Docket Fees

ADRIANO, PRINCESS RUTH B.
CIVIL PROCEDURE CASES
June 18, 2014. G.R. No. 177425.*

ALONZO GIPA, IMELDA MAROLLANO, JUANITO LUDOVICE, VIRGILIO GOJIT, DEMAR
BITANGCOR, FELIPE MONTALBAN and DAISY M. PLACER,1petitioners, vs. SOUTHERN
LUZON INSTITUTE as represented by its Vice President for Operations and Corporate
Secretary, RUBEN G. ASUNCION, respondent.
Remedial Law; Civil Procedure; Pleadings and Practice; Docket Fees; Payment of
the full amount of docket fees within the prescribed period is not a mere technicality of
law or procedure but a jurisdictional requirement.—Petitioners concede that payment of
the full amount of docket fees within the prescribed period is not a mere technicality of
law or procedure but a jurisdictional requirement. Nevertheless, they want this Court to
relax the application of the rule on the payment of the appeal fee in the name of
substantial justice and equity.
Same; Same; Same; The rule in pleadings and practice is that no new issue in a
case can be raised in a pleading which by due diligence could have been raised in
previous pleadings.—“The purpose of a reply is to deny or allege facts in denial of new
matters alleged by way of defense in the answer,” or in this case, in the comment to
the petition. “It is not the office or function of a reply to set up or introduce a new
[issue] or to amend or amplify the [Petition].” The issue of whether Section 6 of RA
9406 should be given retroactive application in order to exempt petitioners from
payment of docket fees was therefore improperly introduced in petitioners’ Reply.
Moreover, “[t]he rule in pleadings and practice is that no new issue in a case can be
raised in a pleading which by due diligence could have been raised in previous
pleadings.” Here, petitioners at the outset could have very well raised the said issue in
the Petition since at the time of its filing on June 7, 2007, RA 9406 was already in
effect. However, they failed to do so. Besides, for this Court to take cognizance of the
same is to offend the basic rules of fair play, justice and due process since SLI had no
chance to propound its argument in connection thereto. This is because even if it
wanted to, SLI could not anymore do so in its Memorandum as no new issues or
arguments may be raised in the said pleading, it being only the summation of the
parties’ previous pleadings. For these reasons, the Court sees no need to belabor the
issue of the retroactive application of Section 6 of RA 9406.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
Juan Sanchez Dealca for respondent.
DEL CASTILLO,J.:
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Suffice it to say that “[c]oncomitant to the liberal interpretation of the rules of

procedure should be an effort on the part of the party invoking liberality to adequately
explain his failure to abide by the rules.”2Those who seek exemption from the
application of the rule have the burden of proving the existence of exceptionally
meritorious reasons warranting such departure.3
Assailed in this Petition for Review on Certiorari is the December 20, 2006
Resolution4 of the Court of Appeals (CA) in C.A.-G.R. CV No. 85215 which dismissed for
non-perfection herein petitioners’ appeal from the January 5, 2005 Decision 5 of the
Regional Trial Court (RTC), Branch 65, Sorsogon City in Civil Case No. 547-37. Likewise
questioned is the CA Resolution6 dated March 30, 2007 which denied the Motion for
Reconsideration thereto.
Factual Antecedents
On February 26, 1996, respondent Southern Luzon Institute (SLI), an educational
institution in Bulan, Sorsogon, filed a Complaint7 for Recovery of Ownership and
Possession with Damages against petitioners Alonzo Gipa, Imelda Marollano, Juanito
Ludovice, Demar Bitangcor, Virgilio Gojit, Felipe Montalban and four others namely,
Arturo Rogacion, Virgilio Gracela, Rosemarie Alvarez and Rosita Montalban (Rosita).
During trial, defendant Rosita executed a Special Power of Attorney8 in favor of her
sister Daisy M. Placer (Placer) authorizing the latter to represent her in the case and to
sign any and all papers in relation thereto.
SLI alleged that it is the absolute owner of a 7,516-square meter parcel of land
situated in Brgy. Poblacion, Bulan, Sorsogon covered by Original Certificate of Title
(OCT) No. P-28928. However, petitioners and their co-defendants who had been
informally occupying a portion of the said property refused to vacate the same despite
demand. Hence, SLI sought that they be ordered to immediately vacate the premises,
turn over the same to SLI, and pay compensatory damages, attorney’s fees and cost of
suit.
In their Answer with Counterclaim,9 petitioners and their co-defendants asserted that
they did not heed SLI’s demand to vacate as they believed that they have the right to
stay on the said property. They relied on their occupation thereof and that of their
predecessors-in-interest which, according to them, dates back to as early as 1950.
Impugning SLI’s claims, petitioners and their co-defendants averred that SLI had not
even for a single moment taken possession of the subject property and was merely able
to procure a title over the same thru fraud, bad faith and misrepresentation. By way of
counterclaim, they prayed that they be declared the lawful possessors of the property;
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that OCT No. P-28928 be declared null and void; and, that SLI be ordered to pay them
moral damages and litigation expenses.
Ruling of the Regional Trial Court
Finding SLI to have proven its ownership of the property by preponderance of
evidence, the RTC rendered a Decision10 in its favor on January 5, 2005. The said court
gave weight to SLI’s documentary evidence showing the grant of its Miscellaneous Sales
Application (MSA) over the subject property which became the basis for the issuance of
title under its name, and the testimony of the Supervising Draftsman of the National
Housing Authority (NHA) who categorically stated that the houses occupied by
petitioners and their co-defendants were within the property of SLI per NHA’s survey. It
rejected, on the other hand, petitioners and their co-defendants’ claim of title to the
property. For one, the fact that SLI had an existing MSA over the property as far back
as 1969 could not have been unknown to them. This is because several of the
petitioners and their co-defendants filed Revocable Permit Applications over the same
property which were denied on March 4, 1964, precisely because the areas applied for
were already included in SLI’s MSA. For another, the documentary evidence submitted
by them consisted mostly of tax declarations and other documents which were self-
serving and could not be considered as conclusive evidence of ownership. Hence, the
RTC ruled:
WHEREFORE, premises considered, judgment is hereby rendered —
a) Declaring plaintiff-SLI as absolute owner of that portion of Lot 4705 containing an
area of SEVEN THOUSAND FIVE HUNDRED SIXTEEN (7,516) SQUARE METERS covered
by “Katibayan ng Orihinal na Titulo Blg. P-28928.”
b) Ordering herein defendants to vacate and relinquish the portions of Lot 4705
belonging to the SLI that they are presently occupying illegally and to demolish the
residential houses existing thereon at their own expense.
c) To pay attorney’s fee in the amount of Php10,000.00 jointly.
d) And to pay the costs.
SO ORDERED.11
Petitioners and their co-defendants filed a Notice of Appeal12 which was granted by
the RTC in its Order13of January 27, 2005.
Ruling of the Court of Appeals
The CA, however, dismissed the appeal in its Resolution14 of August 26, 2005 since it
was not shown that the appellate court docket fees and other lawful fees were
paid.15 Petitioners
_______________
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and their co-defendants promptly filed a Motion for Reconsideration16 to which they
attached a Certification17 from the RTC that they paid the appeal fee in the amount of
P3,000.00 under Official Receipt No. 18091130 dated January 25, 2005. In view of this,
the CA granted the said motion and consequently reinstated the appeal through a
Resolution18 dated November 2, 2005.
Subsequently, however, the CA further required petitioners and their co-defendants,
through a Minute Resolution19 dated March 1, 2006, to remit within ten days from
notice the amount of P30.00 for legal research fund, which apparently was not included
in the P3,000.00 appeal fee previously paid by them. Copy of the said resolution was
received on March 13, 2006 by petitioners’ counsel, Atty. Jose G. Gojar of the Public
Attorney’s Office.20
Despite the lapse of nine months from their counsel’s receipt of the said resolution,
petitioners and their co-defendants, however, failed to comply with the CA’s directive.
to the clerk of court which rendered the judgment or final order appealed from, the
full amount of the appellate court docket and other lawful fees. Proof of payment of
said fess shall be transmitted to the appellate court together with the original record or
the record on appeal.
Hence, the said court dismissed the appeal through its Resolution21 of December 20,
2006 in this wise:
Jurisprudence is replete that the nonpayment of the docket and other lawful fees
within the reglementary period as provided under Section 4 of Rule 41 of the Revised
Rules of [C]ourt is a ground for the dismissal of an appeal, as provided for under
Section 1(c)[,] Rule 50 of the same Rule. We quote:
1. SECTIONGrounds for dismissal of appeal.—An appeal may be dismissed by
the Court of Appeals, on its own motion or on that of the appellee, on the
following grounds:
xxx xxx xxx
c.Failure of the appellant to pay the docket and other lawful fees as
provided in Section 4 of Rule 41; x x x
xxxx
In the instant case, appellants were given sufficient time to complete the payment of
the appeal fees. Unfortunately, appellants still failed to comply with the said directive
[despite the fact] that the amount of P30.00 involved is very little. Hence, appellants
failed to perfect their appeal for failure to fully pay the appeal fees. They are deemed to
have lost interest over the instant appeal.
xxxx
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WHEREFORE, premises considered, the instant Appeal is hereby DISMISSED.

SO ORDERED.22
Petitioners and their co-defendants filed a Motion for Reconsideration23 invoking the
principle of liberality in the application of technical rules considering that they have paid
the substantial amount of P3,000.00 for docket and other legal fees and fell short only
by the meager amount of P30.00. As compliance, they attached to the said motion a
postal money order in the sum of P30.00 payable to the Clerk of Court of the CA.24
The CA, however, was not swayed, hence, the denial of the Motion for
Reconsideration in its Resolution25 of March 30, 2007.
Issue
Petitioners and Placer now file this Petition for Review on Certiorari raising the lone
issue of:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE APPEAL
FILED BY THE PETITIONERS FOR FAILURE TO REMIT THE MEAGER AMOUNT OF
THIRTY PESOS (P30.00) AFTER HAVING ADVANCED A SUBSTANTIAL PORTION OF THE
DOCKET FEES.26
It must, however, be noted at the outset that the caption of the present Petition
includes Placer as one of the petitioners. In fact, the other petitioners even authorized
her to sign the verification and certification of nonforum shopping in their behalf.27 A
review of the records, however, shows that she was not one of the defendants before
the RTC. Her only participation therein was that she represented her sister Rosita as
one of the defendants by virtue of a Special Power of Attorney which the latter
executed in her favor.28Notably in the present Petition, Placer appears to have been
impleaded in her personal capacity and not as Rosita’s representative. This cannot be
done. It bears emphasizing that an appeal on certiorari, as in this case, is a
continuation of the original suit.29 Hence, the parties in the original suit must also be
the parties in such an appeal.30 Placer, therefore, not being a party in the complaint
before the RTC has no personality to continue the same on appeal and cannot be
considered as a petitioner. At the most, her only role in this Petition was to sign the
verification and certification of nonforum shopping for and in behalf of petitioners.
The Parties’ Arguments
Initially, petitioners invoke the liberal application of technical rules31 and contend
that the fact that only the amount of P30.00 was not paid justifies relaxation of the
same. Later in their Reply,32 however, petitioners concede that the payment of docket
fees is not a mere technicality. Nevertheless, they point out that while full payment of
docket fees is indispensable in the perfection of an appeal, the same admits of
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exceptions.33Their case falls under one of the exceptions, that is, in the name of
substantial justice and fair play. According to petitioners, the dismissal of their appeal
for failure to pay P30.00 runs counter to substantial justice and fair play as the same
would deprive them of their right to justice and render ineffective the amount of
P3,000.00, which despite being indigents, they undertook to pay. To support their case,
petitioners cited Andrea Camposagrado v. Pablo Camposagrado34 and
Spouses Gutierrez v. Spouses Valiente35 wherein the Court excused the insufficient
payment of docket fees.
_______________
Moreover, petitioners raise in the said Reply, albeit for the first time, the argument that
while Republic Act (RA) No. 940636 was still inexistent at the time their appeal was filed
before the CA, Section 637thereof which exempts PAO clients party will not be unjustly
prejudiced thereby; (9) fraud, accident, mistake or excusable negligence without
appellant’s fault; (10) peculiar legal and equitable circumstances attendant to each
case; (11) in the name of substantial justice and fair play; (12) importance of the issues
involved; and (13) exercise of sound discretion by the judge guided by all the attendant
circumstances.” Villena v. Rupisan, 549 Phil. 146, 166-167; 520 SCRA 346, 363 (2007).
like themselves from the payment of docket and other fees should be given retroactive
application.
For its part, SLI argues that since petitioners’ appeal was not perfected due to
insufficient payment of docket and other legal fees, the January 5, 2005 Decision of the
RTC had already become final and executory. Further, the CA correctly dismissed
petitioners’ appeal because aside from the fact that petitioners failed to comply with the
CA’s directive to pay the lacking amount of P30.00 for a period of more than nine
months from their counsel’s receipt of notice, no plausible explanation was tendered by
them for such failure.
Our Ruling
The Petition fails.
Payment of the full amount of appel-
late court docket and lawful fees is
mandatory and jurisdictional; Relaxa-
tion of the rule on payment of appeal
fee is unwarranted in this case.
Section 4, Rule 41 of the Rules of Court provides:
4. Sec.Appellate court docket and other lawful fees.—Within the period for
taking an appeal, the appellant shall pay to the clerk of court which rendered the
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judgment or final order appealed from, the full amount of the appellate court
docket and other lawful fees. Proof of payment of said fees shall be transmitted to
the appellate court together with the original record or the record on appeal.
(Emphases supplied)
In Gonzales v. Pe,38 the Court’s explanation anent the requirement of full payment of
docket and other lawful fees under the abovequoted provision was iterated, viz.:
In Far Corporation v. Magdaluyo, as with other subsequent cases of the same ruling,
the Court explained that the procedural requirement under Section 4 of Rule 41 is not
merely directory, as the payment of the docket and other legal fees within the
prescribed period is both mandatory and jurisdictional. It bears stressing that an appeal
is not a right, but a mere statutory privilege. An ordinary appeal from a decision or final
order of the RTC to the CA must be made within 15 days from notice. And within this
period, the full amount of the appellate court docket and other lawful fees must be paid
to the clerk of the court which rendered the judgment or final order appealed from. The
requirement of paying the full amount of the appellate docket fees within the prescribed
period is not a mere technicality of law or procedure. The payment of docket fees
within the prescribed period is mandatory for the perfection of an appeal. Without such
payment, the appeal is not perfected. The appellate court does not acquire jurisdiction
over the subject matter of the action and the Decision sought to be appealed from
becomes final and executory. Further, under Section 1(c), Rule 50, an appeal may be
dismissed by the CA, on its own motion or on that of the appellee, on the ground of the
nonpayment of the docket and other lawful fees within the reglementary period as
provided under Section 4 of Rule 41. The payment of the full amount of the docket fee
is an indispensable step for the perfection of an appeal. In both original and appellate
cases, the court acquires jurisdiction over the case only upon the payment of the
prescribed docket fees.39
Here, petitioners concede that payment of the full amount of docket fees within the
prescribed period is not a mere technicality of law or procedure but a jurisdictional
requirement. Nevertheless, they want this Court to relax the application of the rule on
the payment of the appeal fee in the name of substantial justice and equity.
The Court is not persuaded.
The liberality which petitioners pray for has already been granted to them by the CA
at the outset. It may be recalled that while petitioners paid a substantial part of the
docket fees, they still failed to pay the full amount thereof since their payment was
short of P30.00. Based on the premise that the questioned Decision of the RTC has
already become final and executory due to non-perfection, the CA could have dismissed
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the appeal outright. But owing to the fact that only the meager amount of P30.00 was
lacking and considering that the CA may opt not to proceed with the case until the
docket fees are paid,40 it still required petitioners, even if it was already beyond the
reglementary period, to complete their payment of the appeal fee within 10 days from
notice. Clearly, the CA acted conformably with the pronouncement made
in Camposagrado, a case cited by petitioners, that “[a] party’s failure to pay the
appellate docket fee within the reglementary period confers only a discretionary and not
a mandatory power to dismiss the proposed appeal. Such discretionary power should be
used in the exercise of the court’s sound judgment in accordance with the tenets of
justice and fair play with great deal of circumspection, considering all attendant
circumstances and must be exercised wisely and prudently, never capriciously, with a
view to substantial justice.”41
The CA’s leniency over petitioners’ cause did not end there. Although they were
given only 10 days to remit the P30.00 deficiency, the said court allowed an even
longer period of nine months to lapse, apparently in the hope that petitioners’
compliance would be on its way. But as no payment was remitted, it was constrained to
finally dismiss the appeal for non-perfection. Surprisingly, petitioners were again heard
of when they filed a Motion for Reconsideration to which they attached a postal money
order of P30.00. Nevertheless, they did not offer any plausible explanation either as to
why they, at the start, failed to pay the correct docket fees or why they failed to comply
with the CA’s directive for them to remit the P30.00 deficiency. Instead, they focused
on begging the CA for leniency, arguing that the meager amount of the deficiency
involved justifies relaxation of the rules. What is worse is that even if the CA already
took note of the lack of such explanation in its Resolution denying petitioners’ motion
for reconsideration, petitioners, up to now, have not attempted to tender one in this
Petition and instead continue to capitalize on substantial justice, fair play and equity to
secure a reversal of the dismissal of their appeal. The Court cannot, therefore, help but
conclude that there is really no plausible reason behind the said omission.
Suffice it to say that “[c]oncomitant to the liberal interpretation of the rules of
procedure should be an effort on the part of the party invoking liberality to adequately
explain his failure to abide by the rules.”42Those who seek exemption from the
application of the rule have the burden of proving the existence of exceptionally
meritorious reason warranting such departure.43 Petitioners’ failure to advance any
explanation as to why they failed to pay the correct docket fees or to complete payment
of the same within the period allowed by the CA is thus fatal to their cause. Hence, a
departure from the rule on the payment of the appeal fee is unwarranted.
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Neither do the cases cited by petitioners help because they are not in point. Unlike in
this case, the CA in Camposagrado no longer required the petitioners therein to
complete the payment of the appeal fee by remitting the P5.00 deficiency but just
dismissed the appeal outright. Moreover, a justifiable reason for the insufficient
payment was tendered by petitioners in the said case, i.e., that they relied on the
assessment made by the collection officer of the court and honestly believed that the
amount collected from them was that which is mandated by the Rules.
The same thing goes true with Gutierrez. In fact, the pronouncement made in Sun
Insurance Office, Ltd. v. Asuncion,44 as cited in Gutierrez, even militates against
petitioners. It was reiterated therein that the rule that “a court acquires jurisdiction over
any case only upon payment of the prescribed docket fees does not apply where the
party does not deliberately intend to defraud the court in payment of docket fees, and
manifests its willingness to abide by the rules by paying additional docket fees
when required by the court.”45 As may be recalled, petitioners in this case did not
immediately remit the deficient amount of P30.00 when required by the CA and only did
so after the lapse of more than nine months when their appeal was already dismissed.
The Court need not belabor the
issue of the retroactive application
of Section 6 of RA 9406.
“The purpose of a reply is to deny or allege facts in denial of new matters alleged by
way of defense in the answer,”46 or in this case, in the comment to the petition. “It is
not the office or function of a reply to set up or introduce a new [issue] or to amend or
amplify the [Petition].”47 The issue of whether Section 6 of RA 9406 should be given
retroactive application in order to exempt petitioners from payment of docket fees was
therefore improperly introduced in petitioners’ Reply. Moreover, “[t]he rule in pleadings
and practice is that no new issue in a case can be raised in a pleading which by due
diligence could have been raised in previous pleadings.”48 Here, petitioners at the
outset could have very well raised the said issue in the Petition since at the time of its
filing on June 7, 2007, RA 9406 was already in effect.49 However, they failed to do so.
Besides, for this Court to take cognizance of the same is to offend the basic rules of fair
play, justice and due process since SLI had no chance to propound its argument in
connection thereto. This is because even if it wanted to, SLI could not anymore do so in
its Memorandum as no new issues or arguments may be raised in the said pleading, it
being only the summation of the parties’ previous pleadings.50 For these reasons, the
Court sees no need to belabor the issue of the retroactive application of Section 6 of RA
9406.
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All told, the Court finds the CA’s dismissal of the appeal interposed by petitioners in
order.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed
Resolutions dated December 20, 2006 and March 30, 2007 of the Court of Appeals in
C.A.-G.R. CV No. 85215 are AFFIRMED.
SO ORDERED.
Brion**(Acting Chairperson), Perez, Mendoza*** and Perlas-Bernabe, JJ., concur.
Petition denied, resolutions affirmed.
Notes.—While it is, consequently, true that jurisdiction, once required, cannot be
easily ousted, it is equally settled that a court acquires jurisdiction over a case only
upon the payment of the prescribed filing and docket fees. (Home Guaranty Corporation
vs. R-II Builders, Inc., 652 SCRA 649 [2011])
Payment of docket fees within the prescribed period is not merely a technicality but
a condition sine qua non for the perfection of an appeal. (Philippine National Bank vs.
Roque, 665 SCRA 57 [2012])
——o0o——
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July 9, 2014. G.R. No. 196251.*

OLIVAREZ REALTY CORPORATION and DR. PABLO R. OLIVAREZ,
petitioners, vs. BENJAMIN CASTILLO, respondent.
Remedial Law; Civil Procedure; Judgments; Summary Judgments; Under Rule 35 of

the 1997 Rules of Civil Procedure, a trial court may dispense with trial and proceed to
decide a case if from the pleadings, affidavits, depositions, and other papers on file,
there is no genuine issue as to any material fact.—Trial “is the judicial examination and
determination of the issues between the parties to the action.” During trial, parties
“present their respective evidence of their claims and defenses.” Parties to an action
have the right “to a plenary trial of the case” to ensure that they were given a right to
fully present evidence on their respective claims. There are instances, however, when
trial may be dispensed with. Under Rule 35 of the 1997 Rules of Civil Procedure, a trial
court may dispense with trial and proceed to decide a case if from the pleadings,
affidavits, depositions, and other papers on file, there is no genuine issue as to any
material fact. In such a case, the judgment issued is called a summary judgment.
Same; Same; Same; Same; A motion for summary judgment is filed either by the
claimant or the defending party.—A motion for summary judgment is filed either by the
claimant or the defending party. The trial court then hears the motion for summary
judgment. If indeed there are no genuine issues of material fact, the trial court shall
issue summary judgment. Section 3, Rule 35 of the 1997 Rules of Civil Procedure
provides: SEC. 3. Motion and proceedings thereon.—The motion shall be served at least
ten (10) days before the time specified for the hearing. The adverse party may serve
opposing affidavits, depositions, or admission at least three (3) days before the hearing.
After the hearing, the judgment sought shall be rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file, show that, except as to the
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amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.
Same; Same; Same; Same; An issue of material fact exists if the answer or
responsive pleading filed specifically denies the material allegations of fact set forth in
the complaint or pleading.—An issue of material fact exists if the answer or responsive
pleading filed specifically denies the material allegations of fact set forth in the
complaint or pleading. If the issue of fact “requires the presentation of evidence, it is a
genuine issue of fact.” However, if the issue “could be resolved judiciously by plain
resort” to the pleadings, affidavits, depositions, and other papers on file, the issue of
fact raised is sham, and the trial court may resolve the action through summary
judgment.
Same; Same; Same; Same; “Summary Judgment” and “Judgment on the
Pleadings,” Distinguished.—A summary judgment is usually distinguished from a
judgment on the pleadings. Under Rule 34 of the 1997 Rules of Civil Procedure, trial
may likewise be dispensed with and a case decided through judgment on the pleadings
if the answer filed fails to tender an issue or otherwise admits the material allegations
of the claimant’s pleading. Judgment on the pleadings is proper when the answer filed
fails to tender any issue, or otherwise admits the material allegations in the complaint.
On the other hand, in a summary judgment, the answer filed tenders issues as specific
denials and affirmative defenses are pleaded, but the issues raised are sham, fictitious,
or otherwise not genuine.
Civil Law; Obligations; “Pure Obligations” and “Obligations with Resolutory Period,”
Distinguished.—On one hand, pure obligations, or obligations whose performance do
not depend upon a future or uncertain event, or upon a past event unknown to the
parties, are demandable at once. On the other hand, obligations with a resolutory
period also take effect at once but terminate upon arrival of the day certain.
Same; Contracts; “Contracts to Sell” and “Contracts of Conditional Sale,”
Distinguished.—In both contracts to sell and contracts of conditional sale, title to the
property remains with the seller until the buyer fully pays the purchase price. Both
contracts are subject to the positive suspensive condition of the buyer’s full payment of
the purchase price. In a contract of conditional sale, the buyer automatically acquires
title to the property upon full payment of the purchase price. This transfer of title is “by
operation of law without any further act having to be performed by the seller.” In a
contract to sell, transfer of title to the prospective buyer is not automatic. “The
prospective seller [must] convey title to the property [through] a deed of conditional
sale.” The distinction is important to determine the applicable laws and remedies in
12 | P a g e
case a party does not fulfill his or her obligations under the contract. In contracts of
conditional sale, our laws on sales under the Civil Code of the Philippines apply. On the
other hand, contracts to sell are not governed by our law on sales but by the Civil Code
provisions on conditional obligations. Specifically, Article 1191 of the Civil Code on the
right to rescind reciprocal obligations does not apply to contracts to sell. As this court
explained in Ong v. Court of Appeals, 301 SCRA 387 (1999), failure to fully pay the
purchase price in contracts to sell is not the breach of contract under Article 1191.
Failure to fully pay the purchase price is “merely an event which prevents the [seller’s]
obligation to convey title from acquiring binding force.” This is because “there can be
no rescission of an obligation that is still nonexistent, the suspensive condition not
having [happened].”
Same; Damages; Moral Damages; Moral damages may be awarded in case the
claimant experienced physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury.—Moral damages may be awarded in case the claimant experienced physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury.
Same; Same; Solidary Obligations; Liability of Corporate Officers; As an exception
to the rule, directors or trustees and corporate officers may be solidarily liable with the
corporation for corporate obligations if they acted “in bad faith or with gross negligence
in directing the corporate affairs.”—Under Article 1207 of the Civil Code of the
Philippines, there is solidary liability only when the obligation states it or when the law
or the nature of the obligation requires solidarity. In case of corporations, they are
solely liable for their obligations. The directors or trustees and officers are not liable
with the corporation even if it is through their acts that the corporation incurred the
obligation. This is because a corporation is separate and distinct from the persons
comprising it. As an exception to the rule, directors or trustees and corporate officers
may be solidarily liable with the corporation for corporate obligations if they acted “in
bad faith or with gross negligence in directing the corporate affairs.”
Remedial Law; Civil Procedure; Jurisdiction; An action to cancel a contract to sell,
similar to an action for rescission of contract of sale, is an action incapable of pecuniary
estimation.—Although we discussed that there is no rescission of contract to speak of in
contracts of conditional sale, we hold that an action to cancel a contract to sell, similar
to an action for rescission of contract of sale, is an action incapable of pecuniary
estimation. Like any action incapable of pecuniary estimation, an action to cancel a
contract to sell “demands an inquiry into other factors” aside from the amount of
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money to be awarded to the claimant. Specifically in this case, the trial court principally
determined whether Olivarez Realty Corporation failed to pay installments of the
property’s purchase price as the parties agreed upon in the deed of conditional sale.
The principal nature of Castillo’s action, therefore, is incapable of pecuniary estimation.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
Mendoza, Arzaga-Mendoza Law Firm for petitioners.
Herminio F. Valerio for respondent.
LEONEN, J.:
Trial may be dispensed with and a summary judgment rendered if the case can be
resolved judiciously by plain resort to the pleadings, affidavits, depositions, and other
papers filed by the parties.
This is a petition for review on certiorari1 of the Court of Appeals’ decision2 dated
July 20, 2010 and resolution3 dated March 18, 2011 in C.A.-G.R. CV No. 91244.
The facts as established from the pleadings of the parties are as follows:
Benjamin Castillo was the registered owner of a 346,918-square-meter parcel of land
located in Laurel, Batangas, covered by Transfer Certificate of Title No. T-19972.4 The
Philippine Tourism Authority allegedly claimed ownership of the same parcel of land
based on Transfer Certificate of Title No. T-18493.5
On April 5, 2000, Castillo and Olivarez Realty Corporation, represented by Dr. Pablo
R. Olivarez, entered into a contract of conditional sale6 over the property. Under the
deed of conditional sale, Castillo agreed to sell his property to Olivarez Realty
Corporation for P19,080,490.00. Olivarez Realty Corporation agreed to a down payment
of P5,000,000.00, to be paid according to the following schedule:
DATE AMOUNT
April 8, 2000 P500,000.00
May 8, 2000 500,000.00
May 16, 2000 500,000.00
June 8, 2000 1,000,000.00
July 8, 2000 500,000.00
August 8, 2000 500,000.00
September 8, 2000 500,000.00
October 8, 2000 500,000.00
November 8, 2000 500,000.007
14 | P a g e
As to the balance of P14,080,490.00, Olivarez Realty Corporation agreed to pay in 30

equal monthly installments every eighth day of the month beginning in the month that
the parties would receive a decision voiding the Philippine Tourism Authority’s title to
the property.8 Under the deed of conditional sale, Olivarez Realty Corporation shall file
the action against the Philippine Tourism Authority “with the full assistance of
[Castillo].”9 Paragraph C of the deed of conditional sale provides:
C. [Olivarez Realty Corporation] assumes the responsibility of taking necessary legal
action thru Court to have the claim/title TCT No. T-18493 of Philippine Tourism
Authority over the above described property be nullified and voided; with the full
assistance of [Castillo][.]10
Should the action against the Philippine Tourism Authority be denied, Castillo agreed
to reimburse all the amounts paid by Olivarez Realty Corporation. Paragraph D of the
deed of conditional sale provides:
D. In the event that the Court denie[s] the petition against the Philippine Tourism
Authority, all sums received by [Castillo] shall be reimbursed to [Olivarez Realty
Corporation] without interest[.]11
As to the “legitimate tenants” occupying the property, Olivarez Realty Corporation

undertook to pay them “disturbance compensation,” while Castillo undertook to clear
the land of the tenants within six months from the signing of the deed of conditional
sale. Should Castillo fail to clear the land within six months, Olivarez Realty Corporation
may suspend its monthly down payment until the tenants vacate the property.
Paragraphs E and F of the deed of conditional sale provide:
E. That [Olivarez Realty Corporation] shall pay the disturbance compensation to
legitimate agricultural tenants and fishermen occupants which in no case shall exceed
ONE MILLION FIVE HUNDRED THOUSAND (P1,500,000.00) PESOS. Said amount shall
not form part of the purchase price. In excess of this amount, all claims shall be for the
account of [Castillo];
F. That [Castillo] shall clear the land of [the] legitimate tenants within a period of six
(6) months upon signing of this Contract, and in case [Castillo] fails, [Olivarez Realty
Corporation] shall have the right to suspend the monthly down payment until such time
that the tenants [move] out of the land[.]12
The parties agreed that Olivarez Realty Corporation may immediately occupy the
property upon signing of the deed of conditional sale. Should the contract be cancelled,
Olivarez Realty Corporation agreed to return the property’s possession to Castillo and
15 | P a g e
forfeit all the improvements it may have introduced on the property. Paragraph I of the
deed of conditional sale states:
I. Immediately upon signing this Contract, [Olivarez Realty Corporation] shall be
entitled to occupy, possess and develop the subject property. In case this Contract is
canceled [sic], any improvement introduced by [the corporation] on the property shall
be forfeited in favor of [Castillo][.]13
On September 2, 2004, Castillo filed a complaint14against Olivarez Realty Corporation
and Dr. Olivarez with the Regional Trial Court of Tanauan City, Batangas.
Castillo alleged that Dr. Olivarez convinced him into selling his property to Olivarez
Realty Corporation on the representation that the corporation shall be responsible in
clearing the property of the tenants and in paying them disturbance compensation. He
further alleged that Dr. Olivarez solely prepared the deed of conditional sale and that he
was made to sign the contract with its terms “not adequately explained [to him]
in Tagalog.”15
After the parties had signed the deed of conditional sale, Olivarez Realty Corporation
immediately took possession of the property. However, the corporation only paid
P2,500,000.00 of the purchase price. Contrary to the agreement, the corporation did
not file any action against the Philippine Tourism Authority to void the latter’s title to
the property. The corporation neither cleared the land of the tenants nor paid them
disturbance compensation. Despite demand, Olivarez Realty Corporation refused to fully
pay the purchase price.16
Arguing that Olivarez Realty Corporation committed substantial breach of the
contract of conditional sale and that the deed of conditional sale was a contract of
adhesion, Castillo prayed for rescission of contract under Article 1191 of the Civil Code
of the Philippines. He further prayed that Olivarez Realty Corporation and Dr. Olivarez
be made solidarily liable for moral damages, exemplary damages, attorney’s fees, and
costs of suit.17
In their answer,18 Olivarez Realty Corporation and Dr. Olivarez admitted that the
corporation only paid P2,500,000.00 of the purchase price. In their defense, defendants
alleged that Castillo failed to “fully assist”19 the corporation in filing an action against
the Philippine Tourism Authority. Neither did Castillo clear the property of the tenants
within six months from the signing of the deed of conditional sale. Thus, according to
defendants, the corporation had “all the legal right to withhold the subsequent
payments to [fully pay] the purchase price.”20
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Olivarez Realty Corporation and Dr. Olivarez prayed that Castillo’s complaint be
dismissed. By way of compulsory counterclaim, they prayed for P100,000.00 litigation
expenses and P50,000.00 attorney’s fees.21
Castillo replied to the counterclaim,22 arguing that Olivarez Realty Corporation and
Dr. Olivarez had no right to litigation expenses and attorney’s fees. According to
Castillo, the deed of conditional sale clearly states that the corporation “assume[d] the
responsibility of taking necessary legal action”23 against the Philippine Tourism
Authority, yet the corporation did not file any case. Also, the corporation did not pay
the tenants disturbance compensation. For the corporation’s failure to fully pay the
purchase price, Castillo claimed that he had “all the right to pray for the rescission of
the [contract],”24 and he “should not be held liable . . . for any alleged damages by way
of litigation expenses and attorney’s fees.”25
On January 10, 2005, Castillo filed a request for admission,26 requesting Dr. Olivarez
to admit under oath the genuineness of the deed of conditional sale and Transfer
Certificate of Title No. T-19972. He likewise requested Dr. Olivarez to admit the truth of
the following factual allegations:
1. That Dr. Olivarez is the president of Olivarez Realty Corporation;
2. That Dr. Olivarez offered to purchase the parcel of land from Castillo and that he
undertook to clear the property of the tenants and file the court action to void the
Philippine Tourism Authority’s title to the property;
3. That Dr. Olivarez caused the preparation of the deed of conditional sale;
4. That Dr. Olivarez signed the deed of conditional sale for and on behalf of Olivarez
Realty Corporation;
5. That Dr. Olivarez and the corporation did not file any action against the Philippine
Tourism Authority;
6. That Dr. Olivarez and the corporation did not pay the tenants disturbance
compensation and failed to clear the property of the tenants;
andChanRoblesVirtualawlibrary
7. That Dr. Olivarez and the corporation only paid P2,500,000.00 of the agreed
purchase price.27
On January 25, 2005, Dr. Olivarez and Olivarez Realty Corporation filed their
objections to the request for admission,28 stating that they “reiterate[d] the allegations
[and denials] in their [answer].”29
The trial court conducted pre-trial conference on December 17, 2005.
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On March 8, 2006, Castillo filed a motion for summary judgment and/or judgment on
the pleadings.30He argued that Olivarez Realty Corporation and Dr. Olivarez
“substantially admitted the material allegations of [his] complaint,”31specifically:
1. That the corporation failed to fully pay the purchase price for his property;32
2. That the corporation failed to file an action to void the Philippine Tourism
Authority’s title to his property;33 and
3. That the corporation failed to clear the property of the tenants and pay them
disturbance compensation.34
Should judgment on the pleadings be improper, Castillo argued that summary
judgment may still be rendered as there is no genuine issue as to any material
fact.35 He cited Philippine National Bank v. Noah’s Ark Sugar Refinery36 as authority.
Castillo attached to his motion for summary judgment and/or judgment on the
pleadings his affidavit37 and the affidavit of a Marissa Magsino38attesting to the truth of
the material allegations of his complaint.
Olivarez Realty Corporation and Dr. Olivarez opposed39 the motion for summary
judgment and/or judgment on the pleadings, arguing that the motion was “devoid of
merit.”40 They reiterated their claim that the corporation withheld further payments of
the purchase price because “there ha[d] been no favorable decision voiding the title of
the Philippine Tourism Authority.”41 They added that Castillo sold the property to
another person and that the sale was allegedly litigated in Quezon City.42
Considering that a title adverse to that of Castillo’s existed, Olivarez Realty
Corporation and Dr. Olivarez argued that the case should proceed to trial and Castillo
be required to prove that his title to the property is “not spurious or fake and that he
had not sold his property to another person.”43
In reply to the opposition to the motion for summary judgment and/or judgment on
the pleadings,44 Castillo maintained that Olivarez Realty Corporation was responsible for
the filing of an action against the Philippine Tourism Authority. Thus, the corporation
could not fault Castillo for not suing the Philippine Tourism Authority.45 The corporation
illegally withheld payments of the purchase price.
As to the claim that the case should proceed to trial because a title adverse to his
title existed, Castillo argued that the Philippine Tourism Authority’s title covered another
lot, not his property.46
During the hearing on August 3, 2006, Olivarez Realty Corporation and Dr. Olivarez
prayed that they be given 30 days to file a supplemental memorandum on Castillo’s
motion for summary judgment and/or judgment on the pleadings.47
18 | P a g e
The trial court granted the motion. It gave Castillo 20 days to reply to the
memorandum and the corporation and Dr. Olivarez 15 days to respond to Castillo’s
reply.48
In their supplemental memorandum,49 Olivarez Realty Corporation and Dr. Olivarez
argued that there was “an obvious ambiguity”50 as to which should occur first — the
payment of disturbance compensation to the tenants or the clearing of the property of
the tenants.51This ambiguity, according to defendants, is a genuine issue and “ought to
be threshed out in a full blown trial.”52
Olivarez Realty Corporation and Dr. Olivarez added that Castillo prayed for
irreconcilable reliefs of reformation of instrument and rescission of contract.53Thus,
Castillo’s complaint should be dismissed.
Castillo replied54 to the memorandum, arguing that there was no genuine issue
requiring trial of the case. According to Castillo, “common sense dictates . . . that the
legitimate tenants of the [property] shall not vacate the premises without being paid
any disturbance compensation . . .”55 Thus, the payment of disturbance compensation
should occur first before clearing the property of the tenants.
With respect to the other issues raised in the supplemental memorandum,
specifically, that Castillo sold the property to another person, he argued that these
issues should not be entertained for not having been presented during pre-trial.56
In their comment on the reply memorandum,57Olivarez Realty Corporation and Dr.
Olivarez reiterated their arguments that certain provisions of the deed of conditional
sale were ambiguous and that the complaint prayed for irreconcilable reliefs.58
As to the additional issues raised in the supplemental memorandum, defendants argued
that issues not raised and evidence not identified and pre-marked during pre-trial may
still be raised and presented during trial for good cause shown. Olivarez Realty
Corporation and Dr. Olivarez prayed that Castillo’s complaint be dismissed for lack of
merit.59
Ruling of the trial court
The trial court found that Olivarez Realty Corporation and Dr. Olivarez’s answer
“substantially [admitted the material allegations of Castillo’s] complaint and [did] not . .
. raise any genuine issue [as to any material fact].”60
Defendants admitted that Castillo owned the parcel of land covered by Transfer
Certificate of Title No. T-19972. They likewise admitted the genuineness of the deed of
conditional sale and that the corporation only paid P2,500,000.00 of the agreed
purchase price.61
19 | P a g e
According to the trial court, the corporation was responsible for suing the Philippine
Tourism Authority and for paying the tenants disturbance compensation. Since
defendant corporation neither filed any case nor paid the tenants disturbance
compensation, the trial court ruled that defendant corporation had no right to withhold
payments from Castillo.62
As to the alleged ambiguity of paragraphs E and F of the deed of conditional sale,
the trial court ruled that Castillo and his witness, Marissa Magsino, “clearly
established”63 in their affidavits that the deed of conditional sale was a contract of
adhesion. The true agreement between the parties was that the corporation would both
clear the land of the tenants and pay them disturbance compensation.
With these findings, the trial court ruled that Olivarez Realty Corporation breached
the contract of conditional sale. In its decision64 dated April 23, 2007, the trial court
ordered the deed of conditional sale rescinded and the P2,500,000.00 forfeited in favor
of Castillo “as damages under Article 1191 of the Civil Code.”65
The trial court declared Olivarez Realty Corporation and Dr. Olivarez solidarily liable
to Castillo for P500,000.00 as moral damages, P50,000.00 as exemplary damages, and
P50,000.00 as costs of suit.66
Olivarez Realty Corporation and Dr. Olivarez appealed to the Court of Appeals.67
In its decision68 dated July 20, 2010, the Court of Appeals affirmed in toto the trial
court’s decision. According to the appellate court, the trial court “did not err in its
finding that there is no genuine controversy as to the facts involved [in this
case].”69 The trial court, therefore, correctly rendered summary judgment.70
As to the trial court’s award of damages, the appellate court ruled that a court may
award damages through summary judgment “if the parties’ contract categorically [stipu-
lates] the respective obligations of the parties in case of default.” 71 As found by the trial
court, paragraph I of the deed of conditional sale categorically states that “in case [the
deed of conditional sale] is cancelled, any improvement introduced by [Olivarez Realty
Corporation] on the property shall be forfeited in favor of [Castillo].”72 Considering that
Olivarez Realty Corporation illegally retained possession of the property, Castillo
forewent rent to the property and “lost business opportunities.”73 The P2,500,000.00
down payment, according to the appellate court, should be forfeited in favor of Castillo.
Moral and exemplary damages and costs of suit were properly awarded.
On August 11, 2010, Olivarez Realty Corporation and Dr. Olivarez filed their motion
for reconsideration,74 arguing that the trial court exceeded its authority in forfeiting the
P2,500,000.00 down payment and awarding P500,000.00 in moral damages to Castillo.
20 | P a g e
They argued that Castillo only prayed for a total of P500,000.00 as actual and moral
damages in his complaint.75 Appellants prayed that the Court of Appeals “take a second
hard look”76 at the case and reconsider its decision.
In the resolution77 dated March 18, 2011, the Court of Appeals denied the motion for
reconsideration.
Proceedings before this court
Olivarez Realty Corporation and Dr. Olivarez filed their petition for review
on certiorari78 with this court. Petitioners argue that the trial court and the Court of
Appeals erred in awarding damages to Castillo. Under Section 3, Rule 35 of the 1997
Rules of Civil Procedure, summary judgment may be rendered except as to the amount
of damages. Thus, the Court of Appeals “violated the procedural steps in rendering
summary judgment.”79
Petitioners reiterate that there are genuine issues of material fact to be resolved in
this case. Thus, a full-blown trial is required, and the trial court prematurely decided the
case through summary judgment. They cite Torres v. Olivarez Realty Corporation and
Dr. Pablo Olivarez,80 a case decided by the Ninth Division of the Court of Appeals.
In Torres, Rosario Torres was the registered owner of a parcel of land covered by
Transfer Certificate of Title No. T-19971. Under a deed of conditional sale, she sold her
property to Olivarez Realty Corporation for P17,345,900.00. When the corporation failed
to fully pay the purchase price, she sued for rescission of contract with damages. In
their answer, the corporation and Dr. Olivarez argued that they discontinued payment
because Rosario Torres failed to clear the land of the tenants.
Similar to Castillo, Torres filed a motion for summary judgment, which the trial court
granted. On appeal, the Court of Appeals set aside the trial court’s summary judgment
and remanded the case to the trial court for further proceedings.81 The Court of Appeals
ruled that the material allegations of the complaint “were directly disputed by [the
corporation and Dr. Olivarez] in their answer”82 when they argued that they refused to
pay because Torres failed to clear the land of the tenants.
With the Court of Appeals’ decision in Torres, Olivarez Realty Corporation and Dr.
Olivarez argue that this case should likewise be remanded to the trial court for further
proceedings under the equipoise rule.
Petitioners maintain that Castillo availed himself of the irreconcilable reliefs of
reformation of instrument and rescission of contract.83 Thus, the trial court should have
dismissed the case outright.
Petitioners likewise argue that the trial court had no jurisdiction to decide the case as
Castillo failed to pay the correct docket fees.84 Petitioners argue that Castillo should
21 | P a g e
have paid docket fees based on the property’s fair market value since Castillo’s
complaint is a real action.85
In his comment,86 Castillo maintains that there are no genuine issues as to any
material fact in this case. The trial court, therefore, correctly rendered summary
judgment.
As to petitioners’ claim that the trial court had no jurisdiction to decide the case,
Castillo argues that he prayed for rescission of contract in his complaint. This action is
incapable of pecuniary estimation, and the Clerk of Court properly computed the docket
fees based on this prayer.87
Olivarez Realty Corporation and Dr. Olivarez replied,88 reiterating their arguments in
the petition for review on certiorari.
The issues for our resolution are the following:
I. Whether the trial court erred in rendering summary judgment;
II. Whether proper docket fees were paid in this case.
The petition lacks merit.
I
The trial court correctly rendered

summary judgment, as there were
no genuine issues of material fact
in this case
Trial “is the judicial examination and determination of the issues between the parties
to the action.”89During trial, parties “present their respective evidence of their claims
and defenses.”90 Parties to an action have the right “to a plenary trial of the case”91 to
ensure that they were given a right to fully present evidence on their respective claims.
There are instances, however, when trial may be dispensed with. Under Rule 35 of
the 1997 Rules of Civil Procedure, a trial court may dispense with trial and proceed to
decide a case if from the pleadings, affidavits, depositions, and other papers on file,
there is no genuine issue as to any material fact. In such a case, the judgment issued is
called a summary judgment.
A motion for summary judgment is filed either by the claimant or the defending
party.92 The trial court then hears the motion for summary judgment. If indeed there
are no genuine issues of material fact, the trial court shall issue summary judgment.
Section 3, Rule 35 of the 1997 Rules of Civil Procedure provides:
3. SEC.Motion and proceedings thereon.—The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party may serve
22 | P a g e
opposing affidavits, depositions, or admission at least three (3) days before the hearing.
After the hearing, the judgment sought shall be rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.
An issue of material fact exists if the answer or responsive pleading filed specifically
denies the material allegations of fact set forth in the complaint or pleading. If the issue
of fact “requires the presentation of evidence, it is a genuine issue of fact.”93 However,
if the issue “could be resolved judiciously by plain resort”94 to the pleadings, affidavits,
depositions, and other papers on file, the issue of fact raised is sham, and the trial court
may resolve the action through summary judgment.
A summary judgment is usually distinguished from a judgment on the pleadings.
Under Rule 34 of the 1997 Rules of Civil Procedure, trial may likewise be dispensed with
and a case decided through judgment on the pleadings if the answer filed fails to
tender an issue or otherwise admits the material allegations of the claimant’s
pleading.95
Judgment on the pleadings is proper when the answer filed fails to tender any issue,
or otherwise admits the material allegations in the complaint.96 On the other hand, in a
summary judgment, the answer filed tenders issues as specific denials and affirmative
defenses are pleaded, but the issues raised are sham, fictitious, or otherwise not
genuine.97
In this case, Olivarez Realty Corporation admitted that it did not fully pay the
purchase price as agreed upon in the deed of conditional sale. As to why it withheld
payments from Castillo, it set up the following affirmative defenses: first, Castillo did
not file a case to void the Philippine Tourism Authority’s title to the property; second,
Castillo did not clear the land of the tenants; third, Castillo allegedly sold the property
to a third person, and the subsequent sale is currently being litigated before a Quezon
City court.
Considering that Olivarez Realty Corporation and Dr. Olivarez’s answer tendered an
issue, Castillo properly availed himself of a motion for summary judgment.
However, the issues tendered by Olivarez Realty Corporation and Dr. Olivarez’s
answer are not genuine issues of material fact. These are issues that can be resolved
judiciously by plain resort to the pleadings, affidavits, depositions, and other papers on
file; otherwise, these issues are sham, fictitious, or patently unsubstantial.
Petitioner corporation refused to fully pay the purchase price because no court case
was filed to void the Philippine Tourism Authority’s title on the property. However,
23 | P a g e
paragraph C of the deed of conditional sale is clear that petitioner Olivarez Realty
Corporation is responsible for initiating court action against the Philippine Tourism
Authority:
C. [Olivarez Realty Corporation] assumes the responsibility of taking necessary legal
action thru Court to have the claim/title TCT No. T-18493 of Philippine Tourism
Authority over the above described property be nullified and voided; with the full
assistance of [Castillo].98
Castillo’s alleged failure to “fully assist”99 the corporation in filing the case is not a
defense. As the trial court said, “how can [Castillo] assist [the corporation] when [the
latter] did not file the action [in the first place?]”100
Neither can Olivarez Realty Corporation argue that it refused to fully pay the
purchase price due to the Philippine Tourism Authority’s adverse claim on the property.
The corporation knew of this adverse claim when it entered into a contract of
conditional sale. It even obligated itself under paragraph C of the deed of conditional
sale to sue the Philippine Tourism Authority. This defense, therefore, is sham.
Contrary to petitioners’ claim, there is no “obvious ambiguity”101 as to which should
occur first — the payment of the disturbance compensation or the clearing of the land
within six months from the signing of the deed of conditional sale. The obligations must
be performed simultaneously. In this case, the parties should have coordinated to
ensure that tenants on the property were paid disturbance compensation and were
made to vacate the property six months after the signing of the deed of conditional
sale.
On one hand, pure obligations, or obligations whose performance do not depend upon
a future or uncertain event, or upon a past event unknown to the parties, are
demandable at once.102 On the other hand, obligations with a resolutory period also
take effect at once but terminate upon arrival of the day certain.103
Olivarez Realty Corporation’s obligation to pay disturbance compensation is a pure
obligation. The performance of the obligation to pay disturbance compensation did not
depend on any condition. Moreover, the deed of conditional sale did not give the
corporation a period to perform the obligation. As such, the obligation to pay
disturbance compensation was demandable at once. Olivarez Realty Corporation should
have paid the tenants disturbance compensation upon execution of the deed of
conditional sale.
With respect to Castillo’s obligation to clear the land of the tenants within six months
from the signing of the contract, his obligation was an obligation with a resolutory
period. The obligation to clear the land of the tenants took effect at once, specifically,
24 | P a g e
upon the parties’ signing of the deed of conditional sale. Castillo had until October 2,
2000, six months from April 5, 2000 when the parties signed the deed of conditional
sale, to clear the land of the tenants.
Olivarez Realty Corporation, therefore, had no right to withhold payments of the
purchase price. As the trial court ruled, Olivarez Realty Corporation “can only claim
noncompliance [of the obligation to clear the land of the tenants in] October
2000.”104 It said:
. . . it is clear that defendant [Olivarez Realty Corporation] should have paid the
installments on the P5 million down payment up to October 8, 2000, or a total of
P4,500,000.00. That is the agreement because the only time that defendant
[corporation] can claim noncompliance of the condition is after October, 2000 and so it
has the clear obligation to pay up to the October 2000 the agreed installments. Since it
paid only P2,500,000.00, then a violation of the contract has already been committed. .
. .105
The claim that Castillo sold the property to another is fictitious and was made in bad
faith to prevent the trial court from rendering summary judgment. Petitioners did not
elaborate on this defense and insisted on revealing the identity of the buyer only during
trial.106 Even in their petition for review on certiorari, petitioners never disclosed the
name of this alleged buyer. Thus, as the trial court ruled, this defense did not tender a
genuine issue of fact, with the defense “bereft of details.”107
Castillo’s alleged prayer for the irreconcilable reliefs of rescission of contract and
reformation of instrument is not a ground to dismiss his complaint. A plaintiff may
allege two or more claims in the complaint alternatively or hypothetically, either in one
cause of action or in separate causes of action per Section 2, Rule 8 of the 1997 Rules
of Civil Procedure.108 It is the filing of two separate cases for each of the causes of
action that is prohibited since the subsequently filed case may be dismissed under
Section 4, Rule 2 of the 1997 Rules of Civil Procedure109 on splitting causes of action.
As demonstrated, there are no genuine issues of material fact in this case. These are
issues that can be resolved judiciously by plain resort to the pleadings, affidavits,
depositions, and other papers on file. As the trial court found, Olivarez Realty
Corporation illegally withheld payments of the purchase price. The trial court did not err
in rendering summary judgment.
II
Castillo is entitled to cancel the

contract of conditional sale
25 | P a g e
Since Olivarez Realty Corporation illegally withheld payments of the purchase price,
Castillo is entitled to cancel his contract with petitioner corporation. However, we
properly characterize the parties’ contract as a contract to sell, not a contract of
conditional sale.
In both contracts to sell and contracts of conditional sale, title to the property
remains with the seller until the buyer fully pays the purchase price.110 Both contracts
are subject to
_______________
ficient, the pleading is not made insufficient by the insufficiency of one or more of
the alternative statements. the positive suspensive condition of the buyer’s full payment
of the purchase price.111
In a contract of conditional sale, the buyer automatically acquires title to the
property upon full payment of the purchase price.112 This transfer of title is “by
operation of law without any further act having to be performed by the seller.” 113 In a
contract to sell, transfer of title to the prospective buyer is not automatic.114 “The
prospective seller [must] convey title to the property [through] a deed of conditional
sale.”115
The distinction is important to determine the applicable laws and remedies in case a
party does not fulfill his or her obligations under the contract. In contracts of
conditional sale, our laws on sales under the Civil Code of the Philippines apply. On the
other hand, contracts to sell are not governed by our law on sales 116 but by the Civil
Code provisions on conditional obligations.
Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal
obligations does not apply to contracts to sell.117 As this court explained in Ong v. Court
of Appeals,118 failure to fully pay the purchase price in contracts to sell is not the breach
of contract under Article 1191.119 Failure to fully pay the purchase price is “merely an
event which prevents the [seller’s] obligation to convey title from acquiring binding
force.”120 This is because “there can be no rescission of an obligation that is still
nonexistent, the suspensive condition not having [happened].”121
In this case, Castillo reserved his title to the property and undertook to execute a deed
of absolute sale upon Olivarez Realty Corporation’s full payment of the purchase
price.122 Since Castillo still has to execute a deed of absolute sale to Olivarez Realty
Corporation upon full payment of the purchase price, the transfer of title is not
automatic. The contract in this case is a contract to sell.
26 | P a g e
As this case involves a contract to sell, Article 1191 of the Civil Code of the Philippines
does not apply. The contract to sell is instead cancelled, and the parties shall stand as if
the obligation to sell never existed.123
Olivarez Realty Corporation shall return the possession of the property to Castillo.
Any improvement that Olivarez Realty Corporation may have introduced on the property
shall be forfeited in favor of Castillo per paragraph I of the deed of conditional sale:
I. Immediately upon signing this Contract, [Olivarez Realty Corporation] shall be
entitled to occupy, possess and develop the subject property. In case this Contract is
cancelled, any improvement introduced by [Olivarez Realty Corporation] on the
property shall be forfeited in favor of [Castillo.]124
As for prospective sellers, this court generally orders the reimbursement of the
installments paid for the property when setting aside contracts to sell. 125 This is true
especially if the property’s possession has not been delivered to the prospective buyer
prior to the transfer of title.
In this case, however, Castillo delivered the possession of the property to Olivarez
Realty Corporation prior to the transfer of title. We cannot order the reimbursement of
the installments paid.
In Gomez v. Court of Appeals,126 the City of Manila and Luisa Gomez entered into a
contract to sell over a parcel of land. The city delivered the property’s possession to
Gomez. She fully paid the purchase price for the property but violated the terms of the
contract to sell by renting out the property to other persons. This court set aside the
contract to sell for her violation of the terms of the contract to sell. It ordered the
installments paid forfeited in favor of the City of Manila “as reasonable compensation
for [Gomez’s] use of the [property]”127 for eight years.
In this case, Olivarez Realty Corporation failed to fully pay the purchase price for the
property. It only paid P2,500,000.00 out of the P19,080,490.00 agreed purchase price.
Worse, petitioner corporation has been in possession of Castillo’s property for 14 years
since May 5, 2000 and has not paid for its use of the property.
Similar to the ruling in Gomez, we order the P2,500,000.00 forfeited in favor of
Castillo as reasonable compensation for Olivarez Realty Corporation’s use of the
property.
III
Olivarez Realty Corporation is liable

for moral and exemplary damages
and attorney’s fees
27 | P a g e
We note that the trial court erred in rendering summary judgment on the amount of
damages. Under Section 3, Rule 35 of the 1997 Rules of Civil Procedure, summary
judgment may be rendered, except as to the amount of damages.
In this case, the trial court erred in forfeiting the P2,500,000.00 in favor of Castillo as
damages under Article 1191 of the Civil Code of the Philippines. As discussed, there is
no breach of contract under Article 1191 in this case.
The trial court likewise erred in rendering summary judgment on the amount of
moral and exemplary damages and attorney’s fees.
Nonetheless, we hold that Castillo is entitled to moral damages, exemplary damages,
and attorney’s fees.
Moral damages may be awarded in case the claimant experienced physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury.128
As for exemplary damages, they are awarded in addition to moral damages by way
of example or correction for the public good.129 Specifically in contracts, exemplary
damages may be awarded if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.130
Under the deed of conditional sale, Olivarez Realty Corporation may only suspend
the monthly down payment in case Castillo fails to clear the land of the tenants six
months from the signing of the instrument. Yet, even before the sixth month arrived,
Olivarez Realty Corporation withheld payments for Castillo’s property. It even used as a
defense the fact that no case was filed against the Philippine Tourism Authority when,
under the deed of conditional sale, Olivarez Realty Corporation was clearly responsible
for initiating action against the Philippine Tourism Authority. These are oppressive and
malevolent acts, and we find Castillo entitled to P500,000.00 moral damages and
P50,000.00 exemplary damages:
Plaintiff Castillo is entitled to moral damages because of the evident bad faith
exhibited by defendants in dealing with him regarding the sale of his lot to defendant
[Olivarez Realty Corporation]. He suffered much prejudice due to the failure of
defendants to pay him the balance of purchase price which he expected to use for his
needs which caused him wounded feelings, sorrow, mental anxiety and sleepless nights
for which defendants should pay P500,000.00 as moral damages more than six (6)
years had elapsed and defendants illegally and unfairly failed and refused to pay their
legal obligations to plaintiff, unjustly taking advantage of a poor uneducated man like
plaintiff causing much sorrow and financial difficulties. Moral damages in favor of
plaintiff is clearly justified . . . [Castillo] is also entitled to P50,000.00 as exemplary
28 | P a g e
damages to serve as a deterrent to other parties to a contract to religiously comply with

their prestations under the contract.131
We likewise agree that Castillo is entitled to attorney’s fees in addition to the
exemplary damages.132Considering that Olivarez Realty Corporation refused to satisfy
Castillo’s plainly valid, just, and demandable claim,133 the award of P50,000.00 as
attorney’s fees is in order.
However, we find that Dr. Pablo R. Olivarez is not solidarily liable with Olivarez
Realty Corporation for the amount of damages.
Under Article 1207 of the Civil Code of the Philippines, there is solidary liability only
when the obligation states it or when the law or the nature of the obligation requires
solidarity.134 In case of corporations, they are solely liable for their obligations.135 The
directors or trustees and officers are not liable with the corporation even if it is through
their acts that the corporation incurred the obligation. This is because a corporation is
separate and distinct from the persons comprising it.136
As an exception to the rule, directors or trustees and corporate officers may be
solidarily liable with the corporation for corporate obligations if they acted “in bad faith
or with gross negligence in directing the corporate affairs.”137
In this case, we find that Castillo failed to prove with preponderant evidence that it
was through Dr. Olivarez’s bad faith or gross negligence that Olivarez Realty
Corporation failed to fully pay the purchase price for the property. Dr. Olivarez’s alleged
act of making Castillo sign the deed of conditional sale without explaining to the latter
the deed’s terms in Tagalog is not reason to hold Dr. Olivarez solidarily liable with the
corporation. Castillo had a choice not to sign the deed of conditional sale. He could
have asked that the deed of conditional sale be written in Tagalog.
Thus, Olivarez Realty Corporation is solely liable for the moral and exemplary
damages and attorney’s fees to Castillo.
IV
The trial court acquired jurisdiction

over Castillo’s action as he paid
the correct docket fees
Olivarez Realty Corporation and Dr. Olivarez claimed that the trial court had no
jurisdiction to take cognizance of the case. In the reply/motion to dismiss the
complaint138 they filed with the Court of Appeals, petitioners argued that Castillo failed
to pay the correct amount of docket fees. Stating that this action is a real action,
29 | P a g e
petitioners argued that the docket fee Castillo paid should have been based on the fair
market value of the property. In this case, Castillo only paid P4,297.00, which is
insufficient “if the real nature of the action was admitted and the fair market value of
the property was disclosed and made the basis of the amount of docket fees to be paid
to the court.”139 Thus, according to petitioners, the case should be dismissed for lack of
jurisdiction.
Castillo countered that his action for rescission is an action incapable of pecuniary
estimation. Thus, the Clerk of Court of the Regional Trial Court of Tanauan City did not
err in assessing the docket fees based on his prayer.
We rule for Castillo. In De Leon v. Court of Appeals,140 this court held that an action
for rescission of contract of sale of real property is an action incapable of pecuniary
estimation. In De Leon, the action involved a real property. Nevertheless, this court
held that “it is the nature of the action as one for rescission of contract which is
controlling.”141 Consequently, the docket fees to be paid shall be for actions incapable
of pecuniary estimation, regardless if the claimant may eventually recover the real
property. This court said:
. . . the Court in Bautista v. Lim, held that an action for rescission of contract is one
which cannot be estimated and therefore the docket fee for its filing should be the flat
amount of P200.00 as then fixed in the former Rule 141, §141, §5(10). Said this Court:
We hold that Judge Dalisay did not err in considering Civil Case No. V-144 as
basically one for rescission or annulment of contract which is not susceptible of
pecuniary estimation (1 Moran’s Comments on the Rules of Court, p. 55, 1970 ed;
Lapitan vs. Scandia, Inc., L-24668, July 31, 1968, 24 SCRA 479, 481-483).
Consequently, the fee for docketing it is P200, an amount already paid by plaintiff,
now respondent Matilda Lim. (She should pay also the two pesos legal research fund
fee, if she has not paid it, as required in Section 4 of Republic Act No. 3870, the charter
of the U.P. Law Center.)
Thus, although eventually the result may be the recovery of land, it is the nature of
the action as one for rescission of contract which is controlling. The Court of Appeals
correctly applied these cases to the present one. As it said:
We would like to add the observations that since the action of petitioners [private
respondents] against private respondents [petitioners] is solely for annulment or
rescission which is not susceptible of pecuniary estimation, the action should not be
confused and equated with the “value of the property” subject of the transaction; that
by the very nature of the case, the allegations, and specific prayer in the
complaint, sans any prayer for recovery of money and/or value of the transaction, or for
30 | P a g e
actual or compensatory damages, the assessment and collection of the legal fees
should not be intertwined with the merits of the case and/or what may be its end
result; and that to sustain private respondents’ [petitioners’] position on what the
respondent court may decide after all, then the assessment should be deferred and
finally assessed only after the court had finally decided the case, which cannot be done
because the rules require that filing fees should be based on what is alleged and prayed
for in the face of the complaint and paid upon the filing of the complaint.142
Although we discussed that there is no rescission of contract to speak of in contracts

of conditional sale, we hold that an action to cancel a contract to sell, similar to an
action for rescission of contract of sale, is an action incapable of pecuniary estimation.
Like any action incapable of pecuniary estimation, an action to cancel a contract to sell
“demands an inquiry into other factors”143 aside from the amount of money to be
awarded to the claimant. Specifically in this case, the trial court principally determined
whether Olivarez Realty Corporation failed to pay installments of the property’s
purchase price as the parties agreed upon in the deed of conditional sale. The principal
nature of Castillo’s action, therefore, is incapable of pecuniary estimation.
All told, there is no issue that the parties in this case entered into a contract to sell a
parcel of land and that Olivarez Realty Corporation failed to fully pay the installments
agreed upon. Consequently, Castillo is entitled to cancel the contract to sell.
WHEREFORE, the petition for review on certiorari is DENIED. The Court of
Appeals’ decision dated July 20, 2010 and in C.A.-G.R. CV No. 91244
is AFFIRMEDwith MODIFICATION.
The deed of conditional sale dated April 5, 2000 is declared CANCELLED. Petitioner
Olivarez Realty Corporation shall RETURN to respondent Benjamin Castillo the
possession of the property covered by Transfer Certificate of Title No.
T-19972 together with all the improvements that petitioner corporation introduced on
the property. The amount of P2,500,000.00 is FORFEITED in favor of respondent
Benjamin Castillo as reasonable compensation for the use of petitioner Olivarez Realty
Corporation of the property.
Petitioner Olivarez Realty Corporation shall PAYrespondent Benjamin Castillo
P500,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00 as
attorney’s fees with interest at 6% per annum from the time this decision becomes final
and executory until petitioner corporation fully pays the amount of damages.144
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Villarama, Jr.** and Mendoza, JJ., concur.
31 | P a g e
Petition denied, judgment affirmed with modification.
Notes.—A summary judgment is apt when the essential facts of the case are
uncontested or the parties do not raise any genuine issue of fact. (Bank of the
Philippine Islands, Inc. vs. Yu, 610 SCRA 412 [2010])
Payment made by one of the solidary debtors extinguishes the obligation. (Vigilla vs.
Philippine College of Criminology, Inc., 698 SCRA 247 [2013])
——o0o——
32 | P a g e
CASES REPORTED
ANNOTATED REPORTS COURT SUPREME
____________________
September 29, 2014. G.R. No. 195594.*
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL IRRIGATION

ADMINISTRATION, petitioner, vs. SPOUSES ROGELIO LAZO and DOLORES LAZO,
respondents.
Remedial Law; Special Civil Actions; Certiorari; Although the direct filing of petitions
for certiorari with the Court of Appeals (CA) is discouraged when litigants may still
resort to remedies with the trial court, the acceptance of and the grant of due course to
a petition for certiorari is generally addressed to the sound discretion of the court.—A
petition for certiorari may be given due course notwithstanding that no motion for
reconsideration was filed in the trial court. Although the direct filing of petitions
for certiorari with the CA is discouraged when litigants may still resort to remedies with
the trial court, the acceptance of and the grant of due course to a petition
for certiorari is generally addressed to the sound discretion of the court because the
technical provisions of the Rules may be relaxed or suspended if it will result in a
manifest failure or miscarriage of justice.
Same; Same; Same; Motion for Reconsideration; The general rule is that a motion
for reconsideration is a condition sine qua non before a petition for certiorari may lie, its
purpose being to grant an opportunity for the court a quo to correct any error
attributed to it by a reexamination of the legal and factual circumstances of the case;
Exceptions.—The general rule is that a motion for reconsideration is a condition sine
qua non before a petition for certiorari may lie, its purpose being to grant an
opportunity for the court a quo to correct any error attributed to it by a reexamination
of the legal and factual circumstances of the case. However, the rule is not absolute
and jurisprudence has laid down the following exceptions when the filing of a petition
for certiorari is proper notwithstanding the failure to file a motion for reconsideration:
(a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b)
where the questions raised in the certiorari proceedings have been duly raised and
passed upon by the lower court, or are the same as those raised and passed upon in
the lower court; (c) where there is an urgent necessity for the resolution of the
33 | P a g e
question and any further delay would prejudice the interests of the Government or of
the petitioner or the subject matter of the petition is perishable; (d) where, under the
circumstances, a motion for reconsideration would be useless; (e) where petitioner was
deprived of due process and there is extreme urgency for relief; (f) where, in a criminal
case, relief from an order of arrest is urgent and the granting of such relief by the trial
court is improbable; (g) where the proceedings in the lower court are a nullity for lack
of due process; (h) where the proceeding was ex parte or in which the petitioner had
no opportunity to object; and (i) where the issue raised is one purely of law or public
interest is involved.
Same; Docket Fees; Late payment of docket fees may be admitted when the party
showed willingness to abide by the rules through immediate payment of the required
fees.—While it has been stressed that payment of docket and other fees within the
prescribed period is mandatory for the perfection of the appeal and that such payment
is not a mere technicality of law or procedure, the Court, in exceptional circumstances,
has allowed a liberal application of the Rules when the payments of the required docket
fees were delayed only for a few days. Indeed, late payment of docket fees may be
admitted when the party showed willingness to abide by the rules through immediate
payment of the required fees.
Same; Civil Procedure; Forum Shopping; Forum shopping is committed by a party
who, having received an adverse judgment in one forum, seeks another opinion in
another court, other than by appeal or special civil action of certiorari.—Forum shopping
is committed by a party who, having received an adverse judgment in one forum, seeks
another opinion in another court, other than by appeal or special civil action
of certiorari. It is the institution of two or more suits in different courts, either
simultaneously or successively, in order to ask the courts to rule on the same or related
causes and/or to grant the same or substantially the same reliefs.
Same; Same; Republic Act No. 8975; Temporary Restraining Orders; Preliminary
Injunction; Republic Act (RA) No. 8975, which took effect on November 26, 2000, is the
present law that proscribes lower courts from issuing restraining orders and preliminary
injunctions against government infrastructure projects.—R.A. No. 8975, which took
effect on November 26, 2000, is the present law that proscribes lower courts from
issuing restraining orders and preliminary injunctions against government infrastructure
projects. In ensuring the expeditious and efficient implementation and completion of
government infrastructure projects, its twin objectives are: (1) to avoid unnecessary
increase in construction, maintenance and/or repair costs; and (2) to allow the
immediate enjoyment of the social and economic benefits of the project.
34 | P a g e
Same; Same; Same; Same; Same; Republic Act (RA) No. 8975 exclusively reserves
to the Supreme Court (SC) the power to issue injunctive writs on government
infrastructure projects.—R.A. No. 8975 exclusively reserves to this Court the power to
issue injunctive writs on government infrastructure projects. A judge who violates the
prohibition shall suffer the penalty of suspension of at least sixty (60) days without pay,
in addition to any civil and criminal liabilities that he or she may incur under existing
laws. Through Administrative Circular No. 11-2000, We instructed all judges and
justices of the lower courts to comply with and respect the prohibition.
Civil Law; Sales; Voluntary Offer to Sell; In general, a property-owner has no right
to unilaterally determine the extent of his or her property that should be acquired by
the State or to compel it to acquire beyond what is needed, the conformity of a higher
authority like the Sanggunian Bayan notwithstanding.—In general, however, a property-
owner like respondents has no right to unilaterally determine the extent of his or her
property that should be acquired by the State or to compel it to acquire beyond what is
needed, the conformity of a higher authority like the Sanggunian
Bayan notwithstanding. Similar to cases of voluntary offer to sell ( VOS) a property to
the Department of Agrarian Reform (DAR) for coverage under R.A. No. 6657 or the
Comprehensive Agrarian Reform Law, the Government cannot be forced to buy land
which it finds no necessity for considering that, in the ultimate analysis, an
appropriation of limited government funds is involved. Like the DAR, the NIA has the
power to determine whether a parcel of land is needed for the BPIP. Truly, due
recognition must be made that the NIA is an administrative body with expertise on
matters within its specific and specialized jurisdiction. Presumption of regularity in the
performance of its official duty should be accorded.
Eminent Domain; Taking; The exercise of the power of eminent domain does not
always result in the taking of property.—While the Court concurs with the trial court’s
pronouncement that the exercise of the power of eminent domain does not always
result in the taking of property as it may only result in the imposition of burden upon
the owner of the condemned property without loss of title or possession, We do not
agree with its finding, after the conduct of a one-day hearing relative to the prayer for
provisional relief, that there is real necessity of appropriating more of the respondents’
property by petitioner to ensure the safety and security of operating the open irrigation
canal. The allegation that respondents will stand to suffer damages by NIA’s non-
acquisition of additional land in Monte Vista is evidentiary in nature requiring full blown
trial on the merits. In the same vein, the CA likewise erred when it improperly took
judicial notice that “the construction and operation of an irrigation canal scheme has
35 | P a g e
serious and intricate environmental impact on natural, ecological and socio-economic

conditions, which obviously includes lost of land use that would most certainly affect the
community where it is implemented” so as to sustain the trial court’s ruling.
Local Government Code; Government Projects; Section 2(c) of the Local

Government Code (LGC) declares the policy of the State “to require all national
agencies and offices to conduct periodic consultations with appropriate local
government units, nongovernmental and people’s organizations, and other concerned
sectors of the community before any project or program is implemented in their
respective jurisdictions.”—Section 2(c) of the Local Government Code declares the
policy of the State “to require all national agencies and offices to conduct periodic
consultations with appropriate local government units, nongovernmental and people’s
organizations, and other concerned sectors of the community before any project or
program is implemented in their respective jurisdictions.” This provision applies to
national government projects affecting the environmental or ecological balance of the
particular community implementing the project. Exactly, Sections 26 and 27 of the Local
Government Code requires prior consultations with the concerned sectors and the prior
approval of the Sanggunian. It was said that the Congress introduced these provisions
to emphasize the legislative concern “for the maintenance of a sound ecology and clean
environment.”
Office of the Solicitor General for petitioner.
Nelson C. Delgado, Jr. for respondents.
PERALTA,J.:
This petition for review on certiorari under Rule 45 of the 1997 Revised Rules on Civil
Procedure (Rules) seeks to annul and set aside the October 22, 2010 Decision1 and
January 31, 2011 Resolution2 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 107962,
which affirmed the Order3 dated September 17, 2008 and Supplement to the Order4 of
September 17, 2008 dated September 19, 2008 of Regional Trial Court, Branch 21,
Vigan City, Ilocos Sur, granting respondents’ prayer for preliminary prohibitory and
mandatory injunction in Civil Case No. 6798-V for Just Compensation with Damages
against petitioner.
The facts appear as follows:
36 | P a g e
Respondents spouses Rogelio Lazo and Dolores Lazo are the owners and developers
of Monte Vista Homes (Monte Vista), a residential subdivision located
in Barangay Paing, Municipality of Bantay, Ilocos Sur. Sometime in 2006, they
voluntarily sold to the National Irrigation Administration (NIA) a portion of Monte Vista
for the construction of an open irrigation canal that is part of the Banaoang Pump
Irrigation Project (BPIP). The consideration of the negotiated sale was in a total amount
of P27,180,000.00 at the rate of P2,500.00 per square meter.5
Subsequently, respondents engaged the services of Engr. Donno G. Custodio, retired
Chief Geologist of the Mines and Geosciences Bureau-Department of Environment and
Natural Resources,6 to conduct a geohazard study on the possible effects of the BPIP on
Monte Vista. Engr. Custodio later came up with a Geohazard Assessment Report
(GAR),7 finding that ground shaking and channel bank erosion are the possible hazards
that could affect the NIA irrigation canal traversing Monte Vista. He then recommended
the following:
Construction of a two (2) or double slope retaining walls anchored to a reinforced

foundation on both sides of the irrigation channel within the Monte Vista Homes
Subdivision Project (Phases I & II). A buffer zone of at least 20 meters from the
embankment to the nearest structure should be strictly enforced.
Construction of a one (1) meter high concrete dike above the retaining wall to prevent
surface run-off during heavy rainfall from flowing to the irrigation canal. Likewise, to
prevent future residents of the subdivision from accidentally falling into the irrigation
canal.
Construction of adequate draining system along the buffer zone to prevent surface
run-off during rainy season to percolate into the irrigation canal embankment and/or
scour the concrete dike and retaining wall.
Planting of ornamental trees/plants and shrubs along the buffer zone to prevent
destabilization of the irrigation canal embankment and for aesthetic reasons in the
area.8
On December 22, 2006, the Sangguniang Bayan of Bantay, Ilocos Sur approved
Resolution No. 34, which adopted the recommendations contained in the GAR.9Among
others, it resolved that the GAR recommendations should be observed and implemented
by the concerned implementing agency of the NIA BPIP.
Respondent Rogelio Lazo brought to NIA’s attention Resolution No. 34 through his
letters dated January 15, 2007,
37 | P a g e
September 5, 2007, and November 1, 2007.10 He specifically asked for the

implementation of the GAR recommendations and the payment of just compensation for
the entire buffer zone involving an aggregate area of 14,381 sq. m., more or less.
When respondents’ demands were not acted upon, they decided to file a complaint
for just compensation with damages against NIA on January 31, 2008. 11 Prior to the
filing of an Answer, respondents filed an Amended Complaint with application for a
temporary restraining order (TRO) and preliminary injunction.12They further alleged
that the BPIP contractor is undertaking substandard works that increase the risk of a
fatal accident.
Per Order13 dated July 8, 2008, the trial court issued an ex parte 72-hour TRO and
directed the NIA to appear in a summary hearing on July 9, 2008 to show cause why
the injunction should not be granted. Instead of a personal appearance, the NIA,
through the Office of the Solicitor General (OSG), filed a Manifestation and
Motion14 praying that the TRO be lifted and the application for preliminary injunction be
denied for being prohibited by Republic Act. No. 8975.15 In the July 9, 2008 hearing,
the trial court ordered respondents to comment on the Manifestation and Motion (which
was later on complied with)16 and extended the TRO for 20 days from its issuance.17
During the July 23, 2008 hearing on respondents’ prayer for provisional relief, the
parties presented their respective witnesses. Engr. Jerry Zapanta, the Technical
Operations Manager of the NIA BPIP, was petitioner’s sole witness, while Rogelio Lazo
and Engr. Custodio testified for respondents.
Petitioner filed its Answer18 to the Amended Complaint on August 22, 2008. After
which, respondents filed a Reply.19
On September 17, 2008, the trial court granted respondents’ application for
preliminary injunction. The dispositive portion of the Order reads:
WHEREFORE, in view of all the foregoing, the application for preliminary
prohibitory and mandatory injunction by plaintiffs is hereby GRANTED.
Defendant is hereby enjoined from continuing further construction works on the
irrigation canal particularly those located inside the Monte Vista Homes until the issue in
the main case is resolved.
Further, defendant is ordered to comply with Resolution No. 34, Series of 2006 of
the Sangguniang Bayan of the Municipality of Bantay Ilocos Sur, adopting the
recommendations of the Geohazard Assessment Report undertaken by Engr. Donno
Custodio, unless said Resolution has been revoked, superseded or modified in such a
manner that would negate compliance therewith by defendant.
SO ORDERED.20
38 | P a g e
Two days later, the trial court issued a Supplement to the Order of September 17,
2008, stating:
The dispositive portion of the Order of September 17, 2008 is supplemented with a
last paragraph to read as follows:
“The Court hereby fixes the injunction bond in the amount of THREE
MILLION PESOS (Php3,000,000.00). Upon approval of the requisite bond, let
the Writ of preliminary prohibitory and mandatory injunctions issue.”
SO ORDERED.21
The trial court ruled that the instant case falls under the exception of Section 3 of
R.A. No. 8975, because respondents’ demand for just compensation is by reason of the
property being burdened by the construction of the open irrigation canal in Monte Vista
which altered its use and integrity. In declaring that the right of private individuals
whose property were expropriated by the State is a matter of constitutional urgency, it
opined:
While [petitioner] insists that [respondents] were fully paid for the actual area where
the irrigation canal is being constructed, it refuses to compensate [respondents] for
their property burdened by the construction of the irrigation canal. “Taking” in the
constitutional sense may include trespass without actual eviction of the owner, material
impairment of the property or the prevention of the ordinary use for which the property
was intended. Thus, in National Power Corporation v. Gutierrez (193 SCRA 1, as
cited by J. Antonio B. Nachura in his Outline Reviewer in Political Law, p. 37, 2002
edition), the Supreme Court held that the exercise of the power of eminent domain
does not always result in the taking of property; it may also result in the imposition of
burden upon the owner of the condemned property without loss of title or possession.
It would indubitably appear in this case that there is really a necessity of

appropriating more of the [respondents’] property by [petitioner] to ensure the safety
and security of operating the open irrigation canal. This could never be more true in the
light of the Sangguniang Bayan’s Resolution [34], Series of 2006[,] which adopted the
recommendations contained in the Geohazard Assessment Report. Significantly,
[petitioner] never refuted that there was such a Resolution, and worse, [petitioner]
never explained why it never incorporated the recommendations in the Resolution or
even made an attempt to consult with the concerned Sanggunianconcerning the
same.22
Also, the trial court found that petitioner violated R.A. No. 7160, or the Local
Government Code of 1991. It said:
39 | P a g e
The Local Government Code embodies the policy of the State to devolve the powers
and authority of a former centralized government. [Petitioner] seemed to have
disregarded all deference due to the local government of the Municipality of Bantay
when[,] despite the issuance of Resolution, it insisted that its design of the open
irrigation canal is adequately safe without consultation or asking a formal audience with
the Sangguniang Bayan and spell-out the design of the open irrigation canal which
could persuade the latter to reconsider its Resolution.
Section 3(g) of the Local Government Code provides that:
“The capabilities of local government units, especially the municipalities and
barangays, shall be enhanced by providing them with opportunities to participate
actively in the implementation of national programs and projects”;
Section 5 of the same Code leaves no doubt as to the empowerment of local

government units that it provides.
Rules of Interpretation.—In 5. Section the interpretation of the provision of this
Code, the following rules shall apply:
“Any provision on a power of a local government unit shall be liberally interpreted in
its favor, and in case of doubt any question thereon shall be resolved in favor of
devolution of powers and of the lower local government unit. Any fair and reasonable
doubt as to the (a) existence of the power shall be interpreted in favor of the local
government unit concerned;” x x x
[Petitioner][,] by reason of its failure to abide by the required consultation, had
effectively deprecated the function, authority and power of the Sangguniang Bayan of
the Municipality of Bantay. Consequently, without the prior approbation of
the Sanggunian[,] [petitioner’s] irrigation project cannot be absolutely declared as
representative of the consent of the local government. Hence, it must be enjoined until
compliance by [petitioner] on consultative requirement or clear and convincing proof of
incorporation of the Sanggunian Resolution in the project design of the irrigation project
has been adduced.23
Without moving for a reconsideration of the two Orders, petitioner directly filed a
petition for certiorari24before the CA.
On May 14, 2009, petitioner filed a Very Urgent Motion for the Issuance of a TRO
and/or Writ of Preliminary Injunction.25 In its May 27, 2009 Resolution, the CA denied
the motion and directed the parties to submit their respective
memoranda.26 Accordingly, both parties filed their Memorandum.27
40 | P a g e
Eventually, the CA dismissed the petition and affirmed the challenged Orders of the
trial court on October 22, 2010.
On procedural matters, the appellate court resolved the issues of whether petitioner
failed to exhaust administrative remedies and whether the petition should be dismissed
for lack of motion for reconsideration filed before the trial court. The CA opined that the
controversy falls squarely within the jurisdiction of the regular courts and not of
the Sangguniang Bayan concerned, because what petitioner seeks to nullify are the
Orders of the trial court allegedly rendered in violation of R.A. No. 8975 and not the act
or propriety of the issuance of Resolution No. 34. It agreed, however, with respondents
that the petition for certiorari suffers from fatal defect since it was filed without seeking
first the reconsideration of the trial court. It was said that petitioner omitted to show
sufficient justification that there was no appeal or any plain, speedy, and adequate
remedy in the ordinary course of law.
As to the substantive merits of the case, the CA affirmed that the payment of just
compensation and the alleged need to rectify the inferior construction work on the
irrigation canal are constitutional issues which are of extreme urgency justifying the trial
court’s issuance of an injunctive writ. It held:
In the controversy below, what is put in issue is the consequent just compensation
as a result of the acquisition of a right-of-way for a national infrastructure project.
Hence, the application of Republic Act No. 8974 which pertinently provides:
4. “Sec.Guidelines for Expropriation Proceedings.—Whenever it is necessary to
acquire real property for the right-of-way or location for any national government
infrastructure project through expropriation, the appropriate implementing agency shall
initiate the expropriation proceedings before the proper court under the following
guidelines:
Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property
based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures as determined under Section 7
hereof. (a)
xxx xxx xxx
Applying the provision in the attendant circumstances surrounding the issues in this
petition, it is immediately apparent that in acquiring right-of-way for purposes of
implementing a government infrastructure project and before any taking of the
expropriated property may be effected, it is indispensable for the government to pay
41 | P a g e
the owner of the property the amount equivalent to the sum of (1) one hundred
percent (100%) of the value of the property based on the current relevant zonal
valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the
improvements and/or structures as determined through the guidelines provided by law.
And not merely by implication, petitioner cannot take over the property to be
expropriated and perform act of dominion over the landowner’s property without the
prerequisite full payment of just compensation. The positioning of this Court takes
precedence from the ruling of the Supreme Court in the landmark case of Republic of
the Philippines v. Hon. Henrick F. Gingoyon.
xxxx
Petitioner cannot seek solace to its claim that it did not expropriate respondents’
property but rather purchased it through a negotiated sale. This claim can only be true
to the original plan of the irrigation canal. With the issuance of Resolution No. 34,
petitioner is bound to expropriate more of respondents’ property for sound and safety
reasons, which, unless they pay the full amount of just compensation, petitioner must
be enjoined from acting as de jure owner thereof.
Presently, the legal assumption would be that juridical possession of the property
expropriated remains with respondents. Hence, injunction would be proper in this case.
[Respondents] have proven an unmistakeable right over the property taken by NIA.
They have shown, in conformity with Rule 58 of the Rules of Court which provides for
the requisites before a preliminary injunction may be issued; that they are entitled to
the relief absent the full payment of just compensation, and that the relief asked for
petitioners to refrain from doing act of ownership over their property, and to improve
the quality of the construction work on the irrigation canal. NIA, as a government
expropriating agent, should refrain from continuing the acts complained of; otherwise,
grave and irreparable injury would result to the prejudice of respondents.
Be it noted that for a writ of preliminary injunction to be issued, the Rules of Court
do not require that the act complained of be in clear violation of the rights of the
applicant. Indeed, what the Rules require is that the act complained of be probably in
violation of the rights of the applicant.28
Anent petitioner’s noncompliance with the requirements of the Local Government

Code, the CA sustained the trial court’s finding:
Under the Local Government Code, therefore, two requisites must be met before a
national project that affects the environmental and ecological balance of local
communities can be implemented: prior consultation with the affected local
42 | P a g e
communities, and prior approval of the project by the appropriate sanggunian. Absent
either of these mandatory requirements, the project’s implementation is illegal.
We can take judicial notice that the construction and operation of an irrigation canal
scheme has serious and intricate environmental impact on natural, ecological and socio-
economic conditions, which obviously includes lost of land use that would most certainly
affect the community where it is implemented. NIA should have conducted prior
consultations with the local government in consonance with the foregoing provision of
R.A. 7160. Strangely, it failed to make such consultation.
Petitioner suggests that the local government should have conducted a separate
investigation on the aptness of the matter subject of the GAR or at least endorsed it to
other appropriate government agencies for confirmation in light of the fact that the
local government is dealing with NIA which is supposed to be an expert on its field.
However, this Court cannot sustain a stand clearly borne out of neglect with its
obligation to consult the concerned local government prior to the implementation of the
irrigation project.
Petitioner never even cited any statute or law which mandates the local government
to conduct a separate investigation pertaining to the feasibility, viability or ecological
repercussion of any government infrastructure project to be implemented within its
territorial jurisdiction. The Constitution and Republic Act 7160 [are] adequate [sources]
of the autonomous authority of local governments to determine, based on resources or
references at its disposal, the soundness of a particular measure for a particular
infrastructure project. It has the sole discretion to promulgate enacting ordinances to
execute such measure.
[Respondent] could not be persuaded to rely on the accuracy and integrity of the
Back to Office Report of NIA much more than it could rely on the alleged credibility or
expertise of the persons who prepared the report. Records do not show that petitioner
exerted effort to present these people to establish their expertise; nor did they [make]
affirmation on the contents of the Back to Office Report. Resultantly, the testimony of
petitioner’s witness and his allegations to support the veracity of the contents of NIA’s
[Back] to Office Report are mere self-serving statements and inadmissible for being
hearsay.29
On January 31, 2011, the CA denied petitioner’s motion for reconsideration; hence,
this petition that raises the following issues for resolution:
I
43 | P a g e
WHETHER THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS

NOT IN ACCORD WITH APPLICABLE LAWS AND PREVAILING JURISPRUDENCE.
II
WHETHER THE FACTS OF THIS CASE JUSTIFIED PETITIONER’S IMMEDIATE RESORT
TO THE COURT OF APPEALS WITHOUT FILING A MOTION FOR RECONSIDERATION OF
THE ASSAILED ORDERS OF THE TRIAL COURT.
III
WHETHER REPUBLIC ACT (R.A.) NO. 7160 IS APPLICABLE TO THIS CASE.30
First off, the Court shall settle respondents’ procedural objections, to wit: (1)
petitioners did not follow the Rules when it filed a petition for certioraridirectly with the
CA without seeking for a reconsideration from the trial court; (2) the petition was filed
out of time due to belated payment of docket and other lawful fees; and (3) petitioner
is guilty of forum shopping.
The contentions are untenable.
A petition for certiorari may be given due course notwithstanding that no motion for
reconsideration was filed in the trial court. Although the direct filing of petitions
for certiorari with the CA is discouraged when litigants may still resort to remedies with
the trial court, the acceptance of and the grant of due course to a petition
for certiorari is generally addressed to the sound discretion of the court because the
technical provisions of the Rules may be relaxed or suspended if it will result in a
manifest failure or miscarriage of justice.31
The general rule is that a motion for reconsideration is a condition sine qua
non before a petition for certiorari may lie, its purpose being to grant an opportunity for
the court a quo to correct any error attributed to it by a reexamination of the legal and
factual circumstances of the case.
However, the rule is not absolute and jurisprudence has laid down the following
exceptions when the filing of a petition for certiorari is proper notwithstanding the
failure to file a motion for reconsideration:
(a) where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) where the questions raised in the certiorari proceedings have been duly raised
and passed upon by the lower court, or are the same as those raised and passed upon
in the lower court;
(c) where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner or the
subject matter of the petition is perishable;
44 | P a g e
(d) where, under the circumstances, a motion for reconsideration would be useless;
(e) where petitioner was deprived of due process and there is extreme urgency for
relief;
(f) where, in a criminal case, relief from an order of arrest is urgent and the granting
of such relief by the trial court is improbable;
(g) where the proceedings in the lower court are a nullity for lack of due process;
(h) where the proceeding was ex parte or in which the petitioner had no opportunity
to object; and
(i) where the issue raised is one purely of law or public interest is involved.32
We cannot but agree with petitioner that this case falls within instances (a), (b), (c),
(d) and (i) above mentioned. As will be elucidated in the discussion below, the assailed
Orders of the trial court are patent nullity for having been issued in excess of its
jurisdiction. Also, the questions raised in the certiorari proceedings are the same as
those already raised and passed upon in the lower court; hence, filing a motion for
reconsideration would be useless and serve no practical purpose. There is likewise an
urgent necessity for the resolution of the question and any further delay would
prejudice the interests of the Government. In its petition and memorandum filed before
the CA, petitioner in fact noted that the BPIP is intended to cater the year-round
irrigation needs of 6,312 hectares of agricultural land in Bantay, Caoayan, Magsingal,
San Ildefonso, San Vicente, Sto. Domingo, Sta. Catalina, and Vigan in Ilocos Sur.33 Even
Resolution No. 34 recognizes this.
Public interest is actually involved as the targeted increase in agricultural production
is expected to uplift the farmers’ standard of living. Lastly, the issue raised — that is,
under the antecedent facts, whether the trial court committed grave abuse of discretion
in granting respondents’ prayer for preliminary prohibitory and mandatory injunction
despite the mandate of R.A. No. 8975 — is one purely of law.
The CA and this Court unquestionably have full discretionary power to take
cognizance and assume jurisdiction of special civil actions for certiorari filed directly with
it for exceptionally compelling reasons or if warranted by the nature of the issues
clearly and specifically raised in the petition. We deem it proper to adopt an open-
minded approach in the present case.
Also, while it has been stressed that payment of docket and other fees within the
prescribed period is mandatory for the perfection of the appeal and that such payment
is not a mere technicality of law or procedure,34 the Court, in exceptional
circumstances,35has allowed a liberal application of the Rules when the payments of the
required docket fees were delayed only for a few days. Indeed, late payment of docket
45 | P a g e
fees may be admitted when the party showed willingness to abide by the rules through
immediate payment of the required fees.36
In this case, records show that petitioner timely filed its motion for extension of time
to file a petition on March 2, 2011.37 The petition, however, was not docketed because
the required fees were not paid based on petitioner’s belief that it is exempt therefrom.
Nonetheless, payment was immediately made the following day, March 3, 2011. 38 The
tardiness of petitioner is excusable since no significant period of time elapsed.
Finally, respondents argue that the filing of a Manifestation and Motion dated March
25, 2011 by petitioner with the trial court should be considered as an act of forum
shopping. They assert that the prayer to admonish them from closing or blocking the
irrigation canal that traverses their property is tantamount to asking the trial court to lift
the injunction order. Respondents contend that instead of pleading for a restraining
order from this Court, petitioner, in effect, belatedly sought a reconsideration of the
Orders dated September 17, 2008 and September 19, 2008 before the trial court.
We do not agree.
Forum shopping is committed by a party who, having received an adverse judgment
in one forum, seeks another opinion in another court, other than by appeal or special
civil action of certiorari.39 It is the institution of two or more suits in different courts,
either simultaneously or successively, in order to ask the courts to rule on the same or
related causes and/or to grant the same or substantially the same reliefs.40 In a fairly
recent case,41 the Court reiterated:
There is forum shopping “when a party 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 is an act of malpractice that is prohibited and condemned
because it trifles with the courts and abuses their processes. It degrades the
administration of justice and adds to the already congested court dockets. An important
factor in determining its existence is the vexation caused to the courts and the parties-
litigants by the filing of similar cases to claim substantially the same reliefs.
The test to determine the existence of forum shopping is whether the elements
of litis pendentia are present, or whether a final judgment in one case amounts to res
judicata in the other. Thus, there is forum shopping when the following elements are
present, namely: (a) identity of parties, or at least such parties as represent the same
interests in both actions; (b) identity of rights asserted and reliefs prayed for, the relief
being founded on the same facts; and (c) the identity of the two preceding particulars,
46 | P a g e
such that any judgment rendered in the other action will, regardless of which party is
successful, amounts to res judicata in the action under consideration.
Taking into account the surrounding circumstances, it cannot be said that

petitioner’s Manifestation and Motion dated March 25, 2011 constitutes forum shopping.
The full text of which is quoted as follows:
MANIFESTATION AND MOTION
DEFENDANT, by counsel, to the Honorable Court, respectfully states:

On March 20, 2011, the Office of the Solicitor General (OSG) received a facsimile
letter dated March 10, 2011 from the Administrator of the National Irrigation
Administration (NIA) seeking legal assistance to prevent the plaintiffs from blocking the
irrigation canal traversing their property which would unduly disrupt the operations of
the Banaoang Pump Irrigation Project (BPIP). 1.
xxxx
The above letter was precipitated by plaintiff Rogelio Lazo’s threat to bar the
operation of the section of the Banaoang Irrigation Canal constructed within the Monte
Vista Homes as can be gleaned from the letter dated February 28, 2011 of Engr.
Santiago P. Gorospe, Jr., Project Manager of the BPIP to the NIA Administrator x x x.
2.
It may be recalled that the Honorable Court issued an Order dated September 17,
2008, the dispositive portion of which reads: 3.
xxxx
It must be stressed that plaintiffs had been fully compensated for that portion of
their property at Monte Vista Homes acquired by the NIA for its project; hence, the
Republic of the Philippines is already the owner thereof. Accordingly, plaintiffs have no
right whatsoever to restrain the Republic through the National Irrigation Administration,
to exercise any of the attributes of its ownership. Moreover, the injunction order does
not authorize plaintiffs to close or block the irrigation canal. 4.
It is respectfully informed that the BPIP is now irrigating 3,300 hectares out of the
5,200 hectares irrigable service area and it is possible to irrigate the remaining area of
about 1,900 hectares this next cropping season. Thus, it is very critical that the canal
traversing plaintiff’s property be allowed unimpeded operation to [ensure] the
continued irrigation services to the farmers now depending on the BPIP. 5.
47 | P a g e
PRAYER
WHEREFORE, it is respectfully prayed that plaintiffs be admonished from closing or

blocking the irrigation canal traversing their property for lack of authority to do so and
to await the final resolution of this case.
It is likewise prayed that defendant be granted such other reliefs as are just and
equitable under the premises.
Makati City, Metro Manila for Vigan City, Ilocos Sur, March 25, 2011.42
To note, the above pleading was followed by another Manifestation and Motion
dated September 5, 2011, wherein petitioner further alleged:
In lieu of the hearing, defendant respectfully seeks clarification on whether the Order
dated September 17, 2008 granting plaintiff’s application for preliminary prohibitory and
mandatory injunction grant them the power to close or block the irrigation canal
constructed by the defendant. Again, it should be stressed that the construction of the
irrigation canal was already completed prior to the issuance of the Order dated
September 17, 2008. More importantly, the portion of plaintiff’s land where the
irrigation canal was constructed is already owned by the defendant prior to the
institution of this case because plaintiff’s had already been fully paid for it. 5.
Although the import and coverage of the injunction order dated September 17, 2008
is very clear, the said clarification is imperative to put a stop to the on-and-off threat of
the plaintiffs to close or block the irrigation canal, a government property, on the basis
of said injunction order, to the prejudice of the farmers dependent on it for irrigation
services. 6.43
After cautiously reading both pleadings, it appears that petitioner honestly sought
clarification from the trial court the meaning of the writ it issued. To refresh, when the
trial court granted respondents’ application for preliminary prohibitory and mandatory
injunction on September 17, 2008 it enjoined petitioner from continuing further
construction works on the irrigation canal located inside Monte Vista and ordered it to
comply with Resolution No. 34, which adopted the GAR recommendations. As petitioner
pointed out, the injunction order does not authorize respondents to close or block the
irrigation canal, the construction of which was, as alleged, already completed prior to
the issuance of the Order. In filing the Manifestation and Motion, petitioner was just
protecting its property rights, claiming that it is already the owner of the land where the
48 | P a g e
irrigation canal was constructed by virtue of the negotiated sale that transpired prior to
the institution of this case. According to petitioner, respondents previously blocked the
irrigation canal and it was only through the initiative and efforts of the affected farmers
that the same was removed. Faced with another threat of closure, it only exercised its
legal right to seek affirmative relief from the trial court.
Now, on the substantive merits of the case.
R.A. No. 8975, which took effect on November 26, 2000,44 is the present law that
proscribes lower courts from issuing restraining orders and preliminary injunctions
against government infrastructure projects. In ensuring the expeditious and efficient
implementation and completion of government infrastructure projects, its twin
objectives are: (1) to avoid unnecessary increase in construction, maintenance and/or
repair costs; and (2) to allow the immediate enjoyment of the social and economic
benefits of the project.45 Towards these end, Sections 3 and 4 of the law provide:
3. SEC.Prohibition on the Issuance of Temporary Restraining Orders, Preliminary
Injunctions and Preliminary Mandatory Injunctions.—No court, except the Supreme
Court, shall issue any temporary restraining order, preliminary injunction or
preliminary mandatory injunction against the government, or any of its
subdivisions, officials or any person or entity, whether public or private,
acting under the government’s direction, to restrain, prohibit or compel the
following acts:
(a) Acquisition, clearance and development of the right-of-way and/or site

or location of any national government project;
(b) Bidding or awarding of contract/project of the national government as defined
under Section 2 hereof;
(c) Commencement, prosecution, execution, implementation, operation of any such
contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for such
contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such contract/project. This prohibition
shall not apply when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The applicant shall file a bond, in
49 | P a g e
an amount to be fixed by the court, which bond shall accrue in favor of the government
if the court should finally decide that the applicant was not entitled to the relief sought.
If after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the
qualified and winning bidder or order a rebidding of the same, without prejudice to any
liability that the guilty party may incur under existing laws.
4. SEC.Nullity of Writs and Orders.—Any temporary restraining order,
preliminary injunction or preliminary mandatory injunction issued in
violation of Section 3 hereof is void and of no force and effect. (Emphasis
supplied)
R.A. No. 8975 exclusively reserves to this Court the power to issue injunctive writs
on government infrastructure projects. A judge who violates the prohibition shall suffer
the penalty of suspension of at least sixty (60) days without pay, in addition to any civil
and criminal liabilities that he or she may incur under existing laws.46 Through
Administrative Circular No. 11-2000, We instructed all judges and justices of the lower
courts to comply with and respect the prohibition.47
In the case at bar, the parties do not dispute that the Banaoang Pump Irrigation
Project is a government infrastructure project within the contemplation of R.A. No.
8975. Instead, the focal issue to be resolved is: Does this case for just compensation
with damages one of extreme urgency involving a constitutional issue such that unless
a preliminary prohibitory and mandatory injunction is issued grave injustice and
irreparable injury on the part of respondents will arise? We hold not.
Here, respondents failed to demonstrate that there is a constitutional issue involved,
much less a constitutional issue that is of extreme urgency. The case aims to compel
the Government to acquire more portion of Monte Vista on the bases of the GAR
recommendations, which was espoused by the Sangguniang Bayan of Bantay, Ilocos
Sur, and of the alleged substandard works on the BPIP. The findings in the GAR,
however, are vehemently opposed by petitioner. It asserted that the 20-meter buffer
zone is unnecessary because similar precautionary measures are already sufficiently
installed and that further acquisition of respondents’ property would be grossly
disadvantageous to the Government as it would cost additional P68,370,000.00, more
or less. Petitioner also counters that the claim of substandard works on the BPIP is
speculative, since the contractor has not yet handed over the BPIP as completed and
petitioner is yet to inspect and approve the BPIP according to its design and
specifications. Considering that these issues are very much disputed by the parties, it
cannot be said that respondents’ constitutional right to just compensation was or has
50 | P a g e
already been breached at the time the complaint was filed or even during the hearing
on their application for preliminary injunction.
As petitioner consistently argues, it has not taken any property of respondents that
is more than what was the subject matter of the negotiated sale executed in 2006.
Quite the contrary, it is respondents who are obliging it to purchase more than what it
deems as necessary for the implementation of the BPIP. In general, however, a
property-owner like respondents has no right to unilaterally determine the extent of his
or her property that should be acquired by the State or to compel it to acquire beyond
what is needed, the conformity of a higher authority like the Sanggunian
Bayan notwithstanding. Similar to cases of voluntary offer to sell ( VOS) a property to
the Department of Agrarian Reform (DAR) for coverage under R.A. No. 6657 or the
Comprehensive Agrarian Reform Law,48 the Government cannot be forced to buy land
which it finds no necessity for considering that, in the ultimate analysis, an
appropriation of limited government funds is involved. Like the DAR, the NIA has the
power to determine whether a parcel of land is needed for the BPIP. Truly, due
recognition must be made that the NIA is an administrative body with expertise on
matters within its specific and specialized jurisdiction. Presumption of regularity in the
performance of its official duty should be accorded. As this Court held in Republic v.
Nolasco:49
More importantly, the Court, the parties, and the public at large are bound to respect
the fact that official acts of the Government, including those performed by
governmental agencies such as the DPWH, are clothed with the presumption of
regularity in the performance of official duty, and cannot be summarily, prematurely
and capriciously set aside. Such presumption is operative not only upon the courts, but
on all persons, especially on those who deal with the government on a frequent basis.
There is perhaps a more cynical attitude fostered within the popular culture, or even
through anecdotal traditions. Yet, such default pessimism is not embodied in our
system of laws, which presumes that the State and its elements act correctly unless
otherwise proven. To infuse within our legal philosophy a contrary, gloomy pessimism
would assure that the State would bog down, wither and die.
Instead, our legal framework allows the pursuit of remedies against errors of the
State or its components available to those entitled by reason of damage or injury
sustained. Such litigation involves demonstration of legal capacity to sue or be sued, an
exhaustive trial on the merits, and adjudication that has basis in duly proven
facts and law. x x x50
51 | P a g e
While the Court concurs with the trial court’s pronouncement that the exercise of the
power of eminent domain does not always result in the taking of property as it may
only result in the imposition of burden upon the owner of the condemned property
without loss of title or possession, We do not agree with its finding, after the conduct of
a one-day hearing relative to the prayer for provisional relief, that there is real necessity
of appropriating more of the respondents’ property by petitioner to ensure the safety
and security of operating the open irrigation canal. The allegation that respondents will
stand to suffer damages by NIA’s non-acquisition of additional land in Monte Vista is
evidentiary in nature requiring full blown trial on the merits. In the same vein, the CA
likewise erred when it improperly took judicial notice that “the construction and
operation of an irrigation canal scheme has serious and intricate environmental impact
on natural, ecological and socio-economic conditions, which obviously includes lost of
land use that would most certainly affect the community where it is implemented” so as
to sustain the trial court’s ruling.
Respondents cannot conveniently invoke the NAPOCOR cases51 in order to support
their prayer for preliminary injunction. Therein, the Court consistently ruled that
expropriation is not limited to the acquisition of real property with a corresponding
transfer of title or possession and that the right-of-way easement resulting in a
restriction or limitation on property rights over the land traversed by transmission lines
also falls within the ambit of the term “expropriation.” In contrast, this case obviously
does not deal with the installation power lines, which has different nature and effects
on private ownership. The perpetual deprivation of the normal and ordinary use of the
complainants’ proprietary rights, the danger to life and limbs, and the tax implications
which were uniformly considered in the NAPOCOR cases are relatively not palpable in
this case.
As regards petitioner’s alleged violation of the Local Government Code, the same
does not suffice to grant the prayer for injunctive relief.
Section 2(c) of the Local Government Code declares the policy of the State “to
require all national agencies and offices to conduct periodic consultations with
appropriate local government units, nongovernmental and people’s organizations, and
other concerned sectors of the community before any project or program is
implemented in their respective jurisdictions.” This provision applies to national
government projects affecting the environmental or ecological balance of the particular
community implementing the project.52Exactly, Sections 26 and 27 of the Local
Government Code requires prior consultations with the concerned sectors and the prior
approval of the Sanggunian. It was said that the Congress introduced these provisions
52 | P a g e
to emphasize the legislative concern “for the maintenance of a sound ecology and clean
environment.”53
Sections 26 and 27 provide:
26. SectionDuty of National Government Agencies in the Maintenance of Ecological
Balance.—It shall be the duty of every national agency or government-owned or -
controlled corporation authorizing or involved in the planning and implementation of
any project or program that may cause pollution, climatic change, depletion of
nonrenewable resources, loss of crop land, rangeland, or forest cover, and extinction of
animal or plant species, to consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals and objectives of the
project or program, its impact upon the people and the community in terms of
environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.
27. SectionPrior Consultations Required.—No project or program shall be

implemented by government authorities unless the consultations mentioned in Sections
2(c) and 26 hereof are complied with, and prior approval of the sanggunian concerned
is obtained: Provided, That occupants in areas where such projects are to be
implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.
The projects and programs mentioned in Section 27 should be interpreted to mean

projects and programs whose effects are among those enumerated in Sections 26 and
27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3)
may cause the depletion of nonrenewable resources; (4) may result in loss of crop land,
rangeland, or forest cover; (5) may eradicate certain animal or plant species from the
face of the planet; and (6) other projects or programs that may call for the eviction of a
particular group of people residing in the locality where these will be
implemented.54 Preliminarily, it appears that the present case does not fall under any of
these instances; ergo, there is neither a need for prior consultations of concerned
sectors nor prior approval of the Sanggunian.
In support of their entitlement to a preliminary injunction, respondents insist that the
nonobservance of the buffer zones and other GAR recommendations will spell
calamitous consequences to the future occupants of Monte Vista and tragic disaster to
the community of the Municipality of Bantay. Allegedly, the worst scenario of such
malfeasance, if not immediately enjoined, is the “devastating irreversible ecological and
environmental effects to the community.”55 According to them, petitioner “opted to
53 | P a g e
pursue a treacherous task which could well endanger the community and its people
with threats of perishing through inundation or deluge of mythical proportion, or
through avalanche of mud and soil.”56 Yet in spite of advancing these gruesome
depictions, it is surprising to note that respondents apprised the Court that they “never
really prevented petitioner from finishing the construction of the BPIP canal and even
allowed its operation in deference to the broader interests of the farmer-beneficiaries of
the irrigation project until the issues are finally adjudicated.”57 This admission only
proves that respondents’ arguments are mere suppositions which, as of the time the
provisional remedy was heard and granted, are bereft of undisputed factual moorings.
Certainly, there is no clear and material right of respondents to be protected. There are
no rights in esse since the allegations are merely contingent and may never arise at all.
These are not rights clearly founded on or granted by law or is enforceable as a matter
of law. There is no ostensible right to the final relief prayed for in their complaint.
Respondents failed to satisfy even the basic requirements of the Rules for the
issuance of a preliminary injunction.58
Therefore, the trial court gravely abused its discretion when it granted their application
for preliminary prohibitory and
action; or to prevent the perpetration of an act prohibited by statute.
Indeed, a right, to be protected by injunction, means a right clearly
founded on or granted by law or is enforceable as a matter of law.”
Conclusive proof of the existence of the right to be protected is not demanded,
however, for, as the Court has held in Saulog v. Court of Appeals, it is enough that:
“x x x for the court to act, there must be an existing basis of facts
affording a present right which is directly threatened by an act
sought to be enjoined. And while a clear showing of the right claimed
is necessary, its existence need not be conclusively established. In
fact, the evidence to be submitted to justify preliminary injunction at the
hearing thereon need not be conclusive or complete but need only be a
“sampling” intended merely to give the court an idea of the justification for the
preliminary injunction pending the decision of the case on the merits. This
should really be so since our concern here involves only the propriety
of the preliminary injunction and not the merits of the case still
pending with the trial court.
Thus, to be entitled to the writ of preliminary injunction, the private
respondent needs only to show that it has the ostensible right to the final
relief prayed for in its complaint x x x.”
54 | P a g e
In this regard, the Rules of Court grants a broad latitude to the trial courts
considering that conflicting claims in an application for a provisional writ more often
than not involve and require a factual determination that is not the function of the
appellate courts. Nonetheless, the exercise of such discretion must be sound, that
is, the issuance of the writ, though discretionary, should be upon the grounds and
in the manner provided by law. When that is done, the exercise of sound discretion
by the issuing court in injunctive matters must not be interfered with except when
there is manifest abuse.
Moreover, judges dealing with applications for the injunctive relief ought to be wary of
improvidently or unwarrantedly issuing TROs or writs of injunction that tend to dispose
of the case without the benefit of a full-blown trial wherein testimonial and
documentary evidence could be fully and exhaustively presented, heard, and refuted by
the parties.
The prevailing rule is that the courts should avoid issuing a writ of preliminary
injunction that would in effect dispose of the main case without trial. Otherwise, there
would be a prejudgment of the main case and a reversal of the rule on the burden of
proof since it would assume the proposition which petitioners are inceptively bound to
prove. Indeed, a complaint for injunctive relief must be construed strictly against the
pleader.59
The Court is more inclined to believe that respondents filed the instant complaint
merely to protect their own private interests. The claim of alleged effects on the
environmental or ecological balance of Monte Vista and the Municipality of Bantay is but
a legal tactic to give an impression that the case has urgent constitutional
repercussions. As a matter of fact, their pleadings unfailingly manifest their true intent.
Respondents vigorously contend that the BPIP would jeopardize the entire development
of Monte Vista, which was earmarked for the development of a residential subdivision;
that when the BPIP commenced construction, the suitability and marketability of Monte
Vista already seriously suffered; and that, in building the BPIP that has substandard
specifications, petitioner and its contractor are likely converting the remaining areas of
Monte Vista not suitable and viable for subdivision project. Respondents admitted that
they are having difficulty selling all the other lots in Monte Vista allegedly because of
the people’s awareness that the irrigation canal is unstable and does not comply with
the GAR recommendations as adopted by the Sangguniang Bayan. They claim that
prospective clients either withdrew from the sale or veered away from Monte Vista for
fear of being considered as part of the statistics if the subdivision is deluged by the
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overflow of a substandard irrigation canal. As for those who already purchased a lot, it
is claimed that they now remonstrate to be relocated as far as possible from the
irrigation canal.
Respondents suppose that they deserve additional compensation not only for the
buffer zone to be allocated for the stability and safety operation of the irrigation canal
but for the damage it has caused by rendering Monte Vista perceived as less ideal for
residential location.60 The just compensation they are asking is for the actual area taken
by petitioner for the BPIP and those allegedly burdened and rendered of no use to
respondents as a consequence of the required buffer zones and affected by the
purported substandard work of the irrigation canal. Respondents believe that there is
“taking” in the constitutional sense of portions of Monte Vista which is more than that
which petitioner originally declared as required by BPIP. Again, We do not think so.
Nevertheless, this Court emphasizes that this Decision is limited to the issue of
propriety of the issuance of a writ of preliminary prohibitory and mandatory injunction
as an interim relief under the peculiar factual milieu of this case. As the substantive
issues presented and disputed by the parties are not finally resolved, We leave them to
the trial court for resolution after trial on the merits.
WHEREFORE, premises considered, the Petition is GRANTED. The October 22,
2010 Decision and January 31, 2011 Resolution of the Court of Appeals in C.A.-G.R. S.P.
No. 107962 are REVERSED AND SET ASIDE. The Order dated September 17, 2008
and Supplement to the Order of September 17, 2008 dated September 19, 2008 of
Regional Trial Court, Branch 21, Vigan City, Ilocos Sur, which granted respondents’
application for preliminary prohibitory and mandatory injunction in Civil Case No. 6798-
V for Just Compensation with Damages, are DECLARED VOID AND OF NO FORCE
AND EFFECT.
SO ORDERED.
Velasco, Jr. (Chairperson), Villarama, Jr., Reyesand Jardeleza, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
Notes.—The purpose of a Temporary Restraining Order (TRO) is to prevent a

threatened wrong and to protect the property or rights involved from further injury,
until the issues can be determined after a hearing on the merits. ( National Association
of Electricity Consumer for Reforms, Inc. [NASECORE] vs. Energy Regulatory
Commission [ERC], 653 SCRA 642 [2011])
Any judge who shall issue a temporary restraining order, preliminary injunction or
preliminary mandatory injunction in violation of Section 3, Republic Act No. 8975, shall
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suffer the penalty of suspension of at least sixty (60) days without pay. ( The Baguio
Regreening Movement, Inc. vs. Masweng, 692 SCRA 109 [2013])
——o0o——
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October 1, 2014. G.R. No. 177332.*
NATIONAL POWER CORPORATION, petitioner, vs.CITY OF CABANATUAN, represented

by its CITY MAYOR, HON. HONORATO PEREZ, respondent.
Civil Law; Contracts; Article 1226 of the Civil Code refers to penalties prescribed in
contracts, not to penalties embodied in a judgment.—Article 1226 of the Civil Code
refers to penalties prescribed in contracts, not to penalties embodied in a judgment. We
must yield to the specific language of the fallowhich is controlling and construe its
meaning in the light of the applicable laws.
Statutory Construction; As understood from the common and usual meaning of the
conjunction “and,” the words “tax due” and “unpaid” are inseparable.—As understood
from the common and usual meaning of the conjunction “and,” the words “tax due” and
“unpaid” are inseparable. Hence, when the taxpayer does not pay its tax due for a
particular year, then a surcharge is applied on the full amount of the tax due. However,
when the taxpayer makes a partial payment of the tax due, the surcharge is applied
only on the balance or the part of the tax due that remains unpaid. It is in this sense
that the fallo of the Court of Appeals decision should be read, i.e., a 25% surcharge is
to be added to the proper franchise tax so due and unpaid for each year.
Remedial Law; Civil Procedure; Judgments; Doctrine of Finality of Judgments; It is

the final judgment that determines and stands as the source of the rights and
obligations of the parties.—It is a fundamental rule that the execution cannot be wider
in scope or exceed the judgment or decision on which it is based; otherwise, it has no
validity. “It is the final judgment that determines and stands as the source of the rights
and obligations of the parties.” In Collector of Internal Revenue v. Gutierrez, 108 Phil.
215 (1960), this court did not allow the collection of the 5% surcharge and 1% monthly
interest because the decision sought to be executed did not expressly provide for the
payment of the same.
Taxation; Local Taxation; Local Government Code; Surcharges; Section 168 of the
Local Government Code categorically provides that the local government unit (LGU)
may impose a surcharge not exceeding 25% of the amount of taxes, fees, or charges
not paid on time.—Section 168 of the Local Government Code categorically provides
that the local government unit may impose a surcharge not exceeding 25% of the
amount of taxes, fees, or charges not paid on time. SECTION 168. Surcharges and
Penalties on Unpaid Taxes, Fees, or Charges.—The sanggunian may impose
58 | P a g e
a surcharge not exceeding twenty-five (25%) of the amount of taxes, fees or charges
not paid on time and an interest at the rate not exceeding two percent (2%) per
month of the unpaid taxes, fees or charges including surcharges, until such amount is
fully paid but in no case shall the total interest on the unpaid amount or portion thereof
exceed thirty-six (36) months.
Same; Surcharges; Both the surcharge and interest are imposable upon failure of
the taxpayer to pay the tax on the date fixed in the law for its payment .—The
surcharge is a civil penalty imposed once for late payment of a tax. Contrast this with
the succeeding provisions on interest, which was imposable at the rate not exceeding
2% per month of the unpaid taxes until fully paid. The fact that the interest charge is
made proportionate to the period of delay, whereas the surcharge is not, clearly reveals
the legislative intent for the different modes in their application. Indeed, both the
surcharge and interest are imposable upon failure of the taxpayer to pay the tax on the
date fixed in the law for its payment. The surcharge is imposed to hasten tax payments
and to punish for evasion or neglect of duty, while interest is imposed
to compensate the State “for the delay in paying the tax and for the concomitant use by
the taxpayer of funds that rightfully should be in the government’s hands.”
Same; Statutes; Statutory Construction; Generally, tax statutes are construed

strictly against the government and in favor of the taxpayer.—Generally, tax statutes
are construed strictly against the government and in favor of the taxpayer. “[S]tatutes
levying taxes or duties [are] not to extend their provisions beyond the clear import of
the language used”; and “tax burdens are not to be imposed, nor presumed to be
imposed beyond what the statute[s] expressly and clearly [import]. . . .” Similarly, we
cannot impose a penalty for nonpayment of a tax greater than what the law provides.
To do so would amount to a deprivation of property without due process of law.
Same; Surcharges; Local Taxation; The law allows the local government to collect
an interest at the rate not exceeding 2% per month of the unpaid taxes, fees, or
charges including surcharges, until such amount is fully paid .—Respondent’s yearly
imposition of the 25% surcharge, which was sustained by the trial court and the Court
of Appeals, resulted in an aggregate penalty that is way higher than petitioner’s basic
tax liabilities. Furthermore, it effectively exceeded the prescribed 72% ceiling for
interest under Section 168 of the Local Government Code. The law allows the local
government to collect an interest at the rate not exceeding 2% per month of the unpaid
taxes, fees, or charges including surcharges, until such amount is fully paid. However,
the law provides that the total interest on the unpaid amount or portion thereof should
not exceed thirty-six (36) months or three (3) years. In other words, respondent cannot
59 | P a g e
collect a total interest on the unpaid tax including surcharge that is effectively higher
than 72%. Here, respondent applied the 25% cumulative surcharge for more than three
years. Its computation undoubtedly exceeded the 72% ceiling imposed under Section
168 of the Local Government Code. Hence, respondent’s computation of the surcharge
is oppressive and unconscionable.
Same; Same; Taxes and its surcharges and penalties cannot be construed in such a
way as to become oppressive and confiscatory.—Taxes and its surcharges and penalties
cannot be construed in such a way as to become oppressive and confiscatory. Taxes
are implied burdens that ensure that individuals and businesses prosper in a conducive
environment assured by good and effective government. A healthy balance should be
maintained such that laws are interpreted in a way that these burdens do not amount
to a confiscatory outcome. Taxes are not and should not be construed to drive
businesses into insolvency. To a certain extent, a reasonable surcharge will provide
incentive to pay; an unreasonable one delays payment and engages government in
unnecessary litigation and expense.
Office of the Solicitor General for petitioner.
Edgardo G. Villarin for respondent.
LEONEN,J.:
This is a petition for review1 under Rule 45, seeking to annul and set aside the
January 15, 2007 decision2and April 3, 2007 resolution3 of the Court of Appeals in C.A.-
G.R. S.P. No.
88377. The questioned decision dismissed petitioner’s petition for certiorari and
affirmed the October 25, 2004 order4 of the Regional Trial Court of Cabanatuan City
(Branch 30) directing the issuance of a writ of execution against petitioner for the
satisfaction of the amount of P11,172,479.55, representing the balance of petitioner’s
franchise tax liabilities plus 25% surcharge from 1992 to 2002. The resolution denied
petitioner’s motion for reconsideration.
Antecedents
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The City of Cabanatuan (the City) assessed the National Power Corporation
(NAPOCOR) a franchise tax amounting to P808,606.41, representing 75% of 1% of its
gross receipts for 1992. NAPOCOR refused to pay, arguing that it is exempt from paying
the franchise tax.5 Consequently, on November 9, 1993, the City filed a
complaint6 before the Regional Trial Court of Cabanatuan City, demanding NAPOCOR to
pay the assessed tax due plus 25% surcharge and interest of 2% per month of the
unpaid tax, and costs of suit.
In the order7 dated January 25, 1996, the trial court declared that the City could not
impose a franchise tax on NAPOCOR and accordingly dismissed the complaint for lack of
merit. In the March 12, 2001 decision8 of the Court of Appeals (Eighth Division) in C.A.-
G.R. CV No. 53297, the appellate court reversed the trial court and found NAPOCOR
liable to pay franchise tax, as follows:
IN VIEW OF THE FOREGOING, the decision appealed from is SET
ASIDE and REVERSED. Defendant-appellee National Power Corporation is hereby
ordered to pay the City of Cabanatuan, to wit:
The sum of P808,606.41 representing business tax based on gross receipts for the
year 1992, and 1.
The tax due every year thereafter based [o]n the gross receipts earned by NPC, 2.
In all cases, to pay a surcharge of 25% of the tax due and unpaid, and 3.
The sum of P10,000.00 as litigation expenses. 4.
SO ORDERED.9
In its April 9, 2003 decision,10 this court affirmed the Court of Appeals’ March 12,
2001 decision and July 10, 2001 resolution. In its August 27, 2003 resolution, 11 this
court denied with finality NAPOCOR’s motion for reconsideration.
After the court’s decision had become final, the City filed with the trial court a motion
for execution12 dated December 1, 2003 to collect the sum of
P24,030,565.2613(inclusive of the 25% surcharge of P13,744,096.69). In its
comment,14 NAPOCOR prayed that the issuance of the writ be suspended pending
resolution of its protest letter dated December 12, 2003 filed with the City Treasurer of
Cabanatuan City on the computation of the surcharge. NAPOCOR also informed the
court of its payment to the City Treasurer of P12,868,085.71 in satisfaction of the
judgment award.15
Subsequently, the City filed a supplemental motion for execution16 dated January 29,
2004, claiming that the gross receipts upon which NAPOCOR’s franchise tax liabilities
are to be determined should include transactions within the coverage area of Nueva
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Ecija Electric Cooperative III and sales from the different municipalities of the provinces
of Tarlac, Pangasinan, Baler, and Dingalan, Aurora. According to information allegedly
gathered by the City, these were transacted and consummated at NAPOCOR’s
substation in Cabanatuan City.17
NAPOCOR filed its comment/opposition18 dated March 29, 2004, praying that the
supplemental motion be denied for having raised new factual matters. NAPOCOR
emphasized that “the Court of Appeals Decision limits the franchise tax payable based
on the gross receipts from sales to Cabanatuan City’s electric cooperative.”19
The City filed an amended motion for execution dated June 29, 2004, 20 praying that
“a writ of execution be issued by [the] Court directing [NAPOCOR] to pay. . .the amount
of P69,751,918.19 without prejudice to the collection of the balance, if
any.”21 NAPOCOR filed its comment22 again, praying that the grant of the amended
motion be denied and/or suspended pending final resolution of its protest.
On October 25, 2004, the trial court issued the order23 resolving the pending motions
filed by the City and NAPOCOR’s corresponding comments. The trial court agreed with
NAPOCOR that “the tenor of the decision [sought to be executed] limits the franchise
tax payable on gross receipts from sales to [the City’s] electric cooperative.” 24 However,
the trial court sustained the City’s computation of the surcharge totalling
P13,744,096.69 over NAPOCOR’s claim of P2,571,617.14 only.25
NAPOCOR assailed the trial court’s order dated October 25, 2004 through a petition
for certiorari26 with the Court of Appeals.
On January 15, 2007, the Court of Appeals promulgated the assailed decision
dismissing NAPOCOR’s petition for certiorari and affirming the trial court’s order. It held
that since the franchise tax due was computed yearly, the 25% surcharge should also
be computed yearly based on the total unpaid tax for each particular year. 27 The
appellate court agreed with the City’s reasoning that non-imposition of the surcharge on
a cumulative basis would encourage rather than discourage nonpayment of taxes. 28 In
its resolution29 dated April 3, 2007, the Court of Appeals also denied NAPOCOR’s motion
for reconsideration.
Hence, the present petition for review30 was filed.
According to petitioner, the trial court and the Court of Appeals disregarded the
provisions of Section 168 of Republic Act No. 7160 or the Local Government Code of
1991, which provides:
168. SECTIONSurcharges and Penalties on Unpaid Taxes, Fees, or Charges .—
The sanggunian may impose a surcharge not exceeding twenty-five (25%) of the
amount of taxes, fees or charges not paid on time and an interest at the rate not
62 | P a g e
exceeding two percent (2%) per month of the unpaid taxes, fees or charges including
surcharges, until such amount is fully paid but in no case shall the total interest on the
unpaid amount or portion thereof exceed thirty-six (36) months. (Emphasis supplied)
Petitioner submits that from the foregoing provision, the surcharge should only be
P2,571,617.14, computed by applying the 25% surcharge against the total amount of
taxes not paid on time, which is the total amount of tax due from 1992 to 2002, or
P10,286,468.57. In imposing a surcharge of P13,744,096.69 instead of P2,571,617.14,
the trial court allegedly “varied and/or exceeded the terms of the judgment sought to
be executed.”31
Issue
The sole issue before the court is the proper interpretation for purposes of execution
of the dispositive portion of the Court of Appeals’ decision in C.A.-G.R. CV No. 53297,
promulgated on March 12, 2001 (which was affirmed by this court’s April 9, 2003
decision in G.R. No. 149110). The dispositive portion reads:
IN VIEW OF THE FOREGOING, the decision appealed from is SET
ASIDE and REVERSED. Defendant-appellee National Power Corporation is hereby
ordered to pay the City of Cabanatuan, to wit:
year 1992, and 1.
3.In all cases, to pay a surcharge of 25% of the tax due and unpaid, and
The sum of P10,000.00 as litigation expenses. 4.32(Emphasis supplied)
In other words, the crucial point to be resolved is what the Court of Appeals meant
by “[i]n all cases, to pay a surcharge of 25% of the tax due and unpaid” in the
dispositive portion.
The trial court resolved the question, as follows:
[Petitioner] obtained the amount of P2,571,617.14 by getting the 25% of
P10,286,468.57, the total unpaid tax due. Whereas, the [respondent], by further
studying the data on record, obtained the 25% of the tax due yearly. The total unpaid
tax due for example in year 1992 (P808,606.41) would be added the tax due for 1993
(P821,401.17), obtaining the sum of P1,630,007.58 as unpaid tax due. From this
63 | P a g e
amount of P1,630,007.58 is to be taken the 25% surcharge, giving the amount of

P407,501.89 to be added to the amount of P202,151.60, the 25% of the unpaid
amount of P808,606.41. The same computation was made on the succeeding years up
to the year 2002 giving the total amount of the surcharge/
penalty of P13,744,096.69.
This Court finds the computation of the [respondent] more in accord with the
decision in this case. The [petitioner] was imposed taxes based on the gross receipts
yearly. The tax due was computed yearly and therefore, it can be interpreted to mean
that the 25% surcharge should also be computed yearly based on the unpaid tax due
for each particular year.
Based on these computations, by adding the total tax due for the year 1992 to 2002
(P10,286,468.57), the total surcharge/penalty (P13,744,096.69) and the litigation
expenses (P10,000.00) as contained in the dispositive portion, the [petitioner] has a
total liability of P24,040,565.26. Since the [petitioner] has already paid the sum of
P12,868,085.71; its total liability therefore is P11,172,479.55.33 (Emphasis supplied)
The trial court sustained respondent’s computation of the surcharge based on the
total unpaid tax for each year [proper tax for the year + unpaid tax of the previous
year/s], which, in effect, resulted in the imposition of the 25% surcharge for every year
of default in the payment of a franchise tax, thereby arriving at the total amount of
P13,744,096.69. Petitioner, on the other hand, insists a one-time application of the
25% surcharge based on the total franchise tax due and unpaid (P10,286,468.57 from
1992 to 2002), arriving at the sum of only P2,571,617.14.
This Court’s Ruling
The petition is meritorious.
The trial court’s order of execution, as affirmed by the Court of Appeals,

exceeded the judgment sought to be executed
Respondent’s computation of the surcharge, as sustained by the trial court and the
Court of Appeals, varies the terms of the judgment sought to be executed and
contravenes Section 168 of the Local Government Code.
To repeat, respondent computed the surcharge based on the total unpaid tax for
each particular year. For example, in 1993, the proper tax due (P821,401.17) was
64 | P a g e
added the unpaid tax due in year 1992 (P808,606.41), obtaining the sum of
P1,630,007.58 as total unpaid tax. To this amount of P1,630,007.58 was applied the
25% surcharge, giving the amount of P407,501.89. In 1994, the proper tax due
(P1,075,855.62) was added the unpaid taxes for 1992 and 1993 (P1,630,007.58),
yielding a total unpaid tax of P2,705,863.20. To this sum of P2,705,863.20 was applied
the 25% surcharge, obtaining the amount of P676,465.80. The same computation was
made on the succeeding years up to the year 2002. The surcharges from 1992 to 2002
were added, giving the total amount of P13,744,096.69. Thus:
In effect, respondent’s computation resulted in the imposition of the 25% surcharge

for every year of default in the payment of a franchise tax. To illustrate, the surcharge
for the 1992 franchise tax is 25% of P808,606.41 [proper tax due] multiplied by 11
years [1992 to 2002]; for the 1993 franchise tax, 25% of P821,401.17 [proper tax due]
multiplied by 10 years [1993 to 2002]; for the 1994 franchise tax, 25% of
P1,075,855.62 [proper tax due] multiplied by 9 years [1994 to 2002]; and so on, as
detailed below:
There is nothing in the Court of Appeals’ decision that would justify the
interpretation that the statutory penalty of 25% surcharge should be charged yearly
from due date until full payment. If that was the intention of the Court of Appeals, it
should have so expressly stated in the dispositive portion of its decision.
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Respondent contends that in its complaint before the trial court, it prayed that
petitioner be ordered to pay the franchise tax due, plus 25% surcharge and 2%
monthly interest in accordance with Section 168 of the Local Government
Code.35 However, the appellate court allegedly did not award the 2% monthly interest,
and the only probable reason why it did not do so notwithstanding the express
provision of law was because of Article 122636 of the Civil Code stating that the “pen
alty [25% surcharge] shall substitute the indemnity for damages and the payment of
interest in case of noncompliance.”37 Hence, it contended that sans the payment of
monthly interest, the “one time [sic] imposition of the [surcharge] regardless of the
number of years of delay [would] be a great transgression of [its] right.”38
Respondent’s theory is implausible.
Article 1226 of the Civil Code refers to penalties prescribed in contracts, not to
penalties embodied in a judgment. We must yield to the specific language of
the fallo which is controlling and construe its meaning in the light of the applicable laws.
For clarity, we reiterate the pertinent portion of the dispositive:
year 1992, and 1.
3.In all cases, to pay a surcharge of 25% of the tax due and unpaid, and. . .
.39 (Emphasis supplied)
The fallo says “tax due and unpaid,” which simply means tax owing or owed or “tax
due that was not paid.” The “and” is “a conjunction used to denote a joinder or union,
‘binding together,’ ‘relating the one to the other.’”40 In the context of the decision
rendered, there is no ambiguity.
As understood from the common and usual meaning of the conjunction “and,” the
words “tax due” and “unpaid” are inseparable. Hence, when the taxpayer does not pay
its tax due for a particular year, then a surcharge is applied on the full amount of the
tax due. However, when the taxpayer makes a partial payment of the tax due, the
surcharge is applied only on the balance or the part of the tax due that remains unpaid.
It is in this sense that the fallo of the Court of Appeals decision should be read, i.e., a
25% surcharge is to be added to the proper franchise tax so due and unpaid for each
year.
The proper franchise tax due each year is computed, with paragraphs 1 and 2 of
the fallo being applied, based on the gross receipts earned by NAPOCOR:
66 | P a g e
Since the franchise tax due was not paid on time, a surcharge of 25% is imposed as
an addition to the main tax required to be paid. This is the proper meaning of
paragraph 3 of the fallo. Thus:
It is a fundamental rule that the execution cannot be wider in scope or exceed the
judgment or decision on which it is based; otherwise, it has no validity.42 “It is the final
judgment that determines and stands as the source of the rights and obligations of the
parties.”43 In Collector of Internal Revenue v. Gutierrez,44 this court did not allow the
collection of the 5% surcharge and 1% monthly interest because the decision sought to
be executed did not expressly provide for the payment of the same.
It is the final judgment that determines and stands as the source of the rights and
obligations of the parties. The judgment in this case made no pronouncement as to the
payment of surcharge and interest, but specifically stated the amount for the payment
of which respondents were liable. The Collector by virtue of the writ of execution, may
not vary the terms of the judgment by including in his motion for execution the
payment of surcharge and interest.
“The writ of execution must conform to the judgment which is to be executed, as it

may not vary the terms of the judgment it seeks to enforce. Nor may it go beyond the
67 | P a g e
terms of the judgment sought to be executed. Where the execution is not in harmony
with the judgment which gives it life and exceeds it, it has pro tanto no validity.”
(Moran, Comments on the Rules of Court, Vol. I, p. 556, 1957 ed., and authorities cited
therein)45
In The Philippine American Accident Insurance Co., Inc. v. Hon. Flores,46 the trial
court’s order directing the issuance of an alias writ of execution for the satisfaction of
the compound interest computed by private respondent was set aside by this court,
ruling that the judgment sought to be executed ordered only the payment of a simple
interest:
The questioned Order cannot be sustained. The judgment which was sought to be
executed ordered the payment of simple “legal interest” only. It said nothing about the
payment of compound interest. Accordingly, when the respondent judge ordered the
payment of compound interest he went beyond the confines of his own judgment which
had been affirmed by the Court of Appeals and which had become final. Fundamental is
the rule that execution must conform to that ordained or decreed in the dispositive part
of the decision. Likewise, a court can not [sic], except for clerical errors or omissions,
amend a judgment that has become final.47 (Citation omitted)
Respondent should have filed an appeal from the judgment or at the least sought
clarification insofar as it failed to provide for the payment of the 2% monthly interest.
Instead, it erroneously presumed that the surcharge was to be applied yearly with the
omission of the payment for monthly interest in the judgment. Hence, respondent alone
is to blame and should suffer the consequences of its neglect. With the finality of the
Court of Appeals’ judgment, all the issues between the parties are deemed resolved and
laid to rest. Neither the trial court nor even this court can amend or add to the
dispositive portion of a decision that has attained finality.
The judgment directing the payment of surcharge on taxes due and unpaid
should be read in consonance with Section 168 of the Local Government
Code
Section 168 of the Local Government Code categorically provides that the local
government unit may impose a surcharge not exceeding 25% of the amount of taxes,
fees, or charges not paid on time.
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168. SECTIONSurcharges and Penalties on Unpaid Taxes, Fees, or Charges .—

The sanggunian may impose a surcharge not exceeding twenty-five (25%) of the
amount of taxes, fees or charges not paid on time and an interest at the rate not
exceeding two percent (2%) per month of the unpaid taxes, fees or charges including
surcharges, until such amount is fully paid but in no case shall the total interest on the
unpaid amount or portion thereof exceed thirty-six (36) months. (Emphasis supplied)
The surcharge is a civil penalty imposed once for late payment of a tax.48 Contrast
this with the succeeding provisions on interest, which was imposable at the rate not
exceeding 2% per month of the unpaid taxes until fully paid. The fact that the interest
charge is made proportionate to the period of delay, whereas the surcharge is not,
clearly reveals the legislative intent for the different modes in their application.
Indeed, both the surcharge and interest are imposable upon failure of the taxpayer
to pay the tax on the date fixed in the law for its payment. The surcharge is imposed to
hasten tax payments and to punish for evasion or neglect of duty,49 while interest is
imposed to compensate the State “for the delay in paying the tax and for the
concomitant use by the taxpayer of funds that rightfully should be in the government’s
hands.”50
A surcharge regardless of how it is computed is already a deterrent. While it is true
that imposing a higher amount may be a more effective deterrent, it cannot be done in
violation of law and in such a way as to make it confiscatory. We find this reasoning not
compelling for us to deviate from the express provisions of Section 168 of the Local
Government Code. When a law speaks unequivocally, it is not the province of this court
to scan its wisdom or its policy.
This court has steadfastly adhered to the doctrine that its first and fundamental duty
is the application of the law according to its plain terms, interpretation being called for
only when such literal application is impossible. Neither the court nor the City has the
power to modify the penalty.51
If the legislative intent was to make the 25% surcharge proportionate to the period
of delay, the law should have provided for the same in clear terms.
Generally, tax statutes are construed strictly against the government and in favor of
the taxpayer.52“[S]tatutes levying taxes or duties [are] not to extend their provisions
beyond the clear import of the language used”;53 and “tax burdens are not to be
imposed, nor presumed to be imposed beyond what the statute[s] expressly and clearly
[import]. . . .”54 Similarly, we cannot impose a penalty for nonpayment of a tax greater
69 | P a g e
than what the law provides.55 To do so would amount to a deprivation of property

without due process of law.
Respondent’s computation of the surcharge is oppressive and

unconscionable
The yearly accrual of the 25% surcharge is unconscionable. Respondent’s

computation of the total tax due plus surcharge is reproduced below for easy reference.
Respondent’s yearly imposition of the 25% surcharge, which was sustained by the
trial court and the Court of Appeals, resulted in an aggregate penalty that is way higher
than petitioner’s basic tax liabilities.
Furthermore, it effectively exceeded the prescribed 72% ceiling for interest under
Section 168 of the Local Government Code. The law allows the local government to
collect an interest at the rate not exceeding 2% per month of the unpaid taxes, fees, or
charges including surcharges, until such amount is fully paid. However, the law provides
that the total interest on the unpaid amount or portion thereof should not exceed thirty-
six (36) months or three (3) years. In other words, respondent cannot collect a total
interest on the unpaid tax including surcharge that is effectively higher than 72%. Here,
respondent applied the 25% cumulative surcharge for more than three years. Its
computation undoubtedly exceeded the 72% ceiling imposed under Section 168 of the
Local Government Code. Hence, respondent’s computation of the surcharge is
oppressive and unconscionable.
70 | P a g e
We conclude that the trial court committed grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing its order dated October 25, 2004, which adopted
respondent’s computation and effectively varied the terms of the judgment sought to be
executed insofar as it imposed a surcharge of P13,744,096.69 on the total tax due
(P10,286,468.57) from 1992 to 2002 instead of only P2,571,617.14.
Taxes and its surcharges and penalties cannot be construed in such a way as to
become oppressive and confiscatory. Taxes are implied burdens that ensure that
individuals and businesses prosper in a conducive environment assured by good and
effective government. A healthy balance should be maintained such that laws are
interpreted in a way that these burdens do not amount to a confiscatory outcome.
Taxes are not and should not be construed to drive businesses into insolvency. To a
certain extent, a reasonable surcharge will provide incentive to pay; an unreasonable
one delays payment and engages government in unnecessary litigation and expense.
Since it is undisputed that petitioner had already paid the amount of
P12,868,085.7157 (including litigation expenses of P10,000.00) to the City Treasurer of
Cabanatuan City, the judgment has accordingly been fully satisfied.
WHEREFORE, the petition is GRANTED and the Court of Appeals decision and
resolution dated January 15, 2007 and April 3, 2007 are REVERSED AND SET
ASIDE. The order dated October 25, 2004 of the Regional Trial Court of Cabanatuan
City, Branch 30, in Civil Case No. 1659 AF granting the writ of execution for the
satisfaction of the amount of P11,172,479.55 is ANNULLED AND SET ASIDE.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
——o0o——
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CASES REPORTED
ANNOTATED REPORTS COURT SUPREME
____________________
October 8, 2014. G.R. No. 193650.*
GEORGE PHILIP P. PALILEO and JOSE DELA CRUZ, petitioners, vs. PLANTERS
DEVELOPMENT BANK, respondent.
Pleadings and Practice; Service of Pleadings by Courier Service; Service and filing
of pleadings by courier service is a mode not provided in the Rules.—Indeed, its filing or
service of a copy thereof to petitioners by courier service cannot be trivialized. Service
and filing of pleadings by courier service is a mode not provided in the Rules. This is not
to mention that PDB sent a copy of its omnibusmotion to an address or area which was
not covered by LBC courier service at the time. Realizing its mistake, PDB refiled and
resent the omnibus motion by registered mail, which is the proper mode of service
under the circumstances. By then, however, the 15-day period had expired.
Remedial Law; Civil Procedure; Judgments; Doctrine of Finality of Judgments;

Finality of a judgment or order becomes a fact upon the lapse of the reglementary
period to appeal if no appeal is perfected, and is conclusive as to the issues actually
determined and to every matter which the parties might have litigated and have
decided as incident to or essentially connected with the subject matter of the litigation,
and every matter coming within the legitimate purview of the original action both in
respect to matters of claim and of defense.—Since PDB’s Omnibus Motion for
Reconsideration and for New Trial was filed late and the 15-day period within which to
appeal expired without PDB filing the requisite notice of appeal, it follows that its right
to appeal has been foreclosed; it may no longer question the trial court’s Decision in
any other manner. “Settled is the rule that a party is barred from assailing the
correctness of a judgment not appealed from by him.” The “presumption that a party
who did not interject an appeal is satisfied with the adjudication made by the lower
court” applies to it. There being no appeal taken by PDB from the adverse judgment of
the trial court, its Decision has become final and can no longer be reviewed, much less
reversed, by this Court. “Finality of a judgment or order becomes a fact upon the lapse
of the reglementary period to appeal if no appeal is perfected, and is conclusive as to
the issues actually determined and to every matter which the parties might have
72 | P a g e
litigated and have x x x decided as incident to or essentially connected with the subject
matter of the litigation, and every matter coming within the legitimate purview of the
original action both in respect to matters of claim and of defense.” And “[i]n this
jurisdiction, the rule is that when a judgment becomes final and executory, it is the
ministerial duty of the court to issue a writ of execution to enforce the judgment”;
“execution will issue as a matter of right x x x (a) when the judgment has become final
and executory; (b) when the judgment debtor has renounced or waived his right of
appeal; [or] (c) when the period for appeal has lapsed without an appeal having been
filed.
PETITION for review on certiorari of the amended decision and resolution of the Court
of Appeals.
Nepthali P. Solilapsi for petitioners.
Janda, Asia and Associates for respondent.
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the July 28, 2009 Amended Decision2 of
the Court of Appeals (CA) in C.A.-G.R. S.P. No. 01317-MIN, entitled “Planters
Development Bank, petitioner, versus Hon. Eddie R. Roxas (in his capacity as the
former Pairing Judge), Hon. Panambulan M. Mimbisa (in his capacity as the Presiding
Judge of RTC, Branch 37, General Santos City), Sheriff Marilyn P. Alano, Sheriff Ramon
A. Castillo, George Philip P. Palileo, and Jose Dela Cruz, respondents,” as well as its
August 23, 2010 Resolution3 denying reconsideration of the assailed amended
judgment.
Factual Antecedents
In a June 15, 2006 Decision4 rendered by the Regional Trial Court (RTC) of General
Santos City, Branch 37, in an action for specific performance/sum of money with
damages docketed as Civil Case No. 6474 and entitled “George Philip P. Palileo and Jose
Dela Cruz, plaintiffs, versus, Planters Development Bank, Engr. Edgardo R. Torcende,
Arturo R. delos Reyes,Benjamin N. Tria, Mao Tividad and Emmanuel Tesalonia,
defendants,” it was held thus:
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Before this Court is a complaint for specific performance and/or sum of money and
damages with prayer for the issuance of writs of preliminary attachment and
preliminary injunction filed by Plaintiff George Philip Palileo and Jose L. Dela Cruz
against Engr. Edgardo R. Torcende, Planters Development Bank (defendant Bank),
Arturo R. Delos Reyes, Benjamin N. Tria, Mao Tividad, and Emmanuel Tesalonia on 22
December 1998.
After summons together with the verified Complaint and its annexes were duly
served upon defendants, the latter answered. During Pre-Trial conference defendant
Bank manifested [its] intention of settling the case amicably and several attempts to
explore the said settlement [were] made as per records of this case. In the last pretrial
hearing dated 17 November 2000, only plaintiffs[,] George Philip Palileo and Jose L.
Dela Cruz[,] and their counsel appeared, thus, the latter move [sic] for the presentation
of evidence ex parte, which was granted by the Court with the reservation of verifying
the return card [to determine] whether the order for the pretrial was indeed received by
defendants. Finally, [at the] 21 November 2001 hearing, x x x defendants [again] failed
to appear and their failure to file pretrial brief was noted; thus [plaintiffs were] allowed
to present evidence ex parte before the Clerk of Court.
xxxx
IN LIGHT OF THE FOREGOING, defendants are hereby ORDERED to jointly and
severally PAY plaintiffs as follows:
Actual Damages; i)
Plaintiff George Philip Palileo[,] the amount of Two Million Six Hundred Five
Thousand Nine [ a)sic] Seventy-Two Pesos and Ninety-Two Centavos (P2,605,972.92),
with 12% compounded interest [per annum] reckoned from the filing of this case until
full settlement thereof;
Plaintiff Jose R. Dela Cruz[,] the amount of One Million Five Hundred Twenty-Nine
Thousand Five Hundred Eight Thousand [ b)sic] and Eighty Centavos (P1,529,508.80),
with 12% compounded interest [per annum] reckoned from the filing of this case until
full settlement thereof;
ii) Moral damages in the amount of Five Hundred Thousand Pesos (P500,000.00)
each;
iii) Exemplary Damages in the amount of Five Hundred Thousand Pesos
(P500,000.00) each;
iv) Attorney’s Fees in the amount of Five Hundred Thousand [Pesos] (P500,000.00)
each x x x and to pay the costs.
SO ORDERED.5
74 | P a g e
Respondent Planters Development Bank (PDB) received a copy of the RTC Decision
on July 17, 2006.
On July 31, 2006, PDB filed by private courier service — specifically LBC6 — an
Omnibus Motion for Reconsideration and for New Trial,7 arguing therein that the trial
court’s Decision was based on speculation and inadmissible and self-serving pieces of
evidence; that it was declared in default after its counsel failed to attend the pretrial
conference on account of the distance involved and difficulty in booking a flight to
General Santos City; that it had adequate and sufficient defenses to the petitioners’
claims; that petitioners’ claims are only against its codefendant, Engr. Edgardo R.
Torcende [Torcende]; that the award of damages and attorney’s fees had no basis; and
that in the interest of justice, it should be given the opportunity to cross-examine the
petitioners’ witnesses, and thereafter present its evidence.
5 Id., at p. 112.
6 LBC Express is a domestic corporation that offers cargo and courier services to
and from different parts of the country. http://www.lbcexpress.com/.
7 Rollo, pp. 93-99.
6
6 SUPREME COURT REPORTS ANNOTATED
Palileo vs. Planters Development Bank
Petitioners’ copy of the Omnibus Motion for Reconsideration and for New Trial was
likewise sent on July 31, 2006 by courier service through LBC, but in their address of
record — Tupi, South Cotabato — there was no LBC service at the time.
On August 2, 2006, PDB filed with the RTC another copy of the Omnibus Motion for
Reconsideration and for New Trial via registered mail; another copy thereof was
simultaneously sent to petitioners by registered mail as well.
Meanwhile, petitioners moved for the execution of the Decision pending appeal.
In an August 30, 2006 Order,8 the RTC denied the Omnibus Motion for
Reconsideration and for New Trial, while it granted petitioners’ motion for execution
pending appeal, which it treated as a motion for the execution of a final and executory
judgment. The trial court held, as follows:
Anent the first motion, records show that the Omnibus Motion for Reconsideration
and for New Trial dated 28 July 2006 was initially filed via an LBC courier on 28 July
2006 and was actually received by the Court on 31 July 2006, which was followed by
filing of the same motion thru registered mail on 2 August 2006. Said motion was set
for hearing by the movant on 18 August 2006 or 16 days after its filing.
75 | P a g e
The motion fails to impress. Section 5, Rule 159 of the 1997 Rules of Civil Procedure
as amended is pertinent thus:
Notice of hearing.—The 5. Section notice of hearing shall be addressed to all
parties concerned, and shall specify the time and date of the hearing which must not be
later than ten (10) days after the filing of the motion. (Underscoring and italics
supplied)
The aforesaid provision requires [that] every motion shall be addressed to all parties
concerned, and shall specify the time and date of the hearing NOT later than ten (10)
days after the filing of the motion. Being a litigated motion, the aforesaid rule should
have been complied [with]. Its noncompliance renders it defective.
[The] Rule is settled that a motion in violation thereof is pro forma and a mere scrap
of paper. It presents no question which the court could decide [upon]. In fact, the court
has NO reason to consider it[;] neither [does] the clerk of court [have] the right to
receive the same. Palpably, the motion is nothing but an empty formality deserving no
judicial cognizance. Hence, the motion deserves a short shrift and peremptory denial for
being procedurally defective.
As such, it does not toll the running of the reglementary period thus making the
assailed decision final and executory. This supervening situation renders the Motion for
Execution pending appeal academic but at the same time it operates and could serve
[as] well as a motion for execution of the subject final and executory decision.
Corollarily, it now becomes the ministerial duty of this Court to issue a writ of execution
thereon.
IN LIGHT OF THE FOREGOING, the Omnibus Motion for Reconsideration and New
Trial is hereby DENIED, and the Motion for Execution Pending Appeal (which is treated
as a motion for execution of a final and executory judgment) is also GRANTED as
explained above. Accordingly, let A WRIT OF EXECUTION be issued against herein
defendants to enforce the FINAL and EXECUTORY Decision dated 15 June 2006.
SO ORDERED.10
PDB received a copy of the above August 30, 2006 Order on September 14, 2006.11
_______________
10 Rollo, pp. 119-120.

11 Id., at p. 158. PDB’s Comment to the instant Petition.
8
76 | P a g e

On August 31, 2006, a Writ of Execution12 was issued. PDB filed an Urgent Motion to
Quash Writ of Execution,13 arguing that it was prematurely issued as the June 15, 2006
Decision was not yet final and executory; that its counsel has not received a copy of the
writ; and that no entry of judgment has been made with respect to the trial court’s
Decision. Later on, it filed a Supplemental Motion to Quash Writ of Execution,14claiming
that the writ was addressed to its General Santos branch, which had no authority to
accept the writ.
On September 7, 2006, PDB filed a Notice of Appeal.15
In an October 6, 2006 Order,16 the RTC denied the motion to quash the writ of
execution.
On October 9, 2006, the RTC issued a second Writ of Execution.17
On October 11, 2006, PDB filed with the CA an original Petition for Certiorari, which
was later amended,18 assailing 1) the trial court’s August 30, 2006 Order — which
denied the omnibus motion for reconsideration of the RTC Decision and for new trial; 2)
its October 6, 2006 Order — which denied the motion to quash the writ of execution;
and 3) the August 31, 2006 and October 9, 2006 writs of execution.
_______________
12 CA Rollo, pp. 62-63.

13 Id., at pp. 186-189.
14 Id., at pp. 195-198.
15 Id., at pp. 190-191.
16 Rollo, pp. 121-124.
17 CA Rollo, pp. 200-201.
18 Rollo, pp. 125-145; Amended Petition (with Urgent Motion for Issuance of
Temporary Restraining Order/Preliminary Injunction).
9
VOL. 738, OCTOBER 8, 2014 9
77 | P a g e
On May 31, 2007, the CA issued a Decision19dismissing PDB’s Petition for lack of
merit. It sustained the trial court’s pronouncement, that by setting the hearing of the
Omnibus Motion for Reconsideration and for New Trial on August 18, 2006 — or 16
days after its filing on August 2, 2006 — PDB violated Section 5, Rule 15 of the Rules of
Court which categorically requires that the notice of hearing shall specify the time and
date of the hearing which must not be later than 10 days after the filing of the motion.
Citing this Court’s ruling in Bacelonia v. Court of Appeals,20 the CA declared that the 10-
day period prescribed in Section 5 is mandatory, and a motion that fails to comply
therewith is pro forma and presents no question which merits the attention and
consideration of the court.
The appellate court further characterized PDB’s actions as indicative of a deliberate
attempt to delay the proceedings, noting that it did not timely move to reconsider the
trial court’s November 17, 2000 ruling21allowing petitioners to present their evidence ex
parte, nor did it move to be allowed to present evidence in support of its defense. It
was only after the RTC rendered its June 15, 2006 Decision that PDB moved to be
allowed to cross-examine petitioners’ witnesses and to present its evidence on defense.
The CA likewise held that the RTC did not err in ruling that the omnibus motion for
reconsideration did not toll the running of the prescriptive period, which thus rendered
the June 15, 2006 Decision final and executory. It noted as well that PDB’s September
7, 2006 notice of appeal was tardy.
_______________
19 Id., at pp. 28-40; penned by Associate Justice Romulo V. Borja and concurred in
by Associate Justices Mario V. Lopez and Michael P. Elbinias.
20 445 Phil. 300; 397 SCRA 286 (2003).
21 Rollo, p. 36; ruling of the RTC during pretrial hearing of even date.
10
The CA found no irregularity with respect to the writs of execution, which contained
the fallo of the June 15, 2006 Decision of the RTC — thus itemizing the amount of the
judgment obligation. Additionally, it held that the fact that the judgment debtors are
held solidarily liable does not require that the writs should be served upon all of the
defendants; that it is not true that the sheriffs failed to make a demand for the
satisfaction of judgment upon PDB, as the mere presentation of the writ to it operated
as a demand to pay; and that PDB failed to attach the Sheriff’s Return to its Petition,
78 | P a g e
which thus prevents the appellate court from resolving its claim that the writs were not
validly served.
PDB filed a Motion for Reconsideration,22 arguing that Rule 15, Section 5 of the Rules
of Court should be relaxed in view of the fact that judgment against it was based on a
technicality — and not on a trial on the merits; that there was no deliberate intention
on its part to delay the proceedings; that the court acted with partiality in declaring that
the Omnibus Motion for Reconsideration and for New Trial was pro forma; that its
notice of appeal was timely; and that the writs of execution are null and void.
On July 28, 2009, the CA made a complete turnaround and issued the assailed
Amended Decision, which decreed thus:
WHEREFORE, the motion for reconsideration is GRANTED. This Court’s May 31, 2007
Decision is SET ASIDE and a new one is rendered GRANTING the petition for certiorari.
The trial court’s Order dated August 30, 2006 is SET ASIDE and the Writ of Execution
issued by the trial court is QUASHED. The trial court is ORDERED to hear and rule on
the merits of petitioner’s “Omnibus Motion for Reconsideration and New Trial.”
SO ORDERED.23
_______________
22 CA Rollo, pp. 337-351.

23 Rollo, p. 61.
11
VOL. 738, OCTOBER 8, 2014 11
The CA reversed its original finding that the Omnibus Motion for Reconsideration and
for New Trial was pro forma. This time, it held just the opposite, ruling that PDB’s “tacit
argument” that the “distances involved in the case at bench call for a relaxation of the
application of Section 5, Rule 15 of the Rules of Court” deserved consideration. It held
that Section 5 should be read together with Section 424 of the same Rule, thus:
When a pleading is filed and served personally, there is no question that the
requirements in Sections 4 and 5 of Rule 15 of the Revised Rules of Civil Procedure
pose no problem to the party pleading. Under this mode of service and filing of
pleadings, the party pleading is able to ensure receipt by the other party of his pleading
at least three days prior to the date of hearing while at the same time setting the
hearing on a date not later than ten days from the filing of the pleading.
When, as in the case at bench, the address of the trial court as well as that of the
opposing counsel is too distant from the office of the counsel of the party pleading to
79 | P a g e
personally effect the filing and service of the pleading, the latter counsel faces a real
predicament. In a perfect world with the best postal service possible, it would be
problematic enough to ensure that both requisites are fully met: that opposing counsel
receives the pleading at least three days before the date of hearing and that the date of
hearing is no more than ten days after the filing (mailing) of the pleading. But, as a
matter of fact, given
_______________
24 4. Sec.Hearing of motion.—
Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3)
days before the date of hearing, unless the court for good cause sets the hearing on
shorter notice.
12
the state of the postal service today — a matter the Court takes judicial notice of — the
party pleading often finds himself [locked] between the horns of a dilemma.
The case at bench presents the Court with the novel issue of whether the same rigid
application of the cited Sections-and-Rule is warranted when the filing and service of
pleadings is by mail. The Court is of the opinion that when confronted between [sic] the
demands of sufficient notice and due process on the one hand and the requirement that
the date of hearing be set no later than ten days from filing, the stringent application of
the Rules is not warranted and a liberal posture is more in keeping with Section 6, Rule
1 of the 1997 Rules of Civil Procedure which provides:
6. SECTIONConstruction.—These Rules shall be liberally construed in order to
promote their objective of securing a just, speedy, and inexpensive disposition of every
action and proceeding.25
The CA further sustained PDB’s argument that since judgment against it was arrived
at by mere default or technicality, it is correspondingly entitled to a relaxation of the
Rules, in line with the principles of substantial justice. It likewise held that PDB
counsel’s act of setting the hearing of the Omnibus Motion for Reconsideration and for
New Trial 16 days after its filing was an excusable lapse; that no scheme to delay the
80 | P a g e
case is evident from PDB’s actions; that more telling is the trial court’s “blurring in
cavalier fashion” the distinction between Sections 1 and 2 of Rule 39 of the Rules of
Court,26 as
_______________
25 Rollo, pp. 54-55.

26 1. SectionExecution upon judgments or final orders.—
Execution shall issue as a matter of right, on motion, upon a judgment or order that
disposes of the action or proceeding upon the expiration of the period to appeal
therefrom if no appeal has been duly perfected.
13
VOL. 738, OCTOBER 8, 2014 13
well as its unequal treatment of the parties from its strict application of Section 5,
Rule 15 against respondent, while it bent backward to accommodate petitioners by
converting the latter’s motion for execution pending appeal into a motion for execution
of a final and executory judgment.
Lastly, the appellate court concluded that the trial court committed grave abuse of
discretion, which thus warrants the grant of PDB’s Petition for Certiorari.
Petitioners filed their Urgent Motion for Reconsideration,27 which the CA denied
through its assailed August 23, 2010 Resolution. Hence, the instant Petition.
_______________
If the appeal has been duly perfected and finally resolved, the execution may
forthwith be applied for in the court of origin, on motion of the judgment obligee,
submitting therewith certified true copies of the judgment or judgments or final order or
orders sought to be enforced and of the entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution.
2. Sec.Discretionary execution.—
(a)Execution of a judgment or final order pending appeal.—On motion of the
prevailing party with notice to the adverse party filed in the trial court while it has
jurisdiction over the case and is in possession of either the original record or the record
on appeal, as the case may be, at the time of the filing of such motion, said court may,
in its discretion, order execution of a judgment or final order even before the expiration
of the period to appeal.
81 | P a g e
After the trial court has lost jurisdiction, the motion for execution pending appeal may
be filed in the appellate court.
Discretionary execution may only issue upon good reasons to be stated in a special
order after due hearing.
(b)Execution of several, separate or partial judgments.—A several, separate or partial
judgment may be executed under the same terms and conditions as execution of a
judgment or final order pending appeal.
27 Rollo, pp. 63-80.
14
Issues
Petitioners frame the issues involved in this Petition, as follows:

Being assailed herein is the refusal of the Court of Appeals, which is a patent error,
for not giving credence to petitioners-appellants’ arguments that the respondent-
appellees’ special civil action for certiorari before it is clearly devoid of merit as (i) the
Decision dated June 15, 2006 of the RTC, Branch 37, General Santos City had become
final and executory before the special civil action for Certiorari was filed before it which
should have been dismissed outright, and which issue of “finality” was never ruled
upon, (ii) granting arguendo that a certiorari proceeding could still be had, the same
should be filed under Rule 45 instead of Rule 65 of the 1997 Rules of Civil Procedure,
(iii) the alleged attendant abuse of discretion on the part of the public respondent
judges, even granting arguendo that it exist [sic], were [sic] not grave but on the
contrary were purely errors of judgment and, (iv) the substantial and glaring defects of
the petition in the special civil action for certiorari before the Court of Appeals were
consistently and clearly called to its attention but were unjustifiably ignored by it.28
Petitioners’ Arguments
In their Petition and Reply,29 petitioners seek to reverse the assailed CA dispositions
and to reinstate the appellate court’s original May 31, 2007 Decision, arguing that the
trial court’s June 15, 2006 Decision became final and executory on account of PDB’s
failure to timely file its Omnibus Motion for Reconsideration and for New Trial, as it
82 | P a g e
properly filed the same only on August 2, 2006 — or beyond the 15-day period allowed
by the Rules of Court.
_______________
28 Id., at pp. 13-14.

29 Id., at pp. 166-177.
15
VOL. 738, OCTOBER 8, 2014 15
Petitioners argue that PDB’s filing of its Omnibus Motion for Reconsideration and for
New Trial on July 31, 2006 by courier service through LBC was improper, since there
was no LBC courier service in Tupi, South Cotabato at the time; naturally, they did not
receive a copy of the omnibus motion. This is precisely the reason why PDB refiled its
omnibus motion on August 2, 2006 through registered mail, that is, to cure the
defective service by courier; but by then, the 15-day period within which to move for
reconsideration or new trial, or to file a notice of appeal, had already expired, as the
last day thereof fell on August 1, 2006 — counting from PDB’s receipt of the trial court’s
Decision on July 17, 2006.
Petitioners add that PDB’s notice of appeal — which was filed only on September 7,
2006 — was tardy as well; that PDB’s resort to an original Petition for Certiorari to assail
the trial court’s August 30, 2006 Order denying the Omnibus Motion for Reconsideration
and for New Trial was improper, for as provided under Section 9, Rule 37 of the Rules
of Court,30 an order denying a motion for new trial or reconsideration is not appealable,
the remedy being an appeal from the judgment or final order; that certiorari was
resorted to only to revive PDB’s appeal, which was already lost; and that it was merely
a face-saving measure resorted to by PDB to recover from its glaring blunders, as well
as to delay the execution of the RTC Decision. They also assert that certiorari is not an
available remedy, since PDB did not file a motion for reconsideration with respect to the
other assailed orders of the trial court.
Petitioners maintain as well that the CA erred in relaxing the application of the Rules
of Court as to PDB, a banking
_______________
30 On New Trial or Reconsideration.

9. Sec.Remedy against order denying a motion for new trial or reconsideration.—
83 | P a g e
An order denying a motion for new trial or reconsideration is not appealable, the
remedy being an appeal from the judgment or final order.
16
institution with adequate resources to engage counsel within General Santos City
and not relegate Civil Case No. 6474 to its Manila lawyers who are thus constrained by
the distance involved.
Respondent’s Arguments
Seeking the denial of the Petition, PDB in its Comment31 maintains that the CA did
not err in declaring that its Omnibus Motion for Reconsideration and for New Trial was
not pro forma; that there are justifiable grounds to move for reconsideration and/or
new trial; that it had no intention to delay the proceedings; that it was correct for the
appellate court to relax the application of Section 5, Rule 15; and that the CA is correct
in finding that the trial court committed grave abuse of discretion in misapplying the
Rules and in exhibiting partiality.
Our Ruling
The Court grants the Petition.

The proceedings in the instant case would have been greatly abbreviated if the
court a quo and the CA did not overlook the fact that PDB’s Omnibus Motion for
Reconsideration and for New Trial was filed one day too late. The bank received a copy
of the trial court’s June 15, 2006 Decision on July 17, 2006; thus, it had 15 days — or
up to August 1, 2006 — within which to file a notice of appeal, motion for
reconsideration, or a motion for new trial, pursuant to the Rules of Court.32 Yet, it filed
the omnibus motion for reconsideration and new trial only on August 2, 2006.
_______________
31 Rollo, pp. 155-164.

32 NEW TRIAL OR RECONSIDERATION. 37. RULE
1. SectionGrounds of and period for filing motion for new trial or
reconsideration.—
17
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VOL. 738, OCTOBER 8, 2014 17

Indeed, its filing or service of a copy thereof to petitioners by courier service cannot
be trivialized. Service and filing of pleadings by courier service is a mode not provided in
the Rules.33 This is not to mention that PDB sent a copy of its omnibus motion to an
address or area which was not covered by LBC courier service at the time. Realizing its
mistake, PDB refiled and resent the omnibus motion by registered mail, which is the
proper mode of service under the circumstances. By then, however, the 15-day period
had expired.
PDB’s Notice of Appeal, which was filed only on September 7, 2006, was tardy; it
had only up to August 1, 2006 within
_______________
Within the period for taking an appeal, the aggrieved party may move the trial court
to set aside the judgment or final order and grant a new trial for one or more of the
following causes x x x.
APPEAL FROM THE REGIONAL TRIAL COURTS. 41. RULE
2. Sec.Modes of appeal.—
(a)Ordinary appeal.—The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. x x x
3. Sec.Period of ordinary appeal.—
The appeal shall be taken within fifteen (15) days from notice of the judgment or final
order appealed from. Where a record on appeal is required, the appellant shall file a
notice of appeal and a record on appeal within thirty (30) days from notice of the
judgment or final order.
The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed.
33 Rule 13, on Filing and Service of Pleadings, Judgments and Other Papers; Heirs
of Numeriano Miranda, Sr. v. Miranda, G.R. No. 179638, July 8, 2013, 700 SCRA 746,
755.
18
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which to file the same. The trial court therefore acted regularly in denying PDB’s
notice of appeal.
Since PDB’s Omnibus Motion for Reconsideration and for New Trial was filed late and
the 15-day period within which to appeal expired without PDB filing the requisite notice
of appeal, it follows that its right to appeal has been foreclosed; it may no longer
question the trial court’s Decision in any other manner. “Settled is the rule that a party
is barred from assailing the correctness of a judgment not appealed from by him.” 34The
“presumption that a party who did not interject an appeal is satisfied with the
adjudication made by the lower court”35 applies to it. There being no appeal taken by
PDB from the adverse judgment of the trial court, its Decision has become final and can
no longer be reviewed, much less reversed, by this Court. “Finality of a judgment or
order becomes a fact upon the lapse of the reglementary period to appeal if no appeal
is perfected, and is conclusive as to the issues actually determined and to every matter
which the parties might have litigated and have x x x decided as incident to or
essentially connected with the subject matter of the litigation, and every matter coming
within the legitimate purview of the original action both in respect to matters of claim
and of defense.”36 And “[i]n this jurisdiction, the rule is that when a judgment becomes
final and executory, it is the ministerial duty of the court to issue a writ of execution to
enforce the judgment”;37 “execution will issue as a matter of right x x x (a) when the
judgment has become final and executory; (b) when the judgment debtor has
renounced or waived
_______________
34 Heirs of Juan Oclarit v. Court of Appeals , G.R. No. 96644, June 17, 1994, 233
SCRA 239, 249.
35 Spouses Catungal v. Hao, 407 Phil. 309, 325; 355 SCRA 29, 45 (2001).
36 Amarante v. Court of Appeals, G.R. No. 49698, May 3, 1994, 232 SCRA 104, 109-
110.
37 Torres v. National Labor Relations Commission, 386 Phil. 513, 520; 330 SCRA
311, 316 (2000).
19
VOL. 738, OCTOBER 8, 2014 19
his right of appeal; [or] (c) when the period for appeal has lapsed without an appeal
having been filed x x x.”38
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Neither can the Court lend a helping hand to extricate PDB from the effects of its
mistake; indeed, PDB erred more than once during the course of the proceedings. For
one, it did not attempt to set right its failure to appear during pretrial, which prompted
the court to allow petitioners to present evidence ex parteand obtain a favorable default
judgment. Second, assuming for the sake of argument that it timely filed its Omnibus
Motion for Reconsideration and for New Trial, it nonetheless violated the ten-day
requirement on the notice of hearing under Section 5 of Rule 15. Third, even before it
could be notified of the trial court’s resolution of its omnibus motion on September 14,
2006 — assuming it was timely filed, it filed a notice of appeal on September 7, 2006 —
which thus implies that it abandoned its bid for reconsideration and new trial, and
instead opted to have the issues resolved by the CA through the remedy of appeal. If
so, then there is no Omnibus Motion for Reconsideration and for New Trial that the trial
court must rule upon; its August 30, 2006 Order thus became moot and academic and
irrelevant. “[W]here [an action] or issue has become moot and academic, there is no
justiciable controversy, so that a declaration thereon would be of no practical use or
value.”39
Fourth, instead of properly pursuing its appeal to free itself from the unfavorable
effects of the trial court’s denial of its notice of appeal, PDB chose with disastrous
results to gamble on its Omnibus Motion for Reconsideration and for New Trial by filing
an original Petition for Certiorari to assail the trial court’s denial thereof. Time and
again, it has been said that certiorariis not a substitute for a lost appeal, especially if
_______________
38 Florendo v. Paramount Insurance Corporation, G.R. No. 167976, January 20,

2010, 610 SCRA 377, 384.
39 The Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto,
519 Phil. 15, 29; 484 SCRA 16, 31 (2006).
20
one’s own negligence or error in one’s choice of remedy occasioned such loss.40
What remains relevant for this Court to resolve, then, is the issue relative to the trial
court’s October 6, 2006 Order — which denied the motion to quash the writ of
execution — and the August 31, 2006 and October 9, 2006 writs of execution. The
Court observes that the October 6, 2006 Order and the August 31, 2006 and October 9,
2006 writs of execution were set aside and quashed merely as a necessary
87 | P a g e
consequence of the CA’s directive in the Amended Decision for the trial court to hear
and rule on the merits of PDB’s Omnibus Motion for Reconsideration and for New Trial.
Other than this singular reason, the CA would have sustained them, and this is clear
from a reading of both its original May 31, 2007 Decision and its subsequent Amended
Decision. Now, since the Court has herein declared that PDB’s omnibus motion may not
be considered for being tardy and for having been superseded by the bank’s filing of a
notice of appeal, then the CA’s original pronouncement regarding the October 6, 2006
Order and the August 31, 2006 and October 9, 2006 writs of execution should
necessarily be reinstated as well.
In light of the above conclusions, the Court finds no need to further discuss the
other issues raised by the parties. They are rendered irrelevant by the above
pronouncements.
WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009 Amended
Decision and August 23, 2010 Resolution of the Court of Appeals in C.A.-G.R. S.P. No.
01317-MIN are REVERSED and SET ASIDE. The Regional Trial Court of General
Santos City, Branch 37 is ORDERED to proceed with the execution of its June 15, 2006
Decision in Civil Case No. 6474.
_______________
40 Teh v. Tan, G.R. No. 181956, November 22, 2010, 635 SCRA 593, 604.
21
VOL. 738, OCTOBER 8, 2014 21
SO ORDERED.
Carpio (Chairperson), Mendoza, Perlas-Bernabe**and Leonen, JJ., concur.
Petition granted, amended decision and resolution reversed and set aside.
Notes.—Where there is considerable distance between the offices of two opposing

counsels, and personal service of pleadings and motions by one upon the other is
clearly not practicable, a written explanation as to why personal service was not done
would only be superfluous. (City of Dumaguete vs. Philippine Ports Authority, 656
SCRA 102 [2011])
Under the doctrine of finality of judgment or immutability of judgment, a decision
that has acquired finality becomes immutable and unalterable, and may no longer be
88 | P a g e
modified in any respect, even if the modification is meant to correct erroneous

conclusions of fact and law, and whether it be made by the court that rendered it or by
the Highest Court of the land. (Escalante vs. People, 688 SCRA 362 [2013])
——o0o——
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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 201483 August 4, 2014
CONRADO A. LIM, Petitioner,

vs.
HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG and NELSON
CAMILLER,Respondents.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the March 30, 20121 Decision of the Court of Appeals (CA) in CA G.R. SP No. 112708, a case
involving the computation of the back wages of an illegally dismissed employee. The Facts
On February 8, 200 I, petitioner Conrado A. Lim (Lim) filed a case for illegal dismissal and money
claims against respondents, HMR Philippines, Inc. (HMR)and its officers, Teresa G. Santos-Castro,
Henry G. Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissedthe complaint for lack of
merit. On April 11, 2003, the National Labor Relations Commission (NLRC)in NLRC NCR No. 02-
00926-01, reversedthe LA and declared Lim to have been illegally dismissed. The dispositive portion
of the NLRC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision
REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the
respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his
former position without loss of seniority rights and other privileges. Furthermore, the respondent-
appellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned
from his dismissal on February 3, 2001 up to the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the
backwages and the 10% annual increase from 1998 to 2000.
SO ORDERED.2
[Emphases supplied]
Both Lim and HMR filed their respective petitions for certiorari before the CA, docketed as CA-G.R.
SP No. 80379 and CA-G.R. SP No. 80630, respectively, which were consolidated. Pending
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resolution of the petitions, the CA issued the Temporary Restraining Order (TRO)enjoining the
execution of the NLRC decision.
On November 15, 2005, the CA affirmed the NLRC decision with modification as follows:
WHEREFORE, the Decision of the National Labor Relations Commission is AFFIRMED, with
MODIFICATION by awarding moral damages and exemplary damages to Conrado A. Lim in the
amount of ₱50,000.00 and ₱20,000.00, respectively, as well as attorney’s fees equivalent to 10% of
the total amount due him.
SO ORDERED.3
On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the petition for certiorari4 filed by
HMR assailing the November 15, 2005 CA decision. Entry of judgment was ordered on July 27,
2007.5
On September 24, 2007, Lim moved for execution.6 On November 28, 2007, the Computation and
Research Unit (CRU) of the NLRC computed the total award to amount to ₱2,020,053.46,7 which
computed the backwages from February 3, 2001, the date of the illegal dismissal, up to October 31,
2007, the date ofactual reinstatement.
HMR opposed the computation arguing that the backwages should be computed until April 11, 2003
only, the date of promulgation of the NLRC decision, as stated in the dispositive portion of the NLRC
decision, which provided that backwages shall be "reckoned from his dismissal on February 3, 2001
up to the promulgation of this Decision." It also noted that the 10% annual increase was computed
from 1998 to 2007, instead of only from 1998 to 2000 as decreed.8
In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled
tofull backwages from the time he was illegally dismissed until his actual reinstatement, which was
also in accord with Article 279 of the Labor Codeand all prevailing jurisprudence.9 Ruling of the LA
On April 21, 2009, the LA issued the order10 granting the motion for execution filed by Lim. Holding
thatthe backwages should be reckoned until April 11, 2003 only in accordance with the NLRC
decision, the LA disposed:
Accordingly, in computing complainant’s backwages, the following conditions must apply: 1) that the
backwages cover the period February 3, 2001 up to April 11, 2003; 2) that the base rate applicable
is his salary as of February 3, 2001 inclusive of the ten percent adjustment due at the time, or
₱12,500.00 plus ten percent (10%) or ₱13,750.00; 3) that the computation should include his 13th
month pay; and 4) 15 days vacation pay in accordance with the personnel policy handbook, in lieu of
5 days service incentive leave pay.
While complainant claims that he is entitled to 15 days sick leave pay, a perusal of the personnel
policy handbook on the grant of said benefit shows that sick leave pay is availed of only upon
notification of illness and conversion thereof to cash is subject to the discretion of management.
Accordingly, complainant’s monetary award, which is the proper subject of enforcement through a
91 | P a g e
writ of execution, in accordance with the Decision of the Commission as modified by the Court of
Appeals, is computed as follows:
A. Backwages:
2/3/01 to 4/11/03 = 26.26
₱13,750.00 x 26.26 = ₱361,075.00
13th month pay (₱366,575.00/12) = 30,089.58
Vacation Leave (₱687.50 x 15 x 26.26/12) = 22,859.37 ₱414,023.95
B. Moral Damages = 50,000.00
C. Exemplary Damages = 20,000.00
₱484,023.95
D. Attorney’s Fees = 48,402.39
₱532,426.34
WHEREFORE, complainant’s Motion for Issuance of Writ of Execution is GRANTED. A Writ of

Execution is hereby issued for the satisfaction of the judgment award rendered in this case.
SO ORDERED.11
Ruling of the NLRC
Lim filed his "Motion Ad Cautelamfor Reconsideration or Recomputation and Partial Execution of
Monetary Award," insisting that his backwages should be computed up to his actual
reinstatement.12 On August 28, 2009, the NLRC treated the motion as an appeal and sustained the
computation of the LA, explaining that the dispositive portion was clear, and that it could not alter or
amend the amount based on the final decision of the NLRC which was affirmed by both the CA and
this Court.13 Aggrieved, petitioner filed a petition for certioraribefore the CA.
Ruling of the CA
In its assailed March 30, 2012 Decision,14 the CA dismissed the petition. It emphasized that the April
11, 2003 NLRC decision had long become final and executory after it was affirmed by the Court and,
as such, it may no longer be amended or corrected. While noting that the body of the NLRC decision
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stated that petitioner was entitled to backwages until his actual reinstatement, the CA ruled that
when there was a conflict between the dispositive portion and the body of the decision, the former
must prevail as the dispositive portion was the final order, and that it was the dispositive portion
which was the subject of execution. It wrote that the fallowas clear and unequivocal and could,
therefore, be given effect without going to the body of the decision or further interpretation or
construction.
The CA found that although the NLRC had recognized that petitioner was entitled to backwages until
actual reinstatement, nonetheless, it expressly limited the computation of backwages to the
promulgation date of its decision. It wrote that the issue ofwhether such limitation was lawful or
improper could no longer be ventilated due to the finality of the judgment.
Hence, the present petition.
ISSUES AND ARGUMENTS
Whether or not the Court of Appeals erred in peremptorily applying the doctrine laid down in
PH Credit Corporation v. Court of Appealsand contrary to law as well as the established
jurisprudence mandating the payment of backwages until the illegally dismissed employee is
actually reinstated.
II
Whether or not the Court of Appeals erred in not affirming the applicability of Eastern
Shipping Lines v. Court of Appealsin the computation of interest since the Decision on the
illegal termination case had become final and executory on June 6, 2007 inconsistent with
existing jurisprudence by its failure to include interest payments.15
Petitioner Lim argues that Article279 of the Labor Code and the prevailing jurisprudence provide that
illegally dismissed workers are entitled to an award of backwages from the timeof the illegal
dismissal until they are actually reinstated. He states that the body of the NLRC decision was explicit
in its intent to award backwages until actual reinstatement, especially when read with its fallo,which
ordered his immediate reinstatement. He further avers that it has been held that the dispositive part
of a decision must find support from the decision’s ratio decidendi, because, while the opinion of the
court is not partof the judgment, it may, in case of uncertainty or ambiguity, be referred tofor the
purpose of construing the judgment, where the court may clarify by amendment even after judgment
has become final.
Lim also points out that the LA completely failed to include in the computation the unpaid 10%
annual increase in his salary from 1998 to 2000, as awarded in the falloof the NLRC decision. He
posits that the LA also failed to include the payment of other benefits, such as a 10% increase in
salary per annum, 15 days vacation leave and 15 days sick leave per annum, all as part of employee
benefitsfound in HMR’s Personnel Policy.
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Petitioner Lim also argues that in accordance with the rules laid down in Eastern Shipping Lines v.
Court of Appeals,16 the monetary awards should be subject to interest. He prays that the respondents
be made to pay, jointly and severally, additional moral and exemplary damages on account of their
bad faith in delaying the payment and reinstatement of the petitioner, which prompted him to file the
present petition.
Respondents’ Comment
In their Comment,17 the respondents argue that the August 28, 2009 NLRC Resolution had already
becomefinal and executory and could no longer be modified as the petitioner belatedly filed his
motion for reconsideration. In the same vein, they argue that the April 21, 2009 LA Order had also
become final and executory considering that the petitioner’s motion ad cautelam/appeal was not
seasonably filed.
The respondents insist that the "decretal portion of the NLRC decision, dated April 11, 2003 limited
the amount of petitioner’s backwages from February 3, 2001 and up to promulgation of such
Decision on April 11, 2003 only.18Granting that the body of such decision controls, they aver that the
recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate
Lim, who refused to be reinstated and abandoned his job. They add that it was also clearfrom the
dispositive portion that the 10% annual salary increase awarded was only for the years 1998 to
2000.
They also point out that the ₱12,500.00 base pay of Lim was already inclusive of holiday pay, and
that the conversion of sick leave to cash was subject to management discretion in accordance with
company policy.
They further argue that the claimsfor legal interest and additional moral and exemplary damages are
without merit because these were not awarded in the decision and they simply acted in good faith in
pursuing the legal remedies available to them.
Petitioner’s Reply
In his Reply,19 Lim counters that his pleadings before the NLRC and the LA were timely filed as the
notices of their respective orders had not been received by an authorized representative. As to
HMR’s offer of reinstatement, the petitioner explainsthat the respondent company never responded
to his reply-letter asking for a meeting to discuss the matter of his compensation upon reinstatement.
Lim also argued that holiday pay was not shown by HMR to be included in his salary, and that it is
unjust to leave the sick leave conversion to management discretion. Specifically, the Court has to
address the following
ISSUES:
1. Whether the petitioner’s motion for reconsideration and motion ad cautelam/appeal were
belatedly filed?
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2. Whether the computation of backwages should be reckoned until the promulgation of the
NLRC Decision on April 11, 2003 or until actual reinstatement?
3. Whether the petitioner is entitled to the unpaid 10% annual salary increase from 1998-
2000?
4. Whether the petitioner is entitled to the 10% annual salary increase after the year 2000?
5. Whether the petitioner is entitled to holiday pay?
6. Whether the petitioner is entitled to sick leave pay?
7. Whether the respondents should beheld jointly and severally liable for additional moral
and exemplary damages?
8. Whether the interest in accordance with Eastern Shipping should be awarded?
Ruling of The Court
The petition is partly meritorious.
Preliminarily, the Court shall first dispose of the lone procedural issue. The respondents argue
thatthe August 28, 2009 NLRC Resolution was already final and executory and could no longer be
modified as the petitioner belatedly filed his motion for reconsideration thereto. In the same vein,
they aver that the April 21,2009 LA Order was also final and executory considering that petitioner’s
motion ad cautelam/appeal was not seasonably filed. The petitioner counters that his pleadings were
timely filed because the aforementioned NLRC Resolution and LA Order were not duly received by
an authorized representative.
It appears that the respondents raised this issue before the NLRC and the CA. The lower courts,
nonetheless, ruled on the merits of the assailed pleadings of the petitioner. The lower courts, thus,
gave credence to the petitioner’s argument that the notices were not received by an authorized
representative. The Court sees no reason to deviate from their findings. In any case, this issue is a
question of fact which is beyond the Court’s ambit of review under Rule 45 of the Rules of Court,
considering that a resolution of the issue would require a review of the evidence presented in
connection therewith.
The Court now moves on to the substantive issues.
Backwages
It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the
exact amount owing to petitioner as an illegally dismissed employee.
Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is entitled to
his full backwages computed from the time his compensation was withheld up to the time of his
actual reinstatement, to wit:
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Art. 279. Security of tenure.In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. [Emphases and underscoring supplied]
In accordance with this provision, the body of the April 11, 2003 NLRC decision expressly
recognizes that Lim is entitled to his full backwages until his actual reinstatement, as follows:
In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as tojustify
his dismissal. As such, he is, thus, entitled to reinstatement to his former position as Assistant
Technical Manager, unless such position no longer exists, in which case, he shall be given a
substantially equivalent position without loss of seniority rights. He is, likewise, entitled to his full
backwages from the time he was illegally dismissed until his actual reinstatement.20 [Emphasis and
underscoring supplied]
Nowhere in the body of the NLRC decision was there a discussion restricting the award of
backwages. Nonetheless, the falloof the said decision limited the computation of the backwages up
to its promulgation on April 11, 2003, in this wise:
WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision
REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the
respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his
former position without loss of seniority rights and other privileges. Furthermore, the respondent-
appellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned
from his dismissal on February 3, 2001 up to the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the
backwages and the 10% annual increase from 1998 to 2000.
SO ORDERED.21
[Emphasis and underscoring supplied]
Considering that the judgmentdecreeing the computation of backwages up to the promulgation of the
NLRC decision has long become final and executory, the key question is whether a recomputation of
backwages up to the date of the actual reinstatement of Lim would violate the principle of
immutability of judgments.
The rule is that it is the dispositive portion that categorically states the rights and obligations of the
parties tothe dispute as against each other. Thus, it is the dispositive portion that must be enforced
to ensure the validity of the execution. That a judgment should be implemented according to the
terms of its dispositive portion is a long and well-established rule. A companion to this rule is the
96 | P a g e
principle of immutability of final judgments. Save for recognized exceptions, a final judgment may no
longer be altered, amended or modified, even if the alteration, amendment or modification is meant
to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what
court renders it. Any attempt to insert, change or add matters not clearly contemplated inthe
dispositive portion violates the rule on immutability of judgments.22
The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session
Delights)23 and Nacar v. Gallery Frames (Nacar)24 shed much light on the apparent discrepancy inthe
case at hand. As in the present case, both involve labor cases findingthat the employees therein
were illegally dismissed. At the LA level,in awarding backwages, a precise computation was
provided from the time of illegal dismissal up to the promulgation of the LA decision. 25 Additionally,
the dispositive portion of the LA decision in Nacaralso made a declaration that separation pay in lieu
of reinstatement be "computed only up to promulgation of this decision."26 The LA decisions in these
cases were affirmed by the NLRC and the CA and subsequently became final and executory. At the
execution stage, the computation of backwages came into issue.
Session Delights made clear that a case for illegal dismissal is one that relates to status, where the
decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary
consequences that flow from the declared status, such as, the payment of separation pay and
backwages. In execution, what is primarily implemented is the declaratory finding on the status and
the rights and obligations of the parties therein; the arising monetary consequences from the
declaration only follow as component of the parties’ rights and obligations.27 The precise amount of
backwages should ideally be stated in the final decision; otherwise, the matter is for handling and
computation by the LA of origin as the labor official charged with the implementation of decisions
before the NLRC.28
The Court’s disquisition in Session Delights, also referenced with approval in Nacar, is enlightening:
A source of misunderstanding in implementing the final decision in this case proceeds from the way
the original labor arbiter framed his decision. The decision consists essentially of two parts. The first
is that part of the decision that cannot now be disputed because it has been confirmed with finality.
This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages, attorney’s fees, and legal interests.
The secondpart is the computation of the awards made. On its face, the computation the labor
arbiter made shows that it was time-bound as can be seen from the figures used in the computation.
This part, being merely a computation of what the first part of the decision established and declared,
can, by its nature, be recomputed. This is the part, too, that the petitioner now posits should no
longer be re-computed because the computation is already in the labor arbiter’s decision that the CA
had affirmed. The public and private respondents, onthe other hand, posit that a recomputation is
necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if
reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in
lieu of reinstatement.
xxx
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Clearly implied from this original computation is its currency up to the finality of the labor arbiter’s
decision. As we noted above, this implication is apparent from the terms of the computation itself,
and no question would have arisen had the parties terminated the case and implemented the
decision at that point.
However, the petitioner disagreed with the labor arbiter’s findings on all counts – i.e., on the finding
of illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case
to the NLRC which, in turn, affirmed the labor arbiter’s decision. By law, the NLRC decision is final,
reviewable only by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a
timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority
in affirming the payment of 13th month pay and indemnity, lapsed to finalityand was subsequently
returned to the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the
original labor arbiter’s decision, the implementing labor arbiter ordered the award recomputed; he
apparently read the figures originally ordered to be paid to be the computation due had the case
been terminated and implemented at the labor arbiter’s level. Thus, the labor arbiter recomputed the
award to include the separation pay and the backwages due up to the finality of the CA decision that
fully terminated the case on the merits. Unfortunately, the labor arbiter’s approved computation went
beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards
the final CA decision had deleted – specifically, the proportionate 13th month pay and the indemnity
awards. Hence, the CA issued the decision now questioned in the present petition.
We see no error in the CA decision confirming that a recomputation is necessary as it essentially

considered the labor arbiter’s original decision in accordance with its basic component parts as we
discussed above. To reiterate, the first part contains the finding of illegality and its monetary
consequences; the second part is the computation of the awards or monetary consequences of the
illegal dismissal, computed as of the time of the labor arbiter’s original decision.
To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary
for a specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by a former
employee, the labor arbiter’s computation would admittedly have continuing currency because the
sum is specific and any variation may only be on the interests that may run from the finality of the
decision ordering the payment of the specific sum.
In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this
case, where the claim is the legality of the termination of the employment relationship). In this type of
cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and
monetary consequences that flow from the declared status (in this case, the payment of separation
pay and backwages and attorney’s fees when illegal dismissal is found). When this type of decision
is executed, what is primarily implemented is the declaratory finding on the status and the rights and
obligations of the parties therein; the arising monetary consequences from the declaration only
follow as component of the parties’ rights and obligations.
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In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that
separation pay in lieu of reinstatement and backwages should be paid. How much that separation
pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and
computation by the labor arbiter of origin as the labor official charged with the implementation of
decisions before the NLRC.
xxx
Consistent with what we discussed above, we hold that under the terms of the decision under
execution, no essential change is made by a re-computation as this step is a necessary
consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-
computation (or an original computation, if no previous computation has been made) is a partof the
law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision
– that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue toadd
on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of
the consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands;
only the computation of monetary consequences of this dismissal is affected and this is not a
violation of the principle of immutability of final judgments.
xxx
That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot
avoid as itis the risk that it ran when it continued to seek recourses against the labor arbiter’s
decision.Article 279 provides for the consequences of illegal dismissal in no uncertain terms,
qualified only by jurisprudence in its interpretation of when separationpay in lieu of reinstatement is
allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning
point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision
effectively declares that the employment relationship ended so that separation pay and backwages
are to be computed up to that point. x x x29
[Emphases and underscoring supplied]
Although the NLRC decision in the present case did not provide a precise computation, the
principles enunciated in Session Delightsstill equally apply. In Session Delights, the computation of
the LA was found to be time-bound, which implied the currency of the computation up to the finality
of the LA decision. In the present case, the NLRC declared backwages to be reckoned "up to the
promulgation" of its decision, which was an express declaration of the currency of the computation
up to the finality of the NLRC decision, especially considering that HMR was "ordered to reinstate
immediately" petitioner Lim. The decisions in both cases are premised on their immediate execution,
in that no question would have arisen had the parties terminated the case and the decision
implemented at that point.30
As discussed above, no essential change is being made by a recomputation because such is a

necessary consequence which flows from the nature of the illegality of the dismissal. To reiterate, a
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recomputation, or an original computation, if no previous computation was made, as in the present

case, is a part of the law that is read into the decision, namely, Article 279 of the Labor Code and
established jurisprudence.31 Article 279 provides for the consequences of illegal dismissal, one of
which is the payment of full backwages until actual reinstatement, qualified only by jurisprudence
whenseparation pay in lieu of reinstatement is allowed, where the finality of the illegal dismissal
decision instead becomes the reckoning point.32
The nature of an illegal dismissal case requires that backwages continue to add on until full
satisfaction.The computation required to reflect full satisfaction does not constitute an alteration or
amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in
the present case, a computation of backwages until actual reinstatement is not a violation of the
principle of immutability of final judgments.33
The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the
date HMR offered to reinstate Lim, who allegedly refused to be reinstated and abandoned his job.
HMR sent the petitioner a letter,34 dated December 22, 2007, directing him to report for work on
December 26,2007, with an offer of separation pay in the amount of ₱150,000.00 in lieu of
reinstatement which he could avail of not later than December26, 2007. Lim replied in a
letter,35 dated December 24, 2007, requesting for a meeting in January 2008, considering that his
counsel was out of the country; that the NLRC was still in the process of computing the amount of
the award which was necessary to consider the offer of separation pay; and that a writ of execution
had not yet been issued. HMR never responded to the petitioner’s request, and up to the present,
the latter has yet to be reinstated.
From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or
to have abandoned his job. HMR’s offer of reinstatement appeared superficial and insincere
considering that it never replied to the petitioner’s letter. It did not make any further attempt to
reinstate the petitioner either. The recoverable backwages, thus, continue to run, and must be
reckoned up until the petitioner’s actual reinstatement.
10% annual salary increase
Petitioner Lim argues that the LA completely failed to include in its computation the unpaid 10%
annual increase in his salary from 1998 to 2000, as stated in the falloof the NLRC decision, and the
10% salary increase per annumin backwages until actual reinstatement.
The pertinent portion of the falloof the NLRC decision reads:
The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the
backwages and the 10% annual increase from 1998 to 2000.36
In awarding the 10% annual salary increase from 1998 to 2000, the body of the NLRC decision
explained:
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We see no reason, therefore, why complainant-appellant herein, being a regular employee, should
be deprived of what he is entitled to under Company policy. As such, he should be paid his unpaid
10% annual increase for the years 1998, 1999 and 2000.37
[Emphasis and underscoring supplied]
Lim is, thus, entitled to be paid his unpaid 10% annual salary increase for the years 1998-2000. A
reading of the assailed order of the LA would reveal that it made the following adjustment in
connection to the 10% annual salary increase:
2) that the base rate applicable is his salary as of February 3, 2003 inclusive of the ten percent
adjustment due at the time, or ₱12,500.00 plus ten percent (10%) or ₱13,750.00;38
This is incorrect on two counts. First, the LA failed to include the actual unpaid 10% annual increase
from 1998-2000. The first computation of the LA,39 as well as the suggested computation of
respondent HMR itself,40 gave the correct computation ofthe unpaid salary increase from 1998-2000,
as follows:
Monthly Annual
Year Rate (P) Increase
Increase (P) Increase (P)
1998 12,500.00 10% 1,250.00 15,000.00
1999 13,750.00 10% 1,375.00 16,500.00
2000 15,125.00 10% 1,512.50 18,150.00
Total 49,650.00
Second, based on the above, the applicable base rate for the computation of the petitioner’s
backwages from the time he was illegally dismissed on February 3, 2001 should be ₱15,125.00. Lim
cannot, however, insist that the 10% annual salary increase be applied to his backwages past the
year 2000 up to his actual reinstatement. In Equitable Banking Corporation v. Sadac,41 the Court held
that although Article 279 of the Labor Code mandates that an employee’s full backwages be
inclusive of allowances and other benefits, salary increases cannot be interpreted as either an
allowance or a benefit, as allowances and benefits are separate from salary, while a salary increase
is added to salary as an increment thereto.42 It was further held therein that the base figure to be
used in the computation of backwages was pegged at the wage rate at the time of the employee’s
dismissal, inclusive of regular allowances that the employee had been receiving such as the
emergency living allowances and the 13th month pay mandated by law. The award of salary
differentials was not allowed, the rule being that upon reinstatement, illegally dismissed employees
were to be paid their backwages without deduction and qualification as to any wage increases
orother benefits that might have been received by their co-workerswho were not dismissed.43
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It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years
1998-2000 as such did not constitute backwages as a consequence of the petitioner’s illegal
dismissal, but was earned and owing to the petitioner before he was illegally terminated.
Holiday pay
The respondents insist that the base pay of Lim is already inclusive of holiday pay. The records,
however, are insufficient to determine whether holiday pay is indeed included in the petitioner’s base
pay.
Under Article 94 of the Labor Code, every worker shall be paid his regular daily wage during regular
holidays. Thus, anemployee must receive his daily wage even if he does not work on a regular
holiday. The purpose of holiday pay is to prevent diminution ofthe monthly income of workers on
account of work interruptions declared by the State.44
Whether or not holiday pay is included in the monthly salary of an employee, may be gleaned from
the divisors used by the company in the computation of overtime pay and employees’ absences. To
illustrate, if all nonworking days are paid, the divisor ofthe monthly salary to obtain daily rate should
be 365. If nonworking days are not paid, the divisor is 251, which is a result of subtracting all
Saturdays, Sundays, and the ten legal holidays.45 Hence, if the petitioner’s base pay does not yet
include holiday pay, it must be added tohis monetary award.
This matter is clearly for the LA to determine being the labor official charged with the implementation
of decision46and concomitant computations.
Sick leave pay
The LA found that that the petitioner was not entitled to have his sick leaves converted to cash
because such was subject to the discretion of management in accordance with company policy. The
pertinent provision on sick leave conversion in the Personnel Policy handbook of HMR reads:
d) Accumulated days of unused sick leave may be converted into cash, time-off or vacation
allowance at the end of the calendar year, any of these upon the discretion of the General
Manager.47
It is clear from the above that the provision does not give HMR the absolute discretion to decide
whether ornot to grant sick leave conversion. The discretion of the general manager only pertains to
what form the sick leave conversion may take, and not to whether or not sick leave conversion will
be granted at all. An HMR employee is, therefore, entitled to conversion of unused sick leave,
subject only to the general manager’sdiscretion as to the form it will take, namely – cash,time-off, or
vacation allowance. Considering that the conversion optionsof time-off and vacation allowance are
no longer feasible because the petitioner was illegally dismissed, he is now entitled to have his
unused sick leaves converted to cash.
Additional moral and exemplary damages
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Petitioner Lim prays that the respondents be made to pay, jointly and severally, additional moral and
exemplary damages on account of their bad faith in delaying the payment and his reinstatement.
There appears, however, no basis to award additional damages considering that the respondents
simply availed of the remedies available to them under the law in good faith.
Legal interest
The petitioner argues that legal interest in accordance with the case of Eastern Shippingmust also
be awarded, as follows:
1. the unpaid 10% annual increasefrom 1998 to 2000 shall earn a 6% interest annually
starting 1998 until October 23, 2003 (Entry of Judgment of the April 11, 2003 NLRC
decision); and 12% legal interest per annumthereafter until the same is fully paid; and
2. the backwages, 13th month pay as well asunpaid vacation and sick leaves shall earn a
6% per annuminterest starting at the time of petitioner’s illegal dismissal on February 3, 2001
until October 23, 2003; and 12% legal interest per annumthereafter until the same is fully
paid.48
The respondents counter that interest may no longer be added considering that such was not
included in the any of the courts’ decisions before the judgment became final and executory.
In both Session Delightsand Nacar, no interest was expressly awarded before the judgments
became final and executory, yet in both cases, the Court, nonetheless, awarded legal interest.
Session Delightsexplained that the decision had become a judgment for money from which another
consequence flowed, namely, the payment of interest in case of delay in accordance with Eastern
Shipping Lines v. Court of Appeals. It was held therein that when the judgment of the court awarding
a sum of money became final and executory, the rateof legal interest, should be 12% per
annumfrom finality until satisfaction.49
The rules on legal interest in Eastern Shippinghave, however, been recently modified by Nacar in
accordance with Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, which
became effective on July 1, 2013. Pertinently, it amended the rate of legal interest in judgments from
12% to 6% per annum, with the qualification that the new rate be applied prospectively. Thus, the
12% per annumlegal interest in judgments under Eastern Shippingshall apply only until June 30,
2013, and the new rate of 6% per annumshall be applied from July 1, 2013 onwards.50
Petitioner also prays that he be awarded interest at a rate of 6% per annumon the amounts awarded
from the time they became legally due him until entry of judgment, presumably under the second
paragraph in Eastern Shipping (which was not modified by Nacar), which states:
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on

the amount of damages awarded may be imposed at the discretion of the courtat the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or
until the demand can be established with reasonable certainty. Accordingly, where the demand is
103 | P a g e
established with reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.51
[Emphasis supplied]
It is plain from the above that the interest of 6% per annumfor obligations not constituting a loan or
forbearance of money is one that may be imposed at the discretion of the court. This form of interest
is not mandatory but discretionary in nature and therefore, not necessarily owing to the petitioner in
the present case.
WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012 Decision of the Court of
Appeals, in CA-G.R. SP No. 112708 is REVERSED and SET ASIDE. Respondent HMR 1aw p++i1
Philippines, Inc. is ORDERED to PAY petitioner Conrado A. Lim:
(1) back wages computed from the time the petitioner was illegally dismissed on February 3,
2001 up to his actual reinstatement, with a monthly base pay in the amount of ₱15,125.00;
(2) the unpaid 10% annual salary increase from 1998-2000 in the amount of ₱49,650.00;
(3) 13th monthpay;
(4) vacation pay in accordance with the personnel policy handbook;
(5) the cash value of his unused sick leaves;
(6) holiday pay, provided that the Labor Arbiter finds that such is not yet included in the base
pay;
(7) moral damages in the amount of ₱50,000.00;
(8) exemplary damages in the amount of ₱20,000.00;
(9) attorney's fees equivalent to 10% of the total amount due to the petitioner; and
(10) legal interest of 12% per annum of the total monetary awards computed from July 27,
2007 to June 30, 2013, and 6% per annum from July 1, 2013 until their full satisfaction.
The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the
petitioner in accordance with this decision. 1âw phi 1
SO ORDERED
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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 187144 September 17, 2014
CARMEN T. GAHOL, substituted by her heirs, RICARDO T. GAHOL, MARIA

ESTER GAHOL PEREZ, JOSE MARI T. GAHOL, LUISITO T. GAHOL and ALCREJ
CORPORATION, Petitioners,
vs.
ESPERANZA COBARRUBIAS, Respondent.
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari which seeks to annul the Decision 1 dated
October 6, 2008 and the Resolution2 dated March 4, 2009 of the Court of Appeals in
CA-G.R. SP No. 96144.
Carmen M. Tionko-Gahol (Carmen), petitioners' predecessor-ininterest, was the

registered owner of a parcel of residential lot denominated as Lot 27-B-1 of LRC Psd-
36727, situated in Residential Section "H," Baguio City, with an area of 243 sq. meters,
covered by TCT No. T-24457,3 The lot has a two-storey residential house. On May 2,
1997, Carmen filed a Townsite Sales Application (TSA)4 with the Department of
Environment and Natural Resources (DENR), Baguio City, for a 101 sq. meter land
adjacent to her titled property with the purpose of using the land solely for additional
and protection purposes.
On October 2, 1997, respondent Esperanza Cobarrubias filed a Protest5 against

Carmen's TSA claiming that the late Esperanza Cascolan, respondent’s mother, and her
heirs are the actual occupants of the subject lot since 1970 and continuously having
built thereon a residential building with a store and a barbecue stand; that they had
also planted on the lot several fruit-bearing trees, a narra tree and plants; that the
subject lot is likewise used as an access or as a road rightof way being the only ingress
to and egress from the properties of Apolonia Cascolan and Esperanza Cascolan; that
Esperanza Cascolan was issued a tax declaration over the existing improvements on the
105 | P a g e
said lot and has been religiously paying real estate taxes thereon; and that the earlier
TSA filed by Esperanza Cascolan on a land which included the subject lot was not
accepted by the Bureau of Lands on the ground that the said property was within the
Health Center Reservation. Respondent also filed her own TSA over a 215 sq. meter-lot
which included the subject lot.6
On March 21, 2000, the Regional Executive Director of the Department of Environment
and Natural Resources-Cordillera Administrative Region (DENR-CAR) issued an
Order7 as follows:
IN THE LIGHT OF THE FOREGOING, the instant protest is hereby DENIED. The
Townsite Sales Application in the name of Carmen T. Gahol over a lot located at
Res.Sec. "H", Teodora Alonzo Street, Baguio City be given further due course. Further,
the subject lot shall be utilized strictly, solely, exclusively for gardening, beautification
and driveway purposes only.8
The DENR-CAR held that to sustain respondent's argument that she is entitled to a
direct award of the subject lot because of her and her predecessor's claims of long
years of possession and occupation of the same was misplaced. It ruled that all lands
within the limits of Baguio City are declared as Townsite Reservation disposable under
Chapter IX, Section 58, in relation to Section 79 of Commonwealth Act No. 141 (CA
141), as amended, which provides that such lands are sold by way of public auction to
the highest bidder, and not as an agricultural public land disposable under Chapter VII,
Section 44 of the Public Land Act or under the so called Free Patent Application and/or
confirmation of an imperfect complete title. The DENR-CAR further opined that it could
not adjudicate the said lot to respondent based on Administrative Order (A.O.) No. 504
Clearing Committee Resolution No. 93-1, particularly SITUATION Bwhich states:
SITUATION B. Sandwiched between a road and a titled property Policy:
After providing for the required road-of-way (r.o.w.), minimum area must not be less
than 200 sq.m.; and its minimum depth, measured perpendicularly from edge of rightof
way to titled property lot-line should not be less than 15 meters, otherwise, the subject
area is reserved for greenbelt purposes.9
The DENR-CAR also found that Carmen's handwritten request for an increase from 101
sq. meters as appearing in the sketch plan attached on her TSA to 161 sq. meters
cannot be given due course at this stage of the proceedings. but the matter can be
tackled during the execution of the final survey to rectify any error.
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Respondent filed a motion for reconsideration. which the DENR-CAR denied in its
Order10 dated October 9, 2000. Respondent appealed the Order to the DENR proper.
In an Order11 dated May 21, 2004, the DENR dismissed the appeal. In so ruling, the
DENR reiterated that the subject lot is part of the Baguio Townsite Reservation,
disposable in accordance with CA 141 which does not give preferential right to actual
occupants of lots within townsite reservations. Further, the DENR said that respondent's
actual occupation of the subject lot will not bar Carmen's TSA for the purpose of
conducting a public bidding on the said lot. The DENR then ruled that respondent's TSA
cannot be given due course based on A.O. No. 504 Committee Resolutions 93-1 and 93-
2, and said:
x x x Resolution No. 93-2 requires, as a general policy, that townsite sales applications
for lots within the Baguio Townsite Reservation should have a minimum area of 200
square meters. Additionally, Resolution No. 93-1 of the Committee requires, as a
general policy, that applications for lots sandwiched between a road and a titled
property, should have a minimum area of 200 square meters and a depth of not less
than 15 meters. Otherwise, the applications shall bereturned unacted and unrecorded
to the respective applicants, and the lots reserved for greenbelt purposes. x x x12
The DENR found that respondent's application did not meet the area requirements
under Resolution Nos. 93-1 and 93-2; and that respondent intended to use the subject
lot for residential/commercial purposes when the above-cited Resolutions require that
the same could be used for greenbelt purposes only. Thus, the DENR held that it was
but reasonable to give due course to Carmen's TSA because the subject lot is narrow,
fronts Carmen's property, and is to be used only for the purposes stated in the TSA.
Respondent's motion for reconsideration was denied in an Order13 dated July 15, 2005.
Dissatisfied, respondent filed an appeal to the Office of the President (OP).
In an Order14 dated May 16, 2006, the OPdismissed the appeal, and reiterated the
disquisitions made by the DENR-CAR and the DENR. It also denied respondent's motion
for reconsideration in a Resolution15 dated August 17, 2006.
Respondent filed with the CA a petition for review under Rule 43 seeking to set aside
the OP decision.Carmen filed her Comment thereto and respondent her Reply.
On October 6, 2008, the CA issued its assailed decision which reversed the OP decision,
the dispositive portion of which reads:
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WHEREFORE, the petition is GRANTED. The 16 May 2006 Decision of the Office of the
President is hereby SET ASIDEand a new one is entered giving DUE COURSEto
petitioner's PROTEST by declaring private respondent Carmen Gahol
DISQUALIFIEDfrom applying for a Townsite Sales Application over the subject
property.16
In so ruling, the CA found thatCarmen was a titled owner of a piece of land; thus, in
accomplishing and filing her TSA form which carried the undertaking that she was nota
lot owner, there was already a basis to have such application rejected. Moreover, the
area applied for by Carmen was way below the minimum required areaof 200 sq.
meters set forth in Resolution Nos. 93-1 and 93-2 issuedby A.O. 504 Clearing
Committee of the DENR-CAR; and that she also stated in her TSA that the lot she was
applying for "contains no improvements or indication of occupation or settlement except
rip-rapping, plants with economic values" when the truth was that structures had been
put by respondent's mother as early as 1974.
Despite all these, the DENR-CAR, the DENR, and the OP did not discuss these matters
of Carmen's disqualification and/or lack of certain qualifications. The CA found it
surprising that the restrictions laid down in Resolution Nos. 93-1 and 93-2 of AO 504
Clearing Committee of the DENR-CAR were applied against respondent but not to
Carmen when both were essentially applying for the same lot. The CA also found that
contrary to the DENR's appreciation, the subject lot applied for was not fronting
Carmen's property but located at its side.
The CA, however, ruled that it was precluded from resolving respondent's own TSA as
the administrative agencies only resolved the denial of respondent's protest and the
adjunct granting or giving due course to Carmen's TSA; and that the discussions of
respondent's alleged disentitlement was merely for thatpurpose and no other.
In a Manifestation17 dated October 29, 2008 and motion for reconsideration, notice was
given of Carmen's death in 2007, and that she was being substituted by her children
and the family-owned corporation, ALCREJ Corporation, now the registered owner of
Carmen's property in Baguio, as petitioners. The motion for reconsideration was denied
by the CA in a Resolution dated January 14, 2009.
Dissatisfied with the decision, petitioners filed the instant petition for review on the
following issues, thus:
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A. THE DECISION OF THE HON. COURT OF APPEALS IS CONTRARY TO LAW IN THAT
(1) it declared "Carmen Gahol DISQUALIFIED from applying for a

Townsite Sales Application over the subject property, despite her
qualification under the Public LandAct (C.A. 141) and Resolution Nos. 93-1
and 93-2 of A.O 504 Committee of the DENR-CAR, as correctly found and
applied by the administrative agencies concerned, the DENR and the
Office of the President of the Philippines;
(2) it misapplied the laws or erred in not applying the applicable laws.
B. THE HON. COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVELY

ABUSED ITS DISCRETION WHEN IT REVERSED, IF NOT DISREGARDED, WITHOUT ANY
JUSTIFICATION THE FINDINGS OF FACT AND CONCLUSION OF LAW OF THE
ADMINISTRATIVE AGENCIES CONCERNED IN THE CASE, IN CLEAR VIOLATION OF
ESTABLISHED JURISPRUDENCE THAT:
"courts will not interfere in matters which are addressed to the sound
discretion of government agencies with the regulation of activities coming
under their special technical knowledge and training of such agencies,"
since, "By reason of the special knowledge and expertise of administrative
departments over matters falling within their jurisdiction, they were in a
better position to pass judgment thereon and their findings of fact in that
regard are generally accorded respect,if not finality, by the courts."
C. THE HON. COURT OF APPEALS GRAVELY ERRED WHEN IT DID NOT RULE ON THE
PROCEDURAL MATTERS RAISED BY PETITIONERS THAT THE PETITION FOR REVIEW
FILED WITH IT BY RESPONDENT ESPERANZA COBARRUBIAS SHOULD NOT HAVE BEEN
GIVEN DUE COURSE BUT DISMISSED OUTRIGHT.18
Petitioners raise both proceduraland substantive issues.
Anent the procedural issue, petitioners point out that personal service to her counsel
was the most practical mode of service as both counsels of respondent and petitioners
reside and have their law offices in Baguio City, instead of mailing the copy for
petitioner's counsel in Malacanang Post Office, Manila on October 4, 2006. Thus, the CA
should not have given due course to the petition for violating Section 11, Rule 13 of the
Rules of Court.
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We are not persuaded.
Section 11, Rule 13 of the Rules of Court states:
SEC. 11. Priorities in modes of service and filing. — Whenever practicable, the service
and filing of pleadings and other papers shall be done personally. Except with respect to
papersemanating from the court, a resort to other modes must be accompanied by a
written explanation why the service or filing was not done personally. A violation of this
Rule may be cause to consider the paper as not filed.
Personal service of pleadings is the general rule, and resort to other modes of service is
the exception, so that where personal service is practicable, in the light of the
circumstances of time, place and person, personal service is mandatory.19 Only when
personal service is not practicable may resort to other modes be had, which must then
be accompanied by a written explanation asto why personal service or filing was not
practicable to begin with. Based on this explanation will the court then determine
whether personal service is indeed not practicable so that resort to other modes is
made.20 At this stage, the judge exercises proper discretion but only upon the
explanation given. In adjudging the plausibility of an explanation, the court shall
consider not only the circumstances, the time and the place but also the importance of
the subject matter of the case or the issues involved therein, and the prima faciemerit
of the pleading involved.21
Here, both counsels for the parties have their law offices in Baguio City, thus, personal
service to petitioner's counsel would have been more practicable than mailing the copy
of the petition for petitioner's counsel in Manila. It appears, however, that the petition
for review was filed in the CA, Manila by personal service, and the copies of the petition
for the OP and DENR whose offices are located in Manila and Quezon City, respectively,
were also personally served to them. The copy for petitioner's counsel was thus sent by
registered mail from Manila on the same day the copies for the other agencies were
served personally, thus a written explanation stating that the pleading was sent by
registered mail due to time and distance constraints, as well as lack of office personnel.
Based on such explanation, the CA can exercise its discretion on its plausibility which is
ought to be guided by the principle that substantial justice far outweighs rules of
procedure.22 Thus, the CA accepted the petition taking into consideration the prima
faciemerit of the case sought to be expunged for violation of the rule.
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As to the merits of the case, wefind no error committed by the CA in granting the
petition.
Petitioner Gahol applied for TSA over the 101 sq. meter lot located at Residential
Section "H", Baguio City. One of the requirements for the issuance of a TSA form is a
certificate of no homelot, but Carmen had not submitted any and was issued a TSA.
Also, the TSA to which Carmen affixed her signature, stated among others that:
"I am not the owner of any lot inBaguio City, except the land applied for."
I have been upon and examined the land applied for and it contains no improvement or
indication of occupation or settlement, except as follows: rip-rapping, plants with
economic values and to the best of my knowledge and belief it is neither timber nor
mineral land and contains no valuable deposit of guano, coal or salt.
I understand that any applicant who willfully and knowingly submit false statements or
executes affidavit in connection with his application shall be deemed guilty of perjury
and punished accordingly, and that any person who, not being qualified to apply for
public land, files an application or induces or permits another to file in his behalf shall
be punished by a fine of not more than five thousand pesos and by imprisonment for
not more than five years, or both, and in addition thereto, his application shall be
rejected or canceled and all amounts paid on account thereof forfeited to the
Government, and he shall not be entitled to apply for any public land in the Philippines.
When Carmen filed her TSA, she is the registered owner of a lot in Baguio. In fact, she
is the titled owner ofthe lot adjacent to the subject lot. Therefore, there is no truth to
the statement in the TSA that she does not own any lot in Baguio. We find apropos
what the CA said, thus:
In the instant petition, Cobarrubias persistently questioned the qualifications of Gahol to

apply for TSA. And among the requisites of Administrative Order 504 Clearing
Committee of the DENR-CAR is the Certificate of No-Homelot from the City Assessor's
Office. This is found listed in the very mimeographed list of requirements distributed by
DENRCAR to prospective applicants. But thisis more evident in the TSA form itself which
requires every applicant toundertake or guarantee that he or she is "not the owner of
any lot inBaguio City except the land applied for." Now, Gahol did not only fail to file
such certificate, she in fact was a titled owner of a piece of land which is adjacent to
the very subject property she is applying for in her TSA. And this fact was not unknown
111 | P a g e
to DENR-CAR for it was reported by its own land investigator, a certain Mr. Victor
Fernandez, that:
x x x Ocular inspection appears thatlot is adjacent to her titled property. x x x23
Moreover, Carmen failed to state inher TSA the fact that there were signs of
improvement or indication of occupation on the subject lot. The minutes 24 dated
November 18, 1999 on the ocular inspection of the subject lot established such
improvement and occupation, to wit:
We arrived at the place at exactly 9:15 in the morning in the presence of the applicant-
protestee Carmen Gahol and Atty. Maita Andres and the applicant-protestant Esperanza
Cascolan. We observed a big narra tree standing at the north-east edge ofthe subject
lot. Likewise, we could see two small structures where one serves also as a residence,
which the protestee claimed to have been introduced by the protestant and the
predecessor-in-interest. At the middle ofthe subject lot is an alley which traverse the
subject lot measuring one and one half meters more or less.
At the edge of the subject lot is a cemented portion being used by the protestant
Esperanza Cascolan astheir parking space. There are also plants with economic value
such as coffee, avocado tree and a guava tree and alnus tree are not being claimed and
are not being claimed by the protestee, Mrs. Carmen Gahol.25
Carmen had also filed complaints for violations of PD 1096, National Building Code of
the Philippines, and PD 772, anti-squatting and other similar acts, against Camilo
Coscolan and Rolando Clemente with the end in view of evicting them from the subject
lot which are indications of occupation of the subject lot.
Thus, pursuant to paragraph 10 of Carmen's TSA, her application should have been
rejected at the first instance or canceled.1âwphi1 However, as correctly observed by
the CA:
While Cobarrubias pointed all thisout at the outset neither the DENR-CAR, the DENR, or
the OP touched and discussed the matter of Gahol's disqualification and/or lack
ofcertain qualifications. They simply denied the protest of the former and gave due
course to the latter's TSA without any explanation as to howGahol was able to hurdle
these disqualifications and/or satisfy her lack of certain qualifications. x x x26
112 | P a g e
The DENR-CAR, DENR and OP denied respondent's TSA because of AO 504 Clearing
Committee Resolution No. 93-1 and which we quote again for ready reference, to wit:
Situation B. Sandwiched betweena road and a titled property
Policy: After providing for the required road of way (r.o.w.), minimum area must not be
less than 200 sq. m.; and its minimum depth, measured perpendicularly from edge of
r.o.w. to titled property lot-line should not be less than 15 meters, otherwise, the
subject area is reserved for greenbelt purposes.
The last paragraph of the same resolution reads:
RESOLVED FINALLY, that any or all land applications, Town Site or Miscellaneous Sales,
that fail to satisfy the prescribed requirements, hereinabove specified bereturned
unacted/unrecorded to the applicant/s concerned and such land shall be appropriated
and reserved for greenbelt purposes and/or conservation of both natural and
boundaries and legal easements.
The DENR-CAR and DENR denied respondent's TSA based on said Resolution No. 93-1.
The DENR concluded that respondent's application did not meet the area requirements
and failed to show how it arrived at such conclusion. On the other hand, the area
applied for by Carmen was only 101 sq. meters which was less than the minimum area
required of the resolution, which was 200 sq. meters. She had also stated untruthful
statements in her TSA. Thus, her TSA should have been rejected in the first place
instead of giving due course to it.
WHEREFORE, the petition for review is DENIED. The Decision dated October 6, 2008
and the Resolution dated March 4, 2009 of the Court of Appeals in CA-G.R. SP No.
96144 are hereby AFFIRMED.
SO ORDERED.
113 | P a g e

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ADRIANO, PRINCESS RUTH B.

CIVIL PROCEDURE CASES

June 18, 2014. G.R. No. 177425.*

Suffice it to say that “[c]oncomitant to the liberal interpretation of the rules of

WHEREFORE, premises considered, the instant Appeal is hereby DISMISSED.

July 9, 2014. G.R. No. 196251.*

Remedial Law; Civil Procedure; Judgments; Summary Judgments; Under Rule 35 of

As to the balance of P14,080,490.00, Olivarez Realty Corporation agreed to pay in 30

As to the “legitimate tenants” occupying the property, Olivarez Realty Corporation

The trial court correctly rendered

Castillo is entitled to cancel the

Olivarez Realty Corporation is liable

damages to serve as a deterrent to other parties to a contract to religiously comply with

The trial court acquired jurisdiction

Although we discussed that there is no rescission of contract to speak of in contracts

Petition denied, judgment affirmed with modification.

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL IRRIGATION

serious and intricate environmental impact on natural, ecological and socio-economic

Local Government Code; Government Projects; Section 2(c) of the Local

Construction of a two (2) or double slope retaining walls anchored to a reinforced

September 5, 2007, and November 1, 2007.10 He specifically asked for the

It would indubitably appear in this case that there is really a necessity of

Section 5 of the same Code leaves no doubt as to the empowerment of local

Anent petitioner’s noncompliance with the requirements of the Local Government

WHETHER THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS

Taking into account the surrounding circumstances, it cannot be said that

MANIFESTATION AND MOTION

DEFENDANT, by counsel, to the Honorable Court, respectfully states:

WHEREFORE, it is respectfully prayed that plaintiffs be admonished from closing or

(a) Acquisition, clearance and development of the right-of-way and/or site

27. SectionPrior Consultations Required.—No project or program shall be

The projects and programs mentioned in Section 27 should be interpreted to mean

Petition granted, judgment and resolution reversed and set aside.

Notes.—The purpose of a Temporary Restraining Order (TRO) is to prevent a

October 1, 2014. G.R. No. 177332.*

NATIONAL POWER CORPORATION, petitioner, vs.CITY OF CABANATUAN, represented

Remedial Law; Civil Procedure; Judgments; Doctrine of Finality of Judgments; It is

Same; Statutes; Statutory Construction; Generally, tax statutes are construed

amount of P1,630,007.58 is to be taken the 25% surcharge, giving the amount of

This Court’s Ruling

The petition is meritorious.

The trial court’s order of execution, as affirmed by the Court of Appeals,

In effect, respondent’s computation resulted in the imposition of the 25% surcharge

“The writ of execution must conform to the judgment which is to be executed, as it

168. SECTIONSurcharges and Penalties on Unpaid Taxes, Fees, or Charges .—

than what the law provides.55 To do so would amount to a deprivation of property

Respondent’s computation of the surcharge is oppressive and

The yearly accrual of the 25% surcharge is unconscionable. Respondent’s

Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ., concur.

Petition granted, judgment and resolution reversed and set aside.

Remedial Law; Civil Procedure; Judgments; Doctrine of Finality of Judgments;

DEL CASTILLO, J.:

10 Rollo, pp. 119-120.

Palileo vs. Planters Development Bank

Ruling of the Court of Appeals

12 CA Rollo, pp. 62-63.

22 CA Rollo, pp. 337-351.

25 Rollo, pp. 54-55.

Petitioners frame the issues involved in this Petition, as follows:

28 Id., at pp. 13-14.

30 On New Trial or Reconsideration.

The Court grants the Petition.

31 Rollo, pp. 155-164.

VOL. 738, OCTOBER 8, 2014 17