque City, and hereinafter referred to as
the LESSEES.

WITNESSETH
First, we sift through the varying facts found by
the different lower courts.
The facts parleyed by the MeTC show that
respondent Rosalie Chua (Rosalie) is the owner
of Roferxane Building, a commercial building,
located at No. 158 Quirino
Avenue corner Redemptorist Road, Barangay
Baclaran, Paraaque City.
On July 6, 2001, Rosalie filed a complaint for
unlawful detainer plus damages against
petitioners, Spouses Omar and Moshiera Latip
(Spouses Latip). Rosalie attached to the
complaint a contract of lease over two cubicles
in Roferxane Bldg., signed by Rosalie, as lessor,
and by Spouses Latip, as lessees thereof.
84 | P a g e

1. That the LESSOR is the owner of the

commercial building erected at the lot of the
Toribio G. Reyes Realty, Inc. situated at 158
Quirino Ave. corner Redemptorist Road,
Barangay Baclaran in Paraaque Ctiy;
2. That LESSOR hereby leases two (2) cubicles
located at the 1st & 2nd Floor, of said building
with an area of 56 square meters under the
following terms and conditions, to wit:
a. That the monthly rental of the two (2)
cubicles in PESOS,
SIXTY THOUSAND
(P60,000.00), Philippine Currency. However,
due to unstable power of the peso LESSEES

agrees to a yearly increase of ten (10%) percent

of the monthly rental;
b. That any rental in-arrears shall be paid
before the expiration of the contract to the
LESSOR;

(sgd.)
OMAR LATIEF
LESSEE
SIGNED IN THE PRESENCE OF:

c. That LESSEES agree to pay their own water

and electric
consumptions in the said
premises;

(sgd.)
1. Daisy C. Ramos
C. Chua

d. That the LESSEES shall not sub-let or make

any alteration in the cubicles without a
written permission from the
LESSOR.
Provided, however, that at the
termination of the Contract, the lessee shall
return the two cubicles in its original conditions
at
their expenses;

Republic of the Philippines)

Cityof Manila
)s.s.

e. That the LESSEES agree to keep the cubicles

in a safe and
sanitary conditions, and shall
not keep any kinds of flammable
or
combustible materials.
f. That in case the LESSEES fail to pay the
monthly rental every time it falls due or violate
any of the above conditions shall be enough
ground to terminate this Contract of
Lease. Provided,
further, that, if the LESSEES
pre-terminate this Contract they
shall pay
the rentals for the unused month or period by
way of
liquidated damages in favor of the
LESSOR.
3. That this Contract of Lease is for six (6) yrs.
only starting from December _____, 1999 or up
to December ______, 2005.

IN WITNESS WHEREOF, the parties have

hereunto affixed their hands this ___th day of
December, 1999 at City of Manila, Philippines.
(sgd.)
ROSALIE PALAACHUA
LESSOR
EE
85 | P a g e

(sgd.)
MOSHIERA LATIEF
LESS

(sgd.)
2. Ferdinand

ACKNOWLEDGMENT
BEFORE ME, a Notary Public for and in the City
of Manila personally appeared the following
persons:
Rosalie P. Chua with CTC No. 05769706
at Paraaque City on 2/1/99; Moshiera Latief
with CTC No. 12885654 at Paraaque City on
11/11/99; Omar Latief with CTC No. 12885653
Paraaque City on Nov. 11, 1999.
known to me and to me known to be the same
persons who executed this instrument
consisting of two (2) pages duly signed by them
and the two (2) instrumental witnesses and
acknowledged to me that the same is their free
and voluntarily acts and deeds.
IN FAITH AND TESTIMONY WHEREOF, I have
hereunto affixed my hand and Notarial Seal this
____th day of December, 1999 at the City of
Manila, Philippines.

Doc. No. _____

CALIXTRO B. RAMOS
Page No. _____
PUBLIC
Book No. LXV
December 31, 2000
Series of 1999
374145-1/11/99/-Mla.
IBP # 00262-Life Member[4]

ATTY.
NOTARY
Until
PTR #

Received by:

A year after the commencement of the lease

and with Spouses Latip already occupying the
leased cubicles, Rosalie, through counsel, sent
the spouses a letter demanding payment of
back rentals and should they fail to do so, to
vacate the leased cubicles. When Spouses Latip
did not heed Rosalies demand, she instituted
the aforesaid complaint.
In their Answer, Spouses Latip refuted Rosalies
claims. They averred that the lease of the two
(2) cubicles had already been paid in full as
evidenced by receipts showing payment to
Rosalie of the total amount of P2,570,000.00.
The three (3) receipts, in Rosalies handwriting,
read:
1.
I received the amount of P2,000,000.00
(two million pesos) from [O]mar Latip &
Moshi[e]ra Latip for the payment of 2 cubicles
located at 158 Quirino Ave. corner
Redemptorist Rd.[,] Baclaran P[ara]aque City.
ROFERLAND[5] Bldg. with the terms 6 yrs.
Contract.
P2,000,000.00
___(sgd.)______
CHECK #
3767924
FAR EAST BANK
______(sgd.)______
Ferdinand Chua
2.
Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99
Received by

Rosalie Chua

3.
Received cash
P70,000.00 from
Moshiera Latip
12-11-99
____(sgd.)___

86 | P a g e

___

Rosalie Chua

[6]

Spouses Latip asseverated that sometime in

October 1999, Rosalie offered for sale lease
rights over two (2) cubicles in Roferxane Bldg.
Having in mind the brisk sale of goods during
the Christmas season, they readily accepted
Rosalies offer to purchase lease rights in
Roferxane Bldg., which was still under
construction at the time. According to Spouses
Latip, the immediate payment of P2,570,000.00
would be used to finish construction of the
building giving them first priority in the
occupation of the finished cubicles.
Thereafter, in December 1999, as soon as two
(2) cubicles were finished, Spouses Latip
occupied them without waiting for the
completion of five (5) other stalls. Spouses Latip
averred that the contract of lease they signed
had been novated by their purchase of lease
rights of the subject cubicles. Thus, they were
surprised to receive a demand letter from
Rosalies counsel and the subsequent filing of a
complaint against them.
The MeTC ruled in favor of Rosalie, viz.:
WHEREFORE, premises considered, the
[Spouses Latip] and all persons claiming rights
under them are hereby ordered to VACATE the
property subject of this case located at the
1stand 2nd floors of a Roferxane Building
situated at No. 158 Quirino Avenue corner
Redemptorist Road, Barangay Baclaran,
Paraaque City. The [Spouses Latip] are also
ordered to PAY [Rosalie] the amount of SEVEN
HUNDRED TWENTY THOUSAND PESOS
(P720,000.00) as rent arrearages for the period
of December 1999 to December 2000 and
thereafter to PAY [Rosalie] the amount of
SEVENTY TWO THOUSAND PESOS (P72,000.00)
per month from January 2001 to December
2002, plus ten percent (10%) increase for each
and every succeeding years thereafter as
stipulated in paragraph 2(a) of the Contract of
Lease x x x, until the [Spouses Latip] have

completely vacated the leased premises subject

of this lease. Finally[,] the [Spouses Latip] are
hereby ordered to PAY [Rosalie] the amount of
TWENTY THOUSAND PESOS (P20,000.00) as
attorneys fees and TWO THOUSAND PESOS
(P2,000.00) per *Rosalies+ appearance in Court
as appearance fee and to PAY the cost of this
suit.
*Spouses Latips+ counterclaim is hereby
DISMISSED for lack of merit.

of six (6) years, and already fully paid for by

Spouses Latip. Thus, Spouses Latip could not be
ejected from the leased premises until
expiration of the lease period.
The RTC disposed of the appeal, viz.:
WHEREFORE, all the foregoing considered, the
appealed decision of the [MeTC] dated January
13, 2004 is reversed as judgment is hereby
rendered for the [Spouses Latip] and against
[Rosalie], ordering the latter to pay the former

SO ORDERED.[7]
(1)
the sum of PhP1,000,000.00 as moral
damages;
In stark contrast, the RTC reversed the MeTC
and ruled in favor of Spouses Latip. The RTC did
not give credence to the contract of lease,
ruling that it was not notarized and, in all other
substantial aspects, incomplete. Further on this
point, the RTC noted that the contract of lease
lacked: (1) the signature of Ferdinand Chua,
Rosalies husband; (2) the signatures of Spouses
Latip on the first page thereof; (3) the specific
dates for the term of the contract which only
stated that the lease is for six (6) y[ea]rs only
starting from December 1999 or up to
December 2005; (4) the exact date of
execution of the document, albeit the month of
December and year 1999 are indicated therein;
and (5) the provision for payment of deposit or
advance rental which is supposedly uncommon
in big commercial lease contracts.
The RTC believed the claim of Spouses Latip
that the contract of lease was modified and
supplemented; and the entire lease rentals for
the two (2) cubicles for six (6) years had already
been paid by Spouses Latip in the amount
of P2,570,000.00. As to Rosalies claim that her
receipt of P2,570,000.00 was simply goodwill
payment by prospective lessees to their lessor,
and not payment for the purchase of lease
rights, the RTC shot this down and pointed out
that, apart from her bare allegations, Rosalie
did not adduce evidence to substantiate this
claim. On the whole, the RTC declared an
existent lease between the parties for a period
87 | P a g e

(2)
the sum of PhP500,000.00 as exemplary
damages;
(3)
the sum of PhP250,000.00 plus
PhP3,000.00 per court appearance as and for
attorneys fees; and
(4)

costs of suit.

SO ORDERED.[8]
In yet another turn of events, the CA, as
previously mentioned, reversed the RTC and
reinstated the decision of the MeTC. The CA
ruled that the contract of lease, albeit lacking
the signature of Ferdinand and not notarized,
remained a complete and valid contract. As the
MeTC had, the CA likewise found that the
alleged defects in the contract of lease did not
render the contract ineffective. On the issue of
whether the amount of P2,570,000.00 merely
constituted payment of goodwill money, the CA
took judicial notice of this common practice in
the area of Baclaran, especially around
the Redemptorist Church. According to the
appellate court, this judicial notice was
bolstered by the Joint Sworn Declaration of the
stallholders at Roferxane Bldg. that they all had
paid goodwill money to Rosalie prior to
occupying the stalls thereat. Thus, ruling on
Rosalies appeal, the CA disposed of the case:

WHEREFORE, in view of the foregoing, the

Petition for Review is hereby GRANTED. The
assailed decision of RTC Paraaque City Branch
274 dated September 24, 2004 is hereby
REVERSED and SET ASIDE, and the January 13,
2004 decision of the MeTC is REINSTATED and
AFFIRMED en toto.

unquestionable demonstration or ought to be

known to judges because of their judicial
functions.

SO ORDERED.[9]

I. The doctrine of judicial notice rests on the

wisdom and discretion of the courts. The power
to take judicial notice is to be exercised by
courts with caution; care must be taken that the
requisite notoriety exists; and every reasonable
doubt on the subject should be promptly
resolved in the negative.

Not surprisingly, Spouses Latip filed the present

appeal.
The singular issue for our resolution is whether
Spouses Latip should be ejected from the leased
cubicles.
As previously adverted to, the CA, in ruling for
Rosalie and upholding the ejectment of Spouses
Latip, took judicial notice of the alleged practice
of prospective lessees in the Baclaran area to
pay goodwill money to the lessor.
We disagree.
Sections 1 and 2 of Rule 129 of the Rules of
Court declare when the taking of judicial notice
is mandatory or discretionary on the courts,
thus:
SECTION 1. Judicial notice, when mandatory.
A court shall take judicial notice, without the
introduction of evidence, of the existence and
territorial extent of states, their political history,
forms of government and symbols of
nationality, the law of nations, the admiralty
and maritime courts of the world and their
seals, the political constitution and history of
the Philippines, the official acts of the
legislative, executive and judicial departments
of the Philippines, the laws of nature, the
measure of time, and the geographical
divisions.
SEC. 2. Judicial notice, when discretionary. A
court may take judicial notice of matters which
are of public knowledge, or are capable of
88 | P a g e

On this point, State Prosecutors v. Muro[10] is

instructive:

Generally speaking, matters of judicial notice

have three material requisites: (1) the matter
must be one of common and general
knowledge; (2) it must be well and
authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be
within the limits of the jurisdiction of the
court. The principal guide in determining what
facts may be assumed to be judicially known is
that of notoriety. Hence, it can be said that
judicial notice is limited to facts evidenced by
public records and facts of general notoriety.
To say that a court will take judicial notice of a
fact is merely another way of saying that the
usual form of evidence will be dispensed with if
knowledge of the fact can be otherwise
acquired. This is because the court assumes
that the matter is so notorious that it will not be
disputed. But judicial notice is not judicial
knowledge. The mere personal knowledge of
the judge is not the judicial knowledge of the
court, and he is not authorized to make his
individual knowledge of a fact, not generally or
professionally known, the basis of his
action.Judicial cognizance is taken only of those
matters which are commonly known.
Things of common knowledge, of which
courts take judicial notice, may be matters
coming to the knowledge of men generally in
the course of the ordinary experiences of life, or

they may be matters which are generally

accepted by mankind as true and are capable of
ready and unquestioned demonstration. Thus,
facts which are universally known, and which
may be found in encyclopedias, dictionaries or
other publications, are judicially noticed,
provided they are of such universal notoriety
and so generally understood that they may be
regarded as forming part of the common
knowledge of every person.[11]
We reiterated the requisite of notoriety for the
taking of judicial notice in the recent case
of Expertravel & Tours, Inc. v. Court of
Appeals,[12] which cited State Prosecutors:
Generally speaking, matters of judicial notice
have three material requisites: (1) the matter
must be one of common and general
knowledge; (2) it must be well and
authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be
within the limits of the jurisdiction of the court.
The principal guide in determining what facts
may be assumed to be judicially known is that
of notoriety. Hence, it can be said that judicial
notice is limited to facts evidenced by public
records and facts of general notoriety.
Moreover, a judicially noticed fact must be one
not subject to a reasonable dispute in that it is
either: (1) generally known within the territorial
jurisdiction of the trial court; or (2) capable of
accurate and ready determination by resorting
to sources whose accuracy cannot reasonably
be questionable.
Things of common knowledge, of which
courts take judicial notice, may be matters
coming to the knowledge of men generally in
the course of the ordinary experiences of life, or
they may be matters which are generally
accepted by mankind as true and are capable of
ready and unquestioned demonstration. Thus,
facts which are universally known, and which
may be found in encyclopedias, dictionaries or
other publications, are judicially noticed,
provided, they are such of universal notoriety
and so generally understood that they may be
89 | P a g e

regarded as forming part of the common

knowledge of every person. As the common
knowledge of man ranges far and wide, a wide
variety of particular facts have been judicially
noticed as being matters of common
knowledge. But a court cannot take judicial
notice of any fact which, in part, is dependent
on the existence or non-existence of a fact of
which the court has no constructive knowledge.
From the foregoing provisions of law and our
holdings thereon, it is apparent that the matter
which the appellate court took judicial notice of
does not meet the requisite of notoriety. To
begin with, only the CA took judicial notice of
this supposed practice to pay goodwill money
to the lessor in the Baclaran area. Neither the
MeTC nor the RTC, with the former even ruling
in favor of Rosalie, found that the practice was
of common knowledge or notoriously known.
We note that the RTC specifically ruled that
Rosalie, apart from her bare allegation, adduced
no evidence to prove her claim that the amount
of P2,570,000.00 simply constituted the
payment of goodwill money. Subsequently,
Rosalie attached an annex to her petition for
review before the CA, containing a joint
declaration under oath by other stallholders in
Roferxane Bldg. that they had paid goodwill
money to Rosalie as their lessor. On this score,
we emphasize that the reason why our rules on
evidence provide for matters that need not be
proved under Rule 129, specifically on judicial
notice, is to dispense with the taking of the
usual form of evidence on a certain matter so
notoriously known, it will not be disputed by
the parties.
However, in this case, the requisite of notoriety
is belied by the necessity of attaching
documentary evidence, i.e., the Joint Affidavit
of the stallholders, to Rosalies appeal before
the CA. In short, the alleged practice still had to
be proven by Rosalie; contravening the title
itself of Rule 129 of the Rules of Court What
need not be proved.

Apparently, only that particular division of the

CA had knowledge of the practice to pay
goodwill money in the Baclaran area. As was
held in State Prosecutors, justices and judges
alike ought to be reminded that the power to
take judicial notice must be exercised with
caution and every reasonable doubt on the
subject should be ample reason for the claim of
judicial notice to be promptly resolved in the
negative.
Ultimately, on the issue of whether Spouses
Latip ought to be ejected from the leased
cubicles, what remains in evidence is the
documentary evidence signed by both parties
the contract of lease and the receipts
evidencing payment of P2,570,000.00.
We need not be unduly detained by the issue of
which documents were executed first or if there
was a novation of the contract of lease. As had
been found by the RTC, the lease contract and
the receipts for the amount of P2,570,000.00
can be reconciled or harmonized. The RTC
declared:
Definitely, the parties entered into a lease
agreement over two (2) cubicles of the 1st and
2nd floors of Roferxane (Roferland) Building, a
commercial building located at 158 Quirino
Avenue, corner Redemptorist Road,
Baclaran, Paraaque City and belonging to
[Rosalie]. The lease agreement is for a term of
six (6) years commencing in December 1999 up
to December 2005. This agreement was
embodied in a Contract of Lease x x x. The
terms of this lease contract, however, are
modified or supplemented by another
agreement between the parties executed and
or entered into in or about the time of
execution of the lease contract, which exact
date of execution of the latter is unclear.[13]

We agree with the RTCs holding only up to that

point. There exists a lease agreement between
the parties as set forth in the contract of lease
which is a complete document. It need not be
90 | P a g e

signed by Ferdinand Chua as he likewise did not

sign the other two receipts for P500,000.00
and P70,000.00, respectively, which contained
only the signature of Rosalie. Besides, it is
undisputed that Rosalie owns and leases the
stalls in Roferxane Bldg.; thus, doing away with
the need for her husbands consent. The
findings of the three lower courts concur on this
fact.
The contract of lease has a period of six (6)
years commencing in December 1999. This fact
is again buttressed by Spouses Latips admission
that they occupied the property forthwith in
December 1999, bearing in mind the brisk sales
during the holiday season.
On the conflicting interpretations by the lower
courts of the receipts amounting
to P2,570,000.00, we hold that the practice of
payment of goodwill money in the Baclaran
area is an inadequate subject of judicial notice.
Neither was Rosalie able to provide sufficient
evidence that, apart from the belatedly
submitted Joint Affidavit of the stallholders of
Roferxane Bldg., the said amount was simply for
the payment of goodwill money, and not
payment for advance rentals by Spouses Latip.
In interpreting the evidence before us, we are
guided by the Civil Code provisions on
interpretation of contracts, to wit:
Art. 1371. In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
Art. 1372. However general the terms of a
contract may be, they shall not be understood
to comprehend things that are distinct and
cases that are different from those which the
parties intended to agree.
Art. 1373. If some stipulation of any contract
should admit of several meanings, it shall be
understood as bearing that import which is
most adequate to render it effectual.

The RTC was already on the right track when it

declared that the receipts for P2,570,000.00
modified or supplemented the contract of
lease. However, it made a quantum leap when
it ruled that the amount was payment for
rentals of the two (2) cubicles for the entire sixyear period. We cannot subscribe to this
finding. To obviate confusion and for clarity, the
contents of the receipts, already set forth
above, are again reproduced:
1.
I received the amount of P2,000,000.00
(two million pesos) from [O]mar Latip &
Moshi[e]ra Latip for the payment of 2 cubicles
located at 158 Quirino Ave. corner
Redemptorist Rd.[,] Baclaran P[ara]que City.
ROFERLAND Bldg. with the terms 6 yrs.
Contract.
P2,000,000.00
______(sgd.)______
CHECK #
3767924
Chua
FAR EAST BANK

Rosalie

______(sgd.)______
Ferdinand Chua
2.
Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99
Received by

Rosalie Chua

3.
Received cash
P70,000.00 from
Moshiera Latip
12-11-99

referred to full payment of rentals for the whole

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

___(sgd.)
____
[14]
Received by:
There is nothing on the receipts and on record
that the payment and receipt of P2,570,000.00
91 | P a g e

CONCHITA CARPIO MORALES

Associate Justice

MINITA V. CHICONAZARIO
Associate Justice
Acting Chairperson

DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before
the case was assigned to the writer of the
opinion of the Courts Division.
MINITA V. CHICO-NAZARIO
Associate Justice
Acting Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution and the Division Acting
Chairperson's Attestation, I certify that the
conclusions in the above Decision had been
reached in consultation before the case was
assigned to the writer of the opinion of the
Courts Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
*

Additional member vice Associate

Justice Antonio T. Carpio per Special Order No.
744 dated October 13, 2009.
*
Acting Chairperson vice Associate
Justice Antonio T. Carpio per Special Order No.
743 dated October 13, 2009.
*
Additional member vice Associate
Justice Presbitero J. Velasco, Jr. per Special
Order No. 753 dated October 13, 2009.
[1]
Penned by Associate Justice Lucenito
N. Tagle (retired), with Associate Justices
Rodrigo V. Cosico (retired) and Regalado E.
Maambong (retired), concurring; rollo, pp. 4356.

92 | P a g e

[2]

Penned by Presiding Judge Fortunito

L. Madrona, CA rollo. pp. 36-43.
[3]
Penned by Presiding Judge Jansen R.
Rodriguez, CA rollo, pp. 44-49.
[4]
CA rollo, pp. 72-73.
[5]
Except for this designation in the
receipt, the building where the leased cubicles
are located is referred to in the records as
Roferxane Bldg.
[6]
CA rollo, pp. 99, 102, 103.
[7]
Id. at 48-49.
[8]

Id. at 42.