SECOND DIVISION

[G.R. No. 150286. October 17, 2003]

ELCEE FARMS, INC., and CORAZON SAGUEMULLER, petitioner,

vs. PAMPILO SEMILLANO and ONE HUNDRED THIRTY OTHERS
and THE NLRC, respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Decision, dated February 23, 2001, rendered by
the Court of Appeals in C.A. G.R. SP No. 56492 which dismissed for lack of
jurisdiction the petition for annulment of a decision of the National Labor
Relations Commission (NLRC), filed by Elcee Farms, Inc. (Elcee Farms for
brevity) and Corazon Saguemuller.
[1]

The following are the antecedent facts:

On December 26, 1990, a complaint for illegal dismissal was filed by 144
employees before the NLRC (Regional Arbitration Branch No. VII, Bacolod
City) against (a) petitioners Elcee Farms and Saguemuller; and (b) Hilla
Corporation, Rey Hilado and Roberto Montao. Of the 144 named
complainants, only 28 submitted their affidavits and evidence of
employment.
[2]

In a Decision dated October 20, 1993, the Labor Arbiter ordered Hilla
Corporation to pay each of the 28 complainants the sum of P2,235.62 as
separation pay but dismissed all claims against Elcee Farms, Saguemuller,
Hilado and Montao, for lack of merit.
[3]

[4]

Not satisfied with the decision, private respondents and Hilla Corporation
appealed to the NLRC.
In a Decision dated March 29, 1995, the NLRC modified the decision
the Labor Arbiter by holding all defendants liable for the payment
separation pay and adding the payment of P5,000.00 as moral damages
each complainant for all the troubles and sufferings from the disturbance
their rights to labor. All the parties moved for reconsideration.
[5]

[6]

of
of
to
of

On May 29, 1996, the NLRC issued a Resolution modifying its decision
by: (a) absolving Hilla Corporation from liability and held only petitioners Elcee
Farms and Saguemuller liable for the separation pay, moral and exemplary
damages; and (b) increasing the number of awardees from 28 to 131 based
on the list of remitted SSS contributions as of 1990.
[7]

[8]

[9]

Aggrieved, petitioners filed two separate petitions for certiorari with this
Court under Rule 65 of the Rules of Court through different counsels.
The first petition, docketed as G.R. No. 125714, was initiated on August 9,
1996 via a motion for a 60-day extension of time to file a petition
for certiorari. Petitioners filed a second motion for extension of
time, unaware that they were only granted by the Court a 30-day extension
and they failed to submit their petition within that period. Petitioners counsel
thereafter filed a motion for leave to withdraw the two motions for extension on
the ground that said motions were not authorized by petitioners. In a
Resolution dated October 16, 1996, the Court through the Second Division
denied: (a) the second motion for extension of time for being filed beyond the
extension period granted by the Court, and (b) the motion to withdraw since
the two motions for extension were filed before the authority of counsel was
withdrawn by petitioners. Subsequently, in a Resolution dated February 17,
1997, the Court considered the judgment sought to be reviewed as final and
executory for failure of petitioners to file the petition for certiorari within the
granted extension period. On February 21, 1997, petitioners filed a Motion
for Leave to Admit Manifestation and/or Motion for Clarification of the October
16, 1996 Resolution. On April 10, 1997, petitioners filed a Motion for
Reconsideration of the February 17, 1997 Resolution. Both motions were
denied with finality by the Second Division in its Resolution dated June 23,
1997.
[10]

[11]

[12]

[13]

[14]

[15]

[16]

[17]

The second petition for certiorari, docketed as G.R. No. 126428, was filed
on September 11, 1996, or a month after G.R. No. 125714 was filed with the
Court. In a Resolution dated November 12, 1997, the First Division of this
Court gave due course to the petition and required: (a) the petitioners to pay
the deposit for costs; and, (b) both parties to submit their respective
memoranda. However, the said Resolution was sent at 2nd floor, Jocson
Building, B.S. Aquino Drive, 6100, Bacolod City, Negros Occidental instead of
Mario Building, P. Hernaez Street, 6100 Bacolod City, Negros Occidental, the
address provided for in the petition for certiorari. Thus, petitioners failed to
comply. In a Resolution dated March 25, 1998, the Court dismissed the
petition for certiorari for non-compliance with the Resolution of November 12,
1997 requiring said deposit for costs and memorandum. Said Resolution was
also sent to the wrong address.
[18]

[19]

[20]

[21]

With the dismissal of the petition for certiorari, the NLRC Resolution dated
May 29, 1996 became final and executory as of July 1, 1996.
[22]

On December 20, 1999, petitioner Saguemuller filed before the NLRC a

Motion to Stay Execution on the ground of absolute nullity of decision. But,
without awaiting the resolution of its pending motion with the NLRC, petitioner
Saguemuller together with Elcee Farms filed on January 4, 2000, a petition for
annulment of judgment with the Court of Appeals on the following grounds:
[23]

a) The resolution awards damages in favor of persons or alleged claimants who never
pursued their complaints.
b) The Resolution considered evidence for the first time on appeal.
c) The Resolution considered alleged factual circumstances that were never presented
during the hearing of the case.
d) The Resolution rendered judgment against a person who clearly was not an
employer nor even an employee of the employer corporation.
e) The Resolution awarded damages without basis in law or in fact.
f) The Resolution modified the Decision that was already final.
g) The Resolution ennobled a prescribed claim. [24]

The petitioners reiterated the foregoing grounds for annulment in their

Memorandum dated July 31, 2000 filed with the Court of Appeals and for the
first time, interjected that there was extrinsic fraud in the proceedings before
the Supreme Court claiming that the Resolution dated November 12, 1997 of
the First Division of this Court which required them to pay the cost and to
submit their Memorandum was sent at 2nd floor, Jocson Building, B.S. Aquino
Drive, 6100, Bacolod City, Negros Occidental instead of Mario Building, P.
Hernaez Street, 6100 Bacolod City, Negros Occidental, the address provided
for in the petition for certiorari; as a result of which, they failed to receive the
Resolution and for non-compliance, the First Division dismissed the petition.
[25]

[26]

In its Decision dated February 23, 2001, the Court of Appeals dismissed
the petition for annulment of judgment on ground of lack of jurisdiction. It held
that petitioners cannot invoke the jurisdiction of the said court pursuant to
Rule 47 of the Rules of Court because said rule refers to decisions of regional
trial courts and not to quasi-judicial bodies. The appellate court also noted
that petitioners had availed of the relief of certiorari under Rule 65 before the
Supreme Court but they were not diligent in pursuing the same, to their
prejudice.
[27]

Petitioners filed a Motion for Reconsideration, but the Court of Appeals

denied the same in a Resolution dated September 19, 2001.
[28]

[29]

Hence, this petition for review on certiorari anchored on the ground that
the Court of Appeals committed a reversible error when it refused to assume
jurisdiction and annul a patently unjust decision of the NLRC.
Per the Courts Resolution dated January 21, 2002, respondents filed their
Comment dated March 6, 2002. On June 14, 2002, petitioners filed a Reply
to private respondents Comment.
[30]

On February 3, 2003, private respondents filed with the Court a motion

praying for the remand of the records and for the issuance of an order
directing the Labor Arbiter to issue a writ of execution. In compliance with
the Courts Resolution dated March 17, 2003, petitioners filed their Comment
on June 4, 2003, arguing that to grant the motion would render moot the
present petition for review.
[31]

Hence, the Court deems it proper to resolve the issues raised in the main
petition.
The instant petition for review is devoid of merit. The Court finds no error
in the assailed decision of the Court of Appeals. As correctly held by the
appellate court, it has no jurisdiction to entertain a petition for annulment of a
final and executory judgment of the NLRC. Section 9 of BP 129, as
amended, only vests in the Court of Appeals exclusive jurisdiction over
actions for annulment of judgments of Regional Trial Courts.
[32]

[33]

Moreover, annulment of judgment is allowed only where the ordinary

remedies of new trial, appeal, petition for relief or other appropriate remedies
are no longer available through no fault of petitioners. In this case,
petitioners were well-aware that they had the available remedy of a petition
for certiorari to this Court under Rule 65 of the Rules of Court. In fact, they
twice sought recourse with this Court via petitions for certiorari but both
petitions were dismissed.
[34]

The Court notes that petitioners have an incorrect view of the effect of the
dismissal of their second petition for certiorari (G.R. No. 126428) for nonpayment of costs and failure to file memorandum. They posit that
considering, however, that the dismissal of the petition was not on the merits,
petitioners elected not to further pursue the matter. It is a settled rule that
minute resolutions of this Court denying due course to petitions or dismissing
cases summarily for failure to comply with the formal or substantial
requirements laid down by law are actually dispositions on the merits.
[35]

[36]

The two petitions earlier filed by the petitioners before this Court and the
petition for annulment of judgment filed before the Court of Appeals
undoubtedly run smack of forum shopping. A party is guilty of forum shopping

when he repetitively avails of several judicial remedies in different courts,

simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely,
by some other court. Forum shopping has been characterized as an act of
malpractice that is prohibited and condemned as trifling with the courts and
abusing their processes. It constitutes improper conduct which tends to
degrade the administration of justice. It has also been aptly described as
deplorable because it adds to the congestion of the heavily burdened dockets
of the courts.
[37]

[38]

As a general rule, the client is bound by the negligence or mistake of his

counsel. But this rule is not without exception. The Court in Government
Service Insurance System vs. Bengson Commerical Buildings,
Inc., elucidated, thus:
[39]

As a general rule, the negligence or mistake of counsel binds the client, for
otherwise there would never be an end to a suit so long as a new counsel
could be employed who could allege and show that the former counsel had
not been sufficiently diligent, experienced, or learned.
If under the circumstances of the case, the rule deserts its proper office as an
aid to justice and becomes a great hindrance and chief enemy, its rigors must
be relaxed to admit exceptions thereto and to prevent a miscarriage of justice.
In other words, the Court has the power to except a particular case from the
operation of the rule whenever the purposes of justice require it. What should
guide judicial action is that a party is given the fullest opportunity to establish
the merits of his action or defense rather than for him to lose life, honor or
property on mere technicalities.
[40]

In De Guzman vs. Sandiganbayan, this Court, ever mindful of the supremacy

of substantive rights over technicalities and invoking its power to suspend the
rules, relieved petitioner De Guzman from the costly importunings of his
previous lawyers who filed a demurrer to evidence despite the trial courts
denial of his motion for leave. The Court emphasized:
[41]

. . . Under the circumstances, higher interests of justice and equity demand

that petitioner be not penalized for the costly importunings of his previous
lawyers based on the same principles why this Court had, on many occasions
where it granted new trial, excused parties from the negligence or mistakes of
counsel. To cling to the general rule in this case is only to condone

rather than rectify a serious injustice to petitioners whose only fault was
to repose his faith and entrust his innocence to his previous lawyers.
...

...

...

Let us not forget that the rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate rather
than promote substantial justice, must always be avoided. Even the Rules of
Court envision this liberality. This power to suspend or even disregard the
rules can be so pervasive and encompassing so as to alter even that
which this Court has already declared to be final . . .
...

...

...

The Rules of Court was conceived and promulgated to set forth guidelines in
the dispensation of justice but not to bind and chain the hand that dispenses
it, for otherwise, courts will be mere slaves to or robots of technical rules,
shorn of judicial discretion. That is precisely why courts in rendering real
justice have always been, as they in fact ought to be, conscientiously guided
by the norm that when on the balance, technicalities take a backseat against
substantive rights, and not the other way around. Truly then, technicalities, in
the appropriate language of Justice Makalintal, should give way to the
realities of the situation. (Emphasis supplied)
[42]

It is worthwhile to add that our courts are not only courts of justice but also
of equity. Equity as the complement of legal jurisdiction seeks to reach and
do complete justice where courts of law, through the inflexibility of their rules
and want of power to adapt their judgments to the special circumstances of
cases, are incompetent so to do. Equity regards the spirit and not the letter,
the intent and not the form, the substance rather than the circumstance, as it
is variously expressed by different courts.
[43]

[44]

In this case, the erroneous move taken by petitioners counsel in instituting

the petition for annulment of judgment before the Court of Appeals instead of
zealously pursuing the petition in G.R. No. 126428 before the First Division of
this Court should not bind petitioners because they appear to have legitimate
grievances.
The Court entertains serious apprehensions on the validity of the service
of the Resolution dated November 12, 1997 of the First Division of this Court
in G.R. No. 136428 which required petitioners to deposit for costs and to
submit their memorandum, non-compliance of which inevitably caused the

dismissal of their petition for certiorari. Petitioners claim that the Resolution
dated November 12, 1997 was not sent to the address of his counsel as
expressly stated in the petition itself but to counsels former address when the
case was still with the NLRC. The possibility that such a procedural error
might have been caused by a mistake committed by this Courts personnel is
not far-fetched and it should not militate against petitioners right to due
process. Practical considerations and the realities of the situation dictate that
the service at the old address of petitioners counsel and not at the address of
petitioners counsel as specified in the petition cannot be considered a valid
service. To consider the service of the resolution at counsels old address,
when he did not give it to the court as his address for the particular case in
which he entered his appearance, would be to sanction the service of court
processes and orders on counsel wherever he may have an office.
[45]

The Court is even more concerned with the Resolution of the NLRC
dated May 29, 1996 increasing the number of awardees from 28 to 131
which was apparently based only on the list of remitted SSS
contributions as of 1990 when it is an undisputed fact that only 28
employees submitted their affidavits and evidence of employment
before the Labor Arbiter.
Be that as it may, such concerns cannot be raised and resolved in a
petition for annulment of judgment before the Court of Appeals or in the
instant petition for review. They are proper questions for resolution in the
petition for certiorari before the First Division of this Court (G.R. No. 126428)
should it decide to reinstate the petition, upon proper showing that the subject
Resolution was indeed sent to an incorrect address without the fault of
petitioners but which unduly deprived petitioners of opportunity to present their
case.
Consequently, it is likewise not within the jurisdiction of this Court in the
present petition to act on private respondents motion for remand of the
records and for the issuance of an order directing the Labor Arbiter to issue a
writ of execution.
WHEREFORE, the petition for review on certiorari is DENIED for lack of
merit but without prejudice to a more appropriate remedy, if any.
SO ORDERED.

THIRD DIVISION

[G.R. No. 134895. June 19, 2001]

STA. LUCIA REALTY and DEVELOPMENT, INC., NEW NORTH

FAIRVIEW DEVELOPMENT CORP., DBH DEVELOPMENT CORP.
and ACL DEVELOPMENT CORP., petitioners, vs. LETICIA
CABRIGAS and MIGUEL CABRIGAS, respondents.
DECISION
GONZAGA-REYES, J.:

Assailed in this petition for review is the 31 July 1998 Decision of the Court of
Appeals in CA-G.R. SP No. 47601, affirming the 22 September 1997 and 24 February
1998 Orders of the Regional Trial Court of Quezon City, Branch 221, in Civil Case
No. Q94-19651.
The main point of contention in the instant case is whether or not a judgment
rendered by a trial court in an action for reconstitution may serve to bar an action for
quieting of title pending before another court based upon the principle of res judicata.
The factual antecedents of this controversy, as culled from the pleadings of the
parties and the assailed decision of the appellate court, are as follows:
On 5 February 1993, private respondents Leticia and Miguel Cabrigas filed a
petition with the Regional Trial Court (RTC) of Quezon City for the judicial
reconstitution of the originals of Transfer Certificates of Title (TCT) Nos. 259042 and
259043 of the Registry of Deeds of Quezon City, which were destroyed by the fire
that gutted the Quezon City Hall on 11 June 1988. These certificates of title allegedly
covered Lots 781 and 787 of the Tala Estate. The petition was docketed as LCR Case
No. Q-60161(93) and raffled to Branch 94, presided by Judge Romeo Zamora. In
support of their petition, private respondents presented a photocopy of their owners
duplicate of the transfer certificates of title, together with tax declarations in the name
of private respondent Leticia Cabrigas corresponding to the land in dispute. It was
alleged by private respondent Leticia Cabrigas that she bought the two parcels of land
from her father, Ludovico Cajilig, who held such properties under TCT Nos. 180458
and 180459.

The Republic of the Philippines and petitioners opposed the petition for
reconstitution primarily on the ground that TCT Nos. 259042 and 259043 were
spurious and fabricated, offering an extensive amount of evidence on this point. In
addition, an existing transfer certificate of title covering the disputed parcels of land
(TCT No. 233694) was presented by petitioners, which they traced to TCT No.
200519 issued on 19 July 1974 to B.C. Regalado and Co., Inc., predecessor-in-interest
of petitioners, covering over four million square meters. When the land was
subdivided, TCT No. 200519 was cancelled and thousands of new certificates of title
were issued, including TCT No. 233694. According to the oppositors, TCT No.
233694 covers 166 road lots, thirteen of which fall within the area formerly
encompassed by Lots 781 and 787 of the Tala Estate under TCT No. 200159.[1]
On 7 March 1994, during the pendency of LCR Case No. Q-60161(93), private
respondents filed with the RTC of Quezon City a complaint for quieting of title
against petitioners and the Register of Deeds of Quezon City, which was docketed as
Civil Case No. Q94-19651 and assigned to Branch 221, presided by Judge Noel J.
Tijam.
Meanwhile, a decision was rendered by Judge Zamora in LCR Case No. Q60161(93) on 30 September 1996, dismissing the petition for reconstitution. The trial
court held that it did not acquire jurisdiction to hear and decide the case due to
petitioners failure to comply with certain mandatory and jurisdictional requirements
under Republic Act No. 26 (RA 26). Aside from this, the trial court found that, based
upon the evidence presented by the oppositors, the titles presented by private
respondents were not authentic and that the disputed property is covered by subsisting
titles in the names of other persons which should first be annulled before the court
could proceed with the reconstitution proceedings. The decision, which became final
and executory, provided that
Anent the issued [sic] of jurisdiction, Republic Act No. 26 (1946), entitled An Act
Providing a Special Procedure for the Reconstitution of Torrens Certificate of Title
Lost or Destroyed, which was the basis of the petitioners for the constitution [sic],
confers jurisdiction or authority on the Regional Trial Court to hear and decide
petitions for judicial reconstitution. It provides that [a] petition for reconstitution
must allege certain specific jurisdictional facts before the Court can acquire
jurisdiction. The requirements and procedures under RA 26 are mandatory and
jurisdictional, (Ortigas vs Company Limited Partnership vs Judge Tirso Velasco, Et.,
Al. (234 SCRA 455)). If these requirements are not strictly complied with, the
proceedings will be utterly void (Director of Lands vs. CA, 102 SCRA 370). The law
provides the following requirements:
Sections 12 and 13 of Republic Act No. 26 provide:

SEC. 12. Petitions for reconstitution from sources enumerated in Sections 2 (c), 2
(d), 2 (e), 2 (f), 3 (c), 3 (d), 3 (e), and or 3 (f) of this Act, shall be filed with the proper
Court of First Instance, by the registered owner, his assigns or any person having an
interest in the property. The petition shall state or contain, among others, the
following: (a) that the owners duplicate of the certificate of title had been lost or
destroyed; (b) that no co-owners, mortgagees or lessees duplicate had been issued,
or if any had been issued, the same had been lost or destroyed; (c) the location area
and boundaries of the property; (d) the nature and description of the building or
improvement, if any, which do not belong to the owners of such buildings or
improvements; (e) the names and addresses of the occupants or persons in possession
of the property, of the owners of the adjoining properties and of all persons who may
have any interest in the property; [(f) a detailed description of the encumbrances, if
any, affecting the property;] and (g) a statement that no deeds or other instruments
affecting the property have been presented for registration, or [if] there be [any, the
registration thereof has not been] accomplished, as yet. All the documents, or
authenticated copies thereof, to x x x [sic] [be] introduced in evidence in support x x
x [sic] [of] the petition for reconstitution shall be attached thereto and filed with the
same; Provided, That in case the reconstitution is to be made exclusively from
sources enumerated in Section 2 (f) or 3 (f) of this Act, the petition shall be further
accompanied with a plan and technical description of the property duly approved by
the Chief of the General Land Registration Office (now Commission of Land
Registration) or with a certified copy of the description taken from a prior certificate
covering the same property.
Sec. 13. The Court shall cause a notice of the petition, filed under the preceding
section, to be published, at the expense of the petitioner, twice in successive issues of
the Official Gazette, and to be posted on the main entrance of the municipality or city
in which the land is situated, at the provincial building and of the municipal building
at least thirty days prior to the date of hearing. The Court shall likewise cause a copy
of the notice to be sent, by registered mail or otherwise, at the expense of the
petitioner, to every person named therein whose address is known, at least thirty days
prior to the date of hearing. Said notice shall state, among other things, the number of
the lost or destroyed certificate of title, if known, the name of the registered owner,
the names of the occupants or persons in possession of the property, the owners of the
adjoining properties and all other interested parties, the location, area and boundaries
of the property, and the date on which, all persons having any interest therein must
appear and filed [sic] their claim or objection[s] to the petition. The petitioner shall at
the hearing, submit proof of the publication, posting and service of the notice as
directed by the Court.

Petitioner did not allege the following: (a) the nature and description of the buildings
or improvements, if any, which do not belong to the owner of the lot like the roads,
sewer lines, drainage, club house, and other subdivision amenities introduced by
intervenors; (b) the names and addresses of the occupants or persons in possession of
the property, of the owners of the adjoining properties, and of all persons who may
have interest in the property, particularly the buyers of the different subdivision lots;
and (c) a statement that no deeds or other instruments affecting the property have been
registered. There was no approved plan and technical description with a certified
copy with the description taken from a prior certificate of title covering the same
property. Although the plan submitted by the petitioners was signed by the private
surveyor, there was no seal of approval from any government agency. These
omissions delve into the acquisition of jurisdiction by the Court, furthermore, Sec. 5,
RA No. 26 (as amended) provides:
The petition shall be accompanied with the necessary sources for reconstitution and
with an affidavit of the registered owner stating, among other things:
(1) That no deed or other instrument affecting the property had been presented for
registration, of if there be any, the nature thereof, the date of its presentation, as well
as the names of the parties, and whether the registration of such deed or instrument is
still pending accomplishment;
(2) That the owners duplicate certificate or co-owners duplicate is in due form
without any apparent intention[al] alternation[s] or erasures;
(3) That the certificate of title is not the subject of litigation or investigation,
administrative or judicial, regarding its genuineness or due execution or issuance;
(4) That the certificate of title was in full force and effect at the time it was lost or
destroyed;
(5) That the certificate of title is covered by a tax declaration regularly issued by the
Assessors Office and;
(6) That real estate taxes have been fully paid up to at least two (2) years prior to the
filing of the petition for reconstitution.
such that even assuming arguendo that the titles are valid and authentic the petition
would still be inadequate. The petition is not accompanied by the affidavit required in
this provision. The verification of the petition made by Leticia Cabrigas would not
suffice because it does not contain the following: (a) that no deed or other instrument
affecting the property had been presented for registration; (b) that the owners

duplicate certificate is in due form without any apparent intentional alternations or

erasures; (c) that the certificate of title is not the subject of litigation or investigation,
administrative or judicial, regarding its genuineness or due execution or issuance and
(d) that the real estate taxes have been fully paid up to the last two years prior to the
filing or the petition for reconstitution.
There is also the fact that there was a defect in the notice of hearing and posting. Sec.
13 of RA No. 26 requires notice to be sent to the individual title holders and the
Supreme Court has also ruled that actual notice of the petition must be sent to the
registered owners of the property affected as notice by publication is not enough
(Manila Railroad & Co., Inc. vs Moya, 14 SCRA 358, 363, 364). The petitioners did
not comply with these jurisdictional facts which is mandatory (Ortigas vs. Judge
Velasco, supra). As to the posting of the notice of hearing, Sec. 3 (e); 3 (f) and 13 of
the law require that it be posted in the entrance of the city or municipal hall. The
Certificate of Posting dated March 15, 1993 was posted only on the courts bulletin
board, the sheriffs wall, and at the Barangay Hall as can be read from the very
wording of the Certificate. The aforementioned case of Tahanan vs CA, (118 SCRA
273) teaches us that such defect is fatal to the acquisition of jurisdiction by the court.
Lastly, another important point which is relevant to the determination of whether or
not the petition should be granted is the fact that the disputed property is covered by
subsisting titles in the names of other persons. As was mentioned earlier in the facts
of the case, intervenors and the lot buyers of Neopolitan Subdivision hold torrens
titles to lands which petitioners titles purport to cover this being the case, the Court
could not proceed with the reconstitution proceedings without the titles of these
buyers having [sic] first annulled.
In such a case, this Court is without jurisdiction to grant the petition. As was held in
the case of Alabang Development Co. vs Valenzuela (116 SCRA 261), The courts
simply have no jurisdiction over petitions by such third parties for reconstitution of
allegedly lost or destroyed titles over lands that are already covered by duly issued
subsisting titles in the names of their duly registered owners. (see also Ortigas vs
Judge Velasco, Et. Al., supra)
The court is mindful of the pronouncement of the Supreme Court in the case of
Director of Lands vs CA (93 SCRA 238) which states that:
This Tribunal can take judicial notice of innumerable litigations and [legal]
controversies spawned by overlapping and encroaching boundaries, each party relying
on certificates of titles issued under the Torrens [S]ystem or the Spanish registration
laws or other deeds and documents which prima facie show their lawful interests or
ownership therein. To the ordinary land purchaser not fully acquainted with the

intricacies of the law nor the validity much less the authenticity of these instruments
which in many instances are found to be forged or simply reconstituted with areas that
have x x x increased in table surveys with the cooperation of unscrupulous
officials, the courts by hastily stamping their approval on reconstituted titles have
wittingly or unwittingly aided and abetted these fraudulent transactions resulting in
the wiping out of the lifesaving[s] of many [a] poor, unlettered and inexperienced lot
buyer. The court must guard against such haste and carefully take due precautions
that the public [interest] be protected.
WHEREFORE, in view of the foregoing considerations, the instant petition for
reconstitution is hereby DISMISSED.
So Ordered.[2]
Petitioners filed a Supplemental Answer in Civil Case No. Q94-19651 alleging
that the instant proceedings were barred by the 30 September 1996 Decision in LCR
Case No. Q-60161(93). The trial court admitted petitioners supplemental answer and
treated it as a motion to dismiss. Petitioners then filed a motion asking for a
preliminary hearing on its affirmative defense of res judicata.
In the meantime, private respondents filed a second petition for the reconstitution
of TCT Nos. 259042 and 259043 with the Regional Trial Court of Quezon City. The
case was docketed as LRC Case No. Q-8734(96) and assigned to Branch 81.
Petitioners North Fairview Development Corp. and DBH Development Corp. filed a
motion to dismiss the petition based upon res judicata, which was granted by the trial
court in its resolution of 23 February 1998. Private respondents filed a motion for
reconsideration, asking the trial court to reconsider its order of dismissal, but this was
denied on 28 May 1998. The case was elevated to the Court of Appeals by private
respondents, where it was docketed as CA G.R. No. 59735, and is currently pending.
Coming back to Civil Case No. Q94-19651, on 22 September 1997, the trial court
issued its Order denying petitioners prayer for the dismissal of the case since not all
the elements of res judicata were present. It held that the reconstitution case [LCR
Case No. Q-60161 (93)] and the action for quieting of title [Civil Case No. Q9419651] involved different causes of action. Also, Judge Tijam declared that the trial
court (Branch 94) never acquired jurisdiction over the reconstitution case due to the
failure of private respondents to comply with certain jurisdictional requirements.
Petitioners filed a motion for reconsideration, but this was denied in the trial courts
order dated 24 February 1998.[3]
Thus, petitioners filed a petition for certiorari under Rule 65 with the Court of
Appeals, questioning the trial courts 22 September 1997 and 24 February 1998 orders
in Civil Case No. Q94-19651. The petition was docketed as CA-G.R. SP No. 47601.

Petitioner asked the Court of Appeals to dismiss the action for quieting of title based
on two grounds, namely that (1) it is barred by the final and executory decision
rendered in the reconstitution case [LCR Case No. Q-60161(93)] finding that private
respondents titles are fabricated; and that (2) private respondents were engaged in
forum-shopping when they filed the two reconstitution cases and the action for
quieting of title, with the ultimate objective of confirming their titles over Lots 781
and 787.[4]
On 31 July 1998, the Court of Appeals[5] promulgated its decision[6] dismissing the
petition, thus affirming the assailed orders of the trial court. It explained that res
judicata did not exist since the trial court (Branch 94) in LCR Case No. Q-60161(93),
by its own admission, never acquired jurisdiction over the subject matter of the
case. Consequently, the trial courts factual findings pertaining to the authenticity of
TCT Nos. 259042 and 259043 cannot be invoked as a bar to the action for quieting of
title. Moreover, the reconstitution case and quieting of title case involve different
causes of action, such that a decision in the former will not serve to bar the
latter. Finally, the Court of Appeals held that private respondents are not liable for
forum-shopping. The pertinent portions of the appellate courts decision are
reproduced hereunder:
The Supreme Court, in the case of Ortigas & Company Limited Partnership v
Velasco (234 SCRA 455), ruled that the requisites to be met embodied in Republic
Act No. 26 entitled An Act Providing a Special Procedure for the Reconstitution of
Torrens Certificate of Title Lost or Destroyed, in order that the Court can acquire
competence to act on a petition for reconstitution of title and grant the appropriate
remedy, are mandatory and jurisdictional (p. 482). Failure to comply with these
requisites, as has happened in the first reconstitution case filed by private respondents
herein, results in the failure of the trial court to acquire jurisdiction over the nature or
subject matter of the case, as acknowledged by the trial court in the aforequoted
portion of the decision in the first reconstitution case (Ortigas & Company Limited
Partnership v. Velasco, supra, p. 485).
Since the trial court in the first reconstitution case did not acquire jurisdiction over the
nature or subject matter of the petition, it therefore follows that its factual finding that
the owners duplicate of Transfer Certificates of Title Nos. 259042 and 259043 are
fake, is a nullity (Leonor v. Court of Appeals, 256 SCRA 69, 82) and cannot therefore
be invoked as a bar to the quieting of title case.
Per Section 47 (b), Rule 39 of the 1997 Rules of Civil Procedure, for judgment in a
prior case to be considered a bar on a subsequent case, the court which rendered it
must have jurisdiction. In Mendiola v Court of Appeals, 258 SCRA 492), the
Supreme Court ruled:

There are four (4) essential requisites which must concur in order for res judicata as a
bar by former judgment to attach, viz:
1. The former judgment must be final;
2. It must have been rendered by a court having jurisdiction over the subject
matter and the parties;
3. It must be a judgment or order on the merits; and
4. There must be between the first and second action identity of parties, identity of
subject matter and identity of causes of action. (p. 499-500, Underscoring Supplied)
The trial court in the first reconstitution case acknowledged that it did not acquire
jurisdiction over the subject matter of the petition (p. 10 of Decision in LRC CASE
No. Q-60161 (93). Its disquisition on the spuriousness of the owners duplicate of
Transfer Certificate of Titles Nos. 259042 and 259043 is at best an obiter dictum
which petitioners cannot invoke as a bar to the quieting of title case.
Obiter dictum simply means words of a prior opinion entirely unnecessary for the
decision of the case (Blacks Law Dictionary, p. 1222, citing the case of Noel v.
Olds, 78 U.S. App. D.C. 155) or an incidental and collateral opinion uttered by a
judge and therefore not material to his decision or judgment and not binding
(Websters Third New International Dictionary, p. 1555).
Moreover, since the first reconstitution case and quieting of title case are entirely
different cause of action, the decision in the former case will not bar the latter.
Anent the issue of whether or not private respondents were forum shopping when they
filed the three separate cases, viz, the first reconstitution case that was dismissed for
want of jurisdiction, the quieting of title case and the second reconstitution case, the
Court finds that the quieting of title case can exist separately from the reconstitution
case because each has different legal consequences. In the quieting of title case,
private respondents ownership over Lots 781 and 787 of the Tala Estate can be
affirmed and they can ask for the cancellation of petitioners title thereon. In the
reconstitution case, private respondents can only ask for the reconstitution of
documents that were already lost or destroyed, viz, the original copies of Transfer
Certificates of Title Nos. 259042 and 259043, but the trial court cannot confirm nor
adjudicate ownership over the property they cover (Serra Serra vs Court of Appeals,
195 SCRA 482, 490).

The above premises considered, the Court finds that the issuance of the assailed orders
were not attended by grave abuse of discretion. Simply put, petitioners cannot invoke
an obiter in a prior judgment as a bar to the quieting of title case, and a reconstitution
case can exist separately from a quieting of title case. Consequently, the instant
petition for certiorari must be denied.
WHEREFORE, the petition for certiorari is hereby DISMISSED, for lack of merit.
SO ORDERED.[7]
Thus, the present petition. After the submission of a surety bond in the amount of
P100,000.00 and the necessary supporting documents showing the solvency and good
repute of the bonding company as well as the sufficiency of the bond, the Court
granted a temporary restraining order on 23 November 1998 enjoining the Presiding
Judge of Branch 221 of the RTC of Quezon City from hearing Civil Case No. Q9419651 during the pendency of the instant petition and until further orders from this
Court.[8]
Basically, petitioners insist that the findings of Judge Zamora in his 30 September
1996 Decision in LCR Case No. Q-60161(93) with regard to the lack of authenticity
of private respondents titles should bar the re-litigation of the same issue in the action
for quieting of title on the principle of res judicata in the concept of conclusiveness of
judgment. In both the reconstitution proceedings and in the action for quieting of title,
the existence and authenticity of the private respondents titles were raised as issues;
thus, when such issue was judicially passed upon and determined by Branch 94 in the
reconstitution proceedings, that point should be deemed as having been conclusively
settled by such judgment insofar as the parties herein and their privies are concerned.
Since Branch 94 found that private respondents titles were fabricated, it follows that
the action for quieting of title has no more leg to stand on.
It is argued by petitioners that private respondents are estopped from claiming that
Branch 94 had no jurisdiction over the reconstitution proceedings for non-compliance
with certain requirements under RA 26 since private respondents actively participated
in the proceedings, during the pendency of which they continuously asserted the
jurisdiction of the trial court and the fact of their compliance with the provisions of
the said law. Moreover, the alleged lack of jurisdiction was caused by private
respondents own fault their failure to comply with the provisions of RA 26.
Petitioners also argue that jurisdiction has been acquired over private respondents by
Branch 94 by means of private respondents act of filing the petition for
reconstitution.
According to petitioners, even assuming that Branch 94 had no jurisdiction to
order the reconstitution of private respondents titles due to a lack of compliance with

some mandatory provisions of RA 26, it still retained the jurisdiction to declare as

fabricated the titles of private respondents, citing Ortigas & Co. Ltd. v.
Velasco,[9] Director of Lands v. Sta. Maria,[10] Alabang Development Corp. v.
Valenzuela,[11] and Tahanan Development Corp. v. Court of Appeals,[12] wherein the
Court declared as fake the titles sought to be reconstituted, despite the fact that the
lower courts were pronounced to be without jurisdiction to grant the petition for
failure of the petitioners therein to observe the jurisdictional requirements of RA 26.
Petitioners argue that private respondents are liable for forum-shopping when
they instituted the action for quieting of title during the pendency of LCR Case No. Q60161(93), and when they filed yet another petition for reconstitution [LCR Case No.
8734(96)], involving the very same titles, during the pendency of the action for
quieting of title.[13]
On the other hand, private respondents insist that petitioners motion for a
preliminary hearing on their affirmative defense of res judicata filed in Civil Case No.
Q94-19651 should have been denied by Judge Tijam for being filed out of time since
trial was already on-going at the time it was filed. Also, it is contended that the special
civil action for certiorari under Rule 65 filed by petitioners with the Court of Appeals
assailing the 22 September 1997 and 24 February 1998 orders of Branch 221 was
erroneously resorted to as there was no showing that Judge Tijam had acted without or
with grave abuse of discretion amounting to lack of jurisdiction in denying
petitioners motions. Private respondents would also have the Court dismiss the
instant petition for the failure of petitioners to file a motion for reconsideration from
the 31 July 1998 Decision of the Court of Appeals in CA-G.R. SP No. 47601.
As to the issue of res judicata, private respondents assert that the judgment
rendered in LCR Case No. Q-60161(93) will not bar Civil Case No. Q94-19651 since
certain elements of res judicata are absent. First of all, Branch 94 had no jurisdiction
over the subject matter of the case. Secondly, there is no identity of subject matter as
the petitioners title is fictitious and hence, could not refer to the properties covered by
private respondents titles. Finally, the two cases have different causes of action. [14]
After considering the arguments of both parties and assiduously studying the
records of this case, it is the Courts opinion that the present petition is not imbued
with merit.
Simply stated, the main issue in this case is whether the 30 September 1996
decision of the trial court in LCR Case No. Q-60161(93) will bar by res judicata the
action for quieting of title initiated by private respondents. The doctrine of res
judicata comprehends two distinct concepts - (1) bar by former judgment and (2)
conclusiveness of judgment. For res judicata to serve as an absolute bar to a
subsequent action, the following requisites must concur: (1) the former judgment or
order must be final; (2) the judgment or order must be on the merits; (3) it must have

been rendered by a court having jurisdiction over the subject matter and parties; and
(4) there must be between the first and second actions, identity of parties, of subject
matter, and of causes of action.[15] When there is no identity of causes of action, but
only an identity of issues, there exists res judicata in the concept of conclusiveness of
judgment.[16] Although it does not have the same effect as res judicata in the form of
bar by former judgment which prohibits the prosecution of a second action upon the
same claim, demand, or cause of action, the rule on conclusiveness of judgment bars
the relitigation of particular facts or issues in another litigation between the same
parties on a different claim or cause of action.[17]
Petitioners would have this Court rule that, based on the principle on
conclusiveness of judgment, the declarations made by the trial court in LCR Case No.
Q-60161(93) regarding the lack of authenticity of private respondents titles are
binding upon the parties and accordingly, that this particular issue may no longer be
litigated in the action for quieting of title. On the other hand, private respondents
maintain that there can be no res judicata since Branch 94 had no jurisdiction over the
subject matter due to the non-compliance with certain mandatory provisions of RA
26, and in addition, there was no identity of subject matter and cause of action
between the two cases. In its assailed decision, the Court of Appeals concurred with
the position taken by private respondents. It ruled that there was no res
judicata as the trial court never acquired jurisdiction over the nature or subject matter
of the case since sections 5, 12 and 13 of RA 26, all of which have been held to be
mandatory and jurisdictional provisions by this Court, were not complied with in LCR
Case No. Q-60161(93). In its pleadings, petitioners argue that private respondents
should be considered estopped from denying that Branch 94 had jurisdiction over the
petition for reconstitution since it is due to private respondents own fault that the trial
court failed to acquire jurisdiction, and also because private respondents actively
participated in the reconstitution proceedings and sought affirmative relief from the
trial court.
Republic Act No. 26,[18] entitled An Act Providing a Special Procedure for the
Reconstitution of Torrens Certificates of Title Lost or Destroyed, as amended, [19] is a
special law which provides for a specific procedure for the reconstitution of Torrens
certificates of title lost or destroyed.[20] It confers jurisdiction upon trial courts to hear
and decide petitions for judicial reconstitution. However, before the court can
properly act, assume and acquire jurisdiction or authority over the petition and grant
the reconstitution prayed for, petitioner must observe certain special requirements and
mode of procedure prescribed by the law. Some of these requirements, having to do
with the contents of the petition for reconstitution and notice, are as follows
Sec. 12. Petitions for reconstitution from sources enumerated in sections 2(c), 2(d),
2(e), 2(f), 3(c), 3(d), 3(e) and/or 3(f) of this Act, shall be filed with the proper Court of

First Instance, by the registered owner, his assigns, or any person having an interest in
the property. The petition shall state or contain, among other things, the following: (a)
that the owner's duplicate of the certificate of title had been lost or destroyed; (b) that
no co-owner's mortgagee's or lessee's duplicate had been issued, or, if any had been
issued, the same had been lost or destroyed; (c) the location, area and boundaries of
the property; (d) the nature and description of the buildings or improvements, if any,
which do not belong to the owner of the land, and the names and addresses of the
owners of such buildings or improvements; (e) the names and addresses of the
occupants or persons in possession of the property, of the owners of the adjoining
properties and all persons who may have any interest in the property; (f) a detailed
description of the encumbrances, if any, affecting the property; and (g) a statement
that no deeds or other instruments affecting the property have been presented for
registration, or, if there be any, the registration thereof has not been accomplished, as
yet. All the documents, or authenticated copies thereof, to be introduced in evidence
in support of the petition for reconstitution shall be attached thereto and filed with the
same: Provided, That in case the reconstitution is to be made exclusively from sources
enumerated in section 2(f) of 3(f) of this Act, the petition shall be further be
accompanied with a plan and technical description of the property duly approved by
the Chief of the General Land Registration Office, or with a certified copy of the
description taken from a prior certificate of title covering the same property.
Sec. 13. The court shall cause a notice of the petition, filed under the preceding
section, to be published, at the expense of the petitioner, twice in successive issues of
the Official Gazette, and to be posted on the main entrance of the provincial building
and of the municipal building of the municipality or city in which the land is situated,
at least thirty days prior to the date of hearing. The court shall likewise cause a copy
of the notice to be sent, by registered mail or otherwise, at the expense of the
petitioner, to every person named therein whose address is known, at least thirty days
prior to the date of hearing. Said notice shall state, among other things, the number of
the lost or destroyed certificate of title, if known, the name of the registered owner,
the names of the occupants or persons in possession of the property, the owners of the
adjoining properties and all other interested parties, the location, area and boundaries
of the property, and the date on which all persons having any interest therein must
appear and file their claim or objections to the petition. The petitioner shall, at the
hearing, submit proof of the publication, posting and service of the notice as directed
by the court.
In numerous cases, the Supreme Court has held that compliance with these
provisions are mandatory and jurisdictional.[21] The failure to comply therewith
deprives the trial court of jurisdiction over the subject matter or nature of the case, and
consequently, all its proceedings are rendered null and void. [22] The rationale

underlying this rule concerns the nature of the conferment in the trial court of the
authority to undertake reconstitution proceedings. In all cases where the authority to
proceed is conferred by a statute and the manner of obtaining jurisdiction is
mandatory, the same must be strictly complied with, or the proceedings will be utterly
void.[23]
In the case at bar, it was found by the trial court in its 30 September 1996 decision
in LCR Case No. Q-60161(93) that private respondents failed to comply with both
sections 12 and 13 of RA 26 and therefore, it had no jurisdiction over the subject
matter of the case. However, private respondents never questioned the trial courts
jurisdiction over its petition for reconstitution throughout the duration of LCR Case
No. Q-60161(93). On the contrary, private respondents actively participated in the
reconstitution proceedings by filing pleadings and presenting its evidence. They
invoked the trial courts jurisdiction in order to obtain affirmative relief the
reconstitution of their titles. Private respondents have thus foreclosed their right to
raise the issue of jurisdiction by their own actions.
The Court has constantly upheld the doctrine that while jurisdiction may be
assailed at any stage, a litigants participation in all stages of the case before the trial
court, including the invocation of its authority in asking for affirmative relief, bars
such party from challenging the courts jurisdiction. [24] A party cannot invoke the
jurisdiction of a court to secure affirmative relief against his opponent and after
obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction.[25] The Court frowns upon the undesirable practice of a party participating
in the proceedings and submitting his case for decision and then accepting judgment,
only if favorable, and attacking it for lack of jurisdiction, when adverse. [26]
However, despite our foregoing ruling, the Court is still precluded from declaring
the existence of res judicata, in any of its two forms, since one essential requisite is
absent a judgment on the merits. Citing Escarte v. Office of the President,[27] the
Court defined judgment on the merits in the 1994 case of Allied Banking
Corporation v. Court of Appeals[28] x x x As a technical legal term, merits has been defined in law dictionaries as a
matter of substance in law, as distinguished from matter of form, and as the real or
substantial grounds of action or defense, in contradistinction to some technical or
collateral matter raised in the course of the suit. A judgment is upon the merits when it
amounts to a declaration of the law to the respective rights and duties of the parties,
based upon the ultimate fact or state of facts disclosed by the pleadings and evidence,
and upon which the right of recovery depends, irrespective of formal, technical or
dilatory objectives or contentions.
Meanwhile, in Diwa v. Donato,[29] we held that

A judgment on the merits is one rendered after argument and investigation, and when
there is determination which party is right, as distinguished from a judgment rendered
upon some preliminary or formal or merely technical point, or by default and without
trial. By no stretch of the imagination can our Resolution of September 20, 1989 be
considered a judgment on the merits. All it resolved is the issue of the proper action
that petitioners should file in light of the allegations of their Complaint. We ruled that
they should file an action for specific performance and not an action for
interpleader. Only after the filing of the proper action can the substantive rights of the
parties be adjudicated. Needless to state, we did not adjudicate the substantive rights
of the parties in our Resolution of September 20, 1989.
Thus, a judgment on the merits is one wherein there is an unequivocal
determination of the rights and obligations of the parties with respect to the causes of
action and the subject matter of the case.[30]Clearly, a judgment dismissing an action
for want of jurisdiction cannot operate as res judicata on the merits.[31] Coming to the
case at bar, it is apparent that the trial courts 30 September 1996 Decision in LCR
Case No. Q-60161(93) dismissing the petition for reconstitution was mainly premised
upon its lack of jurisdiction over the subject matter of the case due to the lack of
substantial compliance of private respondents with Sections 5, 12 and 13 of RA
26. In plain and simple language, the trial court explicitly declared that the provisions
of RA 26 are mandatory and jurisdictional, and that it had not acquired jurisdiction
over the case since private respondents failed to comply therewith. Proceeding from
such declarations, it must be presumed, therefore, that Judge Zamora, being cognizant
of the well-entrenched doctrine that absent jurisdiction the court cannot pass upon the
merits of a case,[32] did not intend to adjudicate the substantive aspects of the petition.
For a court to declare that it has no jurisdiction and at the same time to pass upon the
merits of the case contravenes all legal and practical reasoning. Thus, Judge
Zamoras discussions on the existence and authenticity of private respondents
certificates of titles were superfluous, a mere obiter dictum. Such statements do not
change the fact that the petition for reconstitution was dismissed upon a matter of
procedure the courts lack of jurisdiction.
Therefore, as there is no judgment on the merits, neither can there be a finding
of res judicata so as to bar the action for quieting of title. This being the case, there is
no more need to determine whether LCR Case No. Q-60161(93) and Civil Case No.
Q94-19651 share the same causes of action or issues.
As to the second petition for reconstitution of TCT Nos. 259042 and 259043
[LCR Case No. Q-8734(96)] filed by private respondents during the pendency of the
action for quieting of title, the trial court, acting upon a motion filed by petitioners
North Fairview Development Corp. and DBH Development Corp., has already
dismissed the same based on res judicata in its orders issued on 23 February 1998 and

28 May 1998. Such orders are currently being reconsidered by the Court of Appeals
in CA-G.R. No. 59735. Considering these procedural antecedents, it would be
premature for the Court to determine whether or not LCR Case No. Q-8734(96)
should be dismissed. The better option would be to wait for the resolution of CA-G.R.
No. 59735 so as to avoid multiplicity of suits and the possibility of conflicting
decisions.
WHEREFORE, based the foregoing, the petition for review is hereby DENIED.
SO ORDERED.

THIRD DIVISION

[G.R. No. 148267. August 8, 2002]

ARMANDO
C.
CARPIO, petitioner,
vs. SULU
DEVELOPMENT CORPORATION, respondent.

RESOURCES

DECISION
PANGANIBAN, J.:

Decisions and final orders of the Mines Adjudication Board (MAB) are
appealable to the Court of Appeals under Rule 43 of the 1997 Rules of Court.
Although not expresslyincluded in the Rule, the MAB is unquestionably a
quasi-judicial agency and stands in the same category as those enumerated
in its provisions.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, challenging the August 31, 2000 Decision and May 3, 2001
Resolution of the Court of Appeals (CA) in CA-GR SP No. 46830. The
Assailed Decision disposed as follows:
[1]

[2]

WHEREFORE, premises considered, the petition for review is hereby DENIED.

[3]

Reconsideration was denied in the assailed Resolution.

The Facts
In the challenged Decision, the CA summarized the facts of this case as
follows:
This case originated from a petition filed by respondent [Sulu Resources
Development Corporation] for Mines Production Sharing Agreement (MPSA) No.
MPSA-IV-131, covering certain areas in Antipolo, Rizal. Petitioner [Armando C.
Carpio] filed an opposition/adverse claim thereto, alleging, inter alia, that his
landholdings in Cupang and Antipolo, Rizal will be covered by respondents claim,
thus he enjoys a preferential right to explore and extract the quarry resources on his
properties.
After due proceedings were held, the Panel of Arbitrators of the Mines and GeoSciences Bureau of the DENR rendered a Resolution dated September 26, 1996,
upholding petitioners opposition/adverse claim. This dispositive portion of said
Resolution reads:
x x x. WHEREFORE, the opposition/adverse claims of ARMANDO C. CARPIO is
hereby UPHELD. Accordingly, the properties of CARPIO are ordered excluded from
the area of PMPSA-IV-131 of SULU RESOURCES DEVELOPMENT
CORPORATION, and the area not covered by the adverse claim as subject to mining
locations in accordance with existing laws, rules and regulations.
SO ORDERED.
Respondent appealed the foregoing Resolution to the Mines Adjudication Board.
Meanwhile, petitioner filed a motion to dismiss appeal on the ground of respondents
failure to comply with the requirements of the New Mining Acts Implementing Rules
and Regulations.
On June 20, 1997, the Mines Adjudication Board rendered the assailed Order
dismissing petitioners opposition/adverse claim. The dispositive portion of the
assailed Order provides:
WHEREFORE, in view of the foregoing premises, this Resolution of the Panel of
Arbitrators of Region IV dated September 26, 1996, is hereby SET ASIDE and the
adverse claim/opposition of CARPIO DISMISSED. Accordingly, the PMSPA of

SULU should be given due process and evaluated subject to the pertinent provisions
of RA 7942 and DAO 96-40.
SO ORDERED.
Petitioner filed a motion for reconsideration of said Order which was denied by the
Board per Order dated November 24, 1997, the decretal portion of which provides:
WHEREFORE, the Motion for Reconsideration is hereby DENIED for lack of
merit.
[4]

Ruling of the Court of Appeals

Citing Section 79 of Chapter XIII of the Philippine Mining Act of 1995 (RA
7942), the CA ruled that it did not have jurisdiction to review the Decision of
the Mines Adjudication Board (MAB). The adjudication of conflicting mining
claims is completely administrative in nature, as held in Pearson v.
Intermediate Appellate Court. Under RA 7942, the settlement of disputes
involving rights to mining areas, mineral agreements, and surface owners,
occupants and claimholders/concessionaires shall pertain exclusively to a
Panel of Arbitrators in the regional office of the Department of Environment
and Natural Resources, whose decisions are appealable to the Mines
Adjudication Board. Under Section 79 of RA 7942, the findings of fact by the
MAB as well as its decision or order shall be final and executory.
[5]

Inasmuch as the issue raised by petitioner relates to whether an overlap or

a conflict between his properties and the area covered by the application of
respondent has been proven, MABs finding thereon was binding and
conclusive, and the Boards Decision was already final and executory.
Hence, this Petition.

[6]

Issue
In his Memorandum, petitioner raises this sole issue for our consideration:
Whether or not appeals from the Decision or Final Orders of the Mines
Adjudication Board should be made directly to the Supreme Court as contended by
the respondent and the Court of Appeals, or such appeals be first made to the Court of
Appeals as contended by herein petitioner.
[7]

This Courts Ruling

The Petition is meritorious.
Sole Issue:
Appellate Jurisdiction over MAB Decisions
Petitioner submits that appeals from the decisions of the MAB should be
filed with the CA. First, the Supreme Court has authority, under Section 5(5) of
Article VIII of the Philippine Constitution, to promulgate rules of procedure in
all courts, including all quasi-judicial agencies such as the
MAB. Second, Section 3 of Rule 43 of the 1997 Rules of Civil Procedure
authorizes appeals to the CA from judgments or final orders of quasi-judicial
tribunals by means of petitions for review. Third, the MAB gravely abused its
discretion in deliberately, willfully and unlawfully disregarding petitioners
rights to the land unduly included in the questioned application for a Mines
Productive Sharing Agreement (MPSA).
En contrario, the CA ruled and respondent agrees that the settlement of
disputes involving rights to mining areas and overlapping or conflicting claim is
a purely administrative matter, over which the MAB has appellate jurisdiction.
The latters factual findings, decisions and final orders on such matters are
final and executory as provided in Section 79 of Chapter XIII of the Philippine
Mining Act of 1995 and as held in Pearson v. IAC. Since the appeal of
petitioner pertains to the factual matter of whether he was able to prove the
existence of the overlap or conflict between his claimed area and that covered
by respondents application, then the findings of the MAB should be deemed
final and executory.
The CA refused to take jurisdiction over the case because, under Section
79 of the Philippine Mining Act of 1995, petitions for review of MAB decisions
are to be brought directly to the Supreme Court. The provision reads in part:
xxx

xxx

xxx

A petition for review by certiorari and question of law may be filed by the aggrieved
party with the Supreme Court within thirty (30) days from receipt of the order or
decision of the Board.
We hold that respondents reliance on Pearson is misplaced. The claimant
therein sued in the then Court of First Instance (CFI) to prevent the execution

of a Decision rendered by the panel of investigators of the Bureau of Mines

and the Office of the President. Despite a Motion to Dismiss filed by the
mining companies, the CFI ordered the creation of a committee to determine
the correct tie-point of their claims. So, the mining companies went to the then
Intermediate Appellate Court (IAC) via a Petition for Certiorari under Rule 65.
The claimants averred that the appellate court had no jurisdiction.
In the case at bar, petitioner went to the CA through a Petition for Review
on Certiorari under Rule 43, seeking a reversal of the MAB Decision. Given
the difference in the reason for and the mode of appeal, it is obvious
that Pearson is not applicable here.
Still, we can draw one lesson. Far from dismissing the case on the ground
of lack of jurisdiction, Pearson expressly held that the CA had jurisdiction over
the petition for certiorari, because Section 9 of BP Blg. 129 (The Judiciary
Reorganization Act of 1980), now incorporated in Section 4, Rule 65 of the
1997 Rules of Civil Procedure, vested the then IAC with original jurisdiction to
issue writs of certiorari and prohibition, among other auxillary writs x x x.
However, even though the Supreme Court has concurrent jurisdiction with the
CA and the Regional Trial Courts to issue a writ of mandamus, prohibition or
certiorari, litigants are well advised against taking a direct recourse to this
Court without initially seeking proper relief from the lower courts, in
accordance with the hierarchy of courts.
[8]

In Pearson, what was under review was the ruling of the CFI to take
cognizance of the case which had been earlier decided by the MAB, not the
MAB Decision itself which was promulgated by the CA under Rule 43. The
present petitioner seeks a review of the latter.
Pearson held that the nature of the primary powers granted by law to the
then secretary of agriculture and natural resources as well as to the director of
mines were executive or administrative, such as granting of license, permits,
lease and contracts[;] or approving, rejecting, reinstating or canceling
applications[;] or deciding conflicting applications. These powers should be
distinguished from litigants disagreements or controversies that are civil or
contractual in nature, which may be adjudicated only by the courts of justice.
The findings of fact of the MAB, which exercises appellate jurisdiction over
decisions or orders of the panel of arbitrators, are conclusive and binding on
the parties; its decisions or orders on these are final and executory. But
petitions for certiorari may be filed with the appropriate courts. In short, the
Court held that the appellate jurisdiction of the IAC (now the CA)
inPearson fell under Rule 65 -- not 43 -- because what was being impugned
was grave abuse of discretion on the part of the CFI.
[9]

Pearson, however, should be understood in the light of other equally

relevant jurisprudence. In Fabian v. Desierto, the Court clarified that appeals
from judgments and final orders of quasi-judicial agencies are now required to
be brought to the CA, under the requirements and conditions set forth in Rule
43. This Rule was adopted precisely to provide a uniform rule of appellate
procedure from quasi-judicial agencies.
[10]

[11]

Section 27 of RA 6770 which is similarly worded as Section 79 of the

Philippine Mining Act, was struck down by Fabian as unconstitutional,
because it had broadened the appellate jurisdiction of the Supreme Court
without its consent, in violation of Section 30 of Article VI of the
Constitution. In short, Section 27 of RA 6770 which provides that
alladministrative decisions of the Office of the Ombudsman may be appealed
to the Supreme Court, was unconstitutional.
[12]

[13]

In another case, held invalid in the light of Rule 43 of the 1997 Rules of
Court was Section 3(2) of Executive Order No. 561, which had declared that
decisions of the Commission on Settlement of Land Problems (COSLAP)
were appealable exclusively to the Supreme Court. There is no convincing
reason why appeals from the COSLAP should be treated differently from
those arising from other quasi-judicial bodies, the decisions of which are
directly appealable to the CA under Rule 43 of the 1997 Rules.
[14]

Finally, Metro Construction, Inc. v. Chat ham Properties, Inc. held that
Section 19 of Executive Order No. 1008 -- which had deemed arbitral awards
of the Construction Industry Arbitration Commission (CIAC) to be appealable
to the Supreme Court on questions of law -- was modified by Circular No. 191, Batas Pambansa Blg. 129 as amended by RA 7902, Revised
Administrative Circular 1-95, and Rule 43 of the Rules of Court.
Reiterating Fabian, the Court ruled that appeals were procedural and remedial
in nature; hence, constitutionally subject to this Courts rule-making power.
[15]

In the present case, it is claimed that a petition for review is improper

because petitioners challenge is purely factual, bearing only on the MAB
ruling that there was no overlap or conflict between the litigants claims.
We clarify. Factual controversies are usually involved in administrative
actions; and the CA is prepared to handle such issues because, unlike this
Court, it is mandated to rule on questions of fact. In Metro Construction, we
observed that not only did the CA have appellate jurisdiction over CIAC
decisions and orders, but the review of such decisions included questions of
fact and law. At the very least when factual findings of the MAB are
challenged or alleged to have been made in grave abuse of discretion as in
[16]

[17]

the present case, the CA may review them, consistent with the constitutional
duty of the judiciary.
[18]

To summarize, there are sufficient legal footings authorizing a review of

the MAB Decision under Rule 43 of the Rules of Court. First, Section 30 of
Article VI of the 1987 Constitution, mandates that [n]o law shall be passed
increasing the appellate jurisdiction of the Supreme Court as provided in this
Constitution without its advice and consent. On the other hand, Section 79 of
RA No. 7942 provides that decisions of the MAB may be reviewed by this
Court on a petition for review by certiorari. This provision is obviously an
expansion of the Courts appellate jurisdiction, an expansion to which this
Court has not consented. Indiscriminate enactment of legislation enlarging the
appellate jurisdiction of this Court would unnecessarily burden it.
[19]

Second, when the Supreme Court, in the exercise of its rule-making

power, transfers to the CA pending cases involving a review of a quasi-judicial
bodys decisions, such transfer relates only to procedure; hence, it does not
impair the substantive and vested rights of the parties. The aggrieved partys
right to appeal is preserved; what is changed is only the procedure by which
the appeal is to be made or decided. The parties still have a remedy and a
competent tribunal to grant this remedy.
[20]

Third, the Revised Rules of Civil Procedure included Rule 43 to provide a

uniform rule on appeals from quasi-judicial agencies. Under the rule, appeals
from their judgments and final orders are now required to be brought to the
CA on a verified petition for review. A quasi-judicial agency or body has been
defined as an organ of government, other than a court or legislature, which
affects the rights of private parties through either adjudication or rulemaking. MAB falls under this definition; hence, it is no different from the
other quasi-judicial bodies enumerated under Rule 43. Besides, the
introductory words in Section 1 of Circular No. 1-91 -- among these agencies
are -- indicate that the enumeration is not exclusive or conclusive and
acknowledge the existence of other quasi-judicial agencies which, though not
expressly listed, should be deemed included therein.
[21]

[22]

[23]

[24]

Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129 as
amended by RA No. 7902, factual controversies are usually involved in
decisions of quasi-judicial bodies; and the CA, which is likewise tasked to
resolve questions of fact, has more elbow room to resolve them. By including
questions of fact among the issues that may be raised in an appeal from
quasi-judicial agencies to the CA, Section 3 of Revised Administrative Circular
No. 1-95 and Section 3 of Rule 43 explicitly expanded the list of such issues.
[25]

[26]

[27]

According to Section 3 of Rule 43, [a]n appeal under this Rule may be
taken to the Court of Appeals within the period and in the manner herein
provided whether the appeal involves questions of fact, of law, or mixed
questions of fact and law. Hence, appeals from quasi-judicial agencies even
only on questions of law may be brought to the CA.
Fifth, the judicial policy of observing the hierarchy of courts dictates that
direct resort from administrative agencies to this Court will not be entertained,
unless the redress desired cannot be obtained from the appropriate lower
tribunals, or unless exceptional and compelling circumstances justify
availment of a remedy falling within and calling for the exercise of our primary
jurisdiction.
[28]

Consistent with these rulings and legal bases, we therefore hold that
Section 79 of RA 7942 is likewise to be understood as having been modified
by Circular No. 1-91, BP Blg. 129 as amended by RA 7902, Revised
Administrative Circular 1-95, and Rule 43 of the Rules of Court. In brief,
appeals from decisions of the MAB shall be taken to the CA through petitions
for review in accordance with the provisions of Rule 43 of the 1997 Rules of
Court.
WHEREFORE, the Petition is GRANTED, and the assailed Decision and
Resolution REVERSED and SET ASIDE. The Petition in CA-GR SP No.
46830 is REINSTATED,and the CA is ordered to RESOLVE it on the merits
with deliberate dispatch. No costs.
SO ORDERED.

FIRST DIVISION

[G.R. No. 122088. January 26, 2001]

GOLD
LOOP
PROPERTIES,
INC.
and EMMANUEL R. ZAPANTA, petitioners, vs. THE COURT OF
APPEALS,
BHAVNA
HARILELA
SADHWANI
and

RAMESH J. SADHWANI, represented by their

PURSHUTAM DIALANI, respondents.

attorney-in-fact

DECISION
PARDO, J. :

The case before the Court is an appeal via certiorari from the decision[1] of the Court of
Appeals dismissing the petition for certiorari assailing the decision of the Senior Deputy
Executive Secretary, Office of the President sustaining the ruling of the Housing Land Use and
Regulatory Board of Commissioners requiring petitioners to furnish private respondents with
copy of the contract to sell and to accept the balance of the purchase price of a condominium
unit.
On July 16, 1988, private respondents Bhavna Harilela and Ramesh Sadhwani (hereinafter
referred to as Sadhwanis) submitted through St. Martin Realty Corporation, a realtor agent of
petitioner Gold Loop Properties, Inc. (hereinafter referred to as GLPI), a signed pro
forma reservation application addressed to GLPI for the purchase of one (1) condominium unit at
Gold Loop Towers residential complex, located in Ortigas Complex, Pasig. One of the terms of
the reservation was the execution of a contract to sell once the downpayment was paid in
full. Upon submission of the reservation, the Sadhwanis issued a check for P50,000.00 to cover
the reservation fees to Josephine Flores Guina, agent of St. Martin Realty who issued a receipt to
them.
On November 18, 1988, the Sadhwanis paid GLPI the amount of
P819,531.25. Subsequently, Bhavna Harilela signed a Contract To Sell[2] with GLPI,
represented by its President Emmanuel Zapanta. Ms. Guina assured them that they would be
furnished with a copy of the contract after its notarization, and that the amount, representing the
balance of the purchase price, would be included in a loan application with a bank. However, the
contract to sell was not notarized, as the private respondents were not able to supply GLPI with a
copy of their passports.
Under the contract, GLPI agreed to sell to Sadhwanis a 198.75 square meters condominium
unit particularly Unit R-84 of Southwest Tower. The contract price was P2,484,375.00,
inclusive of a reservation deposit of P50,000.00.
The Contract to Sell, Section 3, provides:

Section 3. PURCHASE PRICE AND TERMS OF PAYMENT.

(a) The purchase price of the UNIT, exclusive of interest shall be TWO MILLION
FOUR HUNDRED EIGHTY FOUR THOUSAND THREE HUNDRED SEVENTY
FIVE (P2,484,375.00) Pesos, Philippine Currency, payable as follows:
Amount
Downpayment of 35%

P869,531.25

Due Date

Less: Reservation
Net Downpayment
Balance Payable

50,000.00

July 16, 1988

819,531.25

Oct. 21, 1988

P1,614,843,80

thru the bank designated by the SELLER and subject to standard banking
requisites and approval.
NOTE: In the event of non-approval of the loan by the bank, the BUYER commits to
adopt the Co-Terminus Payment Plan retroactive to the date of scheduled
downpayment as reflected above. This plan requires the payment of non-interest
bearing equal monthly installments spreads on the full balance of the purchase price
commencing 30 days after the scheduled downpayment up to January 1990. [3]
GLPI informed the Sadhwanis that the bank loan accommodation which was to serve as
payment of the balance of the purchase price was disapproved, and thus, per the terms of the
Contract to Sell, the balance would become payable through the Co-terminus Payment Plan
schedule of payments, in implementation of which petitioners were informed
by letter[4] dated March 15, 1989, which pertinently reads:

Despite diligent efforts and ardent representations on our part to have the approval of
the loan in accordance with the Contract, such approval could not be obtained for the
reason that banks are not willing to extend a loan to be secured by a still ongoing
project. Accordingly, the balance of the purchase price should now be paid in equal
monthly installments until January 1990 pursuant to the aforequoted provision. The
schedule of these payments in implementation of this Co-Terminus Payment Plan
should be as follows:
Date of Payment
March 20, 1989 (Covering
the period from Nov. 21,
1989 to March 21, 1989)
April 20, 1989
May 20, 1989
June 20, 1989
July 20, 1989
August 20, 1989
September 20, 1989
October 20, 1989
November 20, 1989
December 20, 1989

Amount

P538,281.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25

January 20, 1989

TOTAL

107,626.25
P1,614,843.80

By
letter[5] dated
March
16,
1989,
addressed
to
GLPI,
the
Sadhwanis offered to resell their rights to the condominium unit they purchased. The letter
contained proposals which read:

Per our verbal agreement, this comes to formalize the earnest intention
of my clients, Spouses Ramesh and Anita Sadhwani, to sell their rights over Unit R84 of the Gold Loop Towers, under the following terms and conditions:
ACQUISITION:
198.75 sq. m. @ 12,500 per sq. m.
=
Less: 35% downpayment paid 11-15-88
Balance
=
Monthly amortization payable in
18 months starting December 1988
until May 1990 @ 3% penalty for
delayed amortization
Penalty per month

89,713.54

_________3%
P
2,691.41
x 3 months
P
8,074.22

198.75 sq. m. @ P14,500.00

per sq. m.

P2,881,875.00

Less: Balance

1,614,843.75
1,267,031.25

Less: Interest for delayed

Amortization

8,074.22

Net cash involved payable

in 6 months

P1,258,957.03

Total Penalty

=
=

P2,484,375.00
869,531.25
1,614,843.75

RE-SALE:

Petitioners rejected the offer on the resale of the rights over the condominium unit proposed
by private respondents because the offer was unreasonable, unfair and inequitable.

On March 19 and April 25, 1989, respondent Ramesh J. Sadhwani demanded a copy of the
contract to sell, noting that his wife had no official document to show that she bought a
condominium unit from GLPI and there were conditions and/or stipulations in the contract
which she could not be expected to comply with, unless a copy of the same be given to her. By
letter dated May 22, 1989 to GLPI, respondent Sadhwanis counsel made a formal demand for
the delivery to him of a copy of the contract to sell.
Spouses Sadhwanis failed to pay any of the monthly amortizations in the payment plan.
On August 7, 1989, petitioners sent a letter demanding payment of the balance amounting to
P1,614,814.80, and informed the Sadhwanis that GLPI will rescind the Contract to Sell and
automatically forfeit their down payment should they fail to pay within five (5) days from receipt
of the letter in accordance with section 8 of the contract to sell. [6]
On August 14, 1990, spouses Sadhwanis filed with the Housing and Land Use Regulatory
Board (hereinafter referred to as HLURB), a complaint for specific performance with an
alternative prayer for refund against GLPI. Spouses Sadhwanis prayed that they be furnished
with a copy of the contract to sell and allowed them to remit the balance of the consideration to
GLPI and to deliver to them the title and possession of the condominium unit, or to be
reimbursed of the amount they paid with interest and damages. [7]
On October 8, 1990, petitioners filed with the HLURB an answer to the complaint and
subsequently, the parties submitted their position papers.
On October 2, 1992, HLURB Arbiter Roberto F. Paras rendered a decision, the dispositive
portion of which provides:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering respondents Gold Loop Properties, Inc. and St. Martin to furnish
complainants with a copy of the subject Contract to Sell and to accept complainants
payment of the agreed purchase price balance of the Condominium unit described in
the said Contract to Sell;
2. Ordering said respondents to deliver possession of and to effect the transfer of
title to the subject condominium unit in favor of the complainants after full payment
of the purchase price;
In the event compliance with the above dispositive portion is no longer possible,
respondents instead are hereby ordered to jointly and severally reimburse
complainants the amount of Eight Hundred Seventy Eight Thousand Three Hundred
Sixty Six Pesos and Thirty Five Centavos (P878,366.35) representing complainants
reservation deposit and downpayment, with legal interest from the time of the filing of
this complaint;

3. Ordering respondents jointly and severally to pay complainants (a) moral

damages in the amount of Ten Thousand Pesos (P10,000.00), and (b) attorneys fees
in the amount of Thirty Thousand Pesos (P30,000.00);
4. Dismissing respondents counterclaim for lack of merit.
IT IS SO ORDERED.[8]
On November 16, 1992, petitioners appealed to the HLURB Board of Commissioners,
Quezon City while private respondents interposed a partial appeal thereto.
On October 11, 1993, the HLURB Board of Commissioners rendered a decision, the
dispositive portion of which reads:

WHEREFORE, premises considered, respondents appeal is hereby DENIED and

complainants Partial Appeal is hereby given due course and the Decision subject of
this Appeal is hereby MODIFIED by DELETING the second paragraph of order
number two. Accordingly, complainants are directed to pay the balance of the
purchase price, without interest, within 30 days from receipt hereof while respondents
are ordered to accept said payment and turn over to complainants the unit subject of
said contract to sell.
All other aspects of the decision is hereby AFFIRMED IN TOTO.
SO ORDERED.[9]
On January 7, 1994, petitioners elevated the case to the Office of the President.
On August 24, 1994, Senior Deputy Executive Secretary Leonardo A.
Quisumbing[10] rendered a decision[11] dismissing petitioners appeal. He also denied petitioners
motion for reconsideration[12] in a Resolution[13] dated December 22, 1994.
On March 22, 1995, petitioners filed with the Supreme Court a special civil action for
certiorari assailing the decision of the Senior Deputy Executive Secretary, Office of the
President. In a resolution dated April 4, 1995, the Court referred the case to the Court of
Appeals for proper disposition.[14]
On June 22, 1995, the Court of Appeals promulgated its decision dismissing the
petition.[15] The court ruled that the failure of petitioners to give respondents a copy of the
contract to sell sued upon, despite repeated demands therefor, and notwithstanding the payment
of P878,366.35, was a valid ground for private respondents to suspend their payments. And
given the fact that the contract to sell was in writing, the Sadhwanis, as buyers, were entitled to a
copy. Their request for a copy sprung from their desire to comply with what was incumbent
upon them to perform thereunder. While buyers do not need a copy of the contract to know the
stipulated purchase price, the schedule of payments and the outstanding balance, the contract to
sell, being an eight paged single-spaced document, broken down into twelve sections, spelling
out the parties respective monetary and non-monetary rights and obligations, the buyers could

not be expected to recall each and every detail of the stipulations of the contract without a copy
of the contract to guide them.
On July 14, 1995, petitioners filed with the Court of Appeals a motion for
reconsideration.[16] However, the court denied the motion.[17]
Hence, this petition.[18]
Petitioners contend that private respondents are not entitled to suspend payment of their
monthly amortizations because of the alleged failure of petitioners to furnish them copy of the
contract to sell and that private respondents used the alleged failure to give them copy of the
contract as an excuse for defaulting in their contractual obligation to pay the
installments. Petitioners insist that private respondents were given copy of the contract to
sell. Petitioners pointed out that under the contract, they had the right to rescind the contract in
case private respondents breached the contract.
In their Comment [19] and Memorandum,[20] private respondents alleged that they have not in
fact received a copy of the contract to sell. Private respondents likewise averred that petitioners
assertion is premised on its completely wrong proposition that private respondents had given
petitioners a reason to rescind the contract to sell. What was really in issue was that it was
petitioners that gave them sufficient and well-founded cause to suspend payment of their
monthly amortizations on the condominium unit.
We agree with private respondents.
The core issue actually boils down to the question of whether or not respondents may
suspend payment of their monthly amortizations due to failure of petitioners to furnish them
copy of the contract to sell.
Time and again, the Court had occasion to reiterate the well-established rule that findings of
fact of the Court of Appeals are conclusive on the parties and are not generally reviewable by
this Court.[21]We find no compelling reason to disturb the factual findings of the Court of
Appeals, in the absence of showing that the present case falls within the exceptions to this
rule.[22] When supported by sufficient evidence, the findings of fact of the Court of Appeals
affirming those of the trial court, are not to be disturbed on appeal. The rationale behind this
doctrine is that review of the findings of fact of the Court of Appeals is not a function that the
Supreme Court normally undertakes. In the case at bar, we subscribe to
the findings of fact of the Court of Appeals when it held that:

x x x Private respondents were indeed justified in suspending payment of their

monthly amortizations. The failure of petitioners to give them a copy of the Contract
to Sell sued upon, despite repeated demands therefor, and notwithstanding the private
respondents payment of P878,366.35 for the subject condominium unit was a valid
ground for private respondents to suspend their payments. x x x
xxx

And contrary to petitioners stance, records disclose that they were the ones who did
fraudulent acts against private respondents by entering into a Contract to Sell with the

latter and accepting their downpayment of P878,366.35, withholding a copy thereof

for no valid reason at all, and then threatening them with rescission and forfeiture,
when private respondents only suspended payment of the balance of the purchase
price while waiting for their copy of the Contract to Sell. [23]
The private respondents are entitled to a copy of the contract to sell, otherwise they would
not be informed of their rights and obligations under the contract. When the Sadhwanis parted
with P878,366.35 or more than one third of the purchase price for the condominium unit, the
contract to sell, or what it represents is concrete proof of the purchase and sale of the
condominium unit.
WHEREFORE, the Court hereby DENIES the petition for review on certiorari, for lack of
merit. The Court AFFIRMS the decision of the Court of Appeals in CA-G.R. SP No. 36977
affirming the order for delivery of a copy of the contract to sell to private respondents and to
accept payment of the balance of the purchase price and deliver title over the condominium
unit to the private respondents upon full payment of the balance of the purchase price.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

FIRST DIVISION

[G.R. No. 144692. January 31, 2005]

CELSA P. ACUA, petitioner, vs. DEPUTY OMBUDSMAN FOR LUZON,

PEDRO PASCUA and RONNIE TURLA, (Angeles City National
Trade School), respondents.
DECISION
CARPIO, J.:

The Case
This is a petition for certiorari[1] of the Resolution dated 4 April 2000 and
the Order dated 19 June 2000 of the Deputy Ombudsman for Luzon. The 4

April 2000 Resolution dismissed for lack of probable cause the complaint for
perjury of petitioner Celsa P. Acua against respondents Pedro Pascua and
Ronnie Turla. The 19 June 2000 Order denied the motion for reconsideration.
The Facts
Petitioner Celsa P. Acua (petitioner) is a former teacher of the Angeles
City National Trade School (ACNTS) in Angeles City, Pampanga.
Respondent Pedro Pascua (respondent Pascua) was ACNTS Officer-InCharge while respondent Ronnie Turla (respondent Turla) was a member of
its faculty.[2]
On 13 July 1998, a certain Erlinda Yabut (Yabut), another ACNTS
teacher, together with other school personnel, requested a dialogue with
respondent Pascua on some unspecified matter. Respondent Pascua agreed
to the request and the meeting took place on 16 July 1998. Respondent Turla
attended the meeting upon respondent Pascuas directive. Petitioner, whom
Yabut apparently invited, also attended the meeting.
As an offshoot to an incident during the 16 July 1998 meeting, petitioner
charged respondent Pascua with misconduct (OMB-ADM-1-99-0387) and
with violation of Article 131[3]of the Revised Penal Code (OMB 1-99-903)
before the Office of the Ombudsman (Ombudsman). [4] In his sworn counteraffidavit in OMB-ADM-1-99-0387, respondent Pascua alleged, among others,
that: (1) OMB-ADM-1-99-0387 is a rehash and a duplication with a slight
deviation of fact of an administrative case pending with the Department of
Education, Culture and Sports (DECS) which petitioner and Yabut earlier
filed against him and (2) Yabut had no authority to invite to the 16 July 1998
meeting a non-employee of ACNTS like petitioner considering that he
(respondent Pascua) was the one who called the meeting. [5] Respondent
Pascua also submitted a sworn statement of respondent Turla confirming that
respondent Pascua and not Yabut called the 16 July 1998 meeting. [6]
The Ombudsman dismissed OMB-ADM-1-99-0387 and OMB 1-99-0903.
Contending that private respondents perjured themselves in their sworn
statements in OMB-ADM-1-99-0387, petitioner charged private respondents
with perjury (OMB 1-99-2467) before the office of the Deputy Ombudsman
for Luzon (public respondent). Petitioner alleged that private respondents
were liable for perjury because: (1) the complaint she and Yabut filed against
respondent Pascua before the Civil Service Commission, later endorsed to
the DECS, was not the same as her complaint in OMB-ADM-1-99-0387 and

(2) it was Yabut and not respondent Pascua who called the 16 July 1998
meeting.[7]
Private respondents denied the charge against them and sought the
dismissal of the complaint.[8]
The Ruling of the Public Respondent
Public respondent dismissed petitioners complaint in his 4 April 2000
Resolution,[9] thus:
Upon careful evaluation of the case record, we find no evidence to indict respondents
for perjury.
xxxx
It could not be established by the evidence on record that it was Erlinda Yabut who
called the meeting on July 16, 1998 and invited complainant. Annex B-1 xxx of the
complaint is the letter of Erlinda Yabut to Dr. Pedro Pascua, dated July 13, 1998,
which shows that Ms. Yabut was requesting respondent to have a dialogue (sic). The
letter states:
We, the undersigned would like to request your good office to allow us to have a
dialogue on Thursday, July 1[6], to once and for all ventilate our
complaints/observations and also listen to the rebuttal of the other side.
It is the desire of everybody who attended the meeting last time that whatever is the
outcome of this confrontation will be the basis of the next appropriate step.
We would like to request the incoming Administrator or somebody from the DECS to
act as moderator.
Pursuant to such circumstance, respondent Pascua stated, among others, in his
counter-affidavit in OMB-ADM-1-99-0387 that:
5. Be that as it may, I vehemently deny the charge that I prevented
Complainant Celsa Acu[]a from testifying against Mrs. Amelia Yambao
on July 16, 1998 the truth of the matter being that there was no hearing or
investigation conducted or called by the undersigned on said date but a
dialogue among the teachers of Angeles City National Trade School which
I previously headed. Mrs. Acu[]a at that time was not a teacher to attend

the said dialogue, thus I stated openly on said occasion that I will not start
the meeting if there are outsiders, and Mr. ROGELIO GUTIERREZ asked
herein Complainant to step out of the room so we could start the dialogue,
xxx;
6. I also deny the charge that she was invited by Mrs. Erlinda Yabut, cocomplainant of hers in the DECS Administrative case, because I was the
one who called for that dialogue and not Mrs. Yabut, thus I never gave any
authority to anyone to invite any person who was not a member of the
school faculty or an employee thereof.
Clearly, the letter of Ms. Yabut and the aforequoted counter-affidavit of respondent
Pascua belie the commission of perjury since there was no deliberate assertion of
falsehood on a material matter.
Respondent Ronnie Turla could not likewise be indicted for the crime charged. Since
it was respondent Pascua who called him to that meeting, it would be truthful of him
to state that way. There was also no willful and deliberate assertion of falsehood on
the part of respondent Ronnie Turla.[10]
Petitioner sought reconsideration but public respondent denied her motion
in the 19 June 2000 Order.
Hence, petitioner filed this petition. Petitioner contends that public
respondent committed grave abuse of discretion in dismissing her complaint
for lack of probable cause.[11]
Public respondent, in his Comment, maintains that he did not commit
grave abuse of discretion in dismissing petitioners complaint in OMB 1-992467.[12]
In their Comment, private respondents claim that petitioner filed this
petition out of time. Hence, this petition should be dismissed outright. On the
merits, private respondents submit that public respondent correctly dismissed
the perjury charge against them.[13]
In her Reply, petitioner counters that she timely filed her petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure (Rule 65). [14]
The Issues
The petition raises these issues:

1. Whether petitioner filed the petition on time; and

2. Whether public respondent committed grave abuse of discretion in dismissing
the complaint in OMB 1-99-2467 for lack of probable cause.

The Ruling of the Court

The petition, while filed on time, has no merit.
The Petition was Filed on Time
Private respondents contend that petitioner filed this petition beyond the
ten-day period provided in Section 27 of Republic Act No. 6770. [15] Section 27
states in part:
Effectivity and Finality of Decisions. xxxx
In all administrative disciplinary cases, orders, directives, or decisions of the Office of
the Ombudsman may be appealed to the Supreme Court by filing a petition
for certiorari within ten (10) days from receipt of the written notice of the order,
directive or decision or denial of the motion for reconsideration in accordance with
Rule 45 of the Rules of Court. (Emphasis supplied)
The contention has no merit. Section 27 is no longer in force because this
Court in Fabian v. Desierto[16] declared it unconstitutional for expanding the
Courts jurisdiction without its consent in violation of Article VI, Section 30 of
the Constitution. Furthermore, Section 27 relates only to appeals from rulings
of the Ombudsman in administrative disciplinary cases. It does not apply to
appeals from the Ombudsmans rulings in criminal cases such as the present
case.[17]
The remedy of an aggrieved party in criminal complaints before the
Ombudsman is to file with this Court a petition for certiorari under Rule 65.
Thus, we held in Tirol, Jr. v. Del Rosario:[18]
The Ombudsman Act specifically deals with the remedy of an aggrieved party from
orders, directives and decisions of the Ombudsman in administrative disciplinary
cases. As we ruled in Fabian, the aggrieved party [in administrative cases] is given
the right to appeal to the Court of Appeals. Such right of appeal is not granted to
parties aggrieved by orders and decisions of the Ombudsman in criminal cases, like
finding probable cause to indict accused persons.

However, an aggrieved party is not without recourse where the finding of the
Ombudsman xxx is tainted with grave abuse of discretion, amounting to lack [or]
excess of jurisdiction. An aggrieved party may file a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure. (Emphasis supplied)
Petitioner precisely availed of such remedy when she filed this petition
for certiorari under Rule 65 alleging that public respondent gravely abused his
discretion in dismissing her complaint against private respondents. Under
Section 4 of Rule 65, as amended, petitioner had 60 days from her receipt of
the 19 June 2000 Order within which to file this petition. Petitioner received a
copy of the 19 June 2000 Order on 13 July 2000. Thus, petitioner had until 11
September 2000 within which to file this petition. Petitioner did so on 11
August 2000. Hence, petitioner filed this petition on time.
The Public Respondent did not Gravely Abuse
His Discretion in Dismissing OMB 1-99-2467
We reiterate this Courts policy of non-interference with the Ombudsmans
exercise of his constitutionally mandated prosecutory powers. [19] We explained
the reason for such policy in Ocampo, IV v. Ombudsman:[20]
The rule is based not only upon respect for the investigatory and prosecutory powers
granted by the Constitution to the Office of the Ombudsman but upon practicality as
well. Otherwise, the functions of the courts will be grievously hampered by
innumerable petitions assailing the dismissal of investigatory proceedings conducted
by the Office of the Ombudsman with regard to complaints filed before it, in much the
same way that the courts would be extremely swamped if they could be compelled to
review the exercise of discretion on the part of the fiscals or prosecuting attorneys
each time they decide to file an information in court or dismiss a complaint by a
private complainant.
The Court, in the present case, finds no reason to deviate from this longstanding policy.
Petitioner contends that public respondent committed grave abuse of
discretion in dismissing her complaint for perjury for lack of probable cause.
The contention is untenable. Probable cause, as used in preliminary
investigations, is defined as the existence of such facts and circumstances as
would excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the crime

for which he was prosecuted.[21] The elements of perjury under Article

183[22] of the Revised Penal Code are:
(a) that the accused made a statement under oath or executed an affidavit upon a
material matter; (b) that the statement or affidavit was made before a competent
officer, authorized to receive and administer oath; (c) that in that statement or
affidavit, the accused made a willful and deliberate assertion of a falsehood; and, (d)
that the sworn statement or affidavit containing the falsity is required by law or made
for a legal purpose.[23](Emphasis supplied)
Public respondent correctly ruled that the first and third elements are absent
here in that private respondents statements in their counter-affidavits in OMBADM-1-99-0387 were not material to that case nor do they constitute willful
and deliberate assertion of falsehood.
On the Element of Materiality
In prosecutions for perjury, a matter is material if it is the main fact which
was the subject of the inquiry, or any circumstance which tends to prove that
fact xxx.[24] To hold private respondents liable, there must be evidence that
their assailed statements in OMB-ADM-1-99-0387 were the subject of inquiry
in that case. Petitioner has presented no such evidence. The records are
hardly helpful, as petitioner did not furnish the Court a copy of her complaint in
OMB-ADM-1-99-0387.
What is before the Court is a portion of respondent Pascuas counteraffidavit in that case as quoted by public respondent in his 4 April 2000
Resolution. Admittedly, some inference is possible from this quoted material,
namely, that the basis of petitioners complaint in OMB-ADM-1-99-0387 is that
respondent Pascua prevented her from taking part in the 16 July 1998
meeting. However, it would be improper for the Court to rely on such
inference because the element of materiality must be established by evidence
and not left to inference.[25]
At any rate, petitioners complaint for perjury will still not prosper because
respondent Pascuas statement that OMB-ADM-1-99-0387 is significantly
the same as petitioners and Yabuts administrative complaint against
respondent Pascua before the DECS is immaterial to the inferred issue.
On the Element of Deliberate Assertion
of Falsehood
The third element of perjury requires that the accused willfully and
deliberately assert a falsehood. Good faith or lack of malice is a valid
defense.[26] Here, the Court finds that respondent Pascuas statement in his

counter-affidavit in OMB-ADM-1-99-0387 that he called the 16 July 1998

meeting does not constitute a deliberate assertion of falsehood. While it was
Yabut and some unidentified ACNTS personnel who requested a dialogue
with respondent Pascua, it was respondent Pascuas consent to their request
which led to the holding of the meeting. Thus, respondent Pascuas
statement in question is not false much less malicious. It is a good faith
interpretation of events leading to the holding of the meeting.
Regarding respondent Pascuas allegation in his counter-affidavit in OMBADM-1-99-0387 that petitioners complaint was a mere rehash and
duplication with a slight deviation of fact of the DECS administrative case
petitioner and Yabut filed against respondent Pascua, petitioner has not
shown why this is false. Petitioner again did not furnish the Court a copy of
her and Yabuts complaint with the DECS.
Respondent Turlas statement in OMB-ADM-1-99-0387 that respondent
Pascua called the 16 July 1998 meeting was a mere reiteration of what
respondent Pascua told him. Consequently, it was correct for public
respondent to hold that since respondent Turla merely repeated what he
heard from respondent Pascua, he could not be held liable for making a false
and malicious statement.
There is grave abuse of discretion where power is exercised in arbitrary or
despotic manner by reason of passion or hostility. The abuse must be so
patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty or to act at all in contemplation of law. [27] No such
conduct can be imputed on public respondent. Public respondent disposed of
petitioners complaint consistent with applicable law.
WHEREFORE, we DISMISS the petition. The Resolution dated 4 April
2000 and the Order dated 19 June 2000 of respondent Deputy Ombudsman
for Luzon are AFFIRMED.
SO ORDERED.

EN BANC

[G.R. No. 142801-802. July 10, 2001]

BUKLOD NG KAWANING EIIB, CESAR POSADA, REMEDIOS G.

PRINCESA, BENJAMIN KHO, BENIGNO MANGA, LULU
MENDOZA,petitioners, vs. HON. EXECUTIVE SECRETARY
RONALDO B. ZAMORA, HON. SECRETARY JOSE PARDO,
DEPARTMENT OF FINANCE, HON. SECRETARY BENJAMIN
DIOKNO, DEPARTMENT OF BUDGET AND MANAGEMENT,
HON. SECRETARY ARTEMIO TUQUERO, DEPARTMENT OF
JUSTICE, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:

In this petition for certiorari, prohibition and mandamus, petitioners Buklod Ng

Kawaning EIIB, Cesar Posada, Remedios Princesa, Benjamin Kho, Benigno Manga
and Lulu Mendoza, for themselves and in behalf of others with whom they share a
common or general interest, seek the nullification of Executive Order No.
191[1] and Executive Order No. 223[2] on the ground that they were issued by the
Office of the President with grave abuse of discretion and in violation of their
constitutional right to security of tenure.
The facts are undisputed:
On June 30, 1987, former President Corazon C. Aquino, issued Executive Order
No. 127[3] establishing the Economic Intelligence and Investigation Bureau (EIIB) as
part of the structural organization of the Ministry of Finance. [4] The EIIB was
designated to perform the following functions:
(a) Receive, gather and evaluate intelligence reports and information and
evidence on the nature, modes and extent of illegal activities affecting the national
economy, such as, but not limited to, economic sabotage, smuggling, tax evasion,
and dollar-salting, investigate the same and aid in the prosecution of cases;
(b) Coordinate with external agencies in monitoring the financial and economic
activities of persons or entities, whether domestic or foreign, which may
adversely affect national financial interest with the goal of regulating, controlling
or preventing said activities;
(c) Provide all intelligence units of operating Bureaus or Offices under the
Ministry with the general framework and guidelines in the conduct of intelligence
and investigating works;

(d) Supervise, monitor and coordinate all the intelligence and investigation
operations of the operating Bureaus and Offices under the Ministry;
(e) Investigate, hear and file, upon clearance by the Minister, anti-graft and
corruption cases against personnel of the Ministry and its constituents units;
(f) Perform such other appropriate functions as may be assigned by the Minister
or his deputies.[5]
In a desire to achieve harmony of efforts and to prevent possible conflicts among
agencies in the course of their anti-smuggling operations, President Aquino issued
Memorandum Order No. 225 on March 17, 1989, providing, among others, that the
EIIB shall be the agency of primary responsibility for anti-smuggling operations in
all land areas and inland waters and waterways outside the areas of sole jurisdiction
of the Bureau of Customs.[6]
Eleven years after, or on January 7, 2000, President Joseph Estrada issued
Executive Order No. 191 entitled Deactivation of the Economic Intelligence and
Investigation Bureau.[7] Motivated by the fact that the designated functions of the
EIIB are also being performed by the other existing agencies of the government and
that there is a need to constantly monitor the overlapping of functions among these
agencies, former President Estrada ordered the deactivation of EIIB and the transfer of
its functions to the Bureau of Customs and the National Bureau of Investigation.
Meanwhile, President Estrada issued Executive Order No. 196 [8] creating the
Presidential Anti-Smuggling Task Force Aduana.[9]
Then the day feared by the EIIB employees came. On March 29, 2000, President
Estrada issued Executive Order No. 223[10] providing that all EIIB personnel
occupying positions specified therein shall be deemed separated from the service
effective April 30, 2000, pursuant to a bona fide reorganization resulting to abolition,
redundancy, merger, division, or consolidation of positions.[11]
Agonizing over the loss of their employment, petitioners now come before this
Court invoking our power of judicial review of Executive Order Nos. 191 and 223.
They anchor their petition on the following arguments:
A

Executive Order Nos. 191 and 223 should be annulled as they are
unconstitutional for being violative of Section 2(3), Article IX-B of the Philippine
Constitution and/or for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction.
B.

The abolition of the EIIB is a hoax. Similarly, if Executive Order Nos. 191 and
223 are considered to effect a reorganization of the EIIB, such reorganization
was made in bad faith.
C.

The President has no authority to abolish the EIIB.

Petitioners contend that the issuance of the afore-mentioned executive orders
is: (a) a violation of their right to security of tenure; (b) tainted with bad faith as they
were not actually intended to make the bureaucracy more efficient but to give way to
Task Force Aduana, the functions of which are essentially and substantially the
same as that of EIIB; and (c) a usurpation of the power of Congress to decide whether
or not to abolish the EIIB.
Arguing in behalf of respondents, the Solicitor General maintains that: (a) the
President enjoys the totality of the executive power provided under Sections 1 and 7,
Article VII of the Constitution, thus, he has the authority to issue Executive Order
Nos. 191 and 223; (b) the said executive orders were issued in the interest of national
economy, to avoid duplicity of work and to streamline the functions of the
bureaucracy; and (c) the EIIB was not abolished, it was only deactivated.
The petition is bereft of merit.
Despite the presence of some procedural flaws in the instant petition, such as,
petitioners disregard of the hierarchy of courts and the non-exhaustion of
administrative remedies, we deem it necessary to address the issues. It is in the
interest of the State that questions relating to the status and existence of a public office
be settled without delay. We are not without precedent. In Dario v.
Mison,[12] weliberally decreed:
The Court disregards the questions raised as to procedure, failure to exhaust
administrative remedies, the standing of certain parties to sue, for two
reasons, `[b]ecause of the demands of public interest, including the need for
stability in the public service,' and because of the serious implications of these cases
on the administration of the Philippine civil service and the rights of public servants.
At first glance, it seems that the resolution of this case hinges on the question Does the deactivation of EIIB constitute abolition of an office? However, after
coming to terms with the prevailing law and jurisprudence, we are certain that the
ultimate queries should be a) Does the President have the authority to reorganize
the executive department? and, b) How should the reorganization be carried out?

Surely, there exists a distinction between the words deactivate and abolish.
To deactivate means to render inactive or ineffective or to break up by discharging
or reassigning personnel,[13] while to abolish means to do away with, to annul,
abrogate or destroy completely.[14] In essence, abolition denotes an intention to do
away with the office wholly and permanently.[15] Thus, while in abolition,the office
ceases to exist, the same is not true in deactivation where the office continues to
exist, albeit remaining dormant or inoperative. Be that as it may, deactivation and
abolition are both reorganization measures.
The Solicitor General only invokes the above distinctions on the mistaken
assumption that the President has no power to abolish an office.
The general rule has always been that the power to abolish a public office is
lodged with the legislature.[16] This proceeds from the legal precept that the power to
create includes the power to destroy. A public office is either created by the
Constitution, by statute, or by authority of law.[17] Thus, except where the office was
created by the Constitution itself, it may be abolished by the same legislature that
brought it into existence.[18]
The exception, however, is that as far as bureaus, agencies or offices in the
executive department are concerned, the Presidents power of control may justify him
to inactivate the functions of a particular office,[19] or certain laws may grant him the
broad authority to carry out reorganization measures. [20] The case in point is Larin v.
Executive Secretary.[21] In this case, it was argued that there is no law which empowers
the President to reorganize the BIR. In decreeing otherwise, this Court sustained the
following legal basis, thus:
Initially, it is argued that there is no law yet which empowers the President to issue
E.O. No. 132 or to reorganize the BIR.
We do not agree.
x

x x

Section 48 of R.A. 7645 provides that:

Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive
Branch. The heads of departments, bureaus and offices and agencies are hereby
directed to identify their respective activities which are no longer essential in the
delivery of public services and which may be scaled down, phased out or
abolished, subject to civil service rules and regulations. X x x. Actual scaling down,
phasing out or abolition of the activities shall be effected pursuant to Circulars or
Orders issued for the purpose by the Office of the President.

Said provision clearly mentions the acts of scaling down, phasing out and
abolition of offices only and does not cover the creation of offices or transfer of
functions. Nevertheless, the act of creating and decentralizing is included in the
subsequent provision of Section 62 which provides that:
Sec. 62. Unauthorized organizational charges.- Unless otherwise created by law or
directed by the President of the Philippines, no organizational unit or changes in key
positions in any department or agency shall be authorized in their respective
organization structures and be funded from appropriations by this Act. (italics ours)
The foregoing provision evidently shows that the President is authorized to effect
organizational changes including the creation of offices in the department or
agency concerned.
x

x x

Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292 which
states:
Sec. 20. Residual Powers. Unless Congress provides otherwise, the President shall
exercise such other powers and functions vested in the President which are provided
for under the laws and which are not specifically enumerated above or which are not
delegated by the President in accordance with law. (italic ours)
This provision speaks of such other powers vested in the President under the
law. What law then gives him the power to reorganize? It is Presidential Decree
No. 1772 which amended Presidential Decree No. 1416. These decrees expressly
grant the President of the Philippines the continuing authority to reorganize the
national government, which includes the power to group, consolidate bureaus
and agencies, to abolish offices, to transfer functions, to create and classify
functions, services and activities and to standardize salaries and materials. The
validity of these two decrees are unquestionable. The 1987 Constitution clearly
provides that all laws, decrees, executive orders, proclamations, letters of instructions
and other executive issuances not inconsistent with this Constitution shall remain
operative until amended, repealed or revoked. So far, there is yet no law amending or
repealing said decrees. (Emphasis supplied)
Now, let us take a look at the assailed executive order.
In the whereas clause of E.O. No. 191, former President Estrada anchored his
authority to deactivate EIIB on Section 77 of Republic Act 8745 (FY 1999 General

Appropriations Act), a provision similar to Section 62 of R.A. 7645 quoted

in Larin, thus;
Sec. 77. Organized Changes. Unless otherwise provided by law or directed by the
President of the Philippines, no changes in key positions or organizational units in
any department or agency shall be authorized in their respective organizational
structures and funded from appropriations provided by this Act.
We adhere to the precedent or ruling in Larin that this provision recognizes the
authority of the President to effect organizational changes in the department or agency
under the executive structure. Such a ruling further finds support in Section 78 of
Republic Act No. 8760.[22] Under this law, the heads of departments, bureaus, offices
and agencies and other entities in the Executive Branch are directed (a) to conduct a
comprehensive review of their respective mandates, missions, objectives, functions,
programs, projects, activities and systems and procedures; (b) identify activities which
are no longer essential in the delivery of public services and which may be scaled
down, phased-out or abolished; and (c) adopt measures that will result in the
streamlined organization and improved overall performance of their respective
agencies.[23] Section 78 ends up with the mandate that the actual streamlining and
productivity improvement in agency organization and operation shall be effected
pursuant to Circulars or Orders issued for the purpose by the Office of the
President.[24] The law has spoken clearly. We are left only with the duty to sustain.
But of course, the list of legal basis authorizing the President to reorganize any
department or agency in the executive branch does not have to end here. We must not
lose sight of the very source of the power that which constitutes an express grant of
power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as
the Administrative Code of 1987), the President, subject to the policy in the
Executive Office and in order to achieve simplicity, economy and efficiency, shall
have the continuing authority to reorganize the administrative structure of the
Office of the President. For this purpose, he may transfer the functions of other
Departments or Agencies to the Office of the President. In Canonizado v.
Aguirre,[25] we ruled that reorganization involves the reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy
of functions. It takes place when there is an alteration of the existing structure of
government offices or units therein, including the lines of control, authority and
responsibility between them. The EIIB is a bureau attached to the Department of
Finance.[26] It falls under the Office of the President. Hence, it is subject to the
Presidents continuing authority to reorganize.
It having been duly established that the President has the authority to carry out
reorganization in any branch or agency of the executive department, what is then left
for us to resolve is whether or not the reorganization is valid. In this jurisdiction,

reorganizations have been regarded as valid provided they are pursued in good
faith. Reorganization is carried out in good faith if it is for the purpose of economy
or to make bureaucracy more efficient.[27] Pertinently, Republic Act No.
6656[28] provides for the circumstances which may be considered as evidence of bad
faith in the removal of civil service employees made as a result of reorganization, to
wit: (a) where there is a significant increase in the number of positions in the new
staffing pattern of the department or agency concerned; (b) where an office is
abolished and another performing substantially the same functions is
created; (c) where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit; (d) where there is a classification of offices in
the department or agency concerned and the reclassified offices perform substantially
the same functions as the original offices, and (e) where the removal violates the order
of separation.[29]
Petitioners claim that the deactivation of EIIB was done in bad faith because four
days after its deactivation, President Estrada created the Task Force Aduana.
We are not convinced.
An examination of the pertinent Executive Orders [30] shows that the deactivation of
EIIB and the creation of Task Force Aduana were done in good faith. It was not for
the purpose of removing the EIIB employees, but to achieve the ultimate purpose of
E.O. No. 191, which is economy. While Task Force Aduana was created to take the
place of EIIB, its creation does not entail expense to the government.
Firstly, there is no employment of new personnel to man the Task Force. E.O.
No. 196 provides that the technical, administrative and special staffs of EIIB are
to be composed of people who are already in the public service, they being
employees of other existing agencies. Their tenure with the Task Force would
only be temporary, i.e., only when the agency where they belong is called upon to
assist the Task Force. Since their employment with the Task force is only by way
of detail or assignment, they retain their employment with the existing
agencies. And should the need for them cease, they would be sent back to the
agency concerned.
Secondly, the thrust of E.O. No. 196 is to have a small group of military men
under the direct control and supervision of the President as base of the governments
anti-smuggling campaign. Such a smaller base has the necessary powers 1) to enlist
the assistance of any department, bureau, or office and to use their respective
personnel, facilities and resources; and 2) to select and recruit personnel from within
the PSG and ISAFP for assignment to the Task Force. Obviously, the idea is to
encourage the utilization of personnel, facilities and resources of the already
existing departments, agencies, bureaus, etc., instead of maintaining an
independent office with a whole set of personnel and facilities. The EIIB had

proven itself burdensome for the government because it maintained separate offices in
every region in the Philippines.
And thirdly, it is evident from the yearly budget appropriation of the government
that the creation of the Task Force Aduana was especially intended to lessen EIIBs
expenses. Tracing from the yearly General Appropriations Act, it appears that the
allotted amount for the EIIBs general administration, support, and operations for the
year
1995,
was P128,031,000;[31] for
1996, P182,156,000;[32] for
1998,P219,889,000;[33] and, for 1999, P238,743,000.[34] These amounts were far above
the P50,000,000[35] allocation to the Task Force Aduana for the year 2000.
While basically, the functions of the EIIB have devolved upon the Task Force
Aduana, we find the latter to have additional new powers. The Task Force Aduana,
being composed of elements from the Presidential Security Group (PSG) and
Intelligence Service Armed Forces of the Philippines (ISAFP), [36] has the
essential power to effect searches, seizures and arrests. The EIIB did not have this
power. The Task Force Aduana has the power to enlist the assistance of any
department, bureau, office, or instrumentality of the government, including
government-owned or controlled corporations; and to use their personnel, facilities
and resources. Again, the EIIB did not have this power. And, the Task Force Aduana
has the additional authority to conduct investigation of cases involving ill-gotten
wealth. This was not expressly granted to the EIIB.
Consequently, it cannot be said that there is a feigned reorganization. In Blaquera
v. Civil Sevice Commission, [37] we ruled that a reorganization in good faith is one
designed to trim the fat off the bureaucracy and institute economy and greater
efficiency in its operation.
Lastly, we hold that petitioners right to security of tenure is not
violated. Nothing is better settled in our law than that the abolition of an office within
the competence of a legitimate body if done in good faith suffers from no
infirmity. Valid abolition of offices is neither removal nor separation of the
incumbents.[38] In the instructive words laid down by this Court in Dario v.
Mison,[39] through Justice Abraham F. Sarmiento:
Reorganizations in this jurisdiction have been regarded as valid provided they are
pursued in good faith. As a general rule, a reorganization is carried out in good
faith if it is for the purpose of economy or to make bureaucracy more efficient. In
that event, no dismissal (in case of dismissal) or separation actually occurs
because the position itself ceases to exist. And in that case, security of tenure
would not be a Chinese wall. Be that as it may, if the abolition, which is nothing
else but a separation or removal, is done for political reasons or purposely to defeat
security of tenure, otherwise not in good faith, no valid abolition takes and whatever

abolition is done, is void ab initio. There is an invalid abolition as where there is

merely a change of nomenclature of positions, or where claims of economy are belied
by the existence of ample funds.
Indeed, there is no such thing as an absolute right to hold office. Except
constitutional offices which provide for special immunity as regards salary and tenure,
no one can be said to have any vested right in an office or its salary.[40]
While we cast a commiserating look upon the plight of all the EIIB employees
whose lives perhaps are now torn with uncertainties, we cannot ignore the unfortunate
reality that our government is also battling the impact of a plummeting
economy. Unless the government is given the chance to recuperate by instituting
economy and efficiency in its system, the EIIB will not be the last agency to suffer the
impact. We cannot frustrate valid measures which are designed to rebuild the
executive department.
WHEREFORE, the petition is hereby DENIED. No costs.
SO ORDERED.