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THIRD DIVISION

[ G.R. No. 212683, November 12,


2018 ]
JERSON E. TORTAL, PETITIONER, VS. CHIZURU
TANIGUCHI, RESPONDENT.DECISION

LEONEN, J.:

An allegation of a trial court's lack of jurisdiction to render the


assailed judgment, final order, or resolution must be brought in a
separate action for annulment of judgment under Rule 47 of the
Rules of Civil Procedure.

This resolves the Petition for Review on Certiorari  filed by Jerson


[1]

E. Tortal (Tortal) assailing the Court of Appeals December 13,


2013 Decision  and May 14, 2014 Resolution  in CA-G.R. CV No.
[2] [3]

98955. The assailed judgments upheld the Regional Trial Court


October 28, 2011 Decision, which annulled the levy and sale of a
house and lot covered by a compromise agreement between
Tortal and Sevillana P. Sales (Sales).[4]

On June 8, 1999,  Tortal married Chizuru Taniguchi (Taniguchi).


[5]

They lived in a 250 m  house and lot in BF Homes, Parañaque


2

City, which was covered by Transfer Certificate of Title (TCT) No.


142089 and registered in the name of Tortal, married to
Taniguchi.[6]

On April 11, 2000, Taniguchi filed a petition for the nullity of her
marriage with Tortal. The petition was docketed as Civil Case No.
CV-00-0149 and was raffled to Branch 260, Regional Trial Court,
Parañaque City. [7]
On August 25, 2003, the Regional Trial Court granted the petition
and annulled Tortal and Taniguchi's marriage. In the same
decision annulling their marriage, the Regional Trial Court
declared the house and lot to be Taniguchi's exclusive property.
 Tortal did not move for the reconsideration of this decision.
[8]

Hence, it became final and executory on October 14, 2005. [9]

While the petition for nullity of marriage was pending, Sales filed
a complaint for collection of sum of money against Tortal. The
collection complaint was docketed as Civil Case No. C-1262 and
raffled to Branch 63, Regional Trial Court, Calauag, Quezon. Sales
and Tortal eventually entered into a compromise agreement,
which was approved by the Regional Trial Court of Calauag. [10]

On December 3, 2003, Tortal and Taniguchi's house and lot was


levied upon in accordance with the Regional Trial Court of
Calauag's Compromise Judgment. The property was then sold at
a public auction to Sales for P3,500,000.00. [11]

On May 24, 2005,  Taniguchi filed a Complaint for Reivindication


[12]

of Title, Annulment of Levy and Sale in Execution, Injunction,


Damages and Attorney's Fees against Tortal and Sales. She
prayed that an injunction be issued against the Register of Deeds
of Parañaque City, and that the levy over the house and lot and
the sale to Sales be declared null and void.  Her complaint was
[13]

docketed as Civil Case No. 05-0198 and was raffled to Branch


257, Regional Trial Court, Parañaque City.[14]

On September 14, 2005, the Regional Trial Court of Parañaque


City granted Taniguchi's application for injunction and enjoined
the Registry of Deeds of Parañaque City from cancelling TCT No.
142089 and from issuing a new one in Sales' favor. [15]

On October 28, 2011, the Regional Trial Court of Parañaque City


nullified the levy and the sale of the house and lot to Sales, and
made permanent the injunction against the Registry of Deeds of
Parañaque City. The fallo of its Decision read:
WHEREFORE, the preliminary injunction issued on September 14,
2005 is hereby made permanent. The levy and sale by public
auction of the property covered by TCT No. 142089 of the
Registry of Deeds of Parañaque conducted by Sheriff Benedicta G.
Hebron and the Certificate of Sale issued pursuant thereto are
declared null and void. Defendant Jerson E. Tortal is ordered to
pay plaintiff Chizuru Taniguchi the amount of P50,000.00 for
moral damages, P50,000.00 for exemplary damages, and
P50,000.00 for attorney's fees and the cost of suit.

IT IS SO ORDERED. [16]

Tortal and Sales appealed the Regional Trial Court October 28,
2011 Decision but on December 13, 2013, the Court of
Appeals  dismissed their appeal and upheld the assailed
[17]

Decision.

The Court of Appeals rejected Tortal's allegations about the


supposed defects of the Regional Trial Court August 25, 2003
Decision nullifying his marriage with Taniguchi. It pointed out that
this Decision had long become final and executory. [18]

It likewise rejected Tortal's assertions that Taniguchi had no right


to acquire property because she was not a Filipino citizen. It
emphasized that Tortal failed to bring up Taniguchi's citizenship
during pre-trial and only did so for the first time on appeal.
[19]

It also stressed that Tortal should have assailed the Regional Trial
Court August 25, 2003 Decision nullifying his marriage with a
petition for annulment of judgment, not in the present case which
only questioned the nullity of the levy and sale of the house and
lot to Sales. Nonetheless, it asserted that the period for filing a
petition for annulment of judgment had likewise long passed. [20]

The fallo of the Court of Appeals December 13, 2013 Decision


read:
WHEREFORE, the Appeal is hereby DENIED. The Decision dated
28 October 2011 of the Regional Trial Court of Parañaque City,
Branch 257, in Civil Case No. 05-0198, is AFFIRMED.

SO ORDERED.  (Emphasis in the original)


[21]

Only Tortal moved for the reconsideration of the Court of Appeals


December 13, 2013 Decision, but on May 14, 2014, the Court of
Appeals  denied his motion.
[22]

In his Petition for Review on Certiorari  before this Court,


[23]

petitioner Tortal maintains that the Regional Trial Court August


25, 2003 Decision nullifying his marriage with respondent was
null and void as there was no valid service of summons on him.
He further claims that substituted service of summons by
publication was improperly complied with; thus, the Regional Trial
Court never obtained jurisdiction over him.[24]

Petitioner likewise asserts that Taniguchi's foreign citizenship


precludes her from owning real property under Philippine law. [25]

Finally, petitioner declares that contrary to the Court of Appeals'


findings, the issue of respondent's capacity to acquire real
property was "impliedly included or inferable from the issues
raised"  before the Regional Trial Court during pre-trial.
[26]

In her Comment  to the petition, respondent Taniguchi contends


[27]

that the Regional Trial Court August 25, 2003 Decision, which
granted her petition for nullity of marriage and upheld her
exclusive ownership over the house and lot, attained finality as
early as October 14, 2005 because neither respondent nor the
Solicitor General moved for its reconsideration. Hence, she
presses that the same issues may no longer be reopened or
relitigated. [28]

Respondent then maintains that the issue of her citizenship and


lack of capacity to own property was never brought up before the
Regional Trial Court. Furthermore, she asserts that petitioner
failed to explain how the pre trial order impliedly included the
issue regarding her supposed lack of c pacity or how this issue
could be inferred from it. [29]

In his Reply,  petitioner merely reiterates his previous arguments


[30]

regarding the Regional Trial Court's lack of jurisdiction over the


petition for nullity of his marriage with respondent and
respondent's lack of capacity to own real property. [31]

The only issue for this Court's resolution is whether or not


petitioner Jerson E. Tortal may assail a final and executory
judgment nullifying his marriage with respondent Chizuru
Taniguchi in his appeal of the Court of Appeals December 13,
2013 Decision, which granted respondent's petition for annulment
of levy and sale in execution.

The Petition lacks merit.

Petitioner claims that he failed to participate in the proceedings


for the nullity of his marriage with respondent before Branch 260,
Regional Trial Court, Parañaque City because summons was
never served on him, either personally or by substitution. [32]

If indeed summons was not properly served on petitioner,


then his remedy was to file a petition for annulment of judgment
under Rule 47 of the Rules of Civil Procedure. An action for the
annulment of judgment is an equitable recourse that is
independent of the case and is allowed only in exceptional cases,
such as when there is no more available or other adequate
remedy. [33]

A petition for the annulment of judgment of Regional Trial Courts


may be given due course if it is sufficiently proven that the
"ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of
the petitioner." [34]
Furthermore, Rule 47, Section 2 of the Rules of Civil Procedure
provides only two (2) grounds for an action for annulment or
judgment: extrinsic fraud and lack of jurisdiction. Nonetheless,
extrinsic fraud cannot be considered a valid ground in an action
under Rule 47 "if it was availed of, or could have been availed of,
in a motion for new trial or petition for relief."
[35]

Rule 47, Section 3 then provides that an action for annulment of


judgment, if based on extrinsic fraud, should be filed within four
(4) years from discovery of the fraud, or if based on lack of
jurisdiction, then before the action is barred by laches or
estoppel.

In the action for the nullity of his marriage with respondent,


petitioner claims that respondent deliberately indicated a non-
existent address, instead of his real address; thus, he never
received the summons and the Regional Trial Court failed to
acquire jurisdiction over him.[36]

However, instead of directly assailing the Regional Trial Court


August 25, 2003 Decision, which granted the nullity of his
marriage in an action for annulment of judgment, petitioner
chose to tackle the issue in his appeal of the Regional Trial Court
October 28, 2011 Decision, which nullified the levy and sale by
auction of the house and lot to Sales. This is clearly not the
correct remedy. The Court of Appeals did not err in dismissing his
appeal and in upholding the Regional Trial Court October 28,
2011 Decision, striking down the levy and sale by auction, thus:
Still and all, appellant Tortal is not left without any recourse. If,
indeed, he believes that the RTC, Br. 260 erred in awarding the
property to appellee despite being a Japanese national, he should
have filed a Petition for Annulment of Judgment under Rule 47 of
the 1997 Rules of Civil Procedure. Upon this point, the court a
quo's disquisition is well-taken -
It is doubtful that defendant Tortal could in the instant
case assail the validity of the final decision of RTC Br.
260. Following the principle of res judicata, the dispute on
ownership was deemed to have been put to rest with the finality
of the said decision. Under the doctrine of res judicata, a matter
that has been adjudicated by a court of competent jurisdiction
must be deemed to have been finally and conclusively settled if it
arises in any subsequent litigation between the same parties and
for the same cause . . . . Certainly, the remedy available to
defendant Tortal is not in this proceeding, but through a
petition for annulment of judgment with the Court of
Appeals under Rule 47 of the Rules of Court.  (Emphasis in
[37]

the original)
Without a ruling from the Court of Appeals nullifying the Regional
Trial Court August 25, 2003 Decision, which granted the nullity of
petitioner and respondent's marriage and declared respondent as
the exclusive owner of the house and lot, this Decision remains
valid and subsisting. Moreover, it became final and executory as
early as October 14, 2005;  hence, the lower courts did not err
[38]

in granting the petition for nullity of levy and sale at auction since
respondent was the established exclusive owner of the house and
lot. Thus, petitioner had no authority to use the real property as
security for his indebtedness with Sales.

WHEREFORE, premises considered, the Petition for Review


is DENIED. The assailed Court of Appeals December 13, 2013
Decision and May 14, 2014 Resolution in CA-G.R. CV No. 98955
are AFFIRMED.

SO ORDERED.

Peralta, (Chairperson), and J. Reyes, Jr., concur.


Gesmundo, and Hernando, JJ., on wellness leave.
THIRD DIVISION

[ G.R. No. 204594, November 07,


2018 ]
SINDOPHIL, INC., PETITIONER, VS. REPUBLIC OF
THE PHILIPPINES, RESPONDENT.DECISION

LEONEN, J.:

The presumption that a holder of a Torrens title is an innocent


purchaser for value is disputable and may be overcome by
contrary evidence. Once a prima facie case disputing this
presumption is established, the adverse party cannot simply rely
on the presumption of good faith and must put forward evidence
that the property was acquired without notice of any defect in its
title.

This resolves Sindophil, Inc.'s (Sindophil) Petition for Review on


Certiorari  assailing the June 19, 2012 Resolution  and November
[1] [2]

23, 2012 Resolution  of the Court of Appeals in CA-G.R. CV No.


[3]

96660. The Court of Appeals deemed as abandoned and,


consequently, dismissed Sindophil's joint appeal with a certain
Marcelo R. Teodoro (Teodoro) for their failure to file their
Appellants' Brief within the required period.[4]

This case involves a 2,791-square-meter parcel of land (Tramo


property) located on Aurora Boulevard (Tramo), Pasay City,
currently in Sindophil's possession. Sindophil anchors its right to
the Tramo property on Transfer Certificate of Title (TCT) No.
132440, which was purportedly issued by the Register of Deeds
of Pasay City. [5]

On July 27, 1993, the Republic of the Philippines filed a


Complaint  for revocation, annulment, and cancellation of
[6]

certificates of title before the Pasay City Regional Trial Court, and
impleaded Sindophil as one of the defendants.

In its Complaint, the Republic alleged that per TCT No. 10354,
 issued by the Register of Deeds of Pasay City, the Tramo
[7]

property was initially registered under the name of Teodoro on


November 12, 1964. Teodoro then sold it to a certain Reynaldo
Puma (Puma), causing the cancellation of TCT No. 10354 and the
issuance of TCT No. 128358.  Subsequently, Puma sold it to a
[8]

certain Lourdes Ty (Ty). Puma's TCT No. 128358 was cancelled


and TCT No. 129957 was issued to Ty.  Finally, on May 3, 1991,
[9]

 Ty sold the property to Sindophil, causing the cancellation of


[10]

TCT No. 129957 and the issuance of TCT No. 132440 to Sindophil
on March 24, 1993. [11]

Despite the issuance of certificates of title over the Tramo


property, the Republic claimed that TCT No. 10354 in the name of
Teodoro was "spurious or of do4btful authenticity."  For one, the [12]

registry records of the Register of Deeds of Pasay City showed


that it was issued for a parcel of land in the name of a certain
Maximo Escobar, not Teodoro.  Another instance was that
[13]

Teodoro's TCT No. 10354 provided that it emanated from TCT No.
3632; but the memorandum of cancellation annotated on TCT No.
3632 provided that it was cancelled by TCT No. 8081 issued to a
certain Efigenia A. Vda. de Inocencio, not by TCT No. 10354
supposedly issued to Teodoro.  Furthermore, TCT No. 10354
[14]

provided that it covered Lot 3270-B of the subdivision plan Psd-


18572, allegedly a portion of Lot 3270 registered in the name of
the Republic of the Philippines under TCT No. 6735. An
examination of TCT No. 6735, however, revealed that it was
never subdivided and that it remained under the name of the
Republic. Neither was there a record of subdivision plan Psd-
18572 recorded with the Department of Environment and Natural
Resources.  For these reasons, the Republic argued that TCT No.
[15]

10354 and all certificates of title that emanated from it, including
Sindophil's TCT No. 132440, were null and void and should
accordingly be cancelled. [16]

In their Answer,  Teodoro, Puma, Ty, and Sindophil countered


[17]

that the Republic was estopped from questioning the transfers


considering that it had allowed the series of transfers and even
accepted the "tremendous amount[s] paid"  as capital gains tax.
[18]

They added that the Complaint was filed because of the Register
of Deeds' "personal grudge"  against them because they had
[19]
questioned a consulta issued by the Register of Deeds before the
Administrator of the Land Registration Authority.  Finally, they
[20]

contended that they were innocent purchasers for value and, in


the absence of evidence to the contrary, reconveyance should not
lie.  Arguing that the Republic had no cause of action against
[21]

them, they prayed for the dismissal of the Complaint. [22]

During trial, only the Republic was able to present its evidence.
Defendants Teodoro, Puma, Ty, and Sindophil were all deemed to
have waived their right to present evidence when they failed to
present any evidence or witness despite several settings. The
parties were then ordered to file their respective memoranda; but
instead of filing a memorandum, Sindophil filed a Motion to Re-
Open Case,  praying that it be allowed to present evidence that it
[23]

was a buyer in good faith. As to why it failed to present evidence


during trial, Sindophil explained that its witness, Sindophil
President Victoria Y. Chalid (Chalid), suffered a stroke which
prevented her from testifying during trial.  Lastly, it pointed out
[24]

that the Regional Trial Court granted the Republic a total of 110
days to file a formal offer of evidence. Thus, Sindophil prayed
that it be "given equal opportunity to present [its] defense since
the [Regional Trial Court] had been very lenient to [the Republic's
counsel,] the Office of the Solicitor General[.]" [25]

The Regional Trial Court, however, went on to decide the case


without acting on Sindophil's Motion to Re-Open Case. In its
November 13, 2009 Decision,  it ruled in favor of the Republic
[26]

and voided the certificates of title issued to defendants Teodoro,


Puma, Ty, and Sindophil. It found that the Tramo property
claimed by Teodoro under TCT No. 10354 was derived from TCT
No. 6735 registered in the name of the Republic.  However, no
[27]

annotation of the supposed transfer to Teodoro was annotated on


TCT No. 6735. [28]

On the claim of defendants that they were innocent purchasers


for value, the Regional Trial Court said that this defense was "just
a mere [assertion] and was never supported by any
documents."  It stated that defendants failed to discharge the
[29]
burden of proving that they were purchasers in good faith and for
value, thus, rejecting their argument. [30]

The dispositive portion of the Regional Trial Court November 13,


2009 Decision read:
WHEREFORE, in view of the foregoing, TCT No. 10354 in the
name of Marcelo R. Teodoro and all subsequent titles derived
therein, TCT Nos. 128358, 129957 and 132440, in the names of
Reynaldo Puma, Lourdes Ty and Sindophil, Inc., respectively, are
hereby declared Null and Void. The Re[gi]ster of Deeds is
hereby ordered to effect the cancellation of the same. Likewise,
defendants are hereby directed to refrain from exercising or
representing acts of ownership and/or possession over the land
covered by the titles declared Null and Void.

SO ORDERED.  (Emphasis in the original)


[31]

Sindophil, together with Teodoro, appealed before the Court of


Appeals.  However, for failure to file their appellants' brief within
[32]

the required period, the Court of Appeals deemed the appeal


abandoned and consequently dismissed it. The Court of Appeals
June 19, 2012 Resolution  stated: [33]

In view of the failure of the defendants-appellants to file their


Appellants' Brief within the period allowed to them, we hereby
consider their appeal as ABANDONED and,
consequently, DISMISSED pursuant to Section 1(e) of Rule SO
of the 1997 Rules of Civil Procedure.

IT IS SO ORDERED.  (Emphasis in the original)


[34]

Sindophil filed a Motion for Reconsideration  with its appellant's


[35]

brief  annexed to it. It explained that it failed to file its appeal


[36]

brief on time because its counsel, Atty. Rovenel O. Obligar (Atty.


Obligar), transferred his law office from Pasig City to Las Piñas
City and, in the process, his house helpers probably lost or
inadvertently disposed of the Resolution directing the filing of
appeal brief. [37]

In its November 23, 2012 Resolution,  the Court of Appeals


[38]

denied Sindophil's Motion for Reconsideration, thus:


This has reference to the motion filed by the defendant-appellant
Sindophil, Inc., through its counsel, for reconsideration of the
resolution promulgated in this case on June 19, 2012.

We find no cogent reason to warrant a reconsideration of the


aforementioned resolution. The petitioner, through its counsel,
admitted in its motion that it committed lapses. It has to suffer
the consequence of such lapses.

Procedural rules have their own wholesome rationale in the


orderly administration of justice. Justice is to be administered
according to the rules in order to obviate arbitrariness, caprice or
whimsicality (Vasco vs. Court of Appeals, G.R. No. L-46763,
February 28, 1978, 81 SCRA 763, 766).

Thus, procedural rules are not to be belittled or dismissed simply


because their non-observance may have resulted in prejudice to a
party's substantive rights. Like all rules, they are required to be
followed except only when, for the most persuasive of reasons,
they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed. While it is true that
litigation is not a game of technicalities, this does not mean that
the Rules of Court may be ignored at will and at random to the
prejudice of the orderly presentation and assessment of the
issues and their just resolution. As held by the Supreme Court
in Garbo vs. Court of Appeals, G.R. No. 107698, July 5, 1996,
258 SCRA 159:
"Procedural rules are tools designed to facilitate the adjudication
of cases. Courts and litigants alike are thus enjoined to abide
strictly by the rules. And while the Court, in some instances,
allows a relaxation in the application of the rules, this, we stress,
was never intended to forge a bastion of erring litigants to violate
the rules with impunity. The liberality in the interpretation and
application of the rules applies only in proper cases and under
justifiable causes and circumstances. While it is true that
litigation is not a game of technicalities, it is equally true that
every case must be prosecuted in accordance with the prescribed
procedure to insure an orderly and speedy administration of
justice."
Procedural rules, therefore, are not to be disdained as mere
technicalities that may be ignored at will to suit the convenience
of a party (Santos vs. Court of Appeals, G.R. No. 92862, July 4,
1991, 198 SCRA 806). We find the instant case to be not an
exception to the aforementioned rule.

WHEREFORE, in view of the foregoing premises, we


hereby DENY the motion for reconsideration filed in this case by
the defendant-appellant Sindophil, Inc.

SO ORDERED. [39]

On January 18, 2013, Sindophil filed its Petition for Review on


Certiorari  before this Court. After four (4) Motions  for
[40] [41]

Extension, the Republic filed its Comment  on July 15, 2013. In
[42]

its July 31, 2013 Resolution,  this Court noted the Comment and
[43]

directed Sindophil to file its Reply within 10 days from notice.

Sindophil was served a copy of the Comment on September 18,


2013 and had until September 28, 2013 to file its Reply.
 However, Sindophil failed to file its Reply within the required
[44]

period and its counsel was required to show cause  why he [45]

should not be disciplinarily dealt with and was again required to


file a Reply. On May 15, 2014, Sindophil filed its Reply  with its
[46]

counsel apologizing for failing to file it within the required period


"because he honestly believed that the filing of one is optional
and not mandatory."  This Court noted the Reply in its July 7,
[47]

2014 Resolution. [48]

The parties raise both procedural and substantive issues for


resolution of this Court. The procedural issues in this case are:

First, whether or not the Court of Appeals erred in dismissing


Sindophil's appeal for failure to file an appeal brief within the
required period; and
Second, whether or not the Regional Trial Court erred in deciding
the case despite Sindophil's filing of a Motion to Re-Open Case.

The substantive issues are:

First, whether or not the certificates of title emanating from TCT


No. 10354 are null and void; and

Second, whether or not the Regional Trial Court erred in not


awarding Sindophil, compensation from the Assurance Fund.

On the procedural issues, Sindophil mainly argues that it was


deprived of the right to "genuine" due process both by the
Regional Trial Court and the Court of Appeals. According to
Sindophil, its failure to present evidence during trial and its
failure to file the appeal brief within the required period are
"technical grounds"  that the Regional Trial Court and the Court
[49]

of Appeals could have excused in the interest of substantial


justice.

On the merits, Sindophil maintains that when it bought the Tramo


property from Ty, it was a buyer in good faith and had no notice
of any infirmities in his title.  Considering that under the Torrens
[50]

System, "[a] purchaser is not bound by the original certificate of


title but only by the certificate of title of the person from whom
he purchased the property[,]"  the Regional Trial Court erred in
[51]

voiding its title to the Tramo property because of the supposed


anomalies surrounding the issuance of TCT No. 10354 to
Teodoro. Assuming that its title is indeed void, Sindophil
nevertheless argues that it should have been awarded
compensation from the Assurance Fund per Section 95  of the [52]

Property Registration Decree, as amended. [53]

As for respondent, it argues that there was no deprivation of due


process because Sindophil was given more than enough
opportunity to present its case but repeatedly and unjustifiably
failed to do so. Its reasons for failing to file the appeal brief-the
Resolution directing the filing of the brief was lost either because
of its counsel's transfer of office from Pasig City to Las Piñas City
or because it might have been disposed by the counsel's house
helpers-are inexcusable and are all due to the negligence of its
counsel. With appeal being a mere statutory privilege, respondent
argues that the Court of Appeals did not err in dismissing
Sindophil's appeal for failure to comply with the Rules ofCourt. [54]

Furthermore, respondent maintains that the issue of whether a


buyer is in good faith is a question of fact. The issue of whether
Sindophil is entitled to compensation from the Assurance Fund is
likewise a question of fact as entitlement to compensation
presupposes that the claimant is a buyer in good faith. These
issues being questions of fact, respondent argues that this Court
may not resolve them because only questions of law may be
brought before this Court on a petition for review on certiorari
under Rule 45 of the Rules of Court.  In any case, even if the
[55]

case is resolved on the merits, respondent avers that Sindophil


still had the burden of proving that it was a buyer in good faith,
an assertion that Sindophil miserably failed to establish.
According to respondent, it was error for Sindophil to rely solely
on the presumption of good faith without proving its case. [56]

This Petition must be denied.

Rule 50, Section 1(e) of the Rules of Court is the basis for
dismissing an appeal for failure to file the appellant's brief within
the required period:
RULE 50
Dismissal of Appeal

Section 1. Grounds 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:

    . . . . 
 
(e) Failure of the appellant to serve and file the required number of copies of his brief
the time provided by these Rules[.]
With the use of the permissive "may," it has been held that the
dismissal is directory, not mandatory, with the discretion to be
exercised soundly and "in accordance with the tenets of justice
and fair play"  and "having in mind the circumstances obtaining
[57]

in each case."  In Bigornia v. Court of Appeals:


[58] [59]

Technically, the Court of Appeals may dismiss an appeal for


failure of the appellant to file the appellants' brief on time. But,
the dismissal is directory, not mandatory. Hence, the court has
discretion to dismiss or not to dismiss the appeal. It is a power
conferred on the court, not a duty. The discretion, however, must
be a sound one, to be exercised in accordance with the tenets of
justice and fair play, having in mind the circumstances obtaining
in each case.  (Emphasis in the original, citation omitted)
[60]

In Bigornia, this Court ordered the reinstatement of the appeal


despite the late filing of the appellant's brief. The petitioners
in Bigornia were police officers who, this Court said, "receive
meager salaries for risking life and limb."  With the police officers
[61]

having been adjudged liable for substantial amounts in damages,


this Court said that "[i]t is but fair that [petitioners] be heard on
the merits of their case before being made to pay damages, for
what could be, a faithful performance of duty." [62]

The appeal was likewise reinstated in Aguam v. Court of Appeals,


 where a motion for extension of time to file appellant's brief
[63]

was denied by the Court of Appeals for having been filed nine (9)
days  beyond the period for filing the appellant's brief. The
[64]

motion for reconsideration with attached appellant's brief was


likewise denied.  However, it was established that the notice to
[65]

file appellant's brief was received by an employee of the realty


firm with whom the appellant's lawyer was sharing office, not by
the appellant's lawyer who was a solo practitioner.  Thus, this [66]

Court ordered the Court of Appeals to admit the appellant's brief


in the higher interest of justice. [67]

The same extraordinary circumstances similar


to Bigornia and Aguam are not present here. In Sindophil's
Motion for Reconsideration  before the Court of Appeals,
[68]

Sindophil's counsel, Atty. Obligar, explained that his law office


used to be located in Pasig City. However, when two (2) of his
staff left due to "family reasons,"  he had to transfer his office to
[69]

Las Piñas City, which was near Parañaque City where he resided.
He then speculated that in the course of the transfer, the Court of
Appeals' resolution directing Sindophil to file its appeal brief
might have been one of the files lost or inadvertently disposed of
by his house helpers. [70]

Atty. Obligar's excuse is unacceptable. While he is not prohibited


from hiring clerks and other staff to help him in his law practice,
it is still, first and foremost, his duty to monitor the receipt of
notices such as the Court of Appeals' resolution directing the filing
of the appellant's brief. He cannot blame his staff or house
helpers as it is already settled that the negligence of the clerks
and employees of a lawyer binds the latter.  That he is not even
[71]

sure what happened to the Resolution shows his carelessness,


and this negligence is one that ordinary diligence could have
guarded against. He should have devised a system in his law
office whereby his clerks are to immediately route the notices
they receive to the handling lawyer because the reglementary
period for filing an appeal brief runs from their receipt.  Under
[72]

the circumstances, the Court of Appeals exercised its discretion


soundly by deeming Sindophil's appeal as abandoned and,
consequently, dismissing the appeal.

II

Neither did the Regional Trial Comi err in deciding the case
despite Sindophil's filing of a Motion to Re-Open Case.

The order of trial is governed by Rule 30, Section 5 of the Rules


of Court, with item (f) specifically governing the reopening of a
case to introduce new evidence, thus:
Section 5. Order of trial. - Subject to the provisions of Section 2
of Rule 31, and unless the court for special reasons otherwise
directs, the trial shall be limited to the issues stated in the pre-
trial order and shall proceed as follows:
(a) The plaintiff shall adduce evidence in support of his complaint;

(b) The defendant shall then adduce evidence in support of his defense, counterclaim,
and third-party complaint;

(c) The third-party defendant, if any, shall adduce evidence of his defense, countercl
claim and fourthparty complaint;

(d) The fourth-party, and so forth, if any, shall adduce evidence of the material facts
them;

(e) The parties against whom any counterclaim or crossclaim has been pleaded, sh
evidence in support of their defense, in the order to be prescribed by the court;

(f) The parties may then respectively adduce rebutting evidence only, unless the cour
reasons and in the furtherance of justice, permits them to adduce evidence upon th
case; and

(g) Upon admission of the evidence, the case shall be deemed submitted for decision,
court directs the parties to argue or to submit their respective memoranda or a
pleadings.
If several defendants or third-party defendants, and so forth,
having separate defenses appear by different counsel, the court
shall determine the relative order of presentation of their
evidence. (Underscoring provided)
Republic v. Sandiganbayan  explained Rule 30, Section 5 in this
[73]

wise:
Under this rule, a party who has the burden of proof must
introduce, at the first instance, all the evidence he relies upon
and such evidence cannot be given piecemeal. The obvious
rationale of the requirement is to avoid injurious surprises to the
other party and the consequent delay in the administration of
justice.

A party's declaration of the completion of the presentation of his


evidence prevents him from introducing further evidence; but
where the evidence is rebuttal in character, whose necessity, for
instance, arose from the shifting of the burden of evidence from
one party to the other; or where the evidence sought to be
presented is in the nature of newly discovered evidence, the
party's right to introduce further evidence must be recognized.
Otherwise, the aggrieved party may avail of the remedy
of certiorari.

Largely, the exercise of the court's discretion under the exception


of Section 5 (f), Rule 30 of the Ru1es of Court depends on the
attendant facts i.e., on whether the evidence would qualify as a
"good reason" and be in furtherance of "the interest of justice."
For a reviewing court to properly interfere with the lower court's
exercise of discretion, the petitioner must show that the lower
court's action was attended by grave abuse of discretion. Settled
jurisprudence has defined this term as the capricious and
whimsical exercise of judgment, equivalent to lack of jurisdiction;
or, the exercise of power in an arbitrary manner by reason of
passion, prejudice, or personal hostility, so patent or so gross as
to amount to an evasion of a positive duty, to a virtual refusal to
perform the mandated duty, or to act at all in contemplation of
the law. Grave abuse of discretion goes beyond the bare and
unsupported imputation of caprice, whimsicality or arbitrariness,
and beyond allegations that merely constitute errors of judgment
or mere abuse of discretion.

In Lopez v. Liboro, we had occasion to make the following


pronouncement:
After the parties have produced their respective direct proofs,
they are allowed to offer rebutting evidence only, but, it has been
held, the court, for good reasons, in the furtherance of justice,
may permit them to offer evidence upon their original case, and
its ruling will not be disturbed in the appellate court where no
abuse of discretion appears. So, generally, additional evidence is
allowed when it is newly discovered, or where it has been omitted
through inadvertence or mistake, or where the purpose of the
evidence is to correct evidence previously offered. The omission
to present evidence on the testator's knowledge of Spanish had
not been deliberate. It was due to a misapprehension or
oversight.
Likewise, in Director of Lands v. Roman Archbishop of Manila, we
ruled:
The strict rule is that the plaintiff must try his case out when he
commences. Nevertheless, a relaxation of the rule is permitted in
the sound discretion of the court. "The proper rule for the
exercise of this discretion," it has been said by an eminent
author, "is, that material testimony should not be excluded
because offered by the plaintiff after the defendant has rested,
although not in rebuttal, unless it has been kept back by a trick,
and for the purpose of deceiving the defendant and affecting his
case injuriously."

These principles find their echo in Philippine remedial law. While


the general rule is rightly recognized, the Code of Civil Procedure
authorizes the judge "for special reasons," to change the order of
the trial, and "for good reason, in the furtherance of justice," to
permit the parties "to offer evidence upon their original
case." . . .
In his commentaries, Chief Justice Moran had this to say:
However, the court for good reasons, may, in the furtherance of
justice, permit the parties to offer evidence upon their original
case, and its ruling will not be disturbed where no abuse of
discretion appears, Generally, additional evidence is allowed when
. . .; but it may be properly disallowed where it was withheld
deliberately and without justification.  (Emphasis in the original,
[74]

citations omitted)
The introduction of new evidence even after a party has rested its
case may, therefore, be done but only if the court finds that it is
for good reasons and in the furtherance of justice. The admission
is discretionary on the part of the court and, as explained
in Republic, may only be set aside if the admission was done with
grave abuse of discretion or:
[T]he capricious and whimsical exercise of judgment, equivalent
to lack of jurisdiction; or, the exercise of power in an arbitrary
manner by reason of passion, prejudice, or personal hostility, so
patent or so gross as to amount to an evasion of a positive duty,
to a virtual refusal to perform the mandated duty, or to act at all
in contemplation of the law.  (citation omitted)
[75]
To recall, Sindophil filed an Urgent Motion to Reset Hearing with
Notice of Change of Address one (1) day before its scheduled
initial presentation of evidence. On motion by the Solicitor
General, representing the Republic, the Regional Trial Court
denied the Motion to Reset Hearing for having been filed on short
notice and deemed as waived Sindophil's right to present
evidence. The parties were then ordered to file their respective
memoranda thirty (30) days from notice, after which the case
would be deemed submitted for decision. [76]

Thereafter, Sindophil filed a motion for extension, praying for an


additional fifteen (15) days or until February 26, 2009, to file its
memorandum.  The Regional Trial Court granted the motion in
[77]

its February 24, 2009 Order.  However, despite the grant of


[78]

extension, Sindophil did not file the required memorandum.


Instead, it filed the Motion to Re-Open Case  more than a month
[79]

later or on March 31, 2009. In its Motion to Re-Open Case,


Sindophil alleged that its witness, Sindophil President Chalid, had
previously suffered a stroke that rendered her indisposed to take
the stand. [80]

The stroke suffered by Sindophil's President was not a good


reason to reopen the case. In its Pre-Trial Brief, Sindophil
indicated the Register of Deeds of Pasay City as its other witness.
 It could have very well presented the Register of Deeds first
[81]

while Chalid recovered from her stroke. Why it did not do so is


only known to Sindophil.

Furthermore, while illness is a valid ground for postponing a


hearing,  it does not appear that Sindophil raised Chalid's stroke
[82]

as a ground to postpone its initial presentation of defense


evidence. The illness was only alleged in the Motion to Re-Open
Case filed on March 31, 2009, more than three (3) months after
the scheduled presentation of evidence on December 10, 2008.
The excuse, therefore, appears to be an afterthought.

Neither can Sindophil claim that it was not given equal


opportunity to present its case. Atty. Obligar, counsel for
Sindophil, admitted that he never objected to the motions for
extension to file formal offer of evidence filed by the Republic.
 Even if this Court believes that he did not object to the
[83]

extensions "as a gesture of consideration bearing in mind the


work load and bulk of cases being attended to by the [Office of
the Solicitor General],"  he was still not entitled to expect that
[84]

the Office of the Solicitor General would grant him the same
leniency by not objecting to the Motion to Reset the initial
presentation of defense evidence. Litigation is primarily an
adversarial proceeding. Counsels are to take every opportunity,
so long as it is within the bounds of the law, to advocate their
clients' causes.

Furthermore, contrary to Sindophil's claim, the Regional Trial


Court entertained the Motion to Re-Open Case that it even set the
Motion for clarificatory hearing and oral argument.  However,
[85]

Atty. Obligar again absented himself during the scheduled


hearing.

Given the foregoing, the Regional Trial Court did not gravely
abuse its discretion in deciding the case despite the filing of the
Motion to ReOpen Case.

III

Sindophil insists that it bought the Tramo property from Ty in


good faith and that it was an innocent purchaser for value.
However, the presumption of good faith and that a holder of a
title is an innocent purchaser for value may be overcome by
contrary evidence.

Here, the Republic presented evidence that TCT No. 10354, from
which Sindophil's TCT No. 132440 was derived, was void. As
found by the Regional Trial Court:
Record shows that Certificate of Title No. 6735, wherein the lot
claimed by defendant, Marcelo R. Teodoro, lot 3270-B, is derived
therefrom, is under the name of the Republic of the Philippines,
dated October 17, 1913. Nothing in the subsequent annotations
was under the name of any of the defendants and neither the
subject TCT No. 10354. [86]

With the Republic having put forward evidence that the Tramo
property claimed by Sindophil belongs to the Republic, the burden
of evidence shifted to Sindophil to prove that its title to it was
valid. Concomitantly, it had the burden of proving that it was
indeed a buyer in good faith and for value. As this Court said
in Baltazar v. Court of Appeals,  "the burden of proving the
[87]

status of a purchaser in good faith and for value lies upon him
who asserts that status"  and "[i]n discharging that burden, it is
[88]

not enough to invoke the ordinary presumption of good faith, i.e.,


that everyone is presumed to act in good faith. The good faith
that is [essential here] is integral with the very status which must
be proved." [89]

Unfortunately for Sindophil, it utterly failed to discharge the


burden of evidence because its counsel failed to attend the
scheduled initial presentation of evidence.

Further, looking at the records, the defects in Sindophil's title


could be inferred from the annotations in TCT No. 129957, the
certificate of title held by Sindophil's immediate predecessor, Ty.
A certain Antonio C. Mercado had filed an adverse claim against
Ty because the Tramo property had been previously sold to him
by Puma, Ty's predecessor.  The alleged double sale should have
[90]

prompted Sindophil to look into Puma's title, TCT No. 128358,


where it can be gleaned that Teodoro likewise filed an adverse
claim.  These annotations show that the Tramo property is
[91]

controversial and has been the subject of several adverse claims,


belying Sindophil's contention that it acquired the property in
good faith.

With Sindophil failing to prove that it was a buyer in good faith, it


cannot recover damages to be paid out of the Assurance Fund
under Section 95  of the Property Registration Decree. In La
[92]

Urbana v. Bernardo,  this Court held that "it is a condition sine


[93]

qua non that the person who brings an action for damages


against the assurance fund be the registered owner, and, as to
holders of transfer certificates of title, that they be innocent
purchasers in good faith and for value."[94]

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The June 19, 2012 Resolution and November 23, 2012 Resolution
of the Court of Appeals in CA-G.R. CV No. 96660 are AFFIRMED.

SO ORDERED.

Peralta, (Chairperson), and A. Reyes, Jr., JJ., concur.


Gesmundo, and J. Reyes, Jr., JJ., on wellness leave.

January 8, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on November 7, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on January 8, 2019 at 3:15 p.m.

[1]
 Rollo, pp. 9-31.

 Id. at 32-33. The Resolution was penned by Associate Justice


[2]

Isaias P. Dicdican and concurred in by Associate Justices Jane


Aurora C. Lantion and Eduardo B. Peralta, Jr. of the Fourteenth
Division, Court of Appeals, Manila.

 Id. at 34-36. The Resolution was penned by Associate Justice


[3]

Isaias P. Dicdican and concurred in by Associate Justices Jane


Aurora C. Lantion and Eduardo B. Peralta, Jr. of the Former
Fourteenth Division, Court of Appeals, Manila.

[4]
 Id. at 32.

[5]
 Id. at 10.

[6]
 Id. at 40-47.

[7]
 Id. at 48-49.

[8]
 Id. at 50-51.

[9]
 Id. at 52-53.

[10]
 Id. at 43.

[11]
 Id. at 54-55.

[12]
 Id. at 43.

[13]
 Id.

[14]
 Id. at 44.

[15]
 Id.

[16]
 Id. at 45-46.

[17]
 Id. at 70-75.

[18]
 Id. at 71.
[19]
 Id.

[20]
 Id. at 71-72.

[21]
 Id. at 72-74.

[22]
 Id. at 75.

[23]
 Id. at 119-127.

[24]
 Id. at 119.

[25]
 Id. at 125.

 Id. at 37-38. The Decision, docketed as Civil Case No. 93-


[26]

10146, was penned by Presiding Judge Jesus B. Mupas of Branch


112, Regional Trial Court, Pasay City.

[27]
 Id. at 37.

[28]
 Id. at 38.

[29]
 Id.

[30]
 Id.

[31]
 Id.

[32]
 Id. at 151-152.

[33]
 Id. at 32.

[34]
 Id. at 32.

[35]
 Id. at 158-162.

[36]
 Id. at 163-177.
[37]
 Id. at 159.

[38]
 Id. at 34-36.

[39]
 Id. at 34-35.

[40]
 Id. at 9-31.

[41]
 Id. at 179-182, 183-186, 187-191, and 192-196.

[42]
 Id. at 197-219.

[43]
 Id. at 424.

[44]
 Id. at 424-A.

[45]
 Id. at 425.

[46]
 Id. at 428-455.

[47]
 Id. at 453.

[48]
 Id. at 462.

[49]
 Id. at 26.

[50]
 Id. at 17-21.

[51]
 Id. at 20.

[52]
 PROPERTY REGISTRATION DECREE, sec. 95 provides:

Section 95. Action for compensation from funds. - A person who,


without negligence on his part, sustains loss or damage, or is
deprived of land or any estate or interest therein in consequence
of the bringing of the land under the operation of the Torrens
system or arising after original registration of land, through fraud
or in consequence of any error, omission, mistake or
misdescription in any certificate of title or in any entry or
memorandum in the registration book, and who by the provisions
of this Decree is barred or otherwise precluded under the
provision of any law from bringing an action for the recovery of
such land or the estate or interest therein, may bring an action in
any court of competent jurisdiction for the recovery of damages
to be paid out of the Assurance Fund.

[53]
 Rollo, pp. 21-23.

[54]
 Id. at 211-215.

[55]
 Id. at 204-206.

[56]
 Id. at 206-208.

 Bigornia v. Court of Appeals, 600 Phil. 693, 698 (2009) [Per J.


[57]

Quisumbing, Second Division].

[58]
 Id.

[59]
 600 Phil. 693 (2009) [Per J. Quisumbing, Second Division].

[60]
 Id. at 698.

[61]
 Id.

[62]
 Id.

[63]
 388 Phil. 587 (2000) [Per J. Pardo, First Division].

[64]
 Id. at 595.

[65]
 Id. at 592.

[66]
 Id. at 594-595.

[67]
 Id. at 595.
[68]
 Rollo, pp. 158-162.

[69]
 Id. at 158.

[70]
 Id. at 159.

 Negros Stevedoring Co., Inc. v. Court of Appeals, 245 Phil. 328,


[71]

333 (1988) [Per J. Padilla, Second Division].

[72]
 Id.

[73]
 678 Phil. 358 (2011) [Per J. Brion, En Banc].

[74]
 Id. at 397-399.

[75]
 Id. at 397-398.

[76]
 Rollo, p. 333.

[77]
 Id. at 348.

[78]
 Id.

[79]
 Id. at 119-127.

[80]
 Id. at 119.

[81]
 Id. at 312.

[82]
 RULES OF COURT, Rule 30, sec. 4.

[83]
 Rollo, p. 356.

[84]
 Id.

[85]
 Id. at 358.
[86]
 Id. at 38.

[87]
 250 Phil. 349 (1988) [Per J. Feliciano, Third Division].

[88]
 Id. at 366.

[89]
 Id.

[90]
 Rollo, p. 233.

[91]
 Id. at 231.

[92]
 PROPERTY REGISTRATION DECREE, sec. 95 provides:

Section 95. Action for compensation from funds. - A person who,


without negligence on his part, sustains loss or damage, or is
deprived of land or any estate or interest therein in consequence
of the bringing of the land under the operation of the Torrens
system or arising after original registration of land, through fraud
or in consequence of any error, omission, mistake or
misdescription in any certificate oftitle in any entry or
memorandum in the registration book, and who by the provisions
of this Decree is barred or otherwise precluded under the
provision of any law from bringing an action for the recovery of
such land or the estate or interest therein, may bring an action in
any court of competent jurisdiction for the recovery of damages
to be paid out of the Assurance Fund.

[93]
 62 Phil. 790 (1936) [Per J. Imperial, En Banc].

[94]
 Id. at 803.

Source: Supreme Court E-Library | Date created: February 07, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 205409, June 13, 2018 ]


CITIGROUP, INC., PETITIONER, VS. CITYSTATE
SAVINGS BANK, INC. RESPONDENT.DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari  assailing the


[1]

August 29, 2012 Decision  and the January 15, 2013


[2]

Resolution  of the Court of Appeals in CA-G.R. SP No. 109679.


[3]

The facts which led to the controversy before this Court, as


summarized by the Court of Appeals, are as follows:
Petitioner Citigroup, Inc. is a corporation duly organized under
the laws of the State of Delaware engaged in banking and
financial services.

In the late 1970s, Citibank N.A., a wholly-owned subsidiary of


petitioner, installed its first automated teller machines in over a
hundred New York City branches. In 1984, Citibank N.A.,
Philippine Branch, began the development of its domestic
Automated Teller Machine (ATM) network, and started operating
ATMs and issuing ATM cards in the Philippines. Citibank N.A.,
Philippine Branch then joined Bancnet Inc. ("Bancnet") in 1990,
the first year Bancnet commenced operations. To date, Citibank
N.A., Philippine Branch has six branches and 22 ATMs in the
Philippines.

In 2005, Citibank Savings, Inc. became an indirect wholly-owned


subsidiary of Citibank, N.A. As a pre-existing thrift bank, it
offered ATM services in the Philippines in 1995 and joined
Bancnet in 2005. Citibank Savings, Inc. now has 36 branches and
27 ATMs in the Philippines.

Combining the branches and ATMs of Citibank N.A., Philippine


Branch and Citibank Savings, Inc., there are a total of 42
branches and 29 ATMs in the Philippines marketed and identified
to the public under the CITI family of marks.

The ATM cards issued by Citibank N.A., Philippine Branch and


Citibank Savings, Inc. are labelled "CITICARD". The trademark
CITICARD is owned by Citibank N.A. and is registered in the
[Intellectual Property Office] of the Philippines on 27 September
1995 under Registration Number 34731.

In addition, petitioner or Citibank N.A., a wholly-owned subsidiary


of petitioner, owns the following other trademarks currently
registered with the Philippine [Intellectual Property Office], to wit:
"CITI and arc design", "CITIBANK", "CITIBANK PAYLINK",
"CITIBANK SPEEDCOLLECT", "CITIBANKING", "CITICARD",
"CITICORP", "CITIFINANCIAL", "CITIGOLD", "CITIGROUP",
"CITIPHONE BANKING'', and "CITISERVICE".

On the other hand, sometime in the mid-nineties, a group of


Filipinos and Singaporean companies formed a consortium to
establish respondent Citystate Savings Bank, Inc. The consortium
included established Singaporean companies, specifically
Citystate Insurance Group and Citystate Management Group
Holdings Pte, Ltd.

Respondent's registered mark has in its name affixed a lion's


head, which is likened to the national symbol of Singapore, the
Merlion. On 08 August 1997, respondent opened its initial branch
in Makati City. From then on, it endeavored to expand its branch
network. At present it has 19 branches in key cities and
municipalities including 3 branches in the province of Bulacan and
1 in Cebu City. Respondent had also established off site ATMs in
key locations in the Philippines as one of its banking products and
services.
In line with this, respondent filed an application for registration
with the [Intellectual Property Office] on 21 June 2005 of the
trademark "CITY CASH WITH GOLDEN LION'S HEAD" for its ATM
service, under Application Serial No. 42005005673. [4]

After respondent Citystate Savings Bank, Inc. (Citystate) applied


for registration of its trademark "CITY CASH WITH GOLDEN
LION'S HEAD" with the Intellectual Property Office, Citigroup, Inc.
(Citigroup) filed an opposition to Citystate's application. Citigroup
claimed that the "CITY CASH WITH GOLDEN LION'S HEAD" mark
is confusingly similar to its own "CITI" marks.  After an exchange
[5]

of pleadings, the Director of the Bureau of Legal Affairs of the


Intellectual Property Office rendered a Decision  dated November
[6]

20, 2008. The Intellectual Property Office concluded that the


dominant features of the marks were the words "CITI" and
"CITY," which were almost the same in all aspects. It further
ratiocinated that Citigroup had the better right over the mark,
considering that 'its "CITI" and "CITI"-related marks have been
registered with the Intellectual Property Office, as well as with the
United States Patent and Trademark Office, covering "financial
services" under Class 36 of the International Classification of
Goods.  Thus, applying the dominancy test and considering that
[7]

Citystate's dominant feature of the applicant's mark was identical


or confusingly similar to a registered trademark, the Intellectual
Property Office ruled that approving it would be contrary to
Section 138 of the Intellectual Property Code and Citigroup's
exclusive right to use its marks.

This was appealed to the Office of the Director General of the


Intellectual Property Office. In a Decision  dated July 3, 2009,
[8]

Director General Adrian S. Cristobal, Jr. (Director General


Cristobal) reversed the November 20, 2008 Decision of the
Director of the Bureau of Legal Affairs and gave due course to
Citystate's trademark application. He made a visual comparison
of the parties' respective marks and considered the golden lion
head device to be the prominent or dominant feature of
Citystate's mark, and not the word "CITY." Thus, Citystate's mark
did not resemble Citigroup's mark such that deception or
confusion was likely. Director General Cristobal found plausible
Citystate's explanation for choosing "CITYSTATE," i.e., that its
name was based on the country of Singapore, which was referred
to as "city-state," and that the golden lion head device was
similar to the national symbol of Singapore, the merlion.  He [9]

appreciated that availing of the products and services related to


the parties' marks would entail very detailed procedures, like
sales representatives explaining the products and clients filling up
and submitting application forms, such that customers would
necessarily be well informed and not confused. [10]

Thus, Citigroup filed a Petition for Review  before the Court of


[11]

Appeals, which dismissed the petition. The Court of Appeals found


that Director General Cristobal did not act with grave abuse of
discretion in ruling that the parties' trademarks were not
confusingly similar, and in giving due course to Citystate's
trademark application.  It found that Citystate's mark was not
[12]

confusingly or deceptively similar to Citigroup's marks:


[Citystate's] trademark is the entire "CITY CASH WITH GOLDEN
LION'S HEAD". Although the words "CITY CASH" are prominent,
the entirety of the trademark must be considered, and focus
should not be made solely on the phonetic similarity of the words
"CITY" and "CITI".

The dissimilarities between the two marks are noticeable and


substantial. [Citystate's] mark, "CITY CASH WITH GOLDEN
LION'S HEAD", has an insignia of a golden lion's head at the left
side of the words "CITY CASH", while [Citigroup's] "CITI" mark
usually has an arc between the two I's. A further scrutiny of the
other "CITI" marks of [Citigroup] would show that their font type,
font size, and color schemes of the said "CITI" marks vary for
each product or service. Most of the time, [Citigroup's] "CITI"
mark is joined with another term to form a single word, with each
product or service having different font types and color schemes.
On the contrary, the trademark of [Citystate] consists of the
words "CITY CASH", with a golden lion's head emblem on the left
side. It is, therefore, improbable that the public would
immediately and naturally conclude that [Citystate's] "CITY CASH
WITH GOLDEN LION'S HEAD" is but another variation under
[Citigroup's] "CITI" marks.

Verily, the variations in the appearance of the "CITI" marks by


[Citigroup], when conjoined with other words, would dissolve the
alleged similarity between them and the trademark of [Citystate].
These dissimilarities, and the insignia of a golden lion's head
before the words "CITY CASH" in the mark of [Citystate] would
sufficiently acquaint and apprise the public that [Citystate's]
trademark "CITY CASH WITH GOLDEN LION'S HEAD" is not
connected with the "CITI" marks of [Citigroup].

Moreover, more credit should be given to the "ordinary


purchaser." Cast in this particular controversy, the ordinary
purchaser is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product
involved. It bears to emphasize that the mark "CITY CASH WITH
GOLDEN LION'S HEAD" is a mark of [Citystate] for its ATM
services which it offers to the public. It cannot be gainsaid that
an ATM service is not an ordinary product which could be
obtained at any store without the public noticing its association
with the banking institution that provides said service. Naturally,
the customer must first open an account with a bank before it
could avail of its ATM service. Moreover, the name of the banking
institution is written and posted either inside or outside the ATM
booth, not to mention the fact that the name of the bank that
operates the ATM is constantly flashed at the screen of the ATM
itself. With this, the public would accordingly be apprised that
[Citystate's] "CITY CASH" is an ATM service of [Citystate], and
not that of [Citigroup's].  (Citation omitted)
[13]

Thus, the Court of Appeals quoted Director General Cristobal:


In evaluating the relevance of the prefix "CITI", due attention
should be given not only to the other features of the competing
marks but also to the attendant circumstances of the case.
Otherwise, a blind adherence to [Citigroup's] claim over the
prefix CITI is tantamount to handing it a monopoly of all marks
with such prefix or with a prefix that sounds alike but with a
different spelling like the word "city". Accordingly, the kind of
products and services involved should likewise be scrutinized.

....

Thus, this Court finds no cogent reason to believe [Citigroup's]


contention that consumers may confuse the products and
services covered by the competing trademarks as coming from
the same source of origin. The fear that the consumer may
mistake the products as to the source or origin, or that the
consumers seeking its products and services will be redirected or
diverted to [Citystate], is unfounded. The products or services
involved are not the ordinary everyday products that one can just
pick up in a supermarket or grocery stores (sic). These products
generally require sales representatives explaining to their
prospective customers the features of and entitlements thereto.
Availing the products and services involved follows certain
procedures that ordinarily and routinely gives the prospective
customers or clients opportunity to know exactly with whom they
are dealing with (sic). The procedures usually include the clients
filling-up and submitting a pro-forma application form and other
documentary requirements, which means that the person is
wel[l]informed and thus, cannot be misled into believing that the
product or service is that of [Citystate] when in fact it is different
from [Citigroup's].

The likelihood of confusion between two marks should be taken


from the viewpoint of the prospective buyer. In Emerald Garment
Manufacturing Corp. vs. Court of Appeals, et al., the Supreme
Court ruled that:
"Finally, in line with the foregoing discussions, more credit should
be given to the 'ordinary purchaser.' Cast in this particular
controversy, the ordinary purchaser is not the 'completely unwary
consumer' but is the 'ordinarily intelligent buyer' considering the
type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is better
suited to the present case. There, the 'ordinary purchaser' was
defined as one 'accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of
some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who
knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears
likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to
purchase." [14]

Citigroup filed a Motion for Reconsideration,  which the Court of


[15]

Appeals denied in its January 15, 2013 Resolution. [16]

Thus, Citigroup filed a Petition for Review  against Citystate


[17]

before this Court. After respondent filed its


Comment/Opposition  and petitioner filed its Reply,  respondent
[18] [19]

filed its Memorandum. [20]

Petitioner claims that the Court of Appeals erred in finding that


there was no confusing similarity between the trademark that
respondent applied for and petitioner's own trademarks.  It avers [21]

that Emerald Manufacturing Company v. Court of Appeals  is not [22]

applicable to this case.  Contrary to the Court of Appeals' finding,


[23]

the arc design is not an integral part of petitioner's "CITI" family


of marks.[24]

Petitioner asserts that when the dominancy test is applied to the


Court of Appeals' findings of fact, the necessary result is a finding
of confusing similarity.  It points out that the Court of Appeals
[25]

found that "CITY CASH" is the dominant feature of respondent's


applied trademark. However, because the word "CASH" was
disclaimed in respondent's trademark application, only "CITY"
may be considered the dominant part of the mark. "'CITY' ...
appears nearly identical to 'CITI'." [26]
Further, petitioner argues that the Court of Appeals did not
understand the services offered in relation to respondent's mark
when it said that the mark is to be applied only in relation to
respondent's ATMs and within the bank premises. It insists that in
actuality, the mark could be used outside the bank premises,
such as in radio, newspapers, and the internet, where there
would not necessarily be a "GOLDEN LION'S HEAD" symbol to
disambiguate the mark from any of petitioner's marks. It argues
that the Court of Appeals should have appreciated the difference
between basic financial services on one hand, which include ATM
services, and sophisticated financial services on the other hand. It
avers that customers do not select ATM services after cautious
evaluation, and that ATM services are marketed to ordinary
consumers. Thus, petitioner claims that the Court of Appeals
erred when it concluded that customers are intelligent
purchasers, and failed to consider ordinary purchasers who have
not yet used the financial services of petitioner and respondent. [27]

It further holds that it is not claiming a monopoly of all marks


prefixed by words sounding like "city." It stresses that it opposes
only marks which are registered under class 36 used in products
directly related and in competition with its "CITI" family of marks,
sold under the same business channels, and sold to the same
group of consumers. [28]

Respondent argues that its mark is not confusingly similar to


petitioner's  and that petitioner's fears are purely speculative.  It
[29] [30]

claims that the phonetic similarity between "CITY" and "CITI" is


not sufficient to deny its registration, asserting that this Court has
ruled that idem sonans alone is insufficient basis for a
determination of the existence of confusing similarity. As for
petitioner's arguments on possible confusion due to advertising,
respondent states that advertisement aims to inform the public of
a certain entity's product and that not mentioning a supplier's
trade name in its advertisement defeats the purpose of
advertisement. It disputes petitioner's claims on ATM services
and the kind of caution exercised prior to obtaining an ATM card,
asserting that before customers may avail of ATM services, they
have to open an account with the bank offering them. [31]

This Court denies the Petition.

The sole issue for this Court's resolution is whether or not the
Court of Appeals committed an error of law in finding that there
exists no confusing similarity between petitioner Citigroup, Inc.'s
and respondent Citystate Savings Bank, Inc.'s marks.

In La Chemise Lacoste, S.A. v. Fernandez,  this Court explained


[32]

why trademarks are protected in the market:


The purpose of the law protecting a trademark cannot be
overemphasized. They are to point out distinctly the origin or
ownership of the article to which it is affixed, to secure to him,
who has been instrumental in bringing into market a superior
article of merchandise, the fruit of his industry and skill, and to
prevent fraud and imposition (Etepha v. Director of Patents, 16
SCRA 495).

The legislature has enacted laws to regulate the use of


trademarks and provide for the protection thereof. Modem trade
and commerce demands that depredations on legitimate trade
marks of non-nationals including those who have not shown prior
registration thereof should not be countenanced. The law against
such depredations is not only for the protection of the owner of
the trademark but also, and more importantly, for the protection
of purchasers from confusion, mistake, or deception as to the
goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA
1; General Garments Corporation v. Director of Patents, 41 SCRA
50).

The law on trademarks and tradenames is based on the principle


of business integrity and common justice. This law, both in letter
and spirit, is laid upon the premise that, while it encourages fair
trade in every way and aims to foster, and not to hamper,
competition, no one, especially a trader, is justified in damaging
or jeopardizing another's business by fraud, deceit, trickery or
unfair methods of any sort. This necessarily precludes the trading
by one dealer upon the good name and reputation built up by
another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338). [33]

In Mirpuri v. Court of Appeals,  this Court traced the historical


[34]

development of trademark law:


A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or
any combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others." This definition has
been simplified in R.A. No. 8293, the Intellectual Property Code of
the Philippines, which defines a "trademark" as "any visible sign
capable of distinguishing goods." In Philippine jurisprudence, the
function of a trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to secure to him,
who has been instrumental in bringing into the market a superior
article of merchandise, the fruit of his industry and skill; to assure
the public that they are procuring the genuine article; to prevent
fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his
product.

Modern authorities on trademark law view trademarks as


performing three distinct functions: ( 1) they indicate origin or
ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of
quality; and (3) they advertise the articles they symbolize.

Symbols have been used to identify the ownership or origin of


articles for several centuries. As early as 5,000 B.C., markings on
pottery have been found by archaeologists. Cave drawings in
southwestern Europe show bison with symbols on their flanks.
Archaeological discoveries of ancient Greek and Roman
inscriptions on sculptural works, paintings, vases, precious
stones, glassworks, bricks, etc. reveal some features which are
thought to be marks or symbols. These marks were affixed by the
creator or maker of the article, or by public authorities as
indicators for the payment of tax, for disclosing state monopoly,
or devices for the settlement of accounts between an
entrepreneur and his workmen.

In the Middle Ages, the use of many kinds of marks on a variety


of goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were
the baker's mark on bread, bottlemaker's marks, smith's marks,
tanner's marks, watermarks on paper, etc. Every guild had its
own mark and every master belonging to it had a special mark of
his own. The marks were not trademarks but police marks
compulsorily imposed by the sovereign to let the public know that
the goods were not "foreign" goods smuggled into an area where
the guild had a monopoly, as well as to aid in tracing defective
work or poor craftsmanship to the artisan. For a similar reason,
merchants also used merchants' marks. Merchants dealt in goods
acquired from many sources and the marks enabled them to
identify and reclaim their goods upon recovery after shipwreck or
piracy.

With constant use, the mark acquired popularity and became


voluntarily adopted. It was not intended to create or continue
monopoly but to give the customer an index or guarantee of
quality. It was in the late 18th century when the industrial
revolution gave rise to mass production and distribution of
consumer goods that the mark became an important
instrumentality of trade and commerce. By this time, trademarks
did not merely identify the goods; they also indicated the goods
to be of satisfactory quality, and thereby stimulated further
purchases by the consuming public. Eventually, they came to
symbolize the goodwill and business reputation of the owner of
the product and became a property right protected by law. The
common law developed the doctrine of trademarks and
tradenames "to prevent a person from palming off his goods as
another's, from getting another's business or injuring his
reputation by unfair means, and, from defrauding the public."
Subsequently, England and the United States enacted national
legislation on trademarks as part of the law regulating unfair
trade. It became the right of the trademark owner to exclude
others from the use of his mark, or of a confusingly similar mark
where confusion resulted in diversion of trade or financial injury.
At the same time, the trademark served as a warning against the
imitation or faking of products to prevent the imposition of fraud
upon the public.

Today, the trademark is not merely a symbol of origin and


goodwill; it is often the most effective agent for the actual
creation and protection of goodwill. It imprints upon the public
mind an anonymous and impersonal guaranty of satisfaction,
creating a desire for further satisfaction. In other words, the mark
actually sells the goods. The mark has become the "silent
salesman," the conduit through which direct contact between the
trademark owner and the consumer is assured. It has invaded
popular culture in ways never anticipated that it has become a
more convincing selling point than even the quality of the article
to which it refers. In the last half century, the unparalleled
growth of industry and the rapid development of communications
technology have enabled trademarks, tradenames and other
distinctive signs of a product to penetrate regions where the
owner does not actually manufacture or sell the product itself.
Goodwill is no longer confined to the territory of actual market
penetration; it extends to zones where the marked article has
been fixed in the public mind through advertising. Whether in the
print, broadcast or electronic communications medium,
particularly on the Internet, advertising has paved the way for
growth and expansion of the product by creating and earning a
reputation that crosses over borders, virtually turning the whole
world into one vast marketplace.  (Citations omitted)
[35]

There is also an underlying economic justification for the


protection of trademarks: an effective trademark system helps
bridge the information gap between producers and consumers,
and thus, lowers the costs incurred by consumers in searching for
and deciding what products to purchase. As summarized in a
report of the World Intellectual Property Organization:
Economic research has shown that brands play an important role
in bridging so-called asymmetries of information between
producers and consumers. In many modem markets, product
offerings differ across a wide range of quality characteristics.
Consumers, in turn, cannot always discern these characteristics
at the moment of purchase; they spend time and money
researching different offerings before deciding which product to
buy. Brand reputation helps consumers to reduce these search
costs. It enables them to draw on their past experience and other
information about products - such as advertisements and third
party consumer reviews. However, the reputation mechanism
only works if consumers are confident that they will purchase
what they intend to purchase. The trademark system provides
the legal framework underpinning this confidence. It does so by
granting exclusive rights to names, signs and other identifiers in
commerce. In addition, by employing trademarks, producers and
sellers create concise identifiers for specific goods and services,
thereby improving communication about those goods and
services.
[36]

Recognizing the significance, and to further the effectivity of our


trademark system,  our legislators proscribed the registration of
[37]

marks under certain circumstances:


Section 123. Registrability. - 123.1. A mark cannot be registered
if it:

(a) Consists of immoral, deceptive or scandalous matter, or


matter which may disparage or falsely suggest a connection with
persons, living or dead, institutions, beliefs, or national symbols,
or bring them into contempt or disrepute;

(b) Consists of the flag or coat of arms or other insignia of the


Philippines or any of its political subdivisions, or of any foreign
nation, or any simulation thereof;

(c) Consists of a name, portrait or signature identifying a


particular living individual except by his written consent, or the
name, signature, or portrait of a deceased President of the
Philippines, during the life of his widow, if any, except by written
consent of the widow;
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in
respect of:
(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive


or cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes a
translation of a mark which is considered by the competent
authority of the Philippines to be well-known internationally and
in the Philippines, whether or not it is registered here, as being
already the mark of a person other than the applicant for
registration, and used for identical or similar goods or
services: Provided, That in determining whether a mark is well
known, account shall be taken of the knowledge of the relevant
sector of the public, rather than of the public at large, including
knowledge in the Philippines which has been obtained as a result
of the promotion of the mark;

(f) Is identical with, or confusingly similar to, or constitutes a


translation of a mark considered well-known in accordance with
the preceding paragraph, which is registered in the Philippines
with respect to goods or services which are not similar to those
with respect to which registration is applied for: Provided, That
use of the mark in relation to those goods or services would
indicate a connection between those goods or services, and the
owner of the registered mark: Provided, further, That the
interests of the owner of the registered mark are likely to be
damaged by such use;

(g) Is likely to mislead the public, particularly as to the nature,


quality, characteristics or geographical origin of the goods or
services;

(h) Consists exclusively of signs that are generic for the goods or
services that they seek to identify;
(i) Consists exclusively of signs or of indications that have
become customary or usual to designate the goods or services in
everyday language or in bona fide and established trade practice;

(j) Consists exclusively of signs or of indications that may serve


in trade to designate the kind, quality, quantity, intended
purpose, value, geographical origin, time or production of the
goods or rendering of the services, or other characteristics of the
goods or services;

(k) Consists of shapes that may be necessitated by technical


factors or by the nature of the goods themselves or factors that
affect their intrinsic value;

(l) Consists of color alone, unless defined by a given form; or

(m) Is contrary to public order or morality.


Based on this proscription, petitioner insists that respondent's
mark cannot be registered because it is confusingly similar to its
own set of marks. Thus, granting the petition rests solely on the
question of likelihood of confusion between petitioner's and
respondent's respective marks.

There is no objective test for determining whether the confusion


is likely. Likelihood of confusion must be determined according to
the particular circumstances of each case.  To aid in determining
[38]

the similarity and likelihood of confusion between marks, our


jurisprudence has developed two (2) tests: the dominancy test
and the holistic test. This Court explained these tests in Coffee
Partners, Inc. v. San Francisco Coffee & Roastery, Inc. :
[39]

The dominancy test focuses on the similarity of the prevalent


features of the competing trademarks that might cause confusion
and deception, thus constituting infringement. If the competing
trademark contains the main, essential, and dominant features of
another, and confusion or deception is likely to result,
infringement occurs. Exact duplication or imitation is not
required. The question is whether the use of the marks involved
is likely to cause confusion or mistake in the mind of the public or
to deceive consumers.

In contrast, the holistic test entails a consideration of the entirety


of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity. The discerning eye
of the observer must focus not only on the predominant words
but also on the other features appearing on both marks in order
that the observer may draw his conclusion whether one is
confusingly similar to the other.  (Citations omitted)
[40]

With these guidelines in mind, this Court considered "the main,


essential, and dominant features" of the marks in this case, as
well as the contexts in which the marks are to be used. This
Court finds that the use of the "CITY CASH WITH GOLDEN LION'S
HEAD" mark will not result in the likelihood of confusion in the
minds of customers.

A visual comparison of the marks reveals no likelihood of


confusion.

Respondent's mark is:

(See image)

This Court agrees with the observation of Director General


Cristobal that the most noticeable part of this mark is the golden
lion's head device,  and finds that after noticing the image of the
[41]

lion's head, the words "CITY" and "CASH" are equally prominent.

On the other hand, petitioner's marks, as noted by the Court of


Appeals, often include the red arc device:

(See image)

Petitioner's other registered marks which do not contain the red


arc device include the following:

(See image)
Examining these marks, this Court finds that petitioner's marks
can best be described as consisting of the prefix "CITI" added to
other words.

Applying the dominancy test, this Court sees that the prevalent
feature of respondent's mark, the golden lion's head device, is
not present at all in any of petitioner's marks. The only similar
feature between respondent's mark and petitioner's collection of
marks is the word "CITY" in the former, and the "CITI" prefix
found in the latter. This Court agrees with the findings of the
Court of Appeals that this similarity alone is not enough to create
a likelihood of confusion.
The dis[s]imilarities between the two marks are noticeable and
substantial. Respondent's mark, "CITY CASH WITH GOLDEN
LION'S HEAD", has an insignia of a golden lion's head at the left
side of the words "CITY CASH", while petitioner's "CITI" mark
usually has an arc between the two I's. A further scrutiny of the
other "CITI" marks of petitioner would show that their font type,
font size, and color schemes of the said "CITI" marks vary for
each product or service. Most of the time, petitioner's "CITI"
mark is joined with another term to form a single word, with each
product or service having different font types and color schemes.
On the contrary, the trademark of respondent consists of the
words "CITY CASH", with a golden lion's head emblem on the left
side. It is, therefore, improbable that the public would
immediately and naturally conclude that respondent's "CITY CASH
WITH GOLDEN LION'S HEAD" is but another variation under
petitioner's "CITI" marks.

Verily, the variations in the appearance of the "CITI" marks by


petitioner, when conjoined with other words, would dissolve the
alleged similarity between them and the trademark of
respondent. These dissimilarities, and the insignia of a golden
lion's head before the words "CITY CASH" in the mark of the
respondent would sufficiently acquaint and apprise the public that
respondent's trademark "CITY CASH WITH GOLDEN LION'S
HEAD" is not connected with the "CITI" marks of petitioner. [42]
This Court also agrees with the Court of Appeals that the context
where respondent's mark is to be used, namely, for its ATM
services, which could only be secured at respondent's premises
and not in an open market of ATM services, further diminishes
the possibility of confusion on the part of prospective customers.
Thus, this Court quotes with approval the Court of Appeals, which
made reference to Emerald Manufacturing:
Moreover, more credit should be given to the "ordinary
purchaser." Cast in this particular controversy, the ordinary
purchaser is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product
involved. It bears to emphasize that the mark "CITY CASH WITH
GOLDEN LION'S HEAD" is a mark of respondent for its ATM
services which it offers to the public. It cannot be gainsaid that
an ATM service is not an ordinary product which could be
obtained at any store without the public noticing its association
with the banking institution that provides said service. Naturally,
the customer must first open an account with a bank before it
could avail of its ATM service. Moreover, the name of the banking
institution is written and posted either inside or outside the ATM
booth, not to mention the fact that the name of the bank that
operates the ATM is constantly flashed at the screen of the ATM
itself. With this, the public would accordingly be apprised that
respondent's "CITY CASH" is an ATM service of the respondent
bank, and not of the petitioner's.
[43]

Petitioner argues that Emerald Manufacturing is distinguishable


from this case, insisting that ATM services are more akin to
ordinary household items than they are akin to brand name
jeans, in terms of how their customers choose their providers:
73. The Emerald Manufacturing case involved the marks "Lee"
and "Stylistic Mr. Lee", and the Supreme Court focused on the
nature of the products as "not the ordinary household items",
pointing to the fact that, "the average Filipino consumer generally
buys his jeans by brand. He does not ask the sales clerk for his
generic jeans but for, say a Levis, Guess, Wrangler or even an
Armani."
74. In contrast, when an ordinary consumer of ATM services
wishes to withdraw cash, more often than not he will simply
locate the nearest ATM, without reference to brand as long as the
ATM accepts his card. When dealing with banks that belong to an
ATM network such as Bancnet, which both parties do, the cards
are almost universally and interchangeably accepted. [44]

This scenario is unclear, and thus, unconvincing and insufficient


to support a finding of error on the part of the Court of Appeals.
Petitioner hypothesizes that there could be some confusion
because ATM users "simply locate the nearest ATM, without
reference to brand as long as the ATM accepts [their]
card."  This Court is at a loss to see how this supports
[45]

petitioner's claims that ATM users locate the nearest ATMs and
use them without reference to brand as long as the ATM accepts
their cards. If petitioner's speculation is true, then bank branding
is wholly irrelevant after the ATM service has been secured. This
Court is hard pressed to accept this assumption. In any case, this
Court simply cannot agree that a bank or ATM service is more
akin to ordinary household items than it is to brand name Jeans.

More relevant than the scenario discussed by petitioner is the


stage when a bank is trying to attract customers to avail of its
services. Petitioner points out that in advertisements, such as in
radio, newspapers, and the internet, which are shown beyond the
bank premises, there may be no golden lion's head device to
disambiguate "CITY CASH" from any of petitioner's own marks
and services.  This Court finds this unconvincing. ATM services,
[46]

like other bank services, are generally not marketed as


independent products. Indeed, as pointed out by petitioner itself,
ATM cards accompany the basic deposit product in most banks.
 They are generally adjunct to the main deposit service provided
[47]

by a bank. Since ATM services must be secured and contracted


for at the offering bank's premises, any marketing campaign for
an ATM service must focus first and foremost on the offering
bank. Hence, any effective internet and newspaper advertisement
for respondent would include and emphasize the golden lion's
head device. Indeed, a radio advertisement would not have it. It
should not be forgotten, however, that a mark is a question of
visuals, by statutory definition.  Thus, the similarity between the
[48]

sounds of "CITI" and "CITY" in a radio advertisement alone


neither is sufficient for this Court to conclude that there is a
likelihood that a customer would be confused nor can operate to
bar respondent from registering its mark. This Court notes that
any confusion that may arise from using "CITY CASH" in a radio
advertisement would be the same confusion that might arise from
using respondent's own trade name. Aurally, respondent's very
trade name, which is not questioned, could be mistaken as
"CITISTATE SAVINGS BANK," and all of petitioner's fears of
possible confusion would be just as likely.

This Court agrees with Director General Cristobal's recognition of


respondent's history and of "Citystate" as part of its name.  Upon
[49]

consideration, it notes that it may have been more aligned with


the purpose of trademark protection for respondent to have
chosen the trademark "CITYSTATE CASH" instead of "CITY CASH"
to create a stronger association between its trade name and the
service provided. Nonetheless, there is no law requiring that
trademarks match the offeror's trade name precisely to be
registrable. The only relevant issue is the likelihood of confusion.

This Court also recognizes that there could be other situations


involving a combination of the word "city" and another word that
could result in confusion among customers. However, it is not
convinced that this is one of those situations.

Thus, having examined the particularities of this case, this Court


affirms the Court of Appeals' finding that Director General
Cristobal of the Intellectual Property Office did not commit any
grave abuse of discretion in allowing the registration of
respondent's trademark.

WHEREFORE, the petition is DENIED. The Court of Appeals


August 29, 2012 Decision and January 15, 2013 Resolution in CA-
G.R. SP No. 109679 are AFFIRMED.

SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,
JJ., concur.

THIRD DIVISION

[ G.R. No. 185484, June 27, 2018 ]


FRANCISCO I. CHAVEZ, PETITIONER, VS. IMELDA
R. MARCOS, RESPONDENT.DECISION

LEONEN, J.:

This Court will not require a judge to inhibit himself in the


absence of clear and convincing evidence to overcome the
presumption that he will dispense justice in accordance with law
and evidence.  This Court will also not allow itself to become an
[1]

instrument to paper over fatal errors done by the petitioner and


the prosecution in the lower court.

This is a Petition for Review on Certiorari,  assailing the Court of


[2]

Appeals February 28, 2008 Decision  and November 24, 2008


[3]

Resolution  in CA-G.R. SP No. 98799, dismissing Francisco I.


[4]

Chavez's (Chavez) Petition for Certiorari  and affirming the


[5]

Regional Trial Court order, which denied the prosecution's motion


for inhibition. [6]

This case involves 33 consolidated criminal cases, namely,


Criminal Case Nos. 91-101732-39, 91-101879-83, 91-101884-
92, and 92-101959-69,  filed against Imelda R. Marcos (Imelda),
[7]

among others, for violations of Section 4 of Central Bank Circular


No. 960,  in relation to Section 34 of Republic Act No. 265,  or
[8] [9]

the Central Bank Act. [10]


The Information in Criminal Case No. 91-101732 read, in part:
That from 1973 up to December 26, 1985, both dates inclusive,
and for sometime thereafter, the above-named accused, in
conspiracy with her late husband, then President Ferdinand E.
Marcos, while both residing in Malacanang Palace in the City of
Manila, Philippines, and within the jurisdiction of this Honorable
Court, did then and there wilfully, unlawfully and feloniously open
and maintain foreign exchange accounts abroad, particularly in
Banque de Paris et des Pays-Bas (also known as Banque Paribas)
in Geneva, Switzerland, later transferred to another bank known
as LOMBARD, ODIER ET CIE also in Geneva, in the names of
several establishments organized by their dummy or attorney-in-
fact identified as Stephane A. Cattaui, among which were
accounts 036-517 J, Establishment BULLSEYE; 037-973 R,
Establishment MABARI; 038-150 L, Establishment GLADIATOR:
038-489Z, Establishment VOLUBILIS, 32.529 X, INTERNATIONAL
INTELLIGENCE FUND; PRETORIEN created under the name
INTELLIGENCE; Establishment GARDENIA; Establishment
GLADIATOR; Establishment CESAR; Establishment ESG; account
numbers 23-0734H, 22-98SC, 23-285; 3652IN; and 073 043 P in
the name of accused who executed a power of attorney in favour
of her husband on September 29, 1980 giving the latter the
authority to do anything with respect to her accounts; which
accounts were reduced to five, namely; 036 517 J; 037-973 R;
038 150 L; 038 489 Z, and 036 521 N which were later on
transferred to LOMBARD, ODIER ET CIE for credit to the account
COGES 00777 per instruction on May 17, 1984 of the accused's
husband and attorney-in-fact to their dummy and duly appointed
administrator Stephane Cattaui who also transferred to said
Lombard Odier et Cie in order to continue managing for them
their hidden accounts, including the investment of $15-million in
Philippine issued dollar-denominated treasury notes which was
fully paid together with the interests on December 26, 1985 and
which payment was remitted to LOMBARD, ODIER ET CIE for the
credit of Account COGES 00777 of the accused and her late
husband, which act of maintaining said foreign exchange
accounts abroad was not pem1itted under the Central Bank
regulations.

CONTRARY TO LAW. [11]

The informations for Criminal Case Nos. 91-101733-39 read


similarly, except for the dates of the offense, the name/s of the
dummy/ies used, the amounts maintained in the foreign
exchange accounts, and the names of the foreign banks where
the accounts were allegedly held by the accused. [12]

The Information in Criminal Case No. 91-101888 read, in part:


That from September 1, 1983 up to 1987, both dates inclusive,
and for sometime thereafter, both accused, conspiring and
confederating with each other and with the late President
Ferdinand E. Marcos, all residents of Manila, Philippines, and
within the jurisdiction of this Honorable Court, did then and there
wilfully, unlawfully and feloniously fail to submit reports in the
prescribed form and/or register with the Foreign Exchange
Department of the Central Bank within 90 days from October 21,
1983 as required of them being residents habitually/customarily
earning, acquiring or receiving foreign exchange from whatever
source or from invisibles locally or from abroad, despite the fact
they actually earned interests regularly every six (6) months for
the first two years and then quarterly thereafter for their
investment of $50-million, later reduced to $25-million in
December 1985, in Philippine-issued dollar denominated treasury
notes with floating rates and in bearer form, in the name of Bank
Hofmann, AG, Zurich, Switzerland, for the benefit of Avertina
Foundation, their front organization established for economic
advancement purposes with secret foreign exchange account
Category (Rubric) C.A.R. No. 211 925-02 in Swiss Credit Bank
(also known as SKA) in Zurich, Switzerland, which earned,
acquired or received for the accused Imelda Romualdez Marcos
and her late husband an interest of $2,267,892 as of December
16, 1985 which was remitted to Bank Hofmann, AG, through
Citibank, New York, United States of America, for the credit of
said Avertina account on December 19, 1985, aside from the
redemption of $25 million (one-half of the original $50-M) as of
December 16, 1985 and outwardly remitted from the Philippines
in the amounts of $7,495,297.49 and $17,489,062.50 on
December 18, 1985 for further investment outside the Philippines
without first complying with the Central Bank
reporting/registering requirements.

CONTRARY TO LAW. [13]

The Information in Criminal Case No. 91-1 01879 read, in part:


That from September 21, 1983 up to December 26, 1985, both
dates inclusive, and for sometime thereafter, all accused,
conspiring and confederating with one another and with the late
President Ferdinand E. Marcos, all residing and/or doing business
in Manila, Philippines, and within the jurisdiction of this Honorable
Court, and assisted by their foreign agent or attorney-in-fact
Stephane G. Cattaui, did then and there wilfully, unlawfully and
feloniously fail to submit reports in the prescribed form and/or
register with the Foreign Exchange Department of the Central
Bank within 90 days from October 21, 1983 as required of them
being residents habitually/customarily earning,
acquiring/receiving foreign exchange from whatever source or
from invisibles locally or from abroad, despite the fact that they
actually earned interests regularly for their investment of
FIFTEEN MILLION ($15-million) DOLLARS, U.S. currency, in
Philippine-issued dollar-denominated treasury notes with floating
rates and in bearer form, in the name of Banque de Paris et des
Pays-Bas (also known as Banque Paribas) in Geneva, Switzerland
but which was transferred on May 17, 1984 to Lombard, Odier et
Cie, a bank also in Geneva, for the account of COGES 00777
being managed by Mr. Stephane Cattaui for the Marcoses who
also arranged the said investment of $15-million through
respondents Roberto S. Benedicto and Hector T. Rivera by using
the Royal Traders Bank in Manila as the custodian of the said
dollar-denominated treasury notes, which earned, acquired or
received for the accused Imelda Romualdez Marcos and her late
husband an interest of $876,875.00 as of June 15, 1984 which
was remitted to Banque Paribas through Chemical Bank in New
York, United States of America, for the Credit of said Account
COGES 00777 of the Marcoses for further investment outside the
Philippines without first complying with the reporting/registering
requirements of the Central Bank.

CONTRARY TO LAW. [14]

The other charges in the other informations read substantially the


same, save for the dates of the offense, the name/s of the
dummy/ies used, the amounts maintained in the foreign
exchange accounts, and the names of the foreign banks where
the accounts were allegedly held by the accused.[15]

The prosecution's version of facts leading to the filing of the


informations was summarized as follows:
In September 1983, the Central Bank of the Philippines issued
dollar-denominated treasury notes (dollar t-notes for brevity) in
the total amount of $125-million, U.S. currency. $75-million of
these notes were purchased by three Swiss banks holding the
hidden wealth of then President Ferdinand E. Marcos and his wife
Imelda Romualdez Marcos (the Marcoses, for brevity). The
purchases were recorded in the Central Bank under the name of
the Marcoses' front man, then Ambassador Roberto S. Benedicto.

Of this $75-million, $50-million came from Bank Hofmann, $10-


million from the Swiss Bank Corporation (SBC), and $15-million
from Banque Paribas. The purchases by Bank Hofmann and SBC
were made through accounts owned by foundations called
Avertina, Maler I, and Maler II, which were owned by the
Marcoses, and which act of opening and maintaining foreign
exchange accounts abroad without CB authorization is a violation
of Sec. 4 of the CB's Foreign Exchange Restrictions as
consolidated in 1983 in CB Circular No. 960.

The purchase by Banque Paribas (later transferred to Lombard,


Odier et Cie) was arranged by the Marcoses' attorney-in-fact
Stephane Cattaui through Traders Royal Bank (TRB) which acted
as custodian of the securities. The contact person at TRB was
Hector T. Rivera, vice president of the bank's Trust Department.
Avertina's $50-million investment earned an interest of
$13,623,540.77 from 1983 to 1986; Maler I and Maler II's $10-
million investment earned $3,369,479.18 in interest from 1984 to
1987; and Banque Paribas/Lombard Odier et Cie's $15-million
investment earned $3,579,479.16 from 1984 to 1985.

Total interest earned by the Marcoses out of the dollar t-notes


amounted to $20,572,499.11 from 1984 to 1987. All of these
interest [illegible] department in violation of Sec. 10 of CB
Circular No. 960.

The transactions came to light only after the so-called EDSA


People Power Revolution in February 1986 when documents
relating to the Marcoses' Swiss bank accounts and dollar t-note
purchases were found in Malacanang Palace after the Marcos
family had fled.

The Malacanang documents revealed that the Marcoses


maintained a number of Swiss bank accounts, among them:

A. In Banque de Paris et des Pays-Bas (also known as Banque


Paribas) in Geneva, Switzerland, later transferred to another bank
known as LOMBARD, ODIER ET CIE also in Geneva, in the names
of several establishments organized by the Marcoses' attorney-in-
fact identified as Stephane A. Cattaui -
1. Account 036-517 J, Establishment BULLSEYE;
2. Account 037-973 R, Establishment MABARI;
3. Account 038-[illegible], Establishment GLADIATOR;
4. Account 038-489 Z, Establishment VOLUBILIS;
5. Account 32.529 X, INTERNATIONAL INTELLIGENCE FUND;
6. Account PRETORIEN created under the name
INTELLIGENCE;
7. Establishment GARDENIA;
8. Establishment GLADIATOR;
9. Establishment CESAR;
10. Establishment ESG;
11. Accounts 23-0734H, 22-98SC, 23-285; 3652IN; and 073
043 P in the name of Mrs. Marcos who executed a power of
attorney in favour of her husband on September 29, 1980
giving the latter the authority to do anything with respect to
her accounts, which accounts were reduced to five, namely;
036 517 J; 037-973 R; 038 150 L; 038 489 Z, and 036 521
N which were later on transferred to LOMBARD, ODIER ET
CIE for credit to the account COGES 00777;
B. In Swiss Credit Bank (also known as SKA) in Switzerland in the
names of foundations which were organized successively or one
after the other by the Marcoses' nominees, fronts, agents or duly
appointed administrators -
1. Charis Foundation which was succeeded by Azio Foundation
on June 11, 1971, renamed Verso Foundation on August 29,
1978, which was dissolved on June 25, 1981 and the funds
transferred to Fides Trust Company in Bank Hofmann, which
transferred the same to Vibur Foundation under the account
"Reference OSER" on September 10, 1981;
2. Trinidad Foundation, succeeded by Rayby Foundation on
June 22, 1973, which was dissolved on March 10, 1981 and
whose funds were transferred to Bank Hofmann in favor of
Fides Trust Company under account "Reference DIDO" which
organized Palmy Foundation;
3. Xandy Foundation, which was renamed Wintrop Foundation
on August 29, 1978, whose assets and/or funds were
transferred on May 10, 1981 to Fides Trust Company under
the account "Reference OMAL" in Bank Hofmann, which
effected the transfer of said assets and/or funds to Avertina
Foundation;
4. Charis Foundation, which was renamed Scolari Foundation
on December 13, 1974 and then renamed Valamo
Foundation on August 29, 1978, which was dissolved on
June 25, 1981 and its assets and/or funds transferred to
Fides Trust Company under the account "Reference OMAL"
in Bank Hofmann, which effected the transfer of said assets
and/or funds to Spinus Foundation which opened an account
with SKA on September 10, 1981, but which also transferred
the funds to Avertina Foundation;
C. In Swiss Bank Corporation (SBC) in Geneva, Switzerland:
Establishment, later transformed into Maler Foundation, which
was organized by the Marcoses' nominees, fronts, agents or duly
appointed administrators, among them Jean Louis Sunier -
1. Maler I;
2. Account No. 98929 NY under Maler II;
3. Rosalys Foundation, which was dissolved on December 19,
1985, and its assets and/or funds transferred to Aguamina
Corporation's (Panama) Account No. 53300 with SBC.
The newly-installed government of President Corazon Aquino
represented by then Solicitor General Sedfrey Ordonez lost no
time in filing an application with the Swiss authorities for mutual
assistance in the matter of the Marcos dollar deposits in
Switzerland.

The request for assistance was eventually granted by Swiss


investigating magistrate Peter Cosenday. Cosenday issued a
freeze order on all the Swiss banks where the Marcoses and their
foundations had accounts, and he further required these banks
and the foundations to submit relevant documents and
information concerning the accounts.

The Marcoses and the foundations appealed Cosenday's decision.


The result of the appeals was that on December 21, 1990, the
Federal Supreme Court of Switzerland rendered twin decisions
sustaining the position of the Philippine government and giving it
a one-year deadline to file the appropriate cases against the
Marcoses and their cronies, otherwise the freeze order covering
the Marcos bank accounts in Switzerland would be lifted.

The Presidential Commission on Good Government (PCGG)


thereupon decided to request the Solicitor General (now Francisco
Chavez) to file the appropriate cases against the estate of the
late President Marcos, Mrs. Marcos, and other members of their
family based on documents already turned over and still to be
turned over by the Swiss authorities.[16]

During the trial, the prosecution presented only two (2)


witnesses. Its first witness was former Assistant Solicitor General
and Presidential Commission on Good Government Commissioner
Caesario Del Rosario (Del Rosario). He identified Swiss bank
documents and testified that they were personally received by
petitioner Chavez before they were referred to him for study,
evaluation, and determination of probative value. He also
identified several documents signed by the late President
Ferdinand Marcos and respondent Imelda. He averred that he
assisted in drafting the complaints connected to the recovery of
the Marcos' properties.[17]

As its second witness, the prosecution presented petitioner


Chavez. He was presented as an expert witness in the field of
law, and he corroborated Del Rosario's testimony. He testified on
the formation of the task force, of which Del Rosario was a
member and which prepared the criminal complaints against the
Marcoses and their cronies.  However, petitioner's presentation
[18]

as a witness was hampered by a series of scheduling issues,


which resulted in several postponements and absences. Chavez's
claim of bias was based largely on his perception of how Regional
Trial Court Presiding Judge Silvino T. Pampilo, Jr. (Judge Pampilo)
scheduled his testimony, combined with what transpired when he
failed to testify on April 24, 2007. Thus, the relevant facts from
the record shall be set forth in detail.

On the matter of scheduling, the Regional Trial issued its January


10, 2007 Order, requiring Chavez to appear in court on January
16, 17, 23, 24, 30, 31, and February 6, 7, 13, 14, 20, 21, 27,
and 28, 2007 to testify. This Order stated further that the
hearings were "intransferrable in character."  In his January 11,
[19]

2007 letter, Chavez advised the Regional Trial Court that his
entire calendar for January and the beginning of February 2007
were full, and requested later dates for his testimony, including
February 20, 21, 27, and 28.  The Regional Trial Court
[20]

reconsidered its January 10, 2007 Order and reset Chavez's


examination to February 21, 27, and 28, again with the warning
that these trial dates were not transferable.  On March 6, 2007,
[21]

a day that was set for the continuation of the direct examination
of Chavez, the prosecution moved that the March 6 and 7
hearings be moved on the ground that Chavez was unavailable,
for he would be attending to his detained clients in Camp
Capinpin, Tanay, Riza1.  The Regional Trial Court granted this as
[22]

well with the following warning:


[I]f the former Solicitor General failed to testify on the next
scheduled hearing, all his testimonies will be stricken off the
record and the prosecution be directed to formally offer its
exhibits.
[23]

On March 20, 2007, Prosecutor George H. Yarte, Jr. (Prosecutor


Yarte) filed a Motion to Cancel Hearing of April 11, 2007, on the
ground that he would be attending the National Prosecutors
League of the Philippines' Annual Convention in Boracay Island
from April 11 to 13. Thereafter, in a letter dated March 21, 2007,
Chavez asked to be excused from attending the April 10, 2007
hearing due to an intransferrable Court Martial setting in Camp
Capinpin, Tanay, Rizal,  but advised the Regional Trial Court that
[24]

he would be available to testify on the April 11 and 24, 2007


hearings.  Judge Pampilo denied Chavez's request in a letter
[25]

dated March 22, 2007 and the prosecution's Motion to Cancel the
April 11, 2007 hearing.  Thereafter, Chavez pleaded that Judge
[26]

Pampilo reconsider the denial and made a commitment that he


would no longer request for further postponements. [27]

Thus, Chavez did not attend the April 10, 2007 hearing. He
attended the succeeding hearing on April 11, 2007. However, he
was unable to testify as the documents he was supposed to
identify were with Prosecutor Yarte, who was attending the
prosecutors' annual convention in Boracay.[28]

Subsequently, Chavez was scheduled to continue his direct


testimony on April 24, 2007. However, the prosecution filed a
Motion to Inhibit,  seeking Judge Pampilo's inhibition, and set it
[29]

to be heard on April 24, 2007.  Reacting to the Motion to Inhibit,


[30]

Chavez explained in a letter dated April 23, 2007  that he would


[31]

not appear in court on April 24, 2007:


I would have decided to go to court to continue my direct
testimony on April 24, 2007 at 1:00 p.m. were it not for the
receipt of this motion to inhibit.
As a witness, I cannot presume that the motion to inhibit, which
is set for hearing also on April 24, 2007 at 2:00 p.m., will be
outrightly denied by this Honorable Court who would then direct
the prosecution to continue with the presentation of its evidence.
In line with due process, I proceed along the assumption that at
the hearing of the motion to inhibit, Your Honor will give the
accused an opportunity to submit their comment thereon, thus
necessarily resulting in the cancellation of the April 24, 2007
setting. I say that the cancellation of the April 24, 2007 setting
follows as a necessary consequence of the motion to inhibit
because such motion raises a question of first priority which
must be first resolved by Your Honor before further proceedings
are undertaken.

....

In view of the foregoing considerations, I most respectfully


submit that my presence at the April 24, 2007 setting would no
longer be necessary. I hasten to reaffirm my commitment to
continue my direct testimony once the issue of Your Honor's
inhibition shall have been resolved with finality.  (Emphasis in
[32]

the original)
Thus, Chavez did not attend the hearing on April 24, 2007 despite
being scheduled for direct examination.[33]

Atty. Napoleon Uy Galit (Atty. Galit), a lawyer from the


Presidential Commission on Good Government, appeared before
the court with a memorandum from then Secretary of Justice
Raul Gonzales, authorizing him to prosecute the consolidated
cases. As Chavez took issue with Atty. Galit's appearance, this
Court shall quote extensively from the transcript of stenographic
notes of the trial on April 24, 2007:
Atty. Galit:

Good afternoon, your Honor, Attorney Napoleon Uy Galit for the


PCGG. Your Honor, just a brief manifestation before the start of
the proceedings. A while ago your Honor, before this Honorable
Court convened the proceedings, I showed this memorandum to
Prosecutor Yarte dated April 17, 2007 signed by Honorable
Secretary Raul Gonzales which your Honor the wordings is quite,
probably this letter will state for itself, your Honor, and I am
showing this to Prosecutor Yarte and for an eventual filing into
the records of this Honorable Court. This Memorandum simply
designates this humble representation authorizing, your Honor, to
prosecute this case even in the presence or without the presence
of any public prosecutor.

Court:

So even without Prosecutor Yarte, you can proceed with the


presentation of that memorandum with or without the prosecutor.
What can you say prosecutor?

Pros. Yarte:

Well your Honor, I still have to check with the office. As of now, I
cannot confirm or deny the truthfulness or the authenticity of this
memorandum.

Court:

You mean to say you are not familiar with the signature of your
boss?

Pros. Yarte:

I am familiar with the signature of my boss, your Honor, but


since this appears to be a xeroxed copy, I cannot yet confirm or
deny. In any case your Honor, this representation will not
contradict the wishes of my boss. I will accept the contents of this
memorandum your Honor after the manifestation of Atty. Galit.

Court:

Proceed Atty. Galit because I will no longer allow Atty. Yarte to


speak for and behalf of the DOJ as well as the PCGG.
Pros. Yarte:

If your Honor please (interrupted)

Court:

Go ahead Atty. Galit.

Atty. Galit:

If your Honor, into the records, I am submitting this April 17,


2007 Memorandum.

Court:

Yes, place it on the record and that you are from DOJ then
understood . . .

Atty. Galit:

Without prejudice to the authority given to this humble


representation, may I be allowed your Honor that prosecutor
Yarte be given the courtesy to speak.

Court:

Go ahead, Atty. Yarte. Pros. Yarte: Your Honor please, we have a


pending Motion to Inhibit and I think it is a matter of
preferential . . . that this Motion to Inhibit be first ruled upon by
this Honorable Court. Court: It's ok with me, I can rule it today.
Considering that there is already an opposition and/or summary
filed by (interrupted)

Pros. Yarte:

Your Honor please, I haven't received a copy of that opposition.


 
Court:

Can you furnish him a copy of that today?

Atty. Sison:

Yes, your Honor.

Pros. Yarte:

Your Honor please again, I would like that my copy be formally


served with the office as an official receipt. In the first place your
Honor, this is not a receiving clerk of the office and I suggest that
I receive it officially, your Honor.

Court:

There is a proof of service that it was sent in your office.


 
Pros. Yarte:

Yes, your Honor, I still have to receive it in the office.


 
Court:

What is your comment Atty. Galit being the lead prosecutor?

Atty. Galit:

Your Honor, I have so much respect to the distinguished public


prosecutor but it is of judicial notice that furnishing a copy is not
limited to furnishing the copy that the office of any particular
counsel. As a matter of fact, that can be very well made at this
moment in time if the defense counsel your Honor, has an extra
copy, I suggest that he give it to Prosecutor Yarte, your Honor.

Pros. Yarte:
I vehemently object to that, in the first place your Honor, I
manifested a while ago that I still have to check on the
authenticity of the memorandum your Honor but it seems that
this Honorable Court has egged Atty. Gal it to proceed and take
over my function as the public prosecutor your Honor. I haven't
seen or checked with the office whether or not Atty. Galit was
sent a copy of this (interrupted)

Court:

Okay, we will have a 10 minutes recess we will call the office of


the Secretary. I will ask my clerk of court to call the office of the
Secretary to confirm.

(Recess for 10 minutes)

-session resumed-

Clerk of Court:

Your Honor, I have called already the Office of the Secretary and
she said that this Memorandum is authentic, your Honor.

Pros. Yarte:

Okay, your Honor. [34]

Having resolved the issue of the authenticity of the Memorandum


authorizing Atty. Galit to prosecute the case, the Regional Trial
Court proceeded to resolve the other pending incidents:
Court:

There are two (2) pending incidents, one is the oral motion citing
for contempt and the other one is a Motion to Inhibit the
Honorable Judge as well as the opposition. You can now argue.

Pros. Yarte:
Yes, your Honor, with respect to the first I have filed an
explanation yesterday and I have confirmed with the Clerk of
Court if they received the copy of the explanation.

Court:

Do you want to counter argue the explanation? Did you give him
a copy of that explanation?

Pros. Yarte:

I sent a copy through registry receipt, your Honor, and if he


would like your Honor I can give him a copy of the explanation. I
have a copy, I have it photocopied.

Atty. Sison:

I don't need, your Honor. I will just submit, your Honor.

Court:

Okay, second incident is the Motion to Excuse (interrupted)

Pros. Yarte:

Your Honor please, as stated by the counsel for the accused, he


has filed an opposition or comment to the Motion and this
representation would humbly request only for a period within
which to reply on it and then it will be up to the counsel for the
accused whether or not he will Answer to that Reply and we can
submit it for resolution. That is my request, your Honor.

Court:

He is already authorized because there is already a


Memorandum.
 
Atty. Galit:
May I say something, your Honor.

Court:

You are no longer authorized by the DOJ to represent.

Pros. Yarte:

With the kind permission of Atty. Galit, your Honor.

Atty. Galit:

Your Honor, may we hear your Honor that position of the


(interrupted)

Atty. Sison:

Your Honor, I understand today we have another incident. We


have a hearing set today based on the previous order by the
Honorable Court for the presentation of the last witness. This is
supposed to be the continuation of his direct testimony your
Honor and I recall the Order of April 11 that today's hearing is
intransferrable and that was said in the presence of the
distinguished witness your Honor, the former Solicitor General
Frank Chavez.

Court:

Yes, I received a copy of the letter coming from the witness. You
want to read it?

Atty. Sison:

Your Honor, as I gathered from the record that there was no


Motion to Reset the hearing set today so I don't think the Court
should be bound by the letter of a witness because this is merely
a request but the Order dated April 11 was very clear and
intransferrable and that in the event the prosecution failed to
present the said witness in today's hearing, your Honor, the
direct testimony of the said witness be stricken off the record.
Now, in so far as the second incident which is a Motion to Inhibit
this Honorable Court, I also gathered from the Motion that it was
set for hearing today in order to allow the parties, the prosecution
especially to err out or to further elaborate the allegations or
averment in the said motion your Honor. This representation
received only yesterday a copy of the said Motion and in this we
managed to prepare an opposition and filed it early this morning
your Honor. And in view of that, we are submitting that Motion to
Inhibit together with our opposition thereto to the sound
discretion of the Honorable Court.

Court:

How about you from the PCGG?

Atty. Galit:

Your Honor, I . . . to Prosecutor Yarte that he confirm the


authority designation of this humble representation as authorized
by the Honorable Justice Secretary. Now on the first incident with
regards to the Motion to cite for indirect contempt the good
prosecutor Honorable Prosecutor George H. Yarte, your Honor,
my proposition is this, your Honor. I do believe that oral Motion
of defense counsel Atty. Roberto Sison may be procedural. The
said Motion your Honor, by the express provision of Rule 71
should be filed separately and be properly . . . Indirect contempt
proceedings should be filed in [a] separate petition and I have
come to the rescue, your Honor, of good prosecutor Yarte in so
far concerned. Now on the second incident of the Inhibition, the
Motion for Inhibition is part of the proceedings, part of the
prosecution of this particular case and this representation having
been so authorized by the Justice Secretary, your Honor, I
humbly submit that the same should also be addressed under my
control and supervision. Earlier, giving courtesy to Prosecutor
Yarte, I requested this Honorable Court that he be allowed to be
heard in so far as his position but that suggestion is without
prejudice to this humble representation whatever position I may
have. Your Honor, in fairness to this Honorable Court, I may not
take the stand . . . by the public prosecutor considering the fact
that I have read in this Motion the grounds cited thereon . . .
Nonetheless your Honor considering the fact that the defense
counsel had already filed its opposition, it is this Honorable
Court's call now to resolve the same without any further
proceedings. And so as your Honor, not to be accused any further
of delaying this case, it has been the position of the defense
counsel, it is my humble submission that the subject motion for
Inhibition be now resolved.

Atty. Sison:

This is something on the issue of citing in contempt of Court. I


recall during the previous hearing, your Honor, that I just asked
the Court that Prosecutor Yarte be asked to explain why he was
absent and it was the witness your Honor who suggested that it
was contempt and he asked me if it was direct or indirect and I
answered him that it was direct contempt and he said it is wrong.
There should be a proper procedure which has to be followed. You
are referring to an indirect contempt that is what he said, your
Honor and believing and thinking that he was correct although
now I realized it is wrong your Honor. I mentioned also indirect
contempt but I wasn't . . . that the public prosecutor be cited
indirect contempt. I did not say that, your Honor.

....

Pros. Yarte:

In my case your Honor, I have filed my explanation and I think


the matter can now be resolved in respect to the manifestation of
Atty. Galit, your Honor. In the terms of Atty. Galit, your Honor,
we would like the matter of Motion to Inhibit be resolved with or
without the earlier request of this representation that it be given
a period within which to reply, your Honor. Again, your Honor,
since the Motion to Inhibit was a product and a toil of this
representation, your Honor, and was actually based on his
personal observations, may I still request that I still be given a
period within which to react on the opposition, your Honor, filed
by the defense counsel.

Court:

If you want, you can argue now because according to the lead
prosecutor now, Atty. Galit, he moves that the two (2) incidents
be submitted for resolution today.

Atty. Sison:

We are willing to argue in open court.

Pros. Yarte:

Your Honor, I cannot argue on it because I haven't read the copy


of the opposition.

Atty. Sison:

I can make an oral manifestation, your Honor.

Pros. Yarte:

And besides, your Honor, I think it is wiser for me to read it and


think it over rather than just stand here and argue based on what
I will hear, your Honor.

Court:

You ask the authorized prosecutor.

....

Atty. Galit:
Your Honor, in the continuation of my statement regarding the
incident of the Motion for Inhibition, my position is clear on that
matter . . . as the designated lead prosecutor in this case, your
Honor, it is my proposition that the subject incident be considered
submitted for resolution your Honor because the very ground are
very simple. The defense counsel was already heard. On the third
incident and this is the very important one because probably the
Department of Justice is alarmed by the barrage of accusations
coming from the defense counsel that this case has been delaying
for several years and it is part of the records, your Honor. As a
matter of fact, this humble representation brought a letter to
Judge del Rosario suggesting that we should always be prepared
with all the exhibits or fees . . . that we lose this case by
technicality and I have written a letter to that duly filed with the
legal office, your Honor. Now this is now the pending incident
where the Solicitor General Frank Chavez would have to continue
his testimony with regards to some other areas not yet testified
to. Now Atty. Chavez is not around. Likewise the records your
Honor are not brought by Public Prosecutor Yarte, your Honor.
So, that is now the dilemma of the Honorable Court. Now the
defense counsel is firm on its stand that the prosecution be
deemed the right to have waived to complete the testimony of
Frank Chavez. To settle the issue, your Honor, in the presence of
Judge del Rosario your Honor who has been handling this case
and Prosecutor Yarte. There are several documents which the
object of the continuation of testimony of Solicitor General Frank
Chavez. I have been vocal enough challenging your Honor the
defense counsel to just admit the existence of these documents.
If he has the nerved to show and admit the same, probably your
Honor there is no reason, your Honor, why we cannot proceed
with the formal offer of documentary exhibits and I challenge
this, your Honor, in this appropriate proceedings to the defense
counsel.  (Grammatical errors in the original)
[35]

Thereafter, the exchange which led to the termination of


presentation of evidence for the prosecution commenced, thus:
Atty. Sison:
May I know what these documents are because if I recall it right,
as early as late last year your Honor the said witness would be
presented for the purpose of identifying only three (3) documents
which are the . . . Affidavit and the newspaper clipping which
mentioned his name your Honor. It was an article about him. So I
cannot understand why this representation is being asked again
to admit on the truthfulness or existence for several documents
that agreed upon to be marked and identified in the course of the
direct examination of said witness.

Atty. Galit:

Judge del Rosario is present your Honor, and with that


memorandum he is still designated subject to his physical
condition and even in the presence of Public Prosecutor Yarte.
The defense counsel is talking of three (3) documents: The two
(2) affidavits of Solicitor General Frank Chavez and the subject
newspaper clipping. Now if that would be the case, would the
defense counsel stipulate the said two (2) affidavits and the
newspaper clippings your Honor has existent and the contents of
the two (2) affidavits to form part your Honor of the testimony of
Solicitor General Frank Chavez.

Court:

Yes, what can you say Attorney?

Atty. Sison:

Your Honor, I think this representation was very clear on that


matter if only to dispense with the presence of that witness, we
already agreed as early as before last December to the existence
of the documents, your Honor and however, unfortunately for this
representation, the prosecution insisted in presenting the witness
despite the admission that we already made in so far as the
existence of these documents.

Court:
What are these two (2) documents?

Atty. Galit:

The two (2) affidavits, your Honor, Supplemental Affidavit and /


Supplement to the Supplement Affidavit. Three (3) Affidavits,
your Honor.

Court:

Another one?
 
Atty. Galit:

Newspaper clipping.

Court:

So three (3) Affidavits as well as the newspaper clipping?

Atty. Galit:

Yes, your Honor.

....

Atty. Galit:

If the defense counsel would like to stipulate, your Honor, first,


my request for stipulation is this. The existence of those
documents as I have mentioned. Second, your Honor, the
contents of this Affidavit should be considered as part and parcel
of the testimony already adduced before this Honorable Court by
the said witness Frank Chavez. If defense counsel would stipulate
on that.

Atty. Sison:
Yes, your Honor, but not on the truthfulness of the contents. Only
on the existence.

Court:

You will only stipulate on the existence of the three (3) affidavits
as well as the newspaper clipping?

Atty. Sison:

Two Affidavits, your Honor.

....

Pros. Yarte:

Three (3) affidavits with several annexes.

Atty. Galit:

The reason why I am doing this is I would like to emphasized


[sic] before this Honorable Court that it is only the defense who is
much willing to the early disposition of this case. Only the
prosecution is so circumstance your Honor that there is a need for
the continuance of the testimony of Solicitor General Frank
Chavez to further identify those documents. Now if he is not
willing, we are willing to proceed with the form[al] offer of
exhibits.  (Grammatical errors in the original)
[36]

At this point, the Regional Trial Court returned to the Issue of the
Motion for Inhibition:
Court:

There is a pending oral motion that based on the letter of former


Solicitor General Frank Chavez that he requested that he will not
attend for today's hearing because the Court first resolves the
Motion for Inhibition.
Atty. Sison:

Yes, your Honor, but I think the witness is too presumptuous that
the Motion will not be resolved today. May I say something your
Honor in so far as the Motion to Inhibit is concerned because this
representation would want to avert further delays in the
administration of this case. In lieu of the opposition that this
representation filed today, may I be allowed to just withdraw that
and make my opposition oral today to give counsel or the public
prosecutor to orally argue out also on what I have to say in so far
as the Motion to Inhibit is concerned.

Court:

You mean to say that you will withdraw your written opposition?

Atty. Sison:

Because the contention of the public prosecutor your Honor is


that they will be asking for ten (10) days from receipt of that and
there is no telling when they will receive that your Honor and
there is also no telling when Frank Chavez will be available again,
your Honor, and as shown by the records, he has been asking for
resetting not on a weekly basis but on a monthly, your Honor.

Court:

As prayed for, the written opposition is now withdrawn from the


records of this case. You can argue your opposition.

Atty. Sison:

Your Honor, we would like to oppose the Motion filed by the


prosecution as showing the records of this case as early as
November or December of 2006, the prosecution was already
ready to rest their case and on the last minute they made an
effort to defer the filing of the formal offer, your Honor, and
despite the objection of this representation, the prosecution was
granted the request and they were allowed to present their
witness Mr. Frank Chavez your Honor and during the course of
this hearing, it was agreed by the parties in open Court that the
said witness will only be asked to identify two (2) affidavits and a
newspaper clipping which he has done already your Honor. And in
succeeding hearings . . . over the objection of this representation
despite all these objections, the Motion to reset at the instance of
the prosecution was granted by this Honorable Court and it
should be noted also your Honor that the settings were suggested
by the witness. In other words, your Honor, they were done in
coordination with the schedule of the witness and in all these
instances, the prosecution was granted their request. Now in so
far as the allegation giving suspicion on the impartiality of the
Honorable Judge when it said that all hearings are intransferrable
in . . ., I think it is normal in any jurisdiction in the most courts
your Honor because if we will not have that, the case will not
come to an end, your Honor. Also your Honor, in so far as the
allegation here in this Motion that my client will be running based
on the newspaper clipping, your Honor, in the Manila Times dated
February 12, 2007, this representation your Honor, obtained from
the Commission on Elections a Certification that my client did not
file any Certificate of Candidacy for the coming elections, your
Honor. So . . . the suspicion of the prosecution that the Motion to
Inhibit should be granted because my client is running for public
in this jurisdiction, your Honor.

Court:

Okay, you want to argue the comment/opposition on the Motion


to Inhibit?

Pros. Yarte:

Your Honor, everything has been fully ventilated with that Motion.
If your Honor please, I have to fetch my daughter in Makati at
2:30 and it[']s now 2:30. May I be allowed to be excused, your
Honor. Atty. Galit is here, I have to go to Makati to fetch my
daughter. May I be allowed to be excused?
Atty. Galit:

It is alright.

Court:

So what is now the pleasure of the counsels present? You want


that the Motion now submitted for resolution?

Atty. Galit:

Submitted, your Honor.

Court:

Order. As prayed for by both parties and after consideration of


the written motion for inhibition as well as the oral
comment/opposition thereto, this Court resolves to deny the
same and considering that the Judge has not manifested any
partiality or exhibited bias in favor of the accused. Wherefore, the
Motion for Inhibition is Denied. So likewise the manifestation and
explanation of prosecutor Yarte about the show cause order, this
Court is satisfied with the explanation of Prosecutor George Yarte.
So ordered.  (Grammatical errors in the original)
[37]

Having resolved the Motion for Inhibition, the Regional Trial Court
continued to the next incident and the issue of Chavez's absence:
Atty. Sison:

Your Honor, the incident today is supposed to be continuation of


direct examination of the witness for the prosecution and I don't
see him around your Honor, despite that he should be present for
today's hearing.

Court:
That is why I show you the letter coming from the former
Solicitor General the reason behind why he did not attend in
today's hearing.

Atty. Sison:

Yes your Honor, as I said also, the witness is too presumptuous


that the Motion to Inhibit will not be resolved immediately your
Honor so in view of that, we will move that the testimonial
evidence given by the said witness be stricken off the record . . .
of the Order of this Honorable Court dated April 11.

Atty. Galit:

Your Honor, it is too much on the part of the defense counsel to


move for the striking out of the testimony of the said witness. As
I have said, the issues are simple. The witness has already
testified and the witness is still very much willing to continue his
testimony. Your Honor, to continue testifying on those three (3)
affidavits with all those annexes, rather than strike the
testimonies of the witness from the records of this case which
would amount your Honor to issue of technicality not favor by
jurisprudential authorities, I would like to challenge the defense
counsel to allow us, your Honor, to have those testimonies stay
on the record and . . . on the contents of those three (3)
affidavits as well as those annexes at least as to the existence
your Honor and allow the prosecution to wind up your Honor their
evidence by filing the complete formal offer of exhibits. In that
way, your Honor, any technicality will be avoided.

Atty. Sison:

Your Honor, I said that if only to give teeth to the order of the
Honorable Court last April 11, in any event, your Honor, this
representation has maintained as early as five months ago that
he is willing to stipulate your Honor on the existence of the
affidavits of Atty. Chavez as well as the existence of the
newspaper clippings but not as to the truth and veracity thereof,
your Honor.

Atty. Galit:

Including annexes of those three (3) affidavits, I would like to call


the attention of this Honorable Court that Prosecutor Sulit is
around and now if the position of the defense counsel would be to
stipulate on the existence of these documents, then we will be
willing enough to wind up our presentation of evidence and
submit the formal offer of evidence . . .

Atty. Galit:

The pending Motion to strike out seems to have been


super[s]eded, your Honor, by the defense counsel himself when
he entered into stipulation regarding the existence of these
documents, your Honor, whom those annexes in the affidavit of
Frank Chavez and as a matter of act without waiving the
stipulations made by the defense counsel, the Sandigan
Prosecutor Wendell Barreras Sulit is showing your Honor to the
defense counsel the original of those documents.

Court:

Is that correct Atty. Sison that the testimony of former Solicitor


General Frank Chavez remains in the records considering the
existence of three (3) affidavits as well as the newspaper clipping
and the annexes?

Atty. Sison:

Yes, your Honor. Only as to the existence of these documents, it


is subject to our cross examination.

Atty. Galit:

So the affidavit dated October 6, 1999.


Court:

So the testimony of former Solicitor General Frank Chavez is now


deemed terminated, correct me if I'm wrong.

Atty. Galit:

Yes, your Honor.

Court:

You want to cross examine the Solicitor General?

Atty. Sison:

I will like to ask for one setting to cross examine him, your Honor
/ and that one said setting I will be presenting my first witness.

Court:

How about formal offer of exhibits?

Atty. Galit:

We will be formally offering our exhibits.

Court:

Is that correct, is it procedural Prosecutor Sulit that (interrupted)

Prosecutor Sulit:

At the same time you will cross examine?

Atty. Galit:

We will file our formal offer of exhibits ten (10) days from today.
Court:

But you will cross examine the witness Frank Chavez after the
cross examination, you will file your formal offer after the cross
examination.

Atty. Sison:

Your Honor, I will not cross examine anymore.

Court:

Okay[.] Order. Considering the manifestation of both counsels,


the testimony of the former Solicitor General Frank Chavez is now
deemed terminated and that the defense counsel manifested that
he is no longer cross examining the witness. So ordered.[38]

Thereafter, the formal offer of the prosecution was discussed:


Court:

....

Do you want to formally offer orally or in writing?

Atty. Galit:

I could not do that, your Honor.

Court:

How many days prosecutor?

Pros. Sulit:

Your Honor, I thought your Honor that I am here for the


comparison of the records and I brought with me the
authenticated and may I show to the Honorable Court for the
Honorable Court's appreciation of the originals of the annexes of
Solicitor General Frank Chavez' affidavit of October 9, 1999.

Court:

I will just delegate my clerk of court.

Pros. Sulit:

Yes, your Honor, but I would wish that the Honorable Judge
himself will go over a sample of the authenticated copies from our
consulate in Berne, Switzerland. These documents, your Honor,
were released to us by the District Magistrate of Zurich, Peter
Consandey, and the process is that: He had these documents
authenticated by their own judges and thereafter authenticated
by our own Consular [O]fficer Fe Pangilinan Klinger in Berne,
Switzerland. And afterwards, these documents were again sent to
the Solicitor General Frank Chavez who was then the Solicitor
General who initiated these complaints via diplomatic vouch, your
Honor, thru Ambassador Aschalon who was then our Ambassador
in Switzerland.

Court:

Okay, noted.

Pros. Sulit:

The marked of authentications are all there, your Honor.

Atty. Galit:

May we put on the records, your Honor, that the Honorable Court
was handed by Prosecutor Wendell, an original of the said
document.

Court:
Okay.

Pros. Sulit:

Your Honor, we have several of those documents all made


attachments to the affidavit of former Solicitor General Frank
Chavez which I believe he has testified already and identified in
the course of his direct testimony in your previous trial. We are
now in the process of comparing these documents your Honor, in
the presence of the defense counsel.

Court:

Can you make a manifestation whether or not faithful


reproduction of the original?

Pros. Sulit:

Yes, your Honor, we are now in exhibit "G".

Court:

So what is your manifestation Atty. Sison?

Atty. Sison:

Well in so far as exhibits "A-F" and submarkings are concerned,


your Honor, they appear to be faithful reproduction of the
documents identified by the witness.

....

Atty. Sison:

Exhibit "I" and "H" earlier identified by the witness are faithful
reproduction of the original kept by Prosecutor Sulit, however,
your Honor I would like to make an additional manifestation that
the translations attached to the originals are unofficial borne by
the very documents, your Honor which I quote unofficial
translation by M. R. Aguinaldo.

Pros. Sulit:

May I be allowed to speak, your Honor.

Court:

Yes, go ahead.

Pros. Sulit:

As explained to me by Atty. Chavez, at the time that they were


crafting these complaints against the Marcoses, there were
documents in the foreign languages like French, German and
Swiss documents that need to be translated into English and they
form a task force Umungos and I think two (2) of the ladies or
maybe four (4) of them came from the Department of Foreign
Affairs and they were the Official translators and so they did the
unofficial although it is called there unofficial translations, we
made it included them to form part of the record for our clearer
understanding of the foreign document.

Court:

I will note your manifestation Prosecutor Sulit.

Atty. Sison:

Can we make an understanding with the prosecution your Honor


that the translators are the translators designated by the
prosecution alone?

Pros. Sulit:
By the Department of Justice. Judge del Rosario is here, he would
know your Honor, because he was part of the Task Force
Umungos.

Court:

Department of Justice or Department of Foreign Affairs?

Judge del Rosario:

Department of Foreign Affairs.

Atty. Sison:

Without the participation of the accused, your Honor.

Court:

I will note your manifestation.

Atty. Sison:

Thank you, your Honor. The document identified as exhibit "J" by


the witness in his Affidavit is a faithful reproduction of the original
which is with Prosecutor Sulit and I make the same manifestation
in so far as the translation is concerned that it was clone in the
instance of the prosecution, your Honor, without the participation
of the accused.

Atty. Sulit:

I think there is no translation here, your Honor. This is an original


document. Your Honor, this was signed by Martin Grossman in
English language this time.

Atty. Sison:
Yes, your Honor, I stand corrected your Honor but I would like to
manifest that this Certificate of Authenticity marked as exhibit "J-
2" is also a photocopy.

Atty. Sulit:

A photocopy certified true by the Presidential Commission on


Good Government, this is a certified true copy and duplicate
photocopy are faithful reproduction of the documents on file with
the PCGG under the custodian Lourdes Magno your Honor.

Atty. Sison:

Without indicating that this was derived out of an original copy


that is kept with the PCGG.

Court:

I will note both manifestations. Next exhibit.

Atty. Sison:

I would like to manifest, your Honor, that these documents


identified by the witness marked as exhibit "K-Q" are faithful
reproduction of the photocopies brought along by Prosecutor
Sulit. In other words, your Honor, these documents are also
photocopied, your Honor.

Atty. Galit:

This are certified true copy by the PCGG office, your Honor.

Atty. Sison:

Yes, your Honor, but I don't think the witness was ever
presented.

Court:
Anyway, I will note both manifestations made by Prosecutor Sulit,
Atty. Galit and Atty. Sison.

Atty. Galit:

Your Honor, we hereby manifest that the custodian of subject


document in the person of Lourdes Magno will be available in
these coming days to present the original of these documents
from which source the said documents were certified.

Court:

Okay, noted.

Atty. Sison:

Is counsel telling this representation that they have the original of


exhibit "Q-6"?

Pros. Sulit:

I saw them, your Honor, only that they cannot give that to me
and I don't know why. They kept it in their files.

Court:

The originals are with the PCGG?

Pros. Sulit:

Yes, your Honor. I think those documents were sent to them


directly, I don't know how but they are not willing to . . . with the
original but I saw the original.

Atty. Galit:
These documents were only marked as certified true copy of the
original from the PCGG.

Atty. Sison:

Anyway, I would like to manifest that I think the parties should


not lost track of the fact that this is a case of dollar salting your
Honor. (off the record)  (Grammatical errors in the original)
[39]

The parties then proceeded to the comparison of the exhibits


intended to prove the existence of the foundations, the names of
which were used to create the bank accounts:
Atty. Sulit:

We are now going to the documents that will prove the existence
of the foundations, Trinidad, Palmy, Maler, Rayby and any other
documents.

Court:

Next exhibit?

Atty. Sison:

Exhibit "R". The documents presented by the prosecution except


that exhibit "R" is concerned, the best document is a certified
true copy correct photocopy of the document on file which does
not say if it is original or not.

Pros. Sulit:

How about the other documents, do you want me to bring it?

Court:

So no more?

Pros. Sulit:
No, there is another your Honor. The original copies, compliance
dated February 16, 2001 and the attached First Supplemental
Affidavit of Francisco Chavez dated February 15, 2001.

Atty. Sison:

We admit the existence of that already, your Honor.

Pros. Sulit:

How about the second supplemental affidavit on the Trinidad


foundation dated February 16, 2001?

Atty. Sison:

The existence again, your Honor.

Pros. Sulit:

And how about the attached documents which were also certified
Xerox copy of the PCGG under the same person Ma. Lourdes
Magno.

Atty. Sison:

May we browse to the original of these documents.

Pros. Sulit:

Okay.

Atty. Sison:

The records will tell out they are certified Xerox copies. I don't
know what that means by the records custodian of the PCGG.

Atty. Galit:
Your Honor these are being certified Xerox copy as indicated in
the subject document.

Court:

I will note both manifestations.

Pros. Sulit:

Statement of Account of Trinidad Foundation and they are all


certified Xerox copy on the one filed at the PCGG. They were sent
to the PCGG.

Judge del Rosario:

Yes, statement of accounts of Marcoses.

Pros. Sulit:

We are willing to stipulate that the existence of the annexes of


the supplemental affidavit of the witnesses, your Honor, existence
as contained part of the annexes of the supplemental affidavit.

Atty. Galit:

Your Honor, we would like to put it on record that the document


bears the stamped of Certified Xerox copy and under the name of
Ma. Lourdes Magno of the PCGG, your Honor.

Court:

Noted.

Pros. Sulit:

And there are document number. This document were given


serial numbers from Switzerland.
Atty. Galit:

Trinidad Foundation 010101.

Pros. Sulit:

Those are the control number when they were sent to the
Philippines.

Atty. Galit:

Second supplemental affidavit of February 16, 2001.

Pros. Sulit:

We stipulate that they do exist as part of the annex of the second


supplemental affidavit of Frank Chavez.

Court:

Noted. So how many days you will formally offer your exhibits?

Atty. Galit:

Considering your Honor the predicament that the records are still
with the DOJ, the original 10 days is allocated to the prosecution
may we ask that we be given additional five (5) days to make a
total of fifteen (15) days.

Court:

No objection?

Atty. Sison:

We leave it to the sound discretion of the Honorable Court.

Court:
Fifteen days from today to formally offer your exhibits. How many
days to file your comment? You want it orally or written?

Atty. Sison:

I will just ask for two (2) days to file your written
comment/opposition.

Atty. Galit:

I undertake to furnish the defense counsel on a personal basis.

Court:

I will now set the case for initial presentation of defense


evidence. Can you set it on several dates?

Atty. Galit:

Yes, your Honor.  (Grammatical errors in the original)


[40]

After the April 24, 2007 hearing, Chavez filed a Petition for
Certiorari, Prohibition, and Mandamus  dated May 3, 2007 with
[41]

the Court of Appeals, docketed as C.A.-G.R. No. 98799, praying


that the Court of Appeals declare null and void Judge Pampilo's
order in open court denying the motion to inhibit. Chavez also
asked that the Court of Appeals issue a temporary restraining
order or a writ of preliminary injunction, ex-parte, and that it
enjoin Judge Pampilo from further proceeding with, hearing, and
deciding the criminal cases against Imelda. Finally, he prayed
that Judge Pampilo be mandated to inhibit himself in the criminal
cases against Imelda. [42]

In its May 22, 2007 Resolution, the Court of Appeals granted the
prayer for the issuance of a writ of preliminary injunction. [43]

The Court of Appeals resolved the petition in its February 28,


2008 Decision  and denied Chavez's petition for certiorari, on the
[44]
basis that Judge Pampilo's alleged bias was not sufficiently
substantiated. It found that none of the grounds for mandatory
inhibition of Judge Pampilo was present in this case. Further,
there was insufficient showing of bias to substantiate Chavez's
claim of bias on the part of Judge Pampilo. The Court of Appeals
found that the prosecution's own acts delayed its presentation of
evidence and that the prosecution had been granted a six (6)-
month extension to complete its presentation of evidence. Thus,
the Court of Appeals ratiocinated that there was no undue haste
on the part of Judge Pampilo when he ordered that the
prosecution rest its case. It further found that the claims of
prejudice against Prosecutor Yarte were likewise unsubstantiated.
[45]

The dispositive portion of the Court of Appeals February 28, 2008


Decision read:
WHEREFORE, in view of the foregoing, the petition for certiorari is
hereby DISMISSED. [46]

Thus, on March 10, 2008,  the Regional Trial Court rendered its
[47]

May 28, 2007 Decision, acquitting accused Imelda and Hector T.


Rivera on the ground of reasonable doubt.

It found the prosecution evidence wanting and did not mince


words in describing the various failures of the prosecution.

It noted that only two (2) witnesses were presented and that the
prosecution's evidence was based on hearsay.  It found that the
[48]

prosecution's case was anchored on documents secured from the


Swiss authorities, but that the only witness presented to identify
the documents was former Assistant Solicitor General and
Presidential Commission on Good Government Commissioner Del
Rosario.  It quoted the transcript of stenographic notes to
[49]

illustrate that Del Rosario had no personal knowledge about the


documents which he testified on:
Atty. Sison:
Q: Now, Mr. Witness the documents that you attached in your
main affidavit and supplemental affidavits may I know where you
obtained these documents all of them Mr. Witness?

A: Well, I obtained them from the PCGG and the OSG . . .

Q: Did you come to know where the PCGG or the OSG derived
these documents?

A: It came from Switzerland all these documents, Swiss bank


documents.

Q: So in other words Mr. Witness all of the documents which you


identified in the proceedings in this case were derived from
Switzerland?

A: Yes, sir.

Q: There is not any document that you identified that was derived
from any other source Mr. Witness?

A: Yes, sir . . .  (Grammatical errors in the original)


[50]

The Regional Trial Court faulted the prosecution's reliance on


hearsay testimony. It held:
To give weight to hearsay testimony gravely violates the
constitutional right of the accused to meet the witnesses face-to-
face and to subject the source of the information to the rigid test
of crossexamination, which is the only effective means to test
their truthfulness, memory, and intelligence.

Furthermore, the prosecution in this case presented as evidence


voluminous documents purporting to be authentic records of the
Marcos accounts in Swiss banks yet not one of the bank officers
who had personal knowledge of said accounts was ever presented
in Court to identify the documents and attest to the veracity of
their contents. Even assuming that the said bank officers could
not possibly make the trip to the Philippines, there was no reason
why their testimonies could not have been taken in Switzerland
by deposition.

Del Rosario himself admitted during the course of his testimony in


these cases that he was authorized to take depositions of
witnesses, and again the Court quotes from the stenographic
notes . . .
"ACSP Mariano

Q: Judge, you stated in your previous statement that you are


now special counsel or legal consultant of PCGG. What are your
main functions as such special counsel or legal consultant?

(Del Rosario)

A: My special function as consultant of PCGG, I am tasked to


assist in the prosecution of all criminal cases against Mrs. Imelda
Marcos all in the Regional Trial Court and in the Sandiganbayan
and I am also tasked to take depositions of witnesses, rather
evaluate additional evidence for the purpose of effectively
prosecuting these cases against Mrs. Marcos . . .
During the course of the trial in these cases, Del Rosario revealed
that he had been to Switzerland in connection with his
investigation of these cases, and that sometimes he went alone
and at other times he went with Solicitor General Chavez, which
this Court takes to mean that he (Del Rosario) had been to
Switzerland many times. Yet he never bothered to communicate
with, let alone take depositions, of the bank officers who could
have identified the Swiss bank documents presented by the
prosecution as evidence in these cases.

Even assuming that Del Rosario was too busy with his
investigative functions that he simply did not have time to take
depositions, there were other persons available in Switzerland
who could have legally taken such depositions if only Solicitor
General Chavez, or any of his agents like Del Rosario had the
foresight and the good sense to request it.[51]
The Regional Trial Court named several witnesses that the
prosecution should have presented:
1. Peter Cosandey, the magistrate who examined the bank
documents;
2. Dr. Theo Bertheau of Zurich, who, according to Del Rosario,
was instructed by the Marcoses to arrange for a lawyer in
Liechtenstein to create Azio Foundation;
3. The alleged Marcos trustees in Switzerland: Mr. C. Walter
Fessler, Cusnach Souviron, Jr., Mr. Ernest Scheller, and Dr.
Helmuth Merlin;
4. Martin Grossman who signed the Certificate of
Authentication of Business Records[.] [52]

The Regional Trial Court noted that the prosecution repeatedly


asked Del Rosario to identify signatures that he was not
competent to identify:
Many times during the course of the trial in these cases, the
prosecution asked Del Rosario to identify signatures of persons
whose handwriting he was not competent to testify on and
despite his own admission that he was not a handwriting expert.
And again, the Court quotes from its own stenographic records.
(TSN, June 10, 2003, page 17-19):
"(State prosecutor)

Q: Now on page 2 of this Exh. "X-Common" appears a legible


signature of Imelda Romualdez Marcos. In the course of your
investigation, were you able to determine the person who affixed
that signature?

(Del Rosario)

A: Yes, your honor, I found out after investigation that this


contract really signed by Imelda Romualdez Marcos, this belongs
to her, this contract opening of account in Swiss Credit Bank . . .

Q: Do you know who this Imelda Marcos referred to in that


document?
Atty. Parungao: Excuse me, your honor, may we be allowed to
see the document first? Your honor, may I just manifest that the
signature has no print or any indication that the signature
belongs to a certain person. It is just a signature which if read,
reads Imelda Romualdez Marcos but there is no indication whose
signature this is.

Court: No printed name.

Atty. Parungao: Yes, your honor."


And in another instance . . .
"SP Carretas

Q: Now on the lower right hand margin of page 2 of Exhibit "W-


Common" appear a signature below the printed word the
Depositor. In the course of your investigation, were you able to
identify or know the signature affixed in this document below the
printed words the Depositor?

A: The very usual and familiar signature of the late President


Ferdinand E. Marcos.

SP Carretas: May I request that the signature of Ferdinand E.


Marcos appearing on the lower right hand margin of page 2 of
Exhibit W-Common be marked as Exhibit "W-2."

Court: Mark it.

SP Carretas

Q: And on the lower left hand margin of page 2 of the same


exhibit appears a signature below the printed words Swiss Credit
Bank. Were you able to find out in the course of your
investigation the person who affixed this signature?

A: I do not know the name of the person who affixed the


signature but this could be the authorized representative of Swiss
Credit Bank.
Q: Why do you say so?

A: Because it appear below the words Swiss Credit Bank and it is


a contract, sir."
Similar exchanges between the state prosecutor and star witness
Del Rosario were repeated many times during the course of the
trial with respect to the signatures of the late President Marcos
and Mrs. Marcos. But the most absurd of all was when on cross-
examination, Del Rosario could not identify the signature of
Martin Grossman, the person who issued the Certificate of
Authenticity of the Swiss bank documents used by the
prosecution in these cases, to wit (TSN, Oct. 10, 2006):
"Q: Now Mr. Witness in this Certificate of Authenticity of Business
Records, appears a signature above the printed name Martin
Grossman. Do you recognize that signature?

A: I am not familiar with the signature, sir.

Q: You are not familiar. So in other words, you do not know if this
is the signature of Mr. Martin Grossman, whose printed name
appears below that?

A: Yes, but I rely on the Certification . . ."


[53]

The Regional Trial Court also noted that the documents presented
were photocopies and that the prosecution had not established
any basis for presenting them instead of the original documents. [54]

Thus, the Regional Trial Court found that the prosecution failed to
present competent proof of the alleged offense and of the
conspiracy among the accused. Regarding the prosecution's
attempt to establish the conspiracy, the Regional Trial Court held:
The prosecution merely presented documentary evidence that
Roberto S. Benedicto invested in the Philippine-issued dollar-
denominated treasury notes. It did not say that Mr. Benedicto did
the transaction for herein accused. He did it for himself alone. In
fact, under the Compromise Agreement executed in November
1990 between the government and Mr. Benedicto, there was no
mention about the above alleged investments of Mr. Benedicto in
behalf of herein accused. Otherwise, Mr. Benedicto would have
made his being the alleged dummy a part of the Compromise
Agreement.

Furthermore, neither did the prosecution submit any


documentary proof that the three Swiss banks from where the
alleged dollar remittances emanated, namely, Bank Hofmann,
SBC and Banque Paribas, held the dollar notes for accused
Marcos . . .

The Court is cognizant of the fact that the government has


expended untold time, effort and money in the prosecution of
these cases, but the accused has the Constitutional presumption
of innocence. The prosecution in these cases failed to discharge
the burden of proof required in criminal cases. This court cannot
in all conscience convict the accused on the basis of mere
hearsay and on the basis of documents which were not
authenticated and proved in the proper manner. [55]

The dispositive portion of the Regional Trial Court Decision read:


WHEREFORE, foregoing premises considered and pursuant to
applicable jurisprudence and law on the matter, the accused
IMELDA ROMUALDEZ MARCOS and HECTOR T. RIVERA are hereby
ACQUITTED on the ground of reasonable doubt. [56]

Chavez filed a Motion for Reconsideration  of the Court of


[57]

Appeals February 28, 2008 Decision. As the Regional Trial Court


Decision was promulgated soon thereafter, on March 10, 2008,
 and within Chavez's period for filing a motion for
[58]

reconsideration with the Court of Appeals, Chavez included in his


motion a prayer for nullification of the Regional Trial Court's
judgment of acquittal.

In support of this prayer, Chavez argued that the acquittal was in


violation of the Court of Appeals injunction, pointing out that the
injunction dated July 20, 2007 stated that it would subsist
"pending final resolution of the present petition or unless a
contrary order is hereafter issued by this Court."  He insisted
[59]

that his case before the Court of Appeals was still pending final
resolution because of his motion for reconsideration and that
there had been no order dissolving the injunction. [60]

In its November 24, 2008 Resolution, the Court of Appeals denied


the Motion for Reconsideration and the prayer for nullification of
the Regional Trial Court March 10, 2008 Decision. It held that the
prayer for nullification was improper considering that it was not
covered in the original petition for certiorari. It also noted that
the assailed Regional Trial Court Decision was rendered after the
Court of Appeals had already denied the petition for certiorari.
The dissolution of the writ of injunction was deemed carried with
the dismissal of the petition for certiorari. [61]

Thus, Chavez filed this Petition for Review on Certiorari before


this Court. After Imelda filed her Comment  and Chavez filed his
[62]

Reply,  this Court gave due course to the petition.  Chavez filed
[63] [64]

his Memorandum,  and Imelda, after seeking four (4) extensions


[65]

of time to file,  finally filed her Memorandum  by mail on


[66] [67]

January 4, 2010. On October 3, 2016, this Court required the


parties to move in the premises and to inform this Court of
pertinent developments which may be of help in the disposition of
this case, or which may have rendered it moot and academic.
 On November 18, 2016, counsel for petitioner informed this
[68]

Court that petitioner Chavez passed away on September 11,


2013.  Thereafter, counsel for petitioner filed a Motion for
[69]

Resolution  arguing that petitioner's action survives his death as


[70]

it involves an issue not personal to him, namely, the national


coffers, and that his death does not render the remedies prayed
for moot and academic, or impossible. [71]

Petitioner claims that the Court of Appeals should have


appreciated Judge Pampilo's demeanor and over-eagerness to
decide the case as evidence of grave abuse of discretion.  He [72]

characterized Judge Pampilo's scheduling of the prosecution's


witness as a "noose-tightening tactic."  He claimed that due to
[73]

the unreasonableness of the schedule for his testimonies, it was


inevitable that the prosecution would have to request for
adjustments, and thereafter accept any resetting with the
warning that its presentation of evidence would be deemed
terminated.  Judge Pampilo made it impossible for petitioner or
[74]

for Department of Justice State Prosecutor Yarte to appear at the


hearing dates set by the court.  By orally denying the Motion to
[75]

Inhibit on April 24, 2007, Judge Pampilo essentially forced the


prosecution to present its evidence on the very same day, or end
its presentation of evidence.  Petitioner also claims that Judge
[76]

Pampilo, Atty. Galit, and Atty. Robert Sison (Atty. Sison) all acted
with a common objective of railroading the cases. He insists that
this common objective is evident from what transpired on April
24, 2007.  In particular, petitioner points out the fact that Judge
[77]

Pampilo interpreted the Department of Justice Memorandum


dated April 17, 2007 as designating Atty. Galit as the lead
prosecutor and refused to allow Prosecutor Yarte to argue as the
lead prosecutor. This is despite the fact that the Department of
Justice Memorandum did not designate Atty. Galit as the lead
prosecutor or exclude Prosecutor Yarte from arguing before the
court. Petitioner alleges that the Department of Justice
Memorandum stated:
[A] directive is hereby made authorizing and/or designating PCGG
Special Counsel, Atty. Napoleon Uy Galit with or without the
presence of any public prosecutors to prosecute the above-
referred cases . . . [78]

Petitioner maintains that it was revealing that Judge Pampilo


swept aside the arguments of Prosecutor Yarte.  He also faulted
[79]

Judge Pampilo for orally deciding the Motion to Inhibit,  averring[80]

that it was hastily done.  He believes that Atty. Galit acted as if
[81]

he were Prosecutor Yarte's adversary instead of a fellow


prosecutor  and that because of this concerted action among
[82]

Judge Pampilo, Atty. Sison, and Atty. Galit, Prosecutor Yarte had
to walk out of the hearing. [83]

Petitioner asserts that the commonality of purpose was also


shown by the risky procedure resorted to by Atty. Sison, who, in
one hearing, waived his written opposition to the Motion to
Inhibit, the cross-examination of petitioner, and the presentation
of evidence:
17. Also, the conduct of counsel for Imelda Marcos provides yet
another glimpse into a sort of "commonality of purpose" shared
by Judge Pampilo and Imelda Marcos. When Prosecutor Yarte
insisted on his right to file a reply to Atty. Sison's opposition to
the Motion to Inhibit, the latter conveniently withdrew his written
opposition. When Judge Pampilo realized that he could not
proceed with the presentation of evidence for the accused without
first requiring the prosecution to submit its formal offer of
evidence, Atty. Sison, who had earlier sought a single setting for
petitioner's cross-examination and the presentation of Imelda
Marcos' evidence, suddenly relinquished his intention to cross-
examine the petitioner. Then, later, when it was already time for
him to present evidence for the accused (Imelda Marcos), Atty.
Sison merely bracketed and marked a solitary statement in the
testimony of Atty. Cesario del Rosario and then waived further
presentation of evidence. He resorted to this risky procedure
instead of being more cautious by filing a Demurrer to Evidence. [84]

Petitioner also assails the circumstances surrounding the


promulgation of Judge Pampilo's decision. He suggests that there
must have been a direct liaison between Judge Pampilo and Atty.
Sison, because without one, under the circumstances, respondent
Imelda would not have been able to file an Urgent Motion to Lift
Temporary Restraining Order Ad Cautelam in time for the original
scheduled promulgation to proceed.  Further, he alleges that
[85]

Judge Pampilo told reporters that promulgation would proceed on


May 23, 2007 despite the issuance of the Temporary Restraining
Order because respondent Imelda was working on having the
Temporary Restraining Order lifted:
25.  . . . On 23 May 2007, Judge Pampilo went to court ready to
promulgate his decision despite the fact that he was already
served with the trial court's TRO in the afternoon of 22 May 2007.
When Judge o was approached by news reporters if the
promulgation would push through, Judge Pampilo answered in the
affirmative since Imelda Marcos is supposedly working out a way
to have the TRO lifted, obviously referring to Imelda
Marcos' Motion to Lift TRO dated 23 May 2007. When no order
from the Court of Appeals came, Judge Pampilo asked the
reporters to come back by 2:00 p.m. of that same day, since
according to him, by that time, Imelda Marcos might be able to
secure the lifting of the TRO. Having failed in his expectations,
Judge Pampilo rescheduled the promulgation of judgment to 30
May 2007 as may be gleaned from page 43 of his Decision. He
just would not give up in his attempts to grant Imelda Marcos an
early acquittal despite orders from the Court of Appeals. How can
such a conduct be explained?

26. Then, finally, as mentioned earlier, Judge Pampilo did not


even await final resolution of the instant case when he
promulgated on 10 March 2008 his judgment of acquittal. Again,
consistent with the Rules of Court, it must be stressed that
petitioner was permitted to file and had in fact filed - his Motion
for Reconsideration of the Court of Appeals' 28 February
2008 Decision. Therefore, the 28 February 2008 Decision is not
yet final. As such, the writ of preliminary injunction issued by the
Court of Appeals is still effective because the Court of Appeals' 20
July 2007 Resolution clearly states that the writ of preliminary
injunction shall subsist "pending final resolution of the present
petition or unless a contrary order is hereafter issued by this
Court." Judge Pampilo's apparent fervor to exculpate Imelda
Marcos even in violation of the Court of Appeals' injunction is only
consistent with something glaringly obvious from the very
beginning: his bias and partiality.
[86]

Petitioner further argues that Judge Pampilo acted with grave


abuse of discretion for promulgating his decision in violation of a
subsisting injunction,  and for abruptly terminating petitioner's
[87]

testimony.  He insists that his testimony would have been


[88]

sufficient to render admissible the documents which Judge


Pampilo found inadmissible as evidence. [89]

Respondent Imelda argues that the petition should be dismissed


for raising questions of fact. Further, the undisputed facts on
record constitute sufficient justification for Judge Pampilo's
decision to tenninate the prosecution's presentation of evidence. [90]

This Court resolves the following issues:


First, whether or not the petition should be dismissed for raising
questions of fact;

Second, whether or not the Regional Trial Court May 28, 2007
Decision acquitting respondent Imelda R. Marcos was issued in
violation of a subsisting injunction; and

Finally, whether or not the records show that Judge Silvino T.


Pampilo, Jr. acted with bias in favor of respondent Imelda R.
Marcos.

This Court denies the Petition.

A petition for review on certiorari under Rule 45 shall only pertain


to questions of law. Further, the Rules of Court mandate that
petitions for review distinctly set forth the questions of law
raised.
[91]

This petition for review on certiorari attributes the following


errors to the Court of Appeals:
a. The Court of Appeals committed reversible error by refusing to
consider Judge Pampilo's demeanor and over-eagerness to decide
the criminal cases against Imelda Marcos intended to culminate in
a judgment of acquittal - as clear evidence of grave abuse of
discretion warranting the issuance of a Writ of Certiorari.

b. The Court of Appeals committed reversible error by refusing to


consider Judge Pampilo's flagrant violation of a subsisting writ of
preliminary injunction and, ultimately, the prosecution's
constitutional right to due process. [92]

Essentially, petitioner takes issue with how the Court of Appeals


interpreted the acts of Judge Pampilo and found no manifest
partiality, which are clearly not questions of law. He did not even
attempt to frame the issues as questions of law. By claiming that
Judge Pampilo violated a writ of injunction, petitioner attempts to
cloak the second alleged error with some semblance of being a
question of law. However, petitioner does not provide any legal
basis or coherent legal argument to support the claim that a writ
of injunction was violated, and this claim is totally specious.

Although this Court may, in exceptional cases, delve into


questions of fact, these exceptions must be alleged,
substantiated, and proved by the parties before this Court may
evaluate and review facts of the case.  Petitioner having failed to
[93]

establish the basis for this Court to evaluate and review the facts
in this case, the petition may be dismissed on this ground.

II

The Regional Trial Court Decision dated May 28, 2007 and
promulgated on March 10, 2008 was not issued in violation of the
Court of Appeals writ of injunction. When this Regional Trial Court
Decision was promulgated, the writ of injunction had already
been dissolved.

As stated by the Court of Appeals in its November 24, 2008


Resolution, the denial of the petition for certiorari carried with it
the dissolution of the writ of injunction. [94]

Petitioner makes much ado of the fact that the text of the
injunction stated that it subsisted "pending final resolution" of the
petition, ignoring the rest of the text which provided that it would
be dissolved if a contrary order was issued by the Court of
Appeals.  Indeed, the Court of Appeals, in its November 24,
[95]

2008 Resolution, resolved this issue, stating:


[I]t should also be considered that at the time of the rendition of
the said RTC decision, the Decision of this Court denying the
petition for certiorari had already been issued. Although the said
Decision itself did not expressly provide for the dissolution of the
writ of injunction the same is deemed carried with the dismissal
of the petition for certiorari.
[96]

In other words, the Court of Appeals' decision denying the


petition for certiorari carried with it a contrary order dissolving
the injunction. Petitioner fails to address this point and does not
show how it is an error of law. Thus, the argument that a
subsisting injunction was violated is clearly frivolous, if not
misleading, and intended only to make it appear as though the
petition has some semblance of basis.

III

Whether or not to voluntarily inhibit from hearing a case is a


matter within the judge's discretion. Absent clear and convincing
evidence to overcome the presumption that the judge will
dispense justice in accordance with law and evidence, this Court
will not interfere.
[97]

On the inhibition of judges, Rule 137 of the Rules of Court


provides:
Section 1. Disqualification of judges. - No judge or judicial officer
shall sit in any case in which he, or his wife or child, is pecuniarily
interested as heir, legatee, creditor or otherwise, or in which he is
related to either party within the sixth degree of consanguinity or
affinity, or to counsel within the fourth degree, computed
according to the rules of the civil law, or in which he has been
executor, administrator, guardian, trustee or counsel, or in which
he has presided in any inferior court when his ruling or decision is
the subject of review, without the written consent of all parties in
interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify


himself from sitting in a case, for just or valid reasons other than
those mentioned above.
The import of Rule 137, Section 1 of the Rules of Court was
explained in Pimentel v. Salanga: [98]

Thus, the genesis of the provision (paragraph 2, Section 1, Rule


137), not to say the letter thereof, clearly illumines the course of
construction we should take. The exercise of sound discretion -
mentioned in the rule-has reference exclusively to a situation
where a judge disqualifies himself, not when he goes forward with
the case. For, the permissive authority given a judge in the
second paragraph of Section 1, Rule 137, is only in the matter of
disqualification, not otherwise. Better stated yet, when a judge
does not inhibit himself, and he is not legally disqualified by the
first paragraph of Section 1, Rule 137, the rule remains as it has
been he has to continue with the case.

So it is, that the state of the law, with respect to the situation
before us, is unaffected by the amendment (paragraph 2 of
Section I, Rule 137) introduced in the 1964 Rules. And it is this:
A judge cannot be disqualified by a litigant or his lawyer for
grounds other than those specified in the first paragraph of
Section I, Rule 137.

This is not to say that all avenues of relief are closed to a party
properly aggrieved. If a litigant is denied a fair and impartial trial,
induced by the judge's bias or prejudice, we will not hesitate to
order a new trial, if necessary, in the interest of justice. Such was
the view taken by this Court in Dais vs. Torres, 57 Phil. 897, 902-
904. In that case, we found that the filing of charges by a party
against a judge generated "resentment" on the judge's part that
led to his "bias or prejudice which is reflected in the decision," We
there discoursed on the "principle of impartiality,
disinterestedness, and fairness on the part of the judge" which "is
as old as the history of court." We followed this with the
pronouncement that, upon the circumstances obtaining, we did
not feel assured that the trial judge's findings were not influenced
by bias or prejudice. Accordingly, we set aside the judgment and
directed a new trial.

Efforts to attain fair, just and impartial trial and decision, have a
natural and alluring appeal. But, we are not licensed to indulge in
unjustified assumptions, or make a speculative approach to this
ideal. It ill behooves this Court to tar and feather a judge as
biased or prejudiced, simply because counsel for a party litigant
happens to complain against him. As applied here, respondent
judge has not as yet crossed the line that divides partiality and
impartiality. He has not thus far stepped to one side of the
fulcrum. No act or conduct of his would show arbitrariness or
prejudice. Therefore, we are not to assume what respondent
judge, not otherwise legally disqualified, will do in a case before
him. We have had occasion to rule in a criminal case that a
charge made before trial that a party "will not be given a fair,
impartial and just hearing" is "premature." Prejudice is not to be
presumed. Especially if weighed against a judge's legal obligation
under his oath to administer justice, "without respect to person
and do equal right to the poor and the rich." To disqualify or not
to disqualify himself then, as far as respondent judge is
concerned, is a matter of conscience.

All the foregoing notwithstanding, this should be a good occasion


as any to draw attention of all judges to appropriate guidelines in
a situation where their capacity to try and decide a case fairly and
judiciously comes to the force by way of challenge from any one
of the parties. A judge may not be legally prohibited from sitting
in a litigation. But when suggestion is made of record that he
might be induced to act in favor of one party or with bias or
prejudice against a litigant arising out of circumstances
reasonably capable of inciting such a state of mind, he should
conduct a careful self-examination. He should exercise his
discretion in a way that the people's faith in the courts of justice
is not impaired. A salutary norm is that he reflect on the
probability that a losing party might nurture at the back of his
mind the thought that the judge had unmeritoriously tilted the
scales of justice against him. That passion on the part of a judge
may be generated because of serious charges of misconduct
against him by a suitor or his counsel, is not altogether remote.
He should, therefore, exercise great care and caution before
making up his mind to act in or withdraw from a suit where that
party or counsel is involved. He could in good grace inhibit
himself where that case could be heard by another judge and
where no appreciable prejudice would be occasioned to others
involved therein. On the result of his decision to sit or not to sit
may depend to a great extent the all-important confidence in the
impartiality of the judiciary. If after reflection he should resolve to
voluntarily desist from sitting in a case where his motives or
fairness might be seriously impugned, his action is to be
interpreted as giving meaning and substances to the second
paragraph of Section 1, Rule 137. He serves the cause of the law
who forestalls miscarriage of justice.  (Emphasis in the original)
[99]

Thus, since the second paragraph of Rule 137, Section 1 was


introduced, this Court has periodically repeated that it shall
always presume that a judge will decide on the merits of the case
without bias. Allowing a judge to inhibit without concrete proof of
personal interest or any showing that his bias stems from an
extrajudicial source will open the floodgates to abuse. [100]

No concrete proof of Judge Pampilo's personal interest in the case


was presented. There was no showing that his bias stems from an
extrajudicial source. Not only that, but none of his acts, as shown
on the record, was characterized by any error.

Petitioner finds fault in the scheduling of his testimony but fails to


show how it was irregular. He characterizes the scheduling as
"noose-tightening," for being scheduled on "unreasonably
proximate" dates.  Far from the scheduling being evidence of
[101]

partiality, it was aligned with this Court's rules on expeditious


disposition of cases and the mandatory continuous trial system.

Supreme Court Administrative Circular No. 3-90 requires all trial


courts to adopt the mandatory continuous trial system pursuant
to Administrative Circular No. 4 and Circular No. 1-89. On trials
for civil and criminal cases, Supreme Court Circular No. 1-89
provides, in part:
II. TRIAL (Civil, Criminal)

....

4. The issuance and services of subpoenas shall be done in


accordance with Administrative Circular No. 4 dated September
22, 1988.

5. A strict policy on postponements shall be observed.


6. The judge shall conduct the trial with utmost dispatch, with
judicious exercise of the court's power to control the trial to avoid
delay.

7. The trial shall be terminated within ninety (90) days from


initial hearing. Appropriate disciplinary sanctions may be imposed
on the judge and the lawyers for failure to comply with this
requirement due to causes attributable to them.

8. Each party is bound to complete the presentation of his


evidence within the trial dates assigned to him. After the lapse of
said dates, the party is deemed to have completed his evidence
presentation. However, upon verified motion based on serious
reasons, the judge may allow a party additional trial dates in the
afternoon; provided that said extension will not go beyond the
three-month limit computed from the first trial date.
Thus, the dates provided for petitioner's testimony were in
accordance with the rules and guidelines issued by this Court.

Petitioner also claims that Judge Pampilo could have


accommodated the prosecution's requests for postponement, but
he did not. However, Judge Pampilo's reluctance in sanctioning
further delays and in denying motions to postpone hearings was
also in accordance with the rules on the expeditious resolution of
cases. This Court cannot assume bias or arbitrariness based on
the denial of requests of postponement. [102]

There was nothing remarkable about the denial of the Motion to


Inhibit. It was not hasty, and whether to deny it orally in court is
the prerogative of the judge, who could have decided it as soon
as its factual basis had been clearly laid.  Further, counsel for
[103]

the prosecution expressly agreed that the motion be submitted


for resolution.
[104]

Petitioner's claims that Atty. Galit acted as an adversary instead


of co counsel for Prosecutor Yarte are outlandish. The transcript
reveals that Atty. Galit was nothing if not courteous to Prosecutor
Yarte. Petitioner also avers that Prosecutor Yarte had to walk out
of the hearing because of the concerted action taken against him.
 However, the transcript shows that he asked permission from
[105]

Judge Pampilo to allow him to pick up his daughter in Makati.


 This incident was not the first questionable act taken by
[106]

Prosecutor Yarte as it appears that he chose to attend an event in


Boracay instead of the April 11, 2007 hearing, despite the denial
of his motion to cancel it. In no way can these actions be
attributed to bias on the part of Judge Pampilo.

Petitioner Chavez believes that respondent Imelda would not


have been acquitted had he been allowed to testify. However,
Judge Pampilo did not even have to decide on whether to allow
petitioner Chavez to continue his testimony because both parties
agreed that his testimony would be terminated during the April
24, 2007 hearing:
Atty. Sison:

Your Honor, the incident today is supposed to be continuation of


direct examination of the witness for the prosecution and I don't
see him around your Honor, despite that he should be present for
today's hearing.

Court:

That is why I show you the letter coming from the former
Solicitor General the reason behind why he did not attend in
today's hearing.

Atty. Sison:

Yes your Honor, as I said also, the witness is too presumptuous


that the Motion to Inhibit will not be resolved immediately your
Honor so in view of that, we will move that the testimonial
evidence given by the said witness be stricken off the record . . .
of the Order of this Honorable Court dated April 11.

Atty. Galit:
Your Honor, it is too much on the part of the defense counsel to
move for the striking out of the testimony of the said witness. As
I have said, the issues are simple. The witness has already
testified and the witness is still very much willing to continue his
testimony. Your Honor, to continue testifying on those three (3)
affidavits with all those annexes, rather than strike the
testimonies of the witness from the records of this case which
would amount your Honor to issue of technicality not favor by
jurisprudential authorities, I would like to challenge the defense
counsel to allow us, your Honor, to have those testimonies stay
on the record and . . . on the contents of those three (3)
affidavits as well as those annexes at least as to the existence
your Honor and allow the prosecution to wind up your Honor their
evidence by filing the complete formal offer of exhibits. In that
way, your Honor, any technicality will be avoided.

Atty. Sison:

Your Honor, I said that if only to give teeth to the order of the
Honorable Court last April 11, in any event, your Honor, this
representation has maintained as early as five months ago that
he is willing to stipulate your Honor on the existence of the
affidavits of Atty. Chavez as well as the existence of the
newspaper clippings but not as to the truth and veracity thereof,
your Honor.

Atty. Galit:

Including annexes of those three (3) affidavits, I would like to call


the attention of this Honorable Court that Prosecutor Sulit is
around and now if the position of the defense counsel would be to
stipulate on the existence of these documents, then we will be
willing enough to wind up our presentation of evidence and
submit the formal offer of evidence . . .

Atty. Galit:
The pending Motion to strike out seems to have been
super[s]eded, your Honor, by the defense counsel himself when
he entered into stipulation regarding the existence of these
documents, your Honor, whom those annexes in the affidavit of
Frank Chavez and as a matter of fact without waiving the
stipulations made by the defense counsel, the Sandigan
Prosecutor Wendell Barreras Sulit is showing your Honor to the
defense counsel the original of those documents.

Court:

Is that correct Atty. Sison that the testimony of former Solicitor


General Frank Chavez remains in the records considering the
existence of three (3) affidavits as well as the newspaper clipping
and the annexes?

Atty. Sison:

Yes, your Honor. Only as to the existence of these documents, it


is subject to our cross examination.

Atty. Galit:

So the affidavit dated October 6, 1999.

Court:

So the testimony of former Solicitor General Frank Chavez is now


deemed terminated, correct me if I'm wrong.

Atty. Galit:

Yes, your Honor.

....

Court:
But you will cross examine the witness Frank Chavez after the
cross examination, you will file your formal offer after the cross
examination.

Atty. Sison:

Your Honor, I will not cross examine anymore.

Court:

Okay[.] Order. Considering the manifestation of both counsels,


the testimony of the former Solicitor General Frank Chavez is now
deemed terminated and that the defense counsel manifested that
he is no longer cross examining the witness. So ordered. [107]

As is apparent from the records, petitioner's testimony was not


terminated abruptly by Judge Pampilo. Rather, the termination of
his testimony was expressly agreed to by the prosecution, having
obtained a stipulation from the defense counsel on the existence
of the documents which petitioner was to identify.

Petitioner's claim that respondent Imelda would not have been


acquitted had petitioner been allowed to continue his testimony is
not only wildly speculative, but it is also devoid of basis. What he
would have identified was a Certification of Swiss banking
documents, addressed to petitioner in his capacity as Solicitor
General of the Philippines, stating, in part:
There is no disposition in any of the criminal proceedings
applicable in Switzerland providing for the certification of banking
documents. If a witness or a bank submits Xerox copies to a
criminal authority, these documents become automatically and
without any certification conclusive evidence.

In legal assistance proceedings, the acts of investigation are


performed according to the applicable law of the requested State,
in casu of Switzerland. In international legal assistance
proceedings, the requesting State usually recognizes the evidence
collected according to the dispositions of the law of the requested
State.
Art. 92 of the Federal Law on international legal assistance in
criminal matters of March 20, 1981 (EIMP) indicates that all the
acts of investigation performed by the authorities of a foreign
State according to its law have the same value in the proceeding
as the corresponding Swiss acts of investigation.

We know that especially in Anglo-Saxon law countries there are


very strict rules concerning the formal constitution of conclusive
evidence. Art. 65 litt. b EIMP therefore provides that in order to
permit the formal admission of other evidence (especially of
documents) the express desiderata of the requesting authority
must be considered. In the Treaty between the Confederation of
Switzerland and the United States of American mutual legal
assistance in criminal matters of May 25, 1973 the certification of
documents is specifically provided for. Practically, this
certification is in the form of two certificates. Through the
"Certificate of Authenticity of Business Records", the holder of the
documents certifies their authenticity; the competent examining
magistrate issues the "Certificate of the Swiss Authority executing
Request for Documents" to attest that he checked himself the
documents and is convinced that they are "genuine,
authenticated and certified true copies". The American Courts
admit without further formalities Swiss banking documents so
certified.

Concerning the documents of Swiss Credit Bank collected in


Zurich, I gave you during your visit of August 13, 1991 two such
certificates for each document which authenticated the banking
documents. To my knowledge, the examining magistrate of
Geneva, Vladimir Sternberger, also prepared similar certificates.
In my opinion, these Swiss certificates of the genuine character of
the documents are sufficient to present the evidence obtained in
Switzerland in the Philippine Courts. A further certification of each
of the several thousand documents is therefore neither necessary
nor proportionate. [108]

Petitioner claims that his testimony would controvert Judge


Pampilo's conclusion that the bank documents are private
documents, and that they were, thus, inadmissible as hearsay.
 However, he failed to lay the legal basis to justify the
[109]

conclusion that his testimony would have established that the


bank records are public documents. In People v. Patamama: [110]

Also of little evidentiary value is the PAGASA certification


presented by the defense respecting the rising and setting of the
moon on the night in question; and this, because it is clearly
hearsay, having been prepared and signed by a certain Carmelito
Calimbas, allegedly the Officer in Charge of the Astronomy
Research and Development Section of PAGASA. Calimbas was not
presented in court for identification and to show that he was
technically qualified to make and issue such certification. The
rules of evidence properly exclude the testimony of witnesses
demonstrably incompetent, as well as evidence that can not be
tested by cross-examination.  (Citations omitted)
[111]

In this case, petitioner would have identified a certification which


was not issued by him, but by a certain Peter Cosandey, who, as
properly noted by the Regional Trial Court, was not presented in
court. Thus, considering that petitioner was not the one who
prepared the certificate, his testimony would have been of little
evidentiary value. The claim that his testimony would have saved
the prosecution's case is baseless.

Finally, petitioner's speculations regarding the strategy employed


by respondent Imelda's counsel are wild and baseless.
Respondent Imelda's counsel may have filed an Urgent Motion to
Lift Temporary Restraining Order Ad Cautelam very quickly, but
timeliness alone cannot and should not be viewed with suspicion.
Counsel for respondent did not need a direct liaison to manage
this, and filing pleadings in a timely manner should not be so out
of the ordinary that it suggests misdeeds.

There is one allegation which, if true, might suggest some bias on


the part of Judge Pampilo. In particular, petitioner alleges that
Judge Pampilo told news reporters that the promulgation would
proceed despite the subsisting Court of Appeals Temporary
Restraining Order because respondent Imelda was working on
lifting said injunction:
25. Petitioner also submits that he made manifestations before
the Court of Appeals during the 25 July 2007 hearing, which
manifestations were not denied by counsel for Imelda Marcos.
On 23 May 2007, Judge Pampilo went to court ready to
promulgate his decision despite the fact that he was already
served with the trial court's TRO  in the afternoon of 22
May 2007. When Judge Pampilo was approached by news
reporters if the promulgation would push through, Judge Pampilo
answered in the affirmative since Imelda Marcos is supposedly
working out a way to have the TRO lifted, obviously referring to
Imelda Marcos' Motion to Lift TRO dated 23 May 2007. When no
order from the Court of Appeals came, Judge Pampilo asked the
reporters to come back by 2:00 p.m. ofthat same / day, since
according to him, by that time, Imelda Marcos might be able to
secure the lifting of the TRO. Having failed in his expectations,
Judge Pampilo rescheduled the promulgation of judgment to 30
May 2007 as may be gleaned from page 43 of his Decision. He
just would not give up in his attempts to grant Imelda Marcos an
early acquittal despite orders from the Court of Appeals. How can
such a conduct be explained?  (Emphasis in the original)
[112]

If it is true that Judge Pampilo told news reporters that he was


expecting the Court of Appeals Temporary Restraining Order to
be lifted within the day, this could suggest that Judge Pampilo
was coordinating with respondent Imelda's lawyers. However, no
evidence was presented to support this allegation. Allegation does
not substitute proof, so this claim must be rejected.

This petition arose from what appears to have been such an


important case for the government, which involves accountability
for millions of pesos spirited away by respondent, filed in the
lower court. Yet, it appears that the government's resolve to
prosecute has been lackadaisical, to say the least. The
prosecution and their witness appear to have requested several
postponements on grounds which, to this Court, do not outweigh
the grave public interest suggested by the various Informations
filed against respondent.
The lower court's liberality in granting the various continuances
does not seem to have been met by the presentation of evidence
with a depth and quality that would have shown the diligence and
seriousness of the prosecution.

Prosecutors for the government should always remember that


their work does not end with public announcements relating to
the filing of informations against those who have committed
nefarious raids on our public coffers. Their work is to
professionally present the evidence marshalled through
painstaking and fastidious investigation. Prosecutors should avoid
the soundbite that will land them the headlines in all forms of
media. Instead, they should do their work and attain justice and
reparations for our people wronged by selfish conniving politicians
who do not deserve their public offices.

Apathetic prosecution allows impunity. It is difficult as enough as


it is to discover wrongdoing, protect key witnesses, preserve the
evidence, and guard against the machinations of powerful and
moneyed individuals. Prosecutors must not only be courageous
but must also show their dedication to public interest through
their competence. Otherwise, the system will invite suspicion that
there had been unholy collusion.

Fatal errors that should have been avoided by veteran litigators,


such as a habit of postponements and a lack of preparation,
cannot be papered over by a labyrinth of appeals that reaches
this Court. That is a fool's strategy that will only contribute to
increasing the dockets of this Court, thereby denying time and
resources from deserving petitioners.

The prosecution could have done better in this case. Sadly, it


failed.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The Court of Appeals February 28, 2008 Decision and November
24, 2008 Resolution in CA-GR. SP No. 98799 are
hereby AFFIRMED.
SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Jardeleza,


JJ., concur.

September 3, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 27, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on September 3, 2018 at 9:35 a.m.

 See Pagoda Philippines, Inc. v. Universal Canning, Inc., 509


[1]

Phil. 339 (2005) [Per J. Panganiban, Third Division].

[2]
 Rollo, pp. 12-73.

 Id. at 180-195. The Decision was penned by Associate Justice


[3]

Jose C. Reyes, Jr. and concurred in by Associate Justices Jose L.


Sabio, Jr. and Myrna Dimaranan Vidal of the Eighth Division,
Court of Appeals, Manila.
 Id. at 291-293. The Resolution was penned by Associate Justice
[4]

Jose C. Reyes, Jr. and concurred in by Associate Justices Jose L.


Sabio, Jr. and Myrna Dimaranan Vidal of the Former Eighth
Division of the Court of Appeals, Manila.

[5]
 Id. at 74-94.

[6]
 Id. at 95-112.

[7]
 Id. at 235-236.

[8]
 Central Bank Circ. No. 960, sec. 4 reads:

Section 4. Foreign exchange retention abroad. - No person shall


promote, finance, enter into or participate in any foreign
exchange transactions where the foreign exchange involved is
paid, retained, delivered or transferred abroad while the
corresponding pesos are paid for or are received in the
Philippines, except when specifically authorized by the Central
bank or otherwise allowed under Central Bank regulations.

[9]
 Rep. Act No. 265, sec. 34 provides:

Section 34. Proceedings upon violation of laws and regulations. -


Whenever any person or entity wilfully violates this Act or any
order, instruction, rule or regulation legally issued by the
Monetary Board, the person or persons responsible for such
violation shall be punished by a fine of not more than twenty
thousand pesos and by imprisonment of not more than five years.

[10]
 Rollo, p. 236-237.

[11]
 Id. at 237-238.

[12]
 Id. at 238.

[13]
 Id. at 239-240.
[14]
 Id. at 240-241.

[15]
 Id. at 241.

[16]
 Id. at 241-248.

[17]
 Id. at 250.

[18]
 Id. at 251.

[19]
 Id. at 118.

[20]
 Id. at 119.

[21]
 Id. at 98.

[22]
 Id. at 98-99.

[23]
 Id. at 99.

[24]
 Id. at 99-100.

[25]
 Id. at 120.

[26]
 Id. at 121.

[27]
 Id. at 123.

[28]
 Id. at 434.

[29]
 Id. at 95-112.

[30]
 Id. at 110-111.

[31]
 Id. at 124-125.

[32]
 Id.
[33]
 Id. at 126.

[34]
 Id. at 127-133.

[35]
 Id. at 133-145.

[36]
 Id. at 145-149.

[37]
 Id. at 150-154.

[38]
 Id. at 155-160.

[39]
 Id. at 161-170.

[40]
 Id. at 170-176.

[41]
 Id. at 74-94.

[42]
 Id. at 92.

[43]
 Id. at 181.

[44]
 Id. at 180-195.

[45]
 Id. at 191-193.

[46]
 Id. at 194.

[47]
 See rollo, p. 197, footnote 3.

[48]
 Id. at 253.

[49]
 Id. at 250.

[50]
 Id. at 254.

[51]
 Id. at 260-262.
[52]
 Id. at 263.

[53]
 Id. at 263-266.

[54]
 Id. at 267-270.

[55]
 Id. at 273-275.

[56]
 Id. at 276.

[57]
 Id. at 196-234.

[58]
 Id. at 197.

[59]
 Id. at 197-198.

[60]
 Id. at 198.

[61]
 Id. at 292.

[62]
 Id. at 352-373.

[63]
 Id. at 379-399.

[64]
 Id. at 400.

[65]
 Id. at 413-475.

[66]
 Id. at 500.

[67]
 Id. at 504-538.

[68]
 Id. at 554.

[69]
 Id. at 564.

[70]
 Id. at 555-563.
[71]
 Id. at 558-559.

[72]
 Id. at 426.

[73]
 Id. at 427-428.

[74]
 Id. at 428.

[75]
 Id. at 430.

[76]
 Id. at 433.

[77]
 Id. at 437.

[78]
 Id. at 438, footnote 30.

[79]
 Id. at 438-439.

[80]
 Id. at 441.

[81]
 Id. at 443.

[82]
 Id. at 441.

[83]
 Id. at 442.

[84]
 Id. at 445-446.

[85]
 Id. at 447-449.

[86]
 Id. at 451-452.

[87]
 Id. at 458-460.

[88]
 Id. at 462.

[89]
 Id. at 462-463.
[90]
 Id. at 517.

[91]
 RULES OF COURT, Rule 45, sec. 1.

[92]
 Rollo, pp. 424-425.

 Pascal v. Burgos, G.R. No. 171722, January 11, 2016 [Per J.


[93]

Leonen, Second Division].

[94]
 Rollo, p. 292.

[95]
 Id. at 197-198.

[96]
 Id. at 292.

 Pagoda Philippines, Inc. v. Universal Canning, Inc., 509 Phil.


[97]

339 (2005) [Per J. Panganiban, Third Division].

[98]
 128 Phil. 176 (1967) [Per J. Sanchez, En Banc].

[99]
 Id. at 181-184.

 See Gochan v. Gochan,


[100]
446 Phil. 433 (2003) [Per J.
Panganiban, Third Division].

[101]
 Rollo, pp. 427-428.

 See Gochan v. Gochan,


[102]
446 Phil. 433 (2003) [Per J.
Panganiban, Third Division].

 Kilosbayan Foundation v. Janolo, Jr., 640 Phil. 33 (2010) [Per


[103]

J. Carpio-Morales, En Banc].

[104]
 Rollo, pp. 150-154.

[105]
 Id. at 442.

[106]
 Id. at 150-154.
[107]
 Id. at 155-160.

[108]
 Id. at 278-279.

[109]
 Id. at 464-465.

[110]
 321 Phil. 193 (1995) [Per C.J. Narvasa, Second Division].

[111]
 Id. at 204.

[112]
 Rollo, pp. 451-452.

Source: Supreme Court E-Library | Date created: September 25, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 201414, April 18, 2018 ]


PEDRO PEREZ PETITIONER, VS. PEOPLE OF THE
PHILIPPINES, RESPONDENT.DECISION

LEONEN, J.:

Inserting a finger in a 12-year-old girl's vagina and mashing her


breasts are not only acts of lasciviousness but also amount to
child abuse punished under Republic Act No. 7610.
This is a Petition for Review on Certiorari  under Rule 45 of the
[1]

1997 Rules of Civil Procedure, praying that the September 30,


2011 Decision  and April 10, 2012 Resolution  of the Court of
[2] [3]

Appeals in CA-G.R. CR No. 33290 be reversed and set aside.  The [4]

Court of Appeals affirmed the March 8, 2010 Judgment  of the [5]

Regional Trial Court, which found Pedro Perez (Perez) guilty


beyond reasonable doubt of violation of Section S(b) of Republic
Act No. 7610.

On March 29, 1999, an Information was filed against Perez,


charging him with violation of Section S(b) of Republic Act No.
7610 or the Special Protection of Children against Child Abuse,
Exploitation and Discrimination Act: [6]

[T]hat on or about the 7  day of November 1998, in Quezon City,


th

Philippines, the said accused, with lewd design, did, then and
there willfully, unlawfully, feloniously commit an act of sexual
abuse upon the person of [AAA], a minor, 12 years of age, by
then and there inserting his finger [into] her private organ while
mashing her breast against her will and without her consent
which act debases, degrades or demeans the intrinsic worth and
dignity of complainant as a human being, to the damage and
prejudice of the said offended party.

CONTRARY TO LAW. [7]

Perez pleaded not guilty during arraignment.  Pre-trial was held,


[8]

wherein the prosecution and the defense stipulated the following:


1. That at the time of the commission of the crime, the minor,
the victim in this case was only 12 years of age; and
2. That the accused was residing at that time at No. 4,
Pangasinan Street, Luzviminda Street, Brgy. Batasan Hills,
Quezon City. [9]

Thereafter, trial on the merits ensued.  The prosecution [10]

presented AAA,  SPO4 Mila Billones (SPO4 Billones), and Dr.


[11]

Winston Tan (Dr. Tan) as its witnesses. [12]

AAA testified that she met Perez for the first time on November 6,
1998 when she attended her cousin BBB's birthday party. The
next day, November 7, 1998, she saw Perez again when she
visited her friend CCC at her house. Aside from her, Perez, and
CCC, their other companions inside the house were BBB, DDD,
and EEE.[13]

AAA recalled that she was wearing a sleeveless blouse, a skirt,


and cycling shorts under her skirt that day.[14]

AAA narrated that she "went to the kitchen to drink water."  She [15]

saw Perez following her.  After drinking, Perez "kissed her on the
[16]

nape and simultaneously told her to keep silent."  Then, Perez


[17]

slid his finger in her vagina while mashing her breasts. AAA
stated that it was painful when Perez inserted his finger. She
attempted to remove his hands but he forced himself. Because
she was very afraid, she failed to fight back. Perez succeeded in
his sexual advances, which lasted for around ten seconds. He
then told her not to tell anybody about what happened. [18]

AAA later narrated what happened to her other cousin FFF, who
disclosed the incident to AAA's parents. Her parents reported the
incident to the barangay officials, who eventually referred the
matter to the police for investigation.
[19]

SPO4 Billones testified that she was the women's desk officer who
interviewed AAA. At first, AAA hesitated to answer the questions
but eventually disclosed what happened. SPO4 Billones observed
that AAA almost cried when she narrated that Perez inserted his
finger into her vagina. After the interview, she prepared AAA's
statement and thereafter filed the case. She also recommended
AAA to undergo further medical examination. [20]

Dr. Tan testified that he was a Medico-Legal Officer of the


Philippine National Police Crime Laboratory in Camp Crame,
Quezon City.  He examined AAA and stated in his Medico Legal
[21]

Report that there were "signs of physical abuse, particularly, deep


healed laceration at three (3) o'clock on the hymen of [AAA] and
ecchymosis in the right mammary region."  He noted that the
[22]

laceration was consistent with AAA's allegation of sexual abuse


and that the ecchymosis or bruising matched with the date of the
alleged incident.  However, he also testified that the "injuries can
[23]

likewise be inflicted in a consensual relationship." [24]

Meanwhile, he defense presented Perez; his sister, Alma Perez


(Alma); and CCC as its witnesses. [25]

At the time of his testimony on May 23, 2005, Perez mentioned


that he was 26 years old. Thus, he was about 19 years old in
1998 when the offense was committed. [26]

Perez denied abusing AAA. He stated that he first met AAA on


October 17, 1998. AAA purportedly infonned him that she was
already 16 years old. He testified that he was not romantically
involved with AAA. However, AAA supposedly gave him a love
letter through Alma but he did not reciprocate her affection. He
admitted that he met AAA again at BBB's birthday on November
6, 1998.[27]

Perez narrated that on the day of the alleged incident, he and his
aunt, Nena Rodrigo, went to a school in New Manila. He left her
aunt around 6:00p.m. and went straight home. [28]

Perez added that on November 11, 1998, AAA filed a complaint


against him for slander before the barangay. They were able to
settle the matter, and their agreement was put in writing. [29]

Alma testified that she noticed that AAA liked her brother Perez.
She was also surprised when AAA gave her a love letter for her
brother. She stated that AAA went to their place frequently and
that she talked to her at BBB 's party. [30]

CCC testified that she, AAA, and BBB were together on the day of
the alleged incident. However, she swore that she did not see
Perez enter her house. She also did not see anything unusual
with AAA that day. She claimed that they just slept for five (5)
hours the whole time they were together. [31]
On March 8, 2010, the Regional Trial Court rendered a Judgment,
 finding Perez guilty beyond reasonable doubt of violation of
[32]

Section S(b) of Republic Act No. 7610, in relation to Article 336 of


the Revised Penal Code.  It held that the prosecution was able to
[33]

establish the presence of all elements of violation of Section S(b).


Perez likewise failed to provide proof of his alibi.  Lastly, it noted
[34]

that "the location as well as the presence of other persons [are]


not a barometer that a rapist will be deterred in his lustful
intentions to commit the crime of rape if and when his urgings
call for it."
[35]

The dispositive portion of the trial court Judgment provided:


WHEREFORE, judgment is hereby rendered finding accused
Pedro Perez GUILTY beyond reasonable doubt of Violation of R.A.
7610, otherwise known as the "Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act in
relation to Article 336 of the Revised Penal Code, as amended,
and is sentenced to suffer an indeterminate penalty of EIGHT
(8) YEARS and ONE (1) DAY OF PRISION MAYOR IN ITS
MEDIUM PERIOD AS MINIMUM TO FOURTEEN (14)
YEARS and EIGHT (8) MONTHS OF RECLUSION TEMPORAL IN
ITS MINIMUM PERIOD AS MAXIMUM.

Accused Pedro Perez is likewise ordered to pay FIFTY THOUSAND


PESOS (P50,000.00) as moral damages and TWENTY[]FIVE
THOUSAND PESOS (P25,000.00) as exemplary damages plus
costs of suit.

SO ORDERED.  (Emphasis in the original)


[36]

Perez filed an appeal  before the Court of Appeals.


[37] [38]

On September 30, 2011, the Court of Appeals promulgated a


Decision,  dismissing the appeal and affirming the trial court's
[39]

Judgment.  The dispositive portion of this Decision provided:


[40]

WHEREFORE, premises considered, the instant appeal is


hereby DISMISSED. Accordingly, the assailed Judgment of the
Regional Trial Court of Quezon City (RTC), Branch 94, dated
March 8, 2010 is AFFIRMED in toto.
SO ORDERED.  (Emphasis in the original)
[41]

Perez moved for reconsideration,  which was denied by the Court


[42]

of Appeals in its April 10, 2012 Resolution. [43]

On May 30, 2012, Perez filed a Petition for Review  before this [44]

Court. Respondent People of the Philippines, through the Office of


the Solicitor General, filed its Comment  on September 6, 2013.
[45]

Meanwhile, petitioner filed a Manifestation and Motion (In Lieu of


Reply)  on September 30, 2013.
[46]

On April 7, 2014, this Court issued a Resolution  giving due [47]

course to the petition. The parties subsequently submitted their


respective Memoranda. [48]

In his pleadings, petitioner asserts that the situation created by


AAA is improbable and not in line with common human
experience, given her tight fitting clothes at the time of the
incident. Although not impenetrable, her attire was restricting
and the time needed to consummate the alleged act was enough
for her to ask for help from her companions. AAA likewise fails to
mention how petitioner subdued her in spite of her resistance.
Petitioner stresses that the alleged crime occurred in close
proximity of other persons. It is then impossible that nobody
noticed what was happening. [49]

Petitioner points out that the medico-legal officer testified that


there was a possibility that the injuries sustained by AAA were
inflicted with her consent in a sexual relationship.  In addition to
[50]

his denial of any romantic relationship with AAA,  he claims that
[51]

"the medico-legal report did not conclusively prove that [he] was
responsible for [AAA's] vaginal laceration." [52]

Finally, petitioner contends that assuming a crime was


committed, it should only be acts of lasciviousness under Article
336 of the Revised Penal Code since the prosecution failed to
prove beyond reasonable doubt the presence of the elements of
child abuse.  Petitioner explains:
[53]
[B]efore an accused may be convicted of child abuse through
lascivious conduct involving a minor below twelve (12) years of
age, the requisites for acts of lasciviousness under Article 336 of
the Revised Penal Code must be met IN ADDITION to the
requisites for sexual abuse under Section 5 of R.A. No. 7610. The
elements of the offense aforementioned, are as follows:
"1. The accused commits the acts of sexual intercourse or lascivious conduct.

2 The said act is performed with a child exploited in prostitution or subjecte


sexual abuse.

3 The child, whether male or female, is below 18 years of age."  (Emphasis in th


[54]

citations omitted)
Petitioner claims that the prosecution failed to allege the second
element either in the Complaint or in the Information. According
to petitioner, the prosecution must also prove that AAA was
"exploited in prostitution or subjected to other sexual abuse"
aside from being subjected to acts of lasciviousness since these
are separate and distinct elements. [55]

On the other hand, respondent avers that petitioner tried to


challenge the credibility of the prosecution's witnesses when he
raised the matter of the attire worn by AAA and when he
questioned her reaction during the incident. However, respondent
pointed out that the trial court already found its witnesses
credible. Hence, the trial court's findings should be given great
weight considering that it did not commit any misappreciation of
facts. [56]

Respondent maintains that AAA's garment, no matter how tight-


fitting as petitioner claims, is not unpiercable and petitioner could
have easily slid his hand inside it. AAA's inaction is also
understandable since she was only 12 years old when the incident
happened and fear already overcame her when petitioner
threatened her not to speak or shout. [57]

In addition, the medico-legal report verifies AAA's claim that she


was sexually assaulted. This report and Dr. Tan's testimony
corroborate AAA's allegation that it was petitioner who committed
the crime.[58]

Respondent also counters that petitioner failed to timely question


the nature of his indictment since he only raised it for the first
time on appeal. Moreover, the allegations contained in the
Information sufficiently support a conviction for Child Abuse
under Section 5(b) of Republic Act No. 7610 in relation to Article
336 of the Revised Penal Code. [59]

There are two (2) issues for this Court's resolution:

First, whether the evidence sufficiently establishes AAA's


narrative; and

Second, whether all the elements charged m the Information are


sufficiently proven beyond reasonable doubt.

Petitioner advances the seeming impossibility of AAA's allegation


of child abuse considering AAA's outfit that day, her inaction
during and after the commission of the alleged act, and the
presence of other persons in the house where it happened.

Petitioner's contention has no merit.

This Court cannot accept this reasoning of petitioner. As correctly


found by the Court of Appeals:
This type of reasoning borders on the preposterous in that the
accused literally made it sound like the victim's cycling shorts
were made of impenetrable steel like a chastity belt. That, or he
is trying to portray himself as a hapless human being with wispy
cotton for arms such that the act of lifting a child's blouse or
adjusting her undergarment's waistband (to accommodate his
hand) pose a serious physical challenge that a man of his age and
built cannot hope to accomplish. This, at all, does not run afoul
with hurr1an experience as the accused so conveniently puts it.
On the contrary, this particular act of indecency is easily
attainable given the disparity in his strength and that of the
child's, the unique access by which the accused succeeded in his
dastardly act and, for good measure, the customary ascendancy
that adults have over children.

As so clearly described by the victim, the manner by which the


accused committed lasciviousness against her is not far removed
from the [other victims of acts of lasciviousness] before her. She
stated that the accused sneaked in after her when she walked
toward the kitchen to fetch herself a glass of water. There, hidden
from everyone else (the living room and the kitchen [were]
separated by a room), the accused took advantage of the
situation by inserting his fingers from behind her and fumbled her
breast that visibly resulted in a bruise. Young as she is, she
struggled as best as she could to remove herself from his grip but
the accused warned her not to scream or shout for help. For a
child of tenders (sic) age, such a stern warning from a fully grown
man was enough to kill off whatever courage she might have had
to scream for the others for assistance. [60]

In Awas v. People,  the 10-year-old victim likewise failed to


[61]

shout for help when the accused touched her vagina.  This Court[62]

held that "[t]here is no standard behavior for a victim of a crime


against chastity."  Moreover, "[b]ehavioral psychology teaches
[63]

that people react to similar situations dissimilarly." [64]

In People v. Lomaque,  the accused sexually abused the victim


[65]

since she was eight (8) years old until she was 14 years old.
 The accused inserted either his penis or his finger in the
[66]

victim's vagina in more than 10 instances.  The victim also failed


[67]

to cry for help.  This Court held:


[68]

Neither the failure of "AAA" to struggle nor at least offer


resistance during the rape incidents would tarnish her credibility.
"Physical resistance need not be established when intimidation is
brought to bear on the victim and the latter submits herself out of
fear. As has been held, the failure to shout or offer tenuous
resistance does not make voluntary the victim's submission to the
criminal acts of the accused." Rape is subjective and not
everyone responds in the same way to an attack by a sexual
fiend. Although an older person may have shouted for help under
similar circumstances, a young victim such as "AAA" is easily
overcome by fear and may not be able to cry for help.

We have consistently ruled that "no standard form of behavior


can be anticipated of a rape victim following her defilement,
particularly a child who could not be expected to fully
comprehend the ways of an adult. People react differently to
emotional stress and rape victims are no different from
them."  (Citations omitted)
[69]

People v. Barcela  further elucidated the reaction of a minor


[70]

when something extremely and unexpectedly dreadful happens to


him or her:
Behavioral psychology teaches us that, even among adults,
people react to similar situations differently, and there is no
standard form of human behavioral response when one is
confronted with a startling or frightful experience. Let it be
underscored that these cases involve victims of tender years, and
with their simple, unsophisticated minds, they must not have fully
understood and realized at first the repercussions of the
contemptible nature of the acts committed against them. This
Court has repeatedly stated that no standard form of behavior
could be anticipated of a rape victim following her defilement,
particularly a child who could not be expected to fully
comprehend the ways of an adult.  (Citations omitted)
[71]

It is also not impossible for petitioner to commit the crime even if


there were other people nearby. In Barcela, the accused was able
to insert his finger inside the vagina of his 14-year-old
stepdaughter while the victim's mother and her other sister were
sleeping in the same room.  In People v. Divinagracia, Sr.,  the
[72] [73]

accused inserted his finger in the vagina of his eight (8)-year-old


daughter and raped her afterwards while his nine (9)year-old
daughter was lying beside her.  In People v. Gaduyon,  the
[74] [75]

accused inserted his finger into the vagina of his 12-year-old


daughter who was then sleeping on the upper portion of a
double-deck bed while his other daughter was on the lower
portion.[76]
This Court cannot emphasize enough that "lust is no respecter of
time and place."  Thus, "rape can be committed even in places
[77]

where people congregate, in parks, along the roadside, within


school premises and even inside a house where there are other
occupants or where other members of the family are also
sleeping."[78]

Furthermore, the victim in this case was able to positively identify


her assailant. She made a clear and categorical statement that
petitioner was the person who committed the crime against her.
Aside from petitioner's denial, he failed to present his aunt as a
witness or other documentary evidence to corroborate his alibi
that he went to a school on the day of the incident. In light of
AAA's positive declaration, petitioner's unsubstantiated defense
must fail following the doctrine that "positive identification
prevails over denial and alibi."
[79]

In People v. Amarela,  this Court had occasion to correct a


[80]

generalization of all women, which amounted to a stereotype,


thus:
More often than not, where the alleged victim survives to tell her
story of sexual depredation, rape cases are solely decided based
on the credibility of the testimony of the private complainant. In
doing so, we have hinged on the impression that no young
Filipina of decent repute would publicly admit that she has been
sexually abused, unless that is the truth, for it is her natural
instinct to protect her honor. However, this misconception,
particularly in this day and age, not only puts the accused at an
unfair disadvantage, but creates a travesty of justice.

The "women's honor" doctrine surfaced in our jurisprudence


sometime in 1960. In the case of People v. Taño, the Court
affirmed the conviction of three (3) armed robbers who took
turns raping a person named Herminigilda Domingo. The Court,
speaking through Justice Alejo Labrador, said:
It is a well-known fact that women, especially Filipinos, would not
admit that they have been abused unless that abuse had actually
happened. This is due to their natural instinct to protect their
honor. We cannot believe that the offended party would have
positively stated that intercourse took place unless it did actually
take place.
This opinion borders on the fallacy of non sequitor. And while the
factual setting back then would have been appropriate to say it is
natural for a woman to be reluctant in disclosing a sexual
assault[,] today, we simply cannot be stuck to the Maria
Clara stereotype of a demure and reserved Filipino woman. We,
should stay away from such mindset and accept the realities of a
woman's dynamic role in society today; she who has over the
years transformed into a strong and confidently intelligent and
beautiful person, willing to fight for her rights.  (Emphasis in the
[81]

original, citations omitted)


This Court then found the alleged victim's statement as less
credible than the inferences from the other established evidence
and proceeded to acquit the accused.

This Court in Amarela, however, did not go as far as denying the


existence of patriarchal dominance in many social relationships.
Courts must continue to be sensitive to the power relations that
come clothed in gender roles. In many instances, it does take
courage for girls or women to come forward and testify against
the boys or men in their lives who, perhaps due to cultural roles,
dominate them. Courts must continue to acknowledge that the
dastardly illicit and lustful acts of men are often veiled in either
the power of coercive threat or the inconvenience inherent in
patriarchy as a culture.

Even if it were true that AAA was infatuated with the accused, it
did not justify the indignity done to her. At the tender age of 12,
adolescents will nonnally be misled by their hormones and
mistake regard or adoration for love. The aggressive expression
of infatuation from a 12-year-old girl is never an invitation for
sexual indignities. Certainly, it does not deserve the accused's
mashing of her breasts or the insertion of his finger into her
vagina.
Consistent with our pronouncement in Amarela, AAA was
no Maria Clara. Not being the fictitious and generalized demure
girl, it does not make her testimony less credible especially when
supported by the other pieces of evidence presented in this case.

II

Petitioner asserts that even assuming that he is liable, he is only


liable for acts of lasciviousness since the prosecution failed to
prove all elements of child abuse under Section S(b) of Republic
Act No. 7610.

Petitioner is mistaken.

Article III, Section S(b) of Republic Act No. 7610 provides:


ARTICLE III
CHILD PROSTITUTION AND OTHER SEXUAL ABUSE

Section 5. Child Prostitution and Other Sexual Abuse. - Children,


whether male or female, who for money, profit, or any other
consideration or due to the coercion or influence of any adult,
syndicate or group, indulge in sexual intercourse or lascivious
conduct, are deemed to be children exploited in prostitution and
other sexual abuse.

The penalty of reclusion temporal in its medium period


to reclusion perpetua shall be imposed upon the following:

....

(b) Those who commit the act of sexual intercourse or lascivious


conduct with a child exploited in prostitution or subjected to other
sexual abuse; Provided, That when the victim is under twelve
(12) years of age, the perpetrators shall be prosecuted under
Article 335, paragraph 3, for rape and Article 336 of Act No.
3815, as amended, the Revised Penal Code, for rape or lascivious
conduct, as the case may be: Provided, That the penalty for
lascivious conduct when the victim is under twelve (12) years of
age shall be reclusion temporal in its medium period[.] (Emphasis
supplied)
Under Section 5(b), the elements of sexual abuse are:
(1) The accused commits the act of sexual intercourse or
lascivious conduct[;]

(2) The said act is performed with a child exploited in prostitution


or subjected to other sexual abuse[; and]

(3) The child, whether male or female, is below 18 years of age. [82]

The presence of the first and third elements is already


established. Petitioner admits in the pre-trial that AAA was only
12 years old at the commission of the crime. He also concedes
that if ever he is liable, he is liable only for acts of lasciviousness.
However, petitioner claims that the second element is wanting.
For petitioner, the prosecution must show that AAA was
"exploited in prostitution or subjected to other sexual abuse."

A thorough review of the records reveals that the second element


is present in this case.

This Court in People v. Villacampa  explained:


[83]

[T]he second element is that the act is performed with a child


exploited in prostitution or subjected to other sexual abuse. To
meet this element, the child victim must either be exploited in
prostitution or subjected to other sexual abuse. In Quimvel v.
People, the Court held that the fact that a child is under the
coercion and influence of an adult is sufficient to satisfy this
second element and will classify the child victim as one subjected
to other sexual abuse. The Court held:
To the mind of the Court, the allegations are sufficient to classify
the victim as one "exploited in prostitution or subject to other
sexual abuse." This is anchored on the very definition of the
phrase in Sec. 5 of RA 7610, which encompasses children who
indulge in sexual intercourse or lascivious conduct (a) for money,
profit, or any other consideration; or (b) under the coercion or
influence of any adult, syndicate or group.
Correlatively, Sec. S(a) of RA 7610 punishes acts pertaining to or
connected with child prostitution wherein the child is abused
primarily for profit. On the other hand, paragraph (b) punishes
sexual intercourse or lascivious conduct committed on a child
subjected to other sexual abuse. It covers not only a situation
where a child is abused for profit but also one in which a child,
through coercior., intimidation or influence, engages in sexual
intercourse or lascivious conduct. Hence, the law punishes not
only child prostitution but also other forms of sexual abuse
against children....  (Emphasis supplied, citations omitted)
[84]

In Ricalde v. People,  this Court clarified:


[85]

The first paragraph of Article III, Section 5 of Republic Act No.


7610 clearly provides that "children ... who ... due to the coercion
... of any adult ... indulge in sexual intercourse ... are deemed to
be children exploited in prostitution and other sexual abuse." The
label "children exploited in ... other sexual abuse" inheres in a
child who has been the subject of coercion and sexual
intercourse.

Thus, paragraph (b) refers to a specification only as to who is


liable and the penalty to be imposed. The person who engages in
sexual intercourse with a child already coerced is liable.
 (Underscoring in the original)
[86]

By analogy with the ruling in Ricalde, children who are likewise


coerced in lascivious conduct are "deemed to be children
exploited in prostitution and other sexual abuse." When petitioner
inserted his finger into the vagina of AAA, a minor, with the use
of threat and coercion, he is already liable for sexual abuse.

III

This Court affirms the finding of guilt beyond reasonable doubt of


petitioner for the charge of child abuse under Section 5(b) of
Republic Act No. 7610. However, this Court modifies the penalty
imposed by the trial court, as affirmed by the Court of Appeals.

Under Section 5(b), "the penalty for lascivious conduct when the
victim is under twelve (12) years of age shall be reclusion
temporal in its medium period." Reclusion temporal in its medium
period is fourteen (14) years, eight (8) months, and one (1) day
to seventeen (17) years and four (4) months.

In People v. Pusing,  this Court imposed the indeterminate


[87]

penalty of fourteen (14) years, eight (8) months, and one (1) day
of reclusion temporal as minimum, to seventeen (17) years and
four (4) months of reclusion temporal as maximum for the
criminal case of child abuse.  This Court also awarded
[88]

P50,000.00 as civil indemnity, P50,000.00 as moral damages,


and P30,000.00 as exemplary damages.  Additionally, "interest
[89]

at the legal rate of 6% per annum [was imposed on all damages


awarded] from the date of finality of [the] judgment until fully
paid."
[90]

WHEREFORE, this Court ADOPTS the findings of fact and


conclusions of law of the Court of Appeals September 30, 2011
Decision in CA-G.R. CR No. 33290, with MODIFICATION as
follows:
WHEREFORE, judgment is hereby rendered finding accused
Pedro Perez GUILTY beyond reasonable doubt of violation of R.A.
7610, otherwise known as the "Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act in
relation to Article 336 of the Revised Penal Code, as amended,
and is sentenced to suffer an indeterminate penalty
of FOURTEEN (14) YEARS, EIGHT (8) MONTHS, and ONE
(1) DAY OF RECLUSION TEMPORAL AS MINIMUM TO
SEVENTEEN (17) YEARS and FOUR (4) MONTHS OF
RECLUSION TEMPORAL AS MAXIMUM.

Accused Pedro Perez is likewise ordered to pay FIFTY


THOUSAND PESOS (P50,000.00) as civil indemnity, FIFTY
THOUSAND PESOS (P50,000.00) as moral damages, and
THIRTY THOUSAND PESOS (P30,000.00) as exemplary
damages plus costs of suit.
All awards for damages shall earn interest at the legal rate
of six percent (6%) per annum from the date of finality of
this judgment until fully paid.

SO ORDERED.
SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

June 26, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on April 18, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on June 26, 2018 at 1:18 p.m.

[1]
 Rollo, pp. 9-29.

 Id. at 85-95. The Decision was penned by Associate Justice


[2]

Stephen C. Cruz and concurred in by Associate Justices Isaias P.


Dicdican and Rodil V. Zalameda of the Special Sixteenth Division,
Court of Appeals, Manila.
 Id. at 103-104. The Resolution was penned by Associate Justice
[3]

Stephen C. Cruz and concurred in by Associate Justices Isaias P.


Dicdican and Rodil V. Zalameda of the Former Special Sixteenth
Division, Court of Appeals, Manila.

[4]
 Id. at 25.

 Id. at 48-58. The Judgment, docketed as Criminal Case No. Q-


[5]

99-84282, was penned by Presiding Judge Roslyn M. Rabara-Tria


of Branch 94, Regional Trial Court, Quezon City.

[6]
 Id. at 48 and 85-86.

[7]
 Id. at 48.

[8]
 Id.

[9]
 Id.

[10]
 Id.

 The fictitious initials "AAA" represent the victim-survivor's real


[11]

name. In People v. Cabalquinto (533 Phil. 703 (2006) [Per J.


Tinga, En Banc]), this Court discussed the need to withhold the
victim's real name and other information that would compromise
the victim's identity, applying the confidentiality provisions of: (1)
Republic Act No. 7610 (Special Protection of Children Against
Child Abuse, Exploitation and Discrimination Act) and its
implementing rules; (2) Republic Act No. 9262 (Anti-Violence
Against Women and their Children Act of 2004) and its
implementing rules; and (3) this Court's October 19, 2004
resolution in A.M. No. 04-10-11-SC (Rule on Violence Against
Women and their Children).

[12]
 Rollo, p. 49 and 87-88.

[13]
 Id. at 49.
[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id. at 49-50 and 87.

[19]
 Id. at 50 and 87.

[20]
 Id. at 50 and 88.

[21]
 Id. at 50.

[22]
 Id.

[23]
 Id. at 50 and 87.

[24]
 Id. at 50.

[25]
 Id. at 50-51 and 86-87.

[26]
 Id. at 54.

[27]
 Id. at 50-51 and 86.

[28]
 Id.

[29]
 Id. at 51.

[30]
 Id.

[31]
 Id. at 86-87.

[32]
 Id. at 48-58.
[33]
 Id. at 57.

[34]
 Id. at 51-57.

[35]
 Id. at 56.

[36]
 Id. at 57.

[37]
 Id. at 30-47.

[38]
 Id. at 85.

[39]
 Id. at 85-95.

[40]
 Id. at 94.

[41]
 Id.

[42]
 Id. at 96-99.

[43]
 Id. at 103-104.

[44]
 Id. at 9-29.

[45]
 Id. at 127-153.

[46]
 Id. at 154-157.

[47]
 Id. at 161.

 Id. at 166-192, People of the Philippines' Memorandum filed on


[48]

July 7, 2014, and 198-213, Pedro Perez's Memorandum filed on


August 4, 2014.

[49]
 Id. at 203-205.

[50]
 Id. at 206.
[51]
 Id. at 86.

[52]
 Id. at 206.

[53]
 Id. at 206-210.

[54]
 Id. at 208-210.

[55]
 Id.

[56]
 Id. at 171-180.

[57]
 Id.

[58]
 Id. at 180-181.

[59]
 Id. at 181-188.

 Id. at 89-90. There was no finding in the trial court or in the


[60]

Court of Appeals as to the physical built of the accused in relation


to that of the victim's physique.

 G.R.
[61]
No. 203114, June 28, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/june2017/203114.pdf> [Per J.
Bersamin, Third Division].

[62]
 Id. at 5.

[63]
 Id.

[64]
 Id.

[65]
 710 Phil. 338 (2013) [Per J. Del Castillo, Second Division].

[66]
 Id. at 344-346.

[67]
 Id.
[68]
 Id. at 351.

[69]
 Id. at 352.

[70]
 734 Phil. 332 (2014) [Per J. Mendoza, Third Division].

[71]
 Id. at 344.

[72]
 Id. at 338.

 G.R.
[73]
No. 207765, July 26, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/207765.pdf> [Per J. Leonen,
Second Division].

[74]
 Id. at 3.

[75]
 720 Phil. 750 (2013) [Per J. Del Castillo, Second Division].

[76]
 Id. at 758.

 People v. Cesista, 435 Phil. 250, 267 (2002) [Per J. Kapunan,


[77]

En Banc]. See also People v. Evina, 453 Phil. 25, 41 (2003) [Per


J. Callejo, Sr., Second Division], People v. Calamlam, 451 Phil.
283, 296 (2003) [Per J. Carpio Morales, Third Division], People v.
Besmonte, 445 Phil. 555, 564 (2003) [Per J. Quisumbing, Second
Division], and People v. Lomaque, 710 Phil. 338, 353 (2013) [Per
J. Del Castillo, Second Division].

 People v. Evina, 453 Phil. 25, 41 (2003) [Per J. Callejo, Sr.,


[78]

Second Division].

 People v. Lubong, 388 Phil. 474, 491 (2000) [Per J. Gonzaga-


[79]

Reyes, Third Division].

 G.R.
[80]
Nos. 225642-43, January 17, 2018
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/225642-43.pdf> [Per J.
Martires, Third Division].

[81]
 Id. at 7.

 People v. Villacampa, G.R. No. 216057, January 8, 2018


[82]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/216057.pdf> [Per J.
Carpio, Second Division]. See also People v. Gaduyon, 720 Phil.
750, 768-769 (2013) [Per J. Del Castillo, Second
Division]; People v. Fragante, 657 Phil. 577, 596 (2011) [Per J.
Carpio, Second Division]; Awas v. People, G.R. No. 203114, June
28, 2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/june2017/203114.pdf> 6 [Per J.
Bersamin, Third Division].

 G.R. No. 216057, January 8, 2018 [Per J. Carpio, Second


[83]

Division].

[84]
 Id.

[85]
 751 Phil. 793 (2015) [Per J. Leonen, Second Division].

[86]
 Id. at 813-814.

 789 Phil. 541 (2016) [Per J. Leonen, Second Division]. See also


[87]

People v. Gaduyon, 720 Phil. 750, 780 (2013) [Per J. Del Castillo,
Second Division], wherein this Court initially imposed the penalty
of reclusion temporal for violation of Section 5 of Republic Act No.
7610 but was later increased to reclusion perpetua due to the
aggravating circumstance of relationship.

 People v. Pusing, 789 Phil. 541, 563 (2016) [Per J. Leonen,


[88]

Second, Division].

[89]
 Id.
[90]
 Id. at 562.

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THIRD DIVISION

[ G.R. No. 196795, March 07, 2018 ]


INTRAMUROS ADMINISTRATION, PETITIONER,
VS. OFFSHORE CONSTRUCTION DEVELOPMENT
COMPANY, RESPONDENT.DECISION

LEONEN, J.:

The sole issue in ejectment proceedings is determining which of


the parties has the better right to physical possession of a piece
of property. The defendant's claims and allegations in its answer
or motion to dismiss do not oust a trial court's jurisdiction to
resolve this issue.

This is a Petition for Review on Certiorari  under Rule 45 of the


[1]

Rules of Court, assailing the April 14, 2011 Decision  of Branch [2]

173, Regional Trial Court, Manila in Civil Case No. 10-124740.


The Regional Trial Court affirmed in toto  the October 19, 2010
Order  of Branch 24, Metropolitan Trial Court, Manila in Civil Case
[3]

No. 186955-CV, dismissing Intramuros Administration's


(Intramuros) Complaint for Ejectment against Offshore
Construction and Development Company (Offshore Construction)
on the grounds of forum shopping and lack of jurisdiction.

In 1998, Intramuros leased certain real properties of the national


government, which it administered to Offshore Construction.
Three (3) properties were subjects of Contracts of Lease:
Baluarte De San Andres, with an area of 2,793 sq. m.;  Baluarte
[4]

De San Francisco De Dilao, with an area of 1,880 sq. m.;  and [5]

Revellin De Recoletos, with an area of 1,036 sq. m.   All three (3)


[6]

properties were leased for five (5) years, from September 1,


1998 to August 31, 2003. All their lease contracts also made
reference to an August 20, 1998 memorandum of stipulations,
which included a provision for lease renewals every five (5) years
upon the parties' mutual agreement. [7]

Offshore Construction occupied and introduced improvements in


the leased premises. However, Intramuros and the Department of
Tourism halted the projects due to Offshore Construction's non-
conformity with Presidential Decree No. 1616, which required
16  to 19  centuries' Philippine-Spanish architecture in the area.
th th

 Consequently, Offshore Construction filed a complaint with


[8]

prayer for preliminary injunction and temporary restraining order


against Intramuros and the Department of Tourism before the
Manila Regional Trial Court,  which was docketed as Civil Case
[9]

No. 98-91587. [10]

Eventually, the parties executed a Compromise Agreement on


July 26, 1999, which the Manila Regional Trial Court approved on
[11] 

February 8, 2000.  In the Compromise Agreement, the parties


[12]

affirmed the validity of the two (2) lease contracts but terminated
the one over Revellin de Recoletos.  The Compromise Agreement
[13]

retained the five (5)-year period of the existing lease contracts


and stated the areas that may be occupied by Offshore
Construction:

FROM:
(1) Baluarte de San Andres
TO:
(1)

(a) Two (2) restaurants as Asean Garden. Each will have an aggregate area of tw
square meters (200 sq. mtrs.);

(b) One (1) kiosk at Puerta Isabel Garden fronting Terraza de la Reyna with an
area of twenty (20) square meters;

(c) Three (3) restaurants at the chambers of Puerta Isabel II with an aggrega
1,180.5 sq.m.;

(d) One (1) restaurant at Fort Santiago American Barracks. Subject to IA Guid
maximum floor area will be the perimeter walls of the old existing building;

FROM:
(2) Baluarte De San Francisco Dilao
TO:

(2) All seven (7) structures including the [Offshore Construction] Administration Bu
Trellises shall be transferred [t]o Cuartel de Sta. Lucia, [O]therwise known
Barracks[.] [14]

During the lease period, Offshore Construction failed to pay its


utility bills and rental fees, despite several demand letters.
 Intramuros tolerated the continuing occupation, hoping that
[15]

Offshore Construction would pay its arrears. As of July 31, 2004,


these arrears allegedly totaled P6,762,153.70. [16]

To settle its arrears, Offshore Construction proposed to pay the


Department of Tourism's monthly operational expenses for lights
and sound equipment, electricity, and performers at the Baluarte
Plano Luneta de Sta. Isabel. Intramuros and the Department of
Tourism accepted the offer, and the parties executed a
Memorandum of Agreement covering the period of August 15,
2004 to August 25, 2005. [17]

However, Offshore Construction continued to fail to pay its


arrears, which amounted to P13,448,867.45 as of December 31,
2009. On March 26, 2010, Offshore Construction received
Intramuros' latest demand letter. [18]

Intramuros filed a Complaint for Ejectment before the Manila


Metropolitan Trial Court on April 28, 2010.  Offshore [19]

Construction filed its Answer with Special and Affirmative


Defenses and Compulsory Counterclaim. [20]

On July 12, 2010, Offshore Construction filed a Very Urgent


Motion,  praying that Intramuros' complaint be dismissed on the
[21]

grounds of violation of the rule on non-forum shopping, lack of


jurisdiction over the case, and litis pendentia. First, it claimed
that Intramuros failed to inform the Metropolitan Trial Court that
there were two (2) pending cases with the Manila Regional Trial
Court over Puerta de Isabel II.  Second, it argued that the
[22]

Metropolitan Trial Court did not acquire jurisdiction over the case
since the relationship between the parties was not one of lessor-
lessee but governed by a concession agreement.  Finally, it
[23]

contended that Intramuros' cause of action was barred by litis


pendentia,  since the pending Regional Trial Court cases were
over the same rights, claims, and interests of the parties. [24]

In its October 19, 2010 Order,  the Metropolitan Trial Court


[25]

granted the motion and dismissed the case. Preliminarily, it found


that while a motion to dismiss is a prohibited pleading under the
Rule on Summary Procedure, Offshore Construction's motion was
grounded on the lack of jurisdiction over the subject matter. [26]

The Metropolitan Trial Court found that Intramuros committed


forum shopping and that it had no jurisdiction over the case. [27]

First, it pointed out that there were two (2) pending cases at the
time Intramuros filed its complaint: Civil Case No. 08-119138 for
specific performance filed by Offshore Construction against
Intramuros, and SP CA No. 10-123257 for interpleader against
Offshore Construction and Intramuros filed by 4H Intramuros,
Inc. (4H Intramuros),  which claimed to be a group of
[28]

respondent's tenants.[29]
The Metropolitan Trial Court found that the specific performance
case was anchored on Offshore Construction's rights under the
Compromise Agreement. In that case, Offshore Construction
claimed that it complied with its undertakings, but Intramuros
failed to perform its obligations when it refused to offset Offshore
Construction's expenses with the alleged unpaid rentals. The
interpleader case, on the other hand, dealt with Offshore
Construction's threats to evict the tenants of Puerta de Isabel II.
4H Intramuros prayed that the Regional Trial Court determine
which between Offshore Construction and Intramuros was the
rightful lessor of Puerta de Isabel II.
[30]

The Metropolitan Trial Court found that the cause of action in


Intramuros' complaint was similar with those in the specific
performance and interpleader cases. Any judgment in any of
those cases would affect the resolution or outcome in the
ejectment case, since they would involve Offshore Construction's
right to have its expenses offset from the rentals it owed
Intramuros, and the determination of the rightful lessor of Puerta
de Isabel II. The Metropolitan Trial Court pointed to the arrears in
rentals that Intramuros prayed for as part of its complaint.
Further, Intramuros failed to disclose the specific performance
and interpleader cases in its certification against forum shopping.
[31]

Second, the Metropolitan Trial Court held that it had no


jurisdiction over the complaint. While there were lease contracts
between the parties, the existence of the other contracts between
them made Intramuros and Offshore Construction's relationship
as one of concession. Under this concession agreement, Offshore
Construction undertook to develop several areas of the
Intramuros District, for which it incurred expenses. The trial court
found that the issues could not be mere possession and rentals
only. [32]

Intramuros appealed the October 19, 2010 Order with the


Regional Trial Court. On April 14, 2011, the Regional Trial Court
affirmed the Municipal Trial Court October 19, 2010 Order in toto.
[33]

On May 25, 2011, Intramuros, through the Office of the Solicitor


General, filed a Motion for Extension of Time to File Petition for
Review on Certiorari (Motion for Extension) before this Court. It
prayed for an additional 30 days, or until June 16, 2011, within
which to file its petition for review on solely on questions of law.
[34]

On June 16, 2011, Intramuros filed its Petition for Review on


Certiorari,  assailing the April 14, 2011 Decision of the Regional
[35]

Trial Court.

In its Petition for Review, Intramuros argues that the Regional


Trial Court erred in upholding the Metropolitan Trial Court findings
that it had no jurisdiction over Intramuros' ejectment
complaint  and that it committed forum shopping.
[36] [37]

First, Intramuros argues that Offshore Construction's Very Urgent


Motion should not have been entertained by the Metropolitan Trial
Court as it was a motion to dismiss, which was prohibited under
the Rule on Summary Procedure.  It claims that the Metropolitan
[38]

Trial Court could have determined the issue of jurisdiction based


on the allegations in its complaint. It points out that "jurisdiction
over the subject matter is determined by the allegations [in] the
complaint" and that the trial court's jurisdiction is not lost "just
because the defendant makes a contrary allegation" in its
defense.  In ejectment cases, courts do not lose jurisdiction by a
[39]

defendant's mere allegation that it has ownership over the 


litigated property. It holds that the Metropolitan Trial Court did
not lose jurisdiction when Offshore Construction alleged that its
relationship with Intramuros is one of concession, that the cause
of action accrued in 2003, and that there was litis pendentia and
forum shopping. It contends that the sole issue in an ejectment
suit is the summary restoration of possession of a piece of land or
building to the party that was deprived of it.  Thus, the [40]

Metropolitan Trial Court gravely erred in granting Offshore


Construction's motion to dismiss despite having jurisdiction over
the subject matter of Intramuros' complaint. [41]

Second, Intramuros avers that it did not commit forum shopping


as to warrant the dismissal of its complaint. It claims that while
there were pending specific performance and interpleader cases
related to the ejectment case, Intramuros was not guilty of forum
shopping since it instituted neither action and did not seek a
favorable ruling as a result of an earlier adverse opinion in these
cases.  Intramuros points out that it was Offshore Construction
[42]

and 4H Intramuros which filed the specific performance and


interpleader cases, respectively.  In both cases, Intramuros was
[43]

the defendant and did not seek possession of Puerta de Isabel II


as a relief in its answers to the complaints.  Moreover, the issues
[44]

raised in these earlier cases were different from the issue of


possession in the ejectment case. The issue in the specific
performance case was whether or not Intramuros should offset
the rentals in arrears from Offshore Construction's expenses in
continuing the WOW Philippines Project.  Meanwhile, the issue in
[45]

the interpleader case was to determine which between


Intramuros and Offshore Construction was the rightful lessor of
Puerta de Isabel II.
[46]

Finally, Intramuros maintains that there is no concession


agreement between the parties, only lease contracts that have
already expired and are not renewed. It argues that there is no
basis for alleging the existence of a concession agreement. It
points out that in the Contracts of Lease and Memorandum of
Agreement entered into by Intramuros and Offshore
Construction, the expiry of the leases would be on August 31,
2003. Afterwards, Intramuros tolerated Offshore Construction's
continued occupation of its properties in hopes that it would pay
its arrears in due course.[47]

On July 20, 2011, this Court issued its Resolution  granting the
[48]

Motion for Extension and requiring Offshore Construction to


comment on the Petition for Review.
On October 10, 2011, Offshore Construction filed its
Comment  to the Petition for Review. In its Comment, Offshore
[49]

Construction argues that the Petition for Review should be


dismissed because it violates the principle of hierarchy of courts
and raises questions of fact.  It points out that Intramuros did
[50]

not move for the reconsideration of the Regional Trial Court April
14, 2011 Decision. Instead of directly filing with this Court,
Intramuros should have filed a Petition for Review with the Court
of Appeals, in accordance with Rule 42 of the Rules of Court.  It [51]

claims that Intramuros raises questions of fact in its Petition for


Review, namely, the expiration of the Contracts of Lease and the
business concession in favor of Offshore Construction. [52]

In its November 21, 2011 Resolution, this Court noted the


Comment and required Intramuros to file its Reply. [53]

On March 12, 2012, Intramuros filed its Reply  to the Comment.
[54]

It argues that direct resort to this Court is proper because the


issues it raises in its Petition for Review do not require review of
evidence to resolve, and the facts of the case are undisputed.  It [55]

claims that the nature of Intramuros and Offshore Construction's


relationship is never an tssue because all the documents
referenced and relied upon by the parties were lease agreements.
[56]

On August 23, 2012, this Court gave due course to the Petition
for Review and ordered both parties to submit their memoranda. [57]

On January 7, 2013, Intramuros filed its Memorandum,  while [58]

Offshore Construction filed its Memorandum   on August 16,


[59]

2013.

In its Memorandum, Offshore Construction claims that it occupies


Puerta de Isabel II by virtue of a legal concession based not only
on the parties' contracts but also on the contemporaneous and
subsequent acts of Intramuros and Offshore Construction. It
argues that under the Contracts of Lease, Offshore Construction
was required to invest around P20,000,000.00 worth of
investments in the leased properties and that it lost its initial
investments, which were demolished due to adverse criticism by
then- Intramuros Administrator Anna Maria L. Harper. Under the
Compromise Agreement, Offshore Construction was again
required to make new developments, again worth millions of
pesos. Offshore Construction claims that these conditions make
their relationship not one of mere lessor and lessee. [60]

Further, it attests that Intramuros committed illegal and inhuman


acts, and injustice against it and its sublessees, allegedly because
the Contracts of Lease had expired.  Moreover, it points out that
[61]

Intramuros only filed the ejectment complaint in 2010, even


though the Contracts of Lease expired on August 31, 2003. It
argues that Intramuros was guilty of estoppel in pais,  since it
continued to accept rental payments as late as July 10, 2009.
 Assuming that the lease contracts had expired, these contracts
[62]

were impliedly renewed by the mutual and voluntary acts of the


parties, in accordance with Article 1670 of the Civil Code.
 Offshore Construction claims that there is now novation of the
[63]

Contracts of Lease, and the courts may fix a period for them,
 pursuant to Article 1687 of the Civil Code.  It reiterates its
[64] [65]

prayer that the Petition for Review be dismissed, due to questions


of fact more properly cognizable by the Court of Appeals. [66]

The issues to be resolved by this Court are:

First, whether or not direct resort to this Court is proper;

Second, whether or not the Metropolitan Trial Court had


jurisdiction over the ejectment complaint filed by Intramuros
Administration;

Third, whether or not Intramuros Administration committed


forum shopping when it filed its ejectment complaint despite the
pending cases for specific performance and interpleader; and

Finally, whether or not Intramuros Administration is entitled to


possess the leased premises and to collect unpaid rentals.
I

At the outset, petitioner should have filed a petition for review


under Rule 42 of the Rules of Court to assail the Regional Trial
Court's ruling upholding the Metropolitan Trial Court October 19,
2010 Order instead of filing a petition for review on certiorari
under Rule 45 with this Court.

Under Rule 42, Section 1 of the Rules of Court, the remedy from
an adverse decision rendered by a Regional Trial Court exercising
its appellate jurisdiction is to file a verified petition for review with
the Court of Appeals:

Section 1. How appeal taken; time for filing. — A party desiring to


appeal from a decision of the Regional Trial Court rendered in the
exercise of its appellate jurisdiction may file a verified petition for
review with the Court of Appeals, paying at the same time to the
clerk of said court the corresponding docket and other lawful
fees, depositing the amount of P500.00 for costs, and furnishing
the Regional Trial Court and the adverse party with a copy of the
petition. The petition shall be filed and served within fifteen (15)
days from notice of the decision sought to be reviewed or of the
denial of petitioner's motion for new trial or reconsideration filed
in due time after judgment. Upon proper motion and the payment
of the full amount of the docket and other lawful fees and the
deposit for costs before the expiration of the reglementary period,
the Court of Appeals may grant an additional period of fifteen
(15) days only within which to file the petition for review. No
further extension shall be granted except for the most compelling
reason and in no case to exceed fifteen (15) days.

Petitioner puts in issue before this Court the findings of the


Metropolitan Trial Court that it has no jurisdiction over the
ejectment complaint and that petitioner committed forum
shopping when it failed to disclose two (2) pending cases, one
filed by respondent Offshore Construction and the other filed by
respondent's group of tenants, 4H Intramuros. Both of these
cases raise questions of law, which are cognizable by the Court of
Appeals in a petition for review under Rule 42.

"A question of law exists when the law applicable to a particular


set of facts is not settled, whereas a question of fact arises when
the truth or falsehood of alleged facts is in doubt."  This Court
[67]

has ruled that the jurisdiction of a court over the subject matter
of a complaint  and the existence of forum shopping  are
[68] [69]

questions of law.

A petition for review under Rule 42 may include questions of fact,


of law, or mixed questions of fact and law.  This Court has
[70]

recognized that the power to hear cases on appeal in which only


questions of law are raised is not vested exclusively in this Court.
 As provided in Rule 42, Section 2, errors of fact or law, or both,
[71]

allegedly committed by the Regional Trial Court in its decision


must be specified in the petition for review:

Section 2. Form and Contents. — The petition shall be filed in


seven (7) legible copies, with the original copy intended for the
court being indicated as such by the petitioner, and shall (a) state
the full names of the parties to the case, without impleading the
lower courts or judges thereof either as petitioners or
respondents; (b) indicate the specific material dates showing that
it was filed on time; (c) set forth concisely a statement of the
matters involved, the issues raised, the specification of errors of
fact or law, or both, allegedly committed by the Regional Trial
Court,  and the reasons or arguments relied upon for the
allowance of the appeal; (d) be accompanied by clearly legible
duplicate originals or true copies of the judgments or final orders
of both lower courts, certified correct by the clerk of court of the
Regional Trial Court, the requisite number of plain copies thereof
and of the pleadings and other material portions of the record as
would support the allegations of the petition.
The petitioner shall also submit together with the petition a
certification under oath that he has not theretofore commenced
any other action involving the same issues in the Supreme Court,
the Court of Appeals or different divisions thereof, or any other
tribunal or agency; if there is such other action or proceeding, he
must state the status of the same; and if he should thereafter
learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he
undertakes to promptly inform the aforesaid courts and other
tribunal or agency thereof within five (5) days therefrom.
(Emphasis supplied)

Petitioner's direct resort to this Court, instead of to the Court of


Appeals for intermediate review as sanctioned by the rules,
violates the principle of hierarchy of courts.  In Diocese of
[72]

Bacolod v. Commission on Elections: [73]

The doctrine that requires respect for the hierarchy of courts was
created by this court to ensure that every level of the judiciary
performs its designated roles in an effective and efficient manner.
Trial courts do not only determine the facts from the evaluation of
the evidence presented before them. They are likewise competent
to determine issues of law which may include the validity of an
ordinance, statute, or even an executive issuance in relation to
the Constitution. To effectively perform these functions, they are
territorially organized into regions and then into branches. Their
writs generally reach within those territorial boundaries.
Necessarily, they mostly perform the all-important task of
inferring the facts from the evidence as these are physically
presented before them. In many instances, the facts occur within
their territorial jurisdiction, which properly present the 'actual
case' that makes ripe a determination of the constitutionality of
such action. The consequences, of course, would be national in
scope. There are, however, some cases where resort to courts at
their level would not be practical considering their decisions could
still be appealed before the higher courts, such as the Court of
Appeals.  (Citation omitted)
[74]

Nonetheless, the doctrine of hierarchy of courts is not inviolable,


and this Court has provided several exceptions to the doctrine.
 One of these exceptions is the exigency of the situation being
[75]

litigated.  Here, the controversy between the parties has been


[76]

dragging on since 2010, which should not be the case when the
initial dispute—an ejectment case—is, by nature and design, a
summary procedure and should have been resolved with
expediency.

Moreover, this Court's rules of procedure permit the direct resort


to this Court from a decision of the Regional Trial Court upon
questions of law, such as those which petitioner raises in this
case. In Barcenas v. Spouses Tomas and Caliboso: [77]

Nonetheless, a direct recourse to this Court can be taken for a


review of the decisions, final orders or resolutions of the RTC, but
only on questions of law. Under Section 5 of Article VIII of the
Constitution, the Supreme Court has the power to

(2) Review, revise, reverse, modify, or affirm on appeal or


certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:
....

(e) All cases in which only an error or question of law is involved.

This kind of direct appeal to this Court of RTC judgments, final


orders or resolutions is provided for in Section 2(c) of Rule 41,
which reads:

SEC. 2. Modes of appeal. —


....
(c) Appeal by certiorari. — In all cases where only questions of
law are raised or involved, the appeal shall be to the Supreme
Court by petition for review on certiorari in accordance with Rule
45.

Procedurally then, petitioners could have appealed the RTC


Decision affirming the MTC (1) to this Court on questions oflaw
only; or (2) if there are factual questions involved, to the CA —
as they in fact did. [78]

Thus, petitioner's resort to this Court is proper and warranted


under the circumstances.

II

In dismissing the complaint, the Metropolitan Trial Court found


that "[t]he issues . . . between the parties cannot be limited to a
simple determination of who has the better right of possession of
the subject premises or whether or not [petitioner] is entitled [to]
rentals in arrears."  It held that the relationship between the
[79]

parties was a "more complicated situation where jurisdiction is


better lodged with the regional trial court,"  upon a finding that
[80]

there was a concession, rather than a lease relationship between


the parties. [81]

It is settled that the only issue that must be settled in an


ejectment proceeding is physical possession of the property
involved.  Specifically, action for unlawful detainer is brought
[82]

against a possessor who unlawfully withholds possession after the


termination and expiration of the right to hold possession.[83]

To determine the nature of the action and the jurisdiction of the


court, the allegations in the complaint must be examined. The
jurisdictional facts must be evident on the face of the complaint.
 There is a case for unlawful detainer if the complaint states the
[84]

following:
(1) initially, possession of property by the defendant was by
contract with or by tolerance of the plaintiff;

(2) eventually, such possession became illegal upon notice by


plaintiff to defendant of the termination of the latter's right of
possession;

(3) thereafter, the defendant remained in possession of the


property and deprived the plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate
the property, the plaintiff instituted the complaint for ejectment.
 (Citation omitted)
[85]

A review of petitioner's Complaint for Ejectment shows that all of


these allegations were made.

First, petitioner alleges that respondent is its lessee by virtue of


three (3) Contracts of Lease. The validity of these contracts was
later affirmed in a Compromise Agreement, which modified
certain provisions of the previous leases but retained the original
lease period. Respondent does not dispute these contracts'
existence or their validity.

Second, following respondent's failure to pay rentals, petitioner


alleges that it has demanded that respondent vacate the leased
premises.

Third, respondent continues to occupy and possess the leased


premises despite petitioner's demand. This is admitted by
respondent, which seeks to retain possession and use of the
properties to "recoup its multi-million pesos worth of
investment." [86]

Fourth, petitioner filed its Complaint for Ejectment on April 28,


2010,  within one (1) year of its last written demand to
[87]
respondent, made on March 18, 2010 and received by respondent
on March 26, 2010.  Contrary to respondent's claim, the one (1)-
[88]

year period to file the complaint must be reckoned from the date
of last demand, in instances when there has been more than one
(1) demand to vacate. [89]

The Metropolitan Trial Court seriously erred in finding that it did


not have jurisdiction over petitioner's complaint because the
parties' situation has allegedly become "more complicated"  than
[90]

one of lease. Respondent's defense that its relationship with


petitioner is one of concession rather than lease does not
determine whether or not the Metropolitan Trial Court has
jurisdiction over petitioner's complaint. The pleas or theories set
up by a defendant in its answer or motion to dismiss do not affect
the court's jurisdiction.  In Morta v. Occidental:
[91] [92]

It is axiomatic that what determines the nature of an action as


well as which court has jurisdiction over it, are the allegations in
the complaint and the character of the relief sought. "Jurisdiction
over the subject matter is determined upon the allegations made
in the complaint, irrespective of whether the plaintiff is entitled to
recover upon a claim asserted therein — a matter resolved only
after and as a result of the trial. Neither can the jurisdiction of
the court be made to depend upon the defenses made by the
defendant in his answer or motion to dismiss. If such were the
rule, the question of jurisdiction would depend almost entirely
upon the defendant."  (Citations omitted)
[93]

Not even the claim that there is an implied new lease or tacita
reconduccion will remove the Metropolitan Trial Court's
jurisdiction over the complaint.  To emphasize, physical
[94]

possession, or de facto possession, is the sole issue to be


resolved in ejectment proceedings. Regardless of the claims or
defenses raised by a defendant, a Metropolitan Trial Court has
jurisdiction over an ejectment complaint once it has been shown
that the requisite jurisdictional facts have been alleged, such as
in this case. Courts are reminded not to abdicate their jurisdiction
to resolve the issue of physical possession, as there is a public
need to prevent a breach of the peace by requiring parties to
resort to legal means to recover possession of real property.[95]

III

In its October 19, 2010 Order, the Metropolitan Trial Court found
that petitioner committed forum shopping when it failed to
disclose that there were two (2) pending cases in other trial
courts concerning the same parties and similar causes of action.
These two (2) cases were Civil Case No. 08-119138 for specific
performance filed by respondent against petitioner; and SP CA
Case No. 10-123257 for interpleader filed by 4H Intramuros. Both
cases were pending with the Manila Regional Trial Court. The
Metropolitan Trial Court found that if it decides petitioner's
Complaint for Ejectment, its ruling would conflict with any
resolution in the specific performance and interpleader cases,
since the same contracts were involved in all three (3) cases. It
found that the parties were the same and the reliefs prayed for
were the same.

Forum shopping is the practice of resorting to multiple fora for


the same relief, to increase the chances of obtaining a favorable
judgment.  In Spouses Reyes v. Spouses Chung:
[96] [97]

It has been jurisprudentially established that forum shopping


exists when a party avails himself 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
courts.

The test to determine whether a party violated the rule against


forum shopping is whether the elements of litis pendentia  are
present, or whether a final judgment in one case will amount
to res judicata  in another. Simply put, when litis pendentia  or res
judicata does not exist, neither can forum shopping exist.

The requisites of litis pendentia are: (a) the identity of parties, or


at least such as representing the same interests in both actions;
(b) the identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the identity of the two
cases such that judgment in one, regardless of which party is
successful, would amount to res judicata in the other. On the
other hand, the elements of res judicata,  also known as bar by
prior judgment, are: (a) the former judgment must be final; (b)
the court which rendered it had jurisdiction over the subject
matter and the parties; (c) it must be a judgment on the merits;
and (d) there must be, between the first and second actions,
identity of parties, subject matter, and causes of action.
 (Citation omitted)
[98]

As observed by the Metropolitan Trial Court, there is an identity


of parties in the specific performance and interpleader cases, and
the Complaint for Ejectment. However, there is no identity of
asserted rights or reliefs prayed for, and a judgment in any of the
three (3) cases will not amount to res judicata in the two others.

In respondent's amended complaint for specific performance, it


prays that petitioner be compelled to offset respondent's unpaid
rentals, with the expenses that respondent supposedly incurred
due to the Department of Tourism's WOW Philippines project,
 pursuant to a July 27, 2004 Memorandum of Agreement.
[99]

Concededly, one of respondent's reliefs prayed for is for petitioner


to respect respondent's lease over Puerta de Isabel II, Asean
Garden and Revellin de Recoletos:

2. Order [Department of Tourism], [Intramuros Administration]


and [Anna Maria L. Harper] to perform their obligation under the
"Memorandum of Agreement" dated 27 July 2004 by OFFSETTING
the rentals in arrears from the expenses incurred by Offshore in
the continuance of the Department of Tourism's WOW Philippines
Project and to allow Offshore to recover their investment at
Intramuros by respecting their lease over Puerta Isabel II, Asean
Garden and Revellin de Recoletos[.][100]

Nevertheless, the Memorandum of Agreement expressly stated


that its purpose was for respondent to pay petitioner and the
Department of Tourism rentals in arrears as of July 31, 2004:

WHEREAS, [respondent] has been indebted to [petitioner] in the


form of rental and utility consumption arrears for the occupancy
of Puerta Isabel Chambers, Asean Gardens and Baluarte de San
Andres (Stable House) in the amount of Six Million Seven
Hundred Sixty[-]Two Thousand One Hundred Fifty[-]Three and
70/100 (P6,762,153.70) as of July 31, 2004 and as a way of
settling said arrears, [respondent] had proposed to pay its
obligations with [petitioner] as shown in the breakdown in "Annex
A" hereof through [respondent's] assumption of [Department of
Tourism's] monthly operational expenses for lights and sound
equipment, electricity, and performers at the Baluarte Plano
Luneta de Sta. Isabel in Intramuros, Manila[.]
[101]

This was affirmed in petitioner's May 29, 2005 letter to


respondent, in which petitioner stated:

During our meeting last May 5, 2005 with Mr. Rico Cordova, it
was reiterated that the subject of the [Memorandum of
Agreement] for the lights and sound at Plano Luneta de Sta.
Isabel was your accumulated account as of July 2004.
Subsequent rentals have to be remitted to [Intramuros] as they
become due and demandable. We have emphasized this concern
in our letter of November 12, 2004.[102]

A final judgment in the specific performance case will not affect


the outcome of the ejectment case. As pointed out by petitioner,
respondent's right to possess the leased premises is founded
initially on the Contracts of Lease and, upon their expiration, on
petitioner's tolerance in hopes of payment of outstanding arrears.
The July 27, 2004 Memorandum of Agreement subject of the
specific performance case cannot be the source of respondent's
continuing right of possession, as it expressly stated there that
the offsetting was only for respondent's outstanding arrears as of
July 31, 2004. Any favorable judgment compelling petitioner to
comply with its obligation under this agreement will not give new
life to the expired Contracts of Lease, such as would repel
petitioner's unlawful detainer complaint.

In its Amended Answer in the specific performance case,


petitioner sets up the counterclaim that "[respondent] be ordered
to pay its arrears of (P13,448,867.45) as of December 31, 2009
plus such rent and surcharges as may be incurred until
[respondent] has completely vacated the [leased]
premises."  This counterclaim is exactly the same as one of
[103]

petitioner's prayers in its ejectment complaint:

WHEREFORE, premises considered, it is most respectfully prayed


that JUDGMENT be rendered ORDERING:
....
(2) DEFENDANT [OFFSHORE CONSTRUCTION] TO PAY ITS
ARREARS OF THIRTEEN MILLION FOUR HUNDRED FORTY-EIGHT
THOUSAND, EIGHT HUNDRED SIXTY-SEVEN PESOS AND FORTY-
FIVE CENTAVOS (P13,448,867.45), PLUS INTEREST OF 1% PER
MONTH AS STIPULATED IN THE LEASE CONTRACTS[.] [104]

A compulsory counterclaim is a defendant's claim for money or


other relief which arises out of, or is necessarily connected with,
the subject matter of the complaint. In Spouses Ponciano v. Hon.
Parentela, Jr.: [105]

A compulsory counterclaim is any claim for money or other relief


which a defending party may have against an opposing party,
which at the time of suit arises out of, or is necessarily connected
with, the same transaction or occurrence that is the subject
matter of plaintiff's complaint. It is compulsory in the sense that
if it is within the jurisdiction of the court, and does not require for
its adjudication the presence of third parties over whom the court
cannot acquire jurisdiction, it must be set up therein, and will be
barred in the future if not set up.  (Citation omitted)
[106]

In its complaint for specific performance, respondent claimed that


petitioner should offset its outstanding rentals and that it was
petitioner which had an outstanding debt to respondent:

16. In compliance with the Memorandum of Agreement, Offshore


incurred expenses amounting to Seven Million Eight Hundred
Twenty[-]Five Thousand Pesos (P7,825,000.00) by way of
Expenses for Rentals of Lights & Sound System, Electrical Bill and
Performers Fees. This amount is excluding the expenses incurred
during the period Offshore supplied the Light & Sound System, as
well as Performers, aforementioned started in October 2004. A
copy of the Statement of Account is hereto appended as ANNEX
"H" to "H-4";

17. Based on Offshore's records, upon re-computation of Actual


Area used during all these period[s] from July 2001 to March 30,
2008, copy of Statement of Accounts has been sent to
Intramuros Administration for reconciliation, Offshore's total
obligation by way of back and current rentals up to March 30,
2008 is only in the amount of Six Million Four Hundred Three
Thousand Three Hundred Sixty[-]Four Pesos (P6,403,364.00);

18. Obviously, when both accounts are offset, it will clearly show
that [Intramuros] still owes Offshore the amount of One Million
Four Hundred Twenty[-]One Thousand Six Hundred Thirty[-]Six
Pesos (P1,421,636.00) as of March 2008;

19. Unfortunately, despite this glaring fact that [Intramuros]


owes Offshore, Defendant [Anna Maria L.] Harper (who has
already showed sour and adverse treatment of Offshore in the
past), being the new Administrator of Intramuros Administration,
sent a Letter dated 09 April 2008 demanding from Offshore to
pay [Intramuros] alleged rentals in arrears in the amount of
P12,478[,]461.74, within seven (7) days from receipt. A copy of
the Letter is hereto attached and marked as Annex "I" to "I-1";

20. It can be deduced from the attachment to the aforementioned


letter that [Intramuros] did not honor the obligations imposed in
the Memorandum of Agreement because the monthly expenses
incurred by Offshore for the payment of the Lights and Sound
System, Electricity and Performers Fees for the continuance of
the Department of Tourism WOW Project at Baluarte Plano,
Luneta de Sta. Isabel which were duly furnished [Intramuros] in
the amount of Seven Million Eight Hundred Twenty[-]Five
Thousand Pesos (P7,825,000.00) as expressly agreed by
[Department of Tourism], [Intramuros] and Offshore in the
Memorandum of Agreement were NOT deducted from the rentals
due[.] [107]

Petitioner's counterclaim in its Amended Answer was set up to


defend itself against such a claim:

26. [Offshore Construction] has not established its right, or the


reality is, [Offshore Constructioin] has been delinquent in the
payment of its financial obligations which are specifically provided
in its contract with defendant [Intramuros], such as rental fees.

27. [Offshore Construction] has to pay rent for being still in


possession of Puerta Isabel II and Asean Garden. Moreover,
plaintiff has enjoyed the fruits of subleasing these premises for
years and yet it has continuously failed to remit all rental fees
and surcharges despite repeated demands from defendants. It
bears stressing that as of December 31, 2009, [Offshore
Construction's] arrears has already ballooned to thirteen million
four hundred and forty[-]eight thousand eight hundred and
sixty[-]seven pesos and forty[-]five centavos (P13,448,867.45).
28. Glaringly, [Offshore Construction] has been remiss in
performing its obligations stated in the Lease Contracts (Annexes
A to A-15; B to B-14 and C to C-14 of the Complaint),
Compromise Agreement (Annexes E to E-17 of the Complaint)
and Memorandum of Agreement (Annexes F to F-16 of the
Complaint). [Intramuros and Anna Maria L. Harper] are therefore
constrained to demand payment from [Offshore Construction] for
the latter's failure or refusal to honor its just and valid
obligations. Necessarily, [Intramuros and Anna Maria L. Harper]
will not hesitate to seek legal remedies if [Offshore Construction]
continues to be delinquent.

29. Essentially, [Offshore Construction] is protesting the


computation of its arrears (P12,478,461.74) in the demand letter
sent by Administrator [Anna Maria L.] Harper on April 9, 2008.
[Offshore Construction] also asserts that it only owes defendant
[Intramuros] six million four hundred three thousand and three
hundred sixty[-]four pesos (P6,403,364.00).

30. [Offshore Construction] is misguided. The [Memorandum of


Agreement] dated July 27, 2004 was executed because [Offshore
Construction], at that time, had been indebted to defendant
[Intramuros] in the form of rental and utility consumption arrears
for the occupancy of Puerta Isabel Chambers, Asean Gardens and
Baluarte de San Andres in the amount of six million seven
hundred sixty[-]two thousand one hundred fifty[-]three and
seventy centavos (P6,762,153.70)....
....

32. Even after July 27, 2004, and up to this time, [Offshore
Construction] remained in possession of, used and/or subleased
the subject premises. As such, [Offshore Construction] still has to
pay rental fees, aside from the aforesaid arrears. The rental fees
continued to pile up and triggered the imposition of surcharges as
[Offshore Construction] again failed to remit payments thereon.
This explains the demandable amount of P13,448,867.45 (Annex
I to I1 of Complaint). [Offshore Construction] is therefore
mistaken in believing that it only owes defendant [Intramuros]
the arrears subject of the [Memorandum of Agreement] of July
27, 2004 and nothing more. [108]

Clearly, petitioner's counterclaim is compulsory, arising as it did


out of, and being necessarily connected with, the parties'
respective obligations under the July 27, 2004 Memorandum of
Agreement. Petitioner cannot be faulted for raising the issue of
unpaid rentals in the specific performance case or for raising the
same issue in the present ejectment case, since it appears that
respondent's alleged failure to pay the rent led to the non-
renewal of the Contracts of Lease. However, it must be
emphasized that any recovery made by petitioner of unpaid
rentals in either its ejectment case or in the specific performance
case must bar recovery in the other, pursuant to the principle of
unjust enrichment. [109]

A judgment in the Complaint for Interpleader will likewise not


be res judicata against the ejectment complaint. The plaintiff in
the interpleader case, 4H Intramuros, allegedly representing the
tenants occupying Puerta de Isabel II, does not expressly disclose
in its Complaint  for Interpleader the source of its right to
[110]

occupy those premises. However, it can be determined from


petitioner's Answer  and from respondent's Memorandum  that
[111] [112]

the members of 4H Intramuros are respondent's sublessees.

A sublessee cannot invoke a superior right over that of the


sublessor.  A judgment of eviction against respondent will affect
[113]

its sublessees since the latter's right of possession depends


entirely on that of the former.  A complaint for interpleader by
[114]

sublessees cannot bar the recovery by the rightful possessor of


physical possession of the leased premises.

Since neither the specific performance case nor the interpleader


case constituted forum shopping by petitioner, the Metropolitan
Trial Court erred in dismissing its Complaint for Ejectment.

IV
Ordinarily, this case would now be remanded to the Metropolitan
Trial Court for the determination of the rightful possessor of the
leased premises. However, this would cause needless delay
inconsistent with the summary nature of ejectment proceedings.
 Given that there appears sufficient evidence on record to make
[115]

this determination, judicial economy dictates that this Court now


resolve the issue of possession.[116]

It is undisputed that respondent's occupation and use of Baluarte


de San Andres, Baluarte de San Francisco de Dilao, and Revellin
de Recoletos started on September 1, 1998 by virtue of Contracts
of Lease all dated August 20, 1998.  The Contracts of Lease
[117]

were modified through Addendums to the Contracts likewise


dated August 20, 1998. [118]

Then, to amicably settle Civil Case No. 98-91587


entitled Offshore Construction and Development Company v.
Hon. Gemma Cruz-Araneta and Hon. Dominador Ferrer, Jr., then
pending before Branch 47, Regional Trial Court, Manila,  the [119]

parties and the Department of Tourism entered into a July 26,


1999 Compromise Agreement. In the Compromise Agreement,
the parties affirmed the validity of the lease contracts, but agreed
to transfer the areas to be occupied and used by respondent in
Baluarte de San Andres and Baluarte de San Francisco de Dilao
due to improvements that it had introduced to the leased
premises.  The lease over Revellin de Recoletos was terminated.
[120]

 It appears that under this Compromise Agreement, the original


[121]

five (5)-year period of the Contracts of Lease were retained,


 such that the leases would expire on August 31, 2003, and
[122]

renewable for another five (5) years upon the parties' mutual
agreement. [123]

Thereafter, the Contracts of Lease expired. Respondent does not


concede this, but there is no proof that there has been any
contract mutually agreed upon by the parties for any extensions
of the leases. Respondent can only argue that petitioner's
continuing tolerance of respondent's possession and acceptance
of respondent's rental payments impliedly renewed the Contracts
of Lease.[124]

But petitioner's tolerance of respondent's occupation and use of


the leased premises after the end of the lease contracts does not
give the latter a permanent and indefeasible right of possession
in its favor. When a demand to vacate has been made, as what
petitioner had done, respondent's possession became illegal and
it should have left the leased premises. In Cañiza v. Court of
Appeals: [125]

The Estradas' first proffered defense derives from a literal


construction of Section 1, Rule 70 of the Rules of Court which
inter alia authorizes the institution of an unlawful detainer suit
when "the possession of any land or building is unlawfully
withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied." They
contend that since they did not acquire possession of the property
in question "by virtue of any contract, express or implied" — they
having been, to repeat, "allowed to live temporarily ... (therein)
for free, out of ... (Cañiza's) kindness" — in no sense could there
be an "expiration or termination of ... (their) right to hold
possession, by virtue of any contract, express or implied." Nor
would an action for forcible entry lie against them, since there is
no claim that they had "deprived (Cañiza) of the possession of ...
(her property) by force, intimidation, threat, strategy, or stealth."

The argument is arrant sophistry. Cañiza's act of allowing the


Estradas to occupy her house, rent-free, did not create a
permanent and indefeasible right of possession in the latter's
favor. Common sense, and the most rudimentary sense of
fairness clearly require that act of liberality be implicitly, but no
less certainly, accompanied by the necessary burden on the
Estradas of returning the house to Cañiza upon her demand. More
than once has this Court adjudged that a person who occupies
the land of another at the latter's tolerance or permission without
any contract between them is necessarily bound by an implied
promise that he will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against
him. The situation is not much different from that of a tenant
whose lease expires but who continues in occupancy by tolerance
of the owner, in which case there is deemed to be an unlawful
deprivation or withholding of possession as of the date of the
demand to vacate. In other words, one whose stay is merely
tolerated becomes a deforciant illegally occupying the land or
property the moment he is required to leave. Thus, in Asset
Privatization Trust vs. Court of Appeals,  where a company,
having lawfully obtained possession of a plant upon its
undertaking to buy the same, refused to return it after failing to
fulfill its promise of payment despite demands, this Court held
that "(a)fter demand and its repudiation, ... (its) continuing
possession ... became illegal and the complaint for unlawful
detainer filed by the ... (plant's owner) was its proper
remedy."  (Emphasis supplied, citations omitted)
[126]

The existence of an alleged concession agreement between


petitioner and respondent is unsupported by the evidence on
record. The Metropolitan Trial Court found that a concession
agreement existed due to the agreements entered into by the
parties:

This Court agrees with the defendant. The various contracts of


lease between the parties notwithstanding, the existence of the
other agreements involved herein cannot escape the scrutiny of
this Court. Although couched in such words as "contracts of
lease", the relationship between the parties has evolved into
another kind – that of a concession agreement whereby
defendant [Offshore Construction] undertook to develop several
areas of the Intramuros District, defendant [Offshore
Construction] actually commenced the development of the
subject premises and incurred expenses for the said
development, effectively making the relationship more than an
ordinary lessor-lessee but one governed by concession whereby
both parties undertook other obligations in addition to their basic
obligations under the contracts of lease. Consensus facit
legem (The parties make their own law by their agreement). It
behooves this Court to respect the parties' contracts, including
the memoranda of agreement that ensued after it.... [127]

Respondent claims that the parties' agreement was for it to


operate the leased premises to recover its investments and to
make profits. However, a review of the Contracts of Lease show
that they are lease contracts, as defined in Article 1643 of the
Civil Code:

Article 1643. In the lease of things, one of the parties binds


himself to give to another the enjoyment or use of a thing for a
price certain, and for a period which may be definite or indefinite.
However, no lease for more than ninety-nine years shall be valid.

The restrictions and limitations on respondent's use of the leased


premises are consistent with petitioner's right as lessor to
stipulate the use of the properties being leased.  Neither the
[128]

Contracts of Lease nor their respective Addendums to the


Contract contain any stipulation that respondent may occupy and
use the leased premises until it recovers the expenses it incurred
for improvements it introduced there. Instead, the lease period
was fixed at five (5) years, renewable for another five (5) years
upon mutual agreement:

3. CONTRACT TERM. (Leased Period) This lease shall be for a


period of FIVE YEARS (5 YRS) commencing from September
1, 1998 to August 31, 2003, renewable for another period of
FIVE YEARS (5 YRS) under such terms and condition that
may be mutually agreed upon in writing by the parties[.] [129]

The subsequent contracts, namely, the July 26, 1999


Compromise Agreement and the July 27, 2004 Memorandum of
Agreement, also do not point to any creation of a "concession" in
favor of respondent. The Compromise Agreement affirms the
validity of the lease contracts, while the Memorandum of
Agreement was for the payment of respondent's arrears until July
2004.

However, this Court cannot award unpaid rentals to petitioner


pursuant to the ejectment proceeding, since the issue of rentals
in Civil Case No. 08-119138 is currently pending with Branch 37,
Regional Trial Court, Manila, by virtue of petitioner's
counterclaim. As the parties dispute the amounts to be offset
under the July 27, 2004 Memorandum of Agreement and
respondent's actual back and current rentals due,  the resolution
[130]

of that case is better left to the Regional Trial Court for trial on
the merits.

WHEREFORE, the Petition for Review on Certiorari


is GRANTED. The April 14, 2011 Decision of Branch 173,
Regional Trial Court, Manila in Civil Case No. 10-124740
is REVERSED AND SET ASIDE, and a new decision is hereby
rendered ordering respondent Offshore Construction and
Development Company and any and all its sublessees and
successors-in-interest to vacate the leased premises immediately.

Branch 37, Regional Trial Court, Manila is DIRECTED to resolve


Civil Case No. 08-119138 with dispatch.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

April 11, 2018


N O T I C E  O F  J U D G M E N T

Sirs /Mesdames:

Please take notice that on March 7, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on April 11, 2018 at 9:00 a.m.

Very truly yours,

WILFREDO V. LAPITAN
Division Clerk of Court

By:

(SGD.) MISAEL DOMINGO C. BATTUNG III


Deputy Division Clerk of Court

[1]
 Rollo, pp. 15-69.

  Id. at 70-73. The Decision was penned by Judge Armando A.


[2]

Yanga.

 Id. at 74-80. The Order was penned by Presiding Judge Jesusa


[3]

S. Prado-Maningas.

[4]
 Id. at 96-106.

[5]
 Id. at 107-116.

[6]
 Id. at 117-126.

[7]
 Id. at 128, 132, and 136.
[8]
 Id. at 22.

[9]
 Id.

[10]
 Id. at 147.

[11]
 Id. at 139-146.

[12]
 Id. at 147-152.

[13]
 Id. at 142.

[14]
 Id. at 141.

[15]
 Id. at 24.

[16]
 Id. at 25.

[17]
 Id. at 161-167.

[18]
 Id. at 178.

[19]
 Id. at 81-95.

[20]
 Id. at 27.

[21]
 Id. at 180-183.

[22]
 Id. at 180.

[23]
 Id. at 181.

[24]
 Id.

[25]
 Id. at 74-80.

[26]
 Id. at 76.
[27]
 Id. at 78-79.

[28]
 Id. at 76.

[29]
 Id. at 285-286.

[30]
 Id. at 76-77.

[31]
 Id. at 77-78.

[32]
 Id. at 79.

[33]
 Id. at 70-73.

[34]
 Id. at 2-7.

[35]
 Id. at 15-69.

[36]
 Id. at 32-37.

[37]
 Id. at 37-52.

[38]
 Id. at 33.

[39]
 Id. at 34.

[40]
 Id. at 35.

[41]
 Id. at 37.

[42]
 Id. at 39-40.

[43]
 Id. at 41-42.

[44]
 Id. at 45.

[45]
 Id. at 43-44.
[46]
 Id. at 45.

[47]
 Id. at 52-54.

[48]
 Id. at 569.

[49]
 Id. at 577-586.

[50]
 Id. at 577.

[51]
 Id. at 578.

[52]
 Id. at 581-582 and 584.

[53]
 Id. at 587-588.

[54]
 Id. at 599-610.

[55]
 Id. at 604.

[56]
 Id. at 605.

[57]
 Id. at 612-613.

[58]
 Id. at 619-662.

[59]
 Id. at 677-696.

[60]
 Id. at 685-686.

[61]
 Id. at 686-688.

[62]
 Id. at 688.

 CIVIL CODE, art. 1670 states:


[63]

Article 1670. If at the end of the contract the lessee should


continue enjoying the thing leased for fifteen days with the
acquiescence of the lessor, and unless a notice to the contrary by
either party has previously been given, it is understood that there
is an implied new lease, not for the period of the original
contract, but for the time established in Articles 1682 and 1687.
The other terms of the original contract shall be revived.

[64]
 Rollo, p. 691.

[65]
 CIVIL CODE, art. 1687 states:

Article 1687. If the period for the lease has not been fixed, it is
understood to be from year to year, if the rent agreed upon is
annual; from month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to day, if the rent is to
be paid daily. However, even though a monthly rent is paid, and
no period for the lease has been set, the courts may fix a longer
term for the lease after the lessee has occupied the premises for
over one year. If the rent is weekly, the courts may likewise
determine a longer period after the lessee has been in possession
for over six months. In case of daily rent, the courts may also fix
a longer period after the lessee has stayed in the place for over
one month.

[66]
 Rollo, p. 693.

 Ronquillo, Jr. v. National Electrification Administration, G.R. No.


[67]

172593, April 20, 2016  <


http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/172593.pdf > 10 [Per J.
Leonen, Second Division].

 Philippine Migrants Watch, Inc. v. Overseas Workers Welfare


[68]

Administration, 748 Phil. 349, 356 (2014) [Per J. Peralta, Third


Division].

 Daswani v. Banco De Oro Universal Bank, 765 Phil. 88, 97


[69]

(2015) [Per J. Brion, Second Division].


 Republic v. Malabanan, 646 Phil. 631, 637 (2010) [Per J.
[70]

Villarama, Jr., Third Division].

 Tan v. People, 430 Phil. 685, 693 (2002) [Per J. Vitug, En


[71]

Banc].

 Barcenas  v. Spouses Tomas and Caliboso,  494 Phil. 565 (2005)


[72]

[Per J. Panganiban, Third Division].

[73]
 751 Phil. 301 (2015) [Per J. Leonen, En Banc).

[74]
 Id. at 329-330.

[75]
 Id.

 Id. at 331; See also Dy v. Hon. Bibat-Palamos, 717 Phil. 776


[76]

(2013) [Per J. Mendoza, Third Division].

[77]
 494 Phil. 565 (2005) [Per J. Panganiban, Third Division].

[78]
 Id. at 577.

[79]
 Rollo, p. 79.

[80]
 Id.

[81]
 Id.

 See Barrientos v. Rapal, 669 Phil. 438 (2011) [Per J. Peralta,


[82]

Third Division].

 See Cruz v. Spouses Christensen, G.R. No. 205539. October 4,


[83]

2017 < http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2017/october2017/205539.pdf > [Per J.
Leonen, Third Division].

 Spouses Valdez v. Court of Appeals, 523 Phil. 39, 48 (2006)


[84]

[Per J. Chico-Nazario, First Division].


 Cabrera v. Getaruela, 604 Phil. 59, 66 (2009) [Per J. Carpio,
[85]

First Division].

[86]
 Rollo, p. 686.

[87]
 Id. at 81.

[88]
 Id. at 178.

 Cañiza v. Court of Appeals, 335 Phil. 1107, 1117 (1997) [Per


[89]

C.J. Narvasa, Third Division].

[90]
 Rollo, p. 79.

 Mendoza v. Germino, 650 Phil. 74, 84 (2010) [Per J. Brion,


[91]

Third Division].

[92]
 367 Phil. 438 (1999) [Per J. Pardo, First Division].

[93]
 Id. at 445.

 Yuki, Jr. v. Co, 621 Phil. 194, 205 (2009) [Per J. Del Castillo,
[94]

Second Division].

 Pajuyo v. Court of Appeals, 474 Phil. 557, 578 (2004) [Per J.


[95]

Carpio, First Division].

 Dy v. Mandy Commodities, Inc., 611 Phil. 74, 84 (2009) [Per J.


[96]

Chico-Nazario, Third Division].

 G.R.
[97]
No. 228112, September 13, 2017, <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/september2017/228112.pdf > [Per J.
Velasco, Jr., Third Division].

[98]
 Id. at 5-6.
[99]
 Rollo, p. 225.

[100]
 Id. at 227.

[101]
 Id. at 161.

[102]
 Id. at 168.

[103]
 Id. at 532.

[104]
 Id. at 342-343.

[105]
 387 Phil. 621 (2000) [Per J. Gonzaga-Reyes, Third Division).

[106]
 Id. at 627.

[107]
 Rollo, pp. 224-225.

[108]
 Id. at 519-522.

[109]
 See CIVIL CODE, art. 22 which states:

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


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

[110]
 Rollo, pp. 285-291.

[111]
 Id. at 304-318. See p. 305, which states in part:

During the consultation meetings, plaintiff's alleged members


acknowledged and realized that as sublessees of [Offshore
Construction], they cannot have any superior right over their
sublessor. (Emphasis supplied)

[112]
 Id. at 677-696. See p. 683, which states in part:
This case involves the same parties as Defendants ([Intramuros]
and [Offshore Construction], the Plaintiff 4H being the Sub-
Lessees of [Offshore Construction]) ... (Emphasis supplied)

 The Heirs of Eugenio Sevilla, Inc. v. Court of Appeals, 283 Phil.


[113]

490, 499 (1992) [Per J. Davide, Jr., Third Division].

 Guevara Realty, Inc. v. Court of Appeals, 243 Phil. 620, 624-


[114]

625 (1988) [Per J. Gutierrez, Jr., Third Division].

 Spouses Morales v. Court of Appeals, 349 Phil. 262, 272


[115]

(1998) [Per J. Panganiban, Third Division].

 See Cathay Metal Corp. v. Laguna West Multi-Purpose


[116]

Cooperative, Inc., 738 Phil. 37(2014) [Per J. Leonen, Third


Division].

[117]
 Rollo, pp. 96-126.

[118]
 Id. at 127-138.

[119]
 Id. at 139.

[120]
 Id. at 139 and 141.

[121]
 Id. at 142.

[122]
 Id. at 142.

[123]
 Id. at 128, 132, and 136.

[124]
 Id. at 688-689.

[125]
 335 Phil. 1107 (1997) [Per C.J. Narvasa, Third Division].

[126]
 Id. at 1115-1117.

[127]
 Rollo, p. 79.
[128]
 CIVIL CODE, art. 1657(2) states:

Article 1657. The lessee is obliged:


....
(2) To use the thing leased as a diligent father of a family,
devoting it to the use stipulated; and in the absence of
stipulation, to that which may be inferred from the nature of the
thing leased, according to the custom of the place[.]

[129]
 Rollo, pp. 128, 132, and 136.

[130]
  Id. at 224 and 252.

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THIRD DIVISION

[ G.R. No. 208185, September 06,


2017 ]
PRISCILLA ZAFRA ORBE, PETITIONER, VS.
FILINVEST LAND, INC., RESPONDENT.DECISION

LEONEN, J.:
When Republic Act No. 6552 or the Maceda Law speaks of paying
"at least two years of installments" in order for the benefits under
its Section 3  to become available, it refers to the buyer's
[1]

payment of two (2) years' worth of the stipulated fractional,


periodic payments due to the seller. When the buyer's payments
fall short of the equivalent of two (2) years' worth of installments,
the benefits that the buyer may avail of are limited to those
under Section 4.  Should the buyer still fail to make payments
[2]

within Section 4's grace period, the seller may cancel the
contract. Any such cancellation is ineffectual, however, unless it is
made through a valid notarial act.

This resolves a Petition for Review on Certiorari  under Rule 45 of


[3]

the 1997 Rules of Civil Procedure praying that the assailed


October 11, 2012 Decision  and July 3, 2013 Resolution  of the
[4] [5]

Court of Appeals in CA-G.R. SP No. 118285 be reversed and set


aside.

The assailed Court of Appeals October 11, 2012 Decision reversed


the prior rulings of the Office of the President, the Board of
Commissioners of the Housing and Land Use Regulator; Board
(HLURB Board of Commissioners), and of Housing and Land Use
Arbiter Leonard Jacinto A. Soriano (Arbiter Soriano) of the
Expanded National Capital Region Field Office of the Housing and
Land Use Regulatory Board (HLURB Field Office). It held that
petitioner Priscilla Zafra Orbe (Orbe) is entitled to the benefits of
Section 3 of Republic Act No. 6552.  The assailed Court of
[6]

Appeals July 3, 2013 Resolution denied Orbe's Motion for


Reconsideration. [7]

Sometime in June 2001, Orbe entered into a purchase agreement


with respondent Filinvest Land, Inc. (Filinvest) over a 385-
square-meter lot identified as Lot 1, Block 10, Phase 1, Highlands
Pointe, Taytay, Rizal. The total contract price was P2,566,795.00,
payable on installment basis  under the following terms:
[8]

Total Contract
: [P]2,566,795.00
Price
Reservation Fee : [P]20,000.00
Down Payments : [P]493,357.00
Payable on
: [P]54,818.00 monthly
installments
from 8/4/01-
4/4/02
Balance : [P]2,053,436.00
Payable on
installments
for a period of
7 years
from
5/8/024/8/09
First year : [P]27,936.84 monthly
Second year : [P]39,758.84 monthly
Third year : [P]41,394.84 monthly
Fourth year to
: [P]42,138.84 monthly [9]

Seventh year
From June 17, 2001 to July 14, 2004, Orbe paid a total of
P608,648.20. These were mainly through several Metrobank
checks, for which Filinvest issued official receipts.  Check [10]

payments were made as follows:


METROBANK CHECK
DATE AMOUNT
NO.
Metro Bank Check No.
June 17, 2001 [P]20,000.00
0306533
Metro Bank Check No.
July 29, 2001 [P]54,818.00
0306544
Metro Bank Check No.
Aug. 29, 2001 [P]54,818.00
0306545
Metro Bank Check No.
Sept. 29, 2001 [P]54,818.00
0306546
Metro Bank Check No.
May 8, 2002 [P]100,000.00
032()243
Metro Bank Check No.
May 22, 2002 [P]100,000.00
0320244
Metro Bank Check No.
March 26, 2003 [P]80,000.00
0370882
Metro Bank Check No.
April 26, 2003 [P]75,789.00
0370883
Metro Bank Check No.
Feb. 12, 2004 [P]37,811.00
0401000
Metro Bank Check No.
July 14, 2004 [P]30,000.00 [11]

0531301
Orbe was unable to make further payments allegedly on account
of financial difficulties. [12]

On October 4, 2004, Filinvest sent a notice of cancellation,


 which was received by Orbe on October 18, 2004.  The notice
[13] [14]

and its accompanying jurat read:


PRISCILLA Z. ORBE
#107 Morena St. Villaverde Homes
Novaliches, Q,C.

                Re: Account No.    6181426


                      Project             HIGH
                      Phase               1
                      Block               10
                      Lot                   1

Gentlemen (sic):

Our records show that your account remains unpaid despite our
written request for your payment. We have in fact given you sixty
(60) days to update but you failed to settle your account.
Accordingly, please be informed that we are now hereby
canceling your account effective thirty (30) days from receipt
hereof,

Very truly yours,

COLLECTION DEPARTMENT

By:

_________________(sgd.)_________________
                 MA. LOUELLA D. SENIA

Republic of the Philippines )


Makati City                      )S.S.
SUBSCRIBED AND SWORN to before me this OCT 06 2004, affiant
exhibiting to me Community Tax Certificate No. 05465460 issued
on February 09, 2004 at Manila.

             (sgd.)
AVELIO L. SALCEDO
    NOTARY PUBLIC
UNTIL DECEMBER 31, 2004
PTR NO. 3703389 3/01/04 SAN JUAN
IBP N0.609984 2/04/04 PASIG CITY

Doc. No. 314


Page No. 64
Book No. XVIII
Series of 2004[15]

Noting that "efforts . . . to seek for a reconsideration of said


cancellation . . . proved futile," and that the parcel had since
been sold by Filinvest to a certain Ruel Ymana "in evident bad
faith,"  Orbe filed against Filinvest a Complaint for refund with
[16]

damages dated November 13, 2007 before the HLURB Field


Office.  Orbe emphasized that she had made payments
[17]

"beginning June, 2001 up to October, 2004."  She further


[18]

asserted that the October 4, 2004 Notice did not amount to an


"effective cancellation by notarial act."
[19]

In its Answer with Counterclaim, Filinvest asserted that Orbe


failed to make 24 monthly amortization payments on her
account, and thus, could not benefit from Section 3 of Republic
Act No. 6552. According to Filinvest, the P608,648.20 paid by
Orbe from June 17, 2001 to July 14, 2004 covered only the
reservation fee, down payment, and late payment charges,
exclusive of the monthly amortization payments stipulated in the
Purchase Agreement. [20]

In his July 25, 2008 Decision,  Arbiter Soriano of the HLURB Field
[21]

Office ruled in favor of Orbe. He held that since Orbe made


payments "from 17 June 2001 to 14 July 2004, or a period of
more than two years,"  all of which should be credited to the
[22]

principal,  she was entitled to a refund of the cash surrender


[23]

value equivalent to 50% of the total payments she had made,


pursuant to Section 3 of Republic Act No. 6552. [24]

Filinvest appealed to the HLURB Board of Commissioners. [25]

In its April 15, 2009 Decision,  the HLURB Board of [26]

Commissioners affirmed Arbiter Soriano's Decision.  It disagreed [27]

with Arbiter Soriano's conclusion that Orbe had paid two (2)
years' installments. It specifically noted rather, that the buyer's
payments fell two (2) months short of the equivalent of two years
of installments.  It added, however, that "[e]quity . . . should
[28]

come in especially where, as here, the payment period is


relatively short and the monthly installment is relatively of
substantial amounts."  Thus, it concluded that Orbe was still
[29]

entitled to a 50% refund. [30]

Filinvest then appealed to the Office of the President. [31]

In its February 4, 2011 Decision,  the Office of the President


[32]

sustained the conclusion that Orbe was entitled to a 50% refund.


It disagreed with the HLURB Board of Commissioners' finding that
Section 3's benefits were available to Orbe purely as a matter of
equity. It agreed instead with Arbiter Soriano's reliance on how
Orbe "ha[d] made installment payments for more than two (2)
years."[33]

Filinvest made another appeal to the Court of Appeals,  arguing [34]

that:
[W]hat [Republic Act No. 6552] requires for refund of the cash
surrender value is not the length of time of at least two years
from the first payment to the last payment, but the number of
installments paid, that is, at least two ears of installments or
twenty[-]four (24) monthly installments paid. [35]

Thus, Section 3, which requires the refund of the cash surrender


value, will only apply when the buyer has made at least 24
installment payments. [36]
In its assailed October 11, 2012 Decision,  the Court of Appeals
[37]

reversed the prior rulings of the Office of the President, of the


HLURB Board of Commissioners, and of Arbiter Soriano; and
dismissed Orbe's Complaint. [38]

The Court of Appeals reasoned that the phrase "two years of


installments" under Section 3 means that total payments made
should at least be equivalent to two years' worth of installments.
 Considering that Orbe's total payment of P608,648.20 was
[39]

short of the required two (2) years' worth of installments, she


could not avail of the benefits of Section 3.  What applied instead
[40]

was Section 4, enabling a grace period of 60 days from the day


the installment became due and further enabling the seller to
cancel or rescind the contract through a notarial act, should the
buyer still fail to pay within the grace period.  It found Filinvest
[41]

to have sent Orbe a valid, notarized notice of cancellation thereby


precluding any further relief.
[42]

In its assailed July 3, 2013 Resolution,  the Court of Appeals


[43]

denied Orbe's Motion for Reconsideration.

Hence, the present petition was filed. [44]

For resolution is the issue of whether or not petitioner Priscilla


Zafra Orbe is entitled to a refund or to any other benefit under
Republic Act No. 6552.

The Court of Appeals correctly held that petitioner was not


entitled to benefits under Section 3 of Republic Act No. 6552 as
she had failed to pay two (2) years' worth of installments
pursuant to the terms of her original agreement with respondent.
It also correctly held that with the shortage in petitioner's
payment, what applies is Section 4, instead of Section 3. This
means that respondent could cancel the contract since petitioner
failed to pay within the 60-day grace period.
The Court of Appeals, however, failed to realize that the notice of
cancellation made by respondent was an invalid notarial act.
Failing to satisfy all of Section 4's requisites for a valid
cancellation, respondent's cancellation was ineffectual. The
contract between petitioner and respondent should then be
deemed valid and subsisting.  Considering however, that
[45]

respondent ha.s since sold the lot to another person, an equitable


ruling is proper. Therefore, this Court rules in a manner
consistent with how it resolved Olympia Housing v. Panasiatic
Travel,  Pagtalunan v. Vda. de Manzano,  Active Realty and
[46] [47]

Development v. Daroya,  Associated Marine Officers and


[48]

Seamen's Union of the Philippines PTGWO-ITF v. Decena,


 and Gatchalian Realty v. Angeles.
[49] [50]

Republic Act No. 6552, the Realty Installment Buyer Act or more
popularly reffered to as the Maceda Law, named after its author,
the late Sen. Ernesto Maceda, was adopted with the purpose of
"protect[ing] buyers of real estate on installment payments
against onerous and oppressive conditions."  It "delineat[es] the
[51]

rights and remedies of . . . buyers and protect[s] them from one-


sided and pernicious contract stipulations": [52]

Its declared public policy is to protect buyers of real estate on


installment basis against onerous and oppressive conditions. The
law seeks to address the acute housing shortage problem in our
country that has prompted thousands of middle and lower class
buyers of houses, lots and condominium units to enter into all
sorts of contracts with private housing developers involving
installment schemes. Lot buyers, mostly low income earners
eager to acquire a lot upon which to build their homes, readily
affix their signatures on these contracts, without an opportunity
to question the onerous provisions therein as the contract is
offered to them on a "take it or leave it" basis. Most of these
contracts of adhesion, drawn exclusively by the developers,
entrap innocent buyers by requiring cash deposits for reservation
agreements which often times include, in fine print, onerous
default clauses where all the installment payments made will be
forfeited upon failure to pay any installment due even if the
buyers had made payments for several years. Real estate
developers thus enjoy an unnecessary advantage over lot buyers
who[m] they often exploit with iniquitous results. They get to
forfeit all the installment payments of defaulting buyers and resell
the same lot to another buyer with the same exigent conditions.
To help especially the low income lot buyers, the legislature
enacted R.A. No. 6552 delineating the rights and remedies of lot
buyers and protect[ing] them from one-sided and pernicious
contract stipulations. [53]

Having been adopted with the explicit objective of protecting


buyers against what it recognizes to be disadvantageous and
onerous conditions, the Maceda Law's provisions must be liberally
construed in favor of buyers. Within the bounds of reason,
fairness, and justice, doubts in its interpretation must be resolved
in a manner that will afford buyers the fullest extent of its
benefits.

II

Sections 3 and 4 of the Maceda Law spell out the rights of


defaulting buyers on installment payments, depending on the
extent of payments made.

Section 3 governs situations in which a buyer "has paid at least


two years of installments":
Section 3. In all transactions or contracts involving the sale or
financing of real estate on installment payments, including
residential condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants under Republic Act
Numbered Thirty eight hundred forty-four, as amended by
Republic Act Numbered Sixty-three hundred eighty-nine, where
the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment
of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grac
which is hereby fixed at the rate of one month grace period for every one year
made: Provided, That this right shall be exercised by the buyer only once in every
the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender v
the property equivalent to fifty per cent of the total payments made and, after five
additional five per cent every year but not to exceed ninety per cent of the total pa
That the actual cancellation of the contract shall take place after thirty days from re
notice of cancellation or the demand for rescission of the contract by a notarial act a
the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be


included in the computation of the total number of installment
payments made.
Section 4 governs situations "where less than two years of
installments were paid":
Section 4, In case where less than two years of installments were
paid, the seller shall give the buyer a grace period of not less
than sixty days from the date the installment became due. If the
buyer fails to pay the installments due at the expiration of the
grace period, the seller may cancel the contract after thirty days
from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.
In both Sections 3 and 4, defaulting buyers are afforded grace
periods in which they may pay the installments due. Should they
fail to make payment within the applicable period, cancellation of
their agreement with the seller may ensue.

III

Contrary to petitioner's allegations, she did not pay "at least two
years of installments" as to fall within the protection of Section 3.

In a sale by installment, a buyer defers full payment of the


purchase price and ratably apportions payment across a period. It
is typified by regular, fractional payments. It is these regular,
fractional payments that are referred to as "installments." [54]

Thus, when Section 3 speaks of paying "at least two years


of installments," it refers to the equivalent of the totality of
payments diligently or consistently made throughout a period of
two (2) years. Accordingly, where installments are to be paid on
a monthly basis, paying "at least two years of installments"
pertains to the aggregate value of 24 monthly installments. As
explained in Gatchalian Realty v. Angeles: [55]

It should be noted that Section 3 of R.A. 6552 and paragraph six


of Contract Nos. 2271 and 2272, speak of "two years of
installments." The basis for computation of the term refers to the
installments that correspond to the number of months of
payments, and not to the number of months that the contract is
in effect as well as any grace period that has been given. Both
the law and the contracts thus prevent any buyer who has not
been diligent in paying his monthly installments tom unduly
claiming the rights provided in Section 3 of R.A. 6552.
 (Emphasis supplied)
[56]

The phrase "at least two years of installments" refers to value


and time. It does not only refer to the period when the buyer has
been making payments, with total disregard for the value that the
buyer has actually conveyed.  It refers to the proportionate value
[57]

of the installments made, as well as payments having been made


for at least two (2) years.

Laws should never be so interpreted as to produce results that


are absurd or unreasonable.  Sustaining petitioner's contention
[58]

that spe falls within Section 3's protection just because she has
been paying for more than two (2) years goes beyond a justified,
liberal construction of the Maceda Law. It facilitates arbitrariness,
as intermittent payments of fluctuating amounts would become
permissible, so long as they stretch for two (2) years. Worse, it
condones an absurdity. It sets a precedent that would endorse
minimal, token payments that extend for two (2) years. A buyer
could, then, literally pay loose change for two (2) years and still
come under Section 3's protection.

Reckoning payment of "at least two years of installments" on the


basis of the regular, factional payments due from the buyer was
demonstrated in Marina Properties Corp. v. Court of Appeals.
 There, the monthly amortization of P67,024.22 was considered
[59]
in determining the validity of the cancellation of the contract by
the seller:
We likewise uphold the finding that MARINA's cancellation of the
Contract To Buy and To Sell was clearly illegal. Prior to MARINA's
unilateral act of rescission, H.L. CARLOS had already paid
P1,810,330.70, or more than 50% of the contract price of
P3,614,000.00. Moreover, the sum H.L. CARLOS had disbursed
amounted to more than the total of 24 installments, i.e., two
years' worth of installments computed at a monthly installment
rate of P67,024.22, inclusive of the downpayment. [60]

In Jestra Development and Management Corporation v. Pacifico,


 where down payment was itself payable in portions, this Court
[61]

reckoned the monthly installment payment for the down payment


amounting to P121,666.66, rather than the monthly amortization.
This Court justified this by referencing Section 3's injunction that
"[d]own payments, deposits or options on the contract shall be
included in the computation of the total number of installment
payments made":
The total purchase price of the property is P2,500,000. As
provided in the Reservation Application, the 30% down payment
on the purchase price or P750,000 was to be paid in six monthly
installments of P121,666.66. Under the Contract to Sell, the 70%
balance of P1,750,000.00 on the purchase price was to be paid in
10 years through monthly installments of P34,983, which was
later increased to P39,468 in accordance with the agreement to
restructure the same.

While, under the above-quoted Section 3 of R.A. No. 6552, the


down payment is included in computing the total number of
installment payments made, the proper divisor is neither P34,983
nor P39,468, but P121,666.66, the monthly installment on the
down payment.

The P750,000 down payment was to be paid in six monthly


installments. If the down payment of P750,000 is to be deducted
from the total payment of P846,600, the remainder is only
P96,600. Since respondent was able to pay the down payment in
full eleven (11) months after the last monthly installment was
due, and the sum of P76,600 representing penalty for delay of
payment is deducted from the remaining P96,600, only a balance
of P20,000 remains.

As respondent failed to pay at least two years of installments, he


is not, under above-quoted Section 3 of R.A. No. 6552, entitled to
a refund of the cash surrender value of his payments.[62]

Jestra was wrong to use the installment payments on the down


payment as divisor. It is an error to reckon the payment of two
(2) years' worth of installments on the apportionment of the
down payment because, even in cases where the down payment
is broken down into smaller, more affordable portions, payments
for it still do not embody the ratable apportionment of the
contract price throughout the entire duration of the contract
term. Rather than the partial payments for the down payment, it
is the partition of the contract price into monthly amortizations
that manifests the ratable apportionment across a complete
contract term that is the essence of sales on installment. The
correct standard is that which was used in Marina, not in Jestra.

Marina also correctly demonstrated how Section 3's injunction


that "[d]own payments, deposits or options on the contract shall
be included in the computation of the total number of installment
payments made" should operate. In Marina, the total amount of
P1,810,330.70 paid by the buyer was inclusive of payments for
down payment worth P1,034,200.00 and cash deposit worth
P50,000.00. In concluding that the buyer in Marina had paid
more than two (2) years' or 24 months' worth of installments,
what this Court considered was the total amount of
P1,810,330.70 and not merely the payments on amortizations.

Following Marina, this Court reckons petitioner's satisfaction of


the requisite two (2) years' or 24 months' worth of installments
using as divisor the monthly amortizations due from petitioner.
However, this Court notes that the mon1hly amortizations due
from petitioner were stipulated to escalate on a yearly basis. In
keeping with the need to construe the Maceda Law in a manner
favorable to the buyer, this Court uses as basis the monthly
amortizations set for the first year, i.e., P27,936.84. With this as
the divisor, it shall appear that petitioner has only paid 21.786
months' worth of installments. This falls short of the requisite two
(2) years' or 24 months' worth of installments.

IV

Failing to satisfy Section 3's threshold, petitioner's case is


governed by Section 4 of the Maceda Law.

Thus, she was "entitled to a grace period of not less than sixty
(60) days from the due date within which to make [her]
installment payment. [Respondent], on the other hand, ha[d] the
right to cancel the contract after thirty (30) days from receipt by
[petitioner] of the notice of cancellation."
[63]

For cancellations under Section 4 to be valid, three (3) requisites


must concur, First, the buyer must have been given a 60-day
grace period but failed to utilize it. Second, the seller must have
sent a notice of cancellation or demand for rescission by notarial
act And third, the cancellation shall take effect only after 30 days
of the buyer's receipt of the notice of cancellation:
Essentially, the said provision provides for three (3) requisites
before the seller may actually cancel the subject contract: first,
the seller shall give the buyer a 60-day grace period to be
reckoned from the date the installment became due; second, the
seller must give the buyer a notice of cancellation/demand
for rescission by notarial act if the buyer fails to pay the
installments due at the expiration of the said grace period;
and third, the seller may actually cancel the contract only after
thirty (30) days from the buyer's receipt of the said notice of
cancellation/demand for rescission by notarial act.  (Emphasis in
[64]

the original)
Respondent's October 4, 2004 notice indicates that petitioner
failed to utilize the 60-day grace period. It also indicates that
cancellation was to take effect "thirty (30) days from [its]
receipt":
Our records show that your account remains unpaid despite our
written request for your payment. We have in fact given you sixty
(60) days to update but you failed to settle your account.
Accordingly, please be informed that we are now hereby
canceling your account effective thirty (30) days from receipt
hereof. [65]

The notice of cancellation was also accompanied by a jurat;


thereby making it appear to have been a valid notarial act:
SUBSCRIBED AND SWORN to before me this OCT 06 2004, affiant
exhibiting to me Community Tax Certificate No. 05465460 issued
on February 09, 2004 at lvfanila.  (Emphasis supplied)
[66]

This is not, however, the valid notarial act contemplated by the


Maceda Law.

In ordinary circumstances, "[n]otarization of a private document


converts the document into a public one making it admissible in
court without further proof of its authenticity."  To enable this
[67]

conversion, Rule 132, Section 19 of the Revised Rules of Evidence


specifically requires that a document be "acknowledged before a
notary public." [68]

Rule II, Section 1 of A.M. No. 02-8-13-SC, the 2004 Rules on


Notarial Practice, defines an acknowledgement, as follows:
SECTION 1. Acknowledgment. - "Acknowledgment" refers to an
act in which an individual on a single occasion:

(a) appears in person before the notary public and presents an integrally complete instr

(b) is attested to be personally known to the notary public or identified by the notary p
evidence of identity as defined by these Rules; and

(c) represents to the notary public that the signature on the instrument or document w
him for the purposes stated in the instrument or document, declares that he has exe
document as his free and voluntary act and deed, and, if he acts in a particular
that he has the authority to sign in that capacity.
Notarization under the Maceda Law extends beyond converting
private documents into public ones. Under Sections 3 and 4,
notarization enables the exercise of the statutory right of
unilateral cancellation by the seller of a perfected contract. If an
acknowledgement is necessary in the customary rendition of
public documents, with greater reason should an
acknowledgement be imperative in notices of cancellation or
demands for rescission made under Sections 3 and 4 of the
Maceda Law.

Through an acknowledgement, individuals acting as


representatives declare that they are authorized to act as such
representatives. This is particularly crucial with respect to
signatories to notices of cancellation or demands for rescission
under Sections 3 and 4 of the Maceda Law. In a great number of
cases, the sellers of real property shall be juridical persons acting
through representatives. In these cases, it is imperative that the
officer signing for the seller indicate that he or she is duly
authorized to effect the cancellation of an otherwise perfected
contract. Not all personnel are capacitated to effect these
cancellations; individuals purporting to do so must demonstrate
their specific authority. In the case of corporations, this authority
is vested through board resolutions, or by stipulations in the
articles of incorporation or by-laws.

Respondent's notice of cancellation here was executed by an


individual identified only as belonging to respondent's Collection
Department. It was also accompanied not by an
acknowledgement, but by a jurat.

A jurat is a distinct notarial act, which makes no averment


concerning the authority of a representative. It is defined by Rule
II, Section 6 of the 2004 Rules on Notarial Practice, as follows:
SECTION 6. Jurat. - "Jurat" refers to an act in which an individual
on a single occasion:

(a) appears in person before the notary public and presents an instrument or document

(b) is personally known to the notary public or identified by the notary public through
identity as defined by these Rules;
(c) signs the instrument or document in the presence of the notary; and

(d) takes an oath or affirmation before the notary public as to such instrument or docum
Even if respondent's notarization by jurat and not by
acknowledgement were to be condoned, respondent's jurat was
not even a valid jurat executed according to the requirements of
the 2004 Rules on Notarial Practice.

The 2004 Rules on Notarial Practice took effect on August 1,


2004.  It governed respondent's October 4, 2004 notice, which
[69]

was notarized on October 6, 2004. As Rule II, Section 6 of these


Rules clearly states, the person signing the document must be
"personally known to the notary public or identified by the notary
public through competent evidence of identity."

Rule II, Section 12, in turn, defines "competent evidence of


identity." As originally worded, when the 2004 Rules on Notarial
Practice came into effect on August 1, 2004, Rule II, Section 12
read:
Section 12. Competent Evidence of Identity. - The phrase
"competent evidence of identity" refers to the identification of an
individual based on:

(a) at least one current identification document issued by an official agency beari
signature of the individual; or

(b) the oath or affirmation of one credible witness not privy to the instrument, docume
personally known to the notary public and who personally knows the individual, or o
neither of whom is privy to the instrument, document or transaction who eac
individual and shows to the notary public documentary identification.
The proof of identity used by the signatory to respondent's notice
of cancellation was a community tax certificate, which no longer
satisfies this requirement.

Rule II, Section 12 was eventually amended by A.M. No. 02-8-13-


SC. As amended, it specifically rebukes the validity of a
community tax certificate as a competent evidence of identity:
Section 12. Competent Evidence of Identity. - The phrase
"competent evidence of identity" refers to the identification of an
individual based on:
a. at least one current identification document issued by an
official agency bearing the photograph and signature of the
individual, such as but not limited to, passport, driver's
license, Professional Regulations Commission ID, National
Bureau of Investigation clearance, police clearance, postal
ID, voter's ID, Barangay certification, Government Service
and Insurance System (GSIS) e-card, Social Security
System (SSS) card, Philhealth card, senior citizen card,
Overseas Workers Welfare Administration (OWWA) ID, OFW
ID, seaman's book, alien certificate of registration/immigrant
certificate of registration, government office ID, certification
from the National Council for the Welfare of Disabled
Persons (NCWDP), Department of Social Welfare and
Development (DSWD) certification; or
b. the oath or affirmation of one credible witness not privy to
the instrument, document or transaction who is personally
known to the notary public and who personally knows the
individual, or of two credible witnesses neither of whom is
privy to the instrument, document or transaction who each
personally knows the individual and shows to the notary
public documentary identification.
Baylon v. Almo  explained why community tax certificates were
[70]

specifically excluded as a permissible proof of identity:


As a matter of fact, recognizing the established unreliability of a
community tax certificate in proving the identity of a person who
wishes to have his document notarized, we did not include it in
the list of competent evidence of identity that notaries public
should use in ascertaining the identity of persons appearing
before them to have their documents notarized. [71]

Marina Properties v. Court of Appeals  was unequivocal: "[I]n


[72]

order to effect the cancellation of a contract, a notarial


cancellation must first be had."  Realty Exchange Venture Corp.
[73]

v. Sendino  explained, "Since R.A. 6552 mandates cancellation


[74]

by notarial act - among other requirements before any


cancellation of a contract may be effected, petitioners' precipitate
cancellation of its contract with private respondent without
observing the conditions imposed by the said law was invalid and
improper."  In Active Realty and Development v. Daroya,  where
[75] [76]

the seller "failed to send a notarized notice of cancellation,"  this


[77]

Court decried the iniquity foisted upon a buyer. "[W]e find it


illegal and iniquitous that petitioner, without complying with the
mandatory legal requirements for canceling the contract, forfeited
both respondent's land and hard-earned money." [78]

In ordinary circumstances, where notarization serves merely to


convert a private document into a public document, notaries
public have been admonished about faithfully observing the rules
governing notarial acts: "Faithful observance and utmost respect
of the legal solemnity of an oath in an acknowledgment or jurat is
sacrosanct."  It is with greater reason that the diligent
[79]

observance of notarial rules should be impressed in cases


concerned with a seller's exercise of a statutory privilege through
cancellations under the Maceda Law.

Respondent's failure to diligently satisfy the imperatives of the


2004 Rules on Notarial Practice constrains this Court to consider
its notice as an invalid notarial act. This amounts to respondent's
failure to satisfy the second requisite for valid cancellations under
Section 4, ultimately rendering its cancellation of the purchase
agreement ineffectual.

This Court is mindful of jurisprudence in which it has been lenient


with the requirement of presenting a competent evidence of
identity before a notary public.

Galicto v. Aquino,  Coca Cola Bottlers Philippines, Inc. v. Dela


[80]

Cruz,  Victorio-Aquino v. Pacific Plans, Inc.,  and Reyes v.


[81] [82]

Glaucoma

Research Foundation, Inc.  concerned


[83]
verifications and
certifications of non-forum shopping in which jurats did not
indicate the required competent evidence of identity. In these
cases, this Court overlooked the defects considering that
"defective jurat in the Verification/Certification of Non-Forum
Shopping is not a fatal defect . . . The verification is only a
formal, not a jurisdictional, requirement that the Court may
waive."  Likewise, this Court considered it more appropriate to
[84]

not hinder the consideration of pleadings in order that party-


litigants may exhaustively plead their cases.[85]

Galicto, Coca-Cola, Victorio-Aquino, and Reyes are markedly


different from the present controversy. They merely concerned
formal infractions. In contrast, this case concerns Section 4's
definite precondition for the seller's exercise of its option to
repudiate a contract. At stake in Galicto, Coca-Cola, Victorio-
Aquino, and Reyes was the right to be heard in judicial
proceedings, a cognate of due process. What is at stake here is
different: the grant of a statutory privilege relating to a civil
contract.

To be effective, sellers' cancellations under the Maceda Law must


strictly comply with the requirements of Sections 3 and 4. This
Court clarifies here that with respect to notices of cancellation or
demands for rescission by notarial act, an acknowledgement is
imperative. Moreover, when these are made through
representatives of juridical persons selling real property, the
authority of these representatives must be duly demonstrated.
For corporations, the representative's authority must have either
been granted by a board resolution or existing in the seller's
articles of incorporation or by-laws.

With the Maceda Law's avowed purpose of extending benefits to


disadvantaged buyers and liberating them from onerous and
oppressive conditions, it necessarily follows that the Maceda
Law's permission for sellers to cancel contracts becomes available
only when its conditions are heedfully satisfied. No liberal
construction of the Maceda Law can be made in favor of the seller
and at the same time burdening the buyer.

V
There being no valid cancellation, the purchase agreement
between petitioner and respondent "remains valid and
subsisting."  However, respondent has already sold the lot
[86]

purchased by petitioner to a certain Ruel Ymana. [87]

Gatchalian Realty v. Angeles  confronted a similar predicament.


[88]

In determining the most judicious manner of disposing of the


controversy, this Court considered the analogous cases
of Olympia Housing v. Panasiatic Travel,  Pagtalunan v. Vda. de
[89]

Manzano,  Active
[90]
Realty and Development v. Daroya,
 and Associated Marine Officers and Seamen's Union of the
[91]

Philippines PTGWO-ITF v. Decena: [92]

In Olympia, this Court dismissed the complaint for recovery of


possession for having been prematurely filed without complying
with the mandate of R.A. 6552. We ordered the defaulting buyer
to pay the developer the balance as of the date of the filing of the
complaint plus 18% interest per annum computed from the day
after the date of the filing of the complaint, but within 60 days
from the receipt of a copy of the decision. Upon payment, the
developer shall issue the corresponding certificate of title in favor
of the defaulting buyer, If the defaulting buyer fails to pay the full
amount, then the defaulting buyer shall vacate the subject
property without need of demand and all payments will be
charged as rentals to the property. There was no award for
damages and attorney's fees, and no costs were charged to the
parties.

In Pagtalunan, this Court dismissed the complaint for unlawful


detainer. We also ordered the defaulting buyer to pay the
developer the balance of the purchase price plus interest at 6%
per annum from the date of filing of the complaint up to the
finality of judgment, and thereafter, at the rate of 12% per
annum. Upon payment, the developer shall issue a Deed of
Absolute Sale of the subject property and deliver the
corresponding certificate of title in favor of the defaulting buyer.
If the defaulting buyer fails to pay the full amount within 60 days
from finality of the decision, then the defaulting buyer should
vacate the subject property without need of demand and all
payments will be charged as rentals to the property. No costs
were charged to the parties.

In Active, this Court held that the Contract to Sell between the
parties remained valid because of the developer's failure to send
a notarized notice of cancellation and to refund the cash
surrender value. The defaulting buyer thus had the right to offer
to pay the balance of the purchase price, and the developer had
no choice but to accept payment. However, the defaulting
buyer was unable to exercise this right because the
developer sold the subject lot. This Court ordered the
developer to refund to the defaulting buyer the actual value of
the lot with 12% interest per annum computedfrom the date of
the filing of the complaint until fully paid, or to deliver a
substitute lot at the option of the defaulting buyer.

In Associated, this Court dismissed the complaint for unlawful


detainer. We held that the Contract to Sell between the parties
remained valid because the developer failed to send to the
defaulting buyer a notarized notice of cancellation and to refund
the cash surrender value. We ordered the MeTC to conduct a
hearing within 30 days from receipt of the decision to determine
the unpaid balance of the full value of the subject properties as
well as the current reasonable amount of rent for the subject
properties. We ordered the defaulting buyer to pay, within 60
days from the trial court's determination of the amounts, the
unpaid balance of the full value of the subject properties with
interest at 6% per annum computed from the date of sending of
the notice of final demand up to the date of actual payment.
Upon payment, we ordered the developer to execute a Deed of
Absolute Sale over the subject properties and deliver the transfer
certificate of title to the defaulting buyer. In case of failure to pay
within the mandated 60 day period, we ordered the defaulting
buyer to immediately vacate the premises without need for
further demand. The developer should also pay the defaulting
buyer the cash surrender value, and the contract should be
deemed cancelled 30 days after the defaulting buyer's receipt of
the full payment of the cash surrender value. If the defaulting
buyer failed to vacate the premises, he should be charged
reasonable rental in the amount determined by the trial court.
 (Emphasis supplied)
[93]

Gatchalian proceeded to, first, assert the propriety of equitably


resolving the controversy, and second, consider the options
available to the buyer. It specifical1y noted that in the event that
its subject properties were no longer available, only two (2)
options remained: a refund or an offer of substitute properties. It
was exclusively for the buyer to choose between these options:
We observe that this case has, from the institution of the
complaint, been pending with the courts for 10 years. As both
parties prayed for the issuance of reliefs that are just and
equitable under the premises, and in the exercise of our
discretion, we resolve to dispose of this case in an equitable
manner. Considering that GRI did not validly rescind Contracts to
Sell Nos. 2271 and 2272, Angeles has two options:

1. The option to pay, within 60 days from the MeTC's


determination of the proper amounts, the unpaid balance of the
full value of the purchase price of the subject properties plus
interest at 6% per annum from 11 November 2003, the date of
filing of the complaint, up to the finality of this Decision, and
thereafter, at the rate of 6% per annum. Upon payment of the
full amount, GRI shall immediately execute Deeds of Absolute
Sale over the subject properties and deliver the corresponding
transfer certificate of title to Angeles.

In the event that the subject properties are no longer available,


GRI should offer substitute properties of equal value. Acceptance
the suitability of the substitute properties is Angeles' sole
prerogative. Should Angeles refuse the substitute properties, GRI
shall refund to Angeles the actual value of the subject properties
with 6% interest per annum computed from 11 November 2003,
the date of the filing of the complaint, until fully paid; and

2. The option to accept from GRI P574,148.40, the cash


surrender value of the subject properties, with interest at 6% per
annum, computed from 11 November 2003, the date of the filing
of the complaint, until fully paid. Contracts to Sell Nos. 2271 and
2272 shall be deemed cancelled 30 days after Angeles' receipt of
GRI's full payment of the cash surrender value. No rent is further
charged upon Angeles as GRI already had possession of the
subject properties on 10 October 2006.  (Emphasis supplied)
[94]

This case is most akin to Active. There, as in this case, the


subject property was actually sold by the seller to a third
person. Gatchalian mirrored Active in discerning an equitable
ruling in the event that its subject properties had been sold by
the seller to another person.

It was Active that originally identified two (2) options where a


seller wrongly cancelled a contract with a buyer and had since
sold that property to a third person, refunding the actual  value
[95]

of the lot sold plus interest or delivering a substitute lot to the


buyer:
Thus, for failure to cancel the contract in accordance with the
procedure provided by law, we hold that the contract to sell
between the parties remains valid and subsisting. Following
Section 3(a) of R.A. No. 6552, respondent has the right to offer
to pay for the balance of the purchase price, without interest,
which she did in this case. Ordinarily, petitioner would have had
no other recourse but to accept payment. However, respondent
can no longer exercise this right as the subject lot was already
sold by the petitioner to another buyer which lot, as admitted by
the petitioner, was valued at P1,700.00 per square meter. As
respondent lost her chance to pay for the balance of the
P875,000.00 lot, it is only just and equitable that the petitioner
be ordered to  refund to respondent the actual value of the
lot resold, i.e., P875,000.00, with 12% interest per annum
computed from August 26, 1991 until fully paid or to deliver a
substitute lot at the option of the respondent.  (Emphasis
[96]

supplied)
In Active, the buyer managed to pay the full price of the principal
value of the lot but was still short of the total contract price net of
interest.  Unlike the buyer in Active, petitioner here has only
[97]

made partial payments. Thus, a full refund of the actual value of


the lot, as Active and Gatchalian ordered, is improper. In
addition, petitioner has disavowed any interest in proceeding with
the purchase.  She has even admitted to not having the financial
[98]

capacity for this.  The antecedents, too, demonstrate that


[99]

petitioner made no further attempt at proceeding with the


purchase. Therefore, this Court follows Active's precedent, as it
did in Gatchalian, but makes adjustments in consideration of the
peculiarities of this case.

Considering that it did not validly cancel its contract with


petitioner and has also sold the lot to another person, it is proper
that respondent be ordered to refund petitioner. This refund shall
not be the full, actual value of the lot resold, as was ordered
in Active and Gatchalian, lest petitioner be unjustly enriched.
Rather, it shall only be the amount actually paid by petitioner to
respondent, i.e., P608,648.20. In view of Nacar v. Gallery
Frames, this amount shall be subject to legal interest at the rate
of twelve percent (12%) per annum reckoned from the filing of
petitioner's Complaint  until June 30, 2013; and six percent
[100]

(6%) per annum from July 1, 2013 until fully paid. [101]

WHEREFORE, the Petition for Review on Certiorari is GRANTED.

The assailed October 11, 2012 Decision and July 3, 2013


Resolution of the Court of Appeals in CA-G.R. SP No. 118285
are REVERSED and SET ASIDE.

Respondent Filinvest Land, Inc. is ordered to refund petitioner


Priscilla Zafra Orbe the amount of P608,648.20. This refund shall
earn legal interest at twelve percent (12%) per annum from
November 17, 2004 to June 30, 2013, and six percent (6%) per
annum, reckoned from July 1, 2013 until fully paid.

This case is REMANDED to the Housing and Land Use Regulatory


Board Expanded National Capital Regional Field Office FOR
PROPER EXECUTION.

SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,
JJ., concur.

November 29, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on September 6, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 29, 2017 at 2:20 p.m.

[1]
 Rep. Act No. 6552, sec. 3 provides:

Section 3. In all transactions or contracts involving the sale or


financing of real estate on installment payments, including
residential condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants under Republic Act
Numbered Thirty-eight hundred forty-four, as amended by
Republic Act Numbered Sixty-three hw1dred eighty-nine, where
the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment
of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total g
hereby fixed at the rate of one month grace period for every one year of installm
this right shall be exercised by the buyer only once in every five years of the life
any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surre
property equivalent to fifty per cent of the total payments made and, after five ye
per cent every year but not to exceed ninety per cent of the total paymen
cancellation of the contract shall take place after thirty days from receipt by the
the demand for rescission of the contract by a notarial act and upon full paymen
buyer.

Down payments, deposits or options on the contract shall be


included in the computation of the total number of installment
payments made.

[2]
 Rep. Act No. 6552, sec. 4 provides:

Section 4. In case where less than two years of installments were


paid, the seller shall give the buyer a grace period of not less
than sixty days from the date the installment became due. If the
buyer fails to pay the installments due at the expiration of the
grace period, the seller may cancel the contract after thirty days
from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.

[3]
 Rollo, pp. 11-29.

 Id. at 209-227. The Decision was penned by Associate Justioe


[4]

Eduardo B. Peralta, Jr. and concurred in by Associate Justices


Vicente S. E. Veloso and Jane Aurora C. Lantion of the Twelfth
Division, Court of Appeals, Manila.

 Id. at 245. The resolution was penned by Associate Justice


[5]

Eduardo B. Peralta, Jr. and concurred in by Associate Justices


Vicente S. E. Veloso and Jane Aurora C. Lantion of the Twelfth
Division, Court of Appeals, Manila.

[6]
 Id. at 59 and 66.

[7]
 Id. at 228-232.
[8]
 Id. at 210.

[9]
 Id. at 212, see footnote 14.

[10]
 Id. at 64-65.
OR NO. DATE AMOUNT
OR No. 375303 06/28/2001 [P]20,000.00
OR No. 382315 07/31/2001 [P]54,818.00
OR No. 389615 08/29/2001 [P]54,818.00
OR No. 399797 10/18/2001 [P]54,818.00
OR No. 410221 12/04/2001 [P]593.86 L
OR No. 444630 05/22/2002 [P]100,000.00
OR No. 442366 05/09/2002 [P]100,000.00
OR No. 504093 03/26/2003 [P]80,000.00
OR No. 604163 07/22/2004 [P]26,652.39
OR No. 604162 07/22/2004 [P]3,347.61
[11]
 Id.

[12]
 Id. at 210.

[13]
 Id. at 100.

[14]
 Id. at 212.

[15]
 Id. at 100.

[16]
 Id. at 68.

[17]
 Id. at 67-68.

[18]
 Id. at 67.

[19]
 Id. at 68.

[20]
 Id. at 212-213.

[21]
 Id. at 64-66.
[22]
 Id. at 65-66.

 Id. at 66. He explained that, "There is nothing on record to


[23]

show that payments had been made to coyer charges for overdue
payments, nor was she charged penalties for late payments. No
demand has been made for delinquency charges, hence the
payments ha[ve] been made on the principal."

[24]
 Id.

[25]
 Id. at 60.

[26]
 Id. at 60-63.

[27]
 Id. at 63.

[28]
 Id. at 62.

[29]
 Id. at 63.

[30]
 Id.

[31]
 Id. at 214.

[32]
 Id. at 54-59.

[33]
 Id. at 58.

[34]
 Id. at 209-210.

[35]
 Id. at 218.

[36]
 Id.

[37]
 Id. at 209-227.

[38]
 Id. at 226.
[39]
 Id. at 223.

[40]
 Id. at 222-226.

[41]
 Id. at 225-226.

[42]
 Id. at 226.

[43]
 Id. at 245.

[44]
 Id. at 11-29.

 Gatchalian Realty v. Angeles, 722 Phil. 407, 425 (2013) [Per J.


[45]

Carpio, Second Division].

[46]
 443 Phil. 385 (2003) [Per J. Vitug, First Division].

[47]
 559 Phil. 658 (2007) [Per J. Azcuna, First Division].

[48]
 431 Phil. 753 (2002) [Per J. Puno, First Division].

[49]
 696 Phil. 188 (2012) [Per J. Perlas-Bernabe, Second Division].

[50]
 722 Phil. 407 (2013) [Per J. Carpio, Second Division].

[51]
 Rep. Act No. 6552, sec. 2.

 Active Realty and Development Corporation v. Daroya, 431


[52]

Phil. 753, 761 (2002) [Per J. Puno, First Division].

 Id. at 760-761 citing Rep. Act No. 6552, sec. 3, Angeles vs.


[53]

Calasanz, 220 Phil. 10 (1985) [Per J. Gutierrez, En Banc];


and Realty Exchange Venture Corporation vs. Sendino, 304 Phil.
65 (1994) [Per J. Kapunan, First Division].

 See also Levy Hermanos, Inc. v. Gervacio, 69 Phil. 52 (1939)


[54]

[Per J. Moran, En Banc], where this Court distinguished between


a sale on installment and a sale on straight term. There, this
Court described installment payments as "partial payments
consist[ing] in relatively small amounts."

[55]
 722 Phil. 407 (2013) [Per J. Carpio, Second Division].

[56]
 Id. at 419.

 See Gatchalian Realty v. Angeles, 722 Phil. 407, 419 (2013)


[57]

[Per J. Carpio, Second Division] where the phrase "at least two
years of installments" was clarified to not only refer to "the
number of months that the contract is in effect".

 See Ang Giok Chip v. Springfield Fire and Marine Insurance Co.,
[58]

56 Phil. 375 (1931) [Per J. Malcolm, En Banc].

[59]
 355 Phil. 705 (1998) [Per J. Davide, Jr., First Division].

 Id. at 719. See also Rillo v. Court of Appeals, 340 Phil. 570


[60]

(1997) [Per J. Puno, Second Division], where compliance was


reckoned in relation to the monthly amortization of P7,092.00.

[61]
 542 Phil. 400 (2007) [Per J. Carpio-Morales, Second Division].

[62]
 Id. at 408-409.

 Rillo v. Court of Appeals, 340 Phil. 570, 578 (1997) [Per J.


[63]

Puno, Second Division].

 Optimum Development Bank v. Spouses Jovellanos, 722 Phil.


[64]

772, 785 (2013) [Per J. Perlas-Bernabe, Second Division].

[65]
 Rollo, p. 100.

[66]
 Id.

 Maligsa v. Cabanting, 338 Phil. 912, 917 (1997) [Per Curiam,


[67]

En Banc].
[68]
 RULES OF COURT, Rule 132, sec. 19 provides:

Section 19. Classes of Documents. - For the purpose of their


presentation in evidence, documents are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority, of
officers, whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills and testaments; a
(c) Public records, kept in the Philippines, of private documents required by law to be e

All other writings are private.

[69]
 Rule XIII, sec. 2 provides:

Section 2. Effective Date. - These Rules shall take effect on the


first day of August 2004, and shall be published in a newspaper
of general circulation in the Philippine which provides sufficiently
wide circulation.

[70]
 578 Phil. 238 (2008) [Per J. Quisumbing, Second Division].

[71]
 Id. at 242.

[72]
 355 Phil. 705 (1998) [Per J. Davide, Jr., First Division].

[73]
 Id. at 720.

[74]
 304 Phil. 65 (1994) [Per J. Kapunan, First Division].

[75]
 Id. at 77.

[76]
 431 Phil. 753 (2002) [Per J. Puno, First Division].

[77]
 Id. at 757.
[78]
 Id. at 762-763.

 Maligsa v. Cabanting, 338 Phil. 912, 917 (1997) [Per Curiam,


[79]

En Banc].

[80]
 683 Phil. 141 (2012) [Per J. Brion, En Banc].

[81]
 622 Phil. 866 (2009) [Per J. Brion, Second Division].

[82]
 749 Phil. 790 (2014) [Per J. Peralta, Third Division].

[83]
 760 Phil. 779 (2015) [Per J. Peralta, Third Division].

 Galicto v. Aquino III, 683 Phil. 141, 175 (2012) [Per J. Brion,
[84]

En Banc].

 See Coca-Cola Bottlers Philippines, Inc. v. Dela Cruz, 622 Phil.


[85]

866 (2009) [Per J. Brion, Second Division]; and Victorio-Aquino


v. Pacific Plans, Inc., 749 Phil. 790 (2014) [Per J. Peralta, Third
Division].

 Gatchalian Realty v. Angeles, 722 Phil. 407, 425 (2013) [Per J.


[86]

Carpio, Second Division].

[87]
 Rollo, p. 68.

[88]
 722 Phil. 407 (2013) [Per J. Carpio, Second Division].

[89]
 443 Phil. 385 (2003) [Per J. Vitug, First Division].

[90]
 559 Phil. 658 (2007) [Per J. Azcuna, First Division].

[91]
 431 Phil. 753 (2002) [Per J. Puno, First Division].

[92]
 696 Phil. 188 (2012) [Per J. Perlas-Bernabe, Second Division].

 Gatchalian Realty v. Angeles, 722 Phil. 407, 426-427 (2013)


[93]

[Per J. Carpio, Second Division].


[94]
 Id. at 427-428. The dispositive portion read:

WHEREFORE, we DENY the petition. The Decision of the Court of


Appeals in CA-G.R. SP No. 105964 promulgated on 11 November
2011 and the Resolution promulgated on 19 June 2012 are
AFFIRMED with MODIFICATIONS.

1. The Metropolitan Trial Court of Las Piñas City is directed to


conduct a hearing within a maximum period of 30 days from
finality of this Decision to (1) determine Evelyn M. Angeles'
unpaid balance on Contracts to Sell Nos. 2271 and 2272; and (2)
the actual value of the subject properties as of 11 November
2003.

2. Evelyn M. Angeles shall notify the Metropolitan Trial Court of


Las Piñas City and Gatchalian Realty, Inc. within a maximum
period of 60 days from the Metropolitan Trial Court of Las Piñas
City's determination of the unpaid balance whether she will pay
the unpaid balance or accept the cash sunender value.

Should Evelyn M. Angeles choose to pay the unpaid balance, she


shall pay, within 60 days from the MeTC's determination of the
proper amounts, the unpaid balance of the full value of the
purchase price of the subject properties plus interest at 6% per
annum from 11 November 2003, the date of filing of the
complaint, up to the finality of this Decision, and thereafter, at
the rate of 6% per annum. Upon payment of the full amount, GRI
shall immediately execute Deeds of Absolute Sale over the
subject properties and deliver the corresponding transfer
certificate of title to Angeles.

In the event that the subject properties are no longer available,


GRI should offer substitute properties of equal value. Should
Angeles refuse the substitute properties, GRI shall refund to
Angeles the actual value of the subject properties with 6%
interest per annum computed from 11 November 2003, the date
of the filing of the complaint, until fully paid.
Should Evelyn M. Angeles choose to accept payment of the cash
surrender value, she shall receive from GRI P574,148.40 with
interest at 6% per annum, computed from 11 November 2003,
the date of the filing of the complaint, until fully paid. Contracts
to Sell Nos. 2271 and 2272 shall be deemed cancelled 30 days
after Angeles receipt of GRI's full paymem of the cash surrender
value. No rent is further charged upon Evelyn M. Angeles.

No costs.

SO ORDERED.

 N.b., the amount to be refunded was the actuul value, not


[95]

thoriginal coutract price. The same value was used for reckoning
the amount to be refunded in Gatchalian. In Gatchalian, this
Court stated:

"GRI shall refund to Angeles the actual value of the subject


properties with 6% interest per annum computed from 11
November 2003, the date of the filing of the complaint, until fully
paid."

 Active Realty and Development Corporation v. Daroya, 431


[96]

Phil. 753, 761 (2002) [Per J. Puno, First Division].

 The principal amount was P224,025.00; total payments to be


[97]

made, net of interest, were P346,367.00; at the time of default,


the buyer had paid P314,816.00.

[98]
 Rollo, p. 21.

[99]
 Id.

 Respondent's obligation to refund petitioner ensued at the


[100]

moment it became impossible for petitioner to avail of her rights


under Section 4 of the Maceda Law, that is, when respondent sold
the property to Ruel Ymana. Interest on it accrued from the
moment of the filing of petitioner's Complaint, the date of judicial
demand. Eastern Shipping Lines v. Court of Appeals (which
articulated the guidelines for the reckoning of legal interest that
were in eftbct when the material incidents of this case arose)
explained that in the absence of stipulation, that interest due on a
breach of obligation consisting in the payment of a sum of money
"shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand."

 716 Phil. 267 (2013) [Per J. Peralta, En Banc]. See Bangko


[101]

Sentral ng Pilipinas Monetary Board Circular No. 799, Series of


2013.

Source: Supreme Court E-Library | Date created: February 08, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 202364, August 30, 2017 ]


ARTURO C. CALUBAD, PETITIONER, VS. RICARCEN
DEVELOPMENT CORPORATION, RESPONDENT.
DECISION

LEONEN, J.:

When a corporation intentionally or negligently clothes its agent


with apparent authority to act in its behalf, it is estopped from
denying its agent's apparent authority as to innocent third parties
who dealt with this agent in good faith. [1]

This resolves the Petition for Review on Certiorari  filed by [2]

petitioner Arturo C. Calubad (Calubad), assailing the January 25,


2012 Decision  and June 20, 2012 Resolution  of the Court of
[3] [4]

Appeals in CA-GR. CV No. 93185, which upheld the January 6,


2009 Decision  of Branch 218, Regional Trial Court, Quezon City
[5]

in Civil Case No. Q-03-50584.

Respondent Ricarcen Development Corporation (Ricarcen) was a


domestic corporation engaged in renting out real estate. It was
the registered owner of a parcel of land located at 53 Linaw St.,
Sta. Mesa Heights, Quezon City.  This parcel of land was covered
[6]

by Transfer Certificate of Title (TCT) No. RT-84937 (166018)  and [7]

was subdivided into two (2) lots.[8]

Ricarcen was a family corporation. Marilyn R. Soliman (Marilyn)


was its president from 2001 to August 2003. The other members
of the board of directors during that time were Marilyn's mother,
Erlinda Villanueva (Erlinda), her brother, Josefelix R. Villanueva
(Josefelix), her aunt, Maura Rico, and her sisters, Ma. Elizabeth
V. Chamorro (Elizabeth), Ma. Theresa R. Villanueva, and
Annabelle R. Villanueva.[9]

On October 15, 2001, Marilyn, acting on Ricarcen's behalf as its


president, took out a P4,000,000.00 loan from Calubad. This loan
was secured by a real estate mortgage over Ricarcen's Quezon
City property covered by TCT No. RT-84937 (166018), as
evidenced by a Deed of Real Estate Mortgage. [10]

The terms of the loan provided that Ricarcen would pay the
P4,000,000.00 loan within a period of six (6) months with "a
compounded interest at the rate of FIVE (5%) percent for the
first month and THREE (3%) percent for [the] succeeding months
and a penalty of ONE (1%) percent per month on the principal
sum in case of delay in payment."  The terms of the loan also
[11]
provided that the first monthly interest payment of P200,000.00
would be deducted from the loan proceeds. [12]

On December 6, 2001, Ricarcen, through Marilyn, and Calubad


amended and increased the loan to P5,000,000.00 in the
Amendment of Deed of Mortgage (Additional Loan of
P1,000,000.00),  with the same property used as security and
[13]

under the same terms and conditions as those of the original


Deed of Real Estate Mortgage.

On May 8, 2002, Ricarcen, again acting through Marilyn, took out


an additional loan of 2,000,000.00 from Calubad, as evidenced by
the executed Second Amendment of Deed of Mortgage (Additional
Loan of P2,000,000.00). [14]

To prove her authority to execute the three (3) mortgage


contracts in Ricarcen's behalf, Marilyn presented Calubad with a
Board Resolution dated October 15, 2001.  This Resolution
[15]

empowered her to borrow money and use the Quezon City


property covered by TCT No. RT-84937 (166018) as collateral for
the loans. Marilyn also presented two (2) Secretary's Certificates
dated December 6, 2001  and May 8, 2002,  executed by
[16] [17]

Marilyn's sister and Ricarcen's corporate secretary, Elizabeth.

Sometime in 2003, after Ricarcen failed to pay its loan, Calubad


initiated extrajudicial foreclosure proceedings on the real estate
mortgage. The auction sale was set on March 19, 2003. [18]

Calubad was the highest bidder during the scheduled auction


sale; thus, on March 27, 2003, he was issued a Certificate of
Sale.
[19]

On April 10, 2003, the Certificate of Sale was annotated on TCT


No. RT-84937 (166018). [20]

Ricarcen claimed that it only learned of Marilyn's transactions


with Calubad sometime in July 2003. [21]
Upon confirming that the Quezon City property had indeed been
mortgaged, foreclosed, and sold to Calubad as a result of
Marilyn's actions, Ricarcen's board of directors removed her as
president and appointed Josefelix as its new president. Josefelix
was also authorized to initiate the necessary court actions to
protect Ricarcen's interests over the Quezon City property.[22]

On September 9, 2003, Ricarcen filed its Complaint for


Annulment of Real Estate Mortgage and Extrajudicial Foreclosure
of Mortgage and Sale with Damages against Marilyn, Calubad,
and employees of the Registry of Deeds of Quezon City and of the
Regional Trial Court of Quezon City.[23]

On October 9, 2003, the Clerk of Court and Ex-Officio Sheriff of


the Regional Trial Court of Quezon City. Atty. Mercedes S.
Gatmaytan, was discharged as party-defendant. [24]

In its Complaint, Ricarcen claimed that it never authorized its


former president Marilyn to obtain loans from Calubad or use the
Quezon City property as collateral for the loans.
[25]

On the other hand, Calubad insisted that the incidents which led
to the foreclosure and sale of the Quezon City property were all
above board and were not marked with irregularity. Furthermore,
he asserted that he exercised the necessary diligence required
under the circumstances by requiring Marilyn to submit the
necessary documents to prove her authority from Ricarcen.
Calubad likewise argued that even if Ricarcen did not authorize
Marilyn, it was already estopped from denying her authority since
the loan proceeds had been released and Ricarcen had benefited
from them. [26]

For their part, spouses Marilyn and Napoleon Soliman denied any
knowledge of or participation in the allegedly falsified documents
and claimed that the falsification was perpetrated by their broker,
Nena leo, and Calubad's broker, a certain Malou, without their
permission.[27]
On January 6, 2009, the Regional Trial Court  granted Ricarcen's
[28]

complaint and annulled the mortgage contracts, extrajudicial


foreclosure, and sale by public auction.

The Regional Trial Court held that Marilyn failed to present a


special power of attorney as evidence of her authority from
Ricarcen. The lack of a special power of attorney should have
been enough for Calubad to be put on guard and to require
further evidence of Marilyn's authority from Ricarcen. [29]

The Regional Trial Court also ruled that the Board Resolution and
Secretary's Certificates, which were supposedly executed by
Ricarcen's Board of Directors, had been unmasked to be merely
fabricated. Furthermore, Atty. William S. Merginio, who
purportedly notarized the Board Resolution and Secretary's
Certificates, denied that he notarized those documents since they
did not appear in his notarial register.
[30]

The Regional Trial Court then dismissed the complaint against the
Registry of Deeds employees for Ricarcen's failure to show any
irregularity in the performance of their duties.  The dispositive
[31]

portion of the Regional Trial Court Decision read:


WHEREFORE, premises considered, judgment is hereby rendered
in favor of plaintiff Ricarcen Development Corporation and
further:

1. Declaring as null and void the following:


• Deed of Real Estate Mortgage dated 15 October 2001;
• Amendment of Real Estate Mortgage dated 06 December 2001;
• Second Amendment of Deed of Mortgage dated 08 May
2002;and
• Extrajudicial Foreclosure of Mortgage and Sale by public auction
in favor of Arturo Calubad[;]
2. Canceling TCT No. 261881 in the name of Arturo Calubad and
reinstating TCT No. RT-84937 (166018), both by the Regist[ry] of
Deeds of Quezon City; and
3. Ordering defendants spouses Solimans and Calubad to pay
jointly and severally damages in the amount of Two Hundred Fifty
Thousand Pesos (Php250,000.00) as attorney's fees and costs of
litigation.

SO ORDERED. [32]

Only Calubad appealed the Regional Trial Court Decision to the


Court of Appeals.

On January 25, 2012, the Court of Appeals dismissed Calubad's


appeal and affirmed the Regional Trial Court Decision. The Court
of Appeals emphasized that the rule on the presumption of
validity of a notarized board resolution and of a secretary's
certificate is not absolute and may be validly overcome by
contrary evidence;  thus:
[33]

In order to defeat the presumption, it is incumbent upon


RICARCEN to prove "with clear, convincing, strong and irrefutable
proof' that the board resolution and secretary's certificates
purportedly authorizing Marilyn Soliman to secure a loan and
mortgage the subject property in behalf of the corporation are, in
fact, invalid.

In the case at bench, RICARCEN was able to discharge this


burden. The truth of the contents of the board resolution and
secretary's certificates relied upon by Calubad had been
overthrown by the records of this case which clearly show that
such documents were not in fact executed by the board of
directors of RICARCEN, and are, therefore, fabricated.
[34]

The Court of Appeals also disregarded Calubad's argument that


Ricarcen was guilty of laches, ruling that Ricarcen's board of
directors only found out about the mortgage contracts in July
2003, when they received a copy of the notice of foreclosure of
mortage. Upon verifying with the Registry of Deeds of Quezon
City, Ricarcen took immediate action by removing Marilyn as
president and instituting a case for annulment and cancellation of
mortgage against Calubad and Marilyn. [35]
The Court of Appeals likewise set aside Calubad's argument that
Ricarcen was estopped from denying the contracts. The Court of
Appeals held that since Ricarcen did not know about the existence
of the contracts of mortgage between Caluband and Marilyn, it
could not have ratified them or knowingly accepted any benefits
from the loan proceeds.[36]

The dispositive portion of the Court of Appeals Decision read:


WHEREFORE, in view of the foregoing premises, the instant
appeal is hereby ordered DISMISSED, and the appealed decision
is AFFIRMED in toto.

SO ORDERED.  (Emphasis in the original)


[37]

On August 10, 2012, Calubad filed his Petition  before this Court.
[38]

Petitioner claims that Ricarcen is barred by estoppel from denying


Marilyn's authority to enter into a contract of loan and mortgage
with Calubad for several reasons. He argues that Ricarcen clothed
Marilyn in apparent authority to act in its behalf.  that it
[39]

benefited from the loans proceeds,  and that it impliedly agreed


[40]

to the mortgage loans by paying the monthly interest payments. [41]

Petitioner avers that Elizabeth executed four (4) separate


document which gave Marilyn the authority to secure loans, use
the Quezon City property as collateral, and execute all documents
needed for those purposes. [42]

The four (4) documents which petitioner claimed to have proved


Marilyn's authority to act in behalf of Ricarcen were:

a) Board Resolution dated October 15, 2001, which read:


RESOLVED, AS IT IS HEREBY RESOLVED, that the President
MARILYN R. SOLIMAN, is the authorized signatory of the
corporation to transact any and all documents necessary for the
purpose of securing monetary loan using a parcel of land owned
by the corporation located at No. 53 Linaw St., Quezon City
covered by TCT No. RT 84937 (166018) of the Registry of Deeds
of [Quezon City] with a total area of 840 square meters more or
less, as collateral/security.

RESOLVED FURTHER, AS IT IS HEREBY RESOLVED, that she is


authorized to sign all documents required for the monetary loan
for and in behalf of the corporation.
[43]

b) Secretary's Certificate dated October 15, 2001, which read:


BE IT RESOLVED, AS IT IS HEREBY RESOLVED, that the
corporation will borrow from ARTURO CALUBAD, Filipino, of legal
age, and residing at 89 East Maya Philam Homes Village, Quezon
City.

FURTHERMORE, BE IT RESOLVED, that the corporation is


authorizing MARILYN R. SOLIMAN, President, to sign for and in
behalf of the corporation.
[44]

c) Secretary's Certificate dated December 6, 2001, which read:


RESOLVED, as it is hereby resolved that the President, MARILYN
R. SOLIMAN, is hereby authorized to secure ADDITIONAL LOAN
OF [P]1,000,000.00 from MR. ARTURO CALUBAD, using as
collateral two (2) parcels of land with the improvements existing
thereon, situated in Quezon City, Metro Manila, covered and
embraced by Transfer Certificate of Title No. RT-84937 (166018)
of the Registry of Deeds of Quezon City, Metro Manila, and in
such amount that she deems it most proper and beneficial to the
corporation.

RESOLVED FINALLY, that the President is hereby authorized to


sign Amendment of Deed of Real Estate Mortgage,
Acknowledgment Receipt and other pertinent documents and get
and receive the loan either in cash or check/s with any bank
lawfully doing business in the Philippines for and in behalf of the
corporation.[45]

d) Secretary's Certificate dated May 8, 2002, which read:


BE IT RESOLVED, AS IT IS HEREBY RESOLVED, that the
corporation will secure additional monetary loan of P2,000,000.00
from ARTURO CALUBAD, Filipino, of legal age, and residing at 89
East Maya Philam Homes Village, Quezon City, using a parcel of
land owned by the corporation located at No. 53 Linaw St.,
Quezon City covered by TCT No. RT-84937 (166018) of the
Registry of Deeds of [Quezon City] with a total area of 840
square meters more or less, as collateral/security.

FURTHERMORE, BE IT RESOLVED, that the corporation is


authorizing MARILYN R. SOLIMAN, President, to sign for and in
behalf of the corporation. [46]

All these four (4) documents were signed by Elizabeth in her


capacity as Ricarcen's corporate secretary.

Elizabeth later on denied signing any of these four (4) documents


cited by petitioner, saying that she regularly signed blank
documents and left them with her sister Marilyn. She opined that
the Board Resolution and Secretary's Certificates, which
purportedly gave Marilyn the authority to transact with petitioner
in Ricarcen's behalf, might have been some of the blank
documents she had earlier signed. [47]

However, petitioner asserts that the fact that Elizabeth entrusted


signed, blank documents to Marilyn proved that Ricarcen
authorized her to secure loans and use its properties as collateral
for the loans.
[48]

Petitioner also points out that Marilyn had possession of the


owner's duplicate copy of TCT No. RT-84937 (166018), and thus,
he had no reason but to believe that she was authorized by
Ricarcen to deal and transact in its behalf.
[49]

Additionally, the loan proceeds were issued through checks


payable to Ricarcen, which were deposited in its bank account
and were cleared. As further evidence of Ricarcen's receipt of the
loan proceeds, petitioner presented several checks drawn and
issued by Elizabeth or Erlinda, jointly with Marilyn, representing
loan payments. [50]

Petitioner also presented several withdrawal slips signed by either


Elizabeth or Erlinda, jointly with Marilyn, authorizing a certain
Lilydale Ombina to repeatedly withdraw from Ricarcen's bank
account.[51]

Petitioner likewise presented several checks drawn from


Ricarcen's bank account, issued by Elizabeth or Erlinda, jointly
with Marilyn, payable to third persons or to cash.  Petitioner
[52]

maintains that the foregoing evidence is indubitable proof that


the loan proceeds have been used by Ricarcen. [53]

Petitioner then claims that Ricarcen, in a check drawn and issued


by Erlinda and Marilyn, paid the 3% monthly interest for the first
loan of P4,000,000.00. This bolstered his belief that Ricarcen and
its officers knew of and approved that loan, and induced him to
grant Ricarcen, through Marilyn, additional loans. [54]

Petitioner asserts that the acts of Elizabeth and Erlinda are


equivalent to clothing Marilyn with apparent authority to deal with
him and use the Quezon City property as collateral:
Their acts are also a manifestation of their acquiescence to
Marilyn Soliman's availment of loans and execution of real estate
mortgage with petitioner.

Thus, even if Marilyn Soliman had acted without or in excess of


her actual authority, if she acted within the scope of an apparent
authority with which [Ricarcen] has clothed her by holding her
out or permitting her to appear as having such authority,
[Ricarcen] is bound thereby in favor of petitioner who in good
faith relied on such apparent authority.
[55]

On November 12, 2012, this Court required Ricarcen to comment


on the Petition.
[56]

On February 4, 2013, Ricarcen filed its Comment,  where it [57]

claims that the Petition raised questions of fact, which are not
proper in a petition for review on certiorari. It also avers that
petitioner failed to raise any exceptional circumstances, and thus,
should be dismissed outright.[58]
Ricarcen asserts that while the documents it purportedly issued
enjoy the presumption of validity, this presumption is not
absolute and it has shown convincing evidence as to the invalidity
of the Board Resolution and of the Secretary's Certificates.[59]

Ricarcen points out that Marilyn clearly acted without authority


when she entered into a loan and mortgage agreement with
petitioner. Being void, the contracts of loan and mortgage can
never be ratified.
[60]

Ricarcen also denied that it was guilty of laches since it only


learned about Marilyn's loan with Calubad in July 2003, when it
received a notice of foreclosure. Upon lean1ing of the
extrajudicial foreclosure and sale by public auction, it immediately
removed Marilyn as president and authorized Josefelix to file the
necessary actions to protect Ricarcen's interests. [61]

Ricarcen likewise claims that it cannot be held guilty of


estoppel in pais since it never induced nor led petitioner to
believe that Marilyn was duly authorized to take out a loan and to
mortgage the Quezon City property as collateral. Additionally, "it
did not knowingly accept any benefit" from the loan proceeds. [62]

Ricarcen declares that petitioner either connived with Marilyn or,


at the very least, failed to exercise reasonable diligence and
prudence in ascertaining Marilyn's supposed agency from
Ricarcen.[63]

On March 11, 2013, this Court noted Ricarcen's Comment and


required Calubad to reply to the Comment, [64]

On May 9, 2013, Calubad filed his Reply,  where he denied that


[65]

he raised purely questions of fact in his Petition since the issue


raised was "the law and jurisprudence applicable to the facts of
this case, or whether the conclusion drawn by the Court of
Appeals from those facts is correct or not."[66]
Petitioner likewise claims that the findings of the Court of Appeals
were contradicted by the evidence on record, and hence, were
not conclusive or binding on the parties.[67]

On April 6, 2016, this Court noted Calubad's motion for early


decision dated March 21, 2016. [68]

The only issue presented for this Court's resolution is whether or


not Ricarcen Development Corporation is estopped from denying
or disowning the authority of Marilyn R. Soliman, its former
President, from entering into a contract of loan and mortgage
with Arturo C. Calubad.

The petition is meritorious.

The Rules of Court categorically state that a review of appeals


filed before this Court is "not a matter of right, but of sound
judicial discretion."  The Rules of Court further require that only
[69]

questions of law should be raised in petitions filed under Rule


45  since factual questions are not the proper subject of an
[70]

appeal by certiorari. It is not this Court's function to analyze or


weigh all over again evidence that has already been considered in
the lower courts.[71]

However, these rules admit exceptions. Medina v. Mayor Asistio,


Jr.  listed down 10 recognized exceptions:
[72]

(1) When the conclusion is a finding grounded entirely on


speculation, surmises or conjectures . . .; (2) When the inference
made is manifestly mist en, absurd or impossible . . .; (3) Where
there is a grave abuse of discretion . . .; (4) When the judgment
is based on a misapprehension of facts . . .; (5) When the
findings of fact are conflicting . . .; (6) When the Court of
Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant
and appellee . . .; (7) The findings of the Court of Appeals are
contrary to those of the trial court . . .; (8) When the findings of
fact are conclusions without citation of specific evidence on which
they are based . . .; (9) When the facts set forth in the petition as
well as in the petitioners' main and reply briefs are not disputed
by the respondents . . .; and (10) The finding of fact of the Court
of Appeals is premised on the supposed absence of evidence and
is contradicted by the evidence on record... [73]

Pascual v. Burgos  instructed that parties must demonstrate by


[74]

convincing evidence that the case clearly falls under the


exceptions to the rule:
Parties praying that this court review the factual findings of the
Court of Appeals must demonstrate and prove that the case
clearly falls under the exceptions to the rule. They have the
burden of proving to this court that a review of the factual
findings is necessary. Mere assertion and claim that the case falls
under the exceptions do not suffice. [75]

Petitioner claims that his case falls under the exceptions to the
general rule on a Rule 45 appeal since the findings of the lower
courts are contradicted by the evidence on record.  After a
[76]

careful study of the records, this Court is convinced that this case
falls under the exceptions cited in Medina, particularly in that "the
inference made is manifestly mistaken," making a Rule 45 appeal
proper.

II

As a corporation, Ricarcen exercises its powers and conducts its


business through its board of directors, as provided for by Section
23 of the Corporation Code:
Section 23. The board of directors or trustees. - Unless otherwise
provided in this Code, the corporate powers of all corporations
formed under this Code shall be exercised, all business conducted
and all property of such corporations controlled and held by the
board of directors or trustees to be elected from among the
holders of stocks, or where there is no stock, from among the
members of the corporation, who shall hold office for one (1) year
until their successors are elected and qualified.
However, the board of directors may validly delegate its functions
and powers to its officers or agents. The authority to bind the
corporation is derived from law, its corporate by-laws, or directly
from the board of directors, "either expressly or impliedly by
habit, custom or acquiescence in the general course of
business." [77]

The general principles of agency govern the relationship between


a corporation and its representatives.  Article 1317  of the Civil
[78] [79]

Code similarly provides that the principal must delegate the


necessary authority before anyone can act on his or her behalf.

Nonetheless, law and jurisprudence recognize actual authority


and apparent authority as the two (2) types of authorities
conferred upon a corporate officer or agent in dealing with third
persons.[80]

Actual authority can either be express or implied. Express actual


authority refers to the power delegated to the agent by the
corporation, while an agent's implied authority can be measured
by his or her prior acts which have been ratified by the
corporation or whose benefits have been accepted by the
corporation. [81]

On the other hand, apparent authority is based on the principle of


estoppel. The Civil Code provides:
Article 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.

....

Article 1869. Agency may be express, or implied from the acts of


the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on
his behalf without authority.

Agency may be oral, unless the law requires a specific form.


Yao Ka Sin Trading v. Court of Appeals  instructed that an
[82]

agent's apparent authority from the principal may also be


ascertained through:
(1) the general manner by which the corporation holds out an
officer or agent as having power to act or, in other words, the
apparent authority with which it clothes him to act in general, or
(2) the acquiescence in his acts of a particular nature, with actual
or constructive knowledge thereof, whether within or without the
scope of his ordinary powers.
The doctrine of apparent authority provides that even if no actual
authority has been conferred on an agent, his or her acts, as long
as they are within his or her apparent scope of authority, bind the
principal. However, the principal's liability is limited to third
persons who are reasonably led to believe that the agent was
authorized to act for the principal due to the principal's conduct.
[83]

Apparent authority is determined by the acts of the principal and


not by the acts of the agent.  Thus, it is incumbent upon Calubad
[84]

to prove how Ricarcen's acts led him to believe that Marilyn was
duly authorized to represent it.

III

As the former president of Ricarcen, it was within Marilyn's scope


of authority to act for and enter into contracts in Ricarcen's
behalf. Her broad authority from Ricarcen can be seen with how
the corporate secretary entrusted her with blank yet signed
sheets of paper to be used at her discretion.  She also had
[85]

possession of the owner's duplicate copy of the land title covering


the property mortgaged to Calubad, further proving her authority
from Ricarcen.[86]

The records show that on October 15, 2001, Calubad drew and
issued two (2) checks payable to Ricarcen representing the loan
proceeds for the first mortgage. The first check was Equitable PCI
Bank check number 0024416 for P2,920,000.00 and the second
check was Equitable PCI Bank check number 0000461 for
P600,000.00. Both checks were deposited in Ricarcen 's bank
account with Banco de Oro, Banawe Branch, and were honored by
the drawee bank. [87]

On December 6, 2001, Marilyn negotiated for an additional


P1,000,000.00 loan with Calubad, under the same terms and
conditions. [88]

From December 15, 2001 to April 15, 2002, Ricarcen paid and
issued several checks payable to Calubad, which he claimed were
the monthly interest payments of the mortgage loans. The
following checks were drawn by Erlinda and Marilyn for Ricarcen:

(a) Banco de Oro check number 0000067624 dated December 15, 2001 for P120,000.0
(b) Banco de Oro check number 0000067622 dated January 15, 2002 for P120,000.00;
(c) Banco de Oro check number 000067626 dated February 15, 2002 for P120,000.00;
(d) Banco de Oro check number 0000067673 dated March 6, 2002 for P30,000.00;
(e) Banco de Oro check number 0000067625 dated March 15, 2002 for P120,000.00;
(f) Banco de Oro check number 0000067674 dated April 6, 2002 for P30,000.00; and
(g) Banco de Oro check number 0002422 dated April 15, 2002 for P120,000.00.
[89]

Calubad deposited the January 15, 2002 check into his


Metrobank, EDSA-Caloocan Branch account, while the rest of the
checks were deposited in his bank account with Equitable PCI
Bank, A. De Jesus-EDSA Branch. All the checks from Ricarcen
cleared. [90]

For the additional loan of P2,000,000.00 obtained on May 8,


2002, Ricarcen again issued several Banco de Oro checks dated
June 15, 2002 to December 6, 2002 as payments for this loan
and its monthly interest. These checks were made to Calubad's
order and were drawn by either Erlinda or Elizabeth with Marilyn.
[91]

However, Banco de Oro check number 0082424 dated June 15,


2002 for P120,000.00, Banco de Oro check number 0082425
dated July 15, 2002 for P120,000.00, and Banco de Oro check
number 0082426 dated August 15, 2002 for P120,000 were all
dishonored by the drawee bank for insufficiency of funds. [92]
Calubad states that he no longer deposited the following checks
from Ricarcen upon Marilyn's request, since she claimed that
Ricarcen's funds were by then insufficient to pay the issued
checks:

(a) Banco de Oro check number 0082467 dated July 6, 2002 for P30,000.00;
(b) Banco de Oro check number 0082447 dated July 8, 2002 for P60,000.00;
(c) Banco de Oro check number 0082448 dated August 8, 2002 for P2,000,000.00;
(d) Banco de Oro check number 0082469 dated September 6, 2002 for P30,000.00;
(e) Banco de Oro check number 0082427 dated September 15, 2002 for P120,000.00;
(f) Banco de Oro check number 0082470 dated October 6, 2002 for P30,000.00;
(g) Banco de Oro check number 0082428 dated October 15, 2002 for P4,000,000.00;
(h) Banco de Oro check number 0082471 dated November 6, 2002 for P30,000.00; and
(i) Banco de Oro check number 0082472 dated December 6, 2002 for P1,000,000.00.
[

Calubad could not be faulted for continuing to transact with


Marilyn, even agreeing to give out additional loans, because
Ricarcen clearly clothed her with apparent authority. Likewise, it
reasonably appeared that Ricarcen's officers knew of the
mortgage contracts entered into by Marilyn in Ricarcen's behalf as
proven by the issued Banco De Oro checks as payments for the
monthly interest and the principal loan.

Ricarcen claimed that it never granted Marilyn authority to


transact with Calubad or use the Quezon City property as
collateral for the loans, but its actuations say otherwise. It
appears as if Ricarcen and its officers gravely erred in putting too
much trust in Marilyn. However, Calubad, as an innocent third
party dealing in good faith with Marilyn, should not be made to
suffer because of Ricarcen's negligence in conducting its own
business affairs. This finds support in Yao Ka Sin Trading: [94]

Also, "if a private corporation intentionally or negligently clothes


its officers or agents with apparent power to perform acts for it,
the corporation will be estopped to deny that such apparent
authority is real, as to innocent third persons dealing in good faith
with such officers or agents." [95]

IV
Nonetheless, petitioner's prayer for the award of damages must
be denied for failing to provide factual or legal basis for the
award.

Moral damages are not automatically awarded when there is a


breach of contract. It must also be proven that the party who
breached the contract acted fraudulently or in bad faith, in
wanton disregard of the contracted obligation.  In addition, the
[96]

following conditions must be met before moral damages may be


awarded:
(1) first, there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) second,
there must be culpable act or omission factually established;
(3) third, the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the
cases stated in Article 2219 of the Civil Code.  (Emphasis
[97]

supplied)
Petitioner failed to allege that Ricarcen acted fraudulently or
wantonly when it breached the loan Md mortgage contract.
Neither is this Court convinced that fraud, bad faith, or wanton
disregard of its obligation can be imputed to Ricarcen due to its
bad business judgment and negligence in putting too much trust
in Marilyn. It was not sufficiently shown that Ricarcn was spurred
by a dishonest purpose or was motivated by ill will or fraud when
it assailed the contract entered into by Marilyn and Calubad.

In the same manner, exemplary damages  cannot be awarded in


[98]

the absence of evidence that Ricarcen acted fraudulently or


wantonly. Finally, in the absence of exemplary damages,
attorney's fees, and costs of suit also cannot be recovered. [99]

VHEREFORE, the Petition is GRANTED. The assailed January 25,


2012 Decision and June 20, 2012 Resolution of the Court of
Appeals in CA-GR. CV No. 93185 are REVERSED and SET
ASIDE. Ricarcen Development Corporation's Amended Complaint
in. Civil Case No. Q-03-50584 before Branch 218, Regional Trial
Court, Quezon City is hereby DISMISSED for lack of merit.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

November 29, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on August 30, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 29, 2017 at 2:20 p.m.

 Yao Ka Sin Trading v. Court of Appeals, 285 Phil. 345, 367


[1]

(1992) [Per J. Davide, Jr., Third Division].

[2]
 Rollo, pp. 9-54.

 Id. at 113-130. The Decision was penned by Associate Justice


[3]

Elihu A. Ybañez and concurred in by Associate Justices Celia C.


Librea-Leagogo and Danton Q. Bueser of the Seventeenth
Division, Court of Appeals, Manila.
[4]
 Id. at 132-133.

 Id. at 106-111. The Decision was penned by Judge Hilario L.


[5]

Laqui.

[6]
 Id. at 114.

[7]
 Id. at 68-70.

[8]
 Id. at 114.

[9]
 Id.

[10]
 Id. at 74-77.

[11]
 Id. at 75.

[12]
 Id.

[13]
 Id. at 78-80.

[14]
 Id. at 81-83.

[15]
 Id. at 98.

[16]
 Id. at 99.

[17]
 Id. at 100.

[18]
 Id. at 116.

[19]
 Id. at 84.

[20]
 Id. at 117.

[21]
 Id.
[22]
 Id. at 117-118.

[23]
 Id. at 118.

[24]
 Id.

[25]
 Id. at 118-119.

[26]
 Id. at 119.

[27]
 Id. at 102.

[28]
 Id. at 106-111.

[29]
 Id. at 108-109.

[30]
 Id. at 109.

[31]
 Id. at 110.

[32]
 Id. at 110-111.

[33]
 Id. at 123-124.

[34]
 Id. at 124.

[35]
 Id. at 127-128.

[36]
 Id. at 128.

[37]
 Id. at 129.

[38]
 Id. at 9-54.

[39]
 Id. at 30-37.

[40]
 Id. at 38-45.
[41]
 Id. at 45-51.

[42]
 Id. at 31-33.

[43]
 Id. at 98.

[44]
 Id. at 32.

[45]
 Id. at 99.

[46]
 Id. at 100.

[47]
 Id. at 33-36.

[48]
 Id. at 36.

[49]
 Id. at 38.

[50]
 Id. at 39-40.

[51]
 Id. at 40-42.

[52]
 Id. at 42-43.

[53]
 Id. at 44.

[54]
 Id. at 45-47.

[55]
 Id. at 49-50.

[56]
 Id. at 135-136.

[57]
 Id. at 141-157.

[58]
 Id. at 141-142.

[59]
 Id. at 147-148.
[60]
 Id. at 148.

[61]
 Id. at 150-151.

[62]
 Id. at 151-152.

[63]
 Id. at 154-155.

[64]
 Id. at 159.

[65]
 Id. at 171-188.

[66]
 Id. at 171.

[67]
 Id. at 172-173.

[68]
 Id. at 193.

[69]
 RULES OF COURT, Rule 45, sec. 6.

[70]
 RULES OF COURT, Rule 45, sec. 1 provides:

Section 1. Filing of petition with Supreme Court. - A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition tor review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

 Quintos v. Nicolas, 736 Phil. 438, 451 (2014) [Per J. Velasco,


[71]

Third Division].

[72]
 269 Phil. 225 (1990) (Per J. Bidin, Third Division].

[73]
 Id. at 232.
 G.R. No. 171722, January 11, 2016, 178 SCRA 189 [Per J.
[74]

Leonen, Second Division].

 Id. at 207 citing Borlongan v. Madrideo, 380 Phil. 215, 223


[75]

(2000) [Per J. De Leon, Jr., Second Division].

[76]
 Rollo, pp. 172-173.

 People's Aircargo and Warehousing Co., Inc. v. Court of


[77]

Appeals, 357 Phil. 850, 863 (1998) [Per J. Panganiban, First


Division].

 University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, 718


[78]

SCRA 458, 500, G.R. No. 194964-65, January 11, 2016 [Per J.
Leonen, Second Division].

[79]
 CIVIL CODE, art. 1317 provides:

Article 1317. No one may contract in the name of another without


being authorized by the latter, or unless he has by law a right to
represent him.

 Banate v. Philippine Countryside Rural Bank (Liloan, Cebu),


[80]

Inc., 639 Phil 35, 45-46 (2010) [Per J. Brion, Third Division].

[81]
 Id. at 45-46.

[82]
 285 Phil. 345, 367 (1992) [Per J. Davide, Jr., Third Division].

 Banate v. Philippine Countryside Rural Bank (Liloan, Cebu),


[83]

Inc., 639 Phil. 35, 47 (2010) [Per J. Brion, Third Division].

[84]
 Id.

[85]
 Rollo, p. 125.

[86]
 Id. at 38.
[87]
 Id. at 39.

[88]
 Id. at 78-80.

[89]
 Id. at 174-175.

[90]
 Id. at 175.

[91]
 Id. at 175-177.

[92]
 Id. at 175-176.

[93]
 Id. at 175-177.

[94]
 285 Phil. 345 (1992) [Per J. Davide, Jr., Third Division].

[95]
 Id. at 367.

 Philippine Savings Bank v. Spouses Castillo, 664 Phil. 774, 786


[96]

(2011) [Per J. Nachura, Second Division].

 Francisco v. Ferrer, Jr., 405 Phil. 741, 749-750 (2001) [Per J.


[97]

Pardo, First Division].

[98]
 CIVIL CODE, art. 1232 provides:

Article 2232. In contracts and quasi-contracts, the court may


award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.

[99]
 CIVIL CODE, art. 2208 provides:

Article 2208. In the absence of stipulation, attorney's fees and


expenses of litigation, other than judicial costs, cannot be
recovered, except:

(1) When exemplary damages are awarded;


(2) When the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to
protect his interest;

(3) In criminal cases of malicious prosecution against the


plaintiff;

(4) In case of a clearly unfounded civil action or proceeding


against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and
demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers,


laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and


employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a


crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be
recovered.

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SECOND DIVISION

[ G.R. No. 192725, August 09, 2017 ]


CE CONSTRUCTION CORPORATION, PETITIONER,
VS. ARANETA CENTER INC., RESPONDENT.
DECISION

LEONEN, J.:

A tribunal confronted not only with ambiguous contractual terms


but also with the total absence of an instrument which definitively
articulates the contracting parties' agreement does not act in
excess of jurisdiction when it employs aids in interpretation, such
as those articulated in Articles 1370 to 1379 of the Civil Code. In
so doing, a tribunal does not conjure its own contractual terms
and force them upon the parties.

In addressing an iniquitous predicament of a contractor that


actually renders services but remains inadequately compensated,
arbitral tribunals of the Construction Industry Arbitration
Commission (CIAC) enjoy a wide latitude consistent with their
technical expertise and the arbitral process' inherent inclination to
afford the most exhaustive means for dispute resolution. When
their awards become the subject of judicial review, courts must
defer to the factual findings borne by arbitral tribunals' technical
expertise and irreplaceable experience of presiding over the
arbitral process. Exceptions may be availing but only in instances
when the integrity of the arbitral tribunal itself has been put in
jeopardy. These grounds are more exceptional than those which
are regularly sanctioned in Rule 45 petitions.
This resolves a Petition for Review on Certiorari  under Rule 45 of
[1]

the 1997 Rules of Civil Procedure, praying that the assailed April
28, 2008 Decision  and July 1, 2010 Amended Decision  of the
[2] [3]

Court of Appeals in CA-G.R. SP No. 96834 be reversed and set


aside. It likewise prays that the October 25, 2006 Decision  of [4]

the CIAC Arbitral Tribunal be reinstated.

The CIAC Arbitral Tribunal October 25, 2006 Decision awarded a


total sum of P217,428,155.75 in favor of petitioner CE
Construction Corporation (CECON). This sum represented
adjustments in unit costs plus interest, variance in take-out costs,
change orders, time extensions, attendance fees, contractor-
supplied equipment, and costs of arbitration. This amount was
net of the countervailing awards in favor of respondent Araneta
Center, Inc. (ACI), for defective and incomplete works, permits,
licenses and other advances. [5]

The assailed Court of Appeals April 28, 2008 Decision modified


the CIAC Arbitral Tribunal October 25, 2006 Decision by awarding
a net amount of P82,758,358.80 in favor of CECON.  The Court of [6]

Appeals July 1, 2010 Amended Decision adjusted this amount to


P93,896,335.71. [7]

Petitioner CECON was a construction contractor, which, for more


than 25 years, had been doing business with respondent ACI, the
developer of Araneta Center, Cubao, Quezon City. [8]

In June 2002, ACI sent invitations to different construction


companies, including CECON, for them to bid on a project
identified as "Package #4 Structure/Mechanical, Electrical, and
Plumbing/Finishes (excluding Part A Substructure)," a part of its
redevelopment plan for Araneta Center Complex.  The project [9]

would eventually be the Gateway Mall. As described by ACI,


"[t]he Project involved the design, coordination, construction and
completion of all architectural and structural portions of Part B of
the Works[;] and the construction of the architectural and
structural portions of Part A of the Works known as Package 4 of
the Araneta Center Redevelopment Project." [10]
As part of its invitation to prospective contractors, ACI furnished
bidders with Tender Documents, consisting of:

Volume I: Tender Invitation, Project Description, Instructions to


Tenderers, Form of Tender, Dayworks, Preliminaries and General
Requirements, and Conditions of Contract;

Volume II: Technical Specifications for the Architectural,


Structural, Mechanical, Plumbing, Fire Protection and Electrical
Works; and

Addenda Nos. 1, 2, 3, and 4 relating to modifications to portions


of the Tender Documents. [11]

The Tender Documents described the project's contract sum to be


a "lump sum" or "lump sum fixed price" and restricted cost
adjustments, as follows:
6 TYPE OF CONTRACT
 
6.1 This is a Lump Sum Contract and the price is a fixed price not subject to measu
should the actual quantities of work and materials differ from any estimate a
contracting, except in regard to Cost-Bearing Changes which may be ordered by th
valued under the terms of the Contract in accordance with the Schedule of Rates,
Value Engineering Proposals under Clause 27. The Contract Sum shall not be adju
cost of labour, materials or other matters.
[12]

TENDER AND CONTRACT

Fixed Price Contract


1. The Contract Sum payable to the Contactor is a Lump Sum
Fixed Price and will not be subject to adjustment, save only
where expressly provided for within the Contract Documents
and the Form of Agreement.
2. The Contract Sum shall not be subject to any adjustment "in
respect of rise and fall in the cost of materials[,] labor,
plant, equipment, exchange rates or any other matters
affecting the cost of execution of Contract, save only where
expressly provided for within the Contract Documents or the
Form of Agreement.
3. The Contract Sum shall further not be subject to any change
in subsequent legislation, which causes additional or reduced
costs to the Contractor.[13]

The bidders' proposals for the project were submitted on August


30, 2002. These were based on "design and construct" bidding. [14]

CECON submitted its bid, indicating a tender amount of


P1,449,089,174.00. This amount was inclusive of "both the act of
designing the building and executing its construction." Its bid and
tender were based on schematic drawings, i.e., conceptual
designs and suppositions culled from ACI's Tender Documents.
CECON's proposal "specifically stated that its bid was valid for
only ninety (90) days, or only until 29 November 2002." This
tender proposed a total of 400 days, or until January 10, 2004,
for the implementation and completion of the project. [15]

CECON offered the lowest tender amount. However, ACI did not
award the project to any bidder, even as the validity of CECON's
proposal lapsed on November 29, 2002. ACI only subsequently
informed CECON that the contract was being awarded to it. ACI
elected to inform CECON verbally and not in writing. [16]

In a phone call on December 7, 2002, ACI instructed CECON to


proceed with excavation works on the project. ACI, however, was
unable to deliver to CECON the entire project site. Only half,
identified as the Malvar-to-Roxas portion, was immediately
available. The other half, identified as the Roxas to-Coliseum
portion, was delivered only about five (5) months later. [17]

As the details of the project had yet to be finalized, ACI and


CECON pursued further negotiations. ACI and CECON
subsequently agreed to include in the project the construction of
an office tower atop the portion identified as Part A of the project.
This escalated CECON's project cost to P1,582,810,525.00. [18]
After further negotiations, the project cost was again adjusted to
P1,613,615,244.00. Still later, CECON extended to ACI a
P73,615,244.00 discount, thereby"reducing its offered project
cost to P1,540,000.00. [19]

Despite these developments, ACI still failed to formally award the


project to CECON. The parties had yet to execute a formal
contract. This prompted CECON to write a letter to ACI, dated
December 27, 2002,  emphasizing that the project cost quoted
[20]

to ACI was "based upon the prices prevailing at December 26,


2002" price levels.[21]

By January 2003 and with the project yet to be formally awarded,


the prices of steel products had increased by 5% and of cement
by P5.00 per bag. On January 8, 2003, CECON again wrote ACI
notifying it of these increasing costs and specifically stating that
further delays may affect the contract sum. [22]

Still without a formal award, CECON again wrote to ACI on


January 21, 2003  indicating cost and time adjustments to its
[23]

original proposal. Specifically, it referred to an 11.52% increase


for the cost of steel products, totalling P24,921,418.00 for the
project; a P5.00 increase per bag of cement, totalling
P3,698,540.00 for the project; and costs incurred because of
changes to the project's structural framing, totalling
P26,011,460.00. The contract sum, therefore, needed to be
increased to P1,594,631,418.00. CECON also specifically stated
that its tender relating to these adjusted prices were valid only
until January 31, 2003, as further price changes may be
forthcoming. CECON emphasized that its steel supplier had
actually already advised it of a forthcoming 10% increase in steel
prices by the first week of February 2003. CECON further
impressed upon ACI the need to adjust the 400 days allotted for
the completion of the project. [24]

On February 4, 2003, ACI delivered to CECON the initial tranche


of its down payment for the project. By then, prices of steel had
been noted to have increased by 24% from December 2002
prices. This increase was validated by ACI.
[25]

Subsequently, ACI informed CECON that it was taking upon itself


the design component of the project, removing from CECON's
scope of work the task of coming up with designs. [26]

On June 2, 2003, ACI finally wrote a letter  to CECON indicating


[27]

its acceptance of CECON's August 30, 2002 tender for an


adjusted contract sum of P1,540,000.00 only:
Araneta Center, Inc. (ACI) hereby accepts the C-E Construction
Corporation (CEC) tender dated August 30, 2002, submitted to
ACI in the adjusted sum of One Billion Five Hundred Forty Million
Pesos Only (P1,540,000,000.00), which sum includes all
additionally quoted and accepted items within this acceptance
letter and attachments, Appendix A, consisting of one (1) page,
and Appendix B, consisting of seven (7) pages plus attachments,
which sum of One Billion Five Hundred Forty Million Pesos Only
(P1,540,000,000.00) is inclusive of any Government Customs
Duty and Taxes including Value Added Tax (VAT) and Expanded
Value Added Tax (EVAD, and which sum is hereinafter referred to
as the Contract Sum. [28]

Item 4, Appendix B of this acceptance letter explicitly recognized


that "all design except support to excavation sites, is now by
ACI."  It thereby confirmed that the parties were not bound by a
[29]

design-and-construct agreement, as initially contemplated in


ACI's June 2002 invitation, but by a construct-only agreement.
The letter stated that "[CECON] acknowledge[s] that a binding
contract is now existing."  However, consistent with ACI's
[30]

admitted changes, it also expressed ACI's corresponding


undertaking: "This notwithstanding, formal contract documents
embodying these positions will shortly be prepared and forwarded
to you for execution."[31]

Despite ACI's undertaking, no formal contract documents were


delivered to CECON or otherwise executed between ACI and
CECON. [32]
As it assumed the design aspect of the project, ACI issued to
CECON the construction drawings for the project. Unlike
schematics, these drawings specified "the kind of work to be done
and the kind of material to be used."  CECON laments, however,
[33]

that "ACI issued the construction drawings in piece-meal fashion


at times of its own choosing."  From the commencement of
[34]

CECON's engagement until its turnover of the project to ACI, ACI


issued some 1,675 construction drawings. CECON emphasized
that many of these drawings were partial and frequently
pertained to revisions of prior items of work.  Of these drawings,
[35]

more than 600 were issued by ACI well after the intended
completion date of January 10, 2004: Drawing No. 1040 was
issued on January 12, 2004, and the latest, Drawing No. 1675,
was issued on November 26, 2004. [36]

Apart from shifting its arrangement with CECON from design-and-


construct to construct only, ACI introduced other changes to its
arrangements with CECON. CECON underscored two (2) of the
most notable of these changes which impelled it to seek legal
relief.

First, on January 30, 2003, ACI issued Change Order No. 11,
 which shifted the portion identified as Part B of the project from
[37]

reinforced concrete framing to structural steel framing. Deleting


the cost for reinforced concrete framing meant removing
P380,560,300.00 from the contract sum. Nevertheless, replacing
reinforced concrete framing with structural steel framing "entailed
substitute cost of Php217,585,000, an additional Php44,281,100
for the additional steel frames due to revisions, and another
Php1,950,000 for the additional pylon." [38]

Second, instead of leaving it to CECON, ACI opted to purchase on


its own certain pieces of equipment-elevators, escalators, chillers,
generator sets, indoor substations, cooling towers, pumps, and
tanks-which were to be installed in the project. This entailed
"take-out costs"; that is, the value of these pieces of equipment
needed to be removed from the total amount due to CECON. ACI
considered a sum totalling P251,443,749.00 to have been
removed from the contract sum due to CECON. This amount of
P251,443,749.00 was broken down, as follows:
(a) For elevators/escalators, PhP106,000,000;
(b) For Chillers, PhP41,152,900;
(c) For Generator Sets, PhP53,040,000;
(d) For Indoor Substation, PhP23,024,150;
(e) For Cooling Towers, PhP5,472,809; and
(f) For Pumps and Tanks, PhP22,753,890. [39]

CECON avers that in removing the sum of P251,443,749.00, ACI


"simply deleted the amount in the cost breakdown corresponding
to each of the items taken out in the contract documents."  ACI[40]

thereby disregarded that the corresponding stipulated costs


pertained not only to the acquisition cost of these pieces of
equipment but also to so-called "builder's works" and other costs
relating to their preparation for and installation in the project.
Finding it unjust to be performing auxiliary services practically for
free, CECON proposed a reduction in the take-out costs claimed
by ACI. It instead claimed P26,892,019.00 by way of
compensation for the work that it rendered. [41]

With many changes to the project and ACI's delays in delivering


drawings and specifications, CECON increasingly found itself
unable to complete the project on January 10, 2004. It noted that
it had to file a total of 15 Requests for Time Extension from June
10, 2003 to December 15, 2003, all of which ACI failed to timely
act on.[42]

Exasperated, CECON served notice upon ACI that it would avail of


arbitration. On January 29, 2004, it filed with the CIAC its
Request for Adjudication.  It prayed that a total sum of
[43]

P183,910,176.92 representing adjusted project costs be awarded


in its favor. [44]

On March 31, 2004, CECON and ACI filed before the CIAC a Joint
Manifestation  indicating that some issues between them had
[45]

already been settled. Proceedings before the CIAC were then


suspended to enable CECON and ACI to arrive at an amicable
settlement.  On October 14, 2004, ACI filed a motion before the
[46]
CIAC noting that it has validated P85,000,000.00 of the total
amount claimed by CECON. It prayed for more time to arrive at a
settlement. [47]

In the meantime, CECON completed the project and turned over


Gateway Mall to ACI.  It had its blessing on November 26, 2004.
[48]

[49]

As negotiations seemed futile, on December 29, 2004, CECON


filed with the CIAC a Motion to Proceed with arbitration
proceedings. ACI filed an Opposition. [50]

After its Opposition was denied, ACI filed its Answer dated
January 26, 2005.  It attributed liability for delays to CECON and
[51]

sought to recover counterclaims totalling P180,752 297.84. This


amount covered liquidated damages for CECON's supposed
delays, the cost of defective works which had to be rectified, the
cost of procuring permits and licenses, and ACI's other advances.
[52]

On February 8, 2005, ACI filed a Manifestation and Motion


seeking the CIAC's clearance for the parties to enter into
mediation. Mediation was then instituted with Atty. Sedfrey
Ordonez acting as mediator. [53]

After mediation failed, an arbitral tribunal was constituted


through a March 16, 2005 Order of the CIAC. It was to be
composed of Dr. Ernesto S. De Castro, who acted as Chairperson
with Engr. Reynaldo T. Viray and Atty. James S. Villafranca as
members. [54]

ACI filed a Motion for Reconsideration of the CIAC March 16, 2005
Order. This was denied in the Order dated March 30, 2005. [55]

In the Order dated April 1, 2005, the CIAC Arbitral Tribunal set
the preliminary conference on April 13, 2005. [56]
At the preliminary conference, CECON indicated that, the total
sum it was entitled to recover from ACI needed to be adjusted to
P324,113,410.08. The CIAC Arbitral Tribunal, thus, directed
CECON to file an Amended Request for Adjudication/Amended
Complaint. [57]

Following the filing of CECON's Amended Request for


Adjudication/Amended Complaint and the ensuing responsive
pleadings, another preliminary conference was set on May 13,
2005. The initial hearing of the case was then set on June 10,
2005.[58]

At the initial hearing, the CIAC Arbitral Tribunal resolved to


exclude the amount of P20,483,505.12 from CECON's claims as
these pertained to unpaid accomplishments that did not relate to
the issue of cost adjustments attributed to ACI, as originally
pleaded by CECON. [59]

Following the conduct of hearings, the submission of the parties'


memoranda and offers of exhibits, the CIAC Arbitral Tribunal
rendered its Decision on October 25, 2006. It awarded a total of
P229,223,318.69 to CECON, inclusive of the costs of arbitration.
It completely denied ACI's claims for liquidated damages, but
awarded to ACI a total of P11,795,162.93 on account of defective
and rectification works, as well as permits, licenses, and other
advances.  Thus, the net amount due to CECON was determined
[60]

to be P217,428,155.75.

The CIAC Arbitral Tribunal noted that while ACI's initial invitation
to bidders was for a lump-sum design-and-construct
arrangement, the way that events actually unfolded clearly
indicated a shift to an arrangement where the designs were
contingent upon ACI itself. Considering that the premise for
CECON's August 30, 2002 lump-sum offer of P1,540,000.00 was
no longer availing, CECON was no longer bound by its
representations in respect of that lump-sum amount. It may then
claim cost adjustments totalling P16,429,630.74, as well as
values accruing to the various change orders issued by ACI,
totalling P159,827,046.94. [61]

The CIAC Arbitral Tribunal found ACI liable for the delays. This
entitled CECON to extended overhead costs and the ensuing
extension cost of its Contractor's All Risk Insurance. For these
costs, the CIAC Arbitral Tribunal awarded CECON the total
amount of P16,289,623.08. As it was ACI that was liable for the
delays, the CIAC Arbitral Tribunal ruled that ACI was not entitled
to liquidated damages. [62]

The CIAC Arbitral Tribunal ruled that CECON was entitled to a


differential in take out costs representing builder's works and
related costs with respect to the equipment purchased by ACI.
This differential cost was in the amount of P15,332,091.47.  The
[63]

CIAC Arbitral Tribunal further noted that while ACI initially opted
to purchase by itself pumps, tanks, and cooling towers and
removed these from CECON's scope of work, it subsequently
elected to still obtain these through CECON. Considering that the
corresponding amount deducted as take-out costs did not
encompass the overhead costs and profits under day work, which
should have accrued to CECON because of these equipment, the
CIAC Arbitral Tribunal ruled that CECON was entitled to 18% day
work rate or a total of P21,267,908.00. [64]

The CIAC Arbitral Tribunal also found that, apart from adjusted
costs incurred on account of ACI's own activities, it also became
necessary for CECON, as main contractor, to continue extending
auxiliary services to the project's subcontractors because of the
delays. Thus, the CIAC Arbitral Tribunal awarded CECON
attendance fees-the main contractor's mark-up for auxiliary
services extended to subcontractors - totalling P14,335,674.88.
This amount was lower than the original amount prayed for by
CECON (i.e., P19,544,667.81)  as the CIAC Arbitral Tribunal
[65]

ruled that CECON may not claim attendance fees pertaining to


subcontractors which directly dealt with ACI. [66]
Considering that CECON's predicament was borne by ACI's fault,
the CIAC Arbitral Tribunal saw it fit to award to CECON the costs
of arbitration totalling P1,083,802.58. [67]

While mainly ruling in CECON's favor, the CIAC Arbitral Tribunal


found CECON liable for discolored and mismatched tiles. It noted
that CECON had engaged the services of a subcontractor for the
installation of tiles, for which it claimed attendance fees. Thus, it
awarded P7,980,000.00 to ACI.  In addition, it found CECON
[68]

liable to ACI for amounts paid in advance for permits and licenses
for the additional office tower, electrical consumption, and
garbage collection. Thus, it awarded another P3,815,162.93 to
ACI.[69]

The dispositive portion of the CIAC Arbitral Tribunal Decision


read:
WHEREFORE, Respondent is hereby ordered to pay the Claimant
the amount of PESOS TWO HUNDRED SEVENTEEN MILLION,
FOUR HUNDRED TWENTY-EIGHT THOUSAND, ONE HUNDRED
FIFTY[-]FIVE PESOS AND SEVENTY[-]FIVE CENTAVOS
(Php217,428,155.75) within thirty (30) days upon promulgation
of the award. Interest 6% per annum shall be imposed on the
award for any balance remaining from the promulgation of the
award up to the time the award becomes final and executory.
Thereafter, interest of 12% per annum shall be imposed on any
balance of the award until fully paid.

SO ORDERED. [70]

On December 4, 2006, ACI filed before the Court of Appeals a


Petition for Review  under Rule 43 of the 1997 Rules of Civil
[71]

Procedure.

In the meantime, on December 28, 2006, the CIAC Arbitral


Tribunal issued an Order  acknowledging arithmetical errors in its
[72]

October 25, 2006 Decision, Thus, it modified its October 25, 2006
Decision, indicating that the net amount due to CECON was
P231,357,136.72, rather than P217,428,155.75. [73]
In its assailed April28, 2008 Decision,  the Court of Appeals
[74]

reduced the award in favor of CECON to P114,324,605.00 and


increased the award to ACI to P31,566,246.20. [75]

The Court of Appeals held as inviolable the lump-sum fixed price


arrangement between ACI and CECON. It faulted the CIAC
Arbitral Tribunal for acting in excess of jurisdiction as it
supposedly took it upon itself to unilaterally modify the
arrangement between ACI and CECON. [76]

Thus, the Court of Appeals deleted the CIAC Arbitral Tribunal's


award representing cost adjustments. However, the Court of
Appeals also noted that in ACI's and CECON's March 30, 2004
Joint Ma11ifestation before CIAC, ACI conceded that
P10,266,628.00 worth of cost adjustments was due to CECON
and undertook to pay CECON that amount. The Court of Appeals,
hence, maintained a P10,266,628.00 award of cost adjustment in
favor of CECON. [77]

On the cost increases borne by Change Order No. 11-the shift


from reinforced concrete to structural steel framing-and by
transitions from schematic diagrams to construction drawings,
the Court of Appeals dismissed the CIAC Arbitral Tribunals award
to CECON as arising from "pity" and unwarranted by the lump-
sum, fixed-price arrangement. [78]

The Court of Appeals held ACI liable to CECON for the sum of
P12,672,488.36 for miscellaneous change orders, which it
construed to be "separate contracts that have been entered into
at the time [ACI] required them."  It likewise held ACI liable for
[79]

P1,132,946.17 representing the balance of 12 other partially paid


change orders.[80]

The Court of Appeals noted that CECON was not entitled to time
extensions because the arrangement between ACI and CECON
had never been altered. Consequently, it was not entitled to
acceleration co ts, additional overhead, ru1d reimbursement for
extending the Contractor's All Risk Insurance.  Conversely, the
[81]
Court of Appeals held CECON liable for delays thereby entitling
ACI to liquidated damages corresponding to 10% of the supposed
contract sum of P1,540,000,000.00, or P15,400,000.00. [82]

Also on account of the supposed lump-sum arrangement, the


Court of Appeals held that CECON was not entitled to attendance
fees on contract amounts increased by change order works.  It [83]

also stated that the rate for attendance fees, overhead, and profit
for subcontractors' works remained subject to the original
contract documents based on ACI's original invitation to bidders
and had never been altered. [84]

Regarding attendance fees, the Court of Appeals proffered that


the work attributed to subcontractors was merely work done by
CECON itself, thereby negating the need for attendance fees. [85]

Concerning take-out costs, the Court of Appeals stated that


CECON was in no position to propose its own take-out costs as
the tender documents issued along with ACI's invitation to
bidders stated that take-out costs must be based exclusively on
the rates provided in the Contract Cost Breakdown. Nevertheless,
as ACI had previously undertaken to pay the variance in takeout
costs amounting to P3,811,289.70, the Court of Appeals
concluded that an award for take-out costs in that amount was
proper.[86]

On the CIAC Arbitral Tribunal's award for overhead costs and


profits under day work, the Court of Appeals held that it was
improper to grant this award based on stipulations on day works
pertaining "only to 'materials' and not to equipment."[87]

Finally, the Court of Appeals held that CECON was not entitled to
costs of litigation considering that "no premium is to be placed on
the right to litigate"  and since ACI could not be faulted for
[88]

delays.

The dispositive portion of the assailed Court of Appeals April 28,


2008 Decision read:
WHEREFORE, based on all the foregoing, the Decision of the
Arbitral Tribunal is modified as follows:

a. AWARD TO CECON
NO. ISSUE Pesos
1 Cost Adjustment 10,266,6
2 Take Out Cost of Equipment 3,811,28
3 Change Orders 99,119,2
a. Approved Change Orders 1,132,946.17
b. [Schematic Drawings] to
80,108,761.60
[Construction Drawings]
c. Miscellaneous Change Orders 12,672,488.30
d. Change Order No. 11 5,205,004.02
[4]
Equipment Supplied by Owner 1,127,48
114,3
Total

b. AWARD TO ARANETA
NO. ISSUE Pesos
[5]
Liquidated Damages 15,400,0
[6]
Defective and Incomplete Works 3,000,00
Bookmarking Granite Tiles 6,980,00
[7]
Permits, Licenses and Other Advances 6,186,24
31,5
Total

In addition, CECON is directed to submit all required. close-out


documents within thirty (30) days from receipt of this Decision.

The parties shall bear their own costs of arbitration and litigation.

SO ORDERED. [89]

Acting on CECON's Motion for Reconsideration, the Court of


Appeals issued its Amended Decision on July 1, 2010.  This [90]

Amended Decision increased the award for miscellaneous change


orders to P27,601,469.32; reinstated awards for undervalued
works in supplying and installing G.I. sheets worth
P1,209,782.50  and for the drilling of holes and application of
[91]

epoxy worth P4,543,456.00;  and deleted the award for takeout


[92]

costs.[93]
The dispositive portion of the assailed Court of Appeals July 1,
2010 Amended Decision read:
WHEREFORE, Our Decision dated 28 April 2008 is hereby
modified as follows:

I - AWARD:

a. AWARD TO CE CONSTRUCTION, INC.


NO. ISSUE PESOS (
1 Additional costs spent on rebars. 10,266,628.0
Increase in the costs of cement and formworks falling under
2 5,205,004.02
cost-bearing change.
Representing undervaluation of respondent's works in the
3 1,209,782.50
supply and installation of G.I. sheets.
4 Representing Miscellaneous Change Orders. 27,601,469.3
5 Drilling of Holes 4,543,450.00
6 [Schematic Drawings] to [Construction Drawings] 80,108,761.6
[7]
Installation of equipment supplied by owner. 1,127,486.50
TOTAL 130,062,581.
b. AWARD TO ARANETA CENTER, INC.
1 Liquidated Damage (sic) 20,000,
2 Defective and Incomplete Works 3,000,0
3 Bookmarking Granite Tiles 6,980,0
4 Permits, Licenses and other Advances 6,186,2
TOTAL 36,166,
II - COMPUTATION:

AWARD TO CE CONSTRUCTION, INC. 130,062,581.94


LESS
AWARD TO ARANETA CENTER, INC. 36,166,246.23
BALANCE PAYABLE BY ARANETA TO CECON 93,896,335.71

SO ORDERED. [94]

Aggrieved at the Court of Appeals' ruling, CECON tiled the


present Petition insisting on the propriety of the CIAC Arbitral
Tribunal's conclusions and findings.  It prays that the assailed
[95]

Court of Appeals decisions be reversed and that the CIAC Arbitral


Tribunal October 25, 2006 Decision, as modified by its December
28, 2006 Order, be reinstated. [96]
ACI counters that the Court of Appeals July 1, 2010 Amended
Decision must be upheld. [97]

ACI insists on the inviolability of its supposed agreement with


CECON, as embodied in the contract documents delivered to
contractors alongside the original offer to bid. It cites specific
provisions of these documents such as valuation rules and
required notices for extensions and changes, reckoning of losses
and expenses, the ensuing liquidated damages for defects, cost-
bearing changes and provisional sums,  which define parameters
[98]

for permissible changes and for reckoning corresponding costs


and liabilities. However, it did not attach any of these documents
to its Comment or Memorandum. It also cites statutory
provisions-Articles 1715  and 1724  of the Civil Code-on
[99] [100]

CECON's liabilities and the primacy of stipulated contract prices.


[101]

By the inviolability their agreement, ACI insists on the supposed


immutability of the stipulated contract sum and on the
impropriety of the CIAC Arbitral Tribunal in writing its own terms
for ACI and CECON to follow.  It faults the CIAC Arbitral Tribunal
[102]

for erroneously reckoning the sums due to CECON, particularly in


relying on factual considerations that run afoul of contractual
stipulations and on bases such as industry practices and
standards, which supposedly should not have even been
considered as the parties have already adduced their respective
evidence.  It insists upon CECON's fault for delays and defects,
[103]

making it liable for liquidated damages. [104]

Though nominally modifying the CIAC Arbitral Tribunal October


25, 2006 Decision, the Court of Appeals actually reversed it on
the pivotal matter of the characterization of the contract between
CECON and ACI. Upon its characterization of the contract as one
for a lump-sum fixed price, the Court of Appeals deleted much of
the CIAC Arbitral Tribunal's monetary awards to CECON and
awarded liquidated damages to ACI.
On initial impression, what demands resolution is the issue of
whether or not the Court of Appeals erred in characterizing the
contractual arrangement between petitioner CE Construction
Corporation and respondent Araneta Center, Inc. as immutably
one for a lump-sum fixed price.

However, this is not merely a matter of applying and deriving


conclusions from cut and dried contractual provisions. More
accurately, what is on issue is whether or not the Court of
Appeals correctly held that the CIAC Arbitral Tribunal acted
beyond its jurisdiction in holding that the price of
P1,540,000,000.00 did not bind the parties as an immutable
lump-sum. Subsumed in this issue is the matter of whether or not
the Court of Appeals correctly ruled that CECON was rightfully
entitled to time extensions and that intervening circumstances
had made ACI liable for cost adjustments, increases borne by
change orders, additional overhead costs, extended contractor's
all risk insurance coverage, increased attendance fees vis-a-vis
subcontractors, and arbitration costs which it awarded to CECON.

This Court limits itself to the legal question of the CIAC Arbitral
Tribunal's competence. Unless any of the exceptional
circumstances that warrant revisiting the factual matter of the
accuracy of the particulars of every item awarded to the parties is
availing, this Court shall not embark on its own audit of the
amounts owing to each.

This Court begins by demarcating the jurisdictional and technical


competence of the CIAC and of its arbitral tribunals.

I.A

The Construction Industry Arbitration Commission was a creation


of Executive Order No. 1008, otherwise known as the
Construction Industry Arbitration Law.  At inception, it was
[105]

under the administrative supervision of the Philippine Domestic


Construction Board  which, in turn, was an implementing agency
[106]

of the Construction Industry Authority of the Philippines (CIAP).


 The CIAP is presently attached to the Department of Trade and
[107]

Industry. [108]

The CIAC was created with the specific purpose of an "early and
expeditious settlement of disputes"  cognizant of the exceptional
[109]

role of construction to "the furtherance of national development


goals." [110]

Section 4 of the Construction Industry Arbitration Law spells out


the jurisdiction of the CIAC:
Section 4. Jurisdiction. - The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction in
the Philippines, whether the dispute arises before or after the
completion of the contract, or after the abandonment or breach
thereof. These disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to


violation of specifications for materials and workmanship;
violation of the terms of agreement; interpretation and/or
application of contractual time and delays; maintenance and
defects; payment, default of employer or contractor and changes
in contract cost.

Excluded from the coverage of this law are disputes arising from
employer-employee relationships which shall continue to be
covered by the Labor Code of the Philippines.
Though created by the act of a Chief Executive who then
exercised legislative powers concurrently with the Batasang
Pambansa, the creation, continuing existence, and competence of
the CIAC have since been validated by acts of Congress,
Republic Act No. 9184 or the Government Procurement Reform
Act, enacted on January 10, 2003, explicitly recognized and
confirmed the competence of the CIAC:
Section 59. Arbitration. - Any and all disputes arising from the
implementation of a contract covered by this Act shall be
submitted to arbitration in the Philippines according to the
provisions of Republic Act No. 876, otherwise known as the
"Arbitration Law": Provided, however, That, disputes that are
within the competence of the Construction Industry Arbitration
Commission to resolve shall be referred thereto. The process of
arbitration shall be incorporated as a provision in the contract
that will be executed pursuant to the provisions of this Act:
Provided, That by mutual agreement, the patties may agree in
writing to resort to alternative modes of dispute resolution.
(Emphasis supplied)
Arbitration of construction disputes through the CIAC was
formally incorporated into the general statutory framework on
alternative dispute resolution through Republic Act No. 9285, the
Alternative Dispute Resolution Act of 2004 (ADR Law). Chapter 6,
Section 34 of ADR Law made specific reference to the
Construction Industry Arbitration Law, while Section 35 confirmed
the CIAC's jurisdiction:
CHAPTER 6
ARBITRATION OF CONSTRUCTION DISPUTES

Section 34. Arbitration of Construction Disputes: Governing Law.


- The arbitration of construction disputes shall be governed by
Executive Order No. 1008, otherwise known as the Construction
Industry Arbitration Law.

Section 35. Coverage of the Law. - Construction disputes which


fall within the original and exclusive jurisdiction of the
Construction Industry Arbitration Commission (the "Commission")
shall include those between or among parties to, or who are
otherwise bound by, an arbitration agreement, directly or by
reference whether such parties are project owner, contractor,
subcontractor, fabricator, project manager, design professional,
consultant, quantity surveyor, bondsman or issuer of an
insurance policy in a construction project.

The Commission shall continue to exercise original and exclusive


jurisdiction over construction disputes although the arbitration is
"commercial" pursuant to Section 21 of this Act.
I.B

The CIAC does not only serve the interest of speedy dispute
resolution, it also facilitates authoritative dispute resolution. Its
authority proceeds not only from juridical legitimacy but equally
from technical expertise. The creation of a special adjudicatory
body for construction disputes presupposes distinctive and
nuanced competence on matters that are conceded to be outside
the innate expertise of regular courts and adjudicatory bodies
concerned with other specialized fields. The CIAC has the state's
confidence concerning the entire technical expanse of
construction, defined in jurisprudence as "referring to all on-site
works on buildings or altering structures, from land clearance
through completion including excavation, erection and assembly
and installation of components and equipment." [111]

Jurisprudence has characterized the CIAC as a quasi-judicial,


administrative agency equipped with technical proficiency that
enables it to efficiently and promptly resolve conflicts;
[The CIAC] is a quasi-judicial agency. A quasi-judicial agency or
body has been defined as an organ of government other than a
court and other than a legislature, which affects the rights of
private parties through either adjudication or rule-making. The
very definition of an administrative agency includes its being
vested with quasi-judicial powers. The ever increasing variety of
powers and functions given to administrative agencies recognizes
the need for the active intervention of administrative agencies in
matters calling for technical knowledge and speed in countless
controversies which cannot possibly be handled by regular courts.
The CIAC's primary function is that of a quasi-judicial agency,
which is to adjudicate claims and/or determine rights in
accordance with procedures set forth in E.O. No. 1008. [112]
The most recent jurisprudence maintains that the CIAC is a quasi-
judicial body. This Court's November 23, 2016 Decision
in Fruehauf Electronics v. Technology Electronics Assembly and
Management Pacific  distinguished construction arbitration, as
[113]

well as voluntary arbitration pursuant to Article 219(14) of the


Labor Code,  from commercial arbitration. It ruled that
[114]

commercial arbitral tribunals are not quasi-judicial agencies, as


they are purely ad hoc bodies operating through contractual
consent and as they intend to serve private, proprietary interests.
 In contrast, voluntary arbitration under the Labor Code and
[115]

construction arbitration operate through the statutorily vested


jurisdiction of government instrumentalities that exist
independently of the will of contracting parties and to which these
parties submit. They proceed from the public interest imbuing
their respective spheres:
Voluntary Arbitrators resolve labor disputes and grievances
arising from the interpretation of Collective Bargaining
Agreements. These disputes were specifically excluded from the
coverage of both the Arbitration Law and the ADR Law.

Unlike purely commercial relationships, the relationship between


capital and labor are heavily impressed with public interest.
Because of this. Voluntary Arbitrators authorized to resolve labor
disputes have been clothed with quasi-judicial authority.

On the other hand, commercial relationships covered by our


commercial arbitratjon laws are purely private and contractual in
nature. Unlike labor relationships, they do not possess the same
compelling state interest that would justify state interference into
the autonomy of contracts. Hence, commercial arbitration is a
purely private system of adjudication facilitated by private
citizens instead of government instrumentalities wielding quasi-
judicial powers.

Moreover, judicial or quasi-judicial jurisdiction cannot be


conferred upon a tribunal by the parties alone. The Labor Code
itself confers subject-matter jurisdiction to Voluntary Arbitrators.
Notably, the other arbitration body listed in Rule 43 the
Construction Industry Arbitration Commission (CIAC) - is also a
government agency attached to the Department of Trade and
Industry. Its jurisdiction is likewise conferred by statute. By
contrast, the subject matter urisdiction of commercial arbitrators
is stipulated by the parties.  (Emphasis supplied, citations
[116]

omitted)
Consistent with the primacy of technical mastery, Section 14 of
the Construction Industry Arbitration Law on the qualification of
arbitrators provides:
Section 14. Arbitrators. - A sole arbitrator or three arbitrators
may settle a dispute.

....

Arbitrators shall be men of distinction in whom the business


sector and the government can have confidence. They shall not
be permanently employed with the CIAC. Instead, thy shall
render services only when called to arbitrate. For each dispute
they settle, they shall be given fees.
Section 8.1 of the Revised Rules of Procedure Governing
Construction Arbitration establishes that the foremost
qualification of arbitrators shall be technical proficiency. It
explicitly enables not only lawyers but also "engineers, architects,
construction managers, engineering consultants, and
businessmen familiar with the construction industry" to serve as
arbitrators:
Section 8.1 General Qualification of Arbitrators. - The Arbitrators
shall be men of distinction in whom the business sector and the
government can have confidence. They shall be technically
qualified to resolve any construction dispute expeditiously and
equitably. The Arbitrators shall come from different professions.
They may include engineers, architects, construction managers,
engineering consultants, and businessmen familiar with the
construction industry and lawyers who are experienced in
construction disputes. (Emphasis supplied)
Of the 87 CIAC accredited arbitrators as of January 2017, only 33
are lawyers. The majority are experts from construction-related
professions or engaged in related fields.
[117]

Apart from arbitrators, technical experts aid the CIAC in dispute


resolution. Section 15 of the Construction Industry Arbitration
Law provides:
Section 15. Appointment of Experts. - The services of technical or
legal experts may be utilized in the settlement of disputes if
requested by any of the parties or by the Arbitral Tribunal. If the
request for an expert is done by either or by both of the parties,
it is necessary that the appointment of the expert be confirmed
by the Arbitral Tribunal.

Whenever the parties request for the services of an expert, they


shall equally shoulder the expert's fees and expenses, half of
which shall be deposited with the Secretariat before the expert
renders service. When only one party makes the request, it shall
deposit the whole amount required.
II

Consistent with CIAC's technical expertise is the primacy and


deference accorded to its decisions. There is only a very narrow
room for assailing its rulings.

Section 19 of the Construction Industry Arbitration Law


establishes that CIAC arbitral awards may not be assailed, except
on pure questions of law:
Section 19. Finality of Awards. - The arbitral award shall be
binding upon the parties. It shall be final and inappealable except
on questions of law which shall be appealable to the Supreme
Court.
Rule 43 of the 1997 Rules of Civil Procedure standardizes appeals
from quasi-judicial agencies.  Rule 43, Section 1 explicitly lists
[118]

CIAC as among the quasi judicial agencies covered by Rule 43.


 Section 3 indicates that appeals through Petitions for Review
[119]

under Rule 43 are to "be taken to the Court of Appeals ...


whether the affoeal involves questions of fact, of law, or mixed
questions of fact and law."
[120]

This is not to say that factual findings of CIAC arbitral tribunals


may now be assailed before the Court of Appeals. Section 3's
statement "whether the appeal involves questions of fact, of law,
or mixed questions of fact and law" merely recognizes variances
in the disparate modes of appeal that Rule 43 standardizes: there
were those that enabled questions of fact; there were those that
enabled questions of law, and there were those that enabled
mixed questions fact and law. Rule 43 emphasizes that though
there may have been variances, all appeals under its scope are to
be brought before the Court of Appeals. However, in keeping with
the Construction Industry Arbitration Law, any appeal from CIAC
arbitral tribunals must remain limited to questions of law.

Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc.


 explained the wisdom underlying the limitation of appeals to
[121]

pure questions of law:


Section 19 makes it crystal clear that questions of fact cannot be
raised in proceedings before the Supreme Court - which is not a
trier of facts - in respect of an arbitral award rendered under the
aegis of the CIAC. Consideration of the animating purpose of
voluntary arbitration in generaland arbitration under the aegis of
the CIAC in particular, requires us to apply rigorously the above
principle embodied in Section 19 that the Arbitral Tribunal's
findings of fact shall be final and unappealable.

Voluntary arbitration involves the reference of a dispute to an


impartial body, the members of which are chosen by the parties
themselves, which parties freely consent in advance to abide by
the arbitral award issued after proceedings where both parties
had the opportunity to be heard. The basic objective is to provide
a speedy and inexpensive method of settling disputes by allowing
the parties to avoid the formalities, delay, expense and
aggravation which commonly accompany ordinary litigation,
especially litigation which goes through the entire hierarchy of
courts. [The Construction Industry Arbitration Law] created an
arbitration facility to which the construction industry in the
Philippines can have recourse. The [Construction Industry
Arbitration Law] was enacted to encourage the early and
expeditious settlement of disputes in the construction industry, a
public policy the implementation of which is necessa and
important for the realization of national development goals. [122]

Consistent with this restrictive approach, this Court is duty-bound


to be extremely watchful and to ensure that an appeal does not
become an ingenious means for und rmining the integrity of
arbitration or for conveniently setting aside the conclusions
arbitral processes make. An appeal is not an artifice for the
parties to undermine the process they voluntarily elected to
engage in. To prevent this Court from being a party to such
perversion, this Court's primordial inclination must be to uphold
the factual finqings of arbitral tribunals:
Aware of the objective of voluntary arbitration in the labor field,
in the construction industry, and in any other area for that
matter, the Court will not assist one or the other or even both
parties in any effort to subvert or defeat that objective tbr their
private purposes. The Court will not review the factual findings of
an arbitral tribunal upon the artful allegation that such body had
"misapprehended the facts" and will not pass upon issues which
are, at bottom, issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties here had recourse
to arbitration and chose the arbitrators themselves; they must
have had confidence in such arbitrators. The Court will not,
therefore, permit the parties to relitigate before it the issues of
facts previously presented and argued before the Arbitral
Tribunal, save only where a very clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal committed
an error so egregious and hurtful to one party as to constitute a
grave abuse of discretion resulting in lack or loss of jurisdiction.
Prototypical examples would be factual conclusions of the
Tribunal which resulted in deprivation of one or the other party of
a fair opportunity to present its position before the Arbitral
Tribunal, and an award obtained through fraud or the corruption
of arbitrators. Any other, more relaxed, rule would result in
setting at naught the basic objective of a voluntary arbitration
and would reduce arbitration to a largely inutile institution.
 (Emphasis supplied, citations omitted)
[123]

Thus, even as exceptions to the highly restrictive nature of


appeals may be contemplated, these exceptions are only on the
nanowest of grounds. Factual findings of CIAC arbitral tribunals
may be revisited not merely because arbitral tribunals may have
erred, not even on the already exceptional grounds traditionally
available in Rule 45 Petitions.  Rather, factual findings may be
[124]

reviewed only in cases where the CIAC arbitral tribunals


conducted their affairs in a haphazard, immodest manner that the
most basic integrity of the arbitral process was imperiled.
In Spouses David v. Construction Industry and Arbitration
Commission: [125]

We reiterate the rule that factual findings of construction


arbitrators are final and conclusive and not reviewable by this
Court on appeal, except when the petitioner proves affirmatively
that: (1) the award was procured by corruption, fraud or other
undue means; (2) there was evident partiality or corruption of
the arbitrators or of any of them; (3) the arbitrators were guilty
of misconduct in refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence pertinent and
material to the controversy; (4) one or more of the arbitrators
were disqualified to act as such under section nine of Republic Act
No. 876 and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights
of any party have been materially prejudiced; or (5) the
arbitrators exceeded their powers, or so imperfectly executed
them, that a mutual, final and definite award upon the subject
matter submitted to them was not made.  (Citation omitted)
[126]

Guided by the primacy of CIAC's technical competence, in


exercising this Court's limited power of judicial review, this Court
proceeds to rule on whether or not the Court of Appeals erred in
its assailed decisions.

III
Properly discerning the issues in this case reveals that what is
involved is not a mere matter of contractual interpretation but a
question of the CIAC Arbitral Tribunal's exercise of its powers.

III.A

F.F. Cruz v. HR Construction  distinguished questions of law,


[127]

properly cognizable in appeals from CIAC arbitral awards, from


questions of fact:
A question of law arises when there is doubt as to what the law is
on a certain state of facts, while there is a question of fact when
the doubt arises as to the truth or falsity of the alleged facts. For
a question to be one of law, the same must not involve an
examination of the probative value of the evidence presented by
the litigants or any of them. The resolution of tbe issue must rest
solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of
the evidence presented, the question posed is one of fact. [128]

It further explained that an inquiry into the true intention of the


contracting parties is a legal, rather than a factual, issue:
On the surface, the instant petition appears to merely raise
factual questions as it mainly puts in issue the appropriate
amount that is due to HRCC. However, a more thorough analysis
of the issues raised by FFCCl would show that it actually asserts
questions of law.

FFCCI primarily seeks from this Court a determination of whether


[the] amount claimed by HRCC in its progress billing may be
enforced against it in the absence of a joint measurement of the
former's completed works. Otherwise stated, the main question
advanced by FFCCI is this: in the absence of the joint
measurement agreed upon in the Subcontract Agreement, how
will the completed works of HRCC be verified and the amolfnt due
thereon be computed?

The determination of the foregoing question entails an


interpretation of the terms of the Subcontract Agreement vis-a-
vis the respective rights of the parties herein. On this point, it
should be stressed that where an interpretation of the true
agreement between the parties is involved in an appeal, the
appeal is in effect an inquiry of the law between the parties, its
interpretation necessarily involves a question of law.

Moreover, we are not called upon to examine the probative value


of the evidence presented before the CIAC. Rather, what is
actually sought from this Court is an interpretation of the terms
of the Subcontract Agreement as it relates to the dispute
between the parties.  (Emphasis supplied)
[129]

Though similarly concerned with "an interpretation of the true


agreement between the parties,"  this case is not entirely
[130]

congruent with F.F. Cruz.

In F.F. Cruz, the parties' agreement had been clearly set out in
writing. There was a definitive instrument which needed only to
be consulted to ascertain the parties' intent:
In resolving the dispute as to the proper valuation of the works
accomplished by HRCC, the primordial consideration should be
the terms of the Subcontract Agreement. It is basic that if the
tem1s of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its
stipulations shall control. [131]

Thus, this Court concluded:


Pursuant to the terms of payment agreed upon by the parties,
FFCCI obliged itself to pay the monthly progress billings of HRCC
within 30 days from receipt of the same. Additionally, the
monthly progress billings of HRCC should indicate the extent of
the works completed by it, the same beinff essential to the
valuation of the amount that FFCCI would pay to HRCC. [132]

III.B

In this case, there is no established contract that simply required


interpretation and application.

The assailed Court of Appeals April 28, 2008 Decision implies that
all that had to be done to resolve the present controversy was to
apply the supposedly clear and unmistakable terms of the
contract between ACI and CECON. It even echoes the words
of F.F. Cruz:
It is a legal principle of long standing that when the language of
the contract is explicit, leaving no doubt as to the intention of the
parties, the courts may not read into it any other intention that
would contradict its plain import. The clear terms of the contract
should never be the subject matter of interpretation. Neither
abstract justice nor the rule of liberal interpretation justifies the
creation of a contract for the parties which they did not make
themselves or the imposition upon one party to a contract or
obligation not assumed simply or merely to avoid seeming
hardships. Their true meaning must be enforced, as it is to be
presumed that the contracting parties know their scope and
effects.

....

The Contract Documents expressly characterize the construction


contract between [ACI] and CECON as "lump-sum" and "fixed
price" in nature. As a consequence, the Contract Documents
expressly prohibit any adjustment of the contract sum due to any
changes or fluctuations in the cost of labor, materials or other
matters.  (Citations omitted)
[133]

Upon its characterization of the contract as one for the lump-sum,


fixed price of P1,540,000,000.00, the Court of Appeals faulted the
CIAC Arbitral Tribunal for acting in excess of jurisdiction as it
supposedly countermanded the parties' agreement, or worse,
conjured its own tenns for the parties' compliance. [134]

It was the Court of Appeals, not the CIAC Arbitral Tribunal, that
committed serious error.

To rule that the CIAC Arbitral Tribunal modified the parties'


agreement because it was indisputably one for a lump-sum, fixed
price of P1,540,000,000.00 is begging the question. The Court of
Appeals used a conclusion as a premise to support itself. It
erroneously jumped to a conclusion only to plead this conclusion
in support of points that should have made up its anterior
framework, points that would have been the ones to lead to a
conclusion. It then used this abortive conclusion to injudiciously
dispose of the case.

The Court of Appeals took the parties' contractual relation as a


revealed and preordained starting point. Then, it dismissed every
prior or subsequent detail that contradicted this assumption. It
thereby conveniently terminated the discussion before it even
began.

III.C

There was never a meeting of minds on the price of


P1,540,000,000.00. Thus, that stipulation could not have been
the basis of any obligation.

The only thing that ACI has in its favor is its initial delivery of
tender documents to prospective bidders. Everything that
transpired after this delivery militates against ACI's position.

Before proceeding to a consideration of the circumstances that


negate a meeting of minds, this Court emphasizes that ACI would
have this Court sustain claims premised on supposed inviolable
documents. Yet, it did not annex copies of these documents
either to its Comment or to its Memorandwn.

ACI leaves this Court compelled to rely purely on their packaged


presentation and in a bind, unable to verify even the accuracy of
the syntax of its citations. This Court cannot approve of this
predicament. To cursorily acquiesce to ACI's overtures without
due diligence and substantiation is being overly solicitous, even
manifestly partisan.

ACI and its counsel must have fully known the importance of
equipping this Court with a reliable means of confirmation,
especially in a case so steeped in the sway of circumstances.
ACI's omission can only work against its cause.
By delivering tender documents to bidders, ACI made an offer. By
these documents, it specitled its terms and defined the
parameters within which bidders could operate. These tender
documents, therefore, guided the bidders in formulating their
own offers to ACI, or, even more fundamentally, helped them
make up their minds if they were even willing to consider
undertaking the proposed project. In responding and submitting
their bids, contractors, including CECON, did not peremptorily
become subservient to ACI's terms. Rather, they made their own
representations as to their own willingness and ability. They
adduced their own counter offers, although these were already
tailored to work within ACI's parameters.

These exchanges were in keeping with Article 1326 of the Civil


Code:
Article 1326. Advertisements for bidders are simply invitations to
make proposals, and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears.
The mere occurrence of these exchanges of offers fails to satisfy
the Civil Code's requirement of absolute and unqualified
acceptance:
Article 1319. Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.

Acceptance made by letter or telegram does not bind the offerer


except from the time it came to his knowledge. The contract, in
such a case, is presumed to have been entered into in the place
where the offer was made. (Emphasis supplied)
Subsequent events do not only show that there was no meeting
of minds on CECON's initial offered contract sum of
P1,449,089,174.00 as stated in its August 30, 2002 bid. They
also show that there was never any meeting of minds on the
contract sum at all.
In accordance with Article 1321 of the Civil Code,  an offeror
[135]

may fix the time of acceptance. Thus, CECON's August 30, 2002
offer of P1,449,089,174.00 "specifically stated that its bid was
valid for only ninety (90) days, or only until 29 November
2002."  November 29, 2002 lapsed and ACI failed to manifest its
[136]

acceptance of CECON's offered contract sum.

It was only sometime after November 29, 2002 that ACI verbally
informed CECON that the contract was being awarded to it.
Through a telephone call on December 7, 2002, ACI informed
CECON that it may commence excavation works. However, there
is no indication that an agreement was reached on the contract
sum in any of these conversations. ACI, CECON, the CIAC Arbitral
Tribunal, and the Court of Appeals all concede that negotiations
persisted.

Still without settling on a contract sum, even the object of the


contract was subjected to multiple modifications. Absent a
concurrence of consent and object, no contract was perfected. [137]

An office tower atop Part A was included in CECON's scope of


works and the contract sum increased to P1,582,810,525.00.
Price fluctuations were conceded after this and the project cost
was again adjusted to P1,613,615,244.00. Thereafter, CECON
agreed to extend a discount and reduced its offered project cost
to P1,540,000,000.00. [138]

After all these, ACI demurred on the tenns of its own tender
documents and changed the project from one encompassing both
design and construction to one that was limited to construction.

Though not pertaining to the object of the contract itself but only
to one (1) of its many facets, ACI also removed from CECON's
scope of works the acquisition of elevators, escalators, chillers,
generator sets, indoor substations, cooling towers, pumps, and
tanks. However, much later, ACI reneged on its own and opted to
still obtain pumps, tanks, and cooling towers through CECON.
It is ACI's contention that the offered project cost of
P1,540,000,000.00 is what binds the parties because its June 2,
2003 letter indicated acceptance of this offered amount.

This is plain error.

CECON was never remiss in impressing upon ACI that the


P1,540,000,000.00 offer was not perpetually availing.
WithoutACI's timely acceptance, on December 27, 2002, CECON
wrote to ACI emphasizing that the quoted sum of
P1,540,000,000.00 was "based [only] upon the prices prevailing
at December 26, 2002" levels.  On January 8, 2003, CECON
[139]

notified ACI of further increases in costs and specifically stated


that "[f]urther delay in the acceptance of the revised offer and
release of the down payment may affect the revised lump sum
amount."  Finally, on January 21, 2003, CECON wrote again to
[140]

ACI,  stating that the contract sum had to be increased to


[141]

P1,594,631,418.00. CECON also specifically stated, consistent


with Article 1321 of the Civil Code, that its tender of this adjusted
price was valid only until January 31, 2003, as further price
changes may be forthcoming. CECON also impressed upon ACI
that the 400 days allotted for the completion of the project had to
be adjusted. [142]

When ACI indicated acceptance, CECON's P1,540,000,000.00


offer had been superseded. Even CECON's subsequent offer of
P1,594,631,418.00 had, by then, lapsed by more than four (4)
months. Apparently totally misinformed, ACI's acceptance letter
did not even realize or remotely reference CECON's most recent
P1,594,631,418.00 stipulation but insisted on the passe offer of
P1,540,000,000.00 from the past year.

ACI's supposed acceptance was not an effective, unqualified


acceptance, as contemplated by Article 1319 of the Civil Code. At
most, it was a counter-offer to revert to P1,540,000,000.00.

ACI's June 2, 2003 letter stated an undertaking: "This


notwithstanding, formal contract documents embodying these
positions will shortly be prepared and forwarded to you for
execution."  Through this letter, ACI not only undertook to
[143]

deliver documents, it also admitted that the final, definitive terms


between the parties had yet to be articulated in writing.

ACI's delivery CECON's review, and both parties' final act of


formalizing their respective consent and affixing their respective
signatures would have established a clear point in which the
contract between ACI and CECON has been perfected. These
points, i.e. ACI's delivery, CECON's review, and parties'
formalization, too, would have validated the Court of Appeals'
assertion that all that remained to be done was to apply
unequivocal contractual provisions.

ACI would fail on its own undertaking.

III.D

Without properly executed contract documents, what would have


been a straightforward exercise, akin to the experience in F.F.
Cruz, became a drawn-out fact-finding affair. The situation that
ACI engendered made it necessary for the CIAC Arbitral Tribunal
to unravel the terms binding ACI to CECON from sources other
than definitive documents.

It is these actions of the CIAC Arbitral Tribunal that raise an


issue, purely as a matter of law, now the subject of this Court's
review; that is, faced with the lacunae confronting it, whether or
not the CIAC Arbitral Tribunal acted within its jurisdiction.

IV

The CIAC Arbitral Tribunal did not act in excess of its jurisdiction.
Contrary to the Court of Appeals' and ACI's assertions, it did not
draw up its own tenns and force these terms upon ACI and
CECON.

IV.A
The CIAC Arbitral Tribunal was not confronted with a barefaced
controversy for which a fom1ulaic resolution sufficed. More
pressingly, it was confronted with a state of affairs where CECON
rendered services to ACI, with neither definitive governing
instrwnents nor a confirmed, fixed remuneration for its services.
Thus, did the CIAC Arbitral Tribunal go about the task of
asce1taining the sum properly due to CECON.

This task was well within its jurisdiction. This determination


entailed the full range of subjects expressly stipulated by Section
4 of the Construction Industry Arbitration Law to be within the
CIAC's subject matter jurisdiction.
Section 4. Jurisdiction. - ....

The jurisdiction of the CIAC may include but is not limited to


violation of specifications for materials and workmanship;
violation of the terms of agreement; interpretation and/or
application of contractual time and delays; maintenance and
defects; payment, default of employer or contractor and changes
in contract cost.
CECON raised the principal issue of the payment due to it on
account, not only of fluctuating project costs but more so because
of ACI's inability to timely act on many contingencies, despite
proper notice and communication from and by CECON. Theretbre,
at the heart of the controversy was the "interpretation and/or
application of contractual time and delays." ACI's counter-
arguments, too, directly appealed to CIAC's subject matter
jurisdiction. ACI countered by asserting that sanctioning CECON's
claims was tantamount to violating the tem1s of their agreement.
It further claimed liability on CECON's part for "maintenance and
defects," and for "violation of specifications for materials and
workmanship."

ACI and CECON voluntarily submitted themselves to the CIAC


Arbitral Tribunal's jurisdiction. The contending parties' own
volition is at the inception of every construction arbitration
proceeding.  Common sense dictates that by the parties'
[144]
voluntary submission, they acknowledge that an arbitral tribunal
constituted under the CIAC has full competence to rule on the
dispute presented to it. They concede this not only with respect
to the literal issues recited in their terms of reference, as ACI
suggests,  but also with respect to their necessary incidents.
[145]

Accordingly, in delineating the authority of arbitrators, the CIAC


Rules of Procedure speak not only of the literally recited issues
but also of "related matters":
SECTION 21.3 Extent of power of arbitrator - The Arbitral
Tribunal shall decide only such issues and related matters as are
submitted to them for adjudication. They have no power to add,
to subtract from, modify, or amend any of the terms of the
contract or any supplementary agreement thereto, or any rule,
regulation or policy promulgated by the CIAC.
To otherwise be puritanical about cognizable issues would be to
cripple CIAC arbitral tribunals. It would potentially be to condone
the parties' efforts at tying the hands of tribunals through
circuitous, trivial recitals that fail to address the complete extent
of their claims and which are ultimately ineffectual in dispensing
an exhaustive and dependable resolution. Construction arbitration
is not a game of guile which may be left to ingenious textual or
technical acrobatics, but an endeavor to ascertain the tluth and to
dispense justice "by every and all reasonable means without
regard to technicalities of law or proc.edure."[146]

IV.B

Two (2) guiding principles steered the CIAC Arbitral Tribunal in


going about its task. First was the basic matter of fairness.
Second was effective dispute resolution or the overarching
principle of arbitration as a mechanism relieved of the
encumbrances of litigation. In Section 1.1 of the CIAC Rules of
Procedure:
SECTION 1.1 Statement of policy and objectives - It is the policy
and objective of these Rules to provide a fair and expeditious
resolution of construction disputes as an altemative to judicial
proceedings, which may restore the disrupted harmonious and
friendly relationships between or among the parties. (Emphasis
supplied)
CECON's predicament demanded compensation. The precise
extent may yet to have been settled; yet, as the exigencies that
prompted CECON to request for arbitration unraveled, it became
clear that it was not for the CIAC Arbitral Tribunal to turn a blind
eye to CECON's just entitlement to compensation.

Jurisprudence has settled that even in cases where parties enter


into contracts which do not strictly confmm to standard
formalities or to the typifying provisions of nominate contracts,
when one renders services to another, the latter must
compensate the fonner for the reasonable value of the services
rendered. This amount shall be fixed by a court. This is a matter
so basic, this Court has once characterized it as one that "springs
from the fountain of good conscience":
As early as 1903, in Perez v. Pomar, this Court mled that where
one has rendered services to another, and these services are
accepted by the latter, in the absence of proof that the service
was rendered gratuitously, it is but just that he should pay a
reasonable remuneration therefore because "it is a well known
principle of law, that no one should be permitted to enrich himself
to the damage of another." Similary in 1914, this Court declared
that in this jurisdiction, even in the absence of statute, ". . .
under the general principle that one person may not enrich
himself at the expense of another, a judgment creditor would not
be permitted to retain the purchase price of land sold as the
property of the judgment debtor after it has been made to appear
that the judgment debtor had no title to the land and that the
purchaser had failed to secure title thereto . . ." The foregoing
equitable principle which springs from the fountain of good
conscience are applicable to the case at bar.[147]

Consistent with the Construction Industry Arbitration Law's


declared policy,  the CIAC Arbitral Tribunal was specifically
[148]

charged with "ascertain[ing] the facts in each case by every and


all reasonable means."  In discharging its task, it was permitted
[149]

to even transcend technical rules on admissibility of evidence.[150]


IV.C

The reality of a vacuum where there were no definite contractual


terms, coupled with the demands of a "fair and expeditious
resolution" of a dispute centered on contractual interpretation,
called into operation Article 1371 of the Civil Code:
Article 1371. In order to judge the intention of the contracting
parties, their contemporaneous and subsequent acts shall be
principally considered. (Emphasis supplled)
Article 1379 of the Civil Code invokes principles from the Revised
Rules on Evidence. By invoking these principles, Article 1379
makes them properly applicable in every instance of contractual
interpretation, even those where the need for interpretation
arises outside of court proceedings:
Article 1379. The principles of interpretation stated in Rule 123 of
the Rules of Court shall likewise be observed in the construction
of contracts.
As with Article 1371, therefore, the following principles from the
Revised Rules on Evidence equally governed the CIAC Arbitral
Tribunal's affairs:
4. Interpretation of Documents

Section 12. Interpretation according to intention; general and


particular provisions. - In the construction of an instrument, the
intention of the parties is to be pursued; and when a general and
a particular provision are inconsistent, the latter is paramount to
the former. So a particular intent will control a general one that is
inconsistent with it.

Section 13. Interpretation according to circumstances. - For the


proper construction of an instrument, the circumstances under
which it was made, including the situation of the subject thereof
and of the parties to it, may be shown, so that the judge may be
placed in the position of those whose language he is to interpret.
Within its competence and in keeping with basic principles on
contractual interpretation, the CIAC Arbitral Tribunal ascertained
the trqe and just terms governing ACI and CECON. Thus, the
CIAC Arbitral Tribunal did not conjure its own contractual creature
out of nothing. In keeping with this, the CIAC Arbitral Tribtmal
found it proper to sustain CECON's position. There having been
no meeting of minds on the contract sum, the amount due to
CECON became susceptible to reasonable adjustment, subject to
proof of legitimate costs that CECON can adduce.

Unravelling the CIAC Arbitral Tribunal's competence and


establishing how it acted consistent with law resolves the
principal legal issue before us. From this threshold, the inquiry
transitions to the matter of whether or not the conclusions made
by the CIAC Arbitral Tribunal were warranted.

They were. Far from being capricious, the CIAC Arbitral Tribunal's
conclusions find solid basis in law and evidence.

V.A

The tender documents may have characterized the contract sum


as fixed and lump-sum, but the premises for this arrangement
have undoubtedly been repudiated by intervening circumstances.

When CECON made its offer of P1,540,000,000.00, it proceeded


from several premises. First, ACI would timely respond to the
representations made in its bid. Second, CECON could act on the
basis of prices prevailing then. Third, the subject matter of the
contract was the entire expanse of design and construction
covering all elements disclosed in the tender documents, nothing
more and nothing less. Fourth, the basic specifications for
designing and building the Gateway Mall, as stated in the tender
documents, would remain consistent. Lastly, ACI would timely
deliver on its concomitant obligations.

Contrary to CECON's reasonable expectations, ACI failed to timely


act either on CECON's bid or on those of its competitors.
Negotiations persisted for the better part of two (2) calendar
years, during which the quoted contract sum had to be revised at
least five (5) times. The object of the contract and CECON's scope
of work widely varied. There were radical changes like the
addition of an entire office tower to the project and the change in
the project's structural framing. There was also the undoing of
CECON's freedom to design, thereby rendering it entirely
dependent on configurations that ACI was to unilaterally resolve,
It turned out that ACI took its time in delivering construction
drawings to CECON, with almost 38% of construction drawings
being delivered after the intended completion date. There were
many other less expansive changes to the project, such as ACI's
fickleness on which equipment it would acquire by itself. ACI even
failed to immediately deliver the project site to CECON so that
CECON may commence excavation, the most basic task in setting
up a structure's foundation. ACI also failed to produce definite
instruments articulating its agreement with CECON, the final
contract documents.

With the withering of the premises upon which a lump-sum, fixed


price arrangement would have been founded, such an
arrangement must have certainly been negated:
[T]he contract is fixed and lump sum when it was tendered and
contracted as a design and constmct package. The contract scope
and character significantly changed when the design was taken
over by the Respondent. At the time of the negotiation and
agreement of the amount of Php1.54 billion, there were no final
plans for the change to structural steel, and all the [mechanical,
electrical and plumbing] drawings were all schematics.

[I]t is apparent to the Tribunal that the quantity and materials at


the time of the P1.54B agreement are significantly different from
the original plans to the finally implemented plans. The price
increases in the steel products and cement were established to
have already increased by 11.52% and by P5.00 per bag
respectively by January 21, 2003. The Tribunal finds agreement
with the Claimant that it is fairer to award the price increase.

....
It should also be mentioned that Respondent had changed the
scope and character of the agreement. First, there were major
changes in the plans and specifications. Originally, the contract
was for design and construct. The design was deleted from the
scope of the Claimant. It was changed to a straight construction
contract. As a straight construction contract, there were no final
plans to speak of at the time of the instructions to change. Then
there was a verbal change to structural steel frame. No plans
were available upon this instruction to change. Next, the
[mechanical, electrical and plumbing] plans were all schematics.
It is therefore expected that changes of plans are forthcoming,
and that changes in costs would follow ...

....

It has been established that the original tender, request for


proposal and award is for a design and construct contract. The
contract documents are therefore associated for said system of
construction. When Respondent decided to change and take over
the design, such as the change from concrete to structural steel
framing, "take-out" equipment from the contract and modify the
[mechanical, electrical and plumbing w]orks, the original scope of
work had been drastically changed. To tie down the Claimant to
the tmit prices for the proposal for a different scope of work
would be grossly unfair. This Tribunal will hold that unit price
adjustment could be allowed but only for change orders that were
not in the original scope of work, such as the change order from
concrete to structural framing, the [mechanical, electrical and
plumbing w]orks, [schematic drawings to construction drawings]
and the Miscellaneous Change Order Works. [151]

V.B

Contrary to ACI's oft-repeated argument,  the CIAC Arbitral


[152]

Tribunal correctly found that ACI had gained no solace in


statutory provisions on the immutability of
prices stipulated between a contractor and a landowner. Article
1724 of the Civil Code reads:
Article 1724. The contractor who undertakes to build a structure
or any other work for a stipulated price, in conformity with plans
and specifications agreed upon with the land-owner, can neither
withdraw from the contract nor demand an increase in the price
on account of the higher cost of labor or materials, save when
there has been a change in the plans and specifications,
provided:

(1) Such change has been authorized by the proprietor in writing;


and

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


determined in writing by both parties.
Article 1724 demands two (2) requisites in order that a price may
become immutable: first, there must be an actual, stipulated
price; and second, plans and specifications must have definitely
been agreed upon.

Neither requisite avails in this case. Yet again, ACI is begging the
question. It is precisely the crux of the controversy that no price
has been set. Article 1724 does not work to entrench a disputed
price and make it sacrosanct. Moreover, it was ACI which thn1st
itself upon a situation where no plans and specifications were
immediately agreed upon and from which no deviation could be
made. It was ACI, not CECON, which made, revised, and deviated
from designs and specifications.

V.C

The CIAC Arbitral Tribunal also merely held ACI to account for its
voluntarily admitted adjustments. The CIAC Rules of Procedure
pennit deviations from technical rules on evidence, including
those on admissions. Still, common sense dictates that the
principle that "[t]he act, declaration or omission of a party as to a
relevant fact may be given in evidence against him"  must [153]

equally hold true in administrative or quasi-judicial proceedings


as they do in court actions. Certainly, each must be held to
account for his or her own voluntary declarations. It would have
been plainly absurd to disregard ACI's reneging on its own
admissions:
Respondent has agreed to the price increase in structural steel
and after some negotiation paid the agreed amount. Respondent
also agreed to the price increase in the reinforcing bars and
instructed the Claimant to bill it accordingly. To the Tribunal, such
action is an acknowledgment of the price increase. Respondent
can make the case that said agreement is conditional, i.e., the
Complaint must be withdrawn. To the Tribunal, the conditionality
falls both ways. The Claimant has as much interest to agree to a
negotiated price increase so that it can collect payments for the
claims. The conditionalities do not change the basis for the
quantity and the amotmt. The process of the negotiation has
arrived at the price difference and quantities. The Tribunal finds
the process in arriving at the Joint Manifestation, a fair
determination of the unit price increase. This holding will render
the discussions on Exhibit JJJJ, and the demand of the burden of
proof of the Respondent superfluous. [154]

This absurdity is so patent that the Court of Appeals was still


compelled to uphold awards premised on ACI's admissions, even
as it reversed the CIAC Arbitral Tribunal decision on the
primordial issue of the characterization of the contractual
arrangement between CECON and ACI:
As stated, the contract between [ACI] and CECON has not been
amended or revised. The Arbitral Tribunal had no power to amend
the contract to provide that there be allowed price and/or cost
adjustment removing the express stipulation that the Project is
for a lump sum or fixed price consideration. Accordingly, this
Court removes the award for additional costs spent by CECON on
cement and formworks due to price increases or removing the
award for these items in the total amount of PhP5,598,338.20.
Since CECON is not entitled to its claim for price increase, it is
likewise not entitled to the award of the interest rate of 6% per
annum.

With regard however to the additional costs for the rebars due to
price increases. this Court finds that CECON is entitled to the
amount of PhP10,266,628.00 representing the additional costs
spent by CECON for rebars due to price increases,
notwithstanding the Arbitral Tribunal's excess of jurisdiction in
amending the contract between the parties because [ACI] and
CECON had in fact agreed that CECON was entitled to such an
amount and that [ACI] would pay the same. This agreement was
made in the parties' Joint Manifestation of Compliance dated
March 30, 2004 which they filed with th Arbitral Tribunal ("Joint
Manifestation").[155]

No extraordinary technical or legal proficiency is required to see


that it would be the height of absurdity and injustice to insist on
the payment of an amount the consideration of which has been
reduced to a distant memory. ACI's invocation of Article 1724 is
useless as the premises for its application are absent. ACI's
position is an invitation for this Court to lend its imprimatur to
unjust enrichment enabled by the gradual wilting of what should
have been a reliable contractual relation. Basic decency impels
this Court to not give in to ACI's advances and instead sustain the
CIAC Arbitral Tribunal's conclusion that the amount due to CECON
has become susceptible to reasonable adjustment.

VI

The Arbitral Tribunal's award must be reinstated.

VI.A

With the undoing of the foundation for the Court of Appeal's


fallacious, circular reasoning, its monetary awards must also
necessarily give way to the reinstatement of the CIAC Arbitral
Tribunal's awards.

The inevitable changes borne by ACI's own trifling actions justify,


as a consequence, compensation for cost adjustments and the
ensuing change orders, additional overhead costs for the period
of extension, extended coverage for contractor's all-risk
insurance, and attendance fees for auxiliary services to
subcontractors whose functions were also necessarily prolonged.
ACI's frivolity on the acquisition of elevators, escalators, chillers,
generator sets, indoor substations, cooling towers, pumps, and
tanlcs also vindicates compensation for the works that remained
under CECON's account. ACI's authorship of the causes of delay
supports time extensions favoring CECON and, conversely,
discredits liquidated damages benefitting ACI.

This Court upholds the Arbitral Tribunal's awards on each of the


items due to CECON, as well as on its findings relating to
CECON's countervailing liabilities.

In fulfilling its task, the CIAC Arbitral Tribunal was equipped with
its technical competence, adhered to the rigors demanded by the
CIAC Rules of Procedure, and was endowed with the experience
of exclusively presiding over 19 months of arbitral proceedings,
examining object and documentary evidence, and probing
witnesses.

VI.B

Within the CIAC Arbitral Tribunal's technical competence was its


reference to prevailing industry practices, a much-bewailed point
by ACI.  This reference was made not only desirable but even
[156]

necessary by the absence of definitive governing instruments.


Moreover, this reference was made feasible by the CIAC Arbitral
Tribunars inherent expertise in the construction industry.

This reference was not only borne by practical contingencies and


buttressed by recognized proficiency, it was also sanctioned by
the statutory framework of contractual interpretation within which
the CIAC Arbitral Tribunal operated. Thus, the following principles
governed the interpretation of the change orders, requests, and
other communications, which had effectively been surrogates of a
single definite instrument executed by the parties.

From the Civil Code:


Article 1375. Words which may have different significations shall
be understood in that which is most in keeping with the nature
and object of the contract.
Article 1376. The usage or custom of the place shall be borne in
mind in the interpretation of the ambiguities of a contract, and
shall fill the omission of stipulations which are ordinarily
established.
From the Revised Rules on Evidence, the following have been
made applicable even outside regular litigation by Article 1379 of
the Civil Code:
Section 14. Peculiar signification of terms. - The terms of a
writing are presumed to have been used in their primary and
general acceptation, but evidence is admissible to show that they
have a local, technical, or otherwise peculiar signification, and
were so used and understood in the particular instance, in which
case the agreement must be construed accordingly.

....

Section 19. Interpretation according to usage. - An instrument


may be construed according to usage, in order to determine its
true character.  (Emphasis supplied)
[157]

Equally availing is the following principle. This is especially tlue of


the remuneration due to CECON, considering that stipulations for
remuneration are devised for the benefit of the person rendering
the service:
Section 17. Of two constn.1ctions, which preferred. - When the
terms of an agreement have been intended in a different sense
by the different parties to it, that sense is to prevail against either
party in which he supposed the other understood it, and when
different constructions of a provision are otherwise equally
proper, that is to be taken which is the most favorable to the
party in whose favor the provision was made. [158]

VI.C

In appraising the CIAC Arbitral Tribunal's awards, it is not the


province of the present Rule 45 Petition to supplant this Court's
wisdom for the inherent technical competence of and the insights
drawn by the CIAC Arbitral Tribunal throughout the protracted
proceedings before it. The CIAC Arbitral Tribunal perused each of
the parties' voluminous pieces of evidence.  Its members
[159]

personally heard, observed, tested, and propounded questions to


each of the witnesses. Having been constituted solely and
precisely for the purpose of resolving the dispute between ACI
and CECON for 19 months, the CIAC Arbitral Tribunal devoted
itself to no other task than resolving that controversy. This Court
has the benefit neither of the CIAC Arbitral Tribunal's technical
competence nor of its irreplaceable experience of hearing the
case, scrutinizing every piece of evidence, and probing the
witnesses.

True, the inhibition that impels this Court admits of exceptions


enabling it to embark on its own factual inquiry. Yet, none of
these exceptions, which are all anchored on considerations of the
CIAC Arbitral Tribunal's integrity and not merely on mistake,
doubt, or conflict, is availing.

This Court finds no basis for casting aspersions on the integrity of


the CIAC Arbitral TribunaL There does not appear to have been
an undisclosed disqualification for any of its three (3) members or
proof of any prejudicial misdemeanor. There is nothing to sustain
an allegation that the parties' voluntarily selected arbitrators were
conupt, fraudulent, manifestly partial, or otherwise abusive. From
all indications, it appears that the CIAC Arbitral Tribunal extended
every possible opportunity for each of the parties to not only
plead their case but also to arrive at a mutually beneficial
settlement. This Court has ruled, precisely, that the arbitrators
acted in keeping with their lawful competencies. This enabled
them to come up with an otherwise definite and reliable award on
the controversy before it.

Inventive, hair-splitting recitals of the supposed imperfections in


the CIAC Arbitral Tribunal's execution of its tasks will not compel
this Court to supplant itself as a fact-finding, technical expert.

ACI's refutations on each of the specific items claimed by CECON


and its counterclaims of sums call for the point by point appraisal
of work, progress, defects and rectifications, and delays and their
causes. They are, in truth, invitations for this Court to engage in
its own audit of works and corresponding financial consequences.
In the alternative, its refutations insist on the application of rates,
schedules, and other stipulations in the same tender documents,
copies of which ACI never adduced and the efficacy of which this
Court has previously discussed to be, at best, doubtful.

This Court now rectifies the error made by the Court of Appeals.
By this rectification, this Court does not open the doors to an
inordinate and overzealous display of this Court's authority as a
final arbiter.

Without a showing of any of the exceptional circumstances


justifying factual review, it is neither this Court's business nor in
this Court's competence to pontificate on technical matters.
These include things such as fluctuations in prices of materials
from 2002 to 2004, the architectural and engineering
consequences - with their ensuing financial effects - of shifting
from reinforced concrete to structural steel, the feasibility of
rectification works for defective installations and fixtures, the
viability of a given schedule of rates as against another, the audit
of changes for every schematic drawing as revised by
construction drawings, the proper mechanism for examining
discolored and mismatched tiles, the minutiae of installing G.I.
sheets and sealing cracks with epoxy sealants, or even unpaid
sums for garbage collection.

The CIAC Arbitral Tribunal acted in keeping with the law, its
competence, and the adduced evidence; thus, this Court upholds
and reinstates the CIAC Arbitral Tribunal's monetary awards.

VII

It does not escape this Court's attention that this controversy has
dragged on for more than 13 years since CECON initially sought
to avail of arbitration.
The CIAC Arbitral Tribunal noted that ACI consumed a total of
840 days filing several motions and manifestations, including at
least eight (8) posturings at pursuing settlement.  It added,
[160]

however, that ACI repeatedly failed to respond to CECON's claims


during meetings thereby constraining CECON to file motions to
proceed after repeatedly being dangled hope of an early
resolution.  It appeared that ACI was more interested in buying
[161]

time than in effecting a consummate voluntary settlement.

The CIAC Arbitral Tribunal October 25, 2006 Decision should have
long brought this matter to an end. This Court does not fault ACI
for availing of remedies. Yet, this Court also notes that even in
proceedings outside of the CIAC Arbitral Tribunal, ACI seems to
not have been sufficiently conscientious of time.

In this Court alone, ACI sought extensions to file its Comment no


less than five (5) times.  It sought several other extensions in
[162]

the filing of its Memorandum. [163]

It also does not escape this Court's attention that while ACI's
arguments have perennially pleaded the supposed primacy and
itnmutability of stipulations originally articulated in the tender
documents, it never bothered to annex any of these documents
either to its Comment or to its Memorandum. Without these and
other supporting materials, this Court is left in the uneasy
predicament of merely relying on ACI's self-stated assertions and
without means of verifying even the syntax of its citations.

While presumptions of good faith may be indulged, the


repercussions of ACI's vacillation cannot be denied.

Even if this Court were to ignore the delays borne by ACI's


procedural posturing, this Court is compelled to hearken to ACI's
original faults. These are, after all, what begot these proceedings.
These are the same original faults which so exasperated CECON;
it was left with no recourse but to seek the intervention of CIAC.
These faults began as soon as bidders responded to ACI's
invitation. In CECON's case, its communicated time for the
validity of its offer lapsed without confinnation from ACI. ACI only
verbally responded and only after CECON's communicated
timeframe. It told CECON to commence excavation works but
failed to completely deliver the project site until five (5) months
later. It engaged in protracted negotiations, never confirming
acceptance until the tenth month, after bidders had submitted
their offers. By then, ACI's supposed acceptance could not even
identify CECON's most recent quoted price. It undertook to
process and deliver formal documents, yet this controversy
already reached this Court and not a single page of those
documents has seen the light of day. It has repeatedly added and
taken from CECONs scope of works but vigorously opposed
adjustments that should have at least been given reasonable
consideration, only to admit and partially stipulate on thern. In
taking upon itself the task of designing, it took its time in
delivering as many as 1,675 construction drawings to CECON,
more than 600 of which were not delivered until well after the
project's intended completion date.

This Court commenced its discussion by underscoring that


arbitration primarily serves the need of expeditious dispute
resolution. This interest takes on an even greater urgency in the
context of construction projects and the national interest so
intimately tied with them. ACI's actions have so bogged down its
contractor. Nearing 13 years after the Gateway Mall's completion,
its contractor has yet to be fully and properly compensated. Not
only have ACI's actions begotten this dispute, they have hyper-
extended arbitration proceedings and dragged courts into the
controversy. The delays have virtually bastardized the hopes at
expeditious and effective dispute resolution which are supposedly
the hallmarks of arbitration proceedings.

For these, in addition to sustaining each of the awards due to


CECON arising from the facets of the project, this Court also
sustains the CIAC Arbitral Tribunal's award to CECON of
arbitration costs. Further, this Court imposes upon respondent
Araneta Corporation, Inc. the burden of bearing the costs of what
have mutated into a full-fledged litigation before this Court and
the Court of Appeals.

WHEREFORE, the Petition is GRANTED. The assailed April 28,


2008 Decision and July 1, 2010 Amended Decision of the Court of
Appeals in CA-G.R. SP No. 96834 are REVERSED and SET
ASIDE. The Construction Industry Arbitration Commission
Arbitral Tribunal October 25, 2006 Decision in CIAC Case No. 01-
2004 is REINSTATED.

Legal interest at the rate of six percent (6%) per annum is


imposed on the award from the finality of this Decision until its
full satisfaction.

Costs against respondent.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

[1]
 Rollo, pp. 153-268.

 Id. at 11-85. The Decision was penned by Associate Justice


[2]

Agustin S. Dizon and concurred in by Associate Justices Regalado


E. Maambong and Celia C. Librea-Leagogo of the Sixteenth
Division, Court of Appeals, Manila.

 Id. at 87-137. The Amended Decision was penned by Presiding


[3]

Justice Andres B. Reyes, Jr. and concurred in by Associate


Justices Hakim S. Abdulwahid, Francisco P. Acosta, and Michael P.
Elbinias, and dissented in by Associate Justice Sesinando E. Villon
of the Former Special Sixteenth Division of Five, Court of Appeals,
Manila.
 Id. at 3762-4029. The Arbitral Tribunal is composed of Ernesto
[4]

S. De Castro as Chairman and James S. Villafranca and Reynaldo


T. Viray as members.

[5]
 Id. at 4028-4029.

[6]
 Id. at 84-85.

[7]
 Id. at 136-137.

 Id. at 6221, CECON's Memorandum; and rollo, p. 6372, ACI's


[8]

Memorandum.

[9]
 Id. at 12.

[10]
 Id. at 6373, ACI's Memorandum.

[11]
 Id.

 Id. at 6374, Conditions of Contract, Clause 6.0. Reproduced in


[12]

ACI's Memorandum.

 Id. Preliminaries and General Requirements, Section 4.0.


[13]

Reproduced in ACI's Memorandum.

[14]
 Id. at 3773.

[15]
 Id. at 6222, CECON's Memorandum.

[16]
 Id. at 6223, CECON's Memorandum.

[17]
 Id.

[18]
 Id.

[19]
 Id. at 6224 CECON's Memorandum.

[20]
 Id. at 549-553, Annex P to CECON's Petition.
[21]
 Id. at 549.

[22]
 Id. at 554-555, Annex E to CECON's Petition

[23]
 Id. at 556 557, Annex "F" to CECON's Petition.

[24]
 Id. at 556.

[25]
 Id. at 3786 and 6225.

[26]
 Id. at 6225.

[27]
 Id. at 558-560, Annex G of CECON's Petition.

[28]
 Id. at 558.

[29]
 Id.at641

[30]
 Id. at 560, Annex G to CECON's Petition.

[31]
 Id.

[32]
 Id. at 6227, CECON's Memorandum.

[33]
 Id.

[34]
 Id.

[35]
 Id.

[36]
 Id. at 6228, CECQN's Memorandum.

 Id. at 663-669, Annex H to CECON's Petition; and, 6228,


[37]

CECON's Memorandum.

[38]
 Id. at 6229, CECON's Memorandum.
[39]
 Id.

[40]
 Id. at 6229.

[41]
 Id. at 6230, CECON's Memorandum.

[42]
 Id.

[43]
 Id. at 670-673, Annex 1 to CECON's Petition.

[44]
 Id. at 673.

[45]
 Id. at 3763.

[46]
 Id. at 6231, CECON's Memorandum.

[47]
 Id. at 3764.

[48]
 Id. at 6231.

[49]
 Id. at 3764.

[50]
 Id. at 3765.

[51]
 Id.

[52]
 Id.

[53]
 Id. at 3765, CECON's Memorandum

[54]
 Id. at 3765 and 4029,

[55]
 Id. at 3766, CECON's Memorandum.

[56]
 Id.

[57]
 Id.
[58]
 Id. at 3767-3769.

[59]
 Id. at 3768-3769.

[60]
 Id. at 4028-4029.

[61]
 Id. at 3811-3813, and 3882-3888.

[62]
 Id. at 3940-3943.

[63]
 Id. at 3832-3833.

[64]
 Id. at 3954-3955.

[65]
 Id. at 3768.

[66]
 Id. at 3980-3990.

[67]
 Id. at 4027-4028.

[68]
 Id. at 3997-3998.

[69]
 Id. at 4012-4014.

[70]
 Id. at 4029.

[71]
 Id. at 4030-4881.

[72]
 Id. at 4882-4887.

[73]
 Id. at 4886.

[74]
 Rollo, pp. 11-85.

[75]
 Id. at 85.

[76]
 Id. at 32-34.
[77]
 Id. at 84-85.

[78]
 Id. at 50.

[79]
 Id. at 50.

[80]
 Id. at 52.

[81]
 Id. at 54-56.

[82]
 Id. at 56-59.

[83]
 Id. at 72-73.

[84]
 Id. at 70-72.

[85]
 Id. at 69.

[86]
 Id. at 42-45.

[87]
 Id. at 62-63.

[88]
 Id. at 83.

[89]
 Id. at 84-85.

[90]
 Id. at 87-137.

[91]
 Id. at 105-106.

[92]
 Id. at 107.

[93]
 Id. at 104.

[94]
 Id. at 136-137.

[95]
 Id. at 153-268.
[96]
 Id. at 263-264.

[97]
 Id. at 6098.

[98]
 Id. at 5914-5929 and 5934-5936.

[99]
 CIVIL CODE, art. 1715 provides:

Article 1715. The contractor shall execute the work in such a


manner that it has the qualities agreed upon and has no defects
which destroy or lessen its value or fitness for its ordinary or
stipulated use. Should the work be not of such quality, the
employer may require that the conlractor remove the defect or
execute another work. If the contractor fails or refuses to comply
with this obligation, the employet may have the defect removed
or another work executed, at the contractor's cost.

[100]
 CIVIL CODE, art. 1724 provides:

Article 1724. The contractor who undertakes to build a structure


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

(1) Such change has been authorized by the proprietor in writing;


and

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


determined in writing by both parties.

[101]
 Rollo pp. 5930-5933.

 Id. at 5893. ACI's Comment states, "the Arbitral Tribunal


[102]

significantly modified and amended the clear terms of the parties'


contract documents by rewriting their construction agreement
and unilaterally imposing upon ACI newly-created obligations,
notwithstanding that there was no issue on the exact terms of the
contract documents and the intent of the parties in executing the
same."

[103]
 Id. at 5894-5895.

[104]
 Id. at 5897-5898.

 Though nominally an "executive order" the Construction


[105]

Industry Arbitration Law is a statute.

Jurisprudence has clarified that, in exercising legislative powers,


then President Marcos did not only use the modality of
presidential decrees, but also of executive orders and letters of
instruction. Though, this is not to say that all executive orders
and letters of intruction issued by him are statutes.

In Parong, et al. v. Enrile, 206 Phil. 392428 (1983) [Per J. De


Castro, En Banc]:

To form part of the law of the land, the decree, order or [letter of
instruction] must be issued by the President in the exercise of his
extraordinary power of legislation as contemplated in Section 6 of
the 1976 amendments to the Constitution, whenever in his
judgment, there exists a grave emergency or a threat or
imminence thereof, or whenever the interim Batasan[g]
Pambansa or the regular National Assembly fails or is unable to
act adequately on any matter for any reason that in his judgment
requires immediate action.

In Irene B. Cortes, Executive Legislation: The Philippine


Experience; 55 PHIL. L.J. 1, 27-29 (1979) Associate Justice Irene
Cortes noted that certain executive orders and letters of
instruction have indeed been on par with President Marcos' more
commonly used mode of legislation (i.e., presidential decrees):
Another problem arises from lack of precision in the appropriate
use of one form of issuance as against another. A presidential
decree is equivalent to a statute enacted by the legislature, and is
thus superior to implementing mles issued as executive orders or
letter of instructions. But, it is not unheard of for an executive
order to amend or repeal a presidential decree or a letter of
instructions to amend an executive order, or lay down a rule of
law.

Associate Justice Cortes specifically cited as an example Exec.


Order No. 543 (1979), which abolished the Philippine Center for
Advanced Studies, a creation of Pres. Decree No. 342 (1973). In
disproving that Exec. Order No. 543 was issued merely as an
implementing rule, she explained that its object a state university
- could not have fallen under the scope of the President's
reorganization powers, for which an e ecutive order issued merely
as an implementing rule was sufficient.

The Construction Industry Arbitration Law's own nomenclature


reveals the intent that it be a statute. Its whereas clauses and
declaration of policy reveal the urgency that impelled immediate
action for the President to exercise his concurrent legislative
powers.

Any doubt on the statutory efficacy of the Construction Industry


Arbitration Law is addressed by Congress' own, voluntary and
repeated reference to and affirmation of it as such a law.
(See Rep. Act No. 9184 and Rep. Act No. 9285). Rep. Act No.
9285 did not only validate the Construction Industry Arbitration
Law, it also incorporated it into the general statutory framework
of alternative dispute resolution.

Jurisprudence, too, has repeatedly and consistently referred to it


as such a "law." See, for example, National Irrigation
Administration v. Court of Appeals, 376 Phil. 362 (1999) [Per C.J.
Davide, Jr., First Division]; Metropolitan Cebu Water District v.
Mactan Rock Industries, Inc., 690 Phil. 163 (2012) [Per J.
Mendoza, Third Division]; and The Manila Insurance Co., Inc. v.
Spouses Amurao, 701 Phil. 557 (2013) [Per Del Castillo, Second
Division].

[106]
 Exec. Order No. 1008, sec. 3.

[107]
 Id., 4  Whereas Clause.
th

 See Department
[108]
of Trade and Industry, Attached
Agencies, (last visited on August 8, 2017).

[109]
 Exec. Order No. 1008, sec. 2.

[110]
 Exec. Order No. 1008, 3  Whereas Clause.
rd

 Fort Bonifacio Development Corp. v. Sorongon, 605 Phil. 689,


[111]

696 (2009) [Per J. Tinga, Second Division].

 Metro Construction, Inc. v. Chatham Properties, Inc., 418 Phil.


[112]

176, 202-203 (2001) [Per C.J. Davide, Jr., First Division], citing


The Presidential Anti-Dollar Salting Task Force v. Court of
Appeals, 253 Phil. 344 (1989) [Per J. Sarmiento, En
Banc]; Tropical Homes v. National Housing Authority, 236 Phil.
580 (1987) [Per J. Gutierrez, Jr., En Banc]; Antipolo Realty Corp.
v. NHA, 237 Phil. 389 (1987) [Per J. Feliciano, En Banc];
and Solid Homes, Inc. v. Payawal, 257 Phil. 914 (1989) [Per J.
Cruz, First Division).

 G.R.
[113]
No. 204197, November 23, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
flle=/jurisprudence/2016/november2016/204197.pdf> [Per J.
Brion, Second Division].

[114]
 LABOR CODE, art. 219 provides:

Article 219. Definitions. - ....


14. "Voluntary Arbitrator" means any person accredited by the
Board as such, or any person named or designated in the
Collective Bargaining Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or without the assistance
of the National Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the Collective Bargaining
Agreement, or any official that may be authorized by the
Secretary of Labor and Employment to act as Voluntary Arbitrator
upon the written request and agreement of the parties to a labor
dispute.
 Fruehauf Electronics v. Technology Electronics Assembly and
[115]

Management Pacific, G.R. No. 204197, November 23, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/november2016/204197.pdf> 11-12
[Per J. Brion, Second Division]. It stated:

Quasi-judicial or administrative adjudicatory power is the power:


(1) to hear and determine questions of fact to which legislative
policy is to apply, and (2) to decide in accordance with the
standards laid down by the law itself in enforcing and
administering the same law. Quasi-judicial power is only
exercised by administrative agencies - legal organs of the
government.

Quasi-judicial bodies can only exercise such powers and


jurisdiction as are expressly or by necessary implication conferred
upon them by their enabling statutes. Like courts, a quasi-judicial
body's jurisdiction over a subject matter is conferred by law and
exists independently from the will of the parties. As government
organs necessary for an effective legal system, a quasi-judicial
tribunal's legal existence continues beyond the resolution of a
specific dispute. In other words, quasi-judicial bodies are
creatures of law.

As a contractual and consensual body, the arbitral tribunal docs


not have any inherent powers over the parties. It has no power to
issue coercive writs or compulsory processes. Thus, there is a
need to resort to the regular courts for interim measures of
protection and for the recognition or enforcement of the arbitral
award.
The arbitral tribunal acquires jurisdiction over the parties and the
subject matter through stipulation. Upon the rendition of the final
award, the tribunal becomes functus officio and - save for a few
exceptions - ceases to have any further jurisdiction over the
dispute. The tribunal's powers (or in the case of ad hoc tribunals,
their very existence) stem from the obligatory force of the
arbitration agreement and its ancillary stipulations. Simply put,
an arbitral tribunal is a creature of contract. (Citations omitted)

[116]
 Id. at 15-16.

 Construction Arbitration and Mediation, CONSTRUCTION


[117]

INDUSTRY AUTHORITY OF THE PHILIPPINES, available at


<http://www.ciap.dti.gov.ph/content/construction-
arbitrationmediation> (last visited on August 8, 2017).

 See Metro Construction, Inc. v. Chatham Properties, Inc., 418


[118]

Phil. 176 (2001) [Per C.J. Davide, Jr., First Division].

[119]
 RULES OF COURT, Rule 43, sec. 1 provides:

Section 1. Scope. - This Rule shall apply to appeals from


judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by
any quasijudicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities
and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil
Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission,
Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by law.
[120]
 RULES OF COURT, Rule 43, sec. 3 provides:

Section 3. Where to appeal. - An appeal under this Rule may be


taken to the Court of Appeals within the period and in the manner
herein provided, whether the appeal involves questions of fact, of
law, or mixed questions of fact and law.

[121]
 298-A Phil. 361 (1993) [Per J. Feliciano, Third Division].

[122]
 Id. at 372.

[123]
 Id. at 373-374.

 In Marasigan v. Fuentes, G.R. No. 201310, January 11, 2016


[124]

<http://sc.judiciary.gov,ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/201310.pdf> 5-6 [Per J.
Leonen, Second Division];

It is basic that petitions for review on certiorari under Rule 45


may only raise pure questions of law and that findings of fact are
generally binding and conclusive on this court. Nevertheless,
there are recognized exceptions that will allow this court to
overturn the factual findings confronting it. These exceptions are
the following:

(1) When the conclusion is a finding grounded entirety on


speculation, surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or


impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;


(6) When the Court of Appeals, in making ittindings, went beyond
the issues of the case and the same is contrary to the admissions
of both appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of


specific evidence on which they are based;

(9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by the
respondents; and

(10) When the findings of fact of the Court of Appeals are


premised on the supposed absence of evidence and contradicted
by the evidence on record. (Citations omitted)

[125]
 479 Phil. 578 (2004) [Per J. Puno, Second Division].

[126]
 Id. at 590.

[127]
 684 Phil. 330 (2012). [Per J. Reyes, Second Division].

 Id. at 346, citing Vda. De Formoso v. Philippine National Bank,


[128]

665 Phil. 174 (2011) [Per J. Mendoza, Second Division].

 Id. at 346-347, citing Philippine National Construction


[129]

Corporation v. Court of Appeals, 541 Phil. 658 (2007) [Per J.


Chico-Nazario, Third Division].

[130] Id.

[131]
 Id. at 347-348, citing CIVIL CODE, art. 1370.

[132]
 Id. at 349.

[133]
 Rollo, pp. 32-37.
[134]
 Id. at 32-33.

[135]
 CIVIL CODE, art. 1321 provides:

Article 1321. The person making the offer may fix the time,
place, and manner of acceptance, all of which must be complied
with.

[136]
 Rollo, p. 6222, CECON's Memorandum.

[137]
 CIVIL CODE, art. 1318 provides:

Article 1318. There is no contract unless the following requisites


concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

[138]
 Rollo, pp. 6224-6225 and 6383.

[139]
 Id. at 549 and 6224.

[140]
 Id. at 3773 and 6225.

[141]
 Id. at 556-557.

[142]
 Id. at 556 and 6224-6225.

[143]
 Id. at 560.

 Exec. Order No. 1008, Section 4 states, among others, that,


[144]

"the parties to a dispute must agree to submit the same to


voluntary arbitration."

[145]
 Rollo, pp. 6454-6461.
[146]
 CIAC RULES OF PROCEDURE, sec. 1.3.

 Pacific Merchandising Corp. v. Consolacion Insurance & Surety


[147]

Co., Inc., 165 Phil. 543, 553-554 (1976) [Per J. Antonio, Second
Division] citing Perez v. Pomar, 2 Phil. 682 (1903) [Per J. Torres,
En Banc]; and Bonzon v. Standard Oil Co. and Osorio, 27 Phil.
141 (1914) [Per J. Carson, First Division]. Fn 16

[148]
 Exec. Order No. 1008, Sec. 2.

[149]
 CIAC RULES OF PROCEDURE, Rule 1, sec. 1.3 provides:

Section 1.3 Judicial rules not controlling - In any arbitration


proceedings under these Rules, the judicial rules of evidence need
not be controlling, and it is the spirit and intention of these Rules
to ascertain the facts in each case by every and all reasonable
means without regard to technicalities of law or procedure.

[150]
 CIAC RULES OF PROCEDURE, Rule 1, sec. 1.3.

[151]
 Rollo pp. 3812-3813 and 3884.

[152]
 Id. at 6483-6487.

[153]
 RULES OF COURT, Rule 130, sec. 26.

[154]
 Id. at 3812.

[155]
 Id. at 38-39.

[156]
 Id. at 5894-5895.

[157]
 RULES OF COURT, Rule 130, sec. 14 and 19.

[158]
 RULES OF COURT, Rule 130, sec. 17.
 Rollo, p. 3771. Exhibits were so voluminous, markings such as
[159]

"BBBBB" and "MMMMM" were necessary.

[160]
 Id. at 4027.

[161]
 Id. at 4027-4028.

[162]
 Id. at 6127.

[163]
 Id. at 6656.

Source: Supreme Court E-Library | Date created: December 04, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 214300, July 26, 2017 ]


PEOPLE OF THE PHILIPPINES, PETITIONER, VS.
MANUEL ESCOBAR, RESPONDENT.DECISION

LEONEN, J.:

This Rule 45 Petition assails the Court of Appeals Decision to


grant the accused's second petition for bail. Res judicata applies
only in a final judgment in a civil case,  not in an interlocutory
[1]

order in a criminal case.  An order disposing a petition for bail is


[2]
interlocutory.  This order does not attain finality when a new
[3]

matter warrants a second look on the application for bail.

Respondent Manuel Escobar (Escobar) filed a petition for bail


(First Bail Petition), which was denied by the Regional Trial Court
in the Order  dated October 6, 2008 and by the Court of Appeals
[4]

in the Decision  dated March 8, 2011. A subsequent development


[5]

in the accused's case  compelled him to file a second petition for


[6]

bail (Second Bail Petition). On April 26, 2012, the Regional Trial
Court denied  this on the ground of res judicata. In the
[7]

Decision  dated March 24, 2014, the Court of Appeals overturned


[8]

the Regional Trial Court Order and granted the Second Bail
Petition.

Escobar was suspected of conspiring in the kidnap for ransom of


Mary Grace Cheng-Rosagas (Mary Grace), daughter of Filipino-
Chinese businessman Robert G. Cheng (Robert), and two (2)
other victims.  Robert was the owner of Uratex Foam, Philippines,
[9]

 a manufacturing company of foams and mattresses.


[10] [11]

On June 18, 2001 at 7:40 a.m., Mary Grace, her bodyguard


Valentin B. Torres (Torres), and her driver Dionisio F. Burca
(Burca) were passing by the front of Malcolm Hall, University of
the Philippines, Diliman, Quezon City when a vehicle blocked their
way.  Another group of suspects helped as lookouts.
[12] [13]

Clad in police uniform, four (4) armed men forced Mary Grace,
Burca, and Torres inside the vehicle.  The incident happened in
[14]

broad daylight.

Alleged group leader Rolando Villaver (Villaver) and some of the


suspects then travelled and detained Mary Grace, Burca, and
Torres in an undisclosed location in Batangas.  Afterwards, the [15]

group headed to Club Solvento, a resort  in Calamba, Laguna [16]

owned by Escobar,  who personally served them food.


[17] [18]

Some of the accused  stayed in Club Solvento to rest or sleep


[19]

while the others, namely, Villaver, Cesar Olimpiada, a certain


Cholo, and Biboy Lugnasin, left to negotiate the price for the
victims' release.  Cheng paid the ransom of P15,000,000.00.
[20] [21]

At 7:00 p.m. on the same day, Villaver's group returned to Club


Solvento,  followed by co-accused brothers Rolando and Harold
[22]

Fajardo (the Fajardo brothers), who were alleged advisers of


Villaver.  The group then locked themselves in a room where
[23]

Villaver partitioned the ransom money.  Cancio Cubillas [24]

(Cubillas), the group's driver,  confessed to have received a total


[25]

of P1,250,000.00 for the kidnapping operation. [26]

At 10:30 p.m. on the same day, Mary Grace, Burca, and Torres
were finally released.  They were freed somewhere in Alaminos,
[27]

Laguna, more than 12 hours since they were abducted. [28]

Cubillas became a state witness.  On June 3, 2002, he executed


[29]

an extrajudicial confession and implicated respondent Escobar as


an adviser for Villaver.  Cubillas believed that Escobar was
[30]

involved after he saw Escobar talk to Villaver while they were in


Club Solvento.  In his extrajudicial confession, Cubillas also
[31]

claimed that Escobar received a portion of the ransom money


from Villaver. [32]

On February 17, 2004, an Amended Information was filed before


the Regional Trial Court charging Escobar as a co-conspirator  in [33]

the kidnapping for ransom.  The charging portion stated:


[34]

That on or about June 18, 2001 at around 7:40 in the morning, at


Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring,
confederating and mutually helping one another and grouping
themselves together, with others not present during the actual
kidnapping but performing some other peculiarly contributory
roles, did, then and there, by force and intimidation, with the use
of long firearms and clad in police uniform, willfully, unlawfully
and feloniously take, carry away and thereafter detain at some
undisclosed place, after having blocked their car in front of
Malcolm Hall, Osmena Avenue, UP Campus, Diliman, Quezon City,
MARY GRACE CHENG-ROSAGAS, her driver DIONISIO F. BURCA
and her bodyguard VALENTIN B. TORRES, against their will and
consent thereby depriving them of their liberty for more than
twelve (12) hours for the purpose of extorting ransom for their
release in the amount of FIFTEEN MILLION PESOS
(P15,000,000.00), and which amount was in fact paid by Mary
Grace's father, Mr. Robert Cheng, owner of Uratex Foam,
Philippines, and have the same delivered at E. Rodriguez
Compound, Calamba, Laguna thereby resulting to the release of
the kidnap victims somewhere in Alaminos, Laguna at about
10:30 p.m. of the same day all to the damage and prejudice of
the three (3) victims and their families in such amount as may be
awarded to them and their families under the provisions of the
Civil Code.

CONTRARY TO LAW. [35]

Escobar was arrested on February 14, 2008. [36]

On June 3, 2008, Escobar filed the First Bail Petition before the
Regional Trial Court.  During the hearing on Escobar's bail
[37]

application, Cubillas testified that Escobar and the Fajardo


brothers were Villaver's advisers.[38]

In the Order dated October 6, 2008, the Regional Trial Court


denied  Escobar's First Bail Petition. The dispositive portion read:
[39]

The Petition for Bail filed by accused Manny Escobar is denied for
lack of merit considering that state witness Cancio Cubillas
positively identified said accused as the owner of Club Solvento
located in Calamba, Laguna; that he was the one who served
food to the group of Rolando Villaver, Jun Jun Villaver, Ning Ning
Villaver, Danny Velasquez, Cholo, Cesar Olimpiada, Mike, Alan
Celebre, Biboy Lugnasin and witness himself, Cancio Cubillas;
that it was also in said Club Solvento where Cancio Cubillas, Jun
Jun Villaver, Ning Ning Villaver, Danny Velasquez, Mike and Alan
Celebre rested and slept after Rolando Villaver, Cholo, Biboy
Lugnasin and Cesar Olimpiada left to negotiate for the ransom of
kidnap victim Mary Grace Cheng Rosagas, and that on the night
of June 18, 2001, Cubillas saw accused Rolando Villaver gave part
of the ransom money to him.
SO ORDERED. [40]

Escobar appealed before the Court of Appeals.  On March 8, [41]

2011, the Court of Appeals affirmed  the denial of the First Bail
[42]

Petition. It recognized that Cubillas' extrajudicial confession was


generally incompetent evidence against his co-accused and was
admissible against himself only  for being hearsay and for
[43]

violating the res inter alios acta rule.  Nevertheless, the Court of


[44]

Appeals invoked an exception to this rule and held that the


Regional Trial Court "did not rely solely on the extrajudicial
confession of Cubillas"; rather, the trial court also relied on
Cubillas' testimony during the bail hearing. [45]

Escobar moved to reconsider the Court of Appeals March 8, 2011


Decision.[46]

Pending the proceedings on Escobar's case, the police arrested


one (1) of the co-accused Fajardo brothers, Rolando Fajardo
(Rolando),  who applied for bail before the Regional Trial Court.
[47]

 As in Escobar's bail hearing, the prosecution relied solely on


[48]

Cubillas' statements to establish the strength of Fajardo's guilt.


 In an Order dated September 13, 2011, the Regional Trial
[49]

Court denied Rolando's petition for bail. [50]

However, in an Order dated October 14, 2011, the Regional Trial


Court reversed its previous order and granted Rolando's bail
application.  The Regional Trial Court stated:
[51]

To summarize, the evidence for the prosecution


does not establish that accused Rolando Fajardo participated
during the actual abduction of Rosagas, Burca and Torres or that
during the actual abduction, accused Rolando Fajardo gave advice
or instruction to the other accused herein. The evidence for the
prosecution likewise does not establish that accused Rolando
Fajardo acted as adviser to accused Rolando Villaver and his
group in connection with the kidnapping of the victims herein.
There is no testimony as to what advice or instructions were
made by accused Rolando Fajardo in connection with the
kidnapping of the victims herein. There is thus a paucity of
evidence establishing the participation of accused Rolando
Fajardo in the kidnapping of Rosagas, Burca and Torres.
 (Emphasis supplied)
[52]

The reversal came about after the trial court considered that,
according to Cubillas, "[Rolando] was not present before, during
and after the kidnapping."  There was paucity of evidence on
[53]

Rolando's alleged participation. [54]

Meanwhile, on October 27, 2011, the Court of Appeals denied


Escobar's motion for reconsideration.  He no longer appealed [55]

before this Court. [56]

By January 2012, only Escobar was left in detention pending the


final judgment on the merits of the case as all the other accused
who had active participation in the kidnapping had been granted
bail.  Escobar saw Rolando's release on bail as a new
[57]

"development which warrant[ed] a different view" on his own bail


application. [58]

Thus, on January 27, 2012, Escobar filed another petition for bail
(Second Bail Petition) before the Regional Trial Court.  He noted [59]

that Cubillas could not explain how either Rolando or Escobar


advised Villaver and that both Rolando and Escobar were absent
before, during, and after the kidnapping.  Hence, if Rolando's [60]

petition for bail was granted based on the unreliability of Cubillas'


testimony, Escobar reasoned that the trial court should likewise
grant him provisional release. [61]

On April 26, 2012, the Regional Trial Court denied  Escobar's [62]

Second Bail Petition on the ground of res judicata,  reasoning [63]

thus: "[i]n deference to the Decision of the Court of Appeals


which has already attained finality, accused's Petition for Bail
which is actually a second petition for bail[,] must be necessarily
denied." [64]

Escobar moved for reconsideration but this was denied by the


Regional Trial Court.  On January 14, 2013, he appealed before
[65]

the Court of Appeals via Rule 65, arguing that the trial court
committed grave abuse of discretion in denying his Second Bail
Petition.
[66]

In the Decision dated March 24, 2014, the Court of Appeals


granted  the petition for certiorari and ordered the Regional Trial
[67]

Court to determine the appropriate bail for Escobar's provisional


liberty. The dispositive portion read:
WHEREFORE, the petition is GRANTED. The April 26, 2012,
September 14, 2012, September 17, 2012 and November 6,
2012 Orders, are SET ASIDE. The trial court is directed to
determine the appropriate bail for the provisional liberty of the
petitioner, Manuel Escobar, with dispatch.

SO ORDERED. [68]

The Court of Appeals denied the prosecution's Motion for


Reconsideration.  According to the Court of Appeals, Escobar's
[69]

Second Bail Petition was not barred by res judicata, which applies
only if the former judgment is a final order or judgment and not
an interlocutory order.  An order denying a petition for bail is
[70]

interlocutory in nature. [71]

On April 4, 2014, the Regional Trial Court fixed  Escobar's bail at


[72]

P300,000.00. The dispositive portion read:


In view of the Decision rendered by the Court of Appeals on 24
March 2014, the bail for the provisional liberty of accused Manuel
Escobar is hereby fixed at Three Hundred Thousand Pesos
(Php300,000.00).

SO ORDERED. [73]

In the Resolution dated September 11, 2014, the Court of


Appeals denied  the prosecution's Motion for Reconsideration.
[74]

On November 6, 2014, the prosecution, through the Office of the


Solicitor General, filed a Petition for Review  via Rule 45 before
[75]

this Court. In its Petition, the prosecution does not pray for the
issuance of a temporary restraining order of the Court of Appeals
Decision;  rather, in assailing the grant of Escobar's Second Bail
[76]
Petition, the prosecution avers that the doctrine of res
judicata must be respected. [77]

On October 19, 2015, Escobar filed his Comment,  arguing [78]

that res judicata did not apply here,  that there was no strong


[79]

evidence of his guilt,  and that the Court of Appeals could rectify
[80]

errors of judgment in the greater interest of justice.  According [81]

to Escobar:
13. Due to this sudden development of the grant of bail to his co-
accused, [Rolando], and considering that both [Rolando] and
[Escobar]'s alleged participation in the crime are based on the
same court-declared unreliable "speculations" of the state witness
Cubillas, who even admitted he was lying when questioned during
[Escobar]'s own bail hearings, it was in the interest of justice and
fairness to re-open the matter of bail with respect to [Escobar]
and thereby grant the same. And the Honorable Court of Appeals
agreed. [82]

This Court's program to decongest holding jails led City Jail


Warden Randel H. Latoza (City Jail Warden Latoza) to review
Escobar's case.  In his manifestation dated August 18, 2016, City
[83]

Jail Warden Latoza informed this Court that there was no


temporary restraining order against the Regional Trial Court April
4, 2014 Order, which fixed Escobar's provisional liberty at
P300,000.00. He also acknowledged the Court of Appeals March
24, 2014 Decision granting Escobar the right to bail.  He [84]

mentioned that Escobar had posted the P300,000.00 bail, as


ordered by the trial court.  Thus, he moved to allow Escobar's
[85]

provisional release on bail. [86]

City Jail Warden Latoza alleged that Escobar had paid the
necessary surety bond  and attached a copy of Traveller's
[87]

Insurance Surety Corporation's surety bond undertaking to his


manifestation.  However, the attached surety bond undertaking
[88]

was neither notarized nor approved by the Regional Trial Court


judge.[89]

In a Letter dated May 15, 2017, the Commission on Human


Rights wrote to Associate Justice Antonio T. Carpio to ask for the
speedy resolution of the case as Escobar was already 78 years
old.[90]

For resolution are the following issues:

First, whether Manuel Escobar's second petition for bail is barred


by res judicata; and

Finally, whether respondent should be granted bail.

Bail is the security given for the temporary release of a person


who has been arrested and detained but "whose guilt has not yet
been proven" in court beyond reasonable doubt.  The right to
[91]

bail is cognate to the fundamental right to be presumed innocent.


In People v. Fitzgerald: [92]

The right to bail emanates from the [accused's constitutional]


right to be presumed innocent. It is accorded to a person in the
custody of the law who may, by reason of the presumption of
innocence he [or she] enjoys, be allowed provisional liberty upon
filing of a security to guarantee his [or her] appearance before
any court, as required under specified conditions.  (Citations [93]

omitted)
Bail may be a matter of right or judicial discretion. The accused
has the right to bail if the offense charged is "not punishable by
death, reclusion perpetua or life imprisonment" before conviction
by the Regional Trial Court.  However, if the accused is charged
[94]

with an offense the penalty of which is death, reclusion perpetua,


or life imprisonment—"regardless of the stage of the criminal
prosecution"—and when evidence of one's guilt is not strong,
then the accused's prayer for bail is subject to the discretion of
the trial court. [95]

In this case, the imposable penalty for kidnapping for ransom is


death,  reduced to reclusion perpetua.  Escobar's bail is, thus, a
[96] [97]

matter of judicial discretion, provided that the evidence of his


guilt is not strong. [98]
Rule 114 of the Revised Rules on Criminal Procedure states:
Section 4. Bail, a matter of right; exception. - All persons in
custody shall be admitted to bail as a matter of right, with
sufficient sureties, or released on recognizance as prescribed by
law or this Rule (a) before or after conviction by the Metropolitan
Trial Court, Municipal Trial Court, Municipal Trial Court in Cities,
or Municipal Circuit Trial Court, and (b) before conviction by the
Regional Trial Court of an offense not punishable by
death, reclusion perpetua, or life imprisonment.

....

Section 7. Capital offense or an offense punishable by reclusion


perpetua or life imprisonment, not bailable. - No person charged
with a capital offense, or an offense punishable by reclusion
perpetua or life imprisonment, shall be admitted to bail when
evidence of guilt is strong, regardless of the stage of the criminal
prosecution.
The Regional Trial Court denied  Escobar's Second Bail Petition
[99]

on the ground of res judicata. The Court of Appeals


overturned  this and correctly ruled that his Second Bail Petition
[100]

was not barred by res judicata.

In its literal meaning, res judicata refers to "a matter


adjudged."  This doctrine bars the re-litigation of the same claim
[101]

between the parties, also known as claim preclusion or bar by


former judgment.  It likewise bars the re-litigation of the same
[102]

issue on a different claim between the same parties, also known


as issue preclusion or conclusiveness of judgement.  It "exists as
[103]

an obvious rule of reason, justice, fairness, expediency, practical


necessity, and public tranquillity." [104]

Degayo v. Magbanua-Dinglasan  held that "[t]he doctrine of res


[105]

judicata is set forth in Section 47 of Rule 39"  of the Revised


[106]

Rules of Civil Procedure, thus:


Sec. 47. Effect of Judgments or Final Orders. — The effect of a
judgment or final order rendered by a court of the Philippines,
having jurisdiction to pronounce the judgment or final order, may
be as follows:

....

(b) [T]he judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for
the same thing and under the same title and in the same
capacity; and

(c) In any other litigation between the same parties or their


successors in interest, that only is deemed to have been
adjudged in a former judgment or final order which appears upon
its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto.
Escobar's Second Bail Petition is not barred by res judicata as this
doctrine is not recognized in criminal proceedings. [107]

Expressly applicable in civil cases, res judicata settles with finality


the dispute between the parties or their successors-in-interest.
 Trinidad v. Marcelo  declares that res judicata, as found in
[108] [109]

Rule 39 of the Rules of Civil Procedure, is a principle in civil law


and "has no bearing on criminal proceedings."  Rule 124, [110]

Section 18 of the Rules of Criminal Procedure states:


Section 18. Application of certain rules in civil procedure to
criminal cases. - The provisions of Rules 42, 44 to 46 and 48 to
56 relating to procedure in the Court of Appeals and in the
Supreme Court in original and appealed civil cases shall be
applied to criminal cases insofar as they are applicable and not
inconsistent with the provisions of this Rule.
Indeed, while certain provisions of the Rules of Civil Procedure
may be applied in criminal cases,  Rule 39 of the Rules of Civil
[111]

Procedure is excluded from the enumeration under Rule 124 of


the Rules of Criminal Procedure. In Trinidad: [112]
Petitioner's arguments — that res judicata applies since the Office
of the Ombudsman twice found no sufficient basis to indict him in
similar cases earlier filed against him, and that the Agan cases
cannot be a supervening event or evidence per se to warrant a
reinvestigation on the same set of facts and circumstances — do
not lie.

Res judicata is a doctrine of civil law and thus has no


bearing on criminal proceedings.

But even if petitioner's arguments] were to be expanded to


contemplate "res judicata in prison grey" or the criminal law
concept of double jeopardy, this Court still finds it inapplicable to
bar the reinvestigation conducted by the Office of the
Ombudsman.  (Emphasis supplied, citations omitted).
[113]

An interlocutory order denying an application for bail, in this case


being criminal in nature, does not give rise to res judicata. As
in Trinidad, even if we are to expand the argument of the
prosecution in this case to contemplate "res judicata in prison
grey" or double jeopardy, the same will still not apply.  Double
[114]

jeopardy requires that the accused has been convicted or


acquitted or that the case against him or her has been dismissed
or terminated without his express consent.  Here, while there
[115]

was an initial ruling on Escobar's First Bail Petition, Escobar has


not been convicted, acquitted, or has had his case dismissed or
terminated.

Even assuming that this case allows for res judicata as applied in


civil cases, Escobar's Second Bail Petition cannot be barred as
there is no final judgment on the merits.

Res judicata requires the concurrence of the following elements:


1. The judgment sought to bar the new action must be final;
2. The decision must have been rendered by a court having
jurisdiction over the parties and the subject matter;
3. The disposition of the case must be a judgment on the
merits; and
4. There must be between the first and second actions, identity
of parties, of subject matter, and of causes of action.[116]

In deciding on a matter before it, a court issues either a final


judgment or an interlocutory order. A final judgment "leaves
nothing else to be done" because the period to appeal has
expired or the highest tribunal has already ruled on the case.  In [117]

contrast, an order is considered interlocutory if, between the


beginning and the termination of a case, the court decides on a
point or matter that is not yet a final judgment on the entire
controversy. [118]

An interlocutory order "settles only some incidental, subsidiary or


collateral matter arising in an action";  in other words,
[119]

something else still needs to be done in the primary case—the


rendition of the final judgment.  Res judicata applies only when
[120]

there is a final judgment on the merits of a case; it cannot be


availed of in an interlocutory order even if this order is not
appealed.  In Macahilig v. Heirs of Magalit:
[121] [122]

Citing Section 49 of Rule 39, Rules of Court, petitioner insists that


the September 17, 1997 [interlocutory] Order of the trial court in
Civil Case No. 3517 bars it from rehearing questions on the
ownership of Lot 4417. She insists that said Order has become
final and executory, because Dr. Magalit did not appeal it.

We disagree. Final, in the phrase judgments or final orders found


in Section 49 of Rule 39, has two accepted interpretations. In the
first sense, it is an order that one can no longer appeal because
the period to do so has expired, or because the order has been
affirmed by the highest possible tribunal involved. The second
sense connotes that it is an order that leaves nothing else to be
done, as distinguished from one that is interlocutory. The phrase
refers to a. final determination as opposed to a judgment or an
order that settles only some incidental, subsidiary or collateral
matter arising in an action; for example, an order postponing a
trial, denying a motion to dismiss or allowing intervention. Orders
that give rise to res judicata and conclusiveness of judgment
apply only to those falling under the second category.
....

For example, an Order overruling a motion to dismiss does not


give rise to res adjudicata [sic] that will bar a subsequent action,
because such order is merely interlocutory and is subject to
amendments until the rendition of the final judgment.
 (Emphasis supplied, citations omitted)
[123]

A decision denying a petition for bail settles only a collateral


matter —whether accused is entitled to provisional liberty—and
[124]

is not a final judgment on accused's guilt or innocence. Unlike in


a full-blown trial, a hearing for bail is summary in nature: it
deliberately "avoid[s] unnecessary thoroughness" and does not
try the merits of the case.  Thus:
[125]

Summary hearing means such brief and speedy method of


receiving and considering the evidence of guilt as is practicable
and consistent with the purpose of the hearing which is merely to
determine the weight of the evidence for purposes of bail. The
course of the inquiry may be left to the discretion of the court
which may confine itself to receiving such evidence as has
reference to substantial matters avoiding unnecessary
thoroughness in the examination and cross-examination of
witnesses and reducing to a reasonable minimum the amount of
corroboration particularly on details that are not essential to the
purpose of the hearing.  (Emphasis in the original)
[126]

Here, the prosecution itself has acknowledged that "the first order
denying bail is an interlocutory order."  The merits of the case
[127]

for kidnapping must still be threshed out in a full-blown


proceeding.

Being an interlocutory order, the March 8, 2011 Court of Appeals


Decision denying Escobar's First Bail Petition did not have the
effect of res judicata. The kidnapping case itself has not attained
finality. Since res judicata has not attached to the March 8, 2011
Court of Appeals Decision, the Regional Trial Court should have
taken cognizance of Escobar's Second Bail Petition and weighed
the strength of the evidence of guilt against him.
In any case, the Court of Appeals may still reverse its Decision,
notwithstanding its denial of the First Bail Petition on March 8,
2011.

Rules of procedure should not be interpreted as to disadvantage a


party and deprive him or her of fundamental rights and liberties.
A judgment or order may be modified where executing it in its
present form is impossible or unjust in view of intervening facts
or circumstances: [128]

[W]here facts and circumstances transpire which render [the]


execution [of a judgment] impossible or unjust and it therefore
becomes necessary, "in the interest of justice, to direct its
modification in order to harmonize the disposition with the
prevailing circumstances."  (Emphasis supplied, citation omitted)
[129]

Appellate courts may correct "errors of judgment if blind and


stubborn adherence to the doctrine of immutability of final
judgments would involve the sacrifice of justice for
technicality."  Thus, an accused may file a second petition for
[130]

bail, particularly if there are sudden developments or a "new


matter or fact which warrants a different view." [131]

Rolando's release on bail is a new development in Escobar's case.


 The Court of Appeals has pointed out that the other alleged co-
[132]

conspirators are already out on bail: Rolando, in particular, was


granted bail because Cubillas' testimony against him was weak.
 "[Escobar] and [Rolando] participated in the same way, but
[133]

[Escobar]'s bail was denied."  Escobar's fundamental rights and


[134]

liberty are being deprived in the meantime.

Article III, Section 13 of the 1987 Constitution states:


Section 13. All persons, except those charged with offenses
punishable by reclusion perpetua when evidence of guilt is strong,
shall, before conviction, be bailable . . . (Emphasis supplied)
The same evidence used by the trial court to grant bail to
Rolando was not used similarly in Escobar's favor. As the Court of
Appeals found: [135]

We cannot ignore the allegation of conspiracy and that the other


accused were all granted bail except him. Specifically, [Rolando]
was granted bail due to the weakness of Cubillas' testimony
against him.[136]

In light of the circumstances after the denial of Escobar's First


Bail Petition, his Second Bail Petition should have been given due
course. It should not be denied on the technical ground of res
judicata.

II

The Court of Appeals already approved Escobar's bail petition.


Meanwhile, City Jail Warden Latoza has informed this Court of the
absence of any temporary restraining order against the Court of
Appeals Decision granting the Second Bail Petition, as well as the
Regional Trial Court Order fixing his bail at P300,000.00.  Thus,
[137]

the Court of Appeals March 24, 2014 Decision granting Escobar's


provisional liberty can be executed upon the approval of his bail
bond, if he has indeed paid the surety bond.

In closing, no part of this Decision should prejudice the


submission of additional evidence for the prosecution to prove
Escobar's guilt in the main case. "[A] grant of bail does not
prevent the trier of facts . . . from making a final assessment of
the evidence after full trial on the merits."  As the Court of
[138]

Appeals correctly ruled:


[T]his determination is only for the purpose of bail[;] it is without
prejudice for the prosecution to submit additional evidence to
prove [Escobar]'s guilt in the course of the proceedings in the
primary case. [139]

WHEREFORE, the Petition is DENIED. The Court of Appeals


Decision dated March 24, 2014 in CA-G.R. SP No. 128189
is AFFIRMED.

Escobar may be provisionally released if he indeed has paid the


surety bond that must be contained in a public document and
approved by the Regional Trial Court judge. Otherwise, he is
directed to post bail.

SO ORDERED.
Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,
concur.

August 29, 2017

NOTICE OF JUDGMENT

Sir/Madam:

Please take notice that on July 26, 2017 a Decision, copy


attached herewith, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on August 29, 2017 at 1:24 p.m.

 Trinidad v. Office of the Ombudsman, 564 Phil. 382, 389 (2007)


[1]

[Per J. Carpio-Morales, En Banc]; Alvarez v. People of the


Philippines, 668 Phil. 216, 253 (2011) [Per J. Villarama, Jr., First
Division].

 Macahilig v. Magalit, 398 Phil. 802, 817-18 (2000) [Per J.


[2]

Panganiban, Third Division].

 Pobre v. Court of Appeals, 501 Phil. 360, 369 (2005) [Per J.


[3]

Austria-Martinez, Second Division].


 Rollo, p. 38, as cited in the Court of Appeals Decision dated
[4]

March 24, 2014. Copies of the Regional Trial Court Order and the
First Petition for Bail are not attached to the records.

 Id. at 51-61. The Decision, docketed as CA-G.R. SP No.


[5]

107641, was penned by Associate Justice Rodil V. Zalameda and


concurred in by Associate Justices Mario L. Guariña III and
Apolinario D. Bruselas, Jr. of the Eighth Division of the Court of
Appeals, Manila.

[6]
 Id. at 137, Comment.

 Id. at 40, as cited in the Court of Appeals Decision dated March


[7]

24, 2014. A copy of the Regional Trial Court Order dated April 26,
2012 is not attached to the records.

 Id. at 36-46. The Decision, docketed as CA-G.R. SP No.


[8]

128189, was penned by Associate Justice Mario V. Lopez and


concurred in by Associate Justices Jose C. Reyes, Jr. and Socorro
B. Inting of the Eighth Division of the Court of Appeals, Manila.

[9]
 Id. at 12.

[10]
 Id.

[11]
 See <https://www.uratex.com.ph/>

[12]
 Rollo, p. 36.

 Cecille Suerte Felipe, 15 charged for Cheng Kidnap, Philippine


[13]

Star, August 10, 2001


<http://www.philstar.com/metro/129492/15-charged-cheng-
kidnap> (last visited July 17, 2017).

[14]
 Rollo, p. 36 and 38.

[15]
 Id.
 Included in the list of private pools and resorts in Calamba,
[16]

Laguna is a "Club Solviento," not a "Club Solvento"


(see http://www.lagunatravelguide.com/index.php?
page=directory-of-private-pools-and-resorts-in-laguna). Club
Solviento is also in the Yellow Pages directory of resorts in
Calamba, Laguna (http://www.yellow-pages.ph/search/hot-
springs/laguna/page-1). The records do not state whether Club
Solvento is the same as Club Solviento. The only information
available is that it is a place where guests may dine and sleep.

[17]
 Rollo, p. 37, 51.

[18]
 Id. at 51.

 Id. at 52. Those who stayed in Club Solvento were Jun Jun
[19]

Villaver, Ning Ning Villaver, Danny Velasquez, Mike Celebre, Alan


Celebre, and Cancio Cubillas.

[20]
 Id. at 57.

[21]
 Id. at 12.

[22]
 Id. at 37-38.

[23]
 Id.

[24]
 Id. at 37.

[25]
 Id. at 24.

[26]
 Id. at 37.

[27]
 Id. at 12.

[28]
 Id.

[29]
 Id. at 36-37.
[30]
 Id.

[31]
 Id. at 38.

[32]
 Id. at 37.

 Id. at 38. The other co-accused were Rolando Villaver y


[33]

Libores, Edgardo Decipulo y Didal, Eugene Radam, Florente


Concepcion y Navelgas, Joven Arcado y Patag, Nicomedes Gerilla
y Dela Cruz, Cancio Cubillas y Ignacio, Jun Jun Villaver, Ning Ning
Villaver, Vicente Lugnasen, Danny Velasquez, Cesar Olimpiada,
Chris Opulencia, Abner Opulencia, Apolonio Opulencia, Roily
Fajardo, Harold Fajardo, Allan Celebre, Idoy Trota, Lito Mercado,
and three (3) John Does.

[34]
 Id. at 38.

[35]
 Id. at 52-53.

[36]
 Id. at 72.

[37]
 Id. at 38.

[38]
 Id.

[39]
 Id. at 51.

[40]
 Id. at 51-52.

[41]
 Id. at 38-39.

[42]
 Id. at 51-61.

[43]
 Id. at 58.

[44]
 Id.
[45]
 Id. at 59.

[46]
 Id. at 39.

[47]
 Id. at 137.

[48]
 Id. at 39.

[49]
 Id. at 137.

[50]
 Id.

[51]
 Id. at 39.

[52]
 Id., See footnote 10.

[53]
 Id. at 137.

[54]
 Id. at 39-40.

[55]
 Id. at 39, See footnote 8.

 Id. at 62-63. The judgment became final and executory on June


[56]

19, 2012.

[57]
 Id. at 39-40.

[58]
 Id. at 39.

[59]
 Id., See footnote 11.

[60]
 Id. at 39-40. See footnote 10.

[61]
 Id. at 40.

 Id. at 64. The Order was penned by Acting Presiding


[62]

Judge/Pairing Judge Charito B. Gonzales of Branch 81, Regional


Trial Court, Quezon City.
[63]
 Id. at 41.

[64]
 Id. at 64.

[65]
 Id. at 40.

[66]
 Id. at 65-113.

[67]
 Id. at 36-46.

[68]
 Id. at 45.

[69]
 Id. at 114-118.

[70]
 Id. at 41-44.

[71]
 Id.

 Id. at 185. The Order was penned by Presiding Judge Madonna


[72]

C. Echiverri of Branch 81, Regional Trial Court, Quezon City.

[73]
 Id.

 Id. at 47-50-B. The Resolution was penned by Associate Justice


[74]

Mario V. Lopez and concurred in by Associate Justices Jose C.


Reyes, Jr. and Socorro B. Inting of the Former Eighth Division,
Court of Appeals, Manila.

[75]
 Id. at 10-35.

[76]
 Id. at 28.

[77]
 Id. at 18-19.

[78]
 Id. at 133-147.

[79]
 Id. at 134.
[80]
 Id. at 138.

[81]
 Id. at 137.

[82]
 Id.

[83]
 Id. at 180.

[84]
 Id. at 180-183.

[85]
 Id. at 183.

[86]
 Id.

[87]
 Id.

[88]
 Id. at 186.

[89]
 Id.

[90]
 Id. at 213.

 Leviste v. Court of Appeals, 629 Phil. 587, 597 (2010) [Per J.


[91]

Corona, Third Division].

[92]
 536 Phil. 413 (2006) [Per J. Austria-Martinez, First Division].

[93]
 Id. at 424.

[94]
 RULES OF COURT, Rule 114, sec. 4.

[95]
 RULES OF COURT, Rule 114, sec. 5 in relation to sec. 7.

 REV. PEN. CODE, art. 267. Kidnapping and serious illegal


[96]

detention. — Any private individual who shall kidnap or detain


another, or in any other manner deprive him of his liberty, shall
suffer the penalty of reclusion perpetua to death:
1. If the kidnapping or detention shall have lasted more than five
days.

2. If it shall have been committed simulating public authority.

3. If any serious physical injuries shall have been inflicted upon


the person kidnapped or detained, or if threats to kill him shall
have been made.

4. If the person kidnapped or detained shall be a minor, female or


a public officer.

The penalty shall be death where the kidnapping or detention was


committed for the purpose of extorting ransom from the victim or
any other person, even if none of the circumstances above-
mentioned were present in the commission of the offense. (As
amended by Republic Act Nos. 18 and 1084).

[97]
 See Rep. Act No. 9346, sec. 2.

 Ocampo v. Bernabe, 11 Phil. 55, 58 (1946) [Per CJ Moran, En


[98]

Banc].

 Rollo, p. 40, as cited in the Court of Appeals Decision dated


[99]

March 24, 2014. A copy of the Regional Trial Court Order dated
April 26, 2012 is not attached to the records.

[100]
 Id. at 36-46.

 Degayo v. Magbanua-Dinglasan, 757 Phil. 376, 382 (2015)


[101]

[Per J. Brion, Second Division].

 See Degayo v. Magbanua-Dinglasan, 757 Phil. 376 (2015) [Per


[102]

J. Brion, Second Division].

 See Degayo v. Magbanua-Dinglasan, 757 Phil. 376 (2015) [Per


[103]

J. Brion, Second Division].


 Degayo v. Magbanua-Dinglasan, 757 Phil. 376, 382 (2015)
[104]

[Per J. Brion, Second Division].

[105]
 757 Phil. 376 (2015) [Per J. Brion, Second Division].

[106]
 Id. at 384.

[107]
 RULES OF COURT, Rule 124, sec. 18.

 Res judicata is found in the Rules of Civil Procedure, but not in


[108]

the Revised Rules of Criminal Procedure.

[109]
 564 Phil. 382 (2007) [Per J. Carpio-Morales, En Banc].

[110]
 Id. at 389.

[111]
 See RULES OF COURT, Rule 124.

[112]
 564 Phil. 382 (2007) [Per J. Carpio-Morales, En Banc].

[113]
 Id. at 389.

[114]
 564 Phil. 382 (2007) [Per J. Carpio-Morales, En Banc].

[115]
 Rules of Court, Rule 117, sec. 7 provides:

Section 7. Former conviction or acquittal; double jeopardy. -


When an accused has been convicted or acquitted, or the case
against him dismissed or otherwise terminated without his
express consent by a court of competent jurisdiction, upon a valid
complaint or information or other formal charge sufficient in form
and substance to sustain a conviction and after the accused had
pleaded to the charge, the conviction or acquittal of the accused
or the dismissal of the case shall be a bar to another prosecution
for the offense charged, or for any attempt to commit the same
or frustration thereof, or for any offense which necessarily
includes or is necessarily included in the offense charged in the
former complaint or information.

However, the conviction of the accused shall not be a bar to


another prosecution for an offense which necessarily includes the
offense charged in the former complaint or information under any
of the following instances:

(a) the graver offense developed due to supervening facts arising


from the same act or omission constituting the former charge;

(b) the facts constituting the graver charge became known or


were discovered only after a plea was entered in the former
complaint or information; or

(c) the plea of guilty to the lesser offense was made without the
consent of the prosecutor and of the offended party except as
provided in section 1(f) of Rule 116.

In any of the foregoing cases, where the accused satisfies or


serves in whole or in part the judgment, he shall be credited with
the same in the event of conviction for the graver offense.

 Mallion v. Alcantara, 536 Phil. 1049, 1055-1056 (2006) [Per J.


[116]

Azcuna, Second Division].

 Macahilig v. Magalil, 398 Phil. 802, 817-818 (2000) [Per J.


[117]

Panganiban, Third Division].

 Pobre v. Court of Appeals, 501 Phil. 360, 369 (2005) [Per J.


[118]

Austria-Martinez, Second Division].

 Macahilig v. Magalit, 398 Phil. 802, 817-818 (2000) [Per J.


[119]

Panganiban, Third Division].

[120] Id.
 Macahilig v. Magalit, 398 Phil. 802, 817-818 (2000) [Per J.
[121]

Panganiban, Third Division].

[122]
 398 Phil. 802 (2000) [Per J. Panganiban, Third Division].

[123]
 Id. at 817-818.

 See Leviste v. Court of Appeals, 629 Phil. 587, 597 (2010) [Per
[124]

J. Corona, Third Division].

 Santos v. How, 542 Phil. 22, 30 (2007) [Per J. Austria-


[125]

Martinez, Third Division].

[126] Id.

[127]
 Rollo, p. 20.

 Industrial Timber Corp. v. National Labor Relations


[128]

Commission, 303 Phil. 621 (1994) [Per J. Cruz, First Division].

[129]
 Id. at 625.

 Republic v. Ballocanag, 593 Phil. 80, 99 (2008) [Per J.


[130]

Nachura, Third Division].

 See People v. Kho (409 Phil. 326 (2001) [Per J. Kapunan, First


[131]

Division]. Kho involves three (3) petitions for bail filed before the
Regional Trial Court. Then Regional Trial Court Judge Lucas
Bersamin (now Supreme Court Associate Justice) denied the first
bail petition, and then the second bail petition on the ground that
there was no new matter or fact that would lead the trial court to
reconsider its previous denial of the bail application. Judge
Bersamin granted the third bail petition, ruling that the
prosecution failed to establish any linkage between the accused
and the alleged gunman. The case primarily involved the
voluntary inhibition of Judge Bersamin after he granted the third
bail application. This Court ordered Judge Bersamin to proceed
with the trial of the case as his voluntary inhibition "was not in
the exercise of sound discretion[.]" Simply put, this Court found
nothing irregular about Judge Bersamin's reversal of his earlier
rulings that denied the bail application. At the very least, Kho
implicitly recognized that a court may validly reverse its previous
denials of a bail application.

[132]
 Rollo, pp. 39-40.

[133]
 Id. at 42.

[134]
 Id. at 42-43.

[135]
 Id. at 36-46.

[136]
 Id. at 42.

[137]
 Id. at 216.

 People v. Sandiganbayan, 556 Phi!. 596, 611 (2007) [Per J.


[138]

Garcia, En Banc]

[139]
 Rollo, p. 45.

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SECOND DIVISION

[ G.R. No. 181489, April 19, 2017 ]


STEVEN R. PAVLOW, PETITIONER, VS. CHERRY L.
MENDENILLA, RESPONDENT.DECISION

LEONEN, J.:

The mother of a victim of acts of violence against women and


their children is expressly given personality by Section 9(b)  of[1]

Republic Act No. 9262, otherwise known as the Anti-Violence


Against Women and Their Children Act of 2004 (the Anti-VAWC
Law), to file a civil action petitioning for the issuance of a
protection order for her child. In filing such a petition, she avails
of a remedy that is distinct from the criminal action under Section
5 of the same law.  The mere filing of such a criminal complaint,
[2]

without the subsequent filing of an information in court, does not


occasion litis pendentia or res judicata that precludes the filing of
a petition for the issuance of a protection order.

The Rules of Court suppletorily apply in proceedings relating to


the Anti-VAWC Law. Among the provisions of the 1997 Rules of
Civil Procedure that continue to govern proceedings under the
Anti-VAWC Law are those on substituted service of summons.
This was validly resorted to in this case, thereby enabling the
Regional Trial Court to acquire jurisdiction over petitioner's
person.

This resolves a Petition for Review on Certiorari  under Rule 45 of


[3]

the 1997 Rules of Civil Procedure praying that the assailed


October 17, 2007 Decision  and January 25, 2008 Resolution  of
[4] [5]

the Court of Appeals in CA-G.R. SP No. 94540 be reversed and


set aside.

The assailed Court of Appeals Decision dismissed petitioner


Steven R. Pavlow's (Pavlow) Petition for Certiorari under Rule 65
of the 1997 Rules of Civil Procedure. The Decision found no grave
abuse of discretion on the part of Judge Natividad A. Giron-Dizon
(Judge Giron-Dizon) of the Regional Trial Court of Quezon City,
Branch 106 in her denial  of petitioner's Omnibus Motion.
[6]

 Petitioner's Motion included a prayer to dismiss the Petition for


[7]

Issuance of a Temporary Protection Order or Permanent


Protection Order  under the Anti-VAWC Law. This Petition for the
[8]

issuance of a protection order was filed by respondent Cherry L.


Mendenilla (Mendenilla), the mother of petitioner's wife, Maria
Sheila Mendenilla Pavlow (Maria Sheila).

In denying petitioner's Omnibus Motion, Judge Giron-Dizon ruled


that Mendenilla had personality to file a petition for the issuance
of a protection order to benefit her daughter. It was equally ruled
that Mendenilla did not engage in forum shopping  despite the
[9]

prosecutor's prior dismissal  of a criminal complaint  filed by


[10] [11]

Maria Sheila against petitioner for slight physical injuries and


maltreatment in relation to the Anti-VAWC Law. Finally, it was
established that jurisdiction over petitioner's person was properly
acquired through substituted service. [12]

On March 11, 2005, petitioner Pavlow, an American citizen and


President of Quality Long Term Care of Nevada, Inc., married
Maria Sheila, a Filipino, in civil rites in Quezon City. Thereafter,
they cohabited as husband and wife. [13]

Barely three (3) months into their marriage, on May 31, 2005,
Maria Sheila filed a Complaint-Affidavit against Pavlow for slight
physical injuries.  On June 3, 2005, Maria Sheila filed an
[14]

Amended Complaint-Affidavit  to include maltreatment in relation


[15]

to the Anti-VAWC Law as a ground.

Specifically, Maria Sheila alleged that she and Pavlow had fights
on February 26, 2005 and on March 10, 2005 over a certain
Diane, an employee of the Manila Peninsula Hotel.  As Maria [16]

Sheila was told by Monette Tolentino (Tolentino) and Louise Cruz,


two (2) of petitioner's employees in Quality Long Term Care of
Nevada, Inc., Diane liked Pavlow and was sending him text
messages and e-mails.  Maria Sheila added that on March 15,
[17]

2005, she and Pavlow quarrelled over their loss of privacy and
the intrusion into their affairs of the same employees.  She [18]
further claimed that, on March 16, 2005, Pavlow hit her in the
stomach and shouted at her for recounting her marital
experiences to her mother, respondent Mendenilla, with Pavlow
telling her that despite their recent marriage there was nothing to
celebrate.  She also recalled that, on April 16, 2005, she and
[19]

Pavlow again clashed over the phone as regards the messages of


one (1) of Steven's female employees, during which, Pavlow
slapped her and hit her upper back.  Maria Sheila also disclosed
[20]

that Pavlow had been compelling her every night to take two (2)
small white tablets, which made her feel dizzy. She contended
that she could not disobey petitioner for fear of being hit and
maltreated. [21]

On August 25, 2005, Makati Assistant City Prosecutor Romel S.


Odronia (Assistant City Prosecutor Odronia) issued a resolution
dismissing Maria Sheila's criminal complaint, holding that Maria
Sheila failed to substantiate her allegations.
[22]

Following this, on August 26, 2015, Mendenilla filed with the


Quezon City Regional Trial Court a Petition  for Maria Sheila's
[23]

benefit, praying for the issuance of a Temporary Protection Order


or Permanent Protection Order under the Anti-VAWC Law. This
Petition was docketed as Civil Case No. Q-05-56169.

In her petition, Mendenilla recalled the same ordeal recounted by


Maria Sheila in her own criminal complaint. Mendenilla added that
she had been aware of her daughter's ordeal and that on July 21,
2005, Maria Sheila was admitted to St. Agnes General Hospital
for injuries borne by Pavlow's alleged acts of violence. [24]

On August 31, 2005, Judge Giron-Dizon issued a Temporary


Protection Order  in favor of Maria Sheila. Issued along with this
[25]

Order was a Summons  addressed to Pavlow.


[26]

In a Sheriff's Report with Clarification dated September 8, 2005,


 Deputy Sheriff Arturo M. Velasco (Deputy Sheriff Velasco)
[27]

recounted that when service of summons with the Temporary


Protection Order attached was attempted on September 7, 2005,
Pavlow was out of the country.  Thus, summons was served
[28]

instead through his employee, Tolentino, who also resided at


Pavlow's own residence in Unit 1503, Grand Tower Condominium,
150 L.P. Leviste St., Makati City. [29]

On September 13, 2005, Pavlow filed Omnibus Motions  praying [30]

for the dismissal of Mendenilla's petition, the reconsideration of


the issuance of the Temporary Protection Order, and the
suspension of the enforcement of the Temporary Protection
Order. He raised as principal ground the Regional Trial Court's
supposed lack of jurisdiction over his person as summons was
purportedly not properly served on him. [31]

In the Order dated December 6, 2005,  Judge Giron-Dizon [32]

denied Pavlow's motion to dismiss, reasoning that substituted


service of summons sufficed since the case filed by Mendenilla
was an action in personam because Pavlow was out of the
country during the service of summons. [33]

Following Judge Giron-Dizon's denial of Pavlow's motion for


reconsideration, Pavlow filed a Petition for Certiorari  before the [34]

Court of Appeals. He charged Judge Giron-Dizon with grave abuse


of discretion in refusing to dismiss Mendenilla's Petition despite
the alleged improper service of summons on him.  Petitioner [35]

further reasoned that Mendenilla lacked personality to file her


Petition  and that her filing of a petition only after Assistant City
[36]

Prosecutor Odronia dismissed Maria Sheila's criminal complaint


was considered forum shopping. [37]

In its assailed October 17, 2007 Decision,  the Court of Appeals


[38]

dismissed Pavlow's Petition for Certiorari. Likewise, the Court of


Appeals denied Pavlow's motion for reconsideration in its assailed
January 25, 2008 Resolution. [39]

Hence, the present Petition for Review on Certiorari  was filed. [40]

This petition concerns substantially the same issues as those


before the Court of Appeals:
First, whether respondent Cherry L. Mendenilla had personality to
file a petition for the issuance of a protection order under Section
8 of the Anti-VAWC Law  for the benefit of her daughter, Maria
[41]

Sheila Mendenilla Pavlow;

Second, whether respondent Mendenilla engaged in forum


shopping by filing a petition for the issuance of a protection order
after a criminal complaint under the Anti-VAWC Law was
dismissed by the prosecutor; and

Finally, whether summons was properly served on petitioner


Steven R. Pavlow and jurisdiction over his person was validly
acquired.

We sustain the ruling of the Court of Appeals and deny the


Petition.

The mother of a victim of acts of violence against women and


their children is expressly given personality to file a petition for
the issuance of a protection order by Section 9(b) of the Anti-
VAWC Law. However, the right of a mother and of other persons
mentioned in Section 9 to file such a petition is suspended when
the victim has filed a petition for herself. Nevertheless, in this
case, respondent Mendenilla filed her petition after her daughter's
complaint-affidavit had already been dismissed.

More basic, the filing of Maria Sheila's complaint-affidavit did not


even commence proceedings on her own petition for the issuance
of a protection order. Preliminary investigation, or proceedings at
the level of the prosecutor, does not form part of trial. It is not a
judicial proceeding that leads to the issuance of a protection
order. Thus, the pendency and subsequent dismissal of Maria
Sheila's Complaint-Affidavit did not engender the risk of
either litis pendentia or res judicata, which would serve the basis
of a finding of forum shopping by her mother.
I.A

Republic Act No. 9262 specifies three (3) distinct remedies


available to victims of acts of "violence against women and their
children":  first, a criminal complaint; second, a civil action for
[42]

damages; and finally, a civil action for the issuance of a


protection order.

A criminal complaint may be resorted to when the act of violence


against women and their children is committed through any,
some, or all of the nine (9) means which Section 5 of the Anti-
VAWC Law  specifies as constitutive of "[t]he crime of violence
[43]

against women and their children." If found guilty, the


perpetrator shall suffer the penalties stipulated under Section 6,
 i.e., imprisonment and payment of a fine. In addition, he or she
[44]

shall be made to undergo psychological counselling or psychiatric


treatment.

A civil action for damages may be resorted to pursuant to Section


36 of the Anti-VAWC Law:
Section 36. Damages. - Any victim of violence under this Act shall
be entitled to actual, compensatory, moral and exemplary
damages.
Rule V, Section 35 of the Implementing Rules and Regulations of
the Anti-VAWC Law  states that when a criminal action is also
[45]

available and is resorted to, "[t]he civil action for damages is


deemed instituted with the criminal action, unless an independent
civil action for damages is filed."

A protection order is issued "for the purpose of preventing further


acts of violence against a woman or her child . . . and granting
other necessary relief;"  thereby "safeguarding the victim from
[46]

further harm, minimizing any disruption in the victim's daily life,


and facilitating the opportunity and ability of the victim to
independently regain control over her life."  If issued, it shall
[47]

specify any, some, or all of the following reliefs:


(a) Prohibition of the respondent from threatening to commit or committing, personally
of the acts mentioned in Section 5 of this Act;

(b) Prohibition of the respondent from harassing, annoying, telephoning, co


communicating with the petitioner, directly or indirectly;

(c) Removal and exclusion of the respondent from the residence of the petitioner, reg
the residence, either temporarily for the purpose of protecting the petitioner, or
property rights are violated, and, if respondent must remove personal effects from
shall direct a law enforcement agent to accompany the respondent to the reside
respondent has gathered his things and escort respondent from the residence;

(d) Directing the respondent to stay away from petitioner and any designated family or
distance specified by the court, and to stay away from the residence, school, place
specified place frequented by the petitioner and any designated family or household

(e) Directing lawful possession and use by petitioner of an automobile and other es
regardless of ownership, and directing the appropriate law enforcement officer to a
to the residence of the parties to ensure that the petitioner is safely restored t
automobile and other essential personal effects, or to supervise the petitioner's or
personal belongings;

(f) Granting a temporary or permanent custody of a child/ children to the petitioner;

(g) Directing the respondent to provide support to the woman and/or her child if e
Notwithstanding other laws to the contrary, the court shall order an appropriate p
or salary of the respondent to be withheld regularly by the respondent's emplo
automatically remitted directly to the woman. Failure to remit and/or withhol
remittance of support to the woman and/or her child without justifiable cause sha
or his employer liable for indirect contempt of court;

(h) Prohibition of the respondent from any use or possession of any firearm or deadly w
surrender the same to the court for appropriate disposition by the court, including r
disqualification to apply for any license to use or possess a firearm. If the offend
agent, the court shall order the offender to surrender his firearm and shall direct t
to investigate on the offender and take appropriate action on the matter;

(i) Restitution for actual damages caused by the violence inflicted, including, but n
damage, medical expenses, childcare expenses and loss of income;

(j) Directing the DSWD or any appropriate agency to provide petitioner temporary
services that the petitioner may need; and
(k) Provision of such other forms of relief as the court deems necessary to protect and
the petitioner and any designated family or household member, provided petitio
family or household member consents to such relief. [48]

Republic Act No. 9262 allows for the issuance of three (3) kinds
of protection orders: a Barangay Protection Order, a Temporary
Protection Order, and a Permanent Protection Order. A Barangay
Protection Order is issued by a Punong Barangay or by a
Barangay Kagawad.  Temporary
[49]
protection orders and
permanent protection orders are judicial issuances obtained
through trial courts. [50]

As its name denotes, a temporary protection order is a


provisional relief. It shall be effective for 30 days, following a
court's "ex parte determination that such order should be
issued."  Within these 30 days, a hearing to determine the
[51]

propriety of issuing permanent protection order must be


conducted. The temporary protection order itself "shall include
notice of the date of the hearing on the merits of the issuance of
a [permanent protection order]." Following the conduct of a
hearing, a permanent protection order may be issued and "shall
be effective until revoked by a court upon application of the
person in whose favor the order was issued." [52]

I.B

Section 9 of the Anti-VAWC Law enumerates the persons who


may apply for the issuance of a protection order:
Section 9. Who May File Petition for Protection Orders. - A
petition for protection order may be filed by any of the following:

(a) the offended party;

(b) parents or guardians of the offended party;

(c) ascendants, descendants or collateral relatives within the fourth civil degree of cons

(d) officers or social workers of the DSWD or social workers of local government units (L

(e) police officers, preferably those in charge of women and children's desks;
(f) Punong Barangay or Barangay Kagawad;

(g) lawyer, counselor, therapist or healthcare provider of the petitioner;

(h) at least two (2) concerned responsible citizens of the city or municipality where the
and their children occurred and who has personal knowledge of the offense committ
As is clear from this enumeration, a petition for the issuance of
protection order is not limited to the alleged victim herself. The
victim's mother - as is the case with respondent Mendenilla - is
explicitly given the capacity to apply for a protection order for the
benefit of her child. By this clear statutory provision, Mendenilla
had the requisite personality to file a petition for the issuance of a
protection order in favor of Maria Sheila.

I.C

Petitioner claims, however, that Maria Sheila's prior filing of a


criminal complaint precluded Mendenilla's subsequent filing of a
petition for the issuance of a protection order. He capitalizes on
the second paragraph of Section 8, as well as on Section 33 of
A.M. No. 04-10-11-SC,  the procedural rules issued by this Court
[53]

governing proceedings under the Anti-VAWC Law.

Section 8 of A.M. No. 04-10-11-SC reads:


Section 8. Who may file petition. — A petition for protection order
may be filed by any of the following:

(a) The offended party;

(b) Parents or guardians of the offended party;

(c) Ascendants, descendants or collateral relatives of the offended party within the
consanguinity or affinity;

(d) Officers or social workers of the Department of Social Welfare and Development (D
of local government units (LGUs);

(e) Police officers, preferably those in charge of women and children's desks;
(f) Punong Barangay or Barangay Kagawad;

(g) lawyer, counselor, therapist or healthcare provider of the petitioner; or

(h) At least two concerned, responsible citizens of the place where the violence ag
children occurred and who have personal knowledge of the offense committed.

The filing of a petition for protection order by the offended parly


suspends the right of all other authorized parties to file similar
petitions. A petition filed by the offended party after the filing of a
similar petition by an authorized party shall not be dismissed but
shall be consolidated with the petition filed earlier. (Emphasis
supplied)
Section 33 of A.M. No. 04-10-11-SC reads:
Section 33. When petition may proceed separately from or be
deemed instituted with criminal action. — (a) An offended party
may file a petition for protection order ahead of a criminal action
arising from the same act. The same shall proceed separately
from the criminal action and shall require only a preponderance of
evidence. Upon motion of the petitioner, the court may
consolidate the petition with the criminal action.

(b) Where the offended party chooses to file a criminal action,


the petition for protection order is deemed instituted with the
criminal action, unless the offended parly reserves the right to
institute it separately. (Emphasis supplied)
Petitioner proceeds to argue that Mendenilla's filing of a separate
petition supposedly anchored on the same factual premises, and
seeking the same reliefs as those of the criminal complaint filed
by Maria Sheila is an act of forum-shopping. He, therefore, claims
that Mendenilla's petition should have been dismissed.

I.D

Petitioner's conclusions are misplaced.


The word used by Section 8 is "suspend." To suspend is to
momentarily, temporarily, or provisionally hold in abeyance. It is
not to perpetually negate, absolutely cancel, or otherwise
obliterate. The right of persons other than the victim to file a
petition for the issuance of a protection order therefore persists;
albeit, they may not exercise such right for as long as the petition
filed by the victim subsists.

Mendenilla's petition for the issuance of a protection order was


filed with the Quezon City Regional Trial Court after Assistant City
Prosecutor Odronia had already dismissed Maria Sheila's
complaint for slight physical injuries and maltreatment under the
Anti-VAWC Law. Thus, even if Maria Sheila's Complaint came with
a petition for the issuance of a protection order and even as
Section 8 of A.M. No. 04-10-11-SC stipulates the suspension of
other people's right to file petitions for the issuance of a
protection order, this suspension is rendered inefficacious by the
remission of Maria Sheila's prior petition. Stated otherwise, there
was no longer a prior petition to compel a suspension.

I.E

Petitioner's position, however, fails to account for an even more


fundamental and pivotal detail: Assistant City Prosecutor
Odronia's dismissal of the complaint-affidavit filed by Maria
Sheila came as a result of a preliminary investigation. This meant
that, to begin with, there was not even a prior judicial proceeding
which could lead to the issuance of a protection order. The
criminal action in which Maria Sheila would have been deemed to
have impliedly instituted her own petition for the issuance of a
protection order did not even commence.

Jurisprudence has long settled that preliminary investigation does


not form part of trial.  Investigation for the purpose of
[54]

determining whether an actual charge shall subsequently be filed


against the person subject of the investigation is a purely
administrative, rather than a judicial or quasi-judicial, function.
 It is not an exercise in adjudication: no ruling is made on the
[55]
rights and obligations of the parties, but merely evidentiary
appraisal to determine if it is worth going into actual adjudication.
[56]

The dismissal of a complaint on preliminary investigation by a


prosecutor "cannot be considered a valid and final
judgment."  As there is no former final judgment or order on the
[57]

merits rendered by the court having jurisdiction over both the


subject matter and the parties, there could not have been res
judicata — actual or looming as to bar one (1) of several
proceedings on account of litis pendentia — as to bar Mendenilla's
petition for being an act of forum shopping.

Res judicata is the conceptual backbone upon which forum


shopping rests. City of Taguig v. City of Makati,  explained in
[58]

detail the definition of forum shopping, how it is committed, and


the test for determining if it was committed. This test relies on
two (2) alternative propositions: litis pendentia and res judicata.
Even then, litis pendentia is itself a concept that merely proceeds
from the concept of res judicata:
Top Rate Construction & General Services, Inc. v. Paxton
Development Corporation explained that:
Forum shopping is committed by a party who institutes 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 or to grant the same or substantially the same
reliefs, on the supposition that one or the other court would make
a favorable disposition or increase a party's chances of obtaining
a favorable decision or action.

....
Jurisprudence has recognized that forum, shopping can be
committed in several ways:
(1) filing multiple cases based on the same cause of action and
with the same prayer, the previous case not having been resolved
yet (where the ground for dismissal is litis pendentia); (2) filing
multiple cases based on the same cause of action and the same
prayer, the previous case having been finally resolved (where the
ground for dismissal is res judicata); and (3) filing multiple cases
based on the same cause of action but with different prayers
(splitting of causes of action, where the ground for dismissal is
also either litis pendentia or res judicata). (Emphasis in the
original)

....
The test for determining forum shopping is settled. In Yap v.
Chua, et al.:
To determine whether a party violated the rule against forum
shopping, the most important factor to ask is whether the
elements of litis pendentia are present, or whether a final
judgment in one case will amount to res judicata in another;
otherwise stated, the test for determining forum shopping is
whether in the two (or more) cases pending, there is identity of
parties, rights or causes of action, and reliefs sought.
For its part, litis pendentia "refers to that situation wherein
another action is pending between the same parties for the same
cause of action, such that the second action becomes
unnecessary and vexatious." For litis pendentia to exist, three (3)
requisites must concur:
The requisites of litis pendentia are: (a) the identity of parties, or
at least such as representing the same interests in both actions;
(b) the identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the identity of the two
cases such that judgment in one, regardless of which party is
successful, would amount to res judicata in the other.
On the other hand, res judicata or prior judgment bars a
subsequent case when the following requisites are satisfied:
(1) the former judgment is final; (2) it is rendered by a court
having jurisdiction over the subject matter and the parties; (3) it
is a judgment or an order on the merits; (4) there is — between
the first and the second actions — identity of parties, of subject
matter, and of causes of action.  (Citations omitted)
[59]

Encinas v. Agustin  explained how a ruling in an investigative


[60]

exercise - such as fact-finding investigations and preliminary


investigation - could not be the basis of res judicata, or of forum
shopping. Its exhaustive and extensive discussion is worth
quoting at length:
[W]e rule that the dismissal of the BFP Complaint does not
constitute res judicata in relation to the CSCRO Complaint. Thus,
there is no forum-shopping on the part of respondents.

....

In order that res judicata may bar the institution of a subsequent


action, the following requisites must concur: (a) the former
judgment must be final; (b) it must have been rendered by a
court having jurisdiction over the subject matter and the parties;
(c) it must be a judgment on the merits; and (d) there must be
between the first and the second actions (i) identity of parties, (ii)
identity of subject matter, and (iii) identity of cause of action.

A judgment may be considered as one rendered on the merits


"when it determines the rights and liabilities of the parties based
on the disclosed facts, irrespective of formal, technical or dilatory
objections;" or when the judgment is rendered "after a
determination of which party is right, as distinguished from a
judgment rendered upon some preliminary or formal or merely
technical point."

In this case, there is no "judgment on the merits" in


contemplation of the definition above. The dismissal of the
BFP Complaint in the Resolution dated 05 July 2005 was
the result of a fact-finding investigation for purposes of
determining whether a formal charge for an administrative
offense should be filed. Hence, no rights and liabilities of
parties were determined therein with finality.

The [Court of Appeals] was correct in ruling that the doctrine


of res judicata applies only to judicial or quasi-judicial
proceedings, and not to the exercise of administrative powers.
Administrative powers here refer to those purely administrative in
nature, as opposed to administrative proceedings that take on a
quasi-judicial character.
In administrative law, a quasi-judicial proceeding involves (a)
taking and evaluating evidence; (b) determining facts based upon
the evidence presented; and (c) rendering an order or decision
supported by the facts proved. The exercise of quasi-judicial
functions involves a determination, with respect to the matter in
controversy, of what the law is; what the legal rights and
obligations of the contending parties are; and based thereon and
the facts obtaining, the adjudication of the respective rights and
obligations of the parties ...

....

The Court has laid down the test for determining whether an
administrative body is exercising judicial or merely investigatory
functions: adjudication signifies the exercise of the power and
authority to adjudicate upon the rights and obligations of the
parties. Hence, if the only purpose of an investigation is to
evaluate the evidence submitted to an agency based on the facts
and circumstances presented to it, and if the agency is not
authorized to make a final pronouncement affecting the parties,
then there is an absence of judicial discretion and judgment.

In this case, an analysis of the proceedings before the BFP yields


the conclusion that they were purely administrative in nature and
constituted a fact-finding investigation for purposes of
determining whether a formal charge for an administrative
offense should be filed against petitioner.

....

The proceedings before the BFP were merely investigative, aimed


at determining the existence of facts for the purpose of deciding
whether to proceed with an administrative action. This process
can be likened to a public prosecutor's preliminary
investigation, which entails a determination of whether
there is probable cause to believe that the accused is
guilty, and whether a crime has been committed.
The ruling of this Court in Bautista v. Court of Appeals is
analogously applicable to the case at bar. In that case, we ruled
that the preliminary investigation conducted by a public
prosecutor was merely inquisitorial and was definitely not a
quasi-judicial proceeding:
A closer scrutiny will show that preliminary investigation is very
different from other quasi-judicial proceedings. A quasi-judicial
body has been defined as "an organ of government other than a
court and other than a legislature which affects the rights of
private parties through either adjudication or rule-making."

....

On the other hand, the prosecutor in a preliminary


investigation does not determine the guilt or innocence of
the accused. He does not exercise adjudication nor rule-
making functions. Preliminary investigation is merely inquisitorial,
and is often the only means of discovering the persons who may
be reasonably charged with a crime and to enable the fiscal to
prepare his complaint or information. It is not a trial of the
case on the merits and has no purpose except that of
determining whether a crime has been committed and whether
there is probable cause to believe that the accused is guilty
thereof. While the fiscal makes that determination, he cannot be
said to be acting as a quasi-court, for it is the courts, ultimately,
that pass judgment on the accused, not the fiscal. (Emphases
supplied)
This principle is further highlighted in MERALCO v. Atilano, in
which this Court clearly reiterated that a public prosecutor, in
conducting a preliminary investigation, is not exercising a quasi-
judicial function. In a preliminary investigation, the public
prosecutor inspects the records and premises, investigates the
activities of persons or entities coming under the formers'
jurisdiction, or secures or requires the disclosure of information
by means of accounts, records, reports, statements, testimony of
witnesses, and production of documents. In contrast, judicial
adjudication signifies the exercise of power and authority to
adjudicate upon the rights and obligations of concerned
parties, viz.:
This is reiterated in our ruling in Spouses Balangauan v. Court of
Appeals, Special Nineteenth Division, Cebu City, where we
pointed out that a preliminary investigation is not a quasi-judicial
proceeding, and the DOJ is not a quasi-judicial agency exercising
a quasi-judicial function when it reviews the findings of a public
prosecutor regarding the presence of probable cause. A quasi-
judicial agency performs adjudicatory functions when its awards
determine the rights of parties, and its decisions have the same
effect as a judgment of a court. [This] is not the case when a
public prosecutor conducts a preliminary investigation to
determine probable cause to file an information against a person
charged with a criminal offense, or when the Secretary of Justice
[reviews] the former's order[s] or resolutions on determination of
probable cause.

In Odchigue-Bondoc, we ruled that when the public prosecutor


conducts preliminary investigation, he thereby exercises
investigative or inquisitorial powers. Investigative or inquisitorial
powers include the powers of an administrative body to inspect
the records and premises, and investigate the activities of
persons or entities coming under his jurisdiction, or to secure, or
to require the disclosure of information by means of accounts,
records, reports, statements, testimony of witnesses, and
production of documents. This power is distinguished from judicial
adjudication which signifies the exercise of power and authority to
adjudicate upon the rights and obligations of concerned parties.
Indeed, it is the exercise of investigatory powers which sets a
public prosecutor apart from the court. (Emphasis supplied)
 (Emphasis supplied, citations omitted)
[61]

Although the prosecutor's dismissal of a criminal complaint does


not give rise to res judicata vis-a-vis subsequent civil and quasi-
judicial proceedings, neither does it engender double jeopardy -
so-called "res judicata in prison grey" — should the alleged
perpetrator's criminal liability still be subsequently pursued.
In Trinidad v. Marcelo:[62]
Petitioner's arguments — that res judicata applies since the Office
of the Ombudsman twice found no sufficient basis to indict him in
similar cases earlier filed against him, and that the Agan cases
cannot be a supervening event or evidence per se to warrant a
reinvestigation on the same set of facts and circumstances — do
not lie.

Res judicata is a doctrine of civil law and thus has no bearing on


criminal proceedings.

But even if petitioner's argument were to be expanded to


contemplate "res judicata in prison grey" or the criminal law
concept of double jeopardy, this Court still finds it inapplicable to
bar the reinvestigation conducted by the Office of the
Ombudsman. For the dismissal of a case during preliminary
investigation does not constitute double jeopardy, preliminary
investigation not being part of the trial.  (Citations omitted)
[63]

Likewise, in Jamaca v. People: [64]

It should be borne in mind that for a claim of double jeopardy to


prosper, petitioner has to prove that a first jeopardy has attached
prior to the second. As stated in Braza v. Sandiganbayan, "[t]he
first jeopardy attaches only (a) after a valid indictment; (b)
before a competent court; (c) after arraignment; (d) when a valid
plea has been entered; and (e) when the accused was acquitted
or convicted, or the case was dismissed or otherwise terminated
without his express consent." In this case, the complaint before
the Office of the Deputy Ombudsman for the Military was
dismissed as early as the preliminary investigation stage, thus,
there was as yet, no indictment to speak of. No complaint or
Information has been brought before a competent court. Hence,
none of the aforementioned events has transpired for the first
jeopardy to have attached.

In Vincoy v. Court of Appeals, which is closely analogous to the


present case, the private complainant therein initially filed a
complaint with the Office of the City Prosecutor of Pasay City, but
said office dismissed the complaint. Private complainant then re-
filed the complaint with the Office of the City Prosecutor of Pasig
City. The Office of the Prosecutor of Pasig City found probable
cause and filed the Information against the accused therein. In
said case, the Court categorically held that:
The dismissal of a similar complaint . . . filed by [private
complainant] before the City Prosecutor's Office of Pasay City will
not exculpate the petitioner. The case cannot bar petitioner's
prosecution. It is settled that the dismissal of a case during its
preliminary investigation does not constitute double jeopardy
since a preliminary investigation is not part of the trial and is not
the occasion for the full and exhaustive display of the parties'
evidence but only such as may engender a well-grounded belief
that an offense has been committed and accused is probably
guilty thereof. For this reason, it cannot be considered equivalent
to a judicial pronouncement of acquittal.  (Citations omitted)
[65]

As deftly noted both by Judge Giron-Dizon and the Court of


Appeals, it was not within the prosecutor's competence to issue
or to direct the issuance of a protection order. Assistant City
Prosecutor Odronia could not have adjudicated the parties' rights
and obligation. That is, he was not in a position to rule on Maria
Sheila's right to be protected or on petitioner's duty to desist
from acts of violence:
Another allegation in the omnibus motion ... is that, plaintiff is
engaged in forum-shopping which merits the dismissal of the
petition because there is a pending criminal complaint for
violation of R.A. 9262 with the City Prosecutor's Office of Makati
City, which is docketed as I.S. No. 05E-6413 and handled by
Asst. City Prosecutor [Romel Odronia]. The said criminal
complaint involves the same parties and the same issue.

The Court is not persuaded. Granting arguendo that violation of


R.A. 9262 is included in the criminal complaint; the Asst. City
Prosecutor is devoid of power to issue a Temporary Protection
Order. Consequently, the aggrieved party in R.A. 9262 would
have no other immediate recourse but to file a TPO before the
court.[66]

Failing in the most basic requisites of forum shopping — there not


having been an actual or potential final judgment on the merits
rendered by a competent court in the course of criminal
proceedings - petitioner's allegations regarding respondent
Mendenilla's alleged lack of personality to file suit and forum
shopping must fail.

II

Petitioner further assails the manner of service of summons. He


claims that service of summons upon his employee, Tolentino, at
Unit 1503, Grand Tower Condominium, 150 L.P. Leviste St.,
Makati City,  while he was out of the country was ineffectual and
[67]

failed to vest jurisdiction over his person in the Regional Trial


Court.

He theorizes that in cases where a temporary protection order is


issued ex parte by a trial court, the temporary protection order
itself is the summons.  He adds that Section 15 of the Anti-
[68]

VAWC Law and Section 15 of A.M. No. 04-10-11-SC stipulate


personal service — and absolutely no other means of service — of
the temporary protection order upon the respondent.  Thus,[69]

service through Tolentino was ineffectual.

II.A

Petitioner's overly pedantic appreciation of the Anti-VAWC Law


and of A.M. No. 04-10-11-SC is grossly erroneous. The non-use
of the precise term "summons" in the Anti-VAWC Law, its
Implementing Rules and Regulations, and its procedural rules
provided in A.M. No. 04-10-11-SC does not justify the equation of
a temporary protection order with summons and the exclusion of
the use of summons.

The nature and purpose of summons is markedly different from


those of a protection order. This prevents the latter from being a
substitute for the former.

Summons is a procedural tool. It is a writ by which the defendant


is notified that an action was brought against him or her.  In an
[70]

action in personam, brought to enforce personal rights and


obligations, jurisdiction over the person of the defendant is
mandatory. In such actions, therefore, summonses serve not only
to notify the defendant of the filing of an action, but also to
enable acquisition of jurisdiction over his person.
[71]

A protection order is not a procedural mechanism, which is


imperative for the progression of an initiated action. Rather, it is
itself a substantive relief which "prevent[s] further acts of
violence against a woman or her child specified in Section 5 of
[the Anti-VAWC Law] and granting other necessary
relief."  Protection orders issued by courts come in two (2)
[72]

forms: temporary and permanent. The distinction, as their


respective names denote, is their duration. A temporary
protection order is provisional, whereas a permanent protection
order is lasting or final.

When a case is of particular urgency, a trial court may ex parte


issue a temporary protection order, granting the reliefs under
Section 8 of the Anti-VAWC Law in the interim, that is, for a 30-
day period.  Precisely because the case is of such particular
[73]

urgency that a temporary protection order is deemed necessary.


Section 15 of the Anti-VAWC Law includes a stipulation that the
temporary protection order must be immediately personally
served on the respondent. It provides, "The court shall order the
immediate personal service of the [temporary protection order]
on the respondent by the court sheriff who may obtain the
assistance of law enforcement agents for the service."

To determine whether the temporary protection order should be


made permanent and a complete, substantive relief extended to
the alleged victim, Section 15 of the Anti-VAWC Law mandates
the conduct of hearing within the 30-day effectivity of the
temporary protection order. The clear and specific singular
purpose of the hearing is manifest in Section 15: "[t]he court
shall schedule a hearing on the issuance of a [permanent
protection order] prior to or on the date of the expiration of the
[temporary protection order]." Because a hearing is to be
conducted, the respondent must necessarily be informed. Thus,
Section 15 further states that, "[t]he [temporary protection
order] shall include notice of the date of the hearing on the
merits of the issuance of a [permanent protection order]."

Clearly then, summons and temporary protection orders are


entirely different judicial issuances. It is true that the latter also
serves the purpose of conveying information. However, this
information pertains not to the filing of an action but merely to
the schedule of an upcoming hearing. The similarities of a
summons and a protection order begin and end with their
informative capacity. At no point does the Anti-VAWC Law
intimate that the temporary protection order is the means for
acquiring jurisdiction over the person of the respondent.

Section 15 of the Anti-VAWC Law's reference to "immediate


personal service" is an incident of the underlying urgency which
compelled the ex parte issuance of a protection order. It should
not be construed as a restriction on the manner of acquisition of
jurisdiction over the person of the respondent. Otherwise, far
from relieving a manifest urgency, it stifles a civil action for the
issuance of a protection order right at the moment of its
initiation. Construed as such, a temporary protection order is
twisted to a shrewdly convenient procedural tool for defeating the
very purposes for which it was issued in the first place.

II.B

Section 1 of A.M. No. 04-10-11-SC expressly states that while it


governs petitions for the issuance of protection orders under the
Anti-VAWC Law, "[t]he Rules of Court shall apply suppletorily." In
the silence of A.M. No. 04-10-11-SC, service of summons - the
means established by the 1997 Rules of Civil Procedure for
informing defendants and/or respondents of the filing of adverse
actions, and for the acquisition of jurisdiction over their persons -
remains efficacious.

Petitioner, though an American citizen, was admittedly a resident


of the Philippines as of September 7, 2005, the date when Deputy
Sheriff Velasco attempted to personally serve summons on him.
 On September 7, 2005, however, he was not in the Philippines.
[74]

It was this circumstance which, according to the Sheriff's Report,


 impelled substituted service of summons through Tolentino.
[75]

Rule 14, Section 6 of the 1997 Rules of Civil Procedure clearly


articulates a preference for personal service of summons:
Section 6. Service in person on defendant. - Whenever
practicable, the summons shall be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive
and sign for it, by tendering it to him.
Rule 14, Section 6 recognizes two (2) alternative ways through
which personal service may be effected: first, by actually handing
summons to the defendant, which presupposes the defendant's
willingness to accept the summons; and second, by mere tender,
if the defendant refuses to accept.

If personal service is impracticable within a reasonable time,


substituted service may be resorted to in lieu of personal service.
Rule 14, Section 7 states:
Section 7. Substituted service. - If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided
in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some
person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant's office or regular place of
business with some competent person in charge thereof.
In the case of residents who are temporarily not in the
Philippines, another alternative means for serving summons is
through extraterritorial service. Rule 14, Section 16 states:
Section 16. Residents temporarily out of the Philippines. — When
any action is commenced against a defendant who ordinarily
resides within the Philippines, but who is temporarily out of it,
service may, by leave of court, be also effected out of the
Philippines, as under the preceding section.
The preceding Section 15 spells out the terms of extraterritorial
service:
Section 15. Extraterritorial service. — When the defendant does
not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or
in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the
property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under Section 6; or by
publication in a newspaper of general circulation in such places
and for such time as the court may order, in which case a copy of
the summons and order of the court shall be sent by registered
mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such
leave shall specify a reasonable time, which shall not be less than
sixty (60) days after notice, within which the defendant must
answer.
II.C

Jurisprudence has long settled that, with respect to residents


temporarily out of the Philippines, the availability of
extraterritorial services does not preclude substituted service.
Resort to substituted service has long been held to be fair,
reasonable and just. This Court has noted that a contrary,
restrictive view is that which defeats the ends of justice. It has
been emphasized that residents who temporarily leave their
residence are responsible for ensuring that their affairs are in
order, and that, upon their return, they shall attend to exigencies
that may have arisen. In Montalban v. Maximo: [76]

This brings us to the question of procedural due process.


Substituted service . . . upon a temporarily absent resident, it has
been held, is wholly adequate to meet the requirements of due
process. The constitutional requirement of due process exacts
that the service be such as may be reasonably expected to give
the notice desired. Once the service provided by the rules
reasonably accomplishes that end, the requirement of justice is
answered; the traditional notions of fair play are satisfied; due
process is served.

....

Chief Justice Moran shares this view. Commenting on Section 18,


Rule 14, he states: "Since the defendant is residing in the
Philippines, jurisdiction over his person may be acquired by
Philippine courts by substituted service of summons under section
8. But extraterritorial service is allowed also by leave of court
according to the above provision [Section 18]." Justice Martin
regards the word "residence" in Section 8 as "the place where the
person named in the summons is living at the time when the
service is made, even though he may be temporarily out of the
state at the time."

This construction is but fair. It is in accord with substantial


justice. The burden on a plaintiff is not to be enlarged with a
restrictive construction as desired by defendant here. Under the
rules, a plaintiff, in the initial stage of suit, is merely required to
know the defendant's "dwelling house or residence" or his "office
or regular place of business" — and no more. He is not asked to
investigate where a resident defendant actually is, at the precise
moment of filing suit. Once defendant's dwelling house or
residence or office or regular place of business is known, he can
expect valid service of summons to be made on "some person of
suitable age and discretion then residing" in defendant's dwelling
house or residence, or on "some competent person in charge" of
his office or regular place of business. By the terms of the law,
plaintiff is not even duty-bound to see to it that the person upon
whom service was actually made delivers the summons to
defendant or informs him about it. The law presumes that for
him.

It is immaterial then that defendant does not in fact receive


actual notice. This will not affect the validity of the
service. Accordingly, the defendant may be charged by a
judgment in personam as a result of legal proceedings upon a
method of service which is not personal, "which in fact may not
become actual notice to him," and which may be accomplished in
his lawful absence from the country. For, the rules do not require
that papers be served on defendant personally or a showing that
the papers were delivered to defendant by the person with whom
they were left.

Reasons for the views just expressed are not wanting. A man
temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to
which any inquiry about him may be directed and where he is
bound to return. Where one temporarily absents himself, he
leaves his affairs in the hands of one who may be reasonably
expected to act in his place and stead; to do all that is necessary
to protect his interests; and to communicate with him from time
to time any incident of importance that may affect him or his
business or his affairs. It is usual for such a man to leave at his
home or with his business associates information as to where he
may be contacted in the event a question that affects him crops
up. If he does not do what is expected of him, and a case comes
up in court against him, he cannot in justice raise his voice and
say that he is not subject to the processes of our courts. He
cannot stop a suit from, being filed against him upon a claim that
he cannot be summoned at his dwelling house or residence or his
office or regular place of business.

Not that he cannot be reached within a reasonable time to enable


him to contest a suit against him. There are now advanced
facilities of communication. Long distance telephone calls and
cablegrams make it easy for one he left behind to communicate
with him.

In the light of the foregoing, we find ourselves unwilling to


concede that substituted service ... may be down-graded as an
ineffective means to bring temporarily absent residents within the
reach of our courts.  (Emphasis supplied, citations omitted)
[77]
We see no reason for holding as ineffectual the substituted
service of summons, which was recounted in the Sheriff's Report
dated September 8, 2005.

Rule 14, Section 7 stipulates that substituted service may be


resorted to "[i]f, for justifiable causes, the defendant cannot be
[personally] served within a reasonable time."

This case pertains to alleged acts of violence against a woman.


Petitioner was alleged to have physically and psychologically
assaulted his wife, Maria Sheila, on multiple occasions. Maria
Sheila was noted to have had to be confined in a medical facility
on account of petitioner's assaults. Maria Sheila's mother found
herself having to intervene to protect her daughter. The totality
of these entails an urgency which, by statute, justifies the
issuance of a temporary protection order even as the respondent
to Mendenilla's petition was yet to be heard. This is an urgency,
which the Regional Trial Court actually found to be attendant as it
did, in fact, issue a temporary protection order.

Time was of the essence. The exigencies of this case reveal a


backdrop of justifiable causes and how, by the convenience of
petitioner Steven Pavlow's temporary absence, immediate
personal service was rendered impossible. These exigencies
justified substituted service of summons upon petitioner during
his temporary absence through Monette Tolentino, a person of
suitable age and discretion, who also resided at petitioner's own
residence. Jurisdiction over petitioner's person was then validly
acquired, and the dismissal of respondent Cherry L. Mendenilla's
petition on this score was correctly held by Judge Natividad
Giron-Dizon to be unwarranted.

WHEREFORE, the Petition is DENIED. The assailed October 17,


2007 Decision and January 25, 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 94540 are AFFIRMED.

SO ORDERED.
Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,
concur.

[1]
 Rep. Act No. 9262, sec. 9 provides:

Section 9. Who May File Petition for Protection Orders. — A


petition for protection order may be filed by any of the following:

....

(b) parents or guardians of the offended party[.]

[2]
 Rep. Act No. 9262, sec. 5 provides:

Section 5. Acts of Violence Against Women and Their Children. -


The crime of violence against women and their children is
committed through any of the following acts:

(a) Causing physical harm to the woman or her child;


(b) Threatening to cause the woman or her child physical harm;
(c) Attempting to cause the woman or her child physical harm;
(d) Placing the woman or her child in fear of imminent physical harm;
(e) Attempting to compel or compelling the woman or her child to engage in conduct w
right to desist from or to desist from conduct which the woman or her child has th
restrict or restricting the woman's or her child's freedom of movement or conduct b
other harm or threat of physical or other harm, or intimidation directed against
include, but not limited to, the following acts committed with the purpose or e
woman's or her child's movement or conduct:
(1) Threatening to deprive or actually depriving the woman or her child of custody or a
(2) Depriving or threatening to deprive the woman or her children of financial supp
deliberately providing the woman's children insufficient financial support;
(3) Depriving or threatening to deprive the woman or her child of a legal right;
(4) Preventing the woman in engaging in any legitimate profession, occupation, bu
victim's own money or properties, or solely controlling the conjugal or common mo
(f) Inflicting or threatening to inflict physical harm on oneself for the purpose of contro
(g) Causing or attempting to cause the woman or her child to engage in any sexual ac
by force or threat of force, physical harm, or through intimidation directed again
immediate family;
(h) Engaging in purposeful, knowing, or reckless conduct, personally or through anoth
emotional or psychological distress to the woman or her child. This shall include
acts:
(1) Stalking or following the woman or her child in public or private places;
(2) Peering in the window or lingering outside the residence of the woman or her child;
(3) Entering or remaining in the dwelling or on the property of the woman or her child
(4) Destroying the property and personal belongings or inflicting harm to animals or pe
(5) Engaging in any form of harassment or violence;
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman o
to, repeated verbal and emotional abuse, and denial of financial support or custody
to the woman's child/children.

[3]
 Rollo, pp. 10-55.

 Id. at 60-87. The Decision was penned by Associate Justice


[4]

Sixto C. Marella, Jr. and concurred in by Associate Justices Mario


L. Guarina III and Japar B. Dimaampao of the Sixteenth Division,
Court of Appeals, Manila.

 Id. at 89-90. The Resolution was penned by Associate Justice


[5]

Sixto C. Marella, Jr. and concurred in by Associate Justices


Amelita G. Tolentino and Lucenito N. Tagle of the Former
Sixteenth Division, Court of Appeals, Manila.

[6]
 Id. at 187-193. Order.

[7]
 Id. at 183-186.

[8]
 Id. at 148-167.

[9]
 Id. at 191.

[10]
 Id. at 144-147. Resolution.

[11]
 Id. at 91-95.

[12]
 Id. at 189-191.
[13]
 Id. at 61-62.

[14]
 Id. at 62.

[15]
 Id. at 91-95.

[16]
 Id. at 92-93.

[17]
 Id.

[18]
 Id. at 93.

[19]
 Id.

[20]
 Id.

[21]
 Id. at 94.

[22]
 Id. at 65-66.

[23]
 Id. at 148-167.

[24]
 Id. at 151.

[25]
 Id. at 176-180.

[26]
 Id. at 175.

[27]
 Id. at 181-182.

[28]
 Id. at 19-20.

[29]
 Id. at 181 and 81.

[30]
 Id. at 183-186.

[31]
 Id. at 183.
[32]
 Id. at 187-193.

[33]
 Id. at 189-190.

[34]
 Id. at 205-248.

[35]
 Id. at 216-229.

[36]
 Id. at 241-245.

[37]
 Id. at 229-241.

[38]
 Id. at 60-87.

[39]
 Id. at 89-90.

[40]
 Id. at 10-55.

 Section 8. Protection Orders. - A protection order is an order


[41]

issued under this Act for the purpose of preventing further acts of
violence against a woman or her child specified in Section 5 of
this Act and granting other necessary relief. The relief granted
under a protection order should serve the purpose of
safeguarding the victim from further harm, minimizing any
disruption in the victim's daily life, and facilitating the opportunity
and ability of the victim to independently regain control over her
life. The provisions of the protection order shall be enforced by
law enforcement agencies. The protection orders that may be
issued under this Act are the barangay protection order (BPO),
temporary protection order (TPO) and permanent protection
order (PPO). The protection orders that may be issued under this
Act shall include any, some or all of the following reliefs:

(a) Prohibition of the respondent from threatening to commit or committing, personall


mentioned in Section 5 of this Act;
(b) Prohibition of the respondent from harassing, annoying, telephoning, contacting o
petitioner, directly or indirectly;
(c) Removal and exclusion of the respondent from the residence of the petitioner, rega
either temporarily for the purpose of protecting the petitioner, or permanently w
and, if respondent must remove personal effects from the residence, the court sh
accompany the respondent to the residence, remain there until respondent h
respondent from the residence;
(d) Directing the respondent to stay away from petitioner and any designated family
specified by the court, and to stay away from the residence, school, place of
frequented by the petitioner and any designated family or household member;
(e) Directing lawful possession and use by petitioner of an automobile and other ess
ownership, and directing the appropriate law enforcement officer to accompany t
parties to ensure that the petitioner is safely restored to the possession of the aut
effects, or to supervise the petitioner's or respondent's removal of personal belongi
(f) Granting a temporary or permanent custody of a child/children to the petitioner;
(g) Directing the respondent to provide support to the woman and/or her child if entit
other laws to the contrary, the court shall order an appropriate percentage of the i
be withheld regularly by the respondent's employer and for the same to be a
woman. Failure to remit and/or withhold or any delay in the remittance of sup
without justifiable cause shall render the respondent or his employer liable for indir
(h) Prohibition of the respondent from any use or possession of any firearm or deadly
the same to the court for appropriate disposition by the court, including revocat
apply for any license to use or possess a firearm. If the offender is a law enforcem
offender to surrender his firearm and shall direct the appropriate authority to i
appropriate action on the matter;
(i) Restitution for actual damages caused by the violence inflicted, including, but not
expenses, childcare expenses and loss of income;
(j) Directing the DSWD or any appropriate agency to provide petitioner temporary she
petitioner may need; and
(k) Provision of such other forms of relief as the court deems necessary to protec
petitioner and any designated family or household member, provided petitioner an
member consents to such relief.

Any of the reliefs provided under this section shall be granted


even in the absence of a decree of legal separation or annulment
or declaration of absolute nullity of marriage.

The issuance of a BPO or the pendency of an application for BPO


shall not preclude a petitioner from applying for, or the court
from granting a TPO or PPO.

[42]
 Defined in Section 3(a) of Rep. Act No. 9262, as follows:
Section. 3. Definition of Terms. - As used in this Act, (a)
"Violence against women and their children" refers to any act or a
series of acts committed by any person against a woman who is
his wife, former wife, or against a woman with whom the person
has or had a sexual or dating relationship, or with whom he has a
common child, or against her child whether legitimate or
illegitimate, within or without the family abode, which result in or
is likely to result in physical, sexual, psychological harm or
suffering, or economic abuse including threats of such acts,
battery, assault, coercion, harassment or arbitrary deprivation of
liberty. It includes, but is not limited to, the following acts:

A. "Physical violence" refers to acts that include bodily or physical harm;


B. "Sexual violence" refers to an act which is sexual in nature, committed against a w
not limited to:
a) rape, sexual harassment, acts of lasciviousness, treating a woman or her child as
sexually suggestive remarks, physically attacking the sexual parts of the victi
obscene publications and indecent shows or forcing the woman or her child to
thereof, forcing the wife and mistress/lover to live in the conjugal home or sleep
abuser;
b) acts causing or attempting to cause the victim to engage in any sexual activity
other harm or threat of physical or other harm or coercion;
c) Prostituting the woman or her child.
C. "Psychological violence" refers to acts or omissions causing or likely to cause m
victim such as but not limited to intimidation, harassment, stalking, damage to pr
repeated verbal abuse and marital infidelity. It includes causing or allowing the vic
psychological abuse of a member of the family to which the victim belongs, or to w
witness abusive injury to pets or to unlawful or unwanted deprivation of the
common children.
D. "Economic abuse" refers to acts that make or attempt to make a woman financially
limited to the following:
1 withdrawal of financial support or preventing the victim from engaging in any legitim
or activity, except in cases wherein the other spouse/partner objects on valid, ser
Article 73 of the Family Code;
2 deprivation or threat of deprivation of financial resources and the right to the
community or property owned in common;
3 destroying household property;
4 controlling the victim's own money or properties or solely controlling the conjugal m

[43]
 Rep. Act No. 9262, sec. 5 provides:
Section 5. Acts of Violence Against Women and Their Children. —
The crime of violence against women and their children is
committed through any of the following acts:

(a)
(b)
(c)
(d)
(e)
(1) Threatening to deprive or actually depriving the woman or her child of custod
(2) Depriving or threatening to deprive the woman or her children of financial su
deliberately providing the woman's children insufficient financial support;
(3) Depriving or threatening to deprive the woman or her child of a legal right;
(4) Preventing the woman in engaging in any legitimate profession, occupation,
victim's own money or properties, or solely controlling the conjugal or comm
(f)
(g)
(h)
(1) Stalking or following the woman or her child in public or private places;
(2) Peering in the window or lingering outside the residence of the woman or her
(3) Entering or remaining in the dwelling or on the property of the woman or her
(4) Destroying the property and personal belongings or inflicting harm to anima
and
(5) Engaging in any form of harassment or violence;
(i)

[44]
 Republic Act No. 9262, sec. 6 provides:

Section. 6. Penalties. — The crime of violence against women and


their children, under Section 5 hereof shall be punished according
to the following rules:

(a) Acts falling under Section 5(a) constituting attempted,


frustrated or consummated parricide or murder or homicide shall
be punished in accordance with the provisions of the Revised
Penal Code. If these acts resulted in mutilation, it shall be
punishable in accordance with the Revised Penal Code; those
constituting serious physical injuries shall have the penalty of
prision mayor; those constituting less serious physical injuries
shall be punished by prision correccional; and those constituting
slight physical injuries shall be punished by arresto mayor.

Acts falling under Section 5(b) shall be punished by imprisonment


of two (2) degrees lower than the prescribed penalty for the
consummated crime as specified in the preceding paragraph but
shall in no case be lower than arresto mayor.

(b) Acts falling under Section 5(c) and 5(d) shall be punished by
arresto mayor;

(c) Acts falling under Section 5(e) shall be punished by prision


correccional;

(d) Acts falling under Section 5(f) shall be punished by arresto


mayor;

(e) Acts falling under Section 5(g) shall be punished by prision


mayor;

(f) Acts falling under Section 5(h) and Section 5(i) shall be
punished by prision mayor.

If the acts are committed while the woman or child is pregnant or


committed in the presence of her child, the penalty to be applied
shall be the maximum period of penalty prescribed in this section.
In addition to imprisonment, the perpetrator shall (a) pay a fine
in the amount of not less than One hundred thousand pesos
(P100,000.00) but not more than Three hundred thousand pesos
(P300,000.00); (b) undergo mandatory psychological counseling
or psychiatric treatment and shall report compliance to the court.

[45]
 Rep. Act No. 9262, sec. 35 provides:

Section 35. Damages. - Any victim-survivor of violence under the


Act shall be entitled to actual, compensatory, moral and
exemplary damages.
The civil action for damages is deemed instituted with the
criminal action, unless an independent civil action for damages is
filed.

[46]
 Rep. Act No. 9262, sec. 8.

[47]
 Rep. Act No. 9262, sec. 8.

[48]
 Rep. Act No. 9262, sec. 8.

[49]
 Rep. Act No. 9262, sec. 14 provides:

Section 14. Barangay Protection Orders (BPOs); Who May Issue


and How. - Barangay Protection Orders (BPOs) refer to the
protection order issued by the Punong Barangay ordering the
perpetrator to desist from committing acts under Section 5(a)
and (b) of this Act. A Punong Barangay who receives applications
for a BPO shall issue the protection order to the applicant on the
date of filing after ex parte determination of the basis of the
application. If the Punong Barangay is unavailable to act on the
application for a BPO, the application shall be acted upon by any
available Barangay Kagawad. If the BPO is issued by a Barangay
Kagawad, the order must be accompanied by an attestation by
the Barangay Kagawad that the Punong Barangay was
unavailable at the time for the issuance of the BPO. BPOs shall be
effective for fifteen (15) days. Immediately after the issuance of
an ex parte BPO, the Punong Barangay or Barangay Kagawad
shall personally serve a copy of the same on the respondent, or
direct any barangay official to effect its personal service.

The parties may be accompanied by a non-lawyer advocate in


any proceeding before the Punong Barangay.

 The second sentence of Section 10 of Rep. Act No. 9262 states:


[50]

"An application for a TPO or PPO may be filed in the regional trial
court, metropolitan trial court, municipal trial court, municipal
circuit trial court with territorial jurisdiction over the place of
residence of the petitioner: Provided, however, That if a family
court exists in the place of residence of the petitioner, the
application shall be filed with that court."

[51]
 Rep. Act No. 9262, sec. 15 provides:

Section 15. Temporary Protection Orders. - Temporary Protection


Orders (TPOs) refers to the protection order issued by the court
on the date of filing of the application after ex parte
determination that such order should be issued. A court may
grant in a TPO any, some or all of the reliefs mentioned in this
Act and shall be effective for thirty (30) days. The court shall
schedule a hearing on the issuance of a PPO prior to or on the
date of the expiration of the TPO. The court shall order the
immediate personal service of the TPO on the respondent by the
court sheriff who may obtain the assistance of law enforcement
agents for the service. The TPO shall include notice of the date of
the hearing on the merits of the issuance of a PPO.

[52]
 Rep. Act No. 9262, sec. 16.

[53]
 Rule on Violence Against Women and Their Children, (2004).

 Trinidad v. Marcelo, 564 Phil. 382, 389 (2007) [Per J. Carpio-


[54]

Morales, En Banc].

 Encinas v. Agustin, 709 Phil. 236, 257 (2013) [Per C.J. Sereno,
[55]

En Banc].

[56]
 Id.

 Apolinario v. Flores, 541 Phil. 108, 118 (2007) [Per J. Carpio,


[57]

Second Division].

 City of Taguig v. City of Makati, G.R. No. 208393, June 15,


[58]

2016 [Per J. Leonen, Second Division].

[59]
 Id.
 Encinas v. Agustin, 709 Phil. 236 (2013) [Per C.J. Sereno, En
[60]

Banc].

[61]
 Id. at 254-260.

 Trinidad v. Marcelo, 564 Phil. 382 (2007) [Per J. Carpio-


[62]

Morales, En Banc].

[63]
 Id. at 389.

 G.R.
[64]
No. 183681, July 27, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/july2015/183681.pdf> [Per J. Peralta,
Third Division].

[65]
 Id. at 4-5.

 Rollo, p. 84. The Assistant City Prosecutor's name was


[66]

mistakenly typed as "Rommel Ordonio."

[67]
 Id. at 181 and 81.

[68]
 Id. at 29.

[69]
 Id. at 27-30.

 Cano-Guttierez v. Guttierez, 395 Phil. 903, 910 (2000) [Per J.


[70]

Kapunan, First Division]; Guanzon v. Arradaza, 539 Phil. 367,


374 (2006) [Per J. Chico-Nazario, First Division].

 Umandap v. Sabio, 393 Phil. 657, 663 (2000) [Per J. Gonzaga-


[71]

Reyes, Third Division]. Cf. actions in rem or quasi in rem where


what is imperative is jurisdiction over the res. In these actions,
service of summons upon the defendant primarily serves the
interest of due process, and not so much the purpose of acquiring
jurisdiction over his or her person.
[72]
 Rep. Act No. 9262, sec. 8.

[73]
 Rep. Act No. 9262, sec. 15.

[74]
 Rollo, p. 81.

[75]
 Id. at 181-182.

[76]
 131 Phil. 154 (1968) [Per J. Sanchez, En Banc].

[77]
 Id. at 162-165.

Source: Supreme Court E-Library | Date created: August 03, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 207776, April 26, 2017 ]


PEOPLE OF THE PHILIPPINES, PETITIONER, VS.
GEORGE GACUSAN, RESPONDENT.DECISION

LEONEN, J.:

The abuse of moral influence is the intimidation required in rape


committed by the common-law father of a minor.

This Court resolves this appeal filed by George Gacusan


(Gacusan) from the August 31, 2012 Decision  of the Court of [1]
Appeals in CA-G.R. CR H.C. No. 04832. The assailed decision
affirmed the Regional Trial Court's ruling that Gacusan was guilty
beyond reasonable doubt of rape in Criminal Case No. 2009-
0581-D. [2]

An information for rape docketed as Criminal Case No. 2009-


0581-D was filed before the Regional Trial Court, Branch 43 of
Dagupan City against Gacusan on October 16, 2009.  The [3]

information provided:
That at around 11 [o]'clock in the evening of October 14, 2009 in
Brgy. [Inmalog], San Fabian, Pangasinan, Philippines and within
the jurisdiction of this Honorable Court, the above-named
accused, did then and there, wilfully, unlawfully and feloniously
have carnal knowledge [of AAA], a 15 year old minor, by having
sexual intercourse with her, against her will and consent, to her
damage and prejudice.

CONTRARY to Article 266-A of the Revised Penal Code, as


amended by [Republic Act No.] 8353. [4]

Upon arraignment, Gacusan pleaded not guilty to the charge. [5]

Trial on the merits ensued. The evidence for the prosecution


showed that victim AAA's mother was BBB and CCC was her
father.  When AAA was asked about her father, she claimed that
[6]

her deceased father had abandoned them. [7]

Gacusan was BBB's common-law partner.  At the onset of their


[8]

relationship, BBB moved in to Gacusan's house.  Within eight (8)


[9]

months of BBB's common-law relationship with Gacusan, she


died, leaving AAA an orphan.  Even though AAA's paternal
[10]

grandmother was still alive, AAA opted to stay with Gacusan "as
life was harder living with her grandmother than with her
stepfather." [11]

When BBB was still alive, AAA slept in a separate room in


Gacusan's house.  When BBB died, AAA began sleeping beside
[12]

Gacusan because of her fear of ghosts. [13]


At around 10:00 p.m. to 11:00 p.m. of October 14, 2009, "AAA
was trying to sleep beside [Gacusan] when" she felt Gacusan's
hand touching her private parts inside her shorts.  DDD, [14]

Gacusan's 19-year old son, was sleeping on a folding bed in the


same room.  AAA said that she did not attempt to remove
[15]

Gacusan's hand because she was already used to it.  Gacusan [16]

"brought out his penis and inserted it through the leg opening of
[AAA]'s shorts. During this time, AAA was on her back while
[Gacusan] was on his side, facing her and trying to lift her
leg."  Gacusan was able to penetrate AAA's vagina then
[17]

proceeded to do a "'push and pull' movement".  When AAA felt


[18]

Gacusan's penis inside her, she got up to go to the bathroom to


urinate.  Thereafter, "AAA went back to sleep beside
[19]

[Gacusan]." [20]

According to AAA, although she felt pain when Gacusan raped


her, "she did not shout [because] she was ... afraid of him ...
[S]he was afraid to lose [a] family and she depended on
[Gacusan for] support[.]"  She also claimed that she "was
[21]

already 15 years old [on the date of the alleged rape] and had
been living with [Gacusan] for five years."  AAA confessed that
[22]

Gacusan was already molesting her two (2) years after BBB's
death. [23]

The next day after the rape incident, AAA confided to her teacher
Aurora Fabia (Fabia).  Fabia informed the school principal, Delia
[24]

Patalud, of A.ANs story, prompting them to report the case to the


police.  Gacusan was then brought to police custody.
[25] [26]

Thereafter, AAA was brought to the Medical Center of Dagupan


City where she was examined by Dr. Marlene Quimoy (Dr.
Quimoy).  The Medico-Legal Report showed that AAA had
[27]

multiple lacerations and spermatozoa in her vagina, as


corroborated by the testimony of Dr. Quimoy as follows: [28]

Dr. Quimoy testified that when she examined AAA, she


discovered the presence of fresh erythema or redness and slight
swelling around AAA's hymen. She explained that erythema [was]
consistent with penetrating trauma caused by a finger or a penis.
In addition to the erythema found around AAA's hymen, Dr.
Quimoy also noted the presence of multiple healed lacerations
consistent with infliction of trauma approximately 72 hours to 21
days prior to the examination. Although no fresh lacerations were
discovered, Dr. Quimoy revealed that she found spermatozoa
inside the vagina of AAA, which may have been caused by a
shallow insertion of the penis and ejaculation into the vagina.
Having only taken a sample of the sperm cell, Dr. Quimoy
admitted that she did not preserve the spermatozoa sample. Dr.
Quimoy opined that based on her examination, AAA is a
victim of sexual abuse.  (Emphasis supplied, citation omitted)
[29]

On the other hand, the defense presented Gacusan as its sole


witness.  He admitted that AAA was his deceased common-law
[30]

partner's daughter.  Gacusan,


[31]
however, denied all the
accusations against him. He identified his 21 and 15-year old
sons and stated that all of them lived in the same house.  He [32]

insisted that he treated AAA as his own child. [33]

On the date of the rape incident, he claimed that all of them were
watching television until 11:00 pm.  He also disputed having
[34]

raped AAA "several times prior to October 14, 2009." [35]

On December 2, 2010, the Regional Trial Court convicted


Gacusan of simple rape.  It found AAA's testimony as credible to
[36]

establish the sordid acts committed against her.  AAA's [37]

testimony was "clear, sincere, spontaneous and


candid."  Moreover, it found no trace of improper motive for AAA
[38]

to concoct an accusation.  The trial court found that AAA only


[39]

succumbed to Gacusan's act for fear that she might lose a family.
[40]

The trial court also ruled that in rape committed by a father to his
daughter, it is the father's moral ascendancy that replaces
violation and intimidation.  Thus, this principle "applies in the
[41]

case of a sexual abuse of a stepdaughter by her stepfather and of


a goddaughter by a godfather in the sacrament of
confirmation."  Furthermore, the medico-legal findings were
[42]

consistent with AAA's testimony that she was raped.  Hence, [43]
there is a sufficient basis to conclude that the essential requisites
of carnal knowledge have been established.  The dispositive
[44]

portion of the decision read:


WHEREFORE, in view of the foregoing, the Court finds the
accused GEORGE GACUSAN GUILTY beyond reasonable doubt
for the crime of simple rape under Article 266-A of the Revised
Penal Code as amended by [Republic Act No.] 8353 and is hereby
sentenced to suffer the penalty of reclusion perpetua. He is
likewise ordered to pay AAA civil indemnity in the amount of
P50,000.00, moral damages in the amount of P50,000.00 and
P30,000 as exemplary damages.

SO ORDERED.  (Emphasis in the original)


[45]

In his appeal, Gacusan insisted that his guilt was not proven
beyond reasonable doubt because "the prosecution failed to prove
the elements of force, threat or intimidation" in the rape incident.
[46]

In its August 31, 2012 Decision, the Court of Appeals affirmed


Gacusan's conviction.  The Court of Appeals ruled that "in
[47]

incestuous rape or those committed by the common law spouse


of the victim's parent, evidence of force and intimidation is not
necessary to secure a conviction."  "[I]n rape committed by an
[48]

ascendant, close kin, a step parent or a common law spouse of a


parent, moral ascendancy takes the place of force and
intimidation."  Furthermore, AAA's testimony and positive
[49]

identification of Gacusan as the person who raped her, as well as


the medical findings confirming the rape, prevail over the bare
denials of Gacusan.  Thus, [50]

WHEREFORE, the instant appeal is DENIED. The Decision dated


December 2, 2010 of the Regional Trial Court Branch 43,
Dagupan City in Criminal Case No. 2009-0581-D finding appellant
George Gacusan GUILTY beyond reasonable doubt of simple
rape under Article 266-A of the Revised Penal Code, as amended
by Republic Act No. 8353 is AFFIRMED.

SO ORDERED.  (Emphasis in the original)


[51]

Hence, an appeal before this Court has been submitted.


On June 27, 2013,  the Court of Appeals elevated to this Court
[52]

the records of this case pursuant to its Resolution  dated [53]

November 15, 2012. The Resolution gave due course to the


Notice of Appeal  filed by the accused-appellant.
[54]

In the Resolution dated August 12, 2013,  this Court noted the
[55]

records of the case forwarded by the Court of Appeals. The


parties were then ordered to file their supplemental briefs, should
they desire, within 30 days from notice. [56]

On October 24, 2013, the Office of the Solicitor General filed a


manifestation  dated October 23, 2013 on behalf of the People of
[57]

the Philippines stating that it would no longer file a supplemental


brief.  A similar manifestation  was filed by the Public Attorney's
[58] [59]

Office on behalf of accused-appellant Gacusan.

The sole issue for resolution is whether Gacusan's guilt was


proven beyond reasonable doubt despite the alleged failure of the
prosecution to prove that Gacusan employed force, threat, or
intimidation in raping AAA.

Gacusan claims that the employment of force, threat, or


intimidation under Article 266-A of the Revised Penal Code was
not satisfactorily proven by the prosecution. [60]

He insists that only when the offended party is either under


twelve (12) years of age or is demented that the elements of
force, threat or intimidation may be dispensed with.  Since it was
[61]

admitted that AAA was already fifteen (15) years old at the time
of the alleged rape, the prosecution should have proven that the
incident was accompanied by force, threat, or intimidation. [62]

Gacusan also asserts that he was unarmed and AAA just "let him
do what he wanted."  Thus, he concludes:
[63]

She, in effect, consented to [Gacusan's] advances,


inasmuch as, according to her, she was used to it as he
always did it or he had done it many times before. After the
advances subsided, according to her again, she stood up to
urinate and then went back to sleep-just the same beside him.
She did not cry. She did not protest. She did not complain. She
did not exhibit any sign of pain or physical suffering. She just
went back to bed and slept, beside him, again, as if nothing
happened.  (Emphasis supplied)
[64]

On the other hand, the Office of the Solicitor General claims that
Gacusan's argument has no merit.  It cites People v. Corpuz,
[65]

 which states that "[i]n rape committed by a close kin, such as


[66]

the victim's father, stepfather, uncle, or the common-law spouse


of her mother, it is not necessary that actual force or intimidation
be employed; moral influence or ascendancy takes the place of
violence or intimidation."  It further asserts that "AAA's failure to
[67]

show outward signs of resistance to appellant's sexual advances"


does not equate to consent.  Thus, [68]

She was an orphan young girl, who was much insecure and
embattled. In her misfortune, she tried to hang on with what little
form of security and stability she could conceive. Unfortunately, it
was under her so called savior's hand that her childhood
innocence was torn apart. [69]

Furthermore, it cites People v. Noveras  to emphasize that there


[70]

is no need to establish physical resistance when a victim submits


because of fear due to the threats and intimidation employed by
the perpetrator.  Physical resistance is not the only test in
[71]

determining "whether a woman involuntarily succumbed to the


lust of an accused."  Thus, rape victims react differently to the
[72]

situation.
[73]

The appeal lacks merit.

Sections 266-A and 266-B of the Revised Penal Code, as


amended by Republic Act No. 8353 or the Anti-Rape Law of 1997,
provide that:
Article 266-A. Rape; When And How Committed. - Rape is
Committed
1) By a man who shall have carnal knowledge of a woman under
any of the following circumstances:

a.  Through force, threat, or intimidation;

....

Article 266-B. Penalties. - Rape under paragraph 1 of the next


preceding article shall be punished by reclusion perpetua.
(Emphasis supplied)
AAA admitted that despite the pain she felt, she neither protested
nor shouted at the time of the rape incident.  Thus,
[74]

COURT:
Q: Did [you] feel pain while he was doing that to you?
A: Yes, sir.
Q: Why did you not shout?

PROS. ESPINOZA:
May I make on record, Your Honor, that the witness is crying.

WITNESS:
A: Because I am very much afraid of him, sir.
Q: Why are you so afraid of him?
A: Because I am afraid that I will lose a family, sir.
Q: You mean, you are dependent on him?
A: Yes, sir.
Q: He is the one supporting your needs as well as your food?
A: Yes, sir.  (Emphasis supplied)
[75]

Appellant contends that his guilt was not proven beyond


reasonable doubt since the prosecution failed to introduce
evidence that will prove the elements of force, intimidation, or
threat.  He underscores that AAA let him do "whatever he
[76]

wanted and even acted as if nothing happened." [77]

Gacusan's contention is unavailing.

The testimony of AAA reveals that the reason she did not shout
during the alleged rape was that she was afraid of losing a family.
 It is reasonable to assume that she was terrified of losing
[78]
someone who provided her support after losing her biological
mother. She testified that she could not find comfort from her
grandmother. [79]

"[D]ifferent people react differently to a given type of situation,


and there is no standard form of human behavioral response
when one is confronted with a strange, startling or frightful
experience."  One person may react aggressively, while another
[80]

may show cold indifference.  Also, it is improper to judge the


[81]

actions of children who are victims of traumatic experiences "by


the norms of behavior expected under the circumstances from
mature people."  From AAA's view, it appeared that the danger
[82]

of losing a family was more excruciating than physical pain. [83]

Furthermore, a victim should never be blemished for her lack of


resistance to any crime especially as heinous as rape.  Neither [84]

the failure to shout nor the failure to resist the act equate to a
victim's voluntary submission to the appellant's lust. [85]

II

Recent cases  reiterating that moral ascendancy replaces


[86]

violence or intimidation in rape committed by a close-kin


cited People v. Corpuz. [87]

In Corpuz, the accused was the live-in partner of the victim's


mother.  The victim, AAA, was 13 years old when accused
[88]

Corpuz started raping her.  The repeated rape incidents made


[89]

AAA pregnant. [90]

Accused Corpuz admitted his sexual encounters with AAA.  He [91]

insisted, however, that he never forced himself to AAA since he


even courted her.  Similarly, he admitted that he was the father
[92]

of AAA's child. [93]

Nonetheless, this Court affirmed his conviction and held that:


[I]n rape committed by a close kin, such as the victim's father,
stepfather, uncle, or the common-law spouse of her mother,
it is not necessary that actual force or intimidation be employed;
moral influence or ascendancy takes the place of violence or
intimidation.  (Emphasis provided)
[94]

In People v. Fraga,  accused Fraga raped the daughters of his


[95]

common-law partner.  Fraga tried evading his conviction by


[96]

shifting from his defense of alibi to lack of force or intimidation.


 While this Court affirmed Fraga's conviction since force and
[97]

intimidation was sufficiently proven, it also emphasized that:


[A]ccused-appellant started cohabiting with complainants' mother
in 1987. As the common-law husband of their mother, he gained
such moral ascendancy over complainants that any more
resistance than had been shown by complainants cannot
reasonably be expected.  (Emphasis provided)
[98]

In People v. Robles,  accused Robles raped his common-law


[99]

wife's daughter.  This Court affirmed his conviction and likened


[100]

Robles' moral ascendancy over the victim to that of a biological


father; thus:
Moral ascendancy and influence by the accused, stepfather of the
12 year-old complainant, and threat of bodily harm rendered
complainant subservient to appellant's lustful desires... Actual
force or intimidation need not even be employed for rape
to be committed where the over powering influence of a
father over his daughter suffices.  (Emphasis provided, [101]

citation omitted)
Gacusan had moral ascendancy over AAA.

In this case, therefore, the issue regarding the need to prove


actual force or intimidation becomes superfluous since it was
already established that Gacusan was the common-law partner of
AAA's deceased mother.

Furthermore, apart from Gacusan's moral ascendancy over AAA,


it is apparent that he also had physical advantage over her. Given
all these reasons, AAA was left without any other choice but to
succumb to Gacusan's sordid acts.

III
AAA's failure to openly verbalize Gacusan's use of force, threat,
or intimidation does not adversely affect the prosecution's case as
long as there is enough proof that there was sexual intercourse.[102]

The Regional Trial Court found that AAA's testimony "ha[s] been
delivered in a clear, sincere, spontaneous and candid
manner."  Moreover, AAA's positive identification of the accused
[103]

as the one who raped her was corroborated by the Medico-Legal


Report and the testimony of Dr. Quimoy.  Dr. Quimoy testified
[104]

that AAA had "spermatozoa and multiple healed lacerations in her


vagina and redness and swelling on her hymen, consistent with
penetrating trauma." [105]

"It is settled that when the victim's testimony is corroborated by


the physician's finding of penetration, there is sufficient
foundation to conclude the existence of the essential requisite of
carnal knowledge."  A healed or fresh laceration "is the best
[106]

physical evidence of forcible defloration."  AAA's lacerations on


[107]

the hymen, therefore, have sufficiently established that there was


sexual intercourse.

AAA's testimony, as well as her positive identification of the


accused, was at par with the findings of the examining physician
that she was raped. This cannot be outweighed by Gacusan's
bare denial of the accusations against him. The prosecution's
positive assertions deserve more credence than the negative
averment of the accused. [108]

After evaluating the records of this case, this Court resolves to


affirm the conviction of the accused and dismiss the appeal, there
being no reversible error in the assailed decision that would
warrant the exercise of this Court's appellate jurisdiction.
However, in accordance with People v. Jugueta,  where this
[109]

Court clarified that "when the circumstances of the crime call for
the imposition of reclusion perpetua only, the civil indemnity and
moral damages should be P75,000.00 each, as well as exemplary
damages in the amount of P75,000.00."  Thus, we modify the
[110]
award of civil indemnity, moral damages, and exemplary
damages to P75,000.00 each.

WHEREFORE, the findings of fact and conclusions of law of the


Court of Appeals are ADOPTED. The assailed August 31, 2012
Decision of the Court of Appeals is AFFIRMED with
MODIFICATION. Accused-appellant George Gacusan is found
guilty beyond reasonable doubt of the crime of Rape. He is
sentenced to suffer the penalty of reclusion perpetua and to pay
private complainant P75,000.00 as civil indemnity, P75,000.00 as
moral damages, P75,000.00 as exemplary damages, and the
costs of the suit.

In line with current jurisprudence, interest at the rate of six


percent (6%) per annum should be imposed on all damages
awarded from the date of the finality of this judgment until fully
paid. [111]

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

 Rollo, pp. 2-16. The Decision was penned by Associate Justice


[1]

Magdangal M. De Leon and concurred in by Associate Justices


Stephen C. Cruz and Myra V. Garcia-Fernandez of the Eleventh
Division, Court of Appeals, Manila.

[2]
 Id. at 15-16.

[3]
 CA rollo, p. 9.

 Id. The Information referred to the barangay as "Brgy. Inmalug


[4]

Sur," while the Court of Appeals' Decision referred to it as "Brgy.


Inmatug, Sur."
[5]
 Rollo, p. 3.

[6]
 Id. at 4.

[7]
 Id.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id. at 5.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id.

[22]
 Id.

[23]
 Id.
[24]
 Id.

[25]
 Id.

[26]
 Id.

[27]
 Id. at 6.

[28]
 Id.

[29]
 Id.

[30]
 Id.

[31]
 Id. and 7.

[32]
 Id. at 7.

[33]
 Id.

[34]
 Id.

[35]
 Id.

[36]
 Id.

[37]
 CA rollo, p. 30.

[38]
 Id.

[39]
 Id.

[40]
 Id.

[41]
 Id.

[42]
 Id.
[43]
 Id. at 31.

[44]
 Id.

 Id. at 32. The Decision, docketed as Crim. Case No. 2009-


[45]

0581-D, was penned by Judge Caridad V. Galvez of Regional Trial


Court, Branch 43, Dagupan City.

[46]
 Id. at 76.

[47]
 Rollo, pp. 15-16.

[48]
 Id. at 11. Citation omitted.

[49]
 Id. at 12-13. Citation omitted.

[50]
 Id. at 15.

[51]
 Id. at 15 16.

[52]
 Id. at 1.

[53]
 CA rollo, p. 124.

[54]
 Id. at 120-120-A.

[55]
 Rollo, p. 23.

[56]
 Id.

[57]
 Id. at 26-28.

[58]
 Id. at 26.

[59]
 Id. at 31-33.

[60]
 CA rollo, p. 76.
[61]
 Id. at 75.

[62]
 Id.

[63]
 Id. at 78.

[64]
 Id.

[65]
 Id. at 102.

[66]
 597 Phil. 459 (2009) [Per J. Carpio-Morales, Second Division].

[67]
 Id. at 467.

[68]
 CA rollo, p. 105.

[69]
 Id. at 105.

[70]
 550 Phil. 871 (2007) [Per J. Callejo, Sr., Third Division].

[71]
 CA rollo, p. 105. HIL 871, 887.

[72]
 Id.

[73]
 Id.

[74]
 Id. at 117.

[75]
 Id.

[76]
 Rollo, p 11.

[77]
 Id.

[78]
 Id. at 12.

[79]
 Id. at 4.
 People v. Lor, 413 Phil. 725, 734 (2001) [Per J. Ynares-
[80]

Santiago, En Banc].

[81]
 Id.

[82]
 Id.

[83]
 Rollo, p. 15.

 People v. Barberan, G.R. No. 208759, June 22, 2016


[84]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/june2016/208759.pdf> 6 [Per J. Perez,
Third Division].

[85]
 Id.

 See People v. Padua y Felomina, 661 Phil. 366 (2011) [Per J.


[86]

Brion, Third Division]; People v. Dimanawa, 628 Phil. 678 (2010)


[Per J. Nachura, Third Division]; People v. Ofemiano, 625 Phil. 92
(2010) [Per J. Velasco, Jr., Third Division]; People v. Viojela y
Asartin, 697 Phil. 513 (2012) [Per J. Leonardo-De Castro, First
Division].

[87]
 597 Phil. 459 (2009) [Per J. Carpio-Morales, Second Division].

[88]
 Id. at 463.

[89]
 Id.

[90]
 Id.

[91]
 Id. at 464.

[92]
 Id. at 463.

[93]
 Id. at 464.

[94]
 Id. at 467.
[95]
 386 Phil. 884 (2000) [Per J. Mendoza, En Banc].

[96]
 Id. at 907.

[97]
 Id. at 906

[98]
 Id. at 907.

[99]
 252 Phil. 579 (1989) [Per J. Paras, Second Division].

[100]
 Id. at 580.

 Id. at 583. While the case refers to the accused as the victim's
[101]

stepfather, a reading of the facts revealed that he was only the


common law spouse of the victim's biological mother.

 People v. Servano, 454 Phil. 256, 280 (2003) [Per J. Corona,


[102]

En Banc].

[103]
 CA rollo, p. 115-A.

[104]
 Id. at 116.

[105] Id.

 People v. Noveras, 550 Phil. 871, 887 (2007) [Per J. Callejo Sr,
[106]

Third Division].

[107]
 Id. Citation omitted.

 People v. Baroy, 431 Phil. 638, 655 (2002) [Per J. Panganiban,


[108]

En Banc].

 G.R.
[109]
No. 202124, April 5, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april20166/202124.pdf> [Per J. Peralta,
En Banc].
[110]
 Id. at 27.

 See Nacar v. Gallery Frames, G.R. No. 189871, August 13,


[111]

2013, 703 SCRA 439, 458 [Per J. Peralta, En Banc].

Source: Supreme Court E-Library | Date created: June 16, 2017


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 229862, June 19, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. ZZZ, ACCUSED-APPELLANT.
DECISION

LEONEN, J.:

Recantations are viewed unfavorably especially in rape cases.


Circumstances in which the recantation was made are thoroughly
examined before the evidence of retraction can be given any
weight.

Before this Court is a criminal case for rape committed by the


common-law spouse of the victim's mother. Accused-appellant
ZZZ assails the September 30, 2016 Decision  of the Court of [1]

Appeals in CA-G.R. CR-HC No. 01769, which affirmed his


conviction in the June 25, 2013 Judgment  of the Regional Trial
[2]

Court.

On May 23, 2006, an Information  was filed against ZZZ charging


[3]

him with the crime of rape:


That on or about 11:00 o'clock (sic) on the morning of the 12th
day of April 2006, in the City of xxxxxxxxxxx, Philippines and
within the jurisdiction of this Honorable Court, the said accused,
the live-in partner of the mother of the victim, by means of force
and intimidation, did then and there willfully, unlawfully and
feloniously have carnal knowledge of the victim [AAA], a minor
fourteen (14) years old, against her will.
Contrary to Article 266-A, in relation to 266-B of the Revised
Penal Code. [4]

ZZZ pleaded not guilty to the crime charged during his


arraignment on July 19, 2006. Pre-trial was held on October 25,
2006. Trial on the merits then ensued. [5]

The prosecution presented AAA  and Dr. Edalin Dacula (Dr.


[6]

Dacula) as its witnesses. [7]

AAA narrated that in the afternoon of April 12, 2006, she had
fallen asleep after doing laundry, while her stepfather, ZZZ, was
doing carpentry works. Suddenly, she woke up and found ZZZ on
top of her, his lower body naked. He then sat on the floor with his
penis showing and removed her short pants and underwear, after
which he went back on top of her and masturbated. He took
AAA's hands and put them on his penis,  telling her that if she
[8]

became pregnant, "he [would] be happy."  ZZZ then inserted his


[9]

penis into her vagina "and sat, kissed her face, touched her
vagina[,] and kissed her breast." [10]

AAA later reiterated on cross-examination that ZZZ put his penis


into her vagina. She failed to see the act, but felt it. She also felt
pain on her vagina's side, caused by the penis' insertion. [11]

Dr. Dacula, who conducted the medical examination on AAA,


testified that she had found redness and abrasion on the right
side of the victim's labia minora, "caused by a smooth, soft
object"  as indicated in the Medico-Legal Report.
[12] [13]

Meanwhile, the defense presented as witnesses: (1) AAA's


mother BBB; (2) ZZZ; and (3) AAA, on her affidavit of
recantation. [14]

BBB testified that ZZZ had been her common-law spouse for four
(4) years. At 10:00 a.m. on April 12, 2006, she and her
stepdaughter, CCC, went for a 30-minute walk to the barangay
hall to request a toilet bowl, as instructed by ZZZ. They went
back home after being told that the toilet bowl was not yet
available. [15]

When she arrived at their house, BBB was surprised to see that
the door and window were shut. Upon opening the door, she saw
AAA sitting and ZZZ standing, both silent. BBB got mad and
whipped ZZZ with a plastic hose, but he remained silent. [16]

Thinking that her daughter was raped, BBB brought AAA to the
barangay hall. Then, with the assistance of the Department of
Social Welfare and Development and the police, they went
to xxxxxxxxxxx City for AAA's physical examination. [17]

On cross-examination, BBB stated that she brought AAA to the


barangay hall "because her vision at that time was blurred as if
she cannot notice a person[.]"  Maintaining that their house was
[18]

closed when she first arrived from the barangay hall, she
reiterated seeing ZZZ and AAA inside when she opened the door
and thinking that her daughter was raped.[19]

ZZZ testified that he was BBB's common-law spouse. He took


AAA as his stepdaughter, supporting her since childhood. He
narrated that at 6:00 a.m. on April 12, 2006, he was working on
the kitchen in their house while AAA and DDD did the laundry.
Meanwhile, BBB proceeded to the barangay hall to check if the
toilet bowl they requested was already available.
ZZZ further narrated that at around 10:00 a.m. on April 12,
2006, DDD and AAA were eating breakfast after they had finished
washing clothes. AAA then went up the second floor of their
house and slept, while he was then Installing an electric bulb in
the kitchen. When BBB arrived, she opened the door at once.
 AAA "was surprised because [BBB] was shouting as if she was
[20]

dreaming."  BBB asked ZZZ if he raped AAA, which he denied.


[21]

He was around 12 meters away from AAA, holding a hammer on


the window. BBB then went to AAA and pinched her
"bulog[.]"  Afterwards, BBB grabbed a hose and whipped ZZZ,
[22]

who was able to parry the strike. BBB then went out with AAA
only to return the following morning. [23]

ZZZ claimed that BBB was influenced by her cousins to accuse


him.  The cousins were allegedly mad at him and wanted BBB
[24]

and him to separate since he was "not a useful person." [25]

On cross-examination, ZZZ stated that the house's window and


door were always shut because the house was still unfinished. He
restated that when BBB arrived, she saw him standing by the
window and AAA sitting at a corner of their house. He reiterated
that BBB whipped him with a hose.  He added that when he saw
[26]

AAA crying, he thought that she would not pinpoint him as her
rapist "because her conscience [was] bothered." [27]

On August 8, 2008, AAA executed her Affidavit of Recantation


and Desistance,  praying that the rape case be dismissed. She
[28]

claimed that her declarations during the direct and cross-


examinations "were done under duress and that she was afraid of
the authorities at that time[.]"  Maintaining that ZZZ did not
[29]

rape her, she claimed that she was forced by a certain EEE to file
the rape case.

On cross-examination, AAA testified that she was not compelled


by the prosecutor to testify. Contrary to her Affidavit, she also
admitted that she was not under duress when she was presented
as a witness. She recalled crying during the direct examination
and pointing to ZZZ as her rapist when she was asked. EEE, she
added, was their neighbor. [30]

In its June 25, 2013 Judgment,  the Regional Trial Court found
[31]

ZZZ guilty beyond reasonable doubt of simple statutory rape. [32]

The trial court found that the prosecution failed to establish AAA's
minority. It did not present documentary evidence, such as her
birth certificate, or even testimonial evidence to prove that AAA
was a minor when the crime was committed. [33]

The trial court further gave weight to AAA's declaration that she
was raped. It noted her sincerity during trial and her candid and
straightforward manner in giving her testimony. It held that her
allegations were corroborated by Dr. Dacula's findings and BBB's
subsequent acts in bringing AAA to the barangay officials, the
Department of Social Welfare and Development, and the police. [34]

The trial court did not give merit to ZZZ's denial for being
unsubstantiated. It further held that instead of discrediting the
prosecution's evidence, AAA's Affidavit of Recantation and
Desistance bolstered her earlier statements by reaffirming that:
(1) ZZZ sexually molested her; (2) the prosecutor did not force
her to testify; and (3) she was not put under duress. [35]

The dispositive portion of the Regional Trial Court Judgment read:


WHEREFORE, based on the prevailing facts, evidences, law and
jurisprudence applicable, the court finds accused [ZZZ] GUILTY
BEYOND REASONABLE DOUBT of the crime of simple statutory
rape and hereby sentenced him to suffer the penalty of
imprisonment of reclusion perpetua. He is hereby ordered to pay
to the victim civil indemnity in the amount of P50,000.00 and
moral damages in the amount of P50,000.00 without proof of its
basis.

SO ORDERED. [36]
ZZZ appealed  before the Court of Appeals. In turn, the People of
[37]

the Philippines, represented by the Office of the Solicitor General,


filed its Brief.
[38]

In its September 30, 2016 Decision,  the Court of Appeals denied


[39]

the appeal and affirmed the trial court Judgment with


modification.  It declared that the trial court erroneously used
[40]

the word "statutory" since it was not established that AAA was
below 12 years old when the crime was committed. Nonetheless,
the error was harmless because the penalty meted and the
monetary awards granted were for the crime of simple rape.  It [41]

sustained ZZZ's conviction based on AAA's "vivid recollection"  of


[42]

how rape was committed against her. [43]

The Court of Appeals did not give merit to ZZZ's argument that
the prosecution failed to prove the presence of force,
intimidation, threat, fraud, or grave abuse of authority.
 Citing People v. Arpon,  it held that the moral influence or
[44] [45]

ascendancy of the common-law spouse of the victim's mother


replaced the elements of violence and intimidation. [46]

Likewise, the Court of Appeals gave no merit to either AAA's


recantation or the argument that her lack of hymenal laceration
negated the crime of rape. [47]

The dispositive portion of the Court of Appeals Decision read:


WHEREFORE, the appeal is DENIED. The Judgment dated June
25, 201.3, of the Regional Trial Court, Branch 63, Bayawan City,
in Criminal Case No. 529 is hereby AFFIRMED, but with
modification only in that the word "statutory" in the dispositive
portion thereof is DELETED.

SO ORDERED. [48]

Hence, ZZZ appealed his case before this Court. [49]

On April 5, 2017, this Court issued a Resolution  requiring the


[50]

parties to file their supplemental briefs. The parties filed their


respective Manifestations,  stating that they would no longer file
[51]
their supplemental briefs as they had sufficiently exhausted their
arguments in their Briefs before the Court of Appeals. [52]

Accused-appellant argues that the crime of statutory rape was


not proven because the prosecution failed to sufficiently establish
AAA's minority, which the trial court also noted. [53]

Assuming that the prosecution established her age, accused-


appellant contends that he was still wrongly convicted of
statutory rape. Pointing out that AAA's alleged age in the
Information was 14 years old, he argues that under the law and
jurisprudence, the victim must be below 12 years old for the
crime to be statutory rape.[54]

Accused-appellant avers that since the case does not involve


statutory rape, the presence of force, intimidation, threat, fraud,
or grave abuse of authority must be established in the alleged
crime's commission. He contends that the prosecution failed to
show these circumstances. [55]

Moreover, accused-appellant alleges that AAA's "[inconsistent and


improbable statements[,]"  particularly on direct examination
[56]

and on her Affidavit of Recantation and Desistance, raised doubts


on the credibility of her allegations.
[57]

Accused-appellant also points out that Dr. Dacula only found


redness and abrasion, and not hymenal laceration, which should
have been present had there been sexual intercourse.  These [58]

manifestations "could have been easily caused by pinching,


scratching, or wearing very tight underwear." [59]

Lastly, accused-appellant argues that the prosecution should not


draw its strength on the alleged weakness of the defense.  He [60]

maintains that he should be acquitted considering that his guilt


was not proven beyond reasonable doubt. [61]

Plaintiff-appellee counters that accused-appellant was actually


convicted not of statutory rape, but of simple rape, and was
meted with the penalty of simple rape. Hence, even if the trial
court erroneously included the word "statutory" in describing the
crime, there was no effect in the imposed penalty. [62]

Plaintiff-appellee insists that accused-appellant's guilt was proven


beyond reasonable doubt.  It was able to establish the following
[63]

elements:
First. [AAA] was then 14-year old when appellant had sexual
intercourse with her.

Second. Appellant who is the common-law husband of [AAA's]


mother exercises moral ascendancy and authority over her.

Third. [AAA] testified that appellant had carnal knowledge of her


on April 12, 2006 at about 11:00 o'clock (sic) in the morning
while her mother went to the Barangay Hall to do an errand for
appellant.  (Emphasis in the original)
[64]

Plaintiff-appellee maintains that AAA's narration of the incident


proves that accused-appellant raped her.  It adds that
[65]

recantations are usually viewed unfavorably since it can be


secured by intimidating the witness or in exchange of monetary
consideration.  It alleges that AAA's recantation was doubtful
[66]

because BBB and accused-appellant continued their common-law


relationship and AAA's new claim "was a mere legal conclusion,
bereft of any details or other indicia of credibility, much less
truth."
[67]

Finally, plaintiff-appellee contends that AAA's intact hymen is not


fatal to its cause. In the crime of rape to be consummated, it is
sufficient that the penis touched the pudendum or the labia. [68]

The sole issue for this Court's resolution is whether or not


accused-appellant ZZZ's guilt for the crime of rape has been
proven beyond reasonable doubt.

In arguing for his innocence, accused-appellant maintains that


the element of force, intimidation, threat, fraud, or grave abuse
of authority in the crime of rape was not established, and that the
element of the victim's minority in the crime of statutory rape
was not proven. Moreover, AAA's recantation and her intact
hymen both negate the allegation of rape.

Accused-appellant's contentions have no merit.

Article 266-A of the Revised Penal Code defines rape as:


Article 266-A. Rape; When and How Committed. — Rape is
committed —

1) By a man who shall have carnal knowledge of a woman under


any of the following circumstances:

a) Through force, threat, or intimidation;

b) When the offended party is deprived of reason or otherwise unconscious;

c) By means of fraudulent machination or grave abuse of authority; and

d) When the offended party is under twelve (12) years of age or is demented, ev
circumstances mentioned above be present.

2) By any person who, under any of the circumstances mentioned


in paragraph 1 hereof, shall commit an act of sexual assault by
inserting his penis into another person's mouth or anal orifice, or
any instrument or object, into the genital or anal orifice of
another person.
After a careful examination of the case records, this Court holds
that the prosecution has established beyond reasonable doubt
that accused-appellant is guilty of raping AAA. The trial court also
found AAA's testimony credible and supported by evidence:
The candid, straightforward and unrehearsed testimony of victim
[AAA] who declared against the bestial acts of the accused on her
person and maintained that she was required to hold his penis
and thereafter, again, rode on top of her placing his penis on her
vagina is corroborated by the unrefuted findings of Dr. Edalin L.
Dacula who found that the abrasion and redness in color on the
right side of the labia minora is caused by a smooth, soft object.
A smooth, soft object is a penis and that the abrasion and
redness in color on the right side of the labia minora is caused
probably by the friction of the hardened and erected penis of the
accused. That was why the victim complained that she felt pain
on her vagina. [69]

The Court of Appeals, likewise, found that AAA's testimony during


the direct examination showed that she clearly remembered how
accused-appellant committed the crime:
PROS. BALBUENA ON DIRECT EXAMINATION:

(COURT INTERRUPTED)

COURT . . . Which come (sic) first, the raping or the masturbating?

WITNESS The raping.

Q How did he rape --- How did the accused rape you?

....

A First, he positioned himself on top of me and then he undressed me, and then
masturbated. He let me hold his penis, kissed me. On top of me, he kissed me
sat on the floor and masturbated, and then he let me hold his penis, and t
himself on top of me.

Q Court. Tell in straight words; answer 'yes' or 'no'. Did he place his penis insid

A Yes.

....

[ON CROSS EXAMINATION]

(COURT INTERRUPTED)

Q Did you feel?

A Yes.
Q And what was your feeling?

A Pain

Q What was painful?

A At the side

Q Of what?

A The side of my vagina.

Q Why?

A Because his penis [was] in my vagina.  (Emphasis in the original)


[70]

This Court finds no reason to disturb the findings of the trial court
and the Court of Appeals. In People v. Quintos: [71]

The observance of the witnesses' demeanor during an oral direct


examination, cross-examination, and during the entire period that
he or she is present during trial is indispensable especially in rape
cases because it helps establish the moral conviction that an
accused is guilty beyond reasonable doubt of the crime charged.
Trial provides judges with the opportunity to detect, consciously
or unconsciously, observable cues and microexpressions that
could, more than the words said and taken as a whole, suggest
sincerity or betray lies and ill will. These important aspects can
never be reflected or reproduced in documents and objects used
as evidence.

Hence, "[t]he evaluation of the witnesses' credibility is a matter


best left to the trial court because it has the opportunity to
observe the witnesses and their demeanor during the trial. Thus,
the Court accords great respect to the trial court's findings," more
so when the Court of Appeals affirmed such findings.  (Citations
[72]

omitted)
There is also no merit in accused-appellant's argument that force,
intimidation, threat, fraud, or grave abuse of authority was not
present. In People v. Gacusan,  this Court reiterated that "[t]he
[73]
abuse of moral influence is the intimidation required in rape
committed by the common-law father of a minor." [74]

As to the inclusion of the word "statutory" in the dispositive


portion of the trial court Judgment, this Court holds that it was
erroneously added by the trial court judge.

In People v. Dalan: [75]

The gravamen of the offense of statutory rape, as provided for in


Article 266-A, paragraph 1 (d) of the Revised Penal Code, as
amended, is the carnal knowledge of a woman below 12 years
old. To convict an accused of the crime of statutory rape, the
prosecution must prove: first, the age of the complainant;
second, the identity of the accused; and last but not the least,
the carnal knowledge between the accused and the complainant.
 (Citation omitted)
[76]

Here, the Information against accused-appellant did not allege


AAA to be below 12 years old, but 14 years old, when the crime
was committed upon her. The trial court even held that without
documentary or testimonial evidence, the prosecution failed to
substantiate the qualifying circumstance of minority. Despite this,
it still found him guilty of simple statutory rape and imposed the
penalty of reclusion perpetua.

Nonetheless, this Court finds that the penalty imposed on


accused-appellant is correct as it is the penalty for offenders who
were found guilty beyond reasonable doubt of simple rape under
Article 266-B  of the Revised Penal Code.
[77] [78]

II

As a rule, affidavits of desistance are viewed with skepticism and


reservation because they can be "easily obtained for monetary
consideration or through intimidation."[79]

Based on the circumstances here, this Court cannot give any


weight to AAA's Affidavit of Recantation and Desistance.
If the crime did not really happen, AAA would have made the
Affidavit at the earliest instance—but she did not. Instead, she
executed it more than two (2) years after the crime had been
committed. If the crime did not really happen, she would not
have submitted herself to physical examination or hours of
questioning—but she did.

Moreover, her recollection on how accused-appellant committed


the crime was detailed; her testimony, consistent. There was no
evidence that AAA was forced or pressured by the prosecutor to
take the witness stand, as manifested by her answer during the
cross-examination:
PROS. BALBUENA ON CROSS EXAMINATION:

Q: Now, Mrs. (sic) Witness, can you recall having testified in this case?

A: Yes.

Q: In fact, it was I who presented you as our witness, Mrs. (sic) Witness?

A: Yes.

Q: And when you testified Mrs. (sic) Witness, of course, this Fiscal did not force
not right?

A: I was not forced.

Q: So, in your testimony when you were presented by the prose[cu]tion as our w
under duress then, Mrs. (sic) Witness?

ATTY. CABUSAO: Objection Your honor. What has be[e]n testified by the witness, Yo
Prosecutor who forced her, Your Honor.

PROS. BALBUENA: I am on cross examination, Your Honor and the credibility of this wit
Honor.

COURT: Okay, let her answer.

....
WITNES
S:
A: I was not forced by the Fiscal.  (Emphasis in the original, citation omitted)
[80]

Likewise, the absence of hymenal laceration fails to exonerate


accused-appellant. As explained in People v. Osing: [81]

[M]ere touching, no matter how slight of the labia or lips of the


female organ by the male genital, even without rupture or
laceration of the hymen, is sufficient to consummate rape. The
absence of fresh hymenal laceration does not disprove sexual
abuse, especially when the victim is a young girl[.]  (Citation [82]

omitted)
This Court has consistently held that an intact hymen does not
negate the commission of rape.  The element of rape does not
[83]

even include hymenal laceration:


The absence of external signs or physical injuries on the
complainant's body does not necessarily negate the commission
of rape, hymenal laceration not being, to repeat, an element of
the crime of rape. A healed or fresh laceration would of course be
a compelling proof of defloration. What is more, the foremost
consideration in the prosecution of rape is the victim's testimony
and not the findings of the medico-legal officer. In fact, a medical
examination of the victim is not indispensable in a prosecution for
rape; the victim's testimony alone, if credible, is sufficient to
convict.  (Citations omitted)
[84]

The guilt of accused-appellant having been proven beyond


reasonable doubt for the crime of rape, the penalty of reclusion
perpetua was correctly imposed. However, in line with prevailing
jurisprudence,  this Court increases the amount of civil indemnity
[85]

to P75,000.00 and moral damages to P75,000.00. Exemplary


damages of P75,000.00 shall also be awarded to AAA. [86]

Finally, a six percent (6%) per annum legal interest shall be


imposed on all the damages awarded to AAA from the date of
finality of the judgment until fully paid. [87]

WHEREFORE, the Court of Appeals' September 30, 2016


Decision in CA-G.R. CR-HC No. 01769 is AFFIRMED. Accused-
appellant ZZZ is found GUILTY beyond reasonable doubt of rape,
as punished under Article 266-B of the Revised Penal Code. He is
sentenced to suffer the penalty of reclusion perpetua.

Accused-appellant is further DIRECTED to pay AAA: (1) Seventy-


Five Thousand Pesos (P75,000.00) as moral damages; (2)
Seventy-Five Thousand Pesos (P75,000.00) as civil indemnity;
and (3) Seventy-Five Thousand Pesos (P75,000.00) as exemplary
damages.

All damages awarded shall be subject to interest at the rate of six


percent (6%) per annum from the finality of this Decision until its
full satisfaction.

SO ORDERED.

A. Reyes, Jr., and Inting, JJ., concur.


Peralta, (Chairperson), and Hernando, JJ., on official leave.

July 22, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 19, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 22, 2019 at 3:35 p.m.
 Rollo, pp. 4-13. The Decision was penned by Associate Justice
[1]

Edward B. Contreras, and concurred in by Associate Justices


Edgardo L. Delos Santos and Geraldine C. Fiel-Macaraig of the
Nineteenth Division, Court of Appeals, Cebu City.

 CA rollo, pp. 40-47. The Judgment, in Crim. Case No. 529, was
[2]

penned by Executive/Presiding Judge Ananson E. Jayme of


Branch 63, Regional Trial Court, Bayawan City, Negros Oriental.

[3]
 Id. at 39.

[4]
 Id.

[5]
 Rollo, p. 5.

 In People v. Cabalquinto, 533 Phil. 703 (2006) [Per J. Tinga, En


[6]

Banc], this Court discussed the need to withhold the victim's real
name and other information that would compromise the victim's
identity, applying the confidentiality provisions of: (1) Republic
Act No. 7610 (Special Protection of Children Against Child Abuse,
Exploitation and Discrimination Act) and its Implementing Rules
and Regulations; (2) Republic Act No. 9262 (Anti-Violence Against
Women and their Children Act of 2004) and its Implementing
Rules and Regulations; and (3) this Court's October 19, 2004
Resolution in A.M. No. 04-10-11-SC (Rule on Violence Against
Women and their Children).

[7]
 CA rollo, p. 41.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.
[13]
 Id.

[14]
 Id. at 42-43.

[15]
 Id. at 42.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 43.

[21]
 Id.

[22]
 Id.

[23]
 Id.

[24]
 Id.

[25]
 Id.

[26]
 Id.

[27]
 Id.

[28]
 Id. at 43 and rollo, p. 6.

[29]
 Id. at 43.

[30]
 Id.

[31]
 Id. at 40-47.
[32]
 Id. at 47.

[33]
 Id. at 44.

[34]
 Id. at 44-46.

[35]
 Id. at 45.

[36]
 Id. at 47.

[37]
 Id. at 18-37.

[38]
 Id. at 67-81.

[39]
 Rollo, pp. 4-13.

[40]
 Id. at 13.

[41]
 Id. at 8-10.

[42]
 Id. at 10.

[43]
 Id. at 8-10.

[44]
 Id. at 10.

 678 Phil. 752 (2011) [Per J. Leonardo-De Castro, First


[45]

Division].

[46]
 Rollo, p. 10.

[47]
 Id. at 10-12.

[48]
 Id. at 13.

[49]
 Id. at 14-16.
[50]
 Id. at 20-21.

 Id. at 22-25, Manifestation for plaintiff-appellee, and 27-28,


[51]

Manifestation for accused-appellant.

[52]
 Id. at 22 and 27.

[53]
 CA rollo, p. 26.

[54]
 Id.

[55]
 Id. at 27.

[56]
 Id.

[57]
 Id. at 27-34.

[58]
 Id. at 34.

[59]
 Id.

[60]
 Id. at 35.

[61]
 Id. at 34.

[62]
 Id. at 72-76.

[63]
 Id. at 70-72.

[64]
 Id. at 72.

[65]
 Id.

[66]
 Id. at 76-78.

[67]
 Id. at 77.

[68]
 Id. at 78-79.
[69]
 Id. at 46.

[70]
 Rollo, pp. 9-10.

[71]
 746 Phil. 809 (2014) [Per J. Leonen, Second Division].

[72]
 Id. at 819-820.

[73]
 809 Phil. 773 (2017) [Per J. Leonen, Second Division].

[74]
 Id. at 774.

[75]
 736 Phil. 298 (2014) [Per J. Brion, Second Division].

[76]
 Id. at 303.

[77]
 REV. PEN. CODE, art. 266-B provides:

ARTICLE 266-B. Penalties. — Rape under paragraph 1 of the next


preceding article shall be punished by reclusion perpetua.

 See People v. Gacusan, 809 Phil. 773, 789 (2017) [Per J.


[78]

Leonen, Second Division] and People v. Corpuz, G.R. No. 208013,


July 3, 2017, 828 SCRA 565, 600 [Per J. Leonen, Second
Division].

 People v. Bertulfo, 431 Phil. 535, 550 (2002) [Per C.J. Davide,
[79]

Jr., First Division].

[80]
 Rollo, p. 11.

[81]
 402 Phil. 343 (2001) [Per J. Melo, Third Division].

[82]
 Id. at 354.

 People v. Francica, G.R. No. 208625, September 6, 2017, 839


[83]

SCRA 113, 135 [Per J. Leonen, Third Division]; People v. Austria,


G.R. No. 210568, November 8, 2017, 844 SCRA 523, 543-544
[Per J. Leonen, Third Division]; and People v. Opong, 577 Phil.
571, 592-593 (2008) [Per J. Chico-Nazario, Third Division].

 People v. Araojo, 616 Phil. 275, 288 (2009) [Per J. Velasco, Jr.,
[84]

Third Division].

 People v. Jugueta, 783 Phil. 806, 851 (2016) [Per J. Peralta, En


[85]

Banc].

[86]
 Id.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[87]

En Banc].

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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 215545, January 07, 2019 ]


QUIRINO T. DELA CRUZ, PETITIONER, VS.
NATIONAL POLICE COMMISSION, RESPONDENT.
DECISION

LEONEN, J.:
This is a Petition for Review on Certiorari  assailing the June 27,
[1]

2014 Decision  and November 18, 2014 Resolution  of the Court
[2] [3]

of Appeals in CA-G.R. SP No. 131189. The Court of Appeals


affirmed the Civil Service Commission September 11, 2012
Decision  holding that petitioner's appeal was filed out of time,
[4]

and thus affirmed the January 12, 2010 National Police


Commission Decision  dismissing petitioner for grave misconduct.
[5]

[6]

In an October 15, 2001 Information,  a certain Sonny H. Villarias


[7]

was charged with violation of Presidential Decree No. 1866 after


he was arrested on October 13, 2001 for allegedly possessing two
(2) firearms without permits. [8]

On August 15, 2002, Villarias filed before the National Police


Commission a Complaint-Affidavit,  where he narrated what
[9]

happened when he was arrested. By filing the Complaint against


the four (4) officers who arrested him, Villarias said that he would
be doing his share in helping the police force rid itself of bad
elements. [10]

He narrated that at about 8:00 p.m. that night, he was awakened


by four (4) uniformed officers, namely: Special Police Officer 4
Quirino Dela Cruz (SPO4 Dela Cruz), Police Officer 1 Ariel
Cantorna (PO1 Cantorna), whom he said he had known, and two
others. He said that SPO4 Dela Cruz poked an armalite rifle at
him, pulled him up, and frisked him without any explanation
despite him repeatedly asking what he had done wrong. They still
did not say anything even after they had handcuffed him. He only
stopped asking after SPO4 Dela Cruz poked him with his armalite
rifle again and, along with the others, took him to their patrol
vehicle and handcuffed him to its steering wheel. The officers
then returned to his house. [11]

Villarias stated that while he was handcuffed to the vehicle, he


saw his common-law wife, Claudia Nicar (Nicar), approaching
their house. He then told her that the police officers were in their
house and that they might do something to their belongings.
When the officers returned to the vehicle, they had with them
eight (8) of Villarias's most valuable fighting cocks, a large plastic
bag containing items from his house, two (2) air guns, and two
(2) bolos.

After the officers left with Villarias, Nicar took photos of their
personal belongings in the house, which had been left in disarray
when the officers ransacked their home. While Villarias was in
jail, she informed him that the police officers had stolen a pair of
wedding rings, a necklace, a coin bank filled with P5.00 coins,
cash worth P12,000.00, and a bottle of men's cologne. At the
precinct, the officers told Villarias to admit to owning two (2) old
and defective-looking handguns, which SPO4 Dela Cruz had
earlier shown him. [12]

Later, Villarias learned that his arrest had been instigated by the
complaint of his neighbor, Ruby Carambas, whom he said was
angry at him because he refused to let her build a house on a lot
of which he was a caretaker. He also learned that Carambas had
previously filed a complaint against him for Illegal Discharge of
Firearm and Grave Threats against him. He alleged that
Carambas was the friend of POl Cantorna, a cockfighting fanatic
who frequently visited Carambas' father, a gaffer at cockfights.
Villarias believed that the officers concocted this plan to
simultaneously benefit Carambas and steal Villarias's fighting
cocks and valuables. He pointed out that, as of his sworn
statement, Carambas and her family had gone into hiding. [13]

Based on Villarias's Complaint, the National Police Commission,


represented by Inspector IV Pedro T. Magcinnon, Acting Chief,
Technical Service Division, National Capital Region, filed a
Complaint  against SPO4 Dela Cruz and PO2 Cantorna. It
[14]

charged them as follows:


That on October 13, 2001 at about 8:00 o'clock in the evening at
No. 20 Williams Street, Subdivision, Tandang Sora, Quezon City,
and within the administrative jurisdiction of this Honorable
Commission, respondents, conspiring and confederating and
mutually helping one another, with intent to gain and with grave
abuse of authority being police officers, did then and there
willfully, unlawfully, and feloniously without any legal grounds
enter and search the house of complainant against his will.
Thereafter, respondent SPO4 Quirino dela Cruz poked his armalite
rifle on the side of complainant, pull[ed] him out of the house and
handcuff[ed] the latter on the steering wheel of respondent's
patrol vehicle. After that[,] respondents went back inside the
house of complainant and carted away some personal belongings
of herein complainant, to wit: one (1) piece wedding ring; one (1)
piece 18 karats necklace; one (1) coin bank filled with 5 cents
coins; cash amount of P12,000.00; one (1) bottle men's cologne;
eight (8) live fighting cocks; two (2) airguns[,] and two (2) bolos,
to the damage and prejudice of complainant Sonny Villarias in the
amount of more or less SEVENTY THOUSAND PESOS
(Php70,000.00).

Acts contrary to law and existing rules and regulations. [15]

Pending resolution of the administrative complaint against SPO4


Dela Cruz and PO2 Cantorna, Villarias was exonerated by the
Regional Trial Court in its July 23, 2009 Decision.  The Decision
[16]

read:
The accused, at the time of his arrest, had not committed, nor
was he actually committing or attempting to commit an offense in
the presence of the arresting officers. Neither was there probable
cause for them to believe based on personal knowledge of facts
or circumstances that the accused committed the crime.

Verily, the warrantless arrest of the accused was unlawful being


outside the scope of Sec. 5, Rule 113. He was arrested solely on
the basis of a call from a woman claiming he illegally fired a gun,
and upon being pointed to, while he was inside his house doing
nothing. Consequently, the guns seized from the accused, if ever
the same came from him, are inadmissible in evidence being the
'fruit of the poisonous tree.

....
The Court entertains very serious doubt as to the culpability of
the accused and cannot in conscience pronounce verdict of guilt
for the crime with which he was charged.

WHEREFORE, for failure of the prosecution to prove the guilt of


the accused, the Court finds Sonny H. Villarias NOT GUILTY.
His ACQUITTAL is hereby pronounced. [17]

In its January 12, 2010 Decision,  the National Police [18]

Commission declared SPO4 Dela Cruz and PO2 Cantorna culpable


of grave misconduct.  It found that Villarias had substantiated
[19]

his case, and was convinced that the officers did what they were
accused of doing.  It also noted that the Regional Trial Court July
[20]

23, 2009 Decision cited the testimony of a witness, Eneceto


Gargallano (Gargallano), who saw four (4) police officers enter
Villarias's home and take out cartons containing fighting cocks,
with one (1) carrying two (2) air guns. [21]

The National Police Commission considered SPO4 Dela Cruz and


PO2 Cantorna's acts of unlawfully arresting Villarias and taking
his belongings as "unforgivable atrocit[ies] by one who has sworn
to uphold the law."  It found that they made a mockery of
[22]

administrative proceedings when they made untruthful


statements during its summary dismissal proceedings, as well as
before the Regional Trial Court.  Thus, SPO4 Dela Cruz and PO2
[23]

Cantorna were dismissed from service:


WHEREFORE, premises considered, the COMMISSION
finds SPO4 QUIRINO DE LA CRUZ and PO2 ARIEL
CANTORNA culpable of Grave Misconduct and are hereby meted
the penalty of DISMISSAL from the service.

SO ORDERED. [24]

SPO4 Dela Cruz filed a Motion for Reconsideration, but it was


denied in the National Police Commission December 15, 2010
Resolution.  In its Resolution, the National Police Commission
[25]

found that SP04 Dela Cruz neither presented newly discovered


evidence nor cited errors of law or irregularities that would affect
the assailed Decision. Further, it found that he filed the Motion on
September 21, 2010, well beyond the ten (10)-day non-
extendible period after he received the Decision on September 8,
2010.[26]

Undaunted, SPO4 Dela Cruz filed before the Civil Service


Commission an Appeal,  which was dismissed. In its September
[27]

11, 2012 Decision,  the Civil Service Commission found that the
[28]

Appeal had been filed out of time, as SPO4 Dela Cruz did so on
January 14, 2011, beyond the fifteen (15)-day period after the
Decision for review was promulgated on December 15, 2010.
Thus, the questioned Resolution had attained finality. [29]

The dispositive portion of the Civil Service Commission


September 11, 2012 Decision read:
WHEREFORE, the appeal of Quirino Dela Cruz is
hereby DISMISSED. Accordingly, the Resolution dated December
15, 2010 of the National Police Commission (NAPOLCOM), finding
him guilty of the offense Grave Misconduct, and imposing upon
him the penalty of dismissal from the service, STANDS. It shall
be clarified that the accessory penalties of cancellation of
eligibility, forfeiture of retirement benefits, perpetual
disqualification from reemployment in the government service,
and bar from taking any Civil Service examination are likewise
imposed. [30]

SPO4 Dela Cruz moved for reconsideration,  insisting that he


[31]

filed his Appeal within the allowable period, but it was denied for
lack of merit. In its July 9, 2013 Resolution,  the Civil Service
[32]

Commission said the Motion failed to provide substantial evidence


under the Revised Rules on Administrative Cases in the Civil
Service to establish that he had timely perfected his appeal. [33]

SPO4 Dela Cruz filed before the Court of Appeals a Petition for
Review, but it was dismissed for lack of merit. In its June 27,
2014 Decision,  the Court of Appeals explained that, while
[34]

technical rules of procedure may be relaxed on occasion, he must


first exert effort to establish the basis for it. In this case, he
merely alleged that he had timely filed his Appeal to merit
relaxation of the rules, without documentary proof. Further, the
Court of Appeals found that he was not denied due process, as he
had been given the chance to present evidence that he had
timely perfected his appeal when he moved for reconsideration
before the Civil Service Commission, but he failed to do this. [35]

In its November 18, 2014 Resolution,  the Court of Appeals [36]

denied Dela Cruz's Motion for Reconsideration.

Thus, SPO4 Dela Cruz filed before this Court a Petition for Review
on Certiorari.  Respondent then filed its Comment,  to which
[37] [38]

petitioner was directed to file a reply,  and was then granted two
[39]

(2) extensions of time to file it. Eventually, petitioner


manifested  that he would no longer file one.
[40]

Petitioner insists that the Court of Appeals erred when it held that
his Appeal was filed beyond the allowable period. He points out
that the Civil Service Commission reckoned his period for appeal
from the Resolution's promulgation date, December 15, 2010, as
opposed to the date he said he actually received it, which was on
January 4, 2011.  Moreover, petitioner points out that when the
[41]

National Police Commission held him liable for grave misconduct,


it committed reversible error  as it did not expound on his
[42]

alleged grave misconduct and summarily disregarded the


evidence he presented in his defense.  He also argues that the
[43]

evidence Villarias submitted was insufficient to justify petitioner's


dismissal.  Petitioner invokes presumption of regularity in the
[44]

performance of official functions, and says it has not been


overcome by clear and convincing evidence to the contrary. [45]

Respondent points out that save for his bare allegation, petitioner
has no proof that he received the National Police Commission
Resolution on January 4, 2011, and that he even admitted to this
failure. Thus, it was proper for the Court of Appeals to affirm the
Civil Service Commission's dismissal of his appeal for having been
filed out of time.  Further, respondent points out that in an
[46]

administrative proceeding, the quantum of proof required to


establish guilt is substantial evidence,  as in this case. The[47]

evidence sufficiently established that petitioner arrested Villarias


without legal basis for a warrantless arrest, and that he stole
valuables from Villarias, constituting grave misconduct and
conduct unbecoming of a police officer. He also untruthfully
entered the incident in a police blotter, an act of dishonesty.
Respondent further points out that factual findings the National
Police Commission's findings were affirmed by the Civil Service
Commission, whose role was not to weigh conflicting evidence.
 It adds that petitioner's bare denials and the presumption of
[48]

regularity in the performance of official duty are insufficient to


exculpate him, saying that Villarias's, Nicar's, and Gargallano's
testimonies in the Regional Trial Court July 23, 2009 Decision are
substantial evidence to conclude that petitioner is guilty of grave
misconduct. [49]

The issues raised by petitioner for this Court's resolution are:

First, whether or not the Court of Appeals erred when it sustained


the Civil Service Commission's dismissal of petitioner's appeal for
having been filed out of time; and

Second, whether or not the evidence presented to the National


Police Commission was sufficient to establish petitioner's liability
for grave misconduct.

The Petition is denied.

Under Rule 45 of the Rules of Court, a petition for review on


certiorari shall only pertain to questions of law.  The factual
[50]

findings of the Court of Appeals bind this Court. While several


exceptions to these rules were provided by jurisprudence, they
must be alleged, substantiated, and proved by the parties so this
Court may evaluate and review the facts of the case. [51]

Both of petitioner's arguments are questions of fact not proper for


review in this case. The date he received the assailed National
Police Commission Resolution is a question of fact that was
resolved by the Civil Service Commission. As the Court of Appeals
pointed out, the Civil Service Commission might have resolved his
motion for reconsideration differently, had petitioner
substantiated his claim with evidence that he received the
National Police Commission Resolution on January 4, 2011. Yet,
petitioner failed to do so. It is not this Court's role to review the
evidence to resolve this question. Further, petitioner has not
addressed the December 15, 2010 Resolution of the National
Police Commission, which found that his motion for
reconsideration was filed out of time.  Thus, the January 12,
[52]

2010 Decision would have already attained finality when he failed


to timely seek its reconsideration, regardless of whether the
December 15, 2010 Resolution was received on January 4, 2011.

Similarly, whether there was sufficient evidence to find petitioner


liable of grave misconduct is also an evidentiary matter, which
this Court will not look into. He claims that the judgment was
based on a misapprehension of facts  to persuade this Court to
[53]

review the case's factual questions. However, he has failed to


sufficiently substantiate this claim to convince this Court to look
into the evidence.[54]

This Court notes that the findings of the National Police


Commission were based on its appreciation of testimony,
together with the conclusions of the Regional Trial Court in its
July 23, 2009 Decision, which, in turn, found that petitioner made
an unlawful warrantless arrest. This Court further notes that
petitioner has neither denied nor explained the circumstances
surrounding Villarias's unlawful warrantless arrest.

Supported by substantial evidence, the National Police


Commission Decision was properly affirmed by the Civil Service
Commission and the Court of Appeals. There is no cogent reason
to reverse their factual findings.

Finally, the relaxation of procedural rules is warranted only if


compelling and justifiable reasons exist. In Asia United Bank v.
Goodland Company: [55]

The relaxation or suspension of procedural rules or the


exemption of a case from their operation is warranted only
by compelling reasons or when the purpose of justice
requires it.

As early as 1998, in Hon. Fortich v. Hon. Coronate expounded on


these guiding principles:

Procedural rules, we must stress, should be treated with


utmost respect and due regard since they are designed to
facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival
claims and in the administration of justice. The
requirement is in pursuance to the [B]ill of [R]ights
inscribed in the Constitution which guarantees that "all
persons shall have a right to the speedy disposition of
their cases before all judicial, quasi-judicial and
administrative bodies." The adjudicatory bodies and the
parties to a case are thus enjoined to abide strictly by the rules.
While it is true that a litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in accordance
with the prescribed procedure to ensure an orderly and speedy
administration of justice. There have been some instances
wherein this Court allowed a relaxation in the application
of the rules, but this flexibility was "never intended to
forge a bastion for erring litigants to violate the rules with
impunity." A liberal interpretation and application of the
rules of procedure can be resorted to only in proper cases
and under justifiable causes and circumstances.  (Citations [56]

omitted; emphasis supplied)


This is not a case that calls for relaxation of the rules. This Court
will not tolerate abuse of police authority over civilians. Where a
police officer has been shown to have committed atrocities
against a civilian, such as in this case, and is punished for his
actions, he will find no relief in this Court.

WHEREFORE, the Petition is DENIED. The June 27, 2014


Decision and November 18, 2014 Resolution of the Court of
Appeals in CA-G.R. SP No. 131189 are AFFIRMED.
SO ORDERED.

Peralta, (Chairperson), Hernando, and Carandang, JJ., concur.


A. Reyes, Jr., J., on leave.

January 24, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on January 7, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on January 24, 2019 at 2:00 p.m.

[1]
 Rollo, pp. 12-34.

 Id. at 36-41. The Decision was penned by Associate Justice


[2]

Franchito N. Diamante, and concurred in by Associate Justices


Celia C. Librea-Leagogo and Melchor Q.C. Sadang of the
Fourteenth Division, Court of Appeals, Manila.

 Id. at 43-44. The Resolution was penned by Associate Justice


[3]

Franchito N. Diamante, and concurred in by Associate Justices


Celia C. Librea-Leagogo and Melchor Q.C. Sadang of the Former
Fourteenth Division, Court of Appeals, Manila.
 Id. at 96-99. The Decision (120576) was signed by
[4]

Commissioner Mary Ann Z. Fernandez-Mendoza, Chairman


Francisco T. Duque III, Commissioner Robert S. Martinez, and
attested by Commission on Secretariat and Liaison Office Director
IV Dolores B. Bonifacio.

 Id. at 78-82. The Decision in the administrative case docketed


[5]

as SD Case No. 2003-016 (NCR) was signed by Commissioners


Eduardo U. Escueta, Luis Mario M. General, and Jesus A. Verzosa.
Chairman Ronaldo V. Puno did not sign.

[6]
 Id. at 82.

[7]
 Id. at 76.

[8]
 Id.

[9]
 Id. at 65-67.

[10]
 Id. at 66.

[11]
 Id. at 65.

[12]
 Id. at 66.

[13]
 Id.

[14]
 Id. at 63-64.

[15]
 Id. at 63.

 Id. at 103-104. The full copy of the Regional Trial Court


[16]

Decision was not attached to the rollo.

[17]
 Id.

[18]
 Id. at 78-82.
[19]
 Id. at 82.

[20]
 Id. at 80.

[21]
 Id. at 81.

[22]
 Id.

[23]
 Id.

[24]
 Id. at 82.

 Id. at 87-89. The Resolution, docketed as SD Case No. 2003-


[25]

016 (NCR), was signed by Chairman Jesse M. Robredo,


Commissioners Eduardo U. Escueta, Luisito T. Palmera, Alejandro
S. Urro, Constancia P. De Guzman, and Raul M. Bacalzo.

[26]
 Id. at 89.

[27]
 Id. at 90-94.

[28]
 Id. at 96-99.

[29]
 Id. at 98.

[30]
 Id. at 99.

[31]
 Rollo, p. 100.

[32]
 Id. at 102-105.

[33]
 Id. at 104.

[34]
 Id. at 36-41.

[35]
 Id. at 40.

[36]
 Id. at 43-44.
[37]
 Id. at 12-34.

[38]
 Id. at 132-149.

[39]
 Id. at 151.

[40]
 Id. at 163-168.

[41]
 Id. at 22.

[42]
 Id. at 25.

[43]
 Id.

[44]
 Id. at 26.

[45]
 Id. at 27.

[46]
 Id. at 138-139.

[47]
 Id. at 139-140.

[48]
 Id. at 143.

[49]
 Id. at 144.

[50]
 RULES OF COURT, Rule 45, sec. 1.

 Pascual v. Burgos, et al., 116 Phil. 167 (2016) [Per J. Leonen,


[51]

Second Division].

[52]
 Rollo, p. 89.

[53]
 Id. at 20.

 Pascual v. Burgos, et al., 116 Phil. 167 (2016) [Per J. Leonen,


[54]

Second Division].
[55]
 650 Phil. 174 (2010) [Per J. Nachura, Second Division].

[56]
 Id. at 183-184.

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THIRD DIVISION

[ G.R. No. 207711, July 02, 2018 ]


MARIA C. OSORIO PETITIONER, VS. PEOPLE OF
THE PHILIPPINES RESPONDENT.DECISION

LEONEN, J.:

Persons who receive money for investment in a particular


company but divert the same to another without the investor's
consent may be held criminally liable for other deceits under
Article 318 of the Revised Penal Code. Article 318 of the Revised
Penal Code is broad in scope intended to cover all other kinds of
deceit not falling under Articles 315, 316, and 317 of the Revised
Penal Code.

For resolution is a Petition for Review on Certiorari  challenging [1]

the January 30, 2013 Decision  and June 14, 2013 Resolution  of
[2] [3]

the Court of Appeals in CA-G.R. CR No. 34274. The assailed


judgments affirmed Maria C. Osorio's (Osorio) conviction for the
crime of estafa.

In an Information, Osorio was charged with estafa, punished


under Article 315, paragraph 2(a) of the Revised Penal Code,
committed as follows:

That in or about and sometime during the period comprised from


November 19, 2001 to January 11, 2002, in the City of Manila[,]
Philippines, the said accused, did then and there willfully,
unlawfully and feloniously defraud JOSEFINA O. GABRIEL, in the
following manner, to wit: the said accused, by means of false
manifestations and fraudulent representations which she made to
said JOSEFINA O. GABRIEL, prior to and even simultaneous with
the commission of the fraud, to the effect that her money, if
invested with Philamlife Fund Management will earn 20% interest
per annum, and by means of other similar deceits, induced and
succeeded in inducing the said JOSEFINA O. GABRIEL to give and
deliver, as in fact, she gave and delivered to the said accused the
total amount of Php200,000.00, on the strength of the
manifestations and representations of said accused well knowing
that the said manifestation and representation were false and
fraudulent and were made solely for the purpose of obtaining, as
in fact she did obtain the total amount of Php200,000.00, which
amount once in her possession, with intent to defraud, willfully,
unlawfully and feloniously misappropriated, misapplied and
converted the same to her own personal use and benefit, to the
damage and prejudice of said JOSEFINA O. GABRIEL in the
aforesaid amount Php200,000.00, Philippine Currency.

Contrary to law. [4]

Osorio pleaded not guilty upon arraignment. After pre-trial, trial


on the merits ensued. [5]

The prosecution presented as witnesses private complainant,


Josefina O. Gabriel (Gabriel), and Alberto G. Fernandez
(Fernandez), head of Philam Life's Business Values and
Compliance Department. Their collective testimonies produced
the prosecution's version of the incident.[6]

Gabriel was a proprietor of a stall in Paco Market, Manila.


Sometime in December 2000, Osorio visited Gabriel's store and
introduced herself as an agent of the Philippine American Life and
General Insurance Company (Philam Life). As proof, Osorio
presented her company ID and calling card. During their meeting,
Osorio offered insurance coverage to Gabriel. Gabriel told Osorio
to come back at a later date as she needed more time to think
about the offer.
[7]

When Osorio returned, Gabriel availed Philam Life's Tri-Life Plan


and Excelife Gold Package.  Gabriel consistently paid the
[8]

quarterly premiums from February 2001 to November 2001. [9]

On November 19, 2001, Osorio offered Gabriel an investment


opportunity with Philam Life Fund Management.  The proposed
[10]

investment would be placed under a time deposit scheme  and [11]

would earn 20% annually. Osorio informed Gabriel that the


proceeds of her investment may be channeled to pay for her
insurance premiums. Enticed by the offer, Gabriel tendered
P200,000.00 to Osorio, who in tum issued Philam Life receipts. [12]

A few months later, Gabriel discovered that her insurance policies


had lapsed due to non-payment of premiums. When Gabriel
confronted Osorio about the matter, Osorio assured Gabriel that
she would take responsibility.
[13]

Meanwhile, in May 2002, Gabriel received a letter from Philippine


Money Investment Asset Management (PMIAM), thanking her for
investing in the company. In the same letter, PMIAM informed
Gabriel that her investment would earn interest on a semi-annual
basis starting June 20, 2002.  Gabriel confronted Osorio on why
[14]

her investment was diverted to PMIAM. Osorio explained that


PMIAM investments would yield a higher rate of return.
Displeased with what had happened, Gabriel asked for a refund of
her initial investment. [15]

On August 2, 2002, Gabriel received P13,000.00 from PMIAM as


evidenced by PMIAM Voucher No. 001854.  In spite of this, [16]

Gabriel insisted on the refund. [17]

Later, PMIAM informed Gabriel that her initial investment and


unpaid interest income would be released to her on May 14,
2004. Unfortunately, she was unable to recover it. She then
visited the Philam Life office to see Osorio but she was nowhere
to be found. Philam Life referred Gabriel to a certain Atty.
Cabugoy  who sent a demand letter to Osorio.
[18] [19]

Fernandez testified that Osorio was a Philam Life agent and that
she was allowed to engage in other lines of work. He stated that
Osorio should not have issued Philam Life receipts for Gabriel's
P200,000.00 investment.  Although the receipts were genuine,
[20]

Fernandez claimed that they should only be issued for insurance


premium payments. [21]

The defense presented Osorio as its sole witness. Osorio admitted


that aside from being a Philam Life agent, she was also a referral
agent of PMIAM. She received P4,000.00 from the company as
commission for Gabriel's investment.  She asserted that she [22]

initially planned to place Gabriel's investment in Philam Life but


decided later on to divert it to PMIAM since the latter offered a
higher rate of return.  When Osorio informed Gabriel of her
[23]

decision, Gabriel allegedly gave her consent.  Osorio claimed that [24]

her husband also failed to recover his P300,000.00 investment in


PMIAM  due to internal problems with its mother company in the
[25]

United States. [26]

On April 19, 2011, the Regional Trial Court rendered judgment


finding Osorio guilty beyond reasonable doubt of estafa.  It ruled [27]

that Gabriel was induced to part with her money through Osorio's
misrepresentation that it would be invested in Philam Life, a
company with an established reputation. It rejected Osorio's
defense that Gabriel later on consented to the placement. When
she was informed of the placement with PMIAM, Gabriel had no
other choice but to agree.
[28]

The dispositive portion of the Regional Trial Court April 19, 2011
Decision stated:

WHEREFORE, the court finds the accused MARIA C. OSORIO


GUILTY beyond reasonable doubt of Estafa punishable under
Article 315 par. 2 (a) of the Revised Penal Code and hereby
sentences her to an indeterminate penalty of imprisonment
ranging from four (4) years and two (2) months of prision
correccional as minimum to twenty (20) years of reclusion
temporal as maximum.

Accused MARIA C. OSORIO is also directed to reimburse the


private complainant, Josefina Gabriel the sum of Php200,000.00,
with legal rate of interest fixed at 6% per annum from the date of
filing of the complaint until the same is fully settled, which the
accused received from the offended party.

With costs against the accused.

SO ORDERED. [29]

Osorio was sentenced to suffer an indeterminate penalty of


imprisonment of four (4) years and two (2) months of prisión
correccional  as minimum to 20 years of reclusión temporal as
maximum. She was also directed to pay P200,000.00 plus six
percent (6%) legal interest per annum from the date of the filing
of the complaint until satisfaction.
[30]

Osorio appealed the Decision of the Regional Trial Court, arguing


that her act of investing Gabriel's money with PMIAM was done in
good faith.
[31]
On January 30, 2013, the Court of Appeals rendered judgment
affirming Osorio's conviction.  Osorio moved for reconsideration
[32]

but her motion was denied. [33]

On August 8, 2013, Osorio filed a Petition for Review before this


Court  to which the People of the Philippines, through the Office
[34]

of the Solicitor General, filed a Comment. [35]

In its February 10, 2014 Resolution, this Court required petitioner


to file a reply to the comment on the petition.  On April 24,
[36]

2014, petitioner manifested that she would no longer file a reply.


[37]

On June 18, 2014, this Court gave due course to the petition and
required both parties to submit their respective memoranda.
 However, both parties manifested that they would no longer file
[38]

their memoranda. [39]

In praying for her acquittal,  petitioner asserts that not all the
[40]

elements of estafa under Article 315(2)(a) of the Revised Penal


Code were established by the prosecution. Only damage on the
part of the private complainant was proven. Petitioner argues
that she did not employ any deceit in soliciting private
complainant's investment as nothing in the records shows that
she used a fictitious name or that she pretended to possess
power, agency, or certain qualifications. Fernandez, one of the
prosecution's witnesses, even admitted that she was a Philam Life
agent. [41]

Furthermore, petitioner claims that she acted in good faith when


she decided to place private complainant's investment in PMIAM.
She adds that she did not conceal this from private complainant,
who later on agreed to the placement. [42]

In its Comment,  respondent claims that the main issue raised


[43]

by petitioner is factual in nature. Thus, it is beyond the scope of


review in a Rule 45 petition. Respondent argues that even if this
Court undertakes a factual review in this case, the lower courts
did not err in convicting petitioner of estafa.  Petitioner
[44]

misrepresented to private complainant that the latter's


investment would be placed in Philam Life and that its proceeds
would be channeled to pay for her insurance premiums. This
misrepresentation caused private complainant to part with her
money. [45]

The principal issue presented by this case is whether or not


petitioner's acts constitute estafa as defined and punished under
Article 315(2)(a) of the Revised Penal Code.

The rule with respect to petitions for review brought under Rule
45 of the Rules of Court is that only questions of law may be
raised.  The factual findings of the trial court, as affirmed by the
[46]

Court of Appeals, are binding on this Court and will not be


disturbed on appeal. [47]

There is a question of law when "doubt or difference arises as to


what the law is on a certain set of facts or circumstances."  On
[48]

the other hand, there is a question of fact when "the issue raised
on appeal pertains to the truth or falsity of the alleged
facts."  This includes an assessment of the probative value of
[49]

evidence presented during trial.  If the principal issue may be


[50]

resolved without reviewing the evidence, then the question before


the appellate court is one of law.

Petitioner claims that the prosecution failed to prove her guilt


beyond reasonable doubt on the ground that she did not employ
deceit in soliciting private complainant's funds. The determination
of whether the element of deceit or fraud is present in a charge
for estafa is a question of fact as it involves a review of the lower
court's appreciation of the evidence. [51]

Petitioner concedes that the case involves mixed questions of fact


and law. However, she claims that this Court is authorized to
undertake a factual review if the findings of the lower courts do
not conform to the evidence on record.  Her contention is well-
[52]

taken.
Petitioner was charged with estafa by means of deceit under
Article 315(2)(a) of the Revised Penal Code:

Article 315. Swindling (Estafa). — Any person who shall defraud


another by any of the means mentioned hereinbelow shall be
punished by:
....

2. By means of any of the following false pretenses or fraudulent


acts executed prior to or simultaneously with the commission of
the fraud:

(a) By using fictitious name, or falsely pretending to possess


power, influence, qualifications, property, credit, agency,
business or imaginary transactions, or by means of other similar
deceits.

In sustaining a conviction under this provision, the following


elements must concur:

(a) [T]hat there must be a false pretense or fraudulent


representation as to his power, influence, qualifications, property,
credit, agency, business or imaginary transactions; (b) that such
false pretense or fraudulent representation was made or executed
prior to or simultaneously with the commission of the fraud; (c)
that the offended party relied on the false pretense, fraudulent
act, or fraudulent means and was induced to part with his money
or property; and (d) that, as a result thereof, the offended party
suffered damage. [53]

There are different modalities of committing the crime of estafa


under Article 315(2)(a). The false pretense or fraudulent
representation referred to under the first element exists when the
accused uses a fictitious name, pretends to possess power,
influence, qualifications, property, credit, agency, business, or
imaginary transactions, or when the accused commits other
similar deceits.

There is no evidence to prove that petitioner committed any of


these acts when she obtained private complainant's money.

Petitioner neither used a fictitious name nor misrepresented


herself as an agent of Philam Life. During her first meeting with
private complainant, petitioner presented her company ID and
calling card as proof of her identity and employment.
 Fernandez, head of Philam Life's Business Values and
[54]

Compliance Department, even admitted during trial that


petitioner had been a Philam Life agent as of December 2000. [55]

There is also no proof that petitioner pretended to possess the


authority to solicit investments for Philam Life Fund Management.
All that Fernandez stated was that the issuance of Philam Life
receipts to private complainant was improper because the
receipts only cover insurance premium payments.  Thus, in the
[56]

absence of contrary evidence, it is presumed that petitioner was


authorized to solicit money for investment purposes.

In estafa by means of deceit under Article 315(2)(a) of the


Revised Penal Code, the element of deceit consisting of the false
pretense or representation must be proven beyond reasonable
doubt. Otherwise, criminal liability will not attach. In Aricheta v.
People,  the accused was charged of estafa for selling property
[57]

that she had previously sold to a third party. She allegedly


misrepresented to the buyer that she was still the owner at the
time of the sale.  In acquitting the accused, this Court found that
[58]

the prosecution failed to prove the alleged false representation


she made:

As can be gleaned from the allegations in the information,


petitioner was charged with Estafa for allegedly selling to private
complainant the subject property knowing fully well that she had
already sold the same to a third party. From this, it is therefore
clear that the supposed false representation or false pretense
made by petitioner to private complainant was that she was still
the owner of the property when she sold it to private
complainant.

....

The question to be resolved is whether the prosecution was able


to prove beyond reasonable doubt the alleged false
representation or false pretense contained in the information.

As above explained, the alleged false representation or false


pretense made by petitioner to private complainant was that she
was still the owner of the property when she sold it to private
complainant. To prove such allegation, the prosecution should
first establish that the property was previously sold to a third
party before it was sold to private complainant. The prosecution
utterly failed to do this. The fundamental rule is that upon him
who alleges rests the burden of proof. It made this allegation but
it failed to support it with competent evidence. Except for private
complainant's bare allegation that petitioner told her that she
(petitioner) sold the property to another person, the records are
bereft of evidence showing that the property was indeed
previously sold to a third person before it was sold again to
private complainant. What was shown by the prosecution and
admitted by the defense is the fact that the property is being
currently occupied by a person other than private complainant.
This fact does not prove that the property was previously sold to
another person before being sold again to private complainant.
 (Citation omitted)
[59]

In this case, although there is no proof that petitioner used a


fictitious name or pretended to possess power, influence,
qualifications, property, credit, agency, or business in soliciting
private complainant's money, petitioner should nevertheless be
held criminally liable for misrepresenting to private complainant
that the latter's money would be invested in Philam Life Fund
Management and that its proceeds may be utilized to pay for
private complainant's insurance premiums.

Private complainant accepted the investment opportunity offered


by petitioner due to the promise that her money would be
invested in Philam Life, a company with which she had existing
insurance policies. She parted with her funds because of the
representation that her investment's earnings would be
conveniently channeled to the payment of her insurance
premiums. As a result of petitioner's representations, private
complainant no longer saw the need to pay for the succeeding
insurance premiums as they fell due.   Moreover, petitioner's
[60]

issuance of Philam Life receipts  led private complainant to


[61]

believe that her money was already as good as invested in the


company.

The false representations committed by petitioner in this case fall


beyond the scope of "other similar deceits" under Article 315(2)
(a) of the Revised Penal Code. The phrase "other similar deceits"
in Article 315(2)(a) of the Revised Penal Code has been
interpreted in Guinhawa v. People  as limited to acts of the same
[62]

nature as those specifically enumerated. Under the principle


of ejusdem generis,  "other similar deceits" cannot be construed
in the broadest sense to include all kinds of deceit:

[T]he petitioner's reliance on paragraph 2(a), Article 315 of the


Revised Penal Code is misplaced. The said provision reads:

2. By means of any of the following false pretenses or fraudulent


acts executed prior to or simultaneously with the commission of
the fraud:

(a By using fictitious name, or falsely pretending to possess power, influence,


) qualifications, property, credit, agency, business or imaginary transactions; or by
means of other similar deceits.

The fraudulent representation of the seller, in this case, that the


van to be sold is brand new, is not the deceit contemplated in the
law. Under the principle of ejusdem generis,  where a statement
ascribes things of a particular class or kind accompanied by words
of a generic character, the generic words will usually be limited to
things of a similar nature with those particularly enumerated
unless there be something in the context to the contrary.
 (Citation omitted)
[63]

Nevertheless, petitioner may be held criminally liable for other


deceits under Article 318 of the Revised Penal Code.

Article 318 of the Revised Penal Code is broad in application. It is


intended as a catch-all provision to cover all other kinds of deceit
not falling under Articles 315, 316, and 317 of the Revised Penal
Code. [64]

For an accused to be held criminally liable under Article 318 of


the Revised Penal Code, the following elements must exist:

(a) [The accused makes a] false pretense, fraudulent act or


pretense other than those in [Articles 315, 316, and 317]; (b)
such false pretense, fraudulent act or pretense must be made or
executed prior to or simultaneously with the commission of the
fraud; and (c) as a result, the offended party suffered damage or
prejudice.  (Citation omitted)
[65]

All the elements of Article 318 of the Revised Penal Code are
present in this case.

Petitioner, in soliciting private complainant's money, falsely


represented that it would be invested in Philam Life and that its
proceeds would be used to pay for private complainant's
insurance premiums. This false representation is what induced
private complainant to part with her funds and disregard the
payment of her insurance premiums. Since petitioner deviated
from what was originally agreed upon by placing the investment
in another company, private complainant's insurance policies
lapsed.

The present case is different from money market transactions


where dealers are usually given full discretion on where to place
their client's investments. In MERALCO v. Atilano,  this Court
[66]

explained the nature of money market transactions and the


corresponding liabilities that dealers may face when dealing with
their clients' investments:

[I]n money market transactions, the dealer is given discretion on


where investments are to be placed, absent any agreement with
or instruction from the investor to place the investments in
specific securities.

Money market transactions may be conducted in various ways.


One instance is when an investor enters into an investment
contract with a dealer under terms that oblige the dealer to place
investments only in designated securities. Another is when there
is no stipulation for placement on designated securities; thus, the
dealer is given discretion to choose the placement of the
investment made. Under the first situation, a dealer who deviates
from the specified instruction may be exposed to civil and
criminal prosecution; in contrast, the second situation may only
give rise to a civil action for recovery of the amount invested.
 (Emphasis in the original)
[67]

Although petitioner was charged of estafa by means of deceit


under Article 315(2)(a) of the Revised Penal Code, she may be
convicted of other deceits under Article 318 of the Revised Penal
Code.

As a rule, an accused can only be convicted of the crime with


which he or she is charged. This rule proceeds from the
Constitutional guarantee that an accused shall always be
informed of the nature and cause of the accusation against him or
her.  An exception to this is the rule on variance under Rule 120,
[68]
Section 4 of the Revised Rules of Criminal Procedure, which
states:

RULE 120
Judgment

Section 4. Judgment in Case of Variance Between Allegation and


Proof. — When there is variance between the offense charged in
the complaint or information and that proved, and the offense as
charged is included in or necessarily includes the offense proved,
the accused shall be convicted of the offense proved which is
included in the offense charged, or of the offense charged which
is included in the offense proved.

Rule 120, Section 4 of the Revised Rules of Criminal Procedure


simply means that if there is a variance between the offense
charged and the offense proved, an accused may be convicted of
the offense proved if it is included in the offense charged. An
accused may also be convicted of the offense charged if it is
necessarily included in the offense proved.

In Sales v. Court of Appeals,  the accused was charged with


[69]

estafa by means of deceit under Article 315(2)(d) of the Revised


Penal Code. She was convicted of other deceits under Article 318
of the Revised Penal Code. In holding that there was no violation
of the accused's constitutional right to be informed of the
accusation against her, this Court held that the elements of the
crime of other deceits under Article 318 of the Revised Penal
Code also constitute one (1) of the elements of estafa by means
of deceit under Article 315(2)(d) of the Revised Penal Code:

In the information filed against her, the petitioner with the crime
of estafa under Article 315, paragraph 2(d) of the Revised Penal
Code which reads:

....
"(d) By postdating a check, or issuing a check in payment of an
obligation when the offender had no funds in the bank, or his
funds deposited therein were not sufficient to cover the amount
of the check. The failure of the drawer of the check to deposit the
amount necessary to cover his check within three (3) days from
receipt of notice from the bank and/or the payee or holder that
said check has been dishonored for lack or insufficiency of funds
shall be prima facie  evidence of deceit constituting false pretense
or fraudulent act. (As amended by Rep. Act No. 4885, approved
June 17, 1967.)"

Under the aforequoted provision, the elements of estafa as


defined therein are as follows: (1) postdating or issuance of a
check in payment of an obligation contracted at the time the
check was issued; (2) lack or insufficiency of funds to cover the
check and (3) damage to the payee thereof . . . Basically, the two
essential requisites of fraud or deceit and damage or injury must
be established by sufficient and competent evidence in order that
the crime of estafa may be established.

On the other hand, Article 318 of the same Code partly provides
that:

"Other deceits. — The penalty of arresto mayor and a fine of not


less than the amount of the damage caused and not more than
twice such amount shall be imposed upon any person who shall
defraud or damage another by any other deceit not mentioned in
the preceding articles of this chapter."
....

Clearly, the principal elements of deceit and damage are likewise


present in the preceding article cited. The petitioner's conviction
under the latter provision instead of that with which she was
charged was merely an application of the rule on variance
between allegation and proof defined under Rule 120, Section 4
of the Revised Rules of Court which states that:
"Judgment in case of variance between allegation and proof. —
When there is variance between the offense charged in the
complaint or information, and that proved or established by the
evidence, and the offense as charged is included in or necessarily
includes the offense proved, the defendant shall be convicted of
the offense proved included in that which is charged, or of the
offense charged included in that which is proved."

Simply put, an accused may be convicted of an offense proved


provided it is included in the charge or of an offense charged
which is included in that which is proved. In the case at bar, the
petitioner was convicted of the crime falling under "Other deceits"
which is necessarily included in the crime of estafa under Article
315, paragraph 2(d) considering that the elements of deceit and
damage also constitute the former. Hence, the petitioner's right
to be properly informed of the accusation against her was never
violated.  (Citation omitted)
[70]

In the present case, the crime of other deceits under Article 318
of the Revised Penal Code is necessarily included in the crime of
estafa by means of deceit under Article 315(2)(a) of the Revised
Penal Code. Therefore, petitioner may be convicted of other
deceits under Article 318 of the Revised Penal Code.

The imposable penalty for other deceits under paragraph 1 of


Article 318 of the Revised Penal Code  has been retained by
[71]

Republic Act No. 10951.  Accordingly, petitioner should suffer the


[72]

penalty of arresto mayor and pay a fine, which should neither be


less than nor more than twice the amount of the damage caused.
The amount of damage caused against private complainant in this
case is P200,000.00.

As a final note, the defense that private complainant eventually


consented to the investment in PMIAM deserves scant
consideration. Records show that private complainant asked
petitioner for a refund of her initial investment when she
discovered that her investment was placed in PMIAM.  The [73]
ratification allegedly given by private complainant hardly qualifies
as genuine consent. When private complainant discovered the
transaction, her insurance policies had already lapsed. She was
trapped in a difficult situation where she could potentially lose
another investment. Thus, she had no other choice but to agree
to the placement. The lack of genuine consent is further
evidenced by private complainant's repeated requests for a
refund of her initial investment even after she received the first
tranche of interest income.[74]

WHEREFORE, the Court of Appeals January 30, 2013 Decision


and the June 14, 2013 Resolution in CA-G.R. CR No. 34274
are AFFIRMED with MODIFICATION. Petitioner Maria C. Osorio
is GUILTY BEYOND REASONABLE DOUBT of other deceits
under Article 318 of the Revised Penal Code. There being no
aggravating or mitigating circumstances, petitioner is sentenced
to suffer the penalty of two (2) months and (1) day to four (4)
months of arresto mayor in its medium period,  and to pay a fine
[75]

of P200,000.00.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

August 16, 2018

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:
Please take notice that on July 2, 2018 a Decision, copy
attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on August 16, 2018 at 3:05 p.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court

[1]
 Rollo, pp. 10-24.

 Id. at 26-39. The Decision was penned by Associate Justice


[2]

Normandie B. Pizarro and concurred in by Associate Justices


Remedios A. Salazar-Fernando and Manuel M. Barrios of the
Second Division, Court of Appeals, Manila.

 Id. at 41-42. The Resolution was penned by Associate Justice


[3]

Normandie B. Pizarro and concurred in by Associate Justices


Remedios A. Salazar-Fernando and Manuel M. Barrios of the
Second Division, Court of Appeals, Manila.

[4]
 Id. at 11-12.

[5]
 Id. at 12.

[6]
 Id. at 28.

[7]
 Id. at 12 and 28.

[8]
 Id. at 12.

[9]
 Id. at 62.

[10]
 Id. at 64.
[11]
 Id. at 29.

[12]
 Id. at 12 and 29.

[13]
 Id. at 12.

[14]
 Id. at 95.

[15]
 Id. at 30.

[16]
 Id.

[17]
 Id. at 64.

[18]
 Id. at 63.

[19]
 Id. at 30-31.

[20]
 Id. at 64.

[21]
 Id. at 31.

[22]
 Id. at 32.

[23]
 Id. at 31.

[24]
 Id.

[25]
 Id. at 32.

[26]
 Id. at 13.

 Id. at 60-69. The Decision, docketed as Criminal Case No. 06-


[27]

246346, was penned by Judge Antonio M. Rosales of Branch 52,


Regional Trial Court, Manila.

[28]
 Id. at 66-68.
[29]
 Id. at 68-69.

[30]
 Id.

[31]
 Id. at 57.

[32]
 Id. at 36-39.

[33]
 Id. at 41-42.

[34]
 Id. at 10.

[35]
 Id. at 93-106.

[36]
 Id. at 107.

[37]
 Id. at 108-112.

[38]
 Id. at 114-114-A.

 Id. at 115-118, Office of the Solicitor General's Manifestation,


[39]

and rollo, pp. 120-124, Osorio's  Manifestation.

[40]
 Id. at 18.

[41]
 Id. at 17.

[42]
 Id. at 17-18.

[43]
 Id. at 93-106.

[44]
 Id. at 97-98.

[45]
 Id. at 101-102.

[46]
 RULES OF COURT, Rule 45, sec. 1.
 Pascual v. Burgos, 776 Phil. 169, 182 (2016) [Per J. Leonen,
[47]

Second Division].

 Spouses Miano v. Manila Electric Company, G.R. No. 205035,


[48]

November 16, 2016 < hError! Hyperlink reference not


valid. > 4 [Per J. Leonen, Second Division] citing Bases
Conversion Development Authority v. Reyes, 711 Phil. 631 (2013)
[Per J. Perlas-Bernabe, Second Division].

[49]
 Id.

 Pascual v. Burgos, 776 Phil. 169, 183 (2016) [Per J. Leonen,


[50]

Second Division].

 See Quesada v. Department of Justice, 532 Phil. 159, 166


[51]

(2006) [Per J. Sandoval-Gutierrez, Second Division].

[52]
 Rollo, p. 15.

 Sy v. People, 632 Phil. 276, 284 (2010) [Per J. Nachura, Third


[53]

Division].

[54]
 Rollo, p. 28.

[55]
 Id. at 64.

[56]
 Id. at 31.

[57]
 560 Phil. 170 (2007) [Per J. Chico-Nazario, Third Division].

[58]
 Id. at 175.

[59]
 Id. at 182-183.

[60]
 Rollo,  p. 67.

[61]
 Id. at 29.
[62]
 505 Phil. 383 (2005) [Per J. Callejo, Sr., Second Division].

[63]
 Id. at 401.

[64]
 Id.

[65]
 Id. at 400.

[66]
 689 Phil. 394 (2012) [Per J. Brion, Second Division].

[67]
 Id. at 409.

 Navarrete v. People, 542 Phil. 496, 504 (2007) [Per J. Corona,


[68]

First Division].

[69]
 247-A Phil. 38 (1988) [Per J. Gutierrez, Jr., Third Division].

[70]
 Id. at 42-43.

[71]
 REV. PEN. CODE, art. 318 provides:

Article 318. Other Deceits. — The penalty of arresto mayor and a


fine of not Jess than the amount of the damage caused and not
more than twice such amount shall be imposed upon any person
who shall defraud or damage another by any other deceit not
mentioned in the preceding articles of this chapter.

Any person who, for profit or gain, shall interpret dreams, make
forecasts, tell fortunes, or take advantage of the credulity of the
public in any other similar manner, shall suffer the penalty
of arresto menor or a fine not exceeding 200 pesos.

[72]
 Rep. Act No. 10951, sec. 86 provides:

Section 86. Article 318 of the same Act is hereby amended to


read as follows:
Article 318. Other deceits. — The penalty of arresto mayor and a
fine of not less than the amount of the damage caused and not
more than twice such amount shall be imposed upon any person
who shall defraud or damage another by any other deceit not
mentioned in the preceding articles of this Chapter.

Any person who, for profit or gain, shall interpret dreams, make
forecasts, tell fortunes, or take advantage of the credulity of the
public in any other similar manner, shall suffer the penalty
of arresto mayor  or a fine not exceeding Forty thousand pesos
(P40,000).

[73]
 Rollo,  p. 29-30.

[74]
 Id.

 The Indeterminate Sentence Law is inapplicable because the


[75]

maximum term of imprisonment does not exceed one year.

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THIRD DIVISION

[ G.R. No. 205695, September 27,


2017 ]
JESUS APARENTE Y PETITIONER, VS. PEOPLE OF
THE PHILIPPINES, RESPONDENT.DECISION
LEONEN, J.:

Where the amount of narcotics seized is miniscule, a stricter


adherence to the requirements of Section 21 of Republic Act No.
9165 is required to preserve the evidentiary value of the seized
drugs.

This is a Petition for Review on Certiorari,  assailing the June 1,


[1]

2012 Decision  and January 24, 2013 Resolution  of the Court of
[2] [3]

Appeals in CA-G.R. CR No. 32853, which dismissed the appeal of


Jesus Aparente y Vocalan (Aparente).

An Information dated February 14, 2006 was filed with the


Regional Trial Court of Binangonan, Rizal against Aparente,
charging him with violating Republic Act No. 9165.  The case was
[4]

docketed as Criminal Case No. 06-080.  It read:


[5]

That on or about the 13  day of February 2006, in the


th

Municipality of Binangonan, Province of Rizal, Philippines, and


within the jurisdiction of this Honorable Court, the above-named
accused, not being lawfully authorized by law to possess any
dangerous drug, did, then and there willfully, unlawfully[,]
feloniously and knowingly possess and have in his custody and
control 0.01 gram of white crystalline substance contained in one
(1) heat[-]sealed transparent plastic sachet, which was found
positive to the test for Methylamphetamine (sic) hydrochloride,
also known as shabu, a dangerous drug, in violation of the above-
cited law.

CONTRARY TO LAW. [6]

Upon arraignment, Aparente pleaded not guilty. After the pre-trial


conference, trial on the merits ensued.[7]

The prosecution's version of the events was as follows:

Prosecution witnesses PO1 Virgilio Dela Cruz (PO1 Dela Cruz) and
PO1 Gem Pastor testified that on the evening of February 13,
2006, they were at Barangay Pantok, Binangonan., Rizal
patrolling the area as part of surveillance operations in relation to
illegal drugs and "Video Karera" activities. They saw two (2) men,
one of whom was later identified as Aparente, in an alley around
three (3) meters away. They watched as the other man handed
Aparente a small plastic sachet. They saw Aparente inspect the
sachet, flicking it against the light emitted from a street light and
a lamp from a house nearby. When the police officers
approached, the two (2) men fled. Only Aparente was caught.
 PO1 Dela Cruz told Aparente to open his hands. They found a
[8]

small sachet with a white crystalline substance,  which the police


[9]

officers confiscated. They brought Aparente to the Binangonan


Police Station where a police investigator marked the confiscated
sachet with Aparente's initials. PO1 Dela Cruz then submitted the
sachet, together with its contents, to the Philippine National
Police Crime Laboratory at Camp Crame. Prosecution witness
Police Inspector and Forensic Chemical Officer Antonieta Abillonar
issued a Laboratory Report that stated that the contents of the
sachet tested positive for methamphetamine hydrochloride. [10]

The defense's version of the events was as follows:

Aparente testified that on the evening of February 13, 2006, he


was watching television with his mother, brother, and niece when
five (5) persons forcibly entered the house. They handcuffed him
and searched the house. Afterwards, the intruders told him they
found shabu, which he was coerced to admit possessing. [11]

The Regional Trial Court found the prosecution witnesses'


testimonies credible and gave them foil faith.  It found [12]

Aparente's denial unbelievable and noted that his demeanor


during his testimony did not inspire credibility.  Thus, in its
[13]

Decision  dated July 30, 2009, the trial court found Aparente
[14]

guilty of violating Section 11 of Republic Act No. 9165. The


dispositive portion of this Decision read:
In view of this, we find accused Jesus Aparente GUILTY beyond
reasonable doubt of violating Section 11, Article II, R.A. No. 9165
otherwise known as the "Comprehensive Dangerous Drugs Act of
2002" and illegally possessing a total of 0.01 grams of
Methylamphetamine (sic) Hydrochloride or shabu and accordingly
sentence him to suffer an indeterminate penalty of 12 years and
1 day as minimum to 13 years as maximum and to pay a fine of
P300,000.00.

Let the drug samples in this case be forwarded to the Philippine


Drug Enforcement Agency (PDEA) for proper disposition. Furnish
PDEA with a copy of this Decision per OCA Circular No. 70-2007.

SO ORDERED.  (Emphasis in the original)


[15]

Aparente appealed the foregoing Decision to the Court of


Appeals, arguing that the evidence against him was obtained
from an illegal warrantless arrest. He also contended that the
prosecution failed to establish that the rules on chain of custody
were followed and that his guilt was proven beyond reasonable
doubt.[16]

In its Decision  dated June 1, 2012, the Court of Appeals


[17]

affirmed the Regional Trial Court Decision. It found that since


Aparente was in the middle of violating the law at the time he
was searched, the warrantless arrest was lawfully conducted
upon probable cause,  The Court of Appeals also held that the
[18]

evidentiary value of the confiscated drugs was preserved,


considering that the police officers went to the police station and
immediately turned over the seized evidence, which was then
marked and submitted to the Philippine National Police Crime
Laboratory at Camp Crame.  Thus, the witnesses established an
[19]

unbroken chain of custody from the arresting officer, to the


investigating officer, and to the forensic chemist.  Further, the
[20]

Court of Appeals found that Aparente failed to submit convincing


evidence to overcome the presumption of regularity of the police
officers' performance of official duties.  The dispositive portion of
[21]

this Decision read:


WHEREFORE, the foregoing considered, the instant appeal is
hereby DISMISSED and the appealed Decision dated 30 July 2009
AFFIRMED in toto. No costs.

SO ORDERED. [22]
Aparente filed his Motion for Reconsideration of the Court of
Appeals June 1, 2012 Decision, which was denied in a Resolution
dated January 24, 2013. [23]

Thus, on March 26, 2013, Aparente filed this Petition for Review
on Certiorari before this Court.  Thereafter, on September 24,
[24]

2013, the Office of the Solicitor General filed its Comment.  On
[25]

February 26, 2014, petitioner filed his Reply.[26]

This Court resolves the following issues:

First, whether or not the circumstances of petitioner Jesus


Aparente's warrantless arrest violated his constitutional rights;
and

Second, whether or not the failure to explain the lack of inventory


and photographing at the place of petitioner's arrest or at the
nearest police station negates the evidentiary value of the
allegedly seized narcotics.

This Court grants the petition.

Article III, Section 2 of the Constitution provides that the right of


the people against unreasonable searches and seizures is
inviolable:
Section 2. The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to
be seized.
In People v. Cogaed,  this Court explained that while this rule
[27]

generally requires a warrant to be issued in order for a search or


seizure to be deemed reasonable, there are situations where a
search is reasonable even without a warrant:
This provision requires that the court examine with care and
diligence whether searches and seizures are "reasonable." As a
general rule, searches conducted with a warrant that meets all
the requirements of this provision are reasonable. This warrant
requires the existence of probable cause that can only be
determined by a judge. The existence of probable cause must be
established by the judge after asking searching questions and
answers. Probable cause at this stage can only exist if there is an
offense alleged to be committed. Also, the warrant frames the
searches done by the law enforcers. There must be a particular
description of the place and the things to be searched.

However, there are instances when searches are reasonable even


when warrantless. In the Rules of Court, searches incidental to
lawful arrests are allowed even without a separate warrant. This
court has taken into account the "uniqueness of circumstances
involved including the purpose of the search or seizure, the
presence or absence of probable cause, the manner in which the
search and seizure was made, the place or thing searched, and
the character of the articles procured." The known jurisprudential
instances of reasonable warrantless searches and seizures are;
1. Warrantless search incidental to a lawful arrest...;

2. Seizure of evidence in "plain view,"...;

3. Search of a moving vehicle. Highly regulated by the


government, the vehicle's inherent mobility reduces expectation
of privacy especially when its transit in public thoroughfares
furnishes a highly reasonable suspicion amounting to probable
cause that the occupant committed a criminal activity;

4. Consented warrantless search;

5. Customs search;

6. Stop and frisk; and


7. Exigent and emergency circumstances.  (Emphasis in the
[28]

original, citations omitted)


Despite the foregoing circumstances, petitioner insists that his
search and arrest violated his constitutional rights. He
cites People v. Tudtud  to argue that assuming the prosecution's
[29]

version of events were true, his warrantless arrest preceded his


warrantless search, and this is a violation of the right against
unreasonable searches and seizures,  This argument cannot be
[30]

sustained.

While it is true that in Tudtud this Court noted that, generally, a


warrantless arrest must precede a warrantless search, this
statement was qualified:
It is significant to note that the search in question preceded the
arrest. Recent jurisprudence holds that the arrest must precede
the search; the process cannot be reversed. Nevertheless, a
search substantially contemporaneous with an arrest can
precede the arrest if the police have probable cause to
make the arrest at the outset of the search.  (Emphasis[31]

supplied, citations omitted)


Thus, this Court explained that where a warrantless search
preceded a warrantless arrest but was substantially
contemporaneous with it, what must be resolved is whether or
not the police had probable cause for the arrest when the search
was made:
The question, therefore, is whether the police in this case had
probable cause to arrest appellants, Probable cause has been
defined as:
an actual belief or reasonable grounds of suspicion. The grounds
of suspicion are reasonable when, in the absence of actual belief
of the arresting officers, the suspicion that the person to be
arrested is probably guilty of committing the offense, is based on
actual facts, i.e., supported by circumstances sufficiently strong
in themselves to create the probable cause of guilt of the person
to be arrested. A reasonable suspicion therefore must be founded
on probable cause, coupled with good faith of the peace officers
making the arrest.
The long-standing rule in this jurisdiction, applied with a great
degree of consistency, is that "reliable information" alone is not
sufficient to justify a warrantless arrest under Section 5 (a), Rule
113. The rule requires, in addition, that the accused perform
some overt act that would indicate that he "has committed, is
actually committing, or is attempting to commit an
offense."  (Emphasis supplied, citation omitted)
[32]

Further, probable cause may be in the form of overt acts which


show that a crime had been, was being, or was about to be
committed. Thus, a warrantless arrest that precedes a
warrantless search may be valid, as long as these two (2) acts
were substantially contemporaneous, and there was probable
cause.

Accordingly, this Court held that the arrest in People v.


Tudtud was invalid, since the appellants in that case were not
performing any such overt acts at the time:
Appellants in this case were neither performing any overt act or
acting in a suspicious manner that would hint that a crime has
been, was being, or was about to be, committed. If the arresting
officers' testimonies are to be believed, appellants were merely
helping each other carry a carton box. Although appellant Tudtud
did appear "afraid and perspiring," "pale" and "trembling," this
was only after, not before, he was asked to open the said box.
 (Citations omitted)
[33]

In this case, the arrest and the search were substantially


contemporaneous. Thus, what must be evaluated is whether or
not the arresting officers had probable cause for petitioner's
arrest when they made the search.

Here, the arresting officers saw a man hand petitioner a small


plastic sachet, which petitioner then inspected by flicking it
against the light of a lamp post in an alley. Upon the officers'
approach, these two (2) men fled. These overt acts and
circumstances were observed personally by the arresting officers
and, taken together, constitute reasonable suspicion that these
two (2) men were violating Republic Act No. 9165, Thus, that the
search preceded the arrest does not render invalid the search and
arrest of petitioner.

II

Section 21 of Republic Act Mo. 9165 provides for the handling of


dangerous drugs after its seizure and confiscation:
Section 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of


the drugs shall, immediately after seizure and confiscation,
physically inventory and photograph the same in the presence of
the accused or the person/s from whom such items were
confiscated arid/or seized, or his/her representative or counsel, a
representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to
sign the copies of the inventory and be given a copy thereof[.]
In relation to the foregoing requirements, Section 21 of the
Implementing Rules and Regulations of Republic Act No. 9165
provides:
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in the
presence of the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest office of
the apprehending officer/team, whichever is practicable, in case
of warrantless seizures; Provided, further, that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.]
In People v. Holgado y Dela Cruz,  this Court explained in depth
[34]

the significance of meeting the foregoing requirements under the


law and the implications of the failure to meet them, especially
where the amount of narcotics seized is miniscule. This Court
stressed that trial courts must carefully consider the intricacies of
cases involving Republic Act No. 9165 and employ heightened
scrutiny. Thus, this Court considered several factors in
determining that violation of Republic Act No. 9165 was not
proven beyond reasonable doubt. This Court noted that non-
compliance with Section 21 of Republic Act No. 9165 produces
doubt as to the origins of any seized narcotics. It further noted
that where a miniscule amount of narcotics is seized, a more
exacting compliance with the requisites of Republic Act No. 9165
is necessary. Additionally, although non-compliance with Republic
Act No. 9165 upon justifiable grounds does not render void and
invalid the seizure of the narcotics, this Court noted that no
justifiable grounds were presented to explain non-compliance
with the requisites.

Here, respondent failed to squarely address this matter of its


compliance with Republic Act No. 9165 in its Comment. Thus, it
becomes necessary to examine its arguments before the Court of
Appeals, where it argued:
As to when and how the markings "JBA" was (sic) placed on the
recovered plastic sachet PO1 Dela Cruz testified:
Q: How many plastic sachets did you recover from the hand of
the accused?
A: Only one (1)[,] ma'am.
Q: And what did you do with the plastic sachet you recovered
from him?
A: We brought it to the crime laboratory for examination[,]
ma'am.

Q: Were there markings placed on the specimens when you


forwarded it (sic) to the crime laboratory?
A: Yes, ma'am.

Q: What markings were placed on the specimens?


A: JBA[,] ma'am.

Q: Who put the markings on the specimen?


A: The investigator, ma'am.
(TSN dated 5 December 2007, page 7)

On cross-examination, PO1 Dela Cruz was straightforward and


candid, when he testified on how the specimen confiscated from
the appellant came into the hands of the PNP Crime Laboratory.
Thus:
Q: And thereafter you recovered the plastic sachet?
A: Yes[,] ma'am.

Q; What markings were put on the plastic sachet?


A: JBA, ma'am.

Q: But you were not the one who put the markings on the plastic
sachet?
A: Yes, ma'am,

Q: And it is a Standard Operating Procedure in your office that


the markings you put on the specimens are the initials of the
accused[,] is that correct?
A: Yes, ma'am.

Q: Who forwarded the specimen to the crime lab, Mister Witness?


A: I was the one who forwarded it, ma'am,
(Ibid, page 12)
   
....

Contrary to what appellant wants to portray, the chain of custody


of the seized prohibited drug was not broken. The initials of
appellant, "JBA" were placed in the transparent plastic sachet
containing white crystalline substance suspected to be shabu
immediately after seizure, as an incident to a valid warrantless
arrest. This was placed by the investigator in the Binangonan
Police Station where the appellant was brought for investigation.
The fact that this investigator was not identified and presented in
court does not in any way cast doubt on the integrity of the chain
of custody. After all, not all people who came into contact with
the seized drugs are required to testify in court. There is nothing
in Republic Act No. 9165 or in any rule implementing the same
that imposes such a requirement. As long as the chain of custody
of the seized drug was clearly established to have not been
broken, as in this case, and the prosecution did not fail to identify
properly the drugs seized, it is not indispensable that each and
every person who came into possession of the drugs should take
the witness stand. [35]

Thus, the Court of Appeals found that the integrity of the seized
narcotics had been preserved;
In like manner, there is no merit in appellant's assertion that the
arresting officers had failed to preserve the integrity and the
evidentiary value of the confiscated drugs. The factual
antecedents of the case reveal that the police officers
immediately went to the police station to turn over appellant and
the evidence seized from. him. The police investigator at the
station then marked the confiscated plastic sachet with
appellant's initials. The plastic sachet and its contents were then
submitted by PO1 Dela Cruz to the PNP Crime Laboratory at
Camp Crame, Quezon City for examination, which was conducted
by PIAFCO Abillonar.

As duly supported by the testimonies of its witnesses, an


unbroken chain of custody of the seized drags had been
established by the prosecution from the arresting officer, to the
investigating officer, and finally to the forensic chemist. There is
no doubt that the items seized from the appellant at the scene of
the crime were also the same items marked by the investigating
officer, sent to the Crime Laboratory, and later on tested positive
for rnethamphetamine hydrochloride. [36]

However, it appears from the record that the seized drugs were
not marked by the apprehending team but by an investigating
officer at the police station, an act which is not in accordance with
Republic Act No. 9165. Further, no justifiable reason for this was
presented by the prosecution.

This Court stresses that where miniscule amounts of drugs are


involved, trial courts should require more exacting compliance
with the requirements under Section 21 of Republic Act No. 9165.
Consequently, the trial court and the Court of Appeals should
have considered the failure of the apprehending team to mark the
seized drugs immediately after seizure and confiscation. They
should also have considered that it was the investigating officer
at the police station who marked the same and not the arresting
officers. The failure of the prosecution to address this issue and
to provide a justifiable reason for this are enough to cast a
shadow of doubt on the integrity of the operation.

WHEREFORE, the petition is GRANTED. The Court of Appeals


Decision dated June 1, 2012, and Resolution dated January 24,
2013 in CA-G.R. CR No. 32853 are REVERSED and SET ASIDE.
Petitioner JESUS APARENTE y VOCALAN is ACQUITTED of
violating Article II, Section 11 of Republic Act No. 9165. Let entry
of judgment be issued immediately.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.
February 21, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on September 27, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on February 21, 2018 at 2:30 p.m.

[1]
 Rollo, pp, 11-32.

 Id. at 34-46. The Decision was penned by Associate Justice


[2]

Danton Q. Bueser and concurred in by Associate Justices Rosmari


D. Carandang and Ricardo R. Rosario of the Sixth Division, Court
of Appeals, Manila.

 Id. at 48-48-A. The Resolution was penned by Associate Justice


[3]

Danton Q. Bueser and concurred in by Associate Justices Rosmari


D. Carandang and Ricardo R. Rosario of the Former Seventh
Division, Court of Appeals, Manila.

[4]
 Id. at 35.

[5]
 Id. at 66.

[6]
 Id.

[7]
 Id. at 36.
[8]
 Id.

[9]
 Id. at 37.

[10]
 Id.

[11]
 Id.

[12]
 Id. at 66-67.

[13]
 Id. at 67.

 Id. at 66-67. The Decision was penned by Presiding Judge


[14]

Dennis Patrick Z. Perez.

[15]
 Id. at 67.

[16]
 Id. at 51.

[17]
 Id. at 34-46.

[18]
 Id. at 42.

[19]
 Id. at 42-43.

[20]
 Id. at 43.

[21]
 Id. at 43-44.

[22]
 Id. at 45.

[23]
 Id. at 48.

[24]
 Id. at 11.

[25]
 Id. at 106-116.

[26]
 Id. at 122-130.
[27]
 740 Phil. 212 (2014) [Per J. Leonen, Third Division].

[28]
 Id. at 227-228.

[29]
 458 Phil 752 (2003) [Per J. Tinga, Second Division].

[30]
 Rollo, pp. 19-21.

 People v. Tudtud, 458 Phil. 752, 772-773 (2003) [Per J. Tinga,


[31]

Second Division].

[32]
 Id. at 773.

[33]
 Id. at 780.

[34]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[35]
 Rollo, pp. 83-85.

[36]
 Id. at 42-43.

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EN BANC

[ G.R. No. 213581, September 19,


2017 ]
BANGKO SENTRAL NG PILIPINAS, PETITIONER,
VS. COMMISSION ON AUDIT, RESPONDENT.
DECISION

LEONEN, J.:

Due process in administrative proceedings does not require the


submission of pleadings or a trial-type of hearing. However, due
process requires that a party is duly notified of the allegations
against him or her and is given a chance to present his or her
defense.

This reviews the Decision  dated April 12, 2013 and


[1]

Resolution  dated May 6, 2014 of the Commission on Audit,


[2]

finding Evelyn T. Yap (Yap) and Perry B. Dequita (Dequita) and


other officers of the Bangko Sentral ng Pilipinas, Cotabato Branch
jointly and solidarity liable for cash shortage in the amount of
P32,701,600.00

The facts as established by the parties are as follows:

On May 27, 2005, Mariam Gayak (Gayak), Bank Officer III of the
Bangko Sentra] ng Pilipinas, Cotabato Branch was assigned to the
Davao Regional Office. In light of Gayak's transfer, Verlina Silo
(Silo) and Yap were designated as Acting Bank Officer III and
Bank Officer II, respectively.
[3]

On June 7, 2005, Silo transferred her cash accountabilities in the


amount of P988,105,695.00 to Yap. Six (6) months later, Gayak
returned to the Cotabato Branch and Yap had to turn over her
cash accountability back to Silo. [4]

From December 5, 2005 to January 6, 2006, the Commission on


Audit audited and examined Yap's cash accountability.  The audit
[5]

was needed before Yap could transfer her cash accountability


back to Silo. [6]
The Commission on Audit stated that in the morning of December
22, 2005, its Audit Team finished auditing Silo's accountability
and proceeded to audit Yap's cash accountability. Later that day,
the Audit Team could no longer locate Silo. [7]

That same day, Silo sent Dequita, Manager of Bangko Sentral ng


Pilipinas, Cotabato Branch, a text message where she admitted
misappropriating a portion of Yap's accountability when she still
had custody over it.  Dequita immediately informed the Audit
[8]

Team of Silo's text message. This prompted the Audit Team to


conduct a piece-by-piece cash count, not just a random sampling
count. The Audit Team discovered the irregularity when they
counted the P1,000.00 notes  and found shortage in the amount
[9]

ofP32,701,600.00 from Yap's cash accountabilities. [10]

On December 23, 2005, Silo executed m1 affidavit where she


admitted sole responsibility for the cash shortage. [11]

Bangko Sentral ng Pilipinas formed a Fact Finding Task Force to


investigate the matter and Silo appeared before it.  In the [12]

presence of the Fact Finding Task Force, Yap, and Dequita, Silo
executed another affidavit  where she again admitted repeatedly
[13]

stealing cash from her accountabilities for a period of about five


(5) years.

Silo then assig.ped to Bangko Sentral ng Pilipinas all the benefits


she would receive from the Bangko Sentral ng Pilipinas Provident
Fund, her retirement benet1ts from the Government Service
Insurance System, and the cash equivalent of her leave credits to
pay for the amount she misappropriated. [14]

On January 18, 2006, the Commission on Audit directed Yap to


explain and return the cash shortage. Yap denied responsibility
over the cash shortage and attached Silo's affidavit where she
admitted sole liability over the missing cash. [15]
The Commission on Audit filed administrative charges of
dishonesty and grave misconduct, and criminal charges of
malversation and violation of Section 3(E) of Republic Act No.
3019 or the Anti-Graft and Corrupt Practices Act against Dequita,
Silo, and Yap before the Office of the Ombudsman. [16]

On April 5, 2006, the Office of the Ombudsman directed Yap, Silo,


and Dequita to submit their respective counter-affidavits for the
administrative complaint. But the order sent to Silo at her office
and home addresses were both returned unserved. [17]

On July 31, 2006, the Office of the Ombudsman  found Silo liable
[18]

of the administrative charge against her but dismissed the


administrative charges against Dequita and Yap.

With Silo's admission of repeatedly misappropriating the cash


under her custody and control for her personal use, the Office of
the Ombudsman found her solely liable for dishonesty and grave
misconduct.  It held:
[19]

Since all evidence points to respondent Silo as the sole


perpetrator of the acts herein complained of, there is no basis to
hold respondents Yap and Dequita administratively liable for the
shortage, notwithstanding the fact that the accountability was
under respondent Yap at the time of audit. Important emphasis
should be made that respondent Silo assumed full responsibility
of the cash shortage and totally absolved respondents Yap and
Dequita of any involvement or participation in the loss of the
funds.[20]

The Office of the Ombudsman also took note that Silo's illegal
activities took place before Dequita became Branch Manager and
long before Silo turned over her cash accountabilities to Yap.[21]

The Office of the Ombudsman likewise absolved Yap and Dequita


from negligence in the performance of their duties. It held that
Yap's only lapse was her failure to conduct a piece-by-piece count
of the P988,105,695.00 that Silo turned over to her on June 7,
2005. However, the Office of the Ombudsman stated that it was
physically impossible for Yap to do a piece-by-piece count of the
staggering an1otmt of cash under her custody and to insist on a
piece-by-piece count would disturb normal banking operations. [22]

The dispositive portion of the Office of the Ombudsman July 31,


2006 Decision read:
WHEREFORE, PREMISES CONSIDERED, there being
insufficient evidence against respondents Perry B, Dequita and
Evelyn T. Yap, the case as against them is hereby
ordered DISMISSED. On the other hand, there being substantial
evidence against respondent Verlina B. Silo, this Oftice finds her
guilty of Dishonesty and Grave Misconduct. Pursuant to Section
52(1) & (3) in relation to Section 57, Rule IV, of CSC Resolution
No. 991936 dated August 31, 1999, respondent Verlina B. Silo is
hereby meted the penalty of DISMISSAL FROM PUBLIC
SERVICE together with the accessory penalties of cancellation of
eligibility, forfeiture of retirement benefits and perpetual
disqualification for reemployment in the government service. The
Honorable Amando M. Tetangco, Jr., Governor of the Banko
Sentral ng Pilipinas, A. Mabini Street, Malate, Manila, is hereby
directed to implement this Decision immediately upon receipt
hereof and to submit to this Office a compliance report within ten
(10) days from its implementation.

SO DECREED. [23]

The Commission on Audit moved for the partial reconsideration of


the Ombudsman's dismissal of the administrative charges against
Dequita and Yap. [24]

On July 4, 2008, the Office of the Ombudsman denied  the [25]

Commission on Audit's motion for partial reconsideration. The


Commission on Audit did not appeal the denial of its motion.

On July 28, 2006, the Office of the Ombudsman  found probable


[26]

cause in the criminal case against Silo, but none against


Deq1,1ita or Yap. The dispositive portion of the Ombudsman
Resolution read:
WHEREFORE, all the foregoing premises considered, and finding
probable cause against respondent Verlina B. Silo, let the
enclosed Informations for Malversation and Violation of Section
3(e) of RA 3019 be filed with the Regional Trial Court of Cotabato
City and preferably to be prosecuted by the Special Prosecution
Bureau of this Area Office. Finding no probable cause against
respondents Perry B. Dequita and Evelyn T. Yap, the criminal
case as against them is hereby ordered DISMISSED.

SO RESOLVED. [27]

The Commission on Audit moved tor the partial reconsideration of


the dismissal of the criminal case against Dequita and Yap [28]

Due to the dismissal of the administrative case against Yap and


Dequita, the Bangko Sentral ng Pilipinas Office of the General
Counsel and Legal Services opined that Yap's liability to restitute
the cash shortage under her accountability had been
extinguished. However, it declined to comment on the status of
Yap's accounts receivables which were booked on December 29,
2005. Instead, it recommended that the matter be referred to the
Commission on Audit for its proper evaluation. [29]

On March 24, 2008, Pedro P. Tordilla, Managing Director of


Bangko Sentral ng Pilipinas Regional Monetary Affairs Sub-Sector,
sent the Commission on Audit a request for an evaluation of the
status of Yap's liability, considering the dismissal of the
administrative case against her.[30]

The Assistant Commissioner of the Corporate Government Sector


of the Commission on Audit opined that any action on the request
for opinion should be subject to the final outcome of the criminal
case against Yap, Silo, and Dequita. [31]

On July 18, 2008, the Office of the Ombudsman  denied the


[32]

Commission on Audit's motion for partial reconsideration of the


Resolution dated July 28, 2006. The Commission on Audit did not
appeal the denial of its motion.

On April 12, 2013, instead of providing an opinion regarding Yap's


liability, the Commission on Audit issued a Decision  denying the
[33]
request to extinguish Yap's liability in the cash shortage and
holding her liable for it. Furthermore, the Commission on Audit
held Dequita, as well as the other Cotabato Branch Managers for
the period of March 1996 to 2000, and the responsible officer/s
who designated Silo to two (2) separate positions at the Cash
Operations Unit to be jointly and solidarily liable with Yap.

The Commission on Audit held that while Silo had already


admitted causing the cash shortage of P32,701,600.00, her
admission of guilt did not automatically release Yap and Dequita
from their responsibility over the funds entrusted to them. They
still needed to "prove that they exercised the highest degree of
care in performing their job in order to protect and safeguard
their accountabilities." [34]

The dispositive portion of the Commission on Audit Decision read:


WHEREFORE, premises considered, the request to extinguish
the receivable from Ms. Yap arising from her shortage in the
amount of [P]32,701,600.00 is DENIED. Moreover, Mr. Dequita
and the other branch managers for the period March 1996 to year
2000, as well as the responsible officer/s designating Ms. Silo
with two (2) positions at the [Cash Operations Units], in violation
of the dual control policy, are also held jointly and solidarily liable
for the lost amount. For this purpose, the Supervising Auditor.
[Bangko Sentral ng Pilipinas] is directed to identify and notify
these bank officers of their liability, and ensure that they are also
included in the receivable account as persons jointly and
solidarity liable with Ms. Yap. [35]

On May 6, 2014, the Commission on Audit  denied Bangko


[36]

Sentral ng Pilipinas' Consolidated Motion for Reconsideration.

On July 28, 2014, petitioner Bangko Sentral ng Pilipinas filed a


Petition for Certiorari  where it asserts that Silo has assumed full
[37]

responsibility of the cash shortage by admitting that she


repeatedly took cash from her accountabilities for five (5) years
without anyone's assistance. [38]

Silo's affidavit read:


At the [Bangko Sentral ng Pilipinas] for lack of manpower, there
was a time that started in March 1996 that I held two (2)
positions at the Cash Operations Unit. One was as a Currency
Operations Officer and at the same time as Assistant Cashier. I
held the said positions for about four (4) years.

I took advantage of the said situation by unlawfully taking part of


my cash accountabilities for my personal use. I started
embezzling the [Bangko Sentral ng Pilipinas]'s funds in my cash
accountabilities from 1996 continuously until 2000 while we were
still at the former [Bangko Sentral ng Pilipinas] Office situated at
Don Rufino Alonzo St., Cotabato City which I made alone or
without the knowledge or participation of any of my officemates
in the Bank.

I started by taking one wrapper of [P]1000 ([P]100,000.00) a


day from my cash accountabilities kept inside the Cash Vault
which I first placed inside a green metal cash box which I could
carry outside the Cash Vault without anybody noticing or minding
what the contents thereof were. Thereafter, from the said box I
transferred the wrapper of [P]1000 into my bag. I was able to
take out about five (5) wrappers of [P]1000 a week or 20
wrappers or [P]2 million a month using the same procedure
mostly to fund the checks that I issued in payment of interests of
my loans/obligations from the banks and individual creditors and
accounts payable to all my suppliers of merchandise for my
businesses.

I also used the [Bangko Sentral ng Pilipinas]'s funds which I took


from my cash accountabilities to pay for the medical expenses
incurred successively and/or simultaneously due to the illnesses
suffered by my sister, mother and brother. My sister had cancer
and my mother had a unique kind of decease (sic) before they
eventually died. My son Daniel was electrocuted in 2000. I had to
assist them financially as they ha[d] no enough money to pay for
huge an1ount of medical expenses. My financial obligations
increased as I was swindled in connection with my jewelry
business, my receivables from government agencies (ARMM-
Maguindanao offices) were not collected and I received death
threats from my creditors and debtors to the point that my eldest
son was abducted to serve as a warning to me and my family so
as not to pursue collecting my receivables from them.

There was a time when my shortage which then already


consisting of five (5) bundles of [P]1,000 currency notes or a
total of [P]5 million were not discovered by those who audited my
cash accountabilities. I hid them at the back of the currency
stockpiles inside the Cash Vault.

Little by little, I replaced the [P]1000 bundles of currency notes


with [P]100 currency notes by exchanging some of the [P]1000
currency notes in my cash accountabilities with any of the tellers
while we were still at the old [Bangko Sentral ng Pilipinas] Office
and even at the present [Bangko Sentral ng Pilipinas] Office site
until I was able to turn the 37 bundles of [P]1000 notes which I
took for my personal use into 37 bundles of [P]100 currency
notes with insertions of few pieces of [P]1000 without any
auditor/head of the branch discovering the said shortage except
on December 23, 2005 by the [Commission on Audit] Auditors
from Manila.

My cash accountabilities had been audited or supposedly


physically or actually counted by the [Internal Audit Office]
Auditors, Branch Special Services Staff Auditors, (Commission on
Audit] Auditors and Heads of Cotabato branch without finding or
discovering any shortage therefrom.

I am executing this affidavit to attest to the truth of the foregoing


facts, to relieve all my officemates from any responsibility,
obligation or damage that may have been caused the [Bangko
Sentral ng Pilipinas] due to the shortage in my cash
accountabilities which I admit to be taken by me for my personal
use.
I truly and sincerely regret what I have done. I apologize for all
the damages and inconveniences that I have caused my
officemates and the management.  (Emphasis in the original)
[39]

Petitioner points out that the Office of the Ombudsman has


dismissed both administrative and criminal charges against Yap
and Dequita, finding only Silo responsible for the cash shortage.
 Additionally, it emphasizes that the dismissal of the
[40]

administrative and criminal charges against Yap and Dequita has


become final and executory) since the Commission on Audit did
not elevate them for appeal. Thus, there was no basis for the
Commission on Audit's denial of Yap's request for relief from
accountability. Neither is there any basis to hold Dequita or any
other officers from the Bangko Sentral ng Pilipinas, Cotabato
Branch jointly and solidarity liable with Yap for the shortage.
[41]

In its Supplemental Petition,  petitioner underscores that the


[42]

assailed Decision was issued in response to its request for opinion


on the extinguishment of Yap's liability on the cash shortage. It
reiterates that it never filed a case against Yap before
respondent, neither did respondent require the filing of any
pleadings or motions before it rendered the assailed Decision. [43]

Petitioner maintains that it was only allowed an opportunity to be


heard when it filed its Motion for Reconsideration, which
respondent denied, while Yap, Dequita, and the other bank
officers were never given the opportunity to present their own
evidence.[44]

Petitioner asserts that with the Office of the Ombudsman's


dismissal of the administrative anq criminal charges against Yap
and Dequita, the proper remedy was to appeal the dismissals and
not for respondent to render the assailed Decision. [45]

In its Resolution  dated August 5, 2014, this Court required the


[46]

Commission on Audit to comment on the petition.

In its Comment,  respondent Commission on Audit insists that


[47]

the principle of res judicata is inapplicable in the case at bar


because jurisprudence has consistently held that res
judicata does not attach to decisions rendered by the Office of the
Ombudsman. [48]

Respondent likewise declares that the administrative and criminal


charges before the Office of the Ombudsman are distinct from its
audit proceedings. [49]

Respondent states that as public officials, Yap and Dequita should


be held accountable for the cash shortage because of their
negligence that emboldened Silo to brazenly steal money. [50]

Respondent further argues that it observed due process because


Yap, Dequita, and Bangko Sentral ng Pilipinas were able to
present their side during the proceedings before the Office of the
Ombudsman. [51]

In its Resolution  dated November 18, 2014, this Court directed


[52]

petitioner to file a reply. Petitioner then filed its Reply  on [53]

February 24, 2015, where it denies that it invoked the principle


of res judicata as its defense. It clarifies that what it disputes is
the lack of due process with respondent's issuance of the assailed
Decision in response to petitioner's request for opinion:[54]

5. Public Respondent [Commission on Audit] failed to afford Mr.


Dequita and Ms. Yap a reasonable opportunity to address the
"case" against them prior to the issuance of the Assailed
Decision. Public Respondent [Commission on Audit]'s allegations
that it afforded Mr. Dequita and Ms. Yap due process since they
"considered their defenses" in their pleadings filed before the
Ombudsman, and that Mr. Dequita and Ms. Yap were later
allowed to file their "comprehensive Motion for Reconsideration"
(of the Assailed Decision), do not hold water. It begs the question
on how Mr. Dequita and Ms. Yap could have filed a
"comprehensive Motion for Reconsideration" when they were not
parties to the Request for Opinion in the first place, since it was
the [Bangko Sentral ng Pilipinas] that prepared and filed said
request. Simply, these allegations are mere afterthoughts that do
not cure the fact that due process was not afforded to Mr.
Dequita and Ms. Yap. [55]

Petitioner insists that the Commission on Audit erred in treating


its request for opinion as a complaint against Yap and Dequita.
 Furthermore, petitioner underscores that respondent failed to
[56]

follow its own rules when it issued the assailed Decision. [57]

In its Resolution  dated March 17, 2015, this Court directed the
[58]

parties to file their respective memoranda.

In its Memorandum,  respondent posits that it is irrelevant if it


[59]

construed the request for opinion from petitioner as a complaint


because petitioner cannot limit or control respondent's
constitutional mandate to audit and settle goven1ment accounts.
[60]

Respondent asserts that a formal hearing or presentation of


pleadings is not required in exercising its jurisdiction to act on
requests for losses.  It claims that it followed the requirements
[61]

of due process because it studied the records and evidence


submitted during the audit proceedings and in the proceedings
before the Office of the Ombudsman. [62]

Respondent also questions why petitioner is representing Yap,


stating, "[Bangko Sentral ng Pilipinas] is bereft of locus standi to
claim nonobservance of due process rights. Violation of due
process is a personal defense that can only be asserted by the
persons whose rights have been allegedly violated." [63]

In its Memorandum,  petitioner reiterates that the assailed


[64]

Decision was issued in response to a request for opinion and not


a complaint. Moreover, respondent resorted to ex
parte proceedings because Yap, Dequita, and the other bank
officers of the Cotabato Branch were denied the chance to
present evidence in their behalf and to refute the allegations
against them. [65]
Petitioner likewise highlights that it took respondent five (5) years
to issue its Decision on the request for opinion, violating the
constitutional rights of Yap, Dequita, and the other bank officials
to a speedy disposition of cases.[66]

The only issue for this Court's resolution is whether or not the
Commission on Audit committed grave abuse of discretion in
issuing its assailed April 12, 2013 Decision.

Respondent Commission on Audit is the guardian of public funds


and the Constitution has vested it with the mandate to "examine,
audit, and settle all accounts pertaining to the revenue and
receipts of, and expenditures or uses of funds and property,
owned and held in trust by, or pertaining to, the Government, or
any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations with original
charters[.]" [67]

Respondent refers to its constitutional mandate to support its


claim that it was well within its power to treat the request for
opinion from the Bangko Sentral ng Pilipinas as a request for
relief from accountability:
31. Indubitably, as a specialized constitutional body, the
[Commission on Audit] is effectively clothed with ample
knowledge on auditing and settlement accounts of government
funds and properties. How respondent [Commission on Audit]
construed the alleged letter request is a trivial matter, for as long
as it performed its mandated duty of judiciously examining
documents and records prior to arriving at its decision. The
authority of the [Commission on Audit] could not be limited or
controlled by petitioner which insists that it was simply seeking
guidance on booking of Yap's accounts receivable. [68]

While this Court has time and again recognized respondent's


mandate,  this does not give it the authority to disregard the
[69]

basic tenets of due process or brush aside its own rules of


procedure.
The request for opinion was dated March 24, 2008;  hence, the
[70]

1997 Commission on Audit Rules of Procedure (1997 Rules)


apply. Rule VIII, Section 1 of the 1997 Rules recognizes a money
claim as the only original case that may be directly filed with the
Commission Proper:
RULE VIII
Original Cases Filed Directly with the Commission Proper

Section 1. Money Claim. - Cases involving money claim against


the Government cognizable by the Commission Proper may be
filed directly with the Commission Secretary.
Rule VIII of the 1997 Rules then lays out in detail the pleadings
to be submitted to support a money claim, with their
corresponding periods for compliance. Under the 1997 Rules, the
following pleadings are to be submitted for the proper resolution
of an original case filed directly with the Commission Proper;
petition,  answer,  and reply.
[71] [72] [73]

Respondent does not deny that it treated the request for opinion
from Bangko Sentral ng Pilipinas as a request for relief from
accountability for losses,  which it avers falls under its original
[74]

jurisdiction in its 2009 Revised Rules of Procedure (2009 Rules):


RULE VIII
Original Cases Filed Directly with the Commission Proper

Section 1. Original Jurisdiction. - The Commission Proper shall


have original jurisdiction over: a) money claim against the
Government; b) request for concurrence in the hiring of legal
retainers by government agency; c) write off of unliquidated cash
advances and dormant accounts receivable in amounts exceeding
one million pesos (P1,000,000.00); d) request for relief from
accountability for los[s]es due to acts of man, i.e., theft, robbery,
arson, etc., in amounts in excess of Five Million pesos
(P5,000,000.00). (Emphasis supplied)
However, to reiterate, the applicable rules in the case at bar are
the 1997 Rules, not the 2009 Rules. The 1997 Rules do not
provide a procedure for the filing of a request for relief from
accountability; instead, the procedure for a request for relief from
accountability can be found in Commission on Audit Resolution
No. 2001-010 dated June 21, 2001, the pertinent portions of
which state:
SUBJE Amendment of [Commission on Audit] Resolution No. 93-605, dated August 3
CT: the delegation of authority of [Commission on Audit] officials to decide on re
relief from money and/or property accountability.
WHER
EAS
,
under
[Com
missio
n on
Audit]
Resol
ution
No.
93-
605,
dated
Augus
t 3,
1993,
this
Comm
ission
deleg
ated
to
certai
n
[Com
missio
n on
Audit]
official
s the
author
ity to
decide
/act
on
reque
st for
relief
from
mone
y
and/o
r
prope
rty
accou
ntabili
ty

...

BE IT
RESO
LVED
, that
all
reque
sts for
relief
from
mone
y
and/o
r
prope
rty
accou
ntabili
ty
shall
be
treate
d like
any
ordina
ry
case
under
the
jurisdi
ction
and
author
ity of
the
Centr
al and
Regio
nal
Direct
ors or
the
Unit
Audito
rs to
decide
BE IT
RESO
LVED
FURT
HER
, tha
 
such
reques
t for
relief
shall
be
accom
panied
by the
docur
nents
requir
ed
 
under
[Com
missio
n on
Audit]
Circul
ar No.
92-
386
for
accou
ntable
officer
s of
local
goven
unent
units
and
those
requir
e
 
under
[Com
missio
n on
Audit]
Memo
randu
m No.
92-
751
for
accou
ntable
officer
s in
the
corpor
ate
and
nation
al
sector
s
BE IT
RESO
LVED
FINAL
LY
, that
the
Chair
man
of this
Comm
ission
be
author
ized
to
disse
minat
e this
Resol
ution
for
the
guida
nce of
all
conce
rned

This
Resol
ution
shall
take
effect
imme
diatel
y
[75]

 
(Emp
hasis
suppli
ed

Commission on Audit Memorandum No. 92-751 dated February


24, 1992, in turn, provides:
TO : All [Commission on Audit] Directors/Officers-in-Charge, Department Audit
Units and All Others Concerned.

SUBJE Documentation on Petitions/Requests for Relief from Accountability.


:
CT

...

In
order
,
theref
ore,
to
ensur
e or
facilit
ate
the
evalu
ation
and
resol
ution
of
applic
ation
s for
relief
from
accou
ntabil
ity
with
utmo
st
accur
acy
and
dispa
tch,
and if
only
to
corre
ct or
put
an
end
to the
com
missi
on of
the
afore
-cited
defici
encie
s
 
the
[Com
missi
on on
Audit]
Direct
or/Off
icer-
in-
Charg
e
and/o
r Unit
Head
conce
rned
shoul
d,
hence
forth,
see
that
the
follow
ing
requir
emen
ts are
first
duly
compl
ied
with
and
that
the
docu
ment
s
called
for
there
under
acco
mpan
y the
pertin
ent
reque
sts
for
relief
to be
submi
tted
to the
Com
missi
on
, to
wit

1. The basic notice of loss to be filed immediately after the


discovery of the loss and the request for relief from
accountability which should be filed by the proper
accountable officer within the reglementary period of 30
days from the occurrence of the loss, with the Auditor
concerned or the Commission, as the case may be.
1. 1. 1.In case of delay in the filing of the aforesaid notice and request, satisfacto
1 the reason(s) for such delay should be submitted, after which the reasons/explana
. be verified or confirmed by the Auditor concerned.
1
.
1
5
1. 1. 1.If the occurrence of the loss has also been reported to other police
1 [National Bureau of Investigation], [Criminal Investigation Service], etc., t
. investigation report thereon should be submitted.
1 2. 8.
.
2
2.
3. Copy of the Investigation, Inventory and Inspection report of
the proper [Commission on Audit) personnel on the facts
and circumstances surrounding the loss;
4. Affidavit or Sworn Statement of the proper accountable
officer on the facts and circumstances surrounding the said
loss, supported by the Affidavit of two (2) disinterested
persons who have personal knowledge of such fact of loss;
5. Comment and/or recommendation of the Agency Head
concerned on the request;
6. Comment and/or recommendation of the [Commission on
Audit] Director/[Officer-in-Charge] and/or Unit Head on the
propriety of the request, together with a full statement of
material facts;
7. Exact or accurate amount of government cash or book value
of the property, subject of the request for relief;
8. Memorandum Receipts covering the properties subject of the
request, if any; and
9. A categorical determination by the Director/Auditor
concerned on the absence of fault or negligence on the part
of the accountable officer in the handling, safekeeping, etc.
of the funds and properties under his custody as evidenced
by a recital of the precautionary/security measures adopted
to protect or safeguard them and the like.  (Emphasis
[76]

supplied)
Respondent itself prescribed the documentary requirements
which should accompany a request for relief from accountability.
Commission on Audit Memorandum No. 92-751 requires the
submission of a basic notice of loss "with the Auditor concerned
or the Commission" and a copy of the investigation report by the
proper Commission on Audit Personnel. The accountable officer is
also required to submit a sworn statement, while the agency
head and Commission on Audit Director are expected to submit
their respective comment or recommendation on the request for
relief. Likewise, documentary evidence on the total missing
amount and a categorical determination from the director or
auditor concerned on the lack of negligence on the part of the
accountable officer should accompany the request for relief.

None of these documents accompanied petitioner's request for


opinion. Instead, the request for opinion was meant ''to seek
guidance from Public Respondent [Commission on Audit], with
regard to the proper booking of the Accounts Receivable by Ms.
Yap, in relation to [the Office of] the Ombudsman's dismissal of
the administrative case against her."[77]

Clearly, respondent erred in treating the request for opinion as a


request for relief from accountability.

II

Even if this Court agrees with respondent that its 2009 Rules
apply in the case at bar and not its 1997 Rules, its arguments still
fail to convince.

The 2009 Rules have expanded the Commission Proper's original


jurisdiction provided for under the 1997 Rules by authorizing it to
act not only on money claims but also on several kinds of
request. These requests are (a) for hiring of legal retainers, (b)
for write-offs of unliquidated cash advances and dormant
amounts, and (c) for relief from accountability for losses due to
acts of man.  Nonetheless, despite the Commission Proper's
[78]

expanded jurisdiction, the Commission on Audit's 2009 Rules still


prescribe the proper procedure to be followed for the resolution of
the original case.

Money claims against the government continue to require the


submission of a petition and an answer, with the petitioner having
the option to file a reply at his or her discretion.  On the other
[79]

hand, a request of a government agency to hire a legal retainer is


to be filed with the Commission on Audit Office of the General
Counsel, who shall then act on the request in respondent's behalf.
[80]

The procedure for requests for write-offs of unliquidated cash


advances and dormant accounts and for relief from accountability
for losses due to acts of man can be found in Rule VIII, Section 4,
which states:
Section 4. Other Cases. - Requests for write off of accounts
receivable or unliquidated cash advances exceeding P1 million; or
relief from accountability for acts of man such as robbery, theft,
arson in excess of P5 million; or approval of private sale of
government property; or other matters within the original
jurisdiction of the [Commission Proper], shall be filed with the
Commission Secretary. The Commission Secretary shall refer the
case to the Central/Regional Office concerned for comment and
recommendation and thereafter to the Legal Services Sector, for
preparation of the draft decision for consideration of the
Commission Proper. (Emphasis supplied)
Respondent claims that there is nothing in Rule VIII, Section 4 of
the 2009 Rules that directs it to conduct adversarial proceedings
with the submission of a request for relief from accountability.  It
[81]

further claims that its assailed Decision was anived at after a


careful evaluation of the evidence submitted by the parties in the
audit proceedings and the proceedings before the Office of the
Ombudsman. [82]

Nonetheless, this still does not cure the glaring defect that Yap
and Dequita were not parties to the request for opinion or request
for relief from accountability, yet respondent found them liable
for the cash shortage. Much worse, respondent also tried to pin
liability on other bank officers who were never part of the request
for opinion or of any of the proceedings before the Office of the
Ombudsman.

Respondent insists that Yap and Dequita were not deprived of


their right to due process since they filed their counter-affidavits
in the administrative proceedings before the Office of the
Ombudsman, while Yap even filed a reply to respondent's
demand letter after the audit was conducted.  Respondent also
[83]

highlights that petitioner filed a "comprehensive Motion for


Reconsideration"  on the assailed Decision. But as respondent
[84]

itself pointed out, administrative and criminal proceedings before


the Office of the Ombudsman are different from the audit
proceedings before it:
16. There is another reason why the dismissal of administrative
and criminal charges against Yap and Dequita by the Office of the
Ombudsman does not necessarily foreclose the possibility of them
being held accountable by the [Commission on Audit]. The
administrative and criminal charges before the Office of the
Ombudsman and the [Commission on Audit] audit are distinct
proceedings. The first involves the determination of (1)
administrative liability of public officers and (2) the fact of the
commission of a crime. On the other hand, the second relates to
the administrative aspect of the expenditure or use of public
funds. As distinct proceedings, they can proceed independently of
each other.[85]

Yet despite admitting the independent nature of the proceedings


before the Office of the Ombudsman from its own audit
proceedings, respondent still contends that its review and
evaluation of the counter-affidavits filed by Yap and Dequita
before the Office of the Ombudsman already satisfied the
requirements of due process.

This Court is not convinced.


Due process in administrative proceedings does not require the
submission of pleadings or a trial-type ofhearing. Due process is
satisfied if the party is duly notified of the allegations against him
or her and is given a chance to present his or her defense.
Furthermore, due process requires that the proffered defense
should have been considered by the tribunal in arriving at its
decision. [86]

This finds basis in Ang Tibay v. Court of Industrial Relations,


 which ruled that admini trative due process only requires the
[87]

following:
(a) The party should be allowed to present his or her own case and submit supporting e
(b) The deciding tribunal must consider the party's evidence;
(c) There is evidence to support the tribunal's decision;
(d) The evidence supporting the tribunal's decision must be substantial or such "
reasonable mind might accept as adequate to support a conclusion";
(e) The tribunal's decision was based on the evidence presented or the records of th
parties;
(f) The tribunal's decision must be based on the judges' independent consideratio
governing the case; and
(g) The tribunal's decision must be rendered such that the issues of the case and the r
are knon to the parties.
[88]

It is beyond dispute that Yap, Dequita, and the other bank


officials of the Bangko Sentral ng Pilipinas, Cotabato Branch were
denied due process with the issuance of the assailed Commission
on Audit Decision.

Respondent rendered its assailed Decision in blatant disregard to


its own rules, treating the request for opinion as a request for
relief from accountability even if the former did not include the
required documents and comments or recommendations needed
under either the 1997 Rules or 2009 Rules. Furthermore, the
request for opinion was filed by petitioner alone, yet the assailed
Decision found Yap, Dequita, and other bank officers of the
Cotabato Branch jointly and solidarily liable, even if they were
never parties to the request for opinion or request for relief from
accountability.
It was an error amounting to grave abuse of discretion to hold
Yap liable, and Dequita and the other bank officers of the
Cotabato Branch jointly and solidarity liable with Yap for the cash
shortage without an actual complaint being filed and without
giving them the chance to defend themselves. Thus, the assailed
Decision violated the basic tenets of due process and must be
annulled and set aside, However, in the absence of a complaint,
this Court cannot grant petitioner's prayer for this Court to render
judgment relieving Yap, Dequita, and the other bank officers from
accountability over the cash shortage. Nonetheless, the Office of
the Ombudsman has already rendered judgment on Yap and
Dequita's liability by dismissing the administrative and criminal
charges against them.

WHEREFORE, the Petition is GRANTED. The Commission on


Audit Decision No. 2013-064 dated April 12, 2013 and its En
Banc Resolution dated May 6, 2014, holding Evelyn T. Yap, Perry
B. Dequita, and the other bank officers of Bangko Sentral ng
Pilipinas, Cotabato Branch jointly and solidarily liable for the cash
shortage, are REVERSED and SET ASIDE.

SO ORDERED.

Sereno, C. J., on official leave.


Carpio, (Acting C. J.), Velasco, Jr., Leonardo-De Castro, Peralta,
Bersamin, Del Castillo, Jardeleza, Caguioa, Martires, and Reyes,
Jr., JJ., concur.
Perlas-Bernabe, J., on official business.
Tijam, J., on official business.
Gesmundo, J., on official business.

NOTICE OF JUDGMENT

Sirs/Mesdames:
Please take notice that on September 19,
2017 a Decision/Resolution, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the
original of which was received by this Office on December 7, 2017
at 2:50 p.m.

 Rollo, pp. 21-30. The Decision was signed by Chairperson Ma.


[1]

Gracia M. Pulido Tan and Commissioner Heidi L. Mendoza.

[2]
 Id. at 31.

[3]
 Id. at 34.

[4]
 Id. at 34-35.

[5]
 Id. at 6.

[6]
 Id. at 34-35, Ombudsman Decision.

[7]
 Id.

[8]
 Id.

[9]
 Id. at 35.

[10]
 Id. at 6, Petition.

[11]
 Id. at 33.

[12]
 Id. at 43, Ombudsman Decision.
[13]
 Id. at 43-46, Ombudsman Decision.

[14]
 Id. at 46.

[15]
 Id. at 33.

[16]
 Id. at 7, Petition.

[17]
 Id. at 34.

[18]
 Id. at 32-55.

[19]
 Id. at 47.

[20]
 Id. at 48.

[21]
 Id. at 49.

[22]
 Id. at 52-53.

[23]
 Id. at 53-54.

[24]
 Id. at 56.

[25]
 Id. at 56-60, Ombudsman Order.

[26]
 Id. at 61-87, Ombudsman Resolution.

[27]
 Id. at 86.

[28]
 Id. at 88.

[29]
 Id. at 22-23.

[30]
 Id. at 23.

[31]
 Id.
[32]
 Id. at 88-92, Ombudsman Order.

[33]
 Id. at 21-30.

[34]
 Id. at 25.

[35]
 Id. at 29.

[36]
 Id. at 31.

[37]
 Id. at 102-118.

[38]
 Id. at 107.

[39]
 Id. at 43-46.

[40]
 Id. at 107.

[41]
 Id. at 109-110.

[42]
 Id. at 195-211.

[43]
 Id. at 196-197.

[44]
 Id. at 197.

[45]
 Id. at 204-205.

[46]
 Id. at 191-A-191-B.

[47]
 Id. at 245-275.

[48]
 Id. at 251-252.

[49]
 Id. at 256-257.

[50]
 Id. at 259-261.
[51]
 Id. at 266-268.

[52]
 Id. at 276.

[53]
 Id. at 317-331.

[54]
 Id. at 317-318.

[55]
 Id. at 318.

[56]
 Id. at 319-320.

[57]
 Id. at 320-321.

[58]
 Id. at 345-346.

[59]
 Id. at 381-415.

[60]
 Id. at 394.

[61]
 Id. at 395.

[62]
 Id. at 396-397.

[63]
 Id. at 398.

[64]
 Id. at 353-380.

[65]
 Id. at 360.

[66]
 Id. at 360-361.

[67]
 CONST., art, IX-D, sec. 2(1).

[68]
 Rollo, p. 394.
 Technical Education and Skills Development Authority (TESDA)
[69]

v. Commission on Audit, 753 Phil. 434, 441 (2015) [Per J.


Bersamin, En Banc]; Granada v. People of the Philippines, G.R.
Nos. 184092, 186084, 186272, 186488, and 186570, February
22, 2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/184092.pdf> [Per J.
Leonen, Second Division].

[70]
 Rollo, p. 318.

 1997 REVISED RULES OF PROCEDURE OF THE COMMISSION


[71]

OF AUDIT, Rule VIII , sec. 2, 3 and 4 provide:

Section 2. Petition. - A claimant for money against the


Government, whose claim is cognizable by the Commission
Proper, may file a petition. The party seeking relief shall be
referred to as "Petitioner" and the government agency or
instrumentality against whom a claim is directed shall be referred
to as "Respondent".

Section 3. Contents of Petition. - The petition shall contain the


personal circumstances or juridical personality of the petitioner, a
concise statement of the ultimate facts constituting his cause of
action, a citation of the law and jurisprudence upon which the
petition is based and the relief sought. The petition shall be
accompanied by certified true copies of documents as are
referred to therein and other supporting papers.

Section 4. Filing of Petition. - The petition shall be filed with the


Commission Secretary, a copy of which shall be served on the
respondent. Proof of service of the petition on the respondent
shall be attached to the petition.

 1997 REVISED RULES OF PROCEDURE FOR THE COMMISSION


[72]

ON AUDIT, Rule VIII, sec. 6 provides:

Section 6. Answer. - Within the said fifteen (15) days from receipt
of the Order, the respondent shall file with the Commission
Secretary an answer to the petition. The answer shall be
accompanied by certified true copies of documents referred to
therein together with other supporting papers. The answer shall
(a) point out insufficiencies or inaccuracies in the petitioner's
statement of facts and issues and (b) state the reasons why the
petition should be denied or dismissed. Copy of the answer shall
be served on the petitioner and the proof of service thereof shall
be attached to the answer.

 1997 REVISED RULES OF PROCEDURE FOR THE COMMISSION


[73]

ON AUDIT, Rule VIII, sec. 7 provides:

Section 7. Reply. - Petitioner may file a reply within ten (10) days
from receipt of the answer.

[74]
 Rollo, pp. 394-395.

[75]
 Id. at 332-333.

[76]
 Id. at 340-341.

[77]
 Id. at 318.

 2009 REVISED RULES OF PROCEDURE OF THE COMMISSION


[78]

ON AUDIT, Rule VIII, sec. 1.

 2009 REVISED RULES OF PROCEDURE OF THE COMMISSION


[79]

ON AUDIT, Rule VIII, sec. 2.

 2009 REVISED RULES OF PROCEDURE OF THE COMMISSION


[80]

ON AUDIT, Rule VIII, sec. 3.

[81]
 Rollo, pp. 395-396.

[82]
 Id. at 396-397.

[83]
 Id. at 397.
[84]
 Id. at 399.

[85]
 Id. at 256-257.

 Gutierrez v. Commission on Audit, 750 Phil. 413, 430 (2015)


[86]

[Per J. Leonen, En Banc].

[87]
 69 Phil. 635 (1940) [Per J. Laurel, En Banc].

 Gutierrez v. Commission on Audit, 750 Phil. 413, 429-430


[88]

(2014) [Per J. Leonen, En Banc] citing Ang Tibay v. Court of


Industrial Relations, 69 Phil. 635, 642-644 (1940) [Per J. Laurel,
En Banc].

Source: Supreme Court E-Library | Date created: January 18, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 232870, June 03, 2019 ]


MANUEL G. ACOSTA, PETITIONER, VS. MATIERE
SAS AND PHILIPPE GOUVARY, RESPONDENTS.
DECISION

LEONEN, J.:

In redundancy, an employer must show that it applied fair and


reasonable criteria in determining what positions have to be
declared redundant. Otherwise, it will be held liable for illegally
dismissing the employee affected by the redundancy.

This Court resolves a Petition for Review on Certiorari  assailing [1]

the April 7, 2017 Decision  and July 12, 2017 Resolution  of the
[2] [3]

Court of Appeals in CA-G.R. SP No. 140108.  The Court of [4]

Appeals upheld the January 30, 2015 Decision  and February 27, [5]

2015 Resolution  of the National Labor Relations Commission,


[6]

which had reversed and set aside the Labor Arbiter's August 18,
2014 Decision  holding petitioner Manuel G. Acosta's (Acosta)
[7]

dismissal illegal.

Matiere SAS is a French company "engaged m the fabrication,


supply[,] and delivery of unibridges and flyovers[.]" [8]

On October 29, 2008, Matiere SAS and the Department of Public


Works and Highways executed a contract for the construction of
flyovers and bridges.  On March 19, 2009, Matiere SAS also
[9]

entered into a contract with the Department of Agrarian Reform


to construct bridges for better access to agricultural lands. [10]

On November 1, 2009, Matiere SAS, represented by its resident


manager Philippe Gouvary (Gouvary), executed a Consulting
Agreement  with Acosta. Per the agreement, Matiere SAS
[11]

engaged Acosta as its technical consultant for 12 months, with a


monthly salary of P70,000.00.  Upon the Consulting Agreement's
[12]

expiration, Matiere SAS hired Acosta as its technical assistant


with the same P70,000.00 monthly salary. [13]

Under the Employment Agreement  dated November 1, 2010,


[14]

Acosta was tasked to:


1. Prepare reports regarding WCI [Woodfields Consultants,
Inc.] consultants.
2. Be the intermediary between the CAD operators in WCI and
the management in the office.
3. Attend coordination meetings with consultant.
4. Evaluate billings.
5. Follow the SIT and prepare reports.
6. Prepare various reports as required by the resident
manager.
7. Site visits. [15]

On December 14, 2011, Matiere SAS wrote Acosta a letter,


 increasing his salary from P70,000.00 to P76,000.00, effective
[16]

January 1, 2012. On the same day, Matiere SAS wrote Acosta


another letter,  giving him a bonus of P30,000.00 for his good
[17]

performance in the second half of 2011. [18]

On June 27, 2013, Matiere SAS sent Acosta a letter  with the [19]

subject, "Ending of the employment agreement[.]"  It read: [20]

We have to inform you that your employment contract within the


company MATIERE/EIFFAGE will end July 31, 2013.

This decision is due to the cessation of our delivery operations


and the diminution of our activities. We cannot find any
reinstatement at the office. Nevertheless[,] we would like to
thank you for your cooperation since the 01, November 2009.

You are authorized not to report at the office starting July 1,


2013.

Regarding the calculation of your separation pay, we will signify


you the amount as soon as possible. [21]

In a June 26, 2013 letter,  Matiere SAS informed the Department


[22]

of Labor and Employment that because its last shipment had


been delivered,  it would have to terminate the employment of
[23]

its five (5) workers: Wilson G. Comia (Wilson), Richard E. Comia


(Richard), Alexander M. Menor (Menor), Alvin P. Roselim
(Roselim), and Acosta. Matiere SAS stated that Wilson, Richard,
and Menor were all based in Subic, while Roselim was based in
Cagayan de Oro.  All four (4) of them were "assigned to the
[24]

stripping operations[.]"  Meanwhile, Acosta, who was based in


[25]

the office, was "primarily in charge [of] the monitoring of


shipments."[26]

On June 28, 2013, Matiere SAS filed before the Department of


Labor and Employment: (1) an Establishment Employment
Report,  citing redundancy and the completion of delivery of
[27]

supplies as its reasons for dismissing its employees; and (2) a


List of Affected Workers by Displacements/Flexible Work
Arrangements,  enumerating the five (5) dismissed employees.
[28]

The employment termination was made effective on July 31,


2013.[29]

On July 23, 2013, Acosta filed before the National Labor Relations
Commission a Complaint  for illegal dismissal against Matiere
[30]

SAS and Gouvary. [31]

Mediation conferences were conducted but the parties failed to


arrive at a settlement. Thus, they were required to submit their
respective pleadings. [32]

While the case was pending, Matiere SAS and Gouvary, through
their counsel, wrote Acosta a letter  dated July 29, 2013, offering
[33]

him a separation pay of  P322,998.60. Acosta, however, refused


the offer. [34]

In her August 18, 2014 Decision,  Labor Arbiter Vivian Magsino [35]

Gonzalez found Acosta's dismissal illegal. She held that Matiere


SAS and Gouvary failed to prove the factual bases for the
reduction of its workforce. She pointed out that while Matiere SAS
submitted a Certificate of Completion from the Department of
Public Works and Highways to support its claim of project
completion, it submitted no such certificate from the Department
of Agrarian Reform. [36]

Moreover, the Labor Arbiter noted that Matiere SAS failed to


submit any redundancy plan.  It also failed to provide "fair and
[37]

reasonable criteria in ascertaining what positions are redundant


and how the selection of employees to be dismissed was
made."  The Labor Arbiter pointed out:
[38]

[I]f there are employees who should be affected by the reduction


of workforce due to completion of deliveries, the field engineers
in-charge of deliveries in the projects, and who supervised the
stripping works/removing the unibridges parts from the container
vans, may be the first ones to go. These field engineers,
however, are undisputedly retained by respondents.

. . . While Alvin Roselim is a forklift operator, [Wilson, Richard,


and Menor] are helpers who work under the supervision of field
engineers. The latter were the ones in charge of deliveries and
respondents may have had reasons to terminate them on [the]
ground of redundancy. As a Technical Assistant whose duties
include monitoring of projects until completion, there is no
substantial basis why complainant was also affected by
respondents' redundancy plan. [39]

The dispositive portion of the Labor Arbiter's Decision read:


WHEREFORE, foregoing considered, complainant is hereby found
to have been illegally dismissed. Respondent Matiere SAS is
hereby ordered to pay complainant separation pay with
backwages totaling Php241,793.62, inclusive of attorney's fees.

Other claims are dismissed for lack of basis.

SO ORDERED.  (Emphasis in the original)


[40]

Both parties appealed the Labor Arbiter's Decision before the


National Labor Relations Commission.  Praying that the award be
[41]

modified to P1,846,389.44, Acosta argued in his Partial


Memorandum of Appeal  that the computation of the Labor
[42]

Arbiter's award should be based on his monthly salary before his


employment termination, which was P78,280.00.  Meanwhile, in
[43]

their Memorandum of Appeal,  Matiere SAS and Gouvary


[44]

contended that Acosta's employment termination was valid and


that they implemented the redundancy based on fair and
reasonable criteria. [45]

In its January 30, 2015 Decision,  the National Labor Relations


[46]

Commission reversed the Labor Arbiter's Decision.  It found that


[47]

Matiere SAS and Gouvary proved that there was a significant


decrease in the volume of their business when they presented
before the National Labor Relations Commission a Certificate of
Completion from the Department of Agrarian Reform. It noted
that the completion of the government contracts would render
unnecessary the services offered by Acosta, whose "main function
was to monitor the delivery of materials . . . from France to the
Philippines."
[48]

The National Labor Relations Commission found that Acosta and


the four (4) other employees were similarly situated, noting that
even if Acosta had a higher position, their tasks were all related
to the shipment of materials.  Moreover, since Acosta's dismissal
[49]

was not done with ill motive or in bad faith, Matiere SAS and
Gouvary's decision should be respected "as a valid exercise of a
management prerogative." [50]

The dispositive portion of the National Labor Relations


Commission Decision read:
WHEREFORE, premises considered, the appeal of respondents
Matiere SAS and Philippe Gouvary is GRANTED and the assailed
Decision of the Labor Arbiter dated August 18, 2014
is REVERSED and SET ASIDE. Accordingly, the instant
complaint for illegal dismissal is hereby DISMISSED for lack of
merit.

The Partial Appeal of complainant-appellant Manuel G. Acosta


is DENIED.

SO ORDERED.  (Emphasis in the original)


[51]

Acosta moved for reconsideration.  He submitted


[52]
a
certification  from
[53]
Woodfields Consultants, Inc. and a
certification  from the Department of Public Works and Highways
[54]

to support his claim that his task was not limited to monitoring
shipments. He also alleged that Matiere SAS hired a certain
Charlie Desamito as his replacement. [55]

In its February 27, 2015 Resolution,  the National Labor


[56]

Relations Commission partially granted Acosta's Motion. It


amended the dispositive portion of its January 30, 2015 Decision
to include the payment of Acosta's separation pay:
IN VIEW OF THE FOREGOING, complainant's motion for
reconsideration is partially granted and the dispositive portion
of Our decision dated January 30, 2015 is hereby amended to
read as follows:
"WHEREFORE, premises considered, the appeal of respondents
[Matiere] SAS and Philippe Gouvary is  GRANTED  and the
assailed Decision of the Labor Arbiter dated August 18, 2014
is REVERSED and  SET ASIDE. Accordingly, the instant
complaint for illegal dismissal is hereby  DISMISSED for lack of
merit.

Respondent-appellants are, however, ordered to pay


complainant-appellant Manuel G. Acosta separation pay as
provided by law.

The Partial Appeal of complainant-appellant Manuel G. Acosta is


DENIED."
SO ORDERED.  (Emphasis in the original)
[57]

Thus, Acosta filed before the Court of Appeals a Petition for


Certiorari.
[58]

In its April 7, 2017 Decision,  the Court of Appeals denied


[59]

Acosta's Petition. It held that Matiere SAS and Gouvary were able
to establish that Acosta's position became redundant upon the
completion of its contracts with the Department of Public Works
and Highways and the Department of Agrarian Reform.  It [60]

added:
Even assuming that Acosta's functions included reporting and
coordination, he completely failed to show that these particular
functions were not incidental only to the supply and delivery of
the bridges. Acosta does not dispute the completion of the
shipments for the covered projects. Neither did he ever dispute
that the DPWH and the DAR projects were Matiere's only
activities locally. It follows clearly that with the completion of the
shipments, Acosta's role became unnecessary. Despite the
continuation of installation and erection of the bridges, Acosta
cannot pretend any involvement in such activities. His task was
indubitably office- and table-bound and not field work. [61]

Acosta moved for reconsideration, but his Motion was denied by


the Court of Appeals in its July 12, 2017 Resolution. [62]
Hence, Acosta filed this Petition for Review on Certiorari  against
[63]

Matiere SAS and Gouvary. Maintaining that the declaration of


redundancy of his position was not based on fair and reasonable
criteria, petitioner pointed out that he, the most senior engineer,
was dismissed while the other engineers remained. [64]

As to the certifications from the Department of Public Works and


Highways and the Department of Agrarian Reform, petitioner
states that the completeness of delivery merely pertained to one
(1) of his tasks as technical assistant. Thus, he claims that it was
wrong to dismiss him based only on these certifications: [65]

The supply contract of the Respondents could not have ended up


upon completion of delivery. The supply contract satisfies only
the delivery of the Supply of Bridging Material. The design,
technical supervision during the erection, installation and
commissioning were still ongoing and to be completed in 2016.
Petitioner checks on the designs of the Design Consultants,
coordinate[s] with them, evaluate[s] their billings. Such activities
were still ongoing when the Petitioner was terminated.

It is important to note that contracts of the Respondents they


entered with the DPWH and DAR comprise of the following:
1. Supply of Bridging Materials.
2. Supply of Goods for the design, manufacture and delivery of
modular steel unibridges.
3. Supply of Technical Advise / Services and Materials.
4. As well as variable services within the maximum provision
for installation and commissioning of the Bridges.
Beyond completeness of the delivery of bridging materials to the
projects, other aspects of the contracts have to be accomplished.
The actual approved accomplishment for the design of DAR
Bridges alone as of June 2013 was only 16%, or 68 out of 418
bridges. Petitioner then was still doing the checking, coordinating
with the consultants and certifying billings of Woodfields
Consultants, Inc[.] and Design Sciences, Inc. He could have
continued doing his assign[ed] tasks if not for his untimely and
unjustified termination.  (Citation omitted)
[66]
In their Comment,  respondents insist that they sufficiently
[67]

established that petitioner's position was already redundant.


 They cite the certifications from the Department of Agrarian
[68]

Reform and the Department of Public Works and Highways to


prove that "there was a significant diminution in the volume of
materials business."  Claiming that the completion of the
[69]

shipments rendered petitioner's position irrelevant, they argue


that he failed to prove that his other tasks were not merely
incidental to his main function. Thus, they were left with no
choice but to legally dismiss him. [70]

Respondents further argue that they did not dismiss petitioner in


bad faith, contending that they complied with labor law
requirements in terminating his employment. They point out that
he was given a notice of termination with computation of his
separation pay, and that the Department of Labor and
Employment was also notified. [71]

Lastly, respondents claim that petitioner did not deny that the
shipments for their projects were already completed. Neither did
he dispute that respondent Matiere SAS' projects in the
Philippines were only those with the Department of Agrarian
Reform and the Department of Public Works and Highways. [72]

The sole issue for this Court's resolution is whether or not


petitioner Manuel G. Acosta was validly dismissed from
employment on the ground of redundancy.

Redundancy is recognized as one (1) of the authorized causes for


dismissing an employee under the Labor Code.  Article 298 of
[73]

the Labor Code provides:


ARTICLE 298. [283] Closure of Establishment and Reduction of
Personnel. - The employer may also terminate the employment of
any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing
the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year. (Emphasis supplied)
In Wiltshire File Company, Inc. v. National Labor Relations
Commission,  this Court explained:
[74]

[R]edundancy, for purposes of our Labor Code, exists where the


services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise.
Succinctly put, a position is redundant where it is superfluous,
and superfluity of a position or positions may be the outcome of a
number of factors, such as overhiring of workers, decreased
volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the
enterprise. The employer has no legal obligation to keep in its
payroll more employees than are necessary for the operation of
its business.  (Emphasis supplied, citation omitted)
[75]

The requirements for a valid redundancy program were laid down


in Asian Alcohol Corporation v. National Labor Relations
Commission: [76]

For the implementation of a redundancy program to be valid, the


employer must comply with the following requisites: (1) written
notice served on both the employees and the Department of
Labor and Employment at least one month prior to the intended
date of retrenchment; (2) payment of separation pay equivalent
to at least one month pay or at least one month pay for every
year of service, whichever is higher; (3) good faith in abolishing
the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and
accordingly abolished.  (Citations omitted)
[77]

Assuming that respondents can declare some positions redundant


due to the alleged decrease in volume of their business, they still
had to comply with the above-cited requisites. This, they failed to
do.

Respondents complied with the first and second requisites. There


is no contention that they notified both petitioner and the
Department of Labor and Employment at least a month before
the planned redundancy. [78]

Petitioner also received a computation of his separation pay


corresponding to at least one (1) month pay for every year of
service with additional payment for economic assistance. [79]

However, as to the third and fourth requisites, this Court held


that "[t]o establish good faith, the company must provide
substantial proof that the services of the employees are in excess
of what is required of the company, and that fair and reasonable
criteria were used to determine the redundant positions." [80]

Here, respondents' only basis for declaring petitioner's position


redundant was that his function, which was to monitor the
delivery of supplies, became unnecessary upon completion of the
shipments. However, upon careful scrutiny, this Court finds that
the Employment Agreement itself contradicts respondents'
allegation. Its pertinent provisions read:
Dear Mr Acosta:

In connection with your position as Technical Assistant, please


be informed that you are subject to the following terms and
condition:
1. ....
2. The Employee shall be employed in the capacity of Technical
Assistant, the current duties and responsibilities of which are
set out in Schedule "A" annexed hereto and forming part of
this agreement. These duties and responsibilities may be
amended from time to time in the sole discretion of the
Employer, subject to formal notification of same being
provided to the Employee.  (Emphasis in the original)
[81]

Under Schedule "A," petitioner's job description listed his tasks as


a technical assistant:
1. Prepare reports regarding WCI [Woodfields Consultants,
Inc.] consultants.
2. Be the intermediary between the CAD operators in WCI and
the management in the office.
3. Attend coordination meetings with consultant.
4. Evaluate billings.
5. Follow the SIT and prepare reports.
6. Prepare various reports as required by the resident
manager.
7. Site visits.
[82]

There was no mention of monitoring shipments as part of


petitioner's tasks. If his work pertains mainly to the delivery of
supplies, it should have been specifically stated in his job
description. Respondents did not even present any evidence to
support their claim or to contradict petitioner's documentary
evidence. There was, hence:, no basis for respondents to
consider his position irrelevant when the shipments had been
completed.

Likewise, respondents failed to show that they used fair and


reasonable criteria in determining what positions should be
declared redundant.

In Panlilio v. National Labor Relations Commission,  this Court


[83]

held that fair and reasonable criteria may take into account the
preferred status, efficiency, and seniority of employees to be
dismissed due to redundancy.  Yet, respondents never showed
[84]

that they used any of these in choosing petitioner as among the


employees affected by redundancy.

Although he was among the five (5) employees dismissed,


petitioner cannot be similarly situated with the other employees.
Roselim was a forklift operator, while Richard, Wilson, and Menor
were helpers assigned to field engineers. The four (4) employees
work directly with the delivery of supplies. On the other hand, as
already discussed, petitioner's duty is not limited to the
monitoring of deliveries. Accordingly, this Court declares
petitioner to have been illegally dismissed.

WHEREFORE, the Petition for Review on Certiorari is GRANTED.


The April 7, 2017 Decision and July 12, 2017 Resolution of the
Court of Appeals are REVERSED and SET ASIDE. Respondent
Matiere SAS is ordered to pay petitioner Manuel G. Acosta the
following:
1. full backwages and other benefits, both based on petitioner's
last monthly salary, computed from the date his
employment was illegally terminated until the finality of this
Decision;
2. separation pay based on petitioner's last monthly salary,
computed from the date he commenced employment until
the finality of this Decision at the rate of one (1) month's
salary for every year of service, with a fraction of a year of
at least six (6) months being counted as one (1) whole year;
and
3. attorney's fees equivalent to ten percent (10%) of the total
award.
The total judgment award shall be subject to interest at the rate
of six percent (6%) per annum from the finality of this Decision
until its full satisfaction.
[85]

This case is REMANDED to the Labor Arbiter to make a detailed


computation of the amounts due to petitioner, which must be
paid without delay, and for the immediate execution of this
Decision.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando, and Inting, JJ.,


concur.
July 8, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 3, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 8, 2019 at 3:55 p.m.

[1]

 
Rollo

[2]

 
[3]

[4]

[5]
 

[6]

[7]
 

[8]

[9]

[10]

[11]

 
[12]

[13]

[14]

[15]

[16]
 

[17]

[18]

[19]

[20]

 
[21]

[22]

[23]

[24]

[25]

 
[26]

[27]

[28]

[29]

[30]

 
[31]

[32]

[33]

[34]

[35]

 
[36]

[37]

[38]

[39]

[40]
 

[41]

[42]

[43]

[44]

 
[45]

[46]

[47]

[48]

[49]

 
[50]

[51]

[52]

[53]

 
[54]

[55]

[56]

[57]

 
[58]

[59]

[60]

[61]

[62]

 
[63]

[64]

[65]

[66]

[67]
 

[68]

[69]

[70]

[71]

 
[72]

[73]

 
Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telep
Company, Inc.

[74]

[75]

 
[76]

[77]

[78]

rollo

rollo
[79]

 
Rollo

[80]

 
Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telep
Company, Inc.

[81]

 
Rollo

[82]
 

[83]

[84]

[85]

 
Nacar v. Gallery Frames

Source: Supreme Court E-Library | Date created: July 16, 2019


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Supreme Court E-Library


THIRD DIVISION

[ G. R. No. 216632, March 13, 2019 ]


AUGUSTO REGALADO Y LAYLAY, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari  assailing the


[1]

Court of Appeals January 29, 2015 Decision  in CA-G.R. CR No.


[2]

36216. The Court of Appeals upheld the Regional Trial Court


November 23, 2011 Decision  in Criminal Case No. 08-03 finding
[3]

Augusto Regalado y Laylay (Regalado) guilty beyond reasonable


doubt for violating Article II, Section 11 of Republic Act No. 9165,
or the Comprehensive Dangerous Drugs Act of 2002.

On January 31, 2003, two (2) informations were filed before the
Regional Trial Court, charging Regalado with two (2) counts of
violating Article II, Section 11 of Republic Act No. 9165.  The
[4]

informations read:

In Crim. Case No. 08-03:

That on or about the 17  day of December 2002, at around 2:00


th

o 'clock (sic) in the afternoon, at barangay (sic) Sibuyao,


municipality (sic) of Torrijos, province (sic) of Marinduque,
Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did[,] then and there[,] wil[l]fully,
unlawfully[,] [and] feloniously possess Cannabis Sativa
(Marijuana) weighing not more than 300 grams, not being
authorized by law to possess the same.

CONTRARY TO LAW.

In Crim. Case No. 09-03:

That on or about the 17  day of December 2002, at around 2:00


th

o 'clock (sic) in the afternoon, at barangay (sic) Sibuyao,


municipality (sic) of Torrijos, province (sic) of Marinduque,
Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did[,] then and there[,] wil[l]fully,
unlawfully[,] [and] feloniously possess Cannabis Sativa
(Marijuana) weighing not more than 300 grams, not being
authorized by law to possess the same.

CONTRARY TO LAW.  (Emphasis in the original, citations omitted)


[5]

On arraignment, Regalado pleaded not guilty to the crimes


charged. Trial then ensued. [6]

According to the prosecution, on December 17, 2002, a team of


five (5) police officers led by Special Police Officer 2 Quirino
Peñascosas (SPO2 Peñascosas), with designated poseur-buyer
PO1 Dario Pedrigal (PO1 Pedrigal), PO2 Rodrigo Llante (PO2
Llante), PO1 Macrino Romeo Palma, and PO1 Manuelito Palma,
conducted a buy-bust operation. [7]

At around 2:00 p.m. that day, PO1 Pedrigal went to Regalado's


house while the rest of the team stayed about 200 meters behind
him. There, PO1 Pedrigal asked Regalado's wife, Marilyn, "Meron
kayo ngayon, bibili ako?"  Marilyn informed him that her husband
[8]

was not in the house and that she would ask her daughter to
fetch him.
[9]

When Regalado arrived, he immediately inquired where PO1


Pedrigal came from, to which he replied that he was from
Marlangga. Regalado then asked PO1 Pedrigal the quantity he
sought to buy, to which the latter replied that he wanted two (2).
[10]

Regalado went into his house, returning with a plastic sachet


suspected to contain marijuana, which he then exchanged with
PO1 Pedrigal's marked bills amounting to P200.00. Regalado took
the money and put it in his pocket.

At this point, PO1 Pedrigal scratched his head—the pre-arranged


signal signifying to the team that the transaction had been
consummated. The rest of the team rushed to Regalado's house
and identified themselves as police officers. They arrested
Regalado after PO1 Pedrigal retrieved the marked money from his
pocket. [11]

Upon the arrest, PO1 Pedrigal asked Regalado, "Meron pa itong


kasamahan?"  to which Regalado admitted having more, pointing
[12]

to the roof of his house. He turned over to PO1 Pedrigal a milk


box that allegedly had two (2) plastic sachets and four (4) sticks
of marijuana. PO1 Pedrigal kept all the confiscated pieces of
evidence. [13]

The police officers informed Regalado of his constitutional rights


in Tagalog. Then, after informing Barangay Captain Isidro
Palomares of what had transpired, they brought Regalado to the
police station. [14]

At the police station, PO1 Pedrigal marked with initials "AR" the
three (3) plastic sachets and four (4) sticks of suspected
marijuana. He later turned them over, along with the marked
money, to the investigator, PO2 Llante. PO2 Llante then brought
the seized evidence, along with a Request for Laboratory
Examination, to the Philippine National Police Crime Laboratory in
Canlubang, Laguna to have them tested for the presence of illegal
drugs. [15]

Police Chief Inspector Lorna Tria (Chief Inspector Tria), the


forensic chemist, confirmed upon a laboratory examination that
the confiscated items were indeed marijuana. The seven (7)
specimens with the "AR" markings weighed 6.40 grams, 13.93
grams, 22.60 grams, 0.49 gram, 0.40 gram, 0.36 gram, and 0.47
gram.  The specimens weighed a total of 44.65 grams. These
[16]

results were evidenced by Chemistry Report No. D-2841-02. [17]

In his defense, Regalado alleged that on December 17, 2002, he


was ploughing the field in his farm located about 100 meters from
his house when his son, Alvin, told him to come home. There, he
was met by a teenager who gave him P200.00, wanting to
purchase marijuana. [18]

As soon as Regalado gave the teenager marijuana, he stated that


five (5) police officers arrived and arrested him. PO1 Pedrigal
recovered from him the P200.00, which the teenager had handed
him. When asked about the rest of his stash, Regalado
immediately divulged its hiding place and surrendered the
marijuana "because he was scared." [19]

Regalado denied handing the marijuana to PO1 Pedrigal and


maintained that the latter took it from the teenager. He claimed
that he signed the confiscation receipt despite not understanding
it as he did not know how to read. He likewise testified that he
was not informed of his constitutional rights. [20]

In its November 23, 2011 Decision,  the Regional Trial Court


[21]

found Regalado guilty of violating Article II, Section 11 of


Republic Act No. 9165 in Criminal Case No. 08-03. However, it
acquitted him in Criminal Case No. 09-03, ruling that one cannot
be convicted twice for the same act.
[22]

The dispositive portion of the November 23, 2011 Decision read:


WHEREFORE, premises considered, the accused Augusto
Regalado y Laylay is hereby found guilty beyond reasonable
doubt of (sic) violation of Section 11 of R.A. 9165 in Criminal
Case No. 08-03. Applying the Indeterminate Sentence Law, he is
hereby sentenced to imprisonment for a period of 12 years and
one day as minimum to 14 years and eight months, as
maximum and is fined P300,000 without subsidiary imprisonment
in case of insolvency. He is hereby acquitted in Criminal Case No.
09-03.

The property bond posted for his temporary liberty is hereby


ordered cancelled.

Let the marijuana subject matter of these cases be disposed of in


the manner provided by law.

SO ORDERED.  (Emphasis in the original)


[23]

On appeal, Regalado argued that the trial court erred when it


appreciated the evidence despite the apprehending team's failure
to prove the integrity and identity of the seized items under
Section 21 of the Comprehensive Dangerous Drugs Act. He
contended that the trial court erred in deviating from the
established rule that by itself, the presumption of regularity in the
performance of official duty should not prevail over his presumed
innocence. [24]

In its January 29, 2015 Decision,  the Court of Appeals denied


[25]

the appeal and affirmed the trial court's Decision:


WHEREFORE, the appeal is DENIED. The assailed disposition of
the RTC in Crim. Case No. 08-03 is AFFIRMED. Costs against the
Accused-Appellant.

SO ORDERED.  (Emphasis in the original)


[26]

According to the Court of Appeals, the prosecution sufficiently


proved and established the elements of the crime of illegal
possession of marijuana.  It ruled that the prosecution's lapses
[27]

were not fatal, since it had nonetheless preserved the integrity


and evidentiary value of the confiscated items. This, it: held, was
enough to establish Regalado's guilt. [28]

Thus, on March 27, 2015, Regalado filed this Petition for Review
on Certiorari. [29]
Petitioner argues that the Court of Appeals erred in affirming the
trial court's finding of his guilt.  He contends that the prosecution
[30]

had no basis to justify its failure to strictly comply with the


requirements under Section 21. He maintains that there was no
elected official, media representative, or Department of Justice
representative present during the physical inventory of the seized
items. Moreover, no photographs of the seized items were
presented in court. [31]

Petitioner further claims that the seized items were not


immediately marked after his arrest, casting doubt on their
origin.  He insists that there was no sufficient evidence to
[32]

establish the chain of custody. [33]

This Court adopted respondent's Brief  before the Court of


[34]

Appeals as its Comment. [35]

Respondent asserts that PO1 Pedrigal's testimony demonstrated


petitioner's culpability, which sufficiently proved his conviction. It
notes that the police officers' testimonies were further bolstered
since petitioner does not impute any ill motive on their part.
Courts, it asserts, may render judgment based on a witness'
testimony as long as it is credible and positive. [36]

Respondent argues that noncompliance with Section 21 per se


will not render the arrest illegal or the seized marijuana
inadmissible, as the law itself provides an exception.  It points[37]

out that the "immediate confiscation" has no exact definition, and


that marking in the nearest police station has been previously
allowed by this Court. [38]

Finally, respondent claims that petitioner's admission of


possessing the seized marijuana rendered the issue of
noncompliance with the chain of custody rule as moot. [39]

For resolution is the lone issue of whether or not the absence of


an elective official, a representative from the media, and a
representative from the Department of Justice during the buy-
bust operation, as well as the non-presentation of the
photographs of the seized marijuana before the trial court
warrants petitioner Augusto L. Regalado's acquittal.

This Court denies the Petition.

Generally, "the findings of fact by the trial court, when affirmed


by the [Court of Appeals], are given great weight and credence
on review."  This is because the trial court "is in the best position
[40]

to assess the credibility of witnesses and their testimonies


because of its unique opportunity to observe the witnesses, their
demeanor, conduct and attitude on the witness stand."  Hence,[41]

this Court accords great respect to the trial court's findings,


 especially when affirmed by the Court of Appeals.  An
[42] [43]

exception is when either or both of the lower courts "overlooked


or misconstrued substantial facts which could have affected the
outcome of the case. [44]

Here, the records show nothing that warrants a reversal of the


Decisions of the Court of Appeals and the Regional Trial Court.

The allegations in both Informations, despite the buy-bust


operation, charged petitioner with illegal possession of dangerous
drugs, not sale. Hence, the trial court correctly acquitted him in
Criminal Case No. 09-03, where the Information was worded
exactly as that in Criminal Case No. 08-03, which charged him
with illegal possession of dangerous drugs. Moreover, although
the actual weight of the seized items (44.65 grams)  was not
[45]

indicated in the Informations, this error was not fatal.

As for the conviction of illegal possession of dangerous drugs, the


following elements must be established: "(1) the accused was in
possession of an item or an object identified to be a prohibited or
regulated drug, (2) such possession is not authorized by law, and
(3) the accused was freely and consciously aware of being in
possession of the drug." [46]
Here, the testimonies of the law enforcers who conducted the
buy-bust operation are clear and categorical. They recalled in
detail the buy-bust operation and the steps they had taken to
maintain the integrity of the seized marijuana.

Notably, the designated poseur-buyer, PO1 Pedrigal, clearly


recounted in his testimony the transaction and petitioner's
possession of the seized marijuana:
[PROSECUTOR]: What happened when you reached the house of
Augusto Regalado?
[PO1 PEDRIGAL]: When I reached the house of Augusto Regalado
his wife named Marilyn confronted me, sir.

[PROSECUTOR]: What did she do or say when she confronted


you?
[PO1 PEDRIGAL]: I told her, sir, (sic) "meron kayo ngayon, bibili
ako".

[PROSECUTOR]: What happened when you say (sic) those words?


[PO1 PEDRIGAL]: She told me that her husband is not in the
house and she ordered her daughter to fetch him, sir.

[PROSECUTOR]: What happened regarding the order?


[PO1 PEDRIGAL]: I waited for several minutes and her daughter
arrived followed by Augusto Regalado and I asked him "meron
kayo ngayon?["]

[PROSECUTOR]: And what happened when you uttered those


words to him?
[PO1 PEDRIGAL]: He asked me "taga saan ka"? and I told him,
from Marlangga and he asked me how many and I told him only
two (2).

[PROSECUTOR]: When you told him only two (2), what happened
next?
[PO1 PEDRIGAL]: So, he entered the house while I waited outside
near the door and when he came out he was holding a plastic
sachet and he handed it to me and in exchange I handed to him
money in different denominations in the amount of Two Hundred
Pesos (P200.00).

[PROSECUTOR]: What transpired next after you handed to him


the P200.00?
[PO1 PEDRIGAL]: He accepted the marked money from me and
he handed to me the plastic sachet and he put the money in his
pocket and after that I made a signal to my co-policemen and
then I shouted "pulis ako" and then I retrieved the marked
money from his pocket and we arrested Augusto Regalado.

[PROSECUTOR]: After you retrieved the marked money and


arrested Augusto Regalado, what happened next?
[PO1 PEDRIGAL]: Upon his arrest, we asked him if "meron pa
itong kasamahan?" and he readily admitted and pointed to the
roof of the house. So, we requested him to get the same and he
readily did so.

[PROSECUTOR]: What actually was sold to you and what actually


did he produce after he was arrested?
[PO1 PEDRIGAL]: What he sold to me was a plastic sachet
containing marijuana and what he retrieved from the roof are two
(2) plastic sachets of marijuana and four (4) sticks of marijuana.
[47]

PO1 Pedrigal testified that he had kept the seized items until they
were marked at the police station where they conducted the
inventory. The seized items were then turned over to PO2 Llante,
who also testified bringing the items to the crime laboratory for
examination. This was confirmed by Chief Inspector Tria, the
forensic chemist who prepared the report stating that the seized
items were marijuana. [48]

What sustains petitioner's conviction is his damning admission in


open court that the police officers had found the three (3) plastic
sachets and four (4) sticks of marijuana in his possession during
his arrest on December 17, 2002. He admitted telling the law
enforcers where he had hidden the rest of the marijuana because
he was scared. [49]
Ultimately, petitioner's free and conscious possession of the
dangerous drug has been established, warranting his conviction.

However, this Court laments the prosecution's apparent


nonchalance in observing the procedure for the custody and
disposition of confiscated, seized, and/or surrendered drugs
and/or drug paraphernalia under Section 21 of the
Comprehensive Dangerous Drugs Act, as amended by Republic
Act No. 10640. It provides:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
 
(1) The apprehending team having initial custody and control of the dangerous drugs, c
essential chemicals, instruments/paraphernalia and/or laboratory equipment s
seizure and confiscation, conduct a physical inventory of the seized items and pho
presence of the accused or the persons from whom such items were confiscated a
representative or counsel, with an elected public official and a representative of t
Service or the media who shall be required to sign the copies of the inventor
thereof: Provided, That the physical inventory and photograph shall be conducted
search warrant is served; or at the nearest police station or at the nearest offi
officer/team, whichever is practicable, in case of warrantless seizures: Provided, fina
of these requirements under justifiable grounds, as long as the integrity and the
seized items are properly preserved by the apprehending officer/team, shall not
such seizures and custody over said items.

(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, plan
drugs, controlled precursors and essential chemicals, as well as instrument
laboratory equipment, the same shall be submitted to the PDEA Forensic Laborato
quantitative examination;

(3) A certification of the forensic laboratory examination results, which shall be done b
examiner, shall be issued immediately upon the receipt of the subject item/s: P
volume of dangerous drugs, plant sources of dangerous drugs, and controlled p
chemicals does not allow the completion of testing within the time frame, a partia
report shall be provisionally issued stating therein the quantities of dangerous drug
the forensic laboratory: Provided, however, That a final certification shall be is
completion of the said examination and certification[.]
These requirements under Section 21 were summarized
in Lescano v. People: [50]

As regards the items seized and subjected to marking, Section


21(1) of the Comprehensive Dangerous Drugs Act, as amended,
requires the performance of two (2) actions: physical inventory
and photographing. Section 21(1) is specific as to when and
where these actions must be done. As to when, it must be
"immediately after seizure and confiscation." As to where, it
depends on whether the seizure was supported by a search
warrant. If a search warrant was served, the physical inventory
and photographing must be done at the exact same place that
the search warrant is served. In case of warrantless seizures,
these actions must be done "at the nearest police station or at
the nearest office of the apprehending officer/team, whichever is
practicable."

Moreover, Section 21(1) requires at least three (3) persons to be


present during the physical inventory and photographing. These
persons are: first, the accused or the person/s from whom the
items were seized; second, an elected public official; and third, a
representative of the National Prosecution Service. There are,
however, alternatives to the first and the third. As to the first
(i.e., the accused or the person/s from whom items were seized),
there are two (2) alternatives: first, his or her representative;
and second, his or her counsel. As to the representative of the
National Prosecution Service, a representative of the media may
be present in his or her place. [51]

In People v. Que,  this Court explained how Republic Act No.


[52]

10640 relaxed the requirements under Section 21(1):


It was relaxed with respect to the persons required to be present
during the physical inventory and photographing of the seized
items. Originally under Republic Act No. 9165, the use of the
conjunctive "and" indicated that Section 21 required the presence
of all of the following, in addition to "the accused or the person/s
from whom such items were confiscated and/or seized, or his/her
representative or counsel":
First, a representative from the media;

Second, a representative from the Department of Justice; and

Third, any elected public official.


As amended by Republic Act No. 10640, Section 21 (1) uses the
disjunctive "or," i.e., "with an elected public official and a
representative of the National Prosecution Service or the media."
Thus, a representative from the media and a representative from
the National Prosecution Service are now alternatives to each
other.  (Emphasis in the original, citations omitted)
[53]

Here, none of the three (3) people required by Section 21(1), as


originally worded,  was present during the physical inventory of
[54]

the seized items.

Moreover, this Court has held that the prosecution has "the
positive duty to establish that earnest efforts were employed in
contacting the representatives enumerated under Section 21 (1)
of [Republic Act No.] 9165, or that there was a justifiable
ground for failing to do so."
[55]

Yet, not only did the prosecution fail to establish that earnest
efforts were employed in securing the presence of the three (3)
witnesses; it did not even bother to offer any justification for the
law enforcers' deviation from the law's requirements. Since
preliminaries do not appear on record, this Court cannot
speculate why the law enforcers neglected the simple rules in the
conduct of a buy-bust operation. Nonetheless, police officers are
reminded that lapses like this—absent any justifiable ground—
cast doubt on the integrity of the seized items and can be fatal to
the prosecution's cause.

WHEREFORE, the Petition is DENIED. The Court of Appeals


January 29, 2015 Decision in CA-G.R. CR No. 36216
is AFFIRMED.
SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando,


and Carandang,  JJ., concur.
*

May 7, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 13, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on May 7, 2019 at 9:28 a.m.

 Designated additional Member per Special Order No. 2624 dated


*

November 28, 2018.

[1]
 Rollo, pp. 12-38. Filed under Rule 45 of the Rules of Court.

 Id. at 40-52. The Decision was penned by Associate Justice


[2]

Normandie B. Pizarro, and concurred in by Associate Justices


Samuel H. Gaerlan and Pedro B. Corales of the Sixteenth
Division, Court of Appeals, Manila.
 Id. at 78-89. The Decision was penned by Presiding Judge
[3]

Antonina M. Calderon-Magtubo of Branch 94, Regional Trial Court,


Boac, Marinduque.

[4]
 Id. at 41.

[5]
 Id. at 41-42.

[6]
 Id. at 42.

[7]
 Id. at 42-43.

[8]
 Id. at 43.

[9]
 Id.

[10]
 Id. at 43.

[11]
 Id.

[12]
 Id. at 44.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id. at 44-45.

[17]
 Id. at 45.

[18]
 Id.

[19]
 Id.

[20]
 Id.
[21]
 Id. at 78-89.

[22]
 Id. at 46.

[23]
 Id. at 88.

[24]
 Id. at 47.

[25]
 Id. at 40-52.

[26]
 Id. at 51.

[27]
 Id. at 48.

[28]
 Id. at 49.

[29]
 Id. at 12-38.

[30]
 Id. at 18.

[31]
 Id. at 19.

[32]
 Id. at 23.

[33]
 Id. at 25.

[34]
 Id. at 92-103.

 In its July 27, 2015 Resolution (rollo, pp. 104-105), this Court
[35]

required respondent to comment on the Petition for Review.


Respondent filed a Manifestation (rollo, pp. 124-127) on October
15, 2015 where it prayed that it be allowed to adopt its Brief filed
before the Court of Appeals. This Court noted the Manifestation in
its December 2, 2015 Resolution (rollo, pp. 129-130).

[36]
 Rollo, pp. 97-98.

[37]
 Id. at 99.
[38]
 Id. at 100.

[39]
 Id. at 100-101.

 People v. Feliciano, Jr., 734 Phil. 499, 521 (2014) [Per J.


[40]

Leonen, Third Division].

 Ditche v. Court of Appeals, 384 Phil. 35, 46 (2000) [Per J. De


[41]

Leon, Jr., Second Division].

 People v. Montinola, 567 Phil. 387, 404 (2008) [Per J. Carpio,


[42]

Second Division] citing People v. Fernandez, 561 Phil. 287 (2007)


[Per J. Carpio, Second Division]; People v. Abulon, 557 Phil. 428
(2007) [Per J. Tinga, En Banc]; and People v. Bejic, 552 Phil. 555
(2007) [Per J. Chico-Nazario, En Banc].

 People v. Baraoil, 690 Phil. 368, 377 (2012) [Per J. Reyes,


[43]

Second Division].

 People v. Montinola, 567 Phil. 387, 404 (2008) [Per J. Carpio,


[44]

Second Division] citing People v. Fernandez, 561 Phil. 287 (2007)


[Per J. Carpio, Second Division]; People v. Abulon, 557 Phil. 428
(2007) [Per J. Tinga, En Banc]; and People v. Bejic, 552 Phil. 555
(2007) [Per J. Chico-Nazario, En Banc].

[45]
 Rollo, p. 45.

 People v. Dela Cruzy De Guzman, 744 Phil. 816, 825-826


[46]

(2014) [Per J. Leonen, Second Division].

[47]
 Rollo, pp. 95-97.

[48]
 Id. at 49-50.

[49]
 Id. at 86.

[50]
 778 Phil. 460 (2016) [Per J. Leonen, Second Division].
[51]
 Id. at 475.

 G.R.
[52]
No. 212994, January 31, 2018,
<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63900
> [Per J. Leonen, Third Division].

[53]
 Id.

[54]
 The buy-bust operation was conducted in 2002.

 People v. Umipang, 686 Phil. 1024, 1053 (2012) [Per J. Sereno,


[55]

Second Division].

Source: Supreme Court E-Library | Date created: May 16, 2019


This page was dynamically generated by the E-Library Content Management System

Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 210731, February 13,


2019 ]
SIMEON LAPI Y MAHIPUS, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION
LEONEN, J.:

The right to question the validity of an arrest may be waived if


the accused, assisted by counsel, fails to object to its validity
before arraignment.

This is a Petition for Review on Certiorari  assailing the April 29,


[1]

2013 Decision  and December 10, 2013 Resolution  of the Court
[2] [3]

of Appeals in CA-G.R. CEB-CR No. 01564, which upheld the


Regional Trial Court September 15, 2010 Decision.  The trial
[4]

court found Simeon M. Lapi (Lapi) guilty beyond reasonable doubt


of having violated Article II, Section 15 of Republic Act No.
9165  and sentenced him to six (6) months of rehabilitation at a
[5]

government-approved facility.

In an Information dated April 20, 2006, Lapi, Allen Sacare


(Sacare), and Kenneth Lim (Lim) were charged with violation of
Article II, Section 15 of Republic Act No. 9165. The Information
read:

That on or about the 17  day of April, 2006, in the City of


th

Bacolod, Philippines, and within the jurisdiction of this Honorable


Court, the herein accused conspiring, confederating and acting in
concert, not being authorized by law to smoke, consume,
administer to oneself, ingest or use a dangerous drug, did, then
and there willfully, unlawfully and feloniously engage in ingesting
and introducing to their bodies a dangerous drug known as
methylamphetamine hydrochloride or shabu and after
confirmatory test on the qualitative examination of the urine
sample on the three accused, they were found positive to the test
for Methylamphetamine, a dangerous drug, per Chemistry Report
Nos. DT-042-2006, DT-043-2006 and DT-045-2006, respectively,
in violation of the aforementioned law.

Act contrary to law. [6]


On arraignment, Lapi, Sacare, and Lim pleaded not guilty to the
crime charged. At pre-trial, Sacare and Lim changed their pleas
to guilty, and were sentenced to rehabilitation for six (6) months
at a government-recognized center. Only Lapi was subjected to
trial on the merits.
[7]

According to the prosecution, at around 1:50 p.m. on April 17,


2006, operatives of the Bacolod City Anti-Illegal Drug Special
Operation Task Group conducted a stake-out operation in Purok
Sigay, Barangay 2, Bacolod City. During the operation, Police
Officer 2 Ronald Villeran (PO2 Villeran) heard noises from one (1)
of the houses. He "peeped through its window"  and saw Lapi,
[8]

Sacare, and Lim "having a pot session." [9]

PO2 Villeran tried to enter the house through the main door, but
the door was locked. He then tried to enter through the kitchen
door. Upon entry, he met someone trying to flee, but PO2 Villeran
restrained the person. [10]

Then, PO2 Villeran "peeked into the adjacent room"  and saw
[11]

that the pot session was ongoing. He entered the room and
introduced himself as a police officer. Lapi, Sacare, and Lim tried
to escape, but were caught b PO2 Villeran's team members, who
were waiting by the main door. [12]

Having been arrested and their paraphernalia seized, the men


were then brought to the City Anti-Illegal Drug Special Operation
Task Group Office, where a police blotter was filed. They were
later brought to the Philippine National Police Crime Laboratory to
undergo drug tests. [13]

The initial laboratory report found that Lapi, Sacare, and Lim
tested positive for methylamphetamine hydrochloride (shabu),
while their companions, Noel Canlas and Carmelo Limbaco,
 tested negative. Another test conducted yielded the same
[14]

results.
[15]
In his defense, Lapi alleged that on April 17, 2006, he was in
Purok Sigay, Barangay 2, Bacolod City to deliver a mahjong set to
a certain Antonio Kadunggo. On his way home, two (2) persons
approached him and searched his pocket. They took his money,
handcuffed him, and boarded him on a tricycle with four (4) other
persons whom he did not know. [16]

Lapi stated that upon reaching the Taculing Police Headquarters,


he and the others were subjected to a drug test. They were then
escorted to their detention cell without being informed of the test
results. Rolando Cordova, a barbecue vendor in the area,
corroborated Lapi's testimony. [17]

In its September 15, 2010 Decision,  the Regional Trial Court


[18]

found Lapi guilty. It ruled that the warrantless arrest against him
was legal since he was caught in flagrante delicto. [19]

The dispositive portion of the Regional Trial Court Decision read:

WHEREFORE, finding accused Simeon Lapi y Mahipus guilty


beyond reasonable doubt of Violation of Section 15, Article II of
R.A. 9165 (Use of Dangerous Drugs) as charged, judgment is
hereby rendered imposing upon him the penalty of a minimum of
Six (6) Months rehabilitation in any government recognized
government center, this being apparently his first offense, to
start within fifteen (15) here-from.

The doctor-in-charge of said rehabilitation facility is also required


to render a written report of the progress of the program and the
termination of the rehabilitation of the accused.

SO ORDERED. [20]

Lapi appealed to the Court of Appeals. [21]

In its April 29, 2013 Decision,  the Court of Appeals denied the
[22]

Appeal and affirmed the Regional Trial Court Decision.


The Court of Appeals ruled that PO2 Villeran, upon seeing the pot
session, "had reasonable ground to believe that [Lapi was] under
the influence of dangerous drugs. Thus, he was justified and even
obligated by law to subject him to drug screening laboratory
examination." [23]

Lapi filed a Motion for Reconsideration,  but it was denied by the


[24]

Court of Appeals in its December 10, 2013 Resolution. [25]

Hence, Lapi filed this Petition. [26]

Petitioner argues that while he raises factual questions, his case


falls under the exceptions under the Rules of Court. He claims
that the Court of Appeals' factual findings "are totally bereft of
support in the records and so glaringly erroneous as to constitute
a serious abuse of discretion." [27]

Petitioner asserts that while he failed to question the validity of


his arrest before entering his plea, his warrantless arrest was
illegal from the start. Hence, any evidence obtained cannot be
used against him. He argues that PO2 Villeran committed "a
malevolent intrusion of privacy"  when he peeped through the
[28]

window; had he not done so, he would not see what the people in
the house did.  He contends that this intrusion into his privacy
[29]

"cannot be equated in plain view[;] therefore[,] petitioner cannot


be considered caught in flagrante delicto."  He submits that to
[30]

"rule otherwise would be like giving authority to every police


officer to intrude into the private homes of anyone in order to
catch suspended drug offenders." [31]

Respondent, on the other hand, counters that petitioner prays for


a review of the facts and evidence, which is beyond the province
of a petition for review on certiorari.  It asserts that the
[32]

warrantless arrest was valid, as "[t]he act of having a pot session


is clearly the overt act required under the law, which indicates
that petitioner is actually committing an offense."  It argues that[33]

what prompted PO2 Villeran to enter the house was not the noise
from one (1) of the houses, but what he saw petitioner and his
companions were doing in the house where they were
apprehended. [34]

Further, respondent claims that since petitioner was not the


owner of that house, he had no "reasonable expectation of
privacy that must be upheld."  It submits that "[a] houseguest
[35]

who was merely present in the house with the consent of the
householder cannot claim a reasonable expectation of privacy in
his host's home." [36]

This Court is asked to resolve the Issue of whether or not the


warrantless arrest against petitioner Simeon M. Lapi was valid.
However, this Court must first pass upon the procedural question
of whether or not the Petition should be denied for raising
questions of fact.

This Court is not a trier of facts.  A petition for review on


[37]

certiorari under Rule 45 of the Rules of Court must, as a general


rule, only raise questions of law.  Parties may only raise issues
[38]

that can be determined without having to review or reevaluate


the evidence on record.  This Court generally gives weight to the
[39]

factual findings of the lower courts "because of the opportunity


enjoyed by the [lower courts] to observe the demeanor of the
witnesses on the stand and assess their testimony." [40]

In criminal cases, however, the accused has the constitutional


right to be presumed innocent until the contrary is proven.  To [41]

prove guilt, courts must evaluate the evidence presented in


relation to the elements of the crime charged.  Thus, the finding [42]

of guilt is essentially a question of fact.  For this reason, the [43]

entire records of a criminal case are thrown open for this Court's
review. In Ferrer v. People: [44]
It is a well-settled rule that an appeal in a criminal case throws
the whole case wide open for review and that it becomes the duty
of the Court to correct such errors as may be found in the
judgment appealed from, whether they are assigned as errors or
not. [45]

This Court is not precluded from reviewing the factual findings of


the lower courts, or even arriving at a different conclusion, "if it is
not convinced that [the findings] are conformable to the evidence
of record and to its own impressions of the credibility of the
witnesses."  The lower court actual findings will not bind this
[46]

Court if facts that could affect the result of the case "were
overlooked and disregarded[.]" [47]

An examination of the factual findings of the trial court and the


Court of Appeals shows no error that requires this Court's review.
On this ground, the Petition can be outright dismissed.

II

Even if this Court reviews the substantial merits of this case, the
Petition is still denied. The Court of Appeals did not err in
affirming the trial court's finding of guilt beyond reasonable
doubt.

A citizen's right to be secure against any unreasonable searches


and seizures is sacrosanct. No less than the Constitution
guarantees that the State cannot intrude into the citizen's
persons, house, papers, and effects without a warrant issued by a
judge finding probable cause:

Article III
Bill of Rights

....
SECTION 2. The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to
be seized. [48]

The Constitution guarantees against "unreasonable" warrantless


searches and seizures. This presupposes that the State may do so
as long as they are reasonable. People v. Aruta  outlines the [49]

situations where a warrantless search and seizure may be


declared valid:

1. Warrantless search incidental to a lawful arrest recognized


under Section 12, Rule 126 of the Rules of Court and by
prevailing jurisprudence;
2. Seizure of evidence in "plain view," the elements of which
are:
1. 1. 1.a prior valid intrusion based on the valid warrantless arrest in wh
1 legally present in the pursuit of their official duties;
. 2. 2.
( 3.7.
a
)
1. 1. 1.the evidence was inadvertently discovered by the police who ha
1 where they are;
. 2. 2.
( 3.12.
b
)
1. 1. 1.the evidence must be immediately apparent[;] and
1 2. 2.
. 3.17.
(
c
)
1. 1. 1."plain view" justified mere seizure of evidence without further sea
1 2. 21.
.
(
d
)
3.
4. Search of a moving vehicle. Highly regulated by the
government, the vehicle's inherent mobility reduces
expectation of privacy especially when its transit in public
thoroughfares furnishes a highly reasonable suspicion
amounting to probable cause that the occupant committed a
criminal activity;
5. Consented warrantless search;
6. Customs search;
7. Stop and Frisk; and
8. Exigent and Emergency Circumstances. [50]

For a warrantless arrest to be valid, the arrest must have been


committed under the following circumstances:

RULE 113

ARREST

....

SECTION 5. Arrest without warrant; when lawful. — A peace


officer or a private person may, without a warrant, arrest a
person:

(a) When, in his presence, the person to be arrested has committed, is actually commit
commit an offense;
(b) When an offense has just been committed and he has probable cause to beli
knowledge of facts or circumstances that the person to be arrested has committed i
(c) When the person to be arrested is a prisoner who has escaped from a penal estab
he is serving final judgment or is temporarily confined while his case is pending, or
transferred from one confinement to another.

In cases falling under paragraphs (a) and (b) above, the person
arrested without a warrant shall be forthwith delivered to the
nearest police station or jail and shall be proceeded against in
accordance with section 7 of Rule 112. [51]

Here, petitioner was seen by police officers participating in a "pot


session."  PO2 Villeran, respondent's primary witness, testified
[52]

that on the day of the incident, he and other police operatives


were conducting a "stake-out operation" in Purok Sigay,
Barangay 2, Bacolod City. He stated:

While I was passing on that house and upon hearing that there
was a noise inside the house, I peeped on the window and I was
able to see three persons sitting with a small table on the middle
of them, one of those person (sic) was holding an alumin[u]m foil
which was rolled and was used as a straw and placed on his
mouth while there was another foil with a lighted lighter in the
bottom of that foil with the fume from that foil he was sniffing
through his mouth and after that he passed that aluminum foil
from him to another. [53]

Petitioner was arrested and subjected to drug testing. When he


tested positive for shabu, he was subsequently charged with
having violated Article II, Section 15 of Republic Act No. 9165,
 which reads:
[54]

SECTION 15. Use of Dangerous Drugs. — A person apprehended


or arrested, who is found to be positive for use of any dangerous
drug, after a confirmatory test, shall be imposed a penalty of a
minimum of six (6) months rehabilitation in a goverrnnent center
for the first offense, subject to the provisions of Article VIII of this
Act. If apprehended using any dangerous drug for the second
time, he/she shall suffer the penalty of imprisonment ranging
from six (6) years and one (1) day to twelve (12) years and a
fine ranging from Fifty thousand pesos (P50,000.00) to Two
hundred thousand pesos (P200,000.00): Provided, That this
Section shall not be applicable where the person tested is also
found to have in his/her possession such quantity of any
dangerous drug provided for under Section 11 of this Act, in
which case the provisions stated therein shall apply.

Petitioner argues that his warrantless arrest was illegal since PO2
Villeran had to peep through the window to ascertain that
something illegal was occurring. He posits that his case is similar
to that of People v. Bolasa.  In Bolasa, the police were tipped off
[55]

by an informant that people were packing drugs in a certain


house. Upon reaching it, the police officers peeked into a window,
where they saw a man and a woman repacking marijuana. The
officers entered the house, introduced themselves as police
officers, and arrested the pair. This Court held that the arrests
and the subsequent searches and seizures were invalid as the
arresting officers had no personal knowledge that the people in
the house were committing a crime.

Here, however, petitioner admits that he failed to question the


validity of his arrest before arraignment.  He did not move to
[56]

quash the Information against him before entering his plea.  He [57]

was assisted by counsel when he entered his plea.  Likewise, he


[58]

was able to present his evidence.  In People v. Alunday:


[59] [60]

The Court has consistently ruled that any objection involving a


warrant of arrest or the procedure for the acquisition by the court
of jurisdiction over the person of the accused must be made
before he enters his plea; otherwise, the objection is deemed
waived. We have also ruled that an accused may be estopped
from assailing the illegality of his arrest if he fails to move for the
quashing of the information against him before his arraignment.
And since the legality of an arrest affects only the jurisdiction of
the court over the person of the accused, any defect in the arrest
of the accused may be deemed cured when he voluntarily
submits to the jurisdiction of the trial court. We have also held in
a number of cases that the illegal arrest of an accused is not a
sufficient cause for setting aside a valid judgment rendered upon
a sufficient complaint after a trial free from error; such arrest
does not negate the validity of the conviction of the accused.

Herein, accused-appellant went into arraignment and entered a


plea of not guilty. Thereafter, he actively participated in his trial.
He raised the additional issue of irregularity of his arrest only
during his appeal to this Court. He is, therefore, deemed to have
waived such alleged defect by submitting himself to the
jurisdiction of the court by his counsel-assisted plea during his
arraignment; by his actively participating in the trial and by not
raising the objection before his arraignment.

It is much too late in the day to complain about the warrantless


arrest after a valid information has been filed, the accused
arraigned, trial commenced and completed, and a judgment of
conviction rendered against him.

Accused-appellant was not even denied due process by virtue of


his alleged illegal arrest, because of his voluntary submission to
the jurisdiction of the trial court, as manifested by the voluntary
and counsel assisted plea he entered during arraignment and by
his active participation in the trial thereafter.
[61]

In Bolasa, the accused were charged with possession of illegal


drugs. This Court not only contended with the validity of the
warrantless arrest, but also examined the validity of the
subsequent search of the accused and the seizure of items in
their possession. As with certain constitutional rights,  the right
[62]

to question the validity of a warrantless arrest can be waived.


This waiver, however, does not carry with it a waiver of the
inadmissibility of the evidence seized during the illegal arrest.[63]
Petitioner does not deny that his drug test yielded positive for
illegal drugs. What he questions is the alleged illegality of his
arrest.

Petitioner, however, has already waived the right to question the


validity of his arrest. No items were seized from him during his
arrest as he was not charged with possession or sale of illegal
drugs. Thus the trial court and the Court of Appeals did not err in
finding him guilty beyond reasonable doubt in violation of Article
II, Section 15 of Republic Act No. 9165.

WHEREFORE, the Petition is DENIED. The April 29, 2013


Decision and December 10, 2013 Resolution of the Court of
Appeals in CA-G.R. CEB-CR No. 01564 are AFFIRMED.

SO ORDERED.

Peralta, (Chairperson), Caguioa,  A.


*
Reyes,
Jr., and Carandang,   JJ., concur.
**

March 25, 2019

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:

Please take notice that on February 13, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 25, 2019 at 4:20 p.m.
Very truly yours,

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court

 Designated additional Member in lieu of Associate Justice Ramon


*

Paul L. Hernando, per Raffle dated February 4, 2019.

 Designated additional Member per Special Order No. 2624 dated


**

November 28, 2018.

[1]
 Rollo, pp. 8-21.

 Id. at 68-73. The Decision was penned by Associate Justice


[2]

Ramon Paul L. Hernando (now an Associate Justice of this Court)


and concurred in by Associate Justices Gabriel T. Ingles and Ma.
Luisa C. Quijano-Padilla of the Special Twentieth Division, Court
of Appeals, Manila.

 Id. at 78-79. The Resolution was penned by Associate Justice


[3]

Ramon Paul L. Hernando (now an Associate Justice of this Court)


and concurred in by Associate Justices Gabriel T. Ingles and Ma.
Luisa C. Quijano-Padilla of the Special Twentieth Division, Court
of Appeals, Manila.

 Id. at. 38-45. The Decision was penned by Judge Edgar G.


[4]

Garvilles of Branch 47, Regional Trial Court, Bacolod City.

[5]
 The Comprehensive Dangerous Drugs Act of 2002.

[6]
 Rollo, p. 69.

[7]
 Id.
[8]
 Id.

[9]
 Id.

[10]
 Id. This person was not named in the records.

[11]
 Id.

[12]
 Id.

[13]
 Id.

 The factual antecedents of the trial court and the Court of


[14]

Appeals do not mention that two (2) other persons were


apprehended. This Court presumes that there were about five (5)
people involved and apprehended in the alleged pot session.

[15]
 Rollo, pp. 69-70.

[16]
 Id. at 70.

[17]
 Id.

[18]
 Id. at 38-45.

[19]
 Id. at 43.

[20]
 Id. at 44-45.

[21]
 Id. at 70.

[22]
 Id. at 68-73.

[23]
 Id. at 72.

[24]
 Id. at 74-77.

[25]
 Id. at 78-79.
 Id. at 8-21. Respondent filed its Comment (rollo, pp. 94-106)
[26]

on June 25, 2014. Petitioner filed his Manifestation in Lieu of


Reply (rollo, pp. 113-115) on September 17, 2014.

[27]
 Id. at 12.

[28]
 Id. at 16.

[29]
 Id. at 16.

[30]
 Id. at 17.

[31]
 Id.

[32]
 Id. at 97-98.

[33]
 Id. at 99.

[34]
 Id. at 100.

[35]
 Id. at 102.

[36]
 Id.

 Korean Airlines v.  Court  of  Appeals, 238 Phil. 204 (1987) [Per


[37]

J. Cruz, First Division] citing Chemplex, Inc. v. Pamatian, 156


Phil. 408 (1974) [Per C.J. Makalintal, En
Banc]; Ereñeta v. Bezore, 153 Phil. 299 (1973) [Per J. Castro,
First Division]; and Miguel, et al. v. Catalina, 135 Phil. 229 (1968)
[Per J. Reyes, J.B.L., En Banc].

[38]
 RULES OF COURT, Rule 45, sec. 1 provides:

SECTION 1. Filing of petition with Supreme Court. — A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

 Century Iron Works v. Bañas, 711 Phil. 576 (2013) [Per J.


[39]

Brion, Second Division].

 People v. Macasinag, 255 Phil. 279, 281 (1989) [Per J. Cruz,


[40]

First Division].

[41]
 CONST. Art. III, sec. 14 (2).

 See Macayan, Jr. v. People, 756
[42]
Phil. 202 (2015) [Per J.
Leonen, Second Division].

[43]
 Id.

[44]
 518 Phil. 196 (2006) [Per J. Austria-Martinez, First Division].

 Id. at 220 citing Aradillos v. Court of Appeals, 464 Phil. 650


[45]

(2004) [Per J. Austria-Martinez, Second Division].

 People v. Macasinag, 255 Phil. 279, 281 (1989) [Per J. Cruz,


[46]

First Division].

 People v. Ortiz, 334 Phil. 590, 601 (1997) [Per J. Francisco,


[47]

Third Division].

[48]
 CONST., Art. III, sec. 2.

[49]
 351 Phil. 868 (1998) [Per J. Romero, Third Division].

 Id. at 879-880 citing RULES OF COURT, Rule 126, sec.


[50]

12; Padilla v. Court of Appeals and People, 336 Phil. 383 (1997)


[Per J. Francisco, Third Division]; People v. Solayao, 330 Phil.
811 (1996) [Per J. Romero, Second Division];
and People v. De Gracia,  304 Phil. 118-138 (1994) [Per J.
Regalado, Second Division].
[51]
 RULES OF COURT, Rule 113, sec. 5.

 Rollo,  p. 69. This Court has never defined a "pot session." The
[52]

closest definition is mentioned in Garcia  v. Court  of Appeals (324


Phil. 846 (1996) [Per J. Panganiban, Third Division]), where the
Information stated that a "pot session" was in violation of Section
27 of Republic Act No. 6425, the previous law against dangerous
drugs:

SECTION 27. Criminal Liability of Possessor or User of Dangerous


Drugs During Social Gatherings. — The maximum of the penalties
provided for in Section 8, Article II and Section 16, Article III of
this Act shall be imposed upon any person found possessing or
using any dangerous drug during a party or at a social gathering
or in a group of at least five persons possessing or using such
drugs.

[53]
 Id. at 54.

[54]
 The Comprehensive Dangerous Drugs Act of 2002.

[55]
 378 Phil. 1073 (1999) [Per J. Bellosillo, Second Division].

[56]
 Rollo, p. 18.

[57]
 Id. at 38.

[58]
 Id.

[59]
 Id. at 41-42.

[60]
 586 Phil. 120 (2008) [Per J. Chico-Nazario, Third Division].

 Id. at 133-134 citing People v. Tidula, 354 Phil. 609, 624


[61]

(1998) [Per J. Panganiban, First Division]; People v. Montilla, 349


Phil. 640, 661 (1998) [Per J. Regalado, En
Banc]; People v. Cabiles, 348 Phil. 220 (1998) [Per J. Melo, Third
Division]; People  v. Mahusay, 346 Phil. 762, 769 (1997) [Per J.
Romero, Third Division]; People v. Rivera, 315 Phil. 454, 465
(1995) [Per J. Vitug, Third Division]; People v. Lopez, Jr., 315
Phil. 59, 71-72 (1995) [Per J. Kapunan, First
Division]; People v. Hernandez, 347 Phil. 56, 74-75 (1997) [Per J.
Puno, Second Division]; People  v.  Nazareno, 329 Phil. 16, 22
(1996) [Per J. Mendoza, Second Division]; People v. Emoy, 395
Phil. 371, 384 (2000) [Per J. Pardo, First Division];
and People v. Navarro, 357 Phil. 1010, 1032-1033 (1998) [Per J.
Panganiban, First Division].

 See Cagang v. Sandiganbayan, G.R. No. 206438, 206458, and


[62]

210141-42, July 31, 2018,  <


http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/july2018/206438.pdf> [Per J. Leonen,
En Banc].

 See People v. Lapitaje, 445 Phil. 729 (2003) [Per J. Austria-


[63]

Martinez, En Banc].

Source: Supreme Court E-Library | Date created: April 15, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 217542, November 21,


2018 ]
CHRISTINE FERNANDEZ Y MEDINA, PETITIONER,
VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

This is an extraordinary case involving the application of doctrines


on violations of Republic Act No. 7610 or the Special Protection of
Children Against Child Abuse, Exploitation and Discrimination Act.

For this Court's resolution is a Petition for Review on


Certiorari  assailing the Court of Appeals September 29, 2014
[1]

Decision  and March 11, 2015 Resolution  in CA-G.R. CR No.


[2] [3]

35695. The Court of Appeals affirmed with modification the


Regional Trial Court April 18, 2013 Joint Decision  finding[4]

Christine Fernandez y Medina (Fernandez) guilty beyond


reasonable doubt of two (2) counts of child abuse.

Two (2) Informations  were filed against Fernandez:


[5]

Criminal Case No. 116-V-12

That on or about November 11, 2011, in Valenzuela City and


within the jurisdiction of the Honorable Court, the above-named
accused, being the stepmother of the herein minor victim,
without any justifiable cause, did then and there willfully,
unlawfully and feloniously maltreated one AAA, 10 years old,
DOB: September 12, 2001 (complainant/victim), by pliers [sic]
the ears, bang[ing] the head on the wall and punch[ing] the back
of the said minor complainant/victim, thereby subjecting said
minor to psychological and physical abuse, cruelty and emotional
maltreatment and which act debase, degraded and demeaned his
intrinsic worth and dignity as human being, thus prejudicial to his
normal development.

CONTRARY TO LAW.
Criminal Case No. 117-V-12

That on or about November 11, 2011, in Valenzuela City and


within the jurisdiction of the Honorable Court, the above-named
accused, being the stepmother of the herein minor victim,
without any justifiable cause, did then and there willfully,
unlawfully and feloniously maltreated one BBB, 11 years old,
DOB: June 5, 2000 (complainant/victim), by scalding her with a
hot rice, (sic) causing her skin to burn, piercing her stomach with
a bamboo stick, hitting her eyes with a slippers [sic], hammering
her foot and hitting her at the back of her body with a bamboo,
thereby subjecting said minor to psychological and physical
abuse, cruelty and emotional maltreatment and which act
debased, degraded and demeaned her intrinsic worth and dignity
as a human being thus prejudicial to her normal development.

Contrary to Law.  (Citations omitted)


[6]

On arraignment, Fernandez pleaded not guilty to the crimes


charged. [7]

The prosecution presented six (6) witnesses: (1) AAA; (2) BBB;
(3) Dominador M. Malabanan (Malabanan); (4) Gregoria
Vengano; (5) Merceditas Padua; and (6) Dr. Janet San Agustin. [8]

During trial, BBB testified that Fernandez was her stepmother


previously hired as a house helper by her biological mother to
take care of her and her younger brother, AAA. She said that
Fernandez was hired because their biological mother lived
separately, and nobody took care of them when their father was
at work.[9]

Eventually, Fernandez cohabited with the two (2) children and


their father. In the beginning, the relationship was harmonious.
However, after some time, Fernandez started inflicting abuse on
AAA and BBB. [10]

During breakfast on November 11, 2011, BBB said that


Fernandez pinched her stomach, crimped her ears with pliers,
and hit her back with a bamboo stick, causing her to vomit blood.
Fernandez also ordered her to lie down, then kicked her in the
stomach, and hit her eyes with rubber slippers. Fernandez then
dragged her by the hair and spun her around like a helicopter. [11]

On a previous occasion, Fernandez scalded BBB with a cooking


pot.
[12]

AAA and BBB's father was often not around because he was a
driver. Whenever their father saw the marks, BBB said that
Fernandez would force her to lie.
[13]

AAA also testified that Fernandez beat him and his older sister.
He recounted that Fernandez clipped, pulled, and rotated his right
ear with rusty pliers after he spilled rice by accident. Fernandez
also forbade them to cry so he just wiped the blood off his ear
with a handkerchief. She also banged his head on the floor
several times, and hit him on the nape and back with a broom
until the broom broke.[14]

After the incident, BBB said that Fernandez prohibited her from
going to school for a week. On the day she went back to school,
her teacher, Malabanan, saw that she had several contusions and
marks on her body. Malabanan also noticed that her black eye
was very prominent, prompting him to ask her about what
happened. [15]

Initially, BBB refused to answer his questions, but upon prodding,


she disclosed that her stepmother hit her as well as her brother,
AAA. [16]

Malabanan brought the matter to the principal, who in turn called


in a barangay councilor. They then talked to a representative
from the Department of Social Welfare and Development. [17]

The defense presented Fernandez as its sole witness. She


narrated that the children were arguing and that it was them who
inflicted the injuries on each other. [18]
In its April 18, 2013 Joint Decision,  the Regional Trial Court
[19]

found Fernandez guilty beyond reasonable doubt of violation of


Section 10(a) of Republic Act No. 7610. It ruled that the
testimonies of the two (2) minor victims were consistent, candid,
spontaneous, and credible. The medical certificates and
photographs of the injuries sustained also supported their
testimonies. The Regional Trial Court rejected Fernandez's
defense that AAA and BBB sustained injuries through a physical
fight. It found her defense self-serving and not in accord with
human experience. [20]

The dispositive portion of the Regional Trial Court April 18, 2013
Joint Decision read:
WHEREFORE, the prosecution having proven the guilt of accused
CHRISTINE M. FERNANDEZ beyond reasonable doubt, accused
CHRISTINE FERNANDEZ is hereby sentenced to four (4) years,
nine (9) months and eleven (11) days of prision correccional, as
minimum, to six (6) years, eight (8) months and one (1) day
of prision mayor, as maximum.

Accused CHRISTINE M. FERNANDEZ is further directed to pay


[BBB] and [AAA] civil indemnity in the amount of P30,000, (sic)
each.

SO ORDERED. [21]

Fernandez appealed the Regional Trial Court April 18, 2013 Joint
Decision, arguing that the prosecution failed to establish her guilt
beyond reasonable doubt. [22]

On September 29, 2014, the Court of Appeals affirmed with


modification Fernandez's conviction.  The dispositive portion of
[23]

its Decision read:


WHEREFORE, the Court AFFIRMS with MODIFICATION the
Decision dated 18 August 2005 of the Regional Trial Court of
Valenzuela City, Branch 270 in Criminal Cases No. 116-V-12 and
117-V-12. Appellant CHRISTINE FERNANDEZ y MEDINA is hereby
found guilty beyond reasonable doubt of two (2) counts of
committing child abuse in violation of Section 10(a) of Republic
Act No. 7610 and is sentenced to suffer imprisonment ranging
from four (4) years, nine (9) months and eleven (11) days of
prision [correccional], as minimum to six (6) years, eight (8)
months and one (1) day of prision mayor, as maximum for each
count of violation.

SO ORDERED.  (Emphasis in the original)


[24]

Fernandez moved for reconsideration, but her motion was denied


by the Court of Appeals in its March 11, 2015 Resolution.[25]

Undaunted, Fernandez on May 22, 2015 filed a Petition for


Review on Certiorari  assailing the Court of Appeals September
[26]

29, 2014 Decision and March 11, 2015 Resolution, to which the
People of the Philippines, through the Office of the Solicitor
General, filed its Comment. [27]

In its July 3, 2017 Resolution,  this Court required petitioner to


[28]

file a reply to the comment on the petition, but petitioner on


August 18, 2017 manifested that she would no longer file a reply.
[29]

In praying for her acquittal, petitioner asserts that the


prosecution failed to establish her guilt beyond reasonable doubt.
 She argues that she was convicted because the lower courts
[30]

relied heavily on the blatantly inconsistent testimonies of AAA and


BBB, whom she said were "coached," for it is unthinkable for a
woman to employ violent acts against children. [31]

In its Comment,  respondent argues that the Court of Appeals


[32]

correctly affirmed the Regional Trial Court April18, 2013 Joint


Decision. It adds that the inconsistencies petitioner pointed out
are trivial as they concern inconsequential matters that do not
change the fact that she physically abused the children.  It says
[33]

that in any case, courts expect minor inconsistencies when a


child-victim narrates the details of a traumatic experience.
Respondent elaborates that inconsistencies on minor details are,
in fact, badges of truth and candidness, and that the testimonies
of AAA and BBB were unrehearsed.

The sole issue in this case is whether or not the Court of Appeals
committed reversible error in affirming petitioner's conviction for
two (2) counts of violation of Section 10(a) of Republic Act No.
7610.

The Petition is denied.

The prosecution proved beyond reasonable doubt that petitioner


violated Republic Act No. 7610, or the Special Protection of
Children Against Child Abuse, Exploitation and Discrimination Act.

Under Article I, Section 3 of the law, child abuse may be


committed through the following:
Section 3. Definition of Terms. -

....

(b) "Child abuse" refers to the maltreatment, whether


habitual or not, of the child which includes any of the
following:
(1) Psychological and physical abuse, neglect, cruelty,
sexual abuse and emotional maltreatment;
(2) Any act by deeds or words which debases, degrades or
demeans the intrinsic worth and dignity of a child as a
human being;
(3) Unreasonable deprivation of his basic needs for survival, such
as food and shelter; or
(4) Failure to immediately give medical treatment to an injured
child resulting in serious impairment of his growth and
development or in his permanent incapacity or death.  (Emphasis
[34]

supplied)
Article VI, Section 10(a) of the same law further provides:
Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation
and Other Conditions Prejudicial to the Child's Development. -
(a) Any person who shall commit any other acts of child abuse,
cruelty or exploitation or be responsible for other conditions
prejudicial to the child's development including those covered by
Article 59 of Presidential Decree No. 603, as amended, but not
covered by the Revised Penal Code, as amended, shall suffer the
penalty of prision mayor in its minimum period. [35]

Section 2 of the Implementing Rules and Regulations on the


Reporting and Investigation of Child Abuse Cases  provides the [36]

following definition of terms:


SECTION 2. Definition of Terms. - ...
 
(a) "Child Abuse" refers to the infliction of physical or psychological injury, cruelty to,
or exploitation of a child;

(b) "Cruelty" refers to any act by word or deed which debases, degrades or demeans
dignity of a child as a human being. Discipline administered by a parent or legal gua
constitute cruelty provided it is reasonable in manner and moderate in degree
physical or psychological injury as defined herein;

(c) "Physical injury" includes but is not limited to lacerations, fractured bones, burns,
injury or serious bodily harm suffered by a child. [37]

Here, records show that the minors suffered physical injuries in


petitioner's hands. The Regional Trial Court's "evaluation of the
facts and evidence is utterly sufficient in substance to support
[petitioner's] conviction." [38]

Petitioner points out that AAA's and BBB's testimonies are


inconsistent.
AAA testified:

Q: Ano pa?

A: Kinurot po ako sa singit at pinalo ng walis tambo nabale pa


nga po eh.

....

Q: At sabi mo, yong walis tambo binale niya, paano niya


binale sa iyo?
A: Ipinalo niya po sa akin.  (Emphasis supplied)
[39]

On the other hand, BBB testified:


Q: Ang sabi mo, nandoon yung kapatid mo. Ano ang ginagawa
niya habang nakikita niya na pinaplais ni Christine ang tenga
mo, tinutusok ka ng kawayan sa tiyan at pinapalo ka ng
kawayan sa likod habang ikaw ay kumakain?

A: Katabi ko po siya at kumakain din.  (Emphasis supplied)


[40]

Petitioner argues that both of the witnesses' narrations contain


the use of objects such as plais, kawayan, and walis tambo,
which are contrary to human experience, and strengthen the
suspicion that they were coached. [41]

This Court finds that petitioner's argument lacks merit, and


agrees with the findings of the Court of Appeals September 29,
2014 Decision, which states:
From our own careful examination of the records, we are
convinced that there is no reason to disturb the assessment and
determination of the private complainants' credibility by the trial
court. The straightforward, candid[,] and intrepid revelation in
coming forward to avenge the physical abuses upon them is more
convincing and plausible compared to the weak and
uncorroborated defense of appellant. Despite the minor
inconsistencies in their testimonies, their general statements
remained consistent throughout the trial as they recounted the
sordid details of their tormenting experience in the hands of
appellant.[42]

The Court of Appeals further ruled:


AAA and BBB remained consistent all throughout the trial as they
recounted the sordid details of [the] tormenting experience they
suffered. They likewise identified the photographs depicting the
injuries they suffered in the hands of the appellant and which was
corroborated by their respective Medical Certificates. Where a
minor-victim's testimony is corroborated by the physical findings
of cruelty, like in this case, there is sufficient basis for concluding
that the minor-complainant was telling the truth. Physical
evidence is of the highest order and speaks more eloquently than
all witnesses put together. [43]

Trial courts at first instance determine the credibility of witnesses.


Generally, their findings and conclusions on this matter are given
great weight.  These findings should not be disturbed on appeal,
[44]

unless facts that were overlooked or misinterpreted would


materially affect the disposition of the case.  Thus, in People v.
[45]

De Los Santos: [46]

Basic is the rule that the matter of assigning values to


declarations on the witness stand is best and most competently
performed by the trial judge, who had the unmatched opportunity
to observe the witnesses and to assess their credibility by the
various indicia available but not reflected on the record. Hence,
the corollary principle that absent any showing that the trial court
overlooked substantial facts and circumstances that would affect
the final disposition of the case, appellate courts are bound to
give due deference and respect to its evaluation of the credibility
of an eyewitness and his testimony as well as its probative value
amidst the rest of the other evidence on record. [47]

A perusal of the records shows that there is no clear reason to


disturb the factual findings of the Regional Trial Court. AAA's and
BBB's testimonies were clear, positive, and direct. The Regional
Trial Court judge's assessment of the witnesses' credibility is
given great weight and respect, especially on appeal, since he or
she had the advantage of actually examining both object and
testimonial evidence, including the demeanors of the witnesses. [48]

In Sanchez v. People, et al.,  this Court upheld the conviction of


[49]

the accused for child abuse through physical violence based on


the witnesses' testimonies. The Decision read:
Appellant could only proffer the defense of denial. Notably, the
RTC found VVV and MMM to be credible witnesses, whose
testimonies deserve full credence. It bears stressing that full
weight and respect are usually accorded by the appellate court to
the findings of the trial court on the credibility of witnesses, since
the trial judge had the opportunity to observe the demeanor of
the witnesses. Equally noteworthy is the fact that the CA did not
disturb the RTC's appreciation of the witnesses' credibility. Thus,
we apply the cardinal rule that factual findings of the trial court,
its calibration of the testimonies of the witnesses, and its
conclusions anchored on such findings, are accorded respect, if
not conclusive effect, especially when affirmed by the CA. The
exception is when it is established that the trial court ignored,
overlooked, misconstrued, or misinterpreted cogent facts and
circumstances which, if considered, will change the outcome of
the case. We have reviewed the records of the RTC and the CA
and we find no reason to deviate from the findings of both courts
and their uniform conclusion that appellant is indeed guilty
beyond reasonable doubt of the offense of Other Acts of Child
Abuse. [50]

Moreover, courts expect minor inconsistencies when a child-


victim narrates the details of a harrowing experience, especially
when the details are too painful to recall. Such inconsistencies
only prove that the child victim was unrehearsed, especially when
the discrepancies are minor details irrelevant to the elements of
the crime, and thus, cannot be considered as grounds for
acquittal. [51]

Here, AAA's and BBB's testimonies sufficiently established that


petitioner committed physical violence against the minors. They
validated their testimonies with properly identified photos
depicting the injuries they had suffered from petitioner, further
corroborated by their medical certificates. Thus, there is sufficient
basis to conclude that they were telling the truth.[52]

The courts must stay true to its mandate of protecting the


welfare of children. In Araneta v. People,  this Court [53]

emphasized:
Republic Act No. 7610 is a measure geared towards the
implementation of a national comprehensive program for the
survival of the most vulnerable members of the population, the
Filipino children, in keeping with the Constitutional mandate
under Article XV, Section 3, paragraph 2, that "The State shall
defend the right of the children to assistance, including proper
care and nutrition, and special protection from all forms of
neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development." This piece of legislation supplies
the inadequacies of existing laws treating crimes committed
against children, namely, the Revised Penal Code and Presidential
Decree No. 603 or the Child and Youth Welfare Code. As a statute
that provides for a mechanism for strong deterrence against the
commission of child abuse and exploitation, the law has stiffer
penalties for their commission, and a means by which child
traffickers could easily be prosecuted and penalized. Also, the
definition of child abuse is expanded to encompass not only those
specific acts of child abuse under existing laws but includes also
"other acts of neglect, abuse, cruelty or exploitation and other
conditions prejudicial to the child's development[."] [54]

However, the Court of Appeals noted that the Regional Trial Court
imposed the penalty for only one (1) count; thus, it modified the
ruling, increasing it to two (2) counts of violation of Section 10(a)
of Republic Act No. 7610.

Under current jurisprudence, an annual 6% interest rate should


be imposed on all damages awarded from the date of judgment
until fully paid.
[55]

WHEREFORE, the Court of Appeals September 29, 2014 Decision


and March 11, 2015 Resolution in CA-G.R. CR No. 35695
are AFFIRMED. Petitioner Christine Fernandez y Medina
is GUILTY BEYOND REASONABLE DOUBT of two (2) counts of
child abuse in violation of Section 10(a) of Republic Act No. 7610,
and is sentenced to suffer imprisonment from a minimum of four
(4) years, nine (9) months, and eleven (11) days of prision
correccional to a maximum of six (6) years, eight (8) months,
and one (1) day of prision mayor for each count of violation.
Furthermore, she is ordered to pay AAA and BBB the amount of
Thirty Thousand Pesos (P30,000.00) each as civil indemnity.

In line with current jurisprudence, an annual six percent (6%)


interest rate should be imposed on all damages awarded from the
date of the finality of this Decision until fully paid.
[56]

SO ORDERED.
Peralta, (Chairperson), Gesmundo, and J. Reyes, Jr., JJ., concur.
Hernando, J., on wellness leave.

January 21, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on November 21, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on January 21, 2019 at 9:45 a.m.

[1]
 Rollo, pp. 11-33.

 Id. at 35-52. The Decision was penned by Associate Justice


[2]

Marlene Gonzales-Sison and concurred in by Associate Justices


Rosmari D. Carandang and Edwin D. Sorongon of the Fourth
Division of the Court of Appeals, Manila.

 Id. at 54-55. The Resolution was penned by Associate Justice


[3]

Marlene Gonzales-Sison and concurred in by Associate Justices


Rosmari D. Carandang and Edwin D. Sorongon of the Former
Fourth Division of the Court of Appeals, Manila.
 Id. at 71-82. The Joint Decision, docketed as Crim. Case No.
[4]

116-V-12 and Crim. Case No. 117-V-12, was penned by Presiding


Judge Evangeline M. Francisco of Branch 270, Regional Trial
Court, Valenzuela City.

[5]
 Id. at 36.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 37.

[9]
 Id.

[10]
 Id.

[11]
 Id. at 37-38.

[12]
 Id. at 37.

[13]
 Id. at 37-38.

[14]
 Id. at 38-39.

[15]
 Id. at 39.

[16]
 Id.

[17]
 Id.

[18]
 Id. at 41.

[19]
 Id. at 71-82.

[20]
 Id. at 81.

[21]
 Id. at 82.
[22]
 Id. at 63.

[23]
 Id. at 35-52.

[24]
 Id. at 51.

[25]
 Id. at 54-55.

[26]
 Id. at 11-33.

[27]
 Id. at 134-158.

[28]
 Id. at 161.

[29]
 Id. at 164-166.

[30]
 Id. at 19.

[31]
 Id. at 23-24.

[32]
 Id. at 134-156.

[33]
 Id. at 145.

[34]
 Republic Act No. 7610 (1991), art. I, sec. 3.

[35]
 Republic Act No. 7610 (1991), art. VI, sec. 10(a).

 Implementing Rules and Regulations on the Reporting and


[36]

Investigation of Child Abuse Cases (1993).

 Implementing Rules and Regulations on the Reporting and


[37]

Investigation of Child Abuse Cases (1993), secs. 2(b), (c), and


(d).

[38]
 Rollo, p.44.
[39]
 Id. at 23.

[40]
 Id. at 22.

[41]
 Id. at 22-23.

[42]
 Id. at 45.

[43]
 Id. at 48.

 People v. Ordona y Rendon, G.R. No. 227863, September 20,


[44]

2017 Error! Hyperlink reference not valid. [Per J. Leonen,


Third Division].

 People v. Racal, G.R. No. 224886, September 4, 2017 Error!


[45]

Hyperlink reference not valid. [Per J. Peralta, Second


Division].

 People v. De los Santos, 739 Phil. 658 (2014) [Per J. Reyes,


[46]

First Division].

[47]
 Id. at 666.

 People v. Cabugatan, 544 Phil. 468 (2007) [Per J. Chico-


[48]

Nazario, Third Division].

[49]
 606 Phil. 762 (2009) [Per J. Nachura, Third Division].

[50]
 Id. at 778-779.

 People v. Vergara, 724 Phil. 702 (2014) [Per J. Del Castillo,


[51]

Second Division]; People v. De Guzman, 644 Phil. 229 (2010)


[Per J. Mendoza, Second Division].

 People v. Bardaje, 187 Phil. 735 (1980) [J. Melencio-Herrera,


[52]

En Banc].

[53]
 578 Phil. 876 (2008) [Per J. Chico-Nazario, Third Division].
[54]
 Id. at 883-884.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[55]

En Banc].

[56]
 Id.

Source: Supreme Court E-Library | Date created: February 14, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 210950, August 15, 2018 ]


MILAGROS P. ENRIQUEZ, PETITIONER, VS. THE
MERCANTILE INSURANCE CO., INC.,
RESPONDENT.DECISION

LEONEN, J.:

A surety bond remains effective until the action or proceeding is


finally decided, resolved, or terminated, regardless of whether the
applicant fails to renew the bond. The applicant will be liable to
the surety for any payment the surety makes on the bond, but
only up to the amount of this bond.
This is a Petition for Review on Certiorari  assailing the August
[1]

13, 2013 Decision  and January 14, 2014 Resolution  of the
[2] [3]

Court of Appeals in CA-G.R. CV No. 95955, which affirmed the


Regional Trial Court's finding that Milagros P. Enriquez (Enriquez)
was liable for the full amount of the replevin bond issued by The
Mercantile Insurance Company, Inc. (Mercantile Insurance).

Sometime in 2003, Enriquez filed a Complaint for


Replevin  against Wilfred Asuten (Asuten) before the Regional
[4]

Trial Court of Angeles City, Pampanga. This Complaint, docketed


as Civil Case No. 10846,  was for the recovery of her Toyota Hi-
[5]

Ace van valued at P300,000.00.  Asuten allegedly refused to


[6]

return her van, claiming that it was given by Enriquez's son as a


consequence of a gambling deal. [7]

Enriquez applied for a replevin bond from Mercantile Insurance.


On February 24, 2003, Mercantile Insurance issued Bond No. 138
for P600,000.00,  which had a period of one (1) year or until
[8]

February 24, 2004. Enriquez also executed an indemnity


agreement with Mercantile Insurance, where she agreed to
indemnify the latter "for all damages, payments, advances,
losses, costs, taxes, penalties, charges, attorney's fees and
expenses of whatever kind and nature"  that it would incur as
[9]

surety of the replevin bond. [10]

On May 24, 2004, the Regional Trial Court issued an


Order  dismissing the Complaint without prejudice due to
[11]

Enriquez's continued failure to present evidence.

The Regional Trial Court found that Enriquez surrendered the van
to the Bank of the Philippine Islands, San Fernando Branch but
did not comply when ordered to return it to the sheriff within 24
hours from receipt of the Regional Trial Court March 15, 2004
Order.  She also did not comply with prior court orders to prove
[12]

payment of her premiums on the replevin bond or to post a new


bond. Thus, the Regional Trial Court declared Bond No. 138
forfeited. Mercantile Insurance was given 10 days to produce the
van or to show cause why judgment should not be rendered
against it for the amount of the bond. [13]

On July 12, 2004, the Regional Trial Court held a hearing on the
final forfeiture of the bond where it was found that Mercantile
Insurance failed to produce the van, and that Bond No. 138 had
already expired.  In an Order  issued on the same day, the
[14] [15]

Regional Trial Court directed Mercantile Insurance to pay Asuten


the amount of P600,000.00.

Mercantile Insurance wrote to Enriquez requesting the remittance


of P600,000.00 to be paid on the replevin bond.  Due to [16]

Enriquez's failure to remit the amount, Mercantile Insurance paid


Asuten P600,000.00 on September 3, 2004, in compliance with
the Regional Trial Court July 12, 2004 Order.  It was also [17]

constrained to file a collection suit against Enriquez with the


Regional Trial Court of Manila. [18]

In her defense, Enriquez claimed that her daughter-in-law, Asela,


filed the Complaint for Replevin in her name and that Asela
forged her signature in the indemnity agreement. She also
argued that she could not be held liable since the replevin bond
had already expired. [19]

In its July 23, 2010 Decision,  the Regional Trial Court ruled in
[20]

favor of Mercantile Insurance. It found that non-payment of the


premiums did not cause the replevin bond to expire. Thus,
Enriquez was still liable for the reimbursement made by the
surety on the bond. The Regional Trial Court likewise pointed out
that Enriquez made "conflicting claims" of having applied for the
bond and then later claiming that her daughter-in-law was the
one who applied for it.  The dispositive portion of the Regional
[21]

Trial Court July 23, 2010 Decision read:

WHEREFORE, judgment is hereby rendered in favor of plaintiff


The Mercantile Insurance Co., Inc. and against defendant
Milagros P. Enriquez, as follows:
(i) Ordering defendant Milagros P. Enriquez to pay plaintiff the
claim of P600,000.00 enforced under the Indemnity Agreement
plus legal interest at the rate of 12% per annum from date of
judicial demand on October 22, 2004, until fully paid;

(ii) Ordering defendant Milagros P. Enriquez to pay attorney's


fees fixed in the reasonable amount of P50,000.00;

(iii) Ordering defendant Milagros P. Enriquez to pay the costs of

SO ORDERED. [22]

Enriquez appealed  with the Court of Appeals, arguing that the


[23]

replevin bond had already expired; therefore, she could not have
been liable under the indemnity agreement. She also averred that
even assuming that she was still liable under the indemnity
agreement, she should not pay the full amount considering that
the value of the van was only P300,000.00. [24]

On August 13, 2013, the Court of Appeals rendered a


Decision  affirming the Regional Trial Court's July 23, 2010
[25]

Decision.

The Court of Appeals held that under the Guidelines on Corporate


Surety Bonds,  the lifetime of any bond issued in any court
[26]

proceeding shall be from court approval until the case is finally


terminated. Thus, it found that the replevin bond and indemnity
agreement were still in force and effect when Mercantile
Insurance paid P600,000.00 to Asuten. [27]

The Court of Appeals likewise found that Enriquez was "bound by


the incontestability of payments clause" in the indemnity
agreement, which stated that she would be held liable for any
payment made by the surety under the bond, regardless of the
actual cost of the van.  It held that the issue of whether Enriquez
[28]

was liable for the full amount of the replevin bond should have
been raised before the Regional Trial Court in the Complaint for
Replevin, and not in her appeal. [29]

Enriquez moved for reconsideration  but was denied by the Court


[30]

of Appeals in its January 14, 2014 Resolution.  Hence, this


[31]

Petition  was filed before this Court.


[32]

Petitioner argues that when respondent paid Asuten on


September 3, 2004, the indemnity agreement was no longer in
force and effect since the bond expired on February 24, 2004.
 She claims that the indemnity agreement was a contract of
[33]

adhesion, and that respondent "intended the agreement to be so


comprehensive and all-encompassing to the point of being
ambiguous." [34]

Petitioner contends that even assuming that the indemnity


agreement could be enforced, she should not have been held
liable for the full amount of the bond. Citing Rule 60, Section 2 of
the Rules of Court, she argues that a judgment on replevin is only
"either for the delivery of the property or for its value in case
delivery cannot be made and for such damages as either party
may prove, with costs." [35]

Respondent, on the other hand, contends that the present action


has already prescribed, considering that Rule 60, Section 10, in
relation to Rule 57, Section 20 of the Rules of Court, mandates
that any objection on the award should be raised in the trial court
where the complaint for replevin is filed. It argues that since
petitioner only raised the objection before the Court of Appeals,
her action should have been barred. [36]

Respondent likewise points out that the forfeiture of the bond was
due to petitioner's own negligence. It asserts that in the
proceedings before the Regional Trial Court, Enriquez failed to
present her evidence, and it was only when she filed an appeal
that she raised her objections.  It argues that the Guidelines on
[37]

Corporate Surety Bonds specify that the expiry of the bond shall
be after the court proceeding is finally decided; hence, the bond
was still in effect when respondent paid Asuten. [38]

The sole issue for this Court's resolution is whether or not


petitioner Milagros P. Enriquez should be made liable for the full
amount of the bond paid by respondent The Mercantile Insurance
Co., Inc. as surety, in relation to a previous case for replevin filed
by petitioner.

Replevin is an action for the recovery of personal property.  It is


[39]

both a principal remedy and a provisional relief. When utilized as


a principal remedy, the objective is to recover possession of
personal property that may have been wrongfully detained by
another. When sought as a provisional relief, it allows a plaintiff
to retain the contested property during the pendency of the
action. In Tillson v. Court of Appeals:[40]

The term replevin is popularly understood as "the return to or


recovery by a person of goods or chattels claimed to be
wrongfully taken or detained upon the person's giving security to
try the matter in court and return the goods if defeated in the
action;" "the writ by or the common-law action in which goods
and chattels are replevied," i.e., taken or gotten back by a writ
for replevin;" and to replevy, means to recover possession by an
action of replevin; to take possession of goods or chattels under a
replevin order. Bouvier's Law Dictionary defines replevin as "a
form of action which lies to regain the possession of personal
chattels which have been taken from the plaintiff unlawfully . . .,
(or as) the writ by virtue of which the sheriff proceeds at once to
take possession of the property therein described and transfer it
to the plaintiff upon his giving pledges which are satisfactory to
the sheriff to prove his title, or return the chattels taken if he fail
so to do;" the same authority states that the term, "to replevy"
means "to re-deliver goods which have been distrained to the
original possessor of them, on his giving pledges in an action of
replevin." The term therefore may refer either to the action itself,
for the recovery of personality, or the provisional remedy
traditionally associated with it, by which possession of the
property may be obtained by the plaintiff and retained during the
pendency of the action. In this jurisdiction, the provisional
remedy is identified in Rule 60 of the Rules of Court as an order
for delivery of personal property.[41]

Similarly, in BA Finance Corporation v. Court of Appeals: [42]

Replevin, broadly understood, is both a form of principal remedy


and of a provisional relief. It may refer either to the action itself,
i.e., to regain the possession of personal chattels being
wrongfully detained from the plaintiff by another, or to the
provisional remedy that would allow the plaintiff to retain the
thing during the pendency of the action and hold it pendente
lite. The action is primarily possessory in nature and generally
determines nothing more than the right of possession. Replevin is
so usually described as a mixed action, being partly in rem and
partly in personam-in rem insofar as the recovery of specific
property is concerned, and in personam as regards to damages
involved. As an "action in rem," the gist of the replevin action is
the right of the plaintiff to obtain possession of specific personal
property by reason of his being the owner or of his having a
special interest therein. Consequently, the person in possession
of the property sought to be replevied is ordinarily the proper and
only necessary party defendant, and the plaintiff is not required
to so join as defendants other persons claiming a right on the
property but not in possession thereof. Rule 60 of the Rules of
Court allows an application for the immediate possession of the
property but the plaintiff must show that he has a good legal
basis, i.e., a clear title thereto, for seeking such interim
possession. [43]

As a provisional remedy, a party may apply for an order for the


delivery of the property before the commencement of the action
or at any time before an answer is filed.  Rule 60 of the Rules of
[44]
Court outlines the procedure for the application of a writ of
replevin. Rule 60, Section 2 requires that the party seeking the
issuance of the writ must first file the required affidavit and a
bond in an amount that is double the value of the property:

Section 2. Affidavit and bond. — The applicant must show by his


own affidavit or that of some other person who personally knows
the facts:

(a) That the applicant is the owner of the property claimed,


particularly describing it, or is entitled to the possession thereof;

(b) That the property is wrongfully detained by the adverse party,


alleging the cause of detention thereof according to the best of
his knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of
execution or preliminary attachment, or otherwise placed
under custodia legis, or if so seized, that it is exempt from such
seizure or custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse


party in double the value of the property as stated in the affidavit
aforementioned, for the return of the property to the adverse
party if such return be adjudged, and for the payment to the
adverse party of such sum as he may recover from the applicant
in the action.
[45]

Once the affidavit is filed and the bond is approved by the court,
the court issues an order and a writ of seizure requiring the
sheriff to take the property into his or her custody.  If there is no
[46]

further objection to the bond filed within five (5) days from the
taking of the property, the sheriff shall deliver it to the applicant.
 The contested property remains in the applicant's custody until
[47]
the court determines, after a trial on the Issues, which among the
parties has the right of possession.
[48]

In Civil Case No. 10846, petitioner Enriquez filed a replevin case


against Asuten for the recovery of the Toyota Hi-Ace van valued
at P300,000.00.  She applied for a bond in the amount of
[49]

P600,000.00 with respondent in Asuten's favor. The Regional


Trial Court approved the bond and ordered the sheriff to recover
the van from Asuten and to deliver it to petitioner. While the van
was in petitioner's custody, the Regional Trial Court dismissed the
case without prejudice for failure to prosecute. Thus, it ordered
the sheriff to restore the van to Asuten. When petitioner failed to
produce the van, the Regional Trial Court directed respondent to
pay Asuten the amount of the bond.

There was no trial on the merits. The Regional Trial Court's


dismissal for failure to prosecute was a dismissal without
prejudice to re-filing. In this particular instance, any writ of
seizure, being merely ancillary to the main action,
becomes functus oficio. The parties returned to the status quo as
if no case for replevin had been filed. Thus, upon the dismissal of
the case, it was imperative for petitioner to return the van to
Asuten. In Advent Capital and Finance Corporation v. Young: [50]

We agree with the Court of Appeals in directing the trial court to


return the seized car to Young since this is the necessary
consequence of the dismissal of the replevin case for failure to
prosecute without prejudice. Upon the dismissal of the replevin
case for failure to prosecute, the writ of seizure, which is merely
ancillary in nature, became functus officio and should have been
lifted. There was no adjudication on the merits, which means that
there was no determination of the issue who has the better right
to possess the subject car. Advent ca mot therefore retain
possession of the subject car considering that it was not adjudged
as the prevailing party entitled to the remedy of replevin.

Contrary to Advent's view, Olympia International Inc. v. Court of


Appeals  applies to this case. The dismissal of the replevin case
for failure to prosecute results in the restoration of the parties'
status prior to litigation, as if no complaint was filed at all. To let
the writ of seizure stand after the dismissal of the complaint
would be adjudging Advent as the prevailing party, when
precisely no decision on the merits had been rendered.
Accordingly, the parties must be reverted to their status quo
ante.  Since Young possessed the subject car before the filing of
the replevin case, the same must be returned to him, as if no
complaint was filed at all.[51]

Petitioner argues that she should not have been made liable for
the bond despite her failure to return the van, considering that it
was effective only until February 24, 2004, and that she did not
renew or post another bond.

De Guia v. Alto Surety & Insurance, Co.  requires that any


[52]

application on the bond be made after hearing but before the


entry of judgment. Otherwise, the surety can no longer be made
liable under the bond:

Construing and applying these provisions of the Rules, we have


held in a long line of cases that said provisions are mandatory
and require the application upon the bond against the surety or
bondsmen and the award thereof to be made after hearing and
before the entry of final judgment in the case; that if the
judgment under execution contains no directive for the surety to
pay, and the proper party fails to make any claim for such
directive before such judgment had become final and executory,
the surety or bondsman cannot be later made liable under the
bond. The purpose of the aforementioned rules is to avoid
multiplicity of suits.
[53]

For this reason, a surety bond remains effective until the action
or proceeding is finally decided, resolved, or terminated. This
condition is deemed incorporated in the contract between the
applicant and the surety, regardless of whether they failed to
expressly state it. Under the Guidelines on Corporate Surety
Bonds: [54]

VII. LIFETIME OF BONDS IN CRIMINAL AND CIVIL


ACTIONS/SPECIAL PROCEEDINGS

Unless and until the Supreme Court directs otherwise,  the [55]

lifetime or duration of the effectivity of any bond issued in


criminal and civil actions/special proceedings, or in any
proceeding or incident therein shall be from its approval by the
court, until the action or proceeding is finally decided, resolved or
terminated. This condition must be incorporated in the terms and
condition of the bonding contract and shall bind the parties
notwithstanding their failure to expressly state the same in the
said contract or agreement.  (Emphasis supplied)

Civil Case No. 10846 is a rare instance where the writ of seizure
is dissolved due to the dismissal without prejudice, but the bond
stands because the case has yet to be finally terminated by the
Regional Trial Court.

The peculiar circumstances in this case arose when


petitioner failed to return the van to Asuten, despite the dismissal
of her action. This is an instance not covered by the Rules of
Court or jurisprudence. In its discretion, the Regional Trial Court
proceeded to rule on the forfeiture of the bond. As a result,
respondent paid Asuten twice the value of the van withheld by
petitioner. Respondent, thus, seeks to recover this  amount from
petitioner, despite the van only being worth half the amount of
the bond.

Of all the provisional remedies provided in the Rules of Court,


only Rule 60, Section 2  requires that the amount of the bond
[56]

be double  the value of the property. The other provisional


remedies provide that the amount be fixed by court or be merely
equal to the value of the property:
Provisional Remedies

Rule 57
Preliminary Attachment

....

Section 4. Condition of applicant's bond. — The party applying for


the order must thereafter give a bond executed to the adverse
party in the amount fixed by the court in its order granting the
issuance of the writ,  conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the attachment, if
the court shall finally adjudge that the applicant was not entitled
thereto.
....

Section 12. Discharge of attachment upon giving counter-bond.


— After a writ of attachment has been enforced, the party whose
property has been attached, or the person appearing on his
behalf, may move for the discharge of the attachment wholly or
in part on the security given. The court shall, after due notice and
hearing, order the discharge of the attachment if the movant
makes a cash deposit, or files a counter-bond executed to the
attaching party with the clerk of the court where the application is
made, in an amount equal to that fixed by the court in the order
of attachment, exclusive of costs. But if the attachment is sought
to be discharged with respect to a particular property, the
counter-bond shall be equal to the value of that property as
determined by the court.  In either case, the cash deposit or the
counter-bond shall secure the payment of any judgment that the
attaching party may recover in the action. A notice of the deposit
shall forthwith be served on the attaching party. Upon the
discharge of an attachment in accordance with the provisions of
this section, the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or
giving the counter-bond, or to the person appearing on his
behalf, the deposit or counter-bond aforesaid standing in place of
the property so released. Should such counter-bond for any
reason be found to be or become insufficient, and the party
furnishing the same fail to file an additional counter-bond, the
attaching party may apply for a new order of attachment.
....

Section 14. Proceedings where property claimed by third person.


— If the property attached is claimed by any person other than
the party against whom attachment had been issued or his agent,
and such person makes an affidavit of his title thereto, or right to
the possession thereof, stating the grounds of such right or title,
and serves such affidavit upon the sheriff while the latter has
possession of the attached property, and a copy thereof upon the
attaching party, the sheriff shall not be bound to keep the
property under attachment, unless the attaching party or his
agent, on demand of the sheriff, shall file a bond approved by the
court to indemnify the third-party claimant in a sum not less than
the value of the property levied upon.  In case of disagreement as
to such value, the same shall be decided by the court issuing the
writ of attachment. No claim for damages for the taking or
keeping of the property may be enforced against the bond unless
the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
....

Rule 58
Preliminary Injunction

....

Section 4. Verified application and bond for preliminary injunction


or temporary restraining order. — A preliminary injunction or
temporary restraining order may be granted only when:

....
(b) Unless exempted by the court, the applicant files with the
court where the action or proceeding is pending, a bond executed
to the party or person enjoined, in an amount to be fixed by the
court, to the effect that the applicant will pay to such party or
person all damages which he may sustain by reason of the
injunction or temporary restraining order if the court should
finally decide that the applicant was not entitled thereto. Upon
approval of the requisite bond, a writ of preliminary injunction
shall be issued.
....

Section 6. Grounds for objection to, or for motion of dissolution


of, injunction or restraining order. — The application for
injunction or restraining order may be denied, upon a showing of
its insufficiency. The injunction or restraining order may also be
denied, or, if granted, may be dissolved, on other grounds upon
affidavits of the party or person enjoined, which may be opposed
by the applicant also by affidavits. It may further be denied, or, if
granted, may be dissolved, if it appears after hearing that
although the applicant is entitled to the injunction or restraining
order, the issuance or continuance thereof, as the case may be,
would cause irreparable damage to the party or person enjoined
while the applicant can be fully compensated for such damages as
he may suffer, and the former files a bond in an amount fixed by
the court conditioned that he will pay all damages which the
applicant may suffer by the denial or the dissolution of the
injunction or restraining order. If it appears that the extent of the
preliminary injunction or restraining order granted is too great, it
may be modified.
....

Rule 59
Receivership

....

Section 2. Bond on appointment of receiver. — Before issuing the


order appointing a receiver the court shall require the applicant to
file a bond executed to the party against whom the application is
presented, in an amount to be fixed by the court, to the effect
that the applicant will pay such party all damages he may sustain
by reason of the appointment of such receiver in case the
applicant shall have procured such appointment without sufficient
cause; and the court may, in its discretion, at any time after the
appointment, require an additional bond as further security for
such damages.

Section 3. Denial of application or discharge of receiver. — The


application may be denied, or the receiver discharged, when the
adverse party files a bond executed to the applicant, in an
amount to be fixed by the court,  to the effect that such party will
pay the applicant all damages he may suffer by reason of the
acts, omissions, or other matters specified in the application as
ground for such appointment. The receiver may also be
discharged if it is shown that his appointment was obtained
without sufficient cause.
....

Rule 60
Replevin

....

Section 7. Proceedings where property claimed by third person.


— If the property taken is claimed by any person other than the
party against whom the writ of replevin had been issued or his
agent, and such person makes an affidavit of his title thereto, or
right to the possession thereof, stating the grounds therefor, and
serves such affidavit upon the sheriff while the latter has
possession of the property and a copy thereof upon the applicant,
the sheriff shall not be bound to keep the property under replevin
or deliver it to the applicant unless the applicant or his agent, on
demand of said sheriff, shall file a bond approved by the court to
indemnify the third-party claimant in a sum not less than the
value of the property under replevin as provided in section 2
hereof. In case of disagreement as to such value, the court shall
determine the same. No claim for damages for the taking or
keeping of the property may be enforced against the bond unless
the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.  (Emphasis supplied)
[57]

However, there is a rationale to the requirement that the bond for


a writ of seizure in a replevin be double the value of the property.
The bond functions not only to indemnify the defendant in case
the property is lost, but also to answer for any damages that may
be awarded by the court if the judgment is rendered in
defendant's favor. In Citibank, N.A. v. Court of Appeals:[58]

It should be noted that a replevin bond is intended to indemnify


the defendant against any loss that he may suffer by reason of its
being compelled to surrender the possession of the disputed
property pending trial of the action. The same may also be
answerable for damages if any when judgment is rendered in
favor of the defendant or the party against whom a writ of
replevin was issued and such judgment includes the return of the
property to him. Thus, the requirement that the bond be double
the actual value of the properties litigated upon. Such is the case
because the bond will answer for the actual loss to the plaintiff,
which corresponds to the value of the properties sought to be
recovered and for damages, if any. [59]

Any application of the bond in a replevin case, therefore, is


premised on the judgment rendered in favor of the defendant.
Thus, the Rules of Court imply that there must be a prior
judgment on the merits before there can be any application on
the bond:

Rule 60
Replevin

....
Section 9. Judgment. — After trial of the issues, the court shall
determine who has the right of possession to and the value of the
property and shall render judgment in the alternative for the
delivery thereof to the party entitled to the same, or for its value
in case delivery cannot be made, and also for such damages as
either party may prove, with costs.

Section 10. Judgment to include recovery against sureties. — The


amount, if any, to be awarded to any party upon any bond filed in
accordance with the provisions of this Rule, shall be claimed,
ascertained, and granted under the same procedure as prescribed
in section 20 of Rule 57.

The Rules of Court likewise require that for the defendant to be


granted the full amount of the bond, he or she must first apply to
the court for damages. These damages will be awarded only after
a proper hearing:

Rule 57
Preliminary Attachment

....

Section 20. Claim for damages on account of improper, irregular


or excessive attachment. — An application for damages on
account of improper, irregular or excessive attachment must be
filed before the trial or before appeal is perfected or before the
judgment becomes executory, with due notice to the attaching
party and his surety or sureties, setting forth the facts showing
his right to damages and the amount thereof. Such damages may
be awarded only after proper hearing and shall be included in the
judgment on the main case.

If the judgment on the appellate court be favorable to the party


against whom the attachment was issued, he must claim
damages sustained during the pendency of the appeal by filing an
application in the appellate court, with notice to the party in
whose favor the attachment was issued or his surety or sureties,
before the judgment of the appellate court becomes executory.
The appellate court may allow the application to be heard and
decided by the trial court.

Nothing herein contained shall prevent the party against whom


the attachment was issued from recovering in the same action
the damages awarded to him from any property of the attaching
party not exempt from execution should the bond or deposit
given by the latter be insufficient or fail to fully satisfy the award.

Forfeiture of the replevin bond, therefore, requires first,  a


judgment on the merits in the defendant's favor, and second,  an
application by the defendant for damages. Neither circumstance
appears in this case. When petitioner failed to produce the van,
equity demanded that Asuten be awarded only an amount equal
to the value of the van. The Regional Trial Court would have
erred in ordering the forfeiture of the entire bond in Asuten's
favor, considering that there was no trial on the merits or an
application by Asuten for damages. This judgment could have
been reversed had petitioner appealed the Regional Trial Court's
May 24, 2004 Order in Civil Case No. 10846. Unfortunately, she
did not. Respondent  was, thus, constrained to follow the
Regional Trial Court's directive to pay Asuten the full amount of
the bond.

II

This is a simple case for collection of a sum of money. Petitioner


cannot substitute this case for her lost appeal in Civil Case No.
10846.

In applying for the replevin bond, petitioner voluntarily undertook


with respondent an Indemnity Agreement, which provided:

INDEMNIFICATION – to indemnify the SURETY for all damages,


payments, advances, losses, costs, taxes, penalties, charges,
attorney's fees and expenses of whatever kind and nature that
the SURETY may at any time sustain or incur as a consequence of
having become a surety upon the above-mentioned bond, and to
pay, reimburse and make good to the SURETY, its successors and
assigns, all sums or all money which it shall pay or become liable
to pay by virtue of said bond even if said payment/s or liability
exceeds the amount of the bond. . . .

INCONTESTABILITY OF PAYMENTS MADE BY THE SURETY – any


payment or disbursement made by the surety on account of the
above-mentioned bond, either in the belief that the SURETY was
obligated to make such payment or in the belief that said
payment was necessary in order to avoid a greater loss or
obligation for which the SURETY might be liable by virtue of
the . . . above-mentioned bond, shall be final, and will not be
contested by the undersigned, who jointly and severally bind
themselves to indemnify the SURETY for any of such payment or
disbursement. [60]

Basic is the principle that "a contract is law between the


parties"  for as long as it is "not contrary to law, morals, good
[61]

customs, public order, or public policy."  Under their Indemnity


[62]

Agreement, petitioner held herself liable for any payment made


by respondent by virtue of the replevin bond.

Petitioner contends that the Indemnity Agreement was a contract


of adhesion since respondent made the extent of liability "so
comprehensive and all-encompassing to the point of being
ambiguous." [63]

A contract of insurance is, by default, a contract of adhesion. It is


prepared by the insurance company and might contain terms and
conditions too vague for a layperson to understand; hence, they
are construed liberally in favor of the insured. In Verendia v.
Court of Appeals: [64]
Basically a contract of indemnity, an insurance contract is the law
between the parties. Its terms and conditions constitute the
measure of the insurer's liability and compliance therewith is a
condition precedent to the insured's right to recovery from the
insurer. As it is also a contract of adhesion, an insurance contract
should be liberally construed in favor of the insured and strictly
against the insurer company which usually prepares it. [65]

Respondent, however, does not seek to recover an amount which


exceeds the amount of the bond or any "damages, payments,
advances, losses, costs, taxes, penalties, charges, attorney's fees
and expenses of whatever kind and nature,"  all of which it could
[66]

have sought under the Indemnity Agreement. It only seeks to


recover from petitioner the amount of the bond, or P600,000.00.

Respondent paid P600,000.00 to Asuten pursuant to a lawful


order of the Regional Trial Court in Civil Case No. 10846. If there
were any errors in the judgment of the Regional Trial Court, as
discussed above, petitioner could have appealed this. Petitioner,
however, chose to let Civil Case No. 10846 lapse into finality. This
case cannot now be used as a substitute for her lost appeal.

It is clear from the antecedents that any losses which petitioner


has suffered were due to the consequences of her actions, or
more accurately, her inactions. Civil Case No. 10846, which she
filed, was dismissed due to her failure to prosecute. The Regional
Trial Court forfeited the replevin bond which she had filed
because she refused to return the property. She is now made
liable for the replevin bond because she failed to appeal its
forfeiture.

WHEREFORE, the Petition is DENIED. The August 13, 2013


Decision and January 14, 2014 Resolution of the Court of Appeals
in CA-G.R. CV No. 95955 are AFFIRMED.

SO ORDERED.
Leonardo-De Castro, (Chairperson), Bersamin, A. Reyes,
Jr., and Gesmundo, JJ., concur.

October 9, 2018

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:

Please take notice that on August 15, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on October 9, 2018 at 2:33 p.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court

[1]
 Rollo, pp. 11-29.

 Id. at 31-39. The Decision was penned by Associate Justice


[2]

Danton Q. Bueser and concurred in by Associate Justices Amelita


G. Tolentino and Ramon R. Garcia of the Fourth Division, Court of
Appeals, Manila.

 Id. at 41-42. The Resolution was penned by Associate Justice


[3]

Danton Q. Bueser and concurred in by Associate Justices Amelita


G. Tolentino and Ramon R. Garcia of the Former Fourth Division,
Court of Appeals, Manila.
[4]
 Id. at 99-101.

[5]
 Id. at 51.

[6]
 Id. at 31.

[7]
 Id. at 32.

 Id. at 47. The CA Decision stated, however, that the replevin


[8]

bond was issued on February 23, 2003. See rollo, p. 32.

[9]
 Id. at 50.

[10]
 Id. at 32.

 Id. at 51-52. The Order, docketed as Civil Case No. 10846, was
[11]

penned by Presiding Judge Ma. Angelica T. Paras-Quiambao of


Branch 59, Regional Trial Court, Angeles City.

 The Regional Trial Court March 15, 2004 Order is not attached
[12]

in the rollo.

[13]
 Rollo, pp. 51-52.

[14]
 Id. at 53.

 Id. at 53-54. The Order was penned by Presiding Judge Ma.


[15]

Angelica T. Paras-Quiambao.

[16]
 Id. at 56.

[17]
 Id. at 57.

[18]
 Id. at 43-46 and 133.

[19]
 Id. at 137-138.
 Id. at 133-142. The Decision, docketed as Civil Case No. 04-
[20]

111228, was penned by Acting Presiding Judge Ma. Theresa


Dolores C. Gomez-Estoesta of Branch 17, Regional Trial Court,
Manila.

[21]
 Id. at 139-141.

[22]
 Id. at 142.

[23]
 Id. at 119-132.

[24]
 Id. at 34.

[25]
 Id. at 31-39.

[26]
 A.M. No. 04-7-02-SC (2004).

[27]
 Rollo, pp. 34-35.

[28]
 Id. at 35.

[29]
 Id. at 36.

[30]
 Id. at 143-147.

[31]
 Id. at 41-42.

 Id. at 11-29. Respondent's Comment (Rollo,  pp. 162-172) to


[32]

the Petition was filed on August 6, 2014 while Petitioner's


Reply (Rollo, pp. 180-186) was filed on November 24, 2014.

[33]
 Id. at 17-18.

[34]
 Id. at 20-21.

[35]
 Id. at 21-22.

[36]
 Id. at 163-164.
[37]
 Id. at 165.

[38]
 Id. at 166.

[39]
 See RULES OF COURT, Rule 60, sec. 1.

[40]
 274 Phil. 880 (1991) [Per J. Narvasa, First Division].

 Id. at 892-893 citing  Webster's Third New International


[41]

Dictionary, copyright 1986 and Third (Rawle's) Revision, Vol. 2.

[42]
 327 Phil. 716 (1996) [Per J. Vitug, First Division].

 Id. at 724-725 citing Tillson v. Court of Appeals,  327 Phil. 716


[43]

(1996) [Per J. Vitug, First Division); Bouvier's Dictionary, Third


(Rawle's) Revision, Vol. 2; Black's Law Dictionary, Sixth Edition,
p. 1299; and 37 WORDS AND PHRASES 17, further citing
the Young Chevrolet Co.  case, 127 P.2d 813, 191 Okl. 161
(1942).

[44]
 See RULES OF COURT, Rule 60, sec. 1.

[45]
 RULES OF COURT, Rule 60, sec. 2.

[46]
 See RULES OF COURT, Rule 60, sec. 3.

[47]
 See RULES OF COURT, Rule 60, sec. 6.

[48]
 See RULES OF COURT, Rule 60, sec. 9.

[49]
 Rollo, p. 31.

[50]
 670 Phil 538 (2011) [Per J. Carpio, Second Division].

 Id. at 547, citing Olympia


[51]
International v. Court of
Appeals,  259 Phil. 841 (1989).
[52]
 117 Phil. 434 (1963) [Per J. Barrera, En Banc].

 Id. at 440, citing Visayan Surety & Insurance Corp. v.


[53]

Pascual, 85 Phil. 779 (1950) [Per J. Ozaeta, En Banc]; Liberty


Construction Supply Co. v. Pecson,  89 Phil. 50 (1951) [Per J.
Feria, First Division]; Aguasin v. Velasquez,  88 Phil. 357 (1951)
[Per J. Tuason, En Banc]; Abelow v. De la Riva,  105 Phil. 159
(1959) [Per J. Bengzon, En Banc]; Riel v. Lacson, G.R. No. L-
9863, September 29, 1958; Port Motors, Inc. v. Raposas, 100
Phil. 732 (1957) [Per J. Felix, En Banc]; Luneta Motor Co. v.
Lopez,  105 Phil. 327 (1959) [Per J.B.L Reyes, En Banc]; Visayan
Surety & Insurance Co. v. Aquino, 96 Phil. 900 (1955) [Per J.
Labrador, En Banc]; Curilan v. Court of Appeals,  105 Phil. 1150
(1959) [Per J. Bautista Angelo, En Banc]; Alliance Insurance &
Surety Co. v. Piccio, 105 Phil. 1192 (1959); and Del Rosario v.
Nava, 95 Phil. 637 (1954) [Per J.B.L. Reyes, En Banc].

 A.M. No. 04-7-02-SC (2004). These Guidelines are given


[54]

retroactive effect considering that the Regional Trial Court Order


was issued on May 24, 2004. Petitioner would not be adversely
affected by its retroactive application since the procedural rule
prevailing at the time, Fixing the Lifetime of Bonds in Civil Actions
or Proceedings  [Administrative Matter No. 03-03-18-SC (2003)],
stated the same rule verbatim.

 This has since been amended by A.M. No. 04-7-02-SC (2015)


[55]

to read: "Unless and until the court concerned directs otherwise."

[56]
 RULES OF COURT, Rule 60, sec. 2. provides:

Section 2. Affidavit and bond. — . . . .

The applicant must also give a bond, executed to the adverse


party in double the value of the property as stated in the affidavit
aforementioned, for the return of the property to the adverse
party if such return be adjudged, and for the payment to the
adverse party of such sum as he may recover from the applicant
in the action.
[57]
 RULES OF COURT, Rules 57-60.

[58]
 364 Phil. 328 (1999) [Per J. Purisima, Third Division].

 Id. at 347, citing Alim v. Court of Appeals, 277 Phil. 156 (1991)


[59]

[Per J. Paras, Second Division]; Sapugay, et al., v. Court of


Appeals, et al., 262 Phil. 506 (1990) [Per J. Regalado, First
Division]; and Stronghold Insurance Co., v. Court of
Appeals, 258-A Phil. 690 (1989) [Per J. Regalado, Second
Division].

[60]
 Rollo, p. 50.

 Alcantara v. Alinea, 8 Phil. 111 (1907) [Per J. Torres, First


[61]

Division].

[62]
 CIVIL CODE, art. 1306.

[63]
 Rollo, p. 21.

[64]
 291 Phil. 439 (1993) [Per J. Melo, Third Division].

 Id. at 446-447 citing Pacific Banking Corporation v. Court of


[65]

Appeals, 250 Phil. 1 (1988) [Per J. Paras, Second


Division]; Oriental Assurance Corporation v. Court of
Appeals, 277 Phil. 525 (1991) [Per J. Melencio-Herrera, Second
Division]; Perla Campania de Seguros, Inc. v. Court of
Appeals, 264 Phil. 354 (1990) [Per C.J. Fernan, Third Division];
and Western Guaranty Corporation v. Court of Appeals, 265 Phil.
687 (1980) [Per J. Feliciano, Third Division].

[66]
 Rollo, p. 20.
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THIRD DIVISION

[ G.R. No. 211450, July 23, 2018 ]


OFFICE OF THE OMBUDSMAN, PETITIONER, VS.
LOVING F. FETALVERO, JR., RESPONDENT.
DECISION

LEONEN, J.:

Complainants in administrative proceedings carry the burden of


proving their allegations with substantial evidence or such
"relevant evidence that a reasonable mind might accept as
adequate to support a conclusion." [1]

This resolves the Petition for Review  filed by the Office of the
[2]

Ombudsman assailing the April 15, 2013 Decision  and February [3]

20, 2014 Resolution  of the Court of Appeals in CA-G.R. SP No.


[4]

119495.

The facts as borne by the records are as follows:

Lockheed Detective and Watchman Agency, Inc. (Lockheed) was


the security services contractor for Philippine Ports Authority's
Port District Office-Luzon. When the time came to bid for a new
security provider, Lockheed applied for accreditation to bid for the
security services contract. [5]
Officers from the Port Police Department reviewed Lockheed's
performance and gave it a rating of 78.30 or "fair." Lockheed's
fair rating effectively disqualified it from being accredited to bid
for the new security services contract. [6]

Philippine Ports Authority Assistant General Manager for


Operations Benjamin Cecilio (Cecilio) referred Lockheed's rating
to Port District Office-Luzon for its review and comments. Port
District Office-Luzon Security Staff Officer Captain Geronimo R.
Grospe (Grospe), in tum, directed Lockheed to comment on its
rating from the Port Police Department. [7]

Lockheed submitted its comment, and Grospe, finding merit in its


arguments for reconsideration, recommended the reconsideration
of its rating and the issuance of its Certificate of Accreditation to
bid for the new security services contract. [8]

Port District Office-Luzon Port District Manager Hector Miole


(Miole) also recommended the recomputation of Lockheed's
rating and the issuance of its Certificate of Accreditation. [9]

Cecilio directed Port District Office-Luzon Superintendent Loving


F. Fetalvero, Jr. (Fetalvero) to review Grospe's and Miole's
recommendations against the guidelines and to draft a reply. [10]

Port Management Office-Puerto Princesa, Palawan Station


Commander Aquilino Peregrina (Peregrina) submitted Lockheed's
reevaluation performance to Miole. [11]

Cecilio eventually adapted Grospe's and Miele's recommendations


and issued Lockheed a Certificate of Final Rating, with a
readjusted rating of 83.97, or satisfactory, from the original
rating of 78.30, or fair, making Lockheed eligible for the
accreditation to bid.
[12]

Port Police Department Division Manager Maximo Aguirre


(Aguirre) filed a complaint-affidavit against Cecilio, Fetalvero,
Miele, Grospe, and Peregrine for Grave Misconduct and
Dishonesty. [13]

Aguirre claimed that Cecilio issued Lockheed's Certificate of Final


Rating without going through the prescribed procedure under the
Philippine Ports Authority Memorandum Circular No. 18-2000. [14]

Aguirre also averred that the Port Police Officers who gave
Lockheed its original rating did not participate in its reevaluation,
contrary to the claims of Peregrine that they did. Furthermore,
the Port Police Officers who rated Lockheed denied reevaluating
Lockheed and changing its rating. Thus, Aguirre asserted that
Cecilio committed deceit, misrepresentation, and deception
because the reassessment was without basis and was done to
favor Lockheed. [15]

On May 21, 2003, Graft Investigation and Prosecution Officer I


Moreno F. Generoso (Officer Generoso) dismissed  the complaint. [16]

However, in his November 25, 2004 Review Resolution,


 Assistant Special Prosecutor III Roberto T. Agagon
[17]

recommended the reversal of the May 21, 2003 Decision and the
dismissal from service of the charged officers.

The Review Resolution held that while it was acceptable to move


for the reconsideration of the issued rating, readjusting it from
78.30 to 83.97 was another matter altogether and constituted
Grave Misconduct and Dishonesty. [18]

It likewise noted that Lockheed's reevaluation was irregularly


made because the Port Police Officers who conducted the first
evaluation denied being part of the reevaluation. Furthermore,
Peregrine and Grospe had no personal knowledge of Lockheed's
performance; hence, they had no basis for their reevaluation of
the original rating. It also emphasized that the readjustment was
done whimsically and capriciously since there were no documents
or computations submitted to support the readjustment. [19]

The fallo of the Review Resolution read:


WHEREFORE, it is recommended that respondents Benjamin
Cecilio, Loving Fetalvero, Jr., Hector Miole, Geronimo Gorospe
(sic) and Aquilino Peregrino be held guilty of Grave Misconduct
and Dishonesty and are meted the penalty of Dismissal from the
service.
[20]

The recommendation was approved by Orlando C. Casimiro, the


Deputy Ombudsman for the Military and Other Law Enforcement
Offices.
[21]

On June 7, 2006, Graft Investigation and Prosecution Officer II


Joselito Fangon (Officer Fangon) granted the motions for
reconsideration filed by Fetalvero, Cecilio, Miole, Grospe, and
Peregrine, and reversed the November 25, 2004 Review
Resolution. [22]

However, on October 20, 2006,  Graft Investigation and


[23]

Prosecution Officer I Russel C. Labor recommended the reversal


of the June 7, 2006 Order and the affirmation of the November
25, 2004 Review Resolution.

The October 20, 2006 Review Order pointed out that personal
knowledge of Lockheed's performance was needed to readjust or
reevaluate its rating. Thus, the readjustment by persons without
personal knowledge of the behavior and performance of
Lockheed's guards was improper and highly irregular. [24]

The Review Order also brought up that Cecilio's and the other
officers' acts showed a "common intent ... to cover up
[Lockheed's] below satisfactory rating" so that it could qualify for
the bidding of Philippine Port Authority's security services. [25]

The recommendation of the Review Order read:


The undersigned respectfully recommends for the affirmation of
the Review Resolution of Special Prosecutor III Agagon holding
respondents, BENJAMIN B. CECILIO, LOVING F. FETALVERO,
JR., HECTOR E. MIOLE, GERONIMO GROSPE, and AQUILINO
PEREGRINO, liable for GRAVE
MISCONDUCT and DISHONESTY.  (Emphasis in the original)
[26]
The recommendation was approved by Deputy Ombudsman for
Luzon Mark E. Jalandoni. [27]

Fetalvero appealed the Office of the Ombudsman's November 25,


2004 Review Resolution and October 20, 2006 Review Order to
the Court of Appeals. [28]

Fetalvero claimed that his acts of collating and computing


Lockheed's reevaluated ratings from Grospe and Miole were
"ministerial ... done in the regular performance of his duty." [29]

On April 15, 2013,  the Court of Appeals granted Fetalvero's


[30]

petition.

The Court of Appeals sustained the May 21, 2003 Decision of


Officer Generoso and upheld his findings that Fetalvero's acts did
not constitute dishonesty and grave misconduct. [31]

It likewise noted that in the June 7, 2006 Order granting the


motion for reconsideration and reversing the November 25, 2004
Review Resolution, Officer Fangon found no abuse of discretion in
the readjustment of Lockheed's rating.[32]

Finally, it emphasized that the related criminal complaint of the


administrative case against Fetalvero and the other officers was
withdrawn by the Ombudsman from the Sandiganbayan. [33]

The fallo of the Court of Appeals April 15, 2013 Decision read:


WHEREFORE, premises considered, the Petition for Review
is GRANTED. The Review Resolution dated November 25, 2004
and Review Order dated October 20, 2006 of the Office of the
Ombudsman in OMB-C-A-02-0023-A are hereby REVERSED and
SET ASIDE. Administrative Case No. OMB-C-A-02-0023-A
against petitioner Loving Fetalvero, Jr. is hereby DISMISSED.

SO ORDERED.  (Emphasis in the original)


[34]
On February 20, 2014, the Court of Appeals denied  the motions
[35]

for reconsideration filed by the Office of the Ombudsman and


Aguirre.

On April 24, 2014, the Office of the Ombudsman filed its petition
before this Court.[36]

In its Petition, petitioner emphasizes that the readjusted


Certificate of Final Rating awarded to Lockheed was loosely based
on respondent Fetalvero's Reply. [37]

Petitioner also points out that two (2) Certificates of Final Rating
were prepared, with one pre-dated for April 25, 2001 and the
other one submitted on May 3, 2001. Furthermore, the officers
who conducted the reevaluation were not the same officers who
conducted the original evaluations. The officers who conducted
the reevaluation, including respondent Fetalvero, had no personal
knowledge of the performance of Lockheed's security guards to
serve as basis for their reevaluation. [38]

Petitioner asserts that respondent's acts of adjusting Lockheed's


ratings and giving it undue preference call for a finding of
administrative liability for grave misconduct and dishonesty.[39]

Citing Mira v. Dosono,  petitioner insists that when it comes to


[40]

administrative proceedings, the lowest standard of substantial


evidence will suffice for administrative liability to attach.
 Nonetheless, petitioner claims that even if respondent indeed
[41]

only acted in a ministerial capacity, this will not absolve him of


administrative liability.[42]

Petitioner likewise stresses that the principle of conclusiveness of


judgment does not apply in the case at bar because the
Information against respondent and the other officers was
withdrawn. Hence, the issues in the administrative case were not
judicially passed upon and determined by a court of competent
jurisdiction.
[43]
Finally, petitioner states that an administrative case may continue
despite dismissal of the criminal charges as administrative cases
proceed independently of criminal cases. [44]

In his Comment,  respondent continues to deny that he gave


[45]

undue advantage to Lockheed with the reevaluated final rating


since his act of collating the performance ratings transmitted to
him by Miole was merely ministerial in character. [46]

Respondent points out that the Court of Appeals in Miole v.


Aguirre, docketed as CA-G.R. SP No. 119526, upheld the
dismissal of the administrative case against Miole, Geronimo, and
Peregrina on the ground of res judicata in light of the Office of the
Ombudsman's withdrawal of the criminal case against them. [47]

In its Reply,  petitioner reiterates that an administrative case


[48]

may proceed independently of criminal proceedings and that the


principle of conclusiveness of judgment does not apply in the case
at bar.[49]

The sole issue for this Court's resolution is whether or not there is
substantial evidence to hold respondent Loving F. Fetalvero, Jr.
administratively liable for the charges of dishonesty and
misconduct against him.

The Petition must fail.

In administrative proceedings, complainants carry the burden of


proving their allegations with substantial evidence or "such
relevant evidence as a reasonable mind will accept as adequate
to support a conclusion." [50]

Petitioner accuses respondent of conniving with Cecilia, Miole,


and Grospe to give Lockheed an unfair preference by readjusting
its rating so that it could participate in the bidding for a security
services contract with the Philippine Ports Authority. [51]
Petitioner faults Cecilia for ordering a reassessment of the Port
Police Department's rating of Lockheed's performance as the then
incumbent security provider. It claims that the reassessment and
eventual readjustment of Lockheed's rating to 83.97 from the
original 78.30 were without basis and were clearly meant to favor
Lockheed. [52]

Petitioner fails to convince.

As the Assistant General Manager for Operations, Cecilio


exercised control and supervision over the Port Police
Department. His authority over it is evident in Philippine Ports
Authority Memorandum Circular No. 18-2000, or the Revised Port
Security Services Procurement and Contract Administration,
 which provides:
[53]

23.4.1 The security agency/guards shall be rated on their


performance and compliance to the Security Services Contract by
Port Management Office (PMO) Port Police Division monthly
and/or by the Office of the [Assistant General Manager for
Operations] through the Port Police Department - Head Office, at
least once every six months during the effectivity of the contract
to ensure that the desired quality of service is rendered.

....

23.4.4. The Office of the [Assistant General Manager for


Operations] shall issue a Certificate of Final Rating, based on the
average rating of the Agency/Security Guards. Monthly
Performance Ratings in the [Port Management Offices] within a
certain [Port District Office] from the effectivity of the contract,
and the average of the [Assistant General Manager for
Operations], through the Port Police Department - Head
Office rating on inspections conducted, pursuant to 23.4 hereof
(with the last rating conducted at least one month before
expiration of the contract) divided by two (for incumbent
contractor).  (Emphasis supplied)
[54]

The power of supervision involves oversight of a subordinate to


ensure that the rules are followed. On the other hand, the power
of control is broader as it involves laying down the actual rules to
be followed. If the rules are not followed, the power of control
allows the controlling officer to order that the act be done or
undone, or even to supplant the subordinate's act with his or her
own act.[55]

Mondano v. Silvosa  expounded on the difference between


[56]

supervision and control:


In administrative law[,] supervision means overseeing or the
power or authority of an officer to see that subordinate officers
perform their duties. If the latter fail or neglect to fulfill them[,]
the former may take such action or step as prescribed by law to
make them perform their duties. Control, on the other hand,
means the power of an officer to alter or modify or nullify or set
aside what a subordinate officer had done in the performance of
his duties and to substitute the judgment of the former for that of
the latter. [57]

Petitioner faults Cecilio for readjusting Lockheed's original rating


from the Port Police Department, thereby leading to Lockheed's
eligibility to participate in the bidding for a security service
contract. However, as the controlling officer over the Port Police
Department, Cecilio precisely had the authority to supplant its
rating with a new one as long as the new rating was backed by
the necessary evidence and he did not gravely abuse his
authority to do so.

In petitioner's June 7, 2006 Order, Officer Fangon found sufficient


basis for the readjustment of Lockheed's rating:
Needless to state, the ensuing review of the recommended
ratings resulted in the re-adjustment of the ratings of [Lockheed]
from Fair to Satisfactory (or from 78.3[0] to 83.97). The records
of the case will reveal that the re-adjusted ratings were based on
documents culled by the officials who conducted the review of the
ratings consisting of Summary Reports and Monthly Performance
Ratings. From these documents, it appears that there was
sufficient basis to recommend the increase of the ratings of
[Lockheed].
It becomes clear from the foregoing, that the re-adjustment of
the ratings was based on reliable proof which was contained in
the records of the [Philippine Ports Authority], and which can not
be said of the initial ratings given to [Lockheed].  (Emphasis
[58]

supplied)
Even petitioner admitted that the readjustment was not
altogether devoid of evidentiary basis:
Moreover, if there be any re-adjustments made, it must have the
accompanying documents/computations, not just re-adjusted
whimsically and capriciously. The submissions of only the portion
of the computation or comment in the logbook is not sufficient.
 (Emphasis supplied)
[59]

As for respondent, petitioner claims that he was guilty of


dishonesty and misconduct because of the undue preference that
he purportedly extended to Lockheed.

Petitioner again fails to convince.

In its Statement of Facts, petitioner puts forth that it was Grospe


and Miole who recommended to Cecilio the reconsideration and
readjustment of Lockheed's rating, while respondent, upon
Cecilio's instructions, reviewed their recommendations vis-a-vis
the guidelines.[60]

Nowhere was it alleged that respondent likewise recommended


the reconsideration or readjustment of Lockheed's original rating.
This supports respondent's assertion that he performed the
ministerial task of creating a report by collating and computing
the ratings transmitted to him by Miole.[61]

In the May 21, 2003 Decision, Officer Generoso likewise found


that respondent was not guilty of dishonesty and grave
misconduct since his participation was limited to the mechanical
act of computing the raw data provided to him:
Similarly, the allegations against respondent Fetalvero deserves
scant consideration considering that the Memorandum dated May
2, 2001 which he submitted together with the draft Certificate of
Final Rating predated April 25, 2001 and the computation of
ratings of [Lockheed] was regular.

We likewise, do not find any irregularity on the Re-evaluated


Performance of [Lockheed] since he (Fetalvero) only conducted
the numerical computation pursuant to [Philippine Ports Authority
Memorandum Circular No.] 18-2000.  (Emphasis supplied)
[62]

Petitioner attempts to pin liability on respondent by insisting that


the Certificate of Final Rating issued by Cecilio was "loosely
based"  on the reply that petitioner drafted. However, as
[63]

respondent's reply is a compilation of Lockheed's ratings, it is


inevitable that it will be referred to for the issuance of Certificate
of Final Rating in Lockheed's favor. This cannot be interpreted as
respondent's positive act to recompute or adjust Lockheed's
rating to give it undue preference.

Dishonesty is defined as the "disposition to lie, cheat, deceive, or


defraud; untrustworthiness, lack of integrity."  It involves
[64]

intentionally making a false statement to deceive or commit a


fraud.[65]

On the other hand, misconduct is more than just mere error of


judgment as it involves a wrongful intention from the public
officer involved.  It is also defined as "a transgression of some
[66]

established and definite rule of action, more particularly, unlawful


behavior or gross negligence by the public officer." [67]

As the complainant, petitioner has the burden of proving that


respondent deliberately committed falsehood or transgressed
established rules to give Lockheed undue preference during the
bidding process of the contract for services.

Petitioner fails to discharge its burden.

What petitioner only managed to prove was that respondent,


upon orders of his superior, collated the ratings and
recommendations submitted by the other officers and then
summarized them into a report. By no stretch of mind can
respondent's submission of a report, an act which was done
within the confines of his function as the Superintendent of the
Port District Office-Luzon, be seen as an unlawful act.

WHEREFORE, this Court resolves to DENY the Petition


and AFFIRM the Court of Appeals April 15, 2013 Decision and
February 20, 2014 Resolution in CA-G.R. SP No. 119495.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

September 27, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on July 23, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on September 27, 2018 at 2:11 p.m.

 De Jesus v. Guerrero III, 614 Phil. 520, 528-529 (2009) [Per J.
[1]

Quisumbing, Second Division].

[2]
 Rollo, pp. 11-29.
 Id. at 31-39. The Decision was penned by Associate Justice
[3]

Sesinando E. Villon and concurred in by Associate Justices Florito


S. Macalino and Pedro B. Corales of the Seventeenth Division,
Court of Appeals, Manila.

 Id. at 41-44. The Resolution was penned by Associate Justice


[4]

Sesinando E. Villon and concurred in by Associate Justices Florito


S. Macalino and Pedro B. Corales of the Former Seventeenth
Division, Court of Appeals, Manila.

[5]
 Id. at 67.

[6]
 Id. at 68.

[7]
 Id.

[8]
 Id.

[9]
 Id. at 68-69.

[10]
 Id. at 69.

[11]
 Id.

[12]
 Id. at 70.

[13]
 Id. at 66-67.

[14]
 Id. at 67.

[15]
 Id. at 69-70.

[16]
 Id. at 66.

[17]
 Id. at 66-72.

[18]
 Id. at 70.
[19]
 Id. at 71-72.

[20]
 Id. at 72.

[21]
 Id.

[22]
 Id. at 45.

[23]
 Id. at 45-65.

[24]
 Id. at 62-63.

[25]
 Id. at 63.

[26]
 Id. at 64.

[27]
 Id.

[28]
 Id. at 31.

[29]
 Id. at 36.

[30]
 Id. at 31-39.

[31]
 Id. at 36-37.

[32]
 Id. at 37-38.

[33]
 Id. at 38.

[34]
 Id. at 38-39.

[35]
 Id. at 41-44.

[36]
 Id. at 11-29.

[37]
 Id. at 18.
[38]
 Id.

[39]
 Id. at 18-19.

[40]
 634 Phil. 54 (2010) [Per J. Carpio, Second Division].

[41]
 Rollo, pp. 19-20.

[42]
 Id. at 20.

[43]
 Id. at 20-22.

[44]
 Id. at 22.

[45]
 Id. at 86-89.

[46]
 Id. at 86-87.

[47]
 Id. at 87.

[48]
 Id. at 103-112.

[49]
 Id. at 104.

 De Jesus v. Guerrero III, 614 Phil. 520, 528-529 (2009) [Per J.
[50]

Quisumbing, Second Division].

[51]
 Rollo, pp. 18-19.

[52]
 Id. at 15 and 18.

[53]
 Id. at 53.

[54]
 Id. at 67.
 Pimentel, Jr. v. Aguirre, 391 Phil. 84, 99-100 (2000) [Per J.
[55]

Panganiban, En Banc] citing Drilon v. Lim, 305 Phil. 146 (1994)


[Per J. Cruz, En Banc].

[56]
 97 Phil. 143 (1955) [Per J. Padilla, First Division].

[57]
 Id. at 147-148.

[58]
 Id. at 37.

[59]
 Id. at 71.

[60]
 Id. at 14.

[61]
 Id. at 86.

[62]
 Id. at 37.

[63]
 Id. at 18.

 Office of the Ombudsman v. Torres, 567 Phil. 46, 58 (2008)


[64]

[Per J. Nachura, Third Division], citing Black's Law Dictionary, 6th


Ed. (1990).

 Aquino v. General Manager of the GSIS, 130 Phil. 488, 492


[65]

(1968) [Per J. Reyes, J.B.L., En Banc].

 In re: Impeachment of Horrilleno, 43 Phil. 212, 214 (1922) [Per


[66]

J. Malcolm, First Division].

[67]
 Id.

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THIRD DIVISION

[ G.R. No. 214886, April 04, 2018 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. BERNIE CONCEPCION, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

This resolves the appeal  from the Court of Appeals March 28,
[1]

2014 Decision,  affirming with modification the November 29,


[2]

2011 Decision  of Branch 34, Regional Trial Court, La Union. The
[3]

Regional Trial Court found the accused, Bernie Concepcion


(Concepcion), guilty beyond reasonable doubt of the complex
crime of forcible abduction with rape. The Regional Trial Court
imposed the penalty of reclusion perpetua and ordered
Concepcion to pay the victim P50,000.00 as moral damages.  On
[4]

appeal, the Court of Appeals ruled that the crime of rape


absorbed the crime of forcible abduction; thus, it found
Concepcion guilty only of the crime of rape and imposed the
same penalty of reclusion perpetua. It ordered Concepcion to pay
the victim the amounts of P50,000.00 as moral damages,
P50,000.00 as civil indemnity, and P30,000.00 as exemplary
damages. [5]

Informations were filed with the Regional Trial Court, La Union


against accused-appellant Concepcion, charging him with serious
illegal detention and two (2) counts of rape. The information for
serious illegal detention was docketed as Criminal Case No. 2899.
The relevant portion stated:
That on or about the 17  day of February 2001, in the
th

Municipality of Province of La Union, Philippines and within the


jurisdiction of this Honorable Court, the above-named accused
being a private individual did then and there willfully, unlawfully
and feloniously kidnap, detain and deprive the liberty of
complainant AAA and while detaining the latter inside a house,
said accused forcibly and with intimidation and lewd design, have
sexual intercourse with complainant twice against her will and
consent, all to the damage and prejudice of said complainant and
her personal liberty and security. [6]

The informations for rape were docketed as Criminal Case Nos.


2900 and 2901, and read, in part:
Crim. Case No. 2900

That on or about the 17  day of February 2001, at 8:00 o'clock in


th

the evening at Brgy. Municipality of Province of La Union,


Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, by means of force and intimidation and
with lewd design did then and there wil[l]fully, unlawfully and
feloniously have sexual intercourse with AAA without her consent,
to the damage and prejudice of said victim.

CONTRARY TO LAW.

Crim. Case No. 2901

That on or about the 17  day of February 2001, at 5:00 o'clock in


th

the afternoon at Brgy. Municipality of Province of La Union,


Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, by means of force and intimidation and
with lewd design did then and there willfully, unlawfully and
feloniously have sexual intercourse with AAA without her consent,
to the damage and prejudice of said victim.

CONTRARY TO LAW. [7]

On June 4, 2002, upon arraignment in the consolidated criminal


cases, accused-appellant pleaded not guilty,  and trial ensued.
[8]
The prosecution's version of the events was as follows:

AAA and her common-law husband lived rent-free in a house


owned by Concepcion. In return, they helped maintain the house
and contributed to utility bills.
[9]

On February 17, 2001, at around 5:00 p.m., AAA arrived home in


a tricycle, bringing with her a sack of rice. Concepcion was at the
gate of the house, drunk, when AAA arrived. She went inside the
house to place her lunchbox and to find someone to help her
carry the sack of rice. Concepcion intercepted her at the garage
area. He held a knife to her back and dragged her to his room.
Then he locked his room and blocked its door using his bed.
Concepcion then pulled AAA to the bed and told her to undress.
She begged Concepcion not to rape her. He undressed her, pulled
down his pants, cut her underwear using his knife, and then
inserted his hand in her vagina. AAA felt pain and struggled.
Then, Concepcion inserted his penis into her vagina.[10]

Shortly after, a vehicle arrived and a person who introduced


himself as Chief of Police Pedro Obaldo, Jr.  called on Concepcion
[11]

to release AAA. In response, Concepcion demanded that the


police first produce the men who raped his girlfriend, Malou
Peralta (Peralta). The police then brought the three (3) men
demanded by Concepcion. Then, Concepcion told the police to
bring Peralta and her father, which they did. When Peralta
arrived, Concepcion refused to release AAA unless Peralta
admitted that she had been raped. At first, Peralta refused to
admit this, but later did just so Concepcion would release AAA.
Then, Concepcion asked that Board Member Alfred Concepcion be
produced. When he arrived, however, Concepcion asked him to
leave.[12]

Concepcion then inserted his penis in AAA's vagina again, holding


a knife to her neck. Mayor Joaquin Ostrea's arrival interrupted the
rape. He tried, but failed, to convince Concepcion to release AAA.
Concepcion instructed AAA to dress up. She could not find her
shirt, however, and wore Concepcion's shirt instead. [13]
Then, to electrocute those who might enter the room, Concepcion
installed electric wires on the door. The police officers used their
vehicle to create noise outside, starting its engine and honking its
horn. They forcibly entered Concepcion's room, breaking the
window and the door. PO3 Bartolome Oriña, Jr. (PO3 Oriña)
 pulled AAA and exited through the window. AAA then passed
[14]

out. [15]

Thereafter, Concepcion was arrested and brought to the police


station. AAA was brought to the hospital where Dr. Maribeth
Baladad (Dr. Baladad) examined her. Dr. Baladad testified that
there were abrasions and lacerations in her genital area, caused
by the forceful entry of an object or organ. [16]

Concepcion did not present evidence before the Regional Trial


Court. [17]

In its November 29, 2011 Decision,  the Regional Trial Court


[18]

found Concepcion guilty of the complex crime of forcible


abduction with rape, considering that she was forcibly abducted
and then sexually assaulted. It dismissed one (1) charge of rape
for failure of the prosecution to establish the same with moral
certainty. The dispositive portion of this Decision read:
WHEREFORE, in view of the foregoing, a judgment is hereby
rendered finding accused Bernie Concepcion GUILTY beyond
reasonable doubt of the complex crime of Forcible Abduction with
Rape and is hereby sentenced to serve the penalty of
imprisonment of Reclusion Perpetua.

Further, accused is hereby ordered to pay FIFTY THOUSAND (PHP


50,000.00) PESOS as moral damages.

SO ORDERED. [19]

Concepcion appealed the Regional Trial Court Decision to the


Court of Appeals. In his appellant's brief, he admitted detaining
AAA and holding her against her will. However, he claimed that
"his intention was not to detain" but "to extract an admission
from his girlfriend of the fact of her being raped and ... to bring
the alleged perpetrators out in the open."  He stressed that even
[20]

AAA testified that he assured her release provided that those who
raped his girlfriend were presented. This was also corroborated
by PO3 Oriña.  He insisted that no evidence was presented to
[21]

show any other intention than to attract attention to the alleged


rape of his girlfriend.  Absent proof that Concepcion's intent was
[22]

to deprive AAA of her liberty, he should not be convicted .under


Article 267 of the Revised Penal Code. Similarly, absent. proof
that he abducted AAA with lewd designs, Concepcion could not be
convicted of forcible abduction under Article 342 of the Revised
Penal Code.  Further, Concepcion insisted that the testimonies
[23]

presented by the prosecution did not establish beyond reasonable


doubt that he raped AAA. It was established that at the time of
the alleged rape, AAA was on her fourth day of menstruation, yet
no evidence was presented showing traces of menstrual
discharge on the bed sheets or on Concepcion's clothing.
Moreover, while it may have been established that the coitus had
occurred, Dr. Baladad could not determine the date of such
occurrence  or recall whether the lacerations she found on AAA
[24]

were fresh or old.  Finally, it was not shown that the


[25]

spermatozoa found inside AAA belonged to Concepcion. [26]

The Court of Appeals denied Concepcion's appeal in its March 28,


2014 Decision.  It found that the elements of rape had been
[27]

proven beyond reasonable doubt. It ruled that carnal knowledge


was established by AAA's testimony, which was corroborated by
the Physical and Medical Examination and testimony of Dr.
Baladad, who examined AAA on February 18, 2001. Dr. Baladad
found abrasions on her flank area, left posterior shoulder, and
right knee, as well as a laceration on her fourchette. The
Exfoliative Cytology Report established the presence of
spermatozoa and of a moderate inflammation. That the carnal
knowledge was accomplished through force or intimidation was
established by AAA, who testified that Concepcion held a knife to
her neck and that her pushes were ineffective against
Concepcion, who was stronger than her. [28]
The Court of Appeals also found that the prosecution established
the elements of abduction. However, the Court of Appeals ruled
that the crime of rape absorbed the forcible abduction,
considering that it was established that the forcible abduction of
AAA was for the purpose of raping her.  The Court of Appeals
[29]

also increased the amount of damages awarded by the trial court.


The dispositive portion of its Decision read:
WHEREFORE, premises considered, the appeal is DENIED. The
Decision dated 29 November 2011 of the Regional Trial Court,
First Judicial Region, Branch 34, La Union in Crim. Case Nos.
2899, 2900 & 2901 is AFFIRMED with MODIFICATION, in that
accused-appellant is hereby found guilty beyond reasonable
doubt of the crime of rape under Article 266-A of the Revised
Penal Code, as amended by Republic Act No. 8353, and
sentenced to suffer the penalty of imprisonment of reclusion
perpetua; and he is ORDERED to pay the victim AAA not only the
amount of Php 50,000.00 as a moral damages already awarded
by the trial court, but also the amounts of Php 50,000.00 as civil
indemnity, and Php 30,000.00 as exemplary damages, plus
interest on all damages at the rate of six percent (6%) per
annum from finality of this Decision until fully paid.

SO ORDERED. [30]

Thus, Concepcion filed a Notice of Appeal with the Court of


Appeals.[31]

In compliance with its May 14, 2014 Resolution,  which gave due
[32]

course to accused-appellant's notice of appeal, the Court of


Appeals elevated the records of the case to this Court.  In its
[33]

January 14, 2015 Resolution,  this Court required the parties to


[34]

submit their respective supplemental briefs. The parties filed their


respective manifestations in lieu of supplemental briefs on March
19, 2015  and March 31, 2015.
[35] [36]

After considering the parties' arguments and the records of this


case, this Court resolves to DISMISS accused-appellant's appeal
for failing to show reversible error in the assailed decision,
warranting this Court's appellate jurisdiction, and to MODIFY the
assailed decision.

Accused-appellant has failed to present any cogent reason to


reverse the factual findings of the Court of Appeals and of the
Regional Trial Court, with regard to his conviction. The trial
court's factual findings, its assessment of the credibility of
witnesses and the probative weight of their testimonies, and its
conclusions based on these factual findings are to be given the
highest respect, and when these are affirmed by the Court of
Appeals, this Court will generally not re-examine them.
 However, this Court modifies the assailed decision.
[37]

To recall, three (3) informations were filed against accused-


appellant for two (2) counts of rape and one (1) count of serious
illegal detention. Accused-appellant was uniformly acquitted of
the second count of rape due to the failure of the prosecution to
establish beyond reasonable doubt that it actually happened. As
for the remaining two (2) charges, the Regional Trial Court and
the Court of Appeals both considered the first count of rape and
the charge of serious illegal detention as necessarily linked.

Upon studying the records of this case, this Court finds AAA's
testimony as sufficient to establish beyond reasonable doubt that
there was a second incident of rape.

The Court of Appeals and the Regional Trial Court found AAA's
testimony to be credible. Thus, in affirming accused-appellant's
conviction for the first count of rape, the Court of Appeals March
28, 2014 Decision properly explained:
(Indeed) (i)n resolving rape cases, primordial consideration is
given to the credibility of the victim's testimony. Further, it bears
stressing that (i)n a prosecution for rape, the accused may be
convicted solely on the basis of the testimony of the victim that is
credible, convincing, and consistent with human nature and the
normal course of things, as in (the present) case. No law or rule
requires the corroboration of the testimony of a single witness in
a rape case. Due to its intimate nature, rape is usually a crime
bereft of witnesses, and, more often than not, the victim is left to
testify for herself.

In this case, accused-appellant had carnal knowledge of AAA by


inserting his penis into AAA's genitalia, and the same was
accomplished through force, threat or intimidation. AAA testified
that she was not able to fight back because accused-appellant's
knife was pointed at her neck and that while she tried to push
him, he was stronger than her. AAA described the weapon used
by accused-appellant as a stainless bread knife which is about 9
inches long. AAA also testified and narrated in detail the manner
on how accused-appellant had carnal knowledge of her, despite
her efforts of fighting back.

We also find that AAA's claim for rape was corroborated by Dr.
Baladad, a Medical Officer III in the OB-Gyne Department of the
Ilocos Training and Regional Medical Center, the doctor who
examined her, upon the request for Physical and Medical
Examination dated 18 February 2001 of Police Chief Inspector
Pedro Obaldo, Jr. of the Police Station...

....

It has been repeatedly held that no woman would want to go


through the process, the trouble and the humiliation of trial for
such a debasing offense unless she actually has been a victim of
abuse and her motive is but a response to the compelling need to
seek and obtain justice. It is settled jurisprudence that when a
woman says that she has been raped, she says in effect all that is
necessary to show that rape was indeed committed.  (Citations [38]

omitted)
As appreciated by the Court of Appeals, AAA testified and
narrated in detail how accused-appellant had carnal knowledge of
her. Upon examining the records, it became clear that AAA
testified and narrated two (2) separate incidents of rape. As to
the first incident, AAA testified:
Q And when the accused took off your underwears, what happened next?
A After he removed the panty and bra he inserted his hand (Witness demonstrating he
Q Where did the accused inserted (sic) his finger?
A In my vagina, sir.

Q What particular part of the room [were you in] when the accused inserted his finger
A On the bed, sir.

....

Q When you struggled so that the finger was removed, what happened next?
A That is the time he inserted his penis in ... my vagina, sir.

Q Can you recall how many minutes or second[s] when he inserted his penis to ... you
A It is a short time bee[ause] he notice[d] that there [was] a vehicle ... stop[ped] out
As for the second incident of rape, AAA narrated:
Q And what happened after the accused ask[ed Board Member Alfred Concepcion] to l
A That [was] the time that he want[ed] again to rape me, sir. [40]

....

Q And what happened after that?


A He went on top of me, sir.

Q And what happened [when he was] on top of you?


A He inserted his penis to my vagina, sir.

Q Was he able to penetrate your vagina?


A Yes, sir.

Q What did you feel when he did that?


A None because I am still afraid at that time because the knife was still pointed at my

....

Q On the 2  time that the accused ... inserted his penis to your vagina, what then [we
nd

A Still I was lying down, sir.

Q You did not push him?


A I did it but of course he [was] a male, he [was] stronger than me, Your Honor.

Q You did not cry while he was raping you?


A I cried, Your Honor. [41]

As properly pointed out by the Court of Appeals, in rape cases,


primordial consideration is given to the credibility of a victim's
testimony. Here, AAA's testimonies on both incidents of rape are
equally credible. Considering that the judge who examined AAA
found her a believable witness  and considering further that
[42]

there was nothing wanting in AAA's testimony on the second rape


incident, for the same reasons outlined by the Court of Appeals in
its decision, this Court finds that the evidence was sufficient to
establish accused-appellant's guilt of the second rape charge.

As for the charge of serious illegal detention, the Court of Appeals


held that the forcible abduction was absorbed in the crime of rape
because it was established that the forcible abduction of AAA was
for the purpose of raping her: [43]

In this case, it is clear that accused-appellant forcibly abducted


AAA for the purpose of raping her. It bears to stress that
accused-appellant already raped AAA, and it was only after his
commission of the said crime that he made demands from the
police authorities for AAA's release. In fact, AAA testified that
accused-appellant even placed electrical wires for the purpose of
electrocuting anybody who would enter the door or the window.
Hence, if it were true that accused-appellant only detained the
victim to extract an admission from his girlfriend Malou [Peralta]
and to bring the alleged perpetrators of the latter out in the open,
he should have released AAA the moment his demands were
acceded to by the police officers. It bears emphasis that accused-
appellant failed to present any evidence, and the defense he is
belatedly putting up now is but a last-ditched effort on his part to
evade criminal liability.  (Citation omitted)
[44]

This Court disagrees.

The facts as found by the Regional Trial Court and the Court of
Appeals show that after raping AAA, accused-appellant continued
to detain her and refused to release her even after raping her.
Thus, although the initial abduction of AAA may have been
absorbed by the crime of rape, the continued detention of AAA
after the rape cannot be deemed absorbed in it. Likewise, since
the detention continued after the rape had been completed, it
cannot be deemed a necessary means for the crime of rape.

Articles 267 and 268 of the Revised Penal Code provide:


Article 267. Kidnapping and serious illegal detention. - Any
private individual who shall kidnap or detain another, or in any
other manner deprive him of his liberty, shall suffer the penalty
of reclusion perpetua to death:
1. If the kidnapping or detention shall have lasted more than
three days.

2. If it shall have been committed simulating public authority.

3. If any serious physical injuries shall have been inflicted upon


the person kidnapped or detained; or if threats to kill him shall
have been made.

4. If the person kidnapped or detained shall be a minor, except


when the accused is any of the parents, female or a public officer.
The penalty shall be death penalty where the kidnapping or
detention was committed for the purpose of extorting ransom
from the victim or any other person, even if none of the
circumstances abovementioned were present in the commission
of the offense.

When the victim is killed or dies as a consequence of the


detention or is raped, or is subjected to torture or dehumanizing
acts, the maximum penalty shall be imposed.

Article 268. Slight illegal detention. - The penalty of reclusion


temporal shall be imposed upon any private individual who shall
commit the crimes described in the next preceding article without
the attendance of any of the circumstances enumerated therein.

The same penalty shall be incurred by anyone who shall furnish


the place for the perpetration of the crime.
If the offender shall voluntarily release the person so kidnapped
or detained within three days from the commencement of the
detention, without having attained the purpose intended, and
before the institution of criminal proceedings against him, the
penalty shall be prision mayor in its minimum and medium
periods and a fine not exceeding seven hundred pesos.
Thus, the felony of slight illegal detention has four (4) elements:
1. That the offender is a private individual.
2. That he kidnaps or detains another, or m any other
manner deprives him of his liberty.
3. That the act of kidnapping or detention is illegal.
4. That the crime is committed without the attendance of any
of the circumstances enumerated in Art. 267.  (Emphasis in
[45]

the original)
The elements of slight illegal detention are all present here.
Accused-appellant is a private individual. The Court of Appeals
found that after raping AAA, accused-appellant continued to
detain her and to deprive her of her liberty. It also appreciated
AAA's testimony that accused-appellant placed electrical wires
around the room to electrocute anyone who might attempt to
enter it. He refused to release AAA even after his supposed
demands were met. The detention was illegal and not attended
by the circumstances that would render it serious illegal
detention. Thus, this Court finds accused-appellant guilty of the
crime of slight illegal detention.

Further, in line with current jurisprudence,  P75,000.00 as civil


[46]

indemnity, P75,000.00 as moral damages, and P75,000.00 as


exemplary damages shall be awarded to the victim for each count
of rape.

WHEREFORE, in view of the foregoing premises, the Regional


Trial Court November 29, 2011 Decision in Criminal Case Nos.
2899, 2900, and 2901, and the Court of Appeals March 28, 2014
Decision in CA-G.R. CR-HC No. 05721 are hereby AFFIRMED
with the following MODIFICATIONS:
Accused-appellant Bernie Concepcion is found guilty beyond
reasonable doubt of two (2) counts of the crime of rape under
Article 266-A of the Revised Penal Code, as amended by Republic
Act No. 8353, and is sentenced to suffer the penalty of
imprisonment of reclusion perpetua for each count. Accused-
appellant Bernie Concepcion is found guilty beyond reasonable
doubt of the crime of slight illegal detention under Article 268 of
the Revised Penal Code, and is sentenced to suffer an
indeterminate penalty of imprisonment from nine (9) years and
four (4) months of prision mayor in its medium period as
minimum to sixteen (16) years and five (5) months of reclusion
temporal in its medium period as maximum.

The victim is entitled to the following amounts, for each count of


rape: P75,000.00 as civil indemnity; P75,000.00 as moral
damages; and P75,000.00 as exemplary damages. The award of
damages shall earn interest at the rate of six percent (6%) per
annum from the date of the finality of this judgment until fully
paid.

The accused shall pay the costs of suit.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

July 9, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on April 4, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 9, 2018 at 4:02 p.m.

 The appeal was filed under Rule 124, Section 13(c) of the Rules
[1]

of Court.

 Rollo, pp. 2-22. The Decision, docketed as CA-G.R. CR-HC No.


[2]

05721, was penned by Associate Justice Celia C. Librea-Leagogo


and concurred in by Associate Justices Franchito N. Diamante and
Zenaida T. Galapate-Laguilles of the Fourteenth Division, Court of
Appeals, Manila.

 CA rollo, pp. 52-57. The Decision, docketed as Crim. Case Nos.


[3]

2899, and 2900 and 2901, was penned by Judge Manuel R.


Aquino.

[4]
 Id. at 57.

[5]
 Rollo, pp. 18-19.

[6]
 Id. at 3.

[7]
 Id. at 3-4.

[8]
 Id. at 4.

[9]
 CA rollo, p. 74.

[10]
 Id. at 74-75.

[11]
 Id. at 111.
[12]
 Id. at 75.

[13]
 Id.

[14]
 Id. at 99.

[15]
 Id. at 75-76.

[16]
 Id. at 76.

[17]
 Id. at 53.

[18]
 Id. at 52-57.

[19]
 Id. at 57.

[20]
 Id. at 42.

[21]
 Id. at 42-43.

[22]
 Id. at 44.

[23]
 Id. at 43.

[24]
 Id. at 46.

[25]
 Id. at 47.

[26]
 Id. at 48.

[27]
 Rollo, pp. 2-22.

[28]
 Id. at 16-17.

[29]
 Id. at 18.

[30]
 Id. at 19.
[31]
 CA rollo, pp. 147-149.

[32]
 Id. at 152.

[33]
 Rollo, p. 1.

[34]
 Id. at 28.

 Id. at 30-32. People of the Philippines filed a Manifestation and


[35]

Motion in Lieu of Supplemental Brief.

 Id. at 33-36. Acused-appellant filed a Manifestation (in Lieu of


[36]

Supplemental Brief).

 See People v. Castel, 593 Phil. 288 (2008) (Per J. Reyes, En


[37]

Banc].

[38]
 Rollo, pp. 16-17.

[39]
 CA rollo, p. 106.

[40]
 Id. at 108.

[41]
 TSN, September 30, 2003, pp. 8-9.

[42]
 RTC Records, p. 220.

[43]
 Rollo, p. 18.

[44]
 Id.

 See People v. Pagalasan, 452 Phil. 341 (2003) [Per J. Callejo,


[45]

Sr., En Banc].

 See People v. Jugueta, G.R. No. 202124, April 5, 2016


[46]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/202124.pdf> [Per J. Peralta,
En Banc].

Source: Supreme Court E-Library | Date created: August 03, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 185530, April 18, 2018 ]


MAKATI TUSCANY CONDOMINIUM CORPORATION,
PETITIONER, VS. MULTI-REALTY DEVELOPMENT
CORPORATION, RESPONDENT.DECISION

LEONEN, J.:

Reformation of an instrument may be allowed if subsequent and


contemporaneous acts of the parties show that their true
intention was not accurately reflected in the written instrument.

This resolves the Petition for Review on Certiorari  filed by Makati


[1]

Tuscany Condominium Corporation (Makati Tuscany), assailing


the April 28, 2008 Amended Decision  and December 4, 2008
[2]

Resolution  of the Court of Appeals in CA-G.R. CV No. 44696.


[3]

In 1974, Multi-Realty Development Corporation (Multi-Realty)


built Makati Tuscany, a 26-storey condominium building located
at the corner of Ayala Avenue and Fonda Street, Makati City. [4]
Makati Tuscany had a total of 160 units, with 156 ordinary units
from the 2  to the 25  floors and four (4) penthouse units on the
nd th

26  floor.  It also had 270 parking slots which were apportioned
th [5]

as follows: one (1) parking slot for each ordinary unit; two (2)
parking slots for each penthouse unit; and the balance of 106
parking slots were allocated as common areas. [6]

On July 30, 1975, Multi-Realty, through its president Henry Sy,


Sr., executed and signed Makati Tuscany's Master Deed and
Declaration of Restrictions (Master Deed),  which was registered
[7]

with the Register of Deeds of Makati in 1977. [8]

Sometime in 1977, pursuant to Republic Act No. 4726, or the


Condominium Act, Multi-Realty created and incorporated Makati
Tuscany Condominium Corporation (MATUSCO) to hold title over
and manage Makati Tuscany's common areas. That same year,
Multi-Realty executed a Deed of Transfer of ownership of Makati
Tuscany's common areas to MATUSCO. [9]

On April 26, 1990, Multi-Realty filed a complaint for damages


and/or reformation of instrument with prayer for temporary
restraining order and/or preliminary injunction against MATUSCO.
This complaint was docketed as Civil Case No. 90-1110 and
raffled to Branch 59 of Makati Regional Trial Court. [10]

Multi-Realty alleged in its complaint that of the 106 parking slots


designated in the Master Deed as part of the common areas, only
eight (8) slots were actually intended to be guest parking slots;
thus, it retained ownership of the remaining 98 parking slots. [11]

Multi-Realty claimed that its ownership over the 98 parking slots


was mistakenly not reflected in the Master Deed "since the
documentation and the terms and conditions therein were all of
first impression,"  considering that Makati Tuscany was one of
[12]

the first condominium developments in the Philippines. [13]


On October 29, 1993, the Regional Trial Court  dismissed Multi-
[14]

Realty's complaint. It noted that Multi-Realty itself prepared the


Master Deed and Deed of Transfer; therefore, it was unlikely that
it had mistakenly included the 98 parking slots among the
common areas transferred to MATUSCO. It also emphasized that
Multi-Realty's prayer for the reformation of the Master Deed could
not be granted absent proof that MATUSCO acted fraudulently or
inequitably towards Multi-Realty. Finally, it ruled that Multi-Realty
was guilty of estoppel by deed.  The fallo of its Decision read:
[15]

Premises considered, this case is dismissed. [MATUSCO's]


counterclaim is likewise dismissed the same not being compulsory
and no filing fee having been paid. [Multi-Realty] is however
ordered to pay [MATUSCO's] attorney's fees in the amount of
P50,000.00

Cost against plaintiff.

SO ORDERED. [16]

Both parties appealed the Regional Trial Court Decision to the


Court of Appeals. On August 21, 2000, the Court of
Appeals  dismissed both appeals on the ground of prescription.
[17]

In dismissing Multi-Realty's appeal, the Court of Appeals held that


an action for reformation of an instrument must be brought
within 10 years from the execution of the contract. As to the
dismissal of MATUSCO's appeal, the Court of Appeals ruled that
its claim was based on a personal right to collect a sum of money,
which had a prescriptive period of four (4) years, and not based
on a real right, with a prescriptive period of 30 years.[18]

The fallo of the Court of Appeals August 21, 2000 Decision read:


WHEREFORE, foregoing premises considered, no merit in fact and
in law is hereby ORDERED DISMISSED, and the judgment of the
trial court is MODIFIED by deleting the award of attorney's fees
not having been justified but AFFIRMED as to its Order dismissing
both the main complaint of [Multi-Realty] and the counterclaim of
[MATUSCO]. With costs against both parties.
SO ORDERED. [19]

Multi-Realty moved for reconsideration,  but its motion was


[20]

denied in the Court of Appeals January 18, 2001 Resolution.  It [21]

then filed a petition for review  before this Court.


[22]

On June 16, 2006, this Court in Multi-Realty Development


Corporation v. The Makati Tuscany Condominium
Corporation  granted Multi-Realty's petition, set aside the
[23]

assailed Court of Appea]s August 21, 2000 Decision, and directed


the Court of Appeals to resolve Multi-Realty's appeal.

Multi-Realty Development Corporation ruled that the Court of


Appeals should have resolved the appeal on the merits instead of
motu proprio resolving the issue of whether or not the action had
already prescribed, as the issue of prescription was never raised
by the parties before the lower courts. [24]

Nonetheless, Multi-Realty Development Corporation held that


even if prescription was raised as an issue, the Court of Appeals
still erred in dismissing the case because Multi-Realty's right to
file an action only accrued in 1989 when MATUSCO denied Multi-
Realty's ownership of the 98 parking slots. The Court of Appeals
ruled that it was only then that Multi-Realty became aware of the
error in the Master Deed, thereafter seeking its reformation to
reflect the true agreement of the parties. Thus, prescription had
not yet set in when Multi-Realty filed its complaint for reformation
of instrument in 1990. [25]

The fallo in Multi-Realty Development Corporation read:


IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.
The Decision of the Court of Appeals in CA-G.R. CV No. 44696
is SET ASIDE. The Court of Appeals is directed to resolve [Multi-
Realty's] appeal with reasonable dispatch. No costs.

ORDERED.  (Emphasis in the original)


[26]

On November 5, 2007, the Court of Appeals  denied both[27]

appeals.
Regarding Multi-Realty's appeal, the Court of Appeals held that
the Master Deed could only be read to mean that the 98 parking
slots being claimed by Multi-Realty belonged to MATUSCO. It
highlighted that the language of the Master Deed, as prepared by
Multi-Realty, was clear and not susceptible to any other
interpretation.
[28]

The Court of Appeals upheld the Regional Trial Court's finding


that Multi-Realty was guilty of estoppel by deed and likewise
declared that MATUSCO was not estopped from questioning Multi-
Realty's claimed ownership over and sales of the disputed parking
slots.
[29]

The fallo of the Court of Appeals November 5, 2007 Decision


read:
WHEREFORE, the instant appeals are hereby DENIED. The
assailed Decision dated October 29, 1993 of the Regional Trial
Court (Branch 65), Makati, Metro Manila (now Makati City), in
Civil Case No.

90-1110 is MODIFIED-in that: (1) the counterclaim of The


Makati Tuscany Condominium Corporation is DISMISSED-not on
the ground of non-payment of docket fees but on ground of
prescription; and, (2) the award of attorney's fees in favor of The
Makati Tuscany Condominium Corporation is DELETED for not
having been justified. We however AFFIRM in all other aspects.
Costs against both parties.

SO ORDERED.  (Emphasis in the original)


[30]

Multi-Realty moved for the reconsideration of the Court of


Appeals November 5, 2007 Decision and on April 28, 2008, the
Court of Appeals promulgated an Amended Decision,  reversing
[31]

its November 5, 2007 Decision and directing the reformation of


the Master Deed and Deed of Transfer.

In reversing its November 5, 2007 Decision, the Court of Appeals


ruled that the Master Deed and Deed of Transfer did not reflect
the true intention of the parties on the ownership of the 98
parking slots.[32]

The Court of Appeals stated that in reformation cases, the party


asking for reformation had the burden to overturn the
presumption of validity accorded to a written contract. It held
that Multi-Realty was able to discharge this burden. [33]

The fallo of the Court of Appeals April 28, 2008 Amended


Decision read:
WHEREFORE, premises considered, the present Motion for

Reconsideration is PARTLY GRANTED. Our Decision dated


November

05, 2007 is hereby MODIFIED-in that We ORDER the


reformation of the Master Deed and Declaration of
Restrictions of the Makati Tuscany Condominium
Project and the Deed of Transfer-to clearly provide that the
ownership over the ninety[-]eight (98) extra parking lots be
retained by Multi-Realty Development Corporation. We
however DENY the damages and attorney's fees prayed for by
Multi-Realty Development Corporation. We AFFIRM in all other
respects. No costs.

SO ORDERED.  (Emphasis in the original)


[34]

MATUSCO moved for the reconsideration  of the Amended[35]

Decision, but its motion was denied in the Court of Appeals


December 4, 2008 Resolution. [36]

On February 5, 2009, MATUSCO filed its Petition for Review  on [37]

Certiorari before this Court.

In its Petition, petitioner claims that the Court of Appeals erred in


granting Multi-Realty's appeal because there was no basis to
reform the Master Deed and Deed of Transfer. It asserts that
there was no mistake, fraud, inequitable conduct, or accident
which led to the execution of an instrument that did not express
the true intentions of the parties. It avers that the instruments
clearly expressed what the parties agreed upon. [38]

Petitioner also assails the Court of Appeals' ruling that it was


estopped from questioning respondent's sales of26 out of the 98
contested parking slots and from claiming ownership of the
remaining unsold parking slots because it was supposedly fully
aware of respondent's ownership of them and did not oppose its
sales for 9 years.[39]

Petitioner maintains that estoppel cannot apply because the sales


made by respondent were patently illegal as they went against
the stipulations in the Master Deed. Furthemore, petitioner
contends that it never misled respondent regarding ownership of
the 98 parking slots since it was respondent itself which drafted
the Master Deed and Deed of Transfer that turned over ownership
of the common areas, including the 98 parking slots, to
MATUSCO. [40]

In its Comment,  respondent insists that it never intended to


[41]

include the 98 parking slots among the common areas transferred


to MATUSCO. It avers that due to its then inexperience with the
condominium business, with Makati Tuscany being one of the
Philippines' first condominium projects, the Master Deed and
Deed of Transfer failed to reflect the original intention to exclude
the 98 parking slots from Makati Tuscany's common areas. [42]

Respondent points to the parties' subsequent acts that led to the


only conclusion that it was always the intention to exclude the 98
parking slots from the common areas, and that this was known
and accepted by petitioner from the beginning. [43]

Respondent maintains that the Petition raises factual findings and


prays that this Court take a second look at the evidence
presented and come up with its own factual findings, in
derogation of the purpose of an appeal under Rule 45 of the Rules
of Court, which generally limits itself to questions of law.
[44]
Respondent also points out that in Multi-Realty Development
Corporation, this Court, in its recital of material facts,
acknowledged that it retained ownership over the 98 parking
slots, but that its ownership over them was not reflected in the
Master Deed and Deed of Transfer. Thus, respondent asserts that
the issue of ownership can no longer be threshed out on appeal
on the ground of res judicata. [45]

In its Reply,  petitioner claims that just like respondent, it also


[46]

committed a mistake in good faith and "also labored under a


mistaken appreciation of the nature and ownership of the
ninety[-]eight (98) parking slots"  when it failed to object to
[47]

respondent's sales of some of the parking slots from 1977 to


1986 and when it issued Certificates of Management over the sold
parking slots. It was only later that petitioner realized the extent
of its legal right over the 98 parking slots; consequently, it
exerted effort to exercise its dominion over them. Petitioner
argues that this cannot be characterized as bad faith on its part.[48]

Petitioner adds that the Master Deed and Deed of Transfer are
public documents, being duly registered with the Register of
Deeds of Makati City, ergo, their terms, conditions, and
restrictions are valid and binding in rem. It opines that for the
Court of Appeals to change the clear and categorical wordings of
the Master Deed more than 30 years after its registration goes
against public policy and the Condominium Act. [49]

Petitioner insists that if respondent merely made a mistake in


including the 98 parking slots among the common areas
transferred to petitioner, this mistake must be construed in
petitioner's favor as respondent is owned by one of the wealthiest
family corporations in the country while petitioner is merely an
association of innocent purchasers for value. [50]

The issues raised for this Court's resolution are as follows:

First, whether or not there is a need to reform the Master Deed


and the Deed of Transfer; and
Second, whether or not this Court is bound by the factual findings
in Multi-Realty Development Corporation v. The Makati Tuscany
Condominium Corporation on the ground of conclusiveness of
judgment.

Reformation of an instrument is a remedy in equity where a valid


existing contract is allowed by law to be revised to express the
true intentions of the contracting parties.  The rationale is that it
[51]

would be unjust to enforce a written instrument which does not


truly reflect the real agreement of the parties.  In reforming an
[52]

instrument, no new contract is created for the parties, rather, the


reformed instrument establishes the real agreement between the
parties as intended, but for some reason, was not embodied in
the original instrument.[53]

An action for reformation of an instrument finds its basis in Article


1359 of the Civil Code which provides:
Article 1359. When, there having been a meeting of the minds of
the parties to a contract, their true intention is not expressed in
the instrument purporting to embody the agreement, by reason
of mistake, fraud, inequitable conduct or accident, one of the
parties may ask for the reformation of the instrument to the end
that such true intention may be expressed.

If mistake, fraud, inequitable conduct, or accident has prevented


a meeting of the minds of the parties, the proper remedy is not
reformation of the instrument but annulment of the contract.
The National Irrigation Administration v. Gamit  stated that there
[54]

must be a concurrence of the following requisites for an action for


reformation of instrument to prosper:
(1) there must have been a meeting of the minds of the parties
to the contract; (2) the instrument does not express the true
intention of the parties; and (3) the failure of the instrument to
express the true intention of the parties is due to mistake, fraud,
inequitable conduct or accident. [55]
The burden of proof then rests upon the party asking for the
reformation of the instrument to overturn the presumption that a
written instrument already sets out the true intentions of the
contracting parties.
[56]

It is not disputed that the parties entered into a contract


regarding the management of Makati Tuscany's common areas. A
Master Deed and a Deed of Transfer were executed to contain all
the terms and conditions on the individual ownership of Makati
Tuscany's units and the co-ownership over the common areas.
The question to be resolved is whether the provisions in the
Master Deed and Deed of Transfer over the 98 parking slots, as
part of the common areas, expressed the true intentions of the
parties, and if not, whether it was due to mistake, fraud,
inequitable conduct, or accident.

Sections 5 and 7(d) of the Master Deed provide as follows:


SEC. 5. Accessories to Units. - To be considered as part of each
unit and reserved for the exclusive use of its owner are the
balconies adjacent thereto and the parking lot or lots which are to
be assigned to each unit.

....

SEC. 7. The Common Areas. - The common elements or areas of


The Makati Tuscany shall comprise all the parts of the project
other than the units, including without limitation the following:

....

(d) All driveways, playgrounds, garden areas and parking areas


other than those assigned to each unit under Sec. 5 above[.] [57]

A plain and literal reading of Section 7(d) in relation to Section 5


shows that all parking areas which are not assigned to units come
under petitioner's authority because they are part of the common
areas.
Respondent argues that what was written in the Master Deed and
Deed of Transfer failed to fully capture what was actually
intended by the parties. However, intentions involve a state of
mind, making them difficult to decipher; therefore, the
subsequent and contemporaneous acts of the parties must be
presented into evidence to reflect the parties' intentions.
[58]

To substantiate its claim that there was a difference between the


written terms in the Master Deed and Deed of Transfer and the
parties' intentions, respondent refers to their prior and
subsequent acts.

First, respondent points out that in the color-coded floor plans for
the ground floor, upper basement, and lower basement, only
eight (8) guest parking slots were indicated as part of the
common areas. However, respondent alleges that due to its
inexperience with documenting condominium developments, it
failed to reflect the correct number of guest parking slots in the
Master Deed and Deed of Transfer. [59]

Second, acting under the honest belief that it continued to own


the 98 parking slots, respondent sold 26 of them to Makati
Tuscany's unit owners from 1977 to 1986, without any hint of a
complaint or opposition from petitioner. Respondent also states
that petitioner repeatedly cooperated and supported its sales by
issuing Certificates of Management for the condominium units
and parking slots sold by respondent. [60]

Third, petitioner's Board of Directors made repeated offers to


purchase the parking slots from respondent, signifying
petitioner's recognition of respondent's retained ownership over
the disputed parking slots. This was made evident in an excerpt
from the minutes of the June 14, 1979 meeting of MATUSCO's
Board of Directors:
UNASSIGNED PARKING SLOTS

Mr. Jovencio Cinco informed the Board of the final proposal of


Multi-Realty Development Corp. to sell the condominium corp. all
of the unassigned parking lots at a discounted price of
P15,000.00 per lot, or some 50% lower than their regular present
price of P33,000.00 each.

After discussion, it was agreed to hold in abeyance any decision


on the matter for all the members of the Board in attendance to
pass upon. [61]

Finally, respondent highlights that it was only in September 1989,


when the value of the 72 remaining unallocated parking slots had
risen to approximately P250,000.00 each or approximately
P18,000,000.00 for the 72 parking slots, that petitioner first
claimed ownership of the remaining parking slots. [62]

At this juncture, it must be pointed out that petitioner never


rebutted any of respondent's statements regarding the
subsequent acts of the parties after the execution and
registration of the Master Deed and Deed of Transfer. Petitioner
even adopted the narration of facts in Multi-Realty Development
Corporation and declared in its Reply that:
1. The Petition does not raise questions of fact because no doubt
or difference exists between the parties' appreciation of the truth
or falsehood of alleged facts, nor does it require the Honorable
Court to evaluate the credibility of witnesses or their testimonies.
The resolution of the instant controversy rests solely upon the
correct application of principles of law and pertinent
jurisprudence, as well as hallowed ideals of fairness and public
policy which are specific or germane to the undisputed facts.
These facts have already been framed by this Honorable Court in
a related case brought before it by the same parties, albeit
limited to the sole issue of prescription of the action for
reformation of instruments initiated by [Multi-Realty]. For the
avoidance of doubt, these facts are reproduced hereunder as
follows:

....

1.3 Makati Tuscany consisted of 160 condominium units, with 156


units from the 2  to the 25  floors, and 4 penthouse units in the
nd th
26  floor. Two hundred seventy (270) parking slots were built
th

therein for appointment among its unit owners. One hundred


sixty-four (164) of the parking slots were so allotted, with each
unit at the 2  to the 25  floors being allotted one ( 1) parking slot
nd th

each, and each penthouse unit with two slots. Eight (8) other
parking slots, found on the ground floor of the Makati Tuscany
were designated as guest parking slots, while the remaining
ninety[-]eight (98) were to be retained by Multi-Realty for sale to
unit owners who would want to have additional slots.

....

1.7. The Master Deed was filed with the Register of Deeds in
1977. Multi-Realty executed a Deed of Transfer in favor of Makati
Tuscany over these common areas. However, the Master Deed
and the Deed of Transfer did not reflect or specify the ownership
of the 98 parking slots. Nevertheless, Multi-Realty sold 26 of
them in 19 to 1986 to condominium unit buyers who needed
additional parking slots. Makati Tuscany did not object, and
certificates of title were later issued by the Register of Deeds in
favor of the buyers. Makati Tuscany issued Certificates of
Management covering the condominium units and parking slots
which Multi-Realty has sold.

1.8 At a meeting of Makati Tuscany's Board of Directors on 13


March 1979, a resolution was approved, authorizing its President,
Jovencio Cinco, to negotiate terms under which Makati Tuscany
would buy 36 of the unallocated parking slots from Multi-Realty.
During another meeting of the Board of Directors on 14 June
1979, Cinco informed the Board members of Multi-Realty's
proposal to sell all of the unassigned parking lots at a discounted
price of P15,000.00 per lot, or some 50% lower than the then
prevailing price of P33,000.00 each. The Board agreed to hold in
abeyance any decision on the matter to enable all its members to
ponder upon the matter.  (Emphasis supplied, citations omitted)
[63]

Just like respondent, petitioner invokes mistake in good faith to


explain its seeming recognition of respondent's ownership of the
72 remaining parking slots, showing its acquiescence to
respondent's sale of the 26 parking slots and its issuance of the
Certificates of Management for the sold condominium units and
parking slots.[64]

Petitioner fails to convince.

The totality of the undisputed evidence proving the parties' acts is


consistent with the conclusion that the parties never meant to
include the 98 parking slots among the common areas to be
transferred to petitioner. The evidence is consistent to support
the view that petitioner was aware of this fact.

From 1977 to 1986, respondent sold 26 of the 98 parking lots


now under contention without protest from petitioner. Petitioner
recognized respondent's ownership of the disputed parking lots
on at least two (2) occasions when its Board of Directors made
known its intention to purchase them from respondent.

In its Manifestation Ad Cautelam,  petitioner asked to be allowed


[65]

to file a reply to respondent's comment to rectify the "erroneous


statements of fact and conclusions of law"  contained in it.
[66]

However, petitioner in its Reply  did not contradict any of the


[67]

subsequent acts of the parties narrated by respondent, showing


petitioner's repeated acquiescence to respondent's acts of
dominion over the parking slots. Petitioner even adopted this
Court's narration of facts in Multi-Realty Development
Corporation where this Court stated that "[e]ight (8) other
parking slots, found on the ground floor of the Makati Tuscany
were designated as guest parking slots, while the remaining 98
were to be retained by Multi-Realty for sale to unit owners who
would want to have additional slots." [68]

Petitioner claims that it was confusion and not bad faith that
caused its belated assertion of ownership over the parking slots.
 However, the facts show that it was the intention of the parties
[69]

all along for Multi-Realty to retain ownership of the 98 parking


slots and then sell them to unit owners who wanted additional
parking slots.
Petitioner argues its lack of bad faith in claiming ownership over
the 98 parking slots. Whether or not it acted in bad faith was
never in issue. Instead, the issue to be resolved was whether or
not respondent committed a mistake in drafting and executing
the Master Deed and Deed of Transfer, thereby leading to the
inadvertent inclusion of the 98 parking slots among the common
areas transferred to petitioner.

Further, it is difficult to impute confusion and bad faith, which are


states of mind appropriate for a natural individual person, to an
entire corporation. The fiction where corporations are granted
both legal personality separate from its owners and a capacity to
act should not be read as endowing corporations with a single
mind. In truth, a corporation is a hierarchical community of
groups of persons both in the governing board and in
management. Corporations have different minds working
together including its lawyers, auditors, and, in some cases, their
compliance officers.

To grant the argument that a corporation, like a natural person,


was confused or not in bad faith is to extend to it too much
analogy and to endow it more of the human characteristics
beyond its legal fiction. This Court is not endowed with such god-
like qualities of a creator or should allow illicit extensions of legal
fiction to cause injustice.

Respondent, through a preponderance of evidence, was able to


prove its claim that the Master Deed and Deed of Transfer failed
to capture the true intentions of the parties; hence, it is but right
that the instruments be reformed to accurately reflect the
agreement of the parties.

Petitioner asserts that respondent's admission of committing a


mistake in drafting the Master Deed and Deed of Transfer makes
it liable to suffer the consequences of its mistake and should be
bound by the plain meaning and import of the instruments. It
contends that respondent should be estopped from claiming that
the Master Deed and Deed of Transfer failed to show the parties'
true intentions.

Again, petitioner fails to convince.

In Philippine National Bank v. Court of Appeals,  this Court held:


[70]

"The doctrine of estoppel is based upon the grounds of public


policy, fair dealing, good faith and justice, and its purpose is to
forbid one to speak against his own act, representations, or
commitments to the injury of one to whom they were directed
and who reasonably relied thereon. The doctrine of estoppel
springs from equitable principles and the equities in the case. It is
designed to aid the law in the administration of justice where
without its aid injustice might result." It has been applied by this
Court wherever and whenever special circumstances of a case so
demand. [71]

In this case, except for the words in the contract, all of


respondent's acts were consistent with its position in the case.

Petitioner does not deny that it stayed silent when respondent


sold the parking slots on several occasions or that it offered to
buy the parking slots from respondent on at least two (2)
occasions. It excuses itself by saying that just like respondent, it
"also labored under a mistaken appreciation of the nature and
ownership of the ninety[-]eight (98) parking slots in question." [72]

Both parties recognized respondent's ownership of the parking


slots. Petitioner initially respected respondent's ownership despite
the Master Deed's and Deed of Transfer's stipulations. It was
petitioner that changed its position decades after it acted as if it
accepted respondent's ownership.

Petitioner cannot claim the benefits of estoppel. It was never


made to rely on any false representations. It knew from its
inception as a corporation that ownership of the parking slots
remained with respondent. Its dealings with respondent and the
actuations of its Board of Directors convincingly show that it was
aware of and respected respondent's ownership. The Court of
Appeals ruled as follows:
Not even the registration of the Master Deed with the Makati City
Register of Deeds renders Multi-Realty guilty of estoppel by deed.
For one, [MATUSCO] was not made to believe that it shall be the
owner of the questioned extra parking lots. And for another,
[MATUSCO] was not made to rely on any false representation. As
we have earlier discussed-evidence is replete that both parties
knew at the outset that ownership over the said extra parking
lots were to be retained by Multi-Realty. It is sad to note,
however, that such fact was not clearly reflected in the Master
Deed and the Deed of Transfer. Besides, it was only after the
issue of ownership cropped up that Multi-Realty realized that,
indeed, there was a mistake in the drafting of the Master Deed. [73]

II

Despite petitioner's adoption of this Court's recital of facts


in Multi-Realty Development Corporation, this Court deems it
proper to address respondent's claim that this Court upheld its
ownership of the disputed parking slots, as Multi-Realty
Development Corporation supposedly contained final factual
findings on this very issue, which ought to be respected on the
ground of res judicata. [74]

Respondent is mistaken.

There is res judicata when the following concur:


a) the former judgment must be final;
b) the court which rendered judgment had jurisdiction over the parties and the subject
c) it must be a judgment on the merits;
d) and there must be between the first and second actions identity of parties, subje
action.  (Emphasis in the original, citation omitted)
[75]

Multi-Realty Development Corporation did not take on the merits


of the case but only tackled the issue of prescription n.ised to this
Court on appeal. After finding that the action had not yet
prescribed and was mistakenly dismissed by the Court of Appeals
because of a supposedly stale claim, this Court directed that it be
remanded to the Court of Appeals for a resolution of the appeal:
Nevertheless, given the factual backdrop of the case, it was
inappropriate for the CA, motu proprio, to delve into and resolve
the issue of whether [Multi-Realty's] action had already
prescribed. The appellate court should have proceeded to resolve
[Multi-Realty's] appeal on its merits instead of dismissing the
same on a ground not raised by the parties in the RTC and even
in their pleadings in the CA.

....

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The


Decision of the Court of Appeals in CA-G.R. CV No. 44696 is SET
ASIDE. The Court of Appeals is directed to resolve petitioner's
appeal with reasonable dispatch. No costs.

ORDERED. [76]

Clearly, res judicata had not yet set in and this Court was not
precluded from evaluating all of the evidence vis-a-vis the issues
raised by both parties.

WHEREFORE, premises considered, the Petition for Review on


Certiorari is DENIED. The Court of Appeals April 28, 2008
Amended Decision and December 4, 2008 Resolution in CA-G.R.
CV No. 44696 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

June 19, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:
Please take notice that on April 18, 2018 a Decision, copy
attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on June 19, 2018 at 10:10 a.m.

[1]
 Rollo, pp. 59-97.

 Id. at 98-111. The Decision was penned by Associate Justice


[2]

Jose L. Sabio, Jr. and concurred in by Associate Justices Rodrigo


V. Cosico and Martin S. Villarama, Jr. of the Special Former
Special Eighth Division, Court of Appeals, Manila.

 Id. at 112-113. The Resolution was penned by Associate Justice


[3]

Jose L. Sabio, Jr. and concurred in by Associate Justices Martin S.


Villarama, Jr. and Noel G. Tijam of the Special Former Special
Eighth Division, Court of Appeals, Manila.

[4]
 Id. at 200, RTC Decision.

 Multi-Realty Development Corporation v. The Makati Tuscany


[5]

Condominium Corporation, 524 Phil. 318, 325 (2006) [Per J.


Callejo, Sr., First Division].

[6]
 Rollo, p. 200, RTC Decision.

[7]
 Id. at 131-146.

 Multi-Realty Development Corporation v. The Makati Tuscany


[8]

Condominium Corporation, 524 Phil. 318, 326 (2006) [Per J.


Callejo, Sr., First Division].
[9]
 Rollo, p. 200, RTC Decision.

 Multi-Realty Development Corporation v. The Makati Tuscany


[10]

Condominium Corporation, 524 Phil. 318, 327 (2006) [Per J.


Callejo, Sr., First Division].

[11]
 Id. at 325 and 327.

[12]
 Id. at 327.

[13]
 Id. at 324.

 Rollo, pp. 200-202. The Decision was penned by Judge


[14]

Salvador S. Abad Santos of Branch 65, Regional Trial Court,


Makati City.

[15]
 Id. at 201-202.

[16]
 Id. at 202.

 Id. at 293-300. The Decision, docketed as CA-G.R. CV No.


[17]

44696, was penned by Associate Justice Jose L. Sabio, Jr. and


concurred in by Associate Justices Ramon Mabutas, Jr. and Martin
S. Villarama, Jr. of the Special Eighth Division, Court of Appeals,
Manila.

[18]
 Id. at 297-298.

[19]
 Id. at 299.

[20]
 Id. at 301-320.

 Id. at 353-356. The Resolution was penned by Associate Justice


[21]

Jose L. Sabio. Jr. and concurred in by Associate Justices Ramon


Mabutas, Jr. and Martin S. Villarama, Jr. of the Special Former
Eighth Division of the Court of Appeals, Manila.
[22]
 Id. at 357-40l. The case was docketed as G.R. No. 146726.

[23]
 524 Phil. 318 (2006) [Per J. Callejo, Sr., First Division].

[24]
 Id. at 336-337.

[25]
 Id. at 343-344.

[26]
 Id. at 346.

 Rollo, pp. 460-480. The Decision was penned by Associate


[27]

Justice Jose L. Sabio, Jr. and concurred in by Associate Justices


Rodrigo V. Cosico and Martin S. Villarama, Jr. of the Special
Former Special Eighth Division of the Court of Appeals, Manila.

[28]
 Id. at 470.

[29]
 Id. at 475-478.

[30]
 Id. at 478-479.

[31]
 Id. at 98-111.

[32]
 Id. at 103.

[33]
 Id. at 106-107.

[34]
 Id. at 110.

[35]
 Id. at 530-538.

[36]
 Id. at 112-113.

[37]
 Id. at 59-97.

[38]
 Id. at 75-80.

[39]
 Id. at 86-87.
[40]
 Id. at 88-89.

[41]
 Id. at 560-594.

[42]
 Id. at 561 and 563.

[43]
 Id. at 563-566.

[44]
 Id. at 573-574.

[45]
 Id. at 577-579.

[46]
 Id. at 630-648.

[47]
 Id. at 635.

[48]
 Id. at 635-636.

[49]
 Id. at 638.

[50]
 Id. at 639.

 Rosello-Bentir v. Leanda, 386 Phil. 802, 811 (2000) [Per J.


[51]

Kapunan, First Division].

 Spouses Rosario v. Alvar, G. R. No. 212731, September 6,


[52]

2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/september2017/212731.pdf> [Per J.
Del Castillo, First Division].

 Multi-Ventures Capital and Management Corp. v. Stalwart


[53]

Management Services Corp., 553 Phil. 385, 391 (2007) [Per J.


Austria-Martinez, Third Division], citing Quiros v. Arjona, 468
Phil. 1000, 1010 (2004) [Per J. Ynares-Santiago, First Division].

[54]
 289 Phil. 914 (1992) [Per J. Padilla, First Division].
[55]
 Id. at 931.

 Multi-Ventures Capital and Management Corp. v. Stalwart


[56]

Management Services Corp., 553 Phil. 385, 392 (2007) [Per J.


Austria-Martinez, Third Division], citing Huibonhoa v. Court of
Appeals, 378 Phil. 386, 407 (1999) [Per J. Purisima, Third
Division] and BA Finance Corporation v. Intermediate Appellate
Court, 291 Phil. 265, 283 (1993) [Per J. Gutierrez, Jr., Third
Division].

[57]
 Rollo, p. 134.

 Sarming v. Dy, 432 Phil. 685, 699 (2002) [Per J. Quisumbing,


[58]

Second Division].

[59]
 Rollo, p. 563.

[60]
 Id. at 563-564.

[61]
 Id. at 565.

[62]
 Id. at 565-566.

[63]
 Id. at 630-634.

[64]
 Id. at 635-636.

[65]
 Id. at 608-612.

[66]
 Id. at 608.

[67]
 Id. at 630-648.

 Multi-Realty Development Corporation v. The Makati Tuscany


[68]

Condominium Corporation, 524 Phil. 318, 325 (2006) [Per J.


Callejo, Sr., First Division].

[69]
 Rollo, pp. 635-636.
[70]
 183 Phil. 54 (1979) [Per J. Melencio-Herrera, First Division].

[71]
 Id. at 63-64, citing 28 Am Jur 2d, Estoppel §28.

[72]
 Rollo, p. 635.

[73]
 Id. at 108.

[74]
 Id. at 577-580.

 Heirs of Enrique Diaz v. Virata, 529 Phil. 799, 823-824 (2006)


[75]

[Per J. Chico-Nazario, First Division].

 Multi-Realty Development Corporation v. The Makati Tuscany


[76]

Condominium Corporation, 524 Phil. 318, 336-337 and 346


(2006) [Per J. Callejo, Sr., First Division].

Source: Supreme Court E-Library | Date created: July 19, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 227544, November 22,


2017 ]
COMMISSIONER OF INTERNAL REVENUE,
PETITIONER, VS. TRANSITIONS PHILIPPINES,
OPTICAL INC., RESPONDENT.DECISION

LEONEN, J.:

Estoppel applies against a taxpayer who did not only raise at the
earliest opportunity its representative's lack of authority to
execute two (2) waivers of defense of prescription, but was also
accorded, through these waivers, more time to comply with the
audit requirements of the Bureau of Internal Revenue.
Nonetheless, a tax assessment served beyond the extended
period is void.

This Petition for Review on Certiorari  seeks to nullify and set


[1]

aside the June 7, 2016 Decision  and September 26, 2016


[2]

Resolution  of the Court of Tax Appeals En Banc in CTA EB No.


[3]

1251. The Court of Tax Appeals En Banc affirmed its First


Division's September 1, 2014 Decision,  cancelling the deficiency
[4]

assessments against Transitions Optical Philippines, Inc.


(Transitions Optical).

On April 28, 2006, Transitions Optical received Letter of Authority


No. 00098746 dated March 23, 2006 from Revenue Region No. 9,
San Pablo City, of the Bureau of Internal Revenue. It was signed
by then Officer-in-Charge-Regional Director Corazon C. Pangcog
and it authorized Revenue Officers Jocelyn Santos and Levi
Visaya to examine Transition Optical's books of accounts for
internal revenue tax purposes for taxable year 2004. [5]

On October 9, 2007, the parties allegedly executed a Waiver of


the Defense of Prescription (First Waiver).  In this supposed First
[6]

Waiver, the prescriptive period for the assessment of Transition


Optical's internal revenue taxes for the year 2004 was extended
to June 20, 2008.  The document was signed by Transitions
[7]

Optical's Finance Manager, Pamela Theresa D. Abad, and by


Bureau of Internal Revenue's Revenue District Officer Myrna S.
Leonida. [8]

This was followed by another supposed Waiver of the Defense of


Prescription (Second Waiver) dated June 2, 2008. This time, the
prescriptive period was supposedly extended to November 30,
2008.[9]

Thereafter, the Commissioner of Internal Revenue, through


Regional Director Jaime B. Santiago (Director Santiago), issued a
Preliminary Assessment Notice (PAN) dated November 11, 2008,
assessing Transitions Optical for its deficiency taxes for taxable
year 2004. Transitions Optical filed a written protest on
November 26, 2008. [10]

The Commissioner of Internal Revenue, again through Director


Santiago, subsequently issued against Transitions Optical a Final
Assessment Notice (FAN) and a Formal Letter of Demand (FLD)
dated November 28, 2008 for deficiency income tax, value-added
tax, expanded withholding tax, and final tax for taxable year
2004 amounting to P19,701,849.68. [11]

In its Protest Letter dated December 8, 2008 against the FAN,


Transitions Optical alleged that the demand for deficiency taxes
had already prescribed at the time the FAN was mailed on
December 2, 2008. In its Supplemental Protest, Transitions
Optical pointed out that the FAN was void because the FAN
indicated 2006 as the return period, but the assessment covered
calendar year 2004.[12]

Years later, the Commissioner of Internal Revenue, through


Regional Director Jose N. Tan, issued a Final Decision on the
Disputed Assessment dated January 24, 2012, holding Transitions
Optical liable for deficiency taxes in the total amount of
P19,701,849.68 for taxable year 2004, broken down as follows:

Tax Amount
Income Tax
Value-Added Tax 1,231,393.47
Expanded Withholding Tax 175,339.51
Final Tax on Royalty 14,026,247.90
Final Tax on Interest Income 1,115,497.76
Total

On March 16, 2012, Transitions Optical filed a Petition for Review


before the Court of Tax Appeals. [14]

In her Answer, the Commissioner of Internal Revenue interposed


that Transitions Optical's claim of prescription was inappropriate
because the executed Waiver of the Defense of Prescription
extended the assessment period. She added that the posting of
the FAN and FLD was within San Pablo City Post Office's exclusive
control. She averred that she could not be faulted if the FAN and
FLD were posted for mailing only on December 2, 2008 since
November 28, 2008 fell on a Friday and the next supposed
working day, December 1, 2008, was declared a Special Holiday.
[15]

After trial and upon submission of the parties' memoranda, the


First Division of the Court of Tax Appeals (First Division) rendered
a Decision on September 1, 2014.  It held:
[16]

In summary therefore, the Court hereby finds the subject


Waivers to be defective and therefore void. Nevertheless,
granting for the sake of argument that the subject Waivers were
validly executed, for failure of respondent however to present
adequate supporting evidence to prove that it issued the FAN and
the FLD within the extended period agreed upon in the 2  Waiver,
nd

the subject assessment must be cancelled for being issued


beyond the prescriptive period provided by law to assess.

WHEREFORE, in light of the foregoing considerations, the instant


Petition for Review is hereby GRANTED. Accordingly, the Final
Assessment Notice, Formal Letter of Demand and Final Decision
on Disputed Assessment finding petitioner Transitions Optical
Philippines, Inc. liable for deficiency income tax, deficiency
expanded withholding tax, deficiency value-added tax and
de1iciency final tax for taxable year 2004 in the total amount
of P19,701,849.68 are hereby CANCELLED and SET ASIDE.

SO ORDERED.  (Emphasis in the original)


[17]

The Commissioner of Internal Revenue filed a Motion for


Reconsideration, which was denied by the First Division in its
Resolution  dated November 7, 2014.
[18]

The Court of Tax Appeals En Bane affirmed the First Division


Decision  and subsequently denied the Commissioner of Internal
[19]

Revenue's Motion for Reconsideration. [20]

Hence, this Petition was filed before this Court. Transitions Optical
filed its Comment. [21]

Petitioner contends that "[t]he two Waivers executed by the


parties on October 9, 2007 and June 2, 2008 substantially
complied with the requirements of Sections 203 and 222 of the
[National Internal Revenue Code]."  She adds that technical
[22]

rules of procedure of administrative bodies, such as those


provided in Revenue Memorandum Order (RMO) No. 20-90 issued
on April 4, 1990 and Revenue Delegation Authority Order (RDAO)
No. 05-01 issued on August 2, 2001, must be liberally applied to
promote justice.  At any rate, petitioner maintains that
[23]

respondent is estopped from questioning the validity of the


waivers since their execution was caused by the delay occasioned
by respondent's own failure to comply with the orders of the
Bureau of Internal Revenue to submit documents for audit and
examination. [24]

Furthermore, petitioner argues that the assessment required to


be issued within the three (3)-year period provided in Sections
203 and 222 of the National Internal Revenue Code refer to
petitioner's actual issuance of the notice of assessment to the
taxpayer or what is usually known as PAN, and not the FAN
issued in case the taxpayer files a protest. [25]

On the other hand, respondent contends that the Court of Tax


Appeals properly found the waivers defective, and therefore, void.
It adds that the three (3)-year prescriptive period for tax
assessment primarily benefits the taxpayer, and any waiver of
this period must be strictly scrutinized in light of the requirements
of the laws and rules.  Respondent posits that the requirements
[26]

for valid waivers are not mere technical rules of procedure that
can be set aside. [27]

Respondent further asserts that it is not estopped from


questioning the validity of the waivers as it raised its objections
at the earliest opportunity.  Besides, the duty to ensure
[28]

compliance with the requirements of RMO No. 20-90 and RDAO


No. 05-01, including proper authorization of the taxpayer's
representative, fell primarily on petitioner and her revenue
officers. Thus, petitioner came to court with unclean hands and
cannot be permitted to invoke the doctrine of estoppel.
 Respondent insists that there was no clear showing that the
[29]

signatories in the waivers were duly sanctioned to act on its


behalf.[30]

Even assuming that the waivers were valid, respondent argues


that the assessment would still be void as the FAN was served
only on December 4, 2008, beyond the extended period of
November 30, 2008.  Contrary to petitioner's stance, respondent
[31]

counters that the assessment required to be served within the


three (3)-year prescriptive period is the FAN and FLD, not just
the PAN.  According to respondent, "it is the FAN and FLD that
[32]

formally notif[y] the taxpayer, and categorically [demand] from


him, that a deficiency tax is due." [33]

The issues for this Court's resolution are:


First, whether or not the two (2) Waivers of the Defense of
Prescription entered into by the parties on October 9, 2007 and
June 2, 2008 were valid; and

Second, whether or not the assessment of deficiency taxes


against respondent Transitions Optical Philippines, Inc. for
taxable year 2004 had prescribed.

This Court denies the Petition. The Court of Tax Appeals


committed no reversible error in cancelling the deficiency tax
assessments.

As a general rule, petitioner has three (3) years to assess


taxpayers from the filing of the return. Section 203 of the
National Internal Revenue Code provides:

Section 203. Period of Limitation Upon Assessment and


Collection. — Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding in
court without assessment for the collection of such taxes shall be
begun after the expiration of such period: Provided, That in a
case where a return is filed beyond the period prescribed by law,
the three (3) year period shall be counted from the day the
return was filed. For purposes of this Section, a return filed
before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.

An exception to the rule of prescription is found in Section 222(b)


and (d) of this Code, viz:

Section 222. Exceptions as to Period of Limitation of Assessment


and Collection of Taxes. —
....

(b) If before the expiration of the time prescribed in Section 203 for the assessm
Commissioner and the taxpayer have agreed in writing to its assessment after
be assessed within the period agreed upon. The period so agreed upon
subsequent written agreement made before the expiration of the period previo

....

(d) Any internal revenue tax, which has been assessed within the period agre
paragraph (b) hereinabove, may be collected by distraint or levy or by a pr
the period agreed upon in writing before the expiration of the five (5) yea
agreed upon may be extended by subsequent written agreements made befo
period previously agreed upon.

Thus, the period to assess and collect taxes may be extended


upon the Commissioner of Internal Revenue and the taxpayer's
written agreement, executed before the expiration of the three
(3)-year period.

In this case, two (2) waivers were supposedly executed by the


parties extending the prescriptive periods for assessment of
income tax, value-added tax, and expanded and final withholding
taxes to June 20, 2008, and then to November 30, 2008.

The Court of Tax Appeals, both its First Division and En Banc,
declared as defective and void the two (2) Waivers of the Defense
of Prescription for non-compliance with the requirements for the
proper execution of a waiver as provided in RMO No. 20-90 and
RDAO No. 05-01. Specifically, the Court of Tax Appeals found that
these Waivers were not accompanied by a notarized written
authority from respondent, authorizing the so-called
representatives to act on its behalf. Likewise, neither the
Revenue District Office's acceptance date nor respondent's receipt
of the Bureau of Internal Revenue's acceptance was indicated in
either document. [34]
However, Presiding Justice Roman G. Del Rosario (Justice Del
Rosario) in his Separate Concurring Opinion  in the Court of Tax
[35]

Appeals June 7, 2016 Decision, found that respondent is estopped


from claiming that the waivers were invalid by reason of its own
actions, which persuaded the government to postpone the
issuance of the assessment. He discussed:

In the case at bar, respondent performed acts that induced the


BIR to defer the issuance of the assessment. Records reveal that
to extend the BIR's prescriptive period to assess respondent for
deficiency taxes for taxable year 2004, respondent executed two
(2) waivers. The first Waiver dated October 2007 extended the
period to assess until June 20, 2008, while the second Waiver,
which was executed on June 2, 2008, extended the period to
assess the taxes until November 30, 2008. As a consequence of
the issuance of said waivers, petitioner delayed the issuance of
the assessment.

Notably, when respondent filed its protest on November 26, 2008


against the Preliminary Assessment Notice dated November 11,
2008, it merely argued that it is not liable for the assessed
deficiency taxes and did not raise as an issue the invalidity of the
waiver and the prescription of petitioner's right to assess the
deficiency taxes. In its protest dated December 8, 2008 against
the FAN, respondent argued that the year being audited in the
FAN has already prescribed at the time such FAN was mailed on
December 2, 2008. Respondent even stated in that protest that it
received the letter (referring to the FAN dated November 28,
2008) on December 5, 2008, which accordingly is five (5) days
after the waiver it issued had prescribed. The foregoing narration
plainly does not suggest that respondent has any objection to its
previously executed waivers. By the principle of estoppel,
respondent should not be allowed to question the validity of the
waivers.[36]

In Commissioner of Internal Revenue v. Next Mobile, Inc.


(formerly Nextel Communications Phils., Inc.),  this Court
[37]
recognized the doctrine of estoppel and upheld the waivers when
both the taxpayer and the Bureau of Internal Revenue were in
pari delicto. The taxpayer's act of impugning its waivers after
benefitting from them was considered an act of bad faith:

In this case, respondent, after deliberately executing defective


waivers, raised the ve1y same deficiencies it caused to avoid the
tax liability determined by the BIR during the extended
assessment period. It must be remembered that by virtue of
these Waivers, respondent was given the opportunity to gather
and submit documents to substantiate its claims before the
[Commissioner of Internal Revenue] during investigation. It was
able to postpone the payment of taxes, as well as contest and
negotiate the assessment against it. Yet, after enjoying these
benefits, respondent challenged the validity of the Waivers when
the consequences thereof were not in its favor. In other words,
respondent's act of impugning these Waivers after benefiting
therefrom and allowing petitioner to rely on the same is an act of
bad faith.
[38]

This Court found the taxpayer estopped from questioning the


validity of its waivers:

Respondent executed five  Waivers and delivered them to


petitioner, one after the other. It allowed petitioner to rely on
them and did not raise any objection against their validity until
petitioner assessed taxes and penalties against it. Moreover, the
application of estoppel is necessary to prevent the undue injury
that the government would suffer because of the cancellation of
petitioner's assessment of respondent's tax liabilities.  (Emphasis
[39]

in the original)

Parenthetically, this Court stated that when both parties


continued to deal with each other in spite of knowing and without
rectifying the defects of the waivers, their situation is "dangerous
and open to abuse by unscrupulous taxpayers who intend to
escape their responsibility to pay taxes by mere expedient of
hiding behind technicalities."[40]

Estoppel similarly applies in this case

Indeed, the Bureau of Internal Revenue was at fault when it


accepted respondent's Waivers despite their non compliance with
the requirements of RMO No. 20-90 and RDAO No. 05-01.

Nonetheless, respondent's acts also show its implied admission of


the validity of the waivers. First, respondent never raised the
invalidity of the Waivers at the earliest opportunity, either in its
Protest to the PAN, Protest to the FAN, or Supplemental Protest
to the FAN.  It thereby impliedly recognized these Waivers'
[41]

validity and its representatives' authority to execute them.


Respondent only raised the issue of these Waivers' validity in its
Petition for Review filed with the Court of Tax Appeals.  In fact,
[42]

as pointed out by Justice Del Rosario, respondent's Protest to the


FAN clearly recognized the validity of the Waivers,  when it
[43]

stated:

This has reference to the Final Assessment Notice ("[F]AN")


issued by your office, dated November 28, 2008. The said letter
was received by Transitions Optical Philippines[,] Inc. (TOPI) on
December 5, 2008, five days after the waiver we issued
which was valid until November 30, 2008 had prescribed.
 (Emphasis supplied)
[44]

Second, respondent does not dispute petitioner's assertion  that [45]

respondent repeatedly failed to comply with petitioner's notices,


directing it to submit its books of accounts and related records for
examination by the Bureau of Internal Revenue. Respondent also
ignored the Bureau of Internal Revenue's request for an Informal
Conference to discuss other "discrepancies" found in the partial
documents submitted. The Waivers were necessary to give
respondent time to fully comply with the Bureau of Internal
Revenue notices for audit examination and to respond to its
Informal Conference request to discuss the discrepancies.  Thus,
[46]

having benefitted from the Waivers executed at its instance,


respondent is estopped from claiming that they were invalid and
that prescription had set in.

II

But, even as respondent is estopped from questioning the validity


of the Waivers, the assessment is nonetheless void because it
was served beyond the supposedly extended period.

The First Division of the Court of Tax Appeals found that "the date
indicated in the envelope/mail matter containing the FAN and the
FLD is December 4, 2008, which is considered as the date of their
mailing."  Since the validity period of the second Waiver is only
[47]

until November 30, 2008, prescription had already set in at the


time the FAN and the FLD were actually mailed on December 4,
2008.

For lack of adequate supporting evidence, the Court of Tax


Appeals rejected petitioner's claim that the FAN and the FLD were
already delivered to the post office for mailing on November 28,
2008 but were actually processed by the post office on December
2, 2008, since December 1, 2008 was declared a Special Holiday.
 The testimony of petitioner's witness, Dario A. Consignado, Jr.,
[48]

that he brought the mail matter containing the FAN and the FLD
to the post office on November 28, 2008 was considered self-
serving, uncorroborated by any other evidence. Additionally, the
Certification presented by petitioner certifying that the FAN issued
to respondent was delivered to its Administrative Division for
mailing on November 28, 2008 was found insufficient to prove
that the actual date of mailing was November 28, 2008.

This Court finds no clear and convincing reason to overturn these


factual findings of the Court of Tax Appeals.
Finally, petitioner's contention that the assessment required to be
issued within the three (3) year or extended period provided in
Sections 203 and 222 of the National Internal Revenue Code
refers to the PAN is untenable.

Considering the functions and effects of a PAN vis à vis a FAN, it


is clear that the assessment contemp1ated in Sections 203 and
222 of the National Internal Revenue Code refers to the service of
the FAN upon the taxpayer.

A PAN merely informs the taxpayer of the initial findings of the


Bureau of Internal Revenue.  It contains the proposed
[49]

assessment, and the facts, law, rules, and regulations or


jurisprudence on which the proposed assessment is based.  It [50]

does not contain a demand for payment but usually requires the
taxpayer to reply within 15 days from receipt. Otherwise, the
Commissioner of Internal Revenue will finalize an assessment and
issue a FAN.

The PAN is a part of due process.  It gives both the taxpayer and
[51]

the Commissioner of Internal Revenue the opportunity to settle


the case at the earliest possible time without the need for the
issuance of a FAN.

On the other hand, a FAN contains not only a computation of tax


liabilities but also a demand for payment within a prescribed
period.  As soon as it is served, an obligation arises on the part
[52]

of the taxpayer concerned to pay the amount assessed and


demanded. It also signals the time when penalties and interests
begin to accrue against the taxpayer. Thus, the National Internal
Revenue Code imposes a 25% penalty, in addition to the tax due,
in case the taxpayer fails to pay the deficiency tax within the time
prescribed for its payment in the notice of assessment.
 Likewise, an interest of 20% per annum, or such higher rate as
[53]

may be prescribed by rules and regulations, is to be collected


from the date prescribed for payment until the amount is fully
paid.  Failure to file an administrative protest within 30 days
[54]
from receipt of the FAN will render the assessment final,
executory, and demandable.

WHEREFORE, the Petition is DENIED. The June 7, 2016


Decision and September 26, 2016 Resolution of the Court of Tax
Appeals En Banc in CTA EB No. 1251 are AFFIRMED.

SO ORDERED.

Bersamin,   (Acting
**
Chairperson), Martires, and Gesmundo,
JJ., concur.
Velasco, Jr., J., on official leave.

February 9, 2018

N O T I C E  O F  J U D G M E N T

Sirs /Mesdames:

Please take notice that on November 22, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on February 9, 2018 at 9:50 a.m.

Very truly yours,            

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court             
 Designated Acting Chairperson per S.O. No. 2514 dated
**

November 8, 2017.

[1]
 Rollo, pp. 30-63.

 Id. at 71-84. The Decision was penned by Associate Justice Ma.


[2]

Belen M. Ringpis-Liban and concurred in by Presiding Justice


Roman G. Del Rosario (with separate concurring opinion, pp. 85-
92) and Associate Justices Juanito C. Castañeda, Jr., Lovell R.
Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-
Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Contangco-
Manalastas of the Court of Tax Appeals, Quezon City.

 Id. at 94-96. The Resolution was penned by Associate Justice


[3]

Ma. Belen M. Ringpis-Liban and concurred in by Presiding Justice


Roman G. Del Rosario and associate Justices Juanito C.
Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A.
Casanova, Esperanza R. Fabon-Victorino, and Cielito N. Mindaro-
Grulla of the Court of Tax Appeals, Quezon City.

 Id. at 97-121. The Decision, docketed as CTA Case No. 8442,


[4]

was penned by Associate Justice Erlinda P. Uy and concurred in


by Presiding Justice Roman G. Del Rosario and Associate Justice
Cielito N. Mindaro Grulla.

[5]
 Id. at 72.

[6]
 Id.

[7]
 Id. at 32.

[8]
 Id. at 150-151.

[9]
 Id. at 32-33 and 152-153.

[10]
 Id. at 72.

[11]
 Id. at 73.
[12]
 Id.

 Id. at 73 and 158-159. The total sum indicated in the Formal


[13]

Letter of Demand is P19,614,438.97 but the correct total sum is


P19,701,849.68.

[14]
 Id. at 34.

[15]
 Id. at 73.

[16]
 Id. at 74.

[17]
 Id. at 120.

[18]
 Id. at 123-127.

[19]
 Id. at 83.

[20]
 Id. at 96.

[21]
 Id. at 283-313.

[22]
 Id. at 37.

[23]
 Id. at 38.

[24]
 Id. at 37-38.

[25]
 Id. at 56-57.

[26]
 Id. at 297.

[27]
 Id. at 300.

[28]
 Id. at 302-303.

[29]
 Id. at 304 and 309.
[30]
 Id. at 302.

[31]
 Id. at 304-305.

[32]
 Id. at 308.

[33]
 Id. at 307.

[34]
 Id. at 77 and 112-115.

[35]
 Id. at 85-92.

[36]
 Id. at 90-91.

[37]
 774 Phi. 428 (2015) [Per J. Velasco, Jr., Third Division].

[38]
 Id. at 442.

[39]
 Id. at 444-445.

[40]
 Id. at 445.

[41]
 Rollo, p. 124.

[42]
 Id. at 184-188.

[43]
 Id. at 91.

[44]
 Id. at 167.

[45]
 Id. at 44-45.

[46]
 Id. at 45.

[47]
 Id. at 118.

[48]
 Id. at 119.
 TAX CODE, sec. 228; Commissioner of Internal Revenue v.
[49]

Menguito, 587 Phil. 234 (2008) [Per J. Austria-Martinez, Third


Division].

[50]
 Revenue Regulation No. 12-99, sec. 3.1.2.

 See Commissioner of Internal Revenue v. Metro Star


[51]

Superama, Inc., 652 Phil. 172 (2010) [Per J. Mendoza, Second


Division].

[52]
 Revenue Regulation No. 12-99, sec. 3.1.4.

[53]
 TAX CODE, sec. 248 (A)(3).

[54]
 TAX CODE, sec. 249.

Source: Supreme Court E-Library | Date created: March 08, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 206958, November 08,


2017 ]
PERSONAL COLLECTION DIRECT SELLING, INC.,
PETITIONER, VS. TERESITA L. CARANDANG,
RESPONDENT.DECISION
LEONEN, J.:

Judges must act with cautious discernment and faithfully exercise


their judicial discretion when dismissing cases for lack of probable
cause. An order granting the withdrawal of an information based
on the prosecutor's findings of lack of probable cause must show
that the judge did not rely solely on the prosecution's conclusions
but had independently evaluated the evidence on record and the
merits of the case.

This is a Petition for Review on Certiorari  under Rule 45 of the


[1]

Rules of Court, assailing the November 7, 2012 Decision  and [2]

April 22, 2013 Resolution  of the Court of Appeals in CA-G.R. SP


[3]

No. 122696. The Decision dismissed Personal Collection Direct


Selling, Inc.'s (Personal Collection) Petition for Certiorari,  which
[4]

alleged that Branch 221, Regional Trial Court, Quezon City acted
with grave abuse of discretion in granting the Motion to Withdraw
Information filed by the prosecutor in Criminal Case No. Q-07-
148858 entitled People of the Philippines v. Teresita L.
Carandang.  Teresita L. Carandang (Carandang) was charged
[5]

with committing estafa with unfaithfulness and/or abuse of


confidence under Article 315 paragraph 1(b) of the Revised Penal
Code.  Personal Collection was the private offended party.
[6] [7]

On March 30, 2007, Personal Collection filed a Complaint-


Affidavit  for estafa with unfaithfulness and/or abuse of
[8]

confidence against Carandang before the Office of the City


Prosecutor of Quezon City. After the preliminary investigation,
Assistant City Prosecutor Job M. Mangente filed an Information
against Carandang before the Regional Trial Court of Quezon
City:
The undersigned accuses TERESITA L. CARANDANG of the crime
of ESTAFA under Art. 315 par. 1(b) of the Revised Penal Code
committed as follows:

That on or about the period from July 11, 2005 up to August 30,
2006 in Quezon City, Philippines, the aid accused, did then and
there, willfully, unlawfully and feloniously defraud Personal
Collection Direct Selling, Inc. herein represented by Marilou
Palarca, in the manner as follows[:] said accused who was then
an employee of said private complainant company received in
trust, cash advances in the total amount of P161,902.80,
Philippine currency as company expenses for various projects
under the obligation to liquidate the proceeds thereof or return
the same if not used, but said accused once in possession of the
said amount far from complying with her obligation as aforesaid,
with intent to defraud, unfaithfulness and grave abuse of
confidence, failed and refused and still fail and refuse to fulfill her
obligation despite repeated demands made upon her to do so and
instead misapplied, misappropriated and converted the same to
her own personal use and benefit, to the damage and prejudice of
the said offended party in the aforesaid amount.

CONTRARY TO LAW. [9]

The case was docketed as Criminal Case No. Q-07-148858. On


September 20, 2007, Presiding Judge Jocelyn A. Solis-Reyes of
Branch 221, Regional Trial Court, Quezon City ordered that an
arrest warrant be issued against Carandang:
After an evaluation of the Resolution and the documents attached
thereto, the Court believes that a prima facie evidence exists to
support the charge and the accused is probably guilty thereof.

WHEREFORE, let a Warrant of Arrest be issued against the


accused. [10]

On July 10, 2009, Carandang filed a Motion for Reinvestigation,


 alleging that she did not appear during the preliminary
[11]

investigation because she did not receive any subpoena from the
Office of the City Prosecutor. She moved for the reinvestigation of
Personal Collection's complaint to not deprive her of due process.

Personal Collection filed its Opposition [To: Motion for


Reinvestigation Dated 01 July 2009],  arguing that Carandang
[12]

was not deprived of due process during the preliminary


investigation and that the Regional Trial Court found that there
was prima facie evidence to support the case. Carandang filed a
Manifestation and Motion to Admit Reply (To Opposition to the
Motion for Reinvestigation Dated 01 July 2009),  arguing that her
[13]

motion was meritorious and not filed to delay the case. The
Regional Trial Co4rt granted Carandang's Motion for
Reinvestigation in its Order dated August 14, 2009. [14]

Carandang filed her Counter Affidavit  before the Office of the


[15]

City Prosecutor, claiming that her failure to completely liquidate


the cash advances was due to the sudden termination of her
employment by Personal Collection. She also claimed that she did
not receive any demand letter or any offer from Personal
Collection to settle the case. Personal Collection, through its
representative Marilou S. Palarca, filed its Reply Affidavit,
 pointing out that Carandang admitted to receiving the cash
[16]

advances and failing to liquidate the proceeds. It also argued that


it had demanded Carandang to return the cash advances or
liquidate their proceeds and that prior demand was unnecessary
since she admitted that he had received these cash advances.
Personal Collection also filed its Compliance,  claiming that the
[17]

cash advances to Carandang were not in the form of a contract of


simple loan.

On January 29, 2010, the Office of the City Prosecutor, through


State Prosecutor Liezel Aquiatan-Morales (Prosecutor Aquiatan-
Morales), issued a Resolution  recommending that the complaint
[18]

against Carandang be dismissed. After reinvestigation, it found


that Personal Collection's cause of action is anchored primarily on
Carandang's failure to liquidate her remaining cash advances.
 However, the Office of the City Prosecutor was unconvinced
[19]

that Carandang's failure to return the cash advances would be


sufficient to hold her liable for estafa. There would be no estafa to
speak of so long as there is no demand to return the money
under obligation to be returned. The element of demand not
being present, the earlier finding that there was probable cause
to charge Carandang with estafa was overturned. Carandang's
acts could only be a subject of a civil action for sum of money. [20]
On June 15, 2010, Prosecutor Aquiatan-Morales filed a Motion to
Withdraw Information  with the Regional Trial Court, stating that
[21]

the Office of the City Prosecutor found that there was lack of
probable cause to hold Carandang liable for estafa. Personal
Collection filed its O position [To: Motion To Withdraw
Information Dated 29 January 2010],  arguing that demand is
[22]

not an element of estafa, such that its lack would warrant the
withdrawal of the Information. Carandang filed her Reply (Private
Complainant's Opposition),  arguing that the Office of the City
[23]

Prosecutor has control of the proceedings in a criminal case and


that the private offended arty or private prosecutor has no right
to question its actions and authority.
[24]

On November 19, 2010, the Regional Trial Court issued an


Order  granting the Motion to Withdraw Information. It found
[25]

that Carandang used the cash advances to pay for the operational
expenses of Personal Collection Iloilo City branch and that her
unceremonious termination from employment prevented her from
fully liquidating these cash advances,  Thus, Carandang was able
[26]

to explain her failure to account for the cash advances she had
received in trust. The trial court also noted the general policy of
the courts to not interfere in the conduct of preliminary
investigations and to give the investigating officers sufficient
discretion to determine probable cause, It found that no
exception existed in the case that would require the court to
intervene in the findings of the preliminary investigation.
 Personal Collection's Motion for Reconsideration  was denied by
[27] [28]

the Regional Trial Court in its Order  dated October 12, 2011.
[29]

Upon Carandang's motion, the Regional Trial Court, in its


Order  dated November 16, 2011, released the cash bond posted
[30]

for Carandang's bail.

Personal Collection filed a Petition for Certiorari  with the Court


[31]

of Appeals, arguing that the Regional Trial Court acted with grave
abuse of discretion when it issued the Orders granting the Motion
to Withdraw Information and the Motion to Release Bond. It
argued that the trial court failed to make its own evaluation of
the merits of the case and only relied on Prosecutor Aquiatan-
Morales' recommendation that there was no probable cause to
charge Carandang with estafa.  It alleged that the trial court had
[32]

already found that there was probable cause to sustain the


complaint in its Order dated September 20, 2007, in which a
warrant of arrest was issued against Carandang. [33]

Moreover, Carandang already admitted in her reply-affidavit that


she had received the funds in trust but still had not liquidated the
balance. Contrary to the public prosecutor's resolution, all of the
elements of estafa were present.  Personal Collection also
[34]

alleged that it was deprived of due process when the Regional


Trial Court granted Carandang's Motion to Release Cash Bond,
even though Personal Collection did not receive a copy of this
motion. [35]

On November 7, 2012 the Court of Appeals issued its Decision,


 dismissing the Petition for Certiorari for lack of merit. It found
[36]

that the Regional Trial Court conducted an independent


asessment of the facts of the case, basing its order to withdraw
the Information on the pleadings filed by the parties.  Further, [37]

the trial court's determination of probable cause for purposes of


preliminary investigation was separate from the probable cause
for the issuance of an arrest warrant. In issuing the warrant of
arrest against Carandang, the trial court only evaluated the
evidence furnished by Personal Collection.  In contrast, by the
[38]

time the trial court was deciding whether to permit the


withdrawal of the Information or not, Carandang had filed her
counter-affidavit and subsequent pleadings.

The Court of Appeals also found that Personal Collection was not
deprived of the opportunity to oppose Carandang's Motion to
Release Cash Bond. Under Rule 110, Section 16 of the Rules of
Court, the accused's bail bond shall be automatically cancelled
when the accused was acquitted, the case dismissed, or the
judgment of conviction executed. [39]

Finally, the Court of Appeals pointed out that the private offended
party's interest in a criminal case was limited to its civil aspect. It
found that the Petition for Certiorari already involved matters
beyond the civil aspect of the estafa case against Carandang. In
praying for the annulment of the trial court Orders, Personal
Collection was asking for the reinstatement of the criminal case,
which only the State, through the Office of the Solicitor General,
could do. [40]

The Court of Appeals denied Personal Collection's Motion for


Reconsideration  in its Resolution dated April 22, 2013.
[41] [42]

On June 17, 2013, Personal Collection filed its Petition for Review
on Certiorari before this Court. It argues that the Regional Trial
Court gravely abused its discretion when it reversed and set aside
its earlier finding of probable cause, despite Carandang's express
admissions, showing that all elements of the crime of estafa were
present.  It claims that the trial court merely adopted the
[43]

Resolution of Prosecutor Aquiatan-Morales and did not make any


independent determination of probable cause.  Moreover, the
[44]

basis of Prosecutor Aquiatan-Morales' finding that Carandang was


willing to fully liquidate her cash advance was Caranadang's
unsubstantiated and self-serving statements. [45]

As regards the grant of the motion to release cash bond, Personal


Collection claims that the motion violated Rule 15, Sections 2, 5,
and 6 of the Rules of Court, which require that motions be in
writing, be set for hearing, and contain proof of service.  It [46]

points out that the trial court did not deny that Personal
Collection was not given notice or an opportunity to appear in the
hearing on the motion. This was tantamount to a deprivation of
due process of law. [47]

Finally, Personal Collection argues that the Court of Appeals


incorrectly ruled that a private complainant in a criminal suit may
file a special civil action for certiorari only in a limited capacity.
 It claims that the Court of Appeals erroneously relied
[48]

on Rodriguez v. Gadiane because this case stated that there was


no limitation to the capacity of a private complainant to seek
judicial review of assailed orders.  Here, Personal Collection
[49]
avers that the Regional Trial Court acted with grave abuse of
discretion amounting to lack or excess of jurisdiction. It also
contends that its Petition for Review is not an appeal assailing an
order dismissing the case, or acquitting the accused, or involving
the merits of the case.  It holds that its interest in the civil
[50]

aspect of the case is the basis of its standing to file its Petition for
Review. [51]

On September 2, 2013, this Court issued a Resolution  requiring [52]

Carandang to comment on the Petition for Review.

On November 5, 2013, Carandang tiled her Comment,  arguing [53]

that the Regional Trial Court did not abuse its discretion in
granting the Motion to Withdraw Information. She points out that
the ruling of the trial court granting the withdrawal was not
irregular.  She also argues that her Motion to Release Cash Bond
[54]

was granted after notice and hearing. Finally, she claims that in
criminal cases, the party in interest is the State and that the
private offended party is only a witness for the State. Thus, the
Petition for Review should be dismissed for lack of merit. [55]

On March 17, 2014, Personal Collection filed its Reply [Re:


Comment dated 04 November 2013].  It argues that the
[56]

Regional Trial Court did not make its own independent evaluation
of the evidence of the case when it granted the Motion to
Withdraw Information. In merely relying on the prosecutor's
recommendation, the trial court disregarded its prior finding of
probable cause and failed to consider that all of the elements of
estafa were present.  It also claims that it became aware of the
[57]

Motion to Release Cash Bond only when it received the trial court
October 12, 2011 Order granting this Motion.  On its personality
[58]

to question the trial court Orders, Personal Collection argues that


a private offended party may file a special civil action on
jurisdictional grounds. [59]

On June 2, 2014, this Court issued a Resolution  noting Personal


[60]

Collection's reply to Carandang's comment.


The issues to be resolved by this Court are as follows:

First, whether or not the Regional Trial Court correctly allowed


the withdrawal of the Information against Teresita L. Carandang
upon a finding that there was a lack of probable cause;

Second, whether or not petitioner Personal Collection Direct


Selling, Inc. was deprived of due process when it was allegedly
not given notice or opportunity to be heard on respondent
Teresita L. Carandang's Motion to Release Cash Bond; and

Finally, whether or not the Court of Appeals correctly ruled that


the Petition for Certiorari was improper, since it is only the State
which may pray for the reinstatement of the criminal case.

This Court notes that the procedural vehicle invoked by petitioner


was inappropriate.

In its Petition for Certiorari before the Court of Appeals, petitioner


claims that it resorted to a special civil action for certiorari as it
had "no recourse to an appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law"  against the trial
[61]

court's orders to withdraw the Information and release


respondent's bail bond.

Petitioner is incorrect. Appeal was available and was the proper


remedy.

Rule 122, Section 1 of the Rules of Court states:


Section 1. Who may appeal. - Any party may appeal from a
judgment or final order, unless the accused will be placed in
double jeopardy.
An order granting a motion to withdraw an information and
dismissing a criminal case is final, and the remedy to question
this final order is an appeal. In Santos v. Orda;[62]
On the first issue, the petition for certiorari filed by respondent
under Rule 65 of the Rules of Court is inappropriate. It bears
stressing that the Order of the RTC, granting the motion of the
prosecution to withdraw the Informations and ordering the case
dismissed, is final because it disposed of the case and terminated
the proceedings therein, leaving nothing to be done by the court.
Thus, the proper remedy is appeal.

Respondent filed with the CA the special civil action


for certiorari under Rule 65 of the Rules of Court instead of an
ordinary appeal, not because it was the only plain, speedy, and
adequate remedy available to him under the law, but, obviously,
to make up for the loss of his right to an ordinary appeal. It is
elementary that the special civil action of certiorari is not and
cannot be a substitute for an appeal, where the latter remedy is
available, as it was in this case. A special civil action under Rule
65 cannot cure a party's failure to timely appeal the assailed
decision or resolution. Rule 65 is an independent action that
cannot be availed of as a substitute for the lost remedy of an
ordinary appeal.[63]

Appealing the withdrawal of an information does not violate the


right of the accused against being placed in double jeopardy.
In First Women's Credit Corp. v. Baybay: [64]

As to what mode of review petition rs may avail of after a court


grants an accused's motion to withdraw information and/or to
dismiss the case, Section 1 of Rule 122 of the 2000 Revised Rules
of Criminal Procedure instructs: "Any party may appeal from a
judgment or final order, unless the accused will be placed in
double jeopardy."

In availing of the remedy of certiorari before the RTC, petitioners


claim that they had no plain, adequate and speedy remedy to
question the MeTC's grant of the motion.

The records of the cases show, however, that the motion was
granted by the MeTC before respondents were arraigned. Thus,
the prohibition against appeal in case a criminal case is dismissed
as the accused would be placed in double jeopardy does not
apply.[65]

The case cited by petitioner to support its choice of remedy


before the Court of Appeals concerns the filing of a special civil
action for certiorari to assail an interlocutory order. In Rodriguez
v. Gadiane,  the order being assailed in the petition for certiorari
[66]

was an order suspending a criminal proceeding due to a


prejudicial question, which was not an order which dismissed the
case or acquitted the accused. If the case is dismissed or if there
is an acquittal, the appeal of the criminal aspect of the case must
be instituted by the Solicitor General on behalf of the State;
The Court has nonetheless recognized that if the criminal
case is dismissed by the trial court or if there is an
acquittal, the appeal on the criminal aspect of the case
must be instituted by the Solicitor General in behalf of the
State. The capability of the private complainant to question such
dismissal or acquittal is limited only to the civil aspect of the
case. This rule is reiterated in the Metrobank case cited by
respondent. However, it should be remembered that the
order which herein petitioner seeks to assail is not one
dismissing the case or acquitting respondents. Hence, there
is no limitation to the capacity of the private complainant to seek
judicial review of the assailed order.  (Emphasis supplied,
[67]

citation omitted)
Despite petitioner's claim that its petition before the Court of
Appeals was not an appeal of an order dismissing the criminal
case against respondent, it is evident that the grant of the Motion
to Withdraw Information dismissed the criminal case. Further, in
its Petition for Certiorari, petitioner assails the Regional Trial
Court's findings of lack of probable cause due to the alleged
insufficiency of evidence presented by respondent and because all
the elements of estafa were present.  Thus, petitioner questions
[68]

the trial court's allegedly erroneous conclusions of fact and law,


which are errors of judgment that cannot be corrected by an
extraordinary writ of certiorari.
[69]

Despite the use of an improper remedy, this Court proceeds to


decide the issues to pursue judicial economy. That is, the
prospective opportunity cost that may be expended by the parties
and the courts far outweigh the likelihood of success of the
aggrieved party Court resources will be more efficiently expended
by this Court's discussion of the merits of the case.

II

When an information is filed in court, the court acquires


jurisdiction over the case and has the authority to determine,
among others, whether or not the case should be dismissed.
 The court is "the best and sole judge of what to do with the
[70]

case before it."  The dismissal of a criminal case due to lack of


[71]

probable cause protects the accused from having to undergo trial


based on insufficient evidence:
Although there is no general formula or fixed rule for the
determination of probable cause since the same must be decided
in the light of the conditions obtaining in given situations and its
existence depends to a large degree upon the finding or opinion
of the judge conducting the examination. such a finding should
not disregard the facts before the judge nor run counter to the
clear dictates of reasons . . . The judge or fiscal, therefore, should
not go on with the prosecution in the hope that some credible
evidence might later turn up during trial for this would be a
flagrant violation of a basic right which the courts are created to
uphold. It bears repeating that the judiciary lives up to its mission
by vitalizing and not denigrating constitutional rights. So it has
been before. It should continue to be so.  (Citations omitted)
[72]

Judges must proceed with caution in dismissing cases for lack of


probable cause since the evidence before them are preliminary in
nature.  When probable cause exists, the court must proceed
[73]

with arraignment and trial. But should the evidence presented


absolutely fail to support this finding of probable cause, the case
should be dismissed. Whether it is to dismiss the case or to
proceed with trial, a judge's action must not impair "the
substantial rights of the accused [or] the right of the State and
the offended party to due process of law." [74]

In Spouses Dimatulac v. Judge Villon: [75]


The Judge, on the other hand, "should always be imbued with a
high sense of duty and responsibility in the discharge of his
obligation to promptly and properly administer justice." He must
view himself as a priest, for the administration of justice is akin to
a religious crusade. Thus exerting the same devotion as a priest
"in the performance of the most sacred ceremonies of religious
liturgy," the judge must render service with impartiality
commensurate with the public trust and confidence reposed in
him. Although the determination of a criminal case before a judge
lies within his exclusive jurisdiction and competence, his
discretion is not unfettered, but rather must be exercised within
reasonable confines. The judge's action must not impair the
substantial rights of the accused, nor the right of the State and
offended party to due process of law.

Indeed, for justice to prevail, the scales must balance; justice is


not to be dispensed for the accused alone. The interests of
society and the offended parties which have been wronged must
be equally considered. Verily, a verdict of conviction is not
necessarily a denial of justice; and an acquittal is not necessarily
a triumph of justice, for, to the society offended and the party
wronged, it could also mean injustice. Justice then must be
rendered even-handedly to both the accused, on one hand, and
the State and offended party, on the other.  (Citations omitted)
[76]

Judges must act with cautious discernment when asked to


dismiss cases on the ground of the absence of probable cause to
support the withdrawal or dismissal of an information. While the
accused is constitutionally given a guarantee of presumption of
innocence, there is also the concern for the right to due process
of the prosecution. The balance in each case is not theoretical.
Rather, it will be the outcome of the proper appreciation of the
evidence presented and a conscientious application by the judge
of the proper burdens of proof and evidence. Likewise, the trial
court must consider that trial is always available after
arraignment and is a forum for the accused as much as it is for
the prosecution to carefully examine the merits of the case. As a
general proposition, once the information is filed and a warrant is
issued after a judicial determination of probable cause,
subsequent technical dismissals are inequitable and should
generally be avoided.

Thus, in granting or denying a motion to withdraw an


information, the court must conduct a cautious and independent
evaluation of the evidence of the prosecution and must be
convinced that the merits of the case warrant either the dismissal
or continuation of the action.  In Baltazar v. People:
[77] [78]

We have likewise held that once a case has been filed with the
court, it is that court, no longer the prosecution, which has full
control of the case, so much so that the information may not be
dismissed without its approval. Significantly, once a motion to
dismiss or withdraw the information is filed, the court may grant
or deny it, in the faithful exercise of judicial discretion. In doing
so, the trial judge must himself be convinced that there was
indeed no sufficient evidence against the accused, and this
conclusion can be arrived at only after an assessment of the
evidence in the possession of the prosecution. What was
imperatively required was the trial judge's own assessment of
such evidence, it not being sufficient for the valid and proper
exercise of judicial discretion merely to accept the prosecution's
word for its supposed insufficiency.  (Citation omitted)
[79]

However, courts are not absolutely barred from reversing a prior


determination of probable cause upon the reassessment of
evidence presented to it.  There is no grave abuse of discretion
[80]

when an earlier finding of probable cause is overturned, if it can


be shown that the judge arrived at the later conclusion upon an
independent study of the available facts, allegations, and
evidence on record. [81]

The order granting the withdrawal of an information must state


the judge's assessment of the evidence and reasons in resolving
the motion. It must clearly show why the court's earlier
assessment of probable cause was erroneous. The court should
not merely accept the prosecution's findings and conclusions. Its
independent judicial discretion in allowing the information to be
withdrawn must not only be implied but must be palpable in its
order.  Should the court fail to faithfully exercise its judicial
[82]
discretion, the order granting the withdrawal of the information is
void.  In extreme cases, arbitrary action by the trial court may
[83]

lead to an administrative inquiry.[84]

In Lee v. KBC Bank N.V.,  this Court stated that some of the
[85]

matters that should be contained in an order granting or denying


a motion to withdraw an information are:
In the present case, Judge Dumayas, in his 26 March 2003 order,
did not (1) positively state that the evidence against Lee and Lim
is insufficient, (2) include a discussion of the merits of the case,
(3) assess whether [Department of Justice] Secretary Perez's
conclusion is supported by evidence. (4) look at the basis of
Secretary Perez's recommendation, (5) embody his assessment in
the order, and (6) state his reasons for granting the motion to
withdraw the informations.

Judge Dumayas' failure to make his own evaluation of the merits


of the case violates KBC Bank's right to clue process and
constitutes grave abuse of discretion. Judge Dumayas' 26 March
2003 order granting the motion to withdraw the informations is
void.  (Citation omitted)
[86]

In Jose v. Suarez,  the trial court was found to not have


[87]

conducted an independent assessment of the merits of the


motion to withdraw information:
When a trial court is confronted to rule on "a motion to dismiss a
case or to withdraw an Information", it is its "bounden duty to
assess independently the merits of the motion, and this
assessment must be embodied in a written order disposing of the
motion."

As aptly observed by the CA, the RTC's December 9, 2005 Order


denying the Motion to Withdraw Information failed to state cogent
reasons behind the said court's refusal to grant withdrawal of the
Information. To stress, the December 9, 2005 Order merely
stated:
ORDER
Acting on the Motion to Resolve "Motion to Withdraw
Information["] dated July 13, 2005, and finding it to be
unmeritorious, the Court resolves to deny the motion.

SO ORDERED.
The RTC simply declared that it was denying the motion for being
"unmeritorious," without further elaborating on the bases of its
conclusion. Moreover, there is nary any reference made to the
findings of the DOJ. The same holds true with respect to the
Order dated February 17, 2006 which denied respondent's Motion
for Reconsideration. We note that in her Motion for
Reconsideration, respondent already called the trial court's
attention to the findings of the DOJ that the transactions were
loans thus civil in character and to this Court's ruling in People v.
Cuyugan which allegedly has a similar factual setting as in this
case. The RTC, however, gave scant consideration to these
arguments. Instead, it denied the Motion for Reconsideration in
its February 17, 2006 Order, viz.:
The Motion for Reconsideration of the Order of this Court dated
December 9, 2005 is DENIED.

SO ORDERED.
Likewise, in its March 10, 2006 Order reiterating its denial of
respondent's Motion for Reconsideration, the RTC merely stated
that the 5% interest is a matter of defense. There was never any
discussion as to how it reached such conclusion, or how the DOJ
findings impacted on its ruling. And instead of confronting the
reasons stated in the motion for the withdrawal of the
Information, the RTC digressed and focused solely on what
constitutes estafa involving bouncing checks. It said, "The
prosecution has established that complainant gave [her] money
to accused for the exchange of checks simultaneously delivered
to [her] and if it were not for the delivery of the checks,
complainant would not have parted with [her] money." Notably,
the RTC in both Orders perfunctorily denied the motion to
withdraw as it did not "(1) positively state that the evidence
against [Purita is sufficient to make out a case for estafa]; (2)
include a discussion [on] the merits of the case; (3) assess [if the
DOJ's conclusion] is supported by evidence; (4) look at the basis
of [the DOJ's] recommendation; (5) embody its assessment in
the [said Orders]; and, (6) state [the] reasons in denying the
motion to withdraw information." Hence, it is plain from the said
Orders that the RTC failed to perform its bounden-duty to make
an independent evaluation of the merits of the case. The CA did
not therefore err in declaring that such failure of the RTC
constitutes grave abuse of discretion amounting to excess of
jurisdiction.  (Citations omitted)
[88]

Conversely, in Ramos v. People,  the order granting the motion


[89]

to withdraw showed that the trial court judge exercised judicial


discretion in evaluating the prosecution's evidence:
On March 14, 2003, the MeTC of Quezon City, Branch 43
dismissed Criminal Case Nos. 94961-64. The trial court was
convinced with the finding of the City Prosecutor, which was
sustained by the DOJ, that probable cause for the falsification of
commercial documents against the remaining accused, Escobal,
did not exist.

The MeTC enumerated the elements of falsification of commercial


documents under paragraph 6 of Article 171 of the RPC. Thus:

1. That there be an alteration (change) or intercalation (insertion)


on a document;

2. That it was made on a genuine document;

3. That the alteration or intercalation has changed the meaning of


the document; and

4. That the change made the document speak something false.


The MeTC ruled that the referred alterations committed by
accused E. Ramos in changing the name of the indorsee of the
stock certificates from that of the complainant Antonio Ramos to
E.M. RAMOS & SONS, INC., could not be considered as the
falsification contemplated by the law as the change did not make
the document speak something false. The commercial documents
subject of these cases were admittedly altered by the accused
Ramos, Sr., purposely to correct the inequity brought about by
the failure of petitioner Ramos to comply with what was
incumbent upon him under their agreement.

....

However, in granting or denying the motion to withdraw, the


court must judiciously evaluate the evidence in the hands of the
prosecution. The court must itself be convinced that there is
indeed no satisfactory evidence against the accused and this
conclusion can only be reached after an assessment of the
evidence in the possession of the prosecution. In this case, the
trial court had sufficiently explained the reasons for the grant of
the motion for the withdrawal of the Information. The Court
agrees with the dispositions made by the trial court. Corollarily,
the RTC did not err in dismissing the petition (under Rule 65)
filed by petitioner challenging the ruling of the MeTC.  (Citations
[90]

omitted)
Similarly, in Torres, Jr. v. Spouses Torres-Aguinaldo,  the trial
[91]

court was found to have independently considered not only the


findings of the Department of Justice but also the private
offended party's opposition to the motion to withdraw and the
accused's comment to it:
We also find that the trial court independently assessed the
merits of the motion to withdraw information. Before it was
granted, respondents were allowed to submit their opposition and
the petitioner to comment thereon, which were both considered.
The trial judge also considered the basis of the Justice Secretary's
resolution before finding that no probable cause exists, thus:
The two DOJ Resolutions absolving the accused from incipient
criminal liability were premised on the ground that the herein
accused had no participation in the preparation of the alleged
falsified Deed of Sale dated July 29, 1979, which deed, in effect,
transferred ownership of private complainant's three parcels of
land located in Tanza, Cavite to the accused. This finding was
based on the argument that it would be highly irregular for the
accused to effect the transfer of the property through a falsified
deed when accused had in his possession a valid and genuine
Deed of Sale dated March 10, 1991 executed by the spouses
complainants transferring ownership of the aforesaid property to
him.

The court is inclined to grant the motion of the public prosecutor.

The issues which the court has to resolve in the instant case had
been amply discussed in the aforesaid resolutions of the DOJ and
it is convinced that, indeed, no probable cause exists against the
accused.  (Citations omitted)
[92]

The trial court erroneously stated in its November 19, 2010 Order
that it is the investigating officers who had sufficient discretion to
determine probable cause:
It is the general policy of the Court not to interfere in the conduct
of preliminary investigations, leaving the investigating officers
sufficient discretion to determine probable cause, jurisprudence
nonetheless made some exceptions to the general rule . . .

In the instant case however, no such exception exists. Thus, the


Court is of the view that the finding of the prosecution must be
given weight. [93]

However, the trial court rendered a more satisfactory


justification. A reading of the Order shows that the trial court
made its own assessment of the prosecution's evidence as
embodied in its January 29, 2010 Resolution, It sufficiently
explained how the elements of estafa were not met based on the
additional evidence presented by the accused at the
reinvestigation before the Office of the City Prosecutor. The trial
court also considered the opposition filed by petitioner to the
Motion to Withdraw Information, giving even the private offended
party the opportunity to be heard:
This resolves the Motion to Withdraw Information filed by the
Public Prosecutor praying that the Information for estafa under
Article 315 par. 1 (b) filed against herein accused be withdrawn
and the case against her be dismissed accordingly.
The Motion is based on the Resolution dated January 29, 2010
finding no probable cause to indict accused for estafa after a
reinvestigation was conducted on the ground of lack of demand.

The Motion is being opposed by the private complainant Personal


Collection Direct Selling, Inc., through counsel which claims that
demand is not an element of the felony or a condition precedent
to the filing of a criminal complaint for estafa. Instead, it is the
appropriation or conversion of money received to the prejudice of
the owner thereof that is the sole essential fact which constitutes
the crime of estafa.

....

After a consideration of the respective allegations of both parties,


the Court finds [that] the Motion [is] impressed with merit.

Estafa is a crime committed by a person who defrauds another


causing him to suffer damages, by means of unfaithfulness or
abuse of confidence, or of false pretenses of fraudulent acts.
From the foregoing, the elements of estafa are, as follows: (1)
that the accused defrauded another by abuse of confidence or
deceit; and (2) that damage or prejudice capable of pecuniary
estimation is caused to the offended party or third party, and it is
essential that there be a fiduciary relation between them either in
the form of a trust, commission or administration (Carmen
Liwanag vs. CA, G.R. No. 114398, October 24, 1997). Demand is
not an element of the felony or a condition precedent to the filing
of a criminal complaint for estafa. Indeed, the accused may be
convicted of the felony under Article 315, par. 1 (b) of the
Revised Penal Code if the prosecution proved misappropriation or
conversion by the accused of the money or subject of the
Information. In a prosecution for estafa, demand is not necessary
where there is evidence of misappropriation or conversion.
However, failure to account upon demand, for funds or property
held in trust, is circumstantial evidence of misappropriation (Lee
v. People, G.R. No. 157781, April 11, 2005).
While it is true that herein accused failed to fully liquidate the
cash advance received in trust from the private complainant,
regardless of whether or not a demand was made upon the
former, is only a circumstantial evidence of misappropriation
which can be rebutted. As found by the prosecution, the accused
was able to satisfactorily explain her failure to account or
liquidate the cash advance received in trust, as follows: (1) that
accused utilized the cash advance given to her but the same was
used to defray the operational expenses of private complainant's
branch in Iloilo City as evidenced by the Cash Advance Summary
as of November 23, 2006 prepared by Marilou S. Palarca, private
complainant's representative; (2) that accused was willing to fully
liquidate her cash advances as in fact she was able to make
partial liquidation and that her unceremonious termination of her
employment with the private complainant prevented her from
doing so.[94]

The trial court did not gravely abuse its discretion when it
reversed its earlier finding of probable cause. The earlier finding
was about the issuance of the arrest warrant, in which the trial
court evaluated the prosecutor's Resolution and its attached
documents. Following this, respondent prayed for the
reinvestigation of the case as she was unable to attend the initial
preliminary investigation. It was during the reinvestigation before
the Office of the City Prosecutor that respondent was able to
present her defense against the allegations in the complaint.

Clearly, the additional evidence adduced prompted the


prosecutor's reversal of its initial finding of probable cause and
the filing of the motion to withdraw information. It was also this
additional evidence that formed the basis of the trial court's
evaluation that there was now a lack of probable cause sufficient
to withdraw the information.

There being insufficient evidence showing that the trial court


erred in finding a lack of probable cause, the grant of the
withdrawal of the information must be upheld.

III
Rule 114, Section 22 of the Rules of Court provides the guidelines
for the cancellation of bail:
Section 22. Cancellation of bail. - Upon application of the
bondsmen, with due notice to the prosecutor, the bail may be
cancelled upon surrender of the accused or proof of his death.

The bail shall be deemed automatically cancelled upon acquittal


of the accused, dismissal of the case, or execution of the
judgment of conviction.

In all instances, the cance1lation shall be without prejudice to any


liability on the bail.
Among the instances when bail is deemed automatically cancelled
is when the case is dismissed.  Since cancellation of bail is
[95]

automatic upon the dismissal of the case, no notice or hearing is


even necessary, as the cancellation takes place when any of the
three (3) enumerated instances takes place.

The release of the amount posted as bail is a separate matter.


When the cash bond is m de to answer for any fines or costs, the
automatic cancellation is not succeeded by the immediate release
of the cash bond.[96]

In this case, the dismissal of the case due to the withdrawal of


the information resulted in the automatic cancellation of
respondent's bail. Further, the trial court November 16, 2011
Order does not state that there is any need for the deposit to be
applied to any fines or costs:
ORDER

Acting on the accused's Motion to Release Cash Bond, there being


no objection from the prosecution and it appearing from the
records that the Information in this case was considered
withdrawn under Order dated November 19, 2010, the Motion is
hereby GRANTED.
WHEREFORE, the cash bond posted for the provisional liberty of
the accused under OR No. 038430 dated June 30, 2009 is hereby
ordered release.

The Clerk of Court VI, Office of the Clerk of Court, RTC, Quezon
City is ordered to withdraw the amount covered by OR No.
0348430 from the judiciary fund and delivered the same to the
accused or to her duly authorized representative.

SO 0RDERED. [97]

The trial court correctly granted the release of respondent's cash


bond.

Petitioner's right to due process was not violated when it was not
given notice or an opportunity to be heard on the Motion to
Release Cash Bond. No notice or hearing was necessary since the
bail was automatically cancelled upon the dismissal of the case.
Petitioner's hypothetical objections to the Motion to Release Cash
Bond would have been superfluous and unnecessary since the
release of the cash bond to respondent was already warranted
under the Rules of Court.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The Decision dated November 7, 2012 and Resolution dated April
22, 2013 of the Court of Appeals in CA-G.R. SP No. 122696
are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

January 10, 2018

NOTICE OF JUDGMENT
Sirs / Mesdames:

Please take notice that on November 8, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on January 10, 2018 at 2:02 p.m.

[1]
 Rollo, pp. 11-31.

 Id. at 33-43. The Decision was penned by Associate Justice


[2]

Hakim S. Abdulwahid and concurred in by Associate Justices


Marlene Gonzales-Sison and Edwin D. Sorongon of the Sixth
Division, Court of Appeals, Manila.

 Id. at 44-46. The Resolution was penned by Associate Justice


[3]

Hakim S. Abdulwahid and concurred in by Associate Justices


Marlene Gonzales-Sison and Edwin D. Sorongon of the Sixth
Division, Court of Appeals, Manila.

[4]
 Id. at 65-109.

[5]
 Id. at 65-66.

[6]
 Id. at 35.

[7]
 Id. at 65.

[8]
 Id. at 111-113.

[9]
 Id. at 35.
[10]
 Id. at 159.

[11]
 Id. at 160-162.

[12]
 Id. at 163-168.

[13]
 Id.at169-172.

[14]
 Id. at 17.

[15]
 Id. at 173-175.

[16]
 Id. at 177-179.

[17]
 Id. at 180-191.
 
[18]
 Id. at 194-196.

[19]
 Id. at 195.

[20]
 Id. at 196.

[21]
 Id. at 192-193.

[22]
 Id. at 200-213.

[23]
 Id. at 214-216.

[24]
 Id. at 215.

[25]
 Id. at 92-94.

[26]
 Id. at 93.
 
[27]
 Id. at 93-94.

[28]
 Id. at 97-109.
[29]
 Id. at 95.

[30]
 Id. at 96.

[31]
 Id. at 65-91.

[32]
 Id. at 78.

[33]
 Id. at 79.

[34]
 Id. at 82.

[35]
 Id. at 87.

[36]
 Id. at 33-43.

[37]
 Id. at 39.

[38]
 Id. at 40.
 
[39]
 Id. at 40-41.

[40]
 Id. at 41-42.

[41]
 Id. at 47-64.

[42]
 Id. at 44-46.

[43]
 Id. at 22.

[44]
 Id. at 22-23.

[45]
 Id. at 23.

[46]
 Id. at 23-24.

[47]
 Id. at 24.
[48]
 Id. at 25.

[49]
 Id. at 26.

[50]
 Id at 27.

[51]
 Id. at 28.

[52]
 Id. at 223.

[53]
 Id. at 224-226.

[54]
 Id. at 224.

[55]
 Id. at 224-225.

[56]
 Id. at 228-239.

[57]
 Id. at 229-230.

[58]
 Id. at 233.

[59]
 Id. at 233-234.

[60]
 Id. at 240.

[61]
 Id. at 69.

[62]
 634 Phil. 452 (2010) [Per J. Nachura, Third Division].

[63]
 Id. at 460.

[64]
 542 Phil. 607 (2007) [Per J. Carpio Morales, Second Division].

[65]
 Id. at 615-616.

[66]
 527 Phil. 691 (2006) [Per J. Tinga, Third Division].
[67]
 Id. at 697.

[68]
 Rollo, pp. 81-86.

 Toh v. Court of Appeals, 398 Phil. 793, 802 (2000) [Per J.


[69]

Gonzaga-Reyes, Third Division].

 Ramos v. People, 639 Phil. 51, 67-68 (2010) [Per. J. Mendoza,


[70]

Second Division].

 Yambot v. Armovit, 586 Phil. 735, 738 (2008) [Per J. Nachura,


[71]

Third Division], citing Crespo v. Mogul, 235 Phil. 465 (1987) [Per


J. Gancayco, En Banc].

 Salonga v. Paño, 219 Phil. 402, 428-429 (1985) [Per J.


[72]

Gutierrez, Jr., En Banc].

 Mendoza v. People, 733 Phil. 603, 615 (2014) [Per J. Leonen,


[73]

Third Division].

 Judge Marcos v. Judge Cabrera-Faller, A.M. No. RTJ-16-2472,


[74]

January 24, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/RTJ-16-2472.pdf> 12-13
[Per Curiam, En Banc].

[75]
 358 Phil. 328 (1998) [Per J. Davide, Jr., First Division].

[76]
 Id. at 365.

 See Ramos v. People,, 639 Phil. 51 (2010) [Per J. Mendoza,


[77]

Second Division] and Jose v. Suarez, 714 Phil. 310 (2013) [Per J.


Del Castillo, Second Division].

[78]
 582 Phil. 275 (2008) [Per J. Chico-Nazario, Third Division].

[79]
 Id. at 292.
 Ramos v. People, 639 Phil. 51,68 (2010) [Per J. Mendoza,
[80]

Second Division].

 See Baltazar v. People, 582 Phil. 275 (2008) [Per J. Chico-


[81]

Nazario, Third Division].

 See Baltazar v. People, 582 Phil. 275 (2008) [Per J. Chico-


[82]

Nazario, Third Division].

 Lee v. KBC Bank N.V., 624 Phil. 115, 125 (2010) [Per J. Carpio,
[83]

Second Division].

 See Marcos v. Judge Pinto, 640 Phil. 1 (2010) [Per J. Peralta,


[84]

Second Division].

[85]
 624 Phil. 115 (2010) [Per J. Carpio, Second Division].

[86]
 Id. at 130.

[87]
 714 Phil. 310 (2013) [Per J. Del Castillo, Second Division].

[88]
 Id. at 319-321.

[89]
 639 Phil. 51 (2010) [Per J. Mendoza, Second Division].

[90]
 Id. at 61-68.

[91]
 500 Phil, 365 (2005) [Per J. Ynares-Santiago, First Division].

[92]
 Id. at 380-381.

[93]
 Rollo, pp. 93-94.

[94]
 Id. at 92-93.

 See Cruz v. People, G.R. No. 224974, July


[95]
3, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/224974.pdf> [Per J. Leonen,
Socond Division].

 Id. See RULES OF COURT, Rule 114, sec. 14, which states in


[96]

part:

Section 14. Deposit of cash as bail. - . . . .

The money deposited shall be considered as bail and applied to


the payment of fine and costs while the excess, if any, shall be
returned to the accused or to whoever made the deposit.

[97]
 Rollo, p. 96.

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THIRD DIVISION

[ G.R. No. 197886, October 04, 2017 ]


OFFICE OF THE OMBUDSMAN, PETITIONER, VS.
ANTONIO Z. DE GUZMAN, RESPONDENT.DECISION

LEONEN, J.:

The Postmaster General may only execute contracts for


procurement of services with the Board of Directors' approval.
However, this lack of authority may be ratified through the Board
of Directors' silence or acquiescence. The ratification of the
unauthorized act does not necessarily mean that the contract is
valid. If the contract is executed without complying with the laws
on procurement, the erring public official may be held
administratively liable.

This is a Petition for Review on Certiorari  assailing the May 4,


[1]

2011 Decision  and July 14, 2011 Resolution   of the Court of


[2] [3]

Appeals in CA-G.R. SP No. 108182, which annulled and set aside


the August 31, 2007 Decision  of the Office of the Ombudsman.
[4]

The Office of the Ombudsman found respondent Antonio Z. De


Guzman (De Guzman) guilty of grave misconduct and dishonesty
for entering into a contract with a private entity for mail delivery
in Luzon despite not having prior approval from the Philippine
Postal Corporation Board of Directors.

Sometime in 2001, the Philippine Postal Corporation entered into


a contract with Aboitiz Air Transport Corporation (Aboitiz Air) for
the carriage of mail at a rate of P5.00 per kilogram.   This [5]

contract would expire on December 31, 2002. [6]

Sometime in October 2003, or after the expiry of its contract with


Aboitiz Air, the Philippine Postal Corporation purchased 40
vehicles for mail deliveries in Luzon. It also hired 25 drivers for
these vehicles on a contractual basis. All of these drivers'
contracts would expire on March 31, 2004, except that of a
certain Oliver A. Cruz.
[7]

The Central Mail Exchange Center of the Philippine Postal


Corporation conducted a post study of the delivery system and
found that the expenses for the salaries and maintenance of its
vehicles for Luzon deliveries were higher than its previous system
of outsourcing deliveries to Aboitiz Air. On April 15, 2004, it
submitted a recommendation that the Philippine Postal
Corporation would save P6,110,152.44 per annum if deliveries
were outsourced instead at the cost of P8.00 per kilogram. [8]
On April 29, 2004, the Board of Directors of the Philippine Postal
Corporation held a Special Board Meeting where De Guzman,  the
[9]

Officer-in-Charge, endorsed for approval the Central Mail


Exchange Center's recommendation to outsource mail delivery in
Luzon.[10]

On May 7, 2004, De Guzman sent a letter to Aboitiz Air, now


Aboitiz One, Inc. (Aboitiz One), through its Chief Operating
Officer, Efren E. Uy, stating:

Pending finalization of the renewal of our contract, you may now


re-assume to undertake the carriage of mail from and to Regions
1, 2, 5, & CAR starting 11 May 2004 until further notice. The
terms and conditions shall be the same as stipulated in the
previous contract except for the schedule and the rate. The
attached revised schedule shall be followed and the rate shall be
P8.00 per Kilogram.[11]

Aboitiz One accepted the proposal and commenced its delivery


operations in Luzon on May 20, 2004. When Postmaster General
Diomedo P. Villanueva (Postmaster General Villanueva) resumed
work, the Aboitiz One contract had already been fully
implemented. Thus, the Postmaster General approved payments
made to Aboitiz One for services rendered. [12]

On October 20, 2005, Atty. Sim Oresca Mata, Jr. filed an


administrative complaint with the Office of the Ombudsman
against De Guzman. He alleged that the Aboitiz One contract
renewal was done without public bidding and that the rate per
kilogram was unilaterally increased without the Philippine Postal
Corporation Board of Directors' approval.
[13]

In his Counter-Affidavit, De Guzman alleged that the Office of the


Ombudsman no longer had jurisdiction over the case since it was
filed one (1) year and five (5) months after the commission of the
act complained of, or after he sent his May 7, 2004 letter to
Aboitiz. He also alleged that the contract renewal was approved
by the Board of Directors in the April 29, 2004 Special Meeting.
He maintained that the expiration of the employment contracts of
the drivers caused a delay in the delivery of mail, which justified
the approval of the outsourcing of deliveries.
[14]

On August 31, 2007, the Office of the Ombudsman rendered its


Decision  finding De Guzman guilty of grave misconduct and
[15]

dishonesty. The dispositive portion of this Decision read:

WHEREFORE, premises considered, respondent ATTY. ANTONIO


Z. DE GUZMAN is found GUILTY of GRAVE MISCONDUCT and
DISHONESTY, and hereby meted the corresponding penalty of
DISMISSAL FROM THE SERVICE including all its accessory
penalties and without prejudice to criminal prosecution.

The Honorable Postmaster General of Philippine Postal


Corporation is hereby directed to implement immediately this
decision pursuant to Memorandum Circular No. 01, Series of
2006.[16]

De Guzman filed his Motion for Reconsideration  but it was


[17]

denied in an Order dated June 16, 2008. Thus, he filed a Petition


[18] 

for Review  with the Court of Appeals, insisting that the


[19]

outsourcing of mail deliveries in Luzon was approved by the


Philippine Postal Corporation Board of Directors and that the lack
of bidding was justified by the delivery delays due to the
expiration of the mail delivery drivers' employment contracts.[20]

On May 4, 2011, the Court of Appeals rendered its


Decision  annulling the Decision and Order of the Office of the
[21]

Ombudsman and setting aside the Complaint against De Guzman


for lack of merit.   The Court of Appeals found that according to
[22]

the Minutes of the April 29, 2004 Special Board Meeting, the
engagement of Aboitiz's services was approved by the Board of
Directors.  The Court of Appeals also found that there was an
[23]

urgent need for the procurement of Aboitiz's services due to the


expiration of the delivery drivers' employment contracts, which
justified the negotiated procurement of Aboitiz's contract. [24]

The Court of Appeals likewise found that the rate increase per
kilogram from P5.00 to P8.00 was approved by the Board of
Directors in the April 29, 2004 Special Board Meeting after
considering and deliberating on the Central Mail Exchange
Center's study on the rates of Aboitiz One's competitors.   It also
[25]

found that the implementation of the contract and the


subsequent approvals of payments to Aboitiz One by then
Postmaster General Villanueva and then Postmaster General
Dario Rama (Postmaster General Rama) were a subsequent
ratification of De Guzman's acts. [26]

The Office of the Ombudsman moved for reconsideration but it


was denied by the Court of Appeals in a Resolution  dated July
[27]

14, 2011. Hence, this Petition  was filed.


[28]

Petitioner argues that respondent committed grave misconduct


since he was not authorized to enter into a contract with Aboitiz
One or to allow the rate increase per kilogram of mail considering
that in the April 29, 2004 Special Board Meeting, respondent was
merely instructed to provide more information on Aboitiz One and
to submit a copy of the proposed contract.  It insists that the
[29]

approval of the contract was contingent upon respondent's


compliance with the conditions set by the Board of Directors and
that the Board of Directors was not fully apprised of the details
during the meeting.   Petitioner likewise submits that negotiated
[30]

procurement was not applicable. It alleges that Aboitiz One took


over only two (2) months after the expiration of the mail delivery
drivers' employment contracts, showing no urgency in the
situation. It also avers that the Board of Directors could only
exercise negotiated procurement when there are substantiated
claims of losses.
[31]

Respondent counters that he obtained the Board of Directors'


approval of his request for authority to enter into the outsourcing
contract with Aboitiz One after a full disclosure to the Board of
Directors of the cost-benefit analysis submitted by the Central
Mail Exchange Center.  Respondent likewise contends that he
[32]

had no legal duty to conduct a public bidding since he was not the
procuring entity.  The Board of Directors, as the procuring entity,
[33]

did not direct or suggest the conduct of a public bidding.  He [34]

insists that negotiated procurement was necessary, arguing that


the non-renewal of the mail delivery drivers' employment
contracts would cause delay or stoppage of mail delivery to
various parts' of the country. [35]

Respondent explains that the Philippine Postal Corporation had


been incurring costs of P21.00 per kilogram and that if services
were outsourced at P8.00 per kilogram, it could save P13.00 per
kilogram or a total of P6,110,152.44 per annum.   He alleges
[36]

that this price would have been the most advantageous for the
government since no other company offered a rate lower than
P8.00 per kilogram for its Luzon mail deliveries.   Respondent
[37]

further asserts that a public bidding was conducted in 2005, and


Airfreight 2100, Inc., the winning bidder, refused the award and
did not sign the contract. He states that due to the cancellation of
Aboitiz One's contract on January 31, 2006, the Philippine Postal
Corporation has incurred costs of more than P25.00 per kilogram
in Luzon mail deliveries.  Respondent contends that if he was the
[38]

only official of the Philippine Postal Corporation found liable of


grave misconduct and dishonesty, it would violate his right to due
process since he merely endorsed for approval a recommendation
by the Central Mail Exchange Center. [39]

This Court is tasked to resolve the issue of whether or not the


Court of Appeals erred in absolving respondent Antonio Z. De
Guzman of his administrative offenses. In resolving this issue,
this Court must first resolve whether or not he committed grave
misconduct and dishonesty in (a) engaging the services of Aboitiz
One, Inc. allegedly without the approval of the Philippine Postal
Corporation Board of Directors, and (b) in procuring Aboitiz One,
Inc.'s services through negotiated procurement.

I
To determine whether or not respondent acted without authority
when he procured Aboitiz One's services in outsourcing mail
deliveries in Luzon, it is necessary to determine first the scope of
his authority under the law.

Respondent was designated Officer-in-Charge when the contract


between the Philippine Postal Corporation and Aboitiz One was
effected, since the Postmaster General had taken a leave of
absence. Thus, he is considered to have been exercising the
functions of the Postmaster General during this period. Under
Republic Act No. 7354,  the powers of the Philippine Postal
[40]

Corporation are exercised by the Board of Directors,  with the


[41]

President appointing all seven (7) members and "with the


Postmaster General as one of the members to represent the
government shareholdings." [42]

The Postmaster General manages the Philippine Postal


Corporation  and has the power to sign contracts on behalf of the
[43]

corporation as "authorized and approved by the Board [of


Directors]."   Valid corporate acts are those that have "the vote
[44]

of at least a majority of the members present at a meeting at


which there is a quorum." [45]

There is no board resolution authorizing respondent to enter into


a contract with Aboitiz One for the outsourcing of mail deliveries
in Luzon. Likewise, there are no Minutes of the April 29, 2004
Special Board Meeting. Thus, respondent relies on the transcript
of stenographic notes taken during the April 29, 2004 Special
Board Meeting  to prove that he had the Board of Directors'
[46]

approval to enter into the contract. Pertinent portions of the


transcript state:

CORSEC F.C. CRUZ;


Next is, "Renewal of the contract with Aboitiz for the outsourcing
of Luzon Mail Run from [the Central Mail Exchange Center] to
Region[s] 1,2,5[,] CAR [and] [v]ice [v]ersa.'

....

CHAIRMAN H.R.R. VILLANUEVA:

....

So, ladies and gentlemen, what is the pleasure of the Board on


this?

DIRECTOR A.P. LORETO:

Mr. Chairman, we would like to request Atty. De Guzman to


present to us more or less, a profile of this company, Aboitiz, and
then, let's say, a draft of the contract before we can totally
approve the proposal.

CHAIRMAN H.R.R. VILLANUEVA:

Is there a prepared contract here?

OIC-POSTGEN A.Z. DE GUZMAN:

Yeah, there was, sir.

CHAIRMAN H.R.R. VILLANUEVA:

Any other comments, Director Gelvezon?

DIRECTOR R.L. GELVEZON:

None.

CHAIRMAN H.R.R. VILLANUEVA:


Governor?

DIRECTOR I.S. SANTIAGO:

No.

CHAIRMAN (sic) H.R.R. VILLANUEVA;

So, we will consider it as approve[d) subject to . . . [pauses]

OIC-POSTGEN A.Z. DE GUZMAN:

Can I now terminate. sir, the [drivers' employment contracts]


because they plan to terminate this at the end of this month, so
that we can start on May 2. Can I now terminate this?

DIRECTOR R.L. GELVEZON:

Actually, hindi  na terminate, but not to renew.

OIC-POSTGEN A.Z. DE GUZMAN:

Ah, okay, not to renew nga.

DIRECTOR R.L. GELVEZON:

Hindi pa nga nag-e-expire, e ite-terminate na. Let it expired (sic).

OIC-POSTGEN A.Z. DE GUZMAN:

Actually, nag expire na sila nitong March 31.

CHAIRMAN H.R.R. VILLANUEVA:

Yeah, but these vehicles will be needing drivers?

OIC-POSTGEN A.Z. DE GUZMAN:


Sir, may mga  available drivers tayo.

CHAIR.MAN H.R.R. VILLANUEVA:

No additional hiring?

OIC-PQSTGEN A.Z. DE GUZMAN:

No additional hiring.

CHAIRMAN H.R.R. VILLANUEVA:

And allowing the contract of drivers to lapse?

OIC-POSTGEN A.Z. DE GUZMAN:

Yes, sir.

CHAIRMAN H.RR. VILLANUEVA:

But no additional hiring?

OIC-POSTGEN A.Z. DE GUZMAN:

Yes, sir.

CHAIRMAN H.R.R. VILLANUEVA:

Next. Corsec!

CORSEC F.C. CRUZ:

No. 3, Renewal of Appointment of Legal Officer IV Atty. Marie


Rose Magallen and Atty. Fernando . . . [47]
While the minutes of a board meeting are not equivalent to a
board resolution, they may be examined to determine what
actually took place during the meeting. In Brias v. Hord: [48]

The minutes of the transactions of a board such as the present,


prepared by its secretary or some person named or appointed for
the purpose of keeping a record of the proceedings, are generally
accepted, once approved by the board, as prima facie  evidence
of what actually took place during that meeting.[49]

Ideally, there would have been minutes taken after the conduct
of the board meeting. In its absence, as in this case, the
transcript may be resorted to in order to determine the Board of
Directors' action on a particular measure, For a corporate act of
the Philippine Postal Corporation to be valid, it must have the
vote of at least a majority of the members in a meeting where
there is a quorum. In this instance, six (6) out of seven (7)
members were present during the April 29, 2004 Special Board
Meeting.[50]

However, the Board of Directors never actually took a vote on


whether or not it should renew its contract with Aboitiz One for
the outsourcing of its mail deliveries. A "no comment" from two
(2) of the directors present cannot be considered as a unanimous
approval. One (1) of the directors even required the presentation
of the draft contract before its approval. There was also no board
resolution issued after approving it. As there was no majority
vote or a board resolution, respondent was not authorized to
enter into the contract  dated May 7, 2004.
[51]

A contract entered into by corporate officers who exceed their


authority generally does not bind the corporation except when
the contract is ratified by the Board of Director.
[52]

There was no evidence presented that the Board of Directors


repudiated the contract dated May 7, 2004 with Aboitiz One. The
contract remained effective until January 31, 2006.  While the
[53]
transcript of the April 29, 2004 Special Board meeting does not
mention the proposal to increase the cost of delivery from P5.00
to P8.00 per kilogram, the Central Mail Exchange Center's cost-
benefit analysis and recommendation for price increase was sent
to the Board of Directors on April 20, 2004.   This memorandum
[54]

was the reason for the April 29, 2004 Special Board Meeting.
Therefore, the Board of Directors was informed that the renewal
of the Aboitiz One contract would include an increase in costs.

Postmaster General Villanueva approved the payments when he


resumed work.   Subsequent Postmaster General Rama, upon his
[55]

assumption to office, also approved the payments to Aboitiz One.


 The Corporate Auditor Commission on Audit likewise certified
[56]

that it did not issue any notice of disallowance on the Aboitiz One
contract.
[57]

Considering that the Board of Directors remained silent and the


Postmaster Generals continued to approve the payments to
Aboitiz One, they are presumed to have substantially ratified
respondent's unauthorized acts. Therefore, respondent's action is
not considered ultra vires.

II

However, the ratification of respondent's unauthorized acts does


not necessarily mean that the May 7, 2004 contract was validly
executed. To determine if respondent committed grave
misconduct when he entered into this contract, it must first be
determined if public bidding was necessary.

As a general rule, all government procurement must undergo


competitive bidding.   This
[58]
ensures transparency,
competitiveness, efficiency, and public accountability in the
procurement process.   However, the government entity may,
[59]

subject to certain conditions, resort to alternative methods of


procurement namely: (1) limited source bidding, (2) direct
contracting, (3) repeat order, (4) shopping, and (5) negotiated
procurement.  The procuring entity must ensure that in any of
[60]

these methods, it secures the most advantageous price for the


government. [61]

In negotiated procurement, "the Procuring Entity directly


negotiates a contract with a technically, legally and financially
capable supplier, contractor or consultant."  Resort to negotiated
[62]

procurement is allowed only under the following conditions:

Section 53. Negotiated Procurement. – Negotiated Procurement


shall be allowed only in the following instances:
( In cases of two (2) failed biddings, as provided in Section 35 hereof;
a
)

( In case of imminent danger to life or property during a state of calamity, or when


b arising from natural or man-made calamities or other causes where immediate action
) damage to or loss of life or property, or to restore vital public services, infrastructure f
utilities;

( Take-over of contracts, which have been rescinded or terminated for causes provided
c existing laws, where immediate action is necessary to prevent damage to or loss o
) restore vital public services, infrastructure facilities and other public utilities;

( Where the subject contract is adjacent or contiguous to an on-going infrastructure p


d IRR: Provided, however, That the original contract is the result of a Competitive Biddi
) to be negotiated has similar or related scopes of work; it is within the contracting ca
the contractor uses the same prices or lower unit prices as in the original contract les
amount involved does not exceed the amount of the ongoing project; and, the con
slippage: Provided, further, That negotiations for the procurement are commenced
original contract. Whenever applicable, this principle shall also govern consultanc
consultants have unique experience and expertise to deliver the require service; or,

( Subject to the guidelines specified in the IRR, purchases of Goods from another age
e such as the Procurement Service of the DBM, which is tasked with a centralized pro
) used Goods for the government in accordance with Letter of Instruction No. 755 and E
series of 1989. [63]
Petitioner and respondent appear to have differing views on
which instance this situation falls under. Petitioner argues that
negotiated procurement does not apply in this case as it is not
situation covered by Republic Act No. 9184, Section 53(c),   [64]

which reads:

Section 53. Negotiated Procurement. – Negotiated Procurement


shall be allowed only in the following instances:

....

(c) Take-over of contracts, which have been rescinded or terminated for causes provide
existing laws, where immediate action is necessary to prevent damage to or loss
restore vital public services, infrastructure facilities and other public utilities[.]

On the other hand, respondent argues that the expiration of the


drivers' employment contracts on March 31, 2004 is an
emergency situation where immediate action was warranted since
the non-renewal of the contracts "would cause delay, if not
stoppage, of delivery of mails to various parts of the country."   [65]

He cites Republic Act No. 9184, Section 53(b), which provides:

Section 53. Negotiated Procurement. – Negotiated Procurement


shall be allowed only in the following instances:

....

(b) In case of imminent danger to life or property during a state of calamity, or when
arising from natural or man-made calamities or other causes where immediate
prevent damage to or loss of life or property, or to restore vital public services, inf
other public utilities[.]

However, this situation cannot be categorized as a takeover of


contracts. Republic Act No. 9184, Section 53(c) requires that the
rescission or termination of the contract be for causes provided
for in the contract and under the law. The drivers' employment
contracts were not terminated; they merely expired and were not
renewed. Moreover, there are certain guidelines that must be
followed in terminations due to default, convenience, insolvency,
unlawful acts, work stoppage, or breach of obligation. [66]

Respondent, in categorizing the situation as an "emergency,"


inevitably anchors the negotiated procurement of the Aboitiz One
contract as a situation "where immediate action is necessary to
prevent damage to or loss of life or property, or to restore vital
public services, infrastructure facilities and other public utilities."
Since neither damage, nor loss of life or property, nor restoration
of infrastructure facilities or public utilities is alleged, negotiated
procurement in this instance was resorted to in restoring vital
public services.

For ordinary citizens, postal services have become near obsolete


in daily life with the advent of electronic mail and the presence of
various private courier services that promise faster delivery than
the local post office. In 2011, the Philippine Postal Corporation
was rationalized and restructured "in light of the continued
downtrend in mail patronage brought about by developments in
communications technology."  However, despite advances in
[67]

communications technology, postal services remain a vital part of


government transactions.

Communications and notices involving judicial processes,


 Bureau of Internal Revenue's assessment notices,  Department
[68] [69]

of Agrarian Reform's notifications,  international


[70]
patent
applications with the Intellectual Property Office,  Commission on
[71]

Audit's notices of disallowance,  and Philippine Deposit Insurance


[72]

Corporation's payments of closed banks' deposit insurance  are [73]

sent through registered mail. Corporations are also allowed to file


their annual financial statements and general information sheets
with the Securities and Exchange Commission through regular
mail.   This is by no means an exhaustive list of postal services
[74]
relied on by government entities. Thus, any delays or stoppage in
the carriage of mail would certainly have precarious effects.

However, negotiated procurement under Republic Act No. 9184,


Section 53(b) involves situations beyond the procuring entity's
control. Thus, it speaks of imminent danger . . . during a state of
calamity . . .  natural or man-made calamities [and] other causes
where immediate action is necessary." Following the principle
of ejusdem generis,  where general terms are qualified by the
particular terms they follow in the statute,   the phrase "other
[75]

causes" is construed to mean a situation similar to a calamity,


whether natural or man-made, where inaction could result in the
loss of life, destruction of properties or infrastructures, or loss of
vital public services and utilities.

The expiration of the mail carriage drivers' employment contracts


is not a calamitous event contemplated under Republic Act No.
9184, Section 53(b).

The contracts were undertaken with a definite expiration date,


i.e., March 31, 2004. The expiration of the contracts was not a
sudden unexpected event. Respondent admits that a post study
was conducted on the delivery system to study its effectivity.   [76]

This means that immediately after the contracts were executed,


the Central Mail Exchange Center was already gauging the
delivery system's performance and studying alternative solutions.
Before the contracts expired, there was still time to consider
outsourcing mail carriage and the conduct of public bidding.

However, respondent chose to wait until the contracts expired to


offer the Board of Directors a viable solution. Under the guise of
an "emergency," he was able to skirt the requirement of
competitive bidding and directly contract with Aboitiz One. Had
outsourcing been discussed before the employment contracts
actually expired, there would have been time to conduct a
competitive public bidding.
Even respondent admits that in March 2005, a public bidding was
eventually conducted to outsource mail carriage in Luzon.   The [77]

result of this bidding is telling. The winning bidder, Airfreight


2100, Inc., offered the rate of P4.95 per kilogram,   which was
[78]

almost half Aboitiz One's rate of P8.00 per kilogram. This rate of
P4.95 per kilogram would have been the price most
advantageous to the government. If, as respondent claims,
Airfreight 2100, Inc. refused to sign the contract,   the Philippine
[79]

Postal Corporation was obliged under the law to conduct a second


bidding.   It is only when the second bidding fails that the
[80]

Philippine Postal Corporation will be allowed to undertake a


negotiated procurement.  Thus, the direct resort to negotiated
[81]

procurement in this case was highly irregular.

Respondent claims that even if public bidding was necessary, he


cannot be held liable for its non-conduct since he is not the head
of the procuring entity. On the contrary, Republic Act No. 9184,
Section 5(j)(ii) defines head of the procuring entity as "the
governing board or its duly  authorized official, for government-
owned and/or -controlled corporations." As previously discussed,
respondent's acts, while initially unauthorized, were eventually
ratified by the Philippine Postal Corporation Board of Directors'
silence. Thus, he was considered "its duly authorized official" in
procuring Aboitiz One's services.

While respondent should be held responsible for transgression,


the failure of the Board of Directors, Postmaster General
Villanueva, and Postmaster General Rama to repudiate the Aboitiz
One contract may also be basis to hold them administratively
liable for the same offense as respondent. However, in view of
their right to due process, petitioner must first file the
appropriate action against them before any determination of their
liability.

III

Petitioner may have incorrectly characterized respondent's


offense as grave misconduct and dishonesty.
Dishonesty is defined as the "disposition to lie, cheat, deceive, or
defraud; untrustworthiness, lack of integrity."   There is no
[82]

evidence that respondent lied, cheated, deceived, or defrauded


when he directly resorted to negotiated procurement. Rather, he
was under the mistaken presumption that he had the approval of
the Board of Directors and that it was the necessary action to
take since there was, in his opinion, an "emergency."

On the other hand, grave misconduct is defined as the "wrongful,


improper or unlawful conduct motivated by a premeditated,
obstinate or intentional purpose,"   In Office of the Ombudsman
[83]

v. PS/Supt. Espina: [84]

Misconduct generally means wrongful, improper or unlawful


conduct motivated by a premeditated, obstinate or intentional
purpose. It is intentional wrongdoing or deliberate violation of a
rule of law or standard of behavior and to constitute an
administrative offense, the misconduct should relate to or be
connected with the performance of the official functions and
duties of a public officer. It is a transgression of some established
and definite rule of action, more particularly, unlawful behavior or
gross negligence by a public officer.

There are two (2) types of misconduct, namely: grave misconduct


and simple misconduct. In grave misconduct, as distinguished
from simple misconduct, the elements of corruption, clear intent
to violate the law, or flagrant disregard of an established rule
must be manifest. Without any of these elements, the
transgression of an established rule is properly characterized as
simple misconduct only. [85]

Grave misconduct and dishonesty are classified as grave offenses


punishable by dismissal.  However, grave misconduct is not mere
[86]

failure to comply with the law. Failure to comply must be


deliberate and must be done in order to secure benefits for the
offender or for some other person. Thus, in Yamson v. Castro: [87]
[T]o be disciplined for grave misconduct or any grave offense, the
evidence should be competent and must be derived from direct
knowledge. There must be evidence, independent of the
[offender's] failure to comply with the rules, which will lead to the
foregone conclusion that it was deliberate and was done precisely
to procure some benefit for themselves or for another person. [88]

In this instance, petitioner has not presented evidence to show


that respondent benefited from the lack of public bidding in the
procurement of Aboitiz One's services. While there was a
transgression of the established rules on public bidding, there
must be evidence, independent from this transgression, which
would show that respondent or some other person on his behalf
benefited from the Aboitiz One contract.

It is true that in Office of the Ombudsman-Mindanao v. Martel,


 this Court categorized the lack of public bidding as an offense
[89]

constituting grave misconduct and dishonesty. However, Martel is


inapplicable to this case.

In Martel,  the Provincial Accountant and the Provincial Treasurer


of Davao del Sur were found guilty of grave misconduct and gross
neglect of duty in failing to conduct public bidding for the
purchase of five (5) additional vehicles for the Office of the
Provincial Governor. Specifically, this Court stated that
respondents "allowed the governor of Davao del Sur to purchase
and use more than one vehicle"  in violation of a Commission on
[90]

Audit circular prohibiting it. Otherwise stated, there was grave


misconduct because the lack of public bidding was deliberately
done in order to benefit the governor of Davao del Sur.

There is no evidence presented that respondent in this case


deliberately resorted to negotiated procurement to benefit himself
or some other person. Respondent should, instead, be held
administratively liable for gross neglect of duty.
[91]
In Office of the Ombudsman v. PS/Supt. Espina: [92]

Gross neglect of duty is defined as "[n]egligence characterized by


want of even slight care, or by acting or omitting to act in a
situation where there is a duty to act, not inadvertently but
willfully and intentionally, with a conscious indifference to the
consequences, insofar as other persons may be affected. It is the
omission of that care that even inattentive and thoughtless men
never fail to give to their own property." In contrast, simple
neglect of duty is the failure of an employee or official to give
proper attention to a task expected of him or her, signifying a
"disregard of a duty resulting from carelessness or indifference."
[93]

In Espina, PS/Supt. Rainer A. Espina (Espina) was initially


charged with and found guilty of grave misconduct and
dishonesty for anomalies in the Philippine National Police's
procurement of 40 tires, repowering, refurbishing, repair and
maintenance services of 28 Light Armored Vehicles, and other
transportation and delivery services amounting to
P409,740,000.00. As Acting Chief of the Management Division of
the Philippine National Police Directorate for Comptrollership,
Espina signed all the Inspection Report Forms without actually
inspecting if the goods were delivered or services were rendered,
which, in turn, resulted in the illegal disbursement of public
funds.

This Court found that although Espina had the duty to ensure that
procurement of goods and services must be done according to
law, his failure would not be considered grave misconduct or
dishonesty absent any independent evidence that he or some
other person benefited from his infraction, thus:

Here, the [Court of Appeals] correctly observed that while Espina


may have failed to personally confirm the delivery of the procured
items, the same does not constitute dishonesty of any form
inasmuch as he did not personally prepare the [Inspection Report
Forms] but merely affixed his signature thereon after his
subordinates supplied the details therein.

Neither can Espina's acts be considered misconduct, grave or


simple. The records are bereft of any proof that Espina was
motivated by a premeditated, obstinate or deliberate intent of
violating the law, or disregarding any established rule, or that he
wrongfully used his position to procure some benefit for himself
or for another person, contrary to duty and the rights of others.[94]

This Court found that the proper offense was gross neglect of
duty since "Espina acted negligently, unmindful of the high
position he occupied and the responsibilities it carried, and
without regard to his accountability for the hundreds of millions in
taxpayers' money involved."  [95]

In Yamson v. Castro,   respondents, who were members of the


[96]

Bids and Awards Committee, were only found guilty of simple


neglect of duty for failing to comply with the requirement of
public bidding. This act was found by this Court as a mere "failure
to use reasonable diligence in the performance of officially-
designated duties."  However, in Espina, this Court emphasized
[97]

that "a public officer's high position imposes upon him greater
responsibility and obliges him to be more circumspect in his
actions and in the discharge of his official duties."
[98]

Respondent's acts cannot be characterized as a mere failure to


use reasonable diligence or that which results from carelessness
or indifference. He was aware that the employment contracts
would expire on March 31, 2004. He knew that the Central Mail
Exchange Center was able to propose a viable alternative for mail
carriage in Luzon. He waited until the contracts actually expired
to recommend the use of outsourcing to the Board of Directors,
thereby creating a condition where the Board of Directors were
left with no choice but to acquiesce since denying the
recommendation may result in indeterminable delay or stoppage.
Respondent, as the acting Postmaster General, had the duty to
first secure the Board of Directors' approval before entering into
the May 7, 2004 contract with Aboitiz One. The Board of Directors
did not actually give its approval since it required him to first
fulfill certain conditions. Instead of complying, he went ahead and
executed the contract with Aboitiz One without ensuring that the
procurement of its services by the Philippine Postal Corporation
would be done through the proper procedures and at the most
advantageous price. Accordingly, he is found guilty of gross
neglect of duty.

Under Rule 10, Section 46(A)(2) of the Revised Rules on


Administrative Cases, gross neglect of duty is categorized as a
grave offense punishable by dismissal from service. In view of the
constitutional principle that "public office is a public trust,"   [99]

erring public officials must be held accountable not for


punishment but to ensure the public's continued trust and
confidence in the civil service.

WHEREFORE, the Petition is PARTIALLY GRANTED. The May 4,


2011 Decision and July 14, 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 108182 are REVERSED and SET
ASIDE. A new judgment is ENTERED finding respondent Antonio
Z. De Guzman GUILTY of GROSS NEGLECT OF DUTY.
Accordingly, he is DISMISSED from government service with all
the accessory penalties of cancellation of eligibility, forfeiture of
leave credits and retirement benefits, and disqualification for re-
employment in the government service.

SO ORDERED.

Velasco, Jr., (Chairperson), Caguioa,   and Martires, JJ,. concur.


**

Leonardo-De Castro, J., on official leave.



December 21, 2017

N O T I C E  O F  J U D G M E N T

Sirs /Mesdames:

Please take notice that on October 4, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on December 21, 2017 at 9:50 a.m.

Very truly yours,        

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court        

 Designated additional member per Raffle dated September 20,


*

2017. On official time per S.O. No. 2492 dated October 3, 2017.

 Designated additional member per Raffle dated September 25,


**

2017.

[1]
 Rollo, pp. 28-55.

 Id. at 57-75. The Decision was penned by Associate Justice


[2]

Sesinando E. Villon and concurred in by Associate Justices


Rebecca De Guia-Salvador and Hakim S. Abdulwahid of the
Special Fifth Division, Court of Appeals, Manila.

 Id. at 77. The Resolution was penned by Associate Justice


[3]

Sesinando E. Villon and concurred in by Associate Justices


Rebecca De Guia-Salvador and Hakim S. Abdulwahid of the
Former Special Fifth Division, Court of Appeals, Manila.

 Id. at 123-135. The Decision, docketed as OMB-C-A-06-0220-E,


[4]

was penned by Graft Investigation and Prosecution Officer I Ruth


Laura A. Mella, reviewed by Acting Director Mothalib C. Onos,
recommended for approval by Acting Assistant Ombudsman Jose
T. De Jesus, Jr., and approved by Acting Ombudsman Orlando C.
Casimiro.

[5]
 Id. at 265-269.

[6]
 Id. at 124.

[7]
 Id. at 58.

[8]
 Id. at 58-59 and 384.

 Then Postmaster General Diomedo P. Villanueva had taken a


[9]

leave of absence since February 16, 2004 so De Guzman was


designated Officer-in-Charge effective February 17,
2004 (rollo, p. 58).

[10]
  Rollo, p. 58.

[11]
 Id, at 59.

[12]
 Id.

[13]
 Id.

[14]
 Id. at 59-60.

[15]
 Id. at 123-135.

[16]
 Id. at 133-134.

[17]
 Id. at 526-561.
 Id. at 190-196. The Order was penned by Graft Investigation
[18]

and Prosecution Officer I Ruth Laura A. Mella, reviewed by Acting


Director Mothalib C. Onos, recommended for approval by
Assistant Ombudsman Jose T. De Jesus, Jr., and approved by
Overall Deputy Ombudsman Orlando C. Casimiro.

[19]
 Id. at 136-189.

[20]
 Id. at 157-180.

[21]
 Id. at 57-75.

[22]
 Id. at 75.

[23]
 Id. at 62-69.

[24]
 Id. at 70-71.

[25]
 Id. at 71-72.

[26]
 Id. at 72.

[27]
 Id. at 77.

 Id. at 28-55. Comment was filed on March 12, 2012 (rollo,  pp.


[28]

599-648) while Reply was filed on August 6, 2012 (rollo, pp. 759-


773). Parties were ordered to submit their respective memoranda
on February 11, 2013 (rollo,  pp. 775-776).

[29]
 Id. at 822.

[30]
 Id. at 823.

[31]
 Id. at 826.

[32]
 Id. at 795-796.
[33]
 Id. at 801.

[34]
 Id. at 802.

[35]
 Id. at 805.

[36]
 Id. at 803.

[37]
 Id. at 807.

[38]
 Id.

[39]
 Id. at 811.

[40]
 The Postal Service Act of 1992.

[41]
 Rep. Act No. 7354, sec. 8.

[42]
 Rep. Act No. 7354, sec. 8.

[43]
 Rep. Act No. 7354, sec. 20.

[44]
 Rep. Act No. 7354, sec. 21 (b).

[45]
 Rep. Act No. 7354, sec. 8.

[46]
  Rollo, pp. 346-369.

[47]
 Id. at 347, 352-355.

[48]
 24 Phil. 29 (1913) [Per Curiam, First Division].

[49]
 Id. at 294.

[50]
 Rollo,  p. 346.

[51]
 Id. at 370.
[52]
 See CIVIL CODE, art. 1898.

[53]
 Rollo,  p. 793.

[54]
 Id. at 795.

[55]
 Id. at 792.

[56]
 Id. at 806.

[57]
 Id. at 525.

[58]
 Rep. Act No. 9184, art. IV, sec. 10.

[59]
 Rep. Act No. 9184, art. I sec. 3.

[60]
 Rep. Act No. 9184, art. XVI, sec. 48.

[61]
 Rep. Act No. 9184, art. XVI, sec. 48.

[62]
 Rep. Act No. 9184, art. XVI, sec. 48 (e).

[63]
 Rep. Act No. 9184, sec. 53.

[64]
 Rollo,  pp. 825-826.

[65]
 Id. at 805.

 See Government Procurement Policy Board, Guidelines on


[66]

Termination of Contracts, available at < Error! Hyperlink


reference not valid. > (last accessed August 15, 2017)

 Governance Commission for GOCCs Memorandum No. 2012-21,


[67]

sixth whereas clause.

 See Presidential Decree No. 26 (1972) and Philippine Judges


[68]

Association v. Prado, 298 Phil. 502 (1993) [Per J. Cruz, En Banc].


 See Barcelon Roxas Securities v. Commissioner of Internal
[69]

Revenue, 529 Phil, 785 (2006) [Per J. Chico-Nazario, First


Division].

 Department of Agrarian Reform, Registered Mail (as of July


[70]

22), available at < Error! Hyperlink reference not


valid. > (last accessed August 15, 2017).

 Intellectual Property Office, Frequently Asked Questions about


[71]

the PCT International Phase, available at < Error! Hyperlink


reference not valid. > (last accessed August 15, 2017).

 See 2009 Revised Rules of Procedure of the Commission on


[72]

Audit, sec.7.

Philippine Deposit Insurance Corporation, PDIC pays PHP82.8-M


[73] 

in deposit insurance to depositors of the  closed Rural Bank of


Goa (Camarines Sur), Inc., June 13, 2017, available at < Error!
Hyperlink reference not valid. > (last accessed August 15,
2017).

SEC Memorandum Circular No. 2, series of 2017, available


[74] 

at < Error! Hyperlink reference not valid. > (last accessed


August 15, 2017).

 See Vera v. Cuevas,  179 Phil. 307 (1979) [Per J. De Castro,


[75]

First Division].

[76]
 Rollo,  p. 784.

[77]
 Id. at 807.

[78]
 Id.

[79]
 Id.

[80]
 Rep. Act No. 9184, sec. 35.
[81]
 Rep. Act No. 9184, sec. 53 (a).

Light Rail Transit Authority v. Salvaña, 736 Phil. 123, 151


[82] 

(2014) [Per J. Leonen, En Banc] citing  Civil Service Commission


Resolution No. 060538 dated April 4, 2006.

   Office of the Ombudsman v. PS/Supt. Espina, GR. No. 213500,


[83]

March 15, 2017, < Error! Hyperlink reference not valid. > 6


[Per Curiam, First Division].

 G.R. No. 213500, March 15, 2017, < Error! Hyperlink


[84]

reference not valid. >  [Per Curiam, First Division].

  Id. at 6 citing Ganzon v. Arlos, 720 Phil. 104, 113 (2013) (Per


[85]

J. Bersamin, En Banc]; Amit v. Commission on Audit (COA), 699


Phil. 9, 26 (2012) [Per J. Brion, En Banc); and Imperial v.
GSIS,  674 Phil. 286, 296 (2011) [Per J. Brion, En Banc].

 See Revised Rules on Administrative Cases in the Civil Service,


[86]

Rule 10, sec. 46(A)(1) and (3).

 G.R. Nos. 194763-64, July 20, 2016, < Error! Hyperlink


[87]

reference not valid. > [Per J. Reyes, Third Division].

 Id. at 21 citing Litonjua v. Justices Enriquez, Jr. and


[88]

Abesamis,  482 Phil. 73, 101 (2004) [Per J. Azcuna, En Banc].

 G.R. No. 221134, March 1, 2017 [Per J. Mendoza, Second


[89]

Division].

[90]
 Id.

 See Avenido  v. Civil Service Commission,  576 Phil. 654, 661


[91]

(2008) [Per Curiam, En Banc], where this Court stated "that the
designation of the offense or offenses with which a person is
charged in an administrative case is not controlling and one may
be found guilty of another offense, where the substance of the
allegations and evidence presented sufficiently proves one's
guilt."

 G.R. No. 213500, March 15, 2017, < Error! Hyperlink


[92]

reference not valid. > [Per Curiam, First Division].

 Id. at 8 citing Ombudsman v. Delos Reyes, Jr., 745 Phil. 366,


[93]

381 (2014) [Per J. Leonen, Second Division]; Ombudsman  v. De


Leon,  705 Phil. 26, 38 (2013) [Per J. Bersamin, First Division];
and  Republic  v.  Canastillo, 551 Phil. 987, 996 (2007) [Per J.
Ynares-Santiago, Third Division].

[94]
 Id. at 7.

[95]
 Id.

 G.R. Nos. 194763-64, July 20, 2016, < Error! Hyperlink


[96]

reference not valid. > [Per J. Reyes, Third Division].

[97]
 Id. at 22.

 Office of the Ombudsman v. P/Supt. Espina, G.R. No. 213500,


[98]

March 15, 2017  < Error! Hyperlink reference not valid. > 9


[Per Curiam, First Division] citing Amit v. Commission on Audit
(COA), 699 Phil. 9, 26 (2012) [Per J. Brion, En Banc].

[99]
 CONST. art. XI, sec. 1.

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Supreme Court E-Library


SECOND DIVISION

[ G.R. No. 207396, August 09, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. DELIA SAUNAR, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

A miniscule amount of dangerous drugs alleged to have been


taken from the accused is highly susceptible to planting,
tampering, or alteration. In these cases, "law enforcers should
not trifle with the legal requirement to ensure integrity in the
chain of custody of seized dangerous drugs and drug
paraphernalia."[1]

This resolves an appeal from the September 26, 2012


Decision  of the Court of Appeals, which affirmed the conviction
[2]

of Delia Saunar (Saunar) for illegal sale of dangerous drugs.

In the Information dated April 24, 2006,  Saunar was charged


[3]

with violation of Article II, Section 5 of Republic Act No. 9165.


The accusatory portion of the Information read:
That on or about the 27  day of February 2006 at around 6:20
th

p.m. at Brgy. Kinali, [Municipality of Polangui, Province of Albay,


Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did then and there willfully, unlawfully
and feloniously deliver, dispense and sell two heat[-] sealed
plastic sachets [of] methamphetamine hydrochloride (shabu)
weighing 0.0526 gram and 0.0509 gram to a poseur buyer,
without authority of law, to the detriment of the public welfare.

ACTS CONTRARY TO LAW. [4]


On June 8, 2006, Saunar was arraigned.  She pleaded not guilty
[5]

to the charge. Afterwards, pre-trial and trial ensued. [6]

Based on the collective testimonies of its witnesses, the


prosecution alleged that on January 5, 2006, the Special
Operation Team of the 5  Regional Criminal Investigation and
th

Detection Group learned about the illegal drug activities of a


certain "Lolita" Saunar  in Polangui, Albay.  The authorities acted
[7] [8]

on this tip and conducted surveillance operations on Saunar. [9]

Before noon on February 27, 2006, the authorities received a


report regarding Saunar's whereabouts.  Captain Cesar Dalonos
[10]

(Capt. Dalonos) formed a team composed of PO2 Ami Montales


(PO2 Montales), SPO4 Rolando Barroga, SPO4 Fernando Cardona,
and SPO2 Roger Seladis to conduct a buy-bust operation. PO2
Montales was designated as the poseur-buyer. [11]

At around 6:00 p.m., the buy-bust team proceeded to Saunar's


residence.  PO2 Montales and the informant met Saunar by the
[12]

gate while the rest of the police operatives positioned themselves


a few meters from Saunar's house.  PO2 Montales introduced
[13]

herself as a buyer of shabu and handed Saunar the marked


money.  After a brief conversation, Saunar went inside the
[14]

house. She returned moments later "with two (2) transparent


plastic sachets containing white crystalline substance."  PO2 [15]

Montales examined the plastic sachets and gave the pre-arranged


signal by removing her sunglasses.  This indicated the[16]

consummation of the transaction to the other members of the


buy-bust team. [17]

The buy-bust team closed in and arrested Saunar. PO2 Montales [18] 

then frisked Saunar to recover the marked money but only found
a Nokia 5210, which she confiscated.  No photograph of the
[19]

seized items was taken at the crime scene.  Saunar was then [20]

brought to Camp Simeon Ola for investigation.  It was only after
[21]

the arrest that the authorities discovered that Saunar's real name
was Delia. [22]
Upon reaching Camp Simeon Ola, PO2 Montales prepared a
seizure receipt, which Saunar refused to sign.  Meanwhile, Capt.
[23]

Dalanos invited representatives from the media and the


Department of Justice and a barangay official to witness the
marking and inventory. [24]

PO2 Montales marked the two (2) plastic sachets with her initials
"AOM1" and "AOM2."  Afterwards, the seized items were
[25]

inventoried and then placed in a larger transparent plastic bag.


 The marking and inventory were both done in the presence of
[26]

the three (3) witnesses from the media, the barangay, and the
Department of Justice.  PO2 Montales brought the seized items
[27]

to the crime laboratory for scientific examination.  The contents


[28]

of the two (2) plastic sachets weighed 0.0496 grams and 0.0487
grams.  They tested positive for shabu.
[29] [30]

While the police officers were preparing the necessary documents


for Saunar's prosecution, the seized cellular phone received
several calls and text messages from different people who were
looking for Saunar to place P1,000.00 and P2,000.00 worth of
orders on something called "LADA." PO2 Montales introduced
herself as Saunar's sister and tried to set up a meeting with
them. However, the callers refused to talk to anyone but Saunar.
[31]

For her defense, Saunar asserted that she was merely framed-up.
 She testified that on the day of the alleged incident, the
[32]

authorities raided her house looking for shabu. However, they


only found her cellphone.  Although the police officers found
[33]

nothing, Saunar was brought to Camp Simeon Ola and was forced
to sign a seizure receipt, which indicated that two (2) sachets
of shabu were taken from her. Saunar did not sign this seizure
receipt.[34]

In the Judgment  dated March 21, 2011, the Regional Trial Court
[35]

found Saunar guilty beyond reasonable doubt of illegal sale of


dangerous drugs.  Accordingly, she was sentenced to suffer the
[36]
penalty of life imprisonment and required to pay a fine of
P500,000.00: [37]

WHEREFORE, judgment is hereby rendered:

1. FINDING the accused, DELIA SAUNAR y DOLOM, GUILTY


beyond reasonable doubt of the crime of Violation of Section 5,
Article II, Republic Act No. 9165, otherwise known as "The
Comprehensive Dangerous Drugs Act of 2002" for selling and/or
delivering two (2) small transparent plastic sachets containing
0.0496 gram and 0.0487 gram respectively of methamphetamine
hydrochloride or "shabu," a dangerous drug, without authority of
law; thereby, sentencing her to suffer the penalty of life
imprisonment and to pay a fine of Five [H]undred Thousand
Pesos (P500,000.00);

2. The two (2) small transparent plastic sachets containing


0.0496 gram and 0.0487 gram respectively of methamphetamine
hydrochloride or "shabu" . . . involved in this case, are DIRECTED
to be disposed/destroyed in accordance with Sec. 21, R.A. No.
9165 and in the presence of a representative from this court.
Within twenty-four (24) hours from such destruction, the
pertinent certification shall be submitted to this court.

Furnish a copy of this judgment to the Philippine Drug


Enforcement [Agency] (PDEA), Central Office, Manila.

SO ORDERED. [38]

In its September 26, 2012 Decision,  the Court of Appeals


[39]

affirmed Saunar's conviction.

On October 9, 2012, Saunar filed a Notice of Appeal,  which was


[40]

given due course by the Court of Appeals. [41]

In the Resolution  dated August 5, 2013, this Court noted the


[42]

records forwarded by the Court of Appeals and required the


parties to file their respective supplemental briefs if they so
desired.
On September 25, 2013, the Office of the Solicitor General, on
behalf of the People of the Philippines, manifested that it would
no longer file a supplemental brief.  A similar motion was made
[43]

by Saunar on October 1, 2013. [44]

In her Appellant's Brief,  accused-appellant argues that the trial


[45]

court glossed over the procedural errors committed by the


apprehending officers. In particular, she argues that the
authorities failed to comply with the chain of custody rule.
Accused-appellant claims that there were gaps in the handling of
the items allegedly seized from her. [46]

On the other hand, the Office of the Solicitor General argues in its
Appellee's Brief  that although the requirements in Republic Act
[47]

No. 9165 were not strictly complied with, the prosecution


sufficiently established the identity, integrity, and evidentiary
value of the seized drugs. [48]

The sole issue for this Court's resolution is whether the guilt of
accused-appellant Delia Saunar for violation of Section 5 of
Republic Act No. 9165 was proven beyond reasonable doubt.

The crime of sale of illegal drugs is consummated "the moment


the buyer receives the drug from the seller."  The prosecution
[49]

must prove beyond reasonable doubt that the transaction actually


took place by establishing the following elements: "(1) the
identity of the buyer and the seller, the object and the
consideration; and (2) the delivery of the thing sold and the
payment." [50]

Aside from this, the corpus delicti must be presented as evidence


in court.  In cases involving dangerous drugs, "the corpus
[51]

delicti is the dangerous drug itself."  Hence, its identity and


[52]

integrity must likewise be established beyond reasonable doubt.


 The obligation of the prosecution is to ensure that the illegal
[53]

drugs offered in court are the very same items seized from the
accused.  This would entail the presentation of evidence on how
[54]

the seized drugs were handled and preserved from the moment
they were confiscated from the accused until their presentation in
court.  Non-compliance with this requirement creates doubt
[55]

regarding the origin of the dangerous drugs. [56]

The chain of custody rule provides the manner by which law


enforcers should handle seized dangerous drugs. Section 21 of
Republic Act No. 9165, as amended by Republic Act No. 10640,
provides:
Section 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. - The
[Philippine Drug Enforcement Agency] shall take charge and have
custody of all dangerous drugs, plant sources of dangerous drugs,
controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so
confiscated, seized and/or surrendered, for proper disposition in
the following manner:

(1) The apprehending team having initial custody and control of


the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and confiscation,
conduct a physical inventory of the seized items and photograph
the same in the presence of the accused or the persons from
whom such items were confiscated and/or seized, or his/her
representative or counsel, with an elected public official and a
representative of the National Prosecution Service or the media
who shall be required to sign the copies of the inventory and be
given a copy thereof: Provided, That the physical inventory and
photograph shall be conducted at the place where the search
warrant, is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures: Provided, finally, That
noncompliance of these requirements under justifiable grounds,
as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team,
shall not render void and invalid such seizures and custody over
said items.

(2) Within twenty-four (24) hours upon confiscation/seizure of


dangerous drugs, plant sources of dangerous drugs, controlled
precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment, the
same shall be submitted to the PDEA Forensic Laboratory for a
qualitative and quantitative examination;

(3) A certification of the forensic laboratory examination results,


which shall be done by the forensic laboratory examiner, shall be
issued immediately upon the receipt of the subject item/s:
Provided, That when the volume of dangerous drugs, plant
sources of dangerous drugs, and controlled precursors and
essential chemicals does not allow the completion of testing
within the time frame, a partial laboratory examination report
shall be provisionally issued stating therein the quantities of
dangerous drugs still to be examined by the forensic laboratory:
Provided, however, That a final certification shall be issued
immediately upon completion of the said examination and
certification[.]
Although "chain of custody" is not specifically defined under the
law, the term essentially refers to:
"[T]he duly recorded authorized movements and custody of
seized drugs or controlled chemicals or plant sources of
dangerous drugs or laboratory equipment of each stage, from the
time of seizure/confiscation to receipt in the forensic laboratory to
safekeeping to presentation in court for destruction." Such record
of movements and custody of seized item shall include the
identity and signature of the person who held temporary custody
of the seized item, the date and time when such transfer of
custody were made in the course of safekeeping and use in court
as evidence, and the final disposition.  (Citation omitted)
[57]

The "duly recorded authorized movements" of the seized


dangerous drugs may be ascertained through the testimonies of
every person who handled them. Mallillin v. People  is [58]

instructive:
As a method of authenticating evidence, the chain of custody rule
requires that the admission of an exhibit be preceded by evidence
sufficient to support a finding that the matter in question is what
the proponent claims it to be. It would include testimony about
every link in the chain, from the moment the item was picked up
to the time it is offered into evidence, in such a way that every
person who touched the exhibit would describe how and from
whom it was received, where it was and what happened to it
while in the witness' possession, the condition in which it was
received and the condition in which it was delivered to the next
link in the chain. These witnesses would then describe the
precautions taken to ensure that there had been no change in the
condition of the item and no opportunity for someone not in the
chain to have possession of the same.  (Emphasis supplied,
[59]

citations omitted)
Although strict compliance with the chain of custody rule may be
excused provided that the integrity and evidentiary value of the
seized items are preserved,  a more exacting standard is
[60]

required of law enforcers when only a miniscule amount of


dangerous drugs are alleged to have been seized from the
accused. The reason for this rule was clarified in People v.
Holgado: [61]

In Mal[l]il[l]in v. People, this court explained that the exactitude


required by Section 21 goes into the very nature of narcotics as
the subject of prosecutions under Republic Act No. 9165:
Indeed, the likelihood of tampering, loss or mistake with respect
to an exhibit is greatest when the exhibit is small and is one that
has physical characteristics fungible in nature and similar in form
to substances familiar to people in their daily lives. Graham vs.
State positively acknowledged this danger. In that case where a
substance later analyzed as heroin—was handled by two police
officers prior to examination who however did not testify in court
on the condition and whereabouts of the exhibit at the time it was
in their possession—was excluded from the prosecution evidence,
the court pointing out that the white powder seized could have
been indeed heroin or it could have been sugar or baking powder.
It ruled that unless the state can show by records or testimony,
the continuous whereabouts of the exhibit at least between the
time it came into the possession of police officers until it was
tested in the laboratory to determine its composition, testimony
of the state as to the laboratory's findings is inadmissible.

A unique characteristic of narcotic substances is that they are not


readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from, other cases—by accident or
otherwise—in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a standard more stringent than that
applied to cases involving objects which are readily identifiable
must be applied, a more exacting standard that entails a chain of
custody of the item with sufficient completeness if only to render
it improbable that the original item has either been exchanged
with another or been contaminated or tampered with.
Compliance with the chain of custody requirement provided by
Section 21, therefore, ensures the integrity of confiscated, seized,
and/or surrendered drugs and/or drug paraphernalia in four (4)
respects: first, the nature of the substances or items seized;
second, the quantity (e.g., weight) of the substances or items
seized; third, the relation of the substances or items seized to the
incident allegedly causing their seizure; and fourth, the relation of
the substances or items seized to the person/s alleged to have
been in possession of or peddling them. Compliance with this
requirement forecloses opportunities for planting, contaminating,
or tampering of evidence in any manner.

....

The prosecution's sweeping guarantees as to the identity and


integrity of seized drugs and drug paraphernalia will not secure a
conviction. Not even the presumption of regularity in the
performance of official duties will suffice. In fact, whatever
presumption there is as to the regularity of the manner by which
officers took and maintained custody of the seized items is
"negated." Republic Act No. 9165 requires compliance with
Section 21.  (Citations omitted)
[62]

In this case, only 0.0496 grams and 0.0487 grams  or a total of
[63]

0.0983 grams of shabu were allegedly taken from accused-


appellant. Such a miniscule amount of drugs is highly susceptible
to tampering and contamination.

A careful review of the factual findings of the lower courts shows


that the prosecution failed to discharge its burden of preserving
the identity and integrity of the dangerous drugs allegedly seized
from accused-appellant.

The prosecution failed to establish who held the seized items from
the moment they were taken from accused-appellant until they
were brought to the police station. The designated poseur-buyer,
PO2 Montales, did not mention who took custody of the seized
items for safekeeping:
Q: Now what happened when you meet face to face with Lolita Saunar who is now iden

A: I was introduced as the buyer of shabu wo[r]th One Thousand Pesos (P1,000.00), th
money and she went inside her house and several minutes later, she went out and
(2) plastic transparent sachet containing white crystalline substance suspected as sh

Q: Upon or after it was handed to you, what happened next?

A: After examining and determining the contents of the plastic sachets, I gave the pr
other members of the team.

....

Q: After you have apprehended the accused, were you able to take possession of this r
Delia Saunar, what did you do next if any?

A: I showed it to our Team Leader including the two (2) sachets of suspected shabu.

Q: After that, where did you proceed?

A: And after that, we proceeded to our office at Camp Simeon Ola. [64]
Based on the testimony of PO2 Montales, the two (2) plastic
sachets were only marked at Camp Simeon Ola.  Any of the
[65]

apprehending officers could have taken custody of the seized


items during transit. It is highly probable, therefore, that the two
(2) sachets had been tampered with, altered, or contaminated.
The belated marking of the seized items creates doubt on the
identity and origin of the dangerous drugs allegedly taken from
accused-appellant.

Although the requirement of "marking" is not found in Republic


Act No. 9165, its significance lies in ensuring the authenticity of
the corpus delicti. In People v. Dahil:
[66]

Crucial in proving the chain of custody is the marking of the


seized drugs or other related items immediately after they have
been seized from the accused. "Marking " means the placing by
the apprehending officer or the poseur-buyer of his/her initials
and signature on the items seized. Marking after seizure is the
starting point in the custodial link; hence, it is vital that the
seized contraband be immediately marked because succeeding
handlers of the specimens will use the markings as reference. The
marking of the evidence serves to separate the marked evidence
from the corpus of all other similar or related evidence from the
time they are seized from the accused until they are disposed of
at the end of the criminal proceedings, thus, preventing
switching, planting or contamination of evidence.

It must be noted that marking is not found in R.A. No. 9165 and
is different from, the inventory-taking and photography under
Section 21 of the said law. Long before Congress passed R.A. No.
9165, however, this Court had consistently held that failure of
the authorities to immediately mark the seized drugs would cast
reasonable doubt on the authenticity of the corpus delicti.
 (Emphasis supplied, citations omitted)
[67]

While it may be true that the seized items were marked and
inventoried in the presence of a media representative, an elected
barangay official, and a representative from the Department of
Justice,  there is no evidence showing that these procedures
[68]

were done in the presence of accused-appellant or her authorized


representative or counsel. Moreover, none of the witnesses to the
marking and inventory of the seized items was presented in court
to testify.
[69]

Further, it appears that the authorities failed to take photographs


of the seized items. No photograph of the seized dangerous drugs
was presented and offered as evidence before the trial court.
 More telling is the finding of the Court of Appeals that although
[70]

there were photographs taken at Camp Simeon Ola, "these were


not photographs of the seized items." [71]

In addition, it was highly irregular for the police officers to use


accused-appellant's cellphone while they were in the process of
filing the criminal case against her. This conduct is violative of
accused-appellant's right to privacy.

The failure of the prosecution to strictly comply with the exacting


standards in Republic Act No. 9165, as amended, casts serious
doubt on the origin, identity, and integrity of the seized
dangerous drugs allegedly taken from accused-appellant.

WHEREFORE, the Decision dated September 26, 2012 of the


Court of Appeals in CA-G.R. CR-H.C. No. 05003
is REVERSED and SET ASIDE. Accused-appellant Delia Saunar
is ACQUITTED for the failure of the prosecution to prove her
guilt beyond reasonable doubt. She is ordered
immediately RELEASED from detention unless she is confined for
any other lawful cause. Let entry of final judgement be issued
immediately.

Let a copy of this decision be furnished to the Bureau of


Corrections, Correctional Institution for Women, Mandaluyong
City, for immediate implementation. The Director of the Bureau of
Corrections is directed to report to this Court, within five (5) days
from receipt of this Decision, the action he has taken. Copies
shall also be furnished to the Director General of the Philippine
National Police and the Director General of the Philippine Drug
Enforcement Agency for their information.
SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

 People v. Holgado, 741 Phil 78, 81 (2014) [Per J. Leonen,


[1]

Second Division].

 Rollo, pp. 2-33, The Decision, docketed as CA-G.R. CR-H.C. No.


[2]

05003, was penned by Associate Justice Remedios A. Salazar-


Fernando and concurred in by Associate Justices Normandie B.
Pizarro and Manuel M. Barrios of the Second Division, Court of
Appeals, Manila.

[3]
 CA rollo, p. 32.

[4]
 Id.

[5]
 Id.

[6]
 Id. at 33.

[7]
 Rollo, pp. 4-9.

[8]
 CA rollo, p. 34.

[9]
 Rollo, pp. 4-9.

[10]
 Id. at 4.

[11]
 CA rollo, pp. 33-34.

[12]
 Rollo, p. 4.

[13]
 Id. at 4-5.
[14]
 Id. at 5.

[15]
 Id.

[16]
 Id. at 8.

[17]
 Id.

[18]
 Id. at 5.

[19]
 Id.

[20]
 Id. at 5-6.

[21]
 Id. at 5.

[22]
 Id. at 6.

[23]
 Id. at 5.

[24]
 Id. at 5-8.

[25]
 Id. at 5.

[26]
 Id.

[27]
 Id. at 5-6.

[28]
 Id. at 6.

[29]
 CA rollo, p. 38.

[30]
 Rollo, p. 6.

[31]
 Id.

[32]
 Id. at 9-12.
[33]
 Id.

[34]
 Id. at 11-12.

 CA rollo, pp. 32-42. The Judgment, docketed as Crim. Case No.


[35]

5229, was penned by Acting Presiding Judge Alben C. Rabe of


Branch 12, Regional Trial Court, Ligao City, Albay.

[36]
 Id. at 42.

[37]
 Id.

[38]
 Id.

[39]
 Rollo, pp. 2-33.

[40]
 Id. at 34-36.

[41]
 Id. at 37.

[42]
 Id. at 39.

[43]
 Id. at 41-43.

[44]
 Id. at 44-46.

[45]
 CA rollo, pp. 69-86.

[46]
 Id. at 79-84.

[47]
 Id. at 105-119.

[48]
 Id. at 111-116.

 People
[49]
v. Tumulak, G.R. No. 206054, July 25,
2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/july2016/206054.pdf> 4 [Per J. Brion,
Second Division].

[50]
 Id.

[51]
 Id.

 People v. Casacop, 755 Phil. 265, 276 (2015) [Per J. Leonen,


[52]

Second Division].

[53]
 Id.

 People v. Holgado, 741 Phil. 78, 93 (2014) [Per J. Leonen,


[54]

Second Division] citing People v. Lorenzo, 633 Phil. 393 (2010)


[Per J. Perez, Second Division].

 Mallillin v. People, 576 Phil. 576, 587 (2008) [Per J. Tinga,


[55]

Second Division].

 People v. Holgado, 741 Phil. 78, 91 (2014) [Per J. Leonen,


[56]

Second Division].

 People
[57]
v. Ameril, G.R. 203293, November 14,
2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/november2016/203293.pdf> 4 [Per J.
Brion, Second Division].

[58]
 576 Phil. 576 (2008) [Per J. Tinga, Second Division].

[59]
 Id. at 587.

 People v. Casacop, 755 Phil. 265, 277-278 (2015) [Per J.


[60]

Leonen, Second Division].

[61]
 741 Phil. 78 (2014) [Per J. Leonen, Second Division].

[62]
 Id. at 92-94.
[63]
 CA rollo, p. 39.

[64]
 Id. at 25.

[65]
 Id. at 5.

[66]
 750 Phil. 212 (2015) [Per J. Mendoza, Second Division].

[67]
 Id. at 232.

[68]
 Rollo, pp. 5-6.

[69]
 Id. at 4.

[70]
 CA rollo, p. 39.

[71]
 Rollo, p. 23.

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SECOND DIVISION

[ G.R. No. 199710, August 02, 2017 ]


PEOPLE OF THE PLAINTIFF-APPELLEE, VS. PO3
JULIETO BORJA, ACCUSED-APPELLANT.DECISION

LEONEN, J.:
Extortion done by police themselves amounting to kidnapping
with ransom undermines the government efforts to establish the
rule of law in general and the proper prosecution against drug
traffickers in particular. Even the subsequent prosecution of the
victim of extortion does not negate the criminal liability of the
accused for the crime the latter committed against the former.

This resolves the appeal to the March 14, 2011 Decision  of the
[1]

Court of Appeals in CA-G.R. CR.-H.C. No. 03998, finding PO3


Julieto Borja (PO3 Borja) guilty beyond reasonable doubt of
kidnapping for ransom.

In the Information dated May 28, 2004, Borja was charged of


kidnapping punished under Article 267  of the Revised Penal
[2]

Code. The accusatory portion of the information read:


That on or about May 26, 2004, at or about 10:10 in the
morning, at the vicinity of Brgy. Central, Diliman, Quezon City
and within the jurisdiction of this Honorable Court, the above-
named accused, with an unknown companion, conspiring and
confederating with one another, mutually aiding and assisting one
another, by the use of force, violence and intimidation and
without authority of law, did then and there, willfully, unlawfully
and feloniously kidnap and illegally detain victim/hostage
RONALYN G. MANATAD, and thereafter demanded and received
the ransom money in the amount of P100,000.00 from Edwin G.
Silvio, the victim's brother, for the release of said RONALYN G.
MANATAD on same date. [3]

PO3 Borja entered a plea of not guilty during arraignment. Trial


on the merits ensued. [4]

Based on the collective testimonies of its witnesses, the


prosecution alleged that at about 10:00 a.m. on May 26, 2004,
Ronalyn Manatad (Ronalyn) and her friend, Vicky Lusterio
(Lusterio), were walking along Agham Road, Diliman, Quezon
City.  Suddenly, a man who was later identified as PO3 Borja,
[5]

grabbed Ronalyn by her right forearm and forcibly took her inside
a gray van where three (3) other men were waiting.  Both [6]
Ronalyn and Lusterio shouted for help but no one came to their
rescue. Lusterio managed to escape. She immediately reported
the incident to Ronalyn's mother, Adelina Manatad (Adelina). [7]

Meanwhile, PO3 Borja and his companions drove the van around
Quezon City.  One (1) of Ronalyn's abductors, a certain Major
[8]

Clarito,  asked for her relatives' contact numbers.  Ronalyn gave


[9] [10]

the number of her brother, Edwin G. Silvio (Edwin). [11]

Adelina received a phone call from one (1) of the kidnappers, who
demanded P200,000.00 in exchange for Ronalyn's liberty. Adelina
informed him that their family could not afford to pay the ransom
due to their financial condition. Suddenly, the caller hung up.
Edwin thereafter arrived and negotiated for a reduced ransom
when one (1) of the kidnappers called again. The kidnappers
acceded and lowered their demand to P100,000.00. [12]

At this juncture, Ronalyn was transferred from the van to a car. [13]

Edwin sought assistance from Sergeant Abet Cordova (Sgt.


Cordova) of the National Anti-Kidnapping Task Force (NAKTAF).
Sgt. Cordova instructed Edwin to negotiate with his sister's
abductors and to notify him of any developments. Sgt. Cordova
then reported the incident to NAKTAF group commander, Major
Saiiti Cababasay, who immediately mobilized his team for an
entrapment operation. [14]

At around 12:00 noon, Edwin received a call from Ronalyn's


abductors. They instructed him to place the money in an SM
plastic bag and to proceed to the Wildlife Park along Quezon
Avenue at 3:00 p.m. Edwin informed Sgt. Cordova about the
payoff. The police operatives proceeded to the Wildlife Park and
positioned themselves within the area.[15]

Edwin went to the Wildlife Park at 3:00 p.m. as planned. Shortly


after, PO3 Borja approached Edwin and took the SM plastic bag
containing the ransom money. Upon seeing the exchange, the
police operatives arrested PO3 Borja and recovered the following
items from him: (1) a 0.9 mm pistol, (2) a cellphone, (3) a
wallet, and (4) the P100,000.00 ransom amount. PO3 Borja was
then brought to the NAKTAF headquarters for investigation. [16]

Despite the successful entrapment operation, the authorities


failed to rescue Ronalyn. While she was inside the van, Ronalyn
heard one (1) of her abductors say that PO3 Borja was
entrapped.  The others cursed her and said, "Putang ina, iyung
[17]

kapatid mo. Tumawag ng taga-NAKTAF."  Afterwards, she was


[18]

taken by her captors to the Philippine Drug Enforcement Agency


where she was charged with illegal sale of shabu. [19]

For his defense, PO3 Borja testified that on the day of the alleged
incident, he was with PO2 Ding Tan at Branch 79, Regional Trial
Court, Quezon City to testify as a witness in a criminal  case. [20]

 However, the hearing was postponed.  After securing a


[21] [22]

certificate of appearance, PO3 Borja decided to go home at 12:00


noon. [23]

At around 2:00 p.m., PO3 Borja received a phone call from an


unknown person. The caller sought assistance to recover his
sister who had been arrested. He instructed the caller to call
back. On the second call, the caller told him to go to the Wildlife
Park and meet a certain Edwin, who would be wearing a white T-
shirt and a bull cap.[24]

PO3 Borja proceeded to the Wildlife Park and met Edwin, who told
him that Ronalyn and Lusterio had been arrested earlier in a buy-
bust operation. PO3 Borja advised Edwin to go with him to the
police station and report the incident. However, Edwin said that
he had to wait for his cousin to arrive.
[25]

Half an hour later, Captain Frederick Obar (Capt. Obar), SPO3


Eric Orellaneda (SPO3 Orellaneda), and three (3) unidentified
persons approached PO3 Borja. SPO3 Orellaneda shouted,
"Meron lang ditong nag-eextortion"C to which PO3 Borja replied,
"Wala naman akong alam" SPO3 Orellaneda confiscated PO3
Borja's wallet, cellphone, and firearm. Afterwards, Sgt. Cordova
shouted, "O, meron ditong P100,000.00 galing kay Borja."  PO3 [26]

Borja was then arrested and was charged of kidnapping for


ransom. [27]

In the Decision  dated October 20, 2008, the Regional Trial Court
[28]

found PO3 Borja guilty beyond reasonable doubt of kidnapping for


ransom.  Accordingly, he was sentenced to the penalty
[29]

of reclusion perpetua: [30]

WHEREFORE, finding the accused PO3 Julieto Borja GUILTY


beyond reasonable doubt of the crime of kidnapping for ransom,
defined and penalized under Article 267 of the Revised Penal
Code, as amended by Republic Act [No.] 7659, the Court hereby
sentences him to suffer the penalty of reclusion perpetua. With
costs against the accused.

SO ORDERED. [31]

PO3 Borja appealed the decision of the Regional Trial Court.  He [32]

argued that Ronalyn was not deprived of her liberty because she
was lawfully arrested and charged with violation of Republic Act
No. 9165. [33]

In the Decision  dated March 14, 2011, the Court of Appeals


[34]

affirmed with modification the Decision dated October 20, 2008 of


the Regional Trial Court. PO3 Borja was ordered to pay the victim
P50,000.00 as civil indemnity and P50,000.00 as moral damages.
[35]

On August 18, 2011, PO3 Borja filed his Notice of Appeal,  which
[36]

was given due course by the Court of Appeals in the


Resolution  dated September 14, 2011.
[37]

On February 6, 2012, this Court noted the records forwarded by


the Court of Appeals and required the Director of the Bureau of
Corrections to confirm accused-appellant PO3 Borja's
confinement.  In the Resolution  dated March 6, 2013, the
[38] [39]

parties were then required to file their respective supplemental


briefs, should they so desired.
Accused-appellant filed his Supplemental Brief  on July 18, 2013.
[40]

On the other hand, the People of the Philippines, through the


Office of the Solicitor General, manifested that it would no longer
file a supplemental brief.
[41]

Accused-appellant anchors his arguments on the arrest and


subsequent conviction of Ronalyn for the sale of shabu. He argues
that it is absurd to convict him of kidnapping considering that the
alleged victim was caught in flagrante delicto during a buy-bust
operation on the day of the alleged incident.  Furthermore,[42]

Ronalyn was found guilty of violation of Republic Act No. 9165 by


both the Court of Appeals  and this Court.  She is now serving
[43] [44]

her sentence in the Women's Correctional in Mandaluyong. [45]

On the other hand, the Office of the Solicitor General asserts that
the categorical and spontaneous testimonies of the prosecution's
witnesses are sufficient to convict accused-appellant of
kidnapping.  The Office of the Solicitor General argues that
[46]

accused-appellant's defense of alibi does not deserve weight. It


was not physically impossible for him to be at the place where the
crime was committed since Quezon City Hall of Justice was just a
few blocks away from where the victim was taken. [47]

The sole issue for this Court's resolution is whether accused-


appellant PO3 Julieto Borja is guilty beyond reasonable doubt of
kidnapping punished under Article 267 of the Revised Penal Code.

This Court affirms the conviction of accused-appellant. His


arguments are unmeritorious.

Ronalyn's apprehension for violation of Republic Act No. 9165


does not automatically negate the criminal liability of accused-
appellant. It also does not exclude the possibility of the
commission of the crime with which accused-appellant is charged.
The buy-bust operation carried out against Ronalyn and her
kidnapping are events that can reasonably coexist.
Furthermore, a violation of Republic Act No. 9165 bears no direct
or indirect relation to the crime of kidnapping. Ronalyn's arrest
and conviction are immaterial to the determination of accused-
appellant's criminal liability. In other words, Ronalyn's innocence
or guilt would neither affirm nor negate the commission of the
crime of kidnapping against her. Therefore, the resolution of this
case will depend solely on whether the prosecution has
established all the elements of kidnapping under Article 267 of
the Revised Penal Code.

The quantum of evidence required in criminal cases is proof


beyond reasonable doubt.  This does not entail absolute certainty
[48]

on the accused's guilt. It only requires moral certainty or "that


degree of proof which produces conviction in an unprejudiced
mind."  The mind and consciousness of a magistrate must be
[49]

able to rest at ease upon a guilty verdict.


[50]

A conviction for the crime of kidnapping or serious illegal


detention requires the concurrence of the following elements:
1. The offender is a private individual[;]
2. That individual kidnaps or detains another or in any other
manner deprives the latter of liberty[;]
3. The act of detention or kidnapping is illegal[;]
4. In the commission of the offense, any of the following
circumstances is present:
a.
b. The kidnapping or detention lasts for more than three
days.
c. It is committed by one who simulates public authority.
d. Any serious physical injury is inflicted upon the person
kidnapped or detained, or any threat to kill that person
is made.
e. The person kidnapped or detained is a minor, a female or a
public officer.  (Citation omitted)
[51]

Although the crime of kidnapping can only be committed by a


private individual,  the fact that the accused is a public official
[52]

does not automatically preclude the filing of an information for


kidnapping against him.
A public officer who detains a person for the purpose of extorting
ransom cannot be said to be acting in an official capacity.
In People v. Santiano,  this Court explained that public officials
[53]

may be prosecuted under Article 267 of the Revised Penal Code if


they act in their private capacity:
The fact alone that appellant Pillueta is "an organic member of
the NARCOM" and appellant Sandigan [is] "a regular member of
the PNP" would not exempt them from the criminal liability for
kidnapping. It is quite clear that in abducting and taking away the
victim, appellants did so neither in furtherance of official function
nor in the pursuit of authority vested in them. It is not, in fine, in
relation to their office, but in purely private capacity, that they
have acted in concert with their co-appellants Santiano and
Chanco.  (Citation omitted)
[54]

The burden is on the accused to prove that he or she acted in


furtherance of his or her official functions. In People v. Trestiza,
 this Court noted:
[55]

Before the present case was tried by the trial court, there was a
significant amount of time spent in determining whether
kidnapping for ransom was the proper crime charged against the
accused, especially since Trestiza and Manrique were both police
officers. Article 267 of the Revised Penal Code specifically stated
that the crime should be committed by a private individual. The
trial court settled the matter by citing our ruling in People v.
Santiano[.]

....

In the same order, the trial court asked for further evidence
which support the defense's claim of holding a legitimate police
operation. However, the trial court found as unreliable the Pre-
Operation/Coordination Sheet presented by the defense. The
sheet was not authenticated, and the signatories were not
presented to attest to its existence and authenticity.  (Citations
[56]

omitted)
Accused-appellant's membership in the Philippine National Police
does not automatically preclude the filing of an information for
kidnapping or serious illegal detention against him. He may be
prosecuted under Article 267 of the Revised Penal Code if it is
shown that he committed acts unrelated to the functions of his
office.

The essence of the crime of kidnapping is "the actual deprivation


of the victim's liberty coupled with the intent of the accused to
effect it."  The deprivation of a person's liberty can be committed
[57]

in different ways.  It is not always necessary that the victim be


[58]

imprisoned,  The second element of the crime of kidnapping  is


[59] [60]

met as long as there is a showing that the victim's liberty of


movement is restricted. [61]

In this case, Ronalyn was clearly deprived of her liberty. She was
forcibly taken inside a vehicle by accused-appellant and his
cohorts and was driven around Quezon City for at least five (5)
hours.  The victim categorically testified on the manner and
[62]

details of her detention,  thus: [63]

While you were, as you said, about to go out of your house on


that morning of May 26, 2004, do you remember any untoward
incident that transpired?
Q: While you were, as you said, about to go out of your house on that morning of
remember any untoward incident that transpired?

A: I was surprised when a male person suddenly grabbed me.

....

Q: You said that a male person suddenly grabbed you, do you know that person?

A: No, ma'am.

Q: After that male person suddenly grabbed you, by the way, on what part of your bod

A: The right forearm, ma'am.

Q: After you were grabbed by your arm, what happened next?


A: I shouted.

....

Q: Where were you b[r]ought?

A: I was loaded in a van.

Q: Do you remember what the van looked like?

A: Yes, ma'am.

Q: Could you describe it to the court?

A: It was big.

Q: What color was it?

A: Gray.

Q: Did you happen to see the plate number of the van?

A: No, ma'am.

Q: You said that you were suddenly grabbed by your arm and you were loaded i
happened thereafter?

A: They drove me to the Circle.

Q: You said they, so, there must be more than one person?

A: Yes, ma'am.

Q: How many were they in that van, including the male person who suddenly grabbed

A: About three, ma'am.

Q: Including the person who took you to the van?

A: He was the fourth.

....
Q: After that conversation, what happened, if any?

A: I was transferred to another vehicle.

Q: And could you describe that car that you transferred to from that van?

A: It was a car.

Q: Do you know the color?

A: Gray.

....

Q: What happened after you were transferred to that gray car?

A: We went to McDonald's at Quezon Avenue.

....

Q: Where exactly were you taken after you were transferred to the gray car?

A: At the back of Sulo Hotel and then McDonald's and then the back of SSS and then
Medical Center.

Q: Until what time were you in that car?

A: 3:00 o'clock in the afternoon, ma'am. [64]

The first two (2) and the last elements of the crime of kidnapping
are present in this case, Ronalyn, a woman, was forcibly taken by
accused-appellant and loaded in a van where she was detained
for several hours. These acts are completely unrelated to
accused-appellant's functions as a police officer, and as such, he
may be prosecuted under Article 267 of the Revised Penal Code.

The third element of the crime of kidnapping is also present.


Accused-appellant and his companions deprived the victim of her
liberty to extort ransom from her family:
Q: You said you heard them calling your brother, what did you hear from them in their
A: They were asking for money.

Q: By the way, who was that person who called your brother?

....

A: Major Clarito, ma'am.

....

Q: You said that you heard Major Clarito telling your brother to prepare money, is that

A: Yes, ma'am.

Q: What else did you hear from him?

A: They asked my brother to give P200,000.00 and then I would be released.

....

Q: What else did you hear in that phone conversation?

....

A: To prepare the P200,000.00 and to meet at Wildlife. [65]

All the elements of kidnapping were sufficiently proven by the


prosecution, which cannot be overturned by accused-appellant's
bare denial and alibi. These two (2) defenses are inherently weak
considering that they can be easily contrived. [66]

For the defense of alibi to prosper, there must be a showing that


it was physically impossible for the accused "to have been at the
scene of the crime at the time of its commission."  In the present
[67]

case, accused-appellant failed to overcome this standard. Even if


he attended the hearing in Quezon City Hall of Justice, there is no
showing that it was physically impossible for him to be at Agham
Road when the victim was forcibly taken. This Court takes judicial
notice that Agham Road and the Quezon City Hall of Justice are
just a few blocks away from each other. Accused-appellant could
have easily slipped out of the city hall at any time.

Moreover, if this Court were to believe accused-appellant's


version of the incident, it was highly irregular for a police officer
to meet the victim's relative in a place other than the police
station to discuss the incident reported to him. That he had to
wait for 30 minutes for another person to arrive is also suspect.
Moreover, as pointed out by the Office of the Solicitor General,
 it is unusual for accused-appellant to interfere with an ongoing
[68]

operation to which he was not assigned. All these irregularities


point to the reasonable conclusion that accused-appellant's
purpose in proceeding to the Wildlife Park was to extort money
from the victim's family.

Although the penalty for kidnapping for ransom is death under


Article 267 of the Revised Penal Code, Republic Act No.
9346  proscribed its imposition. In this regard, both the Regional
[69]

Trial Court and the Court of Appeals correctly imposed the


penalty of reclusion perpetua.

However, in line with current jurisprudence, the civil indemnity of


P50,000.00 and moral damages of P50,000.00 imposed by the
Court of Appeals should be increased to P100,000.00 each.
Exemplary damages of P100,000.00 should also be imposed. [70]

WHEREFORE, the Decision dated March 14, 2011 of the Court of


Appeals in CA-G.R. CR.-H.C. No. 03998
is AFFIRMED with MODIFICATION. Accused-appellant PO3
Julieto Borja is found guilty beyond reasonable doubt of
kidnapping for ransom and is sentenced to suffer the penalty
of reclusion perpetua without eligibility for parole.

Moreover, he is ordered to pay P100,000.00 as civil indemnity,


P100,000.00 as moral damages, and P100,000.00 as exemplary
damages. All monetary awards shall earn interest at the rate of
six percent (6%) per annum from the date of the finality of this
judgment until fully paid.[71]
SO ORDERED.

Carpio, (Chairperson), Bersamin,  Mendoza, and Martires, JJ.,


*

concur.

 Designated as additional member per raffle dated February 16,


*

2013.

 Rollo, pp. 2-23. The Decision was penned by Associate Justice


[1]

Priscilla J. Baltazar-Padilla and concurred in by Associate Justices


Fernanda Latnpas Peralta and Jane Aurora C. Lantion of the
Special Fourteenth Division, Court of Appeals, Manila.

[2]
 REV. PENAL CODE, art. 267 provides:

Article 267. Kidnapping and serious illegal detention. — Any


private individual who shall kidnap or detain another, or in any
other manner deprive him of his liberty, shall suffer the penalty
of reclusion perpetua to death:

1. If the kidnapping or detention shall have lasted more than


three days.

2. If it shall have been committed simulating public authority.

3. If any serious physical injuries shall have been inflicted upon


the person kidnapped or detained, or if threats to kill him shall
have been made.

4. If the person kidnapped or detained shall be a minor, except


when the accused is any of the parents, female, or a public
officer.

The penalty shall be death where the kidnapping or detention was


committed for the purpose of extorting ransom from the victim or
any other person, even if none of the circumstances above-
mentioned were present in the commission of the offense.

When the victim is killed or dies as a consequence of the


detention or is raped, or is subjected to torture or dehumanizing
acts, the maximum penalty shall be imposed.

[3]
 Rollo, p. 3.

[4]
 Id.

[5]
 Id. at 3-4.

[6]
 Id. at 4.

[7]
 Id.

[8]
 Id.

[9]
 CA rollo, p. 26.

[10]
 Rollo, p. 4.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 5.

[14]
 Id.

[15]
 Id. at 5.

[16]
 Id. at 6.

[17]
 CA rollo, p. 26.

[18]
 Id.
[19]
 Rollo, p. 6.

[20]
 Id. at 6-7.

[21]
 CA rollo, p. 28.

[22]
 Rollo, p. 7.

[23]
 Id.

[24]
 Id.

[25]
 Id.

[26]
 CA rollo, p. 28.

[27]
 Rollo, p. 7.

 CA rollo, pp. 25-31. The Decision, docketed as Crim. Case No.


[28]

Q-04-127167, was penned by Presiding Judge Alexander S. Balut


of Branch 76, Regional Trial Court, Quezon City.

[29]
 Id. at 31.

[30]
 Id.

[31]
 Id.

[32]
 Id. at 32-34, Accused-Appellant's Notice of Appeal.

[33]
 Id. at 60, Manifestation.

[34]
 Rollo, pp. 2-23.

[35]
 Id. at 22.

[36]
 Id. at 24-26.
[37]
 Id. at 27.

[38]
 Id. at 29-30.

[39]
 Id. at 50.

[40]
 Id. at 66-75.

[41]
 Id. at 57-58.

[42]
 Id. at 67.

 Id. at 69. The Decision dated December 15, 2010 in CA-G.R.


[43]

CR-HC No. 03140 was penned by then Associate Justice Noel G.


Tijam and concurred in by Associate Justices Marlene Gonzales-
Sison and Danton Q. Bueser of the Eleventh Division of the Court
of Appeals, Manila. In her appeal, Ronalyn Manatad raised the
defense that she was kidnapped. However, according to the Court
of Appeals, there was enough evidence on record that a buy-bust
operation was conducted against her. The Court of Appeals relied
on the testimonies of the prosecution's witnesses, the pre-
operation coordination sheet, and entries in the police log book.

 Rollo, p. 69, Supplemental Brief. In the Resolution dated


[44]

February 1, 2012 this Court dismissed Ronalyn Manatad's appeal


of the Decision of the Court of Appeals dated December 15, 2010.

[45]
 Id.

[46]
 CA rollo, pp. 150-151.

[47]
 Id. at 152.

[48]
 RULES OF COURT, Rule 133, sec. 2 provides:

Section 2. Proof beyond reasonable doubt. - In a criminal case,


the accused is entitled to an acquittal, unless his guilt is shown
beyond reasonable doubt. Proof beyond reasonable doubt does
not mean such a degree of proof as, excluding the possibility of
error, produces absolute certainty. Moral certainty only is
required, or that degree of proof which produces conviction in an
unprejudiced mind.

[49]
 RULES OF COURT, Rule 133, sec. 2.

 People v. Lumibao, 465 Phil. 771, 781 (2004) [Per J.


[50]

Quisumbing, Second Division].

 People v. Obeso, 460 Phil. 625, 633 (2003) [Per J. Panganiban,


[51]

Third Division].

[52]
 REV. PENAL CODE, art. 267.

[53]
 359 Phil. 928 (1998) [Per J. Vitug, First Division].

[54]
 Id. at 943.

[55]
 676 Phil. 420 (2011) [Per J. Carpio, Second Division].

[56]
 Id. at 457-458.

 People v. Mamantak, 582 Phil. 294, 303 (2008) [Per J. Corona,


[57]

En Banc].

[58]
 Id.

 People v. Obeso, 460 Phil. 625, 634 (2003) [Per J. Panganiban,


[59]

Third Division].

[60]
 Id. at 633.

 People v. Jacalne, 61A Phil. 139, 147 (2011) [Per J. Peralta,


[61]

Third Division].

[62]
 Rollo, p. 18.
[63]
 Id. at 3-6.

[64]
 Id. at 12-14.

[65]
 Id. at 13.

 People v. Panlilio, 325 Phil. 848, 857 (1996) [Per J. Bellosillo,


[66]

First Division]; People v. Enriquez, Jr., 503 Phil. 367, 376 (2005)


[Per J. Puno, Second Division].

 People v. Enriquez, Jr., 503 Phil. 367, 376 (2005) [Per J. Puno,
[67]

Second Division].

[68]
 CA rollo, p. 153.

 An Act Prohibiting the imposition of Death Penalty in the


[69]

Philippines (2006).

 People v. Gregorio, G.R. No. 194235, June 8, 2016, 792 SCRA


[70]

469, 504 [Per J. Leonardo-De Castro, First Division]; People v.


Gambao, 718 Phil. 507, 531-532 (2013) [Per J. Perez, En Banc].

 See Nacar v. Gallery Frames, et al., 716 Phil. 267, 281-283


[71]

(2013) [Per J. Peralta, En Banc].

Source: Supreme Court E-Library | Date created: October 13, 2017


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Supreme Court E-Library

SECOND DIVISION
[ G.R. No. 224102, July 26, 2017 ]
RYAN MARIANO Y GARCIA, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

The state of mind of the accused during an alleged act of self-


defense, defense of a relative, or defense of a stranger must be
considered in determining whether his or her means of repelling
an aggressor were reasonable.

This is a Petition for Review assailing the Decision  dated August


[1]

28, 2015 in the case docketed as CA-G.R. CR. No. 35590, which
affirmed the Decision of Branch 114, Regional Trial Court, Pasay
City. The Regional Trial Court found petitioner Ryan Mariano
(Mariano) guilty beyond reasonable doubt of the crime of
frustrated homicide under Article 249 of the Revised Penal Code.[2]

Petitioner Mariano was charged with Frustrated Homicide in an


Information dated July 23, 2010, which read:

That on or about the 22  day of July 2010, in Pasay City, Metro


nd

Manila, Philippines and within the jurisdiction of this Honorable


Court, the above-named accused, Ryan Mariano y Garcia, with
intent to kill, did then and there willfully, unlawfully and
feloniously attack, assault and stab one Frederick Natividad y San
Juan, on the vital part of his body with a kitchen knife, thereby
inflicting upon him serious physical injuries, thus performing all
the acts of execution which would have produced the crime of
homicide as a consequence, but nevertheless did not produce it
by reason or causes due to the timely medical assistance
rendered to said complainant, at Manila Adventist Hospital which
prevented the latter's death.
CONTRARY TO LAW.  (Citation omitted)
[3]

During arraignment, petitioner pleaded not guilty to the offense


charged and trial ensued. [4]

The prosecution's version of the events is as follows:

On July 22, 2010, at around 9:45 p.m., Frederick Natividad


(Natividad) saw Yuki Rivera (Yuki) along Vergel Street.  Yuki [5]

punched Natividad's head thinking that Natividad would tell Yuki's


aunt that he was selling marijuana.  Natividad went to Yuki's
[6]

house to report the punching.  At Yuki's house, Natividad met


[7]

petitioner Mariano and his common-law wife, Pamela Rivera


(Pamela). Later, Mariano stabbed Natividad twice, once in the
buttocks and once on the right side of his body.  A certain [8]

Antonio San Juan (San Juan), who was in his canteen, heard the
noise outside. Upon checking, San Juan saw that Natividad had
been stabbed. He asked barangay tanod Benneth Santos to take
Natividad to the hospital. San Juan noticed Mariano holding a
kitchen knife. Mariano voluntarily surrendered the kitchen knife to
San Juan, who then arrested and surrendered him and the
kitchen knife to the police authorities.
[9]

Dr. Archie B. La Madrid was the surgeon who operated on


Natividad and issued the Medical Certificate certifying his
"penetrating wound at the right lobe of the liver caused by a
sharp object. There was profuse bleeding from the liver." The
wound in the abdomen punctured the liver, and Natividad would
have died without the timely medical intervention. [10]

The prosecution presented evidence to prove that Natividad


incurred the amount of P428,375.51 in medical bills. [11]

On the other hand, the defense's version of the events is as


follows:
On July 22, 2010, at around 8:30 p.m., Mariano was in his
mother's house. He then went to Pamela's house, where he saw
Natividad and Yuki arguing because Yuki refused to buy
marijuana for Natividad. Natividad went berserk, slapped Yuki,
and kicked Pamela's daughter, Pia Rivera (Pia). Mariano went
inside to tell his mother-in-law and Pamela that Natividad was
hurting Yuki and Pia.[12]

Pamela confronted Natividad, who then punched Pamela on the


face and shoulder. Mariano pushed Natividad to the ground.
Natividad stood back up and got a piece of wood and kept hitting
Mariano. Petitioner Mariano evaded Natividad's blows because
Natividad was drunk and staggering. Mariano picked up a knife
and stabbed Natividad on his buttocks. Due to Natividad's
continuous hitting, Mariano stabbed Natividad again, this time on
the right side of his body. [13]

Thus, Mariano claimed that he acted in self-defense and in


defense of a relative.
[14]

Pamela testified that Mariano informed her and her mother that
Natividad was hurting Yuki and Pia. When she went outside to
confront Natividad, he punched her face and shoulder. Upon
seeing this, Mariano pushed Natividad to the ground. Pamela, Pia,
and Yuki went inside the house while Mariano stayed outside.
Later, they learned that Mariano had stabbed Natividad. [15]

Pia and Yuki corroborated Pamela's testimony. None of them


witnessed the stabbing incident because they were already inside
the house when it occurred. [16]

The trial court found Mariano guilty of frustrated homicide:

WHEREFORE, premises considered, the Court finds accused RYAN


MARIANO y GARCIA GUILTY beyond reasonable doubt of the
offense charged of Frustrated Homicide defined and penalized
under Article 249 of the Revised Penal Code, as amended, and
hereby sentences him to suffer the imprisonment of six (6) years
and one (1) day to twelve (12) years of Prision Mayor and to pay
complainant Frederick Natividad the amount of Php428,375.00 as
compensatory damages.

SO ORDERED.  (Emphasis in the original)


[17]

The trial court held that Mariano failed to establish his defense
with clear and convincing evidence  and concluded that Natividad
[18]

was not an unlawful aggressor. The trial court found some conflict
in Mariano's and Pia's testimonies, which put into question
whether Mariano sensed an imminent threat from Natividad:

In this case, there is a divergence in the testimonies of defense


witnesses as to whether victim/complainant Frederick Natividad
really attack [sic] accused Ryan Mariano with a piece of wood (2
x 2). Consider the following testimony of the accused during his
direct examination:

Q: What did you do Mr. Witness when you witnessed Frederick


Natividad boxing your wife?
A: I approached him and pushed him, sir.
Q: What happened to Frederick Natividad after you pushed him?
A: He fell to the ground, sir.
Q: And what happened next after Frederick Natividad fell on the
ground?
A: He fell and when he was able to rise up, he was able to pick up
a piece of wood, sir "parang dos por dos".
Q: Can you describe the width of this piece of wood picked up by
Frederick Natividad?
A: Two inches by two inches (2" x 2"), sir.
Q: What did Frederick Natividad do after picking up the piece of
wood?
A: He hit me with the same, sir.
Q: Where?
A: On the head, sir.
Q: Was he able to hit you on your head Mr. Witness?
A: No sir.
Q: Why Mr. Witness?
A: I was able to parry the blow, sir.
          (TSN, Prado, pp. 12-13, July 5, 2011)

Upon the other hand, defense witness Pia Marie Leaño, during her
direct testimony, unequivocally testified as follows:

Q: What happened to you when you were kicked by Frederick


Natividad?
A: My stepfather saw me when I was kicked by Sonny.
Q: Who are you referring to as your stepfather?
A: Ryan Mariano.
Q: Where was Ryan Mariano in all those times that Frederick
Natividad banged and kicked the gate and threw mono blocks?
A: He was about to get out of the room.
Q: What did Ryan Mariano do after he saw you being kicked by
Mr. Natividad?
A: He tried to defend me.
Q: What exactly did he do Madam Witness?
A: He was able to pick up a piece of wood and tried to hit Sonny
with the same.
Q: What kind of wood Madam Witness?
A: Small wood only.
Q: Was he able to hit Frederick Natividad with that wood?
A: No.
Q: What happened next when Ryan tried to hit Frederick
Natividad with that piece of wood?
A: I went back to my room because my head was starting to
bleed.
(TSN, Tapel, pp. 16-17, January 24, 2012)

With this conflict of who really got hold of a piece of wood and
tried to hit who; emerges the question of whether the accused
sensed an imminent threat to his life. Accused's contention
therefore that there was an imminent threat of bodily harm
coming from victim/complainant Frederick Natividad upon his
person is at best illusory . . .
The span of time between the first and second stabbing and the
nature of wounds suffered by victim Frederick Natividad negate
any claim of self-defense or defense of a relative or stranger.
Consider the following testimony of accused Ryan Mariano during
his re-cross examination by the prosecution:

Q: After stabbing Frederick Natividad outside the compound for


the first time, you are saying that 15 minutes more elapsed
before you stabbed him for the second time, is that what you are
saying?
A: Yes sir.
Q: And you testified that in 15 minutes interval, there was still a
pagkakagulo?
A: Yes sir.
....
Q: Despite of the fact that you stabbed him already at the
buttock, he stayed in that place for 15 minutes?
A: Yes sir, he did not stop and the more he ran amuck.
Q: And despite the fact that you stabbed him at the buttock, he
did not retaliate against you, is that what you are saying?
A: Because he was being pacified by Benet, sir.
(TSN, Arangonn, pp. 17-19, August 24, 2011)

The Court notes that Frederick Natividad's second wound was


fatal as it affected the vital organ of his body specifically his liver.
Had it not been for the timely and medical assistance rendered,
the victim, Frederick Natividad, would have died. Had accused
merely defended himself from the victim/complainant's unlawful
aggression, one (1) stab to the buttock to immobilize him would
have been enough. There was no reason for accused Ryan
Mariano to stab the victim a second time on the abdomen area
even aiming at his vital organs. It bears stressing that the nature
of the second stab wound inflicted by the accused is an indication
which disprove[s] a plea for self-defense or defense of a relative
or defense of a stranger because it demonstrate[s] a determined
effort to kill the victim and not just defend one's self. In the case
at bar, Frederick Natividad's wounds serve to tell us that accused
was induced by revenge, resentment or other motive and that he
was bent on killing the victim.[19]

Thus, in the absence of any unlawful aggression on the part of


Natividad, the trial court ruled that there was no reasonable
means employed by Mariano. Even with unlawful aggression, the
means used by Mariano were unreasonable.  Natividad was
[20]

drunk and staggering, which made it easy for Mariano to evade


Natividad's continuous attempts to hit him. Mariano could have
simply shoved Natividad outside the property and secured the
gate, but instead, he chose to stab him twice. The nature and
number of the stab wounds clearly show his intent to kill. [21]

On appeal, the Court of Appeals affirmed the ruling of the trial


court in its Decision dated August 28, 2015. [22]

The Court of Appeals held that since Mariano claimed that he


acted in self-defense, defense of a relative, and defense of a
stranger when he stabbed Natividad, the burden of evidence
shifted to him, to prove that all the essential elements of self-
defense were present.  It found these elements, particularly
[23]

unlawful aggression, to be absent: [24]

In this case, the element of unlawful aggression is patently


absent. The records of the case shows [sic] that there is no actual
or imminent danger on the person of the Accused when he
stabbed the Complainant. Accused admitted that he was able to
evade each hit by the Complainant because the latter was drunk
and staggering at the time of the alleged unlawful aggression.
The absence of unlawful aggression was even corroborated by the
physical evidence that should clearly defeat the claim of unlawful
aggression on the part of the Complainant because it was only
the latter who was wounded in the assault. It was also testified
by the Accused's own witnesses, i.e. Pamela Rivera, that the
Complainant was merely shouting, to wit:

"Q: What happened after you went out?


A: We just saw Sonny being pacified by Benneth.

Q: Why is Sonny being pacified by Benneth, what was Sonny


doing then?

Court: Put it on record verbatim.


A: "Nagwawala po"

Q: What exactly was he doing when you said "nagwawala po["]?


A: She (sic) was shouting sir.

Q: Aside from shouting, what else was she (sic) doing, if any?
A: No more sir, he was just prevented by Benneth from entering
the gate sir."

Clearly, mere shouting cannot be considered, by any standard, as


an unlawful aggression. To reiterate, unlawful aggression must be
actual or imminent threat. It must not consist in a mere
threatening attitude, nor must it be merely imaginary, but it must
be offensive and positively strong.

The claim of Accused that he only acted in defense of relative and


of stranger at the time he stabbed the Complainant was also
belied by the testimonies of his own witnesses. As testified, the
witnesses were all inside the house at the time the Accused
stabbed the Complainant. Further, the defense witnesses
admitted that there was no unlawful aggression on the part of
Complainant when the Accused stabbed the former. Hence, there
was no longer any imminent danger on the lives of his relatives
as they are all in the safety of their home. Therefore, the reason
for stabbing the Complainant in defense of Accused's relatives is
legally unavailing.  (Citations omitted)
[25]

The Court of Appeals stressed that unlawful aggression is not


merely an imaginary or threatening attitude, but must be
offensive and positively strong.  When asked to describe
[26]

Natividad's acts, Pamela testified that he was shouting, which the


Court of Appeals held could not be considered as unlawful
aggression by any standard.  Mariano's witnesses testified that
[27]

they were all inside the house at the time he stabbed Natividad.
 Thus, there was no imminent danger on their lives for purposes
[28]

of defense of a relative or a stranger.

The Court of Appeals also found that Mariano did not employ
reasonable means to repel Natividad, who was too drunk to pose
a real risk:

The second element of the justifying circumstance of self-


defense, i.e., reasonable means employed to prevent or repel the
alleged aggression, could not have been present in the absence of
any unlawful aggression on the part of the Complainant.
However, even granting that there was unlawful aggression on
the part of Complainant, the means employed by Accused to
repel the attack was not reasonable. To note, Complainant was
drunk and staggering. No matter how many times Complainant
attempted to hit Accused, the latter was able to easily evade the
blows of Complainant due to the condition of the latter at that
time. Accused could have simply pushed the Complainant outside
the premises and locked the gate and/or the door of their house.
But Accused chose to stab the Complainant not only once but
twice and on a vital part of Complainant's body. Clearly, the
nature and the number of the stab wounds shows [sic] a clear
intent to kill the Complainant, not merely to repel the attack of
Complainant.  (Citation omitted)
[29]

However, the Court of Appeals modified the penalty, considering


the absence of mitigating or aggravating circumstances. Thus,
the dispositive portion of its Decision states:

WHEREFORE, the Decision dated December 3, 2012 of the


Regional Trial Court, Branch 114 of Pasay City in Criminal Case
No. R-PSY-10-02334-CR is AFFIRMED with MODIFICATIONS.
Accused RYAN MARIANO y GARCIA is found GUILTY beyond
reasonable doubt of the crime of Frustrated Homicide and is
hereby sentenced to suffer the penalty of imprisonment of 2
years and 4 months of prision correccional as minimum to 8
years and 1 day of prision mayor  as maximum. Accused is
ordered to pay to Complainant Frederick Natividad the amount of
Php30,000.00 as moral damages in addition to the amount of
Php428,375.00 as actual damages. Accused is further ordered to
pay Complainant interest on the damages awarded at the legal
rate of 6% per annum from the date of finality of this judgment
until fully paid.

SO ORDERED. [30]

Thus, petitioner Mariano filed this petition.

Petitioner insists that the elements of self defense were present.


Unlawful aggression on the part of Natividad was present.  The [31]

records established that Natividad attacked Pia, Yuki, and


Pamela.  Pia and Yuki were both minors.  Petitioner only
[32] [33]

intervened when Natividad started attacking Pamela. [34]

Petitioner reiterates that the means employed were reasonable.


 Reasonable necessity is not absolute necessity. A person who is
[35]

assaulted cannot be expected to have the tranquility of mind to


make calculated comparisons on the reasonableness of his
reaction to the assault.  In this case, petitioner cannot be
[36]

expected to have acted in a different manner than to stab


Natividad, who had repeatedly struck him with a piece of wood
and had earlier punched Pamela and hit Pia's forehead with a
steel gate.  Natividad's actions instilled overwhelming fear in
[37]

petitioner Mariano, who became frantic. [38]

Petitioner argues that there was lack of sufficient provocation on


his part.[39]

Thus, petitioner prays to be acquitted or, in the alternative, to be


held liable for less serious physical injuries only and that his
sentence be reduced accordingly.
The Office of the Solicitor General argues that unlawful
aggression is not present in this case, considering that there was
no actual, sudden, and unexpected danger on petitioner or his
companions.  Likewise, the means employed by petitioner to
[40]

repel Natividad were not reasonably necessary, considering that


Natividad was drunk and staggering at the time of the altercation.
 The Office of the Solicitor General insists that the Court of
[41]

Appeals and the trial court's factual findings are binding on this
Court, considering that no exceptional circumstances exist here to
review these findings.[42]

This Court grants the petition.

At the very least, petitioner acted in defense of a stranger. Article


11(1) and (3) of the Revised Penal Code provide:

Article 11. Justifying circumstances. – The following do not incur


any criminal liability:

1. Anyone who acts in defense of his person or rights, provided


that the following circumstances concur:
First. Unlawful aggression;

Second. Reasonable necessity of the means employed to prevent


or repel it;

Third. Lack of sufficient provocation on the part of the person


defending himself.
....

3. Anyone who acts in defense of the person or rights of a


stranger, provided that the first and second requisites mentioned
in the first circumstance of this article are present and that the
person defending be not induced by revenge, resentment, or
other evil motive.
To properly invoke the justifying circumstance of defense of a
stranger, it must be shown that there was unlawful aggression on
the part of the victim, that the means employed to repel the
victim were reasonably necessary, and that the accused was not
induced by revenge, resentment, or other evil motive.

The Court of Appeals rejected petitioner's defense on the ground


that there was no unlawful aggression  and the means employed
[43]

to prevent or repel Natividad were not reasonable. However, a


reading of the assailed Decision reveals that the Court of Appeals
accepted that it did not reject as false petitioner's factual
allegations or evidence to prove the allegations presented before
the trial court. The Court of Appeals only differed as to whether
the facts, as alleged by petitioner, were sufficient to comprise
unlawful aggression. In fact, the Court of Appeals' conclusion—
that no unlawful aggression was present—relied on the testimony
of one (1) of petitioner's witnesses, Pamela. It summarized
Pamela's testimony:

Pamela, testified that on the night of July 22, 2010, while she
was watching TV, the Accused informed her and her mother that
the Complainant was hurting Yuki and Pia. When she went
outside the house to confront the Complainant, the latter
punched her on her face and on her shoulder. The Accused seeing
what happened, pushed Complainant to the ground. After
Accused pushed the Complainant to the ground, they all went
inside of the house, except the Accused. Thereafter, they learned
that the Accused stabbed the Complainant. [44]

In concluding there was no unlawful aggression, the Court of


Appeals relied on Pamela's testimony that she and her
companions, except for petitioner, went inside the house after
petitioner pushed Natividad to the ground. However, the Court of
Appeals ignored Pamela's testimony that Natividad punched her
face and shoulder, which was corroborated by the testimony of
Pamela's daughter, Pia. As summarized by the trial court, Pia
testified:
[T]hat on July 22, 2010 at around 8:00 P.M., she was in front of
their gate standing by together with her friends; that Sonny tried
to request Yuki to buy marijuana; that Yuki, her cousin refused;
that Frederick Natividad got mad at Yuki for refusing to buy
marijuana; that Frederick Natividad slapped Yuki Rivera two or
three times while they were in front of the gate; that she was
beside Yuki Rivera when Frederick slapped him; that Yuki went to
their house and tried to lock the gate; that she also locked the
gate; that "si Sonny po ay kinalampag at tinatadyakan ang gate";
that the steel gate hit her "pumutok po ang noo ko"; that Sonny
threw three (3) mono block chairs to Yuki; that all the chairs hit
her at her back; that Yuki tried to throw the mono blocks but
Sonny kicked her on her right leg thinking that she was Yuki; that
her stepfather, Ryan Mariano, saw her being kicked by Sonny, so,
Ryan Mariano tried to defend her; that Ryan Mariano was able to
pick up a piece of wood and tried to hit Sonny with the same;
that she went back to her room because her head was starting to
bleed; that she stayed less than 15 minutes in her room then
went outside of the house and saw Sonny boxing her mother
Pamela Rivera on her arm; that her mother cried; that her
mother and Ryan were lived-in partners; that Frederick Natividad
boxed Ryan Mariano on his chest; that Ryan Mariano was just
trying to defend himself and her mom; that she stayed inside
their house until the trouble was finished; that she filed a
complaint against Frederick Natividad at the police station; that
she secured a medical certificate as regards to her injuries as the
basis to the child abuse case which she filed against Frederick
Natividad.

On cross-examination, same witness testified; that she did not


see when accused Ryan Mariano stabbed Frederick Natividad
because she was then in her room; that she likewise do not know
where was Yuki Rivera and Pamela Rivera when Ryan Mariano
stabbed Frederick Natividad.[45]
It is significant that Natividad did not deny attacking Pamela or
Pia, as he could not remember these acts. [46]

An attack showing the aggressor's intention is enough to consider


that unlawful aggression was committed.  Thus, the attack on
[47]

Pamela should have been considered as unlawful aggression for


purposes of invoking the justifying circumstance of defense of a
stranger.

The Court of Appeals opined that the means employed by


petitioner to repel Natividad were not reasonable, stressing that
Natividad was drunk and staggering at the time of the altercation.
 This cannot be countenanced.
[48]

The state of mind of the accused during the alleged act of self-
defense or defense of a stranger must be considered in
determining whether a person's means of repelling an aggressor
were reasonable. In Jayme v Repe,  this Court explained:
[49]

Consequently, we rule that petitioner employed reasonable


means to repel the sudden unprovoked attack of which he was
the victim.

"Reasonable necessity does not mean absolute necessity. It must


be assumed that one who is assaulted cannot have sufficient
tranquility of mind to think, calculate and make comparisons
which can easily be made in the calmness of the home. It is not
the indispensable need but the rational necessity which the law
requires. In each particular case, it is necessary to judge the
relative necessity, whether more or less imperative, in
accordance with the rules of rational logic. The defendant may be
given the benefit of any reasonable doubt as to whether he
employed rational means to repel the aggression."

"The rule of reasonable necessity is not ironclad in its application;


it depends upon the circumstances of the particular case. One
who is assaulted does not have the time nor sufficient tranquility
of mind to think, calculate and choose the weapon to be used.
The reason is obvious, in emergencies of this kind, human nature
does not act upon processes of formal reason but in obedience to
the instinct of self-preservation; and when it is apparent that a
person has reasonably acted upon this instinct, it is the duty of
the courts to sanction the act and to hold the actor irresponsible
in law for the consequences."  (Citations omitted)
[50]

In United States v. Paras,  where an accused was knocked to the


[51]

ground by an unlawful aggressor who then kicked him, and thus,


the accused fired several shots at the aggressor in self-defense,
this Court held:

From the facts proven in these proceedings it is inferred that the


three requisites named in No. 4 of article 8 of the Penal Code are
present in the homicide, inasmuch as without previous
provocation on the part of the accused Paras, he was suddenly
and violently assaulted, being struck in the face, the blows
causing blood to flow, and as a result of the aggression he was
laid flat on the ground, where he was kicked; given the rapidity
with which the act was carried out and the imminence of the
danger, it is impossible to affirm that being already prostrate on
the ground the assault of which he was the victim would have
ceased. It is reasonable to believe that the accused, when he
defended himself by shooting his assailant, did not exceed his
rights in his defense or employ unnecessary means to repel an
attack already commenced in a cruel and violent manner or to
prevent its continuation, because from the suddenness of the
attack, the end thereof, without risk to his person, could not be
assured. It would not be proper or reasonable to claim that he
should have fled or selected a less deadly weapon, because in the
emergency in which, without any reason whatever, he was
placed, and being attacked by a person larger and stronger than
himself, there was nothing more natural than to have made use
of the weapon he held, in order to defend himself; anyone, upon
being assaulted in a similar manner, would have acted likewise.
In the natural order of things, following the instinct of self-
preservation, he was compelled to resort to a proper defense; an
impossibility [cannot] be demanded of the injured person when it
[cannot] be affirmed that he could have done less than he did in
defending himself by shooting at his assailant who had
maltreated him and knocked him down.

The reasonable necessity of the means employed in the defense,


according to the jurisprudence of courts, does not de[p]end upon
the harm done, but rests upon the imminent danger of such
injury.
[52]

Here, although the offended party was drunk, and therefore, was
not able to land his blows, his attacks were incessant. He had
already attacked three (3) other persons—two (2) minors as well
as petitioner's common-law wife—and was still belligerent. While
it may be true that Pamela, Pia, and Yuki had already gone inside
the house at the time of the stabbing, it then appeared to the
petitioner that there was no other reasonable means to protect
his family except to commit the acts alleged. It is unreasonable
for courts to demand conduct that could only have been
discovered with hindsight and absent the stress caused by the
threats that the petitioner actually faced.

Finally, petitioner was not induced by revenge, resentment, or


other evil motive. The victim himself, Natividad, testified that he
had no issues with petitioner before the incident.  Thus, all the
[53]

elements to invoke the justifying circumstance of defense of a


stranger were present in this case.

Considering that petitioner was justified in stabbing Natividad


under Article 11, paragraph 3 of the Revised Penal Code, he
should be exonerated of the crime charged.

WHEREFORE, the petition is GRANTED. The Court of Appeals


Decision dated August 28, 2015 in CA-G.R. CR. No. 35590
is REVERSED and SET ASIDE. Petitioner RYAN MARIANO y
GARCIA is ACQUITTED of frustrated homicide. Let entry of
judgment be issued immediately.
SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires,


JJ., concur.

 Rollo, pp. 38-52. The Decision was penned by Associate Justice


[1]

Noel G. Tijam and concurred in by Associate Justices Francisco P.


Acosta and Eduardo B. Peralta, Jr. of the 4  Division, Court of
th

Appeals, Manila.

[2]
 Id. at 71-87.

[3]
 Id. at 39.

[4]
 Id.

[5]
 Id.

[6]
 Id. at 72.

[7]
 Id. at 40.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id. at 41.

[13]
 Id.
[14]
 Id. at 82.

[15]
 Id. at 41.

[16]
 Id. at 42.

[17]
 Id. at 87.

[18]
 Id. at 83.

[19]
 Id. at 83-86.

[20]
 Id. at 47-48.

[21]
 Id. at 48.

[22]
 Id. at 51.

[23]
 Id. at 43-44.

[24]
 Id. at 45.

[25]
 Id. at 45-47.

[26]
 Id. at 46.

[27]
 Id.

[28]
 Id. at 46-47.

[29]
 Id. at 47-48.

[30]
 Id. at 51.

[31]
 Id. at 24.

[32]
 Id. at 25.
[33]
 Id.

[34]
 Id.

[35]
 Id. at 26.

[36]
 Id.

[37]
 Id.

[38]
 Id. at 27.

[39]
 Id. at 28.

[40]
 Id. at 135.

[41] 
Id. at 135-136.

[42]
 Id. at 136-137.

[43]
 Id. at 45.

[44]
 Id. at 41.

[45]
 Id. at 80-81.

[46]
 Id. at 73.

 U.S. v. Guy-Sayco, 13 Phil. 292, 295-296 (1909) [Per J. Torres,


[47]

En Banc].

[48]
 Rollo, p. 48.

[49]
 372 Phil. 796 (1999) [Per J. Pardo, First Division].

[50]
 Id. at 803-804.

[51]
 9 Phil. 367 (1907) [Per J. Torres, First Division].
[52]
 Id. at 369-370.

[53]
 Rollo, p. 73.

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SECOND DIVISION

[ G.R. No. 204544, July 03, 2017 ]


MARLON BACERRA Y TABONES, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

The identity of the perpetrator of a crime and a finding of guilt


may rest solely on the strength of circumstantial evidence.

This resolves the Petition for Review  assailing the [1]

Decision  dated August 30, 2012 and the Resolution  dated


[2] [3]

October 22, 2012 of the Court of Appeals in CA-G.R. CR No.


32923, which upheld the conviction of Marlon Bacerra y Tabones
(Bacerra) for the crime of simple arson punished under Section 1
of Presidential Decree No. 1613. [4]
In the Information dated January 12, 2006, Bacerra was charged
with violation of Section 1 of Presidential Decree No. 1613:
That on or about 4:00 o'clock in the morning of November 15,
2005, at Brgy. San Pedro Ili, Alcala, Pangasinan and within the
jurisdiction of this Honorable Court, the above-named accused,
with intent to cause damage to another, did then and theres
[sic], willfully, unlawfully and feloniously set fire to the rest house
of Alfredo Melegrito y Galamay, to his damage and prejudice in
the amount of Php70,000.00, more or less.

Contrary to Sec. 1, 1  par. of P.D. 1613. st [5]

Bacerra pleaded not guilty to the charge. [6]

During trial, the prosecution presented private complainant


Alfredo Melegrito (Alfredo), Edgar Melegrito (Edgar), Toni Rose
dela Cruz, and PO3 Marcos Bautista, Jr. to testify on the alleged
incident.  Their collective testimonies produced the following facts
[7]

for the prosecution:

Alfredo and his family  were sound asleep in their home on


[8]

November 15, 2005.  At about 1:00 a.m., he was roused from
[9]

sleep by the sound of stones hitting his house. Alfredo went to


the living room  and peered through the jalousie window. The
[10]

terrace light allowed him to recognize his neighbor and co-


worker,  Bacerra.
[11] [12]

Bacerra threw stones at Alfredo's house while saying, "Vulva of


your mother."  Just as he was about to leave, Bacerra exclaimed,
[13]

"[V]ulva of your mother, Old Fred, I'll burn you now."  Bacerra [14]

then left.  Alfredo's son, Edgar, also witnessed the incident


[15]

through a window in his room. [16]

Troubled by Bacerra's threat, Alfredo waited for him to return.


Alfredo sat down beside the window.  At around 4:00 a.m.,  he [17] [18]

heard dogs barking outside.  Alfredo looked out the window and
[19]

saw Bacerra walking towards their nipa hut,  which was located [20]

around 10 meters from their house. [21]


Bacerra paced in front of the nipa hut and shook it.  Moments [22]

later, Alfredo saw the nipa hut burning. [23]

Alfredo sought help from his neighbors to smother the fire.


 Edgar contacted the authorities for assistance  but it was too
[24] [25]

late. The nipa hut and its contents were completely destroyed.
 The local authorities conducted an investigation on the incident.
[26]

[27]

The defense presented Bacerra, Alex Dacanay (Dacanay), and


Jocelyn Fernandez (Fernandez) as witnesses. Their collective
testimonies yielded the defense's version of the incident:

At around 11:00 p.m. of November 14, 2005, Bacerra was at the


house of his friend, Ronald Valencia. The two (2) engaged in a
drinking session with Dacanay and a certain Reyson until 1:00
a.m. of November 15, 2005. [28]

Bacerra asked Dacanay to take him to his grandmother's house.


Dacanay conceded but they found the gate closed.  Embarrassed [29]

to disturb his grandmother,  Bacerra asked Dacanay to bring him


[30]

to Fernandez's house instead.  However, Dacanay was already


[31]

sleepy at that time.  Hence, Bacerra requested his brother-in-


[32]

law, Francisco Sadora (Sadora), to accom any him to Fernandez's


house, which was located one (1) kilometer away. [33]

Bacerra and Sadora arrived at Fernandez's house at around 1:30


a.m. Fernandez told Bacerra to sleep in the living room. She
checked on Bacerra every hour.  At around 7:00 a.m., police
[34]

officers who were looking for Bacerra arrived at Fernandez's


house.  Knowing that he did not do anything wrong,  Bacerra
[35] [36]

voluntarily went to the police station with the authorities. [37]

In the Decision dated October 6, 2009, Branch 50 of the Regional


Trial Court in Villasis, Pangasinan  found Bacerra guilty beyond
[38]

reasonable doubt of arson:


WHEREFORE, judgment is hereby rendered finding accused
Marlon Bacerra y Tabones GUILTY beyond reasonable doubt of
the crime of Simple Arson defined and penalized in Section 1 of
Presidential Decree No. 1613 and, there being no modifying
circumstance, is sentenced to suffer an indeterminate penalty
of six (6) years of prision correccional, as minimum, to ten (10)
years of prision mayor, as maximum, together with all the
accessory penalties provided by law.

The accused is likewise ordered to pay the private complainant


P50,000.00 as temperate damages.

SO ORDERED.  (Emphasis in the original)


[39]

Bacerra appealed the Decision of the Regional Trial Court.  He [40]

argued that none of the prosecution's witnesses had positively


identified him as the person who burned the nipa hut. [41]

In the Decision  dated August 30, 2012, the Court of Appeals


[42]

affirmed the Decision dated October 6, 2009 of the Regional Trial


Court in toto. [43]

Bacerra moved for reconsideration  but the Motion was denied in


[44]

the Resolution  dated October 22, 2012.


[45]

On January 15, 2013, Bacerra filed a Petition for Review on


Certiorari  assailing the Decision dated August 30, 2012 and
[46]

Resolution dated October 22, 2012 of the Court of Appeals.

In the Resolution dated January 30, 2013, this Court required the
People of the Philippines to comment on the petition for review. [47]

On June 18, 2013, the People of the Philippines, through the


Office of the Solicitor General, filed a Comment on the
Petition  to which petitioner filed a Reply  on January 27, 2014.
[48] [49]

Petitioner argues that the Court of Appeals erred in upholding his


conviction based on circumstantial evidence, which, being merely
based on conjecture, falls short of proving his guilt beyond
reasonable doubt.  No direct evidence was presented to prove
[50]

that petitioner actually set fire to private complainant's nipa hut.


 Moreover, there were two (2) incidents that occurred, which
[51]

should be taken and analyzed separately. [52]

Petitioner adds that there were material inconsistencies in the


testimonies of the prosecution's witnesses.  Petitioner also points
[53]

out that private complainant acted contrary to normal human


behavior, placing great doubt on his credibility.  Persons whose
[54]

properties are being destroyed should immediately confront the


perpetrator.  Private complainant and his family, however,
[55]

merely stayed inside their house throughout the entire incident. [56]

Petitioner argues in the alternative that the mitigating


circumstances of intoxication and voluntary surrender should
have been appreciated by the lower tribunals in computing the
imposable penalty.  Petitioner was drunk at the time of the
[57]

alleged incident.  In addition, he voluntarily surrendered to the


[58]

authorities despite the absence of an arrest warrant.  Lastly, [59]

petitioner asserts that temperate damages should not have been


awarded because private complainant could have proven actual
damages during trial. [60]

In its Comment, respondent asserts that direct evidence is not


the only means to establish criminalliability.  An accused may be
[61]

convicted based on circumstantial evidence as long as the


combination of circumstances leads to the conclusion that the
accused is guilty beyond reasonable doubt. [62]

Respondent argues that the Court of Appeals correctly affirmed


the trial court's decision. For intoxication to be considered as a
mitigating circumstance, it must be shown that it is not habitual.
 The state of drunkenness of the accused must be of such
[63]

nature as to affect his or her mental faculties.  Voluntary [64]

surrender cannot likewise be considered as a mitigating


circumstance because there is no showing of spontaneity on the
part of the accused. [65]
Lastly, respondent argues that temperate damages amounting to
P50,000.00 was properly awarded because the burning of private
complainant's nipa hut brought some pecuniary loss. [66]

This case presents the following issues for this Court's resolution:

First, whether petitioner's guilt was proven beyond reasonable


doubt based on the circumstantial evidence adduced during trial;
[67]

Second, whether the mitigating circumstances of intoxication and


voluntary surrender may properly be appreciated in this case to
reduce the imposable penalty;  and
[68]

Finally, whether the award of temperate damages amounting to


P50,000.00 was proper. [69]

This Court affirms petitioner's conviction for the crime of simple


arson.

Direct evidence and circumstantial evidence are classifications of


evidence with legal consequences.

The difference between direct evidence and circumstantial


evidence involves the relationship of the fact inferred to the facts
that constitute the offense. Their difference does not relate to the
probative value of the evidence.

Direct evidence proves a challenged fact without drawing any


inference.  Circumstantial evidence, on the other hand,
[70]

"indirectly proves a fact in issue, such that the fact-finder must


draw an inference or reason from circumstantial evidence." [71]

The probative value of direct evidence is generally neither greater


than nor superior to circumstantial evidence.  The Rules of Court
[72]

do not distinguish between "direct evidence of fact and evidence


of circumstances from which the existence of a fact may be
inferred."  The same quantum of evidence is still required. Courts
[73]

must be convinced that the accused is guilty beyond reasonable


doubt. [74]

A number of circumstantial evidence may be so credible to


establish a fact from which it may be inferred, beyond reasonable
doubt, that the elements of a crime exist and that the accused is
its perpetrator.  There is no requirement in our jurisdiction that
[75]

only direct evidence may convict.  After all, evidence is always a


[76]

matter of reasonable inference from any fact that may be proven


by the prosecution provided the inference is logical and beyond
reasonable doubt.

Rule 113, Section 4 of the Rules on Evidence provides three (3)


requisites that should be established to sustain a conviction based
on circumstantial evidence:
Section 4. Circumstantial evidence, when sufficient. -
Circumstantial evidence is sufficient for conviction if:
 
(a) There is more than one circumstance;
(b) The facts from which the inferences are derived are proven; and
(c) The combination of all the circumstances is such as to produce a conviction beyond
The commission of a crime, the identity of the perpetrator,  and [78]

the finding of guilt may all be established by circumstantial


evidence.  The circumstances must be considered as a whole and
[79]

should create an unbroken chain leading to the conclusion that


the accused authored the crime. [80]

The determination of whether circumstantial evidence is sufficient


to support a finding of guilt is a qualitative test not a quantitative
one.  The proven circumstances must be "consistent with each
[81]

other, consistent with the hypothesis that the accused is guilty,


and at the same time inconsistent with the hypothesis that he is
innocent, and with every other rational hypothesis except that of
guilt." [82]
The crime of simple arson was proven solely through
circumstantial evidence in People v. Abayon.  None of the [83]

prosecution's witnesses actually saw the accused start the fire.


 Nevertheless, the circumstantial evidence adduced by the
[84]

prosecution, taken in its entirety, all pointed to the accused's


guilt. [85]

In People v. Acosta,  there was also no direct evidence linking


[86]

the accused to the burning of the house.  However, the [87]

circumstantial evidence was substantial enough to convict the


accused.  The accused had motive and previously attempted to
[88]

set a portion of the victim's house on fire.  Moreover, he was [89]

present at the scene of the crime before and after the incident. [90]

Similarly, in this case, no one saw petitioner actually set fire to


the nipa hut. Nevertheless, the prosecution has established
multiple circumstances, which, after being considered in their
entirety, support the conclusion that petitioner is guilty beyond
reasonable doubt of simple arson.

First, the evidence was credible and sufficient to prove that


petitioner stoned private complainant's house and threatened to
burn him.  Private complainant testified that he saw petitioner
[91]

throwing stones at his house and heard petitioner say, "okinam


nga Lakay Fred, puuran kayo tad ta!"  (Vulva of your mother,
[92]

Old Fred, I'll burn you now.)  Petitioner's threats were also heard
[93]

by private complainant's son  and grandchildren. [94] [95]

Second, the evidence was credible and sufficient to prove that


petitioner returned a few hours later and made his way to private
complainant's nipa hut.  Private complainant testified that at
[96]

4:00 a.m.,  he saw petitioner pass by their house and walk
[97]

towards their nipa hut.  This was corroborated by private


[98]

complainant's son who testified that he saw petitioner standing in


front of the nipa hut moments before it was burned. [99]
Third, the evidence was also credible and sufficient to prove that
petitioner was in close proximity to the nipa hut before it caught
fire. [100]

Private complainant testified that he saw petitioner walk to and


fro in front of the nipa hut and shake its posts just before it
caught fire.  Private complainant's son likewise saw petitioner
[101]

standing at the side of the nipa hut before it was burned. [102]

The stoning incident and the burning incident cannot be taken


and analyzed separately. Instead, they must be viewed and
considered as a whole. Circumstantial evidence is like a "tapestry
made up of strands which create a pattern when
interwoven."  Each strand cannot be plucked out and scrutinized
[103]

individually because it only forms part of the entire picture.  The [104]

events that transpired prior to the burning incident cannot be


disregarded. Petitioner's threat to burn occurred when he stoned
private complainant's house.

Also, there is no other reasonable version of the events which can


be held with reasonable certainty.

Private complainant could have actually seen petitioner burn the


nipa hut by stepping outside of his house. However, behavioral
responses of individuals confronted with strange, startling, or
frightful experiences vary.  Where there is a perceived threat or
[105]

danger to survival, some may fight, others might escape.


 Private complainant's act of remaining inside his house during
[106]

the incident is not contrary to human behavior. It cannot affect


his credibility as a witness.

Furthermore, "the assessment of the credibility of witnesses is a


function ... of the trial courts."  It is a factual matter that
[107]

generally cannot be reviewed in a Rule 45 petition.  Petitioner


[108]

failed to prove, much less allege, any of the exceptions to the


general rule that only questions of law may be raised in a petition
for review brought under Rule 45 of the Rules of Court.  Hence, [109]

this Court will not disturb the trial court's findings on the matter.
II

For intoxication to be appreciated as a mitigating circumstance,


the intoxication of the accused must neither be "habitual [n]or
subsequent to the plan to commit [a] felony." [110]

Moreover, it must be shown that the mental faculties and


willpower of the accused were impaired in such a way that would
diminish the accused's capacity to understand the wrongful
nature of his or her acts.  The bare assertion that one is
[111]

inebriated at the time of the commission of the crime is


insufficient.  There must be proof of the fact of intoxication and
[112]

the effect of intoxication on the accused.[113]

There is no sufficient evidence in this case that would show that


petitioner was intoxicated at the time of the commission of the
crime. A considerable amount of time had lapsed from petitioner's
drinking spree up to the burning of the nipa hut within which he
could have regained control of his actions. Hence, intoxication
cannot be appreciated as a mitigating circumstance in this case.

Neither can voluntary surrender be appreciated as a mitigating


circumstance.

Voluntary surrender, as a mitigating circumstance, requires an


element of spontaneity. The accused's act of surrendering to the
authorities must have been impelled by the acknowledgment of
guilt or a desire to "save the authorities the trouble and expense
that may be incurred for his [or her] search and capture."[114]

Based on the evidence on record, there is no showing that


petitioner's act of submitting his person to the authorities was
motivated by an acknowledgement of his guilt.

Considering that no mitigating circumstances attended the


commission of the crime, the indeterminate sentence of six (6)
years of prision correccional, as minimum, to ten (10) years
of prision mayor, as maximum, imposed by the trial court,
stands.

III

Under Article 2224 of the Civil Code, temperate damages may be


awarded when there is a finding that "some pecuniary loss has
been suffered but its amount [cannot], from the nature of the
case, be proved with certainty." The amount of temperate
damages to be awarded in each case is discretionary u on the
courts  as long as it is "reasonable under the circumstances."
[115] [116]

Private complainant clearly suffered some pecuniary loss as a


result of the burning of his nipa hut. However, private
complainant failed to substantiate the actual damages that he
suffered. Nevertheless, he is entitled to be indemnified for his
loss. The award of temperate damages amounting to P50,000.00
is proper and reasonable under the circumstances.

WHEREFORE, the Petition for Review is DENIED. The Decision


dated August 30, 2012 and the Resolution dated October 22,
2012 of the Court of Appeals in CA-G.R. CR No. 32923, finding
petitioner Marlon Bacerra y Tabones guilty beyond reasonable
doubt for the crime of arson is AFFIRMED.

SO ORDERED.

Peralta,  (Acting Chairperson),


**
Mendoza, and Martires, JJ.,
concur.
Carpio, J., on official leave.

 Designated Acting Chairperson per S.O. No. 2445 dated June


**

16, 2017.

[1]
 Rollo, pp. 8-35.
 Id. at 36-51. The Decision was penned by Associate Justice
[2]

Michael P. Elbinias and concurred in by Associate Justices Isaias


P. Dicdican and Nina G. Antonio-Valenzuela of the Thirteenth
Division, Court of Appeals, Manila.

[3]
 Id. at 65.

[4]
 Pres. Decree No. 1613, sec. 1 provides:

Section 1. Arson. - Any person who burns or sets fire to the


property of another shall be punished by Prision Mayor.

The same penalty shall be imposed when a person sets fire to his
own property under circumstances which expose to danger the
life or property of another.

[5]
 Id. at 37.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 130-131, TSN dated January 15, 2007.

[9]
 Id. at 37.

[10]
 Id. at 132.

[11]
 Id.

[12]
 Id. at 37.

[13]
 Id.

[14]
 Id.

[15]
 Id.
[16]
 Id. at 160, TSN dated October 23, 2006.

[17]
 Id. at 137-138.

[18]
 Id. at 37.

[19]
 Id. at 138.

[20]
 Id. at 37.

[21]
 Id. at 37-38.

[22]
 Id. at 38.

[23]
 Id.

[24]
 Id.

[25]
 Id. at 139, TSN dated January 15, 2007.

 Id. at 38. The following items were inside the nipa hut at the
[26]

time that it was burned: a television set, an electric fan, a


mountain bike, catering items, and an antique sala set. The
estimated value of these items was P70,000.00.

[27]
 Id.

[28]
 Id.

[29]
 Id. at 38-39.

[30]
 Id. at 202, TSN dated May 18, 2009.

[31]
 Id. at 39.

[32]
 Id.

[33]
 Id.
[34]
 Id.

[35]
 Id.

[36]
 Id. at 206, TSN dated May 18, 2009.

[37]
 Id. at 39.

[38]
 Id. at 36.

[39]
 Id. at 39-40.

[40]
 Id. at 66-84, Appeal Brief for the Accused-Appellant.

[41]
 Id. at 72.

[42]
 Id. at 36-51.

[43]
 Id. at 50.

 Id. at 52-64, Motion for Reconsideration of the Court of Appeals


[44]

Decision.

[45]
 Id. at 65.

[46]
 Id. at 8-35.

[47]
 Id. at 283-284.

[48]
 Id. at 297-336.

[49]
 Id. at 343-354.

[50]
 Id. at 11.

[51]
 Id. at 21.
[52]
 Id. at 22.

[53]
 Id. at 11.

[54]
 Id. at 25-27.

[55]
 Id. at 26.

[56]
 Id.

[57]
 Id. at 11.

[58]
 Id. at 27-28.

[59]
 Id. at 29-30.

[60]
 Id. at 12.

[61]
 Id. at 306.

[62]
 Id. at 306-307.

[63]
 Id. at 331.

[64]
 Id. at 331-332.

[65]
 Id. at 332-333.

[66]
 Id. at 333-334.

[67]
 Id. at 11.

[68]
 Id.

[69]
 Id. at 12.

 People v. Ramos, 310 Phil. 186, 195 (1995) [Per J. Puno,


[70]

Second Division].
 People v. Villaflores, 685 Phil. 595, 614 (2012) [Per J.
[71]

Bersamin, First Division].

 People v. Fronda, 384 Phil. 732, 744 (2000) [Per C.J. Davide,
[72]

First Division].

[73]
 Id.

[74]
 Id.

 See People v. Villaflores, 685 Phil. 595, 613-618 (2012) [Per J.


[75]

Bersamin, First Division]; People v. Whisenhunt, 420 Phil. 677,


696-699 (2001) [Per J. Ynares-Santiago, First Division].

 See People v. Villaflores, 685 Phil. 595, 614 (2012) [Per J.


[76]

Bersamin, First Division]; People v. Whisenhunt, 420 Phil. 677,


696 (2001) [Per J. Ynares-Santiago, First Division].

[77]
 RULES OF COURT, Rule 133, sec. 4.

 Cirera v. People, 739 Phil. 25, 41 (2014) [Per J. Leonen, Third


[78]

Division].

 People v. Villaflores, 685 Phil. 595, 615-617 (2012) [Per J.


[79]

Bersamin, First Division].

 People v. Whisenhunt, 420 Phil. 677, 696 (2001) [Per J.


[80]

Ynares-Santiago, First Division].

 See People v. Ludday, 61 Phil. 216, 221 (1935) [Per J. Vickers,


[81]

En Banc].

[82]
 Id. at 221-222.

 G.R.
[83]
No. 204891, September 14, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/september2016/204891.pdf> [Per J.
Brion, Second Division].

[84]
 Id. at 4.

[85]
 Id. at 5-6.

 382 Phil. 810, 820 (2000) [Per J. Quisumbing, Second


[86]

Division].

[87]
 Id. at 820.

[88]
 Id. at 823.

[89]
 Id. at 821.

[90]
 Id. at 822.

[91]
 Rollo, p. 44.

[92]
 Id. at 182, TSN dated September 3, 2007.

[93]
 Id. at 136-137, TSN dated January 15, 2007.

[94]
 Id. at 160, TSN dated October 23, 2006.

[95]
 Id. at 182, TSN dated September 3, 2007.

[96]
 Id. at 44.

[97]
 Id. at 37.

[98]
 Id. at 138, TSN dated January 15, 2007.

[99]
 Id. at 167, TSN, dated October 23, 2006.

[100]
 Id. at 44.
[101]
 Id. at 138, TSN dated January 15, 2007.

[102]
 Id. at 167, TSN dated October 23, 2006.

 People v. Ragon, 346 Phil. 772, 785 (1997) [Per J. Panganiban,


[103]

Third Division].

[104] Id.

 People v. Mactal, 449 Phil. 653, 661 (2003) [Per J. Corona, En


[105]

Banc].

 Thieny Steimer, The biology of fear-and anxiety-related


[106]

behaviors, NATIONAL CENTER FOR BIOTECHNOLOGY


INFORMATION (last visited on May 16, 2017).

 Torres v. People, G.R. No. 206627, January 18, 2017 6 [Per J.


[107]

Leonen, Second Division].

[108] Id.

[109]
 RULES OF COURT, Rule 45, sec. 1.

[110]
 REV. PEN. CODE, art. 15, par. 3.

 People v. Bautista, 468 Phil. 173, 180 (2004) [Per J. Carpio-


[111]

Morales, Third Division]; Licyayo v. People, 571 Phil. 310, 327


(2008) [Per J. Chico-Nazario, Third Division]; People v. Nimuan,
665 Phil. 728, 736 (2011) [Per J. Brion, Third Division].

 People v. Nimuan, 665 Phil. 728,736-737 (2011) [Per J. Brion,


[112]

Third Division].

[113]
 Id. at 736.

 People v. Garcia, 577 Phil. 483, 505 (2008) [Per J. Brion, En


[114]

Banc], citing People v. Acuram, 387 Phil. 142 (2000) [Per J.


Quisumbing, Second Division].
[115]
 CIVIL CODE, art. 2216.

[116]
 CIVIL CODE, art. 2225.

Source: Supreme Court E-Library | Date created: September 04, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 194152, June 05, 2017 ]


MAKILITO B. MAHINAY, PETITIONER, VS. DURA
TIRE & RUBBER INDUSTRIES, INC., RESPONDENT.
DECISION

LEONEN, J.:

The period to redeem a property sold in an extrajudicial


foreclosure sale is not extendible. A pending action to annul the
foreclosure sale does not toll the running of the one (1)-year
period of redemption under Act No. 3135. [1]

This resolves a Petition for Review on Certiorari  directly filed [2]

before this Court, assailing the Judgment on the Pleadings  dated [3]

April 13, 2010 and Order  dated September 2, 2010 rendered by


[4]

Branch 20 of the Regional Trial Court of Cebu City in Civil Case


No. CEB-33639. The trial court dismissed the Complaint filed by
Makilito B. Mahinay (Mahinay), declaring that he already lost his
right to redeem a parcel of land sold in an extrajudicial
foreclosure sale. [5]

The parcel of land, with an area of 3,616 square meters and


located in Barrio Kiot, Cebu City, was covered by Transfer
Certificate of Title (TCT) No. 111078 under the name of A&A
Swiss International Commercial, Inc. (A&A Swiss).  The property
[6]

was mortgaged to Dura Tire and Rubber Industries, Inc. (Dura


Tire), a corporation engaged in the supply of raw materials for
tire processing and recapping, as security for credit purchases to
be made by Move Overland Venture and Exploring, Inc. (Move
Overland).  Under the mortgage agreement, Dura Tire was given
[7]

the express authority to extrajudicially foreclose the property


should Move Overland fail to pay its credit purchases. [8]

On June 5, 1992, A&A Swiss sold the property to Mahinay for the
sum of P540,000.00.  In the Deed of Absolute Sale,  Mahinay
[9] [10]

acknowledged that the property had been previously mortgaged


by A&A Swiss to Dura Tire, holding himself liable for any claims
that Dura Tire may have against Move Overland. [11]

On August 21, 1994, Mahinay wrote Dura Tire, requesting a


statement of account of Move Overland's credit purchases.
Mahinay sought to pay Move Overland's obligation to release the
property from the mortgage.  Dura Tire, however, ignored
[12]

Mahinay's request. [13]

For Move Overland's failure to pay its credit purchases, Dura Tire
applied for extrajudicial foreclosure of the property on January 6,
1995.  Mahinay protested the impending sale and filed a third-
[14]

party claim before the Office of the Provincial Sheriff of Cebu. [15]

Despite the protest, Sheriff Romeo Laurel (Sheriff Laurel)


proceeded with the sale and issued a Certificate of Sale in favor
of Dura Tire, the highest bidder at the sale.  The property was
[16]

purchased at P950,000.00, and the Certificate of Sale was


registered on February 20, 1995. [17]
On March 23, 1995, Mahinay filed a Complaint  for specific [18]

performance and annulment of auction sale before the Regional


Trial Court of Cebu City. According to Mahinay, there was no
proof that Dura Tire supplied raw materials to Move Overland
after the property was mortgaged.  Mahinay added that Dura
[19]

Tire allegedly deprived him of the opportunity to release the


property from the mortgage by failing to furnish him with Move
Overland's statement of account.  Dura Tire, therefore, had no
[20]

right to foreclose the mortgage and the foreclosure sale was void.

In its Answer,  Dura Tire mainly argued that Mahinay had no


[21]

cause of action to file the Complaint to annul the foreclosure sale


since he was not privy to the mortgage agreement. [22]

Acting on Dura Tire's affirmative defense, Branch 15 of the


Regional Trial Court of Cebu City initially dismissed the
Complaint.  However, on mandamus and certiorari, the Court of
[23]

Appeals set aside the order of the trial court and remanded the
case for further proceedings.  The case was then re-raffled to
[24]

Branch 12 of the Regional Trial Court of Cebu City. [25]

After pre-trial proceedings, the trial court again ordered the


dismissal of the Complaint due to Mahinay's failure to prosecute
the case. However, upon Mahinay's Motion for Reconsideration,
the case was reinstated. [26]

The case was again re-raffled, this time to Branch 58.  After due [27]

proceedings, the trial court ultimately dismissed Mahinay's


Complaint in the Decision  dated July 29, 2004. The trial court
[28]

held that Dura Tire was entitled to foreclose the property because
of Move Overland's unpaid credit purchases. [29]

Mahinay's appeal was dismissed by the Court of Appeals in the


Decision  dated June 16, 2006. The Court of Appeals held that
[30]

Mahinay had no right to question the foreclosure of the property.


 Mahinay, as "substitute mortgagor,"  was fully aware that the
[31] [32]

property he purchased from A&A Swiss was previously mortgaged


to Dura Tire to answer for Move Overland's obligation.
Considering that Move Overland failed to pay for its credit
purchases, Dura Tire had every right to foreclose the property. [33]

Mahinay filed a Petition for Review on Certiorari  before this [34]

Court. In G.R. No. 173117, this Court denied Mahinay's Petition


as well as his Motion for Reconsideration.  The June 16, 2006
[35]

Decision of the Court of Appeals thus became final and executory


on August 8, 2007, 15 days after Mahinay received a copy of the
Resolution denying his Motion for Reconsideration filed before this
Court.[36]

Relying on the Court of Appeals' finding that he was a "substitute


mortgagor," Mahinay filed a Complaint  for judicial declaration of
[37]

right to redeem on August 24, 2007. "As the admitted owner of


the [property] at the time of the foreclosure,"  Mahinay argued [38]

that he "must have possessed and still continues to possess the


absolute right to redeem the [property]." [39]

Dura Tire answered  the Complaint, raising the affirmative


[40]

defense of res judicata. Dura Tire argued that the Complaint for
judicial declaration of right to redeem had identical parties,
subject matter, and causes of action with that of the Complaint
for annulment of foreclosure sale.  Furthermore, the period of
[41]

Mahinay's right of redemption had already lapsed. Therefore,


Mahinay could not be allowed to belatedly redeem the property. [42]

During the hearing on October 27, 2008, Mahinay and Dura Tire
jointly moved for a judgment on the pleadings. The trial court
granted the motion and deemed the case submitted for decision
after the filing of memoranda.[43]

Mahinay having acquired the property from A&A Swiss before


Dura Tire foreclosed the property, the trial court ruled that
Mahinay became a "successor-in-interest" to the property even
before the foreclosure sale. Therefore, by operation of law,
Mahinay was legally entitled to redeem the property.  However, [44]

considering that one (1) year period of redemption had already


lapsed, Mahinay could no longer exercise his right of redemption.
[45]

Despite Dura Tire's refusal to accept his offer to pay Move


Overland's unpaid credit purchases, the trial court said that
"there was nothing to stop [Mahinay] from redeeming the
property as soon as he became aware of the foreclosure sale.
[Mahinay] could have . . . filed an action to compel [Dura Tire] to
accept payment by way of redemption." [46]

Hence, in the Judgment on the Pleadings  dated April 13, 2010,


[47]

Branch 20 of the Regional Trial Court of Cebu City dismissed


Mahinay's Complaint for judicial declaration of right to redeem.
The dispositive portion of the Judgment read:
Upon the foregoing considerations, the court finds no factual and
legal basis to grant the plaintiffs plea to be allowed to redeem the
foreclosed property subject of this case.

IN CONSEQUENCE, Judgment is hereby rendered DISMISSING


the plaintiffs Complaint.

SO ORDERED.  (Emphasis in the original)


[48]

Mahinay filed a Motion for Reconsideration, which the trial court


denied in the Order  dated September 2, 2010.
[49]

On a pure question of law, Mahinay directly filed a Petition for


Review on Certiorari  before this Court. Dura Tire filed its
[50]

Comment,  to which Mahinay filed a Reply.


[51] [52]

Mahinay maintains that he should be allowed to redeem the


property he bought from A&A Swiss despite the lapse of one (1)
year from the registration of the Certificate of Sale on February
20, 1995. Mahinay primarily argues that the one (1)-year period
of redemption was tolled when he filed the Complaint for
annulment of foreclosure sale on March 23, 1995 and resumed
when the June 16, 2006 Decision of the Court of Appeals became
final and executory on August 8, 2007.  As basis, Mahinay
[53]
cites Consolidated Bank & Trust Corp. v. Intermediate Appellate
Court.[54]

In the alternative, Mahinay contends that the one (1)-year period


of redemption should be counted from the time the June 16, 2006
Decision of the Court of Appeals became final and executory on
August 8, 2007. Mahinay theorizes that his right of redemption
only arose when he was judicially declared "entitled to redeem
the property" in this decision. [55]

Since he filed his Complaint for judicial declaration of right to


redeem on August 24, 2007, only 16 days after August 8, 2007,
Mahinay claims that he exercised his right of redemption within
the one (1)-year period under Act No. 3135. [56]

Dura Tire counters that nothing prevented Mahinay from


exercising his right of redemption within one (1) year from the
registration of the Certificate of Sale.  Dura Tire argues that
[57]

Mahinay's filing of an action for annulment of foreclosure sale did


not toll the running of the redemption period because the law
does not allow its extension.  Since the one (1)-year period of
[58]

redemption already lapsed, Dura Tire maintains that Mahinay can


no longer redeem the property at the bid price paid by the
purchaser.

The sole issue for this Court's resolution is whether the one (1)-
year period of redemption was tolled when Mahinay filed his
Complaint for annulment of foreclosure sale.

This Petition must be denied.

Contrary to Mahinay's claim, his right to redeem the mortgaged


property did not arise from the Court of Appeals' "judicial
declaration" that he was a "substitute mortgagor" of A&A Swiss.
By force of law, specifically, Section 6 of Act No. 3135, Mahinay's
right to redeem arose when the mortgaged property was
extrajudicially foreclosed and sold at public auction. There is no
dispute that Mahinay had a lien on the property subsequent to
the mortgage. Consequently, he had the right to buy it back from
the purchaser at the sale, Dura Tire in this case, "from and at any
time within the term of one year from and after the date of the
sale." Section 6 of Act No. 3135  provides:
[59]

Section 6. In all cases in which an extrajudicial sale is made


under the special power hereinbefore referred to, the debtor, his
successors in interest or any judicial creditor or judgment creditor
of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the
term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of
the Code of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act.
The "date of the sale" referred to in Section 6 is the date the
certificate of sale is registered with the Register of Deeds. This is
because the sale of registered land does not "'take effect as a
conveyance, or bind the land' until it is registered." [60]

The right of redemption being statutory,  the mortgagor may


[61]

compel the purchaser to sell back the property within the one
(1)-year period under Act No. 3135. If the purchaser refuses to
sell back the property, the mortgagor may tender payment to the
Sheriff who conducted the foreclosure sale.  Here, Mahinay
[62]

should have tendered payment to Sheriff Laurel instead of


insisting on directly paying Move Overland's unpaid credit
purchases to Dura Tire.

As early as 1956, this Court held in Mateo v. Court of


Appeals  that "the right of redemption . . . must . . . be exercised
[63]

in the mode prescribed by the statute."  The one (1)-year period


[64]

of redemption is fixed, hence, non-extendible, to "avoid


prolonged economic uncertainty over the ownership of the thing
sold."
[65]

Since the period of redemption is fixed, it cannot be tolled or


interrupted by the filing of cases to annul the foreclosure sale or
to enforce the right of redemption. "To rule otherwise . . . would
constitute a dangerous precedent. A likely offshoot of such a
ruling is the institution of frivolous suits for annulment of
mortgage intended merely to give the mortgagor more time to
redeem the mortgaged property." [66]

In CMS Stock Brokerage, Inc. v. Court of Appeals,  Rosario [67]

Sandejas (Sandejas) mortgaged two (2) parcels of land in favor


of the Bank of the Philippine Islands. She subsequently
mortgaged the same parcels of land to CMS Stock Brokerage, Inc.
In 1971, CMS Stock Brokerage, Inc. extrajudicially foreclosed the
properties, which were sold at a public auction. The certificate of
sale was registered on May 19, 1971. [68]

More than a year after the registration of the Certificate of Sale,


or on November 15, 1972, Sandejas wrote the president of the
CMS Stock Brokerage, Inc., requesting for three (3) years within
which to redeem the properties she mortgaged to it.  The [69]

president allegedly agreed, even giving her five (5) more years to
redeem the properties. [70]

However, on February 2, 1973, first mortgagee Bank of the


Philippine Islands extrajudicially foreclosed the properties.
 Despite the third-party claim and action for quieting of title filed
[71]

by Sandejas, the Sheriff proceeded with the public auction with


Carolina Industries, Inc. emerging as the highest bidder.  The [72]

certificate of sale was issued to Carolina Industries, Inc. and was


registered on December 16, 1983. [73]

The action for quieting of title was ultimately resolved in favor of


CMS Stock Brokerage, Inc. In G.R. No. 101351, this Court held
that CMS Stock Brokerage, Inc. was "the real owner" of the
properties, not Sandejas. [74]

Nine (9) years after the registration of the Certificate of Sale in


favor of Carolina Industries, or on December 15, 1992, CMS
Stock Brokerage, Inc. tendered P2,341,166.48 as redemption
money with the Clerk of Court. It then filed with the trial court a
motion to require the Sheriff to execute a certificate of
redemption.  The trial court, however, denied the motion,
[75]

reasoning the right of redemption of CMS Stock Brokerage, Inc.


had already lapsed. [76]

This Court affirmed the trial court's decision. On whether the


quieting of title action filed by Sandejas tolled the running of the
one (1)-year period of redemption, this Court ruled in the
negative. According to this Court, "the issue of ownership insofar
as [CMS Stock Brokerage, Inc.'s] right of redemption as
judgment debtor is concerned, has no bearing whatsoever, so as
have the effect of tolling or interrupting the running of the 12-
month redemption period."  This Court noted that the decision
[77]

on the quieting of title case would only affect Sandejas' title to


the property.

In Spouses Pahang v. Judge Vestil,  where spouses Antonio and


[78]

Lolita Pahang (the Spouses Pahang) were represented by


Mahinay's law firm,  the Spouses Pahang loaned P1,500,000.00
[79]

from Metrobank and mortgaged a parcel of land as security for


the mortgage.  When the Spouses Pahang failed to pay their
[80]

loan, Metrobank extrajudicially foreclosed the property. At the


public sale, Metrobank emerged as the highest bidder and a
corresponding certificate of sale was issued to it. The Certificate
of Sale was registered on January 27, 1998. [81]

On December 29, 1998, Metrobank wrote the Spouses Pahang to


remind them of the expiration of their right of redemption on
January 27, 1999,  Ignoring Metrobank's note, the Spouses
[82]

Pahang instead filed an action for annulment of extrajudicial sale,


contending that Metrobank charged them excessive interests and
other fees. They likewise prayed in their Complaint that they be
allowed to redeem their mortgaged property. [83]

The right of redemption of the Spouses Pahang thus expired on


January 27, 1999. Metrobank consolidated its ownership over the
properties, and a transfer certificate of title was issued in its
name. It subsequently filed a petition for issuance of a writ of
possession.[84]

The Spouses Pahang opposed the petition, arguing that their


pending action for annulment of extrajudicial sale tolled the
running of the one (1)-year period of redemption. [85]

Rejecting the argument of the Spouses Pahang, this Court held


that the "filing of an action by the redemptioner to enforce his
right to redeem does not suspend the running of the statutory
period to redeem the property."  This Court added that upon the
[86]

lapse of the one (1)-year period of redemption, it is the trial


court's ministerial duty to issue a writ of possession to the
purchaser at the foreclosure sale. [87]

Here, the Certificate of Sale in favor of Dura Tire was registered


on February 20, 1995. Mahinay, as the successor-in-interest of
previous owner A&A Swiss, had one (1) year from February 20,
1995, or on February 20, 1996,  to exercise his right of
[88]

redemption and buy back the property from Dura Tire at the bid
price of P950,000.00.

With Mahinay failing to redeem the property within the one (1)-
year period of redemption, his right to redeem had already
lapsed. As discussed, the pendency of an action to annul the
foreclosure sale or to enforce the right to redeem does not toll
the running of the period of redemption. The trial court correctly
dismissed the Complaint for judicial declaration of right to
redeem.

Mahinay nevertheless cites Consolidated Bank & Trust Corp. v.


Intermediate Appellate Court  in arguing that the one (1)-year
[89]

period of redemption was tolled when he filed the Complaint for


annulment of foreclosure sale. In Consolidated Bank, Nicos
Industrial Corporation mortgaged parcels of land to Consolidated
Bank to secure loans totalling P4,076,518.64. When the
corporation failed to pay, Consolidated Bank applied for the
extrajudicial foreclosure of the properties. [90]
Writs of attachment were issued in favor of Consolidated Bank
and Notices of Levy were annotated on the transfer certificates of
title covering the mortgaged properties. However, a year later,
the properties were subsequently foreclosed by first mortgagee
United Coconut Planters Bank, and a certificate of sale was issued
to the latter on September 6, 1983. A month later, the United
Coconut Planters Bank sold the properties to Manuel Go, who, in
turn, sold the properties to Golden Star Industrial Corporation.
Nicos then executed a Waiver of Right of Redemption in favor of
Golden Star.[91]

Golden Star then filed a petition for issuance of a writ of


possession over the properties. The writ of possession was
issued, allowing Golden Star to seize the properties under the
custody of the Sheriff of Manila. [92]

Consolidated Bank then filed a motion to annul the writ of


possession on November 21, 1983. On a petition for review on
certiorari before this Court, Golden Star argued, among others,
that Consolidated Bank had no right to possess the properties. At
that time, one (1) year from the registration of the certificate of
sale had already lapsed.[93]

This Court held that Consolidated Bank's filing of the motion to


annul the writ of possession tolled the running of the one (1)-
year period of redemption.  This Court found that Nicos and
[94]

Golden Star "conspired to defeat [Consolidated Bank's] lien on


the attached properties and to deny the latter its right of
redemption."  Considering that Consolidated Bank filed its
[95]

motion to annul the writ of possession on November 21, 1983,


just two (2) months after the certificate of sale was registered on
September 6, 1983, this Court held that Consolidated Bank may
still redeem the properties from Golden Star.[96]

Consolidated Bank is not precedent for the present case.


Consolidated Bank cited Ong Chua v. Carr,  an inapplicable case,
[97]

as basis for ruling that "the pendency of an action tolls the term
of the right of redemption."  Ong Chua involved a sale with right
[98]

to repurchase,  and the period of the "right of redemption"


[99]

referred to in that case was governed by the provisions of the


Civil Code on conventional redemption, specifically, Articles 1601
and 1606.  On the other hand, the present case involves the
[100]

redemption of an extrajudicially foreclosed property. The right of


redemption involved in this case is governed by Section 6 of Act
No. 3135.

The respondents in Consolidated Bank actively denied the


petitioner its right of redemption.  This Court, therefore, held
[101]

that the petitioner in Consolidated Bank was a victim of fraud.


 No such fraud exists in the present case.
[102]

Moreover, the previously discussed cases of CMS Stock


Brokerage  and Spouses
[103]
Pahang  were promulgated
[104]
later
than Consolidated Bank.  That the pendency of an action
[105]

questioning the legality of the foreclosure sale or enforcing the


right of redemption does not toll the running of the period of
redemption must be the controlling doctrine.

All told, the trial court correctly dismissed Mahinay's Complaint


for judicial declaration of right to redeem. To grant the Complaint
would have extended the period of redemption for Mahinay, in
contravention of the fixed one (1)-year period provided in Act No.
3135.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The Judgment on the Pleadings dated April 13, 2010 and Order
dated September 2, 2010 rendered by Branch 20 of the Regional
Trial Court of Cebu City in Civil Case No. CEB-33639
are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), and Peralta, JJ., concur.


Mendoza, and Martires, JJ., on official leave.

An Act to Regulate the Sale of Property Under Special Powers


[1] 

Inserted in or Annexed to Real-Estate Mortgages (1924).

[2]
 Rollo, pp. 9-32.

 Id. at 34-37. The Judgment on the Pleadings was penned by


[3]

Presiding Judge Bienvenido R. Saniel, Jr.

[4]
 Id. at 38.

[5]
 Id. at 37.

[6]
 Id. at 46.

[7]
 Id.

[8]
 Id. at 46-^7.

[9]
 Id. at 43.

[10]
 Id. at 43-44.

[11]
 Id. at 43.

[12]
 Id. at 45, Letter dated August 21, 1994.

[13]
 Id. at 91, Court of Appeals Decision dated June 16, 2006.

[14]
 Id. at 154, Comment.

[15]
 Id. at 90 and 91.

[16]
 Id.
[17]
 Id. at 48.

[18]
 Id. at 49-54.

[19]
 Id. at 51-52.

[20]
 Id. at 50.

 Id. at 55-64, Answer with Special and Affirmative Defenses and


[21]

Counterclaims.

[22]
 Id. at 57.

 Id. at 66-67. The Order was penned by Presiding Judge German


[23]

G. Lee, Jr. of Branch 15, Regional Trial Court of Cebu, Cebu City.

 Id. at 68-74. The Decision was promulgated on November 27,


[24]

1998, docketed as CA-G.R. SP No. 42944, and was penned by


Associate Justice Corona Ibay Somera and concurred in by
Associate Justice (subsequently Associate Justice of this Court)
Romeo J. Callejo, Sr. and Associate Justice Salvador J. Valdez, Jr.
of the Former Special 8  Division, Court of Appeals, Manila.
th

[25]
 Id. at 92, Court of Appeals Decision dated June 16, 2006.

[26]
 Id.

[27]
 Id. at 93, Court of Appeals Decision dated June 16, 2006.

 Id. at 75-89. The Decision, docketed as Civil Case No. CEB-


[28]

17248, was penned by Presiding Judge Gabriel T. Ingles of


Branch 58, Regional Trial Court, Cebu City.

[29]
 Id. at 89.

 Id. at 90-98. The Decision, docketed as CA-G.R. CV No. 00662,


[30]

was penned by Associate Justice Isaias P. Dicdican and was


concurred in by Associate Justices Apolinario D. Bruselas, Jr. and
Agustin S. Dizon of the 19  Division, Court of Appeals, Cebu City.
th

[31]
 Id. at 96.

[32]
 Id.

[33]
 Id.

[34]
 Id. at 9-32.

[35]
 Id. at 17-19.

 Id. at 18. Mahinay received the copy of the Resolution denying


[36]

his Motion for Reconsideration on July 24, 2007.

[37]
 Id. at 100-110.

[38]
 Id. at 105.

[39]
 Id.

 Id. at 111-122, Answer with Special and Affirmative Defenses


[40]

and Counterclaims.

[41]
 Id. at 114-115.

[42]
 Id. at 115-116.

[43]
 Id. at 34.

[44]
 Id. at 35.

[45]
 Id. at 36-37.

[46]
 Id. at 37.

[47]
 Id. at 34-37.
[48]
 Id. at 37.

[49]
 Id. at 38.

[50]
 Id. at 9-32.

[51]
 Id. at 153-173.

[52]
 Id. at 174-190, Reply to the Comment.

[53]
 Id. at 27-29.

[54]
 234 Phil. 582 (1987) [Per J. Gutierrez, Jr., First Division].

[55]
 Id. at 20-22.

 An Act to Regulate the Sale of Property Under Special Powers


[56]

Inserted in or Annexed to Real-Estate Mortgages (1924).

[57]
 Id. at 163.

[58]
 Id. at 168-170.

 An Act to Regulate the Sale of Property Under Special Powers


[59]

Inserted in or Annexed to Real-Estate Mortgages (1924).

 See Reyes v. Noblejas, 129 Phil. 256, 262 (1967) [Per J.


[60]

Angeles, En Banc] citing Salazar v. Flor de Lis Meneses, 118 Phil.


512, 514 (1963) [Per J. Dizon, En Banc]. See also Agbulos v.
Alberto, 115 Phil. 777, 780 (1962) [Per J. Dizon, En Banc].

 Mateo v. Court of Appeals, 99 Phil. 1042 (1956) [Per J. A.J.


[61]

Reyes, En Banc].

 See Spouses Natino v. Intermediate Appellate Court, 274 Phil.


[62]

602, 611 (1991) [Per J. Davide, Jr., Third Division].


[63]
 99 Phil. 1042 (1956) [Per J. A.J. Reyes, En Banc].

[64]
 Id.

 BPI Family Savings Bank, Inc. v. Spouses Veloso, 479 Phil.


[65]

627, 635 (2004) [Per J. Corona, Third Division].

 See Union Bank of the Phils, v. Court of Appeals, 412 Phil. 64,
[66]

75 (2001) [Per J. De Leon, Jr., Second Division]. The case


involved the right of redemption for property foreclosed as full or
partial payment of an obligation to any bank governed by Section
78 of the General Banking Act. Section 78 of the General Banking
Act and Section 6 of Act No. 3135 both provide for a fixed one
(1)-year period of redemption.

[67]
 341 Phil. 787 (1997) [Per J. Melo, Third Division].

[68]
 Id. at 791.

[69]
 Id.

[70]
 Id.

[71]
 Id.

[72]
 Id. at 792-793.

[73]
 Id. at 793.

[74]
 Id.

[75]
 Id. at 793.

[76]
 Id. at 790.

[77]
 Id. at 799.

[78]
 478 Phil. 189 (2004) [Per J. Callejo, St., Second Division].
[79]
 Id. at 191.

[80]
 Id. at 192.

[81]
 Id.

[82]
 Id.

[83]
 Id. at 192-193.

[84]
 Id. at 193.

[85]
 id at 194.

[86]
 Id. at 199.

[87]
 Id.

[88]
 CIVIL CODE, art. 13 provides:

Article 13. When the laws speak of years, months, days or nights,
it shall be understood that years are of three hundred sixty-five
days each; months, of thirty days; days, of twenty-four hours;
and nights from sunset to sunrise.

If months are designated by their name, they shall be computed


by the number of days which they respectively have.

In computing a period, the first day shall be excluded, and the


last day included.

[89]
 234 Phil. 582 (1987) [Per J. Gutierrez, Jr., First Division].

[90]
 Id. at 583-584.

[91]
 Id. at 584-585.
[92]
 Id. at 585.

[93]
 Id. at 585-587.

[94]
 Id. at 590.

[95]
 Id. at 589.

[96]
 Id. at 591.

[97]
 53 Phil. 975 (1929) [Per J. Ostrand, En Banc].

 Consolidated Bank and Trust Corporation v. Intermediate


[98]

Appellate Court, 234 Phil. 582, 590 (1987) [Per J. Gutierrez, Jr.,
First Division] citing Ong Chua v. Carr, 53 Phil. 975, 983 (1929)
[Per J. Ostrand, En Banc].

 Ong Chua v. Carr, 53 Phil. 975, 976 (1929) [Per J. Ostrand, En


[99]

Banc].

[100]
 CIVIL CODE, arts. 1601 and 1606 provide:

Article 1601. Conventional redemption shall take place when the


vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon.

....

Article 1606. The right referred to in Article 1601, in the absence


of an express agreement, shall last four years from the date of
the contract.

Should there be an agreement, the period cannot exceed ten


years.

However, the vendor may still exercise the right to repurchase


within thirty days from the time final judgment was rendered in a
civil action on the basis that the contract was a true sale with
right to repurchase.

 Consolidated Bank and Trust Corporation v. Intermediate


[101]

Appellate Court, 234 Phil. 582, 589 (1987) [Per J. Gutierrez, Jr.,
First Division]. See CMS Stock Brokerage, Inc. v. Court of
Appeals, 341 Phil. 787, 800 (1997) [Per J. Melo, Third Division].

 See CMS Stock Brokerage, Inc. v. Court of Appeals, 341 Phil.


[102]

787, 800 (1997) [Per J. Melo, Third Division].

[103]
 CMS Stock Brokerage was promulgated in 1997.

[104]
 Spouses Pahang was promulgated in 2004.

[105]
 Consolidated Bank was promulgated in 1987.

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SECOND DIVISION

[ G.R. No. 200370, June 07, 2017 ]


MARIO VERIDIANO Y SAPI, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:
Through this Petition for Review on Certiorari,  Mario Veridiano y
[1]

Sapi (Veridiano) assails the Decision  dated November 18, 2011


[2]

and Resolution  dated January 25, 2012 of the Court of Appeals


[3]

in CA-G.R. CR No. 33588, which affirmed his conviction for


violation of Article II, Section 11 of Republic Act No. 9165. [4]

In an Information filed before the Regional Trial Court of San


Pablo City, Laguna,  Veridiano was charged with the crime of
[5]

illegal possession of dangerous drugs. The Information read:


That on or about January 15, 2008, in the Municipality of
Nagcarlan, Province of Laguna and within the jurisdiction of this
Honorable Court, the above-named accused, not being permitted
or authorized by law, did then and there willfully, unlawfully and
feloniously have in his possession, control and custody one (1)
small heat-sealed transparent plastic sachet containing 2.72
grams of dried marijuana leaves, a dangerous drug.

CONTRARY TO LAW. [6]

On October 9, 2008, Veridiano was arraigned. He pleaded not


guilty to the offense charged. Trial on the merits ensued.[7]

During trial, the prosecution presented PO1 Guillermo Cabello


(PO1 Cabello) and PO1 Daniel Solano (PO1 Solano) to testify. [8]

According to the prosecution, at about 7:20 a.m. of January 15,


2008, a concerned citizen called a certain PO3 Esteves, police
radio operator of the Nagcarlan Police Station, informing him that
a certain alias "Baho," who was later identified as Veridiano, was
on the way to San Pablo City to obtain illegal drugs.
[9]

PO3 Esteves immediately relayed the information to PO1 Cabello


and PO2 Alvin Vergara (PO2 Vergara) who were both on duty.
 Chief of Police June Urquia instructed PO1 Cabello and PO2
[10]

Vergara to set up a checkpoint at Barangay Taytay, Nagcarlan,


Laguna.[11]
The police officers at the checkpoint personally knew Veridiano.
They allowed some vehicles to pass through after checking that
he was not on board.  At around 10:00 a.m., they chanced upon
[12]

Veridiano inside a passenger jeepney coming from San Pablo,


Laguna.  They flagged down the jeepney and asked the
[13]

passengers to disembark.  The police officers instructed the


[14]

passengers to raise their t-shirts to check for possible concealed


weapons and to remove the contents of their pockets. [15]

The police officers recovered from Veridiano "a tea bag containing
what appeared to be marijuana."  PO1 Cabello confiscated the
[16]

tea bag and marked it with his initials.  Veridiano was arrested
[17]

and apprised of his constitutional rights.  He was then brought to


[18]

the police station. [19]

At the police station, PO1 Cabello turned over the seized tea bag
to PO1 Solano, who also placed his initials.  PO1 Solano then [20]

made a laboratory examination request, which he personally


brought with the seized tea bag to the Philippine National Police
Crime Laboratory.  The contents of the tea bag tested positive
[21]

for marijuana.[22]

For his defense, Veridiano testified that he went to the fiesta in


San Pablo City on January 15, 2008.  After participating in the
[23]

festivities, he decided to go home and took a passenger jeepney


bound for Nagcarlan.  At around 10:00 a.m., the jeepney passed
[24]

a police checkpoint in Barangay Taytay, Nagcarlan.  Veridiano [25]

noticed that the jeepney was being followed by three (3)


motorcycles, each with two (2) passengers in civilian attire. [26]

When the jeepney reached Barangay Buboy, Nagcarlan, the


motorcyclists flagged down the jeepney.  Two (2) armed men [27]

boarded the jeepney and frisked Veridiano.  However, they found [28]

nothing on his person.  Still, Veridiano was accosted and brought


[29]

to the police station where he was informed that "illegal drug was
. . . found in his possession." [30]
In the Decision dated July 16, 2010,  the Regional Trial Court
[31]

found Veridiano guilty beyond reasonable doubt for the crime of


illegal possession of marijuana. Accordingly, he was sentenced to
suffer a penalty of imprisonment of twelve (12) years and one (1)
day, as minimum, to twenty (20) years, as maximum, and to pay
a fine of P300,000.00.[32]

Veridiano appealed the decision of the trial court asserting that


"he was illegally arrested."  He argued that the tea bag
[33]

containing marijuana is "inadmissible in evidence [for] being the


'fruit of a poisonous tree.'"  Veridiano further argued that the
[34]

police officers failed to comply with the rule on chain of custody. [35]

On the other hand, the prosecution asserted that "[t]he legality of


an arrest affects only the jurisdiction of the court over [the
person of the accused]."  Thus, by entering his plea, Veridiano
[36]

waived his right to question any irregularity in his arrest.  With [37]

regard to the alleged illegal warrantless search conducted by the


police officers, the prosecution argued that Veridiano's
"submissive deportment at the time of the search" indicated that
he consented to the warrantless search. [38]

On November 18, 2011, the Court of Appeals rendered a


Decision  affirming the guilt of Veridiano.
[39] [40]

The Court of Appeals found that "Veridiano was caught in


flagrante delicto" of having marijuana in his possession.
 Assuming that he was illegally arrested, Veridiano waived his
[41]

right to question any irregularity that may have attended his


arrest when he entered his plea and submitted himself to the
jurisdiction of the court.  Furthermore, the Court of Appeals held
[42]

that Veridiano consented to the warrantless search because he


did not protest when the police asked him to remove the contents
of his pocket. [43]

Veridiano moved for reconsideration, which was denied in the


Resolution dated January 25, 2012. [44]
On March 16, 2012, Veridiano filed a Petition for Review on
Certiorari. [45]

Petitioner argues that the tea bag containing marijuana leaves


was seized in violation of his right against unreasonable searches
and seizures.  He asserts that his arrest was illegal.  Petitioner
[46] [47]

was merely seated inside the jeepney at the time of his


apprehension. He did not act in any manner that would give the
police officers reasonable ground to believe that he had just
committed a crime or that he was committing a crime.  Petitioner
[48]

also asserts that reliable information is insufficient to constitute


probable cause that would support a valid warrantless arrest. [49]

Since his arrest was illegal, petitioner argues that "the


accompanying [warrantless] search was likewise illegal."  Hence, [50]

under Article III, Section 2,  in relation to Article III, Section 3(2)
[51]

 of the Constitution, the seized tea bag containing marijuana is


[52]

"inadmissible in evidence [for] being the fruit of a poisonous


tree." [53]

Nevertheless, assuming that the seized tea bag containing


marijuana is admissible in evidence, petitioner contends that the
prosecution failed to preserve its integrity.  The apprehending
[54]

team did not strictly comply with the rule on chain of custody
under Section 21 of the Implementing Rules and Regulations of
Republic Act No. 9165. [55]

In a Resolution dated June 13, 2012, this Court required


respondent to file a comment on the petition.  In the [56]

Manifestation and Motion dated August 1, 2012,  respondent


[57]

stated that it would no longer file a comment.

The following issues are for this Court's resolution:

First, whether there was a valid warrantless arrest;

Second, whether there was a valid warrantless search against


petitioner; and
Lastly, whether there is enough evidence to sustain petitioner's
conviction for illegal possession of dangerous drugs.

The Petition is granted.

The invalidity of an arrest leads to several consequences among


which are: (a) the failure to acquire jurisdiction over the person
of an accused; (b) criminal liability of law enforcers for illegal
arrest; and (c) any search incident to the arrest becomes invalid
thus rendering the evidence acquired as constitutionally
inadmissible.

Lack of jurisdiction over the person of an accused as a result of


an invalid arrest must be raised through a motion to quash before
an accused enters his or her plea. Otherwise, the objection is
deemed waived and an accused is "estopped from questioning the
legality of his [or her] arrest."
[58]

The voluntary submission of an accused to the jurisdiction of the


court and his or her active participation during trial cures any
defect or irregularity that may have attended an arrest.  The [59]

reason for this rule is that "the legality of an arrest affects only
the jurisdiction of the court over the person of the accused." [60]

Nevertheless, failure to timely object to the illegality of an arrest


does not preclude an accused from questioning the admissibility
of evidence seized.  The inadmissibility of the evidence is not
[61]

affected when an accused fails to question the court's jurisdiction


over his or her person in a timely manner. Jurisdiction over the
person of an accused and the constitutional inadmissibility of
evidence are separate and mutually exclusive consequences of an
illegal arrest.

As a component of the right to privacy,  the fundamental right


[62]

against unlawful searches and seizures is guaranteed by no less


than the Constitution. Article III, Section 2 of the Constitution
provides:
The right of the people to be secure in their persons, houses,
papers, and effects against unreasonable searches and seizures
of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place
to be searched and the persons or things to be seized. [63]

To underscore the importance of an individual's right against


unlawful searches and seizures, Article III, Section 3(2) of the
Constitution considers any evidence obtained in violation of this
right as inadmissible. [64]

The Constitutional guarantee does not prohibit all forms of


searches and seizures.  It is only directed against those that are
[65]

unreasonable.  Conversely, reasonable searches and seizures fall


[66]

outside the scope of the prohibition and are not forbidden. [67]

In People v. Aruta,  this Court explained that the language of the


[68]

Constitution implies that "searches and seizures are normally


unreasonable unless authorized by a validly issued search
warrant or warrant of arrest."  The requirements of a valid[69]

search warrant are laid down in Article III, Section 2 of the


Constitution and reiterated in Rule 126, Section 4 of the Rules on
Criminal Procedure. [70]

However, People v. Cogaed  clarified that there are exceptional


[71]

circumstances "when searches are reasonable even when


warrantless."  The following are recognized instances of
[72]

permissible warrantless searches laid down in jurisprudence: (1)


a "warrantless search incidental to a lawful arrest,"  (2) search of
[73]

"evidence in 'plain view,'" (3) "search of a moving vehicle," (4)


"consented warrantless search[es]," (5) "customs search," (6)
"stop and frisk," and (7) "exigent and emergency
circumstances." [74]
There is no hard and fast rule in determining when a search and
seizure is reasonable. In any given situation, "[w]hat constitutes
a reasonable . . . search . . . is purely a judicial question," the
resolution of which depends upon the unique and distinct factual
circumstances.  This may involve an inquiry into "the purpose of
[75]

the search or seizure, the presence or absence of probable cause,


the manner in which the search and seizure was made, the place
or thing searched, and the character of the articles procured."[76]

II

Pertinent to the resolution of this case is the determination of


whether the warrantless search was incidental to a lawful arrest.
The Court of Appeals concluded that petitioner was caught in
flagrante delicto of having marijuana in his possession making
the warrantless search lawful.[77]

This Court disagrees. Petitioner's warrantless arrest was unlawful.

A search incidental to a lawful arrest requires that there must


first be a lawful arrest before a search is made. Otherwise stated,
a lawful arrest must precede the search; "the process cannot be
reversed."  For there to be a lawful arrest, law enforcers must be
[78]

armed with a valid warrant. Nevertheless, an arrest may also be


effected without a warrant.

There are three (3) grounds that will justify a warrantless arrest.
Rule 113, Section 5 of the Revised Rules of Criminal Procedure
provides:
Section 5. Arrest Without Warrant; When Lawful. — A peace
officer or a private person may, without a warrant, arrest a
person:
(a) When, in his presence, the person to be arrested has
committed, is actually committing, or is attempting to commit an
offense;

(b) When an offense has just been committed and he has


probable cause to believe based on personal knowledge of facts
or circumstances that the person to be arrested has committed it;
and

(c) When the person to be arrested is a prisoner who has escaped


from a penal establishment or place where he is serving final
judgment or is temporarily confined while his case is pending, or
has escaped while being transferred from one confinement to
another.
The first kind of warrantless arrest is known as an in flagrante
delicto arrest. The validity of this warrantless arrest requires
compliance with the overt act test  as explained in Cogaed:
[79]

[F]or a warrantless arrest of in flagrante delicto to be affected,


"two elements must concur: (1) the person to be arrested must
execute an overt act indicating that he [or she] has just
committed, is actually committing, or is attempting to commit a
crime; and (2) such overt act is done in the presence or within
the view of the arresting officer."
[80]

Failure to comply with the overt act test renders an in flagrante
delicto arrest constitutionally infirm. In Cogaed, the warrantless
arrest was invalidated as an in flagrante delicto arrest because
the accused did not exhibit an overt act within the view of the
police officers suggesting that he was in possession of illegal
drugs at the time he was apprehended. [81]

The warrantless search in People v. Racho  was also considered


[82]

unlawful.  The police officers received information that a man


[83]

was in possession of illegal drugs and was on board a Genesis bus


bound for Baler, Aurora. The informant added that the man was
"wearing a red and white striped [t]-shirt."  The police officers
[84]

waited for the bus along the national highway.  When the bus [85]

arrived, Jack Racho (Racho) disembarked and waited along the


highway for a tricycle.  Suddenly, the police officers approached
[86]

him and invited him to the police station since he was suspected
of having shabu in his possession.  As Racho pulled out his hands
[87]

from his pocket, a white envelope fell yielding a sachet of shabu.


[88]
In holding that the warrantless search was invalid, this Court
observed that Racho was not "committing a crime in the presence
of the police officers" at the time he was apprehended.
 Moreover, Racho's arrest was solely based on a tip.  Although
[89] [90]

there are cases stating that reliable information is sufficient to


justify a warrantless search incidental to a lawful arrest, they
were covered under the other exceptions to the rule on
warrantless searches. [91]

Rule 113, Section 5(b) of the Rules of Court pertains to a hot


pursuit arrest.  The rule requires that an offense has just been
[92]

committed. It connotes "immediacy in point of time."  That a [93]

crime was in fact committed does not automatically bring the


case under this rule.  An arrest under Rule 113, Section 5(b) of
[94]

the Rules of Court entails a time element from the moment the
crime is committed up to the point of arrest.

Law enforcers need not personally witness the commission of a


crime. However, they must have personal knowledge of facts and
circumstances indicating that the person sought to be arrested
committed it.

People v. Gerente  illustrates a valid arrest under Rule 113,


[95]

Section 5(b) of the Rules of Court. In Gerente, the accused was


convicted for murder and for violation of Republic Act No. 6425.
 He assailed the admissibility of dried marijuana leaves as
[96]

evidence on the ground that they were allegedly seized from him
pursuant to a warrantless arrest.  On appeal, the accused's
[97]

conviction was affirmed.  This Court ruled that the warrantless


[98]

arrest was justified under Rule 113, Section 5(b) of the Rules of
Court. The police officers had personal knowledge of facts and
circumstances indicating that the accused killed the victim:
The policemen arrested Gerente only some three (3) hours after
Gerente and his companions had killed Blace. They saw Blace
dead in the hospital and when they inspected the scene of the
crime, they found the instruments of death: a piece of wood and
a concrete hollow block which the killers had used to bludgeon
him to death. The eye-witness, Edna Edwina Reyes, reported the
happening to the policemen and pinpointed her neighbor,
Gerente, as one of the killers. Under those circumstances, since
the policemen had personal knowledge of the violent death of
Blace and of facts indicating that Gerente and two others had
killed him, they could lawfully arrest Gerente without a
warrant. If they had postponed his arrest until they could obtain a
warrant, he would have fled the law as his two companions did.
 (Emphasis supplied)
[99]

The requirement that law enforcers must have personal


knowledge of facts surrounding the commission of an offense was
underscored in In Re Salibo v. Warden. [100]

In Re Salibo involved a petition for habeas corpus. The police


officers suspected Datukan Salibo (Salibo) as one (1) of the
accused in the Maguindano Massacre.  Salibo presented himself
[101]

before the authorities to clear his name. Despite his explanation,


Salibo was apprehended and detained.  In granting the petition,
[102]

this Court pointed out that Salibo was not restrained under a
lawful court process or order.  Furthermore, he was not arrested
[103]

pursuant to a valid warrantless arrest: [104]

It is undisputed that petitioner Salibo presented himself before


the Datu Hofer Police Station to clear his name and to prove that
he is not the accused Butukan S. Malang. When petitioner Salibo
was in the presence of the police officers of Datu Hofer Police
Station, he was neither committing nor attempting to commit an
offense. The police officers had no personal knowledge of any
offense that he might have committed. Petitioner Salibo was also
not an escapee prisoner.  (Emphasis supplied)
[105]

In this case, petitioner's arrest could not be justified as an in


flagrante delicto arrest under Rule 113, Section 5(a) of the Rules
of Court. He was not committing a crime at the checkpoint.
Petitioner was merely a passenger who did not exhibit any
unusual conduct in the presence of the law enforcers that would
incite suspicion. In effecting the warrantless arrest, the police
officers relied solely on the tip they received. Reliable information
alone is insufficient to support a warrantless arrest absent any
overt act from the person to be arrested indicating that a crime
has just been committed, was being committed, or is about to be
committed. [106]

The warrantless arrest cannot likewise be justified under Rule


113, Section 5(b) of the Revised Rules of Criminal Procedure. The
law enforcers had no personal knowledge of any fact or
circumstance indicating that petitioner had just committed an
offense.

A hearsay tip by itself does not justify a warrantless arrest. Law


enforcers must have personal knowledge of facts, based on their
observation, that the person sought to be arrested has just
committed a crime. This is what gives rise to probable cause that
would justify a warrantless search under Rule 113, Section 5(b)
of the Revised Rules of Criminal Procedure.

III

The warrantless search cannot be justified under the reasonable


suspicion requirement in "stop and frisk" searches.

A "stop and frisk" search is defined in People v. Chua  as "the [107]

act of a police officer to stop a citizen on the street, interrogate


him, and pat him for weapon(s) or contraband."  Thus, the [108]

allowable scope of a "stop and frisk" search is limited to a


"protective search of outer clothing for weapons." [109]

Although a "stop and frisk" search is a necessary law enforcement


measure specifically directed towards crime prevention, there is a
need to safeguard the right of individuals against unreasonable
searches and seizures. [110]

Law enforcers do not have unbridled discretion in conducting


"stop and frisk" searches. While probable cause is not required, a
"stop and frisk" search cannot be validated on the basis of a
suspicion or hunch.  Law enforcers must have a genuine reason
[111]

to believe, based on their experience and the particular


circumstances of each case, that criminal activity may be afoot.
 Reliance on one (1) suspicious activity alone, or none at all,
[112]

cannot produce a reasonable search. [113]

In Manalili v. Court of Appeals,  the police officers conducted


[114]

surveillance operations in Caloocan City Cemetery, a place


reportedly frequented by drug addicts.  They chanced upon a [115]

male person who had "reddish eyes and [was] walking in a


swaying manner."  Suspecting that the man was high on drugs,
[116]

the police officers approached him, introduced themselves, and


asked him what he was holding.  However, the man resisted.
[117]

 Upon further investigation, the police officers found marijuana


[118]

in the man's possession.  This Court held that the circumstances


[119]

of the case gave the police officers justifiable reason to stop the
man and investigate if he was high on drugs. [120]

In People v. Solayao,  the police officers were conducting an


[121]

intelligence patrol to verify reports on the presence of armed


persons within Caibiran.  They met a group of drunk men, one
[122]

(1) of whom was the accused in a camouflage uniform.  When [123]

the police officers approached, his companions fled leaving


behind the accused who was told not to run away.  One (1) of [124]

the police officers introduced himself and seized from the accused
a firearm wrapped in dry coconut leaves.  This Court likewise [125]

found justifiable reason to stop and frisk the accused when "his
companions fled upon seeing the government agents." [126]

The "stop and frisk" searches in these two (2) cases were
considered valid because the accused in both cases exhibited
overt acts that gave law enforcers genuine reason to conduct a
"stop and frisk" search. In contrast with Manalili and Solayao, the
warrantless search in Cogaed  was considered as an invalid
[127]

"stop and frisk" search because of the absence of a single


suspicious circumstance that would justify a warrantless search.

In Cogaed, the police officers received information that a certain


Marvin Buya would be transporting marijuana.  A passenger [128]

jeepney passed through the checkpoint set up by the police


officers. The driver then disembarked and signaled that two (2)
male passengers were carrying marijuana.  The police officers [129]

approached the two (2) men, who were later identified as Victor
Cogaed (Cogaed) and Santiago Dayao, and inquired about the
contents of their bags. [130]

Upon further investigation, the police officers discovered three (3)


bricks of marijuana in Cogaed's bag.  In holding that the "stop
[131]

and frisk" search was invalid, this Court reasoned that "[t]here
was not a single suspicious circumstance" that gave the police
officers genuine reason to stop the two (2) men and search their
belongings.  Cogaed did not exhibit any overt act indicating that
[132]

he was in possession of marijuana. [133]

Similar to Cogaed, petitioner in this case was a mere passenger


in a jeepney who did not exhibit any act that would give police
officers reasonable suspicion to believe that he had drugs in his
possession. Reasonable persons will act in a nervous manner in
any check point. There was no evidence to show that the police
had basis or personal knowledge that would reasonably allow
them to infer anything suspicious.

IV

Moreover, petitioner's silence or lack of resistance can hardly be


considered as consent to the warrantless search. Although the
right against unreasonable searches and seizures may be
surrendered through a valid waiver, the prosecution must prove
that the waiver was executed with clear and convincing evidence.
 Consent to a warrantless search and seizure must be
[134]

"unequivocal, specific, intelligently given . . . [and unattended] by


duress or coercion."[135]

The validity of a consented warrantless search is determined by


the totality of the circumstances.  This may involve an inquiry
[136]

into the environment in which the consent was given such as "the
presence of coercive police procedures." [137]
Mere passive conformity or silence to the warrantless search is
only an implied acquiescence, which amounts to no consent at all.
 In Cogaed, this Court observed:
[138]

Cogaed's silence or lack of aggressive objection was a natural


reaction to a coercive environment brought about by the police
officer's excessive intrusion into his private space. The
prosecution and the police carry the burden of showing that the
waiver of a constitutional right is one which is knowing,
intelligent, and free from any coercion. In all cases, such waivers
are not to be presumed. [139]

The presence of a coercive environment negates the claim that


petitioner consented to the warrantless search.

Another instance of a valid warrantless search is a search of a


moving vehicle. The rules governing searches and seizures have
been liberalized when the object of a search is a vehicle for
practical purposes.  Police officers cannot be expected to appear
[140]

before a judge and apply for a search warrant when time is of the
essence considering the efficiency of vehicles in facilitating
transactions involving contraband or dangerous articles.
 However, the inherent mobility of vehicles cannot justify all
[141]

kinds of searches.  Law enforcers must act on the basis of


[142]

probable cause.[143]

A checkpoint search is a variant of a search of a moving vehicle.


 Due to the number of cases involving warrantless searches in
[144]

checkpoints and for the guidance of law enforcers, it is imperative


to discuss the parameters by which searches in checkpoints
should be conducted.

Checkpoints per se are not invalid.  They are allowed in


[145]

exceptional circumstances to protect the lives of individuals and


ensure their safety.  They are also sanctioned in cases where the
[146]

government's survival is in danger.  Considering that routine


[147]

checkpoints intrude "on [a] motorist's right to 'free passage'"  to


[148]

a certain extent, they must be "conducted in a way least intrusive


to motorists."  The extent of routine inspections must be limited
[149]

to a visual search. Routine inspections do not give law enforcers


carte blanche to perform warrantless searches. [150]

In Valmonte v. De Villa,  this Court clarified that "[f]or as long


[151]

as the vehicle is neither searched nor its occupants subjected to a


body search, and the inspection of the vehicle is limited to a
visual search, said routine checks cannot be regarded as violative
of an individual's right against unreasonable search[es]."  Thus,
[152]

a search where an "officer merely draws aside the curtain of a


vacant vehicle which is parked on the public fair grounds, or
simply looks into a vehicle, or flashes a light therein" is not
unreasonable. [153]

However, an extensive search may be conducted on a vehicle at a


checkpoint when law enforcers have probable cause to believe
that the vehicle's passengers committed a crime or when the
vehicle contains instruments of an offense. [154]

Thus, routinary and indiscriminate searches of moving vehicles


are allowed if they are limited to a visual search. This holds
especially true when the object of the search is a public vehicle
where individuals have a reasonably reduced expectation of
privacy. On the other hand, extensive searches are permissible
only when they are founded upon probable cause. Any evidence
obtained will be subject to the exclusionary principle under the
Constitution.

That the object of a warrantless search is allegedly inside a


moving vehicle does not justify an extensive search absent
probable cause. Moreover, law enforcers cannot act solely on the
basis of confidential or tipped information. A tip is still hearsay no
matter how reliable it may be. It is not sufficient to constitute
probable cause in the absence of any other circumstance that will
arouse suspicion.

Although this Court has upheld warrantless searches of moving


vehicles based on tipped information, there have been other
circumstances that justified warrantless searches conducted by
the authorities.

In People v. Breis,  apart from the tipped information they


[155]

received, the law enforcement agents observed suspicious


behavior on the part of the accused that gave them reasonable
ground to believe that a crime was being committed.  The [156]

accused attempted to alight from the bus after the law enforcers
introduced themselves and inquired about the ownership of a box
which the accused had in their possession.  In their attempt to [157]

leave the bus, one (1) of the accused physically pushed a law
enforcer out of the way.  Immediately alighting from a bus that
[158]

had just left the terminal and leaving one's belongings behind is
unusual conduct. [159]

In People v. Mariacos,  a police officer received information that


[160]

a bag containing illegal drugs was about to be transported on a


passenger jeepney.  The bag was marked with "O.K."  On the
[161] [162]

basis of the tip, a police officer conducted surveillance operations


on board a jeepney.  Upon seeing the bag described to him, he
[163]

peeked inside and smelled the distinct odor of marijuana


emanating from the bag.  The tipped information and the police
[164]

officer's personal observations gave rise to probable cause that


rendered the warrantless search valid. [165]

The police officers in People v. Ayangao  and People v. [166]

Libnao  likewise received tipped information regarding the


[167]

transport of illegal drugs. In Libnao, the police officers had


probable cause to arrest the accused based on their three (3)-
month long surveillance operation in the area where the accused
was arrested.  On the other hand, in Ayangao, the police officers
[168]

noticed marijuana leaves protruding through a hole in one (1) of


the sacks carried by the accused. [169]

In the present case, the extensive search conducted by the police


officers exceeded the allowable limits of warrantless searches.
They had no probable cause to believe that the accused violated
any law except for the tip they received. They did not observe
any peculiar activity from the accused that may either arouse
their suspicion or verify the tip. Moreover, the search was flawed
at its inception. The checkpoint was set up to target the arrest of
the accused.

There are different hybrids of reasonable warrantless searches.


There are searches based on reasonable suspicion as in Posadas
v. Court of Appeals  where this Court justified the warrantless
[170]

search of the accused who attempted to flee with a buri bag after


the police officers identified themselves.
[171]

On the other hand, there are reasonable searches because of


heightened security. In Dela Cruz v. People,  the search
[172]

conducted on the accused was considered valid because it was


done in accordance with routine security measures in ports.
 This case, however, should not be construed to apply to border
[173]

searches. Border searches are not unreasonable per se;  there is


[174]

a "reasonable reduced expectation of privacy" when travellers


pass through or stop at airports or other ports of travel. [175]

The warrantless search conducted by the police officers is invalid.


Consequently, the tea bag containing marijuana seized from
petitioner is rendered inadmissible under the exclusionary
principle in Article III, Section 3(2) of the Constitution. There
being no evidence to support his conviction, petitioner must be
acquitted.

WHEREFORE, the Decision dated July 16, 2010 of the Regional


Trial Court in Criminal Case No. 16976-SP and the Decision dated
November 18, 2011 and Resolution dated January 25, 2012 of
the Court of Appeals in CA-GR. CR. No. 33588
are REVERSED and SET ASIDE. Petitioner Mario Veridiano y
Sapi is hereby ACQUITTED and is ordered
immediately RELEASED from confinement unless he is being held
for some other lawful cause.

SO ORDERED.
Carpio, (Chairperson), and Peralta, JJ., concur.
Mendoza, and Martires, JJ., on official leave.

[1]
 Rollo, pp. 8-29, Petition for Review on Certiorari.

 Id. at 31-44. The Decision was penned by Associate Justice


[2]

Remedios A. Salazar-Fernando and concurred in by Associate


Justices Sesinando E. Villon and Amy C. Lazaro-Javier of the
Second Division, Court of Appeals, Manila.

 Id. at 46-47. The Resolution was penned by Associate Justice


[3]

Remedios A. Salazar-Fernando and concurred in by Associate


Justices Mario V. Lopez and Amy C. Lazaro-Javier of the Special
Second Division, Court of Appeals, Manila.

[4]
 Comprehensive Dangerous Drugs Act (2002).

[5]
 Rollo, p. 64, Regional Trial Court Decision.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 10.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 11.

[14]
 Id. at 34.
[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id. at 66, Regional Trial Court Decision.

[19]
 Id. at 11.

[20]
 Id.

[21]
 Id. at 35.

[22]
 Id. at 11.

[23]
 Id.

[24]
 Id.

[25]
 Id.

[26]
 Id.

[27]
 Id.

[28]
 Id.

[29]
 Id.

[30]
 Id. at 11-12.

 Id. at 64-72. The Decision, docketed as Crim. Case No. 16976-


[31]

SP, was penned by Presiding Judge Agripino G. Morga of Branch


32, Regional Trial Court of San Pablo City.

[32]
 Id. at 72.
[33]
 Id. at 37.

[34]
 Id.

[35]
 Id. at 41.

[36]
Id. at 88, Brief for the Plaintiff-Appellee.

[37]
 Id.

[38]
 Id.

[39]
 Id. at 31-44.

[40]
 Id. at 43.

[41]
 Id. at 37.

[42]
 Id. at 40.

[43]
 Id.

[44]
 Id. at 46-47.

[45]
 Id. at 8-29.

[46]
 Id. at 14-18.

[47]
 Id. at 14-16.

[48]
 Id. at 16.

[49]
 Id.

[50]
 Id. at 17.

[51]
 CONST, art. III, sec. 2 provides:
Section 2. The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to
be seized.

[52]
 CONST., art. Ill, sec. 3(2) provides:

Section 3.

....

(2) Any evidence obtained in violation of this or the preceding


section shall be inadmissible for any purpose in any proceeding.

[53]
 Rollo, pp. 17-18.

[54]
 Id. at 19.

[55]
 Id. at 19-21.

[56]
 Id. at 106.

[57]
 Id. at 107-111, Manifestation and Motion (In Lieu of Comment).

 People v. Lopez, Jr. y Mancilla, 315 Phil. 59, 71-72 (1995) [Per
[58]

J. Kapunan, First Division]. See Filoteo, Jr. v. Sandiganbayan,


331 Phil. 531, 578 (1996) [Per J. Panganiban, En
Banc]; Rebellion v. People, 637 Phil. 339, 345 (2010) [Per J. Del
Castillo, First Division].
 People v. Lapitaje, 445 Phil. 729, 748 (2003) [Per J. Austria-
[59]

Martinez, En Banc]; Rebellion v. People, 637 Phil. 339, 345


(2010) [Per J. Del Castillo, First Division].

 People v. Escordial, 424 Phil. 627, 651-652 (2002) [Per J.


[60]

Mendoza, En Banc] citing People v. Timon, 346 Phil. 572 (1997)


[Per J. Panganiban, Third Division].

 Homar v. People, G.R. No. 182534, September 2, 2015


[61]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/september2015/182534.pdf> 9 [Per J.
Brion, Second Division]; Sindac v. People, G.R. No. 220732,
September 6, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/september2016/220732.pdf> 10-11
[Per J. Perlas-Bernabe, First Division]; People v. Racho, 640 Phil.
669, 681 (2010) [Per J. Nachura, Second Division]; People v.
Martinez y Angeles, 652 Phil. 347, 359 (2010) [Per J. Mendoza,
Second Division]. See Antiquera y Codes v. People, 723 Phil. 425,
432 (2013) [Per J. Abad, Third Division].

 People v. Cogaed, 740 Phil. 212, 220 (2014) [Per J. Leonen,


[62]

Third Division].

[63]
 CONST., art. III, sec. 2.

[64]
 CONST., art. III, sec. 3(2) provides:

Section 3.

....

(2) Any evidence obtained in violation of this or the preceding


section shall be inadmissible for any purpose in any proceeding.

 People v. Aruta, 351 Phil. 868, 878 (1998) [Per J. Romero,


[65]

Second Division].
[66]
 Id.

 Valmonte v. De Villa, 258 Phil. 838, 843 (1989) [Per J. Padilla,


[67]

En Banc].

[68]
 351 Phil. 868 (1998) [Per J. Romero, Second Division].

[69]
 Id. at 878.

 Revised Rules of Criminal Procedure, A.M. No. 00-5-03-SC,


[70]

Rule 126, sec. 4 provides:

Section 4. Requisites for issuing search warrant. — A search


warrant shall not issue except upon probable cause in connection
with one specific offense to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized
which may be anywhere in the Philippines.

[71]
 740 Phil. 212 (2014) [Per J. Leonen, Third Division].

[72]
 Id. at 227.

 The Revised Rules of Criminal Procedure allows a warrantless


[73]

search incidental to a lawful arrest. RULES OF COURT, Rule 126,


sec. 13 provides:

Section 13. Search incident to lawful arrest. — A person lawfully


arrested may be searched for dangerous weapons or anything
that may have been used or constitute proof in the commission of
an offense without a search warrant.

 People v. Cogaed, 740 Phil. 212, 228 (2014) [Per J. Leonen,


[74]

Third Division], citing People v. Aruta, 351 Phil. 868, 879-880


(1998) [Per J. Romero, Third Division].
 Valmonte v. De Villa, 258 Phil. 838, 843 (1989) [Per J. Padilla,
[75]

En Banc].

 People v. Racho, 640 Phil. 669, 676 (2010) [Per J. Nachura,


[76]

Third Division] citing People v. Nuevas, 545 Phil. 356 (2007) [Per


J. Tinga, Second Division].

[77]
 Rollo, p. 37.

 People v. Racho, 640 Phil. 669, 676 (2010) [Per J. Nachura,


[78]

Second Division].

 See People v. Cogaed, 740 Phil. 212, 238 (2014) [Per J.


[79]

Leonen, Third Division].

 Id. citing People v. Chua 444 Phil. 757 (2003) [Per J. Ynares-


[80]

Santiago, First Division].

[81]
 Id. at 238-239.

[82]
 640 Phil. 669 (2010) [Per J. Nachura, Second Division].

[83]
 Id. at 679-680.

[84]
 Id. at 671-672.

[85]
 Id. at 672.

[86]
 Id.

[87]
 Id.

[88]
 Id.

[89]
 Id.

[90]
 Id. at 667.
 Id. This Court cited People v. Maspil, Jr., 266 Phil. 815 (1990)
[91]

[J. Gutierrez, Jr., Third Division]; People v. Bagista, 288 Phil 828


(1992) [J. Nocon, Second Division]; People v. Balingan, 311 Phil.
290 (1995) [J. Puno, Second Division]; People v. Using, 341 Phil.
801 (1997) [Per J. Melo, Third Division]; and People v. Montilla,
349 Phil. 640 (1998) [Per J. Regalado, En Banc].

 Malacat v. Court of Appeals, 347 Phil. 462, 479 (1997) [Per J.


[92]

Davide, En Banc].

 In re Salibo v. Warden, 757 Phil. 630, 656 (2015) [Per J.


[93]

Leonen, Second Division] citing the Dissenting Opinion of J.


Teehankee in Ilagan v. Enrile, 223 Phil. 561 (1985) [Per J.
Melencio-Herrera, En Banc].

[94]
 Id.

[95]
 292-A Phil. 34 (1993) [Per J. Grino-Aquino, First Division].

[96]
 Id. at 39.

[97]
 Id.

[98]
 Id.

[99]
 Id. at 40.

[100]
 757 Phil. 630 (2015) [Per J. Leonen, Second Division].

[101]
 Id. at 634-635.

[102]
 Id. at 635.

[103]
 Id. at 654-655.

[104] Id.

[105]
 Id. at 655.
 People v. Tudtud, 458 Phil. 752, 773 (2003) [Per J. Tinga,
[106]

Second Division]; People v. Nuevas, 545 Phil. 356, 371-372


(2007) [Per J. Tinga, Second Division]; People v. Racho, 640 Phil.
669, 678 (2010) [Per J. Nachura, Second Division].

[107]
 444 Phil. 757 (2003) [Per J. Ynares-Santiago, First Division].

[108]
 Id. at 773-774.

 Malacat v. Court of Appeals, 347 Phil. 462, 480 (1997) [Per J.


[109]

Davide, Jr., En Banc].

 People v. Cogaed, 740 Phil. 212, 232 (2014) [Per J. Leonen,


[110]

Third Division].

 Malacat v. Court of Appeals, 347 Phil. 462, 481 (1997) [Per J.


[111]

Davide, Jr., En Banc].

[112] Id.

 People v. Cogaed, 740 Phil. 212, 233 (2014) [Per J. Leonen,


[113]

Third Division] citing J. Bersamin, Dissenting Opinion in Esquillo


v. People, 643 Phil. 577 (2010) [Per J. Carpio-Morales, Third
Division].

[114]
 345 Phil. 632 (1997) [Per J. Panganiban, Third Division].

[115]
 Id. at 638.

[116] Id.

[117] Id.

[118] Id.

[119] Id.
[120]
 Id. at 647.

[121]
 330 Phil. 811 (1996) [Per J. Romero, Second Division].

[122]
 Id. at 814-815.

[123]
 Id. at 815.

[124] Id.

[125] Id.

[126]
 Id. at 819.

[127]
 740 Phil. 212 (2014) [Per J. Leonen, Third Division].

[128]
 Id. at 221.

[129] Id.

[130] Id.

[131]
 Id. at 221-222.

[132]
 Id. at 234.

[133]
 Id. at 45236-237.

 Caballes v. Court of Appeals, 424 Phil. 263, 286 (2002) [Per J.


[134]

Puno, First Division].

 Id. See also People v. Nuevas, 545 Phil. 356, 373 (2007) [Per
[135]

J. Tinga, Second Division].

[137] Id.
 See Caballes v. Court of Appeals, 424 Phil. 263, 285 (2002)
[138]

[Per J. Puno, First Division]; People v. Cogaed, 740 Phil. 212,


239-240 (2014) [Per J. Leonen, Third Division].

 People v. Cogaed, 740 Phil. 212, 239 (2014) [Per J. Leonen,


[139]

Third Division].

 Caballes v. Court of Appeals, 424 Phil. 263, 278 (2002) [Per J.


[140]

Puno, First Division].

[141] Id.

[142]
 Id. at 279.

[143] Id.

 See People v. Manago, G.R. No. 212340, August 17, 2016


[144]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/august2016/212340.pdf> 9 [Per J.
Perlas-Bernabe, First Division].

 Valmonte v. De Villa, 264 Phil. 265, 269 (1990) [Per J. Padilla,


[145]

En Banc].

[146] Id.

[147] Id.

[148]
 Id. at 270.

 People v. Vinecario, 465 Phil. 192, 206 (2004) [Per J. Carpio


[149]

Morales, Third Division].

 People v. Manago, G.R. No. 212340, August 17, 2016,


[150]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/august2016/212340.pdf> 10 [Per J.
Perlas-Bernabe, First Division].
[151]
 264 Phil. 265 (1990) [Per J. Padilla, En Banc].

[152]
 Id. at 270.

 Valmonte v. De Villa, 258 Phil. 838, 843 (1989) [Per J. Padilla,


[153]

En Banc].

 Valmonte v. De Villa, 264 Phil. 265, 271 (1990) [Per J. Padilla,


[154]

En Banc]. See People v. Vinecario, 465 Phil. 192 (2004) [Per J.


Carpio-Morales, Third Division].

[155]
 767 Phil. 40 (2015) [Per J. Carpio, Second Division].

[156]
 Id. at 62-65.

[157] Id.

[158]
 Id. at 65.

[159]
 Id. at 64.

[160]
 635 Phil. 315 (2010) [Per J. Nachura, Second Division].

[161]
 Id. 322-323.

[162] Id.

[163] Id.

[164]
 Id. at 325.

[165]
 Id. at 331.

[166]
 471 Phil. 379 (2004) [Per J. Corona, Third Division].

[167]
 443 Phil. 506 (2003) [Per J. Puno, Third Division].

[168]
 Id. at 517.
[169]
 471 Phil. 379, 384 (2004) [Per J. Corona, Third Division].

[170]
 266 Phil. 306 (1990) [Per J. Gancayo, First Division].

[171]
 Id. at 307-312.

 G.R.
[172]
No. 209387, January 11, 2016
< http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/209387.pdf> [Per J.
Leonen, Second Division].

[173]
 Id. at 22.

 Dela Cruz v. People, G.R. No. 209387, January 11, 2016


[174]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
flle=/jurisprudence/2016/january2016/209387.pdf> 16 [Per J.
Leonen, Second Division].

[175]
 Id. at 17.

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SECOND DIVISION

[ G.R. No. 204262, June 07, 2017 ]


MARIO C. MADRIDEJOS, PETITIONER, VS. NYK-
FIL SHIP MANAGEMENT, INC., RESPONDENT.
DECISION

LEONEN, J.:

Illnesses not listed as an occupational disease under Section 32 of


the 2000 Philippine Overseas Employment Administration
Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels
are disputably presumed to be work-related.  However, seafarers
[1]

must prove through substantial evidence the correlation between


their illness and the nature of their work for their claim for
disability benefits to prosper.

This Petition for Review on Certiorari  assails the Resolutions


[2]

dated September 26, 2012  and November 6, 2012  of the Court
[3] [4]

of Appeals in CA-G.R. SP No. 125529. The Court of Appeals ruled


that the National Labor Relations Commission did not commit
grave abuse of discretion in dismissing Mario Madridejos'
(Madridejos) complaint for disability benefits. [5]

Petitioner Madridejos was a Filipino seafarer  hired by respondent


[6]

NYK-Fil Ship Management, Inc. (NYK-FIL),  a registered local


[7]

manning agency operating by virtue of Philippine laws  for its [8]

foreign principal, International Cruise Services, Limited. [9]

On March 25, 2010, Madridejos signed an employment contract


with NYK-FIL as a Demi Chef for the vessel "Crystal
Symphony/Serenity."  The employment contract was effective
[10]

for a period of 10 months with a basic monthly salary of


US$1,055.00, an overtime rate of US$4.00 per hour beyond 70
hours, and vacation leave with pay amounting to 10% of his total
income.[11]
On April 10, 2010, Madridejos commenced to work aboard the
vessel.  Two (2) weeks after, or on April 28, 2010, he claimed
[12]

that he suddenly slipped on a metal stairway and fell down,


hitting his abdomen and chest on a metal pipe.  He was brought
[13]

to the ship doctor and was diagnosed to have a "sebaceous cyst


to the right of the umbilicus."
[14]

The next day, Madridejos was treated at Spire Southampton


Hospital in Hampshire, England.  Under a local anesthesia, his
[15]

cyst was removed, and the lesion was closed with three (3)
stitches. [16]

After two (2) months, or on July 5, 2010, NYK-FIL terminated


Madridejos' services through its foreign principal.  The notice of
[17]

termination  read: [18]

TO: MR. MARIO MADRIDEJOS, #324 D/CHEF DE PARTIE MAIN GALLEY

FRO HERBERT DOPPLER, HOTEL DIRECTOR VICTOR CONCEICAO, FOOD AND BEVERAGE
M:

CC: CAPTAIN ICMA, OSLO


VICE CAPTAIN EXECUTIVE CHEF/CREW ACCOUNTANT

DAT JULY 5, 2010


E:

RE: TERMINATION OF CONTRACT WITH INTERNATIONAL CRUISE SERVICES LIMITED

We
reg
ret
to
info
rm
you
tha
t
we
hav
e
ma
de
the
dec
isio
n to
disc
onti
nue
you
r
em
plo
ym
ent
agr
ee
me
nt.
Hen
ce,
this
lett
er
ser
ves
as
a
for
mal
,
writ
ten
ter
min
atio
n of
you
r
con
trac
t
wit
h
[Int
ern
atio
nal
Cru
ise
Ser
vice
s,
Lim
ited
]

Wit
h
refe
ren
ce
to
Ite
m
No.
7 in
you
r
"E
mpl
oy
me
nt
Agr
ee
me
nt",
whi
ch
stat
es,
"...
Firs
t
tim
e
EM
PLO
YEE
S
sha
ll
be
sub
ject
to a
pro
bati
ona
ry
peri
od
of
thr
ee
(3)
mo
nth
s
foll
owi
ng
co
mm
enc
em
ent
of
ser
vice
duri
ng
whi
ch
this
AG
REE
ME
NT
can
be
ter
min
ate
d
by
eith
er
par
ty
wit
hou
t
cau
se
at
any
tim
e
upo
n
fou
rte
en
(14
)
day
s
prio
r
writ
ten
noti
ce",
you
are
her
eby
giv
en
im
me
diat
e
noti
ce
effe
ctiv
e
tod
ay,
Mo
nda
y,
July
5,
201
0,
whi
ch
fall
s
wit
hin
the
par
am
ete
rs
outl
ine
d in
you
r
con
trac
t

You
r
sala
ry
will
be
pai
d
acc
ordi
ngl
y
thr
oug
h
and
incl
udi
ng
July
18,
201
0.
You
r
sig
n
off
will
tak
e
pla
ce
in
Ista
nbu
l,
Tur
key
, on
Mo
nda
y,
July
5,
201
0.
A
flig
ht
tick
et
has
bee
n
arr
ang
ed
to
you
r
ho
me
airp
ort
in
Ma
nila
,
Phil
ippi
nes
,
and
the
co
mp
any
will
sho
uld
er
you
r
rep
atri
atio
n
exp
ens
es
[19]

Madridejos was repatriated to the Philippines on July 6, 2010. [20]

Madridejos insisted that he did not finish his employment contract


with NYK-FIL due to his unwanted health condition.  "Not being
[21]

at fault. . . for the pre-termination of his employment contract,


[he] made demands upon [NYK-FIL] ... to pay his disability
benefits."
[22]

Madridejos also averred that after his medical procedure in Spire


Southampton Hospital, he was advised to be sent back to the
Philippines "for further evaluation and treatment."  In support,
[23]

he attached the letter of Dr. James P. Byrne (Dr. Byrne), the


doctor who excised his cyst in Spire Southampton Hospital. The
letter read:
Dr. A. Fedorowiez
Ships Surgeon
M/S Crystal Serenity

Dear Dr. Fedorowiez,

Re: Mr. Mario MADRIDEJOS - d.o.b. 04/09/61


C/o Denholm Ship Agency Ltd Liner House, Test Road, Eastern
Docks
Southampton Hampshire SO4 3GE
Thank you very much for referring along this gentleman who
works on your ship who has a sebaceous cyst to the right of the
umbilicus. I explained the diagnosis to this gentleman in clinic
today. He has had symptoms of aching and discomfort and we
therefore proceeded to excise this lesion under local anaesthetic
at the Spire Hospital Southampton today. The diagnosis of
sebaceous cyst was confirmed and he has three interrupted nylon
sutures to close the wound.

I would be very grateful if you could arrange for the sutures to be


removed in approximately ten days' time and I have discharged
him back to your care.

Yours sincerely

(Dictated by Mr. Byrne but sent unsigned to avoid delay) [24]

On July 6, 2010,  he arrived in Manila, Philippines. The following


[25]

day, he allegedly reported to NYK-FIL "for a medical referral to


the company doctor." However, he did not get any referral letter
since he was told that his illness was not work-related. [26]

Due to persistent symptoms, he was purportedly constrained to


undergo medical examinations by Physician-Surgeon Dr. Aylmer
F. Españo (Dr. Españo) from Metropolitan Medical Center. He was
also prescribed with medicines for his sebaceous cyst  On August
[27]

26, 2010, Dr. Españo issued a medical certificate which stated:


This is to certify that Mr. Mario Madridejos, male, married, a
resident of Paete, Laguna, was seen and examined in this clinic
from July 7, 2010 up to present, with the following findings
and/or diagnosis:

• Sebaceous Cyst (Right Umbilicus)

Physical findings ha[ve] been noted with POEA Disability Grade 7-


Moderate Residuals of Disorders of the Intra-abdominal organs,
but due to the severity and deterioration of injury/illness[,] he is
entitled under P.O.E.A. Disability Grade 1 for Severe Residuals of
Impairment of intra-abdominal organs which requires aid and
attendance that will unable [sic] worker to seek any gainful
employment.

Due to his medical condition[,] he is permanently unfit for further


sea service in any capacity. Such injury/illnesses are
work[-]related since exposed to toxic and hazardous material.
Continuous medications and follow-up is advised . . .  [28]

Due to his alleged "very slow healing process," the four (4)
months of medical coverage included in his employment contract
with NYK-FIL expired.  However, he still continued his medication
[29]

as advised by Dr. Españo. [30]

Madridejos claimed that he also engaged the services of Dr.


Eduardo Yu (Dr. Yu), an internist and specialist at Mary Chiles
General Hospital.  Thus, another medical certificate was issued in
[31]

his favor which provided:


This is to certify that I have examined Mr. Mario Madridejos,
male[,] married, in this clinic on September 16, 2010 and up to
the present with following finding[s] and diagnosis of Sebaceous
Cyst (Right Umbilicus) [.]

Physical findings ha[ve] been noted with POEA Disability Grade 7-


Moderate Residuals of Disorders of the Intra-abdominal Organ but
due to the [sjeverity and deterioration of injury/illness, he is
entitled under P.O.E.A Disability Grade 1 for Severe Residuals of
Impairment of Intra-Abdominal organ which requires aid and
attendance that will unable [sic] worker to seek any gainful
employment.

Due to his medical condition[,] he is permanently unfit for further


sea service in any capacity. Such injury/illness are work[-]related
since exposed to toxic and hazardous materials. Advised
continuous medications and follow-up check-up[.] [32]

Madridejos argued that NYK-FIL ignored his repeated demands.


 He was then prompted to file a complaint "for disability
[33]

benefits, payment of medical expenses, damages, and attorney's


fees"  against NYK-FIL before the labor arbiter.
[34] [35]
NYK-FIL denied that Madridejos was repatriated due to his
sebaceous cyst. It asserted that this was not the reason since the
cyst had been excised completely during his operation at Spire
Southampton Hospital. Moreover, Madridejos even resumed his
job "for the next two [2] months without any complaint or report
of recurrence."[36]

NYK-FIL also insisted that Madridejos was not entitled to any


disability claim since there was allegedly no disability to address.
Madridejos only underwent an excision under a local anesthesia,
which did not, in any way, "render him incapable to return to his
previous work as a seafarer." [37]

NYK-FIL surmised that Madridejos merely filed a complaint as "an


afterthought or an act of retribution . . . due to the early
termination of his employment contract."  NYK-FIL purportedly [38]

terminated Madridejos' services properly pursuant to "Item 7"  of [39]

their employment agreement. [40]

NYK-FIL concluded that Madridejos' illness was not work-related


since there was no reasonable correlation between his cyst and
his functions as a Demi Chef.  A cyst is merely caused by
[41]

"blocked sebaceous glands, swollen hair follicles, and excessive


testosterone production." [42]

In his August 11, 2011 Decision,  Labor Arbiter Gaudencio P.


[43]

Demaisip, Jr. (Labor Arbiter Demaisip) found that Madridejos'


illness "was incurred during the term of his employment
contract," making it "compensable."  He affirmed and quoted
[44]

Madridejos' explanation, which stated:

As aptly pointed out by the Supreme Court explaining the


doctrine of "Welfare Legislation", thus:
Compensability of illness. Under the relevant contract:
Compensability of the illness or death of [a] seaman need not
depend on whether the illness was total or partial permanent
disability. It is sufficient that the illness occurred during the
effectivity of the employment contract.

Even assuming that the ailment was contracted prior to


employment, this would not deprive the seaman of compensation
benefits. For what matters is that his work had contribute[d],
even in a small degree, to the development of the disease and in
bringing about his Intra-abdominal organs which requires aid and
attendance that will unable [sic] workers to seek gainful
employment.
Due to his medical condition[,] he is permanently unfit for further
sea service in any capacity. Such injury/illnesses are
work[-]related since exposed to toxic and hazardous materials.
Continuous medications and follow[-]up is advised.

This certification is being issued for whatever purpose it may


serve him best.  (Emphasis in the original)
[45]

Labor Arbiter Demaisip emphasized, however, that since there


was no evidence to prove the severity of Madridejos' illness, he
should only be given a Disability Grade of 7.  The dispositive
[46]

portion of the decision read:


IN VIEW OF THE FOREGOING, respondent Agency is directed to
pay the complainant an amount equivalent to Grade 7 or US$
20,900.

SO ORDERED. [47]

Both parties assailed the decision of Labor Arbiter Demaisip


before the National Labor Relations Commission.  Madridejos
[48]

asserted that Labor Arbiter Demaisip "erred in assessing him with


only a Grade 7 disability" and claimed that "it should have been
Grade 1 or permanent/total disability."  On the other hand, NYK-
[49]

FIL averred that Labor Arbiter Demaisip failed to consider the


termination of contract as the real cause behind Madridejos'
repatriation.
[50]

The National Labor Relations Commission, ruled in favor of NYK-


FIL in its March 30, 2012 Decision.[51]
The National Labor Relations Commission found Madridejos' story
as "unnatural."  His allegation that he was advised to be
[52]

repatriated for further treatment in the Philippines was not


sufficiently proven.  Based on Madridejos' discharge letter from
[53]

Hampshire, England, his operation merely required three (3)


stitches. Hence, he could not have been advised to pursue further
treatment in the Philippines since his operation was only a minor
one.[54]

Additionally, there was nothing in Madridejos' Position Paper  or


[55]

Reply  that he complained of any pain, complication, or


[56]

discomfort after his operation, indicating that "everything went


well."  Similarly, he never showed any ship record regarding his
[57]

alleged accident.  Therefore, the National Labor Relations


[58]

Commission concluded that Madridejos' claim was only an


afterthought and reasoned that:
Well then, knowing fully [sic] well that he was repatriated on July
6, 2010 because his service contract had already been
terminated, why then as he alleged would he go to his local
agency for a medical referral to their company doctor? He said
that he was denied. But of course; in the first place he was not
their employee anymore, but more importantly he was not
even sick as he had been working quite well the past
several months. But now he is back, and sad part of it is
that he was out of work. So he opted for the cyst story. It is
not really difficult to see, however that Madridejos' claim of being
sick is an afterthought.  (Emphasis supplied)
[59]

The National Labor Relations Commission ruled further that


Madridejos' cyst was not work-related since it was "simply a slow-
growing pea-size[d] sac growth under the skin" that grew as a
consequence of infection and caused "clogging of sebaceous
glands."  "It can develop in any part of the body, and at times it
[60]

just simply disappears."  The dispositive portion of the National


[61]

Labor Relations Commission's decision provided:


WHEREFORE, premises considered, complainant Madridejos'
appeal is hereby DISMISSED for lack of merit, while that of
respondents' is granted, the assailed decision is reversed and set
aside, and the complaint herein for disability benefits is likewise
DISMISSED for lack of merit.

SO ORDERED.  (Emphasis in the original)


[62]

On April 30, 2012, the National Labor Relations Commission's


Resolution  denied Madridejos' Motion for Reconsideration.
[63] [64]

On July 9, 2012, Madridejos filed a Petition for Certiorari  before [65]

the Court of Appeals claiming that the National Labor Relations


Commission committed grave abuse of discretion amounting to
lack or excess of jurisdiction by disregarding the pertinent
provisions of the Philippine Overseas Employment Agency
Employment Contract.  Moreover, he argued that the National
[66]

Labor Relations Commission gave more weight to NYK-FIL's


"purely gratuitous and convoluted assertions" rather than the
facts already proven. [67]

The Court of Appeals dismissed  Madridejos' petition and ruled


[68]

that the National Labor Relations Commission had judiciously


denied Madridejos' claim for disability benefits. [69]

The Court of Appeals found that sometime in Madridejos' first or


second month of employment, he suffered from a severe stomach
ache while on board the vessel.  All the doctors involved agreed
[70]

that his severe stomach ache was due to a "Sebaceous Cyst to


the right Umbilicus," which was already removed on April 29,
2010.[71]

Hence, his repatriation in July 2010 was not due to his medical
condition but due to the expiration of his contract as a
probationary employee.  Similarly, the Court of Appeals also
[72]

confirmed National Labor Relations Commission's finding that


Madridejos' cyst was not work-related. [73]

On November 6, 2012, the Court of Appeals' Resolution  denied [74]

Madridejos' Motion for Reconsideration. [75]


Hence, this Petition for Review on Certiorari  was filed before this
[76]

Court.

Madridejos seeks compensation for his sebaceous cyst as an


occupational disease.  He states that he has already presented
[77]

substantial evidence to prove his claim that there was a


"reasonable connection between his work and the cause of his
illness."  He holds that several medical records and reports have
[78]

shown that his cyst was aggravated by the conditions of his work
as a seaman. [79]

He asserts that his cyst has "impaired his [a]bdomen and upper
extremities [causing his] internal organs [to] malfunction."  He [80]

insists that he "suffer[ed] [from] a physical injury in his [u]pper


[e]xtremities . . . [due to] an accident while doing grinding works
... on board the vessel."  Collectively, all these show that his
[81]

condition was totally work-related, making it compensable. [82]

Moreover, his pre-employment medical record was stamped with


"Fit to work."  This proves that he only incurred the cyst during
[83]

his employment and it worsened on board the vessel. [84]

He claims that his cyst should be regarded as Permanent


Disability Grade 1 because his condition has hindered him to
return to work as a seafarer as he is now regularly required to
undergo physiotherapy. [85]

Further, Madridejos avers that neither he nor labor tribunals and


courts are bound by the medical report of NYK-FIL's company-
designated physician; the inherent merits of the case should be
considered. [86]

He maintains that NYK-FIL's refusal to heed his demands was


induced by "bad faith and malice."  He then concludes that the
[87]

National Labor Relations Commission committed grave abuse of


discretion in disregarding his disability compensation, deleting
moral damages, and not awarding attorney's fees in his favor. [88]
On January 21, 2013, this Court issued a Resolution  requiring [89]

NYK-FIL to comment on the Petition.

In its Comment,  NYK-FIL belies Madridejos' claim that he was


[90]

involved in an accident while lifting kitchen equipment on board


the vessel.  It claims that Madridejos' story was "bare, self-
[91]

serving, and hearsay as there was no such incident that ever


happened on board the vessel and no record of such alleged
occurrence exists." [92]

Furthermore, his sebaceous cyst was curable.  Thus, it was even


[93]

completely excised, enabling him "to work for the next two (2)
months . . . without any complaint[.]"  Additionally, the cyst was
[94]

already removed under local anesthesia which allegedly connotes


that:
By local anesthesia, it simply means that the operation or
excision was merely superficial or skin-deep. It is nothing more
serious tha[n] excision or extraction of boil or "pigsa" in the
vernacular. The only difference of the sebaceous cyst from boil, is
that in the former, what is being extracted is sebum/keratin or
"sebo" in the vernacular and in the latter is pus or "nana" in the
vernacular. This explains why only local anesthesia is necessary. [95]

NYK-FIL insists that it has terminated Madridejos' services


pursuant to Item 7 of his Employment Agreement and not
because of his illness.  "[H]e was repatriated . . . three (3)
[96]

months after his cyst was removed."  His silence on the events
[97]

that transpired between his operation and repatriation confirms


NYK-FIL's claim that "[Madridejos] was not repatriated for
medical reason[s] but rather due to a valid termination of... [his]
probationary employment." [98]

Moreover, his assertion that he reported to the local agency to


seek medical referral is untrue.  Hence, his non-compliance with
[99]

the compulsory post-employment medical examination leads to


the forfeiture of the benefits provided for under Philippine
Overseas Employment Agency Standard Employment Contract. [100]
Finally, it claims that Madridejos is not entitled to moral damages,
exemplary damages, or attorney's fees since NYK-FIL did not act
in bad faith. [101]

On June 3, 2013, this Court issued a Resolution  requiring [102]

petitioner to file his Reply to the Comment.

In his Reply,  Madridejos claims that NYK-FIL made him appear


[103]

that he was a "'first time employee' ... on probationary period for


three (3) months."  As indicated in the Overseas Filipino
[104]

Workers information record of the Philippine Overseas


Employment Agency, his employment was merely a re-
engagement contract with NYK-FIL.  Thus, he could not be under
[105]

probation.[106]

He maintains that a day after his repatriation, he immediately


reported to the manning agency to ask for "referral to the
company-designated physician."  Technically, he was already
[107]

under the company's consideration.  However, they still failed to


[108]

conduct his post-employment medical examination insisting that


he was not really sick at all. [109]

On October 21, 2013, this Court issued a Resolution  requiring [110]

the parties to submit their Memoranda. [111]

NYK-FIL maintains that Madridejos is not entitled to disability


benefits since he was validly terminated pursuant to the terms of
his employment contract. [112]

On the other hand, Madridejos denies that the termination of his


probationary contract caused his repatriation. He claims that due
to his sebaceous cyst, "he could no longer effectively perform" his
job as a Demi Chef; thus, he was terminated. [113]

The Court of Appeals, however, ruled in favor of NYK-FIL. It


affirmed the National Labor Relations Commission's finding  that [114]

Madridejos was repatriated in 2010 not for medical reasons but


due to the expiration of his contract as a probationary employee.
[115]

The sole issue for this Court's resolution is Madridejos'


entitlement to disability benefits.

This petition lacks merit.

Madridejos cannot claim disability benefits since he was not


medically repatriated.

Since there are conflicting claims in this case, there is necessarily


an attack on the factual findings of the labor tribunals and of the
Court of Appeals.

As a rule, we only examine questions of law in a Rule 45 petition.


 Thus, "we do not re-examine conflicting evidence, re-evaluate
[116]

the credibility of witnesses, or substitute the findings of fact of


the [National Labor Relations Commission], an administrative
body that has expertise in its specialized field."  Similarly, we do
[117]

not replace our "own judgment for that of the tribunal in


determining where the weight of evidence lies or what evidence is
credible."  The factual findings of the National Labor Relations
[118]

Commission, when confirmed by the Court of Appeals, are usually


"conclusive on this Court." [119]

In this case, we do not see any reason to deviate from the


general rule.

Madridejos insists that he could not be on probationary status


because he was merely "re-engaged" as evinced by his Overseas
Filipino Worker Information.  However, "[t]he employment of
[120]

seafarers and its incidents are governed by the contracts they


sign every time they are hired or re-hired. These contracts have
the force of law between the parties as long as their stipulations
are not contrary to law, morals, public order or public
policy."  Given that he submitted himself with the terms of his
[121]

contract, NYK-FIL may validly terminate his services pursuant to


their agreed terms.

Moreover, Madridejos cannot feign ignorance  about his [122]

termination letter,  which shows his acquiescence through his


[123]

signature. Also in his Reply  to NYK-FIL's Position Paper before


[124]

the National Labor Relations Commission, he explicitly recognized


the termination of his contract stating:
[I]n fact, several days prior to the termination of his
contract, complainant was involved in an accident while lifting
and carrying kitchen equipment aboard the vessel, he
accidentally slipped in a metal stairway.  (Emphasis supplied)[125]

Similarly, a perusal of the records shows that he contested


neither the existence of the termination letter nor the authenticity
of his signature on it. [126]

II

Madridejos asserts that after the excision of his cyst, he was


advised to be repatriated back to the Philippines for further
treatment and evaluation, citing the letter of Dr. Byrne.

However, there is nothing in the discharge letter to show that Dr.


Byrne explicitly advised Madridejos to go back to the Philippines
for further treatment. On the contrary, the letter even confirmed
that the excision was merely a minor operation done under a
local anesthesia. Hence, the lesion only required three (3)
stitches for which Madridejos was immediately discharged back to
the vessel after.  This bolsters NYK-FIL's claim that Madridejos
[127]

was not medically repatriated.

Further, the records  were bereft of any sign that Madridejos


[128]

was having issues following his operation, indicating that


everything was well after the procedure.  As insisted by NYK- [129]

FIL, Madridejos was able to regularly work for the next two (2)
months after the excision. [130]
Madridejos' passport also shows that he arrived in the Philippines
on July 6, 2010  or almost three (3) months after his operation
[131]

on April 29, 2010.  As asserted by NYK-FIL, Madridejos kept


[132]

silent on the events that happened during the time between his
operation and repatriation.  If he was really medically
[133]

repatriated, then he should have been immediately sent back to


the Philippines after his operation. However, he only disembarked
from the vessel almost three (3) months after such operation.

Furthermore, Madridejos failed to present any ship record or


other pertinent proof to show that he was involved in an accident.
 His assertions were not corroborated by any written report or
[134]

testimonies of witnesses.

III

Even assuming that Madridejos was medically repatriated, he still


cannot claim for disability benefits since his sebaceous cyst was
not work-related.

The Philippine Overseas Employment Agency Standard


Employment Contract, which is deemed integrated into
Madridejos' employment contract with NYK-FIL, governs his claim
for disability benefits.  While these guidelines have been recently
[135]

amended,  Philippine
[136]
Overseas Employment Agency
Memorandum Circular No. 9  applies in this case since
[137]

Madridejos signed his contract with NYK-FIL on March 25, 2010. [138]

The requisites for compensable illnesses are provided for under


Section 20(B) of Philippine Overseas Employment Agency
Memorandum Circular No. 9, Series of 2000:
Section 20: COMPENSATION AND BENEFITS

....

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS


The liabilities of the employer when the seafarer suffers work-
related injury or illness during the term of his contract are as
follows . . . (Emphasis supplied)
Madridejos was diagnosed with sebaceous cyst to the right of his
umbilicus during the effectivity of his contract as evinced by the
findings  of Dr. Byrne. Conformably, Labor Arbiter Demaisip
[139]

affirmed that Madridejos' illness was acquired during the term of


his employment contract.  Disputed, however, is whether
[140]

Madridejos' sebaceous cyst was work-related.

In resolving a Rule 45 Petition for Review on Certiorari of a Court


of Appeals' Resolution in a Rule 65 Petition for Certiorari, this
Court is bound to decide "whether the Court of Appeals was
correct in establishing the presence or absence of grave abuse of
discretion."  In this case, therefore, we determine whether the
[141]

Court of Appeals properly ruled that the National Labor Relations


Commission did not commit grave abuse of discretion in denying
Madridejos' claim for disability benefits.
[142]

Madridejos insists that his sebaceous cyst was work-related and


compensable since the risk of acquiring it increased due to his
working conditions.  NYK-FIL opposes, claiming that Madridejos'
[143]

cyst was not attributable to the nature of his job.  It asserts that
[144]

Madridejos failed to show "even a single realistic connection"


between his illness and his employment.  NYK-FIL says that
[145]

Madridejos never met any accident and there was no medical or


accident report to prove its occurrence.[146]

A work-related illness is "any sickness resulting to disability or


death as a result of an occupational disease listed under Section
32-A with the conditions set therein satisfied." [147]

Section 32-A provides:


Section 32-A. OCCUPATIONAL DISEASES

For an occupational disease and the resulting disability or death


to be compensable, all of the following conditions must be
satisfied:
1. The seafarer's work must involve the risks described herein;
2. The disease was contracted as a result of the seafarer's
exposure to the described risks;
3. The disease was contracted within a period of exposure and
under such other factors necessary to contract it;
4. There was no notorious negligence on the part of the
seafarer.
The following diseases are considered as occupational when
contracted under working conditions involving the risks described
herein.
A sebaceous cyst is not included under Section 32  or 32-A  of [148] [149]

the 2000 Philippine Overseas Employment Agency Standard


Employment Contract. However, the guidelines expressly provide
that those illnesses not listed in Section 32 "are disputably
presumed as work[-]related." [150]

Similarly, for an illness to be compensable, "it is not necessary


that the nature of the employment be the sole and only reason
for the illness suffered by the seafarer."  It is enough that there
[151]

is "a reasonable linkage between the disease suffered by the


employee and his work to lead a rational mind to conclude that
his work may have contributed to the establishment or, at the
very least, aggravation of any pre-existing condition he might
have had."[152]

The disputable presumption implies "that the non-inclusion in the


list of compensable diseases/illnesses does not translate to an
absolute exclusion from disability benefits."  Similarly, "the
[153]

disputable presumption does not signify an automatic grant of


compensation and/or benefits claim."  There is still a need for
[154]

the claimant to establish, through substantial evidence, that his


illness is work-related.
[155]

"Substantial evidence is more than a mere scintilla."  It should [156]

attain "the level of relevant evidence that a reasonable mind


might accept as sufficient to support a conclusion." [157]
Madridejos cannot solely rely on the disputable presumption.
 For his failure to substantiate his claim that his cyst was either
[158]

work-related or work-aggravated, this Court cannot grant him


relief. [159]

Accordingly, the disputable presumption "does not allow him to


just sit down and wait for respondent company to present
evidence to overcome the disputable presumption of work-
relatedness of the illness."  Concomitantly, there is still a need
[160]

for him to corroborate his claim for disability benefits. [161]

"A sebaceous cyst is a small, dome-shaped cyst or sac that


develops in the skin. It is filled with a thick, greasy, cream-
cheese like substance (called sebaceous material) that slowly fills
up the cyst over many years."  It occurs "in a hair follicle, which
[162]

has a small duct opening onto the surface of the skin. The duct
becomes plugged with a sticky material and the secretions from
the cyst gradually build up and cause it to expand." [163]

Sebaceous cysts "are usually harmless, but the main risk is


infection by bacteria." In which case, the cysts "become enlarged,
red, inflamed and tender."  Also, the cysts may later rupture and
[164]

discharge "a foul-smelling pus." [165]

An "obtrusive or unsightly" sebaceous cyst can be excised


through "a simple operation for which you will be given a local
anaesthetic" where "a simple incision is made in the skin
overlying the cyst, the sac is removed and the wound is closed
with stitches." [166]

The findings of the National Labor Relations Commission, as


affirmed by the Court of Appeals, are consistent with the nature
of a sebaceous cyst:
It is simply a slow-growing pea-size[d] sac growth under the skin
that develops as a result of infection, clogging of sebaceous
glands (oil gland), or around foreign bodies, such as earrings. It
can develop in any part of the body, and at times it just simply
disappears. [167]
Madridejos insists that he suffered an injury in his upper
extremities due to an accident that he had encountered "while
doing grinding works . . . on board the vessel."  He alleges that
[168]

this incident had caused the development of his cyst. [169]

Surprisingly, however, Madridejos argued differently in his


Memorandum  by saying that, as found by the National Labor
[170]

Relations Commission, a sebaceous cyst could "develop as [a]


result of [an] infection."  He then shifted to a new contention
[171]

blaming the vessel's unhealthy environment as the cause of an


infection which might have probably triggered the occurrence of
his sebaceous cyst. [172]

Madridejos has not enumerated either the scope of his job or his
regular tasks as a Demi Chef that would supposedly show the
correlation of his employment to the development of his cyst.
Similarly, he has failed to provide this Court with an overview of
significant working conditions that might have possibly
contributed to the acquisition or aggravation of his illness.
Instead, he has merely made sweeping assertions about it.

Regrettably, Madridejos has failed to prove that the development


of cyst was due to the nature of his job as a Demi Chef. For this
reason, this Court cannot presuppose that it is work-related.

Furthermore, it was already settled that Madridejos was not


repatriated due to his alleged medical condition but due to the
expiration of his contract as a probationary employee. For this
reason, therefore, it becomes unnecessary for NYK-FIL to
overcome the disputable presumption that Madridejos' illness was
work-related.

IV

Madridejos insists that his Pre-Employment Medical Examination


showed that he was "fit to work" before he commenced
employment.  This proves that he incurred his illness during his
[173]

service and was only aggravated when he was on board. [174]


"A seafarer only needs to pass the mandatory [Pre-Employment
Medical Examination] in order to be deployed on duty at sea."  A [175]

Pre-Employment Medical Examination cannot be relied upon to


reflect a "seafarer's true state of health" since it is not
exploratory and may just disclose enough for employers to decide
whether a "seafarer is fit for overseas employment."  Due to the
[176]

nature of a Pre-Employment Medical Examination, it is possible


that Madridejos' sebaceous cyst was not detected prior to his
employment.

Nevertheless, NYK-FIL has not been remiss in its duty to provide


Madridejos with all the necessary aid. When he was diagnosed
with a sebaceous cyst, he was immediately referred to a hospital
where all the expenses were shouldered by the company.  This [177]

assertion was not contradicted by Madridejos.

Given that Madridejos' repatriation was due to the termination of


his service contract, there was no bad faith on the part of NYK-
FIL. Accordingly, we deny Madridejos' claim for moral damages
and attorney's fees.

The Constitutional mandate in providing full protection to labor "is


not meant to be a sword to oppress employers."  This Court's
[178]

assurance to this policy does not stop us from upholding "the


employer when it is in the right."  Thus, when evidence
[179]

contradicts compensability, the claim cannot prosper, otherwise it


"causes injustice to the employer."[180]

WHEREFORE, the petition is DENIED. The assailed September


26, 2012 and November 6, 2012 Resolutions of the Court of
Appeals are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), and Peralta, JJ., concur.


Mendoza, and Martires, JJ., on official leave.
[1]
 POEA Memorandum Circular No. 009-00 (2000), sec. 20(b).

[2]
 Rollo, pp. 12-53.

 Rollo, pp. 54-55. The Resolution was penned by Associate


[3]

Justice Amy C. Lazaro-Javier and concurred in by Associate


Justices Mariflor P. Punzalan Castillo and Edwin D. Sorongon of
the Sixteenth Division, Court of Appeals, Manila.

 Id. at 56. The Resolution was penned by Associate Justice Amy


[4]

C. Lazaro-Javier and concurred in by Associate Justices Mariflor P.


Punzalan Castillo and Edwin D. Sorongon of the Former Sixteenth
Division, Court of Appeals, Manila.

[5]
 Id. at 55.

[6]
 Id. at 328, NYK-Fil Ship Management, Inc.'s Position Paper.

 Id. at 13. Also referred to as NFSMI which stands for NYK-Fil


[7]

Ship Management, Inc.

[8]
 Id. at 328.

[9]
 Id. at 288 and 328.

[10]
 Id. at 288.

[11]
 Id. at 350, Contract of Employment.

[12]
 Id. at 164, NLRC Decision. The NLRC Decision has no page 3.

[13]
 Id.

[14]
 Id.

[15]
 Id.
[16]
 Id.

[17]
 Id.

[18]
 Id. at 358, Notice of Termination.

[19]
 Id.

[20]
 Id. at 165.

[21]
 Id. at 295, Position Paper (for the Complainant).

[22]
 Id.

[23]
 Id. at 291.

[24]
 Id. at 357.

[25]
 Id. at 319.

[26]
 Id. at 291.

[27]
 Id. at 291-292.

[28]
 Id. at 292, Position Paper (for the Complainant).

[29]
 Id. at 293, Position Paper (for the Complainant).

[30]
 Id.

[31]
 Id.

[32]
 Id. at 294, Position Paper (for the Complainant).

[33]
 Id. at 295.

[34]
 Id. at 282, Labor Arbiter's Decision.
[35]
 Id. at 295.

[36]
 Id. at 333, NYK-FIL's Position Paper.

[37]
 Id. at 332.

[38]
 Id. at 333-334.

 Id. at 352-353. Item 7 of International Cruise Services, Ltd.


[39]

Crystal Cruises Hotel Personnel Terms and Conditions provides:

    . . . .
7. First-time EMPLOYEES shall be subject to a probationary
period of three (3) months following commencement of
service during which this AGREEMENT can be terminated by
either party without cause at any time upon fourteen (14)
days prior written notice. If the AGREEMENT is terminated in
the probationary period by the EMPLOYER, the repatriation
costs should be shouldered by the EMPLOYER. Thereafter
either party may terminate this AGREEMENT without cause
upon one (1) month written notice. An EMPLOYEE that
terminates his contract before the expiry date, or demands
to leave his employment without giving proper notice, will be
responsible for his own repatriation costs. The probation
period shall not apply to EMPLOYEES previously engaged by
the EMPLOYER within a one (1) year period prior to the
execution of this AGREEMENT. EMPLOYER may in lieu of
providing the requisite notice, pay to the EMPLOYEE the
Minimum Income to which the EMPLOYEE would be entitled
during the notice period. If an EMPLOYEE in Group A1-B
terminates this AGREEMENT during service on board and the
EMPLOYEE signs off in accordance with the approved
vacation plan, the term of notice shall apply from the date of
signing off.
 Id. at 334.
[40]

[41]
 Id. at 336.
[42]
 Id.

[43]
 Id. at 282-285.

[44]
 Id. at 284.

[45]
 Id. at 284-285.

[46]
 Id. at 285.

[47]
 Id.

 Id. at 163-167, NLRC Decision. See also rollo, pp. 241-274,


[48]

Petitioner's Memorandum on Appeal and rollo, pp. 198-240,


Respondent's Notice of Appeal with Memorandum of Appeal.

[49]
 Id. at 163.

[50]
 Id. at 164.

[51]
 Id. at 163-167.

[52]
 Id. at 166.

[53]
 Id. at 165.

[54]
 Id.

[55]
 Id. at 286-326.

[56]
 Id. at 359-372.

[57]
 Id. at 165.

[58]
 Id.

[59]
 Id.
[60]
 Id. at 166.

[61]
 Id.

[62]
 Id.

[63]
 Id. at 168-169.

 Id. at 170-195, Motion for Reconsideration (of the Decision


[64]

dated 30 March 2012).

[65]
 Id. at 121-162.

[66]
 Id. at 123.

[67]
 Id. at 123.

[68]
 Id. at 54-55.

[69]
 Id. at 54.

[70]
 Id.

[71]
 Id. at 55.

[72]
 Id. at 54.

[73]
 Id. at 55.

[74]
 Id. at 56.

[75]
 Id. at 57-74, Motion for Reconsideration.

[76]
 Id. at 12-53.

[77]
 Id. at 38.
[78]
 Id. at 39.

[79]
 Id.

[80]
 Id. at 42.

[81]
 Id. at 44.

[82]
 Id. at 46.

[83]
 Id. at 47.

[84]
 Id.

[85]
 Id. at 48.

 Id. citing Maunlad Transport, Inc. et al. v Manigo, 577 Phil. 319


[86]

(2008) [Per J. Austria-Martinez, Third Division].

[87]
 Id. at 49.

[88]
 Id.

[89]
 Id. at 405-406.

[90]
 Id. at 407-438.

 Id. at 411. "Petitioner alleged on page 10 of the Petition that on


[91]

28 April 2010, he was involved in an accident while lifting and


carrying Kitchen Equipment aboard the vessel when he
accidentally slipped in the metal stairway. According to him, he
suddenly felt episodic chest pain and abdominal pains radiating
up to the right upper extremity as electric shock. For the alleged
incident, Petitioner ties his "SEBACEOUS CYST" to claim disability
benefits."

[92]
 Id.
[93]
 Id. at 412.

[94]
 Id.

[95]
 Id. at 412-413.

[96]
 Id. at 411.

[97]
 Id. at 413.

[98]
 Id.

[99]
 Id.

[100]
 Id. at 414.

Section 20: Compensation and Benefits

....

B. Compensation and Benefits for Injury or Illness

    . . . .
3. Upon sign-off from the vessel for medical treatment, the
seafarer is entitled to sickness allowance equivalent to his
basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-
designated physician but in no case shall this period exceed
one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-
employment medical examination by a company-designated
physician within three working days upon his return except when
he is physically incapacitated to do so, in which case, a written
notice to the agency within the same period is deemed
compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to
claim the above benefits.
[101]
 Id. at 433.

[102]
 Id. at438-A.

[103]
 Id. at 439-446.

[104]
 Id. at 439.

[105]
 Id. at 440.

[106] Id.

[107]
 Id. at 441.

[108]
 Id. at 442.

[109] Id.

[110]
 Id. at 447.

 Id. at 480-497, Petitioner's Memorandum; rollo, pp. 448-479,


[111]

Respondent's Memorandum.

[112]
 Id. at 456.

[113]
 Id. at 487.

[114]
 Id. at 165.

[115]
 Id. at 54.

 Career Philippines Shipmanagement, Inc. v. Serna, 700 Phil. 1,


[116]

9 (2012) [Per J. Brion, Second Division].

[117] Id.

[118]
 Id. at 9-10.
[119]
 Id. at 10.

[120]
 Rollo, p. 488.

 Javier v. Philippine Transmarine Carriers, Inc., 738 Phil. 374,


[121]

384 (2014) [Per J. Brion, Second Division].

[122]
 Rollo, p. 456

[123]
 Id. at 358.

[124]
 Id. at 359-372, Reply (to Respondents' Position Paper).

[125]
 Id. at 359.

[126]
 Id. at 456-457.

[127]
 Id. at 165.

[128] Id.

[129] Id.

[130]
 Id. at 429.

[131]
 Id. at 319.

[132]
 Id. at 164.

[133]
 Id. at 413.

[134]
 Id. at 164.

 Monana v. MEC Global Shipmanagement and Manning Corp.,


[135]

746 Phil. 736, 745 (2014) [Per J. Leonen, Second Division].

[136] Id.
 The Amended Standard Terms and Conditions governing the
[137]

Employment of Filipino-Seafarers on Board Ocean-Going Vessels


were adopted on June 14, 2000.

[138]
 Rollo, p. 288 and 329.

[139]
 Id. at 357.

Re: Mr. Mario MADRIDEJOS . . .

....

Thank you very much for referring along this gentleman who
works on your ship who has a sebaceous cyst to the right of
the umbilicus. I explained the diagnosis to this gentleman in
clinic today. (Emphasis supplied)

[140]
 Id. at 284.

 Dayo v. Status Maritime Corp., 751 Phil. 778, 785 (2015) [Per
[141]

J. Leonen, Second Division].

[142] Id.

[143]
 Rollo, p. 488.

[144]
 Id. at 465-466.

[145]
 Id. at 466.

[146]
 Id. at 464.

 POEA Memorandum Circular No. 9 (2000) or the Amended


[147]

Standard Terms and Conditions Governing the Employment of


Filipino Seafarers on Board Ocean-Going Vessels

 Schedule of Disability or Impediment for Injuries Suffered and


[148]

Diseases Including Occupational Diseases or Illness Contracted


[149]
 Occupational Diseases

[150]
 Id. at Section 20(B)

 Dayo v. Status Maritime Corp., 751 Phil. 778, 789 (2015) [Per
[151]

J. Leonen, Second Division] citing Magsaysay Maritime Services


v. Laurel, 707 Phil. 210 (2013) [Per J. Mendoza, Third Division].

[152] Id.

 Jebsen Maritime, Inc. v. Ravena, 743 Phil. 371, 388 (2014)


[153]

[Per J. Brion, Second Division].

[154] Id.

[155] Id.

 Talosig v. United Philippine Lines, Inc., 739 Phil. 774, 783


[156]

(2014) [Per CJ. Sereno, First Division].

[157] Id.

 Quizora v. Denholm Crew Management (Philippines), Inc., 676


[158]

Phil. 313, 327 (2011) [Per J. Mendoza, Third Division].

[159] Id.

[160] Id.

[161] Id.

 See
[162]
Sebacious cysts, available at
<http://www.nevdgp.org.au/info/murtagh/pdf/SEBCYSTS010216.
pdf.> (Last visited April 7, 2017).

[163] Id.

[164] Id.
[165] Id.

[166] Id.

[167]
 Rollo, p. 55.

[168]
 Id. at 44.

[169] Id.

[170]
 Id. at 480-497.

[171]
 Id. at 490.

[172] Id.

[173]
 Id. at 47.

[174] Id.

 Francisco v. Bahia Shipping Services, Inc., 650 Phil. 200, 206


[175]

(2010) [Per J. Carpio-Morales, Third Division].

 NYK-Fil Ship Management Inc. v. National Labor Relations


[176]

Commission, 534 Phil. 725, 739 (2006) [Per J. Carpio-Morales,


Third Division].

[177]
 Rollo, p. 473.

 Magsaysay Maritime Corporation v. National Labor Relations


[178]

Commission, 630 Phil. 352, 369 (2010) [Per J. Brion, Second


Division].

[179] Id.

 Francisco v. Bahia Shipping Services, Inc., 650 Phil. 200, 207


[180]

(2010) [Per J. Carpio-Morales, Third Division].


Source: Supreme Court E-Library | Date created: July 06, 2017
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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 210266, June 07, 2017 ]


ANTHONY DE SILVA CRUZ, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

The possession and use of a counterfeit credit card is considered


access device fraud and is punishable by law. To successfully
sustain a conviction for possession and use of a counterfeit
access device, the prosecution must present not only the access
device but also any evidence that proves that the access device is
counterfeit.

This resolves a Petition  for Review on Certiorari assailing the


[1]

Decision  dated July 4, 2013 and Resolution  dated November


[2] [3]

26, 2013 of the Court of Appeals, which affirmed the conviction of


petitioner Anthony De Silva Cruz (Cruz) by the Regional Trial
Court  for violation of Republic Act No. 8484, otherwise known as
[4]

the Access Devices Regulation Act of 1998.


Cruz was charged with violation of Section 9(a) and (e) of
Republic Act No. 8484, which provide:
SECTION 9. Prohibited Acts. — The following acts shall constitute
access device fraud and are hereby declared to be unlawful:

(a) producing, using, trafficking in one or more counterfeit access devices;

....

(e) possessing one or more counterfeit access devices or access devices fraudulently ap

The Informations against him read:

Under Criminal Case No. 06-0479

That on or about the 18  day of April 2006, in the City of


th

Parañaque, Philippines and within the jurisdiction of this


Honorable Court, the above-named accused, did then and there
willfully, unlawfully and feloniously have in his possession and
control a counterfeit access device (Citibank Visa Card with No.
4539 7207 8677 7008) in violation of the aforecited law.

CONTRARY TO LAW.

....

Under Criminal Case No. 06-0480

That on or about the 18  day of April 2006, in the City of


th

Parañaque, Philippines and within the jurisdiction of this


Honorable Court, the above-named accused, did then and there
willfully, unlawfully and feloniously use a counterfeit Citibank Visa
Card with No. 4539 7207 8677 7008 an access device, in buying
from complainant Duty Free Philippines herein represented by
Redentor M. Quejada, one (1) pair of Ferragamo shoes worth
US$363.00, to the damage and prejudice of the complainant in
the aforementioned amount of US$363.00 or P18,876.00 more or
less.

CONTRARY TO LAW.

....

Under Criminal Case No. 06-0481

That on or about the 18  day of April 2006, in the City of


th

Parañaque, Philippines and within the jurisdiction of this


Honorable Court, the above-named accused, did then and there
willfully, unlawfully and feloniously use a counterfeit Citibank Visa
Card with No. 4539 7207 8677 7008 an access device, in buying
from complainant Duty Free Philippines herein represented by
Redentor M. Quejada, two (2) bottles of perfume worth
US$96.00, to the damage and prejudice of the complainant in the
aforementioned amount of US$96.00 or P4,992.00 more or less.

CONTRARY TO LAW. [5]

Cruz was arraigned on October 17, 2006, where he pleaded not


guilty for each charge.  Trial on the merits ensued.
[6] [7]

According to the prosecution, on April 18, 2006, at around 7:30


p.m., Cruz allegedly tried to purchase two (2) bottles of Calvin
Klein perfume worth US$96.00 from Duty Free Philippines Fiesta
Mall. Danilo Wong (Wong), the cashier at the Perfume Section,
testified that Cruz paid for the purchase using a Citibank Visa
credit card.  The transaction was approved, although Wong
[8]

doubted the validity of the credit card since the number at the
back was not aligned. [9]

At around 8:00 p.m., Cruz allegedly tried to purchase a pair of


Ferragamo shoes worth US$363.00.  Ana Margarita Lim (Lim),
[10]

the cashier on duty, facilitated the sales transaction.  Cruz paid


[11]

for the purchase using a Citibank Visa credit card bearing the
name "Gerry Santos," with credit card number 4539 7207 8677
7008.  When Lim asked for Cruz's Duty Free shopping card, Cruz
[12]
presented a shopping card with the name of "Rodolfo
Garcia."  Lim asked for another identification card, and Cruz
[13]

gave her a driver's license bearing the name "Gerry Santos." [14]

Lim proceeded to the mall's Electronic Section to swipe the credit


card for approval.  The card was approved, but she noticed that
[15]

the last four (4) digits of the card were not properly embossed
and its validity date started in November 2006.  She called [16]

Citibank to verify the credit card. [17]

Upon verification, Citibank informed Lim that the credit card was
counterfeit and that the real Gerry Santos was the Head of
Citibank's Fraud Risk Management Division.  Lim was advised to
[18]

transfer the matter to the Security Department. [19]

Redentor Quejada, Security Supervisor of Duty Free Philippines,


testified that he and two (2) other guards held Cruz and his
companion, Rodolfo De Silva Cruz, at the security office until the
representative from Citibank arrived. At around 9:00 p.m. to
10:00 p.m., Gerardo T. Santos, Head of Citibank's Fraud Risk
Management Division, arrived with members of the Philippine
National Police - Criminal Investigation Detective Group, together
with a certain Atty. Abad Santos, who was allegedly Cruz's
lawyer.  Before Redentor Quejada could turn Cruz over to the
[20]

police, Cruz tried to escape with the help of Atty. Abad Santos.
The security officers, however, were able to close the mall's main
gate, which prevented their escape. [21]

Cruz and Rodolfo De Silva Cruz were turned over to the Criminal
Investigation Detective Group and brought to Camp Crame for
questioning.  Citibank Visa credit card number 4539 7207 8677
[22]

7008 was also turned over to the Criminal Investigation Detective


Group.[23]

Gerardo T. Santos (Santos) testified that he first heard of Cruz's


name in May 2004.  Cruz and his wife Aileen were then
[24]

managing Antonely's Fabric Warehouse and were involved in


incidents related to credit card fraud. Santos did not file a case
against them for lack of basis. He came across Cruz's name again
in 2005, with regard to a fraudulent transaction with a Thai
restaurant in Shoemart Megamall.  He also testified that the
[25]

credit card number was validly issued to a certain Jessamine


Bongat, and that the counterfeit credit card had been previously
used on several fraudulent occasions. [26]

After the prosecution formally offered their evidence, Cruz filed a


Demurrer to Evidence asserting that the credit card was
inadmissible since it was presented and offered by the
prosecution in violation of A.M. No. 03-1-09-SC. [27]

On August 6, 2009, Branch 274 of the Regional Trial Court of


Parañaque City denied the Demurrer to Evidence and stated that
the credit card receipts were properly identified by the witnesses.
 The trial court also stated that the alleged counterfeit credit
[28]

card was offered in evidence by the prosecution. [29]

Despite notice, Cruz and his counsel did not appear during the
scheduled hearings for the presentation of his defense. Later,
Cruz manifested to the trial court that he was waiving his right to
present evidence. [30]

On May 5, 2010, the trial court rendered its Judgment  finding


[31]

Cruz guilty beyond reasonable doubt of violation of Section 9(a)


and (e) of Republic Act No. 8484 in Criminal Case Nos. 06-0479
and 06-0480, when he used a counterfeit access device to
purchase a pair of shoes worth US$363.00. However, it acquitted
Cruz in Criminal Case No. 06-0481 upon finding that the
prosecution failed to prove his guilt beyond reasonable doubt of
using a counterfeit access device to purchase two (2) bottles of
perfume worth US$96.00.  The dispositive portion of the
[32]

Judgment reads:
WHEREFORE, all the foregoing considered, the Court finds the
accused ANTHONY DE SILVA CRUZ as follows:

(1) Under Criminal Case No. 06-0479, GUILTY beyond reasonable


doubt of the offense of Violation of Section 9, par. (a) of Republic
Act No. 8484, as stated in the Information, and accordingly
hereby penalizes the said accused to suffer indeterminate
sentence of fine of Ten Thousand Pesos (P10,000.00) and
imprisonment of six (6) years prision correccional as minimum, to
ten (10) years prision mayor as maximum.

(2) Under Criminal Case No. 06-0480, GUILTY beyond reasonable


doubt of the offense of Violation of Section 9, par. (a) of Republic
Act No. 8484 as stated in the Information, and accordingly
hereby sentences the said accused to suffer indeterminate
sentence of fine of Ten Thousand Pesos (P10,000.00) and
imprisonment often (10) years prision mayor as minimum to
twelve (12) years prision mayor as maximum.

(3) Under Criminal Case No. 06-0481, NOT GUILTY of the offense
of Violation of Section 9, par. (a) of Republic Act No. 8484 as
charged in the Information, and accordingly hereby acquits the
said accused therefrom.

SO ORDERED. [33]

Aggrieved, Cruz appealed to the Court of Appeals. On July 4,


2013, the Court of Appeals rendered the Decision  denying the
[34]

appeal and upholding Cruz's conviction.

According to the Court of Appeals, the prosecution was able to


establish that Cruz had in his possession a counterfeit access
device.  It also held that A.M. No. 03-1-09-SC does not
[35]

absolutely preclude the admission of evidence that has not been


pre-marked during pre-trial since courts may, in its discretion and
"for good cause shown," still admit the evidence. [36]

However, the Court of Appeals modified the penalties to delete


the words "prision correccional" and "prision mayor" as the law
itself  provides the penalties to be imposed.  The dispositive
[37] [38]

portion of the Decision reads:


WHEREFORE, the appeal is DISMISSED. The Judgment of the
Regional Trial Court of Parañaque City in Criminal Case Nos. 06-
0479 & 06-0480 are AFFIRMED with MODIFICATIONS.
In Criminal Case Nos. 06-0479, accused-appellant ANTHONY DE
SILVA CRUZ is found guilty beyond reasonable doubt of violation
of Section 9(e) of R.A. No. 8484 and is sentenced to a prison
term of six (6) years, as minimum, to ten (10) years, as
maximum, and to pay a fine of Ten Thousand Pesos
(P10,000.00).

In Criminal Case No. 06-0480, accused-appellant ANTHONY DE


SILVA CRUZ is found guilty beyond reasonable doubt of violation
of Section 9(a) of the R.A. No. 8484 and is sentenced to a prison
term often (10) years, as minimum, to twelve (12) years, as
maximum, and to pay a fine of US$726.00 or P37,752.00.

SO ORDERED.  (Emphasis in the original)


[39]

Cruz moved for reconsideration, but the Motion was denied in the
Resolution  dated November 26, 2013.
[40]

Hence, petitioner Anthony De Silva Cruz filed before this Court a


Petition for Review on Certiorari.
[41]

Petitioner argues that according to A.M. No. 03-1-09-SC,


the corpus delicti or the alleged counterfeit credit card is
inadmissible since it was not marked and identified during pre-
trial.  He alleges that the testimonies of the prosecution's
[42]

witnesses were inconsistent as to the identification of the credit


card and its eventual turnover to the police.  Petitioner asserts
[43]

that the trial court and the Court of Appeals disregarded the
constitutional presumption of innocence by making an inference
of guilt based on his silence during trial.
[44]

The Office of the Solicitor General, on the other hand, maintains


that the counterfeit credit card is admissible as evidence since
A.M. No. 03-1-09-SC allows the trial court to admit the evidence,
if, in its discretion, there was "good cause shown" for its
admission.  It also notes that there was no inconsistency
[45]

between Lim's and Wong's testimonies, since they were testifying


on two different situations they witnessed. [46]
The Office of the Solicitor General further argues that "the
unexplained failure of the accused to testify . . . gives rise to an
inference that he did not want to testify because he did not want
to betray himself."  It points out that petitioner's attempt to flee
[47]

the premises is an implied admission of guilt. [48]

While the case was pending before this Court, petitioner's counsel
withdrew  and another counsel entered an appearance on his
[49]

behalf. A Motion for Leave of Court to File Supplemental Petition


for Review was filed together with the Entry of Appearance of his
new counsel. [50]

Aside from reiterating that the prosecution witnesses' testimonies


were inconsistent with each other,  petitioner insists that his
[51]

former counsel negligently defended his cause by failing to


present evidence on his behalf and failing to cross-examine the
prosecution's witnesses.  Petitioner adds that Redentor Quejada
[52]

was not duly authorized by Duty Free Philippines to file the


complaint on its behalf based on an invalid Special Power of
Attorney.  Thus, he prays that the July 4, 2013 Decision and
[53]

November 26, 2013 Resolution be reversed, or in the alternative,


the case be remanded to the trial court for the presentation of his
evidence. [54]

The issues for resolution are:

First, whether the prosecution was able to prove beyond


reasonable doubt that petitioner was guilty of violating Section
9(a) and (e) of Republic Act No. 8484. Corollary to this is whether
the counterfeit access device can still be presented in trial despite
not having been presented and marked during pre-trial; and

Second, whether the negligence of petitioner's former counsel


binds petitioner.

I
Republic Act No. 8484, otherwise known as the Access Devices
Regulation Act of 1998, defines an access device as:
any card, plate, code, account number, electronic serial number,
personal identification number, or other telecommunications
service, equipment, or instrumental identifier, or other means of
account access that can be used to obtain money, good, services,
or any other thing of value or to initiate a transfer of funds (other
than a transfer originated solely by paper instrument). [55]

Since a credit card is "any card, plate, coupon book, or other


credit device existing for the purpose of obtaining money, goods,
property, labor or services or anything of value on credit,"  it is [56]

considered an access device.

Section 9(a) and (e) make the possession and use of a


counterfeit access device as "access device fraud" that is
punishable by law:
SECTION 9. Prohibited Acts. - The following acts shall constitute
access device fraud and are hereby declared to be unlawful:

(a) producing, using, trafficking in one or more counterfeit access devices;

....

(e) possessing one or more counterfeit access devices or access devices fraudulently ap
A counterfeit access device is "any access device that is
counterfeit, fictitious, altered, or forged, or an identifiable
component of an access device or counterfeit access
device."  Under Section 9(a) and (e) of Republic Act No. 8484,
[57]

the possession and use of an access device is not illegal. Rather,


what is prohibited is the possession and use of
a counterfeit access device. Therefore, the corpus delicti of the
crime is not merely the access device, but also any evidence that
proves that it is counterfeit.

Petitioner was found in possession of Citibank Visa credit card


number 4539 7207 8677 7008, which bore the name "Gerry
Santos."  He used the same credit card to purchase Ferragamo
[58]
shoes worth US$363.00 at Duty Free Fiesta Mall.  Citibank Visa
[59]

credit card number 4539 7207 8677 7008 was later proven to be
a counterfeit access device. [60]

Possession of a counterfeit access device is punishable by


imprisonment of not less than six (6) years and not more than 10
years and a fine of P10,000.00 or twice the value obtained by the
offense, whichever is higher. On the other hand, use of a
counterfeit access device is punishable by imprisonment of not
less 10 years but not more than 12 years and a fine of
P10,000.00 or twice the value obtained by the offense, whichever
is higher:
SECTION 10. Penalties. — Any person committing any of the acts
constituting access device fraud enumerated in the immediately
preceding section shall be punished with:

(a) a fine of Ten thousand pesos (P10,000.00) or twice the value obtained by the offen
and imprisonment for not less than six (6) years and not more than ten (10) y
offense under Section 9 (b)-(e), and (g)-(p) which does not occur after a convic
under Section 9;

(b) a fine of Ten thousand pesos (P10,000.00) or twice the value obtained by the offens
not less than ten (10) years and for not more than twelve (12) years, in the ca
Section 9 (a), and (f) of the foregoing section, which does not occur after a convic
under Section 9[.][61]

Petitioner, having been found guilty beyond reasonable doubt,


was sentenced to suffer the penalty of imprisonment of 10 years
as minimum to 12 years as maximum and a fine of US$726.00
for violation of Section 9(a) of Republic Act No. 8484. He was also
sentenced to suffer the penalty of imprisonment of six (6) years
as minimum to 10 years as maximum and a fine of P10,000.00
for violation of Section 9(e) of Republic Act No. 8484. [62]

II

Petitioner argues that according to A.M. No. 03-1-09-SC,  the [63]

alleged counterfeit credit card should not have been admitted as


evidence because it was not pre-marked during pre-trial. [64]
A.M. No. 03-1-09-SC, sec. I(A)(2) provides that:
2

....

d. The documents or exhibits to be presented, stating the purpose thereof. (No e


to be presented and offered during the trial in support of a party's evidence-i
that had been earlier identified and pre-marked during the pre-trial, except if
good cause shown)[.]
The rule is that no evidence shall be allowed during trial if it was
not identified and pre-marked during trial. This provision,
however, allows for an exception: when allowed by the court for
good cause shown. There is no hard and fast rule to determine
what may constitute "good cause," though this Court has
previously defined it as any substantial reason "that affords a
legal excuse." [65]

The trial court retains its discretion to allow any evidence to be


presented at trial even if not previously marked during pre-trial.
Here, the trial court allowed the presentation of the counterfeit
credit card at trial due to the prosecution's explanation that
during pre-trial, the counterfeit credit card was still in the
Criminal Investigation and Detective Group's custody:
Court: Additional direct?

Pros. Yes, additional direct. For identification only of the credit card. The credi
Rodriguez:

Atty. De Guia: Your Honor, we would like to put our continuing objection to the presen
because it was not presented during pre-trial.

Pros. This credit card, Your Honor, is part of Exhibit "F," Your Honor.
Rodriguez:

Atty. De Guia: In fact, Your Honor, if I am not mistaken, this is supposed to be the cr
of the . . .

Pros. We made a reservation considering that this document was not availab
Rodriguez: Honor.
Atty. De Guia: Precisely, Your Honor, that's our objection.

Pros. But it forms part of Exhibit F, Your Honor, the Certification that this card
Rodriguez: the Citibank.

Atty. De Guia: But then precisely, Your Honor, the prosecutor is alleging that this cr
document, their failure to present them during pre-trial and mar
consequence of their omission, Your Honor, with due respect.

Pros. During the pre-trial, this card was not available at that time. At that tim
Rodriguez: available, it was in the custody of the police. The police never turned ove

Atty. De Guia: That's precisely the reason, Your Honor, that the prosecution had amp
case, make their case before filing this complaint, this information. An
taken against them, Your Honor. The rule on pre-trial order is mand
other evidence not presented in the pre-trial shall be excluded.

Pros. The defense is very desperate, Your Honor, on technicalities, but then
Rodriguez: Exhibit F where it is specifically mentioned.

Court: It should form part of exhibit?

Pros. Exhibit F, Your Honor, the Certification that this card is not the . . .
Rodriguez:

Court: The certification of Citibank?

Pros. Yes, that this card is not a genuine card. So this is F-1.
Rodriguez:

Court: How come that it will be certification? That card?

Pros. No, that this card is not the - because this is a . . .


Rodriguez:

Court: What is the certification of the Citibank Exhibit F? Does it mention that t

Pros. Yes. Your Honor. At this point, exhibiting to this Honorable Court
Rodriguez: "Citibank Visa Card with embossed account number 4539-7207-867
physical evidence in this case presented to this Court, is a counterfeit,
only part of Exhibit F.
Court: Okay, the Court will allow that.

Arty. De Guia: We will just put our continuing objection on record, Your Honor.  (Emph
[66]

The prosecution was able to present and mark during pre-trial


Citibank's certification that the access device used was
counterfeit. It is this certification that makes the possession and
use of the access device illegal. Therefore, the trial court
determined that the access device could still be presented at trial
since it merely formed part of an exhibit that had already been
presented and marked during pre-trial.

III

Petitioner points out the alleged inconsistencies in the testimonies


of Ana Margarita Lim and Danilo Wong.  Wong testified that the
[67]

credit card presented in trial was not the same credit card that
petitioner used in purchasing the Calvin Klein perfumes worth
US$96.00. [68]

The determination of the credibility of witnesses is a question of


fact that should not be reviewed by this Court in a petition for
review on certiorari under Rule 45 of the Rules of Court.  There [69]

are exceptions to this rule;  however, none of those exceptions


[70]

are present here. Even if we were to review the witnesses'


testimonies, petitioner's argument would still be unmeritorious.

Two (2) transactions took place on the night of April 18, 2006:
the purchase of perfumes at Counter 15  and the purchase of
[71]

shoes at Counter 12.  Lim, the cashier for Counter 12, and
[72]

Wong, the cashier for Counter 15, were called to testify on two
(2) different transactions. There can be no inconsistency between
two witnesses testifying on two different occurrences.

Petitioner also points out other inconsistencies in the prosecution


witnesses' testimonies, such as whom among Lim and Redentor
Quejada turned over the credit card to the police;  whether [73]

petitioner introduced himself;  and why Lim did not bother to


[74]

make a copy of petitioner's driver's license. [75]


These alleged inconsistencies are minor and do not detract from
the conclusion that petitioner used a counterfeit access device in
the purchase of goods.

In any case, the trial court found these witnesses credible. Its
assessment on the credibility of the witnesses is entitled to great
weight and respect, especially if it is affirmed by the Court of
Appeals.[76]

"[T]he flight of an accused discloses a guilty


conscience."  Petitioner does not deny that he tried to escape
[77]

from Duty Free Fiesta Mall when the police arrived. Taken
together with the prosecution's evidence, it is enough to convince
this Court that petitioner is guilty beyond reasonable doubt of
possession and use of a counterfeit access device.

IV

Petitioner, now grasping at straws, argues that his previous


counsel, Atty. Edwin Michael P. Musico (Atty. Musico), negligently
defended his cause. [78]

The rule is that negligence of a counsel binds the client except:


when counsel exhibits reckless or gross negligence that deprives
the client of due process; when the outright application of the
rule results in the deprivation of liberty and property through a
technicality; or when it serves the interests of justice.
[79]

Petitioner alleges that Atty. Musico negligently failed to attend


scheduled hearings before the trial court, conduct cross-
examination of the witnesses, and present evidence on his behalf.
[80]

Records, however, show that petitioner's counsel was not


prevented from objecting to the presentation of the counterfeit
credit card during trial, which he repeatedly did and even offered
continuing objection.  Atty. Musico was also able to cross-
[81]
examine Lim and Redentor Quejada,  the two witnesses
[82]

petitioner claimed had inconsistent testimonies. Atty. Musico even


filed a Demurrer to Evidence after the prosecution made its
formal offer.
[83]

Although there were, indeed, instances where Atty. Musico failed


to attend the scheduled hearings,  petitioner was never deprived
[84]

of due process. The Order  dated February 8, 2010 of the trial


[85]

court shows it was petitioner's decision to forego the presentation


of evidence on his behalf:
In today's hearing, the accused through counsel manifested that
despite the resolution of the Demurrer to Evidence, the defense
will not be presenting evidence. In view whereof [sic], the
defense having considered as waiving the right to present
evidence, this case is now submitted for decision.[86]

The burden of proof was on the prosecution. Petitioner did not


even need to present evidence. To successfully sustain a
conviction, the prosecution must rely on the strength of its
evidence, and not on the weakness of the defense.  The [87]

prosecution's evidence in this case was enough to overcome the


presumption of innocence.

We will no longer discuss petitioner's allegation that Redentor


Quejada was not authorized by Duty Free Philippines to file the
criminal complaint since petitioner failed to attach any proof to
substantiate this allegation.

WHEREFORE, the Petition is DENIED for lack of merit. The


Decision dated July 4, 2013 and Resolution dated November 26,
2013 of the Court of Appeals in CA-G.R. CR. No. 33756
are AFFIRMED.

The Motion for Leave of Court to File Supplemental Petition for


Review on Certiorari dated November 30, 2015 is DENIED in
view of the denial of the Petition.

SO ORDERED.
Carpio, (Chairperson), and Velasco, Jr.,  JJ., concur.
*

Mendoza, and Martires, JJ., on official leave.

*
 Designated additional member per Raffle dated May 29, 2017.

[1]
 Rollo, pp. 9-27.

[2]
 Id. at 28-41.

[3]
 Id. at 42-43.

[4]
 Id. at 46-56.

[5]
 Id. at 46-47, Regional Trial Court Decision.

[6]
 Id. at 47.

[7]
 Id.

[8]
 Id. at 49 and 55.

[9]
 Id.

[10]
 Id. at 48 and 55.

[11]
 Id.

[12]
 Id. at 55.

[13]
 Id. at 30.

[14]
 Id. at 48.

[15]
 Id. at 48.

[16]
 Id.
[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 50.

[21]
 Id. at 31.

[22]
 Id. at 51.

[23]
 Id. at 50-51.

[24]
 Id. at 49.

[25]
 Id. at 49.

[26]
 Id. at 53.

 Id. at 31. A.M. No. 03-1-09-SC (2004), Proposed Rule on


[27]

Guidelines to be Observed by Trial Court Judges and Clerks of


Court in the Conduct of Pre-Trial and Use of Deposition-Discovery
Measures.

[28]
 Id. at 31-32.

[29]
 Id. at 31.

[30]
 Id. at 32.

 Id. at 46-56. The Decision, docketed as Criminal Case No. 06-


[31]

0479, was penned by Presiding Judge Fortunito L. Madrona of


Branch 274 of the Regional Trial Court, Parañaque.

[32]
 Id.at 55.
[33]
 Id. at 56.

 Id. at 28-41. The Decision, docketed as CA-G.R. CR No. 33756,


[34]

was penned by Associate Justice Angelita A. Gacutan and


concurred in by Associate Justices Fernanda Lampas Peralta
(Chair) and Francisco P. Acosta of the Tenth Division, Court of
Appeals, Manila.

[35]
 Id. at 35.

[36]
 Id. at 36.

[37]
 Rep. Act No. 8484 (1998), sec. 10 provides:

SECTION 10. Penalties. — Any person committing any of the acts


constituting access device fraud enumerated in the immediately
preceding section shall be punished with:

(a) a fine of Ten thousand pesos (P10,000.00) or twice the value obtained by th
imprisonment for not less than six (6) years and not more than ten (10) years, in t
(b)-(e), and (g)-(p) which does not occur after a conviction for another offense und

(b) a fine of Ten thousand pesos (P10,000.00) or twice the value obtained by the of
than ten (10) years and for not more than twelve (12) years, in the case of an of
the foregoing section, which does not occur after a conviction for another offense u

(c) a fine of Ten thousand pesos (P10,000.00) or twice the value obtained by the offen
twelve (12) years and not more than twenty (20) years, or both, in the case of
occurs after a conviction for another offense under said subsection, or an attempt t

[38]
 Rollo, p. 39.

[39]
 Id. at 40.

 Id. at 42-43. The Resolution was penned by Associate Justice


[40]

Angelita A. Gacutan and concurred in by Associate Justices


Fernanda Lampas Peralta and Francisco P. Acosta of the Former
Tenth Division, Court of Appeals, Manila.
[41]
 Id. at 9-27.

[42]
 Id. at 19.

[43]
 Id. at 20-23.

[44]
 Id. at 23-24.

[45]
 Id. at 92, Comment.

[46]
 Id. at 94.

[47]
 Id. at 95.

[48]
 Id. at 95-96.

[49]
 Id. at 107.

 Id. at 110-127. The Entry of Appearance was notjd by this


[50]

Court in a Resolution dated August 31, 2016.

[51]
 Id. at 118.

[52]
 Id. at 121-123.

[53]
 Id. at 115-118.

[54]
 Id. at 124.

[55]
 Rep. Act No. 8484 (1998), sec. 3(a).

[56]
 Rep. Act No. 8484 (1998), sec. 3(f).

[57]
 Rep. Act No. 8484 (1998), sec. 3(b).

[58]
 Rollo, pp. 35 and 55.

[59]
 Id.
[60]
 Id.

[61]
 Rep. Act No. 8484 (1998), sec. 10.

[62]
 Rollo, p. 40.

 Re: Proposed Rule on Guidelines to be Observed by Trial Court


[63]

Judges and Clerks of Court in the Conduct of Pre-Trial and Use of


Deposition-Discovery Measures (2004).

[64]
 Rollo, p. 16.

 Fortune Corporation v. Court of Appeals, G.R. No. 108119,


[65]

January 19, 1994, 229 SCRA 355, 371 [Per J. Regalado, Second
Division].

[66]
 Rollo, pp. 57-61, TSN dated August 1, 2007.

[67]
 Id. at 20-21.

[68]
 Id. at 49.

 See Caluag v. People, 599 Phil. 717, 724-725 (2009) [Per J.


[69]

Quisumbing, Second Division], citing Lamis v. Ong, 504 Phil. 84,


90 (2005) [Per J. Sandoval-Gutierrez, Third Division].

 See Medina v. Mayor Asistio, Jr., 269 Phil. 225, 232 (1990) [Per
[70]

J. Bidin, Third Division]: "(1) When the conclusion is a finding


grounded entirely on speculation, surmises or conjectures; (2)
When the inference made is manifestly mistaken, absurd or
impossible; (3) Where there is a grave abuse of discretion; (4)
When the judgment is based on a misapprehension of facts; (5)
When the findings of fact are conflicting; (6) When the Court of
Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant
and appellee; (7) The findings of the Court of Appeals are
contrary to those of the trial court; (8) When the findings of fact
are conclusions without citation of specific evidence on which they
are based; (9) When the facts set forth in the petition as well as
in the petitioner's main and reply briefs are not disputed by the
respondents; and (10) The finding of fact of the Court of Appeals
is premised on the supposed absence of evidence and is
contradicted by the evidence on record."

[71]
 Rollo, p. 49.

[72]
 Id. at 48.

[73]
 Id. at 21-22.

[74]
 Id. at 22.

[75]
 Id.

 See People v. Diu, 708 Phil. 218, 232 (2013) [Per J. De Castro,
[76]

First Division]: "Thus, it has been an established rule in appellate


review that the trial court's factual findings - including its
assessment of the credibility of the witnesses, the probative
weight of their testimonies, and the conclusions drawn from the
factual findings - are accorded great respect and even conclusive
effect. These factual findings and conclusions assume greater
weight if they are affirmed by the Court of Appeals."

 People v. Dalinog, 262 Phil.98, 111 (1990) [Per C.J. Fernan,


[77]

Third Division], citing People v. Anquillano, 233 Phil. 456, 460-


461 (1987) [Per J. Cruz, En Banc].

[78]
 Rollo, pp. 121-122.

 See Dimarucot v. People, 645 Phil. 218, 227 (2010) [Per J.


[79]

Villarama, Jr., Third Division].

[80]
 Rollo, pp. 121-122.
 Id. at 57-61, TSN dated August 1, 2007. Petitioner's counsel on
[81]

record for this hearing is a certain Atty. De Guia, although the


pre-trial order (Id. at 44-45) states that petitioner's counsel is
Arty. Edwin Michael P. Musico.

[82]
 Id. at 49 and 51.

[83]
 Id. at 31.

[84]
 Id. at 128-132.

[85]
 Id. at 133.

[86]
 Id.

 See People v. Magallanes, 231 Phil. 89, 98 (1987) [Per J. Paras,


[87]

Second Division].

Source: Supreme Court E-Library | Date created: July 05, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 212161, March 29, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. JUANITO ENTRAMPAS, ACCUSED-
APPELLANT.DECISION
LEONEN, J.:

This is a tragic story resulting from an act of depravity: an 11-


year old girl gave birth to a child after she was repeatedly raped
by the common-law husband of her biological mother.

This is an appeal from a conviction for two (2) counts of statutory


rape.

We emphatically affirm the conviction.

The setting of this case is in a rural sitio of Barangay Bawod, San


Isidro, Leyte.  It is far from the urban centers where courts sit,
[1]

but it is a place where the writs shaped by the rule of law can still
provide succor.

Accused-appellant Juanita Entrampas (Entrampas) and BBB were


common-law spouses.  They co-habited for eight (8) years, from
[2]

1995 to 2003. AAA, BBB's daughter from a previous relationship,


lived with them.  She looked up to Entrampas as her adoptive
[3]

father.

Entrampas, then 50 years old,  was a farmer who tilled a rice


[4]

field half a kilometer away from their home.  BBB collected [5]

shrimps and shells for a living,  and would usually be at sea or by


[6]

the beach from 4:00 p.m. to 7:00 p.m.  AAA was still in [7]

elementary school. [8]

Sometime in February 2003, at about 5:00 p.m., AAA arrived


from school to cook for her family. She was interrupted by
Entrampas and was asked to go to the room upstairs.  The 11- [9]

year old girl obeyed. [10]

"Once in the room, [Entrampas] forced AAA to lie down on the


floor[.]"  She was warned by accused-appellant that if she
[11]

shouted he would kill her. She was also warned that if she told
her mother about what he was about to do, he would kill them. [12]
Entrampas took off the child's panty, undressed himself, and
inserted his penis into her vagina. AAA felt pain as he penetrated
her. Her vagina bled. She cried and pleaded him to stop. [13]

As he consummated the act, she noticed a knife on the wall


within his reach. She became more fearful. After satisfying
himself, he again warned the child that he would kill her arid her
mother if she informed anyone about the incident. [14]

She was left in the room sobbing. [15]

That evening, after arriving from the sea shore, BBB asked AAA
why she was crying. Fearful of Entrampas' threats, AAA did not
tell her mother. [16]

The incident occurred again a week later in February 2003.


 Entrampas told AAA to lie down, penetrated her vagina, and
[17]

then left her.  AAA stayed in the room upstairs, crying, until her
[18]

mother came home at 10:00 p.m. [19]

Over the following months, Entrampas repeatedly raped AAA,


who, out of fear, remained silent. [20]

In July 2003, BBB observed some changes in her daughter's


body.  AAA's breasts had swollen, she had lost her appetite, and
[21]

she was always sleeping.  By September 2003, AAA's belly had
[22]

become noticeably bigger.  She was brought to the dispensary


[23]

where her urine test was submitted for analysis.  AAA's [24]

pregnancy test yielded positive. [25]

Fearing for her life, AAA refused to reveal the identity of the
father of her child.  Neighbors suspected that Entrampas got her
[26]

pregnant. BBB asked Entrampas, who, according to BBB,


admitted that he was the father of AAA's child. [27]

On September 8, 2003, Entrampas and BBB went to BBB's


brother, CCC, "to confess the crime he had committed against
AAA."  Entrampas allegedly felt remorseful and told CCC to kill
[28]
him to avenge AAA. CCC immediately reported the matter to the
police.[29]

On November 3, 2003, AAA gave birth to a baby boy at the North


Western Leyte District Hospital of Calubian, Leyte.
[30]

Before the Regional Trial Court, Entrampas was charged with two
(2) counts of qualified rape under the Revised Penal Code, as
amended by Republic Act No. 8353 (Anti-Rape Law of 1997).
 Two (2) separate informations were filed against him:
[31]

CRIMINAL CASE NO. CN-04-457

That sometime in the afternoon of February, 2003, in the


Municipality of San Isidro, Province of Leyte, Philippines, and
within the jurisdiction of this Honorable Court, the accused,
actuated by lust, did, then and there, willfully, unlawfully and
feloniously, through threat and intimidation, succeed in having
carnal knowledge of [AAA], who was eleven (11) years old and
the daughter of his common-law wife, without her consent and
against her will.

CRIMINAL CASE NO. CN-04-458

That sometime in the evening of February, 2003, in the


Municipality of San Isidro, Province of Leyte, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
accused, actuated by lust, did, then and there, willfully,
unlawfully and feloniously, through threat and intimidation,
succeed in having carnal knowledge of [AAA], who was eleven
(11) years old and the daughter of his common-law wife, without
her consent and against her will.

CONTRARY TO LAW with the qualifying circumstances that the


victim was under eighteen (18) years of age and the offender is
the common-law spouse of the mother of the victim. [32]

Prosecution presented AAA's certificate of live birth, the


laboratory report of AAA's pregnancy test, Dr. Robert C. Nicolas's
certification dated October 26, 2004, and four (4) witnesses'
testimonies. [33]

According to BBB, Entrampas was her live-in partner for eight (8)
years.  BBB was at sea when the rape happened in February
[34]

2003.  Entrampas admitted to BBB that he impregnated AAA,


[35]

and that they came to see CCC, to whom Entrampas also


admitted the rape. [36]

The second prosecution witness, AAA, narrated how Entrampas


raped her in February 2003, again one (1) week after, and in the
succeeding months until she had a baby bump.  He gave her [37]

P10.00 for the first time he raped her.  She had her [38]

menstruation at 11 years old, while she was in Grade 5, and


Entrampas knew this.  AAA had no boyfriend as she had no
[39]

suitors. [40]

The third prosecution witness, Dr. Danilo Bagaporo (Dr.


Bagaporo), verified that he was the Municipal Health Officer of
San Isidro, Leyte.  On September 10, 2003, he administered
[41]

AANs pregnancy test, which yielded a positive result. [42]

The fourth prosecution witness, CCC, held that, on September 8,


2003, he was chopping wood in Sitio Cabgan, Brgy. Biasong, San
Isidro, Leyte when Entrampas and BBB visited him.  Entrampas [43]

confessed the rape to CCC. At about 11:00 a.m. on the same


day, CCC reported this to the barangay captain of Bawod, San
Isidro. CCC was first referred to the house of the punong tanod,
who was then not around. At noon, he proceeded to the police
headquarters. The police investigated the incident and then
incarcerated Entrampas. [44]

The defense's sole witness was Entrampas himself.  Entrampas [45]

claimed that he could not have raped AAA as he was often in the
rice field.  He usually went to the rice field at 5:00 a.m. and
[46]

headed home at about 5:00 p.m. or 6:00 p.m. [47]


He denied having raped AAA and having visited CCC with BBB.
 He equally refuted confessing to CCC that he raped AAA and
[48]

asking for his forgiveness.  He also contested the alleged


[49]

inconsistent statements of AAA regarding the time the first and


second rape happened, and whether she was awake or asleep
before the sexual molestation. [50]

On December 6, 2008, the Regional Trial Court found the accused


guilty beyond reasonable doubt of two (2) counts of statutory
rape. The dispositive portion of the Decision  reads:
[51]

WHEREFORE, judgment is hereby rendered convicting the


accused, Juanito Entrampas, in Criminal Cases [sic] Nos. CN-04-
457 and CN-04-458, [guilty] beyond reasonable doubt of the
crime of statutory rape as charged in the Informations and as
defined and penalized in Article 299-A of the Revised Penal Code,
and in accordance with Criminal Case No. CN-04-457, this Court
is left with no alternative but to impose upon the accused, Juanito
Entrampas, the penalty of Reclusion Perpetua with all the
accessory penalties provided for by law, and to indemnify the
victim, [AAA] the sum of Fifty Thousand (P50,000.00) Pesos,
without subsidiary imprisonment in case of insolvency and to pay
Ten Thousand (P10,000.00) Pesos, as moral damages, and to pay
the cost, and in Criminal Case No. CN-04-458, the accused,
Juanito Entrampas, is sentenced to suffer the penalty of Reclusion
Perpetua, with all the accessory penalties provided for by law and
to indemnify the victim, [AAA], the sum of Fifty Thousand
(P50,000.00) Pesos, without subsidiary imprisonment in case of
insolvency and to pay Ten Thousand (P10,000.00) Pesos, as
moral damages and to pay the cost.

The herein accused, being a detention prisoner, is entitled to a


full credit of his preventive imprisonment in the service of his
sentence.

SO ORDERED.  (Emphasis in the original)


[52]

In the Decision  dated November 6, 2013, the Court of Appeals


[53]

affirmed the ruling of the Regional Trial Court. It held that the
inconsistencies alleged by Entrampas did not "touch upon the
commission of the crime nor affect [the minor victim]'s
credibility."  The dispositive portion of this Decision reads as
[54]

follows:

WHEREFORE, in view of the foregoing premises, the Decision of


the Regional Trial Court, Branch 11 of Calubian, Leyte, in Criminal
Case Nos. CN-04-457 and CN-04-458 are hereby AFFIRMED
with the following MODIFICATIONS that the award of civil
indemnity and moral damages in both charges are increased to
Php75,000.00 each. Further, accused-appellant is ordered to pay
Php30,000.00 as exemplary damages as well as the rate of 6%
per annum interest on all the damages awarded to be computed
from the date of finality of the judgment until fully paid. No
pronouncement as to costs.

SO ORDERED.  (Emphasis in the original)


[55]

On December 2, 2013, Entrampas appealed via a Notice of


Appeal  before the Court of Appeals, which resolved to give it
[56]

due course on March 25, 2014. [57]

For resolution is whether accused-appellant Juanito Entrampas is


guilty beyond reasonable doubt of two (2) counts of statutory
rape.

We affirm the finding of Entrampas' guilt.

The alleged inconsistencies "are collateral and minor matters


which do not at all touch upon the commission of the crime nor
affect [the minor victim]'s credibility."  AAAs inability to recall
[58]

the precise date and time of the rape is immaterial as these are
not elements of the crime.  Moreover, "rape victims are not
[59]

expected to cherish in their memories an accurate account of the


dates, number of times[,] and manner they were violated." [60]

Inconsistencies on minor details and collateral matters do not


affect the substance truth, or weight of the victim's testimonies.
 "[M]inor inconsistencies may be expected of [a girl] of such
[61]
tender years ... who is unaccustomed to a public
trial[,]"  particularly one where she would recount such a
[62]

harrowing experience as an assault to her dignity. The


inconsistencies and contradictions in AAA's declarations are quite
expected. The victim is a child less than 12 years old and,
therefore, more likely to commit errors than teenagers or adults.
[63]

Neither do these alleged discrepancies, not being elements of the


crime, diminish the credibility of AAA's declarations.
Jurisprudence has consistently given full weight and credence to a
child's testimonies.  "Youth and immaturity are badges of truth
[64]

and sincerity."  "Leeway should be given to witnesses who are


[65]

minors, especially when they are relating past incidents of


abuse." [66]

AAA, then only 11 years old, had no reason to concoct lies


against petitioner. Her declarations are generally coherent and
intrinsically believable. In People v. Dimanawa: [67]

[R]everence and respect for the elders is deeply rooted in Filipino


children and is even recognized by law. Thus, it is against human
nature for a ... girl to fabricate a story that would expose herself,
as well as her family, to a lifetime of shame, especially when her
charge could mean the death or lifetime imprisonment of her own
father.  (Citation omitted)
[68]

Her failures to resist the sexual aggression and to immediately


report the incident to the authorities or to her mother do not
undermine her credibility. The silence of the rape victim does not
negate her sexual molestation or make her charge baseless,
untrue, or fabricated.  A minor "cannot be expected to act like an
[69]

adult or a mature experienced woman who would have the


courage and intelligence to disregard the threat to her life and
complain immediately that she had been sexually assaulted." [70]

Force and intimidation must be appreciated in light of the victim's


perception and judgment when the assailant committed the
crime.  In rape perpetrated by close kin, such as the common-
[71]
law spouse of the child's mother, actual force or intimidation need
not be employed. [72]

"While [accused-appellant] was not the biological father of AAA ...


[she] considered him as her father since she was a child."  Moral [73]

influence or ascendancy added to the intimidation of AAA. It


enhanced the fear that cowed the victim into silence. Accused-
appellant's physical superiority and moral influence depleted AAAs
resolve to stand up against her foster father. The threats to her
and her mother's lives, as well as the knife within accused-
appellant's reach, further prevented her from resisting her
assailant. As accused-appellant sexually assaulted AAA, she cried
and pleaded him to stop. Her failure to shout or tenaciously repel
accused-appellant does not mean that she voluntarily submitted
to his dastardly act.

Accused-appellant questioned the Regional Trial Court's


appreciation of the age of the victim at the time of the
commission of rape. He claimed that the birth certificate cast
doubt on whether the victim was indeed below 12 years old in
February 2003, when the offense was first committed. According
to him, AAA's birth certificate should be questioned as it was
registered late.  This allegation is speculative.
[74]

Absent proof to the contrary, accused-appellant's objection must


be set aside. A public document such as a birth certificate
generally enjoys the presumption of regularity.  Accused- [75]

appellant failed to present any evidence to overturn this legal


presumption. In Baldos v. Court of Appeals: [76]

Applications for delayed registration of birth go through a


rigorous process. The books making up the civil register are
considered public documents and are prima facie evidence of the
truth of the facts stated there. As a public document, a registered
certificate of live birth enjoys the presumption of validity. It is not
for [the owner of the birth certificate] to prove the facts stated in
his [or her] certificate of live birth, but for petitioners who are
assailing the certificate to prove its alleged falsity.  (Citations
[77]

omitted)
Thus, it is not for AAA to prove that the Certificate of Live Birth
reflects the truth of the facts stated in it; rather, it is for accused-
appellant to rebut the presumption that AAA's birth certificate
sufficiently establishes her birth on November 11, 1991. Accused-
appellant miserably failed to do this.

A careful examination of the records shows that there is nothing


that would warrant a reversal of the Decisions of the Regional
Trial Court and the Court of Appeals. "[W]hen a woman,
especially a minor, says that she has been raped, she says in
effect all that is necessary to show that rape was committed." [78]

Settled is the rule that "factual findings of the trial court and its
evaluation of the credibility of witnesses and their testimonies are
entitled to great respect and will not be disturbed on appeal,
unless the trial court is shown to have overlooked,
misapprehended, or misapplied any fact or circumstance of
weight and substance." [79]

On the two (2) charges of qualified rape, AAA clearly and


consistently communicated how accused-appellant threatened
and forced her into having sexual congress with him. Sometime
in February 2003, accused-appellant made AAA lie down on the
floor and warned her that he would kill her and her mother if she
called for attention.  He removed AAA's panty, undressed
[80]

himself, and stripped her of her innocence.  AAA cried and[81]

pleaded him to stop.  She grew more fearful as she saw a knife
[82]

within the assailant's reach.  Accused-appellant again threatened


[83]

her and her mother's lives.  Terrified of accused-appellant's


[84]

threats, AAA did not tell her mother what happened. [85]

The incident occurred again a week later in February 2003.


 Accused-appellant told her to lie down, penetrated her vagina,
[86]

and then went outside.  AAA stayed in the room upstairs, crying,
[87]

until BBB came home later that evening.  "For the succeeding
[88]

months, [Entrampas] continued to rape AAA who [kept silent] out


of fear."
[89]
Accused-appellant's acts amounted to statutory rape through
carnal knowledge under Article 266-A(l)(d) of the Revised Penal
Code, as amended:
Article 266-A. Rape, When and How Committed. Rape is
committed -

1) By a man who shall have carnal knowledge of a woman under any of the follow

a) Through force, threat, or intimidation;

b) When the offended party is deprived of reason or otherwise unconscious;

c) By means of fraudulent machination or grave abuse of authority; and

d) When the offended party is under twelve (12) years of age or is demented, e


circumstances mentioned above be present. (Emphasis supplied)
Accused-appellant also committed the crime with the
aggravating/qualifying circumstance that he was the common-law
spouse of AAA's mother. Under Article 266-B (1) of the Revised
Penal Code, as amended:
Article 266-B. Penalties. - Rape under paragraph 1 of the next
preceding article shall be punished by reclusion perpetua.

...

The death penalty shall also be imposed if the crime of rape is


committed with any of the following aggravating/qualifying
circumstances:
 
1) When the victim is under eighteen (18) years of age and the offender is a ... guar
law spouse of the parent of the victim[.]
As to the circumstances qualifying rape, the prosecution
established that the victim was less than 12 years old when the
incident happened in February 2003, and that the offender was
her guardian.  AAA's Certificate of Live Birth proved her minority.
[90]

AAA was accused-appellant's foster daughter. AAA and her


mother, who was accused-appellant's fanner live-in partner,
resided with accused-appellant in his house.
In September 2003, Dr. Bagaporo administered AANs pregnancy
test and found her to be with child.  AAA gave birth on
[91]

November 3, 2003,  within nine (9) months from the date of the
[92]

first rape in February 2003.

Meanwhile, CCC averred that accused-appellant admitted the


crime to him, after which CCC reported the incident to the
barangay captain and then to the police. [93]

As against these details and testimonies, all that accused-


appellant offered in defense were denials and alibis, which
jurisprudence has long considered weak and unreliable. [94]

The Regional Trial Court, as affirmed by the Court of Appeals,


properly found that the testimonies of AAA, BBB, CCC, and Dr.
Bagaporo corroborated each other and supported the physical
evidence. There was no showing that the witnesses for the
prosecution had ill motives to testify against accused-appellant.
Their testimonies are, therefore, accorded full faith and credence.

Raping a daughter destroys the purity of a father-daughter


relationship. It shatters her dignity. It destroys her ability to trust
her elders charged with her care. The selfish momentary pleasure
of the father will torment her for life. In this case, it will also
aggravate with the existence of the child of his daughter. This
Court is at a loss for words to describe this evil. All it can do is to
increase the amounts awarded to AAA in the hope that she will
remember that the law is on her side.

In view of the depravity of the acts committed by accused-


appellant against his 11-year old foster daughter, this Court
increases the amounts awarded to AAA, in accordance with
jurisprudence:

For qualified rape through carnal knowledge, this Court modifies


the award of civil indemnity from P75,000.00 to P100,000.00;
moral damages from P75,000.00 to P100,000.00; and exemplary
damages from P30,000.00 to P100,000.00. [95]
WHEREFORE, in view of the foregoing premises, the Regional
Trial Court Decision dated December 6, 2008 and Court of
Appeals Decision dated November 6, 2013 are
hereby AFFIRMED with the following MODIFICATIONS:

Judgment is hereby rendered finding the accused, Juanito


Entrampas, in Criminal Case Nos. CN-04-457 and CN-04-458,
guilty beyond reasonable doubt of the crime of statutory rape as
charged in the informations and as defined and penalized in
Article 266-A of the Revised Penal Code.

In Criminal Case No. CN-04-457, Juanito Entrampas


is SENTENCED to reclusion perpetua with all the accessory
penalties provided for by law. We modify the award of civil
indemnity from P75,000.00 to P100,000.00; moral damages
from P75,000.00 to P100,000.00; and exemplary damages from
P30,000.00 to P100,000.00,  without subsidiary imprisonment
[96]

in case of insolvency.

Likewise, in Criminal Case No. CN-04-458, Juanito Entrampas


is SENTENCED to reclusion perpetua with all the accessory
penalties provided for by law. We modify the award of civil
indemnity from P75,000.00 to P100,000.00; moral damages
from P75,000.00 to P100,000.00; and exemplary damages from
P30,000.00 to P100,000.00,  without subsidiary imprisonment
[97]

in case of insolvency.

All awards for damages are with interest at the legal rate of six
percent (6%) per annum from the date of finality of this
judgment until fully paid.
[98]

SO ORDERED.

Carpio, (Chairperson), Peralta, and Martires, JJ., concur.


Mendoza, J., on official leave.
[1]
 Rollo, p. 7, Court of Appeals Decision.

[2]
 Id.

[3]
 Id.

[4]
 CA rollo, p. 39.

[5]
 Rollo, p. 7.

[6]
 Id.

[7]
 CA rollo, p. 36.

[8]
 Rollo, p. 7.

[9]
 CA rollo, p. 36.

[10]
 Rollo, p. 7.

[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 Id. at 8.

[18]
 CA rollo, pp. 36-37.

[19]
 Id.
[20]
 Rollo, p. 8.

[21]
 Id.

[22]
 Id.

[23]
 Id.

[24]
 CA rollo, p. 37.

[25]
 Rollo, p. 8.

[26]
 Id.

[27]
 Id.

[28]
 Id.

[29]
 Id.

[30]
 Id.

[31]
 CA rollo, p. 33.

[32]
 Id. at 33-34.

[33]
 Id. at 34-35.

[34]
 Id. at 35.

[35]
 Id.

[36]
 Id.

[37]
 Id. at 36-37.

[38]
 Id. at 37.
[39]
 Id.

[40]
 Id.

[41]
 Id.

[42]
 Id.

[43]
 Id. at 38.

[44]
 Id.

[45]
 Id.

[46]
 Id. at 39.

 Id. at 38. The time stated that he would go to the field was
[47]

mistakenly reported as 5:00 p.m.

[48]
 Rollo, p. 9.

[49]
 Id.

[50]
 Id. at 13-14.

 CA rollo, pp. 33-44. The Decision was penned by Executive


[51]

Judge Crescente F. Maraya, Jr. of Branch 11, Regional Trial Court,


Calubian, Leyte.

[52]
 Id. at 44.

 Rollo, pp. 4-19. The Decision was penned by Associate Justice


[53]

Ramon Paul L. Hernando and concurred in by Associate Justices


Carmelita Salandanan-Manahan and Ma. Luisa C. Quijano-Padilla
of the Twentieth (20 ) Division of the Court of Appeals, Cebu City.
th

[54]
 Id. at 13-14.
[55]
 Id. at 18.

[56]
 Id. at 20-22.

[57]
 Id. at 23.

[58]
 Id. at 14.

[59]
 Id.

 People v. Lor, 413 Phil. 725, 736 (2001) [Per J. Ynares-


[60]

Santiago, En Banc], citing People v. Zaballero, 340 Phil. 371


(1997) [Per J. Panganiban, Third Division]; citing People v.
Sabellina, G.R. Nos. 93514, December 1, 1994, 238 SCRA 492
[Per J. Bellosillo, First Division].

 People v. Avanzado, Sr., 242 Phil. 163, 169 (1988) [Per J.


[61]

Me1encio-Herrera, Second Division].

[62]
 Id.

[63]
 Id.

 See Pielago v. People, 706 Phil. 460, 468-469 [Per J. Reyes,


[64]

First Division]; Campos v. People, 569 Phil. 658, 671 (2008) [Per


J. Ynares-Santiago, Third Division]; People v. Galigao, 443 Phil.
246, 260 (2003) [Per J. Ynares-Santiago, En Banc]; Ricalde v.
People, G.R. No. 211002, January 21, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/211002.pdf> 8-10 [Per J.
Leonen, Second Division].

 People v. Dimanawa, 628 Phil. 678, 689 (2010) [Per J.


[65]

Nachura, Third Division].

 People v. Dominguez, 661 Phil. 105, 119 (2011) [Per J. Sereno


[66]

(now Chief Justice), Third Division].


 People v. Dimanawa, 628 Phil. 678 (2010) [Per J. Nachura,
[67]

Third Division].

[68]
 Id. at 689.

 People v. Lor, 413 Phil. 725, 736 (2001) [Per J. Ynares-


[69]

Santiago, En Banc].

[70]
 Id.

 People v. Dimanawa, 628 Phil. 678, 688 (2010) [Per J.


[71]

Nachura, Third Division].

 People v. Corpuz, 591 Phil. 459, 467 (2009) [Per J. Carpio-


[72]

Morales, Second Division].

[73]
 Rollo, p. 15.

[74]
 The birth certificate was registered on July 9, 2002.

 Baldos v. Court of Appeals, 638 Phil, 601, 608 (2010) [Per J.


[75]

Carpio, Second Division].

 Baldos v. Court of Appeals, 638 Phil. 601 (2010) [Per J. Carpio,


[76]

Second Division].

[77]
 Id. at 608

 People v. Dimanawa, 628 Phil. 678, 689 (2010) [Per J.


[78]

Nachura, Third Division].

 People v. De Jesus, 695 Phil. 114, 122 (2012) [Per J. Brion,


[79]

Second Division].

[80]
 Rollo, pp. 7-8.

[81]
 Id.
[82]
 Id.

[83]
 Id.

[84]
 Id.

[85]
 Id.

[86]
 Id. at 8.

[87]
 Id.

[88]
 CA rollo, pp. 36-37.

[89]
 Rollo, p. 8.

[90]
 Id. at 7.

[91]
 CA rollo, p. 37.

[92]
 Rollo, p. 8.

[93]
 CA rollo, p. 38.

 People v. Liwanag, et al., 415 Phil. 271, 295 (2001) [Per J.


[94]

Ynares-Santiago, First Division].

 People v. Jugueta, G.R. No. 202124, April 5, 2016


[95]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/202124.pdf> 29-30 [Per J.
Peralta, En Banc].

[96]
 Id.

[97]
 Id.

 Ricalde v. People, G.R. No. 211002, January 21, 2015


[98]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/211002.pdf> 16 [Per J.
Leonen, Second Division].

Source: Supreme Court E-Library | Date created: June 07, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 215957, November 09,


2016 ]
COMMISSIONER OF INTERNAL REVENUE,
PETITIONER, VS. FITNESS BY DESIGN, INC.,
RESPONDENT.DECISION

LEONEN, J.:

To avail of the extraordinary period of assessment in Section


222(a) of the National Internal Revenue Code, the Commissioner
of Internal Revenue should show that the facts upon which the
fraud is based is communicated to the taxpayer. The burden of
proving that the facts exist in any subsequent proceeding is with
the Commissioner. Furthermore, the Final Assessment Notice is
not valid if it does not contain a definite due date for payment by
the taxpayer.

This resolves a Petition for Review on Certiorari  filed by the [1]

Commissioner of Internal Revenue, which assails the


Decision  dated July 14, 2014 and Resolution  dated December
[2] [3]
16, 2014 of the Court of Tax Appeals. The Court of Tax
Appeals En Banc affirmed the Decision of the First Division, which
declared the assessment issued against Fitness by Design, Inc.
(Fitness) as invalid.[4]

On April 11, 1996, Fitness filed its Annul Income Tax Return for
the taxable year of 1995.  According to Fitness, it was still in its
[5]

pre-operating stage during the covered period. [6]

On June 9, 2004, Fitness received a copy of the Final Assessment


Notice dated March 17, 2004.  The Final Assessment Notice was
[7]

issued under Letter of Authority No. 00002953.  The Final[8]

Assessment Notice assessed that Fitness had a tax deficiency in


the amount of P10,647,529.69.  It provides:
[9]

FINAL ASSESSMENT NOTICE

March 17, 2004

FITNESS BY DESIGN, INC


169 Aguirre St., BF Homes,
Paranaque City

Gentlemen:

Please be informed that after investigation of your Internal


revenue Tax Liabilities for the year 1995 pursuant to Letter of
Authority No. 000029353 dated May 13, 2002, there has been
found due deficiency taxes as shown hereunder:

Assessment No. __________

Income Tax

Taxable Income per return P


Add: Unreported Sales 7, 156,336.08
Taxable Income per audit 7, 156,336.08

Tax Due (35%) 2,504,717.63


Add: Surcharge (50%) P 1,252,358.81
Interest (20%/ annum) until
4,508,491.73 5,760,850.54
4-15-04
P
Deficiency Income Tax
8,265,568.17

Value Added Tax

Unreported Sales 7, 156,336.08


Output Tax (10%) 715,633.61
Add: Surcharge (50%) P 357,816.80
Interest (20%/ annum) until
1,303,823.60 1,661,640.41
4-15-04
P
Deficiency VAT
2,377,274.02
Documentary Stamp Tax

Subscribe Capital Stock P 375,000.00


DST due (2/200) 3,750.00
Add: Surcharge (25%) 937.50
Deficiency DST P 4,687.50

P
Total Deficiency Taxes 10,647,529.6
9

The complete details covering the aforementioned discrepancies


established during the investigation of this case are shown in the
accompanying Annex 1 of this Notice. The 50% surcharge and
20% interest have been imposed pursuant to Sections 248 and
249(B) of the [National Internal Revenue Code], as
amended. Please note, however, that the interest and the
total amount due will have to be adjusted if paid prior or
beyond April 15, 2004.

In view thereof, you are requested to pay your aforesaid


deficiency internal revenue taxes liabilities through the duly
authorized agent bank in which you are enrolled within the time
shown in the enclosed assessment notice.  (Emphasis in the [10]

original)
Fitness filed a protest to the Final Assessment Notice on June 25,
2004. According to Fitness, the Commissioner's period to assess
had already prescribed. Further, the assessment was without
basis since the company was only incorporated on May 30, 1995.
[11]

On February 2, 2005, the Commissioner issued a Warrant of


Distraint and/or Levy with Reference No. OCN WDL-95-05-005
dated February 1, 2005 to Fitness. [12]

Fitness filed before the First Division of the Court of Tax Appeals
a Petition for Review (With Motion to Suspend Collection of
Income Tax, Value Added Tax, Documentary Stamp Tax and
Surcharges and Interests) on March 1, 2005. [13]

On May 17, 2005, the Commissioner of Internal Revenue filed an


Answer to Fitness' Petition and raised special and affirmative
defenses.  The Commissioner posited that the Warrant of
[14]

Distraint and/or Levy was issued in accordance with law.  The [15]

Commissioner claimed that its right to assess had not yet


prescribed under Section 222(a)  of the National Internal
[16]

Revenue Code.  Because the 1995 Income Tax Return filed by


[17]

Fitness was false and fraudulent for its alleged intentional failure
to reflect its true sales, Fitness' respective taxes may be assessed
at any time within 10 years from the discovery of fraud or
omission.[18]

The Commissioner asserted further that the assessment already


became final and executory for Fitness' failure to file a protest
within the reglementary period.  The Commissioner denied that
[19]

there was a protest to the Final Assessment Notice filed by


Fitness on June 25, 2004.  According to the Commissioner, the
[20]

alleged protest was "nowhere to be found in the [Bureau of


Internal Revenue] Records nor reflected in the Record Book of the
Legal Division as normally done by [itsr receiving clerk when she
received [sic] any document."  Therefore, the Commissioner had
[21]
sufficient basis to collect the tax deficiency through the Warrant
of Distraint and/or Levy. [22]

The alleged fraudulent return was discovered through a tip from a


confidential informant.  The revenue officers' investigation
[23]

revealed that Fitness had been operating business with sales


operations amounting to P7,156,336.08 in 1995, which it
neglected tq report in its income tax return.  Fitness' failure to
[24]

report its income resulted in deficiencies to its income tax and


value-added tax of P8,265,568.17 and P2,377,274.02
respectively, as well as the documentary stamp tax with regard to
capital stock subscription. [25]

Through the report, the revenue officers recommended the filing


of a civil case for collection of taxes and a criminal case for failure
to declare Fitness' purported sales in its 1995 Income Tax Return.
 Hence, a criminal complaint against Fitness was filed before the
[26]

Department of Justice. [27]

The Court of Tax Appeals First Division granted Fitness' Petition


on the ground that the assessment has already prescribed.  It [28]

cancelled and set aside the Final Assessment Notice dated March
17, 2004 as well as the Warrant of Distraint and/or Levy issued
by the C mmissioner.  It ruled that the Final Assessment Notice
[29]

is invalid for failure to comply with the requirements of Section


228  of the National Internal Revenue Code. The dispositive
[30]

portion of the Decision reads:


WHEREFORE, the Petition for Review dated February 24, 2005
filed by petitioner Fitness by Design, Inc., is hereby GRANTED.
Accordingly, the Final Assessment Notice dated March 17, 2004,
finding petitioner liable for deficiency income tax, documentary
stamp tax and value-added tax for taxable year 1995 in the total
amount of P10,647,529.69 is hereby CANCELLED and SET
ASIDE. The Warrant of Distraint and Levy dated February 1,
2005 is likewise CANCELLED and SET ASIDE.

SO ORDERED.  (Emphasis in the original)


[31]
The Commissioner's Motion for Reconsideration and its
Supplemental Motion for Reconsideration were denied by the
Court of Tax Appeals First Division. [32]

Aggrieved, the Commissioner filed an appeal before the Court of


Tax Appeals En Banc.  The Commissioner asserted that it had 10
[33]

years to make an assessment due to the fraudulent income tax


return filed by Fitness.  It also claimed that the assessment
[34]

already attained finality due to Fitness' failure to file its protest


within the period provided by law. [35]

Fitness argued that the Final Assessment Notice issued to it could


not be claimed as a valid deficiency assessment that could justify
the issuance of a warrant of distraint and/or levy.  It asserted
[36]

that it was a mere request for payment as it did not provide the
period within which to pay the alleged liabilities.[37]

The Court of Tax Appeals En Banc ruled in favor of Fitness. It


affirmed the Decision of the Court of Tax Appeals First Division,
thus:
WHEREFORE, the instant Petition for Review is DENIED for lack
of merit. Accordingly, both the Decision and Resolution in CTA
Case No. 7160 dated July 10, 2012 and November 21, 2012
respectively are AFFIRMED in toto.  (Emphasis in the original)
[38]

The Commissioner's Motion for Reconsideration was denied by the


Court of Tax Appeals En Banc in the Resolution  dated December
[39]

16, 2014.

Hence, the Commissioner of Internal Revenue filed before this


Court a Petition for Review.

Petitioner Commissioner of Internal Revenue raises the sole issue


of whether the Final Assessment Notice issued against respondent
Fitness by Design, Inc. is a valid assessment under Section 228
of the National Internal Revenue Code and Revenue Regulations
No. 12-99. [40]
Petitioner argues that the Final Assessment Notice issued to
respondent is valid since it complies with Section 228 of the
National Internal Revenue Code and Revenue Regulations No. 12-
99.  The law states that the taxpayer shall be informed in writing
[41]

of the facts, jurisprudence, and law on which the assessment is


based.  Nothing in the law provides that due date for payment is
[42]

a substantive requirement for the validity of a final assessment


notice. [43]

Petitioner further claims that a perusal of the Final Assessment


Notice shows that April 15, 2004 is the due date for payment.
 The pertinent portion of the assessment reads:
[44]

The complete details covering the aforementioned discrepancies


established during the investigation of this case are shown in the
accompanying Annex 1 of this Notice. The 50% surcharge and
20% interest have been imposed pursuant to Sections 248 and
249(B) of the [National Internal Revenue Code], as amended.
Please note, however, that the interest and the total amount due
will have to be adjusted if paid prior or beyond April 15, 2004.
 (Emphasis supplied)
[45]

This Court, through the Resolution  dated July 22, 2015, required
[46]

respondent to comment on the Petition for Review.

In its Comment,  respondent argues that the Final Assessment


[47]

Notice issued was merely a request and not a demand for


payment of tax liabilities.  The Final Assessment Notice cannot
[48]

be considered as a final deficiency assessment because it


deprived respondent of due process when it failed to reflect its
fixed tax liabilities.  Moreover, it also gave respondent an
[49]

indefinite period to pay its tax liabilities. [50]

Respondent points out that an assessment should strictly comply


with the law for its validity.  Jurisprudence provides that "not all
[51]

documents coming from the [Bureau of Internal Revenue]


containing a computation of the tax liability can be deemed
assessments[,] which can attain finality."  Therefore, the [52]

Warrant of Distraint and/or Levy cannot be enforced since it is


based on an invalid assessment. [53]
Respondent likewise claims that since the Final Assessment
Notice was allegedly based on fraud, it must show the details of
the fraudulent acts imputed to it as part of due process. [54]

The Petition has no merit.

An assessment "refers to the determination of amounts due from


a person obligated to make payments."  "In the context of [55]

national internal revenue collection, it refers to the determination


of the taxes due from a taxpayer under the National Internal
Revenue Code of 1997." [56]

The assessment process starts with the filing of tax return and
payment of tax by the taxpayer.  The initial assessment
[57]

evidenced by the tax return is a self-assessment of the taxpayer.


 The tax is primarily computed and voluntarily paid by the
[58]

taxpayer without need of any demand from govemment.  If tax [59]

obligations are properly paid, the Bureau of Internal Revenue


may dispense with its own assessment. [60]

After filing a return, the Commissioner or his or her


representative may allow the examination of any taxpayer for
assessment of proper tax liability.  The failure of a taxpayer to
[61]

file his or her return will not hinder the Commissioner from
permitting the taxpayer's examination.  The Commissioner can
[62]

examine records or other data relevant to his or her inquiry in


order to verify the correctness of any return, or to make a return
in case of noncompliance, as well as to determine and collect tax
liability.
[63]

The indispensability of affording taxpayers sufficient written


notice of his or her tax liability is a clear definite requirement.
 Section 228 of the National Internal Revenue Code and
[64]

Revenue Regulations No. 12-99, as amended, transparently


outline the procedure in tax assessment. [65]
Section 3 of Revenue Regulations No. 12-99,  the then prevailing
[66]

regulation regarding the due process requirement in the issuance


of a deficiency tax assessment, requires a notice for informal
conference.  The revenue officer who audited the taxpayer's
[67]

records shall state in his or her report whether the taxpayer


concurs with his or her findings of liability for deficiency taxes.  If [68]

the taxpayer does not agree, based on the revenue officer's


report, the taxpayer shall be informed in writing  of the [69]

discrepancies in his or her payment of internal revenue taxes for


"Informal Conference."  The informal conference gives the
[70]

taxpayer an opportunity to present his or her side of the case. [71]

The taxpayer is given 15 days from receipt of the notice of


informal conference to respond.  If the taxpayer fails to respond,
[72]

he or she will be considered in default.  The revenue [73]

officer  endorses the case with the least possible delay to the
[74]

Assessment Division of the Revenue Regional Office or the


Commissioner or his or her authorized representative.  The [75]

Assessment Division of the Revenue Regional Office or the


Commissioner or his or her authorized representative is
responsible for the "appropriate review and issuance of a
deficiency tax assessment, if warranted." [76]

If, after the review conducted, there exists sufficient basis to


assess the taxpayer with deficiency taxes, the officer shall issue a
preliminary assessment notice showing in detail the facts,
jurisprudence, and law on which the assessment is based.  The [77]

taxpayer is given 15 days from receipt of the pre-assessment


notice to respond.  If the taxpayer fails to respond, he or she will
[78]

be considered in default, and a formal letter of demand and


assessment notice will be issued. [79]

The formal letter of demand and assessment notice shall state


the facts, jurisprudence, and law on which the assessment was
based; otherwise, these shall be void.  The taxpayer or the
[80]

authorized representative may administratively protest the formal


letter of demand and assessment notice within 30 days from
receipt of the notice. [81]

II

The word "shall" in Section 228 of the National Internal Revenue


Code and Revenue Regulations No. 12-99 means the act of
informing the taxpayer of both the legal and factual bases of the
assessment is mandatory.  The law requires that the bases be
[82]

reflected in the formal letter of demand and assessment notice.


 This cannot be presumed.  Otherwise, the express mandate of
[83] [84]

Section 228 and Revenue Regulations No. 12-99 would be


nugatory.  The requirement enables the taxpayer to make an
[85]

effective protest or appeal of the assessment or decision. [86]

The rationale behind the requirement that taxpayers should be


informed of the facts and the law on which the assessments are
based conforms with the constitutional mandate that no person
shall be deprived of his or her property without due process of
law.  Between the power of the State to tax and an individual's
[87]

right to due process, the scale favors the right of the taxpayer to
due process. [88]

The purpose of the written notice requirement is to aid the


taxpayer in making a reasonable protest, if necessary.  Merely[89]

notifying the taxpayer of his or her tax liabilities without details or


particulars is not enough. [90]

Commissioner of Internal Revenue v. United Salvage and Towage


(Phils.), Inc.  held that a final assessment notice that only
[91]

contained a table of taxes with no other details was insufficient:


In the present case, a mere perusal of the [Final Assessment
Notice] for the deficiency EWT for taxable year 1994 will show
that other than a tabulation of the alleged deficiency taxes due,
no further detail regarding the assessment was provided by
petitioner. Only the resulting interest, surcharge and penalty
were anchored with legal basis. Petitioner should have at least
attached a detailed notice of discrepancy or stated an explanation
why the amount of P48,461.76 is collectible against respondent
and how the same was arrived at. [92]

Any deficiency to the mandated content of the assessment or its


process will not be tolerated.  In Commissioner of Internal
[93]

Revenue v. Enron,  an advice of tax deficiency from the


[94]

Commissioner of Internal Revenue to an employee of Enron,


including the preliminary five (5)-day letter, were not considered
valid substitutes for the mandatory written notice of the legal and
factual basis of the assessment.  The required issuance of
[95]

deficiency tax assessment notice to the taxpayer is different from


the required contents of the notice.  Thus: [96]

The law requires that the legal and factual bases of the
assessment be stated in the forma letter of demand and
assessment notice. Thus, such cannot be presumed. Otherwise,
the express provisions of Article 228 of the [National Internal
Revenue Code] and [Revenue Regulations] No. 12-99 would be
rendered nugatory. The alleged "factual bases" in the advice,
preliminary letter and "audit working papers" did not suffice.
There was no going around the mandate of the law that the legal
and factual bases of the assessment be stated in writinin the
formal letter of demand accompanying the assessment notice.
 (Emphasis supplied)
[97]

However, the mandate of giving the taxpayer a notice of the facts


and laws on which the assessments are based should not be
mechanically applied.  To emphasize, the purpose of this
[98]

requirement is to sufficiently inform the taxpayer of the bases for


the assessment to enable him or her to make an intelligent
protest.
[99]

In Samar-I Electric Cooperative v. Commissioner of Internal


Revenue,  substantial compliance with Section 228 of the
[100]

National Internal Revenue Code is allowed, provided that the


taxpayer would be later apprised in writing of the factual and
legal bases of the assessment to enable him or her to prepare for
an effective protest.  Thus:
[101]

Although the [Final Assessment Notice] and demand letter issued


to petitioner were not accompanied by a written explanation of
the legal and factual bases of the deficiency taxes assessed
against the petitioner, the records showed that respondent in its
letter dated April 10, 2003 responded to petitioner's October 14,
2002 letter-protest, explaining at length the factual and legal
bases of the deficiency tax assessments and denying the protest.

Considering the foregoing exchange of correspondence and


documents between the parties, we find that the requirement of
Section 228 was substantially complied with. Respondent had
fully informed petitioner in writing of the factual and legal bases
of the deficiency taxes assessment, which enabled the latter to
file an "effective" protest, much unlike the taxpayer's situation in
Enron. Petitioner's right to due process was thus not violated.[102]

A final assessment notice provides for the amount of tax due with
a demand for payment.  This is to determine the amount of tax
[103]

due to a taxpayer.  However, due process requires that


[104]

taxpayers be informed in writing of the facts and law on which


the assessment is based in order to aid the taxpayer in making a
reasonable protest.  To immediately ensue with tax collection
[105]

without initially substantiating a valid assessment contravenes


the principle in administrative investigations "that tax ayers
should be able to present their case and adduce supporting
evidence."[106]

Respondent filed its income tax return in 1995.  Almost eight (8)
[107]

years passed before the disputed final assessment notice was


issued. Respondent pleaded prescription as its defense when it
filed a protest to the Final Assessment Notice. Petitioner claimed
fraud assessment to justify the belated assessment made on
respondent.  If fraud was indeed present, the period of
[108]

assessment should be within 10 years.  It is incumbent upon


[109]

petitioner to clearly state the allegations of fraud committed by


respondent to serve the purpose of an assessment notice to aid
respondent in filing an effective protest.

III

The prescriptive period in making an assessment depends upon


whether a tax return was filed or whether the tax return filed was
either false or fraudulent. When a tax return that is neither false
nor fraudulent has been filed, the Bureau of Internal Revenue
may assess within three (3) years, reckoned from the date of
actual filing or from the last day prescribed by law for filing.
 However, in case of a false or fraudulent return with intent to
[110]

evade tax, Section 222(a) provides:


Section 222. Exceptions as to Period of Limitation of Assessment
and Collection of Taxes. -

(a) In the case of a false or fraudulent return with intent to evade


tax or of failure to file a return, the tax may be assessed, or a
proceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which has become final and executory, the fact
of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof. (Emphasis supplied)
In Aznar v. Court of Tax Appeals,  this Court interpreted Section
[111]

332  (now Section 222[a] of the National Internal Revenue


[112]

Code) by dividing it in three (3) different cases: first, in case of


false return; second, in case of a fraudulent return with intent to
evade; and third, in case of failure to file a return.  Thus:
[113]

Our stand that the law should be interpreted to mean a


separation of the three different situations of false return,
fraudulent return with intent to evade tax and failure to file a
return is strengthened immeasurably by the last portion of the
provision which aggregates the situations into three different
classes, namely "falsity", "fraud" and "omission." [114]

This Court held that there is a difference between "false return"


and a "fraudulent return."  A false return simply involves a
[115]

"deviation from the truth, whether intentional or not" while a


fraudulent return "implies intentional or deceitful entry with intent
to evade the taxes due." [116]

Fraud is a question of fact that should be alleged and duly


proven.  "The willful neglect to file the required tax return or the
[117]

fraudulent intent to evade the payment of taxes, considering that


the same is accompanied by legal consequences, cannot be
presumed."  Fraud entails corresponding sanctions under the tax
[118]

law. Therefore, it is indispensable for the Commissioner of


Internal Revenue to include the basis for its allegations of fraud in
the assessment notice.

During the proceedings in the Court of Tax Appeals First Division,


respondent presented its President, Domingo C. Juan Jr. (Juan,
Jr.), as witness.  Juan, Jr. testified that respondent was in its
[119]

pre-operating stage in 1995.  During that period, respondent


[120]

"imported equipment and distributed them for market testing in


the Philippines without earning any profit."  He also confirmed
[121]

that the Final Assessment Notice and its attachments failed to


substantiate the Commissioner's allegations of fraud against
respondent, thus:
More than three (3) years from the time petitioner filed its 1995
annual income tax return on April 11, 1996, respondent issued to
petitioner a [Final Assessment Notice] dated March 17, 2004 for
the year 1995, pursuant to the Letter of Authority No. 00002953
dated May 13, 2002. The attached Details of discrepancy
containing the assessment for income tax (IT), value-added tax
(VAT) and documentary stamp tax (DST) as well as the Audit
Result/Assessment Notice do not impute fraud on the part of
petitioner. Moreover, it was obtained on information and
documents illegally obtained by a [Bureau of Internal Revenue]
informant from petitioner's accountant Elnora Carpio in 1996.
 (Emphasis supplied)
[122]

Petitioner did not refute respondent's allegations. For its defense,


it presented Socrates Regala (Regala), the Group Supervisor of
the team, who examined respondent's tax liabilities.  Regala
[123]

confirmed that the investigation was prompted by a tip from an


informant who provided them with respondent's list of sales.  He [124]

admitted  that the gathered information did not show that


[125]

respondent deliberately failed to reflect its true income in 1995. [126]

IV

The issuance of a valid formal assessment is a substantive


prerequisite for collection of taxes.  Neither the National Internal
[127]
Revenue Code nor the revenue regulations provide for a "specific
definition or form of an assessment." However, the National
Internal Revenue Code defines its explicit functions and effects.
 An assessment does not only include a computation of tax
[128]

liabilities; it also includes a demand for payment within a period


prescribed.  Its main purpose is to determine the amount that a
[129]

taxpayer is liable to pay. [130]

A pre-assessment notice "do[es] not bear the gravity of a formal


assessment notice."  A pre-assessment notice merely gives a tip
[131]

regarding the Bureau of Internal Revenue's findings against a


taxpayer for an informal conference or a clarificatory meeting.
[132]

A final assessment is a notice "to the effect that the amount


therein stated is due as tax and a demand for payment
thereof."  This demand for payment signals the time "when
[133]

penalties and interests begin to accrue against the taxpayer and


enabling the latter to determine his remedies[.]"  Thus, it must
[134]

be "sent to and received by the taxpayer, and must demand


payment of the taxes described therein within a specific period." [135]

The disputed Final Assessment Notice is not a valid assessment.

First, it lacks the definite amount of tax liability for which


respondent is accountable. It does not purport to be a demand
for payment of tax due, which a final assessment notice should
supposedly be. An assessment, in the context of the National
Internal Revenue Code, is a "written notice and demand made by
the [Bureau of Internal Revenue] on the taxpayer for the
settlement of a due tax liability that is there definitely set and
fixed."  Although the disputed notice provides for the
[136]

computations of respondent's tax liability, the amount remains


indefinite. It only provides that the tax due is still subject to
modification, depending on the date of payment. Thus:
The complete details covering the aforementioned discrepancies
established during the investigation of this case are shown in the
accompanying Annex 1 of this Notice. The 50% surcharge and
20% interest have been imposed pursuant to Sections 248 and
249 (B) of the [National Internal Revenue Code], as amended.
Please note, however, that the interest and the total amount due
will have to be adjusted if prior or beyond April 15, 2004.
 (Emphasis Supplied)
[137]

Second, there are no due dates in the Final Assessment Notice.


This negates petitioner's demand for payment.  Petitioner's
[138]

contention that April 15, 2004 should be regarded as the actual


due date cannot be accepted. The last paragraph of the Final
Assessment Notice states that the due dates for payment were
supposedly reflected in the attached assessment:
In view thereof, you are requested to pay your aforesaid
deficiency internal revenue tax liabilities through the duly
authorized agent bank in which ou are enrolled within the time
shown in the enclosed assessment notice.  (Emphasis in the
[139]

original)
However, based on the findings of the Court of Tax Appeals First
Division, the enclosed assessment pertained to remained
unaccomplished. [140]

Contrary to petitioner's view, April 15, 2004 was the reckoning


date of accrual of penalties and surcharges and not the due date
for payment of tax liabilities. The total amount depended upon
when respondent decides to pay. The notice, therefore, did not
contain a definite and actual demand to pay.

Compliance with Section 228 of the National Internal Revenue


Code is a substantive requirement.  It is not a mere formality.
[141]

 Providing the taxpayer with the factual and legal bases for the
[142]

assessment is crucial before proceeding with tax collection. Tax


collection should be premised on a valid assessment, which would
allow the taxpayer to present his or her case and produce
evidence for substantiation.
[143]

The Court of Tax Appeals did not err in cancelling the Final
Assessment Notice as well as the Audit Result/Assessment Notice
issued by petitioner to respondent for the year 1995 covering the
"alleged deficiency income tax, value-added tax and documentary
stamp tax amounting to P10,647,529.69, inclusive of surcharges
and interest"  for lack of due process. Thus, the Warrant of
[144]

Distraint and/or Levy is void since an invalid assessment bears no


valid effect. [145]

Taxes are the lifeblood of government and should be collected


without hindrance.  However, the collection of taxes should be
[146]

exercised "reasonably and in accordance with the prescribed


procedure." [147]

The essential nature of taxes for the existence of the State grants
government with vast remedies to ensure its collection. However,
taxpayers are guaranteed their fundamental right to due process
of law, as articulated in various ways in the process of tax
assessment. After all, the State's purpose is to ensure the well-
being of its citizens, not simply to deprive them of their
fundamental rights.

WHEREFORE, the Petition is DENIED. The Decision of the Court


of Tax Appeals En Banc dated July 14, 2014 and Resolution dated
December 16, 2014 in CTA EB Case No. 970 (CTA Case No. 7160)
are hereby AFFIRMED.

SO ORDERED.

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


Mendoza, J., on official leave.

[1]
 The Petition was filed under Rule 45 of the Rules of Court.

 Rollo, pp. 32-49. The Decision was penned by Associate Justice


[2]

Juanito Castañeda, Jr. and concurred in by Associate Justices


Roman G. Del Rosario, Lovell R. Bautista, Erlinda P. Uy, Caesar A.
Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-
Grulla, Amelia R. Cotangco-Manalastas, and Ma. Belen M.
Ringpis-Liban.
 Id. at 53-57. The Resolution was penned by Associate Justice
[3]

Juanito Castañeda, Jr. and concurred in by Associate Justices


Roman G. Del Rosario, Lovell R. Bautista, Erlinda P. Uy, Caesar A.
Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-
Grulla, Amelia R. Cotangco-Manalastas, and Ma. Belen M.
Ringpis-Liban.

[4]
 Id. at 48, Court of Tax Appeals En Banc Decision.

[5]
 Id. at 33.

[6]
 Id.

[7]
 Id. at 34.

[8]
 Id. at 36.

[9]
 Id. at 34.

 Id. at 12-13, Petition for Review. The Annex referred to in the


[10]

Final Assessment Notice was not attached to the records of the


case. However, based on the testimony of Fitness' President,
Domingo C. Juan, "[t]he attached details of discrepancy
containing the assessment for income tax (IT), valueadded tax
(VAT) and documentary stamp tax (DST) as well as, the Audit
Result/Assessment Notices do not impute fraud on the part of
petitioner" (Id. at 37, Court of Tax Appeals En Banc Decision).

[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.
[16]
 TAX CODE, sec. 222(a) provides:

Section 222. Exceptions as to Period of Limitation of Assessment


and Collection of Taxes.

(a) In the case of a false or fraudulent return with intent to evade


tax or of failure to file a return, the tax may be assessed, or a
proceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which has become final and executory, the fact
of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof.

[17]
 Rollo, p. 35, Court of Tax Appeals En Banc Decision.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id.

[22]
 Id.

[23]
 Id. at 39.

[24]
 Id. at 35.

[25]
 Id. at 38.

[26]
 Id. at 39.

[27]
 Id.

 Id. at 67, Petition for Review of the Commissioner of Internal


[28]

Revenue before the Court of Tax Appeals En Banc.


[29]
 Id. at 40, Court of Tax Appeals En Banc Decision.

[30]
 TAX CODE, sec. 228 provides:

Section 228. Protesting of Assessment. - When the Commissioner


or his duly authorized representative finds that proper taxes
should be assessed, he shall first notify the taxpayer of his
findings: Provided, however, That a pre assessment notice shall
not be required in the following cases:

(a) When the finding for any deficiency tax is the result of mathematical error in the co
the face of the return; or
(b) When a discrepancy has been determined between the tax withheld and th
withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable wit
determined to have carried over and automatically applied the same amount claime
for the taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not been paid; or
(e) When an article locally purchased or imported by an exempt person, such as,
equipment, machineries and spare parts, has been sold, traded or transferred to no

The taxpayers shall be informed in writing of the law and


he facts on which the assessment is made; otherwise, the
assessment shall be void.

Within a period to be prescribed by implementing rules and


regulations, the taxpayer shall be required to respond to said
notice. If the taxpayer fails to respond, the Commissioner or his
duly authorized representative shall issue an assessment based
on his findings.

Such assessment may be protested administratively by filing a


request for reconsideration or reinvestigation within thirty (30)
days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. Within
sixty (60) days from filing of the protest, all relevant supporting
documents shall have been submitted; otherwise, the assessment
shall become final.

If the protest is denied in whole or in part, or is not acted upon


within one hundred eighty (180) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the lapse of the
one hundred eighty (180)-day period; otherwise, the decision
shall become final, executory and demandable.

[31]
 Rollo, pp. 32-33, Court of Tax Appeals En Banc Decision.

[32]
 Id. at 40.

[33]
 Id.

[34]
 Id. at 41.

[35]
 Id.

[36]
 Id.

[37]
 Id.

[38]
 Id. at 48.

[39]
 Id. at 53-57.

 Implementing the Provisions of the National Internal Revenue


[40]

Code of 1997 Governing the Rules on Assessment of National


Internal Revenue Taxes, Civil Penalties and Interest and the
Extra-Judicial Settlement of a Taxpayer's Criminal Violation of the
Code Through Payment of a Suggested Compromise Penalty
(1999).

BIR Revenue Reg. No. 12-99, sec. 3.1.4 provides:


SECTION 3. Due Process Requirement in the Issuance of a
Deficiency Tax Assessment

....

3.1.4 Formal Letter of Demand and Assessment Notice. - The


formal letter of demand and assessment notice shall be issued by
the Commissioner or his duly authorized representative. The
letter of demand calling for payment of the taxpayer's deficiency
tax or taxes shall state the facts, the law, rules and regulations,
or jurisprudence on which the assessment is based, otherwise,
the forma/letter of demand and assessment notice shall be
void (Emphasis supplied).

[41]
 Rollo, p. 16, Petition for Review.

[42]
 Id. at 18.

[43]
 Id.

[44]
 Id. at 20.

[45]
 Id. at 13.

[46]
 Id. at 87.

[47]
 Id. at 90-101.

[48]
 Id. at 91.

[49]
 Id.

[50]
 Id.

[51]
 Id.

[52]
 Id.
[53]
 Id. at 92.

[54]
 Id. at 97.

 SMI-ED Phil. Technology, Inc. v. Commissioner of Internal


[55]

Revenue, G.R. No. 175410, November 12, 2014


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/175410.pdf> 5 [Per J.
Leonen, Second Division]

[56]
 Id.

[57]
 TAX CODE, sec. 56(A) provides:

Section 56. Payment and Assessment of Income Tax for


Individuals and Corporations.

A) Payment of Tax. -

(1) In General. - The total amount of tax imposed by this Title shall be paid by the p
return is filed. In the case of tramp vessels, the shipping agents and/or the husb
the captains thereof are required to file the return herein provided and pay the ta
Upon failure of the said agents or captains to file the return and pay the tax
authorized to hold the vessel and prevent its departure until proof of payment o
bond is filed to answer for the tax due.
(2) Installment Payment. - When the tax due is in excess of Two thousand pesos
corporation may elect to pay the tax in two (2) equal installments in which case, th
time the return is filed and the second installment, on or before July 15 following
installment is not paid on or before the date fixed for its payment, the whole amoun
payable, together with the delinquency penalties.
(3) Payment of Capital Gains Tax. - The total amount of tax imposed and prescribed un
28(A)(8)(c) and 28(B)(5)(c) shall be paid on the date the return prescribed t
thereto: Provided, That if the seller submits proof of his intention to avail himself
gains under existing special laws, no such payments shall be required: Provided
qualify for exemption under such special laws and implementing rules and regulatio
from the original transaction shall immediately become due and payable, and subj
applicable provisions of this Code: Provided, finally, That if the seller, having paid
within six (6) months from the registration of the document transferring the rea
refund of such tax upon verification of his compliance with the requirements for suc
In case the taxpayer elects and is qualified to report the gain by installments unde
from each installment payment shall be paid within thirty (30) days from the receip
No registration of any document transferring real property shall be effected b
Commissioner or his duly authorized representative has certified that such tran
herein imposed, if any, has been paid.

 SMI-ED Phil. Technology, Inc. v. Commissioner of Internal


[58]

Revenue, G.R. No. 175410, November 12, 2014


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/175410.pdf> 8 [Per J.
Leonen, Second Division]

[59]
 Id.

[60]
 Id.

[61]
 TAX CODE, sec. 6(A).

[62]
 TAX CODE, sec. 6(A).

[63]
 TAX CODE, sec. 5(A).

 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,


[64]

G.R. Nos. 215534 & 215557, April 18, 2016


<sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/215534.pdf> 7 [Per J.
Mendoza, Second Division]

[65]
 Id.

 On November 28, 2013, Revenue Regulations No. 18-2013 was


[66]

enacted amending Certain Sections of Revenue Regulations No.


12-99 relative to the Due Process Requirement in the Issuance of
a Deficiency Tax Assessment. The scope of the law provides that
under the provisions of Section 244, in relation to Section 245 of
the National Internal Revenue Code, as amended, these
Regulations are promulgated to amend provisions of Revenue
Regulations No. 12-99.
BIR Revenue Reg. No. 18-2013, sec. 2 provides:

Section 2. Amendment. Section 3 of RR 12-99 is hereby amended


by deleting Section 3.1.1 thereof which provides for the
preparation of a Notice of Informal Conference, thereby
renumbering other provisions thereof, and prescribing other
provisions for the assessment of tax liabilities.

[67]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[68]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

 BIR Revenue Reg. No. 12-99, sec. 3.1.1 provides that either
[69]

the Revenue District Office or the Special Investigation Division,


as the case may be (in the case of Revenue Regional Offices) or
the Chief of Division concerned (in the case of the BIR National
Office) may inform the taxpayer of his or her discrepancies.

[70]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[71]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[72]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[73]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

 Revenue Reg. No. 12-99, sec. 3.1.1 provides that in case of


[74]

default, the "Revenue District Officer or the Chief of the Special


Investigation Division of the Revenue Regional Office, or the Chief
of Division in the National Office" shall endorse the case to the
Assessment Division.

[75]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[76]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[77]
 BIR Revenue Reg. No. 12-99, sec. 3.1.2.
[78]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[79]
 BIR Revenue Reg. No. 12-99, sec. 3.1.1.

[80]
 BIR Revenue Reg. No. 12-99, sec. 3.1.4.

[81]
 BIR Revenue Reg. No. 12-99, sec. 3.1.4.

 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,


[82]

G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/apri12016/215534.pdf> [Per J.
Mendoza, Second Division]; Commissioner of Internal Revenue v.
Enron Subic Power Corp., 596 Phil. 229 (2009) [Per J. Corona,
First Division]; Commissioner of Internal Revenue v. United
Salvage and Towage (Phils), Inc., 738 Phil. 335 (2014) [Per J.
Peralta, Third Division].

 Commissioner of Internal Revenue v. Enron Subic Power Corp.,


[83]

596 Phil. 229, 235 (2009) [Per J. Corona, First Division].

[84]
 Id.

[85]
 Id.

 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,


[86]

G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/215534.pdf> 14 [Per J.
Mendoza, Second Division]

[87]
 Id.

 Commissioner of Internal Revenue v. Metro Star Superama,


[88]

Inc., 652 Phil. 172, 187 (2010) [Per J. Mendoza, Second


Division].
 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,
[89]

G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/215534.pdf> 12 [Per J.
Mendoza, Second Division]

 Id., citing Commissioner of Internal Revenue v. Reyes, 516


[90]

Phil. 176, 186-190 (2006) [Per C.J. Panganiban, First Division].

[91]
 738 Phil. 335 (2014) [Per J. Peralta, Third Division]

[92]
 Id. at 349-350.

 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,


[93]

G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/apri12016/215534.pdf> [Per J.
Mendoza, Second Division], citing Commissioner of Internal
Revenue v. United Salvage and Towage (Phils), Inc., 738 Phil.
335 (2014) [Per J. Peralta, Third Division], in turn citing
Commissioner of Internal Revenue v. Enron Subic Power Corp.,
596 Phil. 229 (2009) [Per J. Corona, First Division].

[94]
 596 Phil. 229 (2009) [Per J. Corona, First Division].

[95]
 Id. at 235-236.

[96]
 Id. at 236.

[97]
 Id.

 Commissioner of Internal Revenue v. Liquigaz Philippines Corp.,


[98]

G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/215534.pdf> 14-15 [Per J.
Mendoza, Second Division]

[99]
 Id.
 G.R.
[100]
No. 193100, December 10, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/december2014/193100.pdf> [Per J.
Villarama, Jr., Third Division].

[101]
 Id. at 12.

[102] Id.

 Commissioner of Internal Revenue v. Menguito, 587 Phil. 234,


[103]

256 (2008) [Per J. Austria-Martinez, Third Division].

 Tupaz v. Ulep, 374 Phil. 474, 484 (1999) [Per J. Pardo, First
[104]

Division].

 Commissioner of Internal Revenue v. Liquigaz Philippines


[105]

Corp., G.R. Nos. 215534 & 215557, April 18, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/215534.pdf> 15 [Per J.
Mendoza, Second Division]

 Commissioner of Internal Revenue v. Reyes, 516 Phil. 176, 190


[106]

(2006) [Per C.J. Panganiban, First Division]

[107]
 Rollo, p. 33.

[108]
 Id. at 34.

[109]
 TAX CODE, sec. 222(a).

[110]
 TAX CODE, sec. 203 provides:

Section 203. Period of Limitation Upon Assessment and


Collection. - Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding in
court without assessment for the collection of such taxes shall be
begun after the expiration of such period: Provided, That in a
case where a return is filed beyond the period prescribed by law,
the three (3)-year period shall be counted from the day the
return was filed. For purposes ofthis Section, a return filed before
the last day prescribed by law for the filing thereof shall be
considered as filed on such last day.

[111]
 157 Phil. 510 (1974) [Per J. Esguerra, First Division].

[112]
 TAX CODE, sec. 222(a) provides:

(a) In the case of a false or fraudulent return with intent to evade


tax or of a failure to file a return, the tax may be assessed, or a
proceeding in court for the collection of such tax may be begun
without assessment, at any time within ten years after the
discovery of the falsity, fraud or omission.

 Aznar v. Court of Tax Appeals, 157 Phil. 510 (1974) [Per J.


[113]

Esguerra, First Division].

[114]
 Id. at 523.

[115]
 Id. at 523.

[116] Id.

 Commissioner of Internal Revenue v. Ayala Securities Corp.,


[117]

162 Phil. 287, 296 (1976) [Per J. Esguerra, First Division].

 Commissioner of Internal Revenue v. Air India, 241 Phil. 689,


[118]

698 (1988) [Per J. Gancayco, First Division].

[119]
 Rollo, p. 37, Court of Tax Appeals En Banc Decision.

[120] Id.

[121] Id.
[122] Id.

[123]
 Id. at 38.

[124]
 Id. at 39.

 Id. Regala admitted that "[i]n their memorandum report, they


[125]

recommended the filing of a civil case for the collection of


petitioner's tax liabilities and a criminal case, for its failure to
declare in its ITR for the year 1995 the income derived from its
cited sales. Thus, the BIR's filing of a criminal case against
petitioner with the Department of Justice (DOJ). The witness
confirmed that the gathered information did not indicate that
petitioner's failure to state in its ITR its income and sales for the
year 1995 was deliberate. The instant case was precipitated by
the issuance of the Letter of Authority on May 13, 2002."
(Emphasis supplied)

[126] Id.

 Commissioner of Internal Revenue v. Menguito, 581 Phil. 234,


[127]

256 (2008) [Per J. Austria-Martinez, Third Division].

 Commissioner of Internal Revenue v. Pascor Realty and


[128]

Development Corporation, 368 Phil. 714, 722 (1999) [Per J.


Panganiban, Third Division].

 Tupaz v. Ulep, 314 Phil. 474, 484 (1999) [Per J. Pardo, First
[129]

Division]; Commissioner of Internal Revenue v. Menguito, 587


Phil. 234, 256 (2008) [Per J. Austria-Martinez, Third Division].

 Tupaz v. Ulep, 314 Phil. 474, 484 (1999) [Per J. Pardo, First
[130]

Division].

 Commissioner of Internal Revenue v. Menguito, 581 Phil. 234,


[131]

256 (2008) [Per J. Austria-Martinez, Third Division].

[132] Id.
[133] Id.

[134] Id.

 Commissioner of Internal Revenue v. Pascor Realty and


[135]

Development Corporation, 368 Phil. 714, 722 (1999) (Per J.


Panganiban, Third Division].

 Adamson v. Court of Appeals, 606 Phil. 27, 44 (2009) [Per C.J.


[136]

Puno, First Division].

[137]
 Rollo, p. 13, Petition for Review.

[138]
 Id. at 45, Court of Tax Appeals En Banc Decision.

[139] Id.

[140]
 Id. at 46.

 Commissioner of Internal Revenue v. BASF Coating + Inks


[141]

Phils., Inc., G.R. No. 198677, November 26,


2014 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/198677.pdf> 9 [Per
Justice Peralta, Third Division]

[142] Id.

[143] Id.

[144]
 Rollo, p. 47, Court of Tax Appeals En Banc Decision.

 Commissioner of Internal Revenue v. BASF Coating + Inks


[145]

Phils., Inc., G.R. No. 198677, November 26, 2014


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/198677.pdf> 9 [Per
Justice Peralta, Third Division]
 Id. at 9-10, Petition for Review, citing Commissioner of
[146]

Internal Revenue v. Algue, Inc., 241 Phil. 829 (1988) [Per J.


Cruz, First Division].

[147] Id.

Source: Supreme Court E-Library | Date created: February 21, 2017


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 227497, April 10, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. DIOSCORO COMOSO TUREMUTSA,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

Failure to comply with the chain of custody requirements in drugs


cases will result in an accused's acquittal.

This resolves an appeal of the October 9, 2015 Decision  of the [1]

Court of Appeals in CA-G.R. CR-H.C. No. 05992, which affirmed


the Regional Trial Court January 22, 2013 Decision.  The trial [2]

court convicted accused-appellant Dioscoro Comoso y Turemutsa


(Comoso) for violation of Article II, Section 5 of Republic Act No.
9165, or the Comprehensive Dangerous Drugs Act of 2002.
In a March 27, 2005  Information, Comoso was charged with
[3]

violation of the Comprehensive Dangerous Drugs Act, particularly


for the illegal sale of dangerous drugs. The Information read:

That on or about the 26th day of March 2005, more or less 2:30
o'clock in the afternoon, (sic)  at Quim[s]on, Barangay Bagong
Sikat, Puerto Princesa City, Philippines and within the jurisdiction
of this Honorable Court, the said accused, did then and there
willfully, unlawfully and feloniously sell, convey, distribute and
deliver one (1) piece transparent plastic sachet containing dried
Marijuana leaves/flowering tops, a dangerous drug weighing more
or less 1.1 grams to one poseur-buyer for a consideration of Four
Hundred (P400) Pesos, (sic)  without being authorized by law to
convey, distribute and deliver the same, which act is penalized
under Section 5, Article II of Republic Act No. 9165.

CONTRARY TO LAW. [4]

Upon arraignment, Comoso pleaded not guilty to the crime


charged. Trial on the merits then ensued. [5]

Prosecution witnesses testified that on March 26, 2005, the Anti-


Drug Special Operation Task Force and Drug Enforcement Action
Division planned a buy-bust operation after receiving information
from their civilian asset that a certain "Coro" was selling illegal
drugs in Quimson, Barangay Bagong Sikat, Puerto Princesa City.
The team prepared four (4) P100.00 bills, with Serial Nos.
KU494857, MB020653, QQ011743, and DD744924. [6]

At around 2:30 p.m., Police Officer 2 Ferdinand Aquino (PO2


Aquino) and Police Officer 3 Jose Fernandez (PO3 Fernandez)
proceeded to the area of the operation. They parked their
motorcycle and walked about 50 meters to the target area, where
the asset told them to wait since their target, later identified as
Comoso, was still playing tong-its. The police officers waited by a
store, while their asset waited in front of Comoso's house.[7]
Soon after, Comoso arrived. There, he handed a plastic sachet
supposedly containing marijuana in exchange for the asset's buy-
bust money. The asset, in turn, removed his hat—the pre-
arranged signal that the transaction had been consummated. [8]

Upon seeing the pre-arranged signal, PO2 Aquino and PO3


Fernandez rushed to the scene and arrested Comoso and the
asset. PO2 Aquino recovered the plastic sachet from the asset,
while PO3 Fernandez frisked Comoso and recovered the buy-bust
money, one (1) used marijuana stick, and a lighter. PO2 Aquino
then marked both the plastic sachet and the buy-bust money with
his initials "FJA."
[9]

As they reached the police station, PO2 Aquino also marked the
used marijuana stick and lighter. He then prepared an Inventory
of Confiscated Items. [10]

On April 8, 2005, about two (2) weeks after the buy-bust


operation, Police Superintendent Julita T. De Villa
(Superintendent De Villa), a forensic chemist at the Philippine
National Police Regional Crime Laboratory Office, MIMAROPA,
received the samples of seized items and a letter-request for
laboratory examination. In Chemistry Report No. D-017-05, she
found that the specimens tested positive for marijuana.
[11]

Comoso, a fisher residing on Liberty Road, Barangay Bagong


Sikat, Puerto Princesa City, solely testified in his defense. He
alleged that in the afternoon of March 26, 2005, on his way home
from delivering his catch, he was grabbed and frisked by two (2)
armed men, whom he figured were police officers. They first
brought Comoso to the airport, then to the police station, where
he would be detained.

The police officers recovered from Comoso P420.00, the money


he had earned from selling fish. He denied having sold illegal
drugs.[12]
In its January 22, 2013 Decision,  the Regional Trial Court found
[13]

Comoso guilty beyond reasonable doubt of violating Article II,


Section 5 of the Comprehensive Dangerous Drugs Act. The
dispositive portion of the Decision read:

WHEREFORE, in view of the foregoing, the prosecution having


satisfactorily proven the guilt of the accused DIOSCORO COMOSO
y TUREMUTSA, the Court hereby found him GUILTY beyond
reasonable doubt for the crime of Violation of Section 5, Article II
of R.A. 9165 for illegal sale of dangerous drugs and to suffer the
penalty of life imprisonment and a fine of five hundred thousand
pesos (P500,000.00).

The confiscated marijuana used in prosecuting this case is hereby


ordered to be turned over to the local office of the Philippine Drug
Enforcement Agency (PDEA) for proper disposition.

SO ORDERED. [14]

Comoso appealed before the Court of Appeals, arguing that: (1)


the poseur-buyer, the sole witness to the transaction, was never
presented as a witness; and (2) the identity and integrity of
the corpus delicti  was not properly established.
[15]

In its October 9, 2015 Decision,  the Court of Appeals dismissed


[16]

Comoso's appeal and affirmed his conviction.

According to the Court of Appeals, the prosecution's failure to


present the informant in court was not fatal to the case since the
informant's testimony would merely be corroborative. It held that
the testimony of the arresting officer, who witnessed the
transaction, was sufficient to prove the prosecution's version of
events.[17]

Maintaining that the chain of custody was established, the Court


of Appeals excused the absence of photographs of the seized
items since there were justifiable reasons for noncompliance. It
found that the prosecution had duly established that PO2 Aquino
had custody of the seized items from their seizure until their
turnover to the crime laboratory.  Since Comoso failed to present
[18]

any evidence that the prosecution witnesses had ill motives


against him, the Court of Appeals held that the regularity in the
performance of official duty should be presumed. [19]

Comoso filed a Notice of Appeal.  His appeal having been given


[20]

due course the Court of Appeals elevated the records of this case
to this Court. [21]

In its December 5, 2016 Resolution,  this Court noted the


[22]

records and directed the parties to file their supplemental briefs.


The Office of the Solicitor General, representing plaintiff-appellee
People of the Philippines, manifested that it would no longer
submit a supplemental brief and moved that this Court instead
consider the arguments in its Brief submitted before the Court of
Appeals.  Accused-appellant, on the other hand, submitted a
[23]

Supplemental Brief. [24]

The Office of the Solicitor General argues that the prosecution has
sufficiently established accused-appellant's guilt beyond
reasonable doubt since PO2 Aquino witnessed the entire
exchange and was able to testify to the sequence of events. It
claims that in drugs cases, the police officers' narration of facts
should be given credence as they are presumed to have regularly
performed their duties. [25]

The Office of the Solicitor General further asserts that despite


changes in the seized item's custody and possession, their
identity had been proven by the totality of the prosecution's
evidence. Maintaining that the chain of custody remained
unbroken, it argues that the "integrity of the evidence is
presumed preserved unless there is a showing of bad faith, ill
will[,] or proof that evidence has been tampered with[.]" [26]

Accused-appellant, on the other hand, counters that PO2 Aquino


did not testify that the seized items were marked or inventoried
in front of him. He points out that there were no photographs of
the seized items taken, and that he did not sign the inventory of
seized items. Moreover, he claims that the prosecution failed to
prove that there was no "possibility of switching, planting, or
contamination."[27]

Accused-appellant contends that the chain of custody was not


established, pointing out that there was no transfer of the seized
items from the arresting officer to the investigating officer. He
further notes that it was not explained how the seized items were
handled from the crime laboratory to the forensic chemist, the
transfer of which took 11 days from March 28 to April 8, 2005.
This, he argues, puts a "cloud of doubt and suspicion as to the
supposed preservation of the integrity and evidentiary value"  of
[28]

the corpus delicti. [29]

The sole issue for this Court's resolution is whether or not the
prosecution proved accused-appellant Dioscoro Comoso y
Turemusta's guilt beyond reasonable doubt for violating Article II,
Section 5 of the Comprehensive Dangerous Drugs Act despite not
strictly complying with the requisites for preserving the integrity
and evidentiary value of the corpus delicti.

An accused is presumed innocent until the contrary is proven.


 To secure conviction, the prosecution must overcome this
[30]

presumption by presenting evidence of the accused's guilt beyond


reasonable doubt of the crime charged. Rule 133, Section 2 of the
Rules of Court provides:

SECTION 2. Proof beyond reasonable doubt.  — In a criminal


case, the accused is entitled to an acquittal, unless his guilt is
shown beyond reasonable doubt. Proof beyond reasonable doubt
does not mean such a degree of proof as, excluding possibility of
error, produces absolute certainty. Moral certainty only is
required, or that degree of proof which produces conviction in an
unprejudiced mind.

A guilty verdict relies on the strength of the prosecution's


evidence, not on the weakness of the defense: [31]

Proof beyond reasonable doubt is ultimately a matter of


conscience. Though it does not demand absolutely impervious
certainty, it still charges the prosecution with the immense
responsibility of establishing moral certainty. Much as it ensues
from benevolence, it is not merely engendered by abstruse ethics
or esoteric values; it arises from a constitutional imperative[.]
[32]

The burden of proof lies with the prosecution. Failure to discharge


this burden warrants an accused's acquittal.

II

The sale of illegal drugs is punished under Article II, Section 5 of


the Comprehensive Dangerous Drugs Act:

SECTION 5. Sale, Trading, Administration, Dispensation, Delivery,


Distribution and Transportation of Dangerous Drugs and/or
Controlled Precursors and Essential Chemicals. — The penalty of
life imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.
To secure conviction, the prosecution must prove the following
elements: "(1) proof that the transaction or sale took place[;]
and (2) the presentation in court of the corpus delicti or the illicit
drug as evidence." [33]

Evidence proving that a transaction took place "must be credible


and complete."  In buy-bust operations, this is usually proven by
[34]

the testimony of the poseur-buyer.

In People v. Andaya  the prosecution failed to present their


[35]

informant, who was also their poseur-buyer, to testify on the sale


of illegal drugs. Despite the police officers occupying "different
positions where they could see and observe the asset[,]"  this [36]

Court noted that none of them had witnessed the transaction and
only acted upon the informant/poseur-buyer's pre-arranged
signal. This proved fatal to the prosecution's case:

Here, the confidential informant was not a police officer. He was


designated to be the poseur buyer himself. It is notable that the
members of the buy-bust team arrested Andaya on the basis of
the pre-arranged signal from the poseur buyer. The pre-arranged
signal signified to the members of the buy-bust team that the
transaction had been consummated between the poseur buyer
and Andaya. However, the State did not present the confidential
informant/poseur buyer during the trial to describe how exactly
the transaction between him and Andaya had taken place. There
would have been no issue against that, except that none of the
members of the buy-bust team had directly witnessed the
transaction, if any, between Andaya and the poseur buyer due to
their being positioned at a distance from the poseur buyer and
Andaya at the moment of the supposed transaction. [37]

Andaya recognized that not presenting the informant was


different from not presenting the poseur-buyer. As held in prior
cases,  there was no need to present the confidential informant
[38]

since the testimony would merely corroborate the testimonies of


those who actually witnessed the transaction. The case is
different, however, if the confidential informant and the poseur-
buyer were one and the same person:

The presentation of the confidential informants as witnesses for


the Prosecution in those instances could be excused because
there were poseur buyers who directly incriminated the accused.
In this case, however, it was different, because the poseur buyer
and the confidential informant were one and the same. Without
the poseur buyer's testimony, the State did not credibly
incriminate Andaya.[39]

As with Andaya,  the confidential informant here, despite also


acting as the poseur-buyer, was never presented to testify to the
transaction. Nonetheless, PO2 Aquino testifying that he had
witnessed the entire transaction  suffices to prove the offense's
[40]

first element—that the transaction took place absent any


irregularity in the performance of law enforcers' duties.

This, however, does not suffice to overcome the presumption of


innocence. To do so, the prosecution must prove the second
element of the offense, or the existence of the corpus delicti.

In proving the second element of the offense, the prosecution


must establish compliance with the chain of custody requirements
outlined in Section 21 of the Comprehensive Dangerous Drugs
Act, as amended by Republic Act No. 10640:

SECTION 21. Custody and Disposition of Confiscated, Seized,


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and confiscation,
conduct a physical inventory of the seized items and photograph
the same in the presence of the accused or the persons from
whom such items were confiscated and/or seized, or his/her
representative or counsel, with an elected public official and a
representative of the National Prosecution Service or the media
who shall be required to sign the copies of the inventory and be
given a copy thereof: Provided, That the physical inventory and
photograph shall be conducted at the place where the search
warrant is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures: Provided,  finally,
That noncompliance of these requirements under justifiable
grounds, as long as the integrity and the evidentiary value of the
seized items are properly preserved by the apprehending
officer/team, shall not render void and invalid such seizures and
custody over said items[;]

(2) Within twenty-four (24) hours upon confiscation/seizure of


dangerous drugs, plant sources of dangerous drugs, controlled
precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment, the
same shall be submitted to the PDEA Forensic Laboratory for a
qualitative and quantitative examination;

(3) A certification of the forensic laboratory examination results,


which shall be done by the forensic laboratory examiner, shall be
issued immediately upon the receipt of the subject
item/s: Provided,  That when the volume of dangerous drugs,
plant sources of dangerous drugs, and controlled precursors and
essential chemicals does not allow the completion of testing
within the time frame, a partial laboratory examination report
shall be provisionally issued stating therein the quantities of
dangerous drugs still to be examined by the forensic
laboratory: Provided, however,  That a final certification shall be
issued immediately upon completion of the said examination and
certification[.] (Emphasis in the original)

Chain of custody in the seizure of illegal drugs is defined as:

... the duly recorded authorized movements and custody of


seized drugs or controlled chemicals or plant sources of
dangerous drugs or laboratory equipment of each stage, from the
time of seizure/confiscation to receipt in the forensic laboratory to
safekeeping to presentation in court for destruction. Such record
of movements and custody of seized item shall include the
identity and signature of the person who held temporary custody
of the seized item, the date and time when such transfer of
custody were made in the course of safekeeping and use in court
as evidence, and the final disposition.[41]

Moreover, every link in the chain of custody, as summarized


in People v. Nandi,  must be established:
[42]

[F]irst, the seizure and marking, if practicable, of the illegal drug


recovered from the accused by the apprehending officer; second,
the turnover of the illegal drug seized by the apprehending officer
to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and submission
of the marked illegal drug seized from the forensic chemist to the
court.[43]

Here, PO2 Aquino, the apprehending officer, testified that he had


seized the plastic sachet from accused-appellant and marked it
with his own initials, "FJA." He added that he had also prepared
the Inventory of Confiscated Items and brought the seized items
to the crime laboratory. [44]
However, it remained unclear from PO2 Aquino's testimony if: (1)
he conducted the inventory before accused-appellant; (2) the
inventory was signed by accused-appellant; and (3) PO2 Aquino
turned the items over to an investigating officer. He testified:

Q Now, Mr. Witness, you said that you got the plastic sachet containing this illegal
asset, could you tell us what did you do to this plastic sachet containing illegal
leaves?

A I marked it with my initials and brought it in (sic) the crime lab.

Q What mark did you place, Mr. Witness?

A My initials.  (Emphasis supplied)


[45]

The prosecution further presented evidence that Superintendent


De Villa, the forensic chemist, only received the seized items on
April 8, 2005,  or 10 working days after the buy-bust operation
[46]

on March 26, 2005. This is obviously beyond the 24-hour period


required by law, a delay for which the prosecution has not been
able to explain. This creates reasonable doubt on whether the
illegal drug turned over to the forensic chemist was the same
illegal drug seized from accused-appellant:

This break in the chain of custody opens up the possibility of


substitution, alteration, or tampering of the seized drugs during
the turn over to the chemist, especially since the amount was as
little as 0.02 grams. Thus, the illegal drugs tested by the chemist
may not be the same items allegedly seized by the buy-bust team
from accused-appellant. The doubt that the break created should
have been enough to acquit accused-appellant. [47]

Worse, nothing in the records shows that the witnesses required


to be present and sign the inventory—an elected public official
and a representative of the National Prosecution Service or the
media—were present, even though this was a pre-planned
entrapment operation. Moreover, the prosecution did not justify
the law enforcement officers' noncompliance with the chain of
custody. It merely stated that "the integrity of the evidence is
presumed preserved unless there is a showing of bad faith, ill
will[,] or proof that the evidence has been tampered with."[48]

Generally, noncompliance with these requirements would not


have rendered the search and seizure invalid "under justifiable
grounds."  However, the absence of any justification only serves
[49]

to magnify the irregularity of the police officer's performance of


their official duties:

To sanction non-compliance, two requisites must be satisfied.


First, the prosecution must identify and prove "justifiable
grounds." Second, it must show that, despite non-compliance,
the integrity and evidentiary value of the seized items were
properly preserved. To satisfy the second requirement, the
prosecution must establish that positive steps were observed to
ensure such preservation. The prosecution cannot rely on broad
justifications and sweeping guarantees that the integrity and
evidentiary value of seized items were preserved. [50]

The prosecution cannot merely sweep the police officers' lapses


under the mantle of the presumption of regularity in the
performance of their official duties. This presumption only applies
when nothing in the evidence shows that the police officers
deviated from the standard procedures required by law. In People
v. Kamad: [51]

Given the flagrant procedural lapses the police committed in


handling the seized shabu and the obvious evidentiary gaps in the
chain of its custody, a presumption of regularity in the
performance of duties cannot be made in this case. A
presumption of regularity in the performance of official duty is
made in the context of an existing mle of law or statute
authorizing the performance of an act or duty or prescribing a
procedure in the performance thereof. The presumption applies
when nothing in the record suggests that the law enforcers
deviated from the standard conduct of official duty required by
law; where the official act is irregular on its face, the presumption
cannot arise. In light of the flagrant lapses we noted, the lower
courts were obviously wrong when they relied on the presumption
of regularity in the performance of official duty.[52]

The law's stringent requirements are not designed to hamper


police operations with needless procedural minutiae. They merely
ensure that courts can, with reasonable moral certainty,
guarantee that the illegal drug presented by the prosecution is
the same illegal drug that was seized from the accused:

Compliance with Section 21's chain of custody requirements


ensures the integrity of the seized items. Conversely, non-
compliance with it tarnishes the credibility of the corpus
delicti  around which prosecutions under the Comprehensive
Dangerous Drugs Act revolve. Consequently, they also tarnish the
very claim that an offense against the Comprehensive Dangerous
Drugs Act was committed.

Fidelity to chain of custody requirements is necessary because,


by nature, narcotics may easily be mistaken for everyday objects.
Chemical analysis and detection through methods that exceed
human sensory perception (such as, specially trained canine units
and screening devices) are often needed to ascertain the
presence of dangerous drugs. The physical similarity of narcotics
with everyday objects facilitates their adulteration and
substitution. It also makes conducive the planting of evidence.
In Mallillin v. People:

A unique characteristic of narcotic substances is that they are not


readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from other cases by accident or
otherwise - in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a standard more stringent than that
applied to cases involving objects which are readily identifiable
must be applied, a more exacting standard that entails a chain of
custody of the item with sufficient completeness if only to render
it improbable that the original item has either been exchanged
with another or been contaminated or tampered with.

People v. Holgado, et al., recognized that:

Compliance with the chain of custody requirement. . . ensures the


integrity of confiscated, seized, and/or surrendered drugs and/or
drug paraphernalia in four (4) respects: first, the nature of the
substances or items seized; second, the quantity (e.g., weight) of
the substances or items seized; third, the relation of the
substances or items seized to the incident allegedly causing their
seizure; and fourth, the relation of the substances or items seized
to the person/s alleged to have been in possession of or peddling
them. Compliance with this requirement forecloses opportunities
for planting, contaminating, or tampering of evidence in any
manner.

When the identity of corpus delicti  is jeopardized by non-


compliance with Section 21, the second element of the offense of
illegal sale of dangerous drugs remains wanting. It follows then,
that this non-compliance justifies an accused's acquittal.
In People v. Lorenzo:

In both illegal sale and illegal possession of prohibited drugs,


conviction cannot be sustained if there is a persistent doubt on
the identity of the drug. The identity of the prohibited drug must
be established with moral certainty. Apart from showing that the
elements of possession or sale are present, the fact that the
substance illegally possessed and sold in the first place is the
same substance offered in court as exhibit must likewise be
established with the same degree of certitude as that needed to
sustain a guilty verdict.  (Emphasis supplied)
[53]

Indeed, the often minuscule amounts of dangerous drugs seized


by law enforcement officers compel courts to be more
circumspect in the examination of the evidence. Reasonable
doubt arises in the prosecution's narrative when the links in the
chain of custody cannot be properly established. There is no
guarantee that the evidence had not been tampered with,
substituted, or altered. In People v. Holgado:[54]

Trial courts should meticulously consider the factual intricacies of


cases involving violations of Republic Act No. 9165. All details
that factor into an ostensibly uncomplicated and barefaced
narrative must be scrupulously considered. Courts must employ
heightened scrutiny, consistent with the requirement of proof
beyond reasonable doubt, in evaluating cases involving miniscule
amounts of drugs. These can be readily planted and tampered.
Also, doubt normally follows in cases where an accused has been
discharged from other simultaneous offenses due to mishandling
of evidence. Had the Regional Trial Court and the Court of
Appeals been so judicious in this case, a speedier resolution
would have been handed to Holgado and Misarez whose guilt
beyond reasonable doubt was not established. [55]

This Court has already recognized the numerous "orchestrated or


poorly built up drug-related cases"  that have been languishing
[56]

in the clogged dockets of our lower courts. Thus, in People v.


Lim,  this Court mandated the policy that must be followed in
[57]

prosecuting drugs cases:

[T]o weed out early on from the courts' already congested docket
any orchestrated or poorly built up drug-related cases, the
following should henceforth be enforced as a mandatory policy:
1. In the sworn statements/affidavits, the apprehending/seizing
officers must state their compliance with the requirements of
Section 21 (1) of R.A. No. 9165, as amended, and its IRR.

2. In case of non-observance of the provision, the


apprehending/seizing officers must state the justification or
explanation therefor as well as the steps they have taken in order
to preserve the integrity and evidentiary value of the
seized/confiscated items.

3. If there is no justification or explanation expressly declared in


the sworn statements or affidavits, the investigating fiscal must
not immediately file the case before the court. Instead, he or she
must refer the case for further preliminary investigation in order
to determine the (non) existence of probable cause.

4. If the investigating fiscal filed the case despite such absence,


the court may exercise its discretion to either refuse to issue a
commitment order (or warrant of arrest) or dismiss the case
outright for lack of probable cause in accordance with Section 5,
Rule 112, Rules of Court.  (Citation omitted)
[58]

Lim serves as a clarion call to law enforcement officers and those


involved in the prosecution of drugs cases to be more
circumspect in the performance of their duties. Because the
prosecution was unable to establish accused-appellant's guilt
beyond reasonable doubt, the presumption of innocence must
prevail. Accused-appellant must, thus, be acquitted.

WHEREFORE, the appeal is GRANTED. The Court of Appeals


October 9, 2015 Decision in CA-G.R. CR-H.C. No. 05992
is REVERSED and SET ASIDE. Accused-appellant Dioscoro
Comoso y Turemutsa is ACQUITTED for the prosecution's failure
to prove his guilt beyond reasonable doubt. He is ordered
immediately RELEASED unless he is confined for any other lawful
cause.
Let a copy of this Decision be furnished to the Superintendent of
the Iwahig Prison and Penal Farm, Puerto Princesa City for
immediate implementation. The Superintendent
is ORDERED to REPORT the action he or she has taken to this
Court within five (5) days from receipt of this Decision.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr.,


Hernando, and Carandang,  JJ., concur.
*

July 16, 2019

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:

Please take notice that on April 10, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 16, 2019 at 1:30 p.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court
O R D E R  O F  R E L E A S E

TO:

Thru: CSSupt. Arturo N. Sabadisto


Superintedent
IWAHIG PRISON & PENAL FARM
Brgy. Iwahig, Puerto Princesa City
5300 Palawan

GREETINGS:

WHEREAS, the Supreme Court on April 10, 2019 promulgated


a Decision in the above-entitled case, the dispositive portion of
which reads:

"WHEREFORE, the appeal is GRANTED. The Court of Appeals


October 9, 2015 Decision in CA-G.R. CR-H.C. No. 05992
is REVERSED and SET ASIDE. Accused-appellant Dioscoro
Comoso y Turemutsa is ACQUITTED for the prosecution's failure
to prove his guilt beyond reasonable doubt. He is ordered
immediately RELEASED unless he is confined for any other lawful
cause.

Let a copy of this Decision be furnished to Superintendent of the


Iwahig Prison and Penal Farm, Puerto Princesa City for immediate
implementation. The Superintendent
is ORDERED to REPORT the action he or she has taken to this
Court within five days from receipt of this Decision.

SO ORDERED."

NOW, THEREFORE, You are hereby ordered to immediately


release DIOSCORO COMOSO y TUREMUTSA unless there are
other lawful causes for which he should be further detained, and
to return this Order with the certificate of your proceedings within
five (5) days from notice hereof.

GIVEN by the Honorable DIOSDADQ M. PERALTA,Chairperson


of the Third Division of the Supreme Court of the Philippines,
this 10  day of April 2019.
th

 Designated additional Member per Special Order No. 2624 dated


*

November 28, 2018.

 Rollo, pp. 2-16. The Decision was penned by Associate Justice


[1]

Noel G. Tijam (now a retired Associate Justice of this Court), and


concurred in by Associate Justices Francisco P. Acosta, Jr. and
Eduardo B. Peralta, Jr. of the Fourth Division, Court of Appeals,
Manila.

 CA rollo,  pp. 53-59. The Decision, in Crim. Case No. 20176, was
[2]

penned by Acting Presiding Judge Bienvenido C. Blancaflor of


Branch 48, Regional Trial Court, Puerto Princesa City.

[3]
 Rollo, p. 3.

[4]
 CA  rollo,  p. 53.

[5]
 Rollo, p, 3.

[6]
 CA  rollo,  pp. 53-54.

[7]
 Id. at 53-55.

[8]
 Id. at 55.

[9]
 Id.

[10]
 Id.
[11]
 Id. at 54.

[12]
 Id. at 56.

[13]
 Id. at 53-59.

[14]
 Id. at 59.

[15]
 Rollo,  p. 8.

[16]
 Id. at 2-16.

[17]
 Id. at 10.

[18]
 Id. at 12-13.

[19]
 Id. at 14.

[20]
 Id. at 17-19.

[21]
 Id. at 20.

[22]
 Id. at 22-23.

[23]
 Id. at 24-29.

[24]
 Id. at 30-43.

[25]
 CA rollo, pp. 87-93.

[26]
 Id. at 94.

[27]
 Rollo,  p. 33.

[28]
 Id. at 36.

[29]
 Id. at 35-37.
[30]
 CONST, art. III, sec. 14(2).

 People v. Macasinag, 255 Phil. 279 (1989) [Per J. Cruz, First


[31]

Division].

 J. Leonen, Concurring Opinion in People v. Lim,  G.R. No.


[32]

231989, September 4, 2018, <


http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400>
[Per J. Peralta, En Banc].

 People v. Morales, 630 Phil. 215, 228 (2010) [Per J. Del


[33]

Castillo, Second Division] citing People v. Darisan, 597 Phil. 479


(2009) [Per J. Corona, First Division].

 People v. Andaya,  745 Phil. 237, 247 (2014) [Per J. Bersamin,


[34]

First Division].

[35]
 745 Phil. 237 (2014) [Per J. Bersamin, First Division].

[36]
 Id. at 241-242.

[37]
 Id. at 247.

 People v. Andaya, 745 Phil. 237 (2014) [Per J. Bersamin, First


[38]

Division] citing People v. Khor,  366 Phil. 762 (1999) [Per J.


Gonzaga-Reyes, Third Division]; People v. Gireng, 311 Phil. 12
(1995) [Per J. Bellosillo, First Division]; People v. Ong,  476 Phil.
553 (2004) [Per J. Puno, En Banc]; and People v. Lopez, 288
Phil. 1107 (1992) [Per J. Melo, Third Division].

[39]
 Id. at 248.

[40]
 CA rollo, p. 55.

 People v. Climaco,  687 Phil. 593, 604 (2012) [Per J. Carpio,


[41]

Second Division] citing Dangerous Drags Board Regulation No. 1


(2002), sec. 1.
[42]
 639 Phil. 134 (2010) [Per J. Mendoza, Second Division].

 Id. at 144-145 citing People v. Kamad, 624 Phil. 289 (2010)


[43]

[Per J. Brion, Second Division].

[44]
 CA rollo, p. 58.

[45]
 Id.

[46]
 Id. at 54.

 J. Leonen, Concurring Opinion in People v. Lim,  G.R. No.


[47]

231989, September 4, 2018, <


http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400>
[Per J. Peralta, En Banc].

[48]
 CA rollo, p. 94.

 J. Leonen, Concurring Opinion in People v. Lim,  G.R. No.


[49]

231989, September 4, 2018, <


http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400>
[Per J. Peralta, En Banc].

[50]
 Id.

[51]
 624 Phil. 289 (2010) [Per J. Brion, Second Division].

 Id. at 311 citing People v. Obmiranis,  594 Phil. 561 (2008) [Per


[52]

J. Tinga, Second Division].

 J. Leonen, Concurring Opinion in People v. Lim,  G.R. No.


[53]

231989, September 4, 2018, <


http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400>
[Per J. Peralta, En Banc] citing Mallillin v. People, 576 Phil. 576
(2008) [Per J. Tinga, Second Division]; People v. Holgado,  741
Phil. 78 (2014) [Per J. Leonen, Third Division]; and People v.
Lorenzo,  633 Phil. 393 (2010) [Per J. Perez, Second Division].
[54]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[55]
 Id. at 100.

 People v. Lim, G.R. No. 231989, September 4, 2018, <


[56]

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400>
[Per J. Peralta, En Banc].

[57]
 Id.

[58]
 Id.

Source: Supreme Court E-Library | Date created: August 05, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 228880, March 06, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. LINA ACHIENG NOAH, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

This resolves an appeal from the Court of Appeals July 29, 2016
Decision  in CA-G.R. CR HC No. 07006, affirming the conviction of
[1]

accused-appellant Lina Achieng Noah (Noah) for violating Article


II, Section 5 of Republic Act No. 9165, or the Comprehensive
Dangerous Drugs Act of 2002, for the illegal transportation of
dangerous drugs.

On April 16, 2012, an Information was filed charging Noah with


violation of Article II, Section 5 of Republic Act No. 9165.  It read
[2]

in part:
That on or about the 24  day of February 2012, in Pasay City,
th

Metro Manila, Philippines, and within the jurisdiction of this


Honorable Court, the above-named accused, without authority of
law, did then and there willfully, unlawfully and feloniously
transport and bring to the Philippines a total of 5,941.9 grams of
Methamphetamine Hydrochloride.

CONTRARY TO LAW. [3]

On her arraignment last March 28, 2012, Noah pleaded not guilty
to the crime charged. On July 25, 2012, pre-trial was conducted
and, afterwards, trial on the merits ensued. [4]

Customs Examiner Marius Landicho (Landicho) testified that at


around 5:23 p.m. on February 24, 2012 at the Ninoy Aquino
International Airport Terminal 1, Noah, a Kenyan national who
arrived from Kenya via Dubai, approached Lane Number Five (5)
of the Customs Arrival Area. He asked her to present her
passport and Baggage Declaration. [5]

Landicho then asked her to open her luggage: a black trolley bag,
which was three (3) feet tall and less than two (2) feet wide.  In [6]

it was a smaller bag described as a laptop bag.  Upon inspection,


[7]

Landicho noticed that while the smaller bag was empty, its flap
was hard and thick and its sidings were suspiciously padded and
had tampered stitches. Noting that it was odd for such a bag to
be hard,  Landicho asked Noah to follow him to the exclusion
[8]

room for further examination of her luggage. [9]

In the exclusion room, Landicho examined the bag before: (1)


Noah; (2) three (3) airport employees; (3) Bureau of Customs
Narcotics Group; (4) agents of the Philippine Drug Enforcement
Agency; and (5) other government officers.  The inspection
[10]

revealed seven (7) rectangular packages, wrapped in vacuum-


sealed aluminum foil, on which Landicho affixed his initials and
signature.

Landicho then prepared an Inventory Report as witnessed by: (1)


officers of the Customs Task Force on Dangerous Drugs; (2) Anti-
Narcotics Group; (3) Prosecutor Dolores Rillera (Prosecutor
Rillera); (4) Julie Fabroa (Fabroa), the airport's media
representative; and (5) Barangay Councilor Mel Anthony Bajada
(Barangay Councilor Bajada).  Landicho then turned over the
[11]

Inventory Report, along with Noah's personal belongings, to the


Philippine Drug Enforcement Agency and Customs Task Force. [12]

Special Agent I Alejandro R. Noble (Special Agent I Noble), a


Customs officer, testified that he went to the arrival area of the
Ninoy Aquino International Airport Terminal 1 for an anti-illegal
drug operation. There, he saw Noah show Landicho her Customs
Declaration and luggage. He added that Noah had been invited to
the exclusion room for further examination and interrogation. [13]

In Noah's presence, Special Agent I Noble and Landicho inspected


the luggage and found hidden compartments. Inside were
compressed foil packs containing white crystalline substance.
 Upon testing samples using Marquis Reagent No. 2, the white
[14]

crystalline substance yielded positive for methamphetamine


hydrochloride or shabu. Special Agent I Noble added that before
Noah's arrest, he asked her if she could understand English.
When she said yes, he apprised her of her Miranda rights. [15]

Corroborating Landicho's account, Special Agent I Noble further


testified that they conducted an inventory of the seized items in
the presence of Noah, an elective official, Prosecutor Rillera, and
Fabroa. In addition, pictures showing Noah with Landicho and
other witnesses were taken during the field-testing, marking, and
inventory.[16]
Agent Adrian Fajardo (Agent Fajardo), a member of the Philippine
Drug Enforcement Agency Special Enforcement Service, testified
that he brought the seized items to Forensic Chemist Ariane
Arcos (Forensic Chemist Arcos) for proper documentation and
laboratory examinations. The test results showed that the seized
items contained shabu, with a confirmatory test yielding the same
outcome. [17]

In her defense, Noah denied transporting the illegal drugs,


claiming that she went to the Philippines for a job opportunity.
She added that the luggage was only given to her while she was
in her recruiter's office in Cameroon,  Central Africa. She
[18]

allegedly met an unidentified man who, while discussing her


travel details, also offered the black trolley bag after commenting
that her bag was soiled. He also supposedly helped her transfer
all her things from her old bag to the new luggage.[19]

In its January 16, 2014 Decision,  the Regional Trial Court found
[20]

Noah guilty beyond reasonable doubt of the crime charged. It


held that the warrantless search and arrest of Noah was "lawful,
valid, and effective"  because searches done in airport premises
[21]

fell under consented searches. It found that Noah had known she
was in possession of illegal drugs considering that animus
possidendi is presumed. Moreover, the trial court ruled that the
presumption of regularity of duty on the airline personnel's
placing of the bag tags at the airport of origin established that
Noah was the real owner of the luggage. It ruled that there was
compliance with Article II, Section 21 of Republic Act No. 9165.[22]

The dispositive portion of the Judgment read:


WHEREFORE, premises considered, the prosecution, having
discharged its bounden duty to prove the guilt of the accused
beyond reasonable doubt, the accused, LINA ACHIENG NOAH,
is hereby found guilty of the offense charged in the Information
and is hereby sentenced to suffer a penalty of life imprisonment
and to pay a fine of FIVE HUNDRED THOUSAND PESOS
(P500,000.00).
The Branch Officer-in-Charge is hereby directed to coordinate
with, and transmit to the PDEA, the representative samples
previously extracted from the confiscated specimens for its
proper disposition.

Furnish the Legal and Prosecution Service of the PDEA, the


prosecutor, the accused and her counsel, copies of this decision.
 (Emphasis in the original)
[23]

On March 11, 2015, Noah filed an Appeal  before the Court of


[24]

Appeals.

In its July 29, 2016 Decision,  the Court of Appeals denied the
[25]

Appeal and affirmed Noah's conviction:


WHEREFORE, premises considered, the appeal is DENIED. The
Decision dated 16 January 2014 of Branch 116, Regional Trial
Court of Pasay City in Criminal Case No. R-PSY-12-04855-CR
is AFFIRMED.

SO ORDERED.  (Emphasis in the original)


[26]

The Court of Appeals held that Noah's act of transporting the


seized shabu to the Philippines fell under Section 5 of the
Comprehensive Dangerous Drugs Act. Moreover, since her act
was malum prohibitum, its mere commission constituted the
offense.  It rendered the search valid despite being warrantless,
[27]

ruling that the operation was a customs search.  Further, it


[28]

agreed with the trial court that the integrity and evidentiary value
of the seized drugs were properly preserved. [29]

On August 31, 2016, Noah filed her Notice of Appeal.


 Subsequently, the records of the case were elevated to this
[30]

Court for review.

In its February 22, 2017 Resolution,  this Court noted the


[31]

records forwarded by the Courts of Appeal and notified the


parties to submit their respective supplemental briefs.
On April 24, 2017, the Office of the Solicitor General, on behalf of
the People of the Philippines, filed a Manifestation,  stating that it
[32]

would no longer file a supplemental brief.

On April 26, 2017, accused-appellant filed her Supplemental


Brief.  She stresses that the chain of custody in handling the
[33]

evidence against her had gaps, which raise serious doubts on the
authenticity of the seized shabu. She argues that the integrity
and evidentiary value of the packages recovered from her were
not preserved.  While Landicho testified to marking the seized
[34]

items, she points out that the records show that the marking was
neither immediately made upon seizure nor was it made in her
presence. [35]

Accused-appellant concedes that compliance with Section 21(a)


of the Comprehensive Dangerous Drugs Act's Implementing Rules
and Regulations may be relaxed if the State can explain
reasonable lapses in its handling of evidence. Here, however, the
prosecution neither recognized any lapse in the disposition of the
seized items nor offered any explanation for such lapse. Hence,
she argues that the guidelines under Section 21(a) cannot be
relaxed,  and that this broken chain of custody is enough to raise
[36]

reasonable doubt on her guilt.

For its part, the Office of the Solicitor General counters that the
prosecution sufficiently proved the identity and integrity of the
items seized from accused-appellant. It points out that based on
the records, the chain of custody was followed: packs of
aluminum foil were found when her luggage was examined in the
presence of airport employees, Customs staff, and media
representatives. These were documented in the Inventory Report
signed by the witnesses, and later turned over to the Philippine
Drug Enforcement Agency and Customs Task Force. The
Philippine Drug Enforcement Agency sent the seized items to
Forensic Chemist Arcos for examination and, finally, to the trial
court for identification and presentation.[37]
The Office of the Solicitor General notes that even if Section 21 of
the Comprehensive Dangerous Drugs Act had not been complied
with, it is not fatal as long as the integrity and evidentiary value
of the confiscated items were preserved. It claims that the
sachets of shabu were marked, identified, offered, and admitted
in evidence properly.[38]

The principal issue for this Court's resolution is whether or not


accused-appellant Lina Achieng Noah's guilt for violation of
Section 5 of the Comprehensive Dangerous Drugs Act was proven
beyond reasonable doubt. Subsumed here is the issue of whether
or not the prosecution established the unbroken chain of custody
of the drug seized from accused-appellant.

The Appeal must be dismissed.

To sustain a conviction for the crime of illegal transportation of


dangerous drugs, the transportation  and the identity and
[39]

integrity of the seized drugs must be proven beyond reasonable


doubt.[40]

The illegal transportation of dangerous drugs is punished under


Section 5 of the Comprehensive Dangerous Drugs Act:
SECTION 5. Sale, Trading, Administration, Dispensation,
Delivery, Distribution and Transportation of Dangerous Drugs
and/or Controlled Precursors and Essential Chemicals. - The
penalty of life imprisonment to death and a fine ranging from Five
hundred thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law,, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.
The essential element for the crime of illegal transportation of
dangerous drugs is the movement of the dangerous drug from
one (1) place to another.  To establish the accused's guilt, it
[41]
must be proven that: (1) the transportation of illegal drugs was
committed; and (2) the prohibited drug exists. [42]

Proof of ownership of the dangerous drugs seized is immaterial.


What is important is that the prosecution prove the act of
transporting as well as the identity and integrity of the seized
drugs.[43]

This is because the confiscated drug is the corpus delicti of the


crime.  Since it is not readily identifiable by sight or touch and
[44]

may be easily tampered with, its preservation is paramount.  The


[45]

chain of custody ensures that there would be no unnecessary


doubts concerning the identity of the evidence.[46]

Chain of custody is the duly recorded authorized movements and


custody of seized items at each stage, from seizure to receipt in
the forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
items shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody were made in the course of
safekeeping and used in court as evidence, and the final
disposition. [47]

In Mallillin v. People:
[48]

As a method of authenticating evidence, the chain of custody rule


requires that the admission of an exhibit be preceded by evidence
sufficient to support a finding that the matter in question is what
the proponent claims it to be. It would include testimony about
every link in the chain, from the moment the item was picked up
to the time it is offered into evidence, in such a way that every
person who touched the exhibit would describe how and from
whom it was received, where it was and what happened to it
while in the witness' possession, the condition in which it was
received and the condition in which it was delivered to the next
link in the chain. These witnesses would then describe the
precautions taken to ensure that there had been no change in the
condition of the item and no opportunity for someone not in the
chain to have possession of the same.

While testimony about a perfect chain is not always the standard


because it is almost always impossible to obtain, an unbroken
chain of custody becomes indispensable and essential when the
item of real evidence is not distinctive and is not readily
identifiable, or when its condition at the time of testing or trial is
critical, or when a witness has failed to observe its uniqueness.
The same standard likewise obtains in case the evidence is
susceptible to alteration, tampering, contamination and even
substitution and exchange. In other words, the exhibit's level of
susceptibility to fungibility, alteration or tampering - without
regard to whether the same is advertent or otherwise not -
dictates the level of strictness in the application of the chain of
custody rule.  (Citations omitted)
[49]

Section 21 of the Comprehensive Dangerous Drugs Act, as


amended by Republic Act No. 10640, provides the standard for
the custody and disposition of confiscated, seized, and/or
surrendered drugs and/or drug paraphernalia, spelling out the
requirements for custody prior to the filing of a criminal case:
SECTION 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of


the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and confiscation,
conduct a physical inventory of the seized items and photograph
the same in the presence of the accused or the persons from
whom such items were confiscated and/or seized, or his/her
representative or counsel, with an elected public official and a
representative of the National Prosecution Service or the media
who shall be required to sign the copies of the inventory and be
given a copy thereof: Provided, That the physical inventory and
photograph shall be conducted at the place where the search
warrant is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures: Provided, finally, That
noncompliance of these requirements under justifiable grounds,
as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team,
shall not render void and invalid such seizures and custody over
said items.

(2) Within twenty-four (24) hours upon confiscation/seizure of


dangerous drugs, plant sources of dangerous drugs, controlled
precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment, the
same shall be submitted to the PDEA Forensic Laboratory for a
qualitative and quantitative examination;

(3) A certification of the forensic laboratory examination results,


which shall be done by the forensic laboratory examiner, shall be
issued immediately upon the receipt of the subject item/s:
Provided, That when the volume of dangerous drugs, plant
sources of dangerous drugs, and controlled precursors and
essential chemicals does not allow the completion of testing
within the time frame, a partial laboratory examination report
shall be provisionally issued stating therein the quantities of
dangerous drugs still to be examined by the forensic laboratory:
Provided, however, That a final certification shall be issued
immediately upon completion of the said examination and
certification.
[50]

Compliance with the chain of custody requirements under Section


21 ensures the integrity of the seized items. In contrast,
noncompliance tarnishes the credibility of the corpus delicti, on
which prosecutions under the Comprehensive Dangerous Drugs
Act are based. [51]
In People v. Nandi,  the four (4) links in the chain of custody are
[52]

established:
Thus, the following links should be established in the chain of
custody of the confiscated item: first, the seizure and marking, if
practicable, of the illegal drug recovered from the accused by the
apprehending officer; second, the turnover of the illegal drug
seized by the apprehending officer to the investigating officer;
third, the turnover by the investigating officer of the illegal drug
to the forensic chemist for laboratory examination; and fourth,
the turnover and submission of the marked illegal drug seized
from the forensic chemist to the court.  (Emphasis supplied,
[53]

citation omitted)
When the identity of corpus delicti is compromised by
noncompliance with Section 21, critical elements of the offense of
illegal transportation of dangerous drugs are not proven. This
warrants an accused's acquittal.[54]

Here, the prosecution proved beyond reasonable doubt that


accused appellant was indeed transporting the illegal drugs.
Although she had initially denied ownership of the luggage and
illegal drugs found, accused appellant's claim is disputed by the
evidence on record.

In the ordinary course of business, check-in officers attach airline


bag tags to the owner's check-in luggage at the airport of origin.
As appreciated by both the trial court and the Court of Appeals,
the luggage had a bag tag attached to its handle clearly bearing
the name "Lina Achieng Noah." Accused-appellant exercised
control and took possession of the luggage and its corresponding
claim stub. It must be stressed that the act of transporting illegal
drugs is a malum prohibitum. Consequently, proof of ownership
and intent are not essential elements of the crime. [55]

Accused-appellant was apprehended inside the airport upon her


arrival from Ethiopia to Manila via Dubai. Shabu was found in her
possession, contained in seven (7) packs of vacuum-sealed
aluminum foil and concealed in a laptop bag inside her luggage.
This satisfies the elements of the crime because she was found
transporting illegal drugs to the Philippines.

The chain of custody was also established by the prosecution.

The four links of chain of custody of evidence were proven: (1)


Landicho seized and marked the shabu obtained from accused-
appellant; (2) he turned them over to Agent Fajardo; (3) Agent
Fajardo delivered them to Forensic Chemist Arcos; and (4) from
the Philippine Drug Enforcement Agency, the drugs were
presented in court.

The Court of Appeals summarized the sequence of events


showing that the shabu seized from accused-appellant was the
very same shabu tested and later identified in court:
1. Suspicious of the unusually sewed bag of appellant,
Landicho asked her to follow him at the exclusion room for
further examination of her luggage;
2. While inside the exclusion room, Landicho further examined
the bag in the presence of appellant, Teresita Roque
(Deputy Collector for Passenger Services), Roxanne Antonio
(Supervisor), Nelson Lavilles (Warehouseman), other
Customs staff and some media men;
3. Upon discovery of the packages of shabu, Landicho affixed
his initials "MRL", signature and date thereon;
4. After marking, Landicho prepared the Inventory Report
dated 24 February 2012. This was witnessed by the
representatives of Customs Task Force on Dangerous Drugs,
Narcotics Group and the Department of Justice;
5. Landicho turned over the Inventory Report together with
appellant's personal belongings to the PDEA and Customs
Task Force[;]
6. SA Noble then asked appellant if she can understand
English, to which she replied in positive. He apprised
appellant of her constitutional rights and thereafter effected
arrest;
7. Agent Fajardo of PDEA turned over the luggage and bag to
Forensic Chemist Ariane Arcos;
8. After proper documentation, Arcos conducted physical and
chemical examinations;
9. Arcos then prepared Chemistry Report No. PDEA-DD012-067
dated 25 February 2012;
10. When the specimen subject of her examination was brought
to court, Arcos identified it to be the same sample she took;
and
11. Landicho positively identified it to be the one seized from
appellant.  (Emphasis supplied, citations omitted)
[56]

This Court is convinced that the apprehending officers have


complied with the requirements under Section 21. Based on the
records, there was an unbroken chain of custody of the seized
shabu from the time of its discovery up to its presentation in
court. The prosecution established that in the exclusion room,
Landicho continued inspecting the luggage before airport officers,
government agents, and accused-appellant herself. There were
even pictures showing that accused-appellant was present during
the field test, marking, and inventory of the seized items.

Contrary to accused-appellant's claim, Landicho properly marked


the seized shabu. Both the Court of Appeals and the trial court
found that the Inventory Report had confirmed that members of
the Customs Task Force, Anti-Narcotics Group, Fabroa, Barangay
Councilor Bajada, and Prosecutor Rillera witnessed the marking
and inventory proceedings.  The testimonies of Landicho, Special
[57]

Agent I Noble, and Agent Fajardo corroborated the contents of


the Inventory Report. Against all these, accused-appellant cannot
possibly claim the opposite.

Clearly, there were no lapses in the disposition and handling of


the seized shabu to even prompt the relaxation of the procedure
under Section 21. The prosecution complied with the standard in
handling the evidence and in establishing the chain of custody.
Indeed, it proved beyond reasonable doubt that accused-
appellant is guilty of illegally transporting 5,941.9 grams of shabu
as penalized under Section 5 of the Comprehensive Dangerous
Drugs Act.
WHEREFORE, the Appeal is DISMISSED. The Court of Appeals
July 29, 2016 Decision in CA-G.R. CR HC No. 07006
is AFFIRMED.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando,


and Carandang,  JJ., concur.
*

July 10, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 6, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 10, 2019 at 8:38 a.m.

 Designated additional Member per Special Order No. 2624 dated


*

November 28, 2018.

 Rollo, pp. 2-19. The Decision was penned by Associate Justice


[1]

Renato C. Francisco, and concurred in by Associate Justices


Apolinario D. Bruselas, Jr. and Danton Q. Bueser of the
Fourteenth Division, Court of Appeals, Manila.
[2]
 Id. at 3.

[3]
 CA rollo, p. 134.

[4]
 Id.

[5]
 Id. at 86, RTC Decision, and 134.

[6]
 Id.

[7]
 Id. at 134.

[8]
 Id. at 86.

[9]
 Id. at 135.

[10]
 Id. at 87 and 135.

[11]
 Id.

[12]
 Id. at 135.

[13]
 Id. at 88 and 135.

[14]
 Id. at 135-136.

 Id. at 88 and 136. Marquis reagent was misspelled as "marquee


[15]

reagent" in the RTC Decision.

[16]
 Id. at 88.

[17]
 Id. at 89-90 and 136.

[18]
 Cameroon was misspelled as "Cameroun" in the rollo.

[19]
 CA rollo, pp. 136-137.
 Id. at 85-106. The Decision was penned by Judge Racquelen
[20]

Abary-Vasquez of Branch 116, Regional Trial Court, Pasay City.

[21]
 Id. at 96.

[22]
 Id. at 95-105.

[23]
 Id. at 105-106.

[24]
 Id. at 55-84.

[25]
 Rollo, pp. 2-19.

[26]
 CA rollo, pp. 149-150.

[27]
 Id. at 140-141.

[28]
 Id. at 144-145.

[29]
 Id. at 147.

[30]
 Id. at 160-162.

[31]
 Rollo, pp. 25-26.

[32]
 Id. at 27-31.

[33]
 Id. at 32-38.

[34]
 Id. at 32-33.

[35]
 Id.

[36]
 Id. at 34.

[37]
 CA rollo, p. 124.

[38]
 Id. at 124-125.
 People v. Dimaano, 780 Phil. 586, 603 [Per J. Leonen, Second
[39]

Division] citing People v. Laba, 702 Phil. 301 (2013) [Per J.


Perlas-Bernabe, Second Division].

 Id. citing People v. Guzon, 719 Phil. 441 (2013) [Per J. Reyes,


[40]

First Division].

 People v. Asislo, 778 Phil. 509 (2016) [Per J. Peralta, Third


[41]

Division].

 People v. Watamama, 692 Phil. 102, 106 (2012) [Per J.


[42]

Villarama, Jr., First Division].

 People v. Mariacos, 635 Phil. 315 (2010) [Per J. Nachura,


[43]

Second Division].

 People v. Casacop, 755 Phil. 265, 276 (2015) [Per J. Leonen,


[44]

Second Division].

 People v. Guzon, 719 Phil. 441 (2013) [Per J. Reyes, First


[45]

Division].

 People v. Ismael, 806 Phil. 21, 29 (2017) [Per J. Del Castillo,


[46]

First Division] citing Fajardo v. People, 691 Phil. 752 (2012) [Per


J. Perez, Second Division].

[47]
 Dangerous Drugs Board Regulation No. 1, (2002), sec. 1(b).

[48]
 576 Phil. 576 (2008) [Per J. Tinga, Second Division].

[49]
 Id. at 587-589.

[50]
 Rep. Act No. 9165 (2002), secs. 21(1), (2), and (3).

 People v. Que, G.R. No. 212994, January


[51]
31, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> [Per J.
Leonen, Third Division].

[52]
 639 Phil. 134 (2010) [Per J. Mendoza, Second Division].

[53]
 Id. at 144-145.

 People v. Que, G.R. No. 212994, January


[54]
31, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> [Per J.
Leonen, Third Division].

 People v. Del Mundo, 418 Phil. 740 (2001) [Per J. Ynares-


[55]

Santiago, First Division].

 CA rollo, pp. 148-149. In item no. 4, the Court of Appeals left


[56]

out Julie Fabroa, the airport's media representative, and


Barangay Councilor Mel Anthony Bajada.

[57]
 Id. at 148.

Source: Supreme Court E-Library | Date created: July 18, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 202430, March 06, 2019 ]


METRO BOTTLED WATER CORPORATION,
PETITIONER, VS. ANDRADA CONSTRUCTION &
DEVELOPMENT CORPORATION, INC.,
RESPONDENT.DECISION

LEONEN, J.:

Generally, judicial review of arbitral awards is permitted only on


very narrow grounds. Republic Act No. 876, or the Arbitration
Law, does not allow an arbitral award to be revisited without a
showing of specified conditions,  which must be proven
[1]

affirmatively by the party seeking its review. The Special Rules of


Court on Alternative Dispute Resolution,  implementing the
[2]

Alternative Dispute Resolution Act of 2004,  mandate that arbitral


[3]

awards will not be vacated "merely on the ground that the


arbitral tribunal committed errors of fact, or of law, or of fact and
law, as the court cannot substitute its judgment for that of the
arbitral tribunal."  Parties are even "precluded from filing an
[4]

appeal or a petition for certiorari questioning the merits of an


arbitral award." [5]

On the other hand, arbitral awards by the Construction Industry


Arbitration Commission may only be appealed on pure questions
of law,  though not all will justify an appeal. Consistent with the
[6]

strict standards for judicial review of arbitral awards, only those


appeals which involve egregious errors of law may be
entertained.

Given its technical expertise, the Construction Industry


Arbitration Commission is given a wide latitude of discretion so
that it may resolve all issues before it in a fair and expeditious
manner. Included within the bounds of its discretion are
situations where it resolves, on the basis of equity, to order a
party to compensate a contractor for any unpaid work done.

For this Court's resolution is a Petition for Review on


Certiorari  assailing the March 21, 2012 Decision  and June 25,
[7] [8]

2012 Resolution  of the Court of Appeals, which upheld the April
[9]
11, 2002 Arbitral Award  of the Construction Industry Arbitration
[10]

Commission. The arbitral tribunal had ordered Metro Bottled


Water Corporation (Metro Bottled Water) to pay Andrada
Construction & Development Corporation, Inc. (Andrada
Construction) the amount of P4,607,523.40 with legal interest
from November 24, 2000 as unpaid work accomplishment in the
construction of its manufacturing plant.

On April 28, 1995, Metro Bottled Water and Andrada Construction


entered into a Construction Agreement  for the construction of a
[11]

reinforced concrete manufacturing plant in Gateway Business


Park, General Trias, Cavite for the contract price of
P45,570,237.90. The Construction Agreement covered all
materials, labor, equipment, and tools, including any other works
required.  It provided:
[12]

8. Change Order
a. Without invalidating this Agreement, the OWNER may, at
any time, order additions, deletions or revisions in the Work
by means of a Change Order. The CONTRACTOR shall
determine whether the Change Order causes a decrease or
increase in the Purchase Price or shortening or extension of
the Contract Period. Within three (3) days from receipt of
the Change Order, CONTRACTOR shall give written notice to
the OWNER of the value of the works required under the
Change Order which will increase the Contract Price and of
the extension in the Contract Period necessary to complete
such works. On the other hand, if the Change Order involves
deletions of some works required in the original Contract
Documents, the value of the works deleted shall be
deducted from the Contract Price and the Contract Period
shortened accordingly.In either case, any addition or
reduction in the Contract Price or extension or shortening of
the Contract Period shall be mutually agreed in writing by
the OWNER and the CONTRACTOR prior to the execution of
the works covered by the Change Order. [13]

The project was to be completed within 150 calendar days or by


October 10, 1995, to be reckoned from Andrada Construction's
posting of a Performance Bond to answer for liquidated damages,
costs to complete the project, and third party claims. The
Performance Bond was issued by Intra Strata Assurance
Corporation (Intra Strata). [14]

On May 10, 1995, Metro Bottled Water extended the period of


completion to November 30, 1995 upon Andrada Construction's
request, due to the movement of one (1) bay of the plant
building, weather conditions, and change orders. [15]

On November 14, 1995, E.S. De Castro and Associates, Metro


Bottled Water's consultant for the project, recommended the
forfeiture of the Performance Bond to answer for the completion
and correction of the project, as well as liquidated damages for
delay. [16]

On May 2, 1996, Metro Bottled Water filed a claim against the


Performance Bond issued by Intra Strata.  Andrada Construction
[17]

opposed the claim for lack of legal and factual basis. [18]

On September 6, 1996, Andrada Construction wrote to Metro


Bottled Water contesting E.S. De Castro and Associates' Special
Report.  The works performed by Andrada Construction were
[19]

inspected by Metro Bottled Water and E.S. De Castro and


Associates. Punch lists were prepared to monitor Andrada
Construction's rectifications. [20]

Andrada Construction sent letters to Metro Bottled Water


requesting for payment of unpaid work accomplishments
amounting to P7,292,721.27.  Metro Bottled Water refused to
[21]

pay.[22]

On August 6, 2001, Andrada Construction filed a Request for


Arbitration  before the
[23]
Construction Industry Arbitration
Commission, alleging that Metro Bottled Water refused to pay its
unpaid work accomplishment amounting to P7,954,961.10, with
interest of P494,297.31. [24]
In its Answer,  Metro Bottled Water denied the allegations and
[25]

counterclaimed for cost to complete and correct the project in the


amount of P5,231,452.03 and liquidated damages in the amount
of P1,663,884.36, among others.

A preliminary conference was held. On February 16, 2002, the


arbitral tribunal conducted an ocular inspection of the
construction site. The parties subsequently filed their respective
Memoranda. [26]

In its April 24, 2002 Decision,  the Construction Industry


[27]

Arbitration Commission found that Andrada Construction was


entitled to unpaid work accomplishment in the amount of
P4,607,523.40, with legal interest from November 24, 2000. It,
however, denied Metro Bottled Water's counterclaims. [28]

According to the Construction Industry Arbitration Commission,


Andrada Construction was entitled to the claims from the change
orders since Metro Bottled Water did not strictly enforce its
procedures in approving Change Orders 1 to 38 and impliedly
approved Change Orders 39 to 109 by funding the payrolls and
materials. However, it deducted: (1) P648,773.63, as this was
already included in the claim for change orders; (2)
P2,474,647.28, as costs for completion; and (3) P2,756,804.75,
as corrective costs for the cracks on the concrete slabs in the
production plant building. [29]

The Construction Industry Arbitration Commission also found that


there was no delay in the completion since Metro Bottled Water
validly granted an extension until November 30, 1995. It denied
Metro Bottled Water's claim for corrective costs since any
advance made by Metro Bottled Water for labor and materials
was charged against Andrada Construction's 10%
retention  money.
[30] [31]

The Construction Industry Arbitration Commission also clarified


that there were no valid factual and legal grounds for Metro
Bottled Water's termination of agreement. This was because
Andrada Construction completed the project within the extended
period, and Metro Bottled Water failed to substantiate its
allegation of payroll padding. The arbitral tribunal concluded that
Metro Bottled Water could not have taken over the project from
November 15, 1995, since there was no notice of termination and
Andrada Construction remained in full control of the original
contract and change orders during the extended period.  The [32]

Arbitral Award read:


WHEREFORE, premises considered we hold that:

A
Claimant's claims
.

Unpaid work accomplishment - P4,607,523.40

Interest on the unpaid work - 6% per annum on


Accomplishment P4,607,523.40 reckoned from
November 24, 2000 date of
receipt of the letter dated
October 24, 2000 by Respondent
and 12% per annum from the
time the judgment becomes final
and executory until the entire
sum including interest is fully
paid.

B
Respondent's Counterclaims
.

Cost to complete and correct the


- none
projects
Liquidated damages - none

All other claims and counterclaims are dismissed for lack of merit.

The costs of arbitration shall be shared equally by the parties.

Accordingly, judgment is hereby rendered ordering Metro Bottled


Water Corporation to pay Andrada Construction and Development
Inc. the amount of P4,607,523.40 with interest at 6% per annum
reckoned from November 24, 2000 date of receipt of the letter
dated October 24, 2000 by Respondent and 12% per annum from
the time this judgment becomes final and executory until the
entire sum including interest is fully paid.

SO ORDERED, April 11, 2002. [33]

Metro Bottled Water filed before the Court of Appeals a Petition


for Review  assailing the Arbitral Award.
[34]

In its March 21, 2012 Decision,  the Court of Appeals dismissed


[35]

the Petition for lack of merit  and upheld the factual findings of
[36]

the Construction Industry Arbitration Commission.  It agreed


[37]

with the arbitral tribunal's evaluation that Metro Bottled Water


confirmed the completed works, and thus, Andrada Construction
was entitled to compensation. To deny the payment would be to
permit unjust enrichment at Andrada Construction's expense. [38]

The Court of Appeals found no error in the entitlement of legal


interest since demand could be reasonably established from
Andrada Construction's October 24, 2000 Letter, which stated
that payment was being requested as a formal claim.  It held [39]

that it could not pass upon Metro Bottled Water's allegation that
the claims were barred by laches since it was not among the
issues for resolution in the parties' Terms of Reference. [40]

Metro Bottled Water filed a Motion for Reconsideration, but it was


denied by the Court of Appeals in its June 25, 2012 Resolution.
 Hence, this Petition  was filed.
[41] [42]

Petitioner argues that the Court of Appeals erred in applying the


principle of unjust enrichment, considering that Article 1724 of
the Civil Code  provides the requisites for the recovery of the
[43]

costs of additional work. It contends that Article 1724 requires


both the written authority of the owner allowing the changes and
a written agreement by the parties as to the increase in costs,
neither of which were present in this case.  Even the[44]

Construction Agreement, it asserts, requires a written order to


the contractor signed by the owner, authorizing work changes or
adjustments on the contract price or contract period—to which
respondent did not comply. [45]

Petitioner explains that there was no evidence to conclude that it


did not observe the contractual provisions on Change Order Nos.
1 to 38 since respondent admitted that Change Order Nos. 1 to
38 were submitted to petitioner for approval. At any rate, it
argues, the Construction Agreement provides that any non-
enforcement under the contract cannot be construed as a waiver
of its rights. Hence, its non-enforcement of the contractual
provisions on Change Order Nos. 1 to 38 should not be construed
as a waiver of its rights to enforce the contractual provisions on
Change Order Nos. 39 to 109. [46]

Petitioner asserts that it was entitled to the payment of liquidated


damages since respondent was unable to complete the project
within the contract period. Respondent had no valid reasons to
extend the contract period or execute change orders. It points
out that its October 11, 1995 Letter did not grant a time
extension, but merely provided a new schedule of completion;
hence, respondent's completion of the project nine (9) days after
the contract period constituted delay. [47]

Petitioner submits that the Court of Appeals and the Construction


Industry Arbitration Commission erred in not finding that there
were no factual and legal grounds for terminating the
Construction Agreement and petitioner taking over the project. It
argues that respondent not only failed to complete the project on
time, but also engaged in payroll padding, as proven by
documentary evidence. It points out that it needed no notice to
take over the project if, upon notice of default, respondent could
not complete it within 10 days, per the Construction Agreement.
 Thus, petitioner, on November 15, 1995, assumed the payment
[48]

of labor and supervision of manpower, as proven by its


consultant's testimony and the Progress Reports submitted during
the period.[49]
Respondent counters that petitioner assails the competence of
the Construction Industry Arbitration Commission on its findings
of fact. This, it points outs, is not among the grounds for which
petitioner may appeal the arbitral award. It argues that petitioner
agreed to be bound by arbitration proceedings in an
administrative agency "vested with special powers to determine
issues in construction contracts, agreements[,] and projects."  It [50]

maintains that this Court may only entertain questions of law and
that the arbitral tribunal's factual findings are "regarded with full
respect, if not finality."[51]

Respondent contends that E.S. De Castro and Associates'


engineers and architects gave instructions on change orders that
would later be endorsed to petitioner for approval.  For Change
[52]

Order Nos. 1 to 109, the practice was that respondent would


receive "[a]dvise, directive or instruction and orders"  from E.S.
[53]

De Castro and Associates, after which respondent would draft a


written quotation or proposal to be reviewed and evaluated by
E.S. De Castro and Associates and endorsed to petitioner for
approval. Thus, respondent proceeded with the changes advised
and directed by E.S. De Castro and Associates, without need of
petitioner's written authority. [54]

Respondent further argues that petitioner was not entitled to


liquidated damages considering its requested extension was
thoroughly reviewed by E.S. De Castro and Associates, which
later approved it.  Since there was no delay, it asserts, petitioner
[55]

would have no valid reason to terminate the Construction


Agreement.  It argues that the Construction Industry Arbitration
[56]

Commission and the Court of Appeals correctly found that


petitioner did not take over the project from November 15, 1995
since no evidence presented proved this allegation.  Further, it
[57]

raises the presence of a "domino effect"  in that the contract


[58]

period was validly extended; hence, there could be no delay.


Without delay, there could be no reason for the award of
damages, termination of contract, or take-over of the project. [59]
Respondent submits that there was no error in the application of
unjust enrichment considering that petitioner "has already reaped
enormous benefits out of the use of the construction project" and
has "continued to profit [from the] unhampered commercial
operations of the plant[.]"  It asserts that equity and law are
[60]

"applied distinctly based on the antecedents of each case" and


that the factual circumstances of this case necessarily require the
application of equity rather than "strict legalism or form."
[61]

In rebuttal, petitioner argues that it indeed raised questions of


law when it questioned respondent's entitlement to recover its
claims despite its admission that there was no written approval
by petitioner, as required by the Construction Agreement and the
Civil Code.  It also points out that while the arbitral tribunal's
[62]

factual findings are entitled to great respect, they may still be


reviewed by the Court of Appeals and this Court when there is a
conflict in the application of law, jurisprudence, or the contract
between the parties.  It reiterates its arguments in the
[63]

Petition  and asserts that respondent "erroneously raised


[64]

arguments on equity"  when the provisions of law are clear.


[65] [66]

The main issue raised before this Court is whether or not the
Construction Industry Arbitration Commission and the Court of
Appeals erred in finding that petitioner Metro Bottled Water
Corporation was liable to respondent Andrada Consumption &
Development Corporation, Inc. for unpaid work accomplishment.

To resolve this issue, this Court must pass upon the issue of
whether the Court of Appeals erred in affirming the arbitral
tribunal's findings that: (1) petitioner agreed to the Change
Orders; (2) respondent did not commit delay in the project
completion; and (3) petitioner did not terminate the contract or
take over the project. However, considering the limited scope of
review of arbitral awards by the Construction Industry Arbitration
Commission, this Court must first determine whether petitioner
raises questions of law.

I
The Construction Industry Arbitration Commission was created by
Executive Order No. 1008,  or the Construction Industry
[67]

Arbitration Law, to have "original and exclusive jurisdiction over


disputes arising from, or connected with, contracts entered into
by parties involved in construction in the Philippines, whether the
dispute arises before or after the completion of the contract, or
after the abandonment or breach thereof."  The extent of its
[68]

jurisdiction is clearly provided for in the law:


The jurisdiction of the CIAC may include but is not limited to
violation of specifications for materials and workmanship;
violation of the terms of agreement; interpretation and/or
application of contractual time and delays; maintenance and
defects; payment, default of employer or contractor and changes
in contract cost.

Excluded from the coverage of this law are disputes arising from
employer-employee relationships which shall continue to be
covered by the Labor Code of the Philippines. [69]

Considering that the law covers a specific field of industry and the
arbitral tribunal's jurisdiction is well defined, several provisions of
the law emphasize the technical nature of the proceedings before
it, and provide for the particular expertise required of the
arbitrators:
SECTION 14. Arbitrators. — A sole arbitrator or three arbitrators
may settle a dispute.

....

Arbitrators shall be men of distinction in whom the business


sector and the government can have confidence. They shall not
be permanently employed with the CIAC. Instead, they shall
render services only when called to arbitrate. For each dispute
they settle, they shall be given fees. [70]

The Revised Rules of Procedure Governing Construction


Arbitration provides more stringent qualifications for arbitrators
and enumerate specific professions that they may hold, such as
"engineers, architects, construction managers, engineering
consultants, and businessmen familiar with the construction
industry":[71]

SECTION 8.1 General qualification of Arbitrators. — The


Arbitrators shall be men of distinction in whom the business
sector and the government can have confidence. They shall be
technically qualified to resolve any construction dispute
expeditiously and equitably. The Arbitrators shall come from
different professions. They may include engineers, architects,
construction managers, engineering consultants, and
businessmen familiar with the construction industry and lawyers
who are experienced in construction disputes.
The Construction Industry Arbitration Law even allows the
appointment of experts if requested by the parties or by the
arbitral tribunal:
SECTION 15. Appointment of Experts. — The services of technical
or legal experts may be utilized in the settlement of disputes if
requested by any of the parties or by the Arbitral Tribunal. If the
request for an expert is done by either or by both of the parties,
it is necessary that the appointment of the expert be confirmed
by the Arbitral Tribunal.

Whenever the parties request for the services of an expert, they


shall equally shoulder the expert's fees and expenses, half of
which shall be deposited with the Secretariat before the expert
renders service. When only one party makes the request, it shall
deposit the whole amount required. [72]

Likewise, the law mandates that any resort to arbitration must be


voluntary.[73]

Under the Revised Rules, a party's refusal to submit to arbitration


may result in the dismissal of the complaint without prejudice to
its refiling:
Respondent's refusal to Answer the Complaint or the filing of a
Motion to Dismiss for lack of jurisdiction shall be deemed a
refusal to submit to arbitration. In either case, the Commission
(CIAC) shall dismiss the Complaint without prejudice to its refiling
upon a subsequent submission.  (Citation omitted)
[74]
Due to the highly technical nature of proceedings before the
Construction Industry Arbitration Commission, as well as its
emphasis on the parties' willingness to submit to the proceedings,
the Construction Industry Arbitration Law provides for a narrow
ground by which the arbitral award can be questioned in a higher
tribunal. Section 19 states:
SECTION 19. Finality of Awards. — The arbitral award shall be
binding upon the parties. It shall be final and inappealable except
on questions of law which shall be appealable to the Supreme
Court.
The Construction Industry Arbitration Commission has since been
categorized as a quasi-judicial agency in Metro Construction, Inc.
v. Chatham Properties, Inc.:[75]

[The Construction Industry Arbitration Commission] is a quasi-


judicial agency. A quasi-judicial agency or body has been defined
as an organ of government other than a court and other than a
legislature, which affects the rights of private parties through
either adjudication or rule-making. The very definition of an
administrative agency includes its being vested with quasi-judicial
powers. The ever increasing variety of powers and functions
given to administrative agencies recognizes the need for the
active intervention of administrative agencies in matters calling
for technical knowledge and speed in countless controversies
which cannot possibly be handled by regular courts. The CIAC's
primary function is that of a quasi-judicial agency, which is to
adjudicate claims and/or determine rights in accordance with
procedures set forth in E.O. No. 1008.[76]

To standardize appeals from quasi-judicial agencies, Rule 43 of


the 1997 Rules of Civil Procedure provides that appeals "may be
taken to the Court of Appeals within the period and in the manner
herein provided, whether the appeal involves questions of fact, of
law, or mixed questions of fact and law."  The Construction
[77]

Industry Arbitration Commission is among the quasi-judicial


agencies explicitly listed in the rule.

While there is uniformity between appeals of the different quasi-


judicial agencies, Rule 43 does not automatically apply to all
appeals of arbitral awards. Fruehauf Electronics Philippines
Corporation v. Technology Electronics Assembly and Management
Pacific Corporation  has since distinguished between commercial
[78]

arbitration, construction arbitration, and voluntary arbitration


under Article 219(n) of the Labor Code.  Fruehauf Electronics
[79]

Philippines Corporation declared that commercial arbitration


tribunals are not quasi-judicial agencies, but "purely ad
hoc bodies operating through contractual consent and as they
intend to serve private, proprietary interests."  A commercial
[80]

arbitration tribunal is a "creature of contract"  that


[81]

becomes functus officio once the arbitral award attains finality. [82]

However, the jurisdiction of construction arbitration tribunals and


voluntary arbitrators is vested by statute. This jurisdiction exists
independently of the will of the contracting parties due to the
public interest inherent in their respective spheres,  thus:
[83]

Voluntary Arbitrators resolve labor disputes and grievances


arising from the interpretation of Collective Bargaining
Agreements. These disputes were specifically excluded from the
coverage of both the Arbitration Law and the ADR Law.

Unlike purely commercial relationships, the relationship between


capital and labor [is] heavily impressed with public interest.
Because of this, Voluntary Arbitrators authorized to resolve labor
disputes have been clothed with quasi-judicial authority.

On the other hand, commercial relationships covered by our


commercial arbitration laws are purely private and contractual in
nature. Unlike labor relationships, they do not possess the same
competing state interest that would justify state interference into
the autonomy of contracts. Hence, commercial arbitration is a
purely private system of adjudication facilitated by private
citizens instead of government instrumentalities wielding quasi-
judicial powers.

Moreover, judicial or quasi-judicial jurisdiction cannot be


conferred upon a tribunal by the parties alone. The Labor Code
itself confers subject-matter jurisdiction to Voluntary Arbitrators.
Notably, the other arbitration body listed in Rule 43 — the
Construction Industry Arbitration Commission (CIAC) — is also a
government agency attached to the Department of Trade and
Industry. Its jurisdiction is likewise conferred by statute. By
contrast, the subject-matter jurisdiction of commercial arbitrators
is stipulated by the parties.  (Citation omitted)
[84]

In CE Construction v. Araneta Center,  however, this Court


[85]

emphasized that Rule 43 must be read together with the


Construction Industry Arbitration Law, which provides that
appeals of arbitral awards must only raise questions of law. Thus,
even if Rule 43 now provides that appeals may be brought before
the Court of Appeals, these appeals must still be confined to
questions of law:
This is not to say that factual findings of CIAC arbitral tribunals
may now be assailed before the Court of Appeals. Section 3's
statement "whether the appeal involves questions of fact, of law,
or mixed questions of fact and law" merely recognizes variances
in the disparate modes of appeal that Rule 43 standardizes: there
were those that enabled questions of fact; there were those that
enabled questions of law, and there were those that enabled
mixed questions [of] fact and law. Rule 43 emphasizes that
though there may have been variances, all appeals under its
scope are to be brought before the Court of Appeals. However, in
keeping with the Construction Industry Arbitration Law, any
appeal from CIAC arbitral tribunals must remain limited to
questions of law.  (Emphasis supplied)
[86]

The rationale for this limitation has already been thoroughly


explained in Hi-Precision Steel Center, Inc. v. Lim Kim Steel
Builders, Inc.:
[87]

Section 19 [of Executive Order No. 1008] makes it crystal clear


that questions of fact cannot be raised in proceedings before the
Supreme Court — which is not a trier of facts — in respect of an
arbitral award rendered under the aegis of the CIAC.
Consideration of the animating purpose of voluntary arbitration in
general, and arbitration under the aegis of the CIAC in particular,
requires us to apply rigorously the above principle embodied in
Section 19 that the Arbitral Tribunal's findings of fact shall be
final and unappealable.
Voluntary arbitration involves the reference of a dispute to an
impartial body, the members of which are chosen by the parties
themselves, which parties freely consent in advance to abide by
the arbitral award issued after proceedings where both parties
had the opportunity to be heard. The basic objective is to provide
a speedy and inexpensive method of settling disputes by allowing
the parties to avoid the formalities, delay, expense and
aggravation which commonly accompany ordinary litigation,
especially litigation which goes through the entire hierarchy of
courts. Executive Order No. 1008 created an arbitration facility to
which the construction industry in the Philippines can have
recourse. The Executive Order was enacted to encourage the
early and expeditious settlement of disputes in the construction
industry, a public policy the implementation of which is necessary
and important for the realization of national development goals. [88]

CE Construction further provides that even exceptions that may


be allowed in the review of Rule 45 petitions,  such as the lower
[89]

court's misapprehension of facts or a conflict in the factual


findings, will not apply to reviews of the arbitral tribunal's
decisions. Hi-Precision Steel Center, Inc. sufficiently explains the
rationale of why courts are duty bound to uphold the factual
findings of the tribunal:
Aware of the objective of voluntary arbitration in the labor field,
in the construction industry, and in any other area for that
matter, the Court will not assist one or the other or even both
parties in any effort to subvert or defeat that objective for their
private purposes. The Court will not review the factual findings of
an arbitral tribunal upon the artful allegation that such body had
"misapprehended the facts" and will not pass upon issues which
are, at bottom, issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties here had recourse
to arbitration and chose the arbitrators themselves; they must
have had confidence in such arbitrators. The Court will not,
therefore, permit the parties to relitigate before it the issues of
facts previously presented and argued before the Arbitral
Tribunal, save only where a very clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal committed
an error so egregious and hurtful to one party as to constitute a
grave abuse of discretion resulting in lack or loss of jurisdiction.
Prototypical examples would be factual conclusions of the
Tribunal which resulted in deprivation of one or the other party of
a fair opportunity to present its position before the Arbitral
Tribunal, and an award obtained through fraud or the corruption
of arbitrators. Any other, more relaxed, rule would result in
setting at naught the basic objective of a voluntary arbitration
and would reduce arbitration to a largely inutile institution.
[90]

Thus, the general rule is that appeals of arbitral awards by the


Construction Industry Arbitration Commission may only be
allowed on pure questions of law. Even the Construction Industry
Arbitration Law does not provide for any instance when an
arbitral award may be vacated. Spouses David v. Construction
Industry and Arbitration Commission  recognized this gap, and
[91]

thus, applied the provisions of Republic Act No. 876, or the


Arbitration Law:[92]

[F]actual findings of construction arbitrators are final and


conclusive and not reviewable by this Court on appeal, except
when the petitioner proves affirmatively that: (1) the award was
procured by corruption, fraud or other undue means; (2) there
was evident partiality or corruption of the arbitrators or of any of
them; (3) the arbitrators were guilty of misconduct in refusing to
postpone the hearing upon sufficient cause shown, or in refusing
to hear evidence pertinent and material to the controversy; (4)
one or more of the arbitrators were disqualified to act as such
under section nine of Republic Act No. 876 and willfully refrained
from disclosing such disqualifications or of any other misbehavior
by which the rights of any party have been materially prejudiced;
or (5) the arbitrators exceeded their powers, or so imperfectly
executed them, that a mutual, final and definite award upon the
subject matter submitted to them was not made. [93]

Notably, these exceptions refer to the conduct of the arbitral


tribunal and the qualifications of the arbitrator.  They do not
[94]

refer to the arbitral tribunal's errors of fact and law,


misappreciation of evidence, or conflicting findings of fact.
Hence, CE Construction, in recognizing the nature of these
exceptions, held that questions of law may be allowed "only in
instances when the integrity of the arbitral tribunal itself has been
put in jeopardy."  This Court further mandated that "factual
[95]

findings may be reviewed only in cases where the CIAC arbitral


tribunals conducted their affairs in a haphazard, immodest
manner that the most basic integrity of the arbitral process was
imperiled."[96]

Thus, parties seeking to appeal an arbitral award of a


construction tribunal must raise an egregious error of law to
warrant the exercise of this Court's appellate jurisdiction. Absent
any allegation and proof of these exceptions, the factual findings
of the Construction Industry Arbitration Commission will be
treated by the courts with great respect and even finality.

II

Petitioner raised issues that are questions of fact in the guise of


questions of law. As such, they are not proper for this Court's
review.

The difference between a question of law and a question of fact is


settled. In Spouses David:
There is a question of law when the doubt or difference in a given
case arises as to what the law is on a certain set of facts, and
there is a question of fact when the doubt arises as to the truth
or falsity of the alleged facts. Thus, for a question to be one of
law, it must not involve an examination of the probative value of
the evidence presented by the parties and there must be no
doubt as to the veracity or falsehood of the facts alleged.[97]

Petitioner alleges that it is not liable to respondent for the costs


incurred in Change Order Nos. 39 to 109 since the Construction
Agreement clearly required a written agreement by both parties
of the change orders, which petitioner alleges it did not provide.
At first glance, petitioner appears to be raising a question of
law, i.e., whether respondent complied with the provisions of the
Construction Agreement as to be entitled to compensation, which,
in turn, would require the proper interpretation of the contract
between the parties. This would be a question of law since it
requires the courts to determine the parties' rights under the
contract. The Construction Agreement provided:
8. Change Order
a. Without invalidating this Agreement, the OWNER may, at
any time, order additions, deletions or revisions in the Work
by means of a Change Order. The CONTRACTOR shall
determine whether the Change Order causes a decrease or
increase in the Purchase Price or shortening or extension of
the Contract Period. Within three (3) days from receipt of
the Change Order, CONTRACTOR shall give written notice to
the OWNER of the value of the works required under the
Change Order which will increase the Contract Price and of
the extension in the Contract Period necessary to complete
such works. On the other hand, if the Change Order involves
deletions of some works required in the original Contract
Documents, the value of the works deleted shall be
deducted from the Contract Price and the Contract Period
shortened accordingly.In either case, any addition or
reduction in the Contract Price or extension or shortening of
the Contract Period shall be mutually agreed in writing by
the OWNER and the CONTRACTOR prior to the execution of
the works covered by the Change Order. [98]

To resolve this issue, however, this Court would have to accept


the factual premise alleged by petitioner: that Change Order Nos.
39 to 109 were not authorized by petitioner. This runs counter to
the factual finding established by the Construction Industry
Arbitration Commission that petitioner did indeed agree to the
change orders, thus:
We are not convinced by Respondent's argument that Claimant is
not entitled to its claim for change orders for not following the
procedure prescribed by the contract for change orders because it
did not strictly enforce the same procedure in approving Change
Order 1-38 and impliedly allowed Change Orders 39-109 by
funding the payrolls and some materials. . . . Claimant was able
to present sketches plans and cost estimates and receipts
supporting them (sic). . . . Upon the other hand respondent was
not able to produce contrary evidence that they were not
additional and extra works to the original plans and specifications
or that they spent for them. [99]

Petitioner further argues that even if it waived its right to strictly


enforce the provisions of the Construction Agreement on Change
Order Nos. 1 to 38, it should not have been considered to have
waived the same right with regard to Change Order Nos. 38 to
109, citing Item No. 14 of the Construction Agreement:
14. Waiver

Any forebearance or extension that the OWNER may grant to the


CONTRACTOR or any non-exercise or non-enforcement by the
OWNER of its rights or remedies under this Agreement shall not
in any manner be construed as a waiver of such right or remedies
of the OWNER. [100]

Again, at first glance, this appears to be a legal issue, since it


requires a recognition of whether the waiver of petitioner's rights
in Change Order Nos. 1 to 38 carried with it a waiver of its rights
in Change Order Nos. 39 to 109. However, to fully discuss the
extent of the waiver under the contract, this Court would be
required to accept the factual premise that petitioner did
not waive its rights with regard to Change Order Nos. 39 to 109.
This clearly runs counter to the factual finding of the Construction
Industry Arbitration Commission that petitioner did waive its right
to strictly enforce the provisions of the contract with regard to
Change Order Nos. 39 to 109. Even the Court of Appeals was
inclined to affirm the arbitral tribunal's finding on this matter,
summarizing the latter's findings as follows:
1. Change Order Nos. 39 to 64 — Within the period from October
30 to November 30, 1995, respondent was still working on the
project. During this period petitioner provided respondent
financial assistance by paying the payroll. This financial
assistance was deducted from the billing of respondent;

2. Change Order Nos. 65 to 86 — petitioner confirms that the


work is "completed and can be seen at site", and it was not able
to disprove the claim. The respondent is therefore entitled to its
claim.
3. Change Order Nos. 87 to 89 — it was verified during the ocular
inspection that they had been completed. Petitioner was not able
to disprove the claim. Respondent is therefore entitled to its
claim.

4. Change Order No. 90 — petitioner confirms that the work is


"completed and can be seen at site", and it was not able to
disprove the claim. The respondent is therefore entitled to its
claim.

5. Change Order No. 91 — it was verified during the ocular


inspection that they had been completed. Petitioner was not able
to disprove the claims. Respondent is therefore entitled to its
claim.

6. Change Order No. 92 — was inspected during the ocular


inspection and found to have been completed. Petitioner was not
able to disprove the claim. Respondent is therefore entitled to its
claim.

7. Change Order Nos. 93 to 99 — it was verified during the ocular


inspection that they had been completed. Petitioner was not able
to disprove the claim. Respondent is therefore entitled to its
claim.

8. Change Order Nos. 100 to 101 — petitioner confirms that the


work is "completed and can be seen at site", and it was not able
to disprove the claim. The respondent is therefore entitled to its
claim.

9. Change Order Nos. 102 to 104 — it was verified during the


ocular inspection that they had been completed. Petitioner was
not able to disprove the claim. Respondent is therefore entitled to
it[s] claim.

10. Change Order Nos. 105 to 106 — petitioner confirms that the
work is "completed and can be seen at site", and it was not able
to disprove the claim. The respondent is therefore entitled to its
claim.

11. Change Order No. 107 — it was verified during the ocular
inspection that they had been completed. Petitioner was not able
to disprove the claim. Respondent is therefore entitled to its
claim.

12. Change Order Nos. 108 to 109 — petitioner confirms that the
work is "completed and can be seen at site", and it was not able
to disprove the claim. The respondent is therefore entitled to its
claim.[101]

Petitioner further argues that the Court of Appeals erred in not


finding that it was entitled to liquidated damages since
respondent allegedly committed delay in completing the project.

Liquidated damages  may be awarded if the contract provides


[102]

for a monetary compensation in case of breach. The contractor


must agree to pay the owner in case there is delay.  Thus, this
[103]

provision must be embodied in the contract. A perusal of the


Construction Agreement, however, shows that no such stipulation
was provided. In case of default, the contract provided:
10. / Termination

The OWNER shall have the right to terminate this Agreement,


without prejudice to any other remedies it may have, in case the
CONTRACTOR defaults in the performance of any of its
obligations herein and fails to remedy such default within ten (10)
days from receipt of written notice of default given by the
OWNER.

Upon such termination, the OWNER shall have the right to


exclude the CONTRACTOR from the Work Site, take possession of
what has so far been completed and all materials, equipment and
tools at the Work Site, and finish the Work in whatever manner
the OWNER deems expedient including the engagement of
another contractor. The CONTRACTOR shall lose its right to be
paid the unpaid balance of the Contract Price and if the costs and
expenses for completing the works and enforcing OWNER'S
aforementioned right exceed the unpaid balance of the Purchase
Price, the CONTRACTOR shall pay the OWNER the difference upon
the written demand of the OWNER. [104]

Under the contract, respondent must first be found ki default,


after which it was only required to pay if the enforcement of
petitioner's rights exceeded the unpaid balance of the purchase
price. No specific provision holds respondent liable for liquidated
damages in case of delay.

Even assuming that liquidated damages could be awarded in case


of delay, petitioner's right to receive liquidated damages must
first be anchored on a factual finding that respondent incurred
delay. This, again, is a question of fact since it requires a review
of the findings of the Construction Industry Arbitration
Commission. The arbitral tribunal, however, found that there was
no delay in the completion of the project:
There was no failure on the part of Claimant to complete the
project within the contractual period because Respondent
extended the period up to November 30, 1995 on valid grounds
which are the (1) change orders (Change Order Nos. 1-109) (2)
error in the building set back (Exh. II, Annex A) and rainy
weather condition (Exh. M39C-1). The value of Change Order
Nos. 39-109 (Evaluation of Change Orders by Tribunal) of
P4,607,523.40 would justify the extension of the contract to even
beyond November 30, 1995 while the error in the building set
back and rainy weather would require an extension of more than
twenty five days. And Claimant completed the original contract
and the change orders within the extension period. [105]

Even the arbitral tribunal could not be swayed by petitioner's


argument that it did not grant an "extension" but merely provided
for a "new schedule of completion":
The attempt by Respondent [petitioner here] to distinguish
between a "time extension" and "new schedule of completion" in
order to consider the letter of ESCA dated October 10, 1995 as
not a notice of extension does not convince the tribunal because
the two phrases have the same meaning and effect of extending
the period of work from the original or prior period of work in
order to complete the construction. [106]

This Court cannot pass upon petitioner's arguments that it


terminated the Construction Agreement and took over the project
on November 15, 1995. These are questions of fact already
resolved by the arbitral tribunal. It found that since no notice of
termination was served on respondent, there was no contract
termination.  Consequently, there was no takeover. Any costs
[107]

for labor and materials advanced to respondent during the


extension period were actually deducted by petitioner from
respondent's 10% retention. Thus, no new costs for the alleged
project takeover were actually incurred. [108]

The arbitral tribunal arrived at these findings after an ocular


inspection of the construction site conducted by proven experts in
the field. Any review by this Court of their findings would require
conducting its own ocular inspection, hiring its own experts in the
construction industry to provide amicus briefs, and attempting to
provide its own interpretations of the findings of a highly
technical agency. Review of these factual findings, therefore,
requires no less than proof that the integrity of the arbitral
tribunal has been compromised.

Petitioner has neither alleged that the arbitral tribunal arrived at


its findings "in a haphazard, immodest manner"  nor questioned
[109]

the integrity of the arbitrators. Absent any proof to the contrary,


this Court will not disturb its factual findings.

III

The Construction Industry Arbitration Commission may employ


aids in interpretation when there is ambiguity in the contractual
provisions, or when there is no written instrument that can define
what was agreed upon by the parties.  Otherwise, it need not do
[110]

so when the provisions of the contract on the matter in dispute


are already provided.
Petitioner submits that the Construction Industry Arbitration
Commission and the Court of Appeals erred in applying the
equitable principle of unjust enrichment, since applying Article
1724 of the Civil Code was more appropriate under the
circumstances. Article 1724 provides:
Article 1724. The contractor who undertakes to build a structure
or any other work for a stipulated price, in conformity with plans
and specifications agreed upon with the land-owner, can neither
withdraw from the contract nor demand an increase in the price
on account of the higher cost of labor or materials, save when
there has been a change in the plans and specifications,
provided:

(1) Such change has been authorized by the proprietor in writing;


and

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


determined in writing by both parties.
Petitioner contends that the arbitral tribunal should first apply
Article 1724 when resolving the issue of whether respondent
should be compensated for costs incurred in Change Order Nos.
39 to 109.

Petitioner, however, fails to recognize that there was no need to


apply Article 1724, since salient points of the provision had
already been embodied in the Construction Agreement, which
provided:
8. Change Order
a. Without invalidating this Agreement, the OWNER may, at
any time, order additions, deletions or revisions in the Work
by means of a Change Order. The CONTRACTOR shall
determine whether the Change Order causes a decrease or
increase in the Purchase Price or shortening or extension of
the Contract Period. Within three (3) days from receipt of
the Change Order, CONTRACTOR shall give written notice to
the OWNER of the value of the works required under the
Change Order which will increase the Contract Price and of
the extension in the Contract Period necessary to complete
such works. On the other hand, if the Change Order involves
deletions of some works required in the original Contract
Documents, the value of the works deleted shall be
deducted from the Contract Price and the Contract Period
shortened accordingly.
In either case, any addition or reduction in the Contract Price or
extension or shortening of the Contract Period shall be mutually
agreed in writing by the OWNER and the CONTRACTOR prior to
the execution of the works covered by the Change Order. [111]

It is settled that the contract is the law between the parties.


 Without any ambiguity in Item No. 8 of the Construction
[112]

Agreement, there was no need to resort to other aids in


interpretation, such as Article 1724 of the Civil Code, to resolve
the issue.

As previously discussed, petitioner was found to have waived its


right to strictly enforce the provisions of Item No. 8 of the
Construction Agreement, when respondent undertook Change
Order Nos. 39 to 109. Petitioner should now reckon with the
consequences of that waiver.

The Construction Industry Arbitration Commission, however,


cannot be faulted for applying the equitable principle of unjust
enrichment in determining petitioner's liability to respondent.

CE Construction  discusses two (2) main principles that guide


[113]

the Construction Industry Arbitration Commission in


accomplishing its tasks. First is the basic principle of fairness. The
second is that of "effective dispute resolution or the overarching
principle of arbitration as a mechanism relieved of the
encumbrances of litigation."  Section 1.1 of the Revised Rules of
[114]

Procedure Governing Construction Arbitration provides foremost:


SECTION 1.1 Statement of Policy and Objectives. — It is the
policy and objective of these Rules to provide a fair and
expeditious resolution of construction disputes as an alternative
to judicial proceedings, which may restore the disrupted
harmonious and friendly relationships between or among the
parties.
Here, services were rendered for which compensation was
demanded. The contract between the parties, however,
inadequately provides for the mechanism by which compensation
may be due. The fair and expeditious resolution of the issue
requires the arbitral tribunal to instead apply equitable principles
to arrive at a just conclusion. In CE Construction: [115]

Jurisprudence has settled that even in cases where parties enter


into contracts which do not strictly conform to standard
formalities or to the typifying provisions of nominate contracts,
when one renders services to another, the latter must
compensate the former for the reasonable value of the services
rendered. This amount shall be fixed by a court. This is a matter
so basic, this Court has once characterized it as one that "springs
from the fountain of good conscience":
As early as 1903, in Perez v. Pomar, this Court ruled that where
one has rendered services to another, and these services are
accepted by the latter, in the absence of proof that the service
was rendered gratuitously, it is but just that he should pay a
reasonable remuneration therefore because "it is a well-known
principle of law, that no one should be permitted to enrich himself
to the damage of another." Similarly in 1914, this Court declared
that in this jurisdiction, even in the absence of statute, ". . .
under the general principle that one person may not enrich
himself at the expense of another, a judgment creditor would not
be permitted to retain the purchase price of land sold as the
property of the judgment debtor after it has been made to appear
that the judgment debtor had no title to the land and that the
purchaser had failed to secure title thereto . . ." The foregoing
equitable principle which springs from the fountain of good
conscience are applicable to the case at bar. [116]

Here, the arbitral tribunal computed the entire cost of Change


Order Nos. 1 to 109 at P5,242,697.76.  This includes that of
[117]

Change Order Nos. 1 to 38, which petitioner categorically


admitted were authorized changes. Upon subtracting the contract
price and other costs chargeable to respondent, the arbitral
tribunal found that there was still an unpaid amount of
P4,607,523.40,  resulting from the costs of the change orders,
[118]

which petitioner refuses to pay. There was, therefore, no error in


the arbitral tribunal's finding and the Court of Appeals' affirmation
that petitioner is still liable to respondent for that amount.

WHEREFORE, the Petition is DENIED. The March 21, 2012


Decision and June 25, 2012 Resolution of the Court of Appeals in
CA-G.R. SP No. 70562, as well as the April 24, 2002 Arbitral
Award of the Construction Industry Arbitration Commission in
CIAC Case No. 30-2001, are AFFIRMED. Petitioner Metro Bottled
Water Corporation is ordered to pay respondent Andrada
Construction & Development Corporation, Inc. the amount of
P4,607,523.40, with legal interest of twelve percent (12%) to be
computed from November 24, 2000 to June 30, 2013, and six
percent (6%) from July 1, 2013 until its full satisfaction. The total
amount payable shall also be subject to interest at the rate of six
percent (6%) per annum from the finality of this Decision until its
full satisfaction.
[119]

SO ORDERED.

Peralta, (Chairperson), Jardeleza,  Hernando,


*

and Carandang,  JJ., concur.


**

June 17, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 6, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on June 17, 2019 at 11:05 a.m.
 Designated additional Member per Raffle dated February 27,
*

2019.

 Designated additional Member per Special Order No. 2624 dated


**

November 28, 2018.

[1]
 Rep. Act No. 876 (1953), sec. 24 provides:

SECTION 24. Grounds for vacating award. — In any one of the


following cases, the court must make an order vacating the
award upon the petition of any party to the controversy when
such party proves affirmatively that in the arbitration
proceedings: 
 
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing
refusing to hear evidence pertinent and material to the controversy; that one or m
to act as such under section nine hereof, and wilfully refrained from disclosing s
misbehavior by which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, tha
upon the subject matter submitted to them was not made.

[2]
 A.M. No. 07-11 -08-SC (2009).

[3]
 Rep. Act No. 9285 (2004), ch. 7, sec. 41 provides:

SECTION 41. Vacation Award. — A party to a domestic arbitration


may question the arbitral award with the appropriate Regional
Trial Court in accordance with rules of procedure to be
promulgated by the Supreme Court only on those grounds
enumerated in Section 25 of Republic Act No. 876. Any other
ground raised against a domestic arbitral award shall be
disregarded by the regional trial court.

[4]
 SPECIAL ADR RULES, Rule 19.10.

[5]
 SPECIAL ADR RULES, Rule 19.7.

[6]
 Exec. Order No. 1008 (1985), sec. 19.

[7]
 Rollo, pp. 13-70.

 Id. at 73-88. The Decision, in CA-G.R. SP No. 70562, was


[8]

penned by Associate Justice Sesinando E. Villon, and concurred in


by Presiding Justice Andres B. Reyes, Jr. (now a member of this
Court) and Associate Justice Amy C. Lazaro-Javier (now a
member of this Court) of the First Division, Court of Appeals,
Manila.

 Id. at 91. The Resolution, in CA-G.R. SP No. 70562, was penned


[9]

by Associate Justice Sesinando E. Villon, and concurred in by


Presiding Justice Andres B. Reyes, Jr. (now a member of this
Court) and Associate Justice Amy C. Lazaro-Javier (now a
member of this Court) of the First Division, Court of Appeals,
Manila.

 Id. at 94-115. The Arbitral Award, in CIAC Case No. 30-2001,


[10]

was signed by Arbitrators Beda G. Fajardo, Wenfredo A. Firme,


and Rosauro S. Paderon of the Construction Industry Arbitration
Commission.

[11]
 Id. at 124-136.

[12]
 Id. at 94.

[13]
 Id. at 132.

[14]
 Id. at 74.
[15]
 Id. at 94-95.

[16]
 Id. at 137-138.

[17]
 Id. at 150.

[18]
 Id. at 95.

[19]
 Id. at 163.

[20]
 Id. at 95.

[21]
 Id. at 228-240.

[22]
 Id. at 95.

[23]
 Id. at 118-123.

[24]
 Id. at 95.

[25]
 Id. at 242-272.

[26]
 Id. at 96.

[27]
 Id. at 94-115.

[28]
 Id. at 104-105.

[29]
 Id. at 98-100.

 "In the construction industry, the 10 percent retention money


[30]

is portion of the contract price automatically deducted from the


contractor's billings, as security for the execution of corrective
work—if any—becomes necessary. This amount is to be released
one year after the completion of the project, minus the cost of
corrective work." H.L. Carlos Construction v. Marina Properties
Corporation, 466 Phil. 182, 199-200 (2004) [Per J. Panganiban,
First Division].
[31]
 Rollo, pp. 100-102.

[32]
 Id. at 103-104.

[33]
 Id. at 104-105.

[34]
 Id. at 1773-1828.

[35]
 Id. at 73-88.

[36]
 Id. at 87.

[37]
 Id. at 86.

[38]
 Id. at 77-80.

[39]
 Id. at 80-83.

[40]
 Id. at 86-87.

[41]
 Id. at 91.

 Id. at 13-70. Comment (rollo, pp. 2136-2258) was filed on


[42]

November 20, 2012 while Reply (rollo, pp. 2265-2284) was filed
on February 28, 2013. A Rejoinder (rollo, pp. 2286-2371) was
submitted but was expunged in a June 3, 2013 Resolution (rollo,
p. 2373) for being a prohibited pleading.

[43]
 CIVIL CODE, art. 1724 provides:

ARTICLE 1724. The contractor who undertakes to build a


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

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


determined in writing by both parties.

[44]
 Rollo, pp. 32-35.

[45]
 Id. at 35-36.

[46]
 Id. at 36-37.

[47]
 Id. at 42-52.

[48]
 Id. at 52-57.

[49]
 Id. at 57-62.

[50]
 Id. at 2177.

[51]
 Id. at 2170-2177. Exact quote at 2173.

[52]
 Id. at 2189.

[53]
 Id. at 2201.

[54]
 Id. at 2201-2202.

[55]
 Id. at 2209-2215.

[56]
 Id. at 2223-2224.

[57]
 Id. at 2250-2251.

[58]
 Id. at 2251.

[59]
 Id. at 2251-2252.
[60]
 Id. at 2255.

[61]
 Id. at 2255-2256.

[62]
 Id. at 2266-2267.

[63]
 Id. at 2267-2268.

[64]
 Id. at 2269-2279.

[65]
 Id. at 2279.

[66]
 Id.

[67]
 Enacted February 4, 1985.

[68]
 Exec. Order No. 1008 (1985), sec. 4.

[69]
 Exec. Order No. 1008 (1985), sec. 4.

[70]
 Exec. Order No. 1008 (1985), sec. 14.

 CIAC Revised Rules of Procedure Governing Construction


[71]

Arbitration (2011), Rule 8, sec. 8.1.

[72]
 Exec. Order No. 1008 (1985), sec. 15.

[73]
 Exec. Order No. 1008 (1985), sec. 4 provides:

SECTION 4. Jurisdiction. — The CIAC shall have original and


exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction in
the Philippines, whether the dispute arises before or after the
completion of the contract, or after the abandonment or breach
thereof. These disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to voluntary
arbitration. (Emphasis supplied)

 Revised Rules of Procedure Governing Construction Arbitration


[74]

(2011), Rule 2, sec. 2.3(2.3.3).

[75]
 418 Phil. 176 (2001) [Per C.J. Davide Jr., First Division].

 Id. at 202-203 citing The Presidential Anti-Dollar Salting Task


[76]

Force v. Court of Appeals, 253 Phil. 344 (1989) [Per J. Sarmiento,


En Banc]; Tropical Homes v. National Housing Authority, 236 Phil.
580 (1987) [Per J. Gutierrez, Jr., En Banc]; Antipolo Realty Corp.
v. NHA, 237 Phil. 389 (1987) [Per J. Feliciano, En Banc];
and Solid Homes, Inc. v. Payawal, 257 Phil. 914 (1989) [Per J.
Cruz, First Division].

[77]
 RULES OF COURT, Rule 43, sec. 3.

[78]
 800 Phil. 721 (2016) [Per J. Brion, Second Division].

[79]
 LABOR CODE, art. 219.

ARTICLE 219. [212] Definitions. — . . .

....

(n) "Voluntary Arbitrator" means any person accredited by the


Board as such, or any person named or designated in the
Collective Bargaining Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or without the assistance
of the National Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the Collective Bargaining
Agreement, or any official that may be authorized by the
Secretary of Labor and Employment to act as Voluntary Arbitrator
upon the written request and agreement of the parties to a labor
dispute.
 CE Construction v. Araneta Center, G.R. No. 192725, August 9,
[80]

2017, 836 SCRA 181, 214 [Per J. Leonen, Second Division] citing


Fruehauf Electronics v. Technology Electronics Assembly and
Management Pacific, 800 Phil. 721 (2016) [Per J. Brion, Second
Division].

 Fruehauf Electronics Philippines Corporation v. Technology


[81]

Electronics Assembly and Management Pacific Corporation, 800


Phil. 721, 744 (2016) [Per J. Brion, Second Division].

 See Fruehauf Electronics Philippines Corporation v. Technology


[82]

Electronics Assembly and Management Pacific Corporation, 800


Phil. 721 (2016) [Per J. Brion, Second Division].

 See CE Construction v. Araneta Center, G.R. No. 192725,


[83]

August 9, 2017, 836 SCRA 181, 215 [Per J. Leonen, Second


Division].

[84]
 Id. at 215-216.

 G.R. No. 192725, August 9, 2017, 836 SCRA 181 [Per J.


[85]

Leonen, Second Division].

[86]
 Id. at 219.

[87]
 298-A Phil. 361 (1993) [Per J. Feliciano, Third Division].

 Id. at 372 citing the first three (3) Whereas clauses and sec. 2


[88]

of Exec. Order No. 1008 (1985), as amended.

 See Medina v. Mayor Asistio, Jr., 269 Phil. 225, 232 (1990) [Per
[89]

J. Bidin, Third Division] for the complete list of exceptions to the


prohibition of questions of fact in Rule 45 petitions.

 Hi-Precision Steel Center v. Lim Kim Steel Builders, 298-A Phil.


[90]

361, 373-374 (1993) [Per J. Feliciano, Third Division] citing Asian


Construction and Development Corporation v. Construction
Industry Arbitration Commission, 291-A Phil. 576 (1993) [Per J.
Padilla, First Division]; Chung Fu Industries (Phil.) Inc. v. Court of
Appeals, 283 Phil. 474 (1992) [Per J. Romero, Third
Division]; Primary Structures Corporation v. Victor P. Lazatin,
etc., G.R. No. 101258, July 13, 1992 (Unsigned Resolution); A.C.
Enterprises, Inc. v. Construction Industry Arbitration
Commission, et al., 313 Phil. 745 (1995) [Per J. Quiason, En
Banc]; and Sime Darby Pilipinas, Inc. v. Magsalin, 259 Phil. 658
(1989) [Per J. Feliciano, Third Division].

[91]
 479 Phil. 578 (2004) [Per J. Puno, Second Division].

[92]
 Approved June 19, 1953.

 Spouses
[93]
David v. Construction Industry Arbitration
Commission, 479 Phil. 578, 590-591 (2004) [Per J. Puno, Second
Division] citing Rep. Act No. 876, sec. 24.

 See also Fruehauf Electronics v. Technology Electronics


[94]

Assembly and Management Pacific, 800 Phil. 721 (2016) [Per J.


Brion, Second Division].

 CE Construction v. Araneta Center, G.R. No. 192725, August 9,


[95]

2017, 836 SCRA 181, 186 [Per J. Leonen, Second Division].

[96]
 Id. at 222.

 479 Phil. 578, 584 (2004) [Per J. Puno, Second Division] citing


[97]

Serna v. Court of Appeals, 368 Phil. 1 (1999) [J. Pardo, First


Division] and Palon v. Nino, 405 Phil. 670 (2001) [Per J. Pardo,
First Division].

[98]
 Rollo, p. 132.

[99]
 Id. at 99.

[100]
 Id. at 134.

[101]
 Id. at 78-80.
 CIVIL CODE, art. 2226. Liquidated damages are those agreed
[102]

upon by the parties to a contract, to be paid in case of breach


thereof.

 See H.L. Carlos Construction v. Marina Properties Corporation,


[103]

466 Phil. 182 (2004) [Per J. Panganiban, First Division].

[104]
 Rollo, p. 133.

[105]
 Id. at 102.

[106]
 Id. at 103.

[107] Id.

[108]
 Id. at 103-104.

 CE Construction v. Araneta Center, G.R. No. 192725, August 9,


[109]

2017, 836 SCRA 181, 222 [Per J. Leonen, Second Division].

 See CE Construction v. Araneta Center, G.R. No. 192725,


[110]

August 9, 2017, 836 SCRA 181 [Per J. Leonen, Second Division].

[111]
 Rollo, p. 132.

[112]
 Alcantara v. Alinea, 8 Phil. 111 (1907) [Per J. Torres, En Banc].

 G.R. No. 192725, August 9, 2017, 836 SCRA 181 [Per J.


[113]

Leonen, Second Division].

[114]
 Id. at 234.

 G.R. No. 192725, August 9, 2017, 836 SCRA 181 [Per J.


[115]

Leonen, Second Division].

 Id. at 235 citing Pacific Merchandising Corp. v. Consolation


[116]

Insurance & Surety Co., Inc., 165 Phil. 543, 553-554 (1976) [Per
J. Antonio, Second Division]; Perez v. Pomar, 2 Phil. 682 (1903)
[Per J. Torres, En Banc]; and Bonzon v. Standard Oil Co. and
Osorio, 27 Phil. 141 (1914) [Per J. Carson, First Division].

 Rollo, pp. 99-100. In the cited pages, the Decision erroneously


[117]

indicated Change Order Nos. 1 to 108.

[118] Id.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[119]

En Banc].

Source: Supreme Court E-Library | Date created: June 26, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 182307, June 06, 2018 ]


BELINA CANCIO AND JEREMY PAMPOLINA,
PETITIONERS, VS. PERFORMANCE FOREIGN
EXCHANGE CORPORATION, RESPONDENT.
DECISION

LEONEN, J.:
When a party assails a lower court's appreciation of the evidence,
that party raises a question of fact that cannot be entertained in a
petition for review filed under Rule 45 of the Rules of Court.

This is a Petition for Review on Certiorari  assailing January 31,


[1]

2008 Decision  and March 31, 2008 Resolution  of the Court of
[2] [3]

Appeals, which overturned the Regional Trial Court July 15, 2006
Decision. The Regional Trial Court found Performance Foreign
Exchange Corporation (Performance Forex) solidarity liable with
broker Rolando Hipol (Hipol) for unauthorized trade transactions
he made on Belina Cancio (Cancio) and Jeremy Pampolina's
(Pampolina) joint trading account. The Court of Appeals,
however, absolved Performance Forex from any liability.

Performance Forex is a corporation operating as a financial


broker/agent between market participants in foreign exchange
transactions. [4]

Foreign currency exchange trading or forex trading is the


speculative trade of foreign currency for the sole purpose of
gaining profit from the change in prices.  The forex market is a
[5]

"global, decentralized," and essentially "an over-the-counter


(OTC) market where the different currency trading locations
around the globe electronically form a unified, interconnected
market entity." [6]

Unlike a stock exchange market where the opening and closing of


trades rely on only one (1) or two (2) time zones, a forex market
may have overlapping time zones. Foreign currency, due to its
decentralized nature, may be traded in different financial
markets.  For instance, trading currency using US dollars would
[7]

not depend on the business or banking hours only of financial


institutions in the United States.
[8]

Traders are drawn to the forex market since the price of currency
constantly fluctuates. The value of a foreign currency is
determined by international capital flow or the "movement of
money from one currency to another."  International capital flow
[9]
is caused by a number of factors, among which are "a country's
interest rates, inflation situation, [Gross Domestic Product]
growth, employment, trade balance, and other barometers of
economic health." [10]

Currencies are traded in pairs by speculating the value of one


currency against another.  One currency, usually the US dollar,
[11]

 is considered the "base currency" while the other currency is a


[12]

"quote or counter currency."  If a trader speculates that the base


[13]

currency will be stronger than the counter currency, the trader


will sell the base currency to buy more counter currency. If the
trader speculates that the base currency will be weaker than the
counter currency, then the trader will sell the counter currency to
buy more of the base currency.  For example, if a trader
[14]

speculates that the US dollar will rise in value as against the


Philippine peso, the trader will sell dollars to acquire more pesos.
If the trader speculates that the dollar will weaken against the
peso, the trader will sell pesos to acquire more dollars.

In a standard forex trade, a trader would "open a position" by


buying or selling a certain amount of a particular currency based
on its value against the US dollar. The trader would then hold on
to this particular currency until its value appreciates or
depreciates. Once the value changes, the trader then "closes
position" by selling this currency at a higher price or buying it at
a lower price; hence, earning a profit.  If the trader sells when
[15]

the value depreciates or buys when the value appreciates, the


trader suffers a loss. Losses, however, are only realized when the
traders close their positions. [16]

The participants in a forex market are banks, hedge funds,


investment firms, and individual retail traders.  Unlike banks,
[17]

hedge funds, and investment firms that have significant amounts


of capital to engage in trade, individual retail traders often make
use of brokers, who "serve as an agent of the customer in the
broader [foreign currency exchange] market, by seeking the best
price in the market for a retail order and dealing on behalf of the
retail customer."  Individual retail traders also rely on "leverage
[18]
trading," where traders can open margin accounts with a financial
broker or agent to make use of that broker or agent's credit line
to engage in trade. [19]

A margin account is an account where the broker-dealer lends


money to the trader to purchase currency, using the same
purchased currency as collateral.  Returns will be proportional to
[20]

the amount deposited.  Leverage is determined by the amount


[21]

that the trader is required to deposit. If a trader has to deposit


US$1,000.00 into a margin account to trade US$100,000.00 in
currency, the margin account has a leverage of 100 to 1.  This [22]

system allows the trader to control more money in the market


than what was originally deposited. [23]

Individual retail traders make use of leverage trading and margin


accounts since price movements are usually miniscule. A "pip" is
"the smallest unit of price movement in the exchange rate of a
currency pair."  The goal of every trader in foreign currency
[24]

exchange is to earn pips. To underscore how miniscule expected


profits are, pips commonly refer to the price movement of
the fourth decimal place of major currencies.  Miniscule price
[25]

movements, thus, require large amounts of capital for them to


have significant impact on the profits to be earned.

For example, the current Philippine peso equivalent of one (1)


Japanese yen is P0.4830.  A pip would be a change from P0.4830
[26]

to 0.4831. A P0.0001 price movement in the purchase of one (1)


Japanese yen may not exactly have a significant effect but when
multiplied by a hundred, it will actually mean a P48.31 increase
for every trader betting on the rise of the yen and a P48.31
decrease for those expecting a rise in peso prices. Leverage
trading can substantially magnify profits. Considering, however,
that leverage trading is essentially trade using borrowed money,
leverage trading can magnify losses just as much. Forex trade is,
thus, considered a lucrative but risky endeavor since every trade
multiplies profit and loss by a much higher rate than what was
originally invested.
Sometime in 2000, Cancio and Pampolina accepted Hipol's
invitation to open a joint account with Performance Forex. Cancio
and Pampolina deposited the required margin account deposit of
US$10,000.00 for trading. The parties executed an application for
the opening of a joint account,  with a trust/trading facilities
[27]

agreement  between Performance Forex, and Cancio and


[28]

Pampolina. They likewise entered into an agreement for


appointment of an agent  between Hipol, and Cancio and
[29]

Pampolina.  They agreed that Cancio and Pampolina would make


[30]

use of Performance Forex's credit line to trade in the forex


market while Hipol would act as their commission agent and
would deal on their behalf in the forex market.

The trust/trading facilities agreement between Performance


Forex, and Cancio and Pampolina provided:
6. Orders

You hereby irrevocably authorize us to act upon any instructions,


whether in writing, by cable, telex, facsimile or telephone given
or purported to be given by you or your agent or representative
which appear whether on their respective faces (in the case of
writing, cable, telex or facsimile) or otherwise to be bonafide. We
shall not be responsible and you shall indemnify us for any losses
incurred as a result of acting upon such instructions should there
in fact be any error commission ambiguities or other irregularities
therein or therewith.

....

Commission Agent

You acknowledge and agree that the commission agent (one


Mr/Ms Ronald (sic) M. Hipol) who introduced you to us in
connection with this Facility is your agent and we are in no way
responsible for his actions or any warranties or representations
he may have made (whether expressly on our behalf or not) and
that pursuant to his having introduced you to us, we will (if you
accept this Facility) pay him a commission based on your trading
with us (details of which will be applied to you on request).
Should you choose to also vest in him trading authority on your
behalf please do so only after considering the matter carefully, for
we shall not be responsible nor liable for any abuse of the
authority you may confer on him. This will be regarded strictly as
a private matter between you and him. You further acknowledge
that for our own protection and commercial purpose you are
aware of the terms of the trading agreement between the
commission agent and ourselves where the commission agent is
to trade for you.
[31]

All parties agreed that the trading would only be executed by


Cancio and Pampolina, or, upon instructions to their agent, Hipol.
The trading orders to Hipol would be coursed through phone calls
from Cancio and Pampolina. [32]

From March 9, 2000 to April 4, 2000, Cancio and Pampolina


earned US$7,223.98. They stopped trading for more or less two
(2) weeks, after which, however, Cancio again instructed Hipol to
execute trading currency orders. When she called to close her
position, Hipol told her that he would talk to her personally.
[33]

Cancio later found out that Hipol never executed her orders. Hipol
confessed to her that he made unauthorized transactions using
their joint account from April 5, 2000 to April 12, 2000. The
unauthorized transactions resulted in the loss of all their money,
leaving a negative balance of US$35.72 in their Statement of
Account. Cancio later informed Pampolina about the problem. [34]

Pampolina met with two (2) Performance Forex officers, Dave


Almarinez and Al Reyes, to complain about Hipol's unauthorized
trading on their account and to confront them about his past
unauthorized trades with Performance Forex's other client,
 Justine Dela Rosa.  The officers apologized for Hipol's actions
[35] [36]

and promised to settle their account. However, they stayed quiet


about Hipol's past unauthorized trading. [37]

Performance Forex offered US$5,000.00 to settle the matter but


Cancio and Pampolina rejected this offer. Their demand letters to
Hipol were also unheeded.  Thus, they filed a Complaint  for
[38] [39]

damages against Performance Forex and Hipol before the


Regional Trial Court of Mandaluyong City.

Hipol was declared in default. Since the parties were unable to


come to a settlement, trial commenced. [40]

During trial, Performance Forex's General Manager for Sales and


Marketing Jonathan Reyes Ocampo (Ocampo) testified that clients
could trade through two (2) types of brokers. The first type is the
independent broker, or one who is already experienced in trading
and merely attends Performance Forex's orientation trainings to
know its policies and regulations. The second type is an in-house
broker or business relations officer, who is new to the business
and has to be supervised by the sales and marketing managers.
He stated that Hipol was an Investment Portfolio Manager, or an
independent broker who not only provided information from
financial experts but also executed orders on behalf of the clients.
[41]

Performance Forex Senior Manager Gabriel Erazo (Erazo) added


that in-house brokers usually cater to walk-in clients and are
stationed in the company premises while independent brokers,
like Hipol, seek clients and introduce them to the company. [42]

Ocampo likewise testified that clients must first sign a Purchase


Order Form before Performance Forex could authorize an order
transaction. Every transaction must have its own Purchase Order
Form.  Erazo confirmed that dealings were still done manually at
[43]

the time of the questioned transactions, and that clients or


agents must submit an actual signed Purchase Order Form. [44]

Ocampo confirmed that they paid a "goodwill offer," i.e. the


return of the broker's commission, to their client Justine Dela
Rosa for Hipol's alleged unauthorized transactions. He also
testified that Hipol's accreditation had to be cancelled after
Pampolina complained against him to protect the reputation of
the company. [45]
On July 15, 2006, the Regional Trial Court rendered its
Decision  finding Performance Forex and Hipol solidarity liable to
[46]

Cancio and Pampolina for damages.

According to the Regional Trial Court, Performance Forex should


have disclosed to Cancio and Pampolina that Hipol made similar
unauthorized trading activities in the past, which could have
affected their consent to Hipol's appointment as their agent. It
also noted that innocent third persons should not be prejudiced
due to Performance Forex's failure to adopt the necessary
measures to prevent unauthorized trading by its agents.  The [47]

dispositive portion of the Regional Trial Court July 15, 2006


Decision read:
ACCORDINGLY, judgment is hereby rendered in favor of the
plaintiffs and against the defendants PERFORMANCE FOREIGN
EXCHANGE CORPORATION and ROLANDO HIPOL. Both
defendants are jointly and severally liable to pay the plaintiffs the
following:

a. the amount of US$17,223.98 or its peso equivalent plus legal


interest from the filing of the complaint until the whole obligation
is fully paid.

b. the amount of Php50,000.00 as attorney's fees;


Php100,000.00 moral damages and Php100,000.00 exemplary
damages.

c. cost of suit

SO ORDERED. [48]

Performance Forex appealed this Decision to the Court of


Appeals, arguing that it had adequate safeguards concerning
dealings with commission agents, and that it was Cancio and
Pampolina who vested Hipol with "broad powers to conduct
trading on their behalf."[49]
On January 31, 2008, the Court of Appeals rendered its
Decision  granting the appeal.
[50]

According to the Court of Appeals, Performance Forex was a


trading facility that acted only on whatever their clients or their
representatives would order. It was not privy to anything that
happened between its clients and their representatives.  It found
[51]

that Cancio admitted to giving Hipol pre-signed authorizations to


trade; hence, Performance Forex relied on these orders and on
Hipol's designation as their agent to facilitate the trades from
April 5, 2000 to April 9, 2000. [52]

The Court of Appeals likewise found that Performance Forex's


non disclosure of Hi pol's prior unauthorized transactions with
another client was irrelevant since he was an independent broker
who was not employed with Performance Forex. Thus,
Performance Forex had no legal duty to disclose any prior
misconduct to its clients. It also noted that the trust/trading
facilities agreement between Cancio and Pampolina, and
Performance Forex contained a provision freeing itself from any
liability from losses incurred by acting on the instructions of its
clients or their authorized representatives. Thus, the Court of
Appeals concluded that Cancio and Pampolina's action should only
be against Hipol.  The dispositive portion of the Court of Appeals
[53]

January 31, 2008 Decision read:


WHEREFORE, the appeal is hereby GRANTED. Appellant
Performance Foreign Exchange Corporation is hereby released
from liability.

SO ORDERED. [54]

Cancio and Pampolina moved for reconsideration but were denied


by the Court of Appeals in its March 31, 2008 Resolution.  Hence,
[55]

this Petition  was filed before this Court.


[56]

Petitioners Cancio and Pampolina argue that bonafide


transactions in respondent Performance Forex's facility depends
on signed purchase order forms from clients. They allege that
there were only 10 purchase order forms signed by petitioner
Cancio and yet respondent executed 29 transactions on their
account, in clear breach of its assurance that only bonafide
transactions would be honored.  They likewise point out that
[57]

respondent was aware of similar unauthorized transactions by


Hipol in the past and even settled the complaint against him, but
respondent neglected to inform petitioners about them, thus,
failing to observe the degree of care, precaution, and vigilance for
the protection of petitioners' interests.  They claim that in view
[58]

of respondent's bad faith and breach of its contractual


obligations, it is liable for actual damages, exemplary damages,
and moral damages with attorney's fees. [59]

Respondent counters that it was unnecessary to examine other


purchase order forms since "petitioners' cause of action against
respondent is grounded on defendant Hipol's purported
unauthorized trading transactions which occurred during the
period 4 to 12 April 2000 and no other."  It likewise insists that
[60]

it cannot be held liable for damages caused by Hipol considering


that it is not Hipol's employer and that any losses suffered were
due to "the very broad and vast powers"  that petitioners gave
[61]

him to transact on their behalf. It also points out that according


to the trust/trading facilities agreement, petitioners agreed that
respondent would not be responsible for any act, warranty, or
representation made by their agent on their behalf; thus, it
cannot be held liable for any damages claimed. [62]

Respondent asserts that the Petition should be dismissed outright


since petitioners failed to attach the necessary documents to
support their Petition. It also submits that the Petition raises
questions of fact by asking this Court to examine the probative
value of the evidence introduced before the Regional Trial Court
and the Court of Appeals. [63]

Petitioners, on the other hand, counter that there was substantial


compliance by their subsequent submission of the required
documents.  They claim that they only raise questions of law
[64]

since the facts have been settled. What they argue is merely the
Court of Appeals' application of the law given the facts of the
case.[65]

From the arguments of the parties, this Court is asked to resolve


the issue of whether or not respondent Performance Forex
Exchange Corporation should be held solidarity liable with
petitioners Belina Cancio and Jeremy Pampolina's broker, Hipol,
for damages due to the latter's unauthorized transactions in the
foreign currency exchange trading market. Before this issue can
be resolved, this Court must first pass upon the procedural issues
of whether or not the Petition should be dismissed for petitioners'
failure to attach necessary pleadings, and whether or not the
Petition raises questions of fact.

The failure to attach material portions of the record will not


necessarily cause the outright dismissal of the petition. While
Rule 45, Section 4 of the Rules of Court requires that the petition
"be accompanied by ... such material portions of the record as
would support the petition,"  this Court may still give due course
[66]

if there is substantial compliance with the Rules.  Rule 45,


[67]

Section 7 states:
Section 7. Pleadings and documents that may be required;
sanctions. - For purposes of determining whether the petition
should be dismissed or denied pursuant to section 5 of this Rule,
or where the petition is given due course under section 8 hereof,
the Supreme Court may require or allow the filing of such
pleadings, briefs, memoranda or documents as it may deem
necessary within such periods and under such conditions as it
may consider appropriate, and impose the corresponding
sanctions in case of non-filing or unauthorized filing of such
pleadings and documents or non-compliance with the conditions
therefor. [68]

In E.I. Dupont Nemours v. Francisco,  this Court stated that a


[69]

petition for review under Rule 45 may still be given due course if
the petitioner later submits the required documents, thus:
[A] petition lacking an essential pleading or part of the case
record may still be given due course or reinstated (if earlier
dismissed) upon showing that petitioner later submitted the
documents required, or that it will serve the higher interest of
justice that the case be decided on the merits. [70]

In this instance, petitioners submitted the assailed Court of


Appeals January 31, 2008 Decision in their Petition,  which [71]

quoted substantial portions of the Regional Trial Court June 15,


2006 Decision; the Regional Trial Court's records; and the Court
of Appeals' rollo. They likewise attached in their Reply a copy of
the Complaint,  the Balance Ledger for Dealings,  and the
[72] [73]

Purchase Order Forms  presented before the Regional Trial


[74]

Court. These documents more than suffice to substantiate


petitioners' claims.

II

This Court is not a trier of facts. Factual findings of the lower


courts will not be disturbed by this Court if supported by
substantial evidence.  Thus, Rule 45 of the Rules of Court
[75]

requires that a petition for review on certiorari only raise


questions of law. [76]

The distinction between a question of fact and a question of law is


settled. In Century Iron Works v. Bañas: [77]

A question of law arises when there is doubt as to what the law is


on a certain state of facts, while there is a question of fact when
the doubt arises as to the truth or falsity of the alleged facts. For
a question to be one of law, the question must not involve an
examination of the probative value of the evidence presented by
the litigants or any of them. The resolution of the issue must rest
solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of
the evidence presented, the question posed is one of fact.

Thus, the test of whether a question is one of law or of fact is not


the appellation given to such question by the party raising the
same; rather, it is whether the appellate court can determine the
issue raised without reviewing or evaluating the evidence, in
which case, it is a question of law; otherwise it is a question of
fact. [78]

Appeal is not a matter of right but of sound judicial discretion.


[79]

While questions of fact are generally not entertained by this


Court, there are, of course, ce1iain permissible exceptions,
summarized in Medina v. Mayor Asistio, Jr.: [80]

(1) When the conclusion is a finding grounded entirely on


speculation, surmises or conjectures ...; (2) When the inference
made is manifestly mistaken, absurd or impossible ...; (3) Where
there is a grave abuse of discretion ...; (4) When the judgment is
based on a misapprehension of facts ...; (5) When the findings of
fact are conflicting ...; (6) When the Court of Appeals, in making
its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee ...; (7)
The findings of the Court of Appeals are contrary to those of the
trial court ...; (8) When the findings of fact are conclusions
without citation of specific evidence on which they are based ...;
(9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by the
respondents ...; and (10) The finding of fact of the Court of
Appeals is premised on the supposed absence of evidence and is
contradicted by the evidence on record ...  (Citations omitted)
[81]

A case falling under any of these exceptions, however, does not


automatically require this Court's review. In Pascual v. Burgos,
 this Court explained that a party cannot merely claim that his
[82]

or her case falls under any of the exceptions; he or she "must


demonstrate and prove"  that a review of the factual findings is
[83]

necessary.

In this instance, petitioners do not plead that their case falls


under any of the exceptions since their contention is that their
Petition only raises questions of law. They claim that this Court
"need not probe into the entirety of evidence on record, as the
falsity or veracity of the facts, as stated in the assailed decision,
[is] not in issue."
[84]
Petitioners, however, contradict this when they submit that while
"[t]here is no doubt as to the existence of the ... facts," the Court
of Appeals' legal conclusions were "contradictory to its very
findings" and that the case was "differently ruled, and correctly
so, by the [Regional Trial Court]."  This argument, otherwise
[85]

stated, assails the Court of Appeals' appreciation of the evidence


and not merely its application of the law. This is clear when
petitioners argue that:
29. Despite finding only two (2) purchase order forms for the
twelve (12) enumerated transactions, the [Court of Appeals] still
found no badge of negligence or breach of contractual obligation
on the part of respondent. This is very much contradictory to its
very findings that all trading transactions must be accompanied
by purchase order forms, being the obligation of respondent to
secure the orders of petitioners.[86]

In Pascual, this Court stated that there is a question of fact "when


the issue presented before this court is the correctness of the
lower courts' appreciation of the evidence presented by the
parties."  To determine whether a lower court erred in the
[87]

appreciation of evidence, this Court must also examine the


records to see if there was evidence that was overlooked or if
certain pieces of evidence were given undue weight. Thus,
petitioners cannot evade having raised questions of fact before
this Court by simply arguing that the facts are not disputed.

This Court has previously stated that "[n]egligence, that is, a


failure to comply with some duty of care owed by one to another,
is a mixed question of law and fact."  There is a question of law
[88]

as to the duty of care owed by a defendant to a plaintiff. The


existence of negligence, however, is determined by facts and
evidence, which makes it a question of fact. [89]

The review of a finding of negligence involves a question of fact.


 It is evidentiary in nature. It requires an examination of the
[90]

evidence presented by the parties to determine the basis of this


negligence.  This Court has likewise held that determination of
[91]

the existence of a breach of contract is a question of fact.[92]


A petition for review filed under Rule 45 of the Rules of Court that
assails the Court of Appeals' failure to find negligence or breach
of contract based on the evidence presented is essentially raising
questions of fact. This Court will uphold the findings of the Court
of Appeals unless the case falls under certain exceptions, which
must first be properly pleaded and substantiated. Otherwise, this
Court must apply the general rule and deny the petition.

III

Even if this Court were to liberally review the factual findings of


the Court of Appeals, the Petition would still be denied. A
principal who gives broad and unbridled authorization to his or
her agent cannot later hold third persons who relied on that
authorization liable for damages that may arise from the agent's
fraudulent acts.

Petitioners opened a joint account with respondent, through their


broker, Hipol, to engage in foreign currency exchange trading.
Respondent had a leverage system of trading,  wherein clients
[93]

may use its credit line to facilitate transactions. This means that
clients may actually trade more than what was actually in their
accounts, signifying a higher degree of risk. The contract between
petitioners and respondent provided that respondent was
irrevocably authorized to follow bonafide instructions from
petitioners or their broker:
6. Orders

You hereby irrevocably authorize us to act upon any instructions,


whether in writing, by cable, telex, facsimile or telephone given
or purported to be given by you or your agent or representative
which appear whether on their respective faces (in the case of
writing, cable, telex or facsimile) or otherwise to be bonafide. We
shall not be responsible and you shall indemnify us for any losses
incurred as a result of acting upon such instructions should there
in fact be any error commission ambiguities or other irregularities
therein or therewith.[94]
According to respondent, for instructions to be considered
"bonafide," there must be a signed purchase order form from the
client:
[Direct Examination]
Q [B]ased on your testimony you said that every transaction is to be accompanied b
which purchase order form is signed by the client?

[Gabriel Erazo]
A Yes, sir.

Q By transaction[,] am I correct to say that this [is] either a buy or sell transaction?

A Yes, sir.

Q And whether it be for one (1) lot, two (2) lots, or three (3) lots, there should be a p

A Yes, sir.

Q So without this purchase order form[,] no transaction can be entered into?

A Yes, sir, because the [dealer] will not accept [an] order without [a] purchase order f

Q Just supposing[,] Mr. Witness[,] that a transaction was entered without a purc
happens to the transaction?

A Basically[,] there will be no transaction if there is no purchase order form because t


purchase order form before they will execute the order, sir.

Q So no incident will there be a transaction entered without a purchase order form sig

A Yes, sir. [95]

Petitioner Cancio admitted to giving "[b]etween five (5) to ten


(10)" pre-signed documentation"  to facilitate their transactions.
[96]

 Indeed, 10 signed purchase order forms were presented as


[97]

evidence dated March 15, 2000,  March 17, 2000,  March 20,
[98] [99]

2000,  March 21, 2000,  March 24, 2000,  March 29, 2000,
[100] [101] [102]

 March 31, 2000,  April 4, 2000,  April 5, 2000,  and April 9,


[103] [104] [105] [106]

2000. [107]
Petitioners argue that there were 29 total transactions, as
evidenced by the Balance Ledger for Dealings,  which means
[108]

that 19 of the transactions were unauthorized. The Balance


Ledger reads:
BOUGHT
SOLD
COMMISSI P
UNIT DATE NO. PRICE DATE NO. PRICE
ON
BALANCE BROUGHT FORWARD ->
***MARGIN IN***
16/03/0
2 39) 1.6607 0) 1.6590
0
16/03/0 17/03/0 1.6630(L
2 39) 1.6607 8) -140.00 2
0 0 )
17/03/0
3 0) 106.75 33) 106.65
0
20/03/0 106.50(L 17/03/0
3 25) 33) 106.65 -210.00 4
0 ) 0
21/03/0
1 0) 107.08 22) 107.00
0
21/03/0
1 0) 106.98 22) 107.00
0
21/03/0
1 0) 107.43 22) 107.00
0
23/03/0
2 0) 107.43 3) 107.55
0
24/03/0 107.10(L 21/03/0
1 40) 22) 107.00 -70.00 -
0 ) 0
24/03/0 106.90(L 23/03/0
2 16) 3) 107.55 -140.00 1
0 ) 0
29/03/0
1 25) 105.77 0) 105.45
0
29/03/0
1 25) 105.77 0) 105.40
0
29/03/0 31/03/0 106.00(L
1 25) 105.77 5) -70.00 2
0 0 )
31/03/0 104.80(L 31/03/0
2 33) 4) 105.60 -140.00 1
0 ) 0
31/03/0 104.80(L 31/03/0
1 34) 8) 106.05 -70.00 1
0 ) 0
31/03/0
1 53) 102.50 0) 102.35
0
31/03/0
1 70) 103.03 0) 102.35
0
31/03/0
3 0) 102.45 54) 102.10
0
31/03/0
1 43) 103.00 0) 102.35
0
12 -840.00

31/03/0 03/04/0 104.00(L


1 43) 103.00 1) -70.00 9
0 0 )
31/03/0 03/04/0 104.70(L
1 70) 103.03 13) -70.00 1
0 0 )
31/03/0 03/04/0 104.70(L
1 53) 102.50 14) -70.00 2
0 0 )
03/04/0 03/04/0 104.62(L
2 12) 104.83 21) -140.00 -
0 0 )
31/03/0
3 0) 104.90 54) 102.10
0
31/03/0
3 0) 105.00 54) 102.10
0
04/04/0
3 26) 105.75 0) 104.90
0
04/04/0 05/04/0 105.27(L
1 26) 105.75 31) -70.00 -
0 0 )
31/03/0
3 0) 104.95 54) 102.10
0
04/04/0
2 26) 105.75 0) 104.85
0
04/04/0 06/04/0 104.77(L
2 26) 105.75 4) -140.00 -
0 0 )
31/03/0
3 0) 104.80 54) 102.10
0
31/03/0
3 0) 105.50 54) 102.10
0
10/04/0
3 36) 106.90 0) 106.40
0
31/03/0
3 0) 106.50 54) 102.10
0
31/03/0
3 0) 107.07 54) 102.10
0
10/04/0
3 36) 106.90 0) 106.97
0
10/04/0 12/04/0 105.85(L
3 36) 106.90 22) -210.00 -
0 0 )
12/04/0 105.95(L 31/03/0
3 21) 54) 102.10 -210.00 -
0 ) 0
14 -980.00
Petitioners' argument would have been correct if each transaction
was counted for every buy and sell. During petitioner Cancio's
crossexamination, respondent's counsel counted by date of
transaction, thus, counting 27 transactions. Petitioner Cancio,
however, clarified that they had a "buy and out" type of
transaction. Each "open position" and "close position" would be
considered as only one (1) transaction: [109]

Q Allow me to count the number of transactions here and see how far we could go in
From March 9 to April 4, I counted twenty[-]seven (27) transactions. And out of t
transactions you said that you are responsible for five (5) of them?

A Those are not twenty[-seven] (27) transactions[,] Sir.

Q What are those?

A Because there is what we call "buy" and "out," Sir. So, the "buy and out" is
transaction only, Sir.

Q So, how many transactions are there on [these] orders?

A We made about ten (10)[,] Sir. [110]

According to respondent, each "buy and out" should be covered


by one (1) purchase order form. The actual count then of the
transactions, according to petitioners' own enumeration of the
dealings,  should be:
[111]

DATE DATE
TRANSACTION LOTS PRICE LOT
 [OPEN NEW  [CLOSE
POSITION] POSITION]
March 16, March 17,
1 2 1.6607 2
2000 [Buy] 2000 [Sell]
March 17, March 20,
2 3 106.65 3
2000 [Sell] 2000 [Buy]
March 21, March 24,
3 1 107.00 1
2000 [Sell] 2000 [Buy]
March 23, March 24,
4 2 107.55 2
2000 [Sell] 2000 [Buy]
March 29, March 31,
5 1 105.77 1
2000 [Buy] 2000 [Sell]
March 31, March 31,
6 2 105.60 2
2000 [Sell] 2000 [Buy]
March 31, March 31,
7 2 106.05 2
2000 [Sell] 2000 [Buy]
March 31, April 3, 2000
8 1 102.50 1
2000 [Buy] [Sell]
March 31, April 3, 2000
9 1 103.03 1
2000 [Buy] [Sell]
March 31, April 12,
10 3 102.10 3
2000 [Sell] 2000 [Buy]
March 31, April 3, 2000
11 1 103.00 1
2000 [Buy] [Sell]
April 3, 2000 April 3, 2000
12 2 104.62 2
[Sell] [Buy]
April 4, 2000 April 5, 2000
13 3 105.75 1
[Buy] [Sell]
April 6, 2000
14 2
[Sell]
April 10, 2000 April 12,
15 3 106.90 3
[Buy] 2000 [Sell]
Thus, by petitioners' own count, there were 15 transactions, not
29 transactions.  According to the Balance Ledger, commission
[112]

was deducted from petitioners' account 15 times. Thus,


commission was deducted for every successful transaction, not
for every time a "buy" or "sell" was made.

Interestingly, the eleventh and twelfth transactions occurred


when petitioners were still actively trading. This means that they
executed more instructions to Hipol than what was covered by
the signed purchase order forms that he held, without complaint.
Petitioner Pampolina even testified that they were constantly
aware of the status of their account when they were trading:
Q How did you get to know that you accumulated around $7,000.00 for your account?

A Because every time that we execute orders[,] we take a position[,] and at the same
the rate of the position that we are taking and we also relieve orders to take pr
relieve orders to take profit[,] we know that we are making money.[113]

Petitioners would have been aware that respondent could execute


instructions relayed by Hipol even without the required purchase
order form. Otherwise, they would have stopped executing orders
upon their tenth transaction. Even if this Court were to apply
petitioners' argument that a "buy" and a "sell" is counted as one
(1) transaction each, that would still mean that there were 23
transactions made when petitioners were actively trading. There
would still be 13 orders that petitioners relayed to Hipol over and
above the 10 pre-signed purchase order forms that he held.

Moreover, petitioners assail the alleged unauthorized transactions


executed after April 4, 2000, when they allegedly stopped
relaying instructions to Hipol. These alleged unauthorized
transactions, they argue, breached respondent's contractual
obligation to execute only bonafide instructions from petitioners.
From the table above, these transactions would refer to the
thirteenth, fourteenth, and fifteenth transactions.

Respondents, however, presented signed purchase order forms


for the contested transactions occurring after April 4, 2000,
namely, the purchase order forms dated April 4, 2000,  April 5,
[114]

2000,  and April 9, 2000.  If there was any breach committed
[115] [116]

by respondent, it occurred when petitioners actively traded and


they would have been aware of this breach, not when they
stopped trading.

Respondent likewise did not have the duty to disclose to


petitioners any previous infractions committed by their agent.

Hipol, petitioners' agent, was not employed with respondent. He


was categorized as an independent broker for commission.
In Behn, Meyer, and Co. v. Nolting: [117]
A broker is generally defined as one who is engaged, for others,
on a commission, negotiating contracts relative to property with
the custody of which he has no concern; the negotiator between
other parties. never acting in his own name, but in the name of
those who employed him; he is strictly a middleman and for some
purposes the agent of both parties. [118]

When Hipol became petitioners' agent, he had committed only


one (1) known prior infraction against a client of respondent.
Respondent might have been construed this as an isolated
incident that did not warrant heightened scrutiny. Hipol's
infraction committed against petitioners was his second known
infraction. Respondent cancelled his accreditation when
petitioners informed them of his unauthorized transactions.

It would be different if Hipol committed a series of infractions and


respondent continued to accredit him. In that instance,
respondent would have been complicit to Hipol's wrongdoings.
Respondent, not being Hipol's employer, had no power of
discipline over him. It could only cancel his accreditation, which it
did after a second incident was reported. This was the extent by
which respondent was obligated to act on Hipol's infractions.

Moreover, petitioners and respondent signed and agreed to


absolve respondent from actions, representations, and warranties
of their agent made on their behalf, thus:
Commission Agent

You acknowledge and agree that the commtssiOn agent (one


Mr/Ms Ronald (sic) M. Hipol) who introduced you to us in
connection with this Facility is your agent and we are in no way
responsible for his actions or any warranties or representations
he may have made (whether expressly on our behalf or not) and
that pursuant to his having introduced you to us, we will (if you
accept this Facility) pay him a commission based on your trading
with us (details of which will be applied to you on request).
Should you choose to also vest in him trading authority on your
behalf please do so only after considering the matter carefully, for
we shall not be responsible nor liable for any abuse of the
authority you may confer on him. This will be regarded strictly as
a private matter between you and him. You further acknowledge
that for our own protection and commercial purpose you are
aware of the terms of the trading agreement between the
commission agent and ourselves where the commission agent is
to trade for you.
[119]

Petitioners conferred trading authority to Hipol. Respondent was


not obligated to question whether Hipol exceeded that authority
whenever he made purchase orders. Respondent was likewise not
privy on how petitioners instructed Hipol to carry out their orders.
It did not assign Hipol to be petitioners' agent. Hipol was the one
who approached petitioners and offered to be their agent.
Petitioners were highly educated  and were "[a]lready
[120]

knowledgeable in playing in this foreign exchange


trading."  They would have been aware of the extent of
[121]

authority they granted to Hipol when they handed to him 10 pre-


signed blank purchase order forms. Under Article 1900 of the Civil
Code:
Article 1900. So far as third persons are concerned, an act is
deemed to have been performed within the scope of the agent's
authority, if such act is within the terms of the power of attorney,
as written, even if the agent has in fact exceeded the limits of his
authority according to an understanding between the principal
and the agent.
Before a claimant can be entitled to damages, "the claimant
should satisfactorily show the existence of the factual basis of
damages and its causal connection to defendant's acts."  The [122]

acts of petitioners' agent, Hipol, were the direct cause of their


injury. There is no reason to hold respondent liable for actual and
moral damages. Since the basis for moral damages has not been
established, there would likewise be no basis to recover
exemplary damages  and attorney's fees  from respondent. If
[123] [124]

there was any fault, the fault remains with petitioners' agent and
him alone.

The State has already taken notice of the high risks involved in
foreign exchange leverage trading. In the prior case of Securities
and Exchange Commission v. Performance Foreign Exchange
Corporation,  the Securities and Exchange Commission tried to
[125]

issue a cease-and-desist order against respondent for trading


foreign currency futures contracts without the proper license.

This Court invalidated the cease-and-desist order upon finding


that it was improperly issued. It also took note that even the
Securities and Exchange Commission was unsure of whether
foreign currency exchange trading constituted futures commodity
trading, and that it had to request the Bangko Sentral ng Pilipinas
for its advice. The Bangko Sentral ng Pilipinas' reply read:
Dear Ms. Bautista,

This refers to your letter dated February 8, 2001 requesting for a


definitive statement that the foreign currency leverage trading
engage[d] in by private corporations, particularly, Performance
Foreign Exchange Corporation (PFEC), is a financial derivatives
transaction and that it can only be undertaken by banks or non-
bank financial intermediaries performing quasi-banking functions
and/or its subsidiaries/affiliates.

As indicated in your description of the transactions and the


documents submitted, the foreign currency leverage trading,
subject of your query, is essentially similar in mechanics to
currency future trading, particularly with respect to the margin
requirements, standard contract size, and daily market-to-market
of open position. However, it does not fall under the category of
futures trading because it is not exchangetraded. Further, we can
not classify it as being financial derivatives transactions as we
consider the transaction as plain currency margin trading, which
by its mechanics, involve the set-up of margin and nondelivery of
the currencies involved.

In view of the foregoing facts, the activities of the aforesaid


corporation are not covered by [the Bangko Sentral ng Pilipinas']
guidelines on derivative licensing.

We hope we have satisfactorily clarified your concerns.


Very truly yours,
(Sgd.)
AMANDO M. TETANGCO, JR.  (Emphasis supplied)
[126]

Nonetheless, the Securities and Exchange Commission persisted


in regulating entities involved in foreign exchange leverage
trading, issuing the following Advisory:
SEC ADVISORY

20 October 2016

FOREIGN EXCHANGE TRADING

The advisory is prompted by the complaints of retail investors


who lost their moneys to forex trading.

The public is advised that TRADING OF COMMODITIES FUTURES


CONTRACTS IN THE PHILIPPINES (including Foreign Exchange
Trading as consistently held by the Commission) and the
pertinent RULES ARE STILL SUSPENDED pursuant to Paragraph 4
of Rule II of the Amended Rules and Regulations implementing
the Securities Regulation Code.

Based on the reports, huge amount of money has been invested


(usually in US dollars) in forex trading corporations where
investors opened margin accounts to enable them to trade in
foreign currency. The so-called "experts" of the forex trading
corporations execute foreign trade positions in behalf of the
investors on the representation that investors shall gain profit as
in the stock market.

It has to be reiterated that under Section 11 of the Securities


Regulation Code "no person shall offer, sell or enter into
commodity futures contract except in accordance with rules and
regulations and orders of the Commission may prescribe in the
public interest".

The investors should also take the cue from the ruling laid down
in Onapal v. Court of Appeals (G.R. No. 90707, February 3, 1993)
where the Supreme Court stated in this wise: "xxx The payments
made under said contract were payments of difference in prices
arising out of the rise or fall in the market price above or below
the contract price thus making it purely gambling and declared
null and void by law."

The public is encouraged to report to the Commission entities


operating Foreign Exchange Trading and those acting as agents of
these operators.[127]

Considering, however, that the legality of foreign exchange


leverage trading is not in issue in this case, this Court will not
delve further into the current regulations affecting it. It has been
concluded that foreign exchange leverage trading is known to be
risky and may lead to substantial losses for investors. Petitioners,
who were experienced in this kind of trading, should have been
more careful in the conduct of their affairs.

Currency trading adds no new good or service into the market


that would be of use to real persons. Instead, it has the tendency
to alter the price of real goods and services to the detriment of
those who manufacture, labor, and consume products. It may
alter the real value of goods and services on the basis of a rumor
or anything else that will cause a herd of speculative traders to
move one way or the other. Put in another way, those who
participate in it must be charged with knowledge that getting rich
in this way is accompanied with great risk. Given its real effects
on the real economy and on real people, it will be unfair for this
Court to provide greater warranties to the parties in currency
trading. They should bear their own risks perhaps to learn that
their capital is better invested more responsibly and for the
greater good of society.

Be that as it may, to arrive at these conclusions, this Court has to


extensively review the evidence submitted by the parties. If, as
petitioners claim, the Petition only raised pure questions of law,
there would have been no need to re-examine the evidence. As it
stands, the Petition must be denied.
WHEREFORE, the Petition is DENIED. The January 31, 2008
Decision and March 31, 2008 Resolution of the Court of Appeals
in CA-G.R. CV No. 88439 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

October 1, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 6, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on October 1, 2018 at 2:25 p.m.

[1]
 Rollo, pp. 23-52.

 Id. at 54-75. The Decision, docketed as CA-G.R. CV No. 88439,


[2]

was penned by Associate Justice Mariano C. Del Castillo (now


Supreme Court Associate Justice) and concurred in by Associate
Justices Arcangelita Romilla-Lontok and Romeo F. Barza of the
Fourteenth Division, Court of Appeals, Manila.
 Id. at 77. The Resolution, docketed as CA-G.R. CV No. 88439,
[3]

was penned by Associate Justice Mariano C. Del Castillo (now


Supreme Court Associate Justice) and concurred in by Associate
Justices Arcangelita Romilla-Lontok and Romeo F. Barza of the
Former Fourteenth Division, Court of Appeals, Manila.

[4]
 Id. at 55.

 JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING,


[5]

2 (2009).

[6]
 Id. at 7.

[7]
 Id.

[8]
 Id. at 9.

[9]
 Id. at 15.

[10]
 Id. at 15-16.

[11]
 Id. at 22.

[12]
 Id. at 10.

[13]
 Id. at 22.

[14]
 Id. at 22-23.

[15]
 See rollo, pp. 185 and 334.

 See THOMAS OBERLECHNER, THE PSYCHOLOGY


[16]
OF THE
FOREIGN EXCHANGE MARKET, 85 (2004).

 JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING,


[17]

13-14 (2009).
 A. MORALY, INTERNATIONAL ROBBERY OF U.S. WEALTH, 132
[18]

(2011).

[19]
 Rollo, pp. 61-62.

 See UNITED
[20]
STATES SECURITIES AND EXCHANGE
COMMISSION INVESTOR BULLETIN, Understanding Margin
Accounts, <https://www.investor.gov/additional-resources/news-
alerts/alerts-bulletins/investorbulletin-understanding-margin-
accounts> (Last accessed June 1, 2018).

 See UNITED
[21]
STATES SECURITIES AND EXCHANGE
COMMISSION INVESTOR BULLETIN, Understanding Margin
Accounts, <https://www.investor.gov/additional-resources/news-
alerts/alerts-bulletins/investorbulletin-understanding-margin-
accounts> (Last accessed June 1, 2018).

 See JAMES CHEN, ESSENTIALS


[22]
OF FOREIGN EXCHANGE
TRADING, 35-36 (2009).

 See JAMES CHEN, ESSENTIALS


[23]
OF FOREIGN EXCHANGE
TRADING, 35-36 (2009).

 See JAMES CHEN,
[24]
ESSENTIALS OF FOREIGN EXCHANGE
TRADING, 37 (2009).

 See JAMES CHEN,
[25]
ESSENTIALS OF FOREIGN EXCHANGE
TRADING, 37 (2009).

 See BANGKO SENTRAL NG PILIPINAS FINANCIAL MARKET


[26]

OPERATIONS SUB-SECTOR, Reference Exchange Bulletin, June 1,


2018, http://www.bsp.gov.ph/statistics/sdds/ExchRate.htm (Acce
ssed June 6, 2018).

 Rollo,
[27]
pp. 153-155, Denominated as "Application
(Individual/Non-Incorporated Business)".

[28]
 Id. at 156-161.
[29]
 Id. at 162-164.

[30]
 Id. at 55-56.

[31]
 Id. at 156 and 161.

[32]
 Id. at 56.

[33]
 Id.

[34]
 Id. at 57.

[35]
 Id.

[36]
 Id. at 60-61.

[37]
 Id. at 57.

[38]
 Id. at 58. See also rollo, pp. 299-301.

[39]
 Id. at 302-306.

[40]
 Id. at 59.

[41]
 Id. at 61-62.

[42]
 Id. at 64-65.

[43]
 Id. at 63.

[44]
 Id. at 64-65.

[45]
 Id. at 64.

[46]
 The Decision is not attached to the Rollo.

[47]
 Rollo, pp. 65-66, as quoted in the CA Decision.
[48]
 Id. at 24.

[49]
 Id. at 67.

[50]
 Id. at 54-75.

[51]
 Id. at 68-69.

[52]
 Id. at 70.

[53]
 Id. at 72-74.

[54]
 Id. at 74-75.

[55]
 Id. at 77.

 Id. at 23-52. Comment was filed on August 29, 2008 (rollo, pp.
[56]

84-104) while Reply was filed on November 10, 2008 (rollo, pp.
434-450). Parties were ordered to submit their respective
memoranda (rollo, pp. 481-500 and 503-531) on January 28,
2009 (rollo, pp. 474-475).

[57]
 Id. at 507-518.

[58]
 Id. at 513-516.

[59]
 Id. at 528-529.

[60]
 Id. at 493.

[61]
 Id. at 494.

[62]
 Id. at 496-497.

[63]
 Id. at 487-491.

[64]
 Id. at 442-443.
[65]
 Id. at 440-441.

[66]
 RULES OF COURT, Rule 45, sec. 4 provides:

Section 4. Contents of petition. - The petition shall be filed in


eighteen (18) copies, with the original copy intended for the court
being indicated as such by the petitioner, and shall (a) state the
full name of the appealing party as the petitioner and the adverse
party as respondent, without impleading the lower courts or
judges thereof either as petitioners or respondents; (b) indicate
the material dates showing when notice of the judgment or final
order or resolution subject thereof was received, when a motion
for new trial or reconsideration, if any, was filed and when notice
of the denial thereof was received; (c) set forth concisely a
statement of the matters involved, and the reasons or arguments
relied on for the allowance of the petition; (d) be accompanied by
a clearly legible duplicate original, or a certified true copy of the
judgment or final order or resolution certified by the clerk of court
of the court a quo and the requisite number of plain copies
thereof, and such material portions of the record as would
support the petition; and (e) contain a sworn certification against
forum shopping as provided in the last paragraph of section 2,
Rule 42.

 See F.A.T Kee Computer Systems v. Online Networks


[67]

International, 656 Phil. 403 (2011) [Per J. Leonardo-De Castro,


First Division].

[68]
 RULES OF COURT, Rule 45, sec. 7.

 G.R.
[69]
No. 174379. August 31, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/august2016/174379.pdf> [Per J.
Leonen, Second Division].

 Id. at 11 citing Magsino v. De Ocampo, 741 Phil. 394 (2014)


[70]

[Per J. Bersamin, First Division].


[71]
 Rollo, pp. 54-75.

[72]
 Id. at 446-450.

[73]
 Id. at 452 and 454.

[74]
 Id. at 456-473.

 See Pascual v. Burgos, G.R. No. 171722, January 11, 2016


[75]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> 10-11 [Per
J. Leonen, Second Division] citing Commissioner of Internal
Revenue v. Embroidery and Garments Industries (Phil.), Inc., 364
Phil. 541, 546 (1999) [Per J. Pardo, First Division]; Siasat v.
Court of Appeals, 425 Phil. 139, 145 (2002) [Per J. Pardo, First
Division]; Tabaco v. Court of Appeals, 239 Phil. 485, 490 (1994)
[Per J. Bellosillo, First Division]; Padilla v. Court of Appeals, 241
Phil. 776, 781 (1988) [Per J. Paras, Second Division]; and Bank
of the Philippine Islands v. Leobrera, 461 Phil. 461, 469 (2003)
[Per J. Ynares-Santiago, Special First Division].

[76]
 See RULES OF COURT, Rule 45, sec. 1 provides:

Section 1. Filing of petition with Supreme Court. - A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

[77]
 711 Phil. 576 (2013) [Per J. Brion, Second Division].

 Id. at 585-586 citing Leoncio v. De Vera, 569 Phil. 512 (2008)


[78]

[Per J. Nachura, Third Division] and Elenita S. Binay. in her


capacity as Mayor of the City of Makati, Mario Rodriguez and
Priscilla Ferrolino v. Emerita Odeña, 551 Phil. 681 (2007) [Per J.
Nachura, En Banc].

[79]
 RULES Of COURT, Rule 45, sec. 6.

[80]
 269 Phil. 225 (1990) [Per J. Bidin, Third Division].

[81]
 Id. at 232.

 G.R.
[82]
No. 171722, January 11, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> [Per J.
Leonen, Second Division].

[83]
 Id. at 12.

[84]
 Rollo, p. 441.

[85]
 Id.

[86]
 Id.

 Pascual v. Burgos, G.R. No. 171722, January 11, 2016


[87]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> 11-12 [Per
J. Leonen, Second Division].

 Santos v. Rustia, 90 Phil. 358, 360 (1951) [Per J. Feria, En


[88]

Banc] citing Corpus Juris, Vol. 45, sec. 852.

[89]
 Id.

 Far Eastern Shipping Co. v. Court of Appeals, 357 Phil. 703,


[90]

747 (1998) [Per J. Regalado, En Banc] citing Davidson Steamship


Company vs. United States, 205 U.S. 186, 51 Law, Ed. 764
( 1907).
 See Cebu Shipyard and Engineering Works v. William Lines,
[91]

366 Phil. 439 (1999) [Per J. Purisima, Third Division].

 See Dueñas v. Guce-Africa, 618 Phil. 10, 19 (2009) [Per J. Del


[92]

Castillo, Second Division] citing Omengan v. Philippine National


Bank, 541 Phil. 293 (2007) [Per J. Corona, First Division].

[93]
 Rollo, p. 61.

[94]
 Id. at 156.

[95]
 Id. at 414-417.

[96]
 Id. at 246.

[97]
 Id. at 247.

[98]
 Id. at 189.

[99]
 Id.

[100]
 Id. at 192.

[101]
 Id. at 384.

[102]
 Id. at 389.

[103] Id.

[104]
 Id. at 391.

[105]
 Id. at 308.

[106]
 Id. at 307.

[107]
 Id. at 309.

[108]
 Id. at 452 and 454.
[109]
 Id. at 229-230.

[110] Id.

[111]
 Id. at 512-513.

 Id. at 69. The Court of Appeals likewise noted that petitioners'


[112]

counsel "mistakenly counted" 29 transactions to include even


those transactions that were authorized and not in issue.

[113]
 Id. at 262.

[114]
 Id. at 308.

[115]
 Id. at 307.

[116]
 Id. at 309.

[117]
 35 Phil. 274 (1916) [Per J. Johnson, En Banc].

 Id. at 279 citing 19 Cyc., 186; Henderson vs. The State, 50


[118]

Ind., 234; and Black's Law Dictionary.

[119]
 Rollo, p. 161.

 Id. at 199, Petitioner Cancio was a clinical psychologist. Rollo,


[120]

p. 253, petitioner Pampolina was a bank employee.

[121]
 Id. at 55.

 Kierulf v. Court of Appeals, 336 Phil. 414, 431-432 ( 1997)


[122]

[Per J. Panganiban, Third Division].

[123]
 CIVIL CODE, art. 2234 provides:

Article 2234. While the amount of the exemplary damages need


not be proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court
may consider the question of whether or not exemplary damages
should be awarded ....

[124]
 CIVIL CODE, art. 2208 provides:

Article 2208. In the absence of stipulation, attorney's fees and


expenses of litigation, other than judicial costs, cannot be
recovered, except:

(1) When exemplary damages are awarded[.]

 528 Phil. 169 (2006) [Per J. Sandoval-Gutierrez, Second


[125]

Division].

[126]
 Id. at 176-177.

 SECURITIES AND EXCHANGE COMMISSION, Advisory on


[127]

Foreign Exchange Trading, October 20, 2016


<http://www.sec.gov.ph/sec-advisory-foreign-exchange-
trading/> (last accessed June 1, 2018).

Source: Supreme Court E-Library | Date created: October 29, 2018


This page was dynamically generated by the E-Library Content Management System

Supreme Court E-Library

EN BANC

[ G.R. No. 202836, June 19, 2018 ]


FIRST SARMIENTO PROPERTY HOLDINGS, INC.,
PETITIONER, VS. PHILIPPINE BANK OF
COMMUNICATIONS, RESPONDENT.DECISION

LEONEN, J.:

To determine the nature of an action, whether or not its subject


matter is capable or incapable of pecuniary estimation, the nature
of the principal action or relief sought must be ascertained. If the
principal relief is for the recovery of a sum of money or real
property, then the action is capable of pecuniary estimation.
However, if the principal relief sought is not for the recovery of
sum of money or real property, even if a claim over a sum of
money or real property results as a consequence of the principal
relief, the action is incapable of pecuniary estimation.

This resolves the Petition for Review  filed by First Sarmiento


[1]

Property Holdings, Inc. (First Sarmiento) assailing the April 3,


2012 Decision  and July 25, 2012 Order  of Branch 11, Regional
[2] [3]

Trial Court, Malolos City, Bulacan in Civil Case No. 04-M-2012.

The facts as established by the parties are as follows:

On June 19, 2002,  First Sarmiento obtained from Philippine Bank


[4]

of Communications (PBCOM) a P40,000,000.00 loan, which was


secured by a real estate mortgage  over 1,076 parcels of land.
[5] [6]

On March 15, 2003,  the loan agreement was amended  with the
[7] [8]

increase of the loan amount to P51,200,000.00. On September


15, 2003, the loan agreement was further amended  when the [9]

loan amount was increased to P100,000,000.00.

On January 2, 2006,  PBCOM filed a Petition for Extrajudicial


[10]

Foreclosure of Real Estate Mortgage.  It claimed in its Petition


[11]

that it sent First Sarmiento several demand letters, yet First


Sarmiento still failed to pay the principal amount and accrued
interest on the loan. This prompted PBCOM to resort to
extrajudicial foreclosure of the mortgaged properties, a recourse
granted to it under the loan agreement. [12]

On December 27, 2011, First Sarmiento attempted to file a


Complaint for annulment of real estate mortgage with the
Regional Trial Court. However, the Clerk of Court refused to
accept the Complaint in the absence of the mortgaged properties'
tax declarations, which would be used to assess the docket fees. [13]

On December 29, 2011, Executive Judge Renato C. Francisco


(Judge Francisco), First Vice-Executive Judge Ma. Theresa A.
Mendoza Arcega, Second Vice-Executive Judge Ma. Belen R.
Liban, and Third Vice-Executive Judge Basilio R. Gabo, Jr. of the
Regional Trial Court of City of Malolos, Bulacan, granted First
Sarmiento's Urgent Motion to Consider the Value of Subject
Matter of the Complaint as Not Capable of Pecuniary Estimation,
and ruled that First Sarmiento's action for annulment of real
estate mortgage was incapable of pecuniary estimation. [14]

Also on December 29, 2011, the mortgaged properties were


auctioned and sold to PBCOM as the highest bidder. [15]

On January 2, 2012, First Sarmiento filed a Complaint for


annulment of real estate mortgage and its amendments, with
prayer for the issuance of temporary restraining order and
preliminary injunction.  It paid a filing fee
[16]
of P5,545.00. [17]

First Sarmiento claimed in its Complaint that it never received the


loan proceeds of P100,000,000.00 from PBCOM, yet the latter still
sought the extrajudicial foreclosure of real estate mortgage. It
prayed for the issuance of a temporary restraining order and
preliminary injunction to enjoin the Ex-Officio Sheriff from
proceeding with the foreclosure of the real estate mortgage or
registering the certificate of sale in PBCOM's favor with the
Registry of Deeds of Bulacan. [18]
That same day, Judge Francisco issued an ex-parte temporary
restraining order for 72 hours, enjoining the registration of the
certificate of sale with the Registry of Deeds of Bulacan. [19]

On January 4, 2012, the Regional Trial Court directed the parties


to observe the status quo ante. [20]

On January 24, 2012, the Clerk of Court and Ex-Officio Sheriff of


Malolos City, Bulacan issued a certificate of sale to PBCOM. [21]

In its Opposition (Re: Application for Issuance of Temporary


Restraining Order),  PBCOM asserted that the Regional Trial
[22]

Court failed to acquire jurisdiction over First Sarmiento's


Complaint because the action for annulment of mortgage was a
real action; thus, the filing fees filed should have been based on
the fair market value of the mortgaged properties. [23]

PBCOM also pointed out that the Regional Trial Court's directive
to maintain the status quo order beyond 72 hours constituted an
indefinite extension of the temporary restraining order, a clear
contravention of the rules. [24]

On April 3, 2012, Branch 11, Regional Trial Court,  Malolos City,


[25]

Bulacan dismissed the Complaint for lack of jurisdiction:


Following the High Court's ruling in the case of Home Guaranty
Corporation v. R. II Builders, Inc. and National Housing Authority,
G.R. No. 192549, March 9, 2011, cited by the bank in its
Rejoinder, which appears to be the latest jurisprudence on the
matter to the effect that an action for annulment or rescission of
contract does not operate to efface the true objective and nature
of the action which is to recover real property, this Court hereby
RESOLVES TO DISMISS the instant case for lack of jurisdiction,
plaintiff having failed to pay the appropriate filing fees.

Accordingly, the instant case is hereby DISMISSED.

SO ORDERED. [26]
On July 25, 2012, the Regional Trial Court  denied
[27]
First
Sarmiento's motion for reconsideration. [28]

On August 17, 2012, First Sarmiento sought direct recourse to


this Court with its Petition for Review  under Rule 45. It insists
[29]

that its Complaint for the annulment of real estate mortgage was
incapable of pecuniary estimation.  It points out that the
[30]

Executive Judge and Vice-Executive Judges of the Regional Trial


Court likewise acknowledged that its action was incapable of
pecuniary estimation. [31]

Petitioner highlights that the Supreme Court En Banc in Lu v. Lu


Ym held "that an action for declaration of nullity of issuance of
shares or an action questioning the legality of a conveyance is
one not capable of pecuniary estimation."  Furthermore, [32]

petitioner maintains that the Supreme Court En Banc in Bunayog


v. Tunas also established that a complaint questioning the validity
of a mortgage is an action incapable of pecuniary estimation. [33]

It emphasizes that Home Guaranty Corporation v. R-II Builders,


which the Regional Trial Court relied on to dismiss its complaint
for lack of jurisdiction, was rendered by a division of the Supreme
Court; hence, it cannot modify or reverse a doctrine or principle
of law laid down by the Supreme Court En Banc. [34]

On September 19, 2012,  this Court directed respondent PBCOM


[35]

to comment on the petition.

In its Comment,  respondent contends that petitioner's action to


[36]

annul the real estate mortgage and enjoin the foreclosure


proceedings did not hide the true objective of the action, which is
to restore petitioner's ownership of the foreclosed properties. [37]

Respondent maintains that this Court has already settled that "a
complaint for cancellation of sale which prayed for both
permanent and preliminary injunction aimed at the restoration of
possession of the land in litigation is a real action." [38]
It likewise stresses that since petitioner's primary objective in
filing its Complaint was to prevent the scheduled foreclosure
proceedings over the mortgaged properties and the conveyance
of their ownership to the highest bidder, the case was a real
action.
[39]

Finally, it denies that Home Guaranty Corporation modified and


reversed Lu v. Lu Ym because the factual and legal milieus of
these two (2) cases were different. [40]

On November 26, 2012,  this Court required petitioner to file a


[41]

reply to the comment.

On February 1, 2013, petitioner filed its Reply  where it denies


[42]

that its Complaint was for the annulment of the foreclosure sale,
because when it filed its Complaint, the foreclosure sale had not
yet happened. [43]

It proclaims that its Complaint sought the removal of the lien on


the mortgaged properties and was not intended to recover
ownership or possession since it was still the registered owner
with possession of the mortgaged properties when it filed its
Complaint. [44]

On February 27, 2013,  this Court noted petitioner's reply and


[45]

directed the parties to submit their respective memoranda.

On May 30, 2013, the parties filed their respective memoranda. [46]

In its Memorandum,  petitioner continues to insist that it did not


[47]

receive the loan proceeds from PBCOM which is why it filed its
Complaint for annulment of real estate mortgage in response to
the latter's Petition for Extrajudicial Foreclosure of Real Estate
Mortgage. [48]

Petitioner reiterates that its Complaint for annulment of real


estate mortgage was an action incapable of pecuniary estimation
because it merely sought to remove the lien on its properties, not
the recovery or reconveyance of the mortgaged properties. [49]

It states that it never expressly or impliedly sought the


conveyance of the mortgaged properties because it was still the
registered owner of the mortgaged properties when its Complaint
was first presented for filing with the Clerk of Court.[50]

On the other hand, respondent in its Memorandum  restates its


[51]

stand that petitioner's Complaint involved a real action; hence,


the estimated value of the mortgaged properties should have
been alleged and used as the basis for the computation of the
docket fees.[52]

Respondent claims that the allegations in petitioner's Complaint


reveal the latter's real intention to assert its title and recover the
real properties sold at the public auction.[53]

The only issue for this Court's resolution is whether or not the
Regional Trial Court obtained jurisdiction over First Sarmiento
Corporation, Inc.'s Complaint for annulment of real estate
mortgage.

Rule 45 of the Rules of Court allows for a direct recourse to this


Court by appeal from a judgment, final order, or resolution of the
Regional Trial Court. Rule 45, Section 1 provides:
Section 1. Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.
Rule 41, Section 2(c) likewise provides:
Section 2. Modes of appeal. —
....

(c) Appeal by certiorari. — In all cases where only questions of


law are raised or involved, the appeal shall be to the Supreme
Court by petition for review on certiorari in accordance with Rule
45.
Thus, there is no question that a petitioner may file a verified
petition for review directly with this Court if only questions of law
are at issue; however, if both questions of law and of facts are
present, the correct remedy is to file a petition for review with the
Court of Appeals. [54]

Doña Adela Export International v. Trade and Investment


Development Corp.  differentiated between a question of law and
[55]

a question of fact as follows:


We stress that a direct recourse to this Court from the decisions,
final resolutions and orders of the RTC may be taken where only
questions of law are raised or involved. There is a question of law
when the doubt or difference arises as to what the law is on a
certain state of facts, which does not call for an examination of
the probative value of the evidence presented by the parties-
litigants. On the other hand, there is a question of fact when the
doubt or controversy arises as to the truth or falsity of the alleged
facts. Simply put, when there is no dispute as to fact, the
question of whether the conclusion drawn therefrom is correct or
not, is a question of law.  (Citation omitted)
[56]

In the case at bar, the underlying question for this Court's


resolution pertains to jurisdiction, or to be more precise, whether
the Regional Trial Court attained jurisdiction over petitioner's
Complaint with the amount of docket fees paid.

Considering that the issue of jurisdiction is a pure question of law,


 petitioner did not err in filing its appeal directly with this Court
[57]

pursuant to law and prevailing jurisprudence.

II
Petitioner contends that its Complaint for annulment of real
estate mortgage has a subject incapable of pecuniary estimation
because it was not intended to recover ownership or possession
of the mortgaged properties sold to respondent during the
auction sale.  It insists that it had ownership and possession of
[58]

the mortgaged properties when it filed its Complaint; hence, it


never expressly or impliedly sought recovery of their ownership
or possession. [59]

The petition is meritorious.

Jurisdiction is "the power and authority of a court to hear, try and


decide a case"  brought before it for resolution.
[60]

Courts exercise the powers conferred on them with binding effect


if they acquire jurisdiction over: "(a) the cause of action or the
subject matter of the case; (b) the thing or the res; (c) the
parties; and (d) the remedy." [61]

Jurisdiction over the thing or the res is a court's authority over


the object subject of litigation.  The court obtains jurisdiction or
[62]

actual custody over the object through the seizure of the object
under legal process or the institution of legal proceedings which
recognize the power and authority of the court. [63]

Jurisdiction over the parties is the court's power to render


judgment that are binding on the parties. The courts acquire
jurisdiction over the plaintiffs when they file their initiatory
pleading, while the defendants come under the court's jurisdiction
upon the valid service of summons or their voluntary appearance
in court.
[64]

Jurisdiction over the cause of action or subject matter of the case


is the court's authority to hear and determine cases within a
general class where the proceedings in question belong. This
power is conferred by law and cannot be acquired through
stipulation, agreement between the parties,  or implied waiver
[65]

due to the silence of a party. [66]


Jurisdiction is conferred by the Constitution, with Congress given
the plenary power, for cases not enumerated in Article VIII,
Section 5  of the Constitution, to define, prescribe, and apportion
[67]

the jurisdiction of various courts. [68]

Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of


1980 as amended by Republic Act No. 7691, provided for the
jurisdictional division between the first and second level courts by
considering the complexity of the cases and the experience
needed of the judges assigned to hear the cases.

In criminal cases, first level courts are granted exclusive original


jurisdiction to hear complaints on violations of city or municipal
ordinances  and offenses punishable with imprisonment not
[69]

exceeding six (6) years.  In contrast, second level courts, with
[70]

more experienced judges sitting at the helm, are granted


exclusive original jurisdiction to preside over all other criminal
cases not within the exclusive jurisdiction of any other court,
tribunal, or body. [71]

The same holds true for civil actions and probate proceedings,
where first level courts have the power to hear cases where the
value of personal property, estate, or amount of the demand does
not exceed P100,000.00 or P200,000.00 if in Metro Manila.  First [72]

level courts also possess the authority to hear civil actions


involving title to, possession of, or any interest in real property
where the value does not exceed P20,000.00 or P50,000.00 if the
real property is situated in Metro Manila.  Second level courts
[73]

then assume jurisdiction when the values involved exceed the


threshold amounts reserved for first level courts  or when the
[74]

subject of litigation is incapable of pecuniary estimation. [75]

First level courts were also conferred with the power to hear the
relatively uncomplicated cases of forcible entry and unlawful
detainer,  while second level courts are authorized to hear all
[76]

actions in admiralty and maritime jurisdiction  with claims above


[77]

a certain threshold amount. Second level courts are likewise


authorized to hear all cases involving the contract of marriage
and marital relations,  in recognition of the expertise and probity
[78]

required in deciding issues which traverse the marital sphere.

Section 19(1) of Batas Pambansa Blg. 129, as amended, provides


Regional Trial Courts with exclusive, original jurisdiction over "all
civil actions in which the subject of the litigation is incapable of
pecuniary estimation."

Lapitan v. Scandia  instructed that to determine whether the


[79]

subject matter of an action is incapable of pecuniary estimation,


the nature of the principal action or remedy sought must first be
established. This finds support in this Court's repeated
pronouncement that jurisdiction over the subject matter is
determined by examining the material allegations of the
complaint and the relief sought.  Heirs of Dela Cruz v. Heirs of
[80]

Cruz  stated, thus:


[81]

It is axiomatic that the jurisdiction of a tribunal, including a


quasi-judicial officer or government agency, over the nature and
subject matter of a petition or complaint is determined by the
material allegations therein and the character of the relief prayed
for, irrespective of whether the petitioner or complainant is
entitled to any or all such reliefs.
[82]

However, Lapitan stressed that where the money claim is only a


consequence of the remedy sought, the action is said to be one
incapable of pecuniary estimation:
A review of the jurisprudence of this Court indicates that in
determining whether an action is one the subject matter of which
is not capable of pecuniary estimation, this Court has adopted the
criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary estimation,
and whether jurisdiction is in the municipal courts or in the courts
of first instance would depend on the amount of the claim.
However, where the basic issue is something other than the right
to recover a sum of money, or where the money claim is purely
incidental to, or a consequence of, the principal relief sought like
in suits to have the defendant perform his part of the contract
(specific performance) and in actions for support, or for
annulment of a judgment or to foreclose a mortgage, this Court
has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance. The rationale of
the rule is plainly that the second class cases, besides the
determination of damages, demand an inquiry into other factors
which the law has deemed to be more within the competence of
courts of first instance, which were the lowest courts of record at
the time that the first organic laws of the Judiciary were enacted
allocating jurisdiction (Act 136 of the Philippine Commission of
June 11, 1901).  (Citation omitted)
[83]

Heirs of Sebe v. Heirs of Sevilla  likewise stressed that if the


[84]

primary cause of action is based on a claim of ownership or a


claim of legal right to control, possess, dispose, or enjoy such
property, the action is a real action involving title to real
property.[85]

A careful reading of petitioner's Complaint convinces this Court


that petitioner never prayed for the reconveyance of the
properties foreclosed during the auction sale, or that it ever
asserted its ownership or possession over them. Rather, it
assailed the validity of the loan contract with real estate
mortgage that it entered into with respondent because it
supposedly never received the proceeds of the P100,000,000.00
loan agreement.  This is evident in its Complaint, which read:
[86]

GROUNDS FOR THE APPLICATION OF PRELIMINARY INJUNCTION


AND TEMPORARY RESTRAINING ORDER

7. Defendant PBCOM knows fully well that plaintiff did not receive
from it the loan it (PBCOM) alleged to have granted in its favor.

8. Despite this, defendant PBCOM has filed with the Ex-Officio


Sheriff of Bulacan, a petition for extra judicial foreclosure of real
estate mortgage, bent on foreclosing the real estate properties of
plaintiff, photocopy of the petition is hereto attached as Annex
"F".
9. The auction sale of the properties is set on December 29,
2011.

10. Defendant PBCOM, well knowing the facts narrated above and
willfully disregarding the property rights of plaintiff, wrongfully
filed an extra judicial foreclosure of real estate mortgage and
pursuant to said petition, the Ex-Officio Sheriff now does offer for
sale, the real estate properties of the plaintiff as set forth in its
(PBCOM) said petition.

11. Unless defendants PBCOM and Ex-Officio Sheriff are


restrained by this Honorable Court, they will infringe the property
rights of the plaintiff in the manner herein before related.[87]

Far East Bank and Trust Company v. Shemberg Marketing


Corporation  stated that an action for cancellation of mortgage
[88]

has a subject that is incapable of pecuniary estimation:


Here, the primary reliefs prayed for by respondents in Civil Case
No. MAN-4045 is the cancellation of the real estate and chattel
mortgages for want of consideration. In Bumayog v. Tumas, this
Court ruled that where the issue involves the validity of a
mortgage, the action is one incapable of pecuniary estimation. In
the more recent case of Russell v. Vestil, this Court,
citing Bumayog, held that an action questioning the validity of a
mortgage is one incapable of pecuniary estimation. Petitioner has
not shown adequate reasons for this Court to
revisit Bumayog and Russell. Hence, petitioner's contention
[cannot] be sustained. Since respondents paid the docket fees, as
computed by the clerk of court, consequently, the trial court
acquired jurisdiction over Civil Case No. MAN-4045. [89]

It is not disputed that even if the Complaint were filed a few days
after the mortgaged properties were foreclosed and sold at
auction to respondent as the highest bidder, the certificate of sale
was only issued to respondent after the Complaint was filed.

Section 6 of Act No. 3135,  as amended, provides that a property


[90]

sold through an extrajudicial sale may be redeemed "at any time


within the term of one year from and after the date of the sale":
Section 6. In all cases in which an extrajudicial sale is made
under the special power hereinbefore referred to, the debtor, his
successors in interest or any judicial creditor or judgment creditor
of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the
term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of
the Code of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act.
Mahinay v. Dura Tire & Rubber Industries Inc.  clarified that
[91]

"[t]he date of the sale' referred to in Section 6 is the date the


certificate of sale is registered with the Register of Deeds. This is
because the sale of registered land does not 'take effect as a
conveyance, or bind the land' until it is registered."
[92]

The registration of the certificate of sale issued by the sheriff


after an extrajudicial sale is a mandatory requirement; thus, if
the certificate of sale is not registered with the Registry of Deeds,
the property sold at auction is not conveyed to the new owner
and the period of redemption does not begin to run. [93]

In the case at bar, the Ex-Officio Sheriff of the City of Malolos,


Bulacan was restrained from registering the certificate of sale
with the Registry of Deeds of Bulacan and the certificate of sale
was only issued to respondent after the Complaint for annulment
of real estate mortgage was filed. Therefore, even if the
properties had already been foreclosed when the Complaint was
filed, their ownership and possession remained with petitioner
since the certificate of sale was not registered with the Registry of
Deeds. This supports petitioner's claim that it never asked for the
reconveyance of or asserted its ownership over the mortgaged
properties when it filed its Complaint since it still enjoyed
ownership and possession over them.

Considering that petitioner paid the docket fees as computed by


the clerk of court, upon the direction of the Executive Judge, this
Court is convinced that the Regional Trial Court acquired
jurisdiction over the Complaint for annulment of real estate
mortgage.

Furthermore, even if it is assumed that the instant case were a


real action and the correct docket fees were not paid by
petitioner, the case should not have been dismissed; instead, the
payment of additional docket fees should have been made a lien
on the judgment award. The records attest that in filing its
complaint, petitioner readily paid the docket fees assessed by the
clerk of court; hence, there was no evidence of bad faith or
intention to defraud the government that would have rightfully
merited the dismissal of the Complaint.[94]

III

Although not raised in the Petition, this Court nonetheless deems


it proper to pass upon the legality of the Regional Trial Court
January 4, 2012 Order, which directed the parties to observe the
status quo ante,  effectively extending indefinitely its 72-hour
[95]

ex-parte temporary restraining order issued on January 2, 2012. [96]

Rule 58, Section 5 of the Rules of Court provides the instances


when a temporary restraining order may be issued:
Section 5. Preliminary injunction not granted without notice;
exception. — No preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be
enjoined. If it shall appear from facts shown by affidavits or by
the verified application that great or irreparable injury would
result to the applicant before the matter can be heard on notice,
the court to which the application for preliminary injunction was
made, may issue a temporary restraining order to be effective
only for a period of twenty (20) days from service on the party or
person sought to be enjoined, except as herein provided. Within
the said twenty-day period, the court must order said party or
person to show cause, at a specified time and place, why the
injunction should not be granted, determine within the same
period whether or not the preliminary injunction shall be granted,
and accordingly issue the corresponding order.

However, and subject to the provisions of the preceding sections,


if the matter is of extreme urgency and the applicant will suffer
grave injustice and irreparable injury, the executive judge of a
multiple-sala court or the presiding judge of a single-sala court
may issue ex-parte a temporary restraining order effective for
only seventy-two (72) hours from issuance but he shall
immediately comply with the provisions of the next preceding
section as to service of summons and the documents to be
served therewith. Thereafter, within the aforesaid seventy-two
(72) hours, the judge before whom the case is pending shall
conduct a summary hearing to determine whether the temporary
restraining order shall be extended until the application for
preliminary injunction can be heard. In no case shall the total
period of effectivity of the temporary restraining order exceed
twenty (20) days, including the original seventy-two hours
provided herein.

In the event that the application for preliminary injunction is


denied or not resolved within the said period, the temporary
restraining order is deemed automatically vacated. The effectivity
of a temporary restraining order is not extendible without need of
any judicial declaration to that effect and no court shall have
authority to extend or renew the same on the same ground for
which it was issued.

However, if issued by the Court of Appeals or a member thereof,


the temporary restraining order shall be effective for sixty (60)
days from service on the party or person sought to be enjoined. A
restraining order issued by the Supreme Court or a member
thereof shall be effective until further orders.
It is clear that a temporary restraining order may be issued by a
trial court in only two (2) instances: first, when great or
irreparable injury would result to the applicant even before the
application for writ of preliminary injunction can be heard;
and second, if the matter is of extreme urgency and the applicant
will suffer grave injustice and irreparable injury. The executive
judge of a multi-sala court or the presiding judge of a single-sala
court may issue a 72-hour temporary restraining order.

In both instances, the temporary restraining order may be


issued ex parte. However, in the first instance, the temporary
restraining order has an effectivity of only 20 days to be counted
from service to the party sought to be enjoined. Likewise, within
those 20 days, the court shall order the enjoined party to show
why the injunction should not be granted and shall then
determine whether or not the injunction should be granted.

In the second instance, when there is extreme urgency and the


applicant will suffer grave injustice and irreparable injury, the
court shall issue a temporary restraining order effective for only
72 hours upon issuance. Within those 72 hours, the court shall
conduct a summary hearing to determine if the temporary
restraining order shall be extended until the application for writ of
preliminary injunction can be heard. However, in no case shall
the extension exceed 20 days.

If the application for preliminary injunction is denied or not


resolved within the given periods, the temporary restraining order
is automatically vacated and the court has no authority to extend
or renew it on the same ground of its original issuance.

Despite the clear wording of the rules, the Regional Trial Court
issued a status quo ante order dated January 4, 2012, indefinitely
extending the temporary restraining order on the registration of
the certificate of sale with the Registry of Deeds.

Petitioner applied for a writ of preliminary injunction, yet the


Regional Trial Court did not conduct any hearing for that purpose
and merely directed the parties to observe the status quo ante.

Miriam College Foundation, Inc v. Court of Appeals  explained


[97]

the difference between preliminary injunction and a restraining


order as follows:
Preliminary injunction is an order granted at any stage of an
action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or a person to perform to
refrain from performing a particular act or acts. As an
extraordinary remedy, injunction is calculated to preserve or
maintain the status quo of things and is generally availed of to
prevent actual or threatened acts, until the merits of the case can
be heard. A preliminary injunction persists until it is dissolved or
until the termination of the action without the court issuing a final
injunction.

The basic purpose of restraining order, on the other hand, is to


preserve the status quo until the hearing of the application for
preliminary injunction. Under the former A§5, Rule 58 of the
Rules of Court, as amended by A§5, Batas Pambansa Blg. 224, a
judge (or justice) may issue a temporary restraining order with a
limited life of twenty days from date of issue. If before the
expiration of the 20-day period the application for preliminary
injunction is denied, the temporary order would thereby be
deemed automatically vacated. If no action is taken by the judge
on the application for preliminary injunction within the said 20
days, the temporary restraining order would automatically expire
on the 20th day by the sheer force of law, no judicial declaration
to that effect being necessary. In the instant case, no such
preliminary injunction was issued; hence, the TRO earlier issued
automatically expired under the aforesaid provision of the Rules
of Court.  (Citations omitted)
[98]

A temporary restraining order cannot be extended indefinitely to


take the place of a writ of preliminary injunction, since a
temporary restraining order is intended only to have a limited
lifespan and is deemed automatically vacated upon the expiration
of 72 hours or 20 days, as the case may be. As such, the
temporary restraining order has long expired and, in the absence
of a preliminary injunction, there was nothing to stop the sheriff
from registering the certificate of sale with the Registry of Deeds.

This Court has repeatedly expounded on the nature of a


temporary restraining order  and a preliminary injunction.  Yet
[99] [100]
lower courts consistently interchange these ancillary remedies
and disregard the sunset clause  inherent in a temporary
[101]

restraining order by erroneously extending it indefinitely. Such


ignorance or defiance of basic remedial measures is a gross
disservice to the public, who look towards the court for legal
guidance and legal remedy. More importantly, this cavalier
attitude towards these injunctive reliefs might even be construed
as a deliberate effort to look the other way to favor a party,
which will then sully the image of the entire judiciary. Henceforth,
this Court will demand stricter compliance with the rules from the
members of the bench as regards their issuances of these
injunctive reliefs.

IV

Finally, there is a need to reassess the place of Home Guaranty


v. R-II Builders  in our jurisprudence.
[102]

In Home Guaranty, R-II Builders, Inc. (R-II Builders) filed a


Complaint for the rescission of the Deed of Assignment and
Conveyance it entered into with Home Guaranty Corporation and
National Housing Authority. The Complaint was initially
determined to have a subject that is incapable of pecuniary
estimation and the docket fees were assessed and paid
accordingly.[103]

R-II Builders later filed a motion to admit its Amended and


Supplemental Complaint, which deleted its earlier prayer for the
resolution of its Deed of Assignment and Conveyance, and prayed
for the conveyance of title to and/or possession of the entire
Asset Pool. The Regional Trial Court ruled that the Amended and
Supplemental Complaint involved a real action and directed R-II
Builders to pay the correct docket fees. [104]

Instead of paying the additional docket fees, R-II Builders


withdrew its Amended and Supplemental Complaint and instead
filed a motion to admit its Second Amended Complaint, which
revived the prayer in its original Complaint to resolve the Deed of
Assignment and Conveyance and deleted the causes of action for
conveyance of title to and/or possession of the entire Asset Pool
in its Amended and Supplemental Complaint.  The Regional Trial
[105]

Court granted the motion to admit the Second Amended


Complaint, ratiocinating that the docket fees to the original
Complaint had been paid; that the Second Amended Complaint
was not intended to delay the proceedings; and that the Second
Amended Complaint was consistent with R-II Builders' previous
pleadings.[106]

The Court of Appeals upheld the ruling of the Regional Trial Court
and reiterated that the case involved a subject that was incapable
of pecuniary estimation.  However, Home Guaranty reversed the
[107]

Court of Appeals Decision, ruling that the Complaint and the


Amended and Supplemental Complaint both involved prayers for
the conveyance and/or transfer of possession of the Asset Pool,
causes of action which were undoubtedly real actions. Thus, the
correct docket fees had not yet been paid: [108]

Although an action for resolution and/or the nullification of a


contract, like an action for specific performance, fall squarely into
the category of actions where the subject matter is considered
incapable of pecuniary estimation, we find that the causes of
action for resolution and/or nullification of the [Deed of
Assignment and Conveyance] was erroneously isolated by the
[Court of Appeals] from the other causes of action alleged in R-II
Builders' original complaint and Amended and Supplemental
Complaint which prayed for the conveyance and/or transfer of
possession of the Asset Pool. In Gochan v. Gochan, this Court
held that an action for specific performance would still be
considered a real action where it seeks the conveyance or
transfer of real property, or ultimately, the execution of deeds of
conveyance of real property.

....

Granted that R-II Builders is not claiming ownership of the Asset


Pool because its continuing stake is, in the first place, limited only
to the residual value thereof, the conveyance and/or transfer of
possession of the same properties sought in the original
complaint and Amended and Supplemental Complaint both
presuppose a real action for which appropriate docket fees
computed on the basis of the assessed or estimated value of said
properties should have been assessed and paid. . . .  (Citations
[109]

omitted)
Home Guaranty stated that to determine whether an action is
capable or incapable of pecuniary estimation, the nature of the
principal action or remedy prayed for must first be determined.
 Nonetheless, in citing Ruby Shelter Builders v. Formaran,
[110]

Home Guaranty looked beyond R-II Builder's principal action for


annulment or rescission of contract to purportedly unmask its
true objective and nature of its action, which was to recover real
property.[111]

In a dissenting opinion in the Home Guaranty  June 22, 2011


[112]

Resolution that dismissed R-II Builders' motion for


reconsideration, Associate Justice Presbitero Velasco, Jr. stressed
that one must first look at the principal action of the case to
determine if it is capable or incapable of pecuniary estimation:
Whether or not the case is a real action, and whether or not the
proper docket fees were paid, one must look to the main cause of
action of the case. In all instances, in the original Complaint, the
Amended and Supplemental Complaint and the Amended
Complaint, it was all for the resolution or rescission of the [Deed
of Assignment and Conveyance], with the prayer for the
provisional remedy of injunction and the appointment of a trustee
and subsequently a receiver. In the Second Amended Complaint,
the return of the remaining assets of the asset pool, if any, to
respondent R-II Builders would only be the result of the
resolution or rescission of the [Deed of Assignment and
Conveyance].

Even if real property in the Asset Pool may change hands as a


result of the case in the trial court, the fact alone that real
property is involved does not make that property the basis of
computing the docket fees. De Leon v. Court of Appeals has
already settled the matter. That case, citing Bautista v, Lim, held
that a case for rescission or annulment of contract is not
susceptible of pecuniary estimation. On the other hand, in the
Decision We rendered on July 25, 2005 in Serrano v. Delica, We
ruled that the action for cancellation of contracts of sale and the
titles is a real action. Similarly, on February 10, 2009, We ruled
in Ruby Shelter Builders and Realty Development Corporation v.
Formaran III (Ruby Shelter) that an action for nullification of a
Memorandum of Agreement which required the lot owner to issue
deeds of sale and cancellation of the. Deeds of Sale is a real
action.  (Citations omitted)
[113]

Whatever confusion there might have been regarding the nature


of actions for nullity of contracts or legality of conveyances, which
would also involve recovery of sum of money or real property,
was directly addressed by Lu v. Lu Ym.  Lu underscored that
[114]

"where the basic issue is something other than the right to


recover a sum of money, the money claim being only incidental
to or merely a consequence of, the principal relief sought, the
action is incapable of pecuniary estimation." [115]

This finds support in numerous decisions where this Court


proclaimed that the test to determine whether an action is
capable or incapable of pecuniary estimation is to ascertain the
nature of the principal action or relief sought. Thus, if the
principal relief sought is the recovery of a sum of money or real
property, then the action is capable of pecuniary estimation.
However, if the principal relief sought is not for the recovery of
money or real property and the money claim is only a
consequence of the principal relief, then the action is incapable of
pecuniary estimation. [116]

Considering that the principal remedy sought by R-II Builders was


the resolution of the Deed of Assignment and Conveyance, the
action was incapable of pecuniary estimation and Home
Guaranty erred in treating it as a real action simply because the
principal action was accompanied by a prayer for conveyance of
real property.
It is clear that subject matter jurisdiction cannot be dependent on
the supposed ultimate motive or true objective of the complaint
because this will require the judge to speculate on the defenses
of the plaintiff beyond the material allegations contained in the
complaint. Likewise, in attempting to pinpoint the true objective
of the complaint at the initial stages of trial, the judge might end
up dictating the result outside of the evidence still to be
presented during the trial, opening up the judge to charges of
partiality and even impropriety. Furthermore, the judge is not
aware of the evidence to be presented by either party when the
complaint is filed; thus, there is no reliable basis that can be used
to infer the true objective of the complaint. It is imperative then
that the competing claims as basis of subject matter jurisdiction
be textually based, finding its basis in the body of the complaint
and the relief sought without reference to extraneous facts not
alleged or evidence still to be presented.

Nonetheless, if subject matter jurisdiction is assailed during the


course of the trial and evidence is presented to prove the
defense's allegation of lack of jurisdiction, this will lead to an
anomaly where the defense's evidence, instead of the complaint,
will effectively determine the remedy and cause of action.

In the case at bar, petitioner contends that its complaint prayed


for the annulment of the real estate mortgage it entered into with
respondent and not for the recovery or reconveyance of the
mortgaged properties because it was still the registered owner
when it filed its complaint. The evidence on record supports
petitioner's claim; hence, there was no reason for the dismissal of
its Complaint for lack of jurisdiction.

Home Guaranty likewise erred in dismissing the action because of


non-payment of the correct filing fees. Fedman Development
Corporation v. Agcaoili  reiterated that where the assessed
[117]

docket fees have been paid and the assessment turns out to be
insufficient, the court still acquires jurisdiction over the case,
subject to payment of the deficiency assessment.  The only
[118]

exception is when the deficiency in docket fees is accompanied


with bad faith and an intention to defraud the government.  It is
[119]

not disputed that R-II Builders paid the assessed docket fees
when it filed its Complaint, negating bad faith or intent on its part
to defraud the government.

In light of the foregoing, this Court reaffirms that the nature of an


action is determined by the principal relief sought in the
complaint, irrespective of the other causes of actions that may
also crop up as a consequence of the principal relief prayed for.
The contrary rule espoused in Home Guaranty is thereby set
aside.

WHEREFORE, this Court resolves to GRANT the Petition. The


assailed April 3, 2012 Decision and July 25, 2012 Order of Branch
11, Regional Trial Court, City of Malolos, Bulacan in Civil Case No.
04-M-2012 are REVERSED and SET ASIDE.

The case is ordered REMANDED to Branch 11, Regional Trial


Court, City of Malolos, Bulacan for continued trial on First
Sarmiento Property Holdings, Inc.'s Complaint for annulment of
real estate mortgage and its amendments.

SO ORDERED.

Carpio, Acting C. J., Velasco, Jr., Leonardo-De Castro, Peralta,


Bersamin, Del Castillo, Perlas-Bernabe, Jardeleza, Caguioa,
Martires, Tijam, Reyes, Jr., and Gesmundo, JJ., concur.

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on June 19, 2018 a Decision, copy


attached herewith, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on August 28,2018 at 2:30 p.m.

[1]
 Rollo, pp. 3-20.

 Id. at 21-22. The Decision was penned by Judge Basilio R.


[2]

Gabo, Jr.

 Id. at 23. The Resolution was penned by Judge Basilio R. Gabo,


[3]

Jr.

[4]
 Id. at 53.

[5]
 Id. at 33-34.

[6]
 Id. at 21 and 35-52.

[7]
 Id. at 21.

[8]
 Id. at 53-54.

[9]
 Id. at 55-56.

[10]
 Id. at 179.

[11]
 Id. at 57-64.

[12]
 Id. at 62-64.

[13]
 Id. at 155.
[14]
 Id. at 65-66.

[15]
 Id. at 179.

[16]
 Id. at 24-30.

[17]
 Id. at 67-68.

[18]
 Id. at 26-27.

[19]
 Id. at 69-70.

[20]
 Id. at 21.

[21]
 Id. at 179.

[22]
 Id. at 71-81.

[23]
 Id. at 76-77.

[24]
 Id. at 77-79.

[25]
 Id. at 21-22.

[26]
 Id. at 22.

[27]
 Id. at 23.

[28]
 Id. at 90-94.

[29]
 Id. at 3-20.

[30]
 Id. at 11-13.

[31]
 Id. at 10.

[32]
 Id. at 14.
[33]
 Id. at 14.

[34]
 Id. at 13-15.

[35]
 Id. at 113.

[36]
 Id. at 118-133.

[37]
 Id. at 122.

[38]
 Id.

[39]
 Id. at 125.

[40]
 Id. at 128-129.

[41]
 Id. at 137.

[42]
 Id. at 138-144.

[43]
 Id. at 138-139.

[44]
 Id. at 139-140.

[45]
 Id. at 145.

 Id. at 154-174, First Sarmiento's Memorandum; and rollo, pp.


[46]

175-196, PBCOM's Memorandum.

[47]
 Id. at 154-174.

[48]
 Id. at 155.

[49]
 Id. at 158-159.

[50]
 Id, at 166.

[51]
 Id. at 175-196.
[52]
 Id. at 181.

[53]
 Id. at 182-183.

 Marilao Water v. Intermediate Appellate Court, 278 Phil. 444,


[54]

452 (1991) [Per J. Narvasa, First Division]; Mendoza v. Villas,


659 Phil. 409, 415-416 (2011) [Per J. Velasco, Jr., First
Division]; Doña Adela Export International v. Trade & Investment
Development Corp., 753 Phil. 596, 610 (2015) [Per J. Villarama,
Jr., Third Division].

[55]
 753 Phil. 596 (2015) [Per J. Villarama, Jr., Third Division].

[56]
 Id. at 610.

 Victorias Milling Co. Inc. v. Intermediate Appellate Court, 277


[57]

Phil. 1, 8 (1991) [Per J. Davide, Jr., Third Division].

[58]
 Rollo, pp. 11-13.

[59]
 Id. at 166.

 Zamora v. Court of Appeals, 262 Phil. 298, 304 (1990) [Per J.


[60]

Cruz, First Division].

 De Pedro v. Romasan Development Corp., 748 Phil. 706, 723


[61]

(2014) [Per J. Leonen, Second Division].

[62]
 Id. at 723-724.

 Macahilig v. Heirs of Magalit, 398 Phil. 802, 817 (2000) [Per J.


[63]

Panganiban, Third Division].

 See Villagracia v. Fifth Shari'a District Court, 734 Phil. 239


[64]

(2014) [Per J. Leonen, Third Division].


 Heirs of Concha, Sr. v. Spouses Lumocso, 564 Phil. 580, 592-
[65]

593 (2007) [Per C. J. Puno, First Division].

 Peralta-Labrador v. Bugarin, 505 Phil. 409, 415 (2005) [Per J.


[66]

Ynares-Santiago, First Division]

[67]
 CONST., art. VIII, sec. 5 provides:

Section 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting


ambassadors, other public ministers and consuls, and over
petitions for certiorari, prohibition, mandamus, quo warranto,
and habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or


certiorari, as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any


treaty, international or executive agreement, law, presidential
decree, proclamation, order, instruction, ordinance, or regulation
is in question.

(b) All cases involving the legality of any tax, impost,


assessment, or toll, or any penalty imposed in relation thereto.

(c) All cases in which the jurisdiction of any lower court is in


issue.

(d) All criminal cases in which the penalty imposed is reclusion


perpetua or higher.

(e) All cases in which only an error or question of law is involved.

(3) Assign temporarily judges of lower courts to other stations as


public interest may require. Such temporary assignment shall not
exceed six months without the consent of the judge concerned.
(4) Order a change of venue or place of trial to avoid a
miscarriage of justice.

(5) Promulgate rules concerning the protection and enforcement


of constitutional rights, pleading, practice, and procedure in all
courts, the admission to the practice of law, the Integrated Bar,
and legal assistance to the underprivileged. Such rules shall
provide a simplified and inexpensive procedure for the speedy
disposition of cases, shall be uniform for all courts of the same
grade, and shall not diminish, increase, or modify substantive
rights. Rules of procedure of special courts and quasi-judicial
bodies shall remain effective unless disapproved by the Supreme
Court.

(6) Appoint all officials and employees of the Judiciary in


accordance with the Civil Service Law.

[68]
 CONST., art. VIII, sec. 2.

[69]
 Batas Blg. 129, sec. 32(1).

[70]
 Batas Blg. 129, sec. 32(2).

[71]
 Batas Blg. 129, sec. 20.

[72]
 Batas Blg. 129, sec. 33(1).

[73]
 Batas Blg. 129, sec. 33(3).

[74]
 Batas Blg. 129, sec. 19(2) and (4).

[75]
 Batas Blg. 129, sec. 19(1).

[76]
 Batas Blg. 129, sec. 33(2).

[77]
 Batas Blg. 129, sec. 19(3).
[78]
 Batas Blg. 129, sec. 19(5).

[79]
 133 Phil 526 (1968) [Per J. Reyes, J.B.L, En Banc].

 Figueroa v. People, 580 Phil. 58, 78 (2008) [Per J. Nachura,


[80]

Third Division] citing Villagracia v. Fifth Shari'a District Court, 734


Phil. 239 (2014) [Per J. Leonen, Third Division]; Heirs of Julian
Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, 512 Phil.
389 (2005) [Per J. Callejo, Second Division]; Spouses Atuel v.
Spouses Valdez, 451 Phil. 631 (2003) [Per J. Carpio, First
Division].

[81]
 512 Phil. 389 (2005) [Per J. Callejo, Second Division]

[82]
 Id. at 400.

 Lapitan v. Scandia, 133 Phil. 526, 528 (1968) [Per J. Reyes,


[83]

J.B.L, En Banc]

[84]
 618 Phil. 395 (2009) [Per J. Abad, Second Division].

[85]
 Id. at 407.

[86]
 Rollo, pp. 25-26.

[87]
 Id. at 26-27.

 540 Phil.
[88]
7 (2006) [Per J. Sandoval-Gutierrez, Second
Division].

 Id. at 21 citing Bunayog v. Tunas, 106 Phil. 715 (1959) [Per J.


[89]

Bautista Angelo, En Banc] and Russell v. Vestil, 364 Phil. 392


(1999) [Per J. Kapunan, First Division].

 An Act to Regulate the Sale of Property Under Special Powers


[90]

Inserted In or Annexed to Real-Estate Mortgages.


 G.R.
[91]
No. 194152, June 5, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/june2017/194152.pdf> [Per J. Leonen,
Second Division].

 Id. at 5 citing Reyes v. Noblejas, 129 Phil. 256, 262 (1967)


[92]

[Per J. Angeles, En Banc].

 Reyes v. Noblejas, 129 Phil. 256, 261-262 (1967) [Per J.


[93]

Angeles, En Banc].

 Fedman Development Corp. v. Agcaoili, 672 Phil. 20 (2011)


[94]

[Per J. Bersamin, First Division].

[95]
 Rollo, p. 21.

[96]
 Id. at 69-70.

[97]
 401 Phil. 431 (2000) [Per J. Kapunan, First Division].

[98]
 Id. at 447-448.

 Carpio-Morales v. Court of Appeals, 772 Phil. 627, 736-738


[99]

(2015) [Per J. Perlas-Bernabe, En Banc]; Miriam College


Foundation, Inc. v. Court of Appeals, 401 Phil. 431, 447-448
(2000) [Per J. Kapunan, First Division].

 Carpio-Morales v. Court of Appeals, 772 Phil. 627, 736-738


[100]

(2015) [Per J. Perlas-Bernabe, En Banc]; The Incorporators of


Mindanao Institute, Inc. v. The United Church of Christ in the
Philippines, 685 Phil. 21, 32-34 (2012) [Per J. Mendoza, Third
Division]; Dungog v. Court of Appeals, 455 Phil. 675, 684-685
(2003) [Per J. Carpio, First Division].

 Bankers Association of the Philippines v. Comelec, 722 Phil. 92,


[101]

100 (2013) [Per J. Brion, En Banc].

[102]
 660 Phil. 517 (2011) [Per J. Perez, First Division].
[103]
 Id. at 523.

[104]
 Id. at 524-525.

[105]
 Id. at 525.

[106]
 Id. at 526.

[107]
 Id. at 527.

[108]
 Id. at 532.

[109]
 Id. at 536 and 538.

[110]
 Id. at 535.

[111]
 Id. at 537-538.

[112]
 667 Phil. 781 (2011) [Per J. Perez, Special First Division].

[113]
 Id. at 802.

[114]
 585 Phil. 251 (2008) [Per J. Nachura, En Banc].

[115]
 Id. at 273.

 See Lapitan v. Scandia, Inc., et al., 133 Phil. 526, 528 (1968)
[116]

[Per J. Reyes, J.B.L, En Banc];  Singson v. Isabela Sawmill, 177


Phil. 575, 588 (1979) [Per J. Fernandez, First Division]; Spouses
Huguete v. Spouses Embudo, 453 Phil. 170, 176-177 (2003) Far
East Bank and Trust Company v. Shemberg Marketing
Corporation, 540 Phil. 7, 21 (2006) [Per J. Sandoval-Gutierrez,
Second Division].

[117]
 672 Phil 20 (2011) [Per J. Bersamin, First Division].

[118]
 Id. at 29-30.
[119]
 Id. at 29.

Source: Supreme Court E-Library | Date created: September 05, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 206965, November 29,


2017 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. EMMA BOFILL PANGAN, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

Section 21 of Republic Act No. 9165, otherwise known as the


Comprehensive Dangerous Drugs Act of 2002, cannot be utilized
to frustrate legitimate efforts of law enforcers.  Minor deviations[1]

from the mandated procedure in handling the corpus delicti must


not absolve a guilty defendant. [2]

This Court resolves this appeal  filed by Emma Bofill Pangan


[3]

(Pangan) from the September 21, 2012 Decision  of the Court of [4]

Appeals in CA-G.R. CR-H.C. No. 00747, which affirmed the


Regional Trial Court ruling  that she was guilty beyond
[5]
reasonable doubt of illegal possession of dangerous drugs in
violation of Section 11 of Republic Act No. 9165. [6]

On April 11, 2003, the Office of the City Prosecutor of Roxas City
filed an Information  against Pangan for violation of Section 11 of
[7]

Republic Act No. 9165.  The accusatory portion of this


[8]

Information read:
That on or about the 10  day of April, 2003, in the City of Roxas,
th

Philippines, and within the jurisdiction of this Honorable Court,


said accused, did then and there willfully, unlawfully and
feloniously have in her possession and control 14.16 grams of
Methamphetamine Hydrochloride (shabu), a dangerous drug,
without being authorized by law to possess the same.

CONTRARY TO LAW. [9]

On May 15, 2003, Pangan pleaded not guilty to the charge. [10]

Trial on the merits commenced. [11]

The prosecution presented the following witnesses  : PO1 Eleno [12]

Carillo (PO1 Carillo), SPO4 Dionisio Revisa, Jr. (SPO4 Revisa),


 Forensic Chemist P/Chief Insp. Angela Baldevieso (P/Chief Insp.
[13]

Baldevieso), Fastpak Global Express Corporation (Fastpak)


employee Louie Culili (Culili), Barangay Kagawad Virginia Beluso
(Barangay Kagawad Beluso), and P/S Insp  Leo Batiles (P/S Insp
[14]

Batiles).
[15]

PO1 Carillo was an Intelligence Operative  of the Capiz Police


[16]

Provincial Office in Camp Teodoro Apil, Roxas City.  At around [17]

8:00 a.m. of April 10, 2003, he conducted a test-buy operation


on Pangan at B&T Merchandising on Asis Street, Roxas City.  A [18]

police asset had reported that the shop was owned by Pangan
and her live-in partner, Mario Tupaz (Tupaz). [19]

After PO1 Carillo bought a sachet of shabu worth P1,000.00 from


Pangan, he expressed his interest to buy more drugs.  Pangan [20]

instructed him to return in the afternoon of that day as


more shabu would allegedly be delivered to her via Fastpak. [21]
PO1 Carillo went back to the Police Provincial Office to report the
information to P/S Insp. Batiles. P/S Insp. Batiles and PO1 Carillo
applied for a search warrant before Judge Charlito Fantilanan
(Judge Fantilanan), who later issued Search Warrant No. 2003-
26. [22]

P/S Insp. Batiles conducted a briefing with the buy-bust


team  comprised of PO1 Carillo, SPO4 Revisa, PO2 Escultero,
[23]

PO1 Etalla,  PO1 Cordovero, PO1 Bernardez  and SPO3


[24] [25]

Inocentes Liberia, together with the assigned investigator and


recorder.  PO1 Carillo and PO1 Bernardez were tasked to ensure
[26]

that Pangan was in her store and to give the needed prearranged
signal when already warranted. [27]

At around 4:20 p.m., PO1 Carillo and PO1 Bernardez  bought [28]

soft drinks at Pangan's store.  Thereafter, Pangan went out to


[29]

get a delivery package from Culili.  Pangan acknowledged the [30]

receipt of the delivery by signing Waybill No. 200-0000002352-2.


 She then returned to the store and placed the delivered
[31]

Fastpak pouch on top of a table. [32]

PO1 Carillo made the pre-arranged signal, prompting P/S Insp.


Batiles to advance to the area where other members of the buy-
bust team followed.  P/S Insp. Batiles read the contents of the
[33]

search warrant to Pangan.  Barangay Captain Andrada, [34]

 Barangay Kagawad Beluso, Barangay Kagawad Cesar Lara


[35]

(Lara),  Rey Casumpang of Radio Mindanao Network (RMN),


[36]

Nimbe dela Cruz and Ricardo Bulana (Bulana) of RMN-DYVR also


arrived. [37]

While inside the store, PO1 Carillo and SPO4 Revisa inspected the
Fastpak package on top of the table.  Pangan suddenly became [38]

unruly, trying to grab the package from PO1 Carillo.  The police [39]

officers brought Pangan out of the store to continue the search


and to prevent Pangan from harming herself. [40]
SPO4 Revisa opened the sealed package with a knife.  He found [41]

a Noli Me Tangere book, the pages of which were intentionally


cut  to serve as "compartments" for the three (3) big sachets of
[42]

suspected shabu.  PO1 Carillo searched the table's drawer where


[43]

he found another small pack of suspected illicit drugs, magazines


of a 0.45 caliber pistol, ammunition, a magazine pouch, and a
holster.  Members of the media and barangay officials were
[44]

present during the entire course of the search and seizure. [45]

The confiscated items were turned over to SPO1 Lebria  for [46]

marking.  He wrote "EBP-1," "EBP-2," "EBP-3," and "EBP-4" on


[47]

the four (4) plastic sachets, which stood for Emma Bofill Pangan.
 He also prepared the inventory, which was signed by the third-
[48]

party witnesses, who were present during the search.  PO1 [49]

Carillo took pictures of the premises and the seized items. [50]

The arresting team brought Pangan to the police station.  The [51]

confiscated articles were recorded in the police blotter.  P/S Insp. [52]

Batiles prepared and signed the return of service to be presented


to the trial court which issued the search warrant.  The arresting [53]

team then brought the return of service of the search warrant


and the seized items to the court. [54]

Later, P/S Insp. Batiles wrote a letter to Judge Fantilanan,


requesting to withdraw the four (4) sachets of
suspected shabu for laboratory examination.  The trial court [55]

granted the request causing the items to be forwarded to the


Philippine National Police Crime Laboratory, Camp Delgado, Iloilo
City.  P/C Insp. Baldevieso issued Chemistry Report No. D-145,
[56]

which verified that the seized items tested positive for


methamphetamine hydrochloride or shabu. [57]

On the other hand, the defense's witnesses were Pangan; her


live-in partner, Tupaz; her 17-year-old nephew, Ronel Compa
(Compa); a tricycle driver,  Wilson Villareal (Villareal); and Radio
[58]

Mindanao Network reporter, Bulana. [59]

The defense's narrative was as follows:


Pangan and Compa were operating the store when a tricycle
driver named Nong Nelson came and bought a bottle of soft
drink. Thereafter, two (2) men followed and similarly bought
some drinks. [60]

A delivery man from Fastpak suddenly came with a package for


Pangan. After handing the package to Pangan, the delivery man
directed her to sign the receipt.  Upon checking the package,
[61]

Pangan noticed that it was addressed to a certain "Gemma."  It [62]

is at this point when the two (2) men allegedly approached


Pangan and introduced themselves as police officers. One (1) of
them struggled to possess the package while the other poked a
gun at Compa, instructing him to stay still.
[63]

Pangan continuously struggled to free herself. In the process, she


hit a bottle, which broke into pieces. As the commotion
continued, one (1) of the men instructed Compa to get the
handcuffs inside the store. Pangan was eventually handcuffed and
pulled towards the Radio Mindanao Network vehicle parked about
10 arms' length from the store. The two (2) men who struggled
to detain her then returned to the store to continue the search. [64]

After 15 minutes, more police arrived at the store to aid in the


search. One (1) of the police officers approached Pangan and told
her that her store was being searched. She was told that her
handcuffs would be removed so that she could sign some papers,
which Pangan refused to sign.[65]

Pangan narrated that she and Compa were brought to the police
station. In the evening of the same day, Tupaz came. Pangan
instructed him to go to her store to check the money she had left
in a bag on their bed. When Tupaz returned, he informed Pangan
that her bag was "in disarray" without the money inside.  The
[66]

next day, Pangan caused the incident to be entered in the police


blotter.
[67]
Pangan claimed that the package was sealed when it was
delivered. She asserted that she was already inside the vehicle
when the search warrant was shown to her.  According to her,
[68]

the search warrant had an inaccurate account of its subject as


her true and right name was Emma Bofill, not  Emma Bofill [69]

Pangan,  and that the name of her store, Imar Marketing, was
[70]

not there.  Pangan insisted that she did not know Jaime Castro,
[71]

the indicated sender of the package.  She asserted that she was
[72]

not expecting any delivery that day. [73]

The Regional Trial Court  convicted Pangan.  It found that


[74] [75]

Pangan had animus possidendi as she appeared to know the


contents of the Fastpak package she had received. [76]

It also ruled that Pangan failed to rebut the claim that PO1 Carillo
initially conducted a successful test-buy that led to the application
for a search warrant.  Considering that Pangan directed PO1
[77]

Carillo to return in the afternoon as more supply would allegedly


be delivered to her through Fastpak, PO1 Carillo knew precisely
what to find during the conduct of the search. [78]

Furthermore, when Pangan realized that she was dealing with


police officers, she tried to grab the package. The trial court
inferred that if she really knew nothing about its contents, she
would not have been concerned with its possession. [79]

Contrary to Pangan's assertion that the presumption of regularity


could not work in favor of the arresting team,  the trial court
[80]

ruled that the police officers properly carried out their duties
during the search, there being no proof of any misdeed or
irregularity.  It also ruled that although none of the prosecution
[81]

witnesses testified where the seized articles were marked, this


does not automatically mean that the articles were marked
elsewhere and not at the place where the items were confiscated.
 PO1 Carillo, SPO4 Revisa, and Barangay Kagawad Beluso
[82]

identified the seized illicit drugs in court as the same ones


recovered from Pangan during the implementation of the warrant.
Considering that no evidence was presented to establish any
improper motive on their part, their testimonies deserve full
credit.
[83]

The dispositive portion of its Decision read:


WHEREFORE, accused EMMA BOFILL PANGAN is found guilty
beyond reasonable doubt of possession of 14.16 grams  of [84]

methamphetamine hydrochloride, a dangerous drug, in the


afternoon of April 10, 2003 at Roxas City, Philippines without
being authorized by law to possess the same, defined and
penalized by Section 11 sub paragraph (1), Article II of Republic
Act No. 9165 and is sentenced to life imprisonment and to pay a
fine of Four Hundred Thousand (P400,000.00) Pesos, Philippine
Currency, and the costs of this suit.

She will be credited with the full term of her detention period.

The illegal drugs are ordered confiscated to be turned over to the


Philippine Drug Enforcement Agency (PDEA) for proper disposal.

SO ORDERED.  (Emphasis in the original)


[85]

Pangan appealed the conviction, attesting that the prosecution


failed to prove the identity of the confiscated drugs. Allegedly, the
police officers failed to observe the guidelines provided for under
Section 21 of Republic Act No. 9165. Neither the marking of the
confiscated drugs or the signing of the inventory receipt was
made in her presence. [86]

The Court of Appeals ruled against the accused. [87]

It found that failure to strictly conform to the requirements of


Section 21 of Republic Act No. 9165 does not immediately make
the seized drugs inadmissible as evidence,  provided that the
[88]

integrity and evidentiary worth of the seized articles were


maintained. [89]

Furthermore, the Court of Appeals ruled that Pangan's absence


during the marking and inventory was justified as she became
"hysterical" after the search warrant was read to her.  Hence,
[90]
the arresting officers needed to pacify Pangan to prevent her
from harming herself and other people. [91]

The dispositive portion of its Decision provided:


WHEREFORE, in view of the foregoing premises, the appeal filed
in this case is hereby DENIED. The assailed Decision dated April
18, 2007 of the Regional Trial Court, Branch 16, of Roxas City in
Criminal Case No. C-093-03 is AFFIRMED.

SO ORDERED.  (Emphasis in the original)


[92]

Hence, this appeal was filed before this Court.

On May 20, 2013,  the Court of Appeals elevated to this Court


[93]

the records of this case pursuant to its January 23, 2013


Resolution,  which gave due course to Pangan's Notice of Appeal.
[94]

[95]

In its July 22, 2013 Resolution,  this Court noted the records of
[96]

this case forwarded by the Court of Appeals. The parties were


ordered to file their respective supplemental briefs, should they
have desired, within 30 days from notice. Both parties manifested
that they would no longer file supplemental briefs. [97]

For resolution before this Court is whether or not Emma Bofill


Pangan's  guilt
[98]
was proven beyond reasonable doubt.
Specifically, the main issue presented is whether or not the
prosecution established an unbroken chain of custody on the
handling of the confiscated illicit drugs.

Pangan wonders how three (3) armed middle-aged police officers


allegedly failed to pacify a 42-year-old woman like her, causing
them to lock her up inside a vehicle during the entire course of
the search.  She questions whether or not her enforced inability
[99]

to witness the marking and inventory of the confiscated items has


sufficient justification to allow a deviation from Section 21 of
Republic Act No. 9165. [100]
Furthermore, Pangan claims that the testimony of Culili cannot
prove her guilt considering that the delivery man has no personal
knowledge of the package's contents.  She also insists that the
[101]

trial court erred when it discredited her nephew's testimony on


the ground that he was her relative.  Relationship, in itself, does
[102]

not give rise to assumption of bias or impair the credibility of


witnesses or their statements.[103]

Pangan underscores the arresting officers' failure to provide any


acceptable reason to deviate from the requirements of Republic
Act No. 9165 and its implementing rules.  She asserts that the
[104]

presumption of regularity cannot work in their favor. [105]

On the other hand, the Office of the Solicitor General  presents [106]

that all the elements of illegal possession of dangerous drugs


were present.  The prosecution's testimonial, documentary and
[107]

object evidence amply established that Pangan was guilty of the


charge. [108]

The Office of the Solicitor General reiterates that non-compliance


with Section 21 of Republic Act No. 9165 is not fatal provided that
there are justifiable grounds to deviate and the integrity of the
chain of custody of the confiscated articles is maintained.
 Pangan's absence in the marking and inventory was justifiable
[109]

since the arresting officers needed to pacify her as she became


frantic and disorderly after the search warrant was read to her. [110]

The Office of the Solicitor General further avers that Pangan's


mere denial of the charge and claim of violation of the chain of
custody rule cannot be the bases of her acquittal.  Pangan's [111]

defense of denial is innately weak and unless corroborated by


clear and persuasive evidence, it remains self-serving and does
not merit any credence in law.[112]

This Court dismisses the appeal and sustains the conviction.

I
The prosecution presented evidence beyond reasonable doubt to
establish that all the elements of the offense were present and
that the accused committed the offense.

Section 11 of Republic Act No. 9165 punishes illegal possession of


dangerous drugs as follows:
Section 11. Possession of Dangerous Drugs. — The penalty of life
imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall possess any dangerous drug in the
following quantities, regardless of the degree of purity thereof:

....

(5) 50 grams or more of methamphetamine hydrochloride or


"shabu";

....

Otherwise, if the quantity involved is less than the foregoing


quantities, the penalties shall be graduated as follows:

(1) Life imprisonment and a fine ranging from Four hundred


thousand pesos (P400,000.00) to Five hundred thousand pesos
(P500,000.00), if the quantity of methamphetamine
hydrochloride or "shabu" is ten (10) grams or more but
less than fifty (50) grams[.] (Emphasis supplied)
Based on this provision, sufficient evidence to prove the following
elements should be presented:
(1) the actual possession of an item or object which is identified to be a prohibited drug
(2) such possession is not authorized by law; and
(3) the accused freely or consciously possessed the said drug.  (Citation omitted)
[113]

The prosecution presented evidence that in the morning of April


10, 2003, PO1 Carillo initially conducted a successful test-buy
which served as basis for the application of a search warrant.  In [114]

the test-buy, Pangan disclosed to PO1 Carillo that more drugs


would be delivered to her via Fastpak in the afternoon that day.
 Her words were confirmed when indeed, Culili delivered a
[115]

Fastpak package to Pangan, which prompted PO1 Carillo and


other members of the buy-bust team to effect the search leading
to the seizure of the illegal drugs. [116]

Pangan admitted the delivery of the Fastpak package where she


signed a delivery receipt.  Culili, in response to a subpoena
[117]

issued against him, testified for the prosecution and confirmed


that he delivered a package to Pangan. [118]

Culili added that the package was addressed to "Gemma


Bofill."  He identified Pangan as a regular customer.  This
[119] [120]

claim was expressly acknowledged  by the accused herself, [121]

when she admitted that prior to April 10, 2003, she had received
other packages from Fastpak addressed to either her or Tupaz.
Culili asserted that he already made prior deliveries to Pangan
and Tupaz in their past residence at SANECRA Subdivision in
Gabuan, Roxas City.  Culili was definite that it was Pangan who
[122]

received the package.  He personally handed it to her and saw


[123]

her sign the corresponding waybill.  Moreover, Pangan [124]

admitted  that she was the owner of the store that was made
[125]

subject of the search warrant.

PO1 Carillo testified that when the barangay officials and media
representatives came, he and SPO4 Revisa had started the
search.  When SPO4 Revisa opened the sealed package, they
[126]

found a book containing three (3) sachets of suspected illicit


drugs.  From the table's drawer, an additional sachet was also
[127]

discovered along with other articles listed in the inventory duly


signed by P/S Insp. Batiles and the third-party witnesses.  PO1 [128]

Carillo's testimony was corroborated by the statements of SPO4


Revisa in court. [129]

Barangay Kagawad Beluso testified for the prosecution to confirm


that she saw the search warrant, witnessed its implementation,
and signed the inventory prepared after the search.  Finally, to [130]

prove that the contents of the four (4) sachets tested positive for
methamphetamine hydrochloride or shabu, P/C Insp. Baldevieso
testified to have conducted the qualitative and
quantitative  examination.  The test result was embodied in
[131] [132]

Chemistry Report No. D-145-03, which she and the Regional


Chief of the Crime Laboratory, Police Chief Inspector Rea
Abastillas-Villavicencio, duly signed. [133]

To evade liability, Pangan offered uncorroborated and self-serving


assertions. She alleged that Culili's delivery of the package
cannot prove her guilt considering that he had no personal
knowledge of the package's contents.  She also assumes that [134]

the trial court discredited Compa's testimony as he was her


relative. [135]

This Court is not persuaded with Pangan's defense. She was


found to have been in possession of the illicit drugs without
authority to do so. Her mere possession establishes a prima
facie proof of knowledge or animus possidendi enough to convict
her as an accused in the absence of any acceptable reason for its
custody. [136]

The trial judge had the distinct opportunity to examine the


witnesses and to gauge their credibility.  The trial court was [137]

persuaded with the evidence presented by the prosecution.


 Pangan's culpability of the charge was sufficiently established.
[138]

 This Court does not find either palpable error or grave abuse of
[139]

discretion in the trial court's or Court of Appeals' evaluation of


evidence.  Therefore, their findings will not be overturned on
[140]

appeal. [141]

II

In crimes involving dangerous drugs, the State has the burden of


proving not only the elements of the offense but also the corpus
delicti of the charge. [142]

Prosecutions involving illegal possession of dangerous drugs


demand that the elemental act of possession be proven with
moral certainty and not allowed by law.  The illicit drugs, itself,
[143]
comprise the corpus delicti of the charge and its existence is
necessary to obtain a judgment of conviction.  Therefore, it is
[144]

important in these cases that the identity of the illegal drugs be


proven beyond reasonable doubt. [145]

The prosecution must establish the existence of the illicit drugs.


 It must also prove that the integrity of the corpus delicti has
[146]

been maintained because the confiscated drug, being the proof


involved, is not promptly recognizable through sight and can
be tampered or replaced. [147]

To establish that the illicit drugs scrutinized and presented in


court were the very same ones confiscated from the accused, the
prosecution should offer testimonies relating to its chain of
custody.  Chain of custody is defined as:
[148]

[T]he duly recorded authorized movements and custody of seized


drugs or controlled chemicals or plant sources of dangerous drugs
or laboratory equipment of each stage, from the time of
seizure/confiscation to receipt in the forensic laboratory to
safekeeping to presentation in court for destruction. Such record
of movements and custody of seized item shall include the
identity and signature of the person who held temporary custody
of the seized item, the date and time when such transfer of
custody were made in the course of safekeeping and use in court
as evidence, and the final disposition.  (Citation omitted)
[149]

This is governed by Section 21 of Republic Act No. 9165: [150]

Section 21. Custody and Disposition of Confiscated, Seized,


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of the drugs shall, imme
confiscation, physically inventory and photograph the same in the presence
person/s from whom such items were confiscated and/or seized, or his/
counsel, a representative from the media and the Department of Justice (D
public official who shall be required to sign the copies of the invent
copy thereof;

(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, plan
drugs, controlled precursors and essential chemicals, as well as instrument
laboratory equipment, the same shall be submitted to the PDEA Forensic Laborato
quantitative examination;

(3) A certification of the forensic laboratory examination results, which shall be done un
laboratory examiner, shall be issued within twenty-four (24) hours after the
item/s: Provided, That when the volume of the dangerous drugs, plant sources o
controlled precursors and essential chemicals does not allow the completion of
frame, a partial laboratory examination report shall be provisionally issued stating
dangerous drugs still to be examined by the forensic laboratory: Provided, however,
shall be issued on the completed forensic laboratory examination on the same with
(24) hours;

(4) After the filing of the criminal case, the Court shall, within seventy- two (72) h
inspection of the confiscated, seized and/or surrendered dangerous drugs, plan
drugs, and controlled precursors and essential chemicals, including the instrumen
laboratory equipment, and through the PDEA shall within twenty-four (24) hours
the destruction or burning of the same, in the presence of the accused or the pe
items were confiscated and/or seized, or his/her representative or counsel, a repres
and the DOJ, civil society groups and any elected public official. The Board shall dr
the manner of proper disposition and destruction of such item/s which s
offender: Provided, That those item/s of lawful commerce, as determined by the B
used or recycled for legitimate purposes: Provider, further, That a representative sa
recorded is retained;

(5) The Board shall then issue a sworn certification as to the fact of destruction or burn
which, together with the representative sample/s in the custody of the PDEA, sh
court having jurisdiction over the case. In all instances, the representative samp
minimum quantity as determined by the Board;

(6) The alleged offender or his/her representative or counsel shall be allowed to perso
above proceedings and his/her presence shall not constitute an admission of guilt. I
or accused refuses or fails to appoint a representative after due notice in writing t
counsel within seventy-two (72) hours before the actual burning or destruction of t
the Secretary of Justice shall appoint a member of the public attorney's office to rep
(7) After the promulgation and judgment in the criminal case wherein the repres
presented as evidence in court, the trial prosecutor shall inform the Board of the
case and, in turn, shall request the court for leave to turn over the said represe
PDEA for proper disposition and destruction within twenty-four (24) hours from
(Emphasis supplied)
Compliance with the preconditions provided for under Section 21
cannot be overstated.  It excludes the chances that the evidence
[151]

may be planted, contaminated, or tampered in any way.  Thus, [152]

as signified by its mandatory terms, strict conformity to the


procedures in handling the seized articles and drugs is important
and the prosecution must prove their acquiescence in any case. [153]

Non-conformity equates to failure in proving the identity of


the corpus delicti, which is an important element of the charge
involving illegal possession of illicit drugs.  Hence, even doing
[154]

acts which apparently nears compliance but do not really


conform to the requirements do not suffice.  By failing to prove
[155]

an element of the charge, non-conformity with the law will,


therefore, cause the acquittal of the accused. [156]

This Court had the occasion to discuss the consequences of the


arresting team's failure to comply with Section 21(1) of Republic
Act No. 9165 in this Court's recent cases.

In People v. Jaafar,  the accused was acquitted of the charge for


[157]

the illegal sale of 0.0604 grams of shabu, which was seized from
him through a buy-bust operation. While the police officers
marked the confiscated items, the physical inventory was not
done in the presence of the accused or any of the mandated
third-party witnesses. Also, no photograph was taken. In closing,
this Court held that non-compliance with the mandatory
preconditions of Section 21 creates doubt on the integrity of the
seized shabu. [158]

In People v. Saunar,  accused Delia Saunar was acquitted of the


[159]

charge for illegal sale of 0.0526 grams and 0.0509 grams of


dangerous drugs. This Court held that the prosecution failed to
strictly conform to the rigorous standards provided for under
Republic Act No. 9165, as amended, causing serious doubt on the
origin and identity of the seized drugs.

In Saunar, the marking and inventory were done only when the
team already reached Camp Simeon Ola and not immediately
after confiscation. This Court inferred that any of the arresting
officers could have taken custody of the seized drugs during
transit, thereby concluding that there was a high probability that
the evidence was tampered with or altered. While the belated
marking and inventory were done in the presence of third-party
witnesses, there was no evidence showing that the acts were
done in the presence of the accused or any of her
representatives. More telling was the fact that none of the third-
party witnesses was presented to testify in court. Furthermore,
no photograph was taken. [160]

In People v. Sagana,  photos of the seized items were taken only


[161]

when the accused was already in the police station. The belated
photograph taking was not simultaneously done with the marking
and inventory, which was conducted immediately after the items
were seized.  Also, there was no third-party witness present
[162]

when the items were seized and inventoried. [163]

Accused Sagana was acquitted of the charge for illegal sale of


shabu due to the evident lapses in the chain of custody that cast
doubt on the integrity and identity of the corpus delicti and the
arresting team's lack of justifiable reason to deviate from the
mandated procedures. [164]

While the chain of custody has been a crucial issue which led to


acquittals in drugs cases, this Court has still ruled that non-
conformity with the mandated procedure in handling the seized
drugs does not automatically mean that the seized items' identity
was compromised, which necessarily leads to an acquittal.  The
[165]

Implementing Rules and Regulations of Republic Act No. 9165


provide some flexibility  with the addition of a proviso which
[166]

reads:
Section 21: Custody and Disposition of Confiscated, Seized
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment...
 
(a) The apprehending officer/team having initial custody and control of the drugs
seizure and confiscation, physically inventory and photograph the same in the pre
the person/s from whom such items were confiscated and/or seized, or his/her repr
representative from the media and the Department of Justice (DOJ), and any ele
shall be required to sign the copies of the inventory and be given a copy thereof: Pr
inventory and photograph shall be conducted at the place where the search warr
nearest police station or at the nearest office of the apprehending officer/team, wh
case of warrantless seizures; Provided, further, that non-compliance with the
justifiable grounds, as long as the integrity and the evidentiary value of the se
preserved by the apprehending officer/team, shall not render void and invalid such
over said items[.] (Emphasis supplied)
The saving mechanism included in the implementing rules
guarantees that not every case of non-observance will
irreversibly prejudice the prosecution's cause. However, to merit
the application of the saving clause, the prosecution should
acknowledge and explain the deviations they committed.
Moreover, the prosecution should also prove that the integrity
and evidentiary worth of the confiscated evidence was
maintained. [167]

In other words, the arresting officers' non-compliance with


Section 21 is not fatal, provided that that there is
a justifiable reason for their deviation and that
the evidentiary worth of the seized drugs or articles was
preserved. Non-conformity with the mandated procedures will not
make the arrest of the accused illegal or the items seized
inadmissible as evidence. What matters most is that the integrity
and evidentiary worth of the seized articles were maintained since
these will be used in resolving the guilt or innocence of the
accused. [168]

Pangan's main point of contention rests on her absence during


the inventory and marking of the confiscated articles. [169]
This Court underscores that from the start, Pangan already
insisted that she did not know the contents of the delivery.
 Surprisingly, when she testified in her defense, she disclosed
[170]

that when the two (2) men allegedly "grabbed the package from
her,"  they grappled for its possession for about two (2) to three
[171]

(3) minutes.  Hence, the way she violently reacted belied her
[172]

claim of innocence. As emphasized by the trial court, "She fought


tooth and nail for [the] possession of the Fastpak pouch . . . with
the police officer because a revelation of its contents would surely
incriminate her." [173]

The police officers acknowledged their breach, offering a


justifiable reason why they had to dispense with Pangan's
presence during the search, inventory, and photographing. The
police narrated how Pangan became "uncontrollable."  This is a
[174]

fact corroborated by the accused herself when she testified that


she "struggled to free herself [and] she accidentally swiped a
bottle in front of her store that fell and broke into
pieces."  Therefore, Pangan's aggressive actuations urged the
[175]

police officers to lock her up in the vehicle for the search to


smoothly proceed.

The attendance of third-party witnesses during buy-bust


operations and during time of seizures is to prevent the planting
of evidence or frame-up.  Even though neither Pangan nor any
[176]

of her representatives was present during the marking, inventory,


and photographing, the police officers substantially complied with
the rules as media representatives and barangay officials were
present during the search. [177]

Barangay Kagawad Beluso, who appeared as one (1) of the


witnesses for the prosecution, confirmed that she
was with Barangay Kagawad Lara and Barangay Captain Andrada
during the search. She testified that the police officers found the
sealed Fastpak package on top of Pangan's table, which was
inside the store. She corroborated the testimonies of other
prosecution witnesses narrating that when the Noli Me Tangere
book was opened, three (3) sachets of suspected shabu were
concealed between its pages. She added that the police officers
found another sachet of illicit drugs in Pangan's drawer. [178]

Barangay Kagawad Beluso also identified in court the Fastpak


package, the Noli Me Tangere book, and the additional small
sachet as the articles she was referring to in her statements. She
verified that an inventory of the items was prepared by the police
which she and the other witnesses signed. [179]

Even radio reporter Bulana, who testified for the defense,


mentioned that he was one (1) of the witnesses.  He disclosed[180]

that at around 4:00 p.m. of April 10, 2003, they gathered with
the arresting team at Dinggoy Roxas Civic Center.  He attested [181]

that after seeing the pre-arranged signal from one (1) of the
police officers, they went to Asis Street where he saw PO1 Carillo
and PO1 Bernardez enter Pangan's store, trying to grab a
"bundle" from the accused.  Thereafter, Pangan was "forcefully"
[182]

brought outside the store and was eventually handcuffed inside a


Radio Mindanao Network vehicle. [183]

Furthermore, even assuming that the police officers failed to


strictly conform to the procedures provided for under Section 21,
the accused may still be adjudged guilty of the charge provided
that the chain of custody remains uninterrupted. [184]

In this case, the prosecution was able to establish the necessary


links in the chain of custody from the time the sachets of illicit
drugs were confiscated until they were forwarded to the
laboratory for examination and presented as evidence in court.

After its seizure, the four (4) plastic sachets were immediately
given to SPO1 Liberia for marking. SPO1 Liberia also prepared the
inventory, which was duly signed by the third-party witnesses
present during the search.[185]

PO1 Carillo took photographs of the search and the confiscated


articles. Thereafter, the seized items were forwarded to the trial
court which issued the warrant. Upon P/S Insp. Batiles' request,
the trial court released the seized items for laboratory testing.
The articles were received by SPO1 Alberto Espura of the
Philippine National Police Crime Laboratory in Camp Claudio, Iloilo
City. P/C Insp. Baldevieso confirmed through a chemical analysis
that the contents of the sachets yielded positive for
methamphetamine hydrochloride or shabu as evinced by
Chemistry Report No. D-145. [186]

The confiscated drugs which were examined in the laboratory


were offered as evidence in the trial court and were identified by
PO1 Carillo, Barangay Kagawad Beluso, and SPO4 Revisa as the
same ones seized from Pangan during the lawful search. [187]

Apart from Pangan's unsupported claims, no cogent proof was


shown to attest that the seized items were tampered in any way.
Based on the totality of the prosecution's evidence, the integrity
and evidentiary value of the seized items were never
compromised.

The rationale behind Section 21 is to shield the accused from


malicious assertions of guilt from abusive police officers.
However, this provision cannot be utilized to frustrate legitimate
efforts of law enforcers. Minor deviations from the mandated
procedure in handling the corpus delicti must not absolve a guilty
defendant.[188]

III

In a further attempt to evade liability, accused Pangan denies the


presence of the additional sachet of shabu found hidden in her
drawer, asserting that "PO1 Carillo could have planted it there
because he has a bad record." [189]

It is settled that in proceedings involving violations of the


Dangerous Drugs Act, the testimonies of police officers as
prosecution witnesses are given weight for it is assumed that
they have perforaied their functions in a regular manner. Thus,
this presumption stands except in cases when there is evidence
to the contrary or proof imputing ill-motive on their part, which is
wanting in this case. Pangan failed to adduce any evidence which
could overturn the well-entrenched presumption in favor of the
police officers.
[190]

Pangan's denial was essentially weak and cannot overcome the


prosecution witnesses' positive identification of her as the
perpetrator of the charge. Considering that a denial is self-
serving, it merits no credence in law when uncorroborated by any
clear and persuasive proof.[191]

Therefore, this Court upholds Pangan's guilt for possession of a


considerable amount of 14.16 grams of methamphetamine
hydrochloride or shabu. As correctly imposed by the Regional
Trial Court and affirmed by the Court of Appeals, the penalty of
life imprisonment and a fine of P400,000.00 are warranted and
are in accordance with law. [192]

WHEREFORE, the appeal is DISMISSED. The Court of Appeals


September 21, 2012 Decision in CA-G.R. CR-H.C. No. 00747
affirming the Regional Trial Court's conviction of accused-
appellant Emma Bofill Pangan of illegal possession of dangerous
drugs in violation of Section 11 of Republic Act No. 9165
is AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, and Martires, JJ., concur.


Gesmundo, J., on leave.

March 1, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:
Please take notice that on November 29, 2017 a Decision, copy
attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 1, 2018 at 9:18 a.m.

 People v. Dimaano, G.R. No. 174481, February 10,


[1]

2016, <http://sc.judiciary.gov.ph/pdf/web/viewer.htm!?
file=/jurisprudence/2016/february2016/174481.pdf> 12 [Per J.
Leonen, Second Division].

[2]
 Id.

[3]
 CA rollo, p. 117.

 Rollo, pp. 3-17. The Decision was penned by Associate Justice


[4]

Ramon Paul L. Hernando and concurred in by Associate Justices


Carmelita Salandanan-Manahan and Zenaida T. Galapate-
Laguilles of the Twentieth Division, Court of Appeals, Cebu City.

 CA rollo, pp. 47-63. The Decision, dated April 18, 2007 and
[5]

docketed as Crim. Case No. C-093-03, was penned by Judge


Delano F. Villaruz of Branch 16, Regional Trial Court, Roxas City.

[6]
 Rep. Act No. 9165, sec. 11 provide:

Section 11. Possession of Dangerous Drugs. — The penalty of life


imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall possess any dangerous drug in the
following quantities, regardless of the degree of purity thereof:

....

Otherwise, if the quantity involved is less than the foregoing


quantities, the penalties shall be graduated as follows:

(1) Life imprisonment and a fine ranging from Four hundred


thousand pesos (P400,000.00) to Five hundred thousand pesos
(P500,000.00), if the quantity of methamphetamine
hydrochloride or "shabu" is ten (10) grams or more but less than
fifty (50) grams[.]

 See CA rollo, p. 47. The Information was filed by Assistant City


[7]

Prosecutor Eduardo D. Delfin.

[8]
 Rollo, p. 4.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id. at 5.

[13]
 Id. at 6.

 See CA rollo, p. 48. The RTC Decision referred to him as


[14]

Captain Batiles instead of P/SInsp Batiles.

[15]
 Rollo, p. 5. He was a rebuttal-witness for the prosecution.

 See CA rollo, p. 48. One of PO1 Carillo's functions includes the


[16]

"surveillance, monitoring and gathering information about illegal


drug operations in Roxas City."
[17]
 Rollo, p. 5.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id.

[22]
 Id.

 Id. at 5-6. "[C]omposed of members of Capiz PPO Intelligence


[23]

Section, the First Mobile Group and the Military Intelligence,


Group 6."

[24]
 See CA rollo, p. 49, RTC Decision. Name spelled as PO1 Italia.

 The complete names of PO2 Escultero, PO1 Etalla, PO1


[25]

Cordovero, and PO1 Bernardez are not mentioned.

[26]
 Rollo, p. 6.

[27]
 Id.

 See CA rollo, p. 82, Brief for the Plaintiff-Appellee. He was also


[28]

pertained as PO1 Bernaldez.

[29]
 Rollo, p. 4.

[30]
 Id.

[31]
 Id.

[32]
 Id.

[33]
 Id.
[34]
 Id.

[35]
 Barangay Captain Andrada's complete name is not mentioned.

[36]
 CA rollo, p. 51.

[37]
 Rollo, p. 6.

[38]
 Id.

[39]
 Id.

[40]
 Id. at 6-7.

[41]
 Id at 7.

 See CA rollo, p. 62. "Cutting the tape, the police discovered


[42]

inside the book between the cut portions of pages 45 to 119[,]


three sachets of suspected methamphetamine hydrochloride..."

[43]
 Rollo, p. 7.

[44]
 Id.

[45]
 Id.

 See CA rollo, p. 50, RTC Decision. Pertained to as "SPO3 Libria"


[46]

and the complete name is not mentioned.

[47]
 Rollo, p. 7, CA Decision.

[48]
 Id.

[49]
 Id.

[50]
 Id.

[51]
 Id.
[52]
 Id.

[53]
 Id.

[54]
 Id. at 7-8.

[55]
 Id.

[56]
 Id.

 Id. See RTC Decision on p. 53 of CA rollo which refers to the


[57]

same as Chemistry Report No. D-143-05. However on p. 52 of


the same decision, it was referred as Chemistry Report No. D-
145-03.

[58]
 CA rollo, p. 54.

[59]
 Rollo, p. 8.

[60]
 Id.

[61]
 Id.

[62]
 Id. at 8-9.

[63]
 Id.

[64]
 Id. at 8-9.

[65]
 Id.

[66]
 CA rollo, p. 55.

[67]
 Rollo, p. 8.

[68]
 Id. at 9.
[69]
 See CA rollo, p. 56.

Based on the testimony of Pangan, she disclosed that prior to her


relationship with Tupaz, she had been living with one Noel
Pangan (Noel) who was allegedly charged of illegal possession of
drugs. In that case, Pangan executed an affidavit stating that she
was the wife of Noel and her name appearing therein was "Emma
Bofill Pangan."

[70]
 Rollo, p. 8.

[71]
 Id.

[72]
 See CA rollo, p. 55.

[73]
 Rollo, p. 9.

[74]
 CA rollo, pp. 47-63.

[75]
 Id. at 62.

[76]
 Id. at 59.

[77]
 Id. at 58.

[78]
 Id. at 58-59.

[79]
 Id. at 59.

[80]
 Id. at 60.

[81]
 Id. at 61.

[82]
 Id. at 60.

[83]
 Id.
 Id. at 62. "EBP-1," "EBP-2," "EBP-3," and "EBP-4"
[84]

correspondingly weighed 5.03 grams, 4.09 grams, 5.02 grams,


and 0.02 grams.

[85]
 Id. at 62.

[86]
 Rollo, p. 12.

[87]
 Id. at 3-17.

[88]
 Id. at 10.

[89]
 Id. at 14.

[90]
 Id. at 13-14.

[91]
 Id. at 14.

[92]
 Id. at 16.

[93]
 Id. at 1.

[94]
 Id. at 19-20.

[95]
 Id. at 18.

[96]
 Id. at 22.

 Id. at 24-28, Manifestation of the Office of the Solicitor General


[97]

and rollo, pp. 30-32, Manifestation of A the accused. See


also rollo, p. 34 where this Court noted the Manifestations of the
parties through a Resolution dated November 11, 2013.

 Id. at 37-48. Three indorsements with attachments were


[98]

included as part of the Rollo, all pertaining to a request for


regular hospital referral of Accused-Appellant Pangan to Rizal
Medical Center for further examination and treatment of her T/C
Myoma Uteri with Afbnormal] U[terine] Breeding]. Through a
Resolution dated March 9, 2016 (Rollo, pp. 49-51), this Court
noted the indorsements. Similarly, this Court also approved
(Rollo, pp. 52-57) the request for Pangan's outside medical
referral subject to certain conditions.

[99]
 CA rollo, p. 42.

[100]
 Id. at 41-42.

[101]
 Id. at 43.

[102] Id.

[103] Id.

[104]
 Id. at 43-44.

[105] Id.

[106]
 Id. at 76-97.

[107]
 Id. at 87.

[108]
 Id. at 89.

[109]
 Id. at 90.

[110] Id.

[111]
 Id. at 93.

[112] Id.

 People v. Lagman, 593 Phil. 617, 625 (2008) [Per J. Carpio-


[113]

Morales, En Banc].

[114]
 CA rollo, p. 58.
[115] Id.

[116]
 Id. at 58-59.

[117]
 Id. at 55.

[118]
 Id. at 51.

[119] Id.

[120] Id.

[121]
 Id. at 56.

[122]
 Id. at 51.

[123] Id.

[124] Id.

[125]
 Id. at 56.

[126]
 Id. at 49.

[127] Id.

[128] Id.

[129]
 Id. at 50.

[130]
 Id. at 51.

 Id. She individually weighed the four (4) sachets which yield to
[131]

the following: EBP-1 - 5.03 grams; EBP-2 - 4.09 grams, EBP-3 -


5.02 grams and EBP-4 - 0.02 grams. The total weight of the
confiscated illicit drugs is 14.16 grams.

[132]
 Id. at 52.
[133]
 Id. at 53.

[134]
 Id. at 43.

[135] Id.

 People v. Bontuyan, 742 Phil. 788, 799 (2014) [Per J. Perez,


[136]

First Division].

 People v. Del Mundo, 418 Phil. 740, 755 (2001) [Per J. Ynares-
[137]

Santiago, First Division].

[138]
 CA rollo, p. 62.

[139] Id.

 See People v. Minanga, 751 Phil. 240, 249 (2015) [Per J.


[140]

Villarama, Jr., Third Division].

[141] Id.

 People v. Bautista, 682 Phil. 487, 499 (2012) [Per J. Bersamin,


[142]

First Division].

 Mallillin v. People, 576 Phil. 576, 586 (2008) [Per J. Tinga,


[143]

Second Division].

[144] Id.

[145] Id.

 People v. Dimaano, G.R. No. 174481, February 10,


[146]

2016, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/february2016/174481.pdf> [Per J.
Leonen, Second Division].

[147]
 Id. at 10.
[148] Id.

[149] Id.

 Id. This is the prevailing law then. Now amended by Republic


[150]

Act No. 10640 (2014) or An Act to Further Strengthen the Anti-


Drug Campaign of the Government, amending for the purpose
Section 21 of Republic Act No. 9165, otherwise known as the
"Comprehensive Dangerous Drugs Act of 2002."

 People v. Dela Cruz, 744 Phil. 816, 827 (2014) [Per J. Leonen,
[151]

Second Division].

 People v. Holgado, 741 Phil. 78, 93 (2014) [Per J. Leonen,


[152]

Third Division].

 People v. Denoman, 612 Phil. 1165, 1175 (2009) [Per J. Brion,


[153]

Second Division].

 People v. Dela Cruz, 744 Phil. 816, 827 (2014) [Per J. Leonen,
[154]

Second Division].

 People v. Holgado, 741 Phil. 78, 94 (2014) [Per J. Leonen,


[155]

Third Division].

 People v. Dela Cruz, 744 Phil. 816, 827 (2014) [Per J. Leonen,
[156]

Second Division].

 G.R.
[157]
No. 219829, January 18,
2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/219829.pdf> [Per J.
Leonen, Second Division].

[158]
 Id. at 7-9.

 G.R.
[159]
No. 207396, August 9,
2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/august2017/207396.pdf> [Per J.
Leonen, Second Division].

[160]
 Id. at 9-11.

 G.R.
[161]
No. 208471, August 2,
2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/august2017/208471.pdf> [Per J.
Leonen, Second Division].

[162] Id.

[163]
 Id. at 14-16.

[164] Id.

 People v. Denoman, 612 Phil. 1165, 1178 (2009) [Per J. Brion,


[165]

Second Division].

 People v. Capuno, 655 Phil. 226, 240 (2011) [Per J. Brion,


[166]

Third Division].

 People v. Denoman, 612 Phil. 1165, 1178 (2009) [Per J. Brion,


[167]

Second Division].

 People v. Pringas, 558 Phil. 579, 593 (2007) [Per J. Chico-


[168]

Nazario, Third Division].

[169]
 CA rollo, p. 42.

[170]
 Id. at 58.

[171]
 Id. at 55.

[172]
 Id. at 56.

[173]
 Id. at 59.
[174]
 Id. at 90.

[175]
 Id. at 55.

 See People v. Reyes, G.R. No. 199271, October 19, 2016,


[176]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/october2016/199271.pdf> [Per Justice
Bersamin, First Division].

[177]
 Rollo, p. 14.

[178]
 CA rollo, pp. 51-52.

[179]
 Id. at 52.

[180]
 Id. at 56.

[181] Id.

[182]
 Id. at 56-57.

[183]
 Id. at 57.

 People v. Amarillo, 692 Phil. 698, 711 (2012) [Per J. Perez,


[184]

Second Division].

[185]
 Rollo, p. 14.

[186] Id.

[187] Id.

 People v. Dimaano, G.R. No. 174481, February 10,


[188]

2016, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/february2016/174481.pdf> 12 [Per J.
Leonen, Second Division],

[189]
 See CA rollo, p. 40.
 People v. Dulay, 468 Phil. 56, 65 (2004) [Per J. Azcuna, First
[190]

Division].

[191] Id.

 See Rep. Act No. 9165, art. II, sec. 11 which provides that the
[192]

penalty of "Life imprisonment and a fine ranging from Four


hundred thousand pesos (P400,000.00) to Five hundred thousand
pesos (P500,000.00), if the quantity of methamphetamine
hydrochloride or "shabu" is ten (10) grams or more but less than
fifty (50) grams."

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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 201622, October 04, 2017 ]


ANGELITO L. CRISTOBAL, PETITIONER, VS.
PHILIPPINE AIRLINES, INC., AND LUCIO TAN,
RESPONDENTS.DECISION

LEONEN, J.:

Where a tribunal renders a decision substantially reversing itself


on a matter, a motion for reconsideration seeking reconsideration
of this reversal, for the first time, is not a prohibited second
motion for reconsideration.

This is a Petition for Review on Certiorari,  assailing the Court of


[1]

Appeals Resolutions dated January 10, 2012  and April 18, [2]

2012  in CA-G.R. SP No. 122034 dismissing petitioner Angelita L.


[3]

Cristobal's (Cristobal) Petition for Certiorari for having been filed


out of time.

Cristobal became a pilot for respondent Philippine Airlines, Inc.


(PAL) on October 16, 1971.  In May 1998, in line with a
[4]

downsizing program of PAL,  Cristobal applied for leave without


[5]

pay from PAL to enter into a four (4)-year contract with EVA Air.
 PAL approved the application and advised him that he would
[6]

continue to accrue seniority during his leave and that he could


opt to retire from PAL during this period.  In a letter dated March
[7]

10, 1999, Cristobal advised PAL of his intent to retire.  In [8]

response, PAL advised him that he was deemed to have lost his
employment status on June 9, 1998.  Thus, on May 12, 1999,
[9]

Cristobal filed a complaint with the National Labor Relations


Commission. [10]

In a Decision  dated December 1, 1999, the Labor Arbiter found


[11]

Cristobal's dismissal illegal. On the matter of retirement benefits,


the Labor Arbiter noted PAL's claim that Cristobal could only be
entitled to a retirement pay of P5,000,00 per year, pursuant to
the Philippine Airlines, Inc.-Airline Pilots Association of the
Philippines (PAL-ALPAP) Retirement Plan of 1967. However, he
found that Cristobal's retirement benefits should not be less than
the amount provided under the law. Thus, the Labor Arbiter found
him entitled to an amount computed pursuant to Article 287 of
the Labor Code.  The dispositive portion of the Labor Arbiter
[12]

Decision read:
WHEREFORE, judgment is hereby rendered finding the dismissal
of the complainant illegal.

The respondent is further ordered to pay the complainant:


1. Retirement pay in the amount of P1,575,964.30;
2. Moral damages in the amount of P500,000.00;
3. Exemplary damages in the amount of P500,000.00;
4. Attorney's fees in an amount equivalent to ten percent (10%)
of the total award in favor of the complainant

Respondent is likewise ordered to give and grant to complainant


all other benefits he is entitled to under the law and existing
Collective Bargaining Agreement.

SO ORDERED. [13]

In a Decision  dated September 30, 2010, the National Labor


[14]

Relations Commission affirmed the Labor Arbiter Decision but


reduced the award of moral and exemplary damages to
P100,000.00 each.  On Cristobal's retirement pay, it noted PAL's
[15]

argument that any retirement benefits should be pursuant to the


terms of the Collective Bargaining Agreement and affirmed the
Labor Arbiter's computation. The dispositive portion of the
National Labor Relations Commission Decision read:
WHEREFORE, the assailed Decision is, hereby, AFFIRMED with
MODIFICATION to the effect that the award for moral and
exemplary damages is hereby reduced to P100,000.00 each.

SO ORDERED. [16]

Cristobal filed a Motion for Partial Reconsideration  on November


[17]

12, 2010, raising the following assignment of errors:


1. Since the Honorable Commission found that Respondents-
Appellants acted in bad faith, the award of Php 500,000.00
each for Moral and Exemplary Damages should be
reinstated, instead of the reduced amount of Php
100,000.00
2. The monetary award should include a legal interest
considering the long delay.
3. Respondents-Appellants should be jointly and severally be
(sic) liable in view of the bad faith, as per findings of this
Honorable Commission. [18]
PAL also filed a motion for reconsideration, claiming that it was
error to find that Cristobal was illegally dismissed and to base his
retirement benefits on Article 287 of the Labor Code. [19]

The National Labor Relations Commission resolved both motions


in its Decision  dated May 31, 2011, deleting the award of moral
[20]

and exemplary damages and reducing the amount of Cristobal's


retirement benefits. It agreed that Cristobal's retirement benefits
should not be computed in accordance with Article 287 of the
Labor Code as Cristobal was not yet 60 years old when he retired
on March 10, 1999.  The National Labor Relations Commission
[21]

cited Philippine Airlines, Inc. vs. Airline Pilots Association of the


Philippines  to support this position and held that Cristobal was
[22]

entitled to receive only P5,000.00 per year of service, under the


1967 PAL-ALPAP Retirement Plan:
Nevertheless, the contention of respondents that complainant's
retirement benefits should not be computed in accordance with
Article 287 of the Labor Code, as amended by Republic Act No.
7641, the New Retirement Law, is meritorious. In their motion,
the respondents cite the Supreme Court's decision in Philippine
Airlines. Inc. vs. Airline Pilots Association of the Philippines (G.R.
No. 143686, 15 January 2002). In said case, the Supreme Court
categorically sustained respondent PAL's position and ruled that
Article 287 of the Labor Code does not apply to PAL pilots who,
without reaching the age of sixty (60), retire pursuant to the
provisions of the 1967 PAL-ALPAP Retirement Plan. We have
noted that complainant never refuted respondents' allegation that
he has not reached the age of sixty (60) years when he opted to
retire on 10 March 1999.

....

Hence, PAL pilots who retire without reaching the age of 60 are
entitled to claim retirement benefits from two (2) retirement
plans: a) 1967 PAL-ALPAP Retirement Plan of 1967, and b) PAL
Pilot[s'] Retirement Benefit Plan. The amount of P5,000.00 for
every year of service provided under the 1967 PAL-ALPAP
Retirement Plan would be in addition to the retirement benefits
provided by the PAL Pilot[s'] Retirement Benefit Plan.

In their supplement to motion tor reconsideration, respondents


submit copies of the acknowledgment receipt for P5,530,214.67
signed by Ma. Pilar M. Cristobal on 29 June 1999 as well as
Cashier's Checks issued by Metrobank all dated 28 June 1999 to
complainant Angelito L. Cristobal in the amount of
P5,346,085.23, P93,579.68 and P90,549.76. These amounts
were acknowledged to have been paid by and received from the
PAL PILOT[S'] RETIREMENT BOARD.

Accordingly, complainant is only entitled to receive retirement


benefits from the 1967 PAL ALPAP Retirement Plan in an amount
equal to P5,000.00 for every year of service. In this connection,
the moral and exemplary damages awarded to complainant has
(sic) no legal and factual basis and must be deleted.[23]

The dispositive portion of this May 31, 2011 Decision read:


CONSIDERING THE FOREGOING, the motion for partial
reconsideration filed by complainant is DENIED. The motion for
reconsideration filed by respondents is partially GRANTED.

The award of moral and exemplary damages is DELETED.

The respondents are directed to pay complainant the retirement


benefits pursuant only to the 1967 PAL-ALPAP Retirement Plan in
the amount of one hundred forty thousand pesos (P140,000.00).

The other findings are reiterated.

SO ORDERED. [24]

On June 24, 2011, Cristobal tiled his Motion for Reconsideration,


 seeking reconsideration of the reduction of retirement benefits.
[25]

He pointed out that the PAL Pilots Retirement Benefit Plan is


different from the PAL-ALPAP Retirement Plan, and that it is an
investment plan:
It would appear that in reaching its Decision, the Honorable
Commission took into consideration the fact that the complainant
already received P5,530,214,67 paid for and received from tho
PAL PILOTS RETIREMENT BENEFIT PLAN. Complainant begs [to]
submit that this Honorable Commission committed serious error
in taking into consideration in reducing the retirement benefits
from the PAL-ALPAP Retirement Plan. The PAL PILOTS
RETIREMENT BENEFIT PLAN is totally different from the PAL-
ALPAP Retirement Plan.

Moreover, the PAL PILOTS RETIREMENT BENEFIT PLAN is a


misnomer. It is not really a retirement plan but rather it[']s an
investment plan where the funds come from the contributions of
each pilot deducted from their monthly gross pay and upon
retirement the pilot receives the full amount of his contribution.
Thus, it is a mistake [to] reduce the retirement benefits of the
complainant from the PAL-ALPAP Retirement Plan because the
complainant already received his supposed retirement benefits
(which should be investment) from the PAL PILOTS RETIREMENT
BENEFIT PLAN. [26]

In its Resolution  dated August 24, 2011, the National Labor


[27]

Relations Commission denied Cristobal's Motion for


Reconsideration, deeming it a second motion for reconsideration
of its May 31, 2011 Decision.  The dispositive portion of this
[28]

Resolution read:
PREMISES CONSIDERED, complainant's motion for
reconsideration which we treat as a second motion for
reconsideration is hereby DISMISSED. Let this case be dropped
from the calendar of the Commission.

SO ORDERED. [29]

On November 14, 2011, Cristobal filed his Petition for Certiorari


before the Court of Appeals, which was dismissed in the Court of
Appeals January 10, 2012 Resolution.  The Court of Appeals
[30]

accepted the National Labor Relations Commission's premise that


petitioner's June 24, 2011 Motion for Reconsideration was a
second motion for reconsideration. Thus, it did not toll petitioner's
period to file a petition for certiorari assailing the May 31, 2011
Decision. Consequently, the petition for certiorari was filed out of
time. The Court of Appeals also held that the petition did not
contain copies of the pertinent supporting documents. The
dispositive portion of this Resolution read:
IN VIEW of all the foregoing patent infirmities, the petition
is DISMISSED.

SO ORDERED. [31]

Thus, on June 13, 2012, petitioner filed his Petition for Review on
Certiorari  before this Court. Thereafter, there was an exchange
[32]

of pleadings. [33]

Petitioner points out that his November 12, 2010 Partial Motion
tor Reconsideration only assailed the National Labor Relations
Commission May 31, 2011 Decision, which reduced the award of
moral and exemplary damages. On the other hand, his June 24,
2011 Motion for Reconsideration assailed the reduction of his
retirement benefits.  Moreover, the filing of a motion for
[34]

reconsideration to afford the National Labor Relations Commission


an opportunity to correct itself on the matter of retirement
benefits was a condition sine qua non in instituting a petition for
certiorari before the Court of Appeals.  As for the attachment of
[35]

relevant records, petitioner argues that the main issue in his


petition was whether or not the National Labor Relations
Commission committed grave abuse of discretion in treating his
motion for reconsideration as a prohibited second motion for
reconsideration. Likewise, he adds that the Court of Appeals
should have been more liberal and should have ordered him to
submit documents, instead of dismissing his motion out right.
Petitioner further discussed how the National Labor Relations
Commission committed grave abuse of discretion in reducing his
retirement benefits. [36]

Respondents insist that petitioner's June 24, 2011 Motion for


Reconsideration is a prohibited second motion for reconsideration,
which did not toll his period to question the May 31, 2011
Decision. Thus, petitioner's petition for certiorari with the Court of
Appeals was filed out of time. Respondents call attention to the
fact that the National Labor Relations Commission already
rejected petitioner's arguments against the reduction of
retirement benefits and claim that petitioner's June 24, 2011
Motion for Reconsideration repeated his arguments in his
Opposition.[37]

The sole issue for this Court's resolution is whether or not the
June 24, 2011 Motion for Reconsideration filed by petitioner
Angelito L. Cristobal assailing the National Labor Relations
Commission May 31, 2011 Decision was a prohibited second
motion for reconsideration.

This Court grants the petition.

Rule VII, Section 15 of the National Labor Relations Commission


Rules of Procedure provides:
Section 15. Motions for Reconsideration. - Motion for
reconsideration of any decision, resolution or order of the
Commission shall not be entertained except when based on
palpable or patent errors; provided that the motion is under oath
and filed within ten (10) calendar days from receipt of decision,
resolution or order, with proof of service that a copy of the same
has been furnished, within the reglementary period, the adverse
party; and provided further, that only one such motion from the
same party shall be entertained.
The National Labor Relations Commission Rules of Procedure
prohibits a party from questioning a decision, resolution, or order,
twice. In other words, this rule prohibits the same party from
assailing the same judgment. However, a decision substantially
reversing a determination in a prior decision is a discrete decision
from the earlier one. Thus, in Poliand Industrial Ltd. v. National
Development Co.,  this Court held:
[38]

Ordinarily, no second motion for reconsideration of a judgment or


final resolution by the same party shall be entertained.
Essentially, however, the instant motion is not a second motion
for reconsideration since the viable relief it seeks calls for the
review, not of the Decision dated August 22, 2005, but the
November 23, 2005 Resolution which delved for the first time on
the issue of the reckoning date of the computation of interest . . .
(Citation omitted)
This Court ruled similarly in Solidbank Corp. v. Court of Appeals,
 where the Labor Arbiter dismissed a labor complaint but
[39]

awarded the employee separation pay, compensatory benefit,


Christmas bonus, and moral and exemplary damages. This was
appealed to the National Labor Relations Commission by both
parties. The National Labor Relations Commission rendered a
Decision affirming the Labor Arbiter Decision but modifying it by
deleting the award of moral and exemplary damages. On appeal,
the Court of Appeals ruled that the employee had been illegally
dismissed and, considering the cessation of the employer's
operations, awarded the employee separation pay, backwages,
compensatory benefit, Christmas bonus, unpaid salary, moral and
exemplary damages, and attorneys fees. Then, the employer
bank filed a Motion for Reconsideration and a Supplemental
Motion for Reconsideration, while the employee filed a Motion tor
Clarification and/or Partial Motion for Reconsideration. The Court
of Appeals then issued an Amended Decision, modifying the
amount awarded as separation pay, backwages, and unpaid
salary. Afterwards, the employee filed another Motion for
Reconsideration/Clarification, and the Court of Appeals again
corrected the amounts awarded as separation pay, backwages,
and unpaid salary. In its petition assailing the Court of Appeals
Resolution, the employer bank claimed that the Court of Appeals
erred in granting the employee's second motion for
reconsideration, a prohibited pleading. This Court held:
The Amended Decision is an entirely new decision which
supersedes the original decision, for which a new motion
for reconsideration may be filed again.

Anent the issue of Lazaro's "second" motion for reconsideration,


we disagree with the bank's contention that it is disallowed by the
Rules of Court. Upon thorough examination of the procedural
history of this case, the "second" motion does not partake the
nature of a prohibited pleading because the Amended Decision is
an entirely new decision which supersedes the original, for which
a new motion for reconsideration may be filed again. [40]

In Barba v. Liceo De Cagayan University,  where the Court of


[41]

Appeals denied a motion for reconsideration from an amended


decision on the ground that it was a prohibited second motion for
reconsideration, this Court held that the prohibition against a
second motion for reconsideration contemplates the same party
assailing the same judgment:
Prefatorily, we first discuss the procedural matter raised by
respondent that the present petition is filed out of time.
Respondent claims that petitioner's motion for reconsideration
from the Amended Decision is a second motion for
reconsideration which is a prohibited pleading. Respondent's
assertion, however, is misplaced for it should be noted that the
CA's Amended Decision totally reversed and set aside its previous
ruling. Section 2, Rule 52 of the 1997 Rules of Civil Procedure, as
amended, provides that no second motion for reconsideration of a
judgment or final resolution by the same party shall be
entertained. This contemplates a situation where a second motion
for reconsideration is filed by the same party assailing the same
judgment or final resolution. Here, the motion for reconsideration
of petitioner was filed after the appellate court rendered an
Amended Decision totally reversing and setting aside its previous
ruling. Hence, petitioner is not precluded from filing another
motion for reconsideration from the Amended Decision which held
that the labor tribunals lacked jurisdiction over petitioner's
complaint for constructive dismissal. The period to file an appeal
should be reckoned not from the denial of her motion for
reconsideration of the original decision, but from the date of
petitioner's receipt of the notice of denial of her motion for
reconsideration from the Amended Decision. And as petitioner
received notice of the denial of her motion for reconsideration
from the Amended Decision on September 23, 2010 and filed her
petition on November 8, 2010, or within the extension period
granted by the Court to file the petition, her petition was filed on
time.[42]

Here, the National Labor Relations Commission May 31, 2011


Decision substantially modified its September 30, 2010 Decision.
Thus, petitioner was not precluded from seeking reconsideration
of the new decision of the National Labor Relations Commission,
and it was clearly an error for the Court of Appeals to find that
petitioner's petition for certiorari was filed out of time on that
ground.

As for the purported failure to attach the records necessary to


resolve the petition, in Wack Wack Golf & Country Club v.
National Labor Relations Commission,  this Court held:
[43]

In Novelty Philippines, Inc. v. Court of Appeals, the Court


recognized the authority of the general manager to sue on behalf
of the corporation and to sign the requisite verification and
certification of non-forum shopping. The general manager is also
one person who is in the best position to know the state of affairs
of the corporation. It was also error for the CA not to admit the
requisite proof of authority when in the Novelty case, the Court
ruled that the subsequent submission of the requisite documents
constituted substantial compliance with procedural rules. There is
ample jurisprudence holding that the subsequent and substantial
compliance of an appellant may call for the relaxation of the rules
of procedure in the interest of justice. While it is true that rules of
procedure are intended to promote rather than frustrate the ends
of justice, and while the swift unclogging of court dockets is a
laudable objective, it nevertheless must not be met at the
expense of substantial justice. It was, therefore, reversible error
for the CA to have dismissed the petition for certiorari before it
The ordinary recourse for us to take is to remand the case to the
CA for proper disposition on the merits; however, considering
that the records are now before us, we deem it necessary to
resolve the instant case in order to ensure harmony in the rulings
and expediency. [44]

Thus, this Court finds that the Court of Appeals committed


reversible error in dismissing the petition outright, considering
the circumstances of this case.

Petitioner raises in issue whether or not the PAL Pilots Retirement


Benefit Plan is part of the retirement benefits that should be
computed in comparing the retirement benefits accorded to him
under the Labor Code as against what he is entitled to under PAL
policy. However, the matter of retirement benefits is not
addressed in respondent's memorandum. It would better serve
the interest of substantial justice to remand this case to the Court
of Appeals to allow the parties to fully discuss this issue.

WHEREFORE, the assailed January 10, 2012 and April 18, 2012
Resolutions of the Court of Appeals are REVERSED and SET
ASIDE. The Court of Appeals is directed to REINSTATE the
petition for certiorari, docketed as CA-G.R. SP. No. 122034, for
further proceedings.

No costs.

SO ORDERED.

Bersamin, (Acting Chairperson), Jardeleza,  Martires,


*

and Gesmundo, JJ., concur.

January 17, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on October 4, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on January 17, 2018 at 2:20 p.m.

*
 Designated additional member per Raffle dated October 2, 2017.
[1]
 Rollo, pp. 8-42.

 Id. at 43-45. The Resolutions were penned by Associate Justice


[2]

Edwin D. Sorongon and concurred in by Associate Justices Noel G.


Tijam and Romeo F. Barza of the Ninth Division, Court of Appeals,
Manila.

 Id. at 46-47. The Resolutions were penned by Associate Justice


[3]

Edwin D. Sorongon and concurred in by Associate Justices Noel G.


TiJam and Romeo F. Barza of the Former Ninth Division, Court of
Appeals, Manila.

[4]
 Id. at 154, NLRC Decision.

[5]
 Rollo, p. 10.

[6]
 Id. at 70.

[7]
 Id. at 71.

[8]
 Id. at 73.

[9]
 Id. at 74.

[10]
 Id. at 11.

 Id. at 154-166. The Decision was penned by Labor Arbiter


[11]

Felipe P. Pati.

[12]
 Id. at 162.

[13]
 Id. at 166.

 Id. at 320-335. The Decision was penned by Presiding


[14]

Commissioner Alex A. Lopez and was oncurred in by


Commissioners Gregorio O. Bilog, III and Pablo C. Espiritu, Jr. of
the Third Division, National Labor Relations Commission.
[15]
 Id. at 334.

[16]
 Id.

[17]
 Id. at 353-359.

[18]
 Id. at 354.

[19]
 Id. at 339.

[20]
 Id. at 337-348.

[21]
 Id. at 344.

[22]
 424 Phil. 356 (2002) [Per J. Ynares Santiago, First Division].

[23]
 Id. at 344-347.

[24]
 Id. at 347.

[25]
 Id. at 291-298.

[26]
 Id. at 294-295.

[27]
 Id. at 350-352.

[28]
 Id. at 350.

[29]
 Id. at 351.

[30]
 Id. at 43-45.

[31]
 Id. at 44.

[32]
 Id. at 8-42.
 Id. at 378-403, respondents' Comment and rollo, pp. 435-447,
[33]

petitioner's Reply.

[34]
 Id. at 436-437.

[35]
 Id. at 438.

[36]
 Id. at 439.

[37]
 Id. at 382-384.

[38]
 523 Phil. 368 (2006) [Per J. Tinga, Special Second Division].

 G.R.
[39]
No. 166581 & 167187, December 7,
2015, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/december2015/166581.pdf> [Per C.J.
Sereno, First Division].

[40]
 Id. at 11.

[41]
 699 Phil. 622 (2012) [Per J. Villarama, First Division].

[42]
 Id. at 639.

[43]
 496 Phil. 180 (2005) [Per J. Callejo, Second Division].

[44]
 Id. at 192.

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THIRD DIVISION

[ G.R. No. 207229, September 20,


2017 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. SIEGFRED CABELLON CABAÑERO,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

The marking and identification of the seized dangerous drug is an


essential part of the chain of custody. Absent this step, a gap is
created which casts a shadow of doubt on the identity and
integrity of the dangerous drug presented as evidence, creating
reasonable doubt, which must be resolved in favor of the
accused.

This reviews the August 30, 2012 Decision  of the Court of
[1]

Appeals in CA-G.R. No. CEB-CR HC No. 01081, affirming the


conviction of accused-appellant Siegfred Cabellon y Cabañero
(Cabellon) for violation of Section 5 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of
2002.

This Court restates the facts as found by the lower courts.

In an Information  dated April 28, 2006, Cabellon was charged


[2]

with violation of Section 5 of Republic Act No. 9165:


That on or about the 13  day of April2006 at about 7:30 P.M.
th

more or less, in Bulacao, City of Talisay, Cebu, Philippines, and


within the jurisdiction of this Honorable Court, the said accused,
with deliberate intent, did then and there sell and dispose One (1)
heat sealed plastic packet of white crystalline substance
containing Methylamphetamine (sic) hydrochloride locally known
as "SHABU", weighing 0.03 gram, a dangerous drugs.

CONTRARY TO LAW. [3]

Upon arraignment Cabellon pleaded not guilty.  Trial on the


[4]

merits ensued.

Evidence for the prosecution showed that on April 13, 2006, a


buy bust operation was planned to capture Cabellon in the act of
selling drugs. At 7:30 p.m., PO2 Junar Rey Barangan (PO2
Barangan), PO3 Rey Bucao (PO3 Bucao), and PO3 Reynato
Abellar (PO3 Abellar) went to Sitio Jawod, Barangay Bulacao,
Talisay City to commence the buy-bust operation. The police
officers had a poseur-buyer with them. [5]

The asset poseur-buyer transacted with Cabellon in an alley,


while the police officers observed them from a distance. Once
they saw the poseur-buyer scratch his head, their pre-approved
signal, the police officers descended upon Cabellon, who then ran
away upon noticing the approaching officers. [6]

Cabellon ran and hid inside a nearby house and the police officers
followed him. The police officers stumbled upon three (3) men
sniffing shabu inside the house, one (1) of whom they
apprehended while the other two (2) managed to escape. The
police officers caught up with Cabellon inside the house, whom
they thereafter frisked. They recovered the marked P100.00 and
P50.00 bills from him. [7]

After Cabellon's arrest, the poseur-buyer handed over the sachet


of shabu he purchased from Cabellon to PO3 Bucao. [8]

That same date, a sachet marked with "SCC 04/13/06" was


turned over to the Philippine National Police Crime Laboratory for
examination. The Request for Laboratory Examination was
received by a certain PO1 Domael. [9]
P/S Insp. Mutchit G. Salinas (P/S Insp. Salinas), a forensic
chemist, confirmed executing Chemistry Report No. D-698-2006.
She testified that she had examined a heat-sealed plastic sachet
of white crystalline substance labelled with "SCC 04/13/06." The
chemistry report bore the signatures of P/S Insp. Salinas and
P/Supt. Myrna P. Areola. The specimen weighed 0.03 grams and
tested positive for methamphetamine hydrochloride (shabu). [10]

Cabellon was the only defense witness and he denied selling


shabu to the poseur-buyer. [11]

He claimed that on April 13, 2006, at about 3:30p.m., he was


buying barbecue when he saw his aunt, Jane Cabellon, crying. He
asked her why she was crying and he told her that she had a
fight with someone. He approached and slapped the lady his aunt
had a fight with. The lady then warned him that he would be
arrested for what he had done to her. [12]

Later that evening, at the barbecue station,  he was arrested and
[13]

bodily searched by some police officers; however, nothing was


recovered from him. He claimed that he was not informed by the
arresting officers of the offense he supposedly violated. [14]

Cabellon was then brought to the police station and was asked to
call somebody. He was also asked to pay for his release and for
the settlement of the case filed against him. He was unable to
pay or give a gift and declined to make the phone call; hence, he
was charged and a case was filed against him. [15]

On October 27, 2008, the Regional Trial Court  found that the
[16]

prosecution was able to prove all the elements for the illegal sale
of shabu.  Furthermore, PO3 Bucao and PO2 Barangan identified
[17]

the sachet sold by Cabellon to the poseur-buyer. The seized


sachet's chain of custody from the time Cabellon was arrested
until it was presented as evidence to the court was accounted for.
 The fallo of the trial court Decision read:
[18]
ACCORDINGLY, this court finds the accused GUILTY as charged
and sentences him to suffer the penalty of LIFE IMPRISONMENT
and to pay a fine of [P]500,000.00.

Exhibit "B" is forfeited in favor of the State for proper disposition.

SO ORDERED. [19]

Cabellon filed an appeal before the Court of Appeals and raised


several errors. He claimed that the trial court erred in upholding
the validity of his arrest despite the blatant violation of his right
against unreasonable searches and when it relied on the
weakness of the defense evidence rather than on the strength of
the prosecution evidence. Additionally, he averred that the
prosecution failed to prove his guilt beyond reasonable doubt. [20]

On August 30, 2012, the Court of Appeals  dismissed the appeal


[21]

and upheld the trial court decision.

The Court of Appeals held that the elements for the illegal sale of
shabu were duly proven by the prosecution. [22]

The Court of Appeals also downplayed the supposed necessity of


presenting the poseur-buyer as a witness in court since the
testimonies of the members of the apprehending team had
already sufficiently established the illegal sale between Cabellon
and the poseur-buyer. [23]

The Court of Appeals likewise waived the stringent application of


Section 21 of Republic Act No. 9165, considering the
circumstances obtaining in the case. The Court of Appeals
emphasized that the defense never questioned the integrity of
the evidence during trial and only did so upon appeal.
 The fallo of the Court of Appeals Decision read:
[24]

IN LIGHT OF THE FOREGOING, the appeal is DENIED. The


decision dated October 27, 2008 of the Regional Trial Court
(RTC), Brunch 58, Cebu City in Criminal Case No. CBU-76737
convicting Siegfred Cabellon y Cabañero for the crime of Sale of
Dangerous Drugs penalized under Section 5 of Republic Act No.
9165 is AFFIRMED in toto.

SO ORDERED. [25]

Cabellon filed a Notice of Appeal  on October 4, 2012, which was


[26]

noted and given due course by the Court of Appeals in its April
29, 2013 Resolution. [27]

In its August 7, 2013 Resolution,  this Court notified the parties


[28]

that they may file their respective supplemental briefs. Both


parties manifested  that they were dispensing with the filing of a
[29]

supplemental brief.

Cabellon alleges that the supposed illegal sale was never proven
because the poseur-buyer was not presented to attest to the
alleged sale. Furthermore, the police officers were positioned at a
distance where they could not have seen the sale and could
merely rely on the poseur-buyer's signal. Cabellon insisted that
the fact of the sale was not proven beyond reasonable doubt. [30]

Cabellon also emphasizes that the police officers did not comply
with the mandatory requirements under Section 21, paragraph 1
of Republic Act No. 9165, requiring the apprehending team to
immediately physically inventory and photograph the seized
drugs in the presence of the accused, a representative from
media or the Department of Justice, and any elected official. [31]

Cabellon then points out that the prosecution was unable to show
an unbroken chain of custody, PO3 Bucao testified that the
poseur-buyer handed him the sachet after Cabellon was arrested,
but he never testified as to whom he gave it next or who marked
it.  Lastly, Cabellon asserts that he was not informed either of his
[32]

constitutional rights upon his arrest or the reason for his arrest or
detention.[33]

On the other hand, the prosecution claims that the poseur-


buyer's failure to testify was not fatal to the case since PO3
Bucao testified that he saw the sale. [34]
The prosecution argues that there was substantial compliance
with Section 21 of Republic Act No. 9165 because the integrity
and evidentiary value of the seized item was properly preserved.
The prosecution maintains that the circumstances surrounding
the arrest, where he was arrested in a house with three (3)
persons high on drugs, made it impossible to mark and inventory
the sachet on the spot.  The prosecution also avers that the
[35]

supposed violations of Section 21 of Republic Act No. 9165 were


only raised for the first time on appeal.[36]

Finally, the prosecution denies that Cabellon was found guilty


based on his weak defense and holds that it has proven the
evidentiary integrity of the seized sachet proving Cabellon's guilt
beyond reasonable doubt. It asserts that the prosecution
witnesses have established Cabellon's guilt with their
straightforward and candid testimonies. [37]

The only issue for this Court's resolution is whether or not


accused-appellant Siegfred Cabellon's guilt was proven beyond
reasonable doubt despite the non-observance of the required
procedure under Section 21 of Republic Act No. 9165.

This Court grants the appeal and acquits Siegfred Cabellon y


Cabañero.

In order to sustain a conviction for the illegal sale of dangerous


drugs, these two (2) elements must be established by the
prosecution: "(1) proof that the transaction or sale took place and
(2) the presentation in court of the corpus delicti or the illicit drug
as evidence." [38]

To prove that the illegal sale of shabu took place, the prosecution
presented PO3 Bucao and PO2 Barangan, two (2) of the police
officers who were part of the buy-bust operation team which
apprehended the accused.
Both PO3 Bucao  and PO2 Barangan  testified that they had
[39] [40]

seen the accused talk with the poseur-buyer before the latter
scratched his head, signalling that the transaction had taken
place. The marked money was recovered from the accused,
 while the poseur-buyer turned over the sachet with shabu he
[41]

had bought from the accused to PO3 Bucao. [42]

While the prosecution may have proven that a transaction took


place, it was not as convincing in its presentation of the
alleged corpus delicti as evidence.

People v. Jaafar  underscored the importance of presenting the


[43]

actual illicit drug or corpus delicti recovered as evidence since its


existence is essential to convict the accused. Thus:
In all prosecutions for violations of Republic Act No. 9165,
the corpus delicti is the dangerous drug itself. Its existence is
essential to a judgment of conviction. Hence, the identity of the
dangerous drug must be clearly established.

Narcotic substances are not readily identifiable. To determine


their composition and nature, they must undergo scientific testing
and analysis. Narcotic substances are also highly susceptible to
alteration, tampering, or contamination. It is imperative,
therefore, that the drugs allegedly seized from the accused are
the very same objects tested in the laboratory and offered in
court as evidence. The chain of custody, as a method of
authentication, ensures that unnecessary doubts involving the
identity of seized drugs are removed.  (Emphasis supplied)
[44]

Section 21 of Republic Act No. 9165 provides the manner by


which law enforcement officers should handle seized dangerous
drugs:
Section 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

 (1) The apprehending team having initial custody and control of


the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in the
presence of the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy
thereof[.] (Emphasis supplied)
Section 21 of the Implementing Rules and Regulations of Republic
Act No. 9165 further provides:
Section 21. Custody and Disposition of Confiscated, Seized and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(a) The apprehending officer/team having initial custody and


control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in the
presence of the accused or the person's from whom such items
were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest office of
the apprehending officer/team, whichever is practicable, in case
of warrantless seizures; Provided, further, that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.] (Emphasis supplied)
While it may be true that strict compliance with Section 21 of
Republic Act No. 9165 may be excused under justifiable grounds,
the integrity and evidentiary value of the seized items must still
be preserved by the apprehending officer.

This Court is not convinced that the prosecution was able to


prove the identity of the shabu supposedly seized from the
accused.

PO3 Bucao claimed that the poseur-buyer turned over to him the
sachet purchased from the accused and that he had custody of
the sachet until he reached the police station. He then handed
the sachet to PO3 Abellar, who supposedly prepared the request
for the chemical analysis of the seized item. However, PO3 Bucao
failed to identify who placed the markings on the sachet:
(Pros. Canta) Q: How many packs of shabu did your
poseur[-]buyer handed it (sic) to you?

(PO3 Bucao) A: Only one.

Q: Who kept this pack of shabu from the place of the arrest to
the police station?

A: Myself.

Q: What did you do with this pack of shabu that you get (sic)
from the accused?

A: After we reach in (sic) our station I gave it to PO3 Abellar the


one pack of shabu.

Q: What did PO3 Abellar do with this one pack of shabu?

A: He made a request to the PNP Crime Lab for chemical analysis.


....

Q: I am showing to you this one pack of white crystalline


substance with labeling "SCC" the date thereon, is that the
evidence you are referring to?

A: Yes[,] sir.

Q: Who then made the marking "SCC" and the date?

A: I am not sure who made the marking. [45]

Even PO2 Barangan could not confirm who placed the markings
on the sachet:
(PROS. CANTA) Q: I am showing to you this one pack of white
crystalline substance marked as Exhibit B, with markings SCC
with a date, can you tell us if this is the same evidence that your
(sic) recovered from the accused?

A: Yes, sir.

Q: Why are you sure?

A: Because this is the one PO3 Bucao showed to me.

Q: And there are markings in this plastic pack containing this


small plastic pack of shabu SCC and the date 04/13/06, who
made that marking if you know?

A: I do not know[,] sir.[46]

People v. Nandi  expounded on the four (4) links that should be


[47]

established by the prosecution to constitute an unbroken chain of


custody:
[F]irst, the seizure and marking, if practicable, of the illegal drug
recovered from the accused by the apprehending officer; second,
the turnover of the illegal drug seized by the apprehending officer
to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and submission
of the marked illegal drug seized from the forensic chemist to the
court.[48]

Undeniably, a noticeable gap exists in the chain of custody with


the prosecution's failure to present evidence that the seized
sachet was actually marked by any of the three (3) apprehending
officers.

The prosecution likewise did not present evidence that the seized
sachet was inventoried and photographed in the presence of the
accused or his representative, a representative from the media or
the Department of Justice, and an elected public official. Neither
did it provide an explanation as to why the police officers did not
follow the requirements provided under the law.

PO3 Bucao also testified that he turned over the unmarked seized
sachet to PO3 Abellar, who then prepared the request to the
Philippine National Police for chemical analysis.  However, a
[49]

careful review of the Request for Laboratory Examination  dated


[50]

April 13, 2006 shows that not only did it refer to a marked
sachet, it was also signed by P/Superintendent Romeo Pagal
Perigo, not PO3 Abellar, who supposedly prepared it.

The prosecution utterly failed to proffer evidence on who placed


the markings on the sachet Furthermore, it also failed to account
for the seized sachet's transfer from PO3 Bucao to the Philippine
National Police Crime Laboratory for laboratory examination,
creating another gap in the chain of custody.

This blatant lack of compliance with the safeguards established in


Republic Act No. 9165 is made even more egregious by the fact
that the seized sachet only contained 0.03 grams  of shabu, no
[51]

more than a grain of rice. The danger of tampering and planting


of evidence was, thus, heightened, which should have put the
lower courts on guard and not have so easily relied on the
presumption of regularity accorded to police officers in the
performance of their official acts. As this Court stated in People v.
Holgado: [52]
While the miniscule amount of narcotics seized is by itself not a
ground for acquittal, this circumstance underscores the need for
more exacting compliance with Section 21. In Mallillin v. People,
this court said that "the likelihood of tampering, loss or mistake
with respect to an exhibit is greatest when the exhibit is small
and is one that has physical characteristics fungible in nature and
similar in form to substances familiar to people in their daily
lives."
[53]

WHEREFORE, premises considered, the Decision dated August


30, 2012 of the Court of Appeals in CA-G.R. No. CEB-CR HC No.
01081 is REVERSED and SET ASIDE. Accused-appellant
Siegfred Cabellon y Cabañero is hereby ACQUITTED for failure of
the prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention, unless he is
confined for any other lawful cause.

Let a copy of this decision be furnished the Director of the Bureau


of Corrections, Muntinlupa City for immediate implementation.
The Director of the Bureau of Corrections is directed to report to
this Court, within five (5) days from receipt of this decision the
action he has taken.

The Regional Trial Court is directed to turn over the seized sachet
of methamphetamine hydrochloride to the Dangerous Drugs
Board for destruction in accordance with law.

Let entry of judgment be issued immediately.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

November 29, 2017


NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on September 20, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 29, 2017 at 2:20 p.m.

ORDER OF RELEASE

TO: The Director


       Bureau of Corrections
       1770 Muntinlupa City

GREETINGS:

WHEREAS, the Supreme Court on September 20,


2017 promulgated a Decision in the above-entitled case, the
dispositive portion of which reads:
"WHEREFORE, premises considered, the Decision dated August
30, 2012 of the Court of Appeals in CA-G.R. No. CEB-CR HC No.
01081 is hereby REVERSED and SET ASIDE. Accused-appellant
Siegfred Cabellon y Cabanero is hereby ACQUITTED for failure of
the prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention, unless he is
confined for any other lawful cause.

Let a copy of this decision be furnished the Director of the Bureau


of Corrections, Muntinlupa City for immediate implementation.
The Director of the Bureau of Corrections is directed to report to
this Court, within five (5) days from receipt of this decision, the
action he has taken.

The Regional Trial Court is directed to turn over the seized sachet
of methamphetamine hydrochloride to the Dangerous Drugs
Board for destruction in accordance with law.

Let entry of judgment be issued immediately.

SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately
release SIEGFRED CABELLON y CABAÑERO unless there are
other lawful causes for which he should be further detained, and
to return this Order with the certificate of your proceedings within
five (5) days from notice hereof.

GIVEN by the Honorable PRESBITERO J. VELASCO, JR.,


Chairperson of the Third Division of the Supreme Court of the
Philippines, this 20  day of September 2017.
th

 CArollo, pp. 92-105. The Decision was penned by Associate


[1]

Justice Pamela Ann Abella Maxino and concurred in by Associate


Justices Edgardo L. Didos Reyes and Zenaida T. Galapate-
Laguilles of the Nineteenth Division, Court of Appeals, Cebu City.

[2]
 Id. at 10-11.

[3]
 Id. at 10.

[4]
 Id. at 51, RTC Decision.
[5]
 Id. at 52, RTC Decision.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 53, RTC Decision.

[9]
 Id. at 51-52.

 Id. at 51 and 53. RTC referred


[10]
to the substance as
"methylamphetamine hydrochloride."

[11]
 Id. at 53-54, RTC Decision.

[12]
 Id.

 TSN dated September 23, 2008, p. 4. TSN also refers to the


[13]

date as "September 23, 2007."

[14]
 Id. at 54.

[15]
 Id.

 Id. at 51-58. The Decision, docketed as Criminal Case No. CBU


[16]

76737, was penned by Presiding Judge Gabriel T. Ingles of


Branch 58, Regional Trial Court, Cebu City.

[17]
 Id. at 55-57.

[18]
 Id. at 57.

[19]
 Id. at 58.

[20]
 Id. at 31.

[21]
 Id. at 92-105.
[22]
 Id. at 95-99.

[23]
 Id. at 100-101.

[24]
 Id. at 101-104.

[25]
 Id. at 105.

[26]
 Id. at 106-107.

[27]
 Id. at 111.

[28]
 Rollo, p. 22.

[29]
 Id. at 23-26 and 27-28.

[30]
 CA rollo, pp. 37-38.

[31]
 Id. at 38-39.

[32]
 Id. at 39-42.

[33]
 Id. at 48-49.

[34]
 Id. at 74.

[35]
 Id. at 76-77.

[36]
 Id. at 78-79.

[37]
 Id. at 79-81.

 People v. Morales, 630 Phil. 215, 228 (2010) [Per J. Del


[38]

Castillo, Second Division] citing People v. Darisan, 597 Phil. 479


(2009) [Per J. Corona, First Division].

[39]
 TSN dated April 24, 2007, p. 4.
[40]
 TSN dated February 13, 2007, pp. 5-6.

[41]
 Id. at 7.

[42]
 TSN dated April 24, 2007, pp. 5-6.

 G.R.
[43]
No. 219829, January 18, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/219829.pdf> [Per J.
Leonen, Second Division].

 Id. at 7, citing People v. Simbahon, 449 Phil. 74 (2003) [Per J.


[44]

Ynares-Santiago, First Division] and Mallillin v. People, 516 Phil.


576 (2008) [Per J. Tinga, Second Division].

[45]
 TSN dated April 24, 2007, p. 6.

[46]
 TSN dated February 13, 2007, p. 9.

[47]
 639 Phil. 134 (2010) [Per J. Mendoza, Second Division].

 Id. at 144-145, citing People v, Kamad, 624 Phil. 289 (2010)


[48]

[Per J. Brion, Second Division].

[49]
 TSN dated April 24, 2007, p. 6.

[50]
 RTC records, p. 8.

[51]
 Id. at 9.

[52]
 741 Phil. 78 (2014) [Per J. Leonen].

 Id. at 99, citing Mallillin v. People, 576 Phil. 576 (2008) [Per J.


[53]

Tinga, Second Division].


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THIRD DIVISION

[ G.R. No. 210677, August 23, 2017 ]


PEOPLE OF THE PHILIPPINES PLAINTIFF-
APPELLEE. VS. ABUNDIO M. SARAGENA,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

When the quantity of the confiscated substance is miniscule, the


requirements of Section 21 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002, must
be strictly complied with. [1]

The prosecution's failure to present the police officer who acted


as the poseur-buyer in the buy-bust operation, which allegedly
involved 0.03 grams of shabu, coupled with the improbability that
the two (2) apprehending police officers witnessed the
transaction at night time, engenders reasonable doubt on the
guilt of the accused. The prosecution's failure to sufficiently
establish the chain of custody in accordance with the law further
amplifies the doubt on accused's guilt.

In its April 2, 2013 Decision,  the Court of Appeals upheld


[2]

Abundio Mamolo Saragena's  (Saragena) conviction in the


[3]

Regional Trial Court Judgment dated August 21, 2008. [4]


This Court reverses his conviction and acquits him of the sale of
dangerous drugs under Section 5 of Republic Act No. 9165.

On September 23, 2005,  SPO1 Roldan Paller (SPO1 Paller)


[5]

received information that a certain "Tatay"  was selling illegal [6]

drugs at Sitio Sindulan, Brgy. Mabolo, Cebu City.  "Tatay's" exact [7]

address was unknown. [8]

A buy-bust team was formed, composed of SPO3 Raul Magdadaro


(SPO3 Magdadaro) as team leader, PO1 Roy Misa (PO1 Misa)  as [9]

poseur-buyer, and SPO1 Paller as back-up.  SPO1 Paller called [10]

the Philippine Drug Enforcement Agency for coordination on the


buy-bust operation.  SPO1 Paller, SPO3 Magdadaro, and PO1
[11]

Misa held a briefing before jump-off. A buy-bust money of


P100.00, bearing the serial no. VT129780, was handed to PO1
Misa.[12]

On June 23, 2005, at about 7:00 p.m., the buy-bust team headed
to Sitio Sindulan in their service vehicle.  An informant helped [13]

them locate the house of accused-appellant,  Saragena, alias [14]

"Tatay."  The police officers parked three (3) comers away from
[15]

accused-appellant's house. [16]

As the designated poseur-buyer, PO1 Misa walked towards


accused-appellant's house.  SPO1 Paller and SPO3 Magdadaro
[17]

trailed behind him.  Accused-appellant's house was located at


[18]

the back of a stage.  As PO1 Misa drew closer to the target site,
[19]

SPO1 Paller and SPO3 Magdadaro hid themselves at the side of


the stages  beside the basketball court.  The distance between
[20] [21]

the designated poseur-buyer and the two (2) back-up officers


were about five (5) to eight (8) meters. [22]

Outside accused-appellant's house,  PO1 Misa convinced the


[23]

suspect to sell him shabu.  PO1 Misa handed the P100.00 bill as
[24]

payment, for which he received a "pack of white crystalline


substance."  SPO1 Paller and SPO3 Magdadaro then rushed to
[25]

the scene  and introduced themselves as police officers.  SPO1


[26] [27]

Paller conducted a body search on accused-appellant and


recovered the buy-bust money. Accused-appellant was brought to
the police station. [28]

PO1 Misa retained custody of the plastic pack, while SPO1 Paller
took the buy-bust money from accused-appellant.  At the police [29]

station,  PO1 Misa turned over the plastic pack to their team
[30]

leader, SPO3 Magdadaro,  who then marked it with the letters


[31]

"AS."  The incident was logged in the police blotter.


[32] [33]

SPO3 Magdadaro wrote a letter-request for laboratory


examination of the seized and marked plastic pack, signed by
Chief Police Superintendent Armando Macolbacol Radoc.  PO1 [34]

Misa, accompanied by SPO1 Paller,  delivered SPO3 Magdadaro's


[35]

letter-request and the seized plastic pack to the Philippine


National Police Crime Laboratory in Cebu City.  A certain PO2 [36]

Roma received the letter-request and the specimen from PO1


Misa and then delivered these items to P/S Insp. Pinky Sayson-
Acog (P/S Insp. Acog),  a forensic chemist.
[37] [38]

On June 23, 2005,  P/S Insp. Acog found the plastic pack marked
[39]

as "AS" to be positive for methamphetamine hydrochloride.  She [40]

entered her findings in her Chemistry Report No. D-89G-2005,


 marked the specimen as "D-890-05," and put her initials,
[41]

"PSA." [42]

On the other hand, according to the defense, accused-appellant


was at home when three (3) armed police officers kicked the door
of his house.  He recognized PO1 Misa, SPO1 Palter, and SPO3
[43]

Magdadaro as they frequented illegal cockfights  and would take [44]

turns asking for the defeated fighting cock.  The police officers [45]

held accused-appellant.  One (1) of them searched his pockets


[46]

but found nothing. They also searched his house. [47]

Despite the lack of contraband found, accused-appellant was sent


to the Mabolo Police Station. He inquired why he was being
arrested. The buy-bust team told him that they were able to buy
shabu from him.  Denying this accusation, accused-appellant
[48]

asserted that they planted the evidence. [49]


An Information was filed against accused-appellant for the illegal
sale of a dangerous drug under Section 5 of Republic Act No.
9165, as follows:
That on or about the 23  day of June, 2005, at about 7:00 P.M. in
rd

the City of Cebu, Philippines, and within the jurisdiction of this


Honorabie Court, the said accused, with deliberate intent, and
without authority of law, did then and there sell, deliver or give
away to a poseur buyer:
one (1) heat[-]sealed transparent plastic pocket containing 0.03
gram[s] of white crystalline substance locally known as "SHABU"
containing methylamphetamine (sic) hydrochloride, a dangerous
drug.
CONTRARY TO LAW. [50]

On August 21, 2008, the Regional Trial Court


convicted  accused-appellant of the crime charged. The
[51]

dispositive portion of the Decision read:


In fine, the prosecution has successfully discharged its task to
adduce evidence to obtain a conviction.

For all the foregoing, accused is hereby sentenced to suffer the


penalty of life imprisonment and to pay a fine of one million
pesos.

The plastic pack of shabu is order[ed] forfeited in favor of the


government.

SO ORDERED. [52]

Accused-appellant appealed  before the Court of Appeals.


[53]

The Court of Appeals found that the police officers failed to


comply with the compulsory procedure on the seizure and
custody of dangerous drugs under Section 21 of Republic Act No.
9165 or the chain of custody rule. Nevertheless, it justified the
noncompliance by applying the exception in the same provision. [54]

On April 2, 2013, the Court of Appeals convicted  accused-


[55]

appellant. The dispositive portion of the Decision read:


After due consideration, We resolve that accused-appellant has
not overcome the evidence presented by the prosecution against
him. This Court finds accused-appellant GUILTY beyond
reasonable doubt of violation of Section 5, Article II, Republic Act
No. 9165.

WHEREFORE, the instant appeal is DENIED. The RTC's


judgment dated August 21, 2008 is AFFIRMED.

SO ORDERED.  (Emphasis in the original)


[56]

For resolution of this Court is the sole issue of whether or not


accused-appellant Abundio Mamolo Saragena is guilty beyond
reasonable doubt of violation of Section 5 of Republic Act No.
9165. Subsumed in this issue is the matter of whether or not the
law enforcement officers substantially complied with the chain of
custody rule.

This Court rules in favor of accused-appellant.

Absent proof beyond reasonable doubt, accused-appellant is


presumed innocent of the crime charged.

Section 14(2) of Article III of the Constitution provides that "[i]n


all criminal prosecutions, the accused shall be presumed innocent
until the contrary is proved[.]" To overcome this constitutional
presumption, prosecution must establish accused's guilt beyond
reasonable doubt. [57]

Proof beyond reasonable doubt does not require absolute


certainty; it only requires moral certainty or the "degree of proof
which produces conviction in an unprejudiced mind,"  Thus:
[58]

Reasonable doubt is that doubt engendered by an investigation of


the whole proof and an inability after such investigation to let the
mind rest ea[sy] upon the certainty of guilt. Absolute certainty of
guilt is not demanded by the law to convict a criminal charge, but
moral certainty is required as to every proposition of proof
requisite to constitute the offense. [59]

The legal presumption of innocence prevails if the judge's mind


cannot rest easy on the certainty that the accused committed the
crime. In People v. Santos: [60]

The prosecution has the burden to overcome such presumption of


innocence by presenting the quantum of evidence required.
Corollarily, the prosecution must rest on its own merits and must
not rely on the weakness of the defense. If the prosecution fails
to meet the required quantum of evidence [of proof beyond
reasonable doubt], the defense may logically not even present
evidence on its own behalf. In which case, the presumption of
innocence shall prevail and hence, the accused shall be acquitted.
[61]

This rule is borne by the need to evenly balance the State's


encompassing powers to prosecute and the defense's arduous
struggle for liberty.  It addresses the inherent inequality in
[62]

resources, command, capacity, and authority between the State


and an accused.  In People v. Berroya:
[63] [64]

[P]roof beyond reasonable doubt lies in the fact that "(i)n a


criminal prosecution, the State is arrayed against the subject; it
enters the contest with a prior inculpatory finding in its hands;
with unlimited means of command; with counsel usually of
authority and capacity, who are regarded as public officers, and
therefore as speaking semi-judicially, and with an attitude of
tranquil majesty often in striking contrast to that of defendant
engaged in a perturbed and distracting struggle for liberty[,] if
not for life. These inequalities of position, the law strives to meet
by the rule that there is to be no conviction when there is a
reasonable doubt of guilt."  (Emphasis supplied, citation omitted)
[65]

II

There is great possibility of abuse in drug cases, especially those


involving miniscule amounts. This Court has recognized that buy-
bust operations could be initiated based on dubious claims of
shady persons, or that small amounts of illicit drugs could be
planted as evidence on innocent individuals, in view of the
secrecy surrounding drug deals in general. Thus:
"[B]y the very nature of anti-narcotics operations, the need for
entrapment procedures, the use of shady characters as
informants, the ease with which sticks of marijuana or grams of
heroin can be planted in pockets or hands of unsuspecting
provincial hicks, and the secrecy that inevitably shrouds all drug
deals, the possibility of abuse is great." Thus, the courts have
been exhorted to be extra vigilant in trying drug cases lest an
innocent person is made to suffer the unusually severe penalties
for drug offenses[.]  (Emphasis supplied)
[66]

Therefore, courts must subject "the prosecution evidence through


the crucible of a severe testing . . . [T]he presumption of
innocence requires them to take a more than casual consideration
of every circumstance or doubt favoring the innocence of the
accused."  In deliberating the accused's guilt, courts must
[67]

exercise "utmost diligence and prudence."  More importantly,


[68]

they must be on their guard in trying drug cases; otherwise, they


risk meting severe penalties to innocent persons. [69]

Here, there is reasonable doubt that the sale of shabu took place.

Section 5 of Republic Act No. 9165 penalizes any person who sells
a dangerous drug, regardless of quantity. To successfully convict
an accused under this provision, the prosecution must establish
the identities of the buyer and the seller, the item sold, and the
consideration given for it. There must be an actual sale,
consummated through delivery and payment. Finally, the corpus
delicti must be presented in court as evidence. [70]

According to accused-appellant, SPO3 Magdadaro's allegation of


having "clearly" seen the exchange of money and the pack of
shabu between accused-appellant and PO1 Misa is "quite
disturbing."

It is unclear how SPO1 Paller and SPO3 Magdadaro allegedly


witnessed the purported sale. The alleged illegal drug was of very
small quantity, It weighed only 0.03 grams,  approximately as
[71]

light as a grain of rice  or an ant.  The alleged transaction


[72] [73]

between PO1 Misa and accused-appellant happened five (5) to


eight (8) meters away from SPO3 Magdadaro.  While PO1 Misa
[74]

was allegedly buying shabu from accused-appellant, SPO1 Paller


and SPO3 Magdadaro were hiding at the side of the stage.
Accused-appellant's house was at the back of this stage where
they hid.  Likewise, it was already 7:00 p.m. and the night time
[75]

would have impaired their vision.

PO1 Misa, the only person who could attest to the commission of
the crime, was not presented in court.  The poseur-buyer "had
[76]

personal knowledge of the transaction since he conducted the


actual transaction."  His testimony is crucial in establishing the
[77]

alleged facts and circumstances surrounding the purported sale. [78]

The failure to present the poseur-buyer casts doubt on the charge


that an illegal sale of drugs took place. SPO1 Paller and SPO3
Magdadaro's location, the nightfall, and the miniseule amount of
the alleged illegal drug further call into question prosecution's
claim that SPO1 Paller and SPO3 Magdadaro witnessed the scene.

Even if there was a sale, the corpus delicti was not proven as the


chain of custody was defective.

The corpus delicti is the body of the crime that would establish


that a crime was committed.  In cases involving the sale of
[79]

drugs, the corpus delicti is the confiscated illicit drug itself,  the


[80]

integrity of which must be preserved. [81]

Accused-appellant argues that the conduct of the post-seizure


custody of the shabu allegedly recovered from him violated the
chain of custody rule.  His contention is meritorious. The police
[82]

officers' lapses are numerous and unjustified that there are


serious grounds to doubt the preservation of the integrity of
the corpus delicti.

To begin with, no evidence was adduced to show specifically how


the police officers handled, stored, and safeguarded the seized
shabu pending its offer as evidence. The records merely state:
a. PO1 Misa, as the poseur-buyer, transacted with accused-
appellant with the buy-bust money. Upon receipt of the buy-
bust money, accused-appellant gave PO1 Misa a plastic pack
of white crystalline substance.
b. PO1 Misa turned over the specimen drug to SPO3
Magdadaro at the police station.
c. SPO3 Magdadaro marked the plastic pack of white crystalline
substance as "AS."
d. SPO3 Magdadaro then drafted a letter-request for laboratory
examination of the specimen drug signed by Chief Police
Superintendent Armando Macolbacol Radoc.
e. PO1 Misa then delivered the letter-request for laboratory
examination of the specimen drug, and the actual specimen
drug marked as "AS" to the crime laboratory.
f.SPO2 Roma received the letter-request and the specimen drug.
g. SPO2 Roma immediately delivered the letter-request and the
specimen drug to [PS]Insp. Acog, the forensic chemist of the
PNP Crime Laboratory.
h. [PS]Insp. Acog made the chemical analysis and concluded
that the specimen white crystalline substance tested positive
for methylamphetamine hydrochloride.
i. [PS]Insp. Acog was presented before the court a quo for
identification of the subject specimen marked as "AS." [83]

There was no showing that accused-appellant signed a receipt of


the inventory of the pack of shabu, that it was marked in his
presence, that photographs were taken, or that he was made to
sign a confiscation receipt relating to the seized pack of shabu. [84]

This Court emphasizes that "ostensibly approximate compliance"


does not suffice; rather, there must be actual compliance with
Section 21 of Republic Act No. 9165.  Not doing so is tantamount
[85]

to a failure to establish the corpus delicti, a crucial element of the


crime charged. [86]

This case arose from a buy-bust operation. While a buy-bust


operation can indeed enable authorities to uncover illicit
transactions otherwise kept under wraps, this Court has
recognized that such an operation poses a significant drawback—
that is, "[i]t is susceptible to police abuse, the most notorious of
which is its use as a tool for extortion." [87]

To avert such possibility, the prosecution must establish beyond


reasonable doubt that the dangerous drug offered during trial was
the same that was bought during the buy-bust operation.  The [88]

chain of custody rule under Republic Act No. 9165 fulfills this
rigorous requirement. [89]

Section 1(b) of the Dangerous Drugs Board Regulation No. 01-02,


which implements Republic Act No. 9165, explains chain of
custody rule as follows:
"Chain of Custody" means the duly recorded authorized
movements and custody of seized drugs or controlled chemicals
or plant sources of dangerous drugs or laboratory equipment of
each stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
item shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody were made in the course of
safekeeping and use in court as evidence, and the final
disposition.
This Court agrees with the Court of Appeals that the prosecution
failed to follow the chain of custody rule under Section 21 of
Republic Act No. 9165.

Paragraph 1 of Section 21 of the original Republic Act No. 9165


(2002) provides the requirements for ensuring the integrity and
evidentiary value of the seized item:
(1) The apprehending team having initial custody and control of the drugs shall, imme
confiscation, physically inventory and photograph the same in the presence of [
person/s from whom such items were confiscated and/or seized, or his/her represe
representative from the media and the Department of Justice (DOJ), and [c] any e
shall be required to sign the copies of the inventory and be given a copy thereof[.] (
This is reiterated in paragraph 1 of Section 21 of the
amended  Republic Act No. 9165 (2013):
[90]
(1) The apprehending team having initial custody and control of
the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and
confiscation, conduct a physical inventory of the seized items
and photograph the same in the presence of [a] the accused or
the persons from whom such items were confiscated and/or
seized, or his/her representative or counsel, [b] with an elected
public official and [c] a representative of the National Prosecution
Service or the media[,] who shall be required to sign the copies
of the inventory and be given a copy thereof: Provided, That the
physical inventory and photograph shall be conducted at the
place where the search warrant is served; or at the nearest police
station or at the nearest office of the apprehending officer/team,
whichever is practicable, in case of warrantless
seizures: Provided, finally, That noncompliance of these
requirements under justifiable grounds, as long as the integrity
and the evidentiary value of the seized items are properly
preserved by the apprehending officer/team, shall not render void
and invalid such seizures and custody over said items. (Emphasis
supplied)
The chain of custody rule is further clarified by Section 1(A) of
the Guidelines on the Implementing Rules and Regulations of
Section 21 of Republic Act No. 9165, as amended (Chain of
Custody Implementing Rules and Regulations). [91]

The Chain of Custody Implementing Rules and Regulations


require the apprehending team to mark, inventory, and
photograph the evidence in the following manner:

First, the apprehending officer or the poseur-buyer must place his


or her initials and signature on the seized item.  Here, PO1 Misa
[92]

did not place his initials "RM" on the confiscated pack; rather, it
was SPO3 Magdadaro who wrote "AS" on it,  presumably [93]

standing for accused-appellant's initials for Abundio Saragena,


instead of the police officer's initials. It was also not shown
whether PO1 Misa or SPO3 Magdadaro signed the plastic pack.
Second, in a warrantless search as in this case, the marking of
the drug must be done in the presence of the accused-
appellant  and at the earliest possible opportunity.  The earliest
[94] [95]

possible opportunity to mark the evidence is immediately at the


place where it was seized, if practicable,  to avoid the risk that
[96]

the seized item might be altered while in transit.  In People v.


[97]

Sabdula: [98]

[C]rucial in proving chain of custody is the marking of the seized


drugs or other related items immediately after they are
seized from the accused. "Marking" means the placing by the
apprehending officer or the poseur-buyer of his/her initials and
signature on the items seized. Long before Congress passed R.A.
No. 9165, this Court has consistently held that failure of the
authorities to immediately mark the seized drugs casts
reasonable doubt on the authenticity of the corpus delicti.

Marking after seizure is the starting point in the custodial link;


hence, it is vital that the seized contraband be immediately
marked because succeeding handlers of the specimens will use
the markings as reference. The marking of the evidence serves to
separate the marked evidence from the corpus of all other similar
or related evidence from the time they are seized from the
accused until they are disposed of at the end of the criminal
proceedings, thus preventing switching, "planting," or
contamination of evidence.  (Emphasis supplied,
[99]
citation
omitted)
Here, the records do not show why the officers had to wait to
arrive at the police station  before marking the seized plastic
[100]

pack. The earliest available opportunity to mark it was in


accused-appellant's house. Likewise, there is no showing that the
seized item was marked in the presence of accused-appellant. All
that the prosecution established was that, while at the police
station, PO1 Misa turned over the plastic pack to SPO3
Magdadaro, who marked it with the letters "AS."  Other details
[101]

are left out for this Court to guess.


As in People v. Dahil,  this Court cannot determine "how the
[102]

unmarked drugs were handled," making it possible for the seized


item to have been altered, thus:
The Court must conduct guesswork on how the seized drugs were
transported and who took custody of them while in transit.
Evidently, the alteration of the seized items was a
possibility absent their immediate marking thereof.  (Emphasis
[103]

supplied)
Third, the physical inventory and photograph of the seized item
must be done in the presence of (a) the accused, the accused's
representative, or the accused's counsel; (b) any elected public
official; and (c) a representative of the Department of Justice's
National Prosecution Service or a media practitioner. These three
(3) persons required by law should sign the copies of the
inventory of the seized item and be given a copy of the certificate
of inventory.  This insulates the buy-bust operation "from any
[104]

taint of illegitimacy or irregularity."


[105]

Here, it was not shown that the buy-bust team conducted a


physical inventory or took photographs of the contraband after its
confiscation. Moreover, none of the witnesses testified that (a)
accused-appellant, his representative or counsel, (b) any elected
official, and (c) a representative from the media or from the
National Prosecution Service signed a confiscation receipt.

Section 1(A.1.6) of the Chain of Custody Implementing Rules and


Regulations states that "[a] representative of the Nfational]
Pjrosecution] S[ervice] is anyone from its employees, while the
media representative is any media practitioner. The elected public
official is any incumbent public official regardless of the place
where he/she is elected."

The presence of these three (3) persons required by law can be


ensured in a planned operation such as a buy-bust operation.
Here, the buy-bust operation was arranged and scheduled in
advance: the police officers formed an apprehending, team,
coordinated with the Philippine Drug Enforcement Agency,
 prepared the buy-bust money, and held a briefing,  Yet, they
[106] [107]
failed to ensure that a National Prosecution Office representative,
or if unavailable, any media practitioner, would be present during
the seizure of shabu. They also failed to ensure that any
incumbent public official such as a barangay captain or kagawad
would be there at the same time.

Securing the presence of these persons is not


impossible. Lescano v. People  affirmed that it is not enough for
[108]

the apprehending officers to merely mark the seized pack of


shabu; the buy-bust team must also conduct a physical inventory
and take photographs of the confiscated item in the presence of
these persons required by law. [109]

Finally, the apprehending team shall "document the chain of


custody each time a specimen is handled, transferred or
presented in court until its disposal, and every individual in the
chain of custody shall be identified following the laboratory
control and chain of custody form." [110]

People v. Kamad  stated that the prosecution must prove four


[111]

(4) links in the chain of custody of evidence. Read with the Chain
of Custody Implementing Rules and Regulations, Kamad provided
for the following steps to establish the links necessary for a chain
of custody of the specimen seized from the accused:

First, the apprehending officer seizes and then marks the


dangerous drug taken from the accused.  The chain of custody
[112]

of evidence must show the time and place that the seized item is
marked and the names of the officers who marked it. [113]

Second, the apprehending officer turns over the seized dangerous


drug to the investigating officer.  The chain of custody of
[114]

evidence must establish the names of officers who inventoried,


photographed, and/or sealed the seized item. [115]

Third, the investigating officer turns over the seized dangerous


drug to the forensic chemist for laboratory examination.  The [116]

chain of custody of evidence must show the names of officers


who had custody and received the evidence from one officer to
another within the chain.[117]

Fourth, the forensic chemist turns over and submits the marked
confiscated dangerous drug to the court.  Similarly, the chain of
[118]

custody of evidence must show the names of officers who had


custody and received the evidence from one officer to another
within the chain.[119]

"[E]ach and every link in the custody must be accounted for" until
the seized item is presented before the court.  In this case,
[120]

there are gaps in the linkages in the chain of custody. Some key
witnesses were absent during trial.

PO1 Misa, the poseur-buyer, was not presented in court.  As a [121]

result, prosecution has not established how the purported


transaction with accused-appellant occurred.

PO1 Misa also delivered the drug specimen to the Philippine


National Police Crime Laboratory for examination.  During the [122]

post-seizure custody and handling of the dangerous drug, a


certain PO2 Roma received the specimen from PO1 Misa before
delivering it to P/S Insp. Acog.  However, the prosecution failed
[123]

to present the testimony of P02 Roma, who was also part of the
chain of custody. In People v. Salcena: [124]

[A]n unbroken chain becomes indispensable and essential in the


prosecution of drug cases owing to its susceptibility to alteration,
tampering, contamination and even substitution and exchange.
Accordingly, each and every link in the custody must be
accounted for, from the time the shabu was retrieved from
[accused-appellant] during the buy-bust operation to its
submission to the forensic chemist until its presentation before
the R[egional] T[rial] C[ourt]. In the case at bench, the
prosecution failed to do so.  (Emphasis supplied, citation
[125]

omitted)
III
The chain of custody rule must be strictly complied with. Mallillin
v. People  explained that strict compliance goes into the nature
[126]

of the dangerous drug itself, this being the subject of prosecution


under Republic Act No. 9165. Thus:
A unique characteristic of narcotic substances is that they are not
readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that[,] at any of the links in the chain of custody over
the [narcotic substances,] there could have been tampering,
alteration, or substitution of substances from other cases — by
accident or otherwise — in which similar evidence was seized or
in which similar evidence was submitted for laboratory testing.
Hence, in authenticating the same, a standard more
stringent than that applied to cases involving objects which are
readily identifiable must be applied, a more exacting
standard that entails a chain of custody of the item with sufficient
completeness if only to render it improbable that the original item
has either been exchanged with another or been contaminated or
tampered with.  (Emphasis supplied)
[127]

People v. Casacop  held that the buy-bust team "should have


[128]

been more meticulous in complying with Section 21 of Republic


Act No. 9165 to preserve the integrity of the seized
shabu."  This is especially true where the weight of the seized
[129]

item is a miniscule amount that can be easily planted and


tampered with. [130]

The Court of Appeals correctly found that the police officers failed
to comply with the chain of custody rule under Section 21 of
Republic Act No. 9165.  However, this Court reverses the Court
[131]

of Appeals judgment for erroneously applying the exception here.


[132]

A proviso in the old Section 21 (a) of Republic Act No. 9165


Implementing Rules and Regulations states that the failure to
comply with the chain of custody rule may be excused in
exceptional circumstances, provided that (a) there are justifiable
grounds for it, and (b) the integrity and evidentiary value of the
seized items were properly preserved:
[N]on-compliance with these requirements [a] under justifiable
grounds, [b] as long as the integrity and the evidentiary value of
the seized items are properly preserved by the apprehending
officer/team, shall not render void and invalid such seizures of
and custody over said items. [133]

The Court of Appeals disregarded the operative phrase—that the


prosecution must provide "justifiable grounds" for noncompliance,
in addition to showing that the prosecution maintained the
integrity of the seized item.

In People v. Jafaar,  this Court held that the exception under


[134]

then Section 21 (a) of Republic Act No. 9165 Implementing Rules


and Regulations "will only be triggered by the existence of a
ground that justifies departure from the general rule." [135]

The Court of Appeals' ruling falls further in the face of Sections


1(A.1.9) and 1 (A.1.10) of the Chain of Custody Implementing
Rules and Regulations, which provide:
A.1. Noncompliance, [a] under justifiable grounds, with the requirements of Section 21
9. amended, shall not render void and invalid such seizures and custody over the
integrity and the evidentiary value of the seized items are properly preserve
officer/team.

A.1. Any justification or explanation in cases of noncompliance with the requirements


10. No. 9165, as amended, shall be clearly stated in the sworn statem
apprehending/seizing officers, as well as the steps taken to preserve the integrity
the seized'confiscated items. Certification or record of coordination for operating u
pursuant to Section 86 (a) and (b), Article IX of the IRR of RA No. 9165 shall b
supplied)
The Chain of Custody Implementing Rules and Regulations
require that the apprehending officers do not simply mention a
justifiable ground, but also clearly state this ground in their sworn
affidavit, coupled with a statement on the steps they took to
preserve the integrity of the seized item. [136]

Here, the prosecution has not given a justifiable ground for


applying the exception. All it has done is to assert a self-serving
claim that the integrity of the seized pack has been
preserved  despite the numerous procedural lapses it has
[137]

committed. The fatal errors of the apprehending team can only


lead this Court to seriously doubt the integrity of the corpus
delicti.

Law enforcers "cannot feign ignorance of the exacting standards


under Section 21 of Republic Act No. 9165. [They] are presumed
and are required to know the laws they are charged with
executing." [138]

The prosecution's procedural shoxtcut finds no basis in fact or


law. Its failure to comply with the chain of custody rule is
equivalent to its failure to establish the corpus delicti, and
therefore, its failure to prove that the crime was indeed
committed.  In People v. Dela Cruz:
[139] [140]

Non-compliance [with the chain of custody rule] is tantamount to


failure in establishing identity of corpus delicti, an essential
element of the offenses of illegal sale and illegal possession of
dangerous drugs. By failing to establish an element of these
offenses, non-compliance will, thus, engender the acquittal of an
accused.[141]

Accused-appellant is presumed innocent until the contrary is


proved beyond reasonable doubt. The prosecution had the burden
of overcoming such presumption, which it miserably failed to do
so.

In closing, this Court reiterates its ruling in People v. Holgado:


[142]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more' on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels.
[143]

WHEREFORE, premises considered, the Court of Appeals April 2,


2013 Decision in CA-G.R. CEB-CR-HC No. 00939
is REVERSED and SET ASIDE. Accused-appellant Abundio
Mamolo Saragena is hereby ACQUITTED for failure of the
prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention unless he is
confined for any other lawful cause.

Let a copy of this decision be furnished the Director of the Bureau


of Corrections, Muntinlupa City, for immediate implementation.
The Director of the Bureau of Corrections is directed to report to
this Court within five (5) days from receipt of this decision the
action he has taken. Copies shall also be furnished the Director
General of the Philippine National Police and the Director General
of the Philippine Drugs Enforcement Agency for their information.

The Regional Trial Court is directed to turn over the seized sachet
of shabu to the Dangerous Drugs Board for destruction in
accordance with law.

Let entry of judgment be issued immediately.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.
November 27, 2017

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on August 23, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 2017 at 1:30 p.m.

ORDER OF RELEASE

TO: The Director


      Bureau of Corrections
      1770 Muntinlupa City

GREETINGS:

WHEREAS, the Supreme Court on August 23, 2017 promulgated


a Decision in the above-entitled case, the dispositive portion of
which reads:
"WHEREFORE, premises considered, the Court of Appeals April
2, 2013 Decision in CA-G.R. CEB-CR-HC No. 00939
is REVERSED and SET ASIDE. Accused-appellant Abundio
Mamolo Saragena is hereby ACQUITTED for failure of the
prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention unless he is
confined for any other lawful cause.
Let a copy of this decision be furnished the Director of the Bureau
of Corrections, Muntinlupa City, for immediate implementation.
The Director of the Bureau of Corrections is directed to report to
this Court within five (5) days from receipt of this decision the
action he has taken. Copies shall also be furnished the Director
General of the Philippine National Police and the Director General
of the Philippine Drugs Enforcement Agency for their information.

The Regional Trial Court is directed to turn over the seized sachet
of shabu to the Dangerous Drugs Board for destruction in
accordance with law.

Let entry of judgment be issued immediately.

SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately
release ABUNDIO M. SARAGENA unless there are other lawful
causes for which he should be further detained, and to return this
Order with the certificate of your proceedings within five (5) days
from notice hereof.

GIVEN by the Honorable PRESBITERO J. VELASCO, JR.,


Chairperson of the Third Division of the Supreme Court of the
Philippines, this 23  day of August 2017.
rd

 People v. Holgado, 741 Phil. 78, 81 (2014) [Per J. Leonen, Third


[1]

Division].

 Rollo, pp. 3-11. The Decision, docketed as CA-G.R. CEB-CR-HC


[2]

No. 00939, was penned by-Associate Justice Maria Elisa Sempio


Diy and concurred in by Associate Justices Edgardo L. Delos
Santos and Pamela Ann Abelia Maxino of the Nineteenth Division,
Court of Appeals, Cebu City.

[3]
 Id. at 20.

 CA rollo, pp. 40-43. The Judgment, docketed as Crim. Case No.


[4]

CBU-73766, was penned by Presiding Judge Enriqueta Loquillano-


Belarmino of Branch 57, Regional Trial Court, Cebu City.

 The records state that it was only on September 23, 2005 when
[5]

SPO1 Paller received a tip about "Tatay's" alleged sale of


dangerous drugs (Rollo, p. 4), Curiously, the buy-bust operation
that supposedly resulted from this tip happened three months
earlier, on June 23, 2005 (CA rollo, p. 40).

[6]
 CA rollo, pp. 29-30.

[7]
 Rollo,p. 4,

[8]
 CA rollo, p. 30.

 The Regional Trial Court spells his first name as "Roy" (CA rollo,
[9]

p. 40), while the Court of Appeals spells it as "Rey." (rollo, p. 4).

[10]
 Rollo, pp. 4-5.

[11]
 Id. at 5.

[12]
 CA rollo, p. 40.

[13]
 Id.

[14]
 Id. at 5.

[15]
 Id. at 40.

[16]
 Id. at 40-41.
[17]
 Id. at 41.

[18]
 Id.

[19]
 Id.

[20]
 Rollo, p. 5.

[21]
 CA rollo, p. 30.

[22]
 Id.

[23]
 Id. at 61.

[24]
 Id. at 41.

[25]
 Id. at 61.

[26]
 Id. at 41.

[27]
 Rollo, p. 5.

[28]
 Id.

[29]
 CA rollo, p. 41.

[30]
 Id. at 67.

[31]
 Rollo, p. 5.

[32]
 CA rollo, p. 41.

[33]
 Id.

[34]
 Rollo, p. 5.

[35]
 CA rollo, pp. 68-69.
[36]
 Rollo, p. 5.

[37]
 CA rollo, p. 41.

[38]
 Rollo, p. 5.

[39]
 CA rollo, p. 69.

 Rollo, pp. 5-6. The CA Decision referred to the substance as


[40]

"methylamphetamine hydrochloride."

[41]
 CA rollo, p. 41.

[42]
 Id. at 70.

[43]
 Id. at 41.

[44]
 Rollo, p. 6.

[45]
 CA rollo, p. 28.

[46]
 Id. at 41.

[47]
 Id.

[48]
 Id.

[49]
 Id. at 42.

[50]
 Id. at 40.

 Id. at 40-43. The Decision was penned by Presiding Judge


[51]

Enriqueta Loquillano-Belarmino of Branch 57 of the Regional Trial


Court of Cebu City.

[52]
 Id. at 43.

[53]
 Id. at 24-39.
[54]
 Rollo, p. 8.

[55]
 Id. at 3-11.

[56]
 Id. at 10-11.

 People v. Santos Jr., 562 Phil. 45S, 467 (2007) [Per J. Tinga,
[57]

Second Division].

 People v. Berroya, 347 Phil 410, 423 (1997) [Per J. Romero,


[58]

Third Division].

 People v. Santos, Jr., 562 Phil, 458, 467 (2007) [Per J. Tinga,
[59]

Second Division].

[60]
 562 Phil. 458 (2007) [Per J. Tinga, Second Division].

[61]
 Id. at 467-468.

 People v. Berroya, 347 Phil. 410, 423 (1997) [Per J. Romero,


[62]

Third Division].

[63]
 Id.

[64]
 347 Phil. 410 (1997) [Per J. Romero, Third Division].

[65]
 Id. at 423.

 People v. Tan, 401 Phil. 259,273 (2000) [Per J. Melo, Third


[66]

Division].

 People v. Santos, Jr., 562 Phil. 458, 472 (2007) [Per J, Tinga,
[67]

Second Division].

[68]
 People v. Tan, 401 Phil. 259,273 [Per J. Melo, Third Division].

[69]
 Id.
 People v. Pagaduan, 641 Phil. 432, 448 (2010) [Per J. Brion,
[70]

Third Division].

[71]
 Id. at 40.

 A grain of rice has a mass of roughly 0.2 to 0.3 grams. See Tho
[72]

Lai Hoong, Tho Mun Yi, and Josephine Fong, Interactive Science
for Inquiring Minds, Vol. A (2009), at 36. A weight of 0.03 grams
is equivalent to 0.003058219 ounces. 0.001058219 ounces is
"about as heavy as a [g]rain of [r]ice." See The Measure of
Things, available
at http://www.bluebulbprojects.com/MeasureOfThings/results.ph
p?comp=weight&unit=oz&amt=0.001058219.

 Vosniadou, Stella, ed., International Handbook of Research on


[73]

Conceptual Change, 2nd edition (2013), at 160.

[74]
 CA rollo, p. 30.

[75]
 CA rollo, p. 41.

[76]
 Rollo, p. 4.

 People v. Casacop, 755 Phil. 265, 274 (2015) [Per J. Leonen,


[77]

Second Division].

[78]
 Id.

 People v. Pagaduan, 641 Phil. 432, 447 (2010) [Per J. Brion,


[79]

Third Division].

[80]
 Id.

 People v. Caiz, G.R. No. 215340, July 13, 2016 1 [Per J.


[81]

Leonen, Second Division].

[82]
 Rollo, p. 7.
[83]
 Id. at 9-10.

[84]
 CA rollo, pp. 31-32.

 People v. Holgado, 741 Phil. 78, 94 (2014) [Per J. Leonen,


[85]

Third Division].

 Lescano v. People, G.R. No. 214490, January 13,


[86]

2016 <http://scjudiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/214490.pdf> 7 [Per J.
Leonen, Second Division].

 People v. Dahil, 750 Phil. 212, 226 (2015) [Per J. Mendoza,


[87]

Second Division].

 People v. De Leon, 624 Phil. 786. 800 (2010) [Per J. Velasco


[88]

Jr., Third Division].

[89]
 Id.

[90]
 Amended by Rep. Act No. 10640.

 Guidelines on the Implementing Rules and Regulations (IRR) of


[91]

Section 21 of Republic Act No. 9165 as Amended by Republic Act


No. 10640, sec. 1 provides:

Section 1. Implementing Guidelines. — The PDEA shall take


charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals,
as well as instruments/paraphernalia and/or laboratory
equipment so confiscated, seized and/or surrendered, for proper
disposition in the following manner:

A. Marking, Inventory and Photograph; Chain of Custody


implementing Paragraph "a " of the IRR
A.1. The apprehending or seizing officer having initial custody and
control of the seized or confiscated dangerous drugs, plant
sources of dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernaiia and/or laboratory
equipment shall, immediately after seizure and confiscation,
mark, inventory and photograph the same in the following
manner:

A.1.1. The marking, physical inventory and photograph of the


seized/confiscated items shall be conducted where the search
warrant is served.

A.1.2, The marking is the placing by the apprehending officer or


the poseur-buyer of his/her initial and signature on the item/s
seized.

A.1.3. In warrantless seizures, the marking of the seized items in


the presence of the violator shall be done immediately at the
place where the drugs were seized or at the nearest police station
or nearest office of the apprehending officer/team, whichever is
practicable. The physical inventory and photograph shall be
conducted in the same nearest police station or nearest office of
the apprehending officer/team, whichever is practicable.

A.1.4. In cases when the execution of search warrant is preceded


by warrantless seizures, the marking, inventory and photograph
of the items recovered from the search warrant shall be
performed separately from the marking, inventory and
photograph of the items seized from warrantless seizures.

A.1.5. The physical inventory and photograph of the


seized/confiscated items shall be done in the presence of the
suspect or his representative or counsel, with elected public
official and a representative of the National Prosecution Service
(NPS) or the media, who shall be required to sign the copies of
the inventory of the seized or confiscated items and be given
copy thereof. In case of their refusal to sign, it shall be stated
"refused to sign" above their names in the certificate of inventory
of the apprehending or seizing officer.

A.1.6. A representative of the NPS is anyone from its employees,


while the media representative is any media practitioner. The
elected public official is any incumbent public official regardless of
the place where he/she is elected.

A.1.7. To prevent switching or contamination, the seized items,


which are fungible and indistinct in character, and which have
been marked after the seizure, shall be sealed in a container or
evidence bag and signed by the apprehending/seizing officer for
submission to the forensic laboratory for examination.

A.1.8. In case of seizure of plant sources at the plantation site,


where it is not physically possible to count or weigh the seizure as
a complete entity, the seizing officer shall estimate its count or
gross weight or net weight, as the case may be. If it is safe and
practicable, marking, inventory and photograph of the seized
plant sources may be performed at the plantation site.
Representative samples of prescribed quantity pursuant to Board
Regulation No. 1, Series of 2002, as amended, and/or Board
Regulation No. 1, Series of 2007, as amended, shall be taken
from the site after the seizure for laboratory examination, and
retained for presentation as the corpus delicti of the
seized/confiscated plant sources fallowing the chain of custody of
evidence.

 See Guidelines on the Implementing Rules and Regulations


[92]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.2.

[93]
 CA rollo, p.41.

 See Guidelines on the Implementing Rules and Regulations


[94]

(IRR) of Section 21 of Republic Act No. 9365 as Amended by


Republic Act No. 10640, sec. 1.A.1.3.
 People v. Dahil, 750 Phil. 212, 233-234 (2015) [Per J.
[95]

Mendoza, Second Division].

 See Guidelines on the Implementing Rules and Regulations


[96]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.3.

 People v. Dahil, 750 Phil. 212, 233 (2015) [Per J. Mendoza,


[97]

Second Division].

[98]
 733 Phil. 85 (2014) [Per J. Brion, First Division].

[99]
 Id. at 95.

[100]
 Rollo,p.5.

[101] Id.

[102]
 750 Phil. 212 (2015) [Per J. Mendoza, Second Division].

[103]
 Id. at 233.

 See Guidelines on the Implementing Rules and Regulations


[104]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.5.

 People v. Mendoza, 736 Phil, 749, 762 (2014) [Per J.


[105]

Bersamin, First Division].

[106]
 Rollo, pp. 4-5.

[107]
 CA rollo, p. 40.

 Lescano v. People, G.R. No, 214490, January 13, 2016,


[108]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/214490.pdf> [Per J.
Leonen, Second Division].
[109]
 Id. at 11.

 Guidelines on the Implementing Rules and Regulations (IRR) of


[110]

Section 21 of Republic Act No. 9165 as Amended by Republic Act


No. 10640, sec. 1.B.5.

 People v. Kamad, 624 Phil. 289 (2010) [Per J. Brion, Second


[111]

Division].

 People v. Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion,


[112]

Second Division].

 Guidelines on the Implementing Rules and Regulations (IRR) of


[113]

Section 21 of Republic Act No. 9165 as Amended by Republic Act


No. 10640, sec. 1.A.1.11 provides:

A.1.11. The chain of custody of evidence shall indicate the time


and place of marking, the names of officers who marked,
inventoried, photographed and sealed the seized items, who took
custody and received the evidence from one officer to another
within the chain, and further indicating the time and date every
time the transfer of custody of the same evidence were made in
the course of safekeeping until submitted to laboratory personnel
for forensic laboratory examination. The latter shall continue the
chain as required in paragraph B.5 below.

 People v. Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion,


[114]

Second Division].

 See Guidelines on the Implementing Rules and Regulations


[115]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.11.

 People v. Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion,


[116]

Second Division].
 See Guidelines on the Implementing Rules and Regulations
[117]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.11.

 People v. Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion,


[118]

Second Division].

 See Guidelines on the Implementing Rules and Regulations


[119]

(IRR) of Section 21 of Republic Act No. 9165 as Amended by


Republic Act No. 10640, sec. 1.A.1.11.

 People v. Salcena, 676 Phil. 357, 381 (2011) [Per J. Mendoza,


[120]

Third Division].

 PO1 Misa allegedly "died months after the incident," but no


[121]

proof of his death is attached to the petition. Prosecution also did


not the mention the date of his alleged death. See CA rollo, p. 41.

[122]
 Rollo, p. 5.

[123] Id.

 People v. Salcena, 676 Phil. 357 (2011) [Per J. Mendoza, Third


[124]

Division].

[125]
 Id. at 381.

 Mallillin v. People, 576 Phil. 576 (2008) [Per J. Tinga, Second


[126]

Division].

[127]
 Id. at 588-589.

 People v. Casacop, 755 Phil. 265 (2015) [Per J. Leonen,


[128]

Second Division].

[129]
 Id. at 283.
 People v. Holgado, 741 Phil. 78, 100 (2014) [Per J. Leonen,
[130]

Third Division].

[131]
 Rollo, p. 7.

[132]
 Id. at 8.

 Then Implementing Rules and Regulations of R.A. No. 9165,


[133]

art. II, sec. 21 (a).

 People v. Jaafar, G,R. No. 219829, January 18,


[134]
2017
<http://scjudiciary,gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/219829.pdf> [Per J.
Leonen, Second Division].

[135]
 Id. at 8.

 Guidelines on the Implementing Rules and Regulations (IRR) of


[136]

Section 21 of Republic Act No. 9165 as Amended by Republic Act


No. 10640, sec. 1.A.1.10.

[137]
 CA rollo, pp. 64-71.

 People v. Jaafar, G.R. No. 219829, January 18, 2017


[138]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/219829.pdf> 10 [Per J.
Leonen, Second Division].

 People v. Pagaduan, 641 Phil. 432, 449-450 (2010) [Per J.


[139]

Brion, Third Division].

[140]
 744 Phil. 816 (2014) [Per J. Leonen, Second Division].

[141]
 Id. at 827.

[142]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[143]
 Id. at 100.
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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 207765, July 26, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. JULITO DIVINAGRACIA, SR.,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

"Pa, don't do that[,] Pa." [1]

Child victims of rape by their very own fathers usually continue to


live in an environment where the perpetrators consistently
underscore the weakness and worthlessness of their victims. In
addition to the continued economic dependence of the child
victims, this ensures enormous difficulty to find a safe space for
them to reveal their ordeal and ensure protection. The animosity
and intolerable indignity that child victims experience often lead
them to find the courage to seek succor from someone who
appears to have moral ascendancy over their perpetrator. This is
often their mother, although at times, it may also be a relative.

This case is the story of the courage of AAA and BBB, sisters who
were sexually molested by their father.
This resolves the appeal, through Rule 124, Section 13,
paragraph (c)  of the Rules of Court, as amended by
[2]

Administrative Matter No. 00-5-03-SC dated September 28,


2004, of the October 7, 2009 Joint Judgment  of Branch 28,[3]

Regional Trial Court, Mandaue City in Criminal Case Nos. DU-


8072 and DU-8074. The trial court found accused Julito
Divinagracia, Sr. (Divinagracia) guilty beyond reasonable doubt of
one (1) count of rape in relation to Republic Act No. 7610 and
one (1) count of acts of lasciviousness in relation to Republic Act
No. 7610. The Court of Appeals,  upon intermediate review,
[4]

affirmed the trial court's Decision.

This Court restates the facts as found by the lower courts.

Divinagracia and CCC were husband and wife with seven (7)
children.  The family lived in a one (1)-room house at Jagobiao,
[5]

Mandaue City near the boundary of Riverside, Consolacion. [6]

Sometime in November 1996,  Divinagracia and CCC quarrelled,


[7]

prompting CCC to leave and spend the night at her sibling's


house. Their daughters AAA and BBB were then left by
themselves  since their other siblings were either at their
[8]

grandmother's house or with their friends. [9]

Later that evening, while AAA and BBB were sleeping side by side
inside their house, BBB suddenly woke up to her father's tight
embrace from behind and felt him roughly running his hand over
her leg and breasts. BBB then felt her father poking his hard
penis against her buttocks. BBB begged her father to stop, saying
that she still had to go to school the following day. Divinagracia
moved away from BBB and went out of the house. [10]

BBB was nine (9) years old at that time. [11]

A few minutes later, Divinagracia went back inside the house and
lay down beside AAA.  AAA woke up and asked her father where
[12]
her mother was. Divinagracia pinched her ear and ordered her to
keep quiet. [13]

AAA noticed that BBB, who was then lying beside her, slowly
moved away. AAA tried to follow BBB, but Divinagracia pulled
AAA towards him and made her face him. Divinagracia pulled
down AAA's shorts and put his finger inside her vagina.
Afterwards, Divinagracia got on top of AAA and inserted his penis
inside her vagina. AAA's father then continued to molest her.[14]

AAA cried to her sister for help but BBB could do nothing but
weep and cover her ears.  AAA was eight (8) years old at that
[15]

time.[16]

The following day, AAA was shocked and scared to find blood
stains on her shorts. Divinagracia merely laughed when he saw
AAA's distress. [17]

When CCC arrived later that day, AAA told her that she was
molested by Divinagracia. AAA did not say that she was raped
because she was afraid that her parents would only quarrel again.
However, CCC did not believe her daughter. AAA claimed that
CCC told Elvira Aburido (Aburido), Divinagracia's sister, about the
molestation. [18]

On January 19, 1999, or a little over two (2) years after the
incident, Sister Mary Ann Abuna (Sister Mary Ann), CCC's sister
and a nun,  visited her family in Cebu.
[19] [20]

That same day, AAA told Sister Mary Ann that she wanted to stop
her schooling and begged to go with her back to Manila because
she did not want to see her father anymore. Sister Mary Ann
asked AAA's sisters if their father had changed his ways. BBB and
their other sister responded that he had not reformed and even
almost raped them. [21]

Sister Mary Ann asked the sisters to leave Cebu and go back with
her to Manila to prevent their father from further molesting them.
She brought AAA, BBB, their other sister, and CCC back with her
to Manila. A few days later they all went to Pampanga where
Sister Mary Ann was a missionary. [22]

While in Pampanga, AAA saw CCC crying because she wanted to


go back to Cebu. AAA then went to Sister Mary Ann and declared
that if CCC would return to Cebu, she would not go back with her.
It was at this point that AAA opened up to Sister Mary Ann about
the sexual abuse she suffered from her father. [23]

Sister Mary Ann brought AAA to the Hospital Ning in Angeles City
to be examined by a doctor.  After examining AAA, Dr. Lauro C.
[24]

Biag (Dr. Biag) issued a medical certificate,  a portion of which


[25]

read:
Genitalia: labia majora/minora - well coaptated.
    Hymen: orifice 0.7 cm old healed complete laceration on 11, 8,
2 o'clock.
        old healed incomplete laceration 5 & 10 o'clock.
        (-) abrasion, (-) hematoma, (-) discharge [26]

Sister Mary Ann helped the girls file their respective


complaints  against their father. At first, BBB was hesitant to file
[27]

a complaint but she finally agreed because AAA would not stop
crying and was always afraid. [28]

On November 13, 2000, Divinagracia was charged with rape and


acts of lasciviousness in relation to Republic Act No. 7610.
 Pertinent portions of the Information for rape read:
[29]

That on or about the month of November 1996 in the Municipality


of Consolacion, Province of Cebu, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused
with deliberate intent, by means of force and intimidation, did
then and there wilfully, unlawfully and feloniously have carnal
knowledge with [AAA], his own daughter an [8-year-old] girl at
that time, against her will and consent.

CONTRARY TO LAW. [30]

The Information for acts of lasciviousness read:


That on or about the month of November 1996 in the Municipality
of Consolacion, Province of Cebu, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused
with force and intimidation and with lewd designs, did then and
there wilfully, unlawfully and feloniously commit an act of
lasciviousness against [BBB], his own daughter, a [12-year-old]
girl by embracing her, pressing his penis against her buttocks and
touching her breasts, against her will and consent.

CONTRARY TO LAW. [31]

Divinagracia, assisted by counsel, pleaded not guilty to the


charge of rape against him.  During pre-trial, defense admitted
[32]

the following facts and stipulations:


1. The existence of a birth certificate of the private offended
party. Her birth certificate shows that she was born in
Consolacion, Cebu on October 29, 1988;

2. The accused is the father of the private offended party;

3. On November 1996 and prior thereto, the accused had been


living together with his wife and children at Riverside,
Consolacion, Cebu;

4. The existence of a medical certificate of the private offended


party signed by a certain Dr. Lauro Biag, Medical Officer III of
Hospital Ning Angeles City[.][33]

The prosecution, in turn, admitted the following facts and


stipulations:
1. The house where the family of the accused stays at Riverside,
Consolacion, Cebu is a one room affair, is about 6x8 meters
which is more or less half of the area of this courtroom;

2. The whole family which includes seven (7) children, the


accused and his wife slept in the same house;

3. The next door neighbor is about four (4) feet away from the
house of the accused;
4. Elvira Divinagracia Aburido, sister of the accused, also lives at
Riverside, Consolacion, Cebu;

5. The complaint against the accused was filed at the Provincial


Prosecutor's Office on July 31, 2000.[34]

The complaints for rape and acts of lasciviousness against


Divinagracia were eventually consolidated for trial.[35]

Divinagracia, assisted by counsel, also pleaded not guilty to the


charge of acts of lasciviousness against him.  Defense then
[36]

admitted the following facts and stipulations during pre-trial:


1. The accused is the father of the complaining witness;

2. The accused and the private complainant (his daughter) were


residing at Riverside, Consolacion, Cebu at the time this incident
occurred in November 1996 and prior thereto. As a matter of
fact, according to Atty. Rodriguez, all the members of the family
of the accused lived together at this place at this given time;

3. The existence of a Certificate of Live Birth and Baptismal


Certificate of the complaining witness. [37]

On the other hand, the prosecution admitted the following


stipulations:
1. All the seven (7) children including the father and the mother
lived together in a one-room house at Riverside, Consolacion,
Cebu;

2. The mother of the complaining witness is a housewife;

3. The uncles and aunties of the complaining witness also live in


Consolacion, Cebu;

4. The next door neighbor of the family of the complaining


witness at Riverside, Consolacion, Cebu is about 4 feet away from
their house;
5. The records show a [Si]numpaang Salaysay executed by the
complaining witness and subscribed before the City Prosecutor of
Angeles City on November 1999. [38]

The prosecution presented the following as witnesses: AAA, BBB,


Sister Mary Ann, and Dr. Naomi Poca (Dr. Poca).

Dr. Poca, a pediatrician who was also a child protection specialist,


 interpreted the medical findings of Dr. Biag, who failed to
[39]

attend the hearings due to the distance of Angeles City,


Pampanga from Mandaue City, Cebu. [40]

Dr. Poca testified that the healed lacerations at 11:00, 2:00, and
10:00 positions are "more likely congenital rather than acquired".
 However, the lacerations at 8:00 and 5:00 positions could have
[41]

only been caused by penetration into the vagina.  Moreover, [42]

given AAA's disclosure, Dr. Poca opined that the healed laceration
at 8:00 position suggested sexual abuse. [43]

The defense presented the following as its witnesses:


Divinagracia, his neighbors Pamela Sison (Sison), Alvin Ho (Ho),
Darwin Isok (Isok), and his sister Aburido.

Divinagracia denied abusing his daughters  and claimed that they


[44]

had a happy  family life. He further claimed that he only found


[45]

out about the complaints for molestation against him when he


was arrested in 2001.  Divinagracia then accused his wife's
[46]

family of plotting against him. [47]

Sison testified that Divinagracia and his family had been her
neighbors as far back as the 1980s. Sison claimed that CCC used
to go to her house all the time to complain about her financial
problems and quarrels with Divinagracia.  Sison further averred
[48]

that despite beating his wife, Divinagracia appeared to be a


loving father because he was very affectionate and sent his
children to school, even if he was financially hard-up most of the
time. [49]
Ho, who had been Divinagracia's neighbor since 1992, attested
that Divinagracia would often quarrel with and hit CCC.  He [50]

claimed that it was impossible for Divinagracia to abuse his


children because they were always playful.  He added that he
[51]

had never seen the children look weak and tired or heard them
complain. [52]

Isok claimed that he was friends with some of Divinagracia's


children as they all lived in the same neighborhood.  Isok [53]

testified that he was close with and fond of Divinagracia's family,


yet he never heard of any problems between Divinagracia and his
children.
[54]

Aburido testified to being Divinagracia's sister and aunt to AAA


and BBB.  She claimed that she was not close to Divinagracia
[55]

and his family but that her nieces and nephews would sometimes
ask her for rice. Her brother would also go to her whenever he
had any financial problem. Aburido claimed that she first found
out about her brother's supposed abuse of AAA and BBB when he
was arrested. [56]

In its Joint Judgment  dated October 7, 2009, Branch 28,


[57]

Regional Trial Court, Mandaue City found Divinagracia guilty


beyond reasonable doubt of the charges of rape and acts of
lasciviousness against him.

In DU-8072, the Regional Trial Court ruled that AAA's testimony


was direct, candid, and convincing, clearly proving that
Divinagracia had carnal knowledge of AAA when she was only
eight (8) years old. The Regional Trial Court also held that Dr.
Poca's testimony corroborated AAA's version of the abuse she
experienced. [58]

In DU-8074, the Regional Trial Court found BBB's testimony to be


clear and convincing on the acts of lasciviousness committed by
her father. The Regional Trial Court held that BBB was direct and
remained consistent and steadfast during her testimony. [59]
The Regional Trial Court further held that Sister Mary Ann's
testimony corroborated both the testimonies of AAA and BBB. [60]

The dispositive portion of the Regional Trial Court's Joint


Judgment read:
WHEREFORE, in DU-8072, Joint Judgment is hereby rendered
finding the accused Julito Divinagracia, Sr., guilty beyond
reasonable doubt of rape. The Court hereby imposes upon him
the indeterminate sentence of reclusion perpetua together with
the accessory penalties of the law.

In DU-8074, judgment is hereby rendered finding the accused


Julito Divinagracia, Sr., guilty beyond reasonable doubt of acts of
lasciviousness. The Court hereby imposes upon him the penalty
of 14 years and 4 months of reclusion temporal as the minimum
term to 17 years and 4 months of reclusion temporal as the
maximum term together with the accessory penalties of the law.

The accused shall be given credit of his preventive detention but


he shall not be eligible for parole.

With costs against the accused.

IT IS SO ORDERED. [61]

On March 8, 2010, after Divinagracia filed an appeal from the


Joint Judgment, the Regional Trial Court transmitted the records
of the case to the Court of Appeals.
[62]

On July 30, 2012, the Court of Appeals  denied Divinagracia's


[63]

appeal.

The Court of Appeals agreed with the Regional Trial Court that
AAA's testimony on her father's rape was clear, candid, and
deserving of belief. Additionally, her testimony was corroborated
by BBB.  The dispositive portion of the Court of Appeals Decision
[64]

read:
WHEREFORE, premises considered, this appeal is DENIED.
The Joint Judgment dated October 7, 2009 rendered by the
Regional Trial Court (RTC), Branch 28, Mandaue City, in Criminal
Case Nos. DU-8072 and DU-8074 finding him guilty
for Rape and Acts of Lasciviousness, respectively, is
hereby AFFIRMED in toto. Costs against the appellant.

SO ORDERED. [65]

Divinagracia filed a Notice of Appeal  with the Court of Appeals.


[66]

On August 28, 2013, this Court noted the records forwarded by


the Court of Appeals and informed the parties that they may file
their respective supplemental briefs. This Court also required the
Chief Superintendent of the New Bilibid Prison to confirm
Divinagracia's confinement therein.[67]

On November 12, 2013, Divinagracia manifested  that he would


[68]

be adopting in toto the contents of his brief  filed before the


[69]

Court of Appeals.

On November 15, 2013, the Office of the Solicitor General also


manifested  that it would be adopting its brief  filed before the
[70] [71]

Court of Appeals.

In his Appellant's Brief, Divinagracia points to several


inconsistencies in the testimonies of AAA and BBB that
purportedly lessen their credibility as witnesses.

First, he claims that it was not clear when AAA told Sister Mary
Ann about her rape. AAA claimed that she confided to her aunt
Sister Mary Ann when she visited them in Cebu in 1996.
However, Sister Mary Ann testified that AAA only told her about
the rape when they were in Pampanga in 1999. [72]

Second, AAA testified that she told her mother about the rape the
following day after it happened. This contradicts Sister Mary Ann's
testimony that AAA's mother only learned of the rape after AAA
was physically examined in Pampanga. Furthermore, AAA said
that after she told her mother, CCC disclosed what happened to
Aburido. During her testimony, Aburido denied that she knew
about the rape and claimed that she only found out about it when
her brother was arrested. [73]

Third, Divinagracia emphasizes that BBB never actually saw him


having sexual intercourse with AAA since BBB only testified to
seeing him on top of AAA. Divinagracia also insists that BBB's
accusation of acts of lasciviousness against him was
uncorroborated, even by AAA who was in the same room when it
supposedly happened. [74]

Finally, Divinagracia asserts that the charges of rape and acts of


lasciviousness against him were unfounded and that his guilt was
never established beyond reasonable doubt. [75]

The prosecution, in turn, avers that it was able to prove


Divinagracia's guilt on both charges beyond reasonable doubt. [76]

The prosecution posits that the straightforward and candid


testimonies of AAA and BBB, with the medical certificate issued
by Dr. Biag corroborating AAA's testimony, sufficiently proved the
elements of the charges against their father. [77]

The prosecution contends that the supposed inconsistencies on


when AAA told Sister Mary Ann of the abuse or when CCC and
Aburido learned of the ordeal she underwent are trivial matters,
which have no bearing on the crimes committed. [78]

The issue for resolution before this Court is whether the


prosecution proved beyond reasonable doubt Divinagracia's guilt
for the crimes of rape and acts of lasciviousness against his minor
daughters.

This Court affirms Divinagracia's conviction with some


modifications.

I
The alleged inconsistencies in the testimonies of AAA, BBB, and
Sister Mary Ann are immaterial as these are not elements of the
crime and do not detract from the credibility of the witnesses. In
fact, minor inconsistencies may even be expected from AAA and
BBB who are not accustomed to public trial and were only eight
(8) and nine (9) years old, respectively, at the time of their
father's sexual abuse.[79]

The rule cited in People v. Pacala  that inconsistencies on minor


[80]

details and collateral matters do not affect the veracity,


substance, or weight of the witness' testimony finds application in
the case at bar.
[81]

Divinagracia insists on inconsistencies on when AAA and BBB told


Sister Mary Ann about their father's attack. AAA claims that she
told her aunt sometime in 1996,  contradicting Sister Mary Ann's
[82]

testimony that AAA told her about the rape in 1999. [83]

The records show that AAA admitted that she could no longer
recall when she told her aunt of the rape, but AAA was consistent
in her testimony that she eventually told her aunt about the rape
when they left Cebu.  This corroborates Sister Mary Ann's
[84]

testimony that she only learned of AAA's rape in 1999, when they
were no longer in Cebu. As found by the Court of Appeals:
Stress is made that per the victim's testimony, when Sister
[Mary] Ann visited their family here in Cebu in 1996, she (AAA)
did not say that she was raped but was molested. She only
divulged the real incident when they were already in Manila and
even then, her relatives required that she undergo a medical
examination, which could have been an avenue for them to verify
and ascertain that what she was telling, that is, about being
raped by her father, was the truth.

Moreover, it was BBB who was adamant that they told Sister
Mary Anne [sic] about the incident in 1999 while they were
already in Manila. Sister Mary Anne [sic] herself even testified
that she was told that the children were abused while still in Cebu
and was told about the rape only in Manila. She even asked her
niece AAA to undergo a medical examination in order to confirm if
AAA was really raped.  (Citations omitted)
[85]

These supposed discrepancies, not being elements of the crime,


do not diminish the credibility of AAA's declarations.
Jurisprudence has held "youth and immaturity [to be] badges of
truth and sincerity"  and has generally given leeway to minor
[86]

witnesses when relating traumatic incidents of the past.


[87]

II

Article 266-A, paragraph 1 of the Revised Penal Code, as


amended by Republic Act No. 8353 or the Anti-Rape Law of 1997,
provides the elements for the crime of rape:
Article 266-A. Rape: When And How Committed. — Rape is
committed —

1) By a man who shall have carnal knowledge of a woman under


any of the following circumstances:

a) Through force, threat, or intimidation;

b) When the offended party is deprived of reason or otherwise


unconscious;

c) By means of fraudulent machination or grave abuse of


authority; and

d) When the offended party is under twelve (12) years of age or


is demented, even though none of the circumstances mentioned
above be present.
Rape becomes qualified when committed by a parent against his
child less than 18 years of age. This is provided for under
paragraph 1, Article 266-B:
Article 266-B. Penalties. — Rape under paragraph 1 of the next
preceding article shall be punished by reclusion perpetua.

....
The death penalty shall also be imposed if the crime of rape is
committed with any of the following aggravating/qualifying
circumstances:

1. When the victim is under eighteen (18) years of age and the
offender is a parent, ascendant, step-parent, guardian, relative
by consanguinity or affinity within the third civil degree, or the
common-law spouse of the parent of the victim[.]
The elements of qualified rape are: "(1) sexual congress; (2) with
a woman; (3) [done] by force and without consent; ... (4) the
victim is under eighteen years of age at the time of the rape; and
(5) the offender is a parent (whether legitimate, illegitimate or
adopted) of the victim." [88]

It was not disputed that AAA was eight (8) years old in November
1996. The medical findings of Dr. Biag, as interpreted and
testified to by Dr. Poca, also corroborate AAA's allegations of her
father's abuse. Dr. Poca testified that while some of the healed
lacerations could still be considered as normal variant finding
rather than acquired, the lacerations at 8:00 and 5:00 positions
could have only been caused by the insertion of a penis, object,
or finger into the vagina:
At 11, 8 and 2 - the findings at 11 and 2 o'clock are still
considered, based on studies, more likely congenital rather than
acquired, whereas the 8 o'clock finding is more likely an acquired
condition and that could have been caused by penetration of the
vagina. Then the old healed incomplete laceration ... at 5 and 10
o'clock, again the 10 o'clock might still be a normal finding or a
normal variant finding, but the 5 o'clock is more probably the
result of an acquired condition like trauma. [89]

Dr. Poca likewise testified that given AAA's revelation of her


ordeal caused by her father, "the complete healed laceration at
8:00 o'clock" is indicative of sexual abuse. [90]

People v. Noveras  emphasized that when a rape victim's


[91]

allegation is corroborated by a physician's finding of penetration,


"there is sufficient foundation to conclude the existence of the
essential requisite of carnal knowledge."
[92]
It is well-established that "[p]hysical evidence is evidence of the
highest order. It speaks more eloquently than a hundred
witnesses."  The physical evidence of the healed lacerations in
[93]

AAA's vagina strongly corroborates AAA and BBB's testimonies


that AAA was raped by their father.

Nonetheless, this Court notes that even if AAA was only physically
examined almost three (3) years after she was sexually abused
by her father, the defense never questioned the credibility of the
expert witness, nor was Dr. Poca's testimony impeached.

The trial court, as upheld by the Court of Appeals, also ruled that
AAA's testimony was credible and competent, sufficiently proving
the charge of rape against her father, thus:
The private complainant categorically stated that the accused
(her father) had sexual intercourse with her. The private
complainant clearly described the rape incident. "After he pulled
my waist, he had me face him and he pulled down my shorts
and. at that time I was not wearing any panty then he inserted
his penis into my vagina but first he inserted his finger." This
candid description of the molestations is a direct statement that
undoubtedly shows carnal knowledge by the accused with his
daughter.  (Emphasis in the original)
[94]

It is likewise immaterial that it took AAA more than two (2) years
before divulging the sexual abuse she experienced at her father's
hands.

The records show that the day following her abuse, AAA
immediately told her mother but CCC did not believe her. This
lack of support from the very person she was expecting it from
naturally made AAA wary of whom she could trust. It was only
when she became close to and felt safe with Sister Mary Ann and
after she was no longer in Cebu under her father's control that
she found the courage to reveal her traumatic experience. This is
consistent with the normal reaction of a child raped by her father.
Dr. Poca, a child protection specialist, also confirmed that AAA's
failure to immediately disclose her abuse is a normal reaction of
children:
Given her disclosure or her revelation that her father inserted his
finger and later his penis into her vagina but not having disclosed
immediately because of fear which is a normal reaction of
children, and then having disclosed only to an aunt about 3 years
later, which again is a normal reaction of children especially if
they do find a person whom they can trust and whom they can
feel safe with, between 1996 and 1999 if there were any injuries
at that point in 1996, that could have healed and giving us these
results in 1999.  (Emphasis supplied)
[95]

This Court also notes that AAA asked, "Pa, where is


Nanay?"  when she woke up to find her father lying beside her.
[96]

Her question was telling. At that moment, she perhaps already


entertained a fear that something so wrong was about to happen
to her. At the same time, she was trying to tell him that her
mother would not approve of what he was about to do.

Furthermore, BBB testified that her father groped her and poked
his penis against her buttocks but that he stopped and left the
house after she pleaded with him. However, she saw him go back
a few minutes later and she tried to warn AAA by pinching her,
but AAA did not wake up. When AAA did wake up, Divinagracia
was already beside her. [97]

BBB testified that she saw her father get on top of AAA, who
could not repel his advances. BBB admitted that AAA was crying
and calling out for help the whole time their father was on top of
her, but BBB lamented that she was unable to go to her sister
because she could not move due to fear. [98]

BBB's reaction is consistent with the normal, expected actuations


of a child seeing her father doing despicable acts on her younger
sister, especially after she herself had fallen victim to his acts of
lasciviousness. Her action is a mixture of denial and fear—denial
that the father whom she trusted could do these acts and fear,
not so much for her physical safety, but more for her economic
and financial support.

The rule is settled that the factual findings and the evaluation of
witnesses' credibility and testimony made by the trial court
should be entitled to great respect, unless it is shown that the
trial court may have "overlooked, misapprehended, or misapplied
any fact or circumstance of weight and substance." [99]

Aside from the supposed inconsistencies in AAA's and Sister Mary


Ann's testimonies, Divinagracia only managed to present a
defense of denial, which must fail in light of AAA's categorical and
competent testimony as well as the undisputed findings of healed
lacerations in her vagina. This Court is not swayed by
Divinagracia's argument that his daughters were manipulated by
his in-laws into filing these charges against him. People v.
Venturing  aptly stated that "[n]ot even the most ungrateful and
[100]

resentful daughter would push her own father to the wall as the
fall guy in any crime unless the accusation against him is true."[101]

Even the well-meaning testimonies of the other defense


witnesses  did not disprove AAA's account of the rape since they
[102]

only managed to prove that Divinagracia and his wife constantly


quarrelled. What their testimonies inadvertently revealed,
though, was Divinagracia's proclivity towards violence,
particularly when dealing with his wife. His sister and neighbors
testified that they would regularly hear and see Divinagracia
quarrelling with CCC, with Divinagracia usually hitting CCC in the
course of their arguments. Divinagracia's violent nature frames
an inference of a lack of appreciation of the humanity of every
member of the family and highlights his attitude of impunity.

This Court sees no reason to reverse the findings of the Regional


Trial Court and the Court of Appeals that Divinagracia was guilty
beyond reasonable doubt of rape in relation to Republic Act No.
7610.

IV
On the charge of acts of lasciviousness in relation to Republic Act
No. 7610, Article 2(h) of the Implementing Rules and Regulations
of Republic Act No. 7610 defines lascivious conduct as:
[T]he intentional touching, either directly or through clothing, of
the genitalia, anus, groin, breast, inner thigh, or buttocks, or the
introduction of any object into the genitalia, anus or mouth, of
any person, whether of the same or opposite sex, with an intent
to abuse, humiliate, harass, degrade, or arouse or gratify the
sexual desire of any person, bestiality, masturbation, lascivious
exhibition of the genitals or pubic area of a person[.]
As with the rape case, the parties in the case for acts of
lasciviousness also affirmed BBB's minority at the time of the
assault and her relationship with Divinagracia.

The Regional Trial Court and Court of Appeals likewise found that
there was clear and convincing evidence to hold Divinagracia
guilty of committing sexual violence against his daughter BBB.
The lower courts also found BBB's testimony to be candid,
credible, and competent; thus:
Such finding of lasciviousness is solely attributable to the
testimony of the private complainant BBB whom the court
considers credible and competent. BBB categorically stated that
the accused (her father) lay down beside her, embraced her and
poked his penis to her buttocks. BBB clearly recalled the manner
the lascivious acts by demonstrating these in the court. "He
embraced me tightly this way (witness demonstrating by closing
her arms in front of her fist), the (sic) after that he slipped his
hand from here up to here, touching my body (witness
demonstrating by tracing her palm from the left thigh upward
towards the left side of her body under her armpit." This candid
description of the molestation is a direct statement that
undoubtedly proves the crime committed by the accused with his
daughter.  (Emphasis in the original, citation omitted)
[103]

Compared to his daughter's candid and categorical testimony,


Divinagracia's defense of denial must fail. Imbo v.
People  emphasized that the self-serving defense of denial
[104]
falters against the "positive identification by, and straightforward
narration of the victim."
[105]

This Court has repeatedly held that the lone yet credible
testimony of the offended party is sufficient to establish the guilt
of the accused.[106]

Despite upholding the findings of fact and appreciation of the


evidence by the lower courts, there is a need to modify the
penalties awarded. Section 5(b) of Republic Act No. 7610
provides for the penalty of reclusion perpetua if the rape victim is
below 12 years old while the penalty of reclusion temporal in its
medium period is imposed if the victim of lascivious conduct is
also below 12 years old:
Section 5. Child Prostitution and Other Sexual Abuse. —

....

(b) Those who commit the act of sexual intercourse or lascivious


conduct with a child exploited in prostitution or subjected to other
sexual abuse; Provided, That when the victims is under twelve
(12) years of age, the perpetrators shall be prosecuted
under Article 335, paragraph 3, for rape and Article 336 of Act
No. 3815, as amended, the Revised Penal Code, for rape or
lascivious conduct, as the case may be: Provided, That the
penalty for lascivious conduct when the victim is under twelve
(12) years of age shall be  reclusion temporal in its medium
period[.] (Emphasis supplied)
The Regional Trial Court correctly set the penalty of reclusion
perpetua for rape. However, since the victim was under twelve
(12) years of age at the time of the crime, the imposable penalty
for lascivious conduct should have been within the range of 14
years, 8 months, and 1 day to 17 years and 4 months,
or reclusion temporal in its medium period, as mandated by
Republic Act No. 7610. Instead, the Regional Trial Court imposed
the range of 14 years and 4 months to 17 years and 4 months.
Applying the Indeterminate Sentence Law  and with the [107]

presence of the alternative aggravating circumstance  of [108]

relationship, the maximum term of the sentence to be imposed


should be taken from the maximum period of the imposable
penalty, that is reclusion temporal maximum, which ranges from
17 years, 4 months, and 1 day to 20 years.  The minimum term
[109]

under the Indeterminate Sentence Law shall be within the range


of one (1) degree lower than reclusion temporal, which is prision
mayor with a total range of six (6) years and one (1) day to 12
years.[110]

There is also a need to review the lack of civil indemnity and


other damages in the decisions of the lower courts. The Regional
Trial Court, as affirmed by the Court of Appeals, held that since
Divinagracia, as the father of AAA and BBB, stood to benefit from
the monetary award, it would not be proper to award civil
indemnity:
The Court shall not award civil indemnity to the private
complainant. The accused as the father of the private
complainants stands to benefit from the monetary award if
adjudicated to his daughters since he is a compulsory heir. The
concept of indemnification is not served if the very person made
to pay for his crime shall benefit from it.
[111]

The lower courts are mistaken.

Civil indemnity ex delicto, as a form of monetary restitution or


compensation to the victim, attaches upon a finding of criminal
liability because "[e]very person criminally liable for a felony is
also civilly liable."
[112]

On the other hand, moral damages are treated as "compensatory


damages awarded for mental pain and suffering or mental
anguish resulting from a wrong."  The award of moral damages
[113]

is meant to restore the status quo ante; thus, it must be


commensurate to the suffering and anguish experienced by the
victim.[114]
Finally, exemplary or corrective damages are imposed as an
example to the public,  serving as a deterrent to the commission
[115]

of similar acts. Exemplary damages are also awarded as a part of


the civil liability may be imposed when the crime was committed
with one or more aggravating circumstances. [116]

In view of the depravity of the acts committed by Divinagracia


against his minor daughters, this Court imposes the following
monetary awards, in accordance with jurisprudence:

For rape against AAA, Divinagracia is directed to pay AAA


P100,000.00 as civil indemnity, P100,000.00 as moral damages,
and P100,000.00 as exemplary damages. [117]

For acts of lasciviousness against BBB, this Court adopts the


ruling in People v. Santos  and directs Divinagracia to pay BBB
[118]

P20,000.00 as civil indemnity and P30,000.00 as moral damages.


However, in light of the heinous nature of the crime committed,
exemplary damages are increased from P2,000.00 to P20,000.00.

In addition, interest at the legal rate of six percent (6%) per


annum shall be imposed on all damages awarded from the date
of finality of this judgment until fully paid.
[119]

WHEREFORE, the Court of Appeals Decision in CA-G.R. CEB CR-


H.C. No. 01134 dated July 30, 2012 is AFFIRMED with
MODIFICATION. Accused-appellant Julito Divinagracia, Sr. is
sentenced to suffer the penalty of a) reclusion perpetua for the
crime of rape in relation to Republic Act No. 7610; and b) the
indeterminate penalty of 12 years of prision mayor, as minimum,
to 20 years of reclusion temporal, as maximum, for the crime of
acts of lasciviousness in relation to Republic Act No. 7610.
Furthermore, he is ordered to pay AAA P100,000.00 as civil
indemnity, P100,000.00 as moral damages, and P100,000.00 as
exemplary damages. He is also ordered to pay BBB P20,000.00
as civil indemnity, P30,000.00 as moral damages, and
P20,000.00 as exemplary damages. All the awarded damages
shall earn the legal interest rate of six percent (6%) per annum
from the date of finality of this judgment until fully paid.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

[1]
 TSN dated April 24, 2002, p. 17.

[2]
 RULES OF COURT, Rule 124, sec. 13(c) provides:

Section 13. Certification or appeal of case to the Supreme Court.


....   
 
(c) In cases where the Court of Appeals imposes reclusion perpetua, life imprisonme
and enter judgment imposing such penalty. The judgment may be appealed to th
filed with the Court of Appeals.

 CA rollo, pp. 31-49. The Joint Judgment was penned by Judge


[3]

Marilyn Lagura-Yap.

 Rollo, pp. 3-19. The Decision, promulgated on July 30, 2012


[4]

and docketed as CA-G.R. CEB-CR-H.C. No. 01134, was penned by


Associate Justice Ramon Paul L. Hernando and concurred in by
Associate Justices Carmelita Salandanan-Manahan and Zenaida T.
Galapate-Laguilles of the Twentieth Division, Court of Appeals,
Cebu City.

[5]
 TSN dated November 13, 2003, pp. 4-5.

[6]
 Id. at 5, 10-11.
 Rollo, p. 8. The narration reported "November 1986" but meant
[7]

"November 1996." BBB was nine (9) years old at that time while
AAA was eight (8) years old.

[8]
 TSN dated April 24, 2002, pp. 7-8.

[9]
 Id. at 6.

[10]
 Id. at 30-32.

 Rollo, p. 8, Court of Appeals Decision. The narration reported


[11]

"November 1986" but meant "November 1996."

[12]
 TSN dated April 24, 2002, p. 33.

[13]
 TSN dated April 23, 2002, p. 4.

[14]
 Id. at 5.

[15]
 Id. at 5-6.

[16]
 Rollo, p. 8, Court of Appeals Decision.

[17]
 Id. at 6.

[18]
 TSN dated April 24, 2002, pp. 20-22.

 Sister Mary Ann Abuna was a member of the religious order of


[19]

the Missionaries of Eucharistic Love, Children's Home of the


Immaculate Heart of Mary in Pampanga. See TSN dated
September 4, 2002, p. 2.

[20]
 TSN dated September 4, 2002, pp. 3-4.

[21]
 Id. at 4-5.

[22]
 Id. at 5-6.
[23]
 Id. at 6-7.

[24]
 Id. at 7-8.

[25]
 RTC records (DU-8072), p. 76.

[26]
 Id.

[28]
 RTC records (DU-8072), pp. 3-5 and (DU-8074), pp. 5-6.

TSN dated September 4, 2002, pp. 9-10.

 Special Protection of Children Against Child Abuse, Exploitation


[29]

and Discrimination Act

[30]
 RTC Records (DU-8072), p. 1.

[31]
 RTC Records (DU-8074), p. 1.

 RTC Records (DU-8072), p. 17. The Information stated that


[32]

BBB was 12 years old in November 1996 but it was established


that she was only 9 years old considering the date of birth shown
on her birth certificate.

[33]
 Rollo, p. 6, Court of Appeals Decision.

[34]
 Id. at 6-7.

[35]
 CA Rollo, p. 32.

[36]
 RTC records (DU-8074), p. 20.

[37]
 Rollo, p. 7.

[38]
 Id. at 7-8.

[39]
 TSN dated February 12, 2003, pp. 3 and 5.
[40]
 RTC Records (DU-8072), pp. 31-32, 64.

[41]
 TSN dated February 12, 2003, p. 7.

[42]
 Id.

[43]
 Id. at 8-9.

[44]
 TSN dated November 13, 2003, pp. 13-14.

[45]
 Id. at 7.

[46]
 Id.

[47]
 Id. at 14.

[48]
 TSN dated September 20, 2004, pp. 4-7.

[49]
 TSN dated September 23, 2004, pp. 8-9.

[50]
 TSN dated February 7, 2005, pp. 3-5.

[51]
 TSN dated February 8, 2005, pp. 8-9.

[52]
 TSN dated February 7, 2005, pp. 6-7.

[53]
 TSN dated May 9, 2005, pp. 3-4.

[54]
 Id. at 6-7.

[55]
 TSN dated August 9, 2005, p. 3.

[56]
 Id. at 5-6.

[57]
 Rollo, pp. 31-50.

[58]
 Id. at 43-44.
[59]
 Id. at 46.

[60]
 Id. at 47.

[61]
 Id. at 49.

[62]
 Id. at 3.

[63]
 Rollo, pp. 3-19.

[64]
 Id. at 15-16.

[65]
 Id. at 18.

[66]
 CA Rollo, pp. 109-111.

[67]
 Rollo, p. 25.

[68]
 Id. at 26-29.

[69]
 CA Rollo, pp. 14-30, Brief for the Accused-Appellant.

[70]
 Rollo, pp. 31-32.

[71]
 CA Rollo, pp. 65-88, Brief for the Appellee.

[72]
 Id. at 23-25.

[73]
 Id. at 25-26.

[74]
 Id. at 26-27.

[75]
 Id. at 28.

[76]
 Id. at 74.

[77]
 Id. at 75-78.
[78]
 Id. at 84.

 People v. Avanzado, Sr., 242 Phil. 163, 169 (1988) [Per J.


[79]

Melencio-Herrera, Second Division].

[80]
 157 Phil. 365 (1974) [Per J. Antonio, En Banc].

[81]
 Id. at 375.

[82]
 TSN dated April 24, 2002, p. 26.

[83]
 TSN dated September 4, 2002, pp. 5-7.

[84]
 TSN dated April 24, 2002, pp. 23-24.

[85]
 Rollo, pp. 17-18.

 People v. Dimanawa, 628 Phil. 678, 689 (2010) [Per J.


[86]

Nachura, Third Division].

 People v. Dominguez, 667 Phil. 105, 119 (2011) [Per J. Sereno


[87]

(now Chief Justice), Third Division].

 People v. Buclao, 136 Phil. 325, 336 (2014) [Per J. Leonen,


[88]

Third Division] citing People v. Candellada, 713 Phil 623, 635


(2013) [Per J. Leonardo-De Castro, First Division].

[89]
 TSN dated February 12, 2003, p. 7.

[90]
 Id. at 8-9.

[91]
 550 Phil. 871 (2007) [Per J. Callejo Sr., Third Division].

[92]
 Id. at 887.

 People v. Sacabin, 156 Phil 707, 713 (1974) [Per J. Fernandez,


[93]

Second Division].
[94]
 CA Rollo, p. 44, Regional Trial Court Joint Judgment.

[95]
 TSN dated February 12, 2003, p. 8.

[96]
 TSN dated April 23, 2002, p. 4.

[97]
 TSN dated April 24, 2002, pp. 30-33.

[98]
 Id. at 33-35.

 People v. De Jesus, 695 Phil. 114, 122 (2012) [Per J. Brion,


[99]

Second Division].

[100]
 694 Phil 646 (2012) [Per J. Del Castillo, Second Division].

[101]
 Id. at 655.

[102]
 CA Rollo, pp. 40-43.

[103]
 CA Rollo, p. 46.

 G.R. No. 197712, April 20, 2015 <Error! Hyperlink


[104]

reference not valid.>


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/197712.pdf> [Per J. Perez,
First Division].

[105]
 Id. at 7.

 Ricalde v. People, 751 Phil 793, 807 (2015) [Per J. Leonen,


[106]

Second Division]; Garingarao v. People, 669 Phil. 512, 522


(2011) [Per J. Carpio, Second Division]; People v. Tagaylo, 398
Phil. 1123, 1131-1132 (2000) [Per CJ Davide, Jr., First Division].

[107]
 Act No. 4103 (1933).

[108]
 Revised REV. PEN. CODE Penal Code, art. 15 provides:
Article 15. Their concept. — Alternative circumstances are those
which must be taken into consideration as aggravating or
mitigating according to the nature and effects of the crime and
the other conditions attending its commission. They are the
relationship, intoxication and the degree of instruction and
education of the offender.

The alternative circumstance of relationship shall be taken into


consideration when the offended party is the spouse, ascendant,
descendant, legitimate, natural, or adopted brother or sister, or
relative by affinity in the same degrees of the offender.

The intoxication of the offender shall be taken into consideration


as a mitigating circumstance when the offender has committed a
felony in a state of intoxication, if the same is not habitual or
subsequent to the plan to commit said felony; but when the
intoxication is habitual or intentional it shall be considered as an
aggravating circumstance.

[109]
 REV. PEN. CODE, art. 76.

[110]
 REV. PEN. CODE, art. 76.

[111]
 CA Rollo, p. 48, Regional Trial Court Joint Judgment.

[112]
 REV. PEN. CODE, art. 100.

 Bagumbayan Corp. v. Intermediate Appellate Court, 217 Phil.


[113]

421, 425-426 (1984) [Per J. Aquino, Second Division].

 Lambert v. Heirs of Castillon, 492 Phil. 384, 395, citing CESAR


[114]

SANGCO, TORTS & DAMAGES 986 (1994 ed.) [Per J. Ynares-


Santiago, First Division].

[115]
 CIVIL CODE, art. 2229 provides:
Article 2229. Exemplary or corrective damages are imposed, by
way of example or correction for the public good, in addition to
the moral, temperate, liquidated, or compensatory damages.

[116]
 CIVIL CODE, art. 2230 provides:

Article 2230. In criminal offenses, exemplary damages as a part


of the civil liability may be imposed when the crime was
committed with one or more aggravating circumstances. Such
damages are separate and distinct from fines and shall be paid to
the offended party.

 People v. Juguela, G.R. No. 202124, April 5, 2016


[117]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/202124.pdf> [Per J. Peralta,
En Banc].

[118]
 753 Phil 637, 652 (2015) [Per J. Carpio, Second Division].

 Ricalde v. People, 751 Phil 793, 816 (2015) [Per J. Leonen,


[119]

Second Division].

Source: Supreme Court E-Library | Date created: October 20, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 217764, August 07, 2017 ]


ANTONIETA LUCIDO  @ TONYAY, PETITIONER,
[1]

VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.


DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari  assailing the


[2]

Court of Appeals' Decision  dated August 28, 2014 and


[3]

Resolution  dated March 13, 2015. The assailed Court of Appeals


[4]

Decision affirmed with modification the Regional Trial Court


Decision  dated June 27, 2011, while the assailed Resolution
[5]

denied the Motion for Reconsideration.

The Regional Trial Court Decision found Antonieta Lucido (Lucido)


guilty of child abuse under Section 10(a)  of Republic Act No.
[6]

7610 or the Special Protection of Children Against Child Abuse,


Exploitation and Discrimination Act. [7]

In the Information  dated March 30, 2008, Lucido was charged


[8]

with child abuse under Section 10(a) of Republic Act No. 7610:
That on or about the month of December, 2007 in Brgy. Atabay,
Hilongos, Leyte, within the jurisdiction of the Honorable Court,
the above-named accused, did then and there, maliciously,
willfully, unlawfully, and intentionally, beat with the use of a belt,
pinched, and strangulated the child victim [AAA], who was then
eight (8) years old, thereby inflicting physical injuries that
affected the normal development of the said child victim.

CONTRARY TO LAW. [9]

Lucido pleaded not guilty upon arraignment. [10]

On August 10, 2008, the pre-trial was held. Lucido, through


counsel, offered to plead guilty to the crime of Less Serious
Physical Injuries under Article 265 of the Revised Penal Code or
Violation of Article 59, paragraph 8 of Presidential Decree No.
603  or the Child and Youth Welfare Code. However, it was not
[11]
accepted by the complaining witnesses and the prosecution.
Thereafter, trial on the merits ensued. [12]

On July 1, 2009, Lucido was released on bail. [13]

The prosecution presented the following as witnesses: the victim


AAA, Dr. Conrado Abiera III (Dr. Abiera), the father of the victim
FFF, and Maria Hinampas (Hinampas).  The prosecution[14]

established the following facts:

Sometime in August 2007, in Barangay Atabay, Hilongos, Leyte,


AAA was placed by her parents in the custody of their neighbor
Lucido, alias Tony ay.  The arrangement was made upon the
[15]

request of Lucido that AAA stay with her since she was living
alone.  AAA was eight (8) years old at that time.
[16] [17]

During AAA's stay with Lucido, the child suffered repeated


physical abuse in the latter's hands, which included strangulation,
 beating,  pinching,  and touching of her sex organ by Lucido.
[18] [19] [20]

 AAA was also threatened by Lucido that she would be stabbed if


[21]

she tells anyone about what was being done to her. [22]

One of Lucido's neighbors, Hinampas, noticed the abrasions on


AAA's neck and observed that she was limping as she walked.
 The child then related that she was choked and beaten on her
[23]

leg by Lucido.  AAA's parents learned of her plight,  prompting


[24] [25]

FFF to go to Lucido's residence and take AAA back with the help
of a barangay tanod. [26]

A subsequent physical examination conducted by Dr. Abiera of


Hilongos District Hospital confirmed AAA's story. His findings were
as follows:
Multiple abrasions on different parts of the body secondary to
pricking
nail marks/scratches
There is redness on the peripheral circumference of the hymen
No hymenal laceration noted.
There is weakness of (L) knee joint upon walking. [27]
After the prosecution rested its case, the defense presented
Lucido, Lucia Mancio Lusuegro (Lusuegro), and Estrella L.
Sanchez (Sanchez) as witnesses.  The Court of Appeals
[28]

summarized their testimonies as follows:


[Lucido] denied that she pinched, beat and hit AAA and that she
inserted her finger into AAA's vagina. She claimed that she
usually cleaned AAA's vagina and bathed her with hot water. She,
likewise, denied that she brought AAA to Bato for sexual
intercourse. [Lucido] impute[d] ill motive on Hinampas, whom
she claimed to be her enemy, in instituting the complaint against
her.

Lucia Mancio Lusuegro ... a neighbor of [Lucido] and AAA's


parents at Brgy. Atabay, Hilongos, Leyte, testified that she heard
AAA cry only once outside the house of [Lucido]. She never heard
any commotion that [Lucido] maltreated AAA.

Estrella Sanchez ... testified that the accusation of child abuse


and prostitution was not true. She claimed that the filing of the
case against [Lucido] was instigated by Hinampas, with whom
[Lucido] had a quarrel.[29]

On June 27, 2011, the Regional Trial Court rendered a Decision,


convicting Lucido of child abuse, as follows:
WHEREFORE, in view of the foregoing, accused ANTON1ETA
LUCIDO alyas "Tonyay" is found GUILTY beyond reasonable doubt
in violation of Section 10 (a) of Republic Act No. 7610 and hereby
sentenced to suffer the penalty of Prision Mayor in its minimum
period (SIX (6) YEARS and ONE (1) DAY to EIGHT (8) YEARS
imprisonment), and to pay the offended party [AAA] Fifty
Thousand Pesos (P50,000.00) as moral damages.

SO ORDERED. [30]

The Court of Appeals affirmed Lucido's conviction, but modified


the penalty imposed by applying the Indeterminate Sentence
Law. The dispositive portion of the Decision read:
WHEREFORE, the Appeal is DENIED. The Decision, dated 27 June
2011, of the Regional Trial Court of Hilongos[,] Leyte, 8  Judicial
th
Region, Branch 18 in Criminal Case No. H-1675 is hereby
AFFIRMED with MODIFICATIONS, to wit:

(a) the appellant Antonieta Lucido @ "Tonyay" is hereby


sentenced to four (4) years, nine (9) months and eleven (11)
days of prision correccional, as minimum, to six (6) years, eight
(8) months and one (1) day of prision mayor, as maximum;

(b) an interest at the rate of six percent (6%) per annum shall be
applied to the award of moral damages to be reckoned from this
date until fully paid;

(c) the bondsman is ordered to surrender the appellant to the


court a quo, within ten (10) days from notice and to report to this
Court the fact of surrender, within ten (10) days from notice of
such fact;

(d) in case of non-surrender, the Regional Trial Court of


Hilongos[,] Leyte, 8  Judicial Region, Branch 18 is DIRECTED to:
th

    (i) cancel the bond posted for the provisional liberty of the
appellant;

    (ii) order the arrest of the appellant; and

    (iii) immediately commit the appellant to the Bureau of


Prisons.

SO ORDERED. [31]

Lucido's Motion for Reconsideration was likewise denied in the


Court of Appeals March 13, 2015 Resolution.

Hence, this Petition  was filed on May 20, 2015. This Court
[32]

received respondent's Comment  on November 23, 2015.


[33]

Petitioner raises the following issues for this Court's resolution:


1. whether the Court of Appeals erred in sustaining her conviction
despite the failure of the prosecution to prove her guilt beyond
reasonable doubt; and

2. whether the Court of Appeals erred in not finding that the


crime committed was only slight physical injuries and not a
violation of Republic Act No. 7610. [34]

Petitioner contends that the prosecution failed to prove "that the


physical injuries inflicted on the child had prejudiced the child's
development so as to debase, degrade or demean the intrinsic
worth and dignity of the child as a human being." She cites the
absence of an expert opinion validating scientifically that the acts
complained of proximately caused the "prejudice inflicted upon
the child's development." [35]

Furthermore, petitioner argues that the prosecution was not able


to prove the infliction of physical injuries on the child. She avers
that Hinampas' testimony of having heard the victim being
maltreated several times by Lucido is incredible, exaggerated,
and unworthy of belief. First, the victim's own father, whose
house was about five (5) meters away from Lucido's house, never
testified that he heard the maltreatment done by Lucido upon his
own daughter.  Second, two (2) defense witnesses who were
[36]

neighbors of Lucido testified that they did not hear any noise that
would indicate Lucido's maltreatment of AAA. [37]

Petitioner claims that the charge against her was ill-motivated.


She highlights the ongoing enmity between her and Hinampas,
one (1) of the witnesses for the prosecution. Petitioner also
imputes ill-motive on AAA in falsely testifying against her after
having been scolded for damaging petitioner's cellphone. [38]

Finally, petitioner asserts that the prosecution failed to prove that


the acts alleged in the information—beating using a belt,
pinching, and strangulating AAA—were intended to "debase,
degrade or demean the intrinsic worth and dignity of the child as
a human being."  Citing Bongalon v. People,  petitioner contends
[39] [40]
that she could not be convicted of child abuse but only of slight
physical injuries defined and punished under the Revised Penal
Code. [41]

On the other hand, respondent argues that the petition must be


denied because it raises questions of fact, which could not be
done in a petition for review under Rule 45. [42]

This Court denies the petition.

The issues submitted by petitioner—the prosecution's failure to


prove that the abuse suffered by the victim had prejudiced her
normal development and want of credibility of the prosecution
witnesses—are fundamentally factual. However, this Court is not
a trier of facts. As a rule, "only questions of law may be raised in
a petition for review on certiorari under Rule 45." [43]

It is not the function of this Court to review and weigh anew the
evidence already passed upon by the Regional Trial Court and the
Court of Appeals absent any showing of arbitrariness,
capriciousness, or palpable error.  Petitioner did not present any
[44]

substantive or compelling reason for this Court to apply the


exception in this case.

Even if this Court disregards this infirmity, the petition still fails to
impress. This Court finds no reversible error in the Court of
Appeals Decision affirming petitioner's conviction for child abuse.

It is a fact that when the incident happened, the victim was a


child entitled to the protection extended by Republic Act No.
7610, as mandated by the Constitution.  Thus, petitioner was
[45]

properly charged and found guilty of violating Article VI, Section


10(a) of Republic Act No. 7610, which reads:
ARTICLE VI
OTHER ACTS OF ABUSE
Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation
and Other Conditions Prejudicial to the Child's Development.
 
(a) Any person who shall commit any other acts of child abuse, cruelty or exploitatio
other conditions prejudicial to the child's development including those covered by
Decree No. 603, as amended, but not covered by the Revised Penal Code, as am
penalty of prision mayor in its minimum period. (Emphasis supplied)
Article I, Section 3(b) of Republic Act No. 7610 defines child
abuse as the maltreatment of a child, whether habitual or not,
including any of the following:
(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional ma

(2) Any act by deeds or words which debases, degrades or demeans the intrinsic worth
a human being;

(3) Unreasonable deprivation of his basic needs for survival, such as food and shelter; o

(4) Failure to immediately give medical treatment to an injured child resulting in se


growth and development or in his permanent incapacity or death. (Emphasis supplie
As defined in the law, child abuse includes physical abuse of the
child, whether it is habitual or not. Petitioner's acts fall squarely
within this definition.

AAA testified on the physical abuse she suffered in the hands of


petitioner. The Regional Trial Court described her narration of the
facts to be in "a straightforward, credible and spontaneous
manner which could not be defeated by the denial of the
accused."  From the appearance of the victim, the trial court
[46]

likewise observed physical evidence of the abuses and ill-


treatment inflicted by the petitioner on AAA aside from the
victim's psychological displacement.  AAA's testimony was
[47]

further corroborated by Dr. Abierra, who noted several


observations during his physical examination of the victim. First,
there were "multiple abrasions on different parts of [AAA's]
body."  Additionally, he observed a "redness on the peripheral
[48]

circumference of the hymen," which could have been caused by a


hard pinching.  Finally, there was an evident "weakness on the
[49]

left knee joint," which could have been caused by the victim
falling to the ground or being beaten by a hard object. [50]
Petitioner's bare imputations of ill motive on Hinampas and AAA
deserve scant consideration. This defense had been judiciously
taken into account and rejected by the trial court, in light of the
clear, consistent, and positive testimonies of AAA, Dr. Abierra,
and FFF. As aptly observed by the trial court, Hinampas "ha[d] no
control over the intelligence and will of the victim and the parents
in testifying against [petitioner]."  A child witness like AAA, who
[51]

spoke in a clear, positive, and convincing manner and remained


consistent on cross-examination, is a credible witness.  Motive
[52]

becomes inconsequential when there is a categorical declaration


from the victim, which establishes the liability of the accused. [53]

Moreover, the inconsistencies relied upon by petitioner are trivial


and do not minimize the value of the prosecution witnesses'
testimonies. The fact that the victim's father did not mention in
his testimony that he had heard any sound that would indicate
Lucido's maltreatment of his daughter does not render impossible
the positive declaration of the victim as to the abuses she
suffered. On the other hand, defense witness Sanchez's
testimony is hardly credible because she was no longer residing
in Brgy. Atabay in 2007, when AAA was living with Lucido.
 Further, contrary to petitioner's assertion, the other defense
[54]

witness, Lusuegro, testified that she heard AAA cry when the
latter was staying with Lucido.[55]

Indeed, the trial court's assessment on the trustworthiness of


AAA and Hinampas will not be disturbed, absent any facts or
circumstances of real weight which might have been overlooked,
misappreciated, or misunderstood.  Through its firsthand
[56]

observations during the entire proceedings, the trial court can be


expected to determine, with reasonable discretion, whose
testimony to accept and which witness to believe. [57]

II
Petitioner further insists that the prosecution failed to prove that
the acts complained of were prejudicial to the victim's
development.

This Court disagrees.

Section 10(a) of Republic Act No. 7610 punishes four (4) distinct
offenses, i.e. (a) child abuse, (b) child cruelty, (c) child
exploitation, and (d) being responsible for conditions prejudicial
to the child's development.  As correctly ruled by the Court of
[58]

Appeals, the element that the acts must be prejudicial to the


child's development pertains only to the fourth offense. Thus:
Instructive is Araneta v. People which held, viz:
As gleaned from the foregoing, the provision punishes not only
those enumerated under Article 59 of Presidential Decree No.
603, but also four distinct acts, i.e., (a) child abuse, (b) child
cruelty, (c) child exploitation and (d) being responsible for
conditions prejudicial to the child's development. The Rules and
Regulations of the questioned statute distinctly and separately
defined child abuse, cruelty and exploitation just to show that
these three acts are different from one another and from the act
prejudicial to the child's development. Contrary to petitioner's
assertion, an accused can be prosecuted and be convicted under
Section 10(a), Article VI of Republic Act No. 7610 if he commits
any of the four acts therein. The prosecution need not prove that
the acts of child abuse, child cruelty and child exploitation have
resulted in the prejudice of the child because an act prejudicial to
the development of the child is different from the former acts.

Moreover, it is a rule in statutory construction that the word "or"


is a disjunctive term signifying dissociation and independence of
one thing from other things enumerated. It should, as a rule, be
construed in the sense which it ordinarily implies. Hence, the use
of "or" in Section 10(a) of Republic Act No. 7610 before the
phrase "be responsible for other conditions prejudicial to the
child's development" supposes that there are four punishable acts
therein. First, the act of child abuse; second, child cruelty;
third, child exploitation; and fourth, being responsible for
conditions prejudicial to the child's development. The fourth
penalized act cannot be interpreted, as petitioner suggests, as a
qualifying condition for the three other acts, because an analysis
of the entire context of the questioned provision does not warrant
such construal.
Contrary to the proposition of the appellant, the prosecution
need not prove that the acts of child abuse, child cruelty and child
exploitation have resulted in the prejudice of the child because an
act prejudicial to the development of the child is different from
the former acts. The element of resulting prejudice to the child's
development cannot be interpreted as a qualifying condition to
the other acts of child abuse, child cruelty and child exploitation.
 (Emphasis in the original, citations omitted)
[59]

Strangulating, severely pinching, and beating an eight (8)-year-


old child to cause her to limp are intrinsically cruel and excessive.
These acts of abuse impair the child's dignity and worth as a
human being and infringe upon her right to grow up in a safe,
wholesome, and harmonious place. It is not difficult to perceive
that this experience of repeated physical abuse from petitioner
would prejudice the child's social, moral, and emotional
development.

Petitioner's contention that she should only be convicted for slight


physical injuries in light of the ruling in Bongalon v. People,  is
[60]

likewise untenable.

The facts in Bongalon are markedly different from this case.


In Bongalon, a father was overwhelmed by his parental concern
for the personal safety of his own minor daughters who had just
suffered harm at the hands of the minor complainant and hit the
minor complainant's back with his hand and slapped his left
cheek. [61]

Here, AAA was maltreated by petitioner through repeated acts of


strangulation, pinching, and beating. These are clearly extreme
measures of punishment not commensurate with the discipline of
an eight (8)-year-old child. Discipline is a loving response that
seeks the positive welfare of a child. Petitioner's actions are
diametrically opposite. They are abusive, causing not only
physical injuries as evidenced by the physical marks on different
parts of AAA's body and the weakness of her left knee upon
walking, but also emotional trauma on her.

Republic Act No. 7610 is a measure geared to provide a strong


deterrence against child abuse and exploitation and to give a
special protection to children from all forms of neglect, abuse,
cruelty, exploitation, and other conditions prejudicial to their
development.  It must be stressed that the crime under Republic
[62]

Act No. 7610 is malum prohibitum.  Hence, the intent to debase,


[63]

degrade, or demean the minor is not the defining mark. Any act


of punishment that debases, degrades, and demeans the intrinsic
worth and dignity of a child constitutes the offense.

WHEREFORE, the Petition is DENIED. The August 28, 2014


Decision and March 13, 2015 Resolution of the Court of Appeals
in CA-G.R. CEB CR No. 01911 are hereby AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

[1]
 "Lucedo" in other parts of the Rollo, CA rollo, and RTC records.

[2]
 Rollo, pp. 10-32.

 Id. at 34-47. The Decision, docketed as CA-G.R. CEB CR No.


[3]

01911, was penned by Associate Justice Renato C. Francisco and


concurred in by Associate Justices Gabriel T. Ingles and Pamela
Ann A. Maxino of the Eighteenth Division, Court of Appeals, Cebu
City.

 Id. at 49-52. The Resolution was penned by Associate Justice


[4]

Renato C. Francisco and concurred in by Associate Justices


Gabriel T. Ingles and Pamela Ann A. Maxino of the Former
Eighteenth Division, Court of Appeals, Cebu City.

 Id. at 53-58. The Decision, docketed as Crim. Case No. H-1675,


[5]

was penned by Judge Ephrem S. Abando of Branch 18, Regional


Trial Court, Hilongos, Leyte.

[6]
 Rep. Act No. 7610, sec. 10(a) provides:

Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation


and Other Conditions Prejudicial to the Child's Development. —

(a) Any person who shall commit any other acts of child abuse,
cruelty or exploitation or be responsible for other conditions
prejudicial to the child's development including those covered by
Article 59 of Presidential Decree No. 603, as amended, but not
covered by the Revised Penal Code, as amended, shall suffer the
penalty of prision mayor in its minimum period.

[7]
 Rollo, p. 58.

[8]
 RTC records, p. 19.

[9]
 Id.

[10]
 CA rollo, p. 78.

[11]
 Pres. Decree No. 603, art. 59 provides:

Article 59. Crimes. — Criminal liability shall attach to any parent


who:

(1) Conceals or abandons the child with intent to make such child
lose his civil status.

(2) Abandons the child under such circumstances as to deprive


him of the love, care and protection he needs.
(3) Sells or abandons the child to another person for valuable
consideration.

(4) Neglects the child by not giving him the education which the
family's station in life and financial conditions permit.

(5) Fails or refuses, without justifiable grounds, to enroll the child


as required by Article 72.

(6) Causes, abates, or permits the truancy of the child from the
school where he is enrolled. "Truancy" as here used means
absence without cause for more than twenty schooldays, not
necessarily consecutive.

It shall be the duty of the teacher in charge to report to the


parents the absences of the child the moment these exceed five
schooldays.

(7) Improperly exploits the child by using him, directly or


indirectly, such as for purposes of begging and other acts which
are inimical to his interest and welfare.

(8) Inflicts cruel and unusual punishment upon the child or


deliberately subjects him to indignities and other excessive
chastisement that embarrass or humiliate him.

(9) Causes or encourages the child to lead an immoral or


dissolute life.

(10) Permits the child to possess, handle or carry a deadly


weapon, regardless of its ownership.

(11) Allows or requires the child to drive without a license or with


a license which the parent knows to have been illegally procured.
If the motor vehicle driven by the child belongs to the parent, it
shall be presumed that he permitted or ordered the child to drive.
"Parents" as here used shall include the guardian and the head of
the institution or foster home which has custody of the child.
(Emphasis supplied)

[12]
 CA rollo, p. 78.

[13]
 Id.

[14]
 Rollo, p. 35.

[15]
 TSN dated October 6, 2009, p. 6.

[16]
 Id.

 TSN dated January 5, 2010, pp. 14-15; RTC records, p. 12,


[17]

AAA's Birth Certificate showed that she was born on August 6,


1999.

 TSN dated November 27, 2008, p. 5; TSN dated May 26, 2009,
[18]

p. 4.

[19]
 Id. at 6.

[20]
 Id.

[21]
 Id. at 8.

[22]
 TSN dated May 26, 2009, pp. 7-8.

[23]
 TSN dated January 5, 2010, p. 5.

[24]
 Id.

[25]
 TSN dated, October 6, 2009, p. 14.

[26]
 Id. at 9.

[27]
 RTC records, p. 10, Medical Certificate dated January 2, 2008.
[28]
 Rollo, pp. 56-60.

[29]
 Id. at 37.

[30]
 Id. at 58.

[31]
 Id. at 46.

[32]
 Id. at 10-32.

[33]
 Id. at 118-134.

[34]
 Id. at 19.

[35]
 Id. at 21.

[36]
 Id. at 22.

[37]
 Id. at 22-23.

[38]
 Id. at 23.

[39]
 Id. at 25.

[40]
 707 Phil. 11 (2013) [Per J. Bersamin, First Division].

[41]
 Rollo, pp. 24-25.

[42]
 Id. at 124.

 Torres v. People, G.R. No. 206627, January 18, 2017


[43]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/206627.pdf> 5 [Per J.
Leonen, Second Division].

 Torres v. People, G.R. No. 206627, January


[44]
18, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/january2017/206627.pdf> 6 [Per J.
Leonen, Second Division],

[45]
 CONST., art. XV, sec. 3, par. 2 provides:

Section 3. The State shall defend:

....

(2) The right of children to assistance, including proper care and


nutrition, and special protection from all forms of neglect, abuse,
cruelty, exploitation, and other conditions prejudicial to their
development[.]

[46]
 Rollo, p. 58.

[47]
 Id.

[48]
 TSN dated July 28, 2009, p. 7.

[49]
 Id. at 9.

[50]
 Id. at 9-10.

[51]
 Rollo, p. 58.

 People v. Reyes, 549 Phil. 655, 662 (2007) [Per J. Quisumbing,


[52]

En Banc]; People v. Rama, 403 Phil. 155, 171-172 (2001) [Per J.


Puno, First Division].

 People v. Lawa, AAA Phil. 191, 204 (2003) [Per Curiam, En


[53]

Banc]; People v. Optana, 404 Phil. 316, 348 (2001) [Per J.


Kapunan, First Division].

[54]
 TSN dated September 7, 2010, p. 8.

[55]
 TSN dated January 11, 2011, pp. 5-6 and 9.
 Sanchez v. People, 606 Phil. 762, 779 (2009) [Per J. Nachura,
[56]

Third Division].

 People v. Diu, 708 Phil. 218, 232 (2013) [First Division, per J.
[57]

Leonardo-De Castro]; People v. Nelmida, 694 Phil. 529, 556


(2012) [En Banc, per J. Perez]; Magno v. People, 516 Phil. 72, 81
(2006) [Per J. Garcia, Second Division].

 Araneta v. People, 578 Phil. 876, 883 (2008) [Per J. Chico


[58]

Nazario, Third Division].

[59]
 Rollo, pp. 39-40.

[60]
 707 Phil. 11 (2013) [Per J. Bersamin, First Division].

[61]
 Id. at 14-15.

 Araneta v. People, 578 Phil. 876, 883 (2008) [Per J. Chico


[62]

Nazario, Third Division].

 See Malto v. People, 560 Phil. 119, 139 (2007) [Per J. Corona,
[63]

First Division].

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SECOND DIVISION

[ G.R. No. 210654, June 07, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. PABLO LUAD ARMODIA, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

The rape of a minor constitutes moral depravity of the highest


order. This is an appeal from a conviction for two (2) counts of
rape of a child under Article 266-A (1) of the Revised Penal Code
by a father, who twice fulfilled his desires on his own daughter.

Accused-appellant Pablo Luad Armodia (accused-appellant) and


his wife, BBB, had three (3) children, the oldest of whom was
AAA.  They owned a piggery  in Cambanay, Danao City, Cebu,
[1] [2]

located close to their house.  Beside this piggery was a makeshift


[3]

room that served as the venue for the material incidents in this
case.[4]

The first incident happened in the last week of March 2003, at


about 8:00 p.m. Accused-appellant called for AAA and ordered
her to sleep beside him in the makeshift room. The child obeyed
her father. While AAA was lying down, accused-appellant pinned
her to the ground with his arms and legs. To ensure his success,
he placed a lagting—a bolo used for cutting sugarcanes—a foot
away from her head. [5]

AAA's agony then began to unfold. Accused-appellant slid his leg


down from her hip and removed her shorts and underwear. Then,
he stripped off his briefs and shorts and went on top of her. The
child tried to push him away, but she was powerless against the
figure that lunged towards her. [6]

Holding his penis, accused-appellant inserted it into his child's


vagina. AAA felt pain as he penetrated her. He continued to
thrust her until he ejaculated. Sexually satisfied at her daughter's
expense, accused-appellant cleaned out the sperm left in her
vagina. He threatened to kill anyone to whom she would report
the incident. AAA kept quiet out of fear. She was then only 16
years old. [7]

The second incident happened in the same place. On April 4,


2003, around 3:00 a.m., accused-appellant shouted for her, who
was asleep. His booming voice roused her up from slumber. He
ordered her to give water to the hogs and she complied. Then, he
commanded her to lie down in the makeshift room next to the
piggery. Accused-appellant threatened to wield his lagting and
chop off the heads of those who would find out what he was
about to do. [8]

He grabbed her hands and legs, pinned her down on the floor,
stripped off her panty, and removed his underwear. Going on top
of her, he mashed her breasts and forced himself on her body.
 His penis abused her vagina until he reached his climax.
[9]

 Scooping his semen out of her vagina,  accused-appellant told


[10] [11]

AAA to rest easy as she would not get pregnant. [12]

The child could no longer remain quiet. The next day, on April 5,
2003, AAA finally revealed everything to her mother, BBB.
 Crying and shaking, AAA informed BBB that her father raped
[13]

her. [14]

On April 6, 2003, AAA and BBB reported the incident to


their punong barangay, who thereafter informed the police.  She[15]

was brought to Vicente Sotto Memorial Medical Center, then


Southern Island Hospital, for examination.[16]

Dr. Elvie Austria (Dr. Austria) examined AAA and issued a Medical
Certificate.  The Medical Certificate stated, "Tanner IV,
[17]

redundant."  It also stated that the "medical evaluation is


[18]

suggestive of abuse." [19]

Accused-appellant was arrested on the same day.  He was [20]

charged with two (2) counts of rape of a minor under two (2)
separate informations, the pertinent portions of which read as
follows:
Criminal Case No. DNO-2983

That on or about April 4, 2003 at 3:00 o'clock (sic) at dawn more


or less, in Cambanay, Danao City, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused,
did then and there, with threats, intimidation and influence of
moral ascendency, forcibly, willfully, unlawfully and feloniously
have sexual intercourse with [AAA], a virgin over 12 years old but
under 18 years of age.

CONTRARY TO LAW.

Criminal Case No. DNO-2998

That sometime in the last week of March, 2003, in Cambanay,


Danao City, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, did then and there,
with threats, intimidation and influence of moral ascendency,
forcibly, willfully, unlawfully and feloniously have sexual
intercourse with [AAA], a virgin over 12 years old but under 18
years of age.

CONTRARY TO LAW. [21]

Accused-appellant was arraigned and pleaded "not guilty" to the


rape charges.  On October 21, 2003, the State moved for leave
[22]

to amend the informations and add the phrase, "being the father
of the victim."
[23]

On November 7, 2003, the Regional Trial Court denied the State's


motion, ruling that the requested amendment was substantial
and prejudicial to accused-appellant's right to be informed of the
charges against him. The criminal cases were tried jointly.
[24]

The State presented three (3) witnesses: pediatrician Dr. Naomi


Poca (Dr. Poca), BBB, and AAA. Dr. Poca testified that another
physician, Dr. Austria, examined AAA. She explained that the
phrase "Tanner IV, redundant" in the Medical Certificate issued by
Dr. Austria meant that AAA's hymen was "thickened, redundant,
estrogenized (effect), and elastic;" in simple terms, it could
"accommodate a penis or any object." [25]

For her part, BBB testified that accused-appellant was her


husband and that AAA was their eldest child. On April 5, 2003, at
about 7:00 p.m., AAA trembled and cried as she recounted to
BBB accused-appellant's acts. The following day, BBB
accompanied her daughter to Barangay Captain Tomas Gomez,
who then reported the incidents to the police. [26]

Meanwhile, defense presented accused-appellant as its sole


witness. He admitted that AAA was his daughter but denied the
rape charges against him. According to him, the criminal cases
were filed in retaliation for his strict upbringing of his children.
Accused-appellant added that he was physically incapable of
having sexual intercourse as two (2) years before the first alleged
rape, he sustained a gunshot wound on the right portion of his
body. Thus, whenever he had sex, "his wastes would go out of his
intestines." [27]

On July 25, 2011, the Regional Trial Court convicted  accused-


[28]

appellant of two (2) counts of simple rape.

Citing People v. Ilao,  it held that the "accused [cannot] be


[29]

convicted of qualified rape, because of the prosecution's failure to


include the relationship in the information[.]"  The trial court did
[30]

not give credence to his defense of physical incapacity, as "his


wife BBB testified that they had sexual congress many
times."  The dispositive portion read:
[31]

WHEREFORE, FOR ALL THE FOREGOING the court finds the


accused PABLO LUAD ARMODIA:

a) In Criminal Case No. DNO-2983, GUILTY beyond reasonable doubt for the crime


266-A(1), which is] punished under the provision of Article 266-B of the Revised
sentences him to suffer the penalty of reclusion perpetua; and
b) In Criminal Case No. DNO-2998, GUILTY beyond reasonable doubt of the crime of
A(1), which is] punished under the provision of Article 266-B of the Revised P
sentences him to suffer the penalty of reclusion perpetua.

Accused is likewise directed to indemnify private complainant,


[AAA], the amounts of P50,000.00 as civil indemnity, P50,000.00
as moral damages and P30,000.00 as exemplary damages for
each count of rape pursuant to People v. Malana.

SO ORDERED.  (Emphasis in the original, citation omitted)


[32]

Accused-appellant appealed before the Court of Appeals, arguing


that "the prosecution failed to prove his guilt beyond reasonable
doubt."[33]

The Court of Appeals affirmed  with modification the Regional


[34]

Trial Court's Decision, adding the payment of six percent (6%)


legal interest in the award for damages. The dispositive portion of
the Decision reads:
WHEREFORE, premises considered, this appeal is DENIED.
The Decision of the Regional Trial Court, Branch 25, Danao City in
Crim. Cases Nos. DNO-2983 and DNO-2998 dated July 25, 2011
is AFFIRMED with MODIFICATION. Armodia is
further ORDERED to pay to pay [sic] interest on all damages
awarded at the legal rate of 6% per annum from the date of
finality of this Decision. No pronouncement as to costs.

SO ORDERED.  (Emphasis in the original)


[35]

The case has reached this Court via a notice of appeal.  For [36]

resolution is whether accused-appellant is guilty of two (2) counts


of simple rape.

We affirm the conviction.

The prosecution has proven beyond reasonable doubt that


accused-appellant had carnal knowledge of AAA against her will,
through force, threat, or intimidation.
Article 266-A (1)(a) of the Revised Penal Code states:
Article 266-A. Rape; When And How Committed. - Rape is
committed -

1) By a man who shall have carnal knowledge of a woman under


any of the following circumstances:

    a. Through force, threat, or intimidation[.]


AAA's testimonies established that she was sexually abused by
her father in the last week of March 2003 and on April 4, 2003.
She categorically and positively identified accused-appellant as
the perpetrator of the crime. She adequately recounted the
details that took place, the dates of the incidents, how her father
committed carnal knowledge against her, and his threats to wield
the lagting if the crimes were revealed to others.
[37]

Accused-appellant had carnal knowledge of AAA twice, through


force and intimidation. His moral ascendancy also intimidated her
into submission. This ascendancy or influence is grounded on his
parental authority over his child, which is recognized by our
Constitution  and laws,  as well as on the respect and reverence
[38] [39]

that Filipino children generally accord to their parents.


[40]

AAA's story cannot be trivialized as a mere fabrication or a tale


allegedly weaved to take revenge for her father's strictness.
Children are vulnerable.  Generally, they do not have the
[41]

maturity to execute complex strategies impelled by evil motives.


That they would go through such lengths—exposing themselves
and their families to dishonor by publicly narrating how their
father stripped them of their innocence —only to get even for a
[42]

trivial reason is, therefore, incredulous.

Testimonies of child victims may not always be the absolute


truth. Nevertheless, the testimonies of child rape victims are
generally entitled to full faith and credence. A girl who would
willingly cause the examination of her private parts, allow the
invasion of her privacy via an open trial, and recall the harrowing
experiences she suffered in the hands of her own father must
have been impelled by the desire to have the perpetrator caught
and punished.  More significantly, she must have been motivated
[43]

by the need to be physically and psychologically protected from


her assailant.

After a child rape victim gives a credible testimony, the defense


carries the burden of evidence to rebut it. Certainly, the defense
that a child would wish to cause the arrest, imprisonment, and
embarrassment of her own father only because he was strict
strains logic and common sense. It is a narrative that has no
basis on any fact proven on record.

A child would not concoct a story of incest especially if it would


result in losing one's father to prison.  In People v. Baun,  where
[44] [45]

the father was convicted for raping his 14-year old daughter four
(4) times:
No sane girl would concoct a story of defloration, allow an
examination of her private parts and subject herself to public trial
or ridicule if she has not in truth, been a victim of rape and
impelled to seek justice for the wrong done to her. It is against
human nature for a girl to fabricate a story that would expose
herself and her family to a lifetime of dishonor, especially where
her charges would mean the death or the long-term
imprisonment of her own father.  (Emphasis supplied, citations
[46]

omitted)
The Medical Certificate issued by Dr. Austria stating, "medical
evaluation is suggestive of abuse," further supports the lower
courts' finding that accused-appellant committed the incestuous
acts charged against him.

As against these details and testimonies, all that accused-


appellant has offered in defense are denials and alibis, defenses
which jurisprudence has long considered as weak and unreliable.
[47]

II
Accused-appellant committed two (2) counts of simple rape, not
qualified rape.

The crime of qualified rape under Article 266-B(1)  of the [48]

Revised Penal Code consists of the twin circumstances of the


victim's minority and her relationship to the perpetrator, both of
which must concur and must be alleged in the information.  It is [49]

immaterial whether the relationship was proven during trial if that


was not specifically pleaded for in the information.
[50]

The Court of Appeals  and the Regional Trial Court  found that
[51] [52]

accused-appellant's relationship with AAA was not duly alleged in


the informations. Thus, his relationship with the victim cannot
qualify the crimes of rape. Ruling otherwise would deprive him of
his constitutional right to be informed of the nature and cause of
accusation against him. [53]

Simple rape is punishable by reclusion perpetua.  Even if the


[54]

aggravating circumstances of minority and relationship were


present, the appropriate penalty would still be reclusion
perpetua under the law. Article 63 of the Revised Penal Code
provides that "in all cases in which the law prescribes a single
indivisible penalty, it shall be applied by the courts regardless of
any mitigating or aggravating circumstances that may have
attended the commission of the deed."

In view of the depravity of the acts committed by accused-


appellant against his daughter, we increase the amounts awarded
to AAA, in accordance with jurisprudence: [55]

For each incident of rape through carnal. knowledge, this Court


modifies the award of civil indemnity from P50,000 to
P100,000.00; moral damages from P50,000 to P100,000; and
exemplary damages from P30,000 to P100,000.

WHEREFORE, finding accused-appellant Pablo Luad


Armodia GUILTY beyond reasonable doubt, he is
hereby SENTENCED as follows:
In Criminal Case No. DNO-2983 for simple rape - the penalty
of reclusion perpetua without eligibility for parole and to pay AAA
the amount of P100,000.00 as civil indemnity, P100,000.00 as
moral damages, and P100,000.00 as exemplary damages; and

In Criminal Case No. DNO-2998 for simple rape - the penalty


of reclusion perpetua without eligibility for parole and to pay AAA
the amount of P100,000.00 as civil indemnity, P100,000.00 as
moral damages, and P100,000.00 as exemplary damages.

All awards for damages are with interest at the legal rate of six
percent (6%) per annum from the date of finality of this
judgment until fully paid. [56]

SO ORDERED.

Carpio, (Chairperson), and Peralta, JJ., concur.


Mendoza, and Matires, JJ., on official leave.

[1]
 Rollo, p. 5, Court of Appeals Decision.

[2]
 Id.

[3]
 Id. at 7.

[4]
 Id. at 5.

[5]
 Id.

[6]
 Id.

[7]
 Id.

[8]
 Id.
[9]
 Id.

[10]
 Id. at 5-6.

[11]
 Id. at 6.

[12]
 Id. at 8.

[13]
 Id. at 8.

[14]
 Id. at 6.

[15]
 Id. at 8.

[16]
 Id. at 6.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 8.

[21]
 CA rollo, p. 26.

[22]
 Id. at 27.

[23]
 Id.

[24]
 Id.

[25]
 Rollo, p. 6.

[26]
 Id.

[27]
 Id.
 CA Rollo, pp. 26-40. The Decision was penned by Assisting
[28]

Judge Sylva G. Aguirre Paderanga of Branch 25, Regional Trial


Court of Danao City.

[29]
 357 Phil. 656 (1998) [Per J. Regalado, En Banc].

[30]
 CA Rollo, p. 39.

[31]
 Rollo, p. 6.

[32]
 CA rollo, p. 40.

[33]
 Rollo, p. 7.

 Id. at 3-10. The Decision was promulgated on August 15, 2013,


[34]

docketed as CA-G.R. CEB-C.R.-H.C. No. 01489, and was penned


by Associate Justice Ramon Paul L. Hernando and concurred in by
Associate Justices Carmelita Salandanan-Manahan and Ma. Luisa
C. Quijano-Padilla of the Twentieth (20 ) Division, Court of
th

Appeals, Cebu City.

[35]
 Id. at 10.

[36]
 Rules of Court, Rule 122, sec. 3(c) states:

The appeal to the Supreme Court in cases where the penalty


imposed by the Regional Trial Court is death, reclusion perpetua,
or life imprisonment, or where a lesser penalty is imposed but for
offenses committed on the same occasion or which arose out of
the same occurrence that gave rise to the more serious offense
for which the penalty of death, reclusion perpetua, or life
imprisonment is imposed, shall be by filing a notice of appeal in
accordance with paragraph (a) of this section.

[37]
 Rollo, pp. 5-6.

 CONST., art. XIV, sec. 2(2) recognizes that parents have the
[38]

"natural right . . . to rear their children."


 CIVIL CODE, art. 311 states that "[c]hildren are obliged to obey
[39]

their parents so long as they are under parental power, and to


observe respect and reverence toward them always."

 People v. Panique, 375 Phil. 227, 238 (1999) [Per J. Mendoza,


[40]

En Banc].

 People v. Guillermo, 550 Phil. 176, 188 (2007) [Per J. Garcia,


[41]

En Banc].

 People v. Baun, 584 Phil. 560, 574 (2008) [Per J. Azcuna, En


[42]

Banc].

[43]
 Id.

[44]
 Id.

[45]
 584 Phil. 560 (2008) [Per J. Azcuna, En Banc].

[46]
 Id. at 574.

 People v. Liwanag, 415 Phil. 271, 295 (2001) [Per J. Ynares-


[47]

Santiago, First Division].

[48]
 Article 266-B. Penalties -

....

The death penalty shall also be imposed if the crime of rape is


committed with any of the following aggravating/qualifying
circumstances:

1) When the victim is under eighteen (18) years of age and the


offender is a parent ... of the victim[.]

 People v. Malana, 646 Phil. 290, 310 (2010) [Per J. Perez, First
[49]

Division].
 People v. Ilao, 357 Phil. 656, 671 (1998) [Per J. Regalado, En
[50]

Banc].

[51]
 Rollo, p. 9.

[52]
 CA Rollo, pp. 38-40.

 Andaya v. People, 526 Phil. 480, 496 (2006) [Per J. Ynares-


[53]

Santiago, First Division].

[54]
 See Article 266-B, Revised Penal Code.

 People v. Jugueta, G.R. No. 202124, April 5, 2016


[55]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/apriI2016/202124.pdf> [Per J. Peralta,
En Banc].

 Ricalde v. People, 751 Phil. 793, 816 (2015) [Per J. Leonen,


[56]

Second Division].

Source: Supreme Court E-Library | Date created: August 14, 2017


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Supreme Court E-Library

803 Phil. 393


SECOND DIVISION

[ G.R. No. 186967, January 18, 2017 ]


DIVINA PALAO, PETITIONER, V. FLORENTINO III
INTERNATIONAL, INC., RESPONDENT.DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari  filed by [1]

petitioner Divina Palao (Palao) praying that the assailed January


8, 2009 Decision  and the March 2, 2009 Resolution  of the Court
[2] [3]

of Appeals in CA-G.R. SP No. 105595 be reversed and set aside.


In its assailed Decision, the Court of Appeals reversed and set
aside the September 22, 2008 Order  of Intellectual Property
[4]

Office Director General Adrian S. Cristobal, Jr. and reinstated


respondent Florentino III International, Inc.'s (Florentino) appeal
from Decision No. 2007-31,  dated March 5, 2007, of the Bureau
[5]

of Legal Affairs of the Intellectual Property Office.

Decision No. 2007-31 denied Florentino's Petition for Cancellation


of Letters Patent No. UM-7789, which the Intellectual Property
Office had issued in favor of Palao. [6]

Letters Patent No. UM-7789 pertained to "A Ceramic Tile


Installation on Non-Concrete Substrate Base Surfaces Adapted to
Form Part of Furniture, Architectural Components and the Like." [7]

In its Petition for Cancellation, Florentino claimed that the utility


model covered by Letters Patent No. UM-7789 was not original,
new, or patentable, as it had been publicly known or used in the
Philippines and had even been the subject of several publications.
 It added that it, as well as many others, had been using the
[8]

utility model well before Palao's application for a patent. [9]

In its Decision No. 2007-31,  the Bureau of Legal Affairs of the


[10]

Intellectual Property Office denied Florentino's Petition for


Cancellation. It noted that the testimony and pictures, which
Florentino offered in evidence, failed to establish that the utility
model subject of Letters Patent No. UM- 7789 was publicly known
or used before Palao's application for a patent. [11]
In its Resolution No. 2008-14  dated July 14, 2008, the Bureau
[12]

of Legal Affairs of the Intellectual Property Office denied


Florentino's Motion for Reconsideration.

On July 30, 2008, Florentino appealed to the Office of the


Director General of the Intellectual Property Office.  This appeal's
[13]

Verification and Certification of Non-Forum Shopping was signed


by Atty. John Labsky P. Maximo (Atty. Maximo) of the firm Balgos
and Perez.  However, Florentino failed to attach to its appeal a
[14]

secretary's certificate or board resolution authorizing Balgos and


Perez to sign the Verification and Certification of Non-Forum
Shopping.  Thus, on August 14, 2008, the Office of the Director
[15]

General issued the Order requiring Florentino to submit proof that


Atty. Maximo or Balgos and Perez was authorized to sign the
Verification and Certification of Non-Forum Shopping. [16]

On August 19, 2008, Florentino filed a Compliance.  It submitted


[17]

a copy of the Certificate executed on August 15, 2008 by


Florentino's Corporate Secretary, Melanie Marie A. C. Zosa-Tan,
supposedly showing its counsel's authority to sign.  This [18]

Certificate stated:

[A]t a meeting of the Board of Directors of the said corporation


on 14 August 2008, during which a majority of the Directors were
present, the following resolution was unanimously adopted:

'RESOLVED, as it is hereby resolved, that BALGOS & PEREZ, or


any of its associates, be, as they are hereby, authorized to sign
for and on behalf of the corporation, the Verification and
Certification on Non-Forum Shopping and/or all other documents
relevant to the Appeal filed by the Corporation with the Office of
the Director General of the Intellectual Property Office entitled
"Philippine Chambers of Stonecraft Industries, Inc. and Florentino
III International, Inc. vs. Divina Palao".'

IN WITNESS WHEREOF, I have hereunto set my hand on these


presents, this 15 August 2008 in Cebu City, Cebu. [19]
In his Order dated September 22, 2008, Intellectual Property
Office Director General Adrian S. Cristobal, Jr. (Director General
Cristobal) dismissed Florentino's appeal.  He noted that the
[20]

Secretary's Certificate pertained to an August 14, 2008


Resolution issued by Florentino's Board of Directors, and
reasoned that the same Certificate failed to establish the
authority of Florentino's counsel to sign the Verification and
Certification of Non-Forum Shopping as of the date of the filing of
Florentino's appeal (i.e., on July 30, 2008).
[21]

Florentino then filed before the Court of Appeals a Petition for


Review under Rule 43 of the 1997 Rules of Civil Procedure. In its
assailed January 8, 2009 Decision,  the Court of Appeals faulted
[22]

Director General Cristobal for an overly strict application of


procedural rules. Thus, it reversed Director General Cristobal's
September 22, 2008 Order and reinstated Florentino's appeal. [23]

In its assailed March 2, 2009 Resolution,  the Court of Appeals


[24]

denied Palao's Motion for Reconsideration.

Hence, this Petition was filed.

For resolution is the sole issue of whether the Court of Appeals


erred in reversing the September 22, 2008 Order of Intellectual
Property Office Director General Adrian S. Cristobal, Jr., and in
reinstating respondent Florentino III International, Inc.'s appeal.

We deny the Petition and sustain the ruling of the Court of


Appeals.

The need for a certification of non-forum shopping to be attached


to respondent's appeal before the Office of the Director General
of the Intellectual Property Office is established.

Section 3 of the Intellectual Property Office's Uniform Rules on


Appeal  specifies the form through which appeals may be taken
[25]

to the Director General:


Section 3. Appeal Memorandum. - The appeal shall be perfected
by filing an appeal memorandum in three (3) legible copies with
proof of service to the Bureau Director and the adverse party, if
any, and upon payment of the applicable fee, Reference Code 127
or 128, provided in the IPO Fee Structure.

Section 4(e) specifies the need for a certification of non-forum


shopping. Section 4 reads in full:

Section 4. Contents of the Appeal Memorandum. - The appeal


memorandum shall:

a) State the full name or names, capacity and address or addresses of the appellant or a

b) Indicate the material dates showing that it was filed on time;

c) Set forth concisely a statement of the matters involved, the issues raised, the specific
law, or both, allegedly committed by the Bureau Director and the reasons or argume
allowance of the appeal;

d) Be accompanied by legible copies of the decision or final order of the Bureau Direc
portions of the record as would support the allegations of the appeal; and

e) Contain a certification of non-forum-shopping. (Emphasis supplied)


These requirements notwithstanding, the Intellectual Property
Office's own Regulations on Inter Partes Proceedings (which
governs petitions for cancellations of a mark, patent, utility
model, industrial design, opposition to registration of a mark and
compulsory licensing, and which were in effect when respondent
filed its appeal) specify that the Intellectual Property Office "shall
not be bound by the strict technical rules of procedure and
evidence." [26]

Rule 2, Section 6 of these Regulations provides:

Section 6 Rules of Procedure to be Followed in the Conduct of


Hearing of Inter Partes Cases
In the conduct of hearing of inter partes cases, the rules of
procedure herein contained shall be primarily applied. The Rules
of Court, unless inconsistent with these rules, may be applied in
suppletory character, provided, however, that the Director or
Hearing Officer shall not be bound by the strict technical rules of
procedure and evidence therein contained but may adopt, in the
absence of any applicable rule herein, such mode of proceedings
which is consistent with the requirements of fair play and
conducive to the just, speedy and inexpensive disposition of
cases, and which will give the Bureau the greatest possibility to
focus on the technical grounds or issues before it. (Emphasis
supplied)

This rule is in keeping with the general principle that


administrative bodies are not strictly bound by technical rules of
procedure:

[A]dministrative bodies are not bound by the technical niceties of


law and procedure and the rules obtaining in courts of law.
Administrative tribunals exercising quasi-judicial powers are
unfettered by the rigidity of certain procedural requirements,
subject to the observance of fundamental and essential
requirements of due process in justiciable cases presented before
them. In administrative proceedings, technical rules of procedure
and evidence are not strictly applied and administrative due
process cannot be fully equated with due process in its strict
judicial sense.[27]

In conformity with this liberality, Section 5(b) of the Intellectual


Property Office's Uniform Rules on Appeal expressly enables
appellants, who failed to comply with Section 4's formal
requirements, to subsequently complete their compliance:

Section 5. Action on the Appeal Memorandum - The Director


General shall:

a) Order the adverse party if any, to file comment to the appeal memorandum within
notice and/or order the Bureau Director to file comment and/or transmit the records
from notice; or
b) Order the appellant/appellants to complete the formal requirements mentioned in Sec

c) Dismiss the appeal for being patently without merit, Provided, that the dismissal
appeal is not filed within the prescribed period or for failure of the appellant to pay
the period of appeal. (Emphasis supplied)
Given these premises, it was an error for the Director General of
the Intellectual Property Office to have been so rigid in applying a
procedural rule and dismissing respondent's appeal.

Petitioner-in her pleadings before this Court—and Director


General Cristobal—in his September 2, 2008 Order—cite
Decisions of this Court (namely: Philippine Public School Teachers
Association v. Heirs of Iligan  and Philippine Airlines, Inc. v.
[28]

Flight Attendants & Stewards Association of the Philippines ) to [29]

emphasize the need for precise compliance with the rule on


appending a certification of non-forum shopping.

Philippine Public School Teachers Association states:

Under Section 3 of the same Rule, failure to comply shall be


sufficient ground for the dismissal of the petition. The rule on
certification against forum shopping is intended to prevent the
actual filing of multiple petitions/complaints involving identical
causes of action, subject matter and issues in other tribunals or
agencies as a form of forum shopping. This is rooted in the
principle that a party-litigant should not be allowed to pursue
simultaneous remedies in different forums, as this practice is
detrimental to orderly judicial procedure. Although not
jurisdictional, the requirement of a certification of non-forum
shopping is mandatory. The rule requires that a certification
against forum shopping should be appended to or incorporated in
the initiatory pleading filed before the court. The rule also
requires that the party, not counsel, must certify under oath that
he has not commenced any other action involving the same issue
in the court or any other tribunal or agency.
The requirement that the certification of non-forum shopping
should be executed and signed by the plaintiff or principal means
that counsel cannot sign said certification unless clothed with
special authority to do so. The reason for this is that the plaintiff
or principal knows better than anyone else whether a petition has
previously been filed involving the same case or substantially the
same issues. Hence, a certification signed by counsel alone is
defective and constitutes a valid cause for dismissal of the
petition. In the case of natural persons, the Rule requires the
parties themselves to sign the certificate of non-forum shopping.
However, in the case of the corporations, the physical act of
signing may be performed, on behalf of the corporate entity, only
by specifically authorized individuals for the simple reason that
corporations, as artificial persons, cannot personally do the task
themselves. It cannot be gainsaid that obedience to the
requirements of procedural rules is needed if we are to expect fair
results therefrom. Utter disregard of the rules cannot justly be
rationalized by harking on the policy of liberal construction.
[30]

Philippine Airlines, for its part, states that:

The required certification of non-forum shopping must be valid at


the time of filing of the petition. An invalid certificate cannot be
remedied by the subsequent submission of a Secretary's
Certificate that vests authority only after the petition had been
filed.
[31]

As pointed out by the Court of Appeals,  however, the strict


[32]

posturing of these Decisions are not entirely suitable for this


case. Both Philippine Public School Teachers
Association  and Philippine Airlines involved petitions filed before
the Court of Appeals, that is, petitions in judicial proceedings.
What is involved here is a quasi-judicial proceeding that is
"unfettered by the strict application of the technical rules of
procedure imposed in judicial proceedings." [33]
In any case, even in judicial proceedings, this Court has rebuked
an overly strict application of the rules pertaining to certifications
of non-forum shopping.

In Pacquing v. Coca-Cola Philippines, Inc.: [34]

[T]he rules on forum shopping, which were designed to promote


and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objective. Strict compliance with the
provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification cannot
be altogether dispensed with or its requirements completely
disregarded. It does not, however, prohibit substantial
compliance therewith under justifiable circumstances, considering
especially that although it is obligatory, it is not jurisdictional. [35]

Thus, in Pacquing, this Court held that while, as a rule, "the


certificate of non-forum shopping must be signed by all the
plaintiffs in a case and the signature of only one of them is
insufficient,"  still, "when all the petitioners share a common
[36]

interest and invoke a common cause of action or defense, the


signature of only one of them in the certification against forum
shopping substantially complies with the rules." [37]

Likewise, in Peak Ventures Corp. v. Heirs of Villareal,  we did not


[38]

consider as fatally defective the fact that a petition for review on


certiorari's verification and certification of non-forum shopping
was dated November 6, 2008, while the petition itself was dated
November 10, 2008.  We state:
[39]

With respect to the requirement of a certification of non-forum


shopping, "[t]he fact that the [Rules] require strict compliance
merely underscores its mandatory nature that it cannot be
dispensed with or its requirements altogether disregarded, but it
does not thereby interdict substantial compliance with its
provisions under justifiable circumstances." [40]
Even petitioner's own cited case, Philippine Public School
Teachers Association v. Heirs of Iligan,  repudiates her position.
[41]

The case involved a petition for review filed before the Court of
Appeals by the Philippine Public School Teachers Association.
 The verification and certification of non-forum shopping of the
[42]

petition was signed by a certain Ramon G. Asuncion, Jr. without


an accompanying board resolution or secretary's certificate
attesting to his authority to sign. The petition for review was
dismissed by the Court of Appeals "for being 'defective in
substance,' there being no proof that Asuncion had been duly
authorized by [the Philippine Public School Teachers Association]
to execute and file a certification of non forum shopping in its
behalf."
[43]

This Court acknowledged that, in the strict sense, the Court of


Appeals was correct: "The ruling of the [Court of Appeals] that
[the Philippine Public School Teachers Association] was negligent
when it failed to append in its petition a board resolution
authorizing petitioner Asuncion to sign the certification of non-
forum shopping in its behalf is correct."
[44]

However, this Court did not end at that. It went on to state that
"a strict application of [the rule] is not called for":
[45]

We have reviewed the records, however, and find that a strict


application of Rule 42, in relation to Section 5, Rule 7 of the
Revised Rules of Court is not called for. As we held in Huntington
Steel Products, Inc. v. National Labor Relations
Commission, while the requirement of strict compliance
underscores the mandatory nature of the rule, it does not
necessarily interdict substantial compliance with its provisions
under justifiable circumstances. The rule should not be
interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objective which is the goal of all rules of
procedure, that is, to achieve justice as expeditiously as possible.
A liberal application of the rule may be justified where special
circumstances or compelling reasons are present.
Admittedly, the authorization of petitioner PPSTA's corporate
secretary was submitted to the appellate court only after
petitioners received the comment of respondents. However, in
view of the peculiar circumstances of the present case and in the
interest of substantial justice, and considering further that
petitioners submitted such authorization before the [Court of
Appeals] resolved to dismiss the petition on the technical ground,
we hold that, the procedural defect may be set aside pro hac
vice. Technical rules of procedure should be rules enjoined to
facilitate the orderly administration of justice. The liberality in the
application of rules of procedure may not be invoked if it will
result in the wanton disregard of the rules or cause needless
delay in the administration of justice. Indeed, it cannot be
gainsaid that obedience to the requirements of procedural rule is
needed if we are to expect fair results therefrom.  (Emphasis
[46]

supplied)

The "peculiar circumstances"  in Philippine


[47]
Public School
Teachers Association pertained to a finding that the signatory of
the verification and certification of non-forum shopping, Ramon
G. Asuncion, Jr., was "the former Acting General Manager"  of [48]

the Philippine Public School Teachers Association and was, thus,


previously "authorized to sign a verification and certification of
non-forum shopping"  on behalf of the Association. By the time
[49]

the Association actually filed its petition before the Court of


Appeals, however, his authority as the Acting General Manager
had ceased, and the Association's Board of Directors needed to
give him specific authority to sign a certification of non-forum
shopping:

We agree with respondents' contention that when they filed their


complaint in the MTC, they impleaded petitioner Asuncion as
party-defendant in his capacity as the Acting General Manager of
petitioner PPSTA. As such officer, he was authorized to sign a
verification and certification of non-forum shopping. However, he
was no longer the Acting General Manager when petitioners filed
their petition in the CA, where he was in fact referred to as "the
former Acting General Manager." Thus, at the time the petition
was filed before the CA, petitioner Asuncion's authority to sign
the verification and certification of non-forum shopping for and in
behalf of petitioner PPSTA ceased to exist. There was a need for
the board of directors of petitioner PPSTA to authorize him to sign
the requisite certification of non-forum shopping, and to append
the same to their petition as Annex thereof. [50]

We find this case to be attended by analogous circumstances. As


pointed out by the Court of Appeals, respondent's counsel, Balgos
and Perez, has been representing respondent (and signing
documents for it) "since the [original] Petition for Cancellation of
Letter Patent No. UM-7789 was filed."  Thus, its act of signing for
[51]

respondent, on appeal before the Director General of the


Intellectual Property Office, was not an aberration. It was a mere
continuation of what it had previously done.

It is reasonable, therefore—consistent with the precept of liberally


applying procedural rules in administrative proceedings, and with
the room allowed by jurisprudence for substantial compliance
with respect to the rule on certifications of non-forum shopping—
to construe the error committed by respondent as a venial lapse
that should not be fatal to its cause. We see here no "wanton
disregard of the rules or [the risk of] caus[ing] needless delay in
the administration of justice."  On the contrary, construing it as
[52]

such will enable a full ventilation of the parties' competing claims.


As with Philippine Public School Teachers Association, we consider
it permissible to set aside, pro hac vice, the procedural defect.
 Thus, we sustain the ruling of the Court of Appeals.
[53]

WHEREFORE, the Petition is DENIED. The assailed January 8,


2009 Decision and the March 2, 2009 Resolution of the Court of
Appeals in CA-G.R. SP No. 105595 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Jardeleza, JJ.,


concur.
 Rollo, pp. 3-19. The Petition was filed under Rule 45 of the
[1]

Rules of Court.
 Id. at 24-42. The Decision was penned by Associate Justice
[2]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Mariano C. Del Castillo (now Associate Justice of this Court) and
Apolinario D. Bruselas, Jr. of the Twelfth Division, Court of
Appeals, Manila.

 Id. at 21-22. The Resolution was penned by Associate Justice


[3]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Mariano C. Del Castillo (now Associate Justice of this Court) and
Apolinario D. Bruselas, Jr. of the Twelfth Division, Court of
Appeals, Manila.

[4]
 Id. at 44-45.

 Id. at 48-62. The Decision was penned by Director Estrellita


[5]

Beltran-Abelardo.

[6]
 Id. at 62.

[7]
 Id. at 48.

[8]
 Id. at 25.

[9]
 Id.

[10]
 Id. at 48-62.

[11]
 Id. at 58.

 Id. at 87-89. The Resolution was penned by Director Estrellita


[12]

Beltran-Abelardo.

[13]
 Id. at 44.

[14]
 Id.
[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id. at 44-45.

[20]
 Id. at 45.

[21]
 Id.

[22]
 Id. at 24-42.

[23]
 Id. at 40.

[24]
 Id. at 21-22.

[25]
 IPO Office O. No. 12 (2002).

 REGULATIONS ON INTER PARTES PROCEEDINGS (1998), Rule


[26]

2, sec. 6.

 Samalio v. Court of Appeals, 494 Phil. 456, 464 (2005) [Per J.


[27]

Corona, En Banc], citing Bantolino, et al. v. Coca-Cola Bottlers


Phils., Inc., 451 Phil. 839, 846 (2003) [Per J. Bellosillo, Second
Division]; De los Santos v. National Labor Relations Commission,
et al., 423 Phil. 1020, 1034 (2001) [Per J. Bellosillo, Second
Division]; and Emin v. De Leon, et al., 428 Phil. 172, 186-187
(2002) [Per J. Quisumbing, En Banc].

[28]
 528 Phil. 1197 (2006) [Per J. Callejo, Sr., First Division].

[29]
 515 Phil. 579 (2006) [Per J. Azcuna, Second Division].

 Philippine Public School Teachers Association v. Heirs of Iligan,


[30]

528 Phil. 1197, 1209-1210 (2006) [Per J. Callejo, Sr., First


Division], citing RULES OF COURT, Rule 42, sec. 3;  Republic v.
Carmel Development, Inc., 427 Phil. 723, 743 (2002) [Per J.
Carpio, Third Division]; and  Hydro Resources Contractors
Corporation v. National Irrigation Administration, 484 Phil. 581,
597-598 (2004) [Per J. Ynares-Santiago, First Division].

 Philippine Airlines, Inc. v. Flight Attendants & Stewards


[31]

Association of the Philippines, 515 Phil. 579, 582-583 (2006) [Per


J. Azcuna, Second Division].

[32]
 Rollo, p. 39.

[33]
 Id.

[34]
 567 Phil. 323 (2008) [Per J. Austria-Martinez, Third Division].

 Id. at 332-333, citing Iglesia ni Cristo v. Ponferrada, 536 Phil.


[35]

705, 718-719 (2006) [Per J. Callejo, Sr., First Division]; HLC


Construction and Development Corporation v. Emily Homes
Subdivision Homeowners Association, 458 Phil. 392, 398-400
(2003) [Per J. Corona, Third Division]; Bank of the Philippine
Islands v. Court of Appeals, 450 Phil. 532, 540 (2003) [Per J.
Panganiban, Third Division]; Cavile v. Heirs of Cavile, 448 Phil.
302, 311 (2003) [Per J. Puno, Third Division]; Twin Towers
Condominium Corporation v. Court of Appeals, 446 Phil. 280, 298
(2003) [Per J. Carpio, First Division]; Solmayor v. Arroyo, 520
Phil. 854, 869-870 (2006) [Per J. Chico-Nazario, First
Division]; Cua v. Vargas, 536 Phil. 1082, 1096 (2006) [Per J.
Azcuna, Second Division]; Heirs of Dicman v. Cariño, 523 Phil.
630, 651-653 (2006) [Per J. Austria-Martinez, First Division];
and  Heirs of Agapito T. Olarte v. Office of the President of the
Philippines, 499 Phil. 562, 651-653 (2005) [Per J. Ynares-
Santiago, First Division].

[36]
 Id. at 332.

 Id. at 333, citing Cua v. Vargas, 536 Phil. 1082, 1096 (2006)


[37]

(Per J. Azcuna, Second Division]; San Miguel Corporation v.


Aballa, 500 Phil. 170, 190-194 (2005) [Per J. Carpio Morales,
Third Division]; and Espina v. Court of Appeals, 548 Phil. 255,
270-271 (2007) (Per J. Chico-Nazario, Third Division].

 G.R. No. 184618, November 19, 2014, 741 SCRA 43 [Per J. Del
[38]

Castillo, Second Division].

[39]
 Id. at 53-55.

 Id. at 54, citing Huntington Steel Products, Inc. v. National


[40]

Labor Relations Commission, 485 Phil. 227, 235 (2004) [Per J.


Quisumbing, First Division].

[41]
 528 Phil. 1197 (2006) [Per J. Callejo, Sr. First Division].
[42]
 Id. at 1203.

[43]
 Id. at 1204, as cited in rollo, p. 44.

[44]
 Id. at 1211.

[45]
 Id.

 Id. at 1211-1212, citing Huntington Steel Products, Inc. v.


[46]

National Labor Relations Commission, 485 Phil. 227, 235 (2004)


[Per J. Quisumbing, First Division]; Marcopper Mining Corporation
v. Solidbank Corporation, 476 Phil. 415, 443-441 (2004) [Per J.
Callejo, Sr., Second Division]; and Pet Plans, Inc. v. Court of
Appeals, 486 Phil. 112, 121 (2004) [Per J. Austria-Martinez,
Second Division].

[47]
 Id. at 1212.

[48]
 Id. at 1210.

[49]
 Id.

 Id.,  citing Novelty Philippines, Inc. v. Court of Appeals, 458


[50]

Phil. 36, 44-45 (2003) [Per J. Panganiban, Third Division].

[51]
 Rollo, p. 38.
 Philippine Public School Teachers Association v. Heirs of Iligan,
[52]

528 Phil. 1197, 1212 (2006) [Per J. Callejo, Sr., First Division].

[53]
 Id.

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SECOND DIVISION

[ G.R. No. 172507, September 14,


2016 ]
NATIONAL POWER CORPORATION, PETITIONER,
VS. SPS. MARGARITO ASOQUE AND TARCINIA
ASOQUE, RESPONDENTS.DECISION

LEONEN, J.:

Article III, Section 9  of the Constitution provides a substantive


[1]

guarantee that private property that is taken by the state for


public use should be paid for with just compensation. If the state
does not agree with the property owner on a price, the state,
through the competent government agency, should file the
proper expropriation action under Rule 67 of the Revised Rules of
Court.
In case of a taking without the proper expropriation action filed,
the property owner may file its own action to question the
propriety of the taking or to compel the payment of just
compensation. Among these inverse condemnation actions is a
complaint for payment of just compensation and damages.

When an inverse condemnation is filed, the provisions for the


appointment of commissioners under Rule 32—not Sections 5, 6,
7, or 8 of Rule 67 of the Rules of Court—will be followed.

This resolves a Petition for Review on Certiorari  filed by the


[2]

National Power Corporation to nullify and set aside the November


21, 2005 Decision  and May 3, 2006 Resolution  of the Court of
[3] [4]

Appeals in CA-G.R. CV No. 76313. The assailed Decision affirmed


with modification the judgment of Branch 31 of the Regional Trial
Court, Calbayog City, which, in turn, directed the National Power
Corporation to pay the value of the 4,352-square-meter portion
of Spouses Margarito and Tarcinia Asoque's (Spouses Asoque)
land utilized in its Leyte-Luzon Transmission Line Project.  The
[5]

assailed Resolution denied the National Power Corporation's


Motion for Reconsideration. [6]

Spouses Asoque are the registered owners of a parcel of coconut


land located in Barangay Bugtong, Calbayog City. The parcel of
land has an area of 59,099 square meters and is covered by
Original Certificate of Title No. 2376.
[7]

Sometime in November 1995, the National Power Corporation


entered the Spouses Asoque's land to install transmission lines
for its 350 KV Leyte-Luzon HVDC Power Transmission Line
Project.  The National Power Corporation utilized 4,352 square
[8]

meters for the project. [9]

Spouses Asoque allege that beforehand, they were made to


understand that the National Power Corporation would pay them
the value of the portion of the land used and all improvements
that would be destroyed for the National Power Corporation's
project.  Spouses Asoque incurred actual damages as a result of
[10]
the National Power Corporation's cutting off some coconut trees
and other fruit- and non-fruit-bearing plants during the
construction.  They were also prohibited from introducing on the
[11]

4,352-square-meter area any improvement that could rise by a


few meters from the ground. [12]

Upon Spouses Asoque's demand for just compensation, the


National Power Corporation only paid for the improvements
destroyed and refused to pay for the actual value of the 4,352-
square-meter area utilized for the project.  The National Power
[13]

Corporation claimed that it was only liable to pay for right of way
at 10% of the market value under Section 3-A of Republic Act No.
6395,  as amended.
[14] [15]

On September 20, 1999, Spouses Asoque filed before the


Regional Trial Court of Calbayog City a Complaint  for payment [16]

of just compensation and damages against the National Power


Corporation. The case was docketed as Civil Case No. 737 and
was raffled to Branch 31.

In its Answer  dated February 7, 2000, the National Power


[17]

Corporation denied Spouses Asoque's claims that it had illegally


utilized their property. It alleged that it entered the property with
Spouses Asoque's consent, as shown by the acknowledgment
receipt  for P9,897.00 as payment for damaged improvements
[18]

and waiver of claims to improvements damaged.  By virtue of [19]

the acknowledgement receipt and the waiver, the National Power


Corporation claimed that there was no more need for it to
institute an expropriation proceeding. [20]

When Civil Case No. 737 was called for pre-trial on May 8, 2000,
the case was ordered dismissed by the trial court due to the non-
appearance of both parties and their counsel.  However, the case[21]

was reinstated after Spouses Asoque's counsel explained to the


trial court the reason why he arrived late. The pre-trial of the
case was reset to May 24, 2000. [22]
On May 24, 2000, the trial court, noting the absence of the
National Power Corporation and its counsel, allowed Spouses
Asoque to present their evidence ex parte before a court-
appointed Commissioner. It simultaneously dismissed the
National Power Corporation's counterclaim.[23]

On June 6, 2000, the trial court denied National Power


Corporation's Urgent Manifestation and Motion to Reset Pre-trial,
finding it to have been filed out of time and also moot and
academic.  National Power Corporation's subsequent Motion for
[24]

Reconsideration was denied in the trial court's Order dated June


21, 2000. [25]

"On June 22, July 24[,] and August 28, 2000, Spouses Asoque
presented evidence ex parte before Atty. Ferdinand S. Arpon,
Branch Clerk of Court, who was appointed Commissioner by the
trial court."  Spouses Asoque then filed their Formal Offer of
[26]

Documentary Exhibits  on September 6, 2000, to which the


[27]

National Power Corporation filed its Comment/Objection  on [28]

October 13, 2000, citing the inadmissibility of the exhibits


presented. [29]

On July 20, 2001, the Commissioner submitted to the trial court


his Commissioner's Report dated July 19, 2001.  He [30]

recommended that the fair market value of the land be placed at


P800.00 per square meter and that the schedule of prevailing
market value of the trees, plants, and crops prepared by the
Office of the Provincial Agriculturist, Catbalogan, Samar be
adopted to compute the amount of compensation for the
damaged improvements. [31]

On August 21, 2001, the trial court received the National Power
Corporation's Comment/Opposition to Commissioner's Report, to
which Spouses Asoque filed their Rejoinder on September 20,
2001.[32]
The National Power Corporation and Spouses Asoque filed their
respective memoranda on February 5, 2002 and April 1, 2002.
Thereafter, the case was deemed submitted for decision. [33]

On June 25, 2002, the Regional Trial Court rendered the


Decision  in favor of Spouses Asoque and ordered the National
[34]

Power Corporation to pay them the amounts of:

(1) P3,481,600.00 as just compensation of the land containing an area of 4,352 sq


meter, with legal interest from November 1995 until fully paid; and

(2) P158,369.00 as compensation for the improvements on the land, with interest at
until fully paid.

Aggrieved, the National Power Corporation filed an appeal before


the Court of Appeals. [35]

The Court of Appeals denied  the National Power Corporation's


[36]

appeal in its Decision dated November 21, 2005. It affirmed with


modification the Regional Trial Court Decision by deleting the
amount of P158,369.00 as compensation for the damaged
improvements for lack of legal and factual basis. [37]

The Court of Appeals found no impropriety on the part of the


Regional Trial Court in allowing Spouses Asoque to present their
evidence ex parte and in appointing the Branch Clerk of Court as
Commissioner to receive Spouses Asoque's evidence ex parte.  It [38]

also found no irregularity in the trial court's adoption of the


Commissioner's report/recommendation, which was found to be
comprehensive and supported by evidence. [39]

Rejecting the National Power Corporation's stance that only an


easement of right of way was acquired at 10% of the market
value under Section 3-A of Republic Act No. 6395, the Court of
Appeals ruled that the determination of just compensation is a
judicial function and cannot be diminished by Republic Act No.
6395, as amended. [40]
Finally, the Court of Appeals found that Spouses Asoque have
already been properly compensated for the damaged
improvements per disbursement vouchers in the total amount of
P17,133.50, and Spouses Asoque failed to present competent
proof that they were entitled to an additional award of actual
damages. [41]

The National Power Corporation moved for reconsideration, but


the Motion was denied in the Resolution dated May 3, 2006.

Hence, petitioner National Power Corporation filed the present


Petition, assigning the following errors purportedly committed by
the appellate court:
 The appellate court erred in affirming respondents' presentation
[1]

of evidence ex parte[;]

 The appellate court erred in affirming the trial court's


[2]

appointment of a commissioner, and validating the proceedings


he conducted[;]

 The appellate court erred in affirming the trial court's directive


[3]

to petitioner NPC to compensate respondents for the value of the


land notwithstanding that only an easement thereon was
acquired[;] [and]

 Assuming that petitioner NPC is liable to pay just compensation


[4]

for the subject property and the improvements thereon, the trial
court nonetheless erred in the determination of the values
thereof.[42]

This Court outright denied the Petition for lack of a verified


statement of material date of filing of the Motion for
Reconsideration of the assailed judgment under Rule 45, Sections
4(b) and 5, in relation to Rule 56, Section 5(d).  However, on
[43]

petitioner's Motion for Reconsideration,  this


[44]
Court
reinstated  the Petition and required respondents to comment.
[45]

Respondents Spouses Margarito and Tarcinia Asoque filed their


Comments  on October 25, 2006, and petitioner filed its
[46]
Reply  on
[47]
April 17, 2007. Pursuant to this Court's
Resolution  dated June 25, 2007, petitioner and respondents
[48]

filed their respective memoranda on December 14, 2007  and [49]

November 29, 2007. [50]

On February 11, 2008, this Court noted the memoranda of the


parties. [51]

Petitioner contends that it was not given a reasonable opportunity


to be heard, which is the essence of due process.  Only a very [52]

short notice was given to its counsel to attend the pre-trial, even
though petitioner's lawyers were based in Cebu.  In contrast, [53]

respondents' counsel held office in Catbalogan City, where the


trial court sits. [54]

The May 24, 2000 pre-trial setting was allegedly too close to May
8, 2000, the date of the Order that set it, as to afford petitioner a
reasonable opportunity to make arrangements for it.  The May 8, [55]

2000 Order, which was served by registered mail, was received


by petitioner only on May 22, 2000, just two (2) days before the
pre-trial on May 24, 2000.  By then, both of petitioner's lawyers
[56]

were out of town (one was in Manila and the other was in San
Isidro, Northern Samar) on official business.  Petitioner contends
[57]

that despite having been informed through the Urgent


Manifestation and Motion to Reset Pre-trial dated May 24, 2000
and the Motion for Reconsideration dated June 8, 2000 of the
reason for the failure of petitioner's counsel to appear at the May
24, 2000 pre-trial, the trial court refused to reconsider its default
order; thus, the trial court deprived petitioner of its right to due
process. [58]

Petitioner further argues that the trial court's appointment of a


commissioner and the latter's appraisal of the fair market value of
the property and the improvements made were defective
and ultra vires.  It contends that Rule 18, Section 2(f) of the
[59]

Rules of Court does not give the Commissioner such authority but
merely allows him to assist in defining the issues to be resolved
during the trial.  Petitioner also points out that the May 8, 2000
[60]
Order merely designated a commissioner to receive respondents'
evidence and nothing more.  There is likewise no showing that
[61]

the Commissioner took an oath before performing his function, as


required by the Rules. [62]

As to the third and fourth assigned errors, petitioner claims that it


is liable to pay only an easement fee under Section 3-A of its
Charter, which is computed as 10% of the fair market value of
the affected portion of respondents' land based on the valuation
(P3.31 per square meter) specified in Tax Declaration No. 96-
03023-00104.  Petitioner
[63]
contends that the three (3)
expropriation cases decided in 1997 by other branches of the
Regional Trial Court of Catbalogan City, which were cited by the
trial court in adopting the Commissioner's recommendation, were
not reliable bases for determining the fair market value of
respondents' property. This is because the parcels of land in the
three (3) expropriation cases were located in other barangays of
Calbayog City and there is no showing that the decisions therein
have attained finality.  Finally, petitioner submits that the City
[64]

Assessor's valuation of the subject property appearing in Tax


Declaration No. 96-03023-00104 should prevail over that
determined by the Commissioner—the Branch Clerk of Court—
who does not have the expertise or competence to conduct
property appraisals as required under Rule 67, Section 5. [65]

Respondents aver that the trial court was justified in allowing


them to present evidence ex parte because (1) petitioner and its
counsel failed to appear at the pre-trial on May 24, 2000; and (2)
petitioner's Urgent Manifestation and Motion to postpone the pre-
trial setting on May 24, 2000 was filed late.  They add that due
[66]

process was satisfied in the court a quo as petitioner was afforded


the fair and reasonable opportunity to defend its side and to
move for the reconsideration of the trial court ruling.[67]

As to the appointment of the Branch Clerk of Court as


Commissioner, respondents aver that this was proper and
sanctioned by the Rules; that the Commissioner's preliminary
determination of just compensation was merely recommendatory
and did not make the ex parte proceedings invalid; and that the
final determination of the amount of just compensation still rests
on the trial judge.
[68]

Lastly, respondents contend that Section 3-A of Republic Act No.


6395 cannot defeat the trial court's determination of the just
compensation of their property; that the determination of just
compensation is a judicial function; and that it has been ruled in
previous cases that the acquisition of right-of-way easement is a
taking under the power of eminent domain and the owner is
entitled to the money equivalent of the property expropriated. [69]

The issues for resolution are:

First, whether petitioner was deprived of due process when


respondents were allowed to present evidence ex parte;

Second, whether the appraisal of the property was valid and the
court-appointed Commissioner exceeded his authority when he
conducted an appraisal of the property and recommended a
valuation for just compensation;

Third, whether petitioner should be made to pay simple easement


fee or full compensation for the land traversed by its transmission
lines; and

Lastly, whether the trial court erred in its determination of the


amount of just compensation to be paid to respondents.

The Petition lacks merit.

The Regional Trial Court did not err in allowing respondents to


present their evidence ex parte. The action of the trial court is
expressly allowed under Rule 18, Section 5 of the 1997 Rules of
Civil Procedure. Section 5 provides that if it is the defendant who
fails to appear, then the plaintiff may be allowed "to present his
evidence ex parte and the court to render judgment on the basis
thereof." Petitioner's stance that it was deprived of due process
because it was not given the reasonable opportunity to attend the
second pre-trial setting is likewise untenable.

Petitioner and its counsel were absent during the first pre-trial
setting on May 8, 2000. Respondents' counsel attended, although
he was late. Had petitioner and its counsel appeared on the first
setting, they would have been reasonably notified then and there
of the second pre-trial resetting on May 24, 2000 and would have
had the opportunity to ask for a later date. Nonetheless,
petitioner's counsel should have tried to inquire from the court
the next schedule of the pre-trial.

Attendance by the party and its counsel during a pre-trial


conference is mandatory as expressly stated under Rule 18,
Section 4 of the 1997 Rules of Civil Procedure.  Petitioner alleges
[70]

that it filed a motion for postponement of the first pre-trial


setting. This notwithstanding, it was still its duty to appear at the
pre-trial first set on May 8, 2000. A motion for postponement
should never be presumed to be granted. [71]

Petitioner does not refute respondents' argument that its Urgent


Manifestation and Motion, although dated May 24, 2000, was filed
only one (1) day after the scheduled pre-trial sought to be
postponed, on May 25, 2000. The trial court was, therefore,
justified in denying petitioner's motion for postponement for
having been filed out of time. A motion for postponement should
be filed on or before the lapse of the day sought to be postponed.
 In any case, "the matter of postponement of a hearing is
[72]

addressed to the sound discretion of the court [and] unless there


is a grave abuse of discretion in the exercise thereof the same
should not be disturbed on review." [73]

Petitioner's counsel received the Regional Trial Court Order


resetting the pre-trial to May 24, 2000 on May 22, 2000.
Assuming its counsel was unable to appear at the second pre-trial
setting, petitioner could and should have sent a representative on
May 24, 2000 to ask for postponement of the second pre-trial
setting. During the second pre-trial setting, it was not only
petitioner's counsel who failed to appear, but petitioner as well.

Under the circumstances, petitioner cannot claim that it was


denied due process. "Parties are presumed to have known the
governing rules and the consequences for the violation of such
rules."  Moreover, the essence of due process is an opportunity
[74]

to be heard. Petitioner was given that opportunity. Yet, it failed to


appear at the two (2) pre-trial settings. A pre-trial cannot be
taken for granted for it serves a vital objective: the simplification
and expedition of the trial, if not its dispensation. Non-
appearance of a party may only be excused for a valid cause. We
see none in this case.

In Air Philippines Corporation v. International Business Aviation


Services Philippines, Inc.,  the petitioner and its counsel did not
[75]

appear during the scheduled pre-trials and did not file a pre-trial
brief even after filing a motion to extend the date for filing.
Hence, the respondent was allowed to adduce its evidence ex
parte. The petitioner moved for reconsideration, but the motion
was denied. After the ex parte presentation of the respondent's
evidence, the trial court rendered a judgment in favor of the
respondent. The petitioner moved for new trial arguing that it
was deprived of its day in court due to the gross negligence of its
counsel, but the trial court denied the motion. Affirming the trial
court, this Count ruled that the petitioner and its counsel's lapses
showed a plain disregard of the duty imposed by law. Ruling that
there was no denial of due process, this Court held:
"The essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have
in support of one's defense." Where the opportunity to be heard,
either through verbal arguments or pleadings, is accorded, and
the party can "present its side" or defend its "interest in due
course," "there is no denial of procedural due process." Petitioner
has been given its chance, and after being declared in default,
judgment has not been automatically "rendered in favor of the
non-defaulting party." Rather, judgment was made only after
carefully weighing the evidence presented. Substantive and
adjective laws do complement each other "in the just and speedy
resolution of the dispute between the parties."  (Citations
[76]

omitted)
Similarly, petitioner in this case was not deprived of its day in
court. Petitioner was able to file a Motion for Reconsideration,
participate in further proceedings, and was allowed to submit its
objections to respondents' evidence and to the Commissioner's
recommendation before the trial court rendered judgment. It
must, therefore, bear the consequences of its lapses.

II

On the second issue, we likewise find petitioner's arguments


untenable.

The procedure of designating the clerk of court as commissioner


to receive and report evidence to the court is likewise sanctioned
by Rule 32, Sections 2 and 3 of the 1997 Rules of Civil Procedure.
Section 3 of the same Rule, speaking of the authority that may be
granted to a Commissioner, provides:
RULE 32
Trial by Commissioner

....

SEC. 3. Order of reference; powers of the commissioner. — When


a reference is made, the clerk shall forthwith furnish the
commissioner with a copy of the order of reference. The order
may specify or limit the powers of the commissioner, and may
direct him to report only upon particular issues, or to do or
perform particular acts, or to receive and report evidence only,
and may fix the date for beginning and closing the hearings and
for the filing of his report. Subject to the specifications and
limitations stated in the order, the commissioner has and shall
exercise the power to regulate the proceedings in every hearing
before him and to do all acts and take all measures necessary or
proper for the efficient performance of his duties under the order.
He may issue subpoenas and subpoenas duces tecum, swear
witnesses, and unless otherwise provided in the order of
reference, he may rule upon the admissibility of evidence. The
trial or hearing before him shall proceed in all respects as it would
if held before the court.
Furthermore, after the hearing before the Commissioner, the
Commissioner must file a written report, which may contain his or
her factual findings and conclusions of law:
RULE 32
Trial by Commissioner

....

SEC. 9. Report of commissioner. - Upon the completion of the


trial or hearing or proceeding before the commissioner, he shall
file with the court his report in writing upon the matters
submitted to him by the order of reference. When his powers are
not specified or limited, he shall set forth his findings of fact and
conclusions of law in his report. He shall attach thereto all
exhibits, affidavits, depositions, papers and the transcript, if any,
of the testimonial evidence presented before him.
With respect to the proceedings in the court a quo, the Court of
Appeals observed that:
The report of the commissioner shows clearly that he received
and evaluated [respondents'] evidence which were adduced ex
parte. His preliminary determination of the just compensation of
the property [in] issue would not necessarily render invalid the ex
parte proceedings conducted by him. The valuations suggested by
the commissioner as just compensation for [respondents'] land
that was utilized by [petitioner] were merely recommendatory.
The final determination of just compensation was left to the
court a quo as it rests within the exclusive domain of the latter.
Simply stated, the court a quo was still at liberty to reject or
adopt the recommendations of the commissioner.  (Emphasis in
[77]

the original)
Hence, absent any express limitation in the order of reference,
Branch Clerk of Court Arty. Ferdinand S. Arpon, as the court-
appointed Commissioner, may make factual findings and
recommendations on the valuation of the property. Indeed, the
Commissioner's recommendation could have been necessarily
rejected had it been an ultra vires act.

Besides, the proceedings before the Regional Trial Court were not
for expropriation—for which petitioner itself claims that there is
no need—but were for recovery of just compensation and
damages initiated by respondents. Hence, Rule 67, Section 5 on
the ascertainment of the just compensation to be paid was no
longer applicable. A trial before commissioners, for instance, was
dispensable.[78]

In Republic of the Philippines v. Court of Appeals,  the National


[79]

Irrigation Administration took possession of the property without


the benefit of expropriation proceedings. The property owner
subsequently filed a case for recovery of possession or its value
and damages. This Court held that Rule 67 presupposes a prior
filing of a complaint by the expropriator for eminent domain with
the appropriate court. If no such complaint is filed, the
expropriator is considered to have violated procedural
requirements and, hence, waived the usual procedure prescribed
in Rule 67. This includes the appointment of commissioners to
ascertain just compensation, thus:
NIA contends that it was deprived of due process when the trial
court determined the compensation due to respondent without
the assistance of commissioners. NIA refers to the procedure
found in Section 5, Rule 67 of the 1964 Rules of Court applicable
at the time[.]

....

Rule 67, however, presupposes that NIA exercised its right of


eminent domain by filing a complaint for that purpose before the
appropriate court. Judicial determination of the propriety of the
exercise of the power of eminent domain and the just
compensation for the subject property then follows. The
proceedings give the property owner the chance to object to the
taking of his property and to present evidence on its value and on
the consequential damage to other parts of his property.

Respondent was not given these opportunities, as NIA did not


observe the procedure in Rule 67. Worse, NIA refused to pay
respondent just compensation. The seizure of ones property
without payment, even though intended for public use, is a taking
without due process of law and a denial of the equal protection of
the laws. NIA, not respondent, transgressed the requirements of
due process.

When a government agency itself violates procedural


requirements, it waives the usual procedure prescribed in Rule
67. This Court ruled in the recent case of National Power
Corporation (NPC) v. Court of Appeals, to wit:
We have held that the usual procedure in the determination of
just compensation is waived when the government itself initially
violates procedural requirements. NPC's taking of Pobre's
property without filing the appropriate expropriation proceedings
and paying him just compensation is a transgression of
procedural due process.
Like in NPC, the present case is not an action for expropriation.
NIA never filed expropriation proceedings although it had ample
opportunity to do so. Respondents' complaint is an ordinary civil
action for the recovery of possession of the Property or its value,
and damages. Under these circumstances, a trial before
commissioners is not necessary.  (Emphasis in the original,
[80]

citations omitted)
We hold that the non-appointment of three (3) Commissioners in
the court a quo does not render infirm the entire proceedings.
Neither do we find improper the trial court's appointment of the
Branch Clerk of Court as Commissioner to receive and report on
respondents' evidence. The trial court is not bound by the
Commissioner's recommended valuation of the property. It still
has the discretion on whether to adopt the Commissioner's
recommendation or to make its own independent valuation as
gathered from the evidence reported by the Commissioner.
III

Petitioner is liable to pay respondents just compensation and not


merely an easement fee on the basis that its acquisition of a
right-of-way easement over the portion of respondents' land was
a taking under the power of eminent domain.

While expropriation normally involves a taking of title to and


possession of the property, an easement of right of way on a
private property can be considered a taking under eminent
domain under certain conditions. In Republic v. PLDT: [81]

Normally, of course, the power of eminent domain results in the


taking or appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears why the
said power may not be availed of to impose only a burden upon
the owner of condemned property, without loss of title and
possession. It is unquestionable that real property may, through
expropriation, be subjected to an easement of right of way. [82]

There is taking in the context of the state's power of eminent


domain when the following elements are present:

(1) The expropriator enters a private property;

(2) The entrance into the private property is indefinite or permanent;

(3) There is color of legal authority in the entry into the property;

(4) The property is devoted to public use or purpose; and

(5) The use of property for public use removed from the owner all beneficial enjoyment

A right-of-way easement or burden becomes a "taking" under


eminent domain when there is material impairment of the value
of the property or prevention of the ordinary uses of the property
for an indefinite period.  The intrusion into the property must be
[84]

so immediate and direct as to subtract from the owner's full


enjoyment of the property and to limit his or her exploitation of
it.
In Republic v. Andaya,  the enforcement by the Republic of its
[85]

legal easement on Andaya's property for concrete levees and


floodwalls would render the remaining property unusable and
uninhabitable. This Court held that there was a taking of the
remaining area of Andaya's property:
We are, however, unable to sustain the Republic's argument that
it is not liable to pay consequential damages if in enforcing the
legal easement on Andaya's property, the remaining area would
be rendered unusable and uninhabitable. "Taking," in the exercise
of the power of eminent domain, occurs not only when the
government actually deprives or dispossesses the property owner
of his property or of its ordinary use, but also when there is a
practical destruction or material impairment of the value of his
property. Using this standard, there was undoubtedly a taking of
the remaining area of Andaya's property. True, no burden was
imposed thereon and Andaya still retained title and possession of
the property. But, as correctly observed by the Board and
affirmed by the courts a quo, the nature and the effect of the
Jloodwalls would deprive Andaya of the normal use of the
remaining areas. It would prevent ingress and egress to the
property and turn it into a catch basin for the floodwaters coming
from the Agusan River.  (Emphasis supplied, citations omitted)
[86]

National Power Corporation v. Heirs of Sangkay  held that the


[87]

National Power Corporation's surreptitious construction of a


tunnel underneath the respondents' land adversely affected the
respondent's rights and interests. This is because the National
Power Corporation's subterranean intervention prevented the
respondents from introducing any developments on the surface
and from disposing of the land or any portion of it. Hence, there
was a taking of the land as to entitle the owners to just
compensation:
We agree with both the RTC and the CA that there was a full
taking on the part of NPC, notwithstanding that the owners were
not completely and actually dispossessed. It is settled that the
taking of private property for public use, to be compensable,
need not be an actual physical taking or appropriation. Indeed,
the expropriator's action may be short of acquisition of title,
physical possession, or occupancy but may still amount to a
taking. Compensable taking includes destruction, restriction,
diminution, or interruption of the rights of ownership or of the
common and necessary use and enjoyment of the property in a
lawful manner, lessening or destroying its value. It is neither
necessary that the owner be wholly deprived of the use of his
property, nor material whether the property is removed from the
possession of the owner, or in any respect changes hands.
 (Citations omitted)
[88]

The right-of-way easement resulting in a limitation on property


rights over the land traversed by transmission lines also falls
within the ambit of the term "expropriation." [89]

In National Power Corporation v. Spouses Gutierrez,  the [90]

petitioner argued that it should only be made to pay easement


fees instead of the full market value of the land traversed by its
transmission lines. In striking down the petitioner's argument and
ruling that the property owners were entitled to the full market
value of the land in question, the Court ruled that:
The trial court's observation shared by the appellate court show
that "x x x While it is true that plaintiff [is] only after a right-of-
way easement, it nevertheless perpetually deprives defendants of
their proprietary rights as manifested by the imposition by the
plaintiff upon defendants that below said transmission lines no
plant higher than three (3) meters is allowed. Furthermore,
because of the high-tension current conveyed through said
transmission lines, danger to life and limbs that may be caused
beneath said wires cannot altogether be discounted, and to cap it
all, plaintiff only pays the fee to defendants once, while the latter
shall continually- pay the taxes due on said affected portion of
their property."

The foregoing facts considered, the acquisition of the right-of-way


easement falls within the purview of the power of eminent
domain. Such conclusion finds support in similar cases of
easement of right-of-way where the Supreme Court sustained the
award of just compensation for private property condemned for
public use[.]
....

In the case at bar, the easement of right-of-way is definitely a


taking under the power of eminent domain. Considering the
nature and effect of the installation of the 230 KV Mexico-Limay
transmission lines, the limitation imposed by NPC against the use
of the land for an indefinite period deprives private respondents
of its ordinary use. [91]

In National Power Corporation v. Judge Paderanga,  despite the


[92]

National Power Corporation's protestation that the traversed land


could still be used for agricultural purposes, subject only to its
easement, this Court nevertheless held that the right-of-way
easement was a taking under the power of eminent domain:
From the Commissioners Report chronicling the following
findings:

....

IMPROVEMENTS AFFECTED

Per ocular inspection made on lot own[ed] by PETRONA O.


DILAO, et al. traversed by a transmission line of NPC and with my
verification as to the number of improvements, the following
trees had been damaged.
1. 55 coco trees productive

2. 10 mango trees productive

3. 30 cacao trees productive

4. 110 bananas

5. 400 ipil-ipil trees


....

it cannot be gainsaid that NPCs complaint merely involves a


simple case of mere passage of transmission lines over Dilao, et
al.'s property. Aside from the actual damage done to the property
traversed by the transmission lines, the agricultural and economic
activity normally undertaken on the entire property is
unquestionably restricted and perpetually hampered as the
environment is made dangerous to the occupants' life and limb. [93]

In National Power Corporation v. Tiangco: [94]

While the power of eminent domain results in the taking or


appropriation of title to, and possession of, the expropriated
property, no cogent reason appears why said power may not be
availed of to impose only a burden upon the owner of the
condemned property, without loss of title and possession.
However, if the easement is intended to perpetually or
indefinitely deprive the owner of his proprietary rights through
the imposition of conditions that affect the ordinary use, free
enjoyment and disposal of the property or through restrictions
and limitations that are inconsistent with the exercise of the
attributes of ownership, or when the introduction of structures or
objects which, by their nature, create or increase the probability
of injury, death upon or destruction of life and property found on
the land is necessary, then the owner should be compensated for
the monetary equivalent of the land, in accordance with our
ruling in NPC v. Manubay Agro-Industrial:

....

The evidence suggests that NPCs transmission line project that


traverses the respondents' property is perpetual, or at least
indefinite, in nature. Moreover, not to be discounted is the fact
that the high-tension current to be conveyed through said
transmission lines evidently poses a danger to life and limb;
injury, death or destruction to life and property within the
vicinity. As the Court held in NPC v. Chiong, it is not improper to
assume that NPC will erect structures for its transmission lines
within the property. What is sought to be expropriated in this
case is, at its longest extent, 326.34 meters, and through it may
be built several structures, not simply one[.]  (Emphasis
[95]

supplied, citations omitted)


Hence, due to the nature of the easement, which will deprive the
normal use of the land for an indefinite period and expose the
property owners' lives and limbs to danger, just compensation
must be based on the full market value of the affected property. [96]

Section 3(a) of Republic Act No. 6395, as amended, states that


only 10% of the market value of the property is due the owner of
the property subject to a right-of-way easement. However, this
rule is not binding on the Court. Well-settled is the rule that the
determination of just compensation for property taken in
expropriation is a judicial prerogative.  Such discretion cannot be
[97]

curtailed by legislation.

In Export Processing Zone Authority v. Dulay: [98]

The determination of "just compensation" in eminent domain


cases is a judicial function. The executive department or the
legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that
private property may not be taken for public use without just
compensation, no statute, decree, or executive order can
mandate that its own determination shall prevail over the court's
findings. Much less can the courts be precluded from looking into
the "just-ness" of the decreed compensation.  (Emphasis
[99]

supplied)
Therefore, the Regional Trial Court was correct when it adjudged
the National Power Corporation liable to pay the value of the
4,352-square-meter portion of respondents' land that was used
for its transmission line project.

IV

As regards the amount of just compensation, factual issues


pertaining to the valuation of the expropriated property are
generally beyond the pale of review under a Rule 45 petition.
 Factual findings of the trial and appellate courts will not be
[100]

disturbed by this Court unless they are grounded entirely on


speculations, surmises, or conjectures, among others,  which do
[101]

not obtain in this case.


Just compensation has been defined as the "fair and fall
equivalent of the loss."  In National Power Corporation v. YCLA
[102]

Sugar Development Corporation: [103]

The word "just" is used to intensify the meaning of the word


"compensation" and to convey thereby the idea that the
equivalent to be rendered for the property to be taken shall be
real, substantial, full and ample. The constitutional limitation of
"just compensation" is considered to be a sum equivalent to the
market value of the property, broadly defined as the price fixed
by the seller in open market in the usual and ordinary course of
legal action and competition; or the fair value of the property; as
between one who receives and one who desires to sell it, fixed at
the time of the actual taking by the government. [104]

The value and character of the land at the time it was taken by
government are the criteria for determining just compensation.
 "All the facts as to the condition of the property and its
[105]

surroundings, as well as its improvements and capabilities, must


thus be considered." [106]

Some factors that have been previously considered by the courts


were acquisition cost, current value of like properties, its actual
or potential uses, its size, shape, and location, and the tax
declarations on the property.  In this regard, the standards
[107]

enumerated in statutes such as Section 5  of Republic Act No.


[108]

8974  are merely recommendatory, and courts are not bound to


[109]

consider all of them. [110]

In this case, the Branch Clerk of Court as Commissioner reported


that an inquiry with the Register of Deeds, Calbayog City
involving transfer of realties from January 1998 to December
2000 showed that no transaction involved a parcel of land located
at Barangay Bugtong or its adjacent barangays of Tinaplacan and
Caglanipao Sur.  On the other hand, he found Exhibits F and G
[111]

not sufficient to prove respondents' claim that their land was


worth P1,000.00 per square meter as the properties in Exhibits F
and G were located several kilometers away from respondents'
land and were of a different classification. [112]
Furthermore, the Branch Clerk of Court as Commissioner stated
that one high-ranking personnel of the City Assessor's Office of
Calbayog observed that the market value of respondents' land in
the Tax Declaration is a very low appraisal.  As such, when he
[113]

made the recommendation, he considered other factors such as


the accessibility of the property, availability of basic services in
the area, land valuation trend in the City of Calbayog (which was
somewhere between P600.00 and P3,000.00 per square meter),
 and interviews with some landowners of the adjacent lots
[114]

stating that they would not sell their lands lower than P500.00
per square meter. [115]

The Regional Trial Court found the amount recommended by the


Commissioner as just compensation for the property to be
reasonable, thus:
[T]he Court finds the amount recommended by the commissioner
as just compensation of the property expropriated by defendant
to be reasonable and fairly based on the evidence adduced by
plaintiff. Exhibits "F" and series, "G" and series, and "H" and
series show the comparative value of the lands in Western
Samar. The Court takes note that in the three cases of
expropriation involving lands in Catbalogan, Samar, the National
Power Corporation was adjudged to pay the value of the
properties from Php2,000.00 to Php2,200.00 per square meter,
and these were cases decided in 1997. Likewise, this Court takes
cognizance of the fact that the commissioner may avail or
consider certain factors in determining the fair market value of
the property apart from the preferred documentary evidences.
Thus, the factors taken into account by the commissioner in
arriving at the recommended fair market value of the property at
Php800.00 per square meter, aside from the evidence available,
were valid criteria or gauge in the determination of the just
compensation of the subject property. [116]

The determination of just compensation being a judicial function,


we find no compelling reason to disturb the valuation set by the
Regional Trial Court and approved by the Court of Appeals. It has
not been sufficiently shown to be grossly exorbitant or otherwise
unjustified. [117]

WHEREFORE, the Petition is DENIED. The November 21, 2005


Decision of the Court of Appeals in CA-G.R CV No. 76313
is AFFIRMED. Petitioner National Power Corporation
is ORDERED to pay respondents Spouses Margarito and Tarcinia
Asoque the amount of P3,481,600.00 as just compensation for
the 4,352-square-meter property, with legal interest at 6% per
annum from November 1995 until fully paid. Upon petitioner's
payment of the full amount, respondents are ORDERED to
execute a Deed of Conveyance of the 4,352-square-meter
property in favor of petitioner.

SO ORDERED.

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


concur.

[1]
 CONST., art. III, sec. 9 provides:

SECTION 9. Private property shall not be taken for public use


without just compensation.

[2]
 Rollo, pp. 7-31.

 Id. at 32-42. The Decision was penned by Associate Justice


[3]

Isaias P. Dicdican and concurred in by Associate Justices Ramon


M. Bato, Jr. and Apolinario D. Bruselas, Jr. of the Twentieth
Division, Court of Appeals, Cebu.

 Id. at 43-44. The Resolution was penned by Associate Justice


[4]

Isaias P. Dicdican and concurred in by Associate Justices Ramon


M. Bato, Jr. and Apolinario D. Bruselas, Jr. of the Twentieth
Division, Court of Appeals, Cebu.
[5]
 Id. at 41.

[6]
 Id. at 44.

[7]
 RTC records, p. 114.

[8]
 Id. at 2, Complaint.

[9]
 Id.

[10]
 Id.

[11]
 Rollo, p. 33.

[12]
 Id.

[13]
 RTC records, p. 2.

 Republic Act No. 6395 is otherwise known as the Charter of the


[14]

National Power Corporation. Rep. Act No. 6395, as amended by


Pres. Decree No. 938, sec. 3-A provides:

Sec. 3-A — In acquiring private property or private property


rights through expropriation proceedings where the land or
portion thereof will be traversed by the transmission lines, only a
right-of-way easement thereon shall be acquired when the
principal purpose for which such land is actually devoted will not
be impaired, and where the land itself or portion thereof will be
needed for the projects or works, such land or portion thereof as
necessaryshall be acquired.

In determining the just compensation of the property or property


sought to be acquired through expropriation proceedings, the
same shall —

(a) With respect to the acquired land or portion thereof, not


exceed the market value declared by the owner or administrator
or anyone having legal interest in the property, or such market
value as determined by the assessor, whichever is lower.

(b) With respect to the acquired right-of-way easement


over the land or portion thereof, not to exceed ten percent
(10%) of the market value declared by the owner or
administrator or anyone having legal interest in the property, or
such market value as determined by the assessor whichever is
lower.

In addition to the just compensation for easement of right-of-


way, the owner of the land or owner of the improvement, as the
case may be, shall be compensated for the improvements
actually damaged by the construction and maintenance of the
transmission lines, in an amount not exceeding the market value
thereof as declared by the owner or administrator, or anyone
having legal interest in the property, or such market value as
determined by the assessor whichever is lower; Provided, that in
cases any buildings, houses and similar structures are actually
affected by the right-of-way for the transmission lines, their
transfer, if feasible, shall be effected at the expense of the
Corporation; Provided, further, that such market value prevailing
at the time the Corporation gives notice to the landowner or
administrator or anyone having legal interest in the property, to
the effect that his land or portion thereof is needed for its
projects or works shall be used as basis to determine the just
compensation therefor. (Emphasis supplied)

[15]
 Rollo, p. 106.

[16]
 RTC records, pp. 1-5.

[17]
 Id. at 29-34.

[18]
 Id. at 35.

[19]
 Id. at 36.
[20]
 Id. at 32.

[21]
 Rollo, p. 34.

[22]
 Id. at 111.

[23]
 Id. at 111-112.

[24]
 Id. at 112.

[25]
 Id.

[26]
 Id.

[27]
 RTC records, pp. 108-113.

[28]
 Id. at 150-151.

[29]
 Rollo, pp. 112-114.

[30]
 RTC records, pp. 156-164.

[31]
 Rollo, pp. 114-115.

[32]
 Id. at 115.

[33]
 Id. at 115-116.

 RTC records, pp. 197-213. The Decision was penned by Acting


[34]

Presiding Judge Rosario B. Bandal of Branch 31, Regional Trial


Court, Calbayog City.

[35]
 Rollo,p. 117.

[36]
 Id. at 32-41.

[37]
 Id. at 41.
[38]
 Id. at 36-37.

[39]
 Id. at 37-38.

[40]
 Id. at 38-40.

[41]
 Id. at 40-41.

[42]
 Id. at 19.

[43]
 Id. at 47.

[44]
 Id. at 48-54.

[45]
 Id. at 56.

[46]
 Id. at 57-66.

[47]
 Id. at 81-87.

[48]
 Id. at 88-89.

[49]
 Id. at 104-128.

[50]
 Id. at 130-143.

[51]
 Id. at 148.

[52]
 Id. at 118.

[53]
 Id. at 119.

[54]
 Id.

[55]
 Id. at 119.

[56]
 Id. at 119-120.
[57]
 Id. at 120.

[58]
 Id.

[59]
 Id. at 121-122.

[60]
 Id. at 121.

[61]
 Id. at 122.

[62]
 Id.

[63]
 Id. at 123-124.

[64]
 Id. at 125-126.

[65]
 Id. at 124-125.

[66]
 Id. at 136-140.

[67]
 Id.

[68]
 Id. at 140-142.

[69]
 Id.

[70]
 RULES OF COURT, Rule 18, sec. 4 provides:

SECTION 4. Appearance of Parties. — It shall be the duty of the


parties and their counsel to appear at the pre-trial. The non-
appearance of a party may be excused only if a valid cause is
shown therefor or if a representative shall appear in his behalf
fully authorized in writing to enter into an amicable settlement, to
submit to alternative modes of dispute resolution, and to enter
into stipulations or admissions of facts and of documents.

 In re Presbitero, Sr. v. Court of Appeals, 291 Phil. 387, 395-


[71]

396 (1993) [Per J. Davide, Jr., Third Division]. See also Heirs


ofGayares v. Pacific Asia Overseas Shipping Corp., 691 Phil. 46,
55 (2012) [Per J. Del Castillo, First Division] citing Ramos v.
Dajoyag, Jr., 428 Phil. 267, 278 (2002) [Per J. Mendoza, Second
Division].

 In Linis v. Roviro, 61 Phil. 137, 139 (1935) [Per J. Imperial, En


[72]

Banc], the trial court denied the motion for postponement of a


hearing on the ground that it was presented out of time and the
reason alleged therein was insufficient. This Court affirmed the
trial court, thus: "The postponement of the hearing of a case,
which had been previously set and of which the parties and their
attorneys had already been notified, is not an absolute right of
the litigants nor of their attorneys. The granting of a motion for
postponement depends entirely upon the discretion of the courts,
in the exercise of which all the attending circumstances and the
rights of all the parties appearing therein should be taken into
account. If the postponement would manifestly prejudice some of
the parties, or, if the motion for postponement had been
presented too late to prevent them from notifying their witnesses
not to appear, thus causing them considerable trouble and
expense, as probably would have happened in the present case, it
is the duty of the courts to deny it."

In Macabingkil v. People's Homesite and Housing Corp., 164 Phil.


328, 341 (1976) [Per J. Antonio, Second Division]: "These
provisions of the Rules of Court prescribing the time within which
certain acts must he done, or certain proceedings taken, are
considered absolutely indispensable to the prevention of needless
delays and to the orderly and speedy discharge of judicial
businesses. The time can be extended only if a motion for
extension is filed within the time or period provided therefor."

 Belstar Transportation, Inc. v. Board of Transportation, 260


[73]

Phil. 219, 223 (1990) [Per J. Gancayco, First Division].

 Paredes v. Verano, 535 Phil. 274, 285 (2006) [Per J. Tinga,


[74]

Third Division].
[75]
 481 Phil. 366 (2004) [Per J. Panganiban, Third Division].

[76]
 Id. at 386.

[77]
 Rollo, p. 37.

 National Power Corporation v. Sta. Low vda. De Capin, et al.,


[78]

590 Phil. 665, 680 (2008) [Per J. Chico-Nazario, Third


Division]; National Power Corporation v. Bongbong, 549 Phil. 93,
109 (2007) [Per J. Callejo, Sr., Third Division]; and National
Power Corporation v. Court of Appeals and Antonino Pobre, 479
Phil. 850, 867 (2004) [Per J. Carpio, First Division].

[79]
 494 Phil. 494 (2005) [Per J. Carpio, First Division].

[80]
 Id. at 504-506.

[81]
 136 Phil. 20 (1969) [Per J. J.B.L. Reyes, En Banc].

[82]
 Id. at 29-30.

 Republic v. Vda. de Castellvi, et al., 157 Phil. 329, 345-347


[83]

(1974) [Per J. Zaldivar, En Banc].

 Heirs of Pidacan v. ATO, 552 Phil. 48, 55-56 (2007) [Per J.


[84]

Quisumbing, Second Division]; Didipio Earth-Savers' Multi-


Purpose Association, Inc. v. Gozun, 520 Phil. 457, 480-481
(2006) [Per J. Chico-Nazario, First Division].

[85]
 552 Phil. 40 (2007) [Per J. Quisumbing, Second Division].

[86]
 Id. at 45-46.

[87]
 671 Phil. 569 (2011) [Per J. Bersamin, First Division].

[88]
 Id. at 595-596.
 See National Power Corporation v. Suarez, 589 Phil. 219 (2008)
[89]

[Per J. Carpio-Morales, Second Division]; National Power


Corporation v. Tiangco, 543 Phil. 637 (2007) [Per J. Garcia, First
Division]; National Power Corp. v. Manubay Agro-Industrial
Development Corp., 480 Phil. 470 (2004) [Per J. Panganiban,
Third Division]; Camarines Norte Electric Cooperative, Inc. v.
Court of Appeals, 398 Phil. 886 (2000) [Per J. Pardo, First
Division].

[90]
 271 Phil. 1 (1991) [Per J. Bidin, Third Division].

[91]
 Id. at 6-7.

[92]
 502 Phil. 722 (2005) [Per J. Carpio Morales, Third Division].

[93]
 Id. at 735-736.

 543 Phil. 637 (2007) [Per J. Garcia, First Division]. National


[94]

Power Corporation v. Tiangco was also cited in Spouses Cabahug


v. National Power Corporation, 702 Phil. 597, 606 (2013) [Per J.
Perez, Second Division].

[95]
 Id. at 649-650.

 National Power Corporation v. Spouses Saludares, 686 Phil.


[96]

967, 976-978 (2012) [Per J. Sereno, Second Division]; National


Power Corporation v. Tuazon, 668 Phil. 301, 314 (2011) [Per J.
Brion, Second Division]; National Power Corporation v. Co, 598
Phil. 58, 73 (2009) [Per J. Tinga, Second Division]; National
Power Corporation v. Bagui, 590 Phil. 429, 434 (2008) [Per J.
Tinga, Second Division], citing National Power Corporation v.
Manubay Agro-Industrial Development Corp., 480 Phil. 470, 480
(2004) [Per J. Panganiban, Third Division] and National Power
Corporation v. Bongbong, 549 Phil. 93, 111 (2007) [Per J.
Callejo, Sr., Third Division]; Natonal Power Corporation v.
Tiangco, 543 Phil. 637, 648 (2007) [Per J. Garcia, First Division].
 National Power Corporation v. Spouses Rodolfo Zabala and Lilia
[97]

Baylon, 702 Phil. 491, 499-500 (2013) [Per J. Del Castillo,


Second Division] citing Land Bank of the Philippines v. Celada,
515 Phil. 467,477 (2006) [Per J. Ynares-Santiago, First Division].

[98]
 233 Phil. 313 (1987) [Per J. Gutierrez, Jr., En Banc].

[99]
 Id. at 326.

 Land Bank of the Philippines v. Spouses Costo, 700 Phil. 290,


[100]

300 (2012) [Per J. Peralta, Third Division].

 In Westmont Investment Corp. v. Francia, Jr., 678 Phil. 180,


[101]

191 (2011) [Per J. Mendoza, Third Division], jurisprudence


recognize other exceptions, namely: "(2) when the inference
made is manifestly mistaken, absurd, or impossible; (3) when
there is a grave abuse of discretion; (4) when the judgment is
based on misappreciation of facts; (5) when the findings of fact
are conflicting; (6) when in making its findings, the same are
contrary to the admissions of both appellant and appellee; (7)
when the findings are contrary to those of the trial court; (8)
when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioner's main and reply briefs are
not disputed by the respondent; and (10) when the findings of
fact are premised on the supposed absence of evidence and
contradicted by the evidence on record."

 National Power Corporation v. Court of Appeals and Antonino


[102]

Pobre, 479 Phil. 850 (2004) [Per J. Carpio, First Division].

[103]
 723 Phil. 616 (2013) [Per J. Reyes, First Division].

 Id. at 623. See Republic v. Rural Bank ofKabacan, Inc., 680


[104]

Phil. 247, 256-257 (2012) [Per J. Sereno, Second Division].

 National Power Corporation v. Spouses Chiong, 452 Phil 649,


[105]

664 (2003) [Per J. Quisumbing, Second Division].


 National Power Corporation v. Suarez, 589 Phil. 219, 225
[106]

(2008) [Per J. Carpio Morales, Second Division]; National Power


Corporation v. Manubay Agro-Industrial Development
Corporation, 480 Phil. 470, 480 (2004) [Per J. Panganiban, Third
Division].

 Republic v. Court of Appeals, 612 Phil. 965, 977 (2009) [Per J.


[107]

Carpio, First Division]; Republic v. Ker & Company Ltd., 433 Phil.


70, 77 (2002) [Per J. Austria-Martinez, First Division].

 SECTION 5. Standards for the Assessment of the Value of the


[108]

Land Subject of Expropriation Proceedings or Negotiated Sale. —


In order to facilitate the determination of just compensation, the
court may consider, among other well-established factors, the
following relevant standards:

(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of ce
for the value of the improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as document
(h) Such facts and events as to enable the affected property owners to have sufficie
lands of approximate areas as those required from them by the government, an
early as possible.

 An Act to Facilitate the Acquisition of Right-of-Way, Site or


[109]

Location for National Government Infrastructure Projects and for


Other Purposes.

 Republic v. Heirs of Spouses Bautista, 702 Phil. 284, 298


[110]

(2013) [Per J. Del Castillo, Second Division].

[111]
 RTC records, pp. 160 and 163.
[112]
 Id. at 160.

[113] Id.

[114]
 Id. at 164.

[115]
 Id. at 161-162.

[116]
 RTC records, p. 210.

 National Power Corporation v. Spouses Chiong, 452 Phil. 649,


[117]

664 (2003) [Per J. Quisumbing, Second Division].

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788 Phil. 789


SECOND DIVISION

[ G.R. No. 212186, June 29, 2016 ]


ARIEL LOPEZ, PETITIONER, VS. PEOPLE OF THE
PHILIPPINES, RESPONDENT.DECISION

LEONEN, J.:

To sustain a conviction for cattle-rustling, the identity of the


stolen cattle must be proven with certainty. Otherwise, the
accused must be acquitted on the ground of reasonable doubt.
Further, a "request for appearance" issued by law enforcers to a
person identified as a suspect is akin to an "invitation." Thus, the
suspect is covered by the rights of an accused while under
custodial investigation. Any admission obtained from the "request
for appearance" without the assistance of counsel is inadmissible
in evidence.

Petitioner Ariel Lopez (Lopez) was charged with violation of


Presidential Decree No. 533.  The accusatory portion of the
[1]

Information reads:
That on or about July 17, 2002, in the City of Davao, Philippines,
and within the jurisdiction of this Honorable Court, the above-
mentioned accused, with intent to gain with grave abuse of
confidence and without the knowledge and consent of the
complainant, wilfully, unlawfully, and feloniously took, stole and
carried away one (1) female carabao valued at Five Thousand
(P5,000.00) Pesos, more or less, belonging to Teresita D.
Perez, to the latter's damage and prejudice in the aforesaid
amount.

CONTRARY TO LAW.  (Emphasis in the original)


[2]

Lopez pleaded not guilty during his arraignment. [3]

During trial, Mario Perez (Perez) testified that he purchased the


female carabao from a certain Enrique Villanueva. The purchase
was evidenced by a Certificate of Transfer of Large Cattle. [4]

Perez narrated that he tied his carabao to a coconut tree located


inside the property of a certain Constancio Genosas. [5]

Around 5:00 a.m. on July 17, 2002, Perez discovered that the
female carabao was missing. [6]

Perez claimed that he searched for his carabao for over a month.
After, he went to the Barangay Captain of Wines to ask for
assistance.[7]
Prosecution witness Felix Alderete (Alderete) testified that he
worked as an errand boy for Lopez from 2000 to 2002. [8]

Alderete claimed that he slept at Lopez's house on July 17, 2002.


Around 3:45 a.m. of the next day, Alderete and Lopez went to
Constancio Genosas' property. [9]

Lopez untied the carabao and allegedly told Alderete that he


would "bring the carabao to his boss named Boy Platan at
Malagos."  He ordered Alderete to deliver the carabao to
[10]

Malagos.[11]

Alderete, not knowing whether the carabao was owned by Lopez,


followed Lopez's instructions. [12]

Lopez and Boy Platan met Alderete in Malagos. From there, the
carabao was loaded on a vehicle headed to Davao City. [13]

The next day, Alderete learned that there was a commotion in


Wines, Baguio District, regarding Perez's lost carabao. [14]

Afraid of being accused for the loss of the carabao, Alderete


sought help from the barangay police. [15]

Teresita Perez (Teresita) testified that Barangay Police Moralde


informed her and Perez, her husband, that Lopez stole their
carabao.  Subsequently, a confrontation took place at the
[16]

barangay police station.  During the confrontation, Lopez


[17]

admitted to taking the carabao and promised to pay


indemnification. [18]

Police Officer III Leo Lozarito (PO3 Lozarito) corroborated


Teresita's testimony and stated that a request for Lopez's
appearance was issued, but no custodial investigation was
conducted. He claimed that he simply allowed Lopez and Teresita
to "confront each other."  He also stated that Lopez wanted to
[19]

settle by paying for the carabao, but the parties were unable to
agree on the price. [20]
The defense presented Lopez as a witness during trial. Lopez
denied stealing the carabao.  He also denied knowing Alderete.
[21]

He stated that he was a farmer,  and that at the time the offense
[22]

was committed, he was working at his home in Wines, Baguio


District, Davao City. [23]

Lopez testified that he knew Teresita because she "used to


borrow rice and feeds from his parents."  He was surprised that [24]

she accused him of stealing her carabao. [25]

Lopez also testified that he went to the police station where he


denied stealing any carabao.  After his appearance at the police
[26]

station, he went home. [27]

The defense presented another witness, Marvin Bongato, who


claimed to have seen a certain "Edoy" riding a carabao in the
morning of July 17, 2002.  He denied seeing Alderete riding a
[28]

carabao on the same date. [29]

The trial court found Lopez guilty of cattle-rustling.  It gave [30]

credence to Alderete's testimony that Lopez ordered him to bring


the carabao to Malagos.  The trial court also noted Alderete's
[31]

statement that "he knew Lopez was engaged in the buy and sell
of large cattle."
[32]

In addition, the trial court discussed that Lopez's defense of


denial had no credence because during the meeting at the police
station, Lopez offered to reimburse the value of the carabao and
even knelt in front of Teresita to ask for forgiveness.
[33]

The dispositive portion of the trial court's ruling states:


In view of the foregoing, judgment is hereby rendered finding
Ariel Lopez GUILTY of the crime charged. He is hereby sentenced
to suffer an indeterminate penalty of from TEN (10) years and
ONE (1) day of prision mayor maximum to FOURTEEN (14) years,
EIGHT (8) months and ONE (1) day of reclusion
temporal medium.
He is likewise ordered to pay Mario and Teresita Perez the sum of
FIVE THOUSAND PESOS (P5,000.00) representing the value of
the stolen carabao.

SO ORDERED.  (Emphasis in the original)


[34]

Lopez filed before the Court of Appeals an appeal arguing that the
prosecution was unable to prove that the carabao allegedly stolen
was the same carabao owned by Mario and Teresita Perez.  He [35]

argued that the "request for appearance . . . issued by PO3


Lozarito was in violation of his custodial rights."
[36]

The Court of Appeals ruled  that the Certificate of Transfer of


[37]

Large Cattle and Alderete's testimony were sufficient to prove the


ownership of the lost carabao. [38]

Further, the Court of Appeals held that there was no violation of


Lopez's custodial rights.  PO3 Lozarito did not ask questions, and
[39]

Lopez was not compelled to make any admissions.  Lopez [40]

negotiated for a settlement with Mario and Teresita Perez, which


could not be considered as custodial investigation. [41]

However, the Court of Appeals modified the penalty imposed by


the trial court. It discussed that Presidential Decree No. 533 is
not a special law, but an amendment of Article 310 of the Revised
Penal Code. Hence, Article 64 of the Revised Penal Code should
apply.[42]

The dispositive portion of the Court of Appeals Decision reads:


WHEREFORE, the decision of the RTC is hereby AFFIRMED,
with the modification that appellant Ariel G. Lopez is
hereby SENTENCED to suffer an indeterminate prison term of
four (4) years, two (2) months and one (1) day of prision
correccional maximum, as minimum, to fourteen (14) years,
eight (8) months and one (1) day of reclusion temporal medium,
as maximum.

SO ORDERED.  (Emphasis in the original)


[43]
Lopez moved for reconsideration,  but the Motion was denied in
[44]

the Resolution dated March 6, 2014. [45]

Petitioner Ariel Lopez, through counsel, filed before this Court a


Petition for Review on Certiorari  on April 30, 2014.
[46]

In the Resolution  dated July 28, 2014, this Court required


[47]

respondent to comment and directed the Court of Appeals Clerk


of Court to elevate the records of this case.

The Office of the Solicitor General filed its Comment  on [48]

December 1, 2014.

In the Resolution  dated February 2, 2015, this Court noted the


[49]

Office of the Solicitor General's Comment and required petitioner


to file a reply.

On July 7, 2015, counsel for petitioner filed a


Manifestation  informing this Court that when he received a copy
[50]

of the February 2, 2015 Resolution, he had yet to receive a copy


of respondent's Comment. He subsequently realized that he
might have received it, but it could have been among the
documents that were burned when the Hall of Justice of Cagayan
de Oro was razed by fire. In any case, petitioner would no longer
file a reply because petitioner's arguments on why he should be
acquitted were discussed in the appeal brief, in the Motion for
Reconsideration, as well as in the Petition for Review.
[51]

In his Petition for Review on Certiorari, petitioner reiterates the


arguments raised in his appeal before the Court of Appeals.
Petitioner argues that the prosecution failed to prove Mario and
Teresita Perez's ownership of the lost carabao. Alderete had no
personal knowledge of the lost carabao's appearance, or where it
grazed.[52]

Petitioner alleges that he is "engaged in raising livestock, like


pigs, chickens and carabaos."  He also alleges that the area
[53]
where the carabao was taken is "a rural and agricultural area,
where the abundance of carabaos is not uncommon." [54]

In addition, Alderete himself doubted whether theft was


committed. Prosecution witness Urcesio Moralde testified:
Q: And, specifically, what Felix did say [sic] with respect to his participation in the alleg
did he say?
A: He was doubtful if it was really theft, that he will not report to the other people bec
he was comfortable with.  (Emphasis in the original)
[55]

Petitioner argues that Alderete's doubt shows that he was unsure


who owned the carabao. [56]

In addition, petitioner points out that there were inconsistencies


in the testimonies of the prosecution's witnesses. Alderete
testified "that the carabao he and petitioner allegedly untied and
brought to Malagos was still pregnant[.]"  On the other hand,
[57]

Perez testified "that the carabao had an offspring, indicating that


the carabao was not pregnant." [58]

Alderete also testified that the carabao was taken 3:45 a.m.,
while his affidavit states that the carabao was taken at night. [59]

Further, Alderete claimed that he heard about a stolen carabao


the following day; hence, "he immediately reported the incident
to the barangay police."  He was allegedly told by the police that
[60]

they would notify the Barangay Captain and the carabao's owner.
[61]

However, Perez testified that he had been looking for his carabao
for a month before he reported the loss to the Barangay Captain.
 This shows that Perez was not immediately informed by the
[62]

barangay police regarding Alderete's statement. [63]

Petitioner avers that the date when the carabao was allegedly
stolen was not proven with certainty. Teresita was unable to cite
what year the carabao was stolen. She only testified that the
carabao was stolen at 5:00 a.m. of July 27. She explained that
she learned of the loss from her husband.  Perez, Teresita's
[64]

husband, testified "that the carabao was lost on July 17, 2002." [65]

On the other hand, the police blotter states that the carabao was
stolen on July 15, 2002, "at 5:30 in the morning." [66]

Petitioner further argues that his alleged admission is


inadmissible in evidence.  He was summoned by the police
[67]

because he was suspected of stealing a carabao. [68]

Petitioner points out that custodial investigation includes:


the practice of issuing an "invitation" to a person who is
investigated in connection with an offense he is suspected to
have committed, without prejudice to the liability of the "inviting"
officer for any violation of law. And any uncounselled confession
or admission obtained by the accused on such occasion shall be
inadmissible against him. [69]

On the other hand, respondent cites Perez's testimony and


argues that it established ownership over the carabao:
Q: You said the carabao was lost. How was it lost?
A: Ariel Lopez untied the rope tied at the coconut tree.

Q: When was it that this carabao was discovered to be lost?


A: At 5:00 a.m. on July 17, 2002.

Q: Who was the person who discovered that the carabao was lost at 5:00 a.m. on July
A: Me.

Q: At what place?
A: There where the carabao was tied at the coconut tree.

. . .
.

Q: Who tied the carabao to the tree?


A: Me, sir.  (Emphasis supplied)
[70]

Respondent cites Alderete's testimony stating that there were no


other carabaos tied in the area and that the lost carabao was a
"big female carabao with big horns."  Respondent claims that the
[71]
Certificate of Transfer of Large Cattle; is sufficient to prove that
Mario and Teresita Perez owned the lost carabao. [72]

Respondent argues that the inconsistencies in Alderete's


testimony pertain to minor matters.  Likewise, petitioner's
[73]

statement during the meeting held at the police station was made
spontaneously; thus, it is admissible in evidence.[74]

Further, respondent avers that petitioner raises questions of fact,


which are not allowed in a Rule 45 petition for review. [75]

The issues for resolution are:

First, whether this Court should deny the Petition for raising
questions of fact;

Second, whether all the elements of the crime of cattle-rustling


were proven; and

Lastly, whether petitioner's uncounselled admission during the


confrontation at the barangay police office is admissible in
evidence.

Petitioner should be acquitted.

The general rule is that a Rule 45 petition for review on certiorari


should only raise questions of law. As provided under Rule 45,
Section 1 of the Rules of Court:
RULE 45
APPEAL BY CERTIORARI TO THE SUPREME COURT

SECTION 1. Filing of petition with Supreme Court. — A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the Court
of Tax Appeals, the Regional Trial Court or other courts whenever
authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional
remedies and shall raise only questions of law, which must be
distinctly set forth. The petitioner may seek the same provisional
remedies by verified motion filed in the same action or
proceeding at any time during its pendency.
However, there are instances when this Court allows questions of
fact in a Rule 45 petition for review. These instances include the
following:
(1) when there is grave abuse of discretion; (2) when the findings
are ground&d on speculations; (3) when the inference made is
manifestly mistaken; (4) when the judgment of the Court of
Appeals is based on a misapprehension of facts; (5) when the
factual findings are conflicting; (6) when the Court of Appeals
went beyond the issues of the case and its findings are contrary
to the admissions of the parties; (7) when the Court of Appeals
overlooked undisputed facts which, if properly considered, would
justify a different conclusion; (8) when the findings of the Court
of Appeals are contrary to those of the trial court; (9) when the
facts set forth by the petitioner are not disputed by the
respondent; and (10) when the findings of the Court of Appeals
are premised on the absence of evidence and are contradicted by
the evidence on record. [76]

There is a question of law "when there is doubt as to what the


law is on a certain state of facts"  and there is a question of fact
[77]

"when the doubt arises as to the truth or falsity of the alleged


facts."
[78]

In this case, petitioner asks this Court to review the evidence and
argues that the prosecution was unable to prove his guilt beyond
reasonable doubt.  Thus, petitioner raises a question of fact.
[79]

Nevertheless, this Court gives due course to the Petition because


it falls under the exceptions as to when this Court may entertain
questions of fact. A review of the record shows that the trial court
and the Court of Appeals misapprehended the facts, and their
findings are contradicted by the evidence presented.

II
The prosecution failed to prove one of the elements of cattle-
rustling, specifically, that the lost carabao of Mario and Teresita
Perez is the same carabao allegedly stolen by petitioner.

Presidential Decree No. 533 defines cattle-rustling as:


Section 2. Definition of terms - The following terms shall mean
and be understood to be as herein defined:

....

c. Cattle rustling is the taking away by any means, method or


scheme, without the consent of the owner/raiser, of any of the
abovementioned animals whether or not for profit or gain,
whether committed with or without violence against or
intimidation of any person or force upon things. It includes the
killing of large cattle, or taking the meat or hide without the
consent of the owner/raiser.
The elements of cattle-rustling are:
(1) large cattle is taken; (2) it belongs to another; (3) the taking
is done without the consent of the owner or raiser; (4) the taking
is done by any means, method or scheme; (5) the taking is done
with or without intent to gain; and (6) the taking is accomplished
with or without violence or intimidation against persons or force
upon things. [80]

Not all of the elements of cattle-rustling were proven by the


prosecution. The carabao transported by petitioner and Alderete
was not sufficiently proven to be the same carabao owned by
Mario and Teresita Perez.

During trial, Alderete testified as follows:


Q: Now it says here, that first art, (sic) "The next day, I heard rumors that the
description as the carabao we got the night before, allegedly owned by Mrs. Teresita
confirming that it was the same carabao we delivered to Boy Platan, (sic) I imme
Why do you say and why do you confirm that the carabao that you got that early
also the same carabao that belonged to the private complainant in this case?
A: Because there were no other carabaos tied there. It was only a big carabao, the m
the carabao.
Q: Now, are you saying that in that place of Genosas, there was other carabao othe
Lopez took?

. . .
.

Q: And besides that, why do you say it is the same carabao meaning, (sic) the one yo
owned by the complainant? (sic)
A: Because the carabao we brought to Malagos was big female carabao with big horns.

Q: And the carabao belonging to the private complainant, how do you describe it?
A: It is her carabao because I went to the place where the carabao was tied and it wa
it was lost.
[81]

Alderete's description of the carabao is too generic. Alderete did


not mention any distinguishing mark on the carabao that
petitioner allegedly stole. In other cases involving cattle-rustling,
the identity of the stolen cattle was proven with certainty because
of distinguishing marks on the cattle.

In Pil-ey v. People  the cow was specifically described as "white-


[82]

and-black-spotted cow." [83]

In Canta v. People,  the stolen cow was identified by all four (4)
[84]

caretakers, "based on the location of its cowlicks, its sex, and its
color."  In addition, the reverse side of the Certificate of
[85]

Ownership of Large Cattle had a drawing of the cow, including the


location of its cowlicks. Thus, the identity of the stolen cow was
proven. [86]

Perez claims that he owns the carabao allegedly taken by


petitioner because he has a "Katibayan ng Paglilipat ng
Pagmamay-ari ng Malalaking Baka."  However, the Certificate
[87]

only proves that he owns a carabao. It does not prove that he


owns the carabao allegedly stolen by petitioner.

In addition, Alderete had no personal knowledge of the


appearance of the carabao owned by Mario and Teresita Perez.
He himself doubted whether theft was committed. [88]
The prosecution was unable to establish the date when the
carabao was lost. Perez stated that the carabao was lost on July
17, 2002.  According to Teresita, the carabao was lost on July
[89]

27, without stating any year.  The written entry in the police
[90]

blotter stated that the carabao was lost on July 15, 2002.  While
[91]

the date of commission of the offense is not an element of cattle-


rustling, the inconsistencies in the testimonies of the
prosecution's witnesses with regards the date of commission of
the offense affected petitioner's right to prepare his defense
intelligently. [92]

Further, Alderete gave conflicting statements. He testified that


when he heard about the lost carabao, "he immediately reported
the incident to the barangay police."  However, he also testified
[93]

that "he did not actually reach the barangay." [94]

Alderete stated that he talked with the barangay police and the
owner of the carabao. Yet, he also testified that "he did not know
what happened after he was told by the police to stay out while
the latter [called] the barangay captain and the owner of the
carabao."[95]

Alderete's testimony is also contradicted by Perez's testimony.


Perez stated that he had looked for his carabao for a month
before he reported the matter to the Barangay Captain.  He [96]

never testified that he was able to talk to Alderete.  This leads us


[97]

to doubt whether Alderete was indeed able to talk to the owner of


the carabao.

III

Petitioner's uncounselled admission during the confrontation at


the police station is inadmissible in evidence.

The Court of Appeals held that "[t]he constitutional procedures on


custodial investigation do not apply to a spontaneous statement,
not elicited through questioning by the authorities, but given in
an ordinary manner whereby the accused orally admits having
committed the crime." [98]

However, the record shows that petitioner's appearance before


the police station was far from being voluntary. The transcript of
stenographic notes during the January 30, 2006 hearing states:
Q: Sometime in the month of July 2002, have you come across with [sic] a reported th
A: Yes, sir.

Q: And what did you list from that report?


A: It was told to me by the Desk Officer, sir, that a theft of large cattle was reported
seeking assistance.

Q: And since the complainant sought assistance from the police, what did the Baguio
request of the complainant?
A: So, she identified the alleged suspect so I told my partner to issue a request from
the suspect will be confronted in the police station.

Q: You said that you told your partner to invite the accused, what was that phrase aga
A: Request for appearance.

Q: You said that you asked your partner to issue request for appearance, do you know
request for appearance?
A: It was sent by us sir, and the alleged accused appeared to [sic] our police station.
[99]

In this case, the so-called "request for appearance" is no different


from the "invitation" issued by police officers for custodial
investigation.

Section 2 of Republic Act No. 7438  provides:


[100]

SEC. 2. Rights of Persons Arrested, Detained or under Custodial


Investigation; Duties of Public Officers. -

....

As used in this Act, "custodial investigation" shall include the


practice of issuing an "invitation" to a person who is investigated
in connection with an offense he is suspected to have committed,
without prejudice to the liability of the "inviting" officer for any
violation of law.
Custodial investigation has also been defined as:
Custodial investigation commences when a person is taken into
custody and is singled out as a suspect in the commission of a
crime under investigation and the police officers begin to ask
questions on the suspect's participation therein and which tend to
elicit an admission. [101]

The circumstances surrounding petitioner's appearance before the


police station falls within the definition of custodial investigation.
Petitioner was identified as a suspect in the theft of large cattle.
Thus, when the request for appearance was issued, he was
already singled out as the probable culprit.

PO3 Lozarito testified that there was no custodial investigation


because he did not ask questions. He "let Teresita and
[petitioner] confront each other."  However, PO3 Lozarito's
[102]

explanation attempts to circumvent the law protecting the rights


of the accused during custodial investigation.

People v. Chavez  discussed that the so-called Miranda rights


[103]

"are intended to protect ordinary citizens from the pressures of a


custodial setting."  The confrontation between Teresita and
[104]

petitioner can be considered as having been done in a custodial


setting because (1) petitioner was requested to appear by the
police; (2) the confrontation was done in a police station; and (3)
based on his testimony, PO3 Lozarito was inside the police station
during the confrontation. When petitioner appeared before
Teresita at the police station, the "pressures of a custodial
setting"  were present.
[105]

PO3 Lozarito testified that:


Q: You said that Ariel Lopez appeared in the police station, do you know what if any
between Ariel Lopez and Teresita Perez?

. . .
.

A: No agreement. They will not enter an amicable settlement and the price.
Q: They were just arguing on the price but with respect to other matters, there was no
A: No conflict. [106]

The Daily Record of Events of the Philippine National Police


likewise states that:
[T]he persons of Ariel LOPEZ, Teresita Pere[z], and Mario Pere[z]
appear to this station for confrontation and settlement for theift
(sic) of large cattle (carabao), herein Ariel Lopez while at this
office voluntarily admitted his fault. . . . After lengthly (sic)
confrontation no settlement was reach[ed] between both
parties[.][107]

Hence, PO3 Lozarito's statement on what transpired between


petitioner and Mario and Teresita Perez are inadmissible for being
hearsay.

Hearsay evidence is defined as:


It is a basic rule in evidence that a witness can testify only on the
facts that he knows of his own personal knowledge, i.e., those
which are derived from his own perception. A witness may not
testify on what he merely learned, read or heard from others
because such testimony is considered hearsay and may not be
received as proof of the truth of what he has learned, read or
heard. Hearsay evidence is evidence, not of what the witness
knows himself but, of what he has heard from others; it is not
only limited to oral testimony or statements but likewise applies
to written statements, such as affidavits.  (Emphasis supplied,
[108]

citations omitted)
PO3 Lozarito testified that he "let Teresita and [Lopez] confront
each other."  He most likely overheard the conversation between
[109]

Teresita and petitioner. Thus, he had no personal knowledge of


what the parties had discussed.

People v. Bio  has held that "the infractions of the so-called


[110]

Miranda rights render inadmissible only the extrajudicial


confession or admission made during custodial
investigation."  With this
[111]
rule applied and petitioner's
uncounselled admission disregarded, petitioner should still be
acquitted because the prosecution was unable to prove the
identity of the lost carabao owned by Mario and Teresita Perez.
For the prosecution's failure to prove all the elements of cattle-
rustling, and for the violation of petitioner's rights during
custodial investigation, we hold that there is reasonable doubt
that petitioner is guilty of cattle-rustling. Thus, he must be
acquitted.

WHEREFORE, premises considered, the Petition is GRANTED.


The Decision dated August 12, 2013 of the Court of Appeals in
CA-G.R. CR No. 00673-MIN is REVERSED and SET ASIDE.
Petitioner Ariel Lopez is ACQUITTED for failure of the
prosecution to prove his guilt beyond reasonable doubt. If
detained, he is ordered immediately RELEASED unless he is
confined for any other lawful cause. Any amount paid by way of a
bailbond is ordered RETURNED.

SO ORDERED.

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


Del Castillo, J., on official leave.

[1]
 Anti-Cattle Rustling Law of 1974 (1974).

[2]
 Rollo, p. 34, Court of Appeals Decision.

[3]
 Id.

[4]
 Id. at 16-17, Petition.

[5]
 Id. at 17.

[6]
 Id. at 40, Court of Appeals Decision.

[7]
 Id. at 17.

[8]
 Id.
[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 17-18.

[21]
 Id. at 88, Regional Trial Court Sentence.

[22]
 Id.

[23]
 Id. at 18, Petition.

[24]
 Id. at 88.

[25]
 Id.

[26]
 Id.

[27]
 Id.
[28]
 Id. at 18.

[29]
 Id.

 Id. at 86-90. The Sentence, promulgated on March 18, 2009,


[30]

was penned by Judge Virginia Hofileña-Europa, Presiding Judge of


Branch 11, Regional Trial Court of Davao City.

[31]
 Id. at 88-89.

[32]
 Id. at 88.

[33]
 Id. at 89.

[34]
 Id.

[35]
 Id. at 39.

[36]
 Id. at 44.

 Id. at 33-49. The appeal, docketed as CA-G.R. CR No. 00673-


[37]

MIN, was decided on August 12, 2013. The Decision was penned
by Associate Justice Renato C. Francisco and was concurred in by
Associate Justices Romulo V. Borja and Oscar V. Badelles of the
Twenty-First Division, Court of Appeals, Cagayan de Oro City.

[38]
 Id. at 39-41.

[39]
 Id. at 44.

[40]
 Id.

[41]
 Id. at 44-45.

[42]
 Id. at 47-48.

[43]
 Id. at 48-49.
[44]
 Id. at 50-55.

 Id. at 57-62. The Resolution was penned by Associate Justice


[45]

Renato C. Francisco and was concurred in by Associate Justices


Romulo V. Borja and Oscar V. Badelles of the Twenty-First
Division, Court of Appeals, Cagayan de Oro City.

[46]
 Id. at 13-27.

[47]
 Id. at 123.

[48]
 Id. at 156-176.

[49]
 Id. at 177.

[50]
 Id. at 184-187.

[51]
 Id. at 184.

[52]
 Id. at 21.

[53]
 Id. at 22.

[54]
 Id.

[55]
 Id.

[56]
 Id.

[57]
 Id.

[58]
 Id.

[59]
 Id. at 22-23.

[60]
 Id. at 23.
[61]
 Id. at 23-24.

[62]
 Id. at 24.

[63]
 Id.

[64]
 Id. at 23.

[65]
 Id.

[66]
 Id.

[67]
 Id. at 25.

[68]
 Id.

[69]
 Id. at 26.

[70]
 Id. at 163.

[71]
 Id. at 164.

[72]
 Id. at 165.

[73]
 Id. at 166.

[74]
 Id. at 167.

[75]
 Id. at 171-172.

 Benito v. People, G.R. No. 204644, February 11, 2015, 750


[76]

SCRA 450, 459-460 [Per J. Leonen, Second Division], citing


Pagsibigan v. People, 606 Phil. 233, 241-242 (2009) [Per J.
Carpio, First Division].

 Tongonan Holdings and Dev't Corp. v. Atty. Escaño, Jr., 672


[77]

Phil. 747, 756 (2011) [Per J. Mendoza, Third Division], citing


Republic of the Philippines v. Malabanan, 646 Phil. 631 (2010)
[Per J. Villarama, Jr., Third Division].

[78]
 Id.

[79]
 Rollo, pp. 19-20.

 Ernesto Pil-Ey v. People of the Philippines, 553 Phil. 747, 755


[80]

(2007) [Per J. Nachura, Third Division].

[81]
 Rollo, p. 21.

[82]
 553 Phil. 747 (2007) [Per J. Nachura, Third Division].

[83]
 Id. at 750.

[84]
 405 Phil. 726 (2001) [Per J. Mendoza, Second Division].

[85]
 Id. at 733.

[86]
 Id.

[87]
 Rollo, p. 35.

[88]
 Id. at 22.

[89]
 Id. at 23.

[90]
 Id.

[91]
 Id.

 See People v Pareja, G.R. No. 202122, January 15, 2014, 714
[92]

SCRA 131 [Per J. Leonardo-De Castro, First Division].

[93]
 Rollo, p. 23.

[94]
 Id.
[95]
 Id. at 23-24.

[96]
 Id.

[97]
 Id.

[98]
 Id. at 44.

[99]
 Id. at 25-26.

 An Act Defining Certain Rights of Person Arrested, Detained or


[100]

Under Custodial Investigation as well as the Duties of the


Arresting, Detaining and Investigating Officers and Providing
Penalties for Violations Thereof (1992).

 People v. Guting, G.R. No. 205412, September 9, 2015


[101]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/september2015/205412.pdf> 5 [Per J.
Leonardo-De Castro, First Division].

[102]
 Rollo, p. 17.

 G.R. No. 207950, September 22, 2014, 735 SCRA 728 [Per J.
[103]

Leonen, Second Division].

[104]
 Id. at 750.

[105] Id.

[106]
 Rollo, p. 44.

[107]
 Id. at 45.

 Miro v. Vda. de Erederos, G.R. Nos. 172532 & 172544-45,


[108]

November 20, 2013, 710 SCRA 371, 390 [Per J, Brion. Second
Division].
[109]
 Rollo, p. 17.

 G.R. No. 195850, February 16, 2015, 750 SCRA 572, 580-581
[110]

[Per J. Del Castillo, Second Division].

 Id. See also People v. Chi Chan Liu, G.R. No. 189272, January
[111]

21, 2015, 746 SCRA 476 [Per J. Peralta, Third Division].

Source: Supreme Court E-Library | Date created: July 03, 2018


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787 Phil. 367


SECOND DIVISION

[ G.R. No. 208393, June 15, 2016 ]


CITY OF TAGUIG, PETITIONER, VS. CITY OF
MAKATI, RESPONDENT.DECISION

LEONEN, J.:

Simultaneously pursuing an appeal (or motion for


reconsideration) and a petition for annulment of judgment is an
act of forum shopping. This act, which heaps vexation upon
courts and parties-litigants, is illustrated by the facts of this case
in which conflicting decisions have been rendered by different
courts upon the same issue. The actions of respondent City of
Makati (Makati) through its counsels is at the border of what
appears to be a contumacious attempt to obfuscate the resolution
of cases through the abuse of legal processes.

We grant the Petition.

This resolves a Petition for Review on Certiorari  praying that the


[1]

assailed Court of Appeals Resolutions dated April 30, 2013  and [2]

July 25, 2013  in CA-G.R. SP No. 120495 be modified by


[3]

including a declaration that Makati is guilty of wilful and


deliberate forum shopping, and that appropriate sanctions be
imposed for it. [4]

Petitioner City of Taguig (Taguig) suggests that the assailed


rulings should be considered a "denial of the relief sought"  when
[5]

the Court of Appeals, in its July 25, 2013 Resolution, supposedly


took no action on Taguig's prayer in a Motion for Clarification that
the Court of Appeals' April 30, 2013 Resolution "be reinforced
with the pronouncement that respondent City of Makati did
commit forum shopping." [6]

CA-G.R. SP No. 120495 relates to the Petition for Annulment of


Judgment that Makati filed before the Court of Appeals after an
unfavorable Decision rendered by the Regional Trial Court in
Makati's territorial dispute with Taguig. The assailed April 30,
2013 Resolution denied Makati's Motion for Reconsideration in
CA-G.R. SP No. 120495 and dismissed its Petition for Annulment
of Judgment.  The assailed July 25, 2013 Resolution was issued
[7]

in response to a Motion for Clarification dated May 20, 2013,


which Taguig filed before the Court of Appeals following the April
30, 2013 Resolution. [8]

On November 22, 1993, Taguig, then a municipality, filed before


the Regional Trial Court of Pasig City a Complaint against Makati
(then also a municipality), Former Executive Secretary Teofisto P.
Guingona, Jr., Former Department of Environment and Natural
Resources Secretary Angel Alcala, and Former Director of the
Lands Management Bureau Abelardo Palad, Jr. [9]
The Complaint (Territorial Dispute Case) was denominated as one
for "Judicial Confirmation of the Territory and Boundary Limits of
Tagig [sic] and Declaration of the Unconstitutionality and Nullity
of Certain Provisions of Presidential Proclamations 2475 and 518,
with Prayer for Writ of Preliminary Injunction and Temporary
Restraining Order."  This was docketed as Civil Case No. 63896
[10]

and raffled to Branch 153 of the Regional Trial Court of Pasig


City.  In this Complaint, Taguig asserted that the areas
[11]

comprising the Enlisted Men's Barangays, or EMBOs, as well as


the area referred to as Inner Fort in Fort Bonifacio, were within its
territory and jurisdiction. [12]

In the Decision  dated July 8, 2011, the Regional Trial Court,


[13]

through Judge Briccio C. Ygaña (Judge Ygaña), ruled in favor of


Taguig. The dispositive portion of this Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff Municipality, now City of Taguig and
against all the defendants, as follows:

1. Fort Bonifacio Military Reservation consisting of Parcels 3 and


4, Psu-2031, is confirmed part of the territory of the plaintiff City
of Taguig;

2. Proclamation No. 2475, Series of 1986 and Proclamtion [sic]


No. 518, Series of 1990 are hereby declared UNCONSTITUTIONAL
and INVALID, insofar as they altered boundaries and diminished
the areas of territorial jurisdiction of the City of Taguig without
the benefit of a plebiscite as required in Section 10, Article X of
the 1987 Constitution.

3. Making the Writ of Preliminary Injunction dated August 2, 1994


issued by this Court, explicitly referring to Parcels 3 and 4, Psu-
2031 comprising Fort Bonifacio, be made PERMANENT, to wit:

a) enjoining defendants Secretary of the Department of Environment and Natural Re


Lands Management Bureau, from disposing of, executing deeds of conveyance over
lots covered by Proclamation Nos. 2475 and 518; and
b) enjoining defendant Municipality, now City of Makati, from exercising jur
improvements on, or otherwise treating as part of its territory, Parcels 3 and 4, Ps
Bonifacio.

4. Ordering defendants to pay the cost of the suit.

SO ORDERED.  (Emphasis in the original)


[14]

On July 28, 2001, Makati filed before the Court of Appeals a


Petition for Annulment of Judgment  under Rule 47 of the 1997
[15]

Rules of Civil Procedure. This Petition was docketed as CA-G.R.


SP No. 120495.  It assailed the Regional Trial Court's July 8,
[16]

2011 Decision as having been rendered without jurisdiction and in


violation of due process.  It claimed that the July 8, 2011
[17]

Decision was rendered by Judge Ygaña after he had retired, and


was merely antedated (i.e., to make it appear that it was
rendered before he retired).  It prayed that this Decision be
[18]

annulled and set aside. [19]

Specifically, the Petition for Annulment of Judgment alleged that


in the afternoon of July 12, 2011, three (3) days after Judge
Ygaña's retirement took effect and four (4) days after Judge
Ygaña could have validly promulgated a judgment, three (3) of
Makati's legal counsels—Atty. Pio Kenneth I. Dasal, Atty. Glenda
Isabel L. Biason, and Atty. Gwyn Gareth T. Mariano—went to the
Regional Trial Court to check if Judge Ygaña had rendered
judgment and, if so, to obtain a copy for Makati.  Atty. Jerome T. [20]

Victor (Atty. Victor), Clerk of Court of Branch 153 of the Regional


Trial Court of Pasig City, allegedly could not produce any copy of
a promulgated Decision. Likewise, he was supposedly unable to
produce Branch 153's Book of Judgments.  The Petition for [21]

Annulment of Judgment further cited Atty. Victor as saying that


the only record (or "book" ) he had was Branch 153's Book of
[22]

Entry of Final Judgments. [23]

The Petition added that "right there and then" Makati's three (3)
counsels made a hand-written letter  asking Atty. Victor to issue
[24]

a certification to the effect that, as of July 8, 2011, Judge Ygaña


had not promulgated a Decision on the territorial dispute case.
Atty. Victor then issued a Certification dated July 12, 2011, which
reads:
CERTIFICATION

This is to certify that the draft of the Decision in the above-


entitled case has already been finished on July 8, 2011, but the
same is still undergoing review, revision and counterchecking
with the voluminous records by Judge Briccio C. Ygaña, before
the same is finalized.

This Certification is issued upon the request of Atty. Pio Kenneth


I. Dasal, Atty. Glenda Isabel L. Biason and Atty. Gwyn Gareth T.
Mariano.

City of Taguig, July 12, 2011.

(sgd.)
Atty. JEROME T. VICTOR
Branch Clerk of Court [25]

(Emphasis in the original)


Makati's Petition for Annulment of Judgment further alleged that
in the morning of July 13, 2011, Makati received a copy of the
July 8, 2011 Decision.  This copy was supposedly received under
[26]

protest as it was Makati's position that the July 8, 2011 Decision


was void for having been rendered by a retired judge.  A [27]

handwritten note on the registry return receipt reads:


The undersigned counsel receives this Decision under PROTEST
because in light of the July 12, 2011 Certification of the Clerk of
Court of this Court, this Decision is void.

(sgd.)
Pio Kenneth I. Dasal
7/13/11 1:30 p.m. [28]

Also following the Regional Trial Court's July 8, 2011 Decision,


Makati filed before the same court its Motion for
Reconsideration Ad Cautelam of the July 8, 2011 Decision.  Like[29]

the Petition for Annulment of Judgment, this Motion was dated


July 28, 2011.
On August 8, 2011, Taguig filed before the Court of Appeals a
Motion to Dismiss Makati's Petition for Annulment of Judgment.
 This Motion assailed Makati's Petition: (1) for being fatally
[30]

defective as it supposedly failed to comply with the requirement


for Rule 47 petitions to prosper, that is, that the ordinary
remedies of new trial, reconsideration, appeal, petition for relief,
and other appropriate remedies are not available;  (2) for being
[31]

unnecessary and premature, given that Makati had a pending


Motion for Reconsideration before the Regional Trial Court;  (3)
[32]

for supposedly not having a certification of non-forum shopping


appended to it;  and (4) for forum shopping, as Makati was
[33]

simultaneously pursuing its Petition for Annulment of Judgment


before the Court of Appeals and its Motion for Reconsideration
before the Regional Trial Court. [34]

Makati then filed a Comment (on Taguig's Motion to Dismiss)


 dated December 15, 2011.
[35]

In its Comment, Makati argued that there was no need to wait for
ordinary remedies to become unavailable. It cited Tiu v. First
Plywood Corporation  as supposedly providing an exception to
[36]

the requirement invoked by Taguig. Makati asserted that, in


accordance with Tin, "a judgment rendered by a court without
jurisdiction is null and void, and may therefore be assailed
anytime, without having to wait for ordinary remedies to become
unavailable."  Citing Nazareno
[37]
v. Court of Appeals,  it [38]

emphasized that the subject of its Petition for Annulment of


Judgment was a supposedly void, i.e., non-existent, Decision.
Thus, as there was no "effective or operative judgment to appeal
from[,]"  it was not necessary to wait for the expiration of
[39]

ordinary remedies. [40]

On Taguig's claim that it engaged in forum shopping, Makati


claimed that its Petition for Annulment of Judgment and Motion
for Reconsideration Ad Cautelam were based on different causes
of action, raised different issues, and sought different remedies.
The Petition for Annulment of Judgment related to the validity of
the July 8, 2011 Decision, that is, that it was void for having been
rendered by a retired judge. On the other hand, the Motion for
Reconsideration Ad Cautelam pertained to the merits of the
territorial dispute or to the substance of the respective territorial
claims of Taguig and Makati.  Makati also emphasized that pages
[41]

21 to 22 of its Petition for Annulment of Judgment contained a


verification and certification of non-forum shopping duly signed
by the Mayor of Makati, Jejomar Erwin S. Binay, Jr. [42]

Meanwhile, Pairing Judge Leili Cruz Suarez (Judge Suarez) took


over the territorial dispute case in the Regional Trial Court. On
December 19, 2011, Judge Suarez issued an Order  denying [43]

Makati's Motion for Reconsideration Ad Cautelam. In another


Order dated February 13, 2012, which acted on a Motion for
Clarification filed by Taguig, the Regional Trial Court, also through
Judge Suarez, stated that "the findings of fact and conclusions of
law in the Decision dated 8 July 2011, are all in order and
soundly based." [44]

Makati then filed a Notice of Appeal Ad Cautelam dated January


3, 2012.  This appeal before the Court of Appeals was docketed
[45]

as CA-G.R. CV No. 98377.  On October 5, 2012, Makati filed its


[46]

Appellant's Brief Ad Cautelam. [47]

On January 6, 2012, Taguig filed its Reply to Makati's Comment


on its Motion to Dismiss the Petition for Annulment of Judgment.
 Taguig claimed that the Regional Trial Court's December 19,
[48]

2011 Order in the territorial dispute case, issued through Judge


Suarez, rendered functus officio Makati's Petition for Annulment
of Judgment, and reduced its resolution to "a mere academic
exercise."  It insisted on its assertion that the Petition for
[49]

Annulment of Judgment was fatally defective for failing to comply


with Rule 47's requirements. It also assailed the jurisprudence
cited by Makati as being inapplicable since in those cases, nullity
of the subject cases were "obvious and beyond dispute."  It [50]

underscored its claim that Makati engaged in forum shopping as


"[t]here is only one cause of action [which] revolves around the
alleged rendition of a wrongful decision." [51]
Makati then filed a Rejoinder  dated February 2, 2012 reiterating
[52]

its position that it did not commit forum shopping. It emphasized


that the Motion for Reconsideration Ad Cautelam was merely a
precautionary measure.  It claimed that the Petition for
[53]

Annulment of Judgment was not rendered functus officio by the


Regional Trial Court's December 19, 2011 Order as that Order
included an express recognition that the matter of lack of
jurisdiction was a matter in which the trial court would have to
defer to the Court of Appeals:
This Court agrees with Makati on this point. This Court cannot
state, at this juncture, if the assailed decision is void for lack of
jurisdiction since Makati has already filed a Petition for Annulment
of Judgment with the Court of Appeals... This Court cannot pass
judgment and has to defer to the Court of Appeals (Tenth
Division) with regard to Makati's Petition for Annulment of
Judgment. [54]

Taguig then filed a Sur-rejoinder  dated February 15, 2012.


[55]

In the Resolution  dated May 16, 2012, the Court of Appeals


[56]

denied Taguig's Motion to Dismiss. It favored Makati's assertion


in its Comment on the Motion to Dismiss that Judge Ygaña's July
8, 2011 Decision may be assailed at any time as this Decision
was assailed for being void and having been issued without
jurisdiction.  It also noted that contrary to Taguig's allegation, a
[57]

Verification and Certificate of Non-forum Shopping was attached


to the Petition.  It likewise agreed with Makati's position that the
[58]

Petition for Annulment of Judgment and Motion for


Reconsideration Ad Cautelam were based on different causes of
action, raised different issues, and sought different remedies. [59]

On June 4, 2012, Taguig moved for reconsideration.  Taguig [60]

asserted that the Regional Trial Court's December 19, 2011 and
February 13, 2012 Orders, penned by Judge Suarez, "stand on
their own, independently of the assailed judgment as the final
resolution of the [territorial dispute] case at the RTC level."  It [61]

emphasized that a Petition for Annulment of Judgment was the


wrong remedy as the assailed July 8, 2011 Decision was not yet
final and executory.  It insisted that Makati engaged in forum
[62]

shopping and, in support of this assertion, emphasized that Judge


Suarez made this finding in the Regional Trial Court's December
19, 2011 Order. [63]

In the Resolution dated December 18, 2012,  the Court of


[64]

Appeals granted Taguig's Motion for Reconsideration and


dismissed Makati's Petition for Annulment of Judgment: (1) for
being functus officio and/or moot; (2) for being premature; and
(3) for forum shopping. [65]

The Court of Appeals reasoned that the Petition for Annulment of


Judgment had become ineffectual as the Regional Trial Court's
December 19, 2011 and February 13, 2012 Orders "amounted to
Pairing Judge Suarez' own analysis of the relevant facts and law
juxtaposed with the pieces of evidence on record, making them
the equivalent of her own disposition of the merits of the
case."  Thus, the sole relief that Makati could expect was the
[66]

setting aside of the July 8, 2011 Decision which the Regional Trial
Court had itself already "displaced." [67]

The Court of Appeals added that a Petition for Annulment of


Judgment was improper if other appropriate remedies were
available. Since Makati had recourse to a motion for
reconsideration, its Petition for Annulment of Judgment was
premature. [68]

The Court of Appeals likewise ruled that in filing a Motion for


Reconsideration and Petition for Annulment of Judgment, Makati
effectively split a single cause of action and thereby engaged in
forum shopping. [69]

On January 21, 2013, Makati moved for reconsideration.  It [70]

argued that the Petition for Annulment of Judgment could not


have been rendered functus officio or moot by the Regional Trial
Court's December 19, 2011 and February 13, 2012 Orders as
these Orders did not replace but merely affirmed the July 8, 2011
Decision penned by Judge Ygaña.  It also insisted that a Petition
[71]
for Annulment of Judgment was available to it at any time as the
ground it invoked was lack of jurisdiction.  It maintained that the
[72]

Petition for Annulment of Judgment and Motion for


Reconsideration Ad Cautelam were based on distinct causes of
action.
[73]

In the assailed Resolution  dated April 30, 2013, the Court of


[74]

Appeals denied Makati's Motion for Reconsideration. It abandoned


its conclusions in its December 18, 2012 Resolution that the
Petition for Annulment of Judgment had become functus
officio and/or moot and that Makati engaged in forum shopping.
However, it maintained that the Petition for Annulment of
Judgment was premature:
After considering the arguments raised by both parties, we agree
with petitioner [Makati] that the subsequent orders of the trial
court did not render its petition moot ox functus officio, as the
subsequent orders did not supplant the assailed Decision but
actually affirmed the same. We likewise agree with petitioner that
it did not commit forum-shopping. We subscribe to our previous
ruling in our Resolution dated May 16, 2012, that the issues
raised and the remedies sought by petitioner in the appeal ad
cautelam and in this petition for annulment are independent and
different from each other. Thus, there was no splitting of cause of
action and no forum-shopping committed.

However, the fact remains that petitioner also pursued its


appeal ad cautelam before this Court, which remains pending
before its Sixth Division and as correctly pointed out by
respondent, the availability of the appeal as an ordinary remedy,
which in fact petitioner availed of, renders this extraordinary
remedy of an action for annulment of judgment unnecessary or,
at the very least, premature. [75]

Alleging that the Court of Appeals' pronouncement that the


Petition for Annulment of Judgment was premature was
"inconsistent with and emasculated by the pronouncements that
the instant petition was not mooted by the subsequent orders of
the lower court and that petitioner Makati did not commit forum
shopping,"  Taguig filed before the Court Appeals what it called a
[76]
Motion for Clarification.  The Motion prayed that "the Resolution
[77]

dated April 30, 2013 be reinforced with clarificatory


pronouncements that the instant petition was rendered moot by
the subsequent orders of the lower court through Hon. Leili Cruz
Suarez as Pairing Judge and that petitioner Makati did commit
forum shopping." [78]

In resolving Taguig's Motion for Clarification, the Court of Appeals


issued the second assailed Resolution  dated July 25, 2013,
[79]

stating:
Relative to respondent City of Taguig's Motion for Clarification
filed on May 22, 2013 and by way of clarification, the phrase "for
being unnecessary and/or premature" appearing in the dispositive
portion of the April 30, 2013 Resolution, means that the filing of
the appeal docketed as CA-G.R. CV No. 98377 now pending with
the Sixth Division of this Court has rendered the petition for
annulment of judgment in the above-entitled case moot and
academic, hence, unnecessary. [80]

Construing the Court of Appeals' silence (in its July 25, 2013
Resolution) on the issue of forum shopping as a "denial of the
relief sought[,]"  petitioner City of Taguig comes to this Court
[81]

through the present Petition for Review on Certiorari under Rule


45 of the 1997 Rules of Civil Procedure. It prays that the assailed
Court of Appeals' April 30, 2013 and July 25, 2013 Resolutions be
modified by including a declaration that respondent City of Makati
is guilty of willful and deliberate forum shopping and that
appropriate sanctions be imposed. [82]

On February 24, 2014, respondent City of Makati filed its


Comment  on the present Petition. On April 10, 2014, petitioner
[83]

City of Taguig filed its Reply. [84]

This case centers on the issue of whether respondent City of


Makati engaged in forum shopping in simultaneously pursuing:
first, a Petition for Annulment of the July 8, 2011 Regional Trial
Court Decision; and second, a Motion for Reconsideration (later
Appeal) of the same July 8, 2011 Decision.
Should it be found to have engaged in forum shopping, this Court
must reckon if it was done in such a licentious manner as to
warrant the imposition of sanctions on the persons liable for it.

Top Rate Construction & General Services, Inc. v. Paxton


Development Corporation  explained that:
[85]

Forum shopping is committed by a party who institutes 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 or to grant the same or substantially the same
reliefs, on the supposition that one or the other court would make
a favorable disposition or increase a party's chances of obtaining
a favorable decision or action. [86]

First Philippine International Bank v. Court of Appeals  recounted


[87]

that forum shopping originated as a concept in private


international law:
To begin with, forum-shopping originated as a concept in private
international law, where non-resident litigants are given the
option to choose the forum or place wherein to bring their suit for
various reasons or excuses, including to secure procedural
advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. To
combat these less than honorable excuses, the principle of forum
non conveniens was developed whereby a court, in conflicts of
law cases, may refuse impositions on its jurisdiction where it is
not the most "convenient" or available forum and the parties are
not precluded from seeking remedies elsewhere.

In this light, Black's Law Dictionary says that forum-shopping


"occurs when a party attempts to have his action tried in a
particular court or jurisdiction where he feels he will receive the
most favorable judgment or verdict." Hence, according to Words
and Phrases, "a litigant is open to the charge of 'forum shopping'
whenever he chooses a forum with slight connection to factual
circumstances surrounding his suit, and litigants should be
encouraged to attempt to settle their differences without
imposing undue expense and vexatious situations on the
courts."  (Emphasis in the original)
[88]

Further, Prubankers Association v. Prudential Bank and Trust Co.


 recounted that:
[89]

The rule on forum-shopping was first included in Section 17 of the


Interim Rules and Guidelines issued by this Court on January 11,
1983, which imposed a sanction in this wise: "A violation of the
rule shall constitute contempt of court and shall be a cause for
the summary dismissal of both petitions, without prejudice to the
taking of appropriate action against the counsel or party
concerned." Thereafter, the Court restated the rule in Revised
Circular No. 28-91 and Administrative Circular No. 04-94.
Ultimately, the rule was embodied in the 1997 amendments to
the Rules of Court.[90]

Presently, Rule 7, Section 5 of the 1997 Rules of Civil Procedure


requires that a Certification against Forum Shopping be appended
to every complaint or initiatory pleading asserting a claim for
relief. It also provides for the consequences of willful and
deliberate forum shopping:
RULE 7
PARTS OF A PLEADING
....

SEC. 5. Certification against forum shopping. — The plaintiff or


principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance
with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping,
the same shall be ground for summary dismissal with prejudice
and shall constitute direct contempt, as well as a cause for
administrative sanctions. (Emphasis supplied)
Though contained in the same provision of the 1997 Rules of Civil
Procedure, the rule requiring the inclusion of a Certification
against Forum Shopping is distinct from the rule against forum
shopping. In Korea Exchange Bank v. Gonzales: [91]

The general rule is that compliance with the certificate of forum


shopping is separate from and independent of the avoidance of
the act of forum shopping itself. Forum shopping is a ground for
summary dismissal of both initiatory pleadings without prejudice
to the taking of appropriate action against the counsel or party
concerned. [92]

Top Rate Construction discussed the rationale for the rule against


forum shopping as follows:
It is an act of malpractice for it trifles with the courts, abuses
their processes, degrades the administration of justice and adds
to the already congested court dockets. What is critical is the
vexation brought upon the courts and the litigants by a party who
asks different courts to rule on the same or related causes and
grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being
rendered by the different fora upon the same issues, regardless
of whether the court in which one of the suits was brought has no
jurisdiction over the action.
[93]

Jurisprudence has recognized that forum shopping can be


committed in several ways:
(1) filing multiple cases based on the same cause of action and
with the same prayer, the previous case not having been resolved
yet (where the ground for dismissal is litis pendentia); (2) filing
multiple cases based on the same cause of action and the same
prayer, the previous case having been finally resolved (where the
ground for dismissal is res judicata); and (3) filing multiple cases
based on the same cause of action but with diiferent prayers
(splitting of causes of action, where the ground for dismissal is
also either litis pendentia or res judicata).  (Emphasis in the
[94]

original)
Similarly, it has been recognized that forum shopping exists
"where a party attempts to obtain a preliminary injunction in
another court after failing to obtain the same from the original
court."[95]

The test for determining forum shopping is settled. In Yap v.


Chua, et al.: [96]

To determine whether a party violated the rule against forum


shopping, the most important factor to ask is whether the
elements of litis pendentia are present, or whether a final
judgment in one case will amount to res judicata in another;
otherwise stated, the test for determining forum shopping is
whether in the two (or more) cases pending, there is identity of
parties, rights or causes of action, and reliefs sought.[97]

For its part, litis pendentia "refers to that situation wherein


another action is pending between the same parties for the same
cause of action, such that the second action becomes
unnecessary and vexatious."  For litis pendentia to exist, three
[98]

(3) requisites must concur:


The requisites of litis pendentia are: (a) the identity of parties, or
at least such as representing the same interests in both actions;
(b) the identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the identity of the two
cases such that judgment in one, regardless of which party is
successful, would amount to res judicata in the other. [99]

On the other hand, res judicata or prior judgment bars a


subsequent case when the following requisites are satisfied:
(1) the former judgment is final; (2) it is rendered by a court
having jurisdiction over the subject matter and the parties; (3) it
is a judgment or an order on the merits; (4) there is — between
the first and the second actions — identity of parties, of subject
matter, and of causes of action.  (Emphasis in the original)
[100]

These settled tests notwithstanding:


Ultimately, what is truly important to consider in determining
whether forum-shopping exists or not is the vexation caused the
courts and parties-litigant by a party who asks different courts
and/or administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the same reliefs,
in the process creating the possibility of conflicting decisions
being rendered by the different fora upon the same issue. [101]

II

Respondent City of Makati pursued two (2) simultaneous


remedies: a Petition for Annulment of Judgment under Rule 47 of
the 1997 Rules of Civil Procedure (docketed as CA-G.R. SP No.
120495); and a Motion for Reconsideration (later, an Appeal,
docketed as CA-G.R. CV No. 98377).

There is identity of parties in both cases: the cities of Makati and


Taguig.

Nonetheless, respondent City of Makati argues that it could not


have engaged in forum shopping as its Petition for Annulment of
Judgment and Motion for Reconsideration/Appeal were based on
different causes of action, raised different issues, and sought
different reliefs. It asserted that the Petition for Annulment of
Judgment related to the validity of the July 8, 2011 Decision, i.e.,
that it was void for having been rendered by a retired judge. It
added that, in contrast, the Motion for Reconsideration/Appeal
pertained to the merits of the territorial dispute or the substance
of the respective territorial claims of petitioner City of Taguig and
respondent City of Makati.

These arguments are specious considering the basic nature of a


Rule 47 Petition, and that of an appeal.

Rule 47 of the 1997 Rules of Civil Procedure "govern[s] the


annulment by the Court of Appeals of judgments or final orders
and resolutions in civil actions of Regional Trial Courts for which
the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies are no longer available through no
fault of the petitioner."

Alaban v. Court of Appeals  discussed the nature, purpose, and


[102]

availability of petitions for annulment of judgment:


An action for annulment of judgment is a remedy in law
independent of the case where the judgment sought to be
annulled was rendered. The purpose of such action is to have the
final and executory judgment set aside so that there will be a
renewal of litigation. It is resorted to in cases where the ordinary
remedies of new trial, appeal, petition for relief from judgment, or
other appropriate remedies are no longer available through no
fault of the petitioner, and is based on only two grounds: extrinsic
fraud, and lack of jurisdiction or denial of due process. A person
need not be a party to the judgment sought to be annulled, and it
is only essential that he can prove his allegation that the
judgment was obtained by the use of fraud and collusion and he
would be adversely affected thereby.  (Emphasis supplied)
[103]

No stretch of legal imagination can justify as final and executory


the Order assailed in the Petition for Annulment of Judgment filed
by respondent City of Makati. It was still subject to appeal.
Respondent City of Makati's having availed itself of this remedy
is, in fact, the entire impetus for this Decision.

Rule 47, Section 7 specifies the effect of a judgment granting a


Petition for Annulment of Judgment:
RULE 47
ANNULMENT OF JUDGMENTS OR FINAL ORDERS AND
RESOLUTIONS

....

SEC. 7. Effect of judgment. — A judgment of annulment shall set


aside the questioned judgment or final order or resolution and
render the same null and void, without prejudice to the original
action being refiled in the proper court. However, where the
judgment or final order or resolution is set aside on the ground of
extrinsic fraud, the court may on motion order the trial court to
try the case as if a timely motion for new trial had been granted
therein. (Emphasis supplied)
While petitions for annulment of judgment are governed by Rule
47 of the 1997 Rules of Civil Procedure, motions for
reconsideration of judgments and final orders (as opposed to
Motions for Reconsideration of interlocutory orders) are governed
by Rule 37 of the 1997 Rules of Civil Procedure. Rule 37, Section
1 provides:
RULE 37
NEW TRIAL OR RECONSIDERATION

SECTION 1. Grounds of and period for filing motion for new trial
or reconsideration. — 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 materially affecting the substantial rights of
said party:

....

Within the same period, the aggrieved party may also move for
reconsideration upon the grounds that the damages awarded are
excessive, that the evidence is insufficient to justify the decision
or final order, or that the decision or final order is contrary to law.
Rule 37, Section 3 specifies the effect of granting a motion for
reconsideration: "If the court finds that excessive damages have
been awarded or that the judgment or final order is contrary to
the evidence or law, it may amend such judgment or final order
accordingly."

Escquivel v. Alegre  discussed the nature of amended judgments


[104]

and contrasting it with supplemental judgments:


In an amended and clarified judgment, the lower court makes a
thorough study of the original judgment and renders the
amended and clarified judgment only after considering all the
factual and legal issues. The amended and clarified decision
is an entirely new decision which supersedes the original
decision... [A] supplemental decision does not take the place or
extinguish the existence of the original. As its very name denotes,
it only serves to bolster or adds something to the primary
decision. A supplement exists side by side with the original. It
does not replace that which it supplements.  (Emphasis [105]

supplied)
In terms of immediacy of relief, there is a difference between
motions for reconsideration of judgments and final orders, on the
one hand, and petitions for annulment of judgment, on the other.
The grant of a Motion for Reconsideration grants the movant
immediate relief, the court's issuance granting the Motion is itself
the amended judgment superseding the original Decision. On the
other hand, the grant of a Petition for Annulment of Judgment
only allows for a "renewal of litigation."  Nevertheless, the
[106]

purposes of Motions for Reconsideration and Petitions for


Annulment of Judgment are fundamentally the same: the setting
aside of a judgment in order that a different, favorable, one may
take its place. They "grant. . . substantially the same
reliefs."[107]

Ley Construction and Development Corp. V. Hyatt Industrial


Manufacturing Corp.  involved a civil action for specific
[108]

performance and damages filed by Ley Construction against Hyatt


Industrial. During the proceedings, Ley Construction served
notices to take several depositions. The trial court initially allowed
the taking of these depositions. Subsequently, however, the trial
court issued orders through which it cancelled all the depositions
set for hearing, supposedly not to delay the disposition of the
case. Ley Construction filed before the Court of Appeals a Petition
for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure
assailing the trial court's (interlocutory) order recalling the taking
of depositions. During the pendency of this Petition, the trial court
issued the Resolution dismissing Ley Construction's action for
specific performance and damages. The Court of Appeals also
dismissed Ley Construction's Rule 65 Petition. Ley Construction
then appealed to this court. Resolving Ley Construction's appeal,
this court stated:
Third, petitioner's submission that the Petition for Certiorari has a
practical legal effect is in fact an admission that the two actions
are one and the same. Thus, in arguing that the reversal of the
two interlocutory Orders "would likely result in the setting aside
of the dismissal of petitioner's amended complaint," petitioner
effectively contends that its Petition for Certiorari, like the appeal,
seeks to set aside the Resolution and the two Orders.

Such argument unwittingly discloses a recourse to forum


shopping, which has been held as "the institution of two or more
actions or proceedings grounded on the same cause on the
supposition that one or the other court would make a favorable
disposition." Clearly, by its own submission, petitioner seeks to
accomplish the same thing in its Petition for Certiorari and in its
appeal: both assail the two interlocutory Orders and both seek to
set aside the RTC Resolution.

Hence, even assuming that the Petition for Certiorari has a


practical legal effect because it would lead to the reversal of the
Resolution dismissing the Complaint, it would still be denied on
the ground of forum shopping.  (Emphasis supplied)
[109]

Thus, in Ley Construction, even if the specific relief sought by the


petitioner's Rule 65 Petition was the setting aside of the trial
court's orders recalling the taking of depositions, it was
recognized that granting this relief would result in the "practical
legal effect"  of setting aside the trial court's dismissal of its
[110]

Complaint for specific performance and damages. Thus, the


petitioner would have "accomplish[ed] the same thing in its
Petition for Certiorari and in its Appeal," that is, its Rule 65
Petition and its appeal would have granted practically, or
"substantially," the same relief.

Ley Construction discredits respondent City of Makati's claim that


it could not have engaged in forum shopping as its Rule 47
Petition and its Motion for Reconsideration/Appeal were grounded
on different causes of action.
Ley Construction involved two (2) remedies: first, a Petition for
Certiorari under Rule 65; and second, an Appeal. Rule 65, Section
1  of the 1997 Rules of Civil Procedure states that a Petition for
[111]

Certiorari is available "[w]hen any tribunal, board or officer


exercising judicial or quasi-judicial functions has acted without or
in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction." Thus, a
petition for certiorari raises questions of jurisdiction. It does not,
in the strict sense, delve into the merits or substance of the case
or the proceedings, which allegedly occasioned an error in
jurisdiction.

In Ley Construction, one could have dwelt on the fine distinction


between, on one hand, Rule 65 petitions as proceedings
grounded on errors in jurisdiction, and, on the other, appeals as
proceedings that go into the merits or substance of a case. This is
not entirely different from respondent City of Makati's invitation
to dwell on the difference between, on one hand, its Rule 47
Petition as assailing the issuance of a judgment without
jurisdiction, and, on the other, its Motion for Reconsideration
(later, Appeal), as focusing on the substance of its and of
petitioner City of Taguig's respective territorial claims.

Besides, a Rule 47 petition was not even opportune. It was not as


though respondent City of Makati was left with no other remedy
but a Rule 47 petition. Lack of jurisdiction could have just as
easily been raised as an error in its Appeal or in its Motion for
Reconsideration. It is as much a cause for pursuing a motion
for reconsideration or an appeal as it is for pursuing a
petition for annulment of judgment.

A petition for annulment of judgment is based only on two (2)


grounds: first, extrinsic fraud; and second, lack of jurisdiction or
denial of due process.  In contrast, a motion for reconsideration
[112]

of a judgment or final order may cover "grounds that the


damages awarded are excessive, that the evidence is insufficient
to justify the decision or final order, or that the decision or final
order is contrary to law." [113]
Rule 37, Section 2 of the 1997 Rules of Civil Procedure spells out
what a motion for reconsideration must contain:
RULE 37
NEW TRIAL OR RECONSIDERATION
....

SEC. 2. Contents of motion for new trial or reconsideration and


notice thereof. — The motion shall be made in writing stating the
ground or grounds therefor, a written notice of which shall be
served by the movant on the adverse party.

A motion for new trial shall be proved in the manner provided for
proof of motion. A motion for the cause mentioned in paragraph
(a) of the preceding section shall be supported by affidavits of
merits which may be rebutted by affidavits. A motion for the
cause mentioned in paragraph (b) shall be supported by affidavits
of the witnesses by whom such evidence is expected to be given,
or by duly authenticated documents which are proposed to be
introduced in evidence.

A motion for reconsideration shall point out specifically the


findings or conclusions of the judgment or final order which are
not supported by the evidence or which are contrary to law
making express reference to the testimonial or documentary
evidence or to the provisions of law alleged to be contrary to
such findings or conclusions.

A pro forma motion for new trial or reconsideration shall not toll
the reglementary period of appeal. (Emphasis supplied)
However, Rule 37, Section 2 is not the sole provision in the 1997
Rules of Civil Procedure that spells out what a motion for
reconsideration must state. Rule 15, Section 8, commonly
referred to as the Omnibus Motion Rule, states:
RULE 15
MOTIONS
....
SEC. 8. Omnibus motion. — Subject to the provisions of section 1
of Rule 9, a motion attacking a pleading, order, judgment, or
proceeding shall include all objections then available, and all
objections not so included shall be deemed waived. (Emphasis
supplied)
The Omnibus Motion Rule explicitly refers to Rule 9, Section 1.
 This provision provides for the following exceptions to the
[114]

Omnibus Motion Rule:


(a) lack of jurisdiction over the subject matter;

(b) litis pendentia;

(c) res judicata; and

(d) prescription.
Thus, even if these grounds are not pleaded in a motion attacking
a judgment, such as a motion for reconsideration, they are not
deemed waived.

Clearly, lack of jurisdiction may be invoked as a ground in a


motion for reconsideration. It can thereby serve as basis for
setting aside or amending a judgment or final order.
Accordingly, it is as much a cause for pursuing a motion for
reconsideration as it is a petition for annulment of
judgment.

III

Makati points out that there is jurisprudence to the effect that a


petition for annulment of judgment, if based on lack of
jurisdiction, need not "allege that the ordinary remedies of new
trial, reconsideration or appeal were no longer available through
no fault of his."  Indeed, as explained in Tiu, "[t]his is so
[115]

because a judgment rendered or final order issued by the


[Regional Trial Court] without jurisdiction is null and void and
may be assailed any time either collaterally or in a direct action,
or by resisting such judgment or final order in any action or
proceeding whenever it is invoked." [116]
Moreover, it is correct that Nazareno stated that "[a] judgment
promulgated after the judge who signed the decision has ceased
to hold office is not valid and binding."  This is so because
[117]

"[w]hen a judge[,] retired all his authority to decide any case,


i.e., to write, sign and promulgate the decision thereon also
'retired' with him. In other words, he had lost entirely his power
and authority to act on all cases assigned to him prior to his
retirement."[118]

In this case, however, Tiu and Nazareno afford Makati no relief,


the crux of the present Petition being the matter of forum
shopping.

Tiu involved a petition for annulment of judgment filed after the


assailed judgment attained finality. In that case, by the time a
petition for annulment of judgment was filed, an execution sale
had already been held.

Tiu is markedly different from this case. In Tiu, a petition for


annulment of judgment was availed of at the proper time and not
in a manner that indicated an abuse of court processes. Here,
respondent City of Makati's conduct was assailed by petitioner
City of Taguig precisely because respondent City of
Makati simultaneously pursued a Petition for Annulment of
Judgment and a Motion for Reconsideration.

Nazareno involved a criminal case for serious physical injuries


(Criminal Case No. 2335) in which a Decision was promulgated by
a judge who was substituting for a suspended judge. Specifically,
Acting Judge Aurelio Icasiano, Jr., promulgated a Decision penned
and signed by the suspended Presiding Judge Manuel C.
Diosomito. This Decision was dated November 8, 1995. [119]

Following the promulgation of this Decision, Romeo P. Nazareno


(Nazareno) filed a Petition for Annulment of Judgment before the
Court of Appeals. This Petition was denied by the Court of
Appeals. A subsequent appeal before this Court was not
entertained, it having been filed 12 days late.[120]

Failing in his Petition for Annulment of Judgment, Nazareno went


back to the Municipal Trial Court of Naic, Cavite and filed a
Notice of Appeal. The Regional Trial Court of Naic, Cavite,
however, dismissed his appeal for having been supposedly filed
out of time. Nazareno then filed a Petition for Mandamus and
Certiorari before the Court of Appeals, which the Court of Appeals
dismissed. Nazareno then filed an appeal before this court. [121]

Deciding Nazareno's Appeal, this Court noted that the November


8, 1985 Decision was a void judgment. As a void judgment, "it
cannot be deemed to have become final and
executory."  Citing Metropolitan Waterworks and Sewerage
[122]

System v. Sison,  this Court emphasized that "the situation is


[123]

the same as it would be if there were no judgment. Accordingly,


it leaves the parties litigants in the same position they were in
before the trial."  Accordingly, "in the interest of justice,"  not
[124] [125]

only did this court rule that the November 8, 1985 Decision may
still be appealed from; it was ruled that Criminal Case No. 2335
must be remanded to the Municipal Trial Court of Naic, Cavite "for
adjudication and promulgation of [an entirely] new decision." [126]

In Nazareno, the petitioner did not simultaneously pursue


a Petition for Annulment of Judgment and an Appeal.
Respondent City of Makati did so here. In Nazareno, the
petitioner had the prudence to not trifle with court processes and
"creatje] the possibility of conflicting decisions." On the contrary,
the petitioner deferred to the Court of Appeals where his Petition
for Annulment of Judgment was then pending. It was only after
this Court dismissed his Appeal from the Court of Appeals'
adverse Decision that he filed a Notice of Appeal.

Nazareno, far from helping respondent City of Makati's case,


actually weakens it. Nazareno shows that an appeal (or a motion
for reconsideration as a prelude to an Appeal) need not be
pursued simultaneously with a Petition for Annulment of
Judgment. Nazareno shows that a party burdened by a decision
issued without jurisdiction need not simultaneously go to several
fora to obtain relief. Nazareno shows that the issuance of a
decision despite a tribunal's lack of jurisdiction is no license for
forum shopping.

IV

Respondent City of Makati emphasized that its Motion for


Reconsideration and Appeal were mere precautionary measures.
We are not impressed by this argument. Appending the phrase
"ad cautelam" to an application for relief does not alter the nature
of the remedy being pursued. Had it been granted by the trial
court, the Motion for Reconsideration—ad cautelam or otherwise
—would have ultimately resulted in the setting aside of the
assailed decision.

The antecedents of the present Petition show that respondent


City of Makati's actions have actually and already given rise to
the harm sought to be avoided by the rule against forum
shopping. The Regional Trial Court conflicted with the Court of
Appeals.

In its December 19, 2011 Order, the Regional Trial Court found
that respondent City of Makati engaged in forum shopping:
The Rules of Court, the code governing judicial procedure,
prescribes the remedies (actions and special proceedings) that
may be availed of for the myriad reliefs that persons may
conceivably have need of and seek in this jurisdiction. But, that
the adjective law makes available several remedies does
not imply that a party may resort to them simultaneously
or at his pleasure or whim. There is a sequence and a
hierarchical order which must be observed in availing of
them. Impatience at what may be felt to be the slowness of the
judicial process, or even a deeply held persuasion in the
Tightness of one's cause does not justify short-cuts in procedure,
or playing fast and loose with the rules thereof.
The rationale against forum shopping is that a party
should not be allowed to pursue simultaneous remedies in
two different fora. Filing multiple petitions or complaints
constitutes abuse of court processes, which tend to degrade the
administration of justice, wreaks havoc upon orderly judicial
procedure, and adds to the congestion of the heavily burdened
dockets of the courts.

Without passing judgment on the Petition for Annulment of


Judgment filed by Makati with the Court of Appeals, this Court
would like to quote Section 1, Rule 47 of the Rules of Court which
provides:
SECTION 1. Coverage. — This Rule shall govern the annulment
by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which the
ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of
the petitioner.
There was still an available remedy for Makati and it correctly and
timely filed the present Motion for Reconsideration Ad Cautelam.
If applicable, there is still another remedy available to either
party, appeal to the Court of Appeals and the Supreme Court.

Among the sanctions provided by the Rules and jurisprudence


when there is forum shopping is the summary dismissal of the
action with prejudice.

However, this court would not strictly apply the sanctions


provided in order to give the parties the full measure of the
proceedings that they are allowed to avail of under the law after
the issuance of this order.  (Emphasis in the original, citations
[127]

omitted)
For its part, the Court of Appeals has strangely flip-flopped on the
question of respondent City of Makati's forum shopping. Its May
16, 2012 Resolution denying petitioner City of Taguig's Motion to
Dismiss absolved respondent City of Makati of the charge of
forum shopping. Its December 18, 2012 Resolution granted
petitioner City Taguig's Motion for Reconsideration and dismissed
respondent City of Makati's Petition for Annulment of Judgment
for, among other reasons, forum shopping. Its April 30, 2013
Resolution denied respondent City of Makati's Motion for
Reconsideration but abandoned its earlier conclusion that
respondent City of Makati engaged in forum shopping. Finally, its
July 25, 2013 Resolution granted petitioner City of Taguig's
prayer that a pronouncement be made to the effect that
respondent City of Makati's Petition for Annulment of Judgment
was moot. This Resolution, however, was silent on the matter of
forum shopping.

Respondent City of Makati's actions have not only vexed courts


and an adverse litigant. They have actually and already given rise
to conflicting decisions, not only between different courts—the
Regional Trial Court and the Court of Appeals—but even within
the Court of Appeals itself. The damage to the administration of
justice is not hypothetical; it is a realized harm.

Rule 7, Section 5 of the 1997 Rules of Civil Procedure provides


that, apart from being a ground for summary dismissal, "willful
and deliberate forum shopping . . . shall constitute direct
contempt, [and is] a cause for administrative sanctions." Thus, it
would be inadequate to stop with a mere declaration that
respondent City of Makati, which acted through its counsels,
engaged in forum shopping.

It was among the matters prayed for by petitioner City of Taguig


that appropriate sanctions be imposed for respondent City of
Makati's wilful and deliberate forum shopping. So too, respondent
City of Makati's defenses have been duly pleaded and considered
in this case. Under Rule 71, Section 1 of the 1997 Rules of Civil
Procedure, direct contempt committed against a Regional Trial
Court or a court of equivalent or higher rank is punishable by
imprisonment not exceeding 10 days and/or a fine not exceeding
P2,000.00. Accordingly, a fine of P2,000.00 is imposed on each of
respondent City of Makati's counsels who filed the Petition for
Annulment of Judgment before the Court of Appeals: Atty. Pio
Kenneth I. Dasal, Atty. Glenda Isabel L. Biason, and Atty. Gwyn
Gareth T. Mariano.

WHEREFORE, the Petition is GRANTED. The assailed


Resolutions dated April 30, 2013 and July 25, 2013 of the Court
of Appeals Seventh Division in CA-G.R. SP No. 120495
are MODIFIED. Respondent City of Makati is declared to have
engaged in forum shopping in simultaneously pursuing a Petition
for Annulment of Judgment before the Court of Appeals and a
Motion for Reconsideration before Branch 153 of the Regional
Trial Court of Pasig City, and later, an Appeal before the Court of
Appeals.

We find respondent City of Makati, through its counsels Atty. Pio


Kenneth I. Dasal, Atty. Glenda Isabel L. Biason, and Atty. Gwyn
Gareth T. Mariano, GUILTY of direct contempt, and FINE Atty.
Pio Kenneth I. Dasal, Atty. Glenda Isabel L. Biason and Atty.
Gwyn Gareth T. Mariano P2,000.00 each.

SO ORDERED.

Carpio, (Chairperson), and Mendoza, JJ., concur.


Brion, and Del Castillo, JJ., on official leave.

[1]
 Rollo, pp. 100-130.

 Id. at 81-83. The Resolution was penned by Associate Justice


[2]

Hakim S. Abdulwahid and concurred in by Associate Justices


Marlene Gonzales-Sison and Leoncia Real-Dimagiba of the Former
Seventh Division, Court of Appeals, Manila.

 Id. at 92-93. The Resolution was penned by Associate Justice


[3]

Hakim S. Abdulwahid and concurred in by Associate Justices


Marlene Gonzales-Sison and Leoncia Real-Dimagiba of the Former
Seventh Division, Court of Appeals Manila.
[4]
 Id. at 126.

 Id. at 15, Motion for Extension of Time to File Petition for


[5]

Review on Certiorari.

[6]
 Id.

[7]
 Id. at 83.

[8]
 Id. at 92.

 Id. at 439. Guingona, Alcala, and Palad were impleaded in their


[9]

respective capacities as the occupants of the specified offices.

[10]
 Id. at 138.

[11]
 Id.

[12]
 Id. at 439, Petition for Annulment of Judgment.

[13]
 Id. at 194-214.

[14]
 Id. at 214.

[15]
 Id. at 437-457.

[16]
 Id. at 437.

[17]
 Id. at 452-454.

[18]
 Id. at 451-452.

[19]
 Id. at 455.

[20]
 Id. at 444-445.

[21]
 Id. at 444.
[22]
 Id.

[23]
 Id.

[24]
 Id. at 493.

[25]
 Id. at 494.

[26]
 Id. at 445.

[27]
 Id. at 445-446.

[28]
 Id. at 516.

[29]
 Id. at 215-277.

[30]
 Id. at 517-526.

[31]
 Id. at 518-520.

[32]
 Id. at 521.

[33]
 Id. at 521-522.

[34]
 Id. at 522-524.

[35]
 Id. at. 527-535.

 629 Phil. 120 (2010) [Per J. Carpio Morales, First Division], as


[36]

cited in rollo, p. 527, Makati's Comment on Taguig's Motion to


Dismiss.

[37]
 Rollo, p. 527.

 428 Phil. 32 (2002) [Per J. De Leon, Jr., Second Division], as


[38]

cited in rollo, p. 528.


 Rollo, p. 528-529, citing Nazareno v. Court of Appeals, 428
[39]

Phil. 32, 41 (2002) [Per J. De Leon, Jr. Second Division].

[40]
 Id.

[41]
 Id. at 530-532.

[42]
 Id. at 532.

[43]
 Id. at 262-275.

[44]
 Id. at 26.

[45]
 Id. at 276-277.

[46]
 Id. at 92.

[47]
 Id. at 278-360.

[48]
 Id. at 538-547.

[49]
 Id. at 538.

[50]
 Id. at 539.

[51]
 Id. at 540.

[52]
 Id at 562-569.

[53]
 Id. at 564.

[54]
 Id. at 263.

[55]
 Id. at 588-590.

[56]
 Id. at 21-23.

[57]
 Id. at 22.
[58]
 Id.

[59]
 Id. at 23.

[60]
 Id. at 25-34.

[61]
 Id. at 27.

[62]
 Id. at 29.

[63]
 Id. at 33-34.

[64]
 Id. at 57-64.

[65]
 Id.

[66]
 Id. at 60.

[67]
 Id. at 61.

[68]
 Id. at 61-62.

[69]
 Id. at 63.

[70]
 Id. at 66-78.

[71]
 Id. at 67-70.

[72]
 Id. at 70-74.

[73]
 Id. at 74-76.

[74]
 Id. at 81-83.

[75]
 Id. at 82-83.

[76]
 Id. at 87.
[77]
 Id. at 85-87.

[78]
 Id. at 87.

[79]
 Id. at 92-93.

[80]
 Id. at 92.

[81]
 Id. at 15.

[82]
 Id. at 126.

[83]
 Id. at 646-658.

[84]
 Id. at 664-677.

[85]
 457 Phil. 740 (2003) [Per J. Bellosillo, Second Division].

 Id. at 747-748, citing Santos v. Commission on Elections, 447


[86]

Phil. 760, 770-771 (2003) [Per J. Ynares-Santiago, En


Banc]; Young v. Keng Seng, 446 Phil. 823, 832 (2003) [Per J.
Panganiban, Third Division]; Executive Secretary v. Gordon, 359
Phil. 266, 271-272 (1998) [Per J. Mendoza, En Banc]

[87]
 322 Phil.280 (1996) [Per J. Panganiban, Third Division].

 Id.
[88]
at 303-304, citing JOV1TO SALONGA, PRIVATE
INTERNATIONAL Law 56 et seq. (1995), Black's Law Dictionary,
590 (5  ed., 1979); and 17 Words and Phrases 646 (permanent
th

ed.).

[89]
 361 Phil. 744 (1999) [Per J. Panganiban, Third Division].

[90]
 Id. at 754-755.

[91]
 496 Phil. 127 (2005) [Per J. Callejo, Sr., Second Division].
 Id. at 145, citing Prubankers Association v. Prudential Bank and
[92]

Trust Co., 361 Phil. 744 (1999) [Per J. Panganiban, Third


Division].

 Top Rate Construction & General Services, Inc. v. Paxton


[93]

Development Corporation, 457 Phil. 740, 748 (2003) [Per J.


Bellosillo, Second Division], citing Joy Mart Consolidated Corp. v.
Court of Appeals, G.R. No. 88705, 11 June 1992, 209 SCRA 738,
745 [Per J. Griño-Aquino, First Division] and Villanueva v. Adre,
254 Phil. 882, 888 (1989) [Per J. Sarmiento, Second Division].

 Collantes v. Court of Appeals, 546 Phil. 391, 400 (2007) [Per J.


[94]

Chico-Nazario, En Banc], citing Ao-As v. Court of Appeals, 524


Phil. 645, 660 (2006) [Per J. Chico-Nazario, First Division].

 Executive Secretary v. Gordon, 359 Phil. 266, 272 (1898) [Per


[95]

J. Mendoza, En Banc], citing Fil-Estate Golf and Development,


Inc. v. Court of Appeals, 333 Phil. 465, 486-487 (1996) [Per J.
Kapunan, First Division].

[96]
 687 Phil. 392 (2012) [Per J. Reyes, Second Division].

 Id. at. 400, citing Young v. John Keng Seng, 446 Phil. 823, 833
[97]

(2003) [Per J. Panganiban, Third Division].

[98]
 Id.

 Id., citing Villarica Pawnshop, Inc. v. Gernale, 601 Phil. 66, 78


[99]

(2009) [Per J. Austria-Martinez, Third Division].

 Luzon Development Bank v. Conquilla, 507 Phil. 509, 523


[100]

(2005) [Per J. Panganiban, Third Division], citing Allied Banking


Corporation v. Court of Appeals, G.R. No. 95223, January 10,
1994, 229 SCRA 252, 258 [Per J. Mendoza, Second Division].

 First Philippine International Bank v. Court of Appeals, 322


[101]

Phil. 280, 313 (1996) [Per J. Panganiban, Third Division].


[102]
 507 Phil. 682 (2005) [Per J. Tinga, Second Division].

 Id. at 694, citing Islamic Da'Wah Council of the Philippines v.


[103]

Court of Appeals, 258 Phil. 802 (1989) [Per J. Cortes, Third


Division]; RULES OF COURT, Rule 47, sec. 1; and Pinlac v. Court
of Appeals, 402 Phil. 684 (2001) [Per J. Ynares-Santiago, First
Division].

[104]
 254 Phil. 316 (1989) [Per J. Paras, Second Division].

 Id. at 325-326, citing Magdalena Estate, Inc. v. Caluag, 120


[105]

Phil. 338 (1964) [Per J. Regala, En Banc]; Sta. Romana v.


Lacson, 191 Phil. 435 (1981) [Per J. Fernandez, First Division];
and Aznar III, et. al. v. Bernard, et. al., 244 Phil. 285 (1988) [Per
J. Sarmiento, Second Division].

 Alaban v. Court of Appeals, 507 Phil. 682 (2005) [Per J. Tinga,


[106]

Second Division].

 First Philippine International Bank v. Court of Appeals, 322


[107]

Phil. 280, 313 (1996) [Per J. Panganiban, Third Division].


Emphasis supplied.

[108]
 393 Phil. 633 (2000) [Per J. Panganiban, Third Division].

[109]
 Id. at 641-642.

[110]
 Id. at 641.

[111]
 RULES OF COURT, Rule 65, sec. 1 provides:

SECTION 1. Petition for certiorari. — When any tribunal, board or


officer exercising judicial or quasi-judicial functions has acted
without or in excess its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is
no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the


judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third
paragraph of section 3, Rule 46.

 Alaban v. Court of Appeals, 507 Phil. 682, 694 (2005) [Per J.


[112]

Tinga, Second Division], citing RULES OF COURT, Rule 47, sec. 1.

[113]
 RULES OF COURT, Rule 37, sec. 1.

[114]
 RULES OF COURT, Rule 9, sec. 1 provides:

SECTION 1. Defenses and objections not pleaded. — Defenses


and objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that
the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim.

 Tiu v. First Plywood Corporation, 629 Phil. 120 (2010) [Per J.


[115]

Carpio-Morales, First Division].

[116]
 Id. at 132.

 Id. at 40, citing People v. Court of Appeals, 99 Phil. 786, 790


[117]

(1956) [Per J. Bengzon, En Banc].

 Id. at 41, citing People v. Labao, G.R. No. 102826, March 17,


[118]

1993, 220 SCRA 100 [Per J. Bellosillo, First Division].

[119]
 Id. at 36.
[120]
 Id. at 36-37.

[121]
 Id. at 37.

[122]
 Id. at 41.

[123]
 209 Phil. 325 (1983) [Per J. Escolin, Second Division].

[124] Id.

[125] Id.

[126] Id.

[127]
 Rollo, pp. 274-275.

Source: Supreme Court E-Library | Date created: July 06, 2018


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766 Phil. 750


SECOND DIVISION

[ G.R. No. 200751, August 17, 2015 ]


MONICO LIGTAS, PETITIONER, VS. PEOPLE OF
THE PHILIPPINES, RESPONDENT.DECISION

LEONEN, J.:
"Bakit niya babawiin ang aking saka?" tanong ni Tata Selo.
"Dinaya ko na ba siya sa partihan? Tinuso ko na ba siya? Siya
ang may-ari ng lupa at kasama lang niya ako. Hindi ba't kaya
maraming nagagalit sa akin ay dahil sa ayaw kong magpamigay
ng kahit isang pinangko kung anihan?"

Hindi pa rin umaalis sa harap ng istaked si Tata Selo. Nakahawak


pa rin siya sa rehas. Nakatingin siya sa labas ngunit wala siyang
sino mang tinitingnan.

"Binabawi po niya ang aking saka," sumbong ni Tata Selo. "Saan


papo ako pupunta kung wala na akong saka?"

Habang nakakapit sa rehas at nakatingin sa labas, sinasabi


niyang lahat ay kinuha na sa kanila, lahat, ay! ang lahat ay
kinuha na sa kanila.

- "TataSelo" (1963) by Rogelio R. Sikat


The uncontested declaration of the Department of Agrarian
Reform Adjudication Board that Monico Ligtas was a tenant
negates a finding of theft beyond reasonable doubt. Tenants
having rights to the harvest cannot be deemed to have taken
their own produce.

This is a Petition for Review on Certiorari  under Rule 45 of the


[1]

Rules of Court, assailing the Court of Appeals Decision  dated


[2]

March 16, 2010 and the Resolution  dated February 2, 2012.


[3]

 The Court of Appeals affirmed the Decision  of the Regional


[4] [5]

Trial Court finding Monico Ligtas (Ligtas) guilty beyond


reasonable doubt of theft. [6]

Ligtas was charged with the crime of theft under Article 308 of
the Revised Penal Code.  The Information provides:
[7]

That on or about the 29  day of June 2000 at Sitio Lamak,


th

Barangay San Juan, Municipality of Sogod, Province of Southern


Leyte, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, with intent of gain, entered
into the abaca plantation belonging to one Anecita Pacate, and
once inside the plantation, did then and there willfully, unlawfully
and feloniously harvested 1,000 kilos of abaca fibers, valued at
Php29,000.00 at Php29.00 per kilo, without the consent of said
owner, Anecita Pacate, to her damage and prejudice in the
aforestated amount of Twenty Nine Thousand Pesos
(Php29,000.00), Philippine currency.

CONTRARY TO LAW. [8]

Ligtas pleaded not guilty. [9]

The prosecution presented five (5) witnesses during trial: Efren


Cabero (Cabero), Modesto Cipres (Cipres), Anecita Pacate, SPO2
Enrique Villaruel, and Ernesto Pacate. [10]

According to the prosecution witnesses, Anecita Pacate was the


owner of an abaca plantation situated at Sitio Lamak, Barangay
San Juan, Sogod, Southern Leyte. On June 29, 2000, Cabero, the
plantation's administrator, and several men, including Cipres,
went to the plantation to harvest abaca upon Anecita Pacate's
instructions. At about 10:00 a.m., Cabero and his men were
surprised to find Ligtas harvesting abaca at the plantation. Ligtas
was accompanied by three (3) unidentified men. Allegedly, Ligtas
threatened that there would be loss of life if they persisted in
harvesting the abaca. Cabero reported the incident to Anecita
Pacate and the police. [11]

On July 2, 2000, Cabero and Cipres went back to the plantation


and conducted a survey on the condition of the plantation. They
found that 1,000 kilos of abaca, valued at P28.00 per kilo, were
harvested by Ligtas.[12]

On July 3, 2000, Ligtas and Anecita Pacate confronted each other


before the Sogod Police Station.  Ligtas admitted to harvesting
[13]

the abaca but claimed that he was the plantation owner. [14]

The defense presented three (3) witnesses during trial: Ligtas;


Pablo Palo, his neighbor; and Delia Ligtas, his wife.  According to
[15]
Ligtas, he had been a tenant of Anecita Pacate and her late
husband, Andres Pacate since 1993.  Andres Pacate installed him
[16]

as tenant of the 1.5 to two hectares of land involved in the


criminal case. [17]

Ligtas allegedly "made his first harvest in 1997."  He then gave
[18]

Anecita Pacate her share to the harvest.  However, he could not


[19]

remember the exact amount anymore.  Previously, Ligtas and


[20]

Pablo Palo were workers in another land, around 15 hectares,


owned by Anecita Pacate and Andres Pacate. [21]

Ligtas alleged that on June 28, 2000, Anecita Pacate sent workers
to harvest abaca from the land he cultivated. Ligtas prevented
the men from harvesting the abaca since he was the rightful
tenant of the land. [22]

Furthermore, Ligtas denied harvesting abaca at the plantation on


June 29, 2000. He claimed that he was with Cabero and Cipres
attending a barangay fiesta at Sitio Hubasan, San Juan, Sogod,
Southern Leyte, when the alleged harvesting happened. [23]

Meanwhile, Ligtas filed a Complaint before the Department of


Agrarian Reform Adjudication Board (DARAB) of Sogod, Southern
Leyte for Maintenance of Peaceful Possession on November 21,
2000.  On January 22, 2002, the DARAB rendered the
[24]

Decision  ruling that Ligtas was a bona fide tenant of the land.
[25] [26]

While records are bereft as to when the DARAB Decision was


formally offered as evidence before the trial court, records are
clear that the DARAB Decision was considered by both the trial
court  and Court of Appeals  and without any objection on the
[27] [28]

part of the People of the Philippines. [29]

In the Decision dated August 16, 2006, the Regional Trial Court
held that "the prosecution was able to prove the elements of
theft[.]"  Ligtas' "defense of tenancy was not supported by
[30]

concrete and substantial evidence nor was his claim of harvest


sharing between him and [Anecita Pacate] duly corroborated by
any witness."  His "defense of alibi cannot prevail over the
[31]

positive identification ... by prosecution witnesses."


[32]

The dispositive portion of the Decision reads:


WHEREFORE, finding the accused Monico Ligtas guilty beyond
reasonable doubt of the crime of Theft, this court hereby renders
judgment, sentencing him:
1. To suffer the indeterminate penalty of four (4) years, nine
(9) months and ten (10) days as minimum to eight (8) years
and eight (8) months as maximum;
2. To indemnify the offende[d] party:
a.
b. The amount of P29,000.00 for the value of the abaca
stole[n];
c. The amount of P5000.00 as moral damages;
d. The amount of P10,000.00 as litigation
expenses/attorney's fees;
3.
4. To pay the costs.
SO ORDERED. [33]

The Court of Appeals affirmed the ruling of the trial court.


 According to it, "the burden to prove the existence of the
[34]

tenancy relationship"  belonged to Ligtas. He was not able to


[35]

establish all the essential elements of a tenancy agreement.[36]

The Court of Appeals declared that Ligtas' reliance on the DARAB


Decision "declaring him as a bonafide tenant of the . . . land is
irrelevant in the case at bar":
[37]

Jurisprudence is replete with cases declaring that "findings of or


certifications issued by the Secretary of Agrarian Reform, or his
authorized representative, in a given locality concerning the
presence or absence of a tenancy relationship between the
contending parties, are merely preliminary or provisional and are
not binding upon the courts.["] [38]

As to the ownership of the land, the Court of Appeals held that


Ligtas had taken conflicting positions. While he claimed to be a
legitimate tenant, Ligtas also assailed Anecita Pacate's title over
the land. Under Rule 131, Section 2 of the Rules of Court, a
tenant cannot deny the title of his or her landlord at the time of
the commencement of the tenancy relation. [39]

The Court of Appeals remained unconvinced as to Ligtas'


allegations on ownership. "He claims that the parcel of land
owned by [Anecita Pacate] is different from the subject abaca
land. However, such assertion was based merely on the
testimony of the municipal assessor, not an expert competent to
identify parcels of land."
[40]

More importantly, the Court of Appeals ruled that Ligtas


committed theft by harvesting abaca from Anecita Pacate's
plantation.  Ligtas had constructive possession of the subject of
[41]

the theft without the owner's consent.  "The subject of the crime
[42]

need not be carried away or actually taken out from the land in
order to consummate the crime of theft." [43]

Furthermore, Ligtas' argument that the abaca did not constitute


as personal property under the meaning of Article 308 of the
Revised Penal Code was erroneous.  Following the definition of
[44]

personal property, the abaca hemp was "capable of appropriation


[and] [could] be sold and carried away from one place to
another."  The Court of Appeals affirmed the trial court's finding
[45]

that about 1,000 kilos of abaca were already harvested.  Hence, [46]

all the elements of theft under Article 308 of the Revised Penal
Code were sufficiently established by the prosecution.

The Court of Appeals ruled that Ligtas' defense of alibi could not
excuse him from criminal liability.  His alibi was doubtfully
[47]

established. "[W]here an accused's alibi is established only by


himself, his relatives and friends, his denial of culpability should
be accorded the strictest scrutiny."
[48]

Ligtas' attack on the credibility of the witnesses did not prosper.


 He failed to show that the case was initiated only through
[49]
Anecita Pacate's quest for revenge or to ensure that Ligtas would
be evicted from the land. [50]

The Court of Appeals dismissed Ligtas' appeal and affirmed the


trial court's Decision finding Ligtas guilty beyond reasonable
doubt of theft under Article 308 of the Revised Penal Code.  The
[51]

dispositive portion of the Decision reads:


WHEREFORE, the instant Appeal is DISMISSED. Accordingly,
the assailed Decision dated . . . August 16, 2006 of the Regional
Trial Court of Sogod, Southern Leyte, Branch 39, in Criminal Case
No. R-225, finding accused-appellant Monico Ligtas guilty beyond
reasonable doubt of Theft under Article 308 of the Revised Penal
Code, is hereby AFFIRMED in all respects.

SO ORDERED. [52]

Ligtas filed a Motion for Reconsideration,  which the Court of


[53]

Appeals denied on February 2, 2012. [54]

II

On April 4, 2012, Ligtas filed this Petition assailing the Court of


Appeals Decision and Resolution.  This court required People of
[55]

the Philippines to file its Comment on the Petition within 10 days


from notice.[56]

The issues for consideration of this court are:

First, whether questions of fact may be raised in a petition for


review on certiorari under Rule 45 of the Rules of Court;

Second, whether the DARAB Decision, finding petitioner Monico


Ligtas as tenant of the land owned by private complainant Anecita
Pacate and located at Sitio Lamak, Barangay San Juan, Sogod,
Southern Leyte is conclusive or can be taken judicial notice of in a
criminal case for theft; and
Third, whether the Court of Appeals committed reversible error
when it upheld the conviction of petitioner Monico Ligtas for theft
under Article 308 of the Revised Penal Code.

The Petition is meritorious.

III

Petitioner argues that the findings of fact of both the trial court
and Court of Appeals must be revisited for being "conclusions
without citation of specific evidence on record and premised on
the supposed absence of evidence on the claim of petitioner [as]
tenant." [57]

Only questions of law are allowed in a petition for review under


Rule 45  of the Rules of Court.  Factual findings of the Regional
[58] [59]

Trial Court are conclusive and binding on this court when affirmed
by the Court of Appeals.  This court has differentiated between a
[60]

question of law and question of fact:


A question of law exists when the doubt or controversy concerns
the correct application of law or jurisprudence to a certain set of
facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood
of facts being admitted. A question of fact exists when the doubt
or difference arises as to the truth or falsehood of facts or when
the query invites calibration of the whole evidence considering
mainly the credibility of the witnesses, the existence and
relevancy of specific surrounding circumstances as well as their
relation to each other and to the whole, and the probability of the
situation.  (Emphasis supplied)
[61]

Petitioner admits that the Petition raises substantially factual


issues that are beyond the scope of the Rule he seeks redress
from.  However, there are exceptions to the rule that only
[62]

questions of law should be the subject of a petition for review


under Rule 45:
(1) when the findings are grounded entirely on speculation,
surmises or conjectures, (2) when the inference made is
manifestly mistaken, absurd or impossible, (3) when there is
grave abuse of discretion, (4) when the judgment is based on
misapprehension of facts, (5) when the findings of fact are
conflicting, (6) when in making its findings, the CA went beyond
the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee, (7) when the
CA's findings are contrary to those by the trial court, (8) when
the findings are conclusions without citation of specific evidence
on which they are based, (9) when the acts set forth in the
petition as well as in the petitioner's main and reply briefs are not
disputed by the respondent, (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted
by the evidence on record, or (11) when the CA manifestly
overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion.
 (Emphasis supplied, citation omitted)
[63]

This court has held before that a re-examination of the facts of


the case is justified "when certain material facts and
circumstances had been overlooked by the trial court which, if
taken into account, would alter the result of the case in that they
would introduce an element of reasonable doubt which would
entitle the accused to acquittal." [64]

The issue of tenancy, in that whether a person is an agricultural


tenant or not, is generally a question of fact.  To be precise,
[65]

however, the existence of a tenancy relationship is a legal


conclusion based on facts presented corresponding to the
statutory elements of tenancy. [66]

The Court of Appeals committed reversible error in its assailed


Decision when it held that all the essential elements of the crime
of theft were duly proven by the prosecution despite petitioner
having been pronounced a bona fide tenant of the land from
which he allegedly stole.  A review of the records of the case is,
[67]

thus, proper to arrive at a just and equitable resolution.

IV
Petitioner claims that private complainant's filing of criminal
charges was motivated by ill will and revenge.  The charges were
[68]

designed to remove petitioner from the land he has legitimately


occupied as tenant.  Telling is the fact that petitioner filed his
[69]

Complaint before the DARAB on November 21, 2000, while the


Information for Theft was filed on December 8, 2000. [70]

Petitioner argues that he has sufficiently established his status as


private complainant's tenant.  The DARAB Decision is entitled to
[71]

respect, even finality, as the Department of Agrarian Reform is


the administrative agency vested with primary jurisdiction and
has acquired expertise on matters relating to tenancy
relationship. [72]

The findings of the DARAB were also supported by substantial


evidence.  To require petitioner to prove tenancy relationship
[73]

through evidence other than the DARAB Decision and the


testimonies of the witnesses is absurd and goes beyond the
required quantum of evidence, which is substantial evidence. [74]

Also, according to petitioner, the DARAB Decision has attained


finality since private complainant did not file an appeal. The
DARAB's finding as to the parties' tenancy relationship constitutes
as res judicata. [75]

On the other hand, respondent argues that the Court of Appeals


correctly disregarded the DARAB Decision.  The trial court could
[76]

not have taken judicial notice of the DARAB Decision:


While the DARAB . . . ruled that petitioner is a bonafide tenant of
Pacate, courts are not authorized to take judicial notice of the
contents of the records of other cases even when such cases have
been tried or are pending in the same court, and notwithstanding
the fact that both cases may have been heard or are actually
pending before the same judge.  (Citation omitted)
[77]

Moreover, according to respondent, petitioner invokes conflicting


defenses: that there is a legitimate tenancy relationship between
him and private complainant and that he did not take the abaca
hemp.  Nevertheless, respondent maintains that petitioner failed
[78]
to prove all the essential elements of a tenancy relationship
between him and private complainant.  Private complainant did
[79]

not consent to the alleged tenancy relationship.  Petitioner also


[80]

failed to provide evidence as to any sharing of harvest between


the parties.
[81]

We hold that a DARAB decision on the existence of a tenancy


relationship is conclusive and binding on courts if supported by
substantial evidence.

Generally, decisions in administrative cases are not binding on


criminal proceedings. This court has ruled in a number of cases
that:
It is indeed a fundamental principle of administrative law that
administrative cases are independent from criminal actions for
the same act or omission. Thus, an absolution from a criminal
charge is not a bar to an administrative prosecution, or vice
versa. One thing is administrative liability; quite another thing is
the criminal liability for the same act.

....

Thus, considering the difference in the quantum of evidence, as


well as the procedure followed and the sanctions imposed in
criminal and administrative proceedings, the findings and
conclusions in one should not necessarily be binding on the other.
Notably, the evidence presented in the administrative case may
not necessarily be the same evidence to be presented in the
criminal cases.  (Emphasis supplied, citations omitted)
[82]

However, this case does not involve an administrative charge


stemming from the same set of facts involved in a criminal
proceeding. This is not a case where one act results in both
criminal and administrative liability. DARAB Case No. VIII-319-
SL-2000 involves a determination of whether there exists a
tenancy relationship between petitioner and private complainant,
while Criminal Case No. R-225 involves determination of whether
petitioner committed theft. However, the tenancy relationship is a
factor in determining whether all the elements of theft were
proven by the prosecution.

In its Decision dated January 22, 2002, the DARAB found:


All the necessary requisites in order to establish tenancy
relationship as required in the above-quoted Supreme Court
ruling, has been established by the evidence submitted by
plaintiff; And these evidences were not controverted by any
evidence submitted by the respondent.

In fine, this board found plaintiff a bonafide tenant of the land in


question and as such is entitled to a security of tenure, in which
case he shall not be dispossessed of his holdings by the
landowner except for any of the causes provided by law and only
after the same has been proved before, and the dispossession is
authorized by the Court and in the judgment that is final and
executory[.]  (Citations omitted)
[83]

The dispositive portion of the DARAB Decision provides:


WHEREFORE, premises being considered, judgment is hereby
rendered, finding Monico Ligtas a bonafide tenant of the land
subject in this case and well described in paragraph three (3) in
the complaint, and ordering as follows, to wit:
1. The respondent and all other persons acting for and in her
behalf to maintain plaintiff in the peaceful possession of the
land in dispute;
2. The MARO of Sogod, Southern Leyte, and concurrently the
cluster Manager of Sogod Bay DAR Cluster to call the parties
and assist them in the execution of a leasehold contract
covering the land in dispute, and for the parties to respect
and obey such call of the said MARO in compliance with the
legal mandate.
3. Ordering the respondent to pay plaintiff the amount of Five
Thousand (P5,000.00) Pesos representing the expenses
incurred by plaintiff in vindicating his right and other actual
expenses incurred in this litigation.
Other relief sought are hereby ordered dismissed for lack of
evidence.
No cost.

SO DECIDED. [84]

Private complainant did not appeal the DARAB's findings.

Findings of fact of administrative agencies in the exercise of their


quasi-judicial powers are entitled to respect if supported by
substantial evidence.  This court is not tasked to weigh again
[85]

"the evidence submitted before the administrative body and to


substitute its own judgment [as to] the sufficiency of evidence." [86]

The DARAB is the quasi-judicial tribunal that has the primary


jurisdiction to determine whether there is a tenancy relationship
between adverse parties.  This court has held that "judicial
[87]

determinations [of the a DARAB] have the same binding effect as


judgments and orders of a regular judicial body."  Disputes
[88]

under the jurisdiction of the DARAB include controversies relating


to:
tenurial arrangements, whether leasehold, tenancy, stewardship
or otherwise, over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons
in negotiating, fixing, maintaining, changing or seeking to
arrange terms or conditions of such tenurial arrangements. [89]

In Salazar v. De Leon,  this court upheld the Department of


[90]

Agrarian Reform's primary jurisdiction over agrarian disputes,


which includes the relationship between landowners and tenants.
 The DARAB Decision is conclusive and binding on courts when
[91]

supported by substantial evidence.  This court ruled that


[92]

administrative res judicata exists in that case:


Significantly, respondent did not appeal the Decision dated 17
November 1995 of the DARAB in DARAB Case # II-380-ISA'94;
consequently, the same has attained finality and constitutes res
judicata on the issue of petitioner's status as a tenant of
respondent.
Res judicata is a concept applied in the review of lower court
decisions in accordance with the hierarchy of courts. But
jurisprudence has also recognized the rule of administrative res
judicata: "The rule which forbids the reopening of a matter once
judicially determined by competent authority applies as well to
the judicial and quasi-judicial facts of public, executive or
administrative officers and boards acting within their jurisdiction
as to the judgments of courts having general judicial powers. It
has been declared that whenever final adjudication of persons
invested with power to decide on the property and rights of the
citizen is examinable by the Supreme Court, upon a writ of error
or a certiorari, such final adjudication may be pleaded as res
judicata." To be sure, early jurisprudence was already mindful
that the doctrine of  res judicata  cannot be said to apply
exclusively to decisions rendered by what are usually understood
as courts without unreasonably circumscribing the scope thereof;
and that the more equitable attitude is to allow extension of the
defense to decisions of bodies upon whom judicial powers have
been conferred.  (Emphasis supplied, citations omitted)
[93]

In Encinas v. Agustin, Jr.,  this court clarified that res


[94]

judicata applies only to decisions rendered by agencies in judicial


or quasi-judicial proceedings and not to purely administrative
proceedings:
The CA was correct in ruling that the doctrine of res
judicata applies only to judicial or quasi-judicial proceedings, and
not to the exercise of administrative powers. Administrative
powers here refer to those purely administrative in nature, as
opposed to administrative proceedings that take on a quasi-
judicial character.

In administrative law, a quasi-judicial proceeding involves (a)


taking and evaluating evidence; (b) determining facts based upon
the evidence presented; and (c) rendering an order or decision
supported by the facts proved. The exercise of quasi-judicial
functions involves a determination, with respect to the matter in
controversy, of what the law is; what the legal rights and
obligations of the contending parties are; and based thereon and
the facts obtaining, the adjudication of the respective rights and
obligations of the parties.  (Citations omitted)
[95]

We find it necessary to clarify the two concepts of res judicata:


bar by prior judgment and conclusiveness of judgment. In Social
Security Commission v. Rizal Poultry and Livestock Association,
Inc., et al.,  this court discussed and differentiated the two
[96]

concepts of res judicata:


Res judicata embraces two concepts: (1) bar by prior judgment
as enunciated in Rule 39, Section 47(b) of the Rules of Civil
Procedure; and (2) conclusiveness of judgment in Rule 39,
Section 47(c).

There is "bar by prior judgment" when, as between the first case


where the judgment was rendered and the second case that is
sought to be barred, there is identity of parties, subject matter,
and causes of action. In this instance, the judgment in the first
case constitutes an absolute bar to the second action.

But where there is identity of parties in the first and second


cases, but no identity of causes of action, the first judgment is
conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely
involved therein. This is the concept of res judicata known as
"conclusiveness of judgment." Stated differently, any right, fact
or matter in issue directly adjudicated or necessarily involved in
the determination of an action before a competent court in which
judgment is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the
parties and their privies, whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.

Thus, if a particular point or question is in issue in the second


action, and the judgment will depend on the determination of
that particular point or question, a former judgment between the
same parties or their privies will be final and conclusive in the
second if that same point or question was in issue and
adjudicated in the first suit. Identity of cause of action is not
required but merely identity of issue.
The elements of res judicata are: (1) the judgment sought to bar
the new action must be final; (2) the decision must have been
rendered by a court having jurisdiction over the subject matter
and the parties; (3) the disposition of the case must be a
judgment on the merits; and (4) there must be as between the
first and second action, identity of parties, subject matter, and
causes of action. Should identity of parties, subject matter, and
causes of action be shown in the two cases, then res judicata  in
its aspect as a "bar by prior judgment" would apply. If as
between the two cases, only identity of parties can be shown, but
not identical causes of action, then res judicata as
"conclusiveness of judgment" applies.  (Emphasis supplied,
[97]

citations omitted)
In Martillano v. Court of Appeals,  the DARAB Decision finding for
[98]

the existence of a tenancy relationship between the parties was


declared by this court as conclusive on the parties.  As in this
[99]

case, the DARAB Decision  in Martillano attained finality when


[100]

the landowner did not appeal the Decision.  This court ruled that
[101]

the doctrine of res judicata applies:


Under the afore-cited sections of RA 6657, the Department of
Agrarian Reform is empowered, through its adjudicating arm the
regional and provincial adjudication boards, to resolve agrarian
disputes and controversies on all matters pertaining to the
implementation of the agrarian law. Section 51 thereof provides
that the decision of the DARAB attains finality after the lapse of
fifteen (15) days and no appeal was interposed therefrom by any
of the parties.

In the instant case, the determination of the DARAB in DARAB


Case No. 062-Bul '89, there being no appeal interposed
therefrom, attained finality. Accordingly, the matter regarding the
status of Martillano as a tenant farmer and the validity of the CLT
and Emancipation Patents issued in his favor are settled and no
longer open to doubt and controversy.

....
We recall that DARAB Case 062-Bul '89 was for the cancellation
of petitioner's CLT and Emancipation patents. The same effect is
sought with the institution of DARAB Case No. 512-Bul '94, which
is an action to withdraw and/or cancel administratively the CLT
and Emancipation Patents issued to petitioner. Considering that
DARAB Case 062-Bul '89 has attained finality prior to the filing of
DARAB Case No. 512-Bul '94, no strenuous legal interpretation is
necessary to understand that the issues raised in the prior case,
i.e., DARAB Case No. 062-Bul '89, which have been resolved with
finality, may not be litigated anew.

The instant case is complicated by the failure of the complainant


to include Martillano as party-defendant in the case before the
adjudication board and the DARAB, although he was finally
impleaded on appeal before the Court of Appeals.

The belated inclusion of Martillano as respondent in the petition


will not affect the applicability of the doctrine of bar by prior
judgment. What is decisive is that the issues which have already
been litigated in a final and executory judgment precludes, by the
principle of bar by prior judgment, an aspect of the doctrine of
res judicata, and even under the doctrine of "law of the case,"
the re-litigation of the same issue in another action. It is well
established that when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, so long as it
remains unreversed, it should be conclusive upon the parties and
those in privity with them. The dictum therein laid down became
the law of the case and what was once irrevocably established as
the controlling legal rule or decision, continues to be binding
between the same parties as long as the facts on which the
decision was predicated, continue to be the facts of the case
before the court. Hence, the binding effect and enforceability of
that dictum can no longer be resurrected anew since said issue
had already been resolved and finally laid to rest, if not by the
principle of res judicata, at least by conclusiveness of judgment.
 (Emphasis supplied, citations omitted)
[102]

In Co v. People, et al.,  this court held that "the doctrine of


[103]

conclusiveness of judgment also applies in criminal


cases."  Petitioner in that case was charged with the violation of
[104]

Republic Act No. 1161, as amended, for the alleged non-


remittance of Social Security System contributions.  This court
[105]

upheld the findings of the National Labor Relations Commission in


a separate case, which declared the absence of an employer-
employee relationship and had attained finality.  This court held
[106]

that:
The reasons for establishing the principle of "collusiveness of
judgment" are founded on sound public policy. ... It is allowable
to reason back from a judgment to the basis on which it stands,
upon the obvious principle that where a conclusion is
indisputable, and could have been drawn only from certain
premises, the premises are equally indisputable with the
conclusion. When a fact has been once determined in the course
of a judicial proceeding, and a final judgment has been rendered
in accordance therewith, it cannot be again litigated between the
same parties without virtually impeaching the correctness of the
former decision, which, from motives of public policy, the law
does not permit to be done.

Res judicata has two concepts. The first is bar by prior judgment
under Rule 39, Section 47 (b), and the second is conclusiveness
of judgment under Rule 39, Section 47 (c). Both concepts are
founded on the principle of estoppel, and are based on the
salutary public policy against unnecessary multiplicity of suits.
Like the splitting of causes of action, res judicata is in pursuance
of such policy. Matters settled by a Court's final judgment should
not be litigated upon or invoked again. Relitigation of issues
already settled merely burdens the Courts and the taxpayers,
creates uneasiness and confusion, and wastes valuable time and
energy that could be devoted to worthier cases.  (Citations
[107]

omitted)
In VHJ Construction and Development Corporation v. Court of
Appeals,  this court ruled that tenancy relationship must be duly
[108]

proven:
[A] tenancy relationship cannot be presumed. There must be
evidence to prove this allegation. The principal factor in
determining whether a tenancy relationship exists is intent.
Tenancy is not a purely factual relationship dependent on what
the alleged tenant does upon the land. It is also a legal
relationship.  (Citation omitted)
[109]

The DARAB, in DARAB Case No. VIII-319-SL-2000, held that all


the essential elements of a tenancy relationship were proven by
petitioner.  It found that there was substantial evidence to
[110]

support petitioner's claim as tenant of the land.  In rendering [111]

the Decision, the DARAB examined pleadings and affidavits of


both petitioner and private complainant.  It was convinced by
[112]

petitioner's evidence, which consisted of sworn statements of


petitioner's witnesses that petitioner was installed as tenant by
Andres Pacate sometime in 1993.  Petitioner and Andres Pacate
[113]

had an agreement to share the produce after harvest.  However, [114]

Andres Pacate had died before the first harvest.  Petitioner then [115]

gave the landowner's share to private complainant, and had done


so every harvest until he was disturbed in his cultivation of the
land on June 29, 2000. [116]

We emphasize that after filing her Answer before the DARAB,


private complainant failed to heed the Notices sent to her and
refused to attend the scheduled hearings.  The DARAB even [117]

quoted in its Decision the reason offered by private complainant's


counsel in his Motion to Withdraw as counsel:
That as early as the preliminary hearings of the case, the
respondent has already shown her intention not to participate the
proceedings of the case for reasons known only to her;

That despite the advi[c]e of the undersigned, respondent stood


pat with her decision not to participate in the proceedings of the
case;

That in view of this predicament, the undersigned can do nothing


except to withdraw as he is now withdrawing as counsel for the
respondent of the above-entitled casef.] [118]

It is true that trial courts are not mandated to take judicial notice
of decisions of other courts or even records of other cases that
have been tried or are pending in the same court or before the
same judge.  In declaring that the DARAB's findings on the
[119]
tenancy relationship between petitioner and private complainant
are immaterial to the criminal case for theft, the Court of
Appeals  relied on Rollo, et al. v. Leal Realty Centrum Co., Inc.,
[120]

et al. [121]

In Rollo, petitioners, who were farmers of a 21-hectare


agricultural land in Tarlac that was principally devoted to sugar
and rice and who claim the rights of their predecessors-in-
interest, filed separate Complaints before the Provincial
Adjudication Board of Region III in Tarlac, Tarlac. They claimed
that when the registered owner of the land, Josefina Roxas
Omaña, sold the land to respondents, respondents were aware of
the tenancy relationship between petitioners and Josefina Roxas
Omaña. [122]

Respondents offered a compensation package to petitioners in


exchange for the renunciation of their tenancy rights under the
Comprehensive Agrarian Reform Law. However, they failed to
comply with their obligations under the terms of the
compensation package.  Petitioners then filed a series of
[123]

Complaints before the DARAB. The cases were consolidated and


resolved by the Provincial Adjudicator.
[124]

The Provincial Adjudicator ruled, among other things, that "there


was no tenancy relationship [that] existed between the
parties."  He found that petitioners and their predecessors-in-
[125]

interest were mere hired laborers, not tenants. Tenancy cannot


be presumed from respondents' offer of a compensation package.
[126]

On appeal, the DARAB reversed the Decision of the Provincial


Adjudicator. It found that there was an implied tenancy between
the parties. Petitioners were deemed tenants of the land for more
than 30 years. They were entitled to security of tenure.
[127]

The Court of Appeals reversed the DARAB Decision and reinstated


the Provincial Adjudicator's Decision. It held that there was no
substantial evidence to prove that all the requisites of tenancy
relationship existed. However, despite the lack of tenancy
relationship, the compensation package agreement must be
upheld.[128]

This court affirmed the Court of Appeals Decision.  It held that
[129]

petitioners failed to overcome the burden of proving the existence


of a tenancy relationship:
At the outset, the parties do not appear to be the landowner and
the tenants. While it appears that there was personal cultivation
by petitioners and their predecessors-in-interest of the subject
landholding, what was established was that petitioners' claim of
tenancy was founded on the self-serving testimony of petitioner
Rodolfo Rollo that his predecessors-in-interest had been in
possession of the landholding for more than 30 years and had
engaged in a "50-50" sharing scheme with JOSEFINA and
JOSEFINA's grandmother, the previous owner thereof. Self-
serving statements in pleadings are inadequate; proof must be
adduced. Such claims do not suffice absent concrete evidence to
support them. The burden rests on the shoulders of petitioners to
prove their affirmative allegation of tenancy, which burden they
failed to discharge with substantial evidence. Such a juridical tie
must be aptly shown. Simply put, he who alleges the affirmative
of the issue has the burden of proof, and from the plaintiff in a
civil case, the burden of proof never parts. The same rule applies
to administrative cases. In fact, if the complainant, upon whom
rests the burden of proving his cause of action, fails to show in a
satisfactory manner the facts upon which he bases his claim, the
respondent is under no obligation to prove his exception or
defense....

Neither was it shown to the satisfaction of this Court that there


existed a sharing of harvests in the context of a tenancy
relationship between petitioners and/or their predecessors-in-
interest and JOSEFINA. Jurisprudence is illuminating to the effect
that to prove such sharing of harvests, a receipt or any other
evidence must be presented. None was shown. No receipts were
presented as testaments to the claimed sharing of harvests. The
only evidence submitted to establish the purported sharing of
harvests was the testimony of petitioner Rodolfo Rollo. The
sharing arrangement cannot be deemed to have existed on the
basis alone of petitioner Rodolfo Rollo's claim. It is self-serving
and is without evidentiary value. Self-serving statements are
deemed inadequate; competent proof must be adduced. If at all,
the fact alone of sharing is not sufficient to establish a tenancy
relationship.

We also sustain the conclusion reached by the Provincial


Adjudicator and the Court of Appeals that the testimony of Araceli
Pascua, an employee of the DAR in Victoria, Tarlac, that the
subject landholding was tenanted cannot overcome substantial
evidence to the contrary. To prove the alleged tenancy no
reliance may be made upon the said public officer's testimony.
What cannot be ignored is the precedent ruling of this Court that
the findings of or certifications issued by the Secretary of
Agrarian Reform, or his authorized representative, in a given
locality concerning the presence or absence of a tenancy
relationship between the contending parties, are merely
preliminary or provisional and are not binding upon the
courts. This ruling holds with greater effect in the instant case in
light of the fact that petitioners, as herein shown, were not able
to prove the presence of all the indispensable elements of
tenancy.  (Emphasis supplied, citations omitted)
[130]

Thus, in Rollo, this court did not categorically hold that the
DARAB's findings were merely provisional and, thus, not binding
on courts. What was deemed as a preliminary determination of
tenancy was the testimony of the Department of Agrarian Reform
employee stating that the land involved was tenanted. Further,
the tribunals had conflicting findings on whether petitioners were
bona fide tenants.

In this case, records are bereft as to whether private complainant


appealed the DARAB Decision. Thus, it is presumed that the
Decision has long lapsed into finality.  It is also established that
[131]

private complainant participated in the initial stages of the DARAB


proceedings.  Therefore, the issue of the existence of a tenancy
[132]

relationship is final as between the parties. We cannot collaterally


review the DARAB's findings at this stage. The existence of the
final Decision that tenancy exists creates serious doubts as to the
guilt of the accused.

VI

According to petitioner, the elements of theft under Article 308 of


the Revised Penal Code were not established since he was a bona
fide tenant of the land.  The DARAB's recognition of petitioner as
[133]

a legitimate tenant necessarily "implie[d] that he ha[d] the


authority to harvest the abaca hemp from [private complainant's
land]."  This shows that petitioner had no criminal intent.
[134]

As to the existence of another element of theft—that the taking


was done without the consent of the owner—petitioner argues
that this, too, was negated by his status as private complainant's
tenant:
The purported lack of consent on the part of the private
complainant as alleged by the prosecution, is misplaced. In fact,
it was even improper for Anecita Pacate to stop or prevent
petitioner from harvesting the produce of the landholding because
as tenant, petitioner is entitled to security of tenure. This right
entitled him to continue working on his landholding until the
leasehold relation is terminated or until his eviction is authorized
by the DARAB in a judgment that is final and executory.
 (Citation omitted)
[135]

Petitioner argues that the constitutional presumption of innocence


must be upheld:
Well-settled is the rule that where "inculpatory facts and
circumstances are capable of two or more explanations, one of
which is consistent with the innocence of the accused and the
other consistent with his guilt, then the evidence does not fulfill
the test of moral certainty and is not sufficient to support a
conviction." In acquitting an appellant, we are not saying that he
is lily-white, or pure as driven snow. Rather, we are declaring his
innocence because the prosecution's evidence failed to show his
guilt beyond reasonable doubt. For that is what the basic law
requires. Where the evidence is insufficient to overcome the
presumption of innocence in favour of the accused, then his
"acquittal must follow in faithful obeisance to the fundamental
law."  (Citations omitted)
[136]

The Court of Appeals erred when it affirmed the findings of the


trial court finding petitioner guilty beyond reasonable doubt of
theft.

Article 308 of the Revised Penal Code provides:


ARTICLE. 308. Who are Liable for Theft. — Theft is committed by
any person who, with intent to gain but without violence against
or intimidation of persons nor force upon things, shall take
personal property of another without the latter's consent.

Theft is likewise committed by:


1. Any person who, having found lost property, shall fail to
deliver the same to the local authorities or to its owner;
2. Any person who, after having maliciously damaged the
property of another, shall remove or make use of the fruits
or object of the damage caused by him; and
3. Any person who shall enter an enclosed estate or a field
where trespass is forbidden or which belongs to another and
without the consent of its owner, shall hunt or fish upon the
same or shall gather fruits, cereals, or other forest or farm
products.
The essential elements of theft are: (1) taking of personal
property; (2) the property taken belongs to another; (3) the
taking was done without the owner's consent; (4) there was
intent to gain; and (5) the taking was done without violence
against or intimidation of the person or force upon things.
[137]

Tenants have been defined as:


persons who — in themselves and with the aid available from
within their immediate farm households — cultivate the land
belonging to or possessed by another, with the latter's consent,
for purposes of production, sharing the produce with the
landholder under the share tenancy system, or paying to the
landholder a price certain or ascertainable in produce or money or
both under the leasehold tenancy system.  (Citation omitted)
[138]
Under this definition, a tenant is entitled to the products of the
land he or she cultivates. The landowner's share in the produce
depends on the agreement between the parties. Hence, the
harvesting done by the tenant is with the landowner's consent.

The existence of the DARAB Decision adjudicating the issue of


tenancy between petitioner and private complainant negates the
existence of the element that the taking was done without the
owner's consent. The DARAB Decision implies that petitioner had
legitimate authority to harvest the abaca. The prosecution,
therefore, failed to establish all the elements of theft.

In Pit-og v. People,  this court acquitted petitioner of theft of


[139]

sugarcane and banana crops on the basis of reasonable doubt.


 The prosecution failed to prove lack of criminal intent on
[140]

petitioner's part.  It failed to clearly identify "the person who, as


[141]

a result of a criminal act, without his knowledge and consent, was


wrongfully deprived of a thing belonging to him."  There were
[142]

doubts as to whether the plants taken by petitioner were indeed


planted on private complainant's lot when petitioner had planted
her own plants adjacent to it.  Thus, it was not proven beyond
[143]

reasonable doubt that the property belonged to private


complainant. This court found that petitioner "took the sugarcane
and bananas believing them to be her own. That being the case,
she could not have had a criminal intent." [144]

In this case, petitioner harvested the abaca, believing that he was


entitled to the produce as a legitimate tenant cultivating the land
owned by private complainant. Personal property may have been
taken, but it is with the consent of the owner.

No less than the Constitution provides that the accused shall be


presumed innocent of the crime until proven guilty.  "[I]t is [145]

better to acquit ten guilty individuals than to convict one innocent


person."  Thus, courts must consider "[e]very circumstance
[146]

against guilt and in favor of innocence[.]"  Equally settled is that


[147]

"[w]here the evidence admits of two interpretations, one of which


is consistent with guilt, and the other with innocence, the accused
must be given the benefit of doubt and should be acquitted." [148]

In view of petitioner's acquittal based on reasonable doubt, we


find it unnecessary to discuss further the other errors raised by
petitioner.

WHEREFORE, the Petition is GRANTED. The Court of Appeals


Decision dated March 16, 2010 and the Resolution dated February
2, 2012 are REVERSED and SET ASIDE. Petitioner Monico Ligtas
is ACQUITTED of the crime of theft under Article 308 of the
Revised Penal Code. If detained, he is ordered
immediately RELEASED, unless he is confined for any other
lawful cause. Any amount paid by way of a bailbond is
ordered RETURNED.

SO ORDERED.

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


concur.

[1]
 Rollo, pp. 8-23.

 Id. at 92-110. The case was docketed as CA-G.R. CEB-CR No.


[2]

00482. The Decision was penned by Associate Justice Edwin D.


Sorongon and concurred in by Associate Justices Edgardo L. Delos
Santos (Chair) and Socorro B. Inting of the Eighteenth Division,
Court of Appeals Cebu City.

 Id. at 118-119. The Resolution was penned by Associate Justice


[3]

Edgardo L. Delos Santos (Chair) and concurred in by Associate


Justices Ramon Paul L. Hernando and Victoria Isabel A. Paredes
of the Nineteenth Division, Court of Appeals Cebu City.

[4]
 Id. at 21.
 Id. at 35-49-A. The Decision was penned by Judge Rolando L.
[5]

Gonzalez of Branch 39 of the Regional Trial Court of Sogod,


Southern Leyte.

[6]
 Id. at 109.

 Id. at 92. See REV. PEN. CODE, art. 308. Who are Liable for
[7]

Theft. — Theft is committed by any person who, with intent to


gain but without violence against or intimidation of persons nor
force upon things, shall take personal property of another without
the latter's consent.

Theft is likewise committed by:


1. Any person who, having found lost property, shall fail to
deliver the same to the local authorities or to its owner;
2. Any person who, after having maliciously damaged the
property of another, shall remove or make use of the fruits
or object of the damage caused by him; and
3. Any person who shall enter an enclosed estate or a field
where trespass is forbidden or which belongs to another and
without the consent of its owner, shall hunt or fish upon the
same or shall gather fruits, cereals, or other forest or farm
products.
 Id. at 93.
[8]

[9]
 Id.

[10]
 Id.

[11]
 Id. at 93-98.

[12]
 Id. at 94 and 96.

 Id. at 94 and 96-99. The confrontation was pursuant to a


[13]

summons sent to Ligtas by the Sogod police.

[14]
 Id. at 94.
[15]
 Id. at 42-47.

 Id at 45 and 99. Records show that Anecita Pacate and Andres
[16]

Pacate, Sr. (Id. at 17) had two sons: Ernesto Pacate and Andres
Pacate, Jr. (Id. at 42). However, Andres Pacate, Sr. is referred to
in the records as "Andres Pacate."

[17]
 Id.

[18]
 Id. at 45.

[19]
 Id.

[20]
 Id.

[21]
 Id. at 42-47.

[22]
 Id. at 46 and 99.

[23]
 Id.

[24]
 Id. at 28 and 196.

 Id. at 28-34. The case was docketed as DARAB Case No. VIII-
[25]

319-SL-2000. The Decision was penned by Provincial Adjudicator


Miguel G. Polinar.

[26]
 Id. at 33.

[27]
 Id. at 49.

[28]
 Id. at 104.

[29]
 Id. at 178.

[30]
 Id. at 48.

[31]
 Id.
[32]
 Id. at 100.

 Id. at 49-A. Per the testimonies of the witnesses before the trial
[33]

court and as adopted by the Court of Appeals, the "Kasabutan" or


Agreement dated February 24, 2007 was previously executed
between Ligtas and Anecita Pacate. The Agreement involved
another incident of theft committed by Ligtas against Anecita
Pacate. He was also charged with theft in 1988; however, the
case was ultimately dismissed (Id. at 18-19, 37, 40, 41-43, 46-
47, and 49).

[34]
 Id. at 109.

[35]
 Id. at 101.

[36]
 Id. at 101-103.

[37]
 Id. at 104.

 Id., citing Cornes, et al. v. Leal Realty Centrum Co., Inc., et al.,


[38]

582 Phil. 528, 552 (2008) [Per J. Chico-Nazario, Third Division].

[39]
 Id. at 108.

[40]
 Id.

[41]
 Id. at 105.

[42]
 Id.

[43]
 Id.

[44]
 Id. at 105-106.

[45]
 Id. at 106.

[46]
 Id.
[47]
 Id.

[48]
 Id. at 107-108.

[49]
 Id. at 107.

[50]
 Id. at 108.

[51]
 Id. at 109.

[52]
 Id.

[53]
 Id. at 112-115.

[54]
 Id. at 118-119.

 Id. at 21. Petitioner filed a Motion for Extension of Time to File


[55]

Petition for Review for 30 days dated March 2, 2012 (Id. at 2-4),
which the court granted (Id. at 122).

 Id. at 122. The Resolution was dated March 4, 2013.


[56]

Respondent, through the Office of the Solicitor General, filed its


Comment on June 27, 2013 (Id. at 128-143). In the Resolution
(Id. at 145) dated August 14, 2013, this court noted the
Comment and required petitioner to file a Reply to the Comment.
Petitioner filed his Reply (Id. at 147-149) dated October 14,
2013, which we noted on January 15, 2014 (Id. at 152). In the
Resolution (Id. at 165-167) dated July 14, 2014, this court gave
due course to the petition and required the parties to submit their
respective Memoranda within 30 days from notice. Petitioner's
Memorandum (Id. at 184-201) dated October 8, 2014 was posted
on October 10, 2014 (Id. at 184). Respondent filed its
Memorandum (Id. at 174-182) dated October 2, 2014 before this
court on October 3, 2014 (Id. at 174).

[57]
 Id. at 190.
[58]
 RULES OF COURT, Rule 45, sec. 1 provides:

SECTION 1. Filing of petition with Supreme Court.—A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

 See Delos Reyes Vda. Del Prado v. People, G.R. No. 186030,
[59]

March 21, 2012, 668 SCRA 768, 778 [Per J. Reyes, Second
Division].

 See People v. Cardenas, G.R. No. 190342, March 21, 2012, 668
[60]

SCRA 827, 844-845 [Per J. Sereno (now C.J.), Second Division].

 Ruiz v. People, 512 Phil. 127, 135 (2005) [Per J. Callejo, Sr,
[61]

Second Division], quoting Republic v. Sandiganbayan, 425 Phil.


752, 765-766 (2002) [Per C.J. Davide, Jr., En Banc].

[62]
 Rollo, p. 190.

 Delos Reyes Vda. Del Prado v. People, G.R. No. 186030, March
[63]

21, 2012, 668 SCRA 768, 779-780 [Per J. Reyes, Second


Division].

 Pit-og v. People, 268 Phil. 413, 420 (1990) [Per C.J. Fernan,
[64]

Third Division].

 Cornes, et al. v. Leal Realty Centrum Co., Inc., et al., 582 Phil.
[65]

528, 548 (2008) [Per J. Chico-Nazario, Third Division], citing Mon


v. Court of Appeals, 471 Phil. 65, 78 (2004) [Per J. Carpio, First
Division].

 See Heirs of Nicolas Jugalbot v. Court of Appeals, 547 Phil. 113,


[66]

120 (2007) [Per J. Ynares-Santiago, Third Division]: "Tenancy is


not a purely factual relationship dependent on what the alleged
tenant does upon the land. It is also a legal relationship[.]"

[67]
 Rollo, p. 33.

[68]
 Id. at 194-195.

[69]
 Id. at 195.

[70]
 Id. at 196.

[71]
 Id. at 191.

[72]
 Id.

[73]
 Id. at 193-194.

[74]
 Id. at 194.

[75]
 Id. at 192.

[76]
 Id. at 177.

[77]
 Id. at 178.

[78]
 Id. at 179.

[79]
 Id. at 179-180.

[80]
 Id. at 180.

[81]
 Id. at 178.

 Paredes v. Court of Appeals, 555 Phil. 538, 549-550 (2007)


[82]

[Per J. Chico-Nazario, Third Division].

[83]
 Rollo, p. 33.
[84]
 Id. at 33-34.

 See Miro v. Mendoza Vda. de Erederos, G.R. Nos. 172532 &


[85]

172544-45, November 20, 2013, 710 SCRA 371, 383 [Per J.


Brion, Second Division].

 See Autencio v. City Administrator Mañara, 489 Phil. 752, 761


[86]

(2005) [Per J. Panganiban, Third Division].

[87]
 Rep. Act No. 6657 (1988), sec. 50 provides:

SEC. 50. Quasi-Judicial Powers of the DAR.—The DAR is hereby


vested with primary jurisdiction to determine and adjudicate
agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive
jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).

It shall not be bound by technical rules of procedure and evidence


but shall proceed to hear and decide all cases, disputes or
controversies in a most expeditious manner, employing all
reasonable means to ascertain the facts of every case in
accordance with justice and equity and the merits of the case.
Toward this end, it shall adopt a uniform rule of procedure to
achieve a just, expeditious and inexpensive determination of
every action or proceeding before it.

It shall have the power to summon witnesses, administer oaths,


take testimony, require submission of reports, compel the
production of books and documents and answers to
interrogatories and issue subpoena, and subpoena duces tecum
and to enforce its writs through sheriffs or other duly deputized
officers. It shall likewise have the power to punish direct and
indirect contempts in the same manner and subject to the same
penalties as provided in the Rules of Court.
Responsible farmer leaders shall be allowed to represent
themselves, their fellow farmers, or their organizations in any
proceedings before the DAR: Provided, however, That when there
are two or more representatives for any individual or group, the
representatives should choose only one among themselves to
represent such party or group before any DAR proceedings.

Notwithstanding an appeal to the Court of Appeals, the decision


of the DAR shall be immediately executory. (Emphasis supplied)

 Martillano v. Court of Appeals, 447 Phil. 226, 236-237 (2004)


[88]

[Per J. Ynares-Santiago, First Division], citing Rep. Act No. 6657


(1988), secs. 50 and 51.

 Suarez v. Saul, 510 Phil. 400, 409 (2005) [Per J. Ynares-


[89]

Santiago, First Division], citing Rep. Act No. 6657 (1988), sec. 3


(d) in relation to sec. 50 and DARAB Rules of Procedure, Rule II,
sec. 1.

[90]
 596 Phil. 472 (2009) [Per J. Chico-Nazario, Third Division].

[91]
 Id. at 484-486.

[92]
 Id. at 489.

[93]
 Id. at 488-489.

 G.R. No. 187317, April 11, 2013, 696 SCRA 240 [Per C.J.
[94]

Sereno, En Banc].

[95]
 Id. at 260-261.

[96]
 665 Phil. 198 (2011) [Per J. Perez, First Division].

[97]
 Id. at 205-206.

[98]
 477 Phil. 226 (2004) [Per J. Ynares-Santiago, First Division].
[99]
 Id. at 236-237.

 Id. at 229-230. The DARAB Decision pertains to DARAB Case


[100]

No. 062-Bul '89, which resolved Abelardo Valenzuela, Jr.'s


Complaint for "the cancellation of the Certificate of Land Transfer
(CLT) No. 0-042751 and/or Emancipation Patent Nos. A-308399
issued in favor of [petitioner] Nicanor Martillano. On April 4,
1990, Valenzuela sold 19 parcels of land[,] . . . more or less
1.3785 hectares[,] to private respondent [William] Po Cham."

[101]
 Id. at 236-237.

[102]
 Id. at 237-239.

[103]
 610 Phil. 60 (2009) [Per J. Corona, First Division].

[104]
 Id. at 69.

[105]
 Id. at 63-64.

[106]
 Id. at 67.

[107]
 Id. at 70-71.

[108]
 480 Phil. 28 (2004) [Per J. Callejo, Sr., Second Division].

[109]
 Id. at 35.

 Rollo, p. 33. See VHJ Construction and Development


[110]

Corporation v. Court of Appeals, 480 Phil. 28, 35 (2004) [Per J.


Callejo, Sr., Second Division]: "The requisites of a tenancy
relationship are as follows: (1) the parties are the landowner and
the tenant; (2) the subject is agricultural land; (3) there is
consent by the landowner; (4) the purpose is agricultural
production; (5) there is personal cultivation; and (6) there is
sharing of the harvests."

[111]
 Rollo, p. 33. See RULES OF COURT, Rule 133, sec. 5 provides:
SECTION 5. Substantial evidence.—In cases filed before
administrative or quasi-judicial bodies, a fact may be deemed
established if it is supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.

[112]
 Rollo, pp. 29-32.

[113]
 Id. at 29-30.

[114]
 Id. at 30.

[115] Id.

 Id. The DARAB Decision states that Ligtas had peacefully


[116]

cultivated the land from 1993 to June 29, 2000, when respondent
Anecita Pacate ordered men to harvest abaca from the land.

[117]
 Id. at 28.

[118]
 Id. at 29.

[119]
 See RULES OF COURT, Rule 129, secs. 1 and 2 provide:

SECTION 1. Judicial notice, when mandatory.—A court shall take


judicial notice, without the introduction of evidence, of the
existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of
nations, the admiralty and maritime courts of the world and their
seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments
of the Philippines, the laws of nature, the measure of time, and
the geographical divisions.

SECTION 2. Judicial notice, when discretionary.—A court may


take judicial notice of matters which are of public knowledge, or
are capable of unquestionable demonstration, or ought to be
known to judges because of their judicial functions.

See also Tabuena v. Court of Appeals, et al., 274 Phil. 51, 56-57
(1991) [Per J. Cruz, First Division].

[120]
 Rollo, p. 104.

[121]
 582 Phil. 528 (2008) [Per J. Chico-Nazario, Third Division].

[122]
 Id. at 533-534.

[123]
 Id. at 534.

[124]
 Id. at 533-537.

[125]
 Id. at 537.

[126] Id.

[127]
 Id. at 540-541.

[128]
 Id. at 543-544.

[129]
 Id. at 558.

[130]
 Id. at 550-552.

[131]
 See Rep. Act No. 6657 (1988), sec. 51 provides:

SEC. 51. Finality of Determination.—Any case or controversy


before it shall be decided within thirty (30) days after it is
submitted for resolution. Only one (1) motion for reconsideration
shall be allowed. Any order, ruling or decision shall be final after
the lapse of fifteen (15) days from receipt of a copy thereof.

[132]
 Rollo, pp. 28-29 and 42.
[133]
 Id. at 199.

[134] Id.

[135] Id.

[136]
 Id. at 199-200.

 See Gan v. People, 550 Phil. 133, 159 (2007) [Per J. Chico-
[137]

Nazario, First Division]; United States v. De Vera, 43 Phil. 1000,


1003 (1921) [Per J. Villamor, En Banc]; and People v. Yusay, 50
Phil. 598, 607 (1927) [Per J. Villa-Real, En Banc].

 Cornes, et al. v. Leal Realty Centrum Co., Inc., et al., 582 Phil.
[138]

528, 548 (2008) [Per J. Chico-Nazario, Third Division]

[139]
 268 Phil. 413 (1990) [Per C.J. Fernan, Third Division].

[140]
 Id. at 416 and 423.

[141]
 Id. at 423.

[142] Id.

[143]
 Id. at 422-423.

[144]
 Id. at 423, citations omitted.

[145]
 CONST., art. III, sec. 14(2).

 Ubales v. People, 591 Phil. 238, 257 (2008) [Per J. Chico-


[146]

Nazario, Third Division].

[147] Id.

 Id. at 257-258, citing People v. Mijares, 358 Phil. 154, 166


[148]

(1998) [Per J. Panganiban, First Division]; People v. Corpuz, 459


Phil. 100, 113 (2003) [Per J. Ynares-Santiago, First Division].
Source: Supreme Court E-Library | Date created: October 30, 2017
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767 Phil. 766


SECOND DIVISION

[ G.R. No. 175098, August 26, 2015 ]


ISMAEL V. CRISOSTOMO, PETITIONER, VS.
MARTIN P. VICTORIA, RESPONDENT.DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari under Rule 45 of


the 1997 Rules of Civil Procedure praying that the July 31, 2006
Decision  and the October 20, 2006 Resolution  of the Court of
[1] [2]

Appeals Eighth Division in CA-G.R. SP No. 94107 be reversed and


set aside, and that the April 4, 2005 Decision  and March 17, [3]

2006 Resolution  of the Department of Agrarian Reform


[4]

Adjudication Board be reinstated.

The assailed July 31, 2006 Decision of the Court of Appeals


reversed and set aside the April 4, 2005 Decision and March 17,
2006 Resolution of the Department of Agrarian Reform
Adjudication Board. It recognized respondent Martin P. Victoria
(Victoria) as the bona fide tenant of a parcel of riceland owned by
petitioner Ismael V. Crisostomo (Crisostomo). The assailed
October 20, 2006 Resolution of the Court of Appeals denied
Crisostomo's Motion for Reconsideration.

The April 4, 2005 Decision and March 17, 2006 Resolution of the
Department of Agrarian Reform Adjudication Board sustained the
April 7, 2003 Decision  of the Office of the Provincial Agrarian
[5]

Reform Adjudicator of Bulacan, which ruled in favor of Crisostomo


in his action to eject Victoria from the subject riceland.

In a Complaint for Ejectment filed before the Office of the


Provincial Agrarian Reform Adjudicator of Bulacan, Crisostomo
alleged that he, along with his deceased brother Jose Crisostomo,
were the registered owners of a parcel of riceland with an area of
562,694 square meters. This was covered by Transfer Certificate
of Title No. T-68421 and located in Sta. Barbara, Baliuag,
Bulacan. On June 21, 1973, he and his brother allegedly entered
into a lease contract with David Hipolito (Hipolito) over a portion
of the riceland (disputed portion). The contract was supposedly in
effect until Hipolito's death on December 2, 1999. As Hipolito died
without any known heirs, Crisostomo was set to reclaim
possession and to take over cultivation of the disputed portion.
However, in January 2000, Victoria entered the disputed portion
and began cultivating it without the knowledge and consent of
Crisostomo. Crisostomo confronted Victoria, who insisted that he
had tenancy rights over the disputed portion.[6]

In his Answer, Victoria claimed that Hipolito was his uncle. He


alleged that even during the lifetime of Hipolito, it was he who
was doing farmwork on the disputed portion and that he did so
with Crisostomo's knowledge. He added that from the time
Hipolito became bedridden, it was he who performed all duties
pertaining to tenancy, including the delivery of lease rentals and
corresponding shares in the harvest to Crisostomo. He asserted
that Crisostomo's act of receiving lease rentals from him
amounted to implied consent, which gave rise to a tenancy
relationship between them. [7]
In its April 7, 2003 Decision,  the Office of the Provincial Agrarian
[8]

Reform Adjudicator of Bulacan ruled in favor of Crisostomo and


ordered Victoria, together with all persons claiming rights under
him, to vacate the disputed portion and surrender its possession
to Crisostomo. [9]

The Office of the Provincial Agrarian Reform Adjudicator, noting


that the essential element of consent was absent, held that
Victoria could not be deemed the tenant of the disputed portion.
It further held that implied tenancy could not arise in a situation
where another person is validly instituted as tenant and is
enjoying recognition as such by the landowner. [10]

In its April 4, 2005 Decision,  the Department of Agrarian Reform


[11]

Adjudication Board denied Victoria's Appeal. In its March 17,


2006 Resolution,  it denied Victoria's Motion for Reconsideration.
[12]

In its assailed July 31, 2006 Decision,  the Court of Appeals


[13]

Eighth Division reversed the rulings of the Office of the Provincial


Agrarian Reform Adjudicator of Bulacan and of the Department of
Agrarian Reform Adjudication Board. It recognized Victoria as
bona fide tenant of the disputed portion.

The Court of Appeals reasoned that "Hipolito, as the legal


possessor, could legally allow [Victoria] to work and till the
landholding"  and that Crisostomo was bound by Hipolito's act. It
[14]

added that Crisostomo "had been receiving his share of the


harvest from [Victoria], as evidenced by the numerous receipts
indicating so."  It emphasized that "[t]he receipts rendered
[15]

beyond dispute [Victoria's] status as the agricultural tenant on


the landholding."  It further noted that as an agricultural tenant,
[16]

Victoria was entitled to security of tenure who, absent any of the


grounds for extinguishing agricultural leasehold relationships,
"should not be deprived of but should continue his tenancy on the
landholding." [17]
In its assailed October 20, 2006 Resolution,  the Court of
[18]

Appeals Eighth Division denied Crisostomo's Motion for


Reconsideration.

Hence, this Petition was filed.

For resolution is the issue of whether respondent Martin P.


Victoria is a bona fide tenant of the disputed portion.

Section 6 of Republic Act No. 3844, otherwise known as the


Agricultural Land Reform Code, identifies the recognized parties
in an agricultural leasehold relation:
SECTION 6. Parties to Agricultural Leasehold Relation. — The
agricultural leasehold relation shall be limited to the person who
furnishes the landholding, either as owner, civil law lessee,
usufructuary, or legal possessor, and the person who personally
cultivates the same.
Proceeding from Section 6 of the Agricultural Land Reform Code,
the Court of Appeals capitalized on Hipolito's supposed status as
"legal possessor" of the disputed portion, a status that was
deemed to emanate from his having been the lessee. Thus, the
Court of Appeals concluded that "Hipolito, as the legal possessor,
could legally allow [respondent] to work and till the
landholding"  thereby making respondent a tenant whose
[19]

security of tenure petitioner must now respect.

The Court of Appeals is in error. Hipolito's status as the


acknowledged tenant did not clothe him with the capacity to
designate respondent as a tenant.

This court has settled that tenancy relations cannot be an


expedient artifice for vesting in the tenant rights over the
landholding which far exceed those of the landowner. It cannot be
a means for vesting a tenant with security of tenure, such that he
or she is effectively the landowner.
Even while agrarian reform laws are pieces of social legislation,
landowners are equally entitled to protection. In Calderon v. Dela
Cruz:[20]

It is true that RA 3844 is a social legislation designed to promote


economic and social stability and must be interpreted liberally to
give full force and effect to its clear intent. This liberality in
interpretation, however, should not accrue in favor of actual
tillers of the land, the tenant- farmers, but should extend to
landowners as well. . . . The landowners deserve as much
consideration as the tenants themselves in order not to create an
economic dislocation, where tenants are solely favored but the
landowners become impoverished.  (Emphasis supplied, citation
[21]

omitted)
In Valencia v. Court of Appeals,  this court grappled with the
[22]

consequences of a lessee's employment of farmhands who


subsequently claimed the status of tenants. Insisting on a
tenant's right to security of tenure, these farmhands refused to
vacate and surrender possession of the subject land despite the
landowner's demands:
Contrary to the impression of private respondents, Sec. 6 of R.A.
No. 3844, as amended, does not automatically authorize a civil
law lessee to employ a tenant without the consent of the
landowner. The lessee must be so specifically authorized. For the
right to hire a tenant is basically a personal right of a landowner,
except as may he provided by law. But certainly nowhere in Sec.
6 does it say that a civil law lessee of a landholding is
automatically authorized to install a tenant thereon. A different
interpretation would create a perverse and absurd situation
where a person who wants to be a tenant, and taking advantage
of this perceived ambiguity in the law, asks a third person to
become a civil law lessee of the landowner. Incredibly, this
tenant would technically have a better right over the property
than the landowner himself. This tenant would then gain security
of tenure, and eventually become owner of the land by operation
of law. This is most unfair to the hapless and unsuspecting
landowner who entered into a civil law lease agreement in good
faith only to realize later on that he can no longer regain
possession of his property due to the installation of a tenant by
the civil law lessee.

On the other hand, under the express provision of Art. 1649 of


the Civil Code, the lessee cannot assign the lease without the
consent of the lessor, unless there is a stipulation to the contrary.
In the case before us, not only is there no stipulation to the
contrary; the lessee is expressly prohibited from subleasing or
encumbering the land, which includes installing a leasehold
tenant thereon since the right to do so is an attribute of
ownership. Plainly stated therefore, a contract of civil law lease
can prohibit a civil law lessee from employing a tenant on the
land subject matter of the lease agreement. An extensive and
correct discussion of the statutory interpretation of Sec. 6 of R.A.
No. 3844, as amended, is provided by the minority view
in Bernas v. Court of Appeals.  (Emphasis supplied)
[23]

As explained in Valencia, Section 6 of the Agricultural Land


Reform Code was not designed to vest in the enumerated persons
—the owner, civil law lessee, usufructuary, or legal possessor—a
capacity that they did not previously have. Stated otherwise,
Section 6 was not the enabling legislation that, from the moment
of its adoption, was to "allow"  them, as the Court of Appeals
[24]

posits, to furnish landholding to another who shall personally


cultivate it, thereby making that other person a tenant.

Valencia explained that Section 6 of the Agricultural Land Reform


Code is a subsequent restatement of a "precursor"  provision:
[25]

Section 8 of Republic Act No. 1199. This precursor reads:


SECTION 8. Limitation of Relation. — The relation of landholder
and tenant shall be limited to the person who furnishes land,
either as owner, lessee, usufructuary, or legal possessor, and to
the person who actually works the land himself with the aid of
labor available from within his immediate farm household.
Valencia noted that Section 8 assumed a pre-existing tenancy
relation. From its epigraph "Limitation of Relation," the import
and effect of Section 8 is not to enable or (to use the word of the
Court of Appeals) to "allow" the persons enumerated to make a
tenant of another person. Rather, it is simply to settle that
whatever relation exists, it shall be limited to two persons only:
first, the person who furnished the land; and second, the person
who actually works the land. "Once the tenancy relation is
established, the parties to that relation are limited to the persons
therein stated."
[26]

As it was with the precursor, Section 8 of Republic Act No. 1199,


so it is with Section 6 of the Agricultural Land Reform Code:
Section 6 as already stated simply enumerates who are the
parties to an existing contract of agricultural tenancy, which
presupposes that a tenancy already exists. It does not state that
those who furnish the landholding, i.e., either as owner, civil law
lessee, usufructuary, or legal possessor, are automatically
authorized to employ a tenant on the landholding. The reason is
obvious. The civil lease agreement may be restrictive. Even the
owner himself may not be free to install a tenant, as when his
ownership or possession is encumbered or is subject to a lien or
condition that he should not employ a tenant thereon. This
contemplates a situation where the property may be intended for
some other specific purpose allowed by law, such as, its
conversion into an industrial estate or a residential subdivision.
[27]

Limiting the relation to these two persons, as well as preventing


others from intruding into this relation, is in keeping with the
rationale for adopting Section 6 of the Agricultural Land Reform
Code:
According to Mr. Justice Guillermo S. Santos and CAR Executive
Judge Artemio C. Macalino, respected authorities on agrarian
reform, the reason for Sec. 6 of R.A. No. 3844 and Sec. 8 of R.A.
No. 1199 in limiting the relationship to the lessee and the lessor
is to "discourage absenteeism on the part of the lessor and the
custom of co-tenancy" under which "the tenant (lessee) employs
another to do the farm work for him, although it is he with whom
the landholder (lessor) deals directly. Thus, under this practice,
the one who actually works the land gets the short end of the
bargain, for the nominal or 'capitalist' lessee hugs for himself a
major portion of the harvest." This breeds exploitation, discontent
and confusion. . . . The kasugpong, kasapi, or katulong also
works at the pleasure of the nominal tenant. When the new law,
therefore, limited tenancy relation to the landholder and the
person who actually works the land himself with the aid of labor
available from within his immediate farm household, it eliminated
the nominal tenant or middleman from the picture.

Another noted authority on land reform, Dean Jeremias U.


Montemayor, explains the rationale for Sec. 8 of R.A. No. 1199,
the precursor of Sec. 6 of R.A. No. 3844:
Since the law establishes a special relationship in tenancy with
important consequences, it properly pinpoints the persons to
whom said relationship shall apply. The spirit of the law is to
prevent both landholder absenteeism and tenant absenteeism.
Thus, it would seem that the discretionary powers and important
duties of the landholder, like the choice of crop or seed, cannot
be left to the will or capacity of an agent or overseer, just as the
cultivation of the land cannot be entrusted by the tenant to some
other people. Tenancy relationship has been held to be of a
personal character.  (Citations omitted)
[28]

The Court of Appeals banks on the following statement made by


this court in its 1988 Decision in Co v. Intermediate Appellate
Court:[29]

As long as the legal possessor of the land constitutes a person as


a tenant-farmer by virtue of an express or implied lease, such an
act is binding on the owner of the property even if he himself
may not have given his consent to such an arrangement. This is
settled jurisprudence. The purpose of the law is to protect the
tenant-farmer's security of tenure, which could otherwise be
arbitrarily terminated by an owner simply manifesting his non-
conformity to the relationship.  (Citation omitted)
[30]

However, the factual context in Co, which engendered the quoted


pronouncement, is not entirely identical with that of this case.
This statement should, thus, not be taken as binding in this case.

Co involved a parcel which was originally owned by Toribio


Alarcon. Sometime before the Second World War, Alarcon entered
into a tenancy relation with Miguel Alfonso. In 1955, Alarcon
leased out the same parcel to Republic Broadcasting System
(DZBB). During this time, Alfonso maintained his tenancy. In
1968, Joveno Roaring started helping Alarcon cultivate the land.
Subsequently, Roaring took over the cultivation "in his own
right."  Roaring's status as such was consolidated when, with
[31]

Alfonso's death in 1976, he took over the tenancy. Much later,


the parcel was acquired by Philippine Commercial and Industrial
Bank in a foreclosure sale. The parcel was then acquired by
Anderson Co and, still much later, by Jose Chua. As Co and Chua
asked Roaring to vacate the parcel, Roaring filed a Complaint for
maintenance of possession and damages. [32]

The statement from Co that the Court of Appeals quoted was


made in the course of this court's consideration of Roaring's
relation with DZBB. As this court recounted, DZBB was the party
receiving shares from the harvest. Thus, DZBB exercised and
benefitted from the rights and prerogatives that normally accrue
to the landowner. Stated otherwise, in Co, there was a clear
finding that DZBB stood in the shoes of the landowner:
We also find that Roaring, besides paying rentals, regularly
shared the harvest from the lot with the DZBB, which accepted
the same and included it in the raffle of prizes held during the
regular Christmas program for its employees. That the DZBB was
not much interested in such share and that its board of directors
had not adopted a resolution recognizing the agricultural lease in
favor of Roaring should not signify that the lease does not exist.
The acts of the DZBB clearly show that it had impliedly allowed
Roaring, in his own right, to continue with the original lease
arrangement it had with his father-in-law. Notably, the latter's
possession and cultivation of the land from the time it was leased
to the DZBB in 1955 and until his death in 1976 were never
questioned by the company.

As long as the legal possessor of the land constitutes a person as


a tenant-farmer by virtue of an express or implied lease, such an
act is binding on the owner of the property even if he himself
may not have given his consent to such an arrangement. This is
settled jurisprudence. The purpose of the law is to protect the
tenant-farmer's security of tenure, which could otherwise be
arbitrarily terminated by an owner simply manifesting his non-
conformity to the relationship.[33]

There is nothing in this case to indicate that Hipolito exercised


rights and prerogatives that accrue to the landowner and which
could imply that he was in such a situation where he could
exercise a landowner's competencies. Hipolito was not clothed
with authority to "allow" respondent to be the tenant himself.
Hipolito, as lessee, was entitled to possession of the disputed
portion, and legally so. He was, in this sense, a "legal possessor."
However, his capacities ended here. There was nothing that
authorized him to enter into a tenancy relation with another.

II

Even if Section 6 of the Agricultural Land Reform Code were to be


interpreted loosely, petitioner as the landowner never consented
to making respondent a tenant.

This court has settled the requisites for tenancy, the core of
which is the element of consent. All these requisites must be
demonstrated by substantial evidence; otherwise, the person
claiming to be a tenant is not entitled to security of tenure:
Tenants are defined as persons who — in themselves and with
the aid available from within their immediate farm households —
cultivate the land belonging to or possessed by another, with the
latters consent, for purposes of production, sharing the produce
with the landholder under the share tenancy system, or paying to
the landholder a price certain or ascertainable in produce or
money or both under the leasehold tenancy system.

Based on the foregoing definition of a tenant, entrenched in


jurisprudence are the following essential elements of tenancy: 1)
the parties are the landowner and the tenant or agricultural
lessee; 2) the subject matter of the relationship is an agricultural
land; 3) there is consent between the parties to the relationship;
4) the purpose of the relationship is to bring about agricultural
production; 5) there is personal cultivation on the part of the
tenant or agricultural lessee; and 6) the harvest is shared
between landowner and tenant or agricultural lessee. The
presence of all these elements must be proved by substantial
evidence. Unless a person has established his status as a de
jure tenant, he is not entitled to security of tenure and is not
covered by the Land Reform Program of the Government under
existing tenancy laws. Tenancy relationship cannot be presumed.
Claims that one is a tenant do not automatically give rise to
security of tenure.  (Emphasis supplied)
[34]

This court has previously recognized implied consent as sufficing


to vest security of tenure in a person claiming to be a tenant.
In Ponce v. Guevarra  and Joya v. Pareja,  this court considered
[35] [36]

the landowners' acts of personally negotiating for extensions and


for better terms with the persons purporting to be tenants as
having placed them in estoppel or otherwise demonstrating their
ratification of tenancy.

Here, the Court of Appeals relied on petitioner's having


supposedly received shares of the harvest from respondent and
his issuance of the corresponding receipts as demonstrating his
implied consent to respondent's tenancy.

We disagree.

While the receipts issued by petitioner bore respondent's name,


petitioner never failed to similarly indicate the name of David
Hipolito, the person who, petitioner maintains, is the valid lessee.
Petitioner annexed copies of several of these receipts to his
Petition. These receipts consistently indicated:
J.G.N. TRADING
Tarcan, Conception, Baliwag, Bulacan

No. ...

Petsa ...........

Tinanggap kay MARTIN VICTORIA (DAVID HIPOLITO) ng STA.


BARBARA, BALIUAG, BULACAN and kabuuang . . . kaban ng palay
na may timbang . . . kilo. [37]
Petitioner may have acknowledged actual delivery made by
respondent. However, his consistent inclusion of Hipolito's name
indicates that, to his mind, it was still Hipolito, albeit through
another person making actual delivery, sharing the produce with
him. Respondent was recognized only as an agent acting for
Hipolito.

Concededly, there is some ambiguity to these receipts. For


instance, ' one could make a case for saying that respondent and
Hipolito were co-tenants cooperating in delivering the produce to
petitioner. Indeed, the receipts could have used more definite
language such as "for the account of," "on behalf of," or "para
kay." We reiterate however, the requisites of tenancy must be
established by substantial evidence. Logically, it is for the person
averring tenancy to adduce such evidence. Here, the evidence
does not work to respondent's interest. At best, it evinces an
ambiguity; at worst, it proves that he was only an agent.

Just as damaging to respondent's cause is petitioner's act of


demanding that respondent vacate and surrender possession of
the disputed portion as soon as Hipolito died. Stated otherwise,
as soon as the lease period that petitioner and Hipolito agreed
upon expired, petitioner expected that the disputed portion was
to be restored to his possession.

This definitively settles that, in petitioner's mind, only Hipolito


was entitled to possession precisely because it was only with
Hipolito that petitioner agreed to cede possession for a definite
duration. Conversely, this definitively settles that petitioner never
recognized respondent as having any personal right to possess
the disputed portion.

The Court of Appeals merely noted that petitioner issued receipts


to respondent and stopped at that. As we have demonstrated, a
more exacting consideration of the totality of petitioner's actions
belies any consent or subsequent ratification of respondent's
alleged tenancy.
To hold that respondent is the bona fide tenant of the disputed
portion would be to extend petitioner's dispossession for a period
much longer that he had originally contemplated. It puts him at
the mercy of a person whom he recognized as a tenant. This is
precisely the "economic dislocation" that this court warned
against in Calderon. To hold as such would be to permit agrarian
reform laws to be used as a convenient artifice for investing in a
supposed tenant rights that far exceed those of the owner.

WHEREFORE, the Petition for Review on Certiorari is GRANTED.


The assailed Decision dated July 31, 2006 and the assailed
Resolution dated October 20, 2006 of the Court of Appeals Eighth
Division in CA-G.R. SP No. 94107, which recognized respondent
Martin P. Victoria as the bona fide tenant of the disputed portion,
are REVERSED and SET ASIDE. The July 4, 2005 Decision and
March 17, 2006 Resolution of the Department of Agrarian Reform
Adjudication Board are REINSTATED.

Respondent Martin P. Victoria and all those claiming rights under


him are ordered to vacate and surrender possession of the
disputed portion to petitioner Ismael V. Crisostomo.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Mendoza, and Jardeleza,  JJ.,


*

concur.

 Designated acting member per S.O. No. 2147 dated August 24,
*

2015.

 Rollo, pp. 19-25. The Decision was penned by Associate Justice


[1]

Lucas P. Bersamin (now an Associate Justice of this court) and


concurred in by Associate Justices Martin S. Villarama, Jr. (now
also an Associate Justice of this court) and Celia C. Librea-
Leagogo.
[2]
 Id. at 26-27.

 Id. at 28-34. The Decision was penned by Assistant Secretary


[3]

Lorenzo R. Reyes and concurred in by Secretary Rene C. Villa,


Undersecretary Severino T. Madronio, Undersecretary Ernesto G.
Ladrido, III, Assistant Secretary Augusto P. Quijano, Assistant
Secretary Edgar A. Igano, and Assistant Secretary Delfin B.
Samson.

[4]
 Id. at 35-36.

[5]
 Id. at 37-42.

[6]
 Id. at 19-20, 28-29, and 37-38.

[7]
 Id. at 20, 29-30, and 38.

[8]
 Id. at 37-42.

[9]
 Id. at 28.

[10]
 Id. at 41.

[11]
 Id. at 28-34.

[12]
 Id. at 35-36.

[13]
 Id. at 19-25.

[14]
 Id. at 22.

[15]
 Id. at 24.

[16]
 Id.

[17]
 Id.

[18]
 Id. at 26-27.
[19]
 Id. at 22.

 Calderon v. De La Cruz, 222 Phil. 473 (1985) [Per C.J.


[20]

Makasiar, Second Division].

[21]
 Id. at 477.

[22]
 449 Phil. 711 (2003) [Per J. Bellosillo, Second Division].

 Id. at 730-731, citing Bernas v. Court of Appeals, G.R. No.


[23]

85041, August 5, 1993, 225 SCRA 119, 139-155 [Per J. Padilla,


En Banc].

[24]
 Rollo, p. 22.

 Valencia v. Court of Appeals, 449 Phil. 711, 731 (2003) [Per J.


[25]

Bellosillo, Second Division].

[26]
 Id.

[27]
 Id. at 732-733.

[28]
 Id at 731-732.

[29]
 245 Phil. 347 (1988) [Per J. Cruz, First Division].

[30]
 Id. at 356.

[31]
 Id. at 352.

[32]
 Id.

 Id. at 356, citing Ponce v. Guevarra, 119 Phil. 929 (1964) [Per


[33]

J. Concepcion, En Banc]; Alarcon v. Santos, 115 Phil. 855 (1962)


[Per J. Bautista Angelo, En Banc]; Joya, et al. v. Pareja, 106 Phil.
645 (1959) [Per J. Barrera, En Banc]; and Cunanan v. Aguilar,
174 Phil. 299 (1978) [Per J. Santos, Second Division].
 Soliman v. Pampanga Sugar Development Co., 607 Phil. 209,
[34]

220-221 (2009) [Per J. Nachura, Third Division], citing Bautista


v. Mag-isa Vda. de Villena, 481 Phil. 591 (2004) [Per J.
Panganiban, Third Division]; Tanenglian v. Lorenzo, 573 Phil. 472
(2008) [Per J. Chico-Nazario, Third Division]; Dalwampo v.
Quinocol Farm Workers and Settlers' Association, 522 Phil. 183
(2006) [Per J. Carpio Morales, Third Division]; Benavidez v. Court
of Appeals, 372 Phil. 615 (1999) [Per J. Bellosillo, Second
Division]; Ambayec v. Court of Appeals, 499 Phil. 536 (2005) [Per
J. Ynares-Santiago, First Division]; Heirs of Jugalbot v. Court of
Appeals, 547 Phil. 113 (2007) [Per J. Ynares-Santiago, Third
Division]; and Valencia v. Court of Appeals, 449 Phil. 711, 737
(2003) [Per J. Bellosillo, Second Division].

[35]
 119 Phil. 929 (1964) [Per J. Concepcion, En Banc].

[36]
 106 Phil. 645 (1959) [Per J. Barrera, En Banc].

[37]
 Rollo, pp. 46-51.

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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 212626, June 03, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. ROLANDO TERNIDA Y MUNAR,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

The failure of law enforcers in buy-bust operations to photograph


seized drugs in accordance with Article II, Section 21 of Republic
Act No. 9165, combined with the prosecution's failure to address
this omission, raises doubt on the identity of the drugs seized,
especially when the amount of dangerous drugs allegedly taken
from the accused is minuscule.

This Court resolves an appeal  of the October 30, 2013


[1]

Decision  of the Court of Appeals in CA-G.R. CR-H.C. No. 05208,


[2]

which affirmed the conviction of Rolando Ternida y Munar


(Ternida) for violating Republic Act No. 9165, or the
Comprehensive Dangerous Drugs Act of 2002, for the illegal sale
of dangerous drugs.

An Information was filed charging Ternida with selling 0.0402


gram of shabu, in violation of the Comprehensive Dangerous
Drugs Act. It read in part:
That on or about the 17th day of November 2009, in the City of
San Fernando, Province of La Union, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused,
without authority of law and without first securing the necessary
permit, license or prescription from the proper government
agency, did then and there willfully, unlawfully and feloniously
sell, dispense and deliver one (1) heat-sealed transparent plastic
sachet containing methamphetamine hydrochloride otherwise
known as "Shabu" a dangerous drug, weighing ZERO POINT
ZERO FOUR HUNDRED TWO (0.0402) gram to PO2 RICARDO
ANNAGUE, who posed as a poseur buyer thereof using marked
money one (1) piece of One Thousand peso bill bearing serial
number 526998.
CONTRARY TO LAW. [3]

Upon arraignment, Ternida pleaded not guilty to the crime


charged. Pre-trial was conducted, and trial on the merits then
ensued. [4]

The version of the prosecution is as follows:

On November 12, 2009, a confidential informant told the San


Fernando City Police that an illegal drug transaction involving
Ternida would take place in five (5) days at Quezon Avenue, San
Fernando City, La Union. Acting on the tip, the San Fernando City
Police formed a buy-bust team composed of Police Officer 2
Ricardo Annague (PO2 Annague), who was designated as the
poseur-buyer, Police Inspector Quesada (Inspector Quesada),
PO3 Raul Dapula, and PO3 Paul Batnag (PO3 Batnag), who was
designated as back-up. [5]

On November 17, 2009, the team carried out the operation. At


around 10:40 p.m., the officers spotted Ternida along Quezon
Avenue. PO2 Annague approached him, while PO3 Batnag stayed
at a distance where he could observe the transaction.
[6]

Ternida asked how much PO2 Annague would buy, to which PO2
Annague said P1,000.00 worth. Ternida then gave PO2 Annague
one (1) heat-sealed plastic sachet of crystalline substance in
exchange for PO2 Annague's P1,000.00 bill, which had been
designated as the buy-bust money. After securing the sachet,
PO2 Annague gave the pre-arranged signal to PO3 Batnag, who
immediately approached and arrested Ternida. A Certificate of
Inventory was subsequently prepared. The seized plastic sachet
was then sent to the crime laboratory for forensic examination,
where it tested positive for methamphetamine hydrochloride or
shabu.[7]

In his defense, Ternida denied that there had been a buy-bust


operation. He claimed that on November 17, 2009, he was about
to cross Quezon Avenue on his way to Golden Society Restaurant
when three (3) men, whom he later identified as Inspector
Quesada, PO3 Batnag, and PO2 Annague, arrested him. Inspector
Quesada held his neck, while PO3 Batnag and PO2 Annague
handcuffed him. [8]

After frisking him, the officers took his cell phone and coin purse
containing P150.00. They then brought him under a tree, where
they took photos of him beside the plastic sachet. Afterwards,
they brought him to the police station, where he was detained. [9]

In its July 6, 2011 Decision,  the Regional Trial Court found


[10]

Ternida guilty beyond reasonable doubt of the offense charged.


The dispositive portion of the Decision read:
WHEREFORE, premises considered, accused ROLANDO
TERNIDA y Munar is hereby found GUILTY beyond reasonable
doubt of the crime of violation of Section 5, Article II of Republic
Act No. 9165 and is sentenced to suffer the penalty of life
imprisonment and a fine of five hundred thousand pesos
(Php500,000.00).

SO ORDERED.  (Emphasis in the original)


[11]

On appeal,  Ternida argued that the prosecution failed to


[12]

preserve the identity and integrity of the corpus delicti. He


pointed out that the seized item was not marked with the date of
seizure, which meant that it could not be distinguished from other
evidence that may have been in the police officer's possession.
Moreover, he claimed that the drugs allegedly seized were not
photographed. He asserted that the prosecution did not give
justifiable grounds for the apprehending officers' failure to comply
with the chain of custody requirements under the law. [13]

Ternida also pointed out that the witnesses who had signed the
Certificate of Inventory were not presented in court. l1oreover,
he claimed that the arresting officers contradicted each other as
to the witnesses' presence during the buy-bust. PO2 Annague
testified that the barangay officials and media representatives
witnessed the buy-bust operation itself, while PO3 Batnag
testified that they were called only after the arrest.
[14]
Moreover, Ternida asserted that no Certificate of Coordination
with the Philippine Drug Enforcement Agency was presented, and
that the police officers themselves admitted that they did not
coordinate with the Philippine Drug Enforcement Agency during
the surveillance and monitoring operations before Ternida's
arrest. He also claimed that PO2 Annague's and PO3 Batnag's
testimonies on their coordination with the Philippine Drug
Enforcement Agency were not only inconsistent with each other,
but also inconsistent with the Pre-Operation Report and
Coordination Sheet presented by the prosecution. [15]

Ternida also claimed that the prosecution did not present the
official Physical Sciences Report regarding the shabu, and offered
only the initial laboratory report, which was "issued exclusively
for the inquest ... pending the release of the official chemistry
report[.]" [16]

Ternida also insisted that the prosecution did not establish the
chain of custody of the seized item.[17]

Finally, Ternida maintained that PO2 Annague had motive to plant


evidence to arrest him. He claimed that it was improbable for
Ternida to sell drugs to PO2 Annague, considering that PO2
Annague had previously arrested Ternida in a commotion
incident.
[18]

The Office of the Solicitor General, representing plaintiff-appellee


People of the Philippines, countered in its Brief  that PO2 [19]

Annague's testimony was sufficient to establish the chain of


custody.  As to PO2 Annague having previously arrested Ternida,
[20]

it inscrutably asserted that "it [was] impossible for appellant to


sell shabu to someone whom he [had] previously known as a
policeman."  In any case, the Office of the Solicitor General
[21]

insisted that the presumption that police officers have performed


their duties with regularity applies in this case.
[22]
In its October 30, 2013 Decision,  the Court of Appeals affirmed
[23]

the Regional Trial Court's findings in toto. The dispositive portion


of the Decision read:
WHEREFORE, in view of the foregoing premises, the instant
appeal is hereby ordered DISMISSED, and the appealed decision
rendered by Branch 66 of the RTC of San Fernando City, La Union
in Criminal Case No. 8514 on 06 July 2011 is AFFIRMED in toto.

SO ORDERED.  (Emphasis in the original)


[24]

Thus, Ternida filed a Notice of Appeal. In its December 5, 2013


Resolution,  the Court of Appeals gave due course to Ternida's
[25]

appeal and elevated the case records to this Court.  Accused-[26]

appellant and plaintiff-appellee, in compliance with this Court's


July 23, 2014 Resolution,  filed their respective Manifestations on
[27]

September 9, 2014  and September 26, 2014.


[28] [29]

For this Court's resolution is the issue of whether or not accused-


appellant Rolando Ternida y Munar is guilty beyond reasonable
doubt of illegal sale of dangerous drugs.

Accused-appellant should be acquitted.

To convict an accused of the illegal sale of dangerous drugs, the


prosecution must not only prove that the sale took place, but also
present the corpus delicti in evidence. In doing this, the
prosecution must establish the chain of custody of the seized
items  to prove with moral certainty the identity of the
[30]

dangerous drug seized. [31]

Article II, Section 21 of the Comprehensive Dangerous Drugs Act


provides the procedures that the apprehending team must
observe to comply with the chain of custody requirements in
handling seized drugs. The first step upon seizure mandates:
(1) The apprehending team having initial custody and control of
the drugs shall, immediately after seizure and confiscation,
physically inventory and photograph the same in the presence of
the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a
representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to
sign the copies of the inventory and be given a copy thereof[.]
That the photographing and physical inventory of the seized
drugs must be done immediately where seizure had taken place
minimizes the possibility that evidence may be planted.
Noncompliance with this legally mandated procedure, upon
seizure, raises doubt that what was submitted for laboratory
examination and as evidence in court was seized from an
accused.[32]

Here, the prosecution failed to provide any evidence that the


allegedly seized drugs were photographed upon seizure, in the
presence of the accused. That no photograph of the seized drugs
was offered in evidence raises questions as to whether the
specimen submitted for laboratory examination was seized from
accused-appellant in the buy-bust operation.

Worse, the prosecution did not even address the apprehending


team's failure to photograph the seized items. In plaintiff-
appellee's brief, the Office of the Solicitor General argued that
even if there was a failure to observe the mandated process, this
Court has held that it is irrelevant to the prosecution of the
criminal case:
Even assuming arguendo that there is a deviation from the cited
provision, the same does not affect the prosecution of the case. It
does not render the evidence gathered inadmissible and certainly
could not reasonably lead to the acquittal of appellant. As held by
the Supreme Court, the failure of arresting officers to comply with
a Dangerous Drugs Board (DDB) regulation is a matter strictly
between the DDB and arresting officers and is totally irrelevant to
the prosecution of the criminal case. There is no provision or
statement in any law or in any rule that will bring about the non-
admissibility of the confiscated and/or seized drugs due to non-
compliance with Section 21 of Republic Act No. 9165. Indeed, the
commission of the crime of illegal sale of dangerous drug is
considered consummated once the sale is established and the
prosecution thereof is not undermined by the failure of the
arresting officers to comply with the regulations of the DDB. In
the case at bar, the elements of illegal sale of dangerous drugs
was clearly proven by the prosecution.  (Citations omitted)
[33]

In support of this argument, the Office of the Solicitor General


cited People v. De los Reyes,  a 1994 case where this Court
[34]

rejected the accused's argument that the arresting officers failed


to comply with a 1979 Dangerous Drugs Board regulation. Such
reliance-despite the passage of the Comprehensive Dangerous
Drugs Act in 2002, which expressly requires the apprehending
team to seize the drugs in a specific way-is misplaced, outdated,
and rejected.

Still, conviction may be sustained despite noncompliance with the


chain of custody requirements if there were justifiable grounds
provided. This was only expressly codified into the law with the
passage of Republic Act No. 10640 in 2014, five (5) years after
the buy-bust operation had been conducted. Nonetheless, at the
time of the buy-bust, the Implementing Rules and Regulations of
the Comprehensive Dangerous Drugs Act is already in effect. It
states:
(a) ... Provided, further, that non-compliance with these
requirements under justifiable grounds, as long as the integrity
and the evidentiary value of the seized items are properly
preserved by the apprehending officer/team, shall not render void
and invalid such seizures of and custody over said items[.]
[35]

This Court has expounded on this provision in People v. Miranda:


[36]

The Court, however, clarified that under varied field conditions,


strict compliance with the requirements of Section 21 of RA 9165
may not always be possible. In fact, the Implementing Rules and
Regulations (IRR) of RA 9165 - which is now crystallized into
statutory law with the passage of RA 10640 - provide that the
said inventory and photography may be conducted at the nearest
police station or office of the apprehending team in instances of
warrantless seizure, and that noncompliance with the
requirements of Section 21 of RA 9165 - under justifiable
grounds - will not render void and invalid the seizure and
custody over the seized items so long as the integrity and
evidentiary value of the seized items are properly
preserved by the apprehending officer or team. Tersely put,
the failure of the apprehending team to strictly comply with the
procedure laid out in Section 21 of RA 9165 and the IRR does
not ipso facto render the seizure and custody over the items as
void and invalid, provided that the prosecution satisfactorily
proves that: (a) there is justifiable ground for non-
compliance; and (b) the integrity and evidentiary value of the
seized items are properly preserved.

In People v. Almorfe, the Court stressed that for the above-


saving clause to apply, the prosecution must explain the
reasons behind the procedural lapses, and that the ,
integrity and value of the seized evidence had nonetheless
been preserved. Also, in People v. De Guzman, it was
emphasized that the justifiable ground for non compliance
must be proven as , a fact, because that Court cannot
presume what these grounds are or that they even exist.

To be sure, this Court is not impervious to the sentiments of the


State when it is left to deal with the seemingly unfair situation of
having a drug conviction overturned upon grounds that it was not
able to meet in the proceedings a quo. However, there is no
gainsaying that these sentiments must yield to the higher
imperative of protecting the fundamental liberties of the accused.
Besides, the law itself apprises our law enforcement authorities
about the requirements of compliance with the chain of custody
rule. Case law exhorts that the procedure in Section 21 of RA
9165 is a matter of substantive law, and cannot be brushed aside
as a simple procedural technicality; or worse, ignored as an
impediment to the conviction of illegal drug suspects. Therefore,
as the requirements are clearly set forth in the law, then
the State retains the positive duty to account for any
lapses in the chain of custody of the drugs/items seized
from the accused, regardless of whether or not the
defense raises the same in the proceedings a quo;
otherwise, it risks the possibility of having a conviction
overturned on grounds that go into the evidence's integrity
and evidentiary value, albeit the same are raised only for the
first time on appeal, or even not raised, become apparent upon
further review.  (Emphasis in the original, citations omitted)
[37]

Thus, before courts may consider the seized drugs as evidence


despite noncompliance with the legal requirements, justifiable
grounds must be identified and proved. The prosecution must
establish the steps taken to ensure that the integrity and
evidentiary value of the seized items were preserved.  It has[38]

the positive duty to establish its reasons for the procedural


lapses.

In this case, the prosecution has failed to perform such duty.

Assuming that the other requirements of the law had been


complied with, the prosecution could have strengthened its case
by taking positive action and by providing evidence on why the
seized drugs were not photographed. It could have also
presented evidence to establish that what was submitted for
laboratory examination was, indeed, seized from accused-
appellant.

Instead, the prosecution claimed that noncompliance with the law


is irrelevant. This is not only insufficient to convince this Court of
the evidentiary value of the allegedly seized drugs; it also raises
serious doubts as to their identity, especially given the minuscule
amount involved. [39]

Accused-appellant's other arguments regarding his arrest are


unconvincing. There is no evidence supporting his claim that the
prosecution had an ulterior motive to arrest him, and that it was
implausible for him to engage in illegal transactions with the
police officer due to their prior interaction. When accused-
appellant took the stand, he did not mention having previously
interacted with PO2 Annague or knowing his face.  Moreover, the
[40]

wording of PO2 Annague's testimony on Ternida's previous


incident is unclear and insufficient to establish that PO2 Annague
had any interaction with accused-appellant prior to the buy-bust
operation.[41]
Nonetheless, the arresting officers' failure to photograph the
seized drugs, to explain this failure, and to establish that the
integrity of the seized drugs was preserved despite the failure,
are sufficient to reverse accused appellant's conviction based on
reasonable doubt.

Finally, worth noting is the minuscule amount of shabu subject of


this case. This Court reiterates its pronouncement in People v.
Holgado: [42]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels.
[43]

WHEREFORE, the Court of Appeals October 30, 2013 Decision in


CA-G.R. CR-H.C. No. 05208 is REVERSED and SET ASIDE.
Accused-appellant Rolando Ternida y Munar is ACQUITTED for
the prosecution's failure to prove his guilt beyond reasonable
doubt. He is ordered immediately RELEASED from detention,
unless he is confined for some other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drug Enforcement
Agency.

Let entry of final judgment be issued immediately.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando, and Inting, JJ.,


concur.

July 11, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 3, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 11, 2019 at 9:00 a.m.

ORDER OF RELEASE

TO: The Director General


       BUREAU OF CORRECTIONS
       1770 Muntinlupa City

       Thru: CSSupt. Gerardo F. Padilla


                Superintendent
                New Bilibid Prison
                BUREAU OF CORRECTIONS
                1770 Muntinlupa City

GREETINGS:

WHEREAS, the Supreme Court on June 3, 2019 promulgated


a Resolution in the above-entitled case, the dispositive portion
of which reads:
"WHEREFORE, the Court of Appeals October 30, 2013 Decision
in CA-G.R. CR-H.C. No. 05208 is REVERSED and SET ASIDE.
Accused-appellant Rolando Ten1ida y Munar is ACQUITTED for
the prosecution's failure to prove his guilt beyond reasonable
doubt. He is ordered immediately RELEASED from detention,
unless he is confined for some other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drug Enforcement
Agency.

Let entry of final judgment be issued immediately.

SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately
release ROLANDO TERNIDA y MUNAR unless there are other
lawful causes for which he should be further detained, and to
return this Order with the certificate of your proceedings within
five (5) days from notice hereof.
GIVEN by the Honorable DIOSDADO M. PERALTA, Chairperson
of the Third Division of the Supreme Court of the Philippines,
this 3  day of June 2019.
rd

 The appeal was filed under Rule 124, Section 13(c) of the Rules
[1]

of Court.

 Rollo, pp. 2-13. The Decision was penned by Associate Justice


[2]

Elihu A. Ybañez, and concurred in by Associate Justices Japar B.


Dimaampao and Victoria Isabel A. Paredes of the Fourteenth
Division, Court of Appeals, Manila.

[3]
 Id. at 2-3.

[4]
 Id. at 3.

[5]
 Id. at 4 and CA rollo, p. 13.

[6]
 CA rollo, pp. 13-14.

[7]
 Id. at 14 and rollo, p. 5.

[8]
  Rollo, p. 5.

[9]
 Id. at 5-6.

 CA rollo, pp. 12-20. The Decision was penned by Presiding


[10]

Judge Victor O. Concepcion of Branch 66, Regional Trial Court,


San Fernando City, La Union.
[11]
 Id. at 20.

[12]
 Id. at 45-67.

[13]
 Id. at 53-55.

[14]
 Id. at 55.

[15]
 Id. at 58-59.

[16]
 Id. at 59.

[17]
 Id. at 60.

[18]
 Id. at 64.

[19]
 Id. at 86-104.

[20]
 Id. at 96-99.

[21]
 Id. at 102.

[22]
 Id. at 101.

[23]
 Rollo, pp. 2-13.

[24]
 Id. at 12.

[25]
 CA rollo, p. 127.

[26]
 Rollo, p. 1.

[27]
 Id. at 19-19-A.

[28]
 Id. at 22-26.

[29]
 Id. at 28-31.
 People v. Lim, G.R. No. 231989, September 4, 2018,
[30]

<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400
> [Per J. Peralta, En Banc].

 People v. Miranda, G.R. No. 229671, January 31, 2018,


[31]

<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63999
> [Per J. Perlas-Bernabe, Second Division].

 See People v. Orteza, 555 Phil. 700 (2007) [Per J. Tinga,


[32]

Second Division].

[33]
 CA rollo, pp. 100-101.

[34]
 299 Phil. 460 (1994) [Per J. Melo, Third Division].

 Implementing Rules and Regulations of Republic Act No. 9165


[35]

(2002), sec. 21(a).

 G.R.
[36]
No. 229671, January 31,2018,
<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63999
> [Per J. Perlas-Bernabe, Second Division].

[37]
 Id.

 See People v. Lim, G.R. No. 231989, September 4, 2018,


[38]

<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400
> [Per J. Peralta, En Banc] and J. Leonen, Concurring Opinion
in People v. Lim, G.R. No. 231989, September 4, 2018,
<http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64400
> [Per J. Peralta, En Banc].

 People v. Holgado, 741 Phil. 78, 98 (2014) [Per J. Leonen,


[39]

Third Division].

[40]
 Transcript of Stenographic Notes taken on November 9, 2010.

 Transcript of Stenographic Notes taken on April 29, 2010, pp.


[41]

16-17.
[42]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[43]
 Id. at 100.

Source: Supreme Court E-Library | Date created: July 24, 2019


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 224297, February 13,


2019 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. EDGARDO ROYOL Y ASICO,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

Complete and utter noncompliance with the chain of custody


requirements of Republic Act No. 9165, or the Comprehensive
Dangerous Drugs Act of 2002 (Comprehensive Dangerous Drugs
Act), inescapably leads to an accused's acquittal. Conviction
cannot be sustained by a mere presumption of regularity and the
approximation of compliance.
This resolves an Appeal from a conviction for violation of Section
5  of Republic Act No. 9165, for the illegal sale of dangerous
[1]

drugs.

In an Information, accused-appellant Edgardo A. Royol (Royol), a


garbage collector,  was charged with violating Section 5 of the
[2]

Comprehensive Dangerous Drugs Act, as follows:


That on or about November 27, 2007 at around 10:05 o'clock in
the morning, in the Municipality of Bamban, Province of Tarlac,
Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused did then and there willfully, unlawfully
and criminally sell one half[-]sized (1/2) bricks (sic) of dried
marijuana fruiting tops in the amount of One Thousand Pesos to
poseur buyer PO2 Mark Anthony Baquiran PNP weighing 500.28
grams, a dangerous drug without being authorized by law.

Contrary to law. [3]

The prosecution presented two (2) witnesses: (1) the alleged


poseur-buyer, then Police Officer 2 Mark Anthony Baquiran (PO2
Baquiran); and (2) the arresting officer, Police Inspector Sonny
Los Banos Silva (Inspector Silva).[4]

According to the prosecution, at around 9:00 a.m. on November


27, 2007, a confidential informant went to the Tarlac Provincial
Police Office in Camp Makabulos, Tarlac City and reported that
Royol had been selling illegal drugs in Barangay Lourdes,
Bamban, Tarlac. The informant allegedly told PO2 Baquiran that
he was due to meet Royol that morning. [5]

A buy-bust team was formed with PO2 Baquiran as poseur-buyer,


and Inspector Silva, Police Officer 1 Francis Capinding, and Police
Officer 2 Christopher Soriano (PO2 Soriano) as arresting officers.
Four (4) other members of the team were tasked as back-up.
PO2 Baquiran was provided with two (2) marked P500.00 bills. It
was also agreed that PO2 Baquiran would scratch his head to
signal to the rest of the team that the sale of drugs had been
consummated. [6]
The buy-bust team proceeded to the bridge in Barangay Lourdes,
the informant's supposed meeting place with Royol. Royol arrived
some 20 minutes after PO2 Baquiran positioned himself in the
area. Upon meeting Royol, PO2 Baquiran showed him the two (2)
marked P500.00 bills and told him that he intended to purchase
half a kilogram of marijuana. Royol exchanged half a brick of
marijuana with PO2 Baquiran's marked bills. PO2 Baquiran then
scratched his head.[7]

Upon seeing PO2 Baquiran make the pre-arranged signal, the


other members of the buy-bust team rushed to arrest Royol.
Royol gave chase but was shortly apprehended by Inspector Silva
and PO2 Soriano. He was then brought to the Tarlac Provincial
Police Office, where the brick of marijuana was supposedly
marked. PO2 Baquiran then personally brought the marijuana to
the Tarlac Provincial Crime Laboratory Office, where, upon
examination by Police Inspector Jebie C. Timario, it tested
positive for marijuana. [8]

Royol testified in his defense. He recalled that in the morning of


November 27, 2007, while collecting garbage, two (2) men
approached him asking if he knew a certain Edgardo Saguisag
(Saguisag). They left him after he said that he did not know the
man. A few minutes later, the men returned with two (2)
teenagers who pointed to him as Saguisag. The men then
ordered him to raise his hands. He was handcuffed and made to
lie face on the floor. He asked the men why they handcuffed him,
but they did not reply. Instead, they searched his pockets, found
P140.00, and took it. They then compelled him to board a red car
and brought him to Makabulos. He was also shown marijuana and
asked if it was his, to which he answered in the negative.
[9]

In its five (5)-page Decision dated December 13, 2010,  the [10]

Regional Trial Court found Royol guilty as charged and rendered


judgment as follows:
WHEREFORE, the prosecution having proven the guilt of the
accused beyond reasonable doubt of violation of Section 5, Article
II of Republic Act No. 9165, the Court hereby orders the accused
to suffer the penalty of life imprisonment and to pay a fine of
P500,000.00[.]

SO ORDERED. [11]

The Court of Appeals, in its assailed May 8, 2015 Decision,


 affirmed the Regional Trial Court's ruling in toto.
[12]

Thus, Royol filed his Notice of Appeal. [13]

The issue for this Court's resolution is whether or not the


prosecution established accused-appellant Edgardo A. Royol's
guilt beyond reasonable doubt for violating Section 5 of Republic
Act No. 9165, or the Comprehensive Dangerous Drugs Act.

The elements required to sustain convictions for violation of


Section 5 of the Comprehensive Dangerous Drugs Act are settled.
In People v. Morales:[14]

In actions involving the illegal sale of dangerous drugs, the


following elements must first be established: (1) proof that the
transaction of sale took place and (2) the presentation in court of
the corpus delicti or the illicit drug as evidence.  (Emphasis in
[15]

the original)
Concerning corpus delicti, Section 21 of Republic Act No. 9165, as
amended by Republic Act No. 10640 in 2014, makes specific
stipulations on the custody and disposition of confiscated, seized,
and/or surrendered drugs and/or drug paraphernalia. Particularly,
concerning custody before filing a criminal case, Section 21, as
amended, provides:
SECTION 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the dangerous drugs, c
essential chemicals, instruments/paraphernalia and/or laboratory equipment sha
seizure and confiscation, conduct a physical inventory of the seized items and
the presence of the accused or the persons from whom such items were confis
his/her representative or counsel, with an elected public official and a represe
Prosecution Service or the media who shall be required to sign the copies of the in
copy thereof: Provided, That the physical inventory and photograph shall be condu
the search warrant is served; or at the nearest police station or at the nearest off
officer/team, whichever is practicable, in case of warrantless seizu
That noncompliance of these requirements under justifiable grounds, as long a
evidentiary value of the seized items are properly preserved by the apprehending
render void and invalid such seizures and custody over said items.

(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, plan
drugs, controlled precursors and essential chemicals, as well as instrument
laboratory equipment, the same shall be submitted to the PDEA Forensic Laborato
quantitative examination;

(3) A certification of the forensic laboratory examination results, which shall be done un
laboratory examiner, shall be issued immediately upon the receipt of the subject
when the volume of dangerous drugs, plant sources of dangerous drugs, and co
essential chemicals does not allow the completion of testing within the time fram
examination report shall be provisionally issued stating therein the quantities of da
examined by the forensic laboratory: Provided, however, That a final certifi
immediately upon completion of the said examination and certification[.] (Emphasis
Conformably, People v. Nandi  specified four (4) links that must
[16]

be established in a confiscated item's chain of custody:


[F]irst, the seizure and marking, if practicable, of the illegal drug
recovered from the accused by the apprehending officer; second,
the turnover of the illegal drug seized by the apprehending officer
to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and submission
of the marked illegal drug seized from the forensic chemist to the
court. [17]

People v. Holgado  explained that compliance with the chain of


[18]

custody requirements protects the integrity of the confiscated,


seized, and/or surrendered drugs and/or drug paraphernalia in
four (4) aspects:
[F]irst, the nature of the substances or items seized; second, the
quantity (e.g., weight) of the substances or items seized; third,
the relation of the substances or items seized to the incident
allegedly causing their seizure; and fourth, the relation of the
substances or items seized to the person/s alleged to have been
in possession of or peddling them. Compliance with this
requirement forecloses opportunities for planting, contaminating,
or tampering of evidence in any manner. [19]

II

In Morales,  this Court categorically declared that failing to


[20]

comply with Article II, Section 21(1) of Comprehensive


Dangerous Drugs Act implies "a concomitant failure on the part of
the prosecution to establish the identity of the corpus
delicti[.]"  It "produce[s] doubts as to the origins of the [seized
[21]

paraphernalia]."  This is in keeping with the basic standard for


[22]

establishing guilt in criminal proceedings: proof beyond


reasonable doubt.

While not requiring absolute certainty, proof beyond reasonable


doubt demands moral certainty. Compliance with this standard is
a matter of compliance with a constitutional imperative:
This rule places upon the prosecution the task of establishing the
guilt of an accused, relying on the strength of its own evidence,
and not banking on the weakness of the defense of an accused.
Requiring proof beyond reasonable doubt finds basis not only in
the due process clause of the Constitution, but similarly, in the
right of an accused to be "presumed innocent until the contrary is
proved." "Undoubtedly, it is the constitutional presumption of
innocence that lays such burden upon the prosecution." Should
the prosecution fail to discharge its burden, it follows, as a matter
of course, that an accused must be acquitted. As explained
in Basilio v. People of the Philippines:
We ruled in People v. Ganguso:

An accused has in his favor the presumption of innocence which


the Bill of Rights guarantees. Unless his guilt is shown beyond
reasonable doubt, he must be acquitted. This reasonable doubt
standard is demanded by the due process clause of the
Constitution which protects the accused from conviction except
upon proof beyond reasonable doubt of every fact necessary to
constitute the crime with which he is charged. The burden of
proof is on the prosecution, and unless it discharges that burden
the accused need not even offer evidence in his behalf, and he
would be entitled to an acquittal. Proof beyond reasonable doubt
does not, of course, mean such degree of proof as, excluding the
possibility of error, produce absolute certainty. Moral certainty
only is required, or that degree of proof which produces
conviction in an unprejudiced mind. The conscience must be
satisfied that the accused is responsible for the offense charged.
Well-entrenched in jurisprudence is the rule that the conviction of
the accused must rest, not on the weakness of the defense, but
on the strength of the prosecution. The burden is on the
prosecution to prove guilt beyond reasonable doubt, not on the
accused to prove his innocence.  (Emphasis in the original)
[23]

Since compliance with the chain of custody requirements under


Section 21 ensures the integrity of the seized items, it follows
that noncompliance with these requirements tarnishes the
credibility of the corpus delicti, which is at the core of
prosecutions under the Comprehensive Dangerous Drugs Act.
Such noncompliance casts doubt on the very claim that an
offense against the law was committed: [24]

Worse, the Prosecution failed to establish the identity of the


prohibited drug that constituted the corpus delicti itself. The
omission naturally raises grave doubt about any search being
actually conducted and warrants the suspicion that the prohibited
drugs were planted evidence.

In every criminal prosecution for possession of illegal drugs, the


Prosecution must account for the custody of the incriminating
evidence from the moment of seizure and confiscation until the
moment it is offered in evidence. That account goes to the weight
of evidence. It is not enough that the evidence offered has
probative value on the issues, for the evidence must also be
sufficiently connected to and tied with the facts in issue. The
evidence is not relevant merely because it is available but that it
has an  actual connection with the transaction involved and
with the parties thereto. This is the reason why authentication
and laying a foundation for the introduction of evidence are
important.  (Emphasis supplied, citations omitted)
[25]

Furthermore, noncompliance with Section 21 means that critical


elements of the offense of illegal sale of dangerous drugs remain
wanting. Such noncompliance justifies an accused's acquittal:
In both illegal sale and illegal possession of prohibited
drugs, conviction cannot be sustained if there is a persistent
doubt on the identity of the drug. The identity of the prohibited
drug must be established with moral certainty. Apart from
showing that the elements of possession or sale are present, the
fact that the substance illegally possessed and sold in the first
place is the same substance offered in court as exhibit must
likewise be established with the same degree of certitude as that
needed to sustain a guilty verdict.  (Emphasis supplied)
[26]

III

Lescano v. People  summarized the requirements under Section


[27]

21(1):
As regards the items seized and subjected to marking, Section 21
(1) of the Comprehensive Dangerous Drugs Act, as amended,
requires the performance of two (2) actions: physical inventory
and photographing. Section 21 (1) is specific as to when and
where these actions must be done. As to when, it must be
"immediately after seizure and confiscation." As to where, it
depends on whether the seizure was supported by a search
warrant. If a search warrant was served, the physical inventory
and photographing must be done at the exact same place that
the search warrant is served. In case of warrantless seizures,
these actions must be done "at the nearest police station or at
the nearest office of the apprehending officer/team, whichever is
practicable."

Moreover, Section 21 (1) requires at least three (3) persons to be


present during the physical inventory and photographing. These
persons are: first, the accused or the person/s from whom the
items were seized; second, an elected public official; and third, a
representative of the National Prosecution Service. There are,
however, alternatives to the first and the third. As to the first
(i.e., the accused or the person/s from whom items were seized),
there are two (2) alternatives: first, his or her representative;
and second, his or her counsel. As to the representative of the
National Prosecution Service, a representative of the media may
be present in his or her place.
[28]

Here, the case against accused-appellant is woefully lacking in


satisfying these requirements.

There is no semblance of compliance with Section 21(1). All the


prosecution has to support its assertions on the integrity of the
marijuana that was allegedly obtained from accused-appellant is
its bare claim that it was marked at the Tarlac Provincial Police
Office.

People v. Garcia  is clear: the mere marking of seized items,


[29]

instead of a proper physical inventory and photographing done in


the presence of the persons specified under Section 21, will not
justify a conviction:
Thus, other than the markings made by PO1 Garcia and the police
investigator (whose identity was not disclosed), no physical
inventory was ever made, and no photograph of the seized items
was taken under the circumstances required by R.A. No. 9165
and its implementing rules. We observe that while there was
testimony with respect to the marking of the seized items at the
police station, no mention whatsoever was made on whether the
marking had been done in the presence of Ruiz or his
representatives. There was likewise no mention that any
representative from the media and the Department of Justice, or
any elected official had been present during this inventory, or
that any of these people had been required to sign the copies of
the inventory.  (Citations omitted)
[30]

Neither PO2 Baquiran nor Inspector Silva testified on the conduct


of a proper inventory and photographing. The prosecution's
claims are sorely lacking in accounting how the marijuana was
actually marked, including the safety measures undertaken by
police officers.
Worse, the prosecution failed to account for the presence of even
just one (1) of the persons required by Section 21(1) to be
present during the inventory and photographing. There was no
elected public official. Neither was there a representative of the
National Prosecution Service nor was there a media
representative. The prosecution did not even maintain that
accused-appellant himself was present.

People v. Que  explained the importance of third-party


[31]

witnesses:
The presence of third-party witnesses is imperative, not only
during the physical inventory and taking of pictures, but also
during the actual seizure of items. The requirement of conducting
the inventory and taking of photographs "immediately after
seizure and confiscation" necessarily means that the required
witnesses must also be present during the seizure or confiscation.
This is confirmed in People v. Mendoza, where the presence of
these witnesses was characterized as an "insulating presence
[against] the evils of switching, 'planting' or contamination":

Similarly, P/Insp. Lim did not mention in his testimony, the


relevant portions of which are quoted hereunder, that a
representative from the media or the Department of Justice, or
any elected public official was present during the seizure and
marking of the sachets of shabu, as follows:
....

The consequences of the failure of the arresting lawmen to


comply with the requirements of Section 21 (1), supra, were dire
as far as the Prosecution was concerned. Without the insulating
presence of the representative from the media or the Department
of Justice, or any elected public official during the seizure and
marking of the sachets of shabu, the evils of switching, "planting"
or contamination of the evidence that had tainted the buy-busts
conducted under the regime of RA No. 6425 (Dangerous Drugs
Act of 1972) again reared their ugly heads as to negate the
integrity and credibility of the seizure and confiscation of the
sachets of shabu that were evidence herein of the corpus delicti,
and thus adversely affected the trustworthiness of the
incrimination of the accused. Indeed, the insulating presence of
such witnesses would have preserved an unbroken chain of
custody.[32]

This Court is left with no objective guarantee on the integrity of


the marijuana supposedly obtained from accused-appellant. The
prosecution placed its faith entirely on the self-serving assurances
of PO2 Baquiran and Inspector Silva. As this Court has
emphasized in Que, this is "precisely the situation that the
Comprehensive Dangerous Drugs Act seeks to prevent:" [33]

The very process that Section 21 requires is supposed to be a


plain, standardized, even run-of-the-mill, guarantee that the
integrity of the seized drugs and/or drug paraphernalia is
preserved. All that law enforcers have to do is follow Section 21's
instructions. They do not even have to profoundly intellectualize
their actions. [34]

Apart from the police officers' glaring noncompliance with Section


21(1), the prosecution is sorely lacking in guarantees on the
integrity of the marijuana from the point of marking to chemical
examination. Again, the prosecution completely placed its faith on
PO2 Baquiran's recollection of how he personally brought the
marijuana to the Tarlac Provincial Crime Laboratory Office. [35]

IV

Section 21(1) of the Comprehensive Dangerous Drugs Act allows


for deviations from its requirements under "justifiable grounds."
The prosecution, however, never bothered to account for any
such justifiable ground.

In People v. Lim,  this Court definitively recognized the


[36]

prosecution's burden to allege and substantiate justifiable


grounds for deviating from the chain of custody requirements:
[J]udicial notice is taken of the fact that arrests and seizures
related to illegal drugs are typically made without a warrant;
hence, subject to inquest proceedings. Relative thereto, Section 1
(A. 1.10) of the Chain of Custody Implementing Rules and
Regulations directs:
A. 1.10. Any justification or explanation in cases of
noncompliance with the requirements of Section 21 (1) of R.A.
No. 9165, as amended, shall be clearly stated in the sworn
statements/affidavits of the apprehending/seizing officers, as well
as the steps taken to preserve the integrity and evidentiary value
of the seized/confiscated items. Certification or record of
coordination for operating units other than the PDEA pursuant to
Section 86 (a) and (b), Article IX of the IRR of R.A. No. 9165
shall be presented.
While the above-quoted provision has been the rule, it appears
that it has not been practiced in most cases elevated before Us.
Thus, in order to weed out early on from the courts' already
congested docket any orchestrated or poorly built up drug-related
cases, the following should henceforth be enforced as a
mandatory policy:
1. In the sworn statements/affidavits, the
apprehending/seizing officers must state their compliance
with the requirements of Section 21 (1) of R.A. No. 9165, as
amended, and its IRR.
2. In case of non-observance of the provision, the
apprehending/seizing officers must state the justification or
explanation therefor as well as the steps they have taken in
order to preserve the integrity and evidentiary value of the
seized/confiscated items.
3. If there is no justification or explanation expressly declared
in the sworn statements or affidavits, the investigating fiscal
must not immediately file the case before the court. Instead,
he or she must refer the case for further preliminary
investigation in order to determine the (non) existence of
probable cause.
4. If the investigating fiscal filed the case despite such
absence, the court may exercise its discretion to either
refuse to issue a commitment order (or warrant of arrest) or
dismiss the case outright for lack of probable cause in
accordance with Section 5, Rule 112, Rules of Court.
 (Citations omitted)
[37]
Lim's listing of requirements is consistent with Que, which
explained that:
In order that there may be conscionable non-compliance, two (2)
requisites must be satisfied: first, the prosecution must
specifically allege, identify, and prove "justifiable grounds";
second, it must establish that despite non-compliance, the
integrity and evidentiary value of the seized drugs and/or drug
paraphernalia were properly preserved. Satisfying the second
requisite demands a showing of positive steps taken to ensure
such preservation. Broad justifications and sweeping guarantees
will not suffice. [38]

It is understandably impracticable, even unreasonable, to


retroactively insist here on compliance with the specific directives
in Lim,  which merely serves to concretize Section 21(l)'s
[39]

longstanding requirements. Yet, whether by Lim's contemporary


standard or by Section 21(1)'s bare textual articulation, the
prosecution miserably failed to justify noncompliance with the
chain of custody requirements under the Comprehensive
Dangerous Drugs Act.

In the face of the prosecution's glaring noncompliance and utter


dearth of justification, the Regional Trial Court  and the Court of
[40]

Appeals maintained
[41]
that accused-appellant's guilt was
nonetheless established as the police officers who apprehended
him benefitted from a presumption of regularity.

This is a grave error.

Que  explained that, in drugs cases, the prosecution cannot


[42]

benefit from a presumption of regularity. Section 21 of the


Comprehensive Dangerous Drugs Act articulates a specific
statutory mandate that cannot be trumped by the prosecution's
self-assurance.
As against the objective requirements imposed by statute,
guarantees coming from the prosecution concerning the identity
and integrity of seized items are naturally designed to advance
the prosecution's own cause. These guarantees conveniently aim
to knock two (2) targets with one (1) blow. First, they insist on a
showing of corpus delicti divorced from statutory impositions and
based on standards entirely the prosecution's own. Second, they
justify non-compliance by summarily pleading their own
assurance. These self-serving assertions cannot justify a
conviction.

Even the customary presumption of regularity in the performance


of official duties cannot suffice. People v. Kamad explained that
the presumption of regularity applies only when officers have
shown compliance with "the standard conduct of official duty
required by law." It is not a justification for dispensing with such
compliance:
Given the flagrant procedural lapses the police committed in
handling the seized shabu and the obvious evidentiary gaps in the
chain of its custody, a presumption of regularity in the
performance of duties cannot be made in this case. A
presumption of regularity in the performance of official duty is
made in the context of an existing rule of law or statute
authorizing the performance of an act or duty or prescribing a
procedure in the performance thereof The presumption applies
when nothing in the record suggests that the law enforcers
deviated from the standard conduct of official duty required by
law; where the official act is irregular on its face, the
presumption cannot arise. In light of the flagrant lapses we
noted, the lower courts were obviously wrong when they relied on
the presumption of regularity in the performance of official duty.

We rule, too, that the discrepancy in the prosecution evidence on


the identity of the seized and examined shabu and that formally
offered in court cannot but lead to serious doubts regarding the
origins of the shabu presented in court. This discrepancy and the
gap in the chain of custody immediately affect proof of the corpus
delicti without which the accused must be acquitted.

From the constitutional law point of view, the prosecution's failure


to establish with moral certainty all the elements of the crime and
to identify the accused as the perpetrator signify that it failed to
overturn the constitutional presumption of innocence that every
accused enjoys in a criminal prosecution. When this happens, as
in this case, the courts need not even consider the case for the
defense in deciding the case; a ruling for acquittal must forthwith
issue.  (Emphasis in the original)
[43]

Jurisprudence has been definite on the consequence of


noncompliance. This Court has categorically stated that
noncompliance negates whatever presumption there is on the
regularity of the manner by which officers gained and maintained
custody of the seized items:[44]

In People v. Orteza, the Court did not hesitate to strike down the
conviction of the therein accused for failure of the police officers
to observe the procedure laid down under the Comprehensive
Dangerous Drugs Law, thus:
First, there appears nothing in the records showing that police
officers complied with the proper procedure in the custody of
seized drugs as specified in People v. Lim, i.e., any apprehending
team having initial control of said drugs and/or paraphernalia
should, immediately after seizure or confiscation, have the same
physically inventoried and photographed in the presence of the
accused, if there be any, and or his representative, who shall be
required to sign the copies of the inventory and be given a copy
thereof. The failure of the agents to comply with the requirement
raises doubt whether what was submitted for laboratory
examination and presented in court was actually recovered from
appellant. It negates the presumption that official duties have
been regularly performed by the police officers.

....
IN FINE, the unjustified failure of the police officers to show that
the integrity of the object evidence-shabu was properly
preserved  negates the presumption of regularity accorded to
acts undertaken by police officers in the pursuit of their official
duties.  (Emphasis supplied, citations omitted)
[45]

By its very nature, Section 21 demands strict compliance.


Compliance cannot give way to a facsimile; otherwise, the
purpose of guarding against tampering, substitution, and planting
of evidence is defeated. Proof that strict compliance is imperative
is how jurisprudence disapproves of the approximation of
compliance:
Even acts which approximate compliance but do
not strictly comply with Section 21 have been considered
insufficient. People v. Magat, for example, emphasized the
inadequacy of merely marking the items supposedly seized:
A review of jurisprudence, even prior to the passage of the R.A.
No. 9165, shows that this Court did not hesitate to strike down
convictions for failure to follow the proper procedure for the
custody of confiscated dangerous drugs. Prior to R.A. No. 9165,
the Court applied the procedure required by Dangerous Drugs
Board Regulation No. 3, Series of 1979 amending Board
Regulation No. 7, Series of 1974.

In People v. Laxa, the policemen composing the buy-bust team


failed to mark the confiscated marijuana immediately after the
alleged apprehension of the appellant. One policeman even
admitted that he marked the seized items only after seeing them
for the first time in the police headquarters. The Court held that
the deviation from the standard procedure in anti-narcotics
operations produces doubts as to the origins of the marijuana and
concluded that the prosecution failed to establish the identity of
the corpus delicti.

Similarly, in People v. Kimura, the Narcom operatives failed to


place markings on the alleged seized marijuana on the night the
accused were arrested and to observe the procedure in the
seizure and custody of the drug as embodied in the
aforementioned Dangerous Drugs Board Regulation No. 3, Series
of 1979. Consequently, we held that the prosecution failed to
establish the identity of the corpus delicti.

In Zaragga v. People, involving a violation of R.A. No. 6425, the


police failed to place markings on the alleged seized shabu
immediately after the accused were apprehended. The buy-bust
team also failed to prepare an inventory of the seized drugs
which accused had to sign, as required by the same Dangerous
Drugs Board Regulation No. 3, Series of 1979. The Court held
that the prosecution failed to establish the identity of the
prohibited drug which constitutes the corpus delicti.

In all the foregoing cited cases, the Court acquitted the appellants
due to the failure of law enforcers to observe the procedures
prescribed in Dangerous Drugs Board Regulation No. 3, Series of
1979, amending Board Regulation No. 7, Series of 1974, which
are similar to the procedures under Section 21 of R.A. No. 9165.
Marking of the seized drugs alone by the law enforcers is not
enough to comply with the clear and unequivocal procedures
prescribed in Section 21 of R.A. No. 9165.

In the present case, although PO1 Santos had written his initials
on the two plastic sachets submitted to the PNP Crime Laboratory
Office for examination, it was not indubitably shown by the
prosecution that PO1 Santos immediately marked the seized
drugs in the presence of appellant after their alleged confiscation.
There is doubt as to whether the substances seized from
appellant were the same ones subjected to laboratory
examination and presented in court.

A unique characteristic of narcotic substances is that they are not


readily identifiable as in fact they have to be subjected to
scientific analysis to determine their composition and
nature. Congress deemed it wise to incorporate the
jurisprudential safeguards in the present law in an unequivocal
language to prevent any tampering, alteration or substitution, by
accident or otherwise. The Court, in upholding the right of the
accused to be presumed innocent, can do no less than apply the
present law which prescribes a more stringent standard in
handling evidence than that applied to criminal cases involving
objects which are readily identifiable.

R.A. No. 9165 had placed upon the law enforcers the duty to
establish the chain of custody of the seized drugs to ensure the
integrity of the corpus delicti. Thru proper exhibit handling,
storage, labeling and recording, the identity of the seized drugs is
insulated from doubt from their confiscation up to their
presentation in court.  (Emphasis supplied, citations omitted)
[46]

This is but the latest in a litany of cases that demonstrate law


enforcers' wanton disregard for basic statutory guidelines. While
not losing sight of the urgency of addressing the drug menace, it
is this Court's bounden duty to ensure compliance with laws and
uphold basic freedoms. This Court has harped on and, in this
Decision, continues to impress the need to comply with the bare
minimum that the Comprehensive Dangerous Drugs Act requires.
As in many cases before, this Court emphasizes that law
enforcers' "utter disregard for Section 21 . . . raises grave doubts
not only on the integrity of the allegedly seized items, but even
on their own."  Self-serving assurances cannot replace reliable
[47]

evidence. Failing compliance with the Comprehensive Dangerous


Drugs Act, acquittal must ensue.

WHEREFORE, the Court of Appeals May 8, 2015 Decision in CA-


G.R. CR-H.C. No. 04910 is REVERSED and SET ASIDE. Accused-
appellant Edgardo Royol y Asico is ACQUITTED for the
prosecution's failure to prove his guilt beyond reasonable doubt.
He is ordered immediately RELEASED from detention, unless he
is confined for any other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drugs Enforcement
Agency.

The Regional Trial Court is directed to turn over the marijuana


subject of this case to the Dangerous Drugs Board for destruction
in accordance with law.

SO ORDERED.
Peralta, (Chairperson), A. Reyes, Jr., Hernando,
and Carandang,  JJ., concur.
*

March 29, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on February 13, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 29, 2019 at 2:14 p.m.

ORDER OF RELEASE

TO: The Director General


       BUREAU OF CORRECTIONS
       1770 Muntinlupa City

       Thru: CSSupt. Gerardo F. Padilla


                Chief Superintendent
                New Bilibid Prison
                BUREAU OF CORRECTIONS
                1770 Muntinlupa City

GREETINGS:
WHEREAS, the Supreme Court on February 13,
2019 promulgated a Decision in the above-entitled case, the
dispositive portion of which reads:
"WHEREFORE, the Court of Appeals May 8, 2015 Decision in CA-
G.R. CR-H.C. No. 04910 is REVERSED and SET ASIDE. Accused-
appellant Edgardo Royol y Asico is ACQUITTED for the
prosecution's failure to prove his guilt beyond reasonable doubt.
He is ordered immediately RELEASED from detention, unless he
is confined for any other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drugs Enforcement
Agency.

SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately
release EDGARDO ROYOL y ASICO unless there are other
lawful causes for which he should be further detained, and to
return this Order with the certificate of your proceedings within
five (5) days from notice hereof.

GIVEN by the Honorable DIOSDADO M. PERALTA, Chairperson


of the Third Division of the Supreme Court of the Philippines,
this 13  day of February 2019.
th
 Designated additional Member per Special Order No. 2624 dated
*

November 28, 2018.

[1]
 Rep. Act No. 9165 (2002), sec. 5 provides:

SECTION 5. Sale, Trading, Administration, Dispensation, Delivery,


Distribution and Transportation of Dangerous Drugs and/or
Controlled Precursors and Essential Chemicals. — The penalty of
life imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.

The penalty of imprisonment ranging from twelve (12) years and


one (1) day to twenty (20) years and a fine ranging from One
hundred thousand pesos (P100,000.00) to Five hundred thousand
pesos (P500,000.00) shall be imposed upon any person, who,
unless authorized by law, shall sell, trade, administer, dispense,
deliver, give away to another, distribute, dispatch in transit or
transport any controlled precursor and essential chemical, or shall
act as a broker in such transactions.

If the sale, trading, administration, dispensation, delivery,


distribution or transportation of any dangerous drug and/or
controlled precursor and essential chemical transpires within one
hundred (100) meters from the school, the maximum penalty
shall be imposed in every case.

For drug pushers who use minors or mentally incapacitated


individuals as runners, couriers and messengers, or in any other
capacity directly connected to the dangerous drugs and/or
controlled precursors and essential chemicals trade, the
maximum penalty shall be imposed in every case.
If the victim of the offense is a minor or a mentally incapacitated
individual, or should a dangerous drug and/or a controlled
precursor and essential chemical involved in any offense herein
provided be the proximate cause of death of a victim thereof, the
maximum penalty provided for under this Section shall be
imposed.

The maximum penalty provided for under this Section shall be


imposed upon any person who organizes, manages or acts as a
"financier" of any of the illegal activities prescribed in this
Section.

The penalty of twelve (12) years and one (1) day to twenty (20)
years of imprisonment and a fine ranging from One hundred
thousand pesos (P100,000.00) to Five hundred thousand pesos
(P500,000.00) shall be imposed upon any person, who acts as a
"protector/coddler" of any violator of the provisions under this
Section.

[2]
 Rollo, p. 6.

[3]
 Id. at 2-3.

[4]
 Id. at 3.

[5]
 Id. at 4 and CA rollo, p. 18.

[6]
 Id. at 4-5 and CA rollo, p. 18.

[7]
 Id. at 5.

[8]
 Id. at 5-6.

[9]
 Id. at 6-7.

 CA rollo, pp. 17-21. The Decision, in Criminal Case No. 3499,


[10]

was penned by Judge Alipio C. Yumul of Branch 66, Regional Trial


Court, Capis, Tarlac.
[11]
 Id. at 21.

 Rollo, pp. 2-18. The Decision, in CA-G.R. CR-H.C. No. 04910,


[12]

was penned by Associate Justice Myra V. Garcia-Fernandez and


concurred in by Associate Justices Noel G. Tijam (now a retired
Associate Justice of this Court) and Victoria Isabel A. Paredes of
the Special Fifth Division, Court of Appeals, Manila.

[13]
 Id. at 19-22.

[14]
 630 Phil. 215 (2010) [Per J. Del Castillo, Second Division].

 Id. at 228 citing People v. Darisan, et al., 597 Phil. 479, 485


[15]

(2009) [Per J. Corona, First Division] and People v. Partoza, 605


Phil. 883 (2009) [Per J. Tinga, Second Division].

[16]
 639 Phil. 134 (2010) [Per J. Mendoza, Second Division].

 Id. at 144-145 citing People v. Zaida Kamad, 624 Phil. 289


[17]

(2010) [Per J. Brion, Second Division].

[18]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[19]
 Id. at 93.

[20]
 630 Phil. 215 (2010) [Per J. Del Castillo, Second Division].

 Id. at 229 citing People v. Orteza, 555 Phil. 701 (2007) [Per J.


[21]

Tinga, Second Division].

 People v. Orteza, 555 Phil. 701 (2007) [Per J. Tinga, Second


[22]

Division] citing People v. Laxa, 414 Phil. 156, 170 (2001) [Per J.


Mendoza, Second Division].

 Macayan, Jr. v. People, 756 Phil. 202, 213-214 (2015) [Per J.


[23]

Leonen, Second Division] citing CONST., art. III, sec. 1; Const.,


art. III, sec. 14(2); People v. Solayao, 330 Phil. 811, 819 (1996)
[Per J. Romero, Second Division]; and Boac, et al. v. People, 591
Phil. 508, 521-522 (2008) [Per J. Velasco, Jr., Second Division].

 People v. Belocura, 693 Phil. 476 (2012) [Per J. Bersamin, First


[24]

Division].

[25]
 Id. at 495-496.

 People v. Lorenzo, 633 Phil. 393, 403 (2010) [Per J. Perez,


[26]

Second Division].

[27]
 778 Phil. 460 (2016) [Per J. Leonen, Second Division].

[28]
 Id. at 475.

[29]
 599 Phil. 416 (2009) [Per J. Brion, Second Division].

[30]
 Id. at 429.

 People v. Que, G.R. No. 212994, January


[31]
31, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> [Per J.
Leonen, Third Division].

 Id. at 20-21 citing Rep. Act No. 9165 (2002), sec. 21(1)


[32]

and People v. Mendoza, 736 Phil. 749 (2014) [Per J. Bersamin,


First Division].

[33]
 Id. at 17.

[34]
 Id.

[35]
 Rollo, pp. 5-6.

 G.R. 
[36]
No.  231989,  September 4,  2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/september2018/231989.pdf> [Per J.
Peralta, En Banc].
[37]
 Id. at 15-16.

 People v. Que, G.R. No. 212994, January 31, 2018,


[38]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> 22 [Per J.
Leonen, Third Division].

 People v. Lim, G.R. No. 231989 (Notice), November 13, 2018.


[39]

This Court clarified that, "[t]he mandatory policy laid down in Lim
should not be given retroactive effect. Pertinent portion
of Lim clearly indicates a prospective application of such policy[.]"

[40]
 CA rollo, p. 20.

[41]
 Rollo, pp. 13-14.

 People v. Que, G.R. No. 212994, January


[42]
31, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> [Per J.
Leonen, Third Division].

 Id. at 11-12 citing People v. Kamad, 624 Phil. 289 (2010) [Per


[43]

J. Brion, Second Division].

 People v. Navarrete, 665 Phil. 738 (2011) [Per J. Carpio-


[44]

Morales, Third Division]. See also People v. Ulat, 674 Phil. 484


(2011) [Per J. Leonardo-De Castro, First Division].

 People v. Que, G.R. No. 212994, January 31, 2018,


[45]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/212994.pdf> 12-13 [Per
J. Leonen, Third Division].

[46]
 Id. at 13-14.

[47]
 Id. at 21.
Source: Supreme Court E-Library | Date created: April 29, 2019
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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 204759, November 14,


2018 ]
PEOPLE'S GENERAL INSURANCE CORPORATION,
PETITIONER, VS. EDGARDO GUANSING AND
EDUARDO LIZASO, RESPONDENTS.DECISION

LEONEN, J.:

As a general rule, personal service is the preferred mode of


service of summons. Substituted service is the exception to this
general rule. For the sheriff to avail of substituted service, there
must be a detailed enumeration of the sheriffs actions showing
that a defendant cannot be served despite diligent and
reasonable efforts. These details are contained in the sheriffs
return. Thus, the sheriffs return is entitled to a presumption of
regularity. Courts may allow substituted service based on what
the sheriffs return contains. [1]

Failure to serve summons means that the court did not acquire
jurisdiction over the person of the defendant.  Absent proper [2]

service of summons, the court cannot acquire jurisdiction over


the defendant unless there is voluntary appearance. The filing of
an answer and other subsequent pleadings is tantamount to
voluntary appearance.

This resolves a Rule 45 Petition for Review on Certiorari,


 assailing the Court of Appeals December 10, 2012 Decision  in
[3] [4]

CA-G.R. CV No. 96720, which granted Edgardo Guansing


(Guansing) and Eduardo Lizaso's (Lizaso) appeal  and set aside
[5]

the Regional Trial Court January 28, 2010 Decision  and February
[6]

23, 2011 Order  in Civil Case No. 06115736.


[7]

On February 4, 2006, at around 9:45 a.m., Lizaso, Guansing's


employee, was driving Guansing's truck along Legarda Street,
Sampaloc, Manila when he hit the rear portion of Andrea
Yokohama's (Yokohama) Isuzu Crosswind. The strong impact
caused the Isuzu Crosswind to hit other vehicles, rendering it
beyond repair.[8]

Yokohama's Isuzu Crosswind was insured with People's General


Insurance Corporation. Yokohama filed a total loss claim under
her insurance policy, which paid the full amount of P907,800.00
as settlement. Thus, People's General Insurance Corporation
claimed to have been subrogated to all the rights and interests of
Yokohama against Guansing. [9]

People's General Insurance Corporation sought from Guansing


reimbursement of the total amount paid to Yokohama, less the
salvage value of P470,000.00. Despite repeated demands,
Guansing failed to reimburse the amount claimed. [10]

On August 28, 2006, People's General Insurance Corporation filed


a Complaint for a sum of money and damages  against Guansing
[11]

and Lizaso. The case was docketed as Civil Case No. 06115736 at
Branch 41, Regional Trial Court, Manila City. The sheriff served
the summons on Guansing's brother, Reynaldo Guansing.  The [12]

sheriff's return did not explain why summons was served on his
brother instead of Guansing.[13]
The sheriffs return read:
SHERIFF'S RETURN

This is to certify:

1. That on September 20, 2006, I was able to served (sic)


Summons, Complaint and its Annexes thereto attached, upon the
defendant EDGARDO GUANSING at his given address in Barangay
Tibagan, Bustos, Bulacan thru the assistance of Brgy. Kagawad
Nestor Reyes and received by his brother REYNALDO GUANSING
of sufficient discretion who acknowledge[d] the receipt hereof as
evidence[d by] his signature.

....

WHEREFORE, I respectfully return the original copy of Summons


to the Honorable Court, DULY SERVED, to the defendant
EDGARDO GUANSING . . . for its records and information. [14]

On September 27, 2006, Guansing filed a Motion to Dismiss  the [15]

complaint for lack of jurisdiction over his person. He alleged that


he did not personally receive the summons. People's General
Insurance Corporation argued that summons was properly served
since substituted service was an alternative mode of service. [16]

In its October 11, 2006 Order,  the Regional Trial Court denied
[17]

the Motion to Dismiss for lack of merit. On November 10, 2006,


Guansing filed a Motion for Reconsideration  of the October 11,
[18]

2006 Order, which was also denied in the Regional Trial Court
November 30, 2006 Order.  On January 28, 2007, Guansing filed
[19]

a one (1)-page Answer  containing a general denial of the


[20]

material allegations and causes of action in People's General


Insurance Corporation's Complaint. He also reiterated that the
Regional Trial Court had no jurisdiction over his person.[21]

The case was then set for pre-trial conference. On February 2,


2008, Guansing filed an Urgent Ex-Parte Motion for
Postponement.  After several postponements by both parties,
[22]

Guansing submitted his Pre-trial Brief.  dated March 8, 2008,


[23]
where he again raised the Issue of lack of jurisdiction over his
person. [24]

On December 5, 2008, People's General Insurance Corporation


filed a Motion to Render Judgment on the Pleadings,  which was
[25]

granted by the Regional Trial Court. In its January 28, 2010


Decision,  the Regional Trial Court ruled against Guansing, and
[26]

ordered him to pay People's General Insurance Corporation the


remaining cost of the Isuzu Crosswind, attorney's fees, and costs
of suit.  The dispositive portion of this Decision read:
[27]

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


rendered in favor of the plaintiff and against the defendant
Edgardo Guansing, ordering the latter to pay the former the
following:
1. The sum of P437,800 for the reimbursement of the
remaining cost of the Isuzu Crosswind plus twelve percent
(12%) interest from August 28, 2006, the date of the filing
of this case, until fully paid;
2. The sum of P50,000.00 as attorney's fees;
3. Costs of the suit.
SO ORDERED. [28]

On March 11, 2010, Guansing filed his Motion for


Reconsideration,  where he reiterated his contention that the
[29]

Regional Trial Court did not acquire jurisdiction over his person
due to invalid service of summons. In its February 23, 2011
Order,  the Regional Trial Court denied Guansing's Motion for
[30]

Reconsideration.

On March 8, 2011, Guansing filed an appeal  before the Court of


[31]

Appeals. In a December 10, 2012 Decision,  the Court of Appeals


[32]

ruled in Guansing's favor and held that the Regional Trial Court
did not acquire jurisdiction over him because summons was
improperly served on his brother. Moreover, the sheriff did not
provide an explanation on why the summons was not personally
served upon him. It further remanded the case to the Regional
Trial Court. The dispositive portion of the Court of Appeals
December 10, 2012 Decision read:
WHEREFORE, premises considered, the appeal is GRANTED.
The January 28, 2010 Decision and the February 23, 2011 Order
of the Regional Trial Court of Manila, Branch 41, in Civil Case No.
06-115736 are SET ASIDE. Let the case be REMANDED to the
said trial court for further proceedings which shall include the
valid service of summons.

SO ORDERED.  (Emphasis in the original)


[33]

On January 29, 2013, People's General Insurance Corporation


filed a Petition for Review  before this Court.
[34]

The issues for this Court's resolution are as follows:

First, whether or not the Regional Trial Court acquired jurisdiction


over the person of respondent Edgardo Guansing through service
of summons; and

Second, whether or not respondent Edgardo Guansing, in filing


his Answer and other subsequent pleadings, voluntarily submitted
himself to the jurisdiction of the court.

Petitioner argues that the Court of Appeals incorrectly held that


respondent's filing of an Answer and other subsequent pleadings
did not amount to voluntary appearance.  It also argues
[35]

that Garcia v. Sandiganbayan,  cited by respondent, is


[36]

inapplicable since it erroneously expanded the plain and simple


meaning of "voluntary appearance" in Rule 14, Section 20 of the
Rules of Court.[37]

In his Comment,  respondent Guansing asserts that petitioner is


[38]

misleading this Court by raising the issue on voluntary


appearance. He stresses that the sole issue is whether or not
there was valid service of summons; thus, the Court of Appeals
ruled correctly in reversing the Regional Trial Court January 28,
2010 Decision and February 23, 2011 Order.

By way of reply, petitioner alleges that contrary to respondent


Guansing's assertions, the issue on voluntary appearance is very
much related to the issue on service of summons, especially since
he filed several pleadings and even sought affirmative reliefs.
[39]

This Court finds the Petition meritorious.

The rule requiring jurisdiction over the parties is based on due


process. Due process consists of notice and hearing. Notice
means that persons with interests in the subject of litigation are
to be informed of the facts and the law on which the complaint or
petition is based for them to adequately defend their interests.
This is done by giving the parties notification of the proceedings.
On the other hand, hearing means that the parties must be given
an opportunity to be heard or a chance to defend their interests.
Courts are guardians of constitutional rights, and therefore,
cannot deny due process rights while at the same time be
considered to be acting within their jurisdiction.
[40]

Jurisdiction over the parties is the power of the courts to make


decisions that are binding on them. Jurisdiction over complainants
or petitioners is acquired as soon as they file their complaints or
petitions, while jurisdiction over defendants or respondents is
acquired through valid service of summons or their voluntary
submission to the courts' jurisdiction.
[41]

Violation of due process is a jurisdictional defect. Hence, proper


service of summons is imperative. A decision rendered without
proper service of summons suffers a jurisdictional infirmity. In
the service of summons, personal service is the preferred mode.
As a rule, summons must be served personally on a defendant.

Rule 14, Sections 6 and 7 of the Rules of Court provide:


Section 6. Service in person on defendant. - Whenever
practicable, the summons shall be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive
and sign for it, by tendering it to him.
Section 7. Substituted service. - If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided
in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some
person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant's office or regular place of
business with some competent person in charge thereof.
This Court has consistently held that jurisdiction over a defendant
is acquired upon a valid service of summons or through the
defendant's voluntary appearance in court. In Interlink Movie
Houses Inc. et al. v. Court of Appeals et al.,  this Court
[42]

reiterated:
It is settled that jurisdiction over a defendant in a civil case is
acquired either through service of summons or through voluntary
appearance in court and submission to its authority. In the
absence of service or when the service of summons upon the
person of the defendant is defective, the court acquires no
jurisdiction over his person, and a judgment rendered against
him is null and void.

In actions in personam, such as collection for a sum of money


and damages, the court acquires jurisdiction over the person of
the defendant through personal or substituted service of
summons.

Personal service is effected by handling a copy of the summons to


the defendant in person, or, if he refuses to receive and sign for
it, by tendering it to him . . .  (Emphasis supplied, citations
[43]

omitted)
In the same case, this Court explained:
It is settled that resort to substituted service is allowed only if,
for justifiable causes, the defendant cannot be personally served
with summons within a reasonable time. In such cases,
substituted service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of
suitable age and discretion then residing therein, or (b) by
leaving the copies at defendant's office or regular place of
business with a competent person in charge. Because substituted
service is in derogation of the usual method of service, and
personal service of summons is preferred over substituted
service, parties do not have unbridled right to resort to
substituted service of summons.  (Emphasis supplied)
[44]

Sheriffs, in doing substituted service, must strictly comply with


the prescribed requirements and circumstances authorized by the
rules. In Manotoc v. Court of Appeals: [45]

(1) Impossibility of Prompt Personal Service

The party relying on substituted service or the sheriff must show


that defendant cannot be served promptly or there is impossibility
of prompt service. Section 8, Rule 14 provides that the plaintiff or
the sheriff is given a "reasonable time" to serve the summons to
the defendant in person, but no specific time frame is mentioned.
"Reasonable time" is defined as "so much time as is necessary
under the circumstances for a reasonably prudent and diligent
man to do, conveniently, what the contract or duty requires that
should be done, having a regard for the rights and possibility of
loss, if any, to the other party." Under the Rules, the service of
summons has no set period. However, when the court, clerk of
court, or the plaintiff asks the sheriff to make the return of the
summons and the latter submits the return of summons, then the
validity of the summons lapses. The plaintiff may then ask for an
alias summons if the service of summons has failed. What then is
a reasonable time for the sheriff to effect a personal service in
order to demonstrate impossibility of prompt service? To the
plaintiff, "reasonable time" means no more than seven (7) days
since an expeditious processing of a complaint is what a plaintiff
wants. To the sheriff, "reasonable time" means 15 to 30 days
because at the end of the month, it is a practice for the branch
clerk of court to require the sheriff to submit a return of the
summons assigned to the sheriff for service. The Sheriffs Return
provides data to the Clerk of Court, which the clerk uses in the
Monthly Report of Cases to be submitted to the Office of the
Court Administrator within the first ten (10) days of the
succeeding month. Thus, one month from the issuance of
summons can be considered "reasonable time" with regard to
personal service on the defendant.
For substituted service of summons to be available, there must
be several attempts by the sheriff to personally serve the
summons within a reasonable period of one month which
eventually resulted in failure to prove impossibility of prompt
service. "Several attempts" mean at least three (3) tries,
preferably on at least two different dates. In addition, the sheriff
must cite why such efforts were unsuccessful. It is only then that
impossibility of service can be confirmed or accepted.

(2) Specific Details in the Return

The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date
and time of the attempts on personal service, the inquiries made
to locate the defendant, the name/s of the occupants of the
alleged residence or house of defendant and all other acts done,
though futile, to serve the summons on defendant must be
specified in the Return to justify substituted service. The form on
Sheriffs Return of Summons on Substituted Service prescribed in
the Handbook for Sheriffs published by the Philippine Judicial
Academy requires a narration of the efforts made to find the
defendant personally and the fact of failure. Supreme Court
Administrative Circular No. 5 dated November 9, 1989 requires
that "impossibility of prompt service should be shown by stating
the efforts made to find the defendant personally and the failure
of such efforts," which should be made in the proof of service.

(3) A Person of Suitable Age and Discretion

If the substituted service will be effected at defendant's house or


residence, it should be left with a person of "suitable age and
discretion then residing therein." A person of suitable age and
discretion is one who has attained the age of full legal capacity
(18 years old) and is considered to have enough discernment to
understand the importance of a summons. "Discretion" is defined
as "the ability to make decisions which represent a responsible
choice and for which an understanding of what is lawful, right or
wise may be presupposed". Thus, to be of sufficient discretion,
such person must know how to read and understand English to
comprehend the import of the summons, and fully realize the
need to deliver the summons and complaint to the defendant at
the earliest possible time for the person to take appropriate
action. Thus, the person must have the "relation of confidence" to
the defendant, ensuring that the latter would receive or at least
be notified of the receipt of the summons. The sheriff must
therefore determine if the person found in the alleged dwelling or
residence of defendant is of legal age, what the recipient's
relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and
his duty to immediately deliver it to the defendant or at least
notify the defendant of said receipt of summons. These matters
must be clearly and specifically described in the Return of
Summons.

(4) A Competent Person in Charge

If the substituted service will be done at defendant's office or


regular place of business, then it should be served on a
competent person in charge of the place. Thus, the person on
whom the substituted service will be made must be the one
managing the office or business of defendant, such as the
president or manager; and such individual must have sufficient
knowledge to understand the obligation of the defendant in the
summons, its importance, and the prejudicial effects arising from
inaction on the summons. Again, these details must be contained
in the Return.  (Emphasis supplied, citations omitted)
[46]

In this case, the basis for resorting to substituted service on


respondent Guansing's brother is not provided for in the Sheriffs
Return,  which read:
[47]

SHERIFF'S RETURN

This is to certify:
1. That on September 20, 2006, I was able to served (sic)
Summons, Complaint and its Annexes thereto attached, upon the
defendant EDGARDO GUANSING at his given address in Barangay
Tibagan, Bustos, Bulacan thru the assistance of Brgy. Kagawad
Nestor Reyes and received by his brother REYNALDO GUANSING
of sufficient discretion who acknowledge[d] the receipt hereof as
evidence[d by] his signature.

....

WHEREFORE, I respectfully return the original copy of Summons


to the Honorable Court, DULY SERVED, to the defendant
EDGARDO GUANSING . . . for its records and information.
The Sheriffs Return did not contain a specific narration of the
serious efforts to attempt to serve the summons on the person of
respondent Guansing.

Although Rule 131, Section 3(m) of the Rules of Court provides


that there is a disputable presumption that "official duty has been
regularly performed," in this case, presumption of regularity does
not apply.

To enjoy the presumption of regularity, a sheriffs return must


contain: (1) detailed circumstances surrounding the sheriffs
attempt to serve the summons on the defendant; and (2) the
specifics showing impossibility of service within a reasonable
time.  Based on these requirements, a sheriffs return is merely
[48]

pro forma.

In Manotoc v. Court of Appeals,  this Court explained that the


[49]

presumption of regularity in the issuance of the sheriff's return


does not apply to patently defective returns. In the case at bar,
the Sheriffs Return contained no statement on the efforts or
attempts made to personally serve the summons. It was devoid
of details regarding the service of summons. Thus, it was
defective.
In this case, the sheriff should have established the impossibility
of prompt personal service before he resorted to substituted
service. Impossibility of prompt personal service is established by
a sheriffs failure to personally serve the summons within a period
of one (1) month. Within this period, he or she must have had at
least three (3) attempts, on two (2) different dates, to personally
serve the summons. Moreover, he or she must cite in the sheriffs
return why these attempts are unsuccessful. [50]

Sheriffs are tasked to discharge their duties on the service of


summons with care, diligence, and promptness so as not to affect
the speedy disposition of justice. They are compelled to give their
best efforts to accomplish personal service of summons on a
defendant.  Based on the Sheriffs Return in this case, the sheriff
[51]

clearly failed to meet this requirement.

II

However, by filing his answer and other pleadings, respondent


Guansing is deemed to have voluntarily submitted himself to the
jurisdiction of the court. Generally, defendants voluntarily submit
to the court's jurisdiction when they participate in the
proceedings despite improper service of summons. [52]

Rule 14, Section 20 of the Rules of Court states:


Section 20. Voluntary appearance. - The defendant's voluntary
appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant
shall not be deemed a voluntary appearance.
In Navale et al. v. Court of Appeals et al.:
[53]

Defects of summons are cured by voluntary appearance and by


the filing of an answer to the complaint. A defendant [cannot] be
permitted to speculate upon the judgment of the court by
objecting to the court's jurisdiction over its person if the
judgment is adverse to it, and acceding to jurisdiction over its
person if and when the judgment sustains its defense.
Any form of appearance in court by the defendant, his authorized
agent or attorney, is equivalent to service except where such
appearance is precisely to object to the jurisdiction of the court
over his person. [54]

In G.V. Florida Transport, Inc. v. Tiara Commercial Corporation: [55]

There is voluntary appearance when a party, without directly


assailing the court's lack of jurisdiction, seeks affirmative relief
from the court. When a party appears before the court without
qualification, he or she is deemed to have waived his or her
objection regarding lack of jurisdiction due to improper service of
summons.  (Citations omitted)
[56]

Rapid City Realty Development Corporation v. Villa  laid down


[57]

the rules on voluntary appearance as follows:


(1) Special appearance operates as an exception to the general
rule on voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over


the person of the defendant must be explicitly made, i.e., set
forth in an unequivocal manner; and

(3) Failure to do so constitutes voluntary submission to the


jurisdiction of the court, especially in instances where a pleading
or motion seeking affirmative relief is filed and submitted to the
court for resolution.  (Emphasis supplied)
[58]

Respondent Guansing filed his: (1) Answer dated January 28,


2007; (2) Pre-trial Brief dated February 27, 2007; (3) Urgent Ex-
parte Motion for Postponement dated February 2, 2008; (4)
Motion for Reconsideration dated March 8, 2010; and (5) Notice
of Appeal dated March 8, 2011. His filing of these pleadings
amounts to voluntary appearance. He is considered to have
submitted himself to the court's jurisdiction, which is equivalent
to a valid service of summons. By filing numerous pleadings, he
has confirmed that notice has been effected, and that he has
been adequately notified of the proceedings for him to sufficiently
defend his interests.
In arriving at its Decision, the Court of Appeals erroneously relied
on Garcia v. Sandiganbayan,  which involved two (2) forfeiture
[59]

cases of alleged ill-gotten wealth. The first case involved


P143,052,015.29 and the second case involved P202,005,980.55,
both amounts were amassed by retired Major General Carlos F.
Garcia (Major General Carlos) and his family.

After the filing of the first case, summons was issued and served
on Major General Carlos at his place of detention. According to
the November 2, 2005 Sheriff's Return, the summons was duly
served on "respondent[s] Garcias." Instead of an answer, Major
General Carlos' wife, Clarita Garcia (Clarita), filed a motion to
dismiss on the ground of lack of jurisdiction over her person.

On the second case, the sheriff served the summons on July 12,
2005. In his July 13, 2005 Sheriffs Return, the sheriff stated that
he gave the summons to the Officer-in-Charge/Custodian of the
Philippine National Police Detention Center, who in turn handed
them to Major General Carlos, who signed his receipt of the
summons with the qualifying note: "I'm receiving the copies of
Clarita, Ian Carl, Juan Paolo & Timothy-but these copies will not
guarantee it being served to the above-named (sic)." [60]

This Court ruled that substituted service made on Clarita and her
children were irregular and defective because the service of
summons made on Major General Carlos did not comply with the
requirements of a valid substituted service. It ruled that there
was no voluntary appearance because Clarita's pleadings did not
show that she voluntarily appeared without qualification. In the
first case, she filed a: (a) motion to dismiss; (b) motion for
reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with
plunder case; and (e) motion to dismiss and/or to quash. In the
second case, she filed a: (a) motion to dismiss and/or to quash;
and (b) motion for partial reconsideration.

This Court held that the pleadings filed were "solely for special
appearance with the purpose of challenging the jurisdiction of the
[Sandiganbayan] over her person and that of her three
children"  and that all throughout, she never abandoned her
[61]

stance. Therefore, Clarita and her sons did not voluntarily appear
before the Sandiganbayan. Consequently, the Sandiganbayan did
not acquire jurisdiction over the persons of Clarita and her
children. The proceedings in the cases, insofar as she and her
children are concerned, were declared void for lack of jurisdiction.

Garcia depended heavily on a single provision in the Rules of


Court,. specifically on the second sentence of the provision on
voluntary appearance: "The inclusion in a motion to dismiss of
other grounds aside from lack of jurisdiction over the person of
the defendant shall not be deemed a voluntary appearance." [62]

A plain and simple reading of the second sentence confirms that it


pertains only to a motion to dismiss and not to any other
pleading, thereby making it inapplicable. The provision is very
clear, but this Court in Garcia gave it an expanded meaning when
it ruled that "Clarita never abandoned when she filed her motions
for reconsideration, even with a prayer to admit their
attached Answer Ex Abundante Ad Cautelam . . . setting forth
affirmative defenses with a claim for damages." [63]

Additionally, it is basic that a claim for damages constitutes a


prayer for affirmative relief, which this Court has consistently
considered as voluntary appearance. It is incongruous to ask the
court for damages while asserting lack of jurisdiction at the same
time.

Associate Justice Antonio Carpio's dissent in Garcia is insightful.


He disagreed with the conclusion that there was no voluntary
appearance on Clarita's part. He opined that an appearance
without expressly objecting to the jurisdiction of the court over
the person was voluntary appearance.  Clarita failed to raise lack
[64]

of jurisdiction over her person in her answer even if she filed it ex
abundante ad cautelam. Likewise, she also failed to assert lack of
jurisdiction when she filed her motion to transfer or consolidate
the cases. In any case, by filing a mot on to transfer or
consolidate, she sought an affirmative relief, which in turn was a
recognition of the court's authority. Having invoked the court's
jurisdiction to secure affirmative relief, she could not now assert
otherwise.

In Oaminal v. Castillo,  this Court further explained:


[65]

The filing of Motions seeking affirmative relief - to admit answer,


for additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for
reconsideration - are considered voluntary submission to the
jurisdiction of the court. Having invoked the trial court's
jurisdiction to secure affirmative relief, respondents cannot -
after failing to obtain the relief prayed for - repudiate the very
same authority they have invoked.  (Emphasis supplied, citations
[66]

omitted)
In this case, not only did respondent Guansing file his answer and
pre trial brief, but he also filed pleadings seeking affirmative
reliefs such as the February 2, 2008 Urgent Ex-Parte Motion for
Postponement and March 8, 2011 Notice of Appeal. Clearly, he
cannot negate that affirmative reliefs were sought.

Moreover, respondent Guansing revealed that he was properly


informed of the contents of petitioner's action against him when
he filed his Motion for Reconsideration and Notice of Appeal.

Respondent Guansing, who actively participated in the


proceedings, cannot impugn the court's jurisdiction. To reiterate,
a long line of cases has established that the filing of an answer,
among other pleadings, is considered voluntary appearance and
vests the court with jurisdiction over the person. The rules are
clear: the filing of an answer and other pleadings is considered
voluntary appearance. Respondent Guansing's actions lead to no
other conclusion other than he voluntarily appeared and
submitted himself to the court's jurisdiction.

Nonetheless, technicalities should not be used as a tool to


undermine substantial justice. This Court has consistently held
that if a rigid application of the procedural rules will obstruct
rather than serve the interests of justice, courts may relax a strict
application of the rules. As emphasized in Peñoso v. Dona: [67]

The law abhors technicalities that impede the cause of justice.


The court's primary duty is to render or dispense justice. "A
litigation is not a game of technicalities." "Lawsuits unlike duels
are not to be won by a rapier's thrust. Technicality, when it
deserts its proper office as an aid to justice and becomes its great
hindrance and chief enemy, deserves scant consideration from
courts." Litigations must be decided on their merits and not on
technicality. Every party litigant must be afforded the amplest
opportunity for the proper and just determination of his cause,
free from the unacceptable plea of technicalities. . . .  (Citation
[68]

omitted)
Lastly, this Court notes that the Court of Appeals not only erred
when it ruled that the court did not acquire jurisdiction over
Guansing but more so when it remanded the case for further
proceedings with a directive for the proper service of summons. A
decision remanding the case for further proceedings serves no
purpose if the court never acquired jurisdiction over the person of
the defendant in the first place. Jurisdiction is the power of the
courts to issue decisions that are binding on the parties. Since the
Court of Appeals ruled that the trial court did not acquire
jurisdiction over the person of Guansing, the trial court would
have had no power to issue binding decisions over the parties.
Hence, all the proceedings would have been considered void.

However, it is clear that the Regional Trial Court acquired


jurisdiction over respondent Guansing through voluntary
appearance. Necessarily, the proceedings before it in Civil Case
No. 06115736 should be reinstated. Thus, the Court of Appeals
erred when it nullified the January 28, 2010 Decision and
February 23, 2011 Order of the Regional Trial Court.

WHEREFORE, the present petition is GRANTED. The Court of


Appeals December 10, 2012 Decision in CA-G.R. CV No. 96720
is REVERSED and the Regional Trial Court January 28, 2010
Decision is AFFIRMED. Respondent Edgardo Guansing is ordered
to pay:
1. The sum of P437,800.00 for the reimbursement of the
remaining cost of the Isuzu Crosswind plus interest  of [69]

twelve percent (12%) per annum from August 28, 2006, the
date of filing of this case, until June 30, 2013, and six
percent (6%) per annum from July 1, 2013 until fully paid;
2. The sum of P50,000.00 as attorney's fees; and
3. Costs of the suit.
SO ORDERED.

Peralta, (Chairperson), and J. Reyes, Jr., JJ., concur.


Gesmundo, and Hernando, JJ., on wellness leave.

December 18, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on November 14, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on December 18, 2018 at 3:10 p.m.

 De Pedro v. Romasan Development Corporation, 758 Phil. 706


[1]

(2014) [Per J. Leonen, Second Division].

[2]
 Id.
[3]
 Rollo, pp. 18-55.

 Id. at 199-207. The Decision was penned by Associate Justice


[4]

Danton Q. Bueser and concurred in by Associate Justices Amelita


G. Tolentino and Ramon R. Garcia of the Fourth Division, Court of
Appeals, Manila.

[5]
 Id. at 163.

 Id. at 146-149. The Decision was penned by Acting Presiding


[6]

Judge Teresa P. Soriaso of Branch 41, Regional Trial Court,


Manila.

 Id. at 159-161. The Order was penned by Presiding Judge


[7]

Rosalyn D. Mislos-Loja of Branch 41, Regional Trial Court, Manila.

[8]
 Id. at 20-21.

[9]
 Id. at 21-22.

[10]
 Id.

[11]
 Id. at 56-62.

[12]
 Id. at 201.

[13]
 Id. at 203-204.

[14]
 Id. at 86.

[15]
 Id. at 80.

[16]
 Id. at 83.

 Id. at 89. The Order was penned by Judge Vedasto B. Marco of


[17]

Branch 41, Regional Trial Court, Manila.

[18]
 Id. at 91-92.
 Id. at 100. The Order was penned by Judge Vedasto B. Marco
[19]

of Branch 41, Regional Trial Court, Manila.

[20]
 Id. at 102.

[21]
 Id. at 23.

[22]
 Id. at 128.

[23]
 Id. at 133-134.

[24]
 Id. at 24-25.

[25]
 Id. at 135-140.

[26]
 Id. at 146-149.

[27]
 Id. at 25.

[28]
 Id. at 149.

[29]
 Id. at 151-152.

[30]
 Id. at 159-161.

[31]
 Id. at 163.

[32]
 Id. at 199-207.

[33]
 Id. at 207.

[34]
 Id. at 18-55.

[35]
 Id. at 28-29.

[36]
 618 Phil. 346 (2009) [Per J. Velasco, Third Division].
[37]
 Rollo, p. 30.

[38]
 Id. at 213-219.

[39]
 Id. at 259-267.

 De Pedro v. Romasan Development Corporation, 748 Phil. 706


[40]

(20 14) [Per J. Leonen, Second Division], citing Manotoc v. CA,


530 Phil. 454 (2006) [Per J. Velasco, Jr., Third Division].

[41]
 Id.

 G.R.
[42]
No. 203298, January 17, 2018
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/203298.pdf> [Per J.
Martires, Third Division].

[43]
 Id. at 5.

[44]
 Id. at 6.

[45]
 530 Phil. 454 (2006) [Per J. Velasco, Third Division].

[46]
 Id. at 468-471.

[47]
 Rollo, p. 79.

 De Pedro v. Romasan Development Corp., 748 Phil. 706 (2014)


[48]

[Per. J. Leonen, Second Division].

 530 Phil. 454 (2006) [Per J. Velasco, Third Division],


[49]

citing Veturanza v. Court of Appeals, 240 Phil. 306 (1987) [Per J.


Padilla, Second Division].

 Interlink Movie Houses Inc. et. al. v. Court of Appeals et. al.,
[50]

G.R. No. 203298, January 17, 2018


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/january2018/203298.pdf> [Per J.
Martires, Third Division].

[51]
 Id. at 7.

 Prudential Bank v. Magdamit, Jr., 746 Phil. 649 (2014) [Per J.


[52]

Perez, First Division].

 324 Phil. 70 (1996) [Per J. Romero, Second Division]. See also


[53]

La Naval Drug Corporation v. Court of Appeals, 306 Phil. 84


(2004) [Per J. Vitug, En Banc].

 Id. at 78, citing Carballo v. Encarnacion, 92 Phil. 974 (1953)


[54]

[Per J. Montemayor, First Division] and Republic v. Ker &


Company, Ltd., 124 Phil. 822 (1966) [Per J. Bengzon, J.P., En
Banc].

 G.R.
[55]
No. 201378, October 18, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/october2017/201378.pdf> [Per J.
Jardeleza, First Division].

[56]
 Id. at 11.

[57]
 626 Phil. 211 (2010) (Per J. Carpio Morales, First Division].

[58]
 Id. at 216.

[59]
 618 Phil. 346 (2009) [Per J. Velasco, Third Division].

[60]
 Id. at 359.

[61]
 Id. at 368.

[62]
 Id. at 367, citing RULES OF COURT, Rule 14, sec. 20.

[63]
 Id. at 368.
 Fernandez v. Court of Appeals, 497 Phil. 748 (2005) [Per J.
[64]

Chico-Nazario, Second Division].

[65]
 459 Phil. 542 (2003) [Per J. Panganiban, Third Division].

[66]
 Id. at 555.

[67]
 549 Phil. 39 (2007) [Per J. Austria-Martinez, Third Division].

[68]
 Id. at 45-46.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[69]

En Banc].

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THIRD DIVISION

[ G.R. No. 209468, December 13, 2017


]
UNITED DOCTORS MEDICAL CENTER,
PETITIONER, VS. CESARIO BERNADAS,
REPRESENTED BY LEONILA BERNADAS,
RESPONDENT.DECISION
LEONEN, J.:

An employee who has already qualified for optional retirement


but dies before the option to retire could be exercised is entitled
to his or her optional retirement benefits, which may be claimed
by the qualified employee's beneficiaries on his or her behalf.

This is a Petition for Review on Certiorari  assailing the June 21,


[1]

2013 Decision  and the October 4, 2013 Resolution  of the Court
[2] [3]

of Appeals in CA-G.R. SP No. 126781, sustaining the National


Labor Relations Commission's finding that Cesario Bernadas'
(Cesario) beneficiaries were entitled to his optional retirement
benefits.

On July 17, 1986, Cesario started working as an orderly in United


Doctors Medical Center's housekeeping department. He was
eventually promoted as a utility man. [4]

United Doctors Medical Center and its rank-and-file employees


had a collective bargaining agreement (CBA), under which rank-
and-file employees were entitled to optional retirement benefits.
 On retirement pay, the CBA provided:
[5]

ARTICLE XI
RETIREMENT AND SEVERANCE PAY

SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER


shall grant each employee retirement and severance pay in
accordance with law. It shall also continue its present policy on
optional retirement.[6]

Under the optional retirement policy, an employee who has


rendered at least 20 years of service is entitled to optionally
retire. The optional retirement pay is equal to a retiree's salary
for 11 days per year of service. [7]

In addition to the retirement plan, employees are also provided


insurance, with United Doctors Medical Center paying the
premiums. The employees' family members would be the
beneficiaries of the insurance.
[8]
On October 20, 2009, Cesario died from a "freak accident"  while [9]

working in a doctor's residence. He was 53 years old. [10]

Leonila Bernadas (Leonila), representing her deceased husband,


Cesario, filed a Complaint  for payment of retirement benefits,
[11]

damages, and attorney's fees with the National Labor Relations


Commission. Leonila and her son also claimed and were able to
receive insurance proceeds of P180,000.00 under the CBA. [12]

In a Decision  dated August 31, 2011, the Labor Arbiter


[13]

dismissed Leonila's Complaint. According to the Labor Arbiter,


Cesario should have applied for optional retirement benefits
during his lifetime, the benefits being optional. Since he did not
apply for it, his beneficiaries were not entitled to claim his
optional retirement benefits. [14]

Leonila appealed to the National Labor Relations Commission.  In [15]

its April 30, 2012 Decision,  the National Labor Relations


[16]

Commission reversed the Labor Arbiter's Decision. It found that


the optional retirement plan was never presented in this case,
casting a doubt on whether or not the plan required an
application for optional retirement benefits before an employee
could become entitled to them.  Considering the "constitutional
[17]

mandate to afford full protection to labor,"  the National Labor


[18]

Relations Commission resolved the doubt in favor of Cesario. The


dispositive portion of its Decision read:
WHEREFORE, premises considered, the Decision dated August 31,
2011 is REVERSED AND SET ASIDE. Judgment is hereby rendered
finding complainant Cesario M. Bernadas is entitled to optional
retirement benefit in the amount of P98,252.55 and ordering
respondent United Doctors Medical Center to pay the said amount
to the complainant.

SO ORDERED. [19]

United Doctors Medical Center's Motion for Reconsideration  was [20]

denied;  hence, it filed a Petition for Certiorari  with the Court of


[21] [22]

Appeals.
On June 21, 2013, the Court of Appeals rendered its
Decision  sustaining the ruling of the National Labor Relations
[23]

Commission. According to the Court of Appeals, the retirement


plan and the insurance were two (2) "separate and distinct
benefits"  that were granted to the employees. It held that
[24]

Leonila's receipt of insurance proceeds did not bar her from being
entitled to the retirement benefits under the CBA. [25]

United Doctors Medical Center moved for reconsideration  but [26]

was denied in the Court of Appeals October 4, 2013 Resolution.


 Hence, this Petition  was filed before this Court.
[27] [28]

Petitioner argues that respondent Cesario's beneficiaries do not


have legal capacity to apply for Cesario's optional retirement
benefits since respondent himself never applied for it in his
lifetime.  It asserts that even assuming respondent Cesario was
[29]

already qualified to apply for optional retirement three (3) years


prior to his death, he never did. Thus, there would have been no
basis for respondent Cesario's beneficiaries to be entitled to his
optional retirement benefits.  Petitioner likewise argues that to
[30]

grant respondent Cesario's beneficiaries optional retirement


benefits on top of the life insurance benefits that they have
already received would be equal to "double compensation and
unjust enrichment." [31]

On the other hand, Leonila counters that had her husband died
"under normal circumstances,"  he would have applied for
[32]

optional retirement benefits. That Cesario was unable to apply


before his death "is a procedural technicality"  that should be set
[33]

aside so that "full protection to labor"  is afforded and "the ends
[34]

of social and compassionate justice"  are met. [35]

This Court is tasked to resolve the issue of whether or not Leonila


Bernadas as her husband's representative, may claim his optional
retirement benefits. However, to resolve this issue, this Court
must first resolve the issue of whether or not Cesario Bernadas is
entitled to receive his optional retirement benefits despite his
untimely death.

This Court denies the Petition.

Jurisprudence characterizes retirement as "the result of a bilateral


act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the former." [36]

At the outset, retirement benefits must be differentiated from


insurance proceeds. One is in the concept of an indemnity while
the other is conditioned on age and length of service. "A 'contract
of insurance' is an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event."  On the[37]

other hand, retirement plans,


while initially humanitarian in nature, now concomitantly serve to
secure loyalty and efficiency on the part of employees, and to
increase continuity of service and decrease the labor turnover, by
giving to the employees some assurance of security as they
approach and reach the age at which earning ability and earnings
are materially impaired or at an end.  (Citation omitted)
[38]

Thus, the grant of insurance proceeds will not necessarily bar the
grant of retirement benefits. These are two (2) separate and
distinct benefits that an employer may provide to its employees.

II

Within this jurisdiction, there are three (3) types of retirement


plans available to employees. [39]

The first is compulsory and contributory. This type of plan is


embodied in Republic Act No. 8282  for those in the private
[40]

sector and Republic Act No. 8291  for those in the government.
[41]

These laws require a mandatory contribution from the employer


as well as the employee, which shall become a pension fund for
the employee upon retirement. Considering that the mandatory
employee contribution is deducted from the employee's monthly
income,  "retirement packages are usually crafted as 'forced
[42]

savings' on the part of the employee." [43]

Under this type of retirement plan, the pension is not considered


as mere gratuity but actually forms part of the employee's
compensation.  An employee acquires a vested right to the
[44]

benefits that have become due upon reaching the compulsory age
of retirement.  Thus, the beneficiaries of the retired employee
[45]

are entitled to the pension even after the retired employee's


death.[46]

The second and third types of retirement plans are voluntary.


They may not even require the employee to contribute to a
pension fund. The second type of retirement plan is by agreement
between the employer and the employee, usually embodied in the
CBA between them.  "The third type is one that is voluntarily
[47]

given by the employer, expressly as in an announced company


policy or impliedly as in a failure to contest the employee's claim
for retirement benefits." [48]

The rules regarding the second and third types of retirement


plans are provided for in Article 302 [287]  of the Labor Code, as
[49]

amended,  which read:


[50]

Article 302. [287] Retirement. - Any employee may be retired


upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive


such retirement benefits as he may have earned under existing
laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee's retirement
benefits under any collective bargaining and other agreements
shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but
not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months
being considered as one whole year.
However, these types of retirement plans are not meant to be a
replacement to the compulsory retirement scheme under social
security laws but must be understood as a retirement plan in
addition to that provided by law. Llora Motors, Inc. v. Drilon,
 explained:
[51]

Article 287 of the Labor Code also recognizes that employers and
employees may, by a collective bargaining or other agreement,
set up [a] retirement plan in addition to that established by the
Social Security law, but prescribes at the same time that such
consensual additional retirement plan cannot be substituted for or
reduce the retirement benefits available under the compulsory
scheme established by the Social Security law. Such is the thrust
of the second paragraph of Article 287 which directs that the
employee shall be entitled to receive retirement benefits earned
"under existing laws and any collective bargaining or other
agreement." [52]

Unlike the fixed retirement ages in social security laws, Article


302 [287] of the Labor Code allows employers and employees to
mutually establish an early retirement age option. The rationale
for optional retirement is explained in Pantranco North Express v.
National Labor Relations Commission: [53]

In almost all countries today, early retirement, i.e., before age


60, is considered a reward for services rendered since it enables
an employee to reap the fruits of his labor - particularly
retirement benefits, whether lump-sum or otherwise at an earlier
age, when said employee, in presumably better physical and
mental condition, can enjoy them better and longer. As a matter
of fact, one of the advantages of early retirement is that the
corresponding retirement benefits, usually consisting of a
substantial cash windfall, can early on be put to productive and
profitable uses by way of income-generating investments,
thereby affording a more significant measure of financial security
and independence for the retiree who, up till then, had to contend
with life's vicissitudes within the parameters of his fortnightly or
weekly wages. Thus we are now seeing many CBAs with such
early retirement provisions. [54]

Optional retirement may even be done at the option of the


employer  for as long as the option was mutually agreed upon by
[55]

the employer and the employee. Thus:


Acceptance by the employees of an early retirement age option
must be explicit, voluntary, free, and uncompelled. While an
employer may unilaterally retire an employee earlier than the
legally permissible ages under the Labor Code, this prerogative
must be exercised pursuant to a mutually instituted early
retirement plan. In other words, only the implementation and
execution of the option may be unilateral, but not the adoption
and institution of the retirement plan containing such option. For
the option to be valid, the retirement plan containing it must be
voluntarily assented to by the employees or .at least by a
majority of them through a bargaining representative. [56]

III

The issue in this case concerns the second type of retirement


plan, or that which was provided under the employer and
employees' CBA. To wit, the CBA between the parties provides:
ARTICLE XI
RETIREMENT AND SEVERANCE PAY

SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER


shall grant each employee retirement and severance pay in
accordance with law. It shall also continue its present policy on
optional retirement. [57]

The terms and conditions of a CBA "constitute the law between


the parties."  However, this CBA does not provide for the terms
[58]

and conditions of the "present policy on optional retirement."


Leonila merely alleged before the Labor Arbiter that petitioner
"grants an employee a retirement or separation equivalent to
eleven (11) days per year of service after serving for at least
twenty (20) years,"  which was not disputed by petitioner.
[59]

Therefore, doubt arises as to what petitioner's optional retirement


package actually entails.

It is settled that doubts must be resolved in favor of labor.


 Moreover, "retirement laws should be liberally construed and
[60]

administered in favor of the persons intended to be benefited and


all doubts as to the intent of the law should be resolved in favor
of the retiree to achieve its humanitarian purposes." [61]

Optional, by its ordinary usage, is the opposite of compulsory. It


requires the exercise of an option. For this reason, petitioner
insists that respondent Cesario would not have been entitled to
his optional retirement benefits as he failed to exercise the option
before his untimely death.

However, retirement encompasses even the concept of death.


 This Court has considered death as a form of disability
[62]

retirement as "there is no more permanent or total physical


disability than death."  Compulsory retirement and death both
[63]

involve events beyond the employee's control. [64]

Petitioner admits that respondent Cesario was already qualified to


receive his retirement benefits, having been employed by
petitioner for 23 years.  While the choice to retire before the
[65]

compulsory age of retirement was within respondent Cesario's


control, his death foreclosed the possibility of him making that
choice.

Petitioner's optional retirement plan is premised on length of


service, not upon reaching a certain age. It rewards loyalty and
continued service by granting an employee an earlier age to claim
his or her retirement benefits even if the employee has not
reached his or her twilight years. It would be the height of
inequity to withhold respondent Cesario's retirement benefits
despite being qualified to receive it, simply because he died
before he could apply for it. In any case, the CBA does not
mandate that an application must first be filed by the employee
before the right to the optional retirement benefits may vest.
Thus, this ambiguity should be resolved in favor of the retiree.

Retirement benefits are the property interests of the retiree and


his or her beneficiaries.  The CBA does not prohibit the
[66]

employee's beneficiaries from claiming retirement benefits if the


retiree dies before the proceeds could be released. Even
compulsory retirement plans provide mechanisms for a retiree's
beneficiaries to claim any pension due to the retiree.  Thus,
[67]

Leonila, being the surviving spouse of respondent Cesario,  is [68]

entitled to claim the optional retirement benefits on his behalf.

WHEREFORE, the Petition is DENIED. The June 21, 2013


Decision and October 4, 2013 Resolution of the Court of Appeals
in CA-G.R. SP No. 126781 are AFFIRMED. Petitioner United
Doctors Medical Center is ordered to pay respondent Cesario
Bernadas, through his beneficiary Leonila Bernadas, optional
retirement benefits in the amount of P98,252.55 as provided by
the Labor Code.

SO ORDERED.

Velasco, Jr., (Chairperson), Martires, and Gesmundo, JJ., concur.


Bersamin, J., on official leave.

March 7, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on December 13, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 7, 2018 at 1:56 p.m.

[1]
 Rollo, pp. 3-27.

 Id. at 29-35. The Decision was penned by Associate Justice


[2]

Amelita G. Tolentino and concurred in by Associate Justices


Ramon R. Garcia and Danton Q. Bueser of the Fourth Division,
Court of Appeals, Manila.

 Id. at 37-38. The Resolution was penned by Associate Justice


[3]

Amelita G. Tolentino and concurred in by Associate Justices


Ramon R. Garcia and Danton Q. Bueser of the Fourth Division,
Court of Appeals, Manila.

[4]
 Id. at 30.

[5]
 Id.

[6]
 Id. at 39.

[7]
 Id. at 115-116. NLRC Decision.

[8]
 Id. at 30.

[9]
 Id. at 88.

[10]
 Id. at 30.

[11]
 Id. at 265-266.
[12]
 Id. at 30.

 Id. at 88-96. The Decision, docketed as NLRC NCR CASE NO.


[13]

01-01538-11, was penned by Labor Arbiter Jenneth B. Napiza.

[14]
 Id. at 95-96.

[15]
 Id. at 97-103.

 Id. at 113-118. The Decision was penned by Presiding


[16]

Commissioner Joseph Gerard E. Mabilog and concurred in by


Commissioners Isabel G. Panganiban-Ortiguerra and Nieves E.
Vivar-De Castro of the Sixth Division, National Labor Relations
Commission, Quezon City.

[17]
 Id. at 116.

[18]
 Id.

[19]
 Id. at 117.

[20]
 Id. at 119-131.

[21]
 Id. at 132-134.

[22]
 Id. at 135-160.

[23]
 Id. at 29-35.

[24]
 Id. at 33.

[25]
 Id. at 33-34.

[26]
 Id. at 306-324.

[27]
 Id. at 37-38.
 Id. at 3-27. Comment was filed on March 3, 2015 (rollo, pp.
[28]

336-342) while Reply was filed on May 28, 2014 (rollo, pp. 358-
368).

[29]
 Id. at 9-10.

[30]
 Id. at 17-18.

[31]
 Id. at 20-23.

[32]
 Id. at 339.

[33]
 Id. at 338.

[34]
 Id.

[35]
 Id.

 Cercado v. Uniprom, Inc., 647 Phil. 603, 608-609 (2010) [Per


[36]

J. Nachura, Second Division] citing Magdadaro v. Philippine


National Bank, 610 Phil. 608 (2009) [Per J. Carpio, First
Division]; Universal Robina Sugar Milling Corporation (URSUMCO)
v. Caballeda, 583 Phil. 118 (2008) [Per J. Nachura, Third
Division]; Cainta Catholic School v. Cainta Catholic School
Employees Union (CCSEU), 523 Phil. 134 (2006) [Per J. Tinga,
Third Division]; Ariola v. Philex Mining Corporation, 503 Phil. 765,
783 (2005) [Per J. Carpio, First Division]; and Pantranco North
Express, Inc. v. NLRC, 328 Phil. 470, 482 (1996) [Per J.
Panganiban, Third Division].

[37]
 INS. CODE, sec. 2(1).

 Brion v. South Philippine Union Mission, 366 Phil. 967, 974


[38]

(1999) [Per J. Romero, Third Division].

 See Gerlach v. Reuters Limited, Phils., 489 Phil. 501 (2005)


[39]

[Per J. Sandoval-Gutierrez, Third Division].


[40]
 Social Security Law (1997).

[41]
 The Government Service Insurance System Act (1997).

 See Rep. Act. No. 8282, sec. 9 and Rep. Act No. 8291, sec. 5
[42]

on the mandatory contributions to the Social Security System and


the Government Service Insurance System.

 In Re Mrs. Pacita A. Gruba, 721 Phil. 330, 330 (2013) [Per J.
[43]

Leonen, En Banc].

 GSIS v. Montesclaros, 478 Phil. 573, 584 (2004) [Per J. Carpio,


[44]

En Banc].

[45]
 Id.

 See Rep. Act. No. 8282, sec. 13 on death benefits and Rep. Act
[46]

No. 8291, sec. 20 on survivorship benefits.

 Gerlach v. Reuters Limited, Phils., 489 Phil. 501, 513 (2005)


[47]

[Per J. Sandoval-Gutierrez, Third Division] citing Llora Motors,


Inc. vs. Drilon, 258-A Phil. 749 (1989) [Per J. Feliciano, Third
Division].

 Id. citing Allied Investigation Bureau, Inc. vs. Ople, 180 Phil.


[48]

221 (1979) [Per acting C.J. Fernando, Second Division].

 Article 287 of the Labor Code has since been renumbered to


[49]

Article 302 in view of Rep. Act No. 10151.

[50]
 Article 287 was amended by Republic Act No. 7641 (1992).

[51]
 258-A Phil. 749 (1989) [Per J. Feliciano, Third Division].

[52]
 Id. at 758.

[53]
 328 Phil. 470 (1996) [Per J. Panganiban, Third Division].
[54]
 Id. at 483.

 See Progressive Development Corporation v. National Labor


[55]

Relations Commission, 398 Phil. 433 (2000) [Per J. Bellosillo,


Second Division].

 Cercado v. Uniprom, Inc., 647 Phil. 603, 612 (2010) [Per J.


[56]

Nachura, Second Division].

[57]
 Rollo, p. 39.

 Roche (Philippines) v. National Labor Relations Commission,


[58]

258-A Phil. 160, 171 (1989) [Per J. Gancayco, First Division].

[59]
 Rollo, p. 95.

[60]
 See LABOR CODE, sec. 4.

 In re Monthly Pension of Justices and Judges, 268 Phil. 312,


[61]

317 (1990) [Per J. Regalado, En Banc] citing Bautista vs. Auditor


General, etc., 104 Phil. 428 (1958) [Per J. Padilla, En Banc].

 See In Re Mrs. Pacita A. Gruba, 721 Phil. 330, 341 (2013) [Per
[62]

J. Leonen, En Banc].

 Re: Resolution granting automatic permanent total disability


[63]

benefits to heirs of Judges and Justices who die in actual service,


486 Phil. 148, 156 (2004) [Per J. Garcia, En Banc].

 See In Re Mrs. Pacita A. Gruba, 721 Phil. 330 (2013) [Per J.


[64]

Leonen, En Banc].

[65]
 Rollo, p. 17.

 GSIS v. Montesclaros, 478 Phil. 573, 584 (2004) [Per J. Carpio,


[66]

En Banc].
 See Rep. Act. No. 8282, sec. 13 on death benefits and Rep. Act
[67]

No. 8291, sec. 20 on survivorship benefits.

 See rollo, p. 32, on the presentation of respondent's certificate


[68]

of marriage.

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THIRD DIVISION

[ G.R. No. 227863, September 20,


2017 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. PEDRITO ORDONA Y RENDON,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

To qualify the killing of a person to the crime of murder, evident


premeditation must be proven with reasonable certainty. Facts
regarding "how and when the plan to kill was hatched"  are [1]

indispensable. The requirement of deliberate planning should not


be based merely on inferences and presumptions but on clear
evidence.
For this Court's resolution is an Ordinary Appeal from the June 1,
2015 Decision  of the Court of Appeals in CA-G.R. CR HC No.
[2]

06280, which affirmed the conviction of accused-appellant Pedrito


Ordona y Rendon (Ordona) for the crime of murder.

In an Information, Ordona was charged of murder punished


under Article 248 of the Revised Penal Code. The accusatory
portion of the Information read:
That on or about the 1  day of January, 2005, in Quezon City,
st

Philippines, the said accused, did then and there willfully,


unlawfully and feloniously with intent to kill, taking advantage of
superior strength, with evident premeditation and treachery,
attack, assault and employ personal violence upon the person
IRENEO A. HUBAY, by then and there stabbing him on the trunk
with a bladed weapon thereby inflicting upon him serious and
mortal wounds, which were the direct and immediate cause of his
untimely death, to the damage and prejudice of the heirs of said
Ireneo A. Hubay.

CONTRARY TO LAW. [3]

Ordona, assisted by counsel, pleaded not guilty during


arraignment, Trial on the merits ensued. [4]

The prosecution presented three (3) witnesses, namely: (1)


Samuel Cartagenas (Samuel); (2) Marissa Cartagenas (Marissa);
and (3) PSI Dean Cabrera (PSI Cabrera). Their collective
testimonies produced the prosecution's version of the incident.

Samuel personally knew Ordona and the victim, Ireneo A. Hubay


(Hubay). Ordona was his neighbor while Hubay was a boarder of
his mother.[5]

On the day of the alleged incident, Samuel and his wife Marissa
were talking at the doorway of their house located along E.
Rodriguez Avenue, Quezon City.  Samuel and Marissa saw
[6]

Ordona loitering by the corner of their house. Ordona appeared to


be waiting for someone. After some time, he left but returned five
(5) minutes later. [7]

Meanwhile, Hubay emerged from the house,  holding some food. [8]

 Ordona approached Hubay with a stainless knife, called his


[9]

attention by saying "Pare," and suddenly stabbed him in the left


shoulder.  Samuel and Marissa stood two (2) feet away from
[10]

them. [11]

Hubay managed to run away but Ordona gave chase and


eventually caught up with him.  Despite Hubay's pleas for mercy,
[12]

Ordona stabbed him  in the left torso.  Hubay's stab wounds
[13] [14]

proved to be fatal as he died immediately when he was brought


to the hospital. [15]

PSI Cabrera, the representative of the Medico-Legal Officer who


conducted the autopsy, testified that Hubay died of hemorrhage
and shock from the second stab wound. [16]

The defense presented accused-appellant Ordona as its lone


witness. Ordona testified that on the day of the alleged incident,
he went to the house of his mother-in-law to fetch his wife. The
house was located in the same barangay where the alleged
incident took place. On his way there, he met a certain Cornelio
de Leon who was running amok. This prevented him from
reaching his destination.  After five (5) days, Ordona was
[17]

arrested by the authorities. However, they failed to recover any


bladed weapon from him.  Ordona denied knowledge of Hubay's
[18]

identity. [19]

In its Decision  dated May 20, 2013, the Regional Trial Court
[20]

found Ordona guilty beyond reasonable doubt of murder,


Accordingly, he was sentenced to suffer the penalty of reclusion
perpetua and ordered to pay damages to the heirs of Hubay. The
dispositive portion of this Decision stated:
WHEREFORE, accused PEDRITO ORDONA y RENDON is hereby
pronounced guilty beyond reasonable doubt of the crime of
MURDER and sentenced to suffer the penalty of reclusion
perpetua. Accused Ordona is further ordered to indemnify the
Heirs of Ireneo Hubay the following: (a) P75,000.00 as civil
indemnity; (b) P50,000.00 as moral damages; (c) P30,000.00 as
exemplary damages and ([d]) interest on all damages awarded at
the rate of 6% per annum from the date of finality of this
judgment.

SO ORDERED. [21]

Ordona appealed the Decision of the Regional Trial Court. In his


Brief,  he alleged that there were material inconsistencies in the
[22]

testimonies of the prosecution's witnesses.  Ordona argued, in [23]

the alternative, that assuming he may be held criminally liable,


the trial court erred in appreciating the qualifying circumstances
of evident premeditation and treachery.  Treachery cannot be [24]

appreciated as a qualifying circumstance because the purported


attack was not sudden or unexpected. Ordona pointed out that he
called Hubay's attention before approaching him. Hubay "was
aware of the imminent danger to his life."  Evident premeditation
[25]

cannot likewise be appreciated as a qualifying circumstance


because the prosecution failed to establish an overt act indicating
his resolution to kill Hubay. [26]

In its Brief,  the Office of the Solicitor General, on behalf of the


[27]

People of the Philippines, asserted that the alleged inconsistencies


in the testimonies of the prosecution's witnesses neither pertain
to nor involve the elements of murder.  The Office of the Solicitor
[28]

General added that evident premeditation attended the


commission of the crime.  Ordona's behavior clearly established
[29]

his deliberate plan to kill Hubay.  There was also treachery


[30]

because the attack was sudden and unexpected. [31]

In its Decision  dated June 1, 2015, the Court of Appeals


[32]

affirmed the Decision of the Regional Trial Cotlrt in toto.

The Court of Appeals found the testimony of the prosecution's


witnesses "credible, competent, and sufficient" to prove the
treacherous killing of Bubay.  The alleged inconsistencies were
[33]

only minor, which did not negate the commission of the crime.
 The Court of Appeals agreed with the trial court that evident
[34]

premeditation and treachery were both present in the commission


of the crime.  Ordona's behavior established that "he was
[35]

intentionally waiting for his victim to show up[.]" [36]

On July 9, 2015, Ordona filed his Notice of Appeal,  which was [37]

given due course by the Court of Appeals in its Resolution  dated [38]

July 27, 2015.

On November 17, 2016, the Court of Appeals elevated the


records of the case to this Court. [39]

In its Resolution  dated January 16, 2017, this Court noted the
[40]

records forwarded by the Court of Appeals and required the


parties to submit their supplemental briefs if they so desired.
However, both parties manifested that they would no longer file
supplemental briefs. [41]

The sole issue for this Court's resolution is whether or not


accused-appellant Pedrito Ordona is guilty beyond reasonable
doubt of murder.

This Court affirms accused-appellant Pedrito Ordona's conviction.

The determination of the credibility of witnesses is a function best


left to the trial courts.  Generally, their findings and conclusions
[44]

on this matter are given great respect and weight.  There are [45]

only a few instances when the trial court's findings and


conclusions may be disregarded. The party seeking the exception
must be able to allege and prove that the trial court either erred
in appreciating the fact and circumstances of the case or made
unsound inferences from the facts established. [46]

In the present case, accused-appellant alleged that there were


material inconsistencies in the testimonies of the prosecution's
main witnesses. According to him, Marissa did not testify that she
saw him leave the house for a few minutes. In addition, Samuel
and Marissa presented different accounts on how the crime scene
was illuminated. [47]

Accused-appellant's assertion is unmeritorious. The alleged


inconsistencies were only minor. They do not relate to the
essential elements of the crime of murder. Slight variances in the
testimony of witnesses, especially if immaterial to the crime
charged, do not affect a witness' credibility.  What is material in
[48]

this case is the act of stabbing. That the second witness did not
see accused-appellant momentarily leave the place of the
commission of the crime does not negate Hubay's killing, Also,
both witnesses testified that the place was well-lit for them to see
the incident.  Regardless of the source of illumination, both
[49]

witnesses saw accused appellant stab Hubay twice.

The crime of murder committed when a person is killed under any


of the circumstances enumerated in Article 248 of the Revised
Penal Code, thus:
Article 248. Murder Any person who, not falling within the
provisions of Article 246, shall kill another, shall be guilty of
murder and shall be punished by reclusion perpetua, to death if
committed with any of the following attendant circumstances:
1. With treachery, taking advantage of superior strength, with
the aid of armed men, or employing means to weaken the
defense, or of means or persons to insure or afford
impunity;
2. In consideration of a price, reward, or promise;
3. By means of inundation, fire, poison, explosion, shipwreck,
stranding of a vessel, derailment or assault upon a railroad,
fall of an airship, by means of motor vehicles, or with the
use of any other means involving great waste and ruin;
4. On occasion of any of the calamities enumerated in the
preceding paragraph, or of an earthquake, eruption of a
volcano, destructive cyclone, epidemic or other public
calamity;
5. With evident premeditation;
6. With cruelty, by deliberately and inhumanly augmenting the
suffering of the victim, or outraging or scoffing at his person
or corpse.
For evident premeditation to qualify the killing of a person to the
crime of murder, the following must be established by the
prosecution "with equal certainty as the criminal act itself" : [50]

(a) the time when the offender determined to commit the crime;

(b) an act manifestly indicating that the offender clung to his determination; and

(c) a sufficient interval of time between the determination and the execution of the crim
upon the. consequences of his act. [51]

It is indispensable for the prosecution to establish "how and when


the plan to kill was hatched or how much time had elapsed before
it was carried out."  In People v. Abadies,  this Court
[52] [53]

underscored this requirement, thus:


Evident premeditation must be based on external facts which are
evident, not merely suspected, which indicate deliberate
planning. There must be direct evidence showing a plan or
preparation to kill, or proof that the accused meditated and
reflected upon his decision to kill the victim. Criminal intent must
be evidenced by notorious outward acts evidencing a
determination to commit the crime. In order to be considered an
aggravation of the offense, the circumstance must not merely be
"premeditation" but must be "evident premeditation."

The date and, if possible, the time when the malefactor


determined to commit the crime is essential, because the lapse of
time for the purpose of the third requisite is computed from such
date and time.  (Ermphasis supplied, citations omitted)
[54]

In this regard, evident premeditation cannot be appreciated as a


qualifying circumstance in the present case. The prosecution
failed to establish the time when accused-appellant res.lved to kill
Hubay. There is no evidence on record to show the moment
accused-appellant hatched his plan. In People v. Borbon: [55]

[Evident premeditation] must be based on external acts which


must be notorious, manifest and evident-not merely suspecting-
indicating deliberate planning. - Evident premeditation like other
circumstances that would qualify a killing as murder, must be
established by clear and positive evidence showing the planning
and preparation stages prior to the killing. Without such evidence,
mere presumptions and inferences, no matter how logical and
probable, will not suffice.

It is indispensable to show how and when the plan to kill was


hatched or how much time had elapsed before it was carried out.
 (Emphasis supplied, citations omitted)
[56]

Accused-appellant's act of lurking outside the house can hardly


be considered as an over act indicating his resolution to kill
Hubay.

However, accused-appellant is still liable for murder. The killing


was attended with the qualifying circumstance of treachery.

The essence of treachery, as stated in Abadies, is "the swift and


unexpected attack on the unarmed victim without the slightest
provocation on his part."  Two (2) requisites must be established
[57]

by the prosecution, namely: "(1) that at the time of the attack,


the victim was not in a position to defend himself [or herself],
and (2) that the offender consciously adopted the particular
means, method or form of attack employed by him [or her]." [58]

Both elements are present in this case. Hubay, who was then
unarmed, was casually outside of his residence when accused-
appellant suddenly stabbed him. There was no opportunity for
Hubay to retaliate or to parry accused-appellant's attack, The
facts also establish that accused appellant consciously and
deliberately adopted the mode of attack. Accused appellant
lurked outside Hubay's residence and waited for him to appear.
When Hubay emerged from the house, accused-appellant called
him "Pare" while walking towards him with a bladed, weapon and
immediately stabbed him.  Although the attack was frontal, it
[59]

was done suddenly and unexpectedly. A frontal attack, when


made suddenly, leaving the victim without any means of defense,
is treacherous.  The second stabbing also indicates treachery. At
[60]
that time, Hubay was already wounded and was unprepared to
put up a defense.

Accused-appellant's conviction for the crime of murder is


affirmed. However, this Court modifies the award of civil
indemnity, moral damages, and exemplary damages to
P100,00.00 each, in accordance with People v. Jugueta,  where
[61]

this Court clarified that "when the crime proven is consummated


and the penalty imposed is death but reduced to reclusion
perpetua because of [Republic Act No.] 9346 the civil indemnity
and moral damages that should be awarded will each be
P100,000.00 and another P100,000.00 for exemplary damages." [62]

WHEREFORE, the assailed Decision of the Court of Appeals in


CA-G.R. CR HC No. 06280 is AFFIRMED with MODIFICATION.
Accused-appellant Pedrito Ordona y Rendon is
found GUILTY beyond reasonable doubt of murder and is
sentenced to suffer the penalty of reclusion perpetua without
eligibility for parole.

Moreover, he is ordered to pay the heirs of Ireneo A. Hubay the


amounts of P100,000.00 as civil indemnity, P100,000.00 as moral
damages, and P100,000.00 as exemplary damages. In line with
current jurisprudence, interest at the rate of six percent (6%) per
annum should be imposed on all damages awarded from the date
of the finality of this judgment until fully paid.
[63]

SO ORDERED.

Velasco, Jr., Bersamin, Martires, and Gesmundo, JJ., concur.

November 29, 2017

NOTICE OF JUDGMENT
Sirs / Mesdames:

Please take notice that on September 20, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 29, 2017 at 2:20 p.m.

 People v. Borbon, 469 Phil. 132, 145 (2004) (Per J. Callejo, Sr.,
[1]

Second Division].

 Rollo, pp. 2-10. The Decision was penned by Associate Justice


[2]

Manuel M. Barrios and concurred in by Associate Justices Ramon


M. Bato, Jr. and Maria Elisa Sempio Diy of the Fourteenth
Division, Court of Appeals, Manila.

[3]
 Id. at 3.

[4]
 Id.

[5]
 CA rollo, p. 40.

[6]
 Rollo, pp. 3-4.

[7]
 Id.

[8]
 Id.

[9]
 CA rollo, p. 41.

[10]
 Rollo, p. 4.
[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id. at 5.

[15]
 Id.

[16]
 CA rollo, pp. 42-43.

[17]
 Rollo, p. 5.

[18]
 Id.

[19]
 Id.

 CA rollo, pp. 39-48. The Decision, docketed as Criminal Case


[20]

No. Q-05-131859, was penned by Presiding Judge Madonna C.


Echiverri of Branch 81, Regional Trial Court, Quezon City.

[21]
 Id. at 48.

[22]
 Id. at 25-38.

[23]
 Id. at 31-33.

[24]
 Id. at 33-36.

[25]
 Id. at 34.

[26]
 Id. at 34-36.

[27]
 Id. at 53-66.

[28]
 Id. at 60-61.
[29]
 Id. at 63.

[30]
 Id.

[31]
 Id.

 Rollo, pp. 2-10. The Decision was penned by Associate Justice


[32]

Manuel M. Barrios and concurred in by Associate Justices Ramon


M. Bato, Jr. and Maria Elisa Sempio Diy of the Fourteenth
Division, Court of Appeals, Manila.

[33]
 Id. at 7.

[34]
 Id.

[35]
 Id. at 8-9.

[36]
 Id. at 9.

[37]
 Id. at 11-14.

[38]
 CA rollo, p. 92.

[39]
 Rollo, p. 1.

[40]
 Id. at 17-18.

 Id. at 19-22, Office of the Solicitor General's Manifestation


[41]

and rollo, pp. 24-28, accused-appellant's Manifestation.

 People v. Acuram, 284-A Phil. 756, 765 (1994) [Per J. Romero,


[44]

Third Division].

[45]
 Id.

[46]
 Id.

[47]
 CA rollo, pp. 31-32.
 People v. Rabutin, 338 Phil. 705, 713 (1997) [Per J. Melo, Third
[48]

Division].

[49]
 Rollo, pp, 4-5.

 People v. Abadies, 436 Phil. 98, 105 (2002) [Per J. Ynares-


[50]

Santiago, En Banc].

 People v. Balleras, 432 Phil. 1018, 1026 (2002) [Per J.


[51]

Sandoval-Gutierrez, En Banc].

 People v. Borbon, 469 Phil. 132, 145 (2004) [Per J. Callejo, Sr.,
[52]

Second Division].

[53]
 436 Phil. 98 (2002) [Per J. Ynares-Santiago, En Banc].

[54]
 Id. at 106.

[55]
 469 Phil. 132 (2004) [Per J. Callejo, Sr., Second Division].

[56]
 Id. at 145.

 People v. Abadies, 469 Phil. 132, 105 (2002) [Per J. Callejo,


[57]

Sr., Second Division].

[58]
 Id.

[59]
 Rollo, p. 4.

 People v. Ablao, 299 Phil. 276, 280 (1994) [Per J. Padilla,


[60]

Second Division].

 G.R.
[61]
No. 202124, April 5, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=jurisprudence/2016/april2016/202124.pdf> 27 [Per J.
Peralta, En Banc].
[62]
 Id. at 27.

 See Nacar v. Gallery Frames, et al., 716 Phil. 267, 281-283


[63]

(2013) [Per J. Peralta, En Banc].

Source: Supreme Court E-Library | Date created: January 19, 2018


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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 208625, September 06,


2017 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. RAMON FRANCICA Y NAVALTA,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

No amount, especially not the P50.00 paid by the accused for


sexually abusing his 11-year-old victim, will ever compensate for
her trauma. The depravity of a grown man in taking advantage of
a child's trust and innocence and her family's poverty to
repeatedly rape her rightfully deserves condemnation and the
most severe punishment that can be meted out under the law.
This Court is asked to review the February 22, 2013 Decision  of [1]

the Court of Appeals in CA-G.R. CR-HC No. 03929. This Decision


affirmed the conviction of accused-appellant Ramon Francica
(Francica) for three (3) counts of statutory rape under Article
266-A(1)(d) of the Revised Penal Code, as amended by Republic
Act No. 8353, in relation to Republic Act No. 7610, and imposed
the penalty of reclusion perpetua for each count of rape. [2]

This Court restates the facts as found by the lower courts.

On February 3, 2005, in Criminal Case No. 05-1287-FC-H, an


Information  was filed against Francica before Branch 209,
[3]

Regional Trial Court, Mandaluyong City. This Information read:


That on or about the 2  day of February 2005, in the city of
nd

Mandaluyong, Philippines, a place within the jurisdiction of [this


Honorable Court,] the above-named accused, being the neighbor
of the victim, did, then and there willfully, unlawfully and
feloniously have carnal knowledge with [AAA], a girl eleven (11)
years of age, by then and there inserting his private part into
[the] latter's vagina, all against the latter's will, which acts [sic]
debases, degrades or demeans the intrinsic worth and dignity of
the victim (a child) as a human being.

CONTRARY TO LAW. [4]

When arraigned,  Francica pleaded not guilty to the crime


[5]

charged against him.

On September 20, 2005, in Criminal Case Nos. MCOS-1483-FC-H


and MC05-1484-FC-H, two (2) additional Informations were also
filed against Francica before Branch 209, Regional Trial Court,
Mandaluyong City. The second Information read:
That on or about the 19  day of January 2005, in the city of
th

Mandaluyong, Philippines, a place within the jurisdiction of [this


Honorable Court,] the above-named accused, motivated by carnal
lust and by means of force, threat and intimidation, did, then and
there willfully, unlawfully and feloniously have carnal knowledge
with [AAA], a girl eleven (11) years of age, a child within the
meaning of R.A. 7610, by then and there inserting his private
part into the latter's vagina, all against the latter's will, which acts
[sic] debases, degrades or demeans the intrinsic worth and
dignity of the victim (a child) as a human being.

CONTRARY TO LAW. [6]

The third Information read:


That sometime in the month of March 2004, in the City of
Mandaluyong, Philippines, a place within the jurisdiction [of this
Honorable Court,] the above-named accused, motivated by carnal
lust and by means of force, threat and intimidation, did, then and
there willfully, unlawfully and feloniously have carnal knowledge
with [AAA], a girl eleven (11) years of age, a child within the
meaning of R.A. 7610, by then and there inserting his private
part into the latter's vagina, all against the latter's will, which acts
[sic] debases, degrades or demeans the intrinsic worth and
dignity of the victim (a child) as a human being.

CONTRARY TO LAW. [7]

On October 26, 2005, the trial court ordered the consolidation of


the three (3) charges of rape. [8]

Francica also pleaded not guilty to the two (2) other charges of
rape against him. [9]

Trial on the merits ensued.

The prosecution presented the child victim, AAA, who was then
11 years old and a Grade 6 student at a public school in Nueve de
Pebrero in Mandaluyong City. [10]

AAA testified that she lived with her parents and five (5) siblings
in Mandaluyong City near Cardinal Sin. AAA claimed that she
knew Francica because he was their neighbor. [11]

AAA testified that Francica was a good person because he would


sometimes give her money whenever he touched her.  When [12]

asked how Francica touched her, AAA answered that he licked her
breasts and inserted his penis into her vagina. [13]
She claimed that Francica started touching her sometime in
March 2004 and that this went on many times. He would
sometimes even give her P50.00 after touching her. [14]

The next prosecution witness was BBB, AAA's grandmother. BBB


testified that AAA lived on the ground floor of her house in Nueve
de Pebrero while she lived on the second floor. BBB claimed to
know Francica because he had been her neighbor for many years.
[15]

BBB testified that she had two (2) bathrooms at the back of her
house.  In the afternoon ofFebruary 2, 2005, she was using one
[16]

(1) of them when she heard a voice say, "May tao. Si Mamang
yata yun" from inside the other lavatory.  When she went out,
[17]

she saw someone run out of the other bathroom. She quickly
looked inside the washroom and saw AAA. She ran after the other
person and when he looked backed, she recognized him as
Francica. [18]

She was unable to catch Francica and when she returned to her
house, she saw her other grandchild, CCC, talking with AAA. CCC
was outside the bathrooms when the commotion happened and
CCC told BBB that she saw AAA pulling up her underwear inside
the lavatory after Francica ran out.
[19]

BBB claimed that she had heard rumors that Francica and AAA
regularly had sexual intercourse and that she had confronted AAA
about this before, but AAA never confirmed these rumors. [20]

After she saw AAA and Francica inside the bathroom, BBB told
Josephine, AAA's aunt, about what happened. AAA and Josephine
then went to the barangay hall to report the incident.[21]

BBB testified that she was summoned to the barangay hall later
that afternoon to confront Francica. She claimed that Francica
admitted the accusation against him, for which he was mauled
inside the barangay hall.
[22]
After the barangay investigation, BBB and AAA went to the police
station to execute their respective affidavits.
[23]

BBB testified that AAA's family was very poor and that AAA's
mother could not look after her children because she had a
gambling problem. BBB admitted that she would prefer that AAA
be placed under the custody of the Department of Social Welfare
and Development because she was already overtaxed with
looking after and providing for several other grandchildren and
could no longer take care of AAA. [24]

The third prosecution witness was Carlos C. Gojo (Gojo), a


member of Task Force Anti-Vice. He testified that after BBB
reported AAA's rape, Task Force Anti-Vice teamed up with Bantay
Bayan of Addition Hills that same day to arrest Francica. The two
(2) groups went to Francica's house where they found and
arrested him. Gojo attested that Francica was informed of his
constitutional rights to be silent and be represented by a lawyer
during his arrest.
[25]

Gojo admitted that they had no warrant of arrest when they


arrested Francica since they relied on the complaint lodged
against Francica.[26]

Both parties agreed to stipulate  on the testimony of PO1 Jocelyn


[27]

Samson, who investigated the case and endorsed the complaint


against Francica to the Office of the City Prosecutor.

The trial court then ruled that the prosecution waived its right to
present as its witness medico-legal PSI Pierre Paul Carpio, M.D.
(PSI Carpio), who examined AAA, because of his repeated failure
to attend the hearings. [28]

The last prosecution witness was Court Social Worker Leonor


Laureles (Laureles), who conducted the Social Case Study
Report  on AAA upon the trial court's directive.  Laureles
[29] [30]

testified that she interviewed AAA, who opened up about the


abuse she underwent because of Francica.  Laureles also averred
[31]

that she had recommended that AAA be referred to an institution


as she was neglected by her parents. [32]

Francica was the only witness for the defense and he denied that
he ever had sexual intercourse with AAA. He claimed that he was
only set up by AAA's family after he found out from Nora, AAA's
other aunt, that AAA had a relationship with her uncle. Francica
stated that he told AAA's parents about her relationship with her
uncle, but they ignored him. Francica further claimed that he was
made a scapegoat after he revealed AAA's relationship with her
uncle.[33]

Francica did not deny being inside the bathroom with AAA, but he
claimed that it was a common facility and that he was urinating
when AAA went inside to wait for her turn to use the toilet. It was
at this point when AAA's cousin and BBB saw them inside the
lavatory. [34]

On March 3, 2009, the trial court rendered judgment  finding [35]

Francica guilty of three (3) counts of statutory rape and meting


out the penalty of reclusion perpetua for each count. [36]

The trial court ruled that all the elements of statutory rape were
established with AAA's credible and candid testimony,
corroborated by BBB's testimony. [37]

The trial court also held that it was immaterial that the
prosecution failed to present the testimony of medico-legal PSI
Carpio, since "a medical examination is not indispensable to the
prosecution of rape as long as the evidence on hand convinces
the court that conviction for rape is proper." [38]

The dispositive portion of the trial court's decision read:


WHEREFORE, premises considered, this Court finds the accused
RAMON FRANCICA y NAVALTA GUILTY beyond reasonable doubt
of three (3) counts of Statutory Rape and he is hereby sentenced
to suffer the penalty of three (3) reclusion perpetua to be served
successively. The accused is further ordered to pay the victim, for
each count of rape, the amount of P50,000.00 as civil indemnity,
P25,000.00 as exemplary damages, and P50,000.00 as moral
damages.

COSTS against the accused.

SO ORDERED. [39]

Francica filed a Notice of Appea1.  In his appeal,  he claimed


[40] [41]

that the prosecution's failure to present medico-legal PSI Carpio


was fatal to the prosecution's case because there were matters
that should be clarified by the examining physician. [42]

On February 22, 2013, the Court of Appeals rendered a


decision  affirming Francica's conviction.
[43]

The Court of Appeals held that AAA's Sinumpaang Salaysay and


her testimony in court were consistent in showing that she
repeatedly had sexual intercourse with Francica, sometimes in
exchange for P50.00. [44]

In upholding the trial court's assessment on the credibility of the


witnesses, the Court of Appeals stated that "the trial judge enjoys
the peculiar advantage of observing firsthand the deportment of
witnesses while testifying, and is, therefore, in a better position
to form accurate impressions and conclusions." [45]

The Court of Appeals emphasized that a conviction for rape based


on the sole testimony of the victim is possible, as long as the
victim's testimony is competent and credible. [46]

Finally, the Court of Appeals asserted that a medical examination


of a rape victim is not indispensable to the prosecution of a rape
case, as it is merely corroborative in nature.
[47]

The fallo of the Court of Appeals Decision read:


WHEREFORE, premises considered, the instant Appeal is
hereby DENIED. The Decision of the court a quo dated 3 March
2009 is hereby AFFIRMED in toto.

SO ORDERED.  (Emphasis in the original)


[48]

On March 21, 2013, Francica filed a Notice of Appeal  with the


[49]

Court of Appeals, which was given due course in the


Resolution  dated April 23, 2013. Hence, this appeal was
[50]

instituted.

In the Resolution  dated October 23, 2013, this Court notified


[51]

the parties that they may file their respective supplemental


briefs, if they so desired. However, both parties manifested  that
[52]

they were dispensing with the filing of their supplemental briefs.

In his appellant's brief,  Francica denies the accusations of rape


[53]

against him and insists that he was merely made a fall guy to
cover up AAA's sexual relationship with her uncle. [54]

Francica also claims that the lower courts erred in declaring that
the prosecution's failure to present the medico-legal officer was
not fatal to the case since it affects the reliability of AAA's
allegations. [55]

Francica points out that the alleged rape on February 2, 2005


happened at 1:30 p.m. and AAA was examined that same day at
5:53 p.m.  However, the initial medico-legal report submitted by
[56]

PSI Carpio showed shallow healed lacerations at 3:00 and 9:00


positions.  Francica maintains that if AAA was indeed raped that
[57]

afternoon, the lacerations should either be fresh bleeding


laceration or "fresh healing with fibrin formation and with edema
of the surrounding tissue"  and not healed lacerations as stated
[58]

in the medico-legal report.

Francica likewise asserts that not all lacerations in the vagina are
caused by sexual acts because normal activities like jumping and
running can also lead to lacerations or injury. He opines that the
initial medico-legal report failed to describe the degree and
location of the laceration, thereby creating doubt that the
laceration was indeed caused by a sexual act. [59]

On the other hand, the prosecution emphasizes that given the


nature of rape cases, conviction usually rests on the sole
testimony of the victim.  The prosecution contends that AAA's
[60]

credibility as a witness survived strict scrutiny since she was


credible and straightforward during her testimony. She positively
identified Francica and testified with specificity what transpired
between them. [61]

The prosecution underscores that jurisprudence is consistent that


when a child victim says that she has been raped, her testimony
should be given full weight and credence. [62]

Finally, the prosecution contends that the finding of a healed


laceration instead of a fresh bleeding or fresh healing laceration is
irrelevant, as this Court ruled in People v. Espino  that full penile
[63]

penetration of the vagina is not an element of rape. [64]

The only issue to be resolved by this Court is whether the


prosecution was able to prove beyond reasonable doubt that
accused-appellant was guilty of statutory rape as defined under
Article 266-A(1)(d) of the Revised Penal Code, as amended by
Republic Act No. 8353,  in relation to Republic Act No. 7610.
[65] [66]

This Court affirms Francica's conviction.

This Court notes that in the Information  dated February 3,


[67]

2005, Francica was charged with rape under Article 266-A(2) of


the Revised Penal Code, as amended by Republic Act No. 8353, in
relation to Republic Act No. 7610, while he was charged with rape
under Article 266-A(1) under the two (2) other Informations. [68]

Rape is defined in Article 266-A of the Revised Penal Code as:


Article 266-A. Rape; When and How Committed. - Rape is
committed:
1. By a man who shall have carnal knowledge of a woman
under any of the following circumstances:
a.
b. Through force, threat, or intimidation;
c. When the offended party is deprived of reason or otherwise
unconscious;
d. By means of fraudulent machination or grave abuse of
authority; and
e. When the offended party is under twelve (12) years of age
or is demented, even though none of the circumstances
mentioned above be present.
2.
3. By any person who, under any of the circumstances
mentioned in paragraph 1 hereof, shall commit an act of
sexual assault by inserting his penis into another person's
mouth or anal orifice, or any instrument or object, into the
genital or anal orifice of another person.
For a charge of rape under Article 266-A(1) to prosper, it must be
proven that "(1) the offender had carnal knowledge of a woman,
and (2) he accomplished such act through force or intimidation,
or when she was deprived of reason or otherwise unconscious, or
when she was under 12 years of age or was demented." [69]

On the other hand, rape under Article 266 A(2) is described


in Ricalde v. People  as "'instrument or object rape,' 'gender-free
[70]

rape,' or 'homosexual rape.' The gravamen of rape through


sexual assault is 'the insertion of the penis into another person's
mouth or anal orifice, or any instrument or object, into another
person's genital or anal orifice.'"
[71]

Francica was charged with rape under Article 266-A(2) in the


Information dated February 3, 2005, yet even a cursory reading
of this Information shows that the allegations and the acts or
omissions complained of pertain to rape under Article 266-A(1)(d)
or carnal knowledge of a girl below 12 years of age:
That on or about the 2  day of February 2005, in the city of
nd

Mandaluyong, Philippines, a place within the jurisdiction. of [this


Honorable Court,] the above-named accused, being the neighbor
of the victim, did, then and there willfully, unlawfully and
feloniously have carnal knowledge with [AAA], a girl eleven (11)
years of age, by then and there inserting his private part into
[the] latter s vagina, all against the latter's will, which acts [sic]
debases, degrades or demeans the intrinsic worth and dignity of
the victim (a child) as a human being.  (Emphasis supplied)
[72]

It is well-established that the nature of a criminal charge is


determined "by the recital of the ultimate facts and circumstances
in the complaint or information"  and not by the caption of the
[73]

information or the provision of the law claimed to have been


violated.  Thus, the lower courts did not err in treating and trying
[74]

all charges against Francica as rape through carnal knowledge


under Article 266-A(1)(d).

II

Rape under Article 266-A(1)(d) is also called statutory rape as "it


departs from the usual modes of committing rape."  The child[75]

victim's consent in statutory rape is immaterial because the law


presumes that her young age makes her incapable of discerning
good from evil.  People v. Gutierez  explained the elements of
[76] [77]

statutory rape:
Statutory rape is committed when (1) the offended party is under
12 years of age and (2) the accused has carnal knowledge of her,
regardless of whether there was force, threat or intimidation;
whether the victim was deprived of reason or consciousness; or
whether it was done through fraud or grave abuse of authority. It
is enough that the age of the victim is proven and that there was
sexual intercourse. [78]

The defense did not dispute the fact that AAA was 11 years old at
the time of the incidents. Her birth certificate  was presented
[79]

into evidence before the trial court and was not questioned by the
defense. What only needs to be proven, therefore, is whether
AAA and Francica had sexual intercourse.
AAA testified as follows:
Q [FISCAL TRONCO]: Kilala mo ba iyong akusado sa kasong ito si Ramon Fran[c]ica?

A: Opo.

Q: Bakit mo siya kilala?

A: Kapit-bahay po namin.

. . .
.

Q: Mabait ba siya sa 'yo?

A: (Witness nodded in the positive).

. . .
.

Q: Bakit sinabi mo mabait siya sa 'yo?

A: Kasi po binibigyan niya ako ng pera.

Q: Palagi ka ba niyang binibigyan ng pera?

A: Minsan lang po.

Q: Ito bang perang binibigay niya sa'yo may kapalit?

A: Opo.

Q: Ano ang kapalit noon?

A: No answer.

Q: Naiintindihan mo ba iyong tanong o gusto mong ibahin? Bakit ka niya binibigyan ng

A: Ginagalaw niya po ako.

Q: Binibigyan ka ba niya ng pera dahil ginagalaw ka niya?


A: Opo.

Q: Magkano ang binibigay niya sa 'yo?

A: P50.00 po.

Q: Sa natatandaan mo, ilang beses ka na myang ginagalaw at binibigyan ng pera.

A: Marami na po.

Q: Alam mo ba kung kailan nagsimula iyon? Alam mo ba na kailangan mo dito na m


lamang at bawal magsinungaling?

A: Opo.

Q: So, yung sinasabi mo ngayon totoo yan lahat?

A: Opo.

Q: Kailan nga nagsimula yung paggalaw niya sa 'yo?

A: Mga March 2004 po.

Q: Pag sinabi mong "ginalaw ka niya'' ano ang ginalaw niya sa 'yo?

A: Dede ko po at ari kop o [sic].

Q: Paano niya ginagalaw yung dede mo?

A: Dinidilaan po niya.

Q: Eh yung ari mo paano naman niya ginagalaw?

A: Pinapasok po niya yung ari niya. [80]

AAA's testimony is consistent with her Sinumpaang Salaysay: [81]

T: Bakit ka na ririto [sic] sa amin[g] opisina?


S: Para po sabihin yung ginawa sa akin ni Amon (victim refer[r]ing to suspect ide
Francisca) [sic]
T: Ano ba ang ginawa sa iyo ni Amon?
S: Dinidilaan niya po yung dede ko po at yung ari po nya ay pinapasok niya sa pepe ko
T: Kailan nangyari ang insidente?
S: Kanina lang po, mga 1:30 po sa banyo po.
T: May sinabi ka sa akin kanina na matagal nya nang gin[a]gawa sa iyo ito. Naaalal
nag sinmula [sic]?
S: Opo. Noon pong March 2004 po.
T: Sabihin mo nga sa akin kung paano nagsimula ang insedente?
S: Nandoon po ako sa Bulatao (Bulatao Compound) at naglalaro, lumapit siya (Ra
akin at sinabi niya na punta ka na doon sa banyo. Nagpunta naman po ako[,] tap
ako sa loob ng banyo at pumasok din sya. Tapos po ay dinilaan nya ako sa dede k
ay ipinasok nya sa pepe ko. Umiyak po ako sa sobrang sakit. Nang matapos po
pera. Tapos po ay naging madalas na po.
T: Magkano naman ang ibinigay nyang pera sa iyo?
S: Fifty pesos (50.00Php) po.
T: Kailan naman yung mga sumunod na insedente.
S: Yung iba po ay hindi ko na matandaan pero noong January 19[,] 2005 ng gabi ay
pinapunta nya sa bahay nya at ginawa nya uli yung ginagawa nya sa akin.
T: Hindi ka ba nag sumbong sa magulang mo?
S: [N]agsumbong po ako sa mama ko pero hindi po sya naniniwala sa akin.
T: Yung insedente kanina, maari mo bang sabihin sa akin?
S: Kanina naman po ay nasa Bulatao uli ako at naglalaro tinawag nya po ako pinapun
dinilaan nya ang dede ko at pinasok ang ari nya sa pepe.  (Emphasis in the original
[82]

As shown by her testimony, AAA was able to narrate in a


straightforward and categorical manner what transpired between
her and Francica. In a long line of cases,  this Court has given
[83]

full weight and credence to the testimony of child victims, holding


that their "[y]outh and immaturity are generally badges of truth
and sincerity." [84]

Compared to AAA's candid and categorical testimony, Francica's


defense of denial must fail. Imbo v. People  emphasized that the
[85]

selfserving defense of denial falters against the "positive


identification by, and straightforward narration of the
victim."  This Court has likewise repeatedly held that the lone yet
[86]

credible testimony of the offended party is sufficient to establish


the guilt of the accused. [87]

Francica's defense that he was merely set up to become the fall


guy so that AAA's family can hide her sexual relationship with her
uncle is not worthy of belief. Additionally, Francica's expose is
primarily hearsay in character since it was supposedly relayed to
him by AAA's aunt Nora, who was not presented as a witness
before the trial court to corroborate his testimony. Thus, this
Court concurs with the trial court when it held that "[t]he 'secret'
is too specious a motive for one to file not only one but three
serious charges of rape against the accused." [88]

BBB also corroborated AAA's testimony on the sexual abuse


committed on February 2, 2005:
Q: What did you see inside the bathroom which is being done to your granddaughter, M

A: When I was inside the bathroom which is just beside the other room, I heard noise
don't know whose [sic] inside. My other grandchild who was about to throw or dis
time [was] standing at that time, and when I went out [of] the bathroom that
someone who was inside the other bathroom also went out, ma'am.

Q: What did you see when you got out of the bathroom?

A: When I went out of the bathroom that was the time that the person went out of
person who went out of the bathroom ran but I saw my grandchild inside the bathro
the person who ran and then when we were running looked back and then I saw the
I uttered, "Walang hiya ka ikaw pala!"

Q: What did you exactly see your grandchild doing at that particular time, Madam Witn

A: She was standing but when I asked my other grandchild who was outside at that t
saw, she told me that she was pulling up her underwear, ma'am.

Q: Just for claritlcation, Madam Witness, the grandchild that you saw inside the bathro
the victim in this case?

A: Yes, Ma'am. Her name is [AAA]. [89]

The trial court found AAA's testimony to be worth believing, being


both positive and credible, thus:
[AAA] is a credible witness. She has not obtained enough
experience and maturity to concoct such a story of rape. Her
testimony, considering her very young age, was straightforward
and candid. Thus, it is sufficient to convict the accused. [90]

The Court of Appeals likewise found that "AAA made sensible,


straightforward and categorical answers to the substantial,
relevant and material questions." [91]
The rule is settled that the trial court's factual findings and
evaluation of witnesses' credibility and testimony should be
entitled to great respect unless it is shown that the trial court
may have "overlooked, misapprehended, or misapplied any fact
or circumstance of weight and substance." [92]

Francica's argument that the presence of healed hymenal


lacerations belies AAA's accusation that he sexually abused her
on February 2, 2005 must fail in light of the fact that hymenal
laceration is not an element of rape. People v. Araojo  expounds
[93]

on the evidentiary weight of a hymenal laceration in a charge of


rape:
The absence of external signs or physical injuries on the
complainant's body does not necessarily negate the commission
of rape, hymenal laceration not being, to repeat, an element of
the crime of rape. A healed or fresh laceration would of course be
a compelling proof of defloration. What is more, the foremost
consideration in the prosecution of rape is the victim's testimony
and not the findings of the medico-legal officer. In fact, a medical
examination of the victim is not indispensable in a prosecution for
rape; the victim's testimony alone, if credible, is sufficient to
convict.  (Citations omitted)
[94]

Despite the absence of the medico-legal officer as a witness, the


presence of healed lacerations corroborates AAA's testimony as it
"is the best physical evidence of forcible defloration."
[95]

It is well-established that "[p]hysical evidence is evidence of the


highest order. It speaks more eloquently than a hundred
witnesses."  The physical evidence of the healed lacerations in
[96]

AAA's vagina strongly corroborates her testimony that she was


sexually abused by Francica.

Beyond reasonable doubt, Francica took advantage of AAA's


youth and naivete to repeatedly sexually abuse her.

Article 266-B  of the Revised Penal Code provides that the
[97]

penalty of reclusion perpetua shall be imposed in cases of rape


stated in the first paragraph of Article 266-A where there are no
aggravating or qualifying circumstances present. This
corresponds with Section 5(b) of Republic Act No. 7610, which
also provides for the penalty of reclusion perpetua if the rape
victim is below 12 years old:
Section 5. Child Prostitution and Other Sexual Abuse. -

....

(b) Those who commit the act of sexual intercourse or lascivious


conduct with a child exploited in prostitution or subjected to other
sexual abuse; Provided, That when the victim is under twelve
(12) years of age, the perpetrators shall be prosecuted under
Article 335, paragraph 3, for rape and Article 336 of Act No.
3815, as amended, the Revised Penal Code, for rape or lascivious
conduct, as the case may be: Provided, That the penalty for
lascivious conduct when the victim is under twelve (12) years of
age shall be reclusion temporal in its medium period[.] (Emphasis
supplied)
The lower courts correctly imposed the penalty of reclusion
perpetua for each count of statutory rape. However, this Court
increases the amount of civil indemnity of P50,000.00 to
P75,000.00, moral damages of P50,000.00 to P75,000.00, and
exemplary damages of P25,000.00 to P75,000.00 pursuant to
prevailing jurisprudence.[98]

In addition, interest at the legal rate of six percent (60%) per


annum shall be imposed on all damages awarded from the date
of finality of this judgment until fully paid.
[99]

WHEREFORE, the Decision dated February 22, 2013 of the Court


of Appeals in CA-G.R. CR-HC No. 03929, finding accused-
appellant Ramon Francica y Navalta guilty beyond reasonable
doubt of three (3) counts of statutory rape
is AFFIRMED with MODIFICATION. The accusedappellant is
sentenced to suffer the penalty of three (3) reclusion perpetua to
be served successively and is ordered to pay AAA, for each count
of rape, the amount of P75,000.00 as civil indemnity, P75,000.00
as moral damages, and P75,000.00 as exemplary damages.

All monetary awards for damages shall earn interest at the legal
rate of six percent (6%) per annum from the date of finality of
this judgment until fully paid.

Costs against accused-appellant.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

October 2, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on September 6, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on October 2, 2017 at 3:05 p.m.

 Rollo, pp. 2-11. The Decision was penned by Associate Justice


[1]

Francisco P. Acosta and concurred in by Associate Justices


Fernanda Lampas Peralta and Angelita A. Gacutan of the Tenth
Division, Court of Appeals, Manila.

[2]
 Id. at 10.

[3]
 RTC records, pp. 1-2.

[4]
 Id. at 1.

[5]
 Id. at 13.

[6]
 Id. at 49.

[7]
 Id. at 58.

[8]
 Id. at 69.

[9]
 Id. at 71-72.

[10]
 TSN dated August 30, 2005, pp. 3-4, 6-7.

[11]
 Id. at 5-7.

[12]
 Id. at 7-9.

[13]
 Id. at 9-10.

[14]
 Id. at 9.

[15]
 Id. at 11-12.

[16]
 Id. at 23.

[17]
 Id. at 17.

[18]
 Id. at 13-17.

[19]
 Id. at 14-15.
[20]
 Id. at 17-18.

[21]
 Id. at 19.

[22]
 Id. at 20-21.

[23]
 Id. at 22; RTC records, pp. 4-5.

[24]
 Id. at 25-26.

[25]
 TSN dated August 9, 2006, pp. 3-6.

[26]
 Id. at 9.

[27]
 RTC records, pp. 221-222.

[28]
 Id. at 255-256.

[29]
 CA rollo, pp. 38-41.

[30]
 TSN dated August 6, 2008, pp. 4-5.

[31]
 Id. at 7-8.

[32]
 Id. at 12-15.

 TSN dated October 22, 2008, pp. 5-8 and TSN dated November
[33]

19, 2008, p. 4.

[34]
 TSN dated November 19, 2008, pp. 8-9.

 RTC records, pp. 311-321. The Decision in Crim. Case Nos.


[35]

MC05-1287-FC and MCOS-1483-4-FCH was penned by Presiding


Judge Monique A. Quisumbing-Ignacio of Branch 209, Regional
Trial Court, Mandaluyong City.

[36]
 Id. at 321.
[37]
 Id. at 317-319.

[38]
 Id. at 319.

[39]
 Id. at 321.

[40]
 Id. at 324.

[41]
 CA rollo, pp. 79-91.

[42]
 Id. at 87.

[43]
 Rollo, pp. 2-11.

[44]
 Id. at 7-9.

[45]
 Id. at 6.

[46]
 Id. at 9.

[47]
 Id. at 10.

[48]
 Id.

[49]
 CA rollo, pp. 155-156.

[50]
 Id. at 161.

[51]
 Rollo, p. 17-17-A.

[52]
 Id. at 18-20 and 22-23.

[53]
 CA rollo, pp. 79-91.

[54]
 Id. at 84-85.

[55]
 Id. at 86-87.
[56]
 Id. at 88.

[57]
 Id. at 87.

[58]
 Id. at 88.

[59]
 Id. at 89.

[60]
 Id. at 122.

[61]
 Id. at 124-125.

[62]
 Id. at 126.

[63]
 Id. at 127-128.

[64]
 Id. at 128.

[65]
 Anti-Rape Law of 1997

 Special Protection of Children Against Abuse, Exploitation and


[66]

Discrimination Act

[67]
 RTC records, pp. 1-2.

[68]
 Id. at 49-50 and 58-59.

 People v. Dalan, 736 Phil. 298, 300 (2014) [Per J. Brion,


[69]

Second Division].

[70]
 751 Phil. 793 (2015) [Per J. Leonen, Second Division].

[71]
 Id. at 804.

[72]
 RTC records, p. 1.
 Pielago v. People, 706 Phil. 460, 470 (2013) [Per J. Reyes, First
[73]

Division].

[74]
 Id. at 170.

 People v. Teodoro, 622 Phil. 328, 337 (2009) [Per J. Brion,


[75]

Second Division].

[76]
 Id. at 337.

[77]
 731 Phil. 352 (2014) [Per J. Leonen, Third Division].

[78]
 Id. at 357.

[79]
 CA rollo, p. 42.

[80]
 TSN dated August 30, 2005, pp. 7-10.

[81]
 CA Rollo, p. 33.

[82]
 Id.

 See Pielago v. People, 706 Phil. 460, 471 (2013) [Per J. Reyes,


[83]

First Division]; Campos v. People, 569 Phil. 658, 671 (2008) [Per


J. Ynares-Santiago, Third Division], citing People v. Capareda,
473 Phil. 301, 330 (2004) [Per J. Callejo, Sr., Second
Division]; People v. Galigao, 443 Phil. 246, 260 (2003) [Per J.
Ynares-Santiago, En Banc].

 People v. Oliva, 616 Phil. 786, 792 (2009) [Per J. Nachura,


[84]

Third Division].

 G.R.
[85]
No. 197712, April 20,
2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/197712.pdf> [Per J. Perez,
First Division].

[86]
 Id. at 5.
 Ricalde v. People, 751 Phil 793, 807 (2015) [Per J. Leonen,
[87]

Second Division]; Garingarao v. People, 669 Phil. 512, 522


(2011) [Per J. Carpio, Second Division]; People v. Tagaylo, 398
Phil. 1123, 1131-1132 (2000) [Per CJ Davide, Jr., First Division].

[88]
 CA rollo, p. 52.

[89]
 TSN dated August 30, 2005, pp. 13-15.

[90]
 CA rollo, p. 50.

[91]
 Rollo, p. 9.

 People v. De Jesus, 695 Phil. 114, 122 (2012) [Per J. Brion,


[92]

Second Division].

[93]
 616 Phil. 275 (2009) (Per J. Velasco, Third Division].

[94]
 Id. at 288.

 People v. Noveras, 550 Phil. 871, 887 (2007) [Per J. Callejo,


[95]

Sr., Third Division].

 People v. Sacabin, 156 Phil. 707, 713 (1974) [Per J. Fernandez,


[96]

Second Division].

[97]
 REV. PEN. CODE, art. 266-B provides:

Article 266-B. Penalty. - Rape under paragraph 1 of the next


preceding article shall be punished by reclusion perpetua.

 People v. Jugueta, G.R. No. 202124, April 5, 2016


[98]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/202124.pdf> [Per J. Peralta,
En Banc].
 Ricalde v. People, 751 Phil. 793, 816 (2015) [Per J. Leonen,
[99]

Second Division].

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SECOND DIVISION

[ G.R. No. 197297, August 02, 2017 ]


REPUBLIC OF THE PHILIPPINES, PETITIONER, VS.
SPOUSES DANILO GO AND AMORLINA GO,
RESPONDENTS.DECISION

LEONEN, J.:

Public land remains inalienable unless it is shown to have been


reclassified and alienated to a private person. [1]

This resolves a Petition for Review assailing the Court of Appeals


Decision dated January 21, 2011 and Resolution dated June 6,
2011 in CA-G.R. CV No. 93000, which affirmed the Decision of
the Municipal Trial Court in Cities dated December 12, 2008
issuing the Decree of Registration for Lot No. 4699-B of
Subdivision Plan Csd-04-022290-D in favor of the Spouses Danilo
and Amorlina Go.
On August 26, 2006, respondents Spouses Danilo and Amorlina
Go (the Spouses Go) applied for the registration and confirmation
of title over Cadastral Lot No. 4699-B (Lot No. 4699-B), a parcel
of land in Barangay Balagtas, Batangas City covering an area of
1,000 square meters. [2]

The Spouses Go registered Lot No. 4699-B in their names for


taxation purposes. They had paid the real property taxes,
including the arrears, from 1997 to 2006, as shown in Tax
Declaration No. 026-04167.  They had also established a funeral
[3]

parlor, San Sebastian Funeral Homes, on the lot.  According to [4]

them, there were no other claimants over the property. [5]

The Spouses Go claimed to be in an open, continuous, exclusive,


notorious, and actual possession of the property for seven (7)
years since they bought it.  They also tacked their possession
[6]

through that of their predecessors-in-interest, as follows:

Sometime in 1945,  Anselmo de Torres (Anselmo) came to know


[7]

that his parents, Sergia Almero and Andres de Torres (the


Spouses de Torres),  owned Lot No. 4699,  a bigger property
[8] [9]

where Lot No. 4699-B came from. According to Anselmo, the


Spouses de Torres paid the real property taxes during their
lifetime and planted bananas, mangoes, calamansi, and rice on
this lot.  His mother, Sergia Almero (Sergia), allegedly inherited
[10]

Lot No. 4699 from her parents, Celodonio and Eufemia Almero
(the Spouses Almero). [11]

In the 1960s, Anselmo and his siblings inherited Lot No. 4699
from their parents upon their deaths. [12]

One of Anselmo's sisters, Cristina Almero de Torres Corlit


(Cristina), then built a residential house on Lot No. 4699-B,
 declaring this parcel of land under her name for tax purposes,
[13]

as evidenced by Tax Declaration No. 026-03492.  Meanwhile, [14]

Anselmo and his other siblings built their homes on another


portion of Lot No. 4699.  Anselmo, who was then 28 years old,
[15]

started living in the eastern portion from 1966. [16]


On January 26, 2000, the Spouses Go bought Lot No. 4699-B
from the previous owners, siblings Anselmo, Bernardo Almero de
Torres, Leonila Almero de Torres Morada, and Cristina, as
evidenced by a Deed of Absolute Sale. [17]

On August 26, 2006, the Spouses Go (respondents) applied for


the registration and confirmation of title of Lot No. 4699-B.  They[18]

attached the Report dated January 31, 2007 of Special Land


Investigator I Ben Hur Hernandez (Hernandez) and the
Certification dated January 29, 2008 of Forester I Loida Maglinao
(Maglinao) of the Batangas City Community Environment and
Natural Resources Office (CENRO) of the Calamba, Laguna,
Batangas, Rizal, and Quezon (CALABARZON) Region of the
Department of Environment and Natural Resources (DENR). [19]

Hernandez's January 31, 2007 Report and Maglinao's January 29,


2008 Certification stated that the property was located in an
alienable and disposable zone  since March 26, 1928, under
[20]

Project No. 13, Land Classification Map No. 718.  No patent or
[21]

decree was previously issued over the property. [22]

On November 3, 2006, the Republic of the Philippines (petitioner)


opposed respondents' application for registration for the following
reasons: 1) Lot No. 4699-B was part of the public domain; 2)
neither the Spouses Go nor their predecessors-in-interest had
been in open, continuous, exclusive, and notorious possession
and occupation of the property since June 12, 1945 or even
before then; 3) the tax declaration and payment were not
competent or sufficient proof of ownership, especially considering
that these were relatively recent. [23]

Anselmo and his siblings had no proof of their inheritance. He


claimed that the office having custody of the documentary proof
of their inheritance was burned  and they no longer had the
[24]

original copy of the documents.[25]


In the Decision  dated December 12, 2008, the Municipal Trial
[26]

Court in Cities confirmed the title of the lot in the name of the
Spouses Go. The dispositive portion read:
Considering that the applicants have duly established essential
facts in support of the application, the Court hereby confirms title
to Lot 4699-B, Cad 264 Batangas Cadastre covered in approved
plan Csd-04-22290-D, containing an area of ONE THOUSAND
(1,000) SQUARE METERS situated at Barangay Balagtas,
Batangas City in the name of Spouses Danilo Go and Amorlina A.
Go, of legal age, Filipino and residents of San Jose Subdivision,
Barangay San Sebastian, Lipa City.

Once the Decision becomes final, let the corresponding Decree of


Registration be issued.

SO ORDERED. [27]

Petitioner appealed directly to the Court of Appeals. In the


Decision  dated January 21, 2011, the Court of Appeals denied
[28]

the appeal:
WHEREFORE, premises considered, the appeal is DENIED. The
assailed Decision, dated December 12, 2008, of the Municipal
Trial Court in Cities (MTCC), Branch 2, Pallocan West, Batangas
City in Land Registration Case No. 2006-162, is AFFIRMED.

No pronouncement as to costs.

SO ORDERED. [29]

Petitioner filed its Motion for Reconsideration,  which was denied


[30]

on June 6, 2011. [31]

Petitioner elevated  the case before this Court, arguing that


[32]

Maglinao testified having investigated only 200 square meters of


the 1,000-square-meter land for registration.  She also admitted
[33]

that her certification was based on the approved plan and not on
the Land Classification Map. She certified the lot only to
determine "the point or monument of the entire or whole area"
and not to identify its alienable character. Thus, petitioner argues
that Maglinao's certification should not have been used to
determine that the land was alienable and disposable. [34]

Petitioner assails respondents' failure to submit a copy of the


original classification map that bears the DENR Secretary's
approval and its legal custodian's certification as a true copy.
Petitioner argues that a CENRO Certification is insufficient to
[35] 

establish that a land applied for registration is alienable. [36]

In the Resolution dated August 15, 2011, this Court required


respondents to submit a certified true copy of any Presidential or
DENR Secretary's issuance stating Lot No. 4699-B as alienable
and disposable.[37]

In their Compliance  dated September 25, 2011, the Spouses Go


[38]

attached a certified photocopy of the CENRO Certification dated


January 29, 2008,  which this Court noted.  In the Resolution
[39] [40]

dated November 14, 2011, this Court informed the Spouses Go


that the CENRO Certification was not the submission required of
them. [41]

On June 20, 2012, the Spouses Go's counsel, Atty. Jose Amor M.
Amorado, was ordered "to show cause why he should not be
disciplinarily dealt with or held in contempt" for failure to comply
with this Court's August 15, 2011 Resolution.  The Spouses Go
[42]

manifested that they had already complied with this Court's


Resolution through their September 25, 2011 Compliance.  They [43]

re-attached the CENRO Certification dated January 29, 2008. [44]

On September 24, 2012, this Court resolved  to require [45]

respondents to file their Comment. The Spouses Go failed to do


so, which led this Court to again require  their counsel to show
[46]

cause for their failure to comply with the September 24, 2012
Resolution.

In their Compliance  dated August 15, 2013, the Spouses Go


[47]

informed this Court that they would dispense with the filing of
their Comment.
For resolution before this Court is whether the Court of Appeals
erred in issuing the Spouses Go a Decree of Registration over Lot
No. 4699-B.

Any application for confirmation of title under Commonwealth Act


No. 141  already concedes that the land is previously public.
[48]

For a person to perfect one's title to the land, he or she may


apply with the proper court for the confirmation of the claim of
ownership and the issuance of a certificate of title over the
property.  This process is also known as judicial confirmation of
[49]

title.
[50]

Section 48(b) of Commonwealth Act No. 141, as amended  by [51]

Presidential Decree No. 1073,  states who can apply for judicial
[52]

confirmation of title:
Section 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such
lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance
[Regional Trial Court] of the province where the land is located
for confirmation of their claims and the issuance of a certificate of
title therefor, under the Land Registration Act, to wit:

....
(b) Those who by themselves or through their predecessors in
interest have been in the open, continuous, exclusive, and
notorious possession and occupation of  agricultural lands of the
public domain, under a bona fide claim of acquisition or
ownership, except as against the government, since July twenty-
sixth, eighteen hundred and ninety-four, except when prevented
by war or force majeure. Those shall be conclusively presumed to
have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the
provisions of this chapter. (Emphasis supplied)
Commonwealth Act No. 141 is a special law that applies to
agricultural lands of the public domain, not to forests, mineral
lands, and national parks.  The requisite period of possession
[53]

and occupation is different from that of land classification.

In an application for judicial confirmation of title, an applicant


already holds an imperfect title to an agricultural land of the
public domain after having occupied it from June 12, 1945 or
earlier.  Thus, for purposes of obtaining an imperfect title, the
[54]

date it was classified is immaterial. [55]

Classifying a land of the public domain as agricultural is essential


only to establish the applicant's "eligibility for land registration,
not the ownership or title over it."  Heirs of Malabanan v.
[56]

Republic of the Philippines  explained:


[57]

[T]he applicant's imperfect or incomplete title is derived only


from possession and occupation since June 12, 1945, or earlier.
This means that the character of the property subject of the
application as alienable and disposable agricultural land of the
public domain determines its eligibility for land registration, not
the ownership or title over it. [58]

In Malabanan, the Court En Banc affirmed that June 12, 1945 is


the "reckoning point of the requisite possession and occupation"
and not of the land classification as alienable and disposable:
[T]he choice of June 12, 1945 as the reckoning point of the
requisite possession and occupation was the sole prerogative of
Congress, the determination of which should best be left to the
wisdom of the lawmakers. Except that said date qualified
the period of possession and occupation, no other legislative
intent appears to be associated with the fixing of the date of June
12, 1945. Accordingly, the Court should interpret only the plain
and literal meaning of the law as written by the legislators.

[A]n examination of Section 48 (b) of the Public Land Act


indicates that Congress prescribed no requirement that the land
subject of the registration should have been classified as
agricultural since June 12, 1945, or earlier.  (Emphasis supplied)
[59]
Thus, the land may be declared alienable and disposable at any
time, not necessarily before June 12, 1945. The moment that the
land is declared alienable and disposable, an applicant may then
initiate the proceedings for the judicial confirmation of title.

On the other hand, for the requisite duration of possession, an


applicant must have had possession of the property under a bona
fide claim of ownership or acquisition, from June 12, 1945 or
earlier. Such possession must have also been open, continuous,
exclusive, and notorious. [60]

Under Section 11(4)(a) of Commonwealth Act No, 141, the


judicial confirmation of imperfect or incomplete titles, which the
law describes as "judicial legalization," allows for agricultural
public lands to be disposed of by the State and acquired by
Filipino citizens.[61]

Meanwhile, Section 14(1) of Presidential Decree No.


1529  provides for the procedure to register a title under the
[62]

Torrens system:
Section 14. Who may apply. — The following persons may file in
the proper Court of First Instance an application for registration
of title to land, whether personally or through their duly
authorized representatives:
 
(1) Those who by themselves or through their predecessors-in-interest have bee
exclusive and notorious possession and occupation of alienable and disposable lan
under a bona fide claim of ownership since June 12, 1945, or earlier.
Section 14(1) of Presidential Decree No. 1529 does not vest or
create a title to a public land that has already existed or has been
vested under Commonwealth Act No. 141.  The procedure of
[63]

titling under Presidential Decree No. 1529 "simply recognizes and


documents ownership and provides for the consequences of
issuing paper titles." [64]

Thus, under Section 48(b) of Commonwealth Act No. 141, as


amended, and Section 14(1) of Presidential Decree No. 1529,
Filipino citizens applying for the judicial confirmation and
registration of an imperfect title must prove several requisites.
First, they must prove that they, by themselves or through their
predecessors-in-interest, have been in open, continuous,
exclusive, and notorious possession of the property. Second, it
must be settled that the applicants' occupation is under a bona
fide claim of acquisition or ownership since June 12, 1945 or
earlier, immediately before the application was filed. Third, it
should be established that the land is an agricultural land of
public domain. Finally, it has to be shown that the land has been
declared alienable and disposable.[65]

The Spouses Go's possession, by themselves or through their


predecessors-in-interest, does not meet the statutory
requirements.

The evidence the Spouses Go submitted to prove their required


length of possession consist of Anselmo's testimony, Cristina's
sole Tax Declaration, and the Spouses Go's sole Tax Declaration.
Other than these pieces of evidence, the Spouses Go could not
support their claim of possession in the concept of an owner, by
themselves or through their predecessors-in-interest, from June
12, 1945 or earlier.

The records do not show that the Spouses Go's predecessors-in-


interest fenced the original 3,994-square-meter Lot No. 4699,
claiming it as exclusively theirs or that they introduced
improvements on it since June 12, 1945 or earlier. Cristina built a
residential house on Lot No. 4699-B  when her parents died in
[66]

the 1960s,  while Anselmo started living in the eastern portion of


[67]

Lot No. 4699 in 1966 when he was 28 years old.  These events
[68]

happened at least 15 years after 1945. Moreover, the siblings


could not produce any documentary proof of their alleged
inheritance of this land from their parents. [69]

Apart from Cristina's single tax declaration and the Spouses Go's
single tax declaration covering even Cristina's arrears from 1997
to 2000, nothing in the records shows that the Spouses Go's
predecessors-in-interest religiously paid real property taxes.
Payment of real property taxes is a "good indicia of the
possession in the concept of owner for no one in his [or her] right
mind would be paying taxes for a property that is not in his [or
her] actual, or at the least constructive, possession." [70]

Anselmo only gave bare assertions that his parents paid the real
property taxes during their lifetime.  Neither did the Spouses Go
[71]

give any proof of the alleged tax payments of the Spouses de


Torres or of Anselmo's grandparents, the Spouses Almero.

Although not adequate to establish ownership, a tax declaration


may be a basis to infer possession.  This Court has highlighted
[72]

that where tax declaration was presented, it must be the 1945


tax declaration because June 12, 1945 is material to the case.
 The specific date must be ascertained; otherwise, applicants fail
[73]

to comply with the requirements of the law.  In Republic v.


[74]

Manna Properties: [75]

It is unascertainable whether the 1945 tax declaration was issued


on, before or after 12 June 1945. Tax declarations are issued any
time of the year. A tax declaration issued in 1945 may have been
issued in December 1945. Unless the date and month of issuance
in 1945 is stated, compliance with the reckoning date in
[Commonwealth Act No.] 141 cannot be established.  (Emphasis
[76]

in the original)
II

Even assuming that there is sufficient evidence to establish their


claim of possession in the concept of an owner since June 12,
1945, the Spouses Go nevertheless failed to prove the alienable
and disposable character of the land.

The 1987 Constitution declares that the State owns all public
lands.  Public lands are classified into agricultural, mineral,
[77]

timber or forest, and national parks. Of these four (4) types of


public lands, only agricultural lands may be alienated. Article XII,
Sections 2 and 3 of the Constitution provide:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be
alienated . . .

Section 3. Lands of the public domain are classified into


agricultural, forest or timber, mineral lands, and national parks.
Agricultural lands of the public domain may be further classified
by law according to the uses [to] which they may be
devoted. Alienable lands of the public domain shall be limited to
agricultural lands . . . (Emphasis supplied)
Thus, an applicant has the burden of proving that the public land
has been classified as alienable and disposable.  To do this, the
[78]

applicant must show a positive act from the government


declassifying the land from the public domain  and converting it
[79]

into an alienable and disposable land.  "[T]he exclusive


[80]

prerogative to classify public lands under existing laws is vested


in the Executive Department."  In Victoria v. Republic:
[81] [82]

To prove that the land subject of the application for registration is


alienable, an applicant must establish the existence of a positive
act of the government such as a presidential proclamation or an
executive order; an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative act or statute.
The applicant may secure a certification from the government
that the lands applied for are alienable and disposable, but the
certification must show that the DENR Secretary had approved
the land classification and released the land of the public domain
as alienable and disposable[.]  (Emphasis supplied, citations
[83]

omitted)
Section X(1)  of the DENR Administrative Order No. 1998-24 and
[84]

Section IX(1)  of DENR Administrative Order No. 2000-11 affirm


[85]

that the DENR Secretary is the approving authority for "[l]and


classification and release of lands of the public domain as
alienable and disposable." Section 4.6 of DENR Administrative
Order No. 2007-20 defines land classification as follows:
Land classification is the process of demarcating, segregating,
delimiting and establishing the best category, kind, and uses of
public lands. Article XII, Section 3 of the 1987 Constitution of the
Philippines provides that lands of the public domain are to be
classified into agricultural, forest or timber, mineral lands, and
national parks.
These provisions, read with Victoria v. Republic  establish the
[86]

rule that before an inalienable land of the public domain becomes


private land, the DENR Secretary must first approve the land
classification into an agricultural land and release it as alienable
and disposable.  The DENR Secretary's official acts "may be
[87]

evidenced by an official publication thereof or by a copy attested


by the officer having legal custody of the record, or by his
deputy."[88]

The CENRO or the Provincial Environment and Natural Resources


Officer will then conduct a survey to verify that the land for
original registration falls within the DENR Secretary-approved
alienable and disposable zone. [89]

The CENRO certification is issued only to verify the DENR


Secretary issuance through a survey. "Thus, the CENRO
Certification should have been accompanied by an official
publication of the DENR Secretary's issuance declaring the land
alienable and disposable."  A CENRO certification, by itself, is
[90]

insufficient to prove the alienability and disposability of land


sought to be registered.  In Republic v. Lualhati:
[91] [92]

[I]t has been repeatedly ruled that certifications issued by the


CENRO, or specialists of the DENR, as well as Survey Plans
prepared by the DENR containing annotations that the subject
lots are alienable, do not constitute incontrovertible evidence to
overcome the presumption that the property sought to be
registered belongs to the inalienable public domain. Rather, this
Court stressed the importance of proving alienability by
presenting a copy of the original classification of the land
approved by the DENR Secretary and certified as true copy by the
legal custodian of the official records.  (Emphasis supplied)
[93]

Here, in its Decision  dated December 12, 2008, the Court of


[94]

Appeals concluded that the January 29, 2008 CENRO


Certification, which stated that Lot No. 4699-B was within
alienable and disposable zone, was conclusive proof that this land
applied for registration was alienable. This Court disagrees.

To establish that a land is indeed alienable and disposable,


applicants must submit the application for original registration
with the CENRO certification and a copy of the original
classification approved by the DENR Secretary and certified as a
true copy by the legal custodian of the official records.
[95]

Judicially entrenched  is the rule that it is the DENR Secretary


[96]

who has the authority to approve land classification and release a


land of public domain as alienable and disposable. In Republic v.
T.A.N. Properties:[97]

[I]t is not enough for the PENRO or CENRO to certify that a land
is alienable and disposable. The applicant for land registration
must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as
alienable and disposable, and that the land subject of the
application for registration falls within the approved area per
verification through survey by the PENRO or CENRO. In addition,
the applicant for land registration must present a copy of the
original classification approved by the DENR Secretary and
certified as a true copy by the legal custodian of the official
records. These facts must be established to prove that the land is
alienable and disposable. [98]

Republic v. Hanover  ruled that a CENRO certification does not


[99]

constitute incontrovertible proof that a piece of land is alienable


and disposable. This is because "the CENRO is not the official
repository or legal custodian of the issuances of the DENR
Secretary declaring the alienability and disposability of public
lands."  Republic v. Vda. De Joson explained:
[100] [101]

This doctrine unavoidably means that the mere certification


issued by the CENRO or PENRO did not suffice to support the
application for registration, because the applicant must also
submit a copy of the original classification of the land as alienable
and disposable as approved by the DENR Secretary and certified
as a true copy by the legal custodian of the official records. [102]

III
The pieces of evidence the Spouses Go adduced fall short of the
requirements of the law.

First, the Spouses Go failed to present a certified true copy of the


original classification of the DENR Secretary. This Court has given
them enough chances to prove their claim. As a rule, this Court
can only consider the evidence submitted before the trial court.
 Nevertheless, this Court gave respondents the opportunity to
[103]

submit "a certified true copy of the Presidential or Department of


Environment and Natural Resources Secretary's issuance
declaring the property alienable and disposable."  They failed to
[104]

comply despite being given a show-cause order. [105]

This Court also required them to file their Comment on


petitioner's opposition to their original registration.  Instead of
[106]

complying, they asked that their Comment be dispensed with. [107]

Second, although the Spouses Go submitted a CENRO


certification stating that the land was verified to be within
alienable and disposable zone under Project No. 13, Land
Classification Map No. 718, Maglinao, the person who issued the
CENRO Certification, testified otherwise. She admitted in her
testimony that, she certified the lot only to determine "the point
or monument of the entire or whole area" and not to identify its
alienable character.[108]

The Spouses Go have the burden to show that the land for
registration is alienable or disposable,  which they miserably
[109]

failed to do so. Without the original land classification approved


by the DENR Secretary, the Spouses Go's application for
registration must be denied.  The land remains inalienable.
[110]

In sum, the Court of Appeals gravely erred in affirming the trial


court's Decision that granted the Spouses Go's application for
registration of Lot No. 4699-B. The Spouses Go failed to
adequately prove their claim of possession in the concept of an
owner since June 12, 1945. They likewise failed to establish that
the land applied for registration is alienable and disposable. Thus,
their occupation of this land, no matter how long, cannot ripen
into ownership and cannot be registered as a title. [111]

WHEREFORE, the Petition is GRANTED. The Court of Appeals


Decision dated January 21, 2011 and Resolution dated June 6,
2011 in CA-G.R. CV No. 93000, which affirmed the Decision of
the Municipal Trial Court in Cities dated December 12, 2008,
are REVERSED and SET ASIDE. The application for registration
of the Spouses Danilo Go and Amorlina Go of Lot No. 4699-B of
Subdivision Plan Csd-04-022290-D is DENIED for lack of merit.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

 Republic v. Vega, 654 Phi). 511, 520 (2011) [Per J. Sereno,


[1]

Third Division].

[2]
 Rollo, p. 32, Court of Appeals Decision.

[3]
 Id. at 34, Court of Appeals Decision.

[4]
 Id. at 56, RTC Decision.

[5]
 Id. at 57.

[6]
 Id. at 56.

 Id. at 39. The records state that Anselmo was born on April 21,
[7]

1938 and he was seven (7) years old when he allegedly learned
his parents' ownership of the land.

[8]
 Id. at 32, Court of Appeals Decision.
 Id. at 39. See rollo, pp. 54 and 56. Lot No. 4699 was a 3,994-
[9]

square-meter parcel of land that was subdivided into small areas


under Subdivision Plan Csd-04-022290-D.

[10]
 Id. at 39.

[11]
 Id. at 32.

[12]
 Id. at 57, RTC Decision.

[13]
 Id. at 56-57, RTC Decision.

[14]
 Id. at 34, Court of Appeals Decision.

[15]
 Id. at 56-57, RTC Decision.

[16]
 Id. at 57.

[17]
 Id. at 15,32.

[18]
 Id. at 32, Court of Appeals Decision.

[19]
 Id. at 57-58, RTC Decision.

[20]
 Id. at 57.

[21]
 Id. at 74.

[22]
 Id. at 57, RTC Decision.

[23]
 Id. at 36-37. Court of Appeals Decision.

 Id. at 32. See rollo, p. 56, the Municipal Trial Court in Cities


[24]

cites a Certification dated March 31, 2008 of the Office of the City
Assessor of Batangas City purportedly showing that the office was
burned on an unstated date.

[25]
 Id. at 56, RTC Decision.
 Id. at 54-59. The Decision, docketed as LRC Case No. 2006-
[26]

162, was penned by Judge Eleuterio L. Bathan of Branch 2,


Municipal Trial Court in Cities, Pallocan West, Batangas City.

[27]
 Id. at 58-59.

 Id. at 31-49. The Decision,


[28]
docketed as CA-G.R. CV No. 93000,
was penned by Associate Justice Antonio L. Villamor and
concurred in by Associate Justices Jose C. Reyes, Jr. and
Franchito N. Diamante of the Special Thirteenth Division, Court of
Appeals, Manila.

[29]
 Id. at 48.

[30]
 Id. at 60-65.

 Id. at 50-53. The Resolution was penned by Associate Justice


[31]

Antonio L. Villamor and concurred in by Associate Justices Jose C.


Reyes, Jr. and Franchito N. Diamante of the Former Special
Thirteenth Division of the Court of Appeals, Manila.

[32]
 Id. at 10-30, Petition for Review.

[33]
 Id. at 20-21.

[34]
 Id. at 21.

[35]
 Id.

[36]
 Id. at 22.

[37]
 Id. at 70.

[38]
 Id. at 72-73.

[39]
 Id. at 74.
[40]
 Id. at 76.

[41]
 Id.

[42]
 Id. at 82.

[43]
 Id. at 83-86.

[44]
 Id. at 87.

[45]
 Id. at 89.

[46]
 Id. at 95.

[47]
 Id. at 96-97.

[48]
 The Public Land Act (1936).

[49]
 See Com. Act No. 141, sec. 48.

 Heirs of Malabanan v. Republic, 717 Phil. 141, 164 (2013) [Per


[50]

J. Bersamin, En Banc].

 See Republic v. Court of Appeals, 489 Phil. 405, 417 (2005)


[51]

[Per J. Tinga, Second Division]. This Court has explained:

When the Public Land Act was first promulgated in 1936, the
period of possession deemed necessary to vest the right to
register their title to agricultural lands of the public domain
commenced from July 26, 1894. However, this period was
amended by R.A. No. 1942, which provided that the bona
fide claim of ownership must have been for at least thirty (30)
years. Then in 1977, Section 48(b) of the Public Land Act was
again amended, this time by P.D. No. 1073, which pegged the
reckoning date on June 12, 1945.

[52]
 Pres. Decree No. 1073, sec. 4 provides:
Section 4. The provisions of Section 48(b) and Section 48(c),
Chapter VIII of the Public Land Act are hereby amended in the
sense that these provisions shall apply only to alienable and
disposable lands of the public domain which have been in open,
continuous, exclusive and notorious possession and occupation by
the applicant himself or thru his predecessor-in-interest, under a
bona fide claim of acquisition of ownership, since June 12, 1945.

 In Heirs of Malabanan v. Republic, 717 Phil. 141, 164(2013)


[53]

[Per J. Bersamin, En Banc]. Note that Section 48(b) of the Public


Land Act used the words "lands of the public domain" or
"alienable and disposable lands of the public domain" to clearly
signify that lands otherwise classified, i.e., mineral, forest or
timber, or national parks, and lands of patrimonial or private
ownership, are outside the coverage of the Public Land Act. What
the law does not include, it excludes. The use of the descriptive
phrase "alienable and disposable" further limits the coverage of
Section 48(b) to only the agricultural lands of the public domain
as set forth in Article XII, Section 2 of the 1987 Constitution.

[54]
 Id.

[55]
 Id.

[56]
 Id. at 166.

[57]
 717 Phil. 141 (2013) [Per J. Bersamin, En Banc].

[58]
 Id. at 166.

[59]
 Id. at 165.

[60]
 Com. Act No. 141, sec. 48(b).

[61]
 Com. Act No. 141, sec. 11 provides:

Section 11. Public lands suitable for agricultural purposes can be


disposed of only as follows, and not otherwise:
(1) For homestead settlement;

(2) By sale;

(3) By lease; and

(4) By confirmation of imperfect or incomplete titles;

(a) By judicial legalization; or

(b) By administrative legalization (free patent).

[62]
 Property Registration Decree (1978).

 Development Bank of the Phils. v. Court of Appeals, 387 Phil.


[63]

283, 296 (2000) [Per J. Mendoza, Second Division]); Concurring


and Dissenting Opinion of J. Leonen in Heirs of Malabanan v.
Republic, 717 Phil. 141, 207 (2013) [Per J. Bersamin, En
Banc]; Republic v. Bautista Jr., G.R. No. 166890, June 28, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurispradence/2016/june2016/166890.pdf> 5 [Per J.
Bersamin, First Division]).

 Concurring and Dissenting Opinion of J. Leonen in Heirs of


[64]

Malabanan v. Republic, 1X1 Phil. 141, 207 (2013) [Per J.


Bersamin, En Banc].

 Republic v. Lualhati, G.R. No. 183511, March 25, 2015, 757


[65]

Phil. 119, 129 (2015) [Per J. Peralta, Third Division]; La Tondeña,


Inc. v. Republic, G.R. No. 194617, August 5, 2015, 765 SCRA
265, 283 (2015) [Per J. Leonen, Second Division].

[66]
 Id. at 56, RTC Decision.

[67]
 Id. at 56-57.

[68]
 Id. at 57.
[69]
 Id. at 32, Court of Appeals Decision.

 Republic v. Gielczyk, 720 Phil. 385, 397 (2013) [Per J. Reyes,


[70]

First Division].

[71]
 Rollo, p. 39, CA Decision.

 Republic v. Manna Properties Inc., 490 Phil. 654, 667-668


[72]

(2005) [Per J. Carpio, First Division].

[73]
 Id. at 668.

[74]
 Id.

[75]
 490 Phil. 654 (2005) [Per J. Carpio, First Division].

[76]
 Id. at 668.

Republic v. Lualhati, 757 Phil. 119, 129 (2015) [Per J. Peralta,


[77] 

Third Division].

 Republic v. Lualhati, 757 Phil. 119 (2015) [Per J. Peralta, Third


[78]

Division].

 Victoria v. Republic, 666 Phil. 519, 525 (2011) [Per J. Abad,


[79]

Second Division].

 Ituralde v. Falcasantos, 361 Phil. 245, 250 (1999) [Per J.


[80]

Pardo. First Division]; La Tondeña, Inc. v. Republic, G.R. No.


194617, August 5, 2015, 765 SCRA 265, 285 [Per J. Leonen,
Second Division].

 Heirs of Malabanan v. Republic, 717 Phil. 141, 162 (2013) [Per


[81]

J. Bersamin, En Banc].

[82]
 666 Phil. 519 (2031) [Per J. Abad, Second Division].
[83]
 Id. at 525.

[84]
 DENR Adm. Order No. 1998-24.

[85]
 Dated February 8, 2000, at 72.

[86]
 666 Phil. 519 (2011) [Per J. Abad, Second Division].

 Republic v. Sese, 735 Phil. 108, 121 (2014) [Per J. Mendoza,


[87]

Third Division].

 Republic v. T.A.N. Properties, Inc., 578 Phil. 441, 453 (2008)


[88]

[Per J. Carpio, First Division]; see RULES OF COURT, Rules 132,


sec. 19(a).

 Republic v. Sese, 735 Phil. 108, 121 (2014) [Per J. Mendoza,


[89]

Third Division].

 Republic v. Hanover Worldwide Trading Corp., 636 Phil. 739,


[90]

752 (2010) [Per J. Peralta, Second Division].

 Republic v. Local Superior of the Institute of the Sisters of the


[91]

Sacred Heart of Jesus of Ragusa, G.R. No. 185603, February 10,


2016, 783 SCRA 501, 514 [Per J. Reyes, Third Division].

[92]
 757 Phil. 119 (2015) [Per J. Peralta, Third Division].

[93]
 Id. at 131.

[94]
 Rollo, pp. 54-59.

 Republic v. Lualhati, 757 Phil. 119, 132 (2015) [Per J. Peralta,


[95]

Third Division].

 See Republic v. T.A.N. Properties, Inc., 578 Phil. 441, 453


[96]

(2008) [Per J. Carpio, First Division], Republic v. Hanover


Worldwide Trading Corp., 636 Phil. 739, 752 (2010) [Per J.
Peralta, Second Division], Republic v. Sese, 735 Phil. 108, 121
(2014) [Per J. Mendoza, Third Division], Republic v. Vda. de
Joson, 728 Phil. 550, 562 (2014) [Per J. Bersamin, First
Division], Republic v. Lualhati, 757 Phil. 119, 130-131 (2015)
[Per J. Peralta, Third Division], Republic v. Local Superior of the
Institute of the Sisters of the Sacred Heart of Jesus of Ragusa,
G.R. No. 185603, February 10, 2016, 783 SCRA 501, 514 [Per J,
Reyes, Third Division]; Republic v. Vega, 654 Phil. 511 (2011)
[Per J. Sereno, Third Division].

[97]
 578 Phil. 441 (2008) [Per J. Carpio, First Division].

[98]
 Id. at 452-453.

[99]
 636 Phil. 739 (2010) [Per J. Peralta, Second Division].

[100]
 Id. at 752.

 Republic v. Vda. de Joson, 728 Phil. 550 (2014) [Per J.


[101]

Bersamin, First Division].

[102]
 Id. at 562.

[103] Id.

[104]
 Rollo, p. 70.

[105]
 Id. at 82.

[106]
 Id. at 89.

[107]
 Id. at 96.

[108]
 Id. at 21.

 Republic v. Gomez, 682 Phil. 631, 637 (2012) [Per J. Sereno,


[109]

Second Division].
 Republic v. Local Superior of the Institute of the Sisters of the
[110]

Sacred Heart of Jesus of Ragusa, G.R. No. 185603, February 10,


2016, 783 SCRA 501, 514 [Per J. Reyes, Third Division].

 Republic v. Vega, 654 Phil. 511, 521 (2011) [Per J. Sereno,


[111]

Third Division].

Source: Supreme Court E-Library | Date created: November 06, 2017


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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 205614, July 26, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. JAIME SEGUNDO Y IGLESIAS,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

Although the miniscule quantity of confiscated illicit drugs is by


itself not a reason for acquittal, this instance accentuates the
importance of conformity to Section 21  of Republic Act No. 9165,
[1]

otherwise known as the Comprehensive Dangerous Drugs Act of


2002.
This is an appeal  filed by Jaime Segundo y Iglesias (Segundo)
[2]

from the June 26, 2012 Decision  of the Court of Appeals in CA-
[3]

G.R. CR-HC No. 04377.

The Court of Appeals affirmed the Regional Trial Court's


ruling  that Segundo was guilty beyond reasonable doubt of sale
[4]

of dangerous drugs or of violation of Section 5 of Republic Act No.


9165.[5]

On July 8, 2001, an Information  for violation of Section 5 of


[6]

Republic Act No. 9165, docketed as Criminal Case No. MC-03-


7134-D,  was filed before Branch 213, Regional Trial Court,
[7]

Mandaluyong City against Segundo. [8]

The undersigned Associate Prosecution Atty. II accuses JAIME


SEGUNDO of the crime of VIOLATION OF SECTION 5, ARTICLE II
OF THE REPUBLIC ACT 9165, committed in the manner herein
narrated, as follows:

That on or about the 6  day of July 2003, in the City of


th

Mandaluyong, Philippines, a place within the jurisdiction of this


Honorable Court, the above-named accused, did, then and there
willfully, unlawfully and feloniously sell to a poseur-buyer, PO1
Cesar Claveron, (1) heat-sealed transparent plastic sachet with
markings "JSI-1" containing 0.03 gram of white crystalline
substance, which was found positive to the test for
Methyamphetamine [sic] Hydrochloride, commonly known as
"shabu", a [prohibited] drug for the amount of two (2) pieces of
One Hundred Pesos with serial no. SN HZ558445 and BT254391,
without the corresponding license and prescription in violation of
the above[-]cited law.

CONTRARY TO LAW. [9]

On the same date, two (2) separate Informations for violation of


Sections II  and 12  in relation to Section 14  of Republic Act
[10] [11] [12]
No. 9165 were also filed against Dominador Gubato y Ibuho
(Gubato).[13]

Criminal Case No. MC-03-7135-D

The undersigned Associate Prosecution Atty. II


accuses DOMINADOR GUBATO y IBUHO of the crime
of VIOLATION OF SECTION 11, ARTICLE II OF THE
REPUBLIC ACT 9165, committed in the manner herein narrated,
as follows:

That on or about the 6  day of July 2003, in the City of


th

Mandaluyong, Philippines, a place within the jurisdiction of this


Honorable Court, the above-named accused, not being lawfully
authorized to possess or otherwise use any dangerous drug, did,
then and there willfully, unlawfully and feloniously and knowingly
have in his possession, custody and control two (2) heat-sealed
transparent plastic sachet with markings "JSI-1" containing 0.03
grams and 0.30 grams or a total of 0.33 grams of white
crystalline substance, which was found positive to the test for
Methylamphetamine [sic] Hydrochloride, commonly known as
"shabu", and one (1) heat-sealed transparent plastic sachet with
markings "JSI-3" containing 2.27 grams of dried suspected
Marijuana fruiting tops, without the corresponding license and
prescription.

CONTRARY TO LAW. [14]

Criminal Case No. MC-03-7136-D

The undersigned Associate Prosecution Atty. II


accuses DOMINADOR GUBATO y IBUHO of the crime
of VIOLATION OF SECTION 12 IN RELATION TO SECTION
14, ARTICLE II OF THE REPUBLIC ACT 9165, committed in
the manner herein narrated, as follows:

That on or about the 6  day of July 2003, in the City of


th

Mandaluyong, Philippines, a place within the jurisdiction of this


Honorable Court, the above-named accused, did, then and there
willfully, unlawfully and feloniously and knowingly possess and
have in his control one (1) strip aluminium foil with markings
"JSI-7" containing traces of white crystalline substance and one
(1) improvised glass tooter with markings "JSI-4" containing
traces of white crystalline substance, all equipments and other
paraphernalia, which are fit or intended for smoking, consuming,
administering or inducing a dangerous drug into the body, a
violation of the above-cited law.

CONTRARY TO LAW.  (Emphasis in the original)


[15]

Upon arraignment, both accused pleaded not guilty to the


charges. [16]

On August 27, 2003, Gubato posted bail for his provisional


liberty,  however, he later jumped bail.
[17] [18]

Joint trial on the merits commenced. [19]

The testimonies of the prosecution's witnesses corroborated the


following account of events:

At around 3:00 p.m.  of July 6, 2003,  a tip was received by the
[20] [21]

Mandaluyong Police Station from a "confidential informant" about


Segundo's sale of illegal drugs in Talumpong Street, Barangay
Malamig, Mandaluyong City. [22]

A buy-bust team was created upon the order of Officer in Charge


PO3 Victor Santos (PO3 Santos)  to PO2 Oliver Yumul (PO2
[23]

Yumul), who was stationed as team leader of the operatives at


the Drug Enforcement Unit.  PO1 Cesar Claveron (PO1 Claveron)
[24]

was assigned as the poseur-buyer while PO2 Yumul, PO1 Angel


Von Occeña (PO1 Occeña), PO2 Pascual, PO1 Garro, PO1 Buted,
PO1 Boyles, PO2 Pucan, and POS Bernardino Adriano (POS
Adriano) operated as backups. [25]
Two (2) P100.00 bills served as marked buy-bust money.  PO1 [26]

Occeña prepared a pre-coordination form, which was faxed to the


Philippine Drug Enforcement Agency before the operation. [27]

When the police officers reached their destination, PO1 Claveron


and the confidential informant came near Segundo, who was then
positioned along an alley.  Meanwhile, PO2 Yumul was about 10
[28]

to 15 meters away where he could supervise the operation


without being easily noticed.  PO1 Claveron was introduced as a
[29]

buyer of shabu.  Segundo was initially hesitant but the


[30]

confidential informant persuaded him to finally sell illegal drugs. [31]

PO1 Claveron gave the buy-bust money to Segundo.  In return, [32]

Segundo handed him "one heat-sealed transparent plastic sachet"


with shabu.  PO2 Yumul allegedly saw this exchange although he
[33]

could not tell what Segundo gave PO1 Claveron, considering his
distance. [34]

PO1 Claveron made the pre-arranged signal, which prompted the


other members of the team to make the arrest.  Segundo ran to
[35]

his house and was pursued by PO2 Yumul, PO1 Occeña, and POS
Adriano. [36]

Inside Segundo's house, the police officers coincidentally saw


Gubato "repacking prohibited drugs scattered on the floor."  POS [37]

Adriano pursued Segundo  while PO2 Yumul apprehended


[38]

Gubato  and PO1 Occeña collected the evidence.  Later, POS


[39] [40]

Adriano arrested Segundo. [41]

PO1 Occeña made a body search on Segundo and Gubato.  He [42]

retrieved "one (1) heat[-]sealed transparent plastic sachet


containing three (3) suspected shabu and one (1) heat[-] sealed
transparent plastic sachet containing marijuana" from Gubato's
right pocket.  PO2 Yumul marked these items in the presence of
[43]

the two (2) accused as "JSI 1" to "JSI 10, where "JSI" stood for
"Jaime Segundo y Iglesias. [44]
Segundo and Gubato were subsequently brought to the
Mandaluyong Medical Center and to the Criminal Investigation
Unit  while the drug paraphernalia and shabu were submitted to
[45]

the investigator.[46]

PO2 Yumul prepared a request for the examination of the seized


items,  which was submitted to Karen Palacios,  and the Spot
[47] [48]

Report, which PO1 Occeña forwarded to the Philippine Drug


Enforcement Agency.  The drug paraphernalia and the plastic
[49]

sachet yielded positive for methamphetamine hydrochloride.[50]

During cross examination, PO1 Claveron testified that he only


knew the names of the accused during the investigation. He
identified Segundo as the person who gave him the alleged shabu
after taking the P200.00 buy-bust money. Additionally, he
mentioned that he did not state in his affidavit that the
confidential informant told Segundo, "[P]are, may kasama ako
dito. Iiskor siya. Kung pwede pagbigyan mo."[51]

Further, PO1 Claveron admitted that PO3 Santos did not give him
a receipt for the bills used as marked money but he photocopied
them in their office. He clarified that he had no personal
knowledge on what happened inside Segundo's house when
Segundo was pursued by the police officers. He averred that
Segundo and Gubato did not have a counsel when they were
brought in for investigation. [52]

PO2 Yumul attested that he made the inventory and took the
photographs of the pieces of evidence collected. However, he
admitted that the photos were lost and could not be submitted to
the prosecutor for inquest. He claimed that he did not know the
two (2) accused before their arrest on the day of the operation. [53]

PO1 Occeña averred that he did not know Segundo prior to their
operation and confirmed that "there was no representative of the
media and the Barangay when the markings were placed on the
recovered evidence." [54]
PO3 Romarico D. Sta. Maria, the police investigator on duty when
this case was brought to the Mandaluyong Criminal Investigation
Unit for proper action,  identified the marked bills as the buy-
[55]

bust money used in the operation.  He verified that the items
[56]

and the operational coordination form were submitted to him. [57]

SPO1 Ruperto Balsamo (SPO1 Balsamo), the assigned


investigator to the case,  affirmed that the two (2) accused and
[58]

the physical evidence were turned over to him.  He confirmed


[59]

that the prohibited drugs retrieved from the accused were


recorded in their book at the Drug Enforcement Unit. He admitted
that "no picture [was] taken  on the alleged recovered object
evidence." [60]

On the other hand, the defense presented Segundo, who denied


all the accusations against him and accused the police officers of
extortion. [61]

Segundo insisted that on the date of the incident, he was in his


sari-sari store when he saw several police officers barging in his
neighbor's house. Suddenly, two (2) men in civilian clothes stood
in front of his store and several others entered his store. They
hurriedly handcuffed Segundo and "poked a gun at
him."  Segundo was dragged outside and was boarded into a
[62]

van. [63]

He was allegedly brought for a medical examination at the


Mandaluyong Medical Center. Thereafter, they proceeded to the
office of the Drug Enforcement Unit where he was bodily searched
in a small room. When they got nothing from him, one (1) of the
police officers demanded P100,000.00. Since he could not give
the demanded amount, he was subsequently detained. [64]

Gubato was reportedly at large since November 15, 2005.  For [65]

this reason, the defense had no other witness to present.


 Hence, the case was submitted for decision.
[66] [67]
On February 25, 2010, the Regional Trial Court  found Segundo
[68]

guilty of selling dangerous drugs.  It ruled that in prosecution of


[69]

illegal possession or sale of prohibited drugs, great weight is


given to prosecution witnesses, particularly when they are police
officers.  In the absence of any ill-motive on their part, the
[70]

presumption of regularity in the performance of their duty stands


except when there is proof to the contrary.  Hence, this [71]

presumption prevails over the accused's unsubstantiated defense


of denial and claim of frame-up.  The dispositive portion of the
[72]

decision read:

WHEREFORE, premises considered, judgment is hereby


rendered, viz:
a) in Criminal Case No. MC-03-7134-D, accused JAIME SEGUNDO y
found GUILTY beyond reasonable doubt for violation of Section 5, Article II of Repu
sale of dangerous drugs. As a consequence thereof, accused JAIME SEGUNDO y
to suffer the penalty of LIFE IMPRISONMENT  and to pay the fine of FIVE
PESOS (P 500,000.00);

b) in Criminal Case No. MC-03-7135-D, accused DOMINADOR GUBATO


found GUILTY beyond reasonable doubt for violation of Section 11, Article II of R
for illegal possession [of] dangerous drugs. Accused DOMINADOR GUBATO y
suffer the penalty of imprisonment from TWELVE (12) YEARS AND ONE (1)
FIFTEEN (15) YEARS, as maximum, and to pay the fine of THREE HUNDRED
300,000.00); and

c) in Criminal Case No. MC-03-7136-D, accused DOMINADOR GUBATO


found GUILTY beyond reasonable doubt for violation of Section 12 in relation to
Republic Act No. 9165 or for illegal drug paraphernalia. Accused DOMINADOR
sentenced to suffer the penalty of imprisonment from SIX (6) MONTHS A
minimum, to FOUR (4) YEARS, as maximum, and to pay the fine of TWENTY
20,000.00).

All
the
pie
ces
of
evi
de
nc
e
co
nfi
sca
ted
are
for
feit
ed
in
fav
or
of
the
go
ver
nm
ent
to
be
dis
po
se
d
of
in
acc
or
da
nc
e
wit
h
la
w

Th
e
per
iod
of
det
ent
ion
of
acc
us
ed,
Jai
me
Se
gu
nd
o y
Igl
esi
as,
at
the
Ma
nd
alu
yo
ng
Cit
y
Jail
is
he
reb
y
cre
dit
ed
in
his
fav
or

Fin
all
y,
co
nsi
der
ing
tha
t
acc
us
e
 
DO
MI
NA
DO
R
GU
BA
TO
y
IB
UH
O
 
is
at-
lar
ge,
iss
ue
a
 
AL
IA
S
W
AR
RA
NT
 
for
his
im
me
dia
te
arr
est
to
ser
ve
the
se
nte
nc
e
im
po
se
d
up
on
hi
m
in
Cri
mi
nal
Ca
se
No
s.
MC
-
03
-
71
35
-D
an
d
MC
-
03
-
71
36
-D
SO
OR
DE
RE
D.
[73]

 
(E
mp
ha
sis
in
the
ori
gin
al)

In his appeal, Segundo assailed the broken chain of custody in


handling the alleged confiscated shabu.[74]

On June 26, 2012, the Court of Appeals  affirmed the trial court's
[75]

ruling.  It held that the prosecution's failure to prove that the
[76]

police handled the seized items based on the guidelines provided


for under Section 21 of Republic Act No. 9165 and its
implementing rules did not immediately make Segundo's arrest
illegal and the confiscated items inadmissible as evidence.
[77]

The Court of Appeals held that non-compliance with the rules was
permissible provided that the reasons were justifiable "and as
long as the integrity and evidentiary value of the
confiscated/seized items, [were] properly preserved by the
apprehending officer/team."  Nevertheless, records of this case
[78]

revealed that the confiscated items "were marked at the scene of


the incident in the presence of appellant." [79]

Hence, an appeal  before this Court has been submitted.


[80]

On February 1, 2013  the Court of Appeals elevated to this Court


[81]

the records of this case pursuant to its July 31, 2012 Resolution,
 which gave due course to the Notice of Appeal  filed by
[82] [83]

Segundo.

In its April 10, 2013 Resolution,  this Court noted the records of
[84]

the case forwarded by the Court of Appeals. The parties were


then ordered to file their supplemental briefs, should they desire,
within 30 days from notice.

On June 6, 2013, the Office of the Solicitor General filed a


Manifestation  on behalf of the People of the Philippines stating
[85]

that it would no longer file a supplemental brief. A similar


Manifestation  was filed by the Public Attorney's Office on behalf
[86]

of Segundo.

For resolution is whether Jaime Segundo's guilt was proven


beyond reasonable doubt. Subsumed in this issue is whether the
police officers complied with the chain of custody provided for
under Section 21 of Republic Act No. 9165 and its Implementing
Rules in handling the alleged confiscated shabu.

Segundo insists,  that in the prosecution for illegal sale of


[87]

dangerous drugs, it is essential that there is evidence showing


that the sale occurred, together with the presentation in court of
proof of corpus delicti. [88]

In this case, the prosecution failed to establish the elements of


the crime.  To emphasize, it was only PO1 Claveron and the
[89]

confidential informant who purportedly met Segundo to purchase


the prohibited drugs.  The other members of the buy-bust team
[90]

namely PO2 Yumul, POS Adriano, and PO3 Occeña were


positioned as immediate back-ups.  PO2 Yumul and PO3 Occeña
[91]

even stated that they failed to see what Segundo gave PO1
Claveron in exchange for the buy-bust money. [92]

Similarly, while PO1 Claveron claims that Segundo handed him "a
small plastic sachet containing white crystalline substance," there
was still no assurance that what it contained was shabu. [93]

Segundo asserts that PO2 Yumul was incompetent to identify the


marked seized items since he was not the one who confiscated
them.  Worse, he failed to clearly recognize which among those
[94]

items was the one retrieved from Segundo. [95]

Segundo contends that the testimonies of the police officers were


not categorical and reliable.  The following inconsistencies on the
[96]

material circumstances of this case should be underscored:

1. PO2 Claveron testified that PO3 Occeña was the one who
faxed the pre-coordination form to the PDEA. PO3 Occeña,
however, did not confirm the same, and instead relayed that
it was PO3 Victor Santos who faxed the said form.
2. In their joint affidavit, the police officers stated that when
they arrived at the target area, the accused-appellant was
seen waiting for customers. PO1 Claveron, however, testified
that the accused- appellant was just standing along the
alley.
3. PO1 Claveron stated that it was PO3 Occeña who received
the information from the confidential informant about the
selling of prohibited drugs in Talumpong Street,
Mandaluyong. PO2 Yumul, however, relayed that it was POS
Adriano who received the said information.
4. PO1 Claveron narrated that after Jaime [Segundo] and
Dominador [Gubato] were arrested, they were brought to
the Mandaluyong Medical Center for medical examination.
PO2 Yumul, however, declared that the duo was brought to
their office to file the necessary charges.
5. PO1 Claveron admitted that the recovered items were not
inventoried so as to avoid trouble in the area. PO2 Yumul,
however, testified that he was the one who inventoried the
said items.
6. PO3 Occeña declared that PO2 Yumul placed the markings
on the seized items. PO2 Yumul, however, did not
categorically state he was the one who placed the markings.
7. SPO1 Ruperto Balzamo  admitted that no photographs were
[97]

taken on the confiscated items. PO2 Yumul, however,


recalled that pictures were taken, but they could no longer
be found.  (Citations omitted)
[98]

Segundo insists that even assuming that he perpetrated the


charge, the trial court still erred in finding him guilty due to the
broken chain of custody of the alleged seized prohibited drugs.
 In this case, no picture was taken.  Similarly, PO3 Occeña
[99] [100]

confessed that "no members of the media and representative


from the barangay were present when the said items were
allegedly marked. [101]

His claim of extortion should not be immediately disfavored.


 Hence, there is a need to be "extra vigilant in trying drug
[102]

cases" because there are circumstances when "law enforcers


resort to the practice of planting evidence to extract information
or even harass civilians."  An assumption on regularity cannot
[103]

prevail over the accused's constitutional presumption of


innocence. [104]

On the other hand, the Office of the Solicitor General  contends


[105]

that the prosecution was able to prove that Segundo illegally sold
prohibited drugs. PO1 Claveron's testimony, together with the
identification of the corpus delicti,  has substantiated the claim
against Segundo. Apart from PO1 Claveron's narration of how
Segundo sold him shabu, this assertion was also corroborated by
the other members of the buy-bust team. [106]

The Office of the Solicitor General also insists that the police
officers' failure to strictly comply with Section 21 of Republic Act
No. 9165 and its implementing rules neither "render[ed]
[Segundo's] arrest illegal nor the evidence adduced against him
inadmissible."[107]

The Office of the Solicitor General mainly relies on the police


officers' presumption of regularity in the performance of their
duties. It asserts that in drug cases, the presumption that the
police officers have fulfilled their duties in a regular manner
absent evidence to the contrary prevails and their testimonies are
given weight.[108]

Furthermore, the defense of frame-up is generally disfavored


because "it can easily be concocted and is a common and
standard defense ploy in most prosecutions for violation of
[Republic Act No.] 9165."  In this kind of defense, "the evidence
[109]

must be clear and convincing." [110]

The Office of the Solicitor General then concludes "that the


positive identification of the accused—when categorical and
consistent and without any ill motive on the part of the
prosecution witnesses—prevails over alibi and denial which are
negative and self-serving, undeserving of weight in
law."  Compared with the well- substantiated resolution of
[111]
the
trial court, Segundo's denial is immaterial. [112]

This Court rules in favor of Segundo.

Every criminal prosecution begins with the "constitutionally-


protected presumption of innocence in favor of the accused that
can only be defeated by proof beyond reasonable doubt."  "Proof
[113]

beyond reasonable doubt, or that quantum of proof sufficient to


produce a moral certainty that would convince and satisfy the
conscience of those who act in judgment" is crucial in defeating
the presumption of innocence. [114]
During proceedings, the prosecution initially presents proof
substantiating the elements of the charge.  The prosecution [115]

must rest "on the strength of its case rather than on the
weakness of the case for the defense."  After proving the
[116]

elements, "the burden of evidence shifts to the accused" to


negate the prosecution's claim.  Thereafter, the courts shall
[117]

resolve whether the guilt of the accused was proven beyond


reasonable doubt. [118]

In sustaining a conviction for illegal sale of prohibited drugs, the


prosecution must establish the following elements:

(1) the identity of the buyer and the seller, the object, and the
consideration; and (2) the delivery of the thing sold and the
payment therefor. [119]

Accordingly, these entail proof "that the sale transaction


transpired, coupled with the presentation in court of the
corpus delicti." [120]

Proof beyond reasonable doubt requires "that unwavering


exactitude be observed in establishing the corpus delicti—the
body of the crime whose core is the confiscated illicit
drug."  Moreover, "every fact necessary to constitute the crime
[121]

must be established."  The rule on chain of custody plays this


[122]

role in buy-bust operations, warranting that there are no doubts


on the identity of evidence. [123]

"Proof of the corpus delicti  in a buy-bust situation requires


evidence, not only that the transacted drugs actually exist, but
evidence as well that the drugs seized and examined are the
same drugs presented in court."  This is a pre-condition "for
[124]

conviction as the drugs are the main subject of the illegal sale
constituting the crime and their existence and identification must
be proven for the crime to exist." [125]
Although the meaning of chain of custody is not explicitly
provided for under Republic Act No. 9165, it is defined  in [126]

Section 1(b) of Dangerous Drugs Board Regulation No. 1,  Series


[127]

of 2002:

b. "Chain of custody" means the duly recorded authorized


movements and custody of seized drugs or controlled chemicals
or plant sources of dangerous drugs or laboratory equipment at
each stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
item shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody were made in the course of
safekeeping and use in court as evidence, and the final
disposition[.]

Chain of custody is composed of testimonies on each link of the


sequence. The account starts from the time the item was taken
until it was presented as evidence such that each person who had
contact with "the exhibit would describe how and from whom it
was received, where it was and what happened to it while in [his
or her] possession, the condition in which it was received and . . .
in which it was delivered to the next."  Every person in the chain
[128]

must attest to the precautions observed while in his or her


possession to guarantee that the item's condition has not been
altered and that there is no opportunity for anyone not in the
chain to take hold of it.
[129]

Compliance with the chain of custody is necessary due to the


unique nature of narcotics. In Mallillin v. People,[130]

A unique characteristic of narcotic substances is that they are not


readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from other cases — by accident or
otherwise — in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a standard more stringent than that
applied to cases involving objects which are readily identifiable
must be applied, a more exacting standard that entails a chain of
custody of the item with sufficient completeness if only to render
it improbable that the original item has either been exchanged
with another or been contaminated or tampered with.
 (Emphasis provided)
[131]

The prosecution offered testimonies to establish the identity of


the buyer and seller, as well as the consideration that sustained
the alleged deal and how the sale had transpired.  It failed,
[132]

however, to comply with the chain of custody that would


supposedly ensure that the miniscule amount of 0.03 grams
of shabu offered as evidence in court was the one retrieved from
Segundo at the time of the operation.

II

To confirm the tip that Segundo was selling prohibited drugs, a


buy-bust operation was conducted.  This manner of action has
[133]

been attested to be useful in "flush[ing] out illegal transactions


that are otherwise conducted covertly and in secrecy." [134]

A buy-bust operation, however, poses a danger "that has not


escaped the attention of the framers of the law."  Thus, it is
[135]

prone to abuse, "the most notorious of which is its use as a tool


for extortion."  As explained in People v. Tan,
[136] [137]

[B]y the very nature of anti-narcotics operations, the need for


entrapment procedures, the use of shady characters as
informants, the ease with which sticks of marijuana or grams of
heroin can be planted in pockets or hands of unsuspecting
provincial hicks, and the secrecy that inevitably shrouds all drug
deals, the possibility of abuse is great.  (Emphasis provided)
[138]

For this reason, Republic Act No. 9165 provides for a definite
procedure relevant to the confiscation and handling of prohibited
drugs.  Accordingly, the prosecution is mandated to prove that
[139]

this procedure has been complied with to establish the elements


of the charge. [140]

The initial procedural safeguard  provided for under Section 21,


[141]

paragraph 1 of Republic Act No. 9165,  the then prevailing law,


[142]

 states:
[143]

Section 21. Custody and Disposition of Confiscated, Seized,


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of the drugs shall, imme
confiscation, physically inventory and photograph the same in the presence o
person/s from whom such items were confiscated and/or seized, or his/her repre
representative from the media and the Department of Justice  (DOJ), an
official  who shall be required to sign the copies of the inventory and be given a co
supplied)

In this case, a perusal of the testimonies of the prosecution


witnesses reveals that the procedure provided for under Republic
Act No. 9165 was not complied with "despite [its] mandatory
nature as indicated by the use of 'shall' in the directives of the
law." [144]
PO2 Occeña testified that PO2 Yumul marked the seized items
with "JSI 1" to "JSI 10" inside Segundo's house and in front of the
two (2) accused.  PO2 Yumul's testimony, however, did not
[145]

reveal much about the marking he allegedly made. He merely


stated that he was the one who "inventoried and took
photographs of the pieces of evidence recovered."  PO3 Occeña
[146]

added that when the items were marked, "no representative of


the media and the [b]arangay" were present. [147]

Furthermore, the prosecution's initial witness, SPO1 Balsamo,


admitted that no pictures of the alleged confiscated items were
taken.  Contrary to this assertion, PO2 Yumul testified
[148]

differently. While he insisted that he took photographs of the


seized items, which he also inventoried, the photos purportedly
got lost. [149]

Apparently, these were the only testimonies that comprise the


entirety of the prosecution's evidence on the inventory and
photographs of the confiscated items. To underscore, the step-
by-step process under Republic Act No. 9165 is "a matter of
substantive law, which cannot be simply brushed aside as a
simple procedural technicality."  The law has been "crafted by
[150]

Congress as safety precautions to address potential police


abuses, especially considering that the penalty imposed may be
life imprisonment." [151]

The concern with narrowing the window of opportunity for


tampering with evidence found legislative expression in
Section 21 (1) of RA 9165  on the inventory of seized dangerous
drugs and paraphernalia by putting in place a three-tiered
requirement on the time, witnesses, and proof of inventory by
imposing on the apprehending team having initial custody and
control of the drugs the duty to "immediately after seizure and
confiscation,  physically inventory and photograph the same in
the presence of the  accused or the person/s from whom such
items were confiscated and/or seized, or his/her representative
or counsel, a  representative from the
media and  the Department of Justice
(DOJ),  and any elected public official  who shall be required to
sign the copies of the inventory and be given a copy thereof.
"  (Emphasis provided)
[152]

The varying testimonies on the photographing of the articles


direct this Court to a logical conclusion that there were really no
photos taken  during the seizure of the items. Apart from this,
nothing in the records shows that there was "genuine and
sufficient effort to seek the third-party representatives" specified
under the law.  Despite having enough time to contact the
[153]

needed parties after the tip was received, the police officers
merely dispensed with this requirement. To note, it is the
prosecution who had the concomitant part to "establish that
earnest efforts were employed in contacting the representatives
enumerated" under the law. [154]

Section 21 sets out "matters that are


imperative."  Accomplishing
[155]
acts which seemingly exact
compliance but do not really conform with the pre-conditions
provided for under Section 21 are not enough.  "This is [156]

especially so when the prosecution claims that the seizure of


drugs and drug paraphernalia is the result of carefully planned
operations, as is the case here." [157]

Moreover, a perusal of the Informations against Segundo and


Gubato creates doubt whether the seized items were properly
marked. As pointed out by Segundo, both Informations explicitly
contained the markings "JSI-1." [158]

In Criminal Case No. MC-03-7134-D Segundo was charged with


selling prohibited drugs.

[T]the above-named accused, did, then and there willfully,


unlawfully and feloniously sell to a poseur-buyer, PO1 Cesar
Claveron, one (1) heat-sealed transparent plastic sachet
with markings  "JS1-1" containing 0.03 gram of white
crystalline substance, which was found positive to the test for
Methylamphetamine [sic] Hydrochloride, commonly known as
"shabu[.]"  (Emphasis provided)
[159]

On the other hand, the other Information in Criminal Case No.


MC-03-7135-D charged Gubato with possession of dangerous
drugs.

[T]he above-named accused, not being lawfully authorized to


possess or otherwise use any dangerous drug, did, then and
there willfully, unlawfully and feloniously and knowingly have in
his possession, custody and control two (2) heat-sealed
transparent plastic sachet with markings  "JSI-
1"  containing 0.03 grams and 0.30 grams or a total of 0.33
grams of white crystalline substance, which was found
positive to the test for Methylamphetamine [sic] Hydrochloride,
commonly known as "shabu[.]"  (Emphasis provided)
[160]

Based on the prosecution's narration of the story, the articles


allegedly retrieved from Segundo were different from the ones
seized from Gubato. Supposedly, these separate items should be
marked differently to identify which among the articles were
seized from Segundo and which ones were from Gubato.

Crucial in proving chain of custody is the marking of the seized


drugs or other related items immediately after they are seized
from the accused. Marking after seizure is the starting point
in the custodial link,  thus it is vital that the seized
contraband[s] are immediately marked because succeeding
handlers of the specimens will use the markings as reference.
The marking of the evidence serves to separate the marked
evidence from the corpus of all other similar or related
evidence from the time they are seized from the accused
until they are disposed of at the end of criminal
proceedings, obviating switching, "planting", or
contamination of evidenced.  (Emphasis provided)
[161]
However, the two (2) Informations both involve an article
similarly marked as "JSI 1" that creates confusion. Hence, it casts
doubt on whether the prosecution was able to establish the
identity of the alleged seized shabu. [162]

Negligible departures from the procedures under Republic Act No.


9165 would not certainly absolve the accused from his or her
charges. Nonetheless, "when there is gross disregard of the
procedural safeguards prescribed in the substantive law . . .
serious uncertainty is generated about the identity of the seized
items that the prosecution presented in evidence." [163]

This Court also emphasizes that there were apparent


inconsistencies in the testimonies of the police officers who were
part of the buy-bust team.

First, according to PO1 Claveron, who was allegedly at their office


that time, it was PO1 Occeña who received the tip from the
informant.  However, PO3 Occeña
[164]
who was supposedly "on
duty,"  testified differently, and said
[165]
that it was PO2 Yumul who
received the information. [166]

Further, according to PO1 Claveron, it was PO1 Occeña who


prepared the request for Segundo's drug test, as well as the drug
examination of the seized articles.  On the contrary, PO2 Yumul
[167]

testified that he "prepared a request addressed to the . . . Crime


Laboratory for the examination of the evidence confiscated." [168]

According to PO2 Yumul, when he apprehended Gubato, he


directed "PO1 Occeña to gather all evidence scattered on the
floor."  But according to PO1 Occeña, he confiscated the articles
[169]

"on top of the table."[170]

As the law enforcers who planned and conducted the operation,


they should know the details of the incident. In this case,
however, the police officers posited contradictory statements,
casting uncertainty on the veracity of their narrative.
III

This Court acknowledges that strict conformity with the conditions


provided for under Section 21 of Republic Act No. 9165 might not
be probable under field situations. "[T]he police operates under
varied conditions, and cannot at all times attend to all the niceties
of the procedures in the handling of confiscated evidence."  With [171]

this, Section 21, paragraph 1 of the Implementing Rules and


Regulations of Republic Act No. 9165 reads:

Section 21. Custody and Disposition of Confiscated, Seized


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential
Chemicals, Instruments/Paraphernalia and/or Laboratory
Equipment —

....

(a) The apprehending officer/team having initial custody and control of the dr
immediately after seizure and confiscation, physically inventory and photograph th
the presence of the accused or the person/s from whom such items were confisca
seized, or his/her representative or counsel, a representative from, the medi
Department of Justice (DOJ), and any elected public official who shall be required
copies of the inventory and be given a copy thereof: Provided,  that the physical inv
photograph shall be conducted at the place where the search warrant is served;
nearest police station or at the nearest office of the apprehending officer/team, w
practicable, in case of warrantless seizures; Provided, further,  that non-compli
these requirements under justifiable grounds, as Ions, as the integrity and the
value of the seized items are properly preserved by the apprehending officer/team
render void and invalid such seizures of and custody over said items[.] (Emphasis pr

Failure to comply with Section 21 "is not fatal to the prosecution's


case provided that the integrity and evidentiary value of the
seized items are properly preserved by the apprehending
officers."  This exception, however, "will only be triggered by the
[172]
existence of a ground that justifies departure from the general
rule."
[173]

In this case, the prosecution offered no justifiable reason why


they failed to comply with the conditions provided for under the
law. To underscore, "for the saving clause to apply, it is important
that the prosecution explain the reasons behind the procedural
lapses, and that the integrity and value of the seized evidence
had been preserved."  Simply put, "the justifiable ground for
[174]

noncompliance must be proven as a fact."  Hence, courts cannot


[175]

assume what these reasons are, if they even exist at all. [176]

Moreover, the presumption of regularity in the performance of


their duties cannot work in favor of the law enforcers since the
records revealed severe lapses in complying with the
requirements provided for under the law.  "The presumption [177]

stands when no reason exists in the records by which to doubt


the regularity of the performance of official duty."  Thus, this [178]

presumption "will never be stronger than the presumption of


innocence in favor of the accused. Otherwise, a mere rule of
evidence will defeat the constitutionally enshrined right of an
accused to be presumed innocent." [179]

To emphasize, this case merely involves 0.03 grams of shabu.


Thus, "the miniscule amount of narcotics supposedly seized . . .
amplifies the doubts on their integrity." [180]

To sum, "[l]aw enforcers should not trifle with the legal


requirement to ensure integrity in the chain of custody of seized
dangerous drugs and drug paraphernalia."  Thus, "[t]his is [181]

especially true when only a miniscule amount of dangerous drugs


is alleged to have been taken from the accused." [182]

Although the miniscule quantity of confiscated illicit drugs is


solely by itself not a reason for acquittal, this instance
accentuates the importance of conformity to Section 21  that the [183]

law enforcers in this case miserably failed to do so. If initially


there were already significant lapses on the marking, inventory,
and photographing of the alleged seized items, a doubt on the
integrity of the corpus delicti  concomitantly exists. For this
reason, this Court acquits Segundo as his guilt was not proven
beyond reasonable doubt.

This Court ends with the words in People v Holgado: [184]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels.
[185]

WHEREFORE, the June 26, 2012 Decision of the Court of


Appeals in CA-G.R. CR-HC No. 04377 is REVERSED and SET-
ASIDE. Accused-appellant JAIME SEGUNDO y IGLESIAS is
hereby ACQUITTED for failure of the prosecution to prove his
guilt beyond reasonable doubt. He is ordered
immediately RELEASED from detention, unless he is confined for
any other lawful cause.

Let a copy of this decision be furnished to the Director of the


Bureau of Corrections, Muntinlupa City for immediate
implementation. The  Director of the Bureau of Corrections is
directed to report to this Court the action he has taken within five
(5) days from receipt of this decision. Copies shall also be
furnished to the Director General of Philippine National Police and
the Director General of Philippine Drugs Enforcement Agency for
their information.

Let entry of judgment be issued immediately.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires,


JJ., concur.

 People v. Holgado, 741 Phil. 78, 93(2014) [Per J. Leonen, Third


[1]

Division].

[2]
 CA rollo, pp. 150-151.

 Rollo, pp. 2-14. The Decision was penned by Associate Justice


[3]

Japar B. Dimaampao and concurred in by Associate Justices


Michael P. Elbinias and Nina G. Antonio-Valenzuela of the
Fifteenth Division of the Court of Appeals, Manila.

 CA rollo,  pp. 13-35. The Decision, promulgated on February 25,


[4]

2010, was penned by Judge Carlos A. Valenzuela of Branch 213,


Regional Trial Court, Mandaluyong City.

[5]
 Rep. Act No. 9165, sec. 5, par. 1 provides:

Section 5. Sale, Trading, Administration, Dispensation, Delivery,


Distribution and Transportation of Dangerous Drugs and/or
Controlled Precursors and Essential Chemicals.  — The penalty of
life imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.

 CA rollo,  pp. 11-12. The Information was filed by Associate


[6]

Prosecution Atty. II Regina T. Figura-


Tronco.

[7]
 Id. at 13.

[8]
 Id. at 11.

[9]
 Id.

 Section 11. Possession of Dangerous Drugs. — The penalty of


[10]

life imprisonment to death and a fine ranging from Five hundred


thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall possess any dangerous drug in the
following quantities, regardless of the degree of purity thereof:
...
Otherwise, if the quantity involved is less than the foregoing
quantities, the penalties shall be graduated as follows:
...

(3) Imprisonment of twelve (12) years and one (1) day to twenty (20) years and a
hundred thousand pesos (P300,000.00) to Four hundred thousand pesos (P400,000
of dangerous drugs are less than five (5) grams of opium, morphine, hero
hydrochloride, marijuana resin or marijuana resin oil, methamphetam
"shabu", or other dangerous drugs such as, but not limited to, MDMA or "ec
GHB, and those similarly designed or newly introduced drugs and their derivativ
therapeutic value or if the quantity possessed is far beyond therapeutic requirem
hundred (300) grams of marijuana. (Emphasis supplied)

 Section 12. Possession of Equipment, Instrument, Apparatus


[11]

and Other Paraphernalia for Dangerous Drugs. — The penalty of


imprisonment ranging from six (6) months and one (1) day to
four (4) years and a fine ranging from Ten thousand pesos
(P10,000.00) to Fifty thousand pesos (P50,000.00) shall be
imposed upon any person, who, unless authorized by law, shall
possess or have under his/her control any equipment,
instrument, apparatus and other paraphernalia fit or intended for
smoking, consuming, administering, injecting, ingesting, or
introducing any dangerous drug into the body: Provided, That in
the case of medical practitioners and various professionals who
are required to carry such equipment, instrument, apparatus and
other paraphernalia in the practice of their profession, the Board
shall prescribe the necessary implementing guidelines thereof.

The possession of such equipment, instrument, apparatus and


other paraphernalia fit or intended for any of the purposes
enumerated in the preceding paragraph shall be prima
facie  evidence that the possessor has smoked, consumed,
administered to himself/herself, injected, ingested or used a
dangerous drug and shall be presumed to have violated Section
15 of this Act.

 Section 14. Possession of Equipment, Instrument, Apparatus


[12]

and Other Paraphernalia for Dangerous Drugs During Parties,


Social Gatherings or Meetings.  — The maximum penalty provided
for in Section 12 of this Act shall be imposed upon any person,
who shall possess or have under his/her control any equipment,
instrument, apparatus and other paraphernalia fit or intended for
smoking, consuming, administering, injecting, ingesting, or
introducing any dangerous drug into the body, during parties,
social gatherings or meetings, or in the proximate company of at
least two (2) persons.

[13]
 Rollo,  pp. 4-5, CA Decision.

[14]
 Id.

[15]
 Id. at 5.
[16]
 Id.

[17]
 CA rollo, p. 16.

[18]
 Rollo, p. 5.

[19]
 Id.

 Id. at 6. Claveron stated 1:00 p.m. while Occeña claimed it was


[20]

at 12:30 p.m. See CA rollo, p. 19 and 25, respectively.

 The date appearing on p. 22 of the RTC Decision was June 6,


[21]

2003 however it should be July 6, 2003 pursuant to the


Information attached.

 Rollo, p. 6. Claveron testified that it was Occeña who received


[22]

the tip while Occeña stated that it was Yumul. See CA rollo, p. 19


and 25, respectively.

[23]
 CA rollo, p. 19.

[24]
 Id. at 22.

 Rollo, p. 6. The complete names of the other police officers are


[25]

not mentioned in any of the documents.

[26]
 Id.

[27]
 CA rollo, p.  19.

[28]
 Rollo, p. 6.

[29]
 CA rollo, p. 23.

[30]
 Rollo, p. 6.

[31]
 Id.
[32]
 Id.

[33]
 Id.

[34]
 CA rollo, p. 23.

[35]
 Rollo, p. 6.

[36]
 Id.

 Id. PO1 Occeña claimed it was shabu while PO2 Yumul held that
[37]

it was marijuana. See CA rollo, p. 26 and 23, respectively.

[38]
 CA rollo, p. 23.

[39]
 Id. and 20.

 PO1 Occeña stated that the pieces of evidence collected were


[40]

"on top of the table" while PO2 Yumul attested that they were
"scattered on the floor." See CA rollo, p. 26 and 23, respectively.

[41]
 CA rollo, p. 20.

[42]
 Id. at 26.

[43]
 Id.

[44]
 Id.

[45]
 Id.

[46]
 Rollo, p. 6 and CA rollo,  p. 20.

[47]
 CA rollo, p. 23.

[48]
 Id. at 24.

[49]
 Id. at 20.
 Id. The substance was misspelled as "methylamphetamine
[50]

hydrochloride."

[51]
 Id.

[52]
 Id. at 21.

 Id. at 25. The RTC Decision reported June 6, 2003. However, it


[53]

should be July 6, 2003, which was the date appearing on the


Information against Segundo.

[54]
 Id. at 27.

[55]
 Id. at 21.

[56]
 Id. at 22.

[57]
 Id.

[58]
 Id. at 18.

[59]
 Id. at 19.

[60]
 Id.

[61]
 Id. at 27.

[62]
 Rollo, p. 7.

[63]
 Id.

[64]
 Id.

[65]
 CA Rollo, p. 27.

[66]
 Id.
[67]
 Id.

[68]
 Id. at 13-35.

[69]
 Id. at 34.

[70]
 Id. at 32.

[71]
 Id.

[72]
 Id.

[73]
 Id. at 34-35.

[74]
 Rollo, p. 7.

[75]
 Id. at 2-14.

[76]
 Id. at 14.

[77]
 Id. at 10.

[78]
 Id.

[79]
 Id.

[80]
 Id. at 15-16.

[81]
 Id. at 1.

[82]
 Id. at 18.

[83]
 CA Rollo, pp. 150-151.

[84]
 Rollo,  p. 31.

[85]
 Id. at 23-24.
[86]
 Id. at 27-28.

[87]
 CA Rollo, pp. 49-69, Brief for the Accused-Appellant.

[88]
 Id. at 58.

[89]
 Id.

[90]
 Id.

[91]
 Id.

[92]
 Id.

[93]
 Id.

[94]
 Id.

[95]
 Id. at 59.

[96]
 Id. at 63.

 Balzamo also spelled as Balsamo. See  CA rollo,  p. 18, RTC


[97]

Decision.

[98]
 CA rollo, pp. 61-63.

[99]
 Id. at 64.

[100] Id.

[101] Id.

[102]
 Id. at 67.

[103] Id.

[104] Id.
[105]
 Id. at 109-127, Brief for the Appellee.

[106]
 Id. at 120.

[107]
 Id. at 122.

[108]
 Id. at 123.

[109]
 Id. at 124.

[110] Id.

[111] Id.

[112] Id.

 People v. Garcia y Ruiz, 599 Phil. 416, 426 (2009) [Per J.


[113]

Brion, Second Division].

 People  v. Sanchez y Espiritu,590 Phil. 214, 230 (2008) [Per J.


[114]

Brion, Second Division].

 People v. Garcia y Ruiz, 599 Phil. 416, 426 (2009) [Per J.


[115]

Brion, Second Division].

 People v. Sanchez y Espiritu, 590 Phil. 214, 230 (2008) [Per J.


[116]

Brion, Second Division].

 People v. Garcia y Ruiz, 599 Phil. 416, 426 (2009) [Per J.


[117]

Brion, Second Division].

[118] Id.

 People  v. Pagaduan y Tamayo, 641 Phil. 432, 442-443 (2010)


[119]

[Per J. Brion, Third Division].

[120] Id.
[121]
 Id. at 447.

[122] Id.

[123] Id.

 People v. Kamad y Ambing,  624 Phil. 289, 300 (2010) [Per J.


[124]

Brion, Second Division].

[125] Id.

 People  v. Dahil,  750 Phil. 212, 226 (2012) [Per J. Mendoza,


[126]

Second Division].

 Guidelines on the Custody and Disposition of Seized Dangerous


[127]

Drugs, Controlled Precursors and Essential Chemicals, and


Laboratory Equipment (2002).

 Lopez v. People,  725 Phil. 499, 507 (2014) [Per J. Perez,


[128]

Second Division].

[129] Id.

[130]
 576 Phil. 576 (2008) [Per J. Tinga, Second Division].

[131]
 Id. at 588-589.

 People v. Garcia y Ruiz, 599 Phil. 416, 426 (2009) [Per J.


[132]

Brion, Second Division].

[133]
 Rollo, p. 6.

 People v. Garcia y Ruiz, 599 Phil. 416, 426-427 (2009) [Per J.


[134]

Brion, Second Division].

[135] Id.
[136] Id.

[137]
 401 Phil. 259 (2000) [Per J. Melo, Third Division].

[138]
 Id. at 273.

 People v. Garcia y Ruiz, 599 Phil. 416, 427 (2009) [Per J.


[139]

Brion, Second Division].

[140] Id.

[141] Id.

[142]
 Comprehensive Dangerous Drugs Act (2002).

 This
[143]
was amended by Republic Act No. 10640
(2013) which provides:

Section 21. Custody and Disposition of Confiscated, Seized,


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of the dangerous drugs
chemicals, instruments/paraphernalia and/or laboratory equipment shall, immed
conduct a physical inventory of the seized items and photograph the same in the pr
from whom such items were confiscated and/or seized, or his/her representativ
official and a representative of the National Prosecution Service or the media who
the inventory and be given a copy thereof: Provided, That the physical inventory a
the place where the search warrant is served; or at the nearest police stat
apprehending officer/team, whichever is practicable, in case of warrantle
noncompliance of these requirements under justifiable grounds, as long as the inte
seized items are properly preserved by the apprehending officer/team, shall not r
and custody over said items.
The Implementing Rules and Regulations of Republic Act No.
10640 was issued on May 28, 2015 and was further amended on
August 3, 2016.

 People v. Morales y Midarasa,  630 Phil. 215, 230 (2010) [Per J.


[144]

Del Castillo, Second Division].

[145]
 CA rollo, p. 26.

[146]
 Id. at 25.

[147]
 Id. at 27.

[148]
 Id. at 19.

[149]
 Id. at 25.

 People  v. Umipang y Abdul, 686 Phil. 1024, 1038 (2012) [Per


[150]

CJ. Sereno, Second Division].

[151] Id.

[152]
 Id. at 1039.

[153]
 Id. at 1050.

[154]
 Id. at 1053.

 Lescano y Carreon v. People, G.R. No. 214490, January 13,


[155]

2016,  < Error! Hyperlink reference not valid. > 12 [Per J.


Leonen, Second Division].

[156]
 Id. at 14.

[157]
 Id. at 12.

[158]
 CA rollo, p. 59.
[159]
 Rollo, p. 4.

[160]
 Id. at 4-5.

 People v. Umipang y Abdul, 686 Phil. 1024, 1049 (2012) [Per


[161]

C.J. Sereno, Second Division].

[162]
 CA rollo, p. 59.

 People v. Umipang y Abdul,  686 Phil. 1024, 1054 (2012) [Per


[163]

C.J. Sereno, Second Division].

[164]
 CA rollo, p. 19.

[165]
 Id. at 25.

[166] Id.

[167]
 Id. at 20.

[168]
 Id. at 23.

[169]
 Id. at 23.

[170]
 Id. at 26.

 People v. Pagaduan y Tamayo, 641 Phil. 432, 446 (2010) [Per


[171]

J. Brion, Third Division].

 People v. Jaafar y Tambuyong,  G.R. No. 219829, January 18,


[172]

2017, < Error! Hyperlink reference not valid. > 8 [Per J.


Leonen, Second Division].

[173] Id.

 People v. Pagaduan y Tamayo, 641 Phil. 432, 447 (2010) [Per


[174]

J. Brion, Third Division].


[175] Id.

[176] Id.

 People v. Dahil, 750 Phil. 212, 238 (2015) [Per J. Mendoza,


[177]

Second Division].

[178] Id.

[179] Id.

 Lescano y Carreon  v. People,  G.R. No. 214490, January 13,


[180]

2016, < Error! Hyperlink reference not valid. > 14 [Per J.


Leonen, Second Division].

 People v. Holgado, 741 Phil. 78, 81 (2014) [Per J. Leonen,


[181]

Third Division].

[182] Id.

[183]
 Id. at 93.

[184]
 Id. at 100.

[185] Id.

Source: Supreme Court E-Library | Date created: October 10, 2017


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Supreme Court E-Library


SECOND DIVISION

[ G.R. No. 210615, July 26, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. ABENIR BRUSOLA Y BARAGWA,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

There is never any justification for a husband to hit his wife with
a maso (mallet).

This resolves the appeal  of the Court of Appeals' July 17, 2013
[1]

Decision,  affirming the February 4, 2010 Decision  of Branch


[2] [3]

206, Regional Trial Court, Muntinlupa City, which found Abenir


Brusola (Abenir) guilty beyond reasonable doubt of parricide
under Article 246 of the Revised Penal Code. The trial court
imposed the penalty of reclusion perpetua and ordered him to
pay the children of the deceased the amount of P50,000.00 as
indemnity and P50,000.00 as moral damages. [4]

In the Information dated July 14, 2006, accused-appellant Abenir


was charged with the killing of his wife, Delia Brusola (Delia), as
follows:

That on or about the 12  day of July 2006, in the City of


th

Muntinlupa, Philippines and within the jurisdiction of this


Honorable Court, the above-named accused, being the husband
of complainant DELIA BRUSOLA y RAMILO, now deceased, with
intent to kill and with the use of ball hammer (maso), did then
and there willfully, unlawfully and feloniously hit his said wife,
DELIA BRUSOLA y RAMILO with the said ball hammer on her
head, thereby causing fatal injury to the latter which directly
caused her death.
Contrary to Law. [5]

On August 1, 2006, accused-appellant Abenir was arraigned and


pleaded not guilty. After pre-trial, trial on the merits ensued.
[6]

The prosecution's version of the events was as follows:

Abenir and Delia's children, Joanne, Abegail, and Kristofer,


 testified that they, together with their parents and other sister
[7]

Jessica, were at home on July 12, 2006, at around 6:45 p.m.


Their house was a one (1)-storey building and had an open sala,
a kitchen, and one (1) bedroom. Kristofer was asleep in the
bedroom. Joanne was eating with her back turned to her father,
who was preparing for work. Jessica, Abegail, and Delia were
watching the television, with Delia seated on the floor near the
toilet. Joanne would occasionally glance at her father and noticed
that he seemed restless. Suddenly, Joanne saw Abenir hit Delia
on the head with a maso. A second blow hit the cement wall.
Joanne yelled, "Tay!" and tried to pacify Abenir, asking why he
did it. Abenir said he saw a man in the bathroom with Delia.
Joanne looked in the bathroom but saw no one. Kristofer was
awoken. When he emerged from the bedroom, he saw his father
still holding the maso while his sisters Joanne and Abigail were
attending to Delia, who was on the floor and had blood on her
head. Kristofer held Abenir. Delia was rushed to the hospital by
their neighbors. Joanne lost consciousness but arose when their
neighbors massaged her head. Abenir was brought to the police
station. The next day, their neighbor Joy Tabarno informed the
Brusola siblings that Delia had passed away.  Dr. Joseph
[8]

Palmero, a medico-legal officer of the Philippine National Police


Crime Laboratory in Camp Crame, testified on the cause of Delia's
death.[9]

The defense's version of the events, as testified by Abenir, is as


follows:
Abenir worked in Saudi Arabia as a mason, a steel man, and a
pipe fitter from 1986 until he returned in 1992, when his sister
informed him that Delia had a paramour. He and his family lived
in Muntinlupa City while he worked for the Makati Development
Corporation until 2001, when he moved them to Batangas where
Delia's family could take care of them, considering that he was
often at work. Sometime in September 2002, at around 2:00
a.m., he was on his way to their house in Batangas when he saw
his brother-in-law on the road. When his brother-in-law saw him,
he ran inside Abenir's house and re-emerged with a shirtless
man. When Abenir went inside, he asked Delia why she was still
awake and who the shirtless man was. Delia just nagged him so
he slept as he was very tired. The following day, he went to the
store, and some men mocked him. Abenir later asked Delia about
the shirtless man again. Delia responded by throwing a glass at
him. Thus, Abenir went back to Alabang in 2006 to avoid mockery
and a fight with his brother-in-law.
[10]

On the night of July 12, 2006, Abenir came home at around 7:00
p.m. or 8:00 p.m. Two (2) of his children were asleep and one
(1) was watching the television. While Abenir was preparing
things, Delia went outside. She appeared to be waiting for
somebody. After taking a bath, she fixed her face. When Abenir
asked if Delia was going somewhere, she said it was none of his
business. Abenir went to the bathroom for his personal effects.
While inside, he heard people talking outside and looked out
through a crack in the plywood wall. He saw a man and a woman
kiss and identified the woman as Delia, who told the man,
"Huwag muna ngayon, nandiyan pa siya." The man embraced
her, and groped her breast and private parts. Abenir picked up
the maso, went outside, and approached them, who were
surprised to see him. Abenir attacked the man who used Delia as
a shield and pushed her toward Abenir, causing them to stumble
on the ground. Delia went inside while Abenir chased the man.
After a failed pursuit, he returned to the house where Joanne
hugged him and inquired what happened. Abenir answered that
Delia was having an affair. He noticed that Kristofer was carrying
Delia whose head was bleeding. He instructed his children to take
her to the hospital. He informed Joanne that he would surrender
and asked his children to call the barangay officials and the
police. He voluntarily went with the officers to the police station
where he learned that Delia was hit on the head. He asserted that
he planned to attack the man whom he saw was with his wife but
accidentally hit Delia instead.[11]

In the Decision  dated February 4, 2010, the trial court found


[12]

Abenir guilty beyond reasonable doubt of the crime charged. The


dispositive portion read:

WHEREFORE, the Court finds accused Abenir Brusola y Baragwa


GUILTY beyond reasonable doubt of the crime of parricide defined
and penalized under Article 246 of the Revised Penal Code, and
he is hereby sentenced to suffer the penalty of reclusion
perpetua.  The accused is likewise ordered to pay the children of
the deceased, Delia Brusola y Ramilo, the amount of P50,000.00
as indemnity and P50,000.00 as moral damages.

In the service of his sentence, the accused shall be credited with


the period of his preventive imprisonment.

SO ORDERED. [13]

Abenir appealed the trial court Decision to the Court of Appeals.


 He argued that there was inconsistency between the
[14]

testimonies of Joanne and Abegail.  Moreover, Joanne, the


[15]

prosecution's lone eyewitness to the attack, purportedly had ill


motive against him since he had opposed her plans of early
marriage.  Further, in imposing the penalty of reclusion
[16]

perpetua,  the trial court did not consider the mitigating


circumstances of passion, obfuscation, and voluntary surrender. [17]

The Court of Appeals found no merit in Abenir's arguments. Thus,


in the Decision  dated July 17, 2013, the Court of Appeals
[18]

affirmed the trial court's findings:


WHEREFORE, the appeal is DISMISSED. The Decision, dated
February 4, 2010, of the Regional Trial Court of Muntinlupa City,
Branch 206, in Criminal Case No. 06-650, is AFFIRMED in toto.

SO ORDERED. [19]

Abenir filed a Notice of Appeal. In compliance with its


Resolution  dated August 23, 2013 which gave due course to
[20]

accused-appellant Abenir's notice of appeal, the Court of Appeals


elevated the records of this case to this Court. In the
Resolution  dated March 10, 2014, this Court directed both the
[21]

Office of the Solicitor General and the Public Attorney's Office to


file their respective supplemental briefs. Both parties filed their
respective manifestations that they would not be filing
supplemental briefs. [22]

After considering the parties' arguments and the records of this


case, this Court resolves to dismiss accused-appellant Abenir's
appeal for failing to show reversible error in the assailed decision.

Article 246 of the Revised Penal Code provides:

Article 246. Parricide. – Any person who shall kill his father,
mother, or child, whether legitimate or illegitimate, or any of his
ascendants, or descendants, or his spouse, shall be guilty of
parricide and shall be punished by the penalty of reclusion
perpetua  to death.

The trial court appreciated the evidence presented by the parties,


considered the credibility of their respective witnesses, and found
that all the elements of the crime of parricide were sufficiently
proved by the prosecution. There was no dispute as to the
relationship between the accused-appellant and the victim.  As [23]

for the act of killing, the trial court held:


With respect to the killing by the accused of his wife, their
daughter Joanne clearly testified that she suddenly saw her father
hit the head of her mother with a small mallet. Joanne's
straightforward and candid narration of the incident is regarded
as positive and credible evidence, sufficient to convict the
accused. Well settled is the rule that it is unnatural for a relative,
in this case the accused's own child, who is interested in
vindicating the crime, to accuse somebody else other than the
real culprit. For her to do so is to let the guilty go free. Where
there is nothing to indicate that witnesses were actuated by
improper motives on the witness stand, their positive declarations
made under solemn oath deserve full faith and credence.
 (Citations omitted)
[24]

Thus, this Court quotes with approval the Court of Appeals'


Decision:

It is hornbook doctrine that the findings of the trial court on the


credibility of witnesses and their testimonies are entitled to the
highest respect. Having seen and heard the witnesses and
observed their behavior and manner of testifying, the trial court
is deemed to have been in a better position to weigh the
evidence. The reason for this is that trial courts have the unique
opportunity to observe the witnesses first hand and note their
demeanor, conduct, and attitude under grilling examination.
Thus, the trial court's evaluation shall be binding on the appellate
court unless it is shown that certain facts of substance and value
have been plainly overlooked, misunderstood, or misapplied.
There is no reason to deviate from the rule.

The alleged inconsistency in the testimonies of Joanne and Abigail


does not affect the credibility of either witness. What Abigail
[and] Joanne were actually doing at the precise moment that
appellant struck his wife with a maso is absolutely insignificant
and unsubstantial to merit consideration . . .  Inconsistencies that
refer only to minor details do not weaken the credibility of
witnesses but are rather signs that the witnesses were not
rehearsed.

What is important is that the prosecution witnesses were


consistent on the principal occurrence and the identity of the
accused. Thus, Joanne narrated in a direct and forthright manner
how she saw appellant hit her mother with a maso on the head
and her testimony is supported by the physical evidence of the
injury sustained by the victim. While Abigail and Kristofer did not
actually see appellant in the act of hitting their mother,
nevertheless, they saw appellant holding the murder weapon and
their mother fallen on the floor with a bloodied head immediately
after the criminal act was committed . . .

The alleged ill motive of Joanne is hardly worthy of consideration


and belief. Joanne and her siblings had lost their mother and they
also stood to lose their father to prison, leaving them virtual
orphans. Assuming that appellant had previously disapproved of
Joanne's early marriage, such would not have been a sufficient
motive for her to wrongly accuse her own father of a heinous
crime . . .  (Citations omitted)
[25]

Moreover, the trial court properly sentenced accused-appellant


Abenir to the penalty of reclusion perpetua.  As appreciated by the
Court of Appeals, where there are mitigating circumstances in a
parricide case, the proper penalty to be imposed is reclusion
perpetual  In People v. Sales,  this Court explained:
[26] [27]

As regards the penalty, parricide is punishable by reclusion


perpetua  to death . . . the presence of only one mitigating
circumstance, which is, voluntary surrender, with no aggravating
circumstance, is sufficient for the imposition of reclusion
perpetua  as the proper prison term. Article 63 of the Revised
Penal Code provides in part as follows:

Art. 63. Rules for the application of indivisible penalties. — . . .


In all cases in which the law prescribes a penalty composed of
two indivisible penalties, the following rules shall be observed in
the application thereof:
....
3. When the commission of the act is attended by some
mitigating circumstance and there is no aggravating
circumstance, the lesser penalty shall be applied.
....

The crime of parricide is punishable by the indivisible penalties


of reclusion perpetua to death. With one mitigating circumstance,
which is voluntary surrender, and no aggravating circumstance,
the imposition of the lesser penalty of reclusion perpetua and not
the penalty of death on appellant was thus proper.  (Citation
[28]

omitted)

Accused-appellant Abenir cited People v. Genosa  to support the


[29]

imposition of a lower penalty in light of the mitigating


circumstance.  True, this Court in Genosa  applied Article 64 of
[30]

the Revised Penal Code, instead of Article 63, to determine the


penalty for parricide:

The penalty for parricide imposed by Article 246 of the Revised


Penal Code is reclusion perpetua to death. Since two mitigating
circumstances and no aggravating circumstance have been found
to have attended the commission of the offense, the penalty shall
be lowered by one (1) degree, pursuant to Article 64 of
paragraph 5 of the same Code. The penalty of reclusion
temporal in its medium period is imposable, considering that two
mitigating circumstances are to be taken into account in reducing
the penalty by one degree, and no other modifying circumstances
were shown to have attended the commission of the offense.
Under the Indeterminate Sentence Law, the minimum of the
penalty shall be within the range of that which is next lower in
degree — prision mayor  — and the maximum shall be within the
range of the medium period of reclusion temporal.
Considering all the circumstances of the instant case, we deem it
just and proper to impose the penalty of prision mayor in its
minimum period, or six (6) years and one (1) day in prison as
minimum; to reclusion temporal in its medium period, or 14
years 8 months and 1 day as maximum. Noting that appellant
has already served the minimum period, she may now apply for
and be released from detention on parole.  (Citations omitted)
[31]

However, there is no basis to apply Article 64 to the crime of


parricide. Articles 63 and 64 of the Revised Penal Code provide:

Article 63. Rules for the Application of Indivisible Penalties. — In


all cases in which the law prescribes a single indivisible penalty, it
shall be applied by the courts regardless of any mitigating or
aggravating circumstances that may have attended the
commission of the deed.

In all cases in which the law prescribes a penalty composed of


two indivisible penalties, the following rules shall be observed in
the application thereof:

1. When in the commission of the deed there is present only


one aggravating circumstance, the greater penalty shall be
applied.
2. When there are neither mitigating nor aggravating
circumstances in the commission of the deed, the lesser
penalty shall be applied.
3. When the commission of the act is attended by some
mitigating circumstance and there is no aggravating
circumstance, the lesser penalty shall be applied.
4. When both mitigating and aggravating circumstances
attended the commission of the act, the courts shall
reasonably allow them to offset one another in consideration
of their number and importance, for the purpose of applying
the penalty in accordance with the preceding rules,
according to the result of such compensation.
Article 64. Rules for the Application of Penalties Which Contain
Three Periods.  — In cases in which the penalties prescribed by
law contain three periods, whether it be a single divisible penalty
or composed of three different penalties, each one of which forms
a period in accordance with the provisions of articles 76 and 77,
the courts shall observe for the application of the penalty the
following rules, according to whether there are or are not
mitigating or aggravating circumstances:

1. When there are neither aggravating nor mitigating


circumstances, they shall impose the penalty prescribed by
law in its medium period.
2. When only a mitigating circumstance is present in the
commission of the act, they shall impose the penalty in its
minimum period.
3. When only an aggravating circumstance is present in the
commission of the act, they shall impose the penalty in its
maximum period.
4. When both mitigating and aggravating circumstances are
present, the court shall reasonably offset those of one class
against the other according to their relative weight.
5. When there are two or more mitigating circumstances and
no aggravating circumstances are present, the court shall
impose the penalty next lower to that prescribed by law, in
the period that it may deem applicable, according to the
number and nature of such circumstances.
6. Whatever may be the number and nature of the aggravating
circumstances, the courts shall not impose a greater penalty
than that prescribed by law, in its maximum period.
7. Within the limits of each period, the courts shall determine
the extent of the penalty according to the number and
nature of the aggravating and mitigating circumstances and
the greater or lesser extent of the evil produced by the
crime.
Considering that the penalty for parricide consists of two (2)
indivisible penalties—reclusion perpetua to death—Rule 63, and
not Rule 64, is applicable. Thus, the penalty of reclusion
perpetua  was properly imposed.

In line with current jurisprudence,  the civil indemnity and the


[32]

moral damages awarded to the victim's children are increased to


P75,000.00 each and P75,000.00 as exemplary damages is
added.

The promise of forever is not an authority for the other to own


one's spouse. If anything, it is an obligation to love and cherish
despite his or her imperfections. To be driven to anger, rage, or
murder due to jealousy is not a manifestation of this sacred
understanding. One who professes love should act better than
this. The accused-appellant was never entitled to hurt, maim, or
kill his spouse, no matter the reasons. He committed a crime. He
must suffer its consequences.

WHEREFORE, this Court ADOPTS the findings of fact and


conclusions of law of the Court of Appeals in its July 17, 2013
Decision in CA-G.R. CR-HC No. 04419. Accused-appellant Abenir
Brusola y Baragwa is GUILTY beyond reasonable doubt of
parricide under Article 246 of the Revised Penal Code, as
amended, and is sentenced to reclusion perpetua. The assailed
decision is AFFIRMED with MODIFICATION in that the heirs of
the victim are entitled to P75,000.00 as civil indemnity,
P75,000.00 as moral damages, and P75,000.00 as exemplary
damages. The award of damages shall earn interest at the rate of
six percent (6%) per annum from the date of finality of the
judgment until fully paid.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires,


JJ., concur.
 The appeal was filed under RULES OF COURT, Rule 124, sec.
[1]

13(c).

 Rollo, pp. 2-11. The Decision, docketed as CA-G.R. CR-HC No.


[2]

04419, was penned by Associate Justice Melchor Q.C. Sadang and


concurred in by Associate Justices Celia C. Librea-Leagogo and
Franchito N. Diamante of the Fifteenth Division, Court of Appeals,
Manila.

 CA rollo,  pp. 15-27. The Decision, docketed as Criminal Case


[3]

No. 06-650, was penned by Judge Patria A. Manalastas-De Leon


of Branch 206, Regional Trial Court, Muntinlupa City.

[4]
 Id. at 26-27.

[5]
 Id. at 15.

[6]
 Id.

[7]
 Id. at 16-20.

[8]
 Rollo, p. 4.

[9]
 Id. at 4-5.

[10]
 Id. at 5-6.

[11]
 Id. at 6.

[12]
 CA rollo, pp. 15-27.

[13]
 Id. at 26-27.

[14]
 Id. at 34-45.

[15]
 Id. at 41.
[16]
 Id.

[17]
 Id. at 43.

[18]
 Rollo,  pp. 2-11.

[19]
 Id. at 11.

[20]
 Id. at 1.

[21]
 Id. at 17.

 Id. at 20-22, OSG Manifestation submitted on May 22,


[22]

2014; rollo, pp. 23-25, PAO Manifestation  submitted on May 30,


2014.

[23]
 CA rollo, p. 24.

[24]
 Id. at 24-25.

[25]
 Rollo, pp. 8-9.

 See People v. Arnante, 439 Phil. 754 (2002) [Per J. Vitug, First


[26]

Division], People v. Joyno, 364 Phil. 305 (1999) [Per J. Gonzaga-


Reyes, En Banc].

[27]
 674 Phil. 150 (2011) [Per J. Del Castillo, First Division].

[28]
 Id. at 166.

[29]
 464 Phil. 680 (2004) [Per J. Panganiban, En Banc].

[30]
 CA rollo, pp. 76-77, Brief for the Accused-appellant.

 People v. Genosa, 464 Phil. 680, 746-747 (2004)[Per J.


[31]

Panganiban, En Banc].
 People v. Jugueta,  G.R. No. 202124, April 5, 2016, < Error!
[32]

Hyperlink reference not valid. > [Per J. Peralta, En Banc].

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SECOND DIVISION

[ G.R. No. 205855, March 29, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. KING REX A. AMBATANG,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

In an Information dated November 28, 2002, accused-appellant


King Rex Ambatang (Ambatang) was charged with the murder  of [1]

60-year-old Ely Vidal (Vidal), as follows:


That, on or about the 17  day of October, 2002, in the
th

Municipality of Taguig City, Metro Manila, Philippines and within


the jurisdiction of this Honorable Court, the above-named
accused with intent to kill and with the use of a knife, a deadly
weapon, did, then and there wilfully, unlawfully and feloniously
assault and stab ELY VIDAL y PELEJO, hitting the latter in
different parts of his body, thereby inflicting upon him fatal
injuries which caused his instantaneous death, the said killing
having been attended by the qualifying circumstances of
treachery, evident premeditation and abuse of superior strength
which qualify such killing to murder, aggravated by the
circumstances of insult and disregard of the respect due the
offended party due to his age and nighttime.

CONTRARY TO LAW. [2]

According to the prosecution, on October 17, 2002, at around


10:30 p.m., Jennifer Vidal Mateo  (Jennifer) was at the kitchen of
[3]

their house in Taguig with her cousins when she heard a barrage
of stones hurled at their house.  She peeked out of the window
[4]

and saw Ambatang standing outside with a certain


"Loui."  Melody Vidal Navarro (Melody) immediately called
[5]

barangay tanods, who then immediately went to Ambatang's


house, just across the Vidals' house.  While Ambatang's mother,
[6]

Nicepura Ambatang, was speaking to a tanod, another tanod,


Romeo Acaba (Acaba), saw Ambatang sharpening a knife in their
kitchen.  Suddenly, Ambatang was nowhere to be found and
[7]

appeared to have sneaked past the tanods before running


towards the Vidals' house.  Later, Ambatang was on top of Vidal
[8]

and was stabbing him repeatedly with a kitchen knife. Ambatang


ran away but was apprehended by the tanods.  The victim was [9]

pronounced dead on arrival at Pasig Provincial Hospital.  Post- [10]

mortem findings issued by Dr. Rolando C. Victoria stated that the


cause of death was stab wounds to the chest. [11]

Jennifer and Acaba testified that they personally saw the killing.
 Vidal's wife, Carmelita Vidal (Carmelita), testified that after her
[12]

husband was stabbed, the victim was able to get near her,
embrace her, and tell her, "Si King Rex sinaksak ako ng
sinaksak." [13]

In his defense, Ambatang claimed that he was at AMA Computer


Learning Center on October 17, 2002 from 3:00 p.m. to 8:00
p.m., and did not get home until 9:30 p.m.  He stated that while[14]

he was doing the laundry, barangay tanods went to their house


looking for a person named Louie.  He then heard a noise from a
[15]

commotion outside his house.  His mother and sister went out
[16]
and instructed him to stay in the sala with his girlfriend, Gina
Canapi.  Minutes later, he went out to see his friend Rey Lobo
[17]

(Lobo), who lived roughly eight to ten meters from their house.
 Lobo was not there, but he was able to speak to a certain Rael
[18]

for a few seconds.  He then left Lobo's house and was arrested
[19]

by the barangay tanods on his way home. [20]

In support of Ambatang's testimony, his mother and his girlfriend


both testified that Ambatang was inside the house when the
stabbing occurred. [21]

In the Decision  dated April 5, 2010, the Regional Trial Court,


[22]

Branch 163, Pasig City found Ambatang guilty of murder and


sentenced him to suffer the penalty of reclusion perpetua. It also
ordered the payment of P50,000.00 as civil indemnity,
P29,000.00 as actual damages, P50,000.00 as moral damages,
and P30,000.00 as temperate or moderate damages, as well as
costs and legal interest from the time the Information was filed
until fully paid. The dispositive portion of the Decision reads:
WHEREFORE, accused King Rex A. Ambatang is hereby found
GUILTY beyond reasonable doubt of the crime of Murder, defined
and penalized under Article 248 of the Revised Penal Code and,
there being no mitigating or aggravating circumstance, is
sentenced to suffer the penalty of reclusion perpetua and all the
effects thereof as provided by law. He is further ordered to pay
the victim's heirs Php50,000.00 as civil indemnity; Php29,000.00
as actual damages; Php50,000.00 by way of moral damages;
Php30,000.00 as temperate or moderate damages and to pay the
costs, at the legal rate of interest from the time of the filing of
the Information until fully paid.

SO ORDERED. [23]

On appeal, the Court of Appeals, in its assailed July 31, 2012


Decision,  upheld Ambatang's conviction. However, it modified
[24]

the Regional Trial Court Decision to include an award of


P30,000.00 as exemplary damages and deleted the award of
P30,000.00 as temperate damages, there having already been an
award of actual damages. The dispositive portion of the Decision
reads:
WHEREFORE, the appeal is DISMISSED. The assailed Decision
of the Regional Trial Court of Pasig City, Branch 163, Taguig City
Station in Criminal Case No. 124748-H,
is AFFIRMED with MODIFICATIONS. Accused-appellant King
Rex Ambatang is found guilty beyond reasonable doubt
of MURDER and is hereby sentenced to suffer the penalty
of reclusion perpetua. Accused-appellant is further ORDERED to
pay the heirs of Ely Vidal P50,000.00, as civil indemnity,
P50,000.00, as moral damages, P29,000.00, as actual damages,
and P30,000.00, as exemplary damages. The award of
P30,000.00 as temperate damages is DELETED.

SO ORDERED. [25]

Ambatang then filed his Notice of Appeal. [26]

The Court of Appeals elevated the records of the case to this


Court on March 8, 2013, pursuant to its Resolution dated
September 24, 2012.  The Resolution gave due course to the
[27]

Notice of Appeal filed by Ambatang. [28]

In the Resolution  dated April 10, 2013, this Court noted the
[29]

records forwarded by the Court of Appeals and informed the


parties that they could file their supplemental briefs.

On June 3, 2013, the Office of the Solicitor General filed a


Manifestation,  on behalf of the People of the Philippines, stating
[30]

that it would no longer file a supplemental brief.

On August 5, 2013, accused-appellant filed his Supplemental


Brief.
[31]

For resolution is the sole issue of whether accused-appellant


Ambatang is guilty beyond reasonable doubt of murder.

It is settled that "factual findings of the trial court and its


evaluation of the credibility of witnesses and their testimonies are
entitled to great respect and will not be disturbed on appeal,
unless the trial court is shown to have overlooked,
misapprehended, or misapplied any fact or circumstance of
weight and substance."  An examination of the records shows
[32]

there is nothing that would warrant the reversal of the Decisions


of the Regional Trial Court and of the Court of Appeals.

The testimonies of the prosecution witnesses are sufficient to


convict accused-appellant. The Regional Trial Court and the Court
of Appeals made definitive findings that Jennifer and Acaba made
positive, unequivocal, and categorical identifications of accused-
appellant as the person who stabbed the deceased Vidal.

As against these, accused-appellant offered denial and alibi as


defenses, which jurisprudence has long considered weak and
unreliable. As noted by the Court of Appeals:
Accused-appellant also offered alibi as a defense. He asserts that
he was at home when the stabbing incident happened. We
reiterate once more the oft-repeated rule that the defense of alibi
is worthless in the face of positive identification. Thus:
It is well settled that positive identification by the prosecution
witnesses of the accused as perpetrators of the crime is entitled
to greater weight than their denials and alibis.
True, accused-appellant's alibi was corroborated by Gina Canapi
and Nicepura Ambatang. However, an alibi, especially when
corroborated mainly by relatives and friends of the accused, is
held by this Court with extreme suspicion for it is easy to
fabricate and concoct. Thus, in People v. Albalate, the Supreme
Court in rejecting accused's alibi explained:
The alibi proffered by the appellant must be rejected. Both the
trial court and the Court of Appeals correctly noted that appellant
failed to make any mention about this alleged alibi when he was
placed on the witness stand. It was only when defense witness
Florentina Escleto (Escleto) testified that this alibi cropped up. At
any rate, the same deserves no consideration at all. Escleto
claimed to be a friend of the appellant. It is settled jurisprudence
that an alibi "becomes less plausible when it is corroborated by
relatives and friends who may not be impartial witnesses".
Furthermore, for the defense of alibi to prosper, the accused
must prove not only that he was at some other place at the time
of the commission of the crime but also that it was physically
impossible for him to be at the locus delicti or within its
immediate vicinity. The excuse must be so airtight that it would
admit of no exception. Where there is the least possibility of
accused-appellant's presence at the crime scene, as in this case,
the alibi will not hold water.

In fine, the age-old rule is that the task of assigning values to the
testimonies of witnesses and weighing their credibility is best left
to the trial court which forms first-hand impressions as witnesses
testify before it. It is thus no surprise that findings and
conclusions of trial courts on the credibility of witnesses enjoy, as
a rule, a badge of respect, for trial courts have the advantage of
observing the demeanor of witnesses as they testify. We
thoroughly review the records of the case, including the transcript
of stenographic notes and we find no cogent reason to overturn
the probative value given by the trial court on the testimonies of
the prosecution witnesses. Hence, we sustain the guilty verdict
against herein accused-appellant. [33]

In addition, accused-appellant attributed ill motive on the part of


prosecution witness Carmelita. However, as the Court of Appeals
explained, accused-appellant's conviction was not based on the
testimony of Carmelita, but on the testimonies of eyewitnesses
Jennifer and Acaba, "whose credibility was never assailed by
accused-appellant." [34]

Accused-appellant assails the supposed inconsistencies in the


statements of Jennifer and Acaba, that is, their statements on
how accused-appellant left his residence and stabbed Vidal, and
on the specific number of times that they saw Vidal get stabbed
by accused-appellant.  These inconsistencies, however, are too
[35]

minor. They are ultimately ineffectual in absolving accused-


appellant of liability.

In People v. Bagaua: [36]


[W]e have time and again said that a few discrepancies and
inconsistencies in the testimonies of witnesses referring to minor
details and not actually touching upon the central fact of the
crime do not impair the credibility of the witnesses. Instead of
weakening their testimonies, such inconsistencies tend to
strengthen their credibility because they discount the possibility
of their being rehearsed.[37]

Regardless of Jennifer and Acaba's supposed discrepancies on


how accused-appellant left his residence to stab Vidal and the
exact number of times they saw him stab Vidal, what ultimately
matters is that they witnessed how accused-appellant stabbed
Vidal.

Accused-appellant also makes a brief reference (devoting a


singular paragraph in his Supplemental Brief) to the
circumstances of his apprehension and how the knife used in the
stabbing was never recovered.  Again, these are too minor and
[38]

do not suffice to absolve accused-appellant of liability. Finding an


accused in possession of the weapon used to kill and
apprehending him or her in such a manner that his or her
participation in a murder is conspicuous, is not among the
requisites to be convicted of murder.

Treachery is present to qualify Vidal's killing to murder. As


pointed out by the Regional Trial Court:
Accused employed treachery when he attacked the victim. This is
shown by the suddenness of the attack against the unarmed
victim, without the slightest provocation on the latter's part and
opportunity to defend himself. Accused was a tall, young man
with a sturdy physique. Armed with a sharp bladed weapon, he
attacked and repeatedly stabbed the victim who was at that time
sixty years old and inferior in size and built compared to him.[39]

Thus, this Court resolves to dismiss accused-appellant's appeal


for failure to sufficiently show reversible error in the challenged
Decision to warrant the exercise of this Court's appellate
jurisdiction.
Due to the heinousness of the crime, and in view of People v.
Jugueta,  where this Court increased the award of civil
[40]

indemnity, moral damages, and exemplary damages, we exercise


our judicial prerogative and increase the damages to P100,000.00
as civil indemnity, P100,000.00 as moral damages, and
P100,000.00 as exemplary damages, for each of the offenses for
which accused-appellant is convicted.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R.


CR-HC No. 04485 is AFFIRMED with MODIFICATION. We find
accused-appellant King Rex A. Ambatang GUILTY beyond
reasonable doubt of the crime of murder, defined and penalized
under Article 248 of the Revised Penal Code, as amended. He
is SENTENCED to suffer the penalty of reclusion
perpetua without eligibility for parole, with all the accessory
penalties provided by law, and to pay the heirs of Ely Vidal the
amounts of P100,000.00 as indemnity for his death, P100,000.00
as moral damages, and P100,000.00 as exemplary damages.

All monetary awards for damages shall earn interest at the legal
rate of six percent (6%) per annum from the date of the finality
of this judgment until fully paid.

SO ORDERED.

Carpio, (Chairperson), Reyes,  and Martires, JJ., concur.


**

Mendoza, J., on official leave.

**
 Designated additional member per Raffle dated March 29, 2017.

[1]
 REV. PEN. CODE, art. 248 provides:

Murder. - Any person who, not falling within the provisions of


article 246 shall kill another, shall be guilty of murder and shall
be punished by reclusion temporal in its maximum period to
death, if committed with any of the following attendant
circumstances:
1. With treachery, taking advantage of superior strength, with
the aid of armed men, or employing means to weaken the
defense or of means or persons to insure or afford impunity.
2. In consideration of a price, reward, or promise.
3. By means of inundation, fire, poison, explosion, shipwreck,
stranding of a vessel, derailment or assault upon a street car
or locomotive, fall of an airship, by means of motor vehicles,
or with the use of any other means involving great waste
and ruin.
4. On occasion of any of the calamities enumerated in the
preceding paragraph, or of an earthquake, eruption of a
volcano, destructive cyclone, epidemic, or other public
calamity.
5. With evident premeditation.
6. With cruelty, by deliberately and inhumanly augmenting the
suffering of the victim, or outraging or scoffing at his person
or corpse.
 Rollo, pp. 2-3
[2]

[3]
 Erroneously referred to as "Jennifer Mendoza" in the CA decision

[4]
 Id. at 3.

[5]
 Id.

[6]
 Id. at 3-4.

[7]
 Id. at 4.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.
[12]
 CA rollo, p. 39.

[13]
 Id.

[14]
 Id. at 4.

[15]
 Id. at 4-5.

[16]
 Id. at 5.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id. at 5.

 CA rollo, pp. 36-41. The decision was penned by Judge Leili


[22]

Cruz Suarez of Branch 163, Regional Trial Court of Pasig City.

[23]
 Id. at 41.

 Rollo, pp. 2-14. The decision was penned by Associate Justice


[24]

Angelita A. Gacutan and concurred in by Associate Justices


Fernanda Lampas Peralta and Francisco P. Acosta of the Tenth
Division, Court of Appeals Manila.

[25]
 Id. at 13.

[26]
 Id. at 15.

[27]
 Id. at 1.

[28]
 Id.
[29]
 Id. at 18.

[30]
 Id. at 19.

[31]
 Id. at 34-40.

 People v. De Jesus, 695 Phil. 114, 122 (2012) [Per J. Brion,


[32]

Second Division] citing People v. Jubail, 472 Phil. 527, 546


(2004) [Per J. Carpio, First Division].

 Rollo, pp. 8-10, citing People v. Bracamonte, 327 Phil. 160


[33]

(1996) [Per J. Hermosisima, Jr., First Division]; People v. Tomas,


658 Phil. 653 (2011) [Per J. Velasco, Jr., First Division]; People v.
Malones, 469 Phil. 301 (2004) [Per J. Callejo, Sr., Second
Division]; People v. Albalate, 623 Phil. 437 (2009) [Per J. Del
Castillo, Second Division]; People v. Delim, 559 Phil. 771 (2007)
[Per J. Garcia, First Division]; See People v. Bracamonte, 327
Phil. 160 (1996) [Per J. Hermosisima, Jr., First Division];
and People v. Del Rosario, 657 Phil. 637 (2011) [Per J. Nachura,
Second Division]

[34]
 Id. at 7.

[35]
 Id. at 36-37.

[36]
 442 Phil. 245 (2002) [Per J. Ynares-Santiago, First Division].

 Id. at 255, citing People v. Givera, 402 Phil. 547, 566 (2001)


[37]

[Per J. Mendoza, Second Division].

[38]
 Rollo, p. 37.

[39]
 CA rollo, pp. 40-41.

 G.R.
[40]
No. 202124, April 5, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
flle=/jurisprudence/2016/april2016/202124.pdf> [Per J. Peralta,
En Banc].

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796 Phil. 79
SECOND DIVISION

[ G.R. No. 185765, September 28,


2016 ]
PHILIPPINE ECONOMIC ZONE AUTHORITY,
PETITIONER, VS. PILHINO SALES CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

Although the provisions of a contract are legally null and void, the
stipulated method of computing liquidated damages may be
accepted as evidence of the intent of the parties. The provisions,
therefore, can be basis for finding a factual anchor for liquidated
damages. The liable party may nevertheless present better
evidence to establish a more accurate basis for awarding
damages. In this case, the respondent failed to do so.

This resolves a Petition for Review on Certiorari  praying that the


[1]

assailed May 2, 2008 Decision  and November 25, 2008


[2]
Resolution  of the Court of Appeals in CA G.R. CV No. 86406 be
[3]

reversed and set aside and that the Decision  dated November 2,
[4]

2005 of Branch 108 of the Regional Trial Court of Pasay City in


Civil Case No. 00-0343 be reinstated.

The Regional Trial Court's November 2, 2005 Decision ruled in


favor of petitioner Philippine Economic Zone Authority, which, as
plaintiff, brought an action for rescission of contract and damages
against the defendant, now respondent Pilhino Sales Corporation
(Pilhino).
[5]

The assailed Court of Appeals Decision partly granted Pilhino's


appeal by reducing the amount of liquidated damages due from it
to the Philippine Economic Zone Authority, and by deleting the
forfeiture of its performance bond.  The assailed Court of Appeals
[6]

Resolution denied the Philippine Economic Zone Authority's


Motion for Reconsideration. [7]

The facts are not disputed, and all that is in issue is the
consequence of Pilhino's contractual breach.

On October 4, 1997, the Philippine Economic Zone Authority


published an invitation to bid in the Business Daily for its
acquisition of two (2) brand new fire truck units "with a capacity
of 4,000-5,000 liters [of] water and 500-1,000 liters [of chemical
foam,] with complete accessories." [8]

Three (3) companies participated in the bidding: Starbilt


Enterprise, Inc., Shurway Industries, Inc., and Pilhino.  Pilhino
[9]

secured the contract for the acquisition of the fire trucks.  The [10]

contract price was initially at P3,000,000.00 per truck, but this


was reduced after negotiation to P2,900,000.00 per truck. [11]

The contract awarded to Pilhino stipulated that Pilhino was to


deliver to the Philippine Economic Zone Authority two (2) FF3HP
brand fire trucks within 45 days of receipt of a purchase order
from the Philippine Economic Zone Authority.  A further
[12]

stipulation stated that "[i]n case of fail[u]re to deliver the . . .


good on the date specified . . . , the Supplier agree[s] to pay
penalty at the rate of 1/10 of 1% of the total contract price for
each days [sic] commencing on the first day after the date
stipulated above." [13]

The Philippine Economic Zone Authority furnished Pilhino with a


purchase order dated November 6, 1997.  Pilhino failed to deliver
[14]

the trucks as it had committed.  This prompted the Philippine


[15]

Economic Zone Authority to make formal demands on Pilhino on


July 27, 1998  and on February 23, 1999.  As Pilhino still failed
[16] [17]

to comply, the Philippine Economic Zone Authority filed before the


Regional Trial Court of Pasay City a Complaint  for rescission of [18]

contract and damages. This was docketed as Civil Case No. 00-
0343 and raffled to Branch 108. [19]

In its defense, Pilhino claimed that there was no starting date


from which its obligation to deliver could be reckoned,
considering that the Complaint supposedly failed to allege
acceptance by Pilhino of the purchase order.  Pilhino suggested [20]

that there was not even a meeting of minds between it and the
Philippine Economic Zone Authority. [21]

In its November 2, 2005 Decision,  the Regional Trial Court ruled


[22]

for the Philippine Economic Zone Authority. The dispositive


portion of the Decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
and against the defendant ordering the latter to:
1. Pay the plaintiff in liquidated damages a[t] the rate of 1/10
of 1% of the total contract price of Php 5,800,000.00 for
each day of delay commencing from June 19, 1998.
2. Pay the plaintiff exemplary damages in the amount of Php
100,00[0].00.
3. That the contract be declared rescinded and the
performance bond posted by the defendant be forfeited in
favor of the plaintiff.
4. For defendant to pay the cost of the suit.
SO ORDERED. [23]

Pilhino then appealed before the Court of Appeals.


In its assailed May 2, 2008 Decision,  the Court of Appeals partly
[24]

granted Pilhino's appeal by deleting the forfeiture of Pilhino's


performance bond and pegging the liquidated damages due from
it to the Philippine Economic Zone Authority in the amount of
P1,400,000.00.

The Court of Appeals debunked Pilhino's claim that there was no


meeting of minds. It emphasized that Pilhino "manifested its
acquiescence . . . [to] the Purchase Order . . . when it submitted
to [the Philippine Economic Zone Authority] a Performance Bond
dated 02 June 1999 and Indemnity Agreement dated 09 June
1998 duly signed by its Vice President."  It added that in a
[25]

subsequent letter dated March 29, 1999  "signed by [Pilhino's]


[26]

Hino Division Manager Edgar R. Santiago and noted by VP-


Operations Roberto R. Garcia, [Pilhino] admitted that it can no
longer meet the requirements regarding the specification on the
two (2) units of fire truck[s]."
[27]

In this March 29, 1999 letter, Pilhino not only acknowledged its
inability to meet its obligations but also proposed a modified
arrangement with the Philippine Economic Zone Authority:
[P]lease allow us to submit our new proposal for your
consideration (please see attached specifications). Our price for
this new specification if P3,600,000.00/unit. However, we are
willing to shoulder the difference between the original price of
P2,900,000.00/unit and P3,600,000.00 in lieu of the penalty. May
we also request your good office to stop the accumulation of the
penalty [.]
[28]

In calibrating the amount of liquidated damages, the Court of


Appeals cited Articles 1229  and 2227  of the Civil Code. It
[29] [30]

reasoned that through its March 29, 1999 letter, Pilhino made an
attempt at rectification or mitigation:
In the instant case, we consider the supervening reality that after
appellant's failure to deliver to appellee the two (2) brand new
units of fire trucks in accordance with the specifications
previously agreed upon, appellant nevertheless tried to remedy
the situation by offering to appellee new specifications at
P3,600,000.00 per unit; and expressed willingness to shoulder
the difference between the original price (based on the contract)
of P2,900,000.00 per unit and the price corresponding to the new
specifications. Further, it is undisputed that appellee has not paid
any amount to appellant in connection with said undelivered two
(2) brand new units of fire trucks. We thus equitably reduce said
liquidated damages to P1,400,000.00, which is the difference
between the contract price of P5,800,000.00 and P7,200,000.00
based on the new specifications for two (2) new units of fire
trucks.[31]

The Philippine Economic Zone Authority moved for


reconsideration of the modifications to the Regional Trial Court's
award. As this Motion was denied in the Court of Appeals' assailed
November 25, 2008 Resolution,  the Philippine Economic Zone
[32]

Authority filed the present Petition.

Petitioner asks for the reinstatement of the Regional Trial Court's


award asserting that it already suffered damage when respondent
Pilhino Sales Corporation failed to deliver the trucks on time;
 that the contractually stipulated penalty of 1/10 of 1% of the
[33]

contract price for every day of delay was neither


unreasonable  nor contrary to law, morals, or public order;  that
[34] [35]

the stipulation on liquidated damages was freely entered into by


it and respondent;  and that the Court of Appeals' computation
[36]

had no basis in fact and law.  Regarding respondent's supposed


[37]

attempt at mitigation, petitioner notes that by the time the offer


was made, the Complaint for rescission and damages had already
been filed  and was, therefore, inconsequential and hardly a
[38]

remedy.

Commenting on petitioner's Petition,  respondent raises the


[39]

question of:
Whether or not a contract can be rescinded and declared void ab
initio, and then thus rescinded, can a stipulation for liquidated
damages or penalty contained in that very same contract be
given separate life, force and effect, that is, separate and distinct
from the rescinded and voided contract itself? [40]
Therefore, respondent suggests that with the rescission of its
contract with petitioner must have come the negation of the
contractual stipulation on liquidated damages and the obliteration
of its liability for such liquidated damages. [41]

We resolve the twin issues of:

First, the propriety of an award based on contractually stipulated


liquidated damages notwithstanding the rescission of the same
contract stipulating it; and

Second, on the assumption that such award is proper, the


propriety of the Court of Appeals' reduction of the liquidated
damages due to petitioner.

Respondent's intimation that with the rescission of a contract


necessarily and inexorably follows the obliteration of liability for
what the same contracts stipulates as liquidated damages  is [42]

entirely misplaced.

A contract of. sale, such as that entered into by petitioner and


respondent, entails reciprocal obligations. As explained
in Spouses Velarde v. Court of Appeals,  "[i]n a contract of sale,
[43]

the seller obligates itself to transfer the ownership of and deliver


a determinate thing, and the buyer to pay therefor a price certain
in money or its equivalent."[44]

Rescission on account of breach of reciprocal obligations is


provided for in Article 1191 of the Civil Code:
Article 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.

The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third


persons who have acquired the thing, in accordance with articles
1385 and 1388 and the Mortgage Law. (Emphasis supplied)
Respondent correctly notes that rescission under Article 1911
results in mutual restitution. Jurisprudence has long settled that
the restoration of the contracting parties to their original state is
the very essence of rescission. In Spouses Velarde:
Considering that the rescission of the contract is based on Article
1191 of the Civil Code, mutual restitution is required to bring
back the parties to their original situation prior to the inception of
the contract. Accordingly, the initial payment of P800,000 and the
corresponding mortgage payments . . . should be returned by
private respondents, lest the latter unjustly enrich themselves at
the expense of the former.

Rescission creates the obligation to return the object of the


contract. It can be carried out only when the one who demands
rescission can return whatever he may be obliged to restore. To
rescind is to declare a contract void at its inception and to put an
end to it as though it never was. It is not merely to terminate it
and release the parties from further obligations to each other, but
to abrogate it from the beginning and restore the parties to their
relative positions as if no contract has been made.  (Citations
[45]

omitted)
Laperal v. Solid Homes, Inc.  has explained how the restitution
[46]

spoken of in rescission under Article 1385 of the Civil Code


equally holds true for rescission under Article 1191 of the Civil
Code:
Despite the fact that Article 1124 of the old Civil Code from
whence Article 1191 was taken, used the term "resolution", the
amendment thereto (presently, Article 1191) explicitly and clearly
used the term "rescission". Unless Article 1191 is subsequently
amended to revert back to the term "resolution", this Court has
no alternative but to apply the law, as it is written.

Again, since Article 1385 of the Civil Code expressly and clearly
states that "rescission creates the obligation to return the things
which were the object of the contract, together with their fruits,
and the price with its interest," the Court finds no justification to
sustain petitioners' position that said Article 1385 does not apply
to rescission under Article 1191.

In Palay, Inc. vs. Clave, this Court applied Article 1385 in a case
involving "resolution" under Article 1191, thus:
Regarding the second issue on refund of the installment
payments made by private respondent. Article 1385 of the Civil
Code provides:
"ART. 1385. Rescission creates the obligation to return the things
which were the object of the contract, together with their fruits,
and the price with its interest; consequently, it can be carried out
only when he who demands rescission can return whatever he
may be obliged to restore.

"Neither shall rescission take place when the things which are the
object of the contract are legally in the possession of third
persons who did not act in bad faith.

"In this case, indemnity for damages may be demanded from the
person causing the loss."
As a consequence of the resolution by petitioners, rights to the lot
should be restored to private respondent or the same should be
replaced by another acceptable lot. However, considering that the
property had already been sold to a third person and there is no
evidence on record that other lots are still available, private
respondent is entitled to the refund of installments paid plus
interest at the legal rate of 12% computed from the date of the
institution of the action. It would be most inequitable if
petitioners were to be allowed to retain private respondent's
payments and at the same time appropriate the proceeds of the
second sale to another.
Applying the clear language of the law and the consistent
jurisprudence on the matter, therefore, the Court rules that
rescission under Article 1191 in the present case, carries with it
the corresponding obligation of restitution.  (Citations omitted)
[47]

Contrary to respondent's assertion, mutual restitution under


Article 1191 is, however, no license for the negation of
contractually stipulated liquidated damages.

Article 1191 itself clearly states that the options of rescission and
specific performance come with "with the payment of damages in
either case." The very same breach or delay in performance that
triggers rescission is what makes damages due.

When the contracting parties, by their own free acts of will,


agreed on what these damages ought to be, they established the
law between themselves. Their contemplation of the
consequences proper in the event of a breach has been
articulated. When courts are, thereafter, confronted with the need
to award damages in tandem with rescission, courts must not
lose sight of how the parties have explicitly stated, in their own
language, these consequences. To uphold both Article 1191 of the
Civil Code and the parties' will, contractually stipulated liquidated
damages must, as a rule,  be maintained.
[48]

What respondent purports to be the ensuing nullification of


liquidated damages is not a novel question in jurisprudence. This
matter has been settled, and respondent's position has been
rebuked. In Laperal:
This notwithstanding, the Court does not agree with the Court of
Appeals that, as a consequence of the obligation of mutual
restitution in this case, petitioners should return the amount of
P5,200,833.27 to respondent.

Article 1191 states that "the injured party may choose between
fulfillment and rescission of the obligation, with the payment of
damages in either case." In other words, while petitioners are
indeed obliged to return the said amount to respondent under
Article 1385, assuming said figure is correct, respondent is at the
same time liable to petitioners in the same amount as liquidated
damages by virtue of the forfeiture/penalty clause as freely
stipulated upon by the parties in the Addendum, paragraphs 1
and 2 of which respectively read:
WHEREAS, included as part of said agreement are the following:

1. Further to the stipulations on paragraph 10, upon default of


performances, violations and/or non-compliance with the terms
and conditions herein agreed upon by the DEVELOPER wherein it
appears that the DEVELOPER deliberately abandoned or
discontinued the work on the project, said party shall lose any
entitlement, if any, to any refund and/or advances it may have
incurred in connection with or relative to previous development
works in the subdivision; likewise, all improvements of whatever
nature and kind introduced by the DEVELOPER on the property,
existing as of the date of default or violation, shall automatically
belong to the OWNER without obligation on his part to pay for the
costs thereof.

2. Similarly with the same condition of default or violation


obtaining, as stated in paragraph 10 of said agreement, all
advances made and remittances of proceeds from reservations
and sales given by the DEVELOPER to the OWNER as provided for
in this agreement shall be deemed absolutely forfeited in favor of
the OWNER, resulting to waiver of DEVELOPER'S rights, if any,
with respect to said amount(s).
If this Court recognized the right of the parties to stipulate on an
extrajudicial rescission under Article 1191, there is no reason why
this Court will not allow the parties to stipulate on the matter of
damages in case of such rescission under Book IV, Title VIII,
Chapter 3, Section 2 of the Civil Code governing liquidated
damages.  (Citations omitted)
[49]

We see no reason for departing from this. It is true


that Laperal involved extrajudicial rescission, while this case
involves rescission through judicial action. The distinction
between judicial and extrajudicial rescission is in how
extrajudicial rescission is possible only when the contract has an
express stipulation to that effect.  This distinction does not
[50]
diminish the rights of a contracting party under Article 1191 of
the Civil Code and is immaterial for purposes of the availability of
liquidated damages.

To sustain respondent's claim would be to sustain an absurdity


and an injustice. Respondent's position suggests that with
rescission must necessarily come the obliteration of the punitive
consequence which, to begin with, was the product of its own
(along with the other contracting party's) volition. Its position
turns delinquency into a profitable enterprise, enabling
contractual breach to itself be the means for evading its own
fallout. It is a position we cannot tolerate.

II

In calibrating the amount of liquidated damages, the Court of


Appeals relied on how respondent supposedly attempted to
rectify things "by offering to [petitioner] new specifications at
P3,600,000.00 per unit; and expressed willingness to shoulder
the difference between the original price (based on the contract)
of P2,900,000.00 per unit and the price corresponding to the new
specifications."
[51]

As underscored by petitioner, however, this offer was


inconsequential and hardly a remedy to the predicament it found
itself in.

Petitioner already suffered damage by respondent's mere delay.


Philippine Economic Zone Authority Director General Lilia B. De
Lima's internal memorandum to its Board of Directors
emphasized what was, at the time, the specific urgency of
obtaining fire trucks:
1. With the increase in the number of locator-enterprises at the
regular zones, there is a need for additional units of fire trucks to
address any eventuality. The onset of the El Niño phenomena
further makes it imperative that PEZA be more prepared.
2. At present, there are only six (6) units of serviceable fire
trucks distributed as follows:

Bataan EZ              2
Baguio City EZ        1
Cavite EZ               1
Mactan EZ              2  (Emphasis supplied)
[52]

The Court of Appeals itself recognized that "time was of the


essence when the contract . . . was awarded to [respondent] and
the non-compliance therewith exposed [petitioner's] operations
[at] risk."
[53]

Respondent's attempt at rectification came too late and under


such circumstances that petitioner was no longer even in a
position to accept respondent's offer. As petitioner notes, by the
time respondent made its offer, the Complaint for rescission and
damages had already been filed before the Regional-Trial Court of
Pasay City.  If at all, the offer was nothing more than a belated
[54]

reaction to undercut litigation.

By the time respondent made its attempt at rectification,


petitioner was no longer capable of accommodating contractual
modifications. Jurisprudence has established the impropriety of
modifying awarded contracts that were previously subjected to
public bidding, such as that between petitioner and respondent:
An essential element of a publicly bidded contract is that all
bidders must be on equal footing. Not simply in terms of
application of the procedural rules and regulations imposed by
the relevant government agency, but more importantly, on the
contract bidded upon. Each bidder must be able to bid on the
same thing. The rationale is obvious. If the winning bidder is
allowed to later include or modify certain provisions in the
contract awarded such that the contract is altered in any material
respect, then the essence of fair competition in the public bidding
is destroyed. A public bidding would indeed be a farce if after the
contract is awarded, the winning bidder may modify the
contract and include provisions which are favorable to it that were
not previously made available to the other bidders. Thus:
It is inherent in public biddings that there shall be a fair
competition among the bidders. The specifications in such
biddings provide the common ground or basis for the bidders. The
specifications should, accordingly, operate equally or
indiscriminately upon all bidders.
The same rule was restated by Chief Justice Stuart of the
Supreme Court of Minnesota:
The law is well settled that where, as in this case, municipal
authorities can only let a contract for public work to the lowest
responsible bidder, the proposals and specifications therefore
must be so framed as to permit free and full competition. Nor can
they enter into a contract with the best bidder containing
substantial provisions beneficial to him, not included or
contemplated in the terms and specifications upon which the bids
were invited.  (Emphasis supplied)
[55]

By definition, liquidated damages are a penalty, meant to impress


upon defaulting obligors the graver consequences of their own
culpability. Liquidated damages must necessarily make non-
compliance more cumbersome than compliance. Otherwise,
contracts might as well make no threat of a penalty at all:
Liquidated damages are those that the parties agree to be paid in
case of a breach. As worded, the amount agreed upon answers
for damages suffered by the owner due to delays in the
completion of the project. Under Philippine laws, these damages
take the nature of penalties. A penal clause is an accessory
undertaking to assume greater liability in case of a breach. It is
attached to an obligation in order to ensure performance.
 (Citations omitted)
[56]

Respondent cannot now balk at the natural result of its own


breach. As for the Court of Appeals, we find it to be in error in
frustrating the express terms of the contract that respondent
actively endeavored to be awarded to it. The exigencies that
impelled petitioner to obtain fire trucks made it imperative for
respondent to act with dispatch. Instead, it dragged its feet, left
petitioner with inadequate means for addressing the very
emergencies that engendered the need for fire trucks, and forced
it into litigation to enforce its rights.
WHEREFORE, the Petition is GRANTED. The assailed May 2,
2008 Decision and November 25, 2008 Resolution of the Court of
Appeals in CA G.R. CV No. 86406 are REVERSED and SET
ASIDE. The Decision dated November 2, 2005 of Branch 108 of
the Regional Trial Court of Pasay City in Civil Case No. 00-0343
is REINSTATED.

SO ORDERED.

Brion,  (Acting Chairperson), Del Castillo, and Mendoza, JJ.,


**

concur.
Carpio, J., on official leave.

 Designated Acting Chairperson per Special Order No. 2374


**

dated September 14, 2016.

 Rollo, pp. 14-33. The Petition was filed under Rule 45 of the
[1]

1997 Rules of Civil Procedure.

 Id. at 35-58. The Decision was penned by Associate Justice


[2]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Regalado E. Maambong and Agustin S. Dizon of the Sixteenth
Division, Court of Appeals, Manila.

 Id. at 60-61. The Resolution was penned by Associate Justice


[3]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Josefina Gievarra-Salonga and Regalado E. Maambong of the
Special Former Sixteenth Division, Court of Appeals, Manila.

 Id. at 62-65. The Decision was penned by Pairing Judge


[4]

Tingaraan U. Guiling.

[5]
 Id. at 65.

[6]
 Id. at 55.
[7]
 Id. at 61.

[8]
 Id. at 62.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 75-77.

[14]
 Id.

[15]
 Id. at 78.

[16]
 Id.

[17]
 Id. at 79.

[18]
 Id. at 80-85.

[19]
 Id. at 62.

[20]
 Id. at 37.

[21]
 Id. at 38.

[22]
 Id. at 62-65.

[23]
 Id. at 65.

[24]
 Id. at 35-56.

[25]
 Id. at 51.
[26]
 Id. at 50.

[27]
 Id. at 51.

[28]
 Id. at 50.

[29]
 CIVIL CODE, art. 1229 provides:

Article 1229. The judge shall equitably reduce the penalty when
the principal obligation has been partly or irregularly complied
with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or
unconscionable.

[30]
 CIVIL CODE, art. 2227 provides:

Article 2227. Liquidated damages, whether intended as an


indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable.

[31]
 Rollo, pp. 54-55.

[32]
 Id. at 60-61.

[33]
 Id. at 23.

[34]
 Id. at 24-26.

[35]
 Id. at 26-27

[36]
 Id. at 26.

[37]
 Id. at 27-28.

[38]
 Id. at 24.

[39]
 Id. at 232-241.
[40]
 Id. at 238.

[41]
 Id. at 238-239.

[42]
 CIVIL CODE, art. 2226 provides:

Article 2226. Liquidated damages are those agreed upon by the


parties to a contract, to be paid in case of breach thereof.

[43]
 413 Phil. 360 (2001) [Per J. Panganiban, Third Division].

[44]
 Id. at 372.

[45]
 Id. at 375.

[46]
 499 Phil. 367 (2005) [Per J. Garcia, Third Division].

[47]
 Id. at 379-380.

 Subject to equitable reduction under Articles 1229 and 2227 of


[48]

the Civil Code.

 Laperal v. Solid Homes, Inc., 499 Phil. 367, 380-382 (2005)


[49]

[Per J. Garcia, Third Division].

 Spouses Alcaraz v. Tangga-an, 449 Phil. 62, 73 (2003) [Per J.


[50]

Corona, Third Division]. See also Nissan Car Lease Phils., Inc. v.


Lica Management, Inc., G.R. No. 176986, January 13, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/176986.pdf> [Per J.
Jardeleza, Third Division].

[51]
 Rollo, p. 54.

[52]
 Id. at 66.

[53]
 Id. at 53.
[54]
 Id. at 24.

 Agan, Jr. v. Philippine International Air Terminals Co., Inc., 450


[55]

Phil. 744, 814-815 (2006) [Per J. Puno, En Banc].

 H.L. Carlos Construction, Inc. v. Marina Properties Corp., 466


[56]

Phil. 182, 205 (2004) [Per J. Panganiban, First Division].

Source: Supreme Court E-Library | Date created: July 03, 2018


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785 Phil. 303


SECOND DIVISION

[ A.C. No. 9018, April 20, 2016 ]


TERESITA P. FAJARDO, COMPLAINANT, VS. ATTY.
NICANOR C. ALVAREZ, RESPONDENT.DECISION

LEONEN, J.:

This administrative case involves the determination of whether a


lawyer working in the Legal Section of the National Center for
Mental Health under the Department of Health is authorized to
privately practice law, and consequently, whether the amount
charged by respondent for attorney's fees is reasonable under the
principle of quantum meruit.
Complainant Teresita P. Fajardo (Teresita) was the Municipal
Treasurer of San Leonardo, Nueva Ecija. She hired respondent
Atty. Nicanor C. Alvarez (Atty. Alvarez) to defend her in criminal
and administrative cases before the Office of the Ombudsman.

The parties have differing versions of the facts as summarized by


the Investigating Commissioner of the Commission on Bar
Discipline of the Integrated Bar of the Philippines. Teresita's
version of the facts is as follows:

Around 2009, Teresita hired Atty. Alvarez to handle several cases


filed against her before the Office of the Ombudsman.  Atty. [1]

Alvarez was then working in the Legal Section of the National


Center for Mental Health.  He asked for P1,400,000.00 as
[2]

acceptance fee.  However, Atty. Alvarez did not enter his


[3]

appearance before the Office of the Ombudsman nor sign any


pleadings. [4]

Atty. Alvarez assured Teresita that he had friends connected with


the Office of the Ombudsman who could help with dismissing her
case for a certain fee.  Atty. Alvarez said that he needed to pay
[5]

the amount of P500,000.00 to his friends and acquaintances


working at the Office of the Ombudsman to have the cases
against Teresita dismissed. [6]

However, just two (2) weeks after Teresita and Atty. Alvarez
talked, the Office of the Ombudsman issued a resolution and
decision recommending the filing of a criminal complaint against
Teresita, and her dismissal from service, respectively. [7]

Teresita then demanded that Atty. Alvarez return at least a


portion of the amount she gave.  Atty. Alvarez promised to return
[8]

the amount to Teresita; however, he failed to fulfill this promise.


 Teresita sent a demand letter to Atty. Alvarez, which he failed
[9]

to heed.[10]

On the other hand, Atty. Alvarez claims the following:


Atty. Alvarez is Legal Officer III of the National Center for Mental
Health under the Department of Health.  He has authority to
[11]

engage in private practice of the profession.  He represented [12]

Teresita in several cases before the Office of the Ombudsman. [13]

Atty. Alvarez and Teresita had an arrangement that Teresita


would consult Atty. Alvarez whenever a case was filed against
her.  Atty. Alvarez would then advise Teresita to send him a copy
[14]

of the complaint and its attachments through courier.


 Afterwards, Atty. Alvarez would evaluate the case and call
[15]

Teresita to discuss his fees in accepting and handling the case.


 A 50% downpayment would be deposited to Atty. Alvarez's or
[16]

his secretary's bank account.  The balance would then be paid in


[17]

installments.  The success fee was voluntary on Teresita's part.


[18] [19]

On July 10, 2009, Atty. Alvarez received a call from Teresita


regarding a meeting at Shangri-La Mall to discuss the decision
and resolution she received from the Office of the Ombudsman
dismissing her from service for dishonesty and indicting her for
violation of Section 3 of Republic Act No. 3019, respectively.
 Atty. Alvarez accepted the case and asked for P500,000.00 as
[20]

acceptance fee.  According to Atty. Alvarez, he arrived at the


[21]

amount after considering the difficulty of the case and the


workload that would be involved, which would include appeals
before the Court of Appeals and this Court.  However, the fee is
[22]

exclusive of filing fees, appearance fees, and other miscellaneous


fees such as costs for photocopying and mailing. [23]

Atty. Alvarez claimed that he prepared several pleadings in


connection with Teresita's case:

(1) motion for reconsideration filed on July 23, 2009 in connection with the administrat
(2) motion for reconsideration filed on July 23, 2009 in connection with the criminal cas
(3) petition for injunction filed on October 15, 2009 before the Regional Trial Court of G
(4) petition for preliminary injunction with prayer for a temporary restraining order
November 18, 2009, and the amended petition on November 26, 2009. [24]
Atty. Alvarez also said that he prepared several letters to
different government officials and agencies. [25]

Atty. Alvarez alleged that Teresita made staggered payments for


the amounts they agreed on.  Teresita only paid the balance of
[26]

the agreed acceptance fee equivalent to P450,000.00 on February


11, 2010.  While Teresita paid P60,000.00 for the miscellaneous
[27]

expenses, she did not pay the expenses for other legal work
performed and advanced by Atty. Alvarez. [28]

On the last day for filing of the petition for review of the Office of
the Ombudsman's Decision, Teresita informed Atty. Alvarez that
she was no longer interested in retaining Atty. Alvarez's services
as she had hired Atty. Tyrone Contado from Nueva Ecija, who
was Atty. Alvarez's co-counsel in the cases against Teresita. [29]

On June 1, 2011, Teresita filed before the Office of the Bar


Confidant a Verified Complaint praying for the disbarment of Atty.
Alvarez.  This Court required Atty. Alvarez to file his comment on
[30]

the complaint within 10 days from notice. [31]

On December 7, 2011, the case was referred to the Integrated


Bar of the Philippines for investigation, report, and
recommendation. [32]

In his Report and Recommendation  dated November 12, 2012,


[33]

Investigating Commissioner Honesto A. Villamayor found Atty.


Alvarez guilty of violating the Code of Professional Responsibility
and recommended Atty. Alvarez's suspension from the practice of
law for one (1) year.  Atty. Alvarez was also ordered to return
[34]

the amount of P700,000.00 to Teresita with legal interest from


the time of demand until its full payment.  The dispositive [35]

portion of the Investigating Commissioner's Report and


Recommendation reads:
WHEREFORE, finding Respondent guilty of committing unlawful,
immoral and deceitful acts of the Canon of Professional
Responsibility, [it] is recommended that he be suspended for one
(1) year in the practice of law and he be ordered to return the
amount of P700,000.00 to the Complainant within two (2)
months from receipt of this order with legal interest from the time
of demand, until fully paid, with a warning that repetition of [a]
similar offense in the future will be dealt with more severely. [36]

On the unauthorized practice of law, the Investigating


Commissioner found that while Atty. Alvarez claimed that he was
authorized by his superior to privately practice law, the pleadings
he allegedly prepared and filed did not bear his name and
signature.  Hence, the Investigating Commissioner stated that:
[37]

The time that Respondent spent in following up the case of


Complainant in the Office of the Ombudsman is a time lost to the
government which could have been used in the service of many
taxpayers[.] [38]

In any case, granting that Atty. Alvarez was authorized by his


superior to practice his profession, the Investigating
Commissioner stated that Atty. Alvarez was prohibited to handle
cases involving malversation of funds by government officials
such as a municipal treasurer. [39]

Moreover, the Investigating Commissioner found that the


attorney's fees Atty. Alvarez asked for were unreasonable:
From all indication, Complainant was forced to give to the
Respondent the amount of P1,400,000.00 because of the words
of Respondent that he has friends in the Office of the
Ombudsman who can help with a fee. That because of that
guarantee, Complainant was obligated to shell out every now and
then money for the satisfaction of the allege[d] friend of the
Respondent[.]

Complainant is an ordinary Municipal Treasurer of a 4  or 5  class


th th

municipality and the amount of attorney's fees demanded by the


Respondent is very much excessive. . . . The exorbitant amount
that he demanded from complainant is too much for a lowly local
government employee. What the Respondent did is not only
illegal, immoral and dishonest but also taking advantage of a
defenseless victim.

....
While a lawyer should charge only fair and reasonable fees, no
hard and fast rule may be set in the determination of what a
reasonable fee is, or what is not. That must be established from
the facts of each case[.]

....

The fees claimed and received by the Respondent for the alleged
cases he handled despite the fact that the records and evidence
does not show that he ever signed pleadings filed, the amount of
P700,000.00 is reasonable, thus, fairness and equity dictate, he
has to return the excess amount of P700,000.00 to the
complainant[.][40]

In Notice of Resolution No. XX-2013-778  dated June 21, 2013,


[41]

the Integrated Bar of the Philippines Board of Governors adopted


the findings and recommendations of the Investigating
Commissioner:
RESOLVED to ADOPT AND APPROVE, as it is hereby unanimously
ADOPTED AND APPROVED, the Report and Recommendation of
the Investigating Commissioner in the above-entitled case, herein
made part of this Resolution as Annex "A", and finding the
recommendation fully supported by the evidence on record and
the applicable laws and rules and considering that
complaint [sic] is guilty of unlawful, immoral and deceitful acts,
Atty. Nicanor C. Alvarez is hereby SUSPENDED from the
practice of law for one (1) year with [a] Warning that
repetition of the same acts shall be dealt with more sever[ejly.
Further, he is Ordered to Return the amount of P700,000.00 to
complainant with legal interest from the time of demand.
 (Emphasis in the original)
[42]

Atty. Alvarez moved for reconsideration of the Resolution,  but


[43]

the Motion was denied by the Board of Governors in Notice of


Resolution No. XXI-2014-286  dated May 3, 2014. The
[44]

Resolution reads:
RESOLVED to DENY Respondent's Motion for Reconsideration,
there being no cogent reason to reverse the findings of the
Commission and the resolution subject of the motion, it being a
mere reiteration of the matters which had already been threshed
out and taken into consideration. Thus, Resolution No. XX-2013-
778 dated June 21, 2013 is hereby AFFIRMED.  (Emphasis in the
[45]

original)
We resolve the following issues:

First, whether respondent Atty. Nicanor C. Alvarez, as a lawyer


working in the Legal Section of the National Center for Mental
Health under the Department of Health, is authorized to engage
in the private practice of law; and

Second, whether the amount charged by respondent for


attorney's fees is reasonable under the principle of quantum
meruit.

The Investigating Commissioner did not make a categorical


declaration that respondent is guilty of unauthorized practice of
his profession. The Investigating Commissioner merely alluded to
respondent's unauthorized practice of law.

We find that respondent committed unauthorized practice of his


profession.

Respondent claims that he is authorized to practice his


profession  as shown in the letter dated August 1, 2001 of
[46]

National Center for Mental Health Chief Bernardino A. Vicente.


 The letter reads:
[47]

TO           :            ATTY. NICANOR C. ALVAREZ


                            Legal Officer III
                            This Center

Subject    :            Authority to engage in private practice of


profession

This refers to your request for permission to engage in private


practice of your profession.
In accordance with Administrative Order No. 21, s. 1999 of the
Department of Health, which vested in the undersigned the
authority to grant permission for the exercise of profession or
engage in the practice of profession, you are hereby authorized to
teach or engage in the practice of your profession provided it will
not run in conflict with the interest of the Center and the
Philippine government as a whole. In the exigency of the service
however, or when public interest so requires, this authority may
be revoked anytime.

Please be guided accordingly.

[sgd.]
BERNARDINO A. VICENTE, MD, FFPPA, MHA, CESO IV
Medical Center Chief II  (Emphasis supplied)
[48]

Respondent practiced law even if he did not sign any pleading. In


the context of this case, his surreptitious actuations reveal illicit
intent. Not only did he do unauthorized practice, his acts also
show badges of offering to peddle influence in the Office of the
Ombudsman.

In Cayetano v. Monsod,  the modern concept of the term


[49]

"practice of law" includes the more traditional concept of litigation


or appearance before courts:
The practice of law is not limited to the conduct of cases in court.
A person is also considered to be in the practice of law when he:
"x x x for valuable consideration engages in the business of
advising person, firms, associations or corporations as to their
rights under the law, or appears in a representative capacity as
an advocate in proceedings pending or prospective, before any
court, commissioner, referee, board, body, committee, or
commission constituted by law or authorized to settle
controversies and there, in such representative capacity performs
any act or acts for the purpose of obtaining or defending the
rights of their clients under the law. Otherwise stated, one who,
in a representative capacity, engages in the business of advising
clients as to their rights under the law, or while so engaged
performs any act or acts either in court or outside of court for
that purpose, is engaged in the practice of law."
....

The University of the Philippines Law Center in conducting


orientation briefing for new lawyers (1974-1975) listed the
dimensions of the practice of law in even broader terms as
advocacy, counseling and public service.
"One may be a practicing attorney in following any line of
employment in the profession. If what he does exacts knowledge
of the law and is of a kind usual for attorneys engaging in the
active practice of their profession, and he follows some one or
more lines of employment such as this he is a practicing attorney
at law within the meaning of the statute."
Practice of law means any activity, in or out of court, which
requires the application of law, legal procedure, knowledge,
training and experience. "To engage in the practice of law is to
perform those acts which are characteristics of the profession.
Generally, to practice law is to give notice or render any kind of
service, which device or service requires the use in any degree of
legal knowledge or skill."

....

Interpreted in the light of the various definitions of the term


"practice of law," particularly the modern concept of law practice,
and taking into consideration the liberal construction intended by
the framers of the Constitution, Arty. Monsod's past work
experiences as a lawyer-economist, a lawyer-manager, a lawyer-
entrepreneur of industry, a lawyer-negotiator of contracts, and a
lawyer-legislator of both the rich and the poor—verily more than
satisfy the constitutional requirement—that he has been engaged
in the practice of law for at least ten years.  (Emphasis supplied)
[50]

Cayetano was reiterated in Lingan v. Calubaquib: [51]

Practice of law is "any activity, in or out of court, which requires


the application of law, legal procedure, knowledge, training and
experience." It includes "[performing] acts which are
characteristics of the [legal] profession" or "[rendering any kind
of] service [which] requires the use in any degree of legal
knowledge or skill."

Work in government that requires the use of legal knowledge is


considered practice of law. In Cayetano v. Monsod, this court
cited the deliberations of the 1986 Constitutional Commission and
agreed that work rendered by lawyers in the Commission on
Audit requiring "[the use of] legal knowledge or legal talent" is
practice of law.  (Citations omitted)
[52]

By preparing the pleadings of and giving legal advice to


complainant, respondent practiced law.

Under Section 7(b)(2) of Republic Act No. 6713, otherwise known


as the Code of Conduct and Ethical Standards for Public Officials
and Employees, and Memorandum Circular No. 17, series of
1986,  government officials or employees are prohibited from
[53]

engaging in private practice of their profession unless authorized


by their department heads. More importantly, if authorized, the
practice of profession must not conflict nor tend to conflict with
the official functions of the government official or employee:
Republic Act No. 6713:

Section 7. Prohibited Acts and Transactions. - In addition to acts


and omissions of public officials and employees now prescribed in
the Constitution and existing laws, the following shall constitute
prohibited acts and transactions of any public official and
employee and are hereby declared to be unlawful:

....

(b) Outside employment and other activities related thereto. -


Public officials and employees during their incumbency shall not:

....

(2) Engage in the private practice of their profession unless


authorized by the Constitution or law, provided, that such
practice will not conflict or tend to conflict with their official
functions[.]

....

Memorandum Circular No. 17:

The authority to grant permission to any official or employee shall


be granted by the head of the ministry or agency in accordance
with Section 12, Rule XVIII of the Revised Civil Service Rules,
which provides:
"Sec. 12. No officer or employee shall engage directly in any
private business, vocation, or profession or be connected with
any commercial, credit, agricultural, or industrial undertaking
without a written permission from the head of
Department; Provided, That this prohibition will be absolute in the
case of those officers and employees whose duties and
responsibilities require that their entire time be at the disposal of
the Government: Provided, further, That if an employee is
granted permission to engage in outside activities, the time so
devoted outside of office hours should be fixed by the chief of the
agency to the end that it will not impair in any way the efficiency
of the other officer or employee: And provided, finally, That no
permission is necessary in the case of investments, made by an
officer or employee, which do not involve any real or apparent
conflict between his private interests and public duties, or in any
way influence him in the discharge of his duties, and he shall not
take part in the management of the enterprise or become an
officer or member of the board of directors",
subject to any additional conditions which the head of the office
deems necessary in each particular case in the interest of the
service, as expressed in the various issuances of the Civil Service
Commission.
In Abella v. Cruzabra,  the respondent was a Deputy Register of
[54]

Deeds of General Santos City. While serving as an incumbent


government employee, the respondent "filed a petition for
commission as a notary public and was commissioned . . .
without obtaining prior authority from the Secretary of the
Department of Justice."  According to the complainant, the
[55]

respondent had notarized around 3,000 documents.  This Court


[56]

found the respondent guilty of engaging in notarial practice


without written authority from the Secretary of Justice. Thus:

It is clear that when respondent filed her petition for commission


as a notary public, she did not obtain a written permission from
the Secretary of the D[epartment] [of] J[ustice]. Respondent's
superior, the Register of Deeds, cannot issue any authorization
because he is not the head of the Department. And even
assuming that the Register of Deeds authorized her, respondent
failed to present any proof of that written permission. Respondent
cannot feign ignorance or good faith because respondent filed her
petition for commission as a notary public after Memorandum
Circular No. 17 was issued in 1986. [57]

In this case, respondent was given written permission by the


Head of the National Center for Mental Health, whose authority
was designated under Department of Health Administrative Order
No. 21, series of 1999.
[58]

However, by assisting and representing complainant in a suit


against the Ombudsman and against government in general,
respondent put himself in a situation of conflict of interest.

Respondent's practice of profession was expressly and impliedly


conditioned on the requirement that his practice will not be "in
conflict with the interest of the Center and the Philippine
government as a whole." [59]

In Javellana v. Department of Interior and Local Government,


 the petitioner was an incumbent City Councilor or member of
[60]

the Sangguniang Panlungsod of Bago City. He was a lawyer by


profession and had continuously engaged in the practice of law
without securing authority from the Regional Director of the
Department of Local Government.  In 1989, the petitioner acted
[61]

as counsel for Antonio Javiero and Rolando Catapang and filed a


case for Illegal Dismissal and Reinstatement with Damages
against Engr. Ernesto C. Divinagracia, City Engineer of Bago City.
[62]

Engr. Ernesto C. Divinagracia filed an administrative case before


the Department of Local Government for violation of Section 7(b)
(2) of Republic Act No. 6713 and relevant Department of Local
Government memorandum circulars on unauthorized practice of
profession, as well as for oppression, misconduct, and abuse of
authority.  While the case was pending before Department of
[63]

Local Government, the petitioner was able to secure a written


authority to practice his profession from the Secretary of Interior
and Local Government, "provided that such practice will not
conflict or tend to conflict with his official functions."
[64]

This Court in Javellana observed that the petitioner practiced his


profession in conflict with his functions as City Councilor and
against the interests of government:
In the first place, complaints against public officers and
employees relating or incidental to the performance of their
duties are necessarily impressed with public interest for by
express constitutional mandate, a public office is a public trust.
The complaint for illegal dismissal filed by Javiero and Catapang
against City Engineer Divinagracia is in effect a complaint against
the City Government of Bago City, their real employer, of which
petitioner Javellana is a councilman. Hence, judgment against
City Engineer Divinagracia would actually be a judgment against
the City Government. By serving as counsel for the complaining
employees and assisting them to prosecute their claims against
City Engineer Divinagracia, the petitioner violated Memorandum
Circular No. 74-58 (in relation to Section 7[b-2] of R[epublic]
A[ct] [No.] 6713) prohibiting a government official from engaging
in the private practice of his profession, if such practice would
represent interests adverse to the government.

Petitioner's contention that Section 90 of the Local Government


Code of 1991 and DLG Memorandum Circular No. 90-81 violate
Article VIII, Section 5 of the Constitution is completely off
tangent. Neither the statute nor the circular trenches upon the
Supreme Court's power and authority to prescribe rules on the
practice of law. The Local Government Code and DLG
Memorandum Circular No. 90-81 simply prescribe rules of
conduct for public officials to avoid conflicts of interest between
the discharge of their public duties and the private practice of
their profession, in those instances where the law allows it. [65]

There is basic conflict of interest here. Respondent is a public


officer, an employee of government. The Office of the
Ombudsman is part of government. By appearing against the
Office of the Ombudsman, respondent is going against the same
employer he swore to serve.

In addition, the government has a serious interest in the


prosecution of erring employees and their corrupt acts. Under the
Constitution, "[p]ublic office is a public trust."  The Office of the
[66]

Ombudsman, as "protectors of the [P]eople,"  is mandated to


[67]

"investigate and prosecute . . . any act or omission of any public


officer or employee, office or agency, when such act or omission
appears to be illegal, unjust, improper or inefficient." [68]

Thus, a conflict of interest exists when an incumbent government


employee represents another government employee or public
officer in a case pending before the Office of the Ombudsman.
The incumbent officer ultimately goes against government's
mandate under the Constitution to prosecute public officers or
employees who have committed acts or omissions that appear to
be illegal, unjust, improper, or inefficient.  Furthermore, this is
[69]

consistent with the constitutional directive that "[p]ublic officers


and employees must, at all times, be accountable to the [P]eople,
serve them with utmost responsibility, integrity, loyalty, and
efficiency; act with patriotism and justice, and lead modest
lives."
[70]

The objective in disciplinary cases is not to punish the erring


officer or employee but to continue to uplift the People's trust in
government and to ensure excellent public service:
[W]hen an officer or employee is disciplined, the object sought is
not the punishment of that officer or employee, but the
improvement of the public service and the preservation of the
public's faith and confidence in the government. . . . These
constitutionally-enshrined principles, oft-repeated in our case law,
are not mere rhetorical flourishes or idealistic sentiments. They
should be taken as working standards by all in the public service.
[71]

Having determined that respondent illicitly practiced law, we find


that there is now no need to determine whether the fees he
charged were reasonable.

In disbarment or disciplinary cases pending before this Court, the


complainant must prove his or her allegations through substantial
evidence.  In Advincula v. Macabata,  this Court dismissed a
[72] [73]

complaint for disbarment due to the lack of evidence in proving


the complainant's allegations:
As a basic rule in evidence, the burden of proof lies on the party
who makes the allegations—ei incumbit probation, qui decit, non
qui negat; cum per rerum naturam factum negantis probation
nulla sit. In the case at bar, complainant miserably failed to
comply with the burden of proof required of her. A mere charge
or allegation of wrongdoing does not suffice. Accusation is not
synonymous with guilt.  (Emphasis in the original, citations
[74]

omitted)
Moreover, lawyers should not be hastily disciplined or penalized
unless it is shown that they committed a transgression of their
oath or their duties, which reflects on their fitness to enjoy
continued status as a member of the bar:
The power to disbar or suspend ought always to be exercised on
the preservative and not on the vindictive principle, with great
caution and only for the most weighty reasons and only on clear
cases of misconduct which seriously affect the standing and
character of the lawyer as an officer of the court and member of
the Bar. Only those acts which cause loss of moral character
should merit disbarment or suspension, while those acts which
neither affect nor erode the moral character of the lawyer should
only justify a lesser sanction unless they are of such nature and
to such extent as to clearly show the lawyer's unfltness to
continue in the practice of law. The dubious character of the act
charged as well as the motivation which induced the lawyer to
commit it must be clearly demonstrated before suspension or
disbarment is meted out. The mitigating or aggravating
circumstances that attended the commission of the offense
should also be considered. [75]

Likewise, we find that respondent violated the Lawyer's Oath and


the Code of Professional Responsibility when he communicated to
or, at the very least, made it appear to complainant that he knew
people from the Office of the Ombudsman who could help them
get a favorable decision in complainant's case.

Lawyers are mandated to uphold, at all times, integrity and


dignity in the practice of their profession.  Respondent violated
[76]

the oath he took when he proposed to gain a favorable outcome


for complainant's case by resorting to his influence among staff in
the Office where the case was pending. [77]

Thus, respondent violated the Code of Professional Responsibility.


Canon 1, Rules 1.01, and 1.02  prohibit lawyers from engaging
[78]

in unlawful, dishonest, immoral, or deceitful conduct.


 Respondent's act of ensuring that the case will be dismissed
[79]

because of his personal relationships with officers or employees in


the Office of the Ombudsman is unlawful and dishonest. Canon
7  of the Code of Professional Responsibility requires lawyers to
[80]

always "uphold the integrity and dignity of the legal profession."

In relation, Canon 13  mandates that lawyers "shall rely upon


[81]

the merits of his [or her] cause and refrain from any impropriety
which tends to influence, or gives the appearance of influencing
the court."

A lawyer that approaches a judge to try to gain influence and


receive a favorable outcome for his or her client violates Canon
13 of the Code of Professional Responsibility.  This act of
[82]

influence peddling is highly immoral and has no place in the legal


profession:
The highly immoral implication of a lawyer approaching a judge—
or a judge evincing a willingness—to discuss, in private, a matter
related to a case pending in that judge's sala cannot be over-
emphasized. The fact that Atty. Singson did talk on different
occasions to Judge Reyes, initially through a mutual friend, Atty.
Sevilla, leads us to conclude that Atty. Singson was indeed trying
to influence the judge to rule in his client's favor. This conduct is
not acceptable in the legal profession.[83]

In Jimenez v. Verano, Jr.,  we disciplined the respondent for


[84]

preparing a release order for his clients using the letterhead of


the Department of Justice and the stationery of the Secretary:
The way respondent conducted himself manifested a clear intent
to gain special treatment and consideration from a government
agency. This is precisely the type of improper behavior sought to
be regulated by the codified norms for the bar. Respondent is
duty-bound to actively avoid any act that tends to influence, or
may be seen to influence, the outcome of an ongoing case, lest
the people's faith in the judicial process is diluted.

The primary duty of lawyers is not to their clients but to the


administration of justice. To that end, their clients' success is
wholly subordinate. The conduct of a member of the bar ought to
and must always be scrupulously observant of the law and ethics.
Any means, not honorable, fair and honest which is resorted to
by the lawyer, even in the pursuit of his devotion to his client's
cause, is condemnable and unethical.

....

Zeal and persistence in advancing a client's cause must always be


within the bounds of the law. A self-respecting independence in
the exercise of the profession is expected if an attorney is to
remain a member of the bar. In the present case, we find that
respondent fell short of these exacting standards. Given the
import of the case, a warning is a mere slap on the wrist that
would not serve as commensurate penalty for the offense. [85]

Similar to the present case, in Bueno v. Rañeses,  we disbarred a


[86]

lawyer who solicited bribe money from his client in violation of


Canon 13 of the Code of Professional Responsibility:
Rather than merely suspend Atty. Rañeses as had been done in
Bildner, the Court believes that Atty. Rañeses merits the ultimate
administrative penalty of disbarment because of the multi-layered
impact and implications of what he did; by his acts he proved
himself to be what a lawyer should not be, in a lawyer's relations
to the client, to the court and to the Integrated Bar.

First, he extracted money from his client for a purpose that is


both false and fraudulent. It is false because no bribery
apparently took place as Atty. Rañeses in fact lost the case. It is
fraudulent because the professed purpose of the exaction was the
crime of bribery. Beyond these, he maligned the judge and the
Judiciary by giving the impression that court cases are won, not
on the merits, but through deceitful means—a decidedly black
mark against the Judiciary. Last but not the least, Atty. Rañeses
grossly disrespected the IBP by his cavalier attitude towards its
disciplinary proceedings.

From these perspectives, Atty. Rañeses wronged his client, the


judge allegedly on the "take," the Judiciary as an institution, and
the IBP of which he is a member. The Court cannot and should
not allow offenses such as these to pass unredressed. Let this be
a signal to one and all—to all lawyers, their clients and the
general public—that the Court will not hesitate to act decisively
and with no quarters given to defend the interest of the public, of
our judicial system and the institutions composing it, and to
ensure that these are not compromised by unscrupulous or
misguided members of the Bar.  (Emphasis supplied)
[87]

In the interest of ridding itself of corrupt personnel who


encourage influence peddling, and in the interest of maintaining
the high ethical standards of employees in the judiciary, this
Court did not hesitate in dismissing its own employee from
government service when she peddled influence in the Court of
Appeals:[88]

What brings our judicial system into disrepute are often the
actuations of a few erring court personnel peddling influence to
party-litigants, creating the impression that decisions can be
bought and sold, ultimately resulting in the disillusionment of the
public. This Court has never wavered in its vigilance in
eradicating the so-called "bad eggs" in the judiciary. And
whenever warranted by the gravity of the offense, the supreme
penalty of dismissal in an administrative case is meted to erring
personnel.[89]

The Investigating Commissioner found that complainant was


"forced to give . . . Respondent the amount of P1,400,000.00
because of the words of Respondent that he ha[d] friends in the
Office of the Ombudsman who c[ould] help with a fee."  It is [90]

because of respondent's assurances to complainant that she sent


him money over the course of several months.  These [91]

assurances are seen from the text messages that respondent


sent complainant:
FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Cnbi ko dun sa kontak dati na magbibigay tayo na pera sa


allowance lang muna later na ang bayad pag labas ng reso at
kaliwaan pero sbi nya mas maganda kung isasabay na ang pera
pagbgay ng letter mo sa omb.. Parang dun tayo nagkamali pero
ang solusyon ay sana ibalik nila ang pera . . in d meantime hindi
dapat apektado ang kaso at kailangan an Appeal sa CA at may
deadline yun

DATE: 31-05-2010

TIME: 5:24 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Gud pm pnro, naLBC n b ang Reso? Kung Jan un pnrmahn ...


DATE: 21-05-2010

TIME: 5:13 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Pnro sbi ng Dep Omb la png cnabi sa knya ng Omb. Ang CA Reso
pnaiwan n Orly @ studyohn nya (txt kontal)

DATE: 15-04-2010

TIME: 6:07 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Yung blessing pala ni gutierez ang hnhntay ng overall dep omb si


orly at dun din siya subok kuha letter pero nasbhan na si gutierez
ng dep omb for Luzon sbi ko pwwde b nila gawin total alam na ni
gutierez. . . Maya tawag ko sayo update

DATE: 15-04-2010

TIME: 12:44 pm

TYPE: Text Message
....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Gud mrng Tess hindi na svmagot kahapon tnxt ko pero minsan


hndi tlga sumasagot yun nag ttxt lang pagkatapos kaya lang d
mo pala naiintindihan ang txt nya bisaya "istudyahun" ibig sabihn
kausapin pa so nasbi na nya sa omb yung letter at istudzahan pa

DATE: 31-03-2010

TIME: 8:25 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Ok panero update ko na lang client pero nag txt tlga kailangan


daw nya letter habang wala pa omb reso., Txt mo lang ko
panero, have a nice holidays., (sagot ko yan tess)

DATE: 03-03-2010

TIME: 5:03 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>


SUBJECT:

Sa dep omb for Luzon na nya follow up ang MR at saka overall


dep omb si orly dun nya kukunin letter

DATE: 30-03-2010

TIME: 5:00 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Gud pm pnro. Ang Dep. Omb. My closd dor mtng pro pnkta s
knya ang note q at sabi rw bumalik aq aftr Holy wk. C Orly nman
ay ngsabi n es2dyuhn p rw nya.

DATE: 30-03-2010

TIME: 4:52 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Binigay ko na pera kahapon at kinausap ko para sa letter


magkikita pa kami marnaya las 2 at kukunin nya copy letter natin
kay sales at CA reso

DATE: 15-04-2010
TIME: 12:32 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Tess ndpst mo na? Kakausapin ko kasi na qc na lang kami kita at


malapit ako dun maya at hindi na sa crsng. Tnx

DATE: 14-04-2010

TIME: 1:29 pm

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Gud pm pnro. Ok ba ang 15k rep maya 6pm? Thnx (txt ng kontak
tess kausapin ko mbuti sa letter)

DATE: 14-04-2010

TIME: 10:25 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>


SUBJECT:

Pnro ung rep alo n bngay mo 1st Mar 24 ay ok Ing pra s 2 falo-
ups q Mar 25 @ Mar 30. As usual, magkita tau Apr 14 @ kunin q
20  para sa falo-up Apr 15 thnx
th

DATE: 08-04-2010

TIME: 10:58 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Ok panero kailangan malinaw din ang presentation lp sa client


panero at ang impression nya yun na ang hningi natin... so april
15 panero an balik mo sa MR at yung letter form omb to dof
bhala ka na sa diskarte panero pag nakakuha tayo nakahanda na
150k dun

DATE: 08-04-2010

TIME: 10:56 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:
Pnero dapat maalala mo n ung purpose ng 400  hindi directly
th

delivery ng Reso granting d MR pro ung delivery by the Dep Omb


ng letr of appeal 2 d Omb at pgpaliwang nya sa Omb. Re sa
hnhngi ng rspondnt n modfcation ng Dcsion. Nung 1st mtng ntn
Mar 24, ngin4m q sau n ngawa n i2 ng Dep Omb pro kausapn p
ng Omb c Orly. Itong huli ang nabtn p, pro yon ay dscrtion n ng
Omb@ wing control d2 and Dep. Omb.

DATE: 08-04-2010

TIME: 10:55 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Tess gud mrng, wag mo kalimutan mgdpst 25k today 6pm mtng
naming omb tnx.

DATE: 24-03-2010

TIME: 10:23 am

TYPE: Text Message

....

FROM: Atty. Alvarez <+639063630224>

SUBJECT:

Gud pm uli pnro. Kung subukan q n lkrn ky Orly ung cnabi mong
letr adrsd 2 DOF Sec @ synd n Orly ang letr, pktanong s rspndnt
kung ok b s knya nab yarn nya aq ng Atty's fee n 75thou upfront
@ another 75thou upon receipt of a DOF ordr holdng n abyans
implmntation of hr dsmsal due 2 Orly's letr? thnx

DATE: 11-03-2010

TIME: 7:03 pm

TYPE: Text Message [92]

In response to his alleged text messages, respondent claims that


complainant must have confused him with her other contacts.
 Respondent found it "mesmerizing" that complainant was able
[93]

to save all those alleged text messages from two (2) years ago.
 Moreover, assuming these messages were "true, still they
[94]

[were] not legally admissible as they [were] covered by the


lawyer-client privileged communication as those supposed texts
'[had been] made for the purpose and in the course of
employment, [were] regarded as privileged and the rule of
exclusion [was] strictly enforced.'"
[95]

In cases involving influence peddling or bribery, "[t]he


transaction is always done in secret and often only between the
two parties concerned."  Nevertheless, as found by the
[96]

Investigating Commissioner and as shown by the records, we rule


that there is enough proof to hold respondent guilty of influence
peddling.

We agree with the penalty recommended by the Integrated Bar of


the Philippines Board of Governors. We find respondent's acts of
influence peddling, coupled with unauthorized practice of law,
merit the penalty of suspension of one (1) year from the practice
of law. To be so bold as to peddle influence before the very
institution that is tasked to prosecute corruption speaks much
about respondent's character and his attitude towards the courts
and the bar.

Lawyers who offer no skill other than their acquaintances or


relationships with regulators, investigators, judges, or Justices
pervert the system, weaken the rule of law, and debase
themselves even as they claim to be members of a noble
profession. Practicing law should not degenerate to one's ability
to have illicit access. Rather, it should be about making an honest
appraisal of the client's situation as seen through the evidence
fairly and fully gathered. It should be about making a discerning
and diligent reading of the applicable law. It is foremost about
attaining justice in a fair manner. Law exists to temper, with its
own power, illicit power and unfair advantage. It should not be
conceded as a tool only for those who cheat by unduly influencing
people or public officials.

It is time that we unequivocally underscore that to even imply to


a client that a lawyer knows who will make a decision is an act
worthy of the utmost condemnation. If we are to preserve the
nobility of this profession, its members must live within its ethical
parameters. There is never an excuse for influence peddling.

While this Court is not a collection agency for faltering debtors,


 this Court has ordered restitution of amounts to complainants
[97]

due to the erroneous actions of lawyers.  Respondent is,


[98]

therefore, required to return to complainant the amount of


P500,000.00—the amount that respondent allegedly gave his
friends connected with the Office of the Ombudsman.

WHEREFORE, Respondent Arty. Nicanor C. Alvarez is guilty of


violating the Code of Conduct and Ethical Standards for Public
Officials and Employees, the Lawyer's Oath, and the Code of
Professional Responsibility. He is SUSPENDED from the practice
of law for one (1) year with a WARNING that a repetition of the
same or similar acts shall be dealt with more severely.
Respondent is ORDERED to return the amount of P500,000.00
with legal interest to complainant Teresita P. Fajardo.

Let copies of this Decision be furnished to the Office of the Bar


Confidant, to be appended to respondent's personal record as
attorney. Likewise, copies shall be furnished to the Integrated Bar
of the Philippines and all courts in the country for their
information and guidance.
SO ORDERED.

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


concur.

 Rollo, p. 1, Integrated Bar of the Philippines Commission on Bar


[1]

Discipline Report and Recommendation dated November 14,


2012.

[2]
 Id.

[3]
 Id.

[4]
 Id.

[5]
 Id. at 2.

[6]
 Id.

[7]
 Id.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id. at 9, Comment.

[12]
 Id.

[13]
 Id. at 10-11.

[14]
 Id. at 12.
[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

 Id. at 12-13. The Office of the Deputy Ombudsman for Luzon


[20]

promulgated the Decision dated February 19, 2008 finding


Teresita guilty of serious dishonesty and ordered her dismissal
from service (OMB-L-A-04-0254-D[OMB-L-C-04-0376-D] For:
Dishonesty). In the Resolution dated February 19, 2008, the
same Office issued the Resolution recommending the indictment
of Teresita for violation of Rep. Act No. 3019, sec. 3(e) (OMB-L-
C-04-0376-D [OMB-L-A-04-0254-D] For: Violation of Section 3(e)
of R.A. No. 3019).

[21]
 Id.

[22]
 Id.

[23]
 Id. at 14.

[24]
 Id. at 13-14.

[25]
 Id. at 419, Report and Recommendation.

[26]
 Id.

[27]
 Id.

[28]
 Id.

[29]
 Id. at 419-420.
[30]
 Id. at 1-3.

[31]
 Id. at 8, Resolution dated July 25, 2011.

[32]
 Id. at 282.

[33]
 Id. at 416-423.

[34]
 Id. at 422.

[35]
 Id. at 423.

[36]
 Id. at 422-423.

[37]
 Id. at 429.

[38]
 Id. at 421.

[39]
 Id. at 422.

[40]
 Id. at 421-422.

[41]
 Id. at 415.

[42]
 Id.

[43]
 Id. at 424-433.

[44]
 Id. at 444.

[45]
 Id.

[46]
 Id. at 21.

[47]
 Id.

[48]
 Id.
[49]
 278 Phil. 235 (1991) [Per J. Paras, En Banc].

 Id. at 241-256, citing Land Title Abstract and Trust Co. v.


[50]

Dworken, 129 Ohio St. 23, 193 N.E. 650; State ex. rel. Mckittrick
v. C.S. Dudley and Co., 102 S.W. 2d 895, 340 Mo.
852; Barr D.  Cardell 155 NW 312; and 111 ALR 23.

 A.C. No. 5377, June 30, 2014, 727 SCRA 341 [Per J. Leonen,
[51]

Third Division]

[52]
 Id. at 355.

 Issued by the Office of the President, entitled Revoking


[53]

Memorandum Circular No. 1025 Dated November 25, 1977.

[54]
 606 Phil. 200 (2009) [Per J. Carpio, First Division].

[55]
 Id. at 202.

[56]
 Id.

 Id. at 206-207. Respondent was reprimanded and "warned that


[57]

a repetition of the same or similar act in the future shall merit a


more severe sanction" (Id. at 208).

[58]
 Rollo, p. 21.

[59]
 Id.

 G.R. No. 102549, August 10, 1992, 212 SCRA 475 [Per J.
[60]

Griño-Aquino, En Banc].

[61]
 Id. at 476.

[62]
 Id.

[63]
 Id.
[64]
 Id.

[65]
 Id. at 482.

[66]
 CONST., art. XI, sec. 1.

[67]
 CONST., art. XI, sec. 12.

 Rep. Act No. 6770, sec. 15(1). See CONST., art. XI, secs. 12


[68]

and 13, which provide:

Section 12. The Ombudsman and his Deputies, as protectors of


the people, shall act promptly on complaints filed in any form or
manner against public officials or employees of the Government,
or any subdivision, agency or instrumentality thereof, including
government-owned or controlled corporations, and shall, in
appropriate cases, notify the complainants of the action taken
and the result thereof.

Section 13. The Office of the Ombudsman shall have the following
powers, functions, and duties:

(1) Investigate on its own, or on complaint by any person, any


act or omission of any public official, employee, office or agency,
when such act or omission appears to be illegal, unjust, improper,
or inefficient.

(2) Direct, upon complaint or at its own instance, any public


official or employee of the Government, or any subdivision,
agency or instrumentality thereof, as well as of any government-
owned or controlled corporation with original charter, to perform
and expedite any act or duty required by law, or to stop, prevent,
and correct any abuse or impropriety in the performance of
duties.

(3) Direct the officer concerned to take appropriate action against


a public official or employee at fault, and recommend his
removal, suspension, demotion, fine, censure, or prosecution,
and ensure compliance therewith.

(4) Direct the officer concerned, in any appropriate case, and


subject to such limitations as may be provided by law, to furnish
it with copies of documents relating to contracts or transactions
entered into by his office involving the disbursement or use of
public funds or properties, and report any irregularity to the
Commission on Audit for appropriate action,

(5) Request any government agency for assistance and


information necessary in the discharge of its responsibilities, and
to examine, if necessary, pertinent records and documents.

(6) Publicize matters covered by its investigation when


circumstances so warrant and with due prudence.

(7) Determine the causes of inefficiency, red tape,


mismanagement, fraud, and corruption in the Government and
make recommendations for their elimination and the observance
of high standards of ethics and efficiency.

(8) Promulgate its rules of procedure and exercise such other


powers or perform such functions or duties as may be provided
by law.

 This must be differentiated, however, from the rule governing


[69]

former government lawyers acting as counsel for private parties


after leaving the service. See Presidential Commission on Good
Government v. Sandiganbayan, 495 Phil. 485 (2005) [Per J.
Puno, En Banc] and Code of Professional Responsibility, Canon 6,
rule 6.03.

[70]
 CONST., art. XI, sec. 1.

 Government Service Insurance System v. Mayordomo, 665


[71]

Phil. 131, 151-152 (2011) [Per J. Mendoza, En Banc], citing Civil


Service Commission v. Cortez, 474 Phil. 670, 690 (2004) [Per
Curiam, En Banc]; and Bautista v. Negado, 108 Phil. 283, 289
(1960) [Per J. Gutierrez David, En Banc].

 See Spouses Boyboy v. Yabut, Jr., A.C. No. 5225, April 29,
[72]

2003, 401 SCRA 622 [Per J. Bellosillo, Second Division].

[73]
 546 Phil. 431 (2007) [Per J. Chico-Nazario, Third Division].

[74]
 Id. at 446.

[75]
 Id. at 447-448.

 See Heirs of Alilano v. Examen, A.C. No. 10132, March 24,


[76]

2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/march2015/10132.pdf> [Per J.
Villarama, Jr., En Banc]; Sipin-Nabor v. Baterina y Figueras, All
Phil. 419, 424 (2001) [Per J. Pardo, En Banc]; Vitriolo v. Dasig,
448 Phil. 199, 209 (2003) [Per Curiam, En Banc].

 Lawyer's Oath — I, _____, do solemnly swear that I will


[77]

maintain allegiance to the Republic of the Philippines; I will


support its Constitution and obey the laws as well as the legal
orders of the duly constituted authorities therein; I will do no
falsehood, nor consent to the doing of any in court; I will not
wittingly or willingly promote or sue any groundless, false or
unlawful suit, nor give aid nor consent to the same; I will delay
no man for money or malice, and will conduct myself as a lawyer
according to the best of my knowledge and discretion with all
good fidelity as well to the courts as to my clients; and I impose
upon myself this voluntary obligation without any mental
reservation or purpose of evasion. So help me God.

 Code of Professional Responsibility, Canon 1, rules 1.01 and


[78]

1.02 provide:

CANON 1 - A lawyer shall uphold the constitution, obey the laws


of the land and promote respect for law and for legal processes.
RULE 1.01 A lawyer shall not engage in unlawful, dishonest,
immoral or deceitful conduct.

RULE 1.02 A lawyer shall not counsel or abet activities aimed at


defiance of the law or at lessening confidence in the legal
system[.]

 See Phil. Association of Court Employees v. Alibutdan-Diaz,


[79]

A.C. No. 10134, November 26, 2014


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/10134.pdf> [Per J.
Mendoza, Second Division].

[80]
 Code of Professional Responsibility, Canon 7 provides:

CANON 7 - A lawyer shall at all times uphold the integrity and


dignity of the legal profession and support the activities of the
integrated bar.

[81]
 Code of Professional Responsibility, Canon 13 provides:

CANON 13 - A lawyer shall rely upon the merits of his cause and
refrain from any impropriety which tends to influence, or gives
the appearance of influencing the court.

 Bildner v. Ilusorio, 606 Phil. 369 (2009) [Per J. Velasco, Jr.,


[82]

Second Division].

[83]
 Id. at 389.

 A.C. No. 8108, July 15, 2014, 730 SCRA 53 [Per C.J. Sereno,
[84]

En Banc].

[85]
 Id. at 61-62.

[86]
 700 Phil. 817 (2012) [Per Curiam, En Banc].

[87]
 Id. at 827.
 Nuez v. Cruz-Apao, 495 Phil. 270 (2005) [Per Curiam, En
[88]

Banc], citing Mendoza v. Tiongson, 333 Phil. 508 (1996) [Per


Curiam, En Banc].

[89]
 Id. at 272.

 Rollo, p. 421, Integrated Bar of the Philippines Commission on


[90]

Bar Discipline Report and Recommendation dated November 14,


2012.

[91]
 Id.

[92]
 Id. at 339-344.

 Id. at 382, Respondent's Position Paper dated September 28,


[93]

2012, paragraph 64. Integrated Bar of the Philippines Records.

[94]
 Id.

[95]
 Id. at 382-383, citation omitted.

 Bildner v. Ilusorio, 606 Phil. 369, 390 (2009) [Per J. Velasco,


[96]

Jr., Second Division].

 See In re: Complaint for Failure to Pay Just Debts Against


[97]

Esther T. Andres, 493 Phil. 1 (2005) [Per J. Chico-Nazario, En


Banc].

 See Adrimisin v. Javier, 532 Phil. 639 (2006) [Per J. Carpio, En


[98]

Banc]; Rollon v. Naraval, 493 Phil. 24 (2005) [Per J. Panganiban,


En Banc]; Ramos v. Imbang, 557 Phil. 507 (2007) [Per Curiam,
En Banc].
Source: Supreme Court E-Library | Date created: March 02, 2018
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780 Phil. 553


SECOND DIVISION

[ G.R. No. 171041, February 10,


2016 ]
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS.
MOLDEX REALTY, INC., RESPONDENT.DECISION

LEONEN, J.:

This is a Petition for Review on Certiorari  of the Court of Appeals'


[1]

January 6, 2006 Decision.  The Court of Appeals affirmed the


[2]

Regional Trial Court's February 19, 2002 Decision  granting [3]

respondent Moldex Realty, Inc.'s application for registration of


title to Lot Nos. 9715-B and 9715-C in Alulod, Indang, Cavite.

On January 25, 2000, Luis Erce, Rosa Cinense, and Maria Clara
Erce Landicho applied for the registration of parcels of land in
Alulod, Indang, Cavite, designated as Lot Nos. 9715-A (40,565
square meters), 9715-B (20,000 square meters), and 9715-C
(20,000 square meters) before the Regional Trial Court of Naic,
Cavite.  The properties had a total area of 80,565 square meters.
[4]

[5]

Eventually, applicants sold Lot Nos. 9715-B and 9715-C, with a


total land area of 40,000 square meters, to Moldex Realty, Inc.
 Applicants were later substituted by Moldex Realty, Inc. in the
[6]
application for registration pending before the Regional Trial
Court.  Lot No. 9715-A was dropped from the application for
[7]

registration.[8]

To prove its title, Moldex Realty, Inc. presented the testimonies


of Engineer John Arvin Manaloto (Manaloto) and Pio Atis. [9]

Manaloto was Moldex Realty, Inc's Assistant Manager for its


Technical Services Department.  He testified that Moldex Realty,
[10]

Inc. purchased the properties from the heirs of Ana Erce and
Pedro Erce.  The sale was evidenced by two (2) separate deeds
[11]

of sale executed in 1997. [12]

According to Manaloto, the technical descriptions and the


subdivision plan covering the properties were approved by the
Bureau of Lands.  Tax declarations from the Offices of the
[13]

Municipal Assessor of Indang, Cavite and of the Provincial


Assessor of Trece Martires City indicated that from 1948 to 2001,
the properties had been owned by Olimpio Erce, Pedro Erce, Ana
Erce, Heirs of Ana Erce, and Moldex Realty, Inc. [14]

Manaloto further testified that he secured from the Forest


Management Sector of Community Environment and Natural
Resources Office of Trece Martires City a certification that the
properties were declared alienable and disposable land of the
public domain on March 15, 1982. [15]

Pio Atis, a 77-year-old farmer and resident of Alulod, Indang,


Cavite, testified that he knew the owners of the properties before
Moldex Realty, Inc.  He had been residing in the area since his
[16]

birth. He was a tenant of the properties.  He was also an owner[17]

of a lot adjoining the properties.  He testified that he had


[18]

personal knowledge that the Erces possessed the properties


before the war. [19]

On February 19, 2002, the Regional Trial Court rendered the


Decision granting the application, thus:
WHEREFORE, in view of the foregoing, this Court confirming its
previous Order of general default hereby decrees and adjudges
the two (2) parcels of land known as Lot No. 9715-B and Lot No.
9715-C, Cad-459-D, Indang Cadastre, each consisting [of] an
area of 20,000 square meters, both situated in Alulod, Indang,
Cavite pursuant to the provisions of Act 496 as amended by PD
1529 in the name of MOLDEX REALTY, INC., a corporation
organized and existing under Philippine laws, with office address
at No. 3 West 6  St. corner Times St., Quezon City, Philippines.
th

Once this decision becomes final, let the corresponding decree of


registration be issued.

SO ORDERED. [20]

The Office of the Solicitor General, representing the Republic of


the Philippines, appealed the Regional Trial Court's February 19,
2002 Decision before the Court of Appeals. It argued that Moldex
Realty, Inc. failed to prove its open, continuous, exclusive, and
notorious possession of the property since June 12, 1945, or for
more than 30 years.  The possession of Moldex Realty, Inc.'s
[21]

predecessors-in-interest cannot result in adverse possession


against the Republic since it was only in 1982 when the
properties had been classified as alienable and disposable.
[22]

On January 6, 2006, the Court of Appeals rendered the Decision


affirming the approval of Moldex Realty, Inc.'s application for
registration, thus:
WHEREFORE, premises considered, the appeal is DENIED. The
decision of Br. XV, RTC, Naic, Cavite in LRC Case No. NC-2000-
1127, LRA Record No. N-72489 is AFFIRMED in toto.

SO ORDERED. [23]

The Court of Appeals ruled that based on Republic v. Naguit,  an [24]

application for registration satisfies the requirement that the


property is classified as alienable and disposable if the land has
been alienable and disposable at the time of the application for
registration.
[25]
On March 2, 2006, the Office of the Solicitor General filed a
Petition for Review under Rule 45 of the Rules of Court assailing
the Court of Appeals January 6, 2006 Decision. [26]

The Office of the Solicitor General argued that Moldex Realty, Inc.
failed to prove that it or its predecessors-in-interests had been in
open, continuous, exclusive, and notorious possession of the
property in the concept of an owner from June 12, 1945  or for [27]

at least 30 years.  It also argued that in affirming the Regional


[28]

Trial Court Decision,  the Court of Appeals erroneously relied


[29]

on Naguit instead of Republic v. Herbieto. [30]

On the other hand, Moldex Realty, Inc. argued that for purposes
of registration, land needs only to have been declared alienable
and disposable at the time of the filing of an application for
registration.  It also argued that unless a public land is clearly
[31]

being reserved for public or common use, it should be considered


patrimonial property. [32]

On March 14, 2012, this court received a Manifestation and


Motion from Moldex Realty, Inc. stating that although it had
already been issued a favorable decision by the Regional Trial
Court and the Court of Appeals, it opted to withdraw its
application for registration of the properties in its name.  Hence,
[33]

the case had become moot and academic.  Respondent prayed:


[34]

WHEREFORE, for all the foregoing, it is most respectfully prayed


of this Honorable Court that this Manifestation be noted and this
Motion be granted and that the Appeal in the above case be
considered withdrawn and/or dismissed for having become moot
and academic. [35]

Petitioner filed its Comment on Moldex Realty, Inc.'s


Manifestation and Motion. Moldex Realty, Inc. pointed out that
since the trial court and the Court of Appeals had already issued a
decision in its favor, this court should not just dismiss petitioner's
appeal. Instead, it should reverse and set aside the Decisions of
the trial court and of the Court of Appeals in favor of Moldex
Realty, Inc.[36]
The issues in this case are:

First, whether respondent Moldex Realty, Inc.'s withdrawal of its


application for land registration has rendered this case moot and
academic;

Second, whether respondent was able to prove the required


length of possession for purposes of land registration; and

Lastly, whether Naguit was erroneously applied by the Court of


Appeals.

The Petition has no merit.

Respondent's withdrawal of its application for registration has


rendered this case moot and academic.

This court's power of judicial review is limited to actual cases and


controversies.  Article VIII, Section 1 of the Constitution
[37]

provides:
SECTION 1. The judicial power shall be vested in one Supreme
Court and in such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle


actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality
of the Government.
There is an actual case or controversy when the case presents
conflicting or opposite legal rights that may be resolved by the
court in a judicial proceeding. In David v. Macapagal-Arroyo: [38]

An actual case or controversy involves a conflict of legal right, an


opposite legal claims susceptible of judicial resolution. It is
"definite and concrete, touching the legal relations of parties
having adverse legal interest"; a real and substantial controversy
admitting of specific relief.[39]
A case becomes moot and academic when, by virtue of
supervening events, the conflicting issue that may be resolved by
the court ceases to exist.  There is no longer any justiciable
[40]

controversy that may be resolved by the court.  This court [41]

refuses to render advisory opinions and resolve issues that would


provide no practical use or value.  Thus, courts generally "decline
[42]

jurisdiction over such case or dismiss it on ground of mootness." [43]

Respondent's Manifestation stating its withdrawal of its


application for registration has erased the conflicting interests
that used to be present in this case. Respondent's Manifestation
was an expression of its intent not to act on whatever claim or
right it has to the property involved. Thus, the controversy ended
when respondent filed that Manifestation.

A ruling on the issue of respondent's right to registration would


be nothing but an advisory opinion. [T]he power of judicial review
does not repose upon the courts a "self-starting capacity."  This [44]

court cannot, through affirmation or denial, rule on the issue of


respondent's right to registration because respondent no longer
asserts this right.

It is true that this court does not always refuse to assume


jurisdiction over a case that has been rendered moot and
academic by supervening events. Courts assume jurisdiction over
cases otherwise rendered moot and academic when any of the
following instances are present:
(1) Grave constitutional violations; [45]

(2) Exceptional character of the case; [46]

(3) Paramount public interest; [47]

(4) The case presents an opportunity to guide the bench, the bar,
and the public;  or
[48]

(5) The case is capable of repetition yet evading review. [49]


None of these circumstances are present in this case. Thus, there
is no more reason to go into its substantive issues.

Nevertheless, respondent's Manifestation should not be


considered a waiver of its rights over the property. There is
nothing in the Manifestation that speaks of respondent's
abandonment of its property claims. Nor does the Manifestation
have the effect of proving that the property belongs to the public
domain and the state.

Respondent's Manifestation has the effect of a waiver of the


Decisions of the trial court and of the Court of Appeals in favor of
respondent. Respondent's withdrawal of its application for
registration, pending resolution of petitioner's Petition for Review
before this court and with full knowledge of the Court of Appeals
and the trial court's Decisions in its favor, is not a means to
render final and executory these Decisions.

However, dismissing this case and setting aside the Decisions of


the trial court and of the Court of Appeals in favor of respondent
would not render a conclusive judgment on this issue.
Respondent, or any interested applicant, is not precluded from
filing another application for registration involving the property.

WHEREFORE, the Petition for Review is DENIED. The Decisions


of the Court of Appeals dated January 6, 2006 and of the
Regional Trial Court dated February 19, 2002 are SET ASIDE,
without prejudice to the filing of a new application for registration
by interested parties.

SO ORDERED.

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


concur.
 Rollo, pp. 19-48, Petition. The Petition was filed under Rule 45
[1]

of the Rules of Court.

 Id. at 10-16. The Decision, docketed as CA-G.R. CV No. 79964,


[2]

was penned by Associate Justice Arcangelita M. Romilla-Lontok


and concurred in by Associate Justices Marina L. Buzon and
Aurora Santiago-Lagman of the Special Sixth Division, Court of
Appeals Manila.

 Id. at 79-87. The Decision, docketed as LRC Case No. NC-2000-


[3]

1127, was penned by Judge Napoleon V. Dilag of Branch XV,


Regional Trial Court of Naic, Cavite.

[4]
 Id. at 11, Court of Appeals Decision.

[5]
 Id.

 Id. at 70-78, Motion for Substitution of Parties and for Dropping


[6]

of Lot #9715-A.

[7]
 Id. at 11.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.

 Id. at 11, Court of Appeals Decision, and 73-78, Deed of


[12]

Absolute Sale.

[13]
 Id. at 12, 73-78.

[14]
 Id. at 12.

[15]
 Id. at 182, Petitioner's Memorandum.
[16]
 Id. at 13.

[17]
 Id. at 13 and 86, Regional Trial Court Decision.

[18]
 Id. at 86.

[19]
 Id. at 14 and 86.

[20]
 Id. at 87.

[21]
 Id. at 14.

[22]
 Id.

[23]
 Id. at 15.

[24]
 489 Phil. 405 (2005) [Per J. Tinga, Second Division].

[25]
 Rollo, p. 15.

[26]
 Id. at 19.

[27]
 Id. at 14.

[28]
 Id. at 14 and 30.

[29]
 Id at 185-190, Petitioner's Memorandum.

[30]
 498 Phil. 227 (2005) [Per J. Chico-Nazario, Second Division].

[31]
 Id. at 123, Comment.

[32]
 Id. at 159-161, Respondent's Memorandum.

[33]
 Id. at 196, Respondent's Manifestation and Motion.

[34]
 Id.
[35]
 Id. at 197.

 Id. at 212, Petitioner's Comment on Respondent's Manifestation


[36]

and Motion.

[37]
 CONST., art. VIII, sec. 1.

[38]
 522 Phil. 705 (2006) [Per J. Sandoval-Gutierrez, En Banc].

 Id. at 753, citing ISAGANI A. CRUZ, PHILIPPINE POLITICAL


[39]

LAW 259 (2002 ed.).

 Id. See also Province of Batangas v. Romulo, 473 Phil. 806


[40]

(2004) [Per J. Callejo, Sr., En Banc]; Sanlakas v. Executive


Secretary, 466 Phil. 482 (2004) [Per J. Tinga, En Banc].

[41]
 Id. at 754.

 Lu v. Lu Ym, 585 Phil. 251 (2008) [ Per J. Nachura, Third


[42]

Division].

 David v. Macapagal-Arroyo, 522 Phil. 705, 754 (2006) [Per J.


[43]

Sandoval-Gutierrez, En Banc].

 Id. at 753, citing MARTIN SHAPIRO & ROCCO TRESOLINI,


[44]

AMERICAN CONSTITUTIONAL LAW 79 (6th ed, 1983).

 Province of Batangas v. Romulo, 473 Phil. 806 (2004) [Per J.


[45]

Callejo, Sr., En Banc]; Lu v. Lu Ym, 585 Phil. 251 (2008) [Per J.


Nachura, Third Division].

 David v. Macapagal-Arroyo, 522 Phil. 705, 754 (2006) [Per J.


[46]

Sandoval-Gutierrez, En Banc]; Lu v. Lu Ym, 585 Phil. 251 (2008)


[Per J. Nachura, Third Division].

[47]
 Id.
 Province of Batangas v. Romulo, 473 Phil. 806 (2004) [Per J.
[48]

Callejo, Sr., En Banc]; Lu v. Lu Ym, 585 Phil. 251 (2008) [Per J.


Nachura, Third Division].

 David v. Macapagal-Arroyo, 522 Phil. 705, 754 (2006) [Per J.


[49]

Sandoval-Gutierrez, En Banc]; Province of Batangas v. Romulo,


473 Phil. 806 (2004) [Per J. Callejo, Sr., En Banc]; Sanlakas v.
Executive Secretary, 466 Phil. 482 (2004) [Per J. Tinga, En
Banc]; and Alunan v. Mirasol, 342 Phil. 467 (1997) [Per J.
Mendoza, En Banc].

Source: Supreme Court E-Library | Date created: January 18, 2018


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Supreme Court E-Library

778 Phil. 326


SECOND DIVISION

[ G.R. No. 207406, January 13, 2016 ]


NORBERTO A. VITANGCOL, PETITIONER, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

Persons intending to contract a second marriage must first secure


a judicial declaration of nullity of their first marriage. If they
proceed with the second marriage without the judicial declaration,
they are guilty of bigamy regardless of evidence of the nullity of
the first marriage.

This resolves a Petition for Review on Certiorari  assailing the


[1]

Court of Appeals Decision  dated July 18, 2012 and


[2]

Resolution  dated June 3, 2013. The Court of Appeals affirmed


[3]

with modification the Decision  of Branch 25 of the Regional Trial


[4]

Court of Manila convicting petitioner Norberto Abella Vitangcol


(Norberto) of bigamy punished under Article 349 of the Revised
Penal Code.  Norberto was sentenced to suffer the indeterminate
[5]

penalty of two (2) years and four (4) months of prision


correccional as minimum to eight (8) years and one (1) day
of prision mayor as maximum. [6]

In the Information dated April 29, 2008, the Office of the City
Prosecutor of Manila charged Norberto with bigamy.  The [7]

accusatory portion of the Information reads:


That on or about December 4, 1994, in the City of Manila,
Philippines, the said accused, being then legally married to GINA
M. GAERLAN, and without such marriage having been legally
dissolved, did then and there willfully, unlawfully and feloniously
contract a second or subsequent marriage with ALICE G.
EDUARDO-VITANGCOL which second marriage has all the legal
requisites for its validity with the said accused NORBERTO
ABELLA VITANGCOL knowing fully well prior to and at the time of
the celebration of the second marriage he was already married to
the said GINA M. GAERLAN.

Contrary to law. [8]

Norberto was arraigned, pleading not guilty to the charge. Trial


then ensued. [9]

According to the prosecution, on December 4, 1994, Norberto


married Alice G. Eduardo (Alice) at the Manila Cathedral in
Intramuros. Born into their union were three (3) children. [10]

After some time, Alice "began hearing rumors that [her husband]
was previously married to another womanf.]"  She eventually
[11]
discovered that Norberto was previously married to a certain Gina
M. Gaerlan (Gina) on July 17, 1987, as evidenced by a marriage
contract registered with the National Statistics Office. Alice
subsequently filed a criminal Complaint for bigamy against
Norberto. [12]

On the other hand, Norberto alleged that he and Alice became


romantically involved sometime in 1987.  "After much prodding
[13]

by their friends and relatives, [he and Alice] decided to get


married in 1994." [14]

Before finalizing their marriage plans, however, Norberto revealed


to Alice that he had a "fake marriage"  with his college girlfriend,
[15]

a certain Gina Gaerlan.  Nevertheless, despite Norberto's


[16]

revelation, Alice convinced him that they proceed with the


wedding. Thus, Norberto and Alice were married on December 4,
1994 and, thereafter, had three children. [17]

Sometime in 2007, Norberto heard rumors from their household


workers that Alice was having an affair with a married man. He
was able to confirm the affair after hearing Alice in a phone
conversation with her paramour. [18]

Norberto then sought advice from his business lawyer who later
on convinced Alice to end the affair. The lawyer also warned Alice
of the possible criminal liability she may incur if she continued
seeing her paramour. [19]

Allegedly in retaliation to the threat of criminal action against her,


Alice filed the criminal Complaint for bigamy against Norberto. [20]

Finding that Norberto contracted a second marriage with Alice


despite his subsisting valid marriage with Gina, Branch 25 of the
Regional Trial Court of Manila convicted Norberto of bigamy. The
dispositive portion of the Decision dated September 1, 2010
reads:
WHEREFORE, in view of the foregoing, the Court hereby finds
accused Norberto Abella Vitangcol GUILTY beyond reasonable
doubt of the crime of BIGAMY defined and penalized under Article
349 of the Revised Penal Code. Accused is hereby sentenced to
suffer the penalty of six (6) years and one (1) day of prision
mayor as minimum imprisonment to twelve (12) years of prision
mayor as maximum imprisonment.

SO ORDERED. [21]

On appeal, the Court of Appeals sustained the guilty verdict


against Norberto but modified the penalty imposed in accordance
with the Indeterminate Sentence Law. The dispositive portion of
the Court of Appeals Decision dated July 18, 2012 reads:
WHEREFORE, premises considered, the assailed Decision of the
Regional Trial Court (RTC) of Manila, Branch 25, dated September
1, 2010 is hereby AFFIRMED with MODIFICATION of the
penalty to which appellant is previously sentenced. Accordingly,
he is now meted to suffer an indeterminate penalty of two (2)
years and four (4) months of prision correccional, as minimum, to
eight (8) years and one (1) day of prision mayor, as maximum.

SO ORDERED. [22]

Norberto filed a Motion for Reconsideration,  which the Court of


[23]

Appeals denied in the Resolution dated June 3, 2013. [24]

Norberto filed a Petition for Review on Certiorari before this court.


The People of the Philippines, through the Office of the Solicitor
General, filed a Comment  to which Norberto filed a Reply.
[25] [26]

Norberto argues that the first element of bigamy is absent in this


case.  He presents as evidence a Certification  from the Office of
[27] [28]

the Civil Registrar of Imus, Cavite, which states that the Office
has no record of the marriage license allegedly issued in his favor
and his first wife, Gina. He argues that with no proof of existence
of an essential requisite of marriage—the marriage license—the
prosecution fails to establish the legality of his first marriage. [29]

In addition, Norberto claims that the legal dissolution of the first


marriage is not an element of the crime of bigamy. According to
Norberto, nothing in Article 349 of the Revised Penal Code that
punishes bigamy mentions that requirement.  Stating that "[a]ny
[30]

reasonable doubt must be resolved in favor of the


accused[,]"  Norberto prays for his acquittal.
[31] [32]

The prosecution counters that it has proven the existence of


Norberto's prior valid marriage with Gina as evidenced by the
marriage contract they had executed. The prosecution likewise
proved that the first marriage of Norberto with Gina was not
legally dissolved; that while his first marriage was subsisting,
Norberto contracted a second marriage with Alice; and that the
second marriage would have been valid had it not been for the
existence of the first. Norberto, therefore, should be convicted of
bigamy. [33]

The issue for our resolution is whether the Certification from the
Office of the Civil Registrar that it has no record of the marriage
license issued to petitioner Norberto A. Vitangcol and his first wife
Gina proves the nullity of petitioner's first marriage and
exculpates him from the bigamy charge.

The Certification from the Office of the Civil Registrar that it has
no record of the marriage license is suspect. Assuming that it is
true, it does not categorically prove that there was no marriage
license. Furthermore, marriages are not dissolved through mere
certifications by the civil registrar. For more than seven (7) years
before his second marriage, petitioner did nothing to have his
alleged spurious first marriage declared a nullity. Even when this
case was pending, he did not present any decision from any trial
court nullifying his first marriage.

Bigamy is punished under Article 349 of the Revised Penal Code:


ARTICLE 349. Bigamy. - The penalty of prision mayor shall be
imposed upon any person who shall contract a second or
subsequent marriage before the former marriage has been legally
dissolved, or before the absent spouse has been declared
presumptively dead by means of a judgment rendered in the
proper proceedings.
For an accused to be convicted of this crime, the prosecution
must prove all of the following elements:
[first,] that the offender has been legally married;

[second,] that the first marriage has not been legally dissolved
or, in case his or her spouse is absent, the absent spouse could
not yet be presumed dead according to the Civil Code;

[third,] that he contracts a second or subsequent marriage; and

[lastly,] that the second or subsequent marriage has all the


essential requisites for validity. [34]

The prosecution allegedly fails to prove the validity of his first


marriage with Gina because the civil registrar of the municipality
where they were married had no record of the marriage license
allegedly issued in their favor.

Contrary to petitioner's claim, all the elements of bigamy are


present in this case. Petitioner was still legally married to Gina
when he married Alice. Thus, the trial court correctly convicted
him of the crime charged.

Based on the marriage contract presented in evidence,


petitioner's first marriage was solemnized on July 17, 1987. This
was before the Family Code of the Philippines became effective on
August 3, 1988.  Consequently, provisions of the Civil Code of
[35]

the Philippines  govern the validity of his first marriage.


[36]

Article 53 of the Civil Code enumerates the requisites of


marriage, the absence of any of which renders the marriage void
from the beginning: [37]

Article 53. No marriage shall be solemnized unless all these


requisites are complied with:

(1)  Legal capacity of the contracting parties;


(2) Their consent, freely given;

(3)  Authority of the person performing the marriage; and

(4)  A marriage license, except in a marriage of exceptional


character.
The fourth requisite—the marriage license—is issued by the local
civil registrar of the municipality where either contracting party
habitually resides.  The marriage license represents the state's
[38]

"involvement and participation in every marriage, in the


maintenance of which the general public is interested." [39]

To prove that a marriage was solemnized without a marriage


license, "the law requires that the absence of such marriage
license must be apparent on the marriage contract, or at the very
least, supported by a certification from the local civil registrar
that no such marriage license was issued to the parties." [40]

Petitioner presents a Certification from the Office of the Civil


Registrar of Imus, Cavite, which states:
[A]fter a diligent search on the files of Registry Book on
Application for Marriage License and License Issuance available in
this office, no record could be found on the alleged issuance of
this office of Marriage License No. 8683519 in favor of MR.
NORBERTO A. VITANGCOL and MS. GINA M. GAERLAN dated July
17, 1987. [41]

This Certification does not prove that petitioner's first marriage


was solemnized without a marriage license. It does not
categorically state that Marriage License No. 8683519 does not
exist.
[42]

Moreover, petitioner admitted the authenticity of his signature


appearing on the marriage contract between him and his first
wife, Gina.  The marriage contract between petitioner and Gina is
[43]

a positive piece of evidence as to the existence of petitioner's first


marriage.  This "should be given greater credence than
[44]

documents testifying merely as to [the] absence of any record of


the marriage[.]" [45]
Republic v. Court of Appeals and Castro  was originally an action
[46]

for the declaration of nullity of a marriage.  As part of its


[47]

evidence, the plaintiff presented a certification that states that


the marriage license "cannot be located as said license . . . does
not appear from [the local civil registrar's] records." [48]

This court held that "[t]he certification . . . enjoys probative


value, [the local civil registrar] being the officer charged under
the law to keep a record of all data relative to the issuance of a
marriage license."  This court further said that "[u]naccompanied
[49]

by any circumstance of suspicion and pursuant to Section 29,


Rule 132 of the Rules of Court, a certificate of 'due search and
inability to find' sufficiently proved that [the local civil registrar]
did not issue [a] marriage license . . . to the contracting
parties."[50]

The circumstances in Castro and in this case are


different. Castro involved a civil case for declaration of nullity of
marriage that does not involve the possible loss of liberty. The
certification in Castro was unaccompanied by any circumstance of
suspicion, there being no prosecution for bigamy involved. On the
other hand, the present case involves a criminal prosecution for
bigamy. To our mind, this is a circumstance of suspicion, the
Certification having been issued to Norberto for him to evade
conviction for bigamy.

The appreciation of the probative value of the certification cannot


be divorced from the purpose of its presentation, the cause of
action in the case, and the context of the presentation of the
certification in relation to the other evidence presented in the
case. We are not prepared to establish a doctrine that a
certification that a marriage license cannot be found may
substitute for a definite statement that no such license existed or
was issued. Definitely, the Office of the Civil Registrar of Imus,
Cavite should be fully aware of the repercussions of those words.
That the license now cannot be found is not basis per se to say
that it could not have been issued.
A different view would undermine the stability of our legal order
insofar as marriages are concerned. Marriage licenses may be
conveniently lost due to negligence or consideration. The
motivation to do this becomes greatest when the benefit is to
evade prosecution.

This case is likewise different from Nicdao Cariño v. Yee Cariño.


In Cariño,  the marriage contract between Santiago Cariño and
[51]

his first wife, Susan Nicdao, bore no marriage license number.


 In addition, the local civil registrar certified that it has no
[52]

record of any marriage license issued to Santiago Cariño and


Susan Nicdao.  This court declared Santiago Cariño's first
[53]

marriage void for having been solemnized without a marriage


license.
[54]

In this case, there is a marriage contract indicating the presence


of a marriage license number freely and voluntarily signed and
attested to by the parties to the marriage as well as by their
solemnizing officer. The first marriage was celebrated on July 17,
1987. The second marriage was entered into on December 4,
1994. Within a span of seven (7) years, four (4) months, and 17
(seventeen) days, petitioner did not procure a judicial declaration
of the nullity of his first marriage. Even while the bigamy case
was pending, no decision declaring the first marriage as spurious
was presented. In other words, petitioner's belief that there was
no marriage license is rendered untrue by his own actuations.

This factual context makes the use and issuance of the


Certification from the Office of the Civil Registrar suspect. The
prosecution has to prove that despite the existence of a valid first
marriage, petitioner nevertheless contracted a second or
subsequent marriage. The admission of a marriage contract with
proof of its authenticity and due execution suffices to discharge
the burden of proving beyond reasonable doubt that a prior
marriage exists. The burden of evidence will, thus, pass on to the
defense. Mere presentation of a certification from the civil
registrar that the marriage license cannot be found is not enough
to discharge the burden of proving that no such marriage license
was issued.

The parties clearly identified Marriage License No. 8683519 in the


marriage contract.  There is no evidence to show that the
[55]

number series of that license is spurious or is not likely to have


been issued from its source. There is no proof as to whether the
licenses issued before or after the document in question still
exists in the custody of the civil registrar. There is no evidence
that relates to the procedures for safekeeping of these vital
documents. This would have shown whether there was unfettered
access to the originals of the license and, therefore, would have
contributed to the proper judicial conclusion of what the
manifestation by the civil registrar implies.

This court cannot grant the presumption of good faith and


regularity in the performance of official functions to the civil
registrar for the purposes sought by petitioner. In other words,
the presumption of regularity in the performance of official
functions is too remotely detached to the conclusion that there is
no marriage license.

At best, the presumption of regularity in the performance of the


civil registrar's function without the context just discussed can
lead to the conclusion that he in good faith could not find the
marriage license in his office. This presumption does not mean
that the marriage license did not exist. Nor does it mean that the
marriage license was issued.

However, even the conclusion of good faith is difficult to accept.


There was a marriage contract duly executed by petitioner and
his first spouse as well as by the solemnizing officer. The
marriage contract is in the custody of the civil registrar. The
presumption of regularity in the performance of official functions
by a public officer should likewise be applicable to infer a
conclusion that the marriage license mentioned in that contract
exists.
Conviction in a charge of bigamy will result to a legitimate
imposition of a penalty amounting to a deprivation of liberty. It is
not a far-fetched conclusion—although this is not always the case
—that a well-connected accused will use all means, fair or foul, to
achieve an acquittal. Many criminal cases can turn on
documentary evidence the issuance of which is within the
discretion of a government employee. The temptations for the
employee to issue a document, which may be accurate but which
he knows the accused will be able to use for a different purpose,
can easily be created by an accused. Much of the bases of this
conclusion will depend on how the trial court judge evaluates the
demeanor of the witnesses. We can defer to that discretion as
much as to make our own judgment based on evidence
conclusively admitted and weighed by the trial court. Using both,
we have no reason to disturb the conclusions of the trial court.

II

Assuming without conceding that petitioner's first marriage was


solemnized without a marriage license, petitioner remains liable
for bigamy. Petitioner's first marriage was not judicially
declared void. Nor was his first wife Gina judicially declared
presumptively dead under the Civil Code.  The second element of
[56]

the crime of bigamy is, therefore, present in this case.

As early as 1968, this court held in Landicho v. Relova, et al.


 that
[57]

parties to a marriage should not be permitted to judge for


themselves its nullity, only competent courts having such
authority. Prior to such declaration of nullity, the validity of the
first marriage is beyond question. A party who contracts a second
marriage then assumes the risk of being prosecuted for bigamy. [58]

The commission that drafted the Family Code considered


the Landicho ruling in wording Article 40 of the Family Code: [59]

Art. 40. The absolute nullity of a previous marriage may be


invoked for purposes of remarriage on the basis solely of a final
judgment declaring such previous marriage void.
Should the requirement of judicial declaration of nullity be
removed as an element of the crime of bigamy, Article 349 of
Revised Penal Code becomes useless. "[A]ll that an adventurous
bigamist has to do is to . . . contract a subsequent marriage and
escape a bigamy charge by simply claiming that the first
marriage is void and that the subsequent marriage is equally void
for lack of a prior judicial declaration of nullity of the
first."  Further, "[a] party may even enter into a marriage aware
[60]

of the absence of a requisite—usually the marriage license—and


thereafter contract a subsequent marriage without obtaining a
judicial declaration of nullity of the first on the assumption that
the first marriage is void."
[61]

For these reasons, the Landicho ruling remains good law. It need


not be revisited by this court En Banc as petitioner insists.
[62]

The third element of bigamy is likewise present in this case.


Petitioner admitted that he subsequently married Alice G.
Eduardo on December 4, 1994.  As for the last element of
[63]

bigamy, that the subsequent marriage has all the essential


requisites for validity, it is presumed. The crime of bigamy was
consummated when petitioner subsequently married Alice without
his first marriage to Gina having been judicially declared void. [64]

With all the elements of bigamy present in this case, petitioner


was correctly convicted of the crime charged.

III

Under the Indeterminate Sentence Law, the maximum term of


the penalty that may be imposed on petitioner is that which, in
view of the attending circumstances, could be properly imposed
under the Revised Penal Code. On the other hand, the minimum
term of the penalty shall be within the range of the penalty next
lower to that prescribed by the Revised Penal Code for the
offense. The court then has the discretion to impose a minimum
penalty within the range of the penalty next lower to the
prescribed penalty. As for the maximum penalty, the attending
circumstances are considered.[65]

The imposable penalty for bigamy is prision mayor.  The penalty


[66]

next lower to that is prision correccional. Prision


correccional ranges from six (6) months and one (1) day to six
(6) years;  hence, the minimum penalty can be any period within
[67]

this range.

As for the maximum penalty, it should be within the range


of prision mayor in its medium period, there being no mitigating
or aggravating circumstances. Prision mayor in its medium period
ranges from eight (8) years and one (1) day to 10 years.

Petitioner was sentenced to suffer the indeterminate penalty of


two (2) years and four (4) months of prision correccional as
minimum to eight (8) years and one (1) day of prision mayor as
maximum. The ranges of the minimum and maximum penalties
are within the ranges as previously computed. The indeterminate
penalty imposed was proper.

Nevertheless, "[k]eeping in mind the basic purpose of the


Indeterminate Sentence Law 'to uplift and redeem valuable
human material, and prevent unnecessary and excessive
deprivation of personal liberty and economic usefulness[,]'"  we
[68]

lower the minimum of the indeterminate penalty to six (6)


months and one (1) day of prision correccional. Petitioner is,
thus, sentenced to suffer the indeterminate penalty of six (6)
months and one (1) day of prision correccional as minimum to
eight (8) years and one (1) day of prision mayor as maximum.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The Court of Appeals Decision dated July 18, 2012 and Resolution
dated June 3, 2013 in CA-G.R. CR No. 33936 are AFFIRMED
with MODIFICATION. Petitioner Norberto A. Vitangcol is
sentenced to suffer the indeterminate penalty of six (6) months
and one (1) day of prision correccional as minimum to eight (8)
years and one (1) day of prision mayor as maximum.
SO ORDERED.

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


concur.

[1]
 Rollo, pp. 9-26.

 Id. at 29-37. The Decision was penned by Associate Justice


[2]

Stephen C. Cruz and concurred in by Associate Justices


Magdangal M. de Leon (Chair) and Myra V. Garcia-Fernandez of
the Eleventh Division.

 Id. at 46-47. The Resolution was penned by Associate Justice


[3]

Stephen C. Cruz and concurred in by Associate Justices


Magdangal M. de Leon (Chair) and Myra V. Garcia-Fernandez of
the Eleventh Division.

 Id. at 48-58. The Decision dated September 1, 2010 was


[4]

penned by Presiding Judge Aida Rangel-Roque.

[5]
 Id. at 58.

[6]
 Id. at 36-37, Court of Appeals Decision.

 Id. at 29-30, Court of Appeals Decision, and 48, Regional Trial


[7]

Court Decision.

[8]
 Id. at 48, Regional Trial Court Decision.

 Id. at 30, Court of Appeals Decision, and 48, Regional Trial


[9]

Court Decision.

[10]
 Id. at 30, Court of Appeals Decision.

[11]
 Id.
[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id. at 53, Regional Trial Court Decision.

[16]
 Id.

[17]
 Id. at 30-31, Court of Appeals Decision.

[18]
 Id. at 31.

[19]
 Id.

[20]
 Id.

[21]
 Id. at 58, Regional Trial Court Decision.

[22]
 Id. at 36-37, Court of Appeals Decision.

[23]
 Id. at 38-44.

[24]
 Id. at 47, Court of Appeals Resolution.

[25]
 Id. at 168-179.

[26]
 Id. at 195-205.

[27]
 Id. at 19-24, Petition.

[28]
 Id. at 119. The Certification was dated March 19, 2008.

[29]
 Id. at 19-24, Petition.

[30]
 Id.
[31]
 Id. at 24.

[32]
 Id.

[33]
 Id. at 170-177, Comment.

 Tenebro v. Court of Appeals, 467 Phil. 723, 738 (2004) [Per J.


[34]

Ynares-Santiago, En Banc].

[35]
 Memo. Circ. No. 85 (1988).

[36]
 Rep. Act No. 386 (1949).

[37]
 CIVIL CODE, art. 80 provides:

Article 80. The following marriages shall be void from the


beginning:
(1) Those contracted under the ages of sixteen and fourteen
years by the male and female respectively, even with the consent
of the parents;

(2) Those solemnized by any person not legally authorized to


perform marriages;

(3) Those solemnized without a marriage license, save marriages


of exceptional character;

(4) Bigamous or polygamous marriages not falling under article


83, number 2;

(5) Incestuous marriages mentioned in article 81;

(6) Those where one or both contracting parties have been found
guilty of the killing of the spouse of either of them;

(7) Those between stepbrothers and stepsisters and other


marriages specified in article 82.
[38]
 CIVIL CODE, art. 58 provides:

Article 58. Save marriages of an exceptional character authorized


in Chapter 2 of this Title, but not those under article 75, no
marriage shall be solemnized without a license first being issued
by the local civil registrar of the municipality where either
contracting party habitually resides.

 Alcantara v. Alcantara, 558 Phil. 192, 202 (2007) [Per J. Chico-


[39]

Nazario, Third Division].

[40]
 Id. at 203-204.

[41]
 Rollo, p. 119.

 See Sevilla v. Cardenas, 529 Phil. 419,429 (2006) [Per J.


[42]

Chico-Nazario, First Division].

[43]
 Rollo, p. 48, Regional Trial Court Decision.

 See Tenebro v. Court of Appeals, 467 Phil. 723, 740 (2004)


[44]

[Per J. Ynares-Santiago, En Banc].

[45]
 Id.

 G.R. No. 103047, September 2, 1994, 236 SCRA 257 [Per J.


[46]

Puno, Second Division]

[47]
 Id. at 258.

[48]
 Id. at 259.

[49]
 Id. at 262.

 Id. RULES OF COURT, Rule 132, sec. 29 is renumbered to Rule


[50]

132, sec. 28. RULES OF COURT, Rule 132, sec. 28 provides:

Rule 132. Presentation of Evidence


B. Authentication and Proof of Documents

SECTION 28. Proof of lack of record. — A written statement


signed by an officer having the custody of an official record or by
his deputy that after diligent search no record or entry of a
specified tenor is found to exist in the records of his office,
accompanied by a certificate as above provided, is admissible as
evidence that the records of his office contain no such record or
entry.

[51]
 403 Phil. 861 (2001) [Per J. Ynares-Santiago, First Division].

[52]
 Id. at 869.

[53]
 Id.

[54]
 Id. at 870.

[55]
 Rollo, p. 52, Regional Trial Court Decision.

[56]
 CIVIL CODE, art. 83 provides:

Article 83. Any marriage subsequently contracted by any person


during the lifetime of the first spouse of such person with any
person other than such first spouse shall be illegal and void from
its performance, unless:
(1) The first marriage was annulled or dissolved; or

(2) The first spouse had been absent for seven consecutive years
at the time of the second marriage without the spouse present
having news of the absentee being alive, or if the absentee,
though he has been absent for less than seven years, is generally
considered as dead and believed to be so by the spouse present
at the time of contracting such subsequent marriage, or if the
absentee is presumed dead according to articles 390 and 391.
The marriage so contracted shall be valid in any of the three
cases until declared null and void by a competent court.
[57]
 130 Phil. 745 (1968) [Per J. Fernando, En Banc].

[58]
 Id. at 750.

 See Marbella-Bobis v. Bobis, 391 Phil. 648, 654 (2000) [Per J.


[59]

Ynares-Santiago, First Division].

 Marbella-Bobis v. Bobis, 391 Phil. 648, 654 (2000) [Per J.


[60]

Ynares-Santiago, First Division].

[61]
 Id.

 Rollo, pp. 209-216, Motion to Refer the Case to the Honorable


[62]

Supreme Court En Banc.

[63]
 Id. at 48, Regional Trial Court's Decision.

 See Jarillo v. People, 617 Phil. 45, 53 (2009) [Per J. Peralta,


[64]

Third Division].

[65]
 Act No. 4103, sec. 1, as amended by Act No. 4225.

[66]
 REV. PEN. CODE, Art. 349.

[67]
 REV. PEN. CODE, Art. 27.

 People v. Ducosin, 59 Phil. 109, 117 (1933) [Per J. Butte, En


[68]

Banc].

Source: Supreme Court E-Library | Date created: March 06, 2018


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752 PHIL. 123
SECOND DIVISION

[ G.R. No. 168616, January 28, 2015 ]


HOME GUARANTY CORPORATION, PETITIONER,
VS. LA SAVOIE DEVELOPMENT CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

This is a Petition for Review on Certiorari praying that the


assailed Decision  dated June 21, 2005 of the Court of Appeals in
[1]

CA G.R. CV No. 80241 be reversed and set aside. In the


alternative, it prays that certain properties supposedly conveyed
by respondent La Savoie Development Corporation to petitioner
Home Guaranty Corporation  be excluded from the rehabilitation
[2]

plan of La Savoie Development Corporation, should its Petition for


Corporate Rehabilitation be given due course.

The assailed Decision of the Court of Appeals reversed and set


aside the Order  dated October 1, 2003 of the Regional Trial
[3]

Court, Makati City, reinstated the Stay Order issued by the


Regional Trial Court on June 4, 2003, gave due course to La
Savoie's Petition for Corporate Rehabilitation, and remanded the
case to the Regional Trial Court for further proceedings.  The
[4]

Regional Trial Court's June 4, 2003 Stay Order stayed the


enforcement of all claims, monetary or otherwise, and whether in
court or otherwise, against La Savoie Development Corporation.

La Savoie Development Corporation (La Savoie) is a domestic


corporation incorporated on April 2, 1990. It is engaged in the
business of "real estate development, subdivision and
brokering."[5]
With the onset of the Asian financial crisis in 1997, the
devaluation of the Philippine peso and due to other factors such
as lack of working capital; high interest rates, penalties, and
charges; low demand for real estate properties; and poor peace
and order situations in some of its project sites, La Savoie found
itself unable to pay its obligations to its creditors. Thus, on April
25, 2003, La Savoie filed before the Regional Trial Court, Makati
City  a "petition for the declaration of state of suspension of
[6]

payments with approval of proposed rehabilitation plan"  under


[7]

the Interim Rules of Procedure on Corporate


Rehabilitation  (Interim Rules).
[8]

The proceedings before the Regional Trial Court were initially held
in abeyance as La Savoie failed to attach to its Petition some of
the requirements under Rule 4, Section 2 of the Interim Rules.
 With La Savoie's compliance and finding its "petition to be
[9]

sufficient in form and substance,"  then Regional Trial Court


[10]

Judge Estela Perlas-Bernabe issued the Stay Order dated June 4,


2003 staying the enforcement of all claims against La Savoie. The
entirety of this Order reads:
ORDER

Finding the petition to be sufficient in form and substance, the


enforcement of all claims, whether for money or otherwise, and
whether such enforcement is by court action or otherwise, against
petitioner La Savoie Development Corporation, its guarantors and
sureties not solidarily liable with it, is stayed.

As a consequence of the stay order, petitioner is prohibited from


selling, encumbering, transferring, or disposing in any manner
any of its properties except in the ordinary course of business. It
is further prohibited from making any payment of its liabilities
outstanding as of the date of the filing of the petition on April 25,
2003. Its suppliers of goods or services are likewise prohibited
from withholding supply of goods and services in the ordinary
course of business for as long as it makes payments for the
services and goods supplied after the issuance of the stay order.
Petitioner is directed to pay in full all administrative expenses
incurred after the issuance of the stay order.

The initial hearing on the petition is set on July 22, 2003 at 8:30
o'clock in the morning at the 3  Floor, Gusali ng Katarungan, F.
rd

Zobel St., Makati City.

All creditors and interested parties including the Securities and


Exchange Commission are directed to file and serve on petitioner
a verified comment on or opposition to the petition with
supporting affidavits and documents, not later than ten (10) days
before the date of the initial hearing. Failure to do so will bar
them from participating in the proceedings. Copies of the petition
and its annexes may be secured from the court within such time
as to enable them to file their comment on or opposition to the
petition and to prepare for its initial hearing.

Petitioner is directed to publish this Order in a newspaper of


general circulation in the Philippines once'a week for two (2)
consecutive weeks and to file to this Court within five (5) days
before the initial hearing the publisher's affidavit shewing
compliance with the publication requirements.

Mr. Rito C. Manzana with address at 26B One Lafayette


Condominium cor. Leviste and Cedeno Manor St., Salcedo Village,
Makati City is appointed Rehabilitation Receiver of Petitioner. He
may discharge his duties and functions as such after taking his
oath to perform his duties and functions faithfully and posting a
bond in the amount of P100,000.00 to guarantee the faithful
discharge of his duties and obedience to the orders of the court.

Petitioner is directed to immediately serve a copy of this Order to


Mr. Manzana who is directed to manifest his acceptance or non-
acceptance of his appointment not later than ten (10) days from
receipt of this order.

SO ORDERED.
Given this 4  day of June, 2003 at Makati City.
th

ESTELA PERLAS-BERNABE
[sgd.]
Judge [11]

Following the issuance of the June 4, 2003 Stay Order, La


Savoie's creditors — Planters Development Bank, Philippine
Veterans Bank, and Robinsons Savings Bank — filed their
Comments and/or Oppositions. [12]

Home Guaranty Corporation filed an Opposition  even though "it


[13]

[was] not a creditor of Petitioner."  It asserted that it had a


[14]

"material and beneficial interest in the . . . Petition, in relation to


the interest of Philippine Veterans Bank (PVB), Planters
Development Bank (PDB), and Land Bank of the Philippines
(LBP), which are listed as creditors of Petitioner vis-a-vis certain
properties or assets that might have been taken cognizance of,
and placed under the custody of the [Regional Trial] Court
and[/]or the appointed Rehabilitation Receiver." [15]

Home Guaranty Corporation noted that through the "La Savoie


Asset Pool Formation and Trust Agreement"  (Trust Agreement),
[16]

La Savoie obtained financing for some of its projects through a


securitization process in which Planters Development Bank as
nominal issuer issued PI50 million in asset participation
certificates dubbed as the "La Savoie Development
Certificates"  (LSDC certificates) to be sold to investors. The
[17]

projects financed by these certificates consisted of the


development of real properties in General Trias, Cavite; Sto.
Tomas, Batangas; Los Banos, Laguna; and Quezon City. The
same properties were conveyed in trust by La Savoie, as trustor,
to Planters Development Bank, as trustee, and constituted into
the La Savoie Asset Pool (Asset Pool). [18]

The redemption of the LSDC certificates upon maturity and the


interest payments on them were "backed/collateralized by the
assets that were conveyed by [La Savoie] to the
Trust."  Moreover, the LSDC certificates were covered by a
[19]

guaranty extended by Home Guaranty Corporation through a


"Contract of Guaranty"  entered into by Home Guaranty
[20]

Corporation with La Savoie and Planters Development Bank.

Section 17 of the Contract of Guaranty designates Home


Guaranty Corporation to "undertake financial controllerships of
the Projects."  Thus, in its Opposition, Home Guaranty
[21]

Corporation noted that it was "charged with the duty of ensuring


that all funds due to the Asset Pool are collected, and that funds
are disbursed for the purposes they were intended for." [22]

Home Guaranty Corporation added that in the course of its


business, La Savoie collected a total amount of P60,569,134.30
from the buyers of some of the properties covered by the Asset
Pool. This amount, however, was not remitted by La Savoie to the
trust. With La Savoie's failure to complete some of its projects
and failure to remit sales collections, the Asset Pool defaulted in
redeeming and paying interest on the LSDC certificates. Thus, La
Savoie's investors placed a call on the guaranty.  With La [23]

Savoie's failure to remit collections, however, Home Guaranty


Corporation held in abeyance the settlement of the investors' call.
This settlement was then overtaken by the filing of La Savoie's
Petition for Rehabilitation. [24]

Home Guaranty Corporation argued that it and the investors on


the LSDC certificates had "preferential rights"  over the
[25]

properties making up the Asset Pool as these "were conveyed as


security or collaterals for the redemption of the [LSDC
certificates]."  Thus, they should be excluded from the coverage
[26]

of La Savoie's Petition for Rehabilitation.

On September 1, 2003, La Savoie filed a Consolidated


Answer  to the Comments/Oppositions. It argued that the
[27]

assignment of assets to the Asset Pool was not absolute and


subject to certain conditions. Specifically, it asserted that for the
assignment to take effect, Home Guaranty Corporation had to
first pay the holders of the LSDC certificates. Thus, La Savoie
claimed that the properties comprising the Asset Pool remained to
be its assets. [28]

In the interim, a Verification Report on Accuracy of Petition was


filed by the Rehabilitation Receiver.
[29]

On October 1, 2003, the Regional Trial Court issued an


Order  denying due course to La Savoie's Petition for
[30]

Rehabilitation and lifting the June 4, 2003 Stay Order. The trial
court reasoned that the "findings of sufficiency in the form and
substance of the petition for which a stay order was issued has
been flawed"  and that "[i]t cannot countenance a situation such
[31]

as this where the petitioner files a petition on the basis of


inaccurate or unverifiable allegations and false
representations."  It noted that per the Rehabilitation Receiver's
[32]

Report, there were "various inaccuracies in the material


allegations of the petition and its annexes."  Several documents
[33]

"to verify other material statements made therein" were also


lacking.  It added that La Savoie "has not presented any
[34]

concrete and feasible plan on how it will be able to secure


additional funds to continue with the development of its raw land
and on-going joint-venture projects." [35]

Aggrieved, La Savoie filed an Appeal before the Court of Appeals.


It filed its Appellant's Brief on May 5, 2004. [36]

In the meantime, Home Guaranty Corporation approved and


processed the call on the guaranty for the redemption of the
LSDC certificates. Thus, Home Guaranty Corporation, through
Planters Development Bank, paid a total of P128.5 million as
redemption value to certificate holders. Acting on this, Planters
Development Bank executed a "Deed of Assignment and
Conveyance"  in favor of Home Guaranty Corporation through
[37]

which, in the words of Home Guaranty Corporation, Planters


Development Bank "absolutely conveyed and assigned to [Home
Guaranty Corporation] the ownership and possession of the entire
assets that formed part of the La Savoie Asset Pool."  Home[38]

Guaranty Corporation claims, in addition, that, through the same


Deed, Planters Development Bank "absolutely conveyed and
assigned to [Home Guaranty Corporation] the right to collect
from [La Savoie] cash receivables . . . representing the amount
collected by [La Savoie] from sales in the course of the
development of the projects which it failed to remit to the
Trust."[39]

On August 18, 2004, Home Guaranty Corporation filed its


Appellee's Brief.  It argued that all of the properties comprising
[40]

the Asset Pool should be excluded from the rehabilitation


proceedings in view of the Deed of Assignment and Conveyance
executed in its favor by Planters Development Bank.  Attached to
[41]

this Brief was a copy of the Deed of Assignment and Conveyance.


[42]

In the Decision  dated June 21, 2005, the Court of Appeals


[43]

Special Twelfth Division reversed and set aside the Regional Trial
Court's October 1, 2003 Order, reinstated the Stay Order, gave
due course to the Petition for Rehabilitation, and remanded the
case to the trial court for further proceedings.

The Court of Appeals characterized the inaccuracies noted by the


trial court as "minor" and "trivial,"  as well as insufficient to
[44]

render as "false" the allegations made by La Savoie in its Petition


for Rehabilitation. It added that La Savoie "convincingly showed
that it could undertake to market its projects through [the] Pag-
Ibig Overseas Program, sell the existing inventories of unsold
subdivision lots and use the un-remitted collections due to HGC
which will be converted as additional loan to fund its on-going
projects."  Regarding Home Guaranty Corporation's payment of
[45]

the guaranty call, the Court of Appeals noted that it was made
after the Petition for Rehabilitation had been brought by La
Savoie and after the issuance of the Stay Order; thus, Home
Guaranty Corporation had no right to make such payment.

On August 12, 2005, Home Guaranty Corporation filed before this


court the present Petition for Review on Certiorari under Rule 45
of the 1997 Rules of Civil Procedure.
[46]
Home Guaranty Corporation asserts 'that the properties
comprising the Asset Pool should be excluded from the
rehabilitation proceedings as these have now been "removed
from the oominion"  of La Savoie and have been conveyed and
[47]

assigned to it. It underscores that the transfer made to it by


Planters Development Bank was made after the Stay Order had
been lifted, per the Regional Trial Court's October 1, 2003 Order.

On October 28, 2005, La Savoie filed its Comment.  It claimed


[48]

that the supposed assignment and conveyance to Home Guaranty


Corporation was ineffectual considering that "at the time of the
guaranty call, the Stay Order dated 04 June 2003 was admittedly
in effect."  La Savoie faulted Home Guaranty Corporation for
[49]

supposedly not adducing proof of the transfer effected to it by


Planters Development Bank on the strength of its payment on the
guaranty. It added that, even assuming there was full payment
and that the Deed of Assignment and Conveyance was executed,
"the Subject Properties remained within the jurisdiction of the
[Regional Trial Court] even after the lifting of the Stay Order
dated 04 June 2003"  and that, as a result, "any contract or
[50]

document affecting title to the Subject Properties is also subject


to the rehabilitation proceedings pending with the [trial
court]."  It also asserted that by paying the guaranty, Home
[51]

Guaranty Corporation effectively became its creditor. Excluding


the properties comprising the Asset Pool from the rehabilitation
proceedings would then be tantamount to giving preference to
one creditor, something which is prohibited in rehabilitation
proceedings.

Apart from these, La Savoie ascribes procedural infirmities


against Home Guaranty Corporation's Petition. First, it claimed
that Atty. Danilo C. Javier, the officer who signed the Petition's
verification and certification of non-forum shopping was not
authorized to do so. Second, it claimed that Home Guaranty
Corporation engaged in forum shopping.
On February 6, 2006, Home Guaranty Corporation filed its Reply
to La Savoie's Comment.  In response to La Savoie's allegation
[52]

that there was no proof of its payment of the redemption value of


the LSDC certificates and the resultant transfer to it of the Asset
Pool, Home Guaranty Corporation noted that the following
documents were already attached to its Appellee's Brief and were
re-attached to its Reply: the Deed of Assignment and
Conveyance; the Trust Agreement; the Contract of Guaranty; and
certificates of title covering each of the properties comprising the
Asset Pool.

For resolution is the central issue of whether the properties


comprising the Asset Pool should be excluded from the
proceedings on La Savoie Development Corporation's Petition for
Rehabilitation. The resolution of this issue hinges on whether the
conveyance to Home Guaranty Corporation of the properties
comprising the Asset Pool was valid and effectual. The resolution
of this is, in turn, contingent on the following:

First, whether following the issuance of the Regional Trial Court's


October 1, 2003 Order and pending La Savoie's Appeal, Home
Guaranty Corporation was barred from making payment on the
guaranty call, and Planters Development Bank, concomitantly
barred from conveying the properties comprising the Asset Pool
to Home Guaranty Corporation; and

Second, whether the payment by Home Guaranty Corporation


and the conveyance of the properties by Planters Development
Bank made Home Guaranty Corporation a creditor of La Savoie
and whether recognizing the validity of the transfer made to
Home Guaranty Corporation was tantamount to giving it
inordinate preference as a creditor.

Apart from these are the procedural errors ascribed by La Savoie


to Home Guaranty Corporation and thus the following issues:
First, whether Atty. Danilo C. Javier was authorized to sign the
verification and certificate of non-forum shopping of Home
Guaranty Corporation's Petition; and

Second, whether Home Guaranty Corporation engaged in forum


shopping.

Atty. Danilo C. Javier was authorized to sign the verification and


certificate of non-forum shopping on behalf of Home Guaranty
Corporation.

As pointed out by Home Guaranty Corporation, its board of


directors issued Board Resolution No. 30, Series of 2001,
"specifically authorizing the President of petitioner to designate
the officer to institute the appropriate legal actions[.]"  It was
[53]

pursuant to this resolution that Atty. Danilo C. Javier, Home


Guaranty Corporation's then Officer-in-Charge and Vice President
for Legal, was made signatory to the present Petition's
verification and Certification of non-forum shopping.

The relevant portion of this Resolution reads:


The request for authority for the HGC President, Executive Vice-
President and Vice Presidents as the President may designate or
authorize, to institute appropriate legal actions as the President
may deem proper or necessary to protect the interest of the
corporation be, as it is hereby approved.

Resolved Further That, the said authority shall include but not be
limited to, the verification of Complaints, Petitions, Answer, Reply
and other initiatory or responsive pleadings as the circumstances
may warrant. . . .[54]

II

La Savoie pointed out that (as of the time of the filing of its
Comment) another case between Home Guaranty Corporation
and La Savoie, docketed as Civil Case No. 05314, was pending
before the Makati City Regional Trial Court. [55]

In its reply, Home Guaranty Corporation acknowledged the


pendency of Civil Case No. 05314. It, however, pointed out that it
could not have been guilty of forum shopping as the present case
is an offshoot of a Petition for Corporate Rehabilitation while Civil
Case No. 05314 is an action for injunction, mandamus, specific
performance, and sum of money with application for temporary
restraining order and/or preliminary prohibitory and mandatory
injunction.  Home Guaranty Corporation claimed that it had to
[56]

file Civil Case No. 05314 to compel La Savoie to remit to. it


payments collected from the buyers of La Savoie's real estate
development projects and which La Savoie was supposedly
wrongly withholding from it considering that Home Guaranty
Corporation was now the owner of the properties comprising the
Asset Pool.

Aboitiz Equity Ventures v. Chiongbian  discussed forum


[57]

shopping:
The concept of and rationale against forum shopping were
explained by this court in Top Rate Construction & General
Services, Inc. v. Paxton Development Corporation: [58]

FORUM SHOPPING is committed by a party who institutes 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 or to grant the same or substantially the same
reliefs, on the supposition that one or the other court would make
a favorable disposition or increase a party's chances of obtaining
a favorable decision or action. It is an act of malpractice for it
trifles with the courts, abuses their processes, degrades the
administration of justice and adds to the already congested court
dockets. What is critical is the vexation brought upon the courts
and the litigants by a party who asks different courts to rule on
the same or related causes an.d grant the same or substantially
the same reliefs and in the process creates the possibility of
conflicting decisions being rendered by the different fora upon the
same issues, regardless of whether the court in which one of the
suits was brought has no jurisdiction over the action.[59]

Equally settled is the test for determining forum shopping. As this


court explained in Yap v. Chua: [60]

To determine whether a party violated the rule against forum


shopping, the most important factor to ask is whether the
elements of litis pendentia are present, or whether a final
judgment in one case will amount to res judicata in another;
otherwise stated, the test for determining forum shopping is
whether in the two (or more) cases pending, there is identity of
parties, rights or causes of action, and reliefs sought.
[61]

Litis pendentia "refers to that situation wherein another action is


pending between the same parties for the same cause of action,
such that the second action becomes unnecessary and
vexatious."  It requires the concurrence of three (3) requisites;
[62]

"(1) the identity of parties, or at least such as representing the


same interests in both actions; (2) the identity of rights asserted
and relief prayed for, the relief being founded on the same facts;
and (3) the identity of the two cases such that judgment in one,
regardless of which party is successful, would amount to res
judicata in the other."
[63]

In turn, prior judgment or res judicata bars a subsequent case


when the following requisites concur: "(1) the former judgment is
final; (2) it is rendered by a court having jurisdiction over the
subject matter and the parties; (3) it is a judgment or an order
on the merits; (4) there is — between the first and the second
actions — identity of parties, of subject matter, and of causes of
action."
[64]

It is not disputed that there is identity of parties in the present


Petition and in Civil Case No. 05314. Home Guaranty Corporation,
however, argues that it could not have been guilty of forum
shopping as the relief it sought via Civil Case No. 05314 (i.e., the
restraining of collections and remission to it of funds collected by
La Savoie) is different from the relief it is seeking in the present
Appeal from the Court of Appeals' Decision giving due course to
La Savoie's Petition for Corporate Rehabilitation.
The divergence in specific reliefs sought notwithstanding, Home
Guaranty Corporation's bases for these reliefs are the same. In
Civil Case No. 05314, Home Guaranty Corporation asked that La
Savoie cease collecting payments and that collected payments be
remitted to it because it supposedly now owns the real estate
development projects of La Savoie that form part of the Asset
Pool. In the present Appeal, Home Guaranty Corporation asks
that the properties forming part of the Asset Pool be excluded
from corporate rehabilitation proceedings because it, and no
longer La Savoie, is the owner of these properties.

Thus, in both cases, Home Guaranty Corporation is invoking the


same right and is proceeding from the same cause of action, i.e.,
its supposed ownership. True, there is divergence in the details of
the specific reliefs it is seeking, but Home Guaranty Corporation
is seeking the same basic relief, i.e., the recognition of its alleged
ownership. The exclusion of the properties from corporate
rehabilitation proceedings and the remittance to it of payments
are mere incidents of this basic relief. Accordingly, in
simultaneously pursuing the present case and Civil Case No.
05314, Home Guaranty Corporation engaged in forum shopping.

It is worth emphasizing that the present Petition or Appeal, being


a mere offshoot of La Savoie's original Petition for Rehabilitation,
is not the act constitutive of forum shopping. Forum shopping
was committed not through the filing of this Appeal but through
the filing of Civil Case No. 05314 before the Regional Trial Court.
In any case, apart from this procedural lapse, we find the transfer
of the Asset Pool to Home Guaranty Corporation, without going
through foreclosure proceedings, to be in violation of the rule
against pactum commissorium. It is ineffectual and does not
divest La Savoie of ownership. Thus, even if valid payment was
made by Home Guaranty Corporation on its guaranty, ownership
of the properties comprising the Asset Pool was not vested in it.
Accordingly, Home Guaranty Corporation must await the
disposition of La Savoie's Petition for Rehabilitation in order that a
resolution may be had on how La Savoie's obligations to it shall
be settled.
III

A necessary step in resolving this Petition is a consideration of


the parties and the rights and obligations they have as against
each other, as borne by the agreements they entered into and
which now bind them.

The Trust Agreement  stated


[65]
that La Savoie, as
"landowner/developer," had subdivision and housing projects in
several areas that were collectively referred to as the "La Savoie
Project" or simply as the "Project." Its first preambular clause
reads:
WHEREAS, the LANDOWNER/DEVELOPER, has subdivision and
housing projects located in San Rafael, Bulacan; Banlat, Quezon
City; Gen. Trias, Cavite[;] Sto. Tomas, Batangas; and Los Bailos,
Laguna, totalling 37 hectares, more or less, collectively called the
La Savoie Project (the PROJECT)[.] [66]

On how the project was to be financed, the Trust Agreement


added that "the development and implementation of the PROJECT
[was to be] funded through the issuance and sale of asset
participation certificates known as La Savoie Development
Certificates." Planters Development Bank was specified to be the
"nominal issuer" of these certificates. The Trust Agreement's
second and fourth preambular clauses as well as its Section 4.5
read:
WHEREAS, the development and implementation of the PROJECT
will be funded through the issuance and sale of asset participation
certificates known as La Savoie Development Certificates (the
LSDCs) backed by the asset pool consisting of said real estate
properties and the products and results of their planned
development; [67]

....

WHEREAS, the LANDOWNER/DEVELOPER has appointed the


Planters Development Bank as TRUSTEE and nominal issuer and
Planters Development Bank through its Trust Department has
agreed to perform the functions and responsibilities of a TRUSTEE
as defined hereunder; [68]

....

Section 4.5. Nominal Issuer. The TRUSTEE shall act as nominal


issuer only of all LSDCs. In no case shall the TRUSTEE be liable
for the payment of any amount due to the holder of the LSDC.
The TRUSTEE shall be free from any liability in the event that the
Asset Pool is not sufficient for the redemption of all the LSDCs. In
the event of the nonpayment of the LSDC, the LSDC holder's
exclusive recourse shall be to claim against the HIGC guarantee.
The TRUSTEE shall not be responsible for the failure of HIGC to
pay any amount due to any holder of the LSDC. [69]

These LSDC certificates were "backed" or secured by "real estate


properties and the products and results of their planned
development." More specifically, Section 3.1 of the Trust
Agreement provides for the establishment of the Asset Pool in
which La Savoie "convey[ed], assign[ed], delivered] all its rights
and interests in the real estate properties to the TRUSTEE for the
present and future holders of LSDCs." The third preambular
clause and Section 3.1 of the Trust Agreement read:
WHEREAS, the LANDOWNER/DEVELOPER has agreed to convey
the real estate properties of the PROJECT to a TRUSTEE to form
the La Savoie Project (LSP) Asset Pool which shall be held by the
TRUSTEE for the pro rata and pro indiviso benefit of the holders
of the LSDCs to the extent defined in this Agreement and,
residually for the benefit of the LANDOWNER/DEVELOPER; [70]

....

Section 3.1. Establishment of Starting Asset Pool. The


LANDOWNER/ DEVELOPER hereby establishes a trust, for
purposes of this securitization and formation of the corresponding
Asset pool, out of the properties pertaining to the PROJECT
development and operation, and accordingly does hereby convey,
assign and deliver all its rights and interests in the real estate
properties identified and described through their respective
transfer certificates of title (TCTs) listed in Annex B through B-
1covering properties for Las Palmas Village in Sto. Tomas,
Batangas[;] Buenavista Park in San Rafael, Bulacan; Gen. Trias
Homes in Gen. Trias, Cavite; and La Chesa Heights in Tandang
Sora, Q.C.; Annex C through C-2 covering properties for La Chesa
Valley Estate owned by MHC Realty under a Joint-Venture
Agreement with [La Savoie Development Corporation]; Annex D
covering properties owned by Lenard Lopez under a Joint Venture
Agreement with [La Savoie Development Corporation]; together
with Annexes E and F the Joint Venture Agreements with MHC
Realty Corporation and Lenard Lopez together with the
Supplemental Agreements, attached as integral parts hereof,
together with all present and future improvements thereon and
the corresponding muniments of ownership of the properties,
subject to the reservations concerning the interests of joint-
venturers defined hereunder, to the TRUSTEE for the benefit of
the present and future holders of the LSDCs, in accordance with
the terms and conditions provided herein. The reservations
above-stated refer to the interests of the joint-venturers of the
LANDOWNER/DEVELOPER as follows: [71]

Per the Trust Agreement's fourth preambular clause, Planters


Development Bank was named trustee of the Asset Pool. The
same clause specified that it held the Asset Pool "for the pro rata
and pro indiviso benefit of the holders of the LSDCs and,
residually for the benefit of the [landowner/developer, i.e., La
Savoie]." Moreover, in Section 3.2 of the Trust Agreement:
Section 3.2. Acceptance by the TRUSTEE. The TRUSTEE hereby
acknowledges and accepts the documents delivered by the
LANDOWNER/DEVELOPER and signed for by the TRUSTEE and the
property interests and rights conveyed in Section 3.1, as well as
those which may from time to time be conveyed and intended to
form part of the Asset Pool, and declares that the said TRUSTEE
holds and will hold the said documents and assets, including
properties and values yet to be received by it as TRUSTEE under
this Agreement, for the benefit of all present and future holders
of the LSDCs, as well as the ultimate owner(s) of the residual
assets and values of the Asset Pool, all in accordance with the
terms and conditions of this Trust Agreement. [72]
Apart from the Asset Pool, the LSDC certificates were also
secured by a guaranty. The guaranty was referenced in the Trust
Agreement in the following provisions:
ARTICLE I
DEFINITION OF TERMS

The following words and phrases used in this Agreement shall


have the respective meanings hereunder indicated unless the
contrary clearly appears from the context:
....

4. Contract of Guaranty - shall refer to the Contract of Guaranty


executed by and among the TRUSTEE, HIGC and the
LANDOWNER/DEVELOPER dated, a copy of which is hereto
attached as Annex A including any amendment/revision and
modification, thereof.

....

6. Guarantor - shall refer to the Home Insurance and Guaranty


Corporation (HIGC). [73]

....

Section 2.4. The Home Insurance and Guaranty Corporation. The


roles and responsibilities of the HIGC shall be as follows:
2.4 Provide guaranty coverage for the LSDCs in accordance with its policies and as pro
.1 of Guaranty executed by the parties.

2.4 Act as the Financial Controller in the implementation of the PROJECTS involved
.2 Operations and Accounting Manual as approved by the Governing Board.

2.4 Designate its representative in the Governing Board who shall act as the Chairman t
.3
Section 3.4 of the Trust Agreement provides that in the event
that a call is made on Home Guaranty Corporation for its
guaranty, Planters Development Bank shall convey to the former
the Asset Pool:
Section 3.4. Conveyance to HIGC. Express authority is hereby
granted by the LANDOWNER/DEVELOPER to the TRUSTEE that in
the event of call upon the HIGC guaranty for unredeemed LSDCs
and in order to effect the redemption of the same by the latter, to
make the absolute conveyance to HIGC of the entire Asset Pool,
subject to the reservations regarding joint-venturers [sic]
interests as defined in Section 3.1, a and b above and subject
further to the provision of the aforementioned Contract of
Guaranty. [75]

This conveyance shall be on the strength of the special power of


attorney executed by La Savoie in favor of Planters Development
Bank, in accordance with Section 2.1.6 of the Trust Agreement:
Section 2.1. - The LANDOWNER/DEVELOPER shall:
2.1.6 Execute and deliver to the TRUSTEE an irrevocable Special
Power of Attorney a Secretary's Certificate per enclosed Annex G
giving the TRUSTEE the full power and authority to make the
absolute conveyance of the entire LSP Asset Pool in favor of the
HIGC in the event of call upon the HIGC guaranty for
unredeemed LSDCs and in order to effect the redemption of the
same by the HIGC in accordance with the provisions of the
Contract of Guaranty.[76]

In sum, these contractual provisions evince the following relations


1. A trust relation, with respect to the Asset Pool, in which La
Savoie is the trustor, Planters Development Bank is the
trustee, and the holders of the LSDC certificates are the
beneficiaries;
2. A credit relation, with respect to the LSDC certificates, in
which La Savoie is the debtor (Planters Development Bank
being a mere nominal issuer), the holders of the LSDC
certificates are the creditors, and Home Guaranty
Corporation is the guarantor. (It will be recalled that Home
Guaranty Corporation itself acknowledged, in the Opposition
it filed before the Regional Trial Court, that it was not a
creditor of La Savoie.); and
3. An agency relation, with respect to the transfer of the real
properties in the Asset Pool should the guarantor pay for the
LSDC certificates, in which La Savoie is the principal and
Planters Development Bank is the agent. In this event,
Home Guaranty Corporation is the transferee.
On Home Guaranty Corporation's guaranty, Section 12 of the
Contract of Guaranty entered into by Home Guaranty
Corporation, La Savoie and Planters Development Bank provide
for the events in which Home Guaranty Corporation may be called
to pay for the LSDC certificates:
12

12.
1.

12.
2

12.
3

(a)

(b)
Section 13 of the Contract of Guaranty provides for how guaranty
claims are to be processed and paid by Home Guaranty
Corporation. Likewise, it echoes Section 3.4 of the Trust
Agreement in providing for transfer of the Asset Pool in the event
of a call on the guaranty:
13

13.
1.

a. Deed of Assignment and Conveyance to HIGC of the entire Asset Pool


Agreement;
b. All tax declarations, transfer certificates of title, original certificates of title
payments of real estate taxes covering properties comprising the Asset Pool; a

c. All other documents and papers in the Asset Pool, as defined in the Trust Agre

13.
2

13.
[3]
As against these contractual delimitations were the contingencies
that arose in the course of the rehabilitation proceedings. These,
along with the bounds set by law and established by the parties'
contractual relations, defined the competencies of the parties and
determined the validity of their actions.

It is not disputed that La Savoie defaulted in the redemption and


in the payment of interest on the LSDC certificates. It is also
settled that a call was made on Home Guaranty Corporation to
pay for the LSDC certificates, pursuant to the provisions of the
Trust Agreement and the Contract of Guaranty. However, as
acknowledged by Home Guaranty Corporation, any payment that
it could have made was "overtaken"  by the filing of La Savoie's
[79]

Petition for Rehabilitation.

Thereafter, the Regional Trial Court issued its June 4, 2003 Stay
Order staying "the enforcement of all claims, whether for money
or otherwise, and whether such enforcement is by court action or
otherwise, against [La Savoie], its guarantors and sureties not
solidarity liable with it."  It also "prohibited [La Savoie] from
[80]

making any payment of its liabilities outstanding as of the date of


the filing of the petition on April 25, 2003." [81]

The issuance of the June 4, 2003 Stay Order was in accordance


with Rule 4, Section 6 of this court's November 21, 2000
Resolution in A.M. No. 00-8-10-SC, otherwise known as the
Interim Rules of Procedure on Corporate Rehabilitation (Interim
Rules). Though subsequently replaced in 2013 by the Financial
Rehabilitation Rules of Procedure,  the Interim Rules was in
[82]
effect at the time of the incidents relevant to this case and which
then governed "petitions for rehabilitation filed by corporations,
partnerships, and associations pursuant to Presidential Decree
No. 902-A, as.amended."

Rule 4, Section 6 of the Interim Rules reads:


Sec. 6. Stay Order. - If the court finds the petition to be sufficient
in form and substance, it shall, not later than five (5) days from
the filing of the petition, issue an Order (a) appointing a
Rehabilitation Receiver and fixing his bond; (b) staying
enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise,
against the debtor, its guarantors and sureties not solidarity
liable with the debtor, (c) prohibiting the debtor from selling,
encumbering, transferring, or disposing in any manner any of its
properties except in the ordinary course of business;
(d) prohibiting the debtor.from making any payment of its
liabilities outstanding as at the date of filing of the petition; (e)
prohibiting the debtor's suppliers of goods or services from
withholding supply of goods and services in the ordinary course of
business for as long as the debtor makes payments for the
services and goods supplied after the issuance of the stay order;
(f) directing the payment in full of all administrative expenses
incurred- after the issuance of the stay order; (g) fixing the initial
hearing on the petition not earlier than forty five (45) days but
not later than sixty (60) days from the filing thereof; (h) directing
the petitioner to publish the Order in a newspaper of general
circulation in the Philippines once a week for two (2) consecutive
weeks; (i) directing all creditors and all interested parties
(including the Securities and Exchange Commission) to file and
serve on the debtor a verified comment on or opposition to the
petition, with supporting affidavits and documents, not later than
ten (10) days before the date of the initial hearing and putting
them on notice that their failure to do so will bar them from
participating in the proceedings; and (j) directing the creditors
and interested parties to secure from the court copies of the
petition and its annexes within such time as to enable themselves
to file their comment on or opposition to the petition and to
prepare for the initial hearing of the petition. (Emphasis supplied)
With the issuance of this Stay Order, the claims of La Savoie's
creditors, including, those of the holders of the LSDC certificates,
were barred from being enforced. From the point of view of La
Savoie and "its guarantors and sureties not solidarity liable with
it,"  no payment could have been made by them. Thus, for as
[83]

long as the Stay Order was in effect, certificate holders were


barred from insisting on and receiving payment, whether from
the principal debtor, La Savoie, or from the guarantor, Home
Guaranty Corporation. Conversely, La Savoie and Home Guaranty
Corporation were barred from paying certificate holders for as
long as the Stay Order was in effect.

On October 1, 2003, the Regional Trial Court issued another


Order denying due course to La Savoie's Petition for
Rehabilitation and lifting the June 4, 2003 Stay Order. Aggrieved,
La Savoie filed a Notice of Appeal and thereafter filed before the
Court of Appeals its Appellant's Brief on May 5, 2004. Home
Guaranty Corporation filed its Appellee's Brief on August 18,
2004. On June 21, 2005, the Court of Appeals rendered a
Decision reversing and setting aside the Regional Trial Court's
October 1, 2003 Order and reinstating the June 4, 2003 Stay
Order.

What is notable, however, is what transpired in the interim.


Sometime between La Savoie's filing of its Appellant's Brief and
Home Guaranty Corporation's filing of its Appellee's Brief, Home
Guaranty Corporation approved and processed the call that was
made, prior to the commencement of rehabilitation proceedings,
on its guaranty and proceeded to pay the holders of LSDC
certificates a total amount of P128.5 million as redemption value.
In consideration of this and pursuant to Section 13.2 of the
Contract of Guaranty, Planters Development Bank executed in
favor of Home Guaranty Corporation a Deed of Assignment and
Conveyance  in which Planters Development Bank "absolutely
[84]

assign[ed], transferred[ed], convey[ed] and deliver[ed] to the


HGC, its successor and assigns the possession and ownership
over the entire Asset Pool Project."
[85]

Home Guaranty Corporation asserts that the execution of this


Deed effectively removed the properties comprising the Asset
Pool from the dominion of La Savoie and, thus, beyond the reach
of La Savoie's rehabilitation proceedings. La Savoie contends that
this transfer was ineffectual as the Stay Order was in effect at the
time of the execution of the Deed and as affirming Home
Guaranty Corporation's ownership is supposedly tantamount to
giving it undue preference as a creditor.

Rule 3, Section 5 of the Interim Rules governs the effectivity of


orders issued in proceedings relating to the rehabilitation of
corporations, partnerships, and associations under Presidential
Decree No. 902-A, as amended.
Sec. 5. Executory Nature of Orders. - Any order issued by the
court under these Rules is immediately executory. A petition
for review or an appeal therefrom shall not stay the execution of
the  order unless restrained or enjoined by the appellate
court. The review of any order or decision of the court or an
appeal therefrom shall be in accordance with the Rules of Court:
Provided, however, that the reliefs ordered by the trial or
appellate courts shall take into account the need for resolution of
proceedings in a just, equitable, and speedy manner. (Emphasis
supplied)
Rule 3, Section 5 is definite and unambiguous: Any order issued
by the trial court in rehabilitation proceedings is immediately
executory. Rule 3, Section 5 makes no distinction as to the kinds
of orders (e.g., final or interlocutory and stay orders) that may be
issued by a trial court. Nowhere from its text can it be gleaned
that it does not cover orders such as those issued by the trial
court on October 1, 2003. If at all, its second sentence, which
explicitly makes reference to orders on appeal, affirms that it is
equally applicable to final orders. We entertain no doubt that Rule
3, Section 5 of the Interim Rules covered the trial court's October
1, 2003 Order dismissing the Petition for Rehabilitation and lifting
the Stay Order The same Order was thus immediately executory.
The filing of La Savoie's Appeal did not restrain the effectivity of
the October 1, 2003 Order. It is true thai generally, an appeal
stays the judgment or final order appealed from.  Rehabilitation
[86]

proceedings, however, are not bound by procedural rules spelled


out in the Rules of Court. The Interim Rules, not the Rules of
Court, was the procedural law, which (at the time of the pivotal
incidents in this case) governed rehabilitation proceedings. In
Rule 3, Section 5, the Interim Rules explicitly carved an exception
to the general principle that an appeal stays the judgment or final
order appealed from. It explicitly requires the issuance by the
appellate court of an order enjoining or restraining the order
appealed from.

Per the records, the Court of Appeals did not issue an injunctive
writ or a temporary restraining order. Neither did La Savoie
specifically pray for its issuance in the Appellant's Brief it filed
before the Court of Appeals. The prayer of this Brief reads:
WHEREFORE, Petitioner-Appellant most respectfully pray [sic]
that the Order dated October 1, 2003, dismissing the Petition BE
SET ASIDE and after due consideration a judgment be rendered
giving due course to the Petition for rehabilitation and declaring
the herein petitioner-appellant in a state of suspension of
payments, and reinstating the Stay Order and finally, approving
the Proposed Rehabilitation Plan.

Other relief and remedies are deemed just and equitable under
the premises are likewise prayed for.

RESPECTFULLY SUBMITTED. [87]

Thus, the October 1, 2003 Order, lifting the restrictions on the


payment of claims against La Savoie, remained in effect. La
Savoie's creditors were then free to enforce their claims.
Conversely, La Savoie and "its guarantors and sureties not
solidarity liable with it"  were no longer restrained from effecting
[88]

payment.
Specifically, Home Guaranty Corporation as guarantor was
capacitated, in accordance with Sections 12 and 13 of the
Contract of Guaranty to effect payment to the holders of the
LSDC certificates.

Per Sections 13.1 and 13.2 of the Contract of Guaranty, the


consequence of this payment was the execution by Planters
Development Bank, as trustee of the Asset Pool, of a Deed of
Conveyance in favor of Home Guaranty Corporation. Ostensibly,
all formal and substantive requisites for the execution of this
Deed, as per the Trust Agreement and the Contract of Guaranty,
were fulfilled. Notably, La Savoie failed to intimate that any such
condition or requisite was not satisfied. It assails the conveyance
on only these points: first, the supposed continuing effectivity of
the June 4, 2003 Stay Order; second, that the Asset Pool
remained under the jurisdiction of the Makati City Regional Trial
Court; and third, the supposed violation of the rule against
preference among creditors.

Having established that the Stay Order was lifted and that this
lifting remained in force and was not restrained, we turn to La
Savoie's contention that the conveyance to Home Guaranty
Corporation of the Asset Pool is in violation of the rule against
preference of creditors.

La Savoie cites Article 2067  of the Civil Code and argues that
[89]

with Home Guaranty Corporation's payment of the LSDC


certificates' redemption value, Home Guaranty Corporation was
subrogated into the rights of La Savoie's creditors (i.e., the
certificate holders). It asserts that "effectively, petitioner HGC is
already the creditor of respondent La Savoie"  and that as
[90]

creditor, it cannot be given a preference over the assets of La


Savoie, something that is "prohibited, in rehabilitation
proceedings." [91]

In support of its contentions, La Savoie cites the following portion


of this court's discussion in Araneta v. Court of Appeals: [92]
This Court in Alemar's Sibal & Sons, Inc. vs. Elbinias explained
the rationale behind a SEC order for suspension of payments and
of placing a corporation under receivership thus:
It must be stressed that the SEC had earlier ordered the
suspension of all actions for claims against Alemar's in order that
all the assets of said petitioner could be inventoried and kept
intact for the purpose of ascertaining an equitable scheme of
distribution among its creditors.

During rehabilitation receivership, the assets are held in trust for


the equal benefit of all creditors to preclude one from obtaining
an advantage or preference over another by the expediency of an
attachment, execution or otherwise. For what would prevent an
alert creditor, upon learning of the receivership, from rushing
posthaste to the courts to secure judgments for the satisfaction of
its claims to the prejudice of the less alert creditors.

As between creditors, the key phrase is "equality is equity


(Central Bank vs. Morfe, 63 SCRA 114, citing Ramisch vs. Fulton,
41 Ohio App. 443, 180 N.E. 735)." When a corporation
threatened by bankruptcy is taken over by a receiver, all the
creditors should stand on an equal footing. Not anyone of them
should be given any preference by paying one or some of them
ahead of the others. This is precisely the reason for the
suspension of all pending claims against the corporation under
receivership. Instead of creditors vexing the courts with suits
against the distressed firm, they are directed to file their claims
with the receiver who is a duly appointed officer of the SEC.[93]

It is true, as La Savoie asserts, that the suspension of the


enforcement of claims against corporations under receivership is
intended "to prevent a creditor from obtaining an advantage or
preference over another."  This is "intended to give enough
[94]

breathing space for the management committee or rehabilitation


receiver to make the business viable again, without having to
divert attention and resources to litigations in various
fora."  In Spouses
[95]
Sobrejuanite v. ASB Development
Corporation:[96]
The suspension would enable the management committee or
rehabilitation receiver to effectively exercise its/his powers free
from any judicial or extra-judicial interference that might unduly
hinder or prevent the "rescue" of the debtor company. To allow
such other action to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time,
effort and resources would be wasted in defending claims against
the corporation instead of being directed toward its restructuring
and rehabilitation.[97]

As is evident from these discussions, however, the intention of


"prevent[ing] a creditor from obtaining an advantage" is
applicable in the context of an ongoing receivership. The
prevention of a creditor's obtaining an advantage is not an end in
itself but further serves the purpose of "giv[ing] enough
breathing space for the ... rehabilitation receiver." Thus, it applies
only to corporations under receivership. Plainly, it does not apply
to corporations who have sought to put themselves under
receivership but, for lack of judicial sanction, have not been put
under or are no longer under receivership.

The trial court's October 1, 2003 Order denied due course to and
dismissed La Savoie's Petition for Rehabilitation. It superseded
the trial court's June 4, 2003 Stay Order appointing Rito C.
Manzana as rehabilitation receiver and thereby relieving him of
his duties and removing La Savoie from receivership.

Apart from these, the trial court's October 1, 2003 Order lifted
the June 4, 2003 Stay Order. This was significant not only with
respect to the freedom it afforded to La Savoie's creditors to (in
the meantime that the lifting of the Stay Order was not
restrained) enforce their claims but similarly because it
established a context that removed this case from the strict
applicability of the rule being cited by La Savoie.

The portions cited by La Savoie in Araneta and Alemar's Sibal &


Sons referred to a specific context:
It must be stressed that the SEC had earlier ordered the
suspension of all actions for claims against Alemar's in order
that all the assets of said petitioner could be inventoried and kept
intact for the purpose of ascertaining an equitable scheme of
distribution among its creditors.  (Emphasis supplied)
[98]

The pronouncements in Araneta and Alemar's Sibal & Sons thus


pertained to instances in which there was an outstanding  order
suspending the enforcement of creditors' claims. Here, the Stay
Order was lifted, and its lifting was not enjoined or otherwise
restrained. There was thus no Stay Order to speak of in those
critical intervening moments when Home Guaranty Corporation
acted pursuant to the guaranty call and paid the holders of the
LSDC certificates.

If, following this payment and while La Savoie remained to be not


under receivership, a valid transfer of the properties comprising
the Asset Pool was made in favor of Home Guaranty Corporation,
the properties would then no longer be under the dominion of La
Savoie. They would thus be beyond the reach of rehabilitation
proceedings and no longer susceptible to the rule against
preference of creditors. However, we find that the transfer made
to Home Guaranty Corporation was ineffectual.

Viewed solely through the lens of the Trust Agreement and the
Contract of Guaranty, the transfer made to Home Guaranty
Corporation on the strength of the Deed of Conveyance appears
valid and binding. However, we find that its execution is in
violation of a fundamental principle in the law governing credit
transactions. We find the execution of a Deed of Conveyance
without resorting to foreclosure to be indicative of pactum
commissorium. Hence, it is void and ineffectual and does not
serve to vest ownership in Home Guaranty Corporation.

Articles 2088 and 2137 of the Civil Code provide:


Art. 2088. The creditor cannot appropriate the things given by
way of pledge or mortgage, or dispose of them. Any stipulation to
the contrary is null and void.
Art. 2137. The creditor does not acquire the ownership of the real
estate for non-payment of the debt within the period agreed
upon.

Every stipulation to the contrary shall be void. But the creditor


may petition the court for the payment of the debt or the sale of
the real property. In this case, the Rules of Court on the
foreclosure of mortgages shall apply.
In Garcia v. Villar,  this court discussed the elements of pactum
[99]

commissorium:
The following are the elements of pactum commissorium:
 
(1) There should be a property mortgaged by way of security for the payment of the pri

(2) There should be a stipulation for automatic appropriation by the creditor of the thi
non-payment of the principal obligation within the stipulated period. [100]

Nakpil v. Intermediate Appellate Court  discussed a similar


[101]

situation where there was automatic appropriation on account of


failure to pay:
The arrangement entered into between the parties, whereby
Pulong Maulap was to be considered sold to him (respondent) ...
in case petitioner fails to reimburse Valdes, must then be
construed as tantamount to a pactum commissorium which is
expressly prohibited by Art. 2088 of the Civil Code. For, there
was to be automatic appropriation of the property by Valdes in
the event of failure of petitioner to pay the value of the advances.
Thus, contrary to respondent's manifestations, all the elements of
a pactum commissorium were present: there was a creditor-
debtor relationship between the parties; the property was used as
security for the loan; and, there was automatic appropriation by
respondent of Pulong Maulap in case of default of petitioner. [102]

In this case, Sections 13.1 and 13.2 of the Contract of Guaranty


call for the "prompt assignment and conveyance to [Home
Guaranty Corporation] of all the corresponding properties in the
Asset Pool" that are held as security in favor of the guarantor.
Moreover, Sections 13.1 and 13.2 dispense with the need of
conducting foreclosure proceedings, judicial or otherwise. Albeit
requiring the intervention of the trustee of the Asset Pool,
Sections 13.1 and 13.2 spell out what is, for all intents and
purposes, the automatic appropriation by the paying guarantor of
the properties held as security. This is thus a clear case
of pactum commissorium. It is null and void. Accordingly,
whatever conveyance was made by Planters Development Bank
to Home Guaranty Corporation in view of this illicit stipulation is
ineffectual. It did not vest ownership in Home Guaranty
Corporation.

Air that this transfer engendered is a constructive trust in which


the properties comprising the Asset Pool are held in trust by
Home Guaranty Corporation, as trustee, for the trustor, La
Savoie.

Buan Vda. De Esconde v. Court of Appeals  exhaustively


[103]

discussed the concept of a trust and its classification into express


and implied trusts, as well as resulting and constructive trusts:
Trust is the legal relationship between one person having an
equitable ownership in property and another person owning the
legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the
exercise of certain powers by the latter. Trusts are either express
or implied. An express trust is created by the direct and positive
acts of the parties, by some writing or deed or will or by words
evidencing an intention to create a trust. No particular words are
required for the creation of an express trust, it being sufficient
that a trust is clearly intended.

On the other hand, implied trusts are those which, without being
expressed, are deducible from the nature of the transaction as
matters of intent or which are superinduced on the transaction by
operation of law as matters of equity, independently of the
particular.intention of the parties. In turn, implied trusts are
either resulting or constructive trusts. These two are
differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or
interest and are presumed always to have been contemplated by
the parties. They arise from the nature or circumstances of the
consideration involved in a transaction whereby one person
thereby becomes invested with legal title but is obligated in
equity to hold his legal title for the benefit of another. On the
other hand, constructive trusts are created by the construction of
equity in order to satisfy the demands of justice and prevent
unjust enrichment. They arise contrary to intention against one
who, by fraud, duress or abuse of confidence, obtains or holds
the legal right to property which he ought not, in equity and good
conscience, to hold.  (Emphasis supplied)
[104]

Articles 1450, 1454, 1455, and 1456 of the Civil Code provide
examples of constructive trusts:
Art. 1450. If the price of a sale of property is loaned or paid by
one person for the benefit of another and the conveyance is made
to the lender or payor to secure the payment of the debt, a trust
arises by operation of law in favor of the person to whom the
money is loaned or for whom it is paid. The latter may redeem
the property and compel a conveyance thereof to him.

Art. 1454. If an absolute conveyance of property is made in order


to secure the performance of an obligation of the grantor toward
the grantee, a trust by virtue of law is established. If the
fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property
to him.

Art. 1455. When any trustee, guardian or other person holding a


fiduciary relationship uses trust funds for the purchase of
property and causes the conveyance to be made to him or to a
third person, a trust is established by operation Of law in favor of
the person to whom the funds belong.

Art. 1456. If property is acquired through mistake or fraud, the


person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the
property comes.
In Rodrigo v. Arcilla,  this court held that a constructive trust
[105]

was created when petitioners' predecessor-in-interest, Vicente


Sauza, got respondent's parents, Ramon Daomilas and Lucia
Nagac, "to sign a document which he represented to them as a
deed 'evidencing their status as adjoining landowners' but was
actually a document disclaiming their ownership over [the subject
lot] and transferring the same to [Sauza]."[106]

In Lopez v. Court of Appeals,  properties intended to be for the


[107]

benefit of "a trust fund for [the testatrix's] paraphernal


properties, denominated as Fideicomiso de Juliana Lopez
Manzano (Fideicomiso),"  were mistakenly adjudicated by a
[108]

probate court in favor of respondents' predecessor-in-interest,


Jose Lopez Manzano. These properties were then registered by
him, and transfer certificates of title were issued in his name.
This court held that "[t]he apparent mistake in the adjudication of
the disputed properties to Jose created a mere implied trust of
the constructive variety in favor of the beneficiaries of
the Fideicomiso."[109]

In Lopez, this court held that the factual milieu of that case
placed it within the contemplation of Article 1456 of the Civil
Code:

The provision on implied trust governing the factual milieu of this


case is provided in Article 1456 of the Civil Code, which states:

ART. 1456. If property is acquired through mistake or fraud, the


person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the
property comes.

The disputed properties were excluded from the Fideicomiso at


the outset. Jose registered the disputed properties in his name
partly as his conjugal share and partly as his inheritance from his
wife Juliana, which is the complete reverse of the claim of the
petitioner, as the new trustee, that the properties are intended
for the beneficiaries of the Fideicomiso. Furthermore, the
exclusion of the disputed properties from the Fideicomiso was
approved by the probate court and, subsequently, by the trial
court having jurisdiction over the Fideicomiso. The registration of
the disputed properties in the name of Jose was actually pursuant
to a court order. The apparent mistake in the adjudication of the
disputed properties to Jose created a mere implied trust of. the
constructive variety in favor of the beneficiaries of
the Fideicomiso.[110]

So, too, this case falls squarely under Article 1456 of the Civil
Code. Home Guaranty Corporation acquired the properties
comprising the Asset Pool by mistake or through the ineffectual
transfer (i.e., for being pactum commissorium) made by the
original trustee, Planters Development Bank.

Two key points are established from the preceding discussions.


First, the Court of Appeals' June 21, 2005 Decision restored La
Savoie's status as a corporation under receivership. Second, with
all but a constructive trust created between Home Guaranty
Corporation and La Savoie, the properties comprising the Asset
Pool remain within the dominion of La Savoie.

On the first point, the restoration of La Savoie's status as a


corporation under receivership brings into operation the rule
against preference of creditors. On the second point, La Savoie's
continuing ownership entails the continuing competence of the
court having jurisdiction over the rehabilitation proceedings to
rule on how the properties comprising the Asset Pool shall be
disposed, managed, or administered in order to satisfy La
Savoie's obligations and/or effect its rehabilitation.

The cumulative effect of these is that Home Guaranty Corporation


must submit itself, like La Savoie's other creditors, to how La
Savoie's Petition for Rehabilitation shall be resolved. As a paying
guarantor, Home Guaranty Corporation was subrogated into the
rights of La Savoie's creditors and now stands as the latter's own
creditor. It remains so pending the satisfaction of La Savoie's
obligation and as the void conveyance made to it by Planters
Development Bank failed to terminate in the creditor-debtor
relationship with La Savoie.
WHEREFORE, the Petition is DENIED. The Regional. Trial Court,
Branch 142, Makati City is directed to proceed with dispatch in
resolving the Petition for Rehabilitation filed by respondent La
Savoie Development Corporation.

SO ORDERED.

Del Castillo, (Acting Chairperson), Velasco, Jr.,   Mendoza,


*

and Reyes,  JJ., concur.


**

 Designated as acting member per S.O. No. 1910 dated January


*

12, 2015.

 Designated additional member per Raffle dated January 26,


**

2015.

[1]
 Rollo, pp. 49-62.

 The former Home Insurance and Guaranty Corporation was


[2]

renamed as Home Guaranty Corporation as per Republic Act No.


8763.

[3]
 Rollo, pp. 84-85.

[4]
 Id. at 76-77.

[5]
 Id. at 66.

 Pursuant to Supreme Court Resolution dated November 21,


[6]

2000 in A.M. No. 00-11-03-SC, "Resolution Designating Certain


Branches of Regional Trial Courts to Try and Decide Cases
Formerly Cognizable by the Securities and Exchange
Commission."

[7]
 Rollo, pp. 65-72.
[8]
 A.M. No. 00-8-10-SC (2000).

 SEC. 2. Contents of the Petition. — The petition filed by the


[9]

debtor must be verified and must set forth with sufficient


particularity all the following material facts: (a) the name and
business of the debtor; (b) the nature of the business of the
debtor; (c) the history of the debtor; (d) the cause of its inability
to pay its debts; (e) all the pending actions or proceedings known
to the debtor and the courts or tribunals where they are pending;
(f) threats or demands to enforce claims or liens against the
debtor; and (g) the manner by which the debtor may be
rehabilitated and how such rehabilitation may benefit the general
body of creditors, employees, and stockholders. The petition shall
be accomplished by the following documents:
a. An audited financial statement of the debtor at the end of its
last fiscal year;
b. Interim financial statements as of the end of the month prior
to the filing of the petition;
c. Schedule of Debts and Liabilities which lists all the creditors
of the debtor indicating the name and address of each
creditor, the amount of each claim as to principal, interest,
or penalties due as of the date of filing, the nature of the
claim, and any pledge, lien, mortgage judgment, or other
security given for the payment thereof;
d. An Inventory of Assets which must list with reasonable
specificity all the assets of the debtor, stating the nature of
each asset, the location and condition thereof, the book
value or market value of the asset, and attaching the
corresponding certificate of title therefor in case of real
property, or the evidence of title or ownership in case of
movable property, the encumbrances, liens or claims
thereon, if any, and the identities and addresses of the
lienholders and claimants. The Inventory shall include a
Schedule of Accounts Receivable which must indicate the
amount of each, the persons from whom due, the date of
maturity, and the degree of collegibility categorizing them as
highly collectible to remotely collectible;
e. A rehabilitation plan which conforms to the minimal
requirements set out in section 5, Rule 4 of these Rules;
f.A Schedule of Payments and disposition of assets which the
debtor may have effected within three (3) months
immediately preceding the filing of the petition;
g. A Schedule of the Cash Flow of the debtor for three (3)
months immediately preceding the filing of the petition, and
a detailed schedule of the projected cash flow for the
succeeding three (3) months;
h. A Statement of Possible Claims by or against the debtor
which must contain a brief statement of the facts which
might give rise to the claim and an estimate of the probable
amount thereof;
i. An Affidavit of General Financial Condition which shall contain
answers to the questions or matters prescribed in Annex "A"
hereof;
j.At least three (3) nominees for the position of Rehabilitation
Receiver as well as their qualifications and addresses,
including but not limited to their telephone numbers, fax
number and e-mail address; and
k. A Certificate attesting, under oath, that the (a) filing of the
petition has been duly authorized; and (b) the directors and
stockholders have irrevocably approved and/or consented
to, in accordance with existing laws, all actions or matters
necessary and desirable to rehabilitate the debtor including,
but not limited to, amendments to the articles of
incorporation and by laws or articles of partnership; increase
or decrease in the authorized capital stock; issuance of
bonded indebtedness; alienation, transfer, or encumbrance
of assets of the debtor; and modification of shareholders'
rights.
Five (5) copies of the petition shall be filed with the court.

[10]
 Rollo, p. 76.

[11]
 Id. at 76-77.

[12]
 Id. at 1109-1112 and 1163-1167.
[13]
 Id. at 78-81.

[14]
 Id. at 78.

[15]
 Id.

[16]
 Id. at 1047-1062.

[17]
 Id. at 79.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 1091-1095.

[21]
 Id. at 1095.

[22]
 Id. at 79.

 Id. at 80. As supposedly shown by Planters Development


[23]

Bank's Letter dated October 12, 2001, November 13, 2001, and
June 14, 2002; Annexes "C," "D," and "E," respectively, of Home
Guaranty Corporation's Opposition.

[24]
 Id. at 79-80.

[25]
 Id. at 80.

[26]
 Id.

[27]
 Id. at 1198-1205.

[28]
 Id. at 1201-1202.

[29]
 Id. at 52-53.
[30]
 Id. at 84-85.

[31]
 Id. at 85.

[32]
 Id.

[33]
 Id.

[34]
 Id.

[35]
 Id.

[36]
 Id. at 1288-1322.

[37]
 Id. at 1491-1493.

[38]
 Id. at 25.

[39]
 Id. at 26.

[40]
 Id. at 26-27.

[41]
 Id.

[42]
 Id. at 1472.

 Id. at 49-62. The Decision, docketed as CA-G.R. CV. No.


[43]

80241, was penned by Associate Justice Lucenito N. Tagle and


concurred in by Associate Justices, now Supreme Court Justices,
Martin S. Villarama, Jr. and Lucas P. Bersamin, of the Special
Twelfth (12th) Division, Court of Appeals Manila.

[44]
 Id. at 56.

[45]
 Id. at 58.

[46]
 Id. at 13-44.
[47]
 Id. at 37.

[48]
 Id. at 161-202.

[49]
 Id. at 194.

[50]
 Id. at 196.

[51]
 Id.

[52]
 Id. at 1453-1477.

[53]
 Id. at 1455.

[54]
 Id.

[55]
 Id. at 186.

[56]
 Id. at 1461.

 G.R.
[57]
No. 197530, July 9, 2014
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/july2014/197530.pdf> [Per J. Leonen,
Third Division].

[58]
 457 Phil. 740 (2003) [Per J. Bellosillo, Second Division].

 Id. at 747-748, citing Santos v. Commission on Elections, 447


[59]

Phil. 760 (2003) [Per J. Ynares-Santiago, En Banc]; Young v.


Keng Seng, 446 Phil. 823 (2003) [Per J. Panganiban, Third
Division]; Executive Secretary v. Gordon, 359 Phil. 266 (1998)
[Per J. Mendoza, En Banc]; Joy Mart Consolidated Corp. v. Court
of Appeals, G.R. No. 88705, June 11, 1992, 209 SCRA 738 [Per J.
Grino-Aquino, First Division]; Villanueva v. Adre, 254 Phil. 882
(1989) [Per J. Sarmiento, Second Division].
 GR. No. 186730, June 13, 2012, 672 SCRA 419 [Per J. Reyes,
[60]

Second Division], citing Young v. Keng Seng, 446 Phil. 823, 833


(2003) [Per J. Panganiban, Third Division].

 Yap v. Chua, G.R. No. 186730, June 13, 2012, 672 SCRA 419,
[61]

428 [Per J. Reyes, Second Division].

[62]
 Id.

 Id. at 429, citing Villarica Pawnshop, Inc. v. Gernale, 601 Phil.


[63]

66, 78 (2009) [Per J. Austria-Martinez, Third Division].

 Luzon Development Bank v. Conquilla, 507 Phil. 509, 523


[64]

(2005) [Per J. Panganiban, Third Division], citing Allied Banking


Corporation v. Court of Appeals, G.R. No. 108089, January 10,
1994, 229 SCRA 252, 258 [Per J. Davide, Jr., First Division].

[65]
 Rollo, pp. 1047-1062.

[66]
 Id. at 1047.

[67]
 Id.

[68]
 Id.

[69]
 Id. at 1054.

[70]
 Id. at 1047.

[71]
 Id. at 1051-1052.

[72]
 Id. at 1052.

[73]
 Id. at 1048.

[74]
 Id. at 1051.

[75]
 Id. at 1053.
[76]
 Id. at 1049-1050.

[77]
 Id. at 1093-1094.

[78]
 Id. at 1094.

[79]
 Id. at 80.

[80]
 Id. at 76.

[81]
 Id.

 A.M. No. 12-12-11-SC (2013), Financial Rehabilitation Rules of


[82]

Procedure. This was promulgated pursuant to Republic Act No.


10142, otherwise known as the Financial Rehabilitation and
Insolvency Act (FRIA) of 2010.

[83]
 Rollo, p. 76.

[84]
 Id. at 1492-1493.

[85]
 Id. at 1492.

[86]
 Rules of Court, Rule 34, sec. 4 provides:

Section 4. Judgments not stayed by appeal. — Judgments in


actions for injunction, receivership, accounting and support, and
such other judgments as are now or may hereafter be declared to
be immediately executory, shall be enforceable after their
rendition and shall not, be stayed by an appeal taken therefrom,
unless-otherwise ordered by the trial court. On appeal therefrom,
the appellate court in its discretion may make an order
suspending, modifying, restoring or granting the injunction,
receivership, accounting, or award of support.
The stay of execution shall be upon such terms as to bond or
otherwise as may be considered proper for the security or
protection of the rights of the adverse party.

[87]
 Rollo, p. 120.

[88]
 Id. at 76.

 Article 2067. The guarantor who pays is subrogated by virtue


[89]

thereof to all the rights which the creditor had against the debtor.
If the guarantor has compromised with the creditor, he cannot
demand of the debtor more than what he has really paid.

[90]
 Rollo, p. 197.

[91]
 Id.

 G.R. No. 95253, July 10, 1992, 211 SCRA 390 [Per J. Nocon,
[92]

Second Division].

[93]
 Id. at 398-399.

 Spouses Sobrejuanite v. ASB Development Corporation, 508


[94]

Phil. 715, 721 (2005) [Per J. Ynares-Santiago, First


Division], citing Finasia Investments and Finance Corp. v. Court
of Appeals, G.R. No. 107002, October 7, 1994, 237 SCRA446,
450-451 [Per J. Kapunan, First Division].

 Id., citing Rubberworld (Phils.), Inc. v. NLRC, 365 Phil. 273,


[95]

276-277 (1999) [Per J. Panganiban, Third Division].

[96]
 508 Phil. 715 (2005) [Per J. Ynares-Santiago, First Division].

 Id. at 721, citing BF Homes, Incorporated v. Court of Appeals,


[97]

G.R. Nos. 76879 and 77143, October 3, 1990, 190 SCRA 262,
269 [Per J.Cruz, First Division].
 Araneta v. Court of Appeals, G.R. No. 95253, July 10, 1992,
[98]

211 SCRA 390, 398-399 [Per J. Nocon, Second Division].

 G.R. No. 158891, June 27, 2012, 675 SCRA 80 [Per J.


[99]

Leonardo-De Castro, First Division].

 Id. at 90-91, citing Development Bank of the Philippines v.


[100]

Court of Appeals, 348 Phil. 15, 31 (1998) [Per J. Davide, Jr., First
Division].

 G.R. No. 74449, August 20, 1993, 225 SCRA 456 [Per J.
[101]

Bellosillo, First Division].

[102]
 Id. at 467-468.

[103]
 323 Phil. 81 (1996) [Per J. Romero, Second Division].

 Id. at 88-89, citing IV ARTURO TOLENTINO, CIVIL CODE OF


[104]

THE PHILIPPINES, 669 (1991), citing 54 Am. Jur. 21; Sotto v.


Teves, 175 Phil. 343 (1978) [Per J. Guerrero, First
Division], citing Cuaycong, et al. v. Cuaycong, et al., 129 Phil.
439 (1967) [Per J. Bengzon, J.P, En Banc]; Civil CODE, art.
1443; Heirs of Maria de la Cruz y Gutierrez v. Court of Appeals,
261 Phil. 771 [Per J. Paras, Second Division], citing Vda. de Mapa
v. Court of Appeals, G.R. No. L-38972, September 28, 1987, 154
SCRA 294, 300 [Per J. Fernan, Third Division]; Philippine National
Bank v. Court of Appeals, G.R. No. 97995, January 21, 1993, 217
SCRA 347, 35 [Per J. Romero, Third Division]; and O'Laco v. Co
Cho Chit, G.R. No. 58010, March 31, 1993, 220 SCRA 656, 663
[Per J. Bellosillo, First Division].

[105]
 525 Phil. 590 (2006) [Per J. Corona, Second Division].

[106]
 Id. at 593.

[107]
 594 Phil. 436 (2008) [Per J. Tinga, Second Division].

[108]
 Id. at 439.
[109]
 Id. at 449.

[110]
 Id. at 446-449.

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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 206529, April 23, 2018 ]


RENANTE B. REMOTICADO, PETITIONER, VS.
TYPICAL CONSTRUCTION TRADING CORP. AND
ROMMEL M. ALIGNAY, RESPONDENTS.DECISION

LEONEN, J.:

There can be no case for illegal termination of employment when


there was no termination by the employer. While, in illegal
termination cases, the burden is upon the employer to show just
cause for termination of employment, such a burden arises only if
the complaining employee has shown, by substantial evidence,
the fact of termination by the employer.

This resolves a Petition for Review on Certiorari  under Rule 45 of


[1]

the 1997 Rules of Civil Procedure praying that the assailed


November 29, 2012 Decision  and March 26, 2013 Resolution  of
[2] [3]
the Court of Appeals in CA G.R. SP No. 124993 be reversed and
set aside.

The assailed Court of Appeals November 29, 2012 Decision found


no grave abuse of discretion on the part of National Labor
Relations Commission in rendering its January 11, 2012 Decision,
 which affirmed Labor Arbiter Renell Joseph R. Dela Cruz's
[4]

(Labor Arbiter Dela Cruz) October 11, 2011 Decision.  Labor [5]

Arbiter Del a Cruz's Decision dismissed petitioner Renante B.


Remoticado's (Remoticado) Complaint for illegal dismissal after a
finding that he voluntarily resigned. The assailed Court of Appeals
March 26, 2013 Resolution denied his Motion for Reconsideration.

Remoticado's services were engaged by Typical Construction


Trading Corporation (Typical Construction) as a helper/laborer in
its construction projects, the most recent being identified as the
Jedic Project at First Industrial Park in Batangas.
[6]

In separate sworn statements, Pedro Nielo (Nielo), Typical


Construction's Field Human Resources Officer, and two (2) of
Remoticado's co-workers, Salmero Pedros and Jovito Credo,
 recalled that on December 6, 2010, Remoticado was absent
[7]

without an official leave. He remained absent until December 20,


2010 when, upon showing up, he informed Nielo that he was
resigning. Prodded by Nielo for his reason, Remoticado noted that
they were "personal reasons considering that he got sick."  Nielo
[8]

advised Remoticado to return the following day as he still had to


report Remoticado's resignation to Typical Construction's main
office, and as his final pay had yet to be computed. [9]

Remoticado returned the following day and was handed


P5,082.53 as his final pay. He protested, saying that he was
entitled to "separation pay computed at two (2) months for his
services for two (2) years."  In response, Nielo explained that
[10]

Remoticado could not be entitled to separation pay considering


that he voluntarily resigned. Nielo added that if Remoticado was
not satisfied with P5,082.53, he was free to continue working for
Typical Construction. However, Remoticado was resolute and
proceeded to sign and affix his thumb marks on a Kasulatan ng
Pagbawi ng Karapatan at Kawalan ng Paghahabol, a waiver and
quitclaim.[11]

On January 10, 2011,  Remoticado filed a Complaint for illegal


[12]

dismissal against Typical Construction and its owner and


operator, Rommel M. Alignay (Alignay).  He claimed that on [13]

December 23, 2010, he was told to stop reporting for work due to
a "debt at the canteen"  and thereafter was prevented from
[14]

entering Typical Construction's premises. [15]

In a Decision  dated October 11, 2011, Labor Arbiter Dela Cruz


[16]

dismissed Remoticado's Complaint for lack of merit. He explained


that Remoticado's employment could not have been illegally
terminated as he voluntarily resigned. [17]

In its January 11, 2012 Decision,  the National Labor Relations


[18]

Commission denied Remoticado's appeal.

In its assailed November 29, 2012 Decision,  the Court of [19]

Appeals found no grave abuse of discretion on the part of the


National Labor Relations Commission. In its assailed March 26,
2013 Resolution,  the Court of Appeals denied Remoticado's
[20]

Motion for Reconsideration.

Undeterred by the consistent rulings of the Court of Appeals, the


National Labor Relations Commission, and Labor Arbiter Dela
Cruz, Remoticado filed the present Petition. [21]

For resolution is the issue of whether petitioner Renante B.


Remoticado voluntarily resigned or his employment was illegally
terminated in the manner, on the date, and for the reason he
averred in his complaint.

The Petition lacks merit.

I
Determining which between two (2) alternative versions of events
actually transpired and ascertaining the specifics of how, when,
and why one of them occurred involve factual issues resting on
the evidence presented by the parties.

It is basic that factual issues are improper in Rule 45 petitions.


Under Rule 45 of the 1997 Rules of Civil Procedure,  only [22]

questions of law may be raised in a petition for review


on certiorari. The rule, however, admits of exceptions. In Pascual
v. Burgos: [23]

The Rules of Court require that only questions of law should be


raised in petitions tiled under Rule 45. This court is not a trier of
facts. It will not entertain questions of fact as the factual findings
of the appellate courts are "final, binding[,] or conclusive on the
parties and upon this [c]ourt" when supported by substantial
evidence. Factual findings of the appellate courts will not be
reviewed nor disturbed on appeal to this court.

However, these rules do admit exceptions. Over time, the


exceptions to these rules have expanded. At present, there are
10 recognized exceptions that were first listed in Medina v. Mayor
Asistio, Jr.:
(1) When the conclusion is a finding grounded entirely on
speculation, surmises or conjectures; (2) When the inference
made is manifestly mistaken, absurd or impossible; (3) Where
there is a grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of
fact are conflicting; (6) When the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7)
The findings of the Court of Appeals are contrary to those of the
trial court; (8) When the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) When
the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and
(10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the
evidence on record.
These exceptions similarly apply in petitions for review filed
before this court involving civil, labor, tax, or criminal cases.
 (Citations omitted)
[24]

No exception avails in this case.

Quite glaring is the sheer consistency of the factual findings of


the Court of Appeals, the National Labor Relations Commission,
and Labor Arbiter Dela Cruz.

Not only are these findings uniform, but they are also sustained
by evidence. The Court of Appeals correctly ruled that there is no
showing of grave abuse of discretion on the part of the National
Labor Relations Commission.

II

It is petitioner's claim that the Court of Appeals, the National


Labor Relations Commission, and Labor Arbiter Dela Cruz are all
in error for failing to see that Typical Construction failed to
discharge its supposed burden of proving the validity of his
dismissal. He asserts that such failure leaves no other conclusion
than that his employment was illegally terminated. [25]

It is petitioner who is in error.

It is true that in illegal termination cases, the burden is upon the


employer to prove that termination of employment was for a just
cause. Logic dictates, however, that the complaining employee
must first establish by substantial evidence the fact of
termination by the employer.  If there is no proof of termination
[26]

by the employer, there is no point in even considering the cause


for it. There can be no illegal termination when there was no
termination:
Before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by
substantial evidence the fact of his dismissal from service. If
there is no dismissal, then there can be no question as to the
legality or illegality thereof.
[27]
Petitioner here insists on his version of events, that is, that on
December 23, 2010, he was told to stop reporting for work on
account of his supposed indebtedness at the canteen. This bare
insistence, however, is all that petitioner has. He failed to present
convincing evidence. Even his basic narrative is bereft of
supporting details that could be taken as badges of veracity. As
the Court of Appeals underscored, "[P]etitioner only made a
general statement that he was illegally dismissed . . . He did not
state how he was terminated [or] mentioned who prevented him
from reporting for work." [28]

III

In contrast with petitioner's bare allegation are undisputed facts


and pieces of evidence adduced by respondents, which cast
serious doubt on the veracity of petitioner's recollection of events.

It is not disputed that the establishment identified as Bax


Canteen, to which petitioner owed P2,115.00, is not owned by, or
otherwise connected with any of the respondents, or with any of
Typical Construction's owners, directors, or officers. There was
also no showing that any of the two (2) respondents, or anyone
connected with Typical Construction, was prejudiced or even just
inconvenienced by petitioner's indebtedness. It appears that Bax
Canteen was merely in the proximity of the site of Typical
Construction's Jedic Project. Petitioner failed to show why Typical
Construction would go out of its way to concern itself with the
affairs of another company. What stands, therefore, is the sheer
improbability that Typical Construction would take petitioner's
indebtedness as an infraction, let alone as a ground for
terminating his employment. [29]

The waiver and quitclaim bearing petitioner's signature and


thumbmarks was d9Jed December 21, 2010,  predating [30]

petitioner's alleged illegal termination by two (2) days. If indeed


petitioner was told to stop reporting for work on December 23,
2010, it does not make sense for Typical Construction to have
petitioner execute a waiver and quitclaim two (2) full days ahead
of the termination of his employment. It would have been a
ludicrous move for an employer that is purportedly out to outwit
someone into unemployment.

The waiver and quitclaim could very well have been antedated.
But it is not for this Court to sustain a mere conjecture. It was for
petitioner to allege and prove any possibility of antedating. He did
not do so. In any case, even if this Court were to indulge a
speculation, there does not appear to be any cogent reason for
antedating. To the contrary, antedating the waiver and quitclaim
was an unnecessary complication considering that any simulation
of resignation would have already been served by petitioner's
mere affixing of his signature. Antedating would just have been
an inexplicably asinine move on the part of respondents.

What is most crucial is that petitioner has never disavowed the


waiver and quitclaim.  It does not appear also that petitioner has
[31]

accounted for why this document exists, such as by alleging that


he was coerced into executing it.

Jurisprudence frowns upon waivers and quitclaims forced upon


employees. Waivers and quitclaims are, however, not invalid in
themselves. When shown to be freely executed, they validly
discharge an employer from liability to an employee. "[A]
legitimate waiver representing a voluntary settlement of a
laborer's claims should be respected by the courts as the law
between the parties."  In Goodrich Manufacturing Corporation v.
[32]

Ativo:[33]

It is true that the law looks with disfavor on quitclaims and


releases by employees who have been inveigled or pressured into
signing them by unscrupulous employers seeking to evade their
legal responsibilities and frustrate just claims of employees. In
certain cases, however, the Court has given effect to quitclaims
executed by employees if the employer is able to prove the
following requisites, to wit: (1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of
any of the parties; (3) the consideration of the quitclaim is
credible and reasonable; and (4) the contract is not contrary to
law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law.

Our pronouncement in Periquet v. National Labor Relations


Commission on this matter cannot be more explicit:
Not all waivers and quitclaims are invalid as against public policy.
If the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not
later be disowned simply because of a change of mind. It is only
where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person
making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a
valid and binding undertaking.  (Citations omitted)
[34]

Petitioner's barren tale of his employer's order for him to stop


reporting for work is hardly the requisite "clear proof that the
waiver was wangled from an unsuspecting or gullible
person."  Indeed, courts and tribunals should not be so gullible
[35]

as to lend validity to every waiver and quitclaim confronting


them. However, neither should they be so foolhardy as to believe
a complaining employee's narrative at the mere sight or mention
of a waiver or quitclaim.

IV

Petitioner here would have this Court rule in his favor when he
does absolutely nothing more than entreat the doctrine on an
employer's burden to prove just cases for terminating
employment. It is as though this invocation was a magic spell
that would win the day for him regardless of whether or not he is
able to discharge his primordial burden of proving the occurrence
of termination. This Court cannot fall for this. The task of
adjudication demands more than convenient conclusions obtained
through handy invocations. Rather, it requires a meticulous
appraisal of evidence and legal bases.
Petitioner is utterly wanting, both in evidence and legal bases.
This Court cannot be so witless as to rule in his favor. With an
utter dearth of proof in petitioner's favor, the consistent findings
of the Court of Appeals, the National Labor Relations Commission,
and the Labor Arbiter must be sustained.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The assailed November 29, 2012 Decision and March 26, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 124993
are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

June 19, 2018

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on April 23, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on June 19, 2018 at 10:10 a.m.
[1]
 Rollo, pp. 13-36.

 Id. at 214-226. The Decision was penned by Associate Justice


[2]

Ramon R. Garcia and concurred in by Associate Justices Amelita


G. Tolentino and Danton Q. Bueser of the Fourth Division, Court
of Appeals, Manila.

 Id. at 241-242. The Resolution was penned by Associate Justice


[3]

Ramon R. Garcia and concurred in by Associate Justices Amelita


G. Tolentino and Danton Q. Bueser of the Fourth Division, Court
of Appeals, Manila.

 Id. at 62-69. The Decision, docketed as NLRC LAC No. 11-


[4]

003025-11 (NLRC RAB-IV-03-00317-11-L), was penned by


Commissioner Napoleon M. Menese and concurred in by Presiding
Commissioner Raul T. Aquino and Commissioner Teresita D.
Castillon-Lora of the Second Division, National Labor Relations
Commission, Quezon City.

[5]
 Id. at 72-80.

[6]
 Id. at 65.

[7]
 Id. at 66 and 76-77.

[8]
 Id. at 65.

[9]
 Id.

[10]
 Id.

[11]
 Id. at 65-66.

[12]
 Id. at 76.

[13]
 Id. at 15.

[14]
 Id. at 73.
[15]
 Id. at 215.

[16]
 Id. at 72-80.

[17]
 Id. at 79.

[18]
 Id. at 62-69.

[19]
 Id. at 214-226.

[20]
 Id. at 241-242.

[21]
 Id. at 13-36.

[22]
 RULES OF COURT, Rule 45, sec. 1 provides:

Section 1. Filing of petition with Supreme Court. - A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

 Pascual v. Burgos, G.R. No. 171722, January 11, 2016


[23]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> [Per J.
Leonen, Second Division].

[24]
 Id. at 10-11.

[25]
 Rollo, pp. 22-28.

 Doctor v. NII Enterprises, G.R. No. 194001, November 22,


[26]

2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/november2017/194001.pdf> 9 [Per J.
Leonardo-De Castro, First Division] citing MZR Industries v.
Colambot, 716 Phil. 617, 624 (2013).

[27]
 Id.

[28]
 Rollo, p. 223.

[29]
 Id. at 223-224.

[30]
 Id. at 66.

[31]
 Id. at 221.

 Talam v. National Labor Relations Commission, 631 Phil. 405,


[32]

423 (2010) [Per J. Brion, Second Division], citing Veloso and


Liguaton v. DOLE, et al., 277 Phil. 230 (1992) (Per J. Cruz, First
Division].

[33]
 625 Phil. 102 (2010) [Per J. Villarama, Jr., First Division].

[34]
 Id. at 107-108.

[35]
 Rollo, pp. 222-223.

Source: Supreme Court E-Library | Date created: July 23, 2018


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Supreme Court E-Library

THIRD DIVISION
[ G.R. No. 210080, November 22,
2017 ]
MACARIO S. PADILLA, PETITIONER, VS.
AIRBORNE SECURITY SERVICE, INC. AND/OR
CATALINA SOLIS, RESPONDENT.DECISION

LEONEN, J.:

Placing security guards on floating status is a valid exercise of


management prerogative. However, any such placement on off-
detail should not exceed six (6) months. Otherwise, constructive
dismissal shall be deemed to have occurred. Security guards
dismissed in this manner are ordinarily entitled to reinstatement.
It is not for tribunals resolving these kinds of dismissal cases to
take the initiative to rule out reinstatement. Otherwise, the
discriminatory conduct of their employers in excluding them from
employment shall unwittingly find official approval.

Age, per se, cannot be a valid ground for denying employment to


a security guard.

This resolves a Petition for Review on Certiorari  under Rule 45 of


[1]

the 1997 Rules of Civil Procedure praying that the assailed April
18, 2013 Decision  and November 11, 2013 Resolution  of the
[2] [3]

Court of Appeals in CA-G.R. SP No. 122700 be reversed and set


aside.

The assailed Court of Appeals April 18, 2013 Decision sustained


the August 3, 2011 Decision  of the National Labor Relations
[4]

Commission, which affirmed the September 10, 2010 Decision  of [5]

Labor Arbiter Fedriel S. Panganiban (Labor Arbiter Panganiban)


dismissing petitioner Macario S. Padilla's (Padilla) Complaint  for
[6]

illegal dismissal. The assailed Court of Appeals November 11,


2013 Resolution denied petitioner's Motion for Reconsideration. [7]
On September 1, 1986, Padilla was hired by respondent Airborne
Security Service, Inc. (Airborne) as a security guard.  He was
[8]

first assigned at an outlet of Trebel Piano along Ortigas Avenue


Extension, Pasig City.
[9]

Padilla allegedly rendered continuous service until June 15, 2009,


when he was relieved from his post at City Advertising Ventures
Corporation and was advised to wait for his re-assignment order.
On July 27, 2009, he allegedly received a letter from Airborne
directing him to report for assignment and deployment. He called
Airborne's office but was told that he had no assignment yet. On
September 9, 2009, he received another letter from Airborne
asking him to report to its office. He sent his reply letter on
September 22, 2009 and personally repo1ted to the office to
inquire on the status of his deployment with a person identified
as Mr. Dagang, Airborne's Director for Operations. He was told
that Airborne was having a hard time finding an assignment for
him since he was already over 38 years old. Padilla added that he
was advised by Airborne's personnel to resign, but he refused. In
December 2009, when he reported to the office to collect his
13  month pay, he was again persuaded to hand in his
th

resignation letter. Still not having been deployed or re-assigned,


on February 23, 2010, Padilla filed his Complaint for illegal
dismissal,  impleading Airborne and its president, respondent
[10]

Catalina Solis (Solis).


[11]

Respondents countered that Padilla was relieved from his post on


account of a client's request.  Thereafter, Padilla was directed to
[12]

report to Airborne's office in accordance with a


Disposition/Relieve Order dated June 15, 2009. However, he
failed to comply and went on absence without leave instead.
 Respondents added that more letters—dated July 27, 2009;
[13]

September 9, 2009, which both directed Padilla to submit a


written explanation of his alleged unauthorized absences; January
12, 2010; and May 27, 2010—instructed Padilla to report to
Airborne's office, to no avail.  Respondents further denied
[14]

receiving Padilla's September 22, 2009 letter of explanation. [15]


In his September 10, 2010 Decision,  Labor Arbiter Panganiban
[16]

dismissed Padilla's Complaint.  He lent credence to respondents'


[17]

claim that Padilla failed to report for work despite the letters sent
to him.[18]

In its August 3, 2011 Decision,  the National Labor Relations


[19]

Commission affirmed in toto Labor Arbiter Panganiban's Decision.


[20]

The assailed Court of Appeals April 18, 2013 Decision sustained


the rulings of the National Labor Relations Commission and of
Labor Arbiter Panganiban.  It concluded that, if at all, Padilla
[21]

was, placed on floating status for only two (2) months, from June
15, 2009, when he was recalled, to July 27, 2009.  It [22]

emphasized that the temporary "off-detail" or placing on


"floating" status of security guards for less than six (6)-months
does not amount to dismissal  and that there is constructive
[23]

dismissal only when a security agency fails to provide an


assignment beyond the six (6)-month threshold.  The Court of [24]

Appeals also found that it was Padilla who failed to report for
work despite respondents' July 27, 2009 and September 9, 2009
letters.
[25]

Following the Court of Appeals' denial of his Motion for


Reconsideration  Padilla filed the present Petition before this
[26]

Court.

For this Court's resolution is the sole issue of whether or not


petitioner Macario S. Padilla was constructively dismissed from
his employment with respondent Airborne Security Service, Inc.,
he having been placed on floating status apparently on the basis
of his age and not having been timely re-assigned.

The Court of Appeals gravely erred in ruling that petitioner was


not constructively dismissed and in concluding that he went on
absence without leave and abandoned his work.
I

Rule 45 petitions, such as the one brought by petitioner, may


only raise questions of law.  Equally settled however, is that this
[27]

rule admits of the following exceptions:

(1) when the findings are grounded entirely on speculation,


surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts;  (5) when the findings of facts are
conflicting; (6) when in making its findings the [Court of Appeals]
went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when
the findings are contrary to the trial court; (8) when the findings
are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition, as well as
in the petitioner's main and reply briefs, are not disputed by the
respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence
on record; and (11) when the [Court of Appeals] manifestly
overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion.
 (Emphasis supplied, citation omitted)
[28]

The Court of Appeals made a gross misapprehension of facts and


overlooked other material details. The facts of this case, when
more appropriately considered, sustain a conclusion different
from that of the Court of Appeals. Petitioner was constructively
dismissed from employment owing to his inordinately long
floating status.

II
The practice of placing security guards on "floating status" or
"temporary off-detail" is a valid exercise of management
prerogative.  Jurisprudence has settled that the period of
[29]

temporary off-detail must not exceed six (6) months. Beyond


this, a security guard's floating status shall be tantamount to
constructive dismissal.  In Reyes v. RP Guardians Security
[30]

Agency: [31]

Temporary displacement or temporary off-detail of security guard


is, generally, allowed in a situation where a security agency's
client decided not to renew their service contract with the agency
and no post is available for the relieved security guard. Such
situation does not normally result in a constructive
dismissal. Nonetheless, when the floating status lasts for more
than six (6) months, the employee may be considered to have
been constructively dismissed. No less than the Constitution
guarantees the right of workers to security of tenure, thus,
employees can only be dismissed for just or authorized causes
and after they have been afforded the due process of law.
 (Emphasis supplied, citations omitted)
[32]

Therefore, a security guard's employer must give a new


assignment to the employee within six (6) months.  This [33]

assignment must be to a specific or particular client.  "A general


[34]

return-to-work order does not suffice.": [35]

A holistic analysis of the Court's disposition in JLFP


Investigation reveals that: [1] an employer must assign the
security guard to another posting within six (6) months from his
last deployment, otherwise, he would be considered
constructively dismissed; and [2] the security guard must be
assigned to a specific or particular client. A general return-to-
work order does not suffice. [36]

III
To prove that petitioner was offered a new assignment,
respondents presented a series of letters requiring petitioner to
report to respondent Airborne's head office.  These letters
[37]

merely required petitioner to report to work and to explain why


he had failed to report to the office. These letters did not identify
any specific client to which petitioner was to be re-assigned. The
letters were, at best, nothing more than general return-to-work
orders.

Jurisprudence is consistent in its disapproval of general return-to-


work orders as a justification for failure to timely render
assignments to security guards.

In Ibon v. Genghis Khan Security Services,  petitioner Ravengar


[38]

Ibon (Ibon) filed a complaint for illegal dismissal after he was


placed on floating status for more than six (6) months by his
employer, respondent Genghis Khan Security Services (Genghis
Khan). In its defense, Genghis Khan claimed that Ibon abandoned
his work after he failed to report for work despite its letters
requiring him to do so. Ruling in favor of Ibon, this Court noted
that:

Respondent could not rely on its letter requiring petitioner to


report back to work to refute a finding of constructive dismissal.
The letters, dated November 5, 2010 and February 3, 2011,
which were supposedly sent to petitioner merely requested him to
report back to work and to explain why he failed to report to the
office after inquiring about his posting status. [39]

Similarly, in Soliman Security Services, Inc. v. Sarmiento,


respondent security guards claimed that they were illegally
[40] 

dismissed after they were placed on floating status for more than
six (6) months. Their employer, petitioner Soliman Security
Services, Inc. (Soliman), presented notices requiring them to go
back to work. However, this Court found that the notices did not
absolve Soliman of liability:
The crux of the controversy lies in the consequences of the lapse
of a significant period of time without respondents having been
reassigned. Petitioner agency faults the respondents for their
repeated failure to comply with the directives to report to the
office for their new assignments. To support its argument,
petitioner agency submitted in evidence notices addressed to
respondents, which read:

You are directed to report to the undersigned to clarify your


intentions as you have not been reporting to seek a new
assignment after your relief from Interphil.

To this date, we have not received any update from you neither
did you update your government requirements. . .

We are giving you up to May 10, 2007 to comply or we will be


forced to drop you from our roster and terminate your services
for abandonment of work and insubordination.

Consider this our final warning.

As for respondents, they maintain that the offers of new


assignments were mere empty promises. Respondents claim that
they have been reporting to the office tor new assignments only
to be repeatedly turned down and ignored by petitioner's office
personnel.
....

Instead of taking the opportunity to clarify during the hearing


that respondents were not dismissed but merely placed on
floating status and instead of specifying details about the
available new assignments, the agency merely gave out empty
promises. No mention was made regarding specific details of
these pending new assignments. If respondent guards indeed had
new assignments awaiting them, as what the agency has been
insinuating since the day respondents were relieved from their
posts, the agency should have identified these assignments
during the hearing instead of asking respondents to report back
to the office. The agency's statement in the notices — that
respondents have not clarified their intentions because they have
not reported to seek new assignments since they were relieved
from their posts — is specious at best. [41]

IV

As a further defense, respondents add that it was petitioner who


abandoned his work. [42]

For an employee to be considered to have abandoned his work,


two (2) requisites must concur. First, the employee must have
failed to report for work or have been absent without a valid or
justifiable reason. Second, the employee must have had a "clear
intention to sever the employer-employee relationship."  This
[43]

Court has emphasized that "the second element [i]s the more
determinative factor."  This second element, too, must be
[44]

"manifested by some overt acts." [45]

Petitioner's conduct belies any intent to abandon his work. To the


contrary, it demonstrates how he took every effort to retain his
employment. Right after he received the first letter dated July 27,
2009, he called Airborne's head office, only to be told that he had
no assignment yet.  Upon being informed by his wife of a
[46]

subsequent letter dated September 9, 2009, he replied in the


following manner: [47]

SIR,

HEREWITH MY EXPLANATION REGARDING YOUR LETTER THAT I


RECEIVED MY WIFE YESTERDAY 22 SEPT. 09, WHY IM NOT
REPORTING IN YOUR OFFICE, SINCE I RECEIVED IN MY POST AT
CITY ADVERTISING CORP. JUNE 15 – 09. THAT'S NOT TRUE, SIR.
KINABUKASAN PAGKA RECEIVED KO SA CITY ADS CORP. NAG-
REPORT AKO PERO DI TAYO NAGKITA NAKA-ALIS KA NA, NAGKA-
USAP TAYO SA CELLPHONE NG OPISINA KAY MAM POPS. SABI
MO SA PAY-DAY NA LANG TAYO MAG-USAP.

AFTER OUR CONVERSATION ON PAY-DAY, YOU TOLD ME "NO


AVAILABLE POST FOR YOU RIGHT NOW, BUT JUST CALL ME UP,
OR I WILL CALL YOU IF THERE'S A POSSIBLE POST." SO
OFTENTIMES I'LL CALL, YOUR ANSWER'S THE SAME: "NO POST".

SO DON'T WORRY, SIR, I'LL ALWAYS PRAY TO OUR ALMIGHTY


GOD, SOMEDAY, YOU GIVE ME WORK / BEST POST.

THANK YOU AND HOPING FOR YOUR UNDERSTAND REGARDING


THESE MATTER.

RESPECTFULLY YOURS,

Mr. M. PADILLA [48]

Petitioner emphasized that he also personally reported to


Airborne's Operations Director, Mr. Dagang, to inquire about his
re-assigmnent. However, Mr. Dagang told him that "they were
having difficulty finding him a deployment because he was
already old."  Petitioner added that sometime in December 2009,
[49]

when he personally reported to the head office to get this


13  month pay, he was persuaded to resign.
th [50]

Considering petitioner's 24 years of uninterrupted service, it is


highly improbable that he would abandon his work so easily.
 There is no logical explanation why petitioner would abandon
[51]

his work. Being a security guard has been his source of income
for 24 long years.

In Tatel v. JLFP Investigation Security Agency,  Vicente Tatel


[52]

(Tatel), a security guard, filed a complaint for illegal dismissal


after being placed on floating status for more than six (6)
months. In finding that Tatel did not abandon his work, this Court
gave consideration to Tatel's prolonged service or continuous
employment:

The charge of abandonment in this case is belied by the high


improbability of Tatel intentionally abandoning his work, taking
into consideration his length of service and, concomitantly, his
security of tenure with JLFP. As the NLRC had opined, no rational
explanation exists as to why an employee who had worked for his
employer for more than ten (10) years would just abandon his
work and forego whatever benefits he may be entitled to as a
consequence thereof. As such, respondents failed to sufficiently
establish a deliberate and unjustified refusal on the part of Tatel
to resume his employment, which therefore leads to the logical
conclusion that the latter had no such intention to abandon his
work. [53]

Equally belying petitioner's intent to abandon his work is his


immediate filing of a Complaint for illegal dismissal on February
23, 2010. This was only eight (8) month after he was placed on
floating status.  As similarly noted in Tatel v. JLFP Investigatiqn
[54]

Security Agency: [55]

An employee who forthwith takes steps to protest his layoff


cannot, as a general rule, be said to have abandoned his work,
and the filing of the complaint is proof enough of his desire to
return to work, thus negating any suggestion of abandonment.
 (Citation omitted)
[56]

Taking the totality of circumstances into consideration, this Court


is unable to conclude that petitioner abandoned his work. Rather,
this Court finds that he was placed on floating status for more
than six (6) months. Thus, he was constructively dismissed.

V
As a consequence of the finding of illegal dismissal, petitioner
would ordinarily be entitled to reinstatement, pursuant to Article
294 of the Labor Code:

Article 294. Security of Tenure. — . . . 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.

It is unreasonable to deny employees their means of earning a


living exclusively on the basis of age when there is no other
indication that they are incapable of performing their functions. It
is true that certain tasks require able-bodied individuals. Age, per
se, is not a reliable indication of physical stamina or mental rigor.
What is crucial in determining capacity for continuing employment
is an assessment of an employee's state of health, not his or her
biological age. Outside of limitations founded on scientific and
established wisdom such as the age of minority, proscriptions
against child labor, or a standard retirement age, it is unjust to
discriminate against workers who are within an age range that is
typical of physical productivity.

Ordinarily, it is not for this Court to foreclose an employee's


chances of regaining employment through reinstatement. It is not
for this Court to rule out reinstatement on its own. To do so
would amount to a tacit approval of the abusive, discriminatory
conduct displayed by employers such as Airborne. It would be a
capitulation to and virtual acceptance of the employer's assertion
that employees of a certain age can no longer engage in
productive labor. However, considering that petitioner himself
specifically prayed for an award of separation pay and has also
been specific in asking that he no longer be reinstated, this Court
awards him separation pay, in lieu of reinstatement.

VI
Respondent Solis may not be held personally liable for the illegal
termination of petitioner's employment.

As this Court explained in Saudi Arabian Airlines v. Rebesencio: [57]

A corporation has a personality separate and distinct from those


of the persons composing it. Thus, as a rule, corporate directors
and officers are not liable for the illegal termination of a
corporation's employees. It is only when they acted in bad faith
or with malice that they become solidarily liable with the
corporation.

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang


Manggagawa ng Ever Electrical, this court clarified that "[b]ad
faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of
wrong; it means breach of a known duty through some motive or
interest or ill will; it partakes of the nature of fraud."
[58]

Other than Solis' designation as Airborne's president, this Court


finds no indication that she acted out of bad faith or with malice
specifically aimed at petitioner as, regards the termination of his
employment. Thus, this Court finds that she did not incur any
personal liability.

WHEREFORE, the Petition for Review on Certiorari


is GRANTED. The assailed April 18, 2013 Decision and November
11, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
122700 are REVERSED and SET ASIDE. Accordingly,
respondent Airborne Security Service, Inc. is ordered to pay
petitioner Macario S. Padilla:

1. Full backwages and other benefits computed from the date


petitioner's employment was illegally terminated until the
finality of this Decision;
2. Separation pay computed from the date petitioner
commenced employment until the finality of this Decision at
the rate of one (1) month's salary for every year of service,
with a fraction of a year of at least six (6) months being
counted as one (1) whole year; and
3. Attorney's fees equivalent to ten percent (10%) of the total
award.

The case is REMANDED to the Labor Arbiter to make a detailed


computation of the amounts due to petitioner, which must be
paid without delay, and for the execution of this judgment.

The case is DISMISSED with respect to respondent Catalina


Solis.

SO ORDERED.

Bersamin, (Acting Chairperson),   Martires, and Gesmundo,


**

JJ., concur.
Velasco, Jr., J., on official leave.

February 1, 2018

N O T I C E  O F  J U D G M E N T

Sirs /Mesdames:

Please take notice that on November 22, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on February 1, 2018 at 9:50 a.m.
Very truly yours,           

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court          

 Designated Acting Chairperson per S.O. No. 2514 dated


**

November 8, 2017.

[1]
 Rollo, pp. 11-29.

 Id. at 31-41. The Decision was penned by Associate Justice


[2]

Jane Aurora C. Lantion and concurred in by Associate Justices


Vicente S.E. Veloso and Eduardo B. Peralta, Jr. of the Twelfth
Division, Court of Appeals, Manila.

 Id. at 43-44. The Resolution was penned by Associate Justice


[3]

Jane Aurora C. Lantion and concurred in by Associate Justices


Vicente S.E. Veloso and Eduardo B. Peralta, Jr. of the Twelfth
Division, Court of Appeals, Manila.

 Id. at 169-176. The Decision, docketed as NLRC-LAC-No. 01-


[4]

000062-11 [NLRC NCR 02-02851-10 (05-07337-10)], was


penned by Commissioner Angelo Ang Palana and concurred in by
Presiding Commissioner Herminio V. Suelo and Commissioner
Numeriano D. Villena of the Fourth Division, National Labor
Relations Commission, Quezon City.

[5]
 Id. at. 150-156.

[6]
 Id. at 115-117.

[7]
 Id. at 241-246.
[8]
 Id. at 32.

[9]
 Id. at 151.

[10]
 Id.

[11]
 Id. at 115.

[12]
 Id. at 152.

[13]
 Id.

[14]
 Id. at 152-153.

[15]
 Id. at 153.

[16]
 Id. at 150-156.

[17]
 Id. at 156.

[18]
 Id. at 155.

[19]
 Id. at 169-176.

[20]
 Id. at 175.

[21]
 Id. at 40.

[22]
 Id.

[23]
 Id. at 38-40.

[24]
 Id.

[25]
 Id.

[26]
 Id. at 241-246.
[27]
 RULES OF COURT, Rule 45, Section 1:

Section 1. Filing of petition with Supreme Court. — A party


desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which
must be distinctly set forth.

 Tatel v. JLFP Investigation Security Agency Inc., 755 Phil. 171,


[28]

181-182 (2015) [J. Perlas-Bernabe First Division].

 Soliman Security Services, Inc. v. Sarmiento, G.R. No. 194649,


[29]

August 10, 2016 < Error! Hyperlink reference not valid. >


[J. Perez, Third Division].

 Reyes v. RP Guardians Security Agency, Inc., 708 Phil. 598


[30]

(2013) [J. Mendoza, Third Division].

 Reyes v. RP Guardians Security Agency, Inc.,. 708 Phil. 598


[31]

(2013) [J. Mendoza, Third Division].

[32]
 Id. at 603-604.

 Ibon v. Genghis Khan Security Services, G.R. No. 221085, June


[33]

19, 2017 < Error! Hyperlink reference not valid. >


7 [J. Mendoza, Second Division].

[34]
 Id.

[35]
 Id.

[36]
 Id.

[37]
 Rollo, pp. 39-40.
 G.R. No. 221085, June 19, 2017 < Error! Hyperlink
[38]

reference not valid. > [J. Mendoza, Second Division].

[39]
 Id. at 6.

 G.R.
[40]
No. 194649, August 10, 2016 <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/august2016/194649.pdf > [J. Perez,
Third Division].

[41]
 Id. at 5-6.

[42]
 Rollo, pp. 33-34.

 Tatel v. JLFP Investigation Security Agency, Inc., 755 Phil. 171,


[43]

179 (2015) [J. Perlas-Bernabe First Division].

[44]
 Tatel v. JLFP Investigation Security Agency, Inc., Id. 184.

[45]
 Tatel v. JLFP Investigation Security Agency, Inc., Id.

[46]
 Rollo,  pp. 151-152, Labor Arbiter Decision.

[47]
 Id. at 19-20.

[48]
 Id. (Grammatical errors in the original).

[49]
 Id. at 19.

[50]
 Id.

 See Tatel v. JLFP Investigation Security Agency, Inc., 755 Phil.


[51]

171 (2015) [J. Perlas-Bernabe First Division].

[52]
 755 Phil. 171 (2015) [J. Perlas-Bernabe First Division].

 Tatel v. JLFP Investigation Security Agency, Inc., Id. at 184-


[53]

185.
[54]
 Rollo,  p. 13, Petition.

 Tatel v. JLFP Investigation Security Agency, Inc., 755 Phil. 171


[55]

(2015) [J. Perlas-Bernabe First Division].

[56]
 Id. at 185.

[57]
 750 Phil. 791 (2015) [Per J. Leonen, Second Division].

 Id. at 844-845, citing Ever Electrical Manufacturing, Inc. (EEMI)


[58]

v. Samahang Manggagawa ng Ever Electrical, 687 Phil. 529


(2012) [Per J. Mendoza, Third Division].

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THIRD DIVISION

[ G.R. No. 204288, November 08,


2017 ]
DEMEX RATTANCRAFT, INC. AND NARCISO T.
DELA MERCED, PETITIONERS, VS. ROSALIO A.
LERON, RESPONDENT.DECISION

LEONEN, J.:
To justify the dismissal of an employee based on abandonment of
work, there must be a showing of overt acts clearly evidencing
the employee's intention to sever the employer employee
relationship.

This is a Petition for Review on Certiorari  under Rule 45 of the


[1]

Rules of Court assailing the February 9, 2012 Decision  and [2]

October 25, 2012 Resolution  of the Court of Appeals in CA GR.


[3]

SP No. 109077. The assailed judgments reversed the Resolutions


of the National Labor Relations Commission, which found that
respondent Rosalio A. Leron's (Leron) dismissal was for a just
cause.

In 1980, Leron was hired as a weaver by Demex Rattancraft, Inc.


(Demex), a domestic corporation engaged in manufacturing
handcrafted rattan products for local sale and export.  Narciso T. [4]

Dela Merced was Demex's president. [5]

Leron was paid on a piece-rate basis  and his services were


[6]

contracted through job orders.  He worked from Monday to


[7]

Saturday. However, there were times when he was required to


work on Sundays.  Leron received his wages at the end of every
[8]

week but he never received standard benefits such as 13  month th

pay, service incentive leave, rest day pay, holiday pay, and
overtime pay. [9]

Sometime in June 2006, Leron was dismissed by Demex's


foreman, Marcelo Viray (Viray), and Demex's personnel manager,
Nora Francisco (Francisco). Both accused him of instigating a
campaign to remove Viray as the company's foreman.  Before [10]

Leron was dismissed from service, he was given a memorandum


stating that the dining chair he had previously weaved  for [11]

export to Japan was rejected. For this reason, Demex expressed


that it would no longer avail of his services. [12]

On June 28, 2006, Leron did not report for work.  The next day,
[13]

he filed a complaint against Demex for illegal dismissal before the


Labor Arbiter of Quezon City. This case was docketed as NLRC
NCR Case No. 00-06-05490-06. [14]

Meanwhile, Demex construed Leron's failure to report to work as


an absence without leave. On July 3, 2006, Demex sent Leron a
notice requiring him to return to work on July 5, 2006. This was
personally served to Leron by one (1) of his co-employees. On
July 7, 2006, Demex sent another notice to Leron requiring him
to report to work.  Despite having received these two (2)
[15]

notices, Leron did not resume his post. On July 12, 2006, Leron
received a third notice from Demex informing him of its decision
to terminate his services on the ground of abandonment. [16]

On August 3, 2006, the Labor Arbiter dismissed the illegal


dismissal case without prejudice on the ground of improper
venue.  Leron refiled his complaint before the Labor Arbiter of
[17]

San Fernando City, Pampanga. This case was docketed as NLRC


Case No. RAB III 09-10461-06. [18]

In his Decision  dated July 30, 2007, Labor Arbiter Leandro M.


[19]

Jose (Labor Arbiter Jose) dismissed the complaint holding that


Leron's termination from employment was valid. However,
Demex was ordered to pay 13th month pay amounting to
P5,833.00. [20]

Leron appealed Labor Arbiter Jose's July 30, 2007 Decision before
the National Labor Relations Commission. This was docketed as
LAC No. 06-002057-08. [21]

On January 30, 2009, the National Labor Relations Commission


rendered a Resolution  affirming the Decision of Labor Arbiter
[22]

Jose but awarded Leron P5,000.00 as nominal damages for


Demex's non-compliance with procedural due process.  The [23]

National Labor Relations Commission declared that Leron's


absence was a valid ground to terminate him from employment.
 Leron moved for reconsideration but his motion was denied in
[24]

the Resolution dated March 16, 2009. [25]


Leron filed a Petition for Certiorari under Rule 65 of the Rules of
Court  before the Court of Apfeals assailing the Resolutions of
[26]

the National Labor Relations Commission. [27]

In its Decision  dated February 9, 2012, the Court of Appeals


[28]

found grave abuse of discretion on the part of the National Labor


Relations Commission when it declared that Leron abandoned his
work. According to the Court of Appeals, Demex failed to
establish the elements constituting abandonment. There was no
clear intention on the part of Leron to sever the employer-
employee relationship because he filed an illegal dismissal case
immediately after he was dismissed by Viray and Francisco. Aside
from this, the Court of Appeals ascribed bad faith on Demex and
held that its act of sending return-to-work notices was merely an
afterthought. [29]

Accordingly, the assailed Resolutions of the National Labor


Relations Commission were reversed and set aside. Demex was
ordered to pay Leron accrued backwages and separation pay in
lieu of reinstatement due to the strained relations between the
parties.  The Court of Appeals also deleted the award of nominal
[30]

damages. The dispositive portion of its Decision stated:


WHEREFORE, the petition is Granted. The assailed Resolutions,
dated January 30, 2009 and March 16, 2009, of the Public
Respondent National Labor Relations Commission, in NLRC LAC
NO. 06-002057-08 are hereby REVERSED and SET ASIDE and
a new one is entered declaring Petitioner's dismissal illegal, thus:
1. Private Respondent Demex is ordered to pay Petitioner
backwages, separation pay and P5,833.00 as proportionate
13  month pay for the year 2006.
th

2. The awarded nominal damages in the amount of P5,000.00


is deleted.
This case is remanded to the Labor Arbiter for the computation of

Petitioner's accrued backwages and separation pay.

SO ORDERED.  (Emphasis in the original)


[31]
Demex moved for reconsideration but its motion was denied in
the Resolution  dated October 25, 2012.
[32]

On December 21, 2012, Demex tiled a Petition for Review on


Certiorari before this Court assailing the February 9, 2012
Decision and October 25, 2012 Resolution of the Court of
Appeals.  Respondent filed his Comment  on April 16, 2013 to
[33] [34]

which petitioners filed their Reply on May 21, 2013. [35]

In the Resolution  dated June 17, 2013, this Court gave due
[36]

course to the petition and required the parties to submit their


respective memoranda.

Petitioners filed their Memorandum  on August 23, 2013 while


[37]

respondent filed his Memorandum  on January 8, 2014.


[38]

Petitioners justify respondent's dismissal from employment on the


ground of abandonment. They point out that respondent's
unauthorized absences, non-compliance with the return-to-work
notices, and alleged act of crumpling the first return-to-work
notice are indicators of his intention to sever his employment.
 Petitioners add that the return-to work notices were not sent to
[39]

respondent as an afterthought because they only discovered the


existence of the first illegal dismissal case after they sent the first
notice.[40]

On the other hand, respondent argues that his act of filing an


illegal dismissal case negates the charge of abandonment. He
points out that he had already filed the illegal dismissal complaint
against petitioners before he was given a return-to-work notice.
Petitioners "were very much aware"  of the case and had actively
[41]

participated in the proceedings. Respondent also argues that he


cannot be faulted for his refusal to return to work. The filing of
case for illegal dismissal caused a strained relationship between
him and petitioners. [42]

The sole issue tor this Court's resolution is whether or not


respondent Rosalio A. Leron was validly dismissed from
employment by petitioners Demex Rattancraft, Inc. and Narciso
T. Dela Merced on the ground of abandonment of work.

Only questions of law may be raised in a petition for review


brought under Rule 45 of the Rules of Court.  This Court, not
[43]

being a trier of facts, would no longer disturb the lower court's


factual findings when supported by substantial evidence. [44]

The determination of whether or not an employee is guilty of


abandonment is a factual matter. It involves a review on the
probative value of the evidence presented by each party and the
correctness of the lower courts' assessments.  The Court of [45]

Appeals' finding that respondent did not abandon his work would
generally be binding upon the parties and this Court.  However, [46]

an exception should be made in this case considering that there is


a variance in the findings of the Court of Appeals and the National
Labor Relations Commission. [47]

Article 297 of the Labor Code enumerates the just causes for the
dismissal of an employee:
Article 297. Termination by Employer. - An employer may
terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful ord
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his empl
representative;

(d) Commission of a crime or offense by the employee against the person of his emp
member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.


Although abandonment of work is not expressly enumerated as a
just cause under Article 297 of the Labor Code, jurisprudence has
recognized it as a form of or akin to neglect of duty. [48]
Abandonment of work has been construed as "a clear and
deliberate intent to discontinue one's employment without any
intention of returning back."  To justify the dismissal of an
[49]

employee on this ground, two (2) elements must concur, namely:


"(a) the failure to report for work or absence without valid or
justifiable reason; and, (b) a clear intention to sever the
employer-employee relationship." [50]

Mere failure to report to work is insufficient to support a charge of


abandonment. The employer must adduce clear evidence of the
employee's "deliberate, unjustified refusal . . . to resume his [or
her] employment," which is manifested through the employee's
overt acts.[51]

Set against these parameters, this Court finds that the Court of
Appeals did not err in holding that the National Labor Relations
Commission gravely abused its discretion in upholding
respondent's dismissal from service.

In affirming the findings of the Labor Arbiter and in declaring that


the petitioners discharged the burden of proof,  the National
[52]

Labor Relations Commission relied on petitioners' evidence.


Petitioners presented (1) the Sinumpaang Salaysay of the
employee who served the first return to work notice; (2) the
second return-to-work notice dated July 7, 2006; and (3) the
tennination notice addressed to respondent.  The National Labor
[53]

Relations Commission declared:


In the instant case, we agree with the finding of the Labor Arbiter
that the respondents were able to discharge their burden of
proving the validity of the dismissal of the complainant. As borne
by the records, the complainant stopped reporting for work
beginning June 28, 200[6]. Although he claims that he was not
allowed to work on that day, he admitted having received the
notices sent by the respondents for him to go back to work. He
also failed to justify or offer good reason for ignoring such
return[-]to[-]work notices. Thus, the respondents promptly acted
in considerinhim [Absent Without Leave], which is a just ground
for his dismissal.[54]
The National Labor Relations Commission committed grave abuse
of discretion in holding that respondent's absence from work is a
valid ground for his dismissal.

Petitioners' evidence does not clearly establish a case of


abandonment. Petitioners failed to prove the second element of
abandonment, which is regarded by this Court as the more
decisive factor.
[55]

Intent to sever the employer-employee relationship can be


proven through the overt acts of an employee. However, this
intent "cannot be lightly inferred or legally presumed from certain
ambivalent acts."  The overt acts, after being considered as a
[56]

whole, must clearly show the employee's objective of


discontinuing his or her employment. [57]

Petitioners point to respondent's absences, non-compliance with


the return-to-work notices, and his alleged act of crumpling the
first return-to work notice as indicators of abandonment.  These[58]

acts still fail to convincingly show respondent's clear and


unequivocal intention to sever his employment.

Respondent filed an illegal dismissal case against petitioners on


June 29, 2006, the day after he was unceremoniously dismissed
by his superiors on June 28, 2006.  Petitioners deny [59]

respondent's arbitrary dismissal  and claim that respondent


[60]

abandoned his work starting June 28, 2006. [61]

Petitioners' narrative would mean that respondent instituted an


illegal dismissal complaint right after his first day of absence. This
is illogical. There was no unequivocal intent to abandon.
Respondent even pursued the illegal dismissal case after it was
dismissed without prejudice on the ground of improper venue. [62]

Respondent's non compliance with the return-to-work notices and


his alleged act of cnm1pling the first return-to-work notice are
equivocal acts that fail to show a clear intention to sever his
employment. Strained relations caused by being legitimately
disappointed after being unfairly treated could explain the
employee's hesitation to report back immediately. If any, his
actuations only explain that he has a grievance, not that he
wanted to abandon his work entirely.

Petitioners also failed to comply with procedural due process,


particularly the twin-notice rule. They admitted that after sending
two (2) return-to-work notices, they sent a notice to respondent
informing him of his dismissal.
[63]

Valid termination requires the employer to send an initial notice


to the employee, stating the specific grounds or causes for
dismissal and directing the submission of a written explanation
answering the charges. After considering the employee's answer,
the employer must give another notice informing the employee of
the employer's findings and reason for termination.  These are
[64]

the operative acts that terminate an employer-employee


relationship. In Kams International, Inc. v. National Labor
Relations Commission,  this Court explained:
[65]

Furthennore, it must be stressed that abandonment of work does


not per se sever the employer-employee relationship. It is merely
a fonn of neglect of duty, which is in turn a just cause for
tennination of employment. The operative act that will ultimately
put an end to this relationship is the dismissal of the employee
after complying with the procedure prescribed by law.
 (Emphasis supplied)
[66]

The employer has the burden of proving that an employee's


dismissal from service was for a just or authorized cause.
 Having failed to clearly establish that respondent abandoned
[67]

his work, this Court denies the petition and affirms the Court of
Appeals' finding that respondent was illegally dismissed from
employment

WHEREFORE, the Petition is DENIED. The February 9, 2012


Decision and October 25, 2012 Resolution of the Court of Appeals
in CA G.R. SP NO. 109077 are AFFIRMED.

SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,
JJ., concur.

December 12, 2017

NOTICE OF JUGMENT

Sirs / Mesdames:

Please take notice that on November 8, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on December 12, 2017 at 1:20 p.m.

[1]
 Rollo, pp. 7-29.

 Id. at 30-40. The Decision was penned by then Associate Justice


[2]

Noel G. Tijam and concurred in by Associate Justices Romeo F.


Barza and Edwin D. Sorongon of the Ninth Division, Court of
Appeals, Manila.

 Id. at 41-42. The Re olution was penned by then Associate


[3]

Justice Noel G. Tijam and concurred in by Associate Justices


Romeo F. Barza and Edwin D. Sorongon of the Former Ninth
Division, Court of Appeals, Manila.

[4]
 Id. at 31.
[5]
 Id. at 10.

[6]
 Id. at 31.

[7]
 Id. at 12.

[8]
 Id. at 31.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id. at 263.

[13]
 Id. at 13.

[14]
 Id. at 101-101-A.

[15]
 Id. at 13-14.

[16]
 Id. at 14.

[17]
 Id. at 32.

[18]
 Id. at 102-102-A.

[19]
 Id. at 89-95.

[20]
 Id. at 94-95.

[21]
 Id. at 84.

 Id. at 84-87. The attached Resolution is incomplete. The


[22]

Resolution dated January 30, 2009 was penned by Commissioner


Pablo C. Espiritu, Jr. and concurred in by Presiding Commissioner
Lourdes C. Javier and Commissioner Gregorio O. Bilog III of the
Third Division, National Labor Relations Commission.

[23]
 Id. at 86.

[24]
 Id. at 85-86.

 Id. at 96-97. The Resolution was penned by Commissioner


[25]

Pablo C. Espiritu, Jr. and concurred in by Commissioner Gregorio


O. Bilog III.

[26]
 Id. at 30,

[27]
 Id. at 15.

[28]
 Id. at 30-40.

[29]
 Id. at 35-38.

[30]
 Id. at 38-39.

[31]
 Id. at 39.

[32]
 Id. at 41-42.

[33]
 Id. at 7-29.

[34]
 Id. at 209-213.

[35]
 Id. at 215-221.

[36]
 Id. at 222-222-A.

[37]
 Id. at 224-241.

[38]
 Id. at 246-262.

[39]
 Id. at 227-236.
[40]
 Id. at 232-235.

[41]
 Id. at 256.

[42]
 Id. at 253-257.

[43]
 RULES OF COURT, Rule 45, sec. 1.

 Pascual v. Burgos, G.R. No. 171722, January 11, 2016, 778


[44]

SCRA 189, 204 [Per J. Leonen, Second Division].

[45]
 Id. at 206.

[46]
 Id. at 204-205.

 Id. at 205-206 citing Medina v. Asistio. Jr., 269 Phil. 225


[47]

(1990) [Per J. Bidin, Third Division].

 Stanley Fine Furniture v. Gallano, 748 Phil. 624, 638 (2014)


[48]

[Per J. Leonen, Second Division].

 Flores v. Nuestro, 243 Phil. 712, 715 (1988) [Per J. Yap,


[49]

Second Division] citing Capital Garment Corporation v. Ople, 202


Phil. 797 (1982) [Per J. De Castro, Second Division].

 Pare v. National Labor Relations Commission, 376 Phil. 288,


[50]

292 (1999) [Per J. Bellosillo, Second Division].

[51]
 Id.

[52]
 Rollo, pp. 85-86.

 Id. at 93-94. The Labor Arbiter Decision mentioned "July 7,


[53]

2008" but meant "July 7, 2006."

[54]
 Id. at 85-86.
 Pare v. National Labor Relations Commission, 376 Phil. 288,
[55]

292 (1999) [Per J. Bellosillo, Second Division].

 Kams lntcmational, Inc. v. National Labor Relations


[56]

Commission, 373 Phil. 950, 958 (1999) [Per J. Belosillo, Second


Division] citing De Paul/King Philip Customs Tailor, and/or
Milagros Chuakay and William Go v. National Labor Relations
Commission, 364 Phil. 91 (1999) [Per J. Puno, Second Division].

[57]
 Id.

[58]
 Rollo, pp. 227-236.

[59]
 Id. at 13 and 31.

[60]
 Id. at 17.

[61]
 Id. at 13.

[62]
 Id. at 32.

[63]
 Id. at 226-228.

 King of Kings Transport, Inc. v. Mamac, 553 Phil. 108, 115-117


[64]

(2007) [Per J. Velasco, Second Division].

[65]
 373 Phil. 950 (1999) [Per J. Bellosillo, Second Division].

[66]
 Id. at 959.

 See Polymedic General Hospital v. National Labor Relations


[67]

Commission, 219 Phil. 385 (1985) [Per J. Relova, First


Division]; Austria v. National Labor Relations Commission, 369
Phil. 557, 565 (1999) [Per J. Bellosillo, Second Division].
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THIRD DIVISION

[ G.R. No. 185894, August 30, 2017 ]


BELO MEDICAL GROUP, INC., PETITIONER, VS.
JOSE L. SANTOS AND VICTORIA G. BELO,
RESPONDENTS.DECISION

LEONEN, J.:

A conflict between two (2) stockholders of a corporation does not


automatically render their dispute as intra-corporate. The nature
of the controversy must also be examined. [1]

In this Petition for Review on Certiorari  under Rule 45 of the


[2]

Rules of Court, Belo Medical Group, Inc. (Belo Medical Group)


assails the Regional Trial Court December 8, 2008 Joint
Resolution in Civil Case No. 08-397.  This Joint Resolution
[3]

granted respondent Jose L. Santos' (Santos) Motion to Dismiss


and Belo Medical Group's Complaint for interpleader and
Supplemental Complaint for Declaratory Relief against Santos and
Victoria G. Belo (Belo), and declared all other pending incidents
as moot. [4]

The controversy began on May 5, 2008  when Belo Medical Group


[5]

received a request from Santos for the inspection of corporate


records.  Santos claimed that he was a registered shareholder
[6]
and a co-owner of Belo's shares, as these were acquired while
they cohabited as husband and wife.  Santos sought advice on
[7]

his probable removal as director of the corporation considering


that he was not notified of meetings where he could have been
removed. He also inquired on the election of Alfredo Henares
(Henares) as Corporate Secretary in 2007 when Santos had not
been notified of a meeting for Henares' possible election. Finally,
he sought explanation on the corporation's failure to inform him
of the 2007 annual meeting and the holding of an annual meeting
in 2008.  Santos' concern over the corporate operations arose
[8]

from the alleged death of a patient in one (1) of its clinics.


[9]

Santos was unsuccessful in inspecting the corporate books as


Henares, the officer-in-charge of corporate records, was
travelling. Belo Medical Group asked for time in order for Henares
to accommodate Santos' request. [10]

After the first attempt to inspect, Belo wrote Belo Medical Group
on May 14, 2007 to repudiate Santos' co-ownership of her shares
and his interest in the corporation. She claimed that Santos held
the 25 shares in his name merely in trust for her, as she, and not
Santos, paid for these shares. She informed Belo Medical Group
that Santos already had a pending petition with the Regional Trial
Court to be declared as co-owner of her properties. She asserted
that unless a decision was rendered in Santos' favor, he could not
exercise ownership rights over her properties.[11]

Belo also informed Belo Medical Group that Santos had a business
in direct competition with it. She suspected that Santos' request
to inspect the records of Belo Medical Group was a means to
obtain a competitor's business information, and was, therefore, in
bad faith.[12]

A second inspection was attempted through a written demand by


Santos on May 15, 2008.  Again, he was unsuccessful.
[13]

Belo wrote to Belo Medical Group on May 20, 2008 to reiterate


her objections to Santos' attempts at inspecting corporate books
and his inquiry regarding a patient. Belo further manifested that
she was exercising her right as a shareholder to inspect the books
herself to establish that the 25 shares were not owned by Santos,
and that he did not pay for these shares. [14]

Thus, Belo Medical Group filed a Complaint for Interpleader  with


[15]

Branch 149, Regional Trial Court, Makati City on May 21, 2008.
Belo Medical Group alleged that while Santos appeared to be a
registered stockholder, there was nothing on the record to show
that he had paid for the shares under his name. The Complaint
was filed "to protect its interest and compel [Belo and Santos] to
interplead and litigate their conflicting claims of ownership of, as
well as the corresponding right of inspection arising from, the
twenty-five (25) [Belo Medical Group] shares between
themselves pursuant to Rule 62 of the 1997 Rules of Civil
Procedure . . ."  The following reliefs were prayed for:
[16]

(i) issue an Order summoning and requiring defendants Santos


and Belo to interplead with each other to resolve their conflicting
claims of ownership of the 25 shares of stock of [Belo Medical
Group], including their opposing claims of exclusive entitlement
to inspect [Belo Medical Group] corporate records;

(ii) after due proceedings render judgment in favor of the proper


defendant; and

(iii) allow plaintiff [Belo Medical Group] to recover attorney's fees


and litigation expenses in the amount of at least
Php1,000,000.00 jointly and solidarity against both defendants
and for them to pay the costs of suit. [17]

On the same day, Henares wrote Belo's and Santos' respective


counsels to inform them of the Complaint.  Despite receipt,
[18]

Santos' counsel still proceeded to Belo Medical Group's Makati


office on May 22, 2008, where, again, they were unsuccessful in
inspecting the corporate books. [19]

Santos, for the third time, sent a letter on May 22, 2008 to
schedule an inspection of the corporate books and warned that
continued rejection of his request exposed the corporation to
criminal liability.  Nothing came out of this last attempt as well.
[20]

Bela and Bela Medical Group wrote to Santos on May 27, 2008 to
inform him that he was barred from accessing corporate records
because doing so would be inimical to Belo Medical Group's
interests.  Through another letter on May 28, 2008, Santos was
[21]

reminded of his majority share in The Obagi Skin Health, Inc. the
owner and operator of the House of Obagi (House of Obagi)
clinics. He was likewise reminded of the service of a notice of the
2007 special meeting of stockholders to his address at Valero
Street, Makati City, contrary to his claim. [22]

On May 29, 2008, Belo Medical Group filed a Supplemental


Complaint  for declaratory relief under Rule 63 of the Rules of
[23]

Court. In its Supplemental Complaint, Belo Medical Group relied


on Section 74  of the Corporation Code to deny Santos' request
[24]

for inspection. It prayed that Santos be perpetually barred from


inspecting its books due to his business interest in a competitor.
 Should the ruling for interpleader be in favor of Santos, Belo
[25]

Medical Group prayed that the trial court:


a. exercise its power under Rule 63 of the Revised Rules of Civil
Procedure and give a proper construction of Sections 74 and 75
of the Corporation Code in relation to the facts presented above,
and declare that plaintiff can rightfully decline defendant Santos's
request for inspection under those sections and related provisions
and jurisprudence; and

b. allow plaintiff to recover attorney's fees and litigation expenses


from defendant Santos in the amount of at least
PHP1,000,000.00 and the costs of suit. [26]

Belo Medical Group's Complaint and Supplemental Complaint


were raffled to Branch 149 of the Regional Trial Court of Makati, a
special commercial court,  thus classifying them as intra-
[27]

corporate. [28]

Belo filed her Answer Ad Cautelam with Cross-Claim to put on


record her defenses that Santos had no right to inspect the books
as he was not the owner of the 25 shares of stock in his name
and that he was acting in bad faith because he was a majority
owner of House of Obagi. [29]

Belo further argued that the proceedings should not have been
classified as intra-corporate because while their right of
inspection as shareholders may be considered intra-corporate, "it
ceases to be that and becomes a full-blown civil law question if
competing rights of ownership are asserted as the basis for the
right of inspection." [30]

Meanwhile, on several dates, the trial court sheriff attempted to


personally serve Santos with summons.  After unsuccessful
[31]

attempts,  the sheriff resorted to substituted service in Santos'


[32]

Makati office condominium unit. [33]

On July 4, 2008, Belo Medical Group filed an Omnibus Motion for


Clarificatory Hearing and for Leave to File Consolidated Reply,
 praying that the case be tried as a civil case and not as an
[34]

intra-corporate controversy. It argued that the Interim Rules of


Procedure Governing Intra-Corporate Controversies  did not[35]

include special civil actions for interpleader and declaratory relief


found under the Rules of Court. Belo Medical Group clarified that
the issue on ownership of the shares of stock must first be
resolved before the issue on inspection could even be considered
ripe for determination. [36]

Belo Medical Group later on moved that Santos be declared in


default.  Instead of filing an answer Santos filed a Motion to
[37]

Dismiss. [38]

Apart from procedural infirmities, Santos argued that Belo


Medical Group's Complaint and Supplemental Complaint must be
dismissed "for its failure to state, and ultimately, lack of, a cause
of action."  No ultimate facts were given to establish the act or
[39]

omission of Santos and Belo that violated Belo Medical Group's


rights. There was simply no conflict on the ownership of the 25
shares of stock under Santos' name. Based on the corporation's
2007 Articles of Incorporation and General Information Sheet,
Santos was reflected as a stockholder and owner of the 25 shares
of stock. No documentary evidence was submitted to prove that
Belo owned these shares and merely transferred them to Santos
as nominal shares. [40]

Santos further argued that the filing of the complaints was an


afterthought to take attention away from Belo Medical Group's
criminal liability when it refused Santos' demand to inspect the
records of the corporation. For years, neither Belo Medica1 Group
nor Belo questioned Santos' standing in the corporation. No
change in ownership from Santos to another person was reflected
in the company's General Information Sheet. [41]

Santos also invoked the doctrine of piercing the corporate veil as


Belo owned 90% of Belo Medical Group. Her claim over the 25
shares was a ploy to defeat Santos' right to inspect corporate
records. He asserts that the Complaint for interpleader was an
anticipatory move by the company to evade criminal liability upon
its denial of Santos' requests. [42]

In addition, Santos argued that a prerequisite to filing these


cases is that the plaintiff has not yet incurred liability to any of
the parties. Since Belo Medical Group had already incurred
criminal liability, it could no longer file a complaint for
interpleader or declaratory relief. [43]

Santos denied any conflict of interest because Belo Medical


Group's products and services differed from House of
Obagi's  Belo Medical Group's primary purpose was the
[44]

management and operation of skin clinics  while the House of


[45]

Obagi's main purpose was the sale and distribution of high-end


facial products. [46]

On October 29, 2008, Belo Medical Group filed its


Opposition  and argued that the Motion to Dismiss was a
[47]

prohibited pleading under Section 8 of the Interim Rules of


Procedure Governing Intra-Corporate Controversies.
Belo Medical Group reiterated that Belo and Santos must litigate
against each other to determine who rightfully owned the 25
shares. An accommodation of one of them, absent a resolution to
this issue, would make Belo Medical Group liable to the other. [48]

On its supposed criminal liability when it refused Santos access to


corporate records, Belo Medical Group explained that the
independent liability necessary to defeat complaints for
interpleader arose from a final judgment and not merely a cause
of action that has accrued.[49]

Finally, Belo Medical Group averred that substantiation must be


done during trial. The dismissal of the case would be premature. [50]

Belo's Opposition dated October 29, 2008 raised the same


arguments of Belo Medical Group. [51]

Santos filed his Reply to the Oppositions on November 18, 2008.


 He agreed that the controversy was not intra-corporate but civil
[52]

in nature, as it involved ownership.  However, he stood firm on


[53]

his arguments that the case should be dismissed due to the


Complaints' failure to state a cause of action  and the trial court's
[54]

failure to acquire jurisdiction over his person. [55]

On December 8, 2008, the assailed Joint Resolution  was issued [56]

by the trial court resolving the following incidents: Belo Medical


Group's Omnibus Motion for Clarificatory Hearing and for Leave to
File Consolidated Reply and Motion to Declare Santos in Default,
and Santos' Motion to Dismiss. The trial court declared the case
as an intra-corporate controversy but dismissed the Complaints. [57]

The trial court characterized the dispute as "intrinsically


connected with the regulation of the corporation as it involves the
right of inspection of corporate records."  Included in Santos and
[58]

Belo's conflict was a shareholder's exclusive right to inspect


corporate records. In addition, the issue on the ownership of
shares requires the application of laws and principles regarding
corporations.[59]

However, the Complaint could not flourish as Belo Medical Group


"failed to sufficiently allege conflicting claims of ownership over
the subject shares."  In justifying failure to state a cause of
[60]

action, the trial court reasoned:


Plaintiff clearly admits in the complaint that defendant Santos is
the registered stockholder of the subject shares albeit no records
show that he made any payments thereof. Also, notwithstanding
defendant Belo's claim that she is the true owner thereof, there
was no allegation that defendant Santos is no longer the holder
on record of the same or that it is now defendant Belo who is the
registered stockholder thereof. In fact, the complaint even alleges
that defendant Santos holds the 25 BMGI shares merely as
nominal qualifying shares in trust for defendant Belo. Thus, the
complaint failed to state a cause of action that would warrant the
resort to an action for interpleader.
[61]

Though a motion to dismiss is a prohibited pleading under the


Interim Rules of Procedure Governing Intra-Corporate
Controversies, the trial court ruled that Section 2, Rule 1 of these
rules allowed for the Rules of Court to apply suppletorily.
According to the Rules of Court, motions to dismiss are allowed in
interpleader cases. [62]

Finally, the Complaint for Declaratory Relief was struck down as


improper because it sought an initial determination on whether
Santos was in bad faith and if he should be barred from
inspecting the books of the corporation. Only after resolving
these issues can the trial court determine his rights under
Sections 74 and 75 of the Corporation Code. The act of resolving
these issues is not within the province of the special civil action
as declaratory relief is limited to the construction and declaration
of actual rights and does not include the determination of issues.
[63]

From the Joint Resolution, Belo and Belo Medical Group pursued
different remedies.
Belo filed her Petition for Review before the Court of Appeals
docketed as CA G.R. No. 08-397. [64]

Belo Medical Group, on the other hand, directly filed its Petition
for Review with this Court, alleging that purely questions of law
are at issue.

Belo Medical Group argues that it is enough that there are two
(2) people who have adverse claims against each other and who
are in positions to make effective claims for interpleader to be
given due course.  Belo Medical Group cites Lim v. Continental
[65]

Development Corporation,  which allowed a complaint for


[66]

interpleader to continue because two (2) parties claimed


ownership over the same shares of stock. [67]

On January 30, 2009, Belo Medical Group filed a


Manifestation/Disclosure  informing this Court that on January
[68]

28, 2009, it received Belo's Petition for Review filed before the
Court of Appeals. On February 4, 2009, this Court also received
Belo's Manifestation  that she filed a Petition for Review before
[69]

the Court of Appeals, assailing the Joint Resolution primarily


because it dismissed her counterclaims. She also furnished this
Court a copy of her Manifestation filed with the Court of Appeals
to inform it of Belo Medical Group's Petition for Review before this
Court.[70]

On April 15, 2009, Belo filed her Comment  and manifested that[71]

she agrees with the arguments raised by Belo Medical Group.

On April 28, 2009, Santos filed his Comment.  He argues that [72]

the Petition filed by Belo Medical Group should be dismissed as


the wrong mode of appeal. It should have filed an appeal under
Rule 43, pursuant to the Interim Rules on Intra-Corporate
Disputes.  He alleges that Belo Medical Group committed forum
[73]

shopping. It filed the present Petition for Review after Belo had
already filed an appeal under Rule 43 before the Court of
Appeals. He asserts that Belo and Belo Medical Group have the
san1e interest. Belo, owner of 90% of the shares of stock of the
corporation, dictates Belo Medical Group's actions, which were
ultimately for Belo's benefit and interests. [74]

Meanwhile, on July 31, 2009, the Court of Appeals dismissed


Belo's Petition for Review and ruled that the pending case before
this Court was the more appropriate vehicle to determine the
issues.[75]

The issues for this Court's resolution are as follows:

First, whether or not Belo Medical Group, Inc. committed forum


shopping;

Second, whether or not the present controversy is intra-


corporate; Third, whether or not Belo Medical Group, Inc. came
to this Court using the correct mode of appeal; and

Finally, whether or not the trial court had basis in dismissing Belo
Medica] Group, Inc.'s Complaint for Declaratory Relief.

Neither Belo nor the Belo Medical Group is guilty of forum


shopping.

Forum shopping exists when parties seek multiple judicial


remedies simultaneously or successively, involving the same
causes of action, facts, circumstances, and transactions, in the
hopes of obtaining a favorable decision.  It may be accomplished
[76]

by a party defeated in one forum, in an attempt to obtain a


favorable outcome in another, "other than by appeal or a special
civil action for certiorari."
[77]

Forum shopping trivializes rulings of courts, abuses their


processes, cheapens the administration of justice, and clogs court
dockets.  In Top Rate Construction & General Services, Inc. v.
[78]

Paxton Development Corporation: [79]


What is critical is the vexation brought upon the courts and the
litigants by a party who asks different courts to rule on the same
or related causes and grant the same or substantially the same
reliefs and in the process creates the possibility of conflicting
decisions being rendered by the different fora upon the same
issues.
[80]

Rule 7, Section 5 of the Rules of Court contains the rule against


forum shopping:
Section 5. Certification against forum shopping. - The plaintiff or
principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other
per ding action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been
filed.

Failure to comply with the foregoing requirements shall not be


curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice; unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance
with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping,
the same shall be ground for summary dismissal with prejudice
and shall constitute direct contempt, as well as a cause for
administrative sanctions.
When willful and deliberate violation is clearly shown, it can be a
ground for all pending cases' summary dismissal with
prejudice  and direct contempt 
[81] [82]
Belo Medical Group filed its Petition for Review on Certiorari under
Rule 45 before this Court to appeal against the Joint Resolution of
the trial court. It did not file any other petition related to the
case, as indicated in it verification and certification against forum
shopping. It was Belo, a defendant in Belo Medical Groups
Complaint, who filed a separate appeal under Rule 43 with the
Court of Appeals primarily to protect her counterclaims. Belo and
Belo Medical Group both filed their respective Petitions for Review
on January 28, 2009, the lat day within the period allowed to do
so.  The Court of Appeals already ruled that litis pendencia was
[83]

present when Belo and Belo Medical Group filed their respective
petitions on the same date before different fora. The two petitions
involved the same parties, rights and reliefs sought, and causes
of action.  This is a decision this Court can no longer disturb.
[84]

Neither Belo Medical Group nor Belo can be faulted for willful and
deliberate violation of the rule against forum shopping. Their
prompt compliance of the certification against forum shopping
appended to their Petitions negates willful and deliberate intent.

Belo Medical Group was not remiss in its duty to inform this Court
of a similar action or proceeding related to its Petition. It
promptly manifested before this Court its receipt of Belo's Petition
before the Court of Appeals. Belo Medical Group and Belo
manifested before this Court that Belo filed a Rule 43 petition to
protect her counterclaims and to question the same Joint
Resolution issued by the trial court. Both did so within five (5)
days from discovery, as they undertook in their respective
certificates against forum shopping.

The issue of forum shopping has become moot. The appeal under
Rule 43 filed by Belo has been dismissed by the Court of Appeals
on the ground of litis pendencia.  The purpose of proscribing
[85]

forum shopping is the proliferation of contradictory decisions on


the same controversy.  This possibility no longer exists in this
[86]

case.
II

Belo Medical Group filed a case for interpleader, the proceedings


of which are covered by the Rules of Court. At its core, however,
it is an intra-corporate controversy.

A.M. No. 01-2-04-SC, or the Interim Rules of Procedure


Governing Intra-Corporate Controversies, enumerates the cases
where the rules will apply:
Section 1. (a) Cases Covered - These Rules shall govern the
procedure to be observed in civil cases involving the following:
1. Devices or schemes employed by, or any act of, the board of
directors, business associates, officers or partners,
amounting to fraud or misrepresentation which may be
detrimental to the interest of the public and/or of the
stockholders, partners, or members of any corporation,
partnership, or association;
2. Controversies arising out of intra-corporate, partnership, or
association relations, between and among stockholders,
members, or associates; and between, any or all of them
and the corporation, partnership, or association of which
they are stockholders, members, or associates, respectively;
3. Controversies in the election or appointment of directors,
trustees, officers, or managers of corporations, partnerships,
or associations;
4. Derivative suits; and
5. Inspection of corporate books. [87]

The same rules prohibit the filing of a motion to dismiss:


Section 8. Prohibited Pleadings. -The following pleadings are
prohibited: (1) Motion to dismiss;

(2) Motion for a bill of particulars;

(3) Motion for new trial or for reconsideration of judgment or


order, or for reopening of trial;
(4) Motion for extension of time to file pleadings, affidavits or any
other paper, except those filed due to clearly compelling reasons.
Such motion must be verified and under oath; and

(5) Motion for postponement and other motions of similar intent,


except those filed due to clearly compelling reasons. Such motion
must be verified and under oath.
To determine whether an intra-corporate dispute exists and
whether this case requires the application of these rules of
procedure, this Court evaluated the relationship of the parties.
The types of intra-corporate relationships were reviewed in Union
Glass & Container Corporation v. Securities and Exchange
Commission: [88]

[a] between the corporation, partnership or association and the


public; [b] between the corporation, partnership or association
and its stockholders, partners, members, or officers; [c] between
the corporation, partnership or association and the state in so far
as its franchise, permit or license to operate is concerned; and
[d] among the stockholders, partners or associates themselves. [89]

For as long as any of these intra-corporate relationships exist


between the parties, the controversy would be characterized as
intra-corporate.  This is known as the "relationship test."
[90]

DMRC Enterprises v. Este del Sol Mountain Reserve, Inc.


 employed what would later be called as the "nature of
[91]

controversy test." It became another means to determine if the


dispute should be considered as intra-corporate.

In DMRC Enterprises, Este del Sol leased equipment from DMRC


Enterprises. Part of Este del Sol's payment was shares of stock in
the company. When Este del Sol defaulted, DMRC Enterprises
filed a collection case before the Regional Trial Court. Este del Sol
argued that it should have been filed before the Securities and
Exchange Commission as it involved an intra-corporate dispute
where a corporation was being compelled to issue its shares of
stock to subscribers. This Court held that it was not just the
relationship of the parties that mattered but also the conflict
between them:
The purpose and the wording of the law escapes the respondent.
Nowhere in said decree do we find even so much as an
intimidation that absolute jurisdiction and control is vested in the
Securities and Exchange Commission in all matters affecting
corporations. To uphold the respondent's argument would remove
without legal imprimatur from the regular courts all conflicts over
matters involving or affecting corporations, regardless of the
nature of the transactions which give rise to such disputes. The
courts would then be divested of jurisdiction not by reason of the
nature of the dispute submitted to them for adjudication, but
solely for the reason that the dispute involves a corporation. This
cannot be done. To do so would not only be to encroach on the
legislative prerogative to grant and revoke jurisdiction of the
courts but such a sweeping interpretation may suffer
constitutional infirmity. Neither can we reduce jurisdiction of the
courts by judicial fiat (Article X, Section 1, The Constitution).
[92]

This Court now uses both the relationship test and the nature of
the controversy test to determine if an intra-corporate
controversy is present.[93]

Applying the relationship test, this Court notes that both Belo and
Santos are named shareholders in Belo Medical Group's Articles of
Incorporation  and General Information Sheet for 2007.  The
[94] [95]

conflict is clearly intra-corporate as it involves two (2)


shareholders although the ownership of stocks of one stockholder
is questioned. Unless Santos is adjudged as a stranger to the
corporation because he holds his shares only in trust for Belo,
then both he and Belo, based on official records, are stockholders
of the corporation. Belo Medical Group argues that the case
should not have been characterized as intra-corporate because it
is not between two shareholders as only Santos or Belo can be
the rightful stockholder of the 25 shares of stock. This may be
true. But this finding can only be made after trial where
ownership of the shares of stock is decided.

The trial court cannot classify the case based on potentialities.


The two defendants in that case are both stockholders on record.
They continue to be stockholders until a decision is rendered on
the true ownership of the 25 shares of stock in Santos' name. If
Santos' subscription is declared fictitious and he still insists on
inspecting corporate books and exercising rights incidental to
being a stockholder, then, and only then, shall the case cease to
be intra-corporate.

Applying the nature of the controversy test, this is still an intra--


corporate dispute. The Complaint for interpleader seeks a
determination of the true owner of the shares of stock registered
in Santos' name. Ultimately, however, the goal is to stop Santos
from inspecting corporate books. This goal is so apparent that,
even if Santos is declared the true owner of the shares of stock
upon completion of the interpleader case, Belo Medical Group still
seeks his disqualification from inspecting the corporate books
based on bad faith. Therefore, the controversy shifts from a mere
question of ownership over movable property to the exercise of a
registered stockholder's proprietary right to inspect corporate
books.

Belo Medical Group argues that to include inspection of corporate


books to the controversy is premature considering that there is
still no determination as to who, between Belo and Santos, is the
rightful owner of the 25 shares of stock. Its actions belie its
arguments. Belo Medical Group wants the trial court not to
prematurely characterize the dispute as intra-corporate when, in
the same breath, it prospectively seeks Santos' perpetual
disqualification from inspecting its books. This case was never
about putting into light the ownership of the shares of stock in
Santos' name. If that was a concern at all, it was merely
secondary. The primary aim of Belo and Belo Medical Group was
to defeat his right to inspect the corporate books, as can be seen
by the filing of a Supplemental Complaint for declaratory relief.

The circumstances of the case and the aims of the parties must
not be taken in isolation from one another. The totality of the
controversy must be taken into account to improve upon the
existing tests. This Court notes that Belo Medical Group used its
Complaint for interpleader as a subterfuge in order to stop
Santos, a registered stockholder, from exercising his right to
inspect corporate books.

Belo made no claims to Santos' shares before he attempted to


inspect corporate books, and inquired about the Henares' election
as corporate secretary and the conduct of stockholders' meetings.
Even as she claimed Santos' shares as hers, Belo proffered no
initial proof that she had paid for these shares. She failed to
produce any document except her bare allegation that she had
done so. Even her Answer Ad Cautelam with Cross-
Claim  contained bare allegations of ownership.
[96]

According to its Complaint, although Belo Medical Group's records


reflect Santos as the registered stockholder of the 25 shares,
they did not show that Santos had made payments to Belo
Medical Group for these shares, "consistent with Bela's claim of
ownership over them."  The absence of any document to
[97]

establish that Santos had paid for his shares does not bolster
Belo's claim of ownership of the same shares. Santos remains a
stockholder on record until the contrary is shown.

Belo Medical Group cites Lim v. Continental Development


Corporation  as its basis for filing its Complaint for interpleader.
[98]

In Lim, Benito Gervasio Tan (Tan) appeared as a stockholder of


Continental Development Corporation. He repeatedly requested
the corporation to issue certificates of shares of stock in his name
but Continental Development Corporation could not do this due to
the claims of Zoila Co Lim (Lim). Lim alleged that her mother, So
Bi, was the actual owner of the shares that were already
registered in the corporate books as Lim's, and she delivered
these in trust to Lim before she died. Lim wanted to have the
certificates of shares cancelled and new ones re-issued in his
name. This Court ruled that Continental Development Corporation
was correct in filing a case for interpleader:
Since there is an active conflict of interests between the two
defendants, now herein respondent Benito Gervasio Tan and
petitioner Zoila Co Lim, over the disputed shares of stock, the
trial court gravely abused its discretion in dismissing the
complaint for interpleader, which practically decided ownership of
the shares of stock in favor of defendant Benito Gervasio Tan.
The two defendants, now respondents in G.R. No. L-41831,
should be given full opportunity to litigate their respective claims.

Rule 63, Section 1 of the New Rules of Court tells us when a


cause of action exists to support a complaint in interpleader:
Whenever conflicting claims upon the same subject matter are or
may be made against a person, who claims no interest whatever
in the subject matter, or an interest which in whole or in part is
not disputed by the claimants, he may bring an action against the
conflicting claimants to compel them to interplead and litigate
their several claims among themselves . . .
This provision only requires as an indispensable requisite:
that conflicting claims upon the same subject matter are or may
be made against the plaintiff-in-interpleader who claims no
interest whatever in the subject matter or an interest which in
whole or in part is not disputed by the claimants (Beltran vs.
People's Homesite and Housing Corporation, No. L-25138, 29
SCRA 145).
This ruling, penned by Mr. Justice Teehankee, reiterated the
principle in Alvarez vs. Commonwealth (65 Phil. 302), that
The action of interpleader, under section 120, is a remedy
whereby a person who has personal property in his possession. or
an obligation to render wholly or partially, without claiming any
right in both comes to court and asks that the persons who claim
the said personal property or who consider themselves entitled to
demand compliance with the obligation. be required to litigate
among themselves, in order to determine finally who is entitled to
one or the other thing. The remedy is afforded not to protect a
person against a double liability but to protect him against a
double vexation in respect of one liability.
An interpleader merely demands as a sine qua non element
. . . that there be two or more claimants to the fund or thing in
dispute through separate and different interests. The claims must
be adverse before relief can be granted and the parties sought to
be interpleaded must be in a position to make effective claims
(33 C.J. 430).
Additionally, the fund thing, or duty over which the parties assert
adverse claims must be one and the same and derived from the
same source (33 C.J., 328; Martin, Rules of Court, 1969 ed., Vol.
3, 133-134; Moran, Rules of Court, 1970 ed., Vol. 3, 134-136).

Indeed, petitioner corporation is placed in the same situation as a


lessee who does not know the person to whom he will pay the
rentals due to the conflicting claims over t[h]e property leased, or
a sheriff who finds himself puzzled by conflicting claims to a
property seized by him. In these examples, the lessee
(Pangkalinawan vs. Rodas, 80 Phil. 28) and the sheriff (Sy-Quia
vs. Sheriff, 46 Phil. 400) were each allowed to file a complaint in
interpleader to determine the respective rights of the claimants. [99]

In Lim, the corporation was presented certificates of shares of


stock in So Bi's name. This proof was sufficient for Continental
Development Corporation to reasonably conclude that
controversy on ownership of the shares of stock existed.

Furthermore, the controversy in Lim was between a registered


stockholder in the books of the corporation and a stranger who
claimed to be the rightful transferee of the shares of stock of her
mother. The relationship of the parties and the circumstances of
the case establish the civil nature of the controversy, which was
plainly, ownership of shares of stock. Interpleader was not filed to
evade or defeat a registered stockholder's right to inspect
corporate books. It was borne by the sincere desire of a
corporation, not interested in the certificates of stock to be issued
to either claimant, to eliminate its liability should it favor one over
the other.

On the other hand, based on the facts of this case and applying
the relationship and nature of the controversy tests, it was
understandable how the trial court could classify the interpleader
case as intra-corporate and dismiss it. There was no ostensible
debate on the ownership of the shares that called for an
interpleader case. The issues and remedies sought have been
muddled when, ultimately, at the front and center of the
controversy is a registered stockholder's right to inspect
corporate books.

As an intra-corporate dispute, Santos should not have been


allowed to file a Motion to Dismiss.  The trial court should have
[100]

continued on with the case as an intra-corporate dispute


considering that it called for the judgments on the relationship
between a corporation and its two warring stockholders and the
relationship of these two stockholders with each other.

III

Rule 45 is the wrong mode of appeal.

A.M. No. 04-9-07-SC promulgated by this Court En Banc on


September 14, 2004 laid down the rules on modes of appeal m
cases formerly cognizable by the Securities and Exchange
Commission:
1. All decisions and final orders in cases falling under the Interim
Rules of Corporate Rehabilitation and the Interim Rules of
Procedure Governing Intra-Corporate Controversies under
Republic Act No. 8799 shall be appealable to the Court of Appeals
through a petition for review under Rule 43 of the Rules of Court.

2. The petition for review shall be taken within fifteen (15) days
from notice of the decision or final order of the Regional Trial
Court. Upon proper motion and the payment of the full amount of
the legal fee prescribed in Rule 141 as amended before the
expiration of the reglementary period, the Court of Appeals may
grant an additional period of fifteen (15) days within which to file
the petition for review. No further extension shall be granted
except for the most compelling reasons and in no case to exceed
fifteen (15) days.
On the other hand, Rule 43 of the Rules of Court allows for
appeals to the Court of Appeals to raise questions of fact, of law,
or a mix of both. Hence, a party assailing a decision or a final
order of the trial court acting as a special commercial court,
purely on questions of law, must raise these issues before the
Court of Appeals through a petition for review.  A.M. No. 04-9-
[101]

07-SC mandates it. Rule 43 allows it.

Belo Medical Group argues that since it raises only questions of


law, the proper mode of appeal is Rule 45 filed directly to this
Court. This is correct assuming there were no rules specific to
intra-corporate disputes. Considering that the controversy was
still classified as intra-corporate upon filing of appeal, special
rules, over general ones, must apply.

Based on the policy of judicial economy and for practical


considerations,  this Court will not dismiss the case despite the
[102]

wrong mode of appeal utilized. For one, it would be taxing in time


and resources not just for Belo Medical Group but also for Santos
and Belo to dismiss this case and have them refile their petitions
for review before the Court of Appeals. There would be no benefit
to any of the parties to dismiss the case especially since the
issues can already be resolved based n the records before this
Court. Also, the Court of Appeals already referred the matter to
this Court when it dismissed Belo's Petition for Review.
Remanding this case to the Court of Appeals would not only be
unprecedented, it would further delay its resolution.

IV

At the outset, this Court notes that two cases were filed by Belo
Medical Group: the Complaint for interpleader and the
Supplemental Complaint for Declaratory Relief. Under Rule 2,
Section 5 of the Rules of Court, a joinder of cause of action is
allowed, provided that it follows the conditions enumerated
below:
Section 5. Joinder of Causes of Action. A party may in one
pleading assert, in the alternative or otherwise, as many causes
of action as he may have against an opposing party, subject to
the following conditions:

(a) The party joining the causes of action shall comply with the
rules on joinder of parties;
(b) The joinder shall not include special civil actions or
actions governed by special rules;

(c) Where the causes of action are between the same parties but
pertain to different venues or jurisdictions, the joinder may be
allowed in the Regional Trial Court provided one of the causes of
action falls within the jurisdiction of said court and the venue lies
therein; and

(d) Where the claims in all the causes of action are principally for
recovery of money, the aggregate amount claimed shall be the
test of jurisdiction. (Emphasis supplied)
Assuming this case continues on as an interpleader, it cannot be
joined with the Supplemental Complaint for declaratory relief as
both are special civil actions. However, as the case was classified
and will continue as an intra-corporate dispute, the simultaneous
complaint for declaratory relief becomes superfluous. The right of
Santos to inspect the books of Belo Medical Group and the
appreciation for his motives to do so will necessarily be
determined by the trial court together with determining the
ownership of the shares of stock under Santos' name.

The trial court may make a declaration first on who owns the
shares of stock and suspend its ruling on whether Santos should
be allowed to inspect corporate records. Or, it may rule on
whether Santos has the right to inspect corporate books in the
meantime while there has yet to be a resolution on the ownership
of shares. Remedies are available to Belo Medical Group and Belo
at any stage of the proceeding, should they carry on in
prohibiting Santos from inspecting the corporate books.

WHEREFORE, the Petition for Review of Belo Medical Group, Inc.


is PARTIALLY GRANTED. The December 8, 2008 Joint
Resolution of Branch 149, Regional Trial Court, Makati City in Civil
Case No. 08-397 is REVERSED regarding its dismissal of the
intra-corporate case. Let this case be REMANDED to the
commercial court of origin for further proceedings.
SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

November 29, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on August 30, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on November 29, 2017 at 2:20 p.m.

 Reyes v. Hon. Regional Trial Court of Makati, etc., et al., 583


[1]

Phil. 591 (1984) [Per J. Brion, Second Division].

[2]
 Rollo, pp. 3-32.

 Id. at 33-35. The Joint Resolution was penned by Presiding


[3]

Judge Cesar O. Untalan of Branch 149, Regional Trial Court,


Makati City.

[4]
 Id. at 35.
[5]
 Id. at 7.

[6]
 Id. at 43-44.

[7]
 Id. at 43.

[8]
 Id. at 43-44.

 Id. at 70-74, as culled from the April 25, 2008 letters of Santos'
[9]

counsel to Belo Medical Group and Belo Medical Group's May 14,
2008 reply.

 Id. at 45, Belo Medical Group's letter to Santos' counsel dated


[10]

May 14, 2008.

[11]
 Id. at 46-47.

[12]
 Id. at 47.

[13]
 Id. at 48-49.

[14]
 Id. at 50-51.

[15]
 Id. at 52-59.

[16]
 Id. at 56.

[17]
 Id.

[18]
 Id. at 75.

[19]
 Id. at 76.

[20]
 Id. at 76-77.

[21]
 Id. at 78-79.

[22]
 Id. at 80-81.
[23]
 Id. at 82-92.

[24]
 CORP. CODE, sec. 74 provides:

Section 74. Books to be kept; stock transfer agent. - Every


corporation shall keep and carefully preserve at its principal office
a record of all business transactions and minutes of all meetings
of stockholders or members, or of the board of directors or
trustees, in which shall be set forth in detail the time and place of
holding the meeting, how authorized, the notice given, whether
the meeting was regular or special, if special its object, those
present and absent, and every act done or ordered done at the
meeting. Upon the demand of any director, trustee, stockholder
or member, the time when any director, trustee, stockholder or
member entered or left the meeting must be noted in the
minutes; and on a similar demand, the yeas and nays must be
taken on any motion or proposition, and a record thereof carefully
made. The protest of any director, trustee, stockholder or
member on any action or proposed action must be recorded in
full on his demand.

The records of all business transactions of the corporation and the


minutes of any meetings shall be open to inspection by any
director, trustee, stockholder or member of the corporation at
reasonable hours on business days and he may demand, in
writing, for a copy of excerpts from said records or minutes, at
his expense.

Any officer or agent of the corporation who shall refuse to allow


any director, trustee, stockholder or member of the corporation
to examine and copy excerpts from its records or minutes, in
accordance with the provisions of this Code, shall be liable to
such director trustee, stockholder or member for damages, and in
addition, shall be guilty of an offense which shall be punishable
under Section 144 of this Code: Provided, That if such refusal is
made pursuant to a resolution or order of the board of directors
or trustees, the liability under this section tor such action shall be
imposed upon the directors or trustees who voted for such
refusal: and Provided, further, That it shall be a defense to any
action under this section that the person demanding to examine
and copy excerpts from the corporation's records and minutes
has improperly used any information secured through any prior
examination of the records or minutes of such corporation or of
any other corporation, or was not acting in good faith or for a
legitimate purpose in making his demand.

[25]
 Rollo, pp. 88-89.

[26]
 Id. at 90.

[27]
 Pursuant to A.M. No. 03-03-03-SC (2003).

[28]
 Rollo, p. 13.

[29]
 Id. at 114-122.

[30]
 Id. at 118.

 Id. at 155-156, as indicated in Sheriff Robert V. Alejo's Sheriffs


[31]

Returns.

[32]
 Id. at 155.

[33]
 Id. at 156.

[34]
 Id. at 128-135.

[35]
 A.M. No. 01-2-04-SC (2001).

[36]
 Id. at 131.

[37]
 Id. at 150-158.

[38]
 Id. at 165-189.
[39]
 Id. at 174.

[40]
 Id. at 179.

[41]
 Id. at 180-181.

[42]
 Id. at 182-183.

[43]
 Id. at 183-184, 189.

[44]
 Id. at 185.

[45]
 Id. at 192, Articles of Incorporation of Belo Medical Group, Inc.

 Id. at 36, Articles of Incorporation of the Obago Skin Health,


[46]

Inc.

[47]
 Id. at 207-22l.

[48]
 Id. at 216.

 Id. at 218 citing Wack Wack Golf & Country Club, Inc. v. Won,
[49]

162 Phil. 233 (1976) [Per J. Castro, En Banc].

[50]
 Id. at 219.

[51]
 Id. at 222-254.

[52]
 Id. at 265-290.

[53]
 Id. at 266-272.

[54]
 Id. at 284-288.

[55]
 Id. at 274-284.

[56]
 Id. at 33-35.
[57]
 Id. at 35.

[58]
 Id. at 33.

[59]
 Id.

[60]
 Id. at 34.

[61]
 Id.

[62]
 Id.

 Id. at 35 citing Kawasaki Port Service Corp. v. Amores, 276


[63]

Phil. 249 (1991) [Per J. Bidin, Third Division].

[64]
 Id. at 334-388.

[65]
 Id. at 21.

[66]
 161 Phil. 453 (1976) [Per J. Makasiar, First Division].

[67]
 Rollo, p. 20.

[68]
 Id. at 329-332.

[69]
 Id. at 390-395.

[70]
 Id. at 683-686.

[71]
 Id. at 701-706.

[72]
 Id. at 707-729.

[73]
 Id. at 707.

[74]
 Id. at 718.

[75]
 Id. at 820-831.
 See Asia United Bank v. Goodland Company, 660 Phil. 504
[76]

(2011) [Per J. Del Castillo, First Division].

 Yap v. Chua, 687 Phil. 392, 399 (2012) [Per J. Reyes, Second
[77]

Divison].

 Catayas v. Court of Appeals, 693 Phil. 451, 456 (2012) [Per J.


[78]

Medoza, Second Division].

[79]
 457 Phil. 740 (2003) [Per J. Bellosillo, Second Division].

[80]
 Id. at 748.

 See Ao-as v. Court of Appeals, 524 Phil. 645 (2006) [Per J.


[81]

(Chico-Nazario, First Division).

 RULES OF COURT, Rule 7, sec. 5; Municipality of Taguig v.


[82]

Court of Appeals, 506 Phil. 567, 581 (2005) [Per J. Austria-


Martinez, Second Division] citing Biñan Steel Corporation v. Court
of Appeals, 439 Phil. 688 (2002) [Per J. Corona, Third Division]
and Supreme Court Circular No. 28-91.

[83]
 Rollo, pp. 3 and 390.

[84]
 Id. at 826-829.

[85]
 Id. at 821-831.

 Philippine Postal Corporation v. Court of Appeal and Guzman,


[86]

722 Phil. 860 (2013) [Per J. Perlas-Bernabe, Second Division].

[87]
 Id.

[88]
 211 Phil. 222 (1983) [Per J. Escolin, En Banc].

[89]
 Id. at 231.
 See Philex Mining Corporation v. Hon. Reyes, 204 Phil. 241
[90]

(1982) [Per J. Melencio-Herrera, First Division].

[91]
 217 Phil. 280 (1984) [Per J. Gutierrez, Jr., First Division].

[92]
 Id. at 287.

 See Aguirres II v. FQB+7, Inc., 701 Phil. 216 (2013) [Per J. Del
[93]

Castillo, Second Division]; Reyes v. Hon. Regional Trial Court of


Makati, etc., et al., 583 Phil. 591 (2008) [Per J. Brion, Second
Division]; Speed Distributing Corp. et al. v. Court of Appeals and
Rufina Lim, 469 Phil. 739 (2004) [Per J. Callejo, Sr., Second
Division].

[94]
 Rollo, pp. 190-199.

[95]
 Id. at 200-206.

[96]
 Id. at 114-122.

[97]
 Id. at 56.

[98]
 161 Phil. 453 (1976) [Per J. Makasiar, First Division].

[99]
 Id. at 460-462.

 See Aldersgate College, Inc. v. Gauuan, et al., 698 Phil. 821


[100]

(2012) [Per J. Perlas-Bernabe, Second Division].

 San Jose v. Ozamis, G.R. No. 190590, July 12, 2017,


[101]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/I90590.pdf> 7 [Per J. Carpio,
Second Division].

 Cathay Metal Corp. v. Laguna West Multi Purpose Cooperative,


[102]

Inc., 738 Phil. 37, 63 (2014) [Per J. Leonen, Third Division].


Source: Supreme Court E-Library | Date created: January 04, 2018
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Supreme Court E-Library

SECOND DIVISION

[ G.R. No. 208471, August 02, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. ERNESTO SAGANA Y DE GUZMAN,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

The miniscule quantity of confiscated illicit drugs heightens the


importance of a more stringent conformity to Section 21 of
Republic Act No. 9165, otherwise known as the Comprehensive
Dangerous Drugs Act of 2002. [1]

This Court resolves this appeal  filed by Ernesto Sagana y De


[2]

Guzman (Sagana) from the Decision  of the Court of Appeals


[3]

dated February 26, 2013 in CA-G.R. CR-H.C. No. 05154.

The Court of Appeals affirmed the Regional Trial Court's


ruling  that Sagana was guilty beyond reasonable doubt of illegal
[4]

sale and illegal possession of dangerous drugs.

On July 22, 2010, two (2) Informations for violation of Article II,
Sections 5  and 11  of Republic Act No. 9165 were filed against
[6] [7]

Sagana.  The charging portions of the Informations read:


[8]

Criminal Case No. 2010-0390-D


That on or about the 21  day of July 2010, in the City of Dagupan,
st

Philippines, and within the jurisdiction of this Honorable Court,


the above-named accused, ERNESTO SAGANA Y DE GUZMAN
@ Nestor, did then and there, willfully, unlawfully and criminally,
sell and deliver to a customer Methamphetamine Hydrochlori.de
contained in one (1) heat[-]sealed plastic sachet, weighing more
or less 0.12 gram in exchange for P500.00, without authority do
so.

Contrary to Article II, Section 5, R.A. 9165.

Criminal Case No. 2010-0391-D

That on or about the 21  day of July 2010, in the City of Dagupan,


st

Philippines, and within the jurisdiction of this Honorable Court,


the above-named accused, ERNESTO SAGANAY [sic] Y DE
GUZMAN @ Nestor, did then and there, willfully, unlawfully and
criminally, have in his possession, custody and control
Methamphetamine Hydrochloride (Shabu) contained in five (5)
heat[-]sealed plastic sachets, weighing more or less 0.59 gram,
without authority to possess the same.

Contrary to Article II, Section 11, R.A. 9165.  (Emphasis in the


[9]

original)
Upon arraignment, Sagana pleaded not guilty to the charges. [10]

Trial on the merits ensued. The prosecution's version of the story


is as follows:

On July 21, 2010 at around 2:20 p.m., police officers coordinated


with the Philippine Drug Enforcement Agency to act on a tip by a
confidential informant. P./Insp. Gerardo Macaraeg, Jr., PO3 Lucas
Salonga (PO3 Salonga), PO3 Christian Carvajal (PO3 Carvajal),
PO1 Allan Emerson Daus, and PO1 Ferdinand Lopez carried out a
buy-bust operation in Sagana's residence at Muslim Tondaligan,
Dagupan City. [11]
PO3 Salonga posted as the poseur-buyer. Five (5) P100.00 bills
served as buy-bust money, marked with PO3 Salonga's initials,
"LCS."[12]

Allegedly before the operation, PO3 Salonga had arranged the


transaction through a phone call with Sagana, who set the
meeting at his house. [13]

The operation ensued.

Upon arrival at Sagana's house, Sagana invited PO3 Salonga and


PO3 Carvajal inside. Once inside, PO3 Salonga informed Sagana
that he would purchase P500 worth of shabu. [14]

When Sagana asked for the payment, PO3 Salonga gave him the
marked money. After counting the money, Sagana handed him
one (1) plastic sachet of shabu. Thereafter, PO3 Salonga
confronted Sagana and introduced himself as a police officer. PO3
Carvajal apprehended Sagana's wife and another lady who also
peddled him shabu. [15]

After a body search on Sagana, PO3 Salonga recovered the


marked money and retrieved five (5) more plastic sachets
of shabu.  PO3 Salonga marked the articles with his initals,
[16]

"LCS."  Accordingly, he made the confiscation receipt before


[17]

delivering Sagana to the police station. [18]

At the police station, the incident was entered in the police


blotter. They took photos of Sagana and the confiscated items in
the presence of a representative from the Department of Justice,
media representatives, and an elected barangay official.
[19]

Based on the chemistry reports of P/Sr. Insp. Myma Malojo (P/Sr.


Insp. Malojo), the heat-sealed plastic sachets were positive for
methamphetamine hydrochloride. [20]
On the other hand, the defense posed frame-up and
extortion  against the police officers in their version of the events
[21]

as follows:

On July 21, 2010 at around 2:00 p.m., Sagana was allegedly


washing the dishes by the deep well next to his house when he
heard a commotion in the yard. He was then prompted to check
out what it was. There, he purportedly saw an armed man
attempting to destroy their fence. This man hurriedly approached
him, held his neck, and instructed him not to stand and to keep
quiet because they were searching for someone. [22]

Allegedly, two (2) men barged inside his house. When the men
went out, they commanded him to direct them to "the money."
When Sagana asked about the money, one (1) of them
supposedly hit his left side with a gun and was told that he would
be brought to the police station. His family saw what the men did,
which made his eldest child hysterical. [23]

Sagana and his wife were taken to the police station where he
was asked if the items on top of the office table were his. Sagana
answered in the negative which prompted the police officers to
bring his wife to the investigating room. [24]

A police officer allegedly demanded P50,000.00 in exchange for


not filing a case against Sagana, an amount open for bargain.
However, when Sagana told them that they did not have that
amount, he was detained and was taken to the prosecutor's office
for inquest the following week. [25]

On July 19, 2011, the Regional Trial Court found Sagana guilty of
the charges. It ruled that Sagana "was caught in flagrante
[26] 

delicto selling shabu to a poseur buyer and possessing another


five (5) plastic sachets of shabu."  It found that all the elements
[27]

necessary to establish the illegal sale and illegal possession of


drugs were proven by the prosecution. The dispositive portion of
[28] 

the decision read:


WHEREFORE, premises considered, judgment is hereby rendered
finding accused Ernesto Sagana y de Guzman GUILTY beyond
reasonable doubt in. Criminal Case No. 2010-0390-D for selling
and delivering shabu weighing 0.12 gram to a poseur buyer in
violation of Section 5, Article II of Republic Act [No.] 9165, and
pursuant to law, he is sentenced to suffer the penalty of life
imprisonment and [a] fine of P500,000.00 and to pay the cost of
suit.

In Criminal Case no. 2010-0391-D, the court likewise finds the


accused Ernesto Sagana y de Guzman GUILTY beyond
reasonable doubt for Possession of 0.59 gram of Shabu, a
dangerous drug, in violation of Section 11, Article II of Republic
Act [No.] 9165 and pursuant to law, he is sentenced to suffer the
penalty of imprisonment of twelve (12) years and one (1) day to
twenty (20) years and [a] fine of P400,000.00 and to pay the
cost of suit.

SO ORDERED.  (Emphasis in the original)


[29]

On appeal,  Sagana asserted that the police officers failed to


[30]

comply with Section 21 of Republic Act No. 9165 and its


implementing rules.  He argued that the trial court allegedly
[31]

erred in finding him guilty of the charges.


[32]

On February 26, 2013, the Court of Appeals affirmed  the trial


[33]

court's ruling. It held that failure to comply with Section 21 of


Republic Act No. 9165 did not render Sagana's arrest illegal or
the evidence confiscated inadmissible.  Strict compliance with
[34]

the law can be dispensed with provided that "the integrity and
the evidentiary value of the seized items [were] . . . preserved"
by the law enforcers. [35]

Hence, this appeal before this Court.

On August 28, 2013  the Court of Appeals elevated to this Court


[36]

the records of this case pursuant to its Resolution  dated March


[37]

14, 2013. The Resolution gave due course to the Notice of


Appeal  filed by Sagana.
[38]
In the Resolution dated September 30, 2013  this Court noted
[39]

the records of this case forwarded by the Court of Appeals. The


parties were then ordered to file their supplemental briefs, should
they so desired, within 30 days from notice.

On November 18, 2013, the Office of the Solicitor General filed a


Manifestation  on behalf of the People of the Philippines stating
[40]

that it would no longer file a supplemental brief. A similar


Manifestation  was filed by the Public Attorney's Office on behalf
[41]

of Sagana.

For resolution before this Court is whether Ernesto Sagana's guilt


was proven beyond reasonable doubt. Subsumed in the resolution
of this issue is whether the police officers complied with Section
21 of Republic Act No. 9165 and its implementing rules in
handling the alleged confiscated shabu.

Sagana insists that there are substantial gaps in the chain of


custody presented by the prosecution. [42]

PO3 Salonga allegedly marked the six (6) sachets of shabu and


conformably prepared the pertinent confiscation receipt. [43]

At the police station, the confiscated items were allegedly turned


to the desk officer for the incident to be entered in the police
blotter and for the investigator to prepare the corresponding
request for examination. Thereafter, the articles were delivered to
the crime laboratory and were received by P/Sr. Insp. Malojo. [44]

Given this sequence, Sagana underscores that there are three (3)
key persons involved: an unnamed desk officer, an unnamed
police investigator, and P/Sr. Insp. Malojo, the receiving officer at
the crime laboratory. All of them had contact with the purportedly
confiscated illicit drugs. However, they were not presented as
witnesses by the prosecution, for no reasonable explanation. [45]
Sagana emphasizes that in spite of making P/Sr. Insp. Malojo's
testimony a subject of stipulation, it does not cover either the
circumstances under which the specimens were received at the
laboratory for testing and analysis or the processes done to these
items while in her possession and custody. He then surmises that
there can be no guarantee that the alleged
confiscated shabu were the same ones seized from the buy-bust
operation. [46]

Moreover, Sagana asserts that the prosecution failed to show that


the marking and preparation of the receipt were made in his
presence.  Despite the signatures of an elected public official and
[47]

representatives from the media and the Department of Justice on


the receipt, there were still infirmities as these signatories were
not present in the operation when the inventory was done. [48]

On the other hand, the Office of the Solicitor General contends


that the prosecution was able to establish beyond reasonable
doubt that all the essential elements of illegal sale and illegal
possession of shabu were present. [49]

PO3 Salonga, as well as the other prosecution witnesses,


recounted the circumstances of the contraband's sale that ended
with Sagana's apprehension.  The narration made by other
[50]

witnesses, who were also police officers, should be given weight


with the presumption that they performed their duties in a
regular manner, absent any evidence to the contrary. [51]

Furthermore, the Office of the Solicitor General asserts that the


chain of custody was never broken and that the
seized shabu's integrity remained intact.  It avers that the drugs
[52]

seized from Sagana were undoubtedly the exact specimens


examined in the crime laboratory and presented and identified in
court.
[53]

This Court rules in favor of accused-appellant Sagana.


In a criminal case, this Court commences with the law's own
standpoint on the standing of the accused that "in all criminal
prosecutions, he is presumed innocent of the charge laid unless
the contraiy is proven beyond reasonable doubt."  The burden of
[54]

proof lies with the prosecution.  Thus, it must depend "on the
[55]

strength of its case rather than on the weakness of the case for
the defense." [56]

Moreover, "[p]roof beyond reasonable doubt, or that quantum of


proof sufficient to produce a moral certainty that would convince
and satisfy the conscience of those who act in judgment," is
necessary to surmount the presumption of innocence. [57]

For a plausible conviction under Article II, Section 5 of Republic


Act No. 9165 or illegal sale of prohibited drugs, the prosecution
must ascertain the following:
(1) the identity of the buyer and the seller, the object of the sale
and its consideration; and (2) the delivery of the thing sold and
the payment therefor. [58]

In illegal sale of dangerous drugs, it is necessary that the sale


transaction actually happened and that "the [procured] object is
properly presented as evidence in court and is shown to be the
same drugs seized from the accused." [59]

On the other hand, the following elements must be proven


in illegal possession of prohibited drugs:
[1] the accused was in possession of dangerous drugs; [2] such
possession was not authorized by law; and [3] the accused was
freely and consciously aware of being in possession of dangerous
drugs.[60]

In both cases involving illegal sale and illegal possession, the


illicit drugs confiscated from the accused comprise the corpus
delicti of the charges.[61]

"[I]t is of paramount importance that the existence of the drug,


the corpus delicti of the crime, be established beyond
doubt."  Its identity and integrity must be proven to have been
[62]

safeguarded.  Aside from proving the elements of the charges,


[63]
"the fact that the substance illegally possessed and sold [was] the
same substance offered in court as exhibit must likewise be
established with the same degree of certitude as that needed to
sustain a guilty verdict."  The chain of custody carries out this
[64]

purpose "as it ensures that unnecessary doubts concerning the


identity of the evidence are removed." [65]

While the definition of chain of custody was not expressly


provided for under Republic Act No. 9165,  Section 1(b) of
[66]

Dangerous Drugs Board Regulation No. 1, Series of 2002 defined


it as follows:
b. "Chain of custody" means the duly recorded authorized
movements and custody of seized drugs or controlled chemicals
or plants sources of dangerous drugs or laboratory equipment at
each stage, from the time of seizure/confiscation to receipt in the
forensic laboratory to safekeeping to presentation in court for
destruction. Such record of movements and custody of seized
item shall include the identity and signature of the person who
held temporary custody of the seized item, the date and time
when such transfer of custody w[as] made in the course of
safekeeping and use in court as evidence, and the final
disposition[.]
In compliance with the chain of custody, the prosecution must
identify the persons involved in handling the seized articles from
confiscation up to their presentation as evidence. Concomitantly,
[67] 

the prosecution should also offer statements pertaining to each


link of the chain "in such a way that every person who touched
the illegal drugs would describe how and from whom they were
received, where they were and what happened to them while in
his or her possession, the condition in which he or she received
them, and their condition upon delivery." [68]

Mallillin v. People  explained the importance of acquiescence to


[69]

the chain of custody due to the distinctive nature of narcotics.


A unique characteristic of narcotic substances is that they are not
readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from other cases—by accident or
otherwise—in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a. standard more stringent than
that applied to cases involving objects which are readily
identifiable must be applied, a more exacting standard
that entails a chain of custody of the item with sufficient
completeness if only to render it improbable that the
original item has either been exchanged with another or
been contaminated or tampered with.  (Emphasis supplied)
[70]

The prosecution in this case offered testimonies corroborating the


narration of the alleged sale of illicit drugs that paved the way for
Sagana's arrest. However, there were apparent lapses in the
chain of custody that cast doubt on the identity and integrity of
the corpus delicti. Hence, the prosecution failed to establish that
the miniscule amounts of 0.12 grams and 0.59 grams of
dangerous drugs presented as evidence in court were the very
same ones allegedly seized and retrieved from Sagana.

II

In this case, a buy-bust operation was conducted to validate the


tip given by the confidential informant.  While a buy-bust
[71]

operation has been known to be useful in "flush[ing] out illegal


transactions that are otherwise conducted covertly and in
secrecy," it has its drawback "that has not escaped the attention
of the framers of the law."  It is prone "to police abuse, the most
[72]

notorious of which is its use as a tool for extortion."  In People v.


[73]

Tan,  courts were urged to be more cautious in dealing with drug


[74]

cases:
"[B]y the very nature of anti-narcotics operations, the need for
entrapment procedures, the use of shady characters as
informants, the ease with which sticks of marijuana or grams of
heroin can be planted in pockets or hands of unsuspecting
provincial hicks, and the secrecy that inevitably shrouds
all drug deals, the possibility of abuse is great." Thus, the
courts have been exhorted to be extra vigilant in trying drug
cases lest an innocent person is made to suffer the unusually
severe penalties for drug offenses.  (Emphasis provided)
[75]

Thus, it is essential that the chain of custody is established in


buy-bust operations. This includes:
First, the seizure and marking, if practicable, of the illegal drug
recovered from the accused by the apprehending officer;

Second, the turnover of the illegal drug seized by the


apprehending officer to the investigating officer;

Third, the turnover by the investigating officer of the illegal drug


to the forensic chemist for laboratory examination; and

Fourth, the turnover and submission of the marked illegal drug


seized by the forensic chemist to the court.  (Emphasis supplied,
[76]

citation omitted)
Section 21 of Republic Act No. 9165, the then  prevailing law,[77]

provides the manner in dealing with confiscated articles in drug


cases. This mandated procedure emphasizes "the value of
preserving the chain of custody in relation to the dangerous
drugs."  Hence, the prosecution must prove compliance to
[78]

establish the elements of the charges. [79]

The initial procedural safeguard  is provided for under Section


[80]

21, paragraph 1 of Republic Act No. 9165, which reads:


Section 21. Custody and Disposition of Confiscated, Seized,
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from
whom such items were confiscated and/or seized, or
his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any
elected public official who shall be required to sign the copies
of the inventory and be given a copy thereof[.] (Emphasis
supplied)
This is further elucidated in its Implementing Rules and
Regulations, which state:
Section 21. Custody and Disposition of Confiscated, Seized
and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — ...
(a) The apprehending officer/team having initial custody and
control of the drugs shall, immediately after seizure and
confiscation, physically inventory and photograph the same in the
presence of the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph
shall be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest office of
the apprehending officer/team, whichever is practicable, in case
of warrantless seizures; Provided, further, that non-compliance
with these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not
render void and invalid such seizures of and custody over said
items[.] (Emphasis supplied)
The prosecution's narration of events reveals that the police
officers did not to conform with the chain of custody. This is in
contravention to Section 21 of Republic Act No. 9165, which is
mandatory in nature, as reflected in the presence of the word
"shall"  in the provision.
[81]
According to the prosecution, the items were immediately marked
and inventoried in Sagana's residence after confiscation.
 However, it failed to offer any reason why the mandated
[82]

photographing was not concurrently done with the inventory and


was only made  when Sagana was already in the police station.
[83]

Similarly, none  of the required third-party representatives was


[84]

present during the seizure and inventory of the dangerous


articles. Their presence in buy-bust operations and seizure of
illicit articles in the place of operation would supposedly
guarantee "against planting of evidence and frame up."  In other
[85]

words, they are "necessary to insulate the apprehension and


incriminatiqn proceedings from any taint of illegitimacy or
irregularity."
[86]

To underscore, the prosecution "has the positive duty to establish


that earnest efforts were employed in contacting the
representatives enumerated under Section 21 . . . or that there
was a justifiable ground for failing to do so."  In this case, the
[87]

records were bereft of any explanation why the third-party


representatives were present only during the belated
photographing  of the confiscated articles. Hence, the very
[88]

purpose of their mandated presence is defeated.

While simple procedural irregularities in buy-bust operations are


not ipso facto prejudicial to the claim of the prosecution, provided
that the integrity and evidentiary worth of the confiscated articles
were maintained, courts should still carefully assess and
distinguish this kind of errors from those amounting to "gross,
systematic, or deliberate disregard" of the protections set by law.
Considering that the law enforcers in this case conducted a
[89] 

briefing before the operation,  they had ample time to secure the
[90]

presence of the needed third-party representatives before


proceeding to Sagana's residence.

Section 21 identifies "matters that are imperative."  Carrying out


[91]

acts which are seemingly compliant but do not actually conform


to the prerequisites laid down in Section 21 is insufficient.  "This [92]
is especially so when the prosecution claims that the seizure of
drugs and drug paraphernalia is the result of carefully planned
operations, as is the case here."
[93]

Furthermore, pursuant to "the rule that penal laws shall be


construed strictly against the government, and liberally in favor
of the accused," the failure of the police officers to observe the
procedure in handling the seized items provided for under
Republic Act No. 9165 and its implementing rules essentially
prejudices the prosecution's claim. [94]

III

A perusal of PO3 Salonga's testimony shows that the prosecution


failed to establish an unbroken chain of custody.
Q: When you signaled your other companions, what happened
next?
A: I frisked them and I was able to confiscate around 5 plastic
sachets of shabu from the said suspect, madam.

....

Q: What markings did you place in the pieces of shabu?


A: My initial (sic) LCS, Madam.
Q: After you have placed [the] marking (sic) on the items, what
did you do next?
A: I prepared the confiscation receipt, madam.
Q: Where did you prepare the confiscation receipt?
A: In the area, madam.
Q: What are you referring to?
A: At the place of the incident, madam.
Q: After you prepared the confiscation receipt, what did
you do next?
A:  We brought them in our office, madam.

....

Q: Upon arrival at your office, what did you do next?


A: We indorsed them to the  desk officer for recording, madam.
Q: Where was it recorded?
A: In the police blotter, Madam.
Q After you have it recorded in the police blotter, what did
you do next?
A: We prepared a request for examination, madam.
Q: Who prepared for (sic) the request for examination,
what happened next?
A: The  investigator, madam.
Q: After the preparation of the request for examination,
what happened  next?
A: I brought the same to the Crime Laboratory, madam.
 (Emphasis supplied)
[95]

"Every person who takes possession of seized drugs must show


how it was handled and preserved while in his or her custody to
prevent any switching or replacement."  In a number of drug
[96]

cases,  this Court ruled that the failure of the prosecution to offer
[97]

the testimonies of the persons who had direct contact with the
confiscated items without ample explanation casts doubt on
whether the allegedly seized shabu were the very same ones
presented in court.

The prosecution has the "burden of establishing the identity of


the seized items."  Considering the sequence of the people who
[98]

have dealt with the confiscated articles, the prosecution failed to


justify why three (3) other significant persons were not
presented  as witnesses. These persons were the desk officer
[99]

who supposedly recorded the incident in the police blotter, the


investigator who prepared the request for examination, and the
police officer who received the articles in the laboratory. "In
effect, there is no reasonable guaranty as to the integrity of the
exhibits inasmuch as it failed to rule out the possibility of
substitution of the exhibits, which cannot but inure to its own
detriment. [100]

Furthermore, the prosecution cannot simply rely on the saving


clause provided for under the Implementing Rules and
Regulations of Republic Act No. 9165. While non-conformity with
the strict directive of Section 21 is not essentially prejudicial to its
claim, the lapses committed by the police officers "must be
recognized and explained in terms of
their justifiable grounds and the integrity and evidentiary
value of the evidence seized must be shown to have been
preserved." [101]

In this case, however, the prosecution failed to offer any


justifiable reason why the police officers failed to strictly comply
with Section 21. It also failed to prove that the integrity and
evidentiary value of the confiscated items were maintained
despite the failure to conform to the directives of the law. "The
prosecution's sweeping guarantees as to the identity and integrity
of the seized drugs . . . will not secure a conviction." [102]

IV

To establish "whether there was a valid entrapment or whether


proper procedures were undertaken in effecting the buy-bust
operation, it is incumbent upon the courts to make sure that
the details of the operation are clearly and adequately laid out
through relevant, material and competent evidence."  More so, [103]

as in this case where the seized quantities of shabu are merely


0.12 grams and 0.59 grams, it is important that all details are
clear. Hence, the miniscule quantities of dangerous drugs
allegedly confiscated magnify the uncertainties with regard their
integrity. [104]

Further, the courts cannot solely depend "on but must apply
with studied restraint the presumption of regularity in the
performance of official duty by law enforcement agents."  This [105]

presumption cannot surmount the accused's presumption of


innocence. [106]

Trial courts should thoroughly take into consideration "the factual


intricacies of cases involving violations of Republic Act No.
9165."  Thus, "[c]ourts must employ heightened scrutiny,
[107]

consistent with the requirement of proof beyond reasonable


doubt, in evaluating cases involving miniscule amounts of drugs
[for] [t]hese can be readily planted and tampered." [108]

The miniscule quantity of confiscated illicit drugs heightens the


importance of a more stringent conformity with Section 21,
 which the police officers in this case miserably failed to do so.
[109]

The significant lapses committed, as well as their failure to


explain their non-compliance with the directives of the law, cast
doubt on the integrity of the corpus delicti. With these
circumstances, this Court acquits accused-appellant Sagana as
his guilt was not proven beyond reasonable doubt.

In closing, this Court is reminded of its words in People v.


Holgado: [110]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drag menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels.[111]

WHEREFORE, premises considered, the February 26, 2013


Decision of the Court of Appeals in CA-G.R.CR-H.C. No. 05154
is REVERSED and SET ASIDE. Accused-appellant Ernesto
Sagana y De Guzman is hereby ACQUITTED for failure of the
prosecution to prove his guilt beyond reasonable doubt. He is
ordered immediately RELEASED from detention, unless he is
confined for any other lawful cause. Let entry of final judgment
be issued immediately.

Let a copy of this decision be furnished the Director of the Bureau


of Corrections, Muntinlupa City for immediate implementation.
The Director of the Bureau of CoiTections is directed to report to
this Court within five days from receipt of this Decision the action
he has taken. Copies shall also be furnished the Director General
of the Philippine National Police and the Director General of the
Philippine Drugs Enforcement Agency for their information.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

 People v. Holgado y Dela Cruz, 741 Phil. 78, 81 (2014) [Per J.


[1]

Leonen, Third Division].

[2]
 Rollo, pp. 19-21.

 Id. at 2-18. The Decision was penned by Associate Justice


[3]

Priscilla J. Baltazar-Padilla and concurred in by Associate justices


Rosalinda Asuncion-Vicente and Agnes Reyes-Carpio of the Eighth
Division, Court of Appeals, Manila.

 CA rollo, pp. 16-23. The Decision, dated July 19, 2011, was
[4]

penned by Judge Emma M. Torio of Branch 41, Regional Trial


Court, Dagupan City.

[5]
 Rollo, p. 18, CA Decision

[6]
 Rep. Act No. 9165, sec. 5 provides:

Section 5. Sale, Trading, Administration, Dispensation, Delivery,


Distribution and Transportation of Dangerous Drags and/or
Controlled Precursors and Essential Chemicals. — The penalty of
life imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.

....

[7]
 Rep. Act No. 9165, sec. 11 provides:

Section 11. Possession of Dangerous Drugs. — The penalty of life


imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall possess any dangerous drug in the
following quantities, regardless of the degree of purity thereof:

....

Otherwise, if the quantity involved is less than the foregoing


quantities, the penalties shall be graduated as follows:

....

(3) Imprisonment of twelve (12) years and one (1) day to twenty
(20) years and a fine ranging from Three hundred thousand
pesos (P300,000.00) to Four hundred thousand pesos
(P400,000.00), if the quantities of dangerous drugs are less than
five (5) grams of opium, morphine, heroin, cocaine or cocaine
hydrochloride, marijuana resin or marijuana resin oil,
methamphetamine hydrochloride or "shabu", or other dangerous
drugs such as, but not limited to, MDMA or "ecstasy", PMA, TMA,
LSD, GHB, and those similarly designed or newly introduced
drugs and their derivatives, without having any therapeutic value
or if the quantity possessed is far beyond therapeutic
requirements; or less than three hundred (300) grams of
marijuana.

[8]
 Rollo, pp. 4-5.

[9]
 Id. at 5.

[10]
 Id.

[11]
 Id. at 3.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id. at 3-4.

[17]
 Id. at 4.

[18]
 Id.

[19]
 Id.

 Id. In the CA Decision, they


[20]
referred to shabu as
"methylamphetamine hydrochloride."

[21]
 Id. at 16.

[22]
 Id. at 4.

[23]
 Id.

[24]
 Id.
[25]
 Id.

[26]
 CA rollo, p. 23.

[27]
 Id. at 22.

[28]
 Id. at 21.

[29]
 Id. at 23.

[30]
 Id. at 24.

[31]
 Rollo, pp. 6-7.

[32]
 Id. at 7-9.

[33]
 Id. at 18.

[34]
 Id. at 8.

[35]
 Id. at 9.

[36]
 Id. at 1.

[37]
 Id. at 22.

[38]
 Id. at 19-21.

[39]
 Id. at 24.

[40]
 Id. at 25-27.

[41]
 Id. at 34-36.

[42]
 CA rollo, p. 51.

[43]
 Id.
[44]
 Id. at 51-52.

[45]
 Id.

[46]
 Id. at 52-53.

[47]
 Id. at 56.

[48]
 Id.

[49]
 Id. at 77-92, Appellee's Brief.

[50]
 Id. at 85.

[51]
 Id. at 86-87.

[52]
 Id. at 89.

[53]
 Id.

 People v. Sanchez y Espiritu, 590 Phil. 214, 229 (2008) [Per J.


[54]

Brion, Second Division].

[55]
 Id. at 230.

[56]
 Id.

[57]
 Id.

 People v. Ismael y Raclang, G.R. No. 208093, February 20,


[58]

2017. <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/208093.pdf> 6 [Per J.
Del Castillo, First Division].

[59]
 Id.

[60]
 Id.
[61]
 Id.

 Lopez v. People, 725 Phil. 499, 507 (2014) [Per J. Perez,


[62]

Second Division].

[63]
 Id.

 People v. Lagahit, 746 Phil. 896, 908 (2014) [Per J. Perez, First
[64]

Division].

 People v. Ismael y Radang, G.R. No. 208093, February 20,


[65]

2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/208093.pdf> 6 [Per J.
Del Castillo, First Division].

 People v. Dahil, 750 Phil. 212, 227 (2015) [Per J. Mendoza,


[66]

Second Division].

 People v. Goco y Ombrog, G.R. No. 219584, October 17, 2016


[67]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/october2016/219584.pdf> 7 [Per J.
Perlas-Bernabe, First Division].

[68]
 Id.

[69]
 576 Phil. 576 (2008) [Per J. Tinga, Second Division].

[70]
 Id. at 588-589.

[71]
 Rollo, p. 3.

 People v. Garcia v. Ruiz, 599 Phil. 416, 426-427 (2009) [Per J.


[72]

Brion, Second Division].

[73]
 Id.

[74]
 401 Phil. 259 (2000) [Per J. Melo, Third Division].
[75]
 Id. at 273.

 People v. Casacop y De Castro, 755 Phil. 265, 278 (2015) [Per


[76]

J. Leonen, Second Division] citing People v. Remigio, 700 Phil.


452, 468 (2012) [Per J. Perez, Second Division] and People v.
Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion, Second Division].

[77]
 Before the amendment by Rep. Act No. 10640 (2014).

 People v. Alagarme y Citoy, 754 Phil, 449, 459 (2015) [Per J.


[78]

Bersamin, First Division].

 People v. Garcia y Ruiz, 599 Phil. 416, 426 (2009) [Per J. Brion,
[79]

Second Division].

[80]
 Id. at 427.

 People v. Sanchez y Espiritu, 590 Phil. 214, 231 (2008) [Per J.


[81]

Brion, Second Division].

[82]
 CA rollo, p. 17.

[83]
 Id. at 17-18.

[84]
 Id. at 17.

 People v. Reyes, G.R. No. 199271, October 19, 2016


[85]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/october2016/199271.pdf> 13 [Per J.
Bersamin, First Division].

 People v. Mendoza y Estrada, 736 Phil 749, 762 (2014) [Per J.


[86]

Bersamin, First Division].

 People v. Umipang y Abdul, 686 Phil. 1024, 1053 (2012) [Per


[87]

C.J. Sereno, Second Division].


[88]
 CA rollo, pp. 17-18.

 People v. Umipang y Abdul, 686 Phil. 1024, 1037-1038 (2012)


[89]

[Per C.J. Sereno, Second Division].

[90]
 Rollo, p.3.

 Lescano y Carreon v. People, G.R. No. 214490, January 13,


[91]

2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
fiie=/jurisprudence/2016/january2016/214490.pdf> 12 [Per J.
Leonen, Second Division].

[92]
 Id.

[93]
 Id.

 People v. De la Cruz y Lizing, 591 Phil. 259, 270 (2008) [Per J.


[94]

Tinga, Second Division].

[95]
 Rollo, p. 11.

 People v. Ismael y Radang, G.R. No. 208093, February 20,


[96]

2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/208093.pdf> 11 [Per J.
Del Castillo, First Division].

 See Carino v. People, 600 Phil. 433 (2009) [Per J. Tinga,


[97]

Second Division], People v. Sanchez y Espiritu, 590 Phil. 214


(2008) [Per J. Brion, Second Division], Maltillin v. People, 576
Phil. 576 (2008) [Per J. Tinga, Second Division].

 Mallillin v. People, 576 Phil. 576, 586 (2008) [Per J. Tinga,


[98]

Second Division].

[99]
 See rollo, p. 10.

 Mallillin v. People, 576 Phil. 576, 587-588 (2008) [Per J. Tinga,


[100]

Second Division].
 People v. Sanchez y Espiritu, 590 Phil. 214, 234 (2008) [Per J.
[101]

Brion, Second Division].

 People v. Holgado y Dela Cruz, 741 Phil. 78, 93 (2014) [Per J.


[102]

Leonen, Third Division].

 People v. Ong y Li, 476 Phil. 553, 571-572 (2004) [Per J. Puno,
[103]

En Banc].

 Lescano y Carreon v. People, G.R. No. 214490, January 13,


[104]

2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/214490.pdf> 14 [Per J.
Leonen, Second Division].

 People v. Ong y Li, 476 Phil. 553, 572 (2004) [Per J. Puno, En
[105]

Banc].

 People v. Casacop y De Castro, G.R. No, 208685, March 9,


[106]

2015, 755 Phil. 265, 284 [Per J. Leonen, Second Division].

[107] Id.

[108] Id.

[109] Id.

[110]
 748 Phil. 78 (2014) [Per J. Leonen, Third Division].

[111]
 Id. at 100.

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SECOND DIVISION

[ G.R. No. 209452, July 26, 2017 ]


GOTESCO PROPERTIES, INC., PETITIONER, VS.
SOLIDBANK CORPORATION (NOW
METROPOLITAN BANK AND TRUST COMPANY),
RESPONDENT.DECISION

LEONEN, J.:

The requirement for publication of a Notice of Sale in an


extrajudicial foreclosure is complied with when the publication is
circulated at least in the city where the property is located.

This is a Petition for Review on Certiorari  assailing the May 31,


[1]

2013 Decision  and October 7, 2013 Resolution  of the Court of


[2] [3]

Appeals in CA-G.R. CV No. 97748. The Court of Appeals affirmed


the Decision of the Regional Trial Court, which dismissed the
complaint filed by petitioner Gotesco Properties, Inc. (Gotesco)
for the annulment of the foreclosure proceeding. The Court of
Appeals also upheld the issuance of a writ of possession for
respondent Solidbank Corporation (Solidbank), now Metropolitan
Bank and Trust Company (Metrobank).

In 1995, Gotesco obtained from Solidbank a term loan of P300


million through its President, Mr. Jose Go (Mr. Go). This loan was
covered by three (3) promissory notes. To secure the loan,
Gotesco was required to execute a Mortgage Trust Indenture
(Indenture) naming Solidbank-Trust Division as Trustee. [4]
The Indenture, dated August 9, 1995, obliged Gotesco to
mortgage several parcels of land in favor of Solidbank.  One (1) [5]

of the lots mortgaged and used as a collateral was a property


located in San Fernando, Pampanga, which was covered by
Transfer Certificate of Title (TCT) No. 387371-R.  A stipulation in
[6]

the Indenture also irrevocably appointed Solidbank-Trust Division


as Gotesco's attorney-in-fact.  Under the Indenture, Gotesco also
[7]

agreed to "at all times maintain the Sound Value of the


Collateral."
[8]

When the loan was about to mature, Gotesco found it difficult to


meet its obligation because of the 1997 Asian Financial Crisis.
 On January 24, 2000, Gotesco sent a letter to Solidbank
[9]

proposing to restructure the loan obligation.  The loan [10]

restructuring agreement proposed to extend the payment period


to seven (7) years. The suggested period included a two (2)-year
grace period. [11]

In its February 9, 2000 letter,  Solidbank informed Gotesco of a


[12]

substantial reduction in the appraised value of its mortgaged


properties. Based on an appraisal report submitted to Solidbank,
the sound value of the mortgaged properties at that time was at
P381,245,840.00.  Since the necessary collateral to loan ratio
[13]

was 200%, Solidbank held that there was a deficiency in the


collateral, which Gotesco had to address. Solidbank required
Gotesco to replace or add to the mortgaged properties. [14]

Gotesco construed the February 9, 2000 letter as Solidbank's


implied agreement to the loan restructuring proposal.  However, [15]

Gotesco found it unnecessary to address the alleged deficiency in


the collateral. It insisted that the aggregate sound value of the
mortgaged properties had not changed and was still at
P1,076,905,000.00. [16]

Solidbank sent a demand letter dated June 7, 2000 to Gotesco as


the loan became due.  Despite having received this demand
[17]

letter, Gotesco failed to pay the outstanding obligation. [18]


Solidbank then filed a Petition for the Extrajudicial Foreclosure of
the lot covered by TCT No. 387371-R through Atty. Wilfrido
Mangiliman (Atty. Mangiliman), a notary public. [19]

In the Notice of Sale  dated July 24, 2000, the public auction of
[20]

the land located in Pampanga, covered by TCT No. 387371-R,


was announced to be held on August 24, 2000 at 10:00 a.m.
However, pursuant to paragraph 5 of A.M. No. 99-10-05-0 dated
December 14, 1999,  the Notice of Sale indicated that if the
[21]

minimum requirement of two (2) bidders was not met, the sale
was to be postponed and rescheduled on August 31, 2000. [22]

The public auction was held on August 31, 2000  and Solidbank
[23]

was declared the winning bidder. [24]

 
On February 5, 2001, Gotesco filed a complaint before Branch 42,
Regional Trial Court, San Fernando, Pampanga for Annulment of
Foreclosure Proceedings, Specific Performance, and Damages
against Solidbank, Atty. Mangiliman, and the Register of Deeds of
San Fernando, Pampanga. [25]

Gotesco assailed the validity of the foreclosure proceeding


claiming that it was premature and without legal basis.
 According to Gotesco, the jurisdictional requirements prescribed
[26]

under Act No. 3135 were not complied with. First, Solidbank did
not furnish Gotesco copies of the petition for extrajudicial
foreclosure, notice of sale, and certificate of sale. Second, the
filing fees were not paid. Lastly, even assuming the original
period for loan payment was not extended, the prerequisites for
the foreclosure proceeding provided in the Indenture were not
met. [27]

Section 5.02 of the Indenture provided:


5.02. Foreclosure. If any event of default shall have occurred
and be continuing, the Trustee [Solidbank-Trust Division],
on written instruction by the Majority Creditors
[Solidbank], shall within three (3) Banking Days from
receipt of such notice, give written notice to the Company
[appellant], copy furnished all Creditors, declaring all
obligations secured by this Indenture due and payable and
foreclosing the Collateral. Upon such declaration, the
[appellant] shall pay to the [Solidbank-Trust Division],
within ten (10) days from receipt of such notice, the
amount sufficient to cover costs and expenses of collection,
including compensation for the [Solidbank-Trust Division], its
agents and attorneys.

In default of such payment, the [Solidbank-Trust Division]


may proceed to foreclose this Indenture, judicially or
extra-judicially under Act No. 3135, as
amended. Thereupon, on demand of the [Solidbank-Trust
Division], the appellant shall immediately turn over possession of
the Collateral to any party designated as the duly authorized
representative of the [Solidbank-Trust Division], free of all
charges. (Emphasis supplied.) [28]

In their Answer with Counterclaim, Solidbank alleged that it never


entered into a restructuring agreement with Gotesco. Solidbank
claimed that it complied with the publication and posting
requirements laid down by Act No. 3135. It also asserted that
Gotesco's complaint was insufficient because it failed to state a
cause of action.
[29]

On October 31, 2001, Solidbank filed an Ex-Parte Petition for the


Issuance of a Writ of Possession  before Branch 48, Regional
[30]

Trial Court, San Fernando, Pampanga. [31]

The two (2) cases were consolidated before Branch 42, Regional
Trial Court, San Fernando, Pampanga.  However, the presiding
[32]

judge of Branch 42 recused himself after disclosing that he was a


depositor in Metrobank, previously Solidbank. The case was re-
raffled to Branch 47. [33]

In its May 4, 2011 Decision,  Branch 47, Regional Trial Court,


[34]

San Fernando, Pampanga dismissed Gotesco's complaint for the


annulment of the foreclosure proceeding and granted the Writ of
Possession in Solidbank's favor:
WHEREFORE, premises considered, the plaintiff's Complaint in
Civil Case No. 12212 is hereby DISMISSED for lack of merit.

On the other hand, the Ex-Parte Petition in LRC No. 762 is


hereby GRANTED. Accordingly, let a writ of possession over the
property covered by Transfer Certificate of Title No. 387371-R be
issued against Gotesco Properties, Inc., and all persons claiming
rights under it.

SO ORDERED.  (Emphasis in the original)


[35]

Gotesco filed a Motion for Reconsideration, which was denied on


September 6, 2011. [36]

 
Gotesco appealed the rulings before the Court of Appeals. It
argued that contrary to the trial court's finding, the restructuring
agreement was perfected. The foreclosure was premature
because Gotesco was not in default. Solidbank also failed to
adhere to the stipulation which required that in the event of
default, a notice shall be given to Gotesco. Moreover, Mr. Go
allegedly was not authorized to appoint Solidbank as an attorney-
in-fact.
[37]

In its May 31, 2013 Decision,  the Court of Appeals affirmed the
[38]

decision of the Regional Trial Court. It ruled that there was no


perfected restructuring agreement between the parties.  It cited
[39]

Article 1319 of the Civil Code,  which requires absolute


[40]

acceptance of the offer before it can be considered a binding


contract.  It found that Gotesco failed to prove that Solidbank
[41]

clearly and unequivocally accepted the proposal for loan


restructuring. [42]

The Court of Appeals also declared that Gotesco was in default.


 It quoted Section 4.03 of the Indenture, which provided:
[43]

The Company [Gotesco/appellant] shall at all times maintain the


Sound Value of the Collateral at a level equal to that provided for
under Sec. 2.01 of this Indenture and, for such purpose, shall
make such substitutions, replacements, and additions for or to
the Collateral.
If at any time, in the opinion of the Trustee [ Solidbank-Trust
Division] and the Majority Creditors [Solidbank/appellee], the
Sound Value of the Collateral is impaired, or there is substantial
and imminent danger of such impairment, the [appellant] shall,
upon demand of [Solidbank-Trust Division], effect the
substitution of the Collateral or part thereof with another or
others and/or execute additional mortgages on other properties
and/or deposit cash with the [Solidbank-Trust Division]
satisfactory to the [Solidbank-Trust Division] and [Solidbank].
 (Emphasis in the original)
[44]

Under the Indenture, Gotesco agreed to provide additional


collateral "[i]f at any time, in the opinion of the Trustee and the
Majority Creditors, the Sound Value of the Collateral is
impaired."  Gotesco should have provided the additional security
[45]

demanded by Solidbank after learning that the value of the


properties used as collateral had been reduced significantly.
When Gotesco "chose to rely on its opinion, over and above and
contrary to the opinion of the Trustee and the Creditor," it
defaulted on its obligation.  Thus, the Court of Appeals ruled that
[46]

Gotesco's refusal to address the inadequacy of the collateral was


sufficient reason for Solidbank to foreclose the property.

The Court of Appeals found that the requisites under Section 3 of


Act No. 3135 were satisfied.  The Notice of Sale was physically
[47]

posted in the Office of the Clerk of Court, the Registry of Deeds,


and the Capitol Grounds.  Alongside the posting, the Notice of
[48]

Sale was published in Remate in its issues dated July 29, 2000,
August 5, 2000, and August 12, 2000.  The Court of Appeals
[49]

rejected Gotesco's allegation that the publication was invalid for


being published in a newspaper not printed in the city where the
property was located. According to the Court of Appeals, the fact
that Remate was published in Metro Manila, not in Pampanga, did
not mean that it was not a newspaper of general circulation.  It [50]

was still a newspaper of general circulation; thus, the publication


was valid. The Court of Appeals ruled, "[t]he Notice of Sale,
Affidavit of Publication, and Affidavit of Posting sufficiently prove
that the jurisdictional requirements regarding publication of the
Notice were complied with."  There was also documentary
[51]

evidence proving that contrary to Gotesco's claim, it received a


demand letter from Solidbank. [52]

The Court of Appeals also determined that Mr. Go had the


authority to agree to the conditions related to securing the loan.
 It examined the Secretary's Certificate which quoted
[53]
verbatim
the Board Resolution authorizing Mr. Go to enter into the loan
agreement: [54]

Resolution No. 95-015

RESOLVED, AS IT HEREBY RESOLVED, that the Corporation


[appellant] be as it is hereby authorized, to enter into a Mortgage
Trust Indenture (MTI) arrangement with Solidbank Corporation-
Trust Division.

RESOLVED FURTHER, that the [appellant], be as it is hereby


authorized to secure a loan in the amount of THREE HUNDRED
MILLION only (P300,000,000.00) PESOS from Solidbank
Corporation [appellant] under said Mortgage Trust Indenture on
such items, conditions, and stipulations that the [appellant] may
think fit for the purpose of the loan and to mortgage the
[appellant]'s assets as security and/or collateral for the loan and
other credit facilities.

RESOLVED FURTHER, that JOSE C. GO, be, as he is hereby


authorized, to negotiate and accept the terms and conditions and
to sign, execute and deliver any and all promissory notes, bonds,
mortgages and all other documents necessary in the execution of
the aforesaid resolutions with the said banks, for and in behalf of
the [appellant]. [55]

Lastly, since there was no third party with adverse interest that
occupied the property, the issuance of the Writ of Possession was
ministerial.
[56]

The dispositive portion of the Court of Appeals May 31, 2013


Decision provided:
WHEREFORE, premises considered, the appeal is
hereby DISMISSED. The Decision dated May 4, 2011, and the
Order dated September 6, 2011, of the Regional Trial Court,
Branch 47, San Fernando, Pampanga in the consolidated cases
docketed as Civil Case No. 12212 and LRC No. 726, are
hereby AFFIRMED. Costs against appellant Gotesco Properties
Incorporated.

SO ORDERED.  (Emphasis in the original)


[57]

Gotesco filed a Motion for Reconsideration but it was denied in


the Resolution  promulgated on October 7, 2013.
[58]

Hence, this Petition for Review on Certiorari was filed on


November 28,2013. [59]

In this Petition, petitioner Gotesco maintains that the foreclosure


proceeding is null and void. It insists that respondent Solidbank
agreed to restructure its loan, granting a "payment period of
seven (7) years with two (2) years grace period."  It continues to
[60]

argue that respondent impliedly accepted petitioner's proposal


when it asked for an increase in the collateral.  Respondent
[61]

reneged on the restructuring agreement when it caused the


foreclosure of the property prematurely.

Petitioner claims that it was not notified that it was in default.


Under the Indenture, the foreclosure proceeding can only be
initiated upon petitioner's failure to pay within 10 days after
receipt of the notice of default. Allegedly, respondent did not
send any notice. Respondent's failure to prove that it sent a
demand letter means the obligation is not yet due and
demandable. [62]

 
Petitioner avers that the mortgage is void because the principal
obligation it secured was still inexistent when the Indenture was
signed. The mortgage was executed on August 9, 1995. The
promissory notes representing the loans were dated August 14,
1995, August 21, 1995, and August 28, 1995. Since the
mortgage was only an accessory contract, "it cannot stand alone
absent a principal obligation to secure." [63]

 
Petitioner alleges that Mr. Go was not sanctioned by Gotesco's
Board of Directors "to appoint the bank as the attorney-in-fact to
conduct an extra-judicial foreclosure."  Thus, the subsequent
[64]

proceedings are void.

Moreover, petitioner insists that Section 3 of Act No. 3135 was


violated. The law requires that the Notice of Sale be posted for
not less than 20 days before the day of the auction sale.
According to the Affidavit of Posting by Janet Torres, Atty.
Mangiliman's law clerk,  the Notice of Sale was posted on August
[65]

15, 2000.  Since the auction sale was conducted on August 31,
[66]

2000, the 20-day period was not followed. [67]

Petitioner further contends that the publication of the Notice of


Sale in Remate was defective. Petitioner is of the opinion that the
Notice of Sale should have been published in newspapers
published, edited and circulated" in the same city or province
where the foreclosed property was located.  Since the land being
[68]

sold was situated at San Fernando, Pampanga and Remate was


printed and published in Manila, petitioner suggests that the
publication requirement was violated.[69]

Consequently, since the foreclosure proceeding was void, there


was no basis for the issuance of the Writ of Possession.
Possession of the property must revert back to petitioner.

Thereafter, respondent filed a Comment  and a Supplemental


[70]

Comment  to the Petition. Respondent denies that it agreed to


[71]

restructure petitioner's loan. It emphasized that petitioner has


not shown any concrete proof that respondent accepted the
proposal. Moreover, the alleged restructuring agreement was not
offered in evidence and cannot be considered by this Court. [72]

In its Comment, respondent explains that it is of no moment that


the mortgage agreement was executed before the promissory
notes. Jurisprudence has recognized that a mortgage can secure
present and future obligations.  In any case, since petitioner is
[73]

arguing that the obligation was restructured, it is now estopped


from questioning the validity of the Indenture. [74]

Respondent argues that petitioner cannot claim that it was not


notified of the default. Respondent submitted a return card which
indicated that the demand letter dated June 7, 2000 informing
Gotesco of its default was received by petitioner.  There is also a
[75]

provision in the promissory note, which states that failure to pay


the amounts due makes the obligation immediately due, without
need for notice or demand. [76]

Respondent took the position that Mr. Go was clearly authorized


by the Board of Directors to sign the Indenture. Since the
appointment of Solidbank-Trust Division as an attorney-in-fact
was an integral part of the agreement, petitioner was bound by
Mr. Go's assent. In any case, this contention was not alleged in
the Complaint; hence, it is immaterial. [77]

According to respondent, Section 3 of Act No. 3135 was complied


with. Remate is a newspaper of general circulation. It is among
the newspapers accredited by the Regional Trial Court where a
notice of sale can be published.  Petitioner also cannot raise for
[78]

the first time on appeal the allegation that the Notice of Sale was
defective for being posted less than 20 days before the auction
sale.
[79]

Respondent holds that the Writ of Possession was validly issued


because its issuance was ministerial.

A Reply  was filed by petitioner on May 20, 2014 in compliance


[80]

with this Court's March 17, 2014 Resolution.

On August 28, 2015, petitioner filed a Motion for Voluntary


Inhibition  of the ponente. Petitioner sought the inhibition of
[81]

Associate Justice Marvic M.V.F. Leonen, former Dean of the


College of Law of the University of the Philippines, for his ties
with Metrobank Foundation.  The ponente allegedly had a
[82]

working relationship with respondent.  First, he was an awardee


[83]

of the professorial chair of the Metrobank Foundation.  Second,[84]

he was chosen as a speaker in the Metrobank Professorial Chair


and Metrobank's Country's Outstanding Police Officers in Service.
 Respondent opposed the Motion for Voluntary Inhibition as
[85]

"none of the grounds for mandatory inhibition exist[s] in the


present instance." [86]

In this Court's January 25, 2016 Resolution,  the Motion for


[87]

Inhibition was denied for lack of merit. The Internal Rules of the
Supreme Court  provide several grounds for inhibition in addition
[88]

to those stated under Rule 137, Section 1  of the Rules of Court.
[89]

There was no need for the ponente to inhibit since none of the
enumerated circumstances was attendant in this case. Justices
are not given unfettered discretion to desist from hearing a case.
 Mere imputation of bias or partiality is not enough; there must
[90]

be a just and valid cause for inhibition to prosper. [91]

On March 20, 2017, respondent filed a Motion for Resolution


claiming the case is ripe for resolution.
[92]

There are three (3) issues to be resolved before this Court: First,
whether the foreclosure was premature;

Second, whether the requirements under Section 3 of Act No.


3135 were complied with; and

Finally, whether the Writ of Possession was properly issued.

I.A

Petitioner defaulted in its obligation. Thus, respondent was within


its rights to foreclose the property.

Section 5 of the Indenture provided:


5.01 Events of Default. Each of the following shall constitute an
Event of Default under this Indenture:
(a) the Company shall fail to pay at stated maturity, by
acceleration or otherwise to any Creditor any amount due
and owing under a Secured Principal Document;

(b) any event of default under the Secured Principal Documents


shall occur;

(c) any representation or warranty or statement made or


furnished to this Trustee by or on behalf of the Company in
connection with this Indenture shall prove to have been false in
any material respect when made or furnished or deemed made;

(d) the Company shall default in the due performance or


observance of any provision contained herein and such default
continues unremedied for thirty (30) days after notice to the
Company by the Trustee; or

(e) the lien created by this Indenture shall be lost or


impaired or shall cease to be a first and preferred lien upon the
Collateral.  (Emphasis supplied)
[93]

Petitioner defaulted in its obligation twice. First, when it failed to


pay the loan according to the terms of the promissory note.
Second, when it failed to provide the additional collateral
demanded by respondent.

Petitioner never refuted that it defaulted in its payment of the


loan. In its Stipulation of Facts/Admissions and Proposed Marking
of Exhibits, petitioner admitted to proposing the loan
restructuring because of its inability to meet the loan payments.
 The loan restructuring agreement would have given Petitioner
[94]

an additional "payment period of seven (7) years with two (2)


years grace period on principal payment." [95]

However, as the Court of Appeals correctly held, that there was


no perfected restructuring agreement between the parties. The
Civil Code requires absolute acceptance of the offer before it can
be considered a binding contract:
Article 1319. Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.

Acceptance made by letter or telegram does not bind the offerer


except from the time it came to his knowledge. The contract, in
such a case, is presumed to have been entered into in the place
where the offer was made.
Mendoza v. Court of Appeals  tells us that "[o]nly an absolute
[96]

and unqualified acceptance of a definite offer manifests the


consent necessary to perfect a contract." [97]

For a proposal to bind a party, there must be proof that it


consented to all the terms on offer.  To prove that the original
[98]

period of payment was extended, petitioner must show that


respondent unequivocally accepted the offer. In this case,
petitioner did not present any shred of evidence which would
prove that respondent agreed to restructure the loan. At best,
petitioner only alleged that it sent a letter to respondent to ask
for a debt restructuring. However, sending a proposal is not
enough. There must be proof that respondent expressly accepted
the offer. Without an absolute acceptance, there is no
concurrence of minds.  Thus, this Court cannot bind respondent
[99]

to stipulations it never consented to.

Petitioner points to respondent's February 9, 2000 letter claiming


that if respondent had not agreed to the proposal, it would not
have asked for additional collateral.[100]

However, respondent's February 9, 2000 letter showed no


indication that it extended the loan's payment period. It did not
even mention any restructuring proposal. The demand to address
the deficiency in the loan's security cannot be interpreted as an
implied agreement to restructure the loan.
Notably, petitioner did not offer the alleged restructuring
agreement in evidence. As respondent points out, the theory that
the loan was restructured is hinged on the January 24, 2000
letter from petitioner.  However, this letter which allegedly
[101]

proposed the restructuring of petitioner's obligation was not


offered in evidence.  Under the rules, this Court cannot consider
[102]

any evidence not formally offered.  In Spouses Ong v. Court of


[103]

Appeals,  this Court exonerated a common carrier from liability


[104]

because the police report finding it liable was not formally offered
in evidence. This Court explained:
A formal offer is necessary, since judges are required to base
their findings of fact and their judgment solely and strictly upon
the evidence offered by the parties at the trial. To allow parties to
attach any document to their pleadings and then expect the court
to consider it as evidence, even without formal offer and
admission, may draw unwarranted consequences. Opposing
parties will be deprived of their chance to examine the document
and to object to its admissibility. On the other hand, the appellate
court will have difficulty reviewing documents not previously
scrutinized by the court below.  (Citation omitted)
[105]

Since the loan restructuring which Gotesco proposed was not


accepted, there is no question that petitioner defaulted on the
payment of its loan.

Petitioner's failure to provide the additional collateral demanded


by respondent constituted another Event of Default under the
Indenture.

Under the Indenture, petitioner agreed to maintain the value of


the collateral at a level at least equal to the required collateral
cover. Section 4.03 of the Indenture provided:
The Company [Gotesco/appellant] shall at all times maintain the
Sound Value of the Collateral at a level equal to that provided for
under Sec. 2.01 of this Indenture and, for such purpose, shall
make such substitutions, replacements, and additions for or to
the Collateral.
If at any time, in the opinion of the Trustee [Solidbank-Trust
Division] and the Majority Creditors [Solidbank/appeilec], the
Sound Value of the Collateral is impaired, or there is substantial
and imminent danger of such impairment, [appellant] shall, upon
demand of [Solidbank-Trust Division], effect the substitution of
the Collateral or part thereof with another or others and/or
execute additional mortgages on other properties and/or deposit
cash with the [Solidbank-Trust Division] satisfactory to the
[Solidbank-Trust Division] and [Solidbank].  (Emphasis supplied)
[106]

On February 9, 2000, respondent wrote to petitioner claiming


that the appraised value of the mortgaged properties decreased.
 Respondent then asked petitioner to "address the deficiency in
[107]

the required collateral."  The letter, in part, provided:


[108]

At present, the outstanding secured obligations covered by the


[Mortgage Trust Indenture are] P300 Million, which MPC is held
solely by Solidbank Corporation. The reduction in the collateral
values of the properties shall therefore impair the required
collateral to loan ratio of 200%.

In this regard, we urge you to address the deficiency in the


required collateral cover soonest and make the necessary
substitution, replacements and/or additions on the mortgaged
properties. Section 4.03 of the [Mortgage Trust Indenture]
requires that [Gotesco Properties, Inc.] shall maintain at all times
the Sound Value of the mortgaged property at a level at least
equal to the required collateral cover.
[109]

Petitioner chose not to heed this demand and insisted that the
aggregate sound value of the mortgaged properties was still at
P1,076,905,000.00.  It added:
[110]

42. And even assuming arguendo that the value of the mortgaged
properties has vent down, the fact remains that being a real
estate property, it could not go down more than 50% of the value
thereof. Thus, at best the least valuation of these mortgaged
properties would be no less than P600 million, which is more than
enough to cover the balance of the loan obligations. [111]

The determination of whether the collateral is impaired lies on


respondent. As the Court of Appeals aptly put, petitioner ignored
respondent's demand "to its ruination." [112]
Under the Civil Code,  there is default when a party obliged to
[113]

deliver something fails to do so. In Social Security System v.


Moonwalk Development & Housing Corp.,  this
[114]
Court
enumerated the elements of default:
In order that the debtor may be in default it is necessary that the
following requisites be present: (1) that the obligation be
demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance
judicially and extrajudicially. Default generally begins from the
moment the creditor demands the performance of the obligation.
 (Citations omitted)
[115]

When respondent asked to have the mortgaged properties


replaced, it was requiring petitioner to comply with its obligation
to sustain the loan's security at an appropriate level. Clearly,
petitioner defaulted when it refused to heed respondent's demand
for additional collateral, as expressed in the February 9, 2000
letter. This gave respondent enough reason to foreclose the
property.

I.B

Petitioner argues that the foreclosure should not have been


initiated because it was not notified that an event of default
occurred. It claims that under the Indenture, it should have been
notified that it was in default and that the obligation was due and
demandable. After such notice, it should have been given 10 days
to settle the debt. Petitioner avers that the foreclosure proceeding
could only be initiated upon failure to pay after the lapse of the
10-day period. [116]

Petitioner claims it did not receive any demand letter. Gotesco's


first witness, Arturo M. Garcia, testified that Gotesco did not
receive any written demand.  On the other hand, respondent
[117]

avers that it sent a demand letter dated June 7, 2000 to


petitioner.  As proof, respondent submitted a return card which
[118]

indicated that the letter was accepted by the addressee.


This Court rules for respondent.

Documentary evidence will generally prevail over testimonial


evidence.  As the Court of Appeals noted, the return card
[119]

submitted by respondent proves that the demand letter was


received by petitioner.  This Court is inclined to give more
[120]

evidentiary weight to documentary evidence as opposed to a


testimony which can be easily fabricated.  In any case, the
[121]

question of whether the letter was received is a factual matter


better left to the lower courts. Since the factual findings of
appellate courts are conclusive and binding upon this Court when
supported by substantial evidence, this Court sees no reason to
disturb the findings of the Court of Appeals.
[122]

I.C

The contention that Mr. Go did not have the authority to appoint
Solidbank-Trust Division as an attorney-in-fact for the purpose of
selling the mortgaged property is untenable. As the Court of
Appeals correctly pointed out:
Since Mr. Go was authorized to sign the Indenture, and the
provision of appointment of the [respondent] as attorney-in-fact
in the event of foreclosure is an integral portion of the terms and
conditions of the Indenture, Mr. Go was, therefore, authorized
and invested with the power to appoint an attorney-in-fact. [123]

In any case, petitioner is not allowed to bring a new issue on


appeal. Since the question regarding Mr. Go's authority was only
presented before the Court of Appeals, it deserves scant
consideration.

Canada v. All Commodities Marketing Corporation  explained


[124]

that raising a new argument on appeal violates due process:


As a rule, no question will be entertained on appeal unless it has
been raised in the court below. Points of law, theories, issues and
arguments not brought to the attention of the lower court
ordinarily will not be considered by a reviewing court because
they cannot be raised for the first time at that late stage. Basic
considerations of due process underlie this rule. It would be
unfair to the adverse party who would have no opportunity to
present evidence in contra to the new theory, which it could have
done had it been aware of it at the time of the hearing before the
trial court. To permit petitioner at this stage to change his theory
would thus be unfair to respondent, and offend the basic rules of
fair play, justice and due process.  (Citations omitted)
[125]

II.A

As to the validity of the foreclosure proceeding, this Court rules in


the affirmative.

Section 3 of Act No. 3135 provides:


Section 3. Notice shall be given by posting notices of the sale for
not less than twenty days in at least three public places of the
municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice shall
also be published once a week for at least three consecutive
weeks in a newspaper of general circulation in the municipality or
city.
Section 3 of Act No. 3135 requires that the Notice of Sale be a)
physically posted in three (3) public places and b) be published
once a week for at least three (3) consecutive weeks in a
newspaper of general circulation in the city where the property is
situated.

Petitioner claims that since the foreclosed property was located in


Pampanga, the publication of the Notice of Sale in Remate was
not valid. Petitioner suggests that the Notice of Sale could only be
published in a newspaper printed in the city where the property
was located. It posits that because Remate was printed and
published in Manila, not in San Fernando, Pampanga, the
publication was defective.[126]

Petitioner is mistaken.

Fortune Motors (Phils.), Inc. v. Metropolitan Bank and Trust Co.


 already considered this argument and ruled that this
[127]

interpretation is too restricting:


Were the interpretation of the trial court (sic) to be followed,
even the leading dailies in the country like the 'Manila Bulletin,'
the 'Philippine Daily Inquirer,' or 'The Philippine Star' which all
enjoy a wide circulation throughout the country, cannot publish
legal notices that would be honored outside the place of their
publication. But this is not the interpretation given by the courts.
For what is important is that a paper should be in general
circulation in the place where the properties to be foreclosed are
located in order that publication may serve the purpose for which
it was intended.[128]

If notices are only published in newspapers printed in the city


where the property is located, even newspapers that are
circulated nationwide will be disqualified from announcing auction
sales outside their city of publication.  This runs contrary to the
[129]

spirit of the law which is to attain wide enough publicity so all


parties interested in acquiring the property can be informed of
the upcoming sale.  This Court ruled:
[130]

We take judicial notice of the fact that newspaper publications


have more far-reaching effects than posting on bulletin boards in
public places. There is a greater probability that an
announcement or notice published in a newspaper of general
circulation, which is distributed nationwide, shall have a
readership of more people than that posted in a public bulletin
board, no matter how strategic its location may be, which caters
only to a limited few. Hence, the publication of the notice of sale
in the newspaper of general circulation alone is more than
sufficient compliance with the notice-posting requirement of the
law. By such publication, a reasonably wide publicity had been
effected such that those interested might attend the public sale,
and the purpose of the law had been thereby subserved. [131]

The crucial factor is not where the newspaper is printed but


whether the newspaper is being circulated in the city where the
property is located. Markedly, what the law requires is the
publication of the Notice of Sale in a "newspaper of general
circulation," which is defined as:
To be a newspaper of general circulation, it is enough that "it is
published for the dissemination of local news and general
information; that it has a bona fide subscription list of paying
subscribers; that it is published at regular intervals" . . . The
newspaper need not have the largest circulation so long as it is of
general circulation.
[132]

Verily, there is clear emphasis on the audience reached by the


paper; the place of printing is not even considered.

The Court of Appeals pointed out that Remate is an accredited


publication by the Regional Trial Court of Pampanga.  As argued
[133]

by respondent:
94. It merits judicial notice that the newspaper where the Notice
of Sale was published is chosen by raffle among newspaper
publications accredited by the Regional Trial Court with territorial
jurisdiction over the real property to be foreclosed. It can be
safely presumed that the RTC in this regard imposed standards
and criteria for these newspapers to qualify for the raffle, among
the criteria being that they [are] newspapers of general
circulation in the locality. More so in this instance, when it merits
judicial notice that the Remate, is one of the most widely
circulated tabloids in the country.[134]

II.B

As to the alleged defect with the posting requirement, petitioner


argues that the Notice of Sale was posted less than the required
20 days. Respondent points out that this issue was alleged for the
first time before this Court and should not be considered.

This Court rules for respondent.

Records show that petitioner only raised this argument in the


Petition for Review submitted before this Court. The alleged
defect was not raised before the lower courts. Notably, this is not
the first time petitioner raised a new issue on appeal. As
previously discussed, it raised Mr. Go's alleged lack of authority
for the first time before the Court of Appeals. This Court
reiterates that this practice cannot stand because raising new
issues on appeal violates due process. [135]
In any case, the alleged defect in the posting is superficial. The
Notice of Sale was posted on August 15, 2000,  while the [136]

auction sale took place on August 31, 2000.  The Notice of Sale
[137]

was posted for 16 days, only four (4) days less than what the law
requires.

The object of a Notice of Sale in an extrajudicial foreclosure


proceeding is to inform the public of the nature and condition of
the property to be sold and the time, place, and terms of the
auction sale. Mistakes or omissions that do not impede this
objective will not invalidate the Notice of Sale.  Olizon v. Court
[138]

of Appeals  explained:
[139]

The object of a notice of sale is to inform the public of the nature


and condition of the property to be sold, and of the time, place
and terms of the sale. Notices are given for the purpose of
securing bidders and to prevent a sacrifice of the property. If
these objects are attained, immaterial errors and mistakes will
not affect the sufficiency of the notice; but if mistakes or
omissions occur in the notices of sale, which are calculated to
deter or mislead bidders, to depreciate the value of the property,
or to prevent it from bringing a fair price, such mistakes or
omissions will be fatal to the validity of the notice, and also to the
sale made pursuant thereto.  (Citation omitted)
[140]

III

Generally, the purchaser in a public auction sale of a foreclosed


property is entitled to a writ of possession during the redemption
period. Section 7 of Act No. 3135, as amended by Act No. 4118,
provides:
Section 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province
or place where the property or any part thereof is situated, to
give him possession thereof during the redemption period,
furnishing bond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in
case it be shown that the sale was made without violating the
mortgage or without complying with the requirements of this Act.
Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the
property is registered, or in special proceedings in the case of
property registered under the Mortgage Law or under section one
hundred and ninety-four of the Administrative Code, or of any
other real property encumbered with a mortgage duly registered
in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of the court shall, upon
the filing of such petition, collect the fees specified in paragraph
eleven of section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered Twenty-
eight hundred and sixty-six, and the court shall, upon approval of
the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall
execute said order immediately.
It is ministerial upon the trial court to issue such writ upon an ex
parte petition of the purchaser.  However, this rule admits an
[141]

exception. [142]

The last sentence of Rule 39, Section 33 of the Rules of Court is


instructive:
Section 33. Deed and possession to be given at expiration of
redemption period; by whom executed or given. — If no
redemption be made within one (1) year from the date of the
registration of the certificate of sale, the purchaser is entitled to a
conveyance and possession of the property; or, if so redeemed
whenever sixty (60) days have elapsed and no other redemption
has been made, and notice thereof given, and the time for
redemption has expired, the last redemptioner is entitled to the
conveyance and possession; but in all cases the judgment obligor
shall have the entire period of one (1) year from the date of the
registration of the sale to redeem the property. The deed shall be
executed by the officer making the sale or by his successor in
office, and in the latter case shall have the same validity as
though the officer making the sale had continued in office and
executed it.

Upon the expiration of the right of redemption, the purchaser or


redemptioner shall be substituted to and acquire all the rights,
title, interest and claim of the judgment obligor to the property as
of the time of the levy. The possession of the property shall
be given to the purchaser or last redemptioner by the
same officer unless a third party is actually holding the
property adversely to the judgment obligor. (Emphasis
supplied.)
This is in line with this Court's pronouncement in Saavedra v.
Siari Valley Estates, Inc.  that: [143]

Where a parcel levied upon on execution is occupied by a party


other than a judgment debtor, the procedure is for the court to
order a hearing to determine the nature of said adverse
possession. [144]

This Court in China Banking Corp. v. Spouses Lozada  discussed


[145]

that when the foreclosed property is in the possession of a third


party, the issuance of a writ of possession in favor of the
purchaser ceases to be ministerial and may no longer be done ex
parte.  However, for this exception to apply, the property must
[146]

be held by the third party adversely to the mortgagor.  The [147]

Court of Appeals correctly held that this case does not fall under
the exception.  Since it is the petitioner, and not a third party,
[148]

who is occupying the property, the issuance of the Writ of


Possession is ministerial.

There is also no merit to petitioner's argument that the Writ of


Possession should not be issued while the complaint for the
annulment of the foreclosure proceeding is still
pending. Fernandez v. Spouses Espinoza  already ruled that a
[149]

pending case assailing the validity of the foreclosure proceeding


is immaterial:
Any question regarding the validity of the mortgage or its
foreclosure cannot be a legal ground for the refusal to issue a writ
of possession. Regardless of whether or not there is a pending
suit for the annulment of the mortgage or the foreclosure itself,
the purchaser is entitled to a writ of possession, without
prejudice, of course, to the eventual outcome of the pending
annulment case.  (Citation omitted)
[150]

As the winning bidder, respondent is entitled to the Writ of


Possession.
WHEREFORE, the Petition for Review on Certiorari is
hereby DENIED. The assailed Decision of the Court of Appeals
dated May 31, 2013 and Resolution dated October 7, 2013 in CA-
G.R. CV No. 97748 are AFFIRMED.

SO ORDERED.
 
Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,
concur.

[1]
 Rollo, pp. 10-39.

 Id. at 41-62. The Decision, promulgated on May 31, 2013, was


[2]

penned by Associate Justice Victoria Isabel A. Paredes and


concurred in by Associate Justices Elihu A. Ybañez and Franchito
N. Diamante of the Special Fourteenth Division, Court of Appeals,
Manila.

 Id. at 64-65. The Resolution, promulgated on October 7, 2013,


[3]

was penned by Associate Justice Victoria Isabel A. Paredes and


concurred in by Associate Justices Elihu A. Ybañez and Franchito
N. Diamante of the Former Special Fourteenth Division, Court of
Appeals, Manila.

[4]
 Id. at 42-43.

[5]
 Id. at 43.

[6]
 Id. at 42.

[7]
 Id. at 56.

[8]
 Id. at 52.

[9]
 Id. at 16.
[10]
 Id. at 43.

[11]
 Id. at 20.

[12]
 Id. at 72-73.

[13]
 Id. at 72.

[14]
 Id.

[15]
 Id. at 19.

 Id. at 74, Certificate of Sound Value of Collateral dated July 28,


[16]

1999.

[17]
 Id. at 105, Comment.

[18]
 Id. at 105-106, Comment.

[19]
 Id. at 44.

[20]
 Id. at 75-76.

[21]
 Adm. Matter No. 99-10-05-0 (2000) provides:

5. No auction sale shall be held unless there are at least two (2)
participating bidders, otherwise the sale shall be postponed to
another date. If on the new date set for the sale there shall not
be at least two, bidders, the sale shall then proceed. The names
of the bidders shall be reported by the sheriff or the notary public
who conducted the sale to the Clerk of Court before the issuance
of the certificate of sale.

[22]
 Rollo, p. 76.

[23]
 Id. at 44.
[24]
 Id. at 77-79, Certificate of Sale.

[25]
 Id. at 42.

[26]
 Id. at 44.

[27]
 Id.

 Id. at 53, as quoted in the Decision of the Court of Appeals.


[28]

The parties did not attach a copy of the Indenture to the petition.

[29]
 Id. at 45.

[30]
 Act No. 3135, sec. 7, as amended by Act 4118, provides:

Section 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the province
or place where the property or any part thereof is situated, to
give him possession thereof during the redemption period,
furnishing bond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in
case it be shown that the sale was made without violating the
mortgage or without complying with the requirements of this Act.
Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the
property is registered, or in special proceedings in the case of
property registered under the Mortgage Law or under section one
hundred and ninety-four of the Administrative Code, or of any
other real property encumbered with a mortgage duly registered
in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of the court shall, upon
the filing of such petition, collect the fees specified in paragraph
eleven of section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered Twenty-
eight hundred and sixty-six, and the court shall, upon approval of
the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall
execute said order immediately.
[31]
 Rollo, p. 13.

[32]
 Id. at 95.

[33]
 Id. at 48.

[34]
 Id. at 41-42.

[35]
 Id. at 42, as quoted in the Court of Appeals Decision.

[36]
 Id. at 49.

[37]
 Id. at 50-51.

[38]
 Id. at 41-62.

[39]
 Id. at 50.

[40]
 CIVIL CODE, art. 1319 provides:

Article 1319. Consent is manifested by the meeting of the offer


and the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.

Acceptance made by letter or telegram does not bind the offerer


except from the time it came to his knowledge. The contract, in
such a case, is presumed to have been entered into in the place
where the offer was made.

[41]
 Rollo, p. 51.

[42]
 Id.

[43]
 Id.
[44]
 Id. at 52, as quoted in the Decision of the Court of Appeals.

[45]
 Id.

[46]
 Id.

[47]
 Id. at 57.

[48]
 Id. at 58.

[49]
 Id. at 57.

[50]
 Id. at 58.

[51]
 Id. at 57.

[52]
 Id. at 53.

[53]
 Id. at 56.

[54]
 Id. at 55.

[55]
 Id. at 55-56.

[56]
 Id. at 61.

[57]
 Id. at 61-62.

[58]
 Id. at 64-65.

[59]
 Id. at 10-39.

[60]
 Id. at 20.

[61]
 Id. at 19.

[62]
 Id. at 23.
[63]
 Id. at 30-31.

[64]
 Id. at 30.

[65]
 Id. at 57-58.

[66]
 Id. at 80.

[67]
 Id. at 24.

[68]
 Id. at 25.

[69]
 Id. at 26.

[70]
 Id. at 91-123.

[71]
 Id. at 124-136.

[72]
 Id. at 99.

[73]
 Id. at 103.

[74]
 Id.

[75]
 Id. at 105.

[76]
 Id. at 103.

[77]
 Id. at 107.

[78]
 Id. at 113.

[79]
 Id. at 111.

[80]
 Id. at 168-186.

[81]
 Id. at 188-193.
[82]
 Id. at 189.

 Id. Gotesco considers Metropolitan Bank and Trust Company


[83]

(formerly Solidbank Corporation) and Metrobank Foundation as


the same corporation.

 Id. "[I]n the Metrobank Foundation Professorial Chair Lecture


[84]

Series, Volume 1, 2004, 2009, it is indicated that [Justice


Leonen] had a professorial chair in Constitutional Law while he
was Dean of the UP College of Law and the Vice Chair of the
Department of Constitutional Law, PHILJA."

[85]
 Id.

[86]
 Id. at 195.

[87]
 Id. at 201.

[88]
 Adm. Matter No. 10-4-20-SC (2010), Rule 8, sec. 1 provides:

Section 1. Grounds for inhibition. - A Member of the Court shall


inhibit himself or herself from participating in the resolution of the
case for any of these and similar reasons:

(a) the Member of the Court was the ponente of the decision or participated in the
court;

(b) the Member of the Court was counsel, partner or member of a law firm that is or w
Section 3 (c) of this rule;

(c) the Member of the Court or his or her spouse, parent or child is pecuniarily interest

(d) the Member of the Court is related to either party in the case within the sixth deg
an attorney or any member of a law firm who is counsel of record in the case with
or affinity;

(e) the Member of the Court was executor, administrator, guardian or trustee in the ca

(f) the Member of the Court was an official or is the spouse of an official or forme
private entity that is a party to the case, and the Justice or his or her spouse h
relating to the case.

A Member of the Court may in the exercise of his or her sound


discretion, inhibit himself or herself for a just or valid reason
other than any of those mentioned above.

The inhibiting Member must state the precise reason for the
inhibition.

[89]
 RULES OF COURT, Rule 137, sec. 1 provides:

Section 1. Disqualification of judges. — No judge or judicial officer


shall sit in any case in which he, or his wife or child, is pecuniarily
interested as heir, legatee, creditor or otherwise, or in which he is
related to either party within the sixth degree of consanguinity or
affinity, or to counsel within the fourth degree, computed
according to the rules of the civil law, or in which he has been
executor, administrator, guardian, trustee or counsel, or in which
he has presided in any inferior court when his ruling or decision is
the subject of review, without the written consent of all parties in
interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify


himself from sitting in a case, for just or valid reasons other than
those mentioned above.

 Pagoda Philippines Inc. v. Universal Canning, Inc., 509 Phil.


[90]

339, 341 (2005) [Per J. Panganiban, Third Division].

[91]
 Id.

[92]
 Rollo, p. 202.

[93]
 Id. at 104-105.

[94]
 Id. at 104.
[95]
 Id. at 20.

[96]
 412 Phil. 14 (2001) [Per J. De Leon, Jr. , Second Division].

[97]
 Id. at 28.

[98]
 Id.

 Vda. de Urbano v. Government Service Insurance System, 419


[99]

Phil. 948, 975-976 (2001) [Per J. Puno, First Division].

[100]
 Rollo, p. 19.

[101]
 Id. at 99. 

[102]
 Id. at 43 and 99.

[103]
 RULES OF COURT, Rule 132, sec. 34 provides:

Section 34. Offer of evidence. — The court shall consider no


evidence which has not been formally offered. The purpose for
which the evidence is offered must be specified.

[104]
 361 Phil. 338 (1999) [Per J, Panganiban, Third Division],

[105]
 Id. at 350.

[106]
 Rollo, p. 52, as quoted in the Decision of the Court of Appeals.

[107]
 Id. at 72.

[108] Id.

[109]
 Id. The letter did not state what "MPC" was.

 Id. at 74, Certificate of Sound Value of Collateral dated July 28,


[110]

1999.
[111]
 Id. at 19-20.

[112]
 Id. at 52.

[113]
 CIVIL CODE, art. 1169 provides:

Article 1169. Those obliged to deliver or to do something incur in


delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation. However,
the demand by the creditor shall not be necessary in order that
delay may exist:

(1) When the obligation or the law expressly so declare; or

(2) When from the nature and the circumstances of the obligation
it appears that the designation of the time when the thing is to be
delivered or the service is to be rendered was a controlling
motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has


rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other


does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other begins. (Emphasis
supplied)

[114]
 293 Phil. 129 (1993) [Per J. Campos, Jr., Second Division].

[115]
 Id. at 141.

[116]
 Rollo, p. 21.

[117]
 Id. at 22.

[118]
 Id. at 105.
 Government Service Insurance System v. Court of Appeals,
[119]

293 Phil. 699, 710 (1993) [Per J. Melo, Third Division].

[120]
 Rollo, p. 53 and 105.

 Government Service Insurance System v. Court of Appeals,


[121]

293 Phil. 699, 710 (1993) [Per J. Melo, Third Division].

 Pascual v. Burgos, G.R. No. 171722, January 11, 2016,


[122]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> 10 Per J.
Leonen, Second Division].

[123]
 Rollo, p. 56.

[124]
 590 Phil. 342 (2008) [Per J. Nachura, Third Division].

[125]
 Id. at 347-348.

[126]
 Rollo, pp. 24-28.

[127]
 332 Phil. 844 (1996) [Per J. Hermosisima Jr., First Division].

[128]
 Id. at 850.

[129] Id.

 Olizon v. Court of Appeals, 306 Phil. 162 (1994) [Per J.


[130]

Regalado, Second Division].

[131]
 Id. at 172-173.

 Bonnevie v. Court of Appeals, 210 Phil. 100, 111 (1983) [Per J.


[132]

Guerrero, Second Division].

[133]
 Rollo,p.58.

[134]
 Id. at 113.
 Canada v. All Commodities Marketing Corp., 590 Phil. 342,
[135]

347-348 (2008) [Per J. Nachura, Third Division].

[136]
 Rollo, p. 80, Affidavit of Posting.

[137]
 Id. at 44.

 Olizon v. Court of Appeals, 306 Phil. 162, 172-173 (1994) [Per


[138]

J. Regalado, Second Division].

 Olizon v. Court of Appeals, 306 Phil. 162 (1994) [Per J.


[139]

Regalado, Second Division].

[140]
 Id. at 173.

 Spouses Edralin v. Philippine Veterans Bank, 660 Phil. 368, 381


[141]

(2011) [Per J. Del Castillo, First Division].

 China Banking Corp. v. Spouses Lozada, 579 Phil. 454, 478-


[142]

480 (2008) [J. Chico-Nazario, Third Division].

[143]
 106 Phil. 432 (1959) [Per J. Montemayor, En Banc].

[144]
 Id. at 436.

[145]
 579 Phil. 454 (2008) [J. Chico-Nazario, Third Division].

[146]
 Id. at 473-474.

[147] Id.

[148]
 Rollo, p.6.

[149]
 574 Phil. 292 (2008) [Per J. Chico-Nazario, Third Division].

[150]
 Id. at 307.
Source: Supreme Court E-Library | Date created: October 27, 2017
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Supreme Court E-Library

805 Phil. 13
SECOND DIVISION

[ G.R. No. 188146, February 01,


2017 ]
PILIPINAS SHELL PETROLEUM CORPORATION,
PETITIONER, VS. ROYAL FERRY SERVICES, INC.,
RESPONDENT.DECISION

LEONEN, J.:

The venue for a petition for voluntary insolvency proceeding


under the Insolvency Law is the Court of First Instance of the
province or city where the insolvent debtor resides. A corporation
is considered a resident of the place where its principal office is
located as stated in its Articles of Incorporation. However, when it
is uncontroverted that the insolvent corporation abandoned the
old principal office, the corporation is considered a resident of the
city where its actual principal office is currently found.

This resolves a Petition for Review on Certiorari  assailing the [1]

Court of Appeals' January 30, 2009 Decision  and May 26, 2009
[2]

Resolution  in CA-G.R. CV No. 88320, which reinstated the


[3]
Order  that declared Royal Ferry Services Inc. insolvent made by
[4]

the Regional Trial Court of Manila, Branch 24 (Regional Trial


Court).

Royal Ferry Services Inc. (Royal Ferry) is a corporation duly


organized and existing under Philippine law.  According to its
[5]

Articles of Incorporation, Royal Ferry's principal place of business


is located at 2521 A. Bonifacio Street, Bangkal, Makati City.
 However, it currently holds office at Room 203, BF
[6]

Condominium Building, Andres Soriano corner Solano Streets,


Intramuros, Manila. [7]

On August 28, 2005, Royal Ferry filed a verified Petition for


Voluntary Insolvency before the Regional Trial Court of Manila.  It
[8]

alleged that in 2000, it suffered serious business losses that led


to heavy debts.  Efforts to revive the company's finances failed,
[9]

and almost all assets were either foreclosed or sold to satisfy the
liabilities incurred.  Royal Ferry ceased its operations on
[10]

February 28, 2002.  In a special meeting on August 25, 2005, its
[11]

Board of Directors approved and authorized the filing of a petition


for voluntary insolvency in court.
[12]

The Regional Trial Court declared Royal Ferry insolvent in its


Order  dated December 19, 2005, the relevant portion of which
[13]

reads:
Finding the petition sufficient in form and substance and pursuant
to the provisions of Act No. 1956, petitioner Royal Ferry Services,
Inc., is hereby declared insolvent.

The Court hereby further directs and orders:

1. The Branch Sheriff to take possession of, and safely keep until
the appointment, of an Assignee all the deeds, vouchers, books of
accounts, papers, notes, bills and securities of the petitioner and
all its real and personal properties, estates and effects not
exempt from execution;
2. All persons and entities owing money to petitioner are hereby
forbidden to make payment for its accounts or to deliver or
transfer any property to petitioner except to the duly elected
Assignee;

3. All civil proceedings against petitioner are deemed stayed;

4. For purposes of electing an Assignee, a meeting of all creditors


of the petitioner is hereby set on February 24, 2006 at 8:30 a.m.
before this Court, at Room 435, Fourth Floor, Manila City Hall
Building.

Let this Order be published in a newspaper of general circulation


in the Philippines, once a week for three (3) consecutive weeks,
and copies thereof be furnished all creditors listed in the schedule
of creditors at the expense of petitioner.

SO ORDERED. [14]

On December 23, 2005, Pilipinas Shell Petroleum Corporation


(Pilipinas Shell) filed before the Regional Trial Court of Manila a
Formal Notice of Claim  and a Motion to Dismiss.  In the Notice
[15] [16]

of Claim, Pilipinas Shell asserted that Royal Ferry owed them the
amount of P2,769,387.67.  In its Motion to Dismiss, Pilipinas
[17]

Shell alleged that the Petition was filed in the wrong venue.  It [18]

argued that the Insolvency Law provides that a petition for


insolvency should be filed before the court with territorial
jurisdiction over the corporation's residence.  Since Royal Ferry's
[19]

Articles of Incorporation stated that the corporation's principal


office is located at 2521 A. Bonifacio St., Bangkal, Makati City,
the Petition should have been filed before the Regional Trial Court
of Makati and not before the Regional Trial Court of Manila.[20]

On January 30, 2006, the Regional Trial Court of Manila issued


the Order  denying Pilipinas Shell's Motion to Dismiss for lack of
[21]

merit. It found Royal Ferry to have sufficiently shown full


compliance with the requirements of the Insolvency Law on
venue and that it had abandoned its Makati office and moved to
Manila. The Regional Trial Court also noted that when the Branch
Sherriff confiscated Royal Ferry's books and personal assets, the
properties were taken from a Manila address, at Room 203, BF
Condominium Building, Andres Soriano corner Streets,
Intramuros, Manila.

Pilipinas Shell moved for reconsideration on February 24, 2006. [22]

In the Order  dated June 15, 2006, the Regional Trial Court
[23]

reconsidered the denial of Pilipinas Shell's Motion to Dismiss. It


held that a corporation cannot change its place of business
without amending its Articles of Incorporation.  Without the
[24]

amendment, Royal Ferry's transfer did not produce any legal


effect on its residence.  The Regional Trial Court granted the
[25]

dismissal of the Petition for Voluntary Insolvency. The dispositive


portion of the Order reads:
Accordingly, the Order of this court dated January 30, 2006
denying the claimant-movant's motion to dismiss is hereby
reconsidered. The Motion to Dismiss is granted. The Petition for
Voluntary Insolvency is hereby ordered DISMISSED.

SO ORDERED. [26]

Aggrieved, Royal Ferry filed a Notice of Appeal  on October 26,


[27]

2006. On November 7, 2006, the Regional Trial Court forwarded


the records of the case to the Court of Appeals.[28]

In the Decision  dated January 30, 2009, the Court of Appeals


[29]

reinstated the insolvency proceedings. The dispositive portion of


the Decision reads:
WHEREFORE, premises considered, the instant appeal
is GRANTED. Accordingly, the following Orders of the Regional
Trial Court of Manila (Branch 24) in Civil Case No. 05-113384
are SET ASIDE: 1) Order dated 15 June 2006, which granted
Pilipinas Shell's "Motion to Dismiss the Petition for Voluntary
Insolvency;" and 2) Order dated 16 October 2006, which denied
Royal Ferry's Motion for Reconsideration. On the other hand, the
Orders of the trial court dated 5 September 2005 and 19
December 2005, granting an adjudication of insolvency in favor of
Royal Ferry are REINSTATED.
SO ORDERED.  (Emphasis in the original)
[30]

The Court of Appeals held that the Motion to Dismiss failed to


comply with Section 81  of the Insolvency Law, which required
[31]

the written consent of all creditors before a petition for insolvency


can be dismissed. It overturned the grant of the Motion to
Dismiss since Pilipinas Shell failed to secure the written consent
of all the creditors of Royal Ferry.

On the alleged jurisdictional defects of Royal Ferry's Petition for


Voluntary Insolvency, the Court of Appeals found that "the
[Manila Regional Trial Court] has jurisdiction over the instant
case, and therefore, has the authority to render a decision on
it."  It likewise found that Manila was the proper venue for the
[32]

case because "the cities of Makati and Manila are part of one
region, or even a province, city or municipality, if Section 51 of
the Corporation Code of the Philippines is taken by
analogy."  The Court of Appeals stated that Section 82  of the
[33] [34]

Insolvency Law dictates that an order granting an adjudication of


insolvency is appealable only to the Supreme Court. [35]

Pilipinas Shell moved for reconsideration, but the Motion was


denied on May 26, 2009.  Hence, this Petition was filed on July
[36]

20, 2009.

Petitioner contended that the Court of Appeals should not have


taken cognizance of respondent Royal Ferry's appeal because it
"failed to comply with Section 13, paragraphs (a), (c), (d), (e),
(f), and (h), Rule 44 of the Rules of Court."  Petitioner claimed
[37]

that the Court of Appeals erred when it held that the "petition for
voluntary insolvency [was filed] in the proper venue since the
cities of Makati and Manila are part of one region[.]"  According
[38]

to petitioner, there was no reason to consider Makati and Manila


as part of one region or province for the purpose of determining
venue. [39]

Moreover, petitioner argued that since respondent's Articles of


Incorporation stated that its principal office was located at 2521
A. Bonifacio St., Bangkal, Makati City,  the Petition for Voluntary
[40]

Insolvency should have been filed in Makati, not in Manila.


Petitioner cited Hyatt Elevators and Escalators Corporation v.
Goldstar Elevators Phils., Inc.,  where this Court held that a
[41]

corporation's residence was the place where its principal office


was located as stated in its Articles of Incorporation.  Thus, the
[42]

address in respondent's Articles of Incorporation should control


the venue.

Finally, petitioner claimed that Section 81 of the Insolvency Law


is inapplicable to this case as it contemplated a situation where
the trial court had jurisdiction over the case.  Petitioner
[43]

reiterated that because the venue was improperly laid, the trial
court could not issue a final order declaring respondent insolvent.

In its Comment,  respondent averred that jurisdiction over the


[44]

subject was determined by the allegations in the pleading.


 Respondent argued that because it stated in its Petition that it
[45]

held office in Manila, the Regional Trial Court of Manila had


jurisdiction over the case.  It further asserted that the fiction of a
[46]

corporation's residence must give way to fact.

On April 29, 2016, respondent moved to dismiss the case.


 Respondent stated that it entered into a Compromise
[47]

Agreement  with petitioner, which resulted in the Court of


[48]

Appeals' judgment based on the compromise agreement.  It [49]

argued that the Judgment, promulgated in a related case


docketed as CA-G.R. CV No. 102522,  made the present Petition
[50]

moot and academic.  In CA-G.R. CV No. 102522, the Court of


[51]

Appeals deemed the stipulations of the Compromise Agreement


valid and not contrary to law, morals, good customs, public order,
or public policy.  The dispositive portion of the Judgment reads:
[52]

WHEREFORE, the foregoing premises considered, the


Compromise Agreement is hereby APPROVED and judgment is
hereby rendered in accordance therewith. The parties are hereby
enjoined to comply with and abide by the said terms and
conditions thereof. By virtue of such approval, this case is now
deemed CLOSED and TERMINATED.
SO ORDERED.  (Emphasis in the original)
[53]

On September 23, 2016, petitioner filed a Comment  to [54]

respondent's Motion to Dismiss. It claimed that the Compromise


Agreement was only between Pilipinas Shell, and Antonino R.
Gascon, Jr., and Jonathan D. Gascon (the Gascons).  Respondent
[55]

was not a party to the agreement.  Petitioner argued that it had


[56]

agreed to waive any action against respondent's officers,


directors, employees, stockholders, and successors-in-interest,
but that it did not agree to waive its claim against respondent. [57]

On October 25, 2016, respondent filed a Reply  stating that


[58]

petitioner was held solidarity liable with the Gascons in CA-G.R.


CV No. 102522. Thus, when petitioner "released the Gascons, two
(2) of the solidary debtors, of all their obligations",  petitioner
[59]

effectively extinguished the entire obligation under Article


1215  of the Civil Code.
[60]

The issues for resolution are:

First, whether this Petition is moot and academic in light of the


Compromise Agreement dated August 4, 2015;

Second, whether the Court of Appeals erred in taking cognizance


of Royal Ferry's appeal despite its violation of Rule 44, Section 13
of the Rules of Court; and

Lastly, whether the Petition for Insolvency was properly filed.

Respondent argues that the Petition is moot and academic in light


of the Compromise Agreement. It alleges that petitioner has
abandoned its claim against respondent and, consequently, lost
its status as respondent's creditor. Thus, petitioner has no more
interest in the case and can no longer question the insolvency
proceeding. [61]
For its part, petitioner contends that it has waived only its claims
against "[respondent's] Antonino R. Gascon, Jr. and Jonathan D.
Gascon and its other officers, directors, employees, stockholders,
successors-in-interest and did not waive or abandon any of its
claims against [respondent]."  (Emphasis in the original).
[62]

Petitioner has not abandoned its claim against respondent.


Paragraphs 4 and 5 of the Compromise Agreement provide:
4. The FIRST PARTY waives any further action of whatsoever
nature, whether past, present or contingent, in connection with
the causes of action against the SECOND PARTY and THIRD
PARTY alleged in its complaint in Civil Case No. 05-773, entitled
"Pilipinas Shell Petroleum Corporation vs. Royal Ferry Services,
Inc., Antonino R. Gascon, Jr. and Jonathan D. Gascon" already
partially resolved by the Regional Trial Court of Makati, Branch
141 in its Partial Decision dated 20 May 2013 and Order dated 3
December 2013;

5. Should the Supreme Court of the Philippines rule in favor of


the FIRST PARTY in "Pilipinas Shell Petroleum Corporation vs.
Royal Ferry Services, Inc." (G.R. No. 188146), or otherwise
reinstate the Orders dated 15 June 2006 and 16 October 2006 of
the Regional Trial Court of Manila, Branch 24, dismissing the
Petition for Voluntary Insolvency filed by Royal Ferry Services,
Inc., the FIRST PARTY agrees not to hold the officers, directors,
employees, stockholders, successors-in-interest of Royal Ferry
Services, Inc., the SECOND PARTY, the THIRD PARTY, and the
heirs and assigns of the foregoing personally liable for the
obligations of Royal Ferry Services, Inc. to the FIRST PARTY, and,
instead, abandon completely all causes of action against said
officers, directors, employees, stockholders, successors-in-
interest of Royal Ferry Services, Inc., the SECOND PARTY, the
THIRD PARTY, and their heirs and assigns. [63]

The Compromise Agreement was between petitioner and the


Gascons. Contrary to its claim, respondent was not a party to the
agreement. Nowhere in the Compromise Agreement did petitioner
agree to waive its claim against respondent.
In CA-G.R. CV No. 102522, petitioner held the Gascons solidarity
liable with respondent for the same debt that petitioner was
claiming in these proceedings. It is on this basis that respondent
now asserts that it is a solidary debtor with the Gascons and can,
thus, acquire the benefit stipulated in Article 1215  of the Civil
[64]

Code.

Respondent did not present any other proof of this alleged


solidary liability. In CA-G.R. CV No. 102522, one of petitioner's
contentions was whether the corporate veil should be pierced to
make the Gascons liable for respondent's liabilities. Before the
Court of Appeals could rule on the matter, however, the
Compromise Agreement had been executed and the case was
closed.

A case is moot and academic when it ceases to present a


justiciable controversy because of supervening events so that a
declaration would be of no practical use or value.  As respondent
[65]

has failed to establish that petitioner has abandoned its claim


against it, petitioner continues to have an interest in the
insolvency proceeding.

II

On the issue of the formal defects of respondent's appeal, we


uphold the Court of Appeals Decision to rule on the merits of the
case.

Petitioner alleges that respondent's Appellant's Brief has failed to


comply with Rule 44, Section 13, paragraphs (a), (c), (d), (e),
(f), and (h) of the Rules of Court:
(a) First, the Appellant's Brief is bereft of page references to the
record in its "Statements of Facts and of the Case" and its
discussion supporting its assignment of errors, in violation of
Section 13 (c), (d) and (f) of Rule 44.
(b) Second, the Appellant's Brief failed to include a statement of
the issues of fact or law to be submitted to [the Court of Appeals]
for judgment, in violation of Section 13(e), Rule 44.

(c) Third, the Appellant's Brief does not contain the page of the
report on which the citation of authorities is found, in violation of
Section 13(f), Rule 44.

(d) Fourth, the table of cases is not alphabetically arranged, in


violation of Section 13(a), Rule 44.

(e) Fifth, the Appellants Brief does not contain, as an appendix, a


copy of the judgment or final order appealed from, in violation of
Section 13(h), Rule 44. [66]

On the other hand, respondent argues that it has substantially


complied with the requirements under the law.  It claims that the
[67]

absence of page references to the record in its "Statements of


Facts and of the Case" has not automatically resulted in the
dismissal of the appeal.  Further, as the records of this case are
[68]

not voluminous, the Court of Appeals was not inconvenienced by


the lapse. [69]

Respondent likewise claims that although the Appellant's Brief did


not specifically contain the phrase "statement of issues," the
three errors in issue were identifiable through a reading of the
Brief.  It claims that its failure to append a copy of the trial court
[70]

Order has been mooted because the Court of Appeals has issued
the Resolution requiring them to submit copies of the assailed
Order.  Lastly, respondent argues that it only cited five (5) cases
[71]

in the Brief. Hence, a citation of authorities was unnecessary. [72]

The Court of Appeals committed no reversible error in deciding to


rule on the merits. The term "may" in Rule 50, Section 1  of the
[73]

Rules of Court means that the Court of Appeals has discretion to


dismiss an appeal based on the enumerated grounds. The Court
of Appeals exercised its discretion when it decided that the
interest of justice would be better served by overlooking the
pleading's technical defects. Time and again, this Court has
declared that dismissal on purely technical grounds is frowned
upon.  It is judicial policy to determine a case based on the
[74]

merits so that the parties have full opportunity to ventilate their


cause and defenses.  The Court of Appeals did not err in taking
[75]

cognizance of the appeal.

III

The Petition for Insolvency was properly filed before the Regional
Trial Court of Manila.

The first insolvency law, Republic Act No. 1956, was entitled "An
Act Providing for the Suspension of Payments, the Relief of
Insolvent Debtors, the Protection of Creditors, and the
Punishment of Fraudulent Debtors (Insolvency Law)". It was
derived from the Insolvency Act of California (1895), with few
provisions taken from the United States Bankruptcy Act of 1898.
 With the enactment of Republic Act No. 10142, otherwise
[76]

known as the Financial Rehabilitation and Insolvency Act of 2010


(FRIA), the Insolvency Law was expressly repealed on July 18,
2010. The FRIA is currently the special law that governs
insolvency. However, because the relevant proceedings in this
case took place before the enactment of the FRIA, the case needs
to be resolved under the provisions of the Insolvency Law.

Insolvency proceedings are defined as the statutory procedures


by which a debtor obtains financial relief and undergoes judicially
supervised reorganization or liquidation of its assets for the
benefit of its creditors. [77]

Respondent argues that the Regional Trial Court of Manila


obtained jurisdiction because in its Petition for Voluntary
Insolvency, respondent alleged that its principal office was then
found in Manila. On the other hand, petitioner argues that filing
the petition before the Regional Trial Court of Manila was a patent
jurisdictional defect as the Regional Trial Court of Manila did not
have territorial jurisdiction over respondent's residence.
[78]
Petitioner confuses the concepts of jurisdiction and venue. In City
of Lapu-Lapu v. Phil. Economic Zone Authority: [79]

On the one hand, jurisdiction is "the power to hear and determine


cases of the general class to which the proceedings in question
belong." Jurisdiction is a matter of substantive law. Thus, an
action may be filed only with the court or tribunal where the
Constitution or a statute says it can be brought. Objections to
jurisdiction cannot be waived and may be brought at any stage of
the proceedings, even on appeal. When a case is filed with a
court which has no jurisdiction over the action, the court
shall motu proprio dismiss the case.

On the other hand, venue is "the place of trial or geographical


location in which an action or proceeding should be brought." In
civil cases, venue is a matter of procedural law. A party's
objections to venue must be brought at the earliest opportunity
either in a motion to dismiss or in the answer; otherwise the
objection shall be deemed waived. When the venue of a civil
action is improperly laid, the court cannot motu proprio dismiss
the case.  (Citations omitted)
[80]

Wrong venue is merely a procedural infirmity, not a jurisdictional


impediment.  Jurisdiction is a matter of substantive law, while
[81]

venue is a matter of procedural law.  Jurisdiction is conferred by


[82]

law, and the Insolvency Law vests jurisdiction in the Court of First
Instance—now the Regional Trial Court.

Jurisdiction is acquired based on the allegations in the complaint.


 The relevant portion of respondent's Petition for Voluntary
[83]

Insolvency reads:
Petitioner was incorporated on 18 October 1996 with principal
place of business in 2521 A. Bonifacio Street, Bangkal, Makati
City. At present and during the past six months, [Royal Ferry]
has held office in Rm. 203 BF Condo Building, Andres Soriano cor.
Solana St., Intramuros, Manila, within the jurisdiction of the
Honorable Court, where its books of accounts and most of its
remaining assets are kept. [84]

Section 14 of the Insolvency Law specifies that the proper venue


for a petition for voluntary insolvency is the Regional Trial Court
of the province or city where the insolvent debtor has resided in
for six (6) months before the filing of the petition.  In this case,
[85]

the issue of which court is the proper venue for respondent's


Petition for Voluntary Insolvency comes from the confusion on an
insolvent corporation's residence.

Petitioner contends that the residence of a corporation depends


on what is stated in its articles of incorporation, regardless of
whether the corporation physically moved to a different location.
On the other hand, respondent posits that the fiction of a
corporation's residence must give way to uncontroverted facts.

In Young Auto Supply Co. v. Court of Appeals: [86]

A corporation has no residence in the same sense in which this


term is applied to a natural person. But for practical purposes, a
corporation is in a metaphysical sense a resident of the place
where its principal office is located as stated in the articles of
incorporation... The Corporation Code precisely requires each
corporation to specify in its articles of incorporation the "place
where the principal office of the corporation is to be located which
must be within the Philippines"... The purpose of this requirement
is to fix the residence of a corporation in a definite place, instead
of allowing it to be ambulatory. [87]

Young Auto Supply dealt with the venue of a corporation's


personal action by applying the provisions of the Rules of Court.
Nonetheless, the Rules of Court also provides for when its
provisions on venue do not apply. Rule 4, Section 4 provides:
RULE 4
Venue of Actions
....

SECTION 4. When Rule not applicable. — This Rule shall not


apply.
 
(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action
thereof.
As there is a specific law that covers the rules on venue, the
Rules of Court do not apply.

The old Insolvency Law provides that in determining the venue


for insolvency proceedings, the insolvent corporation should be
considered a resident of the place where its actual place of
business is located six (6) months before the filing of the petition:
Sec. 14. Application. — An insolvent debtor, owing debts
exceeding in amount the sum of one thousand pesos, may apply
to be discharged from his debts and liabilities by petition to the
Court of First Instance of province or city in which he has resided
for six months next preceding the filing of such petition. In his
petition he shall set forth his place of residence, the period of his
residence therein immediately prior to filing said petition, his
inability to pay all his debts in full, his willingness to surrender all
his property, estate, and effects not exempt from execution for
the benefit of his creditors, and an application to be adjudged an
insolvent. He shall annex to his petition a schedule and inventory
in the form herein-after provided. The filing of such petition shall
be an act of insolvency. (Emphasis supplied) [88]

The law places a premium on the place of residence before a


petition is filed since venue is a matter of procedure that looks at
the convenience of litigants.  In insolvency proceedings, this
[89]

Court needs to control the property of the insolvent corporation.


In Metropolitan Bank and Trust Company v. S.F. Naguiat
Enterprises, Inc.:[90]

Conformably, it is the policy of Act No. 1956 to place all the


assets and liabilities of the insolvent debtor completely within the
jurisdiction and control of the insolvency court without the
intervention of any other court in the insolvent debtor's concerns
or in the administration of the estate. It was considered to be of
prime importance that the insolvency proceedings follow their
course as speedily as possible in order that a discharge, if the
insolvent debtor is entitled to it, should be decreed without
unreasonable delay. "Proceedings of [this] nature cannot proceed
properly or with due dispatch unless they are controlled
absolutely by the court having charge thereof."  (Citations[91]

omitted)
To determine the venue of an insolvency proceeding, the
residence of a corporation should be the actual place where its
principal office has been located for six (6) months before the
filing of the petition. If there is a conflict between the place stated
in the articles of incorporation and the physical location of the
corporation's main office, the actual place of business should
control.

Requiring a corporation to go back to a place it has abandoned


just to file a case is the very definition of inconvenience. There is
no reason why an insolvent corporation should be forced to exert
whatever meager resources it has to litigate in a city it has
already left.

In any case, the creditors deal with the corporation's agents,


officers, and employees in the actual place of business. To compel
a corporation to litigate in a city it has already abandoned would
create more confusion.

Moreover, the six (6)-month qualification of the law's requirement


of residence shows intent to find the most accurate location of the
debtor's activities. If the address in a corporation's articles of
incorporation is proven to be no longer accurate, then legal fiction
should give way to fact.

Petitioner cites Hyatt Elevators and Escalators Corp. v. Goldstar


Elevators Phils. Inc.,  where this Court ruled that a corporation's
[92]

articles of incorporation is the controlling document that


determines the venue of a corporation's action.  Thus, [93]

abandoning the principal office does not affect the venue of the
corporation's personal action if the corporation's articles of
incorporation were not previously amended to reflect this change.

Two glaring differences between this case and Hyatt make the
latter inapplicable. First, Hyatt found inconclusive the allegation
that the petitioner corporation relocated to a different city.
 Here, the Regional Trial Court found that respondent had
[94]

sufficiently shown that it had been a resident of Manila for six (6)
months before it filed its Petition for Voluntary Insolvency.
 Second, and more importantly, Hyatt involves a complaint for
[95]

unfair trade practices and damages—a personal action governed


by the Civil Code and the Rules of Court.  This case, however,
[96]

involves insolvency, a special proceeding governed by a special


law that specifically qualifies the residence of the petitioner.

IV

We cannot sustain the ruling of the Court of Appeals that the


"petition for voluntary insolvency [was filed] in the proper venue
since the cities of Makati and Manila are part of one
region[.]"  This is untenable. Section 14 of Batas Pambansa Blg.
[97]

129 provides several judges to preside over the different


branches assigned to Manila and Makati. Thus, the two venues
are distinct:
(d) One hundred seventy-two Regional Trial Judges shall be
commissioned for the National Capital Judicial Region. There shall
be:

Eighty-two branches (Branches I to LXXXII) for the city of Manila,


with seats thereat;

Twenty-five branches (Branches LXXXIII to CVII) for Quezon City,


with seats thereat;

Twelve branches (Branches CVIII to CXIX) for Pasay City, with


seats thereat;

Twelve branches (Branches CXX to CXXXI) for Caloocan City, with


seats thereat;

Thirty-nine branches (Branches CXXXII to CLXX) for the


municipalities of Navotas, Malabon, San Juan, Mandaluyong,
Makati, Pasig, Pateros, Taguig, Marikina, Paranaque, Las Piñas,
and Muntinlupa, Branches CXXXII to CL with seats at Makati,
Branches CLI to CLXVIII at Pasig, and Branches CLXIX and CLXX
at Malabon; and
Two branches (Branches CLXXI and CLXXII) for the municipality
of Valenzuela, with seats thereat. (Emphasis supplied)
Despite being in the same region, Makati and Manila are treated
as two distinct venues. To deem them as interchangeable venues
for being in the same region has no basis in law.

Respondent is a resident of Manila. The law should be read to lay


the venue of the insolvency proceeding in the actual location of
the debtor's activities. If it is uncontroverted that respondent's
address in its Articles of Incorporation is no longer accurate, legal
fiction should give way to fact. Thus, the Petition was correctly
filed before the Regional Trial Court of Manila.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The assailed Decision dated January 30, 2009 and the Resolution
dated May 26, 2009 of the Court of Appeals in CA-G.R. CV No.
88320 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Jardeleza, JJ.,


concur.

[1]
 Under Rule 45 of the 1997 Civil Rules of Procedure.

 Rollo, pp. 78-92. The Decision was penned by Associate Justice


[2]

Marlene Gonzales-Sison and concurred in by Associate Justices


Josefina Guevara-Salonga (Chair) and Isaias P. Dicdican of the
Ninth Division, Court of Appeals, Manila.

 Id. at 94-95. The Resolution was penned by Associate Justice


[3]

Marlene Gonzales-Sison and concurred in by Associate Justices


Josefina Guevara-Salonga (Chair) and Isaias P. Dicdican of the
Ninth Division, Court of Appeals, Manila.
 Id. at 209-210. The Order was issued by Judge Antonio M.
[4]

Eugenio, Jr. of Branch 24, Regional Trial Court, Manila.

[5]
 Id. at 16.

[6]
 Id. at 112.

[7]
 Id. at 79.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id. at 104.

[12]
 Id. at 79.

 Id.at 140-141. The Order was issued by Judge Antonio M.


[13]

Eugenio, Jr. of Branch 24 Regional Trial Court, Manila.

[14]
 Id. at 140-141.

[15]
 Id. at 142-150.

[16]
 Id. at 183-190.

[17]
 Id. at 143.

[18]
 Id. at 183.

[19]
 Act No. 1956 (1909), sec.14 provides:

Section 14. Application. — An insolvent debtor, owing debts


exceeding in amount the sum of one thousand pesos, may apply
to be discharged from his debts and liabilities by petition to the
Court of First Instance of the province or city in which he has
resided for six months next preceding the filing of such petition.
In his petition he shall set forth his place of residence, the period
of his residence therein immediately prior to filing said petition,
his inability to pay all his debts in full, his willingness to surrender
all his property, estate, and effects not exempt from execution for
the benefit of his creditors, and an application to be adjudged an
insolvent. He shall annex to his petition a schedule and inventory
in the form hereinafter provided. The filing of such petition shall
be an act of insolvency.

[20]
 Rollo, pp. 184-185.

[21]
 Id. at 209-210.

[22]
 Id. at 211-217.

 Id. at 252-253. The Order was issued by Judge Antonio M.


[23]

Eugenio, Jr. of Branch 24, Regional Trial Court, Manila.

[24]
 Id. at 253.

[25]
 Id.

[26]
 Id.

[27]
 Id. at 282.

[28]
 Id. at 285.

[29]
 Id. at 78-92.

[30]
 Id. at 91.

[31]
 Act No. 1956(1909), sec.81 provides:

Section 81. If no creditor files written objections, the court may,


upon the application of the debtor, if it be a voluntary petition, or
of the petitioning creditors, if a creditor's petition, dismiss the
petition and the discontinue the proceedings at any time before
the appointment of an assignee, upon giving not less than two
nor more than eight weeks' notice to the creditors, in the same
manner that notice of the time and place of election of an
assignee is given: Provided, however, That by written consent of
all creditors filed in the court the proceedings may be dismissed
at any time. After the appointment of an assignee, no dismissal
shall be made without the consent of all parties interested in or
affected thereby.

[32]
 Rollo, p. 89.

[33]
 Id. See CORP. CODE,sec. 51, which provides:

Section 51. Place and Time of Meetings of Stockholders or


Members. — Stockholders' or members' meetings, whether
regular or special, shall be held in the city or municipality where
the principal office of the corporation is located, and if practicable
in the principal office of the corporation: Provided, That Metro
Manila shall, for the purposes of this section, be considered a city
or municipality.

[34]
 Act No. 1956 (1909), sec. 82 provides:

Section 82. An appeal may be taken to the Supreme Court in the


following cases:

1. From an order granting or refusing an adjudication of


insolvency and, in the latter case, from the order fixing the
amount of costs, expenses, damages, and attorney's fees allowed
the debtor.

[35]
 Rollo, p. 91.

[36]
 Id. at 94-95.

[37]
 Id. at 29.
[38]
 Id. at 49.

[39]
 Id. at 50.

[40]
 Id. at 21.

[41]
 510 Phil.467 (2005) [Per J. Panganiban, Third Division].

[42]
 Rollo, p. 50.

[43]
 Id. at 62.

[44]
 Id. at 448-476.

[45]
 Id. at 458.

[46]
 Id. at 459.

[47]
 Id. at 525-530.

[48]
 Id. at 531-536.

 Id. at 542-548. The Judgment was penned by Associate Justice


[49]

Socorro B. Inting and concurred in by Associate Justices


Remedios Salazar-Fernando and Priscilla Baltazar-Padilla of the
Second Division, Court of Appeals, Manila.

 CA-G.R. CV No. 102522 was entitled Pilipinas Shell Petroleum


[50]

Corporation v. Royal Ferry Services Inc., Antonino R. Gascon, Jr.,


and Jonathan D. Gascon.

[51]
 Rollo, p. 526.

[52]
 Id. at 547.

[53]
 Id. at 548.

[54]
 Id. at 555-561.
[55]
 Id. at 555-556.

[56]
 Id.

[57]
 Id. at 556.

[58]
 Id. at 566-573.

[59]
 Id. at 568.

[60]
 CIVIL CODE, art. 1215 provides:

Article 1215. Novation, compensation, confusion or remission of


the debt, made by any of the solidary creditors or with any of the
solidary debtors, shall extinguish the obligation, without prejudice
to the provisions of Article 1219.

The creditor who may have executed any of these acts, as well as
he who collects the debt, shall be liable to the others for the
share in the obligation corresponding to them.

[61]
 Rollo, p. 526.

[62]
 Id. at 557.

[63]
 Id. at 546-547.

[64]
 CIVIL CODE, art. 1215 provides:

Article 1215. Novation, compensation, confusion or remission of


the debt, made by any of the solidary creditors or with any of the
solidary debtors, shall extinguish the obligation, without prejudice
to the provisions of Article 1219.

The creditor who may have executed any of these acts, as well as
he who collects the debt, shall be liable to the others for the
share in the obligation corresponding to them.
 Deutsche Bank AG v. Court of Appeals, 683 Phil. 80, 88 (2012)
[65]

[Per J. Mendoza, Third Division].

[66]
 Rollo, pp. 28-29.

[67]
 Id. at 450.

[68]
 Id.

[69]
 Id. at 451.

[70]
 Id. at 452.

[71]
 Id.

[72]
 Id. at 453.

[73]
 RULES OF COURT, Rule 50, sec. 1 provides:

Section 1. Grounds 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:

(a) Failure of the record on appeal to show on its face that the appeal was taken within
(b) Failure to file the notice of appeal or the record on appeal within the period prescrib
(c) Failure of the appellant to pay the docket and other lawful fees as provided in sec
41;
(d) Unauthorized alterations, omissions or additions in the approved record on appeal a
(e) Failure of the appellant to serve and file the required number of copies of his b
provided by these Rules;
(f) Absence of specific assignment of errors in the appellant's brief, or of page ref
section 13, paragraphs (a), (c), (d) and (f) of Rule 44;
(g) Failure of the appellant to take the necessary steps for the correction or completion
by the court in its order;
(h) Failure of the appellant to appear at the preliminary conference under Rule 48 o
directives of the court without justifiable cause; and
(i) The fact that the order or judgment appealed from is not appealable.
 Yap v. Court of Appeals, 200 Phil 509 (1982) [Per J. Melencio-
[74]

Herrera, First Division].

 Bunsay v. Civil Service Commission, 556 Phil. 720, 728 (2007)


[75]

[Per J. Austria-Martinez, Third Division].

 See Metropolitan Bank and Trust Company v. S.F. Naguiat


[76]

Enterprises, Inc., G.R. No. 178407, March 18, 2015


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/march2015/178407.pdf> [Per J.
Leonen, Second Division].

 2 STEPHANIE V. GOMEZ-SOMERA, CREDIT TRANSACTIONS;


[77]

NOTES AND CASES 737 (2015).

[78]
 Rollo, p. 41.

 G.R. Nos. 184203 & 187583, November 26, 2014


[79]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/184203.pdf> [Per J.
Leonen, Second Division].

[80]
 Id. at 26-27.

 Gumabon v. Larin, 422 Phil. 222, 228 (2001) [Per J. Vitug,


[81]

Third Division].

 City of Lapu-Lapu v. Phil. Economic Zone Authority, G.R. No.


[82]

184203 & 187583, November 26, 2014


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/november2014/184203.pdf> 26 [Per J.
Leonen, Second Division].

 Bernardo, Sr. v. Court of Appeals, 331 Phil. 962, 975 (1996)


[83]

[Per. J. Davide, Third Division]

[84]
 Rollo, p. 103.
[85]
 Act No. 1956 (1909), sec. 14.

 G.R. No. 104175, June 25, 1993, 223 SCRA 670 [Per J.
[86]

Quiason, First Division].

[87]
 Id. at 674.

[88]
 Act No. 1956 (1909), sec. 14.

 Gumabon v. Larin, 422 Phil. 222, 229 (2001) [Per J. Vitug,


[89]

Third Division].

 G.R.
[90]
No. 178407, March 18, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/march2015/178407.pdf> [Per J.
Leonen, Second Division].

[91]
 Id. at 11.

[92]
 510 Phil.467 (2005) [Per J. Panganiban, Third Division].

[93]
 Id. at 476.

[94]
 Id.

[95]
 Rollo, p. 209.

 Hyatt Elevators and Escalators Corp. v. Goldstar Elevators


[96]

Phils. Inc., 510 Phil. 467, 474 (2005) [Per J. Panganiban, Third
Division].

[97]
 Rollo, p. 49.

Source: Supreme Court E-Library | Date created: November 27, 2018


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Supreme Court E-Library

EN BANC

[ G.R. No. 221538, September 20,


2016 ]
RIZALITO Y. DAVID, PETITIONER, VS. SENATE
ELECTORAL TRIBUNAL AND MARY GRACE POE-
LLAMANZARES, RESPONDENTS.DECISION

LEONEN, J.:

The words of our most fundamental law cannot be read so as to


callously exclude all foundlings from public service.

When the names of the parents of a foundling cannot be


discovered despite a diligent search, but sufficient evidence is
presented to sustain a reasonable inference that satisfies the
quantum of proof required to conclude that at least one or both of
his or her parents is Filipino, then this should be sufficient to
establish that he or she is a natural-born citizen. When these
inferences are made by the Senate Electoral Tribunal in the
exercise of its sole and exclusive prerogative to decide the
qualifications of the members of the Senate, then there is no
grave abuse of discretion remediable by either Rule 65 of the
Rules of Court or Article VIII, Section I of the Constitution.

This case certainly does not decide with finality the citizenship of
every single foundling as natural-born. The circumstances of each
case are unique, and substantial proof may exist to show that a
foundling is not natural-born. The nature of the Senate Electoral
Tribunal and its place in the scheme of political powers, as
devised by the Constitution, are likewise different from the other
ways to raise questions of citizenship.

Before this Court is a Petition for Certiorari  filed by petitioner


[1]

Rizalito Y. David (David). He prays for the nullification of the


assailed November 17, 2015 Decision and December 3, 2015
Resolution of public respondent Senate Electoral Tribunal in SET
Case No. 001-15.  The
[2]
assailed November 17, 2015
Decision  dismissed the Petition for Quo Warranto filed by David,
[3]

which sought to unseat private respondent Mary Grace Poe-


Llamanzares as a Senator for allegedly not being a natural-born
citizen of the Philippines and, therefore, not being qualified to
hold such office under Article VI, Section 3  of the 1987 [4]

Constitution. The assailed December 3, 2015 Resolution  denied [5]

David's Motion for Reconsideration.

Senator Mary Grace Poe-Llamanzares (Senator Poe) is a foundling


whose biological parents are unknown. As an infant, she was
abandoned at the Parish Church of Jaro, Iloilo.  Edgardo Militar
[6]

found her outside the church on September 3, 1968 at about


9:30 a.m.  He later turned her over to Mr. and Mrs. Emiliano
[7]

Militar.  Emiliano Militar reported to the Office of the Local Civil


[8]

Registrar that the infant was found on September 6, 1968.  She [9]

was given the name Mary Grace Natividad Contreras Militar.


 Local Civil Registrar issued a Certificate of Live Birth/Foundling
[10]

Certificate stating:
Circumstances: THE SUBJECT CHILD WAS FOUND IN THE PARISH
CHURCHD [sic] OF JARO, ON SEPTEMBER 3, 1968 AT ABOUT
9:30 A.M. BY EDGARDO MILITAR AND THE SAID CHILD IS
PRESENTLY IN THE CUSTODY OF MR. AND MRS. EMILIANO
MILITAR AT STA. ISABEL STREET, JARO . . . [11]

On May 13, 1974, the Municipal Court of San Juan, Rizal


promulgated the Decision granting the Petition for Adoption of
Senator Poe by Spouses Ronald Allan Poe (more popularly known
as Fernando Poe, Jr.) and Jesusa Sonora Poe (more popularly
known as Susan Roces).  The Decision also ordered the change
[12]

in Senator Poe's name from Mary Grace Natividad Contreras


Militar to Mary Grace Natividad Sonora Poe.  October 27, 2005,
[13]

Clerk of Court III Eleanor A. Sorio certified that the Decision had
become final in a Certificate of Finality. [14]

On April 11, 1980, the Office of Civil Registrar-Iloilo received the


Decision of the San Juan Court Municipal Court and noted on
Senator Poe's foundling certificate that she was adopted by
Spouses Ronald Allan and Jesusa Poe.  This hand-written[15]

notation appears on Senator Poe's foundling certificate:


NOTE: Adopted child by the Spouses Ronald Allan Poe and Jesusa
Sonora Poe as per Court Order, Mun. Court, San Juan, Rizal, by
Hon. Judge Alfredo M. Gorgonio dated May 13, 1974, under Sp.
Proc. No. 138. [16]

Senator Poe became a registered voter in Greenhills, San Juan,


Metro Manila when she turned 18 years old.  The Commission on
[17]

Elections issued her a Voter's Identification Card for Precinct No.


196, Greenhills, San Juan, Metro Manila on December 13, 1986. [18]

On April 4, 1988, the Department of Foreign Affairs issued her a


Philippine passport.  Her passport was renewed on April 5, 1993,
[19]

May 19, 1998, October 13, 2009, December 19, 2013, and March
18, 2014.  Having become Senator, she was also issued a
[20]

Philippine diplomatic passport on December 19, 2013. [21]

Senator Poe took Development Studies at the University of the


Philippines, Manila, but eventually went to the United States in
1988 to obtain her college degree.  In 1991, she earned a
[22]

bachelor's degree in Political Science from Boston College,


Chestnut Hill, Massachusetts. [23]

On July 27, 1991, Senator Poe married Teodoro Misael Daniel V.


Llamanzares, both an American and Filipino national since birth.
 The marriage took place in Sanctuario de San Jose Parish, San
[24]

Juan, Manila.  On July 29, 1991, Senator Poe returned to the
[25]

United States with her husband.  For some time, she lived with
[26]

her husband and children in the United States. [27]


Senator Poe and her husband had three (3) children: Brian Daniel
(Brian), Hanna MacKenzie (Hanna), and Jesusa Anika (Anika).
 Brian was born in the United States on April 16, 1992. Hanna
[28]

was born on July 10, 1998, and Anika on June 5, 2004. Both
Hanna and Anika were born in the Philippines. [29]

Senator Poe was naturalized and granted American citizenship on


October 18, 2001.  She was subsequently given a United States
[30]

passport. [31]

Senator Poe's adoptive father, Fernando Poe, Jr., ran for


President of the Republic of the Philippines in the 2004 National
Elections.  To support her father's candidacy, Senator Poe and
[32]

her daughter Hanna returned to the Philippines on April 8, 2004.


 After the Elections, she returned to the United States on July 8,
[33]

2004.  It was during her stay in the Philippines that she gave
[34]

birth to her youngest daughter, Anika. [35]

Fernando Poe, Jr. was hospitalized on December 11, 2004 and


eventually "slipped into a coma."  Senator Poe returned to the
[36]

Philippines on December 13, 2004.  On December 14, 2004, her


[37]

father died.  She stayed in the country until February 3, 2005 to


[38]

attend her father's funeral and to attend to the settling of his


estate. [39]

In 2004, Senator Poe resigned from work in the United States.


She never looked for work again in the United States. [40]

Senator Poe decided to return home in 2005.  After consulting [41]

her children, they all agreed to return to the Philippines to


support the grieving Susan Roces.  In early 2005, they notified
[42]

Brian and Hanna's schools Virginia, United States that they would
be transferring to the Philippines the following semester.  She [43]

came back on May 24, 2005.  Her children also arrived in the
[44]

first half of 2005.  However, her husband stayed in the United


[45]

States to "finish pending projects, and to arrange for the sale of


the family home there." [46]
Following her return, Senator Poe was issued by the Bureau of
Internal Revenue a Tax Identification Number (TIN) on July 22,
2005.[47]

On July 7, 2006, Senator Poe took the Oath of Allegiance to


Republic of the Philippines: [48]

I, Mary Grace Poe Llamanzares, solemnly swear that I will


support and defend the Constitution of the Republic of the
Philippines and obey the laws and legal orders promulgated by
the duly constituted authorities of the Philippines; and I hereby
declare that I recognize and accept the supreme authority of the
Philippines and will maintain true faith and allegiance thereto;
and that I impose this obligation upon myself voluntarily without
mental reservation or purpose of evasion. [49]

On July 10, 2006, Senator Poe filed a Petition for Retention and
or Re-acquisition of Philippine Citizenship through Republic Act
No. 9225.  She also "filed applications for derivative citizenship
[50]

on behalf of her three children who were all below eighteen (18)
years of age at that time." [51]

The Petition was granted by the Bureau of Immigration and


Deportation on July 18, 2006 through an Order signed by
Associate Commissioner Roy M. Almoro for Commissioner Alipio
F. Fernandez, Jr: [52]

A careful review of the documents submitted in support of the


instant petition indicate that David was a former citizen of the
Republic of the Philippines being born to Filipino parents and
is presumed to be a natural born Philippine citizen; thereafter,
became an American citizen and is now a holder of an American
passport; was issued an ACT and ICR and has taken her oath of
allegiance to the Republic of the Philippines on July 7, 2006 and
so is thereby deemed to have re-acquired her Philippine
Citizenship.  (Emphasis in the original)
[53]

In the same Order, Senator Poe's children were "deemed Citizens


of the Philippines in accordance with Section 4 of R[epublic] A[ct]
No. 9225."  Until now, the Order "has not been set aside by the
[54]

Department of Justice or any other agency of Government." [55]


On July 31, 2006, the Bureau of Immigration issued Identification
Certificates in the name of Senator Poe and her children.  It [56]

stated that Senator Poe is a "citizen of the Philippines pursuant to


the Citizenship Retention and Re-acquisition Act of 2003 . . . in
relation to Administrative Order No. 91, Series of 2004 and
Memorandum Circular No. AFF-2-005 per Office Order No. AFF-
06-9133 signed Associate Commissioner Roy M. Almoro dated
July 18, 2006." [57]

Senator Poe became a registered voter of Barangay Santa Lucia,


San Juan City on August 31, 2006. [58]

Senator Poe made several trips to the United States of America


between 2006 and 2009 using her United States Passport No.
170377935.  She used her passport "after having taken her Oath
[59]

of Allegiance to the Republic on 07 July 2006, but not after she


has formally renounced her American citizenship on 20 October
2010."  The following are the flight records given by the Bureau
[60]

of Immigration:
Departures Flight No.
November 1, 2006 SQ071
July 20, 2007 PR730
October 31, 2007 PR300
October 2, 2008 PR358
April 20, 2009 PR104
July 31, 2009 PR730
October 19, 2009 PR102
November 15, 2009 PR103
December 27, 2009 PR112
March 27, 2010 PR102

Arrivals Flight No.


November 4, 2006 SQ076
July 23, 2007 PR731
November 5, 2007 PR337
May 8, 2008 PR103
October 5, 2008 PR359
May 21, 2009 PR105
August 3, 2009 PR733
November 15, 2009 PR103 [61]

On October 6, 2010, President Benigno Simeon Aquino III


appointed Senator Poe as Chairperson of the Movie and Television
Review and Classification Board (MTRCB).  On October 20, 2010,
[62]

Senator Poe executed an Affidavit of Renunciation of Allegiance to


the United States of America and Renunciation of American
Citizenship,  stating:
[63]

I, MARY GRACE POE-LLAMANZARES, Filipino, of legal age, and


presently residing at No. 107 Rodeo Drive, Corinthian Hills,
Quezon City, Philippines, after having been duly sworn to in
accordance with the law, do hereby depose and state that with
this affidavit, I hereby expressly and voluntarily renounce my
United States nationality/American citizenship, together with all
rights and privileges and all duties and allegiance and fidelity
thereunto pertaining. I make this renunciation intentionally,
voluntarily, and of my own free will, free of any duress or undue
influence.  (Emphasis in the original)
[64]

The affidavit was submitted to the Bureau of Immigration on


October 21, 2010.  On October 21, 2010, she took her Oath of
[65]

Office as MTRCB Chairperson and assumed office on October 26,


2010.  Her oath of office stated:
[66]

PANUNUMPA SA KATUNGKULAN

Ako, si MARY GRACE POE LLAMANZARES, na itinalaga sa


katungkulan bilang Chairperson, Movie and Television Review and
Classification Board, ay taimtim na nanunumpa na tutuparin ko
nang buong husay at katapatan, sa abot ng aking kakayahan,
ang mga tungkulin ng aking kasalukuyang katungkulan at ng
mga iba pang pagkaraan nito'y gagampanan ko sa ilalim ng
Republika ng Pilipinas; na aking itataguyod at ipagtatanggol ang
Saligan Batas ng Pilipinas; na tunay na mananalig at tatalima ako
rito; na susundin ko ang mga batas, mga kautusang lega, at mga
dekretong pinaiiral ng mga sadyang itinakdang may
kapangyarihan ng Republika ng Pilipinas; at kusa kong
babalikatin ang pananagutang ito, nang walang ano mang
pasubali o hangaring umiwas.
Kasihan nawa ako ng Diyos.

NILAGDAAN AT PINANUMPAAN sa harap ko ngayong ika-21 ng


Oktubre 2010, Lungsod ng Maynila, Pilipinas.  (Emphasis in the [67]

original)
Senator Poe executed an Oath/Affirmation of Renunciation of
Nationality of the United States  in the presence of Vice-Consul
[68]

Somer E. Bessire-Briers on July 12, 2011.  On this occasion, she


[69]

also filled out the Questionnaire Information for Determining


Possible Loss of U.S. Citizenship.  On December 9, 2011, Vice
[70]

Consul Jason Galian executed a Certificate of Loss of Nationality


for Senator Poe.  The certificate was approved by the Overseas
[71]

Citizen Service, Department of State, on February 3, 2012. [72]

Senator Poe decided to run as Senator in the 2013 Elections.  On [73]

September 27, 2012, she executed a Certificate of Candidacy,


which was submitted to the Commission on Elections on October
2, 2012.  She won and was declared as Senator-elect on May 16,
[74]

2013.[75]

David, a losing candidate in the 2013 Senatorial Elections, filed


before the Senate Electoral Tribunal a Petition for Quo Warranto
on August 6, 2015.  He contested the election of Senator Poe for
[76]

failing to "comply with the citizenship and residency requirements


mandated by the 1987 Constitution." [77]

Thereafter, the Senate Electoral Tribunal issued Resolution No.


15-01 requiring David "to correct the formal defects of his
petition."  David filed his amended Petition on August 17, 2015.
[78] [79]

On August 18, 2015, Resolution No. 15-02 was issued by the


Senate Electoral Tribunal, through its Executive Committee,
ordering the Secretary of the Senate Electoral Tribunal to
summon Senator Poe to file an answer to the amended Petition. [80]

Pending the filing of Senator Poe's answer, David filed a Motion


Subpoena the Record of Application of Citizenship Re-acquisition
and related documents from the Bureau of Immigration on
August 25, 2015.  The documents requested included Senator
[81]

Poe's record of travels and NSO kept Birth Certificate.  On [82]

August 26, 2015, the Senate Electoral Tribunal issued Resolution


No. 15-04 granting the Motion.  The same Resolution directed
[83]

the Secretary of the Tribunal to issue a subpoena to the


concerned officials of the Bureau of Immigration and the National
Statistics Office.  The subpoenas ordered the officials to appear
[84]

on September 1, 2015 at 10:00 a.m. before the Office of the


Secretary of the Senate bearing three (3) sets of the requested
documents.  The subpoenas were complied with by both the
[85]

Bureau of Immigration and the National Statistics Office on


September 1, 2015. [86]

On September 1, 2015, Senator Poe submitted her Verified


Answer with (1) Prayer for Summary Dismissal; (2) Motion for
Preliminary Hearing on Grounds for Immediate
Dismissal/Affirmative Defenses; (3) Motion to Cite David for
Direct Contempt of Court; and (4) Counterclaim for Indirect
Contempt of Court. [87]

On September 2, 2015, the Senate Electoral Tribunal issued


Resolution No. 15-05 requiring the parties to file a preliminary
conference brief on or before September 9, 2015.  The [88]

Resolution also set the Preliminary Conference on September 11,


2015.  During the Preliminary Conference, the parties "agreed to
[89]

drop the issue of residency on the ground of prescription." [90]

Oral arguments were held by the Senate Electoral Tribunal on


September 21, 2015.  The parties were then "required to submit
[91]

their respective [memoranda], without prejudice to the


submission of DNA evidence by [Senator Poe] within thirty (30)
days from the said date." [92]

On October 21, 2015, Senator Poe moved to extend for 15 days


the submission of DNA test results.  The Senate Electoral [93]

Tribunal granted the Motion on October 27, 2015 through


Resolution No. 15-08.  On November 5, 2015, Senator Poe filed
[94]
a Manifestation regarding the results of DNA Testing,  which
[95]

stated that "none of the tests that [Senator Poe] took provided
results that would shed light to the real identity of her biological
parents."  The Manifestation also stated that Senator Poe was to
[96]

continue to find closure regarding the issue and submit any


development to the Senate Electoral Tribunal. Later, Senator Poe
submitted "the issue of her natural-born Filipino citizenship as a
foundling for resolution upon the legal arguments set forth in her
submissions to the Tribunal."  On November 6, 2015, through
[97]

Resolution No. 15-10, the Senate Electoral Tribunal "noted the


[M]anifestation and considered the case submitted for
resolution." [98]

On November 17, 2015, the Senate Electoral Tribunal


promulgated its assailed Decision finding Senator Poe to be a
natural-born citizen and, therefore, qualified to hold office as
Senator.  The Decision stated:
[99]

We rule that Respondent is a natural-born citizen under the 1935


Constitution and continue to be a natural-born citizen as defined
under the 1987 Constitution, as she is a citizen of the Philippines
from birth, without having to perform any act to acquire or
perfect (her) Philippine citizenship.

....

In light of our earlier pronouncement that Respondent is a


natural-born Filipino citizen, Respondent validly reacquired her
natural-born Filipino citizenship upon taking her Oath of
Allegiance to the Republic of the Philippines, as required under
Section 3 of R.A. No. 9225.

Under Section 11 of B.I. Memorandum Circular No. AFF 05-002


(the Revised Rules Implementing R.A. No. 9225), the foregoing
Oath of Allegiance is the "final act" to reacquire natural-born
Philippine citizenship.

....
To repeat, Respondent never used her USA passport from the
moment she renounced her American citizenship on 20 October
2010. She remained solely a natural-born Filipino citizen from
that time on until today.

WHEREFORE, in view of the foregoing, the petition for quo


warranto is DISMISSED.

No pronouncement as to costs.

SO ORDERED.  (Citations omitted)


[100]

On November 23, 2015, David moved for reconsideration.  The


[101]

Senate Electoral Tribunal issued Resolution No. 15-11 on


November 24, 2015, giving Senator Poe five (5) days to comment
on the Motion for Reconsideration.
[102]

Senator Poe filed her Comment/Opposition to the Motion for


Reconsideration on December 1, 2015.  David's Motion for
[103]

Reconsideration was denied by the Senate Electoral Tribunal on


December 3, 2015: [104]

WHEREFORE, the Tribunal resolves to DENY the Verified Motion


for Reconsideration (of the Decision promulgated on 17
November 2015) of David Rizalito Y. David dated 23 November
2015.

The Tribunal further resolves to CONFIRM Resolution No. 15-11


dated 24 November 2015 issued by the Executive Committee of
the Tribunal; to NOTE the Comment/Opposition filed by counsel
for Respondent on 01 December 2015; to GRANT the motion for
leave to appear and submit memorandum as amici curiae filed by
Dean Arturo de Castro [and to] NOTE the Memorandum (for
Volunteer Amicus Curiae) earlier submitted by Dean de Castro
before the Commission on Elections in SPA No. 15-139 (DC),
entitled "Amado D. Valdez, Petitoner, versus Mary Grace
Natividad Sonora Poe Llaman[z]ares, Respondent."

SO ORDERED.  (Emphasis in the original)


[105]
On December 8, 2015, the Senate Electoral Tribunal's Resolution
was received by David.  On December 9, 2015, David filed the
[106]

pre Petition for Certiorari before this Court.


[107]

On December 16, 2015, this Court required the Senate Electoral


Tribunal and Senator Poe to comment on the Petition "within a
non-extendible period of fifteen (15) days from notice."  The [108]

Resolution also set oral arguments on January 19, 2016.  The [109]

Senate Electoral Tribunal, through the Office of the Solicitor


General, submitted its Comment on December 30, 2015.
 Senator Poe submitted her Comment on January 4, 2016.
[110] [111]

This case was held in abeyance pending the resolution of the


Commission on Elections case on the issue of private
respondent's citizenship.

For resolution is the sole issue of whether the Senate Electoral


Tribunal committed grave abuse of discretion amounting to lack
or excess of jurisdiction in dismissing petitioner's Petition for Quo
Warranto based on its finding that private respondent is a
natural-born Filipino citizen, qualified to hold a seat as Senator
under Article VI, Section 3 of the 1987 Constitution.

Petitioner comes to this Court invoking our power of judicial


review through a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure. He seeks to annul the assailed Decision
and Resolution of the Senate Electoral Tribunal, which state its
findings and conclusions on private respondent's citizenship.

Ruling on petitioner's plea for post-judgment relief calls for a


consideration of two (2) factors: first, the breadth of this Court's
competence relative to that of the Senate Electoral Tribunal; and
second, the nature of the remedial vehicle—a petition for
certiorari—through which one who is aggrieved by a judgment of
the Senate Electoral Tribunal may seek relief from this Court.
I. A

The Senate Electoral Tribunal, along with the House of


Representatives Electoral Tribunal, is a creation of Article VI,
Section 17 of the 1987 Constitution: [112]

ARTICLE VI
The Legislative Department

....

SECTION 17. The Senate and the House of Representatives shall


each have an Electoral Tribunal which shall be the sole judge of
all contests relating to the election, returns, and qualifications of
their respective Members. Each Electoral Tribunal shall be
composed of nine Members, three of whom shall be Justices of
the Supreme Court to be designated by the Chief Justice, and the
remaining six shall be Members of the Senate or the House of
Representatives, as the case may be, who shall be chosen on the
basis of proportional representation from the political parties and
the parties or organizations registered under the party-list system
represented therein. The senior Justice in the Electoral Tribunal
shall be its Chairman. (Emphasis supplied)
Through Article VI, Section 17, the Constitution segregates from
all other judicial and quasi-judicial bodies (particularly, courts and
the Commission on Elections ) the power to rule on
[113]

contests  relating to the election, returns, and qualifications of


[114]

members of the Senate (as well as of the House of


Representatives). These powers are granted to a separate and
distinct constitutional organ. There are two (2) aspects to the
exclusivity of the Senate Electoral Tribunal's power. The power to
resolve such contests is exclusive to any other body. The
resolution of such contests is its only task; it performs no other
function.

The 1987 Constitution is not the first fundamental law to


introduce into our legal system an "independent, impartial and
non-partisan body attached to the legislature and specially
created for that singular purpose."  The 1935 Constitution
[115]
similarly created an Electoral Commission, independent from the
National Assembly, to be the sole judge of all contests relating to
members of the National Assembly.  This was a departure from
[116]

the system introduced by prior organic acts enforced under


American colonial rule—namely: the Philippine Bill of 1902 and
the Jones Law of 1916—which vested the power to resolve such
contests in the legislature itself. When the 1935 Constitution was
amended to make room for a bicameral legislature, a
corresponding amendment was made for there to be separate
electoral tribunals for each chamber of Congress.  The 1973
[117]

Constitution did away with these electoral tribunals, but they


have since been restored by the 1987 Constitution.

All constitutional provisions—under the 1935 and 1987


Constitutions—which provide for the creation of electoral tribunals
(or their predecessor, the Electoral Commission), have been
unequivocal in their language. The electoral tribunal shall be the
"sole" judge.

In Lazatin v. House Electoral Tribunal: [118]

The use of the word "sole" emphasizes the exclusive character of


the jurisdiction conferred. . . . The exercise of the power by the
Electoral Commission under the 1935 Constitution has been
described as "intended to be as complete and unimpaired as if it
had remained originally in the legislature[.]" Earlier, this grant of
power to the legislature was characterized by Justice Malcohn as
"full, clear and complete." . . . Under the amended 1935
Constitution, the power was unqualifiedly reposed upon the
Electoral Tribunal . . . and it remained as full, clear and complete
as that previously granted the legislature and the Electoral
Commission. . . . The same may be said with regard to the
jurisdiction of the Electoral Tribunals under the 1987 Constitution.
[119]

Exclusive, original jurisdiction over contests relating to the


election, returns, and qualifications of the elective officials falling
within the scope of their powers is, thus, vested in these electoral
tribunals. It is only before them that post-election challenges
against the election, returns, and qualifications of Senators and
Representatives (as well as of the President and the Vice-
President, in the case of the Presidential Electoral Tribunal) may
be initiated.

The judgments of these tribunals are not beyond the scope of any
review. Article VI, Section 17's stipulation of electoral tribunals'
being the "sole" judge must be read in harmony with Article VIII,
Section 1's express statement that "[j]udicial power includes the
duty of the courts of justice . . . to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or
instrumentality of the Government." Judicial review is,
therefore, still possible. In Libanan v. House of Representatives
Electoral Tribunal:[120]

The Court has stressed that ". . . so long as the Constitution


grants the [House of Representatives Electoral Tribunal] the
power to be the sole judge of all contests relating to the election,
returns and qualifications of members of the House of
Representatives, any final action taken by the [House of
Representatives Electoral Tribunal] on a matter within its
jurisdiction shall, as a rule, not be reviewed by this Court . . . the
power granted to the Electoral Tribunal . . . excludes the exercise
of any authority on the part of this Court that would in any wise
restrict it or curtail it or even affect the same."

The Court did recognize, of course, its power of judicial review in


exceptional cases. In Robles vs. [House of Representatives
Electoral Tribunal], the Court has explained that while the
judgments of the Tribunal are beyond judicial interference, the
Court may do so, however, but only "in the exercise of this
Court's so-called extraordinary jurisdiction, . . . upon a
determination that the Tribunal's decision or resolution was
rendered without or in excess of its jurisdiction, or with grave
abuse of discretion or paraphrasing Morrero, upon a clear
showing of such arbitrary and improvident use by the Tribunal of
its power as constitutes a denial of due process of law, or upon a
demonstration of a very clear unmitigated error, manifestly
constituting such grave abuse of discretion that there has to be a
remedy for such abuse."

In the old, but still relevant, case of Morrero vs. Bocar, the Court
has ruled that the power of the Electoral Commission "is beyond
judicial interference except, in any event, upon a clear showing of
such arbitrary and improvident use of power as will constitute a
denial of due process." The Court does not, to paraphrase it in Co
vs. [House of Representatives Electoral Tribunal], venture into
the perilous area of correcting perceived errors of independent
branches of the Government; it comes in only when it has to
vindicate a denial of due process or correct an abuse of discretion
so grave or glaring that no less than the Constitution itself calls
for remedial action.  (Emphasis supplied, citations omitted)
[121]

This Court reviews judgments of the House and Senate Electoral


Tribunals not in the exercise of its appellate jurisdiction. Our
review is limited to a determination of whether there has been an
error in jurisdiction, not an error in judgment.

I. B

A party aggrieved by the rulings of the Senate or House Electoral


Tribunal invokes the jurisdiction of this Court through the vehicle
of a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure. An appeal is a continuation of the proceedings in the
tribunal from which the appeal is taken. A petition for certiorari is
allowed in Article VIII, Section 1 of the Constitution and described
in the 1997 Rules of Civil Procedure as an independent civil
action.  The viability of such a petition is premised on an
[122]

allegation of "grave abuse of discretion."[123]

The term "grave abuse of discretion" has been generally held to


refer to such arbitrary, capricious, or whimsical exercise of
judgment as is tantamount to lack of jurisdiction:
[T]he abuse of discretion must be patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to perform a
duty enjoined by law, or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner
by reason of passion and hostility. Mere abuse of discretion is not
enough: it must be grave. [124]

There is grave abuse of discretion when a constitutional organ


such as the Senate Electoral Tribunal or the Commission on
Elections, makes manifestly gross errors in its factual inferences
such that critical pieces of evidence, which have been
nevertheless properly introduced by a party, or admitted, or
which were the subject of stipulation, are ignored or not
accounted for. [125]

A glaring misinterpretation of the constitutional text or of


statutory provisions, as well as a misreading or misapplication of
the current state of jurisprudence, is also considered grave abuse
of discretion.  The arbitrariness consists in the disregard of the
[126]

current state of our law.

Adjudication that fails to consider the facts and evidence or


frivolously departs from settled principles engenders a strong
suspicion of partiality. This can be a badge of hostile intent
against a party.

Writs of certiorari have, therefore, been issued: (a) where the


tribunal's approach to an issue is premised on wrong
considerations and its conclusions founded on a gross misreading,
if not misrepresentation, of the evidence;  (b) where a tribunal's
[127]

assessment of a case is "far from reasonable[,] [and] based


solely on very personal and subjective assessment standards
when the law is replete with standards that can be used";  "(c)
[128]

where the tribunal's action on the appreciation and evaluation of


evidence oversteps the limits of its discretion to the point of being
grossly unreasonable";  and (d) where the tribunal invokes
[129]

erroneous or irrelevant considerations in resolving an issue. [130]

I. C

We find no basis for concluding that the Senate Electoral Tribunal


acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction.
The Senate Electoral Tribunal's conclusions are in keeping with a
faithful and exhaustive reading of the Constitution, one that
proceeds from an intent to give life to all the aspirations of all its
provisions.

Ruling on the Petition for Quo Warranto initiated by petitioner,


the Senate Electoral Tribunal was confronted with a novel legal
question: the citizenship status of children whose biological
parents are unknown, considering that the Constitution, in Article
IV, Section 1(2) explicitly makes reference to one's father or
mother. It was compelled to exercise its original jurisdiction in
the face of a constitutional ambiguity that, at that point, was
without judicial precedent.

Acting within this void, the Senate Electoral Tribunal was only
asked to make a reasonable interpretation of the law while
needfully considering the established personal circumstances of
private respondent. It could not have asked the impossible of
private respondent, sending her on a proverbial fool's errand to
establish her parentage, when the controversy before it arose
because private respondent's parentage was unknown and has
remained so throughout her life.

The Senate Electoral Tribunal knew the limits of human capacity.


It did not insist on burdening private respondent with conclusively
proving, within the course of the few short months, the one thing
that she has never been in a position to know throughout her
lifetime. Instead, it conscientiously appreciated the implications of
all other facts known about her finding. Therefore, it arrived at
conclusions in a manner in keeping with the degree of proof
required in proceedings before a quasi-judicial body: not absolute
certainty, not proof beyond reasonable doubt or preponderance of
evidence, but "substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusion."
[131]
In the process, it avoided setting a damning precedent for all
children with the misfortune of having been abandoned by their
biological parents. Far from reducing them to inferior, second-
class citizens, the Senate Electoral Tribunal did justice to the
Constitution's aims of promoting and defending the well-being of
children, advancing human rights, and guaranteeing equal
protection of the laws and equal access to opportunities for public
service.

II

Article VI, Section 3 of the 1987 Constitution spells out the


requirement that "[n]o person shall be a Senator unless he [or
she] is a natural-born citizen of the Philippines."

Petitioner asserts that private respondent is not a natural-born


citizen and, therefore, not qualified to sit as Senator of the
Republic, chiefly on two (2) grounds. First, he argues that as a
foundling whose parents are unknown, private respondent fails to
satisfy the jus sanguinis principle: that is, that she failed to
establish her Filipino "blood line," which is supposedly the
essence of the Constitution's determination of who are natural-
born citizens of the Philippines. Proceeding from this first
assertion, petitioner insists that as private respondent was never
a natural-born citizen, she could never leave reverted to natural-
born status despite the performance of acts that ostensibly
comply with Republic Act No. 9225, otherwise known as the
Citizenship Retention and Re-acquisition Act of 2003.

Petitioner's case hinges on the primacy he places over Article IV,


Section 1 of the 1987 Constitution and its enumeration of who
are Filipino citizens, more specifically on Section 1(2), which
identifies as citizens "[t]hose whose fathers or mothers are
citizens of the Philippines." Petitioner similarly claims that, as
private respondent's foundling status is settled, the burden to
prove Filipino parentage was upon her. With private respondent
having supposedly failed to discharge this burden, the supposed
inevitable conclusion is that she is not a natural-born Filipino.
III

At the heart of this controversy is a constitutional ambiguity.


Definitely, foundlings have biological parents, either or both of
whom can be Filipinos. Yet, by the nature of their being
foundlings, they may, at critical times, not know their parents.
Thus, this controversy must consider possibilities where
parentage may be Filipino but, due to no fault of the foundling,
remains unknown.  Resolving this controversy hinges on
[132]

constitutional interpretation.

Discerning constitutional meaning is an exercise in discovering


the sovereign's purpose so as to identify which among competing
interpretations of the same text is the more contemporarily viable
construction. Primarily, the actual words—text—and how they are
situated within the whole document—context—govern.
Secondarily, when discerning meaning from the plain text (i.e.,
verba legis) fails, contemporaneous construction may settle what
is more viable. Nevertheless, even when a reading of the plain
text is already sufficient, contemporaneous construction may still
be resorted to as a means for verifying or validating the clear
textual or contextual meaning of the Constitution.

III. A

The entire exercise of interpreting a constitutional provision must


necessarily begin with the text itself. The language of the
provision being interpreted is the principal source from which this
Court determines constitutional intent.[133]

To the extent possible, words must be given their ordinary


meaning; this is consistent with the basic precept of verba legis.
 The Constitution is truly a public document in that it was
[134]

ratified and approved by a direct act of the People exercising their


right of suffrage, they approved of it through a plebiscite. The
preeminent consideration in reading the Constitution, therefore,
is the People's consciousness: that is, popular, rather than
technical-legal, understanding. Thus:
We look to the language of the document itself in our search for
its meaning. We do not of course stop there, but that is where we
begin. It is to be assumed that the words in which constitutional
provisions are couched express the objective sought to be
attained. They are to be given their ordinary meaning except
where technical terms are employed in which case the
significance thus attached to them prevails. As the Constitution is
not primarily a lawyer's document, it being essential for the rule
of law to obtain that it should ever be present in the people's
consciousness, its language as much as possible should be
understood in the sense they have in common use. What it says
according to the text of the provision to be construed compels
acceptance and negates the power of the courts to alter it, based
on the postulate that the framers and the people mean what they
say. Thus, these are the cases where the need for construction is
reduced to a minimum.  (Emphasis supplied)
[135]

Reading a constitutional provision requires awareness of its


relation with the whole of the Constitution. A constitutional
provision is but a constituent of a greater whole. It is the
framework of the Constitution that animates each of its
components through the dynamism of these components'
interrelations. What is called into operation is the entire
document, not simply a peripheral item. The Constitution should,
therefore, be appreciated and read as a singular, whole unit—ut
magis valeat quam pereat.  Each provision must be understood
[136]

and effected in a way that gives life to all that the Constitution
contains, from its foundational principles to its finest fixings.
[137]

The words and phrases that establish its framework and its
values color each provision at the heart of a controversy in an
actual case. In Civil Liberties Union v. Executive Secretary:
[138]

It is a well-established rule in constitutional construction that no


one provision of the Constitution is to be separated from all the
others, to be considered alone, but that all the provisions bearing
upon a particular subject are to be brought into view and to be so
interpreted as to effectuate the great purposes of the instrument.
Sections bearing on a particular subject should be considered and
interpreted together as to effectuate the whole purpose of the
Constitution and one section is not to be allowed to defeat
another, if by any reasonable construction, the two can be made
to stand together.

In other words, the court must harmonize them, if practicable,


and must lean in favor of construction which will render every
word operative, rather than one which may make the words idle
and nugatory.  (Citations omitted)
[139]

Reading a certain text includes a consideration of jurisprudence


that has previously considered that exact same text, if any. Our
legal system is founded on the basic principle that "judicial
decisions applying or interpreting the laws or the Constitution
shall form part of [our] legal system."  Jurisprudence is not an
[140]

independent source of law. Nevertheless, judicial interpretation is


deemed part of or written into the text itself as of the date that it
was originally passed. This is because judicial construction
articulates the contemporaneous intent that the text brings to
effect.  Nevertheless, one must not fall into the temptation of
[141]

considering prior interpretation as immutable.

Interpretation grounded on textual primacy likewise looks into


how the text has evolved. Unless completely novel, legal
provisions are the result of the re-adoption—often with
accompanying re-calibration—of previously existing rules. Even
when seemingly novel, provisions are often introduced as a
means of addressing the inadequacies and excesses of previously
existing rules.

One may trace the historical development of text by comparing


its current iteration with prior counterpart provisions, keenly
taking note of changes in syntax, along with accounting for more
conspicuous substantive changes such as the addition and
deletion of provisos or items in enumerations, shifting
terminologies, the use of more emphatic or more moderate
qualifiers, and the imposition of heavier penalties. The tension
between consistency and change galvanizes meaning.
Article IV, Section 1 of the 1987 Constitution, which enumerates
who are citizens of the Philippines, may be compared with
counterpart provisions, not only in earlier Constitutions but even
in organic laws  and in similar mechanisms  introduced by
[142] [143]

colonial rulers whose precepts nevertheless still resonate today.

Even as ordinary meaning is preeminent, a realistic appreciation


of legal interpretation must grapple with the truth that meaning is
not always singular and uniform. In Social Weather Stations, Inc.
v. Commission on Elections,  this Court explained the place of a
[144]

holistic approach in legal interpretation:


Interestingly, both COMELEC and petitioners appeal to what they
(respectively) construe to be plainly evident from Section 5.2(a)'s
text on the part of COMELEC, that the use of the words "paid for"
evinces no distinction between direct purchasers and those who
purchase via subscription schemes; and, on the part of
petitioners, that Section 5.2(a)'s desistance from actually using
the word "subscriber" means that subscribers are beyond its
contemplation. The variance in the parties' positions, considering
that they are both banking on what they claim to be the Fair
Election Act's plain meaning, is the best evidence of an extant
ambiguity.

Second, statutory construction cannot lend itself to pedantic rigor


that foments absurdity. The dangers of inordinate insistence on
literal interpretation are commonsensical and need not be
belabored. These dangers are by no means endemic to legal
interpretation. Even in everyday conversations, misplaced literal
interpretations are fodder for humor. A fixation on technical rules
of grammar is no less innocuous. A pompously doctrinaire
approach to text can stifle, rather than facilitate, the legislative
wisdom that unbridled textualism purports to bolster.

Third, the assumption that there is, in all cases, a universal plain
language is erroneous. In reality, universality and uniformity in
meaning is a rarity. A contrary belief wrongly assumes that
language is static.
The more appropriate and more effective approach is,
thus, holistic rather than parochial: to consider context
and the interplay of the historical, the contemporary, and
even the envisioned. Judicial interpretation entails the
convergence of social realities and social ideals. The latter are
meant to be effected by the legal apparatus, chief of which is the
bedrock of the prevailing legal order: the Constitution. Indeed,
the word in the vernacular that describes the Constitution —
saligan — demonstrates this imperative of constitutional primacy.

Thus, we refuse to read Section 5.2(a) of the Fair Election Act in


isolation. Here, we consider not an abstruse provision but a
stipulation that is part of the whole, i.e., the statute of which it is
a part, that is aimed at realizing the ideal of fair elections. We
consider not a cloistered provision but a norm that should have a
present authoritative effect to achieve the ideals of those who
currently read, depend on, and demand fealty from the
Constitution.  (Emphasis supplied)
[145]

III. B

Contemporaneous construction and aids that are external to the


text may be resorted to when the text is capable of multiple,
viable meanings.  It is only then that one can go beyond the
[146]

strict boundaries of the document. Nevertheless, even when


meaning has already been ascertained from a reading of the plain
text, contemporaneous construction may serve to verify or
validate the meaning yielded by such reading.

Limited resort to contemporaneous construction is justified by the


realization that the business of understanding the Constitution is
not exclusive to this Court. The basic democratic foundation of
our constitutional order necessarily means that all organs of
government, and even the People, read the fundamental law and
are guided by it. When competing viable interpretations arise, a
justiciable controversy may ensue requiring judicial intervention
in order to arrive with finality at which interpretation shall be
sustained. To remain true to its democratic moorings, however,
judicial involvement must remain guided by a framework or
deference and constitutional avoidance. This same principle
underlies the basic doctrine that courts are to refrain from issuing
advisory opinions. Specifically as regards this Court, only
constitutional issues that are narrowly framed, sufficient to
resolve an actual case, may be entertained. [147]

When permissible then, one may consider analogous


jurisprudence (that is, judicial decisions on similar, but not the
very same, matters or concerns),  as well as thematically similar
[148]

statutes and international norms that form part of our legal


system. This includes discerning the purpose and aims of the text
in light of the specific facts under consideration. It is also only at
this juncture—when external aids may be consulted—that the
supposedly underlying notions of the framers, as articulated
through records of deliberations and other similar accounts, can
be illuminating.

III. C

In the hierarchy of the means for constitutional interpretation,


inferring meaning from the supposed intent of the framers or
fathoming the original understanding of the individuals who
adopted the basic document is the weakest approach.

These methods leave the greatest room for subjective


interpretation. Moreover, they allow for the greatest errors. The
alleged intent of the framers is not necessarily encompassed or
exhaustively articulated in the records of deliberations. Those
that have been otherwise silent and have not actively engaged in
interpellation and debate may have voted for or against a
proposition for reasons entirely their own and not necessarily in
complete agreement with those articulated by the more vocal. It
is even possible that the beliefs that motivated them were based
on entirely erroneous premises. Fathoming original understanding
can also misrepresent history as it compels a comprehension of
actions made within specific historical episodes through detached,
and not necessarily better-guided, modern lenses.
Moreover, the original intent of the framers of the Constitution is
not always uniform with the original understanding of the People
who ratified it. In Civil Liberties Union:
While it is permissible in this jurisdiction to consult the debates
and proceedings of the constitutional convention in order to arrive
at the reason and purpose of the resulting Constitution, resort
thereto may be had only when other guides fail as said
proceedings are powerless to vary the terms of the Constitution
when the meaning is clear. Debates in the constitutional
convention "are of value as showing the views of the individual
members, and as indicating the reasons for their votes, but they
give us no light as to the views of the large majority who did not
talk, much less of the mass of our fellow citizens whose votes at
the polls gave the instrument the force of fundamental law. We
think it safer to construe the constitution from what appears upon
its face." The proper interpretation therefore depends more on
how it was understood by the people adopting it than in the
framer's understanding thereof.  (Emphasis supplied)
[149]

IV

Though her parents are unknown, private respondent is a


Philippine citizen without the need for an express statement in
the Constitution making her so. Her status as such is but the
logical consequence of a reasonable reading of the Constitution
within its plain text. The Constitution provides its own cues; there
is not even a need to delve into the deliberations of its framers
and the implications of international legal instruments. This
reading proceeds from several levels.

On an initial level, a plain textual reading readily identifies the


specific provision, which principally governs: the Constitution's
actual definition, in Article IV, Section 2, of "natural-born
citizens." This definition must be harmonized with Section 1's
enumeration, which includes a reference to parentage. These
provisions must then be appreciated in relation to the factual
milieu of this case. The pieces of evidence before the Senate
Electoral Tribunal, admitted facts, and uncontroverted
circumstances adequately justify the conclusion of private
respondent's Filipino parentage.

On another level, the assumption should be that foundlings are


natural-born unless there is substantial evidence to the contrary.
This is necessarily engendered by a complete consideration of the
whole Constitution, not just its provisions on citizenship. This
includes its mandate of defending the well-being of children,
guaranteeing equal protection of the law, equal access to
opportunities for public service, and respecting human rights, as
well as its reasons for requiring natural-born status for select
public offices. Moreover, this is a reading validated by
contemporaneous construction that considers related legislative
enactments, executive and administrative actions, and
international instruments.

Private respondent was a Filipino citizen at birth. This status'


commencement from birth means that private respondent never
had to do anything to consummate this status. By definition, she
is natural-born. Though subsequently naturalized, she reacquired
her natural-born status upon satisfying the requirement of
Republic Act No. 9225. Accordingly, she is qualified to hold office
as Senator of the Republic.

V. A

Article IV, Section 1 of the 1987 Constitution enumerates who are


citizens of the Philippines:
Section 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippines at the time of the adoption of this Constitu
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973, of Filipino mothers, who elect Philippine citize
age of majority; and
(4) Those who are naturalized in accordance with law. [150]

Article IV, Section 2 identifies who are natural-born citizens:


Sec. 2. Natural-born citizens are those who are citizens of the
Philippines from birth without having to perform any act to
acquire or perfect their Philippine citizenship. Those who
elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens.
(Emphasis supplied)
Section 2's significance is self-evident. It provides a definition of
the term "natural-born citizens." This is distinct from Section 1's
enumeration of who are citizens. As against Section 1's generic
listing, Section 2 specifically articulates those who may count
themselves as natural-born.

The weight and implications of this categorical definition are


better appreciated when supplemented with an understanding of
how our concepts of citizenship and natural-born citizenship have
evolved. As will be seen, the term "natural-born citizen" was a
transplanted, but tardily defined, foreign concept.

V. B

Citizenship is a legal device denoting political affiliation. It is the


"right to have rights."  It is one's personal and . . . permanent
[151]

membership in a political community. . . The core of citizenship is


the capacity to enjoy political rights, that is, the right to
participate in government principally through the right to vote,
the right to hold public office[,] and the right to petition the
government for redress of grievance. [152]

Citizenship also entails obligations to the political community of


which one is part.  Citizenship, therefore, is intimately tied with
[153]

the notion that loyalty is owed to the state, considering the


benefits and protection provided by it. This is particularly so if
these benefits and protection have been enjoyed from the
moment of the citizen's birth.

Tecson v. Commission on Elections  reckoned with the historical


[154]

development of our concept of citizenship, beginning under


Spanish colonial rule.  Under the Spanish, the native inhabitants
[155]
of the Philippine Islands were identified not as citizens but as
"Spanish subjects."  Church records show that native inhabitants
[156]

were referred to as "indios." The alternative identification of


native inhabitants as subjects or as indios demonstrated the
colonial master's regard for native inhabitants as inferior.
 Natives were, thus, reduced to subservience in their own land.
[157]

Under the Spanish Constitution of 1876, persons born within


Spanish territory, not just peninsular Spain, were considered
Spaniards, classification, however, did not extend to the
Philippine Islands, as Article 89 expressly mandated that the
archipelago was to be governed by special laws.  It was only on
[158]

December 18, 1889, upon the effectivity in this jurisdiction of the


Civil Code of Spain, that there existed a categorical enumeration
of who were Spanish citizens,  thus:
[159]

(a) Persons born in Spanish territory,


(b) Children of a Spanish father or mother, even if they were born outside of Spain,
(c) Foreigners who have obtained naturalization papers,
(d) Those who, without such papers, may have become domiciled inhabitants of any tow
1898 marked the end of Spanish colonial rule. The Philippine
Islands were ceded by Spain to the United States of America
under the Treaty of Paris, which was entered into on December
10, 1898. The Treaty of Paris did not automatically convert the
native inhabitants to American citizens.  Instead, it left the
[161]

determination of the native inhabitants' status to the Congress of


the United States:
Spanish subjects, natives of the Peninsula, residing in the
territory over which Spain by the present treaty relinquishes or
cedes her sovereignty may remain in such territory or may
remove therefrom. . . . In case they remain in the territory they
may preserve their allegiance to the Crown of Spain by making . .
. a declaration of their decision to preserve such allegiance; in
default of which declaration they shall be held to have renounced
it and to have adopted the nationality of the territory in which
they may reside.

Thus -
The civil rights and political status of the native inhabitants of the
territories hereby ceded to the United States shall be determined
by Congress. [162]

Pending legislation by the United States Congress, the native


inhabitants who had ceased to be Spanish subjects were "issued
passports describing them to be citizens of the Philippines entitled
to the protection of the United States." [163]

The term "citizens of the Philippine Islands" first appeared in


legislation in the Philippine Organic Act, otherwise known as the
Philippine Bill of 1902:
[164]

Section 4. That all inhabitants of the Philippine Islands continuing


to reside therein, who were Spanish subjects on the eleventh day
of April, eighteen hundred and ninety-nine, and then resided in
said Islands, and their children born subsequent thereto, shall
be deemed and held to be citizens of the Philippine
Islands and as such entitled to the protection of the United
States, except such as shall have elected to preserve their
allegiance to the Crown of Spain in accordance with the
provisions of the treaty of peace between the United States and
Spain signed at Paris December tenth, eighteen hundred and
ninety-eight. (Emphasis supplied)
The Philippine Bill of 1902 explicitly covered the status of children
born in the Philippine Islands to its inhabitants who were Spanish
subjects as of April 11, 1899. However, it did not account for the
status of children born in the Islands to parents who were not
Spanish subjects. A view was expressed that the common law
concept of jus soli (or citizenship by place of birth), which was
operative in the United States, applied to the Philippine Islands. [165]

On March 23, 1912, the United States Congress amended Section


4 of the Philippine Bill of 1902. It was made to include a proviso
for the enactment by the legislature of a law on acquiring
citizenship. This proviso read:
Provided, That the Philippine Legislature, herein provided for, is
hereby authorized to provide by law for the acquisition of
Philippine citizenship by those natives of the Philippine Islands
who do not come within the foregoing provisions, the natives of
the insular possessions of the United States, and such other
persons residing in the Philippine Islands who are citizens of the
United States, or who could become citizens of the United States
under the laws of the United States if residing therein.[166]

In 1916, the Philippine Autonomy Act, otherwise known as the


Jones Law of 1916, replaced the Philippine Bill of 1902. It
restated the citizenship provision of the Philippine Bill of 1902, as
amended: [167]

Section 2.—Philippine Citizenship and Naturalization

That all inhabitants of the Philippine Islands who were Spanish


subjects on the eleventh day of April, eighteen hundred and
ninety-nine, and then resided in said Islands, and their children
born subsequent thereto, shall be deemed and held to be citizens
of the Philippine Islands, except such as shall have elected to
preserve their allegiance to the Crown of Spain in accordance
with the provisions of the treaty of peace between the United
States and Spain, signed at Paris December tenth, eighteen
hundred and ninety-eight, and except such others as have since
become citizens of some other country: Provided, That the
Philippine Legislature, herein provided for, is hereby authorized to
provide by law for the acquisition of Philippine citizenship by
those natives of the Philippine Islands who do not come within
the foregoing provisions, the natives of the insular possessions of
the United States, and such other persons residing in the
Philippine Islands who are citizens of the United States, or who
could become citizens of the United States under the laws of the
United States if residing therein.
The Jones Law of 1916 provided that a native-born inhabitant of
the Philippine Islands was deemed to be a citizen of the
Philippines as of April 11, 1899 if he or she was "(1) a subject of
Spain on April 11, 1899, (2) residing in the Philippines on said
date, and (3) since that date, not a citizen of some other
country."[168]

There was previously the view that jus soli may apply as a mode


of acquiring citizenship. It was the 1935 Constitution that made
sole reference to parentage vis-a-vis the determination of
citizenship.  Article III, Section 1 of the 1935 Constitution
[169]

provided:
SECTION 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippine Islands at the time of the adoption of this C
(2) Those born in the Philippines Islands of foreign parents who, before the adoption
been elected to public office in the Philippine Islands.
(3) Those whose fathers are citizens of the Philippines.
(4) Those whose mothers are citizens of the Philippines and upon reaching the age of m
citizenship.
(5) Those who are naturalized in accordance with law.
The term "natural-born citizen" first appeared in this jurisdiction
in the 1935 Constitution's provision stipulating the qualifications
for President and Vice-President of the Philippines. Article VII,
Section 3 read:
SECTION 3. No person may be elected to the office of President
or Vice-President, unless he be a natural-born citizen of the
Philippines, a qualified voter, forty years of age or over, and has
been a resident of the Philippines for at least ten years
immediately preceding the election.
While it used the term "natural-born citizen," the 1935
Constitution did not define the term.

Article II, Section 1(4) of the 1935 Constitution—read with the


then civil law provisions that stipulated the automatic loss of
Filipino citizens lip by women who marry alien husbands—was
discriminatory towards women.  The 1973 Constitution rectified
[170]

this problematic situation:


SECTION 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippines at the time of the adoption of this Constitu
(2) Those whose fathers or mothers are citizens of the Philippines.
(3) Those who elect Philippine citizenship pursuant to the provisions of the Constituti
and thirty-five.
(4) Those who are naturalized in accordance with law.

SECTION 2. A female citizen of the Philippines who marries an


alien shall retain her Philippine citizenship, unless by her act or
omission she is deemed, under the law, to have renounced her
citizenship. [171]

The 1973 Constitution was the first instrument to actually define


the term "natural-born citizen." Article III, Section 4 of the 1973
Constitution provided:
SECTION 4. A natural-born citizen is one who is a citizen of the
Philippines from birth without having to perform any act to
acquire or perfect his Philippine citizenship. [172]

The present Constitution adopted most of the provisions of the


1973 Constitution on citizenship, "except for subsection (3)
thereof that aimed to correct the irregular situation generated by
the questionable proviso in the 1935 Constitution." [173]

Article IV, Section 1 of the 1987 Constitution now reads:


Section 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippines at the time of the adoption of this Constitu
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973, of Filipino mothers, who elect Philippine citize
age of majority; and
(4) Those who are naturalized in accordance with law. [174]

Article IV, Section 2 also calibrated the 1973 Constitution's


previous definition of natural-born citizens, as follows:
Sec. 2. Natural-born citizens are those who are citizens of the
Philippines from birth without having to perform any act to
acquire or perfect their Philippine citizenship. Those who
elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens.
(Emphasis supplied)
Ironically, the concept of "natural-born" citizenship is a "foreign"
concept that was transplanted into this jurisdiction as part of the
1935 Constitution's eligibility requirements for President and
Vice-President of the Philippines.

In the United States Constitution, from which this concept


originated, the term "natural-born citizen" appears in only a
single instance: as an eligibility requirement for the presidency.
 It is not defined in that Constitution or in American laws. Its
[175]
origins and rationale for inclusion as a requirement for the
presidency are not even found in the records of constitutional
deliberations.  However, it has been suggested that, as the
[176]

United States was under British colonial rule before its


independence, the requirement of being natural-born was
introduced as a safeguard against foreign infiltration in the
administration of national government:
It has been suggested, quite plausibly, that this language was
inserted in response to a letter sent by John Jay to George
Washington, and probably to other delegates, on July 25, 1787,
which stated:
Permit me to hint, whether it would be wise and seasonable to
provide a strong check to the admission of Foreigners into the
administration of our national Government; and to declare
expressly that the Command in Chief of the American army shall
not be given to nor devolve on, any but a natural born Citizen.
Possibly this letter was motivated by distrust of Baron Von
Steuben, who had served valiantly in the Revolutionary forces,
but whose subsequent loyalty was suspected by Jay. Another
theory is that the Jay letter, and the resulting constitutional
provision, responded to rumors that the Convention was
concocting a monarchy to be ruled by a foreign monarch. [177]

In the United States, however, citizenship is based on jus soli,


not jus sanguinis.

V. C

Today, there are only two (2) categories of Filipino citizens:


natural-born and naturalized.

A natural-born citizen is defined in Article IV, Section 2 as one


who is a citizen of the Philippines "from birth without having to
perform any act to acquire or perfect Philippine citizenship." By
necessary implication, a naturalized citizen is one who is not
natural-born. Bengson v. House of Representatives Electoral
Tribunal  articulates this definition by dichotomy:
[178]

[O]nly naturalized Filipinos are considered not natural-born


citizens. It is apparent from the enumeration of who are citizens
under the present Constitution that there are only two classes of
citizens: . . . A citizen who is not a naturalized Filipino, i.e., did
not have to undergo the process of naturalization to obtain
Philippine citizenship, necessarily is a natural-born Filipino. [179]

Former Associate Justice Artemio Panganiban further shed light


on the concept of naturalized citizens in his Concurring Opinion
in Bengson: naturalized citizens, he stated, are "former aliens or
foreigners who had to undergo a rigid procedure, in which they
had to adduce sufficient evidence to prove that they possessed all
the qualifications and none of the disqualifications provided by
law in order to become Filipino citizens."[180]

One who desires to acquire Filipino citizenship by naturalization is


generally required to file a verified petition.  He or she must
[181]

establish. among others, that he or she is of legal age, is of good


moral character, and has the capacity to adapt to Filipino culture,
tradition, and principles, or otherwise has resided in the
Philippines for a significant period of time.  Further, the
[182]

applicant must show that he or she will not be a threat to the


state, to the public, and to the Filipinos' core beliefs. [183]

V. D

Article IV, Section 1 of the 1987 Constitution merely gives an


enumeration. Section 2 categorically defines "natural-born
citizens." This constitutional definition is further clarified in
jurisprudence, which delineates natural-born citizenship from
naturalized citizenship. Consistent with Article 8 of the Civil Code,
this jurisprudential clarification is deemed written into the
interpreted text, thus establishing its contemporaneous intent.

Therefore, petitioner's restrictive reliance on Section 1 and the


need to establish bloodline is misplaced. It is inordinately
selective and myopic. It divines Section 1's mere enumeration but
blatantly turns a blind eye to the succeeding Section's
unequivocal definition.
Between Article IV, Section 1(2), which petitioner harps on, and
Section 2, it is Section 2 that is on point. To determine whether
private respondent is a natural-born citizen, we must look into
whether she had to do anything to perfect her citizenship. In view
of Bengson, this calls for an inquiry into whether she underwent
the naturalization process to become a Filipino.

She did not.

At no point has it been substantiated that private respondent


went through the actual naturalization process. There is no more
straightforward and more effective way to terminate this inquiry
than this realization of total and utter lack of proof.

At most, there have been suggestions likening a preferential


approach to foundlings, as well as compliance with Republic Act
No. 9225, with naturalization. These attempts at analogies are
misplaced. The statutory mechanisms for naturalization are clear,
specific, and narrowly devised. The investiture of citizenship on
foundlings benefits children, individuals whose capacity to act is
restricted.  It is a glaring mistake to liken them to an adult filing
[184]

before the relevant authorities a sworn petition seeking to


become a Filipino, the grant of which is contingent on evidence
that he or she must himself or herself adduce. As shall later be
discussed, Republic Act No. 9225 is premised on the immutability
of natural-born status. It privileges natural-born citizens and
proceeds from an entirely different premise from the restrictive
process of naturalization.

So too, the jurisprudential treatment of naturalization vis-a-vis


natural-born status is clear. It should be with the actual process
of naturalization that natural-born status is to be contrasted, not
against other procedures relating to citizenship. Otherwise, the
door may be thrown open for the unbridled diminution of the
status of citizens.

V. E
Natural-born citizenship is not concerned with being a human
thoroughbred.

Section 2 defines "natural-born citizens." Section 1(2) stipulates


that to be a citizen, either one's father or one's mother must be a
Filipino citizen.

That is all there is to Section 1(2). Physical features, genetics,


pedigree, and ethnicity are not determinative of citizenship.

Section 1(2) does not require one's parents to be natural-born


Filipino citizens. It does not even require them to conform to
traditional conceptions of what is indigenously or ethnically
Filipino. One or both parents can, therefore, be ethnically foreign.

Section 1(2) requires nothing more than one ascendant degree:


parentage. The citizenship of everyone else in one's ancestry is
irrelevant. There is no need, as petitioner insists, for a pure
Filipino bloodline.

Section 1(2) requires citizenship, not identity. A conclusion of


Filipino citizenship may be sustained by evidence adduced in a
proper proceeding, which substantially proves that either or both
of one's parents is a Filipino citizen.

V. F

Private respondent has done this. The evidence she adduced in


these proceedings attests to how at least one—if not both—of her
biological parents were Filipino citizens.

Proving private respondent's biological parentage is now


practically impossible. To begin with, she was abandoned as a
newborn infant. She was abandoned almost half a century ago.
By now, there are only a handful of those who, in 1968, were
able-minded adults who can still lucidly render testimonies on the
circumstances of her birth and finding. Even the identification of
individuals against whom DNA evidence may be tested is
improbable, and by sheer economic cost, prohibitive.

However, our evidentiary rules admit of alternative means for


private respondent to establish her parentage.

In lieu of direct evidence, facts may be proven through


circumstantial evidence. In Suerte-Felipe v. People: [185]

Direct evidence is that which proves the fact in dispute without


the aid of any inference or presumption; while circumstantial
evidence is the proof of fact or facts from which, taken either
singly or collectively, the existence of a particular fact in dispute
may be inferred as a necessary or probable consequence. [186]

People v. Raganas  further defines circumstantial evidence:


[187]

Circumstantial evidence is that which relates to a series of facts


other than the fact in issue, which by experience have been found
so associated with such fact that in a relation of cause and effect,
they lead us to a satisfactory conclusion.  (Citation omitted)
[188]

Rule 133, Section 4 of the Revised Rules on Evidence, for


instance, stipulates when circumstantial evidence is sufficient to
justify a conviction in criminal proceedings:
Section 4. Circumstantial evidence, when sufficient. —
Circumstantial evidence is sufficient for conviction if:

(a) There is more than one circumstances;

(b) The facts from which the inferences are derived are proven;
and

(c) The combination of all the circumstances is such as to produce


a conviction beyond reasonable doubt.
Although the Revised Rules on Evidence's sole mention of
circumstantial evidence is in reference to criminal proceedings,
this Court has nevertheless sustained the use of circumstantial
evidence in other proceedings.  There is no rational basis for
[189]

making the use of circumstantial evidence exclusive to criminal


proceedings and for not considering circumstantial facts as valid
means for proof in civil and/or administrative proceedings.
In criminal proceedings, circumstantial evidence suffices to
sustain a conviction (which may result in deprivation of life,
liberty, and property) anchored on the highest standard or proof
that our legal system would require, i.e., proof beyond
reasonable doubt. If circumstantial evidence suffices for such a
high standard, so too may it suffice to satisfy the less stringent
standard of proof in administrative and quasi-judicial proceedings
such as those before the Senate Electoral Tribunal, i.e.,
substantial evidence. [190]

Private respondent was found as a newborn infant outside the


Parish Church of Jaro, Iloilo on September 3, 1968.  In 1968, [191]

Iloilo, as did most—if not all—Philippine provinces, had a


predominantly Filipino population.  Private respondent is
[192]

described as having "brown almond-shaped eyes, a low nasal


bridge, straight black hair and an oval-shaped face."  She stands
[193]

at 5 feet and 2 inches tall.  Further, in 1968, there was no


[194]

international airport in Jaro, Iloilo.

These circumstances are substantial evidence justifying an


inference that her biological parents were Filipino. Her
abandonment at a Catholic Church is more or less consistent with
how a Filipino who, in 1968, lived in a predominantly religious
and Catholic environment, would have behaved. The absence of
an international airport in Jaro, Iloilo precludes the possibility of a
foreigner mother, along with a foreigner father, swiftly and
surreptitiously coming in and out of Jaro, Iloilo just to give birth
and leave her offspring there. Though proof of ethnicity is
unnecessary, her physical features nonetheless attest to it.

In the other related case of Poe-Llamanzares v. Commission on


Elections,  the Solicitor General underscored how it is
[195]

statistically more probable that private respondent was born a


Filipino citizen rather than as a foreigner. He submitted the
following table is support of his statistical inference:
[196]

NUMBER OF FOREIGN AND FILIPINO CHILDREN BORN IN THE


PHILIPPINES: 1965-1975 and 2010-2014
FOREIGN CHILDREN BORN IN THE FILIPINO CH
YEAR
PHILIPPINES PH
1965 1,479 795,415
1966 1,437 823,342
1967 1,440 840,302
1968 1,595 898,570
1969 1,728 946,753
1970 1,521 966,762
1971 1,401 963,749
1972 1,784 968,385
1973 1,212 1,045,290
1974 1,496 1,081,873
1975 1,493 1,223,837
2010 1,244 1,782,877
2011 1,140 1,746,685
2012 1,454 1,790,367
2013 1,315 1,751,523
2014 1,351 1,748,782

Source: Philippine Statistics Authority [illegible]


[197]

Thus, out of the 900,165 recorded births in the Philippines in


1968, only 1,595 or 0.18% newborns were foreigners. This
translates to roughly 99.8% probability that private respondent
was born a Filipino citizen.

Given the sheer difficulty, if not outright impossibility, of


identifying her parents after half a century, a range of
substantive proof is available to sustain a reasonable conclusion
as to private respondent's parentage.

VI

Before a discussion on how private respondent's natural-born


status is sustained by a general assumption on foundlings arising
from a comprehensive reading and validated by a
contemporaneous construction of the Constitution, and
considering that we have just discussed the evidence pertaining
to the circumstances of private respondent's birth, it is opportune
to consider petitioner's allegations that private respondent bore
the burden of proving—through proof of her bloodline—her
natural-born status.

Petitioner's claim that the burden of evidence shifted to private


respondent upon a mere showing that she is a foundling is a
serious error.

Petitioner invites this Court to establish a jurisprudential


presumption that all newborns who have been abandoned in rural
areas in the Philippines are not Filipinos. His emphasis on private
respondent's supposed burden to prove the circumstances of her
birth places upon her an impossible condition. To require proof
from private respondent borders on the absurd when there is no
dispute that the crux of the controversy—the identity of her
biological parents—is simply not known.

"Burden of proof is the duty of a party to present evidence on the


facts in issue necessary to establish his claim or defense by the
amount of evidence required by law." Burden of proof lies on the
party making the allegations;  that is, the party who "alleges the
[198]

affirmative of the issue"  Burden of proof never shifts from one


[199]

party to another. What shifts is the burden of evidence. This shift


happens when a party makes a prima facie case in his or her
favor.  The other party then bears the "burden of going
[200]

forward"  with the evidence considering that which has


[201]

ostensibly been established against him or her.

In an action for quo warranto, the burden of proof necessarily


falls on the party who brings the action and who alleges that the
respondent is ineligible for the office involved in the controversy.
In proceedings before quasi-judicial bodies such as the Senate
Electoral Tribunal, the requisite quantum of proof is substantial
evidence.  This burden was petitioner's to discharge. Once the
[202]

petitioner makes a prima facie case, the burden of evidence shifts


to the respondent.
Private respondent's admitted status as a foundling does not
establish a prima facie case in favor of petitioner. While it does
establish that the identities of private respondent's biological
parents are not known, it does not automatically mean that
neither her father nor her mother is a Filipino.

The most that petitioner had in his favor was doubt. A taint of
doubt, however, is by no means substantial evidence establishing
a prima facie case and shifting the burden of evidence to private
respondent.

Isolating the fact of private respondent's being a foundling,


petitioner trivializes other uncontroverted circumstances that we
have previously established as substantive evidence of private
respondent's parentage:
(1) Petitioner was found in front of a church in Jaro, Iloilo;

(2) She was only an infant when she was found, practically a newborn;

(3) She was-found sometime in September 1968;

(4) Immediately after she was found, private respondent was registered as a foundling;

(5) There was no international airport in Jaro, Iloilo; and

(6) Private respondent's physical features are consistent with those of typical Filipinos.
Petitioner's refusal to account for these facts demonstrates an
imperceptive bias. As against petitioner's suggested conclusions,
the more reasonable inference from these facts is that at least
one of private respondent's parents is a Filipino.

VII

Apart from how private respondent is a natural-born Filipino


citizen consistent with a reading that harmonizes Article IV,
Section 2's definition of natural-born citizens and Section 1(2)'s
reference to parentage, the Constitution sustains a presumption
that all foundlings found in the Philippines are born to at least
either a Filipino father or a Filipino mother and are thus natural-
born, unless there is substantial proof otherwise. Consistent with
Article IV, Section 1(2), any such countervailing proof must show
that both—not just one—of a foundling's biological parents are
not Filipino citizens.

VII. A

Quoting heavily from Associate Justice Teresita Leonardo-De


Castro's Dissenting Opinion to the assailed November 17, 2015
Decision, petitioner intimates that no inference or presumption in
favor of natural-born citizenship may be indulged in resolving this
case.  He insists that it is private respondent's duty to present
[203]

incontrovertible proof of her Filipino parentage.

Relying on presumptions is concededly less than ideal. Common


sense dictates that actual proof is preferable. Nevertheless,
resolving citizenship issues based on presumptions is firmly
established in jurisprudence.

In 2004, this Court resolved Tecson on the basis of presumptions.


Ruling on the allegations that former presidential candidate
Ronald Allan Poe (more popularly known as Fernando Poe, Jr.)
was not a natural-born Filipino citizen, this Court proceeded from
the presumptions that: first, Fernando Poe Jr.'s grandfather,
Lorenzo Pou, was born sometime in 1870, while the country was
still under Spanish colonial rule;  and second, that Lorenzo Pou's
[204]

place of residence, as indicated in his dearth certificate, must


have also been his place of residence before death, which
subjected him to the "en masse Filipinization," or sweeping
investiture of Filipino citizenship effected by the Philippine Bill of
1902.  This Court then noted that Lorenzo Pou's citizenship
[205]

would have extended to his son and Fernando Poe Jr.'s father,
Allan F. Poe. Based on these, Fernando Poe. Jr. would then have
been a natural-born Filipino as he was born while the 1935
Constitution, which conferred Filipino citizenship to those born to
Filipino fathers, was in effect:
In ascertaining, in G.R. No. 161824, whether grave abuse of
discretion has been committed by the COMELEC, it is necessary
to take on the matter of whether or not respondent FPJ is a
natural-born citizen, which, in turn, depended on whether or not
the father of respondent, Allan F. Poe, would have himself been a
Filipino citizen and, in the affirmative, whether or not the alleged
illegitimacy of respondent prevents him from taking after the
Filipino citizenship of his putative father. Any conclusion on the
Filipino citizenship of Lorenzo Pou could only be drawn from the
presumption that having died in 1954 at 84 years old, when the
Philippines was under Spanish rule, and that San Carlos,
Pangasinan, his place of residence upon his death in 1954, in the
absence of any other evidence, could have well been his place of
residence before death, such that Lorenzo Pou would have
benefited from the "en masse Filipinization" that the Philippine Bill
had effected in 1902. That citizenship (of Lorenzo Pou), if
acquired, would thereby extend to his son, Allan F. Poe, father of
respondent FPJ. The 1935 Constitution, during which regime
respondent FPJ has seen first light, confers citizenship to all
persons whose fathers are Filipino citizens regardless of whether
such children are legitimate or illegitimate.
[206]

It is true that there is jurisprudence—Paa v. Chan  and Go v.


[207]

Ramos  (which
[208]
merely cites Paa)—to the effect that
presumptions cannot be entertained in citizenship cases.

Paa, decided in 1967, stated:


It is incumbent upon the respondent, who claims Philippine
citizenship, to prove to the satisfaction of the court that he is
really a Filipino. No presumption can be indulged in favor
of the claimant, of Philippine citizenship, and any doubt
regarding citizenship must be resolved in favor of the State.
 (Emphasis supplied)
[209]

These pronouncements are no longer controlling in light of this


Court's more recent ruling in Tecson.

Moreover, what this Court stated in Paa was that "no presumption


can be indulged in favor of the claimant of Philippine citizenship."
This reference to "the claimant" was preceded by a sentence
specifically referencing the duty of "the respondent." The syntax
of this Court's pronouncement—using the definitive article "the"—
reveals that its conclusion was specific only to Chan and to his
circumstances. Otherwise, this Court would have used generic
language. Instead of the definite article "the," it could have used
the indefinite article "a" in that same sentence: "no presumption
can be indulged in favor of a claimant of Philippine citizenship." In
the alternative, it could have used other words that would show
absolute or sweeping application, for instance: "no presumption
can be indulged in favor of any/every claimant of Philippine
citizenship;" or, "no presumption can be indulged in favor
of all claimants of Philippine citizenship."

The factual backdrop of Paa is markedly different from those of


this case. Its statements, therefore, are inappropriate precedents
for this case. In Paa, clear evidence was adduced showing that
respondent Quintin Chan was registered as an alien with the
Bureau of Immigration. His father was likewise registered as an
alien. These pieces of evidence already indubitably establish
foreign citizenship and shut the door to any presumption. In
contrast, petitioner in this case presents no proof, direct or
circumstantial, of private respondent's or of both of her parents'
foreign citizenship.

Go cited Paa, taking the same quoted portion but revising it to


make it appear that the same pronouncement was generally
applicable:
It is incumbent upon one who claims Philippine citizenship to
prove to the satisfaction of the court that he is really a Filipino.
No presumption can be indulged hi favor of the claimant of
Philippine citizenship, and any doubt regarding citizenship must
be resolved in favor of the state.  (Emphasis supplied)
[210]

Thus, Paa's essential and pivotal nuance was lost in proverbial


translation. In any case, Go was decided by this Court sitting in
Division. It cannot overturn Tecson, which was decided by this
Court sitting En Banc. Likewise, Go's factual and even procedural
backdrops are different from those of this case. Go involved the
deportation of an allegedly illegal and undesirable alien, not an
election controversy. In Go, copies of birth certificates
unequivocally showing the Chinese citizenship of Go and of his
siblings were adduced.

VII. B

The presumption that all foundlings found in the Philippines are


born to at least either a Filipino father or a Filipino mother (and
are thus natural-born, unless there is substantial proof otherwise)
arises when one reads the Constitution as a whole, so as to
"effectuate [its] whole purpose."
[211]

As much as we have previously harmonized Article IV, Section 2


with Article IV, Section 1(2), constitutional provisions on
citizenship must not be taken in isolation. They must be read in
light of the constitutional mandate to defend the well-being of
children, to guarantee equal protection of the law and equal
access to opportunities for public service, and to respect human
rights. They must also be read in conjunction with the
Constitution's reasons for requiring natural-born status for select
public offices. Further, this presumption is validated by
contemporaneous construction that considers related legislative
enactments, executive and administrative actions, and
international instruments.

Article II, Section 13 and Article XV, Section 3 of the 1987


Constitution require the state to enhance children's well-being
and to project them from conditions prejudicial to or that may
undermine their development. Fulfilling this mandate includes
preventing discriminatory conditions and, especially, dismantling
mechanisms for discrimination that hide behind the veneer of the
legal apparatus:
ARTICLE II

....

State Policies

....
SECTION 13. The State recognizes the vital role of the youth in
nation-building and shall promote and protect their physical,
moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and encourage
their involvement in public and civic affairs.

....

ARTICLE XV
The Family

....

SECTION 3. The State shall defend:

....

(2) The right of children to assistance, including proper care


and nutrition, and special protection from all forms of
neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development[.] (Emphasis supplied)
Certain crucial government offices are exclusive to natural-born
citizens of the Philippines. The 1987 Constitution makes the
following offices exclusive to natural-born citizens:
(1) President; [212]

(2) Vice-President; [213]

(3) Senator;[214]

(4) Member of the House of Representatives; [215]

(5) Member of the Supreme Court or any lower collegiate court; [216]

(6) Chairperson and Commissioners of the Civil Service Commission; [217]

(7) Chairperson and Commissioners of the Commission on Elections; [218]

(8) Chairperson and Commissioners of the Commission on Audit; [219]

(9) Ombudsman and his or her deputies; [220]

(10 Board of Governors of the Bangko Sentral ng Pilipinas;  and


[221]

)
(11 Chairperson and Members of the Commission on Human Rights. [222]

)
Apart from these, other positions that are limited to natural-born
citizens include, among others, city fiscals,  assistant city fiscals,
[223]

 Presiding Judges and Associate Judges of the Sandiganbayan,


[224]

and other public offices.  Certain professions are also limited to


[225]

natural-born citizens,  as are other legally established benefits


[226]

and incentives.[227]

Concluding that foundlings are not natural-born Filipino citizens is


tantamount to permanently discriminating against our foundling
citizens. They can then never be of service to the country in the
highest possible capacities. It is also tantamount to excluding
them from certain means such as professions and state
scholarships, which will enable the actualization of their
aspirations. These consequences cannot be tolerated by the
Constitution, not least of all through the present politically
charged proceedings, the direct objective of which is merely to
exclude a singular politician from office. Concluding that
foundlings are not natural-born citizens creates an inferior class
of citizens who are made to suffer that inferiority through no fault
of their own.

If that is not discrimination, we do not know what is.

The Constitution guarantees equal protection of the laws and


equal access to opportunities for public service:
ARTICLE II

....

State Policies

....

SECTION 26. The State shall guarantee equal access to


opportunities for public service, and prohibit political
dynasties as may be defined by law.

....
ARTICLE III
Bill of Rights

SECTION 1. No person shall be deprived of life, liberty, or


property without due process of law, nor shall any person be
denied the equal protection of the laws.

....

ARTICLE XIII
Social Justice and Human Rights

SECTION 1. The Congress shall give highest priority to the


enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic,
and political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the
common good. (Emphasis supplied)
The equal protection clause serves as a guarantee that "persons
under like circumstances and falling within the same class are
treated alike, in terms of 'privileges conferred and liabilities
enforced.' It is a guarantee against 'undue favor and individual or
class privilege, as well as hostile discrimination or oppression of
inequality.'"
[228]

Other than the anonymity of their biological parents, no


substantial distinction  differentiates foundlings from children
[229]

with known Filipino parents. They are both entitled to the full
extent of the state's protection from the moment of their birth.
Foundlings' misfortune in failing to identify the parents who
abandoned them—an inability arising from no fault of their own—
cannot be the foundation of a rule that reduces them to
statelessness or, at best, as inferior, second-class citizens who
are not entitled to as much benefits and protection from the state
as those who know their parents. Sustaining this classification is
not only inequitable; it is dehumanizing. It condemns those who,
from the very beginning of their lives, were abandoned to a life of
desolation and deprivation.

This Court does not exist in a vacuum. It is a constitutional


organ, mandated to effect the Constitution's dictum of defending
and promoting the well-being and development of children. It is
not our business to reify discriminatory classes based on
circumstances of birth.

Even more basic than their being citizens of the Philippines,


foundlings are human persons whose dignity we value and rights
we, as a civilized nation, respect. Thus:
ARTICLE II

....

State Policies

....

SECTION 11. The State values the dignity of every human person
and guarantees full respect for human rights. (Emphasis
supplied)
VII. C

Though the matter is settled by interpretation exclusively within


the confines of constitutional text, the presumption that
foundlings are natural-born citizens of the Philippines (unless
substantial evidence of the foreign citizenship of both of the
foundling's parents is presented) is validated by a parallel
consideration or contemporaneous construction of the
Constitution with acts of Congress, international instruments in
force in the Philippines, as well as acts of executive organs such
as the Bureau of Immigration, Civil Registrars, and the President
of the Philippines.

Congress has enacted statutes founded on the premise that


foundlings are Filipino citizens at birth. It has adopted
mechanisms to effect the constitutional mandate to protect
children. Likewise, the Senate has ratified treaties that put this
mandate into effect.

Republic Act No. 9344, otherwise known as the Juvenile Justice


and Welfare Act of 2006, provides:
SEC. 2. Declaration of State Policy. - The following State
policies shall be observed at all times:

....

(b) The State shall protect the best interests of the child
through measures that will ensure the observance of
international standards of child protection, especially
those to which the Philippines is a party. Proceedings before
any authority shall be conducted in the best interest of the child
and in a manner which allows the child to participate and to
express himself/herself freely. The participation of children in the
program and policy formulation and implementation related to
juvenile justice and welfare shall be ensured by the concerned
government agency. (Emphasis supplied)
Section 4(b) of the Republic Act No. 9344 defines the "best
interest of the child" as the "totality of the circumstances and
conditions which are most congenial to the survival, protection
and feelings of security of the child and most encouraging to the
child's physical, psychological and emotional development."

Consistent with this statute is our ratification  of the United


[230]

Nations Convention on the Rights of the Child. This specifically


requires the states-parties' protection of: first, children's rights to
immediate registration and nationality after birth; second, against
statelessness; and third, against discrimination on account of
their birth status.  Pertinent portions of the Convention read:
[231]

Preamble

The State Parties to the present Convention,


Considering that, in accordance with the principles proclaimed in
the Charter of the United Nations, recognition of the inherent
dignity and of the equal and inalienable rights of all
members of the human family is the foundation of freedom,
justice and peace in the world,

Bearing in mind that the peoples of the United Nations have, in


the Charter, reaffirmed their faith in fundamental human
rights and in the dignity and worth of the human person,
and have determined to promote social progress and better
standards of life in larger freedom,

Recognizing that the United Nations has, in the Universal


Declaration of Human Rights and in the International Covenants
on Human Rights, proclaimed and agreed that everyone is
entitled to all the rights and freedoms set forth
therein, without distinction of any kind, such as race, colour,
sex, language, religion, political or other opinion, national or
social origin, property, birth or other status,

Recalling that, in the Universal Declaration of Human Rights, the


United Nations has proclaimed that childhood is entitled to
special care and assistance,

....

Have agreed as follows:

....

Article 2
1. State parties shall respect and ensure the rights set forth in
the present Convention to each child within their
jurisdiction without discrimination of any kind,
irrespective of the child's or his or her parent's or legal
guardian's race, colour, sex, language, religion, political or
other opinion, national, ethnic or social origin, property,
disability, birth or other status.
2. States Parties shall take appropriate measures to
ensure that the child is protected against all forms of
discrimination or punishment on the basis of the status,
activities, expressed opinions, or beliefs of the child's
parents, legal guardians, or family members.
Article 3
1. In all actions concerning children, whether undertaken
by public or private social welfare institutions, courts of
law, administrative authorities or legislative bodies, the
best interests of the child shall be a primary
consideration.
2. States Parties undertake to ensure the child such
protection and care as is necessary for his or her well-
being, taking into account the rights and duties of his or her
parents, legal guardians, or other individuals legally
responsible for him or her, and, to this end, shall take all
appropriate legislative and administrative measures.
....

Article 7
1. The child, shall be registered immediately after birth and
shall have the right from birth to a name, the right to
acquire a nationality and as far as possible, the right to
know and be cared for by his or her parents.
2. States Parties shall ensure the implementation of these
rights in accordance with their national law and their
obligations under the relevant international instruments in
this field, in particular where the child would otherwise
be stateless. (Emphasis supplied)
The Philippines likewise ratified  the 1966 International
[232]

Covenant on Civil and Political Rights. As with the Convention on


the Rights of the Child, this treaty requires that children be
allowed immediate registration after birth and to acquire a
nationality. It similarly defends them against discrimination:
Article 24. . . .

1. Every child shall have, without any discrimination as


to race, colour, sex, language, religion, national or social origin,
property or birth, the right to such measures of protection as are
required by his status as a minor, on the part of his family,
society and the State.

2. Every child shall be registered immediately after birth and


shall have a name.

3. Every child has the right to acquire a nationality.

....

Article 26. All persons are equal before the law and are entitled


without any discrimination to the equal protection of the
law. In this respect, the law shall prohibit any discrimination
and guarantee to all persons equal and effective protection
against discrimination on any ground such as race, colour,
sex, language, religion, political or other opinion, national or
social origin, property, birth or other status. (Emphasis
supplied)
Treaties are "international agreements] concluded between state|
in written form and governed by international law, whether
embodied in a single instrument or in two or more related
instruments and whatever its particular designation."  Under[233]

Article VII, Section 21 of the 1987 Constitution, treaties require


concurrence by the Senate before they became binding:
SECTION 21. No treaty or international agreement shall be valid
and effective unless concurred in by at least two-thirds of all the
Members of the Senate.
The Senate's ratification of a treaty makes it legally effective and
binding by transformation. It then has the force and effect of a
statute enacted by Congress. In Pharmaceutical and Health Care
Association of the Philippines v. Duque III, et al.:
[234]

Under the 1987 Constitution, international law can become part


of the sphere of domestic law either by transformation or
incorporation. The transformation method requires that an
international law be transformed into a domestic law through a
constitutional mechanism such as local legislation. The
incorporation method applies when, by mere constitutional
declaration, international law is deemed to have the force of
domestic law.

Treaties become part of the law of the land through


transformation pursuant to Article VII, Section 21 of the
Constitution which provides that "[n]o treaty or international
agreement shall be valid and effective unless concurred in by at
least two-thirds of all the members of the Senate." Thus, treaties
or conventional international law must go through a process
prescribed by the Constitution for it to be transformed into
municipal law that can be applied to domestic conflicts.
 (Emphasis supplied)
[235]

Following ratification by the Senate, no further action, legislative


or otherwise, is necessary. Thereafter, the whole of government—
including the judiciary—is duty-bound to abide by the treaty,
consistent with the maxim pacta sunt servanda.

Accordingly, by the Constitution and by statute, foundlings cannot


be the object of discrimination. They are vested with the rights to
be registered and granted nationality upon birth. To deny them
these rights, deprive them of citizenship, and render them
stateless is to unduly burden them, discriminate them, and
undermine their development.

Not only Republic Act No. 9344, the Convention on the Rights of
the Child, and the International Covenant on Civil and Political
Rights effect the constitutional dictum of promoting the well-
being of children and protecting them from discrimination. Other
legislative enactments demonstrate the intent to treat foundlings
as Filipino citizens from birth.

Republic Act No. 8552, though briefly referred to as the Domestic


Adoption Act of 1998, is formally entitled An Act Establishing the
Rules and Policies on Domestic Adoption of Filipino
Children and for Other Purposes. It was enacted as a mechanism
to "provide alternative protection and assistance through foster
care or adoption of every child who is neglected, orphaned, or
abandoned." [236]
Foundlings are explicitly among the "Filipino children" covered by
Republic Act No. 8552: [237]

SECTION 5. Location of Unknown Parent(s). — It shall be the


duty of the Department or the child-placing or child-caring
agency which has custody of the child to exert all efforts to locate
his/her unknown biological parent(s). If such efforts fail, the
child shall be registered as a foundling and subsequently
be the subject of legal proceedings where he/she shall be
declared abandoned. (Emphasis supplied)
Similarly, Republic Act No. 8043, though briefly referred to as the
Inter-Country Adoption Act of 1995, is formally entitled An Act
Establishing the Rules to Govern Inter-Country Adoption of
Filipino Children, and for Other Purposes. As with Republic Act
No. 8552, it expressly includes foundlings among "Filipino
children" who may be adopted:
SECTION 8. Who May Be Adopted. — Only a legally free child
may be the subject of inter-country adoption, hi order that such
child may be considered for placement, the following documents
must be submitted: to the Board:

    a) Child study;

    b) Birth certificate/foundling certificate;

    c) Deed of voluntary commitment/decree of


abandonment/death certificate of parents;

    d) Medical evaluation/history;

    e) Psychological evaluation, as necessary; and

    f) Recent photo of the child. (Emphasis supplied)


In the case of foundlings, foundling certificates may be presented
in lieu of authenticated birth certificates to satisfy the
requirement for the issuance of passports, which will then
facilitate their adoption by foreigners:
SECTION 5. If the applicant is an adopted person, he must
present a certified true copy of the Court Order of Adoption,
certified true copy of his original and amended birth certificates
as issued by the OCRG. If the applicant is a minor, a Clearance
from the DSWD shall be required. In case the applicant is for
adoption by foreign parents under R.A. No. 8043, the following,
shall be required:

a) Certified true copy of the Court Decree of Abandonment of Child, the Death C
parents, or the Deed of Voluntary Commitment executed after the birth of the child.

b) Endorsement of child to the Intercountry Adoption Board by the DSWD.

c) Authenticated Birth or Foundling Certificate.  (Emphasis supplied)


[238]

Our statutes on adoption allow for the recognition of foundlings'


Filipino citizenship on account of their birth. They benefit from
this without having to do any act to perfect their citizenship or
without having to complete the naturalization process. Thus, by
definition, they are natural-born citizens.

Specifically regarding private respondent, several acts of


executive organs have recognized her natural-born status. This
status was never questioned throughout her life; that is, until
circumstances made it appear that she was a viable candidate for
President of the Philippines. Until this, as well as the proceedings
in the related case of Poe-Llamanzares, private respondent's
natural-born status has been affirmed and reaffirmed through
various official public acts.

First, private respondent was issued a foundling certificate and


benefitted from the domestic adoption process. Second, on July
18, 2006, she was granted an order of reacquisition of natural-
born citizenship under Republic Act No. 9225 by the Bureau of
Immigration. Third, on October 6, 2010, the President of the
Philippines appointed her as MTRCB Chairperson—an office that
requires natural-born citizenship. [239]

VIII
As it is settled that private respondent's being a foundling is not a
bar to natural-born citizenship, petitioner's proposition as to her
inability to benefit from Republic Act No. 9225 crumbles. Private
respondent, a natural-born Filipino citizen, re-acquired natural-
born Filipino citizenship when, following her naturalization as a
citizen of the United States, she complied with the requisites of
Republic Act No. 9225.

VIII. A

"Philippine citizenship may be lost or reacquired in the manner


provided by law."  Commonwealth Act No. 63, which was in
[240]

effect when private respondent was naturalized an American


citizen on October 18, 2001, provided in Section 1(1) that "[a]
Filipino citizen may lose his citizenship . . . [b]y naturalization in a
foreign country." Thus, private respondent lost her Philippine
citizenship when she was naturalized an American citizen.
However, on July 7, 2006, she took her Oath of Allegiance to the
Republic of the Philippines under Section 3 of Republic Act No.
9225. Three (3) days later, July 10, 2006, she filed before the
Bureau of Immigration and Deportation a Petition for
Reacquisition of her Philippine citizenship. Shortly after, this
Petition was granted. [241]

Republic Act No. 9225 superseded Commonwealth Act No.


63  and Republic Act No. 8171  specifically "to do away with the
[242] [243]

provision in Commonwealth Act No. 63 which takes away


Philippine citizenship from natural-born Filipinos who become
naturalized citizens of other countries." [244]

The citizenship regime put in place by Republic Act No. 9225 is


designed, in its own words, to ensure "that all Philippine citizens
who become citizens of another country shall be deemed not to
have lost their Philippine citizenship."  This Court shed light on
[245]

this in Calilung v. Commission on Elections:  "[w]hat Rep. Act


[246]

No. 9225 does is allow dual citizenship to natural-born Filipino


citizens who have lost Philippine citizenship by reason of their
naturalization as citizens of a foreign country."
[247]

Republic Act No. 9225 made natural-born Filipinos' status


permanent and immutable despite naturalization as citizens of
other countries. To effect this, Section 3 of Republic Act No. 9225
provides:
SEC. 3. Retention of Philippine Citizenship. — Any provision of law
to the contrary notwithstanding, natural-born citizens of the
Philippines who have lost their Philippine citizenship by reason of
their naturalization as citizens of a foreign country are hereby
deemed to have reacquired Philippine citizenship upon taking the
following oath of allegiance to the Republic:
"I _________________________, solemnly swear (or affirm)
that I will support and defend the Constitution of the Republic of
the Philippines and obey the laws and legal orders promulgated
by the duly constituted authorities of the Philippines; and I
hereby declare that I recognize and accept the supreme authority
of the Philippines and will maintain true faith and allegiance
thereto; and that I impose this obligation upon myself voluntarily
without mental reservation or purpose of evasion."
Natural-born citizens of the Philippines who, after the effectivity
of this Act, become citizens of a foreign country shall retain their
Philippine citizenship upon taking the aforesaid oath.
Section 3's implications are clear. Natural-born Philippine citizens
who, after Republic Act 9225 took effect, are naturalized in
foreign countries "retain," that is, keep, their Philippine
citizenship, although the effectivity of this retention and the
ability to exercise the rights and capacities attendant to this
status are subject to certain solemnities (i.e., oath of allegiance
and other requirements for specific rights and/or acts, as
enumerated in Section 5). On the other hand, those who became
citizens of another country before the effectivity of Republic Act
No. 9225 "reacquire" their Philippine citizenship and may
exercise attendant rights and capacities, also upon compliance
with certain solemnities. Read in conjunction with Section 2's
declaration of a policy of immutability, this reacquisition is not a
mere restoration that leaves a vacuum in the intervening period.
Rather, this reacquisition works to restore natural-born status as
though it was never lost at all.

VIII. B

Taking the Oath of Allegiance effects the retention or


reacquisition of natural-born citizenship. It also facilitates the
enjoyment of civil and political rights, "subject to all attendant
liabilities and responsibilities."  However, other conditions must
[248]

be met for the exercise of other faculties:


Sec. 5. Civil and Political Rights and Liabilities. - Those who retain
or re-acquire Philippine citizenship under this Act shall enjoy full
civil and political rights and be subject to all attendant liabilities
and responsibilities under existing laws of the Philippines and the
following conditions:

(1) Those intending to exercise their right of suffrage must meet the requirem
Article V of the Constitution, Republic Act No. 9189, otherwise known as "
Voting Act of 2003" and other existing laws;

(2) Those seeking elective public office in the Philippines shall meet the qualific
public office as required by the Constitution and existing laws and, at the tim
certificate of candidacy, make a personal and sworn renunciation o
citizenship before any public officer authorized to administer an oath;

(3) Those appointed to any public office shall subscribe and swear to an oath
Republic of the Philippines and its duly constituted authorities prior t
office; Provided, That they renounce their oath of allegiance to the countr
oath;

(4) Those intending to practice their profession in the Philippines shall apply with
a license or permit to engage in such practice; and

(5) That the right to vote or be elected or appointed to any public office in th
exercised by, or extended to, those who:

a. are candidates for or are occupying any public office in the country of whi
citizens; and/or

b. are in active service as commissioned or noncommissioned officers in the arm


which they are naturalized citizens. (Emphasis supplied)
Thus, natural-born Filipinos who have been naturalized elsewhere
and wish to run for elective public office must comply with all of
the following requirements:

First, taking the oath of allegiance to the Republic. This effects


the retention or reacquisition of one's status as a natural-born
Filipino.  This also enables the enjoyment of full civil and political
[249]

rights, subject to all attendant liabilities and responsibilities under


existing laws, provided the solemnities recited in Section 5 of
Republic Act No. 9225 are satisfied. [250]

Second, compliance with Article V, Section 1 of the 1987


Constitution,  Republic Act No. 9189, otherwise known as the
[251]

Overseas Absentee Voting Act of 2003, and other existing laws.


This is to facilitate the exercise of the right of suffrage; that is, to
allow for voting in elections. [252]

Third, "mak[ing] a personal and sworn renunciation of any and all


foreign citizenship before any public officer authorized to
administer an oath."  This, along with satisfying the other
[253]

qualification requirements under relevant laws, makes one


eligible for elective public office.

As explained in Sobejana-Condon v. Commission on Elections,


 this required sworn renunciation is intended to complement
[254]

Article XI, Section 18 of the Constitution in that "[p]ublic officers


and employees owe the State and this Constitution allegiance at
all times and any public officer or employee who seeks to change
his citizenship or acquire the status of an immigrant of another
country during his tenure shall be dealt with by law."  It is also
[255]

in view of this that Section 5(5) similarly bars those who seek or
occupy public office elsewhere and/or who are serving in the
armed forces of other countries from being appointed or elected
to public office in the Philippines.

VIII. C
Private respondent has complied with all of these requirements.
First, on July 7, 2006, she took the Oath of Allegiance to the
Republic of the Philippines.  Second, on August 31, 2006, she
[256]

became a registered voter of Barangay Santa Lucia, San Juan.


 This evidences her compliance with Article V, Section 1 of the
[257]

1987 Constitution. Since she was to vote within the country, this
dispensed with the need to comply with the Overseas Absentee
Voting Act of 2003. Lastly, on October 20, 2010, she executed an
Affidavit of Renunciation of Allegiance to the United States of
America and Renunciation of American Citizenship.  This was [258]

complemented by her execution of an Oath/Affirmation of


Renunciation of Nationality of the United States  before Vice-
[259]

Consul Somer E. Bessire-Briers on July 12, 2011,  which was, in


[260]

turn, followed by Vice Consul Jason Galian's issuance of a


Certificate of Loss of Nationality on December 9, 2011  and the [261]

approval of this certificate by the Overseas Citizen Service,


Department of State, on February 3, 2012. [262]

Private respondent has, therefore, not only fully reacquired


natural-born citizenship; she has also complied with all of the
other requirements for eligibility to elective public office, as
stipulated in Republic Act No. 9225.

VIII. D

It is incorrect to intimate that private respondent's having had to


comply with Republic Act No. 9225 shows that she is a
naturalized, rather than a natural-born, Filipino citizen. It is
wrong to postulate that compliance with Republic Act No. 9225
signifies the performance of acts to perfect citizenship.

To do so is to completely disregard the unequivocal policy of


permanence and immutability as articulated in Section 2 of
Republic Act No. 9225 and as illuminated in jurisprudence. It is to
erroneously assume that a natural-born Filipino citizen's
naturalization elsewhere is an irreversible termination of his or
her natural-born status.
To belabor the point, those who take the Oath of Allegiance under
Section 3 of Republic Act No. 9225 reacquire natural-born
citizenship. The prefix "re" signifies reference to the preceding
state of affairs. It is to this status quo ante that one returns.
"Re"-acquiring can only mean a reversion to "the way things
were." Had Republic Act No. 9225 intended to mean the
investiture of an entirely new status, it should not have used a
word such as "reacquire." Republic Act No. 9225, therefore, does
not operate to make new citizens whose citizenship commences
only from the moment of compliance with its requirements.

Bengson, speaking on the analogous situation of repatriation,


ruled that repatriation involves the restoration of former status or
the recovery of one's original nationality:
Moreover, repatriation results in the recovery of the original
nationality. This means that a naturalized Filipino who lost his
citizenship will be restored to his prior status as a naturalized
Filipino citizen. On the other hand, if he was originally a natural-
born citizen before he lost his Philippine citizenship, he will be
restored to his former status as a natural-born Filipino.
 (Emphasis supplied)
[263]

Although Bengson was decided while Commonwealth Act No. 63


was in force, its ruling is in keeping with Republic Act No. 9225 's
policy of permanence and immutablity: "all Philippine citizens of
another country shall be deemed not to have lost their Philippine
citizenship."  In Bengson's words, the once naturalized citizen is
[264]

"restored" or brought back to his or her natural-born status.


There may have been an interruption in the recognition of this
status, as, in the interim, he or she was naturalized elsewhere,
but the restoration of natural-born status expurgates this
intervening fact. Thus, he or she does not become a Philippine
citizen only from the point of restoration and moving forward. He
or she is recognized, de jure, as a Philippine citizen from birth,
although the intervening fact may have consequences de facto.

Republic Act No. 9225 may involve extended processes not


limited to taking the Oath of Allegiance and requiring compliance
with additional solemnities, but these are for facilitating the
enjoyment of other incidents to citizenship, not for effecting the
reacquisition of natural-born citizenship itself. Therefore, it is
markedly different from naturalization as there is no singular,
extended process with which the former natural-born citizen must
comply.

IX

To hold, as petitioner suggests, that private respondent is


stateless  is not only to set a dangerous and callous precedent.
[265]

It is to make this Court an accomplice to injustice.

Equality, the recognition of the humanity of every individual, and


social justice are the bedrocks of our constitutional order. By the
unfortunate fortuity of the inability or outright irresponsibility of
those gave them life, foundlings are compelled to begin their very
existence at a disadvantage. Theirs is a continuing destitution
that can never be truly remedied by any economic relief.

If we are to make the motives of our Constitution true, then we


an never tolerate an interpretation that condemns foundlings to
an even greater misfortune because of their being abandoned.
The Constitution cannot be rendered inert and meaningless for
them by mechanical judicial fiat.

Dura lex sed lex is not a callous and unthinking maxim to be


deployed against other reasonable interpretations of our basic
law. It does command us to consider legal text, but always with
justice in mind.

It is the empowering and ennobling interpretation of the


Constitution that we must always sustain. Not only will this
manner of interpretation edify the less fortunate; it establishes
us, as Filipinos, as a humane and civilized people.

The Senate Electoral Tribunal acted well within the bounds of its
constitutional competence when it ruled that private respondent
is a natural-born citizen qualified to sit as Senator of the
Republic. Contrary to petitioner's arguments, there is no basis for
annulling its assailed Decision and Resolution.

WHEREFORE, the Petition for Certiorari is DISMISSED. Public


respondent Senate Electoral Tribunal did not act without or in
excess of its jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction in rendering its
assailed November 17, 2015 Decision and December 3, 2015
Resolution.

Private respondent Mary Grace Poe-Llamanzares is a natural-born


Filipino citizen qualified to hold office as Senator of the Republic.

SO ORDERED.

Sereno, C. J., Velasco, Jr., Peralta, Bersamin, Perez,


and Caguioa, JJ., concur.
Carpio, J., no part.
Leonardo-De Castro, J., no part.
Brion, J., no part.
Del Castillo, J., not natural born until proven otherwise.
Mendoza, J., with some reservation.
Reyes, J., dissenting.
Perlas-Bernabe, J., please see dissenting opinion.
Jardeleza, J., in result.

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on September 20,


2016 a Decision/Resolution, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the
original of which was received by this Office on October 3, 2016
at 2:04 p.m.
 Rollo, pp. 3-76. The Petition was filed under Rule 65 of the 1997
[1]

Rules of Civil Procedure.

[2]
 Id. at 73.

[3]
 Id. at 227-258.

[4]
 CONST., art. VI, sec. 3 provides:

SECTION 3. No person shall be a Senator unless he is a natural-


born citizen of the Philippines, and, on the day of the election, is
at least thirty-five years of age, able to read and write, a
registered voter, and a resident of the Philippines for not less
than two years immediately preceding the day of the election

[5]
 Rollo, pp. 80-83.

[6]
 Id. at 8.

[7]
 Id. See also rollo, p. 227, SET Decision.

[8]
 Id.

[9]
 Id. at 227.

[10]
 Id. at 681, Poe Comment.

[11]
 Id. at 8.
[12]
 Id. at 681.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 Id. at 9.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 228.

[21]
 Id. at 682.

[22]
 Id. at 9 and 682.

[23]
 Id. at 9.

[24]
 Id. at 682-683.

[25]
 Id. at 228.

[26]
 Id.

[27]
 Id. at 9.

[28]
 Id. at 683.

[29]
 Id.

[30]
 Id. at 9.
[31]
 Id.

[32]
 Id. at 683.

[33]
 Id. at 9.

[34]
 Id.

[35]
 Id. at 683.

[36]
 Id. at 10.

[37]
 Id.

[38]
 Id.

[39]
 Id.

[40]
 Id. at 684.

[41]
 Id. at 228.

[42]
 Id. at 684.

[43]
 Id.

[44]
 Id. at 685.

[45]
 Id.

[46]
 Id.

[47]
 Id. at 228.

[48]
 Id. at 10.

[49]
 Id. at 685.
[50]
 Id. at 228.

[51]
 Id. 686.

[52]
 Id. at 228.

[53]
 Id. at 686.

[54]
 Id.

[55]
 Id.

[56]
 Id. at 686-687.

[57]
 Id. at 687.

[58]
 Id.

[59]
 Id. at 256.

[60]
 Id.

[61]
 Id.

[62]
 Id. at 10.

[63]
 Id. at 687.

[64]
 Id. at 687-688.

[65]
 Id. at 688.

[66]
 Id. at 229.

[67]
 Id. at 689, Poe Comment.

[68]
 Id. at 229.
[69]
 Id.

[70]
 Id.

[71]
 Id.

[72]
 Id.

[73]
 Id.

[74]
 Id.

[75]
 Id.

[76]
 Id.

[77]
 Id.

[78]
 Id. at 230.

[79]
 Id.

[80]
 Id.

[81]
 Id.

[82]
 Id.

[83]
 Id.

[84]
 Id.

[85]
 Id.

[86]
 Id.

[87]
 Id.
[88]
 Id. at 231.

[89]
 Id.

[90]
 Id.

[91]
 Id.

[92]
 Id.

[93]
 Id.

[94]
 Id.

[95] Id.

[96]
 Id.

[97]
 Id.

[98]
 Id.

[99]
 Id. at 257.

[100]
 Id. at 253-257.

[101]
 Id. at 84-100.

[102]
 Id. at 80, SET Resolution No. 15-12.

[103]
 Id. at 81.

[104]
 Id. at 80-83.

[105]
 Id. at 82.

[106]
 Id. at 7.
[107]
 Id. at 7-8.

[108]
 Id. at 647, SET Comment.

[109] Id.

[110]
 Id. at 669.

[111]
 Id. at 677-828.

 A counterpart electoral tribunal for the positions of President


[112]

and Vice-President was also created by the seventh paragraph of


Article VII, Section 4 of the 1987 Constitution.

CONST., art. VII, sec. 4 provides:

SECTION 4 . . . .

....

The Supreme Court, sitting en banc, shall be the sole judge of all
contests relating to the election, returns, and qualifications of the
President or Vice-President, and may promulgate its rules for the
purpose.

 Trial courts and the Commission on Elections still exercise


[113]

jurisdiction over contests relating to the election, returns, and


qualifications of local elective offices.

CONST., art. IX-C, sec. 2(2) provides:

SECTION 2. The Commission on Elections shall exercise the


following powers and functions:

....

(2) Exercise exclusive original jurisdiction over all contests


relating to the elections, returns, and qualifications of all elective
regional, provincial, and city officials, and appellate jurisdiction
over all contests involving elective municipal officials decided by
trial courts of general jurisdiction or involving elective barangay
officials decided by trial courts of limited jurisdiction.

Decisions, final orders, or rulings of the Commission on election


contests involving elective municipal and barangay offices shall
be final, executory, and not appealable.

 The term "contest" refers to post-election disputes. In Tecson


[114]

v. Commission on Elections, 468 Phil. 421 (2004) [Per J. Vitug,


En Banc], this Court referring to the counterpart electoral tribunal
for the President and Vice President — the Presidential Electoral
Tribunal - explained: "Ordinary usage would characterize a
"contest" in reference to a post-election scenario. Election
contests consist of eitheir an election protest or a quo warranto
which, although two distinct remedies, would have one objective
in view, i.e. to dislodge the whining candidate from office. A
perusal of the phraseology in Rule 12, Rule 13, and Rule 14 of the
"Rules of the Presidential Electoral Tribunal" promulgated by the
Supreme Court en banc on 18 April 1992, would support this
premise. . . .

"The rules categorically speak of the jurisdiction of the tribunal


over contests relating to the election, returns and qualifications of
the "President" or "Vice-President", of the Philippines, and not of
"candidates" for President or Vice-President. A quo
warranto proceeding is generally defined as being an action
against a person who usurps, intrudes into, or unlawfully holds or
exercises a public office. In such context, the election contest can
only contemplate a post-election scenario. In Rule 14, only a
registered candidate who would have received either the second
or third highest number of votes could file an election protest.
This rule again presupposes a post-election scenario.

"It is fair to conclude that the jurisdiction of the Supreme Court


[sitting as the Presidential Electoral Tribunal], defined by Section
4, paragraph 7, of the 1987 Constitution, would not include cases
directly brought before it, questioning the qualifications of a
candidate for the presidency or vice-presidency before the
elections are held."

 Lazatin v. House of Representatives Electoral Tribunal, 250


[115]

Phil. 390, 399 (1988). [Per J. Cortes, En Banc].

[116]
 CONST. (1935), art. VI, sec. 4 provides:

SECTION 4. There shall be an Electoral Commission composed of


three Justices of the Supreme Court designated by the Chief
Justice, and of six Members chosen by the National Assembly,
three of whom shall be nominated by the party having the largest
number of votes, and three by the party having the second
largest number of votes therein. The senior Justice in the
Commission shall be its Chairman. The Electoral Commission shall
be the sole judge of all contests relating to the election, returns,
and qualifications of the Members of the National Assembly.

[117]
 CONST. (1935 amended), art. VI, sec. 11 provides:

SECTION 11. The Senate and the House of Representatives shall


have an Electoral Tribunal which shall be the sole judge of all
contests relating to the election, returns, and qualifications of
their respective Members. Each Electoral Tribunal shall be
composed of nine Members, three of whom shall be Justices of
the Supreme Court to be designated by the Chief Justice, and the
remaining six shall be Members of the Senate or the House of
Representatives, as the case may be, who shall be chosen by
each House, three upon nomination of the party having the
largest number of votes and three of the party having the second
largest numbers of votes therein. The senior Justice in each
Electoral Tribunal shall be its Chairman.

[118]
 250 Phil. 390 (1988) [Per J. Cortes, En Banc].

[119]
 Id. at 399-400.
[120]
 347 Phil. 797 (1997) [Per J. Vitug, En Banc].

[121]
 Id. at 804-805.

 See J. Leonen, Concurring Opinions in Rappler v. Bautista, G.R.


[122]

No. 222702, April 5, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/april2016/222702.pdf> 2-3 [Per J.
Carpio, En Banc] and in Villanueva v. Judicial Bar Council, G.R.
No. 211833, April 7, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/211833_leonen.pdf> 4-5 [Per
J. Reyes, En Banc].

[123]
 RULES OF COURT, Rule 65, sec. 1 provides:

SECTION 1. Petition for certiorari. — When any tribunal, board or


officer exercising judicial or quasi-judicial functions has acted
without or in excess its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is
no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the


judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third
paragraph of section 3, Rule 46.

 Mitra v. Commission on Elections, 636 Phil. 753, 777 (2010)


[124]

[Per J. Brion, En Banc].


 Abosta Shipmanagement Corporation v. National Labor
[125]

Relations Commission (First Division) and Arnulfo R. Flores, 670


Phil. 136, 151 (2011) [Per J. Brion, Second Division].

 Nightowl Watchman & Security Agency, Inc. v. Lumahan, G.R.


[126]

No. 212096, October 14, 2015


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/october2015/212096.pdf> 7 [Per J.
Brion, Second Division].

 Mitra v. Commission on Elections, 636 Phil. 753, 777-778, 782


[127]

(2010) [Per J. Brion, En Banc].

[128]
 Id. at 787.

 Id. at 778. In Mitra, this Court faulted the Commission on


[129]

Elections for relying on very select facts that appeared to have


been appreciated precisely in such a manner as to make it appear
that the candidate whose residence was in question was not
qualified. Viewing these facts in isolation indicated a practically
deliberate, ill-intentioned intent at sustaining a previously-
conceived myopic conclusion:

"In considering the residency issue, the [Commission on


Elections] practically focused solely on its consideration of Mitra's
residence at Maligaya Feedmill, on the basis of mere photographs
of the premises. In the [Commission on Elections'] view
(expressly voiced out by the Division and fully concurred in by the
En Banc), the Maligaya Feedmill building could not have been
Mitra's residence because it is cold and utterly devoid of any
indication of Mitra's personality and that it lacks loving attention
and details inherent in every home to make it one's residence.
This was the main reason that the [Commission on Elections]
relied upon for its conclusion.

"Such assessment, in our view, based on the interior design and


furnishings of a dwelling as showm by and examined only through
photographs, is far from reasonable; the [Commission on
Elections] thereby determined the fitness of a dwelling as a
person's residence based solely on very personal and subjective
assessment standards when the law is replete with standards that
can be used. Where a dwelling qualifies as a residence - i.e., the
dwelling where a person permanently intends to return to and to
remain - his or her capacity or inclination to decorate the place,
or the lack of it, is immaterial."

 In Varias v. Commission on Elections, 626 Phil. 292, 314-315


[130]

(2010) [Per J. Brion, En Banc], this Court, citing Pecson v.


Commission on Elections, 595 Phil. 1214, 1226 (2008) [Per J.
Brion, En Banc] stated: "[A] court abuses its discretion when it
lacks jurisdiction, fails to consider and make a record of the
factors relevant to its determination, relies on clearly erroneous
factual findings, considers clearly irrelevant or improper factors,
clearly gives too much weight to one factor, relies on erroneous
conclusions of law or equity, or misapplies its factual or legal
conclusions."

[131]
 RULES OF COURT, Rule 133, sec. 5.

[132]
 CONST., art. IV, sec. 1(2):

SECTION 1. The following are citizens of the Philippines:

....

(2) Those whose fathers or mothers are citizens of the


Philippines[.]

 Ang Bagong Bayani-OFW Labor Party v. Commission on


[133]

Elections, 412 Phil. 308, 338 (2001) [Per J. Panganiban, En


Banc].

 See J. Leonen, Dissenting Opinion in Chavez v. Judicial and Bar


[134]

Council, 709 Phil. 478, 501-523 (2013) [Per J. Mendoza, En


Banc].
 Francisco v. House of Representatives, 460 Phil. 830, 885
[135]

(2003) [Per J. Carpio Morales, En Banc], citing J.M. Tuason & Co.,


Inc. v. Land Tenure Administration, 142 Phil. 393 (1970) [Per J.
Fernando, Second Division]. This was also cited in Saguisag v.
Ochoa, G.R. No. 212426, January 12, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/212426.pdf> [Per C.J.
Sereno, En Banc].

 Francisco v. House of Representatives, 460 Phil. 830, 886


[136]

(2003) [Per J. Carpio Morales, En Banc].

 La Bugal-B'laan Tribal Association, Inc. v. Ramos (Resolution),


[137]

486 Phil. 754, 773 (2004) [Per J. Panganiban, En Banc] states


that "[t]he Constitution should be read in broad, life-giving
strokes."

[138]
 272 Phil. 147 (1991) [Per C.J. Fernan, En Banc].

 Id. at 162, as cited in Atty. Macalintal v. Presidential Electoral


[139]

Tribunal, 650 Phil. 326, 341 (2010) [Per J. Nachura, En Banc].

[140]
 CIVIL CODE, art. 8.

 Senarillos v. Hermosisima, 100 Phil. 501, 504 (1956) [Per J. J.


[141]

B. L. Reyes, En Banc].

 The adoption of the Philippine Bill of 1902, otherwise known as


[142]

the Philippine Organic Act of 1902, crystallized the concept of


"Philippine citizens." See Tecson v. Commission on Elections, 468
Phil. 421, 467-468 (2004) per J. Vitug, En Banc].

 For example, the Civil Code of Spain became effective in the


[143]

jurisdiction on December 18, 1889, making the first categorical


listing on who were Spanish citizens. See Tecson v. Commission
on Elections, 468 Phil. 421, 465 (2004) [Per J. Vitug, En Banc].
 G.R.
[144]
No. 208062, April 7, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/208062.pdf> [Per J. Leonen,
En Banc].

[145]
 Id. at 26.

 Sobejana-Condon v. Commission on Elections, 692 Phil. 407,


[146]

421 (2012) [Per J. Reyes, En Banc]: "Ambiguity is a condition of


admitting two or more meanings, of being understood in more
than one way, or of referring to two or more things at the same
time. For a statute to be considered ambiguous, it must admit of
two or more possible meanings."

 See, for example, In the Matter of Save the Supreme Court


[147]

Judicial Independence and Fiscal Autonomy Movement v.


Abolition of Judiciary Development Fund, UDK-15143, January
21, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/15143.pdf> [Per J.
Leonen, En Banc], citing J. Leonen, Concurring Opinion in Belgica
v. Ochoa, G.R. No. 208566, November 19, 2013, 710 SCRA 1,
278-279 [Per J. Perlas-Bernabe, En Banc].

 Cf. what was previously discussed regarding previous judicial


[148]

decisions on the very same text.

 Francisco, Jr. v. House of Representatives, 460 Phil. 830, 887


[149]

[Per J. Carpio Morales, En Banc], citing Civil Liberties Union v.


Executive Secretary, 272 Phil. 147, 169-170 (1991) [Per C.J.
Fernan, En Banc].

 The 1935 Constitution was in effect when petitioner was born.


[150]

However, the provisions are now substantially similar to the


present Constitution, except that the present Constitution
provides clarity for "natural born" status. For comparison, the
1935 provisions state:

SECTION 1. The following are citizens of the Philippines.


(1) Those who are citizens of the Philippine Islands at the time of
the adoption of this Constitution.

(2) Those born in the Philippine Islands of foreign parents who,


before the adoption of this Constitution, had been elected to
public office in the Philippine Islands.

(3) Those whose fathers are citizens of the Philippines.

(4) Those whose mothers are citizens of the Philippines and, upon
reaching the age of majority, elect Philippine citizenship.

(5) Those who are naturalized in accordance with law.

SECTION 2. Philippine citizenship may be lost or reacquired in the


manner provided by law.

 C.J. Warren, Dissenting Opinion in Perez v. Brownwell, 356


[151]

U.S. 44 (1958).

 Go v. Republic of the Philippines, G.R. 202809, July 2, 2014,


[152]

729 SCRA 138, 149 [Per J. Mendoza, Third


Division], citing BERNAS, THE 1987 CONSTITUTION OF THE
REPUBLIC OF THE PHILIPPINES, A COMMENTARY (2009 ed.).

[153] Id.

[154]
 468 Phil. 421 (2004) [Per J.Vitug, En Banc].

[155]
 Id. at 464-470.

[156]
 Id. at 464.

[157] Id.

[158]
 Id. at 465.
[159] Id.

[160]
 Id. at 465-466, citing The Civil Code of Spain, art. 17.

 Id. at 466-467, citing RAMON M. VELAYO,


[161]
PHILIPPINE
CITIZENSHIP AND NATURALIZATION 22-23 (1965).

 Id. at 466, citing RAMON M. VELAYO, PHILIPPINE CITIZENSHIP


[162]

AND NATURALIZATION 22-23 (1965).

[163]
 Id. at 467.

[164]
 Id. at 467-468.

[165] Id.

[166]
 Id. at 468.

[167] Id.

[168]
 Id. at 469.

[169] Id.

[170] Id.

[171]
 CONST. (1973), art. III, secs. 1 and 2.

[172]
 CONST. (1973), art. III, sec. 4.

 Tecson v. Commission on Elections, 468 Phil. 421, 470 (2004)


[173]

[Per J. Vitug, En Banc].

 The 1935 Constitution was in effect when petitioner was born.


[174]

However, the provisions are now substantially similar to the


present Constitution, except that the present Constitution
provides clarity for "natural born" status. For comparison, the
1935 provisions state:
SECTION 1. The following are citizens of the Philippines.

(1) Those who are citizens of the Philippine Islands at the time of
the adoption of this Constitution.

(2) Those born in the Philippine Islands of foreign parents who,


before the adoption of this Constitution, had been elected to
public office in the Philippine Islands.

(3) Those whose fathers are citizens of the Philippines.

(4) Those whose mothers are citizens of the Philippines and, upon
reaching the age of majority, elect Philippine citizenship.

(5) Those who are naturalized in accordance with law.

SECTION 2. Philippine citizenship may be lost or reacquired in the


manner provided by law.

 See Charles Gordon, Who Can Be President of the United


[175]

States: The Unresolved Enigma, 28 Md. L. Rev. 1, 5 (1968).

[176]
 Id. at 3-4.

[177]
 Id. at 5.

[178]
 409 Phil. 633 (2001) [Per J. Kapunan, En Banc].

[179]
 Id. at 651.

[180]
 Id. at 656.

[181]
 See Rep. Act No. 9139 (2000), sec. 5 provides:

SECTION 5. Petition for Citizenship. — (1) Any person desiring to


acquire Philippine, citizenship under this Act shall file with the
Special Committee on Naturalization created under Section 6
hereof, a petition of five (5) copies legibly typed and signed,
thumbmarked and verified by him/her, with the latter's passport-
sized photograph attached to each copy of the petition, and
setting forth the following:

....

Com. Act No. 473, sec.7 provides:

SECTION 7. Petition for Citizenship. — Any person desiring to


acquire Philippine citizenship shall file with the competent court, a
petition in triplicate, accompanied by two photographs of the
petitioner, setting forth his name and surname; his present and
former places of residence; his occupation; the place and date of
his birth; whether single or married and if the father of children,
the name, age, birthplace and residence of the wife and of the
children; the approximate date of his or her arrival in the
Philippines, the name of the port of debarkation, and, if he
remembers it, the name of the ship on which he came; a
declaration that he has the qualifications required by this Act,
specifying the same, and that he is not disqualified for
naturalization under the provisions of this Act; that he has
complied with the requirements of section five of this Act; and
that he will reside continuously in the Philippines from the date of
the filing of the petition up to the time of his admission to
Philippine citizenship. The petition must be signed by the
applicant in his own handwriting and be supported by the affidavit
of at least two credible persons, stating that they are citizens of
the Philippines and personally know the petitioner to be a
resident of the Philippines for the period of time required by this
Act and a person of good repute and morally irreproachable, and
that said petitioner has in then opinion all the qualifications
necessary to become a citizen of the Philippines and is not in any
way disqualified under the provisions of this Act. The petition
shall also set forth the names and post-office addresses of such
witnesses as the petitioner may desire to introduce at the hearing
of the case. The certificate of arrival, and the declaration of
intention must be made part of the petition.
[182]
 See Rep. Act No. 9139 (2000), sec. 3 provides:

SECTION 3. Qualifications. — Subject to the provisions of the


succeeding section, any person desiring to avail of the benefits of
this Act must meet the following qualifications:

(a) The applicant must be born in the Philippines and residing


therein since birth;

(b) The applicant must not be less than eighteen (18) years of
age, at the time of filing of his/her petition;

(c) The applicant must be of good moral character and believes in


the underlying principles of the Constitution, and must have
conducted himselfherself in a proper and irreproachable manner
during his/her entire period of residence in the Philippines in his
relation with the duly constituted government as well as with the
community in which he/she is living;

(d) The applicant must have received his/her primary and


secondary education in any public school or private educational
institution duly recognized by the Department of Education,
Culture and Sports, where Philippine history, government and
civics are taught and prescribed as part of the school curriculum
and where enrollment is not limited to any race or nationality:
Provided, That should he/she have minor children of school age,
he/she must have enrolled them in similar schools;

(e) The applicant must have a known trade, business, profession


or lawful occupation, from which he/she derives income sufficient
for his/her support and if he/she is married and/or has
dependents, also that of his/her family: Provided, however, That
this shall not apply to applicants who are college degree holders
but are unable to practice their profession because they are
disqualified to do so by reason of their citizenship;
(f) The applicant must be able to read, write and speak Filipino or
any of the dialects of the Philippines; and

(g) The applicant must have mingled with the Filipinos and
evinced a sincere desire to learn and embrace the customs,
traditions and ideals of the Filipino people.

Comm. Act No. 473, sec. 2 provides:

SECTION 2. Qualifications. — Subject to section four of this Act,


any person having the following qualifications may become a
citizen of the Philippines by naturalization:

First. He must be not less than twenty-one years of age on the


day of the hearing of the petition;

Second. He must have resided in the Philippines for a continuous


period of not less than ten years;

Third. He must be of good moral character and believes in the


principles underlying the Philippine Constitution, and must have
conducted himself in a proper and irreproachable manner during
the entire period of his residence in the Philippines in his relation
with the constituted government as well as with the community in
which he is living.

Fourth. He must own real estate in the Philippines worth not less
than five thousand pesos, Philippine currency, or must have some
known lucrative trade, profession, or lawful occupation;

Fifth. He must be able to speak and write English or Spanish and


any of the principal Philippine languages;

Sixth. He must have enrolled his minor children of school age, in


any of the public schools or private schools recognized by the
Office of Private Education of the Philippines, where Philippine
history, government and civics are taught or prescribed as part of
the school curriculum, during the entire period of the residence in
the Philippines required of him prior to the hearing of his petition
for naturalization as Philippine citizen.

[183]
 Rep. Act No. 9139 (2000), sec. 4 provides:

SECTION 4. Disqualifications. — The following are not qualified to


be naturalized as Filipino citizens under this Act:

(a) Those opposed to organized government or affiliated with any


association or group of persons who uphold and teach doctrines
opposing all organized governments;

(b) Those defending or teaching the necessity of or propriety of


violence, personal assault or assassination for the success or
predominance of their ideas;

(c) Polygamists or believers in the practice of polygamy;

(d) Those convicted of crimes involving moral turpitude;

(e) Those suffering from mental alienation or incurable


contagious diseases;

(f) Those who, during the period of their residence in the


Philippines, have not mingled socially with Filipinos, or who have
not evinced a sincere desire to learn and embrace the customs,
traditions and ideals of the Filipinos;

(g) Citizens or subjects with whom the Philippines is at war,


during the period of such war; and

(h) Citizens or subjects of a foreign country whose laws do not


grant Filipinos the right to be naturalized citizens or subjects
thereof.

Com. Act No. 473 (1939), sec. 4 provides:


SECTION 4. Who are Disqualified. — The following can not be
naturalized as Philippine citizens:

(a) Persons opposed to organized government or affiliated with


any association or group of persons who uphold and teach
doctrines opposing all organized governments;

(b) Persons defending or teaching the necessity or propriety of


violence, personal assault or assassination for the success and
predominance of their ideas;

(c) Polygamists or believers in the practice of polygamy;

(d) Persons convicted of crimes involving moral turpitude;

(e) Persons suffering from mental alienation or incurable


contagious diseases;

(f) Persons who, during the period of their residence in the


Philippines, have not mingled socially with the Filipinos, or who
have not evinced a sincere desire to learn and embrace the
customs, traditions, and ideals of the Filipinos;

(g) Citizens or subjects of nations with whom the United States


and the Philippines are at war, during the period of such war;

(h) Citizens or subjects of a foreign country other than the United


States, whose laws do not grant Filipinos the right to become
naturalized citizens or subjects thereof.

[184]
 The Civil Code states:

Article 37. Juridical capacity, which is the fitness to be the subject


of legal relations, is inherent in every natural person and is lost
only through death. Capacity to act, which is the power to do acts
with legal effect, is acquired and may be lost.
Article 38. Minority, insanity or imbecility, the state of being a
deaf-mute, prodigality and civil interdiction are mere restrictions
on capacity to act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise from his acts or
from property relations, such as easements.

Article 39. The following circumstances, among others, modify or


limit capacity to act: age, insanity, imbecility, the state of being a
deaf-mute, penalty, prodigality, family relations, alienage,
absence, insolvency and trusteeship. The consequences of these
circumstances are governed in this Code, other codes, the Rules
of Court, and in special laws. Capacity to act is not limited on
account of religious belief or political opinion.

A married woman, twenty-one years of age or over, is qualified


for all acts of civil life, except in cases specified by law.

[185]
 571 Phil. 170 (2008) [Per J. Chico-Nazario, Third Division].

 Id. at 189-190, citing Lack County v. Neilon, 44 Or. 14, 21, 74,


[186]

p. 212; State v. Avery, 113 Mo. 475, 494, 21 S.W. 193;


and Reynolds Trial Ev., Sec. 4, p. 8.

[187]
 374 Phil. 810 (1999) [Per J. Quisumbing, Second Division].

[188]
 Id. at 822.

 See Lua v. O'Brien, et al., 55 Phil. 53 (1930) [Per J. Street, En


[189]

Banc]; Vda. De Laig, et al. v. Court of Appeals, 172 Phil. 283


(1978) [Per J. Makasiar, First Division]; Baloloy v. Hular, 481
Phil. 398 (2004) [Per J. Callejo, Sr., Second Division]; and Heirs
of Celestial v. Heirs of Celestial, 455 Phil. 704 (2003) [Per J.
Ynares-Santiago, First Division].

 Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940)


[190]

[Per J. Laurel, En Banc]. Also, Rule 133, Section 5 of the Revised


Rules on Evidence states:
Section 5. Substantial evidence. — In cases filed before
administrative or quasi-judicial bodie's, a fact may be deemed
established if it is supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.

[191]
 Rollo, p. 8.

 See J. Leonen, Concurring Opinion in Poe-Llamanzares v.


[192]

Commission on Elections, G.R. No. 221698-700, March 8, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/march2016/221697_leonen.pdf> 83
[Per J. Perez, En Banc].

[193] Id.

[194] Id.

 G.R.
[195]
No. 221698-700, March 8, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/march2016/221697.pdf>

 J. Leonen, Dissenting Opinion in Poe-Llamanzares v.


[196]

Commission on Elections, G.R. No. 221698-700, March 8, 2016


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/march2016/221697_leonen.pdf> 83
[Per J. Perez, En Banc].

[197]
 Id. at 84.

 Uytengsu III v. Baduel, 514 Phil. 1 (2005) [Per J. Tinga,


[198]

Second Division].

 Jison v. Court of Appeals, 350 Phil. 138 (1998) [Per J. Davide,


[199]

Jr., First Division].

[200] Id.
 Tañada v. Angara, 338 Phil. 546 (1997) [Per J. Panganiban, En
[201]

Banc].

[202]
 RULES OF COURT, Rule 133, sec. 5.

[203]
 Rollo, pp. 56-58.

 Tecson v. Commission on Elections, 468 Phil. 421, 473-474


[204]

(2004) [Per J. Vitug, En Banc].

[205]
 Id. at 473-474 and 488.

[206]
 Id. at 487-488.

[207]
 128 Phil. 815 (1967) [Per J. Zaldivar, En Banc].

 614 Phil. 451, 479 (2009) [Per J. Quisumbing, Second


[208]

Division].

[209]
 128 Phil. 815, 825 (1967) [Per J. Zaldivar, En Banc].

 Go v. Ramos, 614 Phil. 451, 479 (2009) [Per J. Quisumbing,


[210]

Second Division].

 Civil Liberties Union v. Executive Secretary, 272 Phil. 147, 162


[211]

(1991) [Per C.J. Fernan, En Banc].

[212]
 CONST., art. VII, sec. 2 provides:

ARTICLE VII. Executive Department

....

SECTION 2. No person may be elected President unless he is a


natural-born citizen of the Philippines, a registered voter, able to
read and write, at least forty years of age on the day of the
election, and a resident of the Philippines for at least ten years
immediately preceding such election.
[213]
 CONST., art. VII, sec. 3.

[214]
 CONST., art. VI, sec. 3 provides:

ARTICLE VI. The Legislative Department

....

SECTION 3. No person shall be a Senator unless he is a natural-


born citizen of the Philippines, and, on the day of the election, is
at least thirty-five years of age, able to read and write, a
registered voter, and a resident of the Philippines for not less
than two years immediately preceding the day of the election.

[215]
 CONST., art. VI, sec. 6 provides:

ARTICLE VI. The Legislative Department

....

SECTION 6. No person shall be a Member of the House of


Representatives unless he is a natural-born citizen of the
Philippines and, on the day of the election, is at least twenty-five
years of age, able to read and write, and, except the party-list
representatives, a registered voter in the district in which he shall
be elected, and a resident thereof for a period of not less than
one year immediately preceding the day of the election.

[216]
 CONST., art. VIII, sec. 7(1) provides:

ARTICLE VIII. Judicial Department

....

SECTION 7. (1) No person shall be appointed Member of the


Supreme Court or any lower collegiate court unless he is a
natural-born citizen of the Philippines. A Member of the Supreme
Court must be at least forty years of age, and must have been for
fifteen years or more a judge of a lower court or engaged in the
practice of law in the Philippines.

[217]
 CONST., art. LX-B, sec. 1(1) provides:

ARTICLE IX. Constitutional Commissions

....

B. The Civil Service Commission

SECTION 1. (1) The Civil Service shall be administered by the


Civil Service Commission composed of a Chairman and two
Commissioners who shall be natural-born citizens of the
Philippines and, at the time of their appointment, at least thirty-
five years of age, with proven capacity for public administration,
and must not have been candidates for any elective position in
the elections immediately preceding their appointment.

[218]
 CONST., art. IX-C, sec. 1(1) provides:

ARTICLE IX. Constitutional Commissions

....

C. The Commission on Elections

SECTION 1. (1) There shall be a Commission on Elections


composed of a Chairman and six Commissioners who shall be
natural-born citizens of the Philippines and, at the time of their
appointment, at least thirty-five years of age, holders of a college
degree, and must not have been candidates for any elective
position in the immediately preceding elections. However, a
majority thereof, including the Chairman, shall be Members of the
Philippine Bar who have been engaged in the practice of law for
at least ten years.
[219]
 CONST., art. IX-D, sec. 1(1) provides:

ARTICLE IX. Constitutional Commissions

....

D. Commission on Audit

SECTION 1. (1) There shall be a Commission on Audit composed


of a Chairman and two Commissioners, who shall be natural-born
citizens of the Philippines and, at the time of men-appointment,
at least thirty-five years of age, certified public accountants with
not less than ten years of auditing experience, or members of the
Philippine Bar who have been engaged in the practice of law for
at least ten years, and must not have been candidates for any
elective position in the elections immediately preceding their
appointment. At no time shall all Members of the Commission
beloiig to the same profession.

[220]
 CONST., art. XI, sec.8 provides:

ARTICLE XI. Accountability of Public Officers

....

SECTION 8. The Ombudsman and his Deputies shall be natural-


born citizens of the Philippines, and at the time of their
appointment, at least forty years old, of recognized probity and
independence, and members of the Philippine Bar, and must not
have been candidates for any elective office in the immediately
preceding election. The Ombudsman must have for ten years or
more been a judge or engaged in the practice of law in the
Philippines.

[221]
 CONST., art. XII, sec. 20 provides:

ARTICLE XII. National Economy and Patrimony


....

SECTION 20. The Congress shall establish an independent central


monetary authority, the members of whose governing board must
be natural-born Filipino citizens, of known probity, integrity, and
patriotism, the majority of whom shall come from the private
sector. They shall also be subject to such other qualifications and
disabilities as may be prescribed by law. The authority shall
provide policy direction in the areas of money, banking, and
credit. It shall have supervision over the operations of banks and
exercise such regulatory powers as may be provided by law over
the operations of finance companies and other institutions
performing similar functions.

[222]
 CONST., art. XIII, sec. 17(2) provides:

ARTICLE XIII. Social Justice and Human Rights

....

Human Rights

SECTION 17. . . .

(2) The Commission shall be composed of a Chairman and four


Members who must be natural-born citizens of the Philippines and
a majority of whom shall be members of the Bar. The term of
office and other qualifications and disabilities of the Members of
the Commission shall be provided by law.

 Rep. Act No. 3537 (1963), sec. 1. Section thirty-eight of


[223]

Republic Act Numbered Four hundred nine, as amended by


Republic Act Numbered Eighteen hundred sixty and Republic Act
Numbered Three thousand ten, is further amended to read as
follows:

Sec. 38. The City Fiscal and Assistant City Fiscals. — There shall
be in the Office of the City Fiscal one chief to be known as the
City Fiscal with the rank, salary and privileges of a Judge of the
Court of First Instance, an assistant chief to be known as the first
assistant city fiscal, three second assistant city fiscals who shall
be the chiefs of divisions, and fifty-seven assistant fiscals, who
shall discharge their duties under the general supervision of the
Secretary of Justice. To be eligible for appointment as City Fiscal
one must be a natural born citizen of the Philippines and must
have practiced law in the Philippines for a period of not less than
ten years or held during a like period of an office in the Philippine
Government requiring admission to the practice of law as an
indispensable requisite. To be eligible for appointment as
assistant fiscal one must be a natural born citizen of the
Philippines and must have practiced law for at least five years
prior to his appointment or held during a like period an office in
the Philippine Government requiring admission to the practice of
law as an indispensable requisite. (Emphasis supplied)

[224]
 Rep. Act No. 3537 (1963).

 Examples of these are: the Land Transportation Office


[225]

Commissioner, the Mines and Geosciences Bureau Director, the


Executive Director of Bicol River Basin, the Board Member of the
Energy Regulatory Commission, and the National Youth
Commissioner, among others.

 Examples of these are pharmacists and officers of the


[226]

Philippine Coast Guard, among others.

 Among these incentives are state scholarships in science and


[227]

certain investment rights.

 Sameer v. Cabiles, G.R. No. 170139, August 5, 2014, 732


[228]

SCRA 22, 57 [Per J. Leonen, En Banc].

 People v. Cayat, 68 Phil. 12, 18 (1939) [Per J. Moran, First


[229]

Division].

[230]
 Ratified on August 21, 1990.
 See United Nations Treaty Collection, Convention on the Rights
[231]

of the Child (visited March 7, 2016).

[232]
 Ratified on October 23, 1986.

 See Bayan v. Zamora, 396 Phil. 623, 657-660 (2000) [Per J.


[233]

Buena, En Banc], citing the Vienna Convention on the Laws of


Treaties.

[234]
 561 Phil. 386 (2007) [Per J. Austria-Martinez, En Banc].

[235]
 Id. at 397-398.

[236]
 Rep. Act No. 8552 (1998), sec. 2(b) provides:

Section 2 (b). In all matters relating to the care, custody and


adoption of a child, his/her interest shall be the paramount
consideration in accordance with the tenets set forth in the United
Nations (UN) Convention on the Rights of the Child; UN
Declaration on Social and Legal Principles Relating to the
Protection and Welfare of Children with Special Reference to
Foster Placement and Adoption, Nationally and Internationally;
and the Hague Convention on the Protection of Children and
Cooperation in Respect of Intercountry Adoption. Toward this
end, the State shall provide alternative protection and assistance
through foster care or adoption for every child who is neglected,
orphaned, or abandoned.

 See also Rep. Act No. 9523 (2009), An Act Requiring the


[237]

Certification of the Department of Social Welfare and


Development (DSWD) to Declare a "Child Legally Available for
Adoption" as a Prerequisite for Adoption Proceedings, Amending
for this Purpose Certain Provision of Rep. Act No. 8552, otherwise
known as the Inter-country Adoption Act of 1995, Pres. Decree
No. 603, otherwise known as the Child and Youth Welfare Code,
and for Other Purposes.
Rep. Act No. 9523 (2009), sec. 2 provides:

SECTION 2. Definition of Terms. — As used in this Act, the


following terms shall mean:

(1) Department of Social Welfare and Development (DSWD) is


the agency charged to implement the provisions of this Act and
shall have the sole authority to issue the certification declaring a
child legally available for adoption.

....

(3) Abandoned Child refers to a child who has no proper parental


care or guardianship, or whose parent(s) have deserted him/her
for a period of at least three (3) continuous months, which
includes a foundling.

 DFA Order No. 11-97, Implementing Rules and Regulations for


[238]

Rep. Act No. 8239 (1997), Philippine Passport Act.

[239]
 Pres. Decree No. 1986, sec. 2 provides:

Section 2. Composition; qualifications; benefits. - The BOARD


shall be composed of a Chairman, a Vice-Chairman and thirty
(30) members, who shall all be appointed by the President of the
Philippines. The Chairman, the Vice-Chairman, and the members
of the BOARD, shall hold office for a term of one (1) year, unless
sooner removed by the President for any cause; Provided, That
they shall be eligible for re-appointment after the expiration of
their term. If the Chairman, or the Vice-Chairman or any member
of the BOARD fails to complete his term, any person appointed to
fill the vacancy shall serve only for the unexpired portion of the
term of the BOARD member whom he succeeds.

No person shall be appointed to the BOARD, unless he is a


natural-born citizen of the Philippines, not less than twenty-one
(21) years of age, and of good moral character and standing in
the community; Provided, That in the selection of the members of
the BOARD due consideration shall be given to such qualifications
as would produce a multi-sectoral combination of expertise in the
various areas of motion picture and television; Provided, further,
That at least five (5) members of the BOARD shall be members of
the Philippine Bar. Provided, finally That at least fifteen (15)
members of the BOARD may come from the movie and television
industry to be nominated by legitimate associations representing
the various sectors of said industry.

The Chairman, the Vice-Chairman and the other members of the


BOARD shall be entitled to transportation, representation and
other allowances which shall in no case exceed FIVE THOUSAND
PESOS (P5,000.00) per month.

[240]
 CONST, art. IV, sec. 3.

[241]
 Rollo, pp. 685-686.

 An Act Providing for the Ways in which Philippine Citizenship


[242]

may be Lost or Reacquired.

 An Act Providing for the Repatriation of Filipino Women who


[243]

have Lost their Philippine Citizenship by Marriage to Aliens and


Natural-born Filipinos.

 See Calilung v. Commission on Elections, 551 Phil. 110, 117-18


[244]

(2007) [Per J. Quisumbing, En Banc] in which this Court stated


that this was the clear intent of the legislature when it enacted
Republic Act No. 9225.

[245]
 Rep. Act No. 9225 (2003), sec. 2.

[246]
 551 Phil. 110 (2007) [Per J. Quisumbing, En Banc].

[247]
 Id. at 118.

[248]
 Rep. Act No. 9225 (2003), sec. 5.
[249]
 Rep. Act No. 9225 (2003), sec. 3, par. 2:

Section 3. Retention of Philippine Citizenship - . . .

Natural-born citizens of the Philippines who, after the effectivity


of this Act, become citizens of a foreign country shall retain their
Philippine citizenship upon taking the aforesaid oath.

[250]
 Rep. Act No. 9225 (2003), sec. 5 provides:

Section 5. Civil and Political Rights and Liabilities - Those who


retain or re-acquire Philippine citizenship under this Act shall
enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines
and the following conditions:

....

[251]
 CONST., art. V, sec. 1 provides:

Section 1. Suffrage maybe exercised by all citizens of the


Philippines not otherwise disqualified by law, who are at least
eighteen years of age, and who shall have resided in the
Philippines for at least one year, and in the place wherein they
propose to vote, for at least six months immediately preceding
the election. No literacy, property, or other substantive
requirement shall be imposed on the exercise of suffrage.

[252]
 Rep. Act No. 9225 (2003), sec. 5(1) provides:

Section 5. Civil and Political Rights and Liabilities - Those who


retain or re-acquire Philippine citizenship under this Act shall
enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines
and the following conditions:

(1) Those intending to exercise their right of suffrage must meet


the requirements under Section 1, Article V of the Constitution,
Republic Act No. 9189, otherwise known as "The Overseas
Absentee Voting Act of 2003" and other existing laws;

[253]
 Rep. Act No. 9225 (2003), sec. 5(2) provides:

Section 5. Civil and Political Rights and Liabilities - Those who


retain or re-acquire Philippine citizenship under this Act shall
enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines
and the following conditions:

....

(2) Those seeking elective public in the Philippines shall meet the
qualification for holding such public office as required by the
Constitution and existing laws and, at the time of the filing of the
certificate of candidacy, make a personal and sworn renunciation
of any and all foreign citizenship before any public officer
authorized to administer an oath;

[254]
 692 Phil. 407 (2012) [Per J. Reyes, En Banc].

[255]
 Id. at 428.

[256]
 Rollo, p. 10.

[257]
 Id. at 687.

[258] Id.

[259]
 Id. at 229.

[260] Id.

[261] Id.

[262] Id.
 Bengson v. Bouse of Representatives Electoral Tribunal, 409
[263]

Phil. 633, 649 (2001) [Per J. Kapunan, En Banc].

[264]
 Rep. Act No. 9225 (2003), sec. 2.

[265]
 Rollo, p. 35.

DISSENTING OPINION

PERLAS-BERNABE, J.:

I dissent.

I respectfully submit that the Senate Electoral Tribunal (SET)


committed grave abuse of discretion in ruling that private
respondent Mary Grace Poe-Llamanzares (respondent) was a
natural-born citizen and, thus, qualified to hold office as Senator
of the Republic of the Philippines. [1]

An act of a court or tribunal can only be considered as committed


with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to
lack of jurisdiction. The abuse of discretion must be so patent and
gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion and hostility.
 In this relation, "grave abuse of discretion arises when
[2]

a lower court or tribunal patently violates the Constitution,


the law or existing jurisprudence." [3]

The advent of the 1935 Constitution established the principle


of jus sanguinis as basis for acquiring Philippine citizenship.
 Following this principle, citizenship is conferred by virtue of
[4]

blood relationship to a Filipino parent. [5]


It was admitted that respondent was a foundling with unknown
facts of birth and parentage. On its face, Section 1, Article IV of
the 1935 Constitution - the applicable law to respondent's case -
did not include foundlings in the enumeration of those who are
considered Filipino citizens. It reads:
Section 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippine Islands at the time of the adoption of this C

(2) Those born in the Philippine Islands of foreign parents who, before the adoption o
been elected to public office in the Philippine Islands.

(3) Those whose fathers are citizens of the Philippines.

(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of
citizenship.

(5) Those who are naturalized in accordance with law.


This case was originally a quo warranto proceeding before the
SET.  The initial burden, thus, fell upon petitioner Rizalito Y.
[6]

David to show that respondent lacked the qualifications of a


Senator. However, upon respondent's voluntary admission that
she was a foundling, the burden of evidence was shifted to her.
In his Dissenting Opinion before the SET, Associate Justice Arturo
D. Brion pertinently explains:
[I]n quo warranto, the petitioner who challenges the respondent's
qualification to office carries the burden of proving, by
preponderance of evidence, the facts constituting the
disqualification. Upon such proof, the burden shifts to the
respondent who must now present opposing evidence constituting
his or her defense or establishing his or her affirmative defense.

xxxx

In the present case, the petitioner has alleged that the


respondent is a foundling. He posits that, as a foundling has no
known parents from whom to trace the origins of her citizenship,
the respondent is not a Filipino citizen and is, therefore, not
eligible for the position of senator.

Significantly, the respondent admitted her status as a foundling,


thus, lifting the petitioner's burden of proving his claim that she is
a foundling. With the admission, the fact necessary to establish
the petitioner's claim is considered established. [7]

In this case, respondent failed to present competent and


sufficient evidence to prove her blood relation to a Filipino parent
which is necessary to determine natural-born citizenship pursuant
to the jus sanguinis principle. This notwithstanding,
the ponencia concludes that the following circumstances are
substantial evidence justifying the inference that respondent's
biological parents are Filipino:
[8]

(a) Circumstances of abandonment: Respondent was found as


a newborn infant outside the Parish Church of Jaro, Iloilo on
September 3, 1968. In 1968, Iloilo, as did most if not all other
Philippine provinces, had a predominantly Filipino population. In
1968, there was also no international airport in Jaro, Iloilo.

(b) Physical features: She is described as having "brown


almond-shaped eyes, a low nasal bridge, straight black hair and
an oval-shaped face." She stands at only 5 feet and 2 inches tall.

(c) Statistical inference: in the related case of Poe-


Llamanzares v. Commission on Elections,  former Solicitor
[9]

General Florin T. Hilbay underscored how it was statistically more


probable that respondent was born a Filipino citizen, submitting
that out of 900,165 recorded births in the Philippines in 1968,
over 1,595 or 0.18% were foreigners. This translates to, roughly,
a 99.8% probability that respondent was born a Filipino citizen.

However, the foregoing "circumstantial evidence" do not


adequately prove the determination sought to be established:
that is, whether or not respondent can trace her parentage to a
Filipino citizen. These circumstances can be easily debunked by
contrary but likewise rationally-sounding suppositions. Case law
holds that "[m]atters dealing with qualifications for public elective
office must be strictly complied with."  The proof to hurdle a
[10]

substantial challenge against a candidate's qualifications must


therefore be solid. This Court cannot make a definitive
pronouncement on a candidate's citizenship when there is a
looming possibility that he/she is not Filipino. The circumstances
surrounding respondent's abandonment (both as to the milieu of
time and place), as well as her physical characteristics, hardly
assuage this possibility. By parity of reasoning, they do not prove
that she was born to a Filipino: her abandonment in the
Philippines is just a restatement of her foundling status, while her
physical features only tend to prove that her parents likely had
Filipino features and yet it remains uncertain if their citizenship
was Filipino. More so, the statistics cited - assuming the same to
be true - do not account for all births but only of those recorded.
To my mind, it is uncertain how "encompassing" was the
Philippine's civil registration system at that time - in 1968 - to be
able to conclude that those statistics logically reflect a credible
and representative sample size. And even assuming it to be so,
1,595 were reflected as foreigners, rendering it factually possible
that respondent belonged to this class. Ultimately, the opposition
against respondent's natural-born citizenship claim is simple but
striking: the fact that her parents are unknown directly puts into
question her Filipino citizenship because she has no prima
facie link to a Filipino parent from which she could have traced
her Filipino citizenship.

Absent satisfactory proof establishing any blood relation to a


Filipino parent, and without any mention in the 1935 Constitution
that foundlings are considered or even presumed to be Filipino
citizens at birth, it is my view that, under the auspices of the
1935 Constitution, respondent could not be considered a natural-
born Filipino citizen. As worded, the provisions of Section 1,
Article IV of the 1935 Constitution are clear, direct, and
unambiguous. This Court should therefore apply the statutory
construction principles of expressio unius est exclusio
alterius and verba legis non est recedendum. Consequently, it
would be unnecessary to resort to the constitutional deliberations
or to examine the underlying intent of the framers of the 1935
Constitution. In Civil Liberties Union v. The Executive Secretary,
 this Court remarked that:
[11]

Debates in the constitutional convention "are of value as


showing the views of the individual members, and as
indicating the reasons for their votes, but they give us no
light as to the views of the large majority who did not talk, much
less of the mass of our fellow citizens whose votes at the polls
gave that instrument the force of fundamental law. We think it
[is] safer to construe the constitution from what appears
upon its face." [12]

In fact, it should be pointed out that the 1935 Constitution, as it


was adopted in its final form, never carried over any proposed
provision on foundlings being considered or presumed to
be Filipino citizens. Its final exclusion is therefore indicative of
the framers' prevailing intent.  The ponencia's
[13]
theorized
"harmonization"  of the constitutional provisions on citizenship
[14]

with the provisions on the promotion of children's well-being,


 equal protection,  public service,  and even human dignity and
[15] [16] [17]

human rights  appears to be a tailor-fitted advocacy for allowing


[18]

foundlings to run for key national posts that, quite frankly,


stretches the import of these distinct provisions to the separate
and unique matter of citizenship. There seems to be an evident
logical problem with the argument that since the Constitution
protects its children, and respects human rights and equality to
run for office, then ergo, foundlings should be presumed to be
natural-born. It appears that this approach aims to collate all
possibly related constitutional text, albeit far-flung, just to divine
a presumption when unfortunately, there is none.

Moreover, as Senior Associate Justice Antonio T. Carpio (Justice


Carpio) aptly pointed out in his Dissenting Opinion before the
SET, it would be insensible to suppose that the framers of the
1935 Constitution intended that foundlings be considered as
natural-born citizens:
[N]one of the framers of the 1935 Constitution mentioned the
term natural-born in relation to the citizenship of foundlings.
Again, under the 1935 Constitution, only those whose fathers
were Filipino citizens were considered natural-born citizens. Those
who were born of Filipino mothers and alien fathers were still
required to elect Philippine citizenship, preventing them from
being natural-born citizens. If, as respondent would like us to
believe, the framers intended that foundlings be considered
natural-born Filipino citizens, this would create an absurd
situation where a child with unknown parentage would be placed
in a better position than child whose mother is actually known to
be a Filipino citizen. The framers of the 1935 Constitution could
not have intended to create such absurdity. [19]

While the predicament of foundlings of having their parents


unknown would seem to entail the difficult, if not impossible, task
of proving their Filipino parentage, the current state of the law
which requires evidence of blood relation to a Filipino parent to
establish natural-born citizenship under the jus
sanguinis principle must be respected at all costs. This is not to
say that the position of foundlings in relation to their endeavors
for high public offices has been overlooked in this discourse.
Rather, the correction of this seeming "misfortune" - as
the ponencia would suppose  - lies in legislative revision, not
[20]

judicial supplication. For surely, it is not for this Court to step in


and supply additional meaning when clarity is evoked in the
citizenship provisions of the Constitution.

For another, I would also like to express my reservations on


the ponencia's reliance on Tecson v. Commission on
Elections  (Tecson) wherein this Court resolved that respondent's
[21]

adoptive father, Ronald Allan Kelley Poe, more popularly known


as Fernando Poe Jr. (FPJ), was qualified to run for the presidential
post during the 2004 National Elections which, according to
the ponencia,  was based on the basis of "presumptions" that
[22]

proved his status as a natural-born citizen. In that case, the


identity of FPJ's parents, Allan F. Poe and Bessie Kelley, was
never questioned. More importantly, there was direct
documentary evidence to trace Allan F. Poe's parentage to
Lorenzo Pou, whose death certificate identified him to be a
Filipino. Thus, by that direct proof alone, there was a substantial
trace of Allan F. Poe's parentage to a Filipino (Lorenzo Pou),
which in turn, allowed the substantial tracing of FPJ's parentage
to a Filipino (Allan F. Poe). As such, FPJ was declared qualified to
run for the presidential post in 2004. The Court further explained
that while the birth certificate of FPJ's grandfather, Lorenzo Pou,
was not presented, it could be assumed that the latter was born
in 1870 while the Philippines was still a colony of Spain. This
inference was drawn from the fact that Lorezo Pou died at the
age of 84 years old in 1954. Thus, absent any evidence to the
contrary, and against petitioner therein's bare allegation, Lorenzo
Pou was deemed to be a resident of the Philippines and hence, a
Filipino citizen by operation of the Philippine Organic Act of 1902,
 on the premise that the place of residence of a person at the
[23]

time of his death was also his residence before his death. In any
event, the certified true copy of the original death certificate of
Lorenzo Pou reflecting that he was a Filipino citizen was enough
basis to trace FPJ's Filipino natural-born citizenship. As the Court
aptly cited, according to Section 44, Rule 130 of the Rules of
Court, "entries in official records made in the performance of his
duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated."

In contrast, by her admission as a foundling whose parents are


unknown, and without presenting any other evidence to show any
substantial tracing of Filipino parentage similar to FPJ, the legal
and factual nuances of respondent's case should be treated
differently. Accordingly, Tecson provides no authoritative
jurisprudential anchorage to this case.

Finally, it bears stressing that they jus sanguinis principle of


citizenship established in the 1935 Constitution was subsequently
carried over and adopted in the 1973 and 1987 Constitutions.
 Thus, notwithstanding the existence of any treaty or generally
[24]

accepted principle of international law which purportedly evince


that foundlings are accorded natural-born citizenship in the State
in which they are found, the same, nonetheless, could not be
given effect as it would contravene the Constitution. To recall,
should international law be adopted in this jurisdiction, it would
only form part of the sphere of domestic law.  Being relegated to
[25]

the same level as domestic laws, they could not modify or alter,
much less prevail, over the express mandate of the Constitution.
In this relation, I deem it fitting to echo the point made by
Associate Justice Teresita J. Leonardo-De Castro, likewise in her
Separate Opinion before the SET:
Citizenship is not automatically conferred under the international
conventions cited but will entail an affirmative action of the State,
by a national law or legislative enactment, so that the nature of
citizenship, if ever acquired pursuant thereto, is citizenship by
naturalization. There must be a law by which citizenship can be
acquired. By no means can this citizenship be considered that of
a natural-born character under the principle of jus sanguinis in
the Philippine Constitution.[26]

For all these reasons, I unfortunately depart from the ruling of


the majority and perforce submit that the SET committed grave
abuse of discretion in declaring respondent a natural-born citizen.
The majority ruling runs afoul of and even distorts the plain
language of the Constitution which firmly and consistently follows
the jus sanguinis principle. In the final analysis, since respondent
has not presented any competent and sufficient evidence to prove
her blood relation to a Filipino parent in these proceedings, she
should not be deemed to be a natural-born citizen of the
Philippines, which, thus, renders the instant petition meritorious.
Nonetheless, it is important to point out that respondent is not
precluded from later on proving her natural-born citizenship
through such necessary evidence in the appropriate proceeding
therefor, considering that a decision determining natural-born
citizenship never becomes final.  I reach these conclusions solely
[27]

under the peculiar auspices of this case and through nothing but
my honest and conscientious assessment of the facts parallel to
the applicable legal principles. As a magistrate of this High Court,
I am impelled to do no less than fulfill my duty to faithfully
interpret the laws and the Constitution, bereft of any politics or
controversy, or of any regard to the tides of popularity or gleam
of any personality.

WHEREFORE, I vote to GRANT the petition.


[1]
 See Section 3, Article VI of the 1987 Constitution.

 Carpio-Morales v. Court of Appeals, G.R. Nos. 217126-27,


[2]

November 10, 2015, citing Yu v. Reyes-Carpio, 667 Phil. 474,


481-482 (2011).

 See id., citing Tagolino v. House of Representatives Electoral


[3]

Tribunal, 706 Phil. 534, 558 (2013).

[4]
 Valles v. Commission on Elections, 392 Phil. 327, 336 (2000).

[5]
 Id.

[6]
 Docketed as SET Case No. 001-15.

 See Dissenting Opinion of Justice Brion in David v. Poe-


[7]

Llamanzares, SET Case No. 001-15, November 17, 2015, pp. 12-
13.

[8]
 See ponencia, pp. 39-40.

[9]
 See G.R. Nos. 221697 and 221698-221700, March 8, 2016.

[10]
 See Arnado v. COMELEC, G.R. No. 210164, August 18, 2015.

[11]
 272 Phil. 147 (1991).

[12]
 Id. at 169-170.

 See Civil Liberties Union v. The Executive Secretary, 272 Phil.


[13]

147, 157 (1991).

[14]
 Ponencia, pp. 45-50.

[15]
 Section 13, Article II of the 1987 Constitution provides:
Section 13. The State recognizes the vital role of the youth in
nation-building and shall promote and protect their physical,
moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and encourage
their involvement in public and civic affairs.
Section 3, Article XV of the 1987 Constitution also provides:
Section 3. The State shall defend:

xxxx
 
(3) The right of children to assistance, including proper care and nutrition, and special p
of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their deve

xxxx
 Section 1, Article III of the 1987 Constitution reads:
[16]

Section 1. No person shall be deprived of life, liberty, or property


without due process of law, nor shall any person be denied the
equal protection of the laws.
 Section 26, Article II of the 1987 Constitution states:
[17]

Section 26. The State shall guarantee equal access to


opportunities for public service and prohibit political dynasties as
may be defined by law.
 Section 1, Article XIII of the 1987 Constitution provides:
[18]

Section 1. The Congress shall give highest priority to the


enactment of measures that protect and enhance the right of all
the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good.

xxxx
Section 11, Article II of the 1987 Constitution states:
Section 11. The State values the dignity of every human person
and guarantees full respect for human rights.
 See Dissenting Opinion of Justice Carpio in David v. Poe-
[19]

Llamanzares, SET Case No. 001-15, November 17, 2015, pp. 28-
29.

[20]
 See ponencia, pp. 18-19.
[21]
 468 Phil. 421 (2004).

[22]
 See ponencia, pp. 42-43.

 See Section 4 of the Philippine Organic Act of 1902, entitled


[23]

"AN ACT TEMPORARILY TO PROVIDE FOR THE ADMINISTRATION


OF THE AFFAIRS OF CIVIL GOVERNMENT IN THE PHILIPPINE
ISLANDS, AND FOR OTHER PURPOSES."

 See Valles v. Commission on Elections, supra note 4, at 336-


[24]

337.

 Pharmaceutical and Health Care Assoc. of the Phils, v. Duque


[25]

III, 561 Phil. 386, 397-398 (2007).

 See Separate Opinion of Justice De Castro in David v. Poe-


[26]

Llamanzares, SET Case No. 001-15, November 17, 2015, p. 18.

 See Dissenting Opinion of Justice Carpio in David v. Poe-


[27]

Llamanzares, SET Case. No. 001-15, p. 35, citing Kilosbayan


Foundation v. Ermita, 553 Phil. 331, 343-344 (2007).

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778 Phil. 235


SECOND DIVISION

[ G.R. No. 198627, January 13, 2016 ]


DST MOVERS CORPORATION, PETITIONER, VS.
PEOPLE'S GENERAL INSURANCE CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

A determination of where the preponderance of evidence lies is a


factual issue which, as a rule, cannot be entertained in a Rule 45
petition. When, however, the sole basis of the trial court for ruling
on this issue is evidence that should not have been admitted for
being hearsay, this court will embark on its own factual analysis
and will, if necessary, reverse the rulings of the lower courts. A
traffic accident investigation report prepared by a police officer
relying solely on the account of a supposed eyewitness and not
on his or her personal knowledge is not evidence that is
admissible as an exception to the Hearsay Rule.

This resolves a Petition for Review on Certiorari  under Rule 45 of


[1]

the 1997 Rules of Civil Procedure praying that the assailed May
11, 2011 Decision  and September 8, 2011 Resolution  of the
[2] [3]

Court of Appeals Former Twelfth Division in CA-G.R. SP No.


109163 be reversed and set aside, and that a new one be entered
dismissing respondent People's General Insurance Corporation's
(PGIC) Complaint for Sum of Money. [4]

In its assailed May 11, 2011 Decision, the Court of Appeals


affirmed with modification the ruling of Branch 47 of the Regional
Trial Court of Manila in Civil Case No. 07-118093 which, in turn,
affirmed in toto the ruling of Branch 22 of the Metropolitan Trial
Court of Manila in Civil Case No. 181900. In its assailed
September 8, 2011 Resolution, the Court of Appeals denied
petitioner DST Movers Corporation's (DST Movers) Motion for
Reconsideration. [5]

The Metropolitan Trial Court of Manila found DST Movers liable to


pay PGIC the amount of P90,000.00 by way of actual damages
plus interest as well as P10,000.00 for attorney's fees and costs
of suit.  The Court of Appeals ordered DST Movers to pay PGIC
[6]

the amount of P25,000.00 as temperate damages in lieu of the


original award of P90,000.00 as actual damages. [7]

In a Complaint for Sum of Money filed before the Metropolitan


Trial Court of Manila, PGIC alleged that at about 10:30 p.m. on
February 28, 2002, along the South Luzon Expressway and in the
area of Bilibid, Muntinlupa City, a Honda Civic sedan with plate
number URZ-976 (sedan) was hit on the rear by an Isuzu Elf
truck with plate number UAL-295 (truck). PGIC underscored that
the sedan was on a stop position when it was hit. The sedan was
then allegedly pushed forward, thereby hitting a Mitsubishi
Lancer. The driver of the truck then allegedly escaped. [8]

In support of its recollection of the events of February 28, 2002,


PGIC relied on a Traffic Accident Investigation Report (Report)
prepared by PO2 Cecilio Grospe Tomas (PO2 Tomas) of the
Muntinlupa City Traffic Enforcement Unit of the Philippine National
Police. This was attached as Annex "E"  of PGIC's Complaint and
[9]

also as Annex "E"  of its Position Paper. It stated:


[10]

TRAFFIC ACCIDENT INVESTIGATION REPORT


(Entry No. 805-285-0202)

Time and
: At about 10:30 p.m. February 28, 2002
date
Place : along SLEX, Bilibid N/B, Muntinlupa City
Weather : Fair
Nature : RIR/DTP/PI (hit and run)

Inv
vehicle
(3)

Vehicle-1 : Honda civic


Plate no. : URZ-976
Driver
: MA. ADELINE YUBOCO Y DELA CRUZ
(injured)
Lic. no. : N03-96-213671
Address : 24 Hernandez St., BF Homes Parañaque City
Reg.
: Fidel Yuboco
Owner
Address : same as driver
Damage : rear & front portion, whole right side portion

Vehicle-2 : Mits. Lancer


Plate no. : CMM-373
Driver : HARRISON TUQUERO Y VALDEZ
Lic. no. : 014-02-032855
Address : 13-16 Carolina St., Villasol Subd., Angeles City
Reg.
: Edgardo Tuquero
Owner
Address : 518 Obio st., Villasol Subd., Angeles City
Damage : left side rear portion

Vehicle-3 : Truck
Plate no. : UAL-295
Driver : Unidentified
Damage : Undetermine [sic]
Reportee : G. Simbahon of PNCC/SLEX

FACTS:

It appears that while V1 was on stop position facing north at the


aforesaid place of occurrence when the rear portion of the same
was allegedly hit/bumped by V3 which was moving same
direction on the same place due to strong impact V1 pushed
forward and hit the left side rear portion of V2 causing damages
and injuries thereon. After the impact, V3 escaped towards
undisclosed direction and left V1 & V2 at the place of accident.
During investigation V1 & V2 driver gave voluntary handwritten
statement and they were advised to submit medical certificate,
estimate/photos of damages as annexes.

Status of the case: For follow-up.............

(sgd.)
PO2 Cecilio Grospe Tomas PNP
- on case - [11]

The truck was supposedly subsequently discovered to be owned


by DST Movers.  The sedan was covered by PGIC's insurance
[12]

under Policy No. HAL-PC-1314.  As a result of the February 28,


[13]

2002 incident, the sedan's owner, Fidel Yuboco, filed a total loss
claim with PGIC in the amount of P320,000.00. PGIC paid Fidel
Yuboco the entire amount of P320,000.00. [14]

Asserting that it was subrogated to Fidel Yuboco's rights and that


the proximate cause of the mishap was the negligence of the
driver of the truck, PGIC, through counsel, sent DST Movers
demand letters. PGIC demanded from DST Movers the amount of
P90,000.00, which represented the difference between the
P320,000.00 paid by PGIC to Yuboco and the salvage price of
P230,000.00, at which PGIC was supposedly able to sell what
remained of the sedan. [15]

Its demands not having been satisfied, PGIC proceeded to file its
Complaint  for Sum of Money before the Metropolitan Trial Court
[16]

of Manila. This case was docketed as Civil Case No. 181900. [17]

In its Answer,  DST Movers acknowledged that it was the owner


[18]

of the truck. However, it claimed that the truck did not make any
trips on February 28, 2002 as it was undergoing repairs and
maintenance.  In support of this affirmative defense, DST Movers
[19]

attached as Annexes "1" to "1-F"  copies of invoices, receipts,


[20]

and cash vouchers relating to repairs and maintenance


procedures that were undertaken on the truck on specific dates,
which included February 28, 2002.

Following the submission of the parties' position papers, Branch


22 of the Metropolitan Trial Court Manila rendered its
Decision  favoring PGIC's version of events and finding DST
[21]

Movers liable. The dispositive portion of this Decision reads:


WHEREFORE, judgment is hereby rendered in favor of the plaintiff
and against the defendant ordering to pay the latter to pay the
[sic] of Php90,000.00 as actual damages plus interest of 12% per
annum from the date of filing of the complaint and the sum of
Php10,000.00 as and for attorney's fees and the costs of suit.

SO ORDERED. [22]

On appeal, the ruling of the Metropolitan Trial Court was affirmed


in toto by Branch 47 of the Regional Trial Court of Manila.[23]

DST Movers then filed before the Court of Appeals a Petition for
Review under Rule 42 of the 1997 Rules of Civil Procedure.

In its assailed May 11, 2011 Decision, the Court of Appeals


affirmed the rulings of the Regional Trial Court and the
Metropolitan Trial Court. However, it noted that PGIC failed to
prove actual loss with reasonable certainty. As such, the Court of
Appeals deleted the award of P90,000.00 in actual damages and
replaced it with an award of P25,000.00 in temperate damages.

In its assailed September 8, 2011 Resolution,  the Court of


[24]

Appeals denied DST Movers' Motion for Reconsideration.

Hence, DST Movers filed the present Petition insisting that its
liability was not established by a preponderance of evidence.
Specifically, it faults the Metropolitan Trial Court for ruling in
favor of PGIC despite how its version of events was supported by
nothing more the Traffic Accident Investigation Report. It asserts
that reliance on this Report was misplaced as it was supposedly
"improperly identified [and] uncorroborated."[25]

For resolution is the issue of whether petitioner DST Movers


Corporation's liability was established by a preponderance of
evidence. Subsumed in this is whether it was an error for the
Metropolitan Trial Court to admit and lend evidentiary weight to
the piece of evidence chiefly relied upon by respondent People's
General Insurance Corporation: the Traffic Accident Investigation
Report prepared by PO2 Tomas.

I
Petitioner comes to this court through a Petition for Review on
Certiorari under Rule 45 of the 1997 Rules of Civil Procedure. It
invites this court to reconsider the consistent rulings of the Court
of Appeals, the Regional Trial Court, and the Metropolitan Trial
Court that petitioner's liability arising from the February 28, 2002
incident was established by a preponderance of evidence.

A Rule 45 petition pertains to questions of law and not to factual


issues. Rule 45, Section 1 of the 1997 Rules of Civil Procedure is
unequivocal:
SECTION 1. Filing of Petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.
This court's Decision in Cheesman v. Intermediate Appellate
Court  distinguished questions of law from questions of fact:
[26]

As distinguished from a question of law — which exists "when the


doubt or difference arises as to what the law is on a certain state
of facts" — "there is a question of fact when the doubt or
difference arises as to the truth or the falsehood of alleged facts;"
or when the "query necessarily invites calibration of the whole
evidence considering mainly the credibility of witnesses, existence
and relevancy of specific surrounding circumstances, their
relation to each other and to the whole and the probabilities of
the situation."  (Citations omitted)
[27]

Seeking recourse from this court through a petition for review on


certiorari under Rule 45 bears significantly on the manner by
which this court shall treat findings of fact and evidentiary
matters. As a general rule, it becomes improper for this court to
consider factual issues: the findings of fact of the trial court, as
affirmed on appeal by the Court of Appeals, are conclusive on this
court. "The reason behind the rule is that [this] Court is not a
trier of facts and it is not its duty to review, evaluate, and weigh
the probative value of the evidence adduced before the lower
courts." [28]
A determination of whether a matter has been established by a
preponderance of evidence is, by definition, a question of fact. It
entails an appreciation of the relative weight of the competing
parties' evidence. Rule 133, Section 1 of the Revised Rules on
Evidence provides a guide on what courts may consider in
determining where the preponderance of evidence lies:
SECTION 1. Preponderance of evidence, how determined. — In
civil cases, the party having the burden of proof must establish
his case by a preponderance of evidence. In determining where
the preponderance or superior weight of evidence on the issues
involved lies, the court may consider all the facts and
circumstances of the case, the witnesses' manner of testifying,
their intelligence, their means and opportunity of knowing the
facts to which they are testifying, the nature of the facts to which
they testify, the probability or improbability of their testimony,
their interest or want of interest, and also their personal
credibility so far as the same may legitimately appear upon the
trial. The court may also consider the number of witnesses,
though the preponderance is not necessarily with the greater
number.
Consistent with Cheesman, such determination is a "query [that]
necessarily invites calibration of the whole evidence considering
mainly the credibility of witnesses, existence and relevancy of
specific surrounding circumstances, their relation to each other
and to the whole and the probabilities of the situation." [29]

On point as regards civil liability for damages, this court in Caina


v. People of the Philippines  explained:
[30]

Questions on whether or not there was a preponderance of


evidence to justify the award of damages or whether or not there
was a causal connection between the given set of facts and the
damage suffered by the private complainant or whether or not
the act from which civil liability might arise exists are questions of
fact.
[31]

Equally on point, this court has explained in many instances that


a determination of the causes of and circumstances relating to
vehicular accidents is a factual matter that this court may not
revisit when the findings of the trial court and the Court of
Appeals are completely in accord.

In Industrial Insurance Co. v. Bondad: [32]

Questions regarding the cause of the accident and the persons


responsible for it are factual issues which we cannot pass upon. It
is jurisprudentially settled that, as a rule, the jurisdiction of this
Court is limited to a review of errors of law allegedly committed
by the appellate court. It is not bound to analyze and weigh all
over again the evidence already considered in the proceedings
below. [33]

Likewise, in Viron Transportation v. Delos Santos: [34]

The rule is settled that the findings of the trial court especially
when affirmed by the Court of Appeals, are conclusive on this
Court when supported by the evidence on record. The Supreme
Court will not assess and evaluate all over again the evidence,
testimonial and documentary adduced by the parties to an appeal
particularly where, such as here, the findings of both the trial
court and the appellate court on the maker coincide.  (Citation [35]

omitted)
However, there are exceptions that leave room for this court to
make a factual determination for itself and, ultimately, to
overturn the factual findings with which it is confronted:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and con

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the issues of th
contrary to the admissions of both appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence on wh
(9) When the facts set forth in the petition as well as in the petitioners' main and reply
by the respondents; and

(10 When the findings of fact of the Court of Appeals are premised on the supposed a
) contradicted by the evidence on record. [36]

In Dela Llana v. Biong,  this court conducted its own (re-)


[37]

examination of the evidence as the findings of the Regional Trial


Court conflicted with those of the Court of Appeals. The Regional
Trial Court held that the proximate cause of the injuries suffered
by the petitioner was the supposed reckless driving of the
respondent's employee; the Court of Appeals held otherwise. On
review, this court sustained the findings of the Court of Appeals.

In Standard Insurance v. Cuaresma,  the ruling of the[38]

Metropolitan Trial Court was reversed by the Regional Trial Court.


The latter was then sustained by the Court of Appeals. On review,
this court affirmed the decision of the Court of Appeals. This court
noted that the Metropolitan Trial Court erroneously gave weight
to the traffic accident investigation report presented by the
petitioner as proof of the proximate cause of the damage
sustained by a motor vehicle.

II

Here, petitioner insists that the Traffic Accident Investigation


Report prepared by PO2 Tomas should not have been admitted
and accorded weight by the Metropolitan Trial Court as it was
"improperly identified [and] uncorroborated."  Petitioner, in
[39]

effect, asserts that the non-presentation in court of PO2 Tomas,


the officer who prepared the report, was fatal to respondent's
cause.

Unlike in Dela Llana and Standard Insurance, the findings of the


Metropolitan Trial Court, the Regional Trial Court, and the Court
of Appeals in this case are all in accord. They consistently ruled
that the proximate cause of the damage sustained by the sedan
was the negligent driving of a vehicle owned by petitioner. As
with Standard Insurance, however, this conclusion is founded on
the misplaced probative value accorded to a traffic accident
investigation report. In the first place, this Report should not
have been admitted as evidence for violating the Hearsay Rule.
Bereft of evidentiary basis, the conclusion of the lower courts
cannot stand as it has been reduced to conjecture. Thus, we
reverse this conclusion.

Rule 130, Section 36 of the Revised Rules on Evidence provides


for the Hearsay Rule. It renders inadmissible as evidence out-of-
court statements made by persons who are not presented as
witnesses but are offered as proof of the matters stated. This rule
proceeds from the basic rationale of fairness, as the party against
whom it is presented is unable to cross-examine the person
making the statement: [40]

SECTION 36. Testimony generally confined to personal


knowledge; hearsay excluded. — A witness can testify only to
those facts which he knows of his personal knowledge; that is,
which are derived from his own perception, except as otherwise
provided in these rules.
The Hearsay Rule, however, is not absolute. Sections 37 to 47 of
Rule 130 of the Revised Rules on Evidence enumerate the
exceptions to the Hearsay Rule. Of these, Section 44—regarding
entries in official records—is particularly relevant to this case:
SECTION 44. Entries in official records. — Entries in official
records made in the performance of his duty by a public officer of
the Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts
therein stated.
Precisely as an exception to the Hearsay Rule, Rule 130, Section
44 does away with the need for presenting as witness the public
officer or person performing a duty specially enjoined by law who
made the entry. This, however, is only true, for as long the
following requisites have been satisfied:
(a) that the entry was made by a public officer or by another person specially enjoined

(b) that it was made by the public officer in the performance of his duties, or by s
performance of a duty specially enjoined by law; and
(c) that the public officer or other person had sufficient knowledge of the facts by him
been acquired by him personally or through official information.[41]

Respondent, the Metropolitan Trial Court, the Regional Trial


Court, and the Court of Appeals are all of the position that the
Report prepared by PO2 Tomas satisfies these requisites. Thus,
they maintain that it is admissible as prima facie evidence of the
facts it states. This despite the admitted fact that neither PO2
Tomas, nor the person who supposedly reported the events of
February 28, 2002 to PO2 Tomas - the person identified as "G.
Simbahon of PNCC/SLEX"  - gave a testimony in support of the
[42]

Report.

They are in serious error.

The statements made by this court in Standard Insurance are on


point:
[F]or the Traffic Accident Investigation Report to be admissible as
prima facie evidence of the facts therein stated, the following
requisites must be present:
... (a) that the entry was made by a public officer or by another
person specially enjoined by law to do so; (b) that it was made
by the public officer in the performance of his duties, or by such
other person in the performance of a duty specially enjoined by
law; and (c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must have been
acquired by him personally or through official information.
Regrettably, in this case, petitioner failed to prove the third
requisite cited above. As correctly noted by the courts below,
while the Traffic Accident Investigation Report was exhibited as
evidence, the investigating officer who prepared the same was
not presented in court to testify that he had sufficient knowledge
of the facts therein stated, and that he acquired them personally
or through official information. Neither was there any explanation
as to why such officer was not presented. We cannot simply
assume, in the absence of proof, that the account of the incident
stated in the report was based on the personal knowledge of the
investigating officer who prepared it.
Thus, while petitioner presented its assured to testify on the
events that transpired during the vehicular collision, his lone
testimony, unsupported by other preponderant evidence, fails to
sufficiently establish petitioner's claim that respondents'
negligence was, indeed, the proximate cause of the damage
sustained by Cham's vehicle.  [Emphasis supplied]
[43]

Respondent presented proof of the occurrence of an accident that


damaged Fidel Yuboco's Honda Civic sedan,  that the sedan was
[44]

insured by respondent,  and that respondent paid Fidel Yuboco's


[45]

insurance claims.  As to the identity, however, of the vehicle or


[46]

of the person responsible for the damage sustained by the sedan,


all that respondent relies on is the Report prepared by PO2
Tomas.

It is plain to see that the matters indicated in the Report are not
matters that were personally known to PO2 Tomas. The Report is
candid in admitting that the matters it states were merely
reported to PO2 Tomas by "G. Simbahon of PNCC/SLEX."  It was [47]

this "G. Simbahon," not PO2 Tomas, who had personal knowledge
of the facts stated in the Report. Thus, even as the Report
embodies entries made by a public officer in the performance of
his duties, it fails to satisfy the third requisite for admissibility for
entries in official records as an exception to the Hearsay Rule.

To be admitted as evidence, it was thus imperative for the person


who prepared the Report—PO2 Tomas—to have himself presented
as a witness and then testify on his Report. However, even as the
Report would have been admitted as evidence, PO2 Tomas'
testimony would not have sufficed in establishing the identity of
the motor vehicle and/or the person responsible for the damage
sustained by the sedan. For this purpose, the testimony of G.
Simbahon was necessary.

Of course, we are aware that this case was decided by the


Metropolitan Trial Court pursuant to the Revised Rule on
Summary Procedure (considering that petitioner's total claims
amounted to less than P200,000.00 ). Accordingly, no trial was
[48]
conducted as, after the conduct of a preliminary conference, the
parties were made to submit their position papers. There was,
thus, no opportunity to present witnesses during an actual trial.
However, Section 9 of the Revised Rule on Summary Procedure
calls for the submission of witnesses' affidavits together with a
party's position paper and after the conduct of a preliminary
conference:
SECTION 9. Submission of Affidavits and Position Papers. —
Within ten (10) days from receipt of the order mentioned in the
next preceding section,  the parties shall submit the affidavits of
[49]

their witnesses and other evidence on the factual issues defined


in the order, together with their position papers setting forth the
law and the facts relied upon by them.
These affidavits take the place of actual testimony in court and
serve to expedite the resolution of cases covered by the Revised
Rule on Summary Procedure. Thus, it was still insufficient for
respondent to have merely annexed the Report to its Position
Paper. By its lonesome, and unsupported by an affidavit executed
by PO2 Tomas, the Report was hearsay and, thus, inadmissible.

As the sole evidence relied upon by respondent as to the identity


of the responsible motor vehicle or person has been rendered
unworthy of even the slightest judicial consideration, there is no
basis for holding—as the Metropolitan Trial Court did—that the
motor vehicle responsible for the damage sustained by the sedan
was owned by petitioner. Not only this, petitioner has even
adduced proof that on February 28, 2002, its Isuzu Elf truck with
plate number UAL-295 was undergoing repairs and maintenance
and, thus, could not have been at the South Luzon Expressway.
The weight of evidence is clearly in petitioner's favor.

WHEREFORE, the Petition for Review on Certiorari is GRANTED.


The assailed May 11, 2011 Decision and September 8, 2011
Resolution of the Court of Appeals Former Twelfth Division in CA-
G.R. SP No. 109163 are REVERSED and SET ASIDE.
Respondent People's General Insurance Corporation's Complaint
is DISMISSED.
No pronouncement as to costs.

SO ORDERED.

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


concur.

[1]
 Rollo, pp. 13-60.

 Id. at 62-73. The Decision was penned by Associate Justice


[2]

Edwin D. Sorongon and concurred in by Associate Justices


Rosalinda Asuncion-Vicente and Romeo F. Barza.

 Id. at 75-77. The Resolution was penned by Associate Justice


[3]

Edwin D. Sorongon and concurred in by Associate Justices


Rosalinda Asuncion-Vicente and Romeo F. Barza.

[4]
 Id. at. 78-84, Complaint.

[5]
 Id. at 72-73.

[6]
 Id. at 67.

[7]
 Id.

[8]
 Id. at 79.

[9]
 Id. at 89.

[10]
 Id. at 197.

[11]
 Id.

[12]
 Id. at 79, Complaint.

[13]
 Id.
[14]
 Id. at 80.

[15]
 Id. at 81, and 96-98, Annexes "L" to "M".

[16]
 Id. at 78-83, Complaint.

[17]
 Id.

[18]
 Id. at 103-111.

[19]
 Id. at 104-105, Answer.

[20]
 Id. at 112-118.

 The case was decided pursuant to the Revised Rule on


[21]

Summary Procedure considering that petitioner's total claims


amounted to less than P200,000.00.

[22]
 Id. at 67, Court of Appeals Decision.

[23]
 Id.

[24]
 Id. at 75-77.

[25]
 Id. at 23, Petition.

[26]
 271 Phil. 89 (1991) [Per J. Narvasa, Second Division].

[27]
 Id. at 97-98.

 Frondarina v. Malazarte, 539 Phil. 279,290-291 (2006) [Per J.


[28]

Velasco, Third Division].

 Cheesman v. Intermediate Appellate Court, 271 Phil. 89, 97-98


[29]

(1991) [Per J. Narvasa, Second Division].


 G.R. No. 78777, September 2, 1992, 213 SCRA 309 [Per J.
[30]

Gutierrez, Jr., Second Division].

[31]
 Id. at 711.

[32]
 386 Phil. 923 (2000) [Per J. Panganiban, Third Division].

[33]
 Id. at 931.

[34]
 399 Phil. 243 (2000) [Per J. Gonzaga-Reyes, Third Division].

[35]
 Id. at 250.

 Cirtek Employees Labor Union v. Cirtek Electronics, Inc., 665


[36]

Phil. 784, 789 (2011) [Per J. Carpio Morales, Third Division].

 G.R. No. 182356, December 4, 2013, 711 SCRA 522 [Per J.


[37]

Brion, Second Division].

 G.R. No. 200055, September 10, 2014, 734 SCRA 709 [Per J.
[38]

Peralta, Third Division].

[39]
 Rollo, p. 23.

 See Estrella v. Court of Appeals, 254 Phil. 618 (1989) [Per J.


[40]

Narvasa, First Division].

 D.M. Consunji, Inc. v. Court of Appeals, 409 Phil. 275, 286


[41]

(2001) [Per J. Kapunan, First Division], citing Africa, et al. vs.


Caltex (Phil), Inc., et al., 123 Phil. 272 (1966) [Per J. Makalintal,
En Banc] and People vs. San Gabriel, 323 Phil. 102 (1996) [Per J.
Kapunan, First Division].

[42]
 Rollo, p. 89.

 Standard Insurance v. Cuaresma, G.R. No. 200055, September


[43]

10, 2014, 734 SCRA 709 [Per J. Peralta, Third Division].


 Rollo, p. 198, Photographs,
[44]
Annexes "F" and "G" of
respondent's Position Paper.

 Id. at 196, Private Car Policy, Annex "D" of respondent's


[45]

Position Paper.

 Id. at 199-200, Voucher, Annex "H;" and Release of Claim,


[46]

Annex "1" of respondents Position Paper.

[47]
 Id. at 89.

 SECTION 1. Scope. — This rule shall govern the summary


[48]

procedure in the Metropolitan Trial Courts, the Municipal Trial


Courts in Cities, the Municipal Trial Courts, and the Municipal
Circuit Trial Courts in the following cases falling within their
jurisdiction:

A. Civil Cases:

. . . . 
 
(2) All other cases, except probate proceedings, where the total amount of the plaintiff
thousand pesos (P100,000.00) or, two hundred thousand pesos (P200,000.00)
interest and costs.

 SECTION 8. Record of Preliminary Conference. — Within five


[49]

(5) days after the termination of the preliminary conference, the


court shall issue an order stating the matters taken up therein,
including but not limited to: 
 
a) Whether the parties have arrived at an amicable settlement, and if so, the terms th
b) The stipulations or admissions entered into by the parties;
c) Whether, on the basis of the pleadings and the stipulations and admissions mad
rendered without the need of further proceedings, in which event the judgment sha
from issuance of the order;
d) A clear specification of material facts which remain controverted; and
e) Such other matters intended to expedite the disposition of the case.
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759 Phil. 201


SECOND DIVISION

[ G.R. No. 202331, April 22, 2015 ]


THE PROVINCIAL GOVERNMENT OF AURORA,
PETITIONER, VS. HILARIO M. MARCO,
RESPONDENT.DECISION

LEONEN, J.:

The prohibition on midnight appointments only applies to


presidential appointments. It does not apply to appointments
made by local chief executives.

Nevertheless, the Civil Service Commission has the power to


promulgate rules and regulations to professionalize the civil
service. It may issue rules and regulations prohibiting local chief
executives from making appointments during the last days of
their tenure. Appointments of local chief executives must conform
to these civil service rules and regulations in order to be valid.

This is a Petition for Review on Certiorari  of the Court of Appeals


[1]

Decision  that denied the appeal of the Provincial Government of


[2]

Aurora (the Province). The Province appealed the Resolution  of [3]

the Civil Service Commission granting the Motion for Execution


filed by Hilario M. Marco (Marco). The Civil Service Commission
had earlier reversed and set aside the disapproval of Marco's
permanent appointment as Cooperative Development Specialist
II.
[4]

Governor Ramoncita P. Ong (Governor Ong) permanently


appointed  Marco as Cooperative Development Specialist II on
[5]

June 25, 2004, five (5) days before the end of her term as
Governor of the Province.  On June 28, 2004, Marco's
[6]

appointment, together with 25 other appointments, was


submitted to the Civil Service Commission Field Office-Aurora
(the Field Office). Annexed to Marco's appointment papers was a
certification from Provincial Budget Officer Norma R. Clemente
(Provincial Budget Officer Clemente) and Provincial Accountant
Wilfredo C. Saturno (Provincial Accountant Saturno) stating that
funds from the Province's 2004 Annual Budget were available to
cover the position.[7]

On June 30, 2004, newly elected Governor Bellaflor Angara-


Castillo assumed office. The next day, she called to an executive
meeting all the department heads of the Province. [8]

During the executive meeting, Provincial Budget Officer Clemente


allegedly manifested that the Province had no funds available to
pay for the salaries of Governor Ong's 26 appointees.  She [9]

subsequently issued a Letter recalling the previously issued


certification of the availability of funds:
In view of the result of the dialogue of the concerned offices
regarding the financial status of the Provincial Government of
Aurora, we hereby recall/retrieve our previously issued
certification of availability of funds relative to the appointments
issued by Governor Ramoncita P. Ong. [10]

Provincial Budget Officer Clemente's Letter was submitted to the


Province's Human Resource Management-Office. It was then
forwarded to the Field Office.
[11]

Due to the recall of the certification, the Field Office disapproved


Marco's appointment in the Letter  dated July 5, 2004.
[12] [13]
The Province, through Human Resource Management Officer
Liwayway G. Victorio, served Marco a copy of the Letter dated
July 5, 2004. Marco was, thus, advised to refrain from reporting
for work beginning July 8, 2004, the day he received notice of the
disapproval of his appointment. [14]

Marco wrote the Civil Service Commission Regional Office No. IV


(Regional Office), moving for the reconsideration of the
disapproval of his appointment.  The Regional Office, however,
[15]

denied reconsideration in its Decision  dated April 6, 2005 and


[16]

affirmed the disapproval of Marco's appointment. It said that


"[t]he lack of funds for the [26 appointments Governor Ong
issued] was established during the meeting of the different
department heads of Aurora Province and their new governor." [17]

Through the Letter dated May 17, 2005, Marco appealed before
the Civil Service Commission.  The Province, through its Human
[18]

Resource Management Office, received a copy of Marco's Letter


on May 23, 2005.  However, it failed to comment on the appeal
[19]

within 10 days from receipt as required by Section 73 of the


Uniform Rules on Administrative Cases in the Civil Service. [20]

In the Resolution  dated April 14, 2008, the Civil Service


[21]

Commission granted Marco's appeal and set aside the Regional


Office's Decision dated April 6, 2005. It ruled that Marco's
appointment was valid since it was accompanied by a certification
of availability of funds.  As to the Letter withdrawing the
[22]

certification, the Civil Service Commission ruled that it did not


affect the validity of Marco's appointment because the Province
"failed to submit documentary evidence to support its claim [that
it had no funds to pay for the services of Governor Ong's
appointees]."[23]

The Civil Service Commission added that the Province's


withdrawal of the certification was "unfair to Marco": [24]

It is unfair to Marco who applied for the said position believing in


good faith that funds were available, passed the screening
conducted by the Personnel Selection Board (PSB) on February
12 & 13, 2004, was appointed on June 25, 2004 and was later
told to stop reporting for work as his appointment was
disapproved by [the Civil Service Commission Field Office-Aurora]
simply because the provincial government under the new
governor realized that it has no funds to pay for his services. [25]

Thus, the Civil Service Commission ordered the Regional Office to


investigate whether Provincial Budget Officer Clemente and
Provincial Accountant Saturno were administratively liable for
certifying that funds were available to cover the positions filled by
Governor Ong's appointees but subsequently withdrawing this
certification.  It ordered the. Field Office to reflect the Resolution
[26]

in Marco's appointment papers and in his Service Record. [27]

The Province received a copy of the April 14, 2008 Resolution on


May 21, 2008. [28]

On July 22, 2008, Provincial Administrator Alex N. Ocampo


(Provincial Administrator Ocampo), on behalf of the Province,
filed before the Civil Service Commission a Petition for Relief  on [29]

the ground of extrinsic fraud. According to him, the Civil Service


Commission deprived the Province of an opportunity to be heard
when it failed to implead the Province as an indispensable party.
 He reiterated that Marco's appointment was void since the
[30]

Province had no funds to pay for Marco's salaries. [31]

The Civil Service Commission denied outright the Petition for


Relief in the Resolution  dated November 4, 2008. It ruled that
[32]

Provincial Administrator Ocampo had no legal personality to file


the Petition for Relief absent an authorization from the Provincial
Governor. Moreover, a petition for relief was not allowed under
the Uniform Rules on Administrative Cases in the Civil Service.
Thus, Provincial Administrator Ocampo erred in filing a Petition
for Relief.
[33]

Provincial Administrator Ocampo filed a Motion for


Reconsideration,  this time with a written authority  to file from
[34] [35]

Governor Bellafior Angara-Castillo annexed to the Motion. [36]


The Civil Service Commission denied the Motion for
Reconsideration in the Resolution  dated September 8, 2009. It
[37]

ruled that its April 14, 2008 Resolution had become final and
executory considering that the Province did not file a motion for
reconsideration of this Resolution within the reglementary period.
[38]

Consequently, Marco requested the Civil Service Commission to


implement the April 14, 2008 Resolution.  Through the
[39]

Resolution  dated July 6, 2010, the Commission granted Marco's


[40]

request.

Provincial Administrator Ocampo filed a Motion for


Reconsideration with Motion to Quash "Execution,"  arguing that
[41]

the April 14, 2008 Resolution had already been implemented. As


the Civil Service Commission had ordered, the Province reflected
the April 14, 2008 Resolution.in Marco's appointment papers and
in his Service Record. [42]

In the Resolution  dated January 24, 2011, the Civil Service


[43]

Commission denied the Motion for Reconsideration with Motion to


Quash "Execution." It noted that the Province still refused to
reinstate Marco despite the April 14, 2008 Resolution and thus
clarified that this Resolution necessarily resulted in the approval
of Marco's appointment and his reinstatement as Cooperative
Development Specialist II.  The January 24, 2011 Resolution
[44]

states:
Ocampo, et al. nonchalantly tries to sweep away what is obvious
in the ruling of the Commission in [the April 14, 2008
Resolution], i.e., the reversal of the disapproval by [the Regional
Office] and [the Field Office] of Marco's appointment. The
reversal of the two (2) decisions mean[s] that Marco's
appointment as Cooperative Development Specialist II is in order
and should be approved. Consequently, the approval of Marco's
appointment is legal proof that he is entitled to perform the
duties and functions of the said position and receive the salaries
and benefits attached to the position.
WHEREFORE, the Motion for Reconsideration with Motion to
Quash of Alex N. Ocampo, Provincial Administrator, and Manuel
Joseph R. Bretana III, Legal Counsel, Provincial Government of
Aurora, is DENIED. Accordingly, [the July 6, 2010 Resolution]
which grants the Motion for the Implementation of [the April 14,
2008 Resolution] filed by Hilario M. Marco, STANDS.

The Provincial Governor of Aurora is directed to reinstate Marco


to his Cooperative Development Specialist II position and pay his
back salaries and other benefits from the time that Marco was
actually prohibited from reporting for work up to his actual
reinstatement. [45]

A Petition for Review  under Rule 43 with prayer for issuance of a


[46]

temporary restraining order  was filed before the Court of


[47]

Appeals. For the first time, the Province argued that Marco was a
midnight appointee since Governor Ong appointed him during the
last five (5) days of her tenure. Therefore, Marco's appointment
was void.[48]

In the Decision dated March 2, 2012, the Court of Appeals denied


the Petition for Review and affirmed the implementation of the
Civil Service Commission's April 14, 2008 Resolution. [49]

The Court of Appeals ruled that the April 14, 2008 Resolution
already became final and executory since there was no motion for
reconsideration filed within the reglementary period. Although the
Province filed a Petition for Relief before the Civil Service
Commission, the Court of Appeals held that the remedy of a
petition for relief is not allowed under the Uniform Rules on
Administrative Cases in the Civil Service. Moreover, the Province
failed to prove the extrinsic fraud that allegedly prevented it from
filing a motion for reconsideration. Thus, the Civil Service
Commission correctly denied the Petition for Relief.[50]

On the merits, the Court of Appeals affirmed Marco's


appointment. The Province had earlier certified that it had funds
to pay for his salary as Cooperative Development Specialist II.
 It found that the Sangguniang Panlalawigan even passed a
[51]

"Supplemental Budget for 2004 appropriating P54,014,127.01 in


provincial funds."  Therefore, the issuance of the Letter recalling
[52]

the certification "[did] not change the fact that there [were] funds
available for [Marco's] appointment." [53]

On the claim that Marco was a midnight appointee, the Court of


Appeals said that Marco's case fell within the exception provided
under Civil Service Commission Resolution No. 030918.  He was [54]

fully qualified for the position and underwent a screening process


on February 12 and 13, 2004, long before the election ban.
 Therefore, he was validly appointed.
[55]

The Province filed a Motion for Reconsideration,  which the Court


[56]

of Appeals denied in the Resolution  dated June 13, 2012.


[57]

The Province filed a Petition for Review on Certiorari before this


court. Marco filed his Comment,  after which the Province filed its
[58]

Reply. [59]

In the Resolution  dated January 30, 2013, this court ordered the
[60]

parties to file their respective memoranda. The Province filed its


Memorandum  on April 25, 2013, while Marco filed his
[61]

Memorandum  on May 2, 2013.


[62]

The Province maintains that Marco's appointment was void on the


ground that he was a midnight appointee. Marco was appointed
by Governor Ong five (5) days before the end of her term, in
violation of Civil Service Commission Resolution No. 030918,
 paragraph 2.1 of which provides:
[63]

2.1 All appointments issued by elective appointing officials after elections up to June 3
. except if the appointee is fully qualified for the position and had undergone regu
before the Election Ban as shown in the Promotion and Selection Board (PSB) report
On Marco's claim that he underwent a regular screening process,
which exempted his appointment from the prohibition on
midnight appointments, the Province counters that Marco failed to
present convincing evidence to prove this claim. The Minutes of
the Meeting of the Promotion Selection Board showed that Marco
was among the 201 applicants allegedly screened by the Board
within two (2j days. According to the Province, two days is a
period too short for the Personnel Selection Board to have
carefully considered all the applications. [64]

As to the claim that the April 14, 2008 Resolution is final and
executory and may no longer be reversed, the Province argues
that nothing prevents this court from setting aside this
Resolution. It argues that the promulgation of Nazareno, et al. v.
City of Dumaguete  was a supervening event warranting the
[65]

reversal of the final and executory decision. [66]

In Nazareno, this court voided 89 appointments made by a city


mayor within the month that he left office, ruling that they were
mass appointments prohibited under Civil Service Commission
Resolution No. 010988.  The Province argues that Governor
[67]

Ong's appointments were analogous to


the Nazareno appointments; hence, Governor Ong's
appointments should likewise be voided. [68]

Finally, the Province insists that Marco's appointment was void


due to lack of funds to pay for the position.  In ordering the
[69]

Province to uphold Marco's appointment despite the lack of funds,


the Civil Service Commission allegedly "interfered with [the
Province's] prerogative to draw up its own budget and to spend
its ... revenues as it deems fit."[70]

For his part, Marco maintains that the Civil Service Commission's
Resolution dated April 14, 2008 has long become final and
executory. Therefore, the Resolution may no longer be disturbed.
[71]

On the claim that he was a midnight appointee, Marco pointed


out that the Province belatedly raised this claim. The Province
never raised it before the Civil Service Commission but only did
so before the Court of Appeals.  By belatedly raising this claim,
[72]

the Province should be deemed to have "implicitly


recognized"  that he was not a midnight appointee.
[73]
In any case, Marco asserts that he was qualified for the position
and that he underwent a selection process as required by
Resolution No. 030918. Thus, his appointment was an exception
to the prohibition on midnight appointments. [74]

On the alleged interference of the Civil Service Commission with


the Province's discretionary power to appoint, Marco argues that
it "merely upheld the validity of an existing appointment[.]"  The [75]

Civil Service Commission did not "[substitute] its own appointee


for the one chosen by the appointing authority."  Therefore, it
[76]

correctly upheld his appointment.

Lastly, Marco argues that Nazareno does not apply in this case.


This court in Nazareno voided the 89 appointments of the
appointing authority based on the criteria set in Resolution No.
010988.  However, Nazareno had been promulgated even before
[77]

he was appointed in office. Moreover, Resolution No. 010988 did


not set any new criteria for appointments made during the last
days of the appointing authority in office. Therefore, the
promulgation of Nazareno is not a supervening event that can set
aside the final and executory April 14, 2008 Resolution. [78]

The issues for this court's resolution are:

First, whether the Resolution dated July 6, 2010, which ordered


the implementation of the April 14, 2008 Resolution, was void for
varying the terms of the April 14, 2008 Resolution;

Second, whether the withdrawal of the certification of sufficiency


of funds voided Marco's appointment; and

Lastly, whether Marco's appointment was void on the ground that


he was a midnight appointee.

This Petition must be denied.

I
We note that the Province filed an appeal before the Court of
Appeals against the Civil Service Commission's Resolution that
ordered the execution of the April 14, 2008 Resolution. [79]

The Province erred in filing an appeal before the Court of Appeals,


as no appeal may be taken from an order of execution.  Instead,[80]

it should have filed a petition for certiorari — the appropriate


special civil action under Rule 65 of the Rules of Court. [81]

The Court of Appeals, therefore, should have dismissed the


Province's appeal outright. Rule 50, Section 1(i) of the Rules of
Court allows the Court of Appeals to dismiss an appeal where the
order appealed from is not appealable. [82]

The rule prohibiting appeals from orders of execution is based on


the doctrine of immutability of final judgments. Under this
doctrine, a final and executory judgment "is removed from the
power and jurisdiction of the court which rendered it to further
alter or amend it, much less revoke it."  The judgment remains
[83]

immutable even if it is later on discovered to be erroneous.  The [84]

doctrine "is grounded on fundamental considerations of public


policy and sound practice that at the risk of occasional error, the
judgments of the courts must become final at some definite date
fixed by law. To allow courts to amend final [and executory]
judgments will result in endless litigation." [85]

The doctrine of immutability of final judgments applies to


decisions rendered by the Civil Service Commission. A decision of
the Civil Service Commission becomes final and executory if no
motion for reconsideration is filed within the 15-day reglementary
period under Rule VI, Section 80 of the Uniform Rules on
Administrative Cases in the Civil Service:
Section 80. Execution of Decision. - The decisions of the
Commission Proper or its Regional Offices shall be immediately
executory after fifteen (15) days from receipt thereof, unless a
motion for reconsideration is seasonably filed, in which case the
execution of the decision shall be held in abeyance.
In Mendiola v. Civil Service Commission,  Teodorico Mendiola
[86]

(Mendiola) occupied the position of Budget Examiner III when the


Economic Intelligence and Investigation Bureau terminated his
employment.  On
[87]
Mendiola's appeal, the Civil Service
Commission ordered his reinstatetment in the resolution dated
September 21, 1988. [88]

The Economic Intelligence and Investigation Bureau failed to file a


motion for reconsideration within the 15-day reglementary
period. Consequently, Mendiola filed a motion for execution of the
September 21, 1988 resolution. [89]

Unknown to Mendiola, the Economic Intelligence and


Investigation Bureau belatedly filed a motion for reconsideration,
which the Civil Service Commission granted despite having been
filed out of time. [90]

This court reversed the Civil Service Commission's grant of the


motion for reconsideration and ordered Mendiola's reinstatement
as the Commission previously ordered in the September 21, 1998
resolution. This court held that the September 21, 1998
resolution had become final and executory when the Economic
Intelligence and Investigation Bureau failed to file a motion for
reconsideration within the reglementary period. Thus, the Civil
Service Commission may no longer reverse the resolution. [91]

In Obiasca v. Basallote,  Jeane O. Basallote (Basallote) was


[92]

appointed Administrative Officer II by the Department of


Education and was assigned to work in Tabaco National High
School in Albay. Basallote had assumed the duties of her office as
Administrative Officer II when she learned that Arlin B. Obiasca
(Obiasca) was subsequently appointed to the same position.
Obiasca's appointment was attested to by the Civil Service
Commission, while Basallote's appointment papers were not even
forwarded to the Civil Service Commission. [93]

Basallote protested Obiasca's appointment before the Civil


Service Commission Regional Office V. The Regional Office
dismissed the protest. On appeal, the Civil Service Commission
reversed the Regional Office's Decision, thus approving
Basallote's appointment and recalling that of Obiasca. [94]

Without filing a motion for reconsideration before the Civil Service


Commission, Obiasca directly filed an appeal before the Court of
Appeals. The Court of Appeals affirmed the Civil Service
Commission's Decision. [95]

Obiasca's Petition for Review on certiorari was likewise denied by


this court.  This court held that Obiasca's failure to file a motion
[96]

for reconsideration rendered the Civil Service Commission's


Decision approving Basallote's appointment final and executory.
Thus, the Civil Service Commission's Decision may no longer be
disturbed:[97]

[Obiasca] did not file a petition for reconsideration of the [Civil


Service Commission's resolution] before filing a petition for
review in the [Court of Appeals]. Such fatal procedural lapse on
[Obiasca]'s part allowed the [Civil Service Commission's
resolution] to become final and executory. Hence, for all intents
and purposes, the [Civil Service Commission's resolution] has
become immutable and can no longer be amended or modified. A
final and definitive judgment can no longer be changed,
revised, amended or reversed. Thus, in praying for the
reversal of the assailed Court of Appeals decision which affirmed
the final and executory [Civil Service Commission resolution],
[Obiasca] would want the Court to reverse a final and executory
judgment and disregard the doctrine of immutability of final
judgments.  (Emphasis in the original, citations omitted)
[98]

In this case, the Province, through its Human Resource


Management Office, received a copy of the Civil Service
Commission's April 14, 2008 Resolution on May 21, 2008.  Thus,[99]

the Province had until June 5, 2008 to file a motion for


reconsideration.

However, the Province failed to file a motion for reconsideration


of the April 14, 2008 Resolution within the 15-day reglementary
period. With no motion for reconsideration seasonably filed, the
April 14, 2008 Resolution-became final and executory on June 6,
2008.

In addition, the remedy of a petition for relief from judgment is


not among those provided under the Uniform Rules on
Administrative Cases in the Civil Service. This means that the
remedy is not allowed under civil service rules.  Even assuming
[100]

that a petition for relief may be filed before the Civil Service
Commission, the party must show that the assailed judgment
became final through fraud, accident, mistake, or excusable
negligence.[101]

Here, the Province failed to refute that it received a copy of the


Civil Service Commission's April 14, 2008 Resolution. It was given
an opportunity to be heard, which is the essence of
administrative due process.  It did not even justify why it failed
[103]

to file a motion for reconsideration despite its receipt of the Civil


Service Commission's Resolution. Contrary to the Province's
claim, there was no extrinsic fraud since the Province was not
prevented "from fully and fairly presenting [its] defense[.]"  The
[104]

Civil Service Commission correctly denied the Province's Petition


for Relief.

Since the April 14, 2008 Resolution already became final and
executory, it may no longer be reversed. The Civil Service
Commission correctly granted Marco's request for the Resolution's
implementation.

II

In implementing the April 14, 2008 Resolution, the Civil Service


Commission ordered the Province to reinstate Marco and to pay
him back salaries and other benefits:
WHEREFORE, the request of Hilario M. Marco, Cooperative
Development Specialist II, Provincial Government of Aurora, for
the implementation of CSC Resolution No. 08-0656 dated April
14, 2008 is GRANTED. Accordingly, the Provincial Government of
Aurora is directed to reinstate Marco to his former position and
the payment of his back salaries and other benefits starting from
the date he was advised to stop reporting for work on July 8,
2004 up to his actual reinstatement.
[105]

According to the Province, the Civil Service Commission went


beyond the order sought to be implemented and "varie[d] the
term of the judgment."  The Province claims that nothing in the
[106]

April 14, 2008 Resolution ordered the reinstatement of Marco.


The dispositive portion of the resolution stated:
[107]

WHEREFORE, the appeal of Hilario M. Marco is GRANTED.


Accordingly, the Decision No. 05-0212 dated April 6, 2005 of the
Civil Service Commission Regional Office IV, Quezon City,
affirming the disapproval of the appointment of Marco for lack of
certification of availability of funds is REVERSED and SET
ASIDE.

The Civil Service Commission Field Office-Aurora is directed to


reflect this decision in the appointment of Marco and in his
Service Record.[108]

Therefore, the Province claims that the order implementing the


April 14, 2008 Resolution must be set aside.

We rule that the Civil Service Commission did not vary the terms
of the April 14, 2008 Resolution.

Under Rule IV, Section 1 of Civil Service Commission


Memorandum Circular No. 40-98, an appointment takes effect
immediately upon issuance by the appointing authority. Once the
appointee has assumed the duties of the position, he or she is
entitled to receive the salaries corresponding with the position
though the Civil Service Commission has not yet approved the
appointment.

Should the appointment be initially disapproved, it nevertheless


remains effective if a motion for reconsideration or an appeal of
the disapproval is seasonably filed with the proper office.
 Therefore, during the pendency of the motion for
[109]

reconsideration, the appointee remains entitled to his or her


salaries until the appointment is finally disapproved by the Civil
Service Commission. [110]

Marco's appointment immediately took effect on June 25, 2004


when Governor Ong appointed him as Cooperative Development
Specialist II. Although his appointment was initially disapproved
by the Field Office, Marco seasonably filed a Motion for
Reconsideration before the Civil Service Commission. Thus,
Marco's appointment remained effective during the pendency of
the Motion for Reconsideration.

Because the Civil Service Commission granted his Motion for


Reconsideration and set aside the disapproval of his appointment,
Marco remained entitled to his position. The necessary
consequence of granting reconsideration is his reinstatement as
Cooperative Development Specialist II.

The Civil Service Commission correctly implemented the April 14,


2008 Resolution by ordering Marco's reinstatement and the
payment of his back salaries and other benefits.

III

The Province contends that the Civil Service Commission erred in


approving Marco's appointment as Cooperative Development
Specialist II. It allegedly had no funds to cover the position.
Therefore, the appointment was void, having been issued in
violation of Rule V, Section 1(e)(ii) of the Civil Service
Commission Memorandum Circular No. 40-98. The rule states:
SECTION 1. In addition to the common requirements and
procedures, the following requirements and guidelines shall also
be observed and the necessary documents submitted, when
applicable.

....

e. LGU Appointment. Appointment in local government units for submission to th


accompanied, in addition to the common requirements, by the following
....

ii. Certification by the Municipal/City/Provincial Accountant/Budget Officer that funds a


The certification ensures that the appointee shall occupy a
position adequately covered by appropriations as required by
Section 325(e) of the Local Government Code:
SECTION 325. General Limitations. - The use of the provincial,
city, and municipal funds shall be subject to the following
limitations:

....

(e) Positions in the official plantilla for career positions which are
occupied by incumbents holding permanent appointments shall be
covered by adequate appropriations[.]
As required by Rule V, Section 1 (e)(ii) of the Civil Service
Commission Memorandum Circular No. 40-98, Marco's
appointment was accompanied by a certification from the
Province, through the Provincial Budget Officer and the Provincial
Accountant, that funds were available under the 2004 Annual
Budget of the Province for the 26 positions issued by Governor
Ong. Therefore, there was no violation of Rule V, Section 1(e)(ii)
of the Civil Service Commission Memorandum Circular No. 40-98.
There was no violation of existing Civil Service Law, rules and
regulations. Marco's appointment remains effective.

That the Province suddenly had no funds to pay for Marco's


salaries despite its earlier certification that funds were available
under its 2004 Annual Budget does not affect his appointment.

None of the grounds for disapproval, of an appointment under


Rule V, Section 7  of the Omnibus Rules
[111]
Implementing the Civil
Service Law exists in this case. The appointment remains
effective, and the local government unit remains liable for the
salaries of the appointee. [112]
Moreover, the earlier certification, if proven false, constitutes
intentional misrepresentation of a material fact concerning a civil
service matter. This is an offense punishable by fine, or
imprisonment, or both as provided under Section 67 of the Civil
Service Law:
SEC. 67. Penal Provision. — Whoever makes any appointment or
employs any person in violation of any provision of this Title or
the rules made thereunder or whoever commits fraud, deceit or
intentional misrepresentation of material facts concerning other
civil service matters, or whoever violates, refuses or neglects to
comply with any of such provisions or rules, shall upon conviction
be punished by a fine not exceeding one thousand pesos or by
imprisonment not exceeding six (6) months, or both such fine
and imprisonment in the discretion of the court.
We, therefore, agree with the Civil Service Commission in
ordering the Regional Office to commence appropriate
administrative proceedings against Provincial Budget Officer
Norma R. Clemente and Provincial Accountant Wilfredo C.
Saturno for issuing the certification of availability of funds:
The Commission disapproves of the conduct of the officials of the
Provincial Government of Aurora in issuing a certification dated
June 25, 2004 that funds are available in the 2004 Annual Budget
to support the appointments issued by outgoing Governor Ong
and then later [withdrawing] the same when a new governor
assumes office. As such, the CSCRO No. IV is directed to conduct
the appropriate administrative proceedings to determine whether
Norma R. Clemente (Provincial Budget Officer) and Wilfredo C.
Saturno (Provincial Accountant) violated Civil Service Law, rules
and regulations.[113]

IV

The Province claims that Marco was a midnight appointee.


Moreover, he was among those appointed "en masse"  by [114]

Governor Ong before the end of her term. Thus, the Civil Service
Commission should have disapproved Marco's appointment.

A midnight appointment "refers to those appointments made


within two months immediately prior to the next presidential
election."  Midnight appointments are prohibited under Article
[115]

VII, Section 15 of the Constitution:


SECTION 15. Two months immediately before the next
presidential elections and up to the end of his term, a President
or Acting President shall not make appointments, except
temporary appointments to executive positions when continued
vacancies therein will prejudice public service or endanger public
safety.
Midnight appointments are prohibited because an outgoing
President is "duty bound to prepare for the orderly transfer of
authority to the incoming President, and he [or she] should not
do acts which he [or she] ought to know, would embarrass or
obstruct the policies of his [or her] successor."  An outgoing
[116]

President should not "deprive the new administration of an


opportunity to make the corresponding appointments." [117]

However, the constitutiona prohibition on midnight appointments


only applies to presidential appointments. It does not apply to
appointments made by local chief executives.

In De Rama v. Court of Appeals,  Mayor Conrado L. de Rama


[118]

(Mayor de Rama) of Pagbilao, Quezon sought to recall 14


appointments made by former Mayor Ma. Evelyn S. Abeja on the
sole ground that they were midnight appointments.  The Civil
[119]

Service Commission denied Mayor de Rama's request, ruling that


the prohibition on midnight appointments only applies to outgoing
Presidents.  On appeal, the Court of Appeals affirmed the Civil
[120]

Service Commission's decision.[121]

This court agreed with the Civil Service Commission and the
Court of Appeals. In denying Mayor de Rama's petition for review
on certiorari, this court said that the prohibition on midnight
appointments "applies only to presidential appointments."  This [122]

court noted that "there is no law that prohibits local elective


officials from making appointments during the last days of his or
her tenure." [123]
Nonetheless, the Civil Service Commission, as the central
personnel agency of the Government,  may "establish rules and
[124]

regulations to promote efficiency and professionalism in the civil


service."  Although it conceded that no law prohibits local
[125]

elective officials from making appointments during the last days


of their tenure, this court in Nazareno upheld Civil Service
Commission Resolution No. 010988, which prohibited local
elective officials from making appointments immediately before
and after elections.  In addition, Resolution No. 010988
[126]

prohibited "mass appointments," or those "issued in bulk or in


large number after the elections by an outgoing local chief
executive and there is no apparent need for their immediate
issuance." Resolution No. 010988 states:
WHEREAS, the May 14, 2001 national and local elections have
just concluded and the Commission anticipates controversies that
would arise involving appointments issued by outgoing local chief
executives immediately before and after elections;

WHEREAS, the Commission observed the tendency of some


outgoing local chief executives to issue appointments even after
the elections, especially when their successors have already been
proclaimed;

WHEREAS, this practice of some outgoing local chief executives


causes animosities between the outgoing and incoming officials
and the people who are immediately affected and made to suffer
the consequences thereof are the ordinary civil servants and
eventually, to a larger extent, their constituents themselves;

WHEREAS, one of the reasons behind the prohibition in issuing


appointments or hiring of new employees during the prohibited
period as provided for in CSC Memorandum Circular No. 7, series
of 2001 is to prevent the occurrence of the foregoing, among
others;

WHEREAS, local elective officials, whose terms of office are


about to expire, are deemed as "caretaker" administrators who
are duty bound to prepare for the smooth and orderly transfer of
power and authority to the incoming local chief executives;

WHEREAS, under Section 15, Article VII of the Constitution, the


President or Acting President is prohibited from making
appointments two (2) months immediately before the next
presidential elections and up to the end of his term, except
temporary appointments to executive positions when continued
vacancies therein will prejudice public service or endanger public
safety;

WHEREAS, while there is no equivalent provision in the Local


Government Code of 1991 (Republic Act No. 7160) or in the Civil
Service Law (Book V of Executive Order No. 292) of the above-
stated prohibition, the rationale against the prohibition on the
issuance of "midnight appointments" by the President is
applicable to appointments extended by outgoing local chief
executives immediately before and/or after the elections; and

WHEREAS, the Commission also deems it fit to issue guidelines


that would assist processors in their actions on appointments
issued by theses outgoing local chief executives immediately
before and/or after the elections;

NOW THEREFORE, the Commission, pursuant to its


constitutional mandate as the central personnel agency of the
government, hereby issues and adopts the following guidelines:
1. The validity of an appointment issued immediately before or
after the elections by outgoing local chief executives is to be
determined on the basis of the nature, character and merit
of the individual appointment and the particular
circumstances surrounding the same.
....
3. All appointments, whether original, transfer, reemployment,
reappointment, promotion or demotion, except in cases of
renewal and reinstatement, regardless of status, which are
issued AFTER the elections, regardless of their dates of
effectivity and/or date of receipt by the Commission,
including its Regional or Field Offices, of said appointments
or the Report of Personnel Actions (ROPA), as the case may
be, shall be disapproved unless the following requisites
concur relative to their issuance:
a) The appointment has gone through the regular screening by the Personnel Selec
(PSB) before the prohibited period on the issuance of appointments as shown by the
or minutes of its meeting;

b) That the appointee is qualified;

c) There is a need to fill up the vacancy immediately in order not to prejudice pu


and/or endanger public safety;

d) That the appointment is not one of those mass appointments issued after the electio
4. The term "mass appointments" refers to those issued in bulk
or in large number after the elections by an outgoing local
chief executive and there is no apparent need for their
immediate issuance.
This court said that the rationale behind Resolution No. 010988
"is not difficult to see": [127]

Appointments are banned prior to the elections to ensure that


partisan loyalties will not be a factor in the appointment process,
and to prevent incumbents from gaining any undue advantage
during the elections. To this end, appointments within a certain
period of time are proscribed by the Omnibus Election Code and
related issuances. After the elections, appointments by defeated
candidates are prohibited, except under the circumstances
mentioned in CSC Resolution No. 010988, to avoid animosities
between outgoing and incoming officials, to allow the incoming
administration a free hand in implementing its policies, and to
ensure that appointments and promotions are not used as a tool
for political patronage or as a reward for services rendered to the
outgoing local officials.  (Citation omitted)
[128]

In Nazareno, this court affirmed the disapproval of 89


appointments Mayor Felipe Antonio B. Remollo (Mayor Remollo)
of Dumaguete City made within the month that he left office. This
court found that the appointments were issued in violation of
Resolution No. 010988. Particularly, it found no evidence that the
Personnel Selection Board carefully deliberated on the
qualifications of Mayor Remollo's appointees.  Moreover, the
[129]

timing and the large number of appointments "indicate that the


appointments were hurriedly issued by the outgoing
administration."[130]

The Province argues that the 26 appointments Governor Ong


issued during the last days of her tenure were similar to those
Mayor Remollo issued in Nazareno. Governor Ong allegedly issued
mass appointments, the immediate issuance of which the
Province had no apparent need.

We note, however, that Resolution No. 010988 — the Resolution


effective when Mayor Remollo issued the appointments
in Nazareno — was superseded by Resolution No. 030918 dated
August 28, 2003.  Resolution No. 030918 on "midnight
[131]

appointments" by local chief executives was effective at the time


Governor Ong issued the disputed appointments. Resolution No.
030918 states, in part:
WHEREAS, under Section 3, Article IX-B of the 1987
Constitution, the Commission, as the central personnel agency of
the Government, is mandated to establish a career service and
adopt measures to promote efficiency, integrity, responsiveness,
progressiveness and courtesy in the civil service, among others;

WHEREAS, the Constitution further mandates the Commission to


issue its own rules and regulations for effective and efficient
personnel administration in the Civil Service;

WHEREAS, Section 12(1) and (2), Book V of the Executive Order


No. 292 (Administrative Code of 1987) mandates the Commission
to administer and enforce the constitutional and statutory
provisions on the merit system for all ranks and levels in the Civil
Service and to prescribe, amend and enforce rules and
regulations for carrying into effect the provision of the Civil
Service Law and other pertinent laws;
WHEREAS, problems and controversies inevitably arise involving
appointments issued by outgoing elective and appointive officials
just before and after election periods;

WHEREAS, personnel morale, office operations, and delivery of


public services are inevitably disrupted by such problem's and
controversies;

WHEREAS, there is a need to forestall such problems by defining


and making more stringent the restrictions on personnel
appointments to be observed by outgoing appointing officials,
elective or appointive, before they leave office;

NOW, THEREFORE, the Commission, pursuant to its


constitutional and statutory mandates as the central personnel
agency of the government, hereby issues and adopts the
following guidelines:

....

2. Action on Appointments issued by Elective and


Appointive Officials After the Elections Up to June 30

2.1 All appointments issued by elective appointing officials after elections up to June 3
. except if the appointee is fully qualified for the position and had undergone regu
before the Election Ban as shown in the Promotion and Selection Board (PSB) report

....

This Resolution supersedes CSC Resolution No. 010988 dated 4


June 2001 and shall take effect fifteen (15) days after its
publication in a newspaper of general circulation.

Quezon City, August 28, 2003.


Since Resolution No. 030918 was effective at the time Governor
Ong issued the 26 appointments, we must decide this case based
on Resolution No. 030918. Nazareno is not applicable, as it was
decided based on Resolution No. 0109888.
We agree with the Civil Service Commission and the Court of
Appeals that Governor Ong issued Marco's appointment in
accordance with Resolution No. 030918. Although his
appointment was made five (5) days before the end of Governor
Ong's term, Marco was fully qualified for the position and had
undergone regular screening processes before the election ban.
As the Civil Service Commission found, Marco "applied for the
[position of Cooperative Development Specialist II] [and] passed
the screening conducted by the Personnel Selection Board (PSB)
on February 12 & 13, 2004[.]"  The Court of Appeals reiterated
[132]

this finding in its Decision dated March 2, 2012.  Absent a


[133]

showing of grave abuse of discretion, this court will not disturb


the findings of fact of the Civil Service Commission,  especially
[134]

since it has acquired "specialized knowledge and expertise"  in [135]

the field of civil service law.

Assuming without conceding that Governor Ong's 26


appointments were issued in bulk, this per se does not invalidate
the appointments. Unlike Resolution No. 010988, Resolution No.
030918 does not prohibit appointments that are large in number.
Moreover, 26 appointments can hardly be classified as "mass
appointments," compared with the 89 appointments this court
invalidated in Nazareno.

Marco's appointment was valid. The Civil Service Commission


correctly approved his appointment.

Considering that Marco had already accepted his appointment by


the time the Province prevented him from assuming his office, his
appointment remains effective up to the present.  Consequently,
[136]

the Civil Service Commission correctly ordered the Province to


reinstate Marco as Cooperative Development Specialist II and to
pay him his back salaries from July 8, 2004 when the Province
prevented him from reporting for work up to his actual
reinstatement.
WHEREFORE, the Petition for Review on Certiorari is DENIED.
The Court of Appeals Decision dated March 2, 2012 is affirmed.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Perez,  and Mendoza, JJ.,


*

concur.

 Designated acting member per S.O. No. 1977 dated April 15,
*

2015.

[1]
 Rollo, pp. 13-53.

 Id. at 56-86. The Decision dated March 2, 2012 and docketed


[2]

as CA-G.R. SP No. 118227 was penned by Associate Justice


Mariflor P. Punzalan Castillo and concurred in by Associate
Justices Franchito N. Diamante and Angelita A. Gacutan of the
Seventeenth Division.

 Id. at 325-330. The Resolution dated July 6, 2010 is identified


[3]

as Resolution No. 101361.

[4]
 Id. at 124-129.

[5]
 Id. at 112.

[6]
 Id. at 57.

[7]
 Id.

[8]
 Id. at 57-58.

[9]
 Id. at 58.

[10]
 Id. at 126.
[11]
 Id. at 58.

[12]
 Id. at 114.

[13]
 Id. at 58.

[14]
 Id. at 126.

[15]
 Id.

 Id. at 130-134. The Regional Office's Decision dated April 6,


[16]

2005 is identified as Decision No. 050212.

[17]
 Id. at 133.

[18]
 Id. at 59.

[19]
 Id. at 76.

 Uniform Rules on Administrative Cases in the Civil Service, rule


[20]

V, sec. 73 provides:

Section 73. Requirement of Filing. - The appellant shall furnish a


copy of his appeal to the head of department or agency
concerned who shall submit his comment, together with the
records, to the Commission within ten (10) days from receipt
thereof. Proof of service of the appeal on the head of department
or agency shall be submitted with the Commission.

 Rollo, pp. 124-129. The Resolution dated April 14, 2008 is


[21]

identified as Resolution No. 080656.

[22]
 Id. at 125-126 and 128.

[23]
 Id. at 128.

[24]
 Id.
[25]
 Id.

[26]
 Id.

[27]
 Id. at 129.

[28]
 Id. at 473.

[29]
 Id. at 137-154.

[30]
 Id. at 143-146.

[31]
 Id. at 147-148.

 Id. at 320. The Resolution dated November 4, 2008 is identified


[32]

as Resolution No. 082040.

[33]
 Id.

[34]
 Id. at 157-177.

[35]
 Id. at 178.

[36]
 Id. at 60.

 Id. at 322-323. The Resolution dated September 8, 2009 is


[37]

identified as Resolution No. 091314.

[38]
 Id. at 322.

[39]
 Id. at 61.

 Id. at 325-330. The Resolution dated July 6, 2010 is identified


[40]

as Resolution No. 101361.

[41]
 Id. at 189-200.

[42]
 Id. at 190.
 Id. at 202-206. The Resolution dated January 24, 2011 is
[43]

identified as Resolution No. 1100127.

[44]
 Id. at 206.

[45]
 Id.

[46]
 Id. at 207-239.

[47]
 Id. at 236.

[48]
 Id. at 232-233.

[49]
 Id. at 86.

[50]
 Id. at 72-78.

[51]
 Id. at 81.

[52]
 Id.

[53]
 Id. at 82.

[54]
 CSC Resolution No. 030918, paragraph 2.1 provides:
 
2.1. All appointments issued by elective appointing officials after elections up to June 3
appointee is fully qualified for the position and had undergone regular screening
shown in the Promotion and Selection Board (PSB) report or minutes of meeting.

[55]
 Rollo, p. 84.

[56]
 Id. at 93-110.

 Id. at 88-92. The Resolution was penned by Associate Justice


[57]

Mariflor P. Punzalan Castillo and concurred in by Associate


Justices Franchito N. Diamante and Angelita A. Gacutan of the
Former Seventeenth Division.
[58]
 Id. at 344-351.

[59]
 Id. at 353-379.

[60]
 Id. at 417-419.

[61]
 Id. at 420-467.

[62]
 Id. at 469-481.

 Id. at 426-428. The Resolution is identified as Resolution No.


[63]

030918, dated August 28, 2003.

[64]
 Id. at 430-431.

[65]
 617 Phil. 795 (2009) [Per J. Del Castillo, En Banc].

[66]
 Rollo, pp. 433-436.

 617 Phil. 795, 808 (2009) [Per J. Del Castillo, En Banc]. CSC
[67]

Resolution No. 010988, pars. 3 and 4 provide:

3 All appointments, whether original, transfer, reemployment, reappointment, prom


renewal and reinstatement, regardless of status, which are issued AFTER the e
effectivity and/or date of receipt by the Commission, including its Regional or Field
Report of Personnel Actions (ROPA), as the case may be, shall be disapproved u
relative to their issuance:
a) The appointment has gone through the regular screening by the Personnel Selecti
period on the issuance of appointments as shown by the PSB report or minutes of i
b) That the appointee is qualified;
c) There is a need to fill up the vacancy immediately in order not to prejudice public s
d) That the appointment is not one of those mass appointments issued after the electi
4 The term "mass appointments" refers to those issued in bulk or in large number af
chief executive and there is no apparent need for their immediate issuance.

[68]
 Rollo, pp. 431-432.

[69]
 Id. at 454.
[70]
 Id. at 455.

[71]
 Id. at 473-474.

[72]
 Id. at 474-476.

[73]
 Id. at 474.

[74]
 Id. at 476-477.

[75]
 Id. at 480.

[76]
 Id.

[77]
 Id. at 477-478.

[78]
 Id. at 478.

[79]
 Id. at 207.

[80]
 RULES OF COURT, Rule 41, sec. 1(f).

[81]
 RULES OF COURT, Rule 41, sec. 1,

[82]
 RULES OF COURT, Rule 50, sec. 1(i) provides:

Section 1. Grounds 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:

....

(i) The fact that the order or judgment appealed from is not
appealable.

 Mendiola v. Civil Service Commission, G.R. No. 100671, April 7,


[83]

1993, 221 SCRA 295, 305 [Per J. Campos, Jr., En


Banc], citing Young v. Court of Appeals, G.R. No. 81239,
December 4, 1991, 204 SCRA 584, 599 [Per J. Davide, Jr., Third
Division].

[84]
 Id.

 Id., citing Young v. Court of Appeals, G.R. No. 81239,


[85]

December 4, 1991, 204 SCRA 584, 599 [Per J. Davide, Jr., Third
Division].

 G.R. No. 100671, April 7, 1993, 221 SCRA 295 [Per J. Campos,
[86]

Jr., En Banc].

[87]
 Id. at 297-298.

[88]
 Id. at 298-299.

[89]
 Id. at 299.

[90]
 Id.

[91]
 Id. at 304-306.

[92]
 626 Phil. 775 (2010) [Per J. Corona, En Banc].

[93]
 Id. at 785-786.

[94]
 Id. at 786-787.

[95]
 Id. at 787.

[96]
 Id. at 807.

[97]
 Id. at 791.

[98]
 Id.

[99]
 Rollo, p. 473.
 National Tobacco Administration v. Castillo, 641 Phil. 64, 67
[100]

(2010) [Per J. Bersamin, Third Division].

[101]
 RULES OF COURT, Rule 38, secs. 1 and 2 provide:

Section 1. Petition for relief from judgment, order, or other


proceedings. — When a judgment or final order is entered, or any
other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he
may file a petition in such court and in the same case praying
that the judgment, order or proceeding be set aside.

Sec. 2. Petition for relief from denial of appeal. — When a


judgment or final order is rendered by any court in a case, and a
party thereto, by fraud, accident, mistake, or excusable
negligence, has been prevented from taking an appeal, he may
file a petition in such court and in the same case praying that the
appeal be given due course.

 Vivo v. Philippine Amusement and Gaming Corporation, G.R.


[103]

No. 187854, November 12, 2013, 709 SCRA 276; 281 [Per J.
Bersamin, En Banc].

 City of Dagupan v. Maramba, G.R. No. 174411, July 2, 2014


[104]

<Error! Hyperlink reference not valid.> 13 [Per J. Leonen,


Third Division].

[105]
 Rollo, p. 330.

[106]
 Id. at 445.

[107]
 Id. at 445-446.

[108]
 Id. at 129.

[109]
 CSC Memorandum Circular No. 40-98, rule VI, sec. 3 provides:
SECTION 3. ...

....

If the appointment was disapproved on grounds which do not


constitute a violation of civil service law, such as failure of the
appointee to meet the Qualification Standards (QS) prescribed for
the position, the same is considered effective until disapproved by
the Commission or any of its regional or field offices. The
appointee is meanwhile entitled to payment of salaries from the
government.

If a motion for reconsideration or an appeal from the disapproval


is seasonably filed with the proper office, the appointment is still
considered to be effective. The disapproval becomes final only
after the same is affirmed by the Commission.

[110] Id.

 Omnibus Rules Implementing the Civil Service Law, rule V, sec.


[111]

7 provides:

SEC. 7. The Commission shall disapprove the appointment of a


person who:

(a) does not meet the qualifications for the position; or


(b) has been found guilty of a crime involving moral turpitude, or of infamous, disgrac
or dishonesty; or
(c) has been dismissed from the service for cause, unless an executive clemency has b
(d) has intentionally made a false statement of any material fact or has practiced or at
fraud in connection with his appointment; or
(e) has been issued such appointment in violation of existing Civil Service Law, rules an

[112]
 CSC Memorandum Circular No. 40-98, rule VI, sec. 3.

[113]
 Rollo, p. 128.

[114]
 Id. at 427.
 Nazareno, et al. v. City of Dumaguete, 617 Phil. 795, 810
[115]

(2009) [Per J. Del Castillo, En Banc].

 Aytona v. Castillo, G.R. No. L-19313, January 19, 1962, 4


[116]

SCRA 1, 9-10 [Per C.J. Bengzon, En Banc].

[117]
 Id. at 10.

[118]
 405 Phil. 531 (2001) [Per J. Ynares-Santiago, En Banc].

[119]
 Id. at 539.

[120]
 Id. at 539.

[121]
 Id. at 542-543.

[122]
 Id. at 545.

[123] Id.

[124]
 CONST., art. IX-B, sec. 3.

 Nazareno, et al. v. City of Dumaguete, 617 Phil. 795, 808-809


[125]

(2009) [Per J. Del Castillo, En Banc].

[126]
 Id. at 808-813.

[127]
 Id. at 812.

[128]
 Id. at 812-813.

[129]
 Id. at 814-815.

[130]
 Id. at 815.

[131]
 CSC Resolution No. 030918 (2003), penultimate paragraph.
[132]
 Rollo,p. 128.

[133]
 Id. at 83.

 Japson v. Civil Service Commission, 663 Phil. 665, 675 (2011)


[134]

[Per J. Nachura, En Banc].

[135] Id.

[136]
 CSC Memorandum Circular No. 40-98, rule VI, sec. 3.

Source: Supreme Court E-Library | Date created: October 24, 2017


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753 Phil. 482


SECOND DIVISION

[ G.R. No. 169303, February 11,


2015 ]
PROTECTIVE MAXIMUM SECURITY AGENCY, INC.,
PETITIONER, VS. CELSO E. FUENTES,
RESPONDENT.DECISION

LEONEN, J.:
In this Petition for Review on Certiorari,  Protective Maximum
[1]

Security Agency, Inc. seeks to set aside the Decision  of the [2]

Court of Appeals which affirmed the Resolutions of the National


Labor Relations Commission. [3]

Protective Maximum Security Agency, Inc. (Protective) provides


security services for commercial, industrial and agricultural firms,
and personal residences. [4]

Celso E. Fuentes (Fuentes) was hired as a security guard by


Protective sometime in November 1999. At the time of Fuentes'
employment, Protective assigned him to Picop Resources, Inc. He
was posted to a security checkpoint designated as Post 33 in
Upper New Visayas, Agusan del Sur. [5]

On July 20, 2000, a group of armed persons ransacked Post 33


and took five (5) M-16 rifles, three (3) carbine rifles, and one (1)
Browning Automatic Rifle, all with live ammunition and
magazines. Agency-issued uniforms and personal items were also
taken.  These armed persons inflicted violence upon Fuentes and
[6]

the other security guards present at Post 33, namely: Francisco


Dalacan, Rolando Gualberto Lindo, Jr. (Lindo, Jr.), Cempron
(Cempron), and Wilson Maravilles.  Francisco Dalacan was
[7]

employed by Protective, while the others were employed by


Meshim Security Agency. [8]

On the same day of the incident, Fuentes and his fellow security
guards reported the raid to the Philippine National Police in
Trento, Agusan del Sur. When asked by the police, Fuentes
reported that he and the other security guards assigned to Post
33 were accosted at gunpoint by the New People's Army. [9]

After its initial investigation, the Philippine National Police found


reason to believe that Fuentes conspired and acted in consort
with the New People's Army.  This was based on the two (2)
[10]

affidavits executed by Lindo, Jr. and Cempron, who were both


present in the July 20, 2000 raid.  In their affidavits, Lindo, Jr.
[11]
and Cempron stated that Fuentes should be prosecuted for
criminal acts done on July 20, 2000. [12]

On July 24, 2000, the Philippine National Police, through Senior


Police Officer IV Benjamin Corda, Jr., filed the Complaint for
robbery committed by a band against Fuentes, a certain Mario
Cabatlao, and others.  This was filed before the Second Municipal
[13]

Circuit Trial Court of Trento-Sta. Josefa-Veruela in Trento, Agusan


del Sur.  The Complaint stated that Fuentes was a "cohort of the
[14]

NPA in the raid[.]" [15]

Immediately upon the filing of the Complaint, Fuentes was


detained at the Mangagoy Police Sub-Station, Mangagoy, Bislig,
Surigao del Sur.  During his detention, he alleged that he was
[16]

"mauled and tied up by the security officers of [Protective]."  To[17]

preserve proof of these claims, Fuentes had pictures taken of his


injuries while in custody and acquired a medical certificate
detailing his injuries. [18]

In the Order dated August 1, 2000, Judge Particio Balite of the


Municipal Circuit Trial Court of Trento-Sta. Josefa-Veruela
directed that Fuentes be transferred from the Mangagoy Police
Sub-Station to Trento Municipal Jail in Trento, Agusan del Sur.
 In his return to this court order, however, Police Inspector
[19]

Ernesto Escartin Sr. (Inspector Escartin) reported:


. . . Celso Fuentes is no longer in the custody of this station and
he is never detained [sic] in this station but requested that he will
be put to custody for fear of his life. . . . [H]e left this station on
July 28, 2000 at around 2:45 in the afternoon accompanied by
his mother. The last known address of subject person is Sta.
Josefa, Trento, Agusan del Sur.  (Citation omitted)
[20]

On August 15, 2001, the Office of the Provincial Prosecutor of


Surigao del Sur issued the Resolution dismissing the Complaint
against Fuentes.  It found during preliminary investigation that
[21]

there was no probable cause to warrant the filing of an


Information against Fuentes. [22]
On March 14, 2002, Fuentes filed the Complaint "for illegal
dismissal, non-payment of salaries, overtime pay, premium pay
for holiday and rest day, 13  month pay, service incentive leave
th

and damages against [Protective], Picop [Resources, Inc.], Ernie


S. Dolina and Wilfredo Fuentes before [the National Labor
Relations Commission] Regional Arbitration Branch XIII in Butuan
City."
[23]

In his Position Paper, Fuentes claimed that "right after the


criminal complaint for robbery against [him] was dismissed ... he
demanded to return to work but he was . . . refused entry by [a
certain] Mr. [Regildo] Espinosa on the ground that [Fuentes]
[was] a member of the NPA and that his position had already
been filled up by another security guard."
[24]

On the other hand, Protective claims that "[a]s was usual and
routine, [Fuentes] should have reported to his Team Leader or
Officer-in-Charge. Since the incident of July 20, 2000, private
respondent has not yet reported to his Team [L]eader or to any
of the officers of [Protective]."[25]

Executive Labor Arbiter Rogelio P. Legaspi (Labor Arbiter Legaspi)


rendered his Decision in favor of Protective, thus:
As borne out by the record, complainant was not dismissed from
the service much less illegally by the respondents PMSAI and/or
Ernie S. Dolina. What happened was that complainant was
charged by the PNP Trento, Agusan del, Sur in the 2  Municipal
nd

Circuit Trial Court of TRENTO-STA. JOSEFA-VERUELA, Trento,


Agusan del Sur for conspiring and confederating with the
purported members of the New People's Army in robbing PMSAI
(Post 33) . . . mainly based on the statements of security guards
Gualberto Lindo, Jr. and Rolando Cempron of Mishem Security
Agency who were also assigned at Post 33. Because of this
incident, complainant was detained at the Mangagoy Police Sub-
Station, Mangagoy, Bislig, Surigao [d]el Sur and later at the
Trento Municipal Jail, Trento, Agusan del Sur.
As correctly pointed out by respondents PRI and/or Wilfredo
Fuentes, complainant was unable to perform his duties and
responsibilities as security guard due to the criminal charges filed
against him, hence he was replaced with another guard.

Complainant's claim that respondents refused to admit him back


to work after it was found out that he was innocent of the
charges against him is not supported by relevant and/or material
evidence. Moreover, complainant even failed to state with
sufficient defmiteness and/or clarity the time and date when he
allegedly reported for work after the dismissal of his case on 15
August 2001. In fact, respondents PMSAI and/or Ernie S. Dolina
aver that complainant has not reported to any of his superiors
since 20 July 2000 up to the present (17 July 2002). Neither was
[sic] his whereabouts known to PMSAI as he cannot be found
despite diligent efforts. Hence, notice for him to explain his
involvement in the incident of 20 July 2000 at Post 33 could not
be properly served. The only manifestation of complainant's
existence, respondents admit, came only when respondents were
notified of a labor complaint filed by the complainant before this
Branch sometime in April 2002. [26]

On appeal, the National Labor Relations Commission reversed the


Decision of Labor Arbiter Legaspi and found that Fuentes was
illegally dismissed:
WHEREFORE, the foregoing premises considered, the decision
appealed from is hereby MODIFIED, and a NEW judgment is
rendered, thus:
1. declaring the dismissal of complaint [sic] as illegal;

2. ordering respondent Protective Maximum Security Agency to


pay complainant full backwages (August 15, 2001 to May 30,
2003) amounting to P204,250.00 (P9,500 x 21.5 mos.) and to
reinstate him immediately upon receipt of this decision. However,
should reinstatement is no longer feasible [sic], to pay
complainant in lieu thereof separation pay equivalent to one (1)
month pay for every year of service; and,
3. ordering same respondent and Picop Resources Inc. to pay
complainant in solidum his unpaid salary amounting to
P4,750.00, without prejudice however on the part of PRI to
present proof of payment/remittance to respondent security
agency.
SO ORDERED.  (Citation omitted)
[27]

Protective filed a Petition for Certiorari before the Court of


Appeals alleging grave abuse of discretion on the part of the
National Labor Relations Commission. [28]

Protective asserted that the evidence and the records showed


that Fuentes was never dismissed because he had been missing
until the day he filed the Complaint with the Labor Arbiter.  To
[29]

support its position, Protective raised the following arguments:


The determination of the respondent NLRC was without basis in
law and in fact. Respondent NLRC simply brushed off the
established fact that private respondent vanished after the July
20, 2000 incident. . . .

[F]rom July 20, 2000 until the present time, private respondent
never contacted his superior or reported to the head office of
petitioner PMSAI, much less attempted to do the same, to
officially manifest whether he was still interested in being
employed as security guard. Furthermore, it was incumbent upon
private respondent to explain why he was implicated in the crime
of robbery by fellow security guards. . . .

Hence, it was physically and legally impossible for petitioner to


terminate, constructive, illegal or otherwise [sic], the services of
private respondent since the procedure for such an action have
[sic] have not been initiated. Private respondent had chose [sic]
not to exercise his rights as an employee and remain unreachable
for reasons known only to him.  (Citation omitted)
[30]

The Court of Appeals dismissed the Petition.  It held that


[31]

Protective failed to discharge its burden to prove a just cause for


dismissal:
Petitioner [Protective] bases its contention that private
respondent [Fuentes] abandoned his job entirely upon its claim
that the latter vanished from sight after the July 20, 2000
incident and until he filed the present action.

We are not persuaded.

First, the records do not support such a claim. As respondent


NLRC found:
[The] [r]ecord shows that after the incident on July 20, 2000,
complainant was among those who reported the assault made by
the group of NPA at their post in Trento Police Municipal Office, at
Trento, Agusan del Sur (Annex "C", complainant's Position
Paper). It was only on July 24, 2000 that a criminal complaint
was filed in court leading to his arrest and detention. In fact the
witnesses at the prosecution [sic] are two (2) of the security
guards also assigned at Post 33 of respondent PRI, albeit from
different [sic] security agency (Annex 1, 2 and 3, Respondent
PMSAFs Position Paper). It is thus unbelievable that complainant's
whereabouts were unknown. (NLRC's August 27, 2003
Resolution, pp. 6-7; Rollo, pp. 35-36)
We note, additionally, from petitioner's own submissions, that
private respondent's last known address was given to the
investigating court by Police Inspector Escartin in his report to
that court. That report, incidentally, also reveals the state of mind
of private respondent and explains why he could not report to the
offices of petitioner. Private respondent, after having been
charged with a crime on the strength of affidavits of petitioner's
other security guards and beaten up by them, was so traumatized
that he actually asked to remain in the custody of the police
because he feared for his life. The intensity of his fear is manifest
by the fact that he left the custody of the police only when his
mother accompanied him. His fear, incongruous as it may appear
in a trained security guard, is nonetheless understandable in view
of his allegations of having been beaten up. Which allegations,
[w]e note, are not controverted.

At any rate, the whereabouts of private respondent were


available from official records. The claim of petitioner that private
respondent "simply vanished" has no evidentiary support.
But even granting that petitioner was ignorant of private
respondent's whereabouts, still it does not suffice to establish
abandonment of work. In ACD Investigation Security Agency, Inc.
vs. Daquena, G.R. No. 147473, March 30, 2004, the Supreme
Court held that:
... "for abandonment of work to exist, it is essential (1) that the
employee must have failed to report for work or must have been
absent without valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-employee
relationship manifested by some overt acts. . . . Absence must be
accompanied by overt acts unerringly pointing to the fact that the
employee simply does not want to work anymore. And the burden
of proof to show that there was unjustified refusal to go back to
work rests on the employer."
... It is not enough to simply allege that the private respondent
had "mysteriously disappeared" and that "[a]s usual and routine,
private respondent should have reported to his Team Leader or
Officer-in-Charge."  (Emphasis and underscoring in the original,
[32]

citations omitted).
Further, the Court of Appeals found that Fuentes should have
been afforded his procedural due process rights:
More is required of the employer who must afford private
respondent his right to due process. As respondent NLRC states:
Granting it was so, respondents should have served a written
notice to complainant at his last known address to ascertain
whether he is still interested to continue his job. Feigning
ignorance of the reason why complainant after being hailed in
court failed to report for work is ridiculous, at best, a sham
defense. What was clear is that respondents did not exert diligent
efforts at all to afford complainant his right to due process. No
proof has been adduced to support their defense. Moreover,
considering that there was a team leader assigned by
respondents to Post 33 where complainant was one of its
members, the report of the incident should have come from the
team leader and not from the complainant as adverted to by
respondents. In sum, respondents have all the opportunities to
comply with the due process requirement as mandated by law,
yet they deliberately ignored and failed to do so. Such deliberate
act of respondent PMSAI reflects their deprivation of due process
[sic]. The dismissal is thus illegal.  (Citation omitted)
[33]

Thus, the Court of Appeals found that the National Labor


Relations Commission committed no grave abuse of discretion
amounting to lack or excess of jurisdiction.  It applied the
[34]

reasoning of this court in Philippine Airlines, Inc. v. Pascua,


 where this court held that since the Decision of the National
[35]

Labor Relations Commission is based on substantial evidence, it


would not reverse these findings "[a]bsent any showing of patent
error, or that the [National Labor Relations Commission] failed to
consider a fact of substance that if considered would warrant a
different result[.]" [36]

In this Petition, petitioner assails the Decision of the Court of


Appeals and states that it is the findings of Labor Arbiter Legaspi
that should have been upheld. It argues that the findings of fact
and conclusions of Labor Arbiters are accorded great weight since
they have the opportunity to determine the facts surrounding the
case and the necessary expertise to resolve such matters. [37]

Petitioner relies on Gelmart Industries (Phils.), Inc. v. Hon.


Leogardo, Jr.  and argues that "[w]hen confronted with
[38]

conflicting versions of factual matters, the Labor Arbiter has the


discretion to determine which party deserves credence on the
basis of evidence received."  For petitioner, Labor Arbiter Legaspi
[39]

rightfully concluded that respondent abandoned his post, a


finding that the National Labor Relations Commission and the
Court of Appeals dismissed. [40]

Petitioner states that, by analogy, the Labor Arbiter's findings are


akin to those of a trial judge.  Thus, pursuant to this court's ratio
[41]

decidendi in People v. Valla,  "the trial judge's evaluation of the


[42]

testimony of a witness is generally accorded not only the highest


respect, but also finality, unless some weighty circumstance has
been ignored or misunderstood but which could change the
result."
[43]
For petitioner, this is a clear case of abandonment of work by
respondent. Petitioner claims that since respondent
"vanished"  without reporting his whereabouts, he manifested a
[44]

clear intent to leave his employment. Petitioner argues that


respondent was not dismissed; no dismissal took place due to
respondent's abandonment of duty. Since there was
abandonment, the award of backwages and reinstatement is
capricious and without basis. [45]

Petitioner argues that respondent never bothered to explain why


it took him more than six (6) months from the date petitioner
allegedly refused to allow him to work to file the Complaint for
illegal dismissal.  For petitioner, this six-month delay in filing the
[46]

Complaint showed that it was "a mere afterthought on the part of


[Fuentes] ," [47]

Citing Indophil Acrylic Mfg. Corporation v. National Labor


Relations Commission,  petitioner claims that respondent should
[48]

have been more vigilant of his rights as an employee because at


stake was not only his position but also his means of livelihood.
 Thus, he should have reported to his supervisor immediately
[49]

after the July 20, 2000 raid at Post 33.

Petitioner contends further that contrary to the findings of the


National Labor Relations Commission and the Court of Appeals,
there was no specific last known address where petitioner could
have provided a written notice to respondent.  Petitioner argues
[50]

that the purported last address of respondent is "in Sta. Josefa,


Trento, Agusan del Sur."  The insufficiency of the address
[51]

rendered it impossible for petitioner to provide notice to


respondent.  Thus, respondent's right to procedural due process
[52]

was not violated. [53]

For respondent, the Court of Appeals correctly found that the


National Labor Relations Commission did not commit grave abuse
of discretion. Respondent asserts that the Court of Appeals
committed no reversible error in affirming the findings of the
National Labor Relations Commission. He raises that the National
Labor Relations Commission and the Court of Appeals correctly
found that he did not abandon his job. Respondent reiterates that
after the dismissal of the criminal Complaint for robbery filed
against him, he tried his best to resume work. However, he was
refused because he was allegedly a member of the New People's
Army and he had already been replaced. [54]

According to respondent, the Court of Appeals found no evidence


to support petitioner's allegation that he had "simply
vanished."  Respondent reiterates the findings of the Court of
[55]

Appeals, particularly the report of Inspector Escartin. That report


showed that respondent was traumatized from having been
charged with the crime of robbery and suffering a beating from
petitioner's security guards. This justified respondent's absence
and initial failure to report back for work.
[56]

For respondent, the twin requirements of substantive and


procedural due process were not observed by petitioner. He
asserts that the National Labor Relations Commission and the
Court of Appeals correctly found that mere allegations of "simply
disappearing" and failure to report to the team leader cannot
justify the violation of his substantive and procedural due process
rights. Respondent asserts that his dismissal from service was
clearly illegal. [57]

With these arguments, the principal issues are:

First, whether the Court of Appeals erred in dismissing the


Petition for Certiorari assailing the Decision of the National Labor
Relations Commission, which reversed the findings of Labor
Arbiter Legaspi;

Second, whether respondent was justifiably dismissed due to


abandonment; and

Lastly, whether respondent's right to substantive and procedural


due process was violated.
This Petition must be denied.

The National Labor Relations Commission has the power to


overturn the findings of fact of the Labor Arbiter.

Petitioner asserts that the findings of fact of Labor Arbiter Legaspi


are binding and conclusive. Petitioner raises that, between the
determination of facts of the National Labor Relations Commission
and the Labor Arbiter, the findings of the latter must prevail.

Contrary to petitioner's claims, the National Labor Relations


Commission is not bound by the findings of the Labor Arbiter.
Article 223 of the Labor Code reads:
Article 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following grounds:
1. If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;

2. If the decision, order or award was secured through fraud or


coercion, including graft and corruption;

3. If made purely on questions of law; and

4. If serious errors in the findings of facts are raised which would


cause grave or irreparable damage or injury to the appellant.
Article 223 provides that the decision of the Labor Arbiter is final
and executory, unless appealed to the National Labor Relations
Commission within ten (10) calendar days by any or both of the
parties. The Labor Code vests in the National Labor Relations
Commission the authority to reverse the decision of the Labor
Arbiter, provided that the appellant can prove the existence of
one of the grounds in Article 223.
The errors in the findings of fact that will justify a modification or
reversal of the Labor Arbiter's decision must be "serious" and, if
left uncorrected, would lead to "grave or irreparable damage or
injury to the appellant."

Serious errors refer to inferences of facts without evidence, or


mistakes in the interpretation of the evidence that border on
arbitrariness or similar circumstances. Not only must the error be
palpable, but there must also be a showing that such error would
cause grave and irreparable injury to the appellant. It should
affect the disposition of the cause of the appellant. The error
must impact on the main issues and not some tangential matter.
Evidently, a showing of bias on the part of the Labor Arbiter or a
lack of due regard for the procedural rights of the parties are
indicia that serious errors may be present.

In this case, the National Labor Relations Commission decided


that there was a serious error in the factual findings of Labor
Arbiter Legaspi.

Labor Arbiter Legaspi found that respondent was charged by the


Philippine National Police in Trento, Agusan del Sur for allegedly
conspiring and confederating with the members of the New
People's Army.  Thus, respondent was detained at the Mangagoy
[58]

Police Sub-Station in Surigao del Sur.  Labor Arbiter Legaspi


[59]

found that respondent was "unable to perform his duties and


responsibilities as security guard due to the criminal charges
[that were] filed against him[.]"  This led to petitioner replacing
[60]

respondent with another security guard. [61]

The National Labor Relations Commission found that petitioner's


claims that respondent consorted with the New People's Army
and committed robbery on July 20, 2000 "were never
substantiated at all[.]"  In fact, the Complaint for robbery
[62]

against respondent was dismissed after preliminary investigation.


Thus, the National Labor Relations Commission found that the
refusal to admit respondent to work based on the latter's alleged
conspiracy with the New People's Army during the July 20, 2000
incident had no basis.
[63]

As for respondent's absence from work, Labor Arbiter Legaspi


found that respondent's whereabouts were unknown to petitioner.
 Labor Arbiter Legaspi found that the notice for respondent to
[64]

explain his involvement in the July 20, 2000 incident could not be
properly served despite "diligent efforts."  Thus, he supported
[65]

petitioner's allegation that respondent "vanished" after the July


20, 2000 incident at Post 33.

On appeal, the National Labor Relations Commission found that


petitioner's claim that respondent's whereabouts were unknown
to the former was "unbelievable."  The National Labor Relations
[66]

Commission found that after the July 20, 2000 incident,


respondent "was among those who reported the assault [to the
police]."  Petitioner even submitted that "respondent's last
[67]

known address was given to the investigating court by Police


Inspector Escartin in his report to [the Municipal Circuit Trial
Court]."
[68]

Contrary to Labor Arbiter Legaspi's findings, the National Labor


Relations Commission found that petitioner did not exert diligent
efforts to locate respondent and afford him his right to due
process.  It found that petitioner feigned ignorance of the reason
[69]

of respondent's absence.  It also found petitioner's claim that


[70]

respondent had "vanished" to be "ridiculous, at best, a sham


defense." [71]

Based on these premises, the National Labor Relations


Commission found that there was a serious error in the factual
determination and conclusions of Labor Arbiter Legaspi. The
errors in the findings of fact directly would affect the primary
issues raised by the parties and their respective claims. If the
errors in the findings of fact were not corrected, respondent's
right to security of tenure would have been violated. The National
Labor Relations Commission acted well within the discretion
provided by Article 223 in deciding appealed cases from the Labor
Arbiter.

II

This court's power to decide a Rule 45 petition for review on


certiorari, particularly in labor cases, has its limits.

Petitioner prays that this court reverse the findings of fact of the
National Labor Relations Commission, which were affirmed by the
Court of Appeals.

In St. Martin Funeral Home v. National Labor Relations


Commission,  this court established the proper mode of appeal in
[72]

labor cases:
[O]n this score we add the further observations that there is a
growing number of labor cases being elevated to this Court
which, not being a trier of fact, has at times been constrained to
remand the case to the NLRC for resolution of unclear or
ambiguous factual findings; that the Court of Appeals is
procedurally equipped for that purpose, aside from the increased
number of its component divisions; and that there is undeniably
an imperative need for expeditious action on labor cases as a
major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No.


129 to supposed appeals from the NLRC to the Supreme Court
are interpreted and hereby declared to mean and refer to
petitions for certiorari under Rule 65. Consequently, all such
petitions should henceforth be initially filed in the Court of
Appeals in strict observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief desired.[73]

In Bani Rural Bank, Inc. v. De Guzman,  this court discussed the


[74]

primary issues to be addressed in a Rule 45 petition for review on


certiorari in labor cases:
In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of
discretion in ruling on the case?
This manner of review was reiterated in Holy Child Catholic
School v. Hon. Patricia Sto. Tomas, etc., et al., where the Court
limited its review under Rule 45 of the CA's decision in a labor
case to the determination of whether the CA correctly resolved
the presence or absence of grave abuse of discretion in the
decision of the Secretary of Labor, and not on the basis of
whether the latter's decision on the merits of the case was strictly
correct.

Grave abuse of discretion, amounting to lack or excess of


jurisdiction, has been defined as the capricious and whimsical
exercise of judgment amounting to or equivalent to lack of
jurisdiction. There is grave abuse of discretion when the power is
exercised in an arbitrary or despotic manner by reason of
"passion or personal hostility, and must be so patent and so gross
as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in
contemplation of law."  (Emphasis supplied, citations omitted)
[75]

In Career Philippines Shipmanagement, Inc. v. Serna,  this court


[76]

elaborated on its role to determine whether the Court of Appeals


was correct in either granting or dismissing the petition for
certiorari:
In a Rule 45 review, we consider the correctness of the assailed
CA decision, in contrast with the review for jurisdictional error
that we undertake under Rule 65. Furthermore, Rule 45 limits us
to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it
ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision
on the merits of the case was correct. In other words, we have to
be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it.
(Emphasis in the original)
Accordingly, we do not re-examine conflicting evidence, re-
evaluate the credibility of witnesses, or substitute the findings of
fact of the NLRC, an administrative body that has expertise in its
specialized field. Nor do we substitute our "own judgment for that
of the tribunal in determining where the weight of evidence lies
or what evidence is credible." The factual findings of the NLRC,
when affirmed by the CA, are generally conclusive on this Court.
 (Emphasis supplied, citations omitted)
[77]

Applying these cases, the general rule is that in a Rule 45 petition


for review on certiorari, this court will not review the factual
determination of the administrative bodies governing labor, as
well as the findings of fact by the Court of Appeals. The Court of
Appeals can conduct its own factual determination to ascertain
whether the National Labor Relations Commission has committed
grave abuse of discretion.  "In the exercise of its power of
[78]

review, the findings of fact of the Court of Appeals are conclusive


and binding and consequently, it is not our function to analyze or
weigh evidence all over again." [79]

III

There are exceptions to the general rule that the findings of fact
of labor tribunals, as affirmed by the Court of Appeals, are
binding on this court. In Medina v. Asistio, Jr:
[80]

It is a well-settled rule in this jurisdiction that only questions of


law may be raised in a petition for certiorari under Rule 45 of the
Rules of Court, this Court being bound by the findings of fact
made by the Court of Appeals. The rule, however, is not without
exception. Thus, findings of fact by the Court of Appeals may be
passed upon and reviewed by this Court in the following
instances, none of which obtain in the instant petition:

(1) When the conclusion is a finding grounded entirely on


speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil.
257 [1953]); (2) When the inference made is manifestly
mistaken, absurd or impossible (Luna v. Linatok, 74 Phil. 15
[1942]); (3) Where there is a grave abuse of discretion (Buyco v.
People, 95 Phil. 453 [1955]); (4) When the judgment is based on
a misapprehension of facts (Cruz v. Sosing, L-4875, Nov. 27,
1953); (5) When the findings of fact are conflicting (Casica v.
Villaseca, L-9590 Ap. 30, 1957; unrep.);** (6) When the Court of
Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant
and appellee (Evangelista v. Alto Surety and Insurance Co., 103
Phil. 401 [1958]); (7) The findings of the Court of Appeals are
contrary to those of the trial court (Garcia v. Court of Appeals, 33
SCRA 622 [1970]; Sacay v. Sandiganbayan, 142 SCRA 593
[1986]);** (8) When the findings of fact are conclusions without
citation of specific evidence on which they are based (Ibid.,); (9)
When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondents (Ibid.,); and (10) The finding of fact of the Court of
Appeals is premised on the supposed absence of evidence and is
contradicted by the evidence on record (Salazar v. Gutierrez, 33
SCRA 242 [1970]). [81]

In labor cases, if the petitioner before this court can show grave
abuse of discretion on the part of trie National Labor Relations
Commission, the assailed Court of Appeals ruling (in the Rule 65
proceedings) will be reversed. "Labor officials commit grave
abuse of discretion when their A factual findings are arrived at
arbitrarily or in disregard of the evidence."  If the petitioner can
[82]

show that "the [labor] tribunal acted capriciously and whimsically


or in total disregard of evidence material to the
controversy,"  the factual findings of the National Labor Relations
[83]

Commission may be subjected to review and ultimately rejected.


[84]

In addition, if the findings of fact of the Labor Arbiter are in direct


conflict with the National Labor Relations Commission, this court
may examine the records of the case and the questioned findings
in the exercise of its equity jurisdiction.
[85]

It is the petitioner's burden to justify the existence of one of the


exceptions to the general rule for this court to conduct a factual
review. In this case, we find that petitioner has failed to
discharge this burden.

IV
The absence of respondent does not constitute abandonment.

Petitioner justifies its actions against respondent by maintaining


that respondent never reported to his supervising officer after the
July 20, 2000 raid at Post 33. Thus, this alleged prolonged
absence from work constituted abandonment. Petitioner asserts
that since respondent failed to report for work after the raid,
there was no "actual" dismissal of respondent.

Abandonment as a just cause for dismissal is based on Article


282(b) of the Labor Code: [86]

Art. 282. Termination by employer. An employer may


terminate an employment for any of the following causes:

(b) Gross and habitual neglect by the employee of his duties[.]


Abandonment constitutes a just cause for dismissal because
"[t]he law in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer."  The
[87]

employer cannot be compelled to maintain an employee who is


remiss in fulfilling his duties to the employer, particularly the
fundamental task of reporting to work.

In Agabon v. National Labor Relations Commission,  this court


[88]

discussed the concept of abandonment:


Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of
duty, hence, a just cause for termination of employment by the
employer. For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with the second as the
more determinative factor which is manifested by overt acts from
which it may be deduced that the employees has [sic] no more
intention to work. The intent to discontinue the employment must
be shown by clear proof that it was deliberate and unjustified.
 (Citations omitted)
[89]
The burden to prove whether the employee abandoned his or her
work rests on the employer.  Thus, it is incumbent upon
[90]

petitioner to prove the two (2) elements of abandonment. First,


petitioner must provide evidence that respondent failed to report
to work for an unjustifiable reason. Second, petitioner must prove
respondent's overt acts showing a clear intention to sever his ties
with petitioner as his employer.

There is no abandonment in this case.

The first element of abandonment is the failure of the employee


to report to work without a valid and justifiable reason. Petitioner
asserts that respondent failed to report for work immediately
after his release from prison.  He also failed to abide by company
[91]

procedure and report to his immediate superior.  According to


[92]

petitioner, respondent's actions constitute a failure to report to


work without a valid and justifiable reason. [93]

The National Labor Relations Commission and the Court of


Appeals found that respondent's failure to return to work was
justified because of his detention and its adverse effects. The
Court of Appeals found that petitioner did not refute the
allegation that respondent, while in the custody of the police,
suffered physical violence in the hands of its employees. Thus,
the Court of Appeals gave credence to the report submitted by
Inspector Escartin, which stated that respondent was "so
traumatized that he actually asked to remain in the custody of
the police because he feared for his life."  The Court of Appeals
[94]

further found that respondent experienced intense fear,


"manifested] by the fact that he left the custody of the police only
when his mother accompanied him." [95]

Thus, the intervening period when respondent failed to report for


work, from respondent's prison release to the time he actually
reported for work, was justified. Since there was a justifiable
reason for respondent's absence, the first element of
abandonment was not established.
The second element is the existence of overt acts which show
that the employee has no intention to return to work. Petitioner
alleges that since respondent "vanished" and failed to report
immediately to work, he clearly intended to sever ties with
petitioner.

However, respondent reported for work after August 15, 2001,


when the criminal Complaint against him was dropped. Further,
petitioner refused to allow respondent to resume his employment
because petitioner believed that respondent was a member of the
New People's Army and had already hired a replacement.

Respondent's act of reporting for work after being cleared of the


charges against him showed that he had no intention to sever ties
with his employer. He attempted to return to work after the
dismissal of the Complaint so that petitioner would not have any
justifiable reason to deny his request to resume his employment.

Thus, respondent's actions showed that he intended to resume


working for petitioner. The second element of abandonment was
not proven, as well.

In Standard Electric Manufacturing Corporation v. Standard


Electric Employees Union-NAFLU-KMU,  respondent Rogelio
[96]

Javier failed to report for work on July 31, 1995.  He was
[97]

arrested and detained on August 9, 1995 for the charge of rape


upon his neighbor's complaint.  "[A]n Information for rape was
[98]

filed in the Regional Trial Court (RTC) of Pasig, docketed as


Criminal Case No. 108593." [99]

On January 13, 1996, his employer, Standard Electric


Manufacturing Corporation, received a letter from Javier through
counsel informing them of his detention.  Despite receiving this
[100]

letter, it terminated Javier for "(a) having been absent without


leave (AWOL) for more than, fifteen days from July 31, 1995; and
(b) for committing rape."
[101]
On May 17, 1996, the Regional Trial Court of Pasig issued the
Order "granting Javier's demurrer to evidence and ordered his
release from jail."  "Javier reported
[102]
[to] work, but [Standard
Electric Manufacturing Corporation] refused to accept him
back." [103]

This court found that there was no abandonment:


Respondent Javier's absence from August 9, 1995 cannot be
deemed as an abandonment of his work.' Abandonment is a
matter of intention and cannot lightly be inferred or legally
presumed from certain equivocal acts. To constitute as such, two
requisites must concur: first, the employee must have failed to
report for work or must have been absent without valid or
justifiable reason; and second, there must have been a clear
intention on the part of the employee to sever the employer-
employee relationship as manifested by some overt acts, with the
second element being the more determinative factor.
Abandonment as a just ground for dismissal requires clear,
willful, deliberate, and unjustified refusal of the employee to
resume his employment. Mere absence or failure to report for
work, even after notice to return, is not tantamount to
abandonment.

Moreover, respondent Javier's acquittal for rape makes it more


compelling to view the illegality of his dismissal. The trial court
dismissed the case for "insufficiency of evidence," and such ruling
is tantamount to an acquittal of the crime charged, and proof that
respondent Javier's arrest and detention were without factual and
legal basis in the first place.  (Citation omitted)
[104]

In deciding that there was no abandonment, this court applied its


ruling in Magtoto v. National Labor Relations Commission.
 In Magtoto, Alejandro Jonas Magtoto was arrested by virtue of
[105]

the Arrest, Search and Seizure Order dated September 1, 1980.


 Magtoto was charged with violating Article 136 (Conspiracy and
[106]

Proposal to Commit Rebellion) and Article 138 (Inciting to


Rebellion or Insurrection) of the Revised Penal Code.  On April
[107]

10, 1981, seven months after his arrest, Magtoto was released
after the City Fiscal dismissed the case due to lack of evidence.
 On the same day, Magtoto informed his employer of his
[108]

intention to resume working, but the employer rejected his


request to return to work.  According to his employer, Magtoto's
[109]

prolonged absence justified his dismissal from work.[110]

In its Decision, this court did not' find Magtoto's dismissal to be


justified:
The employer tries to distance itself from the detention by
stressing that the petitioner was dismissed due to prolonged
absence. . . . Since the causes for the detention, which in turn
gave the employer a ground to dismiss the petitioner, proved to
be non-existent, we rule that the termination was illegal and
reinstatement is warranted. A non-existent cause for dismissal
was explained in Pepito v. Secretary of Labor (96 SCRA 454):
". . . . Petitioner was separated because of his alleged
involvement in the pilferage in question. However, he was
absolved from any responsibility therefor by the court. The cause
for his dismissal having been proved non-existent or false, his
reinstatement is warranted. It would be unjust and unreasonable
for the Company to dismiss petitioner after the latter had proven
himself innocent of the cause for which he was dismissed." [111]

In Standard Electric and Magtoto, the employees reported for


work after the charges against them were dropped. This court
found that the employers' refusal to allow these employees to
resume work had no basis.

This is the same premise in this case. Here, Labor Arbiter Legaspi
found that petitioner was justified in refusing respondent to
resume work "due to the criminal charges filed against
him[.]"  However, the National Labor Relations Commission
[112]

found that "[petitioner] utterly failed to establish by convincing


evidence [respondent's] culpability[,]"  and reversed the
[113]

Decision of Labor Arbiter Legaspi. The Court of Appeals affirmed


this finding of fact.

Thus, the act of reporting to work after the Complaint had been
dropped showed that respondent had no intention to sever his
employer-employee relationship with petitioner. Respondent did
not commit any overt act which would show his intention to sever
this relationship. He clearly intended to resume employment.

Petitioner failed to discharge its burden to prove a just cause for


dismissal.

Based on the findings of the National Labor Relations Commission


and the Court of Appeals, petitioner was unable to prove the two
(2) concurrent elements necessary to constitute abandonment.
Outside of the allegation that respondent "simply vanished" and
failed to report to petitioner, they found that petitioner was
unable to provide additional evidence that would have justified its
actions.

Taking all these into consideration, the Court of Appeals did not
err in affirming the findings of the National Labor Relations
Commission. In Stolt-Nielsen Marine Services, Inc. v. National
Labor Relations Commission: [114]

It is a basic rule in evidence that each party must prove his


affirmative allegation. While technical rules are not strictly
followed in the NLRC, this does not mean that the rules on
proving allegations are entirely dispensed with. Bare allegations
are not enough; these must be supported by substantial evidence
at the very least.

The rule is well established that in termination cases, the burden


of proving just and valid cause for dismissing an employee rests
on the employer and his failure to do so shall result in a finding
that the dismissal is unjustified. [115]

The burden to prove a just cause for dismissal must be met by


the employer.

Petitioner was unable to discharge its evidentiary burden before


the National Labor Relations Commission and the Court of
Appeals. Thus, the illegality of the dismissal stands.
VI

The six-month period from the alleged date of dismissal by


petitioner to the date of filing of the complaint is justified.

Petitioner alleges that the Complaint of illegal dismissal filed by


respondent had no basis since petitioner filed it six (6) months
from the date he was allegedly dismissed. According to petitioner,
this delay in the filing of the Complaint strengthens its claim that
this was a mere afterthought on the part of respondent.

Petitioner cites the actions of the respondent-employee


in Philippine Industrial Security Agency Corporation v.
Dapiton  to contrast with the actions of respondent in this case.
[116]

 In Philippine
[117]
Industrial, Virgilio Dapiton "reported to
petitioner's office regularly for a new posting[,] but to no
avail."  Virgilio Dapiton then "lost no time in filing the illegal
[118]

dismissal case."  The immediate filing of the illegal dismissal


[119]

case, therefore, constituted evidence that Virgilio Dapiton did not


wish to be separated from his employment. [120]

In Arriola v. Pilipino Star Ngayon, Inc.,  this court made the


[121]

distinction between money claims under Article 291 and the


claims for backwages under Article 1146 of the Civil Code:
. . . Article 291 of the Labor Code . . . requires that money claims
arising from employer-employee relations [should] be filed within
three years from the time the cause of action accrued:
Art. 291. MONEY CLAIMS. All money claims arising from
employer-employee relations accruing during the effectivity of
this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred.
Article 291 covers claims for overtime pay, holiday pay, service
incentive leave pay, bonuses, salary differentials, and illegal
deductions by an employer. It also covers money claims arising
from seafarer contracts.

The provision, however, does not cover "money claims"


consequent to an illegal dismissal such as backwages. It also
does not cover claims for damages due to illegal dismissal. These
claims are governed by Article 1146 of the Civil Code of the
Philippines, which provides:
Art. 1146. The following actions must be instituted within four
years:
(1) Upon injury to the rights of the plaintiff[.]
This four-year prescriptive period applies to claims for
backwages, not the three-year prescriptive period under Article
291 of the Labor Code. A claim for backwages, according to this
court, may be a money claim "by reason of its practical effect."
Legally, however, an award of backwages "is merely one of the
reliefs which an illegally dismissed employee prays the labor
arbiter and the NLRC to render in his favor as a consequence of
the unlawful act committed by the employer." Though it results
"in the enrichment of the individual [illegally dismissed], the
award of backwages is not in redress of a private right, but,
rather, is in the nature of a command upon the employer to make
public reparation for his violation of the Labor Code."

Actions for damages due to illegal dismissal are likewise actions


"upon an injury to the rights of the plaintiff." Article 1146 of the
Civil Code of the Philippines, therefore, governs these actions.
 (Citations omitted)
[122]

Petitioner admits that respondent filed the Complaint for illegal


dismissal six (6) months after the first time petitioner had refused
to allow respondent to work. This is well within the four-year
prescriptive period provided by Article 1146 of the Labor Code, as
mentioned in Arriola.

In Azcor Manufacturing, Inc. v. National Labor Relations


Commission,  the employee filed a Complaint for illegal dismissal
[123]

with a prayer for reinstatement four (4) months after the incident
of illegal dismissal.  This court held that Article 1146 still
[124]

applied:
In addition, an action for reinstatement by reason of illegal
dismissal is one based on an injury which may be brought within
four (4) years from the time of dismissal pursuant to Art. 1146 of
the Civil Code. Hence, Capulso's case which was filed after a
measly delay of four (4) months should not be treated with
skepticism or cynicism. By law and settled jurisprudence, he has
four (4) years to file his complaint for illegal dismissal. A delay of
merely four (4) months in instituting an illegal dismissal case is
more than sufficient compliance with the prescriptive period. It
may betray an unlettered man's lack of awareness of his rights as
a lowly worker but, certainly, he must not be penalized for his
tarrying.[125]

In this case, the six-month period from the date of dismissal to


the filing of the Complaint was well within reason and cannot be
considered "inexcusable delay." The cases filed before the courts
and administrative tribunals originate from human experience.
Thus, this court will give due consideration to the established
facts which would justify the gap of six (6) months prior to the
filing of the complaint.

First, respondent received a beating from petitioner's employees


at the time of his detention. Even after the dismissal of the
Complaint against him, it would have been reasonable for him to
take time to recover from the physical and emotional trauma he
received.

Second, after the charges against him were dropped, respondent


averred that he "repeatedly"  asked petitioner if he could
[126]

resume employment. The Court of Appeals affirmed this finding.


Prior to the filing of the Complaint on March 14, 2002, respondent
did not sleep on his right to resume work.

Lastly, this court takes notice of the considerable distance


between respondent's last known address at Sta. Josefa, Trento,
Agusan del Sur and Post 33 at Picop Resources, Inc., Upper New
Visayas, Agusan del Sur. The distance he had to travel to ask
petitioner to resume work would have placed an understandable
constraint on respondent's time and resources.

Respondent cannot be prejudiced by the six-month period.


Petitioner's argument on this matter must fail.
VII

Indophil is not applicable as a defense against petitioner's


dismissal of respondent.

According to petitioner, respondent should have made a more


substantial effort to comply with its orders, pursuant to Indophil.
 This application, however, is misplaced.
[127]

In Indophil, the employer gave the employee a letter requiring


him to report and explain his unauthorized absences.  The [128]

employer gave the employee three (3) days to respond to the


letter.  Instead, the employee filed a complaint alleging illegal
[129]

dismissal against the employer.  This court held that by failing to


[130]

respond to the letter, the employee effectively resigned from his


employment. Thus, to begin with, there was no dismissal of the
employee.  The employee in that case should have acted
[131]

promptly in the interest of protecting his employment. [132]

In this case, the National Labor Relations Commission and the


Court of Appeals did not find evidence that petitioner afforded
respondent the opportunity to explain his failure or inability to
report for work. They found that petitioner's allegation that
respondent "simply vanished" did not discharge its burden of
proving that respondent was dismissed for a just cause.
In Functional, Inc. v. Granfil:
[133]

Being a matter of intention, moreover, abandonment cannot be


inferred or presumed from equivocal acts. As a just and valid
ground for dismissal, it requires the deliberate, unjustified refusal
of the employee to resume his employment, without any intention
of returning. . . . The burden of proving abandonment is once
again upon the employer who, whether pleading the same as a
ground for dismissing an employee or as a mere defense,
additionally has the legal duty to observe due process. Settled is
the rule that mere absence or failure to report to work is not
tantamount to abandonment of work.  (Emphasis supplied,
[134]

citations omitted)
Unlike Indophil, illegal dismissal occurred in this case.
Respondent was illegally dismissed from the time petitioner
refused to allow him to resume work.

Further, People v. Valla,  relied upon by petitioner, does not


[135]

apply to this case.

People v. Valla is a criminal case. This, however, is a labor case.


Criminal cases and labor cases have different evidentiary
requirements and procedures. Criminal cases are first heard in
trial courts, while labor cases are first heard by administrative
agencies. They are not analogous, and a trial judge is not in the
same position as the Labor Arbiter. Petitioner's arguments based
on this case must fail.

VIII

Applying the doctrine of "no work, no pay," the computation of


backwages should only begin from the date of the filing of the
Complaint.

The dispositive portion of the Decision of the National Labor


Relations Commission states that respondent should be paid full
backwages from August 15, 2001 to May 30, 2003.  The Court
[136]

of Appeals affirmed this award.  This court finds that this


[137]

amount should be reduced in view of the principle of "no work, no


pay."

In Republic v. Pacheo:[138]

If there is no work performed by the employee there can be no


wage or pay, unless of course the laborer was able, willing and
ready to work but was illegally locked out, dismissed or
suspended. The "No work, no pay" principle contemplates a "no
work" situation where the employees voluntarily absent
themselves. (Emphasis in the original)
[139] 

It would be unjust if petitioner were ordered to pay respondent


for the period of time that respondent could not and did not work.
In Standard Electric, respondent Javier was not entitled to the
entirety of the backwages during the time of his detention:
Finally, in line with the rulings of this Court
in Magtoto and Pedroso on the matter of backwages, respondent
Javier is not entitled to any salary during the period of his
detention. His entitlement to full backwages commenced from the
time the petitioner refused his reinstatement. In the instant case,
when respondent Javier was freed on May 24, 1996 by virtue of
the judgment of acquittal dated May 17, 1996, he immediately
proceeded to the petitioner but was not accepted back to work;
hence, the reckoning point for the grant of backwages started
therefrom.[140]

In Standard Electric, the period of computation of backwages


commenced from the date petitioner refused to allow respondent
to return to work, and not from the date the charges against
respondent were dismissed.

In this case, the date of petitioner's refusal to allow respondent's


return to work was not established in the findings of fact of the
labor tribunals and the Court of Appeals. Petitioner alleged that
the filing of the Complaint took place six (6) months after the
alleged date that respondent's request to return to work was
refused. The date when the incident took place was not specified.

Applying Standard Electric, respondent is not entitled to


backwages from August 15, 2001, the date of the Resolution
dismissing the Complaint against respondent. The facts do not
categorically state that petitioner refused to allow respondent to
resume working on August 15, 2001.

Absent proof of the actual date that respondent first reported for
work and was refused by petitioner, the date of the filing of the
Complaint should serve as the basis from which the computation
of backwages should begin. Thus, this court finds that respondent
is entitled to full backwages starting only on March 14, 2002 until
actual reinstatement.

IX
Respondent's right to procedural due process was not observed.

The employer must always observe the employee's right to due


process. In Agabon:
Procedurally ... if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or
an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss. . . .

Due process under the Labor Code, like Constitutional due


process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the Labor
Code; and procedural, i.e., the manner of dismissal. Procedural
due process requirements for dismissal are found in the
Implementing Rules of P.D. 442, as amended, otherwise known
as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as
amended by Department Order Nos. 9 and 10. Breaches of these
due process requirements violate the Labor Code. . . .

Constitutional due process protects the individual from the


government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process found in
the Labor Code and Implementing Rules protects employees from
being unjustly terminated without just cause after notice and
hearing.  (Citation omitted)
[141]

In this case, petitioner violated respondent's right to procedural


due process. The two-notice requirement was not followed.
Petitioner sought to excuse itself by claiming that there was no
address where the proper notice could have been served.
However, petitioner admitted before the Court of Appeals that
"respondent's last known address was given to the investigating
court by Police Inspector Escartin.]"
[142]
There was no attempt from petitioner to serve the proper notice
on respondent at the address contained in its employment
records. Respondent was replaced without being given an
opportunity to explain his absence.

In Agabon, this court awarded an amount as indemnity to the


dismissed employee due to the violation of the right to procedural
due process.  This court deems it just to confer an additional
[143]

award of P30,000.00 to respondent.

Petitioner has violated respondent's right to security of tenure, as


well as his right to procedural due process. For these violations,
petitioner must be held accountable.

WHEREFORE, the Petition is DENIED. The Court of Appeals


Decision dated June 24, 2005 and Resolution dated August 10,
2005 in CA-G.R. SP No. 81336 are AFFIRMED with
MODIFICATION in that the amount of backwages to be awarded
to respondent Celso E. Fuentes should begin on March 14, 2002
until his actual reinstatement. Petitioner Protective Maximum
Security Agency, Inc. is further ordered to pay respondent Celso
Fuentes the amount of P30,000.00 as indemnity for violation of
respondent's right to procedural due process. Legal interest shall
be computed at the rate of 6% per annum of the total award
from date of finality of this Decision until full satisfaction. Costs
[144] 

against petitioner.

SO ORDERED.

Carpio, (Chairperson), Velasco, Jr.,   Del Castillo, and Mendoza,


*

JJ., concur.

 Designated Acting Member per S.O. No. 1910 dated January 12,
*

2015.

[1]
 Rollo, pp. 30-47.
 Id. at 8-21. The Decision dated June 24, 2005 was penned by
[2]

Associate Justice Romulo V. Borja (Chair) and concurred in by


Associate Justices Rodrigo F. Lim, Jr. and Normandie B. Pizarro of
the Twenty-Third Division. The June 24, 2005 Decision and
August 10, 2005 Resolution in CA-G.R. SP No. 81336 affirmed the
National Labor Relations Commission Resolutions and denied
Protective's Motion for Reconsideration.

[3]
 Id. at 21.

[4]
 Id. at 32.

[5]
 Id. at 9.

[6]
 Id.

[7]
 Id. at 83.

[8]
 Id. at 83-84.

[9]
 Id. at 9-10.

[10]
 Id. at 84.

[11]
 Id. at 10.

[12]
 Id.

[13]
 Id. at 84.

[14]
 Id. at 10 and 84.

[15]
 Id. at 10.

 Id. The Decision of the Court of Appeals referred to "Mangagoy"


[16]

as "Manganoy".
[17]
 Id.

[18]
 Id.

[19]
 Id. at 33.

[20]
 Id. at 12.

[21]
 Id. at 10-11.

[22]
 Id.

[23]
 Id. at 12.

[24]
 Id. at 11.

[25]
 Id.

[26]
 Id. at 37-38.

[27]
 Id. at 13.

[28]
 Id. at 8.

[29]
 Id. at 14.

[30]
 Id. at 15.

[31]
 Id. at 21.

[32]
 Id. at 16-18.

[33]
 Id. at 18-19.

[34]
 Id. at 19-20.

[35]
 456 Phil. 425,438 (2003) [Per J. Quisimbing, Second Division].
[36]
 Rollo, p. 20.

[37]
 Id. at 87-88.

[38]
 239 Phil. 386 (1987) [Per J. Cortes, Third Division].

[39]
 Rollo, p. 39.

[40]
 Id. at. 91.

[41]
 Id. at 38.

[42]
 380 Phil. 31 (2000) [Per J. Quisimbing, Second Division].

[43]
 Id. at 40.

[44]
 Rollo, p. 88.

[45]
 Id. at 91-92.

[46]
 Id. at 39.

[47]
 Id. at 90.

 G.R. No. 96488, September 27, 1993, 226 SCRA 723, 729 [Per
[48]

J. Nocon, Second Division].

[49]
 Rollo, pp. 89-90.

[50]
 Id. at 89.

[51]
 Id. at 89.

[52]
 Id.

[53]
 Id. at 91.

[54]
 Id. at 101-102.
[55]
 Id.

[56]
 Id. at 101.

[57]
 Id. at 102-103.

[58]
 Rollo, p. 37.

[59]
 Id.

[60]
 Id. at 38.

[61]
 Id.

[62]
 Id.

[63]
 Id.

[64]
 Id.

[65]
 Id.

[66]
 Id. at 16.

[67]
 Id.

[68]
 Id.

[69]
 Id. at 18.

[70]
 Id.

[71]
 Id.

[72]
 356 Phil. 811 (1998) [Per J. Regalado, En Banc].

[73]
 Id. at 824.
 G.R. No. 170904, November 13,2013,709 SCRA 330 [Per J.
[74]

Brion, Second Division].

[75]
 Id. at 346-347.

 G.R. No. 172086, December 3, 2012, 686 SCRA 676 [Per J.


[76]

Brion, Second Division].

[77]
 Id. at 684.

 Maralit v. Philippine National Bank, 613 Phil. 270, 289 (2009)


[78]

[Per J. Carpio, First Division].

 Go v. Court of Appeals, G.R. No. 158922, May 28, 2004, 430
[79]

SCRA 358, 364 [Per J. Ynares-Santiago, First Division].

 G.R. No. 75450, November 8, 1990, 191 SCRA218 [Per J.


[80]

Bidin, Third Division].

[81]
 Id. at 223-224.

 Maralit v. Philippine National Bank, 613 Phil. 270, 285 (2009)


[82]

[Per J. Carpio, First Division], citing Triumph International


(Phils.), Inc. v. Apostol, 607 Phil. 157, 170 (2009) [Per J. Carpio,
First Division], Marival Trading, Inc. v. National Labor Relations
Commission, 552 Phil. 762, 774 (2007) [Per J. Chico-Nazario,
Third Division], and Escareal v. National Labor Relations
Commission, G.R. No. 99359, September 2, 1992, 213 SCRA
472,490 [Per J. Davide, Jr., Third Division].

 Odango v. National Labor Relations Commission, G.R. No.


[83]

147420, June 10, 2004, 431 SCRA 633, 640 [Per J. Carpio, First
Division], citing Sajonas v. National Labor Relations Commission,
262 Phil. 201, 206 (1990) [Per J. Regalado, Second Division].
 Norkis Trading Corporation v. Buenavista, G.R. No. 182018,
[84]

October 10, 2012, 683 SCRA 406, 422 [Per J. Reyes, First
Division].

 Luna v. Allado Construction Co., Inc., G.R. No. 175251, May


[85]

30, 2011, 649 SCRA 262, 272 [Per J. Leonardo-De Castro, First
Division], citing Abel v. Philex Mining Corporation, 612 Phil. 203,
213 (2009) [Per J. Carpio Morales, Second Division].

 Alert Security and Investigation Agency, Inc. v. Pasawilan, G.R.


[86]

No. 182397, September 14, 2011, 657 SCRA 655, 666-667 [Per
J. Villarama, Jr., First Division].

 Philippine Long Distance Telephone Company v. Honrado, 652


[87]

Phil. 331, 334 (2010) [Per J. Del Castillo, First Division], citing


Mercury Drug Corporation v. National Labor Relations
Commission, 258 Phil. 384, 391 (1989) [Per C.J. Fernan, Third
Division]; Agabon v. National Labor Relations Commission, 485
Phil. 248, 286 (2004) [Per J. Ynares-Santiago, En Banc].

[88]
 485 Phil. 248 (2004) [Per J. Ynares-Santiago, En Banc].

[89]
 Id. at 278.

 Macahilig v. National Labor Relations Commission, 563 Phil.


[90]

683, 691 (2007) [Per J. Austria-Martinez, Third Division].

[91]
 Rollo, p. 89.

[92]
 Id.

[93]
 Id. p. 89-90.

[94]
 Rollo, p. 17.

[95]
 Id.

[96]
 505 Phil. 418 (2005) [Per J. Callejo, Sr., Second Division].
[97]
 Id. at 420.

[98]
 Id.

[99]
 Id.

[100] Id.

[101] Id.

[102] Id.

[103] Id.

[104]
 Id. at 427-428.

[105]
 224 Phil. 210 (1985) [Per J. Gutierrez, Jr., First Division].

[106]
 Id. at 214.

[107] Id.

    
 Id. at 215.
[108]

[109] Id.

[110]
 Id. at 217.

[111] Id.

[112]
 Rollo, p. 38.

[113] Id.

[114]
 360 Phil. 881 (1998) [Per J. Romero, Third Division].

[115]
 Id. at 888-889.
[116]
 377 Phil. 951 (1999) [Per J. Puno, First Division].

[117]
 Rollo, pp. 90-91.

 Philippine Industrial Security Agency Corporation v. Dapiton,


[118]

311 Phil. 951, 959 (1999) [Per J. Puno, First Division].

[119] Id.

[120] Id.

G.R.
[121] 
No. 175689, August 13,
2014 jurisprudence/2014/august2014/175689.pdf> [Per J.
Leonen, Third Division].

[122]
 Id. at 6-9.

[123]
 362 Phil. 370 (1999) [Per J. Bellosillo, Second Division].

[124]
 Id. at 379.

[125]
 Id. at 379-380.

[126]
 Rollo, p. 102.

[127]
 Id. at 89-90.

 Indophil Acrylic Mfg. Corporation v. National Labor Relations


[128]

Commission, G.R. No. 96488, September 27, 1993, 226 SCRA


723, 725 and 727 [Per J. Nocon, Second Division].

[129]
 Id. at 725.

[130] Id.

[131]
 Id. at 729.

[132] Id.
 G.R. No. 176377, November 16, 2011, 660 SCRA 279 [Per J.
[133]

Perez, Second Division].

[134]
 Id. at 286-287.

[135]
 380 Phil. 31 (2000) [Per J. Quisimbing, Second Division].

[136]
 Rollo, p. 13.

[137]
 Id. at 21.

 G.R. No. 178021, January 31, 2012, 664 SCRA 497 [Per J.
[138]

Mendoza, En Banc].

[139]
 Id. at 505.

 Standard Electric Manufacturing Corporation v. Standard


[140]

Electric Employees Union-NAFLU-KMU, 505 Phil. 418, 429-430


(2005) [Per J. Callejo, Sr., Second Division].

 485 Phil. 248,280-284 (2004) [Per J. Ynares-Santiago, En


[141]

Banc].

[142]
 Rollo, p. 16.

[143]
 485 Phil. 248, 288 (2004) [Per J. Ynares-Santiago, En Banc].

 Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013,


[144]

703 SCRA 439, 458 [Per J. Peralta, En Banc].

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Supreme Court E-Library


G.R. No. 195395
EN BANC

[ G.R. No. 195395, September 10,


2013 ]
ENGINEER MANOLITO P. MENDOZA, PETITIONER,
VS. COMMISSION ON AUDIT, RESPONDENT.
DECISION

LEONEN, J.:

The salary of a water district's general manager is covered by the


Salary Standardization Law despite Section 23 of the Provincial
Water Utilities Act of 1973. The law grants water districts the
power to fix the compensation of their respective general
managers, but it should be consistent with Republic Act No. 6758
or the "Compensation and Position Classification Act of 1989."

We are asked in this Petition  for Certiorari to set aside


[1]

respondent Commission on Audit's Decision  denying petitioner


[2]

Manolito P. Mendoza's Motion for Reconsideration of the "Notice


of Finality of COA Decision."  The Commission on Audit ordered
[3]

petitioner Mendoza to restitute to the government amounts he


had received illegally as salary, thus, violating the Salary
Standardization Law.

Petitioner Mendoza is the general manager of Talisay Water


District in Talisay City, Negros Occidental. The Water District was
formed pursuant to Presidential Decree No. 198, otherwise known
as the "Provincial Water Utilities Act of 1973."
The Commission on Audit disallowed a total amount of Three
Hundred Eighty Thousand Two Hundred Eight Pesos (P3
80,208.00) which Mendoza received as part of his salary as the
Water District's general manager from 2005 to 2006.  The [4]

Commission found that petitioner Mendoza's salary as general


manager "was not in consonance with the rate prescribed under
[Republic Act No.] 6758, otherwise known as the Salary
Standardization Law and the approved Plantilla of Position of the
district."  The Commission also found that petitioner Mendoza's
[5]

claim of salary was "not supported with an Appointment duly


attested by the Civil Service Commission."  Payment to petitioner
[6]

Mendoza was, therefore, "illegal."[7]

On July 6, 2009, the Commission on Audit issued the "Notice of


Finality of COA Decision"  informing petitioner Mendoza of the
[8]

finality of the Notice of Disallowance/s. The Commission then


instructed the Talisay Water District cashier to withhold petitioner
Mendoza's salaries corresponding to the amount disallowed and
apply them in settlement of the audit disallowance in accordance
with Rule XII, Section 3 of the Revised Rules of Procedure of the
Commission on Audit. [9]

Petitioner Mendoza filed his Motion for Reconsideration  of the


[10]

"Notice of Finality of COA Decision."  He assailed the finality of


[11]

the Notice of Disallowance/s, arguing that he had not personally


received a copy of this. This deprived him of the opportunity to
answer the Notice immediately. He also argued that Section 23 of
the Provincial Water Utilities Act of 1973 gives Talisay Water
District board of directors the right to fix and increase his salary
as general manager and is an exception to the Salary
Standardization Law. Finally, he argued that he had relied on
Section 23 in good faith. As such, he cannot be ordered to refund
the salaries he had received.

The Commission on Audit denied petitioner Mendoza's Motion for


Reconsideration for lack of merit.  It found that the Notice of
[12]

Disallowance/s had been received by petitioner Mendoza's


employee and ruled that petitioner Mendoza is deemed to have
received, the Notice of Disallowance/s constructively. It likened
the service of the Notice of Disallowance/s to the service of
summons. As a general rule, summons must be personally served
on the person to whom it is directed, but substituted service is
allowed in certain cases. The Commission also noted that
"technical rules of procedure and evidence are not strictly
applied"  in administrative proceedings; therefore, petitioner
[13]

Mendoza "cannot invoke the defense of technicality." [14]

On the merits, the Commission ruled that Section 23 of the


Provincial Water Utilities Act is not an exception to the Salary
Standardization Law. According to the Commission, Section 23 of
Presidential Decree No. 198 "could be reconciled with the salary
standardization policy of the [Salary Standardization Law]."  The[15]

authority of water districts to fix the salary of a general manager


"is not a blanket authority to be exercised without regard to, or
outside the strictures of, [Republic Act No.] 6758."
[16]

The Commission on Audit determined petitioner Mendoza's proper


salary package was "within Salary Steps (1 to 8) in the
appropriate Salary Grade, depending on the Position Classification
Category of the General Manager under Section 5 of [Republic Act
No.] 6758."  The case of Baybay Water District v. Commission
[17]

on Audit  cited by petitioner Mendoza does not apply to him. In


[18]

Baybay, this Court held that only board members of local water
districts are not covered by the Salary Standardization Law. The
dispositive portion of its Decision  reads:
[19]

WHEREFORE, premises considered, the instant motion for


reconsideration is DENIED for lack of merit. The ATL, Talisay
Water District, Talisay City, is hereby directed to enforce, the
implementation of the FOA dated July 6, 2009 in accordance with
the provisions of Section 23.4, Chapter V, of the 2009 Rules and
Regulations on the Settlement of Accounts. [20]

On February 11, 2011, petitioner Mendoza filed this Petition  to [21]

set aside the Commission on Audit's Decision. He alleged that the


Commission on Audit had committed grave abuse of discretion
amounting to lack or excess of jurisdiction in rendering the
Decision.

In its Comment,  the Commission on Audit argued that the rules


[22]

on personal service of summons are not strictly applied to


administrative proceedings, and substantial compliance is
sufficient. Considering that the "Agency Head" in petitioner
Mendoza's office received the Notice of Disallowance/s, the
receipt is sufficient to notify him of his salary's disallowance. At
the very least, there was substantial compliance with the service
of the Notice of Disallowance/s.

The Commission also argued that Section 23 of Presidential


Decree No. 198 can be reconciled with the Salary Standardization
Law. Although Section 23 grants a water district the power to fix
the compensation of its general manager, this power is not
absolute. The salary of a general manager is limited by the Salary
Standardization Law to a grade of Salary Grade 30 maximum.
The alleged good faith of petitioner Mendoza in relying on Section
23 does not excuse him from reimbursing the government the
amounts unduly disbursed to him.

Petitioner Mendoza filed his Reply to Comment,  after which the


[23]

parties filed their respective Memoranda.

The issues for resolution are the following:

(1) Whether the Notice of Disallowance/s became final and executory despite lac
Mendoza;

(2) Whether the salary of a water district's general manager is covered by the Salary S

(3) Whether petitioner Mendoza's alleged good faith reliance on Section 23 of the P
excuses him from reimbursing the government the amounts unduly disbursed to him

The Petition is partly meritorious.

The Notice of Disallowance/s became final and executory.


Petitioner Mendoza argued that the Commission on Audit gravely
abused its discretion in issuing the "Notice of Finality of COA
Decision."  He stated that the Notice of Disallowance/s never
[24]

became final and executory considering that he was never


personally served a copy of the Notice.

Petitioner Mendoza is mistaken.

The Commission on Audit issued the Notice of Disallowance/s on


May 28, 2007. The 1997 Revised Rules of Procedure of the
Commission on Audit governed pleading and practice in the
Commission during this period. Sections 5 and 6 of Rule IV state:
Sec. 5. Number of Copies and Distribution. - The report,
Certificate of Settlement and Balances, notice of disallowances
and charges, and order or decision of the Auditor shall be
prepared in such number of copies as may be necessary for
distribution to the following: (1) original to the head of agency
being audited; (2) one copy to the Auditor for his record; (3) one
copy to the Director who has jurisdiction over the agency of the
government under audit; (4) other copies to the agency officials
directly affected by the audit findings.

Sec. 6. Finality of the Report, Certificate of Settlement and


Balances, Order or Decision. - Unless a request for
reconsideration in filed or an appeal is taken, the report,
Certificate of Settlement and Balances, order or decision of the
Auditor shall become final upon the expiration of six (6) months
after notice thereof to the parties concerned.
In this case, copies of the Notice of Disallowance/s were received
on May 29, 2007 by "the Agency Head," "Accountant," and
"Persons Liable" with their signatures appearing beside the three
designations.  Petitioner Mendoza never disputed this fact. After
[25]

his receipt of the Notice of Finality of COA Decision on August 27,


2009, petitioner Mendoza filed the Motion for Reconsideration
dated September 10, 2009. The Commission on Audit gave due
course to the Motion for Reconsideration and issued the assailed
Decision two (2) years after the issuance of the Notice of
Disallowance/s. It ruled that petitioner Mendoza's salary is
covered by the Salary Standardization Law.

These circumstances show that the Notice of Disallowance/s was


served on the necessary officers in accordance with the 1997
Revised Rules of Procedure of the Commission on Audit.

Moreover, this Court En Banc in Gannapao v. Civil Service


Commission  ruled that:
[26]

Time and again, we have held that the essence of due process is
simply an opportunity to be heard or, as. applied to
administrative proceedings, an opportunity to explain one's side
or an opportunity to seek a reconsideration of the action or ruling
complained of. In the application of the principle of due
process, what is sought to be safeguarded is not lack of
previous notice but the denial of the opportunity to be
heard. As long as a party was given the opportunity to defend
his interests in due course, he was not denied due process.
 (Emphasis supplied)
[27]

Petitioner Mendoza was afforded due process despite his claim


that he had never personally received a copy of the Notice of
Disallowance/s. He was able to file the Motion for
Reconsideration. The Commission gave due course to the Motion
and ruled on the merits. Petitioner Mendoza, therefore, has been
duly afforded an opportunity to explain his side and seek a
reconsideration of the ruling he assails, which is the "essence of
administrative due process."[28]

For these reasons, We rule that the Commission on Audit issued


the "Notice of Finality of COA Decision"  without grave abuse of
[29]

discretion, and the Notice of Disallowance/s had become final and


executory.

The salary of a water utility general manager is covered by


the Salary Standardization Law.
To resolve whether water utilities are covered by the Salary
Standardization Law, a discussion of the entities covered by and
exempted from the Salary Standardization Law must be made.

A. Rationale and Coverage of the Salary Standardization


Law   

Legislation on the compensation and position classification of


government employees reflects the policy of the State to provide
"equal pay for substantially equal work"  in government and "to
[30]

base differences in pay upon substantive differences in duties and


responsibilities, and qualification requirements of the
positions."  At present, Republic Act No. 6758 or the
[31]

"Compensation and Position Classification Act of 1989" governs


the compensation and position classification system in
government. [32]

The Compensation and Position Classification System established


under Republic Act No. 6758 applies to "all positions, appointive
or elective, on full or part-time basis, now existing or hereafter
created in the government, including government-owned or
controlled corporations and government financial institutions."[33]

The term "government" in Republic Act No. 6758 "refers to the


Executive, the Legislative and the Judicial Branches and the
Constitutional Commissions and shall include all, but shall not be
limited to, departments, bureaus, offices, boards, commissions,
courts, tribunals, councils, authorities, administrations, centers,
institutes, state colleges and universities, local government units,
and the armed forces."  "Government-owned or controlled
[34]

corporations and financial institutions," on the other hand, include


"all corporations and financial institutions owned or controlled by
the National Government, whether such corporations and
financial institutions perform governmental or proprietary
functions."
[35]

The coverage of Republic Act No. 6758 is comprehensive.


In Commission on Human Rights Employees' Association v.
Commission on Human Rights,  this Court ruled that Republic Act
[36]

No. 6758 applies to the entire government without qualification:


The disputation of the Court of Appeals that the CHR is exempt
from the long arm of the Salary Standardization Law is flawed
considering that the coverage thereof, as defined
above, encompasses the entire gamut of government
offices, sans qualification.  (Emphasis supplied)
[37]

B. Government Entities Exempted from the Salary


Standardization Law

Republic Act No. 6758 became effective on July 1, 1989. Since


then, laws have been passed exempting some government
entities from the Salary Standardization Law. These entities were
allowed to create their own compensation and position
classification systems that apply to their respective offices.

We examine some of these laws for Our guidance.

1. Philippine Postal Corporation

Sections 22 and 25 of Republic Act No. 7354 or the "Postal


Service Act of 1992" state:
Sec. 22. Merit System. — The Corporation shall establish a
human resources management system which shall govern
the selection, hiring, appointment, transfer, promotion, or
dismissal of all personnel. Such system shall aim to establish
professionalism and excellence at all levels of the postal
organization in accordance with sound principles of management.

A progressive compensation structure, which shall be based on


job evaluation studies and wage surveys and subject to the
Board's approval, shall be instituted as an integral component of
the Corporation's human resources development program. The
Corporation, however, may grant across-the-board salary
increase or modify its compensation structure as to result in
higher salaries, subject to either of the following conditions:
(a) there are evidences of prior improvement in employee
productivity, measured by such quantitative indicators as mail
volume per employee and delivery times.

(b) a law raising the minimum wage has been enacted with
application to all government employees or has the effect of
classifying some positions in the postal service as below the floor
wage.

xxxx

Sec. 25. Exemption from Rules and Regulations of the


Compensation and Position Classification Office. — All personnel
and positions of the Corporation shall be governed by Section 22
hereof, and as such shall be exempt from the coverage of
the rules and regulations of the Compensation and Position
Classification Office. The Corporation, however, shall see to it
that its own system conforms as closely as possible with that
provided for under Republic Act No. 6758.

(Emphasis supplied)
In Intia, Jr. v. Commission on Audit,  this Court affirmed the
[38]

Philippine Postal Corporation's exemption from the Salary


Standardization Law. However, the corporation should report the
details of its salary and compensation system to the Department
of Budget and Management.
First, it is conceded that the PPC, by virtue of its charter,
R.A. No. 7354, has the power to fix the salaries and
emoluments of its employees. This function, being lodged in
the Postmaster General, the same must be exercised with the
approval of the Board of Directors. This is clear from Sections 21
and 22 of said charter.

Petitioners correctly noted that since the PPC Board of


Directors are authorized to approve the Corporation's
compensation structure, it is also within the Board's power
to grant or increase the allowances of PPC officials or
employees. As can be gleaned from Sections 10 and 17 of P.D
No. 985 (A Decree Revising the Position Classification and
Compensation System in the National Government, and
Integrating the Same), the term "compensation" includes
salaries, wages, allowances, and other benefits.

xxxx

While the PPC Board of Directors admittedly acted within its


powers when it granted the RATA increases in question, the same
should have first been reviewed by the DBM before they were
implemented Section 21, 22, and 25 of the PPC charter should be
read in conjunction with Section 6 of P.D. No. 1597:

Sec 6. Exemption from OCPC Rules and


Regulations. Agencies, positions or groups of officials and
employees of the national government, including government-
owned and controlled corporations, who are hereafter exempted
by law from OCPC coverage, shall observe such guidelines and
policies as may be issued by the President governing position
classification, salary rates, levels of allowances, project and other
honoraria, overtime rates, and other forms of compensation and
fringe benefits. Exemptions notwithstanding, agencies shall
report to the President, through the Budget Commission,
on their position classification and compensation plans,
policies, rates and other related details, following such
specifications as may be prescribed by the
President. (Emphasis supplied).

xxxx

As the Solicitor General correctly observed, there is no express


repeal of Section 6, P.D. No. 1597 by RA No. 7354. Neither is
there an implied repeal thereof because there is no irreconcilable
conflict between the two laws. On the one hand, Section 25 of
R.A. No. 7354 provides for the exemption of PPC from the rules
and regulations of the CPCO. On the other hand, Section 6 of P.D.
1597 requires PPC to report to the President, through the DBM,
the details of its salary and compensation system. Thus, while
the PPC is allowed to fix its own personnel compensation
structure through its Board of Directors, the latter is
required to follow certain standards in formulating said
compensation system. One such standard is specifically
stated in Section 25 of R.A. No. 7354.  (Emphasis supplied)
[39]

2. Trade and Investment Development Corporation of the


Philippines

The Trade and Investment Development Corporation of the


Philippines is also exempted from the Salary Standardization Law
as provided in Section 7 of Republic Act No. 8494: [40]

Sec. 7. The Board of Directors shall provide for an organizational


structure and staffing pattern for officers and employees of the
Trade and Investment Development Corporation of the Philippines
(TIDCORP) and upon recommendation of its President, appoint
and fix their remuneration, emoluments and fringe benefits:
Provided, That the Board shall have exclusive and final authority
to appoint, promote, transfer, assign and reassign personnel of
the TIDCORP, any provision of existing law to the contrary
notwithstanding.

All positions in TIDCORP shall be governed by a compensation


and position classification system and qualification standards
approved by TIDCORP's Board of Directors based on a
comprehensive job analysis and audit of actual duties and
responsibilities. The compensation plan shall be comparable with
the prevailing compensation plans in the private sector and shall
be subject to periodic review by the Board no more than once
every four (4) years without prejudice to yearly merit reviews or
increases based on productivity and profitability. TIDCORP shall
be exempt from existing laws, rules and regulations on
compensation, position classification and qualification
standards. It shall, however, endeavor to make the system to
conform as closely as possible to the principles and modes
provided in Republic Act No. 6758. (Emphasis supplied)
This Court in Trade and Investment Development Corporation of
the Philippines v. Civil Service Commission  recognized the Trade
[41]

and Investment Development Corporation's exemption from the


Salary Standardization Law. The Corporation should, however,
"endeavor" to conform to the principles and modes of the Salary
Standardization Law in making its own system of compensation
and position classification.
The phrase "to endeavor" means "to devote serious and sustained
effort" and "to make an effort to do." It is synonymous with the
words to strive, to struggle and to seek. The use of "to endeavor"
in the context of Section 7 of R.A. 8494 means that despite
TIDCORP's exemption from laws involving compensation, position
classification and qualification standards, it should still strive to
conform as closely as possible with the principles and modes
provided in R.A. 6758. The phrase "as closely as possible," which
qualifies TIDCORP's duty "to endeavor to conform," recognizes
that the law allows TIDCORP to deviate from RA 6758, but
it should still try to hew closely with its principles and
modes. Had the intent of Congress been to require TIDCORP to
fully, exactly and strictly comply with R.A. 6758, it would have so
stated in unequivocal terms. Instead, the mandate it gave
TIDCORP was to endeavor to conform to the principles and modes
of R.A. 6758, and not to the entirety of this law. (Emphasis
supplied)
3. Land Bank of the Philippines, Social Security System,
Small Business Guarantee and Finance Corporation,
Government Service Insurance System, Development Bank
of the Philippines, Home Guaranty Corporation, and the
Philippine Deposit Insurance Corporation

From 1995 to 2004, laws were passed exempting several


government financial institutions from the Salary Standardization
Law. Among these financial institutions are the Land Bank of the
Philippines, Social Security System, Small Business Guarantee
and Finance Corporation, Government Service Insurance System,
Development Bank of the Philippines, Home Guaranty
Corporation, and the Philippine Deposit Insurance Corporation.

This Court has taken judicial notice of this development in Central


Bank (now Bangko Sentral ng Pilipinas) Employees Association,
Inc. v. Bangko Sentral ng Pilipinas:[42]
Indeed, we take judicial notice that after the new BSP charter
was enacted in 1993, Congress also undertook the amendment of
the charters of the GSIS, LBP, DBP and SSS, and three other
GFIs, from 1995 to 2004, viz:
1. R.A. No. 7907 (1995) for Land Bank of the Philippines (LBP);
2. R.A. No. 8282 (1997) for Social Security System (SSS);
3. R.A. No. 8289 (1997) for Small Business Guarantee and
Finance Corporation, (SBGFC);
4. R.A. No. 8291 (1997) for Government Service Insurance
System (GSIS);
5. R.A. No. 8523 (1998) for Development Bank of the
Philippines (DBP);
6. R.A. No. 8763 (2000) for Home Guaranty Corporation
(HGC); and
7. R.A. No. 9302 (2004) for Philippine Deposit Insurance
Corporation (PDIC).
It is noteworthy, as petitioner points out, that the subsequent
charters of the seven other GFIs share this
common proviso: a blanket exemption of all their employees
from the coverage of the SSL, expressly or impliedly, as
illustrated below:

1. Land Bank of the Philippines (Republic Act No. 7907)     

Section 10. Section 90. of [Republic Act No. 3844] is hereby


amended to read as follows:

Section 90. Personnel. -

xxx xxx xxx

All positions in the Bank shall be governed by a compensation,


position classification system and qualification standards
approved by the Bank's Board of Directors based on a
comprehensive job analysis and audit of actual duties and
responsibilities. The compensation plan shall be comparable with
the prevailing compensation plans in the private sector and shall
be subject to periodic review by the Board no more than once
every two (2) years without prejudice to yearly merit reviews or
increases based on productivity and profitability. The Bank shall
therefore be exempt from existing laws, rules and
regulations on compensation, position classification and
qualification standards. It shall however endeavor to make its
system conform as closely as possible with the principles under
Republic Act No. 6758. (Emphasis supplied)

xxx xxx xxx

2. Social Security System (Republic Act No. 8282)

Section 1. [Amending Republic Act No. 1161, Section 3(c)]:

xxx xxx xxx

(c) The Commission, upon the recommendation of the SSS


President, shall appoint an actuary and such other personnel as
may [be] deemed necessary; fix their reasonable compensation,
allowances and other benefits; prescribe their duties and
establish such methods and procedures as may be necessary to
insure the efficient, honest and economical administration of the
provisions and purposes of this Act: Provided, however, That the
personnel of the SSS below the rank of Vice President shall be
appointed by the SSS President: Provided, further, That the
personnel appointed by the SSS President, except those below
the rank of assistant manager, shall be subject to the
confirmation by the Commission; Provided further, That the
personnel of the SSS shall be selected only from civil service
eligibles and be subject to civil service rules and
regulations: Provided, finally, That the SSS shall be exempt
from the provisions of Republic Act No. 6758 and Republic
Act No. 7430. (Emphasis supplied)

3. Small Business Guarantee and Finance Corporation


(Republic Act No. 8289)

Section 8. [Amending Republic Act No. 6977, Section 11]:


(e) notwithstanding the provisions of Republic Act No.
6758, and Compensation Circular No. 10, series of
1989 issued by the Department of Budget and Management, the
Board of Directors of [the Small Business Guarantee and
Finance Corporation] shall have the authority to extend to
the employees and personnel thereof the allowance and
fringe benefits similar to those extended to and currently
enjoyed by the employees and personnel of other
government financial institutions. (Emphases supplied)

4. Government Service Insurance System (Republic Act No.


8291)   

Section 1. [Amending Section 43(d) of Presidential Decree No.


1146].

xxx xxx xxx

Sec. 43. Powers and Functions of the Board of Trustees. - The


Board of Trustees shall have the following powers and functions:

xxx xxx xxx

(d) upon the recommendation of the President and General


Manager, to approve the GSIS' organizational and administrative
structures and staffing pattern, and to establish, fix, review,
revise and adjust the appropriate compensation package for the
officers and employees of the GSIS with reasonable allowances,
incentives, bonuses, privileges and other benefits as may be
necessary or proper for the effective management, operation and
administration of the GSIS, which shall be exempt from
Republic Act No. 6758, otherwise known as the Salary
Standardization Law and Republic Act No. 7430, otherwise
known as the Attrition Law. (Emphasis supplied)

xxx xxx xxx


5. Development Bank of the Philippines (Republic Act No.
8523)   

Section 6. [Amending Executive Order No. 81, Section 13]:

Section 13. Other Officers and Employees. - The Board of


Directors shall provide for an organization and staff of officers
and employees of the Bank and upon recommendation of the
President of the Bank, fix their remunerations and other
emoluments. All positions in the Bank shall be governed by the
compensation, position classification system and qualification
standards approved by the Board of Directors based on a
comprehensive job analysis of actual duties and responsibilities.
The compensation plan shall be comparable with the prevailing
compensation plans in the private sector and shall be subject to
periodic review by the Board of Directors once every two (2)
years, without prejudice to yearly merit or increases based on the
Bank's productivity and profitability. The Bank shall, therefore,
be exempt from existing laws, rules, and regulations on
compensation, position classification and qualification
standards. The Bank shall however, endeavor to make its
system conform as closely as possible with the principles
under Compensation and Position Classification Act of
1989 (Republic Act No. 6758, as amended). (Emphasis
supplied)

6. Home Guaranty Corporation (Republic Act No. 8763)

Section 9. Powers, Functions and Duties of the Board of Directors.


- The Board shall have the following powers, functions and
duties:

xxx xxx xxx

(e) To create offices or positions necessary for the efficient


management, operation and administration of the
Corporation: Provided, That all positions in the Home Guaranty
Corporation (HGC) shall be governed by a compensation and
position classification system and qualifications standards
approved by the Corporation's Board of Directors based on a
comprehensive job analysis and audit of actual duties and
responsibilities: Provided, further, That the compensation plan
shall be comparable with the prevailing compensation
plans in the private sector and which shall be exempt from
Republic Act No. 6758, otherwise known as the Salary
Standardization Law, and from other laws, rules and
regulations on salaries and compensations; and to establish
a Provident Fund and determine the Corporation's and the
employee's contributions to the Fund; (Emphasis supplied)

xxx xxx xxx

7. Philippine Deposit Insurance Corporation (Republic Act


No. 9302)

Section 2. Section 2 of [Republic Act No. 3591, as amended] is


hereby further amended to read:

xxx xxx xxx

3.

xxx xxx xxx

A compensation structure, based on job evaluation studies and


wage surveys and subject to the Board's approval, shall be
instituted as an integral component of the Corporation's human
resource development program: Provided, That all positions in
the Corporation shall be governed by a compensation, position
classification system and qualification standards approved by the
Board based on a comprehensive job analysis and audit of actual
duties and responsibilities. The compensation plan shall be
comparable with the prevailing compensation plans of
other government financial institutions and shall be subject
to review by the Board no more than once every two (2) years
without prejudice to yearly merit reviews or increases based on
productivity and profitability. The Corporation shall therefore
be exempt from existing laws, rules and regulations on
compensation, position classification and qualification
standards. It shall however endeavor to make its system
conform as closely as possible with the principles under Republic
Act No. 6758, as amended.  (Emphases supplied)
[43]

C. Water utilities are government-owned or controlled


corporations created pursuant to a special law.

Water utilities are government-owned or controlled corporations


created pursuant to a special law, the Presidential Decree No. 198
or "the Provincial Water Utilities Act of 1973." This Court held
in Davao City Water District v. Civil Service Commission:[44]

After a fair consideration of the parties' arguments coupled with a


careful study of the applicable laws as well as the constitutional
provisions involved, We rule against the petitioners and reiterate
Our ruling in Tanjay case declaring water districts
government-owned or controlled corporations with
original charter.

As early as Baguio Water District v. Trajano, et al., (G.R. No.


65428, February 20, 1984, 127 SCRA 730), We already
ruled that a water district is a corporation created pursuant
to a special law — P.D. No. 198, as amended, and as such its
officers and employees are covered by the Civil Service Law.

In another case (Hagonoy Water District v. NLRC, G.R. No.


81490, August 31, 1988, 165 SCRA 272), We ruled once again
that local water districts are quasi-public corporations whose
employees belong to the Civil Service, x x x.

Ascertained from a consideration of the whole statute, PD


198 is a special law applicable only to the different water
districts created pursuant thereto. In all its essential terms, it
is obvious that it pertains to a special purpose which is intended
to meet a particular set of conditions .and circumstances. The
fact that said decree generally applies to all water districts
throughout the country does not change the fact that PD 198 is a
special law. Accordingly, this Court's resolution in Metro Iloilo
case declaring PD 198 as a general legislation is hereby
abandoned.

xxx

No consideration may thus be given to petitioners' contention


that the operative act which created the water districts are the
resolutions of the respective local sanggunians and that
consequently, PD 198, as amended, cannot be considered as their
charter.

It is to be noted that PD 198, as amended is the source of


authorization and power to form and maintain a
district. Section 6 of said decree provides:
Sec. 6. Formation of District. — This Act is the source of
authorization and power to form and maintain a district. Once
formed, a district is subject to the provisions of this Act and not
under the jurisdiction of any political subdivision, x x x.
Moreover, it must be observed that PD 198, [sic] contains all the
essential terms necessary to constitute a charter creating a
juridical person, xxx.

xxx

Noteworthy, the above quoted provisions of PD 198, as amended,


are similar to those which are actually contained in other
corporate charters. The conclusion is inescapable that the
said decree is in truth and in fact the charter of the
different water districts for it clearly defines the latter's
primary purpose and its basic organizational setup. In
other words, PD 198, as amended, is the very law which
gives a water district juridical personality. While it is true
that a resolution of a local sanggunian is still necessary for the
final creation of a district, this Court is of the opinion that said
resolution cannot be considered as its charter, the same being
intended only to implement the provisions of said decree. In
passing a resolution forming a water district, the local sanggunian
is entrusted with no authority or discretion to grant a charter for
the creation of a private corporation. It is merely given the
authority for the formation of a water district, on a local option
basis, to be exercised under and in pursuance of PD 198.
 (Emphasis supplied)
[45]

In Feliciano v. Commission on Audit,  this Court reiterated that


[46]

local water districts are government-owned or controlled


corporations existing pursuant to Presidential Decree No. 198,
thus:
LWDs exist by virtue of PD 198, which constitutes their
special charter. Since under the Constitution only government-
owned or controlled corporations may have special charters,
LWDs can validly exist only if they are government-owned or
controlled. To claim that LWDs are private corporations with a
special charter is to admit that their existence is constitutionally
infirm.

Unlike private corporations, which derive their legal existence and


power from the Corporation Code, LWDs derive their legal
existence and power from PD 198. Sections 6 and 25 of PD
198[14] provide:
Section 6. Formation of District. — This Act is the source of
authorization and power to form and maintain a district.
For purposes of this Act, a district shall be considered as a
quasi-public corporation performing public service and
supplying public wants. As such, a district shall exercise
the powers, rights and privileges given to private
corporations under existing laws, in addition to the powers
granted in, and subject to such restrictions imposed, under
this Act.

xxx
Clearly, LWDs exist as corporations only by virtue of PD 198,
which expressly confers on LWDs corporate powers. Section
6 of PD 198 provides that LWDs "shall exercise the powers, rights
and privileges given to private corporations under existing laws."
Without PD 198, LWDs would have no corporate powers. Thus,
PD 198 constitutes the special enabling charter of LWDs. The
ineluctable conclusion is that LWDs are government-
owned and controlled corporations with a special charter.
 (Emphasis supplied)
[47]

Water utilities are not covered by Republic Act No. 10149,


otherwise known as the "GOCC Governance Act of 2011."  This [48]

recognizes that despite being government-owned or controlled


corporations, water utilities are governed by a special law, that is,
Presidential Decree No. 198 or the "Provincial Water Utilities Act
of 1973."

Given that water utilities are government-owned or controlled


corporations existing under the Provincial Water Utilities Act of
1973, the question whether water utilities are covered by the
Salary Standardization Law remains.

The Salary Standardization Law applies to all government


positions, including those in government-owned or controlled
corporations, without qualification.  The exception to this rule is
[49]

when the government-owned or controlled corporation's charter


specifically exempts the corporation from the coverage of the
Salary Standardization Law. To resolve this case, We examine the
provisions of Presidential Decree No. 198 exempting water
utilities from the Salary Standardization Law. The petitioner
asserts that it is Section 23 of Presidential Decree No. 198, as
amended, which grants water utilities this exemption.

Section 23 of Presidential Decree No. 198, promulgated on May


25, 1973, was originally phrased as follows:
Section 23. Additional Officers. - At the first meeting of the
board, .or as soon thereafter as practicable, the board shall
appoint, by a majority vote, a general manager, an auditor, and
an attorney, and shall define their duties and fix their
compensation. Said officers shall service at the pleasure of the
board.
On April 2, 2004, Republic Act No. 9286 was passed amending
certain provisions of Presidential Decree No. 198, including its
Section 23, thus:
Sec. 23. The General Manager. - At the first meeting of the
Board, or as soon thereafter as practicable, the Board shall
appoint, by a majority vote, a general manager and shall define
his duties and fix his compensation. Said officer shall not be
removed from office, except for cause and after due
process. (Emphasis supplied)
We are not convinced that Section 23 of Presidential Decree No.
198, as amended, or any of its provisions, exempts water utilities
from the coverage of the Salary Standardization Law. In statutes
subsequent to Republic Act No. 6758,  Congress consistently
[50]

provided not only for the power to fix compensation but also the
agency's or corporation's exemption from the Salary
Standardization Law. If Congress had intended to exempt water
utilities from the coverage of the Salary Standardization Law and
other laws on compensation and position classification, it could
have expressly provided in Presidential Decree No. 198 an
exemption clause similar to those provided in the respective
charters of the Philippine Postal Corporation, Trade Investment
and Development Corporation, Land Bank of the Philippines,
Social Security System, Small Business Guarantee and Finance
Corporation, Government Service Insurance System,
Development Bank of the Philippines, Home Guaranty
Corporation, and the Philippine Deposit Insurance Corporation.

Congress could have amended Section 23 of Presidential Decree


No. 198 to expressly provide that the compensation of a general
manager is exempted from the Salary Standardization Law.
However, Congress did not. Section 23 was amended to
emphasize that the general manager "shall not be removed from
office, except for cause and after due process." [51]

This does not mean that water utilities cannot fix the
compensation of their respective general managers. Section 23 of
Presidential Decree No. 198 clearly provides that a water utility's
board of directors has the power to define the duties and fix the
compensation of a general manager. However, the compensation
fixed must be in accordance with the position classification
system under the Salary Standardization Law. Section 5 of the
law provides:
Section 5. Position Classification System. - The Position
Classification System shall consist of classes of positions grouped
into four main categories, namely: professional supervisory,
professional non-supervisory, sub-professional supervisory, and
sub-professional non-supervisory, and the rules and regulations
for its implementation.

Categorization of these classes of positions shall be guided by the


following considerations:

(a) Professional Supervisory Category. - This category includes


responsible positions of a managerial character involving the
exercise of management functions such as planning, organizing,
directing, coordinating, controlling and overseeing within
delegated authority the activities of an organization, a unit
thereof or of a group, requiring some degree of professional,
technical or scientific knowledge and experience, application of
managerial or supervisory skills required to carry out their basic
duties and responsibilities involving functional guidance and
control, leadership, as well as line supervision. These positions
require intensive and thorough knowledge of a specialized field
usually acquired from completion of a bachelor's degree or higher
degree courses.

The positions in this category are assigned Salary Grade 9 to


Salary Grade 33.

(b) Professional Non-Supervisory Category. - This category


includes positions performing task which usually require the
exercise of a particular profession or application of knowledge
acquired through formal training in a particular field or just the
exercise of a natural, creative and artistic ability or talent in
literature, drama, music and other branches of arts and letters.
Also included are positions involved in research and application of
professional knowledge and methods to a variety of technological,
economic, social, industrial and governmental functions; the
performance of technical tasks auxiliary to scientific research and
development; and in the performance of religious, educational,
legal, artistic or literary functions.

These positions require thorough knowledge in the field of arts


and sciences or learning acquired through completion of at least
four (4) years of college studies.

The positions in this category are assigned Salary Grade 8 to


Salary Grade 30.

(c) Sub-Professional Supervisory Category. - This category


includes positions performing supervisory functions over a group
of employees engaged in responsible work along technical,
manual or clerical lines of work which are short of professional
work, requiring training and moderate experience or lower
training but considerable experience and knowledge of a limited
subject matter or skills in arts, crafts or trades. These positions
require knowledge acquired from secondary or vocational
education or completion of up to two (2) years of college
education.

The positions in this category are assigned Salary Grade 4 to


Salary Grade 18.

(d) Sub-Professional Non-Supervisory Category. - This category


includes positions involves in structured work in support of office
or fiscal operations or those engaged in crafts, trades or manual
work. These positions usually require skills acquired through
training and experience of completion of elementary education,
secondary or vocational education or completion of up to two (2)
years of college education.

The positions in this category are assigned Salary Grade 1 to


Salary Grade 10.
Thus, a general manager's position will be classified under one of
the categories in Section 5 of the Salary Standardization Law
depending on the duties,as defined by the board of directors.
After determining the category to which a general manager's
position belongs, the board of directors must set the salary
compensation package within Salary Steps 1 to 8 of the
appropriate salary grade. The salary grade assigned, however,
cannot exceed Salary Grade 30 by virtue of Section 9 of the
Salary Standardization Law, which reads:
Section 9. Salary Grade Assignments for Other Positions. -
For positions below the Officials mentioned under Section 8
hereof and their equivalent, whether in the National Government,
local government units, government-owned or controlled
corporations or financial institutions, the Department of Budget
and Management is hereby directed to prepare the Index of
Occupational Services to be guided by the Benchmark Position
Schedule prescribed hereunder and the following factors: (1) the
education and experience required to perform the duties and
responsibilities of the positions; (2) the nature and complexity of
the work to be performed; (3) the kind of supervision received;
(4) mental and/or physical strain required in the completion of
the work; (5) nature and extent of internal and external
relationships; (6) kind of supervision exercised; (7) decision-
making responsibility; (8) responsibility for accuracy of records
and reports; (9) accountability for funds, properties and
equipment; and (10) hardship, hazard and personal risk involved
in the job.

xxxx

In no case shall the salary of the chairman,


president, general manager or administrator, and the board of
directors of government-owned or controlled corporations
and financial institutions exceed Salary Grade 30: Provided,
That the President may, in truly exceptional cases, approve
higher compensation for the aforesaid officials. (Emphasis
supplied)
The rationale for setting the maximum salary grade for a general
manager of a government-owned or controlled corporation to
Salary Grade 30 is to maintain, as much as possible, the same
salary of general managers across all government-owned or
controlled corporations and financial institutions.

All told, the general manager position of a water district is


covered by the Salary Standardization Law. The Commission on
Audit did not gravely abuse its discretion in disallowing petitioner
Mendoza's compensation for exceeding the rate provided in the
Salary Standardization Law.

Petitioner Mendoza is excused from refunding the


disallowed amount due to his good faith.

Petitioner Mendoza argued that he received the disallowed


amounts in good faith, relying on Section 23 of Presidential
Decree No. 198. He cited the 2004 case of De Jesus v.
Commission on Audit  as his authority.
[52]

In De Jesus v. Commission on Audit, members of the Metro


Cariaga Water District board of directors questioned the
Commission on Audit's disallowance of certain allowances and
bonuses they had received under the Local Water Utilities
Administration Resolution No. 313, Series of 1995. Resolution No.
313 granted the board of directors of water utilities
representation and transportation allowance (RATA), rice
allowance, clothing allowance, Christmas bonus, productivity pay,
and honorarium. This Court voided Local Water Utilities
Administration Resolution No. 313 for being contrary to Section
13 of Presidential Decree No. 198, which only allows for per
diems. Section 13 of Presidential Decree No. 198 states:
Compensation. - Each director shall receive a per diem, to be
determined by the board, for each meeting of the board actually
attended by him, but no director shall receive per diems in any
given month in excess of the equivalent of the total per diems of
four meetings in any given month. No director shall receive
other compensation for services to the district:

Any per diem in excess of P50 shall be subject to approval of the


Administration. (Emphasis supplied)
However, We excused the refund of the disallowed amounts
because at the time the board members had received the
allowances and benefits, this Court had not yet
promulgated Baybay Water District v. Commission on Audit. [53]

In Baybay Water District v. Commission on Audit, members of the


water district's board of directors questioned Commission on
Audit's disallowance of their representation, transportation
allowance, and rice allowances. This Court affirmed the
disallowance and ruled that under Section 18 of the Provincial
Water Utilities Act of 1973, members of the board of directors of
water districts are only entitled to per diems and nothing more.
xxx Under §13 of this Decree, per diem is precisely intended to
be the compensation of members of board of directors of water
districts. Indeed, words and phrases in a statute must be given
their natural, ordinary, and commonly-accepted meaning, due
regard being given to the context in which the words and phrases
are used. By specifying the compensation which a director is
entitled to receive and by limiting the amount he/she is allowed
to receive in a month, and, in the same paragraph, providing "No
director shall receive other compensation" than the amount
provided for per diems, the law quite clearly indicates that
directors of water districts are authorized to receive only the per
diem authorized by law and no other compensation or allowance
in whatever form. [54]

The salaries petitioner Mendoza received were fixed by the


Talisay Water District's board of directors pursuant to Section 23
of the Presidential Decree No. 198. Petitioner Mendoza had no
hand in fixing the amount of compensation he received.
Moreover, at the time petitioner Mendoza received the disputed
amount in 2005 and 2006, there was no jurisprudence yet ruling
that water utilities are not exempted from the Salary
Standardization Law.

Pursuant to De Jesus v. Commission on Audit, petitioner Mendoza


received the disallowed salaries in good faith. He need not refund
the disallowed amount.
WHEREFORE, the Decision of the Commission on Audit dated
November 25, 2010 is AFFIRMED with MODIFICATION.
Petitioner Manolito P. Mendoza need not refund the disallowed
amount of Three Hundred Eighty Thousand Two Hundred Eight
Pesos (P380,208.00).

SO ORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion,


Peralta, Bersamin, Del Castillo, Abad, Villarama, Jr., Perez,
Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.

 Petitioner filed a Petition for Certiorari under Rule 65 of the


[1]

1997 Rules of Civil Procedure.

[2]
 November 25, 2010; Rollo, pp. 9-15.

[3]
 July 6, 2009; Rollo, p. 26.

 This was reported by the Commission on Audit's Notice of


[4]

Disallowance/s dated May 28, 2007; Rollo, pp. 24-25.

[5]
 Rollo, p. 24.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 26.

[9]
 Id. at 27.

[10]
 September 10, 2009; Rollo, pp. 16-23.

[11]
 Rollo, p. 26.
[12]
 Decision dated November 25, 2010; Rollo, pp. 9-15.

[13]
 Rollo, p. 12.

[14]
 Id.

[15]
 Id. at 13.

[16]
 Id.

[17]
 Id.

[18]
 425 Phil. 326 (2002).

[19]
 November 25, 2010; Rollo, pp. 9-15.

[20]
 Rollo, p. 14.

 Id. at 3-8. Petitioner filed a Petition for Certiorari under Rule 65


[21]

of the 1997 Rules of Civil Procedure.

[22]
 Id. at 45-58.

[23]
 September 28, 2011; Rollo, pp. 64-66.

[24]
 Rollo, p. 26.

[25]
 Id. at 25.

[26]
 G.R. No. 180141, May 31, 2011, 649 SCRA 595.

[27]
 Id. at 603-604.

[28]
 Id. at 603.

[29]
 Rollo, p. 26.

[30]
 Republic Act No. 6758 (1989), Sec. 2.
 Republic Act No. 6758 (1989), Sec. 2; Presidential Decree No.
[31]

985 (1976), Sec. 2.

 Republic Act No. 6758 (1989), Sec. 2 provides:


[32]

Sec. 2. Statement of Policy. - It is hereby declared the policy of


the State to provide equal pay for substantially equal work and to
base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. In
determining rates of pay, due regard shall be given to, among
others, prevailing rates in the private sector for comparable work.
For this purpose, the Department of Budget and Management
(DBM) is hereby directed to establish and administer a unified
Compensation and Position Classification System, hereinafter
referred to as the System, as provided for in Presidential Decree
No. 985, as amended, that shall be applied for all government
entities, as mandated by the Constitution.
 Republic Act No. 6758 (1989), Sec. 4.
[33]

[34]
 Id.

[35]
 Id.

[36]
 486 Phil. 509 (2004).

[37]
 Id. at 527.

[38]
 366 Phil. 273 (1999).

[39]
 Id. at 298-290.

 An Act Further Amending Presidential Decree No. 1080, As


[40]

Amended, by Reorganizing And Renaming the Philippine Export


and Foreign Loan Guarantee Corporation, Expanding Its Primary
Purpose, and for Other Purposes, Republic Act No. 8494 (1998).

[41]
 G.R. No. 182249, March 5, 2013.
[42]
 487 Phil. 531 (2004).

[43]
 Id. at 568-577.

[44]
 278 Phil. 605 (1991).

[45]
 Id. at 610-616.

[46]
 464 Phil. 439 (2004).

[47]
 Id. at 455-457.

 Republic Act No. 10149 (2011), Sec. 4 states:


[48]

SEC. 4. Coverage.—This Act shall be applicable to all GOCCs,


GICPs/GCEs, and government financial institutions, including their
subsidiaries, but excluding the Bangko Sentral ng Pilipinas,
state universities and colleges, cooperatives, local water
districts, economic zone authorities and research institutions:
Provided, That in economic zone authorities and research
institutions, the President shall appoint one-third (1/3) of the
board members from the list submitted by the GCG. (Emphasis
supplied)
 Republic Act No. 6758 (1989), Sec. 4.
[49]

 An Act Amending Republic Act Numbered Three Thousand Five


[50]

Hundred Ninety-One, as Amended, Otherwise Known as the


"Charter Of The Philippine Deposit Insurance Corporation" and for
Other Purposes, Republic Act No. 9302 (2004); Home Guaranty
Corporation Act of 2000, Republic Act No. 8763 (2000); An Act
Strengthening the Development Bank of the Philippines,
Amending for the Purpose Executive Order No. 81, Republic Act
No. 8523 (1998); An Act Regulating the Issuance and Use of
Access Devices, Prohibiting Fraudulent Acts Committed Relative
thereto, Providing Penalties and for Other Purposes, Republic Act
No. 8484 (1998); An Act Amending Presidential Decree No. 1146,
As Amended, Expanding and Increasing the Coverage and
Benefits of the Government Service Insurance System, Instituting
Reforms Therein and for Other Purposes, Republic Act No. 8291
(1997); An Act to Strengthen the Promotion and Development of,
and Assistance to Small and Medium Scale Enterprises, Amending
for that Purpose Republic Act No. 6977, Otherwise Known as the
"Magna Carta For Small Enterprises" and for Other Purposes,
Republic Act No. 8289 (1997); An Act Further Strengthening the
Social Security System Thereby Amending for this Purpose
Republic Act No. 1161, as Amended, Otherwise Known as the
Social Security Law, Republic Act No. 8282 (1997); An Act
Amending Republic Act Numbered Thirty-Eight Hundred Forty-
Four, as Amended, Otherwise Known as the "Code of Agrarian
Reform in the Philippines," Republic Act No. 7907 (1995); The
Postal Service Act of 1992, Republic Act No. 7354 (1992).

 This is without prejudice to Baybay Water District v.


[51]

Commission on Audit, 425 Phil. 326 (2002) where this Court held
that members of the board of directors of water utilities are not
covered by the Salary Standardization Law.

[52]
 466 Phil. 912 (2004).

[53]
 Baybay Water District v. Commission on Audit, supra note 18.

[54]
 Id. at 337.

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807 Phil. 438


SECOND DIVISION
[ G.R. No. 195021, March 15, 2017 ]
NICOLAS VELASQUEZ AND VICTOR VELASQUEZ,
PETITIONERS, VS. PEOPLE OF THE PHILIPPINES,
RESPONDENT.DECISION

LEONEN, J.:

An accused who pleads a justifying circumstance under Article 11


of the Revised Penal Code  admits to the commission of acts,
[1]

which would otherwise engender criminal liability. However, he


asserts that he is justified in committing the acts. In the process
of proving a justifying circumstance, the accused risks admitting
the imputed acts, which may justify the existence of an offense
were it not for the exculpating facts. Conviction follows if the
evidence for the accused fails to prove the existence of justifying
circumstances.

Through this Petition for Review on Certiorari  under Rule 45 of


[2]

the Rules of Court, the accused petitioners pray that the assailed
March 17, 2010 Decision  and December 10, 2010 Resolution  of
[3] [4]

the Court of Appeals in CA-G.R. CR. No. 31333 be reversed and


set aside, and that they be absolved of any criminal liability.

The Court of Appeals' assailed rulings sustained the July 25, 2007
Decision  of the Regional Trial Court, Branch 41, Dagupan City,
[5]

which found petitioners guilty beyond reasonable doubt of


attempted murder.

In an Information, petitioners Nicolas Velasquez (Nicolas) and


Victor Velasquez (Victor), along with four (4) others - Felix
Caballeda (Felix), Jojo Del Mundo (Jojo), Sonny Boy Velasquez
(Sonny), and Ampong Ocumen (Ampong) - were charged with
attempted murder under Article 248,  in relation to Article 6,  of
[6] [7]

the Revised Penal Code, as follows:


That on May 24, 2003 in the evening at Brgy. Palua, Mangaldan,
Pangasinan and within the jurisdiction of this Honorable Court,
the above named accused while armed with stones and wooden
poles, conspiring, confederating and mutually helping one
another, with intent to kill, with treachery and abuse of superior
strength, did, then and there willfully, unlawfully and feloniously
attack, maul and hit JESUS DEL MUNDO inflicting upon him
injuries in the vital parts of his body, the said accused having
thus commenced a felony directly by overt acts, but did not
perform all the acts of execution which could have produced the
crime of Murder but nevertheless did not produce it by reason of
some causes or accident other than their own spontaneous
desistance to his damage and prejudice.

Contrary to Article 248 in relation to Article 6 and 50 of the


Revised Penal Code. [8]

All accused, except Ampong, who remained at large, pleaded not


guilty upon arraignment.  Trial then ensued.[9] [10]

According to the prosecution, on May 24, 2003, at about 10:00


p.m., the spouses Jesus and Ana Del Mundo (Del Mundo Spouses)
left their home to sleep in their nipa hut, which was about 100
meters away.  Arriving at the nipa hut, the Del Mundo Spouses
[11]

saw Ampong and Nora Castillo (Nora) in the midst of having sex.
 Aghast at what he perceived to be a defilement of his property,
[12]

Jesus Del Mundo (Jesus) shouted invectives at Ampong and Nora,


who both scampered away.  Jesus decided to pursue Ampong
[13]

and Nora, while Ana Del Mundo (Ana) left to fetch their son, who
was then elsewhere.  Jesus went to the house of Ampong's aunt,
[14]

but neither Ampong nor Nora was there.  He began making his
[15]

way back home when he was blocked by Ampong and his fellow
accused.[16]

Without provocation, petitioner Nicolas hit the left side of Jesus'


forehead with a stone. Petitioner Victor also hit Jesus' left
eyebrow with a stone.  Accused Felix did the same, hitting Jesus
[17]

above his left ear.  Accused Sonny struck Jesus with a bamboo,
[18]

hitting him at the back, below his right shoulder.  Ampong [19]
punched Jesus on his left cheek. The accused then left Jesus on
the ground, bloodied. Jesus crawled and hid behind blades of
grass, fearing that the accused might return. He then got up and
staggered his way back to their house. [20]

Jesus testified on his own ordeal. In support of his version of the


events, the prosecution also presented the testimony of Maria
Teresita Viado (Maria Teresita). Maria Teresita was initially
approached by Jesus' wife, Ana, when Jesus failed to immediately
return home.  She and Ana embarked on a search for Jesus but
[21]

were separated.  At the sound of a man being beaten, she hid
[22]

behind some bamboos.  From that vantage point, she saw the
[23]

accused mauling Jesus.  The prosecution noted that about four


[24]

(4) or five (5) meters away was a lamp post, which illuminated
the scene.[25]

At the Del Mundo Spouses' residence, Maria Teresita recounted to


them what she had witnessed (Jesus had managed to return
home by then).  Ana and Maria Teresita then brought Jesus to
[26]

Barangay Captain Pilita Villanueva, who assisted them in bringing


Jesus to the hospital. [27]

After undergoing an x-ray examination, Jesus was found to have


sustained a crack in his skull.  Dr. Jose D. De Guzman (Dr. De
[28]

Guzman) issued a medico-legal certificate indicating the following


findings:
x.x. Positive Alcoholic Breath
3 cms lacerated wound fronto-parietal area left
1 cm lacerated wound frontal area left
Abrasion back left multi linear approximately 20 cm
Abrasion shoulder left, confluent 4x10 cm
Depressed skull fracture parietal area left.

x.x.
[29]

Dr. De Guzman noted that Jesus' injuries required medical


attention for four (4) to six (6) weeks.  Jesus was also advised to
[30]

undergo surgery.  He was, however, unable to avail of the


[31]

required medical procedure due to shortage of funds. [32]


The defense offered a different version of events.

According to the accused, in the evening of May 24, 2003,


petitioner Nicolas was roused in his sleep by his wife, Mercedes
Velasquez (Mercedes), as the nearby house of petitioner Victor
was being stoned. [33]

Nicolas made his way to Victor's place, where he saw Jesus


hacking Victor's door. Several neighbors - the other accused -
allegedly tried to pacify Jesus.  Jesus, who was supposedly
[34]

inebriated, vented his ire upon Nicolas and the other accused, as
well as on Mercedes.  The accused thus responded and
[35]

countered Jesus' attacks, leading to his injuries. [36]

In its July 25, 2007 Decision,  the Regional Trial Court, Branch
[37]

41, Dagupan City found petitioners and Felix Caballeda guilty


beyond reasonable doubt of attempted murder.  The court also
[38]

found Sonny Boy Velasquez guilty beyond reasonable doubt of


less serious physical injuries.  He was found to have hit Jesus on
[39]

the back with a bamboo rod. Jojo Del Mundo was acquitted.  The [40]

case was archived with respect to Ampong, as he remained at


large.
[41]

The dispositive portion of its Decision read:


WHEREFORE, premises considered, judgment is hereby rendered
finding accused NICOLAS VELASQUEZ, VICTOR VELASQUEZ and
FELIX CABALLEDA guilty beyond reasonable doubt of the crime of
Attempted Murder defined and penalized under Article 248 in
relation to Articles 6, paragraph 3 and 51 of the Revised Penal
Code, and pursuant to the law, sentences each of them to suffer
on (sic) indeterminate penalty of four (4) years and one (1) day
of Arrested (sic) Mayor in its maximum period as minimum to
eight (8) years of Prison (sic) Correctional (sic) in its maximum
period to Prison (sic) Mayor in its medium period as maximum
and to pay proportionately to private complainant Jesus del
Mundo the amount of Php55,000.00 as exemplary damages, and
to pay the cost of suit.
The Court likewise finds the accused SONNY BOY VELASQUEZ
[guilty] beyond reasonable doubt of the [crime] of Less Serious
Physical Injuries defined and penalized under Article 265 of the
Revised Penal Code and pursuant thereto, he is hereby sentenced
to suffer the penalty of Arresto Mayor on one (1) month and one
(1) day to six (6) months.

Accused JOJO DEL MUNDO is hereby acquitted on the ground of


absence of evidence.

With respect to accused AMPONG OCUMEN, the case against him


is archived without prejudice to its revival as soon as he is
arrested and brought to the jurisdiction of this Court.
[42]

Petitioners and Felix Caballeda filed a motion for reconsideration,


which the Regional Trial Court denied.[43]

On petitioners' and Caballeda's appeal, the Court of Appeals


found that petitioners and Caballeda were only liable for serious
physical injuries because "first, intent to kill was not attendant
inasmuch as the accused-appellants, despite their superiority in
numbers and strength, left the victim alive and, second, none of
[the] injuries or wounds inflicted upon the victim was fatal."  The
[44]

Court of Appeals thus modified the sentence imposed on


petitioners and Caballeda.

The dispositive portion of its assailed March 17, 2010


Decision  read:
[45]

WHEREFORE, premises considered, the July 25, 2007 Decision


of Branch 41, Regional Trial Court of Dagupan City is
hereby MODIFIED. Instead, accused-appellants are found guilty
of Serious Physical Injuries and each of them is sentenced to
suffer the penalty of imprisonment of six (6) months of arresto
mayor as minimum to four (4) years and two (2) months
of prision correccional as maximum.

SO ORDERED.  (Emphasis in the original)


[46]
Following the denial of their Motion for Reconsideration,
petitioners filed the present Petition.  They insist on their version
[47]

of events, particularly on how they and their co-accused allegedly


merely acted in response to Jesus Del Mundo's aggressive
behavior.

For resolution is the issue of whether petitioners may be held


criminally liable for the physical harm inflicted on Jesus Del
Mundo. More specifically, this Court is asked to determine
whether there was sufficient evidence: first, to prove that
justifying circumstances existed, and second, to convict the
petitioners.

Petitioners' defense centers on their claim that they acted in


defense of themselves, and also in defense of Mercedes, Nicolas'
wife and Victor's mother. Thus, they invoke the first and second
justifying circumstances under Article 11 of the Revised Penal
Code:
ARTICLE 11. Justifying Circumstances. — The following do not
incur any criminal liability:
1. Anyone who acts in defense of his person or rights, provided
that the following circumstances concur:First. Unlawful
aggression;
2.
3. Second. Reasonable necessity of the means employed to
prevent or repel it;
4.
5. Third. Lack of sufficient provocation on the part of the
person defending himself.
6.
7. Anyone who acts in defense of the person or rights of his
spouse, ascendants, descendants, or legitimate, natural or
adopted brothers or sisters, or of his relatives by affinity in
the same degrees, and those by consanguinity within the
fourth civil degree, provided that the first and second
requisites prescribed in the next preceding circumstance are
present, and the further requisite, in case the provocation
was given by the person attacked, that the one making
defense had no part therein.
A person invoking self-defense (or defense of a relative) admits
to having inflicted harm upon another person - a potential
criminal act under Title Eight (Crimes Against Persons) of the
Revised Penal Code. However, he or she makes the additional,
defensive contention that even as he or she may have inflicted
harm, he or she nevertheless incurred no criminal liability as the
looming danger upon his or her own person (or that of his or her
relative) justified the infliction of protective harm to an erstwhile
aggressor.

The accused's admission enables the prosecution to dispense with


discharging its burden of proving that the accused performed
acts, which would otherwise be the basis of criminal liability. All
that remains to be established is whether the accused were
justified in acting as he or she did. To this end, the accused's
case must rise on its own merits:
It is settled that when an accused admits [harming] the victim
but invokes self-defense to escape criminal liability, the accused
assumes the burden to establish his plea by credible, clear and
convincing evidence; otherwise, conviction would follow from his
admission that he [harmed] the victim. Self-defense cannot be
justifiably appreciated when uncorroborated by independent and
competent evidence or when it is extremely doubtful by itself.
Indeed, in invoking self-defense, the burden of evidence is shifted
and the accused claiming self-defense must rely on the strength
of his own evidence and not on the weakness of the prosecution.
[48]

To successfully invoke self-defense, an accused must establish:


"(1) unlawful aggression on the part of the victim; (2) reasonable
necessity of the means employed to prevent or repel such
aggression; and (3) lack of sufficient provocation on the part of
the person resorting to self-defense."  Defense of a relative
[49]

under Article 11 (2) of the Revised Penal Code requires the same
first two (2) requisites as self-defense and, in lieu of the third "in
case the provocation was given by the person attacked, that the
one making the defense had no part therein." [50]

The first requisite - unlawful aggression - is the condition sine


qua non of self-defense and defense of a relative:
At the heart of the claim of self-defense is the presence of an
unlawful aggression committed against appellant. Without
unlawful aggression, self-defense will not have a leg to stand on
and this justifying circumstance cannot and will not be
appreciated, even if the other elements are present. Unlawful
aggression refers to an attack amounting to actual or imminent
threat to the life and limb of the person claiming self-defense.
[51]

The second requisite - reasonable necessity of the means


employed to prevent or repel the aggression - requires a
reasonable proportionality between the unlawful aggression and
the defensive response: "[t]he means employed by the person
invoking self-defense contemplates a rational equivalence
between the means of attack and the defense."  This is a matter
[52]

that depends on the circumstances:


Reasonable necessity of the means employed does not imply
material commensurability between the means of attack and
defense. What the law requires is rational equivalence, in the
consideration of which will enter as principal factors the
emergency, the imminent danger to which the person attacked is
exposed, and the instinct, more than the reason, that moves or
impels the defense, and the proportionateness thereof does not
depend upon the harm done, but rests upon the imminent danger
of such injury . . . As WE stated in the case of People vs. Lara, in
emergencies of this kind, human nature does not act upon
processes of formal reason but in obedience to the instinct of self-
preservation; and when it is apparent that a person has
reasonably acted upon this instinct, it is the duty of the courts to
sanction the act and hold the act irresponsible in law for the
consequences.  (Citations omitted)
[53]

The third requisite - lack of sufficient provocation - requires the


person mounting a defense to be reasonably blameless. He or she
must not have antagonized or incited the attacker into launching
an assault. This also requires a consideration of proportionality.
As explained in People v. Boholst-Caballero,  "[p]rovocation is
[54]

sufficient when it is proportionate to the aggression, that is,


adequate enough to impel one to attack the person claiming self-
defense."[55]

II

We find petitioners' claims of self-defense and defense of their


relative, Mercedes, to be sorely wanting.

Petitioners' entire defense rests on proof that it was Jesus who


initiated an assault by barging into the premises of petitioners'
residences, hacking Victor's door, and threatening physical harm
upon petitioners and their companions. That is, that unlawful
aggression originated from Jesus.

Contrary to what a successful averment of self-defense or


defense of a relative requires, petitioners offered nothing more
than a self-serving, uncorroborated claim that Jesus appeared out
of nowhere to go berserk in the vicinity of their homes. They
failed to present independent and credible proof to back up their
assertions. The Regional Trial Court noted that it was highly
dubious that Jesus would go all the way to petitioners' residences
to initiate an attack for no apparent reason. [56]

The remainder of petitioners' recollection of events strains


credulity. They claim that Jesus launched an assault despite the
presence of at least seven (7) antagonists: petitioners, Mercedes,
and the four (4) other accused. They further assert that Jesus
persisted on his assault despite being outnumbered, and also
despite their and their co-accused's bodily efforts to restrain
Jesus. His persistence was supposedly so likely to harm them
that, to neutralize him, they had no other recourse but to hit him
on the head with stones for at least three (3) times, and to hit
him on the back with a bamboo rod, aside from dealing him with
less severe blows.[57]

As the Regional Trial Court noted, however:


The Court takes judicial notice of (the) big difference in the
physical built of the private complainant and accused Victor
Velasquez, Sonny Boy Velasquez, Felix Caballeda and Jojo del
Mundo, private complainant is shorter in height and of smaller
built than all the accused. The said accused could have had easily
held the private complainant, who was heavily drunk as they
claim, and disarmed him without the need of hitting him. [58]

The injuries which Jesus were reported to have sustained speak


volumes:
3 cms lacerated wound fronto-parietal area left
1 cm lacerated wound frontal area left
Abrasion back left multi linear approximately 20 cm
Abrasion shoulder left, confluent 4x10 cm
Depressed skull fracture parietal area left.[59]

Even if it were to be granted that Jesus was the initial aggressor,


the beating dealt to him by petitioners and their co-accused was
still glaringly in excess of what would have sufficed to neutralize
him. It was far from a reasonably necessary means to repel his
supposed aggression. Petitioners thereby fail in satisfying the
second requisite of self-defense and of defense of a relative.

III

In addition to their tale of self-defense, petitioners insist that the


testimony of Maria Teresita is not worthy of trust because she
parted ways with Ana while searching for Jesus.  They [60]

characterize Maria Teresita as the prosecution's "lone


eyewitness."  They make it appear that its entire case hinges on
[61]

her. Thus, they theorize that with the shattering of her credibility
comes the complete and utter ruin of the prosecution's case.
 Petitioners claim that Maria Teresita is the prosecution's lone
[62]

eyewitness at the same time that they aclmowledge Jesus'


testimony, which they dismissed as laden with inconsistencies. [63]

These contentions no longer merit consideration.

Petitioners' averment of justifying circumstances was dispensed


with the need for even passing upon their assertions against
Maria Teresita's and Jesus' testimonies. Upon their mere
invocation of self-defense and defense of a relative, they relieved
the prosecution of its burden of proving the acts constitutive of
the offense. They took upon themselves the burden of
establishing their innocence, and cast their lot on their capacity to
prove their own affirmative allegations. Unfortunately for them,
they failed.

Even if we were to extend them a measure of consideration, their


contentions fail to impress.

Petitioners' primordial characterization of Maria Teresita as the


"lone eyewitness," upon whose testimony the prosecution's case
was to rise or fall, is plainly erroneous. Apart from her, Jesus
testified about his own experience of being mauled by petitioners
and their co-accused. Maria Teresita's testimony was only in
support of what Jesus recounted.

Moreover, we fail to see how the mere fact of Maria Teresita's


having parted ways with Ana while searching for Jesus diminishes
her credibility. No extraordinary explanation is necessary for this.
Their having proceeded separately may be accounted for simply
by the wisdom of how independent searches enabled them to
cover more ground in less time.

Regarding Jesus' recollection of events, petitioners' contention


centers on Jesus' supposedly flawed recollection of who among
the six (6) accused dealt him, which specific blow, and using
which specific weapon.  These contentions are too trivial to even
[64]

warrant an independent, point by point audit by this Court.

Jurisprudence is replete with clarifications that a witness'


recollection of crime need not be foolproof: "Witnesses cannot be
expected to recollect with exactitude every minute detail of an
event. This is especially true when the witnesses testify as to
facts which transpired in rapid succession, attended by flurry and
excitement."  This is especially true of a victim's recollection of
[65]

his or her own harrowing ordeal. One who has undergone a


horrifying and traumatic experience "cannot be expected to
mechanically keep and then give an accurate account"  of every
[66]

minutiae.

Certainly, Jesus' supposed inconsistencies on the intricacies of


who struck him which specific blow can be forgiven. The merit of
Jesus' testimony does not depend on whether he has an
extraordinary memory despite being hit on the head multiple
times. Rather, it is in his credible narration of his entire ordeal,
and how petitioners and their co-accused were its authors. On
this, his testimony was unequivocal.

WHEREFORE, the Petition is DENIED. The Decision of the Court


of Appeals in CA-G.R. CR. No. 31333 is AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ.,


concur.

[1]
 REV. PEN. CODE, art. 11 provides:

Article 11. Justifying Circumstances. — The following do not incur


any criminal liability:

1. Anyone who acts in defense of his person or rights, provided


that the following circumstances concur:

First. Unlawful aggression;

Second. Reasonable necessity of the means employed to prevent


or repel it;

Third. Lack of sufficient provocation on the part of the person


defending himself.
2. Anyone who acts in defense of the person or rights of his
spouse, ascendants, descendants, or legitimate, natural or
adopted brothers or sisters, or of his relatives by affinity in the
same degrees, and those by consanguinity within the fourth civil
degree, provided that the first and second requisites prescribed in
the next preceding circumstance are present, and the further
requisite, in case the provocation was given by the person
attacked, that the one making defense had no part therein.

3. Anyone who acts in defense of the person or rights of a


stranger, provided that the first and second requisites mentioned
in the first circumstance of this article are present and that the
person defending be not induced by revenge, resentment, or
other evil motive.

4. Any person who, in order to avoid an evil or injury, does an act


which causes damage to another, provided that the following
requisites are present:

First. That the evil sought to be avoided actually exists;

Second. That the injury feared be greater than that done to avoid
it;

Third. That there be no other practical and less harmful means of


preventing it.

5. Any person who acts in the fulfillment of a duty or in the lawful


exercise of a right or office.

6. Any person who acts in obedience to an order issued by a


superior for some lawful purpose.

[2]
 Rollo, pp. 24-40.

 Id. at 49-59. The Decision was penned by Associate Justice


[3]

Arcangelita M. Romilla-Lontok and concurred in by Associate


Justices Portia Aliño-Hormachuelos and Mario V. Lopez of the
Second Division, Court of Appeals, Manila.

 Id. at 60-62. The Resolution was penned by Associate Justice


[4]

Mario V. Lopez and concurred in by Associate Justices Josefina


Guevara-Salonga and Juan Q. Enriquez, Jr. of the Special Former
Second Division, Court of Appeals, Manila.

[5]
 No copy annexed to any of the parties' submissions.

[6]
 REV. PEN. CODE, art. 248 provides:

Article 248. Murder. — Any person who, not falling within the
provisions of article 246 shall kill another, shall be guilty of
murder and shall be punished by reclusion temporal in its
maximum period to death, if committed with any of the following
attendant circumstances:

1. With treachery, taking advantage of superior strength, with the


aid of armed men, or employing means to weaken the defense or
of means or persons to insure or afford impunity.

2. In consideration of a price, reward or promise.

3. By means of inundation, fire, poison, explosion, shipwreck,


stranding of a vessel, derailment or assault upon a street car or
locomotive, fall of an airship, by means of motor vehicles, or with
the use of any other means involving great waste and ruin.

4. On occasion of any of the calamities enumerated in the


preceding paragraph, or of an earthquake, eruption of a volcano,
destructive cyclone, epidemic, or any other public calamity.

5. With evident premeditation.

6. With cruelty, by deliberately and inhumanly augmenting the


suffering of the victim, or outraging or scoffing at his person or
corpse.
[7]
 REV. PEN. CODE, art. 6 provides:

Article 6. Consummated, Frustrated, and Attempted Felonies. —


Consummated felonies, as well as those which are frustrated and
attempted, are punishable.

A felony is consummated when all the elements necessary for its


execution and accomplishment are present; and it is frustrated
when the offender performs all the acts of execution which would
produce the felony as a consequence but which, nevertheless, do
not produce it by reason of causes independent of the will of the
perpetrator.

There is an attempt when the offender commences the


commission of a felony directly by overt acts, and does not
perform all the acts of execution which should produce the felony
by reason of some cause or accident other than his own
spontaneous desistance.

[8]
 Rollo, pp. 187-188. Memorandum.

[9]
 Id. at 188.

[10]
 Id.

[11]
 Id. at 136. Comment.

[12]
 Id. at 136-137. Comment.

[13]
 Id. at 137.

[14]
 Id.

[15]
 Id.

[16]
 Id.
[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 137-138.

[21]
 Id. at 138.

[22]
 Id.

[23]
 Id.

[24]
 Id.

[25]
 Id.

[26]
 Id.

[27]
 Id. at 138-139.

[28]
 Id. at 139.

[29]
 Id.

[30]
 Id. at 140.

[31]
 Id. at 139.

[32]
 Id.

[33]
 Id. at 27.

[34]
 Id.

[35]
 Id.
[36]
 Id.

[37]
 No copy annexed to any of the parties' submissions.

[38]
 Id. at 28.

[39]
 Id.

[40]
 Id.

[41]
 Id. at 28-29.

[42]
 Id. at 28.

[43]
 Id. at 189. Memorandum.

[44]
 Id. at 56.

[45]
 Id. at 49-59.

[46]
 Id. at 59.

[47]
 Id. at 24-40.

 Belbis v. People, 698 Phil. 706, 719 (2012) [Per J. Peralta,


[48]

Third Division], citing People v. Tagana, 468 Phil. 784, 800


(2004) [Per J. Austria-Martinez, Second Division]; and Marzonia
v. People, 525 Phil. 693, 702-703 (2006) [Per J. Quisumbing,
Third Division].

 Id. at 719-720, citing People v. Silvano, 403 Phil. 598, 606


[49]

(2001) [Per J. De Leon, Jr., Second Division]; People v. Plazo,


403 Phil. 347, 357 (2001) [Per J. Quisumbing, Second
Division]; Roca v. Court of Appeals, 403 Phil. 326, 335 (2001)
[Per J. Quisumbing, Second Division].

 People v. Eduarte, 265 Phil. 304, 309 (1990) [Per J. Guttierez,


[50]

Jr., Third Division].


 People v. Caratao, 451 Phil. 588, 602 (2003) [Per J. Azcuna,
[51]

First Division], citing People v. Saure, 428 Phil. 916, 928 (2002)


[Per J. Puno, First Division]; and People v. Enfectana, et al., 431
Phil. 64, 77 (2002) [Per J. Quisumbing, Second Division].

 People v. Obordo, 431 Phil. 691, 712 (2002) [Per J. Kapunan,


[52]

First Division], citing People vs. Encomienda, 150-B Phil. 419,


433 (1972) [Per J. Makasiar, First Division].

 People v. Encomienda, 150-B Phil. 419, 433-434 (1972),


[53]

citing People vs. Lara, 48 Phil. 153 , 159 (1925) [Per J. Street, En


Banc]; People vs. Paras, 9 Phil. 367, 370 (1907) [Per J. Makasiar,
First Division].

[54]
 158 Phil. 827 (1974) [Per J. Muñoz-Palma, First Division].

[55]
 Id. at 845.

[56]
 Rollo, p. 196. Memorandum.

[57]
 Id. at 27.

[58]
 Id. at 196.

[59]
 Id.

[60]
 Id. at 34-37.

[61]
 Id. at 34.

[62]
 Id. at 34-37.

[63]
 Id. at 37-38.

[64]
 Id.
 People v. Alolod, 334 Phil. 135, 141 (1997) [Per J. Bellosillo,
[65]

First Division].

 People v. Rabosa, 339 Phil. 339, 346 (1997) [Per J. Kapunan,


[66]

First Division], citing People v Ching, 310 Phil. 269, 286 (1995)


[Per J. Regalado, Second Division].

Source: Supreme Court E-Library | Date created: November 28, 2018


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Supreme Court E-Library

804 Phil. 293


SECOND DIVISION

[ G.R. Nos. 205045 & 205723, January


25, 2017 ]
COMMISSIONER OF INTERNAL REVENUE,
PETITIONER, v. SAN MIGUEL CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

These consolidated cases consider whether "San Mig Light" is


a new brand or a  variant of one of San Miguel Corporation's
existing beer brands, and whether the Bureau of Internal
Revenue may issue notices of discrepancy that effectively
changes "San Mig Light" 's classification from  new
brand to variant. The issues involve an application of Section 143
of the 1997 National Internal Revenue Code (Tax Code), as
amended, on the definition of a variant, which is subject to a
higher excise tax rate than a new brand. This case also applies
the requirement in Rep. Act No. 9334 that reclassification of
certain fermented liquor products introduced between January 1,
1997 and December 31, 2003 can only be done by an act of
Congress.
The Petition  docketed as G.R. No. 205045 assails the Court of
[1]

Tax Appeals En Banc's September 20, 2012 Decision  affirming


[2]

the Third Division's grant of San Miguel Corporation's refund


claim in CTA Case No. 7708, and the December 11, 2012
Resolution  denying reconsideration. The Commissioner of
[3]

Internal Revenue prays for the reversal and setting aside of the
assailed Decision and Resolution, as well as the issuance of a new
one denying San Miguel Corporation's claim for tax refund or
credit.
[4]

On the other hand, the Petition  docketed as GR. No. 205723 and
[5]

consolidated with G.R. No. 205045 assails the Court of Tax


Appeals En Banc's October 24, 2012 Decision  dismissing the
[6]

Commissioner of Internal Revenue's appeal, and the February 4,


2013 Resolution  denying reconsideration. The Commissioner of
[7]

Internal Revenue prays for the reversal and setting aside of the
assailed Decision and Resolution, the issuance of a new one
remanding the case to the Court of Tax Appeals for the
production of evidence in San Miguel Corporation's possession,
or, in the alternative, the dismissal of the Petitions in CTA Case
Nos. 7052, 7053, and 7405. [8]

On October 19, 1999, Virgilio S. De Guzman (De Guzman), San


Miguel Corporation's Former Assistant Vice President for Finance,
wrote the Bureau of Internal Revenue Excise Tax Services
Assistant Commissioner Leonardo B. Albar (Assistant
Commissioner Albar) to request the registration of and authority
to manufacture "San Mig Light," to be taxed at P12.15 per liter.
 The letter dated October 27, 1999 granted this request.
[9] [10]
On November 3, 1999, De Guzman advised Assistant
Commissioner Albar that "San Mig Light" would be sold at a
suggested net retail price of P21.15 per liter or P6.98 per bottle,
less value-added tax and specific tax. "San Mig Light" would also
be classified under "Medium Priced Brand" to be taxed at P9.15
per liter.
[11]

On January 28, 2002, Alfredo R. Villacorte (Villacorte), San Miguel


Corporation's Vice President and Manager of the Group Tax
Services, wrote the Bureau of Internal Revenue Chief of the Large
Taxpayers Assistance Division II (LTAD II) to request information
on the tax rate and classification of "San Mig Light" and another
beer product named "Gold Eagle King." [12]

On February 7, 2002, LTAD II Acting Chief Conrado P. Item


replied to Villacorte's letter.  He confirmed that based on the
[13]

submitted documents, San Miguel Corporation was allowed to


register, manufacture, and sell "San Mig Light" as a new brand,
had been paying its excise tax for a considerable length of time,
and that the tax classification and rate of "San Mig Light" as a
new brand were in order. [14]

However, on May 28, 2002, Edwin R. Abella (Assistant


Commissioner Abella), Bureau of Internal Revenue Large
Taxpayers Service Assistant Commissioner, issued a Notice of
Discrepancy against San Miguel Corporation. The Notice stated
that "San Mig Light" was a variant of its existing beer products
and must, therefore, be subjected to the higher excise tax rate
for variants.  Specifically, for the year 1999, "San Mig Light"
[15]

should be taxed at the rate of P19.91 per liter instead of P9.15


per liter; and for the year 2000, the 12% increase should be
based on the rate of P19.91 per liter under Section 143(C)(2) of
the Tax Code.  Hence, the Notice demanded payments of
[16]

deficiency excise tax in the amount of P824,750,204.97,


exclusive of increments for years 1999 to April 2002.[17]

The Finance Manager of San Miguel Corporation's Beer Division


wrote a letter-reply dated July 9, 2002 requesting the withdrawal
of the Notice of Discrepancy.  San Miguel Corporation stated,
[18]

among other things, that "San Mig Light" was not a variant of any
of its existing beer brands because of "the distinctive shape, color
scheme[,] and general appearance"; and the "different alcohol
content and innovative low calorie formulation."  It also[19]

emphasized that the Escudo logo was not a beer brand logo but a
corporate logo. [20]

On October 14, 2002, Assistant Commissioner Abella wrote a


letter-rejoinder reiterating its finding that "San Mig Light Pale
Pilsen" was truly a  variant of "San Miguel Pale Pilsen."  The [21]

letter-rejoinder cited certain statements in San Miguel


Corporation's publication, "Kaunlaran," and the corporation's
Annual Report as support for its finding. [22]

On November 20, 2002, Villacorte replied by requesting that "San


Mig Light be reconfirmed as a new brand . . . the deficiency
assessment be set aside and the demand for payment be
withdrawn." [23]

Subsequently, three (3) conferences were held on the "San Mig


Light" tax classification issue. At the conference held on
December 16, 2003, Commissioner Guillermo Parayno, Jr.
(Commissioner Parayno) informed San Miguel Corporation that
five (5) members of the Bureau of Internal Revenue Management
Committee voted that "San Mig Light" was a variant of "Pale
Pilsen in can," while two (2) members voted that it was
a variant of "Premium," a high-priced beer product of San Miguel
Corporation. [24]

On January 6, 2004, Commissioner Parayno wrote San Miguel


Corporation and validated the findings that "San Mig Light" was
a variant of "San Miguel Pale Pilsen in can," subject to the same
excise tax rate of the latter—that is, P13.61 per liter—and that an
assessment for deficiency excise tax against San Miguel
Corporation was forthcoming. [25]
On January 28, 2004, a Preliminary Assessment Notice (PAN) was
issued against San Miguel Corporation for deficiency excise tax in
the amount of P852,039,418.15, inclusive of increments,
purportedly for the removals of "San Mig Pale Pilsen Light," from
1999 to January 7, 2004. [26]

On February 4, 2004, a Notice of Discrepancy was issued against


San Miguel Corporation on an alleged deficiency excise tax in the
amount of P28,876,108.84, from January 8, 2004 to January 29,
2004. [27]

Accordingly, on March 24, 2004, Bureau of Internal Revenue


Deputy Commissioner Estelita C. Aguirre (Deputy Commissioner
Aguirre) issued a PAN against San Miguel Corporation for
P29,967,465.37 representing deficiency excise tax, inclusive of
increments, from January 8, 2004 to January 29, 2004. [28]

On April 12, 2004 and May 26, 2004, Deputy Commissioner


Aguirre issued two (2) Formal Letters of Demand  to San Miguel
[29]

Corporation with the accompanying Final Assessment Notice


(FAN) Nos. LTS TF 004-06-02 and LTS TF 129-05-04,
respectively, directing San Miguel Corporation to pay deficiency
excise taxes in the amounts of:

(a) P876,098,898.83, inclusive of interest until April 30, 2004, for the period of Novem
liter, and January 2000 to January 7, 2004 at P13.61 per liter;  and[30]

(b) P30,763,133.68, inclusive of interest until June 30, 2004, for the period January 8, 2
San Miguel filed a Protest/Request for Reconsideration against
each FAN. [32]

On August 17, 2004 and August 20, 2004, Former Large


Taxpayers Service Officer-in-Charge Deputy Commissioner Kim S.
Jacinto-Henares informed San Miguel Corporation of the denial of
the Protest/Request for Reconsiderations against the two (2)
FANs "for lack of legal and factual basis." [33]

G.R. No. 205723


On September 17, 2004 and September 22, 2004, San Miguel
Corporation filed before the Court of Tax Appeals Petitions for
Review, docketed as CTA Case Nos. 7052 and 7053, assailing the
denials of its Protest/Request for Reconsiderations of the
deficiency excise tax assessments. [34]

To prevent the issuance of additional excise tax assessments on


San Mig Light products and the disruption of its operations, San
Miguel Corporation paid excise taxes at the rate of P13.61
beginning February 1, 2004.[35]

On December 28, 2005, San Miguel Corporation filed with the


Bureau of Internal Revenue its first refund claim. The claim
sought the refund of P782,238,161.47 for erroneous excise taxes
collected on San Mig Light products from February 2, 2004 to
November 30, 2005. [36]

Due to inaction on its claim, on January 31, 2006, San Miguel


Corporation filed before the Court Tax Appeals a Petition for
Review docketed as CTA Case No. 7405.  The Court of Tax
[37]

Appeals, upon motion, later consolidated CTA Case No. 7405 with
CTA Case Nos. 7052 and 7053. [38]

The Court of Tax Appeals First Division, in its Decision  dated


[39]

October 18, 2011, granted the Petitions in CTA Case Nos. 7052
and 7053 and partially granted the Petition in CTA Case No. 7405.
 The Decision's dispositive portion reads:
[40]

WHEREFORE, in view of the foregoing considerations, the


consolidated Petitions for Review in CTA Case Nos. 7052 and
7053 are hereby GRANTED. The (1) [sic] letters dated August
17, 2004 and August 20, 2004 of respondents, denying
petitioner's Protest/Request for Reconsideration dated May 12,
2004 and July 7, 2004, respectively, and (2) Assessment Notice
Nos. LTS TF 004-06-02 and LTS TF 129-05-04 issued by
respondent against petitioner for the periods of November 1999
to January 7, 2004 and January 8, 2004 to January 29, 2004, are
hereby CANCELLED and SET ASIDE.
Moreover, the Petition for Review in CTA Case No. 7405 is
hereby PARTIALLY GRANTED. Respondent CIR is hereby
ORDERED to REFUND petitioner, or to ISSUE A TAX CREDIT
CERTIFICATE in its favor in, the amount of SEVEN HUNDRED
EIGHTY ONE MILLION FIVE HUNDRED FOURTEEN THOUSAND
SEVEN HUNDRED SEVENTY TWO PESOS AND FIFTY SIX
CENTAVOUS [sic] (P781,514,772.56), as determined below:

Claims for Over-Payment of Excise Taxes per Petition P782,238,161.47

Less: Deductions from claims:


1 Excise taxes due on SML removals P420,252.62
per ODI which were not paid per
Returns Polo Plant

2 Excise taxes due per Excise Tax 121,975.00


Returns were Lesser than [the]
amounts per ODI Polo Plant

3 SML Removals per shipping


Memorandum were Greater than ODIs

San Fernando Plant 181,080.11


Bacolod Plant 81.18 723,388.91

Recomputed Excise Taxes for P781,514,772.56


Refund/Issuance of Tax Credit
Certificate
SO ORDERED.  (Emphasis in the original)
[41]

The Commissioner filed a Motion for Reconsideration with Motion


for Production of Documents praying that San Miguel Corporation
be compelled to produce the following: (a) "Kaunlaran"
publication for the months of October 1999 and January 2000;
(b) 1999 Annual Report to stockholders; and (c) copies of the
video footage of two (2) San Mig Light commercials as seen in its
website.  The Commissioner claimed "that the admission of said
[42]
documents would lead to a better illumination of the outcome of
the case."
[43]

The Court of Appeals First Division denied the Motions in its


Resolution  dated February 6, 2012:
[44]

WHEREFORE, premises considered, respondent's


[CIR's] MOTION FOR RECONSIDERATION WITH MOTION
FOR PRODUCTION OF DOCUMENTS (Re: Decision
promulgated 18 October 2011) and SUPPLEMENTAL MOTION
FOR PRODUCTION OF DOCUMENTS are hereby DENIED for
lack of merit.

SO ORDERED.  (Emphasis in the original)


[45]

The Court of Tax Appeals  En Banc, in its Decision  dated October


[46]

24, 2012, dismissed the Petition and affirmed the Division.  It [47]

also denied reconsideration through the Resolution  dated[48]

February 4, 2013.

Hence, the Commissioner on Internal Revenue filed the Petition


for Review on Certiorari  docketed as G.R. No. 205723.
[49]

G.R. No. 205045

On August 30, 2007, San Miguel Corporation filed its second


refund claim with the Bureau of Internal Revenue in the amount
of P926,389,172.02.  Due to inaction on its claim, San Miguel
[50]

Corporation filed before the Court Tax Appeals a Petition for


Review, docketed as CTA Case No. 7708, on November 27, 2007.
[51]

The Court of Tax Appeals Third Division, in its Decision dated


January 7, 2011, partially granted the Petition.  It also denied
[52]

reconsideration.  The Decision's dispositive portion reads:


[53]

WHEREFORE, the Petition for Review is hereby PARTIALLY


GRANTED. Accordingly, respondent is hereby ORDERED TO
REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor [of]
petitioner in the amount of P926,169,056.74, representing
erroneously, or excessively and/or illegally collected, and
overpaid excise taxes on "San Mig Light" during the period from
December 1, 2005 up to July 31, 2007.

SO ORDERED.  (Emphasis in the original)


[54]

On September 20, 2012, the Court of Tax Appeals En


Banc  affirmed the Division and thereafter also denied
[55]

reconsideration. The Decision's dispositive portion reads:

WHEREFORE, the present Petition for Review is


hereby DENIED for lack of merit. The assailed decision and
resolution of the Third Division of this Court promulgated on
January 7, 2011 and. March 23, 2011, respectively, in CTA Case
No. 7708 entitled "SAN MIGUEL CORPORATION vs.
COMMISSIONER OF INTERNAL REVENUE[“], are
hereby AFFIRMED.

Accordingly, petitioner is ORDERED TO REFUND or ISSUE A


TAX CREDIT CERTIFICATE in favor of respondent in the
amount of P926,169,056.74, representing erroneously,
excessively and/or illegally collected and overpaid excise taxes on
"San Mig Light" during the period December 1, 2005 to July 31,
2007.

SO ORDERED.  (Emphasis in the original)


[56]

Hence, the Commissioner on Internal Revenue filed the Petition


for Review on Certiorari  docketed as G.R. No. 205045. The two
[57]

(2) cases were consolidated.

Respondent San Miguel Corporation filed its Comment  on the


[58]

Petitions, to which petitioner filed its Reply.  The parties then


[59]

filed their respective memoranda. [60]

The issues for resolution are:


First, whether a motion for production of documents and objects
may be availed of after the court has rendered judgment;

Second, whether petitioner complied with all requisites of a


motion for production of documents and objects under Rule 27,
such as a showing of good cause;

Third, whether "San Mig Light" is a new brand and not


a variant of "San Miguel Pale Pilsen";

Fourth, whether the "classification freeze" in Rep. Act No. 9334


refers to the freezing of classification of brands, and not to the
freezing of net retail prices of brands;

Fifth, whether the deficiency excise tax assessments issued by


the Bureau of Internal Revenue against respondent dated April
12, 2004 and May 26, 2004 are valid; and

Lastly, whether respondent is entitled to a refund of excess


payment of excise taxes on "San Mig Light" in the amount of
P781,514,772.56 for the period from February 1, 2004 up to
November 30, 2005, and in the amount of P926,169,056.74 for
the period from December 1, 2005 up to July 31, 2007.

Petitioner questions the denial of its Motion for Production of


Documents and Objects. It argues that this motion may be filed
after pre-trial or during the pendency of the action since Rule 27,
Section 1 of the Revised Rules of Civil Procedure does not
explicitly provide that it must be availed of before trial or pre-
trial.  Petitioner contends that all requisites for filing the motion
[61]

were satisfied.  Assuming the Motion was belatedly filed, it


[62]

should have been granted in the higher interest of justice. [63]

Respondent counters that the Motions, which were filed only after
the Court of Tax Appeals Division rendered judgment, were
belatedly filed since this mode of discovery must be availed of
before trial.  Rule 27, Section 1 used the phrase, "in which an
[64]
action is pending"; thus, this defines which court has authority to
resolve the motion and does not define when the motion must be
made.  Respondent contends that this remedy must be availed of
[65]

before trial in order to facilitate and expedite case preparations.


 Respondent adds that petitioner also failed to comply with the
[66]

requisites for the motion. Specifically, the Motion did not


adequately describe the contents of the documents to be
produced to show their materiality and relevance to the case. [67]

Respondent further submits that the documents and objects are


immaterial and irrelevant to the issues. The documents petitioner
sought to have respondent produce are referred to as having to
do with the taste, alcohol content, and calories of "San Mig Light,"
when the Tax Code definition of variant has nothing to do with
these matters.  Respondent submits that in filing the Motions
[68]

after judgment, petitioner was effectively seeking new trial, which


it may only avail itself of with "newly discovered" evidence.
[69]

Rule 27, Section 1 of the Revised Rules of Civil Procedure


provides:

SECTION 1. Motion for production or inspection; order. - Upon


motion of any party showing good cause therefore, the court
in which an action is pending may (a) order any party to
produce and permit the inspection and copying or photographing,
by or on behalf of the moving party, of any designated
documents, papers, books, accounts, letters, photographs,
objects or tangible things, not privileged, which constitute or
contain evidence  material to any matter involved in the
action and which are in his possession, custody or control; or (b)
order any party to permit entry upon designated land or other
property in his possession or control for the purpose of
inspecting, measuring, surveying, or photographing the property
or any designated relevant object or operation thereon. The order
shall specify the time, place and manner of making the inspection
and taking copies and photographs, and may prescribe such
terms and conditions as are just. (Emphasis supplied)
Rule 18, Section 6 of the Rules of Court on Pre-Trial requires that
the pre-trial briefs shall include "[a] manifestation of their having
availed or intention to avail themselves of discovery procedures."

On July 13, 2004, this Court approved A.M. No. 03-1-09-SC,


otherwise known as the Rule on Guidelines to be Observed by
Trial Court Judges and Clerks of Court in the Conduct of Pre-Trial
and Use of Deposition - Discovery Measures. Among other things,
these rules direct trial courts to require parties to submit, at least
three (3) days before pre-trial, pre-trial briefs containing "[a]
manifestation of the parties of their having availed or their
intention to avail themselves of discovery procedures or referral
to commissioners." [70]

Republic v. Sandiganbayan  explained the purpose and policy


[71]

behind modes of discovery:

The truth is that "evidentiary matters" may be inquired into and


learned by the parties before the trial. Indeed, it is the purpose
and policy of the law that the parties — before the trial if
not indeed even before the pre-trial — should discover or
inform themselves of all the facts relevant to the action,
not only those known to them individually, but also those known
to their adversaries; in other words, the desideratum is that civil
trials should not be carried on in the dark; and the Rules of Court
make this ideal possible through the deposition-discovery
mechanism set forth in Rules 24 to 29. The experience in other
jurisdictions has been that ample discovery before trial, under
proper regulation, accomplished one of the most necessary ends
of modern procedure:  it not only eliminates unessential
issues from trials thereby shortening them considerably,
but also requires parties to play the game with the cards
on the table so that the possibility of fair settlement
before trial is measurably increased...

As just intimated, the deposition-discovery procedure was


designed to remedy the conceded inadequacy and
cumbersomeness of the pre-trial functions of notice-giving, issue-
formulation and fact revelation theretofore performed primarily
by the pleadings.

The various modes or instruments of discovery are meant to


serve (1) as a device, along with the pre-trial hearing under Rule
20, to narrow and clarify the basic issues between the parties,
and (2) as a device for ascertaining the facts relative to those
issues. The evident purpose is, to repeat, to enable the parties,
consistent with recognized privileges,  to obtain the fullest
possible knowledge of the issues and facts before civil
trials and thus prevent that said trials are carried on in the
dark.  (Emphasis supplied, citations omitted)
[72]

Specifically, this Court discussed the importance of a motion for


production of documents under Rule 27 of the Rules of Court in
expediting time-consuming trials:

This remedial measure is intended to assist in the administration


of justice by  facilitating and expediting the preparation of
cases for trial and guarding against undesirable surprise
and delay; and it is designed to simplify procedure and obtain
admissions of facts and evidence, thereby  shortening costly
and time-consuming trials. It is based on ancient principles of
equity. More specifically, the purpose of the statute is to enable a
party-litigant to discover material information which, by reason of
an opponent's control, would otherwise be unavailable for judicial
scrutiny, and to provide a convenient and summary method of
obtaining material and competent documentary evidence in the
custody or under the control of an adversary. It is a further
extension of the concept of pretrial.  (Emphasis supplied)
[73]

Consistent with litigation's quest for truth, parties should


welcome every opportunity in attaining this objective, such as
acting in good faith to reveal material documents. [74]

The scope of discovery must be liberally construed, as a general


rule, to serve its purpose of providing the parties with essential
information to reach an amicable settlement or to expedite trial.
 "Courts, as arbiters and guardians of truth and justice, must
[75]

not countenance any technical ploy to the detriment of an


expeditious settlement of the case or to a fair, full and complete
determination on its merits." [76]

Rule 27, Section 1 of the Rules of Court does not provide when
the motion may be used. Hence, the allowance of a motion for
production of document rests on the sound discretion of the court
where the case is pending, with due regard to the rights of the
parties and the demands of equity and justice.[77]

In Eagleridge Development Corporation v. Cameron Granville 3


Asset Management, Inc.,  we held that a motion for production
[78]

of documents may be availed of even beyond the pre-trial stage,


upon showing of good cause as required under Rule 27.  We [79]

allowed the production of documents because the petitioner was


able to show "good cause" and relevance of the documents
sought to be produced, and the trial court had not yet rendered
its judgment.

In this case, petitioner filed its Motion for Production of


Documents after the Court of Tax Appeals Division had rendered
its judgment. According to the Court of Tax Appeals Division, the
documents sought to be produced were already discussed in the
Commissioner's Memorandum dated October 21, 2010 and were
already considered by the tax court when it rendered its Decision.
 If petitioner believed that the evidence in the custody and
[80]

control of respondent "would provide a better illumination of the


outcome of the case," it should have sought their production at
the earliest opportunity as it had been already aware of their
existence.  Petitioner's laxity is inexcusable and is a fatal
[81]

omission.

Under these circumstances, there was indeed no further need for


the production of documents and objects desired by petitioner.
These pieces of evidence could have served no useful purpose.
On the contrary, the production of those documents after
judgment defeats the purpose of modes of discovery in
expediting case preparation and shortening trials.

We find no reversible error on the part of the Court of Tax


Appeals En Banc in affirming the Division's denial of petitioner's
Motion for Production of Documents.

II

These consolidated cases involve the Tax Code provision


defining  new brand as opposed to variant of brand, as these two
are treated differently for excise tax on fermented liquor.

Effective January 1, 1998, Republic Act No. 8424, otherwise


known as the Tax Reform Act of 1997, reproduced as Section 143
the provisions of Section 140 of the old Tax Code, as amended by
Republic Act No. 8240, governing excise taxes on fermented
liquor. Section 143 distinguishes a new brand from a variant of
brand:

Sec. 143. Fermented Liquor. - There shall be levied, assessed and


collected an excise tax on beer, lager beer, ale, porter and other
fermented liquors except tuba, basi, tapuy and similar domestic
fermented liquors in accordance with the following schedule:

(a) If the net retail price (excluding the excise tax and value-
added tax) per liter of volume capacity is less than Fourteen
pesos and fifty centavos (P14.50), the tax shall be Six pesos and
fifteen centavos (P6.15) per liter;

(b) If the net retail price (excluding the excise tax and the value-
added tax) per liter of volume capacity is Fourteen pesos and fifty
centavos (P14.50) up to Twenty-two pesos (P22.00), the tax shall
be Nine pesos and fifteen centavos (P9.15) per liter;

(c) If the net retail price (excluding the excise tax and the value-
added tax) per liter of volume capacity is more than Twenty-two
pesos (P22.00), the tax shall be Twelve pesos and fifteen
centavos (P12.15) per liter.
Variants of existing brands which are introduced in the
domestic market after the effectivity of Republic Act No.
8240 shall be taxed under the highest classification of any
variant of that brand.

Fermented liquor which are brewed and sold at micro-breweries


or small establishments such as pubs and restaurants shall be
subject to the rate in paragraph (c) hereof.

The excise tax from any brand of fermented liquor within the next
three (3) years from the effectivity of Republic Act No. 8240 shall
not be lower than the tax which was due from each brand on
October 1, 1996.

The rates of excise tax on fermented liquor under paragraphs (a),


(b) and (c) hereof shall be increased by twelve percent (12%) on
January 1, 2000.

New brands shall be classified according to their current


net retail price.

For the above purpose, 'net retail price' shall mean the price at
which the fermented liquor is sold on retail in twenty (20) major
supermarkets in Metro Manila (for brands of fermented liquor
marketed nationally), excluding the amount intended to cover the
applicable excise tax and the value-added tax. For brands which
are marketed only outside Metro Manila, the 'net retail price' shall
mean the price at which the fermented liquor is sold in five (5)
major supermarkets in the region excluding the amount intended
to cover the applicable excise tax and the value-added tax.

The classification of each brand of fermented liquor based on its


average net retail price as of October 1, 1996, as set forth in
Annex 'C,' shall remain in force until revised by Congress.

A 'variant of brand' shall refer to a brand on which a


modifier is prefixed and/or suffixed to the root name of
the brand and/or a different brand which carries the same
logo or design of the existing brand.
Every brewer or importer of fermented liquor shall, within thirty
(30) days from the effectivity of R.A. No. 8240, and within the
first five (5) days of every month thereafter, submit to the
Commissioner a sworn statement of the volume of sales for each
particular brand of fermented liquor sold at his establishment for
the three-month period immediately preceding.

Any brewer or importer who, in violation of this Section,


knowingly misdeclares or misrepresents in his or its sworn
statement herein required any pertinent data or information shall
be penalized by a summary cancellation or withdrawal of his or its
permit to engage in business as brewer or importer of fermented
liquor.

Any corporation, association or partnership liable for any of the


acts or omissions in violation of this Section shall be fined treble
the amount of deficiency taxes, surcharges and interest which
may be assessed pursuant to this Section.

Any person liable for any of the acts or omissions prohibited


under this Section shall be criminally liable and penalized under
Section 254 of this Code. Any person who willfully aids or abets in
the commission of any such act or omission shall be criminally
liable in the same manner as the principal.

If the offender is not a citizen of the Philippines, he shall be


deported immediately after serving the sentence, without further
proceedings for deportation. (Emphasis supplied)

On January 1, 2005, Republic Act No. 9334  took effect,


[82]

amending Section 143 of the Tax Code to read:

Sec. 143. Fermented Liquors. — There shall be levied, assessed


and collected an excise tax on beer, lager beer, ale, porter and
other fermented liquors except tuba, basi, tapuy and similar
fermented liquors in accordance with the following schedule:

(a) If the net retail price (excluding the excise tax and the value-
added tax) per liter of volume capacity is less than Fourteen
pesos and fifty centavos (P14.50), the tax shall be Eight pesos
and twenty-seven centavos (P8.27) per liter;

(b) If the net retail price (excluding the excise tax and the value-
added tax) per liter of volume capacity is Fourteen pesos and fifty
centavos (P14.50) up to Twenty-two pesos (P22.00), the tax shall
be Twelve pesos and thirty centavos (P12.30) per liter;

(c) If the net retail price (excluding the excise tax and the value-
added tax) per liter of volume capacity is more than Twenty-two
pesos (P22.00), the tax shall be Sixteen pesos and thirty-three
centavos (P16.33) per liter.

Variants of existing brands and variants of new brands which are


introduced in the domestic market after the effectivity of this Act
shall be taxed under the proper classification thereof based on
their suggested net retail price: Provided, however, That such
classification shall not, in any case, be lower than the highest
classification of any variant of that brand.

A 'variant of a brand' shall refer to a brand on which a


modifier is prefixed and/or suffixed to the root name of
the brand.

Fermented liquors which are brewed and sold at micro-breweries


or small establishments such as pubs and restaurants shall be
subject to the rate in paragraph (c) hereof.

New brands, as defined in the immediately following paragraph,


shall initially be classified according to their suggested net retail
price.

'New brand' shall mean a brand registered after the date


of effectivitv of R.A. No. 8240.

'Suggested net retail price' shall mean the net retail price at
which new brands, as defined above, of locally manufactured or
imported fermented liquor are intended by the manufacturer or
importer to be sold on retail in major supermarkets or retail
outlets in Metro Manila for those marketed nationwide, and in
other regions, for those with regional markets. At the end of
three (3) months from the product launch, the Bureau of Internal
Revenue shall validate the suggested net retail price of the new
brand against the net retail price as defined herein and determine
the correct tax bracket to which a particular new brand of
fermented liquor, as defined above, shall be classified. After the
end of eighteen (18) months from such validation, the Bureau of
Internal Revenue shall revalidate the initially validated net retail
price against the net retail price as of the time of revalidation in
order to finally determine the correct tax bracket which a
particular new brand of fermented liquors shall be
classified: Provided, however, That brands of fermented
liquors introduced in the domestic market between
January 1, 1997 and December 31, 2003 shall remain in
the classification under which the Bureau of Internal
Revenue has determined them to belong as of December
31, 2003. Such classification of new brands and brands
introduced between January 1, 1997 and December 31,
2003 shall not be revised except by an act of Congress.

'Net retail price', as determined by the Bureau of Internal


Revenue through a price survey to be conducted by the Bureau of
Internal Revenue itself, or the National Statistics Office when
deputized for the purpose by the Bureau of Internal Revenue,
shall mean the price at which the fermented liquor is sold on
retail in at least twenty (20) major supermarkets in Metro Manila
(for brands of fermented liquor marketed nationally), excluding
the amount intended to cover the applicable excise tax and the
value-added tax. For brands which are marketed outside Metro
Manila, the 'net retail price' shall mean the price at which the
fermented liquor is sold in at least five (5) major supermarkets in
the region excluding the amount intended to cover the applicable
excise tax and the value-added tax.

The classification of each brand of fermented liquor based


on its average net retail price as of October 1, 1996, as set
forth in Annex 'C', including the classification of brands for
the same products which, although not set forth in said
Annex 'C', were registered and were being commercially
produced and marketed on or after October 1, 1996, and
which continue to be commercially produced and marketed
after the effectivity of this Act, shall remain in force until
revised by Congress.

The rates of tax imposed under this Section shall be increased by


eight percent (8%) every two years starting on January 1, 2007
until January 1, 2011.

Any downward reclassification of present categories, for tax


purposes, of existing brands of fermented liquor duly registered
at the time of the effectivity of this Act which will reduce the tax
imposed herein, or the payment thereof, shall be prohibited.

Every brewer or importer of fermented liquor shall, within thirty


(30) days from the effectivity of this Act, and within the first five
(5) days of every month thereafter, submit to the Commissioner
a sworn statement of the volume of sales for each particular
brand of fermented liquor sold at his establishment for the three-
month period immediately preceding.

Any brewer or importer who, in violation of this Section,


knowingly misdeclares or misrepresents in his or its sworn
statement herein required any pertinent data or information shall
be penalized by a summary cancellation or withdrawal of his or its
permit to engage in business as brewer or importer of fermented
liquor.

Any corporation, association or partnership liable for any of the


acts or omissions in violation of this Section shall be fined treble
the amount of deficiency taxes, surcharges and interest which
may be assessed pursuant to this Section.

Any person liable for any of the acts or omissions prohibited


under this Section shall be criminally liable and penalized under
Section 254 of this Code. Any person who willfully aids or abets in
the commission of any such act or omission shall be criminally
liable in the same manner as the principal.

If the offender is not a citizen of the Philippines, he shall be


deported immediately after serving the sentence, without further
proceedings for deportation. (Emphasis supplied)

On December 19, 2012, Rep. Act No. 10351, otherwise known as


the Sin Tax Law,  was promulgated to further amend certain
[83]

provisions on excise taxes on alcohol and tobacco products.


Among the amendments to Section 143 were:

(1) Increase in the excise tax rates and transition from three (3)-tiered to two (2)-tiere
until December 31, 2016; and to a single tax rate beginning January 1, 2017, irre
the products were sold in the market;

(2) All fermented liquors existing in the market at the time of the effectivity of the Act s
retail prices and the tax rates provided, based on the latest price survey of the
Bureau of Internal Revenue. However, any downward reclassification is prohibited;

(3) Fermented liquors introduced in the domestic market after the effectivity of the
according to their suggested net retail prices until such time that their correct tax
specified period; and

(4) The proper tax classification of fermented liquors, whether registered before or aft
determined every two (2) years from the date of effectivity of the Act.
Excise taxes are imposed on the production, sale, or consumption
of specific goods. Generally, excise taxes on domestic products
are paid by the manufacturer or producer before removal of those
products from the place of production.  The excise tax based on
[84]

weight, volume capacity, or any other physical unit of


measurement is referred to as "specific tax." If based on selling
price or other specified value, it is referred to as "ad valorem"
tax. [85]

The excise tax on beer is a specific tax based on volume, or on a


per liter basis. Before its amendment, Section 143 provided for
three (3) layers of tax rates, depending on the net retail price per
liter. How a new beer product is taxed depends on its
classification, i.e. whether it is a variant of an existing brand or
a  new brand. Variants of a brand that were introduced in the
market after January 1, 1997 are taxed under the highest tax
classification of any variant of the brand. On the other hand, new
brands are Initially classified and taxed according to their
suggested net retail price, until a survey is conducted by the
Bureau of Internal Revenue to determine their current net retail
price in accordance with the specified procedure.

III

Petitioner argues that "San Mig Light," launched in November


1999, is not a new brand but merely a low-calorie variant of "San
Miguel Pale Pilsen."  Thus, the application of the higher excise
[86]

tax rate for variant products is appropriate and respondent should


not be entitled to a refund or issuance of a tax credit certificate.
[87]

Respondent counters that "San Mig Light" is a new brand; the


classification of "San Mig Light" as a new and medium-priced
brand may not be revised except by an act of Congress;  and the
[88]

Court of Tax Appeals did not err in granting its claim for refund or
issuance of tax credit certificate.

The refund claim in CTA Case No. 7405, subject of the Petition
docketed as G.R. No. 205723, covers the period from February 2,
2004 to November 30, 2005, while the refund claim in CTA Case
No. 7708, subject of the Petition docketed as G.R. No. 205045,
covers the period from December 1, 2005 up to July 31, 2007.

We find for respondent.

Parenthetically, the Bureau of Internal Revenue's actions reflect


its admission and confirmation that "San Mig Light" is a new
brand.

When respondent's October 19, 1999 letter requested the


registration and authority to manufacture "San Mig Light," to be
taxed at P12.15 per liter,  the Bureau of Internal Revenue
[89]

granted the request. [90]


The response dated February 7, 2002 of the LTAD II Acting Chief
confirmed that respondent was allowed to register, manufacture,
and sell "San Mig Light" as a new brand.[91]

The Joint Stipulation of Facts, Documents and Issues in CTA


Cases Nos. 7052 and 7053 dated July 29, 2005,  signed by both
[92]

parties, includes paragraph 1.08, which reads:

1.08. From the time of its registration as a new brand in


October 1999 and its production in November 1999, "San Mig
Light" products have been withdrawn and sold, and taxes have
been paid on such removals, on the basis of its registration and
tax rate as a new brand. (CTA No. 7052: Petition, par. 5.06;
Answer, par. 2[e]; CTA No. 7053: Petition, par. 5.06; Answer,
par. 2[e]).  (Emphasis supplied)
[93]

The May 28, 2002 Notice of Discrepancy was effectively nullified


by the subsequent issuance of Revenue Memorandum Order No.
6-2003, which included "San Mig Light” as a new brand.

The Bureau of Internal Revenue issued Revenue Memorandum


Order No. 6-2003 dated March 11, 2003 with the subject,
Prescribing the Guidelines and Procedures in the Establishment of
Current Net Retail Prices of New Brands of Cigarettes and Alcohol
Products Pursuant to Revenue Regulations No. 9-2003. Annex "A-
3" is the Master List of Registered Brands of Locally Manufactured
Alcohol Products as of February 28, 2003, and the list includes
"San Mig Light,"  classified as "NB" or "new brand registered on
[94]

or after January 1, 1997": [95]

INTENDED MARKET
BRAND NAME CLASS SPECIFICATION PACKAGE Domestic
Export Sta
Sale

B. FERMENTED
LIQUOR
1. SAN MIGUEL
CORPORATION
....
"San Mig Light" NB 330ml flint bottle 24 bots x x Act

IV

Any reclassification of fermented liquor products should be by act


of Congress. Section 143 of the Tax Code, as amended by Rep.
Act No. 9334, provides for this classification freeze referred to by
the parties:

Provided, however, That brands of fermented liquors introduced


in the domestic market between January 1, 1997 and December
31, 2003 shall remain in the classification under which the Bureau
of Internal Revenue has determined them to belong as of
December 31, 2003. Such  classification of new brands and
brands introduced between January 1, 1997 and December
31, 2003 shall not be revised except by an act of Congress.

....

The classification of each brand of fermented liquor based on its


average net retail price as of October 1, 1996, as set forth in
Annex ‘C’, including the classification of brands for the same
products which, although not set forth in said Annex 'C’, were
registered and were being commercially produced and marketed
on or after October 1, 1996, and which continue to be
commercially produced and marketed after the effectivity of this
Act, shall remain in force until revised by Congress.  (Emphasis [97]

supplied)

In her Dissenting Opinion, Court of Tax Appeals Associate Justice


Cielito N. Mindaro-Grulla discussed that British American Tobacco
v. Camacho  explained the purpose and application of the
[98]

classification freeze.  Her Dissenting Opinion concludes that the


[99]

classification freeze does not apply when a brand is


a variant erroneously determined as a new brand. [100]
British American Tobacco involves Section 145 of the Tax Code
governing excise taxes for cigars and cigarettes.

This Court in British American Tobacco discussed that Rep. Act


No. 9334 includes, among other things, the legislative freeze on
cigarette brands introduced between January 2, 1997 and
December 31, 2003, in that these cigarette brands will remain in
the classification determined by the Bureau of Internal Revenue
as of December 31, 2003 until revised by Congress.  In other
[101]

words, after a cigarette brand is classified under the low-priced,


medium-priced, high-priced, or premium-priced tax bracket
based on its current net retail price, its classification is frozen
unless Congress reclassifies it.
[102]

The petitioner in British American Tobacco questioned this


legislative freeze under Section 145 for creating a "grossly
discriminatory classification scheme between old and new
brands."  This Court ruled that the classification freeze provision
[103]

does not violate the constitutional provisions on equal protection.


[104]

This Court discussed the legislative intent behind the classification


freeze, that is, to deter the potential for abuse if the power to
reclassify is delegated and much discretion is given to the
Department of Finance and Bureau of Internal Revenue:

To our mind, the classification freeze provision was in the main


the result of Congress' earnest efforts to improve the efficiency
and effectivity of the tax administration over sin products while
trying to balance the same with other state interests. In
particular, the questioned provision addressed Congress'
administrative concerns regarding delegating too much authority
to the DOF and BIR as this will open the tax system to potential
areas of abuse and corruption. Congress may have reasonably
conceived that a tax system which would give the least amount of
discretion to the tax implementers would address the problems of
tax avoidance and tax evasion. [105]
British American Tobacco discussed the legislative history of the
classification freeze, but it did not explicitly rule that the
classification freeze only refers to retail price tax brackets.

In any event, petitioner's letters and Notices of Discrepancy,


which effectively changed San Mig Light's brand's classification
from "new brand to variant of existing brand," necessarily
changes San Mig Light's tax bracket. Based on the legislative
intent behind the classification freeze provision, petitioner has no
power to do this.

A reclassification of a fermented liquor brand introduced between


January 1, 1997 and December 31, 2003, such as "San Mig
Light," must be by act of Congress. There was none in this case.

Before Rep. Act No. 9334 was passed, the Tax Code under
Republic Act No. 8240 defined a "variant of a brand" as follows:

A variant of a brand shall refer to a brand on which a modifier is


prefixed and/or suffixed to the root name of the brand and/or a
different brand which carries the same logo or design of the
existing brand.[106]

This definition includes two (2) types of "variants." The first


involves the use of a modifier that is prefixed and/or suffixed to a
brand root name, and the second involves the use of the same
logo or design of an existing brand.

Rep. Act No. 9334 took effect on January 1, 2005 and deleted the
second type of "variant" from the definition:

A 'variant of a brand' shall refer to a brand on which a modifier is


prefixed and/or suffixed to the root name of the brand. [107]

Revenue Regulations No. 3-2006, with the subject: "Prescribing


the Implementing Guidelines of the Revised Tax Rates on Alcohol
and Tobacco Products Pursuant to the Provisions of Republic Act
No. 9334, and Clarifying Certain Provisions of Existing Revenue
Regulations Relative Thereto" reiterated the deletion of the
second type of "variant":

SEC. 2. DEFINITION OF TERMS. - For purposes of these


Regulations, the following words and phrases shall have the
meaning indicated below:

....

(d) VARIANT OF A BRAND - shall refer to  a brand of


alcohol  or  tobacco products on which a modifier is
prefixed and/or suffixed to the root name of the
brand.  (Emphasis supplied)

For this purpose, the term "root name" shall refer to a letter,
word, number, symbol, or character; or a combination of letters,
words, numbers, symbols, and/or characters that may or may not
form a word; or shall consist of a word or group of words, which
may or may not describe the other word or words: Provided, That
the root name has been originally registered as such with the
Bureau of Internal Revenue (BIR).

Examples of root name: "L & M", " ßΩ", "10", "Pall Mall", "Blue
Ice", "Red Horse", etc.

The term "modifier" shall refer to a word, a number or a


combination of words and/or numbers that specifically describe
the root name to distinguish one variant from another whether or
not the use of such modifier is a common industry practice. The
root name, although accompanied by a modifier at the time of the
original brand registration, shall be the basis in determining the
tax classification of subsequent variants of such brands.

Examples of modifiers:...
For beer: "Light", "Dry", "Ice", "Lager", "Hard", "Premium", etc.
Any variation in the color and/or design of the label (such as logo,
font, picturegram, and the like), manner and/or form of
packaging or size of container of the brand originally registered
with the BIR shall not, by itself, be deemed an introduction of a
new brand or a variant of a brand: Provided, That all instances of
such variation shall require a prior written permit from the BIR.

In case such BIR-registered brand has more than one (1) tax
classification as a result of the shift in the manner of taxation
from ad valorem tax to specific tax under R.A. No. 8240, the
highest tax classification shall be applied to such brand bearing a
new label, package, or volume content per package, subject to
the provisions of the immediately preceding paragraph.

ILLUSTRATION:

No. 1. —

....

In case a letter(s), number(s), symbols(s) or word(s) is/are


deleted from or replaced by another letter(s), number(s),
symbol(s) or word(s) in the root name of a previously BIR-
registered brand, such that the introduction of the said brand
bearing such change(s) shall ride on the popularity of the said
previously registered brand, the same shall be classified as a
variant of such previously registered brand: Provided, That where
the introduction of such brand by another manufacturer or
importer will give rise to any legal action with respect to
infringement of patent or unfair competition, such brand shall be
considered a variant of such previously registered brand.

ILLUSTRATION:

No. 2. —

MODIFIER IS MODIFIER IS MODIFIED ROOT


ROOT NAME
PREFIXED SUFFIXED NAME
L&M Kings L & M L & M Lights M&L
10 Perfect 10 10 Menthols Ten
Blue Ice Wild Blue Ice Blue Ice Supreme Blue Iced
Red Horse Flying Red Horse Red Horse Premium Reddish Horse
Pall Mall Long Pall Mall Pall Mall Filter Pal Mall
Petitioner submits that the complete name of "San Mig Light" is
"San Mig Light Pale Pilsen," and Section 143 of the Tax Code, in
relation to its Annexes C-1 and C-2, show that the parent brands
of San Mig Light are RPT  in cans or San Miguel Beer Pale Pilsen
[108]

in can 330 ml, Pale Pilsen, and Super Dry.  It contends that the [109]

root name of the existing brand is "Pale Pilsen," and RPT had the
highest tax classification at the time "San Mig Light" was
introduced.  "San Miguel Beer Pale Pilsen" and "San Mig Light"
[110]

have almost identical labels, and only these two labels bear the
same "Pale Pilsen." [111]

Respondent counters that petitioner changed its theory of the


case on appeal, and this should not be allowed.  It argues that [112]

petitioner categorically invoked the second part of the definition


of variant  in Section 143, and this part of the definition has been
deleted by Rep. Act No. 9334.  Moreover, petitioner made no
[113]

categorical assertion on the first part of the definition, but only a


vague statement that "the root name of the existing brand is
'Pale Pilsen.'"  Respondent adds that petitioner "has not
[114]

specified which type of 'San Mig Light', in bottle or in can, is a


variant of 'RPT' in can (San Miguel Beer Pale Pilsen)." [115]

Petitioner, on the other hand, maintains that even during the trial
stage, its theory has always been that "San Mig Light" falls under
both first and second parts of Section 143, before its amendment
by Rep. Act No. 9334. [116]

A change of theory on appeal is generally disallowed in this


jurisdiction for being unfair to the adverse party. [117]

Even then, the Court of Tax Appeals En Banc, in both assailed


Decisions, quoted with approval the First Division's finding that
"San Mig Light" does not fall under both first and second parts of
the definition of variant:

The fact that "San Mig Light" is a "new brand" and not merely a
variant of an existing brand is bolstered by the fact that Annexes
"C-1" and "C-2" of RA No. 8240, which enumerated the
fermented liquors registered with the BIR do not include the
brand name "San Mig Light". Instead, what were listed, as
existing brands of petitioner, as of the effectivity of RA No. 8240,
were as follows: "Pale Pilsen 320 ml.", "Super Dry 355 ml." and
"Premium Can 330 ml." Even in Section 4 of RR No. 2-97, which
provides for the classification and manner of taxation of existing
brands, new brands and variants of existing brands, the list of
existing brands of fermented liquors of petitioner does not include
the brand "San Mig Light", but merely "RPT in cans 330 ml",
"Premium Bottles 355 ml.", "Premium Bottles 355 ml." and
"Premium Bottle Can 330 ml." for high priced brands; and "Super
Dry 355 ml.", "Pale Pilsen 320 ml.", and "Grande" for medium-
priced brands.[118]

Thus, it is clear that when the product "San Mig Light" was
introduced in 1999, it was considered as an entirely new product
and a new brand of petitioner's fermented liquor, there being
no root name of "San Miguel" or "San Mig” in its existing
brand names. The existing registered and classified brand
name of petitioner at that time was "Pale Pilsen."
Therefore, the word "Light" cannot be considered as a
mere suffix to the word "San Miguel," but it is part and
parcel of an entirely new brand name, "San Mig
Light." Evidently, as correctly pointed out by petitioner, "San Mig
Light" is not merely a variant of an existing brand, but an
entirely new brand:

Anent the second type of "variant of brand," i.e., when a different


brand carries the same logo or design of an existing
brand,  records show that there are marked differences in
the designs of the existing brand "Pale Pilsen " and the
new brand "San Mig Light":

a) as to "Pale Pilsen" and "San Mig Light" in bottles:

1. the size, shape and color of the respective bottles are different.
Each brand has a distinct design in its packaging. "Pale Pilsen" is
in a steiny bottle, while "San Mig Light" is packed in a tall and
slim transparent bottle;

2. the design and color of the inscription on the bottles are


different from each other. "Pale Pilsen" has its label encrypted or
embossed on the bottle itself, while "San Mig Light" has a silver
and blue label of distinctive design that is printed on paper pasted
on the bottle; and

3. the color of the letters in the "Pale Pilsen" brand is white


against the color of the bottle, while that of the words "San Mig"
is white against a blue background and the word "Light" is blue
against a silver background.

b) As to "Pale Pilsen" and "San Mig Light" in cans:

1. the words "Pale Pilsen" are in ordinary font printed horizontally


in black on the can against a diagonally striped light yellow gold
background, while the words "San Mig" are in Gothic font printed
diagonally on the can against a blue background and the word
"Light" in ordinary font printed diagonally against a diagonally
striped silver background; and

2. the general color scheme of "Pale Pilsen" is light yellow gold,


while that of "San Mig Light" is silver.

Though the "escudo" logo appears on both "Pale Pilsen" bottle


and "San Mig Light" bottle and can, the same cannot be
considered as an indication that "San Mig Light" is merely a
variant of the brand "Pale Pilsen", since the said "escudo" insignia
is the corporate logo of petitioner. It merely identifies the
products, as having been manufactured by petitioner, but does
not form part of its brand. In fact, it appears not only in
petitioner's beer products, but even in its non-beer products.[119]

VI

A variant under the Tax Code has a technical meaning. It is


determined by the brand (name) or logo of the beer product.
To be sure, all beers are composed of four (4) raw materials:
barley, hops, yeast, and water.  Barley grain has always been
[120]

used and associated with brewing beer, while hops act as the
bittering substance.  Yeast plays a role in alcoholic fermentation,
[121]

with bottom-fermenting yeasts resulting in light lager and top-


fermenting ones producing the heavy and rich ale.  With only
[122]

four (4) ingredients combined and processed in varying


quantities, all beer are essentially related variants of these
mixtures.

A manufacturer of beer may produce different versions of its


products, distinguished by features such as flavor, quality, or
calorie content, to suit the tastes and needs of specific segments
of the domestic market. It can also leverage on the popularity of
its existing brand and sell a lower priced version to make it
affordable for the low-income consumers. These strategies are
employed to gain a higher overall level of share or profit from the
market.

In intellectual property law, a registered trademark owner has the


right to prevent others from the use of the same mark (brand) for
identical goods or services. The use of an identical or colorable
imitation of a registered trademark by a person for the same
goods or services or closely related goods or services of another
party constitutes infringement. It is a form of unfair
competition  because there is an attempt to get a free ride on
[123]

the reputation and selling power of another manufacturer by


passing of one's goods as identical or produced by the same
manufacturer as those carrying the other mark (brand). [124]

The variant  contemplated under the tax Code has a technical


meaning. A variant is determined by the brand (name) of the
beer product, whether it was formed by prefixing or suffixing a
modifier to the root name of the alleged parent brand, or whether
it carries the same logo or design. The purpose behind the
definition was to properly tax brands that were presumed to be
riding on the popularity of previously registered brands by being
marketed under an almost identical name with a prefix, suffix, or
a variant.  It seeks to address price differentials employed by a
[125]

manufacturer on similar products differentiated only in brand or


design. Specifically, the provision was meant to obviate any tax
avoidance by manufacturing firms from the sale of lower priced
variants of its existing beer brands, thus, falling in the lower tax
bracket with lower excise tax rates. To favor government,
a variant of a brand is taxed according to the highest rate of tax
for that particular brand.

"San Mig Light" and "Pale Pilsen" do not share a root word.
Neither is there an existing brand in the list (Annexes C-1 and C-
2 of the Tax Code) called "San Mig" to conclude that "Light" is a
suffix rendering "San Mig Light" as its "variant."  As discussed in
[126]

the Court of Tax Appeals Decision, "San Mig Light" should be


considered as one brand name. [127]

Respondent's statements describing San Mig Light as a low-


calorie variant is not conclusive of its classification as
a  variant for excise tax purposes. Burdens are not to be imposed
nor presumed to be imposed beyond the plain and express terms
of the law.  "The general rule of requiring adherence to the letter
[128]

in construing statutes applies with peculiar strictness to tax laws


and the provisions of a taxing act are not to be extended by
implication." [129]

Furthermore, respondent's payment of the higher taxes starting


January 30, 2004 after deficiency assessments were made cannot
be considered as an admission that its San Mig Light is a variant.
Section 130(A)(2) of the Tax Code requires payment of excise tax
"before removal of domestic products from place of
production."  These payments were made in protest as
[130]

respondent subsequently filed refund claims.

VII

Petitioner argues that although the Bureau of Internal Revenue


erroneously allowed San Miguel Corporation to manufacture and
sell "San Mig Light" in 1999 as a "new brand" with the lower
excise tax rate for "new brands," government is not estopped
from correcting previous errors by its agents. 
[131]

Petitioner submits that the Notice of Discrepancy was to remedy


the "misrepresentation"  of "San Mig Light" as new brand. It
[132]

submits that respondent's self-assessment of excise taxes as a


new brand was without approval:

San Mig Light was never registered with BIR as a new brand but
always as a variant. Thus, petitioner's payment of excise taxes on
San Mig Light as a new brand is based on its own classification of
San Mig Light as a new brand without approval of the BIR. Under
existing procedures in the payment of excise taxes, taxpayers are
required to pay their taxes based on self-assessment system with
the government relying heavily on the honesty of taxpayers. Such
being the case, any payments made, even those allegedly made
as a condition for the withdrawal of the product from the place of
production, cannot be considered as a confirmation by the BIR of
the correctness of such payment. [133]

Section 143 of the Tax Code, as amended by Rep. Act No. 9334,
provides for the Bureau of Internal Revenue's role in validating
and revalidating the suggested net retail price of a new brand of
fermented liquor for purposes of determining its tax bracket:

'Suggested net retail price' shall mean the net retail price at
which new brands, as defined above, of locally manufactured or
imported fermented liquor are intended by the manufacturer or
importer to be sold on retail in major supermarkets or retail
outlets in Metro Manila for those marketed nationwide, and in
other regions, for those with regional markets. At the end of
three (3) months from the product launch, the Bureau of
Internal Revenue shall validate the suggested net retail
price of the new brand against the net retail price as
defined herein and determine the correct tax bracket to
which a particular new brand of fermented liquor, as
defined above, shall be classified. After the end of
eighteen (18) months from such validation, the Bureau of
Internal Revenue shall revalidate the initially validated net
retail price against the net retail price as of the time of
revalidation in order to finally determine the correct tax
bracket which a particular new brand of fermented liquors
shall be classified:  Provided, however, That brands of
fermented liquors introduced in the domestic market between
January 1, 1997 and December 31, 2003 shall remain in the
classification under which the Bureau of Internal Revenue has
determined them to belong as of December 31, 2003. Such
classification of new brands and brands introduced between
January 1, 1997 and December 31, 2003 shall not be revised
except by an act of Congress.

When respondent launched "San Mig Light" in 1999, it wrote the


Bureau of Internal Revenue on October 19, 1999 requesting
registration and authority to manufacture "San Mig Light" to be
taxed as P12.15.

The Bureau of Internal Revenue granted this request in its


October 27, 1999 letter. Contrary to petitioner's contention, the
registration granted was not merely for intellectual property
protection  but "for internal revenue purposes only":
[134]

Your request dated October 19, 1999, for the registration of San
Miguel Corporation commercial label for beer bearing the trade
mark "San Mig Light" Pale Pilsen, for domestic sale or export, 24
bottles in a case, each flint bottle with contents of 330 ml., is
hereby granted.

....

Please follow strictly the requirements of internal revenue laws,


rules and regulations relative to the marks to be placed on each
case, cartons or box used as secondary containers. It is
understood that the said brand be brewed and bottled in
the breweries at Polo, Valenzuela (A-2-21).

You are hereby informed that the registration of


commercial labels in this Office is for internal revenue
purposes only and does not give you protection against any
person or entity whose rights may be prejudiced by infringement
or unfair competition resulting from your use of the above
indicated trademark.  (Emphasis supplied)
[135]

Because the Bureau of Internal Revenue granted respondent's


request in its October 27, 1999 letter and confirmed this grant in
its subsequent letters, respondent cannot be faulted for relying
on these actions by the Bureau of Internal Revenue.

While estoppel generally does not apply against government,


especially when the case involves the collection of taxes, an
exception can be made when the application of the rule will cause
injustice against an innocent party. [136]

Respondent had already acquired a vested right on the tax


classification of its San Mig Light as a new brand. To allow
petitioner to change its position will result in deficiency
assessments in substantial amounts against respondent to the
latter's prejudice.

The authority of the Bureau of Internal Revenue to overrule,


correct, or reverse the mistakes or errors of its agents is
conceded. However, this authority must be exercised reasonably,
 i.e., only when the action or ruling is patently erroneous  or
[137] [138]

patently contrary to law.  For the presumption lies in the


[139]

regularity of performance of official duty,  and reasonable care


[140]

has been exercised by the revenue officer or agent in evaluating


the facts before him or her prior to rendering his or her decision
or ruling—in this case, prior to the approval of the registration of
San Mig Light as a new brand for excise tax purposes. A contrary
view will create disorder and confusion in the operations of the
Bureau of Internal Revenue and open the administrative agency
to inconsistencies in the administration and enforcement of tax
laws.

In Commissioner v. Algue: [141]


It is said that taxes are what we pay for civilized society. Without
taxes, the government would be paralyzed for lack of the motive
power to activate and operate it. Hence, despite the natural
reluctance to surrender part of one's hard-earned income to the
taxing authorities, every person who is able to must contribute
his share in the running of the government. The government for
its part, is expected to respond in the form of tangible and
intangible benefits intended to improve the lives of the people
and enhance their moral and material values. This symbiotic
relationship is the rationale of taxation and should dispel the
erroneous notion that it is an arbitrary method of exaction by
those in the seat of power.

But even as we concede the inevitability and indispensability of


taxation, it is a requirement in all democratic regimes that it be
exercised reasonably and in accordance with the prescribed
procedure. If it is not, then the taxpayer has a right to complain
and the courts will then come to his succor. For all the awesome
power of the tax collector, he may still be stopped in his tracks if
the taxpayer can demonstrate, as it has here, that the law has
not been observed. [142]

VIII

The Tax Code includes remedies for erroneous collection and


overpayment of taxes. Under Sections 229 and 204(C) of the Tax
Code, a taxpayer may seek recovery of erroneously paid taxes
within two (2) years from date of payment:

SEC. 229. Recovery of tax Erroneously or Illegally Collected. —


No suit or proceeding shall be maintained in any court for the
recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, of any
sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been
duly filed with the Commissioner; but such suit or proceeding
may be maintained, whether or not such tax, penalty, or sum has
been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the


expiration of two (2) years from the date of payment of the tax or
penalty-regardless of any supervening case that may arise after
payment: Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax, where
on the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid.

....

SEC. 204. Authority of the Commissioner to Compromise, Abate


and Refund or Credit Taxes. — The Commissioner may -

...

(C) Credit or refund taxes erroneously or illegally received or


penalties imposed without authority, refund the value of internal
revenue stamps when they are returned in good condition by the
purchaser, and, in his discretion, redeem or change unused
stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or
penalties shall be allowed unless the taxpayer files in writing with
the Commissioner a claim for credit or refund within two (2)
years after the payment of the tax or penalty: Provided, however,
That a return filed showing an overpayment shall be considered
as a written claim for credit or refund.

A Tax Credit Certificate validly issued under the provisions of this


Code may be applied against any internal revenue tax, excluding
withholding taxes, for which the taxpayer is directly liable. Any
request for conversion into refund of unutilized tax credits may be
allowed, subject to the provisions of Section 230 of this
Code: Provided, That the original copy of the Tax Credit
Certificate showing a creditable balance is surrendered to the
appropriate revenue officer for verification and
cancellation: Provided, further, That in no case shall a tax refund
be given resulting from availment of incentives granted pursuant
to special laws for which no actual payment was made.

The Commissioner shall submit to the Chairmen of the Committee


on Ways and Means of both the Senate and House of
Representatives, every six (6) months, a report on the exercise of
his powers under this Section, stating therein the following facts
and information, among others: names and addresses of
taxpayers whose cases have been the subject of abatement or
compromise; amount involved; amount compromised or abated;
and reasons for the exercise of power: Provided, That the said
report shall be presented to the Oversight Committee in Congress
that shall be constituted to determine that said powers are
reasonably exercised and that the Government is not unduly
deprived of revenues.

In G.R. No. 205045, the Court of Tax Appeals En Banc ruled that


"San Mig Light" is a new brand and not a variant of an existing
brand. Accordingly, it ordered the refund of erroneously collected
excise taxes on "San Mig Light" products in the amount of
P926,169,056.74 for the period of December 1, 2005 to July 31,
2007.[143]

In G.R. No. 205723, the Court of Tax Appeals  En Banc found


proper the refund of erroneously collected excise taxes on "San
Mig Light" products in the amount of P781,514,772.56 for the
period of February 2, 2004 to November 30, 2005.  It referred
[144]

to, and agreed with, the findings of the Court-commissioned


Independent Certified Public Accountant Normita L. Villaruz on
reaching this amount.  The Court of Tax Appeals also found,
[145]

from the records, that respondent timely filed its administrative


claim for refund on December 28, 2005, and its judicial claim on
January 31, 2006. [146]

This Court accords the highest respect to the factual findings of


the Court of Tax Appeals. We recognize its developed expertise
on the subject as it is the court dedicated solely to considering
tax issues, unless there is a showing of abuse in the exercise of
authority.  We find no reason to overturn the factual findings of
[147]

the Court of Tax Appeals on the amounts allowed for refund.

WHEREFORE, the Petitions are DENIED. The assailed Decisions


and Resolutions of the Court of Tax Appeals En Banc in CTA Case
Nos. 7052, 7053, 7405, and 7708 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Velasco, Jr.,  Peralta, and Mendoza, JJ.,


[*]

concur.

 Designated as Fifth Member of the Second Division per Special


[*]

Order No. 2416-D dated January 4, 2017.


 Rollo (G.R. No. 205045), pp. 64-84. The Petition for Review on
[1]

Certiorari was filed under Rule 45 of the Rules of Civil Procedure.

 Id. at 9-25. The Decision was penned by Presiding Justice


[2]

Ernesto D. Acosta; concurred in by Associate Justices Juanito C.


Castaneda, Jr. (concurred with the Separate Concurring Opinion
of Associate Justice Olga Palanca-Enriquez in CTA Case No.
7708), Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and
Olga Palanca-Enriquez (maintained her Separate Concurring
Opinion in CTA Case No. 7708); and dissented by Associate
Justices Esperanza R. Fabon-Victorino (concurred with the
Dissenting Opinion of Associate Justice Cielito N. Mindaro-Grulla),
Cielito N. Mindaro-Grulla, and Amelia R. Cotangco-Manalastas
(maintained her Dissenting Opinion in CTA Case No. 7708 and
concurred with the Dissenting Opinion of Associate Justice
Mindaro-Grulla).

[3]
 Id. at 60-62.

[4]
 Id. at 80. See also  p. 131, Supplemental Petition.
 Rollo (G.R. No. 205723), pp. 44-127-A. The Petition for Review
[5]

on Certiorari was filed under Rule 45 of the Rules of Civil


Procedure.

 Id. at 12-39. The Decision was penned by Associate Justice


[6]

Juanito C. Castaneda, Jr. and concurred in by Presiding Justice


Ernesto D. Acosta and Associate Justices Lovell R. Bautista,
Caesar A. Casanova, Olga Palanca-Enriquez, and Cielito N.
Mindaro-Grulla of the Court of Tax Appeals En Bane, Quezon City.
Associate Justices Erlinda P. Uy, Esperanza R. Fabon-Victorino,
and Amelia R. Cotangco-Manalastas were on leave.

[7]
 Id. at 152-155.

[8]
 Id. at 118.

[9]
 Id. at 517.

[10]
 Id. at 518.

[11]
 Id. at 519.

[12]
 Rollo (G.R. No. 205045), pp. 10-11.

[13]
 Id. at 11.

[14]
 Id.

[15]
 Id.; rollo (G.R. No. 205723), p. 14.

[16]
 Rollo (G.R. No. 205723), p. 14.

 Id. at 532. In Annex B of the Notice of Discrepancy (p. 535),


[17]

the amount is P824,750,204.73

[18]
 Rollo (G.R. No. 205045), p. 11.

[19]
 Rollo (G.R. No. 205723), p. 538.

[20]
 Id.
[21]
 Rollo (G.R. No. 205045), p. 11.

[22]
 Id.

[23]
 Id.

[24]
 Rollo (GR. No. 205723), p. 760.

[25]
 Id. at 553-558.

[26]
 Rollo (G.R. No. 205045), p. 11; rollo (G.R. No. 205723), p. 15.

[27]
 Id. at 11-12; rollo (G.R. No. 205723), p. 15.

[28]
 Id. at 12; rollo (G.R. No. 205723), p. 15.

[29]
 Id; rollo (G.R. No. 205723), p. 15.

[30]
 Id.; rollo (GR. No. 205723), p. 15.

[31]
 Id.; rollo (G.R. No. 205723), p. 15.

[32]
 Id.; rollo (G.R. No. 205723), p. 15.

[33]
 Id.; rollo (G.R. No. 205723), p. 15.

[34]
 Rollo (G.R. No. 205723), p. 15.
[35]
 Id. at 16.

[36]
 Id.

[37]
 Id.

[38]
 Id.

 Id. at 971-1010. The Decision was penned by Associate Justice


[39]

Erlinda P. Uy and concurred in by Presiding Justice Ernesto D.


Acosta and Associate Justice Esperanza R. Fabon-Victorino of the
First Division, Court of Tax Appeals, Quezon City.
[40]
 Id. at 17-18.

[41]
 Id. at 1008-1009.

[42]
 Id. at 1041.

[43]
 Id.

 Id. at 1039-1043. The Resolution was penned by Associate


[44]

Justice Erlinda P. Uy and concurred in by Presiding Justice Ernesto


D. Acosta and Associate Justice Esperanza R. Fabon-Victorino of
the First Division, Court of Tax Appeals, Quezon City.
[45]
 Id. at 1043.

[46]
 Id. at 12-34.

[47]
 Id. at 33.

[48]
 Id. at 36-39.

[49]
 Id. at 44-127-A.

[50]
 Rollo (G.R. No. 205045), p. 13.

[51]
 Id. at 13 and 152.

[52]
 Id. at 14.

[53]
 Id. at 15.

[54]
 Id. at 10.

[55]
 Id. at 9-25.

[56]
 Id. at 24-25.

[57]
 Id. at 64-84.
 Rollo (G.R. No. 205723),
[58]
pp. 1116-1201; rollo (G.R. No.
205045), pp 150-227.

[59]
Id. at 1217-1226; rollo (G.R. No. 205045), pp. 234-235.

[60]
 Id. at 1264-1374; rollo (GR. No. 205045), pp. 3391-1472.

[61]
 Rollo (G.R. No. 205723), pp. 1464-1467.

[62]
 Id. at 1467-1470.

[63]
 Rollo (G.R. No. 205045), pp. 79-80.

[64]
 Id. at 415-416.

[65]
 Id. at 416.

[66]
 Id. at 417.

[67]
 Id. at 418 and 425.

[68]
 Id. at 419 and 424-426.

[69]
 Id. at 420 and 423.

 Hyatt Industrial Manufacturing Corp v. Ley Construction and


[70]

Development Corp., 519 Phil 272, 286-287 (2006) [Per J.


Austria-Martinez, First Division], citing A.M. No. 03-1-09-SC,
pars. I.A. 1.2; 2(e).

[71]
 281 Phil. 234 (1991) [Per J. Narvasa, En Banc].

 Republic v. Sandiganbayan, 281 Phil. 234, 253-254 (1991) [Per


[72]

J. Narvasa, En Banc]. See also Security Bank Corporation v.


Court of Appeals, 380 Phil. 299, 308-309 (2000) [Per J.
Panganiban, Third Division].

 Solidbank v. Gateway Electronics Corporation, 576 Phil. 250,


[73]

260 (2008) [Per J. Nachura, Third Division], citing 27 C.J.S.


Discovery 71 (2008).
 Security Bank Corporation v. Court of Appeals, 380 Phil. 299,
[74]

310 (2000) [Per J. Panganiban, Third Division].

 Eagleridge Development Corporation v. Cameron Granville, 708


[75]

Phil. 693, 704 (2013) [Per J. Leonen, Third Division], citing


Fortune Corporation v. Court of Appeals, 299 Phil. 356, 374
(1994) [Per J. Regalado, Second Division]; Republic v.
Sandiganbayan, 281 Phil. 234, 254-255 (1991) [Per J. Narvasa,
En Banc].

[76]
 Id. at 708.

 See Santos v. Phil. National Bank, 431 Phil. 368 (2002) [Per J.
[77]

Mendoza, Second Division].

 G.R.
[78]
No. 204700, November 24, 2014 <
http://scjudiciary,gov.ph/pdf/web/viewer.html?
file=jurisprudence/2014/november2014/204700.pdf > [Per J.
Leonen, Special Third Division].

[79]
 Id. at 5.

[80]
 Rollo (GR. No. 205723), pp. 1039-1043.

[81]
 Id. at 1042.

 An Act Increasing the Excise Tax Rates Imposed on Alcohol and
[82]

Tobacco Products, Amending for the Purpose Sections 131, 141,


142, 143, 144,145 and 288 of the National Internal Revenue
Code of 1997, as Amended (2005).

An Act Restructuring the Excise Tax on Alcohol and Tobacco


[83] 

Products by Amending Sections 141, 142, 143, 144, 145, 8, 131


and 288 of Republic Act No. 8424, Otherwise Known as the
National Internal Revenue Code of 1997, as Amended by Republic
Act No. 9334, and for Other Purposes.

[84]
 TAX CODE, sec. 130(a)(2).
[85]
 TAX CODE, sec. 129.

 Rollo (G.R. No. 205045), p. 299; rollo (G.R. No. 205723), p.


[86]

1423.

[87]
 Id. at 313; rollo (G.R. No. 205723), pp. 1463-1464.

[88]
 Id. at 341 and 343-350.

[89]
 Rollo (G.R. No, 205723), p. 893.

[90]
 Id. at 894.

[91]
 Id. at 26; rollo (G.R. No. 205045), p. 11.

 Rollo (G.R. No. 205723), pp. 411-516. Attached as Annex K of


[92]

the Petition.

[93]
 Id. at 494.

[94]
 Id. at 960.

[95]
 Rollo (G.R. No. 205045), p. 21.

[96]
 Rollo (G.R. No. 205723), pp. 959-960.

[97]
 Rep. Act No. 9334 (2005), sec. 3.

[98]
 584 Phil. 489 (2008) [Per J. Ynares-Santiago, En Banc].

[99]
 Rollo (G.R. No. 205045), pp. 118-120.

[100]
 Id. at 120.

 British American Tobacco v. Camacho, 584 Phil. 489, 504-505


[101]

(2008) [Per J. Ynares-Santiago, En Banc].

[102]
 Id. at 517-518.

[103]
 Id. at 515.
[104]
 Id. at 545.

[105]
 Id. at 543.

[106]
 Rep. Act No. 8240 (1997), sec. 3.

[107]
 Rep. Act No. 9334 (2005), sec. 3.

[108]
 "Ring Pull Tab." See rollo  (G.R. No. 205723), p. 1440.

[109]
 Rollo (G.R. No. 205723), p. 1428.

[110]
 Id. at 1429.

[111]
 Id. at 1429 and 1433-1434.

[112]
 Rollo (G.R. No. 205045), p. 353.

[113]
 Id. at 352-354.

[114]
 Id. at 354.

[115]
 Id. at 356.

[116]
 Rollo (G.R. No. 205723), pp. 1453 and 1457-1458.

 Commissioner of Internal Revenue v. Mirant Pagbilao


[117]

Corporation, 535 Phil. 481, 489-490 (2006) [Per J. Chico-Nazario,


First Division], citing Ramos v. Poblete, 73 Phil. 241, 246 (1941)
[Per J. Ozaeta, En Banc]; Carantes v. Court of Appeals, 167 Phil.
232, 240 (1977) [Per J. Castro, First Division]; Mon v. Court of
Appeals, 471 Phil. 65, 73-74 (2004) [Per J. Carpio, First Division].

[118]
 Rollo (G.R. No. 205723), p. 24.

[119]
 Id. at 25-26.

 See Tor-Magnus Enari, One Hundred Years of Brewing


[120]

Research, 101 JOURNAL OF THE INSTITUTE OF BREWING (1995)


< http://onlinelibrary.wiley.com/doi/10.1002/j.2050-
0416.1995.tb00887.x/epdf > 3 (visited January 15, 2017).

 See Tor-Magnus Enari, One Hundred Years of Brewing


[121]

Research, 101 JOURNAL OF THE INSTITUTE OF BREWING (1995)


< http://onlinelibrary.wiley.com/doi/10.1002/j.2050-
0416.1995.tb00887.x/epdf > 6-8 (visited January 15, 2017).

 See Tor-Magnus Enari, One Hundred Years of Brewing


[122]

Research, 101 JOURNAL OF THE INSTITUTE OF BREWING (1995)


4 (visited January 15,2017).

 Co Tiong Sa v. Director of Patents, 95 Phil. 1, 5 (1954) [Per J.


[123]

Labrador, En Banc].

 Philippine Nut Industry, Inc. v. Standard Brands, Inc., 160 Phil.


[124]

581, 591-592 (1975) [Per J. Muñoz Palma, First Division]. See


also Philips Export B.V. v. Court of Appeals, 283 Phil. 371, 379-
380 (1992) [Per J. Melencio-Herrera, Second Division].

 See rollo (G.R. No. 205045), pp. 30-31, where the Dissenting


[125]

Opinion of Justice Mindaro-Grulla in the Court of Tax Appeals En


Banc's Decision dated September 20, 2012 quoted a portion of
the Senate Interpellations on the reason behind taxing a variant
of a brand with the highest classification:

Senator Santiago:

Mr. President, allow me to begin with the elementary observation


that when we institute tax reforms, we should consider certain
factors including ease of administering the tax, simplicity of the
tax system, the capability of the tax machinery to implement the
tax laws and the avoidance of the tax leaks that encourage tax
evasion.... [I] still need to raise certain questions even only for
clarification of those who will later be tasked with the
implementation of this law.... I am talking about variants of
existing brands.I would like to lay the basis for my question. I
find it confusing that the taxation of variants is defined in this
manner. The definition of a variant "is made to depend on the
prefix or the suffix. It is based on the name although referring to
the same product. The bill provides that the tax shall be based on
the highest value. Tax wise, it would be unfair for manufacturer
who would wish to introduce cheaper and more affordable
versions of their products. It defeats the purpose of coming out
with lower-priced products.For example, let us assume that a
beer product is well-known in the market. In order to make it
available to more consumers, the manufacturer, let us assume,
comes out with the cheaper version of the original and attaches
the name of the original to this new product in order to
assure consumers that the new one is backed by the same
quality guarantee as the original one. It seems to be absurd
for the new product to be taxed as much as the original product
in this light.My question then is: Should the variant not be that,
which is nearest in value and not which is highest in value?

Senator Enrile:Mr. President, to answer the question briefly, I


would like to state here that from a purely business viewpoint,
probably I will concede that there is some merit to the argument
just stated by the distinguished Senator from Iloilo. But on the
other hand, from a purely fiscal taxation position, to discard the
provision that we have suggested would open a very wide door
for tax avoidance, if not tax evasion because a beer is beer. It is
just a question of brands.What is the composition of beer? Water
and some fermenting elements - malt and some other fermenting
elements. But if we not put this, those brands that are
already well-known in the market could be marketed
under almost an identical name with a prefix, suffix or a
variant and put in a lower category in order to enjoy a
lower tax level, in which case, the government will be
losing. That is the purpose of this measure. (Emphasis supplied)

[126]
 Rollo (G.R. No. 205723), p. 25.
[127] Id.

 Commissioner of Internal Revenue v. Court of Appeals, 363


[128]

Phil. 130, 139 (1999) [Per J. Purisima, Third Division].


 Commissioner of Internal Revenue v. Fortune Tobacco Corp.,
[129]

581 Phil. 146, 168 (2008) [Per J. Tinga, Second Division].

[130]
 TAX CODE, sec. 130 (a)(2) provides:

Section 130. Filing of Return and Payment of Excise Tax on


Domestic Products. -(A) Persons Liable to File a Return on
Removal and Payment of Tax. -....(2) Time for Filing of Return
and Payment of the Tax. - Unless otherwise specifically allowed,
the return shall be filed and the excise tax paid by the
manufacturer or producer before removal of domestic products
from place of production[.]

[131]
 Rollo (G.R. No. 205045), p. 305.

[132]
 Rollo (G.R. No. 205723), pp. 1462-1463.

[133]
 Id. at 1459.

[134]
 Rollo (G.R. No. 205723), p. 1461.

[135]
 Id. at 894.

 Commissioner of Internal Revenue v. Petron Corporation, 685


[136]

Phil. 118, 147 (2012) [Per J. Sereno, Second Division], citing


Secretary of Finance v. Oro, 610 Phil. 419, 437-438 (2009) [Per
J. Brion, Second Division] and Pilipinas Shell v. Commissioner of
Internal Revenue, 565 Phil. 613, 652 (2007) [Per J. Velasco, Jr.,
Second Division]; Commissioner of Internal Revenue v. Benguet
Corporation, 501 Phil. 343, 357-358 (2005) [Per J. Tinga, Second
Division].

 Commissioner of Internal Revenue v. United Salvage and


[137]

Towage (Phils.), Inc., 738 Phil. 335, 353 (2014) [Per J. Peralta,


Third Division].

 Cf. ABS-CBN Broadcasting Corp. v. Court of Tax Appeals, 195


[138]

Phil. 33, 43-44 (1981) [Per J. Melencio-Herrera, First Division].


 Philippine Bank of Communications v. Commissioner of
[139]

Internal Revenue, 361 Phil. 916, 929 (1999) [Per J. Quisumbing,


Second Division].

[140]
 RULES OF COURT, Rule 131, sec. 3(m).

[141]
 241 Phil. 829 (1988) [Per J. Cruz, First Division].

[142]
 Id. at 836.

[143]
 Rollo (G.R. No. 205045), pp. 24-25.

[144]
 Rollo (G.R. No. 205723), pp. 28-31.

[145]
 Id. at 29-31.

[146]
 Id. at 28.

 Commissioner of Internal Revenue v. Mirant (Phils) Operations,


[147]

Corp., 667 Phil. 208, 222 (2011) [Per J. Mendoza, Second


Division], citing Toshiba Information Equipment (Phils.), Inc. v.
Commissioner of Internal Revenue, 628 Phil. 430, 468 (2010)
[Per J. Leonardo-De Castro, First Division],  in turn citing
Commissioner of internal Revenue v. Cebu Toyo Corporation, 491
Phil. 625, 640 (2005) [Per J. Quisumbing, First Division].

Source: Supreme Court E-Library | Date created: November 26, 2018


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Supreme Court E-Library

803 Phil. 480


SECOND DIVISION
[ G.R. No. 206627, January 18, 2017 ]
VAN CLIFFORD TORRES Y SALERA, PETITIONER,
V. PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

Through this Petition for Review on Certiorari,  petitioner Van


[1]

Clifford Torres y Salera (Torres) challenges the Court of Appeals


Decision  dated August 11, 2011 and Resolution  dated February
[2] [3]

22, 2013 in CA-G.R. CEB-CR No. 00481. The assailed judgments


affirmed the Regional Trial Court Decision dated June 5, 2006,
which convicted Torres for violation of Section 10(a) of Republic
Act No. 7610. [4]

In an Information dated June 9, 2004 filed before Branch 1 of the


Regional Trial Court of Tagbilaran City, Bohol, Torres was charged
with other acts of child abuse under Section 10(a) of Republic Act
No. 7610: [5]

That on or about the 11  day of November, 2003, in the


th

municipality of Clarin, province of Bohol, Philippines, and within


the jurisdiction of this Honorable Court, the above-named
accused, with intent to harm and humiliate, did then and there,
willfully, unlawfully and feloniously abuse, slap and whip AAA, a
14 year old minor (born on June 5, 1989) with a T-shirt hitting
his neck and shoulder and causing him to fall down on the stairs
of the barangay hall which acts are humiliating and prejudicial to
the development of the victim and are covered by Article 59 of
Pres. Decree 603, as amended; to the damage and prejudice of
the said victim in the amount to be proved during trial. [6]

Upon arraignment, Torres pleaded not guilty.  Trial on the merits


[7]

ensued.[8]
The prosecution presented the victim AAA, AAA's aunt and uncle,
Dr. Vicente Manalo Jr., and Barangay Captain Hermilando Miano
as witnesses to testify on the alleged incident.  The prosecution
[9]

established the following facts during trial:

CCC, AAA's uncle, previously filed a complaint for malicious


mischief against Torres, who allegedly caused damage to CCC's
multicab.  AAA witnessed the alleged incident and was brought
[10]

by CCC to testify during the barangay conciliation.  [11]

On November 3, 2003, CCC and AAA were at the barangay hall of


Clarin, Bohol waiting for the conciliation proceedings to begin
when they chanced upon Torres who had just arrived from
fishing.  CCC's wife, who was also with them at the barangay
[12]

hall, persuaded Torres to attend the conciliation proceedings to


answer for his liability.  Torres vehemently denied damaging
[13]

CCC's multicab.  In the middle of the brewing argument, AAA


[14]

suddenly interjected that Torres damaged CCC's multicab and


accused him of stealing CCC's fish nets. [15]

Torres told AAA not to pry in the affairs of adults. He warned AAA
that he would whip him if he did not stop.  However, AAA
[16]

refused to keep silent and continued to accuse Torres of


damaging his uncle's multicab. Infuriated with AAA’s meddling,
Torres whipped AAA on the neck using a wet t-shirt.  Torres [17]

continued to hit AAA causing the latter to fall down from the
stairs.  CCC came to his nephew's defense and punched Torres.
[18]

They engaged in a fistfight until they were separated by Barangay


Captain Hermilando Miano.  Torres hit AAA with a wet t-shirt
[19]

three (3) times. [20]

Based on the physical examination conducted by Dr. Vicente


Manalo, Jr., AAA sustained a contusion. [21]

After the prosecution rested its case, the defense presented the
following version of the incident:

Torres testified that he had just arrived tired from fishing when
CCC badgered him to answer for the damage he had allegedly
caused to CCC's multicab. AAA abruptly interrupted the heated
discussion between the two men.  Angered by what AAA had
[22]

done, Torres told AAA to stop making unfounded accusations or


he would be forced to whip him. AAA called Torres' bluff, which
further provoked Torres. Torres attempted to hit AAA but was
thwarted by the timely intervention of CCC, who suddenly
attacked him.[23]

Torres claimed that CCC filed this case to preempt him from filing
a complaint for physical injuries against CCC.  He also claimed
[24]

that he tried to settle the matter with CCC and CCC's wife.
 However, the parties failed to reach an agreement due to the
[25]

unreasonable demands of the spouses. [26]

On June 5, 2006, the Regional Trial Court convicted Torres, thus:

WHEREFORE, premises considered, this Court finds VAN


CLIFFORD TORRES y Salera, the accused[,] GUILTY beyond
reasonable doubt of Other Acts of Child Abuse under Section 10,
paragraph A of Republic Act No. 7610 and applying in his favor
the beneficial provisions of The Indeterminate Sentence Law, he
is hereby imposed the indeterminate sentence of imprisonment of
SIX (6) YEARS, the maximum period of prision correccional as
minimum to EIGHT (8) YEARS of prision mayor as maximum, the
accessory penalties provided by law and to pay the costs. Van
Clifford Torres y Salera is also imposed a penalty of FINE of FIVE
THOUSAND PESOS (P5,000) pursuant to Section 31, Letter f, RA
7610. The Court credits Van Clifford Torres y Salera his
preventive imprisonment in the service of his penalty pursuant to
Art. 29 [of] the Revised Penal Code as Amended.

SO ORDERED. [27]

Torres appealed before the Court of Appeals.  He argued that the
[28]

prosecution failed to establish all the elements of child abuse and


that his guilt was not proven beyond reasonable doubt.  He also [29]

questioned the lower court's jurisdiction over the case. [30]


In its Decision  dated August 11, 2011, the Court of Appeals
[31]

affirmed the Regional Trial Court Decision, albeit with


modification as to the penalty:

WHEREFORE, in view of the foregoing premises, the instant


appeal is hereby DENIED. The Decision dated 5 June 2006
promulgated by the Regional Trial Court of Bohol, Branch 1 in
Tagbilaran City in Crim. Case No. 12338 is AFFIRMED with
MODIFICATION that the accused-appellant is sentenced to five
(5) years, four (4) months and twenty-one (21) days of prision
correccional as minimum, to six (6) years, eight (8) months and
one (1) day of prision mayor as maximum.

SO ORDERED.  (Emphasis in the original)


[32]

Torres moved for reconsideration, but the Motion was denied in


the Court of Appeals Resolution  dated February 22, 2013.
[33]

Aggrieved, Torres filed before this Court this Petition for Review
on Certiorari. [34]

On October 7, 2013, respondent People of the Philippines,


through the Office of the Solicitor General, filed a Comment,  to
[35]

which petitioner filed a Reply  on February 7, 2014.


[36]

Petitioner raises the following issues for this Court's resolution:


(1) whether the Court of Appeals erred in sustaining his
conviction on a judgment premised on a misapprehension of
facts; and (2) whether the Court of Appeals erred in affirming his
conviction despite the failure of the prosecution to prove his guilt
beyond reasonable doubt. [37]

Petitioner invites this Court to review the factual findings on the


ground that the judgment was rendered based on a
misapprehension of facts. He argues that both the Regional Trial
Court and the Court of Appeals disregarded certain material facts,
which, if properly considered, would have justified a different
conclusion.  In particular, petitioner challenges the credibility of
[38]

the prosecution's witnesses.  He highlights the inconsistencies in


[39]
their testimonies and their failure to clearly establish the
presence of CCC's wife during the incident. [40]

Petitioner also calls attention to the partiality of the prosecution's


witnesses, majority of whom are relatives of the victim.  He [41]

believes that the prosecution's witnesses could not have given a


true narrative of the incident because of their obvious bias.
 Hence, their testimonies were undeserving of any weight and
[42]

credit.

On the other hand, respondent argues that the questions raised


by petitioner were questions of fact, which are generally
proscribed in a petition for review under Rule 45. [43]

We affirm petitioner's conviction. The act of whipping a child


three (3) times in the neck with a wet t-shirt constitutes child
abuse.

It is a fundamental rule that only questions of law may be raised


in a petition for review on certiorari under Rule 45.  The factual [44]

findings of the trial court, especially when affirmed by the Court


of Appeals, are generally binding and conclusive on this Court.
 This Court is not a trier of facts.  It is not duty-bound to
[45] [46]

analyze, review, and weigh the evidence all over again in the
absence of any showing of any arbitrariness, capriciousness, or
palpable error.  A departure from the general rule may only be
[47]

warranted in cases where the findings of fact of the Court of


Appeals are contrary to the findings of the trial court or when
these are unsupported by the evidence on record. [48]

The assessment of the credibility of witnesses is a function


properly within the office of the trial courts.  It is a question of
[49]

fact not reviewable by this Court.  The trial court's findings on


[50]

the matter are entitled to great weight and given great respect
and "may only be disregarded . . . if there are facts and
circumstances which were overlooked by the trial court and which
would substantially alter the results of the case[.]" [51]
This Court finds no reason to disturb the factual findings of the
trial court. The trial court neither disregarded nor overlooked any
material fact or circumstance that would substantially alter the
case. The presence or absence of one person during the incident
is not substantial enough to overturn the finding that petitioner
whipped AAA three (3) times with a wet t-shirt. [52]

Assuming, without admitting, that petitioner did whip AAA,


petitioner argues that it should not be considered as child abuse
because the law requires intent to abuse.  Petitioner maintains
[53]

that he whipped AAA merely to discipline and restrain the child


"from further intensifying the situation."  He also maintains that
[54]

his act was justified because AAA harassed and vexed him.
 Thus, petitioner claims that there could not have been any
[55]

intent to abuse on his part.

Petitioner contends that the injuries sustained by AAA will not


affect the latter's physical growth or development and mental
capacity.  He argues that he could not be convicted of child
[56]

abuse without proof that the victim's development had been


prejudiced.  He begs the indulgence of this Court and claims that
[57]

his conviction would only serve as a "precedent to all children to


act recklessly, errantly[,] and disobediently"  and would then
[58]

create a society ruled by juvenile delinquency and errant


behavior.  If at all, petitioner claims that he could only be
[59]

convicted of slight physical injuries under the Revised Penal Code


for the contusion sustained by AAA. [60]

Respondent maintains that the act of whipping AAA is an act of


child abuse.  Respondent argues that the act complained of need
[61]

not be prejudicial to the development of the child for it to


constitute a violation of Republic Act No. 7610.  Respondent, [62]

citing Sanchez v. People,  argues that Section 10(a)  of Republic


[63] [64]

Act No. 7610 defines and punishes four distinct acts. [65]

We reject petitioner's contention that his act of whipping AAA is


not child abuse but merely slight physical injuries under the
Revised Penal Code. The victim, AAA, was a child when the
incident occurred. Therefore, AAA is entitled to protection under
Republic Act No. 7610, the primary purpose of which has been
defined in Araneta v. People:[66]

Republic Act No. 7610 is a measure geared towards the


implementation of a national comprehensive program for the
survival of the most vulnerable members of the population, the
Filipino children, in keeping with the Constitutional mandate
under Article XV, Section 3, paragraph 2, that "The State shall
defend the right of the children to assistance, including proper
care and nutrition, and special protection from all forms of
neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development."  (Emphasis omitted, citation
[67]

omitted)

Under Section 3(b) of Republic Act No. 7610, child abuse is


defined, thus:

Section 3. Definition of Terms.

....

(b) "Child abuse" refers to the maltreatment, whether habitual or


not, of the child which includes any of the following:

(1) Psychological and physical abuse, neglect, cruelty, sexual


abuse and emotional maltreatment;

(2) Any act by deeds or words which debases, degrades or


demeans the intrinsic worth and dignity of a child as a human
being;

(3) Unreasonable deprivation of his basic needs for survival, such


as food and shelter; or

(4) Failure to immediately give medical treatment to an injured


child resulting in serious impairment of his growth and
development or in his permanent incapacity or death. (Emphasis
supplied)
As can be gleaned from this provision, a person who commits an
act that debases, degrades, or demeans the intrinsic worth and
dignity of the child as a human being, whether habitual or not,
can be held liable for violation of Republic Act No. 7610.

Although it is true that not every instance of laying of hands on


the child constitutes child abuse,  petitioner's intention to
[68]

debase, degrade, and demean the intrinsic worth and dignity of a


child can be inferred from the manner in which he committed the
act complained of.

To note, petitioner used a wet t-shirt to whip the child not just
once but three (3) times.  Common sense and human experience
[69]

would suggest that hitting a sensitive body part, such as the


neck, with a wet t-shirt would cause an extreme amount of pain,
especially so if it was done several times. There is also reason to
believe that petitioner used excessive force. Otherwise, AAA
would not have fallen down the stairs at the third strike. AAA
would likewise not have sustained a contusion.

Indeed, if the only intention of petitioner were to discipline AAA


and stop him from interfering, he could have resorted to other
less violent means.

Instead of reprimanding AAA or walking away, petitioner chose to


hit the latter.

We find petitioner liable for other acts of child abuse under Article
VI, Section 10(a) of Republic Act No. 7610, which provides that
"a person who shall commit any other acts of child abuse, cruelty
or exploitation or be responsible for other conditions prejudicial to
the child's development . . . shall suffer the penalty of prision
mayor in its minimum period." [70]

In Araneta:

[Article VI, Section 10(a) of Republic Act No. 7610] punishes not
only those enumerated under Article 59 of Presidential Decree
No. 603, but also four distinct acts, i.e., (a) child abuse, (b) child
cruelty, (c) child exploitation and (d) being responsible for
conditions prejudicial to the child's development. The Rules and
Regulations of the questioned statute distinctly and separately
defined child abuse, cruelty and exploitation just to show that
these three acts are different from one another and from the act
prejudicial to the child's development. . . . [An] accused can be
prosecuted and be convicted under Section 10(a), Article VI of
Republic Act No. 7610 if he commits any of the four acts therein.
The prosecution need not prove that the acts of child abuse, child
cruelty and child exploitation have resulted in the prejudice of the
child because an act prejudicial to the development of the child is
different from the former acts.

Moreover, it is a rule in statutory construction that the word "or"


is a disjunctive term signifying dissociation and independence of
one thing from other things enumerated. It should, as a rule, be
construed in the sense which it ordinarily implies. Hence, the use
of "or" in Section 10(a) of Republic Act No. 7610 before the
phrase "be responsible for other conditions prejudicial to the
child's development" supposes that there are four punishable acts
therein. First, the act of child abuse; second, child cruelty; third,
child exploitation; and fourth, being responsible for conditions
prejudicial to the child's development. The fourth penalized act
cannot be interpreted ... as a qualifying condition for the three
other acts, because an analysis of the entire context of the
questioned provision does not warrant such construal.
 (Emphasis supplied)
[71]

Petitioner's act of whipping AAA on the neck with a wet t-shirt is


an act that debases, degrades, and demeans the intrinsic worth
and dignity of a child. It is a form of cruelty. Being smacked
several times in a public place is a humiliating and traumatizing
experience for all persons regardless of age. Petitioner, as an
adult, should have exercised restraint and self-control rather than
retaliate against a 14-year-old child.

WHEREFORE, the Petition is DENIED. The Court of Appeals


Decision dated August 11, 2011 and Resolution dated February
22, 2013 in CA-G.R. CEB-CR No. 00481 affirming the conviction
of petitioner Van Clifford Torres y Salera for violation of Section
10(a) of Republic Act No. 7610 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Velasco, Jr.,  Peralta,


[*]
and Mendoza,
JJ., concur.

 Designated additional member per Special Order No. 2416-A


[*]

dated January 4, 2017.


  Rollo, pp. 4-18.
[1]

 Id. at 24-34. The Decision was penned by Associate Justice


[2]

Edgardo L. Delos Santos and concurred in by Associate Justices


Ramon Paul L. Hernando and Victoria Isabel A. Paredes of the
Twentieth Division, Court of Appeals, Cebu.

 Id. at 21-22. The Resolution was penned by Associate Justice


[3]

Edgardo L. Delos Santos and concurred in by Associate Justices


Ramon Paul L. Hernando and Marilyn B. Lagura-Yap of the Special
Former Twentieth Division, Court of Appeals, Cebu.

[4] 
Id. at 33.

 Special Protection of Children Against Abuse, Exploitation, and


[5]

Discrimination Act (1992).

[6]
 Rollo, p. 24.

[7]
 Id. at 25.

[8]
 Id.

[9]
 Id.

[10]
 Id.
[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id. at 25-26.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 31.

[21]
 Id. at 26.

[22]
 Id.

[23]
 Id.

[24]
 Id.
[25]
 Id.

[26]
 Id.

[27]
 Id. at 27.

[28]
 Id.

[29]
 Id.

[30]
 Id.

[31]
 Id. at 24-34.
[32]
 Id. at 33-34.

[33]
 Id. at 21-22.

[34]
 Id. at 4-18.

[35]
 Id. at 39-51.

[36]
 Id. at 53-61.

[37]
 Id. at 7.

[38]
 Id. at 10.

[39]
 Id.

[40]
 Id. at 7-10.

[41]
 Id. at 14.

[42]
 Id.

[43]
 Id. at 42-44.

[44]
 RULES OF COURT, Rule 45, sec. 1.

 Manotok Realty, Inc. v. CLT Realty Development Corp., 512


[45]

Phil. 679, 706 (2005) [Per J. SandovalGutierrez, Third Division].


[46]
 Id.

 Fuentes v. Court of Appeals, 335 Phil. 1163, 1168 (1997) [Per


[47]

J. Panganiban, Third Division]; Bautista v. Puyat, 416 Phil. 305,


308 (2001) [Per J. Pardo, First Division].

 Changco v. Court of Appeals, 429 Phil. 336, 342 (2002) [Per J.


[48]

Ynares-Santiago, First Division].

 People v. Pajares, 310 Phil. 361, 366 (1995) [Per J. Melo, Third
[49]

Division].
 Addenbrooky Barker v. People, 126 Phil. 854, 855 (1967) [Per
[50]

J. J.B.L. Reyes, En Banc].

 People v. Pajares, 310 Phil. 361, 366 (1995) [Per J. Melo, Third
[51]

Division].

[52]
 Rollo, pp. 30-31.

[53]
 Id. at 58-59.

[54]
 Id. at 59.

[55]
 Id. at 11.

[56]
 Id. at 14.

[57]
 Id. at 14-15.

[58]
 Id. at 59.

[59]
 Id. at 58.

[60]
 Id, at 15.

[61]
 Id. at 48.

[62]
 Id.

[63]
 606 Phil. 762 (2009) [Per J. Nachura, Third Division].

[64]
 Rep. Act No. 7610 (1992), sec. 10(a) provides:

Sec. 10. Other Acts of Neglect, Abuse, Cruelty of Exploitation and


Other Conditions Prejudicial to the Child's Development. -

(a) Any person who shall commit any other acts of child abuse,
cruelty or exploitation or be responsible for other conditions
prejudicial to the child's development including those covered by
Article 59 of Presidential Decree No. 603, as amended, but not
covered by the Revised Penal Code, as amended, shall suffer the
penalty of prision mayor in its minimum period.

[65]
 Rollo, p. 45.

[66]
 578 Phil. 876 (2008) [Per J. Chico-Nazario, Third Division].

[67]
 Id. at 883.

 Bongalon v. People, 707 Phil. 11, 20-21 (2013) [Per J.


[68]

Bersamin, First Division].

[69]
 Rollo, p. 31.

[70]
 Rep. Act No. 7610 (1992), sec. 10(a).

 Araneta v. People, 578 Phil. 876, 884-886 (2008) [Per J. Chico-


[71]

Nazario, Third Division].

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SECOND DIVISION

[ G.R. No. 205035, November 16,


2016 ]
SPOUSES GEMINO C. MIANO, JR. AND JULIET
MIANO, PETITIONERS, V. MANILA ELECTRIC
COMPANY [MERALCO], RESPONDENTS.DECISION

LEONEN, J.:

The review of appeals filed before this Court is "not a matter of


right, but of sound judicial discretion."  The Rules of Court
[1]

requires that only questions of law should be raised in petitions


filed under Rule 45.
Factual questions are not the proper subject of an appeal by
certiorari. It is not this Court's function to once again analyze or
weigh evidence that has already been considered in the lower
courts.

This resolves the Petition for Review on Certiorari  filed by


[2]

Spouses Gemino and Juliet Miano (Spouses Miano), assailing the


Decision  dated December 18, 2012 of the Court of Appeals,
[3]

which partly granted Spouses Miano's appeal from the


Decision  dated February 17, 2011 of Branch 71 of the Regional
[4]

Trial Court of Pasig City.

Spouses Miano are users of the electric service provided by the


Manila Electric Company (MERALCO). In 1996, their first electric
meter with Service ID No. 551211301 was installed to service
their residence.  In 2002, their second electric meter with Service
[5]

ID No. 911978601 was installed to service their sari-sari store. [6]

On March 7, 2002, MERALCO personnel conducted an inspection


of Spouses Miano's electric meters and discovered that there
were two jumpers on their meter service connection. [7]

MERALCO disconnected the electrical service for Spouses Miano's


residence (Service ID No. 551211301) and issued a billing
differential in the amount of P422,185.20, representing the
unbilled amount of electricity consumed due to the jumpers. [8]
On December 18, 2002, MERALCO also disconnected the electrical
service for Spouses Miano's sari-sari  store (Service ID No.
911978601) because of "illegal/flying service
connection."  MERALCO found that Spouses Miano drew
[9]

electricity from their sari-sari store  to service their residence. [10]

MERALCO refused to reconnect Spouses Miano's electricity service


due to their non-payment of the billing differential. [11]

On January 10, 2003, Spouses Miano filed a Complaint for


damages and injunction with Urgent Prayer for Preliminary
Mandatory Injunction against MERALCO. [12]

On February 17, 2011, the Regional Trial Court dismissed the


Complaint filed by Spouses Miano and ordered them to settle the
billing differential being collected by MERALCO:

WHEREFORE, in view of the foregoing, the instant complaint is


hereby DISMISSED. The plaintiffs are hereby directed to settle
the differential billing being collected by the defendant. [13]

On appeal, the Court of Appeals modified the Regional Trial


Court's Decision and ruled that due to MERALCO's failure to notify
Spouses Miano prior to disconnection, MERALCO should pay
Spouses Miano P100,000.00 as moral damages, P50,000.00 as
exemplary damages, and P50,000.00 as attorney's fees.
 MERALCO was also ordered to restore their electricity
[14]

connection. [15]

Nonetheless, the Court of Appeals ordered Spouses Miano to pay


the billing differential.  The dispositive portion of the Court of
[16]

Appeals Decision reads:

WHEREFORE, the Appeal is hereby PARTLY GRANTED. Appellants


are ORDERED to pay appellee the billing differential of
Php422,185.20; while appellee is ordered to pay appellants
Php100,000 as moral damages, Php50,000 as exemplary
damages and Php50,000 as attorney's fees and cost of suit.
Further, MERALCO is ordered to restore to plaintiffs-appellants at
their residence at 2650 Guyabano Street, Pangarap Village, Tala,
Caloocan City their electric power connection and/or service.

SO ORDERED. [17]

In their Petition for Review on Certiorari,  Spouses Miano pray


[18]

that the portion of the Court of Appeals Decision ordering them to


pay the billing differential of P422,185.20 be reversed and set
aside.

The only issue brought before this Court for resolution is whether
the Court of Appeals erred in ordering Spouses Miano to pay the
billing differential of P422,185.20.

The petition lacks merit.

The Rules of Court states that a review of appeals filed before this
Court is "not a matter of right, but of sound judicial
discretion."  The Rules of Court further requires that only
[19]

questions of law should be raised in petitions filed under Rule


45  since factual questions are not the proper subject of an
[20]

appeal by certiorari. It is not this Court's function to once again


analyze or weigh evidence that has already been considered in
the lower courts. [21]

Bases Conversion Development Authority v. Reyes  distinguished


[22]

a question of law from a question of fact:

Jurisprudence dictates that there is a "question of law" when the


doubt or difference arises as to what the law is on a certain set of
facts or circumstances; on the other hand, there is a "question of
fact" when the issue raised on appeal pertains to the truth or
falsity of the alleged facts. The test for determining whether the
supposed error was one of "law" or "fact" is not the appellation
given by the parties raising the same; rather, it is whether the
reviewing court can resolve the issues raised without evaluating
the evidence, in which case, it is a question of law; otherwise, it
is one of fact. In other words, where there is no dispute as to the
facts, the question of whether or not the conclusions drawn from
these facts are correct is a question of law. However, if the
question posed requires a re evaluation of the credibility of
witnesses, or the existence or relevance of surrounding
circumstances and their relationship to each other, the issue is
factual.
[23]

However, the general rule for petitions filed under Rule 45 admits
exceptions. Medina v. Mayor Asistio, Jr.  lists down the
[24]

recognized exceptions:

(1) When the conclusion is a finding grounded entirely on


speculation, surmises or conjectures; (2) When the inference
made is manifestly mistaken, absurd or impossible; (3) Where
there is a grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of
fact are conflicting; (6) When the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7)
The findings of the Court of Appeals are contrary to those of the
trial court; (8) When the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) When
the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and
(10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the
evidence on record. [25]

These exceptions similarly apply in petitions for review filed


before this court involving civil,  labor,  tax,  or
[26] [27] [28]

criminal  cases.
[29]

Petitioners ask this Court to review the billing differential of


P422,185.20:

4.1. Considering that the lone issue in this appeal pertains only to
the billing differential of Php422,185.20 allegedly due to
MERALCO, petitioners will reiterate the narration of facts of the
trial court and the Honorable Court of Appeals related to the said
issue and determine if the same is in accordance with the
evidence presented by the parties. [30]

Petitioners admit that the only issue for resolution before this
Court is a question of fact, yet they claim that the present
Petition falls under the exceptions to the general rule.
[31]

II

Pascual v. Burgos  instructs that parties must demonstrate by


[32]

convincing evidence that the case clearly falls under the


exceptions to the rule:

Parties praying that this court review the factual findings of the
Court of Appeals must demonstrate and prove that the case
clearly falls under the exceptions to the rule. They have the
burden of proving to this court that a review of the factual
findings is necessary. Mere assertion and claim that the case falls
under the exceptions do not suffice [33]

Petitioners assert that their Petition falls under the established


exceptions because the judgment of the Court of Appeals is
premised on a misappreciation of facts, or on the supposed
absence of evidence that is contradicted by the evidence on
record.[34]

III

Prevailing jurisprudence uniformly holds that findings of facts of


the trial court, particularly when affirmed by the Court of Appeals,
are binding upon this Court. It is not the function of this Court to
analyze or weigh such evidence all over again. It is only in
exceptional cases where this Court may review findings of fact of
the Court of Appeals. [35]

While there are well-settled exceptions  to the general rule, none
[36]

of the exceptions to justify the re-evaluation of the findings of


fact of both the trial court and the Court of Appeals are present in
this case. On the contrary, the findings of fact by the lower court
are well-supported by the evidence on record.

The trial court found that the disconnection of Spouses Miano's


electricity supply was based on sufficient and reasonable grounds.
The trial court ruled that Spouses Miano failed to controvert
charges of violations and differential billings against them, since
they were not able to overturn the presumption of regularity in
the performance of official duty with their mere denials:

The discovery of said violations was never controverted by the


required quantum of evidence adduced by [Spouses Miano].
While there may be some discrepancies in the conduct of
inspection made by defendant's personnel when the alleged
discovery of the two line permanent jumper was made, the
presumption of regularity in the performance of official duty
prevails over the mere denial by the plaintiffs of the existence of
said violation. The same also holds true on the issue of
differential billings. With respect to the plying (sic) connection,
the existence of the same was never denied by the plaintiffs. [37]

The Court of Appeals modified the trial court's Decision by


awarding damages, since MERALCO failed to follow the proper
procedure required by the law in disconnecting Spouses Miano's
power supply.  However, the Court of Appeals upheld the trial
[38]

court's finding that MERALCO was entitled to the billing


differential:

Despite the basis for the award of damages - the lack of due
process in immediately disconnecting plaintiffs-appellants'
electrical supply - defendant's claim for the billing differential is
still proper.

MERALCO should be given what it rightfully deserves. MERALCO's


Senior Billing Staff Enrique Katipunan testified how he computed
the differential billing being suffered by MERALCO on account of
the jumper being used by plaintiffs-appellants.
Direct Examination of Enrique E. Katipunan:

Q: What do you mean by differential billing, Mr. Witness?

A: Differential billing is the billing rendered by the MERALCO


representing the actual electrical energy consumed by the
customer which was not registered on the meter on account of
jumper, sir.

....

Q: What do you mean by connected load?

A: Connected loads are the total electrical loads like appliances,


lights, TV and other electrical equipment which were found during
inspection.

Q: Likewise, Mr. Witness, we noticed some notation after affected


period, "03-16-1998 to 03-07-2002". What do you mean by that?

A: That is the affected period, the March 16, 1998 up to March 7,


2002, which was the discovery of the said jumper.

Q: What do this affected period represent?

A: Affected period is the period where there was an alleged


jumper found during inspection.

....

Q: What is your basis in this affected period?

A: The legal basis I used was Republic Act 7832.

....

Q: What do you call the difference between the original bill and
the corrected bill?
A: Corrected bills minus original bills is the total differential
amount of the customer for (sic) simply the losses of MERALCO.

Q: How much is the totality of the original bills?

A: The total amount of the original bills which has been paid by
the customer was P40,707.95.

Q: How about the totality of the corrected bills?

A: P462,893.15.

Q: What is the difference between P462,893.15 and P40,707.95.

A: The total differential amount was P422,185.20.

Significantly, his testimony was corroborated by


documentary evidence, particularly, the meter/socket
inspection report and the computation worksheet.
 (Emphasis supplied)
[39]

In conclusion, we do not find any compelling reason to reverse


the findings of the Court of Appeals.

WHEREFORE, the Petition for Review on Certiorari is DENIED.

SO ORDERED.

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


Mendoza,  J., on official leave.

[1]
 RULES OF COURT, Rule 45, sec. 6.
[2]
  Rollo, pp. 28-69.

 Id. at 8-26. The Decision was penned by Associate Justice


[3]

Marlene Gonzales-Sison, and concurred in by Associate Justices


Hakim S. Abdulwahid and Edwin D. Sorongon of the Sixth
Division, Court of Appeals Manila.

 Id. at 90-96. The Decision was penned by Judge Franco T.


[4]

Falcon of Branch 71, Regional Trial Court of Pasig.

[5]
 Id. at 9.

[6]
 Id.

[7]
 Id.

[8]
 Id.

[9]
 Id.

[10]
 Id. at 9-10.

[11]
 Id. at 10.

[12]
 Id.

[13]
 Id. at 96.

[14]
 Id. at 25.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id. at 28-65.

[19]
 RULES OF COURT, Rule 45, sec. 6.

[20]
 RULES OF COURT, Rule 45, sec. 1.

 Quintos v. Nicolas, 736 Phil. 438, 451 (2014) [Per J. Velasco,


[21]

Third Division] (citations omitted).


[22]
 711 Phil. 631 (2013) [Per J. Perlas-Bernabe, Second Division].

 Id. at 638-639 citing Land Bank of the Philippines v. Ramos,


[23]

698 Phil. 725, 732 (2012) [Per J. Villarama, First Division]; Heirs


of Nicolas S. Cabigas v. Limbaco, 670 Phil. 274, 285-286 (2011)
[Per J. Brion, Second Division]; and Cucueco v. Court of Appeals,
484 Phil. 254, 264-265 [Per J. Austria-Martinez, Second Division].

[24]
 269 Phil. 225 (1990) [Per J. Bidin, Third Division].

[25]
 Id. at 232.

 Dichoso, Jr. v. Marcos, 663 Phil. 48, 54 (2011) [Per J. Nachura,


[26]

Second Division] and Spouses Caoili v. Court of Appeals, 373 Phil.


11, 132 (1999) [Per J. Gonzaga-Reyes, Third Division].

 Go v. Court of Appeals, 474 Phil. 404, 411 (2004) [Per J.


[27]

Ynares-Santiago, First Division] and Arriola v. Pilipino Star


Ngayon, Inc., G741 Phil. 171, 185-187 (2014) [Per J. Leonen,
Third Division].

 Commissioner of Internal Revenue v. Embroidery and


[28]

Garments Industries (Phil.), Inc., 364 Phil. 541, 546-547 (1999)


[Per J. Pardo, First Division].

 Macayan, Jr. v. People, G.R. No. 175842, March 18, 2015 <
[29]

http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/march2015/175842.pdf > [Per J.
Leonen, Second Division] and Benito v People, G.R. No. 204644,
February 11, 2015 <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/february2015/204644.pdf > [Per J.
Leonen, Second Division].

[30]
 Rollo, p. 30.

[31]
 Id. at 35-36.
 Pascual v. Burgos, G.R. No. 171722, January 11, 2016 <
[32]

http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf > [Per J.
Leonen, Second Division].

[33]
 Id. at 12.

[34]
 Rollo, pp. 35-36.

 Castillo v Court of Appeals, 329 Phil. 150, 159-160 (1996) [Per


[35]

J. Panganiban, Third Division]; NGEI Multi-Purpose Cooperative


Inc v Filipinas Palmoil Plantation Inc., 697 Phil. 433, 443-444
(2012) [Per J. Mendoza, Third Division]; Quintos v. Nicolas, 736
Phil. 438, 451 (2014) [Per J. Velasco, Third Division].

 Virtucio v Alegarbes, 693 Phil. 567, 573-574 (2012) [Per J.


[36]

Mendoza, Third Division]; Surigao Del Norte Electric Cooperative


v Gonzaga, 710 Phil. 676, 687 (2013) [Per J. Perlas-Bernabe,
Second Division]; Republic v Pasicolan, G.R. No. 198543, April
15, 2015 < http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/198543.pdf > [Per J. Del
Castillo, Second Division].

[37]
 Rollo, pp. 95-96.

[38]
 Id. at 14-18.

[39]
 Id. at 23-24.

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786 Phil. 726
SECOND DIVISION

[ G.R. No. 208146, June 08, 2016 ]


VIRGINIA DIO, PETITIONER, VS. PEOPLE OF THE
PHILIPPINES AND TIMOTHY DESMOND,
RESPONDENTS.DECISION

LEONEN, J.:

When a motion to quash an information is based on a defect that


may be cured by amendment, courts must provide the
prosecution with the opportunity to amend the information.

This resolves a Petition for Review on Certiorari  assailing the


[1]

Court of Appeals Decision  dated January 8, 2013 and


[2]

Resolution  dated July 10, 2013. The Court of Appeals reversed


[3]

and set aside the Regional Trial Court Order that quashed the
Informations charging petitioner Virginia Dio (Dio) with libel
because these Informations failed to allege publication.[4]

Private respondent Timothy Desmond (Desmond) is the Chair and


Chief Executive Officer of Subic Bay Marine Exploratorium, of
which Dio is Treasurer and Member of the Board of Directors. [5]

On December 9, 2002, Desmond filed a complaint against Dio for


libel.  Two (2) separate Informations, both dated February 26,
[6]

2003, were filed and docketed as Criminal Case Nos. 9108 and
9109.  The Information in Criminal Case No. 9108 reads:
[7]

That on or about July 6, 2002 in Morong, Bataan, Philippines, and


within the jurisdiction of this Honorable Court, the said accused
with malicious intent to besmirch the honor, integrity and
reputation of Timothy Desmond, Chairman and Chief Executive
Office of Subic Bay Marine Exploratorium, did then and there
willfully, unlawfully, and feloniously send electronic messages to
the offended party and to other persons namely: Atty. Winston
Ginez, John Corcoran, and Terry Nichoson which read as follows:

'NOW THAT WE ARE SET TO BUILD THE HOTEL SO THAT YOU


COULD SURVIVED, (sic) YOU SHOULD STOP YOUR NONSENSE
THREAT BECAUSE YOU COULD NOT EVEN FEED YOUR OWN SELF
UNLESS WE PAY YOUR EXHORBITANT (sic) SALARY, HOUSE YOU
ADN (sic) SUPPORT ALL YOUR PERSONAL NEEDS. YOU SHOULD
BE ASHAMED IN DOING THIS. AS FAR AS WE ARE CONCERNED,
YOU ARE NOTHING EXCEPT A PERSON WHO IS TRYING TO
SURVIVED (sic) AT THE PRETEXT OF ENVIRONMENTAL AND
ANIMAL PROTECTOR [sic]. YOU ARE PADI (sic) TO THE LAST
CENTS ON ALL YOUR WORK IN THE WORK (sic). AT THE SAME
TIME, YOU BLOATED THE PRICE OF EACH ANIMAL YOU BROUGHT
TO THE PHILIPPINES from US$500,000.00 to US$750,000.00
each so that you could owned (sic) more shares that you should.
Please look into this deeply.

IF YOU INSISTS (sic) TO BE CALLED AN ENVIRONMENTAL AND


ANIMAL PROTECTOR IN OUR COUNTRY, THEN YOU AND YOUR
WIFE SHOULD STOP BLEEDING THE COMPANY WITH YOUR
MONTHLY PAYROLL OF ALMOST P1 MILLION A MONTH.'

The above-quoted electronic message being defamatory or


constituting an act causing or tending to cause dishonor, discredit
or contempt against the person of the said Timothy Desmond, to
the damage and prejudice of the said offended party.

CONTRARY TO LAW. [8]

The Information in Criminal Case No. 9109 reads:


That on or about July 13, 2002 in Morong, Bataan, Philippines,
and within the jurisdiction of this Honorable Court, the said
accused, with malicious intent to besmirch the honor, integrity
and reputation of Timothy Desmond, Chairman and Chief
Executive Office of Subic Bay Marine Exploratorium, did then and
there willfully, unlawfully, and feloniously send electronic
messages to the [sic] Atty. Winston Ginez and Fatima
Paglicawan, to the offended party, Timothy Desmond and to other
persons namely: Hon. Felicito Payumo, SBMA Chariman [sic],
Terry Nichoson, John Corcoran, and Gail Laule which read as
follows:
'Dear Winston and Fatima:

UNDER THE LEADERSHIP OF TIM DESMOND AS CHAIRMAN AND


CHIEF EXECUTIVE OFFICER OF SBME, AS OF THIS DATE THE
COMPANY HAD INCURRED A LOSS OF MORE THAN ONE
HUNDRED MILLION. A BALANCE SHEET SUBMITTED TODAY BY
THEIR ACCOUNTANT JULIET REFLECT AND (sic) ASSETS OF
MORE THAN THREE HUNDRED MILLION PESOS, 50% OF WHICH
IS OVERVALUED AND NON-EXISTENT. TIM DESMOND AND
FAMILY HAD ACCUMULATED A (sic) SHARES OF MORE THAN 70%
OF THE RECORDED PAID UP CAPITAL BY OVERVALUING OF THE
ASSETS CONTRIBUTION, PAYMENT TO THEIR OWN COMPANY IN
THE USA, ETC. AT THE SAME TIME, TIM DESMOND AND FAMILY
BLEED THE COMPANY FROM DATE OF INCORPORATION TO
PRESENT FOR AN AVERAGE OF ONE MILLION PER MONTH FOR
THEIR PERSONAL GAIN, LIKE SALARY, CAR, ET, [sic] ETC.'
The above-quoted electronic message being defamatory or
constituting an act causing or tending to cause dishonor, discredit
or contempt against the person of the said Timothy Desmond, to
the damage and prejudice of the said offended party.

CONTRARY TO LAW. [9]

On April 22, 2003, Dio filed a Petition to suspend the criminal


proceedings,  but it was denied in the Order dated February 6,
[10]

2004. [11]

Dio moved for reconsideration of the February 6, 2004 Order.


 She also moved to quash the Informations, arguing that the
[12]

"facts charged do not constitute an offense."  In its Order  dated


[13] [14]

July 13, 2004, the trial court denied both Motions. The dispositive
portion of the Order reads:
Premises considered, the Motion For Reconsideration of the Order
dated February 6, 2004 and the Motion To Quash, both filed for
accused, as well as the Motion For Issuance of a Hold Departure
Order filed by the Prosecution, are hereby DENIED.

Arraignment will proceed as previously set on July 20, 2005 at


9:00 a.m.

SO ORDERED. [15]

Dio moved for partial reconsideration of the July 13, 2004 Order,
but the Motion was denied in the trial court's Order dated
September 13, 2005. [16]

On October 11, 2005, Dio filed a Motion for leave of court to file a
second motion for reconsideration.  She also filed an Omnibus
[17]

Motion to quash the Informations for failure to allege publication


and lack of jurisdiction, and for second reconsideration with leave
of court.
[18]

The trial court's Order dated February 7, 2006 denied both


Motions and scheduled Dio's arraignment on March 9, 2006.  Dio [19]

moved for partial reconsideration. [20]

The trial court granted Dio's Motion for Partial Reconsideration in


its February 12, 2009 Order,  the dispositive portion of which
[21]

reads:
WHEREFORE, the Motion For Partial Reconsideration filed by the
accused in Criminal Cases (sic) Nos. 9108 and 9109, on the
ground that the Informations in the said cases fail (sic) to allege
publication, is GRANTED and, accordingly, the Informations filed
against the accused are thereby QUASHED and DISMISSED.

No finding as to costs.

SO ORDERED. [22]

After filing a Notice of Appeal on March 5, 2009,  Desmond


[23]

raised before the Court of Appeals the following issues:


I
WHETHER OR NOT THE LOWER COURT ERRED IN UPHOLDING
THE ACCUSED'S ARGUMENT THAT THE PRESENT CHARGES
SHOULD BE QUASHED FOR FAILURE OF THE INFORMATIONS TO
ALLEGE PUBLICATION.

II

WHETHER OR NOT THE LOWER COURT ERRED IN DISMISSING


THE CASE AND QUASHING THE INFORMATIONS WITHOUT
GIVING THE PROSECUTOR THE OPPORTUNITY TO AMEND THE
INFORMATIONS. [24]

In its January 8, 2013 Decision, the Court of Appeals sustained


that the Informations did not substantially constitute the offense
charged.  It found that the Informations did not contain any
[25]

allegation that the emails allegedly sent by Dio to Desmond had


been accessed.  However, it found that the trial court erred in
[26]

quashing the Informations without giving the prosecution a


chance to amend them pursuant to Rule 117, Section 4 of the
Rules of Court:
Although we agree with the trial court that the facts alleged in the
Informations do not substantially constitute the offense charged,
the most prudent thing to do for the trial court is to give the
prosecution the opportunity to amend it and make the necessary
corrections. Indeed, an Information may be defective because the
facts charged do not constitute an offense, however, the
dismissal of the case will not necessarily follow. The Rules
specifically require that the prosecution should be given a chance
to correct the defect; the court can order the dismissal only upon
the prosecution's failure to do so. The trial court's failure to
provide the prosecution with this opportunity constitutes an
arbitrary exercise of power.[27]

The dispositive portion reads:


WHEREFORE, premises considered, the appeal is GRANTED. The
order of the Regional Trial Court of Balanga City, Branch 3 dated
February 12, 2009 in Criminal Case Nos. 9108 and 9109 is
REVERSED AND SET ASIDE. The case is remanded to the trial
court and the Public Prosecutor of Balanga City is hereby
DIRECTED to amend the Informations.
SO ORDERED. [28]

Dio moved for reconsideration,  but the Court of Appeals denied


[29]

the Motion in its July 10, 2013 Resolution. [30]

Hence, this Petition was filed.

Desmond and the Office of the Solicitor General filed their


Comments,  to which Dio filed her Reply.  On April 2, 2014, this
[31] [32]

Court gave due course to the Petition and required the parties to
submit their respective memoranda. [33]

The Office of the Solicitor General filed on June 11, 2014 a


Manifestation and Motion  adopting its Comment. Desmond and
[34]

Dio filed their memoranda on June 19, 2014  and July 10, 2014,[35]

 respectively.
[36]

Dio stresses that "venue is jurisdictional in criminal


cases."  Considering that libel is limited as to the venue of the
[37]

case, failure to allege "where the libelous article was printed and
first published"  or "where the offended party actually resided at
[38]

the time of the commission of the offense"  is a jurisdictional [39]

defect. She argues that jurisdictional defects in an Information


are not curable by amendment, even before arraignment. To
support this position, she cites Agustin v. Pamintuan: [40]

We do not agree with the ruling of the CA that the defects in the
Informations are merely formal. Indeed, the absence of any
allegations in the Informations that the offended party was
actually residing in Baguio City, where the crimes charged were
allegedly committed, is a substantial defect. Indeed, the
amendments of the Informations to vest jurisdiction upon the
court cannot be allowed.  (Citations omitted)
[41]

Dio also cites Leviste v. Hon. Alameda,  where this Court has


[42]

stated that not all defects in an Information are curable by


amendment prior to arraignment:
It must be clarified though that not all defects in an information
are curable by amendment prior to entry of plea. An information
which is void ab initio cannot be amended to obviate a ground for
quashal. An amendment which operates to vest jurisdiction upon
the trial court is likewise impermissible.  (Citations omitted)
[43]

Dio argues that the Informations were void as the prosecutor of


Morong, Bataan had no authority to conduct the preliminary
investigation of the offenses charged.  The complaint filed before
[44]

the prosecutor did not allege that the emails were printed and
first published in Morong Bataan, or that Desmond resided in
Morong, Bataan at the time of the offense.  In the absence of [45]

these allegations, the prosecutor did not have the authority to


conduct the preliminary investigation or to file the information. [46]

Dio further argues that publication, one of the elements of libel,


was not present in the case. She asserts that emailing does not
constitute publication under Article 355 of the Revised Penal
Code. As there was no allegation in the Informations that the
emails were received, accessed, and read by third persons other
than Desmond, there could be no publication.  Further, emails [47]

are not covered under Article 355 of the Revised Penal Code.
Thus, at the time the allegedly libelous emails were sent, there
was no law punishing this act. [48]

Finally, Dio argues that she sent the emails as private


communication to the officers of the corporation, who were in the
position to act on her grievances.  The emails were sent in good
[49]

faith, with justifiable ends, and in the performance of a legal


duty.[50]

The primordial issue for resolution is whether an information's


failure to establish venue is a defect that can be cured by
amendment before arraignment.

The Petition is denied.

If a motion to quash is based on a defect in the information that


can be cured by amendment, the court shall order that an
amendment be made. Rule 117, Section 4 of the Rules of Court
states:
SEC. 4. Amendment of complaint or information. - If the motion
to quash is based on an alleged defect of the complaint or
information which can be cured by amendment, the court shall
order that an amendment be made.

If it is based on the ground that the facts charged do not


constitute an offense, the prosecution shall be given by the court
an opportunity to correct the defect by amendment. The motion
shall be granted if the prosecution fails to make the amendment,
or the complaint or information still suffers from the same defect
despite the amendment.
This Court has held that failure to provide the prosecution with
the opportunity to amend is an arbitrary exercise of power.
 In People v. Sandiganbayan:
[51] [52]

When a motion to quash is filed challenging the validity and


sufficiency of an Information, and the defect may be cured by
amendment, courts must deny the motion to quash and order the
prosecution to file an amended Information. Generally, a defect
pertaining to the failure of an Information to charge facts
constituting an offense is one that may be corrected by an
amendment. In such instances, courts are mandated not to
automatically quash the Information; rather, it should grant the
prosecution the opportunity to cure the defect through an
amendment. This rule allows a case to proceed without undue
delay. By allowing the defect to be cured by simple amendment,
unnecessary appeals based on technical grounds, which only
result to prolonging the proceedings, are avoided.

More than this practical consideration, however, is the due


process underpinnings of this rule. As explained by this Court
in People v. Andrade, the State, just like any other litigant, is
entitled to its day in court. Thus, a court's refusal to grant the
prosecution the opportunity to amend an Information, where such
right is expressly granted under the Rules of Court and affirmed
time and again in a string of Supreme Court decisions, effectively
curtails the State's right to due process.
[53]
In this case, petitioner Virginia Dio has not yet been arraigned;
thus, Rule 117, Section 4 of the Rules of Court applies. If the
information is defective, the prosecution must be given the
opportunity to amend it before it may be quashed.

Petitioner claims that Rule 117, Section 4 of the Rules of Court


applies only to informations that can be cured by amendment.
She argues that before a court orders that an amendment be
made, or otherwise gives the prosecution an opportunity to
amend an information, it must first establish that the defective
information can be cured by amendment.

Petitioner relies on Agustin to argue the proscription of an


amendment of an information in order to vest jurisdiction in the
court. This is misplaced.

In Agustin, the accused in the criminal case was already


arraigned under a defective information that failed to establish
venue.  The Court of Appeals held that the defect in the
[54]

information was merely formal and, consequently, could be


amended even after plea, with leave of court. Thus, this Court
held:
We do not agree with the ruling of the CA that the defects in the
Informations are merely formal. Indeed, the absence of any
allegations in the Informations that the offended party was
actually residing in Baguio City, where the crimes charged were
allegedly committed, is a substantial defect. Indeed, the
amendments of the Informations to vest jurisdiction upon the
court cannot be allowed. [55]

In turn, Agustin cited Agbayani v. Sayo.
 However, Agbayani does not involve the amendment of a
[56]

defective information before or after arraignment. Subsequent


cases have cited Agustin as basis that amendment of an
information to vest jurisdiction in the trial court is impermissible.
Thus, in Leviste, this Court cited Agustin and stated that certain
amendments are impermissible even before arraignment:
It must be clarified though that not all defects in an information
are curable by amendment prior to entry of plea. An information
which is void ab initio cannot be amended to obviate a ground for
quashal. An amendment which operates to vest jurisdiction upon
the trial court is likewise impermissible. [57]

It may appear that Leviste supports petitioner's contention that


an amendment operating to vest jurisdiction in the trial court is
impermissible. However, the statement in Leviste was obiter
dictum. It cites only Agustin, which did not involve the
amendment of an information before arraignment.

Aside from obiter dictum in jurisprudence, petitioner provides no


legal basis to reverse the Court of Appeals' determination that the
defective informations may be amended before arraignment.
Although the cases petitioner cited involved defective
informations that failed to establish the jurisdiction of the court
over the libel charges, none involved the amendment of an
information before arraignment. Thus, these cannot be controlling
over the facts of this case.

II

A defect in the complaint filed before the fiscal is not a ground to


quash an information. In Sasot v. People: [58]

Section 3, Rule 117 of the 1985 Rules of Criminal Procedure,


which was then in force at the time the alleged criminal acts were
committed, enumerates the grounds for quashing an information,
to wit:
a) That the facts charged do not constitute an offense;

b) That the court trying the case has no jurisdiction over the offense charged or the pe
accused;

c) That the officer who filed the information had no authority to do so;

d) That it does not conform substantially to the prescribed form;

e) That more than one offense is charged except in those cases in which existing laws
single punishment for various offenses;

f) That the criminal action or liability has been extinguished;


g) That it contains averments which, if true, would constitute a legal excuse or justificat

h) That the accused has been previously convicted or in jeopardy of being convicted, o
of the offense charged.
Nowhere in the foregoing provision is there any mention of the
defect in the complaint filed before the fiscal and the
complainant's capacity to sue as grounds for a motion to quash. [59]

On the other hand, lack of authority to file an information is a


proper ground. In Cudia v. Court of Appeals: [60]

With respect to the second requisite, however, it is plainly


apparent that the City Prosecutor of Angeles City had no
authority to file the first information, the offense having been
committed in the Municipality of Mabalacat, which is beyond his
jurisdiction. Presidential Decree No. 1275, in relation to Section 9
of the Administrative Code of 1987, pertinently provides that:

"Section 11. The provincial or the city fiscal shall:


....

(b) Investigate and/or cause to be investigated all charges of


crimes, misdemeanors and violations of all penal laws and
ordinances within their respective jurisdictions and have the
necessary information or complaint prepared or made against the
persons accused. In the conduct of such investigations he or his
assistants shall receive the sworn statements or take oral
evidence of witnesses summoned by subpoena for the purpose.

....
It is thus the Provincial Prosecutor of Pampanga, not the City
Prosecutor, who should prepare informations for offenses
committed within Pampanga but outside of Angeles City. An
information, when required to be filed by a public prosecuting
officer, cannot be filed by another. It must be exhibited or
presented by the prosecuting attorney or someone authorized by
law. If not, the court does not acquire jurisdiction.
Petitioner, however, insists that his failure to assert the lack of
authority of the City Prosecutor in filing the information in
question is deemed a waiver thereof. As correctly pointed out by
the Court of Appeals, petitioner's plea to an information before he
filed a motion to quash may be a waiver of all objections to it
insofar as formal objections to the pleadings are concerned. But
by clear implication, if not by express provision of the Rules of
Court, and by a long line of uniform decisions, questions relating
to want of jurisdiction may be raised at any stage of the
proceeding. It is a valid information signed by a competent officer
which, among other requisites, confers jurisdiction on the court
over the person of the accused (herein petitioner) and the subject
matter of the accusation. In consonance with this view, an
infirmity in the information, such as lack of authority of the officer
signing it, cannot be cured by silence, acquiescence, or even by
express consent.

In fine, there must have been a valid and sufficient complaint or


information in the former prosecution. If, therefore, the complaint
or information was insufficient because it was so defective in form
or substance that the conviction upon it could not have been
sustained, its dismissal without the consent of the accused cannot
be pleaded. As the fiscal had no authority to file the information,
the dismissal of the first information would not be a bar to
petitioner's subsequent prosecution. Jeopardy does not attach
where a defendant pleads guilty to a defective indictment that is
voluntarily dismissed by the prosecution.

Petitioner next claims that the lack of authority of the City


Prosecutor was the error of the investigating panel and the same
should not be used to prejudice and penalize him. It is an all too
familiar maxim that the State is not bound or estopped by the
mistakes or inadvertence of its officials and employees. To rule
otherwise could very well result in setting felons free, deny
proper protection to the community, and give rise to the
possibility of connivance between the prosecutor and the
accused.
Finally, petitioner avers that an amendment of the first
information, and not its dismissal, should have been the remedy
sought by the prosecution. Suffice it to say that this Court,
in Galvez vs. Court of Appeals has ruled that even if amendment
is proper, pursuant to Section 14 of Rule 110, it is also quite
plausible under the same provision that, instead of an
amendment, an information may be dismissed to give way to the
filing of a new information.  (Emphasis in the original, citations
[61]

omitted)
However, for quashal of an information to be sustained, the
defect of the information must be evident on its face. In Santos
v. People:[62]

First, a motion to quash should be based on a defect in the


information which is evident on its face. The same cannot be said
herein. The Information against petitioner appears valid on its
face; and that it was filed in violation of her constitutional rights
to due process and equal protection of the laws is not evident on
the face thereof. As pointed out by the CTA First Division in its 11
May 2006 Resolution, the more appropriate recourse petitioner
should have taken, given the dismissal of similar charges against
Velasquez, was to appeal the Resolution dated 21 October 2005
of the Office of the State Prosecutor recommending the filing of
an information against her with the DOJ Secretary. [63]

For an information to be quashed based on the prosecutor's lack


of authority to file it, the lack of the authority must be evident on
the face of the information.

The Informations here do not allege that the venue of the offense
was other than Morong, Bataan. Thus, it is not apparent on the
face of the Informations that the prosecutor did not have the
authority to file them.

The proper remedy is to give the prosecution the opportunity to


amend the Informations. If the proper venue appears not to be
Morong, Bataan after the Informations have been amended, then
the trial court may dismiss the case due to lack of jurisdiction, as
well as lack of authority of the prosecutor to file the information.
III

Article 355 of the Revised Penal Code provides:


Article 355. Libel by means of writings or similar means. - A libel
committed by means of writing, printing, lithography, engraving,
radio, phonograph, painting, theatrical exhibition,
cinematographic exhibition, or any similar means, shall be
punished by prision correccional in its minimum and medium
periods or a fine ranging from 200 to 6,000 pesos, or both, in
addition to civil action which may be brought by the offended
party.
Petitioner argues that at the time of the offense, emails were not
covered under Article 355 of the Revised Penal Code. Petitioner
claims this is bolstered by the enactment of Republic Act No.
10175, otherwise known as the Anti-Cybercrime Law, which
widened the scope of libel to include libel committed through
email, among others. [64]

Whether emailing or, as in this case, sending emails to the


persons named in the Informations—who appear to be officials of
Subic Bay Metropolitan Authority where Subic Bay Marine
Exploratorium is found—is sufficiently "public," as required by
Articles 353 and 355 of the Revised Penal Code and by the Anti-
Cybercrime Law, is a matter of defense that should be properly
raised during trial.

Passionate and emphatic grievance, channelled through proper


public authorities, partakes of a degree of protected freedom of
expression. [65]

Certainly, if we remain faithful to the dictum that public office is a


public trust,  some leeway should be given to the public to
[66]

express disgust. The scope and extent of that protection cannot


be grounded in abstractions. The facts of this case need to be
proven by evidence; otherwise, this Court exercises barren
abstractions that may wander into situations only imagined, not
real.
IV

Good faith is not among the grounds for quashing an information


as enumerated in Rule 117, Section 3 of the Rules of Court. It is
not apparent on the face of the Informations, and what is not
apparent cannot be the basis for quashing them. In Danguilan-
Vitug v. Court of Appeals:[67]

We find no reason to depart from said conclusion. Section 3, Rule


117 of the Revised Rules of Court enumerates the grounds for
quashing an information. Specifically, paragraph (g) of said
provision states that the accused may move to quash the
complaint or information where it contains averments which, if
true, would constitute a legal excuse or justification. Hence, for
the alleged privilege to be a ground for quashing the information,
the same should have been averred in the information itself and
secondly, the privilege should be absolute, not only qualified.
Where, however, these circumstances are not alleged in the
information, quashal is not proper as they should be raised and
proved as defenses. With more reason is it true in the case of
merely qualifiedly privileged communications because such cases
remain actionable since the defamatory communication is simply
presumed to be not malicious, thereby relieving the defendant of
the burden of proving good intention and justifiable motive. The
burden is on the prosecution to prove malice. Thus, even if the
qualifiedly privileged nature of the communication is alleged in
the information, it cannot be quashed especially where
prosecution opposes the same so as not to deprive the latter of
its day in court, but prosecution can only prove its case after trial
on the merits. In People v. Gomez we held, inter alia:
"The claim of the accused . . . that the letter is privileged
communication is not a ground for a motion to quash. It is a
matter of defense which must be proved after trial of the case on
the merits."  (Citations omitted)
[68]

Thus, the Court of Appeals did not err in disregarding petitioner's


purported good faith. This should be a matter of defense properly
raised during trial.
WHEREFORE, the Petition for Review on Certiorari dated July 29,
2013 is DENIED. The Court of Appeals Decision dated January 8,
2013 and Resolution dated July 10, 2013 are AFFIRMED.

SO ORDERED.

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


Brion, J., on official leave.

 Rollo, pp. 3-22. The Petition was filed under Rule 45 of the
[1]

Rules of Court.

 Id. at 24-32. The Decision, docketed as CA-G.R. CR No. 32514,


[2]

was penned by Associate Justice Amelita G. Tolentino and


concurred in by Associate Justices Ramon R. Garcia and Danton
Q. Bueser of the Fourth Division, Court of Appeals, Manila.

 Id. at 34-35. The Resolution was penned by Associate Justice


[3]

Amelita G. Tolentino and concurred in by Associate Justices


Ramon R. Garcia and Danton Q. Bueser of the Fourth Division,
Court of Appeals, Manila.

[4]
 Id. at 31.

[5]
 Id. at 24.

[6]
 Id.

[7]
 Id.

[8]
 Id. at 28.

[9]
 Id. at 28-29.

[10]
 Id. at 25.
[11]
 Id.

[12]
 Id.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id. at 26.

[22]
 Id.

[23]
 Id.

[24]
 Id. at 26-27.

[25]
 Id. at 27-28.

[26]
 Id. at 29.

[27]
 Id. at 30-31.

[28]
 Id. at 31.

[29]
 Id. at 36-44.
[30]
 Id. at 34-35.

 Id. at 57-70, Desmond's Comment, and 76-87, Office of the


[31]

Solicitor General's Comment.

[32]
 Id. at 90-97.

[33]
 Id. at 99.

[34]
 Id. at 100.

[33]
 Id. at 104-116.

[36]
 Id. at 130-151.

[37]
 Id. at 139.

[38]
 Id. at 140.

[39]
 Id.

[40]
 505 Phil. 103 (2005) [Per J. Callejo, Sr., Second Division].

[41]
 Id. at 113.

[42]
 640 Phil. 620 (2010) [Per J. Carpio Morales, Third Division].

[43]
 Id. at 640.

[44]
 Rollo , pp. 15-16, Petition.

[45]
 Id.

[46]
 Id.

[47]
 Id. at 147.

[48]
 Id. at 145.
[49]
 Id. at 147.

[50]
 Id.

 Go v. Bangko Sentral ng Pilipinas, 619 Phil. 306, 321 (2009)


[51]

[Per J. Brion, Second Division].

 G.R.
[52]
No. 160619, September 9, 2015
<http://scjudiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/september2015/160619.pdf> [Per J.
Jardeleza, Third Division].

 Id. at 10, citing People v. Andrade, G.R. No. 187000, November


[53]

24, 2014 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2014/november2014/187000.pdf> [Per J.
Peralta, Third Division].

[54]
 Id. at 112.

[55]
 Id. at 113.

[56]
 178 Phil. 574 (1979) [Per J. Aquino, Second Division].

[57]
 Id. at 640.

[58]
 500 Phil. 527 (2005) [Per J. Austria-Martinez, Second Division].

[59]
 Id. at 536.

[60]
 348 Phil. 190 (1998) [Per J. Romero, Third Division].

[61]
 Id. at 199-202.

[62]
 585 Phil. 337 (2008) [Per J. Chico-Nazario, Third Division].

 Id. at 361, citing Gozos v. Hon. Tac-An, 360 Phil. 453,464


[63]

(1998) [Per J. Mendoza, Second Division].


[64]
 Rollo, p. 145, Memorandum.

 See J. Leonen, Dissenting and Concurring Opinion in Disini v.


[65]

Secretary of Justice, G.R. No. 203335, February 18, 2014, 716


SCRA 237, 602-621 [Per J. Abad, En Bane], which proffered the
view that continued criminalization of libel, especially in platforms
using the internet unqualifiedly produces a "chilling effect" that
stifles freedom of expression:

"The crime of libel in its 1930 version in the Revised Penal Code
was again reenacted through the Cybercrime Prevention Act of
2012. It simply added the use of the internet as one of the means
to commit the criminal acts. The reenactment of these archaic
provisions is unconstitutional for many reasons. At minimum, it
failed to take into consideration refinements in the interpretation
of the old law through decades of jurisprudence. It now stands
starkly in contrast with the required constitutional protection of
freedom of expression.

....

With the definite evolution of jurisprudence to accommodate free


speech values, it is clear that the reenactment of the old text of
libel is now unconstitutional. Articles 353, 354, and 355 of the
Revised Penal Code — and by reference, Section 4(c)4 of the law
in question — are now overbroad as it prescribes a definition and
presumption that have been repeatedly struck down by this court
for several decades.

....

The effect on speech of the dangerously broad provisions of the


current law on libel is even more palpable in the internet.

....
The broad and simplistic formulation now in Article 353 of the
Revised Penal Code essential for the punishment of cyber libel
can only cope with these variations produced by the technologies
in the Internet by giving law enforcers wide latitude to determine
which acts are defamatory. There are no judicially determinable
standards. The approach will allow subjective case-by-case ad
hoc determination. There will be no real notice to the speaker or
writer. The speaker or writer will calibrate speech not on the basis
of what the law provides but on who enforces it.

This is quintessentially the chilling effect of this law.

The threat of being prosecuted for libel stifles the dynamism of


the conversations that take place in cyberspace. These
conversations can be loose yet full of emotion. These can be
analytical and the product of painstaking deliberation. Other
conversations can just be exponential combinations of these
forms that provide canisters to evolving ideas as people from
different communities with varied identities and cultures come
together to test their messages.

Certainly, there will be a mix of the public and the private; the
serious and the not so serious. But, this might be the kind of
democratic spaces needed by our society: a mishmash of emotion
and logic that may creatively spring solutions to grave public
issues in better and more entertaining ways than a symposium of
scholars. Libel with its broad bright lines, thus, is an anachronistic
tool that may have had its uses in older societies: a monkey
wrench that will steal inspiration from the democratic mob" (Id.
at 50-62).

[66]
 CONST., art. XI, sec. 1.

 G.R. No. 103618, May 20, 1994, 232 SCRA 460 [Per J. Romero,
[67]

Third Division].

[68]
 Id. at 467-468.
Source: Supreme Court E-Library | Date created: July 09, 2018
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780 Phil. 509


SECOND DIVISION

[ G.R. No. 170631, February 10,


2016 ]
CARAVAN TRAVEL AND TOURS INTERNATIONAL,
INC., PETITIONER, VS. ERMILINDA R. ABEJAR,
RESPONDENT.DECISION

LEONEN, J.:

The plaintiff may first prove the employer's ownership of the


vehicle involved in a mishap by presenting the vehicle's
registration in evidence. Thereafter, a disputable presumption
that the requirements for an employer's liability under Article
2180  of the Civil Code have been satisfied will arise. The burden
[1]

of evidence then shifts to the defendant to show that no liability


under Article 2180 has ensued. This case, thus, harmonizes the
requirements of Article 2180, in relation to Article 2176  of the [2]

Civil Code, and the so-called registered-owner rule as established


in this court's rulings in Aguilar, Sr. v. Commercial Savings Bank,
[3]
 Del Carmen, Jr. v. Bacoy,  Filcar Transport Services v. Espinas,
[4]

[5]
 and Mendoza v. Spouses Gomez. [6]

Through this Petition for Review on Certiorari,  Caravel Travel [7]

and Tours International, Inc. (Caravan) prays that the


Decision  dated October 3, 2005 and the Resolution  dated
[8] [9]

November 29, 2005 of the Court of Appeals Twelfth Division be


reversed and set aside. [10]

On July 13, 2000, Jesmariane R. Reyes (Reyes) was walking


along the west-bound lane of Sampaguita Street, United
Parañaque Subdivision IV, Parañaque City.  A Mitsubishi L-300 [11]

van with plate number PKM 195  was travelling along the east- [12]

bound lane, opposite Reyes.  To avoid an incoming vehicle, the


[13]

van swerved to its left and hit Reyes.  Alex Espinosa (Espinosa), [14]

a witness to the accident, went to her aid and loaded her in the
back of the van.  Espinosa told the driver of the van, Jimmy
[15]

Bautista (Bautista), to bring Reyes to the hospital.  Instead of [16]

doing so, Bautista appeared to have left the van parked inside a
nearby subdivision with Reyes still in the van.  Fortunately for [17]

Reyes, an unidentified civilian came to help and drove Reyes to


the hospital. [18]

Upon investigation, it was found that the registered owner of the


van was Caravan.  Caravan is a corporation engaged in the
[19]

business of organizing travels and tours.  Bautista was Caravan's [20]

employee assigned to drive the van as its service driver. [21]

Caravan shouldered the hospitalization expenses of Reyes.


 Despite medical attendance, Reyes died two (2) days after the
[22]

accident. [23]

Respondent Ermilinda R. Abejar (Abejar), Reyes' paternal aunt


and the person who raised her since she was nine (9) years old,
 filed before the Regional Trial Court of Parañaque a
[24]

Complaint  for damages against Bautista and Caravan. In her


[25]

Complaint, Abejar alleged that Bautista was an employee of


Caravan and that Caravan is the registered owner of the van that
hit Reyes.
[26]

Summons could not be served on Bautista.  Thus, Abejar moved


[27]

to drop Bautista as a defendant.  The Regional Trial Court


[28]

granted her Motion. [29]

After trial, the Regional Trial Court found that Bautista was
grossly negligent in driving the vehicle.  It awarded damages in
[30]

favor of Abejar, as follows:


WHEREFORE, considering that the [respondent] was able to
provide by preponderance of evidence her cause of action against
the defendants, judgment is hereby rendered ordering defendants
JIMMY BAUTISTA and CARAVAN TRAVEL and TOURS[,] INC., to
jointly and solidarity pay the plaintiff, the following, to wit:
1. The amount of P35,000.00 representing actual damages;

2. The amount of P300,000.00 as moral damages;

3. The amount of P30,000.00 as exemplary damages;

4. The amount of P50,000.00 as and by way of attorney's fees;


and

5. The cost of suit.


SO ORDERED. [31]

Caravan's Motion for Reconsideration  was denied through the


[32]

October 20, 2003 Order  of the Regional Trial Court.


[33]

The Court of Appeals affirmed with modification the Regional Trial


Court's July 31, 2003 Decision and October 20, 2003 Order, as
follows:
WHEREFORE, premises considered, the instant appeal
is DENIED for lack of merit. The assailed Decision dated 31 July
2003 and Order dated 20 October 2003 of the Regional Trial
Court, City of Para[ñ]aque, Branch 258, in Civil Case No. 00-0447
are AFFIRMED with the following MODIFICATIONS:
1. Moral Damages is REDUCED to Php 200,000.00;
2. Death Indemnity of Php 50,000.00 is awarded;
3. The Php 35,000.00 actual damages, Php 200,000.00 moral
damages, Php 30,000.00 exemplary damages and Php
50,000.00 attorney's fees shall earn interest at the rate of
6% per annum computed from 31 July 2003, the date of the
[Regional Trial Court's] decision; and upon finality of this
Decision, all the amounts due shall earn interest at the rate
of 12% per annum, in lieu of 6% per annum, until full
payment; and
4. The Php 50,000.00 death indemnity shall earn interest at
the rate of 6% per annum computed from the date of
promulgation of this Decision; and upon finality of this
Decision, the amount due shall earn interest at the rate of
12% per annum, in lieu of 6% per annum, until full
payment.
Costs against [Caravan].

SO ORDERED. [34]

Caravan filed a Motion for Reconsideration, but it was denied in


the Court of Appeals' assailed November 29, 2005 Resolution. [35]

Hence, this Petition was filed.

Caravan argues that Abejar has no personality to bring this suit


because she is not a real party in interest. According to Caravan,
Abejar does not exercise legal or substitute parental authority.
She is also not the judicially appointed guardian or the only living
relative of the deceased.  She is also not "the executor or
[36]

administrator of the estate of the deceased."  According to


[37]

Caravan, only the victim herself or her heirs can enforce an action
based on culpa aquiliana such as Abejar's action for damages. [38]

Caravan adds that Abejar offered no documentary or testimonial


evidence to prove that Bautista, the driver, acted "within the
scope of his assigned tasks"  when the accident occurred.
[39]

 According to Caravan, Bautista's tasks only pertained to the


[40]

transport of company personnel or products, and when the


accident occurred, he had not been transporting personnel or
delivering products of and for the company. [41]

Caravan also argues that "it exercised the diligence of a good


father of a family in the selection and supervision of its
employees." [42]

Caravan further claims that Abejar should not have been awarded
moral damages, actual damages, death indemnity, exemplary
damages, and attorney's fees.  It questions the Certificate
[43]

provided by Abejar as proof of expenses since its signatory, a


certain Julian Peñaloza (Peñaloza), was not presented in court,
and Caravan was denied the right to cross-examine him.
 Caravan argues that the statements in the Certification
[44]

constitute hearsay.  It also contends that based on Article


[45]

2206(3)  of the Civil Code, Abejar is not entitled to moral


[46]

damages.  It insists that moral and exemplary damages should


[47]

not have been awarded to Abejar because Caravan acted in good


faith.  Considering that moral and exemplary damages are
[48]

unwarranted, Caravan claims that the award of attorney's fees


should have also been removed. [49]

Lastly, Caravan argues that it should not be held solidarily liable


with Bautista since Bautista was already dropped as a party. [50]

Abejar counters that Caravan failed to provide proof that it


exercised the requisite diligence in the selection and supervision
of Bautista.  She adds that the Court of Appeals' ruling that
[51]

Caravan is solidarily liable with Bautista for moral damages,


exemplary damages, civil indemnity ex delicto, and attorney's
fees should be upheld.  Abejar argues that since Caravan is the
[52]

registered owner of the van, it is directly, primarily, and solidarity


liable for the tortious acts of its driver. [53]

For resolution are the following issues:

First, whether respondent Ermilinda R. Abejar is a real party in


interest who may bring an action for damages against petitioner
Caravan Travel and Tours International, Inc. on account of
Jesmariane R. Reyes' death; and

Second, whether petitioner should be held liable as an employer,


pursuant to Article 2180 of the Civil Code.

We deny the Petition.

Having exercised substitute parental authority, respondent


suffered actual loss and is, thus, a real party in interest in this
case.

In her Complaint, respondent made allegations that would sustain


her action for damages: that she exercised substitute parental
authority over Reyes; that Reyes' death was caused by the
negligence of petitioner and its driver; and that Reyes' death
caused her damage.  Respondent properly filed an action based
[54]

on quasi-delict. She is a real party in interest.

Rule 3, Section 2 of the 1997 Rules of Civil Procedure defines a


real party in interest:
RULE 3. Parties to Civil Actions

....

SECTION 2. Parties in Interest. — A real party in interest is the


party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party in interest.
"To qualify a person to be a real party in interest in whose name
an action must be prosecuted, he [or she] must appear to be the
present real owner of the right sought to be
enforced."  Respondent's capacity to file a complaint against
[55]

petitioner stems from her having exercised substitute parental


authority over Reyes.
Article 216 of the Family Code identifies the persons who exercise
substitute parental authority:
Art. 216. In default of parents or a judicially appointed guardian,
the following persons shall exercise substitute parental authority
over the child in the order indicated:

(1) The surviving grandparent, as provided in Art. 214; [56]

(2) The oldest brother or sister, over twenty-one years of age,


unless unfit or disqualified; and

(3) The child's actual custodian, over twenty-one years of age,


unless unfit or disqualified.

Whenever the appointment or a judicial guardian over the


property of the child becomes necessary, the same order of
preference shall be observed. (Emphasis supplied)
Article 233 of the Family Code provides for the extent of authority
of persons exercising substitute parental authority, that is, the
same as those of actual parents:
Art. 233. The person exercising substitute parental authority shall
have the same authority over the person of the child as the
parents. (Emphasis supplied)
Both of Reyes' parents are already deceased.  Reyes' paternal
[57]

grandparents are also both deceased.  The whereabouts of


[58]

Reyes' maternal grandparents are unknown.  There is also no


[59]

record that Reyes has brothers or sisters. It was under these


circumstances that respondent took custody of Reyes when she
was a child, assumed the role of Reyes' parents, and thus,
exercised substitute parental authority over her.  As Reyes' [60]

custodian, respondent exercised the full extent of the statutorily


recognized rights and duties of a parent. Consistent with Article
220  of the Family Code, respondent supported Reyes'
[61]

education  and provided for her personal needs.  To echo


[62] [63]

respondent's words in her Complaint, she treated Reyes as if she


were her own daughter. [64]
Respondent's right to proceed against petitioner, therefore, is
based on two grounds.

First, respondent suffered actual personal loss. With her affinity


for Reyes, it stands to reason that when Reyes died, respondent
suffered the same anguish that a natural parent would have felt
upon the loss of one's child. It is for this injury—as authentic and
personal as that of a natural parent—that respondent seeks to be
indemnified.

Second, respondent is capacitated to do what Reyes' actual


parents would have been capacitated to do.

In Metro Manila Transit Corporation v. Court of Appeals,


 Tapdasan, Jr. v. People,  and Aguilar, Sr. v. Commercial
[65] [66]

Savings Bank,  this court allowed natural parents of victims to


[67]

recover damages for the death of their children. Inasmuch as


persons exercising substitute parental authority have the full
range of competencies of a child's actual parents, nothing
prevents persons exercising substitute parental authority from
similarly possessing the right to be indemnified for their ward's
death.

We note that Reyes was already 18 years old when she died.
Having reached the age of majority, she was already
emancipated upon her death. While parental authority is
terminated upon emancipation,  respondent continued to support
[68]

and care for Reyes even after she turned 18.  Except for the
[69]

legal technicality of Reyes' emancipation, her relationship with


respondent remained the same. The anguish and damage caused
to respondent by Reyes' death was no different because of Reyes'
emancipation.

In any case, the termination of respondent's parental authority is


not an insurmountable legal bar that precludes the filing of her
Complaint. In interpreting Article 1902  of the old Civil Code,
[70]

which is substantially similar to the first sentence of Article


2176  of the Civil Code, this court in The Receiver For North
[71]
Negros Sugar Company, Inc. v. Ybañez, et al.  ruled that
[72]

brothers and sisters may recover damages, except moral


damages, for the death of their sibling.  This court declared that
[73]

Article 1902 of the old Civil Code (now Article 2176) is broad
enough to accommodate even plaintiffs who are not relatives of
the deceased, thus: [74]

This Court said: "Article 1902 of the Civil Code declares that any
person who by an act or omission, characterized by fault or
negligence, causes damage to another shall be liable for the
damage done ... a person is liable for damage done to another by
any culpable act; and by any culpable act is meant any act which
is blameworthy when judged by accepted legal standards. The
idea thus expressed is undoubtedly broad enough to include any
rational conception of liability for the tortious acts likely to be
developed in any society." The word "damage" in said article,
comprehending as it does all that are embraced in its meaning,
includes any and all damages that a human being may suffer in
any and all the manifestations of his life: physical or material,
moral or psychological, mental or spiritual, financial, economic,
social, political, and religious.

It is particularly noticeable that Article 1902 stresses the passive


subject of the obligation to pay damages caused by his fault or
negligence. The article does not limit or specify the active
subjects, much less the relation that must exist between the
victim of the culpa aquiliana and the person who may recover
damages, thus warranting the inference that, in principle,
anybody who suffers any damage from culpa aquiliana,  whether
a relative or not of the victim, may recover damages from the
person responsible therefor[.]  (Emphasis supplied, citations
[75]

omitted)
II

Respondent's Complaint is anchored on an employer's liability for


quasi-delict provided in Article 2180, in relation to Article 2176 of
the Civil Code. Articles 2176 and 2180 read:
ARTICLE 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.

.....

ARTICLE 2180. The obligation imposed by article 2176 is


demandable not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are
responsible for the damages caused by the minor children who
live in their company.

Guardians are liable for damages caused by the minors or


incapacitated persons who are under their authority and live in
their company.

The owners and managers of an establishment or enterprise are


likewise responsible for damages caused by their employees in
the service of the branches in which the latter are employed or on
the occasion of their functions.

Employers shall be liable for the damages caused by their


employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.

The State is responsible in like manner when it acts through a


special agent; but not when the damage has been caused by the
official to whom the task done properly pertains, in which case
what is provided in article 2176 shall be applicable.

Lastly, teachers or heads of establishments of arts and trades


shall be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease when the
persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.
(Emphasis supplied)
Contrary to petitioner's position, it was not fatal to respondent's
cause that she herself did not adduce proof that Bautista acted
within the scope of his authority. It was sufficient that Abejar
proved that petitioner was the registered owner of the van that
hit Reyes.

The resolution of this case must consider two (2) rules. First,
Article 2180's specification that "[e]mployers shall be liable for
the damages caused by their employees . . . acting within the
scope of their assigned tasks[.]" Second, the operation of the
registered-owner rule that registered owners are liable for death
or injuries caused by the operation of their vehicles.
[76]

These rules appear to be in conflict when it comes to cases in


which the employer is also the registered owner of a vehicle.
Article 2180 requires proof of two things: first, an employment
relationship between the driver and the owner; and second, that
the driver acted within the scope of his or her assigned tasks. On
the other hand, applying the registered-owner rule only requires
the plaintiff to prove that the defendant-employer is the
registered owner of the vehicle.

The registered-owner rule was articulated as early as 1957


in Erezo, et al. v. Jepte,  where this court explained that the
[77]

registration of motor vehicles, as required by Section 5(a)  of [78]

Republic Act No. 4136, the Land Transportation and Traffic Code,
was necessary "not to make said registration the operative act by
which ownership in vehicles is transferred, . . . but to permit the
use and operation of the vehicle upon any public highway[.]"  Its
[79]

"main aim . . . is to identify the owner so that if any accident


happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner."
[80]
Erezo notwithstanding, Castilex Industrial Corporation v.
Vasquez, Jr.  relied on Article 2180 of the Civil Code even though
[81]

the employer was also the registered owner of the vehicle.  The
[82]

registered-owner rule was not mentioned.

In Castilex, Benjamin Abad (Abad) was a manager of Castilex


Industrial Corporation (Castilex). Castilex was also the registered
owner of a Toyota Hi-Lux pick-up truck. While Abad was driving
the pick-up truck, it collided with a motorcycle driven by Romeo
Vasquez (Vasquez). Vasquez died a few days after. Vasquez's
parents filed a case for damages against Abad and Castilex.
 Castilex denied liability, arguing that Abad was acting in his
[83]

private capacity at the time of the accident. [84]

This court absolved Castilex of liability, reasoning that it was


incumbent upon the plaintiff to prove that the negligent
employee was acting within the scope of his assigned tasks.
 Vasquez's parents failed to prove this.  This court outlined the
[85] [86]

process necessary for an employer to be held liable for the acts of


its employees and applied the process to the case:
Under the fifth paragraph of Article 2180, whether or not engaged
in any business or industry, an employer is liable for the torts
committed by employees within the scope of his assigned tasks.
But it is necessary to establish the employer-employee
relationship; once this is done, the plaintiff must show, to hold
the employer liable, that the employee was acting within the
scope of his assigned task when the tort complained of was
committed. It is only then that the employer may find it
necessary to interpose the defense of due diligence in the
selection and supervision of the employee.

....

Since there is paucity of evidence that ABAD was acting within


the scope of the functions entrusted to him, petitioner CASTILEX
had no duty to show that it exercised the diligence of a good
father of a family in providing ABAD with a service vehicle. Thus,
justice and equity require that petitioner be relieved of vicarious
liability for the consequences of the negligence of ABAD in driving
its vehicle. (Emphasis supplied, citations omitted)
[87]

Aguilar, Sr. v. Commercial Savings Bank recognized the seeming


conflict between Article 2180 and the registered-owner rule and
applied the latter.
[88]

In Aguilar, Sr., a Mitsubishi Lancer, registered in the name of


Commercial Savings Bank and driven by the bank's assistant
vice-president Ferdinand Borja, hit Conrado Aguilar, Jr. The
impact killed Conrado Aguilar, Jr. His father, Conrado Aguilar, Sr.
filed a case for damages against Ferdinand Borja and Commercial
Savings Bank. The Regional Trial Court found Commercial
Savings Bank solidarity liable with Ferdinand Borja. [89]

However, the Court of Appeals disagreed with the trial court's


Decision and dismissed the complaint against the bank. The
Court of Appeals reasoned that Article 2180 requires the plaintiff
to prove that at the time of the accident, the employee was
acting within the scope of his or her assigned tasks. The Court of
Appeals found no evidence that Ferdinand Borja was acting as the
bank's assistant vice-president at the time of the accident. [90]

The Court of Appeals' ruling was reversed by this court.  Aguilar,


[91]

Sr. reiterated the following pronouncements made in Erezo in


ruling that the bank, as the registered owner of the vehicle, was
primarily liable to the plaintiff:
[92]

The main aim of motor vehicle registration is to identify the


owner so that if any accident happens, or that any damage or
injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the
registered owner....

....

A victim of recklessness on the public highways is usually without


means to discover or identify the person actually causing the
injury or damage. He has no means other than by a recourse to
the registration in the Motor Vehicles Office to determine who is
the owner. The protection that the law aims to extend to him
would become illusory were the registered owner given the
opportunity to escape liability by disproving his ownership. [93]

Thus, Aguilar, Sr. concluded:


In our view, respondent bank, as the registered owner of the
vehicle, is primarily liable for Aguilar, Jr.'s death. The Court of
Appeals erred when it concluded that the bank was not liable
simply because (a) petitioner did not prove that Borja was acting
as the bank's vice president at the time of the accident; and (b)
Borja had, according to respondent bank, already bought the car
at the time of the mishap. For as long as the respondent bank
remained the registered owner of the car involved in the
vehicular accident, it could not escape primary liability for the
death of petitioner's son.  (Emphasis supplied)
[94]

Preference for the registered-owner rule became more


pronounced in Del Carmen, Jr. v. Bacoy: [95]

Without disputing the factual finding of the [Court of Appeals]


that Allan was still his employee at the time of the accident, a
finding which we see no reason to disturb, Oscar Jr. contends
that Allan drove the jeep in his private capacity and thus, an
employer's vicarious liability for the employee's fault under Article
2180 of the Civil Code cannot apply to him.

The contention is no longer novel. In Aguilar Sr. v. Commercial


Savings Bank, the car of therein respondent bank caused the
death of Conrado Aguilar, Jr. while being driven by its assistant
vice president. Despite Article 2180, we still held the bank liable
for damages for the accident as  said provision should defer to
the settled doctrine concerning accidents involving
registered motor vehicles, i.e., that the registered owner of
any vehicle, even if not used for public service, would primarily
be responsible to the public or to third persons for injuries caused
the latter while the vehicle was being driven on the highways or
streets. We have already ratiocinated that:
The main aim of motor vehicle registration is to identify the
owner so that if any accident happens, or that any damage or
injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the
registered owner. Instances are numerous where vehicles running
on public highways caused accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to
forestall these circumstances, so inconvenient or prejudicial to
the public, that the motor vehicle registration is primarily
ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways.
 (Emphasis supplied, citations omitted)
[96]

Filcar Transport Services v. Espinas  stated that the registered


[97]

owner of a vehicle can no longer use the defenses found in Article


2180: [98]

Neither can Filcar use the defenses available under Article 2180
of the Civil Code - that the employee acts beyond the scope of his
assigned task or that it exercised the due diligence of a good
father of a family to prevent damage - because the motor vehicle
registration law, to a certain extent, modified Article 2180 of the
Civil Code by making these defenses unavailable to the registered
owner of the motor vehicle. Thus, for as long as Filcar is the
registered owner of the car involved in the vehicular accident, it
could not escape primary liability for the damages caused to
Espinas. [99]

Mendoza v. Spouses Gomez  reiterated this doctrine.


[100]

However, Aguilar, Sr., Del Carmen, Filcar, and Mendoza should


not be taken to mean that Article 2180 of the Civil Code should
be completely discarded in cases where the registered-owner rule
finds application.

As acknowledged in Filcar, there is no categorical statutory


pronouncement in the Land Transportation and Traffic Code
stipulating the liability of a registered owner.  The source of a
[101]

registered owner's liability is not a distinct statutory provision,


but remains to be Articles 2176 and 2180 of the Civil Code:
While Republic Act No. 4136 or the Land Transportation and
Traffic Code does not contain any provision on the liability of
registered owners in case of motor vehicle mishaps, Article 2176,
in relation with Article 2180, of the Civil Code imposes an
obligation upon Filcar, as registered owner, to answer for the
damages caused to Espinas' car. [102]

Thus, it is imperative to apply the registered-owner rule in a


manner that harmonizes it with Articles 2176 and 2180 of the
Civil Code. Rules must be construed in a manner that will
harmonize them with other rules so as to form a uniform and
consistent system of jurisprudence.  In light of this, the words
[103]

used in Del Carmen are particularly notable. There, this court


stated that Article 2180 "should defer to"  the registered-owner
[104]

rule. It never stated that Article 2180 should be totally


abandoned.

Therefore, the appropriate approach is that in cases where both


the registered-owner rule and Article 2180 apply, the plaintiff
must first establish that the employer is the registered owner of
the vehicle in question. Once the plaintiff successfully proves
ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. As a
consequence, the burden of proof shifts to the defendant to show
that no liability under Article 2180 has arisen.

This disputable presumption, insofar as the registered owner of


the vehicle in relation to the actual driver is concerned,
recognizes that between the owner and the victim, it is the
former that should carry the costs of moving forward with the
evidence. The victim is, in many cases, a hapless pedestrian or
motorist with hardly any means to uncover the employment
relationship of the owner and the driver, or any act that the
owner may have done in relation to that employment.

The registration of the vehicle, on the other hand, is accessible to


the public.

Here, respondent presented a copy of the Certificate of


Registration  of the van that hit Reyes.  The Certificate attests
[105] [106]

to petitioner's ownership of the van. Petitioner itself did not


dispute its ownership of the van. Consistent with the rule we have
just stated, a presumption that the requirements of Article 2180
have been satisfied arises. It is now up to petitioner to establish
that it incurred no liability under Article 2180. This it can do by
presenting proof of any of the following: first, that it had no
employment relationship with Bautista; second, that Bautista
acted outside the scope of his assigned tasks; or third, that it
exercised the diligence of a good father of a family in the
selection and supervision of Bautista. [107]

On the first, petitioner admitted that Bautista was its employee at


the time of the accident. [108]

On the second, petitioner was unable to prove that Bautista was


not acting within the scope of his assigned tasks at the time of
the accident. When asked by the court why Bautista was at the
place of the accident when it occurred, Sally Bellido, petitioner's
accountant and supervisor,  testified that she did not "have the
[109]

personal capacity to answer [the question]"  and that she had


[110]

no knowledge to answer it:


COURT : Madam Witness, do you know the reason why your driver, Jimmy Bautista, at
the morning of July 13, 2000 was in the vicinity of Barangay Marcelo G
Subdivision 4?

WITNE : I don't have the personal capacity to answer that, Sir.


SS

Q : So you don't have any knowledge why he was there?

A : Yes, Sir.  (Emphasis supplied)


[111]

Sally Bellido's testimony does not affect the presumption that


Article 2180's requirements have been satisfied. Mere disavowals
are not proof that suffice to overturn a presumption. To this end,
evidence must be adduced. However, petitioner presented no
positive evidence to show that Bautista was acting in his private
capacity at the time of the incident.

On the third, petitioner likewise failed to prove that it exercised


the requisite diligence in the selection and supervision of
Bautista.
In its selection of Bautista as a service driver, petitioner
contented itself with Bautista's submission of a non-
professional driver's license.  Hence, in Sally Balledo's cross-
[112]

examination:
Q : . . . when he was promoted as service driver, of course, there were certain re
other else, you made mention about a driver's license.

A : Yes, Sir.

Q : Would you be able to show to this Honorable Court whether indeed this perso
license to your company?

A : Yes, Sir.

. . .
.

Q : Do you recall what kind of driver's license is this?

A : The Land Transportation Office.

Q : Is it a professional driver's license or non-proffesional [sic] driver's license?

A : Non-professional.

Q : You are not sure?

COU : Non professional, professional?


RT

A : It's a non-professional.  (Emphasis supplied)


[113]

Employing a person holding a non-professional driver's license to


operate another's motor vehicle violates Section 24 of the Land
Transportation and Traffic Code, which provides:
SEC. 24. Use of driver's license and badge. — ...

....
No owner of a motor vehicle shall engage, employ, or hire any
person to operate such motor vehicle, unless the person sought
to be employed is a duly licensed professional driver.
Evidently, petitioner did not only fail to exercise due diligence
when it selected Bautista as service driver; it also committed an
actual violation of law.

To prove that it exercised the required diligence in supervising


Bautista, petitioner presented copies of several memoranda and
company rules.  These, however, are insufficient because
[114]

petitioner failed to prove actual compliance. Metro Manila Transit


Corporation v. Court of Appeals  emphasized that to establish
[115]

diligence in the supervision of employees, the issuance of


company policies must be coupled with proof of compliance:
Due diligence in the supervision of employees, on the other hand,
includes the formulation of suitable rules and regulations for the
guidance of employees and the issuance of proper instructions
intended for the protection of the public and persons with whom
the employer has relations through his or its employees and the
imposition of necessary disciplinary measures upon employees in
case of breach or as may be warranted to ensure the
performance of acts indispensable to the business of and
beneficial to their employer. To this, we add that actual
implementation and monitoring of consistent compliance with
said rules should be the constant concern of the employer, acting
through dependable supervisors who should regularly report on
their supervisory functions.

In order that the defense of due diligence in the selection and


supervision of employees may be deemed sufficient and
plausible, it is not enough to emptily invoke the existence
of said company guidelines and policies on hiring and
supervision. As the negligence of the employee gives rise to the
presumption of negligence on the part of the employer, the latter
has the burden of proving that it has been diligent not only in the
selection of employees but also in the actual supervision of their
work. The mere allegation of the existence of hiring procedures
and supervisory policies, without anything more, is decidedly not
sufficient to overcome presumption.

We emphatically reiterate our holding, as a warning to all


employers, that "(t)he mere formulation of various company
policies on safety without showing that they were being
complied with is not sufficient to exempt petitioner from liability
arising from negligence of its employees. It is incumbent upon
petitioner to show that in recruiting and employing the erring
driver the recruitment procedures and company policies on
efficiency and safety were followed." Paying lip-service to these
injunctions or merely going through the motions of compliance
therewith will warrant stern sanctions from the Court.
 (Emphasis supplied, citations omitted)
[116]

For failing to overturn the presumption that the requirements of


Article 2180 have been satisfied, petitioner must be held liable.

III

Petitioner's argument that it should be excused from liability


because Bautista was already dropped as a party is equally
unmeritorious. The liability imposed on the registered owner is
direct and primary.  It does not depend on the inclusion of the
[117]

negligent driver in the action. Agreeing to petitioner's assertion


would render impotent the rationale of the motor registration law
in fixing liability on a definite person.

Bautista, the driver, was not an indispensable party under Rule 3,


Section 7  of the 1997 Rules of Civil Procedure. Rather, he was a
[118]

necessary party under Rule 3, Section 8.  Instead of insisting


[119]

that Bautista—who was nothing more than a necessary party—


should not have been dropped as a defendant, or that petitioner,
along with Bautista, should have been dropped, petitioner (as a
co-defendant insisting that the action must proceed with Bautista
as party) could have opted to file a cross-claim against Bautista
as its remedy.
The 1997 Rules of Civil Procedure spell out the rules on joinder of
indispensable and necessary parties. These are intended to afford
"a complete determination of all possible issues, not only between
the parties themselves but also as regards to other persons who
may be affected by the judgment." [120]

However, while an exhaustive resolution of disputes is desired in


every case, the distinction between indispensable parties and
necessary parties delineates a court's capacity to render effective
judgment. As defined by Rule 3, Section 7, indispensable parties
are "[p]arties in interest without whom no final determination can
be had of an action[.]" Thus, their non-inclusion is debilitating:
"the presence of indispensable parties is a condition for the
exercise of juridical power and when an indispensable party is not
before the court, the action should be dismissed." [121]

In contrast, a necessary party's presence is not imperative, and


his or her absence is not debilitating. Nevertheless, it is preferred
that they be included in order that relief may be complete.

The concept of indispensable parties, as against parties whose


inclusion only allows complete relief, was explained in Arcelona v.
Court of Appeals: [122]

An indispensable party is a party who has such an interest in the


controversy or subject matter that a final adjudication cannot be
made, in his absence, without injuring or affecting that interest, a
party who has not only an interest in the subject matter of the
controversy, but also has an interest of such nature that a final
decree cannot be made without affecting his interest or leaving
the controversy in such a condition that its final determination
may be wholly inconsistent with equity and good conscience. It
has also been considered that an indispensable party is a person
in whose absence there cannot be a determination between the
parties already before the court which is effective, complete, or
equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward.
A person is not an indispensable party, however, if his interest in
the controversy or subject matter is separable from the interest
of the other parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his
presence would merely permit complete relief between him and
those already parties to the action, or if he has no interest in the
subject matter of the action. It is not a sufficient reason to
declare a person to be an indispensable party that his presence
will avoid multiple litigation.
[123]

Petitioner's interest and liability is distinct from that of its driver.


Regardless of petitioner's employer-employee relationship with
Bautista, liability attaches to petitioner on account of its being the
registered owner of a vehicle that figures in a mishap. This alone
suffices. A determination of its liability as owner can proceed
independently of a consideration of how Bautista conducted
himself as a driver. While certainly it is desirable that a
determination of Bautista's liability be made alongside that of the
owner of the van he was driving, his non-inclusion in these
proceedings does not absolutely hamper a judicious resolution of
respondent's plea for relief.

IV

The Court of Appeals committed no reversible error when it


awarded actual damages to respondent. Respondent's claim for
actual damages was based on the Certificate  issued and signed
[124]

by a certain Peñaloza showing that respondent paid Peñaloza


P35,000.00 for funeral expenses.

Contrary to petitioner's claim, this Certificate is not hearsay.


Evidence is hearsay when its probative value is based on the
personal knowledge of a person other than the person actually
testifying.  Here, the Certificate sought to establish that
[125]

respondent herself paid Peñaloza P35,000.00 as funeral expenses


for Reyes' death: [126]

3. Na ang aking kontrata ay nagkakahalaga ng P35,000-00


[sic] sa lahat ng nagamit na materiales at labor nito kasama
ang lote na ibinayad sa akin ni Gng. ERMILINDA REYES
ABEJAR na siyang aking kakontrata sa pagsasagawa ng
naturang paglilibingan.  (Emphasis supplied)
[127]

It was respondent herself who identified the Certificate. She


testified that she incurred funeral expenses amounting to
P35,000.00, that she paid this amount to Peñaloza, and that she
was present when Peñaloza signed the Certificate:
[ATTY. Did you incur any expenses?
LIM] :

A: Meron po.

Q: How much did you spend for the death of Jesmarian [sic] Reyes?

A: 'Yun pong P35,000.00 na pagpapalibing at saka...

Q: You said that you spent P35,000.00. Do you have any evidence or proof that you

A: Meron po.

Q: Showing to you this sort of certification. What relation has this...

A: Yan po' yung contractor nagumawa.

Q: Contractor of what?

A: 'Yan po' yung mismong binilhan ko ng lupa at nitso.

....

ATTY. There is a signature at the top of the printed name Julian Penalosa [sic]. Whose
LIM :

A: Yan po' yung mismong contractor.

....

Q: Did you see him sign this?

A: Opo.  (Emphasis supplied)


[128]
Respondent had personal knowledge of the facts sought to be
proved by the Certificate, i.e. that she spent P35,000.00 for the
funeral expenses of Reyes. Thus, the Certificate that she
identified and testified to is not hearsay. It was not an error to
admit this Certificate as evidence and basis for awarding
P35,000.00 as actual damages to respondent.

The Court of Appeals likewise did not err in awarding civil


indemnity and exemplary damages.

Article 2206 of the Civil Code provides:


ARTICLE 2206. The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos, even
though there may have been mitigating circumstances[.]
Further, Article 2231 of the Civil Code provides:
ARTICLE 2231. In quasi-delicts, exemplary damages may be
granted if the defendant acted with gross negligence.
Both the Court of Appeals and the Regional Trial Court found
Bautista grossly negligent in driving the van and concluded that
Bautista's gross negligence was the proximate cause of Reyes'
death. Negligence and causation are factual issues.  Findings of
[129]

fact, when established by the trial court and affirmed by the


Court of Appeals, are binding on this court unless they are
patently unsupported by evidence or unless the judgment is
grounded on a misapprehension of facts.  Considering that
[130]

petitioner has not presented any evidence disputing the findings


of the lower courts regarding Bautista's negligence, these findings
cannot be disturbed in this appeal. The evidentiary bases for the
award of civil indemnity and exemplary damages stand. As such,
petitioner must pay the exemplary damages arising from the
negligence of its driver.  For the same reasons, the award of
[131]

P50,000.00 by way of civil indemnity is justified. [132]

The award of moral damages is likewise proper.

Article 2206(3) of the Civil Code provides:


ARTICLE 2206. The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos, even
though there may have been mitigating circumstances. In
addition:

....
 
(3) The spouse, legitimate and illegitimate descendants and ascendants of the decea
damages for mental anguish by reason of the death of the deceased. (Emphasis sup
For deaths caused by quasi-delict, the recovery of moral damages
is limited to the spouse, legitimate and illegitimate descendants,
and ascendants of the deceased. [133]

Persons exercising substitute parental authority are to be


considered ascendants for the purpose of awarding moral
damages. Persons exercising substitute parental authority are
intended to stand in place of a child's parents in order to ensure
the well-being and welfare of a child.  Like natural parents,
[134]

persons exercising substitute parental authority are required to,


among others, keep their wards in their company,  provide for[135]

their upbringing,  show them love and affection,  give them


[136] [137]

advice and counsel,  and provide them with companionship and


[138]

understanding.  For their part, wards shall always observe


[139]

respect and obedience towards the person exercising parental


authority.  The law forges a relationship between the ward and
[140]

the person exercising substitute parental authority such that the


death or injury of one results in the damage or prejudice of the
other.

Moral damages are awarded to compensate the claimant for his


or her actual injury, and not to penalize the wrongdoer.  Moral [141]

damages enable the injured party to alleviate the moral suffering


resulting from the defendant's actions.  It aims to restore—to
[142]

the extent possible—"the spiritual status quo ante[.]" [143]

Given the policy underlying Articles 216 and 220 of the Family
Code as well as the purposes for awarding moral damages, a
person exercising substitute parental authority is rightly
considered an ascendant of the deceased, within the meaning of
Article 2206(3) of the Civil Code. Hence, respondent is entitled to
moral damages.

As exemplary damages have been awarded and as respondent


was compelled to litigate in order to protect her interests, she is
rightly entitled to attorney's fees.
[144]

However, the award of interest should be modified. This


modification must be consistent with Nacar v. Gallery Frames,
 in which we ruled:
[145]

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 court at
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 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.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.  (Emphasis
[146]

supplied)
WHEREFORE, the Decision of the Court of Appeals dated
October 3, 2005 is AFFIRMED with the
following MODIFICATIONS: (a) actual damages in the amount
of P35,000.00 shall earn interest at the rate of 6% per annum
from the time it was judicially or extrajudicially demanded from
petitioner Caravan Travel and Tours International, Inc. until full
satisfaction; (b) moral damages, exemplary damages, and
attorney's fees shall earn interest at the rate of 6% per annum
from the date of the Regional Trial Court Decision until full
satisfaction; and (c) civil indemnity shall earn interest at the rate
of 6% per annum from the date of the Court of Appeals Decision
until full satisfaction.

SO ORDERED.

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


concur.

[1]
 CIVIL CODE, art. 2180 provides:

ARTICLE 2180. The obligation imposed by article 2176 is


demandable not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.

....

Employers shall be liable for the damages caused by their


employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.

....

The responsibility treated of in this article shall cease when the


persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage.

[2]
 CIVIL CODE, art. 2176 provides:
ARTICLE 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.

 412 Phil. 834, 839-841 (2001) [Per J. Quisumbing, Second


[3]

Division].

[4]
 686 Phil. 799, 817 (2012) [Per J. Del Castillo, First Division].

[5]
 688 Phil. 430, 436-442 (2012) [Per J. Brion, Second Division].

 G.R. No. 160110, June 18, 2014, 726 SCRA 505, 518-521 [Per
[6]

J. Perez, Second Division].

 Rollo, pp. 91-131. The Petition was filed pursuant to Rule 45 of


[7]

the 1997 Rules of Civil Procedure.

 Id. at 133-165. The Decision was penned by Associate Justice


[8]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Renato C. Dacudao (Chair) and Lucas P. Bersamin (now Associate
Justice of this court) of the Twelfth Division.

 Id. at 166-167. The Resolution was penned by Associate Justice


[9]

Celia C. Librea-Leagogo and concurred in by Associate Justices


Renato C. Dacudao (Chair) and Lucas P. Bersamin (now Associate
Justice of this court) of the Twelfth Division.

[10]
 Id. at 129, Petition for Review on Certiorari.

[11]
 Id. at 134, Court of Appeals Decision.

[12]
 Id.

[13]
 TSN, May 31, 2002, p. 948.

[14]
 RTC records, p. 445, Regional Trial Court Decision.
[15]
 Id.

[16]
 CA rollo, p. 31, Regional Trial Court Decision.

[17]
 Id.

[18]
 Id.

[19]
 Rollo, p. 134, Court of Appeals Decision.

 RTC records,
[20]
pp. 2, Complaint; and 47, Answer with
Counterclaim.

[21]
 Rollo, p. 134, Court of Appeals Decision.

[22]
 Id. at 139.

[23]
 Id. at 134.

[24]
 Id. at 138.

[25]
 RTC records, pp. 1-5.

[26]
 Id. at 2.

[27]
 CA rollo, p. 48, Caravan's Reply Brief.

[28]
 Rollo, p. 138, Court of Appeals Decision.

[29]
 Rollo, p. 138, Court of Appeals Decision.

 RTC records, p. 447, Regional Trial Court Decision. The trial


[30]

court included Bautista in the Decision even though it already


granted Abejar's motion to drop him as a defendant.
 Id. at 449. The case was docketed as Civil Case No. 00-0447.
[31]

The Decision, promulgated on July 31, 2003, was penned by


Judge Raul E. De Leon of Branch 258.

[32]
 Id. at 450-462.

[33]
 Id. at 513.

 Rollo, p. 162, Court of Appeals Decision. The case was


[34]

docketed as CA-G.R. CV No. 81694.

[35]
 Id. at 166-167, Court of Appeals Resolution.

[36]
 Id. at 231, Caravan's Memorandum.

[37]
 Id.

[38]
 Id. at 232.

[39]
 Id. at 42, Petition for Review on Certiorari.

[40]
 Id. at 42-43.

[41]
 Id. at 42.

[42]
 Id. at 31.

[43]
 Id. at 43.

[44]
 Id. at 44.

[45]
 Id. at 233, Caravan's Memorandum.

[46]
 CIVIL CODE, art. 2206(3) provides:

ARTICLE 2206. The amount of damages for death caused by a


crime or quasi-delict shall be at least three thousand pesos, even
though there may have been mitigating circumstances. In
addition:

....

(3) The spouse, legitimate and illegitimate descendants and


ascendants of the deceased may demand moral damages for
mental anguish by reason of the death of the deceased.

[47]
 Rollo, pp. 45-46, Petition for Review on Certiorari.

[48]
 Id. at 50.

[49]
 Id. at 50-51.

[50]
 Id. at 43.

[51]
 Id. at 203, Abejar's Memorandum.

[52]
 Id. at 206.

[53]
 Id. at 207.

[54]
 RTC records, pp. 1-3, Complaint.

 National Housing Authority v. Magat, 611 Phil. 742, 747 (2009)


[55]

[Per J. Carpio, First Division], citing Shipside Inc. v. Court of


Appeals, 404 Phil. 981, 998 (2001) [Per J. Melo, Third Division].

[56]
 FAMILY CODE, art. 214 provides:

Art. 214. In case of death, absence or unsuitability of the


parents, substitute parental authority shall be exercised by the
surviving grandparent. In case several survive, the one
designated by the court, taking into account the same
consideration mentioned in the preceding article, shall exercise
the authority.
 RTC records, pp. 179, Abejar's Formal Offer of Documentary
[57]

Exhibits; 187, Death Certificate of Edwin Cortez issued by the


Municipal Civil Registrar of Calamba, Laguna; 188, Death
Certificate of Leonora R. Landicho issued by the Municipal Civil
Registrar of Candelaria, Quezon; and 189, Certificate of Death of
Leonora R. Landicho issued by the Parish of San Pedro Bautista,
Candelaria, Quezon.

 Id. at 179, Abejar's Formal Offer of Documentary Exhibits; 190,


[58]

Death Certificate of Leticia Cortez Reyes issued by the Municipal


Civil Registrar of Tiong, Quezon; and 191, Certificate of Death of
Domingo Estiva Reyes issued by the City Civil Registrar of Manila.

[59]
 TSN, April 10, 2002, p. 760.

[60]
 TSN, June 22, 2001, p. 605.

[61]
 FAMILY CODE, art. 220 provides:

Art. 220. The parents and those exercising parental authority


shall have with the respect to their unemancipated children on
wards the following rights and duties:

(1) To keep them in their company, to support, educate and instruct them by right
provide for their upbringing in keeping with their means;
(2) To give them love and affection, advice and counsel, companionship and understan
(3) To provide them with moral and spiritual guidance, inculcate in them honesty, in
industry and thrift, stimulate their interest in civic affairs, and inspire in them comp
(4) To furnish them with good and wholesome educational materials, supervise their
with others, protect them from bad company, and prevent them from acquirin
studies and morals;
(5) To represent them in all matters affecting their interests;
(6) To demand from them respect and obedience;
(7) To impose discipline on them as may be required under the circumstances; and
(8) To perform such other duties as are imposed by law upon parents and guardians.

[62]
 TSN, June 22, 2001, p. 607.

[63]
 Id.
[64]
 RTC records, p. 2, Complaint.

[65]
 359 Phil. 18, 26-27 (1998) [Per J. Mendoza, Second Division].

[66]
 440 Phil. 864, 880 (2002) [Per J. Callejo, Sr., Second Division].

 412 Phil. 834, 835 (2001) [Per J. Quisumbing, Second


[67]

Division].

[68]
 FAMILY CODE, art. 236.

[69]
 Rollo, p. 138, Court of Appeals Decision.

[70]
 CIVIL CODE (1889), art. 1902 provides:

ARTICLE 1902. Any person who by an act or omission causes


damage to another by his fault or negligence shall be liable for
the damage so done.

[71]
 CIVIL CODE, art. 2176, first sentence, provides:

ARTICLE 2176: Whoever by act or omission causes damage to


another, there being fault or negligence, is obliged to pay for the
damage done.

[72]
 133 Phil. 825 (1968) [Per J. Zaldivar, En Banc].

[73]
 Id. at 832-833.

 Id. at 831. This court ruled that while Article 1902 of the old
[74]

Civil Code (now Article 2176) does not require any relation
between the plaintiff and the victim of the quasi-delict, Article
2206(3) of the Civil Code does. Hence, the recovery of moral
damages requires that the plaintiff is the victim's spouse,
legitimate or illegitimate descendant or ascendant (Id. at 833).

[75]
 Id. at 831.
 See Filcar Transport Services v. Espinas, 688 Phil. 430, 435
[76]

(2012) [Per J. Brion, Second Division].

[77]
 102 Phil. 103 (1957) [Per J. Labrador, En Banc].

[78]
 TRANSP. & TRAFFIC CODE, sec. 5 provides:

SECTION 5. Compulsory Registration of Motor Vehicles. - (a) All


motor vehicles and trailer of any type used or operated on or
upon any highway of the Philippines must be registered with the
Bureau of Land Transportation for the current year in accordance
with the provisions of this Act.

 Erezo, et al. v. Jepte, 102 Phil. 103, 108 (1957) [Per J.


[79]

Labrador, En Banc].

[80]
 Id.

[81]
 378 Phil. 1009 (1999) [Per C. J. Davide, Jr., First Division].

[82]
 Id. at 1016-1018.

[83]
 Id. at 1012-1013.

[84]
 Id. at 1018.

[85]
 Id. at 1022-1023.

[86]
 Id. at 1018.

[87]
 Id. at 1017-1022.

 Aguilar, Sr. v. Commercial Savings Bank, 412 Phil. 834, 839-


[88]

841 (2001) [Per J. Quisumbing, Second Division].

[89]
 Id. at 835-837.
[90]
 Id. at 837.

[91]
 Id. at 841.

 Aguilar, Sr. v. Commercial Savings Bank, 412 Phil. 834, 839-


[92]

841 (2001) [Per J. Quisumbing, Second Division].

[93]
 Id. at 839-840.

[94]
 Id. at 841.

[95]
 686 Phil. 799 (2012) [Per J. Del Castillo, First Division].

[96]
 Id. at 817.

[97]
 688 Phil. 430 (2012) [Per J. Brion, Second Division].

[98]
 Id. at 441.

[99]
 Id.

 G.R. No. 160110, June 18, 2014, 726 SCRA 505, 518-521 [Per
[100]

J. Perez, Second Division].

 Filcar Transport Services v. Espinas, 688 Phil. 430, 441 (2012)


[101]

[Per J. Brion, Second Division].

[102]
 Id. at 441-442.

 Spouses Algura v. The Local Government Unit of the City of


[103]

Naga, 536 Phil. 819, 835 (2006) [Per J. Velasco, Jr., Third
Division].

 Del Carmen, Jr. v. Bacoy, 686 Phil. 799, 817 (2012) [Per J. Del
[104]

Castillo, First Division].

[105]
 RTC records, p. 182.
[106]
 Id. at 177, Abejar's Formal Offer of Documentary Evidence.

 A reading of Article 2180 reveals that in order for an employer


[107]

to be liable for the acts of its employee, it is required that the


employment relationship is established, that the employee acted
within the scope of his or her assigned tasks, and that the
employer failed to exercise the diligence of a good father of a
family in the selection and supervision of the employee. See
Castilex Industrial Corp. v. Vasquez, Jr., 378 Phil. 1009, 1017
(1999) [Per C.J. Davide, Jr., First Division] and Metro Manila
Transit Corporation v. Court of Appeals, G.R. No. 104408, June
21, 1993, 223 SCRA 521, 539 [Per J. Regalado, Second Division].

 RTC records,
[108]
pp 2, Complaint; and 47, Answer with
Counterclaim.

[109]
 TSN, September 25, 2002, pp. 1247-1248.

[110]
 Id. at 1284.

[111]
 Id. at 1284-1285.

[112]
 Id. at 1274-1275.

[113]
 Id. at 1273-1275.

[114]
 RTC records, pp. 227-229, Caravan's Formal Offer of Evidence.

 G.R. No. 104408, June 21, 1993, 223 SCRA 521 [Per J.
[115]

Regalado, Second Division].

[116]
 Id. at 540-541.

 Filcar Transport Services v. Espinas, 688 Phil. 430, 439 (2012)


[117]

[Per J. Brion, Second Division]; Aguilar, Sr. v. Commercial


Savings Bank, 412 Phil. 834, 839-841 (2001) [Per J. Quisumbing,
Second Division].
[118]
 1997 RULES OF CIV. PROC., Rule 3, sec. 7 provides:

RULE 3. Parties to Civil Actions

....

SECTION 7. Compulsory Joinder of Indispensable Parties. —


Parties in interest without whom no final determination can be
had of an action shall be joined either as plaintiffs or defendants.

[119]
 1997 RULES OF CIV. PROC., Rule 3, sec. 8 provides:

RULE 3. Parties to Civil Actions

SECTION 8. Necessary Party. — A necessary party is one who is


not indispensable but who ought to be joined as a party if
complete relief is to be accorded as to those already parties, or
for a complete determination or settlement of the claim subject of
the action.

 Director of Lands v. Court of Appeals, 181 Phil. 432, 440-441


[120]

(1979) [Per J. Guerrero, First Division].

 Lucman v. Malawi, 540 Phil. 289, 302 (2006) [Per J. Tinga,


[121]

Third Division].

[122]
 345 Phil. 250 (1997) [Per J. Panganiban, Third Division].

[123]
 Id. at 269-270.

[124]
 RTC records, p. 186.

 Valencia v. Atty. Cabanting, 273 Phil. 534, 545 (1991) [Per


[125]

Curiam, En Banc].

 RTC records, pp.


[126]
178-179, Abejar's Formal Offer of
Documentary Exhibits.
[127]
 Id. at 186, Certificate issued by Julian Peñaloza.

[128]
 TSN, June 22, 2001, pp. 615-616.

 Kierulf v. Court of Appeals, 336 Phil. 414, 423 (1997) [Per J.


[129]

Panganiban, Third Division].

 Pangonorom v. People, 495 Phil. 195, 204 (2005) [Per J.


[130]

Carpio, First Division], citing China Airlines, Ltd. v. Court of


Appeals, 453 Phil. 959, 978 (2003) [Per J. Carpio, First
Division]; Romago Electric Co., Inc. v. Court of Appeals, 388 Phil.
964, 974-975 (2000) [Per J. Gonzaga-Reyes, Third
Division]; Austria v. Court of Appeals, 384 Phil. 408, 415 (2000)
[Per J. Quisumbing, Second Division]; and Halili v. Court of
Appeals, 350 Phil. 906, 912 (1998) [Per J. Panganiban, First
Division].

 See Del Carmen, Jr. v. Bacoy, 686 Phil. 799 (2012) [Per J. Del
[131]

Castillo, First Division].

 Mendoza v. Casumpang, et al., 684 Phil. 459, 462 (2012) [Per


[132]

J. Abad, Third Division].

 The Receiver For North Negros Sugar Company, Inc. v.


[133]

Ybañez, et al., 133 Phil. 825, 833 (1968) [Per J. Zaldivar, En


Banc].

 See Murdock, Sr. and Murdock v. Chuidian, 99 Phil. 821, 824


[134]

(1956) [Per J. Padilla, En Banc].

[135]
 FAMILY CODE, art. 220(1).

[136]
 FAMILYCODE, art. 220(1).

[137]
 FAMILY CODE, art. 220(2).

[138]
 FAMILY CODE, art. 220(2).
[139]
 FAMILY CODE, art. 220(2).

[140]
 FAMILY CODE, art. 220(7).

 Kierulf v. Court of Appeals, 336 Phil. 414, 432 (1997) [Per J.


[141]

Panganiban, Third Division].

[142] Id.

[143] Id.

[144]
 CIVIL CODE, art. 2208 (1) and (2).

 G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J.
[145]

Peralta, En Banc].

[146]
 Id. at 458.

SEPARATE CONCURRING OPINION

BRION, J.:

I concur with the ponencia's conclusions that, first, Ermilinda


Abejar (Abejar) is a real party in interest and, second, Caravan
Travel and Tours International, Inc. (Caravan) is vicariously liable
for damages as Jimmy Bautista (Bautista)'s employer.

I write this Opinion (1) to express my reservation on the


reasoning employed in resolving the first issue, and (2) to reflect
my view on the interplay between Articles 2176 and 2180 of the
Civil Code and the registered owner rule.

In resolving the first issue, the ponencia reasoned out that Abejar


is a real party in interest because she exercised substitute
parental authority over the victim, Jesmariane Reyes (Reyes).
 Having acted as a parent to Reyes, Abejar suffered actual and
[1]

personal loss due to her death.  Furthermore, Abejar was


[2]

capacitated to do what Reyes' actual parents would have been


capacitated to do.  In a number of cases, the Court allowed
[3]

natural parents to recover damages for the death of their


children.
[4]

I disagree with the ponencia's reasoning. In my view, Abejar is


a real party in interest, not because she exercised substitute
parental authority over Reyes, but because she has an interest in
claiming actual and exemplary damages from Caravan.

Parental authority has no bearing on one's status as a real party


in interest in a quasi-delict case. Parental authority refers to the
rights and obligations which parents have over their children's
person and property until their majority age.  This authority is[5]

granted to parents to facilitate the performance of their duties to


their children.  If a child has no parents, grandparents, or
[6]

siblings, the child's actual custodian shall exercise substitute


parental authority over him or her.  Moreover, the child's
[7]

emancipation terminates parental authority. [8]

On the other hand, real party in interest refers to the person who
is entitled to the avails of the suit.  He or she stands to be
[9]

benefited or injured by the judgment.  The interest involved


[10]

must be personal and not based on another person's rights. [11]

The fact that Abejar exercised substitute parental authority over


Reyes does not translate to Abejar's legal interest to recover
damages for Reyes' death. Furthermore, Abejar's parental
authority over Reyes ceased when the latter turned eighteen.
Thus, at the time of her death, Reyes was no longer under
Abejar's parental authority.

Nevertheless, I agree that Abejar is a real party in interest,


because she incurred actual damages when she paid for Reyes'
funeral expenses. Courts may also impose exemplary damages,
in addition to compensatory damages, if the defendant acted with
gross negligence.  In the present case, Bautista's act of leaving
[12]

Reyes rather than bringing her to a hospital amounts to gross


negligence.  Thus, Abejar may recover these damages from
[13]

Caravan.

On the second point, I discuss the registered owner rule in


relation to Articles 2180 and 2176 of the Civil Code. To stress, I
agree that Caravan is directly and primarily liable for damages as
Bautista's employer and as the van's registered owner.

As early as 1957, this Court held in Erezo v. Jepte  that a [14]

vehicle's registered owner is primarily responsible for the


damage caused to another person. The Revised Motor Vehicle
Law  requires vehicles to be registered before they may be used
[15]

in any public highway. The Court stressed that the main purpose


of the registration is to identify the owner so that if any
accident happens or damage is caused on the public highways,
responsibility can be fixed on a definite individual - the registered
owner. [16]

In Filcar Transport Services v. Espinas,  the Court had the


[17]

opportunity to discuss the interplay between Articles 2176 and


2180 of the Civil Code and the registered owner rule. The Court
ruled that the registered owner of a vehicle is deemed the
employer of the vehicle's driver.  Thus, the vehicle's registered
[18]

owner is vicariously liable for the driver's negligent acts pursuant


to Articles 2176 and Article 2180 of the Civil Code.  The vicarious
[19]

liability remains with the registered owner even when the vehicle
had been sold to another person before the accident but the
registration has not yet been transferred.  The Court emphasized
[20]

in R. Transport Corporation v. Yu  that the employer's liability for


[21]

the negligent acts of its subordinate is direct and primary.

Based on the foregoing, I concur with the ponencia's results.


 Reyes' parents and paternal grandparents are dead. The
[1]

whereabouts of her maternal grandparents are unknown. There is


no record that she has brothers or sisters. Abejar supported
Reyes' education, provided her personal needs, and treated her
as her own daughter. Rollo, pp. 719, 187-191, 605, 760.

[2]
 Ponencia, p. 7.

[3]
 Ibid.

[4]
 Id. at 7-9.

 Arturo Tolentino, Civil Code of the Philippines, Vol. 1. p. 603


[5]

(1990).

[6]
 Ibid.

[7]
 FAMILY CODE, Article 216 (3).

[8]
 Id., Article 228 (3).

[9]
 Oscar M. Herrera, Remedial Law, Vol. I, p. 515 (2007).

[10]
 Ibid.

[11]
 Ibid.

[12]
 CIVIL CODE, Articles 2229 and 2231.

[13]
 Rollo, pp. 31 and 953.

[14]
 102 Phil. 103, 107 (1957).

[15]
 Act No. 3992, as amended, Chapter II, Art. 1, Sec. 5(a).

[16]
 Erezo v Jepte, supra note 14, at 108.

[17]
 G.R. No. 174156, June 20, 2012, 674 SCRA 117.
[18]
 Id. at 128-129.

[19]
 Ibid.

 Mendoza v. Gomez, G.R. No. 160110, June 18, 2014, 726


[20]

SCRA 505, 519-521.

[21]
 G.R. No. 174161, February 18, 2015.

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767 Phil. 311


SECOND DIVISION

[ G.R. No. 172301, August 19, 2015 ]


PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, PETITIONER, VS. ASIAVEST
MERCHANT BANKERS (M) BERHAD, RESPONDENT.
DECISION

LEONEN, J.:

This case stemmed from an action for recovery of sum of money


filed before the Regional Trial Court of Pasig by respondent
Malaysian corporation against petitioner Philippine National
Construction Corporation (PNCC), formerly Construction &
Development Corporation of the Philippines. PNCC is a
government-acquired asset corporation.

We resolve whether our courts have subject matter jurisdiction


over an action for recovery of sum of money filed by a Malaysian
corporation against a Philippine corporation involving a contract
executed and performed in Malaysia, and the applicability of
the forum non conveniens principle.

PNCC filed this Petition  assailing the Court of Appeals


[1]

Decision  dated June 10, 2005 dismissing its appeal, and


[2]

Resolution  dated April 7, 2006 denying reconsideration.  The


[3] [4]

trial court ruled in favor of Asiavest Merchant Bankers (M) Berhad


and ordered PNCC to reimburse it the sum of Malaysian Ringgit
(MYR) 3,915,053.54 or its equivalent in Philippine peso. [5]

PNCC prays that this court reverse and set aside the Court of
Appeals Decision and Resolution, as well as the trial court's
Decision  declaring it in default.  It prays the trial court's order of
[6] [7]

default be reversed and it be allowed to file its Answer, or, the


cause of action having already prescribed under Malaysian laws,
the case be dismissed outright. [8]

PNCC and Asiavest Holdings (M) Sdn. Bhd. (Asiavest Holdings)


caused the incorporation of an associate company known as
Asiavest-CDCP Sdn. Bhd. (Asiavest-CDCP), through which they
entered into contracts to construct rural roads and bridges for the
State of Pahang, Malaysia. [9]

In connection with this construction contract, PNCC obtained


various guarantees and bonds from Asiavest Merchant Bankers
(M) Berhad to guarantee the due performance of its obligations.
 The four contracts of guaranty stipulate that Asiavest Merchant
[10]

Bankers (M) Berhad shall guarantee to the State of Pahang "the


due performance by PNCC of its construction contracts . . . and
the repayment of the temporary advances given to
PNCC[.]"  These contracts were understood to be governed by
[11]

the laws of Malaysia.[12]

There was failure to perform the obligations under the


construction contract, prompting the State of Pahang to demand
payment against Asiavest Merchant Bankers (M) Berhad's
performance bonds.  It "entered into a compromise agreement
[13]

with the State of Pahang by paying . . . the reduced amount of


[Malaysian Ringgit (MYR)] 3,915,053.54[.]"  Consequently, the
[14]

corporation demanded indemnity from PNCC by demanding the


amount it paid to the State of Pahang.[15]

On April 12, 1994, Asiavest Merchant Bankers (M) Berhad filed a


Complaint  for recovery of sum of money against PNCC before
[16]

the Regional Trial Court of Pasig.  It based its action on


[17]

Malaysian laws. Specifically, it invoked Section 98  of the[18]

Malaysian Contracts Act of 1950 and Section 11  of the Malaysian


[19]

Civil Law Act of 1956. [20]

PNCC filed Motions for extension of time to file its Answer on May
18, 1994, June 2, 1994, and June 17, 1994. The trial court
granted these motions, with the last one set to expire on July 3,
1994. On July 4, 1994, PNCC filed a Motion for another five-day
extension. The trial court denied this Motion on July 13, 1994. [21]

On July 27, 1994, the trial court declared PNCC in default for
failure to file any responsive pleading, and allowed Asiavest
Merchant Bankers (M) Berhad to present its evidence ex parte. [22]

The Regional Trial Court, in its Decision dated November 29,


1994, rendered judgment in favor of Asiavest Merchant Bankers
(M) Berhad:
WHEREFORE, premises considered and it appearing that plaintiff
hads [sic] proved its claim by preponderance of evidence,
judgment is hereby rendered in favor of plaintiff and against
defendant Philippine National Construction Corporation ordering
the latter to pay the plaintiff:
1. The sum of Malaysian Ringgit M $3,915,053.54 or its
equivalent in [Philippine peso at the bank rate of exchange
(on the date of payment) plus legal interest from the date of
demand until fully paid.
2. The sum of P300,000.00 as and by way of attorney's fees;
and
3. Cost of suit.
SO ORDERED. [23]

The trial court found that Asiavest Merchant Bankers (M) Berhad
complied with the requisites for proof of written foreign laws.
 The Malaysian laws invoked were found to be similar with
[24]

Articles 2066 and 2067 of the Civil Code: [25]

ART. 2066. The guarantor who pays for a debtor must be


indemnified by the latter.

The indemnity comprises:

(1) The total amount of the debt;

(2) The legal interests thereon from the time the payment was made known to the de
not earn interest for the creditor;

(3) The expenses incurred by the guarantor after having notified the debtor that paym
of him;

(4) Damages, if they are due.

ART. 2067. The guarantor who pays is subrogated by virtue


thereof to all the rights which the creditor had against the debtor.

If the guarantor has compromised with the creditor, he cannot


demand of the debtor more than what he has really paid.
On January 30, 1995, the trial court denied PNCC's Motion to Lift
Order of Default  filed on December 12, 1994.  On August 11,
[26] [27]

1995, it also denied PNCC's Motion for Reconsideration Ad


Cautelam  dated December 21, 1994.  PNCC brought its case
[28] [29]

before the Court of Appeals. [30]


The Court of Appeals, in its Decision dated June 10, 2005,
dismissed PNCC's appeal for raising pure questions of law
exclusively cognizable by this court.  It likewise denied [31]

reconsideration. [32]

Hence, PNCC filed this Petition.

PNCC contends it had consistently raised the propriety of


impleading the two Malaysian corporations, Asiavest-CDCP and
Asiavest Holdings, and their participant liability, which are
questions of fact.  According to PNCC, Asiavest-CDCP undertook
[33]

to hold PNCC "free and harmless from all its obligations under the
construction agreement[,]"  while Asiavest Holdings agreed in
[34]

the guaranty agreement to share with PNCC the guarantee


liability on a 51% (Asiavest Holdings) - 49% (PNCC)
arrangement.  Since the repayment of financing facilities
[35]

received by Asiavest-CDCP was jointly guaranteed by PNCC and


Asiavest Holdings as admitted in the Complaint,  the lower courts [36]

"erred in ordering [PNCC] to reimburse the entire amount claimed


by the respondent."  While the issue on its exact liability was not
[37]

assigned as an error, PNCC argues it has amply discussed this


issue in its pleadings. [38]

PNCC submits that the trial court could have invoked the principle
of forum non conveniens and refused to take cognizance of the
case considering the difficulty in acquiring jurisdiction over the
two Malaysian corporations and in determining PNCC's exact
liability.
[39]

PNCC adds that it was deprived of its day in court when its Motion
for another five-day extension to file an Answer was denied, and
it was subsequently declared in default.  "[T]he transactions [40]

involved originated from and occurred in a foreign


country[.]"  This constrained PNCC to request several extensions
[41]

in order to collate the records in preparation for its defense. [42]

PNCC also raises prescription pursuant to Item 6 of the Malaysian


Limitation Act of 1953 (Act 254) in that "actions founded on
contract or to recover any sum ... by virtue of any written
law . . . shall not be brought after the expiration of six years from
[accrual of cause of action]."  The Complaint alleged that
[43]

Asiavest Merchant Bankers (M) Berhad paid the State of Pahang


"in or about 1988[.]"  On April 14, 1982, April 2, 1983, and
[44]

August 2, 1983, Asiavest Merchant Bankers (M) Berhad made


demands against PNCC for payment on the guarantees in favor of
the State of Pahang.  Since the Complaint was filed on April 13,
[45]

1994, six years had already elapsed from 1988. [46]

Lastly, PNCC submits that Asiavest Merchant Bankers (M) Berhad


already winded up voluntarily based on the Certification  issued [47]

by the Director of the Insolvency and Liquidation Department for


Official Receiver, Malaysia.  PNCC alleges that the liquidators
[48]

declared in their Account of Receipts and Payments and


Statement of the Position in the Winding Up dated August 3, 1995
and submitted on April 4, 2006 that "there [were] no more debts
or claims existing for or against the respondent."  Thus, the case
[49]

is now moot and academic with the termination of Asiavest


Merchant Bankers (M) Berhad's corporate existence coupled with
the declaration of no claims. [50]

Asiavest Merchant Bankers (M) Berhad counters that the Court of


Appeals did not err in dismissing the appeal as PNCC's Brief  only [51]

raised two issues that are both questions of law: lack of


jurisdiction over the subject matter, and deprivation of day in
court with the denial of its Motion for Reconsideration Ad
Cautelam. [52]

Asiavest Merchant Bankers (M) Berhad argues that the principle


of forum non conveniens was addressed to the discretion of the
trial court.  Moreover, this issue was not raised before the Court
[53]

of Appeals. The issue on prescription based on Malaysian laws


was also not raised. In any case, PNCC failed to plead and prove
this foreign law provision. [54]

On its civil personality, Asiavest Merchant Bankers (M) Berhad


denies it has ceased to exist, and this issue was also not raised
before the lower court. In any case, this is of no moment as
Asiavest Merchant Bankers (M) Berhad had already acquired a
decision in its favor.
[55]

According to Asiavest Merchant Bankers (M) Berhad, PNCC was


not denied due process as it was granted a total of 60 days to file
a responsive pleading before the trial court.  It submits that
[56]

PNCC wasted almost six months before moving to lift the default
order.  Moreover, "the filing and consideration of a party's
[57]

motion for reconsideration accords [it] due process." [58]

The Petition raises the following issues:

First, whether the Court of Appeals erred in dismissing the appeal


on the ground that it raised pure questions of law;

Second, whether the Court of Appeals erred in not finding that


the two Malaysian corporations, Asiavest Holdings (M) Sdn. Bhd.
and Asiavest-CDCP Sdn. Bhd., should have been impleaded as
parties;

Third, whether the trial court "erred in not refusing to assume


jurisdiction on the ground of forum non-conveniens[;]" [59]

Fourth, whether petitioner Philippine National Construction


Corporation was deprived of due process when the trial court
declared it in default;

Fifth, whether respondent Asiavest Merchant Bankers (M)


Berhad's claim already prescribed under Malaysian laws; and

Lastly, whether this case "should be dismissed considering that


respondent [Asiavest Merchant Bankers (M) Berhad] is no longer
an existing corporation." [60]

I.
On the procedural issue, petitioner submits that the Court of
Appeals erred in finding that only questions of law were raised. [61]

Section 9(3) of Batas Pambansa Blg. 129 enumerates the


appellate jurisdiction of the Court of Appeals. This section
includes the proviso: "except those falling within the appellate
jurisdiction of the Supreme Court[.]" This court's appellate
jurisdiction is found in Article VIII, Section 5(2)(e) of the
Constitution:
SECTION 5. The Supreme Court shall have the following powers:

....

(2) Review, revise, reverse, modify, or affirm on appeal or


certiorari, as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:

....

(e) All cases in which only an error or question of law is involved.


A question of law exists "when the doubt or difference arises as
to what the law is on a certain state of facts[,]"  while a question
[62]

of fact exists "when the doubt or difference arises as to the truth


or the falsehood of alleged facts[.]"  Questions of fact require the
[63]

examination of the probative value of the parties' evidence. [64]

This Petition originated from a default judgment against


petitioner. Petitioner was not able to present evidence before the
trial court. Necessarily, the errors raised from the trial court
involved only questions of law.

II.

Petitioner insists that the issue on "the propriety of impleading


the two Malaysian corporations as well as their participant liability
. . . involves a question of fact."
[65]
According to petitioner, Asiavest-CDCP undertook to hold
petitioner free and harmless from all its obligations under the
construction agreement, while Asiavest Holdings agreed in the
guaranty agreement to share with PNCC the guarantee liability on
a 51% (Asiavest Holdings) - 49% (PNCC) arrangement.
 Petitioner submits that "the propriety of impleading the two
[66]

Malaysian corporations[,] [and] their participant liability[,] [are]


question[s] of fact." [67]

Petitioner adds that it has consistently mentioned its argument on


the two Malaysian companies in its pleadings before the lower
courts.  Specifically, these pleadings were the Motion to Lift
[68]

Order of Default  with Affidavit of Merit  dated December 9,


[69] [70]

1994, Motion for Reconsideration Ad Cautelam,  Brief for PNCC,


[71]

 and Comment  on Asiavest Merchant Bankers (M) Berhad's


[72] [73]

Motion to Dismiss Appeal.

Respondent counters that this was not assigned as an error


before the Court of Appeals. [74]

Rule 44, Section 13 of the Rules of Court enumerates the


required contents of an appellant's brief. In paragraph (e), the
appellant's brief must include "[a] clear and concise statement of
the issues of fact or law to be submitted to the court for its
judgment[.]"

In its appellant's Brief before the Court of Appeals, petitioner only


assigned the following two errors:
I. THE TRIAL COURT GRAVELY ERRED IN RENDERING THE
QUESTIONED DECISION AS IT HAD NO JURISDICTION OVER THE
SUBJECT MATTER OF THE CASE.

II. THE TRIAL COURT GRAVELY ERRED IN DENYING THE MOTION


FOR RECONSIDERATION AD CAUTELAM FILED BY DEFENDANT-
APPELLANT AS IT DEPRIVED THE LATTER OF HIS DAY IN COURT.
[75]
The argument on the two Malaysian corporations was raised by
petitioner for the first time in its Motion to Lift Order of Default
with Affidavit of Merit dated December 9, 1994:
7. If the Defendant be given the chance to present its evidence, it
will prove the following:
....

b. Per subcontract agreement entered into by and between


defendant and a third party, Asiavest CDCP Sdn. Bhd., the
liability of defendant (CDCP) in the event of default regarding the
performance bonds and guarantees alleged in the complaint
which were posted in the name of the defendant shall be borne
by Asiavest CDCP Sdn. Bhd.

Hence, the need for impleading Asiavest CDCP Sdn. Bhd.

c. Assuming that Defendant is liable to the plaintiff, its liability is


joint with Asiavest Holdings Company and only to the extent of
49% of the total amount due which is its proportionate share in
the joint venture project entered into by them. [76]

On January 30, 1995, the trial court denied petitioner's Motion to


Lift Order of Default.  There is no showing whether petitioner
[77]

questioned this trial court Order as petitioner opted to file the


Motion for Reconsideration Ad Cautelam dated December 21,
1994, praying, among others, that it "be considered as Motion for
Reconsideration of the Decision dated November 29, 1994 in the
event that the Motion to Lift Order of Default is denied[.]"  On [78]

August 11, 1995, the trial court also denied this later Motion,
 and there is no showing whether petitioner questioned this trial
[79]

court Order.

In any event, this court has held that "[i]t is essential, to boot,
that that party demonstrate that he has a meritorious cause of
action or defense; otherwise, nothing would be gained by setting
the default order aside." [80]

Petitioner's bare allegations fail to convince. The bases of its


argument to implead and hold the two Malaysian corporations
liable are the subcontract agreement and guaranty agreement.
Copies of these agreements were not submitted with any of its
pleadings. Thus, the lower courts could not have determined for
certain whether the two Malaysian corporations did enter into the
alleged agreements, the subject of the agreements, or the extent
of their liabilities, if any.

Petitioner claims that respondent made admissions in its


Complaint in relation to the two Malaysian companies.
 Specifically, paragraphs 3 and 4 of the Complaint read:
[81]

3. While in Malaysia, defendant [PNCC] jointly with Asiavest


Holdings (M) Sdn[.] Bhd[.], caused the incorporation of an
associate company known as Asiavest-CDCP Sdn. Bhd., with
which it undertook to construct rural roads and bridges under
contracts with the State of Pahang, Malaysia.

4. In connection with defendant's construction contracts with the


State of Pahang, it obtained various guarantees and bonds from
plaintiff to guarantee to the State of Pahang and other parties the
due performance of defendant's obligations. Defendant bound
itself to indemnify plaintiff for liability or payment on these bonds
and guarantees.

Defendant also directly guaranteed to plaintiff, jointly with


Asiavest Holdings (M) Sdn. Bhd., the repayment of
certain financing facilities received from plaintiff by Asiavest-
CDCP Sdn. Bhd.  (Emphasis supplied)
[82]

However, there was no factual finding on the connection between


the "financing facilities" received by Asiavest-CDCP from
respondent, and the performance bond transactions respondent
now claims from. This was argued by respondent in its Brief
before the Court of Appeals as follows:
The suit below was not filed to collect repayment of those
financing facilities, whether against the entity that received the
facilities or its guarantors. It was filed to enforce PNCC's
obligation to indemnify plaintiff Asiavest on its performance bond
payments to project owners that PNCC had abandoned. The
Asiavest performance bonds were transactions different from the
"financing facilities" PNCC refers to. The Asiavest indemnification
claims, and the bonds and other contracts on which they were
based, were clearly identified in the complaint as follows:.... [83]

Also, since petitioner mentioned its argument on the two


Malaysian corporations in its Motion to Lift Order of Default  and [84]

Motion for Reconsideration Ad Cautelam  filed before the trial


[85]

court, these were already considered by the lower court when it


ruled on both Motions.

Assuming that the subcontract agreement indeed provides that


Asiavest-CDCP would answer any liability upon default on the
performance bond, petitioner may later claim reimbursement
from this Malaysian corporation the amount it was made to pay
by judgment in this suit.

III.

Petitioner raised only two errors before the Court of Appeals.


 First, the trial court had no jurisdiction over the subject matter
[86]

of the case, and it would be more convenient for both parties if


the case was heard in the forum where the contracts were
executed and performed.  Second, petitioner was deprived of its
[87]

day in court. [88]

Petitioner raised these contentions before the trial court in its


Motion to Lift Order of Default with Affidavit of Merit dated
December 9, 1994  and Motion for Reconsideration Ad
[89]

Cautelam dated December 21, 1994.  These were the same two


[90]

errors it elevated to the Court of Appeals in its Brief. [91]

On the jurisdiction issue, jurisdiction over the subject matter is


conferred by law.  Batas Pambansa Blg. 129, otherwise known as
[92]

The Judiciary Reorganization Act of 1980, is one such law that


provides for the jurisdiction of our courts. A plain reading of
Section 19  shows that civil actions for payment of sum of money
[93]

are within the exclusive original jurisdiction of trial courts:


SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall
exercise exclusive original jurisdiction:
....

(8) In all other cases in which the demand, exclusive of interest,


damages of whatever kind, attorney's fees, litigation expenses,
and costs or the value of the property in controversy exceeds One
hundred thousand pesos (P100,000) or, in such other cases in
Metro Manila, where the demand, exclusive of the
abovementioned items exceeds Two hundred thousand pesos
(P200,000).
These jurisdictional amounts were adjusted to P300,000.00, and
P400,000.00 in the case of Metro Manila.  Thus, the Regional
[94]

Trial Court of Pasig has jurisdiction over respondent's complaint


for recovery of the sum of Malaysian Ringgit (MYR) 3,915,053.54.

Petitioner argues that "[i]n view of the compelling necessity to


implead the two foreign corporations, the Trial Court should have
refused to assume jurisdiction over the case on the ground of
forum non-conveniens, even if the Court might have acquired
jurisdiction over the subject matter and over the person of the
petitioner."  We find that the trial court correctly assumed
[95]

jurisdiction over the Complaint.

"Forum non conveniens literally translates to 'the forum is


inconvenient.'"  This doctrine applies in conflicts of law cases. It
[96]

gives courts the choice of not assuming jurisdiction when it


appears that it is not the most convenient forum and the parties
may seek redress in another one.  It is a device "designed to
[97]

frustrate illicit means for securing advantages and vexing litigants


that would otherwise be possible if the venue of litigation (or
dispute resolution) were left entirely to the whim of either
party."[98]

Puyat v. Zabarte  enumerated practical reasons when courts may


[99]

refuse to entertain a case even though the exercise of jurisdiction


is authorized by law:
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired
in a foreign jurisdiction or the material witnesses have their
residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a


practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non


residents or aliens when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating


the right sought to be maintained; and

5) The difficulty of ascertaining foreign law.  (Emphasis in the


[100]

original)
On the other hand, courts may choose to assume jurisdiction
subject to the following requisites: "(1) that the Philippine Court
is one to which the parties may conveniently resort to; (2) that
the Philippine Court is in a position to make an intelligent decision
as to the law and the facts; and (3) that the Philippine Court has
or is likely to have power to enforce its decision." [101]

The determination of whether to entertain a case is addressed to


the sound discretion of the court, which must carefully consider
the facts of the particular case.  A mere invocation of the
[102]

doctrine of forum non conveniens or an easy averment that


foreign elements exist cannot operate to automatically divest a
court of its jurisdiction. It is crucial for courts to determine first if
facts were established such that special circumstances exist to
warrant its desistance from assuming jurisdiction. [103]

We discussed in Saudi Arabian Airlines v. Rebesencio  how the [104]

doctrine grounds on "comity and judicial efficiency"  and how it [105]

involves a recognition that other tribunals may be "better


positioned to enforce judgments[:]" [106]

Forum non conveniens is soundly applied not only to address


parallel litigation and undermine a litigant's capacity to vex and
secure undue advantages by engaging in forum shopping on an
international scale. It is also grounded on principles of comity and
judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in


exercising jurisdiction on account of forum non conveniens is a
deferential gesture to the tribunals of another sovereign. It is a
measure that prevents the former's having to interfere in affairs
which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only
that tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better
positioned to enforce judgments and, ultimately, to
dispense justice. Forum non conveniens prevents the
embarrassment of an awkward situation where a tribunal is
rendered incompetent in the face of the greater capability — both
analytical and practical — of a tribunal in another jurisdiction.
 (Emphasis supplied)
[107]

Saudi Arabian Airlines also discussed the need to raise forum non


conveniens at the earliest possible time, and to show that a prior
suit has been brought in another jurisdiction:
On the matter of pleading forum non conveniens, we state the
rule, thus: Forum non conveniens must not only be clearly
pleaded as a ground for dismissal; it must be pleaded as such at
the earliest possible opportunity. Otherwise, it shall be deemed
waived.

....

Consistent with forum non conveniens as fundamentally a factual


matter, it is imperative that it proceed from a factually
established basis. It would be improper to dismiss an action
pursuant to forum non conveniens based merely on a perceived,
likely, or hypothetical multiplicity of fora. Thus, a defendant must
also plead and show that a prior suit has, in fact, been brought in
another jurisdiction.

....
We deem it more appropriate and in the greater interest of
prudence that a defendant not only allege supposed dangerous
tendencies in litigating in this jurisdiction; the defendant must
also show that such danger is real and present in that litigation or
dispute resolution has commenced in another
jurisdiction and  that a foreign tribunal has chosen to exercise
jurisdiction.  (Emphasis in the original)
[108]

The trial court assumed jurisdiction and explained in its Order


dated August 11, 1995 that "[o]n the contrary[,] to try the case
in the Philippines, it is believed, would be more convenient to
defendant corporation as its principal office is located in the
Philippines, its records will be more accessible, witnesses would
be readily available and entail less expenses in terms of legal
services."  We agree.
[109]

Petitioner is a domestic corporation with its main office in the


Philippines. It is safe to assume that all of its pertinent
documents in relation to its business would be available in its
main office. Most of petitioner's officers and employees who were
involved in the construction contract in Malaysia could most likely
also be found in the Philippines. Thus, it is unexpected that a
Philippine corporation would rather engage this civil suit before
Malaysian courts. Our courts would be "better positioned to
enforce [the] judgment and, ultimately, to dispense"  in this
[110]

case against petitioner.

Also, petitioner failed to plead and show real and present danger
that another jurisdiction commenced litigation and the foreign
tribunal chose to exercise jurisdiction.
[111]

IV.

The other error petitioner raised before the Court of Appeals


involved due process. Petitioner argues it was denied its day in
court. We find no denial of petitioner's right to due process by the
lower court.
This court has consistently held that the essence of due process is
the opportunity to be heard. In other words, there is no denial of
the right to due process if there was an opportunity for the
parties to defend their interests in due course. [112]

Petitioner had been able to file a Motion for Reconsideration Ad


Cautelam before the trial court, and later elevated its case before
the Court of Appeals. There is no denial of due process if a party
was given an opportunity to be heard in a Motion for
Reconsideration. [113]

Petitioner also did not take advantage of the opportunities it was


given to file a responsive pleading. It allowed the periods it was
given for the filing of pleadings to lapse.

The trial court granted petitioner's three Motions for extension of


time to file its Answer,  yet petitioner still failed to file its Answer
[114]

on the day it was due. In its Motion to Lift Order of Default,


petitioner alleged that "[t]he Lawyer previously handling this
case, Atty. Noel de Leon, had already transferred to another
government office and that he failed to file an Answer in this case
due to excusable negligence brought about by the failure of the
Defendant to furnish and provide him with all the pertinent
documents necessary in the preparation of its
defense."  Excusable
[115]
negligence means negligence that
"ordinary diligence and prudence could not have guarded
against."  The Motion did not state the pertinent documents it
[116]

needed from respondent that prevented petitioner from filing a


timely Answer.

Petitioner never attempted to file its Answer, even belatedly. In


its Petition before this court, petitioner prays that it still be
allowed to file an Answer.  Petitioner argued below that the trial
[117]

court had no jurisdiction over the subject matter, yet it did not
file a Motion to Dismiss on this ground pursuant to Rule 16,
Section 1(b)  of the Rules of Court.
[118]
Also, the trial court ordered petitioner in default on July 27, 1994
and rendered judgment on November 29, 1994. It was only after
five months or on December 12, 1994 that petitioner filed a
Motion to Lift Order of Default.

This Motion included a two-page Affidavit of Merit alleging that


the trial court has no jurisdiction over the subject matter; its
subcontract agreement with Asiavest-CDCP provides that the
latter will be the one liable in case of default in the performance
bond; and it is jointly liable with Asiavest Holdings so its liability,
if any, is only to the extent of 49%.  The Affidavit did not state
[119]

the evidence it plans to present in the event its Motion is granted,


or attach documents in support of its claims.

V.

Petitioner contends that under Item 6 of the Malaysian Limitation


Act of 1953 (Act 254), "actions founded on contract or to recover
any sum . . . by virtue of any written law . . . shall not be brought
after the expiration of six years from [accrual of] cause of
action[.]"  It contends that the Complaint was filed on April 13,
[120]

1994. Thus, six years already elapsed from 1988. [121]

Prescription is one of the grounds for a motion to dismiss,  but[122]

petitioner did not avail itself of this remedy. Prescription was also
not raised as an error before the Court of Appeals. Nevertheless,
we have ruled that prescription may be raised for the first time
before this court.[123]

Petitioner invokes Malaysian laws on prescription, but it was not


able to prove these foreign law provisions. Our courts follow the
doctrine of processual presumption:
It is hornbook principle, however, that the party invoking the
application of a foreign law has the burden of proving the law,
under the doctrine of processual presumption which, in this case,
petitioners failed to discharge. The Court's ruling in EDI-
Staffbuilders Int'l, v. NLRC illuminates:
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract, Saudi Labor
Laws should govern all matters relating to the termination of the
employment of Gran.

In international law, the party who wants to have a foreign law


applied to a dispute or case has the burden of proving the foreign
law. The foreign law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only
domestic or forum law.

Unfortunately for petitioner, it did not prove the pertinent Saudi


laws on the matter; thus, the International Law doctrine
of presumed-identity approach or processual presumption comes
into play. Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign law
is the same as ours. Thus, we apply Philippine labor laws in
determining the issues presented before us.
The Philippines does not take judicial notice of foreign
laws, hence, they must not only be alleged; they must be
proven. To prove a foreign law, the party invoking it must
present a copy thereof and comply with Sections 24 and 25 of
Rule 132 of the Revised Rules of Court[.]  (Emphasis supplied)
[124]

Our provisions on prescription are found in the Civil Code.


Specifically, Article 1144(1) of the Civil Code states that actions
upon a written contract must be brought within 10 years from the
accrual of the right, and not six years.

Even assuming that the six-year prescription applies, petitioner


cannot conclude prescription from the allegations in the
Complaint. The Complaint filed on April 12, 1994 states that
Asiavest Merchant Bankers (M) Berhad reached settlement with
the State of Pahang "[i]n or about 1988[.]"  If Asiavest
[125]

Merchant Bankers (M) Berhad paid on April 13, 1988 onward, six
years would not yet elapse since the Complaint was filed on April
12, 1994.

VI.

Lastly, petitioner submits that respondent voluntarily winded up


and is no longer an existing corporation based on a Certification
issued by the Director of Insolvency and Liquidation Department
for Official Receiver, Malaysia.  Petitioner adds that the
[126]

appointed liquidators declared that there were no more debts or


claims existing for or against respondent in their Account of
Receipts and Payments and Statement of the Position in the
Winding Up dated August 3, 1995 and submitted on April 4,
2006.

Respondent denies this allegation. It argues that this was not


raised before the lower courts and, in any case, respondent
already acquired a decision in its favor. [127]

The Petition did not attach a copy of the alleged liquidators'


declaration that respondent had no more existing claims. Based
on petitioner's allegation, this declaration was dated August 3,
1995, an earlier date than petitioner's Notice of Appeal  to the
[128]

Court of Appeals dated August 31, 1995. However, petitioner only


mentioned this declaration in its Petition before this court.

It is consistent with fair play that new issues cannot be raised for
the first time before this court if these could have been raised
earlier before the lower courts.  Justice and due process demand
[129]

that this rule be followed.

In any event, respondent is a Malaysian corporation. Petitioner


has not proven the relevant foreign law provisions to support its
allegations that respondent has ceased to exist and that all its
claims are consequently extinguished.

WHEREFORE, the Petition is DENIED for lack of merit.


SO ORDERED.

Carpio, (Chairperson), Brion, Bersamin,  and Del Castillo, JJ.,


*

concur.

 Designated additional member per S.O. No. 2146 dated August


*

10, 2015.

 Rollo, pp. 38-77. The Petition was filed pursuant to Rule 45 of


[1]

the Rules of Court.

 Id. at 81-88. The Decision was penned by Associate Justice


[2]

Edgardo P. Cruz and concurred in by Presiding Justice Romeo A.


Brawner and Associate Justice Jose C. Mendoza of the First
Division.

 Id. at 90-91. The Resolution was penned by Associate Justice


[3]

Edgardo P. Cruz and concurred in by Associate Justices Renato C.


Dacudao and Noel G. Tijam of the Special Former First Division.

[4]
 Id. at 41-42, Petition.

[5]
 Id. at 107-108, Regional Trial Court Decision.

 Id. at 93-108.  The Decision was penned by Judge Armie E.


[6]

Elma of the Regional Trial Court of Branch 153, Pasig.

[7]
 Id. at 74, Petition.

[8]
 Id.

[9]
 Id. at 81-82, Court of Appeals Decision, and 127, Complaint.

[10]
 Id. at 82, Court of Appeals Decision.

[11]
  Id. at 102, Regional Trial Court Decision.
[12]
 Id. at 47, Petition, and 82, Court of Appeals Decision.

[13]
 Id. at 48, Petition, and 82, Court of Appeals Decision.

[14]
 Id. at 82, Court of Appeals Decision.

[15]
 Id. at 48, Petition, and 82, Court of Appeals Decision.

[16]
 Id. at 126-132.

[17]
 Id. at 126.

 Id. at 104-105, Regional Trial Court Decision; Malaysian


[18]

Contracts Act of 1950, sec. 98 provides: In every contract of


guarantee there is an implied promise by the principal debtor to
indemnity the surety; and the surety is entitled to recover from
the principal debtor whatever sum he has rightfully paid under
the guarantee, but not sums which he has paid wrongfully.

 Id. at 105, Regional Trial Court Decision; Malaysian Civil Law


[19]

Act of 1956, sec. 11 provides: In any proceedings tried in any


Court for the recovery of debt or damages, the Court may, if it
thinks fit, order that there shall be included in the sum for which
judgment is given interest at such as it thinks fit on the whole or
any part of the period between the date when the cause of action
arose and the date of judgment.

 Id. at 104-105, Regional Trial Court Decision, and 128-130,


[20]

Complaint.

[21]
 Id. at 82, Court of Appeals Decision.

[22]
  Id.

[23]
 Id. at 107-108, Regional Trial Court Decision.

[24]
 Id. at 106.
[25]
 Id. at 106-107.

[26]
 Id. at 133-140.

[27]
 Id. at 83, Court of Appeals Decision.

[28]
 Id. at 141-151.

[29]
 Id. at 83, Court of Appeals Decision.

 Id. at 83, Court of Appeals Decision, and 152-153, Notice of


[30]

Appeal.

[31]
 Id. at 86-87, Court of Appeals Decision.

[32]
 Id. at 91, Court of Appeals Resolution.

[33]
 Id. at 56, Petition.

[34]
 Id. at 57.

[35]
 Id. at 57 and 62-63.

[36]
 Id. at 127.

[37]
 Id. at 58-59, Petition.

[38]
 Id. at 59.

[39]
 Id. at 64.

[40]
 Id. at 66.

[41]
 Id.

[42]
 Id.
[43]
 Id. at 70.

[44]
 Id. at 71.

[45]
 Id.

[46]
 Id.

[47]
 Id. at 223.

[48]
 Id. at 72, Petition.

[49]
 Id. at 73.

[50]
 Id.

[51]
 Id. at 154-168.

 Id. at 233-234, Asiavest Merchant's Comment, and 162,


[52]

PNCC's Brief.

[53]
 Id. at 236, Asiavest Merchant's Comment.

[54]
 Id. at 237.

[55]
 Id.

[56]
 Id. at 238.

[57]
 Id.

[58]
 Id.

[59]
 Id. at 53.

[60]
 Id. at 53-54.

[61]
 Id. at 56.
 Cheesman v. Intermediate Appellate Court, 271 Phil. 89, 97
[62]

(1991) [Per J. Narvasa, First Division], citing, among


others, Ramos, et al. v. Pepsi-Cola Bottling Co. of the P.I., et al.,
125 Phil. 701, 705 (1967) [Per J. J. P. Bengzon, En Banc].

[63]
 Id.

 Heirs of Jose Martial K. Ochoa, et al. v. G&S Transport Corp.,


[64]

660 Phil. 387, 407 (2011) [Per J. Del Castillo, First Division].

[65]
 Rollo, p. 56, Petition.

[66]
 Id. at 57 and 62-63.

[67]
 Id. at 56.

[68]
 Id.

[69]
 Id. at 135.

[70]
 Id. at 139-140.

[71]
 Id. at 145-146.

[72]
 Id. at 166.

[73]
 Id. at 180.

[74]
 Id. at 233-234.

[75]
 Id. at 162.

[76]
 Id. at 134-135.

[77]
 Id. at 83, Court of Appeals Decision.

[78]
 Id. at 147.
[79]
 Id. at 83, Court of Appeals Decision.

 Circle Financial Corporation v. Court of Appeals, 273 Phil. 379,


[80]

387 (1991) [Per J. Narvasa, First Division], citing Carandang v.


Hon. Cabatuando, 153 Phil. 138, 146-147 (1973) [Per J. Zaldivar,
First Division].

[81]
 Rollo, pp. 61-62, Petition.

[82]
 Id. at 127.

[83]
 Id. at 219.

[84]
 Id. at 135.

[85]
 Id. at 145-146.

[86]
 Id. at 162, PNCC's Brief.

[87]
 Id. at 163.

[88]
 Id. at 165.

[89]
 Id. at 133 and 139.

[90]
 Id. at 144-145.

[91]
 Id. at 163-165.

 Magno v. People, et al., 662 Phil. 726, 735 (2011) [Per J. Brion,
[92]

Third Division], citing Machado, et al. v. Gatdula, et al., 626 Phil.


457, 468 (2010) [Per J. Brion, Second Division], citing in turn
Spouses Vargas v. Spouses Caminas, et al., 577 Phil. 185, 197-
198 (2008) [Per J. Carpio, First Division], Metromedia Times
Corporation v. Pastorin, 503 Phil. 288, 303 (2005) [Per J. Tinga,
Second Division], and Dy v. National Labor Relations Commission,
229 Phil. 234, 242-243 (1986) [Per J. Narvasa, First Division].
[93]
 As amended by Rep. Act No. 7691 (1994), sec. 1.

[94]
 Rep. Act No. 7691 (1994), sec. 5 provides:

SEC. 5. After five (5) years from the effectivity of this Act, the
jurisdictional amounts mentioned in Sec. 19(3), (4), and (8); and
Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act,
shall be adjusted to Two hundred thousand pesos (P200,000.00).
Five (5) years thereafter, such jurisdictional amounts shall be
adjusted further to Three hundred thousand pesos
(P300,000.00): Provided, however, That in the case of Metro
Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to
Four hundred thousand pesos (P400,000.00).

[95]
 Rollo, p. 43, Petition.

 Saudi Arabian Airlines v. Rebesencio, G.R. No. 198587, January


[96]

14, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2015/january2015/198587.pdf> 12 [Per J.
Leonen, Second Division], citing Pioneer Concrete Philippines,
Inc. v. Todaro, 551 Phil. 589, 599 (2007) [Per J. Austria-
Martinez, Third Division].

 Pioneer Concrete Philippines, Inc. v. Todaro, 551 Phil. 589,


[97]

599-600 (2007) [Per J. Austria-Martinez, Third Division], citing


Bank of America NT&SA v. Court of Appeals, 448 Phil. 181 (2003)
[Per J. Austria-Martinez, Second Division].

 Saudi Arabian Airlines v. Rebesencio, G.R. No. 198587, January


[98]

14, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2015/january2015/198587.pdf> 9 [Per J.
Leonen, Second Division].

[99]
 405 Phil. 413 (2001) [Per J. Panganiban, Third Division].
 Id. at 432, citing Jovito R. Salonga, PRIVATE INTERNATIONAL
[100]

LAW 47 (1979).

 Bank of America NT&SA v. Court of Appeals, 448 Phil. 181, 196


[101]

(2003) [Per J. Austria-Martinez, Second Division], citing


Communication Materials and Design, Inc. v. Court of Appeals,
329 Phil. 487, 510-511 (1996) [Per J. Torres, Jr., Second
Division].

 Id., citing Hongkong and Shanghai Banking Corporation v.


[102]

Sherman, 257 Phil. 340, 347 (1989) [Per J. Medialdea, First


Division].

 Philsec Investment Corporation v. Court of Appeals, 340 Phil.


[103]

232, 242 (1997) [Per J. Mendoza, Second Division], citing K.K.


Shell Sekiyu Osaka Hatsubaisho v. Court of Appeals, 266 Phil.
156, 165 (1990) [Per J. Cortes, Third Division] and Hongkong
and Shanghai Banking Corporation v. Sherman, 257 Phil. 340,
347 (1989) [Per J. Medialdea, First Division].

 G.R.
[104]
No. 198587, January 14, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/198587.pdf> [Per J.
Leonen, Second Division].

[105]
 Id. at 13.

[106] Id.

[107] Id.

[108]
 Id. at 15.

 Rollo, p. 211, Asiavest Merchant's Brief, quoting the trial court


[109]

Order dated August 11, 1995, Annex B of appellant's Brief, pp. 3-


A.
 Saudi Arabian Airlines v. Rebesencio, G.R. No. 198587,
[110]

January 14, 2015


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/198587.pdf> 13 [Per J.
Leonen, Second Division].

 See Saudi Arabian Airlines v. Rebesencio, G.R. No. 198587,


[111]

January 14, 2015


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/198587.pdf> 15 [Per J.
Leonen, Second Division].

 See Pasiona, Jr. v. Court of Appeals, et al., 581 Phil. 124, 135-
[112]

136 (2008) [Per J. Austria-Martinez, Third Division], Spouses


Dela Cruz v. Spouses Andres, 550 Phil. 679, 684 (2007) [Per J.
Quisumbing, Second Division], and Arroyo v. Rosal Homeowners
Association, Inc., G.R. No. 175155, October 22, 2012, 684 SCRA
297, 303-304 [Per J. Mendoza, Third Division].

 National Association of Electricity Consumers for Reforms, Inc.,


[113]

et al. v. Energy Regulatory Commission (ERC) et al., 669 Phil. 93,


105 (2011) [Per J. Sereno (now C.J.), Second Division], citing
Samalio v. Court of Appeals, 494 Phil. 456,466 (2005) [Per J.
Corona, En Banc].

[114]
 Rollo, p. 82, Court of Appeals Decision.

[115]
 Id. at 133.

 Magtoto v. Court of Appeals, G.R. No. 175792, November 21,


[116]

2012, 686 SCRA 88, 101 [Per J. Del Castillo, Second


Division], citing Gold Line Transit, Inc. v. Ramos, 415 Phil. 492,
503 (2001) [Per J. Bellosillo, Second Division].

[117]
 Rollo, p. 74.

[118]
 RULES OF COURT, Rule 16, sec. 1 (b) provides:
SECTION 1. Grounds.—...

....

(b) That the court has no jurisdiction over the subject matter of
the claim[.]

 Rollo, pp. 139-140, Motion to Lift Order of Default with


[119]

Affidavit of Merit.

[120]
 Id. at 70, Petition.

[121]
 Id. at 71.

[122]
 RULES OF COURT, Rule 16, sec. 1(f) provides:

SECTION 1. Grounds.—...

(f) That the cause of action is barred by a prior judgment or by


the statute of limitations[.]

 Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No.


[123]

179594, September 11, 2013, 705 SCRA 537, 558 [Per J. Peralta,
Third Division].

 ATC1 Overseas Corp., et al. v. Echin, 647 Phil. 43, 49-50


[124]

(2010) [Per J. Carpio Morales, Third Division], quoting EDI-


Stqffbuilders International, Inc. v. National Labor Relations
Commission, 563 Phil. 1, 22 (2007) [Per J. Velasco, Jr., Second
Division].

[125]
 Rollo, p. 130.

 Id. at 72, Petition, and 223, Certification issued by the Director


[126]

of Insolvency and Liquidation Department for Official Receiver,


Malaysia.

[127]
 Id. at 237, Asiavest Merchant's Comment.
[128]
 Id. at 152-153.

See Reburiano v. Court of Appeals, 361 Phil. 294,304 (1999)


[129] 

[Per J. Mendoza, Second Division].

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763 PHIL. 288


SECOND DIVISION

[ G.R. No. 187491, July 08, 2015 ]


FAR EAST BANK AND TRUST COMPANY,
PETITIONER, VS. LILIA S. CHUA, RESPONDENT.
DECISION

LEONEN, J.:

Respondent Lilia S. Chua (Chua) was dismissed by petitioner Far


East Bank and Trust Co. (Far East Bank) due to a finding that she
engaged in multiple kiting transactions which was a serious
violation of Far East Bank's Code of Conduct. The Labor Arbiter
ruled that there was illegal dismissal. This was reversed by the
National Labor Relations Commission. Chua participated in the
appeal proceedings before the National Labor Relations
Commission.
The Court of Appeals reversed the National Labor Relations
Commission's ruling, stating that Far East Bank's appeal before
the National Labor Relations Commission was not perfected.

We are asked in this Petition to reverse the ruling of the Court of


Appeals.

Chua was employed as a bank executive by Far East Bank, rising


through the latter's ranks and holding the position of Assistant
Vice President from October 1, 1997 until the termination of her
employment. [1]

It is not disputed that on July 1, 1999, Chua's employment was


terminated as Far East Bank found Chua to have engaged in
multiple kiting transactions,  which are fraudulent transactions
[2]

"involving the] drawing out [of] money from a bank account that
does not have sufficient funds [in order] to cover [a] check." [3]

Assailing Far East Bank's basis for terminating her employment,


Chua filed a Complaint for illegal dismissal and monetary claims
before the Regional Arbitration Branch XII, Cotabato City of the
National Labor Relations Commission. [4]

In the course of the proceedings before the Regional Arbitration


Branch, the parties were ordered to submit their respective
Position Papers. Despite an extension having been given to Far
East Bank, it failed to timely file its Position Paper.
[5]

On April 25, 2000, Executive Labor Arbiter Quintin B. Cueto III


(Executive Labor Arbiter Cueto) rendered a Decision  finding
[6]

Chua to have been illegally dismissed. The dispositive portion of


the Decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered declaring the dismissal of the complainant Lilia S.
Chua by respondent FAR EAST BANK AND TRUST COMPANY
(FEBTC) ILLEGAL, thereby entitling her to reinstatement and
full backwages inclusive of allowances and other benefits
computed from the time her compensation was withheld from her
up to the time of her actual reinstatement.

Respondent FEBTC is hereby ordered to pay the backwages of the


complainant until April 25, 2000 (date of this decision) and her
other benefit [sic] as above-discussed for the interim total
of ONE MILLION ONE HUNDRED EIGHTY-ONE THOUSAND
EIGHT HUNDRED FOUR PESOS & 19/100 (P1,181,804.19).

All other additional claims of the complainant as discussed above


are still to be substantiated inorder [sic] for Us to arrive at an
accurate computation.

SO ORDERED. [7]

On the same date, Far East Bank filed a Motion to admit its
Position Paper. On May 15, 2000, this Motion was denied. [8]

On May 25, 2000, Far East Bank directly filed its Notice of Appeal
and Memorandum of Appeal before the National Labor Relations
Commission. [9]

On April 30, 2001, the National Labor Relations Commission Fifth


Division issued a Resolution  reversing and setting aside the April
[10]

25, 2000 Decision of Executive Labor Arbiter Cueto.  It held that
[11]

Far East Bank's delay of "a few days"  in filing its Position Paper
[12]

was excusable, especially considering that it and its counsel were


based in different cities, Cotabato City and General Santos City,
respectively.  It added that it was successfully shown by Far East
[13]

Bank that Chua "had indeed committed irregular acts in relation


to his [sic] position as Assistant Vice President[,]"  "acts that
[14]

would constitute for [sic] loss of trust and


confidence[,]"  thereby justifying the termination of her
[15]

employment.

Chua then filed a Motion for Reconsideration  dated May 25,


[16]

2001, relying on the following grounds:


A
ALTHOUGH THE HONORABLE COMMISSION WAS CORRECT IN
THE ORDER OF THE PRESENTATION OF THE ISSUES IN THAT THE
1st WAS "WHETHER OR NOT RESPONDENTS ARE GUILTY OF
INEXCUSABLE DELAY AND NEGLECT FOR FAILURE TO SUBMIT
THEIR POSITION PAPER BEFORE THE ARBITRATION BRANCH OF
ORIGIN[,]" BECAUSE IF THE ANSWER IS IN THE NEGATIVE,
THEN THE APPEAL SHOULD BE CONFINED ONLY TO THE
APPEALED DECISION OF THE RAB XII, YET, NOT ONLY WAS THIS
ISSUE SKIPPED BY THE HONORABLE COMMISSION, BUT IN
RESOLVING THIS ISSUE, THE HONORABLE COMMISSION
DEPENDED ON THE POSITION PAPER OF APPELLANTS, WHICH
WAS THE VERY FIRST ISSUE UNDER CONSIDERATION. [17]

SINCE WHAT IS THE SUBJECT OF THE APPEAL IS THE DECISION


OF THE RAB XII, IT OUGHT TO HAVE BEEN WHAT THE
HONORABLE COMMISSION SHOULD HAVE REVIEWED AS AN
APPELLATE BODY YET NOT ONLY WAS THE DECISION OF RAB XII
SKIPPED BY THE HONORABLE COMMISSION BUT IN
DETERMINING THE FACT [sic] OF THE CASE THE HONORABLE
COMMISSION ENTIRELY DEPENDED ON THE MATTERS
PRESENTED IN THE POSITION PAPER OF RESPONDENTS, THE
ADMISSION OR THE DENIAL OF ADMISSION OF THE SAME WAS
NOT ONLY THE FIRST ISSUE BUT THE RESOLUTION OF WHICH
WAS SKIPPED BY THE HONORABLE COMMISSION. [18]

EVERY MATERIAL POINT RAISED BY RESPONDENTS IN ITS


POSITION PAPER THE ADMISSION AND DENIAL OF WHICH HAS
NOT BEEN RESOLVED BY THE HONORABLE COMMISSION HAS
BEEN TOUCHED IN THE DECISION OF THE RAB XII, WHICH IS
THE CENTERPIECE OF REVIEW, AND THE POSITION PAPER OF
APPELLEE WHICH LEGALLY, FORMS PART OF THE RECORD[S] OF
THE CASE, AND THE LEAST THAT THE HONORABLE COMMISSION
COULD HAVE DONE WAS TO REVIEW BOTH THEN COMPARE IT
WITH THE FACTS AS PRESENTED BY THE RESPONDENTS IN
THEIR POSITION PAPER WITH THE DOCUMENTS AVAILABLE ON
HAND AS CONFIRMATORY EVIDENCE, AND HAD THIS BEEN
DONE, UNDOUBTEDLY, THE CONCLUSION THAT WOULD HAVE
BEEN ARRIVED AT WAS THAT THE CASE OF APPEALLEE [sic] IS
MERITORIOUS. [19]

In the Resolution dated December 21, 2001, the National Labor


Relations Commission denied Chua's Motion for Reconsideration. [20]

Aggrieved, Chua filed a Petition  for Certiorari under Rule 65 of


[21]

the 1997 Rules of Civil Procedure before the Court of Appeals.


Chua averred the following issue in this Petition:
ISSUE

WHETHER OR NOT PUBLIC RESPONDENT ACTED WITHOUT OR IN


EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN TAKING COGNIZANCE OF THE DIRECTLY FILED
UNPERFECTED APPEAL OF RESPONDENTS [22]

Specifically, Chua claimed that the National Labor Relations


Commission should not have entertained Far East Bank's appeal
for the following reasons: first, it failed to "pay the appeal fee of
P100.00;"  second, it failed to "post the appeal bond equivalent
[23]

to the amount of the monetary award;"  third, it failed to "attach


[24]

a certification of non-forum shopping[;]"  and fourth, it "directly


[25]

filed its appeal with public respondent [National Labor Relations


Commission] contrary to the requirements of Rule VI, Section
3  of the New Rules of Procedure of the National Labor Relations
[26]

Commission." [27]

In its assailed June 30, 2008 Decision,  the Court of Appeals


[28]

Twenty-third Division declared the April 30, 2001 and December


21, 2001 Resolutions of the National Labor Relations Commission
null and void and reinstated Executive Labor Arbiter Cueto's April
25, 2000 Decision. [29]

Citing Rule VI, Sections 3 and 4  of the 1999 Rules of Procedure
[30]

of the National Labor Relations Commission  which were then in


[31]

effect, the Court of Appeals stated that it "is clear and


unambiguous that the memorandum on appeal must be filed with
the Regional Arbitration Branch which rendered the
decision sought to be appealed."  As Far East Bank's Notice
[32]

of Appeal and Memorandum of Appeal were both directly filed


before the National Labor Relations Commission (rather than
being filed before the Regional Arbitration Branch XII, Cotabato
City), the Court of Appeals concluded that "no appeal before
public respondent [National Labor Relations Commission] could
have been perfected."  Thus, Executive Labor Arbiter Cueto's
[33]

April 25, 2000 Decision "has attained finality[.]" [34]

In its assailed March 20, 2009 Resolution,  the Court of Appeals


[35]

denied Far East Bank's Motion for Reconsideration. [36]

Hence, this Petition  was filed.


[37]

For resolution is the sole issue of whether Executive Labor Arbiter


Quintin B. Cueto Ill's April 25, 2000 Decision attained finality in
light of petitioner Far East Bank and Trust Co.'s direct filing of its
appeal before the National Labor Relations Commission, rather
than before the Regional Arbitration Branch XII, Cotabato City.

Petitioner admits to directly filing its Memorandum of Appeal


before the National Labor Relations Commission.  However, it [38]

banks on what it claims was the National Labor Relations


Commission's "discretion to admit appeal[s] directly filed with it
on reasonable and meritorious grounds[.]"  It argues thus that
[39]

"[i]n accepting the appeal memorandum which petitioner directly


filed with it, the [National Labor Relations Commission] was
guided by its own policy that, in line with the jurisprudence set by
the Supreme Court, technicalities in labor cases must yield to
substantial justice."
[40]

Apart from this, petitioner faults respondent for raising the issue
of jurisdiction for the first time in her Rule 65 Petition before the
Court of Appeals. It asserts that because of respondent's failure
to timely raise this matter while petitioner's own appeal was still
pending before the National Labor Relations Commission,
estoppel set in and respondent could not belatedly repudiate the
adverse decision by only then invoking the issue of jurisdiction.[41]

Petitioner's contentions are well-taken. A mere procedural lapse


in the venue where petitioner filed its Memorandum of Appeal is
not fatal to its cause. This is especially so in light of how
respondent estopped herself in failing to raise the issue of
jurisdiction while petitioner's appeal was pending before the
National Labor Relations Commission. Respondent is bound by
her inaction and cannot belatedly invoke this issue on certiorari
before the Court of Appeals.

II

In a long line of cases, this court has held that "[a]lthough the
issue of jurisdiction may be raised at any stage of the
proceedings as the same is conferred by law, it is nonetheless
settled that a party may be barred from raising it on ground of
laches or estoppel."[42]

The rule is stated in La'O v. Republic of the Philippines and the


Government Service Insurance System: [43]

While it is true that jurisdiction over the subject matter of a case


may be raised at any stage of the proceedings since it is
conferred by law, it is nevertheless settled that a party may be
barred from raising it on the ground of estoppel. After voluntarily
submitting a cause and encountering an adverse decision on the
merits, it is improper and too late for the losing party to question
the jurisdiction of the court. A party who has invoked the
jurisdiction of a court over a particular matter to secure
affirmative relief cannot be permitted to afterwards deny that
same jurisdiction to escape liability.  (Citations omitted)
[44]

The wisdom that underlies this was explained at length in Tijam,


et al. v. Sibonghanoy, et al.:
[45]

A party may be estopped or barred from raising a question in


different ways and for different reasons. Thus we speak of
estoppel in pais, of estoppel by deed or by record, and of
estoppel by laches.

Laches, in a general sense, is failure or neglect, for an


unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done
earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled
to assert it either has abandoned it or declined to assert it.

The doctrine of laches or of "stale demands" is based upon


grounds of public policy which requires, for the peace of society,
the discouragement of stale claims and, unlike the statute of
limitations, is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted.

It has been held that a party cannot invoke the jurisdiction of a


court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question
that same jurisdiction. In the case just cited, by way of explaining
the rule, it was further said that the question whether the court
had jurisdiction either of the subject matter of the action or of the
parties was not important in such cases because the party is
barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the
reason that such a practice cannot be tolerated — obviously for
reasons of public policy.

Furthermore, it has also been held that after voluntarily


submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or
power of the court. And in Littleton vs. Burgess, 16 Wyo. 58, the
Court said that it is not right for a party who has affirmed and
invoked the jurisdiction of a court in a particular matter to secure
an affirmative relief, to afterwards deny that same jurisdiction to
escape a penalty.
Upon this same principle is what We said in the three cases
mentioned in the resolution of the Court of Appeals of May 20,
1963 (supra) — to the effect that we frown upon the "undesirable
practice" of a party submitting his case for decision and then
accepting the judgment, only if favorable, and attacking it for lack
of jurisdiction, when adverse — as well as in Pindangan etc. vs.
Dans et al., G. R. L-14591, September 26, 1962; Montelibano et
al. vs. Bacolod-Murcia Milling Co., Inc., G. R. L-15092; Young
Men Labor Union etc. vs. the Court of Industrial Relations et al.,
G. R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p.
277.  (Citations omitted)
[46]

III

The rationale that animates the rule on estoppel vis-a-vis


jurisdiction applies with equal force to quasi-judicial agencies as it
does to courts. The public policy consideration that frowns upon
the undesirable practice of n submitting a case for decision only
to subsequently decry the supposed lack of jurisdiction is as
compelling in cases concerning the National Labor Relations
Commission as it is to courts of law.

In this respect, it is of no consequence that distinctions may be


drawn between administrative agencies, on the one hand, and
judicial bodies, on the other.

Courts derive their authority from the Constitution's recognition


that they shall be the sole and exclusive investees of judicial
power. This, even as the Constitution leaves to the legislature the
authority to establish lower courts, as well as "to define,
prescribe, and apportion the jurisdiction of the various
courts[,]"  except of this court. Article VIII, Section 1 of the 1987
[47]

Constitution provides that "[t]he judicial power shall be vested in


one Supreme Court and in such lower courts as may be
established by law."

For their part, administrative agencies are statutory constructs.


Thus, they are limited by the statutes which created them and
which spelled out their powers and functions. "It is a fundamental
rule that an administrative agency has only such powers as are
expressly granted to it by law and those that are necessarily
implied in the exercise thereof[.]"  Administrative agencies may
[48]

exercise quasi-judicial powers, but only to the extent warranted


by administrative action. They may not exercise judicial
functions. This is illustrated in Philex Mining Corporation v.
Zaldivia, et al.,  which distinguished between judicial questions
[49]

and "questions of fact."  It is only the latter — questions of fact


[50]

— which was ruled to be within the competence of the Director of


Mines to resolve:
We see nothing in sections 61 and 73 of the Mining Law that
indicates a legislative intent to confer real judicial power upon the
Director of Mines. The very terms of section 73 of the Mining Law,
as amended by Republic Act No. 4388, in requiring that the
adverse claim must "state in full detail the nature, boundaries
and extent of the adverse claim" show that the conflicts to be
decided by reason such adverse claim refer primarily to questions
of fact. This is made even clearer by the explanatory note to
House Bill No. 2522, later to become Republic Act 4388, that
"sections 61 and 73 that refer to the overlapping of claims are
amended to expedite resolutions of mining conflicts. . . ." The
controversies to be submitted and resolved by the Director of
Mines under the sections refer therefore only to the overlapping
of claims, and administrative matters incidental thereto.

As already shown, petitioner's adverse claim is not one grounded


on overlapping of claims nor is it a mining conflict arising out of
mining locations (there being only one involved) but one
originating from the alleged fiduciary or contractual relationship
between petitioner and locator Scholey and his transferees
Yrastorza and respondent Zaldivia. As such, the adverse claim is
not within the executive or administrative authority of the mining
director to resolve, but in that of the courts, as it has been
correctly held, on the basis of the doctrine stated in Espinosa vs.
Makalintal, 79 Phil. 134.  (Emphasis supplied)
[51]

Unlike courts, the National Labor Relations Commission's


existence is not borne out of constitutional fiat. It owes its
existence to Article 213 of the Labor Code:
Art. 213. National Labor Relations Commission. There shall
be a National Labor Relations Commission which shall be attached
to the Department of Labor and Employment for program and
policy coordination only, composed of a Chairman and fourteen
(14) Members. (Emphasis in the original)
So, too, its jurisdiction (as well as those of Labor Arbiters) is
spelled out by Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the
Commission.
1. Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:
1.
2. Unfair labor practice cases;
3. Termination disputes;
4. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
5. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee
relations:
6. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and
lockouts; and
7. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
2.
3. The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters.
4. Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration
as may be provided in said agreements. (Emphasis in the
original)
Nevertheless, there is no basis for distinguishing between courts
and quasi-judicial agencies with respect to the effects of a party's
failure to timely assail errors in jurisdiction. These effects have
nothing to do with the distinction between the competencies of
courts and quasi-judicial agencies as spelled out by the
Constitution and statutes.

In a long line of cases, this court has held the rule on estoppel
vis-a-vis jurisdiction, as initially articulated in 1968 in Tijam to be
equally applicable to cases involving the National Labor Relations
Commission (and its related agencies).

By way of example, in Philippine Overseas Drilling and Oil


Development Corporation v. Hon. Ministry of Labor,  this court
[52]

stated:
Petitioner is now barred by estoppel from raising the issue of
jurisdiction, regardless of its merits. In the case of Tijam vs.
Sibonghanoy, April 15, 1968, 23 SCRA 29, the Court laid down
the rule of estoppel to raise the question of jurisdiction. This rule
was reiterated in numerous cases enumerated in the decision in
the case of Solicitor General vs. Coloma promulgated on July 7,
1986. In the case of Akay Printing Press vs. Minister of Labor and
Employment, the Court ruled as follows:
When the illegal dismissal case was pending before the MOLE
Regional Director, petitioner did not raise the issue of jurisdiction
either during the hearing or in its subsequent motion for
reconsideration. Its defense was a stout denial of the dismissal of
private respondents, who were averred instead to have
abandoned their work. After the adverse decision of the Regional
Director and upon the elevation of the case on appeal to the
Ministry of Labor and Employment, still no jurisdictional challenge
was made. It was only when petitioner moved to reconsider the
MOLE decision of affirmance that it assailed the jurisdiction of the
Regional Director. But then, it was too late. Estoppel had barred
him from raising the issue, regardless of its merits. (December 6,
1985, 140 SCRA 381, 384) [53]

Likewise, as stated in M. Ramirez Industries v. Secretary of Labor


and Employment: [54]

Moreover, petitioner is estopped from questioning the jurisdiction


of the Regional Director, having previously invoked it by filing a
motion to dismiss. As has been held:
[A] party can not invoke the jurisdiction of a court to secure
affirmative relief against his opponent and, after obtaining or
failing to obtain such relief, repudiate or question that same
jurisdiction.

In the case just cited, by way of explaining the rule, it was


further said that the question whether the court had jurisdiction
either of the subject-matter of the action or of the parties is
barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the
reason that such a practice can not be tolerated — obviously for
reasons of public policy.

Furthermore, it has also been held that after voluntarily


submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or
power of the court . . . And in Littleton vs. Burges, Wyo, 58, the
Court said that it is not right for a party who has affirmed and
invoked the jurisdiction of a court in a particular matter to secure
an affirmative relief, to afterwards deny that same jurisdiction to
escape a penalty. [55]

IV

Article 218 of the Labor Code vests in the National Labor


Relations Commission the authority to adopt procedural rules:
Art. 218. Powers of the Commission. The Commission shall
have the power and authority:
1. To promulgate rules and regulations governing the hearing
and disposition of cases before it and its regional branches,
as well as those pertaining to its internal functions and such
rules and regulations as may be necessary to carry out the
purposes of this Code[.]
It is consistent with this power that the National Labor Relations
Commission adopted the rules that are at the core of the present
controversy. Rule VI, Section 3 of the 1999 Rules of Procedure of
the National Labor Relations Commission that were in effect when
petitioner appealed from Executive Labor Arbiter Cueto's Decision
provides for the requisites that must be satisfied in order that an
appeal from a decision of a Labor Arbiter may be perfected:
Section 3. Requisites for Perfection of Appeal. — (a) The appeal
shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be under oath with proof of payment
of the required appeal fee and the posting of a cash or surety
bond as provided in Section 5 of this Rule; shall be accompanied
by a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof; the relief prayed for;
and a statement of the date when the appellant received the
appealed decision, order or award and proof of service on the
other party of such appeal.

A mere notice of appeal without complying with the other


requisite aforestated shall not stop the running of the period for
perfecting an appeal.

(b) The appellee may file with the Regional Arbitration Branch,
Regional Office or in the POEA where the appeal was filed, his
answer or reply to appellant's memorandum of appeal, not later
than ten (10) calendar days from receipt thereof. Failure on the
part of the appellee who was properly furnished with a copy of
the appeal to file his answer or reply within the said period may
be construed as a waiver on his part to file the same.
(c)  Subject to the provisions of Article 218, once the appeal is
perfected in accordance with these rules, the Commission may
limit itself to reviewing and deciding specific issues that were
elevated on appeal. (Emphasis in the original)
Rule VI, Section 4 of the same rules stipulates where appeals
must be filed:
Section 4. Where Filed. — The appeal in five (5) legibly
typewritten copies shall be filed with the respective Regional
Arbitration Branch, the Regional Office, or the Philippine Overseas
Employment Administration where the case was heard and
decided. (Emphasis in the original)
This venue for filing appeals is unequivocal. The Court of Appeals
was thus correct in stating that it "is clear and unambiguous that
the memorandum on appeal must be filed with the Regional
Arbitration Branch which rendered the decision sought to be
appealed." [56]

It is not disputed that this rule was violated by petitioner. In the


present Petition, petitioner categorically admitted that it "filed its
memorandum of appeal directly with the [National Labor
Relations Commission.]" [57]

Thus, there is basis for positing, as respondent and the Court of


Appeals did, that "no appeal before [the National Labor Relations
Commission] could have been perfected[.]"  The logical[58]

consequence of this position, assuming it is correct, is that


Executive Labor Arbiter Cueto's April 25, 2000 Decision "has
attained finality[.]"
[59]

This conclusion, however, fails to consider that the error


committed by petitioner pertains to the place for filing appeals
and not the requisites for perfecting an appeal which Rule VI,
Section 3 enumerates. The place where appeals must be filed is
governed by a distinct provision (i.e., Section 4) and is thus a
matter that is different from the requisites for perfecting appeals.
Per Section 3, only the following are necessary in order that
petitioner may perfect its appeal:
(1) Filing within the applicable reglementary period as provided
by Section 1;[60]

(2) That the appeal was under oath;

(3) That the appeal fee must have been paid;

(4) That the appeal bond must have been posted;

(5) A memorandum of appeal which states:


a. the grounds relied upon and the arguments in support of the
appeal;
b. the relief sought; and
c. a statement of the date when the assailed decision was
received; and
(6) Proof of service of the appeal on the adverse party.
Likewise, this conclusion presupposes that procedural rules in
labor cases must be adhered to with uncompromising exactitude.
This is misguided. The same rules which respondent and the
Court of Appeals rely on allow for the liberal application of
procedural rules. In Rule VII, Section 10, it states:
Section 10. Technical rules not binding. — The rules of
procedure and evidence prevailing in courts of law and equity
shall not be controlling and the Commission shall use every and
all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law procedure,
all in the interest of due process.

In any proceeding before the Commission, the parties may be


represented by legal counsel but it shall be the duty of the
Chairman, any Presiding commissioner or Commissioner to
exercise complete control of the proceedings at all stages.
The need for liberality in this case is underscored by how the
National Labor Relations Commission acquiesced to the filing of
an appeal directly before it. As pointed out by petitioner, not only
did the National Labor Relations Commission admit its
Memorandum of Appeal, it also "required petitioner to pay the
appeal fee and to post the required bond."  As the agency
[61]
statutorily vested with jurisdiction over petitioner's appeal,
petitioner could very easily have mistaken that the filing of its
Memorandum of Appeal was rightly made before the National
Labor Relations Commission. If at all, the provision that filing of a
Memorandum of Appeal must be made before the Regional
Arbitration Branch is merely a delegation of a function more
appropriately pertaining to the appellate body itself.

In any case, the National Labor Relations Commission could have


very easily advised petitioner if there was anything irregular with
its direct filing of a Memorandum of Appeal. Its silence on this
matter would have induced in petitioner no other reasonable
conclusion than that direct filing before the National Labor
Relations Commission was in keeping with the procedural
requirements for filing appeals.

Not only did the National Labor Relations Commission acquiesce


to the direct filing of an appeal before it, so did respondent. The
matter of the propriety of the National Labor Relations
Commission's assumption of jurisdiction was never raised by
respondent before the Commission. Even after petitioner's appeal
had been initially decided against her and she filed her Motion for
Reconsideration, respondent totally overlooked this matter. As
was evident from the recital of grounds  invoked in her Motion
[62]

for Reconsideration, respondent's contentions centered merely on


the National Labor Relations Commission's supposedly erroneous
reliance on petitioner's Position Paper.

The Court of Appeals thus failed to account for the crucial fact
that the issue of jurisdiction was invoked by respondent only
upon her elevation to it of the case. It failed to recognize that
respondent had all the opportunity to raise this issue before the
very tribunal whom she claims to have had no competence to rule
on the appeal, but that it was only after the same tribunal ruled
against her twice — first, in its initial Resolution and second, in
denying her reconsideration — that she saw it fit to assail its
jurisdiction. The Court of Appeals failed to see through
respondent's own failure to seasonably act and failed to realize
that she was guilty of estoppel by laches, taking "an
unreasonable . . . length of time, to do that which, by exercising
due diligence, could or should have been done earlier[.]" [63]

Respondent cannot now profit from her own inaction. She actively
participated in the proceedings and vigorously argued her case
before the National Labor Relations Commission without the
slightest indication that she found anything objectionable to the
conduct of those proceedings. It is thus but appropriate to
consider her as acceding to and bound by how the National Labor
Relations Commission was to resolve and, ultimately did resolve,
petitioner's appeal. Its findings that the requisites of substantive
and procedural due process were satisfied in terminating
respondent's employment now stand undisturbed.

WHEREFORE, the Petition for Review on Certiorari is GRANTED.


The June 30, 2008 Decision and the March 20, 2009 Resolution of
the Court of Appeals in CA-G.R. SP No. 69361-MIN
are REVERSED and SET ASIDE. The April 30, 2001 Resolution
of the National Labor Relations Commission is REINSTATED.

SO ORDERED.

Peralta,  Bersamin,  Del


* **
Castillo,  (Acting
***

Chairperson), and Mendoza, JJ., concur

 Designated Acting Member per S.O. No. 2088 dated July 1,


*

2015.

 Designated Acting Member per S.O. No. 2079 dated June 29,
**

2015.

 Designated Acting Chairperson per S.O. No. 2087 (Revised)


***

dated July 1, 2015.


[1]
 Rollo, pp. 33-34.

[2]
 Id. at 42.

[3]
 Id. at 35.

[4]
 Id. at 42.

[5]
 Id. at 42-43.

[6]
 Id. at 322-350.

[7]
 Id. at 349-350.

[8]
 Id. at 43-44.

[9]
 Id. at 44.

 Id. at 68-149. The Resolution was penned by Presiding


[10]

Commissioner Salic B. Dumarpa and concurred in by


Commissioners Oscar Abella and Leon G. Gonzaga, Jr.

[11]
 Id. at 149.

[12]
 Id. at 121.

[13]
 Id. at 121-122.

[14]
 Id. at 123.

[15]
 Id.

[16]
 Id. at 177-195.

[17]
 Id. at 178.

[18]
 Id. at 180.
[19]
 Id. at 182.

[20]
 Id. at 18.

[21]
 Id. at 196-266.

[22]
 Id. at 240.

[23]
 Id. at 45.

[24]
 Id.

[25]
 Id., emphasis and underscoring in the original.

 Section 3. Requisites for Perfection of Appeal. — (a) The appeal


[26]

shall be filed within the reglementary period as provided in


Section 1 of this Rule; shall be under oath with proof of payment
of the required appeal fee and the posting of a cash or surety
bond as provided in Section 5 of this Rule; shall be accompanied
by a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof; the relief prayed for;
and a statement of the date when the appellant received the
appealed decision, order or award and proof of service on the
other party of such appeal.

A mere notice of appeal without complying with the other


requisite aforestated shall not stop the running of the period for
perfecting an appeal.

(b) The appellee may file with the Regional Arbitration Branch,
Regional Office or in the POEA where the appeal was filed, his
answer or reply to appellant's memorandum of appeal, not later
than ten (10) calendar days from receipt thereof. Failure on the
part of the appellee who was properly furnished with a copy of
the appeal to file his answer or reply within the said period may
be construed as a waiver on his part to file the same.
(c) Subject to the provisions of Article 218, once the appeal is
perfected in accordance with these rules, the Commission may
limit itself to reviewing and deciding specific issues that were
elevated on appeal.

[27]
 Rollo, p. 45. Emphasis and underscoring in the original.

 Id. at 32-57. The Decision was penned by Associate Justice


[28]

Rodrigo F. Lim, Jr. (Chair) and concurred in by Associate Justices


Michael P. Elbinias and Ruben C. Ayson.

[29]
 Id. at 56.

 Section 4. Where Filed. — The appeal in five (5) legibly


[30]

typewritten copies shall be filed with the respective Regional


Arbitration Branch, the Regional Office, or the Philippine Overseas
Employment Administration where the case was heard and
decided.

[31]
 Rollo, pp. 46 and 49.

[32]
 Id. at 49, emphasis and underscoring in the original.

[33]
 Id.

[34]
 Id. at 49-50.

 Id. at 65-67. The Resolution was penned by Associate Justice


[35]

Rodrigo F. Lim, Jr. (Chair) and concurred in by Associate Justices


Michael P. Elbinias and Ruben C. Ayson of the Twenty-third
Division.

[36]
 Id. at 66.

[37]
 Id. at 14-27.

[38]
 Id. at 22.
[39]
 Id. at 23.

[40]
 Id.

[41]
 Id. at 24-26.

 Heirs of Bertuldo Hinog v. Hon. Melicor, 495 Phil. 422, 438


[42]

(2005) [Per J. Austria-Martinez, Second Division].

[43]
 515 Phil. 409 (2006) [Per J. Corona, Second Division].

[44]
 Id. at 416.

[45]
 131 Phil. 556 (1968) [Per J. Dizon, En Banc].

[46]
 Id. at 563-565.

[47]
 CONST., art. VIII, sec. 2 provides:

Section 2. The Congress shall have the power to define,


prescribe, and apportion the jurisdiction of the various courts but
may not deprive the Supreme Court of its jurisdiction over cases
enumerated in Section 5 hereof.

No law shall be passed reorganizing the Judiciary when it


undermines the security of tenure of its Members.

 Guerzon v. Court of Appeals, 247 Phil. 142, 152 (1988) [Per J.


[48]

Cortes, Third Division], citing Makati Stock Exchange, Inc. v.


Securities and Exchange Com., et al., 121 Phil. 1412, 1415
(1965) [Per C.J. Bengzon, En Banc] and Sy v. Central Bank of the
Phils., 162 Phil. 764, 786 (1976) [Per J. Martin, First Division].

[49]
 150 Phil. 547 (1972) [Per J. J. B. L. Reyes, En Banc].

[50]
 Id. at 553.

[51]
 Id. at 553-554.
[52]
 230 Phil. 177 (1986) [Per J. Feria, Second Division].

[53]
 Id. at 185-186.

[54]
 334 Phil. 97 (1997) [Per J. Mendoza, Second Division].

 Id. at 113, citing Tijam, et al. v. Sibonghanoy, et al., 131 Phil.


[55]

556, 563 (1968) [Per J. Dizon, En Banc] and Quimpo v. De la


Victoria, et al., 150-B Phil. 124, 133-134 (1972) [Per J. J. B. L.
Reyes, En Banc].

[56]
 Rollo, p. 49.

[57]
 Id. at 22.

[58]
 Id.

[59]
 Id. at 49-50.

 Section 1. Periods of Appeal. — Decisions, awards or orders of


[60]

the Labor Arbiter and the POEA Administrator shall be final and
executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such
decisions, awards or orders of the Labor Arbiter or of the
Administrator, and in case of a decision or of the Regional
Director or his duly authorized Hearing Officer within five (5)
calendar days from receipt of such decisions, awards or orders. If
the 10th or 5th day, as the case may be, falls on a Saturday,
Sunday or a holiday, the last day to perfect the appeal shall be
the next working day.

[61]
 Rollo, p. 22.

[62]
 Id. at 178, 180, and 182.

 Tijam, et al. v. Sibonghanoy, et al., 131 Phil. 556, 563 (1968)


[63]

[Per J. Dizon, En Banc].


Source: Supreme Court E-Library | Date created: October 30, 2017
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749 PHIL. 458


SECOND DIVISION

[ G.R. No. 211465, December 03, 2014


]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. SHIRLEY A. CASIO, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

“Chicks mo dong?” [1]

With this sadly familiar question being used on the streets of


many of our cities, the fate of many desperate women is sealed
and their futures vanquished. This case resulted in the rescue of
two minors from this pernicious practice. Hopefully, there will be
more rescues. Trafficking in persons is a deplorable crime. It is
committed even though the minor knew about or consented to
the act of trafficking.
This case involves Republic Act No. 9208,  otherwise known as
[2]

the “Anti-Trafficking in Persons Act of 2003.” [3]

Accused Shirley A. Casio was charged for the violation of Republic


Act No. 9208, Section 4(a), qualified by Section 6(a). The
information against accused, dated May 5, 2008, states:
That on or about the 3  day of May 2008, at about 1:00 o’clock
rd

A.M., in the City of Cebu, Philippines, and within the jurisdiction


of this Honorable Court, the said accused, with deliberate intent,
with intent to gain, did then and there hire and/or recruit AAA, a
minor, 17 years old and BBB for the purpose of prostitution and
sexual exploitation, by acting as their procurer for different
customers, for money, profit or any other consideration, in
Violation of Sec. 4, Par. (a), Qualified by Sec. 6, Par. ( a), of R.A.
9208 (Qualified Trafficking in Persons).

CONTRARY TO LAW. [4]

The facts, as found by the trial court and the Court of Appeals,
are as follows:

On May 2, 2008, International Justice Mission (IJM),  a non-[5]

governmental organization, coordinated with the police in order


to entrap persons engaged in human trafficking in Cebu City. [6]

Chief PSI George Ylanan, SPO1 Felomino Mendaros, SPO1 Fe


Altubar, PO1 Albert Luardo, and PO1 Roy Carlo Veloso composed
the team of police operatives.  PO1 Luardo and PO1 Veloso were
[7]

designated as decoys, pretending to be tour guides looking for


girls to entertain their guests.  IJM provided them with marked
[8]

money, which was recorded in the police blotter. [9]

The team went to Queensland Motel and rented Rooms 24 and


25. These rooms were adjacent to each other. Room 24 was
designated for the transaction while Room 25 was for the rest of
the police team. [10]

PO1 Luardo and PO1 Veloso proceeded to D. Jakosalem Street in


Barangay Kamagayan, Cebu City’s red light district. Accused
noticed them and called their attention by saying “Chicks mo
dong?” (Do you like girls, guys?). [11]

During trial, PO1 Luardo and PO1 Veloso testified that their
conversation with accused went as follows:
Accused: Chicks mo dong? (Do you like girls, guys?)

PO1 Unya mga bag-o? Kanang batan-on kay naa mi guests naghulat sa motel. (Are
Luardo: be young because we have guests waiting at the motel.)

Accused: Naa, hulat kay magkuha ko. (Yes, just wait and I’ll get them.) [12]

At that point, PO1 Luardo sent a text message to PSI Ylanan that
they found a prospective subject. [13]

After a few minutes, accused returned with AAA and BBB, private
complainants in this case. [14]

Accused: Kining duha kauyon mo ani? (Are you satisfied with these two?)

PO1 Maayo man kaha na sila modala ug kayat? (Well, are they good in sex?) [15]

Veloso:
Accused gave the assurance that the girls were good in sex. PO1
Luardo inquired how much their services would cost. Accused
replied, “Tag kinientos” (P500.00). [16]

PO1 Veloso and PO1 Luardo convinced accused to come with


them to Queensland Motel. Upon proceeding to Room 24, PO1
Veloso handed the marked money to accused. [17]

As accused counted the money, PO1 Veloso gave PSI Ylanan a


missed call. This was their pre-arranged signal. The rest of the
team proceeded to Room 24, arrested accused, and informed her
of her constitutional rights. The police confiscated the marked
money from accused.  Meanwhile, AAA and BBB “were brought
[18]

to Room 25 and placed in the custody of the representatives from


the IJM and the DSWD.” [19]
During trial, AAA testified that she was born on January 27, 1991.
This statement was supported by a copy of her certificate of live
birth.
[20]

AAA narrated that in 2007, she worked as a house helper in


Mandaue City. In March 2008 she stopped working as a house
helper and transferred to Cebu City. She stayed with her cousin,
but she subsequently moved to a boarding house. It was there
where she met her friend, Gee Ann. AAA knew that Gee Ann
worked in a disco club. When Gee Ann found out that AAA was no
longer a virgin, she offered AAA work. AAA agreed because she
needed the money in order to help her father. AAA recalled that
she had sex with her first customer. She was paid P200.00 and
given an additional P500.00 as tip. For the first few weeks, Gee
Ann provided customers for AAA. Eventually, Gee Ann brought
her to Barangay Kamagayan, telling her that there were more
customers in that area.[21]

AAA stated that she knew accused was a pimp because AAA
would usually see her pimping girls to customers in Barangay
Kamagayan.  AAA further testified that on May 2, 2008, accused
[22]

solicited her services for a customer. That was the first time that
she was pimped by accused.  Accused brought her, BBB, and a
[23]

certain Jocelyn to Queensland Motel. [24]

AAA testified that Jocelyn stayed in the taxi, while she and BBB
went to Room 24. It was in Room 24 where the customer paid
Shirley. The police rushed in and told AAA and BBB to go to the
other room. AAA was then met by the Department of Social
Welfare and Development personnel who informed her that she
was rescued and not arrested. [25]

AAA described that her job as a prostitute required her to display


herself, along with other girls, between 7 p.m. to 8 p.m. She
received P400.00 for every customer who selected her. [26]

The prosecution also presented the police operatives during trial.


PSI Ylanan, SPO1 Mendaros, and SPO1 Altubar testified that after
PO1 Veloso had made the missed call to PSI Ylanan, they “rushed
to Room 24 and arrested the accused.”  SPO1 Altubar retrieved
[27]

the marked money worth P1,000.00 from accused’s right hand


“and upon instruction from PCINSP Ylanan recorded the same at
the ‘police blotter prior operation’. . . .”
[28]

The trial court noted that AAA requested assistance from the IJM
“in conducting the operation against the accused.” [29]

Version of the accused

In defense, accused testified that she worked as a


laundrywoman. On the evening of May 2, 2008, she went out to
buy supper. While walking, she was stopped by two men on
board a blue car. The two men asked her if she knew someone
named Bingbing. She replied that she only knew Gingging but not
Bingbing. The men informed her that they were actually looking
for Gingging, gave her a piece of paper with a number written on
it, and told her to tell Gingging to bring companions. When
accused arrived home, she contacted Gingging. Gingging
convinced her to come because allegedly, she would be given
money by the two males. [30]

Ruling of the trial court

The Regional Trial Court, Branch 14 in Cebu City found accused


guilty beyond reasonable doubt and held  that:
[31]

Accused had consummated the act of trafficking of person[s] . . .


as defined under paragraph (a), Section 3 of R.A. 9208 for the
purpose of letting her engage in prostitution as defined under
paragraph [c] of the same Section; the act of “sexual intercourse”
need not have been consummated for the mere “transaction” i.e.
the ‘solicitation’ for sex and the handing over of the “bust money”
of Php1,000.00 already consummated the said act.

....
WHEREFORE, the Court finds accused, SHIRLEY A. CASIO,
GUILTY beyond reasonable doubt of trafficking in persons under
paragraph (a), Section 4 as qualified under paragraph (a),
Section 6 of R.A. 9208 and sentenced to suffer imprisonment of
TWENTY (20) YEARS and to pay a fine of ONE MILLION
(Php1,000,000.00).

Finally, accused is ordered to pay the costs of these proceedings.

SO ORDERED[.] [32]

Ruling of the Court of Appeals

The Court of Appeals affirmed the findings of the trial court but
modified the fine and awarded moral damages. The dispositive
portion of the decision  reads: [33]

WHEREFORE, in view of the foregoing premises, the instant


appeal is hereby DENIED. The assailed Decision dated 10 August
2010 promulgated by the Regional Trial Court, Branch 14 in Cebu
City in Crim. Case No. CBU-83122 is AFFIRMED WITH
MODIFICATIONS. The accused-appellant is accordingly sentenced
to suffer the penalty of life imprisonment and a fine of
Php2,000,000 and is ordered to pay each of the private
complainants Php150,000 as moral damages.

SO ORDERED. [34]

Accused filed a notice of appeal  on August 28, 2013, which the
[35]

Court of Appeals noted and gave due course in its


resolution  dated January 6, 2014.
[36]

The case records of CA-G.R. CEB-CR No. 01490 were received by


this court on March 17, 2014. [37]

In the resolution  dated April 29, 2014, this court resolved to


[38]

notify the parties that they may file their respective supplemental
briefs within 30 days from notice. This court also required the
Superintendent of the Correctional Institution for Women to
confirm the confinement of accused. [39]
Counsel for accused  and the Office of the Solicitor General  filed
[40] [41]

their respective manifestations, stating that they would no longer


file supplemental briefs considering that all issues had been
discussed in the appellant’s brief and appellee’s brief filed before
the Court of Appeals. Through a letter  dated June 17, 2014,
[42]

Superintendent IV Rachel D. Ruelo confirmed accused’s


confinement at the Correctional Institution for Women since
October 27, 2010.

The sole issue raised by accused is whether the prosecution was


able to prove her guilt beyond reasonable doubt.

However, based on the arguments raised in accused’s brief, the


sole issue may be dissected into the following:

(1) Whether the entrapment operation conducted by the police was valid, considering
and the police did not know the subject of the operation;
[43]

(2) Whether the prosecution was able to prove accused’s guilt beyond reasonable doub
presented to show that accused has a history of engaging in human trafficking;  an
[44]

(3) Whether accused was properly convicted of trafficking in persons, considering tha
prostitute.[45]

Arguments of accused

Accused argues that there was no valid entrapment. Instead, she


was instigated into committing the crime.  The police did not
[46]

conduct prior surveillance and did not even know who their
subject was.  Neither did the police know the identities of the
[47]

alleged victims.

Accused further argues that under the subjective test, she should
be acquitted because the prosecution did not present evidence
that would prove she had a history of engaging in human
trafficking or any other offense. She denied being a pimp and
asserted that she was a laundrywoman.  In addition, AAA[48]
admitted that she worked as a prostitute. Thus, it was her
decision to display herself to solicit customers.
[49]

Arguments of the plaintiff-appellee

The Office of the Solicitor General, counsel for plaintiff-appellee


People of the Philippines, argued that the trial court did not err in
convicting accused because witnesses positively identified her as
the person who solicited customers and received money for AAA
and BBB.  Entrapment operations are valid and have been
[50]

recognized by courts.  Likewise, her arrest in flagrante delicto is


[51]

valid.  Hence, the trial court was correct in stating that accused
[52]

had “fully consummated the act of trafficking of persons. . .” [53]

We affirm accused Shirley A. Casio’s conviction.

I.

Background of Republic Act No. 9208

The United Nations Convention against Transnational Organized


Crime (UN CTOC) was “adopted and opened for signature,
ratification and accession”  on November 15, 2000. The UN CTOC
[54]

is supplemented by three protocols: (1) the Protocol to Prevent,


Suppress and Punish Trafficking in Persons, Especially Women
and Children; (2) the Protocol against the Smuggling of Migrants
by Land, Sea and Air; and, (3) the Protocol against the Illicit
Manufacturing of and Trafficking in Firearms, their Parts and
Components and Ammunition. [55]

On December 14, 2000, the Philippines signed the United Nations


“Protocol to Prevent, Suppress and Punish Trafficking in Persons,
Especially Women and Children” (Trafficking Protocol).  This was
[56]

ratified by the Philippine Senate on September 30, 2001.  The [57]

Trafficking Protocol’s entry into force was on December 25, 2003.


[58]

In the Trafficking Protocol, human trafficking is defined as:


Article 3

Use of terms

For the purposes of this Protocol:

(a) “Trafficking in persons” shall mean the recruitment,


transportation, transfer, harbouring or receipt of persons, by
means of the threat or use of force or other forms of coercion, of
abduction, of fraud, of deception, of the abuse of power or of a
position of vulnerability or of the giving or receiving of payments
or benefits to achieve the consent of a person having control over
another person, for the purpose of exploitation. Exploitation shall
include, at a minimum, the exploitation of the prostitution of
others or other forms of sexual exploitation, forced labour or
services, slavery or practices similar to slavery, servitude or the
removal of organs;

(b) The consent of a victim of trafficking in persons to the


intended exploitation set forth in subparagraph (a) of this article
shall be irrelevant where any of the means set forth in
subparagraph (a) have been used;

(c) The recruitment, transportation, transfer, harbouring or


receipt of a child for the purpose of exploitation shall be
considered “trafficking in persons” even if this does not involve
any of the means set forth in subparagraph (a) of this article;

(d) “Child” shall mean any person under eighteen years of age.
Senator Loren Legarda, in her sponsorship speech, stated that
the “Anti-Trafficking Act will serve as the enabling law of the
country’s commitment to [the] protocol.” [59]

Senator Luisa Ejercito Estrada also delivered a sponsorship


speech and described trafficking in persons as follows:
Trafficking in human beings, if only to emphasize the gravity of
its hideousness, is tantamount to modern-day slavery at work. It
is a manifestation of one of the most flagrant forms of violence
against human beings. Its victims suffer the brunt of this
insidious form of violence. It is exploitation, coercion, deception,
abduction, rape, physical, mental and other forms of abuse,
prostitution, forced labor, and indentured servitude.

....

As of this time, we have signed the following: the Convention on


the Elimination of all Forms of Discrimination Against Women; the
1995 Convention on the Rights of the Child; the United Nations
Convention on the Protection of Migrant Workers and their
Families; and the United Nations’ Resolution on Trafficking in
Women and Girls, among others.

Moreover, we have also expressed our support for the United


Nations’ Convention Against Organized Crime, including the
Trafficking Protocol in October last year.

At first glance, it appears that we are very responsive to the


problem. So it seems.

Despite these international agreements, we have yet to come up


with a law that shall squarely address human trafficking. [60]

During the interpellation of Republic Act No. 9208, then


numbered as Senate Bill No. 2444, Senator Teresa Aquino-Oreta
asked if there was a necessity for an anti-trafficking law when
other laws exist that cover trafficking.
[61]

Senator Luisa Ejercito Estrada explained:


At present, Mr. President, the relevant laws to the trafficking
issue are the Revised Penal Code, Republic Act No. 8042 or the
Migrant Workers and Overseas Filipino Act, R[epublic] A[ct] No.
6955 or the Mail-Order Bride Act, and Republic Act No. 8239 or
the Philippine Passport Act. These laws address issues such as
illegal recruitment, prostitution, falsification of public documents
and the mail-order bride scheme. These laws do not respond to
the issue of recruiting, harboring or transporting persons
resulting in prostitution, forced labor, slavery and slavery-like
practices. They only address to one or some elements of
trafficking independent of their results or consequence.
 (Emphasis supplied)
[62]

Thus, Republic Act No. 9208 was enacted in order to fully address
the issue of human trafficking. Republic Act No. 9208 was passed
on May 12, 2003, and approved on May 26, 2003.

II.

Elements of trafficking in persons

The elements of trafficking in persons can be derived from its


definition under Section 3(a) of Republic Act No. 9208, thus:
(1) The act of “recruitment, transportation, transfer or harbouring, or receipt of pers
victim’s consent or knowledge, within or across national borders.”
(2) The means used which include “threat or use of force, or other forms of coe
deception, abuse of power or of position, taking advantage of the vulnerability of th
or receiving of payments or benefits to achieve the consent of a person having contr
(3) The purpose of trafficking is exploitation which includes “exploitation or the prostit
forms of sexual exploitation, forced labor or services, slavery, servitude or the remo
On January 28, 2013, Republic Act No. 10364  was approved, [64]

otherwise known as the “Expanded Anti-Trafficking in Persons Act


of 2012.” Section 3(a) of Republic Act No. 9208 was amended by
Republic Act No. 10364 as follows:
SEC. 3. Section 3 of Republic Act No. 9208 is hereby amended to
read as follows:

“SEC. 3. Definition of Terms. – As used in this Act:

“(a) Trafficking in Persons – refers to the recruitment, obtaining,


hiring, providing, offering, transportation, transfer, maintaining,
harboring, or receipt of persons with or without the victim’s
consent or knowledge, within or across national borders by
means of threat, or use of force, or other forms of coercion,
abduction, fraud, deception, abuse of power or of position, taking
advantage of the vulnerability of the person, or, the giving or
receiving of payments or benefits to achieve the consent of a
person having control over another person for the purpose of
exploitation which includes at a minimum, the exploitation or the
prostitution of others or other forms of sexual exploitation, forced
labor or services, slavery, servitude or the removal or sale of
organs.

“The recruitment, transportation, transfer, harboring, adoption or


receipt of a child for the purpose of exploitation or when the
adoption is induced by any form of consideration for exploitative
purposes shall also be considered as ‘trafficking in persons’ even
if it does not involve any of the means set forth in the preceding
paragraph. (Emphasis supplied)
Under Republic Act No. 10364, the elements of trafficking in
persons have been expanded to include the following acts:
(1) The act of “recruitment, obtaining, hiring, providing, offering, transportation
harboring, or receipt of persons with or without the victim’s consent or knowledge,
borders;”
(2) The means used include “by means of threat, or use of force, or other forms of coe
deception, abuse of power or of position, taking advantage of the vulnerability of th
or receiving of payments or benefits to achieve the consent of a person having contr
(3) The purpose of trafficking includes “the exploitation or the prostitution of others o
exploitation, forced labor or services, slavery, servitude or the removal or sale
supplied)
The Court of Appeals found that AAA and BBB were recruited by
accused when their services were peddled to the police who acted
as decoys.  AAA was a child at the time that accused peddled her
[65]

services.  AAA also stated that she agreed to work as a


[66]

prostitute because she needed money.  Accused took advantage


[67]

of AAA’s vulnerability as a child and as one who need money, as


proven by the testimonies of the witnesses. [68]

III.

Knowledge or consent of the minor is not a defense under


Republic Act No. 9208.

Accused claims that AAA admitted engaging in prostitution even


before May 2, 2008. She concludes that AAA was predisposed to
having sex with “customers” for money.  For liability under our
[69]
law, this argument is irrelevant. As defined under Section 3(a) of
Republic Act No. 9208, trafficking in persons can still be
committed even if the victim gives consent.
SEC. 3. Definition of Terms. — As used in this Act:
a. Trafficking in Persons - refers to the recruitment,
transportation, transfer or harboring, or receipt of
persons with or without the victim's consent or knowledge,
within or across national borders by means of threat or use
of force, or other forms of coercion, abduction, fraud,
deception, abuse of power or of position, taking advantage
of the vulnerability of the persons, or, the giving or receiving
of payments or benefits to achieve the consent of a person
having control over another person for the purpose of
exploitation which includes at a minimum, the exploitation or
the prostitution of others or other forms of sexual
exploitation, forced labor or services, slavery, servitude or
the removal or sale of organs.The recruitment
transportation, transfer, harboring or receipt of a child for
the purpose of exploitation shall also be considered as
“trafficking in persons” even if it does not involve any of the
means set forth in the preceding paragraph.  (Emphasis
[70]

supplied)
The victim’s consent is rendered meaningless due to the coercive,
abusive, or deceptive means employed by perpetrators of human
trafficking.  Even without the use of coercive, abusive, or
[71]

deceptive means, a minor’s consent is not given out of his or her


own free will.

Section 4 of Republic Act No. 9208 enumerates the different acts


of trafficking in persons. Accused was charged under Section
4(a), which states:
SEC. 4. Acts of Trafficking in Persons. — It shall be unlawful for
any person, natural or judicial, to commit any of the following
acts.

a.  To recruit, transport, transfer, harbor, provide, or receive a


person by any means, including those done under the pretext of
domestic or overseas employment or training or apprenticeship,
for the purpose of prostitution, pornography, sexual exploitation,
forced labor, slavery, involuntary servitude or debt bondage; [72]

Republic Act No. 9208 further enumerates the instances when the
crime of trafficking in persons is qualified.
SEC. 6. Qualified Trafficking in Persons. — The following are
considered as qualified trafficking:
a. When the trafficked person is a child;
b. When the adoption is effected through Republic Act No.
8043, otherwise known as the “Inter-Country Adoption Act
of 1995” and said adoption is for the purpose of prostitution,
pornography, sexual exploitation, forced labor, slavery,
involuntary servitude or debt bondage;
c. When the crime is committed by a syndicate, or in large
scale. Trafficking is deemed committed by a syndicate if
carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or
more persons, individually or as a group;
d. When the offender is an ascendant, parent, sibling, guardian
or a person who exercise authority over the trafficked
person or when the offense is committed by a public officer
or employee;
e. When the trafficked person is recruited to engage in
prostitution with any member of the military or law
enforcement agencies;
f.When the offender is a member of the military or law
enforcement agencies; and
g. When by reason or on occasion of the act of trafficking in
persons, the offended party dies, becomes insane, suffers
mutilation or is afflicted with Human Immunodeficiency Virus
(HIV) or the Acquired Immune Deficiency Syndrome (AIDS).
(Emphasis supplied) [73]

Section 3 (b) of Republic Act No. 9208 defines “child” as:


SEC. 3. Definition of Terms. — As used in this Act:

. . . . 
 
b. Child - refers to a person below eighteen (18) years of age or one who is over eigh
to fully take care of or protect himself/herself from abuse, neglect, cruelty, exploi
because of a physical or mental disability or condition.
[74]

Based on the definition of trafficking in persons and the


enumeration of acts of trafficking in persons, accused performed
all the elements in the commission of the offense when she
peddled AAA and BBB and offered their services to decoys PO1
Veloso and PO1 Luardo in exchange for money. The offense was
also qualified because the trafficked persons were minors.

Here, AAA testified as to how accused solicited her services for


the customers waiting at Queensland Motel. AAA also testified
that she was only 17 years old when accused peddled her. Her
certificate of live birth was presented as evidence to show that
she was born on January 27, 1991.

The prosecution was able to prove beyond reasonable doubt that


accused committed the offense of trafficking in persons, qualified
by the fact that one of the victims was a child. As held by the trial
court:
[T]he act of “sexual intercourse” need not have been
consummated for the mere “transaction” i.e. that ‘solicitation’ for
sex and the handing over of the “bust money” of Php.1,000.00
already consummated the said act. [75]

IV.

Validity of the entrapment operation

In People v. Doria,  this court discussed the objective test and


[76]

the subjective test to determine whether there was a valid


entrapment operation:
. . . American federal courts and a majority of state courts use
the “subjective” or “origin of intent” test laid down in Sorrells v.
United States to determine whether entrapment actually
occurred. The focus of the inquiry is on the accused's
predisposition to commit the offense charged, his state of mind
and inclination before his initial exposure to government agents.
All relevant facts such as the accused's mental and character
traits, his past offenses, activities, his eagerness in committing
the crime, his reputation, etc., are considered to assess his state
of mind before the crime. The predisposition test emphasizes the
accused's propensity to commit the offense rather than the
officer's misconduct and reflects an attempt to draw a line
between a “trap for the unwary innocent and the trap for the
unwary criminal.” If the accused was found to have been ready
and willing to commit the offense at any favorable opportunity,
the entrapment defense will fail even if a police agent used an
unduly persuasive inducement.

Some states, however, have adopted the “objective” test. . . .


Here, the court considers the nature of the police activity involved
and the propriety of police conduct. The inquiry is focused on the
inducements used by government agents, on police conduct, not
on the accused and his predisposition to commit the crime. For
the goal of the defense is to deter unlawful police conduct. The
test of entrapment is whether the conduct of the law enforcement
agent was likely to induce a normally law-abiding person, other
than one who is ready and willing, to commit the offense; for
purposes of this test, it is presumed that a law-abiding person
would normally resist the temptation to commit a crime that is
presented by the simple opportunity to act unlawfully. (Emphasis
supplied, citations omitted)[77]

Accused argued that in our jurisprudence, courts usually apply


the objective test in determining the whether there was an
entrapment operation or an instigation.  However, the use of the
[78]

objective test should not preclude courts from also applying the
subjective test. She pointed out that:
Applying the “subjective” test it is worth invoking that accused-
appellant procures income from being a laundry woman. The
prosecution had not shown any proof evidencing accused-
appellant’s history in human trafficking or engagement in any
offense. She is not even familiar to the team who had has [sic]
been apprehending human traffickers for quite some time.
 (Citations omitted)
[79]

Accused further argued that the police should have conducted a


prior surveillance before the entrapment operation.
Time and again, this court has discussed the difference between
entrapment and instigation. In Chang v. People,  this court
[80]

explained that:
There is entrapment when law officers employ ruses and schemes
to ensure the apprehension of the criminal while in the actual
commission of the crime. There is instigation when the accused is
induced to commit the crime. The difference in the nature of the
two lies in the origin of the criminal intent. In entrapment,
the mens rea originates from the mind of the criminal. The idea
and the resolve to commit the crime comes from him. In
instigation, the law officer conceives the commission of the crime
and suggests to the accused who adopts the idea and carries it
into execution.
[81]

Accused contends that using the subjective test, she was clearly
instigated by the police to commit the offense. She denied being
a pimp and claimed that she earned her living as a
laundrywoman. On this argument, we agree with the finding of
the Court of Appeals:
[I]t was the accused-appellant who commenced the transaction
with PO1 Luardo and PO1 Veloso by calling their attention on
whether they wanted girls for that evening, and when the officers
responded, it was the accused-appellant who told them to wait
while she would fetch the girls for their perusal.
[82]

This shows that accused was predisposed to commit the offense


because she initiated the transaction. As testified by PO1 Veloso
and PO1 Luardo, accused called out their attention by saying
“Chicks mo dong?” If accused had no predisposition to commit
the offense, then she most likely would not have asked PO1
Veloso and PO1 Luardo if they wanted girls.

The entrapment would still be valid using the objective test. The
police merely proceeded to D. Jakosalem Street in Barangay
Kamagayan. It was accused who asked them whether they
wanted girls. There was no illicit inducement on the part of the
police for the accused to commit the crime.

When accused was arrested, she was informed of her


constitutional rights.  The marked money retrieved from her was
[83]
recorded in the police blotter prior to the entrapment operation
and was presented in court as evidence. [84]

On accused’s alibi that she was merely out to buy her supper that
night, the Court of Appeals noted that accused never presented
Gingging in court. Thus, her alibi was unsubstantiated and cannot
be given credence. [85]

With regard to the lack of prior surveillance, prior surveillance is


not a condition for an entrapment operation’s validity.  In People
[86]

v. Padua  this court underscored the value of flexibility in police


[87]

operations:
A prior surveillance is not a prerequisite for the validity of an
entrapment or buy-bust operation, the conduct of which has no
rigid or textbook method. Flexibility is a trait of good police work.
However the police carry out its entrapment operations, for as
long as the rights of the accused have not been violated in the
process, the courts will not pass on the wisdom thereof. The
police officers may decide that time is of the essence and
dispense with the need for prior surveillance.  (Citations omitted)
[88]

This flexibility is even more important in cases involving


trafficking of persons. The urgency of rescuing the victims may at
times require immediate but deliberate action on the part of the
law enforcers.

V.

Imposition of fine and award of damages

The Court of Appeals properly imposed the amount of


P2,000,000.00. Section 10 (b) of Republic Act No. 9208 provides
that:
SEC. 10. Penalties and Sanctions. — The following penalties and
sanctions are hereby established for the offenses enumerated in
this Act:

. . . . 
 
c. Any person found guilty of qualified trafficking under Section 6 shall suffer the pen
and a fine of not less than Two million pesos (P2,000,000.00) but not more
(P5,000,000.00);
However, we modify by raising the award of moral damages from
P150,000.00  to P500,000.00. We also award exemplary
[89]

damages in the amount of P100,000.00. These amounts are in


accordance with the ruling in People v. Lalli  where this court
[90]

held that:
The payment of P500,000 as moral damages and P100,000 as
exemplary damages for the crime of Trafficking in Persons as a
Prostitute finds basis in Article 2219 of the Civil Code, which
states:
Art. 2219. Moral damages may be recovered in the following and
analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29,
30, 32, 34, and 35.

....
The criminal case of Trafficking in Persons as a Prostitute is an
analogous case to the crimes of seduction, abduction, rape, or
other lascivious acts. In fact, it is worse. To be trafficked as a
prostitute without one’s consent and to be sexually violated four
to five times a day by different strangers is horrendous and
atrocious. There is no doubt that Lolita experienced physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, and social humiliation
when she was trafficked as a prostitute in Malaysia. Since the
crime of Trafficking in Persons was aggravated, being committed
by a syndicate, the award of exemplary damages is likewise
justified.
[91]

Human trafficking indicts the society that tolerates the kind of


poverty and its accompanying desperation that compels our
women to endure indignities. It reflects the weaknesses of that
society even as it convicts those who deviantly thrive in such
hopelessness. We should continue to strive for the best of our
world, where our choices of human intimacies are real choices,
and not the last resort taken just to survive. Human intimacies
enhance our best and closest relationships. It serves as a
foundation for two human beings to face life’s joys and challenges
while continually growing together with many shared experiences.
The quality of our human relationships defines the world that we
create also for others.

Regardless of the willingness of AAA and BBB, therefore, to be


trafficked, we affirm the text and spirit of our laws. Minors should
spend their adolescence moulding their character in environments
free of the vilest motives and the worse of other human beings.
The evidence and the law compel us to affirm the conviction of
accused in this case.

But this is not all that we have done. By fulfilling our duties, we
also express the hope that our people and our government unite
against everything inhuman. We contribute to a commitment to
finally stamp out slavery and human trafficking.
There are more AAA’s and BBBs out there. They, too, deserve to
be rescued. They, too, need to be shown that in spite of what
their lives have been, there is still much good in our world.

WHEREFORE, premises considered, we AFFIRM the decision of


the Court of Appeals dated June 27, 2013, finding accused Shirley
A. Casio guilty beyond reasonable doubt of violating Section 4(a),
qualified by Section 6(a) of Republic Act No. 9208, and
sentencing her to suffer the penalty of life imprisonment and a
fine of P2,000,000.00, with the MODIFICATION that accused-
appellant shall not be eligible for parole under Act No. 4103
(Indeterminate Sentence Law) in accordance with Section 3 of
Republic Act No. 9346. [92]

The award of damages is likewise MODIFIED as follows:

Accused is ordered to pay each of the private complainants:

(1) P500,000.00 as moral damages; and

(2) P100,000.00 as exemplary damages.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Villarama, Jr.,  and Mendoza,


*

JJ., concur.

 Designated Acting Member per Special Order No. 1888 dated


*

November 28, 2014.

 Rollo, p. 4. The English translation for this is, “Do you like girls,
[1]

guys?” “Chicks” is a colloquial term for girls in Cebuano.

 An Act to Institute Policies to Eliminate Trafficking in Persons


[2]

Especially Women and Children, Establishing the Necessary


Institutional Mechanisms for the Protection and Support of
Trafficked Persons, Providing Penalties for its Violations, and for
Other Purposes.

 Note that the offense was committed on May 2, 2008, prior to


[3]

the enactment of Rep. Act No. 10364, which amended Rep. Act
No. 9208. Thus, the provisions of Rep. Act No. 9208 cited in this
case are the original provisions.

 CA rollo, p. 8. Although the information states, “3  day of May


[4] rd

2008,” the record of the case shows that the offense was
committed on May 2, 2008.

 International Justice Mission, Get To Know Us (visited


[5]

November 26, 2014). International Justice Mission or IJM is a


United States-based human rights organization, founded in 1997,
which aims to “protect the poor from violence.” International
Justice Mission, Where We Work (visited November 26, 2014). At
present, IJM has partner offices in Canada, United Kingdom,
Netherlands, and Germany. IJM also has field offices in Latin
America, India, Africa, Southeast Asia including the Philippines.

[6]
 Rollo, p. 4.

[7]
 Id. at 6.

[8]
 Id. at 4.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id. at 4–5.

[13]
 Id. at 5.

[14]
 Id.
[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 CA rollo, p. 9.

[21]
 Id. at 10.

[22]
 Id.

[23]
 Rollo, p. 6.

[24]
 CA rollo, pp. 10–11.

[25]
 Id. at 11.

[26]
 Id. at 10.

[27]
 Id. at 12.

[28]
 Id.

[29]
 Id.

[30]
 Rollo, p. 6.

[31]
 CA rollo, pp. 9–13.

[32]
 Id. at 13.
 Rollo, pp. 3–13. The decision was penned by Associate Justice
[33]

Edgardo L. Delos Santos and concurred in by Associate Justices


Pamela Ann Abella Maxino and Maria Elisa Sempio Diy of the
Nineteenth Division.

[34]
 Id. at 13.

[35]
 Id. at 14.

[36]
 Id. at 16–17.

[37]
 Id. at 1.

[38]
 Id. at 19–20.

[39]
 Id. at 19.

[40]
 Id. at 30–32. The manifestation was dated July 14, 2014.

[41]
 Id. at 22–24. The manifestation was dated July 14, 2014.

[42]
 Id. at 21.

[43]
 CA rollo, p. 33.

[44]
 Id. at 37.

[45]
 Id.

[46]
 Id. at 32.

[47]
 Id. at 33.

[48]
 Id. at 36–37.

[49]
 Id. at 37.

[50]
 Id. at 72–73.
[51]
 Id. at 74–75.

[52]
 Id. at 75–76.

[53]
 Id. at 72.

 United Nations Human Rights, Protocol to Prevent, “Suppress


[54]

and Punish Trafficking in Persons Especially Women and Children,


supplementing the United Nations Convention against
Transnational Organized Crime” (visited November 26, 2014).

 United Nations Office on Drugs and Crime, “United Nations


[55]

Convention against Transnational Organized Crime and the


Protocols Thereto” (visited November 26, 2014).

[56]
 United Nations Treaty Collection (visited: November 26, 2014).

 Sponsorship speech of Senator Loren Legarda, delivered on


[57]

December 10, 2002. Record of the Senate, Volume II, No. 42,
Twelfth Congress, Second Regular Session, October 15–
December 18, 2002, p. 617; Record of the Senate, Volume III,
No. 62, February 12, 2003, p. 383.

 United Nations Office on Drugs and Crime, “Signatories to the


[58]

United Nations Convention against Transnational Crime and its


Protocols” (visited November 27, 2014).

 Sponsorship speech of Senator Loren Legarda, delivered on


[59]

December 10, 2002. Record of the Senate, Volume II, No. 42,
Twelfth Congress, Second Regular Session, October 15–
December 18, 2002, p. 617.

 Record of the Senate, Volume II, No. 42, Twelfth Congress


[60]

Second Regular Session, October 15–December 18, 2002, p.


614–616.
 Record of the Senate, Volume III, No. 60, Twelfth Congress,
[61]

Second Regular Session, January 13–June 5, 2003, p. 364.

 Record of the Senate, Volume III, No. 60, Twelfth Congress,


[62]

Second Regular Session, January 13–June 5, 2003, p. 364.

 Rep. Act No. 9208 (2003), sec. 3(a). Note that this definition is
[63]

the original definition, considering that the crime was committed


prior to the enactment of Rep. Act No. 10364. In the resolution of
this case, we use the provisions in Rep. Act No. 9208 prior to its
amendment.

 An Act Expanding Rep. Act No. 9208 entitled “An Act to
[64]

Institute Policies to Eliminate Trafficking in Persons Especially


Women and Children, Establishing the Necessary Institutional
Mechanisms for the Protection and Support of Trafficked Persons,
Providing Penalties for its Violations and for Other Purposes.”

[65]
 Rollo, p. 6.

[66]
 Id. at 5.

[67]
 Id.

[68]
 Id. at 5–6.

[69]
 CA rollo, p. 37.

 Considering that Shirley A. Casio committed the offense in


[70]

2008, we apply the original definition of “trafficking in persons.”

 United Nations Office on Drugs and Crime, “Human Trafficking


[71]

FAQs” (visited November 26, 2014).

 Rep. Act No. 9208, sec. 4 prior to its amendment by Rep. Act
[72]

No. 10364.
 Rep. Act No. 9208, sec. 6 prior to its amendment by Rep. Act
[73]

No. 10364.

[74]
 This definition was maintained in Rep. Act No. 10364.

[75]
 CA rollo, p. 13.

[76]
 361 Phil. 595 (1999) [Per J. Puno, En Banc].

[77]
 Id. at 611–612.

[78]
 CA rollo, pp. 35–36.

[79]
 Id. at 36–37.

[80]
 528 Phil. 740 (2006) [Per J. Carpio Morales, Third Division].

 Id. at 751, citing Araneta v. Court of Appeals, 226 Phil. 437,


[81]

444 (1986) [Per J. Gutierrez, Jr., Second Division]; See also


People v. Quiaoit, Jr., 555 Phil. 441, 449 (2007) [Per J. Chico-
Nazario, Third Division]; People v. Cortez, 611 Phil. 360 (2009)
[Per J. Velasco, Jr., Third Division]; People v. Tapere, G.R. No.
178065, February 20, 2013, 691 SCRA 347, 358–359 [Per J.
Bersamin, First Division].

[82]
 Rollo, pp. 9–10.

[83]
 Id. at 5.

[84]
 CA rollo, p. 12.

[85]
 Rollo, p. 11.

[86]
 Id. at 10.

 G.R. No. 174097, July 21, 2010, 625 SCRA 220 [Per J.
[87]

Leonardo-De Castro, First Division].


[88]
 Id. at 239.

[89]
 Rollo, p. 13.

 G.R. No. 195419, October 12, 2011, 659 SCRA 105 [Per J.
[90]

Carpio, Second Division].

[91]
 Id. at 126.

 An Act Prohibiting the Imposition of Death Penalty in the


[92]

Philippines (2006)

Sec. 3 of Republic Act No. 9346 states:

“Sec.3. Persons convicted of offenses punished with reclusion


perpetua, or whose sentences will be reduced to reclusion
perpetua, by reason of this Act, shall not be eligible for parole
under Act No. 4103, otherwise known as the Indeterminate
Sentence Law, as amended.”

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736 Phil. 325


THIRD DIVISION

[ G.R. No. 208173, June 11, 2014 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. OLIVER A. BUCLAO, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

To protect one's daughter is one of the noblest roles of a father. A


father who defies this role is afflicted with a dysfunctional
character that borders on moral depravity. Even if this breach of
trust deserves the highest penalties in our legal order, it will
never compensate for the daughter's deepest scars and sorrows.

This resolves the appeal, through Section 13, paragraph (c), Rule
124 of the Rules of Court, as amended by A.M. No. 00-5-03-SC,
of the decision of the Regional Trial Court, Branch 9, La Trinidad,
Benguet in Criminal Case Nos. 06-CR-6298 and 06-CR-6299.
 The trial court found the accused Oliver Buclao guilty beyond
[1]

reasonable doubt of two counts of rape. The Court of Appeals,


upon intermediate review, affirmed with modification the trial
court's decision, finding the accused guilty of two counts of
qualified rape.
[2]

We restate the facts as summarized by the Court of Appeals.


Accused-appellant was charged with two counts of rape, as
defined under Article 266-A, paragraph 1 (a) and (c) of the
Revised Penal Code, as amended by Republic Act No. 8353 or the
Anti-Rape Law of 1997, in relation to Republic Act No. 7610.  The
[3]

informations read:
In Criminal Case No. 06-CR-6298:

INFORMATION

The undersigned prosecutor accuses OLIVER A. BUCLAO of the


crime of Rape, defined under Article 266-A, par. 1 (a & c), and
penalized under Article 266-B, both of the Revised Penal Code, as
amended by Republic Act No. 8353, otherwise known as "The
Anti-Rape Law of 1997", in relation to Republic Act No. 7610,
committed as follows:
That on or about the third week of September 2004, at
Camanggaan, Virac, Municipality of Itogon, Province of Benguet,
Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, who is the biological father of the
complainant, did then and there willfully, unlawfully and
feloniously, by means of force, threats, intimidation and grave
abuse of authority, have carnal knowledge with her daughter AAA
who is a minor, being fifteen (15) years old, against her will and
consent, to her great damage, prejudice and mental anguish.
CONTRARY TO LAW. In Criminal Case No. 06-CR-6299:

INFORMATION

The undersigned prosecutor accuses OLIVER A. BUCLAO of the


crime of Rape, defined under Article 266-A, par. 1 (a & c), and
penalized under Article 266-B, both of the Revised Penal Code, as
amended by Republic Act No. 8353, otherwise known as "The
Anti-Rape Law of 1997", in relation to Republic Act No. 7610,
committed as follows:
That on or about the 3  day of June 2003, at Camanggaan, Virac,
rd

Municipality of Itogon, Province of Benguet, Philippines and within


the jurisdiction of this Honorable Court, the above-named
accused, who is the biological father of the complainant, did then
and there willfully, unlawfully and feloniously, by means of force,
threats, intimidation and grave abuse of authority, have carnal
knowledge with her daughter [sic] AAA who is a minor, being
fifteen (15) years old, against her will and consent, to her great
damage, prejudice and mental anguish.
CONTRARY TO LAW. [4]

Accused-appellant entered a plea of not guilty, and the cases


were tried jointly.
[5]

During trial, private complainant AAA  testified that she was


[6]

cleaning their backyard at 11:00 a.m. on June 3, 2003.  AAA's


[7]

biological father, accused-appellant, called her to go inside their


house.  When AAA was inside, her father closed the door and
[8]
pushed her onto the bed.  AAA's father pulled her pants and
[9]

panties down to her knees  then he removed his pants and


[10]

briefs.  Next, AAA's father moved on top of her, inserted his


[11]

erect penis into her vagina, and started pumping or doing a push
and pull or an up and down motion.  AAA felt pain during the act,
[12]

but she could not fight back so she just cried while she was being
sexually assaulted.  Her father left after the incident.  However,
[13] [14]

before he left, the accused-appellant threatened her that he


would kill her if she told anyone about what happened. [15]

On the third week of September 2004, AAA was raped for the
second time.  AAA testified that at 12 in the afternoon, she was
[16]

sleeping on her bed and was awakened when she felt somebody
lying on top of her.  AAA was shocked to see her father. He
[17]

pulled down her pants and panties until they were around her
knees.  Her father then removed his pants and briefs.  AAA's
[18] [19]

father inserted his penis into her vagina and started doing the
pumping motion.  She cried out in pain, but she could not fight
[20]

off her father. Her father threatened to kill her if she told anyone
about the incident.  AAA was afraid so she kept the incident a
[21]

secret.  It was in 2006 when AAA told her maternal grandmother
[22]

about the rape.  They reported the incident to the police in


[23]

Binanga, Tuding, on April 4, 2006. [24]

The prosecution also presented as witness Dr. Genalin B. Manipol.


 The doctor testified that she examined AAA's genitalia and
[25]

found no injuries.  However, the doctor clarified that lack of


[26]

evident injuries in the genitalia does not negate the possibility of


sexual abuse. [27]

Accused-appellant denied raping his daughter twice.  He argued [28]

that the charges were false. He claimed that it was his daughter
BBB who was with him at their house on June 3, 2003.
 Similarly, accused-appellant alleged that on the third week of
[29]

September 2004, it was his other children, BBB and CCC, who
were with him at their house. [30]
During trial, accused-appellant admitted that he was convicted for
a previous case of child abuse.  His daughter BBB and his sister
[31]

Virginia Buclao Wacdagan testified for the defense and claimed


there was no truth to AAA's stories. [32]

On August 17, 2011 the trial court rendered a consolidated


judgment finding accused-appellant guilty beyond reasonable
doubt.  The dispositive portion of the decision states:
[33]

WHEREFORE, accused OLIVER BUCLAO is hereby found GUILTY


BEYOND REASONABLE DOUBT of TWO COUNTS OF RAPE. ITe is
sentenced to suffer the penalty of Reclusion Perpetua for each
case.

Further, accused Oliver Buclao is ordered to pay the victim child


the amount of P75,000.00 as civil indemnity, P50,000.00 as
moral damages, and another P30,000.00 as exemplary damages
for each of the two counts of Rape.

Furnish copy of this Consolidated Judgment to the Office of the


Provincial Prosecutor of Benguet, the complainant, the accused
and her counsel.

SO ORDERED. [34]

On review, the Court of Appeals affirmed with modification  the


[35]

trial court's decision. It held that the prosecution proved beyond


reasonable doubt the elements of rape under Article 266-A of the
Revised Penal Code.  AAA was able to narrate in detail the
[36]

antecedents and the surrounding circumstances of both rape


incidents.  Accused-appellant's defense of denial and ill motives
[37]

of AAA's grandmother in prodding AAA to file the case are


insufficient to rebut the evidence and arguments presented by
the prosecution. [38]

The dispositive part of the Court of Appeals' decision provides:


WHEREFORE, in view of the foregoing premises, the instant
appeal is hereby DENIED and the August 17, 2011 Consolidated
Judgment of the Regional Trial Court (Family Court for Benguet
Province), Branch 9, in LA Trinidad, Benguet in Crim. Cases Nos.
06-CR-6298 and 06-CR-6299 is hereby AFFIRMED with
MODIFICATION. Accused-appellant OLIVER BUCLAO is found
GUILTY beyond reasonable doubt of two counts of the crime of
QUALIFIED RAPE, and sentenced to reclusion perpetua, in lieu of
death, without eligibility for parole, for each case. He
is ORDERED to pay the victim AAA Seventy-Five Thousand Pesos
(P75,000.00) as civil indemnity, Fifty Thousand Pesos
(P50,000.00) as moral damages and Thirty Thousand Pesos
(P30,000.00) as exemplary damages, for each of the two counts
of rape.

SO ORDERED.  (Emphasis in the original)


[39]

On September 11, 2013, we issued a resolution which noted the


records forwarded by the Court of Appeals, notified the parties
that they may file their respective' supplemental briefs if they so
desire, and required the Chief Superintendent of the New Bilibid
Prison to confirm the confinement of accused-appellant. [40]

The following documents were then received by this court and


noted in our resolution dated January' 27, 2014: 1) letter dated
October 31, 2013 of P/Supt. IV Venancio J. Tesoro, new Bilibid
Prison, Muntinlupa City, confirming the confinement of accused-
appellant since November 8, 2011; 2) the Public Attorney's
Office's Manifestation (in Lieu of Supplemental Brief) dated
November 7, 2013 which stated that the Public Attorney's Office
would no longer file a supplemental brief as all the relevant
matters to the defense of appellant had already been taken up in
the appellant's brief previously filed before the Court of Appeals;
and 3) the Office of the Solicitor General's Manifestation (Re:
Supplemental Brief) dated November 8, 2013 which stated that
the office was not filing a supplemental brief as the appellee's
brief had sufficiently addressed the issues and arguments in the
appellant's brief.[41]

In his brief, accused-appellant argued that physical evidence is


the best evidence in a rape case.  During trial, the prosecution's
[42]

witness, Dr. Genalin Manipol, testified that her examination of


private complainant resulted in a possibility that no penis entered
private complainant's vagina.  Accordingly, all doubts as to the
[43]

truth of AAA's allegations must be resolved in favor of accused-


appellant and the presumption of innocence. [44]

In addition, accused-appellant questioned the delay in AAA's


reporting of the incident.  Accused-appellant also ascribed the
[45]

filing of the charges against AAA's maternal grandmother.


 According to accused-appellant, the animosity between him and
[46]

his mother-in-law was the reason behind the rape charges. [47]

The Office of the Solicitor General, for the people of the


Philippines, argued in its brief that accused-appellant is guilty
beyond reasonable doubt of the crime of rape under Article 266-A
of the Revised Penal Code.  According to the appellee, AAA's
[48]

positive identification of accused-appellant and her categorical


testimony of the circumstances during the two rape incidents
cannot be easily overcome by bare assertions of alibi and denial. [49]

Moreover, absence of lacerations in the victim's genitals does not


negate the commission of rape.  Rape is also not negated by the
[50]

delay in the reporting of the incident, particularly when the delay


was founded on the threats by the accused-appellant to the
victim's life.
[51]

The sole issue in this case is whether the accused-appellant is


guilty of two counts of rape beyond reasonable doubt.

We affirm the accused-appellant's conviction.

Article 266-A, paragraph (1) of the Revised Penal Code provides


the elements of the crime of rape:
Article 266-A. Rape: When And How Committed. - Rape is
committed:

1) By a man who shall have carnal knowledge of a woman under


any of the following circumstances:

a) Through force, threat, or intimidation;


b) When the offended party is deprived of reason or otherwise
unconscious;

c) By means of fraudulent machination or grave abuse of


authority; and

d) When the offended party is under twelve (12) years of age or


is demented, even though none of the circumstances mentioned
above be present. [52]

Rape is qualified when "the victim is under eighteen (18) years of


age and the offender is a parent, ascendant, step-parent,
guardian, relative by consanguinity or affinity within the third civil
degree, or the common-law spouse of the parent of the
victim."  The elements of qualified rape are: "(1) sexual
[53]

congress; (2) with a woman; (3) [done] by force and without


consent; ... (4) the victim is under eighteen years of age at the
time of the rape; and (5) the offender is a parent (whether
legitimate, illegitimate or adopted) of the victim."[54]

In this case, both the trial court and Court of Appeals found that
the prosecution proved beyond reasonable doubt all the elements
of qualified rape. This court sees no reason to depart from the
findings of the lower courts. As correctly observed by the Court of
Appeals, AAA's recollection of the heinous acts of her father was
vivid and straightforward. She was able to positively identify the
accused-appellant as her sexual assailant. Her testimony was
given in a "categorical, straightforward, spontaneous and candid
manner." [55]

We recently held that "[i]t is doctrinally settled that factual


findings of the trial court, especially on the credibility of the rape
victim, are accorded great weight and respect and will not be
disturbed on appeal." [56]

As to accused-appellant's argument that the absence of hymenal


lacerations admits the possibility that there was never any sexual
abuse, we find our disquisition in People v. Araojo  applicable:
[57]
The absence of external signs or physical injuries on the
complainant's body does not necessarily negate the commission
of rape, hymenal laceration not being, to repeat, an element of
the crime of rape. A healed or fresh laceration would of course be
a compelling proof of defloration. [However,] the foremost
consideration in the prosecution of rape is the victim's testimony
and not the findings of the medico-legal officer.
[58]

We also disagree with accused-appellant's argument that private


complainant AAA's delay in reporting the alleged rape incidents,
together with the prodding of AAA's grandmother, signals the
falsity of the rape allegations. In People v. Delos Reyes,  this
[59]

court ruled that:


The failure to immediately report the dastardly acts to her family
or to the authorities at the soonest possible time or her failure to
immediately change her clothes is not enough reason to cast
reasonable doubt on the guilt of [accused]. This Court has
repeatedly held that delay in reporting rape incidents, in the face
of threats of physical violence, cannot be taken against the
victim. Further, it has been written that a rape victim's actions
are oftentimes overwhelmed by fear rather than by reason. It is
this fear, springing from the initial rape, that the perpetrator
hopes to build a climate of extreme psychological terror, which
would, he hopes, numb his victim into silence and
submissiveness. [60]

To this court's mind, there can be no greater source of fear or


intimidation than your own father — one who, generally, has
exercised authority over your person since birth. Delay brought
by fear for one's life cannot be deemed unreasonable. This court
has recognized the moral ascendancy and influence the father
has over his child.  In cases of qualified rape, moral ascendancy
[61]

or influence supplants the element of violence or intimidation.  It [62]

is not only an element of the crime, but it is also a factor in


evaluating whether the delay in reporting the incident was
unreasonable.

Moreover, "[n]ot even the most ungrateful and resentful daughter


would push her own father to the wall as the fall guy in any crime
unless the accusation against him is true."  Thus, accused-
[63]
appellant's argument that AAA was forced by her grandmother to
fabricate the charges fails to sway this court.

This court has held before that "mere denial, like alibi, is
inherently a weak defense and constitutes self-serving negative
evidence which cannot be accorded greater evidentiary weight
than the declaration of credible witnesses who testify on
affirmative matters."  It is settled that the defense of alibi and
[64]

denial cannot overcome the victim's positive and categorical


testimony and identification of the accused-appellant.  Presence
[65]

of other family members is not a valid defense in rape cases since


rape may be carried out in the same room where the family
members are staying. [66]

With all the elements of qualified rape duly alleged and proven,
the Court of Appeals was correct in modifying the trial court's
decision. Under Article 266-B of the Revised Penal Code, the
proper penalty to be imposed is death. However, with the
effectivity of Republic Act No. 9346,  the imposition of death was
[67]

prohibited, and the penalty of reclusion perpetua without


eligibility for parole should be imposed instead.[68]

The suspension of the death penalty in cases where the father


rapes his daughter should not, however, be misinterpreted as
reducing the heinous nature of this crime. No matter how high
the penalty, our legal system cannot assuage the deepest injuries
caused by the abuse of trust committed by the father.

A father is supposed to be a daughter's role model of a man. He


is there to protect and comfort her. With the mother, a father's
love will be every daughter's assurance that however harsh the
world turns out to be, he will be there for her. Fathers should
inspire courage and trust within their daughters.

That a father abuses this trust to gratify his selfish carnal desires
is a dastardly act. It defiles not only his daughter's person. It
extinguishes all hope the daughter may have of the value of
family. It skews her understanding of the honor that may be
inherent in all men.

This court will never countenance such repugnant acts.

In rape cases, the award of civil indemnity is mandatory upon


proof of the commission of rape, whereas moral damages are
automatically awarded without the need to prove mental and
physical suffering.  Exemplary damages are also imposed, as
[69]

example for the public good and to protect minors from all forms
of sexual abuse.
[70]

In People v. Gambao,  we increased the amounts of indemnity


[71]

and damages where the proper penalty for the crime committed
by the accused is death but where it cannot be imposed because
of the enactment of Republic Act No. 9346.  We imposed as a
[72]

minimum the amounts of One Hundred Thousand Pesos (PI


00,000.00) as civil indemnity; One Hundred Thousand Pesos
(P100,000.00) as moral damages; and One Hundred Thousand
Pesos (P100,000.00) as exemplary damages.

In view of the depravity of the acts in this crime committed in


this case — multiple rape of a minor by her father — we further
increase the amounts awarded to private complainant, AAA.
Hence, we modify the award of civil indemnity from Seventy-five
Thousand Pesos (P75,000.00) to One Hundred Fifty Thousand
Pesos (P150,000.00); moral damages from Fifty Thousand Pesos
(P50,000.00) to One Hundred Fifty Thousand Pesos
(P150,000.00); and exemplary damages from Thirty Thousand
Pesos (P30,000.00) to One Hundred Thousand Pesos
(P100,000.00).

In addition, interest at the rate of 6% per annum should be


imposed on all damages awarded from the date of the finality of
this judgment until fully paid. [73]

WHEREFORE, the Court of Appeals' decision dated November 8,


2012 finding the accused-appellant Oliver Buclao guilty beyond
reasonable doubt of two counts of rape and sentencing him to
reclusion perpetua, without eligibility for parole, for each count of
rape, is AFFIRMED with MODIFICATION. The civil indemnity
awarded is increased to P150,000.00, the moral damages to
P150,000.00, and the exemplary damages to P100,000.00, for
each of the two counts of rape. The award of damages shall earn
interest at the rate of 6% per annum from the date of finality of
the judgment until fully paid.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Villarama, Jr.,  and Mendoza,


*

JJ., concur.

 Villarama, Jr., J., designated as Acting Member per Special


*

Order No. 1691 dated May 22, 2014 in view of the vacancy in the
Third Division.

[1]
 Rollo, p. 2.

 CA-G.R. CR-HC No. 05240, Court of Appeals, Special Thirteenth


[2]

Division per Associate Justice Isaias P. Dicdican with Associate


Justice Manuel M. Barrios and Associate Justice Agnes Reyes-
Carpio concurring.

 See Rep. Act No. 7610 (1992), Special Protection of Children


[3]

Against Abuse, Exploitation and Discrimination Act.

[4]
 Rollo, pp. 3-4.

[5]
 Id. at 4.

 See People v. Cabalquinto, 533 Phil. 703, 709 (2006) [Per J.


[6]

Tinga, En Banc], citing Rep. Act No. 9262 (2004), An Act Defining


Violence Against Women And Their Children, Providing For
Protective Measures For Victims, Prescribing Penalties Therefore,
And For Other Purposes, sec. 44.

[7]
 Rollo, p. 4.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 4-5.

[14]
 Id. at 5.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Id.

[19]
 Id.

[20]
 Id.

[21]
 Id.

[22]
 Id.

[23]
 Id.

[24]
 Id.
[25]
 Id.

[26]
 Id.

[27]
 Id. at 5-6.

[28]
 Id. at 6.

[29]
 Id.

[30]
 Id.

[31]
 Id.

[32]
 Id. at 6-7.

[33]
 Id. at 7.

[34]
 Id.

[35]
 Id. at 14.

[36]
 Id. at 8.

[37]
 Id. at 8-11.

[38]
 Id. at 13.

[39]
 Id. at 14-15.

[40]
 Id. at 21.

[41]
 Id. at 32-33.

[42]
 CA records, p. 45.

[43]
 Id. at 46.
[44]
 Id.

[45]
 Id.

[46]
 Id. at 47.

[47]
 Id.

[48]
 Id. at 73.

[49]
 Id. at 77.

[50]
 Id. at 77-78.

[51]
 Id. at 12-15.

 REV. PEN. CODE (1930), art. 266-A, as amended by Rep. Act


[52]

No. 8353 (1997).

 REV. PEN. CODE (1930), art. 266-B, as amended by Rep. Act


[53]

No. 8353 (1997).

 People v. Candellada, G.R. No. 189293, July 10, 2013, 701


[54]

SCRA 19, 30 [Per J. Leonardo-De Castro, First Division].

[55]
 Rollo, p. 11.

 People v. Gani, G.R. No. 195523, June 5, 2013, 697 SCRA 530,
[56]

537 [Per J. Peralta, Third Division]; See People v. Delos Reyes,


G.R. No. 177357, October 17, 2012, 684 SCRA 260, 275 [Per J.
Mendoza, Third Division] wherein this court held that "[t]he rule
is well-settled that when the decision hinges on the credibility of
witnesses and their respective testimonies, the trial court's
observations and conclusions deserve great respect and are
accorded finality, unless the records show facts or circumstances
of material weight and substance that the lower court overlooked,
misunderstood or misappreciated, and which, if properly
considered, would alter the result of the case." See also People v.
Mirandilla, Jr., G.R. No. 186417, July 27, 2011, 654 SCRA 761,
771 [Per J. Perez, Second Division], citing Soriano v. People, 579
Phil. 83, 97 [Per J. Velasco, Jr., Second Division].

[57]
 616 Phil. 275 (2009) [Per J. Velasco, Third Division].

 Id. at 288, citing People v. Boromeo, G.R. No. 150501, June 3,


[58]

2004, 430 SCRA 533, 542 [Per Curiam, En Banc] and People v.


Espino, Jr., 577 Phil. 546, 566 (2008) [Per J. Chico-Nazario, Third
Division].

 G.R. No. 177357, October 17, 2012, 684 SCRA 260 [Per J.
[59]

Mendoza, Third Division].

[60]
 Id. at 279-280.

 People v. Pioquinto, 549 Phil. 479, 486^87 (2007) [Per J.


[61]

Corona, En Banc].

 People v. Candellada, G.R. No. 189293, July 10, 2013, 701


[62]

SCRA 19, 32 [Per J. Leonardo-De Castro, First Division].

 People v. Venturina, G.R. No. 183097, September 12, 2012,


[63]

680 SCRA 508, 516 [Per J. Del Castillo, Second Division].

 People v. Alvero, 386 Phil. 181, 200 (2000) [Per Curiam, En


[64]

Banc]; see People v. Piosang, G.R. No. 200329, June 5, 2013,


697 SCRA 587, 596 [Per J. Leonardo-De Castro, First Division].

 See People v. Laurino, G.R. No. 199264, October 24, 2012, 684
[65]

SCRA 612, 620 [Per J. Reyes, First Division]; People v. Tamano,


G.R. No. 188855, December 8, 2010, 637 SCRA 672, 689 [Per J.
Perez, First Division],

 People v. Rubio, G.R. No. 195239, March 7, 2012, 667 SCRA


[66]

753, 766-767 [Per J. Velasco, Jr., Third Division].


 Rep. Act No. 9346 (2006), An Act Prohibiting the Imposition of
[67]

Death Penalty in the Philippines.

 See Rep. Act No. 9346 (2006), sec. 2, par. a; see also People
[68]

v. Rubio, G.R. No. 195239, March 7, 2012, 667 SCRA 753 [Per J.
Velasco, Third Division].

 See People v. Piosang, G.R. No. 200329, June 5, 2013, 697


[69]

SCRA 587, 599 [Per J. Leonardo-De Castro, First


Division]; People v. Pamintuan, G.R. No. 192239, June 5, 2013,
697 SCRA 470, 485 [Per J. Leonardo-De Castro, First Division].

 See People v. Piosang, G.R. No. 200329, June 5, 2013, 697


[70]

SCRA 587, 599 [Per J. Leonardo-De Castro, First


Division]; People v. Pamintuan, G.R. No. 192239, June 5, 2013,
697 SCRA 470, 485 [Per J. Leonardo-De Castro, First Division].

 People v. Gambao, G.R. No. 172707, October 1, 2013, 706


[71]

SCRA 508 [Per J. Perez, En Banc].

[72]
 Id. at 533.

 See People v. Cruz, G.R. No. 201728, July 17, 2013, 701 SCRA
[73]

548, 559-560 [Per J. Reyes, First Division], citing People v.


Cabungan, G.R. No. 189355, January 23, 2013, 689 SCRA 236,
249 [Per J. Del Castillo, Second Division]; People v. Gani, G.R.
No. 195523, June 5, 2013, 697 SCRA 530, 540 [Per J. Peralta,
Third Division], citing People v. Amistoso, G.R. No. 201447,
January 9, 2013, 688 SCRA 376, 395-396 [Per J. Leonardo-De
Castro, First Division]; People v. Arpon, G.R. No. 183563,
December 14,2011, 662 SCRA 506, 540 [Per J. Leonardo-De
Castro, First Division].
Source: Supreme Court E-Library | Date created: May 24, 2017
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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 222192, March 13, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. LAHMODIN AMERIL Y ABDUL @
"AMOR/MHONG", ACCUSED-APPELLANT.
DECISION

LEONEN, J.:

At the core of every prosecution for the sale of illegal drugs is the
constitutional mandate of the State to adduce proof on the
identity and integrity of the seized illegal drugs. The wisdom
behind this burden is to ensure that the items seized were neither
tampered nor contaminated. Failure to overcome such burden
calls for the acquittal of the accused. [1]

This resolves an Appeal from the Court of Appeals April 20, 2015
Decision  in CA-G.R. CR-HC No. 05502, which convicted
[2]

Lahmodin Ameril y Abdul @ "Amor/Mhong" of violation of Article


II, Section 5 of Republic Act No. 9165, or the Comprehensive
Dangerous Drugs Act of 2002, for the illegal sale of dangerous
drugs.

In an Information,  dated April 24, 2006 Ameril was charged with


[3]

violation of Article II, Section 5 of Republic Act No. 9165. The


accusatory portion read:
That on or about April 17, 2006, in the City of Manila,
Philippines, the said accused, not being authorized by law to sell,
trade, deliver or give away to another any dangerous drug, did
then and there willfully, unlawfully and knowingly sell or offer for
sale three (3) transparent plastic sachets with the following
markings and net weights, to wit:

    1.  "LAA" containing four point four one one two (4.4112)
grams;

    2.  "LAA-2" containing four point four three five zero (4.4350)
grams; and

    3.  "LAA" containing three point nine seven two seven (3.9727)
grams

of white crystalline substance containing Methylamphetamine


hydrochloride, known as "SHABU", which is a dangerous drug[.]

Contrary to law.  (Emphasis in the original)


[4]

On arraignment, Ameril pleaded not guilty. Trial on the merits


then ensued. [5]

The prosecution presented as its witness Special Investigator


Rolan Fernandez (Special Investigator Fernandez) of the National
Bureau of Investigation. [6]

Special Investigator Fernandez testified that on April 10, 2006, a


confidential informant came to the National Bureau of
Investigation Reaction Arrest Division.  The informant told the
[7]

Division Chief, Atty. Ruel Lasala, Jr. (Chief Lasala), that one (1)
alias "Amor," later identified as Ameril, was selling prohibited
drugs in Metro Manila.  Chief Lasala then instructed Special
[8]

Investigator Fernandez to confirm the information. [9]

The informant called Ameril and introduced Special Investigator


Fernandez as a prospective buyer.  Special Investigator
[10]

Fernandez proposed to Ameril that he wanted to buy P30,000


worth of methylamphetamine hydrochloride (shabu), to which the
latter agreed.
[11]

The informant went to Ameril after the conversation to arrange


the sale with Special Investigator Fernandez.  Later that day, the[12]

informant called Special Investigator Fernandez to tell him that


Ameril was ready to deliver the shabu. [13]

In the morning of April 17, 2006, the informant confirmed to


Special Investigator Fernandez that Ameril would deliver the
shabu at Solanie Hotel, Leon Guinto, Malate, Manila, at around
2:00 p.m. that day.  Special Investigator Fernandez then
[14]

prepared the boodle money consisting of two (2) P500 bills placed
on top of cut bond papers.  Special Investigator Fernandez
[15]

placed his initials on the bills,  but forgot where he actually


[16]

marked them. [17]

Special Investigator Fernandez also prepared a Pre-Operation


Report/Coordination Sheet  and sent it to both the Philippine
[18]

Drug Enforcement Agency and the local police. [19]

As agreed, Special Investigator Fernandez, who was designated


as the poseur buyer,  would ring the cellphone of Special
[20]

Investigator Elson Saul (Special Investigator Saul) to signify that


the sale had been consummated. [21]

The buy-bust operation team, composed of Special Investigator


Fernandez, Special Investigator Saul, and five (5) other officers,
went to Solanie Hotel at around 2:30 p.m. Special Investigator
Fernandez and the informant sat by one (1) of the umbrella
tables in front of the hotel, while the rest positioned themselves
along Leon Guinto, Malate, Manila. [22]

Few minutes later, Ameril arrived at the hotel, where the


informant introduced him to Special Investigator Fernandez. After
a few minutes of conversation, Ameril asked Special Investigator
Fernandez if he had the money, to which Special Investigator
Fernandez replied that Ameril should first show the shabu. Ameril
showed him a black paper bag, inside of which were three (3)
small transparent plastic sachets containing white crystalline
substance. Convinced that the sachets contained shabu, Special
Investigator Fernandez gave the boodle money to Ameril. [23]

As soon as Ameril gave the paper bag to Special Investigator


Fernandez, the latter made the pre-arranged signal. Special
Investigator Fernandez introduced himself as a National Bureau
of Investigation agent, while the other team members rushed to
the area. Special Investigator Saul recovered the boodle money
from Ameril.[24]

After the arrest, SI Fernandez marked the three (3) plastic


sachets with Ameril's initials: (1) "LLA-1"; (2) "LLA-2"; and (3)
"LLA-3." The marking was made in the presence of Kagawad
Analiza E. Gloria (Kagawad Gloria) and Norman Arcega (Arcega)
 of media outlet Police Files Tonite.  Special Investigator
[25] [26]

Fernandez also took photos and inventory of the seized items.


Both Gloria and Arcega signed the inventory. [27]

Special Investigator Fernandez submitted the seized items to the


Forensic Chemistry Division of the National Bureau of
Investigation. Police Senior Inspector Felicisima Francisco (PSI
Francisco) conducted a qualitative examination on the seized
items, which tested positive for shabu. [28]

Ameril denied the allegations against him. He claimed that at


around 11:00 a.m. on April 17, 2006, he was in his house
preparing to go to an agency in Pedro Gil in Manila to meet his
friend, Moy Abdullah (Abdullah).  Abdullah told Ameril, who was
[29]

applying for a job in Jeddah, Saudi Arabia,  to bring his old and
[30]

new passports, NBI clearance, and driver's license to get his visa.
[31]

When Ameril arrived at the Pedro Gil Station of the Light Rail
Transit, he asked someone how to reach Aljaber Manpower
International Agency. The man pointed him to a nearby agency. [32]
The man asked Ameril where he was from, to which he said he
was from Maguindanao Street. The man told his companion that
Ameril was from Maguindanao Street, and that they could ask
him questions. They then told Ameril that they would bring him to
their office. Ameril told them that somebody was waiting for him
at the agency, but the two (2) men insisted on bringing him. [33]

At the National Bureau of Investigation office, Ameril saw Special


Investigator Fernandez, who showed him photos of persons and
asked if he knew them.  Ameril replied that he did not, as he had
[34]

been in the area for just four (4) months.  Pedro Gil Station
[35]

Fernandez warned Ameril that he would be charged with


obstruction of justice if he failed to identify the persons in the
pictures. [36]

Special Investigator Fernandez then told the persons who brought


Ameril to take him into custody and confiscate his belongings. [37]

Ameril was brought the next day to the Manila City Hall for
inquest. He only learned on arraignment that he was charged
with illegal sale of drugs. [38]

In its January 25, 2012 Decision,  the Regional Trial Court


[39]

convicted Ameril. It ruled that the prosecution had successfully


established his guilt  by presenting sufficient evidence that
[40]

showed the elements of illegal sale of dangerous drugs. [41]

The Regional Trial Court noted that although the Information


stated that the three (3) plastic sachets seized from Ameril were
marked: (1) "LAA" containing 4.4112 grams; (2) "LAA-2"
containing 4.4350 grams; and (3) "LAA" containing 3.9727
grams,  the evidence presented showed that the plastic sachets
[42]

seized from Ameril were actually marked LLA-1, LLA-2, and LLA. [43]

Despite this inconsistency, the Regional Trial Court still convicted


Ameril for the second plastic sachet containing 4.4350-grams of
shabu on the ground that Ameril was informed that he was
accused of selling it. The Regional Trial Court ruled that the
prosecution proved this accusation. [44]

Aggrieved, Ameril appealed  before the Court of Appeals. In his


[45]

Appellant's Brief,  Ameril argued that the prosecution failed to


[46]

prove the corpus delicti, as the documents and testimonies


revealed flaws in the prosecution's handling of illegal drugs
allegedly seized from him.  He emphasized that the details of
[47]

where the seized items' markings took place were not on record. [48]

Ameril further argued that the inconsistencies in the markings of


the seized illegal drugs "compromised the integrity of the seized
items." [49]

In its April 20, 2015 Decision,  the Court of Appeals affirmed


[50]

Ameril's conviction.  It ruled that the chain of custody of the


[51]

seized illegal drugs was not in any way broken. The raiding team
conducted the buy-bust operation in an orderly manner.  It [52]

emphasized that under the rules on evidence, law enforcers are


presumed to have carried out their duties regularly under the
law.[53]

Even if there was a variance in the marking of the seized illegal


drugs, the Court of Appeals ruled that Ameril was still
substantially apprised of the crime charged against him.
[54]

Undaunted, Ameril, through counsel, filed a Notice of Appeal


before the Court of Appeals. [55]

In its May 29, 2015 Resolution,  the Court of Appeals gave due
[56]

course to Ameril's Notice of Appeal.

On March 2, 2016, this Court notified accused-appellant


Lahmodin A. Ameril and the People of the Philippines, through the
Office of the Solicitor General, to file their respective
supplemental briefs. [57]
Both the accused-appellant  and the Office of the Solicitor
[58]

General  manifested that they would no longer file supplemental


[59]

briefs.

The sole issue for this Court's resolution is whether or not the
Court of Appeals correctly upheld the conviction of accused-
appellant for violation of Article II, Section 5 of Republic Act No.
9165, or the Comprehensive Dangerous Drugs Act of 2002.

This Court rules in the negative.

In sustaining a conviction for illegal sale of dangerous drugs, "the


following elements must first be established: (1) proof that the
transaction or sale took place[;] and (2) the presentation in court
of the corpus delicti or the illicit drug as evidence."
[60]

The illegal drug itself constitutes the corpus delicti of the offense.


Its existence must be proved beyond reasonable doubt. "Proof
beyond reasonable doubt demands that unwavering exactitude be
observed in establishing the corpus delicti. The chain of custody
rule performs this function as it ensures that unnecessary doubts
concerning the identity of the evidence are removed." [61]

Section 21 of Republic Act No. 9165, as amended by Republic Act


No. 10640, outlines the procedure that police officers must follow
in handling seized illegal drugs:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and confiscation,
conduct a physical inventory of the seized items and photograph
the same in the presence of the accused or the persons from
whom such items were confiscated and/or seized, or his/her
representative or counsel, with an elected public official and a
representative of the National Prosecution Service or the media
who shall be required to sign the copies of the inventory and be
given a copy thereof: Provided, That the physical inventory and
photograph shall be conducted at the place where the search
warrant is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures: Provided, finally, That
noncompliance of these requirements under justifiable grounds,
as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team,
shall not render void and invalid such seizures and custody over
said items. (Emphasis in the original)
In Mallillin v. People,  this Court emphasized the importance of
[62]

the chain of custody:


Indeed, the likelihood of tampering, loss or mistake with respect
to an exhibit is greatest when the exhibit is small and is one that
has physical characteristics fungible in nature and similar in form
to substances familiar to people in their daily lives. Graham vs.
State positively acknowledged this danger. In that case where a
substance later analyzed as heroin — was handled by two police
officers prior to examination who however did not testify in court
on the condition and whereabouts of the exhibit at the time it was
in their possession — was excluded from the prosecution
evidence, the court pointing out that the white powder seized
could have been indeed heroin or it could have been sugar or
baking powder. It ruled that unless the state can show by records
or testimony, the continuous whereabouts of the exhibit at least
between the time it came into the possession of police officers
until it was tested in the laboratory to determine its composition,
testimony of the state as to the laboratory's findings is
inadmissible.

A unique characteristic of narcotic substances is that they are not


readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from other cases — by accident or
otherwise — in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a standard more stringent than that
applied to cases involving objects which are readily identifiable
must be applied, a more exacting standard that entails a chain of
custody of the item with sufficient completeness if only to render
it improbable that the original item has either been exchanged
with another or been contaminated or tampered with.
 (Emphasis supplied, citations omitted)
[63]

Failing to comply with Article II, Section 21, Paragraph 1 of


Republic Act No. 9165 implies "a concomitant failure on the part
of the prosecution to establish the identity of the corpus
delicti[,]"  and "produces doubts as to the origins of the [seized
[64]

illegal drugs]."[65]

II

The Information filed against accused-appellant provided that he


was caught selling three (3) transparent plastic sachets
containing white crystalline substance known as shabu, marked
"LAA," "LAA-2," and "LAA." [66]

However, the evidence presented during trial showed that


accused-appellant sold three (3) plastic sachets with the
markings "LLA-1," "LLA-2," and "LLA." [67]

Nonetheless, the Regional Trial Court brushed aside this


discrepancy and still convicted the accused-appellant. It ruled:
The chain of custody over the evidence was similarly established.
The court is convinced of the integrity and proper preservation of
the evidence. SI Fernandez testified that immediately after the
arrest of the accused, he marked the evidence as LLA-1, LL-2 and
LLA-3 and brought them to their office. Soon after, he delivered
the three sachets to their crime laboratory for chemical analysis
where it was found positive for illegal drugs. The team likewise
substantially complied with the provisions of Section 21 as the
evidence seized was properly marked, photographed, and
inventoried in the presence of witnesses from the barangay and
the media.

....

WHEREFORE, premises considered, the court finds the accused


LAHMODIN AMERIL y ABDUL a. k. a. "Amor/Mhong", GUILTY,
beyond reasonable doubt of the offense of Violation of Section 5,
Article II of R.A. 9165, and is hereby sentenced to suffer the
penalty of life imprisonment AND to pay a fine of Five Hundred
Thousand Pesos (P500,000.00). [68]

Contrary to the Regional Trial Court's findings, the integrity of the


seized illegal drugs was not preserved.

Again, it must be emphasized that the seized illegal drugs


constitute the corpus delicti of the illegal sale of dangerous drugs.
Its identity must be proved beyond reasonable doubt.  When [69]

there is doubt on its identity, conviction cannot be sustained. [70]

In People v. Garcia,  this Court acquitted the accused. It held


[71]

that the discrepancy in the markings of the seized items raised


doubts if the items presented in court were the same ones taken
from the accused upon arrest:
PO1 Garcia testified that he had marked the seized item (on the
wrapper) with the initial "RP-1". However, an examination of the
two documents showed a different marking: on one hand, what
was submitted to the PNP Crime Laboratory consisted of a single
piece telephone directory paper containing suspected dried
marijuana leaves fruiting tops with the marking "RGR-1" and
thirteen pieces of rolling paper with the markings "RGR-RP1" to
"RGR-RP13"; on the other hand, the PNP Crime Laboratory
examined the following items with the corresponding markings: a
printed paper with the marking "RGR-1" together with one small
brick of dried suspected marijuana fruiting tops and thirteen
pieces of small white paper with the markings "RGP-RP1" to
"RGP-RP13".

PO1 Garcia's testimony is the only testimonial evidence on record


relating to the handling and marking of the seized items since the
testimony of the forensic chemist in the case had been dispensed
with by agreement between the prosecution and the defense.
Unfortunately, PO1 Garcia was not asked to explain the
discrepancy in the markings. Neither can the stipulated testimony
of the forensic chemist now shed light on this point, as the
records available to us do not disclose the exact details of the
parties' stipulations.

To our mind, the procedural lapses in the handling and


identification of the seized items, as well as the unexplained
discrepancy in their markings, collectively raise doubts on
whether the items presented in court were the exact same items
that were taken from Ruiz when he was arrested. These
constitute major lapses that, standing unexplained, are fatal to
the prosecution's case.  (Emphasis in the original, citations
[72]

omitted)
Here, like in Garcia, there is a discrepancy in the markings of the
illegal drugs seized from accused-appellant. This raises doubts if
the items presented in court were the exact ones taken from
accused-appellant. [73]

During examination, Special Investigator Fernandez testified that


he marked the seized illegal drugs with the initials LLA-1 and LLA-
3:
Q For your information the Forensic Chemist inc (sic) charge of this case previously
the sachet you bought from this Alyas Amor, without first showing this to you plea
how will you be able to recognize this?
A I think I have my signatures on the plastic sachet and placed the initials LLA-1
supplied)
However, on cross-examination, Special Investigator Fernandez
stated that he marked the seized illegal drugs with initials LAA-1,
LAA-2, and LAA-3:
Q - So since you marked it on the target area, were you able to
ask the person there from the barangay to witness the marking
Mr. Witness?

A - Yes, sir.

Q - And who was that?

A - It was the Kagawad of the barangay, sir, and also the media
from the Police File Tonight, (sic) sir.

Q - You mean to say Mr. Witness, you have a form of the


Inventory of the Seized Items with you at that time?

A - Yes, sir.

Q - So since you followed the Inventory you were able to


photograph it?

A - Of course, because that is the procedure, sir.

Q - But Mr. Witness, there is nothing on file of the photographed


(sic) of the seized items, but at any rate, you said you marked it
Mr. Witness?

A - I placed LAA-1, LAA-2 and LAA-3, sir.  (Emphasis supplied)


[75]

That the integrity of the corpus delicti had been compromised


was further magnified by the gap in the chain of custody. Special
Investigator Fernandez merely testified that he submitted the
seized illegal drugs to the Forensic Chemistry Division for
examination and safekeeping. He did not identify the person to
whom he gave the seized illegal drugs upon delivery. [76]
While the prosecution stipulated that PSI Francisco received three
(3) plastic sachets with markings "LAA-1," "LAA-2," and "LAA-
3,"  the evidence presented showed that accused-appellant sold
[77]

three (3) plastic sachets with the markings "LLA-1," "LLA-2," and
"LLA."  Moreover, Special Investigator Fernandez testified that
[78]

he used the markings "LAA-1," "LAA-2," and "LAA-3."

Thus, the seized illegal drugs were referred to using three (3)
sets of markings. The Regional Trial Court, having evaluated the
evidence presented firsthand, should have been more cautious in
convicting accused-appellant despite the obvious discrepancy in
the markings of the seized drugs and procedural lapses
committed by the arresting officers in handling the same. The
glaring inconsistency in the markings of the seized illegal drugs
should have warned the trial court and the Court of Appeals that
something was amiss.

III

This Court has stressed that the presumption of regularity in the


performance of official duty, which the Court of Appeals relied on
in its Decision,  "stands only when no reason exists in the
[79]

records by which to doubt the regularity of the performance of


official duty. And even in that instance the presumption of
regularity will not be stronger than the presumption of innocence
in favor of the accused." [80]

In People v. Segundo: [81]

Moreover, the presumption of regularity in the performance of


their duties cannot work in favor of the law enforcers since the
records revealed severe lapses in complying with the
requirements provided for under the law. "The presumption
stands when no reason exists in the records by which to doubt
the regularity of the performance of official duty." Thus, this
presumption "will never be stronger than the presumption of
innocence in favor of the accused. Otherwise, a mere rule of
evidence will defeat the constitutionally enshrined right of an
accused to be presumed innocent."  (Citations omitted)
[82]
Moreover, in People v. Mirantes: [83]

The oft-cited presumption of regularity in the performance of


official functions cannot by itself affect the constitutional
presumption of innocence enjoyed by an accused, particularly
when the prosecution's evidence is weak. The evidence of the
prosecution must be strong enough to pierce the shield of this
presumptive innocence and to establish the guilt of the accused
beyond reasonable doubt. And where the evidence of the
prosecution is insufficient to overcome this presumption,
necessarily, the judgment of conviction of the court a quo must
be set aside. The onus probandi on the prosecution is not
discharged by casting doubts upon the innocence of an accused,
but by eliminating all reasonable doubts as to his guilt.
 (Citations omitted)
[84]

The totality of the evidence presented shows that the arresting


officers who conducted the buy-bust operation were remiss in the
performance of their official functions. They made discrepancies
in the markings of the seized illegal drugs, and failed to comply
with the chain of custody. Consequently, the presumption of
regularity in favor of arresting officers is negated.

This Court ends with the words in People v. Holgado, et al.: [85]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels.
[86]

WHEREFORE, the Court of Appeals April 20, 2015 Decision in


CA-G.R. CR-HC No. 05502 is REVERSED and SET ASIDE,
accused-appellant Lahmodin Ameril y Abdul @ "Amor/Mhong"
is ACQUITTED for failure of the prosecution to prove his guilt
beyond reasonable doubt. He is ordered
immediately RELEASED from detention, unless he is confined for
some other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drugs Enforcement
Agency.     

Let entry of final judgment be issued immediately.

SO ORDERED.

Caguioa,  A. Reyes, Jr., Gesmundo,  and Carandang, JJ., concur.


* **

March 29, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 13, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 29, 2019 at 2:14 p.m.
ORDER OF RELEASE

TO: The Director General


       BUREAU OF CORRECTIONS
       1770 Muntinlupa City

        Thru: CSSupt. Gerardo F. Padilla


                 Chief Superintendent
                 New Bilibid Prison
                 BUREAU OF CORRECTIONS
                 1770 Muntinlupa City

GREETINGS:

WHEREAS, the Supreme Court on March 13, 2019 promulgated


a Decision in the above-entitled case, the dispositive portion of
which reads:
"WHEREFORE, the Court of Appeals April 20, 20.15 Decision in
CA-G.R. CR-HC No. 05502 is REVERSED and SET ASIDE.
Accused-appellant Lahmodin Ameril y Abdul @ "Amor/Mhong"
is ACQUITTED for failure of the prosecution to prove his guilt
beyond reasonable doubt. He is ordered
immediately RELEASED from detention, unless he is confined for
some other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections for immediate implementation. The
Director of the Bureau of Corrections is directed to report the
action he has taken to this Court within five (5) days from receipt
of this Decision. For their information, copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drugs Enforcement
Agency.

SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately
release LAHMODIN AMERIL y ABDUL @
"AMOR/MHONG" unless there are other lawful causes for which
he should be further detained, and to return this Order with the
certificate of your proceedings within five (5) days from notice
hereof.

GIVEN by the Honorable MARVIC MARIO VICTOR F. LEONEN,


Acting Chairperson of the Third Division of the Supreme Court of
the Philippines, this 13  day of March 2019.
th

*
 Additional member per Raffle dated October 8, 2018.

**
 Additional member per Raffle dated March 4, 2019.

 Mallillin v. People, 576 Phil. 576 (2008) [Per J. Tinga, Second


[1]

Division].

 Rollo, pp. 2-11. The Decision was penned by Associate Justice


[2]

Ramon Paul L. Hernando (now a member of this court) and


concurred in by Associate Justices Fernanda Lampas Peralta and
Stephen C. Cruz of the Seventh Division, Court of Appeals,
Manila.

[3]
 CA Rollo, pp. 12-13.
[4]
 Id. at 12.

[5]
 Rollo, p. 3.

[6]
 CA Rollo, p. 19.

[7]
 Rollo, p. 3.

[8]
 Id.

[9]
 CA Rollo, p. 19.

[10]
 Rollo, p. 3.

[11]
 Id. at 3.

[12]
 Id. at 3-4.

[13]
 Id.

[14]
 Id.

[15]
 Id.

[16]
 Id.

[17]
 CA Rollo, p. 41.

[18]
 RTC Records, p. 6.

[19]
 Rollo, p. 4.

[20]
 Id.

[21]
 Id.

[22]
 Id.
[23]
 Id.

[24]
 Id. at 4.

[25]
 Id.

[26]
 RTC Records, p. 5.

[27]
 Rollo, pp. 4-5.

[28]
 Id. at 5.

[29]
 CA Rollo, p. 62.

[30]
 Id. at 64.

[31]
 CA Rollo, p. 21.

[32]
 Id.

[33]
 Id.

[34]
 Rollo, p. 5.

[35]
 CA Rollo, p. 21.

[36]
 Rollo, p. 5.

[37]
 Id.

[38]
 Id.

 CA Rollo, pp. 17-24. The Decision in Crim. Case No. 06-243457


[39]

was penned by Presiding Judge Caroline Rivera-Colasito of Branch


23, Regional Trial Court, Manila.

[40]
 Id. at 21.
[41]
 Rollo p. 5.

[42]
 CA Rollo, p. 22.

[43]
 Id.

[44]
 Id.

[45]
 Id. at 25.

[46]
 Id. at 53-76.

[47]
 Id. at 64.

[48]
 Id. at 66.

[49]
 Id. at 67.

[50]
 Rollo, pp. 2-11.

[51]
 Id. at 10.

[52]
 Id. at 7.

[53]
 Id. at 9.

[54]
 Id. at 10.

[55]
 Id. at 12-14.

[56]
 CA Rollo, p. 155.

[57]
 Rollo, pp. 17-18.

[58]
 Id. at 24-28.

[59]
 Id. at 21-23.
 People v. Morales y Midarasa, 630 Phil. 215, 228 (2010) [Per J.
[60]

Del Castillo, Second Division].

 Fajardo v. People, 691 Phil. 752, 758-759 (2012) [Per J. Perez,


[61]

Second Division].

 Mallillin v. People, 576 Phil. 576 (2008) [Per J. Tinga, Second


[62]

Division].

[63]
 Id. at 588-589.

 People v. Morales y Midarasa, 630 Phil. 215, 229 (2010) [Per J.


[64]

Del Castillo, Second Division].

 People v. Laxa, 414 Phil. 156, 170 (2001) [Per J. Mendoza,


[65]

Second Division].

[66]
 CA Rollo, p. 12.

[67]
 Id. at 22.

[68]
 Id. at 23-24.

 Fajardo v. People, 691 Phil. 752 (2012) [Per J. Perez, Second


[69]

Division].

 People v. Lorenzo, 633 Phil. 393 (2010) [Per J. Perez, Second


[70]

Division].

 People v. Garcia, 599 Phil. 416 (2009) [Per J. Brion, Second


[71]

Division].

[72]
 Id. at 431-432.

[73]
 Id. at 432.

[74]
 TSN dated December 14, 2006, p. 20.
[75]
 TSN dated April 7, 2010, p. 7.

[76]
 TSN dated December 14, 2006, p. 28.

[77]
 RTC Records, p. 36.

[78]
 CA Rollo, p. 22.

[79]
 Rollo, p. 9.

 People v. Mendoza y Estrada, 736 Phil. 749, 770 (2014) [Per J.


[80]

Bersamin, First Division].

 People v. Segundo y Iglesias, G.R. No. 205614, July 26, 2017


[81]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/205614.pdf> [Per J. Leonen,
Second Division].

[82]
 Id. at 21.

 People v. Mirantes, 284-A Phil. 630 (1992) [Per J. Regalado,


[83]

Second Division].

[84]
 Id. at 642.

[85]
 741 Phil. 78 (2014) [Per J. Leonen, Third Division].

[86]
 Id. at 100.

Source: Supreme Court E-Library | Date created: April 29, 2019


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Supreme Court E-Library


THIRD DIVISION

[ G.R. No. 179732, September 13,


2017 ]
DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, PETITIONER, VS.
CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE,
RESPONDENT.DECISION

LEONEN, J.:

As the administrative agency tasked with resolving issues


pertaining to the construction industry, the Construction Industry
Arbitration Commission enjoys a wide latitude in recognition of its
technical expertise and experience. Its factual findings are, thus,
accorded respect and even finality, particularly when they are
affirmed by an appellate court.

This is a Petition for Review on Certiorari  assailing the Court of


[1]

Appeals Decision  dated September 20, 2007 in CA-G.R. SP Nos.


[2]

88953 and 88911, which affirmed the March 1, 2005 Award of


the Construction Industry Arbitration Commission (CIAC).

On April 29, 1999, Republic of the Philippines, through the


Department of Public Works and Highways (DPWH), and
CMC/Monark/Pacific/Hi-Tri J.V. (the Joint Venture) executed
"Contract Agreement for the Construction of Contract Package
6MI-9, Pagadian-Buug Section, Zamboanga del Sur, Sixth Road
Project, Road Improvement Component Loan No. 1473-
PHI"  (Contract) for a total contract amount of P713,330,885.28.
[3]

[4]
Parts I (General Conditions with forms of tender + agreement)
and II (Conditions of Particular Application + Guidelines for
Preparation of Part II Clauses) of the "Conditions of Contract for
Works of Civil Engineering Construction of the Federation
International Des Ingenieurs - Conseils" (Conditions of Contract)
formed. part of the Contract.  DPWH hired BCEOM French
[5]

Engineering Consultants to oversee the project. [6]

On October 23, 2002, or while the project was ongoing, the Joint
Venture's truck and equipment were set on fire. On March 11,
2003, a bomb exploded at Joint Venture's hatching plant located
at Brgy. West Boyogan, Kumalarang, Zamboanga del Sur.
According to reports, the bombing incident was caused by
members of the Moro Islamic Liberation Front. [7]

The Joint Venture made several written demands for extension


and payment of the foreign component of the Contract. There
were efforts between the parties to settle the unpaid Payment
Certificates amounting to P26,737,029.49. Thus, only the foreign
component of US$358,227.95 was up for negotiations subject to
further reduction of the amount on account of payments
subsequently received by the Joint Venture from DPWH. [8]

In a letter dated September 18, 2003, BCEOM French Engineering


Consultants recommended that DPWH promptly pay the
outstanding monies due the Joint Venture.  The letter also stated
[9]

that the actual volume of the Joint Venture's accomplishment was


"2,732m  of hardrock and 4,444m  of rippable rock," making the
2 3

project 80% complete when it was halted. [10]

On March 3, 2004, the Joint Venture filed a Complaint  against [11]

DPWH before CIAC. Joint Venture' claims, which amounted to


P77,206,047.88, were as follows:
CLAIMANT'S CLAIM

Foreign component of the project of Php12,502,155.46


  (US$358,227.95 @Php34.90)

Interest as of December 3, 4003

   (Computation for the damages & losses


incurred:

   Php10,297,090.42 + (US$118,094.93@34.90) Php14,418,603.47

Equipment and financial loses 5,080,000.00

Additional costs in the contract price under Clause


69.4 20,311,072.66

Adjustment in the contract price under


Presidential Decree No. 1594

   (9,313,402.91 in pesos and 266,859.68 in


dollar) 18,626,805.81

Effect of the bomping incident 6,267,410.48

TOTAL CLAIMS Php77,206,047.88 [12]

Meanwhile, on July 8, 2004, the Joint Venture sent a "Notice of


Mutual Termination of Contract",  to DPWH requesting for a
[13]

mutual termination of the contract subject of the arbitration case.


This is due to its diminished financial capability due to DPWH's
late payments, changes in the project involving payment terms,
peace and order problems, and previous agreement by the
parties.

On July 16, 2004, then DPWH Acting Secretary Florante Soriquez


accepted the Joint Venture's request for mutual termination of
the contract. [14]

After hearing and submission of the parties' respective


memoranda,  CIAC promulgated an Award  on March 1, 2005,
[15] [16]

directing DPWH to pay the Joint Venture its money claims plus
legal interest. CIAC, however, denied the Joint Venture's claim for
price adjustment due to the delay in the issuance of a Notice to
Proceed under Presidential Decree No. 1594 or the "Policies,
Guidelines, Rules, and Regulations for Government Infrastructure
Contracts."  The dispositive portion of the Award read:
[17]

WHEREFORE, premises considered and in view of the resolution of


the issues presented, an Award is hereby rendered ordering the
Respondent DPWH to pay the Claimant the following:

1. Foreign Component of US$358,227.95 plus legal interest of


US$18,313.79;

2. Equipment and Plant Losses of P5,080,000, plus legal interest


of P464,298.08;

3. Additional Costs resulting from the Bombing of P6,267,410.48


plus legal interest of P320,410.63, and

4. Additional Costs in the contract price under Clause 69.4 of


P20,311,072.66 plus legal interest of [P]1,038,368.78.

The claim of Claimant for adjustment under [Presidential Decree


No.] 1594 of P18,626,805.81 is hereby denied.

Pursuant to the case of Eastern Shipping Lines vs. Court of


Appeals, 234 SCRA 78, the foregoing monetary awards shall earn
interest at the rate of 12% per annum from the date the Award
becomes final and executor until its satisfaction.

SO ORDERED. [18]

DPWH and the Joint Venture filed their respective petitions for
review before the Court of Appeals.[19]

The Court of Appeals in its Decision  dated September 20, 2007,


[20]

sustained CIAC's Award with certain modifications and remanded


the case to CIAC for the determination of the number of days'
extension that the Joint Venture is entitled to and "the conversion
rate in pesos of the awarded foreign exchange payments
stated."
[21]
The Court of Appeals held that CIAC did not commit reversible
error in not awarding the price adjustment sought by the Joint
Venture under Presidential Decree No. 1594 since it was the
Asian Development Bank's Guidelines on procurement that was
applicable and not Presidential Decree No. 1594. [22]

The Court of Appeals also held that CIAC did not err in not
awarding actual damages in the form of interest at the rate of
24% since there was no provision for such interest payment in
the Contract. However, the Court of Appeals ruled that CIAC was
correct when it awarded legal interest.[23]

The Court of Appeals sustained the Joint Venture's argument on


the non-inclusion of a clear finding of its entitlement to time
extensions in the dispositive portion of the CIAC Award.  The [24]

Court of Appeals held that CIAC did not clearly dispose of the
matter:
Yet, a close scrutiny of the foregoing disposition shows that it
does not refer to the 133 days as per Variation Order No. 2 since
CIAC made mention that the project is already terminated and
the entire volume under said Order "will not be consumed".
Whether or not the Claimant then deserves to get the full 133
calendar days is a matter that has to be clearly resolved. On this,
We hold that this Court is not prepared to engage into a technical
bout that only the expertise of the CIAC can pass upon. [25]

On the other hand, the Court of Appeals did not accept DPWH's
argument that the case was already moot and academic.
According to the Court of Appeals, when the Joint Venture
requested for the mutual termination of the Contract on July 8,
2004, it did not waive its right to be paid the amounts due to it. [26]

The Court of Appeals, however, raised a concern with regard to


CIAC's order for DPWH to pay its liabilities in US dollars. It held
that the parties have agreed that "all payments for works carried
out after 31 May 2003 and related price escalation claims and
retention releases in the contract will be in pesos only, therefore
no foreign exchange payments." This was never contested by the
Joint Venture; hence, it may be presumed that it acquiesced to
the request of the DPWH. [27]

The dispositive portion of the Court of Appeals Decision read:


WHEREFORE, premises considered, the assailed Decision is
hereby AFFIRMED with MODIFICATION to include the award to
the Claimant of time extensions per: 1) delay in payment at One
Hundred Eight (108) days, and 2) extension Twenty Nine (29)
days due to peace and order situation.

Re 1) the award of time extension per Variation Order No. 2-as


stated earlier elsewhere in the Decision, the CIAC must make a
vivid presentation of the number of calendar days the Claimant is
entitled to, and 2) the conversion rate in pesos of the awarded
foreign exchange payments states, supra, in the assailed
Decision, these matters are hereby REMANDED to the CIAC for
proper disposition. Accordingly, the rest of the challenged
Decision STANDS.

SO ORDERED.  (Emphasis in the original)


[28]

Petitioner DPWH filed the present Petition for Review  assailing


[29]

the Court of Appeals Decision. In a Resolution  dated January.


[30]

28, 2008, this Court required respondent Joint Venture to file its
Comment.

On March 27, 2008, respondent filed its comment/opposition.


 Petitioner thereafter filed its Reply  on September 3, 2008.
[31] [32]

The issues for resolution in this case are:

First, whether or not the case has become moot and academic
due to the parties' mutual termination of the Construction
Contract;

Second, whether or not the case is premature due to Joint


Venture's non-compliance with the doctrine of exhaustion of
administrative remedies;
Third, whether or not the Joint Venture is entitled to the foreign
component of the Project in the amount of US$358,227.95;

Fourth, whether or not the Joint Venture is entitled to time


extensions due to Variation Order No. 2, peace and order
problems, and delay in payment;

Fifth, whether or not the Joint Venture is entitled to a price


adjustment due to the delay of the issuance of the Notice of the
Proceed;

Sixth, whether or not the Asian Development Bank Guidelines on


Procurement or Presidential Decree 1594 applies with regard to
once adjustments due to the delay of the issuance of the Notice
to Proceed;

Seventh, whether or not the Joint Venture is entitled to its claim


for equipment and financial losses due to peace and order
situation (additional costs);

Eighth, whether or not the Joint Venture is entitled to actual


damages and interest on its claims; and

Finally, whether or not the Joint Venture should be paid in local


currency or in U.S. dollars.

According to respondent Joint Venture, the Petition suffers from a


fatal defect in its certification against non-forum shopping. The
verification and certification against non-forum shopping was
signed only by petitioner's counsel, Atty. Mary Jean D.
Valderama, from the Office of the Solicitor General.
[33]

This Court has long enforced the strict procedural requirement of


verification and certification against non-forum shopping.  It is
[34]

settled that certification against forum shopping must be


executed by the party or principal and not by counsel.
 In Anderson v. Ho,  this Court explained that it is the party
[35] [36]

who is in the best position to know whether he or she has filed a


case before any courts.  It is clear in this case that counsel for
[37]

petitioner, Atty. Valderama, was not clothed with authority to


sign on petitioner's behalf.

In Resolution  dated December 10, 2007, this Court noted


[38]

petitioner's Manifestation that after the petition was posted, the


verification page signed by DPWH Secretary Hermogenes E.
Ebdane was submitted to the Office of the Solicitor General. In
the same Resolution, this Court granted the Office of the Solicitor
General's motion to admit the attached verification and to
substitute and attach it to the petition.

This Court ruled before that: "the lack of a certification against


forum shopping, unlike that of verification, is generally not cured
by its submission after the filing of the petition."  Nevertheless,
[39]

exceptions  exist, as in the case at bar, and it is more prudent to


[40]

resolve the case on its merits than dismiss it on purely technical


grounds.[41]

II

In the assailed Decision, the Court of Appeals held that the


mutual termination of the Contract by the parties did not render
the case moot and academic.  Accordingly, when respondent
[42]

requested for the mutual termination of the Contract, it did not


waive its right to be paid the amounts due to it as shown in its
letter:
In view of the above considerations, we hereby respectfully
request for MUTUAL TERMINATION of our Contract. Our
availment of this remedy does not mean though that we are
waiving our rights (1) to be paid for any and all monetary
benefits due and owing to us under the contract such as but not
limited to payments for works already done, materials delivered
on site which are intended solely for the construction and
completion of the project, price escalation, etc., (2) and without
prejudice to our outstanding claims and entitlements that are
lawfully due to us.  (Emphasis supplied)
[43]

Petitioner argues that the Court of Appeals erred in rendering the


assailed Decision, considering that the case is already moot and
academic. Petitioner insists that "the parties' mutual termination
of their contract prior to the adjudication of this case by the CIAC
on March 1, 2005, rendered the proceedings before CIAC moot
and academic." [44]

According to petitioner, the principle of unjust enrichment does


not apply in this case "because respondent has incurred negative
slippage/delay in carrying out their contractual obligations due to
reasons attributable to it. Moreover, the parties' mutual
termination of the contract rendered the proceedings before the
CIAC moot because there was no more contract to be enforced." [45]

Petitioner's argument is untenable.

Indeed, the rule is that courts will not rule on moot cases.
 However, the moot and academic principle is "not a magical
[46]

formula that can automatically dissuade the courts in resolving a


case."  Exceptions exist that would not prevent a court from
[47]

taking cognizance of cases seemingly moot and academic. [48]

In Carpio v. Court of Appeals,  this Court held that a case could


[49]

not be deemed moot and academic when there remains an


unresolved justiciable controversy. In that case, this Court
affirmed the Court of Appeals' assailed resolutions, which denied
petitioner's prayer for dismissal based on the argument that the
Sheriff's execution pending appeal of the trial court's decision
rendered the case moot and academic. This Court held that:
[I]t is obvious that there remains an unresolved justiciable
controversy in the appealed case for accion publiciana. In
particular, did respondent-spouses Oria really encroach on the
land of petitioner? If they did, does he have the right to recover
possession of the property? Furthermore, without preempting the
disposition of the case for accion publiciana pending before the
CA, we note that if respondents built structures on the subject
land, and if they were builders in good faith, they would be
entitled to appropriate rights under the Civil Code. This Court
merely points out that there are still issues that the CA needs to
resolve in the appealed case before it.

Moreover, there are also the questions of whether respondents


should be made to pay back monthly rentals for the alleged
encroachment; and whether the reward of attorney's fees, which
are also being questioned, was proper. The pronouncements of
the CA on these issues would certainly be of practical value to the
parties. After all, should it find that there was no encroachment,
for instance, respondents would be entitled to substantial relief.
In view of all these considerations, it cannot be said that the main
case has become moot and academic.  (Emphasis supplied.)
[50]

In this case, issues arising from the mutually terminated Contract


are not moot and academic. As the Court of Appeals found, there
are actual substantial reliefs that respondent is entitled to. There
is a practical use or value to decide on the issues raised by the
parties despite the mutual termination of the Contract between
them. These issues include the determination of amounts payable
to respondent by virtue of the time extensions, respondent's
entitlement to price adjustments due to the delay of the issuance
of the Notice to Proceed, additional costs, actual damages, and
interest on its claims. The agreement to mutually terminate the
Contract did not wipe out petitioner's obligation to pay
respondent on works done before the Contract's termination on
October 27, 2004.

III

According to petitioner, the filing of the claim before CIAC was


premature, since under CIAC rules, there must be an exhaustion
of administrative remedies first before government contracts are
brought to it for arbitration.
[51]

Respondent, on the other hand, denies violating the rule on


exhaustion of administrative remedies. It claims that it sent at
least 17 demand letters to petitioner, four (4) of which were sent
to the DPWH Secretary directly. [52]

Petitioner's argument fails to convince.

The case is not premature. The pertinent provision on available


administrative remedies can be found in Sub-Clause 67.1 of the
Conditions of Contract:
Settlement of Disputes

Engineer's Decision 67.1 If a dispute of any kind whatsoever


arises between the Employer and the Contractor in connection
with, or arising out of, the Contract or the execution of the
Works, whether during the execution of the Works or after their
completion and whether before or after repudiation or other
termination of the Contract, including any dispute as to any
opinion, instruction, determination, certificate or valuation of the
Engineer, the matter in dispute shall, in the first place, be
referred in writing to the Engineer, with a copy to the other party.
Such reference shall state that it is made pursuant to this Clause.
No later than the eighty-fourth day after the day on which he
received such reference the Engineer shall give notice of his
decision to the Employer and the Contractor. Such decision shall
state that it is made pursuant to this Clause.

Unless the Contract has already been repudiated or terminated,


the Contractor shall, in every case, continue to proceed with the
Works with all due diligence and the Contractor and the Employer
shall give effect forthwith to every such decision of the Engineer
unless and until the same shall be revised, as hereinafter
provided, in an amicable settlement or an arbitral award.

If either the Employer or the Contractor be dissatisfied with any


decision of the Engineer, or if the Engineer fails to give notice of
his decision on or before the eighty-fourth day after the day on
which he received the reference, then either the Employer or the
Contractor may, on or before the seventieth day after the day on
which he received notice of such decision, or on or before the
seventieth day after the day on which the said period of 84 days
expired, as the case may be, give notice to the other party, with
a copy for information to the Engineer, of his intention to
commence arbitration, as hereinafter provided, as to the matter
in dispute. Such notice shall establish the entitlement of the party
giving the same to commence arbitration, as hereinafter
provided, as to such dispute and, subject to Sub-Clause 67.4, no
arbitration in respect thereof may be commenced unless such
notice is given.

If the Engineer has given notice of his decision as to a matter in


dispute to the Employer and the Contractor and no notice of
intention to commence arbitration as to such dispute has been
given by either the Employer or the Contractor on or before the
seventieth day after the day on which the patties received notice
as to such decision from the Engineer, the said decision shall
become final and binding upon the Employer and the Contractor.
 (Emphasis supplied)
[53]

Under the doctrine of exhaustion of administrative remedies, the


concerned administrative agency must be given the opportunity
to decide a matter within its jurisdiction before an action is
brought before the courts, otherwise, the action will be declared
premature. [54]

In this case, CIAC found and correctly ruled that respondent had
duly complied with the contractual obligation to exhaust
administrative remedies provided for under sub-clause 67.1 of
the Conditions of Contract before it brought the case before the
tribunal:
The Claimant further alleged that, despite of such knowledge, no
relief from the Secretary was forthcoming. It would therefore be
an exercise in futility if Claimant, after it had sent respondent the
seventeen (17) demand letters and despite the unequivocal
admission by Respondent's foreign consultant in charge of the
project of respondent's liability and failure to pay (Annex C of the
Complaint), will further be required to undergo another series of
presentation and exchange of documentation. Moreover,
Respondent has not indicated any practical benefit of resending
the demand to the Secretary nor any prejudice for not doing so.

In this particular contract project, the procedural requirements


governing the Settlement of Disputes is specifically provided
under Clause 67 of the Conditions of the Contract which Claimant
has complied with pursuant to the first paragraph of its letter
dated September 10, 2004 (annex R) pertinent provisions thereof
is read, as follows:

"Pursuant to the provision of Clause 67.1 of the conditions of


contracts, we are formally referring to your good office several
office several [sic] points of disagreement between the position
you have taken and the position we have argued for. These were
already the subject of voluminous correspondence between your
good self and our company but no clear-cut resolution of the
issues raised was ever made."

In the last paragraph of the letter on September 10, 2004 (Annex


"R"), Claimant has requested Respondent for a definitive ruling on
the disputes which were enumerated therein so that Claimant
could avail of the remedies given to it by the aforesaid Clause
67.1. In spite of Claimant's request, respondent DPWH did not act
on the same.

The evidence also disclosed that as far as delayed payments are


concerned, Claimant made various verbal and written demands
for payment as evidenced by Exhibits "E" to "E-16" or starting
December 5, 2000. The demands were not heeded. [55]

A total of 17 demand letters were sent to petitioner to no avail.


To require respondent to wait for the DPWH Secretary's response
while respondent continued to suffer financially would be to
condone petitioner's avoidance of its obligations to respondent.
Hence, even assuming that subclause 67.1 was not applicable,
the case would still fall within the exceptions to the doctrine of
exhaustion of administrative remedies  since strict application of
[56]

the doctrine will be set aside when requiring it would only be


unreasonable under the circumstances. [57]
IV

Petitioner avers that the Court of Appeals gravely erred in


rendering the assailed decision because it completely ignored,
overlooked, or misappreciated facts of substance, which, if duly
considered, would materially affect the outcome of the case.
Petitioner argues that the present case is an exception to the rule
that only questions of law may be raised in a Petition for Review
under Rule 45 of the Rules of Court. [58]

Before delving into the issues raised, it is imperative to


understand CIAC's role as the arbitral tribunal at the center of
this dispute.

CIAC was created under Executive Order No. 1008, or the


"Construction Industry Arbitration Law." It was originally under
the administrative supervision of the Philippine Domestic
Construction Board  which, in turn, was an implementing agency
[59]

of the Construction Industry Authority of the Philippines.  The


[60]

Construction Industry Authority of the Philippines is presently a


part of the Department of Trade and Industry as an attached
agency. [61]

CIAC's specific purpose is the "early and expeditious settlement


of disputes"  in the construction industry as a recognition of the
[62]

industry's role in "the furtherance of national development


goals."
[63]

Section 4 of the Construction Industry Arbitration Law lays out


CIAC's jurisdiction:
Section 4. Jurisdiction. - The CIAC shall have original and
exclusive jurisdiction over disputes arising from, or connected
with, contracts entered into by parties involved in construction in
the Philippines, whether the dispute arises before or after the
completion of the contract, or after the abandonment or breach
thereof. These disputes may involve government or private
contracts. For the Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to


violation of specifications for materials and workmanship;
violation of the terms of agreement; interpretation and/or
application of contractual time and delays; maintenance and
defects; payment, default of employer or contractor and changes
in contract cost.

Excluded from the coverage of this law are disputes arising from
employer-employee relationships which shall continue to be
covered by the Labor Code of the Philippines.
Republic Act No. 9184 or the "Government Procurement Reform
Act," recognized CIAC's competence in arbitrating over
contractual disputes within the construction industry:
Section 59. Arbitration, Any and all disputes arising from the
implementation of a contract covered by this Act shall be
submitted to arbitration in the Philippines according to the
provisions of Republic Act No. 876, otherwise known as the
"Arbitration Law": Provided, however, That, disputes that are
within the competence of the Construction Industry Arbitration
Commission to resolve shall be referred thereto. The process of
arbitration shall be incorporated as a provision in the contract
that will be executed pursuant to the provisions of this Act:
Provided, That by mutual agreement, the parties may agree in
writing to resort to alternative modes of dispute resolution.
(Emphasis supplied)
CIAC's authority to arbitrate construction disputes was then
incorporated into the general statutory framework on alternative
dispute resolution through Republic Act No. 9285, the "Alternative
Dispute Resolution Act of 2004". Section 34 of Republic Act No.
9285 specifically referred to the Construction Industry Arbitration
Law, while Section 35 confirmed CIAC's jurisdiction:
CHAPTER 6 - ARBITRATION OF CONSTRUCTION DISPUTES

Section 34. Arbitration of Construction Disputes: Governing Law.


- The arbitration of construction disputes shall be governed by
Executive Order No. 1008, otherwise known as the Constitution
Industry Arbitration Law.

Section 35. Coverage of the Law. - Construction disputes which


fall within the original and exclusive jurisdiction of the
Construction Industry Arbitration Commission (the "Commission")
shall include those between or among parties to, or who are
otherwise bound by, an arbitration agreement, directly or by
reference whether such parties are project owner, contractor,
subcontractor, quantity surveyor, bondsman or issuer of an
insurance policy in a construction project.

The Commission shall continue to exercise original and exclusive


jurisdiction over construction disputes although the arbitration is
"commercial" pursuant to Section 21 of this Act.
As a general rule, findings of fact of CIAC, a quasi-judicial tribunal
which has expertise on matters regarding the construction
industry, should be respected and upheld. In National Housing
Authority v. First United Constructors Corp.,  this Court held that
[64]

CIAC's factual findings, as affirmed by the Court of Appeals, will


not be overturned except as to the most compelling of reasons:
As this finding of fact by the CIAC was affirmed by the Court of
Appeals, and it being apparent that the CIAC arrived at said
finding after a thorough consideration of the evidence presented
by both parties, the same may no longer be reviewed by this
Court. The all too-familiar rule is that the Court will not, in a
petition for review on certiorari, entertain matters factual in
nature, save for the most compelling and cogent reasons, like
when such factual findings were drawn from a vacuum or
arbitrarily reached, or are grounded entirely on speculation or
conjectures, are conflicting or are premised on the supposed
evidence and contradicted by the evidence on record or when the
inference made is manifestly mistaken or absurd. This conclusion
is made more compelling by the fact that the CIAC is a quasi-
judicial body whose jurisdiction is confined to construction
disputes. Indeed, settled is the rule that findings of fact of
administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but finality
when affirmed by the Court of Appeals.  (Emphasis supplied)
[65]

In distinguishing between commercial arbitration, voluntary


arbitration under Article 219(14) of the Labor Code,  and [66]

construction arbitration, Freuhauf Electronics Philippines


Corporation v. Technology Electronics Assembly and Management
Pacific  ruled that commercial arbitral tribunals are purely ad hoc
[67]

bodies operating through contractual consent, hence, they


are not quasi-judicial agencies. In contrast, voluntary arbitration
under the Labor Code and construction arbitration derive their
authority from statute in recognition of the public interest
inherent in their respective spheres. Furthermore, voluntary
arbitration under the Labor Code and construction arbitration
exist independently of the will of the contracting parties:
Voluntary Arbitrators resolve labor disputes and grievances
arising from the interpretation of Collective Bargaining
Agreements. These disputes were specifically excluded from the
coverage of both the Arbitration Law and the ADR Law.

Unlike purely commercial relationships, the relationship between


capital and labor are heavily impressed with public interest.
Because of this, Voluntary Arbitrators authorized to resolve labor
disputes have been clothed with quasi-judicial authority.

On the other hand, commercial relationships covered by our


commercial arbitration laws are purely private and contractual in
nature. Unlike labor relationships, they do not possess the same
compelling state interest that would justify state interference into
the autonomy of contracts. Hence, commercial arbitration is a
purely private system of adjudication facilitated by private
citizens instead of government instrumentalities wielding quasi-
judicial powers.

Moreover, judicial or quasi-judicial jurisdiction cannot be


conferred upon a tribunal by the parties alone. The Labor Code
itself confers subject-matter jurisdiction to Voluntary Arbitrators.
Notably, the other arbitration body listed in Rule 43 - the
Construction Industry Arbitration Commission (CIAC) - is also a
government agency attached to the Department of Trade and
Industry. Its jurisdiction is likewise conferred by statute. By
contrast, the subject matter jurisdiction of commercial arbitrators
is stipulated by the.parties.  (Emphasis supplied)
[68]

Petitioner argues that respondent is not entitled to


US$358,227.95, as the foreign component of the Contract,
because it is not yet legally demandable.  In declaring that
[69]

petitioner should pay the amount as the foreign component of the


project, CIAC held that petitioner did not deny said amount in its
answer and that respondent's failure to renew its Letter of Credit
does not justify petitioner's act in withholding the dollar
component of the project. [70]

Petitioner maintains that the delay in payment was due to the


negative slippage incurred by respondent and its failure to renew
its Letter of Credit. Petitioner argues that under Clause 60.11 of
the Conditions of the Contract, Part II, an irrevocable standby
letter of credit is required before petitioner can release the
advance payment.  Petitioner states:
[71]

In this case, respondent does not deny that its LC No. OIDS-
00022-00027-0 issued by the United Coconut Planters
Bank (UCPB) expired on October 15, 2003. Petitioner
reminded respondent several times on the imperative need for
the renewal of its LC to avoid delay in the processing of its billing.
The purpose of said LC is to guarantee the return of the advance
payment by petitioner to respondent. [72]

Hence, petitioner claims that respondent cannot compel the


payment of the foreign component of the Contract because it did
not comply with the letter of credit requirement. Moreover,
petitioner asserts that "In directing petitioner to pay the said
award to respondent without the latter posting the said letter of
credit, the CIAC and the Court of Appeals effectively amended the
stipulation thereon in the contract which is legally
impermissible." [73]
For respondent's part, it argues that it was impossible to renew
the Letter of Credit. It explained that banks refused the renewal
of the Letter of Credit since the original contract period had
already expired and petitioner did not act on respondent's
requests for extension.  In addition, evidence shows that "the
[74]

main reason of the non-payment of dollar component was due to


unresolved issues, the right of way acquisition problem between
ADB and the [government], wherein ADB was forced to suspend
the loan disbursement for the entire 6  Road Improvement
th

Project effective 01 June 2003 due to this


conflict."  Nevertheless, respondent admitted that the mutual
[75]

termination of the Contract rendered the requirement of a Letter


of Credit for the release of the $358,227.95 moot and academic. [76]

This Court affirms the findings of CIAC and the Court of Appeals
that respondent is entitled to the foreign component of the
Contract.

CIAC found that petitioner was not justified in withholding the


payment for the dollar component of the Contract.  Further, it
[77]

found that respondent was justified and not at fault for not
reviewing the Letter of Credit. It held that:
The Arbitral Tribunal is persuaded that the main reason for the
nonpayment of the dollar component was due to the unresolved
issues (right of way acquisition) between the ADB and the
Government of the Philippines where the Loan Disbursement was
suspended by ADB for the 61 Road Improvement Project effective
01 June 2003 . . . The foreign Consultant even admonished
Respondent DPWH and reiterated that it should take prompt
action to effect payment of outstanding monies due, and nothing
was ever mentioned of the failure to renew the Letter of Credit.
(paragraph 3.2 of affidavit by Ferdinand Mariano)

Moreover, Claimant explained to the Respondent why the Letter


of credit could not be renewed in its letter of 01 and 15 March
2004 (Exh. "C-16" and "C-17"). It appears that one of the bank's
requirements for issuance of the Letter of Credit was the
approved time extension and the extension of the contract, but
Respondent refused to issue any document extending the
contract.

On the other hand, the Respondent's justification was only based


on its accounting requirement. It asserted that the LC guaranteed
the advance payment as well as the work completion. It further
stated that the LC was a requirement by the funding bank (By
Subair S. Diron, paragraph 3.1.1 of Joint Affidavit by Heinz
Reister, Diron and Pandapatan)  (Emphasis supplied)
[78]

In National Housing Authority v. First United Constructors Corp.,


 this Court held that the respondent contractor was entitled to
[79]

the payment of its claims, as the non-posting of the required


Payment Guarantee Bond was due to the inaction of petitioner
National Housing Authority:
Petitioner's subsequent refusal to process and pay these claims
despite FUCC's willingness to submit a surety bond to secure the
balance of the advance payment still to be recouped by NHA - as
the parties had agreed upon which bond would be submitted
when the check payment for the claim is about to be released,
clearly constitutes a violation by NHA of FUCC's right to be paid
these acknowledged and recognized claims. Thus, respondent had
an accrued cause of action against petitioner for these claims at
the time it filed its Complaint, the constitutive elements of which
are clearly set forth therein.  (Emphasis supplied)
[80]

In the present case, the renewal of the Letter of Credit hinged on


the extension of the contract period. Despite notice by
respondent of the bank's requirement for the renewal of the
Letter of Credit, petitioner chose to ignore respondent's requests
for time extensions. Therefore, petitioner cannot shift the blame
to respondent and claim that the Letter of Credit was a
condition sine qua non for the payment of the dollar component
of the project.

VI

Petitioner also assails the findings of the Court of Appeals with


regard to the time extensions respondent is entitled to. Petitioner
argues that both the CIAC and the Court of Appeals failed to
consider the subsequent payments made to respondent after the
conclusion of the arbitration hearings. Thus, the tribunal's finding
that petitioner still owes respondent US$358,227.95 is factually
erroneous.

Petitioner claims that "respondent failed to prove that it is


entitled to the time extensions of: (1) 133 calendar days in
addition to the 144-calendar days previously agreed by the
parties and (2) 108-calendar days due to delayed payments." [81]

On the other hand, respondent argues that it is entitled to time


extensions in addition to the 144 calendar days granted to it
under Variation Order No. 2.  Respondent claims it is entitled to
[82]

a total of 277 calendar days based on the approved revised


Project Evaluation Review Tracking Critical Path Method (PERT-
CPM) diagram and S-Curve,  As explained by witness Engr.
[83]

Reyes, rock excavation requires special skills, equipment, and


explosives. These factors were not considered when the original
contract schedule was prepared. [84]

Respondent further claims that it is entitled to another time


extension due to the delay in payment. Respondent maintains
that it infused more than double the 10% credit line amounting to
P157,747,945.00.  Respondent also claims that it had already
[85]

mobilized working and state-of-the-art equipment. [86]

The DPWH Bureau of Construction evaluated respondent's


request for time extension and recommended its approval to the
Secretary.  However, the recommendation was withdrawn "on
[87]

the pretext that said DPWH guidelines for computation of time


extension due to delayed payments [were] revised and
modified."[88]

Respondent points out that petitioner, through Engr. Pierre


Castelli, had acknowledged that the delayed payment had greatly
affected respondent's cash flow. [89]
Respondent likewise asserts that it is entitled to a time extension
due to peace and order problems. Petitioner did not object to
respondent's entitlement to an extension due to the peace and
order situation. Hence, the only thing required is to determine the
number of calendar days' extension respondent is entitled to
based on the circumstances. [90]

Chief Resident Engineer Andre Drockur of BCEOM French


Engineering Consultant recommended a time extension of 29
calendar days due to the peace and order situation. While
respondent did not agree with the consultant's recommendation,
it still adopted such recommendation to expedite the computation
of time extension due to peace and order problems. [91]

According to CIAC, respondent was entitled to time extensions in


addition to the 144-calendar day extension agreed upon by the
parties, as per Variation Order No. 2:
The Arbitral tribunal finds that the computation presented by the
Claimant based form the approved revised PERT/CPM and S-
Curve is acceptable and the 277 calendar days should have been
granted by the Respondent or an additional of 133 calendar days.
However, the project is now terminated. The actual
accomplishment as per letter of [Chief Resident Engineer] to
DPWH dated September 18, 2003 shows that the actual volume
of accomplishment was only 2,732 m  of hardrock an 4,444 m  of
2 3

rippable rock. Thus, the entire volume under Change Order #2


[or Variation Order No. 2] will not be consumed as the work is no
80% comp1ete[.] [92]

The Court of Appeals affirmed that respondent was entitled to a


133-day time extension in addition to the 144 calendar days
under Variation Order No. 2.  However, the Court of Appeals
[93]

noted that CIAC did not specify whether respondent was entitled
to the full 133 days' extension, considering that it found that the
entire volume in Variation Order No. 2 will not be fully used up
due to respondent's 80% accomplishment. [94]

CIAC also held that respondent was entitled to a time extension


of 108 calendar days due to petitioner's delayed payments  and
[95]
another time extension of 29 calendar days due to the peace and
order situation in the project area.
[96]

This Court sees no reason to deviate from the findings of both


CIAC and the Court of Appeals with regard to respondent's
entitlement to time extensions: 1) under Variation Order No. 2;
2) due to the delay in payment; and 3) due to the peace and
order situation, since these are supported by the evidence on
record.

To reiterate, findings of fact of administrative agencies and quasi-


judicial bodies are entitled to great respect and even finality when
affirmed by the appellate court,  In this case, the Court of
[97]

Appeals found that respondent was entitled to the time


extensions as evaluated by CIAC, the agency tasked to resolve
issues regarding the construction industry. Both tribunal found
that respondent was entitled to the extensions due to petitioners
delayed payments, peace and order situation, and Variation Order
No. 2. These findings are clearly supported by the facts on
record.

However, in light of the mutual termination of the Contract, the


remand of the case to CIAC will serve no practical purpose and is,
therefore, unnecessary.

VII

According to respondent the delay in the issuance of the Notice to


Proceed entitles it to a price adjustment under Presidential
Decree No. 1594. Bidding was conducted in January 1998 and
respondent was declared the winning bidder. The Contract was
signed on April 29, 1999. However, the Notice to Proceed was
issued on May 5, 1999, or after a delay of more than 120 days
from the bidding date, which entitles the bidder to an adjustment
in the contract unit price under Presidential Decree No. 1594. [98]

On the other hand, petitioner claims that respondent did not


question the findings of the Court of Appeals regarding price
adjustment and claim for actual damages. Hence, it should not be
allowed to assail the Court of Appeals' ruling on this issue before
this Court.
[99]

Both CIAC and the Court of Appeals found that respondent was
not entitled to a price adjustment:
As to the first issue raised by the Claimant, this Court finds that
the CIAC committed no reversible error in not awarding the price
adjustment being sought by the Claimant under P.D. 1594,
finding as flawed its claim based on the alleged DPWH's delay in
the issuance of the notice to proceed.

We quote with approval the pertinent ratiocination of the CIAC on


this point, thus:
....

However, the Claimant is not entitled to a price adjustment under


P.D. 1594 because it is the ADB Guideline[s] on Procurement
which should be followed, and not the provisions on P.D. 1594. In
fact the bid of the Contractor was awarded despite its being
above the approved Agency Estimates (AAE), based on the ADB
guidelines, and against the provisions of P.D. 1594 (paragraph
7.2 of Joint Affidavit by Heinz Reister, Diron and Pandapatan).

The Arbitral Tribunal finds that the Guidelines of the Asian


Development Bank govern this subject Project. Moreover, P.D.
1594 honors the treaties and international or executive
agreements to which the Philippine Government is a signatory.
Loan agreements such as those entered into with international
funding institutions like ADB are considered to be within the
ambit of DOJ opinion No. 46, S. 1987 and are therefore exempt
from the application of P.D. No. 1594 as amended (Paragraph
7.1.1 of Joint Affidavit by Heinz Reister, Diron and Pandapatan).

....
If the Claimant's bid was awarded despite its being above the
approved Agency Estimates based on the ADB guidelines, and
against the provisions of P.D. 1594, We cannot see the rationale
on why the Claimant now refuses to abide by the ADB guidelines
on procurement. After the claimant was benefited by the
approved bid at the inception of the project, We hold that it is
unjustified for the Claimant not to be bound by the ADB
guidelines under the pretext that it fails to get the supposed price
adjustment.  (Emphasis supplied)
[100]

While respondent did not appeal the Court of Appeals' ruling with
regard to its entitlement to a price adjustment under Presidential
Decree No. 1594, for purposes of clarity and to finally settle the
matter, this Court affirms the findings of CIAC and the Court of
Appeals.

This Court has held that a foreign loan agreement with


international financial institutions, such as a multilateral lending
agency organized by governments like the Asian Development
Bank, is an executive or international agreement contemplated by
our government procurement system. [101]

In Abaya v. Ebdane, Jr.,  this Court upheld the applicability of


[102]

the Japan Bank for International Cooperation's Procurement


Guidelines to the implementation of the projects to be undertaken
pursuant to the loan agreement between the Republic of the
Philippines and Japan Bank for International Cooperation. [103]

While the Implementing Rules and Regulations  of Presidential


[104]

Decree No. 1594 provide the formula for price adjustment in case
of delay in the issuance of a notice to proceed, the law does not
proscribe parties from making certain contractual stipulations. In
this case, the Construction Contract is clear that in case of price
adjustments, Clause 70 of the Conditions of Contract will apply:
3. That computation and payment of contract prices adjustment
will be applied in accordance with Clause 70 of the Conditions of
Contract;[105]

It is unclear from the records, however, whether the Asian


Development Bank Guidelines was substantially the same as
Clause 70 of the Conditions of Contract. Nevertheless, as in
the Abaya case, it should be the guidelines that the parties have
agreed upon, i.e., the Asian Development Bank Guidelines, that
should govern in case of issues arising from the contract.
Respondent failed to proffer evidence on what the Asian
Development Bank Guidelines provide, if any, in the event of a
delay in the issuance of a Notice to Proceed.

VIII

Petitioner argues that "CIAC and the Court of Appeals grossly


erred in awarding P5,080,000.00, plus legal interest of
P464,298.08 for the alleged equipment and financial losses; and
additional cost resulting from the alleged bombing incident of
P6,267,410.48, plus legal interest of P320,410.63." [106]

Furthermore, petitioner asserts that "the award to respondent of


additional costs in the contract price under Clause 69.4 of the
General Conditions of the Contract in the amount of
P20,311,072.66, plus legal interest of P1,038,368.78 is
improper."  Petitioner maintains that the award to respondent of
[107]

additional costs in the contract price under Clause 69.4 of the


General Conditions of Contract was baseless, since the Engineer
had not yet consulted with the parties to determine the amount
of additional costs.
[108]

In contrast, respondent claims that it is entitled to equipment and


financial losses due to the peace and order situation. [109]

Petitioner's arguments are untenable.

It has been sufficiently established that a peace and order


problem arose at the project site:
The Arbitral Tribunal was persuaded by the fact that six (6)
named persons and four (4) John Does were accused of
Destructive Arson in the Municipal Circuit Trial Court of
Dumalinao Zamboanga del Sur for feloniously setting on fire
simultaneously one (1) unit of Kumatsu Payloader amounting to
Php3,000,000.00 and one (1) unit Isuzu 10 Wheeler Dump Truck
amounting to Php800,000.00, both belonging to the Claimant.
The accused are believed NP's with motives of hatred due to vain
collection of revolutionary taxes from Claimant (Exh. "C-5").

The burning of the Payloader and Dump Truck, subject of the


criminal case (Exh. "C-5'') was corroborated in its entirety by the
testimony of Pedrito G. Palancos, operator of the burnt Payloader
in his affidavit, paragraph 6.6 to 6.9, part of the records of this
case.

The Chief of Police of Kumalarang, Zamboanga del Sur submitted


a Special Written Report to the PNP Provincial Director, regarding
the bombing at Claimant's hatching plant in Boyugan,
Kumalarang, del Sur on 11 March 2003.

The bombing incident revealed that it resulted in conflagration


causing damage to the Generator Set, Caterpillar Brand KVA 180-
180 and the Conveyor, with total estimated cost of
Php7,300,000.00.

Intelligence Action Agent gathered information that MILF


Members, all armed with undetermined numbers, but believed to
be under Commander Susob Edris, were sighted by the barangay
officials and the neighbor of the Plant location, when the incident
occurred. (Exh. "C-9").

The two incidents described above, one costing approximately


Php3,800,000.00 and the other costing approximately
Php7,300,000.00, will have a total of approximately
Php11,100,000.00 or Php11,347,410.48 to be exact. This is the
amount that Claimant is entitled due to the peace and order
situation at the Project site.
[110]

This Court finds that CIAC and the Court of Appeals did not err
when they found that respondent was entitled to its claim for
equipment and financial losses. The situation was an assumed
risk of petitioner as employer and is, thus, compensable under
Clause 20.4 of the Conditions of Contract, which lists the
Employer's risks as:
(a) war, hostilities (whether war be declared or not), invasion,
act of foreign enemies,

(b) rebellion, revolution, insurrection, or military or usurped


power, or civil war,

(c) ionising radiations, or contamination by radio-activity from


any nuclear fuel, or from any nuclear waste from the combustion
of nuclear fuel, radio active toxic explosive, or other hazardous
properties of any explosive nuclear assembly or nuclear
component thereof,

(d) pressure waves caused by aircraft or other aerial devices


travelling at sonic or supersonic speeds,

(e) riot, commotion or disorder, unless solely restricted to


employees of the Contractor or of his Subcontractors and arising
from the conduct of the Works,

(f) loss or damage due to the use or occupation by the Employer


of any Section or part of the Permanent Works, except as may be
provided for in the Contract,

(g) loss or damage to the extent that it is due to the design of the
Works, other any part of the design provided by the Contractor or
for which the Contractor is responsible,

(h) any operation of the forces of nature against which an


experienced contractor could not reasonably have been expected
to take precautions.  (Emphasis supplied)
[111]

It is clear from the above provision that the assumed risks of the
employer under Clause 20.4 of the Conditions of Contract include
rebellion, revolution, insurrection, or military or usurped power,
or civil war.

Petitioner further insists that respondent is not yet entitled to the


claim because there is no determination by the Engineer of the
costs incurred, as required under Clause 69.4 of the Conditions of
Contract.[112]

In its Answer before CIAC, petitioner denied respondent's claims


for additional costs under Clause 69.4. Petitioner stated that its
denial will be explained more specifically in its Affirmative
Defenses:
6. DENIES the allegations in paragraphs 12, 13, 14, 15 and 16 of
the complaint for being preposterous, misleading and patently
without legal and factual basis, the truth being that as per the
Conditions of Contract, complainant is not entitled to the payment
of additional cost on slowdown or suspension of work on the
project, reimbursement for alleged equipment losses and
additional time extensions to complete the project specifically
stated/discussed in the Affirmative Defenses hereof.  (Emphasis
[113]

supplied)
However, a perusal of petitioner's Affirmative Defenses reveals
that no such qualification was made.

Under Rule 8, Section 10 of the Rules of Court, the "defendant


must specify each material allegation of fact the truth of which he
does not admit and, whenever practicable, shall set forth the
substance of the matters upon which he relies to support his
denial." There are three (3) modes of specific denial provided for
under the Rules:
1) by specifying each material allegation of the fact in the
complaint, the truth of which the defendant does not admit, and
whenever practicable, setting forth the substance of the matters
which he will rely upon to support his denial; (2) by specifying so
much of an averment in the complaint as is true and material and
denying only the remainder; (3) by stating that the defendant is
without knowledge or information sufficient to form a belief as to
the truth of a material averment in the complaint, which has the
effect of a denial.
[114]

In Aquintey v. Spouses Tibong,  this Court held that using


[115]

"specifically" in a general denial does not automatically convert


that general denial to a specific one. The denial in the answer
must be definite as to what is admitted and what is denied, such
that the adverse party will not have to resort to guesswork over
"what is admitted, what is denied, and what is covered by denials
of knowledge as sufficient to form a belief." [116]

The petitioner only tackled the issue on the claim for additional
costs in the Joint Affidavit of petitioner's witnesses Heinz Reister,
Subair S. Diron, and Abdulfatak A. Pandapatan:
Issue No. 9. Is claimant entitled to additional cost under Clause
69.4 of the General Conditions of Contract? If so, how much?

Subair S. Diron and Abdulfatak A. Pandapatan testifying:

9.1 Q: Is claimant entitled to additional cost/charges under Clause 69.4 of the General C

A: Not yet, the claimant should establish that it is allowed. [117]

This Court finds that petitioner failed to specifically deny the


claims of respondent and had, therefore, admitted such claims.
This Court agrees that respondent was able to establish its claims
before the CIAC. This Court notes that the project was in
Mindanao, and mobilization of workers and equipment is not an
easy feat and not without cost. Respondent believed that the
suspension would only be temporary and work could resume at
any time once petitioner settled its obligation. Petitioner must
compensate respondent for the costs it incurred without any fault
on respondent's part.

IX

During the arbitration hearing before the CIAC, respondent itself


admitted that there was no provision in the Conditions of Contract
for interest at the rate of 24% per annum on delayed payments.
[118]

Respondent tries to excuse the lack of contractual stipulations by


claiming that the amount of 24% interest is payment for actual
damages and not stipulated interest. [119]
Respondent claims that petitioner is liable for the amounts
respondent owes its creditors in the total amounts of
P10,297,090.42 and USD$118,094.93. In addition, respondent
avers that petitioner should pay it 6% interest per annum
computed from the receipt of the first demand letter for payment
sent by respondent, as a result of delay in the payment for work
accomplished. [120]

The Court is not convinced.

It is fundamental that a contract is the law between the parties


and, absent any showing that its provisions are wholly or in part
contrary to law, morals, good customs, public order, or public
policy, it shall be enforced to the letter by the courts. [121]

Respondent was not able to establish the basis of its claim that it
is entitled to an award of 24% interest. Moreover, as found by
the Court of Appeals and CIAC, the parties had agreed to delete
the provision on interest on delayed payments, since the project
was funded by the Asian Development Bank. [122]

There is also no basis to award respondent 24% interest as actual


damages for the additional expenses it incurred due to
petitioner's delayed payments.

Before actual damages may be awarded, it is imperative that the


claimant proves its claims first. The issue on the amount of actual
or compensatory damages is a question of fact,  and except as
[123]

provided by law or by stipulation, one is entitled to adequate


compensation only for pecuniary loss duly proven. [124]

In this case, respondent has not sufficiently shown how awarding


it 24% interest per annum on delayed payments corresponds to
the actual damages it allegedly suffered. Respondent failed to
show a causal relation between the alleged losses and the injury
it suffered from petitioner's actions.

X
Respondent claims that it should be paid in U.S. dollars as
specified in the Contract.  It argues that the present case is an
[125]

exception to the general rule that obligations should be paid in


Philippine currency.
[126]

The Court of Appeals held that the parties subsequently agreed


that payments made after March 31, 2003 shall be in pesos only:
However, one aspect in the CIAC decision is shrouded with cloud.
This concerns CIAC's order to DPWH to pay its alleged liability to
the Claimant in US dollars. It is worthy to note that aside from
the agreement of the parties - particularly in paragraph 5 of the
contract, supra, to fix the exchange rate at P34.9 for every
US$1.00, the Claimant itself has acknowledged in its request that
it was advised by the DPWH per its letter dated 13 August 2003
that all payments for works earned out after 31 March 2003 and
related price escalation claims and retention releases in the
contract will be in pesos only, therefore no foreign exchange
payments. This fact was never contested by the Claimant thereby
creating a presumption that it has acquiesced to the request of
the DPWH. Thus, We cannot see Our way through on why the
CIAC has still to make a ruling on the Interest Computation of
Delayed Payment at 6% Per Annum at US$45,206.14 as well as
the Foreign Component of US$358,227.95 plus legal interest at
US$18.313.79 citing the exemption of transactions where the
funds involved are the proceeds of loans or investments made
through bona fide intermediaries or agents, by foreign
government and banking institutions such as the Asian
Development Bank (ADB) from the coverage of Republic Act 529
otherwise known a[s] "An Act to Assure Uniform Value to
Philippine Coin and Currency". Worse, there was no mention
about the subsequent notice by the DPWH to the Claimant, supra
about their subsequent understanding on "no foreign exchange
payments". This is indeed one dubious area that needs to be
clarified by no less than the CIAC itself.  (Emphasis supplied)
[127]

Again, considering that respondent did not appeal the Court of


Appeals decision, the appellate court's ruling on this issue is
deemed final as to respondent, and there is no need to remand
this issue to the CIAC. Issues not raised on appeal are already
final and cannot be disturbed.
[128]

XI

CIAC imposed legal interest in its Award as follows:


In view of the foregoing, the Claimant is entitled to payment of
legal interest of 6% per annum from the receipt of its
extrajudicial demand.

Thus, under Issue No. 3 where the Claimant was awarded


US$358,227.95, the Claimant is entitled to legal interest of 6%
per annum commencing from 2 March 2004 up to this date (or
311 days) in the amount of US$18,313.79.

Under Issue No. 8 where the Claimant was awarded


P11,347,410.48, the Claimant is entitled to legal interest of 6%
per annum for the Equipment and Plant of P5,080,000.00
commencing from 1 July 2003 (or 556 days) in, the amount of
P464,298.08 and for the resulting Additional Expenses of
P6,267,410.48 commencing from 2 March 2004 (or 311 days) in
the amount of P320,410.63.

Under Issue No. 9 where the Claimant was awarded


P20,311,072.66, the Claimant is entitled to legal interest of 6%
per annum for Additional Cost under 69.4 of the Conditions of
Contract commencing from 2 March 2004 (or 311 days) in the
amount of P1,038,368.78.

Under Issue No. 10 with respect to the delayed payment of


billings for various amounts and on various dates, the Claimant is
entitled to legal interest of 6% per annum as detailed in
Attachment 1, in the amount of US$45,206.14 and
P2,175,516.63.

However, pursuant to the Eastern Shipping Lines vs. Court of


Appeals, 234 SCRA 78 (1994), a monetary award shall earn
interest at the rate of 12% per annum from the date when the
award becomes final and executory until its satisfaction. [129]

On May 16, 2013, the Monetary Board of the Bangko Sentral ng


Pilipinas issued Resolution No. 796, which revised the interest
rate to be imposed on the loan or forbearance of any money,
goods, or credits. This was implemented in Bangko Sentral ng
Pilipinas Circular No.799  Series of 2013, which reads:
[130]

The Monetary Board, in its Resolution No. 796 dated 16 May


2013, approved the following revisions governing the rate of
interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any


money, goods or credits and the rate allowed in judgments, in
the absence of an express contract as to such rate of interest,
shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual


of Regulations for Banks and Sections 4305Q.1, 43058.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
    
    This Circular shall take effect on 1 July 2013.
Nacar v. Gallery Frames  then laid down the guidelines for the
[131]

imposition of legal interest:


To recapitulate and for future guidance, the guidelines laid down
in the case of Eastern Shipping Lines are accordingly modified to
embody BSP MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law,


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

II. With regard particularly to an award of interest in the concept


of actual and compensatory damages, the rate of interest, as well
as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest
shall be 6% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to
the provisions of Article 1169 of the Civil Code.
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 court at
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 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.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final
and executory prior to July 1, 2013, shall not be disturbed and
shall continue to be implemented applying the rate of interest
fixed therein.
[132]

Before Nacar and Bangko Sentral ng Pilipinas Monetary Board


Resolution No. 796 dated May 16, 2013, the rate of legal interest
was pegged at 12% per annurn from finality of judgment until its
satisfaction, "this interim period being deemed to be by then an
equivalent to a forbearance of credit."
[133]

With this Court's pronouncement in Nacar, the rate of interest


imposed should be modified. The monetary awards, as computed
by the CIAC, should earn legal interest at the rate of 12% per
annum until June 30, 2013, after which, it shall earn legal
interest at the rate of 6% per annum until full satisfaction.

The other issues raised by the parties were no longer discussed


due to the mutual termination of the Contract by parties, which
rendered them moot and academic.

WHEREFORE, the Petition is DENIED. The Court of Appeals


Decision dated September 20, 2007 in CA-G.R. SP Nos. 88953
and 88911 is AFFIRMED with MODIFICATION as follows: (1)
that the order remanding the case to the Construction Industry
Arbitration Commission for proper disposition is REVERSED for
being moot and academic; and (2) that the legal interest rate is
pegged at twelve percent (12%) per annum until June 30, 2013,
and then at six percent (6%) per annum until full satisfaction.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

December 1, 2017

NOTICE OF JUDGMENT

Sirs / Mesdames:
Please take notice that on September 13, 2017 a Decision, copy
attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on December 1, 2017 at 10:20 a.m.

[1]
 Rollo, pp. 398-463.

 Id. at 464-480. The Decision was penned by Associate Justice


[2]

Myrna Dimaranan Vidal and concurred in by Associate .Justices


Jose C. Reyes, Jr. and Japar B. Dlrnaampao of the Special Eighth
Division, Court of Appeals, Manila.

[3]
 Id. at 481-485.

[4]
 Id. at 482.

 Id. at 401. The "Conditions of Contract for Works of Civil


[5]

Engineering Construction" is a standard contract form prepared


by the Federation International Des Ingenieurs - Conseils
(FIDIC). The standard contract is recommended for general use
for the purpose of construction of such works where tenders are
invited on an international basis. The Conditions of Contract are
also equally suitable for use on domestic contracts. It is
commonly referred to as the Red Book in the construction
industry. Available at <http://fidic.org/bookshop/about-
bookshop/which-fidic-contract-should-i-use> (last accessed on
September 4, 2017)

[6]
 Id.
 Id. at 491-492, Joint Venture's Complaint before the CIAC and
[7]

pp. 742-744, CIAC Award.

[8]
 Id. at 728, CIAC Award.

[9]
 Id.

[10]
 Id. at 740.

[11]
 Id. at 486-500.

[12]
 Id. at 732, CIAC Award.

[13]
 Id. at 553-555.

[14]
 Id. at 338-339.

[15]
 Id. at 733, CIAC Award.

[16]
 Id. at 726-751.

[17]
 Id. at 741-742 (CIAC Award).

[18]
 Id. at 750-751.

[19]
 Id. at 78-79.

[20]
 Id. at 464-480.

[21]
 Id. at 480.

[22]
 Id. at 473-474.

[23]
 Id. at 474-475.

[24]
 Id. at 475-476.

[25]
 Id. at 477.
[26]
 Id. at 477-478.

[27]
 Id. at 479.

[28]
 Id. at 479-480.

[29]
 Id. at 398-463.

[30]
 Id. at 779.

[31]
 Id. at 785-815.

[32]
 Id. at 823-852.

[33]
 Id. at 461.

 Anderson v. Ho, 701 Phil. 6, 13-15 (2013) [Per J. Del Castillo,


[34]

Second Division]; Clavecilla v. Quitain, 518 Phil. 53, 62-64


(2006) [Per J. Austria-Martinez, First Division].

 Agustin v. Cruz-Herrera, 726 Phil. 533, 542-543 (2014) [Per J.


[35]

Reyes, First Division], Mariveles Shipyard Corp. v. Court of


Appeals, 461 Phil. 249, 263 (2003) [Per J. Quisumbing, Second
Division].

[36]
 701 Phil. 6 (2013) [Per J. Del Castillo, Second Division].

[37]
 Id. at 14.

[38]
 Id. at 396-A.

 Clavecilla v. Quitain, 518 Phil. 53, 63 (2006) [Per J. Austria-


[39]

Martinez, First Division].

 Donato v. Court of Appeals, 462 Phil. 676, 690 (2003) [Per J.


[40]

Austria-Martinez, Second Division]; Spouses Wee v. Galvez, 479


Phil. 737, 749 (2004) [Per J. Quisumbing, First Division].
 See Diamond Taxi v. Llamas, Jr., 729 Phil. 364, 379 (2014)
[41]

[Per J. Brion, Second Division].

[42]
 Rollo, pp. 477-478.

[43]
 Id. at 555.

[44]
 Id. at 426.

[45]
 Id. at 414.

 Pasig Printing Corp. v. Rockland Construction Co., Inc., 726


[46]

Phil. 256, 265 (2014) [Per J. Mendoza, Third Division].

 David v. Macapagal-Arroyo, 522 Phil. 705, 754 (2006) [Per J.


[47]

Sandoval-Gutierrez, En Banc].

[48]
 Id. at 754.

[49]
 705 Phil 153 (2013) [Per C.J. Sereno, First Division].

[50]
 Id. at 164.

[51]
 Rollo, pp. 426-427.

[52]
 Id. at 793-794.

 http://www.quantumconsult.org/wp-
[53]

content/uploads/2012/01/2927771-FIDIC-for-civil-engineeing-
construction-1987.pdf (Accessed on September 4, 2017)

 See University of Santo Tomas v. Sanchez, 640 Phil. 189, 194-


[54]

195 (2010) [Per J. Del Castillo, First Division].

[55]
 Rollo, p.735.
 Paat v. Court of Appeals, 334 Phil. 146, 153 ( l 997) [Per J.
[56]

Torres, Jr., Second Division].

 Information Technology Foundation of the Phils. v. Commission


[57]

on Elections, 464 Phil. 173, 207 (2004) [Per J. Panganiban, En


Banc].

[58]
 Rollo, pp. 430-431.

[59]
 Exec. Order No. 1008, sec. 3.

[60]
 Exec. Order No. 1008, 4  Whereas Clause.
th

 http://www.dti.gov.ph/about/the-organization/attached-
[61]

agencies

[62]
 Exec. Order No. 1008, Sec. 2.

[63]
 Exec. Order No. 1008, 3  Whereas Clause.
rd

[64]
 672 Phil. 621 (2011) [Per J. Perez, Second Division].

[65]
 Id. at 658.

[66]
 LABOR CODE, art. 212(14) provides; Article 212. Definitions. -

....

14. "Voluntary Arbitrator" means any person accredited by the


Board as such or any person named or designated in the
Collective Bargaining Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or without the assistance
of the National Conciliation and Mediation Board, pursuant to a
selection procedure agreed upon in the Collective Bargaining
Agreement, or any official that may be authorized by the
Secretary of Labor and Employment to act as Voluntary Arbitrator
upon the written request and agreement of the parties to a labor
dispute.
 G.R.
[67]
No. 204197, November 23, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/november2016/204197.pdf> [Per J.
Brion, Second Division].

[68]
 Id. at 15-16.

[69]
 Id. at 431-435.

[70]
 Id. at 738-739.

[71]
 Id. at 432-433.

[72]
 Id. at 433-434.

[73]
 Id. at 434.

[74]
 Id. at 798.

[75]
 Id.

[76]
 Id. at 798-799.

[77]
 Id. at 738.

[78]
 Id. at 739.

[79]
 672 Phil. 621 (2011) [Per J. Perez, Second Division].

[80]
 Id. at 653.

[81]
 Id. at 435.

[82]
 Id. at 799-801.

[83]
 Id. at 800.
[84]
 Id.

[85]
 Id. at 801.

[86]
 Id. at 802.

[87]
 Id. at 802.

[88]
 Id.

[89]
 Id. at 803.

[90]
 Id. at 803-805.

[91]
 Id. at 805.

[92]
 Id. at 740.

[93]
 Id. at 477.

[94]
 Id. at 476-477.

[95]
 Id. at 740-741.

[96]
 Id. at 741.

 See Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and


[95]

Surety Corp., 695 Phil. 169, 194 (2012) [Per J. Mendoza, En


Banc].

[98]
 Rollo, pp. 806-807.

[99]
 Id. at 845-848.

[100]
 Id. at 473-474.

 Department of Budget and Management Procurement Service


[101]

(DBM-PS) v. Kolonwel Trading, 551 Phil. 1030, 1049 (2007) [Per


J. Garcia, En Banc] This case applied the provisions of Rep. Act
No. 9184 or the Government Procurement Reform Act which
came into effect in 2003.

[102]
 544 Phil. 645 (2007) [Per J. Callejo, Sr., Third Division].

[103]
 Id. at 687.

[104]
 IB 10.10 - ISSUANCE OF NOTICE TO PROCEED

1. The concerned government office/agency/corporation should


issue the Notice to Proceed (NTP) to the successful bidder not
later than fifteen (15) calendar days from the date of approval of
the contract by the concerned/authorized government official.
The effectivity date of the NTP shall be specified by the agency
concerned.

2. For projects whereby the Notice to Proceed (NTP) is issued


after 120 calendar days from the bidding date, the awarded
bidder may request for a contract unit price adjustment using the
parametric formulae updated to the month of the NTP.
Computation of the unit price adjustment shall be the original
contract unit price multiplied by the fluctuation factor K without
deducting the 5%. Such updated unit prices shall be used as
basis for computing the regular progress billings, and price
escalation for work accomplishment shall be calculated using the
parametric formulae herein prescribed as applied to the updated
unit prices reckoned from the month of the NTP. Adjustment of
unit prices shall be made within fourteen (14) calendar days from
the date the required indices are available/issued by the
appropriate govemment agency.

[105]
 Rollo, p. 482.

[106]
 Id. at 442.

[107]
 Id. at 447.
[108]
 Id. at 449-450.

[109]
 Id. at 807.

[110]
 Id. at 742-743.

 Id.
[111]
at 530. See <http://www.quantumconsult.org/wp-
content/uploads/2012/01/2927771-FIDIC-for-civil-engineeing-
construction-1987.pdf> (last accessed on September 4, 2017).

[112]
 Id. at 449-450.

[113]
 Id. at 503.

 Philippine Bank of Communications v. Spouses Go, 658 Phil.


[114]

43, 57 (2011) [Per J. Mendoza, Second Division].

[115]
 540 Phil. 422 (2006) [Per J. Callejo, Sr., Firt Division].

[116]
 Id. at 441.

[117]
 Rollo, p. 579.

[118]
 Id.at747.

[119]
 Id. at 813.

[120] Id.

 Stronghold Insurance Co., Inc. v. Interpacific Container


[121]

Services, 762 Phil. 483, 491 (2015) [Per J. Perez, First Division].

[122]
 Rollo, pp. 474-475.

 City of Dagupan v. Maramba, 738 Phil. 71, 96 (2014) [Per J.


[123]

Leonen, Third Division].

[124]
 CIVIL CODE, art. 2199.
[125]
 Id. at 813-814.

[126]
 Id. at 814.

[127]
 Id. at 478-479 (Court of Appeals Decision).

 See A.C. Ransom Labor Union-CCLU v. National Labor


[128]

Relations Commission, 226 Phil. 199, 204 (1986) [Per J.


Melencio-Herrera, First Division].

[129]
 Rollo, p. 749.

 The subject of Bangko Sentral ng Pilipinas Circuiar No. 799


[130]

dated June 21, 2013 is the "[r]ate of interest in the absence of


stipulation."

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[131]

En Banc].

[132]
 Id. at 281-283.

 See Eastern Shipping Lines, Inc. v. Court of Appeals, 304 Phil.


[133]

236, 254 (1994) [Per J. Vitug, En Banc].

Source: Supreme Court E-Library | Date created: January 23, 2018


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Supreme Court E-Library

THIRD DIVISION
[ G.R. No. 203943, August 30, 2017 ]
MAGSAYSAY MARITIME CORPORATION/EDUARDO
MANESE AND PRINCESS CRUISE LINES, LTD.,
PETITIONERS, VS. CYNTHIA DE JESUS,
RESPONDENT.DECISION

LEONEN, J.:

A conditional settlement of a judgment award may be treated as


a compromise agreement and a judgment on the merits of the
case if it turns out to be highly prejudicial to one of the parties.

This resolves the Petition for Review on Certiorari  filed by [1]

Magsaysay Maritime Corporation, Eduardo Manese,  and Princess


[2]

Cruise Lines, Limited petitioners) assailing the August 17, 2012


Decision  and October 19, 2012 Resolution   of the Court of
[3] [4]

Appeals in CA-G.R. SP No. 119393. The assailed Court of Appeals


Decision upheld the November 24, 2010 Decision  and February
[5]

28, 2011 Resolution  of the National Labor Relations Commission


[6]

in NLRC NCR LAC No. 08-000481-09 (NLRC NCR No. (M) 09-
13352-08).

On February 28, 2006, Magsaysay Maritime Corporation


(Magsaysay), the local manning agent of Princess Cruise Lines,
Limited, hired Bernardine De Jesus (Bernardine) as an
Accommodation Supervisor for the cruise ship Regal Princess.
Based on the contract of employment  that he signed, Bernardine
[7]

was to receive a basic monthly wage of US$388.00 for a period of


10 months.

On March 9, 2006, Bernardine boarded Regal Princess and he


eventually disembarked 10 months later, or on January 16, 2007,
after his contract of employment ended. [8]
Bernardine was soon diagnosed with Aortic Aneurysm and on
March 15, 2007, he had a coronary angiography. On March 21,
2007, he underwent a Left Axillofemoral Bypass.  He died on
[9]

March 26, 2007. [10]

On September 24, 2008, respondent Cynthia De Jesus (Cynthia),


Bernardine's widow, filed a complaint  against Magsaysay for
[11]

"payment of death benefits, medical expenses, sickness


allowance, damages, and attorney's fees."  Cynthia and
[12]

Magsaysay were unable to amicably settle the case; hence, they


were directed to submit their respective position papers. [13]

On June 30, 2009, the Labor Arbiter granted Cynthia's complaint


and directed Magsaysay to pay her claims for death benefits,
additional benefits, burial expenses, and attorney's fees. [14]

The Labor Arbiter ruled that it was highly improbable that


Bernardine developed a cardio-vascular disease which would lead
to his death merely two (2) months after his repatriation. [15]

The Labor Arbiter held that Cynthia sufficiently established that


her husband suffered chest pains while he was still aboard the
Regal Princess. She claimed that he had reported his condition
but he was not provided with medical attention. Furthermore, he
had also asked for medical attention upon his repatriation, but his
request was once again denied.  The dispositive portion of the
[16]

Labor Arbiter Decision read:


WHEREFORE, foregoing premises considered, judgment is hereby
rendered finding respondents liable to pay, jointly and severally,
complainant's claims for death benefits under the POEA Standard
Employment Contract, amounting to US$50,000.00 and additional
benefits amounting to US$21,000.00 for complainant's three (3)
minor children, in Philippine currency at the prevailing rate of
exchange at the time of payment; US$1,000,00 representing
burial expenses; and attorney's fees often percent (10%) of the
total monetary award.

All other claims are denied.


SO ORDERED. [17]

On November 24, 2010, the National Labor Relations


Commission  denied Magsaysay's appeal.
[18]

The National Labor Relations Commission upheld the Labor


Arbiter's finding that Bernardine's cardio-vascular disease was
work-related. [19]

The National Labor Relations Commission also noted that while


the general rule in compensability of death is that a seafarer's
death must have occurred during the term of the employment
contract, an exception to this rule is when a seafarer contracted
an illness while under the contract and this illness caused his
death:[20]

In such case, even if the seaman died after the term of the
contract, his beneficiaries are entitled to death compensation and
benefits. Thus, [w]here a seaman contracts an illness during the
term of his employment and such illness causes the death of the
seaman even after the term of his contract, the beneficiaries of
the seaman are entitled, as a matter of right, to death
compensation and benefits. [21]

As for Bernardine's failure to submit himself to a post-


employment medical examination, the National Labor Relations
Commission remarked that this Court had already ruled that it
could be dispensed with. Furthermore, the National Labor
Relations Commission pointed out that the failure to undergo a
post employment medical examination within three (3) days from
repatriation leads to the forfeiture of medical benefits and
sickness allowance, not death benefits.  The dispositive portion
[22]

of the National Labor Relations Commission Decision read:


WHEREFORE, the Decision of the labor arbiter a quo dated June
30, 2009 rendered in NLRC NCR Case No. (M) 09-13352-08 is
hereby AFFIRMED in toto.

SO ORDERED.  (Emphasis in the original)


[23]

On May 13, 2011, Magsaysay filed a Petition for


Certiorari  before the Court of Appeals.
[24]
On June 30, 2011, Magsaysay paid Cynthia P3,370,514.40 as
conditional satisfaction of the judgment award against it and
without prejudice to its Petition for Certiorari pending before the
Court of Appeals. [25]

On July 1, 2011, in light of the conditional settlement between


the parties, the Labor Arbiter considered the case closed and
terminated but without prejudice to Magsaysay's pending petition
before the Court of Appeals. [26]

On August 17, 2012, the Court of Appeals  dismissed the petition


[27]

for being moot and academic.  On October 19, 2012, the Court
[28]

of Appeals  denied Magsaysay's motion for reconsideration.


[29] [30]

On December 19, 2012, petitioners filed their Petition for Review


on Certiorari  where they continue to assert that the Court of
[31]

Appeals erred in dismissing their Petition for Certiorari for being


moot and academic. Petitioners emphasize that Leonis Navigation
v. Villamater  stated that if the Court of Appeals grants a petition
[32]

for certiorari, the assailed decision of the National Labor Relations


Commission will become void ab initio and will never attain
finality.
[33]

Petitioners maintain that Leonis ruled that even if the employer


voluntarily pays the judgment award, the seafarer's beneficiary is
estopped from claiming that the controversy has ended with the
Labor Arbiter's Order closing and terminating the case. This is
because the beneficiary acknowledged that the payment received
"was without prejudice to the final outcome of the petition for
certiorari pending before the [Court of Appeals]." [34]

Furthermore, petitioners claim that Bernardine's death was not


compensable under the Philippine Overseas Employment Agency
Standard Employment Contract (POEA-SEC) because he died
after his contract of employment was terminated.  Petitioners [35]

put forth that "[f]rom then on, petitioners' responsibilities and


obligations to the deceased seafarer had ceased." [36]
Petitioners also highlight that Bernardine was not repatriated due
to illness but because of the completion of his contract.
 Additionally, Bernardine failed to submit himself to a post-
[37]

employment medical examination within three (3) days from his


repatriation, as required by the POEA-SEC. Thus, petitioners
claim that there was no basis for the death benefits claimed by
Cynthia. Petitioners point out that Bernardine did not complain of
any illness during the de-briefing session conducted before his
repatriation. [38]

Nonetheless, even if Bernardine complied with the rule on post-


employment medical examination, petitioners contend that Aortic
Aneurysm, which caused Bernardine's death, was not a
compensable occupational disease under the POEA-SEC. They
aver that it cannot be presumed that the cause of his death was
work-related. They posit that respondent utterly failed to
substantiate her claim that her husband's death was work
related.
[39]

On February 13, 2013, this Court required respondent Cynthia to


comment on the Petition for Review. [40]

On May 3, 2013, respondent filed her Comment  where she [41]

stresses that the ruling in Career Philippines Ship Management


Inc. v. Madjus  is applicable to her case since both cases pertain
[42]

to voluntary satisfaction of claims for death benefits.


 Furthermore, just like in Career Philippines, by accepting the
[43]

monetary award from petitioners, respondent will no longer have


any available remedy against them, while petitioners are still free
to pursue any of the remedies available to them. [44]

Respondent also argues that the issues raised before this Court
are the same factual issues already threshed out before the Court
of Appeals and the National Labor Relations Commission.
Respondent contends that the findings of the administrative
tribunals are supported by substantial evidence; hence, they
should be accorded great weight and respect by this Court. [45]
Respondent denies that her husband failed to comply with the
three (3)-day reporting requirement and claims that her husband
even asked to be provided with medical attention upon his
repatriation, but his request was denied:
The petitioners merely told him to take a rest and after that, he
will be re-deployed again. Seaman De Jesus could not have
immediately filed a disability claim (as suggested by petitioners)
because he was not yet examined by a doctor due to the refusal
of petitioners to provide post-employment medical attention. He
was also hoping that his condition would improve after taking a
rest, as suggested by petitioners.

However, his condition did not improve until he suffered aortic


aneurism on March 14, 2007.  (Emphasis in the original)
[46]

On August 12, 2013, this Court required petitioners to reply to


the Comment. [47]

On November 4, 2013, petitioners filed their Reply  where they


[48]

deny respondent's allegation that they voluntarily offered to pay


the full judgment award. They claim that they even opposed
respondent's Motion for the Issuance of a Writ of Execution and
were just forced to pay the judgment award since their petition
before the Court of Appeals did not stay the judgment award. [49]

Petitioners reiterate that the Court of Appeals erred in dismissing


the petition on the ground that the payment of the judgment
award rendered the petition moot arid academic because the
payment made to respondent was without prejudice to the then
pending petition before the Court of Appeals.[50]

Petitioners argue that the labor tribunals committed grave abuse


of discretion in awarding death benefits to Cynthia and her three
(3) minor children considering that Bernardine's death was not
compensable under the POEA-SEC and that respondent failed to
prove her claims of compensability with substantial evidence. [51]
The parties filed their respective memoranda on February 12,
2014  and March 24, 2014,  in compliance with this Court's
[52] [53]

December 2, 2013 Resolution. [54]

This Court resolves the following issues:

First, whether or not the payment of money judgment has


rendered the Petition for Certorari before the Court of Appeals
moot and academic; and

Second, whether or not the award of death benefits was issued


with grave abuse of discretion.

The petition is devoid of merit.

Petitioner cite Leonis Navigation v. Villamater  to support their


[55]

claim that their payment of the judgment award did not render
the Petition for Certiorari before the Court of Appeals moot and
academic. Leonis stated:
Simply put, the execution of the final and executory decision or
resolution of the NLRC shall proceed despite the pendency of a
petition for certiorari, unless it is restrained by the proper court.
In the present case, petitioners already paid Villamater's widow,
Sonia, the amount of [P]3,649,800.00, representing the total and
permanent disability award plus attorney's fees, pursuant to the
Writ of Execution issued by the Labor Arbiter. Thereafter, an
Order was issued declaring the case as "closed and terminated."
However, although there was no motion for reconsideration of
this last Order, Sonia was, nonetheless, estopped from claiming
that the controversy had already reached its end with the
issuance of the Order closing and terminating the case. This is
because the Acknowledgment Receipt she signed when she
received petitioners' payment was without prejudice to the final
outcome of the petition for certiorari pending before the CA. [56]

Respondent, in turn, cites Career Philippines Ship Management


Inc. v. Madjus  to substantiate her claim that the Conditional
[57]
Satisfaction of Judgment Award was akin to an amicable
settlement, rendering the Petition for Certiorari before the Court
of Appeals moot and academic. Career Philippines stated:
As for the "Conditional Satisfaction of Judgment," the Court holds
that it is valid, hence, the "conditional" settlement of the
judgment award insofar as it operates as a final satisfaction
thereof to render the case moot and academic.

....

Finally, the Affidavit of Claimant attached to the "Conditional


Satisfaction of Judgment" states:
....

5. That I understand that the payment of the judgment award of


US$66,000.00 or its peso equivalent of
PhP2,932,974.00 includes all my past, present and
future expenses and claims, and all kinds of benefits due
to me under the POEA employment contract and all
collective bargaining agreements and all labor laws and
regulations, civil law or any other law whatsoever and all
damages, pains and sufferings in connection with my
claim.

6. That I have no further claims whatsoever in any theory of law


against the Owners of MV "Tama Star" because of the payment
made to me. That I certify and warrant that I will not file any
complaint or prosecute any suit of action in the
Philippines, Panama, Japan or any country against the
shipowners and/or released parties herein after receiving the
payment of US$66,000.00 or its peso equivalent of
PhP2,932,974.00 (emphasis and underscoring supplied)
In effect, while petitioner had the luxury of having other remedies
available to it such as its petition for certiorari pending before the
appellate court, and an eventual appeal to this Court, respondent,
on the other hand, could no longer pursue other claims, including
for interests that may accrue during the pendency of the case.
 (Emphasis in the original)
[58]
Philippine Transmarine Carriers, Inc. v. Legaspi  clarified that
[59]

this Court ruled against the employer in Career Philippines not


because the parties entered into a conditional settlement but
because the conditional satisfaction of judgment was "highly
prejudicial to the employee." [60]

The agreement stated that the payment of the monetary award


was without prejudice to the right of the employer to file a
petition for certiorari and appeal, while the employee agreed that
she would no longer file any complaint or prosecute any suit of
action against the employer after receiving the payment. [61]

Equitable considerations were the underlying basis for the ruling


in Career Philippines  and this was accentuated in Philippine
[62]

Transmarine Carriers, Inc. v. Pelagio,  which summarized the


[63]

ruling in Philippine Transmarine Carriers, Inc. v. Legaspi as


follows:
Ultimately, in Philippine Transmarine, the Court ruled that since
the agreement in that case was fair to the parties in that it
provided available remedies to both parties, the certiorari petition
was not rendered moot despite the employer's satisfaction of the
judgment award, as the respondent had obliged himself to return
the payment if the petition would be granted. [64]

In the instant case, the parties entered into a compromise


agreement when they executed a Conditional Satisfaction of
Judgment Award. [65]

Article 2028 of the Civil Code defines a compromise agreement as


"a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already
commenced." Parties freely enter into a compromise agreement,
making it a judgment on the merits of the case with the effect
of res judicata upon them. [66]

While the general rule is that a valid compromise agreement has


the power to render a pending case moot and academic, being a
contract, the parties may opt to modify the legal effects of their
compromise agreement to prevent the pending case from
becoming moot. [67]
In the Conditional Satisfaction of Judgment Award,  respondent
[68]

acknowledged receiving the sum of P3,370,514.40 from


petitioners as conditional payment of the judgment award. Both
parties agreed that the payment of the judgment award was
without prejudice to the pending certiorari proceedings before the
Court of Appeals and was only made to prevent the imminent
execution being undertaken by respondent and the National Labor
Relations Commission. Finally, in the event the judgment award
of the labor tribunals is reversed by the Court of Appeals or by
this Court, respondent agreed to return whatever she would have
received back to petitioners and in the same vein, if the Court of
Appeals or this Court affirms the decisions of the labor tribunals,
petitioners shall pay respondent the balance of the judgment
award without need of demand. [69]

Respondent, for herself and for her three (3) minor children with
Bernardine, then signed a Receipt of Payment  where she
[70]

reiterated the undertakings she took in the Conditional


Satisfaction of Judgment Award.

However, in the Affidavit of Heirship,  respondent was prohibited


[71]

from seeking further redress against petitioners, making the


compromise agreement ultimately prejudicial to respondent:
I, CYNTHIA P. DE JESUS, with residence at 157 Isarog St., La
Lorna, Quezon City, Philippines, after being duly sworn, depose
and say:

....

[7.] That I understand that the payment of the judgment award


of US$79,200.00 or its peso equivalent plus
of Php3,370,514.40 includes all my past, present and future
expenses and claims, and all kinds of benefits due to me under
the POEA employment contract and all collective bargaining
agreements and all labor laws and regulations, civil law or any
other law whatsoever and all damages, pains and sufferings in
connection with my claim;
[8.] That I have no further claims whatsoever in any theory of
law against the Owners of "REGAL PRINCESS" because of the
payment made to me. That I certify and warrant that I will not
file any complaint or prosecute any suit or action in the
Philippines, United States of America, Liberia, Kuwait, Panama,
United Kingdom or any other country against the shipowners
and/or the released parties herein after receiving the payment
of US$79,200.00 or its peso equivalent of Php3,370,514.40[.]
 (Emphasis supplied)
[72]

This prohibition on the part of respondent to pursue any of the


available legal remedies should the Court of Appeals or this Court
reverse the judgment award of the labor tribunals or prosecute
any other suit or action in another country puts the seafarer's
beneficiaries at a grave disadvantage. Thus, Career Philippines is
applicable and the Court of Appeals did not err in treating the
conditional settlement as an amicable settlement, effectively
rendering the Petition for Certiorari moot and academic.

II

Despite our previous disquisition, this Court will still take up the
second issue brought before it for resolution.

Madridejos v. NYK-Fil Ship Management, Inc.  discussed that


[73]

generally, this Court limits itself to questions of law in a Rule 45


petition:
As a rule, we only examine questions of law in a Rule 45 petition.
Thus, "we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the
[National Labor Relations Commission], an administrative body
that has expertise in its specialized field." Similarly, we do not
replace our "own judgment for that of tribunal in determining
where the weight of evidence lies or what evidence is credible."
The factual findings of the National Labor Relations Commission,
when confirmed by the Court of Appeals, we usually "conclusive
on this Court."
[74]

This Court sees no reason to depart from this rule.


Section 20(A) of the POEA-SEC requires that for a seafarer to be
entitled to death benefits, he must have suffered a work-related
death during the term of his contract. This provision reads:
SECTION 20. COMPENSATION AND BENEFITS. -

A. COMPENSATION AND BENEFITS FOR DEATH


1. In case of work-related, death of the seafarer, during the
term of his contract the employer shall pay his beneficiaries
the Philippine Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an additional amount
of Seven Thousand US dollars (US$7,000) to each child
under the age of twenty-one (21) but not exceeding four (4)
children, at the exchange rate prevailing during the time of
payment.
....
4. The other liabilities of the employer when the .seafarer dies
as a result of work-related injury or illness during the term
of employment are as follows:
a.
b. The employer shall pay the deceased's beneficiary all
outstanding obligations due the seafarer under this
Contract.
c. The employer shall transport the remains and personal
effects of the seafarer to the Philippines at employer's
expense except if the death occurred in a port where
local government laws or regulations do not permit the
transport of such remains. In case death occurs at sea,
the disposition of the remains shall be handled or dealt
with in accordance with the master's best judgment. In
all cases, the employer/master shall communicate with
the manning agency to advise for disposition of
seafarer's remains.
d. The employer shall pay the beneficiaries of the seafarer the
Philippines [sic] currency equivalent to the amount of
One Thousand US dollars (US$1,000) for burial
expenses at the exchange rate prevailing during the
time of payment.
However, Section 32-A of the POEA-SEC acknowledges the
possibility of "compensation for the death of the seafarer
occurring after the employment contract on account of a work-
related illness"  as long as the following conditions are met
[75]

(1) The seafarer's work must involve the risks described herein;

(2) The disease was contracted as a result of the seafarer's


exposure to the described risks;

(3) The disease was contracted within a period of exposure and


under such other factors necessary to contract it;

(4) There was no notorious negligence on the part of the


seafarer.
[76]

Furthermore, a cardio-vascular disease may be considered


occupational under Section 32-A (11) if any of the established
conditions are met:
The following diseases are considered as occupational when
contracted under working conditions involving the risks described
herein:

....

11. Cardio-Vascular Diseases. Any of the following conditions


must be met:
a. If the heart disease was known to have been present during
employment, there must e proof that an acute exacerbation
was clearly precipitated by the unusual strain by reasons of
the nature of his work.
b. The train of work that brings about an acute attack must be
sufficient severity and must be followed within 24 hours by
the clinical signs of a cardiac insult to constitute causal
relationship.
c. If a person who was apparently asymptomatic before being
subjected to strain at work showed signs and symptoms of
cardiac injury during the performance of his work and such
symptoms and signs persisted, it is reasonable to claim a
causal relationship.
[77]
In fulfilling these requisites, respondent must present no less
than substantial evidence. Substantial evidence is defined as
"such amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion."
[78]

Both labor tribunals found that Bernardine first experienced chest


pains while he was still onboard the cruise ship, i.e., during the
term of his employment contract. It was likewise established that
while Bernardine requested medical attention when he started to
feel ill and upon his repatriation, his requests were repeatedly
ignored. The Labor Arbiter held:
Complaint has clearly established that her husband's condition
was suffered while he was on board the vessel and during the
term of his employment contract with the respondent. Strict roles
of evidence are not applicable in claims for compensation and
disability benefits. Against the self-serving denials of the
respondents, complainant has shown that her husband, prior to
his death, suffered chest pains while on board and reported his
condition but he was not allowed to seek medical attention. When
he was repatriated, he asked the respondents anew for medical
check up but his request was again denied. Having substantially
established that the causative circumstances leading to her
husband's death had transpired during his employment. We find
that complainant is entitled to the death compensation and other
benefits under the POEA Standard Contract. Probability and not
the ultimate degree of certainty is the test of proof in
compensation proceedings[.] [79]

While the National Labor Relations Commission opined:


Evidently, the disease which led to the death of Bernardine de
Jesus is work related, and in this regard, We believe that
complainant-appellee presented sufficient evidence to show the
nature of the maritime employment of her late husband, as well
as the disease he suffered from and its causal relationship to his
maritime employment. [80]

The findings of the labor tribunals correspond with the unassailed


fact that Bernardine died from a cardio-vascular disease merely
two (2) month after his repatriation. This Court concurs with the
Labor Arbiter's observation that it was improbable for Bernardine
to have developed and died from a cardio-vascular disease within
the two (2) short months following his repatriation:
Seaman de Jesus died just over two (2) months from his
repatriation. It is quite improbable for him to develop cardio-
vascular disease which caused his death during that short span of
time. Medical studies cited on record recognize the fact that it is
medically impossible to acquire cardiovascular illnesses merely
days or weeks prior to one's death ...

It is therefore evident that the illness which caused Seaman de


Jesus' death occurred during the term of his employment
contract, though it may not have fully manifested at once. The
fact that the seaman's work exposed him to different climates
and unpredictable weather also helped trigger the onset of his
disease. There is therefore a reasonable connection between the
conditions of employment and work actually performed by the
deceased seafarer and his illness. [81]

Being factual in nature, this Court sees no reason to disturb the


findings of the labor tribunals as it has usually given deference to
the findings of fact of administrative agencies which have
acquired expertise in their specific jurisdiction. Their factual
findh1gs are generally binding upon this Court, absent a showing
a grave abuse of discretion.[82]

WHEREFORE, this Court resolves to deny the Petition. The


assailed Court of Appeals Decision dated August 17, 2012 and
Resolution dated October 19, 2012 in CA-G.R. SP No. 119393 are
hereby AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

December 1, 2017
NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on August 30, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on December 1, 2017 at 2:50 p.m.

[1] 
Rollo, pp. 24-62.

 Id. at 484. Eduardo


[2]
Manese was Magsaysay Maritime
Corporation's employee.

 Id. at 64-76. The Decision was penned by Associate Justice


[3]

Ramon M. Bato, Jr. and concurred in by Presiding Justice Andres


B. Reyes, Jr. and Associate Justice Rodil V. Zalameda of the First
Division, Court of Appeals, Manila.

 Id. at 21-22. The Resolution was penned by Associate Justice


[4]

Ramon M. Bato, Jr. and concurred in by Presiding Justice Andres


B. Reyes, Jr. and Associate Justice Rodil V. Zalameda. of the First
Division, Court of Appeals, Manila.

[5]
 Id. at 122-135.

[6]
 Id. at 145-146.

[7]
 Id. at 170.
[8]
 Id. at 65.

[9]
 Id.

[10]
 Id. at 210.

[11]
 Id. at 149-151.

[12]
 Id. at 151.

[13]
 Id. at 65.

 Id. at 136-143. The Decision docketed as NLRC NCR Case No.


[14]

(M) NCR-09-13352-08 was penned by Labor Arbiter Madjayran H.


Ajan.

[15]
 Id. at 140.

[16]
 Id. at 141.

[17]
 Id. at 142-143.

 Id. at 122-135. The Decision docketed as NLRC NCR LAC No.


[18]

08-000481-09 (NLRC NCR No. (M) 09-13352-08) was penned by


Commissioner Romeo L. Go and concurred in by Commissioner
Perlita B. Velasco. Presiding Commissioner Gerardo C. Nograles
took no part.

[19]
 Id. at 130.

[20]
 Id. at 131-132.

[21]
 Id. at 132.

[22]
 Id.

[23]
 Id. at 132-133.
[24]
 Id. at 80-121.

[25]
 Id. at 400-408.

[26]
 Id. at 408-A.

[27]
 Id. at 64-76.

[28]
 Id. at 75.

[29]
 Id. at 21-22.

[30]
 Id. at 427-450.

[31]
 Id. at 24-62.

[32]
 628 Phil. 81 (2010) [Per J. Nachura, Third Division].

[33]
 Rollo, pp. 35 and 766.

[34]
 Id. at 36 and 766-767.

[35]
 Id. at 40-41 and 769-771.

[36]
 Id. at 4l and 771.

[37]
 Id. at 43 and 772-773.

[38]
 Id. 44-45 and 773-774.

[39]
 Id. at 47-54 and 777-784.

[40]
 Id. at 556-557.

[41]
 Id. at 561-608.

[42]
 650 Phil. 157 (2010) [Per J. Carpio Morales, Third Division].
[43]
 Rollo, pp. 572-581 and 714-720.

[44]
 Id. at 584-585 and 725-727.

[45]
 Id. at 585-588 and 727-730.

[46]
 Id. at 598-599 and 741.

[47]
 Id. at 610.

[48]
 Id. at 616-635.

[49]
 Id. at 616-617.

[50]
 Id. at 617-620.

[51]
 Id. at 620-623, 626-631.

[52]
 Id. at 706-749.

[53]
 Id. at 757-789.

[54]
 Id. at 704-705.

[55]
 628 Phil. 81 (2010) [Per J. Nachura, Third Division].

[56]
 Id. at 94.

[57]
 650 Phil. 157 (2010) [Per J. Carpio Morales, Third Division].

[58]
 Id. at 163-165.

[59]
 710 Phil. 838 (2013) [Per J. Mendoza, Third Division).

[60]
 Id. at 847.

[61]
 Id. at 847-848.
 Seacrest Maritime Management, Inc. v. Picar, 155 Phil. 901,
[62]

907 (2015) [Per J. Mendoza, Second Division].

[63]
 766 Phil. 504 (2015) [Per J. Perlas-Bernabe, First Division].

[64]
 Id. at 515.

[65]
 Rollo, pp. 400-404.

 Gadrinab v. Salamanca, 736 Phil. 279, 290 (2014) [Per J.


[66]

Leonen, Third Division].

 Philippine Transmarine Carriers, Inc. v. Pelagio, 766 Phil. 504,


[67]

512 (2015) [Per J. Perlas-Bernabe, First Division] (citing Morla v.


Belmonte, 678 Phil. 102, 116-117 (2011) [Per J. Leonardo-De
Castro, First Division]).

[68]
 Rollo, pp. 400-404.

[69]
 Id. at 401-402.

[70]
 Id. at 405.

[71]
 Id. at 407-408.

[72]
 Id. at 408.

 G.R.
[73]
No. 204262, June 7, 2017,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=jurisprudence/2017/june2017/204262.pdf> [Per J. Leonen,
Second Division].

 Id. citing Career Philippine Shipmanagement, Inc. v. Serna,


[74]

700 Phil. 1, 9-10 (2012) [Per J. Brion, Second Division].

 See Power Shipping Enterprises, Inc. v. Salazar, 716 Phil. 693,


[75]

705 (2013) [Per Sereno, C.J., First Division].


 POEA Standard Terms and Conditions Governing the
[76]

Employment of Filipino Seafarers on Board Ocean Going Vessels


(2000), sec. 32-A.

 POEA Standard Terms and Conditions Governing the


[77]

Employment of Filipino Seafarers on Board Ocean Going Vessels


(2000), sec. 32-A (11).

 Philippine Airlines, Inc. v. National Labor Relations Commission,


[78]

342 Phil. 352, 365 (1997) [Per J. Davide, Jr., Third Division].

[79]
 Rollo, pp. 141-142.

[80]
 Id. at 131.

[81]
 Id. at 140-141.

 Maya Farms Employees Organization v. National Labor


[82]

Relations Commission, 309 Phil. 465, 470 (1994) [Per J.


Kapunan, First Division].

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SECOND DIVISION

[ G.R. No. 197032, July 26, 2017 ]


SECURITIES AND EXCHANGE COMMISSION,
PETITIONER, VS. PRICE RICHARDSON
CORPORATION, CONSUELO VELARDE-ALBERT,
AND GORDON RESNICK, RESPONDENTS.DECISION

LEONEN, J.:

The determination of probable cause for purposes of filing an


information is lodged with the public prosecutor. It is not
reviewable by courts unless it is attended by grave abuse of
discretion.

This is a Petition for Review on Certiorari  under Rule 45 of the


[1]

Rules of Court, praying that the Court of Appeals Decision  dated


[2]

May 26, 2011 and the Department of Justice Resolutions dated


April 12, 2005  and July 5, 2006  be reversed and set aside.  The
[3] [4] [5]

Court of Appeals affirmed the assailed Resolutions of the


Department of Justice, which denied the Petition for Review filed
by the Securities and Exchange Commission (petitioner).
 Petitioner prays for the filing of an Information against Price
[6]

Richardson Corporation, Consuelo Velarde-Albert, and Gordon


Resnick (respondents) for violating Sections 26.3 and 28 of the
Securities Regulation Code.[7]

Respondent Price Richardson Corporation (Price Richardson) is a


Philippine corporation duly incorporated under Philippine laws on
December 7, 2000.  Its primary purpose is "[t]o provide
[8]

administrative services which includes but is not limited to


furnishing all necessary and incidental clerical, bookkeeping,
mailing and billing services." [9]

On October 17, 2001, its former employee, Michelle S. Avelino,


(Avelino) executed a sworn affidavit at the National Bureau of
Investigation's Interpol Division,  alleging that Price Richardson
[10]

was "engaged in boiler room operations, wherein the company


sells non[-]existent stocks to investors using high pressure sales
tactics."  Whenever this activity was discovered, the company
[11]

would close and emerge under a new company name.  Pertinent [12]

portions of her sworn statement read:

Q0 State your reason why you are here at the NBI Interpol?
3:
A: I am here to give a statement about the "boiler room" operation of PRICE RICHARDS

Q0 What do you mean by "boiler room"?


4:
A: A boiler room is a company which sells non-existent stocks to investors by using hig
They had no intention of paying the duped investors and when their operation ha
company would close and would spring up under a new name. I know this for a fact
before with New Millennium Market Research, Inc. which was shut down after the d
authorities [its] illegal activities. New Millennium Market Research, Inc. eventually b
Boiler Room operation is an illegal activity considering that the company has no lic
and Exchange Commission to deal on securities or stocks.

Q0 Why do you know that Price Richardson is a "boiler room"?


5:
A: I used to work there as a telemarketer from September 3, 2001 to October 15, 200

Q0 As telemarketer at Price Richardson what do you do?


6:
A: Our supervisor would give "leads" for me to call. "Leads" are names of pros
contracting a prospective investor, I would read a prepared "script" or presentation
and the services it offers. If the prospect is interested, I will write all the informatio
would forward the same to our supervisor JOVY AGUDO. All our leads or prospects a

Q0 As a telemarketer, how many calls do you make in a day and how many investors d
7:
[A: I average 100 calls a day and I can qualify an average of six (6) would[-]be investo
]

....
Q1 After you qualify a prospective investor, what happens next?
0:
A: The company will send him a newsletter and then the salesman would contact him
sales tactics to make a sale of non-existent stocks. The salesmen would use th
gathered by the telemarketers and would make reference to the calls or i
telemarketers. If the investor agreed, the salesman would give him instructions on
to the company. Usually, the payment is made through telegraphic transfers. Afte
received, a confirmation receipt would then be sen[t] by the courier to the invest
name of the company where the alleged investment was made, the number of
share, the tax and commissions paid. However, no hard copy of the stocks or certi
in truth and in fact there was no actual sale or transfer of stocks or certificates for t
the event that the investor would then sell his certificates or stocks, the salesman w
investor not to sell in order not to release the money. Eventually, the company wo
spring up under a new name.

Q1 Who are these salesmen?


1:
A: The salesmen are all foreigners of various nationalities. They used also a prepa
prospective client to invest.

....

Q1 Do you know if these salesmen are licensed stockbrokers duly authorized by the
3: Commission?
A: They are not licensed by the Securities and Exchange Commission. They are tour
and they used aliases to hide their identities. [13]

Janet C. Rillo corroborated Avelino's claims.  She was a former[14]

employee of Capital International Consultants, Inc. (Capital


International), a corporation that allegedly merged with Price
Richardson.  She claimed that their calls to prospective investors
[15]

should be in Price Richardson's name.  Pertinent portions of her


[16]

sworn statement read:

07. Q: You said that CAPITAL INTERNATIONAL


CONSULTANTS CORP. has just merged with Price Richardson
Inc., can you elaborate on this?
A: Yes, just this September, we have been informed of the
[merge]. In fact we have been instructed to use the name of
Price Richardson in our calls starting September 2001.

....

09. Q: Can you describe the process in, as you said – "qualify
clients as possible investors"?
A: I make overseas calls to individuals listed in our Client Leads.
The "Client Leads" contains a list of the names of the top-level
personnel of international companies, it includes their address
and telephone numbers. From these leads, we select clients to
call and offer them a free subscription of our "Financial News
Letter".

....

11. Q: What does these "Financial News Letter" contain?


A: It contains the current status of the worldwide stock market.

12: Q: So what happens when a client agrees to subscribe in your


news letter?
A: We then check from our list if the information we have
regarding their address and telephone numbers [is] correct. This
is to check their mail preference - where they would like us to
send the news letter.

13. Q: What happens after that?


A: Those who agree to receive the subscription are considered as
qualified clients. We then fill out a "SALES LEAD" card, which
reflects the information of the client. We then forward these cards
to the marketing department, consisting of the encoders and
other telemarketers. These people are the ones who send the
newsletters and transaction receipts to clients. Their office is
located at the Price Richardson Office, 31  Floor Citibank Tower,
st

Paseo De Roxas, Makati. It is from these cards that our foreigner


salesmen could get possible investors. These possible investors
would then be sold with non-existent stocks.
....

15. Q: So are you saying that CAPITAL INTERNATIONAL


CONSULTANTS CORP and/or PRICE RICHARDSON, Inc. is
engaged in the illegal trading of stocks to clients?

A: Yes. When I applied for the job, I was briefed by ANNE


BENWICK, the Operations Manager, about the nature of their
[b]usiness. She said that the company is engaged in trading
stocks, and my job as a Telemarketer would be to "qualify
clients" who might become possible investors. I am also aware of
the nature of their business since I have been employed in a
similar company. [17]

Upon application of the National Bureau of Investigation Interpol


Division  and the Securities and Exchange Commission  on
[18] [19]

November 15, 2001, Branch 143, Regional Trial Court, Makati


City issued three (3) search warrants against Capital
International and Price Richardson for violation of Section 28  of
[20]

the Securities Regulation Code.  The Regional Trial Court ordered


[21]

the seizure of Price Richardson's and Capital International's office


equipment, documents, and other items that were connected with
the alleged violation. [22]

On November 16, 2001, the search warrants were served and


Price Richardson's office equipment and documents were seized. [23]

On December 4, 2001, the Securities and Exchange Commission


filed before the Department of Justice its complaint against Price
Richardson, Clara Arlene Baybay (Baybay), Armina A. La Torre
(La Torre), Manuel Luis Limpin (Limpin), Editha C. Rupido
(Rupido), Jose C. Taopo (Taopo), Consuelo Velarde-Albert
(Velarde-Albert), and Gordon Resnick (Resnick) for violation of
Article 315(1)(b)  of the Revised Penal Code and Sections
[24]

26.3  and 28 of the Securities Regulation Code.  Baybay, La


[25] [26]

Torre, Limpin, Rupido, and Taopo (the incorporators and


directors) were Price Richardson's incorporators and directors.
 Velarde-Albert was its Director for Operations and Resnick was
[27]

its Associated Person. [28]

The Securities and Exchange Commission alleged that Price


Richardson was neither licensed nor registered "to engage in the
business of buying and selling securities within the Philippines or
act as salesman, or an associated person of any broker or
dealer."  As shown by the seized documents and equipment,
[29]

Price Richardson engaged in seeking clients for the buying and


selling of securities, thereby violating Sections 26.3 and 28 of the
Securities Regulation Code. [30]

The Securities and Exchange Commission claimed that Velarde-


Albert and Resnick should be liable for acting as brokers or
salesmen despite not being registered.  Meanwhile, the
[31]

incorporators and directors' liability was based on being


responsible "for the corporate management with the obligation to
ensure that [Price Richardson] operate[d] within the bounds of
law." [32]

Price Richardson, Velarde-Albert, Resnick, and the incorporators


and directors were also charged with Estafa under Article 315(1)
(b) of the Revised Penal Code. The Securities and Exchange
Commission averred that they obtained their investors'
confidence by comporting themselves as legitimate stock brokers.
 Thus, when they failed to return the investments they received,
[33]

their act "constitute[d] misappropriation with abuse of


confidence." [34]

In defense, the incorporators and directors denied knowing or


agreeing to the offenses charged. They countered that they
already transferred their respective shares to various individuals
in December 2000, as shown by their registered Deeds of
Absolute Sale of Shares of Stock.  Velarde-Albert denied the
[35]

Securities and Exchange Commission's allegations against her


while Resnick did not submit any evidence refuting the charges. [36]
On March 13, 2002, State Prosecutor Aristotle M. Reyes (State
Prosecutor Reyes) issued a Resolution,  dismissing the Securities
[37]

and Exchange Commission's complaint "for lack of probable


cause."  He found that:
[38]

[C]omplainant SEC failed to adduce evidence showing respondent


Price's alleged unauthorized trading. While it is true that based on
the certification issued by the SEC, respondent-corporation has
no license to buy or sell securities, it does not, however, follow,
that said corporation had indeed engaged in such business. It is
imperative for complainant to prove the respondent-corporation's
affirmative act of buying and selling securities to constitute the
offense charged. It cannot be established on the expedient
reason that a corporation is not license[d] or authorize[d] to
trade securities. He who alleges a positive statement has the
burden of proving the same.

The various "confirmation of trade" receipts . . . taken singly,


does not prove violation of Sections 26.3 and 28 of the Securities
Regulation Code. Far from proving the offense charged, those
confirmation of trade could very well mean that indeed
respondent Price was merely "providing administrative services of
furnishing all necessary and incidental clerical, bookkeeping,
mailing and billing services" pursuant to its primary purpose as
embodied in its articles of incorporation. There is no evidence
that indeed anyone transacted business much less purchased or
sold securities with any of the respondents acting as broker or
dealer in securities. In other words, the burden of proving that
respondents made various offers to sell unregistered securities;
that the offers were accepted; and, that agreements of sale were
reached and consummated, has not been dislodged by the
complainant. Independent proof of the various stages of a sale
transaction is necessary to show violation of Sections 26.3 and 28
of the Securities Regulation Code.[39]

State Prosecutor Reyes absolved the incorporators and directors


from any liability considering that they already relinquished their
positions as directors of Price Richardson when they transferred
their shares to third parties.  He also found Velarde-Albert and
[40]

Resnick not liable for lack of sufficient proof that they engaged in
the trading of securities. [41]

On the allegation of conspiracy, State Prosecutor Reyes held that


because the facts failed "to establish the alleged unauthorized
trading, or the fraudulent investments that constitute the crime
charged, there can be no basis in determining collective criminal
responsibility."  Finally, State Prosecutor Reyes ruled that there
[42]

was no sufficient evidence to show that Price Richardson,


Velarde-Albert, Resnick, and the incorporators and directors
deceived investors that would constitute the crime of estafa with
abuse of confidence. [43]

In the meantime, individuals claiming to have agreed to purchase


securities from Price Richardson and have been defrauded
surfaced and executed sworn statements against it.  They [44]

claimed that Price Richardson engaged in illegal trade of


securities.  They filed complaints against Price Richardson before
[45]

the Department of Justice for violation of Article 315(1)(b) of the


Revised Penal Code and Sections 26.3 and 28 of the Securities
Regulation Code. [46]

The Securities and Exchange Commission moved for


reconsideration  of the March 13, 2002 Resolution, which was
[47]

denied by State Prosecutor Reyes in a Resolution  dated May 31, [48]

2002.

The Securities and Exchange Commission filed before the


Department of Justice a Petition for Review  of State Prosecutor
[49]

Reyes' March 13, 2002 and May 31, 2002 Resolutions. This was
denied in the April 12, 2005 Resolution  of Department of Justice
[50]

Secretary Raul M. Gonzalez (Secretary Gonzalez). The Securities


and Exchange Commission filed a Motion for Reconsideration  of [51]

the April 12, 2005 Resolution but this was denied by Secretary
Gonzalez in his July 5, 2006 Resolution. [52]
The Securities and Exchange Commission filed a Petition for
Certiorari  against Secretary Gonzalez, Price Richardson,
[53]

Velarde-Albert, and Resnick before the Court of Appeals for the


annulment of Secretary Gonzalez's April 12, 2005 and July 5,
2006 Resolutions. [54]

On May 26, 2011, the Court of Appeals promulgated a


Decision  affirming the assailed Resolutions.  The Court of
[55] [56]

Appeals held that there was no grave abuse of discretion on the


part of Secretary Gonzalez when he affirmed State Prosecutor
Reyes' Resolutions, which found no probable cause to file an
information. [57]

The Court of Appeals found that the affidavits executed by Price


Richardson's employees were merely surmises.  They did not [58]

have personal knowledge of the security trading since their jobs


were limited to persuading people to get newsletter subscriptions.
 Indeed, the documents seized from Price Richardson's office
[59]

showed a transaction between it and an investor.  However, "no [60]

clear and specific acts of buying or selling of securities were


alleged and substantiated by the SEC[.]" [61]

The alleged investors' affidavits were not sufficient to find


probable cause because the alleged transactions transpired over
the phone and while these investors were not in the Philippines.
 Moreover, since the traded stocks were not of domestic
[62]

corporations or from corporations doing business in the


Philippines, Philippine penal laws could not be applied. [63]

Lastly, there was no basis for the complaints against Velarde-


Albert and Resnick because they were neither board members nor
stockholders of the corporation. The complaint did not allege any
particular act that can be interpreted as their direct participation
in the purported illegal stock trading.
[64]

Hence, on July 26, 2011, the Securities and Exchange


Commission filed a Petition for Review  before this Court against
[65]

Price Richardson, Velarde-Albert, and Resnick. It assailed the May


26, 2011 Decision of the Court of Appeals and the April 12, 2005
and July 5, 2006 Resolutions of Secretary Gonzalez and prayed
for the filing of an information against respondents for violation of
Sections 26.3 and 28 of the Securities Regulation Code. [66]

Petitioner claims that Secretary Gonzalez committed grave abuse


of discretion in not finding probable cause to indict respondents.
 The complainants who claimed to have been defrauded by
[67]

respondents and the documents and equipment seized show that


respondent Price Richardson was engaged in buying and selling
securities without license or authority.  On the liability of
[68]

respondents Velarde-Albert and Resnick, petitioner asserts that


the seized documents sufficiently show that they acted as
salesmen or associated persons under Section 28 of the
Securities Regulation Code. [69]

On December 7, 2011, respondent Price Richardson filed its


Comment,  arguing that the determination of probable cause is
[70]

an executive function and is reviewable by courts only upon


showing of grave abuse of discretion.  The Department of Justice
[71]

did not gravely abuse its discretion when it found that there was
no probable cause to indict respondents for violation of the
Securities Regulation Code.  Respondent Price Richardson's
[72]

former employees' sworn statements contained factual claims


that were outside their personal knowledge or conclusions of law
that were beyond their capacity to make. [73]

Respondent Price Richardson insists that Section 28 of the


Securities Regulation Code prohibits anyone from engaging in the
business of buying and selling securities without registration from
the Securities and Exchange Commission if those transactions are
offered "to the public within the Philippines[.]"  This provision
[74]

does not apply in this case because the alleged buyers of


securities were not citizens of or resided in the Philippines.
Additionally, the allegedly sold or offered securities were
registered outside the Philippines, where the alleged sales also
transpired. Hence, these sales are not under the Philippine
jurisdiction.[75]
Respondent Resnick filed his Comment  on January 11, 2012
[76]

while respondent Velarde-Albert filed her Comment  on April 23,


[77]

2013. Both respondents argue that the complaints did not allege
any act attributable to them or related to the alleged transactions
involved.  Respondent Velarde-Albert also contends that there
[78]

was no question of law raised in the Petition, which is required in


a Rule 45 petition. [79]

On November 4, 2013, petitioner filed its Consolidated Reply.


 Petitioner posits that direct invocation of this Court's original
[80]

jurisdiction is allowed as its petition is an exception to the rule


that only questions of law may be raised in a Rule 45 petition.
 Petitioner alleges that the Court of Appeals' grave abuse of
[81]

discretion and its Decision, which was based on a


misapprehension of facts and was contradicted by evidence on
record,  make its Petition an exception to the rule.
[82] [83]

On December 2, 2013, this Court issued a Resolution,  giving [84]

due course to the Petition and required the parties to file their
respective memoranda.

Petitioner filed its Memorandum  on March 21, 2014.


[85]

Respondents Velarde-Albert, Resnick, and Price Richardson


submitted their Memoranda on February 24, 2014,  April 3, [86]

2014,  and May 8, 2014,  respectively.


[87] [88]

This Court resolves the following issues:

First, whether courts may pass upon the prosecutor's


determination of probable cause; and

Finally, whether there is probable cause to indict respondents for


violation of Sections 26.3 and 28 of the Securities Regulation
Code and Article 315(1)(b) of the Revised Penal Code.

I
Courts may pass upon the prosecutor's determination of probable
cause only upon a showing of grave abuse of discretion.

Probable cause, in relation to the filing of an information, was


explained by this Court in Villanueva v. Secretary of Justice:
[89]

Probable cause, for purposes of filing a criminal information, has


been defined as such facts as are sufficient to engender a well-
founded belief that a crime has been committed and that the
private respondent is probably guilty thereof. It is such a state of
facts in the mind of the prosecutor as would lead a person of
ordinary caution and prudence to believe or entertain an honest
or strong suspicion that a thing is so. The term does not mean
"actual or positive cause;" nor does it import absolute certainty.
It is merely based on opinion and reasonable belief. Thus, a
finding of probable cause does not require an inquiry into whether
there is sufficient evidence to procure a conviction. It is enough
that it is believed that the act or omission complained of
constitutes the offense charged. [90]

The definition of probable cause was lifted from Rule 112, Section
1, paragraph 1 of the Revised Rules of Criminal Procedure, which
states:

RULE 112
Preliminary Investigation

Section 1. Preliminary Investigation Defined; When Required. —


Preliminary investigation is an inquiry or proceeding to determine
whether there is sufficient ground to engender a well-founded
belief that a crime has been committed and the respondent is
probably guilty thereof, and should be held for trial.
Under Rule 112, preliminary investigation must be conducted to
determine the existence of probable cause.  In Andres v. Justice
[91]

Secretary Cuevas,  this Court stressed that:


[92]

[Preliminary investigation] is not the occasion for the full and


exhaustive display of their evidence. The presence or absence of
the elements of the crime is evidentiary in nature and is a matter
of defense that may be passed upon after a full-blown trial on the
merits.

In fine, the validity and merits of a party's defense or accusation,


as well as admissibility of testimonies and evidence, are better
ventilated during trial proper than at the preliminary investigation
level.  (Citations omitted)
[93]

It has long been established that the determination of probable


cause to charge a person of a crime is an executive function,
 which pertains to and lies within the discretion of the public
[94]

prosecutor and the justice secretary.[95]

If the public prosecutor finds probable cause to charge a person


with a crime, he or she causes the filing of an information before
the court.  The court may not pass upon or interfere with the
[96]

prosecutor's determination of the existence of probable cause to


file an information regardless of its correctness.  It does not
[97]

review the determination of probable cause made by the


prosecutor. It does not function as the prosecutor's appellate
court.  Thus, it is also the public prosecutor who decides "what
[98]

constitutes sufficient evidence to establish probable cause." [99]

However, if the public prosecutor erred in its determination of


probable cause, an appeal can be made before the Department of
Justice Secretary. Simultaneously, the accused may move for the
suspension of proceedings until resolution of the appeal. [100]

Upon filing of the information before the court, judicial


determination of probable cause is initiated. The court shall make
a personal evaluation of the prosecutor's resolution and its
supporting evidence.  Unlike the executive determination of
[101]

probable cause, the purpose of judicial determination of probable


cause is "to ascertain whether a warrant of arrest should be
issued against the accused."  This determination is independent
[102]

of the prosecutor's determination of probable cause and is a


function of courts for purposes of issuance of a warrant of arrest.

Judicial determination of probable cause is in consonance with


Article III, Section 2 of the Constitution:

ARTICLE III
Bill of Rights

....

Section 2. The right of the people to be secure in their persons,


houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to
be seized. (Emphasis supplied)

Accordingly, a judge may immediately dismiss the case if he or


she finds that there is no probable cause to issue a warrant of
arrest based on the records.  To protect the accused's right to
[103]

liberty,  the trial court may dismiss an information based on "its


[104]

own independent finding of lack of probable cause"  when an


[105]

information has already been filed and the court is already set to
determine probable cause to issue a warrant of arrest.

Thus, the general rule is that the determination of probable cause


is an executive function which courts cannot pass upon. As an
exception, courts may interfere with the prosecutor's
determination of probable cause only when there is grave abuse
of discretion.  Grave abuse of discretion constitutes "a refusal to
[106]

act in contemplation of law or a gross disregard of the


Constitution, law, or existing jurisprudence, [accompanied by] a
whimsical and capricious exercise of judgment amounting to lack
of jurisdiction." [107]

A prosecutor gravely abuses his or her discretion in not finding


probable cause by disregarding or overlooking evidence that "are
sufficient to form a reasonable ground to believe that the
crime . . . was committed and that the respondent was its
author."  Further, "what is material to a finding of probable
[108]

cause is the commission of acts constituting [the offense], the


presence of all its elements and the reasonable belief, based on
evidence, that the respondent had committed it." [109]

In this case, grave abuse of discretion exists, which warrants this


Court's interference in the conduct of the executive determination
of probable cause.

II

Petitioner provided sufficient bases to form a belief that a crime


was possibly committed by respondent Price Richardson.

The complaint alleged that respondents committed violations of


the following:

SECURITIES REGULATION CODE

Section 26. Fraudulent Transactions. – It shall be unlawful for any


person, directly or indirectly, in connection with the purchase or
sale of any securities to:

....
26.3. Engage in any act, transaction, practice or course of
business which operates or would operate as a fraud or deceit
upon any person.

....

Section 28. Registration of Brokers, Dealers, Salesmen and


Associated Persons. – 28.1. No person shall engage in the
business of buying or selling securities in the Philippines as a
broker or dealer, or act as a salesman, or an associated person of
any broker or dealer unless registered as such with the
Commission.

REVISED PENAL CODE

ARTICLE 315. Swindling (Estafa). — Any person who shall


defraud another by any of the means mentioned hereinbelow
shall be punished by:

....

4th. By arresto mayor in its medium and maximum periods, if


such amount does not exceed 200 pesos, provided that in the
four cases mentioned, the fraud be committed by any of the
following means:

....

1. With unfaithfulness or abuse of confidence, namely:

(b) By misappropriating or converting, to the prejudice of


another, money, goods, or any other personal property received
by the offender in trust or on commission, or for administration,
or under any other obligation involving the duty to make delivery
of or to return the same, even though such obligation be totally
or partially guaranteed by a bond; or by denying having received
such money, goods, or other property.

An examination of the records reveals that probable cause exists


to file an information against respondent Price Richardson for
violating the laws.

Based on the Certification  dated October 11, 2001 issued by the


[110]

Market Regulation Department of the Securities and Exchange


Commission, respondent Price Richardson "has never been issued
any secondary license to act as broker/dealer in securities,
investment house and dealer in government
securities."  Petitioner also certified that respondent Price
[111]

Richardson "is not, under any circumstances, authorized or


licensed to engage and/or solicit investments from clients." [112]

However, the documents seized from respondent Price


Richardson's office show possible sales of securities. These
documents include:

a) A company brochure consisting of 8 pages which declares that it is a financial co


portfolio investment advice and other financial services to investors . . .
b) Detailed Quotes of OWTNF Otis-Winston Ltd. shares downloaded from the Bloom
indicates its price, return, fundamentals and other matters . . .
c) Confirmation of Trade issued by the respondent to its client MR. PETER VAN DER
that he bought on Oc[to]ber 16, 2001 750 Otis-[W]inston Ltd at $4.15 price per sha
d) Confirmation of Trade issued by the respondent to MR. RENNY NAIR who boug
International (HGOI) at $5.75 per share for which he paid $2,932.50 . . . and Te
Oman U.A.E. Exchange Centre & Co. LLC made by Mr. Nair to PRICE RICHARDS
account No. 103-719221-0 in China Banking Corporation in the amount of $2932.50
e) Confirmation of Trade issued by the respondent to MR. JOHANNES DE KORTE wh
Otis-Winston Ltd (OWTNF) at $5.05 per share for which he paid $2,575.50 . . .
f) Confirmation of Trade issued by the respondent to MR. JUERGEN GEIGER who boug
International at $4.65 per share for which he paid $11,857.50 . . .
g) Confirmation of Trade issued by the respondent to MR. ZULKEPLI HAMID who
OWTNF at $5.05 per share for which he paid $10,302. . .
h) Telegraphic Transfers issued by China Banking Corporation to Union Bank of Californ
Price Richardson as the Order Party and M.L. Vitale as the beneficiary in the amoun
Belgium as the Beneficiary Bank . . .
i) Confirmation of Trade issued by the respondent to MR. Junzo Watanabe who bough
at $3.90 per share and sold 1500 Geoalert (GEOA) shares for which he paid $3,525
j) First Hawaiian Bank check issued by Junzo Watanabe payable to the Order of Price R

Petitioner further supports its charges by submitting the


complaint-affidavits and letters of individuals who transacted with
Price Richardson:

The SEC has submitted the complaint of Mr. Don Sextus Nilantha,
a citizen of Sri Lanka who clearly named Price Richardson as
selling him 1000 shares of Hugo Intl. Telecom, Inc. sometime in
April 2001. At such time, and until today, Price Richardson was
not authorized to act as traders or brokers o[f] securities in the
Philippines.

Furthermore, there are other complainants against Price


Richardson who deserve to have their complaints aired and tried
before the proper court. Mr. Johannes Jacob Van Prooyen filed a
complaint against Price Richardson with the National Bureau of
Investigation . . . In the said complaint, Mr. Van Prooyen clearly
pointed to Price Richardson as the ones who contacted him on
June 12, 2001 to buy 2000 shares of Hugo Intl. Telecom, Inc. and
on July 10, 2001 to buy 2000 shares of GeoAlert. At no time at
such relevant dates was Price Richardson licensed to act as
traders or brokers of securities in the Philippines.

Mr. Bjorn L. Nymann of Oslo, Norway wrote about Price


Richardson to this very same Department of Justice, which letter
was received on July 9, 2002. In his letter Mr. Nymann admitted
dealing with Price Richardson. He admitted to having bought
3000 shares of Hugo Intl. Telecom, Inc. . . . Although Mr.
Nymann is not a complaining witness against Price Richardson,
his letter is relevant as at no time at such relevant date was Price
Richardson licensed to act as traders or brokers of securities in
the Philippines.[114]
In addition, respondent Price Richardson stated in its
Memorandum:

If this Honorable Court were to consider the set-up of Price


Richardson, it was as if it engaged in outsourced operations
wherein persons located in the Philippines called up persons
located in foreign locations to inform them of certain securities
available in certain locations, and to determine if they wanted to
buy these securities which are offered in a different country. [115]

The evidence gathered by petitioner and the statement of


respondent Price Richardson are facts sufficient enough to
support a reasonable belief that respondent is probably guilty of
the offense charged.

III

However, respondents Velarde-Albert and Resnick cannot be


indicted for violations of the Securities Regulation Code and the
Revised Penal Code.

Petitioner failed to allege the specific acts of respondents Velarde-


Albert and Resnick that could be interpreted as participation in
the alleged violations. There was also no showing, based on the
complaints, that they were deemed responsible for Price
Richardson's violations. As found by State Prosecutor Reyes in his
March 13, 2002 Resolution:

[T]here is no sufficient evidence to substantiate SEC's allegation


that individual respondents, Connie Albert and Gordon Resnick,
acted as broker, salesman or associated person without prior
registration with the Commission. The evidence at hand merely
proves that the above-named respondents were not licensed to
act as broker, salesman or associated person. No further proof,
however, was presented showing that said respondents have
indeed acted as such in trading securities. Although complainant
SEC presented several confirmation of trade receipts and
documents intended to establish respondents Albert and Resnick
illegal activities, the said documents, standing alone as heretofore
stated, could not warrant the indictment of the two respondents
for the offense charged.[116]

A corporation's personality is separate and distinct from its


officers, directors, and shareholders. To be held criminally liable
for the acts of a corporation, there must be a showing that its
officers, directors, and shareholders actively participated in or
had the power to prevent the wrongful act. [117]

WHEREFORE, premises considered, the Petition is PARTIALLY


GRANTED. The Court of Appeals Decision dated May 26, 2011
and Department of Justice Secretary Raul M. Gonzalez's
Resolutions dated April 12, 2005 and July 5, 2006
are AFFIRMED in so far as they find no grave abuse of discretion
in the dismissal of the complaints for lack of probable cause
against Consuelo Velarde-Albert and Gordon Resnick for: a)
committing Estafa under Article 315(1)(b) of the Revised Penal
Code and b) violating Sections 26.3 and 28 of the Securities
Regulation Code.

This Court, however, finds that the dismissal of the complaint for
lack of probable cause against Price Richardson Corporation for
violation of Sections 26.3 and 28 of the Securities Regulation
Code was rendered with grave abuse of discretion amounting to
lack or excess of jurisdiction and is, thus, ANNULLED and SET
ASIDE.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires,


JJ., concur.
[1]
 Rollo, pp. 355-388.

 Id. at 391-399. The Decision, docketed as CA-G.R. SP No.


[2]

96258, was penned by Associate Justice Florito S. Macalino and


concurred in by Associate Justices Juan Q. Enriquez, Jr. and
Ramon M. Bato, Jr. of the Sixth Division, Court of Appeals,
Manila.

 Id. at 400-404. The Resolution was penned by Secretary Raul


[3]

M. Gonzalez.

 Id. at 405-406. The Resolution was penned by Secretary Raul


[4]

M. Gonzalez.

[5]
 Id. at 383.

[6]
 Id. at 399, 400 and 403.

[7]
 Id. at 383, Petition for Review.

[8]
 Id. at 407, Certificate of Incorporation.

[9]
 Id. at 408, Articles of Incorporation.

[10]
 Id. at 392, Court of Appeals Decision.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 424-425, Michelle S. Avelino's Sworn Statement.

[14]
 Id. at 392, Court of Appeals Decision.

[15]
 Id.
[16]
 Id.

[17]
 Id. at 428-429, Janet C. Rillo's Sworn Statement.

 The National Bureau of Investigation Interpol Division was


[18]

represented by Agent Jeralyn Jalagat.

 The Securities and Exchange Commission was represented by


[19]

Atty. Elmira Alconaba.

[20]
 SECURITIES CODE, sec. 28.1 provides:

Section 28. Registration of Brokers, Dealers, Salesmen and


Associated Persons. – 28.1. No person shall engage in the
business of buying or selling securities in the Philippines as a
broker or dealer, or act as a salesman, or an associated person of
any broker or dealer unless registered as such with the
Commission.

[21]
 Rollo, p. 392.

[22]
 Id.

[23]
 Id. at 392 and 536.

[24]
 REV. PEN. CODE, art. 315, sec. 1(b) provides:

Article 315. Swindling (Estafa). — Any person who shall defraud


another by any of the means mentioned hereinbelow shall be
punished by:
....
4th. By arresto mayor in its medium and maximum periods, if
such amount does not exceed 200 pesos, provided that in the
four cases mentioned, the fraud be committed by any of the
following means

1. With unfaithfulness or abuse of confidence, namely:


....
(b) By misappropriating or converting, to the prejudice of
another, money, goods, or any other personal property received
by the offender in trust or on commission, or for administration,
or under any other obligation involving the duty to make delivery
of or to return the same, even though such obligation be totally
or partially guaranteed by a bond; or by denying having received
such money, goods, or other property.

[25]
 SECURITIES CODE, sec. 26.3 provides:

Section 26. Fraudulent Transactions. – It shall be unlawful for any


person, directly or indirectly, in connection with the purchase or
sale of any securities to:
....
26.3. Engage in any act, transaction, practice or course of
business which operates or would operate as a fraud or deceit
upon any person.

[26]
 Rollo, pp. 392-393 and 535.

[27]
 Id. at 535-537.

[28]
 Id. at 391-392.

[29]
 Id. at 536.

[30]
 Id. at 536-537.

[31]
 Id. at 537.

[32]
 Id.

[33]
 Id.

[34]
 Id.

[35]
 Id. at 537-538.
[36]
 Id. at 538.

 Id. at 535-542. The Resolution was recommended for approval


[37]

by the Task force on Securities Chairman, Senior State Prosecutor


Miguel F. Gudio. It was approved by Assistant Chief State
Prosecutor Nilo C. Mariano.

[38]
 Id. at 393-394 and 540.

[39]
 Id. at 538-539.

[40]
 Id. at 539.

[41]
 Id. at 539-540.

[42]
 Id. at 540.

[43]
 Id.

 Id. at 394; rollo,  p. 613, Complaint-Affidavit of Johannes Jacob


[44]

Van Prooyen; rollo, pp. 674-675, Complaint-Affidavit of Don


Sextus Nilantha.

[45]
 Id.

[46]
 Id.

[47]
 Id. at 543-553.

 Id. at 579-582. The Resolution was recommended for approval


[48]

by Assistant Chief State Prosecutor Nilo C. Mariano and was


approved by Chief State Prosecutor Jovencito R. Zuño.

[49]
 Id. at 583-605.

[50]
 Id. at 400-404.

[51]
 Id. at 606-612.
[52]
 Id. at 405-406.

[53]
 Id. at 632-660.

[54]
 Id. at 658.

[55]
 Id. at 391-399.

[56]
 Id. at 399.

[57]
 Id.

[58]
 Id. at 398.

[59]
 Id.

[60]
 Id.

[61]
 Id.

[62]
 Id.

[63]
 Id.

[64]
 Id. at 399.

[65]
 Id. at 355-388.

[66]
 Id. at 383.

[67]
 Id. at 371-376.

[68]
 Id. at 379-382.

[69]
 Id. at 383.

[70]
 Id. at 709-726.
[71]
 Id. at 711-712.

[72]
 Id. at 712-715.

[73]
 Id. at 721-723.

[74]
 Id. at 717.

[75]
 Id. at 719.

[76]
 Id. at 736-742.

[77]
 Id. at 775-779.

[78]
 Id. at 738 and 776-777.

[79]
 Id. at 776.

[80]
 Id. at 797-810.

[81]
 Id. at 807.

[82]
 Id. at 808.

[83]
 Id. at 807-808.

[84]
 Id. at 813.

[85]
 Id. at 1062-1093.

[86]
 Id. at 823-835.

[87]
 Id. at 884-897.

[88]
 Id. at 908-922.

[89]
 512 Phil. 145 (2005) [Per J. Callejo, Sr, Second Division].
 Id. at 159, citing Baytan v. COMELEC, 444 Phil. 812, 818
[90]

(2003) [Per J. Carpio, En Banc].

 See ABS-CBN Corporation v. Gozon, G.R. No. 195956, March


[91]

11, 2015, 753 SCRA 1, 32 [Per J. Leonen, Second Division].

[92]
 499 Phil. 36 (2005) [Per J. Carpio Morales, Third Division].

[93]
 Id. at 49-50.

 Corpuz v. Del Rosario, 653 Phil. 36, 38 (2010) [Per J. Del


[94]

Castillo, First Division]; Unilever v. Tan,  725 Phil. 486, 492


(2014) [Per J. Brion, Second Division]; Mendoza v. People, et
al., 733 Phil. 603, 610 (2014) [Per J. Leonen, Third
Division], citing People v. Castillo, et al.,  607 Phil. 754, 764
(2009) [Per J. Quisumbing, Second Division]; People v. Borje,
Jr., 479 Phil. 719, 726-727 (2014) [Per J. Peralta, Third
Division]; De Lima v. Reyes,  G.R. No. 209330, January 11, 2016,
779 SCRA 1, 19 [Per J. Leonen, Second Division]; Napoles v. De
Lima, G.R. No. 213529, July 13, 2016 < Error! Hyperlink
reference not valid. > 9-10 [Per J. Leonen, Second
Division]; Maza v. Turla,  G.R. No. 187094, February 15, 2017
< Error! Hyperlink reference not valid. > 14 [Per J. Leonen,
Second Division].

 Unilever v. Tan, 725 Phil. 486, 492 (2014) [Per J. Brion,


[95]

Second Division].

 Mendoza v. People, et al., 733 Phil. 603, 609 (2014) [Per J.


[96]

Leonen, Third Division].

 Id. at 610, citing People v. Castillo, et al., 607 Phil. 754, 764-


[97]

765 (2009) [Per J. Quisumbing, Second Division].

[98]
 Id. at 611.
 Unilever v. Tan,  725 Phil. 486, 493 (2014) [Per J. Brion,
[99]

Second Division].

 Mendoza v. People, et al., 733 Phil. 603, 612 (2014) [Per J.


[100]

Leonen, Third Division], citing People v. Court of Appeals, 361


Phil. 401, 421 (1999) [Per J. Panganiban, Third Division].

[101]
 Id. at 609-610.

 Id. at 610, citing People v. Castillo, et al., 607 Phil. 754, 764-


[102]

765 (2009) [Per J. Quisumbing, Second Division].

[103]
 RULES OF COURT, Rule 112, sec. 6(a) provides:

Rule 112. Preliminary Investigation


....
Section 6. When Warrant of Arrest May Issue. — (a) By the
Regional Trial Court. — Within ten (10) days from the filing of the
complaint or information, the judge shall personally evaluate the
resolution of the prosecutor and its supporting evidence. He may
immediately dismiss the case if the evidence on record clearly
fails to establish probable cause.  If he finds probable cause, he
shall issue a warrant of arrest, or a commitment order if the
accused has already been arrested pursuant to a warrant issued
by the judge who conducted the preliminary investigation or
when the complaint or information was filed pursuant to section 7
of this Rule. In case of doubt on the existence of probable cause,
the judge may order the prosecutor to present additional
evidence within five (5) days from notice and the issue must be
resolved by the court within thirty (30) days from the filing of the
complaint of information. (Emphasis supplied)

 See Mendoza v. People, et al., 733 Phil. 603, 604-605 (2014)


[104]

[Per J. Leonen, Third Division].

 Mendoza v. People, et al., 733 Phil. 603, 608 (2014) [Per J.


[105]

Leonen, Third Division].


 Asetre, et al. v. Asetre, et al., 602 Phil. 840, 852-853 (2009)
[106]

[Per J. Quisumbing, Second Division].

 Valderrama v. People, et al., G.R. No. 220054, March 27, 2017


[107]

[Per J. Leonen, Second Division], citing Republic v. Caguioa, 704


Phil. 315, 333 (2013) [Per J. Brion, Second Division]. See also
Unilever v. Tan, 725 Phil. 486, 493-494 (2014) [Per J. Brion,
Second Division], and Asetre, et al. v. Asetre, et al.,  602 Phil.
840, 853 (2009) [Per J. Quisumbing, Second Division].

 Unilever v. Tan, 725 Phil. 486, 495 (2014) [Per J. Brion,


[108]

Second Division]

[109] Id.

[110]
 Rollo, p. 481.

[111] Id.

[112] Id.

[113]
 Id. at 448-450, Complaint-Affidavit.

[114]
 Id. at 607-608.

[115]
 Id. at 921.

[116]
 Id. at 539-540.

 ABS-CBN Corporation v. Gozon, G.R. No. 195956, March 11,


[117]

2015, 753 SCRA 1, 78-79 [Per J. Leonen, Second Division].

Source: Supreme Court E-Library | Date created: October 09, 2017


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804 Phil. 195


SECOND DIVISION

[ G.R. No. 184317, January 25, 2017 ]


METROPOLITAN BANK AND TRUST COMPANY,
PETITIONER, V. LIBERTY CORRUGATED BOXES
MANUFACTURING CORPORATION, RESPONDENT.
DECISION

LEONEN, J.:

A corporation with debts that have already matured may still file
a petition for rehabilitation under the Interim Rules of Procedure
on Corporation Rehabilitation.
This resolves a Petition for Review  on certiorari assailing the
[1]

Court of Appeal's June 13, 2008 Decision  and August 20, 2008
[2]

Resolution.  The Court of Appeals affirmed the Regional Trial


[3]

Court's December 21, 2007 Order  approving Liberty Corrugated


[4]

Boxes Manufacturing Corp.'s rehabilitation plan.

Respondent Liberty Corrugated Boxes Manufacturing Corp.


(Liberty) is a domestic corporation that produces corrugated
packaging boxes.  It obtained various credit accommodations and
[5]

loan facilities from petitioner Metropolitan Bank and Trust


Company (Metrobank)amounting to P19,940,000.00. To secure
its loans, Liberty mortgaged to Metrobank 12 lots in Valenzuela
City.[6]

Liberty defualted on the loans. [7]


On June 21, 2007, Liberty filed a Petition  for corporate
[8]

rehabilitation before Branch 74 of the Regional Trial Court of


Malabon City. Liberty claimed that it could not meet its
obligations to Metrobank because of the Asian Financial Crisis,
which resulted in a drastic decline in demand for its goods, and
the serious sickness of its Founder and President, Ki Kiao Koc. [9]

Liberty's rehabilitation plan consisted of: (a) a debt moratorium;


(b) renewal of marketing efforts; (c) resumption of operations;
and (d) entry into condominium development, a new business. [10]

On June 27, 2007, the Regional Trial Court, finding the Petition
sufficient in form and substance, issued a Stay Order  and set an
[11]

initial hearing for the Petition. On August 6, 2007, Metrobank filed


its Comment/Opposition. It argued that Liberty was not qualified
for corporate rehabilitation; that Liberty's Petition for
rehabilitation and rehabilitation plan were defective; and that
rehabilitation was not feasible. It also claimed that Liberty filed
the Petition solely to avoid its obligations to the bank.

In its September 20, 2007 Order,  the Regional Trial Court gave
[12]

due course to the Petition and referred the rehabilitation plan to


the Rehabilitation Receiver.

Rehabilitation Receiver Rafael Chris F. Teston recommended the


approval of the plan, provided that Liberty would initiate
construction on the property in Valenzuela within 12 months from
approval.[13]

In its December 21, 2007 Order,  the Regional Trial Court


[14]

approved the rehabilitation plan. The trial court found that Liberty
was capable of being rehabilitated and that the rehabilitation plan
was feasible and viable.[15]

Metrobank appealed to the Court of Appeals. On June 13, 2008,


the Court of Appeals issued the Decision  denying the Petition
[16]

and affirming the Regional Trial Court's December 21, 2007


Order.
The Court of Appeals affirmed the Regional Trial Court's finding
that debtor corporations could still avail themselves of the
remedy of rehabilitation under the Interim Rules of Procedure on
Corporate Rehabilitation (Interim Rules) even if they were already
in default.  It held that even insolvent corporations could still file
[17]

a petition for rehabilitation. [18]

The Court of Appeals also found that the trial court correctly
approved the rehabilitation plan over Metrobank's Opposition
upon the recommendation of the Rehabilitation Receiver, who had
carefully considered and addressed Metrobank's criticism on the
plan's viability. [19]

The Court of Appeals stressed that the purpose of rehabilitation


proceedings is to enable the distressed company to gain a new
lease on life and to allow the creditors to be paid their claims. It
held that the approval of the Regional Trial Court was precisely
"'to effect a feasible and viable rehabilitation' of ailing
corporations[,]"  as required by Presidential Decree No. 902-A.
[20]

Metrobank moved for reconsideration, but the Motion was


denied  on August 20, 2008.
[21]

Hence, this Petition was filed.

This Court required respondent Liberty Corrugated Boxes


Manufacturing Corp. to file its comment on the Petition within 10
days from notice.  On March 23, 2009, respondent filed its
[22]

Comments to the Petitioner,  noted by this Court in its April 20,


[23]

2009 Resolution.  Petitioner Metropolitan Bank and Trust


[24]

Company filed its Reply  dated May 26, 2009, which this Court
[25]

noted in its July 20, 2009 Resolution.  This Court also gave due
[26]

course to the Petition and required the parties to submit their


respective memoranda within 30 days from notice.

The parties filed their Memoranda on September 24, 2009  and [27]

November 3, 2009. [28]


Petitioner argues that respondent can no longer file a petition for
corporate rehabilitation. It claims that Rule 4, Section 1 of the
Interim Rules restricts the kind of debtor who can file petitions for
corporate rehabilitation.  Petitioner insists that the phrase "who
[29]

foresees the impossibility of meeting its debts when they


respectively fall due" must be construed plainly to mean that an
element of foresight is required.  Because foresight is required,
[30]

the debts of the corporation should not have matured. [31]

Petitioner also argues that the Regional Trial Court's approval of


the rehabilitation plan is contrary to Rule 4, Section 23 of the
Interim Rules.  Under the provision, the court may approve the
[32]

rehabilitation plan over the opposition of the creditors only when


two (2) elements concur: (a) when the court finds that the
rehabilitation of the debtor is feasible; and (b) when the
opposition of the creditors is "manifestly
unreasonable."  Petitioner claims that the Regional Trial Court
[33]

did not declare the manifest unreasonableness of petitioner's


opposition.[34]

Petitioner likewise argues that respondent's Petition for


rehabilitation and the attached inventory of accounts receivable
failed to disclose the maturity dates of the accounts.  This failure
[35]

renders the Petition defective under Rule 4, Section 2(d) of the


Interim Rules. [36]

Petitioner further claims that the rehabilitation plan lacked


material financial commitments required under Rule 4, Section 5
of the Interim Rules.  The rehabilitation plan did not claim that
[37]

new money would be invested in the corporation. [38]

On the other hand, respondent insists on its qualification to seek


rehabilitation.  It argues that petitioner's reading of Rule 4,
[39]

Section 1 of the Interim Rules is restrictive, merely indicating the


minimum conditions for a debtor to be able to file a petition for
rehabilitation. [40]
In support of its claim that the remedy of corporate rehabilitation
covers defaulting debtors, respondent cites Rule 4, Sections
4  and 6  of the Interim Rules.  Under Section 6, a stay order,
[41] [42] [43]

which may assume that cases have been filed to collect on


matured debts, may be granted.

Respondent argues that the Court of Appeals' finding that the


rehabilitation plan is feasible is well-grounded and in keeping with
Rule 4, Section 23 of the Interim Rules.  The Rehabilitation
[44]

Receiver deemed the rehabilitation plan viable  The Petition also


[45]

listed the receivables, clearly due for collection, in its annexes.


[46]

Respondent further contends that contrary to petitioner's


arguments, the rehabilitation plan contains material financial
commitments.  When the Interim Rules speak of "material
[47]

financial commitments to support the rehabilitation plan,"  it [48]

does not mean that the commitment must come from outside
sources. The corporation's showing that the rehabilitation plan
can find sufficient funding should be sufficient. [49]

The issues for resolution are:

First, whether respondent, as a debtor in default, is qualified to


file a petition for rehabilitation under Presidential Decree No. 902-
A and Rule 4, Section 1 of the Interim Rules; and

Second, whether respondent's Petition for rehabilitation is


sufficient in form and substance and respondent's rehabilitation
plan, feasible.

I.A

A corporation that may seek corporate rehabilitation is


characterized not by its debt but by its capacity to pay this debt.

Rule 4, Section 1 of the Interim Rules provides:

RULE 4Debtor-Initiated Rehabilitation


SECTION 1. Who May Petition.  — Any debtor who foresees the
impossibility of meeting its debts when they respectively fall due,
or any creditor or creditors holding at least twenty-five percent
(25%) of the debtor's total liabilities, may petition the proper
Regional Trial Court to have the debtor placed under
rehabilitation.

Petitioner insists that the words of the Interim Rules are clear and
must be given their plain and literal meaning. A better
interpretation requires scrutiny of the purpose behind the
enactment of the Interim Rules and its provisions.

Philippine Bank of Communications v. Basic Polyprinters and


Packaging Corporation  reiterates the purpose of rehabilitation,
[50]

which is to provide meritorious corporations an opportunity for


recovery:

Under the Interim Rules, rehabilitation is the process of restoring


"the debtor to a position of successful operation and solvency, if it
is shown that its continuance of operation is economically feasible
and its creditors can recover by way of the present value of
payments projected in the plan more if the corporation continues
as a going concern that if it is immediately liquidated." It
contemplates a continuance of corporate life and activities in an
effort to restore and reinstate the corporation to its former
position of successful operation and solvency.  (Citations
[51]

omitted)

As stated by the Court of Appeals in Philippine Bank of


Communications, rehabilitation is in line with the State's objective
to promote a wider and more meaningful equitable distribution of
wealth.[52]

In line with this objective, the Interim Rules provide for a liberal
construction of its provisions:

RULE 2Definition of Terms and Construction

....
SECTION 2. Construction. — These Rules shall be liberally
construed to carry out the objectives of Sections 5(d), 6(c) and
6(d) of Presidential Decree No. 902-A, as amended, and to assist
the parties in obtaining a just, expeditious, and inexpensive
determination of cases. Where applicable, the Rules of Court shall
apply suppletorily to proceedings under these Rules.

To adopt petitioner's interpretation would undermine the purpose


of the Interim Rules. There is no reason why corporations with
debts that may have already matured should not be given the
opportunity to recover and pay their debtors in an orderly
fashion. The opportunity to rehabilitate the affairs of an economic
entity, regardless of the status of its debts, redounds to the
benefit of its creditors, owners, and to the economy in general.
Rehabilitation, rather than collection of debts from a company
already near bankruptcy, is a better use of judicial rewards.

A.M. No. 08-8-10-SC  further describes the remedy intitiated by


[53]

a petition for rehabilitation:

[A] petition for rehabilitation, the procedure for which is provided


in the Interim Rules of Procedure on Corporate Recovery, should
be considered as a special proceeding. It is one that seeks to
establish the status of a party or a particular fact. As provided in
section 1, Rule 4 of the Interim Rules on Corporate Recovery, the
status or fact sought to be established is the inability of the
corporate debtor to pay its debts when they fall due so that a
rehabilitation plan, containing the formula for the successful
recovery of the corporation, may be approved in the end. It does
not seek a relief from an injury caused by another party.
(Emphasis supplied)

Thus, the condition that triggers rehabilitation proceedings is not


the maturation of a corporation's debts but the inability of the
debtor to pay these.

I.B.
Where the law does not distinguish, neither should this Court.
 Because the definition under the Interim Rules is
[54]

encompassing,  there should be no distinction whether a claim


[55]

has matured or otherwise.

Petitioner's proposed interpretation contradicts provisions of the


Interim Rules, which contemplate situations where a debtor
corporation may already be in default. As correctly pointed out by
respondent, a creditor may possibly petition for the debtor's
rehabilitation for default on debts already owed. [56]

Rule 4, Section 1 of the Interim Rules does not specify what kind
of debtor may seek rehabilitation. The provision allows creditors
holding 25% of the debtor corporation's total liabilities to petition
for the corporation's rehabilitation.

Further, Rule 4, Section 6 of the Interim Rules provides for a stay


order "staying enforcement of all claims, whether for money or
otherwise and whether such enforcement is by court action or
otherwise."  A stay order, however, only applies to the
[57]

suspension of the enforcement of claims. Hence, claims, if proper,


can still be instituted in other proceedings. There may already be
pending claims against a debtor corporation for debts already
matured.

In Spouses Sobrejuanite v. ASB Development,  the purpose of


[58]

the stay order is to preserve the rights of both the debtor


corporation and its creditors:

The purpose for the suspension of the proceedings is  to prevent a


creditor from obtaining an advantage or preference over
another and to protect and preserve the rights of party litigants
as well as the interest of the investing public or creditors. Such
suspension is intended to give enough breathing space for the
management committee or rehabilitation receiver to make the
business viable again, without having to divert attention and
resources to litigations in various fora.  (Emphasis supplied,
[59]

citations omitted)
The stay order prevents preference or advantage of creditors over
others, including the advantage that a creditor with matured
money claims may have over one whose claims are not in yet in
default.

Rule 2, Section 1 of the Interim Rules defines the term "claim":

RULE 2Definition of Terms and Construction

....

"Claim" shall include all claims or demands of whatever nature or


character against a debtor or its property, whether for money or
otherwise.

The term "claim," " which includes "all claims or demands of


whatever nature or character," is not limited to claims which have
not yet defaulted.

This does not mean that those with secured claims against
corporations undergoing rehabilitation are deprived of the
preference given them by law. Negros Navigation Co., Inc. v.
Court of Appeals  enumerated the guidelines in the treatment of
[60]

claims against corporations undergoing rehabilitation:

1. All claims against corporations, partnerships, or associations


that are pending before any court, tribunal, or board, without
distinction as to whether or not a creditor is secured or
unsecured, shall be suspended effective upon the appointment of
a management committee, rehabilitation receiver, board, or body
in accordance with the provisions of Presidential Decree No. 902-
A.

2. Secured creditors retain their preference over unsecured


creditors, but enforcement of such preference is equally
suspended upon the appointment of a management committee,
rehabilitation receiver, board, or body. In the event that the
assets of the corporation, partnership, or association are finally
liquidated, however, secured and preferred credits under the
applicable provisions of the Civil Code will definitely have
preference over unsecured ones.61 While the corporation is
undergoing rehabilitation, all claims, regardless of nature, are
suspended from enforcement. However, once the corporation has
successfully rehabilitated or finally liquidated, the enforcement of
these secured claims takes precedence. [61]

In Negros Navigation Co., Tsuneishi Heavy Industries (Tsuneishi)


filed a collection case against Negros Navigation Co, Inc. (Negros
Navigation) for repairman's lien, or the unpaid services for the
repair of its vessels.  The Regional Trial Court of Cebu issued a
[62]

writ of preliminary attachment against Negros Navigation's


properties and held that Tsuneishi's repairman's lien constituted a
superior maritime lien.  Negros Navigation then filed before the
[63]

Regional Trial Court of Manila a petition for corporate


rehabilitation with prayer for suspension of payments, which the
trial court, in issuing a stay order, granted.  On appeal, Tsuneishi
[64]

argued before this Court that uits maritime liens were not
covered by the stay order. [65]

This Court held that the admiralty proceeding was appropriately


suspended under Rule 4, Section 6 of the Interim Rules, there
being no exemptions or distinctions in the law on what kinds of
claims are covered by suspension:

The justification for the suspension of actions or claims, without


distinction, pending rehabilitation proceedings is to enable the
management committee or rehabilitation receiver to effectively
exercise its/his powers free from any judicial or extra-judicial
interference that might unduly hinder or prevent the "rescue" of
the debtor company. To allow such other actions to continue
would only add to the burden of the management committee or
rehabilitation receiver, whose time, effort and resources would be
wasted in defending claims against the corporation instead of
being directed toward its restructuring and rehabilitation.
 (Citations omitted)
[66]
Likewise, in Abrera v. Hon. Barza,  College Assurance Plan
[67]

Philippines, Inc. (CAP) sold pre-need educational plans, which


guaranteed the payment of tuition and other standard school
fees.  CAP suffered financial difficulties and failed to meet its
[68]

obligations under the plans.  The CAP planholders then filed an


[69]

action for specific performance and/or annulment of contract


against CAP, its directors, and its officers. [70]

CAP filed a petition for rehabilitation, which the trial court


deemed sufficient in form and substance.  The trial court also
[71]

issued a stay order.[72]

Questioning the stay order and the petition for rehabilitation, the
CAP planholders argued that CAP was a pre-need corporation and
that a trust relationship existed between the corporation and the
planholders.  They argued that because they did not have a
[73]

debtor-creditor relationship with CAP, CAP could not apply for


rehabilitation, and the stay order could not apply to the action for
specific performance. [74]

This Court held that CAP, a pre-need corporation already in


default of its obligations to the planholders, could file for
rehabilitation:

Under the Interim rules, "debtor" shall mean "any corporation,


partnership, or association, whether supervised or regulated
by the Securities and Exchange Commission or other
government agencies, on whose behalf a petition for
rehabilitation has been filed under these Rules."

The Interim Rules does not distinguish whether a pre-need


corporation like CAP cannot file a petition for rehabilitation before
the RTC. Courts are not authorized to distinguish where the
Interim Rules makes no distinction.

Moreover, under the Interim Rules, "claim" shall include "all


claims or demands of whatever nature or character against
a debtor or its property, whether for money or otherwise."
"Creditor" shall mean "any holder of a claim."
Hence, the claim of petitioners for payment of tuition fees from
CAP is included in the definition of "claims" under the Interim
Rules.  (Emphasis in the original, citations omitted)
[75]

In Express Investments III Private Ltd. and Export Development


Canada v. Bayan Telecommunications, Inc.,  Bayan
[76]

Telecommunications, Inc. (Bayantel) defaulted on its obligations


to its creditors and reached a total of P35.928 billion in unpaid
principal and interest.  One of its bank creditors filed a petition
[77]

for rehabilitation.  The trial court gave due course to the petition.
[78]

[79]

This Court allowed Bayantel to undergo rehabilitation proceedings


despite Bayantel's status as a debtor corporation already in
default. [80]

The definition of "claim" and the nature of stay orders


contemplate situations where debtor corporations already in
default may be under rehabilitation. Rule 4, Section 1 does not
limit who may file a petition for rehabilitation.

I.C.

The plain meaning doctrine cannot apply to Rule 4, Section 1 of


the Interim Rules. In Social Weather Stations, Inc. and Pulse Asia
v. Commission on Elections: [81]

First, verba legis or the so-called plain-meaning rule applies only


when the law is completely clear, such that there is absolutely no
room for interpretation. Its application is premised on a situation
where the words of the legislature are clear that its intention,
insofar as the facts of a case demand from the point of view of a
contemporary interpretative community, is neither vague nor
ambiguous. This is a matter of judicial appreciation. It cannot
apply merely on a party's contention of supposed clarity and lack
of room for interpretation.

....
Second, statutory construction cannot lend itself to pedantic rigor
that foments absurdity. The dangers of inordinate insistence on
literal interpretation are commonsensical and need not be
belabored. These dangers are by no means endemic to legal
interpretation. Even in everyday conversations, misplaced literal
interpretations are fodder for humor. A fixation on technical rules
of grammar is no less innocuous. A pompously doctrinaire
approach to text can stifle, rather than facilitate, the legislative
wisdom that unbridled textualism purports to bolster.

Third, the assumption that there is, in all cases, a universal plain
language is erroneous. In reality, universality and uniformity of
meaning is a rarity. A contrary belief wrongly assumes that
language is static.  (Citations omitted)
[82]

The context of the words of the statute should be considered to


clarify inherent ambiguities. Thus, in Chavez v. Judicial and Bar
Council: [83]

Under the maxim noscitur a sociis, where a particular word or


phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and specific
by considering the company of words in which it is founded or
which it is associated. This is because a word or phrase in a
statute is always used in association with other words or phrases,
and its meaning may, thus, be modified or restricted by the
latter. The particular words, clauses and phrases should not be
studied as detached and isolated expressions, but the whole and
every part of the statute must be considered in fixing the
meaning of any of its parts and in order to produce a harmonious
whole. A statute must be so construed as to harmonize and give
effect to all its provisions whenever possible. In short, every
meaning to be given to each word or phrase must be ascertained
from the context of the body of the statute since a word or
phrase in a statute is always used in association with other words
or phrases and its meaning may be modified or restricted by the
latter.  (Emphasis supplied, citations omitted)
[84]
Where a literal meaning would lead to absurdity,  contradiction,
[85]

or injustice,  or otherwise defeat the clear purpose of the


[86]

lawmakers,  the spirit and reason of the statute may be


[87]

examined to determine the true intention of the provision. [88]

In this case, the phrase "any debtor who foresees the


impossibility of meeting its debts when they respectively fall due"
in Rule 4, Section 1 of the Interim Rules need not refer to a
specific period or point in time when the debts mature. It may
refer to the debtor corporation's general realization that it will not
be able to fulfill its obligations— a realization that may come
before default.

Construing the phrase "when they respectively fall due" to mean


that the debtor must already be in default defeats the clear
purpose of the lawmakers. It unjustly limits rehabilitation to
corporations with matured obligations.

II

This Court is not a trier of facts.  The factual findings of the lower
[89]

courts are accorded great weight and respect.  This is especially


[90]

so in corporate rehabilitation proceedings, to which commercial


courts are designated on account of their expertise and
specialized knowledge. [91]

The Court of Appeals affirmed the Regional Trial Court's findings


that the Petition for rehabilitation was sufficient and that the
rehabilitation plan was reasonable. Petitioner seeks to overturn
these findings. It argues that the Petition was insufficient for its
failure to include maturity dates in the attached inventory; that
the Regional Trial Court failed to determine whether petitioner's
opposition was manifestly unreasonable; and that the
rehabilitation plan was not feasible as it lacked materially
significant financial commitments. [92]
These are questions of fact. The resolution of these issues entails
a review of the sufficiency and weight of the evidence presented
by the parties, including the inventory attached to the Petition, as
well as the other financial documents for the rehabilitation.

Pascual v. Burgos  reiterates that only questions of law should be


[93]

raised in petitions for certiorari under Rule 45:

The Rules of Court require that only questions of law should be


raised in petitions filed under Rule 45. This court is not a trier of
facts. It will not entertain questions of fact as the factual findings
of the appellate courts are "final, binding[,] or conclusive on the
parties and upon this [c]ourt" when supported by substantial
evidence. Factual findings of the appellate courts will not be
reviewed nor disturbed on appeal to this court.

However, these rules do admit exceptions. Over time, the


exceptions to these rules have expanded. At present, there are
10 recognized exceptions that were first listed in Medina v. Mayor
Asistio, Jr.:

(1) When the conclusion is a finding grounded entirely on


speculation, surmises or conjectures; (2) When the inference
made is manifestly mistaken, absurd or impossible; (3) Where
there is a grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of
fact are conflicting; (6) When the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7)
The findings of the Court of Appeals are contrary to those of the
trial court; (8) When the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) When
the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and
(10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the
evidence on record.
These exceptions similarly apply in petitions for review filed
before this court involving civil, labor, tax, or criminal cases.

A question of fact requires this court to review the truthfulness or


falsity of the allegations of the parties. This review includes
assessment of the "probative value of the evidence presented."
There is also a question of fact when the issue presented before
this court is the correctness of the lower courts' appreciation of
the evidence presented by the parties.  (Citations omitted)
[94]

Absent any of the exceptions enumerated in Pascual, this Court


will neither review nor disturb the lower courts' findings of fact on
appeal.

Petitioner contends that the Court of Appeals' findings are


misapprehensions of the facts of the case, and that these findings
are conclusions without citations of their specific factual bases. It
claims that the Court of Appeals ignored respondent's failure to
attach the maturity dates  and merely relied on respondent's
[95]

self-serving assertions.  It also argues that the Court of Appeals


[96]

failed to refute petitioner's observations on the defects of


respondent's rehabilitation plan. [97]

Petitioner fails to convince. The Court of Appeals had legal and


factual bases for approving the Petition for rehabilitation.

The Interim Rules does not specify that courts must make
a written declaration that a creditor's opposition is manifestly
unreasonable. The Regional Trial Court Orders gave petitioner
every opportunity to make its opposition and stance clear. In
issuing the December 21, 2007 Order and approving the
rehabilitation plan, the Regional Trial Court found the opposition
unreasonable.

Rule 4, Section 5 of the Interim Rules outlines the requisites of a


rehabilitation plan:

RULE 4Debtor-Initiated Rehabilitation


....

SECTION 5. Rehabilitation Plan — The rehabilitation plan shall


include (a) the desired business targets or goals and the duration
and coverage of the rehabilitation; (b) the terms and conditions
of such rehabilitation which shall include the manner of its
implementation, giving due regard to the interests of secured
creditors; (c) the material financial commitments to support the
rehabilitation plan; (d) the means for the execution of the
rehabilitation plan, which may include conversion of the debts or
any portion thereof to equity, restructuring of the debts, dacion
en pago, or sale of assets or of the controlling interest; (e) a
liquidation analysis that estimates the proportion of the claims
that the creditors and shareholders would receive if the debtor's
properties were liquidated; and (f) such other relevant
information to enable a reasonable investor to make an informed
decision on the feasibility of the rehabilitation plan.

The Regional Trial Court, as affirmed by the Court of Appeals,


deemed the Petition for rehabilitation sufficient. In its June 27,
2007 Order, it found that all the documents required under Rule
4, Section 2 of the Interim Rules were attached to the Petition. [98]

The Court of Appeals did not disregard the maturity dates. The
Petition annexed a table of accounts receivable showing
obligations that had already matured. Respondent likewise
admitted in the Petition  that it could not comply with its
[99]

obligations to petitioner.

Petitioner argues that the Regional Trial Court failed to rule on its
Opposition and declare it manifestly unreasonable. It claims that
this failure renders respondent's Petition for rehabilitation
insufficient. This argument lacks credence.

Both the Court of Appeals and the Regional Trial Court found that
the Rehabilitation Receiver carefully considered the feasibility of
the rehabilitation plan, and that no serious objection and counter
proposal were presented by petitioner. [100]
Philippine Bank of Communications illustrates what may be
deemed as insufficient financial commitments:

The commitment to add P10,000,000.00 working capital


appeared to be doubtful considering that the insurance claim
from which said working capital would be sourced had already
been written off by Basic Polyprinters's affiliate, Wonder Book
Corporation. A claim that has been written off is considered a bad
debt or a worthless asset, and cannot be deemed a material
financial commitment for purposes of rehabilitation. ..

We also declared in Wonder Book Corporation v. Philippine Bank


of Communications (Wonder Book)  that the conversion of all
deposits for future subscriptions to common stock and the
treatment of all payables to officers and stockholders as trade
payables was hardly constituting material financial commitments.
Such "conversion" of cash advances to trade payables was, in
fact, a mere re-classification of the liability entry and had no
effect on the shareholders' deficit....

....

We observe, too, that Basic Polyprinters's proposal to enter into


the dacion en pago to create a source of "fresh capital" was not
feasible because the object thereof would not be its own property
but one belonging to its affiliate, TOL Realty and Development
Corporation, a corporation also undergoing rehabilitation.
Moreover, the negotiations (for the return of books and
magazines from Basic Polyprinters's trade creditors) did not
partake of a voluntary undertaking because no actual financial
commitments had been made thereon.

....

Due to the rehabilitation plan being an indispensable requirement


in the corporate rehabilitation proceedings, Basic Polyprinters was
expected to exert a conscious effort in formulating the same, for
such plan would spell the future not only for itself but also for its
creditors and the public in general. The contents and execution of
the rehabilitation plan could not be taken lightly.  (Emphasis
[101]

supplied, citations omitted)

Petitioner's contention hinges on the sufficiency of respondent's


material financial commitments, which becomes significant in
determining its resolve, earnestness, and good faith. [102]

Respondent intends to source its funds from internal operations.


That the funds are internally generated does not render the funds
insufficient. This arrangement is still a material, voluntary, and
significant financial commitment, in line with respondent's
rehabilitation plan.

Both the Court of Appeals and the Regional Trial Court found the
Rehabilitation Receiver's assurance that the cashflow from
respondent's committed sources to be sufficient, thus:

From the foregoing, the undersigned deems the expected sources


of cashflow to support the proposed Rehabilitation Plan of the
Petitioner as realistic. The funds requirement to jumpstart the
Rehabilitation Plan is minimal and easily obtained by the
Petitioner's management; while the income to be realized from
the development of a condominium project is also feasible.
Finally, the present management of the Petitioner appears to be
capable of revitalizing and operating the Company and to
generate the expected cashflow to support its repayment
program. [103]

Based on his assessment, the Rehabilitation Receiver noted that


the funds required to finance the first year of the rehabilitation
plan would be much less than that the amount stated in the
Petition.  Respondent
[104]
put forth in detail its financial
commitments.

Respondent, as a debtor corporation, may file for rehabilitation


despite having defaulted on its obligations to petitioner. As its
Petition for rehabilitation was sufficient and its rehabilitation plan
was feasible, respondent's rehabilitation should proceed.
WHEREFORE, the Petition is DENIED. The June 13, 2008
Decision and August 20, 2008 Resolution of the Court of Appeals
in CA-G.R. SP No. 102147 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Jardeleza, JJ.,


concur.

 Rollo, pp. 22-52. The Petition was filed under Rule 45 of the
[1]

Rules of Court.
 Id. at 54-73. The Decision was penned by Associate Justice
[2]

Martin S. Villarama, Jr. (later Associate Justice of this Court) and


concurred in by Associate Justices Noel G. Tijam and Estela M.
Perlas-Bernabe (now Associate Justice of this Court) of the
Special Fourth Division, Court of Appeals, Manila.

 Id. at 75. The Resolution was penned by Associate Justice


[3]

Martin S. Villarama, Jr. (later Associate Justice of this Court) and


concurred in by Associate Justices Noel G. Tijam and Estela M.
Perlas-Bernabe (now Associate Justice of this Court) of the
Former Special Fourth Division, Court of Appeals, Manila.

 Id. at 334-336. The Order was issued by Assisting Judge


[4]

Leonardo L. Leonida of Branch 74, Regional Trial Court, Malabon


City.

[5]
 Id. at 469.

[6]
 Id.

[7]
 Id. at 470.

 Id. at 77-89. The case was docketed as SEC Case No. S8-001-
[8]

MN.

[9]
 Id. at 78 and 81.
[10]
 Id. at 111-139.

 Id. at 259-262. The Order was issued by Assisting Judge


[11]

Leonardo L. Leonida of Branch 74, Regional Trial Court, Malabon


City.

 Id. at 310-313. The Order was issued by Assisting Judge


[12]

Leonardo L. Leonida of Branch 74, Regional Trial Court, Malabon


City.

[13]
 Id. at 314-333.

[14]
 Id. at 334-336.
[15]
 Id. at 336.

[16]
 Id. at 54-73.

[17]
 Id. at 70.

[18]
 Id. at 69.

[19]
 Id. at 70.

[20]
 Id. at 72.

[21]
 Id. at 75.

[22]
 Id. at 409, Resolution dated November 19, 2008.

 Id. at 429-439. Respondent filed an Urgent Motion for


[23]

Extension of Time to File Comment dated February 6, 2009,


which this Court granted (Id. at 424-428).

[24]
 Id. at 442.

[25]
 Id. at 443-459.

[26]
 Id. at 460-461.
[27]
 Id. at 467-498, petitioner's Memorandum.

[28]
 Id. at 499-516, respondent's Memorandum.

[29]
 CORP. REHAB. RULE, Rule 4, sec. 1 provides:

Section 1. Who May Petition. - Any debtor who foresees the


impossibility of meeting its debts when they respectively fall due,
or any creditor or creditors holding at least twenty-five percent
(25%) of the debtor's total liabilities, may petition the proper
Regional Trial Court to have the debtor placed under
rehabilitation.

[30]
 Rollo, p. 476.

[31]
 Id. at 476-477.

[32]
 CORP. REHAB. RULE, Rule 4, sec. 23 provides:

Section 23. Approval of the Rehabilitation Plan. - The Court may


approve a rehabilitation plan even over the opposition of creditors
holding a majority of the total liabilities of the debtor if, in its
judgment, the rehabilitation of the debtor is feasible and the
opposition of the creditors is manifestly unreasonable.In
determining whether or not the opposition of the creditors is
manifestly unreasonable, the court shall consider the following:a.
That the plan would likely provide the objecting class of creditors
with compensation greater than that which they would have
received if the assets of the debtor were sold by a liquidator
within a three-month period;b. That the shareholders or owners
of the debtor lose at least their controlling interest as a result of
the plan; and c. The Rehabilitation Receiver has recommended
approval of the plan. In approving the rehabilitation plan, the
court shall issue the necessary orders or processes for its
immediate and successful implementation. It may impose such
terms, conditions, or restrictions as the effective implementation
and monitoring thereof may reasonably require, or for the
protection and preservation of the interests of the creditors
should the plan fail.
[33]
 Rollo, p. 482.

[34]
 Id. at 482-483.

[35]
 Id. at 488.

[36]
 CORP. REHAB. RULE, Rule 4, sec. 2 provides:

Section 2. Contents of the Petition. - The petition filed by the


debtor must be verified and must set forth with sufficient
particularity all the following material facts: (a) the name and
business of the debtor; (b) the nature of the business of the
debtor; (c) the history of the debtor; (d) the cause of its inability
to pay its debts; (e) all the pending actions or proceedings known
to the debtor and the courts or tribunals where they are pending;
(t) threats or demands to enforce claims or liens against the
debtor; and (g) the manner by which the debtor may be
rehabilitated and how such rehabilitation may benefit the general
body of creditors, employees, and stockholders.The petition shall
be accompanied by the following documents:. . .(d) An Inventory
of Assets which must list with reasonable specificity all the assets
of the debtor, stating the nature of each asset, the location and
condition thereof, the book value or market value of the asset,
and attaching the corresponding certificate of title therefor in
case of real property, or the evidence of title or ownership in case
of movable property, the encumbrances, liens or claims thereon,
if any, and the identities and addresses of the lienholders and
claimants. The Inventory shall include a Schedule of Accounts
Receivable which must indicate the amount of each, the persons
from whom due, the date of maturity, and the degree of
collectibility categorizing them as highly collectible to remotely
collectible[.]

[37]
 CORP. REHAB. RULE, Rule 4, sec. 5 provides:

Sec. 5. Rehabilitation Plan. - The rehabilitation plan shall include


(a) the desired business targets or goals and the duration and
coverage of the rehabilitation; (b) the terms and conditions of
such rehabilitation which shall include the manner of its
implementation, giving due regard to the interests of secured
creditors; (c) the material financial commitments to support the
rehabilitation plan; (d) the means for the execution of the
rehabilitation plan, which may include conversion of the debts or
any portion thereof to equity, restructuring of the debts, dacion
en pago, or sale of assets or of the controlling interest; (e) a
liquidation analysis that estimates the proportion of the claims
that the creditors and shareholders would receive if the debtor's
properties were liquidated; and (f) such other relevant
information to enable a reasonable investor to make an informed
decision on the feasibility of the rehabilitation plan.

[38]
 Rollo, p. 492.

[39]
 Id. at 503.

[40]
 Id. at 504.

[41]
 CORP. REHAB. RULE, Rule 4, sec. 4 provides:

Section 4. Creditor-initiated Petitions. - Where the petition is filed


by a creditor or creditors, it is sufficient that the petition is
accompanied by a rehabilitation plan and a list of nominees to the
position of Rehabilitation Receiver and verified by a sworn
statement that the affiant has read the petition and that its
contents are true and correct of his personal knowledge or based
on authentic records obtained from the debtor.

[42]
 CORP. REHAB. RULE, Rule 4, sec. 6 provides:

Sec. 6. Stay Order. - If the court finds the petition to be sufficient


in form and substance, it shall, not later than five (5) days from
the filing of the petition, issue an Order (a) appointing a
Rehabilitation Receiver and fixing his bond; (b) staying
enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise, against
the debtor, its guarantors and sureties[.]

[43]
 Rollo, p. 504.
[44]
 Id. at 508-509.

[45]
 Id. at 509.

[46]
 Id.

[47]
 Id. at 511.

[48]
 Id.

[49]
 Id.

[50]
 745 Phil. 651 (2014) [Per J. Bersamin, First Division].

[51]
 Id. at 660.

[52]
 Id. at 657.

 Re: Transfer of Cases from the Securities and Exchange


[53]

Commission to the Regional Trial Courts (2001).

 Abrera v. Barza, 615 Phil. 595, 622 (2009) [Per J. Peralta,


[54]

Third Division].

 Spouses Sobrejuanite v. ASB Development Corporation, 508


[55]

Phil. 715, 723 (2005) [Per J. Ynares-Santiago, First Division].

[56]
 Rollo, pp. 504-505.

[57]
 CORP. REHAB. RULE, Rule 4, sec. 6.

[58]
 508 Phil. 715 (2005) [Per J. Ynares-Santiago, First Division].

[59]
 Id. at 721.

[60]
 594 Phil. 97 (2008) [Per J. Nachura, Third Division].

 Id. at 114, citing Rizal Commercial Banking Corporation v.


[61]

Intermediate Appellate Court, 378 Phil. 10 (1999) [Per J. Melo,


En Banc].
[62]
 Id. at 101.

[63]
 Id. at 102.

[64]
 Id.

[65]
 Id. at 108.

[66]
 Id. at 112.

[67]
 615 Phil. 595 (2014) [Per J. Peralta, Third Division].

[68]
 Id. at 612.

[69]
 Id.

[70]
 Id.

[71]
 Id. at 613.

[72]
 Id.

[73]
 Id. at 614.

[74]
 Id.

[75]
 Id. at 621.
[76]
 700 Phil. 225 (2012) [Per J. Villarama, First Division].

[77]
 Id. at 236.

[78]
 Id. at 237.

[79]
 Id. at 239-240.

[80]
 Id. at 289.

[81]
 G.R. No. 208062, April 27, 2015 [Per J. Leonen, En Banc].

[82]
 Id. at 25-26.
[83]
 691 Phil. 173 (2012) [Per J. Mendoza, En Banc].

[84]
 Id. at 200.

 Secretary of Justice, et al. v. Koruga, 604 Phil. 405, 416 (2009)


[85]

[Per J. Austria-Martinez, Third Division].

[86]
 Id.

 Ursua v. Court of Appeals, 326 Phil. 157, 163 (1996) [Per J.


[87]

Bellosillo, First Division].

[88]
 Id. at 201-202.

 Pascual v. Burgos, G.R. No. 171722, January 11, 2016 10 [Per


[89]

J. Leonen, Second Division].

[90]
 Id.

 Bank of the Philippine Islands v. Sarabia Manor Hotel


[91]

Corporation, 715 Phil. 420, 435 (2013) [Per J. Perlas-Bernabe,


Second Division].

[92]
 Rollo, pp. 467-497.

 G.R. No. 171722, January 11, 2016 [Per J. Leonen, Second


[93]

Division].

[94]
 Id. at 10-12.

[95]
 Rollo, p. 487.

[96]
 Id. at 490.

[9]
7 Id. at 495.

[98]
 Id. at 259-262.

[99]
 Id. at 22-59.
[100]
 Id. at 70.

 Philippine Bank of Communications v. Basic Polyprinters and


[101]

Packaging Corporation, 745 Phil. 651, 663-664 (2014) [Per J.


Bersamin, First Division].

[102]
 Id. at 665.

[103]
 Rollo, p. 72.

[104]
 Id. at 71.

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Supreme Court E-Library

803 Phil. 582


SECOND DIVISION

[ G.R. No. 219829, January 18, 2017 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, V. MONIR JAAFAR Y TAMBUYONG,
ACCUSED-APPELLANT.DECISION

LEONEN, J.:

This reviews the Decision  dated February 24, 2015 of the Court
[1]

of Appeals in CA-GR. CR HC No. 01053-MIN affirming the


conviction of accused-appellant Monir Jaafar y Tambuyong for
violation of Article II, Section 5 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of
2002.
In an Information, accused-appellant Monir Jaafar y Tambuyong
(Jaafar) and Ahmad Gani y Idjirani (Gani) were charged with
violation of Republic Act No. 9165:

That on the 11  day of September 2009 at Barangay Port Area,


th

Isabela City, Zamboanga Peninsula, Philippines and within the


jurisdiction of this Honorable Court, the above named accused,
not being authorized by law to sell, deliver, give away to another,
transport or distribute any dangerous drug, conspiring and
confederating together, mutually aiding and assisting one
another, did then and there willfully, unlawfully and feloniously
sell and deliver to PO1 Marlon Takazi M. Look, who acted as
poseur-buyer, one (1) [heat-sealed] transparent plastic sachet
containing white crystalline substance weighing 0.0604 grams
which when subjected to qualitative examination gave positive
result to the tests for the presence of METHAMPHETAMINE
HYDROCHLORIDE (SHABU), knowing [the] same to be a
dangerous drug.

CONTRARY TO LAW. [2]

Upon arraignment, both accused pleaded not guilty.  Trial on the


[3]

merits ensued. [4]

According to the prosecution, at 8:00 a.m. on September 10,


2009, a male civilian informant reported to Chief of Police, Police
Superintendent Alberto Capacio Larubis (Chief Larubis) that a
certain "Mana" was selling methamphetamine hydrochloride
(shabu) at the port area barangay located just beside the police
station.  Mana was later identified as Jaafar, who sold shabu
[5]

between 12:00 m.n. and 4:00a.m. to facilitate the sale of the


drug and evade arrest.  Jaafar allegedly peddled shabu in his
[6]

house.[7]
Chief Larubis instructed SPO4 Enrico Morales (SPO4 Morales) to
form a team composed of SPO3 Tabunyag, PO3 Perez, PO3
Hasim, PO2 Canete, PO2 Bobby Rey Bucoy (PO2 Bucoy), PO1
Insang, and PO1 Marlon Takazi M. Look (PO1 Look) and to
schedule a buy-bust operation the next day. He also instructed
the team to coordinate with agents from the Philippine Drug
Enforcement Agency (PDEA).  PO1 Look was designated as the
[8]

poseur-buyer while PO2 Bucoy and PDEA Agent Mark Dela Cruz
were designated as the arresting officers. [9]

On September 11, 2009, the buy-bust team left the police station
at 1:45 a.m. and went to Jaafar's house. [10]

Jaafar met PO1 Look and the informant at the door of his house
and asked them if they were buying shabu.  PO1 Look answered [11]

in the affirmative and gave Jaafar a marked P500.00 bill.  Jaafar [12]

called for Gani inside the house.  Gani came out and handed
[13]

Jaafar a sachet containing shabu.  Jaafar gave the sachet to PO1


[14]

Look, who immediately lit a cigarette—the pre-arranged signal


agreed upon by the buy-bust team.  [15]

The police officers rushed to arrest Jaafar, but he managed to


escape.  Jaafar threw away the marked P500.00 bill as he ran.
[16]

 Eventually, the arresting officers caught up with him 30 meters


[17]

away from his house. [18]

Immediately after the arrest, PO1 Look marked the confiscated


sachet of shabu with his initials.  He then turned over the sachet
[19]

and the marked P500.00 bill to their team leader, SPO4 Morales.
 The buy-bust team brought Jaafar and Gani to the police
[20]

station for investigation. [21]

Chief Larubis prepared a letter-request addressed to forensic


chemist Melvin Manuel for the examination of the contents of the
sachet.  Upon examination, the contents tested positive for
[22]

methamphetamine hydrochloride. [23]

In his defense, Gani testified that he was at an internet cafe


located near the police station at 2:00 a.m. on September 11,
2009.  After stepping out of the establishment, Gani was
[24]

suddenly apprehended by unknown persons, who later identified


themselves as PO1 Look and PO2 Bucoy.  He was detained at the
[25]

police station for two (2) days and was subsequently transferred
to the Bureau of Jail Management and Penology.  Gani claimed
[26]

that he did not know the reason for his arrest. [27]

Meanwhile, Jaafar testified that he was at the internet cafe at


12:00 m.n. on September 11, 2009, watching people play video
games.  He left after two (2) hours and made his way home.
[28]

 Upon entering an alley, Jaafar saw six (6) persons headed


[29]

towards him.  One of them pointed a gun at him and told him
[30]

not to run. Out of fear, he ran towards the main road.  However,[31]

the six (6) persons, who turned out to be police officers, caught
up with him.  They conducted a body search but found nothing
[32]

since Jaafar was only wearing boxer shorts and a t-shirt. Jaafar
was detained after his arrest and brought to the Office of the City
Prosecutor at the City Hall of Isabela the next day. [33]

The Regional Trial Court found that the prosecution clearly


established all the elements of the crime of illegal sale of drugs.
 Although the chain of custody rule was not strictly complied
[34]

with, the trial court ruled that the integrity and evidentiary value
of the confiscated shabu sachet had been duly preserved.  It [35]

applied the legal presumption of regularity in the performance of


duties by the police officers.
[36]

Jaafar primarily relied on denial for his defense and presented a


different story of what had transpired. The Regional Trial Court
considered the version of the defense weak.  It could not have
[37]

foreclosed the possibility that Jaafar committed the crime.  The [38]

Regional Trial Court also found it unusual that Jaafar never


exhibited any form of resistance.  Instead, he remained cool and
[39]

calm.  This, according to the Regional Trial Court, was an


[40]

unusual reaction since a person whose rights were allegedly


transgressed would offer some form of resistance. [41]
In its Decision  dated May 15, 2012, the Regional Trial Court
[42]

convicted Jaafar for violation of Article II, Section 5 of Republic


Act No. 9165. However, it acquitted Gani for insufficiency of
evidence. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, accused Ahmad Gani Y


Idjirani a.k.a. "Botchoy" is hereby ACQUITTED of the above
charge for want of sufficient evidence. The property bond posted
for his provisional liberty is ordered cancelled and returned to its
lawful owner.

WHEREAS, accused Monir Jaafar y Tambuyong a.k.a. "Mana" is


found GUILTY beyond reasonable doubt of the offense of illegal
sale of 0.0604 gram of shabu, a dangerous drug, in violation of
Section 5, Article II of Republic Act No. 9165, and is hereby
sentenced to suffer the penalty of LIFE IMPRISONMENT and to
pay a fine of P500,000.00.

SO ORDERED. [43]

Jaafar filed an appeal before the Court of Appeals and raised the
following errors: (1) the prosecution failed to prove his guilt
beyond reasonable doubt; and (2) the arresting team violated the
chain of custody rule under Section 21 of Republic Act No. 9165. [44]

Jaafar argued that the shabu was not formally offered as


evidence during trial; rather, it was only presented during the
hearing for the application for bail. Hence, the Regional Trial
Court should not have considered the shabu as evidence. Jaafar
further argued that the prosecution failed to show an unbroken
chain of custody of the shabu allegedly obtained from him. He
pointed out that the police officers neither photographed nor
inventoried the seized shabu sachet and emphasized that there
were no representatives from the media and the Department of
Justice as well as an elected public official to witness the
proceedings. [45]

On the other hand, the People of the Philippines argued that the
alleged non-compliance with the chain of custody rule was not
fatal to the prosecution's case considering that the integrity and
evidentiary value of the seized items were properly preserved. [46]

The Court of Appeals ruled that although the sachet of shabu was
not formally offered in evidence during trial, it was nevertheless
identified by PO1 Look and the forensic chemist. Being part of
their direct testimonies, the shabu formed part of the records of
the case. Hence, the Court of Appeals ruled that the Regional
Trial Court did not err in considering the shabu as evidence. [47]

The Court of Appeals also agreed with the Regional Trial Court
with regard to the alleged violation of the chain of custody rule.
Although there was a departure in the procedure mandated under
Section 21 of Republic Act No. 9165, the Court of Appeals ruled
that it did not automatically render the confiscated drugs
inadmissible since the integrity of the seized shabu had been kept
intact.
[48]

In its Decision  dated February 24, 2015, the Court of Appeals


[49]

affirmed the Regional Trial Court Decision in toto.

Aggrieved, Jaafar filed a Notice of Appeal on March 20, 2015,


which was noted and given due course in the Court of Appeals
Resolution dated May 11, 2015. [50]

In the Resolution dated October 7, 2015, this Court noted the


records forwarded by the Court of Appeals and informed the
parties that they could submit their supplemental briefs. [51]

On November 25, 2015, the People of the Philippines, through the


Office of the Solicitor General, filed a Manifestation stating that it
would dispense with the filing of a supplemental brief since all its
arguments had been sufficiently raised in its Appellee's Brief
dated August 22, 2013. [52]

On January 26, 2016, accused-appellant filed a similar


Manifestation stating that he would no longer file a supplemental
brief and instead would adopt his appellant's brief. [53]
The issue for this Court's resolution is whether the guilt of
accused appellant was proven beyond reasonable doubt despite
the non-observance of the required procedure under Section 21
of Republic Act No. 9165.

This Court grants the appeal and acquits accused-appellant Monir


Jaafar y Tambuyong.

In all prosecutions for violations of Republic Act No. 9165,


the corpus delicti is the dangerous drug itself.  Its existence is
[54]

essential to a judgment of conviction.  Hence, the identity of the


[55]

dangerous drug must be clearly established. [56]

Narcotic substances are not readily identifiable.  To determine [57]

their composition and nature, they must undergo scientific testing


and analysis. Narcotic substances are also highly susceptible to
alteration, tampering, or contamination.  It is imperative,
[58]

therefore, that the drugs allegedly seized from the accused are
the very same objects tested in the laboratory and offered in
court as evidence.  The chain of custody, as a method of
[59]

authentication, ensures that unnecessary doubts involving the


identity of seized drugs are removed.  [60]

Section 21 of Republic Act No. 9165 provides the manner by


which law enforcement officers should handle seized dangerous
drugs:

SECTION 21. Custody and Disposition of Confiscated, Seized,


and/or Surrendered Dangerous Drugs, Plant Sources of
Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(1 The apprehending team having initial custody and control of the drugs  shall, immed
) seizure and confiscation, physically inventory and photograph the same in the pr
the accused or the person/s from whom such items were confiscated and/or s
his/her representative or counsel, a representative from the media
Department of Justice (DOJ), and any elected public official who shall be requi
the copies of the inventory and be given a copy thereof[.] (Emphasis supplied)
The Implementing Rules and Regulations of Republic Act No.
9165 further provide:

Section 21. Custody and Disposition of Confiscated, Seized and/or


Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:

(a The apprehending officer/team having initial custody and control of the drugs shall, im
) after seizure and confiscation, physically inventory and photograph the same in the p
the accused or the person/s from whom such items were confiscated and/or seized,
representative or counsel, a representative from the media and the Department of Jus
and any elected public official who shall be required to sign the copies of the invento
given a copy thereof: Provided, that the physical inventory and photograph shall be co
the place where the search warrant is served; or at the nearest police station or at t
office of the apprehending officer/team, whichever is practicable, in case of w
seizures; Provided, further, that non-compliance with these requiremen
justifiable grounds, as long as the integrity and the evidentiary value of th
items are properly preserved by the apprehending officer/team, shall not re
and invalid such seizures of and custody over said items[.] (Emphasis supplied)
While it may be true that non-compliance with Section 21 of
Republic Act No. 9165 is not fatal to the prosecution's case
provided that the integrity and evidentiary value of the seized
items are properly preserved by the apprehending officers,  this [61]

exception will only be triggered by the existence of a ground that


justifies departure from the general rule. [62]

This Court finds that the prosecution failed to show any justifiable
reason that would warrant non-compliance with the mandatory
requirements in Section 21 of Republic Act No. 9165.
Although the buy-bust team marked  and conducted a physical
[63]

inventory  of the seized sachet of shabu, the records do not


[64]

show that the seized sachet had been photographed.

Furthermore, there is absolutely no evidence to show that the


physical inventory was done in the presence of accused-appellant
or his representative, representatives from the media and the
Department of Justice, and an elected public official.  The [65]

poseur-buyer, PO1 Look, testified as follows:

Q. Can you go over this Certificate of [Inventory], is there an entry under the witnesses
name there and signature?
A. No, sir[.]
Q. How about representative from Department of Justice, can you see any name there a
signature?
A. None, sir[.]
Q. In the entry Elected Official, do you see any name there and their signature?
A. None, sir.
Q. And lastly[,] the representative of the accused, can you see any printed name there an
A. None, sir. [66]

The buy-bust team had an entire day within which to coordinate


with the persons required by law to be present during the
physical inventory of the seized drugs. The Chief of Police
received the confidential tip early in the morning.  He [67]

immediately instructed SPO4 Morales to form a buy-bust team


and coordinate with agents from the Philippine Drug Enforcement
Agency.  The buy-bust team had ample time to contact an
[68]

elected public official and representatives from the media and the
Department of Justice.

The prosecution established during trial  and on appeal  that the


[69] [70]

buy-bust operation had been carefully planned by narrating the


events with intricate detail. However, at the same time, the
prosecution relied heavily on the exception to the chain of
custody rule.  Worse, the prosecution did not even offer any
[71]

explanation on why they failed to comply with what was


mandated under the law. Indeed, if the police authorities had
carefully planned the buy-bust operation, then there was no
reason for them to neglect such important requirements. They
cannot feign ignorance of the exacting standards under Section
21 of Republic Act No. 9165. Police officers are presumed and are
required to know the laws they are charged with executing.

This Court cannot merely gloss over the glaring procedural lapses
committed by the police officers, especially when what had been
allegedly seized from accused-appellant was only 0.0604 grams
of shabu.  Recent cases  have highlighted the need to ensure
[72] [73]

the integrity of seized drugs in the chain of custody when only a


miniscule amount of drugs had been allegedly seized from the
accused.

In People v. Holgado,  this Court held that "[c]ourts must employ


[74]

heightened scrutiny, consistent with the requirement of proof


beyond reasonable doubt, in evaluating cases involving miniscule
amounts of drugs . . . [as] they can be readily planted and
tampered." [75]

Non-observance of the mandatory requirements under Section 21


of Republic Act No. 9165 casts doubt on the integrity of the shabu
supposedly seized from accused-appellant. This creates
reasonable doubt in the conviction of accused-appellant for
violation of Article II, Section 5 of Republic Act No. 9165.

WHEREFORE, the Decision dated February 24, 2015 of the Court


of Appeals in CA-G.R. CR HC No. 01053-MIN
is REVERSED and SET ASIDE. Accused-appellant Monir Jaafar y
Tambuyong is ACQUITTED for failure of the prosecution to prove
his guilt beyond reasonable doubt. He is ordered
immediately RELEASED from detention, unless he is confined for
any other lawful cause.

Let a copy of this Decision be furnished to the Director of the


Bureau of Corrections, Muntinlupa City, for immediate
implementation. The Director of the Bureau of Corrections is
directed to report to this Court, within five (5) days from receipt
of this Decision, the action he has taken. Copies shall also be
furnished to the Director General of the Philippine National Police
and the Director General of the Philippine Drug Enforcement
Agency for their information.

SO ORDERED.

Carpio, (Chairperson), Velasco, Jr.,   Peralta, and  Mendoza, JJ.,


[*]

concur.

 Designated additional member per Special Order No. 2416-A


[*]

dated January 4, 2017.


 Rollo, pp. 3-11. The Decision was penned by Associate Justice
[1]

Henri Jean Paul B. Inting and concurred in by Associate Justices


Edgardo A. Camello and Pablito A. Perez of the Twenty-Second
Division, Court of Appeals, Cagayan de Oro City.

[2]
 Id. at 5.

[3]
 CA  rollo, p. 66.

[4]
 Id.

[5]
 Id.

[6]
 Id.

[7]
 Id.

[8]
 Id.

[9]
 Id.

[10]
 Id.

[11]
 Id. at 67.
[12]
 Id.

[13]
 Rollo, p. 5.

[14]
 CA rollo, p. 67.

[15]
 Id.

[16]
 Id.

[17]
 Rollo, p. 5.

[18]
 CA rollo, p. 67.

[19]
 Id.

[20]
 Id.

[21]
 Id.

[22]
 Id.

[23]
 Id.

 Id. at 68. In the Regional Trial Court Decision, it was indicated


[24]

that Gani was at the internet cafe on September 11, 2012.

[25]
 Id.
[26]
 Id.

[27]
 Id.

[28]
 Rollo, p. 6.

[29]
 CA rollo, p. 68.

[30]
 Id. at 69.

[31]
 Id.
[32]
 Id.

[33]
 Id.

[34]
 Id. at 70.

[35]
 Id. at 71.

[36]
 Id. at 72.

[37]
 Id.

[38]
 Id. at 72.

[39]
 Id. at 73.

[40]
 Id.

[41]
 Id.

 Id. at 65-75. The Decision was penned by Presiding Judge


[42]

Danilo M. Bucoy of Branch 2, Regional Trial Court, Isabela City,


Basilan.

[43]
 Id. at 75.

[44]
 Rollo, p. 6.

[45]
 CA rollo, pp. 57-63.

[46]
 Id. at 88-91.

[47]
 Rollo, pp. 7-8.

[48]
 Id. at 8-10.

[49]
 Rollo, pp. 3-10.

[50]
 Id. at 1.

[51]
 Id. at 17.
[52]
 Id. at 19.

[53]
 Id. at 25.

 People v. Simbahon, 449 Phil. 74, 81 (2003) [Per J. Ynares-


[54]

Santiago, First Division].

[55]
 Id.

 Id. See also People v. Laxa, 414 Phil. 156, 170 (2001) [Per J.
[56]

Mendoza, Second Division]; Mallillin v. People, 516 Phil. 576, 586


(2008) [Per J. Tinga, Second Division].

 Mallillin v. People, 516 Phil. 576, 588 (2008) [Per J. Tinga,


[57]

Second Division].

[58]
 Id.

[59]
 Id.

[60]
 Id. at 586.

 People v. Pringas, 558 Phil. 579, 593 (2007) [Per J. Chico-


[61]

Nazario, Third Division).

[62]
 Id. at 594.

[63]
 Rollo, p. 9.

[64]
 Id.

[65]
 Rep. Act No. 9165, sec. 21(a).

[66]
 CA rollo, p. 59.

[67]
 Rollo, p. 4.

[68]
 Id.

[69]
 CA rollo, pp. 15-16.
[70]
 Id. at 84-86.

[71]
 Id. at 89-90.

[72]
 CA rollo, p. 14.

 People v. Holgado, G.R. No. 207992, August 11, 2014, 732


[73]

SCRA 554, 569 (2014) [Per J. Leonen, Third Division]; Tuano v.


People, G.R. No. 205871, September 28, 2016 <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/september2016/205871.pdf > [Per J.
Leonen, Second Division]; People v. Talvo, G.R. No. 215340, July
13, 2016 < sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/july2016/215340.pdf > [Per J. Leonen,
Second Division].

 G.R. No. 207992, August 11, 2014, 732 SCRA 554 [Per J.
[74]

Leonen, Third Division].

[75]
 Id. at 576-577.

Source: Supreme Court E-Library | Date created: October 23, 2018


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Supreme Court E-Library

790 Phil. 183


SECOND DIVISION

[ G.R. No. 215340, July 13, 2016 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. GLORIA CAIZ Y TALVO, ACCUSED-
APPELLANT.DECISION

LEONEN, J.:

Failure to prove the preservation of the integrity of the corpus


delicti in dangerous drugs cases will lead to the acquittal of the
accused on the ground of reasonable doubt.

Two Informations were filed against accused-appellant Gloria Caiz


y Talvo (Caiz) for violation of Sections 5 and 11 of Republic Act
No. 9165.[1]

The accusatory portion of the Information for violation of Section


5 of Republic Act No. 9165 states:
That on or about 11:00 o'clock in the morning of February 20,
2008 at Zone 1, Brgy. Pinmaludpod, Urdaneta City, Pangasinan
and within the jurisdiction of this Honorable Court, the above-
named accused, did then and there willfully, unlawfully and
feloniously sell one (1) heat sealed transparent plastic sachet
containing Methamphetamine Hydrochloride (SHABU) weighing
0.05 gram, a dangerous drug.

CONTRARY to Sec. 5, Art. II of Republic Act 9165, otherwise


known as the "Comprehensive Dangerous Drugs Act of 2002." [2]

The accusatory portion of the Information for violation of Section


11 of Republic Act No. 9165 states:
That on or about 11:00 o'clock in the morning of February 20,
2008 at Zone 1, Brgy. Pinmaludpod, Urdaneta City, Pangasinan
and within the jurisdiction of this Honorable Court, the above-
named accused, did then and there willfully, unlawfully and
feloniously have in her possession, control and custody two (2)
heat sealed transparent plastic sachet containing
methamphetamine hydrochloride (SHABU) weighing 0.05 gram
and 0.04 gram, with a total weight of 0.09 gram.
CONTRARY to Art. II, Sec. 11 of Republic Act 9165, otherwise
known as the "Comprehensive Dangerous Drugs Act of 2002." [3]

During the trial, Police Officer I Nesely Valle (PO1 Valle), Senior
Police Officer I Ronald Patricio (SPO1 Patricio), and Police Officer
III Michael Datuin (PO3 Datuin) were presented as witnesses.
 They testified on the events "before, during[,] and after the
[4]

buy-bust operation[.]"  Police Officer II Jeffrey Tajon (PO2 Tajon)


[5]

of the Philippine National Police Crime Laboratory testified that he


"received the request for laboratory examination at around 5:00
o'clock in the afternoon of February 20, 2008." [6]

PO1 Valle testified that on February 20, 2008, at around 7:00


a.m., an informant reported to the Special Operations Group of
the Philippine National Police in Lingayen about the rampant sale
of methamphetamine hydrochloride (shabu) in Barangay
Pinmaludpod, Urdaneta City. [7]

A buy-bust operation team was immediately organized by the


Special Operations Group. SPO1 Patricio and PO1 Valle were the
poseur buyers, while Senior Police Officer II Meginio Garcia (SPO2
Garcia) prepared the marked money. [8]

The Philippine National Police coordinated with the Urdaneta City


Police Community Precinct at Barangay Pinmaludpod for the
conduct of the buy-bust operation.  The buy-bust operation was
[9]

scheduled on the same day, February 20, 2008. [10]

On February 20, 2008, the buy-bust team conducted a


verification surveillance in Barangay Pinmaludpod and were able
to observe Caiz's activities.[11]

After the verification surveillance, SPO1 Patricio, PO1 Valle, and


the confidential informant went to Caiz's house at around 11:00
a.m. to conduct the buy-bust operation.  The informant [12]

introduced SPO1 Patricio and PO1 Valle to Caiz. As poseur buyers,


SPO1 Patricio and PO1 Valle told Caiz that they would like to
purchase P600.00 worth of shabu.  The marked money used
[13]
consisted of one (1) P500.00 bill and one (1) P100.00 bill.  These [14]

bills were marked before the buy-bust operation.  The marking [15]

used was "RDP,"  the initials of SPO1 Patricio.


[16] [17]

After Caiz received the marked money, she handed a "small


transparent plastic sachet containing white crystalline
substance"  to SPO1 Patricio. SPO1 Patricio then removed his
[18]

bonnet, which was the prearranged signal of the operation. SPO1


Patricio and PO1 Valle identified themselves to Caiz as police
officers and proceeded to arrest her. [19]

Caiz was informed of her constitutional rights.  PO1 Valle frisked [20]

her right after she was arrested  and recovered the marked
[21]

money and "two (2) more plastic sachets containing shabu from .
. . [Caiz's] pocket."  Caiz was then brought to the Philippine
[22]

National Police office in Lingayen  for interrogation and [23]

documentation. [24]

The items recovered from Caiz "were turned over by PO1 Valle to
SPO1 Patricio for marking purposes[.]" [25]

The plastic sachet sold to the police officers was marked


"RDP."  The two (2) other plastic sachets confiscated from Caiz
[26]

were marked "RDP1"  and "RDP2." [27] [28]

PO1 Valle testified that the seized sachets were marked by SPO1
Patricio immediately after Caiz was arrested.  On the other hand, [29]

SPO1 Patricio testified that the seized sachets were marked at the
police station. [30]

After marking, SPO1 Patricio "surrendered the [marked plastic


sachets] to their investigator, PO3 Michael Datuin[,] at their
Lingayen Office for transmittal to the crime laboratory." [31]

Forensic Chemist Police Senior Inspector Emelda Besarra Roderos


issued an initial laboratory report stating that the contents of the
heat-sealed transparent plastic sachet weighed 0.05 gram and
tested positive for shabu. [32]
Caiz presented a different version of the facts. She testified that
on February 20, 2008, at around 10:00 a.m.,  "she was putting
[33]

her grandson to sleep . . . when she saw somebody enter her


aunt's yard." [34]

She shouted and went to her mother's house.  However, two (2)
[35]

men were following her and asking for the marked money. [36]

Caiz informed the men that she had nothing.  Inside her [37]

mother's house, she was "strip-searched by PO1 Valle."  Still, [38]

PO1 Valle was unable to retrieve anything from her.  She was [39]

then invited by the police officers to go to the police station.  She [40]

could not refuse because a gun was pointed at her so they first
went to the Barangay Hall at Pinmaludpod, Urdaneta City.  Caiz [41]

narrated that she stayed inside the vehicle and that there was
another person left with her inside the vehicle. That person,
whom she did not name, showed her the plastic sachets allegedly
confiscated from her.  Caiz stated that it was the first time she
[42]

saw the plastic sachets. [43]

They then went to the office of the Special Operations Group of


the Philippine National Police Office in Lingayen. Caiz testified that
while she was there, "she was offered a meal and allowed to
watch TV."  After, they proceeded to the Urdaneta City Police
[44]

Station. Caiz alleged that the seized sachets were marked at the
police station.  A medical examination was conducted on her at a
[45]

hospital.
[46]

After two (2) days of incarceration at the police station,  Caiz [47]

was brought to the prosecutor's office and was made to sign


documents. She was then "committed to the Urdaneta City
District Jail." [48]

In the Decision dated July 18, 2012,  the trial court found Caiz
[49]

guilty of violating Section 5 of Republic Act No. 9165, but


dismissed the case for violation of Section 11.
The trial court reasoned that Caiz was positively identified by the
prosecution's witnesses as the seller of shabu. She sold "one
heat-sealed plastic sachet containing white crystalline
substance"  to PO1 Valle. The sachet was found to contain 0.05
[50]

gram of shabu. The seized sachet and the marked money were
presented in court. [51]

The trial court held that the charge against Caiz for illegal
possession of dangerous drugs was to be absorbed by the crime
of illegal sale, thus:
As to the charge of illegal possession of dangerous drugs against
said accused, the same is already absorbed in the crime of illegal
sale. Based on the testimonies of the prosecution witnesses,
accused was arrested and frisked immediately after the
consummation of the sale transaction resulting in the recovery of
two more plastic sachets of shabu from her pocket. The fact that
the arresting officer recovered other plastic sachets containing
shabu from the pocket of the accused during said illegal sale
transaction is already immaterial - and will not justify the filing of
a separate case of illegal possession as enunciated by the Court
in the case of People vs. Lacerna. . . . Possession of prohibited
drugs is generally inherent in the crime of illegal sale of
dangerous drugs and that conviction for both offenses is not
feasible.  (Citations omitted)
[52]

The dispositive portion of the Regional Trial Court Decision reads:


WHEREFORE, judgment is hereby rendered finding the accused
GUILTY beyond reasonable doubt of the crime of Illegal Sale of
Dangerous Drugs and the court sentences her to suffer the
penalty of life imprisonment and to pay a fine of Php500,000.00.

The case of Illegal Possession of Dangerous Drugs filed against


said accused is hereby DISMISSED.

The prohibited drugs presented in court as evidence is ordered


forfeited in favor of the government and shall be forwarded to the
PDEA Office for the proper disposition.

SO ORDERED. [53]
In her appeal before the Court of Appeals, Caiz argued that there
were several procedural lapses committed by the police officers.
 Section 86  of the Implementing Rules and Regulations of
[54] [55]

Republic Act No. 9165 requires coordination with the Philippine


Drug Enforcement Agency, which the police officers did not do.
The place where the seized sachets were marked was not proven
because the police officers gave different testimonies. [56]

Further, the confiscation receipts prepared by SPO1 Patricio were


not signed by Caiz, her representative or counsel, a
representative from the media, a representative from the
Department of Justice, or any public official.  Caiz was not given
[57]

a copy. [58]

Caiz claimed that there were no photographs of the seized


sachets and the booking sheet of accused was prepared on the
day after she was arrested.  The police officer who received the
[59]

request for laboratory examination and the forensic chemist were


not presented in court.  She also alleged that the prosecution
[60]

was unable to show "who had the custody and safekeeping of the
drugs after their examination and pending their presentation in
court."[61]

On the other hand, the Office of the Solicitor General argued that
the trial court correctly convicted Caiz because the prosecution
was able to prove that the sale of illegal drugs took place, and
the items seized were presented in evidence. [62]

In addition, the required procedure in handling the seized items


was substantially complied with. The police officers who
conducted the buy-bust operation coordinated with the Philippine
Drug Enforcement Agency.  The Office of the Solicitor General
[63]

likewise argued that non-compliance with Section 21 of Republic


Act No. 9165 "would not necessarily render the evidence obtained
from the drug operation as inadmissible, but it would only affect
the merit or probative value of such evidence." [64]
The Office of the Solicitor General claimed that although there
were inconsistencies in the testimonies of PO1 Valle and SPO1
Patricio on where the seized item was marked, the inconsistency
"[did] not affect the credibility of the witnesses."  The [65]

inconsistencies in their testimonies referred to trivial and


insignificant matters.[66]

On the confiscation receipts, the Office of the Solicitor-General


cited People v. Rosialda  in that "[t]he failure of the prosecution
[67]

to show that the police officers conducted the required physical


inventory and photograph of the evidence confiscated pursuant to
said guidelines, is not fatal and does not automatically render
accused-appellant's arrest illegal or the items seized/confiscated
from him inadmissible." [68]

On the non-presentation of the forensic chemist, the Office of the


Solicitor General cited People v. Amansec  and argued that the
[69]

laboratory reports and chemistry reports are sufficient to prove


that the chain of custody was not broken. [70]

The Court of Appeals affirmed the ruling of the Regional Trial


Court.  It held that Caiz failed to present evidence that the chain
[71]

of custody was broken.  It further held that non-compliance with


[72]

Article II, Section 21 of Republic Act No. 9165 does not justify
Caiz's acquittal. "What is of utmost importance is the
preservation of the integrity and the evidentiary value of the
seized items, as the same would be utilized in the determination
of the guilt or innocence of the accused."
[73]

The dispositive portion of the Court of Appeals Decision reads:


WHEREFORE, the foregoing considered, the instant appeal is
hereby DISMISSED and the appealed Decision dated July 18,
2012 AFFIRMED in toto. No costs.

SO ORDERED.  (Emphasis in the original)


[74]

Caiz filed a Notice of Appeal on September 26, 2014. [75]


The Notice of Appeal was noted and given due course in the Court
of Appeals' October 20, 2014 Resolution.  The case records were
[76]

elevated to this Court on December 1, 2014. [77]

In the Resolution  dated January 28, 2015, this Court noted the
[78]

records forwarded by the Court of Appeals and notified the


parties that they could file their respective supplemental briefs
within 30 days from notice.

The Office of the Solicitor General filed a Manifestation and


Motion  stating that it would not file a supplemental brief since
[79]

Caiz did not raise new issues in her appeal.  Counsel for Caiz
[80]

filed a Manifestation  informing this Court that it would no longer


[81]

file a supplemental brief.

We resolve the following issues:

First, whether the guilt of accused-appellant Gloria Caiz y Talvo


for violation of Section 5 of Republic Act No. 9165 was proven
beyond reasonable doubt; and

Second, whether the rules on the chain of custody of the corpus


delicti were observed.

We find for accused-appellant.

The prosecution was unable to prove the integrity of the corpus


delicti. The non-compliance with the requirements of Section 21
of Republic Act No. 9165 was not justified.

The elements of violation of Section 5  of Republic Act No. 9165


[82]

are:
(1) the identity of the buyer and the seller, the object and the
consideration; and (2) the delivery of the thing sold and the
payment. What is material is the proof that the transaction
actually took place, coupled with the presentation before the
court of the corpus delicti.  (Emphasis in the original)
[83]

The prosecution must also establish the integrity of the


dangerous drug, being the corpus delicti of the case.[84]

Section 21 of Republic Act No. 9165, as amended by Republic Act


No. 10640,  states the procedure to be observed by law
[85]

enforcement officers in dangerous drugs cases:


SEC. 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of
the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and
confiscation, conduct a physical inventory of the seized items and
photograph the same in the presence of the accused or the
person/s from whom such items were confiscated and/or seized,
or his/her representative or counsel, with an elected public
official and a representative of the National Prosecution Service
or the media who shall be required to sign the copies of the
inventory and be given a copy thereof: Provided, That the
physical inventory and photograph shall be conducted at the
place where the search warrant is served; or at the nearest police
station or at the nearest office of the apprehending officer/team,
whichever is practicable, in case of warrantless seizures:
Provided, finally, That noncompliance of these requirements
under justifiable grounds, as long as the integrity and the
evidentiary value of the seized items are properly preserved by
the apprehending officer/team, shall not render void and invalid
such seizures and custody over said items.
....

(3) A certification of the forensic laboratory examination results,


which shall be done by the forensic laboratory examiner, shall be
issued immediately upon the receipt of the subject
item/s: Provided, That when the volume of dangerous drugs,
plant sources of dangerous drugs, and controlled precursors and
essential chemicals does not allow the.completion of testing
within the time frame, a partial laboratory examination report
shall be provisionally issued stating therein the quantities of
dangerous drugs still to be examined by the forensic
laboratory: Provided, however, That a final certification shall be
issued immediately upon completion of the said examination and
certification[.]  (Emphasis supplied)
[86]

In view of the amendments to Republic Act No. 9165, the


Implementing Rules and Regulations of Section 21 of Republic Act
No. 9165 were also amended, thus:
SECTION 1. Implementing Guidelines. — The PDEA shall take
charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals,
as well as instruments/paraphernalia and/or laboratory
equipment so confiscated, seized and/or surrendered, for proper
disposition in the following manner:
A. Marking, Inventory and Photograph; Chain of Custody
Implementing Paragraph "a" of the IRR
A. A. A.The apprehending or seizing officer having initial custody an
seized or confiscated dangerous drugs, plant sources of dangerous
A precursors and essential chemicals, instruments/paraphernalia and/or labo
. shall, immediately after seizure and confiscation, mark, inventory and pho
A in the following manner:
.
1
.
G.
A. A. A.The marking, physical inventory and photograph of the seized/
shall be conducted where the search warrant is served.
A.A
.1.
1.
M.
A. A. A.The marking is the placing by the apprehending officer or the
his/her initial and signature on the item/s seized.
A.A
.1.
2.
S.
A. A. A.In warrantless seizures, the marking of the seized items in th
violator shall be done immediately at the place where the drugs were
A.A nearest police station or nearest office of the apprehending officer/tea
.1. practicable. The physical inventory and photograph shall be conducted in
3. police station or nearest office of the apprehending officer/team, whichever
Y.
A. A. A.In cases when the execution of search warrant is precede
seizures, the marking, inventory and photograph of the items recovered
A.A warrant shall be performed separately from the marking, inventory and p
.1. items seized from warrantless seizures.
4.
E.
A. A. A.The physical inventory and photograph of the seized/confiscat
done in the presence of the suspect or his/her representative or counsel, w
A.A official and a representative of the National Prosecution Service (NPS) o
.1. shall be required to sign the copies of the inventory of the seized or conf
5. be given copy thereof. In case of their refusal to sign, it shall be stated
above their names in the certificate of inventory of the apprehending or sei
K.
A. A. A.A representative of the NPS is anyone from its employees,
representative is any media practitioner. The elected public official is any
A.A official regardless of the place where he/she is elected.
.1.
6.
Q.
A. A. A.To prevent switching or contamination, the seized items, which
indistinct in character, and which have been marked after the seizure, sh
A.A container or evidence bag and signed by the apprehending/seizing officer
.1. the forensic laboratory for examination.
7.
W.
A. A. A.In case of seizure of plant sources at the plantation site,
physically possible to count or weigh the seizure as a complete entity, t
A.A shall estimate its count or gross weight or net weight, as the case may be
.1. practicable, marking, inventory and photograph of the seized plant
8. performed at the plantation site. Representative samples of prescribed qua
Board Regulation No. 1, Series of 2002, as amended, and/or Board Regula
of 2007, as amended, shall be taken from the site after the seizur
examination, and retained for presentation as the corpus delicti of the s
plant sources following the chain of custody of evidence.
C.
A. A. A.Noncompliance, under justifiable grounds, with the requireme
(I) of RA No. 9165, as amended, shall not render void and invalid such seiz
A.A over the items provided the integrity and the evidentiary value of the
.1. properly preserved by the apprehending officer/team.
9.
I.
A. A. A.Any justification or explanation in cases of noncompliance with
of Section 21 (1) of RA No. 9165, as amended, shall be clearly stat
A.A statements/affidavits of the apprehending/seizing officers, as well as th
.1. preserve the integrity and evidentiary value of the seized/confiscated item
10. record of coordination for operating units other than the PDEA pursuant
and (b), Article IX of the IRR of RA No. 9165 shall be presented.
O.
A. A. A.The chain of custody of evidence shall indicate the time and
the names of officers who marked, inventoried, photographed and sealed
A.A who took custody and received the evidence from one officer to another
.1. and further indicating the time and date every time the transfer of cust
11. evidence were made in the course of safekeeping until submitted to labora
forensic laboratory examination. The latter shall continue the chain as requ
B.5 below.
B. S.
B.
C. Laboratory Examination, Custody and Report Implementing
Paragraphs "b" and "c" of the IRR
W.
Y.
A. A. A.In any case, the chain of custody of the seized/confiscated items rece
from the apprehending officer/team, and examined in the forensic or crime labora
A shall be observed, where it shall document the chain of custody each time a spec
. is handled, transferred or presented in court until its disposal and every individu
B the chain of custody shall be identified following the laboratory control and cha
. custody form. (Emphasis supplied)
5
.
II
Here, the lapses of the police officers in the procedure for
handling seized sachets containing dangerous drugs are
numerous and unjustified such that there is reasonable doubt
whether the integrity of the corpus delicti was preserved.

People v. Kamal  summarized the links in the chain of custody


[87]

that must be established by the prosecution:


[F]irst, the seizure and marking, if practicable, of the illegal drug
recovered from the accused by the apprehending officer; second,
the turnover of the illegal drug seized by the apprehending officer
to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for
laboratory examination; and fourth, the turnover and submission
of the marked illegal drug seized from the forensic chemist to the
court.  (Emphasis in the original)
[88]

First, the place where the seized sachets were marked was not
established with certainty.

Accused-appellant alleges that the marking of the sachets of


shabu was not done at the place of arrest, but at the police
station.  She claims that there was a nearer police station where
[89]

the marking could have been done, specifically:


The marking of the alleged three (3) sachets of shabu with PI
Patricio's initials . . . was not made at the place of arrest but only
at the police station. This took place only after they have passed
by the barangay hall of Pinmaludpod, then the police's safehouse
located at Zone 5, Brgy. Pinmaludpod, then to the office of
S[pecial] O[perations] G[roup] in Lingayen, Pangasinan and have
brought the accused-appellant to the hospital for medical
examination. [90]

On the other hand, the testimonies of the police officers reveal


that they were confused as to the place where the seized sachets
were marked. PO1 Valle testified:
Q: What did you [sic] Patricio do after you turned over those plastic sachets?
A: He placed marking.

Q: What marking?
A: RDP. [91]

On the other hand, SPO1 Patricio testified:


Q: By the way, Mr. Witness, where were you when you marked these 3 plastic sachets?
A: In our office, sir. [92]

PO1 Valle's testimony seems to imply that the seized sachets


were marked at the place where the buy-bust operation was
conducted. On the other hand, SPO1 Patricio testified that the
seized sachets were marked at the police station.

The prosecution argues that the inconsistencies in the testimonies


of the police officers strengthen the case since these show that
the police officers were not rehearsed witnesses. In addition, the
place where the seized sachets were marked is not an essential
element in establishing that the sale of illegal drugs took place. [93]

Although it may be true that the place of marking is not an


essential element, the failure to establish with certainty where
the seized sachets were marked affects the integrity of the chain
of custody of the corpus delicti.

People v. Dahil  has discussed the purpose and importance of


[94]

marking evidence:
Marking after seizure is the starting point in the custodial link;
hence, it is vital that the seized contraband be immediately
marked because succeeding handlers of the specimens will use
the markings as reference. The marking of the evidence serves to
separate the marked evidence from the corpus of all other similar
or related evidence from the time they are seized from the
accused until they are disposed of at the end of the criminal
proceedings, this, preventing switching, planting or contamination
of evidence.  (Citations omitted)
[95]

Second, the police officers failed to have the confiscation receipts


signed by accused-appellant, by her representative or counsel, by
a representative from the media, the Department of Justice, or by
an elected public official.  The police officers likewise failed to
[96]

give a copy of the confiscation receipts to accused-appellant.


 The prosecution does not refute these procedural lapses but
[97]
argues that substantial compliance with the chain of custody rule
is sufficient,  citing People v. Rosialda:
[98] [99]

The failure of the prosecution to show that the police officers


conducted the required physical inventory and photograph of the
evidence confiscated pursuant to said guidelines, is not fatal and
does not automatically render accused-appellant's arrest illegal or
the items seized/confiscated from him inadmissible. Indeed, the
implementing rules offer some flexibility when a proviso added
that 'non-compliance with these requirements under justifiable
grounds, as long as the integrity and the evidentiary value of the
seized items are properly preserved by the apprehending
officer/team, shall not render void and invalid such seizures of
and custody over said items.' The same provision clearly states as
well, that it must still be shown that there exists justifiable
grounds and proof that the integrity and evidentiary value of the
evidence have been preserved.

....

. . . The chain of custody requirement performs the function of


ensuring that the integrity and evidentiary value of the seized
items are preserved, so much so that unnecessary doubts as to
the identity of the evidence are removed.

To be admissible, the prosecution must show by records or


testimony, the continuous whereabouts of the exhibit at least
between the time it came into possession of the police officers
and until it was tested in the laboratory to determine its
composition up to the time it was offered in evidence.
 (Emphasis in the original)
[100]

In this case, the integrity of the corpus delicti is in doubt because


the police officers cannot even state with certainty where the
seized sachets were marked.

Third, none of the witnesses testified that the seized sachets were
photographed. This leads us to believe that no photos of the
seized sachets were taken by the buy-bust team. [101]
Fourth, accused-appellant's arrest was not immediately entered
in the booking sheet.  SPO1 Patricio testified on cross-
[102]

examination:
Q: After the arrest, Mr. Witness, you said and identified a while ago that you ma
prepared by you?
A: It was prepared by me in the office, sir.

Q: At Lingayen?
A: Yes, sir.

Q: On what date was it prepared, Mr. Witness?


A: That date February 20.

Q: Showing to you the booking sheet you identified a while ago. Will you go over the s
date was it prepared, Mr. Witness, according to the booking sheet? What date?
A: 21 February 2008, sir.

Q: And the arrest was made on February 2008?


A: Yes, sir.

Q: You said a while ago that it was made on the same date the booking sheet was
same date?
A: No, sir, 21. It was placed on the booking sheet.

Q: So, it was made on the 21  not on February 20 (sic)?


st

A: Yes, sir.
[103]

The totality of the procedural lapses committed by the police


officers leads this Court to doubt the integrity of the corpus
delicti.

III

Accused-appellant argues that the non-coordination of the buy-


bust operation with the Philippine Drug Enforcement Agency is a
procedural lapse that overturns the presumption of regularity in
the performance of duties. [104]

The alleged non-coordination of the police officers with the


Philippine Drug Enforcement Agency did not render the buy-bust
operation invalid.
People v. Rebotazo  has discussed that Section 86  of Republic
[105] [106]

Act No. 9165 does not state any consequence in case a buy-bust
operation is not coordinated with the Philippine Drug Enforcement
Agency, thus:
It is a well-established rule of statutory construction that where
great inconvenience will result from a particular construction, or
great public interests would be endangered or sacrificed, or great
mischief done, such construction is to be avoided, or the court
ought to presume that such construction was not intended by the
makers of the law, unless required by clear and unequivocal
words.
As we see it, Section 86 is explicit only in saying that the PDEA
shall be the "lead agency" in the investigations and prosecutions
of drug-related cases. Therefore, other law enforcement bodies
still possess authority to perform similar functions as the PDEA as
long as illegal drugs cases will eventually be transferred to the
latter. Additionally, the same provision states that PDEA, serving
as the implementing arm of the Dangerous Drugs Board, "shall be
responsible for the efficient and effective law enforcement of all
the provisions on any dangerous drug and/or controlled precursor
and essential chemical as provided in the Act." We find much
logic in the Solicitor General's interpretation that it is only
appropriate that drugs cases being handled by other law
enforcement authorities be transferred or referred to the PDEA as
the "lead agency" in the campaign against the menace of
dangerous drugs. Section 86 is more of an administrative
provision. By having a centralized law enforcement body, i.e., the
PDEA, the Dangerous Drugs Board can enhance the efficacy of
the law against dangerous drugs. [107]

This Court has ruled in other cases  that nothing in Section 86


[108]

states that non-coordination with the PDEA renders the buy-bust


operation invalid.

IV

Mallillin v. People  emphasizes why proof of the chain of custody


[109]

in dangerous drugs cases must be strictly complied with:


A unique characteristic of narcotic substances is that they are not
readily identifiable as in fact they are subject to scientific analysis
to determine their composition and nature. The Court cannot
reluctantly close its eyes to the likelihood, or at least the
possibility, that at any of the links in the chain of custody over
the same there could have been tampering, alteration or
substitution of substances from other cases — by accident or
otherwise — in which similar evidence was seized or in which
similar evidence was submitted for laboratory testing. Hence, in
authenticating the same, a standard more stringent than that
applied to cases involving objects which are readily identifiable
must be applied, a more exacting standard that entails a chain of
custody of the item with sufficient completeness if only to render
it improbable that the original item has either been exchanged
with another or been contaminated or tampered with. [110]

The law recognizes that there may be instances when exact


compliance with the required procedure is not observed. Thus,
the Implementing Rules and Regulations of Section 21 of Republic
Act No. 9165, as amended, provides:
SECTION 1. Implementing Guidelines. — The PDEA shall take
charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals,
as well as instruments/paraphernalia and/or laboratory
equipment so confiscated, seized and/or surrendered, for proper
disposition in the following manner:

....

A.1. Noncompliance, under justifiable grounds, with the requirements of Section 21


9. amended, shall not render void and invalid such seizures and custody over
integrity and the evidentiary value of the seized items are properly preserve
officer/team.

A.1. Any justification or explanation in cases of noncompliance with the requirements


10. No. 9165, as amended, shall be clearly stated in the sworn statem
apprehending/seizing officers, as well as the steps taken to preserve the integrity
the seized/confiscated items. Certification or record of coordination for operatin
PDEA pursuant to Section 86 (a) and (b), Article IX of the IRR of RA No. 9165 shal
Here, the prosecution does not offer any explanation why there
were several procedural lapses. The prosecution's argument that
there is a presumption that "official duty has been regularly
performed"  will not suffice. Thus:
[111]

It needs no elucidation that the presumption of regularity in the


performance of official duty must be seen in the context of an
existing rule of law or statute authorizing the performance of an
act or duty or prescribing a procedure in the performance thereof.
The presumption, in other words, obtains only where nothing on
record suggests that the law enforcers involved deviated from the
standard conduct of official duty as provided for in the law.
Otherwise, where the official act in question is irregular on its
face, an adverse presumption arises as a matter of course.
 (Citations omitted)
[112]

People v. Garry dela Cruz  acquitted the accused as the


[113]

prosecution failed to establish the corpus delicti due to non-


compliance with the rule on the chain of custody:
Non-compliance is tantamount to failure in establishing identity of
corpus delicti, an essential element of the offenses of illegal sale
and illegal possession of dangerous drugs. By failing to establish
an element of these offenses, non-compliance will, thus,
engender the acquittal of an accused. [114]

Courts are reminded to exercise a higher level of scrutiny when


deciding cases involving miniscule amounts of dangerous drugs.
There should be stricter compliance with the rule on the chain of
custody when the amount of the dangerous drug is minute due to
the possibility that the seized item was tampered.  We reiterate
[115]

the words in People v. Holgado: [116]

It is lamentable that while our dockets are clogged with


prosecutions under Republic Act No. 9165 involving small-time
drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases
involving small fry who have been arrested for miniscule
amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of
drug cartels. Both law enforcers and prosecutors should realize
that the more effective and efficient strategy is to focus resources
more on the source and true leadership of these nefarious
organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05
gram of shabu under doubtful custodial arrangements will hardly
make a dent in the overall picture. It might in fact be distracting
our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these
cartels. [117]

WHEREFORE, premises considered, the Court of Appeals


Decision dated August 29, 2014 in CA-G.R. CR-H.C. No. 06167
is REVERSED and SET ASIDE. Accused-appellant Gloria Caiz y
Talvo is ACQUITTED for failure of the prosecution to prove her
guilt beyond reasonable doubt. She is ordered
immediately RELEASED from detention unless she is confined for
any other lawful cause.

Let a copy of this Decision be furnished to the Superintendent of


the Correctional Institution for Women, Mandaluyong City, for
immediate implementation. The Superintendent of the
Correctional Institution is DIRECTED to report to this Court,
within five (5) days from receipt of this Decision, the action she
has taken. Copies shall also be furnished to the Director General
of the Philippine National Police and to the Director General of the
Philippine Drug Enforcement Agency for their information.

The Regional Trial Court is DIRECTED to turn over the seized


sachet of methamphetamine hydrochloride to the Dangerous
Drugs Board for destruction in accordance with law.

SO ORDERED.

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


Mendoza, J., on official leave.

[1]
 Comprehensive Dangerous Drugs Act of 2002 (2002).
[2]
 Rollo p. 5, Court of Appeals Decision.

[3]
 Id.

[4]
 Id.

[5]
 Id. at 5-6.

[6]
 Id. at 6.

[7]
 CA rollo, p. 67, Brief for plaintiff-appellee.

[8]
 Rollo, p. 3.

[9]
 Id.

[10]
 CA rollo, p. 51, Regional Trial Court Decision.

[11]
 Id. at 51-52.

[12]
 Rollo, p. 4.

[13]
 Id.

[14]
 CA rollo, p. 51.

[15]
 Id.

[16]
 Id.

[17]
 Id.

[18]
 Rollo, p. 4.

[19]
 Id.

[20]
 CA rollo, p. 52.
[21]
 Id.

[22]
 Rollo, p. 4.

[23]
 CA rollo, p. 68.

[24]
 Rollo, p. 4.

[25]
 Id.

[26]
 CA rollo, p. 36, Brief for accused-appellant.

[27]
 Id.

[28]
 Id.

[29]
 Id. at 42.

[30]
 Id.

[31]
 Rollo, p. 4.

[32]
 Id.

[33]
 CA rollo, p. 36.

[34]
 Rollo, p. 6.

[35]
 Id.

[36]
 Id.

[37]
 Id.

[38]
 Id.

[39]
 CA rollo, p. 54.
[40]
 Id.

[41]
 Id.

[42]
 Id.

[43]
 Id.

[44]
 Id.

[45]
 Id. at 42.

[46]
 Id. at 37.

[47]
 Id. at 54.

[48]
 Id.

 Id. at 50-56. The case was docketed as Crim. Case Nos. U-


[49]

15454 & 15455 and was raffled to Branch 48 of the Regional Trial
Court of Urdaneta City, Pangasinan. The Decision was penned by
Presiding Judge Gonzalo P. Marata.

[50]
 Id. at 55.

[51]
 Id.

[52]
 Id. at 55-56.

[53]
 Id. at 56.

[54]
 Id. at 40.

 Implementing Rules and Regulations of Rep. Act No. 9165


[55]

(2002), sec. 86 provides:

Sec. 86. Transfer, Absorption, and Integration of All Operating


Units on Illegal Drugs into the PDEA and Transitory Provisions. -
. . . . 
 
(a) Relationship/Coordination between PDEA and Other Agencies. - The PDEA shall be t
the Act, while the PNP, the NBI and other law enforcement agencies shall continue
in support of the PDEA; Provided, that the said agencies shall, as far as practicab
anti-drug operations; Provided, further, that, in any case, said agencies shall
operations within twenty-four (24) hours from the time of the actual custody of t
and substances, as well as paraphernalia and transport equipment used in illegal
substances, and shall regularly update the PDEA on the status of the cases inv
Provided, furthermore, that raids, seizures, and other anti-drug operations condu
law enforcement agencies prior to the approval of this IRR shall be valid and auth
in this IRR shall deprive the PNP, the NBI, other law enforcement personnel and t
the Philippines (AFP) from effecting lawful arrests and seizures in consonance with
of the Rules of Court.

[56]
 CA rollo, p. 42.

[57]
 Id. at 43.

[58]
 Id.

[59]
 Id.

[60]
 Id. at 45.

[61]
 Id. at 46.

[62]
 Id. at 69-70.

[63]
 Id. at 78.

[64]
 Id. at 82.

[65]
 Id. at 78.

[66]
 Id.

[67]
 643 Phil. 712 (2010) [Per J. Velasco, Jr., First Division].
[68]
 Id. at 726-727.

 678 Phil. 831 (2011) [Per J. Leonardo-De Castro, First


[69]

Division]: "Furthermore, there is nothing in Republic Act No. 9165


or in its implementing rules, which requires each and everyone
who came into contact with the seized drags to testify in court. As
long as the chain of custody of the seized drag was clearly
established to have not been broken and the prosecution did not
fail to identify properly the drags seized, it is not indispensable
that each and every person who came into possession of the
drags should take the witness stand" (Id. at 857).

[70]
 CA rollo, p. 81.

 Rollo, pp. 2-15. The Decision was penned by Associate Justice


[71]

Danton Q. Bueser and concurred in by Associate Justices


Remedios A. Salazar-Fernando (Chair) and Ramon R. Garcia of
the Second Division, Court of Appeals, Manila.

[72]
 Id. at 13.

[73]
 Id. at 12.

[74]
 Id. at 14.

[75]
 CA rollo, p. 108.

[76]
 Id. at 111.

[77]
 Rollo, p. 1.

[78]
 Id. at 21-22.

[79]
 Id. at 23-25.

[80]
 Id. at 23.
[81]
 Id. at 28-31.

[82]
 Rep. Act No. 9165 (2002), sec. 5 provides:

SEC. 5. Sale, Trading, Administration, Dispensation, Delivery,


Distribution and Transportation of Dangerous Drugs and/or
Controlled Precursors and Essential Chemicals. — The penalty of
life imprisonment to death and a fine ranging from Five hundred
thousand pesos (P500,000.00) to Ten million pesos
(P10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver,
give away to another, distribute, dispatch in transit or transport
any dangerous drug, including any and all species of opium poppy
regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions.

The penalty of imprisonment ranging from twelve (12) years and


one (1) day to twenty (20) years and a fine ranging from One
hundred thousand pesos (P100,000.00) to Five hundred thousand
pesos (P500,000.00) shall be imposed upon any person, who,
unless authorized by law, shall sell, trade, administer, dispense,
deliver, give away to another, distribute, dispatch in transit or
transport any controlled precursor and essential chemical, or shall
act as a broker in such transactions. If the sale, trading,
administration, dispensation, delivery, distribution or
transportation of any dangerous drug and/or controlled precursor
and essential chemical transpires within one hundred (100)
meters from the school, the maximum penalty shall be imposed
in every case. For drug pushers who use minors or mentally
incapacitated individuals as runners, couriers and messengers, or
in any other capacity directly connected to the dangerous drugs
and/or controlled precursors and essential chemical trade, the
maximum penalty shall be imposed in every case. If the victim of
the offense is a minor or a mentally incapacitated individual, or
should a dangerous drug and/or a controlled precursor and
essential chemical involved in any offense herein provided be the
proximate cause of death of a victim thereof, the maximum
penalty provided for under this Section shall be imposed.
The maximum penalty provided for under this Section shall be
imposed upon any person who organizes, manages or acts as a
"financier" of any of the illegal activities prescribed in this
Section. The penalty of twelve (12) years and one (1) day to
twenty (20) years of imprisonment and a fine ranging from One
hundred thousand pesos (P100,000.00) to Five hundred thousand
pesos (P500,000.00) shall be imposed upon any person, who acts
as a "protector/coddler" of any violator of the provisions under
this Section.

 People v. Casacop y de Castro, G.R. No. 208685, March 9,


[83]

2015, 752 SCRA 151, 161 [Per J. Leonen, Second Division], citing


People v. Almodiel, 694 Phil. 449, 460 (2012) [Per J. Carpio,
Second Division].

 People v. Enumerable y De Villa, G.R. No. 207993, January 21,


[84]

2015, 747 SCRA 495, 506-507 [Per J. Carpio, Second Division].

 An Act to Further Strengthen the Anti-Drug Campaign of the


[85]

Government, Amending for the Purpose Section 21 of Republic


Act No. 9165, Otherwise known as the "Comprehensive
Dangerous Drugs Act of 2002" (2014).

 The italicized phrases are the amendments introduced by Rep.


[86]

Act No. 10640.

[87]
 624 Phil. 289 (2010) [Per J. Brion, Second Division].

[88]
 Id. at 304.

 Accused-appellant did not specify whether the markings were


[89]

done at the police station in Lingayen or at the police station in


Urdaneta.

[90]
 CA rollo, p. 42.

[91]
 Id.
[92]
 Id.

[93]
 Id. at 78.

 G.R. No. 212196, January 12, 2015, 745 SCRA 221 [Per J.
[94]

Mendoza, Second Division].

[95]
 Id. at 241.

[96]
 CA rollo, p. 43.

[97]
 Id.

[98]
 Id. at 79.

[99]
 643 Phil. 712 (2010) [Per J. Velasco, Jr., First Division].

 Id. at 726-727, citing People v. Rivera, 590 Phil. 894, 913-914


[100]

(2008) [Per J. Chico-Nazario, Third Division].

[101]
 CA rollo, pp. 51-54.

[102]
 Id. at 43.

[103]
 Id. at 43-44.

 Id. at 41-42. Coordination with the Philippine Drug


[104]

Enforcement Agency is a requirement under Section 86 of the


Implementing Rules and Regulations of Republic Act No. 9165, as
amended.

[105]
 711 Phil. 150 (2013) [Per C.J. Sereno, First Division].

[106]
 Rep. Act No. 9165 (2002), sec. 86 provides:

Section 86. Transfer, Absorption, and Integration of All Operating


Units on Illegal Drugs into the PDEA and Transitory Provisions. —
The Narcotics Group of the PNP, the Narcotics Division of the NBI
and the Customs Narcotics Interdiction Unit are hereby abolished;
however they shall continue with the performance of their task as
detail service with the PDEA, subject to screening, until such time
that the organizational structure of the Agency is fully operational
and the number of graduates of the PDEA Academy is sufficient to
do the task themselves: Provided, That such personnel who are
affected shall have the option of either being integrated into the
PDEA or remain with their original mother agencies and shall,
thereafter, be immediately reassigned to other units therein by
the head of such agencies. Such personnel who are transferred,
absorbed and integrated in the PDEA shall be extended
appointments to positions similar in rank, salary, and other
emoluments and privileges granted to their respective positions in
their original mother agencies.

The transfer, absorption and integration of the different offices


and units provided for in this Section shall take effect within
eighteen (18) months from the effectivity of this Act: Provided,
that personnel absorbed and on detail service shall be given until
five (5) years to finally decide to join the PDEA. Nothing in this
Act shall mean a diminution of the investigative powers of the
NBI and the PNP on all other crimes as provided for in their
respective organic laws: Provided, however, That when the
investigation being conducted by the NBI, PNP or any ad hoc anti-
drug task force is found to be a violation of any of the provisions
of this Act, the PDEA shall be the lead agency. The NBI, PNP or
any of the task force shall immediately transfer the same to the
PDEA: Provided, further, that the NBI, PNP and the Bureau of
Customs shall maintain close coordination with the PDEA on all
drug related matters.

 People v. Rebotazo, 711 Phil. 150, 177-178 (2013) [Per C.J.


[107]

Sereno, First Division], citing People v. Sta. Maria, 545 Phil. 520;


531-532 (2007) [Per J. Garcia, First Division].

 See People v. Salvador, 726 Phil. 389, 403-405 (2014) [Per J.


[108]

Del Castillo, Second Division]; People v. Adrid, G.R. No. 201845,


March 6, 2013, 692 SCRA 683, 703-704 [Per J. Velasco, Jr., Third
Division]; People v. Mondejar, 675 Phil. 91, 107 (2011) [Per J.
Sereno, Second Division]; People v. Roa, 634 Phil. 437, 448-449
(2010) [Per J. Perez, Second Division].

[109]
 576 Phil. 576 (2008) [Per J.Tinga, Second Division].

[110]
 Id. at 588-589.

 CA rollo, p.73. RULES OF COURT, Rule 131, sec. 3(m)


[111]

provides:

SEC. 3. Disputable presumptions. — The following presumptions


are satisfactory if uncontradicted, but may be contradicted and
overcome by other evidence:

....

(m) That official duty has been regularly performed[.]

 People v. Gutierrez, 614 Phil. 285, 298 (2009) [Per J. Carpio


[112]

Morales, Second Division].

 G.R. No. 205821, October 1, 2014, 737 SCRA 486 [Per J.


[113]

Leonen, Second Division].

[114]
 Id. at 496.

 Mallillin v. People, 576 Phil. 576, 588 (2008) [Per J. Tinga,


[115]

Second Division].

 G.R. No. 207992, August 11, 2014, 732 SCRA 554 [Per J.
[116]

Leonen, Third Division].

[117]
 Id. at 577.
Source: Supreme Court E-Library | Date created: March 22, 2018
This page was dynamically generated by the E-Library Content Management System

Supreme Court E-Library

775 Phil. 169


SECOND DIVISION

[ G.R. No. 192947, December 09, 2015


]
MELANIE E. DE OCAMPO, PETITIONER, VS. RPN-
9/RADIO PHILIPPINES NETWORK, INC.,
RESPONDENT.DECISION

LEONEN, J.:

Unlike an appeal, a pending petition for certiorari shall not stay


the judgment or order that it assails. Unless a restraining order or
writ of preliminary injunction is issued, the assailed decision
lapses into finality. Thereafter, it can no longer be disturbed,
altered, or modified, and execution may ensue.

This Petition for Review on Certiorari, filed under Rule 45 of the


1997 Rules of Civil Procedure, prays that the assailed March 5,
2010 Decision  and July 8, 2010 Resolution  of the Court of
[1] [2]

Appeals in CA-G.R. SP No. 108457 be reversed and set aside. The


Petition further prays that the recomputation that petitioner
Melanie De Ocampo (De Ocampo) sought in the monetary award
she had already received be permitted in order that she may
receive additional backwages, separation pay, and 13th month
pay, as well as 12% interest per annum. [3]
In its assailed March 5, 2010 Decision, the Court of Appeals
dismissed De Ocampo's Petition for Certiorari and affirmed the
September 30, 2008 Decision  and December 15, 2008
[4]

Resolution  of the National Labor Relations Commission. In its


[5]

assailed July 8, 2010 Resolution, the Court of Appeals denied De


Ocampo's Motion for Reconsideration. [6]

For its part, the National Labor Relations Commission affirmed


the December 13, 2007  Order of Executive Labor Arbiter Manuel
[7]

M. Manansala (Executive Labor Arbiter Manansala), which denied


De Ocampo's Motion to Recompute the Monetary Award with
Motion to Issue Alias Writ of Execution. [8]

De Ocampo was the complainant in a case for illegal dismissal,


unpaid salaries, damages, and attorney's fees against respondent
Radio Philippines Network, Inc. (RPN-9) and several RPN-9
officers, namely: President Cerge Remonde; News and Current
Affairs Manager Rodolfo Lacuna; and Human Resources Manager
Lourdes Angeles. This case was docketed as NLRC-NCR Case No.
00-05-05 857-2003. [9]

On May 12, 2004, Executive Labor Arbiter Manansala rendered


the Decision  finding De Ocampo to have been illegally
[10]

dismissed. RPN-9 was ordered to pay her separation pay in lieu of


reinstatement and full backwages. The impleaded officers of RPN-
9 were absolved from liability. The dispositive portion of this
Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring respondent Radio Philippines Network, Inc. (RPNI)


also known as RPN-9 guilty of illegal dismissal for the reasons
above-discussed. Consequently, the aforenamed respondent is
hereby directed to pay complainant Melanie De Ocampo the sum
of P206,433.50 and P109,200.00 representing her full-backwages
and separation pay, respectively, for the reasons above-
discussed, and as computed by the Examination and Computation
Unit of this Arbitration Branch (See Annex "A", of this Decision).
2. Directing respondent Radio Philippines Network, Inc. (RPNI)
also known as RPN-9 to pay complainant Melanie De Ocampo the
sum of P54,600.00 representing her 13th Month Pay as compjted
[sic] by the Examination and Computation Unit of this Arbitration
Branch (See Annex "A", of this Arbitration Branch [sic]).

3. Directing the aforenamed respondent to pay complainant


Melanie De Ocampo ten (10%) percent attorney's fees based on
the total monetary award for having been forced to prosecute
and/or litigate the instant case/complaint by hiring the services of
legal counsel [sic].

4. Dismissing the claims for Holiday Pay and Service Incentive


Leave Pay for lack of merit for the reasons above-cited.

5. Dismissing the other money claims and/or charges of


complainant Melanie De Ocampo for lack of factual and legal
basis.

6. Dismissing the charges against individual respondents Cerge


Remonde, Rodolfo Lacuna, and Lourdes Angeles, as President,
Manager of News and Current Affairs, and Manager of Human
Resources, respectively, of respondent RPN-9 for lack of merit.

SO ORDERED. [11]

In its Decision  dated February 28, 2006, the National Labor


[12]

Relations Commission affirmed the May 12, 2004 Decision of


Executive Labor Arbiter Manansala. In the Resolution dated April
28, 2006, RPN-9's Motion for Reconsideration was denied. [13]

RPN-9 then filed before the Court of Appeals a Petition for


Certiorari with prayer for temporary restraining order and/or
preliminary injunction. The Petition was docketed as C.A.-G.R.
SP. No. 95229. [14]

In the Resolution dated December 11, 2006, the Court of Appeals


issued a temporary restraining order preventing the National
Labor Relations Commission from enforcing its ruling for a period
of 60 days. The sixty-day period lapsed without a writ of
preliminary injunction being subsequently issued by the Court of
Appeals.  Accordingly, the ruling of Executive Labor Arbiter
[15]

Manansala, as affirmed by the National Labor Relations


Commission, became final and executory on May 27, 2006.
 Entry of Judgment was issued on July 19, 2006.
[16] [17]

De Ocampo then filed a Motion for Issuance of Writ of Execution.


 In the Order  dated October 30, 2006, the National Labor
[18] [19]

Relations Commission granted De Ocampo's Motion. Conformably,


a Writ of Execution  was issued on May 7, 2007. This Writ
[20]

directed the Deputy Sheriff to collect from RPN-9 the total


amount of P410,826.85. [21]

This amount was fully satisfied through Banco de Oro Check No.
0087385, which was deposited at the National Labor Relations
Commission Cashier's Office on August 22, 2007.  On the [22]

following day, or on August 23, 2007, De Ocampo filed a Motion


to Release the amount of P410,826.85. [23]

The full satisfaction of the original award notwithstanding, De


Ocampo filed a Motion to Recompute the Monetary Award with
Motion to Issue Alias Writ of Execution  on September 11, 2007.
[24]

In the Motion, De Ocampo sought the increase of the monetary


award given her. Specifically, she sought the payment of an
additional amount of P518,700.00 representing additional
backwages, separation pay, and 13th month pay. She also
prayed for an additional amount of P53,188.83, representing
12% interest per annum on the original monetary award. [25]

In the Order  dated December 13, 2007, Executive Labor Arbiter


[26]

Manansala denied De Ocampo's Motion to Recompute the


Monetary Award with Motion to Issue Alias Writ of Execution on
the ground that the May 12, 2004 Decision fixing the amounts of
the monetary award due to De Ocampo had become final and
executory.
In its September 30, 2008 Decision,  the National Labor
[27]

Relations Commission sustained Executive Labor Arbiter


Manansala's December 13, 2007 Decision.  In its December 15,
[28]

2008 Resolution,  the National Labor Relations Commission


[29]

denied De Ocampo's Motion for Reconsideration.

In its assailed March 5, 2010 Decision,  the Court of Appeals


[30]

dismissed De Ocampo's Petition for Certiorari and sustained the


September 30, 2008 Decision and December 15, 2008 Resolution
of the National Labor Relations Commission. In its assailed July 8,
2010 Resolution,  the Court of Appeals denied De Ocampo's
[31]

Motion for Reconsideration.

Aggrieved, De Ocampo filed the present Petition  insisting that


[32]

she remains entitled to additional monetary awards, thereby


warranting a recomputation of the amount due to her.

For resolution is the sole issue of whether petitioner Melanie De


Ocampo may still seek a recomputation of and an increase in the
monetary award given her.

She cannot.

It is basic that a judgment can no longer be disturbed, altered, or


modified as soon as it becomes final and executory;  "[n]othing [33]

is more settled in law."  Once a case is decided with finality, "the


[34]

controversy is settled and the matter is laid to


rest."  Accordingly, a final judgment may no longer be modified
[35]

in any respect "even if the modification is meant to correct what


is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made
by the court rendering it or by the highest court of the
land."  Once a judgment becomes final, the court or tribunal
[36]

loses jurisdiction, and any modified judgment that it issues, as


well as all proceedings taken for this purpose, is null and void. [37]
This elementary rule finds basis in "public policy and sound
practice that at the risk of occasional error, the judgment of
courts and the award of quasi-judicial agencies must become final
at some definite date fixed by law."  Basic rationality dictates
[38]

that there must be an end to litigation. Any contrary posturing


renders justice inutile and reduces to futility the winning party's
capacity to benefit from a resolution of the case. [39]

This rule, however, does admit of exceptions. As this court


explained in Sacdalan v. Court of Appeals: [40]

The only exceptions to the general rule are the correction of


clerical errors, the so-called nunc pro tunc entries which cause no
prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision rendering
its execution unjust and inequitable.  (Citations omitted)
[41]

Consistent with the principle of finality of judgments, it follows


that no appeal may be taken from orders of execution of
judgments. [42]

II

As basic as the principle of finality of judgments is the rule that


filing a petition for certiorari under Rule 65 of the 1997 Rules of
Civil Procedure "shall not interrupt the course of the principal
case unless a temporary restraining order or a writ of preliminary
injunction has been issued against the public respondent from
further proceeding in the case."  Unlike an appeal, a pending
[43]

petition for certiorari shall not stay the judgment or order that it
assails.

The 2005 Rules of Procedure of the National Labor Relations


Commission, which were in effect when the material incidents of
this case occurred, explicitly and specifically makes this principle
applicable to decisions of labor arbiters and of the National Labor
Relations Commission. Rule XI, Section 10 of the 2005 Rules of
Procedure of the National Labor Relations Commission states:
SECTION 10. Effect of Petition for Certiorari on Execution. — A
petition for certiorari with the Court of Appeals or the Supreme
Court shall not stay the execution of the assailed decision unless
a restraining order is issued by said courts.
In contrast, Rule XI, Section 9 states the following with respect to
appeals:
SECTION 9. Effect of Perfection of Appeal on Execution. — The
perfection of an appeal shall stay the execution of the decision of
the Labor Arbiter on appeal, except execution for reinstatement
pending appeal.
Accordingly, where no restraining order or writ of preliminary
injunction is issued, the assailed decision lapses into finality.
Thereafter, execution may ensue. As Rule XI, Section 1 of the
2005 Rules of Procedure of the National Labor Relations
Commission states:
SECTION 1. Execution Upon Finality of Decision or Order. — a) A
writ of execution may be issued motu proprio or on motion, upon
a decision or order that finally disposes of the action or
proceedings after the parties and their counsels or authorized
representatives are furnished with copies of the decision or order
in accordance with these Rules, but only after the expiration of
the period to appeal if no appeal has been filed, as shown by the
certificate of finality. If an appeal has been filed, a writ of
execution may be issued when there is an entry of judgment as
provided for in Section 14 of Rule VII.

b) No motion for execution shall be entertained nor a writ of


execution be issued unless the Labor Arbiter or the Commission is
in possession of the records of the case which shall include an
entry of judgment if the case was appealed; except that, as
provided for in Section 14 of Rule V and Section 6 of this Rule,
and in those cases where partial execution is allowed by law, the
Labor Arbiter shall retain duplicate original copies of the decision
to be implemented and proof of service thereof for the purpose of
immediate enforcement.
The pivotal facts of this case are also settled. After the filing
before the Court of Appeals of RPN-9's Petition for Certiorari, the
Court of Appeals issued a temporary restraining order preventing,
for a period of 60 days, the National Labor Relations Commission
from enforcing its ruling. However, the sixty-day period lapsed
without a writ of preliminary injunction being subsequently issued
by the Court of Appeals.  Thus, on May 27, 2006, the ruling of
[44]

Executive Labor Arbiter Manansala, as affirmed by the National


Labor Relations Commission, became final and executory on May
27, 2006.  Conformably, Entry of Judgment was made on July
[45]

19, 2006. [46]

None of the four exceptions mentioned in Sacdalan v. Court of


Appeals  that warrant a modification of judgments that have
[47]

attained finality is availing in this case.

What petitioner seeks is not a mere clerical correction. Rather,


she seeks an overhaul of Executive Labor Arbiter Manansala's
Decision in order that it may award her a total additional sum of
P571,888.83 representing backwages, separation pay, 13th
month pay, and accrued interest. Petitioner does not merely seek
an entry into the records of acts done but not entered (i.e., nunc
pro tunc entries). Petitioner does not claim that Executive Labor
Arbiter Manansala's Decision is void, only that its computation of
monetary awards is inadequate. Neither does petitioner allege
that certain events transpired after May 27, 2006 rendering
Executive Labor Arbiter Manansala's Decision unjust or
inequitable.

The Decision having attained finality, and as this case does not
fall under any of the recognized exceptional circumstances, there
remains no opening for revisiting, amending, or modifying
Executive Labor Arbiter Manansala's judgment.

III

Not only is Executive Labor Arbiter Manansala's Decision binding


and conclusive as a matter of procedural law; it is as binding and
conclusive on petitioner because of both her inaction and her own
actions. She is estopped from seeking a modification of Executive
Labor Arbiter Manansala's Decision.
Following the rendition of Executive Labor Arbiter Manansala's
Decision on May 12, 2004, petitioner did not file a motion for
reconsideration, pursue an appeal before the National Labor
Relations Commission, file a petition for certiorari before any
court, or otherwise assail the whole or any part of the Decision.
This judgment, as well as its execution, was stayed not by
petitioner's actions but by those of respondent RPN-9. RPN-9 filed
an appeal before the National Labor Relations Commission and,
following the denial of this appeal, filed a Rule 65 Petition before
the Court of Appeals, where it sought preliminary injunctive relief.

By her inaction, petitioner made it appear that as far as she was


concerned, Executive Labor Arbiter Manansala's Decision should
have stood as it did. Her inaction revealed that she saw no reason
for the same Decision to be revisited or reconsidered by
Executive Labor Arbiter Manansala himself, by the National Labor
Relations Commission, or by any court. She failed to act in a
timely manner—that is, by pursuing the appropriate remedy
within the duration permitted by the rules. She failed "to assert a
right within a reasonable time, [and this] warrant[ed] a
presumption that the party entitled to assert it [i.e., petitioner]
either has abandoned it or declined to assert it."  Stated [48]

otherwise, to petitioner may be imputed estoppel by laches.

Moreover, as soon as Entry of Judgment was made, petitioner


filed a Motion for Issuance of Writ of Execution.  After the Writ of
[49]

Execution was satisfied and the check representing payment of


the monetary award was deposited with the Cashier's Office of
the National Labor Relations Commission, petitioner lost no time
in seeking to have the monetary award in her hands: just a day
after deposit was made, petitioner was quick to file a Motion to
Release the amount of P410,826.85. [50]

Accordingly, petitioner's willful acceptance of the judgment


rendered by Executive Labor Manansala is not only something
that may be implied from her omission or inaction. Rather, it is
something explicitly affirmed by her own motions and
submissions. Whatever doubt there was, if any, as to her
concession to the monetary award given her was dispelled by the
positive assertions and pleas for relief that petitioner herself
made.

No recourse, whether in law or equity, leaves room for petitioner


to avail herself of the modifications she seeks. The most basic
legal principles dictate that Executive Labor Arbiter Manansala's
Decision—in all its aspects—has long attained finality and may no
longer be revisited. Principles of equity require that petitioner be
bound by her own omissions and declarations.

WHEREFORE, the Petition for Review on Certiorari is DENIED.


The assailed March 5, 2010 Decision and July 8, 2010 Resolution
of the Court of Appeals Former Sixth Division in CA-G.R. SP No.
108457 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Perez,  and Mendoza, JJ.,


*

concur.

 Designated acting member per S.O. No. 2301 dated December


*

1, 2015.

 Rollo, pp. 33-39. The Decision was penned by Associate Justice


[1]

Estela M. Perlas-Bernabe (now Associate Justice of this court) and


concurred in by Associate Justices Rebecca De Guia-Salvador and
Michael P. Elbinias of the Sixth Division, Court of Appeals Manila.

 Id. at 40. The Resolution was penned by Associate Justice


[2]

Estela M. Perlas-Bernabe (now Associate Justice of this court) and


concurred in by Associate Justices Rebecca De Guia-Salvador and
Michael P. Elbinias of the Former Sixth Division, Court of Appeals
Manila.

[3]
 Id. at 29, Petition for Review on Certiorari.
 Id. at 207-215. The Decision was penned by Presiding
[4]

Commissioner Lourdes C. Javier and concurred in by


Commissioners Gregorio O. Bilog III and Pablo C. Espiritu, Jr.

 Id. at 217-218. The Resolution was penned by Presiding


[5]

Commissioner Lourdes C. Javier and concurred in by


Commissioners Gregorio O. Bilog III and Pablo C. Espiritu, Jr.

[6]
 Id. at 40.

[7]
 Id. at 95-101.

[8]
 Id. at 79-89.

[9]
 Id. at 33-34, Court of Appeals Decision dated March 5, 2010.

[10]
 Id. at 41-54.

[11]
 Id. at 53-54.

 Id. at 56-70. The Decision was penned by Presiding


[12]

Commissioner Lourdes C. Javier and concurred in by


Commissioner Tito F. Genilo of the Third Division. Commissioner
Romeo C. Lagman took no part.

[13]
 Id. at 35, Court of Appeals Decision dated March 5, 2010.

[14]
 Id.

[15]
 Id.

[16]
 Id. at 71.

[17]
 Id.

 Id. at 72, National Labor Relations Commission Order dated


[18]

October 30, 2006.


[19]
 Id. at 72-73.

[20]
 Id. at 74-77.

[21]
 Id. at 77.

 Id. at 35, Court of Appeals Decision dated March 5, 2010, and


[22]

78, Motion to Release.

[23]
 Id. at 78.

[24]
 Id. at 79-89.

 Id. at 87, Motion to Recompute the Monetary Award with


[25]

Motion to Issue Alias Writ of Execution.

[26]
 Id. at 95-101.

[27]
 Id. at 207-215.

 Id. at 214, National Labor Relations Commission Decision dated


[28]

September 30, 2008.

[29]
 Id. at 217-218.

[30]
 Id. at 33-39.

[31]
 Id. at 40.

[32]
 Id. at 11-29.

 Industrial Timber Corp. v. Ababon, 515 Phil. 805, 816 (2006)


[33]

[Per J. Ynares-Santiago, First Division].

 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551,
[34]

560 (2006) [Per J. Ynares-Santiago, First Division].


 Siy v. National Labor Relations Commission, 505 Phil. 265, 273
[35]

(2005) [Per J. Corona, Third Division].

 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551,
[36]

560 (2006) [Per J. Ynares-Santiago, First Division].

 Equatorial Realty Development v. Mayfair Theater, Inc., 387


[37]

Phil. 885, 896 (2000) [Per J. Pardo, First Division].

 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551,
[38]

560 (2006) [Per J. Ynares-Santiago, First Division].

[39]
 Id.

 Sacdalan v. Court of Appeals, G.R. No. 128967, May 20, 2004,


[40]

428 SCRA 586 [Per J. Austria-Martinez, Second Division].

[41]
 Id. at 599.

 1997 RULES OF CIV. PROC., Rule 41, sec. 1(f) states:


[42]

Section 1. Subject of appeal. — An appeal may be taken from a


judgment or final order that completely disposes of the case, or
of a particular matter therein when declared by these Rules to be
appealable.

No appeal may be taken from:

....

(f) An order of execution;


 RULES OF COURT, Rule 65, sec. 7.
[43]

[44]
 Rollo, p. 35.

[45]
 Id. at 71.

[46]
 Id.
 Sacdalan v. Court of Appeals, G.R. No. 128967, May 20, 2004,
[47]

428 SCRA 586 [Per J. Austria-Martinez, Second Division].

 Philippine National Construction Corporation v. National Labor


[48]

Relations Commission, 366 Phil. 678, 686 (1999) [Per J. Puno,


Second Division].

[49]
 Rollo, p. 72

[50]
 Id. at 78.

Source: Supreme Court E-Library | Date created: November 09, 2017


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Supreme Court E-Library

764 Phil. 642


SECOND DIVISION

[ G.R. No. 208792, July 22, 2015 ]


BANK OF THE PHILIPPINE ISLANDS, PETITIONER,
VS. SPOUSES ROBERTO AND TERESITA GENUINO,
RESPONDENTS.DECISION

LEONEN, J.:

A.M. No. 03-1-09-SC  does not remove the plaintiff's duty under
[1]

Rule 18, Section 1 of the Rules of Court to promptly move ex-


parte to set his or her case for pre-trial after the last pleading has
been served and filed.  While pre-trial promotes efficiency in
[2]
court proceedings and aids in decongesting dockets, A.M. No. 03-
1-09-SC did not give sole burden on the courts to set cases for
pre-trial.

A.M. No. 03-1-09-SC, providing that "[wjithin five (5) days from
date of filing of the reply, the plaintiff must promptly move ex
parte that the case be set for pre-trial conference [and] [i]f the
plaintiff fails to file said motion within the given period, the
Branch COC shall issue a notice of pre-trial,"  must be read
[3]

together with Rule 17, Section 3 of the Rules of Court on


dismissals due to plaintiff's fault. Plaintiff should thus sufficiently
show justifiable cause for its failure to set the case for pre-trial;
otherwise, the court can dismiss the complaint outright.

The trial court dismissed without prejudice the Bank of the


Philippine Islands' Complaint against Spouses Roberto and
Teresita Genuino for failure to prosecute under Rule 17, Section 3
of the Rules of Court.  The Bank of the Philippine Islands
[4]

concedes that dismissal is justified under the Rules of Court, but


submits that dismissal for non-filing of a Motion to Set Case for
Pre-trial Conference is no longer proper beginning August 16,
2004 when A.M. No. 03-1-09-SC was issued. [5]

This Petition  assails the Court of Appeals February 26, 2013


[6]

Decision  that dismissed Bank of the Philippine Islands' Petition


[7]

for Certiorari, and August 13, 2013 Resolution  that denied [8]

reconsideration. [9]

On October 6, 2009, Bank of the Philippine Islands filed a


Complaint for Sum of Money/Judgment on the Deficiency against
the Spouses Genuino before the Regional Trial Court of Makati. [10]

The Complaint alleged that on May 27, 1997 and May 11, 1999,
the Spouses Genuino executed a Deed of Real Estate Mortgage
over a 10,000-square-meter  parcel of land in General Trias,
[11]

Cavite City, together with its improvements, to secure loans and


other credit accommodations obtained or to be obtained from the
bank.[12]
The Spouses Genuino availed themselves of this credit
accommodation in the amount of P8,840,000.00 as evidenced by
various promissory notes. They defaulted in their installment
payments, and their failure to pay despite demand resulted in the
entire outstanding balance of the loan, plus interests and other
charges, becoming due and demandable. [13]

On April 18, 2004, Bank of the Philippine Islands foreclosed the


mortgaged property after due notice and publication, and sold it
to the highest bidder at the public auction for P2,900,000.00. A
deficiency of P27,744,762.49 remained after the tendered bid
price had been deducted from the Spouses Genuino's total
obligation of P30,644,762.49. The Spouses Genuino failed to pay
the deficiency despite written demands by the bank. [14]

Thus, Bank of the Philippine Islands filed the Complaint. It prayed


for the reduced amount of P10,626,121.69, waiving partly the
stipulated interest, and waiving totally the late payment charges
and attorney's fees.[15]

On November 25, 2009, the Spouses Genuino filed their Answer


with Special and Affirmative Defenses. They argued nullity of the
auction sale for lack of notice or demand made to them before
and after the alleged foreclosure. Even assuming the auction sale
was valid, they argued that Bank of the Philippine Islands waived
the remedy of collection when it chose to foreclose the security.
The Spouses Genuino included a Compulsory Counterclaim for
moral damages, exemplary damages, and attorney's fees. [16]

On December 2, 2009, Bank of the Philippine Islands received a


copy of the Answer and opted not to file any Reply. [17]

The Regional Trial Court, in its Order  dated May 17, 2010,
[18]

dismissed the case without prejudice for lack of interest to


prosecute under Rule 17, Section 3 of the Rules of Court. The
Spouses Genuino's counterclaim was also dismissed without
prejudice pursuant to Rule 17, Section 4 of the Rules of Court. [19]
In its Motion for Reconsideration,  Bank of the Philippine Islands
[20]

explained that the case folder was misplaced in the


office bodega together with the records of terminated cases. The
assigned secretary of counsel had already left the firm, and the
bank could no longer seek an explanation for the misfiling of the
case after it had been unloaded by previous counsel. The bank
argued for the application of A.M. No. 03-1-09-SC. The court
denied reconsideration. [21]

The Court of Appeals, in its Decision dated February 26, 2013,


denied due course and dismissed Bank of the Philippine Islands'
Petition for Certiorari.  It found no grave abuse of discretion by
[22]

the trial court in dismissing without prejudice the bank's


Complaint. [23]

Hence, Bank of the Philippine Islands filed this Petition.

The bank submits that with the issuance of A.M. No. 03-1-09-SC,
"it is no longer proper to dismiss a case for failure to prosecute
starting August 16, 2004 due to the non-filing by the plaintiff of a
Motion to Set Case for Pre Trial Conference but instead the Clerk
of Court should issue an Order setting the case for Pre Trial
Conference."  It quotes Espiritu, et al. v. Lazaro, et al.  that
[24] [25]

"clarified the application of [A.M.] No. 03-1-09[-SC] to cases filed


after its effectivity on August 16, 2004[.]"  Cases should also be
[26]

resolved based on its merits and not on mere technicalities. [27]

The Spouses Genuino counter that "[w]hile the clerk of court has
the duty to include a case in the trial calendar after the issues are
joined and to fix the date for trial as well as to notify the parties
of the same, plaintiff may not rely upon said duty of the clerk,
nor is it relieved of its own duty to prosecute the case diligently,
calling if necessary the attention of the court to the need of
putting the case back to its calendar if the court, because of
numerous cases, has neglected to attend thereto."  They [28]

cite Olave v. Mistas  where the trial court dismissed the case


[29]
with prejudice when plaintiff failed to move for pre-trial after
more than three months. [30]

The Spouses Genuino submit that "notwithstanding A.M. No. 03-


1-09-SC it is the duty of the plaintiff to prosecute its action within
a reasonable length of time and the failure to do so would justify
the dismissal of the case." [31]

The issue for resolution is whether the trial court acted with grave
abuse of discretion in dismissing the case without prejudice on
the ground of failure to prosecute when Bank of the Philippine
Islands failed to file a motion to set case for pre-trial conference.

We deny this Petition by Bank of the Philippine Islands.

The trial court dismissed the Complaint pursuant to Rule 17,


Section 3 of the Rules of Court. This dismissal operated as an
adjudication on the merits:
SEC. 3. Dismissal due to fault of plaintiff. — If, for no justifiable
cause, the plaintiff fails to appear on the date of the presentation
of his evidence in chief on the complaint, or to prosecute his
action for an unreasonable length of time, or to comply with
these Rules or any order of the court, the complaint may be
dismissed upon motion of the defendant or upon the court's own
motion without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate
action. This dismissal shall have the effect of an
adjudication upon the merits, unless otherwise declared
by the court. (Emphasis supplied)
A.M. No. 03-1-09-SC entitled Re: Proposed Rule on Guidelines to
be Observed by Trial Court Judges and Clerks of Court in the
Conduct of Pre-Trial and Use of Deposition-Discovery
Measures took effect on August 16, 2004. This provides that:
I. Pre-Trial
A. Civil Cases

1....
....

Within five (5) days from date of filing of the reply, the plaintiff
must promptly move ex parte that the case be set for pre-trial
conference. If the plaintiff fails to file said motion within
the given period, the Branch COC shall issue a notice of
pre-trial.  (Emphasis supplied, citations omitted)
[32]

Respondents Spouses Genuino cannot rely on Olave v. Mistas as


this involved a trial court Order dated October 20, 1997
dismissing the Complaint with prejudice.  The facts in Olave took
[33]

place before the effectivity of A.M. No. 03-1-09-SC on August 16,


2004.

Espiritu, et al. v. Lazaro, et al. quoted by petitioner Bank of the


Philippine Islands "clarified the application of [A.M.] No. 03-l-09[-
SC] to cases filed after its effectivity on August 16, 2004":[34]

In every action, the plaintiffs are duty-bound to prosecute their


case with utmost diligence and with reasonable dispatch to enable
them to obtain the relief prayed for and, at the same time, to
minimize the clogging of the court dockets. Parallel to this is the
defendants' right to have a speedy disposition of the case filed
against them, essentially, to prevent their defenses from being
impaired.

Since the incidents occurred prior to the effectivity of A.M.


No. 03-1-09-SC on August 16, 2004, the guidelines stated
therein should not be made applicable to this case. Instead,
the prevailing rule and jurisprudence at that time should be
utilized in resolving the case.

Section 1 of Rule 18 of the Rules of Court imposes upon the


plaintiff the duty to set the case for pre-trial after the last
pleading is served and filed. Under Section 3 of Rule 17, failure to
comply with the said duty makes the case susceptible to dismissal
for failure to prosecute for an unreasonable length of time or
failure to comply with the rules.  (Emphasis supplied, citation
[35]

omitted)
Nevertheless, nowhere in the text of A.M. No. 03-1-09-SC does it
remove the plaintiff's duty under Rule 18, Section 1 of the Rules
of Court to set the case for pre-trial after the last pleading has
been served and filed. Nowhere does it repeal Rule 17, Section 3
of the Rules of Court that allows dismissals due to plaintiff's fault,
including plaintiff's failure to comply with the Rules for no
justifiable cause. Nowhere does it impose a sole burden on the
trial court to set the case for pre-trial.

Reading A.M. No. 03-1-09-SC together with Rule 17, Section 3


and Rule 18, Section 1 of the Rules of Court accommodates the
outright dismissal of a complaint upon plaintiff's failure to show
justifiable reason for not setting the case for pre-trial within the
period provided by the Rules. Thus, trial courts must consider the
facts of each case.

This court has allowed cases to proceed despite failure by the


plaintiff to promptly move for pre-trial when it finds that "the
extreme sanction of dismissal of the complaint might not be
warranted": [36]

It must be stressed that even if the plaintiff fails to promptly


move for pre-trial without any justifiable cause for such
delay, the extreme sanction of dismissal of the complaint
might not be warranted if no substantial prejudice would
be caused to the defendant, and there are special and
compelling reasons which would make the strict
application of the rule clearly unjustified.

....

While "heavy pressures of work" was not considered a persuasive


reason to justify the failure to set the case for pre-trial in Olave
v. Mistas, however, unlike the respondents in the said case,
herein respondent never failed to comply with the Rules of Court
or any order of the trial court at any other time. Failing to file a
motion to set the case for pre-trial was her first and only
technical lapse during the entire proceedings. Neither has she
manifested an evident pattern or a scheme to delay the
disposition of the case nor a wanton failure to observe the
mandatory requirement of the rules. Accordingly, the ends of
justice and fairness would best be served if the parties are given
the full opportunity to litigate their claims and the real issues
involved in the case are threshed out in a full-blown trial.
Besides, petitioners would not be prejudiced should the case
proceed as they are not stripped of any affirmative defenses nor
deprived of due process of law.

This is not to say that adherence to the Rules could be dispensed


with. However, exigencies and situations might occasionally
demand flexibility in their application. Indeed, on several
occasions, the Court relaxed the rigid application of the rules of
procedure to afford the parties opportunity to fully ventilate the
merits of their cases. This is in line with the time-honored
principle that cases should be decided only after giving all parties
the chance to argue their causes and defenses. Technicality and
procedural imperfection should thus not serve as basis of
decisions.

Finally, A.M. No. 03-1-09-SC or the new Guidelines To Be


Observed By Trial Court Judges And Clerks Of Court In The
Conduct Of Pre-Trial And Use Of Deposition-Discovery Measures,
which took effect on August 16, 2004, aims to abbreviate court
proceedings, ensure prompt disposition of cases and decongest
court dockets, and to further implement the pre-trial guidelines
laid down in Administrative Circular No. 3-99 dated January 15,
1999. A.M. No. 03-1-09-SC states that: Within five (5) days from
date of filing of the reply, the plaintiff must promptly move ex-
parte that the case be set for pre-trial conference. If the plaintiff
fails to file said motion within the given period, the Branch COC
shall issue a notice of pre-trial.  As such, the clerk of court of
[37]

Branch 17 of the Regional Trial Court of Malolos should issue a


notice of pre-trial to the parties and set the case for pre-trial.
(Emphasis supplied, citations omitted)
On the other hand, this court has sustained dismissals due to
plaintiff's fault after finding that plaintiff's failure to prosecute or
comply with the rules was without justifiable reason. The Court of
Appeals Decision cited Spouses Zarate v. Maybank Philippines,
Inc.  and Eloisa Merchandising, Inc. v. Banco de Oro Universal
[38]

Bank  on the need for vigilance in prosecuting one's case,


[39]

and Regner v. Logarta  on the right to speedy trial.


[40] [41]

In Zarate, the trial court "dismiss[ed] the complaint for lack of


interest to prosecute the case."  Pre-trial and presentation of
[42]

evidence-in-chief were reset several times due to plaintiff


spouses' and/or their counsel's failure to appear, without offering
any explanation for most of their absences.  This court sustained
[43]

the trial court's dismissal of the complaint after finding that


"petitioners inexorably delayed the trial of the case without any
justifiable reasons[.]" [44]

In Eloisa Merchandising, Inc., the case "had been at the pre-trial


stage for more than two years and petitioners have not shown
special circumstances or compelling reasons to convince [this
court] that the dismissal of their complaint for failure to prosecute
was unjustified."  The case remained at pre-trial stage when
[45]

A.M. No. 03-1-09-SC took effect.  The trial court already


[46]

dismissed the complaint twice due to petitioners' non-appearance


at pre-trial.  This court sustained the third dismissal since
[47]

"despite the trial court's leniency and admonition, petitioners


continued to exhibit laxity and inattention in attending to their
case." [48]

This court discussed that "[w]hile under the present Rules, it is


now the duty of the clerk of court to set the case for pre-trial if
the plaintiff fails to do so within the prescribed period, this does
not relieve the plaintiff of his own duty to prosecute the case
diligently." [49]

Regner does not involve the non-filing of a motion to set case for
pre-trial, but the failure to serve summons on respondents in a
Complaint for declaration of nullity of deed of donation filed in
June 1999. [50]
Nevertheless, we can apply by analogy Regner's, ruling that
"[although Section 1, Rule 14 of the Rules imposes upon the clerk
of court the duty to serve summons, this does not relieve the
petitioner of her own duty as the plaintiff in a civil case to
prosecute the case diligently[,] [and] [i]f the clerk had been
negligent, it was petitioner's duty to call the court's attention to
that fact."  A plaintiff's failure to vigilantly pursue his or her case
[51]

also affects respondent's right to speedy trial. [52]

The Court of Appeals Decision discussed that petitioner Bank of


the Philippine Islands "cannot simply 'fold its hands' and say that
it was the duty of the clerk of court to set the case for pre-trial
for the prompt disposition of its case." [53]

Trial courts should be more proactive in ensuring the progression


of cases to pre-trial considering the significance of this stage in
civil actions:
Pre-trial is an answer to the clarion call for the speedy disposition
of cases. Although it was discretionary under the 1940 Rules of
Court, it was made mandatory under the 1964 Rules and the
subsequent amendments in 1997. Hailed as "the most important
procedural innovation in Anglo-Saxon justice in the nineteenth
century," pre-trial seeks to achieve the following:

(a) The possibility of an amicable settlement or of a submission to alternative modes of

(b) The simplification of the issues;

(c) The necessity or desirability of amendments to the pleadings:

(d) The possibility of obtaining stipulations or admissions of facts and of documents to a

(e) The limitation of the number of witnesses;

(f) The advisability of a preliminary reference of issues to a commissioner;

(g) The propriety of rendering judgment on the pleadings, or summary judgment, or


should a valid ground therefor be found to exist;
(h) The advisability or necessity of suspending the proceedings; and

(i) Such other matters as may aid in the prompt disposition of the action. [54]

Pre-trial promotes efficiency of case proceedings by allowing the


parties to stipulate on facts and admissions that no longer need
proof, and to agree on key issues, among others. It protects the
right to speedy trial without compromising substantive justice.

A.M. No. 03-1-09-SC upholds this purpose in requiring the Clerk


of Court to issue a notice of pre-trial "[i]f the plaintiff fails to file
[the] said motion [to set case for pre-trial] within the given
period[.]" [55]

However, petitioner Bank of the Philippine Islands also has the


duty to set the case for pre-trial after the last pleading has been
served and filed,  and to diligently pursue its case and comply
[56]

with the rules. Failure to do so without justifiable cause warrants


an outright dismissal of the Complaint. [57]

Petitioner Bank of the Philippine Islands' explanation of misfiling


by previous counsel's secretary of the case records together with
terminated cases in the office bodega cannot be considered as
justifiable cause for its failure to set the case for pre-trial. This
court has held that "a counsel is required to inquire, from time to
time, and whenever necessary, about the status of handled
cases, as well as motions filed for a client."  Also, petitioner Bank
[58]

of the Philippine Islands is one of the oldest and more established


banks in the country. There is reasonable expectation that it has
the necessary organizational structures, system flows, and
procedures to address urgent matters and meet litigation
deadlines.

Between the parties, petitioner Bank of the Philippine Islands is in


a better position to bear the costs of a procedural misstep of its
own doing as compared with respondents Spouses Genuine The
bank may have had its reasons to waive payment or the pursuit
of its claims. For instance, it could have weighed that the costs of
pursuing its litigation against respondents Spouses Genuino
outweigh the potential benefits. It could be that their business
with the bank was far more valuable than the incidental rupture
in their relationship caused by this transaction. In all these
possible cases, respondents Spouses Genuino and other debtors
have a right to rely on the non-action of the plaintiff. In their
view, the non-filing of the basic motion for setting of pre-trial
would have been, at best, a reasonable economic signal that the
bank was no longer interested. At worse, it was clearly negligence
of an entity with enough institutional resources to maintain a
large arsenal of in-house and external counsel. The bank's
explanation for its own negligence is unavailing. While it is true
that A.M. No. 03-1-09-SC does provide that the Clerk of Court set
the date of pre-trial,  plaintiff should not be rewarded for his or
[59]

her negligence.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

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


concur.

 Re: Proposed Rule on Guidelines to be Observed by Trial Court


[1]

Judges and Clerks of Court in the Conduct of Pre-Trial and Use of


Deposition-Discovery Measures (2004).

[2]
 RULES OF COURT, Rule 18, sec. 1.

[3]
 A.M. No. 03-1-09-SC (2004), sec. I, A, 1, last paragraph.

[4]
 Rollo, p. 88.

[5]
 Id. at 25.

 Id. at 20-29. The Petition was filed pursuant to Rule 45 of the


[6]

Rules of Court.
 Id. at 34-43. The Decision was penned by Associate Justice
[7]

Rosalinda Asuncion-Vicente (Chair) and concurred in by Associate


Justices Priscilla J. Baltazar-Padilla and Agnes Reyes-Carpio of the
Eighth Division.

 Id. at 45-47. The Resolution was penned by Associate Justice


[8]

Rosalinda Asuncion-Vicente (Chair) and concurred in by Associate


Justices Priscilla J. Baltazar-Padilla and Agnes Reyes-Carpio of the
Eighth Division.

[9]
 Id. at 20-21.

[10]
 Id. at 34-35.

[11]
 Id. at 139.

[12]
 Id. at 35.

[13]
 Id. at 35.

[14]
 Id.

[15]
 Id. at 140.

[16]
 Id. at 35-36.

[17]
 Id. at 36.

 Id. at 88. The Order was penned by Presiding Judge J. Cedrick


[18]

O. Ruiz of Makati Regional Trial Court, Branch 61.

[19]
 Id.

[20]
 Id. at 89-92.

[21]
 Id. at 37-38.
[22]
 Id. at 42.

[23]
 Id. at 41.

[24]
 Id. at 26 and 142.

[25]
 620 Phil. 584 (2009) [Per J. Nachura, Third Division].

[26]
 Rollo, p. 142.

[27]
 Id. at 144-145.

 Id. at 116-117 and 151-152, citing I Justice JOSE Y. FERIA


[28]

(Ret.), CIVIL PROCEDURE ANNOTATED 467


(2001), citing  Insurance Company of North America v. Republic,
et al., 129 Phil. 113, 116 (1967) [Per J. J. P. Bengzon, En Banc]
and Smith Bell & Co., Ltd., et al. v. American Pres. Lines, et al.,
94 Phil. 879, 880 (1954) [Per J. Reyes, En Banc].

[29]
 486 Phil. 708 (2004) [Per J. Callejo, Sr., Second Division].

[30]
 Rollo, pp. 117 and 152.

[31]
 Id.

[32]
 A.M. No. 03-1-09-SC (2004), sec. I, A, 1, last paragraph.

 Olave v. Mistas, 486 Phil. 708, 717 (2004) [Per J. Callejo, Sr.,
[33]

Second Division].

[34]
 Rollo, p. 142.

 Espiritu, et al. v. Lazaro, et al., 620 Phil. 584, 591 (2009) [Per
[35]

J. Nachura, Third Division].

 Polanco, et al. v. Cruz, 598 Phil. 952, 959 (2009) [Per J.


[36]

Ynares-Santiago, Third Division].


[37]
 Id. at 959-961.

[38]
 498 Phil. 825 (2005) [Per J. Callejo, Sr., Second Division].

 G.R. No. 192716, June 13, 2012, 672 SCRA 533 [Per J.
[39]

Villarama, Jr., First Division].

[40]
 562 Phil. 862 (2007) [Per J. Chico-Nazario, Third Division].

[41]
 Rollo, pp. 40-41.

 Spouses Zarate v. Maybank Philippines, Inc., 498 Phil. 825, 831


[42]

(2005) [Per J. Callejo, Sr., Second Division].

[43]
 Id. at 830 and 838-839.

[44]
 Id. at 840.

 Eloisa Merchandising, Inc. v. Banco de Oro Universal Bank, G.R.


[45]

No. 192716, June 13, 2012, 672 SCRA 533, 547 [Per J.
Villarama. Jr., First Division].

[46]
 Id. at 545.

[47]
 Id. at 546.

[48]
 Id.

[49]
 Id. at 547.

 Regner v. Logarta, 562 Phil. 862, 870, 885-886 (2007) [Per J.


[50]

Chico-Nazario, Third Division].

[51]
 Id. at 885.

[52]
 Id.

[53]
 Rollo, p. 39.
 The Philippine American Life & General Insurance Company v.
[54]

Enario, 645 Phil. 166, 176 (2010) [Per J. Perez, First


Division], citing Balatico Vda. De Agatep v. Rodriguez, et al., 619
Phil. 632, 642-643 (2009) [Per J. Peralta, Third Division],
quoting Tiu v. Middleton, 369 Phil. 829, 835 (1999) [Per J.
Panganiban, Third Division].

[55]
 A.M. No. 03-1-09-SC (2004), sec. I, A, 1, last paragraph.

[56]
 RULES OF COURT, Rule 18, sec. 1.

[57]
 RULES OF COURT, Rule 17, sec. 3.

 Spouses Zarate v. Maybank Philippines, Inc., 498 Phil. 825, 837


[58]

[Per J. Callejo, Sr., Second Division], citing  Oriental Assurance


Corp. v. Solidbank Corp., 392 Phil. 847, 856 (2000) [Per J.
Panganiban, Third Division].

[59]
 A.M. No. 03-1-09-SC (2004), sec. 1, A, 1, last paragraph.

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757 PHIL. 70
SECOND DIVISION

[ G.R. No. 175493, March 25, 2015 ]


REPUBLIC OF THE PHILIPPINES, PETITIONER, VS.
HEIRS OF GABRIEL Q. FERNANDEZ,
 RESPONDENTS.DECISION
[1]

LEONEN, J.:

The state and its implementing agencies must first comply with
the requirements outlined in Section 4 of Republic Act No.
8974  before these are allowed to take possession of private
[2]

property for a national infrastructure project.

This is a Petition for Review on Certiorari  under Rule 45 assailing


[3]

the Decision  dated August 25, 2006 and Resolution  dated


[4] [5]

November 14, 2006 of the Court of Appeals, which reversed and


set aside the authorization granted by the trial court for petitioner
Republic of the Philippines to take possession of respondents
Heirs of Gabriel Q. Fernandez's property in an expropriation
proceeding.

The Heirs of Gabriel Q. Fernandez (Heirs of Fernandez) are the


owners of an 11,165-square-meter property in Barangay Tuyo,
Balanga, Bataan. The property is covered by Transfer Certificate
of Title No. T-139051. [6]

On June 5, 2001, the Republic of the Philippines (Republic), on


behalf of the Department of Public Works and Highways, filed a
Verified Complaint for Expropriation against the Heirs of
Fernandez and Sotera Santuyo, the owner of another property in
Barangay Tuyo. [7]

The Republic, through its Verified Complaint for Expropriation,


alleged that the Department of Public Works and Highways
intended to construct a four-lane highway in Barangay Tuyo. It
further alleged that it was necessary to acquire the properties of
the Heirs of Fernandez and Sotera Santuyo for that purpose, but
its offer to purchase was refused. It also alleged that the adjacent
properties were already acquired by negotiation. The Republic
prayed that a Writ of Possession be issued in its favor upon the
filing of the Petition and the deposit of the value of the properties
"as provisionally ascertained and fixed by the court, which should
not be more than P50.00 per square meter." [8]

In their Answer, the Heirs of Fernandez admitted that there was


"nobility and utility"  in the construction of the highway but
[9]

disputed the necessity of expropriating their property. They


argued that the expropriation of their property was not permitted
by the Constitution and that the Republic must first comply with
the guidelines stated in Section 4 of Republic Act No. 8974  and [10]

Section 12 of its Implementing Rules and Regulations  before a


[11]

Writ of Possession can be issued. They also alleged that the fair
and true market value of their property was PI ,200.00 per
square meter. [12]

The summons, meanwhile, for Sotera Santuyo "was returned


unserved." [13]

In the Pre-trial Order dated January 7, 2002, the trial court


stated that no stipulation of facts was made by the parties and
that while the Republic had marked their documentary evidence,
the Heirs of Fernandez had not yet marked theirs. The trial court
terminated the pre-trial and set the case for initial hearing. [14]

The Republic filed a Motion/Manifestation dated February 4, 2002


wherein it alleged that on October 20, 2000, it offered the
amount of P35.00 per square meter to the Heirs of Fernandez as
compensation for the property. It alleged that the price was
above the zonal value, which was P15.00 per square meter. It
also alleged that after it had filed the Verified Complaint for
Expropriation, it offered the Heirs of Fernandez P50.00 per square
meter, which the latter refused as they were demanding
P1,000.00 per square meter. It also submitted that in compliance
with Section 12 of the Implementing Rules and Regulations of
Republic Act No. 8974, it was ready to deposit P167,475.00,
which was the equivalent of the zonal value of the property. [15]
The Heirs of Fernandez also filed a Manifestation and Motion
alleging that the pre-trial had not yet been concluded as they had
not yet marked their evidence. They prayed for the re-opening of
the pre-trial so that they could mark their evidence and the
parties could enter into a stipulation of facts.
[16]

On February 11, 2002, a hearing was conducted.  The Heirs of


[17]

Fernandez's counsel was absent, but the Republic was able to


mark additional documents. The trial court also directed the re-
opening of the pre-trial.
[18]

On February 21, 2002, the trial court issued an Order allowing


the Republic to take possession of the Heirs of Fernandez's
property in view of their payment of P167,475.00, as evidenced
by a Land Bank of the Philippines check in the name of Gabriel Q.
Fernandez. [19]

On April 23, 2002, the Heirs of Fernandez filed an Omnibus


Motion requesting for the admission of the existence of seven
roads connecting , Balanga to the Roman Highway, the
comprehensive land use plan, a list of provincial roads per
municipality, and a photocopy of the Bureau of Internal Revenue
zonal valuation for Barangay. Tuyo. They prayed for the
nullification of the Order dated February 21, 2002, alleging that a
copy of the Order was only served on them at the pre-trial on
April 3, 2002. They also alleged that they were not served a copy
of the Republic's Motion/Manifestation dated February 4, 2002. [20]

On May 22, 2002, the trial court issued an Order finding that the
Republic had a lawful right to take the property and appointing
three commissioners to determine the amount of just
compensation to be given to the Heirs of Fernandez. It also ruled
that the failure to serve a copy of the Order dated February 21,
2002 was a mere inadvertence of the clerk in charge of civil
cases. It ruled that the zonal value of P15.00 per square meter
obtained by the Republic was also based on a Bureau of Internal
Revenue certification and that the Heirs of Fernandez's rights
were not violated when the Republic exercised its power of
eminent domain. [21]

The Heirs of Fernandez appealed the case before the Court of


Appeals, arguing that the expropriation was unnecessary since
there were seven existing public roads that connected Balanga to
the Roman Highway. They also argued that they were deprived of
due process as they were not duly notified of the trial court's
Order dated February 21, 2002. They argued that the trial court
Order not only violated Article III of the Constitution but also the
guidelines set forth in Section 4 of Republic Act No. 8974 and
Section 12 of its Implementing Rules and Regulations. [22]

On August 25, 2006, the Court of Appeals rendered a


Decision  that set aside the Republic's authority to take
[23]

possession of the property but affirmed the Order to appoint


commissioners to determine the amount of just compensation.

The Court of Appeals acknowledged that while there were roads


that connected Balanga to Roman Highway, it conceded that the
construction of a four-lane highway was a public need that would
undeniably become beneficial to Balanga and the Province of
Bataan.[24]

The Court of Appeals also ruled that the Heirs of Fernandez were
not denied due process since they had the opportunity to seek for
the nullification of the Order dated February 21, 2002 when they
filed their Omnibus Motion on April 23, 2002. [25]

On the issue, however, on the correct valuation of the property,


the Court of Appeals relied on the Heirs of Fernandez's copy of
the Bureau of Internal Revenue zonal valuation and Gabriel Q.
Fernandez's tax declaration submitted by the Republic, which
categorized the property as "A1" or "1st agricultural land" valued
at P50.00 per square meter. Since the valuation of P15.00 per
square meter was for pastureland, the Court of Appeals
concluded that the Republic's deposit of P167,475.00 was
incorrect. [26]
Citing Section 4 of Republic Act No. 8974, the Court of Appeals
ruled that it was only upon the payment of P558,250.00, which
was 100% of the zonal value of the property, and the submission
of a certificate of availability of funds that a Writ of Possession
may be issued.  The dispositive portion states:
[27]

WHEREFORE, the Order dated May 22, 2002, which reiterated the
Order dated February 21, 2002[,] is REVERSED and SET ASIDE
insofar as it authorized plaintiff-appellee to take possession of the
11,650 square meter property of defendants-appellants in view of
the deposit of the amount of P167,475.00 only, but AFFIRMED
with respect to the appointment of Commissioners to determine
the just compensation for defendants-appellants' property. [28]

The Republic filed a Motion for Reconsideration, but this was


denied by the Court of Appeals in the Resolution dated November
14, 2006.  Aggrieved, the Republic filed a Petition for Review on
[29]

Certiorari before this court.

Petitioner Republic alleges that it faithfully complied with the legal


requirements to authorize it to take possession of the property.
 It also alleges that the PI5.00 per square meter valuation was
[30]

based on the Bureau of Internal Revenue's zonal valuation, while


the P50.00 per square meter valuation was a "sheer
allegation"  of respondents Heirs of Fernandez "which was not
[31]

even offered in evidence." [32]

Petitioner Republic argues that since a Writ of Possession was


already issued in its favor when it made its deposit, the only issue
left to be settled is the determination of just compensation. It
also argues that the Court of Appeals' Decision was similar to a
temporary restraining order or injunction, which is prohibited by
Section 3  of Republic Act No. 8975.
[33] [34]

In their Comment,  respondents Heirs of Fernandez argue that


[35]

the P15.00 per square meter valuation corresponded to


pastureland, not agricultural land, as stated in the Bureau of
Internal Revenue's zonal valuation presented as petitioner
Republic's own evidence. They also argue that since the Order
issuing the Writ of Possession was already reversed by the Court
of Appeals, there was no more Writ of Possession. [36]

Petitioner Republic was required to reply to the Comment.


However, it manifested on July 26, 2007 that it was no longer
filing a Reply since it already raised and extensively discussed the
issues in its Petition.
[37]

The issues for this court's resolution are:

First, whether the Court of Appeals erred in setting aside


petitioner Republic's Writ of Possession for the latter's failure to
comply with Section 4 of Republic Act No. 8974.

Second, whether the reversal of the issuance of the Writ of


Possession by the Court of Appeals was effectively an injunction
against petitioner Republic from proceeding with the
expropriation.

The Petition is denied.

A Writ of Possession may be issued only upon full compliance with


Section 4 of Republic Act No. 8974.

Before the state may expropriate private property for a national


infrastructure project, it must first comply with the requisites in
Republic Act No. 8974, otherwise known as An Act to Facilitate
the Acquisition of Right-of-Way, Site or Location for National
Government Infrastructure Projects and for Other Purposes.
Section 4 of Republic Act No. 8974 states:
Section 4. 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:
(a) Upon the filing of the complaint, and after due notice to the defendant, the imp
immediately pay the owner of the property the amount equivalent to the sum, of (1
(100%) of the value of the property based on the current relevant zonal valuation o
Revenue (BIR); and (2) the value of the improvements and/or structures as de
7  hereof;
[38]

(b) In provinces, cities, municipalities and other areas where there is no zonal valua
mandated within the period of sixty (60) days from the date of the expropriation
zonal valuation for said area; and

(c) In case the completion of a government infrastructure project is of utmost urgen


there is no existing valuation of the area concerned, the implementing agency sh
owner of the property its proffered value taking into consideration the standards
hereof.
Upon compliance with the guidelines abovementioned, the court
shall immediately issue to the implementing agency an order to
take possession of the property and start the implementation of
the project.

Before the court can issue a Writ of Possession, the implementing


agency shall present to the court a certificate of availability of
funds from the proper official concerned.

In the event that the owner of the property contests the


implementing agency's proffered value, the court shall determine
the just compensation to be. paid the owner within sixty (60)
days from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between
the amount already paid and the just compensation as
determined by the court.

Under Section 4 of Republic Act No. 8974, the implementing


agency must, upon filing of the expropriation complaint,
immediately pay the property owner an amount equivalent to
100% of the value of the property based on the current relevant
zonal valuation by the Bureau of Internal Revenue and the value
of any improvements or structure on a replacement cost method.
The law further mandates that courts may issue a Writ of
Possession only upon the presentation by the implementing
agency of a certificate of availability of funds.

The provisional value that must be paid under Section 4 of


Republic Act No. 8974 should not be confused with the payment
of just compensation required by the Constitution  in the[39]

exercise of the power of eminent domain.

II

The payment of the provisional value under Section 4 of Republic


Act No. 8974 is different from the payment of just compensation.

In Capitol Steel Corporation v. PHIVIDEC Industrial Authority: [40]

Upon compliance with the requirements, a petitioner in an


expropriation case is entitled to a writ of possession as a matter
of right and it becomes the ministerial duty of the trial court to
forthwith issue the writ of possession. No hearing is required and
the court neither exercises its discretion or judgment in
determining the amount of the provisional value of the properties
to be expropriated as the legislature has fixed the amount under
Section 4 of R.A. 8974.

To clarify, the payment of the provisional value as a prerequisite


to the issuance of a writ of possession differs from the payment
of just compensation for the expropriated property. While the
provisional value is based on the current relevant zonal valuation,
just compensation is based on the prevailing fair market value of
the property. As the appellate court explained:

The first refers to the preliminary or provisional determination of


the value of the property. It serves a double-purpose of pre-
payment if the property is fully expropriated, and of an indemnity
for damages if the proceedings are dismissed. It is not a
final determination of just compensation  and may not necessarily
be equivalent to the prevailing fair market value of the property.
Of course, it may be a factor to be considered in the
determination of list compensation.

Just compensation, on the other hand, is the  final determination


of the fair market value of the property. It has been described as
"the just and complete equivalent of the loss which the owner of
the thing expropriated has to suffer by reason of the
expropriation." Market values, has also been described in a
variety of ways as the "price fixed by the buyer and seller in the
open market in the usual and ordinary course of legal trade and
competition; the price and value of the article established as
shown by sale, public or private, in the ordinary way of business;
the fair value of the property between one who desires to
purchase and one who desires to sell; the current price; the
general or ordinary price for which property may be sold in that
locality.

There is no need for the determination with reasonable certainty


of the final amount of just compensation before the writ of
possession may be issued.  (Emphasis and underscoring in the
[41]

original)
Any payment made by the Republic as to the expropriated
property's provisional value is not equivalent to the payment of
the present fair market value of the property. It only serves- as a
pre-payment so that the government may take possession of the
property. Moreover, the value need not be judicially determined;
rather, the value has already been set by the current relevant
zonal value of the area as classified by the Bureau of Internal
Revenue.

This pre-payment must also be paid immediately to the owner of


the property before a Writ of Possession may be issued.
In Republic v. Gingoyon: [42]

Rep. Act No. 8974 represents a significant change from previous


expropriation laws such as Rule 67, or even Section 19 of the
Local Government Code. Rule 67 and the Local Government Code
merely provided that the Government deposit the initial amounts
antecedent to acquiring possession of the property with,
respectively, an authorized Government depositary or the proper
court. In both cases, the private owner does not receive
compensation prior to the deprivation of property. On the other
hand, Rep. Act No. 8974 mandates immediate payment of the
initial just compensation prior to the issuance of the writ of
possession in favor of the Government.

Rep. Act No. 8974 is plainly clear in imposing the requirement of


immediate prepayment, and no amount of statutory
deconstruction can evade such requisite. It enshrines a new
approach towards eminent domain that reconciles the inherent
unease attending expropriation proceedings with a position of
fundamental equity. While expropriation proceedings have always
demanded just compensation in exchange for private property,
the previous deposit requirement impeded immediate
compensation to the private owner, especially in cases wherein
the determination of the final amount of compensation would
prove highly disputed. Under the new modality prescribed by
Rep. Act No. 8974, the private owner sees immediate monetary
recompense with the same degree of speed as the taking of
his/her property.  (Emphasis supplied)
[43]

Here, the Republic issued a check  in the name of Gabriel Q.


[44]

Fernandez for P167,475.00, the amount it alleged was 100% of


the zonal value of the property at P15.00 per square meter. It
presented as evidence a certification  by the Bureau of Internal
[45]

Revenue on the zonal valuation of Barangay Road in Barangay


Tuyo, Balanga, Bataan, which pegged the property as
"pastureland" valued at P15.00 per square meter.

The Department of Public Works and Highways also submitted a


certificate of availability of funds  certifying that the amount of
[46]

P7,705,000.00 was appropriated for the four-lane highway in


Barangay Tuyo, Balanga, Bataan less the amount of P167,475.00
to be paid to Gabriel Q. Fernandez.

Respondents Heirs of Fernandez, however, contest the amount


deposited by the Republic. They insist that the zonal value of the
property was P50.00 per square meter, not PI5.00 per square
meter.[47]

III

The correct zonal value of the property is P50.00 per square


meter, not P15.00 per square meter.

As a general rule, findings of fact of the lower courts are binding


on this court. There are, however, exceptions to this rule, such as
when the factual findings of the Court of Appeals contradict the
findings of the trial court.  In this instance, an independent
[48]

examination of the evidence is necessary in order to resolve the


issue.

The case records show that the parties presented as evidence two
different sets of the Bureau of Internal Revenue zonal valuations
covering Barangay Tuyo, Balanga, Bataan.

The relevant zonal value of the properties in Balanga, Bataan at


the time of the filing of the expropriation case was covered by
Bureau of Internal Revenue Department Order No. 92-96. This
Department Order was effective from December 30, 1996 to
December 27, 2002.

Respondents Heirs of Fernandez's photocopy of the Bureau of


Internal Revenue's zonal values for Barangay Tuyo, Balanga,
Bataan states:[49]

RDO NO. 20 BALANGA, BATAAN

PAGE 12

BARANGAY: TUYO

STREET/SUBDIVISION VICINITY CLASSIFICATION V

JACOBA RR 300
MONARK SUBD RR 200
SUNSHINE SUBD RR 300
BARANGAY ROAD A1 50.
In contrast, the Republic presented the following photocopy of the
Bureau of Internal Revenue's zonal value of the area: [50]

RDO NO. 20 BALANGA, BATAAN

PAGE 12

BARANGAY: TUYO

STREET/SUBDIVISION VICINITY CLASSIFICATION V

JACOBA RR 300
MONARK SUBD RR 200
SUNSHINE SUBD RR 300
BARANGAY ROAD riceland A1 50.
unirr. riceland 20.
pastureland 15.
The photocopies presented by the Republic and respondents Heirs
of Fernandez are almost identical computer-encoded copies.
However, typewritten annotations on the Republic's photocopy,
specifically of "riceland," "unirr. riceland," and "pastureland"
under "Vicinity" and the corresponding amounts of "20.00"
corresponding to "unirr. riceland" and "15.00" corresponding to
"pastureland," are present.

The Republic's photocopy was certified as a true photocopy by


"Marciano P. Felipe, Jr., Group Supervisor, Chief, Assessment Br."
His name and designation were also typewritten. The document
stamps were affixed on February 2, 2002.

Respondents Heirs of Fernandez's photocopy, on the other hand,


was certified as a true photocopy by Epifania A. Recana, signing
on behalf of Beatriz S. Pelino, Assistant Division Chief of the Asset
Valuation Board, and verified by Mirasol Z. Tolentino on June 2,
2001. It does not contain the typewritten annotations.

Since there was a discrepancy as to the two certifications,


reference must be made to the zonal values posted by the Bureau
of Internal Revenue on their website, which are accessible to the
general public.  The zonal values of the Bureau of Internal
[51]

Revenue for Barangay Tuyo, Balanga, Bataan do not reflect the


same typewritten annotations as that of the Republic's
photocopy. What appears in the Bureau of Internal Revenue's
records, in fact, is the same document presented by respondents
Heirs of Fernandez:
RDO NO. 20 BALANGA, BATAAN

PAGE 12

BARANGAY: TUYO

STREET/SUBDIVISION VICINITY CLASSIFICATION V

JACOBA RR 300
MONARK SUBD RR 200
SUNSHINE SUBD RR 300
BARANGAY ROAD A1 50.
It is clear, therefore, that alterations were made to the Republic's
photocopy of the zonal values. These alterations, however, were
not properly authenticated in court by the Republic. Rule 132(B),
Section 31 of the Rules of Evidence provides:
Section 31. Alteration in document, how to explain. — The party
producing a document as genuine which has been altered and
appears to have been altered after its execution, in a part
material to the question in dispute, must account for the
alteration. He may show that the alteration was made by another,
without his concurrence, or was made with the consent of the
parties affected by it, or was otherwise properly or innocently
made, or that the alteration did not change the meaning or
language of the instrument. If he fails to do that, the document
shall not be admissible in evidence. (Emphasis'supplied)
Marciano P. Felipe, Jr. was not presented as a witness to testify
on the typewritten annotations. There was no evidence presented
that the Bureau of Internal Revenue or any of its officers
consented to the typewritten annotations. There was also no
explanation given by the Republic as to why there were
typewritten annotations to what otherwise appeared to be a
genuine document.

Under Section 6(E) of Republic Act No. 8424,  only the [52]

Commissioner of Internal Revenue has the power to determine


the zonal value of properties. The provision states:
Section 6. Power of the Commissioner to Make assessments and
Prescribe additional Requirements for Tax Administration and
Enforcement. -

(E) Authority of the Commissioner to Prescribe Real Property


Values. - The Commissioner is hereby authorized to divide the
Philippines into different zones or areas and shall, upon
consultation with competent appraisers both from the private and
public sectors, determine the fair market value of real properties
located in each zone or area. For purposes of computing any
internal revenue tax, the value of the property shall be,
whichever is the higher of [:]
(1) the fair market value as determined by the Commissioner, or

(2) the fair market value as shown in the schedule of values of the Provincial and City
(Emphasis supplied)
Under Section 7  of Republic Act No. 8424, the Commissioner is
[53]

authorized to delegate his or her powers under the law. However,


the Republic did not present any evidence that the signatory,
Marciano P. Felipe, Jr., was authorized by the Commissioner to
make alterations on the photocopy of the document.

In view of this omission, the Republic's photocopy is inadmissible


as evidence.

Even assuming that the Republic's' photocopy were valid, the


zonal value of respondents Heirs of Fernandez's property at
P15.00 per square meter, corresponding to "pastureland," would
still be incorrect. According to the tax declaration of Gabriel Q.
Fernandez submitted by the Republic before the trial court, the
property was classified as "Veg. land."  In the Bureau of Internal
[54]

Revenue Department Order No. 92-96, the classification legend of


vegetable land was "A7" while the classification legend for
pastureland was "A9." The Republic would have to pay the zonal
value corresponding to "A7," not "A9."

As it stands, the Bureau of Internal Revenue Department Order


No. 92-96 only classified the area of respondents Heirs of
Fernandez's property as "A1," valued at P50.00 per square meter.
The proper zonal value of the property, therefore, is P50.00 per
square meter. The incorrect amount paid by petitioner Republic
cannot be considered as sufficient pre-payment since it was less
than the amount required by Section 4 of Republic Act No. 8974.
The Court of Appeals correctly set aside the Writ of Possession in
view of petitioner Republic's failure to pay the correct provisional
value.

IV

The setting aside of an improperly issued Writ of Possession is not


the same as the issuance of an Injunctive Writ.

The Republic argues that the Court of Appeals' setting aside the
Writ of Possession was "akin to a Temporary Restraining Order
(TRO) or Injunction,"  which was prohibited by Section 3 of
[55]

Republic Act No. 8975.  This is erroneous.


[56]

Section 3 of Republic Act No. 8975 states:


Sec. 3. 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 locat
) national government 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 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.
(Emphasis supplied)
The law is clear. All courts, excluding this court, are prohibited
from issuing a temporary restraining order, preliminary
injunction, or mandatory preliminary injunction to enjoin the
government from acquiring the site of any national government
project.

Contrary to the Republic's argument, the setting aside of a Writ of


Possession is not an injunction.

Section 4 of Republic Act No. 8974 mandates that:


[u]pon compliance with the guidelines abovementioned,
the court shall immediately issue to the implementing
agency an order to take possession of the property and
start the implementation of the project.

Before the court can issue a Writ of Possession, the implementing


agency shall present to the court a certificate of availability of
funds from the proper official concerned. (Emphasis supplied)
Thus, the court cannot issue a Writ of Possession if the guidelines
were not complied with. There is also nothing that prevents a
court from setting aside a Writ of Possession on appeal when it is
found that the guidelines were not complied with.
In contrast, an injunction is a separate proceeding that must be
instituted by a party seeking immediate relief. Before an
injunctive writ can be issued, a party must first establish a right
to be protected and show a perceived injury if the act complained
of is not enjoined. In Nerwin Industries Corporation v. PNOC
Energy Development Corporation: [57]

A preliminary injunction is an order granted at any stage of an


action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or person, to refrain from a
particular act or acts. It is an ancillary or preventive remedy
resorted to by a litigant to protect or preserve his rights or
interests during the pendency of the case. As such, it is issued
only when it is established that:
(a) The applicant is entitled to the relief demanded, and the whole or part of such relief
restraining the commission or continuance of the act or acts complained of, or in re
performance of an act or acts, either for a limited period or perpetually; or

(b) The commission, continuance or non- performance of the act or acts complained of
litigation would probably work injustice to the applicant; or

(c) A party, court, agency or a person is doing, threatening, or is attempting to do, or i


or suffering to be done, some act or acts probably in violation of the rights of th
respecting the subject of the action or proceeding, and tending to render the
ineffectual.  (Emphasis supplied)
[58]

Moreover, the applicant must follow the procedural requisites


outlined in Rule 58 of the Rules of Civil Procedure before a
preliminary injunction may be granted by the court. The facts
show that respondents Heirs of Fernandez have not commenced
any proceeding of this nature.

Clearly, the Writ of Possession was set aside by the Court of


Appeals, not as an ancillary remedy to preserve respondents
Heirs of Fernandez's rights, but because the Republic failed to
comply with the requirements of Republic Act No. 8974.

For the Republic to be able to take possession of the property,


the law mandates that it must first pay to the landowner 100% of
the value of the property based on the current relevant zonal
valuation of the property by the Bureau of Internal Revenue. The
payment of less than the amount required by law cannot be
considered substantial compliance.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

Brion,  (Acting Chairperson), Del Castillo, Mendoza, and Perlas-


*

Bernabe,  JJ., concur.


**

 Namely, Helen F. De Los Santos, Bernardita Fernandez, Gabriel


[1]

Y. Fernandez, and Generoso Y. Fernandez.

 Designated Acting Chairperson per S.O. No. 1955 dated March


*

23, 2015.

 Designated Acting Member per S.O. No. 1956 dated March 23,
**

2015.

 An Act to Facilitate the Acquisition of Right-of-Way, Site or


[2]

Location for National Government Infrastructure Projects and for


Other Purposes (2000).

[3]
 Rollo, pp. 8-20.

 Id. at 23-39. The case, docketed as CA-G.R. CV No. 75449 and


[4]

dated August 25, 2006, was penned by Associate Justice Marina


L. Buzon and concurred in by Associate Justices Regalado E.
Maambong and Japar B. Dimaampao of the Court of Appeals
Manila Fifth Division.

[5]
 Id. at 41-42.

[6]
 Id. at 24.
[7]
 Id.

[8]
 Id. at 24-25.

[9]
 Id. at 25.

 Rep. Act No. 8974, sec. 4. Guidelines for Expropriation


[10]

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:
 
(a) Upon the filing of the complaint, and after due notice to the defendant, the im
pay the owner of the property the amount equivalent to the sum of (1) one hun
the property based on the current relevant zonal valuation of the Bureau of
value of the improvements and/or structures as determined under Section 7 her

(b) In provinces, cities, municipalities and other areas where there is no zonal va
within the period of sixty (60) days from the date of the expropriation case, t
said area; and

(c) In case the completion of a government infrastructure project is of utmost urge


existing valuation Of the area concerned, the implementing agency shall immed
its proffered value taking into consideration the standards prescribed in Section

Upon compliance with the guidelines above mentioned, the court


shall immediately issue to the implementing agency an order to
take possession of the property and start the implementation of
the project.

Before the court can issue a Writ of Possession, the implementing


agency shall present to the court a certificate of availability of
funds from the proper official concerned.

In the event that the owner of the property contests the


implementing agency's proffered value, the court shall determine
the just compensation to be paid the owner within sixty (60) days
from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between
the amount already, paid and the just compensation as
determined by the court.

 Implementing Rules and Regulations, Rep. Act. No. 8974, sec.


[11]

12. Writ of Possession - pursuant to Section 4 of the Act, upon


compliance with the guidelines stated in Section 8 of this IRR, the
Court shall immediately issue to the Implementing Agency an
order to take possession of the property and start the
implementation of the project.

Before the Court can issue a Writ of Possession, however, the


Implementing Agency shall present to the Court a Certificate of
Availability of Funds signed by authorized officials to cover the
payment to be made to the property owner.

After the Implementing Agency has complied with foregoing


requirements, the Court shall immediately issue the Writ of
Possession to the complainant Implementing Agency.

[12]
 Rollo, p. 25.

[13]
 Id.

[14]
 Id.

[15]
 Id. at 26.

[16]
 Id.

[17]
 Id. at 27.

[18]
 Id.

[19]
 Id.

[20]
 Id. at 27-28.
[21]
 Id. at 28-30.

[22]
 Id. at 30-31.

[23]
 Id. at 23-39.

[24]
 Id. at 31.

[25]
 Id. at 31-32.

[26]
 Id. at 36.

[27]
 Id. at 36-37.

[28]
 Id. at 38.

[29]
 Id. at 41-42.

[30]
 Id. at 14.

[31]
 Id. at 16.

[32]
 Id.

 Rep. Act No. 8975, sec. 3. Prohibition on the Issuance of


[33]

Temporary Restraining Orders, 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 direction, to
restrain, prohibit or compel the following acts:
 
a) Acquisition, clearance and development of the right-of-way and/or site or l
project[.]

[34]
 Rollo, pp. 16-18.
[35]
 Id. at 49-52.

[36]
 Id. at 50-51.

[37]
 Id. at 54-55.

 Rep. Act No. 8974, sec. 7. Valuation of Improvements and/or


[38]

Structures. - The Department of Public Works and Highways and


other implementing agencies concerned, in coordination with the
local government units concerned in the acquisition of right-of-
way, site or location for any national government infrastructure
project, are hereby mandated to adopt within sixty (60) days
upon approval of this Act, the necessary implementing rules and
regulations for the equitable valuation of the improvements
and/or structures on the land to be expropriated.

Implementing Rules and Regulations, Rep. Act No. 8974, sec.


10. Valuation of Improvements and/or Structures - Pursuant to
Section 7 of the Act, the Implementing Agency shall determine
the valuation of the improvements and/or structures on the land
to be acquired using the replacement cost method. The
replacement cost of the improvements/structures is defined as
the amount necessary to replace the improvements/structure's,
based on the current market prices for materials, equipment,
labor, contractor's profit and overhead, and all other attendant
costs associated with the acquisition and installation in place of
the affected improvements/structures.

In the valuation of the affected improvements/structures, the


Implementing Agency shall consider, among other things, the
kinds and quantities of materials/equipment used, the location,
configuration and other physical features of the properties, and
prevailing construction prices.

 CONST., art. III, sec. 9. Private property shall not be taken for
[39]

public use without just compensation.


[40]
 539 Phil. 644 (2006) [Per J. Carpio Morales, Third Division].

 Id. at 659-660, citing City of Iloilo v. Legaspi, 486 Phil. 474


[41]

(2004) [Per J. Chico-Nazario, Second Division] and Republic v.


Gingoyon, G.R. No. 166429, February 1, 2006, 481 SCRA 457,
469 [Per J. Tinga, En Banc].

 G.R. No. 166429, February 1, 2006, 481 SCRA 457 [Per J.


[42]

Tinga, En Banc].

 Id., citing RULES OF COURT, Rule 67, sec. 2 and LOCAL GOVT.


[43]

CODE, sec. 19.

[44]
 RTC records, p. 53.

[45]
 Id. at 49.

[46]
 Id. at 51.

[47]
 Id. at 110.

 See Republic v. Court of Appeals and Francisco Diaz, 494 Phil.


[48]

494, 507 (2005) [Per J. Carpio, First Division], citing Changco v.


Court of Appeals, 429 Phil. 336 (2002) [Per J. Ynares-Santiago,
First Division].

[49]
 RTC records, p. 110.

[50]
 Id. at 49.

 Zonal
[51]
Values <http://www.bir.gov.ph/index.php/zonal-
values.html> (visited February 11, 2015).

 Otherwise known as the Tax Reform Act of 1997, enacted on


[52]

December 11, 1997.

 Title I, sec. 7. Authority of the Commissioner to Delegate


[53]

Power. - The Commissioner may delegate the powers vested in


him under the pertinent provisions of this Code to any or such
subordinate officials with the rank equivalent to a division chief or
higher, subject to such limitations and restrictions as may be
imposed under rules and regulations to be promulgated by the
Secretary of [F]inance, upon recommendation of the
Commissioner: Provided, However, That the following powers of
the Commissioner shall not be delegated:

(a) The power to recommend the promulgation of rules and regulations by the Secre
(b) The power to issue rulings of first impression or to reverse, revoke or modify an
(c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code,
That assessments issued by the regional offices involving basic deficiency ta
(P500,000) or less, and minor criminal violations, as may be determined by rul
by the Secretary of [F]inance, upon recommendation of the Commissioner,
officials, may be compromised by a regional evaluation board which shall be c
Chairman, the Assistant Regional Director, the heads of the Legal, Assessm
Revenue District Officer having jurisdiction over the taxpayer, as members; and
(d) The power to assign or reassign internal revenue officers to establishments wh
produced or kept.

[54]
 RTC records, p. 8.

[55]
 Rollo, p. 17.

 An Act to Ensure the Expeditious Implementation and


[56]

Completion of Government Infrastructure Projects by Prohibiting


Lower Courts from issuing Temporary Restraining Orders,
Preliminary Injunctions or Preliminary Mandatory Injunctions,
Providing Penalties for Violations thereof, and for Other Purposes
(2000).

 G.R. No. 167057, April 11, 2012, 669 SCRA 173 [Per J.
[57]

Bersamin, First Division].

[58]
 Id. at 186, citing RULES OF CIV. PROC., Rule 58, secs. 1 and 3.
Source: Supreme Court E-Library | Date created: June 30, 2017
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757 PHIL. 582


SECOND DIVISION

[ G. R. No. 171601, April 08, 2015 ]


SPOUSES BONIFACIO AND LUCIA PARAS,
PETITIONERS, VS. KIMWA CONSTRUCTION AND
DEVELOPMENT CORPORATION, RESPONDENT.
DECISION

LEONEN, J.:

This resolves the Petition for Review on Certiorari  under Rule 45


[1]

of the 1997 Rules of Civil Procedure praying that the assailed


Decision  dated July 4, 2005 and Resolution  dated February 9,
[2] [3]

2006 of the Court of Appeals Special 20  Division in CA-G.R. CV


th

No. 74682 be reversed and set aside, and that the Decision  of [4]

Branch 55 of the Regional Trial Court, Mandaue City dated May


16, 2001 in Civil Case No. MAN-2412 be reinstated. [5]

The trial court's May 16, 2001 Decision ruled in favor of


petitioners Spouses Bonifacio and Lucia Paras (plaintiffs before
the Regional Trial Court) in their action for breach of contract with
damages against respondent Kimwa Construction and
Development Corporation (Kimwa). [6]
The assailed Decision of the Court of Appeals reversed and set
aside the trial court's May 16, 2001 Decision and dismissed
Spouses Paras' Complaint.  The Court of Appeals' assailed
[7]

Resolution denied Spouses Paras' Motion for Reconsideration.[8]

Lucia Paras (Lucia) was a "concessionaire of a sand and gravel


permit at Kabulihan, Toledo City[.]"  Kimwa is a "construction
[9]

firm that sells concrete aggregates to contractors and haulers in


Cebu."[10]

On December 6, 1994, Lucia and Kimwa entered into a contract


denominated "Agreement for Supply of Aggregates" (Agreement)
where 40,000 cubic meters of aggregates were "allotted"  by [11]

Lucia as supplier to Kimwa.  Kimwa was to pick up the allotted


[12]

aggregates at Lucia's permitted area in Toledo City  at P240.00


[13]

per truckload.
[14]

The entirety of this Agreement reads:


AGREEMENT FOR SUPPLY OF AGGREGATES

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into by and between:

LUCIA PARAS, of legal age, Filipino, married and resident of


Poblacion, Toledo City, Province of Cebu, hereinafter referred to
as the SUPPLIER:

-and-

KIMWA CONSTRUCTION AND DEVELOPMENT CORP., a


corporation duly organized and existing under the laws of the
Philippines with office address at Subangdaku, Mandaue City,
hereinafter represented by its President MRS. CORAZON Y. LUA,
of legal age, Filipino and a resident of Subangdaku, Mandaue
City[,] hereinafter referred to as the CONTRACTOR;

WITNESSETH:
That the SUPPLIER is [sic] Special Permittee of (Rechanelling
Block # VI of Sapang Daco River along Barangay Ilihan) located
at Toledo City under the terms and conditions:
1. That the aggregates is [sic] to be picked-up by the
CONTRACTOR at the SUPPLIER [sic] permitted area at the
rate of TWO HUNDRED FORTY (P240.00) PESOS per truck
load;
2. That the volume allotted by the SUPPLIER to the
CONTRACTOR is limited to 40,000 cu.m.;
3. That the said Aggregates is [sic] for the exclusive use of the
Contractor;
4. That the terms of payment is Fifteen (15) days after the
receipt of billing;
5. That there is [sic] no modification, amendment, assignment
or transfer of this Agreement after acceptance shall be
binding upon the SUPPLIER unless agreed to in writing by
and between the CONTRACTOR and SUPPLIER.
IN WITNESS WHEREOF, we have hereunto affixed our signatures
this 6  day of December, 1994 at Mandaue City, Cebu,
th

Philippines.
LUCIA PARAS (sgd.) CORAZON Y. LUA (sgd.)
Supplier Contractor[15]

(Emphasis supplied)
Pursuant to the Agreement, Kimwa hauled 10,000 cubic meters of
aggregates. Sometime after this, however, Kimwa stopped
hauling aggregates. [16]

Claiming that in so doing, Kimwa violated the Agreement, Lucia,


oined by her husband, Bonifacio, filed the Complaint  for breach
[17]

of contract with damages that is now subject of this Petition.

In their Complaint, Spouses Paras alleged that sometime in


December 1994, Lucia was approached by Kimwa expressing its
interest to purchase gravel and sand from her.  Kimwa allegedly
[18]

asked that it be "assured"  of 40,000 cubic meters worth of


[19]

aggregates.  Lucia countered that her concession area was due


[20]

to be rechanneled on May 15, 1995, when her Special Permit


expires.  Thus, she emphasized that she would be willing to
[21]

enter into a contract with Kimwa "provided the forty thousand


cubic meter[s] w[ould] be withdrawn or completely extracted and
hauled before 15 May 1995[.]"  Kimwa then assured Lucia that it
[22]

would take only two to three months for it to completely haul the
40,000 cubic meters of aggregates.  Convinced of Kimwa's[23]

assurances, Lucia and Kimwa entered into the Agreement. [24]

Spouses Paras added that within a few days, Kimwa was able to
extract and haul 10,000 cubic meters of aggregates. However,
after extracting and hauling this quantity, Kimwa allegedly
transferred to the concession area of a certain Mrs. Remedios
dela Torre in violation of their Agreement. They then addressed
demand letters to Kimwa. As these went unheeded, Spouses
Paras filed their Complaint. [25]

In its Answer,  Kimwa alleged that it never committed to obtain


[26]

40,000 cubic meters of aggregates from Lucia. It argued that the


controversial quantity of 40,000 cubic meters represented only an
upper limit or the maximum quantity that it could haul.  It [27]

likewise claimed that it neither made any commitment to haul


40,000 cubic meters of aggregates before May 15, 1995 nor
represented that the hauling of this quantity could be completed
in two to three months.  It denied that the hauling of 10,000
[28]

cubic meters of aggregates was completed in a matter of days


and countered that it took weeks to do so. It also denied
transferring to the concession area of a certain Mrs. Remedios
dela Torre. [29]

Kimwa asserted that the Agreement articulated the parties' true


intent that 40,000 cubic meters was a maximum limit and that
May 15, 1995 was never set as a deadline. Invoking the Parol
Evidence Rule, it insisted that Spouses Paras were barred from
introducing evidence which would show that the parties had
agreed differently. [30]

On May 16, 2001, the Regional Trial Court rendered the Decision
in favor of Spouses Paras. The trial court noted that the
Agreement stipulated that the allotted aggregates were set aside
exclusively for Kimwa. It reasoned that it was contrary to human
experience for Kimwa to have entered into an Agreement with
Lucia without verifying the latter's authority as a concessionaire.
 Considering that the Special Permit  granted to Lucia
[31] [32]

(petitioners' Exhibit "A" before the trial court) clearly indicated


that her authority was good for only six (6) months from
November 14, 1994, the trial court noted that Kimwa must have
been aware that the 40,000 cubic meters of aggregates allotted
to it must necessarily be hauled by May 15, 1995. As it failed to
do so, it was liable to Spouses Paras for the total sum of
P720,000.00, the value of the 30,000 cubic-meters of aggregates
that Kimwa did not haul, in addition to attorney's fees and costs
of suit.
[33]

On appeal, the Court of Appeals reversed the Regional Trial


Court's Decision. It faulted the trial court for basing its findings
on evidence presented which were supposedly in violation of the
Parol Evidence Rule. It noted that the Agreement was clear that
Kimwa was under no obligation to haul 40,000 cubic meters of
aggregates by May 15, 1995. [34]

In a subsequent Resolution, the Court of Appeals denied


reconsideration to Spouses Paras. [35]

Hence, this Petition was filed.

The issue for resolution is whether respondent Kimwa


Construction and Development Corporation is liable to petitioners
Spouses Paras for (admittedly) failing to haul 30,000 cubic
meters of aggregates from petitioner Lucia Paras' permitted area
by May 15, 1995.

To resolve this, it is necessary to determine whether petitioners


Spouses Paras were able to establish that respondent Kimwa was
obliged to haul a total of 40,000 cubic meters of aggregates on or
before May 15, 1995.
We reverse the Decision of the Court of Appeals and reinstate
that of the Regional Trial Court. Respondent Kimwa is liable for
failing to haul the remainder of the quantity which it was obliged
to acquire from petitioner Lucia Paras.

Rule 130, Section 9 of the Revised Rules on Evidence provides for


the Parol Evidence Rule, the rule on admissibility of documentary
evidence when the terms of an agreement have been reduced
into writing:
Section 9. Evidence of written agreements. — When the terms of
an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add


to the terms of written agreement if he puts in issue in his
pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of
thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in intere
execution of the written agreement.
The term "agreement" includes wills.
Per this rule, reduction to written form, regardless of the
formalities observed,  "forbids any addition to, or contradiction
[36]

of, the terms of a written agreement by testimony or other


evidence purporting to show that different terms were agreed
upon by the parties, varying the purport of the written
contract." [37]

This rule is animated by a perceived wisdom in deferring to the


contracting parties' articulated intent. In choosing to reduce their
agreement into writing, they are deemed to have done so
meticulously and carefully, employing specific — frequently, even
technical — language as are appropriate to their context. From an
evidentiary standpoint, this is also because "oral testimony . . .
coming' from a party who has an interest in the outcome of the
case, depending exclusively on human memory, is not as reliable
as written or documentary evidence. Spoken words could be
notoriously unreliable unlike a written contract which speaks of a
uniform language."  As illustrated in Abella v. Court of Appeals:
[38] [39]

Without any doubt, oral testimony as to a certain fact, depending


as it does exclusively on human memory, is not as reliable as
written or documentary evidence. "I would sooner trust the
smallest slip of paper for truth," said Judge Limpkin of Georgia,
"than the strongest and most retentive memory ever bestowed
on mortal man." This is especially true in this case where such
oral testimony is given by a party to the case who has an interest
in its outcome, and by a witness who claimed to have received a
commission from the petitioner. [40]

This, however, is merely a general rule. Provided that a party


puts in issue in its pleading any of the four (4) items enumerated
in the second paragraph of Rule 130, Section 9, "a party may
present evidence to modify, explain or add to the terms of the
agreement[.]"  Raising any of these items as an issue in a
[41]

pleading such that it falls under the exception is not limited to the
party initiating an action. In Philippine National Railways v. Court
of First Instance of Albay,  this court noted that "if the defendant
[42]

set up the affirmative defense that the contract mentioned in the


complaint does not express the true agreement of the parties,
then parol evidence is admissible to prove the true agreement of
the parties[.]"  Moreover, as with all possible objections to the
[43]

admission of evidence, a party's failure to timely object is


deemed a waiver, and parol evidence may then be entertained.

Apart from pleading these exceptions, it is equally imperative that


the parol evidence sought to be introduced points to the
conclusion proposed by the party presenting it. That is, it must be
relevant, tending to "induce belief in [the] existence"  of the
[44]

flaw, true intent, or subsequent extraneous terms averred by the


party seeking to introduce parol evidence.
In sum, two (2) things must be established for parol evidence to
be admitted: first, that the existence of any of the four (4)
exceptions has been put in issue in a party's pleading or has not
been objected to by the adverse party; and second, that the parol
evidence sought to be presented serves to form the basis of the
conclusion proposed by the presenting party.

II

Here, the Court of Appeals found fault in the Regional Trial Court
for basing its findings "on the basis of evidence presented in
violation of the parol evidence rule."  It proceeded to fault
[45]

petitioners Spouses Paras for showing "no proof of [respondent


Kimwa's] obligation."  Then, it stated that "[t]he stipulations in
[46]

the agreement between the parties leave no room for


interpretation." [47]

The Court of Appeals is in serious error.

At the onset, two (2) flaws in the the Court of Appeals' reasoning
must be emphasized. First, it is inconsistent to say, on one hand,
that the trial court erred on the basis of "evidence
presented"  (albeit supposedly in violation of the Parol Evidence
[48]

Rule), and, on the other, that petitioners Spouses Paras showed


"no proof."  Second, without even accounting for the exceptions
[49]

provided by Rule 130, Section 9, the Court of Appeals


immediately concluded that whatever evidence petitioners
Spouses Paras presented was in violation of the Parol Evidence
Rule.

Contrary to the Court of Appeal's conclusion, petitioners Spouses


Paras pleaded in the Complaint they filed before the trial court a
mistake or imperfection in the Agreement, as well as the
Agreement's failure to express the true intent of the parties.
Further, respondent Kimwa, through its Answer, also responded
to petitioners Spouses Paras' pleading of these issues. This is,
thus, an exceptional case allowing admission of parol evidence.
Paragraphs 6 to 10 of petitioners' Complaint read:
6. Sensing that the buyers-contractqrs and haulers alike could
easily consumed [sic] the deposits defendant proposed to
the plaintiff-wife that it be assured of a forty thousand
(40,000) cubic meter [sic];
7. Plaintiff countered that the area is scheduled to be
rechanneled on 15 May 1995 and by that time she will be
prohibited to sell the aggregates;
8. She further told the defendant that she would be willing to
enter into a contract provided the forty thousand cubic
meter [sic] will be withdrawn or completely extracted and
hauled before 15 May 1995, the scheduled rechanneling:
9. Defendant assured her that it will take them only two to
three months to haul completely the desired volume as
defendant has all the trucks needed;
10.
11. Convinced of the assurances, plaintiff-wife and the
defendant entered into a contract for the supply of the
aggregates sometime on 6 December 1994 or thereabouts,
at a cost of Two Hundred Forty (P240.00) Pesos per
truckload[.]
[50]

It is true that petitioners Spouses Paras' Complaint does not


specifically state words and phrases such as "mistake,"
"imperfection," or "failure to express the true intent of the
parties." Nevertheless, it is evident that the crux of petitioners
Spouses Paras' Complaint is their assertion that the Agreement
"entered into on 6 December 1994 or thereabouts"  was founded
[51]

on the parties' supposed understanding that the quantity of


aggregates allotted in favor of respondent Kimwa must be hauled
by May 15, 1995, lest such hauling be rendered impossible by the
rechanneling of petitioner Lucia Paras' permitted area. This
assertion is the very foundation of petitioners' having come to
court for relief.

Proof of how petitioners Spouses Paras successfully pleaded and


put this in issue in their Complaint is how respondent Kimwa felt
it necessary to respond to it or address it in its Answer.
Paragraphs 2 to 5 of respondent Kimwa's Answer read:
2. The allegation in paragraph six of the complaint is admitted
subject to the qualification that when defendant offered to
buy aggregates from the concession of the plaintiffs, it
simply asked the plaintiff-concessionaire if she could sell a
sufficient supply of aggregates to be used in defendant's
construction business and plaintiff-concessionaire agreed to
sell to the defendant aggregates from her concession up to a
limit of 40,000 cubic meters at the price of P240.00 per
cubic meter.
3. The allegations in paragraph seven and eight of the
complaint are vehemently denied by the defendant. The
contract which was entered into by the plaintiffs and the
defendant provides only that the former supply the latter the
volume of 40,000.00 cubic meters of aggregates. There is
no truth to the allegation that the plaintiff wife entered into
the contract under the condition that the aggregates must
be quarried and hauled by defendant completely before May
15, 1995, otherwise this would have been unequivocally
stipulated in the contract.
4. The allegation in paragraph nine of the complaint is hereby
denied. The defendant never made any assurance to the
plaintiff wife that it will take only two to three months to
haul the aforesaid volume of aggregates. Likewise, the
contract is silent on this aspect for in fact there is no definite
time frame agreed upon by the parties within which
defendant is to quarry and haul aggregates from the
concession of the plaintiffs.
5. The allegation in paragraph ten of the complaint is admitted
insofar as the execution of the contract is concerned.
However, the contract was executed, not by reason of the
alleged assurances of the defendant to the plaintiffs, as
claimed by the latter, but because of the intent and
willingness of the plaintiffs to supply and sell aggregates to
it. It was upon the instance of the plaintiff that the
defendant sign the subject contract to express in writing
their agreement that the latter would haul aggregates from
plaintiffs' concession up to such point in time that the
maximum limit of 40,000 cubic meters would be quarried
and hauled without a definite deadline being set. Moreover,
the contract does not obligate the defendant to consume the
allotted volume of 40,000 cubic meters. [52]

Considering how the Agreement's mistake, imperfection, or


supposed failure to express the parties' true intent was
successfully put in issue in petitioners Spouses Paras' Complaint
(and even responded to by respondent Kimwa in its Answer), this
case falls under the exceptions provided by Rule 130, Section 9 of
the Revised Rules on Evidence. Accordingly, the testimonial and
documentary parol evidence sought to be introduced by
petitioners Spouses Paras, which attest to these supposed flaws
and what they aver to have been the parties' true intent, may be
admitted and considered.

III

Of course, this admission and availability for consideration is no


guarantee of how exactly the parol evidence adduced shall be
appreciated by a court. That is, they do not guarantee the
probative value, if any, that shall be attached to them. In any
case, we find that petitioners have established that respondent
Kimwa was obliged to haul 40,000 cubic meters of aggregates on
or before May 15, 1995. Considering its admission that it did not
haul 30,000 cubic meters of aggregates, respondent Kimwa is
liable to petitioners.

The Pre-Trial Order issued by the Regional Trial Court in Civil


Case No. MAN-2412 attests to respondent Kimwa's admission
that:
6) Prior to or during the execution of the contract[,] the Plaintiffs furnished the Defe
and requisite papers in connection with the contract, one of which was a copy of th
permit indicating that the Plaintiff's [sic] authority was only good for (6) months from
This Special Permit was, in turn, introduced by petitioners in
evidence as their Exhibit "A,"  with its date of issuance and
[54]

effectivity being specifically identified as their Exhibit "A-


1."  Relevant portions of this Special Permit read:
[55]
To All Whom It May Concern:
PERMISSION is hereby granted to:
Name                                                        Address

LUCIA PARAS                                      Poblacion, Toledo City


to undertake the rechannelling of Block No. VI of Sapang Daco
River along Barangay Ilihan, Toledo City, subject to following
terms and conditions:
1. That the volume to be extracted from the area is
approximately 40,000 cubic meters;
This permit which is valid for six (6) months from the date hereof
is revocable anytime upon violation of any of the foregoing
conditions or in the interest of public peace and order.

Cebu Capitol, Cebu City, November 14, 1994. [56]

Having been admittedly furnished a copy of this Special Permit,


respondent Kimwa was well aware that a total of only about
40,000 cubic meters of aggregates may be extracted by
petitioner Lucia from the permitted area, and that petitioner Lucia
Paras' operations cannot extend beyond May 15, 1995, when the
Special Permit expires.

The Special Permit's condition that a total of only about 40,000


cubic meters of aggregates may be extracted by petitioner Lucia
Paras from the permitted area lends credence to the position that
the aggregates "allotted" to respondent Kimwa was in
consideration of its corresponding commitment to haul all 40,000
cubic meters. This is so, especially in light of the Agreement's
own statement that "the said Aggregates is for the exclusive use
of [respondent Kimwa.]"  By allotting the entire 40,000 cubic
[57]

meters, petitioner Lucia Paras bound her entire business to


respondent Kimwa. Rational human behavior dictates that she
must have done so with the corresponding assurances from it. It
would have been irrational, if not ridiculous, of her to oblige
herself to make this allotment without respondent Kimwa's
concomitant undertaking that it would obtain the entire amount
allotted.
Likewise, the condition that the Special Permit shall be valid for
only six (6) months from November 14, 1994 lends credence to
petitioners Spouses Paras' assertion that, in entering into the
Agreement with respondent Kimwa, petitioner Lucia Paras did so
because of respondent Kimwa's promise that hauling can be
completed by May 15, 1995. Bound as she was by the Special
Permit, petitioner Lucia Paras needed to make it eminently clear
to any party she was transacting with that she could supply
aggregates only up to May 15, 1995 and that the other party's
hauling must be completed by May 15, 1995. She was merely
acting with due diligence, for otherwise, any contract she would
enter into would be negated; any commitment she would make
beyond May 15, 1995 would make her guilty of
misrepresentation, and any prospective income for her would be
rendered illusory.

Our evidentiary rules impel us to proceed from the position


(unless convincingly shown otherwise) that individuals act as
rational human beings, i.e, "[t]hat a person takes ordinary care of
his concerns[.]"  This basic evidentiary stance, taken with the-
[58]

supporting evidence petitioners Spouses Paras adduced,


respondent Kimwa's awareness of the conditions under which
petitioner Lucia Paras was bound, and the Agreement's own text
specifying exclusive allotment for respondent Kimwa, supports
petitioners Spouses Paras' position that respondent Kimwa was
obliged to haul 40,000 cubic meters of aggregates on or before
May 15, 1995. As it admittedly hauled only 10,000 cubic meters,
respondent Kimwa is liable for breach of contract in respect of the
remaining 30,000 cubic meters.

WHEREFORE, the Petition is GRANTED. The assailed Decision


dated July 4, 2005 and Resolution dated February 9, 2006 of the
Court of Appeals Special 20  Division in CA-G.R. CV No. 74682
th

are REVERSED and SET ASIDE. The Decision of Branch 55 of


the Regional Trial Court, Mandaue City dated May 16, 2001 in
Civil Case No. MAN-2412 is REINSTATED.
A legal interest of 6% per annum shall likewise be imposed on
the total judgment award from the finality of this Decision until
full satisfaction.

SO ORDERED.

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


concur.

[1]
 Rollo, pp. 11-28.

 Id. at 32-39. The Decision was penned by Associate Justice


[2]

Isaias P. Dicdican (Chair) and concurred in by Associate Justices


Sesinando E. Villon and Enrico A. Lanzanas.

 Id. at 47-8. The Resolution was penned by Associate Justice


[3]

Isaias P. Dicdican (Chair) and concurred in by Associate Justices


Pampio A. Abarintos and Enrico A. Lanzanas.

[4]
 Id. at 66-70.

[5]
 Id. at 26.

[6]
 Id. at 70.

[7]
 Id. at 38.

[8]
 Id. at 48.

[9]
 Id. at 32.

[10]
 Id.

[11]
 Id. at 36.

[12]
 Id. at 33.
[13]
 Id.

[14]
 Id. at 66.

[15]
 RTC records, p. 97.

[16]
 Rollo, p. 33.

[17]
 Id. at 56-59.

[18]
 Id. at 56.

[19]
 Id.

[20]
 Id. at 56-57.

[21]
 Id. at 57.

[22]
 Id.

[23]
 Id.

[24]
 Id.

[25]
 Id.

[26]
 Id. at 60-63.

[27]
 Id. at 60.

[28]
 Id. at 60-61.

[29]
 Id. at 61-62.

[30]
 Id. at 62-63.

[31]
 Id. at 70.
[32]
 Id. at 96.

[33]
 Id. at 70.

[34]
 Id. at 36-37.

[35]
 Id. at 48.

 See Inciong, Jr. v. Court of Appeals, 327 Phil. 364, 371 (1996)
[36]

[Per J. Romero, Second Division].

 Seaoil Petroleum Corporation v. Autocorp Group, 590 Phil. 410,


[37]

418 (2008) [Per J. Nachura, Third Division], citing Spouses


Edrada v. Spouses Ramos, 505 Phil. 672, 677-678 (2005) [Per J.
Tinga, Second Division].

 Ortanez v. Court of Appeals, 334 Phil. 514,518(1997) [Per J.


[38]

Francisco, Third Division].

[39]
 327 Phil. 270 (1996) [Per J. Francisco, Third Division].

 Id. at 276, citing De Leon v. Court of Appeals, 205 SCRA 612,


[40]

622-623 (1992) [Per J. Cruz, First Division] and Miller v. Cotten,


5 Ga. 341, 349.

 ACI Philippines, Inc. v. Coquia, 580 Phil. 275, 284 (2008) [Per
[41]

J. Tinga, Second Division].

[42]
 173 Phil. 5 (1978) [Per J. Aquino, Second Division].

 Id. at 11, citing Enriquez, et al. v. Ramos, 116 Phil. 525, 531


[43]

(1962) [Per J. Bautista Angelo, En Banc], Philippine Sugar E. D.


Co. v. Philippines, 62 L. Ed. 1177, 247 U.S. 385, Heirs of De la
Rama v. Talisay-Silay Milling Co., 54 Phil. 580, 588 (1930) [Per J.
Romualdez, En Banc], and Land Settlement and Development
Corporation v. Garcia Plantation Co., Inc., 117 Phil. 761, 765
(1963) [Per J. Paredes, En Banc].
[44]
 REV. RULES ON EVID., Rule 128, secs. 3 and 4 provide:

Section 3. Admissibility of evidence. — Evidence is admissible


when it is relevant to the issue and is not excluded by the law of
these rules.

Section 4. Relevancy; collateral matters. — Evidence must have


such a relation to the fact in issue as to induce belief in its
existence or non-existence. Evidence on collateral matters shall
not be allowed, except when it tends in any reasonable degree to
establish the probability or improbability of the fact in issue.

[45]
 Rollo, p. 36.

[46]
 Id. at 37.

[47]
 Id.

[48]
 Id. at 36.

[49]
 Id. at 37.

[50]
 Id. at 56-57.

[51]
 Id. at 57.

[52]
 Id. at 60-61.

[53]
 Id. at 64.

[54]
 RTC records, pp. 93 and 96.

[55]
 Id. at 93.

[56]
 Id. at 96.

[57]
 Id. at 97.
[58]
 REV. RULES ON EVID., Rule 131, sec. 3(d).

Source: Supreme Court E-Library | Date created: July 05, 2017


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THIRD DIVISION

[ G.R. No. 220456, June 10, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. GAJIR ACUB Y ARAKANI A.K.A.
"ASAW," ACCUSED-APPELLANT.DECISION

LEONEN, J.:

State agents must strictly comply with the legal safeguards


established in Section 21 of Republic Act No. 9165, as amended,
for the custody and disposition of seized illegal drugs, to ensure
that the evidence was not tampered with, substituted, or planted.
For the saving clause in Section 21 to apply, the prosecution
must prove beyond reasonable doubt that noncompliance was
justified and that the integrity and evidentiary value of the seized
item were preserved.

This Court reviews the March 16, 2015 Decision  of the Court of [1]

Appeals in CA-G.R. CR HC No. 01003-MIN, affirming the


conviction of accused-appellant Gajir Acub y Arakani a.k.a.
"Asaw" (Acub) for violation of Section 5 of the Comprehensive
Dangerous Drugs Act.
In an Information dated February 11, 2005, Acub was charged
with selling a dangerous drug to an undercover police officer
during a buy-bust operation:
That on or about February 10, 2005, in the City of Zamboanga,
Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, not being authorized by law to sell,
deliver, transport, distribute or give away to another any
dangerous drug, did then and there willfully and unlawfully, sell
and deliver to PO2 Ronald Canete Cordero, member of the PNP,
Anti-Illegal Drugs Special Operation Task Force (AIDSOTF), who
acted as poseur buyer, one (1) pc. heat sealed transparent plastic
sachet containing white crystalline substance weighing 0.0188
gram, which when subjected to qualitative examination gave
positive result to the test for the presence of METHAMPHETAMlNE
HYDROCHLORIDE (shabu), accused knowing the same to be a
dangerous drug, in flagrant violation of the above-mentioned law.

CONTRARY TO LAW. [2]

Upon arraignment, Acub pleaded not guilty to the charge against


him. Trial on the merits ensued, with the prosecution presenting
three (3) police officers as its witnesses and the defense
presenting Acub and his wife, Intan Acub (Intan), as its
witnesses.[3]

The prosecution evidence established that at about 1:00 p.m. on


February 10, 2005, a confidential informant tipped Senior Police
Officer 1 Amado Mirasol (SPO1 Mirasol) of the Zamboanga City
Police Station that a certain Asaw, later identified as Acub, had
been selling illegal drugs at Ayer Village. SPO1 Mirasol informed
Chief Police Inspector Ibrahim Jambiran (Chief Inspector
Jambiran) of the tip, and the latter planned a buy-bust operation
against Asaw. [4]

Chief Inspector Jambiran directed PO2 Ronald Cordero (PO2


Cordero) to act as the poseur-buyer, with PO3 Ajuji as back-up.
 Chief Inspector Jambiran gave PO2 Cordero a P500.00 bill,
[5]

which the latter then marked with his initials.


[6]
The informant and PO2 Cordero then rode a motorcycle to Ayer
Village. PO3 Ajuji followed on another motorcycle, while the rest
of the police officers rode a white service van.
[7]

Upon arriving at Ayer Village, PO2 Cordero and the informant


walked toward a small alley, where they then saw Asaw. The
informant talked to Asaw and pointed to PO2 Cordero as a buyer.
When Asaw asked for the money, PO2 Cordero gave him the
marked P500.00 bill. [8]

With the payment in hand, Asaw went into a house and came out
a few minutes later with a plastic sachet containing white
crystalline substance, which he handed over to PO2 Cordero. The
police officer examined the plastic sachet, after which he folded
his lower shirt sleeve—the pre-arranged signal that the sale had
been consummated. [9]

As PO2 Cordero grabbed Asaw's arm and introduced himself as a


police officer, PO3 Ajuji rushed to the scene and searched Asaw
for weapons and the marked bill. He then informed Asaw of his
constitutional rights in the Tausug dialect, before bringing him to
the police station. [10]

At the police station, PO2 Cordero marked the seized sachet with
his initials before turning it and Asaw over to PO3 Arlan
Delumpines (PO3 Delumpines). [11]

PO3 Delumpines then marked the sachet with his own initials,
prepared a request for laboratory examination, and delivered the
request and the seized sachet to the Regional Crime Laboratory
Office.  At about 8:20 p.m., PO1 Joel Bentican received the
[12]

request with the sachet, and turned them over to Police Inspector
Melvin Ledesma Manuel (Inspector Manuel) at 2:00 a.m. the
following day.[13]

Later, at around 6:00 a.m., Inspector Manuel examined the


specimen and found it positive for methamphetamine
hydrochloride or shabu. He summarized his findings in a
Chemistry Report. [14]

In his defense, Acub, a pedicab driver, testified that on February


10, 2005, he was at home resting after he and his wife, Intan,
had gone to the pawnshop earlier that morning to pawn her
earrings. Later, at around 1:00 p.m., he went outside to buy
food. On his way back, Acub was suddenly stopped by two (2)
men and one (1) woman. One (1) of the men restrained him,
while the other poked a gun at him and asked if he had money.
After Acub denied having money, they all brought him to his
house.[15]

Inside his house, Acub saw his wife crying while three (3) other
persons searched his house for shabu. When they found nothing,
all six (6) strangers then brought Acub to the police station. [16]

Intan corroborated her husband's testimony. She testified that


while her husband was outside buying food, three (3) police
officers in civilian clothes suddenly entered and searched their
house without a search warrant. They left after finding nothing,
but soon returned with more police officers and Acub, who had
his hand cuffed and was beaten up by the police officers.
[17]

The police officers then asked Intan to produce the shabu, but
she denied having any. When they asked her to just give them
money instead, she also denied having it.[18]

Intan later visited Acub at the police station, where she was told
that she had to pay P50,000.00 for her husband's release. She
told the officer that she did not have the money for her husband's
freedom. [19]

The Regional Trial Court, in its Decision promulgated on


November 4, 2011,  found Acub guilty of the crime of illegal sale
[20]

of dangerous drugs.
Upholding the presumption of regularity in the police officers'
official actions, the trial court pointed out that it was "out of sync
with human nature"  for a team of police officers to prey on an
[21]

impoverished pedicab driver. It also highlighted Acub's admission


that prior to the buy-bust operation, he had no misunderstanding
with the arresting officers, striking a blow to his frame-up
allegations.[22]

The trial court likewise brushed aside the lack of an inventory, as


the chain of custody of evidence remained unbroken and the
evidence was properly identified in court. [23]

Acub was sentenced to life imprisonment and to pay a penalty of


P500,000.00. The dispositive portion of the Regional Trial Court
Decision read:
WHEREFORE, in the light of all the foregoing, this Court finds
accused GADJIR ACUB Y ARAKANI, a.k.a.
"ASAW" GUILTY beyond reasonable doubt for violating Section 5,
Article II of the Comprehensive Dangerous Drugs Act of 2002
(R.A. 9165) and sentences him to suffer the penalty of LIFE
IMPRISONMENT and pay a fine of FIVE HUNDRED THOUSAND
PESOS (P500,000) without subsidiary imprisonment in case of
insolvency.

SO ORDERED.  (Emphasis in the original)


[24]

Acub filed a Notice of Appeal.  In its May 3, 2012 Resolution,


[25]

 the Court of Appeals directed Acub to file his appellant's brief


[26]

and the Office of the Solicitor General to file its corresponding


appellee's brief upon receipt of the appellant's brief. Both parties
complied and filed their respective briefs. [27]

In its March 16, 2015 Decision,  the Court of Appeals affirmed


[28]

the Regional Trial Court Decision convicting Acub.

The Court of Appeals upheld the Regional Trial Court's findings


that the prosecution successfully established all the elements of
the illegal sale of a dangerous drug. Furthermore, it affirmed that
there were no gaps in the chain of custody. [29]
The Court of Appeals opined that the police officers' failure to
strictly comply with Article II, Section 21 of the Comprehensive
Dangerous Drugs Act was immaterial as the integrity and
evidentiary value of the seized shabu were properly preserved. [30]

The dispositive portion of the Court of Appeals Decision read:


WHEREFORE, premises considered, the appeal is DENIED. The
Decision dated 04 November 2011 rendered by the Regional Trial
Court of Zamboanga City, Branch 13, in Crim. Case No. 5658
(21352), which declares accused-appellant guilty of violation of
Section 5, Article II of the Comprehensive Dangerous Drugs Act
of 2002 (RA 9165) is hereby AFFIRMED with the MODIFICATION,
in that the accused-appellant shall not be eligible for parole.

SO ORDERED.  (Emphasis in the original)


[31]

Thus, Acub filed a Notice of Appeal,  which was given due course
[32]

by the Court of Appeals in its July 14, 2015 Resolution.[33]

In its November 25, 2015 Resolution,  this Court notified the


[34]

parties that they may file their respective supplemental briefs.


However, as noted in this Court's April 6, 2016 Resolution,  both
[35]

parties manifested  that they were dispensing with the filing of a


[36]

supplemental brief Instead, they would adopt their Briefs filed


before the Court of Appeals.

Accused-appellant alleges that the prosecution failed to show


strict compliance with Section 21 of the Comprehensive
Dangerous Drugs Act. The police officers have not marked,
inventoried, and photographed the sachet of shabu upon seizure
and in the presence of the required representatives.
 Furthermore, accused-appellant notes that the prosecution
[37]

failed to offer a justifiable ground for the officers' noncompliance


with Section 21. [38]

Additionally, accused-appellant claims that the prosecution failed


to substantiate its allegation of a planned buy-bust operation. He
points out that the lack of a pre-operation report or blotter in the
records raises doubt on whether the buy-bust money was
marked, and whether the police officers participated in the
supposed operation. [39]

Stressing that the prosecution failed to establish an unbroken


chain of custody, accused-appellant points out that no other
testimony aside from PO2 Cordero's, the poseur-buyer, was
presented to prove the alleged sale. Moreover, he states that the
prosecution failed to present the confidential informant who
supposedly tipped off the police officers. This, he points out,
could have shed light on the transaction. [40]

Accused-appellant argues that another gap in the chain was


created after Inspector Manuel, the forensic chemist, admitted
that he did not personally receive the laboratory request with the
specimen. He points out that the Chemistry Report Inspector
Manuel identified did not bear his name, but that of a certain Nur-
in Moderika y Sawadjaan. He insists that all of these
circumstances created doubt on the integrity and identity of the
sachet of shabu that he supposedly sold to PO2 Cordero. [41]

For its part, plaintiff-appellee People of the Philippines, through


the Office of the Solicitor General, claims that it was able to prove
all the elements of illegal sale of dangerous drugs. It explains
that the identities of the buyer and seller, consideration, and
object of the sale were established.  Denying accused-appellant's
[42]

assertion that the failure to present the marked money was fatal
to its case, it argues that in buy-bust operations, the marked
money is not an indispensable requirement, but is merely
corroborative.[43]

Plaintiff-appellee, likewise, denies that noncompliance with


Section 21 was fatal to its case since the integrity and evidentiary
value of the seized sachet were preserved by the apprehending
officers, as shown by the unbroken chain of custody. [44]

Finally., plaintiff-appellee maintains that accused-appellant failed


to present clear and convincing evidence to overturn the
presumption of regularity in the arresting officers' performance of
their duties.
[45]

The sole issue for this Court's resolution is whether or not


accused-appellant Gajir Acub y Arakani's guilt was proven beyond
reasonable doubt despite noncompliance with the required
procedure under Section 21 of the Comprehensive Dangerous
Drugs Act, as amended.

Accused-appellant must be acquitted.

To sustain a conviction for the illegal sale of dangerous drugs, it


must be proven that a transaction took place and the corpus
delicti or the illicit drug must be presented into evidence.
[46]

Although not easily identifiable, the identity of the illicit drug


must be clearly established since its very existence is essential to
convict an accused. People v. Jaafar  explained:
[47]

In all prosecutions for violations of Republic Act No. 9165,


the corpus delicti is the dangerous drug itself. Its existence is
essential to a judgment of conviction. Hence, the identity of the
dangerous drug must be clearly established.

Narcotic substances are not readily identifiable. To determine


their composition and nature, they must undergo scientific testing
and analysis. Narcotic substances are also highly susceptible to
alteration, tampering, or contamination. It is imperative,
therefore, that the drugs allegedly seized from the accused are
the very same objects tested in the laboratory and offered in
court as evidence. The chain of custody, as a method of
authentication, ensures that unnecessary doubts involving the
identity of seized drugs are removed. [48]

Section 21 of the Comprehensive Dangerous Drugs Act, as


amended by Republic Act No. 10640, provides the manner of
custody and disposition of confiscated, seized, and/or
surrendered drugs and/or drug paraphernalia. Section 21, as
amended, imposes the following requirements when it comes to
custody of drugs or drug paraphernalia prior to the filing of a
criminal case:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs,
plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or
laboratory equipment so confiscated, seized and/or surrendered,
for proper disposition in the following manner:
1. The apprehending team having initial custody and control of
the dangerous drugs, controlled precursors and essential
chemicals, instruments/paraphernalia and/or laboratory
equipment shall, immediately after seizure and confiscation,
conduct a physical inventory of the seized items and
photograph the same in the presence of the accused or the
person/s from whom such items were confiscated and/or
seized, or his/her representative or counsel, with an elected
public official and a representative of the National
Prosecution Service or the media who shall be required to
sign the copies of the inventory and be given a copy thereof:
Provided, That the physical inventory and photograph shall
be conducted at the place where the search warrant is
served; or at the nearest police station or at the nearest
office of the apprehending officer/team, whichever is
practicable, in case of warrantless seizures: Provided, finally,
That noncompliance of these requirements under justifiable
grounds, as long as the integrity and. the evidentiary value
of the seized items are properly preserved by the
apprehending officer/team, shall not render void and invalid
such seizures and custody over said items[;]
2. Within twenty-four (24) hours upon confiscation/seizure of
dangerous drugs, plant sources of dangerous drugs,
controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment, the
same shall be submitted to the PDEA Forensic Laboratory for
a qualitative and quantitative examination;
3. A certification of the forensic laboratory examination results,
which shall be done by the forensic laboratory examiner,
shall be issued immediately upon the receipt of the subject
item/s: Provided, That when the volume of dangerous drugs,
plant sources of dangerous drugs, and controlled precursors
and essential chemicals does not allow the completion of
testing within the time frame, a partial laboratory
examination report shall be provisionally issued stating
therein the quantities of dangerous drugs still to be
examined by the forensic laboratory: Provided, however,
That a final certification shall be issued immediately upon
completion of the said examination and certification[.]
This Court has repeatedly emphasized that strict compliance  is [49]

the expected standard when it comes to the custody and


disposition of seized illegal drugs, to prevent tampering and
planting of evidence. People v. Que  stressed:
[50]

The Comprehensive Dangerous Drugs Act requires nothing less


than strict compliance. Otherwise, the raison d'etre of the chain
of custody requirement is compromised. Precisely, deviations
from it leave the door open for tampering, substitution, and
planting of evidence.

Even acts which approximate compliance but do not strictly


comply with Section 21 have been considered insufficient. [51]

Strict compliance with Section 21 is in keeping with the doctrine


that penal laws are strictly construed against the government and
its agents. In People v. Gonzales:[52]

These provisions obviously demand strict compliance, for only by


such strict compliance may be eliminated the grave mischiefs of
planting or substitution of evidence and the unlawful and
malicious prosecution of the weak and unwary that they are
intended to prevent. Such strict compliance is also consistent with
the doctrine that penal laws shall be construed strictly against the
Government and liberally in favor of the accused. [53]

Nonetheless, the Comprehensive Dangerous Drugs Act recognizes


that strict compliance with its provisions may not always be
possible. Hence, a saving clause was introduced, first in the
Implementing Rules and Regulations, before being eventually
inserted in the amended law. The saving clause states:
[P]rovided, finally, that non-compliance with these requirements
under justifiable grounds, as long as the integrity and the
evidentiary value of the seized items are properly preserved by
the apprehending officer/team, shall not render void and invalid
such seizures of and custody over said items.
The law is clear that for the saving clause to apply, the twin
requirements must be met: (1) the noncompliance was
justifiable; and (2) the integrity and evidentiary value of the
seized item were preserved. Not only must the prosecution
explain why the requirements were not strictly complied with,  it
[54]

must also prove during trial the justifiable grounds for


noncompliance.  People v. Umipang  instructed:
[55] [56]

Minor deviations from the procedures under R.A. 9165 would not
automatically exonerate an accused from the crimes of which he
or she was convicted. This is especially true when the lapses in
procedure were "recognized and explained in terms of []
justifiable grounds." There must also be a showing "that the
police officers intended to comply with the procedure but were
thwarted by some justifiable consideration/reason." However,
when there is gross disregard of the procedural safeguards
prescribed in the substantive law (R.A. 9165), serious uncertainty
is generated about the identity of the seized items that the
prosecution presented in evidence. This uncertainty cannot be
remedied by simply invoking the presumption of regularity in the
performance of official duties, for a gross, systematic, or
deliberate disregard of the procedural safeguards effectively
produces an irregularity in the performance of official duties. As a
result, the prosecution is deemed to have failed to fully establish
the elements of the crimes charged, creating reasonable doubt on
the criminal liability of the accused.  (Citations omitted)
[57]

Here, both the trial court  and[58]


the Court of
Appeals  acknowledged that the prosecution failed to prove strict
[59]

compliance with Section 21. However, they both brushed this


failure aside by reasoning that the integrity and evidentiary value
of the seized shabu were nevertheless preserved. The Court of
Appeals held:
Section 21, Article II of RA 9165 clearly outlines the post-seizure
procedure for the custody and disposition of seized drugs. The
law mandates that the officer taking initial custody of the drug
shall, immediately after seizure and confiscation, conduct the
physical inventory of the same and take a photograph thereof in
the presence of the accused, of the person/s from whom such
items were confiscated and/or seized or his/her representative or
counsel, a representative from the media and the Department of
Justice (DOJ), and any elected public official, who shall be
required to sign the copies of the inventory and be given a copy
thereof.

However, the Implementing Rules and Regulations of the said law


provide a saving clause whenever the procedures laid down in the
law are not strictly complied with, thus:
... Provided, further, that non-compliance with these
requirements under justifiable grounds, as long as the integrity
and the evidentiary value of the seized items are properly
preserved by the apprehending officer/team, shall not render void
and invalid such seizures of and custody over said items.
As gleaned from the foregoing, the most important factor is the
preservation of the integrity and the evidentiary value of the
seized items as they will be used to determine the guilt or
innocence of the accused. As long as the evidentiary value and
integrity of the illegal drug are properly preserved, strict
compliance of the requisites under Section 21 of RA 9165 may be
disregarded. Further, slight infractions or nominal deviations by
the police from the prescribed method of handling the corpus
delicti should not exculpate an otherwise guilty defendant.
 (Citations omitted)
[60]

The Court of Appeals is mistaken.

It has not escaped this Court's attention that the seized sachet
only contained 0.0188 gram of shabu,  a minuscule amount that
[61]

is practically just a grain of rice. This magnifies the danger of


tampering with or planting evidence. Hence, the lower courts
should have been on guard instead of easily resorting to the
presumption of regularity enjoyed by police officers in the
performance of their official acts. In People v. Holgado:
[62]

While the miniscule amount of narcotics seized is by itself not a


ground for acquittal, this circumstance underscores the need for
more exacting compliance with Section 21. In [Mallillin] v. People,
this court said that "the likelihood of tampering, loss or mistake
with respect to an exhibit is greatest when the exhibit is small
and is one that has physical characteristics fungible in nature and
similar in form to substances familiar to people in their daily
lives."
[63]

It is disconcerting how quickly the lower courts downplayed the


legal safeguards in Section 21 by immediately resorting to the
saving clause and embracing the presumption of regularity
accorded to State agents.

The prosecution failed to prove that an inventory of the seized


sachet was prepared and that it was photographed in the
presence of accused-appellant, an elected public official, and
representatives from the National Prosecution Service or the
media. Despite the blatant lapses, the prosecution did not explain
the arresting officers' failure to comply with the requirements in
Section 21. Nonetheless, despite the prosecution's indifference to
the established legal safeguards, both the lower courts still found
accused-appellant guilty of the charge against him.

Contrary to what the lower courts may believe, the saving clause,
as an exception to the rule of strict compliance, is not a talisman
that the prosecution may invoke at will. Instead, it may only be
appreciated in the prosecution's favor if the latter shows a valid
reason for not observing the procedure laid out in Section 21.

The unjustified lapses or noncompliance with Section 21 is


tantamount to a substantial gap in the chain of custody.
In Marinas v. People:[64]

There is no question that the prosecution miserably failed to


provide justifiable grounds for the arresting officers' non-
compliance with Section 21 of R.A. No. 9165, as well as the
IRR. The unjustified absence of an elected public official and DOJ
representative during the inventory of the seized item constitutes
a substantial gap in the chain of custody. There being a
substantial gap or break in the chain, it casts serious doubts on
the integrity and evidentiary value of the corpus delicti. As such,
the petitioner must be acquitted.  (Emphasis supplied)
[65]

In his separate concurring opinion in Mariñas, Associate Justice


Diosdado Peralta expounded that the prosecution, in accordance
with the Rules on Evidence, has the burden of proving a
justifiable cause for noncompliance with Section 21.  He then
[66]

listed some of the possible justifiable reasons for noncompliance


with Section 21:
In this case, the prosecution never alleged and proved that the
presence of all the required witnesses was not obtained for any of
the following reasons, such as: (1) their attendance was
impossible because the place of arrest was a remote area; (2)
their safety during the inventory and photograph of the seized
drugs [was] threatened by an immediate retaliatory action of the
accused or any person/s acting for and in his/her behalf; (3) the
elected official[s] themselves were involved in the punishable acts
sought to be apprehended; (4) earnest efforts to secure the
presence of a DOJ or media representative and an elected public
official within the period required under Article 125 of the Revised
Penal Code prove futile through no fault of the arresting officers,
who face the threat of being charged with arbitrary detention; or
(5) time constraints and urgency of the anti-drug operations,
which often rely on tips of confidential assets, prevented the law
enforcers from obtaining the presence of the required witnesses
even before the offenders could escape.  (Citation omitted)
[67]

The prosecution utterly failed to provide any justifiable ground for


the arresting officers' failure to inventory and photograph the
seized sachet in the presence of accused-appellant, an elected
public official, and representatives from the National Prosecution
Service or the media. Worse, the prosecution remained silent as
to the noncompliance with Section 21.

This noncompliance created a huge gap in the chain of custody


that not even the presumption of regularity in the performance of
official duties may remedy, as the lapses themselves are
undeniable evidence of irregularity.[68]

WHEREFORE, the March 16, 2015 Decision of the Court of


Appeals in CA-G.R. CR HC No. 01003-MIN is REVERSED and
SET ASIDE. Accused-appellant Gajir Acub y Arakani a.k.a.
"Asaw" is ACQUITTED for the prosecution's failure to prove his
guilt beyond reasonable doubt. He is ordered
immediately RELEASED from detention, unless he is confined for
any other lawful cause.

Let a copy of this Decision be furnished to the Penal Institute


Superintendent of the Bureau of Corrections San Ramon Prison
and Penal Farm, Zamboanga City, for immediate implementation.
The Penal Institute Superintendent is directed to report the action
he has taken to this Court within five (5) days from receipt of this
Decision.

The Regional Trial Court is directed to turn over the seized sachet
of shabu to the Dangerous Drugs Board for destruction in
accordance with law.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando, and Inting, JJ.,


concur.

July 18, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 10, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 18, 2019 at 1:20 p.m.

ORDER OF RELEASE

TO: The Director General

 
CSupt. Robert A. Veneracion
GREETINGS:

 
June 10, 2019
 

 
Decision
 

"
WHEREFORE
, the March 16, 2015 Decision of the Court of Appeals in CA-G.R. CR HC
01003-MIN is 
REVERSED and SET ASIDE
. Accused-appellant Gajir Acub y Arakani a.k.a. "Asaw" is 
ACQUITTED
 for the prosecution's failure to prove his guilt beyond reasonable doubt. H
ordered immediately 
RELEASED
 from detention, unless he is confined for any other lawful cause.

Let a copy of this Decision be furnished to the Penal Institute Superintende


the Bureau of Corrections San Ramon Prison and Penal Farm, Zamboanga
for immediate implementation. The Penal Institute Superintendent is directe
report the action he has taken to this Court within five (5) days from recei
this Decision.

The Regional Trial Court is directed to turn over the seized sachet of shabu to
Dangerous Drugs Board for destruction in accordance with law.

SO ORDERED.
"

NOW, THEREFORE,
 

 
GAJIR ACUB Y ARAKANI a.k.a. "ASAW"
 
GIVEN
 

 
DIOSDADO M. PERALTA

 
10
th

 
June 2019
[1]

 
rollo

[2]

[3]
 

 
rollo

[4]

[5]

 
rollo

[6]

 
[7]

[8]

[9]

[10]

[11]
 

[12]

[13]

[14]

[15]

 
[16]

[17]

[18]

[19]

[20]

 
[21]

[22]

[23]

[24]
 

[25]

[26]

[27]

[28]

 
[29]

[30]

[31]

[32]

[33]

 
[34]

 
Rollo

[35]

[36]

[37]

 
rollo
[38]

[39]

[40]

[41]

[42]

 
[43]

[44]

[45]

[46]

 
People v. Morales

 
citing People v. Darisan

[47]

[48]

 
citing People v. Simbahon

 
People v. Laxa

 
Mallillin v. People

[49]

 
People v. Que

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63900

 
People v. Gonzales

 
People v. Carin

[50]
 

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63900

[51]

[52]

[53]

 
citing People v. Denoman
[54]

 
People v. Almorfe

 
citing People v. Garcia

[55]

 
People v. De Guzman

[56]
 

[57]

[58]

 
rollo

[59]

[60]
 

[61]

[62]

[63]

 
citing Mallillin v. People
[64]

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64388

[65]

[66]

 
Mariñas v. People

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64388
[67]

[68]

 
People v. Ramirez

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/63896

 
citing People v. Mendoza

Source: Supreme Court E-Library | Date created: August 01, 2019


This page was dynamically generated by the E-Library Content Management System

Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 217044, January 16, 2019 ]


SPOUSES RAINIER JOSE M. YULO AND JULIET L.
YULO, PETITIONERS, VS. BANK OF THE
PHILIPPINE ISLANDS, RESPONDENT.DECISION

LEONEN, J.:

When issuing a pre-screened or pre-approved credit card, the


credit card provider must prove that its client read and consented
to the terms and conditions governing the credit card's use.
Failure to prove consent means that the client cannot be bound
by the provisions of the terms and conditions, despite admitted
use of the credit card.

This resolves the Petition for Review on Certiorari  filed by [1]

Spouses Rainier Jose M. Yulo (Rainier) and Juliet L. Yulo (Juliet),


assailing the Court of Appeals February 20, 2015 Decision  in CA- [2]

G.R. SP No. 131192, which upheld the June 26, 2013 Decision  of [3]

the Regional Trial Court, Branch 62, Makati City.

On October 9, 2006,  the Bank of the Philippine Islands issued


[4]

Rainier a pre-approved credit card. His wife, Juliet, was also given
a credit card as an extension of his account. Rainier and Juliet
(the Yulo Spouses) used their respective credit cards by regularly
charging goods and services on them. [5]
The Yulo Spouses regularly settled their accounts with the Bank
of the Philippine Islands at first, but started to be delinquent with
their payments by July 2008. Their outstanding balance ballooned
to P264,773.56 by November 29, 2008. [6]

On November 11, 2008, the Bank of the Philippine Islands sent


Spouses Yulo a Demand Letter  for the immediate payment of
[7]

their outstanding balance of P253,017.62.

On February 12, 2009, the Bank of the Philippine Islands sent


another Demand Letter  for the immediate settlement of their
[8]

outstanding balance of P325,398.42.

On February 23, 2009, the Bank of the Philippine Islands filed a


Complaint  before the Metropolitan Trial Court of Makati City for
[9]

sum of money against the Yulo Spouses. This was initially raffled
to the Metropolitan Trial Court Branch 67, Makati City, and was
docketed as Civil Case No. 97470.

In their Answer,  the Yulo Spouses admitted that they used the
[10]

credit cards issued by the Bank of the Philippine Islands but


claimed that their total liability was only P20,000.00. They also
alleged that the Bank of the Philippine Islands did not fully
disclose to them the Terms and Conditions on their use of the
issued credit cards. [11]

Several attempts at mediation  between the parties were


[12]

unsuccessful; thus, the case was re-raffled to the Metropolitan


Trial Court Branch 65, Makati City, and proceeded with both
parties presenting their respective witnesses. [13]

On June 29, 2012,  the Metropolitan Trial Court, in its Decision,


[14]

 ruled in favor of the Bank of the Philippine Islands and ordered


[15]

the Spouses Yulo to pay the bank the sum of P229,378.68.

The Metropolitan Trial Court found that the Bank of the Philippine
Islands successfully proved by preponderance of evidence that
the Yulo Spouses failed to comply with the Terms and Conditions
of their contract. Nonetheless, it equitably reduced the monthly
three percent (3%) interest and three percent (3%) penalty
charged under the Terms and Conditions to one percent (1%)
interest and one percent (1%) penalty, to be computed from
demand. [16]

The dispositive portion of the Metropolitan Trial Court's June 29,


2012 Decision read:
WHEREFORE, premises considered, judgment is hereby
rendered ordering defendants SPS. RAINER (sic) JOSE M.
YULO and JULIET L. YULO, jointly and severally, to pay plaintiff
the amount of P229,378.68 plus 1% interest and 1% penalty per
month from February 12, 2009 until the whole amount is fully
paid and the amount of P15,000.00 as and by way of attorney's
fees; and, the costs.

SO ORDERED.  (Emphasis in the original, citation omitted)


[17]

The Yulo Spouses filed an Appeal, but it was dismissed on June


26, 2013  by the Regional Trial Court Branch 62, Makati City,
[18]

which affirmed the Metropolitan Trial Court Decision.

The Regional Trial Court declared that when it comes to pre-


approved credit cards, like those issued to the Yulo Spouses, the
credit card provider had the burden of proving that the credit
card recipient agreed to be bound by the Terms and Conditions
governing the use of the credit card.[19]

The Regional Trial Court noted that the Bank of the Philippine
Islands presented as evidence the Delivery Receipt for the credit
card packet, which was signed by Rainier's authorized
representative, Jessica Baitan (Baitan). It held that the Bank of
the Philippine Islands successfully discharged its burden, as the
signed Delivery Receipt and Rainier's use of credit card were
proofs that Rainier agreed to be bound by its Terms and
Conditions. [20]

The Regional Trial Court further ruled that the charge slips signed
by the Yulo Spouses were the best evidence that they had indeed
availed of the Bank of the Philippine Islands' credit
accommodation. However, the facts established by the bank and
the Yulo Spouses' failure to timely challenge the charges in the
Statements of Account were sufficient evidence that the Yulo
Spouses admitted the veracity of the Statements of Account. [21]

The dispositive portion of the Regional Trial Court's June 26, 2013
Decision read:
IN VIEW WHEREOF, the appeals interposed by spouses Yulo
is DISMISSED and the assailed decision dated June 29, 2011
(2012) of the Metropolitan Trial Court of Makati City Branch 65
is AFFIRMED in toto.

SO ORDERED.  (Emphasis in the original)


[22]

The Yulo Spouses then filed a Petition for Review before the Court
of Appeals.  On February 20, 2015, the Court of Appeals denied
[23]

the Petition and affirmed the Regional Trial Court Decision.


[24]

The Court of Appeals concurred with the Regional Trial Court's


finding that Rainier, through his authorized representative,
received the pre-approved credit card issued by the Bank of the
Philippine Islands, and thus, agreed to be bound by its Terms and
Conditions.[25]

Moreover, the Court of Appeals found that the Yulo Spouses'


failure to contest the charges in the monthly Statements of
Account signified that they accepted the veracity of the charges.
It further noted that Rainier, an insurance underwriter, was
familiar with contractual stipulations; hence, he could not feign
ignorance over his own contractual obligation to the Bank of the
Philippine Islands. [26]

The dispositive portion of the Court of Appeals' February 20, 2015


Decision read:
WHEREFORE, the Petition is hereby DENIED.
The Decision dated 26 June 2013 of the Regional Trial Court of
Makati City, Branch 62, in Civil Case No. 12-945, is AFFIRMED.
SO ORDERED.  (Emphasis in the original)
[27]

The Yulo Spouses then elevated the case to this Court through
this Petition.

In their Petition for Review on Certiorari,  petitioners, the Yulo


[28]

Spouses, contend that respondent Bank of the Philippine Islands


failed to prove their liability. They claim that the only valid proofs
that they availed of respondent's credit line were the transaction
slips they signed after purchasing goods or services with their
credit cards, not the Statements of Account respondent presented
as evidence.  They also assert that the Terms and Conditions,
[29]

which petitioner Rainier supposedly agreed to, was never


presented as evidence. Moreover, respondent failed to
substantiate its claim that he consented to the Terms and
Conditions. [30]

Petitioners claim that respondent failed to prove that it


ascertained the authority of Baitan, petitioner Rainier's purported
authorized representative, before handing her the credit card
packet.  They then assailed the Terms and Conditions for being
[31]

"written in so fine prints and in breathlessly long sentences for


the purpose of being ignored altogether, to the prejudice of the
public."  They also claim that the imposed charges and penalties
[32]

are "excessive and contrary to morals." [33]

Petitioners concede that the Court of Appeals did not err in


striking down and replacing respondent's original charges and
penalties for being usurious. However, they insist that the
reckoning period of the lowered interest rates and penalties
should be from March 9, 2008, when they were first in default,
not from February 12, 2009, when a written demand was sent to
them. [34]

In its Comment,  respondent underscores that the Petition raised


[35]

purely questions of fact improper in a petition for review on


certiorari. Further, respondent claims that petitioners brought up
the same issues already ruled upon by the lower courts, making it
a pro-forma petition, which should be outright denied. [36]
Respondent maintains that aside from petitioners' bare
allegations that the charges against them were inaccurate, they
have neither presented an alternative computation nor contested
the supposed error in the billing statements.  Respondent also
[37]

asserts that when petitioners used their credit cards, they bound
themselves to its Terms and Conditions in the credit card packet's
Delivery Receipt. [38]

Petitioners were directed  to reply to respondent's Comment, but


[39]

they manifested  that they would no longer be filing their reply.


[40]

The sole issue for this Court's resolution is whether or not


petitioners Rainier Jose M. Yulo and Juliet L. Yulo are bound by
the Terms and Conditions on their use of credit cards issued by
respondent.

When a credit card provider issues a credit card to a pre-


approved or pre-screened client, the usual screening processes
"such as the filing of an application form and submission of other
relevant documents prior to the issuance of a credit card, are
dispensed with and the credit card is issued outright."  As the
[41]

recipient of an unsolicited credit card, the pre-screened client can


then choose to either accept or reject it.
[42]

The Regional Trial Court found that the credit card packet from
respondent, which contained petitioner's pre-approved credit card
and a copy of its Terms and Conditions, was duly delivered to
petitioner Rainier through his authorized representative, Baitan,
as shown in the Delivery Receipt:
As record shows, [the Bank of the Philippine Islands] presented
as evidence the Delivery Receipt marked in evidence as Exhibit
"C". The [Bank of the Philippine Islands] credit card issued in
favor [of] defendant-appellant Rainier Jose M. Yulo was received
by his duly authorized representative, one Jessica Baitan. In fact,
defendants-appellants admitted having made [use] and availed of
the credits which plaintiff-appellees may have in its member
establishments. [43]
This was affirmed by the Court of Appeals, which stated, "The
[Bank of the Philippine Islands] credit card issued to petitioner
Rainier was received by his authorized representative, a certain
Jessica Baitan, as evidenced by a Delivery Receipt."[44]

As a pre-screened client, petitioner Rainier did not submit or sign


any application form as a condition for the issuance of a credit
card in his account. Unlike a credit card issued through an
application form, with the applicant explicitly consenting to the
Terms and Conditions on credit accommodation use, a pre-
screened credit card holder's consent is not immediately
apparent.

Thus, respondent, as the credit card provider, had the burden of


proving its allegation that petitioner Rainier consented to the
Terms and Conditions surrounding the use of the credit card
issued to him. [45]

While the Delivery Receipt  showed that Baitan received the


[46]

credit card packet for petitioner Rainier, it failed to indicate


Baitan's relationship with him. Respondent also failed to
substantiate its claim that petitioner Rainier authorized Baitan to
act on his behalf and receive his pre-approved credit card. The
only evidence presented was the check mark in the box beside
"Authorized Representative" in the Delivery Receipt. This self-
serving evidence is obviously insufficient to sustain respondent's
claim.

A contract of agency is created when a person acts for or on


behalf of a principal, with the latter's consent or authority.
 Unless required by law, an agency does not require a particular
[47]

form, and may be express or implied from the acts or silence of


the principal.  Rallos v. Felix Go Chan & Sons Realty
[48]

Corporation  lays down the elements of agency:


[49]

Out of the above given principles, sprung the creation an


acceptance of the relationship of agency whereby one party,
called the principal (mandante), authorizes another, called the
agent (mandatario), to act for find (sic) in his behalf in
transactions with third persons. The essential elements of agency
are: (1) there is consent, express or implied, of the patties to
establish the relationship; (2) the object is the execution of a
juridical act in relation to a third person; (3) the agents (sic) acts
as a representative and not for himself; and (4) the agent acts
within the scope of his authority.  (Emphasis in the original,
[50]

citation omitted)
Respondent fell short in establishing an agency relationship
between petitioner Rainier and Baitan, as the evidence presented
did not support its claim that petitioner Rainier authorized Baitan
to act on his behalf. Without proof that petitioner Rainier read
and agreed to the Terms and Conditions of his pre-approved
credit card, petitioners cannot be bound by it.

Petitioners do not deny receiving and using the credit cards


issued to them. They do, however, insist that respondent failed to
establish their liability because the Statements of Account
submitted into evidence "merely reflect [their] alleged incurred
transactions[,]"  but are not the source of their obligation or
[51]

liability.

Petitioners are mistaken.

When petitioners accepted respondent's credit card by using it to


purchase goods and services, a contractual relationship was
created between them, "governed by the Terms and Conditions
found in the card membership agreement. Such terms and
conditions constitute the law between the parties." [52]

Under Payment of Charges in the Terms and Conditions,


petitioners would be furnished monthly Statements of Account
and would have a 20-day period from the statement date to
settle their outstanding balance, or the minimum required
payment.  However, with respondent's failure to prove petitioner
[53]

Rainier's conformity and acceptance of the Terms and Conditions,


petitioners cannot be bound by its provisions.
Nonetheless, petitioner Rainier admitted to receiving the
Statements of Account from respondent, and was aware of the
interest rate charges imposed by respondent.  In his testimony,
[54]

he even categorically admitted that he was not disputing the


transactions and purchases he made before his default in
payment and his account's freezing:
ATTY. BAUTISTA:
But would you admit that before June 2008 you made purchases?
A
Yes, Ma'am.
Q
Would you admit that those purchases were reflected in the
Statement of Account?
COURT:
Were there disputed purchases before June 2008?
ATTY. PUZON:
None, Your Honor.
COURT:
That is improper because they are not disputing the purchases or
transactions as stated in the Statement of Account earlier
identified by the witness.
ATTY. BAUTISTA:
Mr. Witness, did you receive the Statement of Account sent to
you by the plaintiff?
ATTY. PUZON:
Not covered by direct examination, Your Honor.   
ATTY. BAUTISTA:
I'm on cross-examination, Your Honor.
COURT:
What Statement of Account? Give certain period. Are you
referring to the Statement of Account after the June 2008?
ATTY. BAUTISTA:
Before the June 2008, Your Honor.   
COURT:
There is no dispute as to the obligation as of June 2008, so that
would be improper.  (Emphasis supplied)
[55]

This case thus falls squarely within Alcaraz v. Court of


Appeals  and Ledda v. Bank of the Philippine Islands,  where the
[56] [57]
credit card provider also failed to prove the pre-screened client's
consent to the credit card's terms and conditions. Alcaraz ruled
that when the credit card provider failed to prove its client's
consent, even if the latter did not deny availing of the credit card
by charging purchases on it, the credit card client may only be
charged with legal interest:
As correctly pointed out by the Court of Appeals, the petitioner
should not be condemned to pay the interests and charges
provided in the Terms and Conditions on the mere claim of the
private respondent without any proof of the former 's conformity
and acceptance of the stipulations contained therein. Even if we
are to accept the private respondent's averment that the
stipulation quoted earlier is printed at the back of each and every
credit card issued by private respondent Equitable, such
stipulation is not sufficient to bind the petitioner to the Terms and
Conditions without a clear showing that the petitioner was aware
of and consented to the provisions of this document. This, the
private respondent failed to do.

It is, however, undeniable that petitioner Alcaraz accumulated


unpaid obligations both in his peso and dollar accounts through
the use of the credit card issued to him by private respondent
Equitable. As such, petitioner Alcaraz is liable for the payment
thereof. Since the provisions of the Terms and Conditions are
inapplicable to petitioner Alcaraz, the legal interest on obligations
consisting of loan or forbearance of money shall apply.
 (Emphasis supplied, citation omitted)
[58]

The records reveal that as of the July 9, 2008 Statement of


Account, petitioners had an outstanding balance of P229,378.68.
The Metropolitan Trial Court stated:
As of Statement Date July 9, 2008, wherein defendants made
their last payment, the outstanding balance is P110,778.49.
However, there are still installments due on the account; thus,
the following must be included in his obligation:

Establishment Monthly Installment No. of Installments Due


Automatic Centre 624.96 7 4,3
Abenson 961.11 5 4,8
Abenson 849.58 2 1,6
EBC 2,738.85 3 8,2
EBC 7,012.48 3 21,
EBC 8,718.53 9 78,
TOTAL 118

Thus, the amount of P118,600.19 must be added to P110,778.49,


which would sum up to P229,378.68.  (Emphasis in the original,
[59]

citation omitted)
The Metropolitan Trial Court ruling was affirmed by both the
Regional Trial Court and the Court of Appeals. However, since
petitioner Rainier did not consent to the Terms and Conditions
governing his credit card, there is a need to modify the
outstanding balance by removing the interests, penalties, and
other charges imposed before and on the July 9, 2008 Statement
of Account.

A careful review of the Statements of Account from March 2008


to July 2008  shows that respondent made the following charges
[60]

on petitioner Rainier's account:


Statement Date Finance Charge Pena
March 9, 2008 P606.01 [61]

641.11 [62]

373.58 [63]

April 9, 2008 605.19 [64]

431.69 [65]

813.61 [66]

May 11, 2008 0


June 9, 2008 1,510.88 [67]

21.28[68]

July 9, 2008

2,121.10 [71]

72.93[73]

Sub-total 7,197.38 2,123.79


Total P9,321.17
Thus, the finance charges, penalties, and interests amounting to
P9,321.17 should be deducted from the outstanding balance of
P229,378.68, leaving a new outstanding balance of P220,057.51.
This outstanding balance shall then be subjected to 12% legal
interest from November 11, 2008,  the date of respondent's first
[74]

extrajudicial demand  until June 30, 2013, and six percent (6%)
[75]

legal interest from July 1, 2013 until fully paid. [76]

Finally, the award of P15,000.00 as attorney's fees  is deleted for


[77]

lack of basis. It is well established that the trial court "must state
the factual, legal[,] or equitable justification for the award of
attorney's fees"  in the body of its decision. The Metropolitan
[78]

Trial Court failed to state the factual or legal justification for its
award of attorney's fees in respondent's favor; instead, it merely
declared that the award of P15,000.00 as attorney's fees was just
and equitable.  Hence, it must be deleted.
[79]

WHEREFORE, premises considered, the Petition for Review on


Certiorari is PARTIALLY GRANTED. The assailed Court of
Appeals February 20, 2015 Decision in CA-G.R. SP No. 131192
is MODIFIED. Petitioners Rainier Jose M. Yulo and Juliet L. Yulo
are DIRECTED TO PAY respondent Bank of the Philippine
Islands the amount of Two Hundred Twenty Thousand Fifty-Seven
Pesos and Fifty-One Centavos (P220,057.51) plus twelve percent
(12%) legal interest per annum from November 11, 2008 until
June 30, 2013, and six percent (6%) legal interest per annum
from July 1, 2013 until their entire obligation is fully paid. [80]

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando,


and Carandang,  JJ., concur.
*

March 5, 2019

NOTICE OF JUDGMENT
Sirs / Mesdames:

Please take notice that on January 16, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 5, 2019 at 9:20 a.m.

 Designated additional Member per Special Order No. 2624 dated


*

November 28, 2018.

[1]
 Rollo. pp. 12-42.

 Id. at 44-52. The Decision was penned by Associate Justice


[2]

Japar B. Dimaampao and concurred in by Associate Justices


Franchito N. Diamante and Carmelita S. Manahan of the Tenth
Division Court of Appeals, Manila.

 Id. at 72-75. The Decision, in the case docketed as Civil Case


[3]

No. 12-945, was penned by Judge Selma Palacio Alaras of Branch


62, Regional Trial Court, Makati City.

[4]
 Id. at 84.

[5]
 Id. at 45.

[6]
 Id.

[7]
 Id. at 94.

[8]
 Id. at 135.
[9]
 Id. at 77-81.

[10]
 Id. at 95-97.

[11]
 Id. at 96.

[12]
 Id. at 136.

[13]
 Id. at 136-139.

 Not June 29, 2011 as written in the Metropolitan Trial Court


[14]

Decision.

 Rollo, pp. 136-140. The Decision, in the case docketed as Civil


[15]

Case No. 97470, was penned by Presiding Judge Henry E. Laron


of Branch 65, Metropolitan Trial Court, Makati City.

[16]
 Id. at 139.

[17]
 Id. at 140.

[18]
 Id. at 72-75.

[19]
 Id. at 73.

[20]
 Id. at 73-74.

[21]
 Id. at 74-75.

[22]
 Id. at 75.

[23]
 Id. at 44.

[24]
 Id. at 44-52.

[25]
 Id. at 47-49.

[26]
 Id. at 49-50.
[27]
 Id. at 52.

[28]
 Id. at 12-33.

[29]
 Id. at 23.

[30]
 Id. at 28.

[31]
 Id. at 24.

[32]
 Id. at 25.

[33]
 Id. at 27.

[34]
 Id. at 29.

[35]
 Id. at 239-245.

[36]
 Id. at 239-240.

[37]
 Id. at 241.

[38]
 Id. at 241-242.

[39]
 Id. at 247-1.

[40]
 Id. at 248-252.

 Alcaraz v. Court of Appeals, 529 Phil. 77, 86 (2006) [Per J.


[41]

Puno, Second Division].

[42]
 Id.

[43]
 Rollo, p. 73.

[44]
 Id. at 47.
 Alcaraz v. Court of Appeals, 529 Phil. 77, 87 (2006) [Per J.
[45]

Puno, Second Division].

[46]
 Rollo, p. 84.

[47]
 CIVIL CODE, art. 1868 provides:

ARTICLE 1868. By the contract of agency a person binds himself


to render some service or to do something in representation or on
behalf of another, with the consent or authority of the latter.

[48]
 CIVIL CODE, art. 1869 provides:

ARTICLE 1869. Agency may be express, or implied from the acts


of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on
his behalf without authority.

Agency may be oral, unless the law requires a specific form.

[49]
 171 Phil. 222 (1978) [Per J. Muñoz Palma, First Division].

 Rallos v. Felix Go Chan & Sons Realty Corporation, 171 Phil.


[50]

222, 226-227 (1978) [Per J. Muñoz Palma, First Division].

[51]
 Rollo, p. 23.

 BPI Express Card Corporation v. Armovit, 745 Phil. 31, 36


[52]

(2014) [Per J. Bersamin, First Division].

[53]
 Rollo, pp. 48-49.

[54]
 Id. at 138.

[55]
 Id. at 192-194.

[56]
 529 Phil. 77 (2006) [Per J. Puno, Second Division].
[57]
 699 Phil. 273 (2012) [Per J. Carpio, Second Division].

 Alcaraz v. Court of Appeals, 529 Phil. 77, 88 (2006) [Per J.


[58]

Puno, Second Division].

[59]
 Rollo, p. 139.

[60]
 Id. at 103-121.

[61]
 Id. at 103.

[62]
 Id. at 105.

[63]
 Id. at 106.

[64]
 Id. at 107.

[65]
 Id. at 109.

[66]
 Id.

[67]
 Id. at 118.

[68]
 Id.

[69]
 Id. at 119.

[70]
 Id.

[71]
 Id.

[72]
 Id. at 121.

[73]
 Id.

[74]
 Id. at 94.

[75]
 CIVIL CODE, art. 1169 provides:
ARTICLE 1169. Those obliged to deliver or to do something incur
in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in


order that delay may exist: (1) When the obligation or the law
expressly so declare; or

(2) When from the nature and the circumstances of the obligation
it appears that the designation of the time when the thing is to be
delivered or the service is to be rendered was a controlling
motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has


rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other


does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other begins.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[76]

En Banc].

[77]
 Rollo, p. 140.

 Ledda v. Bank of the Philippine Islands, 699 Phil. 273, 283


[78]

(2012) [Per J. Carpio, Second Division].

[79]
 Rollo, p. 140.

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[80]

En Banc].
Source: Supreme Court E-Library | Date created: March 22, 2019
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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 205638, August 23, 2017 ]


DEE HWA LIONG FOUNDATION MEDICAL CENTER
AND ANTHONY DEE, PETITIONERS, VS. ASIAMED
SUPPLIES AND EQUIPMENT CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

Generally, a petition for review under Rule 45 of the Rules of


Court may only raise questions of law.

This is a Petition for Review on Certiorari  filed under Rule 45 of


[1]

the Rules of Court praying that the August 30, 2012


Decision  and the January 23, 2013 Resolution  of the Court of
[2] [3]

Appeals in CA G.R. CV No. 91410 be reversed and set aside.

On August 2, 2002, petitioner Dee Hwa Liong Foundation Medical


Center (DHLFMC) and respondent Asiamed Supplies and
Equipment Corporation (Asiamed) entered into a Contract of Sale.
 This Contract of Sale stated that DHLFMC agreed to purchase
[4]

from Asiamed a GammaMed Plus Brachytherapy machine and a


Gammacell Elan 3000 blood irradiator (collectively, the machines)
for the price of P31,000,000.00. Regarding payment, the Contract
of Sale provided:
1. PURCHASE PRICE
DEE HWA LIONO FOUNDATION MEDICAL CENTER agrees to
purchase the equipment through ASIAMED SUPPLIES and
EQUIPMENT CORPORATION at the total price of THIRTY ONE
MILLION PESOS (P31,000,000.00) Philippine Currency ...

Such payment is to be made no later than (2) two working days


upon delivery of the equipment and prior to the installation of the
same.

....

5. BUYERS GUARANTEE

DEE HWA LIONG FOUNDATION MEDICAL CENTER warrants unto


ASIAMED SUPPLIES & EQUIPMENT CORPORATION the
genuineness, validity and enforceability of any check, note or
evidence of obligation as forelisted and DEE HWA LIONG
FOUNDATION MEDICAL CENTER, at the agreed payment terms[,]
shall pay to ASIAMED SUPPLIES & EQUIPMENT CORPORATION
the amount due. [5]

These machines were delivered on May 20, 2003 and July 17,
2003.  A Sales Invoice  and two (2) Delivery Invoices  were
[6] [7] [8]

signed by petitioner Anthony Dee (Anthony) and DHLFMC Vice


President for Administration, Mr. Alejandro Mateo (Mateo).
 These invoices provided:
[9]

Interest of 12% per annum is to be charged on all overdue


accounts, and a sum equal to 25% of the amount due is further
charged but in no case shall be less than P50.00 for attorney's
fees and cost of collection in case of suit.
[10]

On January 26, 2004, Asiamed filed a Complaint  against [11]

DHLFMC and Anthony (petitioners) for sum of money, with prayer


for issuance of a writ of preliminary attachment, before the
Regional Trial Court, docketed as Civil Case No. 04108948.
Asiamed alleged that DHLFMC agreed to pay the total purchase
price of P31,000,000.00 no later than two (2) days from receiving
the machines. Despite receiving the machines on May 20, 2003
and July 17, 2003, DHLFMC only paid the amounts of
P3,500,000.00 on July 25, 2003, P1,000,000.00 on September
16, 2003, and P800,000.00 on October 30, 2003.  Asiamed[12]

demanded payment, but DHLFMC refused to pay the balance. [13]

In their Answer, DHLFMC and Anthony alleged that the purchase


of the equipment was conditioned on the approval of a loan from
Planters Development Bank (Planters Bank). However, this loan
was not approved. [14]

The Regional Trial Court issued a Writ of Preliminary


Attachment  dated January 30, 2004, and the Brachytherapy
[15]

equipment was pulled out by Sheriff Manuelito Viloria (Sheriff


Viloria) on February 2, 2004. Sheriff Viloria also placed other
medical equipment on constructive levy. Petitioners filed a motion
to discharge the writ of preliminary attachment, which the
Regional Trial Court denied. The Regional Trial Court also denied
petitioners' motion for reconsideration. [16]

After trial, the Regional Trial Court rendered a Decision dated


June 18, 2008  finding that the parties had entered into a
[17]

Contract of Sale and that the pieces of equipment subjects of the


contract were received by petitioners, who failed to pay the
balance of the contract:
With the foregoing, there is no dispute [that] the parties entered
into the Contract of Sale (Exh. "A" & Exh. "1"). The two medical
equipment, Brachytherapy machine and Blood irradiator were
delivered to [petitioners] who received them in good condition.
[Asiamed]'s engineers installed said machine[s] properly in
[petitioner] hospital. As [petitioners] did not pay the balance of
P25.7 million, their lawyer resorted to dilatory schemes, like
raising the issues of excessive levy and oppressive manner of
attachment. The self serving testimonies of Atty. Estaris and Dr.
Reyes are irrelevant to this case. Besides, there was no excessive
levy as there are only 3 items pulled out by Special Sheriff
Mariano (Exh. "32"). The bulk of [petitioners'] medical items were
by constructive levy only and were enforced by Sheriff Viloria of
Br. 7 (Exhs. "30" & "31"). The said items are still in the
possession of [petitioner] hospital.
[18]
The dispositive portion stated:
WHEREFORE, judgment is hereby rendered against [petitioners]
who are ordered to pay, jointly and severally, [respondent]:

a) the sum of P25.7 million representing the balance of the


purchase price with interest thereon at 12% per annum from
October 28, 2003 until fully paid;

b) the sum of P2.5 million for attorney's fees; and

c) the costs of suit.

[Petitioners'] counterclaim is denied for lack of merit.

SO ORDERED. [19]

Thus, petitioners appealed to the Court of Appeals.

The Court of Appeals denied the appeal in its Decision  dated[20]

August 30, 2012. As understood by the Court of Appeals,


petitioners' main argument was that the Contract of Sale had
been rescinded because a loan from Planters Bank was not
approved. However, the Court of Appeals found that the text of
the Contract of Sale did not support this contention. Further,
even assuming that the Planters Bank loan approval was a
condition for the effectivity of the Contract of Sale, petitioners did
not prove that Planters Bank did not approve the loan.  On [21]

petitioner Anthony's liability, the Court of Appeals held that


petitioners were estopped from raising the separate juridical
personality of DHLFMC as a defense for Anthony. This was in
consideration of petitioners' denial of the allegation that DHLFMC
"[was] an entity representing itself to be a corporation duly
organized and existing," stating that they "never represented that
[petitioner] DHLFMC [was] a corporate entity duly organized and
existing."[22]

The Court of Appeals also granted respondent Asiamed's motion


for substitution, allowing it to procure the appointment of an
administrator for the estate of petitioner Anthony, who passed
away during the pendency of the case:
Lastly, We note that [petitioner] Anthony Dee had already passed
away, without Us being informed by his counsel of such fact, in
violation of Rule 3, section 16 of the Rules of Court. Thus, the
[respondent] filed a Motion for Substitution of [petitioner]
Anthony D. Dee praying that it be allowed to procure the
appointment of an administrator for the Estate of Anthony Dee in
accordance with the provisions of the Rules of Court. Considering
that [petitioner] Anthony Dee's counsel has not given Us the
name and address of his legal representative or representatives,
We, therefore, grant [respondent]'s aforesaid motion.  (Citation
[23]

omitted)
The dispositive portion of this Decision read:
WHEREFORE, premises considered, the assailed Decision of the
court a quo is hereby AFFIRMED.

Further, [respondent]'s Motion for Substitution of Defendant-


Appellant Anthony D. Dee is GRANTED. [Respondent] is hereby
ORDERED to procure the appointment of an administrator for the
estate of the deceased within thirty (30) days from notice hereof.

SO ORDERED. [24]

Thus, on March 25, 2013, petitioners filed this present Petition


assailing the Court of Appeals Decision and Resolution.  In the [25]

Resolution dated July 8, 2013, this Court denied the petition for
failure of petitioners to show any reversible error in the assailed
Decision and Resolution. [26]

On September 5, 2013, petitioners filed a Motion for


Reconsideration.  In its Resolution dated November 13, 2013,
[27]

this Court required respondent to comment on the Motion for


Reconsideration. [28]

Respondent filed an Omnibus Opposition/Comment  on February


[29]

7, 2014. Petitioners filed their Reply on March 18, 2014.  In a [30]

Resolution dated June 11, 2014, this Court gave due course to
this petition and required the parties to submit their respective
memoranda. [31]

In their Memorandum,  petitioners insist that the Contract of


[32]

Sale was rescinded  and that respondent conformed to this


[33]

rescission.  The sale was conditioned on the loan application


[34]

from Planters Bank, which was not approved.  By virtue of the
[35]

rescission, the parties should have been restored to their


respective positions before entering the Contract of Sale. [36]

Petitioners aver that petitioner Anthony should not have been


held jointly and severally liable for the breach of contract,
invoking the separate personality of a corporation.  They point
[37]

out that no mention was made of petitioner Anthony's personal


liability and that the officers of a corporation are generally not
liable for the consequences of their acts done on behalf of the
corporation.  Further, respondent did not prove that petitioner
[38]

Anthony acted with bad faith or malice. [39]

Petitioners argue that the Court of Appeals and the Regional Trial
Court erred in finding them liable for interest, penalty charges,
and attorney's fees based on Delivery Invoice Nos. 2680 and
2683, which stipulated:
Interest of 12% per annum is to be charged on all overdue
accounts, and a sum equal to 25% of the amount due is further
charged but in no case shall be less than P50.00 for attorney's
fees and cost of collection in case of [suit]. The herein listed
below are shipped at the buyer's risk and cost of goods remain
the property of ASIA MED SUPPLIES & EQUIPMENT CORP. until
paid in full.
[40]

Petitioners claim that these are in the nature of contracts of


adhesion. The delivery invoices were unilaterally prepared by
respondent, without petitioners' conformity.  These stipulations
[41]

attempted to modify the Contract of Sale. However, petitioners


insist that the delivery invoices cannot be deemed to have
modified the Contract of Sale, considering that they lacked the
informed consent of petitioner DHLFMC.  In any case, the penalty
[42]
stipulated in the delivery invoices was unconscionably high and
should be reduced. [43]

Petitioners point out that there was an attachment, which


petitioner repeatedly demanded to be set aside. By virtue of this
attachment, there were four (4) pieces of medical equipment,
including the Brachytherapy subject of the Contract of Sale, that
were placed in the custody of respondent, which had a total value
of P37,420,983.25.  In relation to this, there was an attachment
[44]

bond posted in the amount of P27,000,000.00 on behalf of


respondent. The Regional Trial Court was informed on March 23,
2006 that the attachment bond expired. Despite this, the
Regional Trial Court did not immediately set aside the attachment
and only did so on August 22, 2007.  However, the pieces of
[45]

medical equipment are still in the possession of respondent. Thus,


petitioners insist that it is unfair to require petitioner DHLFMC to
pay the amount of P25,700,000.00.  Petitioners claim that there
[46]

was no basis for the attorney's fees awarded to respondent.


 Finally, petitioners insist they are entitled to the grant of their
[47]

counterclaims  as respondent initiated the case against


[48]

petitioners prematurely as a form of harassment.  As for the [49]

appointment of an administrator for the estate of deceased


petitioner Anthony, petitioners allege that it would be superfluous
and dilatory, considering that his surviving spouse, Carmelita
Dee, represents him. [50]

On the other hand, respondent argues in its Memorandum  that [51]

the Contract of Sale was not rescinded.  The disapproved loan


[52]

from Planters Bank has no effect on the Contract of Sale,


considering it was not even mentioned there.  Respondent insists [53]

that rescission was not proven during trial  and adds that the [54]

issues of the attachment are irrelevant to their claim for the


collection of a sum of money.  It claims that petitioners were
[55]

properly held liable for the amount of P25,700,000.00 considering


that they only paid P5,300,000.00 out of the total
P31,000,000.00 agreed upon in the Contract of Sale.  As for the [56]

12% interest on all overdue accounts and the 25% attorney's


fees, respondent maintains that petitioners agreed to these
provisions when they signed the delivery invoices.  Petitioner
[57]

Anthony was properly held jointly and severally liable together


with petitioner DHLFMC because of his patent bad faith in not
paying the amount stipulated in the Contract of Sale.  The [58]

circumstances in this case are among the instances when an


officer may be held jointly and severally liable with the
corporation sued.  Respondent points out that petitioner Anthony
[59]

raised this issue for the first time on appeal.  Finally, it asserts
[60]

that the petition was filed without valid substitution of parties


under Rule 3, Section 16 of the Rules of Court.  The petition was
[61]

signed by petitioner Anthony's purported widow. However, there


was no showing that she was designated and qualified as the
administrator of the estate of petitioner Anthony.

The issues for this Court's resolution are as follows:

First, whether or not the Contract of Sale was rescinded;

Second, whether or not petitioner Anthony Dee was properly held


solidarity liable with petitioner Dee Hwa Liong Foundation Medical
Center;

Third, whether or not the interest rate and attorney's fees


stipulated in the delivery invoices are binding on the parties; and

Finally, whether or not the Court of Appeals erred in granting


respondent Asiamed Supplies and Equipment Corporation's
motion to procure the appointment of an administrator for the
estate of deceased petitioner Anthony Dee.

This Court denies the petition.

Only questions of law are allowed in a petition for review under


Rule 45 of the Rules of Court.  It is a general rule that factual
[62]

findings of the Regional Trial Court are conclusive, especially


when they have been affirmed by the Court of Appeals. The
factual findings of the Court of Appeals bind this Court. Although
jurisprudence has provided several exceptions to this rule,
exceptions must be alleged, substantiated, and proved by the
parties so this Court may evaluate and review the facts of the
case.[63]

Here, the Court of Appeals made a tactual determination that the


effectivity of the Contract of Sale did not depend on any alleged
loan application from Planters Bank. It relied on the evidence
presented, particularly the Contract of Sale, which did not
mention any loan from Planters Bank.  Petitioners assail this
[64]

detem1ination, insisting that respondent was aware that the


Contract of Sale was conditional. Petitioners cite the testimony
during cross-examination of respondent's vice president for sales,
Edward Dayao (Dayao), where he said that he "was told that
there was supposed to be a P200 million Joan with Planters
[Bank]."  Petitioners cite respondent's vice president for
[65]

operation, Onofre Reyes (Reyes), who testified that Dayao


directed him to modify the earlier agreement with petitioner
Anthony, in light of the alleged disapproved loan:
A Before Mr. Dee went to the United States of America, there
w[as a] series of talks between Mr. Dayao, between us and Mr.
Dee. Mr. Dee, since he can no longer pay because of what
happened to the bank that the loan was no longer approved, Mr.
Dee wanted to return the machine. There was [a] series of talks
that took place about the returning of the machine[,] sir.

Q And what was the reaction of Mr. Dayao to this?

A Mr. Dayao is amenable provided he will no longer return the


initial payment made by Mr. Dee.

Q So what happened?

A He caused me to make a letter pertaining to that kind of


transaction[,] sir.[66]

However, the above mentioned letter drafted by Reyes pertaining


to the modification of the earlier agreement remained unsigned.
 Nonetheless, petitioners refer to the draft as evidence that
[67]

rescission was being undertaken and argue that respondent's


demand for the balance of the obligation was consequently
premature. [68]

Petitioners have failed to show how the Court of Appeals' factual


determination based on the evidence presented is an error of law.
Indeed, petitioners' argument that respondent was aware of the
conditionality of the contract hinges on an appreciation of
evidence. Petitioners have failed to allege, substantiate, or prove
any exception to the general rule allowing only questions of law
to be raised in a petition for review so that this Court may
evaluate and review the evidence presented and the facts of the
case.

II

On petitioner Anthony's liability, the Court of Appeals found that


petitioners admitted that they never represented that petitioner
DHLFMC is a corporate entity with separate personality from
petitioner Anthony. Thus, they are estopped from raising its
separate personality as a defense for petitioner Anthony:
It is important to remember, however, that [respondent]'s
complaint alleged. among other things, that "[petitioner] DEE
HWA LIONG FOUNDATION MEDICAL CENTER, is an entity
representing itself to be a corporation duly organized and existing
under and by virtue of the laws of the Republic of the
Philippines." In reply thereto, [petitioners] answered that
"[petitioners] deny the allegations relating to the
corporate circumstances of [petitioner] DHLFMC in
paragraph no. 2 of the Complaint, ... the truth being that
the [petitioners] never represented that [petitioner]
DHLFMC is a corporate entity duly organized and existing
under and by virtue of the laws of the Republic of the
Philippines[.]" From the foregoing, it cannot be denied that the
[petitioners) are estopped from raising a corporation's separate
juridical personality as a defense to shield [petitioner] Anthony
Dee from any liability.  (Emphasis supplied, citations omitted)
[69]
Petitioners do not dispute that they specifically denied the
allegation regarding petitioner DHLFMC's corporate
circumstances. Petitioners fail to show how the Court of Appeals
appreciation of this specific denial is an error of law. Petitioners
merely insist that petitioner Anthony was not shown to have
acted in bad faith, and thus, cannot be held solidarily liable with
petitioner DHLFMC.  However, petitioners do not point to
[70]

anything on record to counter their own specific denial that would


establish DHLFMC's existence as a corporation with separate
juridical personality. Thus, this argument must fail.

III

Petitioners argue that respondent unilaterally imposed the


interest and penalty charges.  However, they do not dispute that
[71]

these charges were specifically provided for in the delivery


invoices, which they signed. The Court of Appeals did not mention
the stipulations on interest and penalty contained in the delivery
invoices; thus, it can be gathered that they sustained the
Regional Trial Court, which held:
The 12% interest and 25% attorney's fees in case of litigation are
explicitly sta[t]ed in the sales and delivery invoices. "Art. 1159.
Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good
faith." (Civil Code of the Philippines). As there is no written
agreement to rescind, [respondent] is not bound by [petitioners]'
notice of rescission. "Art. 1308 - The contract must bind both
contracting parties; the validity or compliance cannot be left to
the will of one of them." (Ibid). All told, plaintiff has established a
preponderance of evidence in its favor. Interest shall accrue from
October 28, 2003 when formal demand was made while lawyer's
fee will be toned down to about 10% of the amount due. [72]

Both the Regional Trial Court and the Court of Appeals found that
the delivery invoices formed part of the Contract of Sale.
Petitioners claim that the delivery invoice receipts signed by
petitioner Anthony and Mateo could not modify or be considered
part of the Contract of Sale.
A contract may be contained in several instruments with non-
conflicting terms. In BF Corp. v. Court of Appeals, [73]

A contract need not be contained in a single writing. It may be


collected from several different writings which do not conflict with
each other and which, when connected, show the parties, subject
matter, terms and consideration, as in contracts entered into by
correspondence. A contract may be encompassed in several
instruments even though every instrument is not signed by the
parties, since it is sufficient if the unsigned instruments are
clearly identified or referred to and made part of the signed
instrument or instruments. Similarly, a written agreement of
which there are two copies, one signed by each of the parties, is
binding on both to the same extent as though there had been
only one copy of the agreement and both had signed it.
 (Citations omitted)
[74]

Petitioners claim that the delivery invoice receipts are contracts of


adhesion and that they were unwittingly signed, without informed
consent.  However, it is not disputed that the delivery invoices
[75]

provided for the interest and attorney's fees or that petitioner


Anthony and Mateo signed these invoices.  Thus, the Regional
[76]

Trial Court and the Court of Appeals ruled that the parties
mutually agreed to the interest and attorney's fees as a factual
matter. Although petitioners allege that these invoices lacked
petitioner DHLFMC's informed consent, there is no attempt to
prove this. It is also not proven that the stipulations were
somehow hidden or obscured such that DHLFMC could not have
read them, making it impossible tor DHLFMC to agree to the
terms. In any case, it is a question of fact, which is not proper for
review in a petition for review. Absent any other factual or legal
basis, the mere allegation that the documents were signed
without the informed consent of petitioner DHLFMC will not suffice
to cause this Court to review these documents.

Petitioners claim that the circumstances of the attachment


aggravate respondent's undue enrichment at petitioner DHLFMC's
expense. [77]
However, the circumstances of the attachment do not affect the
validity of the Contract of Sale. Petitioners provide no legal basis
for reversing the assailed decision based on the manner in which
the attachment was carried out.

IV

Finally, the Court of Appeals' order that respondent be allowed to


procure an administrator for the estate of petitioner
Anthony  was based on Rule 3, Section 16 of the Rules of Court,
[78]

which provides:
Section 16. Death of party; duty of counsel. - Whenever a party
to a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to inform the
court within thirty (30) days after such death of the fact thereof
and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with this duty shall
be a ground for disciplinary action.

The heirs of the deceased may be allowed to be substituted for


the deceased, without requiring the appointment of an executor
or administrator and the court may appoint a guardian ad
litem for the minor heirs.

The court shall forthwith order said legal representative or


representatives to appear and be substituted within a period of
thirty (30) days from notice.

If no legal representative is named by the counsel for the


deceased party, or if the one so named shall fail to appear within
the specified period, the court may order the opposing party,
within a specified time, to procure the appointment of an
executor or administrator for the estate of the deceased and the
latter shall immediately appear for and on behalf of the deceased.
The court charges in procuring such appointment, if defrayed by
the opposing party, may be recovered as costs.
Petitioners fail to show how the application of the Rules of Court
was an error of law. The only basis for petitioners' objection to
the order requiring the appointment of an administrator for the
estate of petitioner Anthony is a liberal interpretation of the rules.
 Thus, their argument fails.
[79]

WHEREFORE, the petition is DENIED. The Court of Appeals


Decision dated August 30, 2012 and Resolution dated January 23,
2013 in CA-G.R. CV No. 91410 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

November 29, 2017

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on August 23, 2017 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
office on November 29, 2017 at 2:20 p.m.

[1]
 Rollo, pp. 11-35.

 Id. at 36-46, The Decision was penned by Associate Justice


[2]

Agnes Reyes Carpio and concurred in by Associate Justices


Rosalinda Asuncion-Vicente and Priscilla J. Baltazar-Padilla of the
Eighth Division, Court of Appeals, Manila.

 Id. at 7-8. The Resolution was penned by Associate Justice


[3]

Agnes Reyes Carpio and concurred in by Associate Justices


Rosalinda Asuncion-Vicente and Priscilla J. Baltazar-Padilla of the
Eighth Division, Court of Appeals, Manila.

[4]
 RTC records, pp. 13-16.

[5]
 Id. at 14-15.

[6]
 CA Rollo, p. 29.

[7]
 RTC records, p. 29.

[8]
 Id. at 30 and 31.

[9]
 Rollo, p. 216.

[10]
 RTC records, pp. 30-31.

[11]
 Id. at 1.

[12]
 Id. at 3-5.

[13]
 Id. at 5.

[14]
 Id. at 155-156.

[15]
 Id. at 45-46.

[16]
 Rollo, pp. 152-153.

[17]
 Id. at 47-49.

[18]
 Id. at 48.
[19]
 Id. at 49.

[20]
 Id. at 36-46.

[21]
 Id. at 40-41.

[22]
 Id. at 43-44.

[23]
 Id. at 44-45.

[24]
 Id. at 45.

[25]
 Id. at 11.

[26]
 Id. at 70.

[27]
 Id. at 71-82.

[28]
 Id. at 83.

[29]
 Id. at 90-128.

[30]
 Id. at 140-149.

[31]
 Id. at 150.

[32]
 Id. at 151-184.

[33]
 Id. at 162.

[34]
 Id. at 164.

[35]
 Id. at 163.

[36]
 Id. at 165-166.

[37]
 Id. at 166.
[38]
 Id. at 167.

[39]
 Id. at 168.

[40]
 Id. at 169.

[41]
 Id. at 170.

[42]
 Id. at 171.

[43]
 Id. at 172.

[44]
 Id. at 173.

[45]
 Id. at 172-173.

[46]
 Id. at 173.

[47]
 Id. at 173-175.

[48]
 Id. at 175.

[49]
 Id. at 179.

[50]
 Id. at 180.

[51]
 Id. at 186-223.

[52]
 Id. at 197.

[53]
 Id.

[54]
 Id. at 200.

[55]
 Id. at 206.

[56]
 Id. at 213.
[57]
 Id. at 214.

[58]
 Id. at 220.

[59]
 Id. at 219.

[60]
 Id. at 220.

[61]
 Id. at 222.

[62]
 RULES OF COURT, Rule 45, sec. 1.

 Pascal v. Burgos, G.R. No. 171722, January 11, 2016


[63]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> 12 [Per J.
Leonen, Second Division].

[64]
 Rollo, p. 40.

[65]
 Id. at 162.

[66]
 Id. at 164-165.

[67]
 Id. at 165.

[68]
 Id.

[69]
 Id. at 43-44.

[70]
 Id. at 167-169.

[71]
 Id. at 171-172.

[72]
 Id. at 49.

[73]
 351 Phil. 507 (1998) [Per J. Romero, Third Division].

[74]
 Id. at 523.
[75]
 Rollo, p. 171.

[76]
 Id. at 216-217.

[77]
 Id. at 172.

[78]
 Id. at 44-45.

[79]
 Id. at 180.

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SECOND DIVISION

[ G.R. No. 224974, July 03, 2017 ]


MARVIN CRUZ AND FRANCISCO CRUZ, IN HIS
CAPACITY AS BONDSMAN, PETITIONERS, VS.
PEOPLE OF THE PHILIPPINES, RESPONDENT.
DECISION

LEONEN, J.:

The trial court's failure to comply with procedural rules


constitutes grave abuse of discretion and may be the subject of a
petition for certiorari before the Court of Appeals.
This is a Petition for Review on Certiorari  assailing the [1]

Decision  dated January 18, 2016 and Resolution  dated June 1,


[2] [3]

2016 of the Court of Appeals, which dismissed the Petition for


Certiorari filed by Marvin Cruz (Cruz) and his bondsman,
Francisco Cruz (Francisco) for being the wrong remedy. They filed
the Petition before the Court of Appeals to assail the Regional
Trial Court's denial of their Motion to Release Cash Bond after the
criminal case against Cruz was dismissed.

In an Information  dated September 19, 2013, Cruz, along with


[4]

seven (7) others, was charged with Robbery in an Uninhabited


Place and by a Band for unlawfully taking four (4) sacks filled
with scraps of bronze metal and a copper pipe worth P72,000.00
collectively.  Cruz posted bail through a cash bond in the amount
[5]

of P12,000.00. [6]

The private complainant in the criminal case subsequently filed an


Affidavit of Desistance  stating that he was no longer interested
[7]

in pursuing his complaint against Cruz.  On October 23, 2014, [8]

Assistant City Prosecutor Deborah Marie Tan filed a Motion to


Dismiss,  which was granted by Branch 170, Regional Trial Court,
[9]

City of Malabon in an Order  dated October 24, 2014.


[10]

Cruz, through his bondsman Francisco, filed a Motion to Release


Cash Bond.  In an Order  dated January 7, 2015, the Regional
[11] [12]

Trial Court denied the Motion on the ground that the case was
dismissed through desistance and not through acquittal. The
Motion for Reconsideration  filed by Francisco was likewise
[13]

denied in an Order  dated April 6, 2015.


[14]

Cruz and Francisco filed a Petition for Certiorari  with the Court [15]

of Appeals, arguing that the Regional Trial Court committed grave


abuse of discretion in dismissing the Motion to Release Cash
Bond.

On January 18, 2016, the Court of Appeals rendered a


Decision  dismissing the Petition.
[16]
The Court of Appeals anchored its dismissal on the ground that
Cruz and Francisco should have filed an appeal, instead of a
petition for certiorari, to question the denial of their Motion to
Release Cash Bond.  The Court of Appeals further stated that it
[17]

could not treat the Petition for Certiorari as an appeal since the
period for appeal had lapsed before its filing. [18]

Cruz and Francisco filed a Motion for Reconsideration but this was
denied in the Resolution  dated June 1, 2016. Hence, this
[19]

Petition  was  filed.


[20]

Petitioners Cruz and Francisco insist that the filing of a petition


for certiorari was proper since the Regional Trial Court's denial of
their Motion to Release Cash Bond amounted to grave abuse of
discretion. They point out that under Rule 114, Section 22  of the
[21]

Rules of Court, bail is deemed automatically cancelled upon the


dismissal of the case regardless of whether the case was
dismissed through acquittal or desistance. [22]

The Office of the Solicitor General, however, points out that while
Rule 114, Section 22 calls for automatic cancellation, the
cancellation is without prejudice to any liabilities on the bond.
 Thus, it posits that while the cancellation is automatic, the
[23]

release of the bond is still subject to further proceedings. It adds


that if the trial court erred in dismissing petitioners' Motion to
Release Cash Bond, the error is "perhaps . . . a mistake in the
application of the law" and not grave abuse of discretion, which
should not be the subject of a petition for certiorari. [24]

Considering the parties' arguments, the sole issue to be resolved


is whether the Court of Appeals erred in dismissing the petition
for certiorari for being the wrong remedy to question the denial of
a motion to release cash bond.

The writ of certiorari is not issued to correct every error that may
have been committed by lower courts and tribunals. It is a
remedy specifically to keep lower courts and tribunals within the
bounds of their jurisdiction. In our judicial system, the writ is
issued to prevent lower courts and tribunals from committing
grave abuse of discretion in excess of their jurisdiction. Further,
the writ requires that there is no appeal or other plain, speedy,
and  adequate remedy available to correct the error. Thus,
certiorari may not be issued if the error can be the subject of an
ordinary appeal. As explained in Delos Santos v. Metrobank: [25]

We remind that the writ of certiorari — being a remedy narrow in


scope and inflexible in character, whose purpose is to keep an
inferior court within the bounds of its jurisdiction, or to prevent
an inferior court from committing such grave abuse of discretion
amounting to excess of jurisdiction, or to relieve parties from
arbitrary acts of courts (i.e., acts that courts have no power or
authority in law to perform) — is not a general utility tool in the
legal workshop, and cannot be issued to correct every error
committed by a lower court.

In the common law, from which the remedy of certiorari evolved,


the writ of certiorari was issued out of Chancery, or the King's
Bench, commanding agents or officers of the inferior courts to
return the record of a cause pending before them, so as to give
the party more sure and speedy justice, for the writ would enable
the superior court to determine from an inspection of the record
whether the inferior court's judgment was rendered without
authority. The errors were of such a nature that, if allowed to
stand, they would result in a substantial injury to the petitioner to
whom no other remedy was available. If the inferior court acted
without authority, the record was then revised and corrected in
matters of law. The writ of certiorari was limited to cases in which
the inferior court was said to be exceeding its jurisdiction or was
not proceeding according to essential requirements of law and
would lie only to review judicial or quasi-judicial acts.

The concept of the remedy of certiorari in our judicial system


remains much the same as it has been in the common law. In
this jurisdiction, however, the exercise of the power to issue the
writ of certiorari is largely regulated by laying down the instances
or situations in the Rules of Court in which a superior court may
issue the writ of certiorari to an inferior court or officer. Section
1, Rule 65 of the Rules of Court compellingly provides the
requirements for that purpose[.]

....

Pursuant to Section 1, supra, the petitioner must show that, one,


the tribunal, board or officer exercising judicial or quasi-judicial
functions acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction,
and, two, there is neither an appeal nor any plain, speedy and
adequate remedy in the ordinary course of law for the purpose of
amending or nullifying the proceeding.  (Citations omitted)
[26]

An essential requisite for filing a petition for certiorari is the


allegation that the judicial tribunal acted with grave abuse of
discretion amounting to lack or excess of jurisdiction.  Grave
[27]

abuse of discretion has been defined as a "capricious or whimsical


exercise of judgment that is patent and gross as to amount to an
evasion of positive duty or a virtual refusal to perform a duty
enjoined by law."  In order to determine whether the Court of
[28]

Appeals erred in dismissing the Petition for Certiorari for being


the wrong remedy, it is necessary to find out whether the
Regional Trial Court acted with grave abuse of discretion as to
warrant the filing of a petition for certiorari against it.

Rule 114, Section 22 of the Rules of Court states:

Section 22. Cancellation of bail. — Upon application of the


bondsmen, with due notice to the prosecutor, the bail may be
cancelled upon surrender of the accused or proof of his death.

The bail shall be deemed automatically cancelled upon acquittal


of the accused, dismissal of the case, or execution of the
judgment of conviction.
In all instances, the cancellation shall be without prejudice to any
liability on the bail.

The provisions of the Rules of Court are clear. Bail shall be


deemed automatically cancelled in three (3) instances: (1) the
acquittal of the accused, (2) the dismissal of the case, or (3) the
execution of the judgment of conviction. The Rules of Court do
not limit the cancellation of bail only upon the acquittal of the
accused.

The Office of the Solicitor General made the same observation in


its Comment  before the Court of Appeals:
[29]

The trial court denied the motion to release cash bond on the
ground that the dismissal was only due to the desistance of the
complainant and not because the accused was acquitted or that
the crime was not proved beyond reasonable doubt.

Such ruling, however, has no legal basis. In fact, the provision of


Section 22, Rule 114 is clear: the dismissal of the criminal case
results to the automatic cancellation of the bail bond.  (Citation
[30]

omitted)

Non-compliance with the Rules of Court is not, as the Office of


the Solicitor General asserts, a mere error of judgment. It
constitutes grave abuse of discretion. In Crisologo v. JEWM Agro-
Industrial Corporation:[31]

This manifest disregard of the basic rules and procedures


constitutes a grave abuse of discretion.

In State Prosecutors II Comilang and Lagman v. Judge Medel


Belen,  the Court held as inexcusable abuse of authority the trial
judge's "obstinate disregard of basic and established rule of law
or procedure." Such level of ignorance is not a mere error of
judgment. It amounts to "evasion of a positive duty or to a virtual
refusal to perform a duty enjoined by law, or to act at all in
contemplation of law," or in essence, grave abuse of discretion
amounting to lack of jurisdiction.

Needless to say, judges are expected to exhibit more than just a


cursory acquaintance with statutes and procedural laws. They
must know the laws and apply them properly in good faith as
judicial competence requires no less.  (Citations omitted)
[32]

When a court or tribunal renders a decision tainted with grave


abuse of discretion, the proper remedy is to file a petition for
certiorari under Rule 65 of the Rules of Court. Rule 65, Section 1
states:

Section 1. Petition for certiorari. — When any tribunal, board or


officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction, and
there is no appeal, or any plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the


judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third
paragraph of Section 3, Rule 46.

Considering that the trial court blatantly disregarded Rule 114,


Section 22 of the Rules of Court, petitioners' remedy was the
filing of a petition for certiorari with the proper court.
The Court of Appeals, however, focused on the Office of the
Solicitor General's argument that petitioners availed the wrong
remedy. It cited Belfast Surety and Insurance Company, Inc. v.
People  and Babasa v. Linebarger  as bases to rule that appeal
[33] [34]

was the proper remedy for a denial of a motion to release cash


bond.

In Belfast Surety,  the trial court declared a forfeiture of cash


[35]

bond under Rule 114, Section 15  of the 1964 Rules of Criminal
[36]

Procedure  for failure of the accused to appear on trial. This


[37]

Court stated that while appeal would be the proper remedy from
a judgment of forfeiture of bond, certiorari is still available if the
judgment complained of was issued in lack or excess of
jurisdiction:

While appeal is the proper remedy from a judgment of forfeiture,


nevertheless, certiorari is available despite the existence of the
remedy of appeal where the judgment or order complained of
was either issued in excess of or without jurisdiction. Besides,
appeal under the circumstances of the present case is not an
adequate remedy since the trial court had already issued a writ of
execution. Hence, the rule that certiorari does not lie when there
is an appeal is relaxed where, as in the present case, the trial
court had already ordered the issuance of a writ of execution.
 (Citations omitted)
[38]

Babasa, meanwhile, states that an appeal should be available in


denials of petitions for the cancellation of a bond. Nothing
in Babasa,  however, limits the remedy to an appeal only:

Inasmuch as the said petition to procure the cancellation of the


bond was denied without further process of law, it is
unquestionable that the order of court denying it could be
appealed from, for the reason that if this last decision were not
appealable, it would become final, without ulterior remedy, and
would work irreparable injury to the petitioner. [39]
Thus, a party may still file a petition for certiorari in instances
where the lower court commits grave abuse of discretion in
excess of jurisdiction.

The automatic cancellation of bail, however, does not always


result in the immediate release of the bail bond to the accused. A
cash bond, unlike a corporate surety or a property bond, may be
applied to fines and other costs determined by the court.  The[40]

excess shall be returned to the accused or to the person who


deposited the money on the accused's behalf.  Here, the Order
[41]

dated October 24, 2014 reads:

Acting on the Motion to Dismiss filed by Assistant City Prosecutor


Deborah Marie O. Tan, based on the Affidavit of Desistance
executed by private complainant Efren C. Ontog, which states,
among others, that he is no longer interested in the further
prosecution of this case, hence, without the active participation of
the said private complainant, the prosecution could no longer
effectively obtain the required evidence to sustain the conviction
of the accused, the motion to dismiss is granted.

WHEREFORE, this case of "Robbery in Uninhabited Place and by a


Band" against Marvin Cruz (MNU) is hereby DISMISSED.

SO ORDERED.

City of Malabon, October 24, 2014. [42]

There was no fine imposed on Cruz. The Order does not specify
any costs of court that he must answer for. There was, thus, no
lien on the bond that could prevent its immediate release.
Considering these circumstances, petitioners could not have been
faulted for filing a petition for certiorari before the Court of
Appeals since there was no legal basis for the Regional Trial Court
to deny their Motion to Release Cash Bond.
Instead of addressing the merits of the case, the Court of Appeals
instead chose to focus on procedural technicalities, dismissing the
petition for certiorari based on cases that did not actually prohibit
the filing of a petition for certiorari. While procedural rules are
necessary for the speedy disposition of justice, its indiscriminate
application should never be used to defeat the substantial rights
of litigants. [43]

WHEREFORE, the Decision dated January 18, 2016 and


Resolution dated June 1, 2016 in CA-G.R. SP No. 141009
are REVERSED and SET ASIDE. The case is
hereby REMANDED to the Court of Appeals for a resolution on
the merits of the case.

SO ORDERED.

Peralta,   (Acting
**
Chairperson), Mendoza, and Martires,
JJ., concur.
Carpio, J., on official leave.

 Designated Acting Chairperson per S.O. No. 2445 dated June


**

16, 2017.

[1]
 Rollo, pp. 12-29.

 Id. at 34-37. The Decision, docketed as CA-G.R. SP No.


[2]

141009, was penned by Associate Justice Agnes Reyes-Carpio


and concurred in by Presiding Justice Andres B. Reyes, Jr. and
Associate Justice Romeo F. Barza of the First Division, Court of
Appeals, Manila.

 Id. at 31-32. The Resolution was penned by Associate Justice


[3]

Agnes Reyes-Carpio and concurred in by Presiding Justice Andres


B. Reyes, Jr. and Associate Justice Romeo F. Barza of the First
Division, Court of Appeals, Manila.
[4]
 Id. at 62.

[5]
 Id.

[6]
 Id. at 35.

[7]
 Id. at 64.

[8]
 Id. at 35.

[9]
 Id. at 63.

[10]
 Id. at 65.

[11]
 Id. at 57.

[12]
 Id. at 56.

[13]
 Id. at 59-60.

[14]
 Id. at 55.

[15]
 Id. at 38-54.

[16]
 Id. at 34-37.

[17]
 Id. at 36.

[18]
 Id. at 36-37.

[19]
 Id. at 31-32.

[20]
 Id. at 12-29.

[21]
 RULES OF COURT, Rule 114, sec. 22 provides:
Section 22. Cancellation of bail. — Upon application of the
bondsmen, with due notice to the prosecutor, the bail may be
cancelled upon surrender of the accused or proof of his death.

The bail shall be deemed automatically cancelled upon acquittal


of the accused, dismissal of the case, or execution of the
judgment of conviction.

In all instances, the cancellation shall be without prejudice to any


liability on the bail.

[22]
 Rollo, pp. 18-19.

[23]
 Id. at 105.

[24]
 Id. at 106-108.

[25]
 698 Phil. 1 (2012) [Per J. Bersamin, Second Division].

 Id. at 14-16 citing Estares v. Court of Appeals, 498 Phil. 640


[26]

(2005) [Per J. Austria- Martinez, Second Division]; Cushman v.


Commissioners' Court of Blount County,  49 So. 311, 312, 160
Ala. 227 (1909); Ex parte Hennies,  34 So.2d 22, 23, 33 Ala. App.
377 (1948); Schwander v. Feeney's Del. Super,  29 A.2d 369, 371
(1942); Worcester Gas Light Co. v. Commissioners of Woodland
Water Dist. in Town of Auburn, 49 N.E.2d 447, 448, 314 Mass. 60
(1943); Toulouse v. Board of Zoning Adjustment, 87 A.2d 670,
673, 147 Me. 387 (1952); Greater Miami Development Corp. v.
Pender,  194 So. 867, 868, 142 Fla. 390 (1940).

[27]
 See RULES OF COURT, Rule 65, sec. 1.

 Rodriguez v. Hon. Presiding Judge of the Regional Trial Court of


[28]

Manila, Branch 17, et al., 518 Phil. 455, 462 (2006) [Per J.


Quisumbing, En Banc] citing Zarate v. Maybank Philippines,
Inc., 498 Phil. 825 (2005) [Per J. Callejo, Sr., Second Division].

[29]
 Rollo, pp. 66-72.
[30]
 Id. at 68.

[31]
 728 Phil. 315 (2014) [Per J. Mendoza Third Division].

 Id. at 328 citing State Prosecutors II Comilang and Lagman v.


[32]

Judge Medel Belen, 689 Phil. 134 (2012) ,[Per Curiam, En


Banc]; Nationwide Security and Allied Services, Inc. v. Court of
Appeals,  580 Phil. 135, 140 (2008) [Per J. Quisumbing, Second
Division]; Enriquez v. Judge Caminade, 519 Phil. 781 (2006) [Per
C.J. Panganiban, First Division], and Abbariao v. Beltran, 505
Phil. 510 (2005) [Per J. Panganiban, Third Division].

[33]
 197 Phil. 361 (1982) [Per J. Concepcion, Jr., Second Division].

[34]
 12 Phil. 766 (1906) [Per J. Torres, En Banc].

[35]
 197 Phil. 361 (1982) [Per J. Concepcion, Jr., Second Division].

[36]
 1964 RULES OF COURT, Rule 114, sec. 15 provides:

Section 15. Forfeiture of bail. — When the appearance of the


defendant is required by the court, his sureties shall be notified to
produce him before the court on a given date. If the defendant
fails to appear as required, the bond is declared forfeited and the
bondsmen are given thirty (30) days within which to produce
their principal and to show cause why a judgment should not be
rendered against them for the amount of their bond. Within the
said period of thirty (30) days, the bondsmen (a) must produce
the body of their principal or give the reason for its non-
production; and (b) must explain satisfactorily why the defendant
did not appear before the court when first required so to do.
Failing in these two requisites, a judgment shall be rendered
against the bondsmen.

[37]
 See RULES OF COURT, Rule 114, Section 15.

[38]
 Id. at 371-372.
 Babasa v. Linebarger, 12 Phil 766, 769 (1906) [Per J. Torres,
[39]

En Banc].

 See RULES OF COURT, Rule 114, sec. 14. See also Esteban v.


[40]

Hon. Alhambra, 481 Phil. 162 (2004) [Per J. Sandoval-Gutierrez,


Third Division].

[41]
 See RULES OF COURT, Rule 114, sec. 14.

[42]
 Rollo, p. 65.

 See A-One Feeds v. Court of Appeals, 188 Phil. 577 (1980)


[43]

[Per J. De Castro, First Division].

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SECOND DIVISION

[ G.R. No. 208243, June 05, 2017 ]


EDWIN GRANADA REYES, PETITIONER, VS. THE
OFFICE OF THE OMBUDSMAN, THE
SANDIGANBAYAN, AND PAUL JOCSON ARCHES,
RESPONDENTS.DECISION

LEONEN, J.:
This resolves a Petition for Certiorari  under Rule 65 of the Rules
[1]

of Court, filed by petitioner Edwin Granada Reyes (Reyes),


together with Rita Potestas Domingo (Domingo) and Solomon
Anore de Castilla (de Castilla).  This Petition assails the Office of
[2]

the Ombudsman's March 20, 2013 Resolution  in Case No. OMB-
[3]

M-C-11-0005-A and the June 26, 2013

Memorandum  denying their motion for reconsideration. The


[4]

assailed March 20, 2013 Resolution found probable cause to indict


petitioner Reyes, Domingo, de Castilla, and Gil C. Andres
(Andres) for violation of Section 3(e) of Republic Act No. 3019
and directed that an information against them be filed before the
Sandiganbayan. [5]

On November 21, 2005, the Sangguniang Bayan of Bansalan,


Davao del Sur passed Municipal Ordinance No. 357, prohibiting
the "storing, displaying, selling, and blowing up ('pagpabuto') of
those pyrotechnics products allowed by law, commonly called
'firecrackers' or 'pabuto' within the premises of buildings 1 and 2
of the Bansalan Public Market."  On December 14, 2009, then
[6]

Bansalan Mayor Reyes approved a permit allowing vendors to sell


firecrackers at the Bansalan Public Market from December 21,
2009 to January 1, 2010. [7]

On December 27, 2009, a fire befell the Bansalan Public Market.


It caused extensive damage and destroyed fire hydrants of the
Bansalan Water District. Subsequently, private respondent Paul
Jocson Arches (Arches) filed a complaint dated December 20,
2010 against Reyes before the Office of the Ombudsman,
Mindanao (Ombudsman-Mindanao). Arches questioned the
approval and issuance of a mayor's permit agreeing to sell
firecrackers, in violation of Municipal Ordinance No. 357. He
claimed that this permit caused the fire the previous year. [8]

By order of the Ombudsman-Mindanao, Chief of Police de Castilla,


Fire Marshall Andres,  and Permits and Licensing Officer
[9]

Designate Domingo were made respondents in the case,


considering that they recommended the approval of the mayor's
permit's. [10]

The respondents a quo filed their respective counter-affidavits.


Reyes alleged that Andres filed two (2) different counter-
affidavits, and Reyes was not furnished a copy of the second
counter-affidavit (Andres' affidavit). [11]

After concluding the preliminary investigation, the Ombudsman


issued the assailed Resolution  dated March 20, 2013 and found
[12]

that probable cause existed to charge Reyes and his co-


respondents a quo with violation of Section 3(e) of Republic Act
No. 3019. The Ombudsman held that Reyes and his co-
respondents a quo were public officers during the questioned
acts.  Both the government and private stall owners suffered
[13]

undue injury due to the fire at the Bansalan Public Market.  While
[14]

the mayor's permit was not the proximate cause of the fire, it
nonetheless, "gave unwarranted benefit and advantage to the fire
cracker vendors . . . [to sell] firecrackers in the public market
despite existing prohibition."  The issuance of the mayor's permit
[15]

was "patently tainted with bad faith and partiality or, at the very
least, gross inexcusable negligence."  The Ombudsman
[16]

appreciated the evidence presented and found that Reyes and his
co-respondents a quo were aware of Municipal Ordinance No.
357.  Despite this, Reyes approved and issued a mayor's permit
[17]

stating, "Permit is hereby granted to sell firecrackers on


December 21, 2009 to January 1, 2010 at Public Market,
Bansalan, Davao del Sur."  The assailed Resolution read:
[18]

WHEREFORE, this Office finds probable cause to indict


respondents Edwin G. Reyes, Solomon A. De Castilla, Gil C.
Andres, and Rita P. Domingo for violation of Section 3 (e) of
Republic Act No. 3019, as amended (Anti-Graft and Corrupt
Practices Act). Let an Information for violation of Section 3 (e) of
Republic Act No. 3019 be filed against the respondents before the
Sandiganbayan.

The other charges against the respondents are dismissed. [19]


Thus, an Information  was filed against Reyes, together with his
[20]

corespondents a quo Domingo, de Castilla, and Andres for


violating Section 3(e) of Republic Act No. 3019. It read:
On December 14, 2009, or sometime prior or subsequent thereto,
in the Municipality of Bansalan, Davao del Sur, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
accused, EDWIN GRANADA REYES, RITA POTESTAS DOMINGO,
SOLOMON ANORE DE CASTILLA, GIL CURAMENG ANDRES, public
officers being then the Mayor, Permits and Licensing Officer
Designate, Chief of Police, and Fire Marshall, respectively, of the
Municipality of Bansalan, while in the discharge of their official
functions, conspiring and confederating with one another, with
evident bad faith, manifest partiality, or at the very least, gross
inexcusable negligence, did then and there willfully, unlawfully,
and criminally give unwarranted benefit to a group of firecracker
vendors by approving and issuing them a mayor's permit "to sell
firecrackers on December 21, 2009 to January 1, 2010 at Public
Market, Bansalan, Davao del Sur" despite fully knowing the
existence of a municipal ordinance expressly prohibiting the
storing, displaying, selling and blowing-up of firecrackers at the
Bansalan Public Market and the non-issuance of the requisite Fire
Safety Inspection Certificate (FSIC) to the firecracker vendors,
thereby giving the said firecracker vendors the unwarranted
benefit and advantage of holding the business of selling
firecrackers at the Bansalan Public Market.

CONTRARY TO LAW. [21]

The Ombudsman denied a motion for reconsideration of its March


20, 2013 Resolution. [22]

Thus, petitioner filed this petition, arguing that public respondent


Ombudsman gravely abused its discretion considering there was
no legal basis to support the finding of probable cause against
petitioner.
[23]

Petitioner argues that there was no probable cause, insisting that


there was not enough basis for the finding of bad faith, manifest
partiality, or gross inexcusable negligence in this case.  There
[24]
was no unwarranted advantage or preference given to the
firecracker vendors because the mayor's permit was granted
based on a long-standing practice to allow them to sell their
wares during the Christmas season.  All firecracker vendors [25]

received similar treatment and were allowed to sell their wares,


provided they submitted the requirements.  Acts done in a public [26]

official's performance of official duty are presumed to have been


done in good faith, and mistakes committed are not actionable
unless malice or gross negligence amounting to bad faith is
shown. [27]

Petitioner insists that public respondent Ombudsman committed


grave abuse of discretion when it relied solely on Andres'
affidavit, which was not furnished to petitioner, to indict him.
 Petitioner did not know of Andres' affidavit, which contained
[28]

accusations against petitioner, until he received the assailed


Resolution.  Thus, petitioner's right to due process was violated.
[29]

Petitioner imputes bad faith in the filing of the complaint against


him. [30]

In support of his prayer for injunctive relief, petitioner claims that


he and his family will suffer financial, emotional, and
psychological hardship. The issuance of injunctive relief is
necessary because the Sandiganbayan has already set the
arraignment date of petitioner. [31]

In his Comment,  private respondent Arches argues that there


[32]

was probable cause,  that none of the grounds for enjoining a


[33]

criminal prosecution exists,  and that the assailed Resolution was


[34]

not based solely on Andres' affidavit. [35]

The Office of the Ombudsman argues in its Comment  that [36]

petitioner failed to show any grave abuse of discretion on the part


of the Ombudsman. There were sufficient bases to indict
petitioner for violation of Section 3(e) of Republic Act No. 3019.
The findings of the Ombudsman were based on the evidence
presented.  In the absence of grave abuse of discretion, this
[37]

Court has consistently refrained from interfering with the


Ombudsman's exercise of its mandate.  The Ombudsman [38]

opposes petitioner's prayer for injunctive relief, as no invasion of


any clear or legal right has been established by the petitioner. [39]

In his Reply,  petitioner Reyes argues that conspiracy could not


[40]

be present, considering that the respondents did not even agree


with one another, as shown by Andres' affidavit.  Further, it was
[41]

not shown that petitioner intentionally disregarded the Fire Safety


Inspection Certificate requirement as mandated by law. Without
this, only administrative liability would attach. The Ombudsman
also did not show that the vendors enjoyed any undue benefit or
that the government suffered any undue disadvantage.  Lastly, [42]

there was no showing of manifest partiality, evident bad faith, or


gross inexcusable neglect without which petitioner cannot be held
criminally liable. [43]

Petitioner avers that during the preliminary investigation, he was


not clearly informed of the nature of the charge against him, in
violation of his constitutional right to due process.  The findings
[44]

of the Ombudsman were confusing,  and petitioner was not


[45]

provided a copy of co-respondent a quo Andres' affidavit, upon


which the Ombudsman relied in its finding of probable cause
against petitioner. [46]

Petitioner insists that this Court can interfere with the findings of
the investigatory powers of the Ombudsman in this case,
considering that "this is a case of persecution, [not]
prosecution."  Private respondent Arches was compelled by
[47]

vengeance in filing the complaint. [48]

The sole issue for resolution of this Court is whether the


Ombudsman committed grave abuse of discretion in determining
that probable cause against petitioner exists.

We dismiss the Petition.

I
This Court generally does not interfere with the Ombudsman's
findings of probable cause. In Dichaves v. Office of the
Ombudsman: [49]

As a general rule, this Court does not interfere with the Office of
the Ombudsman's exercise of its constitutional mandate. Both the
Constitution and Republic Act No. 6770 (The Ombudsman Act of
1989) give the Ombudsman wide latitude to act on criminal
complaints against public officials and government employees.
The rule on non-interference is based on the "respect for the
investigatory and prosecutory powers granted by the Constitution
to the Office of the Ombudsman[.]"

An independent constitutional body, the Office of the Ombudsman


is "beholden to no one, acts as the champion of the people[,] and
[is] the preserver of the integrity of the public service." Thus, it
has the sole power to determine whether there is probable cause
to warrant the filing of a criminal case against an accused. This
function is executive in nature.

The executive determination of probable cause is a highly factual


matter. It requires probing into the "existence of such facts and
circumstances as would excite the belief, in a reasonable
mind, acting on the facts within the knowledge of the prosecutor,
that the person charged was guilty of the crime for which he [or
she] was prosecuted."

The Office of the Ombudsman is armed with the power to


investigate. It is, therefore, in a better position to assess the
strengths or weaknesses of the evidence on hand needed to
make a finding of probable cause. As this Court is not a trier of
facts, we defer to the sound judgment of the Ombudsman.

Practicality also leads this Court to exercise restraint in interfering


with the Office of the Ombudsman's finding of probable
cause. Republic v. Ombudsman Desierto explains:
[T]he functions of the courts will be grievously hampered by
innumerable petitions assailing the dismissal of investigatory
proceedings conducted by the Office of the Ombudsman with
regard to complaints filed before it, in much the same way that
the courts would be extremely swamped if they could be
compelled to review the exercise of discretion on the part of the
fiscals or prosecuting attorneys each time they decide to file an
information in court or dismiss a complaint by a private
complainant.  (Emphasis in the original, citations omitted)
[50]

Despite this well-established principle, petitioner would have this


Court interfere with the Ombudsman's assessment on the basis of
grave abuse of discretion. However, disagreement with the
Ombudsman's findings is not enough to constitute grave abuse of
discretion. It is settled:
An act of a court or tribunal may constitute grave abuse of
discretion when the same is performed in a capricious or
whimsical exercise of judgment amounting to lack of jurisdiction.
The abuse of discretion must be so patent and gross as to
amount to an evasion of positive duty, or to a virtual refusal to
perform a duty enjoined by law, as where the power is exercised
in an arbitrary and despotic manner because of passion or
personal hostility.  (Emphasis in the original, citations omitted)
[51]

Thus, for this Petition to prosper, petitioner would have to show


this Court that the Ombudsman conducted the preliminary
investigation in such a way that amounted to a virtual refusal to
perform a duty under the law. Petitioner has failed to do this. "A
preliminary investigation is only for the determination of probable
cause."  Further, probable cause is:
[52]

[T]he existence of such facts and circumstances as would lead a


person of ordinary caution and prudence to entertain an honest
and strong suspicion that the person charged is guilty of the
crime subject of the investigation. Being based merely on opinion
and reasonable belief, it does not import absolute certainty.
Probable cause need not be based on clear and convincing
evidence of guilt, as the investigating officer acts upon
reasonable belief. Probable cause implies probability of guilt and
requires more than bare suspicion but less than evidence which
would justify a conviction.  (Citations omitted)
[53]

Here, the Ombudsman properly performed its duty to determine


probable cause as to whether petitioner and his co-respondents a
quo violated Section 3(e) of Republic Act No. 3019. Section 3(e)
provides:
Section 3. Corrupt practices of public officers. — In addition to
acts or omissions of public officers already penalized by existing
law, the following shall constitute corrupt practices of any public
officer and are hereby declared to be unlawful:

....

(e) Causing any undue injury to any party, including the


Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his official
administrative or judicial functions through manifest partiality,
evident bad faith or gross inexcusable negligence. This provision
shall apply to officers and employees of offices or government
corporations charged with the grant of licenses or permits or
other concessions.
Based on opinion, reasonable belief, and the evidence on record,
the Ombudsman found that the elements of the crime punishable
under Section 3(e) of Republic Act No. 3019 existed.  Petitioner
[54]

and his co-respondents a quo did not deny that they were public
officers when the alleged acts were committed.  There was
[55]

"unwarranted benefit and advantage [given] to the firecracker


vendors."  The issuance of the mayor's permit was "tainted with
[56]

bad faith" or gross inexcusable negligence. [57]

Petitioner claims that the Ombudsman failed to show the undue


benefit given to the vendors,  but the Resolution sufficiently
[58]

explained:
Nevertheless, respondents' approval and issuance of the subject
mayor's permit gave unwarranted benefit and advantage to the
[firecracker] vendors. "Unwarranted" means lacking adequate or
official support; unjustified, unauthorized; or without justification
or adequate reasons; while "advantage" is defined as "a more
favorable or improved position or condition; benefit or gain of any
kind." The approval and issuance of the mayor's permit was
clearly without basis as it was, in fact, in violation of a municipal
ordinance and the Fire Code of the Philippines. It gave a group of
vendors the benefit and advantage of holding the business of
selling firecrackers in the public market despite existing
prohibition.  (Citations omitted)
[59]

Petitioner's claim that the Ombudsman did not explain the


evident bad faith or gross inexcusable neglect  also cannot be
[60]

countenanced. The Ombudsman likewise sufficiently explained


the finding of bad faith:
. . . Respondents' action was patently tainted with bad faith and
partiality or, at the very least, gross inexcusable negligence. "Bad
faith" refers to a conscious doing of a wrong; a breach of sworn
duty through some motive or intent or ill will; "partiality" is
synonymous with "bias" which excites a disposition to see and
report matters as they are wished for rather than as they are;
while "gross negligence" is negligence characterized by the want
of even slight care with a conscious indifference to consequences
as far as other persons are concerned.

Based on their respective counter-affidavits, respondents were


well aware of Municipal Ordinance No. 357 which expressly
prohibits "the storing, displaying, selling and blowing up
("pagbubuto") of those pyrotechnics products allowed by law,
commonly called as "firecrackers" or "pabuto" within the premises
of buildings 1 and 2 of Bansalan Public Market." In clear violation
of this ordinance, respondents approved and issued a mayor's
permit stating[,] "Permit is hereby granted to sell firecrackers on
December 21, 2009 to January 1, 2010 at Public Market,
Bansalan, Davao del Sur." Furthermore, as respondent Andres
narrated in his counter-affidavit, the firecracker vendors were not
issued a Fire Safety Inspection Certificate (FSIC) because they
did not comply with fire safety requirements. The issuance of a
FSIC by the Bureau of Fire [Protection] is a prerequisite to the
grant of permits by local governments. According to Andres, he
expressly informed respondent Reyes of the lack of the safety
requirements and objected to the issuance of the mayor's permit
because of the fire risk involved in such sale of firecrackers.
Nevertheless, despite the absence of the required FSIC,
respondents Domingo, Castilla, and Andres himself recommended
for approval the application for the subject mayor's permit.
Respondent mayor, for his part, cannot claim that he merely
relied on the other respondents' recommendation for approval
since he knew of an existing ordinance prohibiting such sale of
firecrackers and was apprised of the fact that the firecracker
vendors were not given a FSIC.  (Citations omitted)
[61]

Petitioner may insist on his innocence and the absence of bad


faith, but the presence or absence of bad faith is a matter of
evidence, best threshed out during trial. In any case, petitioner
has failed to show how the Ombudsman's determinations
constituted grave abuse of discretion.

II

Petitioner avers that his right to due process was violated.


Petitioner points out that the initial complaint against him and his
co-respondents a quo did not mention giving unwarranted benefit
to the firecracker vendors. Yet, he was charged with violating
Section 3(e) of Republic Act No. 3019 for giving unwarranted
benefit to the firecracker vendors. Petitioner states that this
charge was based on co-respondent a quo Andres' affidavit,
which he was not given. Because he had no opportunity to
respond to Andres' affidavit, he asserts that he was deprived of
due process.  This argument is untenable.
[62]

Preliminary investigation is not part of trial and is conducted only


to establish whether probable cause exists. Consequently, it is
not subject to the same due process requirements that must be
present during trial. In Webb v. De Leon: [63]

Considering the low quantum and quality of evidence needed to


support a finding of probable cause, we also hold that the DOJ
Panel did not gravely abuse its discretion in refusing to call the
NBI witnesses for clarificatory questions. The decision to call
witnesses for clarificatory questions is addressed to the sound
discretion of the investigator and the investigator alone. If the
evidence on hand already yields a probable cause, the
investigator need not hold a clarificatory hearing. To repeat,
probable cause merely implies probability of guilt and should be
determined in a summary manner. Preliminary investigation is
not a part of trial and it is only in a trial where an accused can
demand the full exercise of his rights, such as the right to
confront and cross-examine his accusers to establish his
innocence. In the case at bar, the DOJ Panel correctly adjudged
that enough evidence had been adduced to establish probable
cause and clarificatory hearing was unnecessary. [64]

A person's rights during preliminary investigation are limited to


those provided by procedural law.  Rule 112, Section 3 of the
[65]

Rules of Court provides:


Section 3. Procedure. — The preliminary investigation shall be
conducted in the following manner:

....

(b) . . .

The respondent shall have the right to examine the evidence


submitted by the complainant which he may not have been
furnished and to copy them at his expense. If the evidence is
voluminous, the complainant may be required to specify those
which he intends to present against the respondent, and these
shall be made available for examination or copying by the
respondent at his expense.

....

(c) Within ten (10) days from receipt of the subpoena with the
complaint and supporting affidavits and documents, the
respondent shall submit his counter-affidavit and that of his
witnesses and other supporting documents relied upon for his
defense. The counter-affidavits shall be subscribed and sworn to
and certified as provided in paragraph (a) of this section, with
copies thereof furnished by him to the complainant. The
respondent shall not be allowed to file a motion to dismiss in lieu
of a counter-affidavit.
Under procedural law, a respondent under preliminary
investigation has the right to examine the evidence submitted by
the complainant,  but he does not have a similar right over the
[66]

evidence submitted by his or her co-respondents.

This issue is not novel. This Court has held that during
preliminary investigation, the Ombudsman is not required to
furnish a respondent with the counter-affidavits of his co-
respondents. In Estrada v. Office of the Ombudsman: [67]

First. There is no law or rule which requires the Ombudsman to


furnish a respondent with copies of the counter-affidavits of his
corespondents.

....

Sen. Estrada claims that the denial of his Request for the
counter-affidavits of his co-respondents violates his constitutional
right to due process. Sen. Estrada, however, fails to specify a
law or rule which states that it is a compulsory
requirement of due process in a preliminary investigation
that the Ombudsman furnish a respondent with the
counter-affidavits of his co-respondents. Neither Section 3
(b), Rule 112 of the Revised Rules of Criminal Procedure nor
Section 4 (c), Rule II of the Rules of Procedure of the Office of
the Ombudsman supports Sen. Estrada's claim.

What the Rules of Procedure of the Office of the Ombudsman


require is for the Ombudsman to furnish the respondent with a
copy of the complaint and the supporting affidavits and
documents at the time the order to submit the counter-
affidavit is issued to the respondent. This is clear from
Section 4 (b), Rule II of the Rules of Procedure of the Office of
the Ombudsman when it states, "[a]fter such affidavits [of the
complainant and his witnesses] have been secured, the
investigating officer shall issue an order, attaching thereto a copy
of the affidavits and other supporting documents, directing the
respondent to submit, within ten (10) days from receipt thereof,
his counter-affidavits . . . ." At this point, there is still no counter-
affidavit submitted by any respondent. Clearly, what Section 4
(b) refers to are affidavits of the complainant and his
witnesses, not the affidavits of the co-
respondents. Obviously, the counter-affidavits of the co-
respondents are not part of the supporting affidavits of the
complainant. No grave abuse of discretion can thus be attributed
to the Ombudsman for the issuance of the 27 March 2014 Order
which denied Sen. Estrada's Request.

Although Section 4 (c), Rule II of the Rules of Procedure of the


Office of the Ombudsman provides that a respondent "shall have
access to the evidence on record," this provision should be
construed in relation to Section 4 (a) and (b) of the same Rule,
as well as to the Rules of Criminal Procedure. First, Section 4 (a)
states that "the investigating officer shall require the complainant
or supporting witnesses to execute affidavits to substantiate the
complaint." The "supporting witnesses" are the witnesses of the
complainant, and do not refer to the co-respondents.

Second, Section 4 (b) states that "the investigating officer shall


issue an order attaching thereto a copy of the affidavits and all
other supporting documents, directing the respondent" to submit
his counter-affidavit. The affidavits referred to in Section 4 (b)
are the affidavits mentioned in Section 4 (a). Clearly, the
affidavits to be furnished to the respondent are the affidavits of
the complainant and his supporting witnesses. The provision in
the immediately succeeding Section 4 (c) of the same Rule II that
a respondent shall have "access to the evidence on record" does
not stand alone, but should be read in relation to the provisions
of Section 4 (a and b) of the same Rule II requiring the
investigating officer to furnish the respondent with the "affidavits
and other supporting documents" submitted by "the complainant
or supporting witnesses." Thus, a respondent's "access to
evidence on record" in Section 4 (c), Rule II of the Ombudsman's
Rules of Procedure refers to the affidavits and supporting
documents of "the complainant or supporting witnesses" in
Section 4 (a) of the same Rule II.

Third, Section 3 (b), Rule 112 of the Revised Rules of Criminal


Procedure provides that "[t]he respondent shall have the right
to examine the evidence submitted by the
complainant which he may not have been furnished and to copy
them at his expense." A respondent's right to examine refers only
to "the evidence submitted by the complainant."

Thus, whether under Rule 112 of the Revised Rules of Criminal


Procedure or under Rule II of the Ombudsman's Rules of
Procedure, there is no requirement whatsoever that the affidavits
executed by the corespondents should be furnished to a
respondent.  (Emphasis in the original, citations omitted)
[68]

Thus, petitioner's non-receipt of Andres' affidavit did not violate


his procedural rights during preliminary investigation.

Moreover, petitioner was fully accorded due process in the


preliminary investigation proceedings.

In Resurreccion v. People: [69]

We have consistently held that the essence of due process is


simply an opportunity to be heard, or an opportunity to explain
one's side or an opportunity to seek for a reconsideration of the
action or ruling complained of. For as long as the parties are
given the opportunity to present their cause of defense, their
interest in due course as in this case, it cannot be said that there
was denial of due process.
Here, petitioner was able to file a counter-affidavit to explain his
side and to respond to the complaint filed against him. He was
not denied due process.

WHEREFORE, the Petition for Certiorari is DISMISSED. The


Office of the Ombudsman's March 20, 2013 Resolution in Case
No. OMB-M-C-11-0005-A and its June 26, 2013 Memorandum:
Resolution on the Motion for Reconsideration  in relation to
[70]

Criminal Case No. SB-13-CRM-0596 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), and Peralta, JJ., concur.


Mendoza, and Martires, JJ., on official leave.
[1]
 Rollo, pp. 3-28.

 Pursuant to Rita Potestas Domingo and Solomon Anore de


[2]

Castilla's motion to withdraw from being parties to the Petition


(rollo, pp. 226-231), this Court dropped them as petitioners in a
Resolution dated September 16, 2013 (rollo, p. 249-A).

 Rollo, pp. 29-40. The Resolution was penned by Assistant


[3]

Special Prosecutor III Anna Isabel G. Aurellano and approved by


the Ombudsman Conchita Carpio Morales.

 Id. at 120-130. The Memorandum: Resolution on the Motion for


[4]

Reconsideration, docketed as Criminal Case No. SB-13-CRM-


0596, was penned by Assistant Special Prosecutor II Joseph F.
Capistrano, with recommending approval of Acting Director
Lalaine D. Benitez and approved by The Ombudsman Conchita
Carpio Morales.

[5]
 Id. at 39.

[6]
 Id. at 262-263, Comment to the Petition for Certiorari.

[7]
 Id. at 262.

[8]
 Id. at 29-30.

[9]
 Id. at 5.

[10]
 Id. at 29-30.

[11]
 Id. at 21.

[12]
 Id. at 29-40.

[13]
 Id. at 34.
[14]
 Id.

[15]
 Id. at 35.

[16]
 Id. at 36.

[17]
 Id.

[18]
 Id.

[19]
 Id. at 39.

[20]
 Id. at 66-68.

[21]
 Id. at 66-67.

[22]
 Id. at 130.

[23]
 Id. at 11.

[24]
 Id. at 13.

[25]
 Id. at 19.

[26]
 Id.

[27]
 Id. at 20.

[28]
 Id.

[29]
 Id. at 22.

[30]
 Id. at 23.

[31]
 Id. at 24.

[32]
 Id. at 262-273, Comment to the Petition for Certiorari.
[33]
 Id. at 264.

[34]
 Id.

[35]
 Id. at 265.

[36]
 Id. at 477-495.

[37]
 Id. at 484.

[38]
 Id. at 487.

[39]
 Id. at 490.

 Id. at 499-527, Reply to the Comment to the Petition for


[40]

Certiorari, Prohibition with Prayer for Injunction and Temporary


Restraining Order.

[41]
 Id. at 508.

[42]
 Id. at 509.

[43]
 Id.

[44]
 Id. at 512.

[45]
 Id. at 512-513.

[46]
 Id. at 514.

[47]
 Id. at 520.

[48]
 Id.

 G.R.
[49]
Nos. 206310-11, December 7, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/december2016/206310-11.pdf> [Per J.
Leonen, Second Division].

[50]
 Id. at 16-17.

 Angeles v. Secretary of Justice, 503 Phil 93, 100 (2005) [Per J.


[51]

Carpio, First Division].

 Estrada v. Office of the Ombudsman, 751 Phil. 821, 863 (2015)


[52]

[Per J. Carpio, En Banc].

 Chan y Lim v. Secretary of Justice, 572 Phil 118, 132 (2008)


[53]

[Per J. Nachura, Third Division].

[54]
 Rollo, pp. 34-37.

[55]
 Id.

[56]
 Id. at 35.

[57]
 Id. at 36.

[58]
 Id. at 509.

[59]
 Id. at 35.

[60]
 Id. at 510.

[61]
 Id. at 36-37.

[62]
 Id. at 22.

[63]
 317 Phil. 758 (1995) [Per J. Puno, Second Division].

[64]
 Id. at 789.

 Dichaves v. Office of the Ombudsman, G.R. Nos. 206310-11,


[65]

December 7, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/december2016/206310-11.pdf> 18 [Per
J. Leonen, Second Division].

[66]
 RULES OF COURT, Rule 112, sec. 3.

[67]
 751 Phil. 821 (2015) [Per J. Carpio, En Banc].

[68]
 Id. at 855-861.

[69]
 738 Phil. 704, 720 (2014) [Per J. Brion, Second Division].

[70]
 Rollo, p. 120.

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765 Phil. 544


SECOND DIVISION

[ G.R. No. 215568, August 03, 2015 ]


RICHARD N. RIVERA, PETITIONER, VS. GENESIS
TRANSPORT SERVICE, INC. AND RIZA A. MOISES,
RESPONDENTS.DECISION

LEONEN, J.:
This resolves a Petition for Review on Certiorari under Rule 45 of
the 1997 Rules of Civil Procedure praying that the July 8, 2014
Decision  and the November 20, 2014 Resolution  of the Court of
[1] [2]

Appeals Fifth Division in CA-G.R. SP No. 130801 be reversed and


set aside, and that new judgment be entered finding petitioner
Richard N. Rivera to have been illegally dismissed and awarding
to him his monetary claims.

The assailed July 8, 2014 Decision of the Court of Appeals


dismissed the Petition for Certiorari under Rule 65 of the 1997
Rules of Civil Procedure filed by Richard N. Rivera (Rivera) and
affirmed the February 28, 2013  and April 30, 2013  Resolutions
[3] [4]

of the National Labor Relations Commission Second Division.


These Resolutions sustained the ruling of Labor Arbiter Gaudencio
P. Demaisip, Jr. who, in his June 26, 2012 Decision,  dismissed
[5]

Rivera's Complaint  for illegal dismissal.


[6]

The assailed November 20, 2014 Resolution of the Court of


Appeals denied Rivera's Motion for Reconsideration.

Rivera was employed by respondent Genesis Transport Service,


Inc. (Genesis) beginning June 2002 as a bus conductor, assigned
to the Cubao-Baler, Aurora route. As part of the requisites for his
employment, he was required to post a cash bond of P6,000.00.
Respondent Riza A. Moises is Genesis' President and General
Manager. [7]

In his Position Paper before the Labor Arbiter, Rivera


acknowledged that he was dismissed by Genesis on account of a
discrepancy in the amount he declared on bus ticket receipts. He
alleged that on June 10, 2010, he received a
Memorandum  giving him twenty-four (24) hours to explain why
[8]

he should not be sanctioned for reporting and remitting the


amount of P198.00 instead of the admittedly correct amount of
P394.00 worth of bus ticket receipts. He responded that it was an
honest mistake, which he was unable to correct "because the bus
encountered mechanical problems." [9]
The discrepancy between the reported and remitted amount as
against the correct amount was detailed in the "Irregularity
Report" prepared by Genesis' Inspector, Arnel Villaseran
(Villaseran). [10]

According to Villaseran, on May 25, 2010, he conducted a "man


to man" inspection on the tickets held by the passengers on
board Bus No. 8286 who had transferred from Bus No. 1820 in
San Fernando, Pampanga. (Bus No. 1820 broke down.) In the
course of his inspection, he noticed that Ticket No. 723374 VA
had a written corrected amount of P394.00. However, the amount
marked by perforations made on the ticket, which was the
amount originally indicated by the bus conductor, was only
P198.00. Upon inquiring with the passenger holding the ticket,
Villaseran found out that the passenger paid P500.00 to Rivera,
who gave her change in the amount of P106.00. [11]

Subsequently, Villaseran conducted verification works with the


Ticket Section of Genesis' Cubao Main Office. Per his inquiries, the
duplicate ticket surrendered by Rivera to Genesis indicated only
the unconnected amount of P198.00. It was also found that
Rivera remitted only P198.00. [12]

On July 20, 2010, Genesis served on Rivera a written


notice  informing him that a hearing of his case was set on July
[13]

23, 2010. Despite his explanations, Rivera's services were


terminated through a written notice dated July 30, 2010.
 Contending that this termination was arbitrary and not based
[14]

on just causes for terminating employment, he filed the


Complaint  for illegal dismissal, which is subject of this Petition.
[15] [16]

For their defense, Genesis and Riza A. Moises claimed that


Rivera's misdeclaration of the amount in the bus ticket receipts
and failure to remit the correct amount clearly violated Genesis'
policies and amounted to serious misconduct, fraud, and willful
breach of trust; thereby justifying his dismissal.
[17]
In a Decision  dated June 26, 2012, Labor Arbiter Gaudencio P.
[18]

Demaisip gave credence to respondents' appreciation of the


gravity of Rivera's acts of misdeclaring the amount of bus ticket
receipts and failing to remit the correct amount. Thus, he
dismissed Rivera's Complaint.

In a Resolution  dated February 28, 2013, the National Labor


[19]

Relations Commission Second Division affirmed the Decision of


Labor Arbiter Demaisip. In a Resolution  dated April 30, 2013,
[20]

the National Labor Relations Commission denied Rivera's Motion


for Reconsideration.

Thereafter, Rivera filed a Rule 65 Petition before the Court of


Appeals. In the assailed July 8, 2014 Decision,  the Court of
[21]

Appeals Fifth Division sustained the rulings of Labor Arbiter


Demaisip and the National Labor Relations Commission. In the
assailed November 20, 2014 Resolution,  the Court of Appeals
[22]

denied Rivera's Motion for Reconsideration.

Hence, this Petition was filed.

For resolution is the issue of whether petitioner Richard N.


Rivera's employment was terminated for just cause by
respondent Genesis Transport, Inc.

As Riza A. Moises, Genesis' President and General Manager, has


been impleaded, this court must also rule on her personal
liability, should the termination of petitioner's employment be
found invalid.

Our laws on labor, foremost of which is the Labor Code, are


pieces of social legislation. They have been adopted pursuant to
the constitutional recognition of "labor as a primary social
economic force"  and to the constitutional mandates for the state
[23]

to "protect the rights of workers and promote their welfare"  and


[24]

for Congress to "give highest priority to the enactment of


measures that protect and enhance the right of all the people to
human dignity, [and] reduce social, economic, and political
inequalities."
[25]

They are means for effecting social justice, i.e., the


"humanization of laws and the equalization of social and
economic forces by the State so that justice in the rational and
objectively secular conception may at least be approximated." [26]

Article XIII, Section 3 of the 1987 Constitution guarantees the


right of workers to security of tenure. "One's employment,
profession, trade or calling is a 'property right,'"  of which a
[27]

worker may be deprived only upon compliance with due process


requirements:
It is the policy of the state to assure the right of workers to
"security of tenure" (Article XIII, Sec. 3 of the New Constitution,
Section 9, Article II of the 1973 Constitution). The guarantee is
an act of social justice. When a person has no property, his job
may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has
construed security of tenure as meaning that "the employer shall
not terminate the services of an employee except for a just cause
or when authorized by" the code. Dismissal is not justified for
being arbitrary where the workers were denied due process and a
clear denial of due process, or constitutional right must be
safeguarded against at all times.  (Citations omitted)
[28]

Conformably, liberal construction of Labor Code provisions in


favor of workers is stipulated by Article 4 of the Labor Code:
Art. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved
in favor of labor.
This case is quintessentially paradigmatic of the need for the law
to be applied in order to ensure social justice. The resolution of
this case should be guided by the constitutional command for
courts to take a preferential view in favor of labor in ambitious
cases.
This case revolves around an alleged discrepancy between the
amounts indicated on a single ticket. For the paltry sum of
P196.00 that petitioner failed to remit in his sole documented
instance of apparent misconduct, petitioner's employment was
terminated. He was deprived of his means of subsistence.

II

Misconduct and breach of trust are just causes for terminating


employment only when attended by such gravity as would leave
the employer no other viable recourse but to cut off an
employee's livelihood.

The Labor Code recognizes serious misconduct, willful breach of


trust or loss of confidence, and other analogous causes as just
causes for termination of employment:
Article 282. Termination by employer. An employer may
terminate an employment for any of the following just causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful ord
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his empl
representative;

(d) Commission of a crime or offense by the employee against the person of his emp
member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.


Serious misconduct as a just cause for termination was discussed
in Yabut v. Manila Electric Co.: [29]

Misconduct is defined as the "transgression of some established


and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere
error in judgment." For serious misconduct to justify dismissal,
the following requisites must be present: (a) it must be serious;
(b) it must relate to the performance of the employee's duties;
and (c) it must show that the employee has become unfit to
continue working for the employer.  (Emphasis supplied, citation
[30]

omitted)
Thus, it is not enough for an employee to be found to have
engaged in improper or wrongful conduct. To justify termination
of employment, misconduct must be so severe as to make it
evident that no other penalty but the termination of the
employee's livelihood is viable.

In Philippine Plaza Holdings v. Episcope,  we discussed the


[31]

requisites for valid dismissal on account of willful breach of trust:


Among the just causes for termination is the employer's loss of
trust and confidence in its employee. Article 296 (c) (formerly
Article 282 [c]) of the Labor Code provides that an employer may
terminate the services of an employee for fraud or willful breach
of the trust reposed in him. But in order for the said cause to be
properly invoked, certain requirements must be complied with[,]
namely[:] (1) the employee concerned must be holding a position
of trust and confidence and (2) there must be an act that would
justify the loss of trust and confidence. [32]

Relating to the first requisite, Philippine Plaza Holdings clarified


that two (2) classes of employees are considered to hold
positions of trust:
It is noteworthy to mention that there are two classes of positions
of trust: on the one hand, there are managerial employees whose
primary duty consists of the management of the establishment in
which they are employed or of a department or a subdivision
thereof, and to other officers or members of the managerial
staff; on the other hand, there are fiduciary rank-and-file
employees, such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property. These
employees, though rank-and-file, are routinely charged with the
care and custody of the employer's money or property, and are
thus classified as occupying positions of trust and confidence.
 (Emphasis supplied)
[33]
The position an employee holds is not the sole criterion. More
important than this formalistic requirement is that loss of trust
and confidence must be justified. As with misconduct as basis for
terminating employment, breach of trust demands that a degree
of severity attend the employee's breach of trust. In China City
Restaurant Corporation v. National Labor Relations Commission,
 this court emphasized the need for caution:
[34]

For loss of trust and confidence to be a valid ground for the


dismissal of employees, it must be substantial and not arbitrary,
whimsical, capricious or concocted.

Irregularities or malpractices should not be allowed to escape the


scrutiny of this Court. Solicitude for the protection of the rights of
the working class [is] of prime importance. Although this is not
[al license to disregard the rights of management, still the Court
must be wary of the ploys of management to get rid of
employees it considers as undesirable.  (Emphasis supplied)
[35]

III

The social justice suppositions underlying labor laws require that


the statutory grounds justifying termination of employment
should not be read to justify the view that bus conductors should,
in all cases, be free from any kind of error. Not every improper
act should be taken to justify the termination of employment.

Concededly, bus conductors handle money. To this extent, their


work may be analogous to that of tellers, cashiers, and other
similarly situated rank-and-file employees who occupy positions
of trust and confidence. However, even granting that the first
requisite for termination of employment on account of willful
breach of trust has been satisfied, we find it improper to sustain
the validity of the termination of petitioner's employment.

We take judicial notice of bus conductors' everyday work. Bus


conductors receive, exchange, and keep money paid by
passengers by way of transportation fare. They keep track of
payments and make computations down to the last centavo,
literally on their feet while a bus is in transit.
Regardless of whether a bus is driving through awkward spaces—
through steep inclines, rugged roads, or sharp turns—or of
whether a bus is packed with standing passengers, the lonesome
task of keeping track of the passengers' payments falls upon a
bus conductor.

Thus, while they do handle money, their circumstances are not at


all the same as those of regular cashiers. They have to think
quickly, literally on their feet. Regular cashiers, on the other
hand, have the time and comfort to deliberately and carefully
examine the transactions of their employer.

However, handling passengers' fare payments is not their sole


function. Bus conductors assist drivers as they maneuver buses
through tight spaces while they are in transit, depart, or park.
They often act as dispatchers in bus stops and other such places,
assist passengers as they embark and alight, and sometimes
even help passengers load and unload goods and cargo. They
manage the available space in a bus and ensure that no space is
wasted as the bus accommodates more passengers. Along with
drivers, bus conductors commit to memory the destination of
each passenger so that they can anticipate their stops.

There are several ways to manifest the severity that suffices to


qualify petitioner's alleged misconduct or breach of trust as so
grave that terminating his employment is warranted. It may be
through the nature of the act itself: spanning an entire spectrum
between, on one end, an overlooked error, made entirely in good
faith; and, on another end, outright larceny. It may be through
the sheer amount mishandled. It may be through frequency of
acts. It may be through other attendant circumstances, such as
attempts to destroy or conceal records and other evidence, or
evidence of a motive to undermine the business of an employer.

We fail to appreciate any of these in this case.


To reiterate, what is involved is a paltry amount of P196.00. All
that has been proven is the existence of a discrepancy. No proof
has been adduced of ill-motive or even of gross negligence. From
all indications, petitioner stood charged with a lone, isolated
instance of apparent wrongdoing.

The records are bereft of evidence showing a pattern of


discrepancies chargeable against petitioner. Seen in the context
of his many years of service to his employer and in the absence
of clear proof showing otherwise, the presumption should be that
he has performed his functions faithfully and regularly. It can be
assumed that he has issued the correct tickets and given
accurate amounts of change to the hundreds or even thousands
of passengers that he encountered throughout his tenure. It is
more reasonable to assume that—except for a single error costing
a loss of only P196.00—the company would have earned the
correct expected margins per passenger, per trip, and per bus
that it allowed to travel.

Absent any other supporting evidence, the error in a single ticket


issued by petitioner can hardly be used to justify the inference
that he has committed serious misconduct or has acted in a
manner that runs afoul of his employer's trust. More so,
petitioner cannot be taken to have engaged in a series of acts
evincing a pattern or a design to defraud his employer.
Terminating his employment on these unfounded reasons is
manifestly unjust.

To infer from a single error that petitioner committed serious


misconduct or besmirched his employer's trust is grave abuse of
discretion. It is an inference that is arbitrary and capricious. It is
contrary to the high regard for labor and social justice enshrined
in our Constitution and our labor laws.

The Court of Appeals committed an error of law correctible by a


petition for review under Rule 45. It erred when it held that the
National Labor Relations did not commit grave abuse of discretion
when the latter did not engage in the requisite scrutiny to review
the inference and its bases.

IV

As his employment was illegally and unjustly terminated,


petitioner is entitled to full backwages and benefits from the time
of his termination until the finality of this Decision. He is likewise
entitled to separation pay in the amount of one (1) month's
salary for every year of service until the finality of this Decision,
with a fraction of a year of at least six (6) months being counted
as one (1) whole year.

As he was compelled to litigate in order to seek relief for the


illegal and unjust termination of his employment, petitioner is
likewise entitled to attorney's fees in the amount of 10% of the
total monetary award. [36]

"Moral damages are awarded in termination cases where the


employee's dismissal was attended by bad faith, malice or fraud,
or where it constitutes an act oppressive to labor, or where it was
done in a manner contrary to morals, good customs or public
policy."  Also, to provide an "example or correction for the public
[37]

good,"  exemplary damages may be awarded.


[38]

However, we find no need to award these damages in favor of


petitioner. While the termination of his employment was invalid,
we nevertheless do not find respondent Genesis to have acted
with such a degree of malice as to act out of a design to oppress
petitioner. It remains that a discrepancy and shortage chargeable
to petitioner was uncovered, although this discrepancy and
shortage does not justify a penalty as grave as termination of
employment.

Respondent Riza A. Moises may not be held personally liable for


the illegal termination of petitioner's employment.
As we explained in Saudi Arabian Airlines v. Rebesencio: [39]

A corporation has a personality separate and distinct from those


of the persons composing it. Thus, as a rule, corporate directors
and officers are not liable for the illegal termination of a
corporation's employees. It is only when they acted in bad faith
or with malice that they become solidarity liable with the
corporation.

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang


Manggagawa ng Ever Electrical, this court clarified that "[b]ad
faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of
wrong; it means breach of a known duty through some motive or
interest or ill will; it partakes of the nature of fraud." [40]

Petitioner has not produced proof to show that respondent Riza A.


Moises acted in bad faith or with malice as regards the
termination of his employment. Thus, she did not incur any
personal liability.

WHEREFORE, the Petition for Review on Certiorari


is PARTIALLY GRANTED. The assailed Decision dated July 8,
2014 and the assailed Resolution dated November 20, 2014 of
the Court of Appeals Fifth Division in CA-G.R. SP No. 130801,
which dismissed the Petition for Certiorari filed by petitioner
Richard N. Rivera and affirmed the February 28, 2013 and April
30, 2013 Resolutions of the National Labor Relations Commission
Second Division, as well as the June 26, 2012 Decision of Labor
Arbiter Gaudencio P. Demaisip, Jr., are REVERSED and SET
ASIDE. Accordingly, respondent Genesis Transport Service, Inc.
is ordered to pay petitioner:

(1) Full backwages and other benefits computed from July 30, 2010, when petitioner's
until the finality of this Decision;

(2) Separation pay computed from June 2002, when petitioner commenced employme
at the rate of one (1) month's salary for every year of service, with a fraction of a
counted as one (1) whole year; and
(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The case is REMANDED to the Labor Arbiter to make a detailed


computation of the amounts due to petitioner, which respondents
should pay without delay.

The case is DISMISSED with respect to respondent Riza A.


Moises.

SO ORDERED.

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


concur.

 Rollo, pp. 45-59. The Decision was penned by Associate Justice


[1]

Ramon A. Cruz and concurred in by Associate Justices Hakim S.


Abdulwahid and Romeo F. Barza.

[2]
 Id. at 61-62.

 Id. at 95-103. The Resolution was penned by Presiding


[3]

Commissioner Raul T. Aquino and concurred in by Commissioners


Teresita D. Castillon-Lora and Erlinda T. Agus.

 Id. at 92-93. The Resolution was penned by Presiding


[4]

Commissioner Raul T. Aquino and concurred in by Commissioners


Teresita D. Castillon-Lora and Erlinda T. Agus.

[5]
 Id. at 188-193.

[6]
 Id. at 105-106.

[7]
 Id. at 46.

[8]
 Id. at 125.
[9]
 Id. at 46.

[10]
 Id. at 127.

[11]
 Id.

[12]
 Id.

[13]
 Id. at 126.

[14]
 Id. at 127-131.

[15]
 Id. at 105.

[16]
 Id. at 46-47.

[17]
 Id. at 47.

[18]
 Id. at 188-193.

[19]
 Id. at 95-103.

[20]
 Id. at 92-93.

[21]
 Id. at 32-43.

[22]
 Id. at 61-62.

[23]
 Const., art. II, sec. 18.

[24]
 Const., art. II, sec. 18.

[25]
 Const., art. XIII, sec. 1.

 Calalang v. Williams, 70 Phil. 726 (1940) [Per J. Laurel, First


[26]

Division].
 Callanta v. Carnation Phil., Inc., 229 Phil. 279, 288-189 (1986)
[27]

[Per J. Fernan, Second Division].

 Ranee v. National Labor Relations Commission, 246 Phil. 287,


[28]

292-293 (1988) [Per J. Paras, Second Division].

[29]
 679 Phil. 97 (2012) [Per J. Reyes, Second Division].

[30]
 Id. at 110-111.

 G.R. No. 192826, February 27, 2013, 692 SCRA 227 [Per J.
[31]

Perlas-Bernabe, Second Division].

[32]
 Id. at 235.

 Id. at 235-236, citing M+WZander Philippines, Inc. v. Enriquez,


[33]

606 Phil. 591 (2009) [Per C.J. Puno, First Division].

 G.R. No. 97196, January 22, 1993, 217 SCRA 443 [Per J.
[34]

Campos, Jr., Second Division].

[35]
 Id. at 453-454.

 Aliling v. Manuel, G.R. No. 185829, April 25, 2012, 671 SCRA
[36]

186, 220 [Per J. Velasco, Third Division], citing Exodus


International Construction Corporation v. Biscocho, 659 Phil. 142
(2011) [Per J. Del Castillo, First Division] and Lambert
Pawnbrokers and Jewelry Corporation, 639 Phil. 1 (2010) [Per J.
Del Castillo, First Division].

 San Miguel Properties Philippines, Inc. v. Gucaban, 669 Phil.


[37]

288, 302 (2011) [Per J. Peralta, Third Division], citing Mayon


Hotel and Restaurant v. Adana, 497 Phil. 892, 922 (2005) [Per J.
Puno, Second Division]; Litonjua Group of Companies v. Vigan,
412 Phil. 627, 643 (2001) [Per J. Gonzaga-Reyes, Third
Division]; Equitable Banking Corp. v. National Labor Relations
Commission, 339 Phil. 541, 565 (1997) [Per J. Vitug, First
Division]; Airline Pilots Association of the Philippines v. National
Labor Relations Commission, 328 Phil. 814, 830 (1996) [Per J.
Francisco, Third Division]; and Maglutac v. National Labor
Relations Commission, 267 Phil. 816 (1990) [Per J. Medialdea,
First Division].

[38]
 CIVIL CODE. art. 2229.

 G.R.
[39]
No. 198587, January 14,
2015, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/january2015/198587.pdf> [Per J.
Leonen, Second Division].

 Id. at 28, citing Ever Electrical Manufacturing, Inc. (EEMI) v.


[40]

Samahang Manggagawa ng Ever Electrical, G.R. No. 194795,


June 13, 2012, 672 SCRA 562, 572 [Per J. Mendoza, Third
Division].

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Supreme Court E-Library

THIRD DIVISION

[ G.R. No. 200170, June 03, 2019 ]


MARILYN R. YANGSON, PETITIONER, VS.
DEPARTMENT OF EDUCATION REPRESENTED BY
ITS SECRETARY BRO. ARMIN A. LUISTRO, FSC,
RESPONDENT.DECISION
LEONEN, J.:

Reassignments differ from transfers, and public employees with


appointments that are not station-specific may be reassigned to
another station in the exigency of public service.

This resolves a Petition for Review on Certiorari  assailing the July


[1]

28, 2011 Decision  and January 4, 2012 Resolution  of the Court
[2] [3]

of Appeals in CA-G.R. SP No. 117679.

Marilyn R. Yangson (Yangson) was Principal III at the Surigao


Norte National High School (Surigao National). [4]

On April 30, 2008, Yangson was personally served a


Memorandum dated April 14, 2008 issued by then Assistant
Schools Division Superintendent Officer-in-Charge Fidela Rosas
(Rosas).  In the Memorandum, Yangson was reassigned from
[5]

Surigao National to Toledo S. Pantilo Memorial National High


School (Toledo Memorial):
In the exigency of the service, you are hereby advise[d] of your
reassignment from Surigao Norte National High School to Toledo
S. Pantilo Memorial National High School effective May 5, 2008.

Please submit your clearance as to money and property


accountability before reporting to your new station. Your First
Day of Service must also be submitted to this Office for our
reference and file.

It is expected that you do your best in the interest of the service.


Please be guided accordingly. [6]

Yangson refused to accept the Memorandum without first


consulting her counsel. [7]

Two (2) days prior to the effectivity of her reassignment on May


5, 2008, Yangson filed before the Regional Trial Court a Petition
for Injunction with Prayer for Temporary Restraining Order and
Damages against Rosas and Dulcesima Corvera (Corvera), who
was supposed to replace Yangson as the new principal of Surigao
National.[8]

Yangson alleged that the Memorandum violated Department of


Education Circular No. 02, series of 2005, because it failed to
specify the duration of her reassignment and because it was
issued without her prior consultation. She also claimed that there
was no vacancy in the position, and the reassignment would
cause diminution in her rank. [9]

On May 5, 2008, the Regional Trial Court issued a Temporary


Restraining Order. [10]

However, in its May 24, 2008 Order,  the Regional Trial Court
[11]

denied Yangson's prayer for preliminary injunction. It held that


Yangson did not have a vested right over her position at Surigao
National because her appointment as Principal III was not
station-specific.  It also found that the Temporary Restraining
[12]

Order was sufficient to vindicate her rights even if the


Memorandum was not served properly.

Furthermore, the trial court ruled that Yangson was not singled
out as other principals were also reassigned. It held that the
reassignments were in good faith and within Rosas' authority.  It [13]

ruled that the issuance of an injunction was improper as Yangson


could still appeal to the Director of Public Schools under Section 6
of Republic Act No. 4670, or the Magna Carta for Public School
Teachers. While this was pending resolution, the trial court
explained, her transfer could be held in abeyance. [14]

Thus, Yangson appealed before the Department of Education


CARAGA Regional Office. [15]

In her June 11, 2008 Resolution,  Regional Director Jesusita


[16]

Arteche (Regional Director Arteche) denied Yangson's appeal.


Citing Section 26 of the Administrative Code, which differentiated
transfers from reassignments,  she found that Yangson was
[17]

reassigned, not transferred. Thus, Section 6 of the Magna Carta


for Public School Teachers, which only provided for transfers, was
inapplicable. Yangson's reassignment, then could not be held in
abeyance while her appeal was pending resolution. [18]

Regional Director Arteche also ruled that Yangson was not


constructively dismissed because her reassignment was done in
good faith. Further, it held that Rosas had the discretion to
reassign principals and teachers under DECS Order No. 7, series
of 1999, which directed the reassignment of teachers and
principals every five (5) years.
[19]

Yangson elevated her case to the Department of Education


Central Office, but her appeal was denied in the August 13, 2008
Resolution.[20]

The Department of Education Central Office affirmed that


Yangson was reassigned, not transferred, since her movement
did not involve the issuance of an appointment.  It held that
[21]

since Yangson's appointment was not station-specific, her


reassignment was within the prerogative of the head of office for
the exigency of service. Hence, Yangson could be assigned to any
school.

Moreover, the Department of Education Central Office found that


since her reassignment was done to promote efficiency in
government service, her consent was not necessary. Thus, the
Magna Carta for Public School Teachers was not violated. [22]

Even if the movement was a transfer, the Department of


Education Central Office found that Yangson's consent was not
required since her appointment was not station-specific. It
explained that when the appointment is not station-specific, one's
consent is not required when he or she is merely assigned or
temporarily appointed.[23]

The Department of Education Central Office ruled that there was


no malice in Yangson's reassignment just because she was unable
to consult her lawyer to question it. It found that Rosas made
several earnest efforts to serve Yangson the Memorandum on
time, beginning April 22, 2008. In all those instances, Yangson
refused to receive the Memorandum, and only accepted it on May
2, 2008. Thus, it ruled that Yangson could not feign ignorance of
the action as it was she who employed delaying tactics. [24]

Maintaining that Yangson was not singled out, the Department of


Education Central Office explained that her reassignment was
part of the reshuffling of all school heads and principals within the
division under DECS Order No. 7. [25]

The Department of Education Central Office, likewise, ruled that


Yangson's reassignment to a smaller school was neither a
demotion nor constructive dismissal. It held that government
projects, programs, efforts, and resources could not be
subordinated to individual preferences of Civil Service employees
as it would defy the notion that "a public office is a public trust."
[26]

The Department of Education Central Office further found that


Yangson's Appeal before the Regional Director was filed out of
time.  It found:
[27]

WHEREFORE, premises considered, the appeal of appellant


Marilyn Yangson, is hereby dismissed for lack of merit. She is
hereby directed to report immediately to Toledo S. Pantilo
Memorial National High School, Sison, Surigao Del Norte.

SO RESOLVED. [28]

Yangson filed a Motion for Reconsideration, but it was denied by


the Department of Education Central Office in its October 13,
2008 Resolution. Thus, she elevated her claims to the Civil
Service Commission. [29]

In its June 15, 2010 Resolution,  the Civil Service Commission


[30]

reversed both Resolutions of the Department of Education Central


Office and ruled in favor of Yangson. It found that her
reassignment did not comply with the requirements of Section 6
of the Magna Carta for Public School Teachers. [31]
The Civil Service Commission affirmed that Yangson could be
assigned anywhere in the school division.  However, It noted
[32]

that while the movement would be in the same region, Yangson


would be placed in a different division. It found that Surigao
National is under the Division of Surigao City, while Toledo
Memorial is under the Division of Surigao del Norte.  Thus, it [33]

ruled that Yangson's consent was necessary. [34]

The Civil Service Commission also concluded that the


Memorandum only stated the exigency of service, but "failed to
show that [Yangson's] transfer was premised on the ground of
completion of five (5) years . . . at [Surigao National]."  The [35]

dispositive portion of the Resolution read:


WHEREFORE, the appeal filed by Marilyn R. Yangson is GRANTED.
Accordingly, Resolution dated August 13, 2008 and Resolution
dated October 13, 2008 issued by the Secretary, Department of
Education, Pasig City, directing her to immediately report to
Toledo S. Pantilo Sr. Memorial National High School, Sison,
Surigao del Norte, are declared NULL AND VOID. The Schools
Division Superintendent is directed to immediately reinstate
Yangson in her original work station. [36]

Thus, the Department of Education elevated the matter to the


Court of Appeals.[37]

In its July 28, 2011 Decision,  the Court of Appeals set aside the
[38]

rulings of the Civil Service Commission. [39]

The Court of Appeals maintained that while reassignments are


different from transfers, both are covered by Section 6 of the
Magna Carta for Public School Teachers.  However, though it was
[40]

applicable, the Court of Appeals found that the provision was not
violated.  It explained that Yangson was being reassigned under
[41]

the Division Office's plan to reshuffle school administrators in the


exigency of service, as the last reshuffling had happened more
than five (5) years earlier.
[42]

The Court of Appeals also ruled that the reassignment was valid
without Yangson's consent, and the notice served to her
sufficiently complied with the requirement under the Magna Carta
for Public School Teachers.  It agreed with the Civil Service
[43]

Commission that Yangson had not been demoted as there was no


reduction in Yangson's rank, status, or salary. [44]

The Court of Appeals further found that Yangson was reassigned


to a school in the same division as Surigao National. It noted that
she was appointed at the Department of Education, Division of
Surigao del Norte, and not any specific station or school.
 Citing Fernandez v. Sto. Tomas,  it held that since her
[45] [46]

appointment was not station-specific, Yangson could be assigned


to any school. Her security of tenure does not entitle her to
permanently stay in only one (1) school. [47]

The dispositive portion of the Court of Appeals Decision read:


WHEREFORE, the Petition is hereby GRANTED. Resolution Nos.
101241 and 1000476 of the Civil Service Commission dated 15
June 2010 and 13 December 2010, respectively, are SET ASIDE.

SO ORDERED. [48]

Yangson filed a Motion for Reconsideration, which the Court of


Appeals denied in its January 4, 2012 Resolution. [49]

Thus, Yangson filed this Petition for Review on Certiorari. [50]

Petitioner insists that the Court of Appeals did not address the
issue of whether her movement was a reassignment or a transfer.
 She claims that her reassignment contravenes Section 6 of the
[51]

Magna Carta for Public School Teachers, which provides that her
consent must first be obtained before she is transferred.  She [52]

asserts that she should have been given prior notice. She also
posits that the reassignments should not have been implemented
while the appeal was pending. [53]

Petitioner further questions the reason and motivation for her


transfer. She alleges that Rosas merely shuffled the assignments
of three (3) principals after previous attempts to remove her from
Surigao National had failed. Likewise, she assails the Division
Office's reason that it was for the exigency of service, maintaining
that there was no extraordinary occurrence in Toledo Memorial
that will require her expertise and qualifications.
[54]

Moreover, petitioner claims that there is no reason to remove her


from Surigao National as she had an exemplary record at the
school. She notes, among others, that the school excelled during
her administration and that she was recognized by the
Department of Education as Most Outstanding Principal for school
year 2005 to 2006. [55]

Further claiming that the reassignment diminished her rank and


status, petitioner points out that she will only have 31 personnel
at Toledo Memorial against her 165 personnel at Surigao
National. Since Toledo Memorial is smaller, her supervisory
authority will be considerably diminished, as such size is for the
position of Principal I, not Principal III.
[56]

Petitioner further argues that even if there was no new


appointment, her movement was still a demotion. She claims that
demotion does not have to be evidenced by a change of
appointment, and it may be shown by the size of the school
where she is being transferred. [57]

Petitioner suggests that her appointment to Surigao National is


station-specific, as her appointment papers indicate that she
would replace Mamerto Racaza (Racaza), who had been assigned
to Surigao National before he retired. [58]

Petitioner explains that she does not claim any property right
over her present position. She is simply refusing her transfer
because her constitutional right to security of tenure was
violated. [59]

Finally, petitioner argues that even if the movement was a


reassignment, not a transfer, it should not be for an indefinite
period  and should not last longer than one (1) year.
[60] [61]
In its Comment,  respondent Department of Education argues
[62]

that the Court of Appeals correctly ruled that petitioner's


reassignment is valid.  It asserts that petitioner's appointment
[63]

was not station-specific since her appointment papers indicate


that she was appointed as "Principal III of [the Department of
Education] Division of Surigao del Norte."  It contends that Civil
[64]

Service Commission Memorandum Circular No. 2, series of 2005,


provides that employees without specific stations may be
reassigned indefinitely. [65]

Respondent further argues that petitioner need not be served


prior notice or an explanation for her reassignment to be valid.
Similarly, her consent is not necessary as her transfer was done
in good faith and in the interest of government service.  It [66]

argues that petitioner cannot demand as a right that she remain


the principal of Surigao National just because she withheld her
consent.[67]

Respondent claims that under Section 26(7) of the Administrative


Code, Rosas is vested with management prerogative to effect
reassignments.  It argues that Section 6 of the Magna Carta for
[68]

Public School Teachers cannot impinge on the policy that school


staff would be reassigned after a five (5)-year service in a
station. It explains that the policy was made to prevent situations
where school officials tend to be complacent after staying in a
station for too long, which causes administrative problems. [69]

Asserting that the reassignment was made in accordance with


law, respondent argues that the act cannot be deemed a removal
without lawful cause or a violation of petitioner's right to security
of tenure. It reiterates that petitioner has no vested right to serve
at Surigao National, pointing out that she would retain the same
rank, status, and salary as Principal III of Toledo Memorial.[70]

Furthermore, respondent claims that petitioner raises factual


issues improper in a Rule 45 petition.  It asserts that the findings
[71]

of the Court of Appeals are conclusive as they were supported by


substantial evidence. [72]
Respondent also points that petitioner failed to comply with the
requirement under Rule 45, Section 5 of the Rules of Court
because it was petitioner herself who certified the documents
attached to the Petition as true copies. [73]

In her Reply,  petitioner reiterates that even if she can be


[74]

transferred or reassigned, it should not be for an indefinite


period.[75]

For this Court's resolution is the issue of whether or not petitioner


Marilyn R. Yangson's reassignment was valid. In connection with
this, we resolve the following issues:

First, whether or not petitioner's appointment is station-specific;

Second, whether or not Section 6 of the Magna Carta for Public


School Teachers applies to petitioner's movement;

Third, whether or not petitioner's reassignment violated her


security of tenure;

Fourth, whether or not petitioner's reassignment was for the


exigency of service and in accordance with policy;

Fifth, whether or not petitioner was demoted; and

Finally, whether or not petitioner's appointment may be


indeterminate.

The Petition lacks merit. Petitioner's reassignment is valid.

This Court affirms the finding that petitioner's appointment was


not station-specific.
Petitioner suggests that her appointment is station-specific
because her appointment papers state that she would replace
Racaza, who, before his retirement, had been assigned at Surigao
National.[76]

This contention is untenable.

An appointment is station-specific if the employee's appointment


paper specifically indicates on its face the particular office or
station the position is located. Moreover, the station should
already be specified in the position title, even if the place of
assignment is not indicated on the face of the appointment. [77]

Here, respondent alleges that petitioner was appointed as


"Principal III of [the Department of Education] Division of Surigao
del Norte." [78]

Petitioner did not deny this in her pleadings.

Evidently, petitioner's appointment is not solely for Surigao


National or for any specific school. There is no particular office or
station specifically indicated on the face of her appointment
paper. Neither does her position title specifically indicate her
station.

Furthermore, the Regional Trial Court,  the Department of


[79]

Education,  and the Court of Appeals,  all found that petitioner's


[80] [81]

appointment was not station-specific.

It is settled that the factual findings of lower tribunals are entitled


to great weight and respect absent any showing that they were
not supported by evidence, or the judgment is based on a
misapprehension of facts.  There is no showing of any of these
[82]

exceptions here.

II
Moreover, Section 6 of the Magna Carta for Public School
Teachers does not apply here. The provision states:
SECTION 6. Consent for Transfer — Transportation Expenses. —
Except for cause and as herein otherwise provided, no teacher
shall be transferred without his consent from one station to
another.

Where the exigencies of the service require the transfer of a


teacher from one station to another, such transfer may be
effected by the school superintendent who shall previously notify
the teacher concerned of the transfer and the reason or reasons
therefor. If the teacher believes there is no justification for
the transfer, he may appeal his case to the Director of Public
Schools or the Director of Vocational Education, as the case may
be. Pending his appeal and the decision thereon, his transfer shall
be held in abeyance: Provided, however, That
no transfers whatever shall be made three months before any
local or national election.

Necessary transfer expenses of the teacher and his family shall


be paid for by the Government if his transfer is finally approved.
(Emphasis supplied)
The text of the law is clear and unequivocal: Section 6 applies to
transfers, not reassignments. Petitioner's movement from Surigao
National to Toledo Memorial was a reassignment, not a transfer.

The legal concept of transfer differs from reassignment. Most


notably, a transfer involves the issuance of another appointment,
while a reassignment does not.

Section 26 of the Administrative Code provides:


SECTION 26. Personnel Actions. — . . .

As used in this Title, any action denoting the movement or


progress of personnel in the civil service shall be known as
personnel action. Such action shall include appointment through
certification, promotion, transfer, reinstatement, re-employment,
detail, reassignment, demotion, and separation. All personnel
actions shall be in accordance with such rules, standards, and
regulations as may be promulgated by the Commission.

....
(3) Transfer. — A transfer is a movement from one position to another which is of e
salary without break in service involving the issuance of an appointment.

It shall not be considered disciplinary when made in the interest of public ser
employee concerned shall be informed of the reasons therefor. If the employee
justification for the transfer, he may appeal his case to the Commission.

The transfer may be from one department or agency to another or from on


another in the same department or agency: Provided, however, That any movem
service to the career service shall not be considered a transfer.

(7) Reassignment. — An employee may be reassigned from one organizational unit


agency: Provided, that such reassignment shall not involve a reduction in rank, s
Transfer and reassignment are defined in Section 24 of
Presidential Decree No. 807,  or the Civil Service Law:
[83]

SECTION 24. Personnel Actions. — All appointments in the career


service shall be made only according to merit and fitness, to be
determined as far as practicable by competitive examinations. A
non-eligible shall not be appointed to any position in the civil
service whenever there is a civil service eligible actually available
for and ready to accept appointment.

As used in this Decree, any action denoting the movement or


progress of personnel in the civil service shall be known as
personnel action. Such action shall include appointment through
certification, promotion, transfer, reinstatement, re-employment,
detail, reassignment, demotion, and separation. All personnel
actions shall be in accordance with such rules, standards, and
regulations as may be promulgated by the Commission.

....

(c) Transfer. — A transfer is a movement from one position to another which is of e


salary without break in service involving the issuance of an appointment.
It shall not be considered disciplinary when made in the interest of public ser
employee concerned shall be informed of the reasons therefore. If the employee
justification for the transfer, he may appeal his case to the Commission.

The transfer may be from one department or agency to another or from on


another in the same department or agency: Provided, however, That any movem
service to the career service shall not be considered a transfer.

(g) Reassignment. — An employee may be reassigned from one organizational unit


agency: Provided, That such reassignment shall not involve a reduction in rank,
They are also defined in Sections 11 and 13(a) of Civil Service
Commission Resolution No. 1800692, otherwise known as the
2017 Omnibus Rules on Appointments and Other Human
Resource Actions. The provisions state:
SECTION 11. Nature of Appointment. — The nature of
appointment shall be, as follows:
....

c. Transfer — the movement of employee from one position to


another which is of equivalent rank, level or salary without gap in
the service involving the issuance of an appointment.

The transfer may be from one organizational unit to another in


the same department or agency or from one department or
agency to another: Provided, however, that any movement from
the non-career service to the career service and vice versa shall
not be considered as a transfer but reappointment.

....
SECTION 13. Other Human Resource Actions. — The following
human resource actions which will not require the issuance of an
appointment shall nevertheless require an Office Order issued by
the appointing officer/authority:

a. Reassignment — movement of an employee across the


organizational structure within the same department or agency,
which does not involve a reduction in rank, status or salary.
Osea v. Malaya  differentiates a reassignment from a new
[84]

appointment, which is necessary in a transfer:


Appointment should be distinguished from reassignment. An
appointment may be defined as the selection, by the authority
vested with the power, of an individual who is to exercise the
functions of a given office. When completed, usually with its
confirmation, the appointment results in security of tenure for the
person chosen unless he is replaceable at pleasure because of the
nature of his office.

On the other hand, a reassignment is merely a movement of an


employee from one organizational unit to another in the same
department or agency which does not involve a reduction in rank,
status or salary and does not require the issuance of an
appointment.  (Citations omitted)
[85]

In Department of Education, Culture and Sports v. Court of


Appeals,  a secondary school principal, whose appointment was
[86]

not station-specific, contested her reassignment to another


school. She cited the Magna Carta for Public School Teachers,
arguing that her consent is necessary for the reassignment's
validity. There, this Court differentiated transfer from
reassignment and held that the Magna Carta for Public School
Teachers is not applicable:
The aforequoted provision of Republic Act No. 4670 particularly
Section 6 thereof which provides that except for cause and in the
exigencies of the service no teacher shall be transferred without
his consent from one station to another, finds no application in
the case at bar as this is predicated upon the theory that the
teacher concerned is appointed — not merely assigned — to a
particular station. Thus:
"The rule pursued by plaintiff only goes so far as the appointment
indicates a specification. Otherwise, the constitutionally ordained
security of tenure cannot shield her. In appointments of this
nature, this Court has consistently rejected the officer's demand
to remain — even as public service dictates that a transfer be
made — in a particular station. Judicial attitude toward transfers
of this nature is expressed in the following statement in Ibañez
vs. Commission on Elections:
'That security of tenure is an essential and constitutionally
guaranteed feature of our Civil Service System, is not open to
debaite. The mantle of its protection extends not only against
removals without cause but also against unconsented transfer
which, as repeatedly enunciated, are tantamount to removals
which are within the ambit of the fundamental guarantee.
However, the availability of that security of tenure necessarily
depends, in the first instance, upon the nature of the
appointment. Such that the rule which proscribes transfers
without consent as anathema to the security of tenure is
predicated upon the theory that the officer involved is appointed
— not merely assigned to a particular station."
The appointment of Navarro as principal does not refer to any
particular station or school. As such, she could be assigned to
any station and she is not entitled to stay permanently at any
specific school. When she was assigned to the Carlos Albert High
School, it could not have been with the intention to let her stay in
said school permanently. Otherwise, her appointment would have
so stated. Consequently, she may be assigned to any station or
school in Quezon City as the exigencies of public service require
even without her consent.  (Emphasis supplied, citations
[87]

omitted)
Here, the Memorandum petitioner questions specifically stated
that she was being reassigned:
In the exigency of the service, you are hereby advise(d) of your
reassignment from [Surigao National] to [Toledo Memorial]
effective May 5, 2008.[88]

This was a simple reassignment. Section 6 of the Magna Carta for


Public School Teachers, then, does not apply.

III

Moreover, petitioner's reassignment did not violate her right to


security of tenure.

In Brillantes v. Guevarra,  another principal contested her


[89]

assignment to a school, alleging that she was being removed


without cause and her consent. This Court found her contentions
unmeritorious:
1. Arguing that an appointment as principal in the Bureau of
Public Schools and assignment to a particular school are
inseparable, plaintiff maintains that her unconsented transfer to
another school by virtue of an administrative directive amounts to
a removal — prohibited by the Constitution and the Civil Service
Act — which cannot be done unless for causes specified by law.

Plaintiffs confident stride falters. She took too loose a view of the
applicable jurisprudence. Her refuge behind the mantle of
security of tenure guaranteed by the Constitution is not
impenetrable. She proceeds upon the assumption that she
occupies her station in Sinalang Elementary School by
appointment. But her first appointment as Principal merely reads,
thus: "You are hereby appointed a Principal (Elementary School)
in the Bureau of Public Schools, Department of Education"
without mentioning her station. She cannot therefore claim
security of tenure as Principal of Sinalang Elementary School or
any particular station. She may be assigned to any station as
exigency of public service requires, even without her consent.
She thus has no right of choice.

The rule pursued by plaintiff only goes so far as the appointment


indicates a specific station. Otherwise, the constitutionally
ordained security of tenure cannot shield her. In appointments of
this nature, this Court has consistently rejected the officer's
demand to remain—even as public service dictates that a transfer
be made—in a particular station.  (Citations omitted)
[90]

Fernandez discusses several more cases where it was ruled that


the right to security of tenure is not violated when a public officer
or employee, whose appointment is not station-specific, is
reassigned:
In the very recent case of Fernando, et al. v. Hon. Sto. Tomas,
etc., et al., the Court addressed appointments of petitioners as
"Mediators-Arbiters in the National Capital Region" in dismissing a
challenge on certiorari to resolutions of the CSC and orders of the
Secretary of Labor. The Court said:
"Petitioners were appointed as Mediator-Arbiters in the National
Capital Region. They were not, however, appointed to a specific
station or particular unit of the Department of Labor in the
National Capital Region (DOLE-NCR). Consequently, they can
always be reassigned from one organizational unit to another of
the same agency where, in the opinion of respondent Secretary,
their services may be used more effectively. As such they can
neither claim a vested right to the station to which they were
assigned nor to security of tenure thereat. As correctly observed
by the Solicitor General, petitioners' reassignment is not a
transfer for they were not removed from their position as med-
arbiters. They were not given new appointments to new positions.
It indubitably follows, therefore, that Memorandum Order No. 4
ordering their reassignment in the interest of the service is legally
in order."
In Quisumbing v. Gumban, the Court, dealing with an
appointment in the Bureau of Public Schools of the Department of
Education, Culture and Sports, ruled as follows:
"After a careful scrutiny of the records, it is to be underscored
that the appointment of private respondent Yap is simply that of
a District Supervisor of the Bureau of Public Schools which does
not indicate a specific station. As such, she could be assigned to
any station and she is not entitled to stay permanently at any
specific station."
Again, in Ibañez v. Commission on Elections, the Court had
before it petitioners' appointments as "Election Registrars in the
Commission of Elections," without any intimation to what city,
municipality or municipal district they had been appointed as
such. The Court held that since petitioners "were not appointed
to, and consequently not entitled to any security of tenure or
permanence in, any specific station," "on general principles, they
[could] be transferred as the exigencies of the service required,"
and that they had no right to complain against any change in
assignment. The Court further held that assignment to a
particular station after issuance of the appointment was not
necessary to complete such appointment:
. . . And the respective appointees were entitled only to such
security of tenure as the appointment papers concerned actually
conferred — not in that of any place to which they may have
been subsequently assigned. . . . As things stand, in default of
any particular station stated in their respective appointments, no
security of tenure can be asserted by the petitioners on the basis
of the mere assignments which were given to them. A contrary
rule will erase altogether the demarcation line we have repeatedly
drawn between appointment and assignment as two distinct
concepts in the law of public officers."
....

Also noteworthy is Sta. Maria v. Lopez which involved the


appointment of petitioner Sta. Maria as "Dean, College of
Education, University of the Philippines." Dean Sta. Maria was
transferred by the President of the University of the Philippines to
the Office of the President, U.P., without demotion in rank or
salary, thereby acceding to the demands of student activists who
were boycotting their classes in the U.P. College of Education.
Dean Sta. Maria assailed his transfer as an illegal and
unconstitutional removal from office. In upholding Dean Sta.
Maria's claim, the Court, speaking through Mr. Justice Sanchez,
laid down the applicable doctrine in the following terms:
....

The clue to such transfers may be found in the 'nature of the


appointment.' Where the appointment does not indicate a specific
station, an employee may be transferred or reassigned provided
the transfer affects so substantial change in title, rank and
salary. Thus, one who is appointed 'principal in the Bureau of
Public Schools' and is designated to head a pilot school may be
transferred to the post of principal of another school.

And the rule that outlaws unconsented transfers as anathema to


security of tenure applies only to an officer who is appointed —
not merely assigned — to a particular station. Such a rule does
not proscribe a transfer carried out under a specific statute that
empowers the head of an agency to periodically reassign the
employees and officers in order to improve the service of the
agency. The use of approved techniques or methods in personnel
management to harness the abilities of employees to promote
optimum public service cannot be objected to.
....

To be stressed at this point, however, is that the appointment of


Sta. Maria is that of 'Dean, College of Education, University of the
Philippines.' He is not merely a dean 'in the university.' His
appointment is to a specific position; and, more importantly, to a
specific station."  (Emphasis supplied, citations omitted)
[91]

Here, it has been established that petitioner's appointment is not


station-specific. While she is entitled to her right to security of
tenure, she cannot assert her right to stay at Surigao National.
Her appointment papers are not specific to the school, which
means she may be assigned to any station as may be necessary
for public exigency. Because she holds no vested right to remain
as Principal III of Surigao National, her security of tenure was not
violated.

IV

Clearly, petitioner's reassignment was for the exigency of service.

Prior to the issuance of the Memorandum, in a March 31, 2008


letter, Rosas recommended the reshuffling and/or reassignment
of secondary administrators and teachers to the Regional Director
of the Department of Education CARAGA.  The Regional Director
[92]

did not object.


[93]

Furthermore, on March 7, 2008, a special meeting of secondary


school administrators was held to inform the teachers of the
planned reshuffling of school administrators to comply with MEC
Circular No. 26.  This allegation was supported by Affidavits from
[94]

those in attendance. [95]

While petitioner was absent on the day of the meeting, she does
not deny that the meeting took place. Neither can she assert that
she was insufficiently notified of her reassignment, since she had
refused the Memorandum precisely entailing her reassignment to
be served upon her. [96]
Section 26(7) of the Administrative Code allows any government
department or agency that is embraced in the civil service
prerogative to reassign employees: [97]

SECTION 26. Personnel Actions. — . . .

As used in this Title, any action denoting the movement or


progress of personnel in the civil service shall be known as
personnel action. Such action shall include appointment through
certification, promotion, transfer, reinstatement, re-employment,
detail, reassignment, demotion, and separation. All personnel
actions shall be in accordance with such rules, standards, and
regulations as may be promulgated by the Commission.

. . . . 
 
( Reassignment. — An employee may be reassigned from one organizational unit t
7 agency; Provided, That such reassignment shall not involve a reduction in rank, stat
) supplied)
Fernandez discusses that reassignments by virtue of this
provision are neither deemed as removals without lawful cause
nor seen as violations of the right to security of tenure:
It follows that the reassignment of petitioners . . . had been
effected with express statutory authority and did not constitute
removals without lawful cause. It also follows that such
reassignment did not involve any violation of the constitutional
right of petitioners to security of tenure considering that they
retained their positions of Director IV and would continue to enjoy
the same rank, status and salary at their new assigned stations
which they had enjoyed at the Head Office of the Commission in
Metropolitan Manila. Petitioners had not, in other words, acquired
a vested right to serve at the Commission's Head Office. [98]

In Department of Education, Culture and Sports, this Court


affirmed the reshuffling of principals in the exigencies of service:
It should be here emphasized that Azurin's letter of August 12,
1982, clearly stated that Navarro's reassignment is in the
exigencies of the service. It was explicitly mentioned that her
reassignment is a recognition of her capabilities as administrator
in improving the Carlos Albert High School and that she should
look at her new assignment as a challenge to accomplish new and
bigger projects for Manuel Roxas High School. Moreover, her
reassignment was the result of a recognition/reshuffling of all
principals in the Quezon City public high schools in the exigencies
of the service pursuant to MEC Circular No. 26, Series of 1972.
This circular refers to the policy of the Ministry of Education that
principals, district supervisors, academic supervisors, general
education supervisors, school administrative officers and
superintendents are to be transferred upon completion of five (5)
years of service in one station. Such policy was based on the
experience that when school officials have stayed long enough in
one station, there is a tendency for them to become stale and
unchallenged by new situations and conditions, and that some
administrative problems accumulate for a good number of years.

In the case at bar, the reasons given by Azurin in recommending


Navarro's reassignment were far from whimsical, capricious or
arbitrary. Navarro had been assigned as principal of Carlos Albert
High School for more than ten (10) years. She was ripe for
reassignment. That she was a model principal was precisely one
of the reasons for recommending her for reassignment so that
her management and expertise could be availed of in her new
assignment. Apart from the presumption of good faith that Azurin
enjoys, We believe that her recommendation for Navarro's
reassignment — for the latter to share the benefits of her
expertise in her new assignment plus the recognizable fact that a
relatively long stay in one's station tends towards over-
fraternization with associates which could be injurious to the
service — has a substantial factual basis that meets the
requirements of the exigencies of the service.  (Citations
[99]

omitted)
Similarly, here, we cannot conclude as a matter of established
fact that petitioner was reassigned by whim, fancy, or spite, as
she would like this Court to believe. It is presumed that
reassignments are "regular and made in the interest of public
service."  The party questioning its regularity or asserting bad
[100]
faith carries the burden to prove his or her allegations.
 In Andrade v. Court of Appeals:
[101] [102]

Entrenched is the rule that bad faith does not simply connote bad
judgment or negligence; it imputes a dishonest purpose or some
moral obliquity and conscious doing of a wrong; a breach of
sworn duty through some motive or intent or ill will; it partakes
of the nature of fraud. In the case at bar, we find that there was
no "dishonest purpose," or "some moral obliquity," or "conscious
doing of a wrong," or "breach of a known duty," or "some motive
or interest or ill will" that can be attributed to the private
respondent. It appeared that efforts to accommodate petitioner
were made as she was offered to handle two (2) non-teaching
jobs, that is, to handle Developmental Reading lessons and be an
assistant Librarian, pending her re-assignment or transfer to
another work station, but she refused. The same would not have
been proposed if the intention of private respondent were to
cause undue hardship on the petitioner. Good faith is always
presumed unless convincing evidence to the contrary is adduced.
It is incumbent upon the party alleging bad faith to sufficiently
prove such allegation. Absent enough proof thereof, the
presumption of good faith prevails. In the case at bar, the burden
of proving alleged bad faith therefore was with petitioner but she
failed to discharge such onus probandi. Without a clear and
persuasive evidence of bad faith, the presumption of good faith in
favor of private respondent stands. [103]

Petitioner's reassignment cannot be considered a demotion or


constructive dismissal.

A demotion means that an employee is moved or appointed from


a higher position to a lower position with decreased duties and
responsibilities, or with lesser status, rank, or salary.
[104]

Constructive dismissal occurs whether or not there is diminution


in rank, status, or salary if the employee's environment has
rendered it impossible for him or her to stay in his or her work. It
may be due to the agency head's unreasonable, humiliating, or
demeaning actuations, hardship because geographic location,
financial dislocation, or performance of other duties and
responsibilities inconsistent with those attached to the position.[105]

A reassignment may be deemed a constructive dismissal if the


employee is moved to a position with a more servile or menial job
as compared to his previous position. It may occur if the
employee was reassigned to an office not in the existing
organizational structure, or if he or she is not given a definite set
of duties and responsibilities. It may be deemed constructive
dismissal if the motivation for the reassignment was to harass or
oppress the employee on the pretext of promoting public interest.
This may be inferred from reassignments done twice within a
year, or during a change of administration of elective and
appointive officials.
[106]

However, demotion and constructive dismissal are never


presumed and must be sufficiently proven.  Again, petitioner
[107]

failed to rebut this reasonable presumption.

Petitioner's position at Toledo Memorial is still Principal III. She


retains the same rank, status, and salary, and is expected to
exercise the same duties and responsibilities. There is no
movement from a higher position to a lower position. She was not
given a more servile or menial job.

Similarly, she was not humiliated, demeaned, or treated


unreasonably. She did not allege that it was impossible for her to
continue her work due to the geographic location. There is no
showing that she was financially dislocated or that she was being
made to perform duties and responsibilities that contravene those
of her position. Moreover, Toledo Memorial is a high school within
her area of appointment. She was given a definite set of duties
and responsibilities. This is not the second reassignment within a
year, or a reassignment during a change of administration of
elective and appointive officials.
[108]
Moreover, petitioner explains that she was demoted because her
supervisory authority has been diminished considering the school
she was reassigned to is smaller than Surigao National. [109]

This argument is specious.

In Brillantes, a principal insisted that she was demoted because


the school she was assigned to was not a pilot demonstration
school, was six (6) kilometers from her hometown, and only had
13 teachers. She compared this to her old school which was a
pilot school in her hometown with 23 teachers. This Court noted
that her rank was maintained as Principal I and that her
preferences could not be prioritized over the demands of public
service and the interest of the public that may benefit from her
experience.[110]

VI

Finally, petitioner argues that assuming she was only reassigned,


her reassignment should not be for an indefinite period and
should not last longer than a year. [111]

Again, petitioner's argument fails.

When an employee's appointment is station-specific, his or her


reassignment may not exceed a maximum period of one (1) year.
This is not the case for appointments that are not station-specific.
In such instances, the reassignment may be indefinite and exceed
one (1) year —as in petitioner's case.
[112]

On a final note, this Court is aghast that grammatical errors


pervade the Memorandum of the Assistant Schools Division
Superintendent Officer-in-Charge.  Such errors committed by a
[113]

public employee, whose position affects the education of the


youth, is disturbing. Certainly, it appears that there is a need to
better the quality of education in our country and impose higher
standards on the competence of public officers, in keeping with
the constitutional provision to promote the right of all citizens to
quality education at all levels —unless, of course, this
[114]

unforgivable lack of proficiency in the English language is unique


to Rosas. For the good of the country, we advise that she brush
up her skills using the lessons that our public schools teach our
children.

WHEREFORE, this Court DENIES the Petition. The July 28, 2011


Decision and January 4, 2012 Resolution of the Court of Appeals
in CA-G.R. SP No. 117679 are AFFIRMED. Petitioner Marilyn R.
Yangson's reassignment is valid and consistent with law and
jurisprudence.

SO ORDERED.

Peralta, (Chairperson), Hernando, and Inting, JJ., concur.


Caguioa, J., on wellness leave.

July 16, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 3, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on July 16, 2019 at 1:30 p.m.
[1]
 Rollo, pp. 9-31.

 Id. at 32-44. The Decision was penned by Associate Justice


[2]

Japar B. Dimaampao, and concurred in by Presiding Justice


Andres B. Reyes, Jr. (now a member of this Court) and Associate
Justice Jane Aurora C. Lantion of the First Division, Court of
Appeals, Manila.

 Id. at 45-46. The Resolution was penned by Associate Justice


[3]

Japar B. Dimaampao, and concurred in by Presiding Justice


Andres B. Reyes, Jr. (now a member of this Court) and Associate
Justice Jane Aurora C. Lantion of the Former First Division, Court
of Appeals, Manila.

[4]
 Id. at 32.

[5]
 Id. at 32-33.

[6]
 Id. at 47.

[7]
 Id. at 33.

[8]
 Id.

[9]
 Id. at 54.

[10]
 Id. at 33 and 54-55.

[11]
 Id. at 56-58.

[12]
 Id. at 56-57.

[13]
 Id. at 57.

[14]
 Id. at 33-34 and 57-58.

[15]
 Id. at 34.
 Id. at 64-66. The Resolution was penned by Regional Director
[16]

Jesusita L. Arteche, CESO, of the Department of Education


CARAGA Regional Office.

[17]
 Id. at 64-65.

[18]
 Id. at 65.

[19]
 Id.

 Id. at 34-35 and 75-82. The Resolution was recommended by


[20]

Undersecretary Atty. Franklin C. Suñga and approved by


Secretary Jesli A. Lapus of the Department of Education.

[21]
 Id. at 77.

[22]
 Id. at 80-81.

[23]
 Id. at 78.

[24]
 Id. at 79-80.

[25]
 Id. at 80.

[26]
 Id.

[27]
 Id. at 81.

[28]
 Id. at 82.

[29]
 Id. at 35.

 Id. at 91-97. The Resolution was signed by Commissioners


[30]

Mary Ann Z. Fernandez-Mendoza and Cesar D. Buenaflor and


Chairman Francisco T. Duque III, and attested by Director IV
Dolores B. Bonifacio of the Civil Service Commission.

[31]
 Id. at 39-40.
[32]
 Id. at 95.

 Id. The Civil Service Commission based its finding on the


[33]

master list of schools of the CARAGA Region.

[34]
 Id. at 96.

[35]
 Id.

 Id. at 97. The Resolution dated June 15, 2010 was penned by
[36]

Civil Service Commissioner Mary Ann Z. Fernandez-Mendoza,


signed by Chairman Francisco T. Duque III, and Commissioner
Cesar D. Buenaflor, and attested by Director IV of the Civil
Service Commission Secretariat and Liason Office Dolores B.
Bonifacio, of the Civil Service Commission.

[37]
 Id. at 36.

[38]
 Id. at 32-44.

[39]
 Id. at 43.

 Id. at 40 citing The Superintendent of City Schools for Manila v.


[40]

Azarcon, 568 Phil. 273 (2008) [Per J. Corona, First Division].

[41]
 Id.

[42]
 Id.

[43]
 Id. at 40-41.

[44]
 Id. at 42.

[45]
 Id. at 41.

[46]
 312 Phil. 235 (1995) [Per J. Feliciano, En Banc].
[47]
 Rollo, p. 42.

[48]
 Id. at 43.

[49]
 Id. at 46.

[50]
 Id. at 9-28.

[51]
 Id. at 18.

[52]
 Id. at 16.

[53]
 Id. at 19.

[54]
 Id. at 22.

[55]
 Id. at 24.

[56]
 Id. at 23-24.

[57]
 Id. at 23.

[58]
 Id. at 24.

[59]
 Id. at 25.

[60]
 Id. at 19.

[61]
 Id. at 25.

[62]
 Id. at 184-211.

[63]
 Id. at 195.

[64]
 Id. at 198.

[65]
 Id. at 195.
[66]
 Id. at 200.

[67]
 Id. at 201.

[68]
 Id. at 200.

[69]
 Id. at 201.

[70]
 Id. at 205.

 Id. at 205-206. These factual issues allegedly include: (1)


[71]

whether Yangson's movement was a transfer; (2) whether the


notice is necessary to enable her appeal; (3) whether her
reassignment is for an indefinite period; (4) whether there is a
valid reason for her reassignment; (5) whether it amounts to a
diminution in her rank and status; (6) whether she was appointed
solely to Surigao National; and (7) whether her reassignment was
warranted considering her excellent performance at Surigao
National.

[72]
 Id.

[73]
 Id. at 207.

[74]
 Id. at 266-270.

[75]
 Id. at 266.

[76]
 Id. at 24.

 CSC Resolution No. 1800692 (2018), sec. 13(1). 2017 Omnibus


[77]

Rules on Appointments and Other Human Resource Actions


(Revised 2018).

[78]
 Rollo, p. 198.

[79]
 Id. at 56.
[80]
 Id. at 80.

[81]
 Id. at 41.

 Fangonil-Herrera v. Fangonil, 558 Phil. 235, 254 (2007) [Per J.


[82]

Chico-Nazario, Third Division].

 Presidential Decree No. 807 (1975), sec. 24, Civil Service


[83]

Decree of the Philippines or Civil Service Law of 1975.

[84]
 425 Phil. 920 (2002) [Per J. Ynares-Santiago, En Banc].

[85]
 Id. at 926.

[86]
 262 Phil. 608 (1990) [Per J. Paras, Second Division].

[87]
 Id. at 614-615.

[88]
 Rollo, p. 33.

[89]
 136 Phil. 315 (1969) [Per J. Sanchez, En Banc].

[90]
 Id. at 321-322.

[91]
 312 Phil. 235, 254-258 (1995) [Per J. Feliciano, En Banc].

[92]
 Rollo, pp. 75 and 91.

 Id. In accordance with the 1  Indorsement dated April 2, 2008


[93] st

signed by Dr. Isabelita M. Borres, CESO IV, Assistant Regional


Director and Officer-in-Charge, Department of Education
CARAGA.

[94]
 Id. at 212.

[95]
 Id. at 212-229.

[96]
 Id. at 33.
 Fernandez v. Sto. Tomas, 312 Phil. 235 (1995) [Per J.
[97]

Feliciano, En Banc].

[98]
 312 Phil. 235, 251 (1995) [Per J. Feliciano, En Banc].

[99]
 262 Phil. 608, 616 (1990) [Per J. Paras, Second Division].

 Nieves v. Blanco, 688 Phil. 282, 292 (2012) [Per J. Reyes, En


[100]

Banc] citing CSC Resolution No. 1800692 (2018), sec. 13(a)(3).

 Andrade v. Court of Appeals, 423 Phil. 30, 43 (2001) [Per J. De


[101]

Leon, Jr. Second Division].

[102]
 423 Phil. 30 (2001) [Per J. De Leon, Jr. Second Division].

[103]
 Id. at 43.

 Cruz v. Court of Appeals, 322 Phil. 649, 667 (1996) [Per J.


[104]

Davide, Jr., Third Division], citing Rule VII, Section 11 of the Civil


Service Commission Rules Implementing Book V of Executive
Order No. 292 and Other Pertinent Civil Service Laws,
and Fernando v. Sto. Tomas, 304 Phil. 713 (1994) [Per J.
Regalado, En Banc].

 Coseteng v. Perez, G.R. No. 185938, September 6, 2017, 838


[105]

SCRA 680-681 (2017) [Per J. Reyes, Jr., Second Division] and


CSC Resolution No. 1800692 (2018), sec. 13(a)(3).

[106]
 CSC Resolution No. 1800692 (2018), sec. 13(a)(3).

[107]
 CSC Resolution No. 1800692 (2018), sec. 13(a)(3).

[108] Id.

[109]
 Rollo p. 23.

[110]
 136 Phil. 315, 325-327 (1969) [Per J. Sanchez, En Banc].
[111]
 Rollo, pp. 19 and 25-26.

 Nieves v. Blanco, 688 Phil. 282, 290 (2012) [Per J. Reyes, En


[112]

Banc]. CSC Resolution No. 1800692 (2018), sec. 13 (a), par. 1-2.

[113]
 Rollo, p. 33.

[114]
 CONST., art. XIV, sec. 1.

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THIRD DIVISION

[ G.R. No. 205068, March 06, 2019 ]


HEIRS OF RENATO P. DRAGON, REPRESENTED BY
PATRICIA ANGELI D. NUBLA, PETITIONERS, VS.
THE MANILA BANKING CORPORATION,
RESPONDENT.DECISION

LEONEN, J.:

Payment of the correct amount of filing fees should not be made


contingent on the result of a case.
This is a Petition for Review on Certiorari  assailing the June 27,
[1]

2012 Decision  and December 5, 2012 Resolution  of the Court of


[2] [3]

Appeals in CA-G.R. CV No. 92266. The Court of Appeals upheld


the September 26, 2007 Decision  of the Regional Trial Court,
[4]

which ordered Renato P. Dragon (Dragon) to pay The Manila


Banking Corporation (Manila Banking) P6,945,642.00, plus
interest and penalties, as well as attorney's fees. The amount
corresponded to several loans Dragon obtained from Manila
Banking from 1976 to 1983.

From 1976 to 1982, Dragon obtained several loans from Manila


Banking, which were evidenced by four (4) Promissory Notes: (1)
Promissory Note No. 20669 dated March 30, 1976;  (2) [5]

Promissory Note No. 20670 dated March 30, 1976;  (3) [6]

Promissory Note No. 7426 dated June 28, 1979;  and (4) [7]

Promissory Note No. 10973 dated February 26, 1982.  The total[8]

principal amount of his loans was P6,945,642.00.  Each [9]

Promissory Note stipulated a rate of interest, penalty interest in


case of default, and attorney's fees, and due dates from 1976 to
1983.

In 1987, Manila Banking was placed under receivership by the


Bangko Sentral ng Pilipinas. The bank's receiver sent Dragon
several demand letters  requiring him to pay his outstanding
[10]

loans, the final letter being dated August 12, 1998.  In a [11]

Statement of Account attached to the final letter, Manila Banking


computed the amount Dragon owed as P44,038,995.00,
consisting of the principal amount of P6,945,642.00, plus accrued
interest, penalties, and attorney's fees as of July 31, 1998. [12]

Dragon failed to pay his outstanding obligation. Thus, on January


7, 1999, Manila Banking filed before the Regional Trial Court a
Complaint for collection of sum of money.  The prayer of the
[13]

Complaint read:
WHEREFORE, premises considered, it is most respectfully prayed
that, after hearing, judgment be rendered ordering the defendant
to pay plaintiff the above principal sum of P6,945,642, plus
interests, penalties, and attorney's fees computed up to the date
of actual payment pursuant to the corresponding Promissory
Notes. Plaintiff further prays for such other reliefs and remedies
as may be deemed just and equitable in the premises. [14]

In his Answer with Compulsory Counterclaim,  Dragon claimed


[15]

that he had already partially paid his debts to Manila Banking,


 and that his loans with the bank had been extinguished by
[16]

novation. Allegedly, in 1984, Kalilid Wood Industries Corporation


(Kalilid Wood), of which he was an officer and stockholder, wrote
to Manila Banking requesting that Kalilid Wood's loans and the
accounts of other persons, including that of Dragon's, be
restructured. Manila Banking allegedly agreed to the
restructuring, allowing Kalilid Wood to assume Dragon's loan
obligations, including those covered by the four (4) Promissory
Notes. Supposedly, this novation was confirmed in an April 22,
1991 Decision of the Regional Trial Court, Branch 58 of Makati
City in Civil Case No. 46961 titled, "The Manila Banking
Corporation v. Builders Wood Products, Inc., Claudio J. Sanchez,
Horacio Abrantes, and Renato P. Dragon" which had become final
and executory. [17]

Dragon further claimed that Manila Banking's cause of action had


prescribed, since it failed to demand payment on the Promissory
Notes within 10 years from their due date. He alleged that he
never received the demand letters sent by Manila Banking, which
would have otherwise interrupted the prescriptive period. [18]

He prayed that he be awarded P2,000,000.00 as moral damages


for Manila Banking's act of dispossessing him of his properties for
the settlement of accounts that could not be established, which
allegedly caused him emotional trauma. [19]

On September 26, 2007, the Regional Trial Court issued its


Decision  in favor of Manila Banking. The dispositive portion of
[20]

the Decision read:


WHEREFORE, plaintiff having proved its claim by preponderance
of evidence against defendant Renato P. Dragon, judgment is
hereby rendered ordering defendant to pay plaintiff the following:
1. The amount of Php6,945,642.00 plus interest and penalties,
the rates of which are indicated in the [preceding]
paragraphs starting August 12, 1998 until the obligation is
fully paid;
2. Attorney's fees equivalent to 5% of the total amount due;
3. Costs of suit.
SO ORDERED. [21]

The Regional Trial Court noted that Dragon's defenses of


prescription and novation were neither pleaded in his Answer nor
raised in a motion to dismiss.  Even if it could have taken
[22]

cognizance of these defenses, the Regional Trial Court found that


Manila Banking's cause of action had not prescribed and that the
obligations were not novated. It held that Manila Banking's cause
of action began to accrue only on August 12, 1998, when Dragon
refused to pay, and not on the maturity dates stated in the
promissory notes. [23]

Further, the Regional Trial Court found that Dragon could not
prove that the obligations had been novated. It ruled that the
April 22, 1991 Decision of the Regional Trial Court in Civil Case
No. 46961 could not be proof of the alleged novation since the
facts and subject matter of that case were different from this
case.[24]

Nonetheless, the Regional Trial Court held that it could only order
Dragon to pay the amount of P6,945.642.00, representing his
principal obligation, plus the interest and penalty charges, as
stipulated in the Promissory Notes, and not P48,028,268.98, per
the Statement of Account submitted by Manila Banking. During
trial, Manila Banking failed to submit documents to justify or
support the computation in the Statement of Account. [25]

Both parties filed Motions for Reconsideration of the Regional Trial


Court September 26, 2007 Decision.  Notably, in his Reply and
[26]

Supplemental Opposition to Manila Banking's Motion for Partial


Reconsideration,  Dragon raised for the first time the issue of the
[27]

trial court's lack of jurisdiction over the Complaint. He alleged


that Manila Banking willfully and deliberately evaded payment of
the correct docket fees for the amounts it claimed. [28]

In its April 3, 2008 Order,  the Regional Trial Court denied both
[29]

parties' Motions. As to the issue of docket fees, it held that this


Court's ruling in Sun Insurance Office, Ltd. v. Asuncion  applied;
[30]

hence, there was no need to resolve it. [31]

Upon appeal by both parties, the Court of Appeals, in its June 27,
2012 Decision,  affirmed the Regional Trial Court September 26,
[32]

2007 Decision and April 3, 2008 Order.

As to Manila Banking, the Court of Appeals affirmed the trial


court's finding that since the Statement of Account was not
substantiated, the amount to be considered should only be
P6,945.642.00, plus the stipulated interest and penalty charges. [33]

As to Dragon, the Court of Appeals held that he proved neither


novation nor prescription. By failing to raise these defenses in his
Answer and before the termination of pre-trial, Dragon waived
them in accordance with Rule 9, Section 1 of the Rules of Court. [34]

Moreover, the Court of Appeals found that the correspondence


between Manila Banking and Kalilid Wood could not serve as basis
for Dragon's claim of novation. Manila Banking's reply to Kalilid
Wood's request to restructure the loans did not expressly state
that Dragon had been released from his obligations under the
Promissory Notes, or that there was an agreement that Kalilid
Wood would assume Dragon's obligations under the Promissory
Notes. Since novation is never presumed, but must be shown
through an express agreement or by the parties' intent, the Court
of Appeals held that Dragon failed to prove that novation had
extinguished his obligations to Manila Banking. [35]

Similarly, the Court of Appeals ruled that the April 22, 1991
Decision of the Regional Trial Court in Civil Case No. 46961 could
not serve as the "law of the case"  for this case. That Decision, it
[36]

held, never mentioned or alluded to the Promissory Notes for


which Manila Banking was now demanding payment. The
transaction in that case involved a different transaction that
Kalilid Wood and Dragon had entered into. [37]

Dragon's defense of prescription was, likewise, not given


credence by the Court of Appeals. It found that the 10-year
prescriptive period on the enforcement of the Promissory Notes,
which matured from 1982 to 1983, was interrupted by Manila
Banking's demand letters to Dragon in November 1988, October
1991, February 1993, November 1994, January 1996, and August
1998. It did not give credence to Dragon's claim that he never
received the demand letters, as he admitted in his Answer that
they had been sent to him. Dragon also failed to specifically deny
Manila Banking's allegation that he received the demand letters. [38]

In its December 5, 2012 Resolution,  the Court of Appeals denied


[39]

both parties' Motions for Reconsideration. In addition to its earlier


ruling, the Court of Appeals found that the deficient payment of
docket fees did not automatically result in the case's dismissal as
the trial court may still allow payment of the difference within a
reasonable period, but before the expiry of the reglementary
period. The deficiency could also be a lien on the judgment
award. It ruled that the claimed interests, penalties, and
attorney's fees could not be determined with certainty until the
resolution of the case.[40]

On January 22, 2013, the Heirs of Dragon, represented by


Patricia Angeli D. Nubia (Heirs of Dragon), filed before this Court
a Notice of Death with Motion for Substitution of Petitioner and a
Motion for Extension of Time to File Petition for Review under
Rule 45.  The Heirs of Dragon stated that Dragon died on
[41]

October 22, 2012 and under Rule 3, Section 16 of the Rules of


Court, his counsel informed this Court of this fact and moved for
the substitution of parties. They further prayed for an additional
30 days within which to file their Petition for Review.

In its February 18, 2013 Resolution,  this Court granted the


[42]

Motion for Substitution and Motion for Extension of Time.


On February 21, 2013, the Heirs of Dragon filed their Petition for
Review on Certiorari,  assailing the June 27, 2012 Decision and
[43]

December 5, 2012 Resolution of the Court of Appeals.

Petitioners argue that the Regional Trial Court had no jurisdiction


to award Manila Banking's claims due to insufficient payment of
docket fees. Manila Banking only paid P34,975.75 corresponding
to its P6,945,642.00 claim in its Complaint. However, as shown
by the Statement of Account attached to the Complaint, the true
amount it claimed was P44,03 8,995.00. Petitioners claim that
Manila Banking concealed the true amount it claimed to mislead
the trial court's clerk of court and, thus, avoid paying the correct
docket fees. [44]

For petitioners, Sun Insurance Office is inapplicable to this case.


In Sun Insurance Office, the amount of damages could be
inferred from the body of the complaint, and the plaintiff
indicated willingness to abide by the rules by paying the
additional fees when he amended his complaint, even without an
order from the court. Here, Manila Banking knew the exact
amount that it wanted to collect by way of interest, penalties, and
attorney's fees; yet, it did not state these in its Complaint's
prayer.[45]

They argue that the applicable case is Tacay v. Regional Trial


Court of Tagum, Davao del Norte,  where this Court held that the
[46]

phrase "awards of claims not specified in the pleading" should


only refer to "damages arising after the filing of the complaint or
similar pleading." [47]

Further, petitioners claim that the April 22, 1991 Decision of the
Regional Trial Court in Civil Case No. 46961 settled the novation
of Dragon's obligations to Manila Banking. They point out that in
the proceedings in Civil Case No. 46961, Dragon presented two
(2) letters, dated November 14, 1984 and September 19, 1984,
which the trial court found to be proof that Builders Wood
Products, Inc. and Dragon as guarantor were replaced by Kalilid
Wood, the new debtor. Here, Dragon again offered these letters
before the Regional Trial Court to prove that there was a
consolidation of his loan accounts to Kalilid Wood's loan accounts.
[48]

Petitioners argue that the Court of Appeals was incorrect in


finding that the April 22, 1991 Decision of the Regional Trial Court
in Civil Case No. 46961 did not cover the Promissory Notes. They
claim that the Promissory Notes were part of the obligations that
Kalilid Wood assumed when it proposed the loan restructuring in
1984 even though they were not specifically stated in Civil Case
No. 46961. For them, since the Promissory Notes all bore dates
prior to 1984, they were necessarily included in the loan
restructuring.
[49]

Finally, petitioners argue that Manila Banking's cause of action


had prescribed, claiming that Dragon never admitted to receiving
the demand letters allegedly sent by Manila Banking, which would
have interrupted the prescriptive period.[50]

On April 3, 2013, this Court ordered Manila Banking to comment


on the Petition. [51]

In its Comment filed on June 10, 2013,  respondent claims that


[52]

the Petition raises issues which constitute questions of fact,


namely: (1) whether respondent paid the correct docket fees; (2)
whether novation took place; and (3) whether its cause of action
had prescribed. These issues, it avers, are improper in a Rule 45
petition, which only involves questions of law. Moreover,
petitioners failed to prove that any of the exceptions, which would
allow this Court to resolve a question of fact, exist.
[53]

Respondent points out that the issues raised in the Petition were
never raised during pre-trial in the Regional Trial Court. For being
belatedly raised, these defenses should be waived. In particular,
petitioners were estopped from questioning the non-payment of
correct docket fees since they only raised this issue after the
Regional Trial Court rendered its September 26, 2007 Decision
against Dragon. [54]

Respondent further claims that it paid the correct amount of


docket fees for the Complaint based on the principal amount of
P6,945,642.00. It argues that it was impossible to compute the
interests, penalties, and attorney's fees it should claim because
the date of actual payment by Dragon was uncertain at the time
of the filing of the Complaint. However, even if the trial court
rendered a judgment award more than the P6,945,642.00 it
claimed, respondent argues that Sun Insurance Office should
apply, and the additional docket fees shall be a lien on the
judgment. [55]

Respondent further argues that: (1) the April 22, 1991 Decision
of the Regional Trial Court in Civil Case No. 46961 was not the
law of the case; (2) petitioners failed to prove novation; and (3)
Dragon had failed to specifically deny receipt of Manila Banking's
demand letters. [56]

On July 31, 2013,  this Court required petitioners to file their


[57]

reply to respondent's Comment.

In their Reply filed on October 29, 2013,  petitioners argue that


[58]

their Petition raises questions of law cognizable by this Court,


namely: (1) whether the Regional Trial Court had jurisdiction over
Manila Banking's claims for interests, penalties, and attorney's
fees despite its failure to pay the correct docket fees; (2) whether
the April 22, 1991 Decision served as res judicata for this case;
and (3) whether the prescriptive period began to run only upon
alleged service of the demand letter, or upon maturity of the
Promissory Notes. [59]

In its March 3, 2014 Resolution,  this Court gave due course to


[60]

the Petition and required the parties to submit their Memoranda.


Respondent and petitioners filed their Memoranda on May 8,
2014  and May 12, 2014,  respectively.
[61] [62]
The issues to be resolved are:

First, whether or not the Petition for Review on Certiorari raises


questions of fact not cognizable under Rule 45 of the Rules of
Court; and

Second, whether or not the trial court acquired jurisdiction over


the Complaint of respondent The Manila Banking Corporation in
view of the insufficient payment of docket fees.

The existence of novation and prescription of an action is a


question of fact not cognizable under a petition for review on
certiorari under Rule 45 of the Rules of Court.

To determine if there was novation, the facts on record must be


examined to show if the elements are present.  Here, the[63]

Regional Trial Court and the Court of Appeals did not err in
finding that there was no novation of the Promissory Notes.

Petitioners claim that Kalilid Wood had agreed to assume


Dragon's personal loans to respondent, including those arising
from the Promissory Notes, an agreement given judicial
recognition in the April 22, 1991 Decision of the Regional Trial
Court, Branch 58 of Makati City in Civil Case No. 46961. [64]

Based on the April 22, 1991 Decision of the Regional Trial Court
in Civil Case No. 46961, Builders Wood Products, Inc. obtained a
loan from respondent, with Dragon as surety, in 1980.  When [65]

Builders Wood Products, Inc. defaulted, respondent filed an action


for sum of money against it and its sureties.  In 1983, while the
[66]

action was pending, Builders Wood Products, Inc. ceded its


timber concession to Kalilid Wood, of which Dragon was an
officer. Thus, Kalilid Wood assumed all the existing obligations of
Builders Wood Products, Inc. and, later on, the obligations of
Dragon as part of its repayment schedule. [67]
The Court of Appeals is correct that the April 22, 1991 Decision
does not mention the Promissory Notes included in the loans
Kalilid Wood had assumed from Dragon. What Kalilid Wood had
assumed were Dragon's obligations as surety for Builders Wood
Products, Inc. It did not include his personal loans to respondent.
[68]

Further, it is telling that petitioners cannot substantiate their


claim that the Promissory Notes are included in the April 22, 1991
Decision.

The April 22, 1991 Decision declares that "the proposed


repayment plan by [Kalilid Wood] regarding the various accounts
mentioned in the letter (Exh. 1-Dragon) and the letter dated
September 19, 1984 (Exhs. 2-Dragon, 2-A-Dragon), including
that of Builders and Dragon were accepted by plaintiff Manila
Banking Corporation."  Yet, petitioners were unable to prove or
[69]

even claim that the Promissory Notes were included in these


"various accounts." These exhibits should have been easy to
present, as they should be extant judicial records, but they have
not been presented by petitioners.

Novation must be clear and unequivocal, and is never presumed.


 It is the burden of the party asserting that novation has taken
[70]

place to prove that all the elements exist.

Likewise, the question of prescription of an action is a factual


matter.  The Court of Appeals did not err when it held:
[71]

In addition, it cannot be said that appellant-bank's cause of


action based on such promissory notes had prescribed. Actions
based upon a written contract should be brought within ten (10)
years from the time the right of action accrues. Indubitably, such
right of action accrue from the moment the breach of right or
duty occurs. Prescription of actions is, nevertheless, interrupted
when they are filed before the courts, when there is a written
extrajudicial demand by the creditors, and when there is any
written acknowledgement of the debt by the debtor. In the
present case, the ten-year (10) prescriptive period on the
enforcement of said promissory notes that matured in 1982 -
1983, was timely interrupted by appellant-bank's demand letters
to defendant-appellant in November 1988, October 1991,
February 1993, November 1994, January 1996 and August 1998.
Verily, every time the defendant-appellant receives said demand
letters, a new ten-year (10) period is added, and the elapsed
period is, thereby, eliminated. Indeed, a written extrajudicial
demand wipes out the period which has already elapsed, and it
starts anew the prescriptive period.  (Citations omitted)
[72]

II

The general rale is that the issue of jurisdiction may be raised at


any stage of the proceedings, even on appeal, and is not lost by
waiver or by estoppel.  A party is only estopped from raising the
[73]

issue when it does so "in an unjustly belated manner especially


when it actively participated during trial."  In Villagracia v. Fifth
[74]

Shari'a District Court:


[75]

In [Tijam v. Sibonghanoy], it took Manila Surety and Fidelity Co.,


Inc. 15 years before assailing the jurisdiction of the Court of First
Instance. As early as 1948, the surety company became a party
to the case when it issued the counter-bond to the writ of
attachment. During trial, it invoked the jurisdiction of the Court of
First Instance by seeking several affirmative reliefs, including a
motion to quash the writ of execution. The surety company only
assailed the jurisdiction of the Court of First Instance in 1963
when the Court of Appeals affirmed the lower court's decision.
This court said:
. . . Were we to sanction such conduct on [Manila Surety and
Fidelity, Co. Inc.'s] part, We would in effect be declaring as
useless all the proceedings had in the present case since it was
commenced on July 19, 1948 and compel [the spouses Tijam] to
go up their Calvary once more. The inequity and unfairness of
this is not only patent but revolting.
After this court had rendered the decision in Tijam, this court
observed that the "non-waivability of objection to jurisdiction"
has been ignored, and the Tijam doctrine has become more the
general rule than the exception. In Calimlim v. Ramirez, this
court said:
A rule that had been settled by unquestioned acceptance and
upheld in decisions so numerous to cite is that the jurisdiction of
a court over the subject-matter of the action is a matter of law
and may not be conferred by consent or agreement of the
parties. The lack of jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This doctrine has been
qualified by recent pronouncements which stemmed principally
from the ruling in the cited case of [Tijam v. Sibonghanoy]. It is
to be regretted, however, that the holding in said case had been
applied to situations which were obviously not contemplated
therein. . . .
Thus, the court reiterated the "unquestionably accepted" rule that
objections to a court's jurisdiction over the subject matter may be
raised at any stage of the proceedings, even on appeal. This is
because jurisdiction over the subject matter is a "matter of law"
and "may not be conferred by consent or agreement of the
parties."

In Figueroa, this court ruled that the Tijam doctrine "must be


applied with great care;" otherwise, the doctrine "may be a most
effective weapon for the accomplishment of injustice":
. . . estoppel, being in the nature of a forfeiture, is not favored by
law. It is to be applied rarely — only from necessity, and only in
extraordinary circumstances. The doctrine must be applied with
great care and the equity must be strong in its favor. When
misapplied, the doctrine of estoppel may be a most effective
weapon for the accomplishment of injustice. ... a judgment
rendered without jurisdiction over the subject matter is void. ...
No laches will even attach when the judgment is null and void for
want of jurisdiction[.]  (Citations omitted)
[76]

In this regard, this Court has consistently held that a party may
be estopped from questioning the lack of jurisdiction due to
insufficient payment of filing or docket fees, if the objection is not
timely raised.[77]

The records show that Dragon raised the defense of prematurity,


and no other, in his Answer with Compulsory Counterclaim dated
January 31, 2000.  Dragon later actively participated in the
[78]
proceedings of the case, including trial on the merits.
Respondent's insufficient payment of docket fees was raised for
the first time before the trial court in Dragon's Reply (To:
Plaintiffs Opposition to Defendant's Motion for Reconsideration)
and Supplemental Opposition (To: Plaintiffs Motion for Partial
Reconsideration),  filed on February 26, 2008, following the
[79]

September 26, 2007 Decision. The jurisdictional objection had


been available to petitioners long before then, but they failed to
timely raise it.

Nonetheless, the circumstances of this case warrant an


examination of the rules and principles on payment of docket
fees.

Under Rule 141, Section 1 of the Rules of Court, filing fees must
be paid in full at the time an initiatory pleading or application is
filed.  Payment is indispensable for jurisdiction to vest in a court.
[80]

[81]

The amount must be paid in full. Nonetheless, in Magaspi v.


Ramolete  despite insufficient payment of filing fees, a complaint
[82]

for recovery of ownership and possession was deemed docketed


as there had been an "honest difference of opinion as to the
correct amount to be paid[.]"  However, this Court declined to
[83]

apply Magaspi in Manchester Development Corporation v. Court


of Appeals.  There, the counsel deliberately did not specify the
[84]

amount of damages in the complaint's prayer even though at


least P78 million was alleged in the body. It later even amended
the same complaint to remove all mentions of damages in the
body. Thus:
The Court cannot close this case without making the observation
that it frowns at the practice of counsel who filed the original
complaint in this case of omitting any specification of the amount
of damages in the prayer although the amount of over P78 million
is alleged in the body of the complaint. This is clearly intended for
no other purpose than to evade the payment of the correct filing
fees if not to mislead the docket clerk in the assessment of the
filing fee. This fraudulent practice was compounded when, even
as this Court had taken cognizance of the anomaly and ordered
an investigation, petitioner through another counsel filed an
amended complaint, deleting all mention of the amount of
damages being asked for in the body of the complaint. It was
only when in obedience to the order of this Court of October 18,
1985, the trial court directed that the amount of damages be
specified in the amended complaint, that petitioners' counsel
wrote the damages sought in the much reduced amount of
P10,000,000.00 in the body of the complaint but not in the
prayer thereof. The design to avoid payment of the required
docket fee is obvious.

The Court serves warning that it will take drastic action upon a
repetition of this unethical practice.

To put a stop to this irregularity, henceforth all complaints,


petitions, answers and other similar pleadings should specify the
amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be
considered in the assessment of the filing fees in any case. Any
pleading that fails to comply with this requirement shall not be
accepted nor admitted, or shall otherwise be expunged from the
record.

The Court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction in
the Court, much less the payment of the docket fee based on the
amounts sought in the amended pleading. The ruling in the
Magaspi case in so far as it is inconsistent with this
pronouncement is overturned and reversed.  (Citation omitted)
[85]

Later, in Sun Insurance Office,  this Court laid down the rules
[86]

concerning the payment of filing fees, taking into


consideration Magaspi, Manchester Development Corporation,
and other earlier rulings:
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject matter or
nature of the action. Where the filing of the initiatory pleading is
not accompanied by payment of the docket fee, the court may
allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party


claims and similar pleadings, which shall not be considered filed
until and unless the filing fee prescribed therefor is paid. The
court may also allow payment of said fee within a reasonable
time but also in no case beyond its applicable prescriptive or
reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the


filing of the appropriate pleading and payment of the prescribed
filing fee but, subsequently, the judgment awards a claim not
specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee therefor shall
constitute a lien on the judgment. It shall be the responsibility of
the Clerk of Court or his duly authorized deputy to enforce said
lien and assess and collect the additional fee.[87]

Notwithstanding Sun Insurance Office, it must be emphasized


that payment of filing fees in full at the time the initiatory
pleading or application is filed is still the general rule. Exceptions
that grant liberality for insufficient payment are strictly construed
against the filing party. In Colarina v. Court of Appeals:[88]

While the payment of docket fees, like other procedural rules,


may have been liberally construed in certain cases if only to
secure a just and speedy disposition of every action and
proceeding, it should not be ignored or belittled lest it scathes
and prejudices the other party's substantive rights. The payment
of the docket fee in the proper amount should be followed subject
only to certain exceptions which should be strictly construed. [89]

Moreover, the filing party must show that there was no intention
to defraud the government of the appropriate filing fees due it.
 In Manchester Development Corporation, this Court found that
[90]
the filing party, in repeatedly omitting the amount of damages it
was asking for, aimed to evade payment of docket fees.

In Philippine First Insurance Company, Inc. v. Pyramid Logistics


and Trucking Corporation,  the respondent attempted to pass off
[91]

its action for collection of money as one for "specific performance


and damages,"  failing to specify the amounts in the prayer of its
[92]

complaint. Thus:
If respondent Pyramid's counsel had only been forthright in
drafting the complaint and taking the cudgels for his client and
the trial judge assiduous in applying Circular No. 7 vis-a-
vis prevailing jurisprudence, the precious time of this Court, as
well as of that of the appellate court, would not have been
unnecessarily sapped.

The Court at this juncture thus reminds Pyramid's counsel to


observe Canon 12 of the Code of Professional Ethics which
enjoins a lawyer to "exert every effort and consider it his duty to
assist in the speedy and efficient administration of justice," and
Rule 12.04 of the same Canon which enjoins a lawyer "not [to]
unduly delay a case, impede the execution of a judgment or
misuse court processes." And the Court reminds too the trial
judge to bear in mind that the nature of an action is determined
by the allegations of the pleadings and to keep abreast of all laws
and prevailing jurisprudence, consistent with the standard that
magistrates must be the embodiments of competence, integrity
and independence.  (Citations omitted)
[93]

Likewise, this Court applied the Manchester Development


Corporation doctrine in Central Bank of the Philippines v. Court of
Appeals.  There, private respondent Producers Bank of the
[94]

Philippines concealed its intent to collect damages by making it


appear that its complaint was principally for injunction. Thus, it
avoided the need to pay filing fees on the amount of damages.

Should there be a finding that the filing party intended to conceal


the amount of its claims to pay a smaller amount of docket fees,
demonstrating an intent to defraud the court what it is owed,
then the doctrine in Manchester Development Corporation,
not Sun Insurance Office, shall apply.
[95]

Thus, the Regional Trial Court gravely erred when it merely


stated in its April 3, 2008 Order that Sun Insurance Office was
applicable:
The court however is intrigued with the issue raised for the first
time by defendant in his reply and supplemental opposition.
According to the defendant, since plaintiff willfully and
deliberately evaded payment of the correct docket fees for the
amounts claimed for interests, penalties and attorney's fees,
plaintiff is deemed to have abandoned such claims. Defendant
further argues that as a consequence of the non-payment of the
correct docket fees by plaintiff, this court has not acquired
jurisdiction to award the amounts claimed by the plaintiff.

The concern of defendant in this case is not novel. Nevertheless,


the case of Sun Insurance Office, Ltd. Et al. vs. Hon. Maximiano
C. Asuncion and Manuel ChuaUy Po (G.R. Nos. 79937-38, 13
February 1989) provides a solution on this issue. Hence, there is
no more necessity of delving further on this matter.
[96]

The trial court should have closely examined whether the


circumstances here warrant the liberality of the Sun Insurance
Office doctrine, especially when even a cursory application of the
governing rules on docket fees at that time shows a glaring
omission on respondent's part.

For actions involving recovery of money or damages, the


aggregate amount claimed should be the basis for assessment of
docket fees. In Tacay:[97]

Where the action is purely for the recovery of money or damages,


the docket fees are assessed on the basis of the aggregate
amount claimed, exclusive only of interests and costs. In this
case, the complaint or similar pleading should, according to
Circular No. 7 of this Court, "specify the amount of damages
being prayed for not only in the body of the pleading but also in
the prayer, and said damages shall be considered in the
assessment of the filing fees in any case."
Two situations may arise. One is where the complaint or similar
pleading sets out a claim purely for money or damages and there
is no precise statement of the amounts being claimed. In this
event the rule is that the pleading will "not be accepted nor
admitted, or shall otherwise be expunged from the record." In
other words, the complaint or pleading may be dismissed, or the
claims as to which the amounts are unspecified may be
expunged, although as aforestated the Court may, on motion,
permit amendment of the complaint and payment of the fees
provided the claim has not in the meantime become time-barred.
The other is where the pleading does specify the amount of every
claim, but the fees paid are insufficient; and here again, the rule
now is that the court may allow a reasonable time for the
payment of the prescribed fees, or the balance thereof, and upon
such payment, the defect is cured and the court may properly
take cognizance of the action, unless in the meantime
prescription has set in and consequently barred the right of
action.[98]

When respondent filed its Complaint in 1999, the applicable rule


on the basis of the assessment of docket fees was the Supreme
Court Administrative Circular No. 11-94, dated June 28, 1994,
amending Rule 141 of the Rules of Court. It states in part:
RULE 141
LEGAL FEES

....

Sec. 7. Clerks of Regional Trial Courts

(a) For filing an action or a permissive counterclaim or money


claim against an estate not based on judgment, or for filing with
leave of court a third-party, fourth-party, etc. complaint, or a
complaint in intervention, and for all clerical services in the
same, if the total sum claimed, inclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs, or
the stated value of the property in litigation, is: . . . (Emphasis
supplied)
Thus, the basis for the assessment of the filing fees for
respondent's Complaint should not have been only the principal
amounts due on the loans, but also the accrued interests,
penalties, and attorney's fees. These amounts should have all
been specified in both the Complaint's body and prayer.

In its defense, respondent claims that it did not willfully conceal


the amount it sought to collect from petitioners, as its Complaint
"clearly states"  that it intended to collect both the principal
[99]

amount, plus interests, penalties, and attorney's fees up to the


date of actual payment. In effect, respondent claims that it had
stated the amount of its claim accurately to assess the filing fees
it should pay. Yet, respondent blatantly did not comply with the
requirement in Supreme Court Administrative Circular No. 11-94
that the total aggregate amount, including interest claimed,
should be specified in the body and prayer of a complaint.

Respondent alleges that it could not determine with certainty the


accrued interests, penalties, and attorney's fees petitioners are
liable for, pointing to the uncertainty of the date when these
additional claims would be awarded by the Regional Trial Court.
 According to respondent, only the principal amount to be
[100]

collected could be determined with absolute certainty:


It is clear that the computation of such interest, penalties and
attorney's fees would have been impossible to perform on the
date of filing of the Complaint as the date of actual payment of
the instant claim could not be foreseen or forecasted when the
Complaint was filed as evidenced by the fact that to date,
Decedent Dragon has willfully and deliberately evaded payment
of these loan obligations he obtained from plaintiff TMBC.
 (Emphasis supplied)
[101]

Similarly, the Court of Appeals explained:


Truly, the payment of complete docket fees for the claimed
interests, penalties and attorney's fees cannot be made at the
time of the filing of the complaint since their true or exact
amount cannot be determined as yet with certainty until after the
resolution of the case.
[102]
However, the demand letters sent to Dragon prior to the filing of
respondent's Complaint already contained respondent's
computation of the accrued interests, penalties, and attorney's
fees corresponding to the Promissory Notes.  In its last demand
[103]

letter before it filed its Complaint, respondent demanded


P37,093,353.00 in addition to the P6,945,642.00 principal
amount. [104]

Respondent itself, in multiple pleadings, stated that as of April 3,


2002, it had computed the outstanding interests, penalties, and
attorney's fees owed it in the amount of P41,082,626.98. [105]

Clearly, respondent is perfectly capable of estimating the accrued


interests, penalties, and charges it demanded as of the date it
filed its Complaint. But despite respondent's demand letters
containing computations of accrued interests, penalties, and
attorney's fees, none of these computations were mentioned in
the Complaint, either in its body or prayer.

This stands in stark contrast to Proton Pilipinas Corporation v.


Banque Nationale De Paris.  There,
[106]
the amount of
US$1,544,984.40 claimed by Banque Nationale De Paris, for
which it paid filing fees, represented the principal amount and
interest claimed until August 15, 1998. The insufficient payment
there pertained only to the unstated accrued interest from August
16, 1998 until September 7, 1998, the day the complaint was
filed.

Here, on the other hand, absolutely no filing fees were paid by


respondent for the accrued interest it claimed.

In multiple pleadings, respondent reasons that it has not


defrauded the government because the court may simply recoup
the filing fees in the form of a lien over the judgment award in
the event that it be awarded all the amounts it is allegedly owed.
In its March 19, 2008 Rejoinder (To Defendant's Reply dated 21
February 2008) with Supplemental Reply (To Defendant's
Supplemental Opposition dated 21 February 2008): [107]

8. Following the Sun Insurance (Supra.) ruling, any additional


filing fees due on the award made by this Honorable Court upon
its proper determination of the interest, penalties and attorney's
fees that should rightfully be paid by defendant Dragon for
putting plaintiff TMBC through all this trouble, shall constitute a
lien upon this Honorable Court's Judgment. As such, the
government will not be defrauded, of the filing fees due it and
defendant Dragon will not be spared from paying what he should
rightfully be held liable for.  (Emphasis in the original)
[108]

In its October 23, 2009 Plaintiff-Appellee's Brief:[109]

20. Following the Sun Insurance (Supra.) and Soriano and Padilla


(Supra.) rulings, any additional filing fees due on the Appealed
Decision, upon the proper determination of the amount of
interest, penalties and attorney's fees that should rightfully be
paid by Defendant-Appellant Dragon to TMBC, shall constitute a
lien upon the Judgment. As such, the government will not be
defrauded of the filing fees due it and Defendant-Appellant
Dragon will not be spared from paying what he should rightfully
be held liable for.  (Emphasis in the original)
[110]

In its November 3, 2009 Reply Brief: [111]

19. Following the Sun Insurance (Supra.) and Soriano and Padilla


(Supra.) rulings, any additional filing fees due on the award in
favor of TMBC, upon the proper determination of the amount of
interest, penalties and attorney's fees that should rightfully be
paid by Defendant Dragon to TMBC, shall constitute a lien upon
such award. As such, the government will not be defrauded of the
filing fees due it and Defendant Dragon will not be spared from
paying what he should rightfully be held liable for.  (Emphasis in
[112]

the original)
In its June 10, 2013 Comment: [113]

96. Following the Sun Insurance (Supra.) and Soriano and Padilla


(Supra.) rulings, any additional filing fees due on the Appealed
Decision, upon the proper determination of the amount of
interest, penalties and attorney's fees that should rightfully be
paid by Decedent Dragon to TMBC, shall constitute a lien upon
the Judgment. As such, the government will not be defrauded of
the filing fees due it and Decedent Dragon will not be spared from
paying what he should rightfully be held liable for.  (Emphasis in
[114]

the original)
In its May 8, 2014 Memorandum: [115]

106. Following the Sun Insurance (Supra.) and Soriano and


Padilla (Supra.) rulings, any additional filing fees due on the
Appealed Decision, upon the proper determination of the amount
of interest, penalties and attorney's fees that should rightfully be
paid by Decedent Dragon to TMBC, shall constitute a lien upon
the judgment. As such, the government will not be defrauded of
the filing fees due it and Decedent Dragon will not be spared from
paying what he should rightfully be held liable for.  (Emphasis in
[116]

the original)
What respondent forgets is that the payment of correct docket
fees cannot be made contingent on the result of the case.
 Otherwise, the government and the judiciary would sustain
[117]

tremendous losses, as these fees "take care of court expenses in


the handling of cases in terms of cost of supplies, use of
equipmen[t], salaries and fringe benefits of personnel, etc.,
computed as to man hours used in handling of each case." [118]

Concededly, Rule 141, Section 2 of the Rules of Court states:


SEC. 2. Fees in lien. — Where the court in its final judgment
awards a claim not alleged, or a relief different from, or more
than that claimed in the pleading, the party concerned shall pay
the additional fees which shall constitute a lien on the judgment
in satisfaction of said lien. The clerk of court shall assess and
collect the corresponding fees.
However, the rule on after-judgment liens applies to instances of
incorrectly assessed or paid filing fees, or where the court has
discretion to fix the amount to be awarded.  In Proton Pilipinas
[119]

Corporation:[120]

In Ayala Corporation v. Madayag, in interpreting the third rule


laid down in Sun Insurance regarding awards of claims not
specified in the pleading, this Court held that the same refers
only to damages arising after the filing of the complaint or
similar pleading as to which the additional filing fee
therefor shall constitute a lien on the judgment.
. . . The amount of any claim for damages, therefore, arising on
or before the filing of the complaint or any pleading should be
specified. While it is true that the determination of certain
damages as exemplary or corrective damages is left to the sound
discretion of the court, it is the duty of the parties claiming such
damages to specify the amount sought on the basis of which the
court may make a proper determination, and for the proper
assessment of the appropriate docket fees. The exception
contemplated as to claims not specified or to claims
although specified are left for determination of the court is
limited only to any damages that may arise after the filing
of the complaint or similar pleading for then it will not be
possible for the claimant to specify nor speculate as to the
amount thereof.  (Emphasis in the original)
[121]

Further, nowhere in any of respondent's pleadings filed before


any court did respondent manifest its willingness, to the Regional
Trial Court or to the Court of Appeals or to this Court, that it will
be paying additional docket fees when required. Its repeated
invocation of Sun Insurance Office is not a manifestation of
willingness to pay additional docket fees contemplated in United
Overseas Bank and subsequent cases.  In none of its pleadings
[122]

did respondent allude to paying any additional docket fee if so


ordered; instead, it left it to the courts to constitute a lien over a
hypothetical award, to which it was not entitled, as both lower
courts have already held.

Unlike other cases,  the amount of unremitted filing fees here is


[123]

substantial. Respondent paid only P34,975.75 in filing fees based


on its P6,945,642.00 claim alleged in its Complaint.  If [124]

respondent had properly stated the total sum it claimed in its


prayer, including the interests, penalties, and charges, it should
have paid P222,300.43, as computed by the clerk of court.  In [125]

effect, respondent only paid 15.7% of the docket fees it owes the
court.
Under the circumstances, a liberal application of the rules on
payment of filing fees is unwarranted. In accordance
with Manchester Development Corporation, the Regional Trial
Court did not acquire jurisdiction over the Complaint due to
respondent's insufficient payment of filing fees.

WHEREFORE, the Petition for Review on Certiorari is GRANTED.


The Court of Appeals June 27, 2012 Decision and December 5,
2012 Resolution in CA-G.R. CV No. 92266 are REVERSED AND
SET ASIDE. The January 7, 1999 Complaint filed by respondent
The Manila Banking Corporation before the Regional Trial Court
is DISMISSED for lack of jurisdiction due to non-payment of
filing fees.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando,


and Carandang,  JJ., concur.
*

May 3, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 6, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on May 3, 2019 at 3:32 p.m.
 Designated additional Member per Special Order No. 2624 dated
*

November 28, 2018.

 Rollo, pp. 18-56. The Petition was filed under Rule 45 of the
[1]

Rules of Court.

 Id. at 57-68. The Decision was penned by Associate Justice


[2]

Manuel M. Barrios, and concurred in by Associate Justices


Sesinando E. Villon and Apolinario D. Bruselas, Jr. of the Special
Fourth Division, Court of Appeals, Manila.

 Id. at 69-72. The Resolution was penned by Associate Justice


[3]

Manuel M. Barrios, and concurred in by Associate Justices


Sesinando E. Villon and Apolinario D. Bruselas, Jr. of the Former
Special Fourth Division, Court of Appeals, Manila.

 Id. at 225-248. The Decision was penned by Judge Elmo M.


[4]

Alameda of Branch 150, Regional Trial Court, Makati City.

[5]
 Id. at 264.

[6]
 Id. at 265-266.

[7]
 Id. at 267.

[8]
 Id. at 268.

[9]
 Id. at 270.

[10]
 Id. at 514-523.

[11]
 Id. at 522.

[12]
 Id.

[13]
 Id. at 524-527.
[14]
 Id. at 526.

[15]
 Id. at 256-259.

[16]
 Id. at 256-257.

 Id. at 233-235 and 272-273. Abrantes is at times spelled as


[17]

"Abantes."

[18]
 Id. at 239-240.

[19]
 Id. at 257-258.

[20]
 Id. at 225-248.

[21]
 Id. at 248.

[22]
 Id. at 240.

[23]
 Id. at 240-241.

[24]
 Id. at 245-246.

[25]
 Id. at 246-247.

[26]
 Id. at 249.

[27]
 Id. at 311-332.

[28]
 Id. at 312-314.

[29]
 Id. at 249-250.

[30]
 252 Phil. 280 (1989) [Per J. Gancayco, En Banc].

[31]
 Rollo, p. 250.
[32]
 Id. at 57-68.

[33]
 Id. at 63-64.

[34]
 Id. at 64.

[35]
 Id. at 64-66.

[36]
 Id. at 65.

[37]
 Id. at 66.

[38]
 Id. at 66-67.

[39]
 Id. at 69-72.

[40]
 Id. at 71.

[41]
 Id. at 3-7.

[42]
 Id. at 16-A-16-C.

[43]
 Id. at 18-56.

[44]
 Id. at 31-36.

[45]
 Id. at 34-35.

[46]
 259 Phil. 927 (1989) [Per J. Narvasa, En Banc].

[47]
 Rollo, pp. 35.

[48]
 Id. at 36-42.

[49]
 Id. at 42-44.

[50]
 Id. at 48-52.
[51]
 Id. at 455.

[52]
 Id. at 461-508.

[53]
 Id. at 470-481.

[54]
 Id. at 481-485.

[55]
 Id. at 495-499.

[56]
 Id. at 499-505.

[57]
 Id. at 872.

[58]
 Id. at 877-886.

[59]
 Id. at 877-883.

[60]
 Id. at 890-890-A.

[61]
 Id. at 891-935.

[62]
 Id. at 936-975.

 David v. David, 724 Phil. 239 (2014) [Per J. Bersamin, First


[63]

Division].

[64]
 Rollo, pp. 36-43.

[65]
 Id. at 294-295.

[66]
 Id. at 294.

[67]
 Id. at 295-296.

[68]
 Id.

[69]
 Id. at 298.
 Arco Pulp and Paper Company, Inc. v. Lim, 737 Phil. 133
[70]

(2014) [Per J. Leonen, Third Division].

 Crisostomo v. Garcia, Jr., 516 Phil. 743 (2006) [Per J. Chico-


[71]

Nazario, First Division].

[72]
 Rollo, pp. 66-67.

 Cacho v. Balagtas, G.R. No. 202974, February 7, 2018,


[73]

<elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64051> [Per
J. Leonardo-De Castro, First Division]; Cabrera v. Clarin, G.R. No.
215640, November 28, 2016 [Per J. Peralta, Third Division];
and Adlawan v. Joaquino, G.R. No. 203152, June 20, 2016 [Per J.
Brion, Second Division].

 Amoguis v. Ballado, G.R. No. 189626, August 20,


[74]

2018, elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64639>
15 [Per J. Leonen, Third Division].

[75]
 734 Phil. 239 (2014) [Per J. Leonen, Third Division].

[76]
 Id. at 259-261.

 Pantranco North Express, Inc. v. Court of Appeals, 296 Phil.


[77]

335 (1993) [Per J. Davide, Jr., Third Division]; National Steel


Corporation v. Court of Appeals, 362 Phil. 150 (1999) [Per J.
Mendoza, Second Division]; and International Container Terminal
Services, Inc. v. City of Manila, G.R. No. 185622, October 17,
2018, elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64632>
[Per J. Leonen, Third Division].

[78]
 Rollo, pp. 256-259.

[79]
 Id. at 311-332.

[80]
 RULES OF COURT, Rule 141, sec. 1 states:
SECTION 1. Payment of fees. — Upon the filing of the pleading or
other application which initiates an action or proceeding, the fees
prescribed therefor shall be paid in full.

 Lazaro v. Endencia, 57 Phil. 552 (1932) [Per J. Hull, En


[81]

Banc]; Malimit v. Degamo, 120 Phil. 1247 (1964) [Per J. Dizon,


Second Division]; Mercado v. Court of Appeals, 484 Phil. 438
(2004) [Per J. Quisimbing, First Division]; and Montañer v.
Shari'a District Court, 596 Phil. 815 (2009) [Per C.J. Puno, First
Division].

[82]
 200 Phil. 583 (1982) [Per J. Abad Santos, Second Division].

[83]
 Id. at 595.

[84]
 233 Phil. 579 (1987) [Per J. Gancayco, En Banc].

[85]
 Id. at 585.

[86]
 252 Phil. 280 (1989) [Per J. Gancayco, En Banc].

[87]
 Id. at 291-292.

[88]
 363 Phil. 271 (1999) [Per J. Bellosillo, Second Division].

[89]
 Id. at 278.

 Heirs of Hinog v. Melicor, 495 Phil. 422 (2005) [Per J. Austria-


[90]

Martinez, Second Division]; Intercontinental Broadcasting


Corporation v. Legasto, 521 Phil. 469 (2006) [Per J. Ynares-
Santiago, First Division]; and United Overseas Bank v. Ros, 556
Phil. 178 (2007) [Per J. Chico-Nazario, Third Division].

[91]
 579 Phil. 679 (2008) [Per J. Carpio Morales, Second Division].

[92]
 Id. at 681.

[93]
 Id. at 693.
[94]
 284-A Phil. 143 (1992) [Per J. Davide, Jr., En Banc].

 United Overseas Bank v. Ros, 556 Phil. 178 (2007) [Per J.


[95]

Chico-Nazario, Third Division].

[96]
 Rollo, p. 250.

[97]
 259 Phil. 927 (1989) [Per J. Narvasa, En Banc].

[98]
 Id. at 937-938.

[99]
 Rollo, p. 923.

[100]
 Id. at 495.

[101]
 Id. at 497.

[102]
 Id. at 71.

[103]
 Id. at 514-518, 520, and 522.

[104]
 Id. at 522.

[105]
 Id. at 698 and 708-709.

[106]
 499 Phil. 247 (2005) [Per J. Carpio Morales, Third Division].

[107]
 Rollo, pp. 657-682.

[108]
 Id. at 662.

[109]
 Id. at 751-796.

[110]
 Id. at 766-767.

[111]
 Id. at 797-830.
[112]
 Id. at 805-806.

[113]
 Id. at 461-508.

[114]
 Id. at 499.

[115]
 Id. at 891-935.

[116]
 Id. at 926-927.

 Pilipinas Shell Petroleum Corporation v. Court of Appeals, 253


[117]

Phil. 660 (1989) [Per J. Paras, Second Division].

 Id. at 667. See also Far East Bank and Trust Company v.


[118]

Shemberg Marketing Corporation, 540 Phil. 7 (2006) [Per J.


Sandoval-Gutierrez, Second Division].

 Do-All Metals Industries, Inc. v. Security Bank Corporation,


[119]

654 Phil. 35 (2011) [Per J. Abad, Second Division].

[120]
 499 Phil. 247 (2005) [Per J. Carpio Morales, Third Division].

[121]
 Id. at 266-267.

 See Heirs of Reinoso, Sr. v. Court of Appeals, 669 Phil. 272


[122]

(2011) [Per J. Mendoza, Third Division]; Negros Oriental Planters


Association, Inc. v. Hon. Presiding Judge of Regional Trial Court-
Negros Occidental, Branch 52, Bacolod City, 595 Phil. 1158
(2008) [Per J. Chico-Nazario, Third Division]; and Spouses
Gutierrez v. Spouses Valiente, 579 Phil. 486 (2008) [Per J.
Austria-Martinez, Third Division].

 See Negros Oriental Planters Association, Inc. v. Presiding


[123]

Judge of Regional Trial Court-Negros Occidental, Branch 52,


BacolodCity, 595 Phil. 1158 (2008) [Per J. Chico-Nazario, Third
Division] and Ku v. RCBC Securities, Inc., G.R. No. 219491,
October 17, 2018,
<elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64662> [Per
J. Peralta, Third Division].

THIRD DIVISION

[ G.R. No. 217978, January 30, 2019 ]


PEOPLE OF THE PHILIPPINES, PLAINTIFF-
APPELLEE, VS. NANCY LASACA RAMIREZ A.K.A.
"ZOY" OR "SOY" ACCUSED-APPELLANT.DECISION

LEONEN, J.:

This is an Appeal assailing the Court of Appeals October 23, 2014


Decision  in CA-G.R. CEB-CR HC No. 01655, which affirmed the
[1]

Regional Trial Court January 9, 2013 Judgment  in Crim. Case


[2]

No. R-LLP-09-05622-CR. The trial court found Nancy Lasaca


Ramirez a.k.a. "ZOY" or "SOY" (Ramirez) guilty beyond
reasonable doubt of qualified trafficking of persons in relation to
Section 4(e)  of Republic Act No. 9208, or the Anti-Trafficking in
[3]

Persons Act of 2003.

In an Information, Ramirez was charged with qualified trafficking


of persons in relation to Section 4(e) of Republic Act No. 9208. It
read:
That on the 5  day of December, 2009, at or about 9:45 o'clock
th

(sic) in the evening, in xxxxxxxxxxx, Lapu-Lapu City, Philippines,


within the jurisdiction of this Honorable Court, the aforenamed
accused, did then and there willfully and unlawfully maintain or
hire Nica Jean U. Goc-ong, 20 years old, AAA, 16 year old minor,
Cindy Pancho, 20 years old and BBB, 15 year old minor, to
engage in prostitution and offered them for sex or any form of
sexual exploitation to poseur customers.

CONTRARY TO LAW. [4]

Ramirez pleaded not guilty on arraignment. Trial on the merits


ensued.[5]

The prosecution alleged that at around 9:45 p.m. on December 5,


2009, Police Officer 1 Nef Nemenzo (PO1 Nemenzo) and 13 other
members of the Regional Anti-Human Trafficking Task Force
conducted an entrapment operation in xxxxxxxxxxx, Lapu-Lapu
City. The operation was "based on their surveillance of a
widespread sexual service for sale by young girls"  in the area.
[6] [7]

The operation was divided into two (2) groups. PO1 Nemenzo's
group targeted the area of xxxxxxxxxxx KTV Bar in front
of xxxxxxxxxxx Grill. He would be disguised as a customer
negotiating for the prices of the minors' services.
[8]

In the bar, PO1 Nemenzo and a team member, Police Officer 1


Llanes (PO1 Llanes), ordered beers and waited for the pimps.
Two (2) women approached them and introduced themselves as
AAA and BBB.  Upon hearing that they would need two (2) more
[9]

girls, another woman approached them and introduced herself as


Nancy, who was later identified as Ramirez. She told the police
officers that she could provide the girls. Then, BBB and Ramirez
left, and after a while, returned with two (2) more girls. They
agreed that each girl would cost P600.00 as payment for sexual
services.[10]

After Ramirez provided the four (4) girls, the group left and
hailed a taxi heading for xxxxxxxxxxx Motel. Ramirez had told the
girls to accept the money that they would be given. In the taxi,
PO1 Llanes handed P2,400.00 to one (1) of the girls. As soon as
the girl received it, PO1 Nemenzo and PO1 Llanes introduced
themselves as police officers, and turned the girls over to their
team leader in a civilian van parked near them. The police officers
were told to return to the area and await the other teams' return.
Later, Ramirez was arrested when BBB pointed to her as the
pimp. [11]

The prosecution also presented the testimony of BBB, a minor,


who testified knowing Ramirez and that she herself was pimped
out by Ramirez several times already. BBB stated that on the
night of the incident, Ramirez approached her and asked if she
wanted to have sex for P200.00. She accepted and later, she and
another girl, AAA, approached two (2) customers. The men said
that they needed two (2) more girls, so Ramirez instructed BBB
to get a couple more. She came back with two (2) girls, Nica and
Cindy. After the deal was made, the six (6) of them boarded a
taxi.
[12]

Before they left, Ramirez instructed BBB to get the money from
the two (2) men. While in the taxi, one (1) of the men handed
her P2,400.00. She received the money and told her companions
to set aside P400.00 as their pimp's share. Instead of going to
the motel, the taxi stopped and the men introduced themselves
as police officers.
[13]

The prosecution likewise presented the testimony of AAA, a


minor, who testified that she had already been pimped by
Ramirez twice. On the night of the incident, AAA testified that
Ramirez pimped her and three (3) other girls out to two (2)
customers for P2,400.00. She stated that she knew Ramirez to be
a pimp because Ramirez would look for customers, negotiate
prices, get girls to have sex with the customers, and get
commission from it. [14]

In her defense, Ramirez testified that at about 9:00p.m. on


December 5, 2009, she and her sister, Francy Ramirez, were
at xxxxxxxxxxx Grill watching a live band when two (2) men
rushed to them, arrested her, and pushed her into a van. She
asked why she was being arrested but the men just laughed. In
the van, she saw BBB, who told her that police officers were
around the area to arrest prostitutes. The men then brought her
to a gas station, where they were made to board another van
with other women and two (2) gay men. They were brought to
the police station in xxxxxxxxxxx, Cebu City, where they were
investigated for prostitution.
[15]

In its January 9, 2013 Judgment,  the Regional Trial Court found


[16]

Ramirez guilty. The dispositive portion read:


WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered finding the accused, Nancy Lasaca Ramirez
guilty of the crime of Qualified Trafficking of Person in Relation to
Sec. 4 (e) of R.A. 9208 beyond reasonable doubt and sentences
her to suffer the penalty of life imprisonment and a fine of Two
million pesos (P2,000,000.00).

SO ORDERED. [17]

Ramirez appealed before the Court of Appeals.  She argued that


[18]

she does not work at xxxxxxxxxxx KTV Bar, and that it was BBB
who negotiated with the poseur customers about the girls' prices
and received the supposed payment for sexual services.  She [19]

posits that the advanced payment made to BBB was "contrary to


human nature and natural course of events"  since no sexual
[20]

activity had occurred yet. She insists that she was in the area just
to watch a live band.[21]

In its October 23, 2014 Decision,  the Court of Appeals denied


[22]

the Appeal and affirmed the Regional Trial Court January 9, 2013
Judgment. It highlighted the trial court's finding of overwhelming
evidence against Ramirez, as two (2) of the minor victims
positively identified her as their pimp. [23]

The Court of Appeals held that Ramirez not being employed at


the xxxxxxxxxxx KTV Bar was irrelevant. It also found that even
if BBB initiated the negotiation with the poseur customers, the
deal was only closed when Ramirez brought another pair of girls.
 It further noted that it was not uncommon for the payment to
[24]

be received by the hired girls instead of the pimps. In any case,


BBB testified that P400.00 had already been earmarked from the
P2,400.00 payment as Ramirez' commission. This was enough to
conclude that she was the girls' pimp. [25]
Ramirez filed a Notice of Appeal,  to which the Court of Appeals
[26]

gave due course,  elevating the case records to this Court.


[27] [28]

In its June 29, 2015 Resolution,  this Court noted the elevation
[29]

of records and directed the parties to file their supplemental


briefs. Both parties manifested that they were no longer
submitting supplemental briefs and moved that this Court instead
consider the arguments in their briefs submitted before the Court
of Appeals.[30]

While the case was pending, accused-appellant sent a


handwritten letter  to this Court, insisting that on the night of the
[31]

incident, she was merely in the area with her sister to watch a
live band. She claims that she only met BBB that night, and that
BBB suddenly dragged her to look for two (2) more girls. She
further alleges that it was BBB who negotiated with the two (2)
customers and that she had no idea what was going on.  She [32]

submits that BBB pointed to her as a pimp only because the


police officers were threatening to detain her instead.[33]

This Court is confronted with the sole issue of whether or not the
prosecution proved accused-appellant Nancy Lasaca Ramirez'
guilt beyond reasonable doubt of qualified trafficking of persons.

Republic Act No. 9208 defines trafficking in persons as:


SECTION 3. Definition of Terms. — As used in this Act:

(a) Trafficking in Persons — refers to the recruitment,


transportation, transfer or harboring, or receipt of persons with or
without the victim's consent or knowledge, within or across
national borders by means of threat or use of force, or other
forms of coercion, abduction, fraud, deception, abuse of power or
of position, taking advantage of the vulnerability of the persons,
or, the giving or receiving of payments or benefits to achieve the
consent of a person having control over another person for the
purpose of exploitation which includes at a minimum, the
exploitation or the prostitution of others or other forms of sexual
exploitation, forced labor or services, slavery, servitude or the
removal or sale of organs.
The crime is still considered trafficking if it involves the
"recruitment, transportation, transfer, harboring[,] or receipt of a
child for the purpose of exploitation" even if it does not involve
any of the means stated under the law.  Trafficking is considered
[34]

qualified when "the trafficked person is a child[.]" [35]

In People v. Casio,  this Court enumerated the elements that


[36]

must be established to successfully prosecute the crime:


The elements of trafficking in persons can be derived from its
definition under Section 3 (a) of Republic Act No. 9208, thus:

(1) The act of "recruitment, transportation, transfer or harbouring, or receipt of pers


victim's consent or knowledge, within or across national borders."

(2) The means used which include "threat or use of force, or other forms of coe
deception, abuse of power or of position, taking advantage of the vulnerability of th
or receiving of payments or benefits to achieve the consent of a person having contr

(3) The purpose of trafficking is exploitation which includes "exploitation or the prostit
forms of sexual exploitation, forced labor or services, slavery, servitude or the remo
Republic Act No. 9208 has since been amended by Republic Act
No. 10364  on February 6, 2013. In recognition of the
[38]

amendments to the law, Casio clarifies that crimes prosecuted


under Republic Act No. 10364 must have the following elements:
Under Republic Act No. 10364, the elements of trafficking in
persons have been expanded to include the following acts:

(1) The act of "recruitment, obtaining, hiring, providing, offering, transportation


harboring, or receipt of persons with or without the victim's consent or knowledge,
borders[";]

(2) The means used include "by means of threat, or use of force, or other forms of coe
deception, abuse of power or of position, taking advantage of the vulnerability of th
or receiving of payments or benefits to achieve the consent of a person havin
person"[;]

(3) The purpose of trafficking includes "the exploitation or the prostitution of others o
exploitation, forced labor or services, slavery, servitude or the removal or sale of o
the original)
Here, accused-appellant was charged with having violated
qualified trafficking in relation to Section 4(e) of Republic Act No.
9208, which provides that it is unlawful for anyone "[t]o maintain
or hire a person to engage in prostitution or pornography[.]"

The prosecution established that on the night of December 5,


2009, accused-appellant approached PO1 Nemenzo and offered
him the sexual services of four (4) girls, two (2) of whom were
minors, for P2,400.00. The police operation had been the result
of previous surveillance conducted within the area by the
Regional Anti-Human Trafficking Task Force. Both minor victims
testified that this incident was not the first time that accused-
appellant pimped them out to customers, and that any payment
to them would include the payment of commission to accused-
appellant

This Court in People v. Rodriguez  acknowledged that as


[40]

with Casio, the corroborating testimonies of the arresting officer


and the minor victims were sufficient to sustain a conviction
under the law. In People v. Spouses Ybanez, et al.,  this Court
[41]

likewise affirmed the conviction of traffickers arrested based on a


surveillance report on the prostitution of minors within the area.
In People v. XXX and YYY,  this Court held that the exploitation
[42]

of minors, through either prostitution or pornography, is explicitly


prohibited under the law. Casio also recognizes that the crime is
considered consummated even if no sexual intercourse had taken
place since the mere transaction consummates the crime. [43]

Here, accused-appellant cannot use as a valid defense either


BBB's and AAA's consent to the transaction, or that BBB received
the payment on her behalf. In Casio: [44]

The victim's consent is rendered meaningless due to the coercive,


abusive, or deceptive means employed by perpetrators of human
trafficking. Even without the use of coercive, abusive, or
deceptive means, a minor's consent is not given out of his or her
own free will.[45]

Similarly, in People v. De Dios: [46]


It did not matter that there was no threat, force, coercion,
abduction, fraud, deception or abuse of power that was employed
by De Dios when she involved AAA in her illicit sexual trade. AAA
was still a minor when she was exposed to prostitution by the
prodding, promises and acts of De Dios. Trafficking in persons
may be committed also by means of taking advantage of the
persons' vulnerability as minors, a circumstance that applied to
AAA, was sufficiently alleged in the information and proved during
the trial. This element was further achieved through the offer of
financial gain for the illicit services that were provided by AAA to
the customers of De Dios. [47]

Accused-appellant hired children to engage in prostitution, taking


advantage of their vulnerability as minors. AAA's and BBB's
acquiescence to the illicit transactions cannot be considered as a
valid defense.

Accused-appellant initially used the defense of denial, testifying


that she was merely in the area to listen to a live band when the
police rushed to her and arrested her. Denial, however, becomes
a weak defense against the positive identification by the poseur-
buyer and the minor victims. [48]

Moreover, accused-appellant, in her handwritten letter to this


Court,  seemingly abandoned her earlier statement that she was
[49]

just in the area to watch a live band when the police rushed to
and arrested her. This time, she alleged that it was BBB who
approached and dragged her to the police officers, and who also
started negotiating prices.  This contradicts her earlier statement
[50]

that she had no knowledge of the transaction. Worse, this


appears to corroborate the prosecution witnesses' testimonies
that she was indeed at the transaction.

In any case, PO1 Nemenzo had categorically testified that he and


PO1 Llanes were approached by accused-appellant, who had
negotiated prices on AAA and BBB's behalf.  Accused-appellant
[51]

has not alleged any ill motive on PO1 Nemenzo's part to testify
against her.
This Court, therefore, affirms the trial court and the Court of
Appeals' conviction of accused-appellant in violation of Republic
Act No. 9208, Section 4(e), as qualified by Section 6(a) and
punished under Section 10(c).  In Casio,  however, this Court
[52] [53]

held that moral damages and exemplary damages must also be


imposed. In People v. Aguirre:[54]

The criminal case of Trafficking in Persons as a Prostitute is an


analogous case to the crimes of seduction, abduction, rape, or
other lascivious acts. In fact[,] it is worse, thus, justifying the
award of moral damages. Exemplary damages are imposed when
the crime is aggravated, as in this case. [55]

Thus, in line with jurisprudence, this Court deems it proper to


impose moral damages of P500,000.00 and exemplary damages
of P100,000.00.

WHEREFORE, the Appeal is DISMISSED. The Court of Appeals


October 23, 2014 Decision in CA-G.R. CEB-CR HC No. 01655
is AFFIRMED with MODIFICATION. Accused-appellant Nancy
Lasaca Ramirez a.k.a "ZOY" or "SOY" is found GUILTY beyond
reasonable doubt of having violated Republic Act No. 9208,
Section 4(e), as qualified by Section 6(a). She is sentenced to
suffer the penalty of life imprisonment and to pay a fine of Two
Million Pesos (P2,000,000.00). She is further ordered to pay Five
Hundred Thousand Pesos (P500,000.00) as moral damages and
One Hundred Thousand Pesos (P100,000.00) as exemplary
damages to each of the minor victims, AAA and BBB.

All damages awarded shall be subject to the rate of six percent


(6%) per annum from the finality of this Decision until its full
satisfaction.
[56]

SO ORDERED.

Carpio,  Peralta, (Chairperson), A. Reyes, Jr., and Carandang, JJ.,


*

concur.
March 29, 2019

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on January 30, 2019 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on March 29, 2019 at 2:27 p.m.

 Designated additional Member per Raffle dated January 28,


*

2019.

 Rollo, pp. 3-14. The Decision was penned by Associate Justice


[1]

Ramon Paul L. Hernando (now an Associate Justice of this Court)


and concurred in by Associate Justices Ma. Luisa C. Quijano-
Padilla and Marie Christine Azcarraga-Jacob of the Twentieth
Division, Court of Appeals, Cebu City.

 CA rollo, pp. 38-41. The Judgment was penned by Presiding


[2]

Judge Toribio S. Quiwag of Branch 27, Regional Trial Court, Lapu-


Lapu City.

[3]
 Rep. Act No. 9208 (2003), sec. 4 provides:

SECTION 4. Acts of Trafficking in Persons. — It shall be unlawful


for any person, natural or juridical, to commit any of the following
acts: (e) To maintain or hire a person to engage in prostitution or
pornography[.]
[4]
 RTC records, p. 2.

[5]
 CA rollo, p. 38.

[6]
 Id. at 39.

[7]
 Id. at 38-39.

[8]
 Id. at 39.

[9]
 Id.

[10]
 Id.

[11]
 CA rollo, p. 39.

[12]
 Id.

[13]
 Id.

[14]
 Id. at 39-40.

[15]
 Id. at 40.
 
[16]
 Id. at 38-41.

[17]
 Id. at 41.

[18]
 Id. at 25-37.

[19]
 Id. at 33-34.

[20]
 Id. at 34.

[21]
 Id. at 34-35.

[22]
 Rollo, pp. 3-14.
[23]
 Id. at 8.

[24]
 Id. at 11-12.

[25]
 Id. at 13.

[26]
 Id. at 15-16.
 
[27]
 Id. at 17.

[28]
 Id. at 1.

[29]
 Id. at 19-20.

[30]
 Id. at 22-26 and 29-31.

[31]
 Id. at 34-41.

[32]
 Id. at 35.

[33]
 Id. at 37.

[34]
 Rep. Act No. 9208 (2003), sec. 3(a).

[35]
 Rep. Act No. 9208 (2003), sec. 6(a).

[36]
 749 Phil. 458 (2014) [Per J. Leonen, Third Division].

[37]
 Id. at 472-473 citing Rep. Act No. 9208, sec. 3(a).

[38]
 Expanded Anti-Trafficking in Persons Act of 2012.

 People v. Casio, 749 Phil. 458, 474 (2014) [Per J. Leonen, Third
[39]

Division].

 G.R. No. 211721, September 20, 2017, 840 SCRA 388 [Per J.
[40]

Martires, Third Division].


[41]
 793 Phil. 877 (2016) [Per J. Peralta, Third Division].

 G.R.
[42]
No. 235652, July 9, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/july2018/235652.pdf> [Per J. Perlas-
Bemabe, Second Division].

 People v. Casio,749 Phil. 458 (2014) [Per J. Leonen, Third


[43]

Division]. See also People v. Aguirre, G.R. No. 219952, November


20, 2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/november2017/219952.pdf> [Per J.
Tijam, First Division].

[44]
 749 Phil. 458 (2014) [Per J. Leonen, Third Division].

 Id. at 475-476 citing United Nations Office on Drugs and Crime,


[45]

"Human Trafficking FAQs"


<https://www.unodc.org/unodc/en/human-
trafficking/faqs.html>.

 G.R.
[46]
No. 234018, June 6, 2018,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/june2018/234018.pdf> [Per J. Reyes,
Jr., Second Division].

[47]
 Id. at 7-8.

 See People v. Bandojo, Jr., G.R. No. 234161, October 17, 2018,
[48]

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/october2018/234161.pdf> [Per J.
Reyes, A., Jr., Second Division].

[49]
 Rollo, pp. 34-41.

[50]
 Id. at 35.

[51]
 CA rollo, p. 39.
 Rep. Act No. 9208 (2003), sec. 10. Penalties and Sanctions. —
[52]

The following penalties and sanctions are hereby established for


the offenses enumerated in this Act:

....

(c) Any person found guilty of qualified trafficking under Section 6


shall suffer the penalty of life imprisonment and a fine of not less
than Two million pesos (P2,000,000.00) but not more than Five
million pesos (P5,000,000.00)[.]

[53]
 749 Phil. 458 (2014) [Per J. Leonen, Third Division].

 G.R.
[54]
No. 219952, November 20, 2017,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/november2017/219952.pdf> [Per J.
Tijam, First Division].

 Id. at 11, citing People v. Lalli, et al., 675 Phil. 126 (2011) [Per
[55]

J. Carpio, Second Division]; People v. Casio, 749 Phil. 458 (2014)


[Per J. Leonen, Third Division]; and People v. Hirang, 803 Phil.
277 (2017) [Per J. Reyes, Third Division].

 Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta,


[56]

En Banc].

Source: Supreme Court E-Library | Date created: April 29, 2019


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Supreme Court E-Library

THIRD DIVISION
[ G.R. No. 210528, November 28,
2018 ]
COMMISSIONER OF INTERNAL REVENUE,
PETITIONER, VS. J.P. MORGAN CHASE BANK, N.A.
– PHILIPPINE CUSTOMER CARE CENTER,
RESPONDENT.DECISION

LEONEN, J.:

Respondent's lease of the physical plant space, infrastructure,


and other transmission facilities of PeopleSupport (Philippines),
Inc., a Philippine Economic Zone Authority (PEZA)-registered
Export Enterprise, is not covered within its registered activities.
Thus, income derived from it is subject to the regular corporate
income tax.

This Petition for Review on Certiorari  seeks to reverse and set


[1]

aside the Court of Tax Appeals En Banc Decision  dated July 15,
[2]

2013 and Resolution  dated December 18, 2013 in CTA EB No.


[3]

876. The Court of Tax Appeals En Banc denied the Commissioner


of Internal Revenue's appeal and affirmed the December 21,
2011  and February 17, 2012  Resolutions of the Court of Tax
[4] [5]

Appeals Second Division, which ruled that the income from the
lease of PeopleSupport (Philippines) Inc.'s transmission facilities
is exempt from withholding tax, and granted J.P. Morgan Chase
Bank N.A.–Philippine Customer Care Center's claim for refund. [6]

JP Morgan Chase Bank, N.A. – Philippine Customer Care Center


(J.P. Morgan–Philippines) is the Philippine branch of American
corporation J.P. Morgan Chase Bank, N.A. It is registered with the
Securities and Exchange Commission to engage in call center and
business process services, information technology, information
technology-enabled services, and customer care services. [7]
On May 1, 2007,  J.P. Morgan–Philippines entered into Task
[8]

Order #2 to the Master Service Provider Agreement (Agreement)


with PeopleSupport (Philippines), Inc. (PeopleSupport), a
Philippine Economic Zone Authority (PEZA)-registered Economic
Zone IT (Export) Enterprise, which enjoys an income tax holiday
period from May to July 2007. Under the Agreement,
PeopleSupport would provide and lease transmission facilities to
J.P. Morgan-Philippines for a fee.[9]

The Agreement stated:

III. DESCRIPTION AND SCOPE OF SERVICES


Supplier shall provide the following services to [JP Morgan]:

A. Scope of Services.

Supplier will provide physical plant space in its facility located at


6780 Ayala Avenue, Makati City 1227 Philippines (the "Facility")
that will allow JPMC personnel to perform certain services for the
benefit of JPMC. Supplier will provide all voice and data
infrastructure needed for JPMC personnel to perform their
intended function(s). Supplier will further provide all workstation
infrastructure (as further detailed below) that is compatible with
JPMC specifications to support JPMC work types to be performed
at Supplier's location. Supplier will provide workstation voice and
data bandwidth as set forth below. Supplier will also provide all
infrastructure necessary to conduct telephone call recording,
workstation screen data capture, and data storage per the
requirements of JPMC. Additionally, Supplier will provide the
platform and support for inbound telemarketing activities that will
be performed by JPMC employees located in the Facility. This
platform and support will be consistent with all service
requirements as set forth in Task Order #1 currently executed
between PeopleSupport, Inc. and JPMorgan Chase Bank, National
Association.

V[.] SUPPLIER/JPMC INTERACTION
Supplier and JPMC agree to the following:
• Supplier will assign an account manager mutually agreeable to
JPMC and Supplier.
• The account manager must be proactive, responsive[,] and
solution oriented.
• The account manager should have expertise in, or direct linkage
to, Supplier's facilities, security and information technology.
• The account manager must have the ability to effectively
manage or address the Services to ensure optimum results
for JPMC.
• The account manager will be responsible for facilitating
communication between JPMC and Supplier.
• Supplier will notify JPMC of any staff reassignments involving
the account manager or other designated [k]ey personnel.
• JPMC will provide a point of contact(s) ("POC") that will serve as
a liaison between the Supplier and JPMC.
• JPMC will provide POC(s) during Supplier's hours of operations.
• JPMC POC(s) will provide feedback or updates regarding
escalations or concerns made by the Supplier."  (Emphasis
[10]

in the original)

From May to July 2007, J.P. Morgan-Philippines paid


PeopleSupport P56,913,080.40, and withheld tax amounting to
P2,845,654.02. [11]

On August 10, 2007, J.P. Morgan-Philippines filed its Monthly


Remittance Return of Creditable Income Taxes Withheld for July
and paid P3,705,125.61, including the P2,845,654.02 withheld
tax from PeopleSupport. [12]

On August 16, 2007, however, J.P. Morgan-Philippines


reimbursed PeopleSupport the amount of P2,845,654.02 after
having realized that it had erroneously withheld taxes on its
payments to PeopleSupport, as the latter enjoys the income tax
holiday. PeopleSupport acknowledged the reimbursement in its
August 16, 2007 Official Receipt No. 1660 and July 23, 2008
letter.[13]

On August 7, 2008, J.P. Morgan–Philippines filed before the


Bureau of Internal Revenue District Office No. 50 (South Makati)
an application for refund of P2,845,654.02.  However, due to the
[14]

latter's inaction, it later filed on August 10, 2009 a Petition for


Review before the Court of Tax Appeals. [15]

The Commissioner of Internal Revenue filed an Answer on


September 9, 2009, arguing that J.P. Morgan-Philippines failed to
show that the tax was erroneously or illegally collected.
 Assuming it was, she added that J.P. Morgan-Philippines was
[16]

not the proper party to ask for refund as it was merely a


withholding agent. She further argued that the claim for refund, if
allowed, should be in the name and with the express authority of
PeopleSupport. [17]

In its September 23, 2011 Decision,  the Court of Tax Appeals


[18]

Second Division denied J.P. Morgan-Philippines' claim for refund.


It found that while J.P. Morgan-Philippines was the proper party
to file the claim for refund,  the lease of transmission facilities
[19]

was outside PeopleSupport's registered activities with PEZA.  It [20]

ruled that the income from the lease was subject to the regular
income tax, and thus, the tax was correctly withheld. [21]

On J.P. Morgan–Philippines' Motion for Reconsideration, the Court


of Tax Appeals Second Division reversed itself in its December
21, 2011 Resolution,  and granted the claim for refund. It ruled
[22]

that under the Agreement, PeopleSupport would supply the whole


package of infrastructure and information technology support
services to J.P. Morgan–Philippines, which includes the lease of its
transmission facilities. Consequently, the lease of transmission
facilities was an activity related to PeopleSupport's registered
activities; hence, the rental income from this lease was exempt
from withholding tax. [23]
The Commissioner of Internal Revenue filed a Motion for
Reconsideration, but it was denied in the Court of Tax Appeals
Second Division Resolution  dated February 17, 2012.
[24]

The Commissioner of Internal Revenue filed an Appeal before the


appealed to the Court of Tax Appeals En Banc, but it was denied.
In its July 15, 2013 Decision,  the Court of Tax Appeals En Banc
[25]

ruled that the scope of PeopleSupport's services under the


Agreement was within its registered activities with PEZA, i.e. the
establishment of a contact center to provide outsourced customer
care and business process outsourcing services. It also held that
providing support services for maintenance and repair of the
facility was part of PeopleSupport's obligation to J.P. Morgan-
Philippines.
[26]

The Commissioner of Internal Revenue filed a Motion for


Reconsideration, but it was likewise denied in the Court of Tax
Appeals En Banc Resolution  dated December 18, 2013.
[27]

Hence, this Petition was filed.

To comply with this Court's April 21, 2014 Resolution,  J.P. [28]

Morgan–Philippines filed its Comment,  to which


[29]
the
Commissioner of Internal Revenue filed a Reply. [30]

The issues for this Court's resolution are:

First, whether or not the Petition for Review on Certiorari raises a


factual question; and

Second, whether or not J.P. Morgan–Philippines' lease of physical


plant space, infrastructure, and other transmission facilities is
related to the PEZA–registered activities of PeopleSupport, and is
thus, exempt from withholding taxes.

Petitioner states that PeopleSupport is registered with PEZA to


provide outsourced customer care and business process
outsourcing services.  It is granted an income tax holiday and
[31]
other fiscal incentives, which apply only to income derived from
its registered activities under the Implementing Rules and
Regulations of Republic Act No. 7916, or the Special Economic
Zone Act of 1995. [32]

The Agreement, petitioner argues, was essentially a lease of


physical plant space, infrastructure, and other transmission
facilities of PeopleSupport for the use of respondent's personnel.
 She submits that this activity is not necessarily related to
[33]

PeopleSupport's PEZA–registered operations, but an entirely


different activity that should be covered by a separate
registration.  Thus, PeopleSupport's income from the lease is
[34]

subject to regular income tax. [35]

Respondent counters that the Petition should be dismissed for


failure to raise questions of law. [36]

Respondent points out that the terms "outsourced customer care


services"  and
[37]
"business process outsourcing
services"  commonly mean the "contracting out of operations
[38]

and responsibilities of specific business functions (or processes)


to a third-party service provider."  Under their Agreement,
[39]

respondent contracted out to PeopleSupport the operations of


maintaining and managing the infrastructure and transmission
facilities that the latter provided. From PeopleSupport's
standpoint, it rendered to respondent business process
outsourcing services that are information technology-based. [40]

Finally, respondent argues that PeopleSupport's services under


the Agreement fall within or are related to its registered activities
with PEZA.  Thus, the income that PeopleSupport derived from
[41]

its services is exempt from income tax. [42]

In her Reply,  petitioner contends that: (1) a factual


[43]
review is
warranted as she has discussed in her Petition how the inference
of the Court of Tax Appeals was manifestly mistaken,  and the
[44]

Decision was based on a misapprehension of facts;  (2) the


[45]

Agreement was essentially a lease of physical facilities  and the


[46]
information technology support services PeopleSupport would
provide were merely incidental;  and (3) the lease of facilities is
[47]

a new and additional product line that requires PEZA approval,


 and respondent presented no evidence that PeopleSupport is
[48]

registered with PEZA as a facility provider.


[49]

Tax refunds must be granted only by a clear and unequivocal


provision of law. Thus, petitioner submits that PeopleSupport's
income derived from the lease of its facilities to respondent, not
being a PEZA–registered activity, is subject to corporate income
tax. [50]

The Commissioner of Internal Revenue invoked the correct


remedy. Rule 45 applies to issues raised before this Court that
involve purely questions of law. In Villamor, Jr. v. Umale,  this
[51]

Court held:

There is a question of law "when there is doubt or controversy as


to what the law is on a certain [set] of facts." The test is
"whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence." Meanwhile, there
is a question of fact when there is "doubt ... as to the truth or
falsehood of facts." The question must involve the examination of
probative value of the evidence presented.  (Citation omitted)
[52]

To resolve the issue on the taxability of the transaction between


respondent and PeopleSupport, this Court is required to interpret
Task Order #2 to the Agreement. Petitioner asserts that the
Agreement between respondent and PeopleSupport merely
involved a lease of information technology infrastructure, which is
not covered by PeopleSupport's PEZA registration. This issue is a
question of law. It does not require us to examine the probative
value of the evidence presented. The Petition essentially requires
this Court to determine the scope of the Agreement and the
scope of activities covered by the fiscal incentives granted to
PeopleSupport.

II (A)

Under Section 23 of Republic Act No. 7916, or the Special


Economic Zone Act of 1995, as amended, business enterprises
operating within economic zones are entitled to fiscal incentives.
It states:

Section 23. Fiscal Incentives. — Business


establishments operating within the ECOZONES shall be entitled
to the fiscal incentive:s as provided for under Presidential Decree
No. 66, the law creating the Export Processing Zone Authority, or
those provided under Book VI of Executive Order No. 226,
otherwise known as the Omnibus Investment Code of 1987.

Furthermore, tax credits for exporters using local materials as


inputs shall enjoy the same benefits provided for in the Export
Development Act of 1994.

Article 39(a)(1), Book VI of Executive Order No. 226, as


amended,  enumerates the fiscal incentives granted to a
[53]

registered enterprise, which include income tax holiday from four


(4) to six (6) years, depending on whether the enterprise is
registered as a pioneer or non-pioneer firm. It reads:

Art. 39. Incentives to Registered Enterprises. — All registered


enterprises shall be granted the following incentives to the
extent engaged in a preferred area of investment;

(a) Income Tax Holiday. —

(1) For six (6) years from commercial operation for pioneer firms
and four (4) years for non-pioneer firms, new registered firms
shall be fully exempt from income taxes levied by the National
Government. Subject to such guidelines as may be prescribed by
the Board, the income tax exemption will be extended for another
year in each of the following cases: . . . (Emphasis supplied)

However, Rule XIII, Section 5 of the Implementing Rules and


Regulations of Republic Act No. 7916 specifies that PEZA-granted
incentives shall apply only to registered operations of the Ecozone
Enterprise and only during its registration with PEZA. In other
words, tax incentives to which an Ecozone Enterprise is entitled
do not necessarily include all kinds of income received during the
period of entitlement. Only income actually gained or received by
the Ecozone Enterprise related to the conduct of its registered
business activity are covered by fiscal incentives.

Executive Order No. 226 also provides that the incentives shall
only be "to the extent engaged in a preferred area of
investment."  The purpose of the income tax holiday was
[54]

explained, thus:

An income tax holiday is bestowed on a new project to encourage


investors to set up businesses and to contribute to the country's
economic growth. The fiscal incentive is also meant to help
registered enterprises recoup their substantial initial investments
by giving them a reprieve from paying income tax for a few
years. However, like any privilege, the income tax holiday comes
with conditions and requirements which must be fulfilled for its
continued enjoyment.  (Emphasis supplied)
[55]

Revenue Regulations No. 20-2002  of the Bureau of Internal


[56]

Revenue clarifies the tax treatment of income earned from


unregistered activities by enterprises under the Bases Conversion
and Development Act of 1992 and the Philippine Economic Zone
Act of 1995. It states:

SECTION 1. TAX TREATMENT — Income derived by an


enterprise registered with the Subic Bay Metropolitan Authority
(SBMA), the Clark Development Authority (CDA), or the Philippine
Economic Zone Authority (PEZA) from its registered activity/ies
shall be subject to such tax treatment as may be specified in its
terms of registration (i.e., the 5% preferential tax rate, the
income tax holiday, or the regular income tax rate, as the case
may be). Nonetheless, whatever the tax treatment of said
enterprise with respect to its registered activity/ies, income
realized by such registered enterprise that is not related to its
registered activity/ies shall be subject to the regular internal
revenue taxes, such as the 20% final income tax on interest from
Philippine Currency bank deposits and yield or any other
monetary benefit from deposit substitutes, and from trust funds
and similar arrangements, the 7.5% tax on foreign currency
deposits and the 5%/10% capital gains tax or ½% stock
transaction tax, as the case may be, on the sale of shares of
stock.  (Emphasis supplied)
[57]

Several Bureau of Internal Revenue rulings later determined the


tax treatment of certain income derived by PEZA-registered
enterprises.

In its Ruling No. DA-023-03,  the Bureau of Internal Revenue


[58]

held that the sale by a PEZA-registered enterprise of its


manufacturing plant and equipment, such as generator sets and
others, is not within its registered activity, and therefore, is
subject to regular income tax. The registered enterprise was
engaged in the sale of disk drives.

Likewise, in Bureau of Internal Revenue Ruling No. DA-166-04,


 the gain derived by a PEZA-registered enterprise from the sale
[59]

of machineries and equipment, resulting from the foreign


exchange translation of their US Dollar denominated book value
in pesos, was held subject to regular income tax. The company
was registered with PEZA as an Ecozone Export Enterprise
engaged in the assembly of semiconductor devices in plastic
packages (integrated circuits).
Also, the granting of a foreign currency denominated loan to an
affiliate  and investment in a time deposit account or any other
[60]

Philippine currency bank deposit  were considered not related to


[61]

the registered activities of an Ecozone Export Manufacturing


Enterprise and Clark Freeport Zone Enterprise, respectively.

On September 15, 2005, PEZA issued Memorandum Circular No.


2005-032,  which provided:
[62]

On Gains on Foreign Exchange Transactions:

Foreign currency is normally used by Ecozone Export Enterprises


for their registered activities, either as the functional currency or
as a supplemental currency. On the other hand, it is also used by
some Ecozone Export Enterprises for other activities which can be
considered as "additional business opportunities" which PEZA has
no control of.

The tax treatment of foreign exchange (forex) gains shall depend


on the activities from which these arise. Thus, if the forex gain is
attributed to an activity with income tax incentive (Income Tax
Holiday or 5% Gross Income Tax), said forex gain shall be
covered by the same income tax incentive. On the other hand, if
the forex gain is attributed to an activity without income tax
incentive, said forex gain shall likewise be without income tax
incentive, i.e., therefore, subject to normal corporate income tax.

The tax treatment of forex gains is illustrated as follows:

Activity Income Tax Incentive Tax Trea


Registered 1st Project 5% Gross Income Tax 5% Gros
Registered 2nd Project Income Tax Holiday Income T
Other Activities None Normal C

On Sales of Production "Rejects" and "Seconds[,"] Scrap, Raw


Materials, Packaging Materials and Other Production Supplies:
1. All local sales shall be subject to applicable duties and taxes
(including VAT) prior to withdrawal thereof from the Ecozone.

2. For purposes of entitlement to income tax incentives (Income


Tax Holiday or 5% Gross Income Tax), the following shall apply:

a. Sale of production "rejects" and "seconds" from the registered


activity of the Export Enterprise shall be considered covered by
the registered activity of said Enterprise. Thus, any income
derived therefrom shall be covered by the applicable income tax
incentive, i.e., Income Tax Holiday or 5% Gross Income Tax.

b. Sale of recovered waste/scrap generated from processing of


raw materials, including used packaging materials and other
direct/indirect materials/supplies that have undergone
processing/which have been used in production/processing
activity registered with PEZA shall likewise be considered covered
by the registered activity of an Export Enterprise. Any income
derived therefrom shall likewise be covered by the applicable
income tax incentive.

c. Sale of unprocessed, unused, obsolete or "off-specs"


production inputs (direct/indirect materials/supplies) shall not be
covered by the registered activity of an Ecozone Enterprise. Thus,
any income derived therefrom shall be subject to normal
corporate income tax, provided that the related cost shall be
deducted only once for purposes of computing income.

For purposes of proper reckoning of incentives, Ecozone Export


Enterprises with multiple activities are required to maintain
separate books of accounts for each activity.[63]

Following the rulings and the PEZA Memorandum Circular, it is


clear that the registration of an activity with PEZA is an essential
requirement to enjoy tax incentives under the law, and only
income arising from or directly related to the conduct of the
Ecozone Enterprises' registered activities are covered by tax
incentives under the Philippine Economic Zone Act of 1995.

Hence, to qualify for the income tax holiday incentive, respondent


must satisfactorily show that its transaction with PeopleSupport is
a registered activity or embraced within the latter's registered
activities with the PEZA.

II (B)

PEZA lists on its website ten (10) activities  that are eligible for
[64]

registration and fiscal incentives. These are:

1. Export Manufacturing — manufacturing, assembly or


processing activity resulting in the exportation of at least
70% of production ... Eligible firms shall qualify for
registration as "Economic Zone Export Manufacturing
Enterprise."
2. IT (Information Technology) Service Export — IT
service activities, of which 70% of total revenues is derived
from clients abroad. ("IT Service Activities" are activities
which involve the use of any IT software and/or system for
value addition) ... Eligible firms shall qualify for registration
as "IT Enterprise."
3. Tourism — establishment and operation within PEZA
Tourism Special Economic Zones of sports and recreation
centers, accommodation, convention, and cultural facilities
and their special interest attraction activities/establishments,
with foreign tourists as primary clientele. Eligible firms shall
qualify for registration as "Tourism Economic Zone Locator
Enterprise."....
4. Medical Tourism — medical health services, endorsed by
the Department of Health, with foreign patients as primary
clientele. Eligible firms shall qualify for registration as
"Medical Tourism Enterprise" in a Medical Tourism Special
Economic Zone Park or Center.....
5. Agro-industrial Export Manufacturing — processing and
or manufacturing of agricultural products resulting in the
exportation of its production ... Eligible firms shall qualify for
registration as "Agro-Industrial Economic Zone Export
Enterprise."....
6. Agro-industrial Bio-Fuel Manufacturing — specialized
manufacturing of agricultural crops and eventual commercial
processing which shall result in the production of clean
energy such as bio-fuels and the like. Eligible firms shall
qualify for registration as "Agro-Industrial Economic Zone
Enterprise."....
7. Logistics and Warehousing Services — (a) operation of a
warehouse facility for the storage, deposit, safekeeping of
goods for PEZA-registered Economic Zone Export
Manufacturing Enterprises, and or (b) importation or local
sourcing of raw materials, semi-finished goods for resale to -
or for packing/covering (including marking / labeling)
cutting or altering to customers' specification, mounting
and/or packaging into kits or marketable lots for subsequent
sale to - PEZA-registered Export Manufacturing Enterprises
for use in their export manufacturing activities, or for direct
export, or for consignment to PEZA-registered Export
Manufacturing Enterprises and eventual export. Eligible firms
shall qualify for registration as "Economic Zone Logistics
Services Enterprise."....
8. Economic Zone Development and Operation:8.a.
Manufacturing Economic Zone Development /
Operation —....8.b. IT Park Development /
Operation — development, operation and maintenance of
an area as a complex capable of providing infrastructures
and other support facilities required by IT Enterprises, as
well as amenities required by professionals and workers
involved in IT Enterprise, or easy access to such amenities.
Eligible firms shall qualify for registration as "IT Park
Developer / Operator."....8.c. Tourism Economic Zone
Development / Operation —....8.d. Medical Tourism
Economic Zone Development / Operation —....8.e.
Agro-Industrial Economic Zone Development /
Operation —....8.f. Retirement Economic Zone
Development / Operation — ...
9. Facilities Providers:9.a. Facilities for Manufacturing
Enterprises — ...9.b. Facilities for IT Enterprises —
construction as owner/operator of buildings and other
facilities inside IT Parks which are leased to PEZA-registered
IT Enterprises. Eligible firms shall qualify for registration as
"IT Park Facilities Enterprise."....9.c. Retirement
Facilities —
10. 10.Utilities — establishment, operation and
maintenance of light and power systems, water supply and
distribution systems inside Special Economic Zones. Eligible
firms shall qualify for registration as "Economic Zone Utilities
Enterprise." [65]

PEZA Board Resolution No. 00-411  or The "Guidelines on the


[66]

Registration of Information Technology (IT) Enterprises and the


Establishment and Operation of IT Parks / Buildings" defines
"information technology," "IT enterprises," "IT parks and
buildings," and "facilities-providers" in connection with PEZA
registration and availment of incentives. It states:

I. Definition of Terms

....

"Information Technology" or "IT" is the collective term for the


various technologies involved in processing and transmitting
information, which include computing, multimedia,
telecommunications, microelectronics[,] and their
interdependencies. Also called "informatics" or "telematics," the
term "IT" is now also often used to refer to the convergence of
various information-based, broadcast[,] and mass media
communication technologies (NITC 1997);

"IT Service Activities" are activities which involve the use of any
IT software and/or system for value addition;

"IT Enterprises" are companies operating/offering IT services;


"IT Park" is an area which has been developed into a complex
capable of providing infrastructures and other support facilities
required by IT Enterprises, as well as amenities required by
professionals and workers involved in IT Enterprises, or easy
access to such amenities.

"IT Building" is a building, the whole or part of which has been


developed to provide infrastructures and other support facilities
required by IT Enterprises, and which may also provide amenities
required by professionals and workers involved in IT Enterprises,
or easy access to such amenities.

"Facilities-Providers" are owners/operators of buildings and other


facilities inside economic zones/IT Parks which are leased to
PEZA-registered locator enterprises. [67]

The Board Resolution also enumerates the information technology


service activities eligible for registration with PEZA, which
include:

• Software development and application, including programming


and adaptation of system softwares (sic)  and
middlewares (sic), for business, media, e-commerce,
education, entertainment, etc.;
• IT-enabled services, encompassing call centers, data encoding,
transcribing and processing; directories; etc.;
• Content development for multi-media or internet purposes;
• Knowledge-based and computer-enabled support services,
including engineering and architectural design services,
consultancies, etc.;
• Business process out-sourcing using e-commerce;
• IT research and development; and
• Other IT[-]related service activities, as may be identified and
approved by the PEZA Board.
An IT Enterprise operating any of the above-listed IT service
activities may register with PEZA for availment of incentives
provided under R. A. No. 7916, as amended by Republic Act No.
8748, provided it physically locates inside a PEZA-registered IT
Park, Building or special economic zone, which is covered by the
required Presidential Proclamation.[68]

II (C)

PEZA certified in its June 27, 2007 Certification No. 2007-067


that PeopleSupport is registered as an Economic Zone IT (Export)
Enterprise with sites at the Asiatown I.T. Park, PeopleSupport
Center, 6780 Ayala, Makati and SM Baguio Cyberzone Building. [69]

The Certification further confirms that PeopleSupport is registered


with PEZA to "engage in the establishment of a contact center
which will provide outsourced customer care services and
[business process outsourcing] services." [70]

Moreover, the incentives granted to PeopleSupport under the


Registration Agreement with PEZA dated August 12, 2003, and
Supplemental Agreements dated February 20, 2004, July 14,
2005, May 15, 2007 and June 6, 2007,  are as follows:
[71]

1. Incentives under Book VI of EO 226 which includes the


following:
a. Corporate income tax holiday (ITH) for six (6) years for
pioneer project and four (4) years for non-pioneer
project effective on the committed date of start of
commercial operations or the actual date of start of
commercial operations, whichever is earlier; ITH
entitlement can also be extended but in no case to
exceed a total period of eight (8) years for pioneer
project and seven (7) years for non-pioneer project
provided specific criteria are met for each additional
year and prior PEZA approval is obtained. Duly
approved and registered 'Expansion' and 'New' projects
are entitled to a three-year, and four-year ITH,
respectively;
b. Tax and duty free importation of merchandise which
include raw materials, capital equipment, machineries
and spare parts;
c. Exemption from wharfage dues and export tax, impost or
fees;
d. VAT zero-rating of local purchases subject to compliance
with BIR and PEZA requirements; and
e. Exemption from payment of any and all local government
imposts, fees, licenses or taxes except real estate tax;
however, machineries installed and operated in the
ecozone for manufacturing, processing[,] or for
industrial purposes shall not be subject to payment of
real estate taxes for the first three (3) years of
operation of such machineries; production equipment
not attached to real estate shall be exempt from real
property taxes.[72]

All income that PeopleSupport derived from its registered


activities are "subject to such tax treatment as may be specified
in its terms of registration."  Apropos, all income that it earned
[73]

from rendering outsourced customer care and business process


outsourcing services during its registration with PEZA are entitled
to income tax holiday, and thus, are exempt from the payment of
regular corporate income tax under Section 27(A). Consequently,
they are not subject to the creditable withholding tax under
Section 57(B) of the National Internal Revenue Code of 1997, as
amended, and Section 2.57.2 of Revenue Regulations No. 2-98,
 as amended.
[74]

II (C)

Respondent contends that "business process outsourcing," in its


common use, refers to "the contracting out of operations and
responsibilities of specific business functions (or processes) to a
third-party service provider. Such functions are frequently
information-technology based and not limited to telemarketing
activities."
[75]

Respondent insists that it contracted out to PeopleSupport the


function of "maintaining and managing the infrastructure and
transmission facilities" provided by [PeopleSupport]."  It further
[76]

contends that "information technology infrastructure and support


services" is a business process, which it outsourced to
PeopleSupport. [77]

This is misleading.

Tax incentives under the Philippine Economic Zone Act of 1995


are granted to information technology service activities, which
refer to activities that involve the use of any information
technology software and/or system for value addition, as defined
in Board Resolution No. 00-411. These include "business
processes outsourced using e-commerce."

The Department of Trade and Industry defines "business process


outsourcing" as the "delegation of service-type business
processes to a third-party service provider."  In the Philippines,
[78]

this industry is generally divided into the following sectors: (1)


contact centers; (2) back office services; (3) data transcription;
(4) animation; (5) software development; (6) engineering
development; and (7) game development. [79]

Inbound and outbound voice operation services for sales,


customer service, and technical support comprise the contact
center sector. Back office services, or knowledge outsourcing,
refer to services related to finance, accounting, and human
resource administration.[80]

Providing information technology-enabled services is different


from providing information technology facilities, infrastructure, or
equipment. Service entails "useful labor or work rendered or to
be rendered by one person to another."  Information technology
[81]

facilities or infrastructures are the medium used to support the


business processes and functions of companies.

PeopleSupport's registered activity of rendering "business process


outsourcing services" refer to provision of information
technology-enabled services that support certain business
processes of its clients.

The Agreement between respondent and PeopleSupport pertains


to the provision of physical plant space, voice and data
infrastructure, all workstation infrastructure, and platform and
support for inbound telemarketing activities.  In his Dissenting
[82]

Opinion  to the Court of Tax Appeals July 15, 2013 Decision,
[83]

Presiding Justice Roman G. Del Rosario observed that


"respondent is not actually outsourcing its customer care
functions or business processes to [PeopleSupport]. Respondent's
own personnel shall actually perform the services using
[PeopleSupport]'s physical plant space, infrastructure[,] and
other transmission facilities."  Thus, the Agreement is essentially
[84]

a lease of facilities outside the latter's registered activities, and


thus, is not exempt from income tax.

PeopleSupport's leasing services to respondent are within the


scope of the activity of a facilities provider/enterprise. Tax
incentives that may be granted to an information technology
service enterprise  are different from tax incentives granted to
[85]

an information technology facilities provider/enterprise. [86]

PeopleSupport is registered with PEZA as an Economic Zone


Information Technology (Export) Enterprise, not an Information
Technology Facilities Provider/Enterprise. Incidentally, the
Registration Agreement states the scope of PeopleSupport's
registered activity, as follows:

Article II
Scope of Registrant's Registered Activity
2. The scope of the REGISTRANT's registered activity shall be
limited to the establishment of a contact center which will
provide outsourced customer care services and the
importation of machinery, equipment, tools, goods, wares,
articles, or merchandise directly used in its registered
operations at Asiatown IT Park. In the event the
REGISTRANT decides to engage in a new or additional
product line, directly or indirectly related to its registered
activity, it shall apply anew with PEZA for the latter's
approval.   (Emphasis supplied)
[87]

The Registration Agreement explicitly requires the approval anew


of the PEZA for new or additional activities of the registered
enterprise, even though the same may be directly or indirectly
related to its registered activity.

As Court of Tax Appeals Presiding Justice Del Rosario pointed out


in his Dissenting Opinion:

While Certification No. 2007-067 dated June 27, 2013 states that
[PeopleSupport] has a site in 6780 Ayala, there is nothing therein
that shows that the leasing activity conducted by [PeopleSupport]
in the 6780 Ayala site is registered with PEZA and entitled to
incentives. In my mind, respondent has the burden of proving by
preponderant evidence that [PeopleSupport] is registered with
PEZA as a facility-provider and that [PeopleSupport]'s income
from the lease of its physical plant space, infrastructure[,] and
other transmission facilities to respondent is entitled to the ITH
incentive.

Considering that respondent failed to establish that


[PeopleSupport] is registered with PEZA as a facility-provider and
that [PeopleSupport]'s income from the lease of physical plant
space, infrastructure[,] and other transmission facilities to
respondent is entitled to ITH incentive, it is my humble view that
the income received by PPI from respondent is subject to regular
corporate income tax imposed under Section 27(A) of the 1997
[National Internal Revenue Code], as amended. [88]

Tax incentives partake of the nature of tax exemptions. They are


a privilege to which the rule that tax exemptions must be strictly
construed against the taxpayer apply.  One who seeks an
[89]

exemption must justify it by words "too plain to be mistaken and


too categorical to be misinterpreted."
[90]

WHEREFORE, the Petition for Review on Certiorari


is GRANTED. The July 15, 2013 Decision and December 18, 2013
Resolution of the Court of Tax Appeals En Banc  in CTA EB No.
876 are SET ASIDE. Respondent's claim for refund is DENIED.

SO ORDERED.

Gesmundo, J. Reyes, Jr., and Hernando, JJ., concur.


Peralta, J., on official business.

February 6, 2019

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:

Please take notice that on November 28, 2018 a Decision, copy


attached hereto, was rendered by the Supreme Court in the
above-entitled case, the original of which was received by this
Office on February 6, 2019 at 9:35 a.m.
Very truly yours,

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court

[1]
 Rollo, pp. 36-55.

 Id. at 56-70. The Decision was penned by Associate Justice


[2]

Esperanza R. Fabon-Victorino and concurred in by Associate


Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P.
Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, and Amelia R.
Cotangco-Manalastas of the Court of Tax Appeals En Banc,
Quezon City. It was dissented by Presiding Justice Roman G. Del
Rosario (pp. 71-76). Associate Justice Ma. Belen M. Ringpis-Liban
inhibited.

 Id. at 77-79. The Resolution was penned by Associate Justice


[3]

Esperanza R. Fabon-Victorino and concurred in by Associate


Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P.
Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, and Amelia R.
Cotangco-Manalastas of the Court of Tax Appeals En Banc,
Quezon City. It was dissented by Presiding Justice Roman G. Del
Rosario. Associate Justice Ma. Belen M. Ringpis-Liban inhibited.

 Id. at 96-102. The Resolution, in the case docketed as CTA Case


[4]

No. 7962, was penned by Associate Justice Caesar A. Casanova


and concurred in by Associate Justices Juanito C. Castañeda, Jr.
and Cielito N. Mindaro-Grulla of the Second Division of the Court
of Tax Appeals, Quezon City.

 Id. at 110-113. The Resolution, in the case docketed as CTA


[5]

Case No. 7962, was penned by Associate Justice Caesar A.


Casanova and concurred in by Associate Justices Juanito C.
Castañeda, Jr. and Cielito N. Mindaro-Grulla of the Second
Division of the Court of Tax Appeals, Quezon City.
[6]
 Id. at 101-102.

[7]
 Id. at 57.

[8]
 Id. at 139, Comment.

[9]
 Id. at 57.

[10]
 Id. at 19-20.

[11]
 Id. at 57.

[12]
 Id. at 57-58.

[13]
 Id. at 58.

[14]
 Id.

[15]
 Id.

 Id. at 82-83, Court of Tax Appeals September 23, 2011


[16]

Decision.

[17]
 Id. at 58.

 Id. at 80-95. The Decision, docketed as CTA Case No. 7962,


[18]

was penned by Associate Justice Caesar A. Casanova and


concurred in by Associate Justices Juanito C. Castañeda, Jr. and
Cielito N. Mindaro-Grulla of the Second Division of the Court of
Tax Appeals, Quezon City.

[19]
 Id. at 87.

[20]
 Id. at 93.

[21]
 Id. at 94.
[22]
 Id. at 96-102.

[23]
 Id. at 101-102.

[24]
 Id. at 110-113.

[25]
 Id. at 56-70.

[26]
 Id. at 67.

[27]
 Id. 77-79.

[28]
 Id. at 128.

[29]
 Id. at 138-153.

[30]
 Id. at 171-186.

[31]
 Id. at 42.

[32]
 Id. at 44.

[33]
 Id. at 45-46.

[34]
 Id. at 47.

[35]
 Id. at 49.

[36]
 Id. at 143.

[37]
 Id. at 146.

[38]
 Id.

[39]
 Id.

[40]
 Id.
[41]
 Id. at 149.

[42]
 Id. at 150.

[43]
 Id. at 171-187.

[44]
 Id. at 173.

[45]
 Id. at 175.

[46]
 Id. at 178.

[47]
 Id. at 179.

[48]
 Id.

[49]
 Id. at 180.

[50]
 Id. at 182.

[51]
 744 Phil. 31 (2014) [Per J. Leonen, Second Division].

[52]
 Id. at 44.

[53]
 Republic Act No. 7918 (1995), sec. 1.

 Executive Order No. 226 (1987), sec. 39. The Omnibus


[54]

Investments Code of 1987.

 J. Leonen, Dissenting Opinion in Board of Investments v. SR


[55]

Metals, Inc., G.R. No. 219927, October 3, 2018, <


http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/october2018/219927.pdf> 7 [Per J. Del
Castillo, First Division].

 Revenue Regulations No. 20-2002 (2002). Clarifying the Tax


[56]

Treatment of Income Earned from Unregistered Activities by


Enterprises Registered under the Bases Conversion and
Development Act of 1992 and the Philippine Economic Zone Act of
1995.

[57]
 Revenue Regulations No. 20-2002 (2002), sec. 1.

 The Ruling was signed by Deputy Commissioner Jose Mario C.


[58]

Buñag on January 28, 2003.

 The Ruling was signed by Deputy Commissioner Jose Mario C.


[59]

Buñag on April 5, 2004.

 Bureau of Internal Revenue Ruling No. DA-209-06 was signed


[60]

by Officer-in-Charge Pablo M. Bastes, Jr. on April 5, 2006. In it,


the grant by Hitachi Cable Philippines, Inc. of a foreign currency
denominated loan to its affiliate was considered not related to its
registered activities.

 Bureau of Internal Revenue Ruling No. 320-11 was signed by


[61]

Commissioner of Internal Revenue Kim S. Jacinto-Henares on


August 22, 2011. In it, the investment of Our Lady of Mt. Carmel
Medical Center in a time deposit account was held an
unregistered business activity.

 Philippine Economic Zone Authority, Memorandum Circular No.


[62]

2005-032 (2005). Clarification of the Tax Treatment of (a) Gains


on Foreign Exchange Transactions; and, (b) Sales of Production
"Rejects" and "Seconds[,"] Scrap, Raw Materials, Packaging
Materials and Other Production Supplies.

 Philippine Economic Zone Authority, Memorandum Circular No.


[63]

2005-032 (2005).

 Activities
[64]
Eligible for PEZA Registration and
Incentives, Philippine Economic Zone Authority <
http://www.peza.gov.ph/index.php/eligible-activities-incentives>
(last accessed on November 28, 2018).
 Activities
[65]
Eligible for PEZA Registration and
Incentives, Philippine Economic Zone Authority (last accessed on
November 28, 2018).

 PEZA Board Resolution No. 00-411, Philippine Economic Zone


[66]

Authority, December 29, 2000 <


http://www.peza.gov.ph/issuances/guidelines/Guidelines_IT.pdf> 
(last accessed on November 28, 2018).

[67]
 Id.

[68]
 Id.

[69]
 Rollo,  p. 42.

[70]
 Id.

[71]
 Id. at 16.

[72]
 Id. at l6-17.

[73]
 Revenue Regulations No. 20-2002 (2002) sec. 1.

[74]
 Revenue Regulations No. 2-98 (1998), sec. 2.57.2.

[75]
 Rollo,  p. 146.

[76]
 Id.

[77]
 Id.

 BPO Industry  at a Glance, Senate, January 2010 <


[78]

https://senate.gov.ph/publications/AG%202010-01%20-%20BPO
%20Industry.pdf> (last accessed on November 19, 2018).

[79]
 Id.

[80]
 Id.
 Commissioner of  Internal  Revenue v. American Express 
[81]

International, Inc.,  500 Phil. 586, 598 (2005) [J. Panganiban,


Third Division].

[82]
 Rollo, pp. 19-20.

[83]
 Id. at 25-30.

[84]
 Id. at 29.

 Fiscal
[85]
Incentives to PEZA-Registered Economic Zone
Enterprises, http://www.peza.gov.ph/index.php/eligible-
activities-incentives/fiscal-incentives (last accessed on November
20, 2018).

[86]
 Id.

[87]
 Rollo, pp. 42-43.

[88]
 Id. at 30.

 PLDT v. City of Davao, 447 Phil. 571 (2003) [Per J. Mendoza,


[89]

En Banc]; Luzon Stevedoring Corp. v. Court of Tax Appeals, 246


Phil. 666 (1988) [Per J. Paras, Second Division].

 Sea-Land Service, Inc. v. Court of Appeals, 409 Phil. 508, 513


[90]

(2001) [Per J. Pardo, First Division] citing Commissioner of


Internal Revenue v. P. J. Kiener Co., Ltd., 160 Phil. 149 (1975)
[Per J. Martin, First Division].

Source: Supreme Court E-Library | Date created: March 07, 2019


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THIRD DIVISION

[ G.R. No. 229192, July 23, 2018 ]


MAGSAYSAY MOL MARINE,INC. AND/OR MOL
SHIP MANAGEMENT (SINGAPORE) PTE. LTD.,
PETITIONERS, VS. MICHAEL PADERES ATRAJE
RESPONDENT.DECISION

LEONEN, J.:

The third doctor rule does not apply when there is no final and
definitive assessment by the company-designated physicians.

This is a Petition for Review on Certiorari  against the Court of


[1]

Appeals August 5, 2016 Decision  and January 5, 2017


[2]

Resolution  in CA-G.R. SP No. 141333. The Court of Appeals


[3]

affirmed the May 15, 2015 Decision  of the Office of the Panel of
[4]

Voluntary Arbitrators of the National Conciliation and Mediation


Board granting Michael Paderes Atraje (Atraje) permanent total
disability benefits in the amount of US$95,949.00 and 10%
attorney's fees. It also denied Magsaysay Mol Marine, Inc.
(Magsaysay Mol) and Mol Ship Management (Singapore) Pte.
Ltd.'s (Mol Ship) Motion for Reconsideration.

The facts as narrated by the Court of Appeals are as follows:

On February 11, 2014, Atraje entered into a Contract of


Employment  with Mol Ship, through its local manning agent,
[5]

Magsaysay Mol, to work on board the vessel Carnation Ace as


Second Cook. The employment contract was for nine (9) months
with a basic monthly salary of US$599.00.  It was his seventh
[6]

(7 ) contract with the company.


th [7]
Atraje boarded the vessel on February 28, 2014. [8]

On March 4, 2014, at around noontime, Atraje slipped and fell


while holding a casserole containing water and sliced vegetables.
His head hit the stainless disposer and the floor. He had seizure
and lost his consciousness for about five (5) hours. The incident
was witnessed by the messman who was with him at that time.
 When the vessel reached Singapore on March 8, 2014, he was
[9]

brought to Singapore General Hospital,  where he underwent


[10]

brain magnetic resonance imaging (MRI), electroencephalogram


(EEG), and brain computed tomography (CT) scan. He was
diagnosed to have suffered Epileptic Seizure with post-fit
neurological deficit. He was declared unfit to work and
recommended to be repatriated. [11]

Atraje arrived in the Philippines on March 12, 2014, and was


referred to Shiphealth, Inc. (Shiphealth)  for further medical
[12]

evaluation and treatment. He was noted to have left-sided


hemiparesis. He underwent repeat brain CT scan,
electrocardiography (ECG), EEG, and brain MRI, which showed
normal results. He was advised to undergo physical therapy for
motor function and muscle strength improvements. [13]

Atraje likewise underwent cervical spine MRI showing "mild


desiccation at C3-4, C4-5, C5-6 with impression of mild cervical
spondylosis with multi-level disc disease." He was still advised to
undergo physical therapy. [14]

On April 4, 2014, Atraje was examined by an Orthopedic Spine


Surgeon wherein the assessment was Ossified Posterior
Longitudinal Ligament. He was advised to continue with the
physical therapy and oral medications for the next two (2) weeks,
and to undergo laminoplasty, C3-C6, if the left-sided weakness
persisted or worsened. [15]

On April 25, 2014, Shiphealth issued a medical report stating that


the Neurologist service's reassessment was single seizure
episode. There was no indication for Atraje to undergo further
diagnostic or treatment intervention neurology-wise. Hence,
Atraje was discharged from Neurology service, although referral
to Orthopedic Spine Surgery was recommended. [16]

On May 12, 2014, Atraje completed his 12 sessions of physical


therapy. However, persistence of gait instability and weakness on
his left side were still noted. Additionally, he reported intermittent
recurrences of lower back pain. [17]

Shiphealth opined that "the current symptoms of weakness and


spasticity of the left upper and lower extremities could be
secondary to the [Ossified Posterior Longitudinal
Ligament]."  Surgery was contemplated or, as an alternative,
[18]

physical therapy for an indefinite period of time. The company-


designated physicians further stated that the cervical Ossified
Posterior Longitudinal Ligament may be pre-existing. "However,
slight trauma to the neck may cause symptoms which may
qualify it as work-aggravated." [19]

Atraje continued to suffer from shoulder and neck pain, and had
difficulty in using his upper extremities. He complained of
tenderness on the paracervical area and was not restored to his
pre-injury health status. He consulted an independent specialist,
Dr. Manuel Fidel M. Magtira (Dr. Magtira), who issued on June 19,
2014 a Medical Report,  which stated that Atraje was
[20]

"permanently unfit in any capacity to resume his sea duties as a


seaman." [21]

On June 25, 2014 or 105 days from disembarkation, Shiphealth


issued an Interim Disability Grading  of Grade 10: "Head,
[22]

moderate paralysis of two (2) extremities producing moderate


difficulty in movements with self-care activities." [23]

Atraje was referred to Ygeia Medical Center, Inc. (Ygeia Medical


Center) for second opinion. In a letter  dated October 2, 2014,
[24]

Dr. Lourdes A. Quetulio (Dr. Quetulio), the Medical Director of


Ygeia Medical Center, stated that Atraje's illnesses, namely,
"Herniated Nucleus Pulposus L3-4, L4-5, LS-S1 with Spondylosis
and Radiculopathy, Bilateral Cervical Radiculopathy C5-C6 with
degenerative changes; and Carpal Tunnel Syndrome Left,
Moderate, are not work-related." [25]

Atraje sought payment of disability benefits from Magsaysay Mol


and Mol Ship, invoking Article 28 of the Collective Bargaining
Agreement  between All Japan Seamen's Union/Associated
[26]

Marine Officers' and Seamen's Union of the Philippines, and Mol


Ship, represented by Magsaysay Mol.  This Agreement is
[27]

otherwise known as the IBF JSU/AMOSUP-IMMAJ CBA. [28]

However, Atraje's demands proved futile. [29]

Thus, he filed a Complaint against Magsaysay Mol and Mol Ship


for payment of total and permanent disability benefits, damages,
and attorney's fees.[30]

On November 17, 2014, the parties agreed to terminate the


mediation and to convene a Voluntary Arbitration Panel. [31]

Not reaching an amicable settlement, the parties were directed to


submit their respective pleadings. [32]

In its May 15,2015 Decision,  the Panel of Voluntary Arbitrators


[33]

of the National Conciliation and Mediation Board awarded


disability benefits of US$95,949.00 plus 10% of this amount as
attorney's fees in favor of Atraje.  Finding that his injuries were
[34]

work-related, it held that there was sufficient evidence to


establish that he indeed suffered a fall while on board the ship,
which caused injury to his neck area and his wrist. However, pre-
existence of epileptic seizure has not been proven.  The Panel of [35]

Voluntary Arbiters further gave credence to the Grade 1


assessment of Atraje's physician over the company-designated
physician's interim assessment of Grade 10.  It further noted
[36]

that while Atraje initiated submitting to examination by a third


doctor, there was silence on the part of Magsaysay Mol and Mol
Ship. Hence, it held that Atraje could not be faulted anymore if
the appointment of a third physician was deemed waived in this
case. [37]

 
Magsaysay Mol and Mol Ship's subsequent Motion for
Reconsideration  was denied in the Panel of Voluntary Arbiters'
[38]

July 3, 2015 Resolution. [39]

Atraje filed a Motion for Execution,  which was granted by the [40]

Panel of Voluntary Arbitrators.  Magsaysay Mol and Mol Ship paid


[41]

Atraje the amount of US$95,949.00 plus 10% of this amount as


attorney's fees, without prejudice to the outcome of their Rule 65
petition before the Court of Appeals.  A Deed of Conditional [42]

Satisfaction of Judgment  dated September 24, 2015 was


[43]

executed between the parties and submitted to the National


Conciliation and Mediation Board. [44]

In its August 5, 2016 Decision  and January 5, 2017 Resolution,


[45]

 the Court of Appeals affirmed  the Panel of Voluntary


[46] [47]

Arbitrators' decision and denied  Magsaysay Mol and Mol Ship's


[48]

subsequent motion for reconsideration. [49]

On March 1, 2017, Magsaysay Mol and Mol Ship filed their


Petition for Review on Certiorari before this Court. [50]

Petitioners maintain that respondent is not entitled to permanent


total disability benefits because his illnesses are not work-related,
according to the letter of Dr. Quetulio on October 2, 2014.  They [51]

add that respondent's repatriation was not due to his alleged


accident but due to a single episode of seizure,  the cause of [52]

which was unknown per the medical report of the same company-
designated doctor.  Finally, petitioners argue that referral to a
[53]

third doctor in case of conflicting findings of the company-


designated doctor and the seafarer's personal doctor is
mandatory. Since respondent failed to comply with this
requirement, the assessment of the company-designated doctor
should prevail.[54]
In his Comment,  respondent counters that his medical
[55]

conditions are compensable under the governing Collective


Bargaining Agreement  and that the Court of Appeals did not err
[56]

in granting him permanent and total disability benefits.  The [57]

statements of Messman Francisco M. De Guzman (Messman De


Guzman)  and Chief Cook Alvin Bartolome (Chief Cook
[58]

Bartolome)  show clearly that respondent suffered an accidental


[59]

fall while on duty.  Respondent adds that petitioners have not


[60]

presented a Master's Report to prove their allegation that no


accident occurred that time.  Moreover, the Certification  of
[61] [62]

Capt. Igor Pisarenko (Capt. Pisarenko) that there was no record


of an accident involving respondent in the ship's official logbook is
not the best evidence of this fact; rather, it is the logbook itself.
 Respondent contends that "[p]etitioners' unjustifiable failure to
[63]

present the 'Carnation Ace' logbook is tantamount to willful


suppression of evidence, adverse to them if presented." [64]

Respondent further contends that Dr. Quetulio's October 2, 2014


letter relied upon by petitioners does not discount but even lends
support to his claim that his medical conditions are work-related.
 Dr. Quetulio's opinion that his injury is not work-related is
[65]

negated by the Grade 10 assessment given by the other


company-designated physicians at Shiphealth, which constituted
"an admission that [respondent's] disabling conditions are work-
related nothing less." [66]

Finally, respondent counters that non-referral to a third doctor is


not a drawback to his complaint. In the first place, the medical
assessment and opinion of the company-designated doctors were
not disclosed to him. He came to know about them only after his
complaint had been filed. As of April 21, 2014, the company
stopped providing for his treatment and he was, since then, left
on his own. He could not have complied with the third doctor rule
since he was not given any assessment by the company-
designated physicians even after his treatment had been
supposedly terminated. If at all, it was petitioners who committed
a breach of contract by withholding and concealing his medical
records.[67]
This Court resolves the issue of whether or not the Court of
Appeals erred in affirming the award of permanent and total
disability benefits in favor of respondent Michael Paderes Atraje.

This Court denies the Petition.

Petitioners insist that respondent's illnesses are not work-related.


They anchor their position on Dr. Quetulio's declaration in her
October 2, 2014 letter that without any past medical results or
examinations, it was difficult to trace the causes of the illnesses,
thereby concluding that they were not work-related. [68]

However, the same letter relied upon by petitioners likewise


acknowledged that "Herniated Nucleus Pulposus is considered
work-related if there is history of trauma or carrying of heavy
objects. Carpal Tunnel Syndrome is considered work-related if
there is history of repetitive movement of the involved
wrist/hand."  Shiphealth's earlier report also declared that a
[69]

"slight trauma to the neck may cause symptoms which may


qualify [respondent's injuries] as work[-]aggravated." [70]

In this case, it has been established that there was history of


trauma at work involving respondent while on board the vessel.
The Panel of Voluntary Arbitrators held that substantial
evidence  exists showing that respondent indeed suffered a fall
[71]

while on board the ship, which caused injury to his neck area and
his wrist.
[E]xtant from the uncontested statement of Chief Cook Alvin
Bartolome, that he together with Messman De Guzman saw
[respondent] had a sudden fall which incident they immediately
reported to their superiors . . . [W]hen [respondent] regained his
consciousness, he was asked why and he answered that he was
not able to sleep due to the noise of the air-conditioning unit in
his cabin.
Such recorded event of [respondent] having suffered a fall and/or
lost consciousness while in the course of performing duties as
Second Cook aboard has gained prominence as the starting point
of the medical condition . . .

It does not require a rocket scientist to ascertain the fact that a


person who suffers from lack of or without sleep has weakened
systems with tendency to pass out and/or prone to accident.
Hence, the sudden fall experienced by [respondent] at work
which resulted to the disabling injury on his neck area and
aggravated by the injury on his wrist otherwise known as Carpal
Tunnel Syndrome. [72]

The Panel of Voluntary Arbitrators further found no evidence to


prove that respondent's condition "merely arose from wear and
tear or degeneration,"  or that he was suffering from a
[73]

preexistent illness.
[74]

These factual findings of the Panel of Voluntary Arbitrators, which


were affirmed by the Court of Appeals, are binding and will not be
disturbed absent any showing that they were made arbitrarily or
were unsupported by substantial evidence. [75]

Petitioners would insist, however, that there was no accident


involving respondent. They point to the Certification of Capt.
Pisarenko, which stated as follows:
CERTIFICATION

I, Capt. Igor Pisarenko, am the custodian of the logbook of the


ship Carnation Ace. The ship's logbook is a repository of all the
ship's activities, including incidents of accidents or injuries
onboard. I do certify that upon review of the ship's official
logbook, there appears no record of an accident involving Mr.
Michael P. Atraje.

Mr. Michael P. Atraje was engaged as 2  Cook onboard Carnation


nd

Ace from 28 February 2014 until 08 March 2014. [76]

This Court is not persuaded.


As a rule, a Rule 45 review by this Court in labor cases does not
delve into factual questions or to an evaluation of the evidence
submitted by the parties.  This Court is tasked to merely
[77]

determine the legal correctness of the Court of Appeals'


conclusion that found no grave abuse of discretion on the part of
the Panel of Voluntary Arbitrators in awarding full disability
benefits to respondent.  Even so, this Court finds Capt.
[78]

Pisarenko's Certification proffered by petitioners insufficient to


prove their claim that Atraje did not incur an accident.

Capt. Pisarenko's Certification lacks probative value. First, it was


not authenticated by Philippine consular officials. Second, the
vessel's logbook, which is the official repository of the daily
transactions and occurrences on board the vessel,  is the best
[79]

evidence of its contents.  In Haverton Shipping Ltd. v. NLRC,


[80]

 this Court declared that entries made in the vessel's logbook,


[81]

when "made by a person in the performance of a duty required


by law[,] are prima facie evidence of the facts stated [in
it]."  However, the logbook itself or authenticated copies of
[82]

pertinent pages of it must be presented and not merely


"typewritten excerpts from the 'logbook' [that] have no probative
value at all."[83]

In C.F. Sharp Crew Management, Inc. v. Legal Heirs of Repiso,


 this Court rejected an employer's claim that a seafarer was
[84]

merely repatriated at a convenient port and not due to medical


illness, and held:
The burden was thus shifted to petitioners to prove that
Godofredo was only repatriated at a convenient port. However,
aside from their bare allegations, petitioners did not present any
other proof of their purported reason for Godofredo's repatriation.
Petitioners explain that they no longer presented in evidence the
ship's logbook or master's report since Godofredo did not
complain of or suffer any illness on board M/T Umm Al Lulu,
hence, there was no such entry in the ship's logbook or any
master's report of such incident. The Court notes though that
petitioners had possession of and access to all logbooks
and records of M/T Umm Al Lulu, and presentation of the
said logbooks and records would have been material to
prove the actual absence of any entry or report regarding
Godofredo's health while he was on board. Moreover, it is
difficult to believe that petitioners had absolutely no log entry or
record regarding Godofredo's repatriation, whether for medical or
any other reason. Godofredo could not have disembarked from
M/T Umm Al Lulu without express authority or consent from the
master of the ship or petitioners as Godofredo's employers, and
such authority or consent would have most likely stated the
justifying cause for the same. That petitioners did not present
such logbooks and records even gives rise to the
presumption that something in said logbooks and records
is actually adverse to petitioners' case.  (Emphasis supplied)
[85]

Petitioners should have presented the vessel's logbook instead of


a mere unauthenticated Certification of a certain Capt. Pisarenko,
who was not even shown to be the ship captain during
respondent's employment. Moreover, even if no record of the
accident is reflected in the logbook, this does not constitute
conclusive proof that it did not happen, especially in light of the
positive declarations of Chief Cook Bartolome and Messman De
Guzman that respondent suffered a fall while at work.

To be compensable, reasonable proof of work-connection, not


direct causal relation, is sufficient. "Thus, probability, not the
ultimate degree of certainty, is the test of proof in compensation
proceedings."  This Court agrees with the Panel of Voluntary
[86]

Arbitrators and the Court of Appeals that respondent's illnesses


are work-related.

II

Neither did the Court of Appeals err in affirming the Panel of


Voluntary Arbitrators' award of permanent total disability
benefits.

The facts of this case show that respondent was never issued any
medical assessment or progress report by the company-
designated physicians, from his initial check up on March 13,
2014  until his last consultation on October 2, 2014, spanning a
[87]

total of 204 days. Neither the interim disability rating issued on


June 25, 2014 nor Dr. Quetulio's letter dated October 2, 2014
was given to respondent. In fact, respondent came to know about
the reports only after his Complaint had been filed with the
National Conciliation and Mediation Board. By legal
contemplation, Atraje's disabilities are conclusively presumed to
be permanent and total. [88]

Under the Philippine Overseas Employment Administration-


Standard Employment Contract (POEA-SEC), it is the primary
responsibility of the company-designated doctor to determine the
disability grading or fitness to work of seafarers.  To be [89]

conclusive, however, the medical assessment or report of the


company-designated physician must be complete  and[90]

definite  to give the seafarer proper disability benefits. As


[91]

explained by this Court:


A final and definite disability assessment is necessary in
order to truly reflect the true extent of the sickness or injuries of
the seafarer and his or her capacity to resume work as such.
Otherwise, the corresponding disability benefits awarded might
not be commensurate with the prolonged effects of the injuries
suffered.  (Emphasis in the original)
[92]

Furthermore, while the assessment of the company-designated


physician vis a vis the schedule of disabilities under the POEA-
SEC is the basis for compensability of a seafarer's disability, it is
still subject to the periods prescribed in the law.
[93]

Article 192(c)(l) of the Labor Code provides that temporary total


disability lasting continuously for more than 120 days, except as
otherwise provided in the Implementing Rules or the Amended
Rules on Employee Compensation of Title II, Book IV of the Labor
Code, shall be deemed total and permanent. Rule X, Section 2(a)
of the Amended Rules on Employee Compensation in turn
provides that:
Section 2. Period of entitlement. - (a) The income benefit shall be
paid beginning on the first day of such disability. If caused by an
injury or sickness it shall not be paid longer than 120 consecutive
days except where such injury or sickness still requires
medical attendance beyond 120 days but not to exceed
240 days from onset of disability in which case benefit for
temporary total disability shall be paid. However, the System
may declare the total and permanent status at any time after 120
days of continuous temporary total disability as may be
warranted by the degree of actual loss or impairment of physical
or mental functions as determined by the System.  (Emphasis
[94]

supplied)
In Talaroc v. Arpaphil Shipping Corp.,  this Court summarized
[95]

the rules regarding the duty of the company-designated physician


in issuing a final medical assessment, as follows:
1. The company-designated physician must issue a final
medical assessment on the seafarer's disability grading
within a period of 120 days from the time the seafarer
reported to him;
2. If the company-designated physician fails to give his
assessment within the period of 120 days, without any
justifiable reason, then the seafarer's disability becomes
permanent and total;
3. If the company-designated physician fails to give his
assessment within the period of 120 days with a sufficient
justification (e.g, seafarer required further medical
treatment or seafarer was uncooperative), then the period of
diagnosis and treatment shall be extended to 240 days. The
employer has the burden to prove that the company-
designated physician has sufficient justification to extend the
period; and
4. If the company-designated physician still fails to give his
assessment within the extended period of 240 days, then
the seafarer's disability becomes permanent and total,
regardless of any justification.
[96]

Here, the company-designated physicians clearly breached their


duty to provide a definite assessment of respondent's condition.
While the records show that reports were regularly issued to
update respondent's medical condition, the particular treatment
administered, and the medicines prescribed to him, they were
correspondences between the company-designated physicians
and petitioners only. There was no indication that respondent was
furnished these reports.

Significantly, the interim disability rating of Grade 10 issued on


June 25, 2014, or 105 days from respondent's repatriation, was
never given to respondent. Also, as an interim disability grade, it
does not fully assess respondent's condition and cannot provide
sufficient basis for the award of disability benefits in his favor. In
fact, the company doctors recommended that respondent
undergo MRI of the lumbosacral spine  and surgery. Respondent
[97]

was, instead, referred by petitioners to Ygeia Medical Center for a


second medical opinion.

Dr. Quetulio's October 2, 2014 letter, on the other hand, stated


that "without any past medical results or examinations from Mr.
Atraje, . . . it would be difficult to trace the cause of the illnesses.
Therefore, concluding, that Mr. Atraje's illnesses are not work-
related."  This report lacked a final assessment of respondent's
[98]

medical condition, of his disability, or of his fitness to work. On


the contrary, it is noted from the report that physical therapy was
recommended by the Neuro-Psychiatrist for further management
of respondent's condition. Similar to the June 25, 2014 interim
disability rating, respondent also did not have a copy of this
report.

Through all his check-ups and tests, respondent did not receive
any medical assessment of his fitness to resume work from the
company-designated physicians. Respondent's shoulder and neck
pain persisted such that he was forced to consult an independent
physician, Dr. Magtira. After evaluating respondent's previous
MRI and physical examination, and after giving a brief description
of respondent's disease, Dr. Magtira issued his Medical Report on
June 19, 2014. He stated that respondent "should refrain from
activities producing torsional stress on the back and those that
require repetitive bending and lifting"  and that his work
[99]

activities must be restricted. He further stated that respondent


does not have the physical capacity to return to his previous work
and is "permanently unfit in any capacity to resume his sea
duties."[100]

Evidently, his illnesses disabled him to continue his job on board


the vessel. Despite medication and physical therapy, he was not
restored to his pre-injury health status.  Moreover, there was no
[101]

declaration from the company-designated doctors about his


fitness to return to work, while his own physician advised him to
refrain from undergoing strenuous activities.

This Court has held that:


[P]ermanent total disability does not mean a state of absolute
helplessness but the inability to do substantially all material acts
necessary to the prosecution of a gainful occupation without
serious discomfort or pain and without material injury or danger
to life. In disability compensation, it is not the injury per se which
is compensated but the incapacity to work. [102]

Respondent's inability to perform his customary sea duties,


coupled with the company-designated physicians' abdication of
their primary duty to declare his fitness or unfitness to work
within the prescribed period, transforms his disability to
permanent and total by operation of law. [103]

III

Finally, petitioners' contention on non-compliance with the third


doctor rule is untenable.

Under Section 20(A)(3)  of the 2010 POEA-SEC, "If a doctor


[104]

appointed by the seafarer disagrees with the  assessment, a


third doctor may be agreed jointly between the Employer and the
seafarer. The third doctor's decision shall be final and binding on
both parties."  The assessment refers to the declaration of
[105]

fitness to work or the degree of disability, as can be gleaned from


the first paragraph of Section 20(A)(3). It presupposes that the
company-designated physician came up with a valid, final, and
definite assessment on the seafarer's fitness or unfitness to work
before the expiration of the 120- or 240-day period. [106]
In this case, the third doctor-referral provision does not apply
because there is no definite disability assessment from the
company-designated physicians. [107]

In Kestrel Shipping Co., Inc. v. Munar: [108]

In addition, that it was by operation of law that brought forth the


conclusive presumption that Munar is totally and permanently
disabled, there is no legal compulsion for him to observe the
procedure prescribed under Section 20-B (3) of the POEA-SEC. A
seafarer's compliance with such procedure presupposes
that the company-designated physician came up with an
assessment as to his fitness or unfitness to work before
the expiration of the 120-day or 240-day periods.
Alternatively put, absent a certification from the company-
designated physician, the seafarer had nothing to contest
and the law steps in to conclusively characterize his
disability as total and permanent.  (Emphasis supplied)
[109]

Respondent was kept in the dark about his medical condition. It is


the height of unfairness, bordering on bad faith, for petitioners to
demand from respondent compliance with the third doctor rule
when they and their designated physicians, in the first place, did
not fulfill their obligations under the law and the POEA-SEC.
Given the company-designated physicians' inaction or failure to
disclose respondent's medical progress, the extent of his
illnesses, and their effect on his fitness or disability, respondent
was justified in seeking the medical expertise of the physician of
his choice.

In Sharpe Sea Personnel, Inc. v. Mabunay, Jr.,  a company's


[110]

belated release of the disability rating and its attempt to discredit


the findings of a seafarer's doctor for non-compliance with the
third doctor rule was considered by this Court as acts of bad faith,
which justified the award of damages in favor of the seafarer. It
held:
By not timely releasing Dr. Cruz's interim disability grading,
petitioners revealed their intention to leave respondent in the
dark regarding his future as a seafarer and forced him to seek
diagnosis from private physicians. Petitioners' bad faith was
further exacerbated when they tried to invalidate the findings of
respondent's private physicians, for his supposed failure to move
for the appointment of a third-patty physician as required by the
POEA-SEC, despite their own deliberate concealment of their
physician's interim diagnosis from respondent and the labor
tribunals. Thus, this Court concurs with the Court of Appeals
when it stated:
We also grant petitioner's prayer for moral and exemplary
damages. Private respondents acted in bad faith when they
belatedly submitted petitioner's Grade 8 disability rating only via
their motion for reconsideration before the [National Labor
Relations Commission]. By withholding such disability rating from
petitioner, the latter was compelled to seek out opinion from his
private doctors thereby causing him mental anguish, serious
anxiety, and wounded feelings, thus, entitling him to moral
damages of P50,000.00. Too, by way of example or correction for
the public good, exemplary damages of P50,000.00 is awarded. [111]

In this case, however, respondent no longer questioned the


denial of his claims for moral and exemplary damages. Neither
did he raise before the Court of Appeals or this Court the issue of
whether he was entitled to these damages. Instead, he sought
the execution of the Panel of Voluntary Arbitrators' May 15, 2015
Decision while petitioners' Rule 65 petition was pending before
the Court of Appeals. Hence, this matter will no longer be tackled
here.

Furthermore, as noted by the Panel of Voluntary Arbitrators, non-


referral of the case to a third doctor was attributable to
petitioners. For while respondent initiated to be submitted to
examination by a third doctor, there was silence on the part of
petitioners,  who did not respond by setting into motion the
[112]

process of choosing a third doctor who could rule with finality the
disputed medical situation.[113]

Lastly, petitioners were adamant in their position that


respondent's disabling medical conditions are not work-related.
The third doctor rule covers only conflicting medical findings on
the fitness to work or degree of disability. It does not cover the
determination of whether the disability is work-related or not. As
this Court held in Leonis Navigation Co. v. Obrero: [114]

[U]nder Section 20 (B) (3) of the POEA-SEC, referral to a third


physician in case of contrasting medical opinions (between the
company-designated physician and the seafarer-appointed
physician) is a mandatory procedure that must be expressly
requested by the seafarer. As a consequence of the provision, the
company can insist on its disability rating even against a contrary
opinion by another physician, unless the seafarer signifies his
intent to submit the disputed assessment to a third physician. We
clarify, however, that Section 20 (B) (3) refers only to the
declaration of fitness to work or the degree of
disability. It  does not cover the determination of whether the
disability is work-related. There is nothing in the POEA-SEC which
mandates that the opinion of the company-designated physician
regarding work-relation should prevail or that the determination
of such relation be submitted to a third physician.  (Emphasis in
[115]

the original, citation omitted)


Under the circumstances of this case, non-referral to a third
doctor will not prejudice respondent's claim.

The rigorous process for disability claims prescribed in the POEA


SEC seeks a balance between a seafarer's right to receive a just
compensation for his or her injuries  and an employer's interest
[116]

to determine the veracity of disability claims against it. In line


with this policy, the third doctor rule was added to enable the
parties to expeditiously settle disability claims  in case of conflict
[117]

between the findings of the company-designated physicians and


the seafarer's doctor. It was not to be construed to mean that "it
is only the company-designated physician who could assess the
condition and declare the disability of seamen."  Certainly, it
[118]

cannot be used by employers to limit or defeat the legitimate


claims of seafarers.

WHEREFORE, the Petition is DENIED. The Court of Appeals


August 5, 2016 Decision and January 5, 2017 Resolution in CA-
G.R. SP No. 141333 are AFFIRMED.
SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo,


JJ., concur.

[1]
 Rollo, pp. 29-64; Filed under Rule 45.

 Id. at 10-21. The Decision was penned by Associate Justice


[2]

Fiorito S. Macalino and concurred in by Associate Justices Mariflor


P. Punzalan Castillo and Zenaida T. Galapate-Laguilles of the
Tenth Division, Court of Appeals, Manila.

 Id. at 24-25. The Resolution was penned by Associate Justice


[3]

Fiorito S. Macalino and concurred in by Associate Justices Mariflor


P. Punzalan Castillo and Zenaida T. Galapate-Laguilles of the
Tenth Division, Court of Appeals, Manila.

 Id. at 131-153. The Decision, docketed as AC-691-RCMB-NCR-


[4]

MVA-129-08-11-2014, was signed by Chairman Cenon Wesley P.


Gacutan and Members Gregorio C. Biares, Jr. and Generoso T.
Mamaril.

[5]
 Id. at 178.

[6]
 Id. at 11 & 32.

[7]
 Id. at 132.

[8]
 Id. at 11.

[9]
 Id.

[10]
 Id. at 33.

[11]
 Id. at 11.
[12]
 Id. at 291.

[13]
 Id. at 12.

[14]
 Id.

[15]
 Id. at 12 and 299.

[16]
 Id. at 12 and 301.

[17]
 Id. at 12.

[18]
 Id. at 12 and 304.

[19]
 Id.

[20]
 Id. at 238-239.

[21]
 Id. at 13.

[22]
 Id. at 306.

[23]
 Id. at 13.

[24]
 Id. at 307-308.

[25]
 Id. at 13.

[26]
 Id.

[27]
 Id. at 179-229.

[28]
 Id. at 132.

[29]
 Id. at 13.

[30]
 Id.
[31]
 Id.

[32]
 Id. at 14 and 410.

[33]
 Id. at 131-153.

[34]
 Id. at 153.

[35]
 Id. at 149.

[36]
 Id. at 151.

[37]
 Id. at 152.

[38]
 Id. at 391-409.

[39]
 Id. at 129.

[40]
 Id. at 411-413.

[41]
 Id. at 36 and 81.

[42]
 Id. at 81.

[43]
 Id. at 84-86.

[44]
 Id. at 81-83.

[45]
 Id. at 10-21.

[46]
 Id. at 24-25.

[47]
 Id. at 20.

[48]
 Id. at 25.

[49]
 Id. at 440-465.
[50]
 Id. at 29.

[51]
 Id. at 40 and 46-47.

[52]
 Id. at 41.

[53]
 Id. at 45.

[54]
 Id. at 58.

[55]
 Id. at 482-507.

[56]
 Id. at 497.

[57]
 Id. at 488-489.

[58]
 Id. at 230-231, 370.

[59]
 Id. at 371.

[60]
 Id. at 489-490.

[61]
 Id. at 491.

[62]
 Id. at 389.

[63]
 Id. at 491-492.

[64]
 Id. at 491.

[65]
 Id. at 493.

[66]
 Id. at 496.

[67]
 Id. at 499-500.

[68]
 Id. at 308.
[69]
 Id. at 308.

[70]
 Id. at 304.

[71]
 Id. at 150.

[72]
 Id. at 148-149.

[73]
 Id. at 148.

[74]
 Id. at 149.

 Centennial Transmarine, Inc. v. Quiambao, G.R. No. 198096,


[75]

July 8, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2015/july2015/198096.pdf> [Per J. Del
Castillo, Second Division]; Dela Rosa v. Michaelmar Philippines,
Inc., 664 Phil. 154 (2011) [Per J. Nachura, Second
Division]; Merin v. National Labor Relations Commission, 590
Phil. 596 (2008) [Per J. Tinga, Second Division]; DMA Shipping
Philippines v. Cabillar, 492 Phil. 631 (2005) (Per J. Callejo, Sr.,
Second Division]; Stolt-Nielsen Marine Services, Inc. v. National
Labor Relations Commission, 360 Phil. 881 (1998) [Per J.
Romero, Third Division].

[76]
 Rollo, p. 389.

 Perea v. Elburg Shipmanagement Philippines, Inc., G.R. No.


[77]

206178, August 9, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/august2017/206178.pdf> [Per J.
Leonen, Third Division]; Cootauco v. MMS Phil. Maritime Services,
Inc., 629 Phil. 506 (2010) [Per J. Perez, Second Division].

 See Jebsen Maritime, Inc. v. Ravena, 743 Phil. 371 (2014) [Per
[78]

J. Brion, Second Division]; Javier v. Philippine Transmarine


Carriers, Inc., 738 Phil. 374 (2014) [Per J. Brion, Second
Division]; Reyes & Lim Co., Inc. v. National Labor Relations
Commission, 278 Phil. 761 (1991) [Per J. Medialdea, First
Division].

 Transglobal Maritime Agency, Inc. v. Chua, Jr., G .R. No.


[79]

222430, August 30, 2017


<http://sc.judiciary.gov.ph/jurisprudence/2008/october2008/172
800.htm> [Per J. Peralta, Second Division].

 See Centennial Transmarine, Inc. v. De/a Cruz, 585 Phil. 206


[80]

(2008); Wallem Maritime Services, Inc. v. NLRC, 331 Phil. 476


(1996) [Per J. Romero, Second Division]; Abacast Shipping and
Management Agency, Inc. v. National Labor Relations
Commission, 245 Phil. 487 (1988) [Per J. Cruz, First Division].

[81]
 220 Phil. 356 (1985) [Per J. Melencio-Herrera, First Division].

[82]
 Id. at 362-363.

 Wallem Maritime Services, Inc. v. NLRC, 331 Phil. 476, 489


[83]

(1996) [Per J. Romero, Second Division].

 G.R.
[84]
No. 190534, February 10, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/february2016/190534.pdf> [Per J.
Leonardo-De Castro, First Division].

[85]
 Id. at 20-21.

 Magat v. Interorient Maritime Enterprises, Inc., G.R. No.


[86]

232892, April 4, 2018


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2018/april2018/232892.pdf> 7 [Per J.
Peralta, Second Division]; Leonis Navigation Co., Inc. v. Obrero,
G.R. No. 192754, September 7, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/september2016/192754.pdf> [Per J.
Jardeleza, Third Division]; Leonis Navigation Co., Inc. v.
Villamater, 628 Phil. 81 (2010) [Per J. Nachura, Third Division].
[87]
 Rollo, p. 33.

 Cutanda v. Marlow Navigation Phils., Inc., G.R. No. 219123,


[88]

September 11, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/september2017/219123.pdf> [Per J.
Peralta, Second Division]; Tamin v. Magsaysay Maritime Corp.,
G.R. No. 220608, August 31, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/august2016/220608.pdf> [Per J.
Velasco, Jr., Third Division]; Fair Shipping Corp. v. Medel, 693
Phil. 516 (2012) [Per J. Leonardo-De Castro, First Division].

 OSG Ship Management Manila, Inc. v. Monje, G.R. No. 214059,


[89]

October 11, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/october2017/214059.pdf> [Per J.
Reyes, Jr., Second Division]; Magsaysay Maritime Corp. v.
Velasquez, 591 Phil. 839 (2008) [Per J. Leonardo-De Castro, First
Division].

 Olidana v. Jebsens Maritime, Inc., G.R. No. 215313, October


[90]

21, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2015/october2015/215313.pdf> [Per J.
Mendoza, Second Division].

 Sunit v. OSM Maritime Services, Inc., G.R. No. 223035,


[91]

February 27, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/223035.pdf> [Per J.
Velasco, Jr., Third Division].

[92]
 Id. at 10.

 Carcedo v. Maine Marine Philippines, Inc., 758 Phil. 166 (2015)


[93]

[Per J. Carpio, Second Division].


 Amended Rules on Employees' Compensation, Rule X, Sec. 2
[94]

<http://ecc.gov.ph/wp-
content/uploads/2015/09/Booklet_Amended_Rules_on
_EC_2014.pdf>.

 G.R.
[95]
No. 223731, August 30, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/august2017/223731.pdf> [Per J.
Perlas-Bernabe, Second Division]. See also Oidana v. Jebsens
Maritime, Inc., G.R. No. 215313, October 21, 2015
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/october2015/215313.pdf> [Per J.
Mendoza, Second Division]; and Sunit v. OSM Maritime Services,
Inc., G.R. No. 223035, February 27, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/february2017/223035.pdf> [Per J.
Velasco, Jr., Third Division].

[96]
 Id. at 9.

 Rollo, p. 301 (April 25, 2014 Medical Report No. 5), 302 (May
[97]

12, 2014 Medical Report No. 6), and 305 (June 25, 2014 Medical
Report No.8).

[98]
 Id. at 308.

[99]
 Id. at 239.

[100] Id.

[101]
 Id. at 73.

 Olidana v. Jebsens Maritime, Inc., G.R. No. 215313, October


[102]

21, 2015 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2015/october2015/215313.pdf> 8 [Per J.
Mendoza, Second Division].
 Tamin v. Magsaysay Maritime Corp., G.R. No. 220608, August
[103]

31, 2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.htm?


file=/jurisprudence/2016/august2016/220608.pdf> [Per J.
Velasco, Jr., Third Division]; Carcedo v. Maine Marine Philippines,
Inc., 758 Phil. 166 (2015) [Per J. Carpio, Second Division].

[104]
 Section 20. Compensation and Benefits

A. Compensation and Benefits for Injury or Illness

The liabilities of the employer when the seafarer suffers work-


related injury or illness during the term of his contract are as
follows:

....

3. In addition to the above obligation of the employer to provide


medical attention, the seafarer shall also receive sickness
allowance from his employer in an amount equivalent to his basic
wage computed from the time he signed off until he is declared tit
to work or the degree of disability has been assessed by the
company-designated physician. The period within which the
seafarer shall be entitled to his sickness allowance shall not
exceed 120 days. Payment of the sickness allowance shall be
made on a regular basis, but not less than once a month.

The seafarer shall be entitled to reimbursement of the cost of


medicines prescribed by the company-designated physician. In
case treatment of the seafarer is on an out-patient basis as
determined by the company-designated physician, the company
shall approve the appropriate mode of transportation and
accommodation. The reasonable cost of actual traveling expenses
and/or accommodation shall be paid subject to liquidation and
submission of official receipts and/or proof of expenses.

For this purpose, the seafarer shall submit himself to a post-


employment medical examination by a company-designated
physician within three working days upon his return except when
he is physically incapacitated to do so, in which case, a written
notice to the agency within the same period is deemed as
compliance. In the course of the treatment, the seafarer shall
also report regularly to the company-designated physician
specifically on the dates as prescribed by the company-
designated physician and agreed to by the seafarer. Failure of the
seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above
benefits.

If a doctor appointed by the seafarer disagrees with the


assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctor's decision shall be
final and binding on both parties.

 POEA Memo. Circ. No. 010-10 (2010), Sec. 20 (A)(3),


[105]

Amended Standard Terms and Conditions Governing the


Overseas Employment of Filipino Seafarers On-Board Ocean-
Going Ships,
<http://www.poea.gov.ph/memorandumcirculars/2010/10.pdf>.

 Saso v. 88 Aces Maritime Service, Inc., (Resolution), 770 Phil.


[106]

677 (2015) [Per J. Del Castillo, Second Division] citing C.F. Sharp


Crew Management, Inc. v. Taok, 691 Phil. 521 (2012) [Per J.
Reyes, Second Division].

 Tamin v. Magsaysay Maritime Corp., G.R. No. 220608, August


[107]

31, 2016 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?


file=/jurisprudence/2016/august2016/220608.pdf> [Per J.
Velasco, Jr., Third Division]; Carcedo v. Maine Marine Philippines,
Inc., 758 Phil. 166 (2015) [Per J. Carpio, Second Division]. See
also De Andres v. Diamond H Marine Services & Shipping Agency,
Inc., G.R. No. 217345, July 12, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/217345.pdf> [Per J. Mendoza,
Second Division]; Apines v. Elburg Shipmanagement Philippines,
Inc., G.R. No. 202114, November 9, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/november2016/202114.pdf> [Per J.
Reyes, Third Division].

[108]
 702 Phil. 717 (2013) [Per J. Reyes, First Division].

[109]
 Id. at 737-738.

 G.R.
[110]
No. 206113, November 6, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/november2017/206113.pdf> (Per J.
Leonen, Third Division].

[111]
 Id. at 16.

[112]
 Rollo, p. 152.

 INC Shipmanagement, Inc. v. Rosales, 744 Phil. 774 (2014)


[113]

[Per J. Brion, Second Division] citing Bahia Shipping Services,


Inc. v. Constantino, 738 Phil. 564 (2014) [Per J. Brion, Second
Division].

 G.R.
[114]
No. 197254, September 7, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/september2016/192754.pdf> [Per J.
Jardeleza, Third Division].

[115]
 Id. at 9.

 De Andres v. Diamond H Marine Services & Shipping Agency,


[116]

Inc., G.R. No. 217345, July 12, 2017


<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/july2017/217345.pdf> [Per J. Mendoza,
Second Division].

 Philippine Hammonia Ship Agency, Inc. v. Dumadag, 712 Phil.


[117]

507 (2013) [Per J. Brion, Second Division].


 Magsaysay Maritime Services v. Laurel, 707 Phil. 210 (2013)
[118]

[Per J. Mendoza, Third Division].

Source: Supreme Court E-Library | Date created: November 08, 2018


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THIRD DIVISION

G.R. No. 208396, March 14, 2018

ARIEL A. EBUENGA, Petitioner, v. SOUTHFIELD AGENCIES, INC., WILHEMSEN


SHIP MANAGEMENT HOLDING LTD., AND CAPT. SONNY
VALENCIA, Respondents.

DECISION

LEONEN, J.:

This Court is duty-bound to respect the consistent prior findings of the Labor
Arbiter, of the National Labor Relations Commission, and of the Court of Appeals. It
must be cautious not to substitute its own appreciation of the facts to those of the
tribunals which have previously weighed the parties' claims and personally perused
the evidence. It will not discard consistent prior findings and award disability
benefits to a seafarer who fails to adduce even an iota of evidence, let alone
substantial evidence, and fails to draw a causal connection between his or her
alleged ailment and working conditions.This resolves a Petition for Review on
Certiorari  under Rule 45 of the 1997 Rules of Civil Procedure, praying that the April
1

29, 2013 Decision  and July 26, 2013 Resolution  of the Court of Appeals in CA-G.R.
2 3

SP No. 126939 be reversed and set aside.The assailed Court of Appeals April 29,
2013 Decision affirmed the June 29, 2012 Decision  of the National Labor Relations
4

Commission which, in turn, affirmed Labor Arbiter Lilia S. Savari's (Labor Arbiter
Savari) October 12, 2011 Decision,  dismissing Ariel A. Ebuenga's (Ebuenga)
5

complaint  for permanent disability benefits. The assailed Court of Appeals July 26,
6

2013 Resolution  denied Ebuenga's Motion for Reconsideration.Ebuenga was hired


7

by Southfield Agencies, Inc. (Southfield) as a chief cook aboard respondent


Wilhemsen Ship Management Holding Ltd.'s (Wilhemsen) vessel, MTV Super
Adventure.  Ebuenga boarded the vessel on December 19, 2010. About two (2)
8 9

months into his engagement, or on February 26, 2011, Ebuenga wrote a letter to
Southfield, Wilhemsen, and Captain Sonny Valencia (Capt. Valencia)  (collectively,
10

respondents), asking that he be repatriated as soon as possible "to attend to a


family problem."  Respondents acted favorably on this request and Ebuenga was
11

repatriated on March 5, 2011. Without consulting Southfield's designated physician,


12

Ebuenga had himself checked at St. Luke's Medical Center where he underwent
Magnetic Resonance Imaging. The test revealed that he was afflicted with
"Multilevel Disk Dessication, from C2-C3 to C6-C7."  He was advised to undergo
13

physical therapy. Ebuenga went back to his hometown in Bogtong, Legaspi City to
14

undergo physical therapy sessions. Thereafter, he consulted Dr. Misael Jonathan A.


Ticman, who issued a Disability Report, finding him to be permanently disabled and
no longer fit to work as a seafarer. Consequently, Ebuenga filed a complaint for
permanent disability benefits. In his Position Paper, Ebuenga disavowed voluntarily
15

seeking repatriation on account of a family concern. He claimed instead that upon


embarkation, a crew member died from overfatigue. He reported this death to the
International Transport Workers' Federation, which took no action. Incensed at
Ebuenga's actions, the captain of the vessel, Capt. Jonathan B. Lecias, Sr. (Capt.
Lecias), coerced him to sign a letter seeking immediate repatriation. Ebuenga also
claimed to have reported to Capt. Lecias that he was suffering intense back pain
but the latter refused to entertain this because of the animosity between them. He
added that upon repatriation, he sought medical assistance from the company-
designated physician, but was refused. Thus, he was forced to seek treatment on
his own. In their defense, respondents denied that there was ever an incident
16

where Ebuenga encountered medical problems while on board the vessel. However,
they noted that Ebuenga had been a delinquent crew member as he was always
complaining and agitating his colleagues about the lack of a washing machine. They
added that Ebuenga's claim for disability benefits could not be entertained as he
failed to undergo the requisite post-employment medical examination with the
company-designated physician. In her October 12, 2011 Decision,  Labor Arbiter
17 18

Savari dismissed Ebuenga's complaint. Labor Arbiter Savari explained that Ebuenga
failed to prove that he had suffered an illness or injury while on board the M/V
Super Adventure. She added that Ebuenga may no longer claim disability benefits
for failing to undergo a post-employment medical examination with the company-
designated physician. The National Labor Relations Commission denied Ebuenga's
19

appeal in its June 29, 2012 Decision. On April 29, 2013, the Court of Appeals found
20

no grave abuse of discretion on the part of the National Labor Relations


Commission. It also denied Ebuenga's Motion for Reconsideration in its July 26,
2013 Resolution. Hence, Ebuenga filed the present Petition.  He contends that he
21 22

could not have forfeited his claims as respondents refused to have the company-
designated physician examine him.  He also insists on his version of events: that he
23

came in conflict with Capt. Lecias over the death of a co-worker, was forced to sign
a letter recounting a family emergency, and was denied assistance by Capt. Lecias
when he fell ill while on board the M/V Super Adventure.For resolution is the issue
of whether or not petitioner Ariel A. Ebuenga is entitled to permanent disability
benefits. Subsumed under this is the issue of whether or not his failure to have
himself examined by the company-designated physician bars him from pursuing his
claim.The Petition lacks merit.

I
Section 20(B) of the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA-SEC)  established the procedures for assessing claims
24

for disability benefits. It mandates seafarers to see a company-designated


physician for a post-employment medical examination, which must be done within
three (3) working days from their arrival. Failure to comply shall result in the
forfeiture of the right to claim disability benefits:
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows:

....
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.For this purpose, the seafarer shall submit
himself to a post-employment medical examination by a company-
designated physician within three working days upon his return except when
he is physically incapacitated to do so, in which case, a written notice to the
agency within the same period is deemed as compliance. Failure of the
seafarer to comply with the mandatory reporting requirement shall result in
his forfeiture of the right to claim the above benefits.If a doctor appointed by
the seafarer disagrees with the assessment, a third doctor may be agreed
jointly between the Employer and the seafarer. The third doctor's decision
shall be final and binding on both parties.  (Emphasis supplied)
25

Kestrel Shipping Co., Inc. v. Munar,  citing Vergara v. Hammonia Maritime


26

Services, Inc.  clarified the rules and the period for reckoning a seafarer's
27

permanent disability for purposes of entitlement to disability benefits:


In Vergara v. Hammonia Maritime Services, Inc., this Court read the POEA-SEC in
harmony with the Labor Code and the AREC in interpreting in holding that: (a) the
120 days provided under Section 20-B (3) of the POEA-SEC is the period given to
the employer to determine fitness to work and when the seafarer is deemed to be
in a state of total and temporary disability; (b) the 120 days of total and temporary
disability may be extended up to a maximum of 240 days should the seafarer
require further medical treatment; and (c) a total and temporary disability becomes
permanent when so declared by the company-designated physician within 120 or
240 days, as the case may be, or upon the expiration of the said periods without a
declaration of either fitness to work or permanent disability and the seafarer is still
unable to resume his regular seafaring duties....28

This Court's discussion on the same topic in Vergara  read:


29

As these provisions operate, the seafarer, upon sign-off from his


vessel, must  report to the company-designated physician within three (3) days
from arrival for diagnosis and treatment. For the duration of the treatment but in
no case to exceed 120 days, the seaman is on temporary total disability as he is
totally unable to work. He receives his basic wage during this period until he is
declared fit to work or his temporary disability is acknowledged by the company to
be permanent, either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the 120 days
initial period is exceeded and no such declaration is made because the seafarer
requires further medical attention, then the temporary total disability period may be
extended up to a maximum of 240 days, subject to the right of the employer to
declare within this period that a permanent partial or total disability already exists.
The seaman may of course also be declared fit to work at any time such declaration
is justified by his medical condition.

....

As we outlined above, a temporary total disability only becomes


permanent when so declared by the company physician within the periods
he is allowed to do so, or upon the expiration of the maximum 240-day
medical treatment period without a declaration of either fitness to work or
the existence of a permanent disability. In the present case, while the initial
120-day treatment or temporary total disability period was exceeded, the company-
designated doctor duly made a declaration well within the extended 240-day period
that the petitioner was fit to work. Viewed from this perspective, both the NLRC and
CA were legally correct when they refused to recognize any disability because the
petitioner had already been declared fit to resume his duties. In the absence of any
disability after his temporary total disability was addressed, any further discussion
of permanent partial and total disability, their existence, distinctions and
consequences, becomes a surplusage that serves no useful purpose.  (Emphasis 30

supplied, citations omitted)


Manota v. Avantgarde Shipping Corporation  explained why the requisite three (3)-
31

day period for examination by the company-designated physician "must be strictly


observed":
The 3-day mandatory reporting requirement must be strictly observed since within
3 days from repatriation, it would be fairly manageable for the physician to identify
whether the disease . . . was contracted during the term of his employment or that
his working conditions increased the risk of contracting the ailment.

....

Moreover, the post-employment medical examination within 3 days from . . . arrival


is required in order to ascertain [the seafarer's] physical condition, since to ignore
the rule would set a precedent with negative repercussions because it would open
the floodgates to a limitless number of seafarers claiming disability benefits. It
would certainly be unfair to the employer who would have difficulty determining the
cause of a claimant's illness considering the passage of time. In such a case, the
employers would have no protection against unrelated disability claims. 32

However, this Court has clarified that the conduct of post-employment medical
examination is not a unilateral burden on the part of the seafarer. Rather, it is a
reciprocal obligation where the seafarer is obliged to submit to an examination
within three (3) working days from his or her arrival, and the employer is
correspondingly obliged "to conduct a meaningful and timely examination of the
seafarer":33
We note on this point that the obligation imposed by the mandatory reporting
requirement under Section 20 (B) (3) of the 1996 POEA-SEC is not solely on the
seafarer. It requires the employer to likewise act on the report, and in this sense
partakes of the nature of a reciprocal obligation. Reciprocal obligations are those
which arise from the same cause, and where each party is effectively a debtor and
a creditor of the other, such that the obligation of one is dependent upon the
obligation of the other. While the mandatory reporting requirement obliges the
seafarer to be present for the post-employment medical examination, which must
be conducted within three (3) working days upon the seafarer's return, it also poses
the employer the implied obligation to conduct a meaningful and timely
examination of the seafarer.

The petitioners failed to perform their obligation of providing timely medical


examination, thus rendering meaningless Serna's compliance with the mandatory
reporting requirement. With his July 14, 1999 visit, Serna clearly lived up to his end
of the agreement; it was the petitioners who defaulted on theirs. They cannot now
be heard to claim that Serna should forfeit the right to claim disability benefits
under the POEA-SEC and their [Collective Bargaining Agreement]. 34

In cases where the employer refuses to have the seafarer examined, the seafarer's
claim for disability benefits is not hindered by his or her reliance on a physician of
his or her own choosing:
The Court has in the past, under unique circumstances, sustained the award of
disability benefits even if the seafarer's disability had been assessed by a personal
physician. In Philippine Transmarine Carriers, Inc. v. NLRC, we affirmed the grant
by the CA and by the NLRC of disability benefits to a claimant, based on the
recommendation of a physician not designated by the employer. The "claimant
consulted a physician of his choice when the company-designated physician refused
to examine him." In Cabuyoc v. Inter-Orient Navigation Shipmanagement, Inc., we
reinstated the NLRC's decision, affirmatory of that of the labor arbiter, which
awarded sickness wages to the petitioner therein even if his disability had been
assessed by the Philippine General Hospital, not by a company-designated hospital.
Similar to the case at bar, the seafarer in Cabuyoc initially sought medical
assistance from the respondent employer but it refused to extend him
help.  (Citations omitted)
35

II

It is petitioner's claim that respondents failed to deliver their part of the reciprocal
obligation by refusing to entertain him when he asked to have himself examined.
He insists that their refusal is allegedly an offshoot of his acrimony with them,
which began after his report of a colleague's death to the International Transport
Workers' Federation.

Petitioner weaves a curious narrative of indifference and oppression but, just as


curiously, has nothing more than bare allegations to back him up. He falls far too
short of the requisite quantum of proof in labor cases. He failed to discharge his
burden to prove his allegations by substantial evidence. 36
In the first place, this Court is duty-bound to respect the uniform findings of Labor
Arbiter Savari, the National Labor Relations Commission, and the Court of Appeals.
In the context of the present Rule 45 Petition, this Court is limited to resolving pure
questions of law. It should be careful not to substitute its own appreciation of the
facts to those of the tribunals which have previously weighed the parties' claims
and even personally perused the evidence:
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we
discussed the particular parameters of a Rule 45 appeal from the CA's Rule 65
decision on a labor case, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in
contrast with the review for jurisdictional error that we undertake under Rule 65.
Furthermore, Rule 45 limits us to the review of questions of law raised against the
assailed CA decision. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the
NLRC decision before it, not on the basis of whether the NLRC decision on the
merits of the case was correct. In other words, we have to be keenly aware that the
CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it.
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility
of witnesses, or substitute the findings of fact of the NLRC, an administrative body
that has expertise in its specialized field. Nor do we substitute our "own judgment
for that of the tribunal in determining where the weight of evidence lies or what
evidence is credible." The factual findings of the NLRC, when affirmed by the CA,
are generally conclusive on this Court.37

Labor Arbiter Savari, the National Labor Relations Commission, and the Court of
Appeals are consistent in finding that petitioner's claim of presenting himself for
examination is direly unsupported by evidence. The Court of Appeals emphasized
that "petitioner's narration of facts is bereft of details as to the alleged
report."  Petitioner could not even state when he actually wanted to have himself
38

examined. He could neither identify the person he approached for his request nor
disclose the exact manner and circumstances of his being rebuffed.  Ultimately,
39

petitioner has nothing more than a scant, one-sentence story: he went to


Southfield's office, was refused, and had to go to another doctor.

Petitioner himself claims that respondents' refusal to have him medically examined
was only the last episode in a prolonged conflict. If indeed it was, petitioner must
logically be expected to adduce proof, not only of that terminal episode, but of his
complete narrative and its many incidents. In this regard, too, petitioner was
grossly deficient.

Given petitioner's slew of allegations, coupled with his burden of repudiating the
uniform findings of the three (3) tribunals, it is glaring that petitioner annexed
nothing to his Petition and Reply  except the assailed Court of Appeals Decision and
40

Resolution. His plea for this Court to overturn the uniform antecedent findings of
the three (3) tribunals demands more than attaching a copy of the immediately
preceding judgments. Attaching a copy of the assailed judgments to a Rule 45
Petition does not even manage to accomplish any evidentiary purpose. One could
hazard that petitioner's scant annexes were included only out of conventional
compliance with Rule 45, Section 4  of the 1997 Rules of Civil Procedure because
41

his Petition would otherwise have been denied outright. 42

It is true that there are exceptions to the rule that Petitions for Review on Certiorari
may only be concerned with pure questions of law.  But these exceptions are not
43

occasioned by their mere invocation. A party who files a Rule 45 Petition and
asserts that his or her case warrants this Court's review of factual questions bears
the burden of proving two (2) things. First is the basic exceptionality of his or her
case such that this Court must go out of its way to revisit the evidence. Second is
the specific factual conclusion that he or she wants this Court to adopt in place of
that which was made by the lower tribunals. This dual burden requires a party to
not merely plead or aver. He or she must demonstrate and prove. His or her
evidentiary task persists before this Court precisely because he or she pleads this
Court to sustain different factual conclusions.

Petitioner's deficiencies manifest his failure to discharge this burden.

Petitioner's allegation of a deceased colleague could have been substantiated by


official records. He did not adduce these documents. Worse, he could not even
name that co-worker. The truth is that there is no certainty if someone actually
died on board. Likewise, while petitioner claims that respondents were so hostile to
him, he claims to have still managed to lodge a complaint while on mid-voyage to
the International Transport Workers' Federation. If he was so ingenious to do this
mid-voyage despite the belligerence of his superiors, nothing could have prevented
him from adducing proof that he made that report. A copy of any form of
acknowledgment by the International Transport Workers' Federation would have
bolstered his cause. He must certainly have access to an acknowledgment as he
himself initiated and pursued the purported complaint. He also claims that the M/V
Super Adventure was arrested specifically because of his complaint.  Yet, he 44

presented no record or attestation of this occurrence.

If it is also true that Capt. Lecias was so hostile as to demand his repatriation and
downright abusive as to withhold medical attention to an ill crew member,
petitioner could have at least presented affidavits from colleagues to corroborate in
whole or in part his account. He must realize that his allegations are not mere
assertions to further his narrative; they are also grave accusations that a captain
violated his most important role in protecting his crew.  This Court, lending its
45

approval to claims such as petitioner's, could potentially become the basis of


punitive measures against captains of vessels. As this Court's decisions set
precedents, it has all the more reason to not be swayed by bare allegations.

Petitioner would have this Court hang on to nothing but his word. He would have
this Court discard the consistent findings of the three (3) tribunals on nothing but
faith in what he asserts. This Court cannot act with blind credulity. With the utter
dearth of proof advancing petitioner's cause, this Court is constrained to sustain the
consonant findings of Labor Arbiter Savari, of the National Labor Relations
Commission, and of the Court of Appeals.

III

Even if this Court were to overlook petitioner's utter failure to substantiate his
version of events, no award of disability benefits is availing as petitioner has failed
to demonstrate that his affliction was work-related.

Tagud v. BSM Crew Service Centre Phils., Inc.  explained the twin requirements for
46

compensation of disability:
For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two
elements must concur: (1) that the illness or injury must be work-related, and (2)
that the work-related illness or injury must have existed during the term of the
seafarer's employment contract.

The 2000 POEA-SEC defines "work-related injury" as injury resulting in disability or


death arising out of and in the course of employment and "work-related illness" as
any sickness resulting to disability or death as a result of an occupational disease
listed under Section 32-A of the 2000 POEA-SEC. Thus, the seafarer only has to
prove that his illness or injury was acquired during the term of employment to
support his claim for sickness allowance and disability benefits.47

To be "work-related" is to say that there is a "reasonable linkage between the


disease suffered by the employee and his work."  Section 32-A, paragraph 1 of the
48

POEA-SEC, thus, requires the satisfaction of all of its listed general conditions "[f]or
an occupational disease and the resulting disability or death to be compensable":
Section 32-A. OCCUPATIONAL DISEASES

For an occupational disease and the resulting disability or death to be compensable,


all of the following conditions must be satisfied:

( The seafarer's work must involve the risks described herein;


1
)

( The disease was contracted as a result of the seafarer's exposure to the described risk
2
)

( The disease was contracted within a period of exposure and under such other f
3 contract it;
)
( There was no notorious negligence on the part of the seafarer. 49

4
)
Petitioner himself wrote and submitted a letter requesting repatriation "to attend to
a family problem."  Petitioner did not deny the existence of this letter but
50

disavowed it as having been made under duress. The preceding discussion


demonstrated how petitioner's attempts at disavowal are a folly. The declaration in
that letter, therefore, stands and amounts to an admission professing the true
reasons for his repatriation, belying his belated claim of suffering an injury while
aboard M/V Super Adventure.

Petitioner's account concerning this letter is also laden with a fatal inconsistency.
According to him, his entire acrimonious relationship with respondents arose from
his report of a co-worker's death to the International Transport Workers'
Federation. This report allegedly made Capt. Lecias so indignant that he forced
petitioner into fabricating a letter requesting to be sent home. However, while
petitioner himself claims this death happened "upon embarkation,"  his letter was
51

made more than two (2) months after embarkation, on February 26,
2011.  Petitioner, too, would not be repatriated until March 5, 2011.
52 53

Petitioner's own account raises curious questions. If, indeed, Capt. Lecias was so
incensed at petitioner that he was made to immediately fabricate a repatriation
request, why was the letter made only on February 26, 2011? Why would a captain
so driven to discard a seafarer have to wait so long to effect his or her repatriation?

Medical literature underscores petitioner's affliction—disc desiccation—as a


degenerative change of intervertebral discs, the incidence of which climbs with age
and is a normal part of disc aging.  Hence, it is not a condition peculiarly borne by
54

petitioner's occupation. Moreover, petitioner was engaged to serve, not merely as a


regular cook, but as chief cook. While his designation to this position does not
absolutely negate occasions of physical exertion, it can nevertheless be reasonably
inferred that his engagement did not principally entail intense physical labor, as
would have been the case with other seafarers such as deckhands. In any case,
contrary to Section 32-A of the POEA-SEC, petitioner failed to demonstrate how his
work necessarily "involve[d] the risks described" and how he contracted his
affliction specifically "as a result of [his] exposure to the described risks."

Likewise, petitioner needed to be repatriated merely two (2) months into his
engagement. This is not disputed, whether on the basis of petitioner's claims of
falling ill mid-voyage or on the basis of his letter request to respondents. Again,
contrary to Section 32-A of the POEA-SEC, the brevity of his engagement
contradicts the likelihood that his disc desiccation—a degenerative ailment requiring
prolonged conditions—"was contracted within a period of exposure and under such
other factors necessary to contract it." 55
IV

Petitioner's cause is grossly deficient in several ways. First, he failed to undergo the
requisite examination, thereby creating a situation resulting in the forfeiture of his
claims. This alone suffices for the denial of his Petition. Second, he posited a
narrative of indifference and oppression but failed to adduce even the slightest
substantiation of it. He asked this Court to overturn the consistent findings of the
three (3) tribunals but offered nothing other than his word as proof. Finally, he
averred a medical condition from which no causal connection can be drawn to his
brief engagement as chief cook. He would have this Court sustain an imputation
grounded on coincidence and conjecture.

In this review, this Court is bound by basic logical parameters. First, as a court
without the opportunity to personally peruse the evidence, this Court cannot
cavalierly disregard the uniform anterior findings of the three (3) tribunals. Second,
a factual conclusion must be borne by substantial evidence. Finally, this Court
should not award disability benefits absent a causal relationship between a
seafarer's work and ailment. Petitioner's case fails in all of these parameters.
Hence, his Petition must be denied.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed April
29, 2013 Decision and July 26, 2013 Resolution of the Court of Appeals in CA-G.R.
SP No. 126939 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo, JJ., concur.

April 30, 2018

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on March 14, 2018 a Decision, copy attached hereto, was
rendered by the Supreme Court in the above-entitled case, the original of which
was received by this Office on April 30, 2018 at 1:19 p.m.

Very truly yours,

(SGD)

WILFREDO V.
LAPITAN

Division Clerk of Court

Endnotes:

Rollo, pp. 3-43, Petition for Review on Certiorari.


1

2
 Id. at 45-56. The Decision was penned by Associate Justice Ramon R. Garcia and
concurred in by Associate Justices Amelita G. Tolentino and Danton Q. Bueser of
the Fourth Division, Court of Appeals, Manila.

 Id. at 58-59. The Resolution was penned by Associate Justice Ramon R. Garcia
3

and concurred in by Associate Justices Amelita G. Tolentino and Danton Q. Bueser


of the Fourth Division, Court of Appeals, Manila.

 No copy annexed to the Petition. See rollo, p. 45.


4

 No copy annexed to the Petition. See rollo, pp. 5 and 45.


5

 No copy annexed to the Petition. See rollo, p. 4.


6

Rollo, pp. 58-59.


7

 Id. at 45-46.
8

 Id. at 10.
9

 "Capt. Sonny Valencia is the president and/or manager of the local manning
10

agent." See rollo, p. 9.

11
Rollo, p. 46.

12
 Id.

13
 Id.

14
 Id.

15
 Id.

16
 Id. at 46-47.

17
 Id. at 47-48.

18
 No copy annexed to the Petition. See rollo, p. 5.
Rollo, p. 48.
19

 No copy annexed to the Petition. See rollo, p. 48.


20

Rollo, pp. 58-59.


21

 Id. at 3-43.
22

 Id. at 12.
23

 POEA Memo. Circ. No. 09 (2000), Amended Standard Terms and Conditions
24

Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels.

 POEA Memo. Circ. No. 09 (2000), sec. 20 (b) as amended by POEA Memo. Circ.
25

No. 10 (2010) sec. 20 (A.3) which substantially reproduces sec. 20 (b) but adds the
following:

"The seafarer shall be entitled to reimbursement of the cost of medicines prescribed


by the company designated physician. In case treatment of the seafarer is on an
out-patient basis as determined by the company-designated physician, the
company shall approve the appropriate mode of transportation or accommodation.
The reasonable cost of actual traveling expenses and/or accommodation shall be
paid subject to liquidation and submission of official receipts and/or proof of
expenses."

 702 Phil. 717 (2013) [Per J. Reyes, First Division].


26

 588 Phil. 895 (2008) [Per J. Brion, Second Division].


27

 702 Phil. 732-733 (2013) [Per J. Reyes, First Division].


28

 588 Phil. 895 (2008) [Per J. Brion, Second Division].


29

 Id. at 912-913.
30

 715 Phil. 54 (2013) [Per J. Peralta, Third Division].


31

 Id. at 64-65 citing Crew and Ship Management International, Inc. and Salena,
32

Inc. v. Jina T. Soria, G.R. No. 175491, December 10, 2012; Jebsens Maritime, Inc.
v. Undag, G.R. No. 191491, December 14, 2011, 662 SCRA 670, 681.

Career Philippines Shipmanagement, Inc., et al. v. Serna, 700 Phil. 1 (2012) [Per
33

J. Brion, Second Division].

 Id. at 15 citing Cortes v. Court of Appeals, 527 Phil. 153, 160 (2006) [Per J.
34

Ynares-Santiago, First Division], citing Tolentino, Arturo, Commentaries and


Jurisprudence on the Civil Code of the Phils., Vol. IV, 1985 edition, p. 175.
 Id. at 15-16.
35

 In Tenazas v. R. Villegas Taxi Transport, 731 Phil. 217, 229 (2014) [Per J. Reyes,
36

First Division]: "It is an oft-repeated rule that in labor cases, as in other


administrative and quasi-judicial proceedings, 'the quantum of proof necessary is
substantial evidence, or such amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.' '[T]he burden of proof rests upon
the party who asserts the affirmative of an issue.'"

Career Philippines Shipmanagement, Inc., et al. v. Serna, 700 Phil. 9—10 (2012)
37

[Per J. Brion, Second Division] citing Montoya v. Trammed Manila Corporation, 613


Phil. 616 (2009) [Per J. Brion, Second Division]; Cabuyoc v. Inter-Orient Navigation
Shipmanagement, Inc., 537 Phil. 897 (2006) [Per J. Garcia, Second
Division]; Sarocam v. Interorient Maritime Ent., Inc., 526 Phil. 448, 454 (2006)
[Per J. Callejo, Sr., First Division]; Cootauco v. MMS Phil. Maritime Services, Inc.,
629 Phil. 506 (2010) [Per J. Perez, Second Division].

Rollo, p. 54.
38

 Id.
39

In the words of the Court of Appeals:

"As correctly observed by the tribunals a quo, this claim was not substantiated in
the records. Even petitioner's narration of facts is bereft of details as to the alleged
report made at the manning agency's office. Notably, petitioner failed to specify the
name of the employee to whom he reported, the time he reported and the reason
why private respondent South Field allegedly refused to render him a medical
examination. The absence of these details casts serious doubt on the veracity of
petitioner's allegation that he indeed reported for post-employment medical
examination."

 Id. at 72-83.
40

 1997 RULES OF CIV. PROC., Rule 45, sec. 4 provides:


41

Section 4. Contents of petition. — The petition shall be filed in eighteen (18) copies,
with the original copy intended for the court being indicated as such by the
petitioner, and shall (a) state the full name of the appealing party as the petitioner
and the adverse party as respondent, without impleading the lower courts or judges
thereof either as petitioners or respondents; (b) indicate the material dates
showing when notice of the judgment or final order or resolution subject thereof
was received, when a motion for new trial or reconsideration, if any, was filed and
when notice of the denial thereof was received; (c) set forth concisely a statement
of the matters involved, and the reasons or arguments relied on for the allowance
of the petition; (d) be accompanied by a clearly legible duplicate original, or a
certified true copy of the judgment or final order or resolution certified by the clerk
of court of the court a quo and the requisite number of plain copies thereof, and
such material portions of the record as would support the petition; and (e) contain
a sworn certification against forum shopping as provided in the last paragraph of
section 2, Rule 42.

 1997 RULES OF CIV. PROC., Rule 45, sec. 5 provides:


42

Section 5. Dismissal or denial of petition. — The failure of the petitioner to comply


with any of the foregoing requirements regarding the payment of the docket and
other lawful fees, deposit for costs, proof of service of the petition, and the contents
of and the documents which should accompany the petition shall be sufficient
ground for the dismissal thereof.

The Supreme Court may on its own initiative deny the petition on the ground that
the appeal is without merit, or is prosecuted manifestly for delay, or that the
questions raised therein are too unsubstantial to require consideration.

 In Pascual
43
v. Burgos, G.R. No. 171722, January 11, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2016/january2016/171722.pdf> 11 [Per J. Leonen, Second
Division]:

However, these rules do admit exceptions. Over time, the exceptions to these rules
have expanded. At present, there are 10 recognized exceptions that were first listed
in Medina v. Mayor Asistio, Jr.:
(1) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures; (2) When the inference made is manifestly mistaken, absurd or
impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment
is based on a misapprehension of facts; (5) When the findings of fact are
conflicting; (6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant and
appellee; (7) The findings of the Court of Appeals are contrary to those of the trial
court; (8) When the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) When the facts set forth in the petition as
well as in the petitioner's main and reply briefs are not disputed by the
respondents; and (10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the evidence on record.
These exceptions similarly apply in petitions for review filed before this court
involving civil, labor, tax, or criminal cases. (Citations omitted)

Rollo, p.11.
44

 In Inter-Orient Maritime Enterprises, Inc. v. National Labor Relations Commission,


45

305 Phil. 286, 297 (1994) [Per J. Feliciano, Third Division]:

"Of these roles, by far the most important is the role performed by the captain as
commander of the vessel; for such role (which, to our mind, is analogous to that of
"Chief Executive Officer" [CEO] of a present-day corporate enterprise) has to do
with the operation and preservation of the vessel during its voyage and the
protection of the passengers (if any) and crew and cargo."

Tagud v. BSM Crew Service Centre Phils., Inc., G.R. No. 219370, December 6,
46

2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2017/december2017/219370.pdf> [Per J. Carpio, Second
Division].

 Id. at 8.
47

Dayo v. Status Maritime Corporation, 751 Phil. 778, 789 (2015) [Per J. Leonen,
48

Second Division].

 POEA Memo. Circ. No. 09 (2000), sec. 32-A.


49

Rollo, p. 46.
50

 Id. at 10.
51

Rollo, p. 46.
52

 Id.
53

 See MCGRAW-HILL EDUCATION, HARRISON'S PRINCIPLES OF INTERNAL


54

MEDICINE (19  ed.); and Lumbar Disc Degenerative Disease: Disc Degeneration
th

Symptoms and Magnetic Resonance Image


Findings, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3863659/.

 POEA Memo. Circ. No. 09 (2000), sec. 32-A.


55

THIRD DIVISION

G.R. Nos. 208481-82, February 07, 2018

OFFICE OF THE OMBUDSMAN, REPRESENTED BY OMBUDSMAN CONCHITA


CARPIO MORALES, Petitioner, v. MARIA ROWENA REGALADO, Respondent.

DECISION

LEONEN, J.:

"Yes, my dear, that's the system ng


government . . . Ganito ang system,
ano ako magmamalinis?" 1
Public officers who, in the course of performing the
haggle, bribe, knowingly use falsified copies of officia
and services, deny possession of official receipts to
unabashedly exclaim that extortion and bribery are s
Their nefarious acts are an utter disservice to the pub
the termination of their stint in public service. The con
convenient excuses of being caught only for the first
satisfied clients that speak of their purported good per

This resolves a Petition for Review on Certiorar


2

under Rule 45 of the 1997 Rules of Civil Procedure pra


3

of the Court of Appeals in CA-G.R. SP Nos. 120843 a


Appeals January 7, 2013 original Decisio
4

be reinstated

The Court of Appeals January 7, 2013 original Decision


5
 

of the Office of the Ombudsman for Mindanao, findi


Grave Misconduct and violation of Section 7(d) of Repu
6

otherwise known as the Code of Conduct and Ethical


the penalty of dismissal from the service, along w
eligibility, forfeiture of retirement benefits, and perp
service
7

The assailed Court of Appeals July 19, 2013 Amend


Misconduct but reduced her penalty to suspension fro
reinstatement to her former position, her penalty havin
8

The facts are settled

Herein respondent Regalado was a public employee, h


Immigration
9

In October 2006, Carmelita F. Doromal (Doromal), th


and Tutorial Center, Inc. (St. Martha's), went to the D
letter requiring her school to obtain an accreditation t
her that she needed to pay P50,000.00 as "processi
amount was prohibitive. Regalado responded that she
10

Citing a copy of Office Memorandum Order No. RBR


"the head office of the Bureau of Immigration, throug
allow the accreditation at a lower amount, depending o
11

In January 2007, St. Martha's Assistant Headmaster,


the necessary papers for the school's accreditation
12

On April 7, 2007, Regalado called Doromal on the latt


responded by saying that the school was ready for
Regalado persuaded Doromal to pay P50,000.00 dire
soar as high as P100,000.00 if it were to be don:e i
Manila Office, as Doromal would still have to spend for
and a special dinner on top of the P50,000.00 "honora
13

Regalado insisted on how paying just P50,000.00 dire


that if Doromal were to tender the P50,000.00, only P1
14

Doromal later sent Regalado a text message, saying t


she were to decline paying P50,000.00, she would h
again. Doromal replied that she did not mind re-a
P50,000.00
15
On April 10, 2007, Regalado sent Doromal a text mess
reduced.
16

On May 3, 2007, Regalado sent Doromal another te


Regalado allegedly managed to reduce the accreditatio
17

On May 21, 2007, Regalado came to inspect St. Mar


possible to pay the P10,000.00 by check but Regalad
that she would also have to pay "honorarium." Doroma

"[I]kaw na bahala, ayaw ko na talaga i-


mention yan baka umatras ka pa.

18

Regalado further instructed Doromal to come to her o


brown envelope and to say that it contained "additiona
19

Doromal could not personally come to Regalado's offic


so Diaz went in Doromal's stead. She was accompanie
St. Martha's. Diaz carried with her an unmarked bro
inside as "honorarium.
20
Upon finding that the contents were only P1,500.00, R
21

Diaz asked

"Bakit po?"
22

Regalado exclaimed, "You want me to give this amoun


be. Regalado replied that it should be at least P30,0
retorted, "It will go to my boss along with your accred

Ganyan ang system dito pag


magprocess, actually na lower na nga
ang amount because the inspectors are
not from Manila, you will not book them
at the Marco Polo Hotel, you will no
longer entertain them, it's cheaper." 
23

Diaz asked, "Is this under the table ma'am?


24

Regalado brazenly replied, "Yes, my dear, that's the sy


25

Diaz lamented, "So sad to know that.


26

 
Regalado scoffed

"Ganito ang system, ano aka


magmamalinis

?
27

Diaz and Tautho underscored that the transaction was


around. Regalado assured them

"I'll be backing you up, walang gugulo sa


inyo."
28

Regalado instructed Diaz and Tautho to return the fo


the accreditation fee of P10,000.00 with the cashier.
her: the official receipt. Before leaving, Regalado ask
was a teacher at St. Martha's, Regalado remarked

"Ah at least safe tayo, mahirap na baka


magsumbong."
29

On May 24, 2007, Regalado called Diaz, asking if she


emphasized that it was for her boss
30
On May 29, 2007, Doromal, Diaz, and Tautho filed w
against Regalado
31

Thus, an administrative case was filed for Grave Misco


Commission Resolution No. 991936
32

and for violation of Section 7(d) of Republic Act No. 67


33

In her defense, Regalado denied ever extorting money


in league with "people who ha[d] a grudge against her
34

She admitted asking for P50,000.00 but cited that p


amount properly due from a school accredited to adm
due may be lowered and surmised that her explanation
35

She claimed that she only really wanted to help St. Ma


36

In its November 5, 2008 Decision


37

the Office of the Ombudsman for Mindanao found Rega


WHEREFORE, foregoing premises
considered, this Office finds substantial
evidence to hold MARIA ROWENA
REGALADO y PLURAL guilty of Grave
Misconduct and violation of Sec. 7(d) of
R.A. 6713, any of which merits her
removal from the government service.
She is thus meted with the supreme
penalty of DISMISSAL FROM THE
SERVICE, which shall carry with it the
accessory penalties of CANCELLATION OF
ELIGIBILITY, FORFEITURE OF
RETIREMENT BENEFITS, and PERPETUAL
DISQUALIFICATION [FROM]
REEMPLOYMENT IN THE GOVERNMENT
SERVICE.
38

On June 24, 2011, Acting Ombudsman Orlando Cas


Decision
39

In its September 8, 2011 Order


40

the Office of the Ombudsman denied Regalado's Motio


41

In its January 7, 2013 Decision


42

the Court of Appeals affirmed i

toto

the Office of the Ombudsman's ruling

The Court of Appeals explained that in the first place


supposed basis for accreditation, Office Memorandum
43

apply only to the accreditation of Riper Education Insti


44

The Court of Appeals added that this Memorandum re


accreditation fee
45

It also explained that Regalado knowingly used a fals


signature of then Bureau of Immigration Commis
P50,000.00 as the accreditation fee
46

The dispositive portion of the Court of Appeals January


WHEREFORE, in view of the foregoing,
the Petition in CA-G.R. SP No. 120843 is
DISMISSED for being moot and
academic. The Petition in CA-G.R. SP No.
121748 is DENIED for lack of merit. The
Decision dated 05 November 2008 and
Order dated 8 September 2011 of the
Office of the Ombudsman are hereby
AFFIRMED in toto.

SO ORDERED.
47

Acting on Regalado's Motion for Reconsideration, the


2013
48

which maintained Regalado's liability. However, it no


representatives of other schools previously assisted by
49

It added that "this is the very first time that [Regalado


50

and that she had previously been credited with "good


51

On account of the mitigating circumstances it noted, t


(1)-year suspension without pay
52

It added that Regalado had effectively served the


reinstatement
53

The dispositive portion of the Court of Appeals July 19

WHEREFORE, the foregoing considered,


WE hereby AMEND the DECISION dated
07 January 2007 by reducing the penalty
imposed on Maria Rowena Regalado from
DISMISSAL from the service to
SUSPENSION FROM OFFICE WITHOUT
PAY FOR ONE (1) YEAR, which is deemed
to have already been served by her.

Accordingly, WE hereby order petitioner's


REINSTAMENT to her former position
without loss of seniority and payment of
her back wages and such other
emoluments that she did not receive by
reason of her dismissal from the service.

SO ORDERED.
54
Asserting that the reduction of Regalado's penalty to
Ombudsman filed the present Petitio
55

seeking the reinstatement of the Court of Appeals Janu

The acts attributed to Regalado are no longer in di


Amended Decision disavow the truth of the factual find

Further, how Regalado's acts amount to Grave Miscon


is no longer in issue. The rulings rendered by the
Ombudsman, and the Court of Appeals in its January 7

The Office of the Ombudsman for Mindanao Novembe


of Grave Misconduct and violation of Sec. 7(d) of R.A.
56

The Court of Appeals January 7, 2013 original Decisio


and Order dated 8 September 2011 of the Office of the
57

At no point did the Court of Appeals July 19, 2013 A


nature of Regalado's liability. In accordance with its
dated 07 January 2007 by reducing the penalty impose
58
Even Regalado herself opted to no longer appeal the C
Regalado, it was the Office of the Ombudsman which
"[j]udgment be rendered REVERSING and SETTING A
July 2013 and REINSTATING the Decision of the Court
59

Accordingly, all that remains in issue is whether or not


Rowena Regalado the reduced penalty of one (1)
circumstances it appreciated in respondent's favor

The confluence and totality of respondent's actions ar


setting aside the original penalty of dismissal from ser

The 1987 Constitution spells out the basic ethos under

Section 1. Public office is a public trust.


Public officers and employees must at all
times be accountable to the people, serve
them with utmost responsibility,
integrity, loyalty, and efficiency, act with
patriotism and justice, and lead modest
lives.
60
The fundamental notion that one's tenure in governm
means that continuance in office is contingent upon th
Justice Enrique Fernando eloquently wrote in his concu

Pineda v. Claudio:
61

[W]e must keep in mind that the Article


on the Civil Service, like other provisions
of the Constitution, was inserted
primarily to assure a government, both
efficient and adequate to fulfill the ends
for which it has been established. That is
a truism. It is not subject to dispute. It is
in that sense that a public office is
considered a public trust.

Everyone in the public service cannot and


must not lose sight of that fact. While his
right as an individual although employed
by the government is not to be arbitrarily
disregarded, he cannot and should not
remain unaware that the only justification
for his continuance in such service is his
ability to contribute to the public welfare.
62

 (Citation omitted)

No one has a vested right to public office. One can


proves worthy of public trust
II

Consistent with the dignity of public office, our civil se


the additional elements of corruption, willful intent to v
63

is grave. This gravity means that misconduct was com


end to an individual's current engagement as a public
occupying public office

Accordingly, the 2017 Rules on Administrative Cases in


64

consider grave misconduct as a grave offense warran


accessory penalties of cancellation of eligibility, perpe
service examinations, and forfeiture of retirement ben

Section 50. Classification of Offenses. —


Administrative offenses with
corresponding penalties are classified into
grave, less grave and light, depending on
their gravity or depravity and effects on
the government service.

A. The following grave offenses shall be


punishable by dismissal from the service:
....

3. Grave Misconduct;

....

Section 57. Administrative Disabilities


Inherent in Certain Penalties. — The
following rules shall govern in the
imposition of accessory penalties:

a.
The penalty of dismissal shall carry with
it cancellation of eligibility,
perpetual disqualification from
holding public office, bar from
taking civil service examinations,
and forfeiture of retirement
benefits.

Terminal leave benefits and personal


contributions to Government
Service Insurance System (GSIS),
Retirement and Benefits
Administration Service (RBAS) or
other equivalent retirement
benefits system shall not be
subject to forfeiture.
65
In like manner, Civil Service Commission Resolution N
Civil Service, which were in effect during respondent's

RULE IV

Penalties

Section 52. Classification of Offenses. —


Administrative offenses with
corresponding penalties are classified into
grave, less grave or light, depending on
their gravity or depravity and effects on
the government service.

A. The following are grave offenses with


their corresponding penalties:

....

3. Grave Misconduct

    1st offense - Dismissal

....

Section 58. Administrative Disabilities


Inherent in Certain Penalties. —
a. The penalty of dismissal shall carry
with it that of cancellation of eligibility,
forfeiture of retirement benefits, and the
perpetual disqualification for
reemployment in the government
service, w1less otherwise provided in the
decision.
66

III

Apart from the general treatment of misconduct with


violate the law or disregard of established rules,
67

Republic Act No. 6713 specifically identifies as unlawfu


official duties or in connection with any operation bein
the functions of their office.
68

Section 7(d) of Republic Act No. 6713 provides

Section 7. 

Prohibited Acts and Transactions. 


- In addition to acts and omissions of
public officials and employees now
prescribed in the Constitution and
existing laws, the following shall
constitute prohibited acts and
transactions of any public official and
employee and are hereby declared to be
unlawful:

....

(d) Solicitation or acceptance of gifts. —


Public officials and employees shall not
solicit or accept, directly or indirectly, any
gift, gratuity, favor, entertainment, loan
or anything of monetary value from any
person in the course of their official
duties or in connection with any
operation being regulated by, or any
transaction which may be affected by the
functions of their office.

As to gifts or grants from foreign


governments, the Congress consents to:

The Ombudsman shall prescribe such


regulations as may be necessary to carry
out the purpose of this subsection,
including pertinent reporting and
disclosure requirements.

Nothing in this Act shall be construed to


restrict or prohibit any educational,
scientific or cultural exchange programs
subject to national security requirements.
69

Section 7(d) of Republic Act No. 6713, which took eff


3019, otherwise known as the Anti-Graft and Corrupt P

Section 3. 

Corrupt practices of public officers. 

In addition to acts or omissions of public


officers already penalized by existing law,
the following shall constitute corrupt
practices of any public officer and are
hereby declared to be unlawful:

....

Republic Act No. 3019 punishes violations of its Sectio


office, and confiscation or forfeiture of proceeds

Section 9. 

Penalties for violations.  — 

(a) Any public officer or private person


committing any of the unlawful acts or
omissions enumerated in Sections 3, 4, 

and 6 of this Act shall be punished with


imprisonment for not less than one year
nor more than ten years, perpetual
disqualification from public office, and
confiscation or forfeiture in favor of the
Government of any prohibited interest
and unexplained wealth manifestly out of
proportion to his salary and other lawful
income.

Any complaining party at whose


complaint the criminal prosecution was
initiated shall, in case of conviction of the
accused, be entitled to recover in the
criminal action with priority over the
forfeiture in favor of the Government, the
amount of money or the thing he may
have given to the accused, or the value
of such thing.
71

For its part, Republic Act No. 6713 penalizes violation


disqualification to hold public office

Section 11. Penalties. — (a) Any public


official or employee, regardless of
whether or not he holds office or
employment in a casual, temporary,
holdover, permanent or regular capacity,
committing any violation of this Act shall
be punished with a fine not exceeding the
equivalent of six (6) months' salary or
suspension not exceeding one (1) year,
or removal depending on the gravity of
the offense after due notice and hearing
by the appropriate body or agency. If the
violation is punishable by a heavier
penalty under another law, he shall be
prosecuted under the latter statute.
Violations of Sections 7, 8 or 9 of this Act
shall be punishable with imprisonment
not exceeding five (5) years, or a fine not
exceeding five thousand pesos (P5,000),
or both, and, in the discretion of the
court of competent jurisdiction,
disqualification to hold public office.

(b) Any violation hereof proven in a


proper administrative proceeding shall be
sufficient cause for removal or dismissal
of a public official or employee, even if no
criminal prosecution is instituted against
him.
72

Section 11(b) of Republic Act No. 6713 explicitly state


an administrative proceeding, even if the erring office
with the three (3)-fold liability rule in the law on public
a public officer may give rise to civil, criminal an
independently of the others.
73

IV

It is without question that respondent violated Sec


summarized her "modus operandi," as follows

[T]he 

modus operandi 

of [Regalado] is to present to applicants


for accreditation a fake copy of Office
Memorandum Order No. RBR 00-57
providing an accreditation fee of
P50,000.00 to be able to charge the said
amount, when the actual fee required is
only P10,000.00. If the applicant cannot
afford to pay such a high amount,
[Regalado], as she did in the present
case, will tell the applicant that through
her efforts, she will be able to reduce the
accreditation fee to P10,000.00.
However, in return, the applicant will
have to give an honorarium to
[Regalado's] boss amounting to at least
P30,000.00.
74

The matter is not a question of whether or not, as re


she actually received or profited from the solicitation
even after she had completed the inspection of St. Ma
75

Section 7(d) of Republic Act No. 6713 penalizes both s


of Republic Act No. 3019 penalizes both the requestin
7(d), the prior or subsequent performance of official ac
It is equally without question that respondent engag
willful intent to violate the law and to disregard est
benefits is specifically listed by. Section 3(c) of Repu
certainly nothing in the records to suggest that respon

It is clear, then, that respondent's actions deserve t


Appeals, however, held that certain circumstances w
suspension

The Court of Appeals was in serious error

The Court of Appeals noted, as a mitigating circumsta


offense and this is the very first time that she was fou
76

In taking this as a mitigating circumstance, the Court


Administrative Cases in the Civil Service. Rule IV,
dismissal shall be meted even if it is only the first offen

RULE IV
Penalties

Section 52. Classification of Offenses. —


Administrative offenses with
corresponding penalties are classified into
grave, less grave or light, depending on
their gravity or depravity and effects on
the government service.

A. The following are grave offenses with


their corresponding penalties:

....

3. Grave Misconduct

    1st offense — Dismissal


77

Jurisprudence has been definite on this point. This Cou

En Banc 

Decision i

Duque v. Veloso
78

 
underscored how "the clear language of Section 52, R
circumstance.

[T]he circumstance that this is the


respondent's first administrative offense
should not benefit him. By the express
terms of Section 52, Rule IV of the
Uniform Rules, the commission of an
administrative offense classified as a
serious offense (like dishonesty) is
punishable by dismissal from the service
even for the first time. In other words,
the clear language of Section 52, Rule IV
does not consider a first-time offender as
a mitigating circumstance. Likewise,
under statutory construction principles, a
special provision prevails over a general
provision. Section 53, Rule IV of the
Uniform Rules, a general provision
relating to the appreciation of mitigating,
aggravating or alternative circumstances,
must thus yield to the provision of
Section 52, Rule IV of the Uniform Rules
which expressly provides for the penalty
of dismissal 

even for the first commission of the


offense.
79

  (Emphasis supplied)

Medina v. Commission on Audit,


80
 

this Court emphasized that "a grave offense cannot


offender or by the length of service of the accused.
81

Jurisprudence is replete with cases


declaring that a grave offense cannot be
mitigated by the fact that the accused is
a first time offender or by the length of
service of the accused. In 

Civil Service Commission v. Cortez,

 the Court held as follows:

The gravity of the offense committed is


also the reason why we cannot consider
the "first offense" circumstance invoked
by respondent. In several cases, we
imposed the heavier penalty of dismissal
or a fine of more than P20,000.00,
considering the gravity of the offense
committed, even if the offense charged
was respondent's first offense. Thus, in
the present case, even though the
offense respondent was found guilty of
was her first offense, the gravity thereof
outweighs the fact that it was her first
offense.

Also, in 

Concerned Employees v. Nuestro,

 a court employee charged with and


found guilty of dishonesty for falsification
was meted the penalty of dismissal
notwithstanding the length of her service
in view of the gravity of the offense
charged.

To end, it must be stressed that


dishonesty and grave misconduct have
always been and should remain
anathema in the civil service. They
inevitably reflect on the fitness of a civil
servant to continue in office. When an
officer or employee is disciplined, the
object sought is not the punishment of
such officer or employee but the
improvement of the public service and
the preservation of the public's faith and
confidence in the government.
82

 (Citations omitted)

The fact that an offender was caught for the first tim
actually committed. Grave misconduct is not a questio
weight. One who commits grave misconduct is one wh
herself unworthy of the continuing confidence of the
the offender forfeits any right to hold public office

Underscoring the severity of grave misconduct and


specifically state that no mitigating circumstances, of
punishable by dismissal from service

Section 53. Mitigating and Aggravating


Circumstances. — Except for offenses
punishable by dismissal from the service,
the following may be appreciated as
either mitigating or aggravating
circumstances in the determination of the
penalties to be imposed:

a.
Physical illness;

b.

Malice;

c.

Time and place of offense;

d.

Taking undue advantage of official


position;

e.

Taking undue advantage of subordinate;

f.

Undue disclosure of confidential


information;
g.

Use of government property in the


commission of the offense;

h.

Habituality;

i.

Offense is committed during office hours


and within the premises of the
office or building;

j.

Employment of fraudulent means to


commit or conceal the offense;

k.

First offense;

l.

Education;
m.

Length of service; or

n.

Other analogous circumstances.

In the appreciation thereof, the same


must be invoked or pleaded by the
respondent, otherwise, said
circumstances will not be considered in
the imposition of the proper penalty. The
disciplining authority, however, in the
interest of substantial justice, may take
and consider these circumstances 

motu proprio.
83

VI

The Court of Appeals also cited respondent's supposed


84

and referenced "affidavits executed by the representat


stating their satisfaction with the service rendered by [
85

This Court is, quite frankly, baffled by how solicited s


operate to erode the liability of one such as responden

The plain and evident truth is that, while the langu


unadorned, she did so much more than merely
appropriate summation of respondent's actions should
soliciting, but downright badgering—money from the c
(7) months from October 2006 to May 2007, she pest
as "processing fee,
86

"accreditation fee,
87

and "honorarium.
88

Respondent could not even bear to be consistent ab


extortion

In the course of pressing the complainants for money,


issuance of the Bureau of Immigration. The Court of
then proceeded to explain the incredulity of responden
First, the records of the case show that
when Doromal first met [respondent] at
the Bureau, the latter told her that the
accreditation fee is P50,000.00.
[Respondent's] basis in assessing such
amount was her copy of 

Office Memorandum Order No. RBR 00-


57 

which petitioner showed to Doromal


when the latter was applying for
accreditation. A copy of the said
memorandum was also attached by
petitioner to her counter-affidavit. The
certified copy of the same memorandum
submitted by Mr. Estrada, Chief of the
Student Desk of the Bureau of
Immigration, however, shows that the
accreditation fee is merely P10,000.00.

Conspicuously missing also from


petitioner's copy is the signature of the
Commissioner of the Bureau of
Immigration, Rufus Rodriguez. By reason
of these dissimilarities, Atty. Tansingco,
Chief of Staff of the Commissioner of the
Bureau of Immigration was prompted to
declare petitioner's copy as fake in his
letter dated 05 December 2007
submitted to the Ombudsman.

[Respondent] denies knowing that the


copy she was using is fake as she alleges
that she merely obtained it from the
available records of the Davao District
Office. She, however, failed to present
any proof to support this contention.
Mere allegation is not proof. It was
incumbent on the part of [respondent] to
prove this allegation by at least
submitting any copy of the memorandum
existing in their Davao office similarly
showing that the accreditation fee being
charged is P50,000.00 and also not
bearing the signature of the
Commissioner of the Bureau of
Immigration. Petitioner could have also
submitted the affidavit of any of her
officemates that they have also used or
even came in contact with a copy of the
said memorandum with the same
omissions. [Respondent's] failure to do
any of these greatly prejudiced her case.

Furthermore, WE agree with the


observation of the Ombudsman that
[respondent's] explanation that she does
not know that the copy she was using is
falsified and that she merely relied on the
copy of 

Office Memorandum No. RBR 00-57

available at their office, to be flimsy and


crude to be worthy of belief. For even as
[respondent] alleges that at the time she
was merely an entry level employee
when she was assigned to the Student's
Desk at the Office and that to perform
her duties she had to rely on her superior
officers as well as the records of the
office for information as to the applicable
rules and regulations, it is still hard to
believe that she was not able to discern
the illegality of the copy of the
memorandum she was using as it is clear
that the same was unsigned.
89

 (Citation omitted)
Still in the course of badgering the complainants for m
other officers of the Bureau of Immigration. She stated

"I'll be backing you up, walang gugulo sa


inyo.

90

Likewise, she implicated other officers, repeatedly a


others were in on her corrupt scheme, and suggesting
been more prodigal
91

Respondent's incessant demands also came with less


with her exaction would result in the denial of benefi
told Doromal that it would be to Doromal's disadvanta
to go through the entire accreditation process all ove
even need to go through accreditation, as the Cour
papers, even if it did not need to
92

Apart from these, when Diaz and Tautho paid through


neither reason nor any right to do so, demanded that
93

Most telling of respondent's audacity and depravity is


corruption, but even besmirching the entire governm
table," respondent answered

"Yes, my dear, that's the system ng


government.

94

She even added

"Ganito ang system, ano ako


magmamalinis?"
95

Far from demonstrating considerations that should mi


conceivably be appreciated as even aggravating. Her c
of a corrupt bureaucrat

The civil service cannot have itself overrun by officer


that public service exemplifies. For once, some individ
enough to show that respondent is nowhere near de
public, and as a portent to others who may be simi
respondent the supreme administrative penalty of dism

WHEREFORE,

the Petition for Review on Certiorari i

 
GRANTED.

The July 19, 2013 Amended Decision of the Court of A

REVERSED and SET ASIDE.

The Court of Appeals January 7, 2013 original Decision

REINSTATED.

Respondent MARIA ROWENA REGALADO is foun

GUILTY

of Grave Misconduct and of violating Section 7(d) of R


from service, along with its accessory penalties of ca
perpetual disqualification from employment in governm

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin,

an

Gesmundo, JJ.,
 

concur

Martires, J.,

on official leave

March 20, 2018

N O T I C E  O F  J U D G M E N T

Sirs /Mesdames

Please take notice that o

February 7, 2018

a Decision, copy attached hereto, was rendered by th


which was received by this Office on March 20, 2018 a

(i) The acceptance and retention by a public officia


received as a souvenir or mark of courtesy;

(ii) The acceptance by a public official or employee o


or medical treatment; or

(iii) The acceptance by a public official or employee


entirely outside the Philippine (such as allowan
nominal value if such acceptance is appropriate
permitted by the head of office, branch or agency

(c) Directly or indirectly requesting or receiving any


himself or for another, from any person for wh
secured or obtained, or will secure or obtain, any
help given or to be given, without prejudice to Sec

Very truly yours,          

(SGD.) WILFREDO V. LAPITAN


Division Clerk of Court        

Endnotes:

  Rollo,  p. 31.
1

 Id. at 10-26, Petition for Review on Certiorari.


2

 Id. at 28-39. The Amended Decision was penned by Associate Justice Priscilla J.
3

Baltazar-Padilla and concurred in by Associate Justices Fernanda Lampas Peralta


and Agnes Reyes-Carpio of the Former Fourteenth Division, Court of Appeals,
Manila.

 Id. at 41-62. The Decision was penned by Associate Justice Priscilla J. Baltazar-
4

Padilla and concurred in by Associate Justices Fernanda Lampas Peralta and Agnes
Reyes-Carpio of the Former Fourteenth Division, Court of Appeals, Manila.

 No copy was annexed to the Petition.


5
 Rep. Act No. 6713 (1989), sec. 7(d), Code of Conduct and Ethical Standards for
6

Public Officials and Employees.

Section 7. Prohibited Acts and Transactions. — In addition to acts and omissions of


public officials and employees now prescribed in the Constitution and existing laws,
the following shall constitute prohibited acts and transactions of any public official
and employee and are hereby declared to be unlawful:
....
(d Solicitation or acceptance of gifts. — Public officials and employees shall not solicit o
) indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary value
the course of their official duties or in connection with any operation being re
transaction which may be affected by the functions of their office.

As to gifts or grants from foreign governments, the Congress consents to:

(i) The acceptance and retention by a public official or employee of a gift of nominal
received as a souvenir or mark of courtesy;

(ii The acceptance by a public official or employee of a gift in the nature of a scholarship
) or medical treatment; or

(ii The acceptance by a public official or employee of travel grants or expenses for
i) entirely outside the Philippine (such as allowances, transportation, food, and lod
nominal value if such acceptance is appropriate or consistent with the interests of
permitted by the head of office, branch or agency to which he belongs.

The Ombudsman shall prescribe such regulations as may be necessary to carry out
the purpose of this subsection, including pertinent reporting and disclosure
requirements.

Nothing in this Act shall be construed to restrict or prohibit any educational,


scientific or cultural exchange programs subject to national security requirements.

Rollo, p. 48.
7

 Id. at 39.
8

 Id. at 15.
9

10
 Id. at 43.

11
 Id. at 59.

12
 Id. at 43.
 Id.
13

 Id.
14

 Id. at 44.
15

 Id.
16

 Id.
17

 Id.
18

 Id.
19

 Id.
20

 Id. at 46.
21

 Id.
22

 Id.
23

 Id.
24

 Id.
25

 Id.
26

 Id.
27

 Id.
28

 Id.
29

 Id. at 46 and 45.


30

 Id. at 45.
31

 CSC Res. No. 991936 (1999), sec. 52(A)(3) Uniform Rules on Administrative
32

Cases in the Civil Service.

Section 52. Classification of Offenses.  — Administrative offenses with corresponding


penalties are classified into grave, less grave or light, depending on their gravity or
depravity and effects on the government service.

A. The following are grave offenses with their corresponding penalties:


     . . . .
     3. Grave Misconduct
     1st offense -- Dismissal

 Code of Conduct and Ethical Standards for Public Officials and Employees.
33

  Rollo,  p. 45.
34

 Id.
35

 Id. at 47.
36

 No copy annexed to the Petition.


37

  Rollo,  p. 48.
38

 Id.
39

 No copy annexed to the Petition.


40

  Rollo,  p. 48.
41

 Id. at 41-62.
42

 BI Office Memo. Order No. RBR 00-57 (2000).


43

 Id. at 57.
44

 Id. at 56.
45

 Id. at 56-57.
46

 Id.at 61.
47

 Id. at 28-39.
48

 Id. at 37.
49

 Id. at 38.
50

 Id.
51

 Id. at 39.
52

 Id.
53

 Id. at 39.
54

 Id. at 10-26.
55
 Id. at 48.
56

 Id. at 61.
57

 Id. at 39.
58

 Id. at 22.
59

 CONST., art. XI, sec. 1.


60

 138 Phil. 37 (1969) [Per J. Castro, En Banc].


61

 J. Fernando, Concurring Opinion in Pineda v. Claudio, 138 Phil. 37, 58 (1969) [Per
62

J. Castro, En Banc].

  Office of the Ombudsman v. Faller, G.R. No. 208976 (Resolution), February 22,


63

2016 [Per J. Leonen, Second Division] citing Atty. Valera v. Office of the


Ombudsman, et al.,  570 Phil. 368, 385 (2008) [Per C.J. Puno, First Division].

Misconduct is the "transgression of some established and definite rule of action,


more particularly, unlawful behavior or gross negligence by a public officer. The
misconduct is grave if it involves any of the additional elements of corruption, willful
intent to violate the law or disregard of established rules, which must be proved by
substantial evidence."

 CSC Res. No. 1701077 (2017), 2017 Rules on Administrative Cases in the Civil
64

Service (2017 RACCS).

 CSC Res. No. 1701077 (2017), Rule 10, sec. 50 and 57.
65

 CSC Res. No. 991936 (1999), secs. 52(A)(3) and 58.


66

  Office of the Ombudsman v. Faller, G.R. No. 208976 (Resolution), February 22,


67

2016. [Per J. Leonen, Second Division]. citing Atty. Valera v. Office of the


Ombudsman, et al.,  570 Phil. 368, 385 (2008) [Per C.J. Puno, First Division].

 Rep. Act No. 6713 (1989), sec. 7(d).


68

 Id.
69

 Rep. Act No. 3019 (1960), sec.3(c).


70

 Rep. Act No. 3019 (1960), sec. 9(a).


71

 Rep. Act No. 6713 (1989), sec. 11(a)(b).


72
  Domingo v. Rayala, 569 Phil. 423, 447 (2008), citing Office of the Court
73

Administrator v. Enriquez, Adm. Matter No. P-89-290, 218 SCRA 1 (1993) [Per J.


Nachura, Third Division].

  Rollo,  pp. 55-56.


74

 Id. at 118.
75

 Id. at 38.
76

 CSC Res. No. 991936 (1999), sec. 52(A)(3).


77

 688 Phil. 318 (2012) [Per J. Brion, En Banc].


78

 Id. at 326.
79

Medina v. Commission on Audit, 567 Phil. 649 (2008) [Per J. Tinga, En Banc].


80

 Id. at 664.
81

 Id. at 664-665.
82

 CSC Res. No. 1701077 (2017), sec. 53.


83

Rollo, p. 38.
84

 Id. at 37.
85

 Id. at 43.
86

 Id.
87

 Id.
88

 Id. at 56-57.
89

 Id. at 46.
90

 Id.
91

 Id. at 44.
92

 Id. at 31-32.
93

 Id.
94

 Id.
95
SECOND DIVISION

March 8, 2017

G.R. No. 205745

CAPISTRANO DAAYATA, DEXTER SALISI, and BREGIDO MALA CAT,


JR., PetitionersvsPEOPLE OF THE PHILIPPINES, Respondent

DECISION

LEONEN, J.:

Pride, when unchecked, can waste our youth and cause the forfeiture of all
meaning in life, even in the most inconsequential things: in this case, a
basketball game.

Proof beyond reasonable doubt charges the prosecution with the immense
responsibility of establishing moral certainty. The prosecution's case must
rise on its own merits, not merely on relative strength as against that of the
defense. Should the prosecution fail to discharge its burden, acquittal must
follow as a matter of course.

This resolves a Petition for Review on Certiorari  under Rule 45,  praying
1 2

that the assailed May 31, 2012 Decision  and January 14, 2013
3

Resolution  of the Court of Appeals in CA-G.R. CR. No. 27951 be reversed
4

and set aside, and that petitioners be acquitted of the offense of which they
are charged.

The Court of Appeals' assailed Decision affirmed the April 24, 2003
Decision  of the Regional Trial Court of Cagayan de Oro City, Branch 37,
5

which found petitioners guilty beyond reasonable doubt of frustrated


murder. The Court of Appeals' assailed January 14, 2013 Resolution
denied petitioners' motion for reconsideration.

In an Information, petitioners Capistrano Daayata (Daayata), Dexter Salisi


(Salisi), and Bregido Malacat, Jr. (Malacat) were charged with frustrated
murder, as follows:
That on December 17, 1995, at about 6:00 [o]'clock in the morning at Zone
3, San Simon, Cagayan de Oro City, Philippines, and within the jurisdiction
of this Honorable Court, the above-named accused, with evident
premeditation and taking advantage of their superior strength, conspiring,
confederating together and mutually helping one another, did then and
there willfully, unlawfully and feloniously and with intent to kill, attack,
assault[,] box and struck one Rolando 0. Bahian with a stone and hitting the
latter's head and several parts of his body, thereby inflicting injuries[,] to wit:
"Depressed Fracture, Open frontal bone, left, and advised for surgery,["]
thus performing all the acts of execution which would produce the crime of
Murder, but nevertheless did not produce it by reason of some cause
independent of the will of the accused, that is, by the timely and able
medical attendance rendered to the said offended party which prevented
his death. 6

Upon arraignment, all three accused, now petitioners, pleaded not


guilty.  Trial then ensued.
7 8

Five (5) witnesses testified for the prosecution: the offended party, Rolando
Bahian (Bahian); Kagawad Leonardo Abalde (Kagawad Abalde) of
Barangay San Simon, Cagayan de Oro City; Barangay Captain Reynaldo
Yafiez (Barangay Captain Yafiez); Dr. Percy H. Arreza (Dr. Arreza) of the
Cagayan de Oro City Hospital; and Dr. John Mata (Dr. Mata), the surgeon
who tended to Bahian. 9

According to the prosecution, on December 16, 1995, at about 6:00 p.m.,


Bahian went to the house of Kagawad Abalde.  Bahian recounted to
10

Kagawad Abalde a violent altercation between him and the petitioners in


the course of a basketball game earlier that afternoon.  Bahian claimed that
11

Salisi had committed a foul against him, making him fall to the ground.  He 12

complained to the referee and this infuriated Salisi. In response, he


threatened Salisi, telling him that "he would just get even with
him."  Malacat heard his threat and positioned himself to punch Bahian.
13

Bahian, however, dodged the blow.  Daayata then came, pointing a gun at
14

Bahian.  Bahian then backed off and pleaded that they should not fight as
15

they were friends. 16

Kagawad Abalde advised Bahian to bring the matter to the attention of


Barangay Captain Y afiez. 17
Accordingly, the following morning, Bahian and Kagawad Abalde made
their way to Barangay Captain Yafiez' house.  While on their way, they
18

were blocked by petitioners.  Daayata hit Bahian on the left part of his
19

chest.  Bahian staggered and fell onto a parked jeep.  Salisi then hit Bahian
20 21

with a stone on the left side of his forehead, causing Bahian to fall to the
ground.  While Bahian was lying prostrate on the ground, petitioners boxed
22

and kicked Bahian.  Kagawad Abalde tried his best to get Bahian away but
23

to no avail.  All he could do was to shout for help.  Daayata then poked a
24 25

gun at Bahian, Malacat unsheathed a bolo, and Salisi wielded an iron bar. 26

Barangay Captain Yafiez rushed to the scene.  There, Bahian lay on the
27

ground as Kagawad Abalde tried to ward off his attackers.  Barangay 28

Captain Yafiez shouted to petitioners to stop.  Shortly after, they 29

retreated.  Barangay Captain Yafiez and Kagawad Abalde then brought


30

Bahian to Barangay Captain Yafiez' house, and later to Cagayan de Oro


City Hospital. 31

Upon examination, Dr. Arreza made the following findings on Bahian:


"depressed fracture, open frontal bone, left." 32

Bahian was noted to have possibly died, if not for the timely medical
intervention.  Dr. Mata subsequently performed surgery on Bahian.
33 34

The defense offered a different version of events. Apart from the three
petitioners, it offered the testimonies of Delfin Yafiez (Delfin),  Rodolfo 35

Yafiez (Rodolfo), Danzon Daayata (Danzon) and Rosemarie Daayata


(Rosemarie ). 36

Petitioners Salisi and Malacat claimed that they were having coffee at the
house of Vicente Daayata (Vicente), brother of petitioner Daayata, in the
morning of December 17, 1995.  Bahian arrived, together with Kagawad
37

Abalde, and called for Salisi to come out.  When Salisi acceded, Bahian
38

challenged him to a fight and threw the first punch that started a scuffle.  In 39

the course of the melee, Bahian took a swing for Salisi, who ducked,
causing Bahian to lose his balance. Bahian then fell on the pavement and
hit his head.  Kagawad Abalde then drew a gun, poked it at Salisi, and
40

threatened to kill him. 41

For his part, petitioner Daayata claimed that he was in his house, some 50
meters away from Vicente's house when the incident recalled by petitioners
Salisi and Malacat transpired.  He rushed to Vicente's house upon hearing
42
a commotion.  There, he saw Bahian and Kagawad Abalde, who was
43

pointing a gun at Malacat.


44

All three (3) petitioners claimed that it was not until an hour after the
incident that Barangay Captain Yafiez arrived.  They also acknowledged
45

that an altercation did take place during a basketball game the day before,
or on December 16, 1995.  They added however, that in the evening of
46

December 16, while they were on their way home, Bahian waited for them
to pass by his house, where he challenged them to a fight.  Defense
47

witness Rodolfo allegedly pacified Bahian.


48

In its Decision  dated April 24, 2003, the Regional Trial Court, Branch 37,
49

Cagayan de Oro City found petitioners guilty beyond reasonable doubt of


frustrated murder. The dispositive portion of its Decision read:

WHEREFORE, premises considered, this Court finds accused Capistrano


Daayata, Dexter Salisi, and Br[e]gido Malacat, Jr., guilty beyond
reasonable doubt of the crime of frustrated murder committed against
Rolando Bahian, and they conspired in committing the crime, and,
accordingly, each of the said accused is sentenced to suffer the penalty of
imprisonment of nine (9) years of prision mayor medium as the minimum
term to sixteen (16) years of reclusion temporal medium as the maximum
term.

Moreover, all the three accused are sentenced and ordered (1) to pay
Rolando Bahian jointly and severally the sum of Fifty Seven Thousand
Pesos (₱57,000.00) by way of reimbursement for the expenses he incurred
for medicines; (2) to pay Rolando Bahian jointly and severally the sum of
Eighty Thousand Pesos (₱80,000.00) for the income that

Rolando Bahian could have earned for two (2) years as a farmer; (3) to pay
Rolando Bahian jointly and severally the sum of Thirty Thousand Pesos
(₱30,000.00) by way of moral damages; and (4) to pay the costs of suit.

SO ORDERED. 50

On appeal, the Court of Appeals sustained the Regional Trial Court's


conclusions. It affirmed the penalty imposed by the Regional Trial Court,
but replaced the award of actual damages to temperate damages
amounting to ₱25,000. The Court of Appeals also deleted the award for
loss of earning capacity, there being no proof in support of it. It also
awarded ₱20,000 as civil indemnity. The dispositive portion of its assailed
May 31, 2012 Decision  read: 51

WHEREFORE, premises considered, the appealed Decision dated April


24, 2003 of the Regional Trial Court, Branch 37 of Cagayan de Oro City in
Criminal Case No. 96-266 is hereby AFFIRMED as to the penalty
imposed with MODIFICATION as to the award of damages.

All three (3) accused-appellants, CAPISTRANO DAAYATA, DEXTER


SALIS[I] and BREGIDO MALACAT, JR., are ordered to pay jointly and
severally Rolando Bahian the following amounts:

1. Php20,000.00 as civil indemnity;

2. Php30,000.00 as moral damages; and

3. Php25,000.00 as temperate damages.

SO ORDERED.  (Emphasis in the original)


52

Following the denial of their Motion for Reconsideration, petitioners filed the
present Petition,  where they insist on their version of events. They
53

emphasize several factual details and maintain that they did not initiate an
assault on Bahian. They assert that Bahian sustained the injury on his
forehead through his own fault; thus, they could not be held liable for acting
with intent to kill Bahian.

On July 24, 2013, respondent People of the Philippines, through the Office
of the Solicitor General, filed its Comment.  It insisted that it was
54

supposedly improper for this Court to re-evaluate the factual findings of the
Regional Trial Court and the Court of Appeals in the context of the present
Rule 45 Petition.  Apart from pleading the nature of a Rule 45 Petition, the
55

five (5)-page Comment devoted a singular paragraph to arguing that the


positive identification of the petitioners as Bahian's supposed attackers
must prevai1. 56

On May 12, 2014, petitioners filed their Reply,  noting that respondent
57

failed to directly confront the factual issues they had raised.

For resolution is the sole issue of whether petitioners are guilty beyond
reasonable doubt of frustrated murder.
I

Petitioners seek relief from this Court through a Petition for Review
on Certiorari under Rule 45 of the Rules of Court. It is basic that Rule 45
petitions may only raise pure questions of law,  and that the factual findings
58

of lower courts are generally binding and conclusive on this Court. Still,
there are recognized exceptions permitting this Court to overturn the factual
findings with which it is confronted. These exceptions are:

(1) When the conclusion is a finding grounded entirely on speculation,


surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both
appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based;

(9) When the facts set forth in the petition as well as in the petitioners' main
and reply briefs are not disputed by the respondents; and

(10) When the findings of fact of the Court of Appeals are premised on the
supposed absence of evidence and contradicted by the evidence on record
. 59

Specifically concerning criminal cases, this Court has stated that "in
exceptional circumstances, such as when the trial court overlooked
material and relevant matters ... this Court will re-calibrate and evaluate the
factual findings of the [lower courts]."
60
A careful review of this case and of the body of evidence that was available
for the Regional Trial Court's perusal reveals that there has been a gross
misapprehension of facts on the part of the Regional Trial Court and the
Court of Appeals. Thus, we reverse and acquit petitioners Capistrano
Daayata, Dexter Salisi, and Bregido Malacat, Jr.

II

The defense points out several facts, which lend greater plausibility to its
claim that the possibly fatal injury sustained by Bahian on his forehead was
not inflicted by any of the petitioners, and that petitioners did not initiate an
assault against Bahian. Negating the fact of the alleged perpetrators'
assault and infliction of a potentially fatal injury negates the corpus delicti of
the offense charged.

First, it appears that the location where the altercation occurred between
Bahian and Kagawad Abalde, on the one hand, and petitioners, on the
other, is not as plain and austere as the prosecution made it seem. The
prosecution merely claimed that Bahian and Kagawad Abalde were on their
way to Barangay Captain Yafiez's house when they were suddenly blocked
and assaulted by petitioners.  However, it was actually settled during trial -
61

consistent with the defense's contention - that the confrontation took place
in the vicinity of the house of vicente. 62

This detail does not intrinsically weigh in favor of either the prosecution or
the defense. For indeed, it may simply have been necessary to pass by
Vicente's house en route to Barangay Captain Yafiez's house and,
consistent with what the prosecution claimed, that it may have merely been
the spot where Bahian's attackers chose to launch their assault. But while
specificity of location may ultimately be inconsequential to the prosecution's
case, it is the genesis of the defense's case. As the defense asserts, the
altercation was precipitated by Bahian and Kagawad Abalde's arrival
outside Vicente's residence, where Bahian then called out and challenged
Salisi.
63

Second, while the prosecution painted a picture of a relentless assault that


lasted for as much as 30 minutes  - with petitioners supposedly not content
64

with Bahian falling onto a parked jeep, but even attacking him until he lay
on the pavement, and thereafter still continuing to punch and kick him 65
- Bahian's "medical certificate showed no injury other than that on [his]
forehead." 66

"Physical evidence is evidence of the highest order. It speaks more


eloquently than a hundred witnesses."  They have been characterized as
67

"that mute but eloquent manifestations of truth which rate high in our
hierarchy of trustworthy evidence."  Thus, in People v. Vasquez,  this Court
68 69

refused to undiscemingly lend credence to the incriminating assertions of


prosecution witnesses as to an alleged mauling, and stated that "[t]his
Court cannot be persuaded by the prosecution's claim of perpetrati on of
physical violence in the absence of any marked physical injuries on the
various parts of the victim's face and body." 70

As the defense correctly points out, if the prosecution's assertion of a


relentless assault were true, the greater probability was that Bahian must
have been "black and blue all over."  Quite contrary to the sort of physical
71

evidence that a purported relentless and prolonged assault should have


reasonably yielded, however, there was but one injury that Bahian was
noted to have sustained.

Third, Bahian himself was noted to have admitted that his head injury was
"caused by [him] hitting the edge of the concrete pavement." As the
following excerpt from Bahian's cross-examination reveals: 72

Q - And on February of 1995, your forehead was operated on by a certain


Dr. John Mata, is that correct?

A- Yes.

Q - And you told Dr. Mata that the wound on your forehead was caused by
you hitting the edge of the concrete pavement, is that correct?

A - Yes, I told him a lie so that I could be treated.

Q - But nobody in the German Doctors told you that you would not be
operated if that was caused by a stone or in a fight?

A- He asked me the reason why I got this injury?

Q-And then?
A - Then I told him the reason how I got this injury.

Q - That you hit the edge of the concrete pavement?

A- Yes.

Q-And that was the first time you talked to him before the operation?

A- Yes.

Q - The first time you talked to him, you lied to him?

A - Yes, I told a lie because I wanted to be operated.  (Citations omitted)


73

As the Court of Appeals has pointed out, it is true that the prosecution has
sought to extenuate the weight of Bahian's admission by having him
explain that he only lied to Dr. Mata because otherwise, "he would not have
been admitted to the hospital and his injury would have not been operated
on."  However, even this extenuating explanation does not completely
74

diminish the significance of his admission.

As the same excerpt from Bahian's cross-examination indicated, nobody


intimated to Bahian that he would not have been operated on if his injury
arose from a violent altercation. Confronted with this detail, Bahian never
offered a direct response, and instead appeared to have evaded the
question. He merely reiterated that, "Yes, I told a lie because I wanted to be
operated."  Thus, the defense's revelation that Bahian's alleged lie was not
75

predicated on a rational basis stands unrefuted.

Moreover, in the present Petition, the defense points out the curious
parallelism between, on the one hand, the admission or otherwise lie made
by Bahian to Dr. Mata, and on the other hand, the defense's main
contention that Bahian sustained a head injury through his own fault:

There is no showing that petitioners knew that complainant told his doctor
that he hit his head on the edge of the concrete pavement. They came to
know of it only when they heard him admit it on cross-examination. And yet,
that's exactly what they have always been asserting right from the very
start, even during the preliminary investigation, or long before they heard
him say it on the witness stand.
It is too much of a coincidence that petitioners and the complainant should
say exactly the same thing, that he hit his head on the edge of the concrete
pavement - unless it is true. 76

Finally, several witnesses - both from the defense and the prosecution -
have belied the prosecution's claim that petitioners Daayata, Malacat, and
Salisi wielded a gun, a bolo and an iron bar, respectively.

The most compromising of these witnesses is the prosecution's own,


Barangay Captain Yañez. He categorically stated that he was well in a
position to "see or identify if they were armed."  Ultimately, however, his
77

observation was to the contrary:

Q - They were armed or not?

A- Who?

Q - The three of them?

A - I could see or identify if they were armed.

Q - Nobody brought a bolo?

A - When I arrived there, I did not see anybody holding a bolo.

Q - Nobody brought a steel pipe?

A - I have not seen.

Q - You did not see anybody holding a gun?

Q - No.  (Citation omitted)


78

Danzon, a defense witness whom the prosecution never bothered to cross-


examine, stated:

Q - Tell us what was that unusual incident all about?

A - What I could say is that: I heard noise outside and because I was
watching them, I saw Kag. Abalde holding a gun pointing upward and I saw
Rolando Bahian already wounded on his face.  (Citation omitted)
79
Two (2) other defense witnesses - Rosemarie and Delfin -were noted to
have made the same observations. 80

III

Conviction in criminal actions demands proof beyond reasonable doubt.


Rule 133, Section 2 of the Revised Rules on Evidence states:

Section 2. Proof beyond reasonable doubt. - In a criminal case, the


accused is entitled to an acquittal, unless his guilt is shown beyond
reasonable doubt. Proof beyond reasonable doubt does not mean such a
degree of proof as, excluding possibility of error, produces absolute
certainty. Moral certainty only is required, or that degree of proof which
produces conviction in an unprejudiced mind.

While not impelling such a degree of proof as to establish absolutely


impervious certainty, the quantum of proof required in criminal cases
nevertheless charges the prosecution with the immense responsibility of
establishing moral certainty, a certainty that ultimately appeals to a
person's very conscience. While indeed imbued with a sense of altruism,
this imperative is borne, not by a mere abstraction, but by constitutional
necessity:

This rule places upon the prosecution the task of establishing the guilt of an
accused, relying on the strength of its own evidence, and not banking on
the weakness of the defense of an accused. Requiring proof beyond
reasonable doubt finds basis not only in the due process clause of the
Constitution, but similarly, in the right of an accused to be "presumed
innocent until the contrary is proved." "Undoubtedly, it is the constitutional
presumption of innocence that lays such burden upon the prosecution."
Should the prosecution fail to discharge its burden, it follows, as a matter of
course, that an accused must be acquitted. As explained in Basilio v.
People of the Philippines:

We ruled in People v. Ganguso:

An accused has in his favor the presumption of innocence which the Bill of
Rights guarantees.  Unless his guilt is shown beyond reasonable doubt, he
1âwphi1

must be acquitted. This reasonable doubt standard is demanded by the


due process clause of the Constitution which protects the accused from
conviction except upon proof beyond reasonable doubt of every fact
necessary to constitute the crime with which he is charged. The burden of
proof is on the prosecution, and unless it discharges that burden the
accused need not even offer evidence in his behalf, and he would be
entitled to an acquittal. Proof beyond reasonable doubt does not, of course,
mean such degree of proof as, excluding the possibility of error, produce
absolute certainty. Moral certainty only is required, or that degree of proof
which produces conviction in an unprejudiced mind. The conscience must
be satisfied that the accused is responsible for the offense charged.

Well-entrenched in jurisprudence is the rule that the conviction of the


accused must rest, not on the weakness of the defense, but on the strength
of the prosecution. The burden is on the prosecution to prove guilt beyond
reasonable doubt, not on the accused to prove his innocence.  (Citations
81

omitted)

The details pointed out by the defense reveal how the prosecution failed to
establish the moral certainty and conscientious satisfaction that attends
proof of guilt beyond reasonable doubt. While not per se demonstrating the
veracity and blamelessness of the defense's entire version of events, they
nevertheless disclose how the prosecution's case is unable to stand on its
own merits.

They cast doubt on whether the complainant and his companion were
actually stopped in their tracks to be assaulted, and support the possibility
that they may have instead deliberately intended to bring themselves to
Vicente's house to provoke or challenge one (1) of the petitioners.

They also cast doubt on whether the complainant was relentlessly


assaulted, with the specific purpose of ending his life; whether the
ostensible fatal blow was dealt to complainant by one (1) of the petitioners
or was dealt upon him by his own violent imprudence; and whether
petitioners had actually brandished implements for maiming and killing.

Not only do these doubts persist, details disclosed by the prosecution itself
- taken together with how the defense accounted for the events of
December 16 and 17, 1995 - demonstrate the dubiety of the prosecution's
claims.

As Bahian himself recalled to Kagawad Abalde, it was he who threatened


Salisi that "he would just get even with him."  By his own recollection too,
82

he acknowledged that it was only upon his utterance of that threat that
Malacat and Daayata responded with correlative aggression. He conceded
having been put in a situation where he had to back off. By his own
recollection, the clash between him and petitioners could have ended there,
yet it did not. It appears that, rather than letting the better part of reason
and modesty prevail, Bahian elected to make good on his threat to
eventually just get even with his adversaries. Along the way, it even
appears that he enlisted the aid of Kagawad Abalde, whose participation in
the clash in the morning of December 17, 1995, as the defense recounted,
was not as a pacifier but also as an aggressor. Unfortunately for Bahian, it
appears that his own hubris and lack of fighting prowess not only prolonged
his quarrel, but even brought him potentially fatal physical harm.

Taking off from the events in the basketball game of December 16, 1995,
the prosecution unravelled a narrative of petitioners' supposed
vindictiveness. Yet the contrary is apparent. The confluence of Bahian's
admissions of a prior altercation, his self-issued threat, how he was
constrained to desist, and his own account to Dr. Mata of how he sustained
his injury, as well as the glaring dissonance noted by the defense and
backed by physical evidence, demonstrate how the prosecution has fallen
far too short of discharging its burden of proving petitioners' guilt beyond
reasonable doubt.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of


Appeals in CA G.R. CR No. 27951 is REVERSED and SET
ASIDE. Petitioners Capistrano Daayata, Dexter Salisi, and Bregido
Malacat, Jr. are hereby ACQUITTED for failure of the prosecution to prove
their guilt beyond reasonable doubt. Any amount they each paid by way of
a bail bond is ordered RETURNED.

SO ORDERED.

MARVIC M.V.F. LEONENAssociate Justice

WE CONCUR:

ANTONIO T. CARPIOAssociate JusticeChairperson

PRESBITERO J. VELASCO, JR. *


DIOSDADO M. PERA
Associate Justice Associate Justice
JOSE CATRAL MENDOZAAssociate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

ANTONIO T. CARPIOAssociate JusticeChairperson

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division
Chairperson’s Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENOChief Justice

Footnotes
*
 Designated as Fifth Member per S.O. No. 2416-U dated January 4, 2017.
1
 Rollo, pp. 4-23.
2
 1997 Rules of Court

 Rollo, pp. 100-116. The Decision was penned by Associate Justice


3

Carmelita Salandanan Manahan and concurred in by Associate Justices


Romulo V. Borja and Pedro B. Corales of the Twenty-First Division, Court
of Appeals, Cagayan de Oro City.

 Id. at 125-129. The Resolution was penned by Associate Justice Romulo


4

V. Borja and concurred in by Associate Justices Ma. Luisa C. Quijano-


Padilla and Marie Christine Azcarraga-Jacob of the TwentyFirst

Division, Court of Appeals, Cagayan de Oro City.

 Id. at 24-42. The Decision was penned by Judge Jose L. Escobido of


5

Branch 37, Regional Trial Court, Misamis Oriental, Cagayan de Oro City.
 Rollo, p. 24.
6

 Id. at 102.
7

 Id.
8

 Id.
9

10
 Id.
11
 Id. at 102-103.
12
 Id. at 103.
13
 Id.
14
 Id.
15
 Id.
16
 Id.
17
 Id.
18
 Id.
19
 Id.
20
 Id.
21
 Id.
22
 Id.
23
 Id.
24
 Id.
25
 Id. at 104.
26
 Id.
27
 Id.
28
 Id.
29
 Id.
30
 Id.
31
 Id.
32
 Id.
33
 Id.
34
 Id.
35
 Id. at 12.
36
 Id. at 105.
37
 Id.
38
 Id.
39
 Id.
40
 Id.
41
 Id. at 106.
42
 Id.
43
 Id.
44
 Id.
45
 Id.
46
 Id.
47
 Id.
48
 Id.
49
 Id. at 24-42.
50
 Id. at 41-42.
51
 Id. at 100-116.
52
 Id. at 115.
53
 Id. at 4-23.
54
 Id. at 145-149.
55
 Id.
56
 Id. at 149.
57
 Id. at 161-163.
58
 RULES OF COURT, Rule 45, sec. 1:

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal


by certiorari from a judgment or final order or resolution of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall raise only questions of
law which must be distinctly set forth.

 Marasigan y De Guzman v. Fuentes, G.R. No. 201310, January 11, 2016


59

<http://sc.judiciary.gov. ph/pdf/web/viewer.html?
file=/jurisprudence/20l6/january2016/20131 O.pdt> 5-6 [Per J. Leonen,
Second Division], citing Cirtek Employees Labor Union-Federation of Free
Workers v. Cirtek Electronics, Inc., 665 Phil. 784, 789-790 (2011) [Per J.
Carpio-Morales, Third Division].

 People of the Philippines v. Esteban, G.R. No. 200290, June 9, 2014


60

<http://sc.judiciary.gov .ph/pdf/web/viewer .html?


file=/jurisprudence/2014/june2014/200920 .pdt> 6 [Per J. Reyes, First
Division].
61
 Rollo, p. 103.
62
 Id. at 6.
63
 Id. at 105.
64
 Id. at 13 and 17.
65
 Id. at 103.
66
 Id. at 13.

 People v. Sacabin, 156 Phil. 707, 713 (1974) [Per J. Fernandez, Second


67

Division].

 People v. Vasquez, 345 Phil. 380, 395 (1997) [Per J. Hermosisima, Jr.,


68

First Division], citing People v. Uycoque, 316 Phil. 930, 942 (1995) [Per J.


Puno, Second Division].
69
 345 Phil. 380 (1997) [Per J. Hermosisima, Jr., First Division].
70
 Id. at 395.
71
 Rollo, p. 14.
72
 Id. at 9.
73
 Id. at 8-10.
74
 Id. at 109.
75
 Id. at 10.
76
 Id. at 10.
77
 Id. at 13.
78
 Id. at l2-13.
79
 Id. at 12.
80
 Id.
 Macayan, Jr. y Malana v. People, G.R. No. 175842, March 18, 2015
81

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/20l5/march2015/17 5842.pdt> 7-8 [Per J. Leonen,
Second Division], citing CONST., art. Ill, sec. 1; CONST., art. Ill, sec. 14
(2); People of the Philippines v. Solayao, 330 Phil. 811, 819 (1996) [Per J.
Romero, Second Division]; and Basilio v. People of the Philippines, 591
Phil. 508, 521-522 (2008) [Per J. Velasco, Jr., Second Division].
82
 Rollo, p. 103.

SECOND DIVISION

February 20, 2017

G.R. No. 198120

MERCEDES S. GATMAYTAN, Petitionervs.FRANCISCO DOLOR


(SUBSTITUTED BY HIS HEIRS) AND HERMOGENA DOLOR,
Respondents

DECISION

LEONEN, J.:

When a party's counsel serves a notice of change in address upon a court,


and the court acknowledges this change, service of papers, processes, and
pleadings upon the counsel's former address is ineffectual. Service is
deemed completed only when made at the updated address. Proof,
however, of ineffectual service at a counsel's former address is not
necessarily proof of a party's claim of when service was made at the
updated address. The burden of proving the affirmative allegation of when
service was made is distinct from the burden of proving the allegation of
where service was or was not made. A party who fails to discharge his or
her burden of proof is not entitled to the relief prayed for.

This resolves a Petition for Review on Certiorari  under Rule 45 of the


1

1997 Rules of Civil Procedure, praying that the assailed March 24, 2011
Decision  and August 9, 2011 Resolution  of the Court of Appeals, Sixth
2 3

Division, in CA-G.R. CV No. 88709 be reversed and set aside and that the
Court of Appeals be directed to resolve petitioner Mercedes S. Gatmaytan's
(Gatmaytan) appeal on the merits.

In its assailed March 24, 2011 Decision, the Court of Appeals dismissed
Gatmaytan's appeal, noting that the assailed March 27, 2006 Decision  of 4

the Quezon City Regional Trial Court, Branch 223, had already attained
finality. In its assailed August 9, 2011 Resolution, the Court of Appeals
denied Gatmaytan's Motion for Reconsideration.

The Regional Trial Court's March 27, 2006 Decision resolved an action for
reconveyance against Gatmaytan and in favor of the plaintiff spouses, now
respondents Francisco and Hermogena Dolor (Dolor Spouses).

In a Complaint for Reconveyance of Property and Damages filed with the


Quezon City Regional Trial Court, the Dolor Spouses alleged that on
February 17, 1984, they, as buyers, and Manuel Cammayo (Cammayo), as
seller, executed a Deed of Sale over a 300 square meter parcel of land
located in Novaliches, Quezon City.  This 300 square meter parcel was to
5

be segregated from a larger landholding.6

The Deed of Sale stated that, of the total consideration of ₱30,000.00, half
(i.e., ₱l5,000.00) would be paid upon the execution of the Deed.  The 7

balance of ₱15,000.00 would be paid upon the release and delivery of the
registrable Deed of Sale and of the Transfer Certificate of Title (TCT)
covering the segregated portion.8

Per a "Kasunduan"  and based on a receipt dated May 18, 1984,  the Dolor
9 10

Spouses were able to pay the entire consideration of P30,000.00 even


before the TCT was delivered to them.  As such, on May 16, 1986, a
11

second Deed of Sale, in lieu of the first, was executed by Cammayo in


favor of Francisco Dolor.  This Deed no longer referenced the condition for
12

payment of the ₱15,000.00 balance but merely stated that the lot was
being sold "for and in consideration of the sum of THIRTY THOUSAND
PESOS[.]" 13

The Dolor Spouses claimed that, on March 27, 1989, they authorized
Cecilio T. Manzanilla and his family to occupy the lot and to construct a
house on it. 14
To the Dolor Spouses' surprise, in October 1999, petitioner Gatmaytan filed
an ejectment suit against Encarnacion V da. De Manzanilla and her
family.  Gatmaytan anchored her ejectment suit on her claim that she was
15

the registered owner of the lot. 16

In response, the Dolor Spouses filed against Gatmaytan and Cammayo the
Complaint for Reconveyance of Property and Damages, which gave rise to
the present petition.

In her Answer, Gatmaytan claimed that the Deed of Sale between the Dolor
Spouses and Cammayo was never registered.  She explained that the lot
18

was a portion of a larger 5,001 square meter parcel, which Cammayo had
earlier conveyed to her.  She further averred that the Dolor Spouses' action
19

was barred by prescription as they failed to enforce their rights for 11


years.20

In his Answer, Cammayo acknowledged executing a Deed of Sale in favor


of the Dolor Spouses.  He added that he entered into an agreement with
21

Gatmaytan for the latter to defray the expenses for the payment of real
estate taxes, and the segregation of the title covering the portion sold to the
Dolor Spouses from the larger, 5,001 square meter, parcel.  Per this22

agreement, Gatmaytan was to have the larger parcel titled in her name with
the condition that Gatmaytan would deliver to the Dolor Spouses the
segregated portion and TCT covering it. 23

On March 27, 2006, the Quezon City Regional Trial Court, Branch 223
rendered a Decision ordering Gatmaytan to convey the lot to the Dolor
Spouses. 24

On June 16, 2006, Gatmaytan filed her Motion for Reconsideration,  which 25

was denied by the trial court on August 28, 2006. 26

Gatmaytan then filed an Appeal with the Court of Appeals.

In its assailed March 24, 2011 Decision,  the Court of Appeals, Sixth
27

Division, dismissed Gatmaytan's Appeal. It ruled that the Regional Trial


Court's March 27, 2006 Decision had already attained finality as Gatmaytan
filed her Motion for Reconsideration beyond the requisite 15-day period.
This ruling was anchored on the following factual observations:

First, the Regional Trial Court's Decision was rendered on March 27, 2006; 28
Second, per the registry return receipt attached to the back portion of the
last page of the Regional Trial Court's Decision, Gatmaytan's counsel, Atty.
Raymond Palad (Atty. Palad), received a copy of the same Decision on
April 14, 2006;  and 29

Finally, Gatmaytan filed her Motion for Reconsideration only on June 16,
2006.30

Gatmaytan then filed a Motion for Reconsideration. 31

In its assailed August 9, 2011 Resolution,  the Court of Appeals denied


32

Gatmaytan's Motion for Reconsideration. It emphasized that the Receipt at


the back of the last page of the Regional Trial Court's Decision indicated
that a copy of the same Decision was received by a certain Maricel Luis
(Luis), for and on behalf of Atty. Palad, on April 14, 2006.  The Court of
33

Appeals added that previous orders of the Regional Trial Court were
likewise received by Luis, and that Luis' authority to receive for Atty. Palad
had never been questioned. 34

Gatmaytan filed the Present Petition. 35

Gatmaytan insists that the Regional Trial Court's March 27, 2006 Decision
has not attained finality as the April 14, 2006 service was made to her
counsel's former address (at No. 117 West Avenue, Quezon City) as
opposed to the address (at Unit 602, No. 42 Prince Jun Condominium,
Timog Avenue, Quezon City) that her counsel indicated in a June 8, 2004
Notice of Change of Address  filed with the Regional Trial Court.
36

Gatmaytan adds that the Regional Trial Court noted the change of address
in an Order  of the same date, and directed that, from then on, service of
37

papers, pleadings, and processes was to be made at her counsel's updated


address at Unit 602, No. 42 Prince Jun Condominium, Timog Avenue,
Quezon City. 38

In support of the present Petition, Gatmaytan attached a copy of the


Regional Trial Court's March 27, 2006 Decision.  On its last page is a
39

typewritten text, which indicates that a copy of the same Decision was
furnished to:

Atty. Raymond Palad

Counsel for Gatmaytan No. 117 West Ave., Quezon City 40


The same last page of the copy of the Regional Trial Court's Decision
indicates, in handwritten text:

Mailed also to

Atty. Raymond Palad at:

Unit 602, No. 42 Prince Jun Condominium Timog Ave., Quezon City 41

For resolution is the sole issue of whether the Regional Trial Court's March
27, 2006 Decision has already attained finality thus, precluding the filing of
petitioner Mercedes S. Gatmaytan's appeal with the Court of Appeals.

It is elementary that "[a]ppeal is not a matter of right but a mere statutory


privilege."  As such, one who wishes to file an appeal "must comply with
42

the requirements of the rules, failing in which the right to appeal is lost."
43

It is just as basic that a judgment can no longer be disturbed, altered, or


modified as soon as it becomes final and executory;  "nothing is more
44

settled in law."  Once a case is decided with finality, the controversy is


45

settled and the matter is laid to rest.  Accordingly,


46

[a final judgment] may no longer be modified in any respect, even if the


modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of
the land.47

Once a judgment becomes final, the court or tribunal loses jurisdiction, and
any modified judgment that it issues, as well as all proceedings taken for
this purpose are null and void.48

This elementary rule finds basis in "public policy and sound practice that at
the risk of occasional error, the judgment of courts and the award of quasi-
judicial agencies must become final at some definite date fixed by
law."  Basic rationality dictates that there must be an end to litigation. Any
49

contrary posturing renders justice inutile, reducing to futility the winning


party's capacity to benefit from the resolution of a case.
50
In accordance with Rule 36, Section 2 of the 1997 Rules of Civil Procedure,
unless a Motion for Reconsideration is timely filed, the judgment or final
order from which it arose shall become final:

Section 2. Entry of Judgments and Final Orders. - If no appeal or motion


for new trial or reconsideration is filed within the time provided in these
Rules, the judgment or final order shall forthwith be entered by the clerk in
the book of entries of judgments. The date of finality of the judgment or
final order shall be deemed to be the date of its entry. The record shall
contain the dispositive part of the judgment or final order and shall be
signed by the clerk, with a certificate that such judgment or final order has
become final and executory. (Emphasis supplied)

In turn, Rule 37, Section 1, in relation to Rule 41, Section 3 of the 1997
Rules of Civil Procedure, allows for 15 days from notice of a judgment or
final order within which a Motion for Reconsideration may be filed.

Rule 37, Section 1 reads:

Section 1. Grounds of and Period for Filing Motion for New Trial or
Reconsideration. - 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 materially affecting
the substantial rights of said party:

(a) Fraud, accident, mistake or excusable negligence which ordinary


prudence could not have guarded against and by reason of which such
aggrieved party has probably been impaired in his rights; or

(b) Newly discovered evidence, which he could not, with reasonable


diligence, have discovered, and produced at the trial, and which if
presented would probably alter the result.

Within the same period, the aggrieved party may also move for
reconsideration upon the grounds that the damages awarded are
excessive, that the evidence is insufficient to justify the decision or final
order, or that the decision or final order is contrary to law. (Emphasis
supplied)
For its part, Rule 41, Section 3 reads:

Section 3. 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. (Emphasis supplied)

II

Reckoning the date when a party is deemed to have been given notice of
the judgment or final order subject of his or her Motion for Reconsideration
depends on the manner by which the judgment of final order was served
upon the party himself or herself.

When, however, a party is represented and has appeared by counsel,


service shall, as a rule, be made upon his or her counsel. As Rule 13,
Section 2 of the 1997 Rules of Civil Procedure provides:

Section 2. Filing and Service, Defined. –

...

Service is the act of providing a party with a copy of the pleading or paper
concerned. If any party has appeared by counsel, service upon him shall
be made upon his counsel or one of them, unless service upon the party
himself is ordered by the court. Where one counsel appears for several
parties, he shall only be entitled to one copy of any paper served upon him
by the opposite side. (Emphasis supplied)

In Delos Santos v. Elizalde,  this Court explained the reason for equating


51

service upon counsels with service upon the parties themselves:

To reiterate, service upon the parties' counsels of record is tantamount to


service upon the parties themselves, but service upon the parties
themselves is not considered service upon their lawyers. The reason is
simple-the parties, generally, have no formal education or knowledge of the
rules of procedure, specifically, the mechanics of an appeal or availment of
legal remedies; thus, they may also be unaware of the rights and duties of
a litigant relative to the receipt of a decision. More importantly, it is best for
the courts to deal only with one person in the interest of orderly procedure-
either the lawyer retained by the party or the party him/herself ifs/he does
not intend to hire a lawyer.52

Rule 13, Section 9 of the 1997 Rules of Civil Procedure provides for three
(3) modes of service of judgments or final orders: first, personal service;
second, service by registered mail; and third, service by publication. It
reads:

Section 9. Service of Judgments, Final Orders or Resolutions. - Judgments,


final orders or resolutions shall be served either personally or by registered
mail. When a party summoned by publication has failed to appear in the
action, judgments, final orders or resolutions against him shall be served
upon him also by publication at the expense of the prevailing party.

Rule 13, Section 10 specifies when the first two (2) modes - personal
service and service by registered mail - are deemed completed, and notice
upon a party is deemed consummated:

Section 10. Completeness of Service. - Personal service is complete upon


actual delivery. Service by ordinary mail is complete upon the expiration of
ten (10) days after mailing, unless the court otherwise provides. Service by
registered mail is complete upon actual receipt by the addressee, or after
five (5) days from the date he received the first notice of the postmaster,
whichever date is earlier. (Emphasis supplied)

III

While petitioner filed a Motion for Reconsideration of the Regional Trial


Court's March 27, 2006 Decision,  there is a dispute as to the date from
53

which the 15-day period for filing a Motion for Reconsideration must be
reckoned. That is, there is a dispute as to when petitioner was given notice
of the Decision. The Court of Appeals refused to entertain petitioner's
appeal reasoning that the judgment appealed from has attained
finality.  This, according to it, is because petitioner belatedly filed her
54

Motion for Reconsideration on June 16, 2006 considering that her counsel
supposedly received notice of it on April 14, 2006.  Petitioner insists that
55
the Motion was timely filed, her counsel having received notice of it only on
June 1, 2006. 56

Petitioner claims that the Court of Appeals wrongly reckoned service on


April 14, 2006 as the service made on this date was upon her counsel's
former address.  She adds that service upon her counsel's updated and
57

correct address was made only on June 1, 2006.  Petitioner points out that
58

her counsel filed with the Regional Trial Court a Notice of Change of
Address. She further emphasizes that the Regional Trial Court
acknowledged this change of address and issued an Order stating that,
from then on, service shall be made upon the updated address. 59

We sustain petitioner's position that the service made on her counsel's


former address was ineffectual. We find however, that petitioner failed to
discharge her burden of proving the specific date - allegedly June 1, 2006 -
in which service upon her counsel's updated address was actually made.
Having failed to establish the reckoning point of the period for filing her
Motion for Reconsideration, we cannot sustain the conclusion that
petitioner insists on, and which is merely contingent on this reckoning point:
we cannot conclude that her Motion for Reconsideration was timely filed.
Having failed to discharge her burden of proof, we are constrained to deny
her Petition.

IV

Indeed, petitioner's counsel filed with the Regional Trial Court a Notice of
Change of Address dated June 8, 2004. She attached this Notice to her
Petition as its Annex "F." This Notice states:

NOTICE OF CHANGE OF ADDRESSTHE BRANCH CLERK OF COURT

Regional Trial Court, Branch 223, Quezon City

GREETINGS:

Undersigned counsel hereby manifest (sic) that effective June 8,


2004, their office address shall be at:

PALAD, LAURON & PALAD LAW FIRM UNIT 602, NO. 42 PRINCE JUN
CONDOMINIUM, TIMOG AVENUE QUEZON CITY
Quezon City for Manila, June 8, 2004

PALAD, LAURON & PALAD LAW FIRM

By:

RAYMUND. P. PALAD (sgd) Counsel for Defendant Gatmaytan PTR No.


52151545 I 02-17-04 I QC IBP No. 594509 I 01-10-04 I Kal. City Roll of
Attorneys No. 39140 I 3-15- 94 Page No. 328, Book No. XVI 60

Conformably, the Regional Trial Court issued an Order of the same date,
noting the change of address and stating that service of paper, processes
and pleadings shall, from then on, be made on petitioner's counsel's
updated address:

ORDER

The Notice of Change Address (sic) dated June 8, 2004, filed by Atty.
Raymund P. Palad, is NOTED. Let therefore said counsel be furnished with
Orders and other papers corning from this court at his new address at Unit
602, No. 42 Prince Jun Condominium, Timog Avenue, Quezon City.

SO ORDERED.

Quezon City, Philippines, June 8, 2004.

Presiding Judge 61

By its own Order, the Regional Trial Court bound itself to make service at
petitioner's counsel's updated address at Unit 602, No. 42 Prince Jun
Condominium, Timog Avenue, Quezon City. Thus, the service of its March
27, 2006 Decision at petitioner's counsel's former address at No. 117 West
Avenue, Quezon City was ineffectual.

Service, however, was also made at petitioner's counsel's updated


address. Petitioner herself acknowledges this. Precisely, it is her contention
that the 15-day period in which she may file her Motion for Reconsideration
must be reckoned from the date when service at this updated address was
made. This date, she alleges, was June 1, 2006.
Petitioner is correct in saying that the 15-day period must be reckoned from
the date when service was made at the updated address. To hold
otherwise would be to condone a glaring violation of her right to due
process. It is to say that she might as well not be given notice of the
Decision rendered by the Regional Trial Court. In this respect, we sustain
petitioner.

We, however, find ourselves unable to sustain her claim that the 15-day
period must be reckoned from June 1, 2006.

As basic as the previously-discussed principles on appeal as a statutory


privilege, finality of judgments, and service of papers, is the principle that "a
party who alleges a fact has the burden of proving it."  A mere allegation
62

will never suffice: "a mere allegation is not evidence, and he who alleges
has the burden of proving the allegation with the requisite quantum of
evidence."  Logically, a party who fails to discharge his or her burden of
63

proof will not be entitled to the relief prayed for.

This court's grant of relief to petitioner is contingent on her ability to prove


two (2) points: first, that the Regional Trial Court was bound to make
service at her counsel's updated address; and second, that service at this
address was made on June 1, 2006, and not on an earlier date. While
petitioner has successfully shown that service to her counsel's former
address was ineffectual, she failed to prove that service on her counsel's
updated address was made only on June 1, 2006.

Petitioner attached the following annexes in support of the Petition she filed
with this court:

a. Annex "A" - a certified true copy of the Court of Appeals' assailed March
24, 2011 Decision 64

b. Annex "B" - a certified true copy of the Court of Appeals' assailed August
9, 2011 Resolution 65

c. Annex "C" - a photocopy of the Regional Trial Court's March 27, 2006
Decision 66

d. Annex "D" - a copy of the Brief she filed before the Court of Appeals 67
e. Annex "E" - a copy of the Motion for Reconsideration she filed before the
Court of Appeals 68

f. Annex "F" - a copy of the Notice of Change of Address filed with the
Regional Trial Court by her counsel 69

g. Annex "G" - a photocopy of the Regional Trial Court's June 8, 2004


Order 70

h. Annex "H" - a copy of the respondents' Comment I Opposition to her


Formal Offer of Evidence filed with the Regional Trial Court 71

i. Annex "I" - a copy of respondents' Memorandum filed with the Regional


Trial Court 72

Annexes "C" "F" "G," "H" and "I" are crucial to petitioner's claim that service
of the March 27, 2006 Decision to her counsel's former address was
ineffectual. In addition to what we previously discussed was the importance
of the Notice of Change of Address and the ensuing Order of the Regional
Trial Court. Annexes "H" and "I" indicate that the respondents themselves
started serving copies of their submissions and pleadings with petitioner's
counsel's updated address, in conformity with the Regional Trial Court's
June 8, 2004 Order.

None, however, of the documents that petitioner adduced before this Court
attests to the truth of her allegation that service to her counsel's new and
correct address was made only on June 1, 2006.

In her Petition, petitioner alluded to a '"[r]eceipt' attached at the back of the


[Regional Trial Court's March 27, 2006] decision."  No copy of this receipt,
73

however, was produced by petitioner. In all of the 16 pages of the Regional


Trial Court's Decision that petitioner submitted as Annex "C" of her Petition,
the only references made to the mailing of the Decision to her counsel are:
first, the previously mentioned typewritten and handwritten texts indicating
mailing to both her counsel's former address and updated address; and
second, a stamped notation that stated:

RELEASED BY REGISTERED MAIL DATE 3/31/06 By: [signature


appears] 74
Neither of these attests to June 1, 2006 as the date of delivery to her
counsel.

In Cortes v. Valdellon,   this Court noted the following as acceptable proofs


75

of mailing and service by a court to a party: (1) certifications from the


official Post Office record book and/or delivery book; (2) the actual page of
the postal delivery book showing the acknowledgment of receipt; (3)
registry receipt; and (4) return card.76

Petitioner could have produced any of these documents or other similar


proof to establish her claim. She did not. All she has relied on is her bare
allegation that delivery was made on June 1, 2006. It is as though belief in
this allegation necessarily follows from believing her initial claim that
service to her counsel's former address was ineffectual.

Petitioner's own, voluntary reference to a '"[r]eceipt' attached at the back of


the [Regional Trial Court's March 27, 2006] decision"  suggests that she
77

herself had access to this receipt and could have presented a copy of it to
this Court. The fact that she did not present it implies negligence, or worse,
calls into operation the presumption "[t]hat evidence willfully suppressed
would be adverse if produced."  Regardless, it remains that she failed to
78

prove what she claimed.

Petitioner similarly alludes to the Regional Trial Court's supposed


realization of its error and subsequent action to correct its mistake:

On account of this mistake and realizing that Atty. Raymond Palad only
received a copy of the decision on 01 June 2006 (see Affidavit of Atty.
Raymond Palad, attached to Motion for Reconsideration, Annex
"E ", hereof), the court a quo resolved the motion for reconsideration on the
merits and gave due course to Gatmaytan's Notice of Appeal. The Hon.
Court of Appeals - Sixth Division should have done the same thing. 79
(Emphasis in the original)

As with the "receipt" she had earlier adverted to, petitioner could just as
easily have presented to this Court a copy of the Regional Trial Court's
Resolution, which supposedly resolved her Motion for Reconsideration on
the merits as opposed, presumably, to denying it on the technical ground
that it was filed beyond the 15-day period. This would supposedly reveal
that the Regional Trial Court realized its mistake and corrected it. She did
not present this.
Instead of producing the Regional Trial Court's Resolution, petitioner
adduced a copy of a Motion for Reconsideration.  Even then, what she
1âwphi1

annexed was a not a copy of the Motion for Reconsideration she filed with
the Regional Trial Court but a copy of the Motion for Reconsideration dated
April 12, 2011, which she filed with the Court of Appeals. This was a Motion
for Reconsideration she filed in response to the presently assailed March
24, 2011 Court of Appeals Decision, not to the Regional Trial Court's March
27, 2006 Decision.

Again, petitioner's failure to attach the correct annexes to her Petition could
be attributed to mere inadvertence or negligence. We shudder to think
however, that this could just as possibly be an indication of how petitioner
makes an allegation but willfully refuses to produce proof - indeed,
suppresses proof - of what she alleges. Worse, her explicit reference to a
Motion for Reconsideration filed with the Regional Trial Court, only to
present something entirely different, could indicate an attempt to mislead
this Court into blindly accepting her allegations.

As with the missing receipt however, regardless of whether petitioner failed


to attach it deliberately or out of mere inadvertence, what remains is that
petitioner failed to prove what she claimed.

Lacking evidentiary basis, petitioner's contention that service upon her


counsel's updated and correct address was made only on June 1, 2006
cannot be sustained. As her plea for relief hinges on this singular detail, we
are constrained to deny such. Bereft of any avenue for revisiting the
Regional Trial Court's March 27, 2006 Decision, its findings and ruling must
stand.

WHEREFORE, the Petition for Review on Certiorari is DENIED, the


assailed March 24, 2011 Decision and August 9, 2011 Resolution of the
Court of Appeals, Sixth Division, in CA-G.R. CV No. 88709 are AFFIRMED.

SO ORDERED.

MARVIC M.V.F. LEONENAssociate Justice

WE CONCUR:
ANTONIO T. CARPIOAssociate JusticeChairperson

DIOSDADO M. PERALTA JOSE CATRAL M


Associate Justice Associate Ju
FRANCIS H. JARDELEZAAssociate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in


consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

ANTONIO T. CARPIOAssociate JusticeChairperson, Second Division

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division
Chairperson’s Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENOChief Justice

Footnotes

 Rollo, pp. 3-37.
1

 Id. at 38-47. The Decision was promulgated on March 24, 2011, and was
2

penned by Associate Justice Fiorito S. Macalino and concurred in by


Associate Justices Juan Q. Enriquez, Jr., and Ramon M. Bato, Jr. of the
Sixth Division, Court of Appeals, Manila.

 Id. at 49-50. The Resolution was penned by Associate Justice Fiorito S.


3

Macalino, and concurred in by Associate Justices Juan Q. Enriquez, Jr.,


and Ramon M. Bato, Jr. of the Sixth Division, Court of Appeals, Manila.

 Id. at 52--67. The Decision was penned by Judge Ramon A. Cruz of


4

Branch 223, Regional Trial Court, Quezon City.

Id. at 39.
5
Id. at 39.
6

Id.
7

Id.
8

 Id.
9

10
 Id. at 53.
11
 Id.
12
 Id. at 39.
13
 Id. at 53.
14
 Id. at 40.
15
 Id.
16
 Id.
17
 Id.
18
 Id.
19
 Id.
20
 Id.
21
 Id.
22
 Id. at 41.
23
 Id.
24
 Id. at 52-67.
25
 Id. at 42.
26
 Id. at 42-43.
27
 Id. at 38-47.
28
 Id. at 45.
29
 Id. at 45-46.
30
 Id. at 45.
31
 Id. at 131-138.
32
 Id. at 49-50.
33
 Id.
34
 Id. at 50.
35
 Id. at 3-37.
36
 Id. at 141-142.
37
 Id. at 143.
38
 Id. at 25.
39
 Id. at 52-67.
40
 Id. at 67.
41
 Id.

 BPI Family Savings Bank v. Pryce Gases, 668 Phil. 206, 215 (2011) [Per
42

J. Carpio, Second Division].

 Id. citing Stolt-Nielsen Services, Inc. v. NLRC, 513 Phil. 642, 653 (2005)


43

[Per J. Garcia, Third Division].  Industrial Timber Corp. v. Ababon, 515 Phil.


44

805, 816 (2006) [Per J. Ynares-Santiago, First Division].

 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551, 560 (2006)
45

[Per J. Ynares-Santiago, First Division].

 Siy v. National Labor Relations Commission, 505 Phil. 265, 273 (2005)


46

[Per J. Corona, Third Division].


 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551, 560 (2006)
47

[Per J. Ynares-Santiago, First Division].

 Equatorial Realty Development v. Mayfair Theater, Inc., 387 Phil. 885,


48

895 (2000) [Per J. Pardo, First Division].

 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551, 560 (2006)
49

[Per J. Ynares-Santiago, First Division].


50
 Id.
51
 543 Phil. 12 (2007) [Per J. Velasco, Second Division].
52
 Id. at 26.
53
 Rollo, p. 42.
54
 Id. at 45-46.
55
 Id. at 26.
56
 Id.
57
 Id. at 27.
58
 Id.
59
 Id. at 25.
60
 Id. at 141.
61
 Id. at 143.

 Dela Liana v. Biong, G.R. No. 182356, December 4, 2013, 711 SCRA


62

522, 534 [Per J. Brion, Second Division].

 Clado-Reyes v. Limpe, 579 Phil. 669, 677 (2008) [Per J. Quisumbing,


63

Second Division].
64
 Rollo, pp. 38-48.
65
 Id. at 49-51.
66
 Id. at 52-67.
67
 Id. at 68-130.
68
 Id. at 131-140.
69
 Id. at 141-142.
70
 Id. at 143.
71
 Id. at144-146.
72
 Id. at 147-158.
73
 Id. at 23.
74
 Id. at 67.
75
 162 Phil. 745 (1976) [Per J. Teehankee, First Division].
76
 Id. at 751-753.

Said the court:

The certifications from the official record book and delivery book of the Post
Office together with the very page of the delivery book showing the
acknowledgment of receipt on January 27, 1972 of the registered mail
matter as per signature of respondents' counsel's authorized clerk are the
direct and primary evidence of completion of service, even more so than
the registry receipt and return card which the Rule accepts as such proof of
service for practical purposes (since it would be too cumbersome to require
similar detailed 'certifications and exhibits as those presented by petitioner
as proof of service for each of the tens if not hundreds of thousands of
registered mail matter involved in court proceedings).

SECOND DIVISION

July 8, 2015

G.R. No. 195166


SPOUSES SALVADOR ABELLA AND ALMA ABELLA, Petitioners,vs.
SPOUSES ROMEO ABELLA AND ANNIE ABELLA, Respondents.

DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari under Rule 45 of the Rules
of Court praying that judgment be rendered reversing and setting aside the
September 30, 2010 Decision  and the January 4, 2011 Resolution  of the
1 2

Court of Appeals Nineteenth Division in CA-G.R. CV No. 01388. The


Petition also prays that respondents Spouses Romeo and Annie Abella be
ordered to pay petitioners Spouses Salvador and Alma Abella 2.5%
monthly interest plus the remaining balance of the amount loaned.

The assailed September 30, 2010 Decision of the Court of Appeals


reversed and set aside the December 28, 2005 Decision3 of the Regional
Trial Court, Branch 8, Kalibo, Aklan in Civil Case No. 6627. It directed
petitioners to pay respondents P148,500.00 (plus interest), which was the
amount respondents supposedly overpaid. The assailed January 4, 2011
Resolution of the Court of Appeals denied petitioners’ Motion for
Reconsideration.

The Regional Trial Court’s December 28, 2005 Decision ordered


respondents to pay petitioners the supposedly unpaid loan balance of
P300,000.00 plus the allegedly stipulated interest rate of 30% per annum,
as well as litigation expenses and attorney’s fees.
4

On July 31, 2002, petitioners Spouses Salvador and Alma Abella filed a
Complaint  for sum of money and damages with prayer for preliminary
5

attachment against respondents Spouses Romeo and Annie Abella before


the Regional Trial Court, Branch 8, Kalibo, Aklan. The case was docketed
as Civil Case No. 6627.6

In their Complaint, petitioners alleged that respondents obtained a loan


from them in the amount of P500,000.00. The loan was evidenced by an
acknowledgment receipt dated March 22, 1999 and was payable within one
(1) year. Petitioners added that respondents were able to pay a total of
P200,000.00— P100,000.00 paid on two separate occasions—leaving an
unpaid balance of P300,000.00. 7
In their Answer  (with counterclaim and motion to dismiss), respondents
8

alleged that the amount involved did not pertain to a loan they obtained
from petitioners but was part of the capital for a joint venture involving the
lending of money. 9

Specifically, respondents claimed that they were approached by petitioners,


who proposed that if respondents were to "undertake the management of
whatever money [petitioners] would give them, [petitioners] would get 2.5%
a month with a 2.5% service fee to [respondents]."  The 2.5% that each
10

party would be receiving represented their sharing of the 5% interest that


the joint venture was supposedly going to charge against its debtors.
Respondents further alleged that the one year averred by petitioners was
not a deadline for payment but the term within which they were to return the
money placed by petitioners should the joint venture prove to be not
lucrative. Moreover, they claimed that the entire amount of P500,000.00
was disposed of in accordance with their agreed terms and conditions and
that petitioners terminated the joint venture, prompting them to collect from
the joint venture’s borrowers. They were, however, able to collect only to
the extent of P200,000.00; hence, the P300,000.00 balance remained
unpaid.11

In the Decision  dated December 28, 2005, the Regional Trial Court ruled in
12

favor of petitioners. It noted that the terms of the acknowledgment receipt


executed by respondents clearly showed that: (a) respondents were
indebted to the extent of P500,000.00; (b) this indebtedness was to be paid
within one (1) year; and (c) the indebtedness was subject to interest. Thus,
the trial court concluded that respondents obtained a simple loan, although
they later invested its proceeds in a lending enterprise.  The Regional Trial
13

Court adjudged respondents solidarily liable to petitioners. The dispositive


portion of its Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the defendants jointly and severally to pay the plaintiffs the sum
of P300,000.00 with interest at the rate of 30% per annum from the time the
complaint was filed on July 31, 2002 until fully paid;

2. Ordering the defendants to pay the plaintiffs the sum of P2,227.50 as


reimbursement for litigation expenses, and another sum of P5,000.00 as
attorney’s fees.
For lack of legal basis, plaintiffs’ claim for moral and exemplary damages
has to be denied, and for lack of merit the counter-claim is ordered
dismissed. 14

In the Order dated March 13, 2006,  the Regional Trial Court denied
15

respondents’ Motion for Reconsideration.

On respondents’ appeal, the Court of Appeals ruled that while respondents


had indeed entered into a simple loan with petitioners, respondents were
no longer liable to pay the outstanding amount of P300,000.00. 16

The Court of Appeals reasoned that the loan could not have earned
interest, whether as contractually stipulated interest or as interest in the
concept of actual or compensatory damages. As to the loan’s not having
earned stipulated interest, the Court of Appeals anchored its ruling on
Article 1956 of the Civil Code, which requires interest to be stipulated in
writing for it to be due.  The Court of Appeals noted that while the
17

acknowledgement receipt showed that interest was to be charged, no


particular interest rate was specified.  Thus, at the time respondents were
18

making interest payments of 2.5% per month, these interest payments


were invalid for not being properly stipulated by the parties. As to the loan’s
not having earned interest in the concept of actual or compensatory
damages, the Court of Appeals, citing Eusebio-Calderon v. People,  noted19

that interest in the concept of actual or compensatory damages accrues


only from the time that demand (whether judicial or extrajudicial) is made. It
reasoned that since respondents received petitioners’ demand letter only
on July 12, 2002, any interest in the concept of actual or compensatory
damages due should be reckoned only from then. Thus, the payments for
the 2.5% monthly interest made after the perfection of the loan in 1999 but
before the demand was made in 2002 were invalid. 20

Since petitioners’ charging of interest was invalid, the Court of Appeals


reasoned that all payments respondents made by way of interest should be
deemed payments for the principal amount of P500,000.00. 21

The Court of Appeals further noted that respondents made a total payment
of P648,500.00, which, as against the principal amount of P500,000.00,
entailed an overpayment of P148,500.00. Applying the principle of solutio
indebiti, the Court of Appeals concluded that petitioners were liable to
reimburse respondents for the overpaid amount of P148,500.00.  The 22

dispositive portion of the assailed Court of Appeals Decision reads:

WHEREFORE, the Decision of the Regional Trial Court is


hereby REVERSED and SET ASIDE, and a new one issued, finding that
the Spouses Salvador and Alma Abella are DIRECTED to jointly and
severally pay Spouses Romeo and Annie Abella the amount of
P148,500.00, with interest of 6% interest (sic) per annum to be computed
upon receipt of this decision, until full satisfaction thereof. Upon finality of
this judgment, an interest as the rate of 12% per annum, instead of 6%,
shall be imposed on the amount due, until full payment thereof. 23

In the Resolution  dated January 4, 2011, the Court of Appeals denied


24

petitioners’ Motion for Reconsideration.

Aggrieved, petitioners filed the present appeal  where they claim that the
25

Court of Appeals erred in completely striking off interest despite the parties’
written agreement stipulating it, as well as in ordering them to reimburse
and pay interest to respondents.

In support of their contentions, petitioners cite Article 1371 of the Civil


Code,  which calls for the consideration of the contracting parties’
26

contemporaneous and subsequent acts in determining their true intention.


Petitioners insist that respondents’ consistent payment of interest in the
year following the perfection of the loan showed that interest at 2.5% per
month was properly agreed upon despite its not having been expressly
stated in the acknowledgment receipt. They add that during the
proceedings before the Regional Trial Court, respondents admitted that
interest was due on the loan. 27

In their Comment,  respondents reiterate the Court of Appeals’ findings that


28

no interest rate was ever stipulated by the parties and that interest was not
due and demandable at the time they were making interest payments. 29

In their Reply,  petitioners argue that even though no interest rate was
30

stipulated in the acknowledgment receipt, the case fell under the exception
to the Parol Evidence Rule. They also argue that there exists convincing
and sufficiently credible evidence to supplement the imperfection of the
acknowledgment receipt. 31

For resolution are the following issues:


First, whether interest accrued on respondents’ loan from petitioners. If so,
at what rate?

Second, whether petitioners are liable to reimburse respondents for the


latter’s supposed excess payments and for interest.

As noted by the Court of Appeals and the Regional Trial Court,


respondents entered into a simple loan or mutuum, rather than a joint
venture, with petitioners.

Respondents’ claims, as articulated in their testimonies before the trial


court, cannot prevail over the clear terms of the document attesting to the
relation of the parties. "If the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control."
32

Articles 1933 and 1953 of the Civil Code provide the guideposts that
determine if a contractual relation is one of simple loan or mutuum:

Art. 1933. By the contract of loan, one of the parties delivers to another,


either something not consumable so that the latter may use the same for a
certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the condition
that the same amount of the same kind and quality shall be paid, in which
case the contract is simply called a loan or mutuum.

Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation to pay interest.

In commodatum the bailor retains the ownership of the thing loaned, while
in simple loan, ownership passes to the borrower.

....

Art. 1953. A person who receives a loan of money or any other fungible
thing acquires the ownership thereof, and is bound to pay to the creditor an
equal amount of the same kind and quality. (Emphasis supplied)
On March 22, 1999, respondents executed an acknowledgment receipt to
petitioners, which states:

Batan, Aklan

March 22, 1999

This is to acknowledge receipt of the Amount of Five Hundred Thousand


(P500,000.00) Pesos from Mrs. Alma R. Abella, payable within one (1) year
from date hereof with interest.

Annie C. Abella (sgd.) Romeo M. Abella (sgd.)  (Emphasis supplied)


33

The text of the acknowledgment receipt is uncomplicated and


straightforward. It attests to: first, respondents’ receipt of the sum of
P500,000.00 from petitioner Alma Abella; second, respondents’ duty to pay
back this amount within one (1) year from March 22, 1999; and third,
respondents’ duty to pay interest. Consistent with what typifies a simple
loan, petitioners delivered to respondents with the corresponding condition
that respondents shall pay the same amount to petitioners within one (1)
year.

II

Although we have settled the nature of the contractual relation between


petitioners and respondents, controversy persists over respondents’ duty to
pay conventional interest, i.e., interest as the cost of borrowing money. 34

Article 1956 of the Civil Code spells out the basic rule that "[n]o interest
shall be due unless it has been expressly stipulated in writing."

On the matter of interest, the text of the acknowledgment receipt is simple,


plain, and unequivocal. It attests to the contracting parties’ intent to subject
to interest the loan extended by petitioners to respondents. The
controversy, however, stems from the acknowledgment receipt’s failure to
state the exact rate of interest.

Jurisprudence is clear about the applicable interest rate if a written


instrument fails to specify a rate. In Spouses Toring v. Spouses Olan,  this
35

court clarified the effect of Article 1956 of the Civil Code and noted that the
legal rate of interest (then at 12%) is to apply: "In a loan or forbearance of
money, according to the Civil Code, the interest due should be that
stipulated in writing, and in the absence thereof, the rate shall be 12% per
annum." 36

Spouses Toring cites and restates (practically verbatim) what this court


settled in Security Bank and Trust Company v. Regional Trial Court of
Makati, Branch 61: "In a loan or forbearance of money, the interest due
should be that stipulated in writing, and in the absence thereof, the
rate shall be 12% per annum." 37

Security Bank also refers to Eastern Shipping Lines, Inc. v. Court of


Appeals, which, in turn, stated:38

1. When the obligation is breached, and it consists in the payment of a sum


of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12% per annum to
be computed from default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil Code.  (Emphasis
39

supplied)

The rule is not only definite; it is cast in mandatory language. From Eastern


Shipping to Security Bank to Spouses Toring, jurisprudence has
repeatedly used the word "shall," a term that has long been settled to
denote something imperative or operating to impose a duty.  Thus, the rule
40

leaves no room for alternatives or otherwise does not allow for discretion.
It requires the application of the legal rate of interest.

Our intervening Decision in Nacar v. Gallery Frames  recognized that the


41

legal rate of interest has been reduced to 6% per annum:

Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-


MB), in its Resolution No. 796 dated May 16, 2013, approved the
amendment of Section 2 of Circular No. 905, Series of 1982 and,
accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013,
the pertinent portion of which reads:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013,
approved the following revisions governing the rate of interest in the
absence of stipulation in loan contracts, thereby amending Section 2 of
Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the absence of an
express contract as to such rate of interest, shall be six percent (6%) per
annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of


Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for

Non-Bank Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the


rate of interest that would govern the parties, the rate of legal interest for
loans or forbearance of any money, goods or credits and the rate allowed
in judgments shall no longer be twelve percent (12%) per annum — as
reflected in the case of Eastern Shipping Lines and Subsection X305.1 of
the Manual of Regulations for Banks and Sections 4305Q.1,= 4305S.3 and
4303P.1 of the Manual of Regulations for Non- Bank Financial Institutions,
before its amendment by BSP-MB Circular No. 799 — but will now be six
percent (6%) per annum effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal
interest shall apply only until June 30, 2013. Come July 1, 2013 the new
rate of six percent (6%) per annum shall be the prevailing rate of interest
when applicable.  (Emphasis supplied, citations omitted)
42

Nevertheless, both Bangko Sentral ng Pilipinas Circular No. 799, Series of


2013 and Nacar retain the definite and mandatory framing of the rule
articulated in Eastern Shipping, Security Bank, and Spouses
Toring. Nacar even restates Eastern Shipping:

To recapitulate and for future guidance, the guidelines laid down in the
case of Eastern Shipping Lines are accordingly modified to embody BSP-
MB Circular No. 799, as follows:

....
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per annum to
be computed from default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil Code.  (Emphasis
43

supplied, citations omitted)

Thus, it remains that where interest was stipulated in writing by the debtor
and creditor in a simple loan or mutuum, but no exact interest rate was
mentioned, the legal rate of interest shall apply. At present, this is 6% per
annum, subject to Nacar’s qualification on prospective application.

Applying this, the loan obtained by respondents from petitioners is deemed


subjected to conventional interest at the rate of 12% per annum, the legal
rate of interest at the time the parties executed their agreement.
Moreover, should conventional interest still be due as of July 1, 2013, the
rate of 12% per annum shall persist as the rate of conventional interest.

This is so because interest in this respect is used as a surrogate for the


parties’ intent, as expressed as of the time of the execution of their
contract. In this sense, the legal rate of interest is an affirmation of the
contracting parties’ intent; that is, by their contract’s silence on a specific
rate, the then prevailing legal rate of interest shall be the cost of borrowing
money. This rate, which by their contract the parties have settled on, is
deemed to persist regardless of shifts in the legal rate of interest. Stated
otherwise, the legal rate of interest, when applied as conventional interest,
shall always be the legal rate at the time the agreement was executed and
shall not be susceptible to shifts in rate.

Petitioners, however, insist on conventional interest at the rate of 2.5% per


month or 30% per annum. They argue that the acknowledgment receipt
fails to show the complete and accurate intention of the contracting parties.
They rely on Article 1371 of the Civil Code, which provides that the
contemporaneous and subsequent acts of the contracting parties shall be
considered should there be a need to ascertain their intent.  In addition,
44

they claim that this case falls under the exceptions to the Parol Evidence
Rule, as spelled out in Rule 130, Section 9 of the Revised Rules on
Evidence. 45
It is a basic precept in legal interpretation and construction that a rule or
provision that treats a subject with specificity prevails over a rule or
provision that treats a subject in general terms. 46

The rule spelled out in Security Bank and Spouses Toring is anchored on


Article 1956 of the Civil Code and specifically governs simple loans
or mutuum. Mutuum is a type of nominate contract that is specifically
recognized by the Civil Code and for which the Civil Code provides a
specific set of governing rules: Articles 1953 to 1961. In contrast, Article
1371 is among the Civil Code provisions generally dealing with contracts.
As this case particularly involves a simple loan, the specific rule spelled out
in Security Bank and Spouses Toring finds preferential application as
against Article 1371.

Contrary to petitioners’ assertions, there is no room for entertaining


extraneous (or parol) evidence. In Spouses Bonifacio and Lucia Paras v.
Kimwa Construction and Development Corporation,  we spelled out the
47

requisites for the admission of parol evidence:

In sum, two (2) things must be established for parol evidence to be


admitted: first, that the existence of any of the four (4) exceptions has been
put in issue in a party’s pleading or has not been objected to by the
adverse party; and second, that the parol evidence sought to be presented
serves to form the basis of the conclusion proposed by the presenting
party.48

The issue of admitting parol evidence is a matter that is proper to the trial,
not the appellate, stage of a case. Petitioners raised the issue of applying
the exceptions to the Parol Evidence Rule only in the Reply they filed
before this court. This is the last pleading that either of the parties has filed
in the entire string of proceedings culminating in this Decision. It is,
therefore, too late for petitioners to harp on this rule. In any case, what is at
issue is not admission of evidence per se, but the appreciation given to the
evidence adduced by the parties. In the Petition they filed before this court,
petitioners themselves acknowledged that checks supposedly attesting to
payment of monthly interest at the rate of 2.5% were admitted by the trial
court (and marked as Exhibits "2," "3," "4," "5," "6," "7," and "8").  What
49

petitioners have an issue with is not the admission of these pieces of


evidence but how these have not been appreciated in a manner consistent
with the conclusions they advance.
Even if it can be shown that the parties have agreed to monthly interest at
the rate of 2.5%, this is unconscionable. As emphasized in Castro v.
Tan,  the willingness of the parties to enter into a relation involving an
50

unconscionable interest rate is inconsequential to the validity of the


stipulated rate:

The imposition of an unconscionable rate of interest on a money debt, even


if knowingly and voluntarily assumed, is immoral and unjust. It is
tantamount to a repugnant spoliation and an iniquitous deprivation of
property, repulsive to the common sense of man. It has no support in law,
in principles of justice, or in the human conscience nor is there any reason
whatsoever which may justify such imposition as righteous and as one that
may be sustained within the sphere of public or private morals. 51

The imposition of an unconscionable interest rate is void ab initio for being


"contrary to morals, and the law."52

In determining whether the rate of interest is unconscionable, the


mechanical application of pre-established floors would be wanting. The
lowest rates that have previously been considered unconscionable need
not be an impenetrable minimum. What is more crucial is a consideration of
the parties’ contexts. Moreover, interest rates must be appreciated in light
of the fundamental nature of interest as compensation to the creditor for
money lent to another, which he or she could otherwise have used for his
or her own purposes at the time it was lent. It is not the default vehicle for
predatory gain. As such, interest need only be reasonable. It ought not be a
supine mechanism for the creditor’s unjust enrichment at the expense of
another.

Petitioners here insist upon the imposition of 2.5% monthly or 30% annual
interest. Compounded at this rate, respondents’ obligation would have
more than doubled—increased to 219.7% of the principal—by the end of
the third year after which the loan was contracted if the entire principal
remained unpaid. By the end of the ninth year, it would have multiplied
more than tenfold (or increased to 1,060.45%). In 2015, this would have
multiplied by more than 66 times (or increased to 6,654.17%). Thus, from
an initial loan of only P500,000.00, respondents would be obliged to pay
more than P33 million. This is grossly unfair, especially since up to the
fourth year from when the loan was obtained, respondents had been
assiduously delivering payment. This reduces their best efforts to satisfy
their obligation into a protracted servicing of a rapacious loan.

The legal rate of interest is the presumptive reasonable compensation for


borrowed money. While parties are free to deviate from this, any deviation
must be reasonable and fair. Any deviation that is far-removed is suspect.
Thus, in cases where stipulated interest is more than twice the prevailing
legal rate of interest, it is for the creditor to prove that this rate is required
by prevailing market conditions. Here, petitioners have articulated no such
justification.

In sum, Article 1956 of the Civil Code, read in light of established


jurisprudence, prevents the application of any interest rate other than that
specifically provided for by the parties in their loan document or, in lieu of it,
the legal rate. Here, as the contracting parties failed to make a specific
stipulation, the legal rate must apply. Moreover, the rate that petitioners
adverted to is unconscionable. The conventional interest due on the
principal amount loaned by respondents from petitioners is held to be 12%
per annum.

III

Apart from respondents’ liability for conventional interest at the rate of 12%
per annum, outstanding conventional interest—if any is due from
respondents—shall itself earn legal interest from the time judicial demand
was made by petitioners, i.e., on July 31, 2002, when they filed their
Complaint. This is consistent with Article 2212 of the Civil Code, which
provides:

Art. 2212. Interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point.

So, too, Nacar states that "the interest due shall itself earn legal interest
from the time it is judicially demanded." 53

Consistent with Nacar, as well as with our ruling in Rivera v. Spouses


Chua,  the interest due on conventional interest shall be at the rate of 12%
54

per annum from July 31, 2002 to June 30, 2013. Thereafter, or starting July
1, 2013, this shall be at the rate of 6% per annum.

IV
Proceeding from these premises, we find that respondents made an
overpayment in the amount of P3,379.17.

As acknowledged by petitioner Salvador Abella, respondents paid a total of


P200,000.00, which was charged against the principal amount of
P500,000.00. The first payment of P100,000.00 was made on June 30,
2001,  while the second payment of P100,000.00 was made on December
55

30, 2001. 56

The Court of Appeals’ September 30, 2010 Decision stated that


respondents paid P6,000.00 in March 1999. 57

The Pre-Trial Order dated December 2, 2002,58 stated that the parties
admitted that "from the time the principal sum of P500,000.00 was
borrowed from [petitioners], [respondents] ha[d] been religiously
paying"  what was supposedly interest "at the rate of 2.5% per month."
59 60

From March 22, 1999 (after the loan was perfected) to June 22, 2001
(before respondents’ payment of P100,000.00 on June 30, 2001, which
was deducted from the principal amount of P500,000.00), the 2.5% monthly
"interest" was pegged to the principal amount of P500,000.00. These
monthly interests, thus, amounted to P12,500.00 per month. Considering
that the period from March 1999 to June 2001 spanned twenty seven (27)
months, respondents paid a total of P337,500.00. 61

From June 22, 2001 up to December 22, 2001 (before respondents’


payment of another P100,000.00 on December 30, 2001, which was
deducted from the remaining principal amount of P400,000.00), the 2.5%
monthly "interest" was pegged to the remaining principal amount of
P400,000.00. These monthly interests, thus, amounted to P10,000.00 per
month. Considering that this period spanned six (6) months, respondents
paid a total of P60,000.00.
62

From after December 22, 2001 up to June 2002 (when petitioners filed their
Complaint), the 2.5% monthly "interest" was pegged to the remaining
principal amount of P300,000.00. These monthly interests, thus, amounted
to P7,500.00 per month. Considering that this period spanned six (6)
months, respondents paid a total of P45,000.00. 63

Applying these facts and the properly applicable interest rate (for
conventional interest, 12% per annum; for interest on conventional interest,
12% per annum from July 31, 2002 up to June 30, 2013 and 6% per annum
henceforth), the following conclusions may be drawn:

By the end of the first year following the perfection of the loan, or as of
March 21, 2000, P560,000.00 was due from respondents. This consisted of
the principal of P500,000.00 and conventional interest of P60,000.00.

Within this first year, respondents made twelve (12) monthly payments
totalling P150,000.00 (P12,500.00 each from April 1999 to March 2000).
This was in addition to their initial payment of P6,000.00 in March 1999.

Application of payments must be in accordance with Article 1253 of the


Civil Code, which reads:

Art. 1253. If the debt produces interest, payment of the principal shall not
be deemed to have been made until the interests have been covered.

Thus, the payments respondents made must first be reckoned as interest


payments. Thereafter, any excess payments shall be charged against the
principal. As respondents paid a total of P156,000.00 within the first year,
the conventional interest of P60,000.00 must be deemed fully paid and the
remaining amount that respondents paid (i.e., P96,000.00) is to be charged
against the principal. This yields a balance of P404,000.00. By the end of
the second year following the perfection of the loan, or as of March 21,
2001, P452,480.00 was due from respondents. This consisted of the
outstanding principal of P404,000.00 and conventional interest of
P48,480.00.

Within this second year, respondents completed another round of twelve


(12) monthly payments totaling P150,000.00.

Consistent with Article 1253 of the Civil Code, as respondents paid a total
of P156,000.00 within the second year, the conventional interest of
P48,480.00 must be deemed fully paid and the remaining amount that
respondents paid (i.e., P101,520.00) is to be charged against the principal.
This yields a balance of P302,480.00.

By the end of the third year following the perfection of the loan, or as of
March 21, 2002, P338,777.60 was due from respondents. This consists of
the outstanding principal of P302,480.00 and conventional interest of
P36,297.60.
Within this third year, respondents paid a total of P320,000.00, as follows:

(a) Between March 22, 2001 and June 30, 2001, respondents completed
three (3) monthly payments of P12,500.00 each, totaling P37,500.00.

(b) On June 30, 2001, respondents paid P100,000.00, which was charged
as principal payment.

(c) Between June 30, 2001 and December 30, 2001, respondents delivered
monthly payments of P10,000.00 each. At this point, the monthly payments
no longer amounted to P12,500.00 each because the supposed monthly
interest payments were pegged to the supposedly remaining principal of
P400,000.00. Thus, during this period, they paid a total of six (6) monthly
payments totaling P60,000.00.

(d) On December 30, 2001, respondents paid P100,000.00, which, like the
June 30, 2001 payment, was charged against the principal.

(e) From the end of December 2002 to the end of February 2002,
respondents delivered monthly payments of P7,500.00 each. At this point,
the supposed monthly interest payments were now pegged to the
supposedly remaining principal of P300,000.00. Thus, during this period,
they delivered three (3) monthly payments totaling P22,500.00.

Consistent with Article 1253 of the Civil Code, as respondents paid a total
of P320,000.00 within the third year, the conventional interest of
P36,927.50 must be deemed fully paid and the remaining amount that
respondents paid (i.e., P283,702.40) is to be charged against the principal.
This yields a balance of P18,777.60.

By the end of the fourth year following the perfection of the loan, or as of
March 21, 2003, P21,203.51 would have been due from respondents. This
consists of: (a) the outstanding principal of P18,777.60, (b) conventional
interest of P2,253.31, and (c) interest due on conventional interest starting
from July 31, 2002, the date of judicial demand, in the amount of P172.60.
The last (i.e., interest on interest) must be pro-rated. There were only 233
days from July 31, 2002 (the date of judicial demand) to March 21, 2003
(the end of the fourth year); this left 63.83% of the fourth year, within which
interest on interest might have accrued. Thus, the full annual interest on
interest of 12% per annum could not have been completed, and only the
proportional amount of 7.66% per annum may be properly imposed for the
remainder of the fourth year.

From the end of March 2002 to June 2002, respondents delivered three (3)
more monthly payments of P7,500.00 each. Thus, during this period, they
delivered three (3) monthly payments totalling P22,500.00.

At this rate, however, payment would have been completed by


respondents even before the end of the fourth year. Thus, for precision, it
is more appropriate to reckon the amounts due as against payments
made on a monthly, rather than an annual, basis.

By April 21, 2002, _18,965.38 (i.e., remaining principal of P18,777.60 plus


pro-rated monthly conventional interest at 1%, amounting to P187.78)
would have been due from respondents. Deducting the monthly payment of
P7,500.00 for the preceding month in a manner consistent with Article 1253
of the Civil Code would yield a balance of P11,465.38.

By May 21, 2002, _11,580.03 (i.e., remaining principal of P11,465.38 plus


pro-rated monthly conventional interest at 1%, amounting to P114.65)
would have been due from respondents. Deducting the monthly payment of
P7,500.00 for the preceding month in a manner consistent with Article 1253
of the Civil Code would yield a balance of P4,080.03.

By June 21, 2002, P4,120.83 (i.e., remaining principal of P4,080.03 plus


pro-rated monthly conventional interest at 1%, amounting to P40.80) would
have been due from respondents. Deducting the monthly payment of
P7,500.00 for the preceding month in a manner consistent with Article 1253
of the Civil Code would yield a negative balance of P3,379.17.

Thus, by June 21, 2002, respondents had not only fully paid the principal
and all the conventional interest that had accrued on their loan. By this
date, they also overpaid P3,379.17. Moreover, while hypothetically, interest
on conventional interest would not have run from July 31, 2002, no such
interest accrued since there was no longer any conventional interest due
from respondents by then.

As respondents made an overpayment, the principle of solutio indebiti as


provided by Article 2154 of the Civil Code  applies. Article 2154 reads:
64
Article 2154. If something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to return it
arises.

In Moreno-Lentfer v. Wolff,  this court explained the application of solutio


65

indebiti:

The quasi-contract of solutio indebiti harks back to the ancient principle


that no one shall enrich himself unjustly at the expense of another. It
applies where (1) a payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person who received
the payment, and (2) the payment is made through mistake, and not
through liberality or some other cause. 66

As respondents had already fully paid the principal and all conventional
interest that had accrued, they were no longer obliged to make further
payments.  Any further payment they made was only because of a
1awp++i1

mistaken impression that they were still due. Accordingly, petitioners are
now bound by a quasi-contractual obligation to return any and all excess
payments delivered by respondents.

Nacar provides that "[w]hen 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 court at the rate of 6%
per annum."  This applies to obligations arising from quasi-contracts such
67

as solutio indebiti.

Further, Article 2159 of the Civil Code provides:

Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal
interest if a sum of money is involved, or shall be liable for fruits received or
which should have been received if the thing produces fruits.

He shall furthermore be answerable for any loss or impairment of the thing


from any cause, and for damages to the person who delivered the thing,
until it is recovered.

Consistent however, with our finding that the excess payment made by
respondents were borne out of a mere mistake that it was due, we find it in
the better interest of equity to no longer hold petitioners liable for interest
arising from their quasi-contractual obligation.
Nevertheless, Nacar also provides:

3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such
finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit. 68

Thus, interest at the rate of 6% per annum may be properly imposed on the
total judgment award. This shall be reckoned from the finality of this
Decision until its full satisfaction.

WHEREFORE, the assailed September 30, 2010 Decision and the January


4, 2011 Resolution of the Court of Appeals Nineteenth Division in CA-G.R.
CV No. 01388 are SET ASIDE. Petitioners Spouses Salvador and Alma
Abella are DIRECTED to jointly and severally reimburse respondents
Spouses Romeo and Annie Abella the amount of P3,379.17, which
respondents have overpaid.

A legal interest of 6% per annum shall likewise be imposed on the total


judgment award from the finality of this Decision until its full satisfaction.

SO ORDERED.

MARVIC M.V.F. LEONENAssociate Justice

WE CONCUR:

DIOSDADO M. PERALTA Associate Justice


*

MARIANO C. DEL C
LUCAS P. BERSAMIN **

Associate Ju
Associate Justice
Acting Chairp
JOSE CATRAL MENDOZAAssociate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
MARIANO C. DEL CASTILLOAssociate JusticeActing Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Acting Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENOChief Justice

Footnotes
*
 Designated Acting Member per S.O. No. 2088 dated July 1, 2015.
**
 Designated Acting Member per S.O. No. 2079 dated June 29, 2015.

 Designated Acting Chairperson per S.O. No. 2087 (Revised) dated July 1,
***

2015.

 Rollo, pp. 28-42. The Decision was penned by Associate Justice Ramon


1

A. Cruz and concurred in by Associate Justices Pampio A. Abarintos and


Myra V. Garcia-Fernandez of the Court of Appeals Cebu.
2
 Jd.at50-51.

 Id. at 102–112. The Decision was penned by Judge Eustaquio G.


3

Terencio.
4
 Id. at 112.
5
 Id. at 53–55.
6
 Id. at 29.
7
 Id. at 53–55.
8
 Id. at 58–63.
9
 Id. at 59.
10
 Id.
11
 Id. at 59–60.
12
 Id. at 102–112.
13
 Id. at 111–112.
14
 Id. at 112.
15
 Id. at 123.
16
 Id. at 39–41.

 Art. 1956. No interest shall be due unless it has been expressly stipulated
17

in writing.
18
 Rollo, p. 39.
19
 484 Phil. 87 (2004) [Per J. Ynares-Santiago, First Division].
20
 Rollo, p. 39.
21
 Id. at 39–40.
22
 Id.
23
 Id. at 41.
24
 Id. at 50–51.
25
 Id. at 10–25.

 Art. 1371. In order to judge the intention of the contracting parties, their
26

contemporaneous and subsequent acts shall be principally considered.


27
 Rollo, pp. 19–20.
28
 Id. at 128–137.
29
 Id. at 133–136.
30
 Id. at 178–181.
31
 Id. at 178–179.
32
 CIVIL CODE, art. 1370.
33
 Id. at 57.

 Cf. interest on interest (i.e., interest due on conventional interest) and


34

compensatory interest / penalty interest / indemnity interest (i.e., damages


paid arising from delay in paying a fixed sum of money or delay in
assessing and paying damages).
35
 589 Phil. 362 (2008) [Per J. Quisumbing, Second Division].

 Id. at 368, citing CIVIL CODE, art. 1956 and Security Bank and Trust


36

Company v. RTC of Makati, Br. 61, 331 Phil. 787 (1996) [Per J.
Hermosisima, Jr., First Division], emphasis supplied.

 331 Phil. 787, 794 (1996) [Per J. Hermosisima, Jr., First Division], citing
37

Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12,
1994, 234 SCRA 78 [Per J. Vitug, En Banc], emphasis supplied.
38
 G.R. No. 97412, July 12, 1994, 234 SCRA 78 [Per J. Vitug, En Banc].
39
 Id. at 95, citing CIVIL CODE, art. 2195, 1956, and 1169.

 See Philippine Registered Electrical Practitioners, Inc. v. Francia, Jr., 379


40

Phil. 634 (2000) [Per J. Quisumbing, Second Division]; University of


Mindanao, Inc. v. Court of Appeals, 659 Phil. 1 (2011) [Per J. Peralta,
Second Division]; and Bersabal v. Salvador, 173 Phil. 379 (1978) [Per J.
Makasiar, First Division].

 G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J. Peralta, En
41

Banc].
42
 Id. at 454–456.
43
 Id. at 457–458.
44
 CIVIL CODE, art. 1371.
 Section 9. Evidence of written agreements. — When the terms of an
45

agreement have been reduced to writing, it is considered as containing all


the terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents
of the written agreement.

However, a party may present evidence to modify, explain or add to the


terms of written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and
agreement of the parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their


successors in interest after the execution of the written agreement.

The term "agreement" includes wills.

 See National Power Corporation v. Presiding Judge, RTC, 10th Judicial


46

Region, Br. XXV, Cagayan De Oro City, 268 Phil. 507 (1990) [Per C.J.
Fernan, Third Division].

 G.R.
47
No. 171601, April 8, 2015,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2015/april2015/171601.pdf> [Per J. Leonen, Second
Division].
48
 Id.
49
 Rollo, p. 19.
50
 620 Phil. 239, (2009) [Per J. Del Castillo, Second Division].

 Id. at 242-243, citing Ibarra v. Aveyro, 37 Phil. 273, 282 (1917) [Per J.


51

Torres, First Division].


52
 Id. at 248, citing CIVIL CODE, art. 1306.
 G.R. No. 189871, August 13, 2013, 703 SCRA 439, 457 [Per J. Peralta,
53

En Banc].
54
 G.R. No. 184458, January 14, 2015,

<http://sc.judiciary.gov.ph/jurisprudence/2015/january2015/184458.pdf>
[Per J. Perez, First Division].
55
 Rollo, p. 31.
56
 Id.
57
 Id. at 40.
58
 Id. at 125–126.
59
 Id. at 125.
60
 Id.
61
 Id. at 40.
62
 Id.
63
 Id.

 Art. 2154. If something is received when there is no right to demand it,


64

and it was unduly delivered through mistake, the obligation to return it


arises.
65
 484 Phil. 552 (2004) [Per J. Quisumbing, First Division].

 Id. at 559–560, citing Power Commercial and Industrial Corp. v. Court of


66

Appeals, 340 ]Phil. 705 (1997) [Per J. Panganiban, Third Division];


and National Commercial Bank of Saudi Arabia v. Court of Appeals, 480
Phil. 391 (2003) [Per J. Carpio-Morales, Third Division].

 Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA
67

439, 458 [Per J. Peralta, En Banc].


68
 Id.
EN BANC

G.R. No. 200628, January 13, 2015

MARIA THERESA G. GUTIERREZ, Petitioner, v. COMMISSION ON AUDIT AND


AUDITOR NARCISA DJ JOAQUIN, Respondents.

DECISION

LEONEN, J.:

A cashier who is found to have been negligent in keeping the funds in his or her
custody cannot be relieved from his or her accountability for amounts lost through
robbery.This is a Petition for Certiorari under Rule 65 of the Rules of Court assailing
the June 5, 2008 withholding order and the Commission on Audit's January 31,
2012 decision holding Maria Theresa G. Gutierrez (Gutierrez) liable for the
P10,105,687.25 that was lost through robbery.Gutierrez is a Cash Collecting
Officer, with the designation of Cashier III at National Food Authority-National
Capital Region, National District Office (NFA-NCR, NDO).  On May 30, 2008, she had
1

collections amounting to F9,390,834.00, covered by Official Receipt Nos. 0420975


to 0421246.  On that day, she placed the collections in a wooden cabinet. The next
2 3

day,.Gutierrez's collections amounted to P1,505,625.00.  Of that amount, 4

P714,852.75 and an undeposited amount of P0.50 from March 2008 were placed in
a wooden cabinet.  The rest was placed in the safety vault. The total undeposited
5 6

collection as of March 31, 2008 was P10,896,459.50. Of that amount,


P10,105,687.25 was placed in the "pearless" boxes  in a wooden cabinet and
7

P790,772.25 was placed in the safety vault. On June 1, 2008, at about 1:35 a.m.,
8

armed men in military uniforms with Philippine National Police-Security Agencies


and Guards Supervision Division (PNP-SAGSD) identifications entered the NFA-NCR,
NDO.  The armed men disarmed NFA-NCR, NDO's security guards and took
9

Gutierrez's undeposited collections.  Lockheed Detective and Watchman Agency,


10

Inc. was NFA-NCR, NDO's contracted security agency. The security guards on duty
11

executed their respective affidavits. Based on their affidavits, armed men entered
the NFA-NCR, NDO compound after they had been disarmed, threatened, and tied
up.  The security guards immediately reported the incident to the Valenzuela Police
12

Station,  where an investigation report  was issued consistent with the security
13 14

guards' narrations in their affidavits. On June 3, 2008, the Commission on Audit,


15

National Food Authority-NCR, North District Office, Malanday, Valenzuela City,


through State Auditor Narcisa DJ Joaquin (State Auditor Joaquin), issued a demand
letter to Gutierrez.  Gutierrez was informed that she must immediately produce the
16

missing funds amounting to P10,105,686.75.  She was also ordered to submit


17

within 72 hours a written explanation why such shortage occurred. On June 5, 18


2008, the Commission on Audit, through State Auditor Joaquin, issued a
withholding order, addressed to Roberto S. Musngi (Musngi), Manager of National
Food Authority, North District Office.  Musngi was informed that upon examination
19

of Gutierrez's account on June 1, 2008, it was established that there was a


P10,105,686.75 shortage in Gutierrez's accountabilities.  Pursuant to Section 37 of
20

Presidential Decree No. 1445, Musngi was directed to withhold Gutierrez's salaries
and other emoluments so these could be applied to the satisfaction of the
shortage. In response to the June 3, 2008 demand letter of the Commission on
21

Audit, Gutierrez executed an affidavit dated June 6, 2008 wherein she narrated that
she had been serving as National Food Authority's Cash Collecting Officer since
1985.  Her office was located at the far end of the National Food Authority
22

building.  That was where the "pearless" boxes and the cabinet where she kept her
23

collections could be found.  Quoted below is her explanation for using "pearless"
24

boxes to keep her collections: chanroblesvirtuallawlibrary

6. That because of the volume of money I accept every day, which averages from 4
to 6 million pesos every day depending on the seasons, most of my time inside the
office is spent to counting, bundling by different denominations the money. To
emphasize the point, the money that I am accepting from remittances and
payments are of different denominations, from twenty five centavo (Php0.25) coins
to one thousand peso (Php1,000.00) bills. The coins alone would amount in the
average of Twelve thousand pesos (Php12,000.00). I could literally say that from
the time I timed in the office at about 6:30 a.m. up to the time I timed out at about
6:30 p.m., my only rest from my work is to [be] going to the ladies room and the
break during lunch time.

....

8. That when the rice crises came up on April 2008, volume of work including the
amount of money that comes into my office almost doubled. That because of the
heavy operations in our office I had an average collection starting April 2008 of 6 to
9 Million Pesos every day of every denomination, with coins averaging from 12 to
16 thousand pesos that needs to be counted, receipted, bundled, balanced,
reported and kept.

9. That it is almost automatic that when I enter my office what comes to my mind
is to count the money and bundle them by the hundreds and prepare receipts for
the payments and remittances until the time to leave at about 6:30 p.m. I would
also cause the deposit of the money collected the day before to Land Bank. But
there were even times that because of the volume of the money, bank
representatives could not sort out all the smaller bills (P20s and P50s) being picked
up from our office as the Armor van should be in the bank at 3:00 p.m. Thus, there
would be arrangements in the bank that the counting would continue inside their
office, which oftentimes lasts until late night.

10. That since April 2008 or the start of the heavy operations, I have been putting
some of the money in the "pearless" box, because of the volume, which I have to
carry and keep safe at the cabinet inside. I have six (6) pearless boxes in the office.
....

13. That since May 30, 2008 is a Friday, banks are closed the following day and the
money collected on said date would have remained in my office until the next
banking day.

....

18. It was very unfortunate that the money accepted on May 30, 2008 and the
collection in the night before the robbery were left in the pearless box inside the
cabinet and not inside the vault. But with the volume of money, the vault has not
enough space to accommodate all of it.

19. And with the amount of work that I am doing every day from 6:30 in the
morning up to 6:30 p.m., more or less, where my only rest is literally going to the
ladies room, and with the safe location of my office, it did not come to my mind
that this incident would come.

20. That I have nothing to do with what happened in the incident of June 1, 2008 at
1:30 in the morning and I am not in control now to produce those missing funds
taken by the robbers. 25
cralawlawlibrary

On June 10, 2008, Gutierrez requested relief from money accountability for the loss
of the collections.  The letter was addressed to State Auditor Joaquin.
26

In the letter dated June 26, 2008 addressed to State Auditor Joaquin, Gutierrez
appealed the withholding order issued on June 5, 2008.  She prayed that her
27

salaries and emoluments be given to her while the robbery incident was still under
investigation.  She was a widow who had three (3) dependents and an 85-year-old
28

mother residing with her in need of medical attention.  She had no other source of
29

income to support herself, her dependents, and her mother. 30

On June 26, 2008, State Auditor Joaquin denied Gutierrez's appeal of the
withholding order.  State Auditor Joaquin informed Gutierrez that there was already
31

a prima facie case for malversation against her under Article 217 of the Revised
Penal Code.32

On July 11, 2008, Gutierrez filed a notice of appeal of State Auditor Joaquin's
withholding order dated June 5, 2008. 33

On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the National Food
Authority, Enforcement, Investigation and Prosecution Department, submitted a
memorandum addressed to the Administrator, Jessup P. Navarro.  He found that
34

the security agency was solidarity liable with security guard Romeo Casta for the
amount lost.  He also found that Gutierrez, by keeping her collections in unsecured
35

"pearless" boxes and not in a vault, was grossly negligent in safekeeping her
collections.  He recommended that Gutierrez be administratively charged with
36

dishonesty, gross neglect of duty, conduct prejudicial to the best interest of the
service, and violation of reasonable office rules and regulations without prejudice to
the filing of appropriate criminal charges.  He also recommended the restitution of
37

the amount lost from Lockheed Detective and Watchman Agency, Inc. Further, he
recommended the ban of security guard Romeo Casta from deployment in any
National Food Authority installations. 38

Similar incidents of robbery at different National Food Authority offices involving


Lockheed Detective and Watchman Agency, Inc. were reported between 2006 and
2008. 39

On September 11, 2008, Commission on Audit Director IV Tito S. Nabua (Director


Nabua) issued a decision denying Gutierrez's appeal  and expressing his agreement
40

with the issuance of the withholding order.  The robbery incident was acknowledged
41

in the decision.  However, Gutierrez's alleged act of negligence in the performance


42

of her duties could not be set aside.  Her failure to follow safekeeping procedures
43

showed lack of due care on her part.  Aside from Article 217 of the Revised Penal
44

Code, the liabilities of an accountable officer are found in Section 105 of Presidential
Decree No. 1445. 45

Gutierrez filed a motion for reconsideration of the September 11, 2008 decision of
Director Nabua on the ground that he did not give her a chance to file a
memorandum of appeal before submission of the case for resolution.  According to 46

Gutierrez, this was a violation of the rules and of her right to due process.  She also 47

cited reversible error in upholding State Auditor Joaquin's order despite lack of
factual and legal bases as ground for her motion. 48

On January 31, 2012, the Commission on Audit denied her request for relief from
money accountability.  Its ruling is reproduced as follows:
49
chanroblesvirtuallawlibrary

WHEREFORE, premises considered, this Commission DENIES the herein request


for relief from money accountability, there being positive showing of fault or
negligence on the part of Ms. Maria Theresa G. Gutierrez in the safekeeping and
custody of subject government funds.

Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the missing amount of
P10,105,687.25. This is without prejudice to the right of the NFA-NCR, NDO to
proceed against Lockheed Detective and Watchman Agency, Inc. for the
indemnification of the loss as security services provider to the NFA-NCR, NDO,
Valenzuela City. 50
cralawlawlibrary

The Commission on Audit found that Gutierrez was negligent in safekeeping her
collections.  Placement of collections in a "pearless" box instead of in the safety
51

vault, especially given the volume of collections, constituted gross negligence on


her part.  Her 20-year service aggravated her negligence.  It should have made her
52 53

more "security-conscious." 54

The Commission on Audit also found that the security guards' failure to secure
National Food Authority's premises was a violation of the contract between National
Food Authority and Lockheed Detective and Watchman Agency, Inc. 55
We decide whether Gutierrez's due process rights were violated when the
Commission on Audit decided her appeal without requiring her to file an appeal
memorandum. We also decide whether Gutierrez is liable for the amounts lost
through a robbery.

Petitioner emphasizes that she was first assisted by counsel only when she filed a
notice of appeal. Respondent auditor had already issued the withholding order
dated June 5, 2008 and .letter dated June 26, 2008 before petitioner was assisted
by counsel.

Petitioner argues that her right to due process was violated when a decision was
rendered against her without giving her a chance to file an appeal memorandum in
accordance with Section 5 of Rule V of the Revised Rules of Procedure of the
Commission on Audit. The appeal memorandum was her chance to raise issues
against respondent auditor's orders to prove her case and to submit evidence to
support her defense.56

Petitioner's right to due process was further violated when her motion for
reconsideration was resolved by the Commission on Audit instead of by Director
Nabua. This prevented her from filing a petition for review of Director Nabua's
decision before the Commission on Audit. 57

Petitioner cites Article IX(A), Section 7 of the Constitution to support her argument
that she has a right to present her side in a memorandum.  It provides:
58
chanroblesvirtuallawlibrary

Section 7. Each Commission shall decide by a majority vote of all its Members, any
case or matter brought before it within sixty days from the date of its submission
for decision or resolution. A case or matter is deemed submitted for decision
or resolution upon the filing of the last pleading, brief, or memorandum
required by the rules of the Commission or by the Commission itself. Unless
otherwise provided by this Constitution or by law, any decision, order, or ruling of
each Commission may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty days from receipt of a copy thereof. (Emphasis
supplied)
Petitioner argues that aside from the right to be heard, administrative due process
also requires the right to present evidence and for such evidence to be considered
by the deciding tribunal.59

Lastly, petitioner points out that the cause of the shortage was the robbery
incident, which was a result of the negligence of the security guards and not her
negligence.  The vault that was assigned to her did not have enough space to
60

accommodate her collections. 61

On the other hand, respondents argue that petitioner was not deprived of due
process when she was not given the opportunity to file an appeal memorandum.
Her affidavit was a sufficient platform to raise her defenses.  Moreover, the
62

presence of a counsel is not required in administrative proceedings.63


Respondents also argue that petitioner cannot ask the Director or the Auditor to
allow her to file an appeal memorandum since it is the Commission on Audit that
has the exclusive jurisdiction over requests for relief from accountability in excess
of P500,000.00.  This, according to respondent, is based on Commission on Audit
64

Resolution No. 93-605 dated August 3, 1993. 65

Finally, respondents argue that the circumstances show that petitioner fell short of
the demands of her position as cashier.  What she could have done was to request
66

additional vaults if the vaults in her possession were not enough to accommodate
all her collections. 67

We rule for respondents. chanRoblesvirtualLawlibrary

Petitioner's due process rights were not violated

Petitioner argues that she was assisted by counsel only after a withholding order
had already been issued. She also argued that the Commission on Audit Director's
issuance of a decision on her appeal without requiring her to file an appeal
memorandum was a violation of her due process rights.

Petitioner's arguments are not tenable.

The right to counsel under Section 12(1) of Article III of the Constitution applies in
criminal proceedings, but not in administrative proceedings. It is a right given to
persons accused of an offense during criminal investigation.  Any proceeding 68

conducted by an administrative body is not part of the criminal investigation or


prosecution.69

Thus, this court said in Remolona v. Civil Service Commission: 70


ChanRoblesVirtualawlibrary

While investigations conducted by an administrative body may at times be akin to a


criminal proceeding, the fact remains that under existing laws, a party in an
administrative inquiry may or may not be assisted by counsel, irrespective of the
nature of the charges and of the respondent's capacity to represent himself, and no
duty rests on such body to furnish the person being investigated with counsel. In an
administrative proceeding, a respondent has the option of engaging the services of
counsel or not. This is clear from the provisions of Section 32, Article VII of
Republic Act No. 2260 (otherwise known as the Civil Service Act) and Section 39,
paragraph 2, Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of
Executive Order No. 292 (otherwise known as the Administrative Code of 1987).
Thus, the right to counsel is not always imperative in administrative investigations
because such inquiries are conducted merely to determine whether there are facts
that merit disciplinary measure against erring public officers and employees, with
the purpose of maintaining the dignity of government service. As such, the hearing
conducted by the investigating authority is not part of a criminal prosecution. 71
cralawlawlibrary

While the purpose of criminal proceedings is to determine if a person suspected of


committing an offense has indeed committed an offense, the purpose of an
administrative proceeding is to determine if a person in public office has violated
the trust reposed in him or her by the public. In a criminal proceeding, if a person is
found guilty of an offense, the corresponding punishment is imposed primarily to
protect the public from being exposed to and correct his or her deviant behavior. In
an administrative proceeding, if a person is found administratively liable, the
corresponding penalty is imposed primarily to preserve public trust and protect the
integrity of public service. 72

Petitioner is not being accused of or investigated for a crime. The Commission on


Audit's withholding order and its denial of petitioner's request for relief from
shortage were issued after it had made a finding that the money entrusted to
petitioner was lost. A finding of criminal liability was not the reason for the
Commission on Audit's issuances. The Commission on Audit has no jurisdiction to
investigate a crime or to make a finding of criminal liability. Any proceeding
conducted prior to these issuances was for the purpose of determining if petitioner's
salaries should be withheld or if petitioner should be relieved from her liability as a
cashier.

Petitioner argues that Rule V, Section 5 of the Revised Rules of Procedure of the
Commission on Audit  requires that she be given an opportunity to file an appeal
73

memorandum before the case is submitted for decision. Section 5 is cited as


follows:chanroblesvirtuallawlibrary

Section 5. APPEAL MEMORANDUM AND REPLY - Upon receipt of the records of the
case, the Director shall issue an Order requiring the appellant to file an appeal
memorandum within twenty (20) days from receipt of the order. The appellant shall
serve a copy of his appeal memorandum to the Auditor or appellee who may reply
thereto within the same period of time. With the filing of the appeal memorandum
and reply or lapse of the period within which to file them, the appeal shall be
deemed submitted for decision.
Petitioner also argues that her due process rights were violated when the
Commission on Audit decided her motion for reconsideration of the Commission on
Audit Director's decision dated September 11, 2008, and denied her request for
relief from accountability without her filing a memorandum or a petition for review.
She cites Article IX(A), Section 7 of the Constitution:
chanroblesvirtuallawlibrary

Section 7. Each Commission shall decide by a majority vote of all its Members, any
case or matter brought before it within sixty days from the date of its submission
for decision or resolution. A case or matter is deemed submitted for decision or
resolution upon the filing of the last pleading, brief, or memorandum required by
the rules of the Commission or by the Commission itself. Unless otherwise provided
by this Constitution or by law, any decision, order, or ruling of each Commission
may be brought to the Supreme Court on certiorari by the aggrieved party within
thirty days from receipt of a copy thereof. (Emphasis supplied)
Petitioner's due process rights were not violated when the Commission on Audit
Director had failed to require her to submit an appeal memorandum before he
decided her appeal of the State Auditor's issuance of a withholding order. There
was also no violation of due process rights when the Commission on Audit issued its
January 31, 2012 decision denying her request for relief from accountability,
without a petition for review of the Commission on Audit Director's decision. The
right to appeal is not part of due process.  Neither is it a natural right.
74 75

Moreover, petitioner's relief from accountability may be decided by the Commission


on Audit at the first instance. Based on Commission on Audit Resolution No. 93-
605,  only the Commission on Audit may approve requests for relief from
76

accountabilities amounting to more than P500,000.00. Thus: chanroblesvirtuallawlibrary

Now, therefore, pursuant to Article IX-D, Section 2(2) of the Constitution, Section


73 of PD 1445 and in conformity with Section 378 of the Local Government Code,
the Commission Proper hereby resolves, as it does hereby resolve, to authorize the
following COA Officials to act on requests for relief from property and/or money
accountability in the amounts indicated hereunder, except in cases of questions of
law, without prejudice to the usual appeal that may be taken therefrom to the
Commission Proper, pursuant to Section 48 of PD 1445.

Total Amount of Money o


Approving COA Official
Involve

Corporate and National Unit Auditor Provincial and City


not exceeding P5 0,000
Auditor

Director/Officer-in-Charge of Central and Regional


in excess of P50,000 up to P100
Offices

Assistant Commissioner in excess of P100,000 up to P20

COA Chairman in excess of P200,000 up to P50

Commission Proper above P500,000


The lost accountability involved in this case amounts to 10,105,687.75.

In any case, we determine if petitioner's due process rights were violated in the
course of the proceedings before the Commission on Audit.

This court in Ang Tibay v. Court of Industrial Relations  ruled that administrative
77

due process requires only the following: chanroblesvirtuallawlibrary

(a) The party should be allowed to present his or her own case and submit supporting e
(b) The deciding tribunal must consider the party's evidence;
(c) There is evidence to support the tribunal's decision;
(d) The evidence supporting the tribunal's decision must be substantial or such "
reasonable mind might accept as adequate to support a conclusion"; 78

(e) The tribunal's decision was based on the evidence presented or the records of th
parties;
(f) The tribunal's decision must be based on the judges' independent consideratio
governing the case; and
(g) The tribunal's decision must be rendered such that the issues of the case and the r
are known to the parties. 79

In sum, due process in administrative proceedings does not necessarily require a


trial type of hearing. Neither does it require an exchange of pleadings between or
among the parties. Due process is satisfied if the party who is properly notified of
allegations against him or her is given an opportunity to defend himself or herself
against those allegations, and such defense was considered by the tribunal in
arriving at its own independent conclusions. This court explained in Ledesma v.
Court of Appeals: 80
ChanRoblesVirtualawlibrary

Due process is satisfied when a person is notified of the charge against him and
given an opportunity to explain or defend himself. In administrative proceedings,
the filing of charges and giving reasonable opportunity for the person so charged to
answer the accusations against him constitute the minimum requirements of due
process. The essence of due process is simply to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side, or an opportunity
to seek a reconsideration of the action or ruling complained of.

....

Administrative due process cannot be fully equated with due process in its strict
judicial sense for it is enough that the party is given the chance to be heard before
the case against him is decided. 81
cralawlawlibrary

Petitioner's arguments and the issues she raised are sufficiently expressed in her
affidavit submitted to the Commission on Audit, her motion for reconsideration of
the Commission on Audit Director's decision, and her petition and memorandum
submitted to this court. Even though petitioner was not able to file an appeal
memorandum, she was able to state her substantive defenses in the pleadings she
filed before the Commission on Audit and this court. According to petitioner, the
money that was lost through robbery was not a result of her negligence. She kept
the money in "pearless" boxes for practical and not for malicious reasons.

The decisions of the State Auditor, the Commission on Audit Director, and the
Commission on Audit had considered these facts and defenses before they made
conclusions' against petitioner. Therefore, petitioner cannot say that her due
process rights were violated for the lack of order to file an appeal memorandum. chanRoblesvirtualLawlibrary

II

Relief from cashier's liability cannot be granted if the cashier was


negligent in keeping funds under his or her custody

As a cashier for the National Food Authority, petitioner qualified as an accountable


officer under Presidential Decree No. 1445. Accountable officers are government
officers whose duties require them to possess or be in custody of government funds
or properties.  They are in charge of the safekeeping of the funds or properties
82

under their custody. 83


Presidential Decree No. 1445 makes cashiers liable for the value of the money or
property in their custody in case they were lost because of negligence or unlawful
deposit, use, or application. Thus: chanroblesvirtuallawlibrary

Section 105. Measure of liability of accountable officers.

(1) Every officer accountable for government property shall be liable for its money
value in case of improper or unauthorized use or misapplication thereof, by himself
or any person for whose acts he may be responsible. We shall likewise be liable for
all losses, damages, or deterioration occasioned by negligence in the keeping or use
of the property, whether or not it be at the time in his actual custody.

(2) Every officer accountable for government funds shall be liable for all losses
resulting from the unlawful deposit, use, or application thereof and for all losses
attributable to negligence in the keeping of the funds.
Imposing liability on cashiers for lost money or property in their custody means that
the value of the money or property becomes their debt.

The Commission on Audit has the power to withhold payment of money due to
persons indebted to the government. Section 37 of Presidential Decree No. 1445
provides:chanroblesvirtuallawlibrary

Section 37. Retention of money for satisfaction of indebtedness to government.


When any person is indebted to any government agency, the Commission may
direct the proper officer to withhold the payment of any money due such person or
his estate to be applied in satisfaction of the indebtedness.
Petitioner does not deny that the money for which she was accountable as a cashier
was lost through robbery. She also did not deny that she kept the greater portion of
the amount lost, not in the vault, but in boxes, for practical reasons. She was not
motivated by malice when she kept the money that was in her possession in the
boxes.

Without going to the issue of the existence of negligence, the Commission on Audit
may already issue a withholding order for petitioner's salaries and emoluments
because of this. Petitioner's act of keeping the money in boxes instead of in the
vault can be subsumed under "unlawful deposit" that may cause a cashier to incur
liability in case the unlawfully deposited money was lost.

A similar case, Leano v. Domingo,  showed that the safety of money cannot be


84

ensured when it is deposited in enclosures other than the safety vault. Leano also


involves a government cashier whose money accountability was lost through
robbery. As in this case, the cashier did not keep her money accountabilities in the
vault. Requesting this court to review the Commission on Audit's denial of her
request for accountability, Leano argued that she had no other choice but to use a
steel cabinet to keep her money accountabilities because the former cashier did not
entrust to her the safety vault's combination. This court upheld the Commission on
Audit's decision to deny Leano's request for relief from accountabilities and found
her to be negligent in handling her money accountabilities: chanroblesvirtuallawlibrary
[I]t is evident that petitioner fell short of the demands inherent in her position. As
aptly argued by the Solicitor General, an exercise of proper diligence expected of
her position would have compelled petitioner to request an immediate change of
the combination of the safe. However, the record is bare of any showing that
petitioner had, at least, exerted any effort to have the combination changed,
content with the fact that, according to her, the former cashier also used the steel
cabinet as depository of the funds.

In addition, it was found that the use of the steel cabinet was not a wise and
prudent decision. The steel cabinet, even when locked, at times could be pulled
open, thus it can be surmised that even without the use of a key, the robbery could
be committed once the culprits succeed in entering the room (Progress Report of
the Police dated February 28, 1985). Moreover, the original key of the steel cabinet
was left inside a small wooden box placed near the steel cabinet; it is therefore
highly possible that the said steel cabinet was opened with the use of its original
key (Police Alarm Report). 85
cralawlawlibrary

Hence, keeping National Food Authority collections outside the vault constituted
negligence on the part of petitioner.

The test of negligence is stated in Picart v. Smith, Jr.:86


ChanRoblesVirtualawlibrary

The test by which to determine the existence of negligence in a particular case may
be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence. 87
cralawlawlibrary

"The existence of negligence in a given case is not determined by reference to the


personal judgment of the actor in the situation before him. The Law considers what
would be reckless, blameworthy, or negligent in the man of ordinary intelligence
and prudence and determines liability by that." Petitioner is negligent because she
88

failed to use "that reasonable care and caution which an ordinarily prudent person
would have used in the same situation."  A cashier in her position would have used
89

the vault to keep her collections. Petitioner failed to do this. Her negligence is made
more pronounced by the fact that the collections kept in the vault were not taken
by the robbers.Petitioner insists that the space in the vault was not enough to
accommodate all her collections. However, she admitted that she had been
receiving relatively large collections in the past three (3) months prior to the
robbery. She should have requested an additional vault wherein she could safely
keep her collections. She could also have set aside time to deposit her collections
for the day considering the. amount of cash she had been collecting, in order to
prevent its accumulation. This could have ensured that the vault's space would be
sufficient to keep any remaining collection after the deposit. This could also have
prevented her collections from accumulating to an amount that rendered any loss
through untoward incidents such as robbery significant. Petitioner failed to even
allege that she exerted effort to obtain additional vaults or to set aside time to
deposit her collections to the bank.For these reasons, petitioner cannot be relieved
from liability. A person who is negligent in keeping the funds cannot be relieved
from liability. WHEREFORE, the petition is DENIED.SO ORDERED. Sereno, C.
90
chanroblesvirtuallawlibrary

J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo,
Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.Brion, J., on
leave.Jardeleza, J., no part.

Endnotes:

Rollo, pp. 26 and 125.


1

 Id. at 26.
2

 Id.
3

 Id.
4

 Id.
5

 Id.
6

 Peerless boxes are movable boxes that can be used for archival or storage
7

purposes. In the affidavit by Maria Theresa Gutierrez submitted to the Commission


on Audit and found on page 33 of the rollo, the term used for these boxes was
"'pearless' boxes."

Rollo, p. 27.
8

 Id.
9

10
 Id.

11
 Id.

12
 Id. at 27-28.

13
 Id. at 28.

14
 The investigation report was dated June 1, 2008.

15
Rollo, pp. 28, 94-95.

16
 Id. at 32.

17
 Id.

18
 Id.

19
 Id. at 17 and 123.

20
 Id. at 17, 28, and 123.
 Id. at 17 and 123.
21

 Id. at 33.
22

 Id.
23

 Id.
24

 Id. at 33-35.
25

 Id. at 28 and 60.


26

 Id. at 87, 124, and 126.


27

 Id. at 87.
28

 Id.
29

 Id.
30

 Id. at 18 and 124.


31

 Id. at 18.
32

 Id. at 21 and 45.


33

 Id. at 88-93.
34

 Id. at 91.
35

 Id. at 92.
36

 Id. at 93.
37

 Id.
38

 Id. at 96-107.
39

 Id. at 19-20 and 124.


40

 Id. at 19-20.
41

 Id.
42

 Id.
43

 Id.
44
 Id.
45

 Id. at 21.
46

 Id.
47

 Id.
48

Rollo, pp. 26-31. The decision was signed by Chairperson Ma. Gracia M. Pulido Tan
49

and Commissioners Juanito G. Espino, Jr. and Heidi L. Mendoza.

 Id. at 30.
50

 Id. at 29.
51

 Id.
52

 Id.
53

 Id.
54

 Id. at 30.
55

 Id. at 128.
56

 Id.
57

 Id. at 129.
58

 Id.
59

 Id. at 132-133.
60

 Id.
61

 Id. at 147-148.
62

 Id. at 148.
63

 Id. at 149-150.
64

 Id. at 149.
65

 Id. at 152-153.
66

 Id. at 153.
67
Lumiqued v. Exevea, 346 Phil. 807, 821-822 (1997) [Per J. Romero, En Banc].
68

Remolona v. Civil Service Commission, 414 Phil. 590 (2001) [Per J. Puno, En
69

Banc].

 Id.
70

 Id. at 599.
71

See also Encinas v. Agustin, G.R. No. 187317, April 11, 2013, 696 SCRA 240, 268
72

[Per C.J. Sereno, En Banc].

 BOC Memorandum Circular No. 32-98 (1997), otherwise known as the REVISED
73

RULES OF PROCEDURE OF THE COMMISSION ON AUDIT.

See Quileste v. People, 599 Phil. 117, 122 (2009) [Per J. Nachura, Third
74

Division]; See also La Campana Development Corporation v. Development Bank of


the Philippines, 598 Phil. 612 (2009) [Per J. Chico-Nazario, Third Division].

  Id.
75

  The resolution was dated August 3, 1993.


76

Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940) [Per J. Laurel, En
77

Banc].

  Id. at 642.
78

  Id. at 642-644.
79

Ledesma v. Court of Appeals, 565 Phil. 731 (2007) [Per J. Tinga, Second Division].
80

  Id. at 740-741.
81

  Pres. Decree No. 1445 (1978), sec. 101.


82

  Pres, Decree No. 1445 (1978), sec. 101.


83

  G.R. No. 84378, July 4, 1991, 198 SCRA 800 [Per J. Paras, En Banc].
84

  Id. at 804-805.
85

  37 Phil. 809 (1918) [Per J. Street, En Banc].


86

  Id. at 813.
87

Leano v. Domingo, G.R. No. 84378, July 4, 1991, 198 SCRA 800, 804 [Per J.
88

Paras, En Banc].
  Id.
89

  Id.
90

EN BANC

G.R. No. 211293, June 04, 2019

ADELAIDO ORIONDO, TEODORO M. HERNANDEZ, RENATO L. BASCO,


CARMEN MERINO, AND REYNALDO SALVADOR, PETITIONERS, v.
COMMISSION ON AUDIT, RESPONDENT.

DECISION

LEONEN, J.:

A corporation, whether with or without an original charter, is under the audit


jurisdiction of the Commission on Audit so long as the government owns or has
controlling interest in it.This resolves the Petition  under Rule 64 of the Rules of
1

Court filed by Adelaido Oriondo, Teodoro M. Hernandez, Renato L. Basco, Carmen,


Merino, and Reynaldo Salvador, former officers of the Philippine Tourism Authority
who had received honoraria and cash gifts for concurrently rendering services to
Corregidor Foundation, Inc. They assail the Commission on Audit's Decision  No. 2

2010-095 dated October 21, 2010 and Resolution  dated December 6, 2013,
3

disallowing the payment of the honoraria and cash gifts to them for being contrary
to Department of Budget and Management Budget Circular No. 2003-5 on the
payment of honoraria and Article IX-B, Section 8  of the Constitution prohibiting the
4

payment of additional or double compensation.The submissions of the parties


present the following facts.Executive Order No. 58, series of 1954,  made certain
5

battlefield areas in Corregidor open to the public and accessible as tourist


attractions. Executive Order No. 123, series of 1968, further amended Executive
Order No. 58, thereby authorizing the Ministry of National Defense to enter into
contracts for the conversion of areas within the Corregidor as tourist spots. 6

Pursuant to Executive Order No. 123, the Ministry of National Defense and the
Philippine Tourism Authority executed a Memorandum of Agreement  dated July 10,
7

1986 for the development of Corregidor and its neighboring islands into major
tourist attractions. Specifically, the Ministry of National Defense, with prior approval
of the President, leased the entire island of Corregidor to the Philippine Tourism
Authority for one peso (P1.00). As for the Philippine Tourism Authority, it undertook
to maintain and preserve the war relics on the island and to fully develop
Corregidor's potential as an international and local tourist destination. The
Philippine Tourism Authority was thus authorized to "[p]ackage and source the
necessary funds to develop and restore the Corregidor Island group." On February
8

6, 1987, the Philippine Tourism Authority Board of Directors adopted Resolution No.
B-7-87,  approving the creation of a foundation for the development of Corregidor.
9

On October 28, 1987, the Corregidor Foundation, Inc. was incorporated under
Securities and Exchange Commission Registration No. 145674. On August 3, 1993,
10

the Philippine Tourism Authority executed a Memorandum of Agreement  with 11

Corregidor Foundation, Inc. to centralize the island's planning and development.


The Philippine Tourism Authority agreed to release to the Corregidor Foundation,
Inc. its operating funds based on a budget for its approval. For its part, the
Corregidor Foundation, Inc. agreed to submit a quarterly report on the receipts and
disbursements of Philippine Tourism Authority funds. It additionally agreed to
deposit all collections of revenues in a distinct and separate account in the name of
the island of Corregidor, with the disposition of the funds at the sole discretion of
the Philippine Tourism Authority.Another Memorandum of Agreement  was 12

subsequently entered into by the Philippine Tourism Authority and the Corregidor
Foundation, Inc. on September 3, 1996. The subsequent Agreement reiterated the
provisions of the August 3, 1993 Agreement but added some stipulations. In
particular, the second paragraph of item 4 was included, providing that the
disbursements of the Philippine Tourism Authority's funds by Corregidor
Foundation, Inc. shall be subject to the audit of the Internal Auditor of the
Philippine Tourism Authority and the Commission on Audit.On February 14, 2005,
the Commission on Audit, through Audit Team Leader Divina M. Telan, issued Audit
Observation Memorandum No. 2004-002  for comments of then Corregidor
13

Foundation, Inc. Executive Director Artemio G. Matibag. There, the Audit Team
noted that the following personnel of the Philippine Tourism Authority who were
concurrently rendering services in Corregidor Foundation, Inc. received honoraria
and cash gifts in 2003, to wit:

Name Position Bonus

Adelaido Treasurer / Deputy General Manager of the Philippine


42,000 1
Oriondo Tourism Authority

Teodoro
Corporate Secretary 42,000 1
Hernandez

Renato L.
Technical Assistant 16,000 1
Basco

Carmen Merino Executive Secretary A 9,600 1

Reynaldo
Utility Worker A 14,400 1
Salvador

124,00
Total 7
0
The Audit Team was of the opinion that the grant of honoraria to Oriondo,
Hernandez, Basco, Merino, and Salvador were contrary to Department of Budget
and Management Circular No. 2003-5.  This budget circular, applicable to all
14

national government agencies, government-owned and/or controlled corporations,


and government financial institutions, enumerated in item 4 those exclusively
entitled to honoraria:
4. General Guidelines

Heads of entities are authorized to use their respective appropriation for the
payment of honoraria only to the following:

4. teaching personnel of the Department of Education, Commission on Higher E


1. Education and Skills Development Authority, State Universities and Colleges an
institutions engaged in actual classroom teaching whose teaching load is outside o
hours and/or in excess of the regular load;

4. those who act as lecturers, resource persons, coordinators and facilitators in seminar
2 and other similar activities in training institutions, including those conducted by entit
and employees; and

4. chairs and members of Commissions/Board Councils and other similar entities w


3. referred to as a collegial body including the personnel thereof, who are neither p
diems but compensated in the form of honoraria as provided by law, rules and regula
Further, according to the Audit Team, the cash gifts given to Oriondo, Hernandez,
Basco, Merino, and Salvador, as officers of the Corregidor Foundation, Inc.,
constituted double compensation prohibited in Article IX-B, Section 8  of the
16

Constitution because they had already received honoraria and cash gifts as
employees of the Philippine Tourism Authority. 17

The Audit Team thus recommended that Corregidor Foundation, Inc. comply with
Budget Circular No. 2003-5; otherwise, it would be constrained to recommend the
disallowance of the amounts paid as honoraria and cash gift. 18

On June 15, 2006, the Legal and Adjudication Office-Corporate of the Commission
on Audit issued Notice of Disallowance No. CFI-2006-001,  disallowing in audit the
19

honoraria and cash gift paid to Oriondo, Hernandez, Basco, Merino, and Salvador.
Aside from the payees, the persons made liable for the amount were Corregidor
Foundation, Inc.'s Chief Accountant Noria Jane Perez, Finance Office Lauro Legazpi,
and Executive Director Artemio G. Matibag. 20

Oriondo, Hernandez, Basco, Merino, and Salvador filed a Motion for Reconsideration
of the Notice of Disallowance, arguing that Corregidor Foundation, Inc. is a private
corporation created under the Corporation Code and, therefore, cannot be audited
by the Commission on Audit.  This was denied by the Legal Adjudication Office-
21

Corporate in its Decision No. 2007-037,  where it held that Corregidor Foundation,
22

Inc. is a government-owned or controlled corporation.


The appeal filed was likewise denied by the Adjudication and Settlement Board of
the Commission on Audit in Decision No. 2009-002.  Citing the definition of a
23

government owned or controlled corporation in the Administrative Code of 1987,


the Adjudication and Settlement Board held that Corregidor Foundation, Inc. is a
government-owned or controlled corporation under the audit powers of the
Commission on Audit. Corregidor Foundation, Inc., according to the Adjudication
and Settlement Board, is a non-stock corporation which receives funds from the
government, through the Philippine Tourism Authority. The Adjudication and
Settlement Board highlighted that Memorandum of Agreement dated September 3,
1996 provided that the funds received and disbursed by the Corregidor Foundation,
Inc. is subject to the audit of the Internal Auditor of the Philippine Tourism
Authority and the Commission on Audit. Finally, Corregidor Foundation, Inc. was
deemed created for a public purpose, which is the maintenance and preservation of
Corregidor.

Considering that Corregidor Foundation, Inc. is a government-owned or controlled


corporation, the Adjudication and Settlement Board held the foundation is subject
to Budget Circular No. 2003-5 and 2003-02, limiting the grant of honoraria to
specific government personnel, and Article IX-B, Section 8 of the Constitution
prohibiting double compensation. 24

The dispositive portion of the Adjudication and Settlement Board's Decision No.
2009-002 read:
WHEREFORE, the foregoing premises considered, this Board hereby DENIES the
instant appeal for want of merit. Accordingly, LAO-Corporate Decision No. 2007-037
dated June 07, 2007 sustaining ND No. CFI-2006-001 dated June 15, 2006
is AFFIRMED.  (Emphasis in the original)
25

Oriondo, Hernandez, Basco, Merino, and Salvador appealed  Decision No. 2009-
26

002, but the appeal was denied by the Commission on Audit in its October 21, 2010
Decision No. 2010-095. 27

The Commission on Audit Commission Proper maintained that the Corregidor


Foundation, Inc. is a government-owned or controlled corporation given the
following circumstances: (1) the incorporators of the Corregidor Foundation, Inc.
are all government officials; (2) the Corregidor Foundation, Inc. is substantially
subsidized by the government, with 99.66% of its budget coming from the
Department of Tourism, Duty Free Philippines, and the Philippine Tourism
Authority; (3) the budget of Corregidor Foundation, Inc. needs prior approval of the
Philippine Tourism Authority; (4) Corregidor Foundation, Inc. is required to submit
a quarterly report of its receipts and disbursement of Philippine Tourism Authority
funds; (5) all collections of revenues are to be deposited and taken up in the books
of Corregidor Foundation, Inc. as accountability to the Philippine Tourism Authority,
and the disposition of the funds are at the sole discretion of the Philippine Tourism
Authority; and (6) Corregidor Foundation, Inc. has no authority to dispose of the
properties subject of the Memorandum of Agreement. 28

While it is true that Corregidor Foundation, Inc. was organized under the
Corporation Code, the Commission Proper, citing Philippine Society for the
Prevention of Cruelty to Animals v. Commission on Audit,  held that it is the
29

"totality test"—the totality of the relation of a corporation to the State-that


determines a corporation's status as a government-owned or controlled
corporation. Given that Corregidor Foundation, Inc. was created by the State as its
own instrumentality to carry out a governmental function, the Commission Proper
concluded that Corregidor Foundation, Inc. should be considered a public
corporation.

The Commission proper added that coverage under the Social Security System "is
but a consequence of [Corregidor Foundation, Inc.'s] insistence that it is a private
corporation, not a priori reason that it is."30

Given the foregoing premises, the Commission Proper held that Corregidor
Foundation, Inc. is a government-owned or controlled corporation subject to Budget
Circular No. 2003-5 and Article IX-B, Section 8 of the Constitution. Corregidor
Foundation, Inc. had no authority to grant honoraria to its personnel and give cash
gifts to its employees who were concurrently holding a position in the Philippine
Tourism Authority.

The dispositive portion of the Commission on Audit's Decision No. 2010-095 read:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack
of merit. Accordingly, ASB Decision No. 2009-002 dated January 26, 2009
is AFFIRMED.  (Emphasis in the original)
31

Oriondo, Hernandez, Basco, Merino, and Salvador filed a Motion for


Reconsideration, which the Commission on Audit En Banc denied in a its December
5, 2013 Resolution  thus:
32

The [Commission on Audit Proper] denied the Motion for Reconsideration for lack of
merit and affirmed with finality COA Decision No. 2010-095 dated October 21, 2010
affirming the disallowance on the grant of honoraria and cash gift to the Philippine
Tourism Authority employees who are rendering services to Corregidor
Foundation[,] Inc. in the amount of P131,500.00. The movant failed to present new
and material evidence that would warrant a reversal or modification of the assailed
decision.
33

On March 14, 2014, Oriondo, Hernandez, Basco, Merino, and Salvador filed before
this Court a Petition  designated as a "Petition for Review on Certiorari"  under Rule
34 35

64 of the Rules of Court. The Commission on Audit, through the Office of the
Solicitor General, filed its Comment  on June 25, 2014, to which Oriondo,
36

Hernandez, Basco, Merino, and Salvador replied  on October 7, 2014. Upon the
37

directive of this Court,  the parties filed their respective Memoranda.


38 39

According to petitioners, a cursory reading of Article IX-D, Section 2  of the 40

Constitution reveals that the Commission on Audit has no power to determine


whether an entity is a government-owned or controlled corporation. Petitioners
maintain that the Commission on Audit had no jurisdiction to conduct a post-audit
of Corregidor Foundation, Inc.'s disbursements on the basis of its own
determination of Corregidor Foundation's status as a government-owned or
controlled corporation. Consequently, the Commission's rulings on the grant of
honoraria and cash gifts are allegedly null and void. 41
On the threshold issue, petitioners insist that Corregidor Foundation, Inc. is not a
government-owned or controlled corporation due to the following reasons: (1)
Corregidor Foundation, Inc. is neither organized as a stock corporation nor is it
created by a special law or is governed by a charter created by a special law;  (2)
42

Corregidor Foundation, Inc. was organized as a private corporation under the


general corporation law, and its assets are allegedly its exclusive property, not
government-owned;  (3) the personnel of Corregidor Foundation, Inc. are under the
43

coverage of the Social Security System, further showing that Corregidor


Foundation, Inc. is a private corporation;  (4) its funds come primarily from grants
44

and donations of international organizations and foreign entities, not from the
National Government considering that its funding was never provided in the General
Appropriations Act;  and (5) the quarterly reports submitted by Corregidor
45

Foundation, Inc. is only based on its Memorandum of Agreement with the Philippine
Tourism Authority, not because it is a government-owned or controlled
corporation. 46

Countering petitioners, respondent Commission on Audit first highlighted that the


Petition was erroneously denominated as a "Petition for Review on Certiorari" under
Rule 64 of the Rules of Court. "[T]here is no such thing as a Petition for Review
under Rule 64,"  argued respondent Commission. The error notwithstanding,
47

respondent Commission contends that the Petition should be treated as one for
certiorari, specifically, to determine whether or not there was grave abuse of
discretion on the part of the Commission on Audit in disallowing the grant of
honoraria and cash gifts to petitioners.
48

On whether or not it has the jurisdiction to determine whether an entity is a


government-owned or controlled corporation, respondent Commission argues that it
has the competence to make such determination. Pursuant to its constitutional duty
to examine, audit, and settle all accounts pertaining to the revenue and
expenditures of the government, including government-owned or controlled
corporations, respondent Commission maintains that the determination of the
status of an entity as a government-owned or controlled corporation is but a
"necessary incident to [the] performance of its duties and the discharge of its
functions."  Respondent Commission asserts its competency to determine the
49

status of Corregidor Foundation, Inc. as a government-owned or controlled


corporation, arguing that it only applied the law on the matter.
50

On the principal issue of whether or not Corregidor Foundation, Inc. is a


government-owned or controlled corporation, respondent Commission answers in
the affirmative. It cites Philippine National Oil Company (PNOC) - Energy
Development Corporation v. National Labor Relations Commission and Philippine
51

Society for the Prevention of Cruelty to Animals v. Commission on Audit  where this
52

Court enunciated the criteria for determining the status of a corporation as


government-owned or controlled. Respondent Commission thereafter noted the
circumstances demonstrating that all these criteria are present in this case. First,
Corregidor Foundation, Inc. is under the Department of Tourism, created to develop
the tourism in the island of Corregidor. Second, the incorporators of Corregidor
Foundation, Inc. are all government officials and all of its trustees are public
officials sitting in an ex officio capacity.
53

Respondent Commission maintains that Corregidor Foundation, Inc. was created by


the State to carry out a governmental function as shown by the following: (1)
Corregidor Foundation, Inc. is substantially subsidized by the government, with
99.66% of its budget, as audited, coming from the Department of Tourism, Duty
Free Philippines, and the Philippine Tourism Authority; (2) Corregidor Foundation,
Inc.'s budget is subject to the prior approval of the Philippine Tourism Authority;
(3) Corregidor Foundation, Inc. is required to submit a quarterly report on its
receipts and disbursement of Philippine Tourism Authority funds; (4) all collections
of revenues are deposited and taken up in the books of Corregidor Foundation, Inc.
as accountability to the Philippine Tourism Authority; and (5) Corregidor
Foundation, Inc. cannot encumber, mortgage, or alienate the premises subject of
its Memorandum of Agreement with the Philippine Tourism Authority.  These 54

allegedly show that the disallowed amounts were public funds, which are definitely
within the audit jurisdiction of respondent Commission; thus, there was no grave
abuse of discretion on the part of the Commission on Audit in issuing the Notice of
Disallowance.

The issues for this Court's resolution are:

First, whether or not the Commission on Audit has jurisdiction to determine


whether a corporation such as Corregidor Foundation, Inc. is a government-owned
or controlled corporation; and

Second, whether or not Corregidor Foundation, Inc. is a government-owned or


controlled corporation under the audit jurisdiction of the Commission on Audit.

The Petition is dismissed.

Respondent Commission on Audit did not gravely abuse its discretion in issuing
Notice of Disallowance No. CFI-2006-001. It has the competency to determine the
status of corporations such as Corregidor Foundation, Inc. as government-owned or
controlled, and correctly found that Corregidor Foundation, Inc. is, indeed, a
government-owned or controlled corporation under its audit jurisdiction.

We first address respondent Commission's contention that petitioners erroneously


referred to their Petition as a "Petition for Review on Certiorari" under Rule 64 of
the Rules of Court.

A petition for review on certiorari is the remedy provided in Rule 45, Section 1 of
the Rules of Court against an adverse judgment, final order, or resolution of the
Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law:
RULE 45
Appeal by Certiorari to the Supreme Court

SECTION 1. Filing of Petition with Supreme Court. - A party desiring to appeal by


certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth.
On the other hand, Rule 64 of the Rules of Court pertains to "Review of Judgments
and Final Orders or Resolutions of the Commission on Elections and the Commission
on Audit." Section 1 of Rule 64 defines the scope of the Rule, while section 2 refers
to "Mode of Review" and provides that the judgments, final orders, and resolutions
of the Commission on Audit are to be brought on certiorari to this Court under Rule
65. The pertinent provisions of Rules 64 and 65 are as follows:
RULE 64
Review of Judgments and Final Orders or Resolutions of the Commission on
Elections and the Commission on Audit

SECTION 1. Scope. — This Rule shall govern the review of judgments and final
orders or resolutions of the Commission on Elections and the Commission on Audit.

SECTION 2. Mode of Review. — A judgment or final order or resolution of the


Commission on Elections and the Commission on Audit may be brought by the
aggrieved party to the Supreme Court on certiorari under Rule 65, except as
hereinafter provided.

SECTION 3. Time to File Petition. — The petition shall be filed within thirty (30)
days from notice of the judgment or final order or resolution sought to be reviewed.
The filing of a motion for new trial or reconsideration of said judgment or final order
or resolution, if allowed under the procedural rules of the Commission concerned,
shall interrupt the period herein fixed. If the motion is denied, the aggrieved party
may file the petition within the remaining period, but which shall not be less than
five (5) days in any event, reckoned from notice of denial.

....

RULE 65
Certiorari, Prohibition and Mandamus

SECTION 1. Petition for Certiorari. — When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto, and a sworn certification of non-forum shopping as provided in
the paragraph of Section 3, Rule 46.

....

SECTION 4. Where Petition Filed. — The petition may be filed not later than sixty
(60) days from notice of the judgment, order or resolution sought to be assailed in
the Supreme Court or, if it relates to the acts or omissions of a lower court or of a
corporation, board, officer or person, in the Regional Trial Court exercising
jurisdiction over the territorial area as defined by the Supreme Court. It may also
be filed in the Court of Appeals whether or not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves the
acts or omissions of a quasi-judicial agency, and unless otherwise provided by law
or these Rules, the petition shall be filed in and cognizable only by the Court of
Appeals.

The foregoing provisions readily reveal that a Petition for Review on Certiorari
under Rule 45 is an appeal and a true review that involves "digging into the merits
and unearthing errors of judgment."  However, despite the repeated use of the
55

word "review" in Rule 64, the remedy is principally one for certiorari that "deals
exclusively with grave abuse of discretion, which may not exist even when the
decision is otherwise erroneous." 56

That the remedy against an adverse decision, order, or ruling of the Commission on
Audit is a petition for certiorari, not review or appeal, is based on Article IX-A,
Section 7 of the Constitution, thus:

ARTICLE IX
Constitutional Commissions

A. Common Provisions

....

SECTION 7. Each Commission shall decide by a majority vote of all its Members any
case or matter brought before it within sixty days from the date of its submission
for decision or resolution. A case or matter is deemed submitted for decision or
resolution upon the filing of the last pleading, brief, or memorandum required by
the rules of the Commission or by the Commission itself. Unless otherwise provided
by this Constitution or by law, any decision, order, or ruling of each Commission
may be brought to the Supreme Court on certiorari by the aggrieved party within
thirty days from receipt of a copy thereof. (Emphasis Supplied)

This is affirmed in Reyna v. Commission on Audit,  where the Court maintained its
57

certiorari jurisdiction over judgments, final orders or resolutions of the Commission


on Audit:
In the absence of grave abuse of discretion, questions of fact cannot be raised in a
petition for certiorari, under Rule 64 of the Rules of Court. The office of the petition
for certiorari is not to correct simple errors of judgment; any resort to the said
petition under Rule 64, in relation to Rule 65, of the 1997 Rules of Civil Procedure is
limited to the resolution of jurisdictional issues.
58

We agree with respondent Commission that petitioners erroneously denominated


their Petition as a "Petition for Review on Certiorari." Except for the designation,
however, we find that the Petition was filed under Rule 64 of the Rules of Court
given that the Petition refers to Rule 64 and was filed within 30 days from notice of
the Resolution dated December 6, 2013 denying petitioners' Motion for
Reconsideration before the Commission on Audit. Therefore, we shall resolve the
Petition in the exercise of our certiorari jurisdiction under Article IX-A, Section 7 of
the Constitution.

II

The Constitution, the Administrative Code of 1987, and

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