[G.R. No. 74833. January 21, 1991.

]
THOMAS C. CHEESMAN, petitioner, vs. INTERMEDIATE APPELLATE COURT and
ESTELITA PADILLA, respondents.
Estanislao L . Cesa, Jr . for petitioner.
Benjamin I . Fernandez for private respondent.
SYLLABUS
1.
REMEDIAL LAW; APPEAL; QUESTION OF FACT DISTINGUISHED FROM
QUESTION OF LAW. 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."
2.
ID.; PETITION FOR REVIEW; ONLY QUESTIONS OF LAW MAY BE RAISED
THEREIN. It is axiomatic that only questions of law, distinctly set forth, may be
raised in a petition for the review on certiorari of a decision of the Court of Appeals
presented to this Court. As everyone knows or ought to know, the appellate
jurisdiction of this Court is limited to reviewing errors of law, accepting as conclusive
the factual findings of the lower court upon its own assessment of the evidence.
3.
ID.; ID.; FINDINGS OF FACT OF BOTH THE TRIAL AND APPELLATE COURTS, NOT
DISTURBED ON APPEAL; CASE AT BAR. Both the Trial Court and the Intermediate
Appellate Court reached the same conclusions on the three (3) factual matters
above set forth, after assessment of the evidence and determination of the
probative value thereof. Both Courts found that the facts on record adequately
proved fraud, mistake or excusable negligence by which Estelita Padilla's rights had
been substantially impaired; that the funds used by Criselda Cheesman was money
she had earned and saved prior to her marriage to Thomas Cheesman, and that
Estelita Padilla did believe in good faith that Criselda Cheesman was the sole owner
of the property in question. Consequently, these determinations of fact will not be
here disturbed, this Court having been cited to no reason for doing so.
4.
ID.; ACTIONS; PETITION FOR RELIEF; ORDER GRANTING RELIEF,
INTERLOCUTORY AND NOT APPEALABLE; FAILURE OF OPPOSITOR TO APPEAL
THEREFROM DOES NOT PRECLUDE HIS RAISING THE SAME QUESTION ON APPEAL
ON THE MERITS OF THE MAIN CASE. An order of a Court of First Instance (now
Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory and
is not appealable. Hence, the failure of the party who opposed the petition to appeal
from said order, or his participation in the proceedings subsequently had, cannot be

construed as a waiver of his objection to the petition for relief so as to preclude his
raising the same question on appeal from the judgment on the merits of the main
case.
5.
CONSTITUTIONAL LAW; 1973 CONSTITUTION; ALIENS CANNOT ACQUIRE OR
HOLD RESIDENTIAL LAND EXCEPT BY HEREDITARY SUCCESSION. The fundamental
law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973
Constitution ordains that, "Save in cases of hereditary succession, no private land
shall be transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain."
6.
ID.; ID.; ID.; INDIRECT CONTROVERSION OF THE CONSTITUTIONAL BAN, NOT
PERMITTED; CASE AT BAR. Petitioner Thomas Cheesman was charged with
knowledge of this prohibition. Thus, assuming that it was his intention that the lot in
question be purchased by him and his wife, he acquired no right whatever over the
property by virtue of that purchase; and in attempting to acquire a right or interest
in land, vicariously and clandestinely, he knowingly violated the Constitution; the
sale as to him was null and void. In any event, he had and has no capacity or
personality to question the subsequent sale of the same property by his wife on the
theory that in so doing he is merely exercising the prerogative of a husband in
respect of conjugal property. To sustain such a theory would permit indirect
controversion of the constitutional prohibition. If the property were to be declared
conjugal, this would accord to the alien husband a not insubstantial interest and
right over land, as he would then have a decisive vote as to its transfer or
disposition. This is a right that the Constitution does not permit him to have.
7.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALE; PURCHASER IN GOOD
FAITH, ENTITLED TO PROTECTION; CASE AT BAR. Estelita Padilla is a purchaser in
good faith, both the Trial Court and the Appellate Court having found that
Cheesman's own conduct had led her to believe the property to be exclusive
property of the latter's wife, freely disposable by her without his consent or
intervention. An innocent buyer for value, she is entitled to the protection of the law
in her purchase, particularly as against Cheesman, who would assert rights to the
property denied him by both letter and spirit of the Constitution itself.
DECISION
NARVASA, J p:
This appeal concerns the attempt by an American citizen (petitioner Thomas
Cheesman) to annul for lack of consent on his part the sale by his Filipino wife
(Criselda) of a residential lot and building to Estelita Padilla, also a Filipino.
Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970
but have been separated since February 15, 1981. 1

On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed
by Armando Altares conveying a parcel of unregistered land and the house thereon
(at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P.
Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing
at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City . . ." 2 Thomas
Cheesman, although aware of the deed, did not object to the transfer being made
only to his wife. 3
Thereafter and again with the knowledge of Thomas Cheesman and also without
any protest by him tax declarations for the property purchased were issued in the
name only of Criselda Cheesman and Criselda assumed exclusive management and
administration of said property, leasing it to tenants. 4 On July 1, 1981, Criselda
Cheesman sold the property to Estelita M. Padilla, without the knowledge or consent
of Thomas Cheesman. 5 The deed described Criselda as being" . . . of legal age,
married to an American citizen, . . ." 6
Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of
First Instance at Olongapo City against his wife, Criselda, and Estelita Padilla,
praying for the annulment of the sale on the ground that the transaction had been
executed without his knowledge and consent. 7 An answer was filed in the names of
both defendants, alleging that (1) the property said was paraphernal, having been
purchased by Criselda with funds exclusively belonging to her ("her own separate
money"); (2) Thomas Cheesman, being an American, was disqualified to have any
interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in
good faith. 8
During the pre-trial conference, the parties agreed upon certain facts which were
subsequently set out in a pre-trial Order dated October 22, 1981, 9 as follows:
"1.
Both parties recognize the existence of the Deed of Sale over the residential
house located at No. 7 Granada St., Gordon Heights, Olongapo City, which was
acquired from Armando Altares on June 4, 1974 and sold by defendant Criselda
Cheesman to Estelita Padilla on July 12, 1981; and
"2.
That the transaction regarding the transfer of their property took place during
the existence of their marriage as the couple were married on December 4, 1970
and the questioned property was acquired sometime on June 4, 1974."
The action resulted in a judgment dated June 24, 1982, 10 declaring void ab initio
the sale executed by Criselda Cheesman in favor of Estelita M. Padilla, and ordering
the delivery of the property to Thomas Cheesman as administrator of the conjugal
partnership property, and the payment to him of P5,000.00 as attorney's fees and
expenses of litigation. 11
The judgment was however set aside as regards Estelita Padilla on a petition for
relief filed by the latter, grounded on "fraud, mistake and/or excusable negligence"

which had seriously impaired her right to present her case adequately. 12 "After the
petition for relief from judgment was given due course," according to petitioner, "a
new judge presided over the case." 13
Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own
answer to the complaint, and a motion for summary judgment on May 17, 1983.
Although there was initial opposition by Thomas Cheesman to the motion, the
parties ultimately agreed on the rendition by the court of a summary judgment after
entering into a stipulation of facts, at the hearing of the motion on June 21, 1983,
the stipulation being of the following tenor: 14
"(1) that the property in question was bought during the existence of the
marriage between the plaintiff and the defendant Criselda P. Cheesman;
(2)
that the property bought during the marriage was registered in the name of
Criselda Cheesman and that the Deed of Sale and Transfer of Possessory Rights
executed by the former owner-vendor Armando Altares in favor of Criselda
Cheesman made no mention of the plaintiff;
(3)
that the property, subject of the proceedings, was sold by defendant Criselda
Cheesman in favor of the other defendant Estelita M. Padilla, without the written
consent of the plaintiff."
Obviously upon the theory that no genuine issue existed any longer and there was
hence no need of a trial, the parties having in fact submitted, as also stipulated,
their respective memoranda each praying for a favorable verdict, the Trial Court 15
rendered a "Summary Judgment" dated August 3, 1982 declaring "the sale executed
by . . . Criselda Cheesman in favor of . . . Estelita Padilla to be valid," dismissing
Thomas Cheesman's complaint and ordering him "to immediately turn over the
possession of the house and lot subject of . . . (the) case to . . . Estelita Padilla . . .
16
The Trial Court found that
1)
the evidence on record satisfactorily overcame the disputable presumption in
Article 160 of the Civil Code that all property of the marriage belongs to the
conjugal partnership "unless it be proved that it pertains exclusively to the husband
or to the wife" and that the immovable in question was in truth Criselda's
paraphernal property;
2)
that moreover, said legal presumption in Article 160 could not apply
"inasmuch as the husband-plaintiff is an American citizen and therefore disqualified
under the Constitution to acquire and own real properties;" and
3)
that the exercise by Criselda of exclusive acts of dominion with the
knowledge of her husband "had led . . . Estelita Padilla to believe that the properties
were the exclusive properties of Criselda Cheesman and on the faith of such a belief

she bought the properties from her and for value," and therefore, Thomas
Cheesman was, under Article 1473 of the Civil Code, estopped to impugn the
transfer to Estelita Padilla. LLphil
Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed
the Trial Court acts (1) of granting Estelita Padilla's petition for relief, and its
resolution of matters not subject of said petition; (2) of declaring valid the sale to
Estelita Padilla despite the lack of consent thereto by him, and the presumption of
the conjugal character of the property in question pursuant to Article 160 of the
Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having
been set aside as against Criselda Cheesman, continued to be binding on her; and
(4) of making findings of fact not supported by evidence. All of these contentions
were found to be without merit by the Appellate Tribunal which, on January 7, 1986,
promulgated a decision (erroneously denominated, "Report") 17 affirming the
"Summary Judgment complained of," "having found no reversible error" therein.
Once more, Thomas Cheesman availed of the remedy of appeal, this time to this
Court. Here, he argues that it was reversible error for the Intermediate Appellate
Court
1)
to find that the presumption that the property in question is conjugal in
accordance with Article 160 had been satisfactorily overcome by Estelita Padilla; 18
2)
to rule that Estelita Padilla was a purchaser of said property in good faith, it
appearing:
a)
that the deed by which the property was conveyed to Criselda Cheesman
described her as "married to Thomas C. Cheesman," as well as the deed by which
the property was later conveyed to Estelita Padilla by Criselda Cheesman also
described her as "married to an American citizen," and both said descriptions had
thus "placed Estelita on knowledge of the conjugal nature of the property;" and
b)
that furthermore, Estelita had admitted to stating in the deed by which she
acquired the property a price much lower than that actually paid "in order to avoid
payment of more obligation to the government;" 19
3)
to decline to declare that the evidence did not warrant the grant of Estelita
Padilla's petition for relief on the ground of "fraud, mistake and/or excusable
negligence;" 20
4)
to hold that Thomas Cheesman had waived his objection to Estelita's petition
for relief by failing to appeal from the order granting the same;
5)
to accord to Estelita Padilla a relief other than that she had specifically
prayed for in her petition for relief, i.e., "the restoration of the purchase price which
Estelita allegedly paid to Criselda;" 21 and

6)
to fail to declare that Thomas Cheesman's citizenship is not a bar to his
action to recover the lot and house for the conjugal partnership. 22
Such conclusions as that (1) fraud, mistake or excusable negligence existed in the
premises justifying relief to Estelita Padilla under Rule 38 of the Rules of Court, or
(2) that Criselda Cheesman had used money she had brought into her marriage to
Thomas Cheesman to purchase the lot and house in question, or (3) that Estelita
Padilla believed in good faith that Criselda Cheesman was the exclusive owner of
the property that she (Estelita) intended to and did in fact buy derived from the
evidence adduced by the parties, the facts set out in the pleadings or otherwise
appearing on record are conclusions or findings of fact. 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;" 23 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." 24
Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in
a petition for the review on certiorari of a decision of the Court of Appeals presented
to this Court. 25 As everyone knows or ought to know, the appellate jurisdiction of
this Court is limited to reviewing errors of law, accepting as conclusive the factual
findings of the lower court upon its own assessment of the evidence. 26 The
creation of the Court of Appeals was precisely intended to take away from the
Supreme Court the work of examining the evidence, and confine its task to the
determination of questions which do not call for the reading and study of transcripts
containing the testimony of witnesses. 27 The rule of conclusiveness of the factual
findings or conclusions of the Court of Appeals is, to be sure, subject to certain
exceptions, 28 none of which however obtains in the case at bar.
It is noteworthy that both the Trial Court and the Intermediate Appellate Court
reached the same conclusions on the three (3) factual matters above set forth, after
assessment of the evidence and determination of the probative value thereof. Both
Courts found that the facts on record adequately proved fraud, mistake or excusable
negligence by which Estelita Padilla's rights had been substantially impaired; that
the funds used by Criselda Cheesman was money she had earned and saved prior
to her marriage to Thomas Cheesman, and that Estelita Padilla did believe in good
faith that Criselda Cheesman was the sole owner of the property in question.
Consequently, these determinations of fact will not be here disturbed, this Court
having been cited to no reason for doing so. cdll
These considerations dispose of the first three (3) points that petitioner Cheesman
seeks to make in his appeal. They also make unnecessary an extended discussion of

the other issues raised by him. As to them, it should suffice to restate certain
fundamental propositions.
An order of a Court of First Instance (now Regional Trial Court) granting a petition for
relief under Rule 38 is interlocutory and is not appealable. Hence, the failure of the
party who opposed the petition to appeal from said order, or his participation in the
proceedings subsequently had, cannot be construed as a waiver of his objection to
the petition for relief so as to preclude his raising the same question on appeal from
the judgment on the merits of the main case. Such a party need not repeat his
objections to the petition for relief, or perform any act thereafter (e.g., take formal
exception) in order to preserve his right to question the same eventually, on appeal,
it being sufficient for this purpose that he has made of record "the action which he
desires the court to take or his objection to the action of the court and his grounds
therefor." 29
Again, the prayer in a petition for relief from judgment under Rule 38 is not
necessarily the same prayer in the petitioner's complaint, answer or other basic
pleading. This should be obvious. Equally obvious is that once a petition for relief is
granted and the judgment subject thereof set aside, and further proceedings are
thereafter had, the Court in its judgment on the merits may properly grant the relief
sought in the petitioner's basic pleadings, although different from that stated in his
petition for relief.
Finally, the fundamental law prohibits the sale to aliens of residential land. Section
14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary
succession, no private land shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public
domain." 30 Petitioner Thomas Cheesman was, of course, charged with knowledge
of this prohibition. Thus, assuming that it was his intention that the lot in question
be purchased by him and his wife, he acquired no right whatever over the property
by virtue of that purchase; and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the Constitution; the sale as to
him was null and void. 31 In any event, he had and has no capacity or personality to
question the subsequent sale of the same property by his wife on the theory that in
so doing he is merely exercising the prerogative of a husband in respect of conjugal
property. To sustain such a theory would permit indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this would
accord to the alien husband a not insubstantial interest and right over land, as he
would then have a decisive vote as to its transfer or disposition. This is a right that
the Constitution does not permit him to have.
As already observed, the finding that his wife had used her own money to purchase
the property cannot, and will not, at this stage of the proceedings be reviewed and
overturned. But even if it were a fact that said wife had used conjugal funds to
make the acquisition, the considerations just set out militate, on high constitutional

grounds, against his recovering and holding the property so acquired, or any part
thereof. And whether in such an event, he may recover from his wife any share of
the money used for the purchase or charge her with unauthorized disposition or
expenditure of conjugal funds is not now inquired into; that would be, in the
premises, a purely academic exercise. An equally decisive consideration is that
Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate
Court having found that Cheesman's own conduct had led her to believe the
property to be exclusive property of the latter's wife, freely disposable by her
without his consent or intervention. An innocent buyer for value, she is entitled to
the protection of the law in her purchase, particularly as against Cheesman, who
would assert rights to the property denied him by both letter and spirit of the
Constitution itself. LibLex
WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

[G.R. No. 109645. August 15, 1997.]

ORTIGAS & CO. LTD. PARTNERSHIP, petitioner, vs. JUDGE TIRSO VELASCO and
DOLORES MOLINA, respondents.
[G.R. No. 112564. August 15, 1997.]
DOLORES V. MOLINA, petitioner, vs. HON. PRESIDING JUDGE OF RTC, QUEZON CITY,
BR. 105; and MANILA BANKING CORPORATION, respondents.
RE:
ADMINISTRATIVE PROCEEDINGS FOR DISMISSAL FROM THE JUDICIARY OF
JUDGE TIRSO D.C. VELASCO, BR. 105, REGIONAL TRIAL COURT, QUEZON CITY
Eulogio R. Rodriguez for petitioner in 109645.
Valdez, Sales & Associates for petitioner in 112564.
Villaraza & Cruz for Manila Banking.
Gregorio Bilog, Jr. for respondent Judge Tirso D.C. Velasco.
Justice Sixto A. Domondon/Rodol B. Mapile and Associates for Dolores Molina.
SYNOPSIS
This is an administrative proceedings filed by petitioners Ortigas & Co. Ltd.
Partnership and Manila Banking Corporation against Judge Tirso Velasco accusing
the latter of grievous transgression of quite elementary procedural and jurisdictional
rules praying for the dismissal from the judiciary of the respondent judge. In
response thereto, respondent judge theorized that the recycled petition for his
dismissal had became moot and academic due to the dismissal on October 18, 1995
of the administrative case against him and the entry of the final and executory
judgment of the second division in G.R. No. 109645 and G.R. No. 112564. Due to the
seriousness of the charges and of the penalty corresponding thereto, the instant
case was referred to the Court En Banc.

The Supreme Court En Banc ruled that the dismissal of the complaints filed against
respondent was without prejudice to their revival should the Court in its adjudication
of the case now pending before it pertaining to these cases find the decisions/orders
issued by respondent judges to have been issued in violation of the judicial norms of
conduct warranting disciplinary action. With regard to the specific charges against
respondent judge, the Court said that it is abundantly clear that no notice of the
reconstitution petition was ever given to the owners of the adjoining properties and
other interested parties, and no publication in the Official Gazette or posting in the
indicated places of the petition was made which effectively precluded this court
from acquiring jurisdiction over the reconstitution proceeding and proceeded to act

on the case and preside over a proceeding void ab initio. Moreover, respondent
judge disregarded well-known and firmly established doctrines by dismissing the
appeals of petitioner Ortigas and by the Solicitor General. A rule of long-standing
and uniform application is that dismissals by Regional Trial Courts of appeals are
allowed provided that a motion to dismiss an appeal was filed or no notice of appeal
was made. Aside from this two, the trial court cannot disallow an appeal. In sum,
respondent's acts are so serious and indefensible a character as to call for the
penalty of dismissal from service, especially so when it is considered that the
disciplinary proceeding at bar is not the first initiated against him. In view thereof,
respondent judge is dismissed from the service, with forfeiture of all retirement
benefits and accrued leave credits, and with prejudice to re-employment in any
branch or instrumentality of the government including government-owned or
controlled corporation. DEHcTI
SYLLABUS
1.
JUDICIAL ETHICS; JUDGES; DISMISSED, FOR GROSS IGNORANCE OF THE LAW,
SERIOUS MISCONDUCT PREJUDICIAL TO THE INTEREST OF THE SERVICE, PATENT
BIAS AND PARTIALITY. The first of these accusations is that respondent Judge
acted on and indeed favorably resolved the reconstitution proceeding instituted by
Molina despite full awareness that he had no jurisdiction over it, the pre-requisites
therefor not having been complied with. Judge Velasco was made aware of the
petitioner's failure to comply with the peremptory requirements of Section 13 of
Republic Act No. 26. However, what the Velasco Court actually did, through the
Clerk of Court, was to send notices of the hearing scheduled on July 16, 1992 to
persons OTHER than those mentioned by the law. It is thus abundantly clear that no
notice of the reconstitution petition was ever given to the owners of the adjoining
properties and other interested parties, and no publication in the Official Gazette, or
posting in the indicated public places, of notices of the petition stating the names of
these persons was ever accomplished. Respondent Judge ignored these patent
defects which effectively precluded his Court's acquiring jurisdiction over the
reconstitution proceeding and proceeded to act on the case and preside, in fine,
over a proceeding void ab initio. Respondent Judge moreover disregarded wellknown and firmly established doctrines respecting dismissal of appeals and
execution of judgments, in a manner that clearly favored petitioner Molina. He
dismissed Ortigas' appeal, pronouncing its notice of appeal as a "mere scrap of
paper" because Ortigas allegedly had no material interest in the litigation. Not only
was this contrary to the doctrine just discussed, it also went against relevant facts
and related substantive provisions of law. Judge Velasco also threw out the appeal of
the Office of the Solicitor General. He branded the appeal "sham" because said
Office had "not filed any formal opposition to the petition and neither has it
introduced and/or formally offered any evidence to warrant its dismissal, etc.," and
declared that the appeal was tardily attempted. The next misdeed ascribed to Judge
Velasco concerns his Order of October 14, 1992 by which he authorized the

immediate execution of the judgment rendered by him just twenty-one (21) days
earlier (on September 23, 1992), directing reconstitution of Molina's title.
Respondent Judge's concession to Molina of immediate execution of the judgment in
her favor thus constitutes yet another breach of established principles. Respondent
Judge proceeded with the reconstitution case and rendered judgment despite lack of
jurisdiction, adverse evidence of high ranking officials of LRA, published precedents
re Ortigas' titles and reconstitution proceedings, and reconstitution petition based
on plainly inferior evidence. The disregard by Judge Velasco of these simply cannot
be explained away as an honest mistake of judgment or an innocent error in the
exercise of discretion. It can only be viewed as an attempt through misuse of
judicial processes to give a semblance of merit to a clearly unmeritorious cause and
accord undeserved benefits to the party espousing and promoting said cause.
WHEREFORE, Judge Tirso D. C. Velasco is hereby DISMISSED from the service, with
forfeiture of all retirement benefits and accrued leave credits, and with prejudice to
re-employment in any branch or instrumentality of the government including
government-owned or controlled corporations. Immediately upon service on him of
notice of this adjudgment, he shall be deemed to have VACATED his office, and his
authority to act in any manner whatsoever as Judge shall be considered to have
automatically CEASED. STEacI
2.
CIVIL LAW; REPUBLIC ACT NO. 26 (RECONSTITUTION OF LOST OR DESTROYED
TORRENS CERTIFICATE OF TITLE); REQUISITES FOR COURT TO ACQUIRE
JURISDICTION. Section 13 of Republic Act No. 26 sets down the indispensable
requisites for the acquisition by the court of jurisdiction over a proceeding for
reconstitution of title, these being: 1) publication, at petitioner's expense, of notice
of the petition for reconstitution twice in successive issues of the Official Gazette,
and posting thereof on the main entrance of the provincial building and of the
municipal building of the municipality or city in which the land is situated, at least
thirty days prior to the date of hearing; 2) specific statement in the notice of the
number of the lost or destroyed certificates of title if known, the name of the
registered owner, the name of the occupants or persons in possession of the
property, the owner of the adjoining properties and all other interested parties, the
location, area and boundaries of the property, and the date on which all persons
having any interest therein must appear and file their claim or objection to the
petition; 3) sending, by registered mail or otherwise, at the expense of the
petitioner, of a copy of the notice to every person named therein (i.e., the
occupants or persons in possession of the property, the owner of the adjoining
properties and all other interested parties) whose address is known, at least thirty
days prior to the date of the hearing; and 4) submission by petitioner at the hearing
of proof of the publication, posting and service of the notice as directed by the
court.
3.
REMEDIAL LAW; ACTIONS; APPEAL FROM THE REGIONAL TRIAL COURT;
GROUND FOR DISMISSAL. A rule of long standing and uniform application is that

dismissals by Regional Trial Courts of appeals from their judgments are allowed only
under the conditions stated in Sections 13 and 14, Rule 41 of the Rules of Court.
Section 14 provides that a "motion to dismiss an appeal may be filed prior to the
transmittal of the record to the appellate court," the grounds being limited to those
"mentioned in the preceding section," i.e., Section 13, to wit: "where the notice of
appeal, appeal bond, or record on appeal is not filed within the period of time herein
provided." In other words, the ground for dismissal of an appeal from the Regional
Trial Court is the failure of an appellant to file the notice of appeal, or the record on
appeal in cases of multiple appeals the requirement of an appeal bond having
been eliminated. It has no power to disallow an appeal on any other ground, e.g.,
that it is frivolous, or the case has become moot, etc. The reason is obvious:
otherwise, "the way would be opened for courts to forestall review or reversal of
their decisions by higher courts, no matter how erroneous or improper such
decisions should be."
4.
ID., ID.; APPEALS; EXECUTION PENDING APPEAL; AVAILED OF ONLY IN
EXTRAORDINARY CIRCUMSTANCES. Now, it is axiomatic that execution of
judgments pending appeal is allowed only as an exception to the general rule that
only judgments which have become final and executory may be executed. The
principle is set forth in Section 2, Rule 39 of the Rules of Court. The element that
gives validity to an order of execution pending appeal is the existence of good
reasons, to be stated in a special order. The discretion to authorize immediate
execution is sound discretion, which so authorizes it only where there are good
reasons therefor. Execution pending appeal is not to be availed of and applied
routinely, but only in extraordinary circumstances. Indeed, particularly as regards
land registration or cadastral cases, the rule should be applied with even more
circumspection in light of: (1) the declared inapplicability of the Rules of Court "to
land registration, cadastral and election cases, naturalization and insolvency
proceedings, and other cases not provided for, except by analogy or in a suppletory
character and whenever practicable and convenient"; and (2) the holding in Director
of Lands v. Reyes, 68 SCRA 177 (1975) that "execution pending appeal is not
applicable in a land registration proceeding," for the reason that it "is fraught with
dangerous consequences (as) (i)nnocent purchasers may be misled into purchasing
real properties upon reliance on a judgment which may be reversed on appeal."
5.
ID.; REPUBLIC ACT NO. 26 (RECONSTITUTION OF LOST OR DESTROYED
CERTIFICATE OF TITLE); LANDS ALREADY COVERED BY EXISTING TITLES CANNOT BE
THE SUBJECT THEREOF. Lands already covered by existing titles "cannot be the
subject of petitions for reconstitution of allegedly lost or destroyed titles filed by
third parties without first securing by final judgment the cancellation of such
existing titles"; and that "courts simply have no jurisdiction over petitions by such
third parties for reconstitution of allegedly lost or destroyed titles over lands that
are already covered by duly issued subsisting titles in the names of their duly
registered owners." TSDHCc

RESOLUTION
PER CURIAM p:
I.

The Petitions for Dismissal

Shortly after notice of the judgment of July 25, 1994 in the consolidated cases at bar
was served on counsel of Ortigas & Co. Ltd., it filed a "Motion for Reconsideration
(Re: Dismissal of Respondent Judge)," dated August 15, 1994, pointing out that
while it had been awarded the basic reliefs it sought, the prayer set out in its
Memorandum 1 that Hon. Judge Tirso D.C. Velasco be purged from the judiciary
had not been granted. It made reference to a "litany of glaring errors committed
by respondent Judge" disregarding the mandatory notice requirement in
reconstitution proceedings; "reviving" a long interred petition; disregarding the
Decisions of this Court and its warning to take extra care in reconstitution
proceedings; relying on incredible and unbelievable evidence; bad faith in
disallowing the appeals of Ortigas and the Republic of the Philippines; and allowing
execution pending appeal and argued that collectively, these errors amply
establish Judge Velasco's "gross bad faith and connivance in the fraudulent
reconstitution of the fake titles." 2
The Manila Banking Corporation (TMBC) joined Ortigas in the petition for Velasco's
removal from the Judiciary. 3 In fact, as early as July 12, 1993, it had filed an
administrative complaint against the Judge for gross ignorance of the law, serious
misconduct prejudicial to the interest of the service, patent bias and partiality in
favor of Dolores Molina, and hostility to those opposing her claims involving the
same orders and rulings which were annulled by this Court's Decision of July 25,
1995. The case was docketed as Administrative Matter No. RTJ-93-1108, entitled
"Epimaco V . Oreta (On Behalf of the Manila Banking Corporation) v. Hon. Tirso D.C.
Velasco, etc." It was, however, dismissed without prejudice by the First Division in a
Resolution dated October 18, 1995 principally for being premature. 4 cdasia
II.

Relevant Pleadings Prior to Submission of Case for Resolution

The Court required Judge Velasco to file a comment on the petition for his removal
within ten (10) days, 5 but filing thereof was, at his instance, held in abeyance ". . .
pending resolution of petitioner Molina's motion for reconsideration of the said
decision of July 25, 1994 . . ." 6 That motion for reconsideration was denied with
finality by Resolution of January 23, 1995, which also accordingly ordered Judge
Velasco "to SUBMIT within ten (10) days from notice . . . his comment on the 'Motion
for Reconsideration (Re: Dismissal of Respondent Judge)' . . . dated August 15,
1994." In a subsequent Resolution, 7 the Court directed inter alia that "no further
pleadings, motions or papers be henceforth filed in these cases except only as
regards the issues directly involved in the 'Motion for Reconsideration (Re: Dismissal
of Respondent Judge)' of Ortigas & Co. Ltd., dated August 15, 1994."

Judge Velasco submitted his Comment on March 17, 1995.

By Resolution dated July 24, 1995, the Court declared the consolidated cases at bar
"closed and terminated;" directed entry of judgment; reiterated the order that no
further pleadings, motions or papers be henceforth filed except only as regards the
issues directly involved in the motion for the dismissal of the Judge, dated August
15, 1994; and directed the Clerk of Court to transmit the mittimus in both cases to
the corresponding Courts of origin for appropriate action. Then, after passing upon
and disposing of other incidents, including inter alia the liability of Dolores Molina
and her lawyers for contempt of court, 8 the Court promulgated another Resolution
(dated May 20, 1996) granting the parties thirty (30) days from notice within which
to file memoranda, if they be so minded, in relation to the application for Judge
Velasco's removal from the Judiciary. Judge Velasco filed his memorandum on June
26, 1996; TMBC and Ortigas filed theirs on July 15, 1996 and September 11, 1996,
respectively. No hearing was conducted. The parties did not ask for it. Having raised
no issue of fact requiring presentation of proof, they were evidently disposed to
submit the case for resolution on the basis of their pleadings and memoranda in
relation to the facts on record.

The seriousness of the charges and of the penalty thereto corresponding have
impelled the referral of the case to the Court En Banc.
III.

Judge's Theory that Case Moot and Academic

In his memorandum, Judge Velasco theorizes that "the recycled petition for . . . (his)
dismissal in the THIRD DIVISION of the Supreme Court (had been rendered) moot
and academic" by: (1) the dismissal on October 18, 1995 of the administrative case
against him (Adm. Matter No. RTJ-93-1108), and (2) the entry of the final and
executory judgment of the Second Division "dated July 25, 1994 in G.R. No. 109645
and G.R No. 112564 . . ." The theory is utterly untenable.
The dismissal of the complaints in Adm. Matter No. RTJ-93-1108 was "without
prejudice to their revival should the Court in its adjudication of the cases now
pending before it pertaining to these cases find the Decisions/Orders issued by
respondent Judges to have been issued in violation of judicial norms of conduct
warranting disciplinary action." 9 And other pertinent Resolutions have made clear
that Judge Velasco's administrative liability would be dealt with separately from the
merits of the consolidated cases; that the finality and entry of the consolidated
judgment would have no effect on the determination of said liability; that the
proceedings, in other words, would be kept open solely as regards the petition for
the Judge's removal. The Resolution of January 23, 1995, for instance, which denied
with finality Molina's motion for reconsideration of the consolidated decision of July
25, 1994 (inclusive of said motion's supplements), not only ordered the Judge to
submit his comment on the petition for his dismissal from the service (its filing

having been deferred pending resolution of Molina's aforesaid motion for

reconsideration), but also directed that "no further pleadings, motions or papers
(should) be henceforth filed in these cases except only as regards the issues directly
involved in the 'Motion for Reconsideration (Re: Dismissal of Respondent Judge)' of
Ortigas & Co. Ltd., dated August 15, 1994." indubitably indicating that the inquiry
into Judge Velasco's administrative liability would be pursued despite the attainment
of finality of the judgment, then quite imminent. These dispositions were reiterated
in the Resolutions of March 1, 1995 and July 24, 1995. 10 All this, apart from the
fact that Judge Velasco's administrative liability was never directly in issue in the
proceedings leading to the rendition of the consolidated judgment in the cases at
bar.
IV.

Specific Accusations

At Judge Velasco's door are laid accusations of grievous transgressions of quite

elementary procedural and jurisdictional rules.
A.

Proceeding with Reconstitution Case Without Jurisdiction

The first of these is that he acted on and indeed favorably resolved the
reconstitution proceeding instituted by Molina despite full awareness that he had no
jurisdiction over it, the pre-requisites therefor not having been complied with. The
validity of the accusation cannot but be conceded.
Section 13 of Republic Act No. 26, 11 sets down the indispensable requisites 12 for
the acquisition by the court of jurisdiction over a proceeding for reconstitution of
title, these being:
1)
publication, at petitioner's expense, of notice of the petition for reconstitution
twice in successive issues of the Official Gazette, and posting thereof on the main
entrance of the provincial building and of the municipal building of the municipality
or city in which the land is situated, at least thirty days prior to the date of hearing;
2)
specific statement in the notice of the number of the lost or destroyed
certificates of title if known, the name of the registered owner, the name of the
occupants or persons in possession of the property, the owner of the adjoining
properties and all other interested parties, the location, area and boundaries of the
property, and the date on which all persons having any interest therein must appear
and file their claim or objection to the petition;
3)
sending, by registered mail or otherwise, at the expense of the petitioner, of
a copy of the notice to every person named therein (i.e., the occupants or persons
in possession of the property, the owner of the adjoining properties and all other
interested parties) whose address is known, at least thirty days prior to the date of
the hearing; and

4)
submission by petitioner at the hearing of proof of the publication, posting
and service of the notice as directed by the court.
Judge Velasco was made aware of the petitioner's failure to comply with these
peremptory requirements. In truth, in his Order of July 3, 1992, he confessed his
inability to "declare as of now that . . . (his Court) had already acquired jurisdiction
over . . . (the) case considering the manifestation of . . . (Solicitor) Ma. Eloisa Castro
that the requirement of notice to the other adjacent owners has not as yet been
submitted to the Court . . ." Having thus been put on guard that an essential feature
of the proceeding was fatally flawed essential because it affected his very power
to act thereon he became unavoidably obliged to review the record and, of
course, the legal provisions laying down the germane jurisdictional requirements.
Had he done so, he would have quickly discovered that the notice of the petition for
reconstitution, as published and posted, did not state the names of the occupants or
persons in possession of the property, the owner of the adjoining properties and all
other interested parties, and that petitioner had not (as she could not have) sent
copies of the notice to said persons. These omissions are clearly albeit implicitly
conceded by petitioner herself when she filed an ex parte motion dated July 13,
1992 praying that notices be sent to certain individuals and by His Honor when
he granted that motion by Order dated July 16, 1992. However, what the Velasco
Court actually did, through the Clerk of Court, was to send notices of the hearing
scheduled on July 16, 1992 to persons OTHER than those mentioned by the law,
namely: cdll
1)
the "president of the Corinthian Neighborhood Association or Corinthian
Homeowners Association thru the Barangay Chairman of Barangay Corinthian
because the adjoining property designated as Vicente Madrigal is now part of this
Barangay Corinthian;"
2)
the "Director, Bureau of Lands, Plaza Cervantes, Manila, as adjoining owner
designated as Public Land:" and
3)
the "City Engineer of Quezon City for the adjoining boundaries designated as
Roads or Road Lot." prcd
By no means may these notices be deemed to meet the fundamental prerequisites
for acquisition of jurisdiction in reconstitution cases. For clearly, as this Court said in
its Decision of July 25, 1994, the officers of the neighborhood or homeowners'
association "are not the adjoining owners contemplated by law, on whom notice of
the reconstitution proceedings must be served . . .; nor did they, by their receipt of
notice of the petition (or the process server's admonition) incur the obligation to
transmit such notice to the actual owners of the adjoining lots, assuming they had
knowledge of the latter's identities." 13 Nor may said notices be considered
substantially satisfactory, simply on the basis of respondent Judge's claim of
"honest belief" that notice on the officers of the Corinthian Neighborhood

Association was sufficient because the "occupants or homeowners (whom the law
required to be notified) are themselves, bonafide members of the Association," and
said officers "were specifically charged by the process server to inform their
respective constituents about the notice." The claim is put forth with no little
effrontery, considering its patent puerility, and underscores the Judge's cavalier
attitude towards the stringent jurisdictional requirements of the law.
His Honor advances the equally preposterous theory that since Atty. Ongkiko
appeared "in behalf of the Association" which shows, he says, that the latter had
received the notice of hearing, it was "up to him to make further inquiries . . . (this
being) his own lookout as representative of the Association." Of the same ilk is his
excuse for omitting to serve any notice on Ortigas, i.e., that its "claims can be
properly determined in a separate, ordinary action where the issue of ownership can
be threshed out, and not in a reconstitution proceeding . . ." That excuse is a flimsy
attempt to mask his deliberate refusal to the allegations of the oppositors, including
the government itself, that there was nothing to reconstitute because Molina's title
was fabricated and completely void.
It is thus abundantly clear that no notice of the reconstitution petition was ever
given to the owners of the adjoining properties and other interested parties, and no
publication in the Official Gazette, or posting in the indicated public places, of
notices of the petition stating the names of these persons was ever accomplished.
Respondent Judge ignored these patent defects which effectively precluded his
Court's acquiring jurisdiction over the reconstitution proceeding and proceeded to
act on the case and preside, in fine, over a proceeding void ab initio.
B.

Unwarranted Dismissal of Appeals

Respondent Judge moreover disregarded well-known and firmly established

doctrines respecting dismissal of appeals and execution of judgments, in a manner
that clearly favored petitioner Molina.
A rule of long standing and uniform application is that dismissals by Regional Trial
Courts of appeals from their judgments are allowed only under the conditions stated
in Sections 13 and 14, Rule 41 of the Rules of Court. Section 14 provides that a
"motion to dismiss an appeal may be filed . . . prior to the transmittal of the record
to the appellate court," the grounds being limited to those "mentioned in the
preceding section," i.e., Section 13, to wit: "where the notice of appeal, appeal
bond, or record on appeal is not filed within the period of time herein provided." In
other words, the only ground for dismissal of an appeal from the Regional Trial Court
is the failure of an appellant to file the notice of appeal, or the record on appeal
in cases of multiple appeals the requirement of an appeal bond having been
eliminated.
It has no power to disallow an appeal on any other ground, e.g., that it is frivolous,
or the case has become moot, etc. The reason is obvious: otherwise, "the way

would be opened for courts . . . to forestall review or reversal of their decisions by

higher courts, no matter how erroneous or improper such decisions should be." 14
Neither may the Trial Court dismiss appeals on the grounds mentioned in Rule 50 of
the Rules of Court, or other recognized grounds, e.g., that the cause has become
moot, or the appeal is frivolous or manifestly dilatory for authority to do so "is not
certainly with the court a quo whose decision is in issue, but with the appellate
court." 15
But in defiance of these familiar precepts, respondent Judge dismissed appeals
attempted to be taken from his judgment in favor of Molina by Ortigas and the
Solicitor General.
He dismissed Ortigas' appeal, pronouncing its notice of appeal as a "mere scrap of
paper" because Ortigas allegedly had no material interest in the litigation. Not only
was this contrary to the doctrine just discussed, it also went against relevant facts
and related substantive provisions of law. As observed by this Court in the judgment
of July 25, 1994: 16
"There is in the first place, the conceded fact that Ortigas still retained title to a
considerable number of street lots within the land in question, which it would lose if
the entire area were declared to belong to Molina. Again, the respondent Judge's
acknowledgment of Ortigas' status of vendor of all the subdivision lots covered by
Molina's adverse claim., was implicit recognition of its right and obligation to defend
its vendees' titles being impugned by Molina precisely on the theory that Ortigas'
titles were void, a right and obligation arising from the warranty against eviction
imposed on it by law. The avoidance of liability for eviction is certainly an interest of
sufficient substance to concede to Ortigas capacity to litigate as party in interest in
the reconstitution proceeding, prescinding from its stated intention of preventing
the perpetration of fraud by Molina upon Ortigas' vendees and successors-ininterest and upon the public at large."
Respondent Judge pleads "good faith," saying that when he dismissed Ortigas'
appeal, he had no furtive design, self-interest, ill-will or ulterior purposes in his mind
and heart. The record shows otherwise and precludes acceptance of his plea.
Judge Velasco also threw out the appeal of the Office of the Solicitor General. He
branded the appeal "sham" because said Office had "not filed any formal opposition
to the petition and neither has it introduced and/or formally offered any evidence to
warrant its dismissal, etc.," and declared that the appeal was tardily attempted.
Again, the ruling on the matter in the judgment of July 25, 1994 is relevant and
cogent: 17
"Prescinding from the patent fact that the records do contain (1) the formal
objection of the OSG to Molina's petition for reconstitution on the ground inter alia
that no actual notice had been given to the adjacent owners, an omission that the

Trial Judge had precisely acknowledged, (2) the report of the Land Registration
Authority drawing the Court's attention to irregularities in the petition, e.g., that the
plan relied upon by Molina, Psd-16740 'appears to be derived from two different
surveys, numbered Psu-1148 & Psu-20191, neither of which appear(s) to have been
the subject of original registration; thus it is presumed that no original title had
been issued from which TCT-124088 could have emanated;' that said plan 'is a
portion of (LRC) SWO-15352 which is being applied for registration of title in Land
Reg. Case No. Q-336, LRC Rec. No. N-50589,' etc., (3) the notice of appeal of the
OSG from the judgment of September 23, 1992, (4) the motion of the OSG for
reconsideration of the Order of October 14, 1992 unmistakably indicating the
active opposition of the OSG to the Molina petition for reconstitution the rule, as
already explained, is that Trial Courts have no competence to dismiss appeals on
the stated ground or any other going to the merits thereof. While it may be assumed
that Trial Courts are morally convinced of the correctness of the judgments and
orders that they promulgate, and hence, in most cases, they honestly believe that
appeals from their judgments or final orders are inutile, frivolous, dilatory, this gives
them no warrant to reject appeals on these grounds; otherwise, the right of appeal
would be rendered largely illusory."
A fallacy known in logic as non sequitur is what his Honor offers by way of refutation
of this accusation. He argues that government agencies "directly involved in this
kind of proceeding . . . (were) duly notified" such as "the Land Management
Bureau, the DENR, the Register of Deeds . . . and the City Engineers Office of
Quezon City" and since "they . . . (had) not registered any opposition to the
petition," the Solicitor General's appeal is "sham and unnecessary." The conclusion
does not follow, it has no bearing whatever on the stated premise; and the Judge's
plea of "good faith" founded on such an obviously contrived argument cannot but
be rejected. Furthermore, ranking officials of the Land Registration Authority had in
fact impugned Molina's title, as will shortly be recounted. 18
C.

Unwarranted Order of Execution Pending Appeal

The next misdeed ascribed to Judge Velasco concerns his Order of October 14, 1992
by which he authorized the immediate execution of the judgment rendered by him
just twenty-one (21) days earlier (on September 23, 1992), directing reconstitution
of Molina's title. In that Order he opined that, on the ostensible basis of cited
precedents. Ortigas' appeal was "frivolous and interposed only for purposes of
delay;" hence, immediate execution was warranted not only by Molina's advanced
age, but also to "prevent wastage of (her) income," "avoid the possibility of . . .
judgment becoming illusory or to "prevent further damage" to her or "minimize
damage unduly suffered by . . . (her)." cdpr
Now, it is axiomatic that execution of judgments pending appeal is allowed only as
an exception to the general rule that only judgment which have become final and

executory may be executed. The principle is set forth in Section 2, Rule 39 of the
Rules of Court.
"SEC. 2.
Execution pending appeal. On motion of the prevailing party with
notice to the adverse party the court may, in its discretion, order execution to issue
even before the expiration of the time to appeal, upon good reasons to be stated in
a special order. If a record on appeal is filed thereafter, the motion and the special
order shall be included therein."
The element that gives validity to an order of execution pending appeal, it will be
noted, is the existence of good reasons, to be stated in a special order. The
discretion to authorize immediate execution, is sound discretion, which so
authorizes it only where there are good reasons therefor. 19 Execution pending
appeal is not to be availed of and applied routinely, but only in extraordinary
circumstances. Indeed, particularly as regards land registration or cadastral cases,
the rule should be applied with even more circumspection in light of: (1) the
declared inapplicability of the Rules of Court "to land registration, cadastral and
election cases, naturalization and insolvency proceedings, and other cases not . . .
provided for, except by analogy or in a suppletory character and whenever
practicable and convenient;" and (2) the holding in Director of Lands v. Reyes, 68
SCRA 177 (1975) that "execution pending appeal is not applicable in a land
registration proceeding," for the reason that it "is fraught with dangerous
consequences . . . (as) (i)nnocent purchasers may be misled into purchasing real
properties upon reliance on a judgment which may be reversed on appeal." 20
Respondent Judge's concession to Molina of immediate execution of the judgment in
her favor thus constitutes yet another breach of established principles.
Insofar as immediate execution is premised on the theory that Ortigas' appeal was
"frivolous and interposed only for purposes of delay," such rationalization is
indefensible for the reasons already stated relative to the Judge's disallowance of
Ortigas' appeal. And insofar as it is sought to be justified upon the broad and
general grounds cited by His Honor, i.e., in order "to prevent wastage of income," or
"avoid the possibility of . . . judgment becoming illusory or to minimize damage
unduly suffered by the prevailing party or to prevent further damage," as well as by
Molina's "advanced age" the proffered rationale is just so much gobbledygook. In
the first place, respondent Judge was aware that Molina's title was in conflict with
Ortigas' document of ownership which had been in existence for many, many
years, and had been subject of, and upheld in, several decisions and final
resolutions of the highest court of the land. Any reasonably prudent person in his
shoes should have realized that there could be some serious questions about
Molina's title. Assuming, however, that the Judge had been convinced by Molina's
proofs that Ortigas' titles were gravely flawed, he may not (as this Court's judgment
of July 25, 1996 emphasizes) ascribe "such infallibility to his judgment as to
preclude the possibility of its being overturned on appeal, (and) condemn any

appeal sought to be taken therefrom as idle and merely generative of needless

injury to the prevailing party." Otherwise, the exception would come to be the
general rule; it would then be possible for the prevailing party in every case to bring
about immediate execution by merely alleging that any projected appeal would
result in injury to him because his income would be wasted, or he would be caused
further damage; or, if he should happen to be of advanced age, that he would not
survive an appeal.
Of course as it turned out, respondent Judge's decision was not as invulnerable as
he posited. Indeed, it was riddled with invalidating imperfections, and only the most
biased would have imputed such soundness to it as to spawn optimism of its
affirmance by this Court. All things considered, the gross impropriety of authorizing
that judgment's immediate execution is quite apparent.
D.

Disregard of Factors Cogently Militating Against Reconstitution

Again, respondent Judge proceeded with the reconstitution case and rendered
judgment in disregard, and even in defiance, of powerfully cogent circumstances of
which he was fully aware, deepening the doubt as to the bona fides of his claim, just
discussed, of frivolousness of the appeals from his judgment, and of the existence
of good reasons for its immediate execution.
1.

Lack of Jurisdiction

The first of these circumstances is, as already stressed, the non-fulfillment of the
legal requisites for his Court's acquisition of jurisdiction over the Molina
reconstitution case, a fatal defect he sought to trivialize and evade by ordering
service of notice on inconsequential parties who clearly were not those
contemplated by law or obliged to relay the notice to the proper persons.
2.

Adverse Evidence of High-Ranking Officials of LRA

A second circumstance ignored by His Honor although it obviously made obligatory

the exercise of extreme caution in assessment of the merits of Molina's application,
was the fact that Government agencies and officials directly in charge of
enforcement of land registration laws had pointed to pernicious, if not invalidating,
defects in her title.
At the commencement of the reconstitution proceedings, the Land Registration
Authority presented to the Judge a report explicitly identifying irregularities in
Molina's title. 21 And high-ranking officers of the Land Registration Authority
testified in support of that report: Atty. Benjamin Bustos, Chief of the Reconstitution
Division, who declared that Molina's plans had never been subject of registration
proceedings; Engineer Felino Cortez, Chief of the Ordinary and Cadastral Decree
Division, who said there were discrepancies in the plans and technical description
submitted by Molina; and Mr. Privadi J. G. Dalire, Chief of the Geodetic Surveys

Division of the Land Management Bureau, who testified that the plans of Molina
could not refer to the land allegedly covered thereby.
Atty. Bustos explained, among other things, that the absence of corresponding
registration proceedings indicated that there was no original certificate of title from
which the transfer certificate of title a photocopy of which was presented by
Molina could have emanated. He recommended denial of her application for
reconstitution, stating that every transfer certificate of title regularly issued has a
control number allotted by the Land Registration Authority, and while Molina claims
that her title was issued in 1967, the records show that the number on Molina's title
was not released to the Quezon City Register of Deeds until 1975; and Molina's
alleged title overlapped 19 other genuine titles. cdta
Engineer Cortez testified inter alia that two plans submitted by Molina, dated 1910
and 1918, were suspect because the eastern and western boundaries were parallel,
an unlikely position for land that was probably forested at that time; and that the
record number of one of the plans submitted, 781, referred to property in Palawan,
not Quezon City.
The evidence given by Mr. Dalire of the Land Management Bureau 22 indicates that
the procedure in the assignment of subdivision numbers renders it impossible for
Psd-16740 to be a subdivision survey of both Psu-1148 and Psu-20191 as Molina
submits although both refer to land in Bo. Ugong, Pasig, Rizal. The official record
of approved surveys discloses that Psd-16740 pertains to a survey conducted by a
certain R Guerrero for the Heirs of Jose dela Via over land located in Valle Hermoso,
Negros Oriental (not Quezon City).
3.

Published Precedents Re Ortigas' Titles and Re-constitution Proceedings

Respondent Judge also disregarded precedents laid down by this Court germane to
the issues before him. Admitted on all sides was that Molina's titles overlapped
those of Ortigas. Ortigas had in fact explicitly pleaded such overlapping and drawn
His Honor's attention to this Court's rulings vindicating its titles. It did so, for
instance, in its "Manifestation and Motion" dated September 7, 1992, to which it
appended a copy of this Court's Decision of August 7, 1992 in the so-called WIDORA
Case. 23 His Honor was thus charged with knowledge that Ortigas' titles had more
than once been passed upon and upheld by the highest court of the land. And he
should have known, too as emphasized in this Court's judgment of July 25, 1994
that those relevant precedents 24 operated to put Ortigas' titles over the lands
thereby embraced beyond the pale of further judicial inquiry; and that no court in
the country now has competence to take cognizance of applications for the
registration anew of said lands in the name of persons other than Ortigas or its
predecessor-in-interest, or successors and assigns, or entertain further challenges
to the validity and efficacy of the latter's titles.

He was in the premises, also charged with knowledge of this Court's

pronouncements in Alabang Development Corporation et al. v. Valenzuela, 25 and
other precedents, 26 to the effect that 27
". . . courts must exercise the greatest caution in entertaining . . . petitions for
reconstitution of allegedly lost certificates of title, particularly where the petitions
are filed, as in this case, after an inexplicable delay of 25 years after the alleged
loss. . . . We can take judicial notice of innumerable litigations and controversies
that have been spawned by the reckless and hasty grant of such reconstitution of
alleged lost or destroyed titles as well as of the numerous purchasers who have
been victimized by forged or fake titles or their areas simply 'expanded' through
'table surveys' with the cooperation of unscrupulous officials.
The Court stresses once more that lands already covered by duly issued existing
Torrens titles (which become incontrovertible upon the expiration of one year from
their issuance under section 38 of the Land Registration Act) cannot be the subject
of petitions for reconstitution of allegedly lost or destroyed titles filed by third
parties without first securing by final judgment the cancellation of such existing
titles. (And as the Court reiterated in the recent case of Silvestre vs. Court of
Appeals [G.R. Nos. L-32694 and L-33119, July 16, 1982], 'in cases of annulment
and/or reconveyance of title, a party seeking it should establish not merely by a
preponderance of evidence but by clear and convincing evidence that the land
sought to be reconveyed is his') The courts simply have no jurisdiction over
petitions by such third parties for reconstitution of allegedly lost or destroyed titles
over lands that are already covered by duly issued subsisting titles in the names of
their duly registered owners. The very concept of stability and indefeasibility of
titles covered under the Torrens System of registration rules out as anathema the
issuance of two certificates of title over the same land to two different holders
thereof. A fortiori, such proceedings for 'reconstitution' without actual notice to the
duly registered owners and holders of Torrens Titles to the land are null and void.
Applicants, land officials and judges who disregard these basic and fundamental
principles will be held duly accountable therefor."
and that 28
"Time and again, the integrity and inviolability of Torrens titles issued pursuant to
the Land Registration Act (Act 496) and Presidential Decree No. 1529 have been
shaken by the very courts whose unwavering duty should be to protect the rights
and interests of title holders but instead have favored claimants under the guise of
reconstitution filed after a long lapse of time after the Japanese occupation, alleging
the existence of original and duplicate certificates of title issued pursuant to a court
decree but have subsequently been lost or destroyed including the record of the
land registration case on account of the war and lay claim to valuable parcels of
land previously titled and registered under the Torrens registration system and are
even able to dispose these properties to unsuspecting homelot buyers and

speculating land developers. The courts must be cautious and careful in granting
reconstitution . . . based on documents and decrees made to appear authentic from
mere xerox copies and certification of officials supposedly signed with the seals of
their office affixed thereon, considering the ease and facility with which documents
are made to appear as official and authentic. It is the duty of the court to scrutinize
and verify carefully all supporting documents, deeds and certifications. Each and
every fact, circumstance or incident which corroborates or relates to the existence
and loss of the title should be examined."
Despite all these rulings, some of which bear striking similarities to the
reconstitution case at bar, respondent Judge ignored the binding admonition that
lands already covered by existing titles "cannot be the subject of petitions for
reconstitution of allegedly lost or destroyed titles filed by third parties without first
securing by final judgment the cancellation of such existing titles;" and that "courts
simply have no jurisdiction over petitions by such third parties for reconstitution of
allegedly lost or destroyed titles over lands that are already covered by duly issued
subsisting titles in the names of their duly registered owners." His opinion that
Ortigas should ventilate the issue of ownership, not in the reconstitution
proceeding, but in a separate suit, defied this admonition. What is worse, he
ordered immediate execution of his indefensible judgment, and made it possible for
Molina get title to the property and dispose of it, which she forthwith proceeded to
do. As observed in this Court's judgment of July 25, 1994, 29
". . . Molina succeeded in having her title (TCT No. 124088) reconstituted; and it was
assigned a new number: TCT No. RT-58287. Molina caused the land thereby covered
to be subdivided into five (5) parcels and obtained separate titles for them (the
reconstituted title being, of course, consequently cancelled in the process). These
titles over the five (5) subdivided lots, TCTs Numbered 83163, 83164, 83165, 83166
and 83167, were all issued in the name of Dolores V. Molina. Later, TCT No. 83164
was cancelled and replaced by TCT No. 83869 in the name of Gateway Enterprises
Co., Inc., to which Molina had apparently sold the land therein described for
P24,408,000.00. (Footnote 17: 'Rollo, p. 222. N.B. Ortigas claims that sales by
Molina have grossed something like 750 million pesos.')"
4.

Reconstitution Petition Based on Plainly Inferior Evidence

Molina had nothing but a mere photocopy of a suppositional title as basis for her
application for reconstitution, and nothing but self-contradictory tales as regards her
acquisition of ownership of the land, and of her possession of the corresponding
documents of title. 30
Yet respondent Judge insists his judgment was founded on "concrete, hard-bitten
evidence . . . thoroughly examined." 31 He cites a purported subdivision plan (Psd16740) found in the microfilm files of the Land Management Bureau, on which he
opted to rely; this, despite the candid admission of witness Amado Bangayan the

Assistant Chief of the Record Management Division of the Land Management

Bureau, who, as custodian of all survey plans, was presented by Molina to
authenticate this item of proof that never having seen the original of Psd-16740,
he could not attest to the genuineness or authenticity thereof.
He also points to the evidence given by another witness of Molina, Ernesto Benitez
of the Patent and Reconstitution Section of the Land Registration Authority, who
pronounced correct the technical description of the area set out in a document
entitled "1st Indorsement," which he had prepared and submitted directly to Judge
Velasco. He opted to give credit to such evidence despite the testimony of Benitez's
superior, Atty. Bustos, that Benitez had no authority to issue that certification. 32
cdti
Why His Honor chose to rely on Bangayan and Benitez despite declared
dubiousness of their competence or why their doubtful testimony should be
deemed of superior credibility as against the evidence of no less than three higher
ranking officials of the Land Registration Authority, supra, and the several
judgments and final orders handed down by this Court respecting the titles which
Molina would in effect nullify and supersede is not explained. Indeed, it is difficult
to conceive of a tenable explanation in the premises.
His submission, that Bangayan and Benitez were entitled to the legal presumption
that they acted regularly and were clothed with authority in the performance of
their official functions," is specious for, as just pointed out, Bangayan had candidly
admitted to incompetence to attest to the genuineness or authenticity of the
document depicted in the microfilm subject of his testimony, never having seen the
original; and Benitez' superior officer Atty. Benjamin Bustos, Chief of the
Reconstitution Division, of the Land Registration Authority had categorically
denied Benitez' authority to certify to the correctness of the technical description in
his "1st Indorsement" submitted directly to Judge Velasco. In other words, the
recorded evidence precluded recourse to the presumption of regularity in
performance of official functions. Moreover, there is the unanswered question of
why his Honor should invoke that presumption in respect of Bangayan and Benitez,
and not as regards their superior officials whose testimony was contrary to theirs
the above mentioned Atty. Bustos, and Engineer Felino Cortez, Chief of the Ordinary
and Cadastral Decree Division, and Mr. Privadi J. G. Dalire, Chief of the Geodetic
Surveys Division of the Land Management Bureau.
The obvious flimsiness of the evidence given by Molina's witnesses (Bangayan and
Benitez) magnifies the equally evident feebleness of her own testimony which,
having been dealt with in some detail in the Decision of July 25, 1994, 33 will no
longer be summarized in this opinion. It suffices to point out that Molina's testimony
and her other proofs can hardly be described, as His Honor does, as
"overwhelming," or as "concrete, hard-bitten," or even as "preponderant," and that

with all their defects plainly discernible in the record, respondent Judge
nevertheless chose to rest his opinion on the same.
Equally specious is his argument that the "overturning of his decision should not be
equated with bias, bad faith or gross misconduct, for if at all, a mistake was
committed, . . . it can only be regarded as an honest error of judgment incurred on
complex points of law. . .." 34 The points of law involved, concerning dismissal of
appeals and execution pending appeal are not complex, unsettled or controversial.
They are well established, familiar, uniformly applied legal principles. His was not a
case of not knowing or failing to understand relevant doctrine, but of a deliberate
disregard of them. He wilfully ignored those points of law, just as he ignored the
precedents directly brought to his attention of which, in any case, he was
charged with knowledge as well as the evidence traversing Molina's.
The disregard by Judge Velasco (1) of the palpable absence of jurisdiction on the
part of his Court over the reconstitution case in question, (2) of the adverse
evidence given by LRA officials of higher rank and greater authority than those
employees presented by Molina as her witnesses, (3) of the published precedents (i)
regarding Ortigas' titles and (ii) respecting reconstitution proceedings of which the
general public, and particularly judges, are charged with notice, and (4) of the
patent flaws in Molina's proofs, simply cannot be explained away as an honest
mistake of judgment or an innocent error in the exercise of discretion. It can only be
viewed as an attempt through misuse of judicial processes to give a semblance of
merit to a clearly unmeritorious cause and accord undeserved benefits to the party
espousing and promoting said cause.
V.

Final Disposition

The respondent's acts herein condemned are of so serious and indefensible a

character as to call for the penalty of dismissal from the service, specially so when it
is considered that the disciplinary proceeding at bar is not the first initiated against
him. The record reveals that there have been eight (8) other administrative cases
filed against him, and while six of which of these have been dismissed, 35 one is
still pending, 36 and another resulted in the imposition on him of a fine of
P20,000.00 for ignorance of the law, with a stern warning that a repetition of similar
acts will be dealt with more severely. 37
VI.

Deliberation and Voting by the Court

Pursuant to Section 13, Article VIII of the Constitution, the conclusions in this per
curiam resolution were reached in consultation before the case was assigned to the
writer of the opinion of the Court. Except for four (4) Justices who abstained from
voting on account of their close personal association with a party but whose
identities are not here disclosed, all the Members of the Court whose signatures
appear hereunder concurred in this judgment. One justice took no part because he
was on leave during the deliberations.

WHEREFORE, Judge Tirso D. C. Velasco is hereby DISMISSED from the service, with
forfeiture of all retirement benefits and accrued leave credits, and with prejudice to
re-employment in any branch or instrumentality of the government including
government-owned or controlled corporations. Immediately upon service on him of
notice of this judgment, he shall be deemed to have VACATED his office, and his
authority to act in any manner whatsoever as Judge shall be considered to have
automatically CEASED. llcd
SO ORDERED.
Narvasa, C .J ., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
Kapunan, Mendoza, Francisco, Hermosisima, Jr., Panganiban and Torres, Jr., JJ .,
concur.
Footnotes
1.

At pp. 43-44.

2.

Rollo of G.R. No. 109645 at 707 et seq.

3.
In its memorandum, it adopted in general terms Ortigas's arguments, and
cited other grounds for disciplinary action against the Judge: (1) taking cognizance
of LRC Case No. Q-5404, notwithstanding non-compliance with the mandatory
notice requirement to the adjacent property owners; (2) reinstating, without
authority, Molina's withdrawn petition; (3) directing reconstitution of title over
properties titled in the name of Manila Interpublic and Breeders Feeds; (4)
disregarding other evidence establishing the nullity of Molina's claims; (5) strikingout the notices of appeal filed, contrary to well-settled jurisprudence; and (6)
ordering immediate execution of his decision pending appeal.
4.
The Court ruled that the complaints should be dismissed because the issues
raised were "subjudice, but . . . (the dismissal) is without prejudice to their revival
should the Court in its adjudication of the cases now pending before it pertaining to
these cases find the Decisions/Orders issued by respondent Judges to have been
issued in violation of judicial norms of conduct warranting disciplinary action."
5.

By Resolution dated Sept. 14, 1994.

6.

By Resolution dated Dec. 7, 1994.

7.

Dated March 1, 1995.

8.
E.g., extended Resolution promulgated on March 4, 1996 by the Third Division
(to which the cases had been transferred in accordance with established procedure)
which found Dolores Molina guilty of contempt for wilful disregard of the orders of
the Court and sentenced her to pay a fine of P1,000.00. SEE also Resolutions of July

25, 1995 and October 25, 1995 treating of the fine of P1,000.00 imposed on one of
Molina's lawyers for contempt of court.
9.

SEE footnote 4, supra.

10.

SEE footnote 7, supra.

11.
"An Act Providing A Special Procedure For The Reconstitution of Torrens
Certificate of Title Lost or Destroyed."
12.

SEE cases collated in footnote 32 of the main decision (234 SCRA 482).

13.

234 SCRA 485 (1994).

14.

SEE Moran, Comments on the Rules, 1979 ed., Vol. 2, p. 433, citing cases.

15.

SEE Moran, op. cit., p. 509; Feria, Civil Procedure, 1969 ed., pp. 728-729.

16.

234 SCRA 495.

17.

234 SCRA 496-497.

18.

SEE footnote 23 and related text, infra.

19.
SEE Heiman v. Cabrera, 73 Phil. 707; de la Rosa, et al. v. City of Baguio, et al.,
91 Phil. 721; Asturias, et al. v. Victoriano, et al., 98 Phil. 581, cited in Feria, Civil
Procedure, 1969 Ed., p. 553.
20.
In this case, the Trial Court rendered judgment granting, over the opposition
of the Director of Lands, the Director of Forestry, and the Armed Forces of the
Philippines, an application for registration of "a vast tract of land, containing an area
of 16,800 hectares, more or less," and thereafter authorized immediate execution of
its decision at the applicant's instance, directing "the issuance of a decree of
registration of the entire land . . . subject to the final outcome of the appeal."
21.
Prepared by Benjamin M. Bustos, Reconstituting Officer and Chief of the
Reconstituting Division of the Land Registration Authority, dated July 17, 1992.
22.
seq.

Annex B, Memorandum of petitioner Ortigas & Co., Ltd., Rollo at pp. 1182, et

23.
"Widows & Orphans Association, Inc. v. Court of Appeals," 212 SCRA 360-390;
See Annex C, Memorandum of petitioner Ortigas (p. 57), Rollo of G.R. No. 109645 at
pp. 1181 et seq.
24.
Cia. Agricola de Ultramar v. Domingo, 6 Phil. 146 (1906) affirming the validity
of Original Decree of Registration No. 1425, issued in G.L.R.O. Record No. 917 on
April 26, 1905 by the Land Registration Court of Manila, in relation to the Hacienda
de Mandaloyon, a tract of land in what is now Manila, Quezon City, and Pasig, in

favor of the Compaia Agricola de Ultramar, predecessor-in-interest of Ortigas,

whose titles, TCTs No. 77652 and 77653 are genuine derivatives of the title of the
Cia. Agricola de Ultramar; Ortigas v. Hon. Ruiz 148 SCRA 326, 331 (1987): additional
affirmation of confirmation by Decree No. 1425 of ownership of Compaia Agricola
de Ultramar of the Hacienda de Mandaloyon; Minute Resolution dated 16 February
1985 in Del Rosario v. Ortigas, G.R No. 66110, refusing review of the judgment of
the Court of Appeals which pertinently ruled that the extant documentary sources of
the boundaries of the Hacienda de Mandaloyon are the technical descriptions
thereof appearing in the initial notice of hearing in G.L.RO. Record No. 917, duly
published in two (2) newspapers of general circulation in 1904, the technical
descriptions of the land covered by TCT Nos. 77652 and 77653 showing that the
land lies within the Hacienda; Minute Resolution in Navarro v. Ortigas, G.R. No.
50156, May 7, 1979 (affirming the decision of the Court of Appeals in CA-G.R. No.
53125-R dated December 13, 1978), and in del Rosario v. Ortigas, G.R No. 66110,
February 16, 1985 (sustaining the judgment of the Court of Appeals in AC-G.R. CV
No. 61456 dated December 29, 1983), both Navarro and del Rosario sustaining the
holding that TCT Nos. 77652 and 77653 had become indefeasible and
incontrovertible.
25.

116 SCRA 261.

26.
Republic v. Court of Appeals, 94 SCRA 865 (1979); Director of Lands v. Court
of Appeals, and Demetria Sta. Maria Vda. de Bernal, etc., 102 SCRA 370; Tahanan
Development Corporation v. Court of Appeals, 118 SCRA 273.
27.
370.

116 SCRA 277-278, citing Director of Lands v. Court of Appeals, 102 SCRA

28.

118 SCRA 273, 313-314.

29.

234 SCRA 470-471.

30.
234 SCRA, pp. 487-489. To recapitulate: (1) On November 14, 1991 she
alleged she was in possession of the owner's duplicate of the title she wished to be
reconstituted. On April 3, 1992, she declared that in mid-September, 1991, she
discovered that said duplicate was missing (so, it could not have been in her
possession in November, 1991). (2) In 1978 she twice alleged that she became
owner of the land subject of the reconstitution case by acquisitive prescription. In
1990, she claimed to be owner thereof by purchase from her husband's relatives.
(3) She testified that she tried to obtain title to the land in the 1960's, and even
sought the help of President Marcos, her "boyfriend." Earlier, she had averred she
could not attend to the titling of the land because she was the sole breadwinner of
her family. (4) She recognized the ownership by the Mormon religious corporation of
land covered by its title (No. 348048), situated within the area being claimed by her.
she thereby admitted ownership of Ortigas over the same, since it was from the
latter that the Mormons had bought the property.

31.

Comment, Rollo, G.R No. 109645, p. 950

32.

See TSN of September 2, 1992 at pp. 6 et seq.

33.

See footnote 30. supra

34.

Comment, id. at p. 905.

35.
RTJ-87-126, RTJ-90-529, RTC-90-641, RTJ-92-810, RTJ-93-1084, RTJ-93-1108,
RTJ-94-1209.
36.

OCA IPI No. 97-287-RTJ.

37.
601.

Buzon, Jr. v. Velasco, A. M. No. RTJ-94-1209, February 13, 1996, 253 SCRA

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

A.M. No. P-96-1219 August 15, 1997

Court of Appeals v. Escalante
EN BANC
[A.M. No. P-96-1219. August 15, 1997.]
(Formerly CA-G.R. SP No. 35697)
COURT OF APPEALS, petitioner, vs. Clerk of Court MARCELO ESCALANTE, Regional
Trial Court, Branch 53, Sorsogon, Sorsogon, respondent.
SYNOPSIS
This is an administrative case filed by the Court of Appeals against Marcelo
Escalante, Clerk of Court of the Regional Trial Court of Sorsogon, Sorsogon, Branch
53 in the Office of the Court Administrator for transmitting and certifying two
apparently conflicting photocopies of decedent's last will and testament in a case
appealed before it. Thereafter, in a memorandum dated March 21, 1997, the Office
of the Court Administrator, after conducting an investigation, recommended that
respondent clerk of court be meted a penalty of one month suspension without pay
for being grossly negligent in the performance of his duty by certifying as true copy
a document purporting to be a copy of the last will and testament without first
examining and comparing it with the original in the custody of the court. aCcEHS

The Supreme Court ruled that the findings as well as the recommendation of the
Office of the Court Administrator are well-taken. The Court finds respondent
Escalante remiss in his duty when he certified as true copy a document purporting
to a copy of the last will and testament of Henry Grant without first examining said
document by comparing it with the original on file to determine whether it is indeed
a true and faithful reproduction of the original in custody of the probate court. Such
failure constitutes gross negligence, which warrants disciplinary sanction. In view
thereof, the Court adopted the penalty recommended by the Office of the Court
Administrator.
SYLLABUS
1.
ADMINISTRATIVE LAW; COURT EMPLOYEES; PROPER DECORUM. The
conduct and behavior of everyone connected with an office charged with the
dispensation of justice, from the presiding judge to the lowest clerk, should be
circumscribed with the heavy burden of responsibility. Their conduct at all times,
must not only be characterized by propriety and decorum but above all else must
be above suspicion. (Lloveras vs. Sanchez, 229 SCRA 302 [1994]).
2.
ID.; ID.; CLERK OF COURT; DUTIES; GROSS NEGLIGENCE IN THE
PERFORMANCE THEREOF WARRANTS DISCIPLINARY SANCTION. A clerk of court,
like herein respondent Escalante, is a ranking and essential officer in any judicial
system. His office is the hub of activities. He performs delicate administrative
functions essential to the prompt and proper administration of justice. He keeps the
records and seal, issues processes, enters judgments and orders, and gives, upon
request, certified copies from the records (Juntilla vs. Branch COC-Teresita Calleja
and Court Stenographer-Salome A. Montezon, P-26-1225, prom. Sept. 23, 1996;
Angeles vs. Bantug, et. al., 209 SCRA 413 [1992]). In the present case, the Court
finds respondent Escalante remiss in his duty when he certified as true copy a
document purporting to be a copy of the last will and testament of Henry Grant
without first examining said document by comparing it with the original on file to
determine whether it is indeed a true and faithful reproduction of the original in
custody of the probate court. Such failure constitutes gross negligence which
warrants disciplinary sanction. Respondent's failure to observe due diligence in the
performance of his functions resulted in the introduction of an unfaithful document,
causing confusion as well as the delay in the speedy disposition of the case before
the Court of Appeals. As administration of justice is a sacred duty, this Court has
continuously and assiduously condemned any omission or act which tends to
undermine the faith and trust of the people in the judiciary (Alivia vs. Nieto, 251
SCRA 62 [1995]). IaEACT
DECISION
MELO, J p:

The present administrative case against Marcelo Escalante, Clerk of Court of the
Regional Trial Court of the Fifth Judicial Region, Sorsogon, Sorsogon, Branch 53,
stemmed from a petition for probate of the will of Henry Grant filed by Atty. Jose
Bernabe with said court. LibLex
Henry Grant, an American citizen, died on October 6, 1993, in Legaspi City leaving a
4-page notarial will. Atty. Jose Bernabe, who was designated by Henry Grant to
execute the will, lodged with the above-mentioned court, a petition for probate of
will which was docketed as Special Proceeding No. 93-5936.
The probate court then issued an Order dated March 16, 1994, giving Atty. Bernabe
15 days within which to file his formal written offer of documentary exhibits and
thereafter, the case would be deemed submitted for resolution.
On April 12, 1994, a certain Gloria Sotto filed with the probate court a petition for
relief from the March 16, 1994 Order and an Opposition to the probate of the will,
contending, inter alia, that she was the nearest kin of the deceased and that the
instituted heirs were all American citizens who have no intention of acquiring
property in the Philippines. The probate court denied the petition in an Order dated
June 21, 1994.
Sotto filed motions for reconsideration one after the other which were denied. On
July 8, 1994, the probate court issued an Order allowing the probate of the last will
and testament of Henry Grant.
Sotto then filed with the Court of Appeals a petition for nullification of the allowance
of the last will and testament of Henry Grant (p. 2, Rollo). She prayed that the last
will and testament of Henry Grant be declared to be fatally defective in form as it
lacked the signature of Henry Grant and the three attesting witnesses on the left
margin of the first, second, and fourth pages thereof; that the probate thereof be
declared null and void; and, that the late Henry Grant be disqualified from owning
lands in the Philippines and his testamentary heirs be likewise disqualified from
inheriting said lands (pp. 10-11, Rollo). The petition was docketed as CA-G.R. SP No.
35697.
In resolving the Sotto petition, the Court of Appeals was confronted with two
conflicting photocopies of the last will and testament of Henry Grant.
The first was a photocopy of a true copy, certified by respondent Escalante, without
any date and submitted by Sotto. It had no marginal signatures on the first, second,
and fourth pages, and no exhibit markings. The second was a certified xerox copy,
certified to by Tomas H. Moral for respondent Escalante, dated December 20, 1994,
containing marginal signatures on the first, second, and fourth pages, and exhibit
markings.

Due to such conflicting photocopies, the Court of Appeals issued a Resolution dated
March 15, 1995 ordering respondent Escalante: a) to transmit to the court within
ten days from notice, the original of the last will and testament of Henry Grant; b) to
certify if there was any other copy different from that which was submitted to the
probate court; and c) to explain why he had certified two apparently conflicting
copies of Henry Grant's last will and testament (p. 98, Rollo). In compliance with,
respondent Escalante submitted the original carbon copy of the last will and
testament of Henry Grant, explaining that only an original carbon copy was
submitted to the probate court inasmuch as the original could not be found (p. 99,
Rollo).
The Court of Appeals, in a Resolution dated May 12, 1995, denied the Sotto petition
and made the following findings concerning the apparently tampered photocopy of
the true copy of the last will and testament of Henry Grant which was certified by
respondent Escalante and submitted by Sotto in support of her petition, to wit:
After comparing the photocopies of the Will submitted by the parties us with the
said original carbon copy of the same, we have ascertained that the certified xerox
copy submitted by the private respondent copy matches the carbon original,
whereas the photocopy of a certified true copy submitted by the petitioner does
not. Moreover, a close scrutiny of the photocopy attached by the petitioner to her
Petition reveals marks thereon which indicate that the original thereof actually bore
the necessary marginal signatures, but they were covered with a piece of paper
when photocopied, to make it appear that they were not present. Such act of deceit
and misrepresentation is highly reprehensible.
(p. 109, Rollo.)
In view of such finding, the Court of Appeals ordered Sotto's counsel to show cause
why they should not be disciplined for utilizing an apparently tampered photocopy
of a certified true copy of the last will and testament of Henry Grant in support of
their petition.
In his Compliance dated May 26, 1995, Atty. Ray M. Dorado denied any participation
in tampering with the will, claiming that what he submitted were the very
documents furnished him by his client (p. III, Rollo). Atty. Dorado likewise submitted
the affidavit of Sotto, together with a certified xerox copy of the last will and
testament of Henry Grant dated January 23, 1995 and signed by respondent
Escalante (p. 114, Rollo).
On the other hand, Sotto, in her motion for reconsideration, suggested that a
thorough investigation be made preferably by the NBI to determine who tampered
with the documents, and at the same time to ascertain whether or not the
signatures appearing in the last will and testament of Henry Grant submitted to the
Court of Appeals were made after respondent Escalante had furnished her a copy
thereof (p. 123, Rollo).

In a Resolution dated July 11, 1995, the Court of Appeals admonished Atty. Dorado
and denied Sotto's motion for reconsideration (p. 129, Rollo).
In another Resolution promulgated on the same date, the Court of Appeals referred
the case of the Office of the Court Administrator for investigation and proper action
in view of the confusing situation caused by the certifications of different copies of
the same will made by respondent Escalante. Said Resolution reads as follows:
In the instant case, we have been confronted with four (4) varying copies of the
alleged last will and testament of the deceased Henry Grant, to wit:
(1)
A photo-copy of a Certified True Copy, certified to by Marcelo Escalante, Clerk
of Court, attached as Annex "C" to the Petition (pp. 19-23, Rollo), without marginal
signatures of the testator and his attesting witnesses, but which signatures appear
to have been covered when the document was photocopied;
(2)
A Certified True Copy dated December 20, 1994, certified to by Tomas H.
Moral for Marcelo E. Escalante, Clerk of Court, containing marginal signatures and
exhibit markings (Exhibits "I" to "I-4" and submarkings) submitted by the
respondents (pp. 67-71, Rollo); cdpr
(3)
A carbon original of the said last will and testament, sent to us by Clerk of
Court Marcelo E. Escalante, pursuant to our Resolution dated March 15, 1995, with
marginal signatures but different exhibit markings (Exhs. "J" to "J-4" and
submarkings) (pp. 100-104, Rollo); and
(4)
A Certified Xerox Copy dated January 23, 1995, a Certified True Copy signed
by Marcelo Escalante (pp. 117-121, Rollo) which appears to be the same as No. (1)
above.
In view of this confusing situation which is apparently due to certifications of
different copies of the same will by the Office of the Clerk of Court of the Regional
Trial Court of Sorsogon, Branch 53, either out of malice or negligence, the Division
Clerk is hereby ordered to refer the records of this case to the Office of the Court
Administrator, for such investigation and action as it may deem proper to take.
(pp. 133-134, Rollo.)
In a Memorandum dated January 30, 1996, the Office of the Court Administrator
recommended that the resolutions of the Court of Appeals dated May 12 and July
11, 1995 be treated as an administrative complaint for alleged false certification
against respondent Escalante and that the latter be ordered to show cause why he
should not be administratively dealt with for making certifications on apparently
different and conflicting copies of the last will and testament of deceased Henry
Grant, within ten days from notice (p. 136, Rollo). A Resolution to such effect was
issued by the Court on September 3, 1996 (p. 139, Rollo).

In his explanation dated September 30, 1996, respondent Escalante alleged that:
1.
No false certification was ever committed by him, since the two copies of the
last will and testament certified to by him was copied from one and the same last
will and testament in the custody of the Regional Trial Court Branch 53;
2.
A careful scrutiny of the two copies will reveal that the contents therein are
identical and is a mere reproduction of the original last will and testament in the
custody of the Court;
3.
The undersigned will never do such stupid act of certifying two different
copies of last will and testament, when the original of which is in the custody of the
court attached to the record and is always available to those interested either to
have it copied or merely to subject it to his scrutiny;
4.
One of the copies of the last will and testament alleged to have been falsely
certified by him was photocopied without it being removed from the voluminous
records and the stitches was still intact making it possible to open fully, the reason
why the marginal signatures was not photocopied because the same was blocked
by the nylon stitches;
5.
The undersigned begs the Honorable Court to carefully examine the copies as
well as the original copy in the custody of the Court;
6.

It is never his intention to cause injustice to the parties in this case.

(pp. 140-141, Rollo.)

Said explanation was noted and referred to the Office of the Court Administrator for
evaluation, report, and recommendation by the Court in a Resolution dated
November 19, 1996 (p. 144, Rollo).
In a Memorandum dated March 21, 1997, the Office of the Court Administrator
made the following findings and recommendation to wit:
Records reveal that the original carbon copy of the last will and testament of
deceased Henry Grant submitted by his lawyer, petitioner Atty. Jose Bernabe, to the
probate court, in lieu of the original, contains the marginal signatures of the testator
and his 3 attesting witnesses and the exhibit markings. The same is true with the
copy certified by Tomas H. Moral on December 20, 1994 for Clerk of Court Marcelo
Escalante and the carbon original which was sent to the Court of Appeals by the
respondent Clerk of Court in compliance with the Court of Appeals resolution dated
March 15, 1995. Both copies bear the marginal signatures and the exhibit markings.
It is highly suspicious therefore that a photocopy of the said document was
submitted as evidence to the Court of Appeals without the marginal signatures and
the markings specially so that the one who submitted it was the oppositor in the

probate proceedings and the petitioner in the Appellate Court seeking for the
nullification of the probated will.
To our mind there is more than meets the eye here. This could have been done
intentionally by the petitioner (Gloria Sotto) to mislead the Appellate Court to give
semblance to her claim that the will is void ab initio because it does not have the
signatures of the testator and his 3 attesting witnesses as required by law. As
between a carbon original of the last will and testament and a photocopy or xerox
copy thereof, the former should be given more credence as the truthful and faithful
reproduction of the document. It is of common experience that a copy which is
merely xeroxed or photocopied can be easily tampered with to omit or add
something in the document.
However, we may not find sufficient proof showing that respondent Clerk of Court
had a direct hand in the tampering of the document or that there was ill-motive in
bad faith on his part. Nevertheless, he is still administratively liable for certifying a
tampered document. It is certainly grossly negligent on his part to have certified as
true copy a document purporting to be a copy of the last will and testament without
first examining the said document by comparing it with the original to find out if it is
really the true and faithful reproduction of the original in custody of the court. His
explanation proffered earlier that the records are voluminous and the records could
not be opened fully, the reason why the marginal signatures and exhibit markings
were covered by the stitches on the photocopy shows his carelessness in allowing
such document. As an officer of the court, he ought to know that the document has
become part of the public record and will be used for all legal intent and purposes,
so much so that any copy thereof shall be the true and faithful reproduction of the
original before he makes any certification. His negligence in the performance of his
duty has resulted to an untruthful document.
The principle laid down by the Honorable Court in Bautista vs. Joaquin, Jr., A.M. No.
P-236. July 29, 1977, though not in four squares with the instant case may be
applied, thus:
In the administration of justice, litigants repose their faith and trust in the
authenticity and correctness of court records, and is the bounden duty of officials
and employees of the court to maintain and uphold the confidence of the public.
Any act which tends to undermine and corrode the public trust is a wrong doing
which warrants administrative sanction the severity of which should be
commensurate with the gravity of the act committed.
Under the Civil Service Law, gross neglect of duty is penalized by 6 months
suspension up to dismissal from service. However, this is the first offense of this
nature by the respondent.
WHEREFORE, it is respectfully recommended that respondent Clerk of Court Marcelo
Escalante, RTC, Branch 53, Sorsogon, Sorsogon be meted a penalty of one month

suspension without pay to be effective immediately from notice. He be further

warned that commission of similar negligence in the future will be severely dealt
with.
(pp. 148-150, Rollo.)
The findings as well as the recommendation of the Office of the Court Administrator
are well-taken.
We must once again emphasize that the conduct and behavior of everyone
connected with an office charged with the dispensation of justice, from the presiding
judge to the lowest clerk, should he circumscribed with the heavy burden of
responsibility. Their conduct at all times, must not only be characterized by
propriety and decorum but above all else must be above suspicion (Lloveras vs.
Sanchez, 229 SCRA 302 [1994]). A clerk of court, like herein respondent Escalante,
is a ranking and essential officer in any judicial system. His office is the hub of
activities. He performs delicate administrative functions essential to the prompt and
proper administration of justice. He keeps the records and seal, issues processes,
enters judgments and orders, and gives, upon request, certified copies from the
records (Juntilla vs. Branch COC-Teresita Calleja and Court Stenographer-Salome A.
Montezon, P-96-1225, prom. Sept. 23, 1996; Angeles vs. Bantug, et al., 209 SCRA
413 [1992]).
In the present case, the Court finds respondent Escalante remiss in his duty when
he certified as true copy a document purporting to be a copy of the last will and
testament of Henry Grant without first examining said document by comparing it
with the original on file to determine whether it is indeed a true and faithful
reproduction of the original in custody of the probate court. Such failure constitutes
gross negligence which warrants disciplinary sanction. Respondent Escalante
explains that one of the copies of the last will and testament alleged to have been
falsely certified by him was photocopied without it being taken from the voluminous
stitched records making it impossible to open fully the records and for this reasons,
the marginal signatures were not photocopied because the same were blocked by
the nylon stitches. As correctly observed by the Office of the Court Administrator,
the explanation only shows respondent's negligence and carelessness in permitting
such document to be certified without first examining said document. Before
certifying the document, Escalante should have compared it with the original so as
to determine whether the copy is a faithful reproduction of the original in the
custody of the court, this being the proper way in certifying as a true copy a
particular document. As it is, respondent's failure to observe due diligence in the
performance of his functions resulted in the introduction of an unfaithful document,
causing confusion as well as the delay in the speedy disposition of the case before
the Court of Appeals.

As administration of justice is a sacred duty, this Court has continuously and

assiduously condemned any omission or act which tends to undermine the faith and
trust of the people in the judiciary (Alivia vs. Nieto, 251 SCRA 62 [1995]). Thus,
every employee or officer involved in this task should be circumscribed with the
heavy burden of responsibility and their conduct must, at all times, be above
suspicion (Cunanan vs. Tuazon, 237 SCRA 380 [1994]). cdta
ACCORDINGLY, for gross negligence, respondent Marcelo E. Escalante, Clerk of
Court, Regional Trial Court, Branch 53, Sorsogon, Sorsogon is hereby SUSPENDED
for one month without pay, effective immediately from notice. He is further warned
that a repetition of similar offense shall be dealt with severely.
SO ORDERED.
Narvasa, C .J ., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Puno, Vitug,
Kapunan, Mendoza, Francisco, Hermosisima, Jr., Panganiban and Torres, Jr., JJ .,
concur.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

G.R. No. 127255 August 14, 1997

Arroyo v. De Venecia
EN BANC
[G.R. No. 127255. August 14, 1997.]
JOKER P. ARROYO, EDCEL C. LAGMAN, JOHN HENRY R. OSMEA, WIGBERTO E.
TAADA, AND RONALDO B. ZAMORA, petitioners, vs. JOSE DE VENECIA, RAUL DAZA,
RODOLFO ALBANO, THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, AND
THE COMMISSIONER OF INTERNAL REVENUE, respondents.
Azcuna, Yorac, Sarmiento, Arroyo & Chua and Rene A.V. Saguisag for petitioners.
Cesar A. Sevilla & Associates for De Venecia.
SYNOPSIS
This is a petition for certiorari and prohibition challenging the validity of Republic
Act No. 8240, which amends certain provisions of the National Internal Revenue
Code by imposing so-called sin taxes on the manufacture and sale of beer and
cigarettes. Petitioners brought this suit against herein respondents claiming that the
latter violated Rule VIII, Section 35, Rule XVII, Section 103, Rule XIX, Section 112,
Rule XVI, Section 97, Rule XX Section 121-122, Rule XXI Section 123 and Rule XVIII

Section 109 of the House Rules. For this matter, petitioners assert that violation of
the House Rules is a violation of the Constitution thereof. AEDISC
In its decision, the Supreme Court finds no ground for holding that congress
committed grave abuse of discretion in enacting Republic Act 8240. It is clear from
the facts of the case that what is alleged to have been violated in the enactment of
R.A. 8240 are merely internal rules of procedure of the House rather than the
constitutional requirement for the enactment of a law, that is, Article VI, Section 2627 of the 1987 Constitution, pertaining to the existence of the quorum. The
established rule is that courts cannot declare an act of the legislature void on
account merely of noncompliance with rules of procedure made by itself. Verily, it
follows that the case at hand does not present a situation in which a branch of the
government has gone beyond the constitutional limit of its jurisdiction so as to call
for the exercise of Article VIII, Section I.
Moreover, under the enrolled bill doctrine, the signing of House No. 7198 by speaker
of the House and President of the Senate and certification by secretaries of both
Houses of Congress that it was passed on November 21, 1996 are conclusive of its
due enactment. In view of the foregoing, the petition for certiorari and prohibition is
dismissed. TAacCE
SYLLABUS
1.
CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; PARLIAMENTARY RULES
ARE MERELY PROCEDURAL AND COURTS HAVE NO CONCERN WITH THEIR
OBSERVANCE; FAILURE TO CONFORM THEREWITH WILL NOT INVALIDATE ACTION
WHEN THE REQUISITE NUMBER OF MEMBERS HAVE AGREED THERETO. Cases,
both here and abroad, in varying forms of expression, all deny to the courts the
power to inquire into allegations that, in enacting a law, a House of Congress failed
to comply with its own rules, in the absence of showing that there was a violation of
a constitutional provision or the rights of private individuals. In Osmea v. Pendatun,
it was held: "At any rate, courts have declared that 'the rules adopted by
deliberative bodies are subject to revocation, modification or waiver at the pleasure
of the body adopting them.' And it has been said that 'Parliamentary rules are
merely procedural, and with their observance, the courts have no concern. They
may be waived or disregarded by the legislative body.' Consequently, 'mere failure
to conform to parliamentary usage will not invalidate the action (taken by a
deliberative body) when the requisite number of members have agreed to a
particular measure.'"
2.
ID.; ID.; ID.; ID.; RULES MUST NOT IGNORE CONSTITUTIONAL RESTRAINTS OR
VIOLATE FUNDAMENTAL RIGHTS. In United States v. Ballin, Joseph & Co., the rule
was stated thus: "The Constitution empowers each house to determine its rules of
proceedings. It may not by its rules ignore constitutional restraints or violate
fundamental rights, and there should be a reasonable relation between the mode or

method of proceeding established by the rule and the result which is sought to be
attained. But within these limitations all matters of method are open to the
determination of the House, and it is no impeachment of the rule to say that some
other way would be better, more accurate, or even more just. It is no objection to
the validity of a rule that a different one has been prescribed and in force for a
length of time. The power to make rules is not one which once exercised is
exhausted. It is a continuous power, always subject to be exercised by the House,
and within the limitations suggested, absolute and beyond the challenge of any
other body or tribunal." CIHAED
3.
ID.; ID.; ID.; ID.; ID.; CASE AT BAR. In this case no rights of private
individuals are involved but only those of a member who, instead of seeking redress
in the House, chose to transfer the dispute to this Court. We have no more power to
look into the internal proceedings of a House than members of that House have to
look over our shoulders, as long as no violation of constitutional provisions is shown.
Petitioners must realize that each of the three departments of our government has
its separate sphere which the others may not invade without upsetting the delicate
balance on which our constitutional order rests. Due regard for the working of our
system of government, more than mere comity, compels reluctance on our part to
enter upon an inquiry into an alleged violation of the rules of the House. We must
accordingly decline the invitation to exercise our power.
4.
REMEDIAL LAW; COURTS; CANNOT DECLARE AN ACT OF LEGISLATURE VOID
FOR NONCOMPLIANCE WITH ITS OWN RULES OF PROCEDURE. If, then, the
established rule is that courts cannot declare an act of the legislature void on
account merely of noncompliance with rules of procedure made by itself, it follows
that such a case does not present a situation in which a branch of the government
has "gone beyond the constitutional limits of its jurisdiction" so as to call for the
exercise of our Art. VIII, 1 power.
5.
CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; HOUSE OF
REPRESENTATIVES; THERE IS NO RULE REQUIRING THAT THE CHAIR MUST RESTATE
THE MOTION AND CONDUCT A VIVA VOCE OR NOMINAL VOTING. No rule of the
House of Representatives has been cited which specifically requires that in cases
such as this involving approval of a conference committee report, the Chair must
restate the motion and conduct a viva voce or nominal voting. On the other hand,
as the Solicitor General has pointed out, the manner in which the conference
committee report on H. No. 7198 was approved was by no means a unique one. It
has basis in legislative practice. It was the way the conference committee report on
the bills which became the Local Government Code of 1991 and the conference
committee report on the bills amending the Tariff and Customs Code were approved.
Indeed, it is no impeachment of the method to say that some other way would be
better, more accurate and even more just. The advantages or disadvantages, the
wisdom or folly of a method do not present any matter for judicial consideration. In
the words of the U.S. Circuit Court of Appeals, "this Court cannot provide a second

opinion on what is the best procedure. Notwithstanding the deference and esteem
that is properly tendered to individual congressional actors, our deference and
esteem for the institution as a whole and for the constitutional command that the
institution be allowed to manage its own affairs precludes us from even attempting
a diagnosis of the problem."
6.
ID.; ID.; ID.; NO CONSTITUTIONAL PROVISION REQUIRING THAT THE YEAS AND
NAYS OF THE MEMBERS BE TAKEN EVERYTIME A HOUSE HAS TO VOTE; EXCEPTIONS.
Nor does the Constitution require that the yeas and the nays of the Members be
taken every time a House has to vote, except only in the following instances: upon
the last and third readings of a bill, at the request of one-fifth of the Members
present, and in repassing a bill over the veto of the President. Indeed, considering
the fact that in the approval of the original bill the votes of the Members by yeas
and nays had already been taken, it would have been sheer tedium to repeat the
process.
7.
ID.; ID.; ID.; PARLIAMENTARY RULES; QUESTION REGARDING MOTION TO
APPROVE AND RATIFY CONFERENCE COMMITTEE REPORT, NOT A QUESTION OF
PRIVILEGE ENTITLED TO PRECEDENCE. Petitioners claim that they were prevented
from seeking reconsideration allegedly as a result of the precipitate suspension and
subsequent adjournment of the session. It would appear, however, that the session
was suspended to allow the parties to settle the problem, because when it resumed
at 3:40 p.m. on that day Rep. Arroyo did not say anything anymore. While it is true
that the Majority Leader moved for adjournment until 4 p.m. of Wednesday of the
following week, Rep. Arroyo could at least have objected if there was anything he
wanted to say. It is thus apparent that petitioners' predicament was largely of their
own making. Instead of submitting the proper motions for the House to act upon,
petitioners insisted on the pendency of Rep. Arroyo's question as an obstacle to the
passage of the bill. But Rep. Arroyo's question was not, in form or substance, a point
of order or a question of privilege entitled to precedence. And even if Rep. Arroyo's
question were so, Rep. Albano's motion to adjourn would have precedence and
would have put an end to any further consideration of the question.
8.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE ABUSE OF
DISCRETION, DEFINED. The phrase "grave abuse of discretion amounting to lack
or excess of jurisdiction" has a settled meaning in the jurisprudence of procedure. It
means such capricious and whimsical exercise of judgment by a tribunal exercising
judicial or quasi judicial power as to amount to lack of power. As Chief Justice
Concepcion himself said in explaining this provision, the power granted to the
courts by Art. VIII, 1 extends to cases where "a branch of the government or any of
its officials has acted without jurisdiction or in excess of jurisdiction, or so
capriciously as to constitute an abuse of discretion amounting to excess of
jurisdiction."

9.
CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; HOUSE OF
REPRESENTATIVES; CONTINUED INTERPELLATION OF SPONSOR, AN
ACKNOWLEDGMENT OF PRESENCE OF QUORUM. Here, the matter complained of
concerns a matter of internal procedure of the House with which the Court should
not be concerned. To repeat, the claim is not that there was no quorum but only that
Rep. Arroyo was effectively prevented from questioning the presence of a quorum.
Rep. Arroyo's earlier motion to adjourn for lack of quorum had already been
defeated, as the roll call established the existence of a quorum. The question of
quorum cannot be raised repeatedly especially when the quorum is obviously
present for the purpose of delaying the business of the House. Rep. Arroyo
waived his objection by his continued interpellation of the sponsor for in so doing he
in effect acknowledged the presence of a quorum. CTEaDc
10.
ID.; ID.; ENROLLED BILL DOCTRINE; SIGNING OF HOUSE BILL BY THE SPEAKER
OF THE HOUSE AND PRESIDENT OF THE SENATE AND CERTIFICATION BY THE
SECRETARIES OF BOTH HOUSES, CONCLUSIVE OF ITS DUE ENACTMENT. Under the
enrolled bill doctrine, the signing of H. No. 7198 by the Speaker of the House and
the President of the Senate and the certification by the secretaries of both Houses
of Congress that it was passed on November 21, 1996 are conclusive of its due
enactment. The enrolled bill doctrine, as a rule of evidence, is well established. It is
cited with approval by text writers here and abroad. The enrolled bill rule rests on
the following considerations: . . . As the President has no authority to approve a bill
not passed by Congress, an enrolled Act in the custody of the Secretary of State,
and having the official attestations of the Speaker of the House of Representatives,
of the President of the Senate, and of the President of the United States, carries, on
its face, a solemn assurance by the legislative and executive departments of the
government, charged, respectively, with the duty of enacting and executing the
laws, that it was passed by Congress. The respect due to coequal and independent
departments requires the judicial department to act upon that assurance, and to
accept, as having passed Congress, all bills authenticated in the manner stated;
leaving the court to determine, when the question properly arises, whether the Act,
so authenticated, is in conformity with the Constitution. To overrule the doctrine
now, as the dissent urges, is to repudiate the massive teaching of our cases and
overthrow an established rule of evidence.
11.
ID.; ID.; JOURNAL; CONCLUSIVE WITH RESPECT TO MATTERS THAT ARE
REQUIRED BY THE CONSTITUTION TO BE RECORDED THEREIN. The Journal is
regarded as conclusive with respect to matters that are required by the Constitution
to be recorded therein. With respect to other matters, in the absence of evidence to
the contrary, the Journals have also been accorded conclusive effect. Thus, in
United States v. Pons, this Court spoke of the imperatives of public policy for
regarding the Journals as "public memorials of the most permanent character," thus:
"They should be public, because all are required to conform to them; they should be
permanent, that rights acquired today upon the faith of what has been declared to

be law shall not be destroyed tomorrow, or at some remote period of time, by facts
resting only in the memory of individuals." As already noted, the bill which became
R.A. No. 8240 is shown in the Journal. Hence its due enactment has been duly
proven.
12.
ID.; SUPREME COURT; WITHOUT JURISDICTION TO SET ASIDE LEGISLATIVE
ACTION AS VOID BECAUSE THE COURT THINKS THE HOUSE DISREGARDED ITS OWN
RULES. It would be an unwarranted invasion of the prerogative of a coequal
department for this Court either to set aside a legislative action as void because the
Court thinks the House has disregarded its own rules of procedure, or to allow those
defeated in the political arena to seek a rematch in the judicial forum when
petitioners can find their remedy in that department itself. The Court has not been
invested with a roving commission to inquire into complaints, real or imagined, of
legislative skullduggery. It would be acting in excess of its power and would itself be
guilty of grave abuse of its discretion were it to do so. The suggestion made in a
case may instead appropriately be made here: petitioners can seek the enactment
of a new law or the repeal or amendment of R.A. No. 8240. In the absence of
anything to the contrary, the Court must assume that Congress or any House
thereof acted in the good faith belief that its conduct was permitted by its rules, and
deference rather than disrespect is due the judgment of that body.
ROMERO, J., separate opinion:
1.
POLITICAL LAW; LEGISLATIVE DEPARTMENT; ENROLLED BILL DOCTRINE;
APPLICATION MUST BE LIMITED TO MINOR MATTERS RELATING TO FORM AND
FACTUAL ISSUES WHICH DO NOT MATERIALLY ALTER THE ESSENCE AND SUBSTANCE
OF THE LAW. Reliance on the enrolled bill theory is not to be discontinued but its
application must be limited to minor matters relating more to form and factual
issues which do not materially alter the essence and substance of the law itself.
2.
ID.; ID.; BILL; INTRODUCTION OF SEVERAL PROVISIONS IN THE BICAMERAL
CONFERENCE COMMITTEE REPORT VIOLATED THE CONSTITUTIONAL PROSCRIPTION
AGAINST ANY AMENDMENT UPON THE LAST READING. The introduction of several
provisions in the Bicameral Conference Committee Report did not only violate the
pertinent House and Senate Rules defining the limited power of the conference
committee but that the Constitutional proscription against any amendment upon
the last reading of a bill was likewise breached. Hence, in view of these lapses, I
thought that judicial review would have been proper in order to uphold the
Constitution. This the majority, however, disregarded invoking the same principle
which should have justified the Court in questioning the actuations of the legislative
branch.
PUNO; J.; concurring and dissenting opinion:
1.
REMEDIAL LAW; SUPREME COURT; POWER OF JUDICIAL REVIEW OF
CONGRESSIONAL RULES; BOUNDARIES. In the 1891 case of US. v. Ballin, (144 US

1 [1891]) the US Supreme Court first defined the boundaries of the power of the
judiciary to review congressional rules. Ballin clearly confirmed the jurisdiction of
courts to pass upon the validity of congressional rules, i.e., whether they are
constitutional. Ballin was followed in 1932 by the case of US v. Smith (286 US 6
[1932]). The Court, speaking thru Mr. Justice Brandeis, assumed jurisdiction over the
dispute relying on Ballin. It exercised jurisdiction although "the question primarily at
issue relates to the construction of the applicable rules, not to their
constitutionality." Smith, of course, involves the right of a third person and its ruling
falls within the test spelled out in Ballin. Smith was followed by the 1948 case of
Christoffel v. United States (338 US 89 [1948]). A majority of the Court, with Mr.
Justice Murphy, as ponente, defined the issue as "what rules the House had
established and whether they have been followed." The US Supreme Court pursued
the same line in 1963 in deciding the case of Yellin v. United States (374 US 109
[1963]). In the benchmark case of Baker v. Carr, (369 US 186 [1962]), the US
Supreme Court assumed jurisdiction to hear a petition for re-appointment of the
Tennessee legislature ruling that "the political question doctrine, a tool for
maintenance of government order, will not be so applied as to promote only
disorder" and that "the courts cannot reject as 'no law suit,' a bona fide controversy
as to whether some action denominated 'political' exceeds constitutional authority."
THEDCA
2.
ID.; ID.; ID.; ID. In the Philippine setting, there is more compelling reason
for courts to categorically reject the political question defense when its interposition
will cover up abuse of power. For Section 1, Article VIII of our Constitution was
intentionally cobbled to empower courts ". . . 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." This power is new and
was not granted to our courts in the 1935 and 1972 Constitutions. It was not also
xeroxed from the US Constitutional or any foreign state constitution. In Tolentino, I
endorsed the view of former, Senator Salonga that this novel provision stretching
the latitude of judicial power is distinctly Filipino and its interpretation should not be
depreciated by undue reliance on inapplicable foreign jurisprudence. In resolving
the case at bar, the lessons of our own history should provide us the light and not
the experience of foreigners.
3.
CONSTITUTIONAL LAW; LEGISLATIVE DEPARTMENT; LAW-MAKING POWER;
ENROLLED BILL, DEFINED. An enrolled bill is one which has been duly introduced,
finally enacted by both Houses, signed by the proper officers of each House and
approved by the President. It is a declaration by the two Houses, through their
presiding officers, to the President that a bill, thus attested, has received in due the
sanction of the legislative branch of the government, and that it is delivered to him
in obedience to the constitutional requirement that all bills which pass Congress
shall be presented to him.

4.
ID.; ID.; ID.; ENROLLED BILL DOCTRINE; RULES. The enrolled bill originated
in England where there is no written Constitution controlling the legislative branch
of the government, and the acts of Parliament, being regarded in their nature as
judicial as emanating from the highest tribunal in the land are placed on the
same footing and regarded with the same veneration as the judgment of the courts
which cannot be collaterally attacked. In England, the conclusiveness of the bill was
premised on the rationale that "an act of parliament thus made is the exercise of
the highest authority that this kingdom acknowledges upon earth. And it cannot be
altered, amended, dispensed with, suspended or repealed, but in the same forms
and by the same authority of parliament; for it is a maxim in law that it requires the
same strength to dissolve as to create an obligation. Over the years, the enrolled
bill theory has undergone important mutations. Some jurisdictions have adopted the
modified entry or affirmative contradiction rule. Under this rule, the presumption in
favor of the enrolled bill is not conclusive. The rule concedes validity to the enrolled
bill unless there affirmatively appears in the journals of the legislature a statement
that there has not been compliance with one or more of the constitutional
requirements. Other jurisdictions have adopted the Extrinsic Evidence Rule which
holds that an enrolled bill is only prima facie evidence that it has been regularly
enacted. The prima facie presumption, however, can be destroyed by clear,
satisfactory and convincing evidence that the constitutional requirements in
enacting a law have been violated. For this purpose, journals and other extrinsic
evidence are allowed to be received. Some limit the use of extrinsic evidence to
issues of fraud or mistakes.
5.
ID.; ID.; ID.; ID.; MODERN RATIONALE. The modern rationale for the
enrolled bill theory was spelled out in Field v. Clark, viz.: . . . "The signing by the
Speaker of the House of Representatives, and, by the President of the Senate, in
open session, of an enrolled bill, is an official attestation by the two houses of such
bill as one that has passed Congress. It is a declaration by the two Houses, through
their presiding officers, to the President, that a bill, thus attested, has received, in
due form, the sanction of the legislative branch of the government, and that it is
delivered to him in obedience to the constitutional requirement that all bills which
pass Congress shall be presented to him. And when a bill, thus attested, receives
his approval, and is deposited in the public archives, its authentication as a bill that
has passed Congress should be deemed complete and unimpeachable. As the
President has no authority to approve a bill not passed by Congress, an enrolled Act
in the custody of the Secretary of State, and having the official attestations of the
Speaker of the House of Representatives, of the President of the Senate, and of the
President of the United States, carries, on its face, a solemn assurance by the
legislative and executive departments of the government, charged, respectively,
with the duty of enacting and executing the laws, that it was passed by Congress.
The respect due to coequal and independent departments requires the judicial
department to act upon the assurance, to accept, as having passed Congress, all
bills authenticated in the manner stated; leaving the courts to determine, when the

question properly arises, whether the Act, so authenticated, is in conformity with

the Constitution.
6.
ID.; ID.; ID.; ID; CONCLUSIVE PRESUMPTION RULE SHOULD BE ABANDONED.
The enrolled bill doctrine no longer enjoys its once unassailable respectability in
United States. Sutherland reveals that starting in the 1940's, ". . . the tendency
seems to be toward the abandonment of the conclusive presumption rule and the
adoption of the third rule leaving only a prima facie presumption of validity which
may be attacked by any authoritative source of information." It is high time we reexamine our preference for the enrolled bill doctrine. It was in the 1947 case of
Mabanag v. Lopez Vito, (78 Phil. 1 [1947]) that this Court, with three (3) Justices
dissenting, first embraced the rule that a duly authenticated bill or resolution
imports absolute verity and is binding on the courts. In the 1969 case of Morales v.
Subido, (27 SCRA 131, 134-135) we reiterated our fidelity to the enrolled bill
doctrine. Significantly, however, Morales diluted the conclusiveness rule of the
enrolled bill doctrine. The ponencia stressed: "All we hold is that with respect to
matters not expressly required to be entered on the journal, the enrolled bill prevails
in the event of any discrepancy." In the 1974 case of Astorga v. Villegas, (56 SCRA
714) we further diluted the enrolled bill doctrine when we refused to apply it after
the Senate President declared his signature on the bill as invalid. We ruled: As far as
Congress itself is concerned, there is nothing sacrosanct in the certification made by
the presiding officers. It is merely a mode of authentication. The law-making process
in Congress ends when the bill is approved by both Houses, and the certification
does not add to the validity of the bill or cure any defect already present upon its
passage. In other words it is the approval by Congress and not the signatures of the
presiding officers that is essential. Finally in 1994 came the case of Tolentino v.
Secretary of Finance, et al., and its companion cases. These cases show that we
have not blindly accepted the conclusiveness of the enrolled bill. Even in Tolentino,
Mr. Justice Mendoza was cautious enough to hold that "no claim is here made that
the enrolled bill is absolute." I respectfully submit that it is now time for the Court to
make a definitive pronouncement that we no longer give our unqualified support to
the enrolled bill doctrine. There are compelling reasons for this suggested change in
stance. For one, the enrolled bill is appropriate only in England where it originated
because in England there is no written Constitution and the Parliament is supreme.
For another, many of the courts in the United States have broken away from the
rigidity and unrealism of the enrolled bill in light of contemporary developments in
lawmaking. And more important, our uncritical adherence to the enrolled bill is
inconsistent with our Constitution, laws and rules. In Mabanag, we relied on Section
313 of the Old Code of Civil Procedure as amended by Act No. 2210 as a principal
reason in embracing the enrolled bill. This section, however has long been repealed
by our Rules of Court. A half glance at our Rules will show that its section on
conclusive presumption does not carry the conclusive presumption we give to an
enrolled bill. But this is not all. The conclusiveness of an enrolled bill which all too
often results in the suppression of truth cannot be justified under the 1987

Constitution. The Preamble of our Constitution demands that we live not only under
a rule of law but also under a regime of truth. Our Constitution also adopted a
national policy requiring full public disclosure of all state transactions involving
public interest. Any rule which will defeat this policy on transparency ought to be
disfavored. And to implement these policies, this Court was given the power to pry
open and to strike down any act of any branch or instrumentality of government if it
amounts to grave abuse of discretion amounting to lack or excess of jurisdiction. It
is time to bury the enrolled bill for its fiction of conclusiveness shuts off truth in
many litigations. We cannot dispense justice based on fiction for the search for
justice is the search for truth. I submit that giving an enrolled bill a mere prima facie
presumption of correctness will facilitate our task of dispensing justice based on
truth. DHSCTI
7.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE ABUSE OF
DISCRETION; NEGATED IN CASE AT BAR. I do not find any grave abuse of
discretion committed by the public respondents to justify granting petition. As the
ponencia points out, the petition merely involves the complaint that petitioner was
prevented from raising the question of quorum. The petition does not concern
violation of any rule mandated by the Constitution. Nor does it involve the right of a
non-member of the House which requires constitutional protection. The rules on
how to question the existence of a quorum are procedural in character. They are
malleable by nature for they were drafted to help the House enact laws. As well
stated, these rules are servants, not masters of the House. Their observance or nonobservance is a matter of judgment call on the part of our legislators and it is not
the business of the Court to reverse this judgment when untainted by grave abuse
of discretion amounting to lack or excess of jurisdiction.
VITUG, J., concurring opinion:
1.
CONSTITUTIONAL LAW; SUPREME COURT; WITH POWER TO DETERMINE
WHETHER OR NOT THERE IS GRAVE ABUSE OF DISCRETION ON ANY BRANCH OF
GOVERNMENT; GRAVE ABUSE OF DISCRETION, CONSTRUED. When the 1987
Constitution has embodied, in its circumscription of judicial power under Section 1,
Article VIII, of the Constitution, the determination of whether or not there is grave
abuse of discretion on the part of any branch or instrumentality of government, the
Supreme Court, upon which that great burden has been imposed, could not have
been thought of as likewise being thereby tasked with the awesome responsibility of
overseeing the entire bureaucracy. The term grave abuse of discretion has long
been understood in our jurisprudence as, and confined to, a capricious and
whimsical or despotic exercise of judgment as amounting to lack or excess of
jurisdiction.
2.
ID.; ID.; ID.; CASE AT BAR. Absent a clear case of grave abuse of discretion,
like the patent disregard of a Constitutional proscription, I would respect the
judgment of Congress under whose province the specific responsibility falls and the

authority to act is vested. To do otherwise would be an unwarranted intrusion into

the internal affairs of a co-equal, independent and coordinate branch of
government. At no time, it would seem to me, has it been intended by the framers
of the fundamental law to cause a substantial deviation, let alone departure, from
the time-honored and accepted principle of separation, but balanced, powers of the
three branches of government. There is, of course, a basic variant between the old
rule and the new Charter on the understanding of the term "judicial power." Now,
the Court is under mandate to assume jurisdiction over, and to undertake judicial
inquiry into, what may even be deemed to be political questions provided, however,
that grave abuse of discretion the sole test of justiciability on purely political
issues is shown to have attended the contested act. DEICTS
DECISION
MENDOZA, J p:
This is a petition for certiorari and/or prohibition challenging the validity of Republic
Act No. 8240, which amends certain provisions of the National Internal Revenue
Code by imposing so-called "sin taxes" (actually specific taxes) on the manufacture
and sale of beer and cigarettes.
Petitioners are members of the House of Representatives. They brought this suit
against respondents Jose de Venecia, Speaker of the House of Representatives,
Deputy Speaker Raul Daza, Majority Leader Rodolfo Albano, the Executive
Secretary, the Secretary of Finance, and the Commissioner of Internal Revenue,
charging violation of the rules of the House which petitioners claim are
"constitutionally mandated" so that their violation is tantamount to a violation of the
Constitution. cdphil
The law originated in the House of Representatives as H. No. 7198. This bill was
approved on third reading on September 12, 1996 and transmitted on September
16, 1996 to the Senate which approved it with certain amendments on third reading
on November 17, 1996. A bicameral conference committee was formed to reconcile
the disagreeing provisions of the House and Senate versions of the bill.
The bicameral conference committee submitted its report to the House at 8 a.m. on
November 21, 1996. At 11:48 a.m., after a recess, Rep. Exequiel Javier, chairman of
the Committee on Ways and Means, proceeded to deliver his sponsorship speech,
after which he was interpellated. Rep. Rogelio Sarmiento was first to interpellate. He
was interrupted when Rep. Arroyo moved to adjourn for lack of quorum. Rep.
Antonio Cuenco objected to the motion and asked for a head count. After a roll call,
the Chair (Deputy Speaker Raul Daza) declared the presence of a quorum. 1 Rep.
Arroyo appealed the ruling of the Chair, but his motion was defeated when put to a
vote. The interpellation of the sponsor thereafter proceeded.

Petitioner Rep. Joker Arroyo registered to interpellate. He was fourth in the order,
following Rep. Rogelio Sarmiento, Rep. Edcel C. Lagman and Rep. Enrique Garcia. In
the course of his interpellation, Rep. Arroyo announced that he was going to raise a
question on the quorum, although until the end of his interpellation he never did.
What happened thereafter is shown in the following transcript of the session on
November 21, 1996 of the House of Representatives, as published by Congress in
the newspaper issues of December 5 and 6, 1996:
MR. ALBANO. Mr. Speaker, I move that we now approve and ratify the conference
committee report.
THE DEPUTY SPEAKER (Mr. Daza). Any objection to the motion?
MR. ARROYO. What is that, Mr. Speaker?
THE DEPUTY SPEAKER (Mr. Daza). There being none, approved.
(Gavel)
MR. ARROYO. No, no, no, wait a minute, Mr. Speaker, I stood up. I want to know what
is the question that the Chair asked the distinguished sponsor.
THE DEPUTY SPEAKER (Mr. Daza). There was a motion by the Majority Leader for
approval of the report, and the Chair called for the motion.
MR. ARROYO. Objection, I stood up, so I wanted to object.
THE DEPUTY SPEAKER (Mr. Daza). The session is suspended for one minute.
(It was 3:01 p.m.)
(3:40 p.m., the session was resumed)
THE DEPUTY SPEAKER (Mr. Daza). The session is resumed.
MR. ALBANO. Mr. Speaker, I move to adjourn until four o'clock, Wednesday, next
week.
THE DEPUTY SPEAKER (Mr. Daza). The session is adjourned until four o'clock,
Wednesday, next week.
(It was 3:40 p.m.)
On the same day, the bill was signed by the Speaker of the House of
Representatives and the President of the Senate and certified by the respective
secretaries of both Houses of Congress as having been finally passed by the House
of Representatives and by the Senate on November 21, 1996. The enrolled bill was
signed into law by President Fidel V. Ramos on November 22, 1996.

Petitioners claim that there are actually four different versions of the transcript of
this portion of Rep. Arroyo's interpellation: (1) the transcript of audio-sound
recording of the proceedings in the session hall immediately after the session
adjourned at 3:40 p.m. on November 21, 1996, which petitioner Rep. Edcel C.
Lagman obtained from the operators of the sound system; (2) the transcript of the
proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996, as certified by the
Chief of the Transcription Division on November 21, 1996, also obtained by Rep.
Lagman; (3) the transcript of the proceedings from 3:00 p.m. to 3:40 p.m. of
November 21, 1996 as certified by the Chief of the Transcription Division on
November 28, 1996, also obtained by Rep. Lagman; and (4) the published version
abovequoted. According to petitioners, the four versions differ on three points, to
wit: (1) in the audio-sound recording the word "approved," which appears on line 13
in the three other versions, cannot be heard; (2) in the transcript certified on
November 21, 1996 the word "no" on line 17 appears only once, while in the other
versions it is repeated three times; and (3) the published version does not contain
the sentence "(Y)ou better prepare for a quorum because I will raise the question of
the quorum," which appears in the other versions.
Petitioners' allegations are vehemently denied by respondents. However, there is no
need to discuss this point as petitioners have announced that, in order to expedite
the resolution of this petition, they admit, without conceding, the correctness of the
transcripts relied upon by the respondents. Petitioners agree that for purposes of
this proceeding the word "approved" appears in the transcripts.
Only the proceedings of the House of Representatives on the conference committee
report on H. No. 7198 are in question. Petitioners' principal argument is that R.A. No.
8240 is null and void because it was passed in violation of the rules of the House;
that these rules embody the "constitutional mandate" in Art. VI, 16(3) that "each
House may determine the rules of its proceedings" and that, consequently, violation
of the House rules is a violation of the Constitution itself. They contend that the
certification of Speaker De Venecia that the law was properly passed is false and
spurious.
More specifically, petitioners charge that (1) in violation of Rule VIII, 35 and Rule
XVII, 103 of the rules of the House, 2 the Chair, in submitting the conference
committee report to the House, did not call for the yeas or nays, but simply asked
for its approval by motion in order to prevent petitioner Arroyo from questioning the
presence of a quorum; (2) in violation of Rule XIX, 112, 3 the Chair deliberately
ignored Rep. Arroyo's question, "What is that . . . Mr. Speaker?" and did not repeat
Rep. Albano's motion to approve or ratify; (3) in violation of Rule XVI, 97, 4 the
Chair refused to recognize Rep. Arroyo and instead proceeded to act on Rep.
Albano's motion and afterward declared the report approved; and (4) in violation of
Rule XX, 121-122, Rule XXI, 123, and Rule XVIII, 109, 5 the Chair suspended the
session without first ruling on Rep. Arroyo's question which, it is alleged, is a point of
order or a privileged motion. It is argued that Rep. Arroyo's query should have been

resolved upon the resumption of the session on November 28, 1996, because the
parliamentary situation at the time of the adjournment remained upon the
resumption of the session.
Petitioners also charge that the session was hastily adjourned at 3:40 p.m. on
November 21, 1996 and the bill certified by Speaker Jose De Venecia to prevent
petitioner Rep. Arroyo from formally challenging the existence of a quorum and
asking for a reconsideration.
Petitioners urge the Court not to feel bound by the certification of the Speaker of the
House that the law had been properly passed, considering the Court's power under
Art. VIII, 1 to pass on claims of grave abuse of discretion by the other departments
of the government, and they ask for a reexamination of Tolentino v. Secretary of
Finance, 6 which affirmed the conclusiveness of an enrolled bill, in view of the
changed membership of the Court.
The Solicitor General filed a comment in behalf of all respondents. In addition,
respondent De Venecia filed a supplemental comment. Respondents' defense is
anchored on the principle of separation of powers and the enrolled bill doctrine.
They argue that the Court is not the proper forum for the enforcement of the rules
of the House and that there is no justification for reconsidering the enrolled bill
doctrine. Although the Constitution provides in Art. VI, 16(3) for the adoption by
each House of its rules of proceedings, enforcement of the rules cannot be sought in
the courts except insofar as they implement constitutional requirements such as
that relating to three readings on separate days before a bill may be passed. At all
events, respondents contend that, in passing the bill which became R.A. No. 8240,
the rules of the House, as well as parliamentary precedents for approval of
conference committee reports on mere motion, were faithfully observed.
In his supplemental comment, respondent De Venecia denies that his certification of
H. No. 7198 is false and spurious and contends that under the journal entry rule, the
judicial inquiry sought by the petitioners is barred. Indeed, Journal No. 39 of the
House of Representatives, covering the sessions of November 20 and 21, 1996,
shows that "On Motion of Mr. Albano, there being no objection, the Body approved
the Conference Committee Report on House Bill No. 7198." 7 This Journal was
approved on December 2, 1996 over the lone objection of petitioner Rep. Lagman. 8
After considering the arguments of the parties, the Court finds no ground for holding
that Congress committed a grave abuse of discretion in enacting R.A. No. 8240. This
case is therefore dismissed.
First. It is clear from the foregoing facts that what is alleged to have been violated in
the enactment of R.A. No. 8240 are merely internal rules of procedure of the House
rather than constitutional requirements for the enactment of a law, i.e., Art. VI,
26-27. Petitioners do not claim that there was no quorum but only that, by some

maneuver allegedly in violation of the rules of the House, Rep. Arroyo was
effectively prevented from questioning the presence of a quorum. cdrep
Petitioners contend that the House rules were adopted pursuant to the
constitutional provision that "each House may determine the rules of its
proceedings" 9 and that for this reason they are judicially enforceable. To begin
with, this contention stands the principle on its head. In the decided cases, 10 the
constitutional provision that "each House may determine the rules of its
proceedings" was invoked by parties, although not successfully, precisely to support
claims of autonomy of the legislative branch to conduct its business free from
interference by courts. Here petitioners cite the provision for the opposite purpose
of invoking judicial review.
But the cases, both here and abroad, in varying forms of expression, all deny to the
courts the power to inquire into allegations that, in enacting a law, a House of
Congress failed to comply with its own rules, in the absence of showing that there
was a violation of a constitutional provision or the rights of private individuals. In
Osmea v. Pendatun, 11 it was held: "At any rate, courts have declared that 'the
rules adopted by deliberative bodies are subject to revocation, modification or
waiver at the pleasure of the body adopting them.' And it has been said that
'Parliamentary rules are merely procedural, and with their observance, the courts
have no concern. They may be waived or disregarded by the legislative body.'
Consequently, 'mere failure to conform to parliamentary usage will not invalidate
the action (taken by a deliberative body) when the requisite number of members
have agreed to a particular measure.'"
In United States v. Ballin, Joseph & Co., 12 the rule was stated thus: "The
Constitution empowers each house to determine its rules of proceedings. It may not
by its rules ignore constitutional restraints or violate fundamental rights, and there
should be a reasonable relation between the mode or method of proceeding
established by the rule and the result which is sought to be attained. But within
these limitations all matters of method are open to the determination of the House,
and it is no impeachment of the rule to say that some other way would be better,
more accurate, or even more just. It is no objection to the validity of a rule that a
different one has been prescribed and in force for a length of time. The power to
make rules is not one which once exercised is exhausted. It is a continuous power,
always subject to be exercised by the House, and within the limitations suggested,
absolute and beyond the challenge of any other body or tribunal."
In Crawford v. Gilchrist, 13 it was held: "The provision that each House shall
determine the rules of its proceedings does not restrict the power given to a mere
formulation of standing rules, or to the proceedings of the body in ordinary
legislative matters; but in the absence of constitutional restraints, and when
exercised by a majority of a constitutional quorum, such authority extends to a
determination of the propriety and effect of any action as it is taken by the body as

it proceeds in the exercise of any power, in the transaction of any business, or in the
performance of any duty conferred upon it by the Constitution."
In State ex rel. City Loan & Savings Co. v. Moore, 14 the Supreme Court of Ohio
stated: "The provision for reconsideration is no part of the Constitution and is
therefore entirely within the control of the General Assembly. Having made the rule,
it should be regarded, but a failure to regard it is not the subject-matter of judicial
inquiry. It has been decided by the courts of last resort of many states, and also by
the United States Supreme Court, that a legislative act will not be declared invalid
for noncompliance with rules."
In State v. Savings Bank, 15 the Supreme Court of Errors of Connecticut declared
itself as follows: "The Constitution declares that each house shall determine the
rules of its own proceedings and shall have all powers necessary for a branch of the
Legislature of a free and independent state. Rules of proceedings are the servants
of the House and subject to its authority. This authority may be abused, but when
the House has acted in a matter clearly within its power, it would be an
unwarranted invasion of the independence of the legislative department for the
court to set aside such action as void because it may think that the House has
misconstrued or departed from its own rules of procedure."
In McDonald v. State, 16 the Wisconsin Supreme Court held: "When it appears that
an act was so passed, no inquiry will be permitted to ascertain whether the two
houses have or have not complied strictly with their own rules in their procedure
upon the bill, intermediate its introduction and final passage. The presumption is
conclusive that they have done so. We think no court has ever declared an act of
the legislature void for non-compliance with the rules of procedure made by itself ,
or the respective branches thereof, and which it or they may change or suspend at
will. If there are any such adjudications, we decline to follow them."
Schweizer v. Territory 17 is illustrative of the rule in these cases. The 1893 Statutes
of Oklahoma provided for three readings on separate days before a bill may be
passed by each house of the legislature, with the proviso that in case of an
emergency the house concerned may, by two-thirds vote, suspend the operation of
the rule. Plaintiff was convicted in the district court of violation of a law punishing
gambling. He appealed contending that the gambling statute was not properly
passed by the legislature because the suspension of the rule on three readings had
not been approved by the requisite two-thirds vote. Dismissing this contention, the
State Supreme Court of Oklahoma held:
We have no constitutional provision requiring that the legislature should read a bill
in any particular manner. It may, then, read or deliberate upon a bill as it sees fit,
either in accordance with its own rules, or in violation thereof, or without making
any rules. The provision of section 17 referred to is merely a statutory provision for
the direction of the legislature in its action upon proposed measures. It receives its

entire force from legislative sanction, and it exists only at legislative pleasure. The
failure of the legislature to properly weigh and consider an act, its passage through
the legislature in a hasty manner, might be reasons for the governor withholding his
signature thereto; but this alone, even though it is shown to be a violation of a rule
which the legislature had made to govern its own proceedings, could be no reason
for the court's refusing its enforcement after it was actually passed by a majority of
each branch of the legislature, and duly signed by the governor. The courts cannot
declare an act of the legislature void on account of noncompliance with rules of
procedure made by itself to govern its deliberations. McDonald v. State, 80 Wis.
407, 50 N.W. 185; In re Ryan, 80 Wis. 414, 50 N.W. 187; State v. Brown, 33 S.C. 151,
11 S.E. 641; Railway Co. v. Gill, 54 Ark. 101, 15 S.W. 18.
We conclude this survey with the useful summary of the rulings by former Chief
Justice Fernando, commenting on the power of each House of Congress to
determine its rules of proceedings. He wrote:
Rules are hardly permanent in character. The prevailing view is that they are subject
to revocation, modification or waiver at the pleasure of the body adopting them as
they are primarily procedural. Courts ordinarily have no concern with their
observance. They may be waived or disregarded by the legislative body.
Consequently, mere failure to conform to them does not have the effect of nullifying
the act taken if the requisite number of members have agreed to a particular
measure. The above principle is subject, however, to this qualification. Where the
construction to be given to a rule affects persons other than members of the
legislative body the question presented is necessarily judicial in character. Even its
validity is open to question in a case where private rights are involved. 18
In this case no rights of private individuals are involved but only those of a member
who, instead of seeking redress in the House, chose to transfer the dispute to this
Court. We have no more power to look into the internal proceedings of a House than
members of that House have to look over our shoulders, as long as no violation of
constitutional provisions is shown.
Petitioners must realize that each of the three departments of our government has
its separate sphere which the others may not invade without upsetting the delicate
balance on which our constitutional order rests. Due regard for the working of our
system of government, more than mere comity, compels reluctance on our part to
enter upon an inquiry into an alleged violation of the rules of the House. We must
accordingly decline the invitation to exercise our power.
Second. Petitioners, quoting former Chief Justice Roberto Concepcion's sponsorship
in the Constitutional Commission, contend that under Art. VIII, 1, "nothing involving
abuse of discretion [by the other branches of the government] amounting to lack or
excess of jurisdiction is beyond judicial review." 19 Implicit in this statement of the
former Chief Justice, however, is an acknowledgment that the jurisdiction of this

Court is subject to the case and controversy requirement of Art. VIII, 5 and,
therefore, to the requirement of a justiciable controversy before courts can
adjudicate constitutional questions such as those which arise in the field of foreign
relations. For while Art. VIII, 1 has broadened the scope of judicial inquiry into areas
normally left to the political departments to decide, such as those relating to
national security, 20 it has not altogether done away with political questions such as
those which arise in the field of foreign relations. As we have already held, under
Art. VIII, 1, this Court's function is merely [to] check whether or not the
governmental branch or agency has gone beyond the constitutional limits of its
jurisdiction, not that it erred or has a different view. In the absence of a showing . . .
[of] grave abuse of discretion amounting to lack of jurisdiction, there is no occasion
for the Court to exercise its corrective power. . . . It has no power to look into what it
thinks is apparent error. 21
If, then, the established rule is that courts cannot declare an act of the legislature
void on account merely of noncompliance with rules of procedure made by itself, it
follows that such a case does not present a situation in which a branch of the
government has "gone beyond the constitutional limits of its jurisdiction" so as to
call for the exercise of our Art. VIII, 1 power. prcd
Third. Petitioners claim that the passage of the law in the House was "railroaded."
They claim that Rep. Arroyo was still making a query to the Chair when the latter
declared Rep. Albano's motion approved.
What happened is that, after Rep. Arroyo's interpellation of the sponsor of the
committee report, Majority Leader Rodolfo Albano moved for the approval and
ratification of the conference committee report. The Chair called out for objections
to the motion. Then the Chair declared: "There being none, approved." At the same
time the Chair was saying this, however, Rep. Arroyo was asking, "What is that . . .
Mr. Speaker?" The Chair and Rep. Arroyo were talking simultaneously. Thus,
although Rep. Arroyo subsequently objected to the Majority Leader's motion, the
approval of the conference committee report had by then already been declared by
the Chair, symbolized by its banging of the gavel.
Petitioners argue that, in accordance with the rules of the House, Rep. Albano's
motion for the approval of the conference committee report should have been
stated by the Chair and later the individual votes of the Members should have been
taken. They say that the method used in this case is a legislator's nightmare
because it suggests unanimity when the fact was that one or some legislators
opposed the report.
No rule of the House of Representatives has been cited which specifically requires
that in cases such as this involving approval of a conference committee report, the
Chair must restate the motion and conduct a viva voce or nominal voting. On the
other hand, as the Solicitor General has pointed out, the manner in which the

conference committee report on H. No. 7198 was approved was by no means a

unique one. It has basis in legislative practice. It was the way the conference
committee report on the bills which became the Local Government Code of 1991
and the conference committee report on the bills amending the Tariff and Customs
Code were approved.
In 1957, the practice was questioned as being contrary to the rules of the House.
The point was answered by Majority Leader Arturo M. Tolentino and his answer
became the ruling of the Chair. Mr. Tolentino said:
Mr. TOLENTINO. The fact that nobody objects means a unanimous action of the
House. Insofar as the matter of procedure is concerned, this has been a precedent
since I came here seven years ago, and it has been the procedure in this House that
if somebody objects, then a debate follows and after the debate, then the voting
comes in.
xxx

xxx

xxx

Mr. Speaker, a point of order was raised by the gentleman from Leyte, and I wonder
what his attitude is now on his point of order. I should just like to state that I believe
that we have had a substantial compliance with the Rules. The Rule invoked is not
one that refers to statutory or constitutional requirement, and a substantial
compliance, to my mind, is sufficient. When the Chair announces the vote by saying
"Is there any objection?" and nobody objects, then the Chair announces "The bill is
approved on second reading." If there was any doubt as to the vote, any motion to
divide would have been proper. So, if that motion is not presented, we assume that
the House approves the measure. So I believe there is substantial compliance here,
and if anybody wants a division of the House he can always ask for it, and the Chair
can announce how many are in favor and how many are against. 22
Indeed, it is no impeachment of the method to say that some other way would be
better, more accurate and even more just. 23 The advantages or disadvantages, the
wisdom or folly of a method do not present any matter for judicial consideration. 24
In the words of the U.S. Circuit Court of Appeals, "this Court cannot provide a
second opinion on what is the best procedure. Notwithstanding the deference and
esteem that is properly tendered to individual congressional actors, our deference
and esteem for the institution as a whole and for the constitutional command that
the institution be allowed to manage its own affairs precludes us from even
attempting a diagnosis of the problem." 25
Nor does the Constitution require that the yeas and the nays of the Members be
taken every time a House has to vote, except only in the following instances: upon
the last and third readings of a bill, 26 at the request of one-fifth of the Members
present, 27 and in repassing a bill over the veto of the President. 28 Indeed,
considering the fact that in the approval of the original bill the votes of the Members

by yeas and nays had already been taken, it would have been sheer tedium to
repeat the process.
Petitioners claim that they were prevented from seeking reconsideration allegedly
as a result of the precipitate suspension and subsequent adjournment of the
session. 29 It would appear, however, that the session was suspended to allow the
parties to settle the problem, because when it resumed at 3:40 p.m. on that day
Rep. Arroyo did not say anything anymore. While it is true that the Majority Leader
moved for adjournment until 4 p.m. of Wednesday of the following week, Rep.
Arroyo could at least have objected if there was anything he wanted to say. The
fact, however, is that he did not. The Journal of November 21, 1996 of the House
shows:
ADJOURNMENT OF SESSION
On motion of Mr. Albano, there being no objection, the Chair declared the session
adjourned until four o'clock in the afternoon of Wednesday, November 27, 1996.
It was 3:40 p.m. Thursday, November 21, 1996. (Emphasis added)
This Journal was approved on December 2, 1996. Again, no one objected to its
approval except Rep. Lagman.
It is thus apparent that petitioners' predicament was largely of their own making.
Instead of submitting the proper motions for the House to act upon, petitioners
insisted on the pendency of Rep. Arroyo's question as an obstacle to the passage of
the bill. But Rep. Arroyo's question was not, in form or substance, a point of order or
a question of privilege entitled to precedence. 30 And even if Rep. Arroyo's question
were so, Rep. Albano's motion to adjourn would have precedence and would have
put an end to any further consideration of the question. 31
Given this fact, it is difficult to see how it can plausibly be contended that in signing
the bill which became R.A. No. 8240, respondent Speaker of the House acted with
grave abuse of his discretion. Indeed, the phrase "grave abuse of discretion
amounting to lack or excess of jurisdiction" has a settled meaning in the
jurisprudence of procedure. It means such capricious and whimsical exercise of
judgment by a tribunal exercising judicial or quasi judicial power as to amount to
lack of power. As Chief Justice Concepcion himself said in explaining this provision,
the power granted to the courts by Art. VIII, 1 extends to cases where "a branch of
the government or any of its officials has acted without jurisdiction or in excess of
jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction." 32
Here, the matter complained of concerns a matter of internal procedure of the
House with which the Court should not be concerned. To repeat, the claim is not that
there was no quorum but only that Rep. Arroyo was effectively prevented from

questioning the presence of a quorum. Rep. Arroyo's earlier motion to adjourn for
lack of quorum had already been defeated, as the roll call established the existence
of a quorum. The question of quorum cannot be raised repeatedly especially
when the quorum is obviously present for the purpose of delaying the business of
the House. 33 Rep. Arroyo waived his objection by his continued interpellation of the
sponsor for in so doing he in effect acknowledged the presence of a quorum. 34
At any rate it is noteworthy that of the 111 members of the House earlier found to
be present on November 21, 1996, only the five, i.e. petitioners in this case, are
questioning the manner by which the conference committee report on H. No. 7198
was approved on that day. No one except Rep. Arroyo, appears to have objected to
the manner by which the report was approved. Rep. John Henry Osmea did not
participate in the bicameral conference committee proceedings. 35 Rep. Lagman
and Rep. Zamora objected to the report 36 but not to the manner it was approved;
while it is said that, if voting had been conducted, Rep. Taada would have voted in
favor of the conference committee report. 37
Fourth. Under the enrolled bill doctrine, the signing of H. No. 7198 by the Speaker of
the House and the President of the Senate and the certification by the secretaries of
both Houses of Congress that it was passed on November 21, 1996 are conclusive
of its due enactment. Much energy and learning is devoted in the separate opinion
of Justice Puno, joined by Justice Davide, to disputing this doctrine. To be sure, there
is no claim either here or in the decision in the EVAT cases [Tolentino v. Secretary of
Finance] that the enrolled bill embodies a conclusive presumption. In one case 38
we "went behind" an enrolled bill and consulted the Journal to determine whether
certain provisions of a statute had been approved by the Senate. Cdpr
But, where as here there is no evidence to the contrary, this Court will respect the
certification of the presiding officers of both Houses that a bill has been duly
passed. Under this rule, this Court has refused to determine claims that the threefourths vote needed to pass a proposed amendment to the Constitution had not
been obtained, because "a duly authenticated bill or resolution imports absolute
verity and is binding on the courts." 39 This Court quoted from Wigmore on
Evidence the following excerpt which embodies good, if old-fashioned democratic
theory:
The truth is that many have been carried away with the righteous desire to check at
any cost the misdoings of Legislatures. They have set such store by the Judiciary for
this purpose that they have almost made them a second and higher Legislature. But
they aim in the wrong direction. Instead of trusting a faithful Judiciary to check an
inefficient Legislature, they should turn to improve the Legislature. The sensible
solution is not to patch and mend casual errors by asking the Judiciary to violate
legal principle and to do impossibilities with the Constitution; but to represent
ourselves with competent, careful, and honest legislators, the work of whose hands

on the statute-roll may come to reflect credit upon the name of popular
government. 40
This Court has refused to even look into allegations that the enrolled bill sent to the
President contained provisions which had been "surreptitiously" inserted in the
conference committee:
[W]here allegations that the constitutional procedures for the passage of bills have
not been observed have no more basis than another allegation that the Conference
Committee "surreptitiously" inserted provisions into a bill which it had prepared, we
should decline the invitation to go behind the enrolled copy of the bill. To disregard
the "enrolled bill" rule in such cases would be to disregard the respect due the other
two departments of our government. 41
It has refused to look into charges that an amendment was made upon the last
reading of a bill in violation of Art. VI, 26(2) of the Constitution that "upon the last
reading of a bill, no amendment shall be allowed." 42
In other cases, 43 this Court has denied claims that the tenor of a bill was otherwise
than as certified by the presiding officers of both Houses of Congress.
The enrolled bill doctrine, as a rule of evidence, is well established. It is cited with
approval by text writers here and abroad. 44 The enrolled bill rule rests on the
following considerations:
. . . As the President has no authority to approve a bill not passed by Congress, an
enrolled Act in the custody of the Secretary of State, and having the official
attestations of the Speaker of the House of Representatives, of the President of the
Senate, and of the President of the United States, carries, on its face, a solemn
assurance by the legislative and executive departments of the government,
charged, respectively, with the duty of enacting and executing the laws, that it was
passed by Congress. The respect due to coequal and independent departments
requires the judicial department to act upon that assurance, and to accept, as
having passed Congress, all bills authenticated in the manner stated; leaving the
court to determine, when the question properly arises, whether the Act, so
authenticated, is in conformity with the Constitution. 45
To overrule the doctrine now, as the dissent urges, is to repudiate the massive
teaching of our cases and overthrow an established rule of evidence.
Indeed, petitioners have advanced no argument to warrant a departure from the
rule, except to say that, with a change in the membership of the Court, the three
new members may be assumed to have an open mind on the question of the
enrolled bill rule. Actually, not three but four (Cruz, Feliciano, Bidin, and Quiason,
JJ .) have departed from the Court since our decision in the EVAT cases and their
places have since been taken by four new members (Francisco, Hermosisima,

Panganiban, and Torres, JJ .) Petitioners are thus simply banking on the change in
the membership of the Court.
Moreover, as already noted, the due enactment of the law in question is confirmed
by the Journal of the House of November 21, 1996 which shows that the conference
committee report on H. No. 7198, which became R.A. No. 8240, was approved on
that day. The keeping of the Journal is required by the Constitution. Art. VI, 16(4)
provides:
Each House shall keep a Journal of its proceedings, and from time to time publish
the same, excepting such parts as may, in its judgment, affect national security;
and the yeas and nays on any question shall, at the request of one-fifth of the
Members present, be entered in the Journal.
Each House shall also keep a Record of its proceedings.
The Journal is regarded as conclusive with respect to matters that are required by
the Constitution to be recorded therein. 46 With respect to other matters, in the
absence of evidence to the contrary, the Journals have also been accorded
conclusive effect. Thus, in United States v. Pons, 47 this Court spoke of the
imperatives of public policy for regarding the Journals as "public memorials of the
most permanent character," thus: "They should be public, because all are required
to conform to them; they should be permanent, that rights acquired today upon the
faith of what has been declared to be law shall not be destroyed tomorrow, or at
some remote period of time, by facts resting only in the memory of individuals." As
already noted, the bill which became R.A. No. 8240 is shown in the Journal. Hence
its due enactment has been duly proven.
xxx

xxx

xxx

It would be an unwarranted invasion of the prerogative of a coequal department for

this Court either to set aside a legislative action as void because the Court thinks
the House has disregarded its own rules of procedure, or to allow those defeated in
the political arena to seek a rematch in the judicial forum when petitioners can find
their remedy in that department itself. The Court has not been invested with a
roving commission to inquire into complaints, real or imagined, of legislative
skullduggery. It would be acting in excess of its power and would itself be guilty of
grave abuse of its discretion were it to do so. The suggestion made in a case 48
may instead appropriately be made here: petitioners can seek the enactment of a
new law or the repeal or amendment of R.A. No. 8240. In the absence of anything to
the contrary, the Court must assume that Congress or any House thereof acted in
the good faith belief that its conduct was permitted by its rules, and deference
rather than disrespect is due the judgment of that body. 49 cdtech
WHEREFORE, the petition for certiorari and prohibition is DISMISSED.

SO ORDERED.
Narvasa, C .J ., Padilla, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ ., concur.
Regalado, J ., concurs in the result.
Bellosillo, J ., took no part due to relationship to parties.
Panganiban, J ., took no part; former counsel of a party.
Torres, Jr., J ., took no part; on leave during deliberations.

G.R. No. 157985. December 2, 2005.]

ZENAIDA BUGARIN, VIOLETA ABANO, LIZA ABAYATA, ANTONIO ALEGRE, REMEDIOS
ALEGRE, CHRIS ANASCO, JEFFREY ARQUILLOS, LOURDES BAGARESE, EUGENIA
BARAQUIL, PRECIOS BASOY, RANNY BASOY, FELY BERMEJO, CARLOS BO, JUN BO,
ALEX BORRES, ANNA MARIE CORDOVA, ESPERANZE CORDOVA, EDWIN DEPETILLO,
ROMULO FERRY, LEONISA GABRIEL, MA. FE GABRIEL, SALOME CORDOVA, ELEN
JACOB, JEREMIAS JACOB, OLIVIA LERIN, CRISELDA MADEJA, JOMARI MANONG,
NESTOR MANONG, VALENTIN MANONG, EDMUNDO/FELY MINA, TEDDY PARUAN,
SALVACION PASCUA, ROMMEL POLISTICO, DANIEL/NANCY PRADO, ARMANDO
ROMERO, SANCHO VILLAFUERTE, and FERNANDO YAMID, petitioners, vs. CECILIA B.
PALISOC, MARINA B. MATA and REYNALDO T. NEPOMUCENO, respondents.
RESOLUTION
QUISUMBING, J p:
Before us is a petition for review on certiorari assailing the Order 1 dated April 30,
2003 and the Special Order of Demolition 2 dated May 9, 2003 of the Metropolitan
Trial Court (MeTC) of Paraaque City, Branch 77. Petitioners had applied for the
issuance of a temporary restraining order (TRO) but the Court in a resolution 3
dated May 15, 2003 denied the application. AHcCDI
The facts in this case, culled from the record, are as follows.
The present controversy arose from a complaint for ejectment, docketed as Civil
Case No. 11799, filed before the MeTC by private respondents Cecilia B. Palisoc and
Marina B. Mata. In a decision 4 dated February 27, 2002, the court declared
respondents as the rightful possessors of the properties in dispute. It also ordered
the petitioners to vacate the premises and pay to private respondents the rentals.
Petitioners appealed to the Regional Trial Court (RTC) of Paraaque City, Branch 274
while private respondents moved for execution pending appeal. On January 8, 2003,
the RTC affirmed the MeTC decision with the modification that petitioners must start
paying rentals from the date of the appealed decision. cdtai 2006
On January 28, 2003, petitioners filed a Motion for Reconsideration with Opposition
to the Issuance of a Writ of Execution. In an order dated March 3, 2003, the RTC
denied the motion and granted private respondents' motion for execution for failure
of petitioners to post a supersedeas bond or to pay the back rentals. Thus, a writ of
execution pending appeal was issued. On March 7, 2003, petitioners were served
with the writ and notice to vacate.
On March 11, 2003, petitioners filed a Motion to Defer Implementation of the Writ of
Execution. On March 14, 2003, private respondents filed a Motion to Issue a Special
Order of Demolition since petitioners refused to vacate the premises. The RTC

deferred action on the motions to allow petitioners to exhaust legal remedies

available to them. aTIEcA
Petitioners thereafter filed a Supplement to the Motion to Defer Implementation of
Writ of Execution and Opposition to Motion to Issue Special Order of Demolition,
contending that Section 28 of Republic Act No. 7279 5 was not complied with.
On April 4, 2003, private respondents filed a Motion Reiterating the Motion for
Issuance of Special Order of Demolition. In an order dated April 11, 2003, the RTC
declared the decision denying petitioners' appeal final and executory, and
remanded the records of the case to the MeTC without acting on the motions.
However, on April 10, 2003, petitioners filed a Petition for Certiorari and Prohibition
with Prayer for Preliminary Prohibitory Injunction before the Court of Appeals. They
also filed an Urgent Vigorous Opposition and Motion to Suspend Proceedings on
respondents' Motion Reiterating the Motion for Issuance of Special Order of
Demolition before the MeTC.
The MeTC set the Motion for the Issuance of Special Order of Demolition for hearing.
The court granted said motion on April 30, 2003, but gave petitioners five (5) days
from receipt of its order to voluntarily vacate the premises and remove all
structures and improvements made thereon.
On May 6, 2003, MeTC Branch Sheriff Reynaldo T. Nepomuceno reported that
petitioners refused to vacate the premises. Petitioners instead filed a Motion to
Quash and Recall the Order dated April 30, 2003 and/or Special Order of Demolition.
The MeTC denied the motion and issued the Special Order of Demolition on May 9,
2003.
Hence, this petition where petitioners raise the lone error that
THE COURT A QUO, IN BRUSHING ASIDE REPUBLIC ACT [NO.] 7279 IN THE
RESOLUTION OF THE CASE AGAINST THESE UNDERPRIVILEGED PETITIONERS, HAS
DECIDED A QUESTION OF SUBSTANCE, NOT THERETOFORE DETERMINED BY THE
SUPREME COURT, AND/OR HAS DECIDED IT IN A WAY PROBABLY NOT IN ACCORD
WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME
COURT. 6
Simply, the issue is, are the Orders of the MeTC proper?
Petitioners contend that the Orders of the MeTC violated the mandatory
requirements of Section 28 7 of Rep. Act No. 7279 since there was no 30-day notice
prior to the date of eviction or demolition and there had been no consultation on the
matter of resettlement. They also claim that there was neither relocation nor
financial assistance given. They insist that the MeTC orders are patently
unreasonable, impossible and in violation of the law. 8

Private respondents for their part argue that Rep. Act No. 7279 is not applicable.
They aver that there was no proof that petitioners are registered as eligible
socialized housing program beneficiaries in accordance with procedure set forth in
the Implementing Rules and Regulations Governing the Registration of Socialized
Housing Beneficiaries issued by the Department of Interior and Local Government
and the Housing and Urban Development Coordinating Council. They aver that even
if Rep. Act No. 7279 was applicable, the required notices under the law had already
been complied with. According to them, petitioners were already notified on March
7, 2003 of an impending demolition, when the writ of execution was served. 9
We find for respondents.

TAIESD

Under Section 19, 10 Rule 70 of the Revised Rules on Civil Procedure, a judgment on
a forcible entry and detainer action is immediately executory to avoid further
injustice to a lawful possessor, and the court's duty to order the execution is
practically ministerial. 11 The defendant may stay it only by (a) perfecting an
appeal; (b) filing a supersedeas bond; and (c) making a periodic deposit of the
rental or reasonable compensation for the use and occupancy of the property during
the pendency of the appeal. 12 Once the Regional Trial Court decides on the appeal,
such decision is immediately executory under Section 21, 13 Rule 70, without
prejudice to an appeal, via a petition for review, before the Court of Appeals or
Supreme Court. 14
However, petitioners failed to file a petition for review. Records show that
petitioners received on March 12, 2003 the RTC decision denying their motion for
reconsideration. They had until March 27, 2003 to file a petition for review before
the Court of Appeals. Instead, they filed a petition for certiorari and prohibition on
April 10, 2003. In said petition, which is still pending, petitioners contended that the
RTC committed grave abuse of discretion in affirming the MeTC decision and insisted
that the latter court had no jurisdiction over the complaint.
The remedy to obtain reversal or modification of the judgment on the merits in the
instant case is appeal. This holds true even if the error ascribed to the court
rendering the judgment is its lack of jurisdiction over the subject matter, or the
exercise of power in excess thereof, or grave abuse of discretion in the findings of
fact or of law set out in the decision. The existence and availability of the right of
appeal prohibits the resort to certiorari because one of the requirements for the
latter remedy is that "there should be no appeal." 15
Clearly, petitioners' petition for certiorari before the Court of Appeals was filed as a
substitute for the lost remedy of appeal. Certiorari is not and cannot be made a
substitute for an appeal where the latter remedy is available but was lost through
fault or negligence. 16 Thus, the filing of the petition for certiorari did not prevent
the RTC decision from becoming final and executory. 17 The RTC acted correctly

when it remanded the case to the court of origin in the order dated April 11, 2003.
18
Thus, we find that the MeTC cannot be faulted for issuing the assailed orders to
enforce the RTC judgment. Both orders were issued after the requisite notice and
hearing. Moreover, the Court of Appeals did not issue any writ of preliminary
injunction to stay the execution of the judgment. AcIaST
Petitioners tried to stay the execution of the order of demolition by filing a petition
for review with prayer for TRO before us. We earlier denied said prayer for TRO. We
also find petitioners' contention that the said orders violated Rep. Act No. 7279,
particularly Section 28(c), 19 totally without merit. Under the provision, eviction or
demolition may be allowed when there is a court order for eviction and demolition,
as in the case at bar. Moreover, nothing is shown on record that petitioners are
underprivileged and homeless citizens as defined in Section 3(t) of Rep. Act No.
7279. 20 The procedure for the execution of the eviction or demolition order under
Section 28(c) is, in our view, not applicable.
It also appears that the order of demolition had already been executed. Petitioners
had already vacated the area and private respondents now possess the properties
free from all occupants, as evidenced by the sheriff's turn-over of possession dated
May 19, 2003. Thus, the instant case before us has indeed become moot and
academic.
WHEREFORE, the petition for review assailing the Order dated April 30, 2003 and
the Special Order of Demolition dated May 9, 2003 of the Metropolitan Trial Court of
Paraaque City, Branch 77, is DENIED for mootness and lack of merit. AcSCaI
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.

G.R. No. 130866. September 16, 1998.]

ST. MARTIN FUNERAL HOME, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and BIENVENIDO ARICAYOS, respondents.
Isagani M. Jungco for petitioner.
Sebastinian Office of Legal Aid for private respondent.
SYNOPSIS
This is a case of an illegal dismissal filed by private respondent Bienvenido Aricayos
against St. Martin Funeral Home. The Labor Arbiter ruled in favor of St. Martin
Funeral Home declaring that there was no employer-employee relationship that
existed between the parties, and therefore, his office had no jurisdiction over the
case. On appeal, the National Labor Relations Commission rendered a resolution
setting aside the questioned decision and remanding the case to the labor arbiter
for immediate appropriate proceedings. After the motion for reconsideration of the
herein petitioner was denied, it filed before this Court the instant petition for
certiorari. cdasia
The Court, instead of going to the merits of the case, discussed the mode of judicial
review with respect to decisions of the National Labor Relations Commission
pursuant to the provisions of Presidential Decree No. 442 (Labor Code of the
Philippines) and Batas Pambansa Blg. 129 (The Judiciary Reorganization Act of
1980).
In remanding this case to the Court of Appeals, the Court ruled that while it does not
wish to intrude into the congressional sphere on the matter of the wisdom of a law,
it further observed that there is a growing number of labor cases being elevated to
the court which, not being a trier of facts, 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 the
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. aECTcA
SYLLABUS

1.
REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; REGLEMENTARY PERIOD;
SIXTY DAYS DESPITE LAPSE OF THE 10-DAY PERIOD FOR FINALITY OF THE DECISION
OF THE NLRC. . . . the remedy of the aggrieved party is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then
seasonably avail of the special civil action of certiorari under Rule 65, for which said
Rule has now fixed the reglementary period of sixty days from notice of the
decision. Curiously, although the 10-day period for finality of the decision of the
NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it
has been held that this Court may still take cognizance of the petition for certiorari
on jurisdictional and due process considerations if filed within the reglementary
period under Rule 65.
2.
ID.; ID.; ID.; MODE OF JUDICIAL REVIEW OVER DECISIONS OF THE NLRC.
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. SAEHaC
DECISION
REGALADO, J p:
The present petition for certiorari stemmed from a complaint for illegal dismissal
filed by herein private respondent before the National Labor Relations Commission
(NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private
respondent alleges that he started working as Operations Manager of petitioner St.
Martin Funeral Home on February 6, 1995. However, there was no contract of
employment executed between him and petitioner nor was his name included in the
semi-monthly payroll. On January 22, 1996, he was dismissed from his employment
for allegedly misappropriating P38,000.00 which was intended for payment by
petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1
Petitioner on the other hand claims that private respondent was not its employee
but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral
Home. Sometime in 1995, private respondent, who was formerly working as an
overseas contract worker, asked for financial assistance from the mother of Amelita.
Since then, as an indication of gratitude, private respondent voluntarily helped the
mother of Amelita in overseeing the business.
In January 1996, the mother of Amelita passed away, so the latter then took over
the management of the business. She then discovered that there were arrears in
the payment of taxes and other government fees, although the records purported to
show that the same were already paid. Amelita then made some changes in the
business operation and private respondent and his wife were no longer allowed to

participate in the management thereof. As a consequence, the latter filed a

complaint charging that petitioner had illegally terminated his employment. 2
Cdpr
Based on the position papers of the parties, the labor arbiter rendered a decision in
favor of petitioner on October 25, 1996 declaring that no employer-employee
relationship existed between the parties and, therefore, his office had no jurisdiction
over the case. 3
Not satisfied with the said decision, private respondent appealed to the NLRC
contending that the labor arbiter erred (1) in not giving credence to the evidence
submitted by him; (2) in holding that he worked as a "volunteer and not as an
employee of St. Martin Funeral Home from February 6, 1995 to January 23, 1996, or
a period of about one year; and (3) in ruling that there was no employer-employee
relationship between him and petitioner. 4
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned
decision and remanding the case to the labor arbiter for immediate appropriate
proceedings. 5 Petitioner then filed a motion for reconsideration which was denied
by the NLRC in its resolution dated August 18, 1997 for lack of merit, 6 hence the
present petition alleging that the NLRC committed grave abuse of discretion. 7
Before proceeding further into the merits of the case at bar, the Court feels that it is
now exigent and opportune to reexamine the functional validity and systemic
practicability of the mode of judicial review it has long adopted and still follows with
respect to decisions of the NLRC. The increasing number of labor disputes that find
their way to this Court and the legislative changes introduced over the years into
the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the
Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act
of 1980) now stridently call for and warrant a reassessment of that procedural
aspect.
We prefatorily delve into the legal history of the NLRC. It was first established in the
Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were
expressly declared to be appealable to the Secretary of Labor and, ultimately, to the
President of the Philippines.
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same
to take effect six months after its promulgation. 8 Created and regulated therein is
the present NLRC which was attached to the Department of Labor and Employment
for program and policy coordination only. 9 Initially, Article 302 (now, Article 223)
thereof also granted an aggrieved party the remedy of appeal from the decision of
the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said
provision and abolished such appeals. No appellate review has since then been
provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals
from the decision of the NLRC. 10 The present Section 223, as last amended by
Section 12 of R.A. No. 6715, instead merely provides that the Commission shall
decide all cases within twenty days from receipt of the answer of the appellee, and
that such decision shall be final and executory after ten calendar days from receipt
thereof by the parties.
When the issue was raised in an early case on the argument that this Court has no
jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of
Labor, since there is no legal provision for appellate review thereof, the Court
nevertheless rejected that thesis. It held that there is an underlying power of the
courts to scrutinize the acts of such agencies on questions of law and jurisdiction
even though no right of review is given by statute; that the purpose of judicial
review is to keep the administrative agency within its jurisdiction and protect the
substantial rights of the parties; and that it is that part of the checks and balances
which restricts the separation of powers and forestalls arbitrary and unjust
adjudications. 11
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court,
the remedy of the aggrieved party is to timely file a motion for reconsideration as a
precondition for any further or subsequent remedy, 12 and then seasonably avail of
the special civil action of certiorari under Rule 65, 13 for which said Rule has now
fixed the reglementary .period of sixty days from notice of the decision. Curiously,
although the 10-day period for finality of the decision of the NLRC may already have
lapsed as contemplated in Section 223 of the Labor Code, it has been held that this
Court may still take cognizance of the petition for certiorari on jurisdictional and due
process considerations if filed within the reglementary period under Rule 65. 14
Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129
originally provided as follows:
SEC. 9.

Jurisdiction. The Intermediate Appellate Court shall exercise:

(1)
Original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not
in aid of its appellate jurisdiction;
(2)
Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and
(3)
Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards, or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve
factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under
the Labor Code of the Philippines and by the Central Board of Assessment Appeals.
15
Subsequently, and as it presently reads, this provision was amended by R.A. No.
7902 effective March 18, 1995, to wit:
SEC. 9.

Jurisdiction. The Court of Appeals shall exercise:

(1)
Original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not
in aid of its appellate jurisdiction;
(2)
Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and
(3)
Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings
receive evidence and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings. Trials or hearings in
the Court of Appeals must be continuous and must be completed within, three (3)
months, unless extended by the Chief Justice."
It will readily be observed that, aside from the change in the name of the lower
appellate court, 16 the following amendments of the original provisions of Section 9
of B.P. No. 129 were effected by R.A. No. 7902, viz.:
1.
The last paragraph which excluded its application to the Labor Code of the
Philippines and the Central Board of Assessment Appeals was deleted and replaced
by a new paragraph granting the Court of Appeals limited powers to conduct trials
and hearings in cases within its jurisdiction.

2.
The reference to the Labor Code in that last paragraph was transposed to
paragraph (3) of the section, such that the original exclusionary clause therein now
provides "except those falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied)
3.
Contrarily, however, specifically added to and included among the quasijudicial agencies over which the Court of Appeals shall have exclusive appellate
jurisdiction are the Securities and Exchange Commission, the Social Security
Commission, the Employees Compensation Commission and the Civil Service
Commission.
This, then, brings us to a somewhat perplexing impass, both in point of purpose
and terminology. As earlier explained, our mode of judicial review over decisions of
the NLRC has for some time now been understood to be by a petition for certiorari
under Rule 65 of the Rules of Court. This is, of course, a special original action
limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction
and, in almost all cases that have been brought to us, grave abuse of discretion
amounting to lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of
the Regional Trial Courts and the quasi-judicial agencies generally or specifically
referred to therein except, among others, "those falling within the appellate
jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, . . ." This would
necessarily contradict what has been ruled and said all along that appeal does not
lie from decisions of the NLRC 17 Yet, under such excepting clause literally
construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but
to this Court by necessary implication.
The same exceptive clause further confuses the situation by declaring that the
Court of Appeals has no appellate jurisdiction over decisions falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of B. P. No. 129, and those specified cases in Section 17 of the Judiciary
Act of 1948. These cases can, of course, be properly excluded from the exclusive
appellate jurisdiction of the Court of Appeals. However, because of the
aforementioned amendment by transposition, also supposedly excluded are cases
falling within the appellate jurisdiction of the Supreme Court in accordance with the
Labor Code. This is illogical and impracticable, and Congress could not have
intended that procedural gaffe, since there are no cases in the Labor Code the
decisions, resolutions, orders or awards wherein are within the appellate jurisdiction
of the Supreme Court or of any other court for that matter. LibLex

A review of the legislative records on the antecedents of R A. No. 7902 persuades us

that there may have been an oversight in the course of the deliberations on the said
Act or an imprecision in the terminology used therein. In fine, Congress did intend to
provide for judicial review of the adjudications of the NLRC in labor cases by the
Supreme Court, but there was an inaccuracy in the term used for the intended
mode of review. This conclusion which we have reluctantly but prudently arrived at
has been drawn from the considerations extant in the records of Congress, more
particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No.
1495/H. No. 10452. 18
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship
speech 19 from which we reproduce the following excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its jurisdiction and
powers. Among others, its appellate jurisdiction was expanded to cover not only
final judgment of Regional Trial Courts, but also all final judgment(s), decisions,
resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards
and commissions, except those falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129
and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of
the Judiciary Act of 1948.
Mr. President, the purpose of the law is to ease the workload of the Supreme Court
by the transfer of some of its burden of review of factual issues to the Court of
Appeals. However, whatever benefits that can be derived from the expansion of the
appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of
Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the
"decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals."
Among the highest number of cases that are brought up to the Supreme Court are
labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally, extends the coverage of appellate review
of the Court of Appeals in the decision(s) of the Securities and Exchange
Commission, the Social Security Commission, and the Employees Compensation
Commission to reduce the number of cases elevated to the Supreme Court.
(Emphases and corrections ours)
xxx

xxx

xxx

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides
the ideal situation of drastically reducing the workload of the Supreme Court without
depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in

1986 in the Annual Report of the Supreme Court:
. . . Amendatory legislation is suggested so as to relieve the Supreme Court of the
burden of reviewing these cases which present no important issues involved beyond
the particular fact and the parties involved, so that the Supreme Court may wholly
devote its time to cases of public interest in the discharge of its mandated task as
the guardian of the Constitution and the guarantor of the people's basic rights and
additional task expressly vested on it now "to determine whether or not there has
been a grave abuse of discretion amounting to lack of jurisdiction on the part of any
branch or instrumentality of the Government."
We used to have 500,000 cases pending all over the land, Mr. President. It has been
cut down to 300,000 cases some five years ago. I understand we are now back to
400,000 cases. Unless we distribute the work of the appellate courts, we shall
continue to mount and add to the number of cases pending.
In view of the foregoing, Mr. President, and by virtue of all the reasons we have
submitted, the Committee on Justice and Human Rights requests the support and
collegial approval of our Chamber.
xxx

xxx

xxx

Surprisingly, however, in a subsequent session, the following Committee

Amendment was introduced by the said sponsor and the following proceedings
transpired: 20
Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with
the Constitution," add the phrase " THE LABOR CODE OF THE PHILIPPINES UNDER
P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising
from the Labor Code will still be appealable to the Supreme Court.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.
Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was
also discussed with our Colleagues in the House of Representatives and as we
understand it, as approved in the House, this was also deleted, Mr. President.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.
Senator Roco. There are no further Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved. (Emphasis supplied)
xxx

xxx

xxx

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was
passed on second reading and being a certified bill, its unanimous approval on third
reading followed. 21 The Conference Committee Report on Senate Bill No. 1495 and
House Bill No. 10452, having theretofore been approved by the House of
Representatives, the same was likewise approved by the Senate on February 20,
1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court
earlier discussed.
The Court is, therefore, of the considered opinion that ever since appeals from the
NLRC to the Supreme Court were eliminated, the legislative intendment was that
the special civil action of certiorari was and still is the proper vehicle for judicial
review of decisions of the NLRC. The use of the word "appeal" in relation thereto and
in the instances we have noted could have been a lapsus plumae because appeals
by certiorari and the original action for certiorari are both modes of judicial review
addressed to the appellate courts. The important distinction between them,
however, and with which the Court is particularly concerned here is that the special
civil action of certiorari is within the concurrent original jurisdiction of this Court and
the Court of Appeals; 23 whereas to indulge in the assumption that appeals by
certiorari to the Supreme Court are allowed would not subserve, but would subvert,
the intention of Congress as expressed in the sponsorship speech on Senate Bill No.
1495.
Incidentally, it was noted by the sponsor therein that some quarters were of the
opinion that recourse from the NLRC to the Court of Appeals as an initial step in the
process of judicial review would be circuitous and would prolong the proceedings.
On the contrary, as he commendably and realistically emphasized, that procedure
would be advantageous to the aggrieved party on this reasoning:
On the other hand, Mr. President, to allow these cases to be appealed to the Court
of Appeals would give litigants the advantage to have all the evidence on record be
reexamined and reweighed after which the findings of facts and conclusions of said
bodies are correspondingly affirmed, modified or reversed.
Under such guarantee, the Supreme Court can then apply strictly the axiom that
factual findings of the Court of Appeals are final and may not be reversed on appeal
to the Supreme Court. A perusal of the records will reveal appeals which are factual
in nature and may, therefore, be dismissed outright by minute resolutions. 24
While we do not wish to intrude into the Congressional sphere on the matter of the
wisdom of a law, on 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.
Apropos to this directive that resort to the higher courts should be made in
accordance with their hierarchical order, this pronouncement in Santiago vs.
Vasquez, et al. 25 should be taken into account:
One final observation. We discern in the proceedings in this case a propensity on
the part of petitioner, and, for that matter, the same may be said of a number of
litigants who initiate recourses before us, to disregard the hierarchy of courts in our
judicial system by seeking relief directly from this Court despite the fact that the
same is available in the lower courts in the exercise of their original or concurrent
jurisdiction, or is even mandated by law to be sought therein. This practice must be
stopped, not only because of the imposition upon the precious time of this Court but
also because of the inevitable and resultant delay, intended or otherwise, in the
adjudication of the case which often has to be remanded or referred to the lower
court as the proper forum under the rules of procedure, or as better equipped to
resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the
judicial policy that this Court will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the
exercise of our primary jurisdiction.
WHEREFORE, under the foregoing premises, the instant petition for certiorari is
hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to
the Court of Appeals for appropriate action and disposition consistent with the views
and ruling herein set forth, without pronouncement as to costs. cdasia
SO ORDERED.
Narvasa, C .J ., Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Panganiban, Martinez, Quisumbing and Purisima, JJ ., concur.

[G.R. No. 70895. May 30, 1986.]

HABALUYAS ENTERPRISES, INC. and PEDRO HABALUYAS, petitioners, vs. JUDGE
MAXIMO M. JAPSON, Manila Regional Trial Court, Branch 36; SHUGO NODA & CO.,
LTD., and SHUYA NODA, respondents.
Norberto J. Quisumbing for respondents.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; JUDICIARY REORGANIZATION ACT (BATAS
PAMBANSA BLG. 129); PERIOD OF APPEAL, REDUCED TO 15 DAYS. Section 39 of
the Judiciary Reorganization Act, Batas Pambansa Blg. 129, reduced the period for
appeal from final orders or judgments of the Regional Trial Courts (formerly Courts
of First Instance) from thirty (30) to fifteen (15) days and provides a uniform period
of fifteen days for appeal from final orders, resolutions, awards, judgments, or
decisions of any court counted from notice thereof, except in habeas corpus cases
where the period for appeal remains at forty-eight (48) hours.
2.
ID.; ID.; ID.; 30 DAY PERIOD OF APPEAL RETAINED IN SPECIAL PROCEEDINGS
AND IN OTHER CASES WHEREIN MULTIPLE APPEALS ARE ALLOWED; RATIONALE.
To expedite appeals, only a notice of appeal is required and a record on appeal is no
longer required except in appeals in special proceedings under Rule 109 of the Rules
of Court and in other cases wherein multiple appeals are allowed. Section 19 of the
Interim Rules provides that in these exceptional cases, the period for appeal is thirty
(30) days since a record on appeal is required.
3.
ID.; ID.; ID.; FILING OF MOTION FOR EXTENSION OF TIME TO FILE NEW TRIAL
OR RECONSIDERATION NOT EXPRESSLY PROHIBITED OR ALLOWED BY LAW. The
law and the Rules of Court do not expressly prohibit the filing of a motion for
extension of time to file a motion for reconsideration of a final order or judgment. In
the case of Gibbs vs. Court of First Instance (80 Phil. 160), the Court dismissed the
petition for certiorari and ruled that the failure of defendant's attorney to file the
petition to set aside the judgment within the reglementary period was due to
excusable neglect, and, consequently, the record on appeal was allowed. The Court
did not rule that the motion for extension of time to file a motion for new trial or
reconsideration could not be granted. In the case of Roque vs. Gunigundo
(Administrative Case No. 1684, March 30, 1979, 89 SCRA 178), a division of the
Court cited the Gibbs decision to support a statement that a motion to extend the
reglementary period for filing the motion for reconsideration is not authorized or is
not in order. The Intermediate Appellate Court is sharply divided on this issue.
Appeals have been dismissed on the basis of the original decision in this case. After
considering the able arguments of counsels for petitioners and respondents, the
Court resolved that the interest of justice would be better served if the ruling in the

original decision were applied prospectively from the time herein stated. The reason
is that it would be unfair to deprive parties of their right to appeal simply because
they availed themselves of a procedure which was not expressly prohibited or
allowed by the law or the Rules. On the other hand, a motion for new trial or
reconsideration is not a pre-requisite to an appeal, a petition for review or a petition
for review on certiorari; and since the purpose of the amendments above referred to
is to expedite the final disposition of cases, a strict but prospective application of
the said ruling is in order.
4.
ID.; ID.; ID.; GUIDELINES. For the guidance of Bench and Bar, the Court
restates and clarifies the rules on this point, as follows: 1) Beginning one month
after the promulgation of this Resolution, the rule shall be strictly enforced that no
motion for extension of time to file a motion for new trial or reconsideration may be
filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and
the Intermediate Appellate Court. Such a motion may be filed only in cases pending
with the Supreme Court as the court of last resort, which may in its sound discretion
either grant or deny the extension requested. 2) In appeals in special proceedings
under Rule 109 of the Rules of Court and in other cases wherein multiple appeals
are allowed, a motion for extension of time to file the record on appeal may be filed
within the reglementary period of thirty (30) days. (Moya vs. Barton, 76 Phil. 831;
Heirs of Nantes vs. Court of Appeals, July 25, 1983, 123 SCRA 753.) If the court
denies the motion for extension, the appeal must be taken within the original period
(Bello vs. Fernando, January 30, 1962, 4 SCRA 135), inasmuch as such a motion
does not suspend the period for appeal (Reyes vs. Sta. Maria, November 20, 1972,
48 SCRA 1). The trial court may grant said motion after the expiration of the period
for appeal provided it was filed within the original period. (Valero vs. Court of
Appeals, June 28, 1973, 51 SCRA 467, Berkenkotter vs. Court of Appeals, September
28, 1973, 53 SCRA 228). All appeals heretofore timely taken, after extensions of
time were granted for the filing of a motion for new trial or reconsideration, shall be
allowed and determined on the merits.
RESOLUTION
FERIA, J p:
Respondents have filed a motion for reconsideration of the Decision of the Second
Division of the Court promulgated on August 5, 1985 which granted the petition for
certiorari and prohibition and set aside the order of respondent Judge granting
private respondents' motion for new trial. cdphil
The issue in this case is whether the fifteen-day period within which a party may file
a motion for reconsideration of a final order or ruling of the Regional Trial Court may
be extended.
Section 39 of The Judiciary Reorganization Act, Batas Pambansa Blg. 129, reduced
the period for appeal from final orders or judgments of the Regional Trial Courts

(formerly Courts of First Instance) from thirty (30) to fifteen (15) days and provides
a uniform period of fifteen days for appeal from final orders, resolutions, awards,
judgments, or decisions of any court counted from notice thereof, except in habeas
corpus cases where the period for appeal remains at forty-eight (48) hours. To
expedite appeals, only a notice of appeal is required and a record on appeal is no
longer required except in appeals in special proceedings under Rule 109 of the Rules
of Court and in other cases wherein multiple appeals are allowed. Section 19 of the
Interim Rules provides that in these exceptional cases, the period for appeal is thirty
(30) days since a record on appeal is required. Moreover, Section 18 of the Interim
Rules provides that no appeal bond shall be required for an appeal, and Section 4
thereof disallows a second motion for reconsideration of a final order or judgment.
All these amendments are designed, as the decision sought to be reconsidered
rightly states, to avoid the procedural delays which plagued the administration of
justice under the Rules of Court which are intended to assist the parties in obtaining
a just, speedy and inexpensive administration of justice. LexLib
However, the law and the Rules of Court do not expressly prohibit the filing of a
motion for extension of time to file a motion for reconsideration of a final order or
judgment.
In the case of Gibbs vs. Court of First Instance (80 Phil. 160), the Court dismissed
the petition for certiorari and ruled that the failure of defendant's attorney to file the
petition to set aside the judgment within the reglementary period was due to
excusable neglect, and, consequently, the record on appeal was allowed. The Court
did not rule that the motion for extension of time to file a motion for new trial or
reconsideration could not be granted.
In the case of Roque vs. Gunigundo (Administrative Case No. 1684, March 30, 1979,
89 SCRA 178), a division of the Court cited the Gibbs decision to support a
statement that a motion to extend the reglementary period for filing the motion for
reconsideration is not authorized or is not in order.
The Intermediate Appellate Court is sharply divided on this issue. Appeals have
been dismissed on the basis of the original decision in this case.
After considering the able arguments of counsels for petitioners and respondents,
the Court resolved that the interest of justice would be better served if the ruling in
the original decision were applied prospectively from the time herein stated. The
reason is that it would be unfair to deprive parties of their right to appeal simply
because they availed themselves of a procedure which was not expressly prohibited
or allowed by the law or the Rules. On the other hand, a motion for new trial or
reconsideration is not a pre-requisite to an appeal, a petition for review or a petition
for review on certiorari, and since the purpose of the amendments above referred to
is to expedite the final disposition of cases, a strict but prospective application of

the said ruling is in order. Hence, for the guidance of Bench and Bar, the Court
restates and clarifies the rules on this point, as follows:
1.)
Beginning one month after the promulgation of this Resolution, the rule shall
be strictly enforced that no motion for extension of time to file a motion for new trial
or reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the
Regional Trial Courts, and the Intermediate Appellate Court. Such a motion may be
filed only in cases pending with the Supreme Court as the court of last resort, which
may in its sound discretion either grant or deny the extension requested.
2.)
In appeals in special proceedings under Rule 109 of the Rules of Court and in
other cases wherein multiple appeals are allowed, a motion for extension of time to
file the record on appeal may be filed within the reglementary period of thirty (30)
days. (Moya vs. Barton, 76 Phil. 831; Heirs of Nantes vs. Court of Appeals, July 25,
1983, 123 SCRA 753.) If the court denies the motion for extension, the appeal must
be taken within the original period (Bello vs. Fernando, January 30, 1962, 4 SCRA
135), inasmuch as such a motion does not suspend the period for appeal (Reyes vs.
Sta. Maria, November 20, 1972, 48 SCRA 1). The trial court may grant said motion
after the expiration of the period for appeal provided it was filed within the original
period. (Valero vs. Court of Appeals, June 28, 1973, 51 SCRA 467; Berkenkotter vs.
Court of Appeals, September 28, 1973, 53 SCRA 228).
All appeals heretofore timely taken, after extensions of time were granted for the
filing of a motion for new trial or reconsideration, shall be allowed and determined
on the merits. llcd
WHEREFORE, the motion for reconsideration of, and to set aside, the decision of
August 5, 1985 is granted and the petition is dismissed. No costs.
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr.,
Cruz and Paras, JJ., concur.
Abad Santos, J., no part.

NYK INTERNATIONAL KNITWEAR CORPORATION PHILIPPINES and/or CATHY NG,

petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and VIRGINIA M.
PUBLICO, respondents.
Eufemio Law Offices for petitioners.

Carlo A. Domingo for private respondents.

SYNOPSIS
Private respondent Publico was sewer of petitioner corporation. On May 7, 1997,
Publico went home early despite refusal of petitioner because she was not feeling
well. The next day, she notified petitioner that she was still recovering from her
sickness. On May 9, 1997, however, Publico was refused entry for work and later
informed of her dismissal. The Labor Arbiter and the NLRC both ruled the dismissal
illegal. A special civil action for certiorari was then filed in the Court of Appeals by
petitioner, but the same was dismissed outright because it was not accompanied by
a certified true copy of the assailed NLRC decision, but by a certified xerox copy of
the assailed NLRC decision. DcCHTa
The disputed document although stamped as "certified true copy" is not an
authenticated original of such certified true copy, but only a xerox copy thereof.
Hence, no error may be ascribed to the Court of Appeals for dismissing the petition
outright pursuant to Adm. Circular No. 3-96. At any rate, the Court found no grave
abuse of discretion committed by the NLRC in its assailed decision.
SYLLABUS
1.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; MUST BE
ACCOMPANIED BY CERTIFIED TRUE COPY OF JUDGMENT OR ORDER SUBJECT
THEREOF. Section 1 of Rule 65, 1997 Rules of Civil Procedure, requires that the
petition shall be accompanied by a certified true copy of the judgment or order
subject thereof, together with copies of all pleadings and documents relevant and
pertinent thereto. The precursor of the Revised Rules of Civil Procedure,
Administrative Circular No. 3-96, which took effect on June 1, 1996, instructs us
what a "certified true copy" is: 1. . . . The "certified true copy" thereof shall be such
other copy furnished to a party at his instance or in his behalf, duly authenticated
by the authorized officers or representatives of the issuing entity as hereinbefore
specified. . . 3. The certified true copy must further comply with all the regulations
therefor of the issuing entity and it is the authenticated original of such certified
true copy, and not a mere xerox copy thereof, which shall be utilized as an annex to
the petition or other initiatory pleadings. . . . Applying the preceding guidepost in
the present case, the disputed document although stamped as "certified true copy"
is not an authenticated original of such certified true copy, but only a xerox copy
thereof, in contravention of paragraph 3 of the above-quoted guidelines. Hence, no
error may be ascribed to the Court of Appeals in dismissing the petition for certiorari
outright pursuant to paragraph 5 of Administrative Circular No. 3-96, which
provides: 5. It shall be the duty and responsibility of the party using the documents
required by Paragraph (3) of Circular No. 1-88 to verify and ensure compliance with
all the requirements therefor as detailed in the preceding paragraphs. Failure to do
so shall result in the rejection of such annexes and the dismissal of the case.

Subsequent compliance shall not warrant any reconsideration unless the court is
fully satisfied that the non-compliance was not in any way attributable to the party,
despite due diligence on his part, and that there are highly justifiable and
compelling reasons for the court to make such other disposition as it may deem just
and equitable. Petitioners are hereby reminded that the right to file a special civil
action of certiorari is neither a natural right nor a part of due process. A writ of
certiorari is a prerogative writ, never demandable as a matter of right, never issued
except in the exercise of judicial discretion. Hence, he who seeks a writ of certiorari
must apply for it only in the manner and strictly in accordance with the provisions of
the law and the Rules. TcDIaA
2.
ID.; EVIDENCE; FINDINGS OF THE NLRC, RESPECTED. Petitioners raise
factual questions which are improper in a petition for review on certiorari. Findings
of facts of the NLRC, particularly in a case where the NLRC and the Labor Arbiter are
in agreement, are deemed binding and conclusive upon this Court. Both bodies
being deemed to have acquired expertise in matters within their jurisdictions, when
sufficiently supported by evidence on record, are accorded respect if not finality,
and are considered binding on this Court. As long as their decisions are devoid of
any unfairness or arbitrariness in the process of their deduction from the evidence
proffered by the parties, all that is left is for the Court to stamp its affirmation and
declare its finality.
3.
LABOR LAW AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;
ILLEGAL DISMISSAL; SOLIDARY LIABILITY OF CORPORATION AND ITS OFFICERS.
Anent petitioners' assertion that they cannot be solidarily liable in this case as there
was no malice or bad faith on their part has no leg to stand on. What the Court finds
apropos is our disquisition in A.C. Ransom Labor Union-CCLU v. NLRC, which held
that since a corporation is an artificial person, it must have an officer who can be
presumed to be the employer, being the "person acting in the interest of the
employer." In other words the corporation, in the technical sense only, is the
employer. In a subsequent case, we ordered the corporate officers of the employer
corporation to pay jointly and solidarily the private respondents' monetary award.
More recently, a corporation and its president were directed by this Court to jointly
and severally reinstate the illegally dismissed employees to their former positions
and to pay the monetary awards. In this case Cathy Ng, admittedly, is the manager
of NYK. Conformably with our ruling in A. C. Ransom, she falls within the meaning of
an "employer" as contemplated by the Labor Code, who may be held jointly and
severally liable for the obligations of the corporation to its dismissed employees.
Pursuant to prevailing jurisprudence, Cathy Ng, in her capacity as manager and
responsible officer of NYK, cannot be exonerated from her joint and several liability
in the payment of monetary award to private respondent. TEHIaA
DECISION
QUISUMBING, J p:

In this petition for review, petitioners NYK International Knitwear Corporation

Philippines (henceforth NYK, for brevity) and its manager, Cathy Ng, assail the
resolution 1 dated September 15, 2000 of the Court of Appeals in CA-G.R. SP No.
60542, which dismissed their petition for certiorari for non-compliance with Section
1, Rule 65 of the 1997 Rules of Civil Procedure. Also assailed is the appellate court's
resolution 2 of December 5, 2000, which denied the motion for reconsideration.
ETDHSa
The facts, as gleaned from the findings of the Labor Arbiter as affirmed by the
National Labor Relations Commission (NLRC), show that:
On February 8, 1995, herein petitioner NYK hired respondent Virginia Publico as a
sewer. Under the terms and conditions of her employment, Publico was paid on a
piece-rate basis, but required to work from 8:00 A.M. to 12:00 midnight. On the
average, she earned P185.00 daily.
At about 10:00 P.M. of May 7, 1997, Publico requested that she be allowed to leave
the work place early, as she was not feeling well due to a bout of influenza.
Permission was refused but nonetheless, Publico went home.
The following day, Publico called up her employer and notified management that
she was still recovering from her ailment.
On May 9, 1997, Publico reported for work. To her mortification and surprise,
however, the security guard prevented her from entering the NYK premises,
allegedly on management's order. She begged to be allowed inside, but the guard
remained adamant. It was only when Publico declared that she would just complete
the unfinished work she had left on May 7 that the guard let her in.
Once inside the factory, Publico requested to see the owner, one Stephen Ng. Her
request was declined. She was instead asked to come back the following day.
On May 10, 1997, Publico returned to NYK as instructed. After waiting for three and
half (3 1/2) hours, she was finally able to see Stephen Ng. When she inquired why
she was barred from reporting for work, Mr. Ng told her she was dismissed due to
her refusal to render overtime service.
Aggrieved, private respondent filed a complaint for illegal dismissal against
petitioner corporation and its manager, petitioner Cathy Ng, docketed as NLRC NCR
Case No. 00-06-03925-97.
Before the Labor Arbiter, petitioners predictably had a different version of the story.
Allegedly, they took the pains to verify why Publico did not report for work on May 7,
1997 and found out that her husband did not allow her to work at night. As night
work is a must in their line of business, particularly when there are rush orders,
petitioners claimed that given Publico's failure to render overtime work, they were
left with no other recourse but to fire her. cSIACD

On March 19, 1998, the Labor Arbiter held Publico's dismissal to be illegal, disposing
as follows:
WHEREFORE, the respondents are hereby ordered to reinstate the complainant to
her former position with full backwages from the date her salary was withheld until
she is actually reinstated, which amounted to P50,168.30 . . . The respondents are,
likewise, assessed the sum of P5,016.83 representing 10% of the amount awarded
as attorney's fees. The rest of the claims are dismissed for lack of merit.
SO ORDERED. 3
On appeal, the NLRC, in a resolution 4 dated May 17, 2000, affirmed the decision of
the Labor Arbiter in toto.
In due time, petitioners impugned the NLRC decision by way of a special civil action
of certiorari filed before the Court of Appeals, docketed as CA-G.R. SP No. 60542.
Petitioners ascribed grave abuse of discretion amounting to lack or excess of
jurisdiction to public respondent NLRC for affirming the ruling of the Labor Arbiter.
In its resolution of September 15, 2000, the appellate court dismissed the petition
outright. The Court of Appeals pointed out that there was non-compliance with
Section 1 of Rule 65 of the 1997 Rules of Civil Procedure as the petition was merely
accompanied by a certified xerox copy of the assailed NLRC decision, instead of a
certified true copy thereof as required by the Rules of Court. 5 Furthermore,
petitioners failed to attach the other pleadings and documents pertinent and
material to their petition, such as the parties' position papers, their evidence and
the motion for reconsideration in contravention of the said rule. 6
Petitioners duly moved for reconsideration, explaining that they had requested for a
certified true copy of the NLRC's decision but since the original NLRC decision was
printed on onionskin was not legible, the NLRC itself photocopied the resolution and
certified it afterwards. As proof of payment of petitioners' request for a certified true
copy of the NLRC decision, petitioners attached a copy of the official receipts issued
by the NLRC, which described the nature of the entry as "CERT. TRUE COPY." 7
Petitioners, likewise, appended in their motion copies of pertinent pleadings and
documents not previously attached in their petition. cSaATC
On December 5, 2000, the appellate court denied petitioners' motion for
reconsideration. 8
Hence this petition for review.
Before us, petitioners submit the following issues for our resolution:
I

WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GIVEN DUE COURSE TO
THE PETITION FOR CERTIORARI.
II
WHETHER OR NOT THERE EXISTS EVIDENCE ON RECORD TO WARRANT THE RULING
THAT COMPLAINANT WAS ILLEGALLY DISMISSED, AND COROLLARY THERETO,
WHETHER OR NOT THERE IS LEGAL JUSTIFICATION TO AWARD BACKWAGES AND
ORDER REINSTATEMENT.
III
WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON THE PART OF THE
PUBLIC RESPONDENT NLRC SO AS TO JUSTIFY A REVERSAL OF ITS RESOLUTIONS
DATED MAY 17, 2000 AND JUNE 30, 2000. 9
Only two issues need resolution, one having to do with adjective law and the other
with substantial law, namely:
(1)
Did the Court of Appeals commit a reversible error in dismissing CA-G.R. SP
No. 60542 on purely technical grounds, i.e., that the attached copy of the NLRC
decision is a mere photocopy of the original decision; and
(2)
Did the Court of Appeals err in refusing to rule on the correctness of the
NLRC's findings that private respondent was illegally dismissed?
On the first issue, petitioners, contend that they have substantially complied with
the requirements of Section 1, Rule 65, hence, in the interests of justice and equity,
the Court of Appeals should have given due course to their special civil action for
certiorari.
Private respondent, on the other hand, maintains that petitioners' wanton disregard
of the Rule warrant the outright dismissal of their petition. She adds that the
present petition raises factual issues that the Court cannot pass upon at the first
instance. EcDTIH
Section 1 of Rule 65, 10 1997 Rules of Civil Procedure, requires that the petition
shall be accompanied by a certified true copy of the judgment or order subject
thereof, together with copies of all pleadings and documents relevant and pertinent
thereto. The precursor of the Revised Rules of Civil Procedure, Administrative
Circular No. 3-96, which took effect on June 1, 1996, instructs us what a "certified
true copy" is:
1.
. . . The "certified true copy" thereof shall be such other copy furnished to a
party at his instance or in his behalf, duly authenticated by the authorized officers
or representatives of the issuing entity as hereinbefore specified.
xxx

xxx

xxx

3.
The certified true copy must further comply with all the regulations therefor
of the issuing entity and it is the authenticated original of such certified true copy,
and not a mere xerox copy hereof, which shall be utilized as an annex to the petition
or other initiatory pleading. (Emphasis supplied.)
xxx

xxx

xxx

Applying the preceding guidepost in the present case, the disputed document
although stamped as "certified true copy" is not an authenticated original of such
certified true copy, but only a xerox copy thereof, in contravention of paragraph 3 of
the above-quoted guidelines. Hence, no error may be ascribed to the Court of
Appeals in dismissing the petition for certiorari outright pursuant to paragraph 5 of
Administrative Circular No. 3-96, which provides:
5.
It shall be the duty and responsibility of the party using the documents
required by Paragraph (3) of Circular No. 1-88 to verify and ensure compliance with
all the requirements therefor as detailed in the preceding paragraphs. Failure to do
so shall result in the rejection of such annexes and the dismissal of the case.
Subsequent compliance shall not warrant any reconsideration unless the court is
fully satisfied that the non-compliance was not in any way attributable to the party,
despite due diligence on his part, and that there are highly justifiable and
compelling reasons for the court to make such other disposition as it may deem just
and equitable. (Emphasis supplied.)
The members of this Court are not unmindful that in exceptional cases and for
compelling reasons, we have disregarded similar procedural defects in order to
correct a patent injustice made. However, petitioners here have not shown any
compelling reason for us to relax the rule. Petitioners are hereby reminded that the
right to file a special civil action of certiorari is neither a natural right nor a part of
due process. A writ of certiorari is a prerogative writ, never demandable as a matter
of right, never issued except in the exercise of judicial discretion. 11 Hence, he who
seeks a writ of certiorari must apply for it only in the manner and strictly in
accordance with the provisions of the law and the Rules. cADEIa
To avoid further delay in resolving the present controversy, we now come to the
second issue. Petitioners contend that private respondent's refusal to render night
work is tantamount to abandonment of duties which constitutes a just ground for
termination of service. They aver that the Labor Arbiter gravely erred in awarding
backwages to private respondent, as there was no illegal dismissal. Petitioners
allege that management did not terminate her services, but in fact asked her to
return to work during the preliminary conferences. Hence, it would be the height of
injustice to award backwages for work, which was never rendered through private
respondent's own choice. Petitioners add that they cannot be held solidarily liable in
this case as there was neither malice nor bad faith.

Petitioners' arguments fail to persuade us. Petitioners raise factual questions which
are improper in a petition for review on certiorari. Findings of facts of the NLRC,
particularly in a case where the NLRC and the Labor Arbiter are in agreement, are
deemed binding and conclusive upon this Court. 12
Hence, petitioners' bare allegations of abandonment cannot stand the unswerving
conclusion by both quasi-judicial agencies below that private respondent was
unlawfully dismissed. We find no reason to deviate from the consistent findings of
the Labor Arbiter and the NLRC that there was no basis to find that Virginia
abandoned her work. Indeed, factual findings of the NLRC affirming those of the
Labor Arbiter, both bodies being deemed to have acquired expertise in matters
within their jurisdictions, when sufficiently supported by evidence on record, are
accorded respect if not finality, and are considered binding on this Court. 13 As long
as their decisions are devoid of any unfairness or arbitrariness in the process of
their deduction from the evidence proffered by the parties, all that is left is for the
Court to stamp its affirmation and declare its finality. No reversible error may thus
be laid at the door of the Court of Appeals when it refused to rule that the NLRC
committed a grave abuse of discretion amounting to want or excess of jurisdiction
in holding that private respondent was illegally dismissed.
Anent petitioners' assertion that they cannot be solidarily liable in this case as there
was no malice or bad faith on their part has no leg to stand on. What the Court finds
apropos is our disquisition in A.C. Ransom Labor Union-CCLU v. NLRC, 14 which held
that since a corporation is an artificial person, it must have an officer who can be
presumed to be the employer, being the "person acting in the interest of the
employer." In other words the corporation, in the technical sense only, is the
employer. In a subsequent case, we ordered the corporate officers of the employer
corporation to pay jointly and solidarily the private respondents' monetary award.
15 More recently, a corporation and its president were directed by this Court to
jointly and severally reinstate the illegally dismissed employees to their former
positions and to pay the monetary awards. 16
In this case Cathy Ng, admittedly, is the manager of NYK. Conformably with our
ruling in A. C. Ransom, she falls within the meaning of an "employer" as
contemplated by the Labor Code, 17 who may be held jointly and severally liable for
the obligations of the corporation to its dismissed employees. Pursuant to prevailing
jurisprudence, Cathy Ng, in her capacity as manager and responsible officer of NYK,
cannot be exonerated from her joint and several liability in the payment of
monetary award to private respondent. DaIACS
WHEREFORE, the instant petition is DENIED. The assailed resolutions of the Court of
Appeals dated September 15, 2000 and December 5, 2000, are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.

Bellosillo, Mendoza, Austria-Martinez and Callejo, Sr., JJ., concur.

[G.R. No. 147082. January 28, 2008.]

HEIRS OF MAURA SO, namely, YAN LAM LIM, JIMMY SO LIM, and FERDINAND SO LIM,
petitioners, vs. LUCILA JOMOC OBLIOSCA, ELVIRA JOMOC GARDINAB, and HEIRS OF
ABUNDIA JOMOC BALALA, namely, ROSITA BALALA ACENAS, EVANGELINE BALALA
BAACLO, OLIVER JOMOC BALALA, and PERLA BALALA CONDESA, respondents.
DECISION
NACHURA, J p:
This is a petition for review on certiorari of the Decision 1 of the Court of Appeals
(CA) dated October 18, 2000, and Resolution dated January 11, 2001, denying the
motion for reconsideration of the said decision. The assailed decision declared that
a petition for annulment of judgment cannot be availed of when the petitioner had
already filed an appeal under Rule 45 of the Rules of Court. IcDCaT
The antecedents of the case are as follows:
Pantaleon Jomoc was the owner of a parcel of land with an area of 496 square
meters, covered by Transfer Certificate of Title (TCT) No. T-19648, and located at
Cogon District, Cagayan de Oro. Upon his death, the property was inherited by his
wife, brothers, sisters, nephews and nieces (collectively referred to as the Jomoc
heirs). The respondents, Lucila Jomoc Obliosca and Abundia Jomoc Balala, sisters of
the deceased, and Elvira Jomoc, a niece, were among those who inherited the
property.
In February 1979, the Jomoc heirs executed a Deed of Extrajudicial Settlement with
Absolute Sale of Registered Land 2 in favor of petitioner, Maura So, over the
property for P300,000.00. However, the three respondents and Maura So failed to
affix their signatures on this document. Moreover, the document was not notarized.
Nonetheless, petitioner made a partial payment of P49,000.00 thereon.
Thereafter, petitioner demanded the execution of a final deed of conveyance but
the Jomoc heirs ignored the demand. On February 24, 1983, petitioner filed a
Complaint 3 for specific performance against the Jomoc heirs to compel them to
execute and deliver the proper registerable deed of sale over the lot. The Jomoc

heirs, except for the respondents, were impleaded as defendants. The case was
docketed as Civil Case No. 8983.
On February 28, 1983, the Jomoc heirs executed again a Deed of Extrajudicial
Settlement with Absolute Sale of Registered Land 4 in favor of the spouses Lim
Liong Kang and Lim Pue King for P200,000.00. The spouses Lim intervened as
defendants in Civil Case No. 8983. CEDHTa
On February 12, 1988, the trial court decided the case in favor of the petitioner. On
appeal, the CA affirmed the decision with the modification that the award of
damages, attorney's fees and expenses of litigation was deleted. The defendant
heirs and the spouses Lim filed separate petitions for review with the Supreme
Court, docketed as G.R. Nos. 92871 and 92860, which petitions were later
consolidated.
On August 2, 1991, the Court rendered a Decision 5 in these consolidated cases
upholding petitioner's better right over the property. 6 The decision became final
and executory on November 25, 1991.
On February 10, 1992, petitioner filed a motion for execution of the said decision.
The respondents opposed the motion on the ground that they did not participate in
the execution of the Deed of Extrajudicial Settlement with Absolute Sale of
Registered Land and they were not parties to the case. Despite the opposition, the
trial court granted the motion for execution. The respondents filed a motion for
reconsideration but the trial court denied the same.
On July 22, 1992, the trial court issued an Order granting the motion for execution
and divesting all the Jomoc heirs of their titles over the property. 7 Accordingly, the
Register of Deeds cancelled the title of the Jomoc heirs and issued TCT No. T-68370
in the name of the petitioner on July 24, 1992. IHSTDE
All the Jomoc heirs filed a petition for certiorari with the CA, assailing the said order
of the RTC. They alleged that herein respondents were not parties to the case,
therefore, they should not be bound by the decision therein and be deprived of their
right over the property. On December 8, 1992, the CA dismissed the petition,
holding that respondents were bound by the said decision. The CA ratiocinated that
respondents were aware of the pendency of the case, yet they did not intervene,
and that the case is barred by res judicata. Respondents elevated the case to this
Court through a petition for review on certiorari, which was docketed as G.R. No.
110661. In a Resolution dated December 1, 1993, the Court denied the petition,
thus:
In the case of Vda. de Jomoc v. Court of Appeals (200 SCRA [1991]), this Court
concluded that the contract of sale between the heirs of Pantaleon Jomoc and the
private respondent Maura So, even if not complete in form, so long as the essential
requisites of consent of the contracting parties, object and cause of the obligation

concur, and they were clearly established to be present, is valid and effective
between the parties.
The lower court found that petitioners were aware of the pendency of the specific
performance case brought by Maura So and we agree with the Court of Appeals that
their failure to intervene in said suit for the protection of their rights binds them to
the decision rendered therein.
This Court has held that a writ of execution may be issued against a person not a
party to a case where the latter's remedy, which he did not avail of, was to
intervene in the case in question involving rights over the same parcel of land
(Lising vs. Plan, 133 SCRA 194 [1984]; Suson vs. Court of Appeals, 172 SCRA 70
[1989]) STDEcA
It appears that petitioner Elvira Jomoc Gadrinab signed a Special Power of Attorney
in favor of Fellermo Jomoc to represent her in all proceedings regarding Civil Case
No. 8983. It also appears that all the Jomoc heirs wanted to realize a higher price by
selling the same piece of land a second time to the Lim spouses. Petitioner Lucila,
Abundia and Elvira shared the same goal, and kept quiet while Maura So sought
relief before the trial court. The other heirs sought to capitalize on Lucila's,
Abundia's and Elvira's non-participation in the first sale to Maura So. The heirs' (all
of them) position is bereft of moral and equitable basis.
As for the issue of res judicata, we believe that the same applies as a bar to the
instant Petition. In G.R. No. 92871 and G.R. No. 92860, this Court had occasion to
rule that herein private respondent had the right to compel the heirs of Pantaleon
Jomoc to execute the proper public instrument so that a valid contract of sale of
registered land can be duly registered and can bind third persons. In effect, this
Court had already determined the right of private respondent to a proper
registerable deed of sale which petitioners seek to challenge again in this Petition. A
party cannot avoid the application of the principle of bar by prior judgment by
simply varying the form of the action or by adopting a different mode of presenting
its case or by adding or dropping a party (Widows and Orphans Association, Inc. vs.
Court of Appeals, 212 SCRA 360 [1992]).
ACCORDINGLY, the Court Resolved to DENY the Petition for Review for lack of merit.
The resolution became final and executory on June 20, 1994.

IaEScC

It appears that, on March 12, 1992, respondents also filed a complaint for legal
redemption against petitioner with the Regional Trial Court (RTC) of Misamis
Oriental. The case was docketed as Civil Case No. 92-135. Respondents posited
therein that, since they did not sell their shares in the property to petitioner, they
remained co-owners, who have the right to redeem the shares sold by the other
heirs. They prayed that they be allowed to exercise their right to redeem their co-

heirs' shares and that petitioner execute all papers, documents and deeds to
effectuate the right of legal redemption.
On April 27, 1994, the RTC resolved the case in favor of the respondents, thus:
WHEREFORE, judgment is hereby rendered on the pleadings and evidence of the
parties on record, affidavits and other documents submitted, there being but purely
legal issues involve[d], ordering the defendant herein, MAURA SO, to allow the
plaintiffs to exercise their substantive right of legal redemption of the shares of
plaintiffs' co-heirs, defendant Maura So, for the purpose of redemption by the
plaintiffs, Lucita Jomoc Obliosca, Abundia Jomoc Balala (deceased) substituted by
her children: Rosita Balala Acenas, Evangeline Balala Baaclo, Oliver J. Balala, and
Perla Balala Condesa; and Elvira Jomoc Gardinab, is ordered to receive and accept
the amount tendered by the plaintiffs in the amount of P49,000.00 deposited in the
Office of the Clerk of Court of the Regional Trial Court of Misamis Oriental at
Cagayan de Oro City, and to execute a deed of redemption in favor of the herein
plaintiffs reconveying to the latter the property, and to pay Plaintiffs for attorney's
fees in the reasonable sum of P20,000.00.
Other claims and for counterclaims for monetary damages of the parties are
dismissed, with costs against defendant. EAHcCT
SO ORDERED. 8
In a Resolution dated July 14, 1994, the RTC granted petitioner's motion for
reconsideration. 9 Respondents moved for reconsideration of the said resolution. On
September 7, 1994, the RTC issued an Order 10 granting respondents' motion for
reconsideration and reinstating the April 27, 1994 Resolution.
On November 14, 1994, acting jointly on petitioner's Motion for Reconsideration and
respondents' Compliance/Motion for the Issuance of a Writ of Execution, the RTC
rendered a Resolution, 11 denying petitioner's motion for reconsideration and
granting respondents' motion for execution.
On December 28, 1994, petitioner, later substituted by her heirs, filed with the CA a
petition for annulment of judgment, particularly the September 7, 1994 Order,
which reinstated the RTC's April 27, 1994 and November 14, 1994 Resolutions,
which denied the petitioner's motion for reconsideration. On October 18, 2000, the
CA denied the petition, holding that the remedy of a petition for annulment of
judgment is no longer available since petitioner Maura So had already filed a
petition for review with this Court assailing the same orders of the trial court. 12
Apparently, on December 19, 1994, prior to the filing of the petition for annulment
of judgment with the CA, petitioner Maura So filed a petition for review on certiorari
13 with this Court assailing the same RTC Order and Resolution. This case was
docketed as G.R. No. 118050. In a Minute Resolution dated March 1, 1995, the Court

denied the petition for failure to sufficiently show that the questioned judgment is
tainted with grave abuse of discretion and for being the wrong remedy. 14 On June
7, 1995, the Court likewise denied petitioner's first motion for reconsideration, 15
and on July 27, 1998, the second motion for reconsideration. The March 1, 1995
Minute Resolution became final and executory on September 1, 1998. 16 ECaITc
On January 11, 2001, the CA denied petitioners' motion for reconsideration of its
decision denying the petition for annulment of judgment. 17 Petitioners then filed
this petition for review, raising the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR IN NOT HOLDING THAT THE TRIAL COURT ACTED WITHOUT JURISDICTION IN
CIVIL CASE NO. 92-135 BECAUSE THE HONORABLE SUPREME COURT HAD
PREVIOUSLY RULED THAT THE LOT IN QUESTION HAD BEEN SOLD TWICE BY ALL THE
HEIRS OF PANTALEON TO MAURA SO AND LATER TO THE LIM SPOUSES IN G.R. NOS.
92871 AND 98860 AND G.R. NO. 110661 AND SAID FINAL DECISIONS AND
RESOLUTION CANNOT BE REVISED AND REVERSED BY SAID TRIAL COURT.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR IN HOLDING THAT THE ORIGINAL PETITION DOCKETED AS CA-G.R. SP NO.
50059 IS BARRED BY RES JUDICATA BECAUSE THE RESOLUTION IN G.R. NO. 118050
DID NOT AND CANNOT REPEAL THE FINAL AND EXECUT[ORY] DECISIONS IN G.R. NO.
92871 AND G.R. NO. 92860, AND THE FINAL AND EXECUT[ORY] RESOLUTION IN G.R.
NO. 110661, AS THE RESOLUTION IN G.R. NO. 118050 IS NOT ON THE MERITS, OR
BY THE SUPREME COURT EN BANC. 18
The Court resolves to grant the petition despite the prevailing procedural
restrictions, considering the peculiar circumstances of the case, in order to avoid
causing a grave injustice to petitioners. TCAScE
But before we discuss these circumstances which impel us to grant the petition, we
must acknowledge extant procedural principles.
First, annulment of judgment is a recourse equitable in character, allowed only in
exceptional cases as where there is no available or other adequate remedy. 19
Thus, it may not be invoked (1) where the party has availed himself of the remedy
of new trial, appeal, petition for relief, or other appropriate remedy and lost; or (2)
where he has failed to avail himself of those remedies through his own fault or
negligence. 20 We, therefore, agree with the CA that the remedy of a petition for
annulment of judgment is no longer available to petitioners since their predecessorin-interest, Maura So, had already availed herself of a petition for review on
certiorari under Rule 45 of the Rules of Court.

Further, none of the grounds for annulment of judgment, namely, extrinsic fraud
and lack of jurisdiction, is present in this case.
Petitioners argue that the RTC acted without jurisdiction when it rendered the
Resolution which recognized respondents' right to redeem the property because
this, in effect, amended the Decision of the Supreme Court in G.R. Nos. 92871 and
92860, and the Resolution in G.R. No. 110661, which sustained the sale of the
property to Maura So. CDAHaE
Petitioners clearly confused lack of jurisdiction with error in the exercise of
jurisdiction. Jurisdiction is not the same as the exercise of jurisdiction. As
distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide
a case, and not the decision rendered therein. Where there is jurisdiction over the
person and the subject matter, the decision on all other questions arising in the
case is but an exercise of such jurisdiction. And the errors which the court may
commit in the exercise of jurisdiction are merely errors of judgment which are the
proper subject of an appeal. 21 The error raised by petitioners pertains to the trial
court's exercise of its jurisdiction, not its lack of authority to decide the case. In a
petition for annulment of judgment based on lack of jurisdiction, petitioner must
show not merely an abuse of jurisdictional discretion but an absolute lack of
authority to hear and decide the case. On this basis, there would be no valid ground
to grant the petition for annulment of judgment.
Second, well-settled is the principle that a decision that has acquired finality
becomes immutable and unalterable, and may no longer be modified in any respect
even if the modification is meant to correct erroneous conclusions of fact or law and
whether it will be made by the court that rendered it or by the highest court of the
land. 22 The reason for this is that litigation must end and terminate sometime and
somewhere, and it is essential to an effective and efficient administration of justice
that, once a judgment has become final, the winning party, through a mere
subterfuge, be not deprived of the fruits of the verdict. 23
The doctrine of finality of judgment is grounded on the fundamental principle of
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 on some definite
date fixed by law. 24 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 which render its execution unjust and inequitable. 25 Again, none of
these exceptions is present in this case. DCAEcS
Notwithstanding these principles, however, the higher interests of justice and equity
demand that we brush aside the procedural norms. After all, rules of procedure are
intended to promote rather than defeat substantial justice, and should not be
applied in a very rigid and technical sense. Rules of procedure are merely tools

designed to facilitate the attainment of justice; they are promulgated to aid the
court in the effective dispensation of justice. The Court has the inherent power and
discretion to amend, modify or reconsider a final judgment when it is necessary to
accomplish the ends of justice. 26
If the rigid application of the Rules would frustrate rather than promote justice, it is
always within the Court's power to suspend the Rules or except a particular case
from its operation. 27 The power to suspend or even disregard rules can be so
pervasive and compelling as to alter even that which this Court itself has already
declared to be final. 28
The present case is peculiar in the sense that it involves three final and executory
judgments. The first is this Court's Decision in G.R. Nos. 92871 and 92860 which
upheld the sale of the whole property by the Jomoc heirs, including the herein
respondents, to petitioner Maura So. The second is the Court's Resolution in G.R. No.
110661, which sustained the order of execution of the said decision against the
herein respondents despite the fact that they were not party-defendants in the first
case. And the third is the Court's Minute Resolution in G.R. No. 118050 which denied
Maura So's petition for review of the RTC Decision granting respondents' right to
redeem the property.
It is the third judgment that is apparently in conflict with the two previous
judgments. It rendered final and executory the April 27, 1994 Resolution of the RTC
which recognized the right of respondents, as co-owners, to redeem the disputed
land from Maura So. To recall, the RTC premised its decision on its finding that
respondents did not actually sell their shares in the property to Maura So because
they did not sign the Deed of Extrajudicial Settlement with Absolute Sale of
Registered Land in favor of So; hence, they remained co-owners. This ruling is
patently erroneous because this Court had already pronounced in the first two final
and executory judgments (in G.R. Nos. 92871 and 92860, and G.R. No. 110661) that
the whole property had already been sold to Maura So. The RTC was barred from
holding otherwise under the doctrine of conclusiveness of judgment. cSATDC
The doctrine of "conclusiveness of judgment" precludes the re-litigation of a
particular fact or issue already passed upon by a court of competent jurisdiction in a
former judgment, in another action between the same parties based on a different
claim or cause of action. 29
In Collantes v. Court of Appeals, 30 the Court offered three options to solve a case
of conflicting decisions: the first is for the parties to assert their claims anew, the
second is to determine which judgment came first, and the third is to determine
which of the judgments had been rendered by a court of last resort. In that case, the
Court applied the first option and resolved the conflicting issues anew.
Instead of resorting to the first offered solution as in Collantes, which would entail
disregarding all the three final and executory decisions, we find it more equitable to

apply the criteria mentioned in the second and third solutions, and thus, maintain
the finality of one of the conflicting judgments. The principal criterion under the
second option is the time when the decision was rendered and became final and
executory, such that earlier decisions should be sustained over the current ones
since final and executory decisions vest rights in the winning party. The major
criterion under the third solution is a determination of which court or tribunal
rendered the decision. Decisions of this Court should be accorded more respect than
those made by the lower courts. ISTHED
The application of these criteria points to the preservation of the Decision of this
Court in G.R. Nos. 92871 and 92860 dated August 2, 1991, and its Resolution in G.R.
No. 110661 dated December 1, 1993. Both judgments were rendered long before
the Minute Resolution in G.R. No. 118050 was issued on March 1, 1995. In fact, the
August 2, 1991 Decision was executed already respondents were divested of
their title over the property and a new title, TCT No. T-68370, was issued in the
name of Maura So on July 24, 1992. Further, while all three judgments actually
reached this Court, only the two previous judgments extensively discussed the
respective cases on the merits. The third judgment (in G.R. No. 118050) was a
Minute Resolution, dismissing the petition for review on certiorari of the RTC
Resolution in the legal redemption case for failure to sufficiently show that the
questioned resolution was tainted with grave abuse of discretion and for being the
wrong remedy. In a manner of speaking, therefore, the third final and executory
judgment was substantially a decision of the trial court.
Obviously, the complaint for legal redemption was deliberately filed by the
respondents with the RTC to circumvent this Court's previous decisions sustaining
the sale of the whole property to Maura So. The Court cannot condone this ploy,
even if it failed to uncover the same when the case was erroneously elevated to it
directly from the trial court (G.R. No. 118050).
The matter is again before this Court, and this time, it behooves the Court to set
things right in order to prevent a grave injustice from being committed against
Maura So who had, for 15 years since the first decision was executed, already
considered herself to be the owner of the property. The Court is not precluded from
rectifying errors of judgment if blind and stubborn adherence to the doctrine of
immutability of final judgments would involve the sacrifice of justice for technicality.
CaDATc
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the
Court of Appeals dated October 18, 2000, and Resolution dated January 11, 2001,
are REVERSED. The April 27, 1994 Resolution and September 7, 1994 Order of the
RTC are SET ASIDE. The complaint for legal redemption docketed as Civil Case No.
92-135 is DISMISSED.
SO ORDERED.

Ynares-Santiago, Austria-Martinez, Corona * and Reyes, JJ., concur.

[G.R. Nos. 65957-58. July 5, 1994.]

ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners, vs. Hon. Judge RAMON
AM. TORRES, as Presiding Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ
& COMPANY, INC. and THE PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and
METRO MANILA, Respectively, respondents.
SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; INTENT TO DEFRAUD
CREDITORS; MUST BE CLEARLY ALLEGED IN THE AFFIDAVIT IN SUPPORT OF THE
PRAYER THEREOF. The affidavit submitted by respondent Aboitiz in support of its
prayer for the writ of attachment does not meet the requirements of Rule 57 of the
Revised Rules of Court regarding the allegations on impending fraudulent removal,
concealment and disposition of defendant's property. As held in Carpio v. Macadaeg,
9 SCRA 552 (1963), to justify a preliminary attachment, the removal or disposal
must have been made with intent to defraud defendant's creditors. Proof of defraud
is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of
Court on the grounds upon which attachment may issue. Thus, the factual basis on
defendant's intent to defraud must be clearly alleged in the affidavit in support of
the prayer for the writ of attachment if not so specifically alleged in the verified
complaint.
2.
ID.; ID.; ID.; ID.; ID.; FACTUAL BASES MUST CLEARLY BE AVERRED. It is
evident from said affidavit that the prayer for attachment rests on the mortgage by
petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz
considered as fraudulent concealment of property to its prejudice. We find,
however, that there is no factual allegation which may constitute as a valid basis for
the contention that the mortgage was in fraud of respondent Aboitiz. As this Court
said in Jardine-Manila finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he
general rule is that the affidavit is the foundation of the writ, and if none be filed or
one be filed which wholly fails to set out some facts required by law to be stated
therein, there is no jurisdiction and the proceedings are null and void." Bare
allegation that an encumbrance of a property is in fraud of the creditor does not
suffice. Factual bases for such conclusion must be clearly averred. The execution of
a mortgage in favor of another creditor is not conceived by the Rules as one of the
means of fraudulently disposing of one's property. By mortgaging a piece of

property, a debtor merely subjects it to a lien but ownership thereof is not parted
with. Furthermore, the inability to pay one's creditors is not necessarily synonymous
with fraudulent intent not to honor an obligation. Consequently, when petitioners
filed a motion for the reconsiderations of the order directing the issuance of the writ
of attachment, respondent Judge should have considered it as a motion for the
discharge of the attachment and should have conducted a hearing or required
submission of counter-affidavits from the petitioners, if only to gather facts in
support of the allegation of fraud.
3.
ID.; ID.; ID.; ID.; ISSUANCE THEREOF MUST BE STRICTLY CONSTRUED AGAINST
APPLICANT; REASON THEREFOR. This procedure should be followed because, as
the Court has time and again said, attachment is a harsh, extraordinary and
summary remedy and the rules governing its issuance must be construed strictly
against the applicant. Verily, a writ of attachment can only be granted on concrete
and specific grounds and not on general averments quoting perfunctorily the words
of the Rules. The judge before whom the application is made exercises full
discretion in considering the supporting evidence proffered by the applicant. One
overriding consideration is that a writ of attachment is substantially a writ of
execution except that it emanates at the beginning, instead of at the termination of
the suit.
DECISION
QUIASON, J p:
This is a petition for certiorari and mandamus with preliminary injunction order to
nullify: (1) the Order dated September 14, 1983 of respondent Judge Ramon Am.
Torres of the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185
and the Order dated September 26, 1983 of Judge Emilio A. Jacinto of Branch 23 of
the same court in Civil Case No. CEB-1186, which granted the motion for the
issuance of writs of preliminary attachments for the seizure of the property of
petitioners by respondent Provincial Sheriffs; and (2) the Order dated December 12,
1983 or respondent Judge Ramon Am. Torres in the consolidated cases, Civil Case
No. CEB-1185 and civil Case No. CEB-1186. Cdpr
I
In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu,
now Regional Trial Court, (Civil Case No. R-21761), respondent Aboitiz and
Company, Inc. (Aboitiz) sought to collect from petitioners a sum of money
representing payments for: (1) the unpaid amortizations of a loan; (2) technical and
managerial services rendered; and (3) the unpaid installments of the equipment
provided by respondent Aboitiz to petitioners (Rollo, p. 37).
Acting on the ex parte application for attachment, the Executive Judge of the Court
of First Instance of Cebu, issued on May 14, 1982, an order directing the issuance of

the writ of preliminary attachment against the property of petitioners upon the filing
by respondent Aboitiz of an attachment bond. cdll
Subsequently, the case was raffled to Branch 11 of the Court of First Instance of
Cebu, which issued a writ of attachment addressed to the Provincial Sheriffs of Cebu
and the City Sheriff of Davao City. It was the Sheriff of Davao City who enforced the
writ of attachment, resulting in the seizure of heavy construction equipment, motor
vehicle spare parts, and other personal property with the aggregate value of
P15,000,000.00. The said court also granted the motion of respondent Aboitiz to
take possession and custody of the attached property of petitioners and ordered the
Provincial Sheriff of Davao to deliver the property to respondent Aboitiz.
Petitioners moved for a bill of particulars and to set aside the ex parte writ of
attachment. Finding merit in the motion to set aside the writ, Branch 11 ordered on
July 6, 1982 the lifting of the writ and, consequently, the discharge of the property
levied upon.
Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the July
6, 1982 Order for a period of 15 days for it to be able to appeal the order. The
motion was favorably acted upon.
However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its
complaint in accordance with Section 1, Rule 17 of the Revised Rules of Court.
Consequently, Branch 11 issued an order confirming the notice of dismissal,
emphasizing that all orders of the court issued prior to the filing of said notice of
dismissal had been rendered functus oficio, and considering all pending incidents in
the case as moot and academic.
Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be
implemented and enforced. On December 20, however, Branch 11 denied the
motion on account of the filing by respondent Aboitiz before Branch 16 of the Court
of First Instance of Cebu in Lapu-lapu City of an action for delivery of personal
property (Civil Case No. 619-L), and the filing by petitioner Eleazar Adlawan before
Branch 10 of the same court of an action for damages in connection with the seizure
of his property under the writ of attachment. Cdpr
In the replevin suit, Branch 16 ordered the seizure and delivery of the property
described in the complaint. Said property were later delivered by the provincial
sheriff to respondent Aboitiz that while his office was situated in Cebu City, Adlawan
was a resident of Minglanilla, and therefore, the Lapu-lapu City court should not
entertain the action for replevin. Petitioner Eleazar Adlawan filed an omnibus motion
praying for the reconsideration and dissolution of the writ of seizure, the retrieval of
the property seized, and the dismissal of the complaint. He also averred that the
property seized were in custodia legis by virtue of the writ of attachment issued by
Branch 11. His omnibus motion was denied. Subsequently, he filed a motion for
reconsideration which was not granted.

The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for
certiorari and mandamus in the Supreme Court (G. R. No. 63225). The Third Division
of this Court ruled on April 3, 1990 that since attachment is an ancillary remedy, the
withdrawal of the complain left it with no leg to stand on. Thus, the Court disposed
of the case as follows:
"WHEREFORE, in view of the foregoing, this Court rules that the attached properties
left in the custody of private respondent Aboitiz and Company, Inc. be returned to
petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by
both parties" (Rollo, p. 324).
Respondent Aboitiz filed a motion for reconsideration of the decision, contending
that the replevin case was distinct and separate from the case where the writ of
attachment was issued. It argued that the writ of replevin, therefore, remained in
force as the third Division of the Supreme Court had not found it illegal. The motion
was, however, denied with finality in the Resolution of July 11, 1990. LLjur
Undaunted, respondent Aboitiz filed a second motion for reconsideration with a
prayer that the dispositive portion of the decision be clarified. It asserted that
because the writ of preliminary attachment was different from the writ of replevin,
we should rule that the property subject of the latter writ should remain in custodia
legis of the court issuing the said writ.
In the Resolution dated September 10, 1990, the Third Division stated that "the
properties to be returned to petitioner are only those held by private respondent
(Aboitiz) by virtue of the writ attachment which has been declared non-existent."
Accordingly, the dispositive portion of the April 3, 1990 decision of the Third Division
of this Court was modified as follows:
"WHEREFORE, in view of the foregoing, this Court rules that the properties in the
custody of the private respondent Aboitiz & Company by virtue of the writ of
attachment issued in Civil Case No. R-2176 be returned to the petitioner, but
properties in the custody of the private respondent by virtue of the writ of replevin
issued in Civil Case No. 619-L be continued in custodia legis of said court pending
litigation therein."
The decision in G. R. No. 63225 having become final and executory, entry of
judgment was made on November 15, 1990. This should have terminated the
controversy between petitioners and respondent Aboitiz insofar as the Supreme
Court was concerned, but that was not to be. On September 9, 1983 respondent
Aboitiz filed against petitioners two complaints for collection of sums of money with
prayers for the issuance of writs of attachment in the Regional Trial Court, Branch
23, Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The complaint
in Civil Case No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant
therein) was awarded a contract for the construction of the Tago Diversion Works for
the Tago River Irrigation Project by the National Irrigation Administration and that

respondent Aboitiz (plaintiff therein) loaned him money and equipment, which
indebtedness as of June 30, 1983 totalled P13,430,259.14. Paragraph 16 of the
complaint states:
"16. That, in view of the enormous liabilities which the defendants have with the
plaintiff, defendants executed a real estate mortgage covering eleven (11) parcels
of land in favor of Philippine Commercial and Industrial Bank (PCIB) to secure a
P1,000,000.00 loan with said bank and was able to remove, conceal and dispose of
their properties, obviously to defraud the plaintiff, . . ." (Rollo, pp. 65-66).
The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan
(defendant therein) was awarded a contract for the construction of the Lasang River
Irrigation Project by the National Irrigation Administration and that respondent
Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as
of June 30, 1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly
worded as paragraph 16 of the complaint in Civil Case No. CEB-1185.
Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, presided
by respondent Judge Ramon Am. Torres. On September 14, 1983, respondent Judge
ordered the issuance of a writ of attachment upon respondent Aboitiz' filing of a
bond of P5,000,000.00. Similarly, in Civil Case No. CEB-1186, which was raffled to
Branch 23, presiding Judge Emilio A. Jacinto ordered the issuance of a writ of
attachment upon the filing of a bond of P2,500,000.00. Accordingly, in Civil Case No.
CEB-1185, the Acting Provincial Sheriff of Cebu issued separate writs dated
September 26, 1983 addressed to the Sheriffs of Cebu, Davao and Metro Manila. No
writ of preliminary attachment was, however, issued in Civil Case No. CEB-1186.
Petitioners then filed in Civil Case Nos. CEB-1185 and CEB-1186 urgent motions to
hold in abeyance the enforcement of the writs of attachments. They alleged in the
main that since their property had been previously attached and said attachment
was being questioned before the Supreme Court in G.R. No. 63225, the filing of the
two cases, as well s the issuance of the writs of attachment, constituted undue
interference with the processes of this court in the then pending petition involving
the same property. cdll
Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order
directing the transfer to Branch 6 of Civil Case No. CEB-1186 for consolidation with
Civil Case No. CEB-1185.
Meanwhile, in its comment on petitioners' motion to withhold the enforcement of
the writs of attachment, respondent Aboitiz alleged that the voluntary dismissal of
Civil Case No. R-21761 under Section 1, Rule 17 of the Revised Rules of Court was
without prejudice to the institution of another action based on the same subject
matter. It averred that the issuance of the writ of attachment was justified because
petitioners were intending to defraud respondent Aboitiz by mortgaging 11 parcels
of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of

the loan P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice of
respondent Aboitiz, which had an exposure amounting to P13,430,259.14.
Petitioners then filed a rejoinder to said comment, contending that since the
property subject of the writ of attachment have earlier been attached or replevied,
the same property were under custodia legis and therefore could not be the subject
of other writs of attachment.
On December 12, 1983, respondent Judge issued an order finding no merit in
petitioners' motion for reconsideration and directing the sheriffs of Cebu, Davao and
Metro Manila "to proceed with the enforcement and implementation of the writs of
preliminary attachment." Respondent Judge ruled that the writs of attachment were
issued on the basis of the supporting affidavits alleging that petitioners had
removed or disposed of their property with intent to defraud respondent Aboitiz
(Rollo, pp. 109-113).
On December 15, petitioners filed an ex parte motion praying: (1) that the
December 12, 1983 Order be set for hearing; (2) that they be given 15 days within
which to either file a motion for reconsideration or elevate the matter to this Court
or the then Intermediate Appellate Court; and (3) that within the same 15-day
period the implementation or enforcement of the writs of attachment be held in
abeyance.
On the same day, respondent Judge issued an order holding in abeyance the
enforcement of the writs of preliminary attachment in order to afford petitioners an
opportunity to seek their other remedies (Rollo, p. 116).On December 27,
petitioners filed the instant petition for certiorari and mandamus. They alleged that
respondent Judge gravely abused his discretion in ordering the issuance of the writs
of preliminary attachment inasmuch as the real estate mortgage executed by them
in favor of PCIB did not constitute fraudulent removal, concealment or disposition of
property. They argued that granting the mortgage constituted removal or
disposition of property, it was not per se a ground for attachment lacking proof of
intent to defraud the creditors of the defendant. LibLex
Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the
loan for which the mortgage was executed was contracted in good faith, as it was
necessary for them to continue their business operations even after respondent
Aboitiz had stopped giving them financial aid.
Petitioners also contended that respondent Judge exceeded his direction when he
issued the Order of December 12, 1983, without first hearing the parties on the
motion for attachment and the motion to dissolve the attachment. Moreover, they
argued that respondent Judge gravely abused his discretion in proceeding with the
case, notwithstanding that his attention had been called with regard to the
pendency of G.R. No. 63225 in this Court.

As prayed for by petitioners, we issued a temporary retraining order on January 6,

1984 "enjoining the respondent from enforcing or implementing the writs of
preliminary attachment against the property of petitioners, all dated September 26,
1983 and issued in Civil Case Nos. CEB 1185 and 1186" (Rollo, p. 118).
II
The resolution of this case centers on the issue of the legality of the writ of
attachment issued by the respondent Judge in the consolidated cases for collection
of sums of money. cdrep
The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of
attachment does not meet the requirements of Rule 57 of the Revised Rules of
Court regarding the allegations on impending fraudulent removal, concealment and
disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA 552
(1963), to justify a preliminary attachment, the removal or disposal must have been
made with intent to defraud defendant's creditors. Proof of defraud is mandated by
paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the
grounds upon which attachment may issue. Thus, the factual basis on defendant's
intent to defraud must be clearly alleged in the affidavit in support of the prayer for
the writ of attachment if not so specifically alleged in the verified complaint. The
affidavit submitted by respondent Aboitiz states:
"REPUBLIC OF THE PHILIPPINES).
CITY OF CEBU ...............................) S.S.
I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after
being sworn in accordance with law, hereby depose and say:
That I am the Vice-President of the plaintiff corporation in the above-entitled case;
That a sufficient cause of action exists against the defendants named therein
because the said defendants are indebted to the plaintiffs in the amount of
P13,430,259.14 exclusive of interests thereon and damages claimed;
That the defendants have removed or disposed of their properties with intent to
defraud the plaintiff, their creditor, because on May 27, 1982 they executed a real
estate mortgage in favor of Philippine Commercial and Industrial Bank (PCIB)
covering eleven (11) of their fifteen (15) parcels of land in Cebu to secure a
P1,100,000.00 loan with the same bank;
That this action is one of those specifically mentioned in Section 1, Rule 57 of the
Rules of Court, whereby a writ preliminary attachment may lawfully issue because
the action therein is one against parties who have removed or disposed of their
properties with intent to defraud their creditor, plaintiff herein;

That there is no sufficient security for the claims sought to be enforced by the
present action;
That the total amount due to the plaintiff in the above-titled case is P13,430,259.14,
excluding interests and claim for damages and is as much the sum for which an
order of attachment is herein sought to be granted; above all legal counter-claim on
the part of the defendants.
IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu
City, Philippines.
(Sgd.)
RAMON S. RONQUILLO
Affiant
(Rollo, pp. 171-172)
It is evident from said affidavit that the prayer for attachment rests on the mortgage
by petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz
considered as fraudulent concealment of property to its prejudice. We find,
however, that there is no factual allegation which may constitute as a valid basis for
the contention that the mortgage was in fraud of respondent Aboitiz. As this Court
said in Jardine-Manila finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he
general rule is that the affidavit is the foundation of the writ, and if none be filed or
one be filed which wholly fails to set out some facts required by law to be stated
therein, there is no jurisdiction and the proceedings are null and void."
Bare allegation that an encumbrance of a property is in fraud of the creditor does
not suffice. Factual bases for such conclusion must be clearly averred.
The execution of a mortgage in favor of another creditor is not conceived by the
Rules as one of the means of fraudulently disposing of one's property. By
mortgaging a piece of property, a debtor merely subjects it to a lien but ownership
thereof is not parted with.
Furthermore, the inability to pay one's creditors is not necessarily synonymous with
fraudulent intent not to honor an obligation (Insular Bank of Asia & America, Inc. v.
Court of Appeals, 190 SCRA 629 [1990]).
Consequently, when petitioners filed a motion for the reconsiderations of the order
directing the issuance of the writ of attachment, respondent Judge should have
considered it as a motion for the discharge of the attachment and should have
conducted a hearing or required submission of counter-affidavits from the
petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v.

Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of rule 57
mandates. LLpr
This procedure should be followed because, as the Court has time and again said,
attachment is a harsh, extraordinary and summary remedy and the rules governing
its issuance must be construed strictly against the applicant. Verily, a writ of
attachment can only be granted on concrete and specific grounds and not on
general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil
Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]).
The judge before whom the application is made exercises full discretion in
considering the supporting evidence proffered by the applicant. One overriding
consideration is that a writ of attachment is substantially a writ of execution except
that it emanates at the beginning, instead of at the termination of the suit (Santos
v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chuan Suy v. Court of Appeals, 212 SCRA
713 [1992]). LibLex
We need not discuss the issue of whether or not Civil Cases Nos. CB-1185 and CEB1186 constituted undue interference with the proceedings in G.R. No. 63225 in view
of the entry of judgment in the latter case.
WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued
on January 6, 1984 is made PERMANENT. Respondent Judge or whoever is the
presiding judge of the regional Trial court, Branch 6, Cebu City, is DIRECTED to
PROCEED with the resolution of Civil Cases Nos. CEB-1185 and CEB-1186 with
deliberate dispatch.
SO ORDERED.
Cruz, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

A.M. No. P-93-935 July 5, 1994

Ong v. Meregildo
EN BANC
[A.M. No. P-93-935. July 5, 1994.]
ILDEFONSO ONG, complainant, vs. MAXIMO A. MEREGILDO, Deputy Sheriff of
Municipal Trial Court, Branch 31, Quezon City, respondent.
SYLLABUS

CONSTITUTIONAL LAW; SUPREME COURT; ADMINISTRATIVE SUPERVISION OVER

COURT PERSONNEL; DEPUTY SHERIFF; REPEATED DEMANDS FOR SUMS OF MONEY
TO DEFRAY EXPENSES OF EXECUTION WITHOUT COURT APPROVAL CONSTITUTES
GRAVE MISCONDUCT; DISMISSAL FROM SERVICE, SANCTION; CASE AT BAR.
Respondent Sheriff failed grievously to comply with the requirements of Section 9 of
Rule 141, Revised Rules of Court, as amended. Respondent knew, or should have
known, that he had to present his cost estimates for implementation of the Writ of
Demolition and Possession to the court issuing that Writ for its approval. He did not
do so. Respondent Sheriff repeated charged and collected from complainant sums of
money totalling in the amount of P47,000.00 without approval of the Court; he did
not deposit the sums received from complainant with the Clerk of Court who, under
Section 9, was then authorized to disburse the same to respondent Sheriff to effect
implementation of the Writ. We note also that respondent Sheriff made no mention
in the Final Sheriff's Return which he submitted to Judge Vera, of the amounts of
monies he had received from complainant. It does not appear that he submitted any
liquidation of such amounts to the trial court, before the present administrative
complaint was instituted. Respondent Sheriff attempted to defend the
"reasonableness" of the amounts he had charged and received from the
complainant, and tried to explain his repeated failure to execute the Writ. The
Investigating Judge was not persuaded by the explanations offered by respondent
Sheriff. Investigating Judge Alonzo-Legasto stated that the amounts charged and
collected from the complainant were exorbitant and highly disproportionate to the
actual service rendered by the laborers purportedly retained by respondent Sheriff.
She believed that there was no justification for employing as many as fifty (50)
laborers and fifty (50) policemen for enforcing the Writ. The Investigating Judge
dismissed respondent Sheriff's accounting of sums received as "too simplistic," . . .
and unworthy of credence and highly improbable. The Court agrees with the
Investigating Judge that respondent Sheriff was dishonest in rendering his
accounting of expenses actually incurred (if any). Respondent Sheriff's explanations
are strained to an extreme; in any case, "reasonableness" of the amounts charged
and collected and received by respondent is not a defense. For respondent clearly
ignored the procedures laid down in Section 9 of Rule 141 of the Rules of Court. The
Investigating Judge recommended suspension for respondent Sheriff. The Court,
however, is convinced that the inculpatory acts committed by respondent Sheriff
are very serious and call for a more severe penalty. Respondent Sheriff Maximo A.
Meregildo is an officer of the court. As such, he forms an integral part of the
administration of justice, since he is called upon to serve the orders and writs and
execute all processes of the court. As such, he is required to live up to strict
standards of honesty and integrity in public service. His conduct must at all times
be characterized by honesty and openness and must constantly be above suspicion.
Respondent Sheriff's unilaterally and repeatedly demanding sums of money from a
party-litigant purportedly to defray expenses of execution, without obtaining the
approval of the trial court for such purported expense and without rendering to that
court an accounting thereof, in effect constituted dishonesty and extortion. That

conduct, therefore, fell too far short of the required standards of public service.
Such conduct is threatening to the very existence of the system of administration of
Justice. WHEREFORE, respondent Maximo A. Meregildo, Deputy Sheriff of the
Municipal Trial Court, Branch 31 of Quezon City, is hereby FOUND GUILTY of serious
misconduct and conduct prejudicial to the best interest of the service, and is hereby
DISMISSED from office, with forfeiture of all retirement benefits and accrued leave
credits and with prejudice to re-employment in any branch or instrumentality of
government, including government owned or controlled corporations.
RESOLUTION
PER CURIAM p:
Complainant Ildefonso Ong originally charged respondent Deputy Sheriff Maximo A.
Meregildo with violation of Section 3 (e) of R.A. No. 3019, the Anti-Graft and Corrupt
Practices Act, before the Office of the Ombudsman. This charge was dismissed by
the Office of the Ombudsman for lack of sufficient evidence. At the same time, the
Investigating Officer of the Office of the Ombudsman declared that the complaint
was sufficient in form and substance for purposes of initiation of an administrative
inquiry. Thus, in April 1993, Overall Deputy Ombudsman Francisco Villa referred to
the Office of the Court Administrator the Affidavit- Complaint of Ildefonso Ong for
appropriate action. prLL
On 29 June 1993, the Court referred the Indorsement of the Overall Deputy
Ombudsman, the Affidavit-Complaint of complainant Ong and related papers to the
Executive Judge of the Metropolitan Trial Court of Quezon City, Judge Rose Marie
Alonzo-Legasto for investigation, report and recommendation.
The Investigating Judge held hearings on 10, 17 and 21 September 1993, 15
October 1993 and 14 January 1994. Both parties appeared at these hearings.
On 9 March 1994, Judge Alonzo-Legasto submitted her Report and
Recommendation. We find, from this Report and Recommendation, that the
following facts are substantially undisputed:
Respondent Deputy Sheriff Maximo Meregildo was appointed by Judge Abraham
Vera of the Regional Trial Court, Branch 90, Quezon City, as Special Sheriff to
implement the Fourth Alias Writ of Demolition and Possession issued in LRC Case
No. 87-8187. As such Special Sheriff, respondent Meregildo advised complainant
Ong, the successor-in-interest of the judgment creditor in LRC Case No. 87-8187,
that expenses would have to be incurred in the implementation of the Writ, e.g.,
expenses for transportation of laborers and policemen to the demolition site, as well
as expenses for food of the laborers and policemen and their compensation.
Respondent Sheriff advised complainant Ong to prepare P11,000.00 as the "initial
sheriff's fees and expenses." 1

On 21 August 1992, respondent Deputy Sheriff received from complainant Ong

P11,000.00 in cash. Meregildo, however, failed or was unable successfully to
implement the Writ of Demolition. Respondent and complainant agreed that a
second attempt could and should be made to implement the Fourth Alias Writ of
Possession and Demolition, since such Fourth Writ had not then expired. For this
second attempt at implementation, respondent Sheriff asked complainant Ong to
prepare an amount of P10,000.00; this amount complainant Ong delivered promptly
to respondent on 27 August 1992.
The second attempt to enforce the Fourth Alias Writ of Demolition and Possession
also produced no effects. By this time, the effectivity of the Fourth Alias Writ had
expired and the judgment creditor secured a Fifth Alias Writ of Demolition and
Possession. LexLib
Respondent Sheriff again asked complainant to prepare another P10,000.00 for the
enforcement of the Fifth Alias Writ. On 17 September 1992, complainant handed
over P5,000.00 to respondent Sheriff. Two (2) days later, on 17 September 1992,
respondent Sheriff received another P20,000.00 in cash from complainant, the
complainant having been told by respondent Sheriff that that additional sum was
essential for effective implementation. Respondent Sheriff repaired to the
demolition site with his group of laborers and policemen. The demolition team
allegedly penetrated the barricades set up by the squatter families sought to be
ejected. However, peaceful possession of the area was not turned over to the
complainant. According to respondent Sheriff, the Office of the Mayor of Quezon
City, or the CAPCOM, had directed the policemen to back off from the area.
Respondent alleged that the policemen left the area and, fearing for his safety and
that of his laborers, respondent and his group of laborers followed suit. Complainant
Ong offered in evidence five (5) receipts signed by respondent for the sums of
money referred to above, including a receipt for P1,000.00 dated 4 November 1992,
to wit:
Date Received

Amount Received

21 August

1992 P11,000.00

27 August

1992 P10,000.00

15 September

1992

17 September

1992 P20,000.00

4 November 1992

P5,000.00

P1,000.00

TOTAL

P47,000.00

Disappointed with the repeated failure of respondent Sheriff to put him in peaceful
possession of the premises involved despite the cumulative amount of fees and
expenses paid to the Sheriff, and doubting either the sincerity or the ability or both
of respondent to deliver possession of the premises to complainant, complainant
Ong demanded the return of the total amount of P47,000.00 from respondent
Sheriff. Respondent Sheriff alleged that most of the various sums had already been
spent and offered to return an "unspent portion" of P8,800.00. Thereupon,
complainant Ong filed his Affidavit-Complaint with the Office of the Ombudsman
which, as noted, referred the same to this Court for appropriate administration
action.
Respondent Sheriff submitted to the Investigating Judge, by way of comment on the
complaint, his "Explanation" or accounting of the monies he had received. This
"Explanation" read, in relevant part, as follows:
"xxx

xxx

xxx

The amount of P47,000.00 collected by me from Mr. Ong was properly receipted to
show that there was good faith in my intention that the said amount would be solely
spent for the costs of the implementation such as food, costs of labor,
transportation, voluntary police allowances and other incidental expenses. The said
amount of P47,000.00 was actually spent for the said purposes not only for the
implementation of the Fifth Alias Writ but also for the prior writ which has the Fourth
Alias Writ dated 16 June 1992. A scrutiny of the Receipts reveal that the Receipt
under date of August 21, 1992 in the amount of P11,000.00 and the Receipt under
date of August 27, 1992 in the amount of P10,000.00 were spent during which the
Fourth alias Writ was still in effect and has not yet expired. With respect to the
Receipt under date of September 15, 1992, receipt under date of September 17,
1992 and the receipt under date of November 4, 1992 were spent for the purposes
during which the Fifth Alias Writ was still in effect and has not yet expired. Said
receipts are hereto attached and respectively marked as Annexes 'D,' 'E,' 'F,' 'G'
AND 'H.'.
A mathematical calculation would show that the amount of P11,000.00 under
Receipt dated August 21, 1992 (Annex D) which was actually spent on August 24,
1992 represented the following to:
Labor for 35 laborers at
P150.00 per person

P5,250.00

Food expenses for 35

laborers and 20 policemen
at P50.00/person

P3,250.00

Jeepney Rent at P800.00

per jeep of three jeeps

P2,400.00

TOTAL

P10,900.00

With regards to the amount of P10,000.00 under Receipt dated August 27, 1992
(Annex E) was actually spent on August 26, 1992 for the following:
Labor for 35 laborers at
P150.00 per person

P5,250.00

Food expenses for 35

laborers and 20 policemen
at P50.00/person

P3,250.00

Jeepney rent for three

jeepneys at P700.00
per jeepney P2,100.00

TOTAL

P10,600.00

It can be noted that there was an excess of the amount of P600.00 and said amount
was shouldered by herein complainant.
The amount of P5,000.00 and P20,000.00 under Receipts of September 15 and 17,
1992 (Annexes F and G) were actually spent for the same purposes on September
17, 1992 and which represented the following:
Labor for 50 laborers
at P150.00/person P5,250.00
Food expenses for 35 laborers
and 20 policemen at P50.00/person

P3,250.00

Jeepney rent for three

jeepneys at P700.00 per jeepney

P2,100.00

TOTAL

P16,200.00

On the amount of P25,000.00, on the amount of P16,200.00 and the unspent

portion thereof was in the amount of P8,800.00 and said amount was retain by me
to be spent again for future implementations.
With regards to the last amount mentioned in the amount of P1,000.00 under
Receipt dated November 4, 1992 was actually spent for transportation and food
allowances for laborers on November 5, 1992 but said implementation had to be
postponed because of lack of security police assistance plus on the account of bad
weather. The excess amount of P8,800.00 was actually spent during the
implementation of the Sixth Alias Writ on April 22 and 23, 1993.
xxx

xxx

xxx" 2

The complainant, on the witness stand, controverted the explanation rendered by

respondent Sheriff. He stated that respondent had charged him the amount of
P200.00 per laborer employed and not merely P150.00. Complainant, who had
physically accompanied respondent Sheriff to the demolition site during the
attempts to enforce the Writ, stated that respondent Sheriff had only fifteen (15)
men to a team and not thirty-five (35) or more persons as alleged by respondent.
Moreover, complainant saw only on (1) owner-type vehicle, for the personal use of
another sheriff who was assisting respondent; complainant saw no evidence of the
three (3) or four (4) public utility jeeps respondent had allegedly hired. Further,
complainant claimed that he had paid for the cost of food for the policemen, over
and above the amounts he had delivered to respondent Sheriff. Complainant's
testimony in this respect follows:
"Q:

What other items did you find that are not correct?

A:
For the expenses of the policemen, sir, I usually pay for the food of the
policemen if there is any.
Q:

In other words, the Sheriff did not spend this amount?

A:
I did not pay for the policemen (sic) food, sir, I usually gave him for the food
of the policemen, sir.
Q:

If you paid the food.

A:
Aside from the money I gave to Meregildo, sir, the payment I gave to this
policemen was from my own pocket and is not included in P47,000.00.
Court:
Are you insinuating Mr. Ong that aside from the money you gave to this
respondent, you spend (sic) personally?

Witness:
Yes, your Honor, for the policemen.
Court:
For what date?
Witness:
This August 27, your Honor.
Court:
August 21?
Atty. Linzag:
Well, I think that was the implementation of the writ, your Honor.
Witness:
Yes, your Honor, for the implementation of the writ I usually pay for the food
of the policemen, your Honor.
Court:
For all the writs?
Witness:
Yes, your Honor, not for the laborers, your Honor, for the policemen.
Court:
So, you mean you gave directly to the policemen aside from the money you
give (sic) to the Sheriff?
Witness:
Yes, your Honor.
Court:
How much did you give to these policemen?
Witness:
Actual expenses, your Honor.
Court:

How much?
Atty. Linzag:
For food?
Witness:
P3,000.00, your Honor, sometime (sic) we are eating(sic) at the Tropical Hut,
your Honor." 3 (Emphasis supplied)
Upon examination of the evidence presented by the parties, the Investigating Judge
concluded that the behavior of respondent Sheriff was, under the circumstances,
highly irregular and prejudicial to the best interest of the service.
We agree with the Investigating Judge's view that Section 9 of Rule 141, as
amended, of the Rules of Court is applicable. This Section reads in part as follows:
"Sec. 9.
xxx

Sheriffs, and other persons serving processes.

xxx

xxx

(g)
For executing a writ of process to place a party in possession of real estate,
one hundred (P100.00) pesos;
xxx

xxx

xxx

In addition to the fees hereinabove, fixed, the party requesting the process of any
court, preliminary, incidental, or final, shall pay the sheriff's expenses in serving or
executing the process or safeguarding the property levied upon, attached or seized,
including kilometrage for each kilometer of travel, guard's fees, warehousing and
similar charges, in an amount estimated by the sheriff, subject to the approval of
the court. Upon approval of said estimated expenses, the interested party shall
deposit such amount with the clerk of court and ex-officio sheriff, who shall disburse
the same to the deputy sheriff assigned to effect the process, subject to liquidation
within the same period for rendering a return on the process. Any unspent amount
shall be refunded to the party making the deposit. A full report shall be submitted
by the deputy sheriff assigned with his return, and the sheriff's expenses shall be
taxed as costs against the judgment debtor. (7a)" 4 (Emphasis supplied).
Respondent Sheriff failed grievously to comply with the above requirements of
Section 9. Respondent knew, or should have known, that he had to present his cost
estimates for implementation of the Writ of Demolition and Possession to the court
issuing that Writ for its approval. He did not do so. Respondent Sheriff repeatedly
charged and collected from complainant sums of money without approval of the
Court; he did not deposit the sums received from complainant with the Clerk of
Court who, under Section 9, was then authorized to disburse the same to
respondent Sheriff to effect implementation of the Writ. We note also that

respondent Sheriff made no mention in the Final Sheriff's Return which he submitted
to Judge Vera, of the amounts of monies he had received from complainant. It does
not appear that he submitted any liquidation of such amounts to the trial court,
before the present administrative complaint was instituted. 5
Respondent Sheriff attempted to depend the "reasonableness" of the amounts he
had charged and received from the complainant, and tried to explain his repeated
failure to execute the Writ. Respondent claimed that the Writ of Demolition was
directed against sixty (60) families, more or less, of squatters illegally occupying the
parcel of land here involved, located in Bagong Bantay, Quezon City. These
squatters families had refused to leave voluntarily and so had to be ejected by
force. When respondent allegedly tried to implement the Fourth Writ, the police
contingent he had allegedly arranged for was supposedly not dispatched by their
commanding officer in view of a heavy rain on that day. On his alleged second
attempt to enforce the Writ, bad weather again prevented the success of his efforts.
He assured complainant that they would try once more as soon as the weather
cleared up. On the next attempt, he alleged that, although prepared to demolish the
structures found in the premises, he acceded to the request of counsel of the
squatters for "peaceful settlement of the conflict." 6
The Investigating Judge was not persuaded by the explanations offered by
respondent Sheriff. Investigating Judge Alonzo-Legasto stated that the amounts
charged and collected from the complainant were exorbitant and highly
disproportionate to the actual service rendered by the laborers purportedly retained
by respondent Sheriff. She believed that there was no justification for employing as
many as fifty (50) laborers and fifty (50) policemen for enforcing the Writ. The
Investigating Judge dismissed respondent Sheriff's accounting of sums received as
"too simplistic," . . . and unworthy of credence and highly improbable." 7 The Court
agrees with the Investigating Judge that respondent Sheriff was dishonest in
rendering his accounting of expenses actually incurred (if any). Respondent Sheriff's
explanations are strained to an extreme; in any case, "reasonableness" of the
amounts charged and collected and received by respondent is not a defense. For
respondent clearly ignored the procedures laid down in Section 9 of Rule 141 of the
Rules of Court.
The Investigating Judge recommended suspension for respondent Sheriff. The Court,
however, is convinced that the inculpatory acts committed by respondent Sheriff
are very serious and call for a more severe penalty. Respondent Sheriff Maximo A.
Meregildo is an officer of the court. As such, he forms an integral part of the
administration of justice, since he is called upon to serve the orders and writs and
execute all processes of the Court. 8 As such, he is required to live up to strict
standards of honesty and integrity in public service. 9 His conduct must at all
times be characterized by honesty and openness and must constantly be above
suspicion. 10 Respondent Sheriff's unilaterally and repeatedly demanding sums of
money from a party-litigant purportedly to defray expenses of execution, without

obtaining the approval of the trial court for such purported expense and without
rendering to that court an accounting thereof, in effect constituted dishonesty and
extortion. That conduct, therefore, fell too far short of the required standards of
public service. Such conduct is threatening to the very existence of the system of
administration of justice.
WHEREFORE, respondent Maximo A. Meregildo, Deputy Sheriff of the Municipal Trial
Court, Branch 31 of Quezon City, is hereby FOUND GUILTY of serious misconduct
and conduct prejudicial to the best interest of the service, and is hereby DISMISSED
from office, with forfeiture of all retirement benefits and accrued leave credits and
with prejudice to re-employment in any branch or instrumentality of government,
including government owned or controlled corporations.
SO ORDERED.

FILINVEST CREDIT CORPORATION, petitioner, vs. THE HONORABLE JUDGE BENJAMIN

RELOVA (In his capacity as Presiding Judge of the Court of First Instance of Manila,
Branch XI) and ERNESTO SALAZAR, respondents.
Labaquis, Loyola & Angara Law Offices for petitioner.
Cecilio D. Ignacio for respondents.
SYNOPSIS
In payment of a motor vehicle he purchased, Ernesto Salazar, herein private
respondent, executed a promissory note and a deed of chattel mortgage over the
subject property in favor of seller Rallye Motor Co., Inc. which subsequently
assigned all its rights, title and interest to the said note and mortgage to Filinvest
Credit Corporation, herein petitioner. Later, petitioner Filinvest filed with the Court of
First Instance a complaint against Rallye and Salazar for collection with damages
and preliminary writ of attachment, alleging that defendants have committed fraud
in securing the obligation and are now avoiding payment of the same. For his
defense, respondent Salazar claimed that he was himself defrauded, because while
he signed the promissory note and chattel mortgage over the motor vehicle which
he bought from Rallye, the latter did not deliver to him the said personal property
and that Rallye has disappeared and can no longer be found. The then presiding
judge granted petitioner's ex-parte motion for a writ of attachment which was
implemented solely against respondent Salazar's property. Over a year later,
however, the now respondent judge,on motion of respondent Salazar, ordered the
dissolution and setting aside of the writ of preliminary attachment and the return of
the attached properties on a finding that Salazar did not commit fraud in
contracting his obligation.
On certiorari, the Supreme Court reversed and set aside the order of the lower court
holding that the failure of respondent Salazar to disclose the material fact of nondelivery of the motor vehicle, there being a duty on his part to reveal the same,
constitutes fraud which justifies issuance of the writ of attachment, hence
respondent judge committed grave abuse of discretion in dissolving and setting
aside the subject writ.
Petition granted and decision reversed and set aside.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; PROVISIONAL REMEDIES; ATTACHMENT;
WRIT MAY BE ISSUED EX-PARTE. Nothing in the Rules of Court makes notice and
hearing indispensable and mandatory requisites for the issuance of a writ of
attachment. The statement in the case of Blue Green Waters, vs. Hon. Sundiam and
Tan (79 SCRA 66) cited by private respondent, to the effect that the order of
attachment issued without notice to therein petitioner Blue Green Waters, Inc. and

without giving it a chance to prove that it was not fraudulently disposing of its
properties is irregular, give the wrong implication. As clarified in the separate
opinion of Mr. Justice Claudio Teehankee in the same cited case, a writ of
attachment may be issued ex-parte.
2.
ID.; ID.; ID.; ID.; GROUND FOR DISCHARGE; IMPROPER AND IRREGULAR
ISSUANCE; FILING OF CASH DEPOSIT OR COUNTER-BOND NOT REQUIRED. A writ
of attachment may be discharged without the necessity of filing the cash deposit or
counter-bond required by Section 12, Rule 57. Section 13 of the same Rule grants
an aggrieved party relief from baseless and unjustifiable attachments procured,
among others, upon false allegations, without having to file any cash deposit or
counter-bond.
3.
ID.; ID.; ID.; ID.; CASE AT BAR. In the instant case, the order of attachment
was granted upon the allegation of petitioner, as plaintiff in the court below, that
private respondent RALLYE, the defendants, had committed "fraud in contracting
the debt or incurring the obligation upon which the action is brought," covered by
Section 1(d), Rule 57. Subsequent to the issuance of the attachment order on
August 17, 1977, private respondent filed in the lower court an "Urgent Motion for
the Recall and Quashal of the Writ of Preliminary Attachment on (his property)"
dated December 11, 1971 precisely upon the assertion that there was "absolutely
no fraud on (his) part'' in contracting the obligation sued upon by petitioner. Private
respondent was in effect claiming that petitioner's allegation of fraud was false, that
hence there was ground for- attachment, and that therefore the attachment order
was "improperly or irregularly issued." This Court has held that "(i)f the grounds
upon which the attachment was issued were not true . . . , the defendant has his
remedy by immediately presenting a motion for the dissolution of the same." (Hijos
de I. de la Rama vs. Sajo, 45 Phil. 703, 706). We find that private respondent's
Urgent Motion was filed under Section 13, Rule 57.
4.
ID.; ID.; ID.; ID.; ID.; ID.; HEARING REQUIRED TO DETERMINE DEFECT IN
ISSUANCE OF WRIT. The last sentence of Section 13, Rule 57 indicates that a
hearing must be conducted by the judge for the purpose of determining whether or
not there really was a defect in the issuance of the attachment.
5.
ID.; ID.; ID.; ID.; ID.; ID.; ID.; BURDEN OF PROOF LIES IN THE PARTY WITH
AFFIRMATIVE ALLEGATIONS. The question is:At this hearing, on whom does the
burden of proof lie? Under the circumstances of the present case, We sustain the
ruling of the court a quo in its questioned Order dated February 2, 1979 that it
should be the plaintiff (attaching creditor), who should prove his allegation of fraud.
This pronouncement finds support in the first sentence of Section 1, Rule 13, which
states that: "Each party must prove his own affirmative allegations.'' The last part of
the same provision also provides that: "The burden of proof lies on the party who
would be defeated if no evidence were given on either side." It must be borne in
mind that in this jurisdiction, fraud is never presumed. FRAUS EST IDIOSA ET NON

PRAESUMENDA. Indeed, private transactions are presumed to have been fair and
regular. (Rule 131, Section 5 [o]. Likewise, written contracts such as the documents
executed by the parties in the instant case, are presumed to have been entered into
for a sufficient consideration. (Rule 131, Section 5(r)).
6.
CIVIL LAW; ARTICLE 1339 OF THE NEW CIVIL CODE; FRAUD; FAILURE OF A
PARTY TO DISCLOSE MATERIAL FACTS WHERE HE IS DUTY-BOUND TO REVEAL THEM.
Respondent Salazar had previously applied for financing assistance from
petitioner FILINVEST as shown in Exhibits "E" and "E-1" and his application was
approved, thus he negotiated for the acquisition of the motor vehicle in question
from Rallye Motors. Since he claimed that the motor vehicle was not delivered to
him, then he was duty-bound to reveal that to FILINVEST, it being ,material in
inducing the latter to accept the assignment of the promissory note and the chattel
mortgage. More than that, good faith as well as commercial usages or customs
require the disclosure of facts and circumstances which go into the very object and
consideration of the contractual obligation. We rule that the failure of respondent
Salazar to disclose the material fact of non-delivery of the motor vehicle, there
being a duty on his part to reveal them, constitutes fraud. (Article 1339, New Civil
Code).
DECISION
GUERRERO, J p:
This is a special civil action for certiorari, with prayer for restraining order or
preliminary injunction, filed by petitioner Filinvest Credit Corporation seeking to
annul the Orders issued by respondent Judge dated February 2, 1979 and April 4,
1979 in Civil Case No. 109900.
As shown by the records, the antecedents of the instant Petition are as follows:
On August 2, 1977, Filinvest Credit Corporation (hereinafter referred to as
FILINVEST) filed a complaint in the lower court against defendants Rallye Motor CO.,
Inc. (hereinafter referred to as RALLYE) and Ernesto Salazar for the collection of a
sum of money with damages and preliminary writ of attachment. From the
allegations of the complaint, 1 it appears that in payment of a motor vehicle
described as: "One (1) Unit MAZDA DIESEL SCHOOL BUS, Model: E4100, Serial No.:
EXC43P-02356, Motor No.: Y-13676," Salazar executed a promissory note dated May
5, 1977 in favor of RALLYE for the amount of P99,828.00. To secure the note, Salazar
also executed in favor of RALLYE a deed of chattel mortgage over the above
described motor vehicle. On May 7, 1977, RALLYE, for valuable consideration,
assigned all its rights, title and interest to the aforementioned note and mortgage to
FILINVEST. Thereafter, FILINVEST came to know that RALLYE had not delivered the
motor vehicle subject of the chattel mortgage to Salazar, "as the said vehicle (had)
been the subject of a sales agreement between the co-defendants." Salazar
defaulted in complying with the terms and conditions of the aforesaid promissory

note and chattel mortgage. RALLYE, as assignor who guaranteed the validity of the
obligation, also failed and refused to pay FILINVEST despite demand. According to
FILINVEST, the defendants intentionally, fraudulently and with malice concealed
from it the fact that there was no vehicle delivered under the documents negotiated
and assigned to it, otherwise, it would not have accepted the negotiation and
assignment of the rights and interest covered by the promissory note and chattel
mortgage. Praying for a writ of preliminary attachment, FILINVEST submitted with
its complaint the affidavit of one Gil Mananghaya, pertinent portions of which read
thus: Cdpr
"That he is the Collection Manager, Automotive Division of Filinvest Credit
Corporation;
"That in the performance of his duties, he came to know of the account of Ernesto
Salazar, which is covered by a Promissory Note and secured by a Chattel Mortgage,
which documents together with all the rights and interest thereto were assigned by
Rallye Motor Co., Inc.;
"That for failure to pay a stipulated installment, and the fact that the principal
debtor, Ernesto Salazar, and the assignor, Rallye Motor Co., Inc. concealed the fact
that there was really no motor vehicle mortgaged under the terms of the Promissory
Note and the Chattel Mortgage, the entire amount of the obligation stated in the
Promissory Note becomes due and demandable, which Ernesto Salazar and Rallye
Motor Co., Inc. failed and refused to pay, so much so that a sufficient cause of
action really exists for Filinvest Credit Corporation to institute the corresponding
complaint against said person and entity;
"That the case is one of those mentioned in Section 1, Rule 57 of the Rules of Court,
particularly an action against parties who have been guilty of a fraud in contracting
the debt or incurring the obligation upon which the action is brought;
"That there is no other sufficient security for the claim sought to be enforced by the
action, and that the amount due to the applicant Filinvest Credit Corporation is as
much as the sum for which the order is granted above all legal counterclaims;
That this affidavit is executed for the purpose of securing a writ of attachment from
the court." 2
The specific provision adverted to in the above Affidavit is Section 1(d) of Rule 57
which includes "an action against a party who has been guilty of fraud in
contracting the debt or incurring the obligation upon which the action is brought, or
in concealing or disposing of the property for the taking, detention or conversion of
which the action is brought" as one of the cases in which a "plaintiff or any proper
party may, at the commencement of the action or at any time thereafter, have the
property of the adverse party attached as security for the satisfaction of any
judgment that may be recovered."

Judge Jorge R. Coquia (now Justice of the Court of Appeals), then presiding Judge of
the lower court, granted the prayer for a writ of attachment in an Order dated
August 17, 1977 stating that:
"Finding the complaint sufficient in form and substance, and in view of the sworn
statement of Gil Mananghaya, Collection Manager of the plaintiff that defendants
have committed fraud in securing the obligation and are now avoiding payment of
the same, let a writ of attachment issue upon the plaintiff's filing of a bond in the
sum of P97,000.00.
"In the meantime, let summons issue on the defendants." 3
More than a year later, in an Urgent Motion dated December 11, 1978, 4 defendant
Salazar prayed that the writ of preliminary attachment issued ex parte and
implemented solely against his property be recalled and/or quashed. He argued that
when he signed the promissory note and chattel mortgage on May 5, 1977 in favor
of RALLYE, FILINVEST was not yet his creditor or obligee, therefore, he could not be
said to have committed fraud when he contracted the obligation on May 5, 1977.
Salazar added that as the motor vehicle which was the object of the chattel
mortgage and the consideration for the promissory note had admittedly not been
delivered to him by RALLYE, his repudiation of the loan and mortgage is more
justifiable.
FILINVEST filed an Opposition, but on February 2, 1979, the court a quo, this time
presided over by herein respondent Judge, ordered the dissolution and setting aside
of the writ of preliminary attachment issued on August 17, 1977 and the return to
defendant Salazar of all his properties attached by the Sheriff by virtue of the said
writ. In this Order, respondent Judge explained that:
"When the incident was called for hearing, the Court announced that, as a matter of
procedure, when a motion to quash a writ of preliminary attachment is filed, it is
incumbent upon the plaintiff to prove the truth of the allegations which were the
basis for the issuance of said writ. In this hearing, counsel for the plaintiff
manifested that he was not going to present evidence in support of the allegation of
fraud. He maintained that it should be the defendant who should prove the truth of
his allegation in the motion to dissolve the said writ. The Court disagrees." 5
FILINVEST filed a Motion for Reconsideration of the above Order, and was
subsequently allowed to adduce evidence to prove that Salazar committed fraud as
alleged in the affidavit of Gil Mananghaya earlier quoted. This notwithstanding,
respondent Judge denied the Motion in an Order dated April 4, 1979 reasoning thus:
cdrep
"The plaintiff's evidence show that the defendant Rallye Motor assigned to the
former defendant Salazar's promissory note and chattel mortgage by virtue of which
plaintiff discounted the note. Defendant Salazar refused to pay the plaintiff for the

reason that Rallye Motor has not delivered to Salazar the motor vehicle which he
bought from Rallye. It is the position of plaintiff that defendant Salazar was in
conspiracy with Rallye Motor in defrauding plaintiff.
"Ernesto Salazar, on his part complained that he was himself defrauded, because
while he signed a promissory note and chattel mortgage over the motor vehicle
which he bought from Rallye Motor, Rullye Motor did not deliver to him the personal
property he bought; that the address and existence of Rallye Motor can no longer be
found.
"While it is true that the plaintiff may have been defrauded in this transaction, it
having paid Rallye Motor the amount of the promissory note, there is no evidence
that Ernesto Salazar had connived or in any way conspired with Rallye Motor in the
assignment of the promissory note to the plaintiff, because of which the plaintiff
paid Rallye Motor the amount of the promissory note. Defendant Ernesto Salazar
was himself a victim of fraud. Rallye Motor was the only party which committed it."
6
From the above order denying reconsideration and ordering the sheriff to return to
Salazar the personal property attached by virtue of the writ of preliminary
attachment issued on August 17, 1977, FILINVEST filed the instant Petition on April
19, 1979. On July 16, 1979, petitioner FILINVEST also filed an Urgent Petition for
Restraining Order 7 alleging, among others, that pending this certiorari proceeding
in this court, private respondent Salazar filed a Motion for Contempt of Court in the
court below directed against FILINVEST and four other persons allegedly for their
failure to obey the Order of respondent Judge dated April 4, 1979, which Order is the
subject of this Petition. On July 23, 1979, this Court issued a temporary restraining
order "enjoining respondent Judge or any person or persons acting in his behalf from
hearing private respondent's motion for contempt in Civil Case No. 109900, entitled,
'Filinvest Credit Corporation, Plaintiff, versus. The Rallye Motor Co., Inc., et al.,
Defendants' of the Court of First Instance of Manila, Branch XI." 8
Petitioner FILINVEST in its MEMORANDUM contends that respondent Judge erred:
(1)
In dissolving the writ of preliminary attachment already enforced by the
Sheriff of Manila without Salazar's posting a counter-replevin bond as required by
Rule 57, Section 12; and
(2)
In finding that there was no fraud on the part of Salazar, despite evidence in
abundance to show the fraud perpetrated by Salazar at the very inception of the
contract.
It is urged in petitioner's first assignment of error that the writ of preliminary
attachment having been validly and properly issued by the lower court on August
17, 1977, the same may only be dissolved, quashed or recalled by the posting of a

counter-replevin bond under Section 12, Rule 57 of the Revised Rules of Court which
provides that:
"Section 12. Discharge of Attachment upon giving counterbond. At any time after an order of attachment has been granted, the party
whose property has been attached, or the person appearing on his behalf, may,
upon reasonable notice to the applicant, apply to the judge who granted the order,
or to the judge of the court in which the action is pending, for an order discharging
the attachment wholly or in part on the security given. The judge shall, after
hearing, order the discharge of the attachment if a cash deposit is made, or a
counter-bond executed to the attaching creditor is filed, on behalf of the adverse
party, with the clerk or judge of the court where the application is made, in an
amount equal to the value of the property attached as determined by the judge, to
secure the payment of any judgment that the attaching creditor may recover in the
action. . . . . "
Citing the above provision, petitioner contends that the court below should not have
issued the Orders dated February 2, 1979 and April 4, 1979 for failure of private
respondent Salazar to make a cash deposit or to file a counter-bond.
On the other hand, private respondent counters that the subject writ of preliminary
attachment was improperly or irregularly issued in the first place, in that it was
issued ex parte without notice to him and without hearing.
We do not agree with the contention of private respondent. Nothing in the Rules of
Court makes notice and hearing indispensable and mandatory requisites for the
issuance of a writ of attachment. The statement in the case of Blue Green Waters,
Inc. vs. Hon. Sundiam and Tan 9 cited by private respondent, to the effect that the
order of attachment issued without notice to therein petitioner Blue Green Waters,
Inc. and without giving it a chance to prove that it was not fraudulently disposing of
its properties is irregular, gives the wrong implication. As clarified in the separate
opinion of Mr. Justice Claudio Teehankee in the same cited case, 10 a writ of
attachment may be issued ex parte. Sections 3 and 4, Rule 57, merely require that
an applicant for an order of attachment file an affidavit and a bond: the affidavit to
be executed by the applicant himself or some other person who personally knows
the facts and to show that (1) there is a sufficient cause of action, (2) the case is
one of those mentioned in Section 1 of Rule 57, (3) there is no other sufficient
security for the claim sought to be enforced, and (4) the amount claimed in the
action is as much as the sum for which the order is granted above all legal
counterclaims; and the bond to be "executed to the adverse party in an amount
fixed by the judge, not exceeding the applicant's claim, 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."

We agree, however, with private respondents contention that a writ of attachment

may be discharged without the necessity of filing the cash deposit or counter-bond
required by Section 12, Rule 57, cited by petitioner. The following provision of the
same Rule allows it:
"Sec. 13.

Discharge of attachment for improper or irregular

issuance. The party whose property has been attached may also, at any time
either before or after the release of the attached property, or before any attachment
shall have been actually levied, upon reasonable notice to the attaching creditor,
apply to the judge who granted the order, or to the judge of the court in which the
action is pending, for an order to discharge the attachment on the ground that the
same was improperly or irregularly issued. If the motion be made on affidavits on
the part of the party whose property has been attached; but not otherwise, the
attaching creditor may oppose the same by counter-affidavits or other evidence in
addition to that on which the attachment was made. After hearing, the judge shall
order the discharge of the attachment if it appears that it was improperly or
irregularly issued and the defect is not cured forthwith." (Italics supplied)
The foregoing provision grants an aggrieved party relief from baseless and
unjustifiable attachments procured, among others, upon false allegations, without
having to file any cash deposit or counter-bond. In the instant case, the order of
attachment was granted upon the allegation of petitioner, as plaintiff in the court
below, that private respondent RALLYE, the defendants, had committed "fraud in
contracting the debt or incurring the obligation upon which the action is brought,"
covered by Section 1(d), Rule 57, earlier quoted. Subsequent to the issuance of the
attachment order on August 17, 1977, private respondent filed in the lower court an
"Urgent Motion for the Recall and Quashal of the Writ of Preliminary Attachment on
(his property)" dated December 11, 1978 11 precisely upon the assertion that there
was "absolutely no fraud on (his) part" in contracting the obligation sued upon by
petitioner. Private respondent was in effect claiming that petitioner's allegation of
fraud was false, that hence there was no ground for attachment, and that therefore
the attachment order was "improperly or irregularly issued." This Court was held
that "(i)f the grounds upon which the attachment was issued were not true . . . , the
defendant has his remedy by immediately presenting a motion for the dissolution of
the same." 12 We find that private respondent's abovementioned Urgent Motion
was filed under Section 13, Rule 57.
The last sentenced of the said provision, however, indicates that a hearing must be
conducted by the judge for the purpose of determining whether or not there really
was a defect in the issuance of the attachment. The question is: At this hearing, on
whom does the burden of proof lie? Under the circumstances of the present case,
We sustain the ruling of the court a quo in its questioned Order dated February 2,
1979 that it should be the plaintiff (attaching creditor), who should prove his
allegation of fraud. This pronouncement finds support in the first sentence of

Section 1, Rule 131, which states that: "Each party must prove his own affirmative
allegations." The last part of the same provision also provides that: "The burden of
proof lies on the party who would be defeated if no evidence were given on either
side." It must be borne in mind that in this jurisdiction, fraud is never presumed.
FRAUS EST IDIOSA ET NON PRAESUMENDA. 13 Indeed, private transactions are
presumed to have been fair and regular. 14 Likewise, written contracts such as the
documents executed by the parties in the instant case, are presumed to have been
entered into for a sufficient consideration. 15
In a similar case of Villongco, et al. vs. Hon. Panlilio, et al.,16 a writ of preliminary
attachment was issued ex parte in a case for damages on the strength of the
affidavit of therein petitioners to the effect that therein respondents had concealed,
removed or disposed of their properties, credits or accounts collectible to defraud
their creditors. Subsequently, the lower court dissolved the writ of attachment. This
was questioned in a certiorari proceeding wherein this Court held, inter alia, that:
LLpr
"The affidavit supporting the petition for the issuance of the preliminary attachment
may have been sufficient to justify the issuance of the preliminary writ, but it cannot
be considered as proof of the allegations contained in the affidavit. The reason is
obvious. The allegations are mere conclusions of law, not statement of facts. No
acts of the defendants are ever mentioned in the affidavit to show or prove the
supposed concealment to defraud creditors. Said allegations are affirmative
allegations, which plaintiffs had the obligation to prove . . . " 17
It appears from the records that both herein private parties did in fact adduce
evidence to support their respective claims. 18 Attached to the instant Petition as
its Annex "H" 19 is a Memorandum filed by herein petitioner FILINVEST in the court
below on March 20, 1979. After private respondent filed his Comment to the
Petition, 20 petitioner filed a Reply 21 attaching another copy of the aforesaid
Memorandum as Annex "A". 22 In this case on February 28, 1979 and March 1,
1979, the plaintiff (FILINVEST) presented in evidence documentary exhibits "marked
Exhibit A, A-1, B, B-1, B-2, B-3, B-4, C, C-1, D, E, F, G and G-1. The Memorandum
goes on to state that FILINVEST presented as its witness defendant Salazar himself
who testified that he signed Exhibits A, B, C, D, E and G; that he is a holder of a
master's degree in Business Administration and is himself a very careful and
prudent person; that he does not sign post-dated documents; that he does not sign
contracts which do not reflect the truth or which are irregular on their face; that he
intended to purchase a school bus from Rallye Motors Co., Inc. from whom he had
already acquired one unit; that he had been dealing with Abel Sahagun, manager of
RALLYE, whom he had known for a long time; that he intended to purchase the
school bus on installment basis so he applied for financing with the FILINVEST; that
he knew his application was approved; that with his experience as a business
executive, he knew that under a financing arrangement, upon approval of his
application, when he signed Exhibits A, B, C, D, E and G, the financing company

(FILINVEST) would release the proceeds of the loan to RALLYE and that he would be
obligated to pay the installments to FILINVEST; that he signed Exhibits A, B and C
simultaneously; that it was his wife who was always transacting business with
RALLYE and Abel Sahagun. 23
Without disputing the above summary of evidence, private respondent Salazar
states in his Comment that "the same evidence proferred by (petitioner's) counsel
was adopted by (private respondent) Ernesto Salazar during the proceedings." 24
According to the court a quo in its assailed order of April 4, 1979, Ernesto Salazar
"was himself defrauded because while he signed the promissory note and the
chattel mortgage over the vehicle which he bought from Rallye Motors, RALLYE did
not deliver to him the personal property he bought." And since no fraud was
committed by Salazar, the court accordingly ordered the sheriff to return to Salazar
the properties attached by virtue of the writ of preliminary attachment issued on
August 17, 1977.
We do not agree. Considering the claim of respondent Salazar that Rallye Motors did
not deliver the motor vehicle to him, it follows that the Invoice, Exhibit "C", for the
motor vehicle and the Receipt, Exhibit "G", for its delivery and both signed by
Salazar, Exhibits "C-1" and "G-1", were fictitious. It also follows that the Promissory
Note, Exhibit "A", to pay the price of the undelivered vehicle was without
consideration and therefore fake; the Chattel Mortgage, Exhibit "B", over the nonexistent vehicle was likewise a fraud; the registration of the vehicle in the name of
Salazar was a falsity and the assignment of the promissory note by RALLYE with the
conforme of respondent Salazar in favor of petitioner over the undelivered motor
vehicle was fraudulent and a falsification. LLpr
Respondent Salazar, knowing that no motor vehicle was delivered to him by RALLYE,
executed and committed all the above acts as shown in the exhibits enumerated
above. He agreed and consented to the assignment by RALLYE of the fictitious
promissory note and the fraudulent chattel mortgage, by affixing his signature
thereto, in favor of petitioner FILINVEST, who, in the ordinary course of business,
relied on the regularity and validity of the transaction. Respondent had previously
applied for financing assistance from petitioner FILINVEST as shown in Exhibits "E"
and "E-1" and his application was approved, thus he negotiated for the acquisition
of the motor vehicle in question from Rallye Motors. Since he claimed that the
motor vehicle was not delivered to him, then he was duty-bound to reveal that to
FILINVEST, it being material in inducing the latter to accept the assignment of the
promissory note and the chattel mortgage. More than that, good faith as well as
commercial usages or customs require the disclosure of facts and circumstances
which go into the very object and consideration of the contractual obligation. We
rule that the failure of respondent Salazar to disclose the material fact of nondelivery of the motor vehicle, there being a duty on his part to reveal them,
constitutes fraud. (Article 1339, New Civil Code).

We hold that the court a quo committed grave abuse of discretion in dissolving and
setting aside the writ of preliminary attachment issued on August 17, 1977.
WHEREFORE, IN VIEW OF THE FOREGOING, the appealed Orders of the lower court
dated February 2, 1979 and April 4, 1979 are hereby REVERSED and SET ASIDE. The
temporary restraining order issued by Us on July 23, 1979 is hereby made
permanent. No costs.
SO ORDERED.

DAVAO LIGHT & POWER CO., INC., petitioner, vs. THE COURT OF APPEALS,
QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and TEODORICO
ADARNA, respondents.
Breva & Breva Law Offices for petitioner.
Goc-Ong & Associates for private respondents.
SYLLABUS
1.
REMEDIAL LAW; ACTIONS; JURISDICTION; HOW ACQUIRED. An action or
proceeding is commenced by the filing of the complaint or other initiatory pleading.
By that act, the jurisdiction of the court over the subject matter or nature of the
action or proceeding is invoked or called into activity; and it is thus that the court
acquires jurisdiction over said subject matter or nature of the action. And it is by
that self-same act of the plaintiff (or petitioner) of filing the complaint (or other
appropriate pleading) by which he signifies his submission to the court's power
and authority that jurisdiction is acquired by the court over his person. On the
other hand, jurisdiction over the person of the defendant is obtained, as above
stated, by the service of summons or other coercive process upon him or by his
voluntary submission to the authority of the court.
2.
ID.; PROVISIONAL REMEDIES; PRELIMINARY ATTACHMENT; DEFINED. A
preliminary attachment may be defined, paraphrasing the Rules of Court, as the
provisional remedy in virtue of which a plaintiff or other proper party may, at the
commencement of the action or at any time thereafter, have the property of the
adverse party taken into the custody of the court as security for the satisfaction of
any judgment that may be recovered. It is a remedy which is purely statutory in
respect of which the law requires a strict construction of the provisions granting it.
Withal no principle, statutory or jurisprudential, prohibits its issuance by any court
before acquisition of jurisdiction over the person of the defendant.
3.
ID.; ID.; ID.; PHRASE "AT THE COMMENCEMENT OF THE ACTION,"
CONSTRUED. Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The phrase, "at the
commencement of the action," obviously refers to the date of the filing of the
complaint which, as above pointed out, is the date that marks "the
commencement of the action;" and the reference plainly is to a time before
summons is served on the defendant, or even before summons issues.
4.
ID.; ID.; ID.; WRIT MAY BE ISSUED EX-PARTE. What the rule is saying quite
clearly is that after an action is properly commenced by the filing of the
complaint and the payment of all requisite docket and other fees the plaintiff may
apply for and obtain a writ of preliminary attachment upon fulfillment of the
pertinent requisites laid down by law, and that he may do so at any time, either
before or after service of summons on the defendant. And this indeed, has been the

immemorial practice sanctioned by the courts: for the plaintiff or other proper party
to incorporate the application for attachment in the complaint or other appropriate
pleading (counterclaim, cross-claim, third-party claim) and for the Trial Court to
issue the writ ex-parte at the commencement of the action if it finds the application
otherwise sufficient in form and substance.
5.
ID.; ID.; ID.; HEARING ON APPLICATION THEREON, GENERALLY NOT
NECESSARY. In Toledo v. Burgos this Court ruled that a hearing on a motion or
application for preliminary attachment is not generally necessary unless otherwise
directed by the Trial Court in its discretion. And in Filinvest Credit Corporation v.
Relova, the Court declared that "(n)othing in the Rules of Court makes notice and
hearing indispensable and mandatory requisites for the issuance of a writ of
attachment."
6.
ID.; ID.; ID.; ID.; BASIS OF GRANT. The only pre-requisite is that the Court
be satisfied, upon consideration of "the affidavit of the applicant or of some other
person who personally knows the facts, that a sufficient cause of action exists, that
the case is one of those mentioned in Section 1 . . . (Rule 57), that there is no other
sufficient security for the claim sought to be enforced by the action, and that the
amount due to the applicant, or the value of the property the possession of which
he is entitled to recover, is as much as the sum for which the order (of attachment)
is granted above all legal counterclaims." If the court be so satisfied, the "order of
attachment shall be granted," and the writ shall issue upon the applicant's posting
of a bond executed to the adverse party in an amount to be fixed by the judge, not
exceeding the plaintiff's claim, 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."
7.
ID.; ID.; ID.; ID.; REASON. In Mindanao Savings & Loan Association, Inc. v.
Court of Appeals, decided on April 18, 1989, decided on April 18, 1989, this Court
had occasion to emphasize the postulate that no hearing is required on an
application for preliminary attachment, with notice to the defendant, for the reason
that this "would defeat the objective of the remedy . . . (since the) time which such
a hearing would take, could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues." As observed by a former
member of this Court, such a procedure would warn absconding debtors-defendants
of the commencement of the suit against them and the probable seizure of their
properties, and thus give them the advantage of time to hide their assets, leaving
the creditor-plaintiff holding the proverbial empty bag; it would place the creditorapplicant in danger of losing any security for a favorable judgment and thus give
him only an illusory victory.

8.
ID.; ID.; ID.; HOW DISCHARGED. There are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of its
improper or irregular issuance.
9.
ID.; ID.; ID.; ID.; BY COUNTERBOND. The submission of a counterbond is an
efficacious mode of lifting an attachment already enforced against property, or even
of preventing its enforcement altogether. When property has already been seized
under attachment, the attachment may be discharged upon counterbond in
accordance with Section 12 of Rule 57. But even before actual levy on property,
seizure under attachment may be prevented also upon counterbond. The defendant
need not wait until his property is seized before seeking the discharge of the
attachment by a counterbond. This is made possible by Section 5 of Rule 57.
10.
ID.; ID.; ID.; ID.; BY MOTION TO DISCHARGE ON GROUND THAT THE SAME
WAS IRREGULARLY OR IMPROPERLY ISSUED. Aside from the filing of a
counterbond, a preliminary attachment may also be lifted or discharged on the
ground that it has been irregularly or improperly issued, in accordance with Section
13 of Rule 57. Like the first, this second mode of lifting an attachment may be
resorted to even before any property has beer levied on. Indeed, it may be availed
of after property has been released from a levy on attachment, as is made clear by
said Section 13.
11.
ID.; ID.; ID.; ID.; FIRST MODE SPEEDIER THAN THE SECOND. The filing of a
counterbond is a speedier way of discharging the attachment writ maliciously
sought out by the attaching creditor instead of the other way, which, in most
instances . . . would require presentation of evidence in a fullblown trial on the
merits, and cannot easily be settled in a pending incident of the case.
12.
ID.; ID.; ID.; MAY NOT BE DISSOLVED BY A SHOWING OF ITS IRREGULAR OR
IMPROPER ISSUANCE. (a) When an attachment may not be dissolved by a
showing of its irregular or improper issuance:
". . . (W)hen the preliminary attachment is issued upon a ground which is at the
same time the applicant's cause of action e.g., 'an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a public
officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk,
in the course of his employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty.' (Sec. 1 [b], Rule 57), or 'an action against
a party who has been guilty of fraud in contracting the debt or incurring the
obligation upon which the action is brought' (Sec. 1 [d], Rule 57), the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57
by offering to show the falsity of the factual averments in the plaintiff's application
and affidavits on which the writ was based and consequently that the writ based
thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA
41) the reason being that the hearing on such a motion for dissolution of the writ

would be tantamount to a trial of the merits of the action. In other words, the merits
of the action would be ventilated at a mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of attachment is of this nature, the only way it
can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886)."
13.
ID.; ID.; ID.; DISSOLUTION OF PRELIMINARY ATTACHMENT DOES NOT
DISCHARGE SURETIES ON BOND; REASON. ". . . The dissolution of the preliminary
attachment upon security given, or a showing of its irregular or improper issuance,
does not of course operate to discharge the sureties on plaintiff's own attachment
bond. The reason is simple. That bond is 'executed to the adverse party, . . .
conditioned that the . . . (applicant) 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' (SEC. 4, Rule 57). Hence, until that determination is made, as to the
applicant's entitlement to the attachment, his bond must stand and cannot be
withdrawn."
DECISION
NARVASA, J p:
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in
CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao
Light & Power Co., Inc., promulgated on May 4, 1990. 1 That decision nullified and
set aside the writ of preliminary attachment issued by the Regional Trial Court of
Davao City 2 in Civil Case No. 19513-89 on application of the plaintiff (Davao Light
& Power Co.), before the service of summons on the defendants (herein respondents
Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed material facts culled from the
Appellate Tribunal's judgment of May 4, 1990.
1.
On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light)
filed a verified complaint for recovery of a sum of money and damages against
Queensland Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19613-89).
The complaint contained an ex parte application for a writ of preliminary
attachment.
2.
On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by
raffle, issued an Order granting the ex parte application and fixing the attachment
bond at P4,600,513.37.
3.
On May 11, 1989 the attachment bond having been submitted by Davao
Light, the writ of attachment issued.
4.
On May 12, 1989, the summons and a copy of the complaint, as well as the
writ of attachment and a copy of the attachment bond, were served on defendants

Queensland and Adarna; and pursuant to the writ, the sheriff seized properties
belonging to the latter. LibLex
5.
On September 6, 1989, defendants Queensland and Adarna filed a motion to
discharge the attachment for lack of jurisdiction to issue the same because at the
time the order of attachment was promulgated (May 3, 1989) and the attachment
writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the
cause and over the persons of the defendants.
6.
On September 14, 1989, Davao Light filed an opposition to the motion to
discharge attachment.
7.
On September 19, 1989, the Trial Court issued an Order denying the motion
to discharge.
This Order of September 19, 1989 was successfully challenged by Queensland and
Adarna in a special civil action of certiorari instituted by them in the Court of
Appeals. The Order was, as aforestated, annulled by the Court of Appeals in its
Decision of May 4, 1990. The Appellate Court's decision closed with the following
disposition:
". . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary
attachment, dated September 19, 1989 denying the motion to discharge
attachment; dated November 7, 1989 denying petitioner's motion for
reconsideration; as well as all other orders emanating therefrom, specially the Writ
of Attachment dated May 11, 1989 and Notice of Levy on Preliminary Attachment
dated May 11, 1989, are hereby declared null and void and the attachment hereby
ordered DISCHARGED."
The Appellate Tribunal declared that
". . .While it is true that a prayer for the issuance of a writ of preliminary attachment
may be included in the complaint, as is usually done, it is likewise true that the
Court does not acquire jurisdiction over the person of the defendant until he in duly
summoned or voluntarily appears, and adding the phrase that it be issued 'ex parte'
does not confer said jurisdiction before actual summons had been made, nor
retroact jurisdiction upon summons being made. . . ."
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court
acquires authority under law to act coercively against the defendant or his
property . . .;" and that " critical time is the time of the vesting of jurisdiction in the
court over the person of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light
seeks in the present appellate proceedings. cdrep

The question is whether or not a writ of preliminary attachment may issue ex parte
against a defendant before acquisition of jurisdiction of the latter's person by
service of summons or his voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been commenced
and jurisdiction over the person of the plaintiff has been vested in the court, but
before the acquisition of jurisdiction over the person of the defendant (either by
service of summons or his voluntary submission to the court's authority), nothing
can be validly done by the plaintiff or the court. It is wrong to assume that the
validity of acts done during this period should be dependent on, or held in
suspension until, the actual obtention of jurisdiction over the defendant's person.
The obtention by the court of jurisdiction over the person of the defendant is one
thing; quite another is the acquisition of jurisdiction over the person of the plaintiff
or over the subject-matter or nature of the action, or the res or object thereof.
An action or proceeding is commenced by the filing of the complaint or other
initiatory pleading. 4 By that act, the jurisdiction of the court over the subject
matter or nature of the action or proceeding is invoked or called into activity; 5 and
it is thus that the court acquires jurisdiction over said subject matter or nature of
the action. 6 And it is by that self-same act of the plaintiff (or petitioner) of filing the
complaint (or other appropriate pleading) by which he signifies his submission to
the court's power and authority that jurisdiction is acquired by the court over his
person. 7 On the other hand, jurisdiction over the person of the defendant is
obtained, as above stated, by the service of summons or other coercive process
upon him or by his voluntary submission to the authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well
known. After the complaint is filed, summons issues to the defendant, the summons
is then transmitted to the sheriff, and finally, service of the summons is effected on
the defendant in any of the ways authorized by the Rules of Court. There is thus
ordinarily some appreciable interval of time between the day of the filing of the
complaint and the day of service of summons of the defendant. During this period,
different acts may be done by the plaintiff or by the Court, which are of
unquestionable validity and propriety. Among these, for example, are the
appointment of a guardian ad litem, 9 the grant of authority to the plaintiff to
prosecute the suit as a pauper litigant, 10 the amendment of the complaint by the
plaintiff as a matter of right without leave of court, 11 authorization by the Court of
service of summons by publication, 12 the dismissal of the action by the plaintiff on
mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment,
preliminary injunction, receivership or replevin. 14 They may be validly and properly

applied for and granted even before the defendant is summoned or is heard from.
LibLex
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the
provisional remedy in virtue of which a plaintiff or other proper party may, at the
commencement of the action or at any time thereafter, have the property of the
adverse party taken into the custody of the court as security for the satisfaction of
any judgment that may be recovered. 15 It is a remedy which is purely statutory in
respect of which the law requires a strict construction of the provisions granting it.
16 Withal no principle, statutory or jurisprudential, prohibits its issuance by any
court before acquisition of jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the
action or at any time thereafter." 17 The phrase, "at the commencement of the
action," obviously refers to the date of the filing of the complaint which, as above
pointed out, is the date that marks "the commencement of the action;" 18 and the
reference plainly is to a time before summons is served on the defendant, or even
before summons issues. What the rule is saying quite clearly is that after an action
is properly commenced by the filing of the complaint and the payment of all
requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law,
and that he may do so at any time, either before or after service of summons on the
defendant. And this indeed, has been the immemorial practice sanctioned by the
courts: for the plaintiff or other proper party to incorporate the application for
attachment in the complaint or other appropriate pleading (counterclaim, crossclaim, third-party claim) and for the Trial Court to issue the writ ex-parte at the
commencement of the action if it finds the application otherwise sufficient in form
and substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for
preliminary attachment is not generally necessary unless otherwise directed by the
Trial Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the
Court declared that "(n)othing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of attachment."
The only pre-requisite is that the Court be satisfied, upon consideration of "the
affidavit of the applicant or of some other person who personally knows the facts,
that a sufficient cause of action exists, that the case is one of those mentioned in
Section 1 . . . (Rule 57), that there is no other sufficient security for the claim sought
to be enforced by the action, and that the amount due to the applicant, or the value
of the property the possession of which he is entitled to recover, is as much as the
sum for which the order (of attachment) is granted above all legal counterclaims."
22 If the court be so satisfied, the "order of attachment shall be granted," 23 and
the writ shall issue upon the applicant's posting of a bond executed to the adverse
party in an amount to be fixed by the judge, not exceeding the plaintiff's claim,
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." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April
18, 1989, 25 this Court had occasion to emphasize the postulate that no hearing is
required on an application for preliminary attachment, with notice to the defendant,
for the reason that this "would defeat the objective of the remedy . . . (since the)
time which such a hearing would take, could be enough to enable the defendant to
abscond or dispose of his property before a writ of attachment issues." As observed
by a former member of this Court, 26 such a procedure would warn absconding
debtors-defendants of the commencement of the suit against them and the
probable seizure of their properties, and thus give them the advantage of time to
hide their assets, leaving the creditor-plaintiff holding the proverbial empty bag; it
would place the creditor-applicant in danger of losing any security for a favorable
judgment and thus give him only an illusory victory. Cdpr
Withal, ample modes of recourse against a preliminary attachment are secured by
law to the defendant. The relative ease with which a preliminary attachment may be
obtained is matched and paralleled by the relative facility with which the
attachment may legitimately be prevented or frustrated. These modes of recourse
against preliminary attachments granted by Rule 57 were discussed at some length
by the separate opinion in Mindanao Savings & Loans Asso. Inc. v. C.A., supra.
That separate opinion stressed that there are two (2) ways of discharging an
attachment: first, by the posting of a counterbond; and second, by a showing of its
improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an
attachment already enforced against property, or even of preventing its
enforcement altogether.
1.1. When property has already been seized under attachment, the attachment
may be discharged upon counterbond in accordance with Section 12 of Rule 57.
'SECTION 12.
Discharge of attachment upon giving counterbond. At any
time after an order of attachment has been granted, the party whose property has
been attached or the person appearing in his behalf, may, upon reasonable notice
to the applicant, apply to the judge who granted the order, or to the judge of the
court in which the action is pending, for an order discharging the attachment wholly
or in part on the security given . . . in an amount equal to the value of the property
attached as determined by the judge to secure the payment of any judgment that
the attaching creditor may recover in the action . . .'
1.2. But even before actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not wait until his property is

seized before seeking the discharge of the attachment by a counterbond. This is

made possible by Section 5 of Rule 57.
'SECTION 5. Manner of attaching property. The officer executing the order shall
without delay attach, to await judgment and execution in the action, all the
properties of the party against whom the order is issued in the province, not exempt
from execution, or so much thereof as may be sufficient to satisfy the applicant's
demand, unless the former makes a deposit with the clerk or judge of the court from
which the order issued, or gives a counter-bond executed to the applicant, in an
amount sufficient to satisfy such demand besides costs, or in an amount equal to
the value of the property which is about to be attached, to secure payment to the
applicant of any judgment which he may recover in the action. . . .' (Emphasis
supplied).
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be
lifted or discharged on the ground that it has been irregularly or improperly issued,
in accordance with Section 13 of Rule 57. Like the first, this second mode of lifting
ar attachment may be resorted to even before any property has beer levied on.
Indeed, it may be availed of after property has been released from a levy on
attachment, as is made clear by said Section 13, viz.: cdphil
'SECTION 13.
Discharge of attachment for improper or irregular issuance.
The party whose property has been attached may also, at any time either BEFORE
or AFTER the release of the attached property, or before any attachment shall have
been actually levied, upon reasonable notice to the attaching creditor, apply to the
judge who granted the order, or to the judge of the court in which the action is
pending, for an order to discharge the attachment on the ground that the same was
improperly or irregularly issued. If the motion be made on affidavits on the part of
the party whose property has been attached, but not otherwise, the attaching
creditor may oppose the same by counter-affidavits or other evidence in addition to
that on which the attachment was made. . . .' (Emphasis supplied).
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), 'The
attachment debtor cannot be deemed to have waived any defect in the issuance of
the attachment writ by simply availing himself of one way of discharging the
attachment writ, instead of the other. Moreover, the filing of a counterbond is a
speedier way of discharging the attachment writ maliciously sought out by the
attaching creditor instead of the other way, which, in most instances . . . would
require presentation of evidence in a fullblown trial on the merits, and cannot easily
be settled in a pending incident of the case.'" 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao
Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a)
When an attachment may not be dissolved by a showing of its irregular or
improper issuance:

". . . (W)hen the preliminary attachment is issued upon a ground which is at the
same time the applicant's cause of action e.g., 'an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a public
officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk,
in the course of his employment as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty.' (Sec. 1 [b], Rule 57), or 'an action against
a party who has been guilty of fraud in contracting the debt or incurring the
obligation upon which the action is brought' (Sec. 1 [d], Rule 57), the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57
by offering to show the falsity of the factual averments in the plaintiffs application
and affidavits on which the writ was based and consequently that the writ based
thereon had been improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA
41) the reason being that the hearing on such a motion for dissolution of the writ
would be tantamount to a trial of the merits of the action. In other words, the merits
of the action would be ventilated at a mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of attachment is of this nature, the only way it
can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886)."
(b)
Effect of the dissolution of a preliminary attachment on the plaintiff's
attachment bond:
". . . The dissolution of the preliminary attachment upon security given, or a
showing of its irregular or improper issuance, does not of course operate to
discharge the sureties on plaintiff's own attachment bond. The reason is simple.
That bond is 'executed to the adverse party, . . . conditioned that the . . . (applicant)
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' (SEC. 4, Rule 57). Hence, until that
determination is made, as to the applicant's entitlement to the attachment, his
bond must stand and cannot be withdrawn." LexLib
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is
the same: they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of the defendant, as above indicated
issuance of summons, order of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of authority to the plaintiff to prosecute
the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a
matter of right without leave of court 30 and however valid and proper they
might otherwise be, these do not and cannot bind and affect the defendant until
and unless jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary submission to
the court's authority. Hence, when the sheriff or other proper officer commences

implementation of the writ of attachment, it is essential that he serve on the

defendant not only a copy of the applicant's affidavit and attachment bond, and of
the order of attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint and order
for appointment of guardian ad litem, if any, as also explicitly directed by Section 3,
Rule 14 of the Rules of Court. Service of all such documents is indispensable not
only for the acquisition of jurisdiction over the person of the defendant, but also
upon considerations of fairness, to apprise the defendant of the complaint against
him, of the issuance of a writ of preliminary attachment and the grounds therefor
and thus accord him the opportunity to prevent attachment of his property by the
posting of a counterbond in an amount equal to the plaintiff's claim in the complaint
pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal
of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating
the insufficiency of the applicant's affidavit or bond in accordance with Section 13,
Rule 57.
It was on account of the failure to comply with this fundamental requirement of
service of summons and the other documents above indicated that writs of
attachment issued by the Trial Court ex parte were struck down by this Court's Third
Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC
Manufacturing and Sales Corporation v. Court of Appeals, et al. 32 In contrast to the
case at bar where the summons and a copy of the complaint, as well as the order
and writ of attachment and the attachment bond were served on the defendant
in Sievert, levy on attachment was attempted notwithstanding that only the petition
for issuance of the writ of preliminary attachment was served on the defendant,
without any prior or accompanying summons and copy of the complaint; and in BAC
Manufacturing and Sales Corporation, neither the summons nor the order granting
the preliminary attachment or the writ of attachment itself was served on the
defendant "before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition
that writs of attachment may properly issue ex parte provided that the Court is
satisfied that the relevant requisites therefor have been fulfilled by the applicant,
although it may, in its discretion, require prior hearing on the application with notice
to the defendant; but that levy on property pursuant to the writ thus issued may not
be validly effected unless preceded, or contemporaneously accompanied by service
on the defendant of summons, a copy of the complaint (and of the appointment of
guardian ad litem, if any), the application for attachment (if not incorporated in but
submitted separately from the complaint), the order of attachment, and the
plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of
Appeals is hereby REVERSED, and the order and writ of attachment issued by Hon.
Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City
in Civil Case No. 19513-89 against Queensland Hotel or Motel or Queensland Tourist

Inn and Teodorico Adarna are hereby REINSTATED. Costs against private
respondents.
SO ORDERED.

[G.R. No. 107303. February 23, 1995.]

EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners, vs. HON.
ZEUS C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of
Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, respondents.
[G.R. No. 107491. February 23, 1995.]
BRUNNER DEVELOPMENT CORPORATION, petitioner, vs. HON. ZEUS C. ABROGAR, as
Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE
ASSURANCE COMPANY OF CANADA, respondents.
SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; WRIT ISSUED PRIOR
TO THE ACQUISITION OF JURISDICTION OVER THE PERSON OF THE DEFENDANT,
CONSIDERED VOID; CASE AT BAR. It should be stated that the Court does not in
the least doubt the validity of the writ of attachment issued in these cases. The fact
that a criminal complaint for estafa which Sun Life had filed against petitioner Oate
and Noel L. Dio, president of Brunner, was dismissed by the Office of the Provincial
Prosecutor is immaterial to the resolution of the motions for reconsideration. In the
first place, the dismissal, although later affirmed by the Department of Justice, is
pending reconsideration. In the second place, since the issue in the case below is
precisely whether petitioners were guilty of fraud in contracting their obligation,
resolution of the question must await the trial of the main case. However, we find
petitioners' contention respecting the validity of the attachment of their properties
to be well taken. We hold that the attachment of petitioners' properties prior to the
acquisition of jurisdiction by the respondent court is void and that the subsequent
service of summons on petitioners did not cure the invalidity of such attachment.
The records show that before the summons and the complaint were served on
petitioners Oate and Econ Holdings Corporation (Econ) on January 9, 1992, Deputy
Sheriff Arturo C. Flores had already served on January 3, 1992 notices of
garnishment on the PNB Head Office and on all its Metro Manila branches and on
A.B. Capital. In addition he made other levies before the service of summons on
petitioners. Private respondent invokes the ruling in Davao Light & Power Co. v.
Court of Appeals, (204 SCRA 343 [1991]) in support of its contention that the
subsequent acquisition of jurisdiction by the court cured the defect in the
proceedings for attachment. It cites the following portion of the decision in Davao
Light and Power, written by Justice, now Chief Justice, Narvasa: It goes without
saying that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as above indicated issuance of
summons, order of attachment and writ of attachment (and/or appointment of
guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a
pauper litigant, or amendment of the complaint by the plaintiff as a matter of right
without leave of court and however valid and proper they might otherwise be,

these do not and cannot bind and affect the defendant until and unless jurisdiction
over his person is eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to the court's
authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the
defendant not only a copy of the applicant's affidavit and attachment bond, and of
the order of attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint and order
for appointment of guardian ad litem, if any, as also explicitly directed by Section 3,
Rule 14 of the Rules of Court. It is clear from the above excerpt, however, that while
the petition for a writ of preliminary attachment may be granted and the writ itself
issued before the defendant is summoned, the writ of attachment cannot be
implemented until jurisdiction over the person of the defendant is obtained. As this
Court explained, "levy on property pursuant to the writ thus issued may not be
validly effected unless preceded, or contemporaneously accompanied, by service on
the defendant of summons, a copy of the complaint (and of the appointment of
guardian ad litem, if any), the application for attachment (if not incorporated in but
submitted separately from the complaint), the order of attachment, and the
plaintiff's attachment bond."
2.
ID.; ID.; ID.; ID.; NOT CURED BY SUBSEQUENT SERVICE OF SUMMONS.
Further clarification was made in Cuartero v. Court of Appeals, (212 SCRA 260, 266
[1992]) in which it was held: It must be emphasized that the grant of the provisional
remedy of attachment practically involves three stages; first, the court issues the
order granting the application; second, the writ of attachment issues pursuant to
the order granting the writ; and third, the writ is implemented. For the initial two
stages, it is not necessary that jurisdiction over the person of the defendant should
first be obtained. However, once the implementation commences, it is required that
the court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against the
defendant. Any order issuing from the Court will not bind the defendant. Private
respondent argues that the case of Cuartero itself provides for an exception as
shown in the statement that "the court [in issuing the writ of preliminary
attachment] cannot bind and affect the defendant until jurisdiction is eventually
obtained" and that since petitioners were subsequently served with summons, no
question can be raised against the validity of the attachment of petitioners'
properties before such service. The statement in question has been taken out of
context. The full statement reads: It is clear from our pronouncements that a writ of
preliminary attachment may issue even before summons is served upon the
defendant. However, we have likewise ruled that the writ cannot bind and affect the
defendant until jurisdiction over his person is eventually obtained. Therefore, it is
required that when the proper officer commences implementation of the writ of
attachment, service of summons should be simultaneously made. Indeed, as this
Court through its First Division has ruled in H.B. Zachry Co., Inc. v. Court of Appeals

(232 SCRA 329 [1994]) on facts similar to those in these cases, the attachment of
properties before the service of summons on the defendant is invalid, even though
the court later acquires jurisdiction over the defendant. At the very least, then, the
writ of attachment must be served simultaneously with the service of summons
before the writ may be enforced. As the properties of the petitioners were attached
by the sheriff before he had served the summons on them, the levies made must be
considered void.
3.
ID.; ID.; ID.; ID.; CANNOT BE CURED ON THE GROUND THAT THE DEFENDANT
MIGHT DISPOSE THE PROPERTY. Nor can the attachment of petitioners' properties
before the service of summons on them was made be justified on the ground that
unless the writ was then enforced, petitioners would be alerted and might dispose
of their properties before summons could be served on them. The Rules of Court do
not require that issuance of the writ be kept a secret until it can be enforced.
Otherwise in no case may the service of summons on the defendant precede the
levy on attachment. To the contrary, Rule 57, sec. 13 allows the defendant to move
to discharge the attachment even before any attachment is actually levied upon,
thus negating any inference that before its enforcement, the issuance of the writ
must be kept secret. As this Court pointed out in Davao Light and Power, the lifting
of an attachment "may be resorted to even before any property has been levied
on." It is indeed true that proceedings for the issuance of a writ of attachment are
generally ex parte. In Mindanao Savings and Loans Ass'n v. Court of Appeals (172
SCRA 480, 484 [1989]) it was held that no hearing is required for the issuance of a
writ of attachment because this "would defeat the objective of the remedy
[because] the time which such hearing would take could be enough to enable the
defendant to abscond or dispose of his property before a writ of attachment issues."
It is not, however, notice to defendant that is sought to be avoided but the "time
which such hearing would take" because of the possibility that defendant may delay
the hearing to be able to dispose of his properties. On the contrary there may in fact
be a need for a hearing before the writ is issued as where the issue of fraudulent
disposal of property is raised. It is not true that there should be no hearing lest a
defendant learns of the application for attachment and he removes his properties
before the writ can be enforced. On the other hand, to authorize the attachment of
property even before jurisdiction over the person of the defendant is acquired
through the service of summons or his voluntary appearance could lead to abuse. It
is entirely possible that the defendant may not know of the filing of a case against
him and consequently may not be able to take steps to protect his interests. Nor
may sheriff's failure to abide by the law be excused on the pretext that after all the
court later acquired jurisdiction over petitioners. More important than the need for
insuring success in the enforcement of the writ is the need for affirming a principle
by insisting on that "most fundamental of all requisites the jurisdiction of the
court issuing attachment over the person of the defendant." It may be that the
same result would follow from requiring that a new writ be served all over again.

The symbolic significance of such an act, however, is that it would affirm our
commitment to the rule of law.
4.
ID.; ID.; ID.; ID.; EXAMINATION OF THE PROPERTY BY VIRTUE THEREOF;
CONSIDERED VOID. We likewise find petitioners' second contention to be
meritorious. The records show that, on January 21, 1992, respondent judge ordered
the examination of the books of accounts and ledgers of Brunner at the Urban Bank,
Legaspi Village branch, and on January 30, 1992 the records of account of petitioner
Oate at the BPI, even as he ordered the PNB to produce the records regarding
certain checks deposited in it. First, Sun Life defends these court orders on the
ground that the money paid by it to Brunner was subsequently withdrawn from the
Urban Bank after it had been deposited by Brunner and then transferred to
petitioner Oate's account in the BPI and to the unnamed account in the PNB. The
issue before the trial court, however, concerns the nature of the transaction
between petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that
Oate, in his personal capacity and as president of Econ, offered to sell to Sun Life
P46,990,000.00 worth of treasury bills owned by Econ and Brunner at the
discounted price of P39,526,500.82; that on November 27, 1991, Sun Life paid the
price by means of a check payable to Brunner; that Brunner, through its president
Noel L. Dio, issued to it a receipt with undertaking to deliver the treasury bills to
Sun Life; and that on December 4, 1991, Brunner and Dio delivered instead a
promissory note, dated November 27, 1991, in which it was made to appear that
the transaction was a money placement instead of sale of treasury bills. Thus the
issue is whether the money paid to Brunner was the consideration for the sale of
treasury bills, as Sun Life claims, or whether it was money intended for placement,
as petitioners allege. Petitioners do not deny receipt of P39,526,500.82 from Sun
Life. Hence, whether the transaction is considered a sale or money placement does
not make the money the "subject matter of litigation" within the meaning of s. 2 of
Republic Act No. 1405 which prohibits the disclosure or inquiry into bank deposits
except "in cases where the money deposited or invested is the subject matter of
litigation." Nor will it matter whether the money was "swindled" as Sun Life
contends. Since, as already stated, the attachment of petitioners' properties was
invalid, the examination ordered in connection with such attachment must likewise
be considered invalid. Under Rule 57, sec. 10, such examination is only proper
where the property of the person examined has been validly attached.
DECISION
MENDOZA, J p:
These are motions separately filed by petitioners, seeking reconsideration of the
decision of the Second Division holding that although the levy on attachment of
petitioner's properties had been made before the trial court acquired jurisdiction
over them, the subsequent service of summons on them cured the invalidity of the
attachment. LLjur

The motions were referred to the Court en banc in view of the fact that in another
decision rendered by the Third Division on the same question, it was held that the
subsequent acquisition of jurisdiction over the person of a defendant does not
render valid the previous attachment of his property. 1 The Court en banc accepted
the referral and now issues this resolution.
Petitioners maintain that, in accordance with prior decisions of this Court, the
attachment of their properties was void because the trial court had not at that time
acquired jurisdiction over them and that the subsequent service of summons on
them did not cure the invalidity of the levy. They further contend that the
examination of the books and ledgers of the Bank of the Philippine Islands (BPI), the
Philippine National Bank (PNB) and the Urban Bank was a "fishing expedition" which
the trial court should not have authorized because petitioner Emmanuel C. Oate,
whose accounts were examined, was not a signatory to any of the documents
evidencing the transaction between Sun Life Assurance of Canada (Sun Life) and
Brunner Development Corporation (Brunner).cdasia
On the other hand private respondent Sun Life stresses the fact that trial court
eventually acquired jurisdiction over petitioners and contends that this cured the
invalidity of the attachment of petitioner's properties. With respect to the second
contention of petitioners, private respondent argues that the examination of
petitioner Oate's bank account was justified because it was he who signed checks
transferring huge amounts from Brunner's account in the Urban Bank to the PNB
and the BPI.
I.
At the outset, it should be stated that the Court does not in the least doubt the
validity of the writ of attachment issued in these cases. The fact that a criminal
complaint for estafa which Sun Life had filed against petitioner Oate and Noel L.
Dio, president of Brunner, was dismissed by the Office of the Provincial Prosecutor
is immaterial to the resolution of the motions for reconsideration. In the first place,
the dismissal, although later affirmed by the Department of Justice, is pending
reconsideration. In the second place, since the issue in the case below is precisely
whether petitioners were guilty of fraud in contracting their obligation, resolution of
the question must await the trial of the main case. cdasia
However, we find petitioner's contention respecting the validity of the attachment of
their properties to be well taken. We hold that the attachment of petitioner's
properties prior to the acquisition of jurisdiction by the respondent court is void and
that the subsequent service of summons on petitioners did not cure the invalidity of
such attachment. The records show that before the summons and the complaint
were served on petitioners Oate and Econ Holdings Corporation (Econ) on January
9, 1992, Deputy Sheriff Arturo C. Flores had already served on January 3, 1992
notices of garnishment on the PNB Head Office 2 and on all its Metro Manila

branches and on A.B. Capital. 3 In addition he made other levies before the service
of summons on petitioners, to wit:
On January 6, 1992, he served notices of garnishment on the Urban Bank Head
Office and all its Metro Manila branches, 4 and on the BPI. 5
On the same day, he levied on attachment Oate's condominium unit at the
Amorsolo Apartments Condominium Project, covered by Condominium Certificate of
Title No. S-1758. 6
On January 7, 1992, he served notice of garnishment on the Union Bank of the
Philippines. 7
On January 8, 1992, attached Oate's lot, consisting of 1,256 square meters, at
the Ayala-Alabang Subdivision, Alabang, Muntinlupa, covered by TCT No. 112673. 8
First. The Deputy Sheriff claims that he had tried to serve the summons with a copy
of the complaint on petitioners on January 3, 1992 but that there was no one in the
offices of petitioners on whom he could make a service. This is denied by petitioners
who claim that their office was always open and that Adeliza M. Jaranilla, Econ's
Chief Accountant who eventually received summons on behalf of Oate and Econ,
was present that day. Whatever the truth is, the fact is that no other attempt was
made by the sheriff to serve the summons except on January 9, 1992, in the case of
Oate and Econ, and on January 16, 1992, in the case of Dio. Meantime, he made
several levies, which indicates a predisposition to serve the writ of attachment in
anticipation of the eventual acquisition by the court of jurisdiction over petitioners.
cdasia
Second. Private respondent invokes the ruling in Davao Light & Power Co. v. Court of
Appeals 9 in support of its contention that the subsequent acquisition of jurisdiction
by the court cured the defect in the proceedings for attachment. It cites the
following portion of the decision in Davao Light and Power, written by Justice, now
Chief Justice Narvasa:
It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of the defendant, as above indicated
issuance of summons, order of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of authority to the plaintiff to prosecute
the suit as a pauper litigant, or amendment of the complaint by the plaintiff as a
matter of right without leave of court and however valid and proper they might
otherwise be, these do not and cannot bind and affect the defendant until and
unless jurisdiction over his person is eventually obtained by the court, either by
service on him of summons or other coercive process or his voluntary submission to
the court's authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the
defendant not only a copy of the applicant's affidavit and attachment bond, and of

the order of attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint and order
for appointment of Guardian ad litem, if any, as also explicitly directed by Section 3,
Rule 14 of the Rules of Court. 10
It is clear from the above excerpt, however, that while the petition for a writ of
preliminary attachment may be granted and the writ itself issued before the
defendant is summoned, the writ of attachment cannot be implemented until
jurisdiction over the person of the defendant is obtained. As this Court explained,
"levy on property pursuant to the writ thus issued may not be validly effected
unless preceded, or contemporaneously accompanied, by service on the defendant
of summons, a copy of the complaint (and of the appointment of guardian ad litem,
if any), the application for attachment (if not incorporated in but submitted
separately from the complaint), the order of attachment, and the plaintiff's
attachment bond." 11
Further clarification on this point was made in Cuartero v. Court of Appeals, 12 in
which it was held:
It must be emphasized that the grant of the provisional remedy of attachment
practically involves three stages; first, the court issues the order granting the
application; second, the writ of attachment issues pursuant to the order granting
the writ; and third, the writ is implemented. For the initial two stages, it is not
necessary that jurisdiction over the person of the defendant should first be
obtained. However, once the implementation commences, it is required that the
court must have acquired jurisdiction over the defendant for without such
jurisdiction, the court has no power and authority to act in any manner against the
defendant. Any order issuing from the Court will not bind the defendant. cdasia
Private respondent argues that the case of Cuartero itself provides for an exception
as shown in the statement that "the court [in issuing the writ of preliminary
attachment] cannot bind and affect the defendant until jurisdiction is eventually
obtained" and that since petitioners were subsequently served with summons, no
question can be raised against the validity of the attachment of petitioner's
properties before such service.
The statement in question has been taken out of context. The full statement reads:
It is clear from our pronouncements that a writ of preliminary attachment may issue
even before summons is served upon the defendant. However, we have likewise
ruled that the writ cannot bind and affect the defendant until jurisdiction over his
person is eventually obtained. Therefore it is required that when the proper officer
commences implementation of the writ of attachment, service of summons should
be simultaneously made. 13

Indeed, as this Court through its First Division has ruled on facts similar to those in
these cases, the attachment of properties before the service of summons on the
defendant is invalid, even though the court later acquires jurisdiction over the
defendant. 14 At the very least, then, the writ of attachment must be served
simultaneously with the service of summons before the writ may be enforced. As
the properties of the petitioners were attached by the sheriff before he had served
the summons on them, the levies made must be considered void. cdasia
Third. Nor can the attachment of petitioners' properties before the service of
summons on them was made be justified on the ground that unless the writ was
then enforced, petitioners would be alerted and might dispose of their properties
before summons could be served on them.
The Rules of Court do not require that issuance of the writ be kept a secret until it
can be enforced. Otherwise in no case may the service of summons on the
defendant precede the levy on attachment. To the contrary, Rule 57, s. 13 allows
the defendant to move to discharge the attachment even before any attachment is
actually levied upon, thus negating any inference that before its enforcement, the
issuance of the writ must be kept secret. Rule 57, s. 13 provides:
SEC. 13.
Discharge of attachment for improper or irregular issuance. The
party whose property has been attached may also, at any time either before or after
the release of the attached property, or before any attachment shall have been
actually levied, upon reasonable notice to the attaching creditor, apply to the judge
who granted the order, or to the judge of the court in which the action is pending,
for an order to discharge the attachment on the ground that the same was
improperly or irregularly issued . . . . (Emphasis added).
As this Court pointed out in Davao Light and Power, 15 the lifting of an attachment
"may be resorted to even before any property has been levied on."
It is indeed true that proceedings for the issuance of a writ of attachment are
generally ex parte. In Mindanao Savings and Loans Ass'n v. Court of Appeals 16 it
was held that no hearing is required for the issuance of a writ of attachment
because this "would defeat the objective of the remedy [because] the time which
such hearing would take could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues." It is not, however, notice
to defendant that is sought to be avoided but the "time which such hearing would
take" because of the possibility that defendant may delay the hearing to be able to
dispose of his properties. On the contrary there may in fact be a need for a hearing
before the writ is issued as where the issue of fraudulent disposal of property is
raised. 17 It is not true that there should be no hearing lest a defendant learns of
the application for attachment and he removes his properties before the writ can be
enforced. cdasia

On the other hand, to authorize the attachment of property even before jurisdiction
over the person of the defendant is acquired through the service of summons or his
voluntary appearance could lead to abuse. It is entirely possible that the defendant
may not know of the filing of a case against him and consequently may not be able
to take steps to protect his interests.
Nor may sheriff's failure to abide by the law be excused on the pretext that after all
the court later acquired jurisdiction over petitioners. More important than the need
for insuring success in the enforcement of the writ is the need for affirming a
principle by insisting on that "most fundamental of all requisites the jurisdiction
of the court issuing attachment over the person of the defendant." 18 It may be that
the same result would follow from requiring that a new writ be served all over again.
The symbolic significance of such an act, however, is that it would affirm our
commitment to the rule of law. 19
II.
We likewise find petitioner's second contention to be meritorious. The records show
that, on January 21, 1992, respondent judge ordered the examination of the books
of accounts and ledgers of Brunner at the Urban Bank, Legazpi Village branch, and
on January 30, 1992 the records of account of petitioner Oate at the BPI, even as
he ordered the PNB to produce the records regarding certain checks deposited in it.
cdasia
First. Sun Life depends these court orders on the ground that the money paid by it
to Brunner was subsequently withdrawn from the Urban Bank after it had been
deposited by Brunner and then transferred to petitioner Oate's account in the BPI
and to the unnamed account in the PNB.
The issue before the trial court, however, concerns the nature of the transaction
between petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that
Oate, in his personal capacity and as president of Econ, offered to sell to Sun Life
P46,990,000.00 worth of treasury bills owned by Econ and Brunner at the
discounted price of P39,526,500.82; that on November 27, 1991, Sun Life paid the
price by means of a check payable to Brunner; that Brunner, through its president
Noel L. Dio, issued to it a receipt with undertaking to deliver the treasury bills to
Sun Life; and that on December 4, 1991, Brunner and Dio delivered instead a
promissory note, dated November 27, 1991, in which it was made to appear that
the transaction was a money placement instead of sale of treasury bills.
Thus the issue is whether the money paid to Brunner was the consideration for the
sale of treasury bills, as Sun Life claims, or whether it was money intended for
placement, as petitioners allege. Petitioners do not deny receipt of P39,526,500.82
from Sun Life. Hence, whether the transaction is considered a sale or money
placement does not make the money the "subject matter of litigation" within the
meaning of s. 2 of Republic Act No. 1405 which prohibits the disclosure or inquiry

into bank deposits except "in cases where the money deposited or invested is the
subject matter of litigation." Nor will it matter whether the money was "swindled" as
Sun Life contends.
Second. The examination of bank books and records cannot be justified under Rule
57, s. 10. This provision states:cdasia
SEC. 10.
Examination of party whose property is attached and persons indebted
to him or controlling his property; delivery of property to officer. Any person
owing debts to the party whose property is attached or having in his possession or
under his control any credit or other personal property belonging to such party, may
be required to attend before the court in which the action is pending, or before a
commissioner appointed by the court, and be examined on oath respecting the
same. The party whose property is attached may also be required to attend for the
purpose of giving information respecting his property, and may be examined on
oath. The court may, after such examination, order personal property capable of
manual delivery belonging to him, in the possession of the person so required to
attend before the court, to be delivered to the clerk of the court, sheriff, or other
proper officer on such terms as may be just, having reference to any lien thereon or
claims against the same, to await the judgment in the action.
Since, as already stated, the attachment of petitioner's properties was invalid, the
examination ordered in connection with such attachment must likewise be
considered invalid. Under Rule 57, s. 10, as quoted above such examination is only
proper where the property of the person examined has been validly attached.
WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and SET
ASIDE and another one is rendered GRANTING the petitions for certiorari and
SETTING ASIDE the orders dated February 26, 1992 and September 9, 1992, insofar
as they authorize the attachment of petitioner's properties and the examination of
bank books and records pertaining to their accounts, and ORDERING respondent
Judge Zeus C. Abrogar
(1)
forthwith to issue an alias writ of attachment upon the same bond furnished
by respondent Sun Life Assurance Company of Canada;
(2)
direct the sheriff to lift the levy under the original writ of attachment and
simultaneously levy on the same properties pursuant to the alias writ so issued; and
cdasia
(3)
take such steps as may be necessary to insure that there will be no
intervening period between the lifting of the original attachment and the
subsequent levy under the alias writ.
Petitioners may file the necessary counterbond to prevent subsequent levy or to
dissolve the attachment after such levy.

SO ORDERED.

[G.R. No. 158997. October 6, 2008.]

FORT BONIFACIO DEVELOPMENT CORPORATION, petitioner, vs. YLLAS LENDING
CORPORATION and JOSE S. LAURAYA, in his official capacity as President,
respondents.
DECISION
CARPIO, J p:
The Case
This is a petition for review on certiorari 1 of the Orders issued on 7 March 2003 2
and 3 July 2003 3 by Branch 59 of the Regional Trial Court of Makati City (trial court)
in Civil Case No. 01-1452. The trial court's orders dismissed Fort Bonifacio
Development Corporation's (FBDC) third party claim and denied FBDC's Motion to
Intervene and Admit Complaint in Intervention. ADcHES
The Facts
On 24 April 1998, FBDC executed a lease contract in favor of Tirreno, Inc. (Tirreno)
over a unit at the Entertainment Center Phase 1 of the Bonifacio Global City in
Taguig, Metro Manila. The parties had the lease contract notarized on the day of its
execution. Tirreno used the leased premises for Savoia Ristorante and La Strega Bar.
HCTAEc
Two provisions in the lease contract are pertinent to the present case: Section 20,
which is about the consequences in case of default of the lessee, and Section 22,
which is about the lien on the properties of the lease. The pertinent portion of
Section 20 reads:
Section 20. Default of the Lessee
20.1 The LESSEE shall be deemed to be in default within the meaning of this
Contract in case: cTECIA
(i)
The LESSEE fails to fully pay on time any rental, utility and service charge or
other financial obligation of the LESSEE under this Contract;

xxx

xxx

xxx

20.2 Without prejudice to any of the rights of the LESSOR under this Contract, in
case of default of the LESSEE, the lessor shall have the right to: CSaITD
(i)
Terminate this Contract immediately upon written notice to the LESSEE,
without need of any judicial action or declaration;
xxx

xxx

xxx

Section 22, on the other hand, reads:

Section 22. Lien on the Properties of the Lessee.
Upon the termination of this Contract or the expiration of the Lease Period without
the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR
shall have the right to retain possession of the properties of the LESSEE used or
situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to
offset the prevailing value thereof as appraised by the LESSOR against any unpaid
rentals, charges and/or damages. If the LESSOR does not want to use said
properties, it may instead sell the same to third parties and apply the proceeds
thereof against any unpaid rentals, charges and/or damages. SHTaID
Tirreno began to default in its lease payments in 1999. By July 2000, Tirreno was
already in arrears by P5,027,337.91. FBDC and Tirreno entered into a settlement
agreement on 8 August 2000. Despite the execution of the settlement agreement,
FBDC found need to send Tirreno a written notice of termination dated 19
September 2000 due to Tirreno's alleged failure to settle its outstanding obligations.
On 29 September 2000, FBDC entered and occupied the leased premises. FBDC also
appropriated the equipment and properties left by Tirreno pursuant to Section 22 of
their Contract of Lease as partial payment for Tirreno's outstanding obligations.
Tirreno filed an action for forcible entry against FBDC before the Municipal Trial
Court of Taguig. Tirreno also filed a complaint for specific performance with a prayer
for the issuance of a temporary restraining order and/or a writ of preliminary
injunction against FBDC before the Regional Trial Court (RTC) of Pasig City. The RTC
of Pasig City dismissed Tirreno's complaint for forum-shopping. aIcDCA
On 4 March 2002, Yllas Lending Corporation and Jose S. Lauraya, in his official
capacity as President, (respondents) caused the sheriff of Branch 59 of the trial
court to serve an alias writ of seizure against FBDC. On the same day, FBDC served
on the sheriff an affidavit of title and third party claim. FBDC found out that on 27
September 2001, respondents filed a complaint for Foreclosure of Chattel Mortgage
with Replevin, docketed as Civil Case No. 01-1452, against Tirreno, Eloisa Poblete
Todaro (Eloisa), and Antonio D. Todaro (Antonio), in their personal and individual
capacities, and in Eloisa's official capacity as President. In their complaint,
respondents alleged that they lent a total of P1.5 million to Tirreno, Eloisa, and

Antonio. On 9 November 2000, Tirreno, Eloisa and Antonio executed a Deed of

Chattel Mortgage in favor of respondents as security for the loan. The following
properties are covered by the Chattel Mortgage:
a.
Furniture, Fixtures and Equipment of Savoia Ristorante and La Strega Bar, a
restaurant owned and managed by [Tirreno], inclusive of the leasehold right of
[Tirreno] over its rented building where [the] same is presently located. EcDSTI
b.
Goodwill over the aforesaid restaurant, including its business name, business
sign, logo, and any and all interest therein.
c.
Eighteen (18) items of paintings made by Florentine Master, Gino Tili, which
are fixtures in the above-named restaurant.
The details and descriptions of the above items are specified in Annex "A" which is
hereto attached and forms as an integral part of this Chattel Mortgage instrument. 4
cHAaEC
In the Deed of Chattel Mortgage, Tirreno, Eloisa, and Antonio made the following
warranties to respondents:
1.

WARRANTIES: The MORTGAGOR hereby declares and warrants that:

a.
The MORTGAGOR is the absolute owner of the above named properties
subject of this mortgage, free from all liens and encumbrances. IcTCHD
b.
There exist no transaction or documents affecting the same previously
presented for, and/or pending transaction. 5
Despite FBDC's service upon him of an affidavit of title and third party claim, the
sheriff proceeded with the seizure of certain items from FBDC's premises. The
sheriff's partial return indicated the seizure of the following items from FBDC:
DIESaC
A.

FIXTURES

(2) Smaller Murano Chandeliers

(1) Main Murano Chandelier
B.

EQUIPMENT

(13) Uni-Air Split Type 2HP Air Cond.

(2) Uni-Air Split Type 1HP Air Cond.
(3) Uni-Air Window Type 2HP Air Cond.
(56) Chairs

(1) Table
(2) boxes Kitchen equipments [sic] 6
The sheriff delivered the seized properties to respondents. FBDC questioned the
propriety of the seizure and delivery of the properties to respondents without an
indemnity bond before the trial court. FBDC argued that when respondents and
Tirreno entered into the chattel mortgage agreement on 9 November 2000, Tirreno
no longer owned the mortgaged properties as FBDC already enforced its lien on 29
September 2000. TSHcIa
In ruling on FBDC's motion for leave to intervene and to admit complaint in
intervention, the trial court stated the facts as follows:
Before this Court are two pending incidents, to wit: 1) [FBDC's] Third-Party Claim
over the properties of [Tirreno] which were seized and delivered by the sheriff of
this Court to [respondents]; and 2) FBDC's Motion to Intervene and to Admit
Complaint in Intervention.
Third party claimant, FBDC, anchors its claim over the subject properties on
Sections 20.2(i) and 22 of the Contract of Lease executed by [FBDC] with Tirreno.
Pursuant to said Contract of Lease, FBDC took possession of the leased premises
and proceeded to sell to third parties the properties found therein and appropriated
the proceeds thereof to pay the unpaid lease rentals of [Tirreno]. AICTcE
FBDC, likewise filed a Motion to Admit its Complaint-in-Intervention.
In Opposition to the third-party claim and the motion to intervene, [respondents]
posit that the basis of [FBDC's] third party claim being anchored on the aforesaid
Contract [of] Lease is baseless. [Respondents] contend that the stipulation of the
contract of lease partakes of a pledge which is void under Article 2088 of the Civil
Code for being pactum commissorium. AEScHa
xxx

xxx

xxx

By reason of the failure of [Tirreno] to pay its lease rental and fees due in the
amount of P5,027,337.91, after having notified [Tirreno] of the termination of the
lease, . . . FBDC took possession of [Tirreno.'s] properties found in the premises and
sold those which were not of use to it. Meanwhile, [respondents], as mortgagee of
said properties, filed an action for foreclosure of the chattel mortgage with replevin
and caused the seizure of the same properties which [FBDC] took and appropriated
in payment of [Tirreno's] unpaid lease rentals. 7 ITcCaS
The Ruling of the Trial Court
In its order dated 7 March 2003, the trial court stated that the present case raises
the questions of who has a better right over the properties of Tirreno and whether

FBDC has a right to intervene in respondents' complaint for foreclosure of chattel

mortgage. caEIDA
In deciding against FBDC, the trial court declared that Section 22 of the lease
contract between FBDC and Tirreno is void under Article 2088 of the Civil Code. 8
The trial court stated that Section 22 of the lease contract pledges the properties
found in the leased premises as security for the payment of the unpaid rentals.
Moreover, Section 22 provides for the automatic appropriation of the properties
owned by Tirreno in the event of its default in the payment of monthly rentals to
FBDC. Since Section 22 is void, it cannot vest title of ownership over the seized
properties. Therefore, FBDC cannot assert that its right is superior to respondents,
who are the mortgagees of the disputed properties. ACTEHI
The trial court quoted from Bayer Phils. v. Agana 9 to justify its ruling that FBDC
should have filed a separate complaint against respondents instead of filing a
motion to intervene. The trial court quoted from Bayer as follows:
In other words, construing Section 17 of Rule 39 of the Revised Rules of Court (now
Section 16 of the 1997 Rules on Civil Procedure), the rights of third-party claimants
over certain properties levied upon by the sheriff to satisfy the judgment may not
be taken up in the case where such claims are presented but in a separate and
independent action instituted by the claimants. 10 cSEaDA
The dispositive portion of the trial court's decision reads:
WHEREFORE, premises considered, [FBDC's] Third Party Claim is hereby DISMISSED.
Likewise, the Motion to Intervene and Admit Complaint in Intervention is DENIED. 11
FBDC filed a motion for reconsideration on 9 May 2003. The trial court denied
FBDC's motion for reconsideration in an order dated 3 July 2003. FBDC filed the
present petition before this Court to review pure questions of law. CIcEHS
The Issues
FBDC alleges that the trial court erred in the following:
1.
Dismissing FBDC's third party claim upon the trial court's erroneous
interpretation that FBDC has no right of ownership over the subject properties
because Section 22 of the contract of lease is void for being a pledge and a pactum
commissorium; IaTSED
2.
Denying FBDC intervention on the ground that its proper remedy as third
party claimant over the subject properties is to file a separate action; and
3.
Depriving FBDC of its properties without due process of law when the trial
court erroneously dismissed FBDC's third party claim, denied FBDC's intervention,

and did not require the posting of an indemnity bond for FBDC's protection. 12
TCASIH
The Ruling of the Court
The petition has merit.
Taking of Lessee's Properties without Judicial Intervention
We reproduce Section 22 of the Lease Contract below for easy reference:

TSHIDa

Section 22. Lien on the Properties of the Lessee.

Upon the termination of this Contract or the expiration of the Lease Period without
the rentals, charges and/or damages, if any, being fully paid or settled, the LESSOR
shall have the right to retain possession of the properties of the LESSEE used or
situated in the Leased Premises and the LESSEE hereby authorizes the LESSOR to
offset the prevailing value thereof as appraised by the LESSOR against any unpaid
rentals, charges and/or damages. If the LESSOR does not want to use said
properties, it may instead sell the same to third parties and apply the proceeds
thereof against any unpaid rentals, charges and/or damages. SECAHa
Respondents, as well as the trial court, contend that Section 22 constitutes a
pactum commissorium, a void stipulation in a pledge contract. FBDC, on the other
hand, states that Section 22 is merely a dacion en pago.
Articles 2085 and 2093 of the Civil Code enumerate the requisites essential to a
contract of pledge: (1) the pledge is constituted to secure the fulfillment of a
principal obligation; (2) the pledgor is the absolute owner of the thing pledged; (3)
the persons constituting the pledge have the free disposal of their property or have
legal authorization for the purpose; and (4) the thing pledged is placed in the
possession of the creditor, or of a third person by common agreement. Article 2088
of the Civil Code prohibits the creditor from appropriating or disposing the things
pledged, and any contrary stipulation is void. IcSEAH
On the other hand, Article 1245 of the Civil Code defines dacion en pago, or dation
in payment, as the alienation of property to the creditor in satisfaction of a debt in
money. Dacion en pago is governed by the law on sales. Philippine National Bank v.
Pineda 13 held that dation in payment requires delivery and transmission of
ownership of a thing owned by the debtor to the creditor as an accepted equivalent
of the performance of the obligation. There is no dation in payment when there is no
transfer of ownership in the creditor's favor, as when the possession of the thing is
merely given to the creditor by way of security. IEAacS
Section 22, as worded, gives FBDC a means to collect payment from Tirreno in case
of termination of the lease contract or the expiration of the lease period and there
are unpaid rentals, charges, or damages. The existence of a contract of pledge,

however, does not arise just because FBDC has means of collecting past due rent
from Tirreno other than direct payment. The trial court concluded that Section 22
constitutes a pledge because of the presence of the first three requisites of a
pledge: Tirreno's properties in the leased premises secure Tirreno's lease payments;
Tirreno is the absolute owner of the said properties; and the persons representing
Tirreno have legal authority to constitute the pledge. However, the fourth requisite,
that the thing pledged is placed in the possession of the creditor, is absent. There is
non-compliance with the fourth requisite even if Tirreno's personal properties are
found in FBDC's real property. Tirreno's personal properties are in FBDC's real
property because of the Contract of Lease, which gives Tirreno possession of the
personal properties. Since Section 22 is not a contract of pledge, there is no pactum
commissorium. TEDAHI
FBDC admits that it took Tirreno's properties from the leased premises without
judicial intervention after terminating the Contract of Lease in accordance with
Section 20.2. FBDC further justifies its action by stating that Section 22 is a
forfeiture clause in the Contract of Lease and that Section 22 gives FBDC a remedy
against Tirreno's failure to comply with its obligations. FBDC claims that Section 22
authorizes FBDC to take whatever properties that Tirreno left to pay off Tirreno's
obligations. HIaTCc
We agree with FBDC.
A lease contract may be terminated without judicial intervention. Consing v.
Jamandre upheld the validity of a contractually-stipulated termination clause:
This stipulation is in the nature of a resolutory condition, for upon the exercise by
the [lessor] of his right to take possession of the leased property, the contract is
deemed terminated. This kind of contractual stipulation is not illegal, there being
nothing in the law proscribing such kind of agreement. aDcEIH
xxx

xxx

xxx

Judicial permission to cancel the agreement was not, therefore necessary because
of the express stipulation in the contract of [lease] that the [lessor], in case of
failure of the [lessee] to comply with the terms and conditions thereof, can takeover the possession of the leased premises, thereby cancelling the contract of sublease. Resort to judicial action is necessary only in the absence of a special
provision granting the power of cancellation. 14 CAcDTI
A lease contract may contain a forfeiture clause. Country Bankers Insurance Corp. v.
Court of Appeals upheld the validity of a forfeiture clause as follows:
A provision which calls for the forfeiture of the remaining deposit still in the
possession of the lessor, without prejudice to any other obligation still owing, in the
event of the termination or cancellation of the agreement by reason of the lessee's

violation of any of the terms and conditions of the agreement is a penal clause that
may be validly entered into. A penal clause is an accessory obligation which the
parties attach to a principal obligation for the purpose of insuring the performance
thereof by imposing on the debtor a special prestation (generally consisting in the
payment of a sum of money) in case the obligation is not fulfilled or is irregularly or
inadequately fulfilled. 15 ADcHES
In Country Bankers, we allowed the forfeiture of the lessee's advance deposit of
lease payment. Such a deposit may also be construed as a guarantee of payment,
and thus answerable for any unpaid rent or charges still outstanding at any
termination of the lease.
In the same manner, we allow FBDC's forfeiture of Tirreno's properties in the leased
premises. By agreement between FBDC and Tirreno, the properties are answerable
for any unpaid rent or charges at any termination of the lease. Such agreement is
not contrary to law, morals, good customs, or public policy. Forfeiture of the
properties is the only security that FBDC may apply in case of Tirreno's default in its
obligations. HDCAaS
Intervention versus Separate Action
Respondents posit that the right to intervene, although permissible, is not an
absolute right. Respondents agree with the trial court's ruling that FBDC's proper
remedy is not intervention but the filing of a separate action. Moreover,
respondents allege that FBDC was accorded by the trial court of the opportunity to
defend its claim of ownership in court through pleadings and hearings set for the
purpose. FBDC, on the other hand, insists that a third party claimant may vindicate
his rights over properties taken in an action for replevin by intervening in the
replevin action itself. acHETI
We agree with FBDC.
Both the trial court and respondents relied on our ruling in Bayer Phils. v. Agana 16
to justify their opposition to FBDC's intervention and to insist on FBDC's filing of a
separate action. In Bayer, we declared that the rights of third party claimants over
certain properties levied upon by the sheriff to satisfy the judgment may not be
taken up in the case where such claims are presented, but in a separate and
independent action instituted by the claimants. However, both respondents and the
trial court overlooked the circumstances behind the ruling in Bayer, which makes
the Bayer ruling inapplicable to the present case. The third party in Bayer filed his
claim during execution; in the present case, FBDC filed for intervention during the
trial. IESTcD
The timing of the filing of the third party claim is important because the timing
determines the remedies that a third party is allowed to file. A third party claimant
under Section 16 of Rule 39 (Execution, Satisfaction and Effect of Judgments) 17 of

the 1997 Rules of Civil Procedure may vindicate his claim to the property in a
separate action, because intervention is no longer allowed as judgment has already
been rendered. A third party claimant under Section 14 of Rule 57 (Preliminary
Attachment) 18 of the 1997 Rules of Civil Procedure, on the other hand, may
vindicate his claim to the property by intervention because he has a legal interest in
the matter in litigation. 19 DAcSIC
We allow FBDC's intervention in the present case because FBDC satisfied the
requirements of Section 1, Rule 19 (Intervention) of the 1997 Rules of Civil
Procedure, which reads as follows:
Section 1.
Who may intervene. A person who has a legal interest in the matter
in litigation, or in the success of either of the parties, or an interest against both, or
is so situated as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof may, with leave of court,
be allowed to intervene in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's rights may be fully protected in
a separate proceeding. SaTAED
Although intervention is not mandatory, nothing in the Rules proscribes
intervention. The trial court's objection against FBDC's intervention has been set
aside by our ruling that Section 22 of the lease contract is not pactum
commissorium.
Indeed, contrary to respondents' contentions, we ruled in BA Finance Corporation v.
Court of Appeals that where the mortgagee's right to the possession of the specific
property is evident, the action need only be maintained against the possessor of the
property. However, where the mortgagee's right to possession is put to great doubt,
as when a contending party might contest the legal bases for mortgagee's cause of
action or an adverse and independent claim of ownership or right of possession is
raised by the contending party, it could become essential to have other persons
involved and accordingly impleaded for a complete determination and resolution of
the controversy. Thus: IHEAcC
A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the
possession of the property, unless and until the mortgagor defaults and the
mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of
possession is conditioned upon the actual default which itself may be controverted,
the inclusion of other parties, like the debtor or the mortgagor himself, may be
required in order to allow a full and conclusive determination of the case. When the
mortgagee seeks a replevin in order to effect the eventual foreclosure of the
mortgage, it is not only the existence of, but also the mortgagor's default on, the
chattel mortgage that, among other things, can properly uphold the right to replevy
the property. The burden to establish a valid justification for that action lies with the

plaintiff [-mortgagee]. An adverse possessor, who is not the mortgagor, cannot just
be deprived of his possession, let alone be bound by the terms of the chattel
mortgage contract, simply because the mortgagee brings up an action for replevin.
20 (Emphasis added) SITCcE
FBDC exercised its lien to Tirreno's properties even before respondents and Tirreno
executed their Deed of Chattel Mortgage. FBDC is adversely affected by the
disposition of the properties seized by the sheriff. Moreover, FBDC's intervention in
the present case will result in a complete adjudication of the issues brought about
by Tirreno's creation of multiple liens on the same properties and subsequent
default in its obligations. EcHTDI
Sheriff's Indemnity Bond
FBDC laments the failure of the trial court to require respondents to file an
indemnity bond for FBDC's protection. The trial court, on the other hand, did not
mention the indemnity bond in its Orders dated 7 March 2003 and 3 July 2003.
Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to
respondents the properties subject of this case in view of respondents' failure to file
a bond. The bond in Section 14 of Rule 57 (proceedings where property is claimed
by third person) is different from the bond in Section 3 of the same rule (affidavit
and bond). Under Section 14 of Rule 57, the purpose of the bond is to indemnify the
sheriff against any claim by the intervenor to the property seized or for damages
arising from such seizure, which the sheriff was making and for which the sheriff
was directly responsible to the third party. Section 3, Rule 57, on the other hand,
refers to the attachment bond to assure the return of defendant's personal property
or the payment of damages to the defendant if the plaintiff's action to recover
possession of the same property fails, in order to protect the plaintiff's right of
possession of said property, or prevent the defendant from destroying the same
during the pendency of the suit. aCcSDT
Because of the absence of the indemnity bond in the present case, FBDC may also
hold the sheriff for damages for the taking or keeping of the properties seized from
FBDC.
WHEREFORE, we GRANT the petition. We SET ASIDE the Orders dated 7 March 2003
and 3 July 2003 of Branch 59 of the Regional Trial Court of Makati City in Civil Case
No. 01-1452 dismissing Fort Bonifacio Development Corporation's Third Party Claim
and denying Fort Bonifacio Development Corporation's Motion to Intervene and
Admit Complaint in Intervention. We REINSTATE Fort Bonifacio Development
Corporation's Third Party Claim and GRANT its Motion to Intervene and Admit
Complaint in Intervention. Fort Bonifacio Development Corporation may hold the
Sheriff liable for the seizure and delivery of the properties subject of this case
because of the lack of an indemnity bond. CTDHSE

SO ORDERED.
Azcuna, Reyes * and Leonardo-de Castro, JJ., concur.
Puno, C.J., took no part.
Footnotes
1.

Under Rule 45 of the 1997 Rules of Civil Procedure.

TDCAIS

2.

Rollo, pp. 49-52. Penned by Judge Winlove M. Dumayas.

3.

Id. at 53.

4.

Id. at 100-101.

5.

Id. at 101.

6.

Id. at 121.

7.

Id. at 49-50.

8.
Article 2088 provides that "[t]he 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". EaHcDS
9.

159 Phil. 955 (1975).

10.

Rollo, p. 52.

11.

Id.

12.

Id. at 19.

13.

274 Phil. 274 (1991).

14.

159-A Phil. 291, 298 (1975).

15.

G.R. No. 85161, 9 September 1991, 201 SCRA 458, 464-465.

16.

Supra note 9.

ETCcSa

17.
Proceedings where property claimed by third person. If the property levied
on is claimed by any person other than the judgment obligor 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 the same upon the officer
making the levy and a copy thereof upon the judgment obligee, the officer shall not
be bound to keep the property, unless such judgment obligee, on demand of the
officer, files a bond approved by the court to indemnify the third-party claimant in a
sum not less than the value of the property levied on. In case of disagreement as to

such value, the same shall be determined by the court issuing the writ of execution.
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. EHSADc
The officer shall not be liable for damages for the taking or keeping of the
property, to any third-party claimant if such bond is filed. Nothing herein contained
shall prevent such claimant or any third person from vindicating his claim to the
property in a separate action, or prevent the judgment obligee from claiming
damages in the same or separate action against a third-party claimant who filed a
frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall not be
required, and in case the sheriff or levying officer is sued for damages as a result of
the levy, he shall be represented by the Solicitor General and if held liable therefor,
the actual damages adjudged by the court shall be paid by the National Treasurer
out of such funds as may be appropriated for the purpose.
18.
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. DTcASE
The sheriff shall not be liable for damages, for the taking or keeping of such
property, to any such third-party claimant if such bond shall be filed. Nothing herein
contained shall prevent such claimant or any third person from vindicating his claim
to the property, or prevent the applicant from claiming damages against a thirdparty claimant who filed a frivolous or plainly spurious claim, in the same or a
separate action.
When the writ of attachment is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall not be
required, and in case the sheriff is sued for damages as a result of the attachment,
he shall be represented by the Solicitor General, and if held liable therefor, the

actual damages adjudged by the court shall be paid by the National Treasurer out of
the funds appropriated for the purpose. IEDaAc
19.
Yllas Lending Corporation filed a complaint for Foreclosure of Chattel
Mortgage with Replevin. However, Yllas Lending Corporation did not allege that it is
the owner of the properties being claimed, which is a requirement in the issuance of
a writ of replevin. Yllas Lending Corporation merely stated that it is Tirreno's chattel
mortgagee.
20.

G.R. No. 102998, 5 July 1996, 258 SCRA 102, 113-114.

*
As replacement of Justice Renato C. Corona who is on official leave per
Special Order No. 520. ATSIED

Copyright 2005

C D T e c h n o l o g i e s A s i a, I n c.

G.R. No. 156962 October 6, 2008

Victorias Milling Co., Inc. v. Padilla
FIRST DIVISION
[G.R. No. 156962. October 6, 2008.]
VICTORIAS MILLING CO., INC., petitioner, vs. LUIS J. PADILLA, EMMANUEL S.
DUTERTE, CARLOS TUPAS, JR., and ROLANDO C. RODRIGUEZ, respondents.
DECISION
CARPIO, J p:
The Case
This petition for review assails the 13 June 2002 Decision 1 and the 22 January 2003
Resolution 2 of the Court of Appeals in CA-G.R. SP No. 65895. The Court of Appeals
dismissed the petition for certiorari filed by petitioner on the grounds of (1) lack of
standing to prosecute the criminal cases for falsification of private documents
against respondents; (2) failure to attach the assailed order in the petition for
certiorari filed in the Regional Trial Court; and (3) late filing of the petition for
certiorari in the Regional Trial Court. CSIDEc
The Facts
The present controversy stemmed from a single complaint for falsification of private
documents filed by the Chief of Police 3 of the then Municipality of Victorias against

respondents Luis J. Padilla (Padilla), Emmanuel S. Duterte (Duterte), Carlos Tupas, Jr.
(Tupas), and Rolando C. Rodriguez (Rodriguez). Docketed as Criminal Case No. 8069V, the complaint reads:
COMPLAINT
The undersigned, Station Commander, Victorias Police Station, PNP Victorias, Negros
Occidental, hereby accuses Luis J. Padilla, Emmanuel S. Duterte, Carlos Tupas, Jr.
and Rolando C. Rodriguez of the crime of Violation of Article 172 Paragraph 2 of the
Revised Penal Code on Falsification of Private Documents committed as follows:
SaAcHE
That confederating, working and acting in conspiracy with one another and with
intent to cause damage to Victorias Milling Company (VMC), Luis J. Padilla,
Emmanuel S. Duterte, Carlos Tupas, Jr. and Rolando C. Rodriguez on various dates
and in various quantities during the period from 21 January 1992 to 02 December
1996 committed the crime of falsification of private documents in Victorias, Negros
Occidental by executing, issuing and signing RSDOs (Refined Sugar Invoice/Delivery
Orders) amounting to THREE MILLION ONE HUNDRED FORTY TWO THOUSAND
SEVEN HUNDRED SIXTEEN (3,142,716) LKG, which are sugarless, and executing,
issuing and signing false certifications supporting the RSDOs without securing the
authority of the board of directors of VMC, as shown in Annex "A" hereof.
Acts contrary to Law. 4 (Emphasis supplied)
On 6 November 1998, upon Motions to Quash the Complaint filed by several of the
respondents on the ground, among others, of duplicity of offenses, Municipal Trial
Court in Cities Judge Ricardo S. Real, Sr. (MTCC Judge) dismissed the complaint and
ordered the amendment of the complaint or the filing of another information. 5
THCSEA
Accordingly, on 13 November 1998, upon the conversion of the Municipality of
Victorias into a city, 6 City Prosecutor Adelaida R. Rendon filed sixty-four (64)
Informations for falsification 7 against respondents, 8 alleging conspiracy among
respondents in signing and using "sugarless" Refined Sugar Delivery Orders
(RSDOs) as collateral to obtain loans from five banks 9 in the total amounts of
US$15,274,956.40 and P692,322,644.86.
The MTCC Judge approved the issuance of Warrants of Arrest against respondents
only in the cases where they were the signatories of the sugarless RSDOs. Thus,
warrants of arrest were issued against Padilla in 47 cases only, against Duterte in 10
cases only, against Tupas in 6 cases only, and against Rodriguez in 1 case only.
On 14 January 1999, the prosecution filed a Motion to Defer Arraignment, 10
praying for the issuance of 64 warrants of arrest against each respondent

corresponding to the 64 informations for falsification in view of the charge of

conspiracy. cHAaCE
In an Order of 7 April 1999, 11 the MTCC Judge denied the Motion to Defer
Arraignment, ruling that conspiracy had to be proved by the prosecution and setting
the cases for arraignment on 3 July 2000.
On 14 April 1999, the prosecution moved for reconsideration, 12 which the MTCC
Judge denied in his Order of 24 November 1999. 13 This order reads:
It must be stressed that although the affidavit of the prosecution is based on
personal knowledge, the same were not yet introduced, authenticated, marked as
exhibits and offered as evidence, consequently, it remained as a worthless piece of
evidence to establish even the circumstantial evidence of conspiracy. During the
preliminary investigation using the sworn statement of the prosecution as part
thereof is only to determine that a probable cause exists that the crime as charged
was committed and that all the accused were probably guilty thereof and there is a
necessity to issue a warrant of arrest.
The theory of the City Prosecutor of Victorias to issue Sixty Four (64) Warrants of
Arrest to each accused as a result of the alleged conspiracy is baseless. Each
accused is only liable for each RSDO's that they have signed since the dictum that
the act of one is the act of all no longer stand [sic]. The High Court speaking thru
Justice Davide, Jr. states: CAHaST
"Conspiracy, just like the crime itself, must be established by proof beyond
reasonable doubt and the Rule has always been that co-conspirators are liable only
for the acts done pursuant to the conspiracy, for other acts done outside the
contemplation of the co-conspirators or which are not necessary and logical
consequence of the intended crime, only the actual perpetrators are liable. In such
a case, the dictum that the act of one is the act of all does not hold true anymore.
People versus Rodolfo Federico y Mediona (G.R. No. 99840, August 14, 1995)." 14
(Underscoring in the original)
On 29 June 2000, the prosecution filed an Urgent Ex-Parte Motion 15 praying for an
ex-parte hearing for the presentation of evidence on its allegation of conspiracy.
On 3 July 2000, during the scheduled arraignment, the MTCC Judge impliedly denied
the ex-parte motion, stating in open court that it is a "mere scrap of paper" 16 and
proceeded with the arraignment. Respondents, except Tupas, were arraigned only
on specific informations where their signatures appeared in the RSDOs or
certifications. Accordingly, Padilla pleaded not guilty to 46 cases, 17 Duterte
pleaded not guilty to 10 cases, and Rodriguez pleaded not guilty to 1 case only.
Tupas, through his counsel, requested a deferment of his arraignment. DICSaH

On the same date, the MTCC Judge set the pre-trial of the case on 4 September
2000 and trial proper on 25 and 26 September, 23 and 24 October, and 27 and 28
November 2000. He also reset the arraignment of Tupas to 4 September 2000.
On 30 August 2000, petitioner filed with the Regional Trial Court (RTC) of Negros
Occidental a petition for certiorari and mandamus, docketed as Civil Case Nos.
2133-40, against the MTCC Judge. 18 Petitioner prayed for the nullification of the
arraignment of the three respondents and for the issuance of a writ of preliminary
injunction to enjoin the MTCC Judge from further hearing the cases.
On 31 August 2000, the RTC issued an Order setting the date of the hearing for the
preliminary injunction on 7 September 2000 and granting a temporary restraining
order. 19 EHTISC
On 29 September 2000, petitioner filed an Amended Petition attaching the 24
November 1999 Order of the MTCC Judge, which had been inadvertently omitted
from the original Petition.
On 23 November 2000, the RTC issued an Order 20 denying the petition for
certiorari and mandamus on three grounds: 1) petitioner has no standing to file the
petition for certiorari; 2) the petition was incomplete in the narration of facts; and 3)
the petition was filed beyond the prescribed period.
On 26 December 2000, petitioner filed a Motion for Reconsideration, which was
denied in the 25 May 2001 Order of the RTC. 21
On 1 August 2001, petitioner filed a petition for certiorari with the Court of Appeals
challenging the 23 November 2000 and 25 May 2001 Orders of the RTC.
On 5 December 2001, the Court of Appeals issued a Resolution directing the
issuance of a temporary restraining order. 22 EIDATc
On 12 December 2001, the Office of the Solicitor General (OSG) filed a
Manifestation and Motion (in Lieu of Comment) 23 asking that the People of the
Philippines be removed as a party respondent and be excused from filing a
comment to the petition considering that it was in conformity with the petition.
On 13 June 2002, the Court of Appeals rendered a Decision dismissing the petition.
On 1 July 2002, petitioner filed a Motion for Reconsideration, which was denied by
the Court of Appeals on 22 January 2003.
Hence, this petition.
The Ruling of the Court of Appeals
In dismissing the petition for certiorari, the Court of Appeals ruled that petitioner
has no personality to file the petition. The Court of Appeals stated that all criminal

actions either commenced by complaint or by information should be prosecuted

under the direction and control of the public prosecutor. In this case, petitioner did
not even acquire the conformity of the public prosecutor before filing the petition.
Petitioner was not also able to show that it suffered damages by reason of the
alleged criminal act committed by respondents. TEAICc
The Court of Appeals also found procedural lapses in petitioner's filing of the
petition for certiorari before the RTC. Petitioner failed to attach the assailed orders
to its petition and filed the petition beyond the reglementary period. The Court of
Appeals opined that the 60-day period should start from the date of receipt of the
24 November 1999 Order, not from 3 July 2000 when the RTC impliedly denied the
motion to conduct an ex-parte hearing. Hence, the RTC did not commit grave abuse
of discretion in dismissing the petition for certiorari.
The Issues
Petitioner raises the following issues:
1.

Whether the petition for certiorari was filed within the reglementary period;

2.
Whether the petition for certiorari lacked the required vital documents;
TCIEcH
3.

Whether petitioner has a legal personality to file a petition for certiorari; and

4.
Whether the issuance of a writ of mandamus directing the MTCC Judge to
conduct an ex-parte hearing on the allegation of conspiracy is proper.
The Ruling of the Court
The petition is meritorious.
On the procedural issues
Petitioner contends that it seasonably filed on 30 August 2000 the petition for
certiorari with the RTC considering that it "directly challenged the 3 July 2000 Orders
issued by the MTCC", not the Orders dated 7 April 1999 and 24 November 1999. The
prayer of the petition for certiorari filed in the RTC reads: acCETD
WHEREFORE, it is respectfully prayed of this Honorable Court that, after hearing,
judgment be rendered in favor of the petitioner and against the respondents,
directing the issuance of the writs of certiorari and mandamus, setting aside the
arraignment of the three (3) accused for being null and void, and directing
respondent judge through the writ of mandamus to conduct first an ex-parte
hearing to determine whether warrants of arrest (shall) issue against all the accused
in all the criminal informations for falsification, with costs against the respondents.

It is also prayed of this Honorable Court that after hearing, a writ of preliminary
injunction be likewise issued to enjoin respondent Judge from further hearing the
cases below and arraigning the accused Carlos Tupas, Jr. until further orders from
this Honorable Court; that pending consideration of the issuance of the writ of
preliminary injunction, a temporary restraining order be issued forthwith to the
same effect. 24 (Emphasis supplied)
Under Section 4 of Rule 65, 25 the aggrieved party must file a petition for certiorari
within 60 days from notice of the assailed judgment, resolution or order. IHEDAT
As can be gleaned from the prayer of the petition for certiorari, petitioner was not
only assailing the implied denial of its ex-parte motion during the scheduled
arraignment on 3 July 2000. Petitioner was also challenging the legality of
respondents' arraignment on specific informations only instead of on all the 64
informations. Since the arraignment of the three respondents was held on 3 July
2000, the 60-day period for filing a petition for certiorari questioning the legality of
the arraignment may be reckoned from that date. Therefore, the petition for
certiorari filed on 30 August 2000 was filed within the reglementary period.
Considering that petitioner is also objecting to the arraignment of the respondents,
then the attachment to the petition for certiorari of the 3 July 2000 orders of the
MTCC Judge and the transcript of the stenographic notes taken on that date
substantially complied with the requirement under the Rules.
On petitioner's personality to file a petition for certiorari
Contrary to the view of the Court of Appeals, petitioner has the personality to file a
petition for certiorari assailing the orders of the MTCC Judge. In Paredes v.
Gopengco, 26 which ruling was reiterated in People v. Calo, Jr., 27 the Court held
that: cdphil
The non-joinder of the People in the action was . . . but a formality, . . . and should
not serve as a ground for dismissal of the action, by virtue of the provisions of Rule
3, section 11, providing that "parties may be dropped or added by order of the
Court on motion of any party or on its own initiative at any stage of the action and
on such terms as are just." Furthermore, as offended party . . ., it cannot be gainsaid
that respondents have sufficient interest and personality as "person(s) aggrieved" . .
. to file the special civil action, under sections 1 and 2 of Rule 65.
Moreover, it is basic in criminal law that the civil case is impliedly included in the
criminal case. 28 Therefore, private complainant, petitioner in this case, has
sufficient interest and personality in filing the petition for certiorari.
At any rate, the OSG fully adopted petitioner's views, curing the perceived lack of
standing on the part of petitioner to assail the 3 July 2000 orders of the MTCC Judge
via a petition for certiorari. In its Manifestation and Motion (In Lieu of Comment)
filed with the Court of Appeals, the OSG explicitly stated that: TDcAaH

. . . it is in conformity with the instant petition [for certiorari], being on all fours with
the Rules of Court and pertinent jurisprudence. Hence, it should be removed as
party respondent, and excused from filing comment on the petition. 29
In its Manifestation and Motion filed before this Court, the OSG reiterated its
position that the petition for certiorari is correct. 30
Further, it is not yet necessary to prove that petitioner suffered damages on account
of the falsification of the private documents in order for petitioner to have standing
to file a petition for certiorari. Intent to cause damage is a sufficient allegation of
damage for a charge of falsification of private documents. 31
On the MTCC Judge's failure to determine the existence of probable cause against
respondents as conspirators in the crimes charged
The 64 separate informations filed with the Municipal Trial Court in Cities by City
Prosecutor Adelaida R. Rendon uniformly charge Padilla, Duterte, Tupas, and
Rodriguez of conspiring in the falsification of 64 private documents consisting of
various RSDOs or certifications on different occasions with the intent to cause
damage to petitioner. In effect, each respondent is charged, as a co-conspirator,
with 64 counts of falsification of private documents. CTAIDE
At the time of the filing of the informations, the applicable provision was Section 9,
Rule 112 of the 1985 Rules on Criminal Procedure, which covers cases not falling
under the original jurisdiction of the Regional Trial Courts nor covered by the Rule on
Summary Procedure. 32 No preliminary investigation is required in such cases. 33
In the course of the proceedings, Section 9 of Rule 112 was amended to read as
follows:
SEC. 8.
Cases not requiring a preliminary investigation nor covered by the Rule
on Summary Procedure.
xxx

xxx

xxx

(b)
If the complaint or information is filed with the Municipal Trial Court or
Municipal Circuit Trial Court for an offense covered by this section, the procedure in
section 3(a) of this Rule shall be observed. If within ten (10) days after the filing of
the complaint or information, the judge finds no probable cause after personally
evaluating the evidence, or after personally examining in writing and under oath the
complainant and his witnesses in the form of searching questions and answers, he
shall dismiss the same. He may, however, require the submission of additional
evidence, within ten (10) days from notice, to determine further the existence of
probable cause. If the judge still finds no probable cause despite the additional
evidence, he shall, within ten (10) days from its submission or expiration of said
period, dismiss the case. When he finds probable cause, he shall issue a warrant of
arrest, or a commitment order if the accused had already been arrested, and hold

him for trial. However, if the judge is satisfied that there is no necessity for placing
the accused under custody, he may issue summons instead of a warrant of arrest.
(Emphasis supplied) DaCEIc
Whether under the old or new provision, the Rules applicable to this case are
substantially the same. The Rules essentially provide that if the MTCC judge finds no
probable cause against respondents, he shall dismiss the complaint or information.
Otherwise, he shall issue either warrants of arrest or summonses, depending on the
necessity to place the accused under custody.
In the present case, Padilla, Duterte, Tupas, and Rodriguez are charged in each
information as conspirators of falsifying 64 private documents. In other words,
whether respondents signed the falsified documents or not, they are alleged to
have conspired in making untruthful statements in such documents. EAISDH
After the filing of the 64 informations for falsification of private documents by the
City Prosecutor, the MTCC Judge proceeded to the issuance of warrants of arrest
only against the signatories of the allegedly falsified documents and arraigned the
same respondents against whom warrants of arrest were issued. The MTCC Judge
opined that "each respondent is liable only for the RSDO that he signed", citing the
case of People v. Federico, where this Court held that "conspiracy, just like the
crime itself, must be established by proof beyond reasonable doubt." The MTCC
Judge also stated that the prosecution's evidence is worthless for not being marked
as exhibits and for not being authenticated.
The MTCC Judge is mistaken. He ruled out the existence of conspiracy based on a
wrong ground. At that stage of the proceedings, the MTCC Judge need not find proof
beyond reasonable doubt of the existence of conspiracy. He must only satisfy
himself whether there is probable cause or sufficient ground to hold each
respondent for trial as a co-conspirator. It is obviously absurd for the MTCC Judge to
require that conspiracy must be proved before conspiracy can be alleged in the
informations. ACcEHI
For the sake of the prosecution, which desires the punishment of the criminals liable
for the falsifications, and for the benefit of the respondents, who will possibly face
prosecution or conviction for the crimes charged, the MTCC Judge should properly
and clearly resolve whether there is probable cause against each respondent as a
co-conspirator for 64 counts of falsification of private documents. The summary
nature of the procedure under the Rules does not dispense with such determination.
As stated above, Section 9 of Rule 112 was amended. Since remedial laws may be
given retroactive effect, 34 the Court orders the MTCC Judge to determine the
existence of probable cause against respondents as conspirators for the crimes
charged pursuant to the amended provision, specifically Section 8 (b) of Rule 112 of
the Revised Rules of Criminal Procedure. Accordingly, if the MTCC judge finds no
probable cause against respondents as conspirators, he shall dismiss the

informations against the non-conspirators. He may, however, require the submission

of additional evidence, within ten (10) days from notice, to determine further the
existence of probable cause. If the MTCC Judge still finds no probable cause despite
the additional evidence, he shall, within ten (10) days from its submission or
expiration of said period, dismiss the informations against the non-conspirators. If
there exists probable cause against each respondent as a co-conspirator for 64
counts of falsification of private documents, then the MTCC Judge shall issue either
warrants of arrest, in addition to the arrest warrants already issued, or summonses
against respondents, depending on the necessity of placing the accused under
custody. Thereafter, the MTCC Judge should arraign each respondent for 64 counts
of falsification of private documents. HETDAa
Concerning the arraignment of the respondents, the same is not void. If ever, the
eventual positive finding of the existence of probable cause against all respondents
as conspirators will only mean additional indictments for respondents. This finding
will not affect the arraignment of the respondents.
WHEREFORE, the Court GRANTS the petition. The Court orders Judge Ricardo S.
Real, Sr. or the Presiding Judge of the Municipal Trial Court in Cities of Victorias City
to determine whether there is probable cause against respondents as conspirators
in the crime of falsification of 64 private documents defined and penalized under
Article 172 (1) in relation to Article 171 (4) of the Revised Penal Code in accordance
with the procedure in Section 8 (b) of Rule 112 of the Revised Rules of Criminal
Procedure. CDISAc
SO ORDERED.

[G.R. No. 73976. May 29, 1987.]

THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK), petitioner, vs.
HON. INTERMEDIATE APPELLATE COURT, GOLDEN STAR INDUSTRIAL CORPORATION,
NICOS INDUSTRIAL CORPORATION and THE PROVINCIAL SHERIFF OF BULACAN,
respondents.
C.M. Delos Reyes and Associates for petitioner.
Magtanggol C. Gunigundo and Fajardo Law office for respondents.

SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; WRIT OF ATTACHMENT; CREATES A
LIEN OVER THE PROPERTY LEVIED. The rule is well settled that when a writ of
attachment has been levied on real property or any interest therein belonging to the
judgment debtor, the levy thus effected creates a lien which nothing can destroy
but its dissolution (Chua Pua Hermanos v. Register of Deeds of Batangas, 50 Phil.
670; Government, et. al. v. Mercado, 67 Phil. 409).
2.
ID.; ID.; WRIT OF POSSESSION ISSUED OVER PROPERTY IN CUSTODIA LEGIS,
NULL AND VOID; REASON. The writ of possession issued by the Malolos court in
favor of respondent GOLDEN STAR is null and void ab initio because it interfered
with the jurisdiction of a co-ordinate and co-equal court (See De Leon v. Salvador,
36 SCRA 567): "While property or money is in custodia legis, the officer holding it is
the mere hand of the court, his possession is the possession of the court, and to
interfere with it is to invade the jurisdiction of the court itself (Gende v. Fleming, 371
N.E. 2d. 191; Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. 27, 7 CJS 320)."
3.
ID.; ID.; WRIT OF ATTACHMENT; ENTITLES ATTACHING CREDITOR THE RIGHT
TO REDEEM THE FORECLOSED PROPERTIES. Petitioner has acquired by operation
of law the right of redemption over the foreclosed properties pursuant to Sec. 6 of
Act No. 3135, to wit: "In all such cases in which an extrajudicial sale is made . . . any
person having a lien on the property subsequent to the mortgage . . . may redeem
the same at any time within the term of one year from and after the date of sale. It
has been held that "an attaching creditor may succeed to the incidental rights to
which the debtor was entitled by reason of his ownership of the property, as for
example, a right to redeem from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7
CJS 505).
4.
CIVIL LAW; SPECIAL CONTRACTS; MORTGAGE; PERIOD TO EXERCISE RIGHT OF
REDEMPTION; SUSPENDED DURING PENDENCY OF AN ACTION. Well settled is the
rule that the pendency of an action tolls the term of the right of redemption.
Specifically, this Court in Ong Chua v. Carr, (53 Phil. 975, 983), categorically ruled
that: . . . ". . . Neither was it error on the part of the court to hold that the pendency
of the action tolled the term for the right of redemption; that is an old and well
established rule."
5.
ID.; ID.; ID.; ID.; CONTINUES AFTER PERFECTION OF THE APPEAL AND UNTIL
THE DECISION THEREOF. It has been held that "under a statute limiting the time
for redemption . . ., the right of redemption continues after perfection of an
appeal . . . until the decision of the appeal (Philadelphia Mortgage Co. v. Gustus, 75
N.W. 1107).
DECISION
GUTIERREZ, JR., J p:

The basic issue for resolution in this petition for review of the December 13, 1985
decision of the Intermediate Appellate Court, now the Court of Appeals, as well as
the resolution of March 13, 1986 denying the motion for reconsideration, is whether
or not an attaching creditor acquires the right of redemption of a debtor over the
attached properties of the latter which are subsequently extrajudicially foreclosed
by third parties.
Briefly, the facts are as follows: Originally, petitioner Consolidated Bank and Trust
Corporation (SOLIDBANK) loaned private respondent NICOS Industrial Corporation
(NICOS) sums of money in the total amount of FOUR MILLION SEVENTY SIX
THOUSAND FIVE HUNDRED EIGHTEEN AND 64/100 PESOS (P4,076,518.64).
Subsequently, NICOS failed to pay back the loan prompting SOLIDBANK to file a
collection case before the Court of First Instance of Manila, Branch XXIX. The case
was docketed as Civil Case No. 82-11611.
On August 30, 1982, the court in the aforecited case issued an order of attachment
". . . upon the rights, interests and participation of which defendants NICOS
Industrial Corporation . . . may have in Transfer Certificate of Title No. T-210581 (T32.505 M) and Transfer Certificate of Title No. T-210580 (T-32.504 M) (Annexes "B,"
"B-1." "B-2" and "B-3" of petition).
On September 1, 1982, pursuant to the writ of attachment issued by the Court and
upon petitioner's posting of sufficient bond, the Sheriff of Manila levied and
attached the two real properties described by the foregoing order of attachment,
including the buildings and other improvements thereon. Afterwards, the Sheriff
sent separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos,
Bulacan, dated September 1, 1982 requesting him "to make the proper annotation
in the books of your office" by virtue of the order of attachment dated August 30,
1982 issued by the Manila Court in Civil Case No. 82-11611.
Accordingly, on September 7, 1982, the Registrar of Deeds of Malolos, Bulacan,
pursuant to the request of the Manila Sheriff, inscribed and annotated the Notices of
Levy Upon Real Property at the back of Transfer Certificates of Title Nos. 210581 (T32.505 M) and T-210580 (T-32.504 M).
Pursuant to the foregoing inscription and annotations, guards were deputized by the
Manila Sheriff to secure the premises of the two attached realties. LexLib
A year later, however, on July 11, 1983, the attached properties which had been
mortgaged by NICOS to the United Coconut Planters Bank (UCPB) on March 11,
1982, were extra-judicially foreclosed by the latter. As the highest bidder therein, a
certificate of sale was issued to it by the Sheriff of Bulacan over the subject realties
including the buildings and improvements thereon.

Surprisingly, two transactions occurred soon thereafter, both on August 29, 1983.
First, UCPB sold all of its rights, interests, and participation over the properties in
question to a certain Manuel Go; Second, Manuel Go sold all the rights he acquired
from UCPB over the same lots on that very same day to private respondent Golden
Star Industrial Corporation (GOLDEN STAR).
Barely a month later, on October 5, 1983, respondent NICOS, though fully aware
that it still had the right to redeem the auctioned properties within the one year
period of redemption from July 11, 1983, suddenly executed a document entitled
"Waiver of Right of Redemption" in favor of respondent GOLDEN STAR.
On September 15, 1983, GOLDEN STAR filed a petition for the issuance of a writ of
possession over the subject realties before the Regional Trial Court, Branch VI of
Malolos, Bulacan.
On November 4, 1983, the Malolos Court granted GOLDEN STAR's petition for a writ
of possession and issued the writ. In accordance with these orders, armed men of
GOLDEN STAR forcibly took over the possession of the properties in dispute from the
guards deputized by the Sheriff of Manila to secure the premises.
Thus on November 21, 1983, petitioner SOLIDBANK, on the strength of its prior
attachment over the lands in question filed with the Malolos court an omnibus
motion to annul the writ of possession issued to GOLDEN STAR and to punish for
contempt of court the persons who implemented the writ of possession with the use
of force and intimidation.
The respondents NICOS and GOLDEN STAR, filed oppositions to the foregoing
omnibus motion, the former on the basis of the waiver of its right of redemption to
GOLDEN STAR, and the latter on its alleged ignorance that the lands in question
were under custodia legis, having been attached by the Sheriff of Manila.
On June 9, 1984, the Malolos Court issued an order denying the omnibus motion,
the decretal portion of which is as follows:
"WHEREFORE, the Omnibus Motion of movant Consolidated Bank and Trust
Corporation to annul the writ of possession issued by this Court in favor of Golden
Star Industrial Corporation and to cite for contempt those who fraudulently secured
and unlawfully implemented the writ of possession is hereby DENIED for lack of
merit." (p. 8 of the Brief for the Complainant-Oppositor-Appellant in AC-G.R. CV No.
04398 [p. 118, Rollo])
The petitioner SOLIDBANK forthwith interposed an appeal before the Intermediate
Appellate Court arguing inter alia that the properties were under custodia legis,
hence the extrajudicial foreclosure and the writ of possession were null and void,
and that the right of NICOS to redeem the auctioned properties had been acquired
by SOLIDBANK.

On December 13, 1985, the Intermediate Appellate Court rendered its assailed
decision "finding no merit in this appeal and affirming in toto the appealed order of
June 9, 1984, ruling that "the properties in issue . . . were not in custodia legis at the
time of the extrajudicial foreclosure."
The petitioner moved for reconsideration, arguing that its writ of attachment over
the properties in question was duly registered in the Register of Deeds of Malolos,
Bulacan, and that the right to redeem said properties should be retained or given
back to SOLIDBANK as attaching creditor. LLphil
On March 13, 1986, the Intermediate Appellate Court promulgated its resolution
denying the motion for reconsideration for lack of merit.
Hence this petition for review, on the grounds that respondent appellate court
decided the case contrary to law and applicable decisions of the Supreme Court,
and has departed from the accepted and usual course of judicial proceedings as to
call for an exercise of the power of supervision of this Court.
The fundamental question herein, which is determinative of the other issues, is
whether or not the subject properties were under custodia legis by virtue of the
prior annotation of a writ of attachment in petitioner's favor at the time the
properties were extrajudicially foreclosed.
We rule in the affirmative on the following grounds:
First of all, the records show (specifically Annexes "B," "B-1" to "B-3" of the petition)
that on September 1, 1982, the Sheriff of Branch XXIX of the Court of First Instance
of Manila, sent separate Notices of Levy Upon Realty to the Registrar of Deeds of
Malolos Bulacan, requesting him "to make the proper annotation in the books of
your office," "by virtue of an order of attachment issued in Civil Case No. 82-11611
dated August 30, 1982, . . . upon the rights, interests, and participation of which
defendant NICOS Industrial Corporation in this case may have in . . ." Transfer
Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T210580 (T-32.505 M).
Secondly, and more significant, the records clearly show (page 4, Annex "D" of
petition) that the Registrar of Deeds of Malolos, Bulacan, on September 7, 1982,
inscribed and annotated the foregoing Notices of Levy at the back of Transfer
Certificate of Title Nos. 210580 and 210581, to wit:
TRANSFER CERTIFICATE OF TITLE
No. T-210580 (T-32.504 M)
"Entry No. 79524 (M): Kind: NOTICE OF LEVY UPON REALTY, Executed in favor of the
CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK); Plaintiff;
Conditions: Notice is hereby given that by virtue of an Order of Attachment issued

by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights,
interest and participation of NICOS INDUSTRIAL CORPORATION Defendant over
the herein described lot is hereby levied upon attached.; Date of Instrument:
September 1, 1982; Date of Inscription: September 7, 1982 at 2:35.
Meycauayan, Bulacan.
(SGD.) VIOLETA R. LINCALLO GARCIA
Branch Register of Deeds
TRANSFER CERTIFICATE OF TITLE
No. T-210581 (T-32.505 M)
"Entry No. 79524 (M); Kind: NOTICE OF LEVY UPON REALTY, Executed in favor of THE
CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK) Plaintiff;
Conditions: Notice is hereby given that by virtue of an Order of Attachment issued
by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights,
interest and participation of NICOS INDUSTRIAL CORPORATION Defendants over
the herein described lot is hereby levied upon attached.; Date of Instrument;
September 1, 1982; Date of Inscription: September 7, 1982 at 2:35.
Meycauayan, Bulacan.
(SGD.) VIOLETA R. LINCALLO GARCIA
Branch Register of Deeds"
(pp. 91-92, Rollo)
Based on the foregoing evidence on record, the conclusion is clear that the disputed
real properties were under custodia legis by virtue of a valid attachment at the time
the same were extrajudicially foreclosed by a third party mortgagee.
The rule is well settled that when a writ of attachment has been levied on real
property or any interest therein belonging to the judgment debtor, the levy thus
effected creates a lien which nothing can destroy but its dissolution (Chua Pua
Hermanos v. Register of Deeds of Batangas, 50 Phil. 670; Government, et. al. v.
Mercado, 67 Phil. 409). LexLib
The foregoing conclusion has two necessary consequences.
Firstly, it follows that the writ of possession issued by the Malolos court in favor of
respondent GOLDEN STAR is null and void ab initio because it interfered with the
jurisdiction of a co-ordinate and co-equal court (See De Leon v. Salvador, 36 SCRA
567):

"While property or money is in custodia legis, the officer holding it is the mere hand
of the court, his possession is the possession of the court, and to interfere with it is
to invade the jurisdiction of the court itself (Gende v. Fleming, 371 N.E. 2d. 191;
Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. 27, 7 CJS 320)."
Of equal importance is the fact that the transactions on which respondent GOLDEN
STAR's right to a writ of possession are based are highly irregular and questionable,
to say the least, considering the following circumstances:
On July 11, 1983, the Sheriff of Bulacan executed a certificate of sale over the two
lots in question in favor of UCPB.
On August 29, 1983, or about a month and a half later, UCPB sold its rights,
interests and participation over the lands to Manuel Go.
On that very same day, August 29, 1983, Manuel Go sold the same properties to
respondent GOLDEN STAR.
On October 5, 1983, respondent NICOS, which had a one year right of redemption
over the lands in question executed a "Waiver of Right of Redemption in favor of
respondent GOLDEN STAR." The attempts to bring the disputed properties out of the
petitioner's reach, inspite of the attachment, are plain and apparent.
Based on the foregoing facts, we find that respondents NICOS and GOLDEN STAR
conspired to defeat petitioner's lien on the attached properties and to deny the
latter its right of redemption.
It appears that in issuing the writ of possession, the Malolos court relied on copies of
documents (which did not show the memorandum of encumbrance) submitted to it
by GOLDEN STAR. It was thus led into the error of ruling that the petitioner's
attachment was not properly annotated.
Secondly, it likewise follows that the petitioner has acquired by operation of law the
right of redemption over the foreclosed properties pursuant to Sec. 6 of Act No.
3135, to wit:
"In all such cases in which an extrajudicial sale is made . . . any person having a lien
on the property subsequent to the mortgage . . . may redeem the same at any time
within the term of one year from and after the date of sale.
It has been held that "an attaching creditor may succeed to the incidental rights to
which the debtor was entitled by reason of his ownership of the property, as for
example, a right to redeem from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7
SJS 505).

The fact that respondent NICOS executed a waiver of right of redemption in favor of
respondent GOLDEN STAR on October 5, 1983 is of no moment as by that time it
had no more right which it may waive in favor of another.
Finally, GOLDEN STAR argues that even if the attachment in issue was duly
registered and the petitioner has a right of redemption, the certificate of sale of the
lands in question was registered on September 6, 1983. It claims that the period to
redeem therefore lapsed on September 6, 1984 without the petitioner bank ever
exercising any right of redemption. cdrep
This argument is untenable. Well settled is the rule that the pendency of an action
tolls the term of the right of redemption. Specifically, this Court in Ong Chua v. Carr,
(53 Phil. 975, 983), categorically ruled that:
xxx

xxx

xxx

". . . Neither was it error on the part of the court to hold that the pendency of the
action tolled the term for the right of redemption; that is an old and well established
rule."
This was reiterated in Fernandez v. Suplido (96 Phil. 541, 543), as follows:
xxx

xxx

xxx

". . . As pointed out in Ong Chua v. Carr, 53 Phil. 975, the pendency of an action
brought in good faith and relating to the validity of a sale with pacto de retro tolls
the term for the right of redemption. . . ."
Not only that. It has been held that "under a statute limiting the time for redemption
. . ., the right of redemption continues after perfection of an appeal . . . until the
decision of the appeal (Philadelphia Mortgage Co. v. Gustus, 75 N.W. 1107).
In the case at bar, the petitioner commenced the instant action by way of an
omnibus motion before the Bulacan Court on November 21, 1983 or barely two
months after the certificate of sale was registered on September 6, 1983, well
within the one year period of redemption.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is granted and judgment is
hereby rendered:
1)
declaring as valid and binding the levy and attachment by the Manila Sheriff
on the two realties in question including the buildings and improvements thereon;
2)
declaring that petitioner has acquired the right of redemption over the
aforesaid properties which it may exercise within one year from notice of entry of
judgment in this case; and

3)
declaring as null and void (a) the order of the Bulacan Court dated November
4, 1983 granting the writ of possession to respondent GOLDEN STAR, (b) its order of
June 9, 1984 denying the petitioner's omnibus motion, and (c) the Waiver of Right of
Redemption executed by respondent NICOS in favor of respondent GOLDEN STAR.
SO ORDERED.
Fernan, Paras, Padilla, Bidin and Cortes, JJ., concur.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

G.R. No. 73804 May 29, 1987

People v. Bravante
SECOND DIVISION
[G.R. No. 73804. May 29, 1987.]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. FELIPE BRAVANTE and AUGUSTO
ALTAREJOS, accused-appellants.
SYLLABUS
REMEDIAL LAW; EVIDENCE; WEIGHT AND SUFFICIENCY; TREACHERY; DEEMED
PRESENT IN VIEW OF THE WAYLAYING AND SUDDEN ATTACK OF ACCUSED. The
evidence shows that Miguel Nuevo was bringing food items for a noche buena when
he was suddenly attacked by two assailants, one armed with a spear and the other
with a bolo. The victim alone suffered the fatal wounds. The attack was so sudden
that the victim had no opportunity to defend himself or to inflict retaliatory blows on
the assailants. He just fell down after the spearing and was then hacked by Altarejos
with the bolo. The waylaying and the sudden attack show that the elements of
treachery or alevosia are present. (See People v. Estillore, 141 SCRA 456).
DECISION
GUTIERREZ, JR., J p:
This is an appeal from an August 16, 1985 judgment of the Regional Trial Court of
Masbate which found Felipe Bravante and Augusto Altarejos guilty of murder and
sentenced them as follows:
"WHEREFORE, premises considered, judgment is hereby entered finding all the
herein accused GUILTY beyond reasonable doubt of the crime of murder and hereby
sentences them with the penalty of RECLUSION PERPETUA with all the accessory

penalties provided for by law; and, to indemnify, jointly and severally, the heirs of
the victim, Miguel B. Nuevo, in the sum of P30,000.00, without subsidiary
imprisonment in case of insolvency, and to pay their proportionate share of the
costs."(pp. 8-9, Decision of the trial court.)
In an information dated May 18, 1984, the two accused-appellants were charged as
follows:
"That on or about December 24, 1983, in the evening thereof, at sitio Burabod,
Barangay Resurreccion, Municipality of San Fernando, Province of Masbate,
Philippines, within the jurisdiction of this court, the said accused conspiring and
helping each other, with intent to kill, evident premeditation, treachery and
superiority of strength, did then and there wilfully, unlawfully and feloniously attack,
assault, spear, hack and stab with bolos one Miguel Nuevo, hitting the latter on the
different parts of the body, thereby inflicting wounds which directly caused his
instantaneous death. "(p. 2, Rollo)
The facts upon which the trial court based its decision finding the appellants guilty
beyond reasonable doubt are summarized as follows. prcd
"It is not disputed that on or about 6:00 o'clock in the afternoon of December 24,
1983, Miguel Bravante Nuevo, the victim in this case, died of 'massive hemorrhage
secondary to multiple wounds'(Exh. B-2.) as a result of injuries he suffered in an
incident involving him and the herein accused which took place at sitio Burabod,
barangay Resurreccion (also known as Looc), San Fernando, Masbate, more
particularly the following, to wit:
'1.
Hacking wound to the head, "C" shaped about 6 inches on left temporal area
penetrating the brain;
'2.
Hacking wound to the throat, about 6 inches long, 3 inches deep, along
anterior side of the neck;
'3.
Stab wound, right side, thorax, about 3 inches long, 1 inch to the right of
sternum at 3rd intercostal spine;
'4.

Incised wound, 3 inches long across left palm.

"The post-mortem examination of the victim was conducted at about 1:00 p.m. of
December 25, 1983 by Municipal Health Officer Roger A. Badillo of Batusa, Masbate
(Exhs. B & B-1) who likewise issued the victim's Certificate of Death (Exhs. C & C-1).
Per testimony of Dr. Artemio Capellan (who was called to the witness stand in lieu of
Dr. Badillo who was unavailable), the fatal wounds were injuries Nos. 1, 2 and 3,
inclusive, which could have been respectively caused by a 'C-shaped' spade, a
sharp-bladed instrument like a bolo, and a sharp-pointed weapon like a dagger (tsnDiano, January 24, 1985, p. 2).

"The State asserts that late in the afternoon of December 24, 1983, while victim
Miguel B. Nuevo, the latter's 8-year old son Jose Nuevo and their companion Nilo
(alias Sato) Bauso (also known as Danilo Bauso) were on their way home to
Burabod, Resurreccion, from the Poblacion of San Fernando, Masbate, (where they
bought some food items in preparation for the 'noche buena'), the herein accused
Felipe Bravante and his co-accused and son-in-law Augusto Altarejos suddenly
approached them while they were in a trail near accused Bravante's house, and
without any warning, accused Felipe Bravante armed with a spear attacked the
victim Miguel B. Nuevo (who ran then unarmed) hitting the latter twice first, on
the upper portion of his left arm below the shoulder, followed by the thrust of the
spear on the middle portion of the victim's breast. After the victim fell down to the
ground face upward, accused Augusto Altarejos, armed with a bolo, hacked the
victim twice hitting him on the forehead and on the neck. Thereafter, the two
accused chased Nilo (alias Danilo or Sato) Banso while the victim's son, Jose Nuevo,
went home to inform his mother, Teresita Aninipot (victim's wife) about his father's
death in the hands of the herein two accused. Mother and son returned to the crime
scene where they found the victim lying dead on the ground, face upward. One
named Leonardo Maro reported the incident to the municipal authorities.
"Jose Nuevo and the victim's wife were interrogated that same evening by
Patrolman Darlie Alvarez and the latter's companions, Patrolman Llacer and Arnulfo
Arizala, all of whom failed to reduce into writing the child's narration of the incident.
Nonetheless, the said policemen prepared a sketch of the crime scene (Exhs. A & A1) indicating therein the location of the victim's corpse in relation to the house of
accused Felipe Bravante which turned out to be only thirteen (13) meters away
(Exh. A-2). The policemen learned, during their interrogation, that the victim's
assailants were the herein accused Felipe Bravante and Augusto Altarejos who were
both no longer at the crime scene so they failed to investigate them. They also
failed to investigate that evening the victim's companion, Nilo Bauso, who was
likewise a suspect in this case.
"On the following day, December 25, 1983, Patrolman Arnulfo Arizala, on orders of
the Station Commander, conducted an investigation of the two accused but only
accused Felipe Bravante executed an extrajudicial confession while his co-accused,
Augusto Altarejos, refused to give any formal statements, even as it was uncertain
whether the third suspect, Nilo (Sato) Bauso, ever gave any written affidavit.
"The victim's widow, Teresita Aninipot, claims furthermore that sometime in January,
1984, accused Felipe Bravante, armed with a bolo, gave her P60.00 (which she
received for fear of her life) in her residence at Burabod, Resurreccion telling her to
leave the place with her children for if she does she would still be paid the
additional sum of P300.00 so as to abandon this case. In fact, accused Bravante
revealed to her that Nilo (alias Sato) Bauso had already left the place and would no
longer be available as a witness in this case, in consideration of P500.00 given to
him by the accused." (pp. 2-4, Decision of the trial court.)

The evidence presented by the appellants consisted of their own testimonies and
that of two witnesses Pelagio Tuca and Patrolman Redempto Caperino. It
consisted primarily of allegations of self-defense on the part of Felipe Bravante and
alibi on the part of Augusto Altarejos. llcd
The accused-appellants summarized their evidence as follows:
"Evidence for the defense shows that at 2:00 o'clock in the afternoon of December
24, 1983, Felipe Bravante and his hired cook, Melanio Tuca, were preparing food at
the former's house. Miguel Nuevo and Nilo Bauso arrived uninvited at Bravante's
house and were entertained with drinks. The duo left at about five p.m., but
returned after an hour and challenged Felipe Bravante to a fight, threatening to kill
the accused and his family. Knowing the victim to be a criminal and a trouble maker,
with a sturdier and bigger body build than the accused, the latter armed himself
with a bolo and a double bladed spear. As Nuevo tried to go up the house of
Bravante, the latter blocked his way with the spear, hitting the former on the head
and breast. Nuevo died a few meters away from Bravante's dwelling. The accused
surrendered to Pat. Arizala.
"When the quarrel actually took place, accused Augusto Altarejos already left
Bravante's house. Altarejos, out of fear, ran with his pregnant wife and mother-inlaw towards his own house some two (2) kilometers away. He denied any
participation in the offense charged and was implicated in the case for being a sonin-law of Felipe Bravante." (p. 3, appellants' brief)
xxx

xxx

xxx

The accused-appellants raised the following assignments of errors in their appeal:

I
THE COURT A QUO ERRED IN FINDING THAT CONSPIRACY BETWEEN AUGUSTO
ALTAREJOS AND HIS CO-ACCUSED WAS ESTABLISHED BY EVIDENCE.
II
THE COURT A QUO ERRED IN FINDING THAT THE QUALIFYING CIRCUMSTANCE OF
TREACHERY WAS ATTENDANT IN THE COMMISSION OF THE CRIME.
III
THE COURT A QUO ERRED IN FINDING THE ACCUSED GUILTY BEYOND REASONABLE
DOUBT OF THE CRIME OF MURDER. (pp. 4 and 5 of appellants' brief)
The first assigned error alleges that Augusto Altarejos had no participation in the
killing of Miguel Nuevo. The evidence indicates otherwise. Altarejos was not a mere
passive co-conspirator. Much less was he an innocent person two kilometers away
when the crime was committed. After Bravante struck the victim with a spear

wounding him in the breast and in the upper left arm, Altarejos finished him off by
hacking him on the forehead with a bolo. The wound was so deep that it penetrated
to the brain. The two appellants then chased Nilo Bauso, the victim's companion
while the victim's eight year old son, Jose Nuevo, ran home to report the killing and
to seek help. The evidence points to two assailants. There was eye-witness
testimony. The number and nature of the wounds corroborate the testimony of the
eyewitness that the two accused one armed with a spear and the other with a
bolo perpetrated the killing.
We agree with the findings of the trial court on this point:
"As established by the evidence, the sequence of the overt acts individually
performed by the accused clearly revealed their unity of purpose at the time of the
commission of the offense and that they were united in its execution. (See People v.
Cadag, 2 SCRA 288; People v. Clarit, 3 SCRA 331; and People v. Pagaduan, 29 SCRA
54). In fact, the victim suffered numerous wounds a circumstance which
negatived the defense' submission that it was the accused Felipe Bravante who
alone inflicted the fatal injuries. Notwithstanding Dr. Capellan's opinion as to the
possibility that the victim's various wounds could have been caused by only one
assailant armed with 2 or 3 weapons (tsn.; Diano, January 24, 1985, p. 4), the Court,
nonetheless, finds ample justification in the conclusion of 'plurality of assailants' in
the light of the nature and degree of the victim's fatal injuries which, per the
doctor's opinion, were caused probably by at least two (2) weapons one, a 'Cshaped' instrument, and the other, by a bladed and sharp-pointed bolo or dagger
(tsn., p. 2). As aptly observed by the Supreme Court in one case:
'Numerous wounds in the body of the victim indicate plurality of assailants' (People
v. Manzano, 58 SCRA 250).
Having thus cooperated indispensably in causing the death of the victim, the herein
two accused are liable as co-conspirators (People v. Cutura, 4 SCRA 663) and each
of them responsible for the acts of the other in furtherance of their conspiracy
(People v. Pareja, 30 SCRA 693)." (p. 6, Decision of trial court).
The other assigned error questions the finding of treachery.
The appellants claim that the bolo belonged to Miguel Nuevo and that appellant
Bravante was able to arm himself with another bolo and a double bladed spear to
defend himself against an attack by Nuevo. Cdpr
The findings of the trial court that Bravante and Altarejos waylaid Miguel Nuevo,
Nilo Bauso, and eight year old Jose Nuevo when the three were passing along a trail
near the Bravante's house is more logical and believable than the allegation of selfdefense. The evidence shows that Miguel Nuevo was bringing food items for a
noche buena when he was suddenly attacked by two assailants, one armed with a
spear and the other with a bolo. The victim alone suffered the fatal wounds. The

attack was so sudden that the victim had no opportunity to defend himself or to
inflict retaliatory blows on the assailants. He just fell down after the spearing and
was then hacked by Altarejos with the bolo. The killing was characterized by
treachery.
The Revised Penal Code states:
"ART 14.
Aggravating circumstances The following are aggravating
circumstances:
xxx

xxx

xxx

"(16) That the act be committed with treachery (alevosia).

"There is treachery when the offender commits any of the crimes against the
person, employing means, methods, or forms in the execution thereof which tend
directly and specially to insure its execution, without risk to himself arising from the
defense which the offended party might make."
xxx

xxx

xxx

The waylaying and the sudden attack show that the elements of treachery or
alevosia are present. (See People v. Estillore, 141 SCRA 456).
To support his self-defense theory, Felipe Bravante alleged voluntary surrender. This
claim is belied by the trial court which stated:
"The Court also finds defense' evidence as to the fact of surrender of accused Felipe
Bravante to be unsatisfactory and unconvincing for, as disclosed by the record, the
accused did not surrender but was, in fact, arrested on March 12, 1984 (more than 2
months after the incident) by Patrolman Blandino Deinla and was placed in
detention in the municipal jail of San Fernando, Masbate, up to March 16, 1984
when he posted bail for his provisional liberty (record, pp. 13 to 21). Besides, his
assertion of having surrendered to Patrolman Alvarez has not been corroborated by
any competent and reliable evidence, muchless by Pat. Alvarez whose testimony in
Court did not bear any suggestion to that effect.
"In this case, the crime committed is murder qualified by treachery. The two
accused, all armed with deadly weapons, suddenly attacked the victim without any
warning, accused Felipe Bravante, using his double-bladed spear, struck the victim,
hitting him on the upper portion of the left arm, and on the middle portion of the
victim's breast. When the victim fell down, accused Augusto Altarejos hacked him
with a bolo on the forehead and the neck, causing his instantaneous death, without
any opportunity on the part of the victim to defend himself." (p. 8, Decision of the
trial court).

The third assignment of error has no merit. The evidence clearly shows the
appellants' guilt beyond reasonable doubt.
WHEREFORE, the judgment rendered by the court a quo is hereby AFFIRMED in toto
with costs against the accused-appellants.
SO ORDERED.
Fernan, Paras, Padilla, Bidin and Cortes, JJ., concur.

[G.R. No. 174569. September 17, 2008.]

CHINA BANKING CORPORATION, SPOUSES JOEY & MARY JEANNIE CASTRO and
SPOUSES RICHARD & EDITHA NOGOY, petitioners, vs. BENJAMIN CO, ENGR. DALE
OLEA and THREE KINGS CONSTRUCTION & REALTY CORPORATION, respondents.
DECISION
CARPIO-MORALES, J p:
Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision,
Sindalan, San Fernando, Pampanga, which was covered by Transfer Certificate of
Title (TCT) No. 450216-R to petitioner-spouses Joey and Mary Jeannie Castro (the
Castro spouses). It sold two other lots also located in the same place covered by
TCT Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha Nogoy
(the Nogoy spouses). CSEHcT
The lots of the Castro spouses and the Nogoy spouses are commonly bound on their
southeastern side by Lot No. 3783-E, which is covered by TCT No. 269758-R in the
name of respondent Benjamin Co (Co) and his siblings.
Co and his siblings entered into a joint venture with respondent Three Kings
Construction and Realty Corporation for the development of the Northwoods
Estates, a subdivision project covering Lot No. 3783-E and adjacent lots. For this
purpose, they contracted the services of respondent, Engineer Dale Olea.
In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote respondents asking
them to stop constructing the wall, and remove all installed construction materials
and restore the former condition of Lot No. [3]783-E which they (petitioners)
claimed to be a road lot. 1 They also claimed that the construction obstructed and
closed the only means of ingress and egress of the Nogoy spouses and their family,
and at the same time, caved in and impeded the ventilation and clearance due the
Castro spouses' residential house. 2 aESTAI
Petitioners' demand remained unheeded, prompting them to file before the Regional
Trial Court (RTC) of San Fernando, Pampanga a complaint, 3 docketed as Civil Case
No. 12834, for injunction, restoration of road lot/right of way and damages with
prayer for temporary restraining order and/or writ of preliminary injunction.
Before respondents filed their Answer, 4 petitioners filed an Amended Complaint, 5
alleging that the construction of the perimeter wall was almost finished and thus
modifying their prayer for a writ of preliminary injunction to a writ of preliminary
mandatory injunction, viz.: STECDc
WHEREFORE, it is respectfully prayed of this Honorable Court that:

A.
Before trial on the merits, a temporary restraining order be issued
immediately restraining the defendants from doing further construction of the
perimeter wall on the premises, and thereafter, a writ of preliminary mandatory
injunction be issued enjoining the defendants from perpetrating and continuing with
the said act and directing them jointly and severally, to restore the road lot, Lot
3783-E to its previous condition.
xxx
supplied)

xxx

xxx 6 (Underscoring in the original; emphasis

After hearing petitioners' application for a writ of preliminary mandatory injunction,

Branch 44 of the San Fernando, Pampanga RTC denied the same, without prejudice
to its resolution after the trial of the case on the merits, in light of the following
considerations: HSCAIT
After a judicious evaluation of the evidence, the Commissioner's Report on the
Conduct of the Ocular Inspection held on February 14, 2004, as well as the
pleadings, the Court is of the opinion and so holds that a writ of preliminary
injunction should not be issued at this time. Plaintiffs have not clearly shown that
their rights have been violated and that they are entitled to the relief prayed for and
that irreparable damage would be suffered by them if an injunction is not issued.
Whether lot 3783-E is a road lot or not is a factual issue which should be resolved
after the presentation of evidence. This Court is not inclined to rely only on the
subdivision plans presented by plaintiffs since, as correctly argued by defendants,
the subdivision plans do not refer to lot 3783-E hence are not conclusive as to the
status or classification of lot 3783-E. This court notes further that Subdivision Plan
Psd-03-000577 of Lot 3783 from which the other subdivision plans originates [sic]
does not indicate lot 3783-E as a road lot.
Even the physical evidence reveals that lot 3783-E is not a road lot. The Court
noticed during the ocular inspection on February 14, 2004, that there is a PLDT box
almost in front of lot 3783-E. There is no visible pathway either in the form of a
beaten path or paved path on lot 3783-E. Visible to everyone including this court
are wild plants, grasses, and bushes of various kinds. Lot 3783-E could not have
been a road lot because Sps. Nogoy, one of the plaintiffs, even built a structure on
lot 3783-E which they used as a coffin factory. HTSaEC
Plaintiffs failed to prove that they will be prejudiced by the construction of the wall.
The ocular inspection showed that they will not lose access to their residences. As a
matter of fact, lot 3783-E is not being used as an access road to their residences
and there is an existing secondary road within St. Benedict Subdivision that serves
as the main access road to the highway. With respect to the blocking of ventilation
and light of the residence of the Sps. Castro, suffice it to state that they are not
deprived of light and ventilation. The perimeter wall of the defendants is situated on
the left side of the garage and its front entrance is still open and freely accessible.

This is indeed an issue of fact which should be ventilated in a full blown trial,
determinable through further presentation of evidence by the parties. . . .
xxx

xxx

xxx

WHEREFORE, premises considered, plaintiffs' application for the issuance of a writ of

preliminary mandatory injunction is denied without prejudice to its resolution after
the trial of the case on the merits. 7 (Underscoring supplied) cSATEH
Their Motion for Reconsideration 8 having been denied, petitioners filed a petition
for certiorari 9 before the Court of Appeals which dismissed the same 10 and denied
their subsequent Motion for Reconsideration. 11
Hence, the petitioners filed the present petition, 12 faulting the Court of Appeals in
I.
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF SUBSTANCE NOT IN ACCORD
WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II.
. . . PROMOTING THE LOWER COURT'S RATIOCINATION THAT PETITIONERS ARE
SEEKING THE ESTABLISHMENT OF AN EASEMENT OF RIGHT OF WAY, WHEN THEY
ARE CLAIMING THE ENFORCEMENT OF THE STATUTORY PROHIBITION AGAINST
CLOSURE OR DISPOSITION OF AN ESTABLISHED ROAD LOT. ISHCcT
III.
. . . SANCTION[ING] THE LOWER COURT'S PATENT GRAVE ABUSE OF DISCRETION IN
PERFUNCTORILY DENYING PETITIONERS' APPLICATION FOR WRIT OF PRELIMINARY
INJUNCTION. 13
It is settled that the grant of a preliminary mandatory injunction rests on the sound
discretion of the court, and the exercise of sound judicial discretion by the lower
court should not be interfered with except in cases of manifest abuse. 14
It is likewise settled that a court should avoid issuing a writ of preliminary
mandatory injunction which would effectively dispose of the main case without trial.
15
In the case at bar, petitioners base their prayer for preliminary mandatory injunction
on Section 44 of Act No. 496 (as amended by Republic Act No. 440), Section 50 of
Presidential Decree 1529, and their claim that Lot No. 3783-E is a road lot. DTaSIc
To be entitled to a writ of preliminary injunction, however, the petitioners must
establish the following requisites: (a) the invasion of the right sought to be

protected is material and substantial; (b) the right of the complainant is clear and
unmistakable; and (c) there is an urgent and permanent necessity for the writ to
prevent serious damage. 16
Since a preliminary mandatory injunction commands the performance of an act, it
does not preserve the status quo and is thus more cautiously regarded than a mere
prohibitive injunction. 17 Accordingly, the issuance of a writ of preliminary
mandatory injunction is justified only in a clear case, free from doubt or dispute. 18
When the complainant's right is thus doubtful or disputed, he does not have a clear
legal right and, therefore, the issuance of injunctive relief is improper.
Section 44 of Act 496, 19 which petitioners invoke, provides:
xxx

xxx

HCEcaT

xxx

Any owner subdividing a tract of registered land into lots shall file with the Chief of
the General Land Registration Office a subdivision plan of such land on which all
boundaries, streets and passageways, if any, shall be distinctly and accurately
delineated. If no streets or passageways are indicated or no alteration of the
perimeter of the land is made, and it appears that the land as subdivided does not
need of them and that the plan has been approved by the Chief of the General Land
Registration Office, or by the Director of Lands as provided in section fifty-eight of
this Act, the Register of Deeds may issue new certificates of title for any lot in
accordance with said subdivision plan. If there are streets and/or passageways, no
new certificates shall be issued until said plan has been approved by the Court of
First Instance of the province or city in which the land is situated. A petition for that
purpose shall be filed by the registered owner, and the court after notice and
hearing, and after considering the report of the Chief of the General Land
Registration Office, may grant the petition, subject to the condition, which shall be
noted on the proper certificate, that no portion of any street or passageway so
delineated on the plan shall be closed or otherwise disposed of by the registered
owner without approval of the court first had, or may render such judgment as
justice and equity may require. 20 (Underscoring supplied by the petitioners)
Section 50 of Presidential Decree No. 1529, 21 which petitioners likewise invoke,
provides: DEHaTC
SEC. 50.
Subdivision and consolidation plans. Any owner subdividing a tract
of registered land into lots which do not constitute a subdivision project as defined
and provided for under P.D. No. 957, shall file with the Commissioner of Land
Registration or with the Bureau of Lands a subdivision plan of such land on which all
boundaries, streets, passageways and waterways, if any, shall be distinctly and
accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the Commissioner of
Land Registration or the Bureau of Lands together with the approved technical

descriptions and the corresponding owner's duplicate certificate of title is presented

for registration, the Register of Deeds shall, without requiring further court approval
of said plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of Deeds shall
annotate on the new certificate of title covering the street, passageway or open
space, a memorandum to the effect that except by way of donation in favor of the
national government, province, city or municipality, no portion of any street,
passageway, waterway or open space so delineated on the plan shall be closed or
otherwise disposed of by the registered owner without the approval of the Court of
First Instance of the province or city in which the land is situated. . . . 22
(Underscoring supplied by petitioner) CDHcaS
The best evidence thus that Lot No. 3783-E is a road lot would be a memorandum to
that effect annotated on the certificate of title covering it. Petitioners presented TCT
No. 185702-R covering Lot No. 3783-E in the name of Sunny Acres Realty
Management Corporation which states that the registration is subject to "the
restrictions imposed by Section 44 of Act 496, as amended by Rep. Act No. 440." 23
The annotation does not explicitly state, however, that Lot No. 3783-E is a road lot.
In any event, TCT No. 185702-R had been cancelled and in its stead was issued TCT
No. 247778-R 24 which, in turn, was cancelled by TCT No. 269758-R 25 in the name
of respondent Co and his siblings.
TCT No. 247778-R and respondent Co's TCT No. 269758-R do not now contain the
aforementioned memorandum annotated on TCT No. 185702-R re the registration
being "subject to restrictions imposed by Section 44 of Act 496, as amended by
Republic Act No. 440." Given the immediately foregoing circumstances, there is
doubt on whether Lot No. 3783-E is covered by a road lot. STDEcA
While petitioners correctly argue that certain requirements must be observed before
encumbrances, in this case the condition of the lot's registration as being subject to
the law, may be discharged and before road lots may be appropriated 26 gratuity
assuming that the lot in question was indeed one, TCT Nos. 247778-R and 269758-R
enjoy the presumption of regularity 27 and the legal requirements for the removal
of the memorandum annotated on TCT No. 185702-R are presumed to have been
followed. 28
At all events, given the following factual observations of the trial court after
conducting an ocular inspection of Lot 3783-E, viz.:
. . . The ocular inspection showed that [petitioners] will not lose access to their
residences. As a matter of fact, lot 3783-E is not being used as an access road to
their residences and there is an existing secondary road within St. Benedict
Subdivision that serves as the main access road to the highway. 29 With respect to
the blocking of ventilation and light of the residence of the Sps. Castro, suffice it to
state that they are not deprived of light and ventilation. The perimeter wall of the

defendants is situated on the left side of the garage and its front entrance is still
open and freely accessible, 30 EHCaDS
and the absence of a showing that petitioners have an urgent and paramount need
for a writ of preliminary mandatory injunction to prevent irreparable damage, they
are not entitled to such writ.
WHEREFORE, the petition is DENIED.
SO ORDERED.

[G.R. Nos. 139275-76 and 140949. November 25, 2004.]

LIGHT RAIL TRANSIT AUTHORITY, petitioner, vs. COURT OF APPEALS and T.N. LAL &
CO., LTD., respondents.
The Government Corporate Counsel for petitioner.
Vitales Dela Cruz Diwa & Napenas for private respondent.
SYNOPSIS
T.N. LAL & Co. Ltd. donated a stereo system to the Light Rail Transit Authority (LRTA)
to provide music for relaxation and amusement in the 18 stations and all the rail
vehicles of the LRTA along its Line 1. Later, LAL and LRTA entered into an agreement
to expire on March 31, 1997 whereby LAL was authorized to air commercial
advertisements through the aforesaid stereo system. On March 31, 1997, LAL filed
an action for reformation of contract and damages with application for preliminary
mandatory and prohibitory injunction and temporary restraining order against LRTA
with the Regional Trial Court of Pasay City. The trial court issued a temporary
restraining order enjoining the parties to maintain the status quo until April 20,
1997. On April 16, 1997, the trial court granted the issuance of a writ of preliminary
injunction on the condition that LAL will post a bond. On April 22, 1997, LRTA
unplugged the electrical connection of the sound system for failure of LAL to post a
bond. On April 25, 1997, LAL filed an injunction bond and the writ of preliminary
injunction was issued by the trial court which was immediately served on LRTA.
Later, upon motion of LAL, the trial court found the officers of LRTA guilty of indirect
contempt because they refused to comply with the order of the court to restore the
sound system to its original status/condition. In the petitions for certiorari
separately filed by the General Manager of Metro Transit Organization and the LRTA,
the Court of Appeals annulled the Order that found the officers of the LRTA guilty of
indirect contempt but it upheld the writ of preliminary injunction issued by the trial
court. Hence, this petition. DcITHE
The Court ruled that the contract explicitly states that it was due to expire on March
31, 1997, the same day respondent filed its action for reformation of contract. When
the trial court issued its Order dated April 16, 1997 ordering petitioner to refrain
from terminating the contract and to retain respondent's services until further
orders from the court, the contract had already expired. Respondent, therefore, has
no clear and unmistakable right to be protected by the issuance of the writ. This is
but a consequence of their stipulation of a determinate period for its expiration. The
injunction, in effect, virtually extended the original period agreed upon. It was the
trial court's belief that to allow the contract to expire would render respondent's
action for reformation of contract moot and academic. Needless to say, a contract
can be renewed, revived or extended only by mutual consent of the parties. No
court can compel a party to agree through the instrumentality of a writ of

preliminary injunction. Also, the possibility of irreparable damage without proof of

actual existing right is not a ground for an injunction.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; IT IS THE DISPOSITIVE PART
THAT ACTUALLY SETTLES AND DECLARES THE RIGHTS AND OBLIGATIONS OF THE
PARTIES. It must be stressed that it is the dispositive part of the judgment that
actually settles and declares the rights and obligations of the parties, finally,
definitively, and authoritatively, notwithstanding the existence of inconsistent
statements in the body that may tend to confuse. ICcaST
2.
ID.; ID.; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; PURPOSE AND
REQUISITES. The purpose of a preliminary injunction is to prevent threatened or
continuous irremediable injury to some of the parties before their claims can be
thoroughly studied and adjudicated. To be entitled to an injunctive writ, the
petitioner has the burden to establish the following requisites: (1) a right in esse or
a clear and unmistakable right to be protected; (2) a violation of that right; (3) that
there is an urgent and permanent act and urgent necessity for the writ to prevent
serious damage.
3.
ID.; ID.; ID.; ID.; PLAINTIFF'S ENTITLEMENT THERETO CAN BE DETERMINED BY
THE TERMS OF THE CONTRACT BETWEEN THE PARTIES; CASE AT BAR. In the
present case, respondent's entitlement to the injunctive writ is found on its prima
facie legal right to remain in the premises and continue broadcasting commercial
advertisements within the LRT stations. The only way to determine this is to look
into the terms of the contract between petitioner and respondent, as it provides for
their respective rights and obligations. It is fundamental that 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. No amount of extrinsic aids are
required and no further extraneous sources are necessary in order to ascertain the
parties' intent.
4.
ID.; ID.; ID.; ID.; NO COURT CAN COMPEL A PARTY TO AGREE TO A CONTRACT
THROUGH THE INSTRUMENTALITY OF A WRIT THEREOF. The contract explicitly
states that it was due to expire on March 31, 1997, the same day respondent filed
its action for reformation of contract. When the trial court issued its Order dated
April 16, 1997, ordering petitioner to refrain from terminating the contract and to
retain respondent's services until further orders from the court, the contract had
already expired. Respondent, therefore, has no clear and unmistakable right to be
protected by the issuance of the writ. This is but a consequence of their stipulation
of a determinate period for its expiration. The injunction, in effect, virtually
extended the original period agreed upon. It was the trial court's belief that to allow
the contract to expire would render respondent's action for reformation of contract
moot and academic. Needless to say, a contract can be renewed, revived or

extended only by mutual consent of the parties. No court can compel a party to
agree to a contract through the instrumentality of a writ of preliminary injunction.
Also, the possibility of irreparable damage without proof of actual existing right is
not a ground for an injunction. cCaATD
DECISION
AUSTRIA-MARTINEZ, J p:
Both filed by petitioner Light Rail Transit Authority (LRTA), G.R. Nos. 139275-76
assail the Decision dated February 26, 1999, rendered by the Court of Appeals (CA)
in the consolidated petitions docketed as CA-G.R. SP Nos. 44220 and 44227; 1 G.R.
No. 140949, on the other hand, questions the Decision dated November 12, 1999,
issued by the CA in CA-G.R. SP No. 52382. 2 These cases originated from the orders
issued by the Regional Trial Court of Pasay City (Branch 111) in Civil Case No. 970423. HcDSaT
The antecedent facts of these consolidated petitions were summed up by the CA in
CA-G.R. SP Nos. 44220 and 44227, as follows:
On October 1, 1986, T.N. LAL & CO., LTD. (private respondent herein and hereafter
to be referred to as LAL for short) donated a stereo system to the LRTA, to provide
music for relaxation and amusement in the 18 stations and all the rail vehicles of
LRTA along its Line 1. On March 19, 1990, LAL and the LRTA entered into an
agreement whereby LAL was authorized to air commercial advertisements through
the aforesaid stereo system for a period of five (5) years and three (3) months from
March 19, 1990, in consideration of a fee equivalent to thirty percent (30%) of the
gross sales of advertisements (less any agency commission) annually, with
minimum annual guaranteed fees. Subsequently, the period of the contract was
amended to five (5) years from April 1, 1992, or until March 31, 1997.
On March 31, 1997, LAL filed an action for reformation of contract and damages
(with application for preliminary mandatory & prohibitory injunction and Temporary
Restraining Order) against LRTA with the Regional Trial Court at Pasay City, and the
same was docketed as Civil Case No. 97-0423 and raffled to Branch 111, presided
over by the respondent judge.
The complaint alleged that vibrations and noises coming from the light rail vehicles
caused disruptions in the sound system, resulting in a sharp decline of
advertisements aired over the said system. LAL requested for a moratorium of the
agreement until the said problem can be solved, but LRTA refused to grant such
request. Hence, the complaint prays that the contract be reformed by including
therein a provision allowing a moratorium in case of disruption affecting the system
attributable to mechanical/technical problems in the LRT line or light rail vehicles,
including a pro rata extension of the agreement. The complaint also prays for a
temporary restraining order and preliminary injunction ordering the defendant to

maintain the status quo and prohibiting it or any of its agents from disrupting,
cutting, severing or disconnecting the electric power supplied to the plaintiff's
sound system.
Upon receipt of the complaint, the respondent Judge issued a Temporary Restraining
Order enjoining the parties to maintain the status quo, and restraining the LRTA
from disrupting, cutting, severing or disconnecting the electric power supplied to
LAL's sound system installed in all the LRT stations and vehicles. The TRO was to
expire on April 20, 1997.
On April 16, 1997, after notice and hearing, the respondent judge issued an Order,
the dispositive portion of which is as follows:
WHEREFORE, with all the foregoing considerations, and subject to the condition of
plaintiff posting a bond in the amount of Five Hundred Thousand Pesos
(P500,000.00), Philippine Currency, conditioned to answer for any damage which
the defendant may suffer by reason of the injunction herein granted, let therefore, a
Writ of Preliminary Injunction be issued in favor of the plaintiff against the defendant
who is enjoined from:
(a)
Terminating or declaring as terminated the Agreement dated March 19, 1990
as amended on August 6, 1993 and to observe the status quo before March 31,
1997; and,
(b)
As a consequence thereof, to desist from removing, disrupting, interfering,
disconnecting or tampering the power supply leading to plaintiff's sound system, in
all places, sites and locations within the defendant's area of responsibility for the
duration of this proceedings, UNLESS THIS ORDER IS EARLIER RECALLED by this
Court. EaSCAH
SO ORDERED. (p. 57, Rollo)
On April 22, 1997, LRTA filed a Manifestation alleging that the failure of LAL to post
a bond has rendered the Order dated April 16, 1997 ineffective. On the same day,
LRTA unplugged the electrical connection of the sound system.
However, on April 25, 1997, LAL filed an injunction bond in the amount of
P500,000.00, and the writ of preliminary injunction was issued by the respondent
judge. The same was served on LRTA on the same day.
On April 25, 1997, LAL filed a "Motion to Cite the Defendant in Contempt", alleging
that on April 22, 1997, in defiance of the court's Order of March 31, 1997 (sic), the
defendant disconnected and cut off the power supply to its sound system thereby
disrupting and disturbing the regular programs and advertisements aired therein.
The motion was set for hearing on April 29, 1997.

On April 28, 1997, LRTA filed a motion for postponement which was granted and the
hearing was reset to May 15, 1997. However, the respondent judge issued an order
dated April 29, 1997, the dispositive portion of which is as follows:
WHEREFORE, pending resolution of plaintiff's 'Motion To Cite Defendant In
Contempt' which is calendared anew on May 15, 1997 at 8:30 A.M., defendant Light
Rail Transit Authority as well as its counsel are hereby ORDERED to comply with the
Order of this Court dated April 16, 1997 to cause the complete restoration of the
sound system to its original status/condition immediately upon receipt hereof. Let
this Order be served for prompt implementation by the Sheriff of this Court who is
directed to submit his report/return on the action taken in this regard.
SO ORDERED. (p. 32, Rollo)
On April 30, 1997, the LRTA filed a motion for reconsideration of the said order.
On May 5, 1997, LAL filed another motion to cite Evangeline M. Razon, Geronima P.
Anastacio and Atty. Moises S. Tolentino, [Jr.] for civil contempt, for refusing to
comply with the order of the court dated April 29, 1997. The motion was requested
to be submitted for [to] the court for proper decision "immediately upon receipt
hereof".
On May 7, 1997, LRTA filed an opposition to the two motions to cite in contempt.
On May 13, 1997, the respondent judge issued the herein assailed order the
dispositive portion of which is as follows:
WHEREFORE, this Court finds the defendants guilty of indirect contempt for defying
the Orders of April 16 and 29, 1997 and the Writ of Preliminary Injunction issued in
this case. Since the act committed can still be corrected or capable of being undone
by the officers of the defendant corporation and/or its agents/operators themselves,
let therefore a Warrant of Arrest be issued against the following persons, namely:
1)

Evangeline M. Razon, Officer-in-charge, LRTA;

2)

Geronima P. Anastacio, Head of LRTA, Legal Department; and,

3)
Moises S. Tolentino, [Jr.], General Manager, Metro Transit Organization,
Operators of the LRT system.
for their apprehension and incarceration/imprisonment until such time when they
have performed or cause to be performed the act complained of in this case, by
reconnecting, replugging or reactivating plaintiff's sound system at all LRT facilities
and restoring them in the same state and condition as it was on April 16, 1997.
SO ORDERED. (p. 25, Rollo)

Accordingly, warrants of arrest were issued against the persons named in the order.
Motions to quash warrants of arrest were filed by LRTA, Evangeline M. Razon, [and]
Geronima P. Anastacio. At the same time, the LRTA filed a motion for the respondent
judge to inhibit himself from further hearing the case. . . . 3
Atty. Moises S. Tolentino, Jr., General Manager of Metro Transit Organization
(operators of the LRT system), then filed a special civil action for certiorari and
prohibition (CA-G.R. SP No. 44227) on May 21, 1997, assailing the trial court's order
dated May 13, 1997, finding him, Evangeline M. Razon, and Geronima P. Anastacio,
guilty of indirect contempt and ordering the issuance of warrants of arrest against
them. Atty. Tolentino contended that the trial court issued the orders in disregard of
substantive and procedural due process. 4
Petitioner LRTA, meanwhile, filed a special civil action for certiorari (CA-G.R. SP No.
44220) on May 28, 1997, seeking the annulment of the following orders issued by
the trial court: (1) Order dated April 29, 1997, ordering petitioner to comply with the
trial court's Order dated April 16, 1997; and (2) Order dated May 13, 1997, denying
petitioner's motion for reconsideration and finding Atty. Tolentino, Razon, and
Anastacio, guilty of indirect contempt and ordering the issuance of warrants of
arrest against them.
CA-G.R. SP Nos. 44220 and 44227 were thereafter consolidated as both involved
related issues. 5
On February 26, 1999, the CA rendered its decision in the above-mentioned cases,
the decretal portion of which reads:
WHEREFORE, the petitions filed in these cases are hereby GIVEN DUE COURSE, and
judgment is hereby rendered ANNULLING AND SETTING ASIDE the Order dated May
13, 1997 and the warrants of arrest in connection therewith, issued by the
respondent judge in Civil Case No. 97-0423.
SO ORDERED. 6
While the CA annulled the Order dated May 13, 1997 and the warrants of arrest
issued by the trial court in Civil Case No. 97-0423, it nevertheless ruled that the writ
of preliminary injunction issued by the trial court per Order dated April 16, 1997, as
well as the Order dated April 29, 1997, is valid and binding. 7
Respondent then filed with the trial court a Motion to Enforce the Order dated April
16, 1997. Petitioner, on the other hand, filed a Manifestation asking that the
resolution of respondent's motion be suspended on the ground that there appears
to be an inconsistency with the body and the dispositive portion of the CA's
decision. 8
Notwithstanding petitioner's manifestation, the trial court issued an order dated
April 7, 1999, granting respondent's motion and ordering petitioner to immediately

restore the power supply to respondent's sound system within 24 hours. 9 Petitioner
filed a motion for reconsideration but the trial court denied it in another (second)
order dated April 7, 1999.
On April 22, 1999, the trial court issued an order amending the second order dated
April 7, 1999, to be dated April 20, 1999.10
Thus, petitioner filed on April 22, 1999, another special civil action for certiorari (CAG.R. SP No. 52382) with the CA, contesting the trial court's orders dated April 7,
1999 and April 20, 1999 (previously dated April 7, 1999).
Petitioner alleged that the assailed orders were issued with grave abuse of
discretion, as these are not in accordance with the CA's decision dated February 26,
1999. 11
In the meantime, petitioner, on April 14, 1999, filed in CA-G.R. SP Nos. 44220 and
44227 a Motion for Clarification of Decision, 12 but it was denied by the CA per
Resolution dated May 21, 1999. 13 Petitioner sought reconsideration but it was also
denied per Resolution dated July 9, 1999, 14 prompting petitioner to institute on July
29, 1999, a petition for certiorari with this Court, docketed as G.R. Nos. 139275-76.
The CA then promulgated its decision in CA-G.R. SP No. 52382 on November 12,
1999, dismissing the petition and affirming the assailed orders dated April 7, 1999
and April 20, 1999. Petitioner elevated the dismissal to this Court via petition for
review filed on December 20, 1999, docketed as G.R. No. 140949. SIaHDA
On February 21, 2000, the Court ordered the consolidation of G.R. Nos. 139275-76
and G.R. No. 140949. 15
In G.R. Nos. 139275-76, petitioner raises the following issues:
I
IF THE BODY OF THE DECISION IN THE SAID CONSOLIDATED CASES IS IN CONFLICT
WHICH HAS BECOME FINAL CONFLICTS WITH THE DISPOSITIVE PORTION THEREOF,
WHICH OF THEM SHALL PREVAIL?
II
CAN THE LIFETIME OF AN EXPIRED CONTRACT BE EXTENDED BY A PRELIMINARY
INJUNCTION? 16
In G.R. No. 140949, the following:
1.
CAN A BODY OF THE DECISION [WHICH DOES NOT HAVE ANY SUPPORT IN OR
CONTRARY TO THE DISPOSITIVE PORTION THEREOF] BE ENFORCED OR EXECUTED?

2.
WHETHER OR NOT THE ORDER OF THE TRIAL COURT A QUO DATED APRIL 7,
1999 AND THE OTHER ONE ALSO DATED APRIL 7, 1999 [WHICH WAS LATER
AMENDED BY THE TRIAL COURT A QUO TO BE DATED APRIL 20, 1999 IN AN ORDER
DATED APRIL 22, 1999] ENFORCING THE BODY OF THE DECISION OF THE
HONORABLE COURT OF APPEALS DATED FEBRUARY 26, 1999 IN CA-G.R. SP NO.
44220 AND CA-G.R. SP NO. 44227 ARE NULL AND VOID. 17
Petitioner's argument rests mainly on its adamant belief that the discussion of the
CA in the body of its Decision dated February 26, 1999, rendered in CA-G.R. SP Nos.
44220 and 44227, is inconsistent with its fallo, which nullified and set aside the trial
court's order dated May 13, 1997. According to petitioner, since the May 13, 1997
order is premised on the April 16, 1997 (granting the issuance of the writ of
preliminary injunction) and April 29, 1997 (enforcing compliance with the injunctive
writ) orders, therefore, these orders are likewise invalid, and respondent cannot
seek its enforcement.
The Court, however, has carefully read the assailed decision and cannot find
anything inconsistent with the body and fallo. Even a student of law can understand
its import. It has been said that, to understand the dispositive portion of a decision,
one has only to ascertain the issues of the action. 18
CA-G.R. SP Nos. 44220 and 44227 involved three issues. First is whether or not an
injunction order, as embodied in the April 16, 1997 order, is effective prior to the
posting of an injunction bond and the issuance of the injunctive writ; 19 second,
whether or not the Order of April 29, 1997 is valid and binding; 20 and the third is
whether or not the petitioners were validly held guilty of contempt of court per
Order dated May 13, 1997. 21
On the first issue, the CA categorically ruled that the April 16, 1997 order is binding
even without the filing of the injunction bond. 22 On the second issue, the CA
likewise ruled that the April 29, 1997 Order is valid and binding. 23 It was on the
third issue that the CA found grave abuse of discretion committed by the trial court,
and the Order dated May 13, 1997 was consequently rendered null and void. The CA
is clear on this score. It held, viz.:
The Motion to Cite Defendant in Contempt, dated April 23, 1997 (Annex "G",
Petition, SP No. 44227) does not name them as respondents. It prays only that the
defendant (LRTA) "and its officers and employees who are responsible for the act
complained of" be held in contempt. It is only in the Motion to Cite Defendants for
Civil Contempt Under Rule 71, Section 7 of the Revised Rules of Court dated May 5,
1997 (sic) that Evangeline M. Razon, Geronima P. Atanacio, and Moises S. Tolentino,
[Jr.] are mentioned as "responsible on the continuing defiance of the Orders of the
Honorable Court." But the said motion was fatally defective in that it did not contain
a proper notice of hearing, as required by Sec. 4, Rule 15 of the Revised Rules of

Court. It only contains the request to the Branch Clerk of Court that the said motion
be submitted to the court "immediately upon receipt hereof."
Worst of all, the respondent judge issued his disputed order . . ., two (2) days before
the date that he himself fixed for the hearing of the motion to cite the defendant in
contempt. Clearly, the said persons were denied their day in court.
Moreover, we have reviewed the transcript of the ex parte hearing conducted by the
respondent judge on April 29, 1997 (on the motion to cite defendant in contempt
dated April 23, 1997), and we find that the evidence presented against the
abovenamed persons (who are now facing warrants of arrest) were basically
hearsay testimony. . . . The respondent judge acted with grave abuse of discretion in
issuing his disputed order, and its corresponding warrants of arrest, without a
hearing, and on the basis of flimsy evidence. 24 (Emphasis Ours)
It is plain to see that only the May 13, 1997 order was nullified by the CA. The April
16 and 29, 1997 orders remain valid and binding. Petitioner's argument that these
two orders should likewise have been nullified because the May 13, 1997 order is
based thereon, is misplaced. The nullity of the May 13, 1997 order was not based on
these 2 orders, but on grounds of lack of due process and evidence. These grounds
inevitably led to the dispositive portion of the CA's decision. It must be stressed that
it is the dispositive part of the judgment that actually settles and declares the rights
and obligations of the parties, finally, definitively, and authoritatively,
notwithstanding the existence of inconsistent statements in the body that may tend
to confuse. 25
If there was any error committed by the CA, it was in failing to state in the
dispositive portion of the decision that the petition was only partially granted. But
this does not affect the decision, as its import can be grasped notwithstanding the
lapse. Consequently, the Decision dated February 26, 1999 in CA-G.R. SP Nos.
44220 and 44227 nullifying the Order dated May 13, 1997 is a valid decision.
aHcACI
Nevertheless, the Court agrees with petitioner that the trial court committed grave
abuse of discretion in issuing the injunctive writ.
Section 3 of Rule 58 of the Rules of Court provides for the grounds justifying the
issuance of a preliminary injunction, to wit:
SEC. 3.
Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established:
(a)
That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;

(b)
That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c)
That a party, court, agency or a person is doing, threatening or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in violation
of the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
The purpose of a preliminary injunction is to prevent threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly
studied and adjudicated. To be entitled to an injunctive writ, the petitioner has the
burden to establish the following requisites: 26
(1)

a right in esse or a clear and unmistakable right to be protected;

(2)

a violation of that right;

(3)
that there is an urgent and permanent act and urgent necessity for the writ to
prevent serious damage.
In the present case, respondent's entitlement to the injunctive writ is found on its
prima facie legal right to remain in the premises and continue broadcasting
commercial advertisements within the LRT stations. The only way to determine this
is to look into the terms of the contract between petitioner and respondent, as it
provides for their respective rights and obligations. It is fundamental that 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. No amount of
extrinsic aids are required and no further extraneous sources are necessary in order
to ascertain the parties' intent. 27
The "Agreement" contains the following stipulations, inter alia:
Whereas, for purposes of adjusting the five-year period corresponding to the annual
minimum guaranteed amount disrupted by the start-up ninety-day period and the
six-month moratorium period effective September 1, 1990, to end March 1, 1991,
the parties have agreed to formally amend the "Agreement" to reflect the changes
thereon;
xxx
1.

xxx

xxx

Article I (a) of the "Agreement" is hereby amended to read as follows:

(a.)
This Agreement shall be effective for five (5) years to commence on April 1,
1992 until March 31, 1997, unless sooner terminated as provided hereunder." 28
The contract explicitly states that it was due to expire on March 31, 1997, the same
day respondent filed its action for reformation of contract. When the trial court
issued its Order dated April 16, 1997, ordering petitioner to refrain from terminating

the contract and to retain respondent's services until further orders from the court,
the contract had already expired. Respondent, therefore, has no clear and
unmistakable right to be protected by the issuance of the writ. This is but a
consequence of their stipulation of a determinate period for its expiration. 29 The
injunction, in effect, virtually extended the original period agreed upon. THcaDA
It was the trial court's belief that to allow the contract to expire would render
respondent's action for reformation of contract moot and academic. 30 Needless to
say, a contract can be renewed, revived or extended only by mutual consent of the
parties. No court can compel a party to agree to a contract through the
instrumentality of a writ of preliminary injunction. 31 Also, the possibility of
irreparable damage without proof of actual existing right is not a ground for an
injunction. 32
WHEREFORE, the petitions in G.R. Nos. 139275-76 and 140949, are hereby
GRANTED. The Decision dated February 26, 1999, in CA-G.R. SP Nos. 44220 and
44227, and the Decision dated November 12, 1999, in CA-G.R. SP No. 52382,
rendered by the Court of Appeals are hereby SET ASIDE. Consequently, the Orders
dated April 16 and 29, 1997, issued by the Regional Trial Court of Pasay City (Branch
111) in Civil Case No. 97-0423, and all other orders appurtenant thereto, are
NULLIFIED.
The trial court is ORDERED to proceed with Civil Case No. 97-0423 with immediate
dispatch. HIDCTA
SO ORDERED.
Puno, Callejo, Sr., Tinga and Chico-Nazario, JJ ., concur.

[G.R. No. 157494. December 10, 2004.]

BACOLOD CITY WATER DISTRICT, petitioner, vs. THE HON. EMMA C. LABAYEN,
Presiding Judge, RTC of Bacolod City, Br. 46 and the City of Bacolod, respondents.
Office of the Government Corporate Counsel for petitioner.
Vicente A. Sabornay for respondents.
SYNOPSIS
Respondent City filed a case for Injunction with Prayer for Temporary Restraining
Order (TRO) and/or Preliminary Mandatory Injunction against petitioner who
announced the implementation of its water rates adjustment. The trial court issued
a restraining order but the same was put in issue: Whether the Order was a TRO or
a preliminary injunction. CAIHTE
The Court ruled that the attendant facts and circumstances of the case clearly
showed that the trial court issued a TRO. That the Order failed to state the period
for the restraint does not convert it from a TRO to a preliminary injunction. And the
20-day limited period of effectivity of the TRO is absolute. The 20-day period should
be deemed incorporated in the Order where there is an omission to do so.
SYLLABUS
REMEDIAL LAW; CIVIL PROCEDURE; ACTION FOR INJUNCTION; DISTINGUISHED FROM
PRELIMINARY INJUNCTION; ELUCIDATED. Injunction is a judicial writ, process or
proceeding whereby a party is ordered to do or refrain from doing a certain act. It
may be the main action or merely a provisional remedy for and as an incident in the
main action. The main action for injunction is distinct from the provisional or
ancillary remedy of preliminary injunction which cannot exist except only as part or
an incident of an independent action or proceeding. As a matter of course, in an
action for injunction, the auxiliary remedy of preliminary injunction, whether
prohibitory or mandatory, may issue. Under the law, the main action for injunction
seeks a judgment embodying a final injunction which is distinct from, and should
not be confused with, the provisional remedy of preliminary injunction, the sole
object of which is to preserve the status quo until the merits can be heard. A
preliminary injunction is granted at any stage of an action or proceeding prior to the
judgment or final order. It persists until it is dissolved or until the termination of the
action without the court issuing a final injunction. A restraining order, on the other
hand, is issued to preserve the status quo until the hearing of the application for
preliminary injunction which cannot be issued ex parte. Under Rule 58 of the Rules
of Court, a judge may issue a temporary restraining order with a limited life of
twenty (20) days from date of issue. If before the expiration of the twenty (20)-day
period the application for preliminary injunction is denied, the temporary restraining
order would be deemed automatically vacated. If no action is taken by the judge on

the application for preliminary injunction within the said twenty (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. The rule
against the non-extendibility of the twenty (20)-day limited period of effectivity of a
temporary restraining order is absolute if issued by a regional trial court. The failure
of respondent court to fix a period for the ordered restraint did not lend the
temporary restraining order a breath of semi-permanence which can only be
characteristic of a preliminary injunction. The twenty (20)-day period provided by
the Rules of Court should be deemed incorporated in the Order where there is an
omission to do so. EScAHT
DECISION
PUNO, J p:
First, the chronology of facts. Petitioner Bacolod City Water District (BACIWA) is a
water district established pursuant to Presidential Decree No. 198 as a governmentowned and controlled corporation with original charter. It is in the business of
providing safe and potable water to Bacolod City. ETDHSa
Public respondent City of Bacolod is a municipal corporation created by
Commonwealth Act No. 326, otherwise known as the Charter of Bacolod.
On March 26, 1999, respondent City filed a case for Injunction With a Prayer for
Temporary Restraining Order And/Or Preliminary Mandatory Injunction against
petitioner in the sala of public respondent judge. The petition stated that on January
15, 1999, BACIWA published in the Visayan Daily Star, 1 a local paper of general
circulation, a Schedule of Automatic Water Rates Adjustments for the years 1999,
2000 and 2001. The rates were supposed to take effect seven (7) days after its
posting in the local papers or on January 22, 1999. The increase was aborted after
petitioner unilaterally suspended the January 22, 1999 scheduled implementation.
On March 15, 1999, however, petitioner announced that the rate hike will be
implemented on April 1, 1999. 2
Respondent City opposed. It alleged that the proposed water rates would violate
due process as they were to be imposed without the public hearing required under
Letter of Instructions No. 700 3 and Presidential Decree No. 1479. 4 Hence, it
prayed that before the hearing of the main case, a temporary restraining order or a
preliminary injunction be issued. 5
On March 30, 1999, the court a quo issued an Order 6 summoning the parties with
their counsels to attend the preliminary hearing for the issuance of a temporary
restraining order or preliminary mandatory injunction. On April 8, 1999, it required
the parties to simultaneously submit their respective memoranda on whether it had
jurisdiction over the case and whether a public hearing was conducted re the
proposed increase in water rates. 7

Petitioner filed its Position Paper dated April 15, 1999. It attached documents
evidencing the conduct of extensive and lengthy public hearings in fifty-eight (58) of
the sixty-one (61) barangays of Bacolod City. It opined that original jurisdiction over
cases on rate review is vested in the Local Water Utilities Administration (LWUA);
appellate jurisdiction is vested in the National Water Resources [Board] (NWRB)
whose decisions shall be appealable to the Office of the President. 8
On May 5, 1999, petitioner also filed a Motion to Dismiss. In an Order 9 dated May 7,
1999, the court directed respondent City to file its Opposition to petitioner's Motion
to Dismiss within fifteen (15) days.
On June 17, 1999, respondent City filed a Motion to Set [for] Hearing 10 its
application for a temporary restraining order or preliminary mandatory injunction. It
alleged that the parties had already submitted their respective memoranda and it
has already submitted its Opposition to petitioner's Motion to Dismiss. It also
alleged that petitioner had already effected the water rates increase and collection,
hence, causing irreparable injury to the public. HITAEC
Petitioner opposed the Motion. On July 20, 1999, respondent City filed its Reply to
Opposition and reiterated that the application for the issuance of a temporary
restraining order or preliminary mandatory injunction be heard since petitioner
continued to violate the right of the public to due process and it might take time
before the case would be finally resolved. 11 On the same date, petitioner filed a
Manifestation and Motion 12 stating that the hearing may no longer be necessary as
the respective positions of both parties have already been presented and amplified
in their pleadings and memoranda.
On July 22, 1999, respondent trial court issued an Order 13 stating that there was
no more need to hear the case on the merits 14 as both parties have already
submitted their position papers and documents to prove their respective
allegations.
On July 23, 1999, petitioner filed its Reply 15 to respondent City's Opposition to the
Motion to Dismiss reiterating that petitioner failed to exhaust administrative
remedies provided by law hence the petition be dismissed for utter lack of merit.
After a hiatus of nearly seven (7) months, or on February 18, 2000, respondent City
filed an Urgent Motion for the Issuance of Temporary Restraining Order And[/]Or Writ
of Preliminary Injunction 16 praying that the case be set for hearing on February 24,
2000. On the same date requested, respondent court heard respondent's
application for temporary restraining order and issued an Order 17 commanding
petitioner to stop, desist and refrain from implementing the proposed water rates
for the year 2000 which were then supposed to take effect on March 1, 2000.
On March 7, 2000, petitioner filed an Urgent Motion for Reconsideration and
Dissolution of the Temporary Restraining Order. 18 Respondent court a quo issued

on March 10, 2000 an Order 19 directing respondent City to file an Opposition to the
Urgent Motion. In its Opposition, respondent City 20 contended that the temporary
restraining order issued was not infirmed with procedural and substantive defects. It
also averred that respondent court has jurisdiction over the case since the sole
question of the lack of public hearing does not require the special knowledge or
expertise of an administrative agency and may be resolved by respondent court,
hence the doctrine of primary jurisdiction does not apply.
Respondent court continued with the proceedings by receiving the evidence of
petitioner in support of its Motion for Reconsideration and Dissolution of Temporary
Restraining Order. It further issued Orders dated March 17, 2000 21 and March 20,
2000. 22
On April 6, 2000, respondent court issued an Order 23 finding petitioner's Urgent
Motion for Reconsideration and Dissolution of Temporary Restraining Order moot
and academic considering petitioner's compliance of said temporary restraining
order. TaCSAD

Four (4) days after, in an Order 24 dated April 10, 2000, it denied petitioner's Motion
to Dismiss for lack of merit.
On April 19, 2000, respondent City filed a Manifestation praying that respondent
trial court issue a writ of preliminary injunction against petitioner, stating thus:
A Temporary Restraining Order was issued against the respondents which, however,
expired before the parties were able to finish the presentation of their respective
witnesses and evidences;
The instant case was submitted for resolution and decision of this Honorable Court
during the last week of March but while awaiting the decision of this Honorable
Court, several complaints had reached the petitioner that the respondents had
already reflected in the water billings for the month of April the new water rates for
the year 2000;
xxx

xxx

xxx 25

Petitioner, for its part, filed a Motion for Reconsideration 26 of .respondent trial
court's Order denying its Motion to Dismiss. Respondent City filed an Opposition to
[the] Motion for Reconsideration 27 on June 1, 2000.
Respondent court did not act upon petitioner's Motion for Reconsideration until
respondent City filed an [Ex Parte] Motion for Speedy Resolution 28 of the case on
October 6, 2000 praying that the case be resolved before the year 2000 ends in
order to prevent the implementation of the water rates increase for the year 2001
which was to be imposed allegedly without the benefit of a public hearing.

On December 21, 2000, respondent court issued the assailed Decision 29 granting
the final injunction which allegedly confirmed the previous preliminary injunction.
Petitioner filed its Motion for Reconsideration 30 of the assailed Decision on January
11, 2001 asserting, among others, that the case was not yet ripe for decision when
the court granted the final injunction, the petitioner having had no opportunity to
file its answer, avail of the mandatory pre-trial conference and have the case tried
on the merits.
Respondent court denied the Motion for Reconsideration for lack of merit in an
Order 31 dated January 24, 2001. Petitioner then filed a special civil action for
certiorari under Rule 65 in the Court of Appeals. It alleged that public respondent
judge acted without or in excess of jurisdiction and/or with grave and patent abuse
of discretion amounting to lack or excess of jurisdiction when she issued the final
injunction in disregard of petitioner's basic right to due process. 32
The Court of Appeals dismissed the petition for review on certiorari, ratiocinating
thus:
In the case at bar, the [O]rder of public respondent dated 24 February 2000, though
termed by BACIWA as a temporary restraining order, is in fact a preliminary
injunction. The period of the restraint was not limited. By its wordings, it can be
safely inferred that the increased water rates must not be effected until final
disposition of the main case. This note of semi-permanence simply cannot issue
from a mere temporary restraining order. It must be further noted that the
temporary restraining order has been elevated to the same level as the preliminary
injunction in the procedure, grounds and requirements of its obtention by S[ection]
4, Rule 58. Thus, to set [a] distinction, the present practice is to categorically refer
to it as a temporary restraining order. In which case, the omission by the public
respondent in referring to the 24 February 2000 order as a temporary restraining
order could not have been a mere oversight but deliberate. 33
Resorting to this Court, petitioner raises the following issues:
I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED AND REFUSED TO RULE
THAT RESPONDENT COURT HAD ACTED WITHOUT OR IN EXCESS OF JURISDICTION
AND/OR WITH GRAVE ABUSE OF DISCRETION FOR ARBITRARILY AND CAPRICIOUSLY
RENDERING A DECISION PURPORTING TO ISSUE A FINAL INJUNCTION AND
CONFIRMING ITS ALLEGED PRELIMINARY INJUNCTION, DESPITE THE FACT THAT:
A.

NO PRELIMINARY INJUNCTION HAD BEEN ISSUED;

B.
THE RESPONDENT LOWER COURT DID NOT RESOLVE HEREIN PETITIONER'S
MOTION FOR RECONSIDERATION OF THE ORDER DENYING PETITIONER'S MOTION TO
DISMISS; DHCSTa

C.

THE HEREIN PETITIONER HAD NOT YET FILED ITS ANSWER TO THE PETITION;

D.
THERE WAS STILL NO JOINDER OF THE ISSUES SINCE NO ANSWER HAD YET
BEEN FILED;
E.

THE MANDATORY PRE-TRIAL CONFERENCE WAS NOT YET CONDUCTED;

F.

THERE WAS NO TRIAL ON THE MERITS FOR THE MAIN CASE.

II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT INSISTED THAT THE 24
FEBRUARY 2000 ORDER (ANNEX R) ISSUED BY THE TRIAL COURT WAS A
PRELIMINARY INJUNCTION WHEN THE RECORDS CLEARLY AND INDUBITABLY SHOW
THAT IT WAS A TEMPORARY RESTRAINING ORDER (TRO).
III
BY DISMISSING THE PETITION FOR CERTIORARI, THE COURT OF APPEALS GRAVELY
ERRED WHEN IT EFFECTIVELY PREVENTED PETITIONER FROM FULLY VENTILATING ITS
CASE IN THE MAIN ACTION DUE TO THE IRREGULAR AND CONFUSED PROCEEDINGS
CONDUCTED BY THE RESPONDENT COURT. 34
We rule in favor of petitioner.
The initial issue is the proper characterization of the Order dated February 24, 2000.
The sequence of events and the proceedings that transpired in the trial court make
a clear conclusion that the Order issued was a temporary restraining order and not
a preliminary injunction.
First. We quote the pertinent parts of the questioned Order:
xxx

xxx

xxx

When this motion was called for hearing wherein both parties have argued
exhaustedly their respective sides, this court denied the ten (10) days extension for
further amplification of the arguments of the respondent to oppose the said motion
for issuance of a temporary restraining order.
It appearing therefore, that the acts of the defendant will actually affect the plaintiff
before the decision of this court can be rendered and in order to afford the court to
pass on the issues without the same becoming moot and academic and considering
the urgency of the matter that immediate action should be taken, and pursuant to
Administrative Circular No. 6, Paragraph 4 and sub-paragraph 15 and The Interim
Rules and Guidelines [set forth] by the Rules of Court, this court hereby orders the
respondent[,] its agents, representatives or any person acting in his behalf to stop,
desist and refrain from implementing in their billings the new water rate increase

which will start on March 1, 2000. The Deputy Provincial Sheriff of this court is
hereby ordered to furnish copy of this order to the respondent Bacolod City Water
District as well as to its agents or representatives acting [o]n his behalf. HSEcTC
xxx

xxx

xxx 35 (emphases supplied)

It can be gleaned from the afore-quoted Order that what the trial court issued was a
temporary restraining order and not a preliminary injunction. The trial court has
always referred to it as a temporary restraining order in the succeeding Orders it
issued on March 10, 2000 36 and April 6, 2000. 37
The parties, in their succeeding pleadings, 38 also referred to the assailed Order as
a temporary restraining order. The petitioner filed an Urgent Motion for
Reconsideration and Dissolution of Temporary Restraining Order (TRO) 39 on March
1, 2000. This was opposed by respondent City itself in its Opposition to Motion for
Reconsideration and Dissolution of Temporary Restraining Order (TRO) 40 dated
March 14, 2000. Further, respondent City, in its Manifestation dated April 19, 2000
stated, viz:
xxx

xxx

xxx

A Temporary Restraining Order was issued against the respondents which, however,
expired before the parties were able to finish the presentation of their respective
witnesses and evidences;
xxx

xxx

xxx

WHEREFORE, it is most respectfully prayed that while waiting for the decision and
order of the Honorable Court, a preliminary injunction as prayed for in the petition
be issued against the respondents.
xxx

xxx

xxx 41 (emphases supplied)

It can be gleaned from the foregoing that both parties and respondent trial court
have consistently referred to the directive as a temporary restraining order. It was
only in the respondent court's assailed Decision that the Order was referred to as a
preliminary injunction, viz:
xxx

xxx

xxx

This Court therefore grants the final injunction prayed for restraining the respondent
from the commission of the act complained of for the year 2001 and hereby
confirming the preliminary injunction previously ordered.
xxx

xxx

xxx 42 (emphasis supplied)

Again, it was only when petitioner expressed its vehement objection on the ruling
that the final injunction confirmed the preliminary injunction previously issued,

when the respondent City and the respondent trial court started to insist that the
questioned Order was a preliminary injunction. Given the previous undeviating
references to it as a temporary restraining order, respondents cannot now consider
it as a preliminary injunction to justify the validity of the assailed Decision. The
attendant facts and circumstances clearly show that the respondent trial court
issued a temporary restraining order. THCASc
Second. Injunction is a judicial writ, process or proceeding whereby a party is
ordered to do or refrain from doing a certain act. It may be the main action or
merely a provisional remedy for and as an incident in the main action. 43
The main action for injunction is distinct from the provisional or ancillary remedy of
preliminary injunction which cannot exist except only as part or an incident of an
independent action or proceeding. As a matter of course, in an action for injunction,
the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory,
may issue. Under the law, the main action for injunction seeks a judgment
embodying a final injunction which is distinct from, and should not be confused
with, the provisional remedy of preliminary injunction, the sole object of which is to
preserve the status quo until the merits can be heard. 44 A preliminary injunction is
granted at any stage of an action or proceeding prior to the judgment or final order.
It persists until it is dissolved or until the termination of the action without the court
issuing a final injunction. 45
A restraining order, on the other hand, is issued to preserve the status quo until the
hearing of the application for preliminary injunction which cannot be issued ex
parte. Under Rule 58 46 of the Rules of Court, a judge may issue a temporary
restraining order with a limited life of twenty (20) days from date of issue. If before
the expiration of the twenty (20)-day period the application for preliminary
injunction is denied, the temporary restraining order would be deemed
automatically vacated. If no action is taken by the judge on the application for
preliminary injunction within the said twenty (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. 47
Hence, in the case at bar, since no preliminary injunction was issued, the temporary
restraining order granted automatically expired after twenty (20) days under the
Rules. The fact that respondent court merely ordered "the respondent[,] its agents,
representatives or any person acting in his behalf to stop, desist and refrain from
implementing in their billings the new water rate increase which will start on March
1, 2000" 48 without stating the period for the restraint does not convert the
temporary restraining order to a preliminary injunction.
The rule against the non-extendibility of the twenty (20)-day limited period of
effectivity of a temporary restraining order is absolute if issued by a regional trial
court. The failure of respondent court to fix a period for the ordered restraint did not

lend the temporary restraining order a breath of semi-permanence which can only
be characteristic of a preliminary injunction. The twenty (20)-day period provided by
the Rules of Court should be deemed incorporated in the Order where there is an
omission to do so. It is because of this rule on non-extendibility that respondent City
was prompted to move that hearings be set for its application of a preliminary
injunction. Respondent City cannot take advantage of this omission by respondent
trial court. ASDCaI
Third. Even if we assume that the issued Order was a preliminary injunction,
petitioner is correct in contending that the assailed Decision is premature.
The records reveal that respondent court did not resolve petitioner's Motion for
Reconsideration of the Order denying its Motion to Dismiss before it issued the
assailed Decision. Consequently, there was no answer filed by petitioner, no joinder
of issues, no mandatory pre-trial conference, and no trial on the merits, yet, a
Decision was handed down by the respondent trial court.
The short circuiting of the procedural process denied the petitioner due process of
law. It was not able to allege its defenses in an answer and prove them in a hearing.
The convoluted procedure allowed by the respondent trial court and the pleadings
filed by the parties which are not models of clarity certainly created confusion. But
this confusion should not be seized as a reason to deny a party the constitutional
right to due process. Over and above every desideratum in litigation is fairness. All
doubts should be resolved in favor of fairness.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the
Court of Appeals dated November 27, 2002 and February 28, 2003, respectively, are
REVERSED and SET ASIDE. The case is REMANDED to the court a quo for further
proceedings. DTAaCE
SO ORDERED.
Austria-Martinez, Callejo, Sr., Tinga and Chico-Nazario, JJ ., concur

[G.R. No. 79128. June 16, 1988.]

ORTIGAS & COMPANY Limited Partnership, petitioner, vs. COURT OF APPEALS and
SPS. DALTON B. KING and CECILIA F. KING, respondents.
DECISION
YAP, C.J p:
Challenged in this petition is the writ of preliminary mandatory injunction issued by
the respondent Court of Appeals directing the petitioner herein to reconnect and
restore the electrical service to Gondola Unit No. 8 of private respondent at the
Greenhills Shopping Center upon the filing by the latter of an injunction bond in the
amount of P15,000. The respondent court annulled and set aside the order of the
Regional Trial Court of Pasig, Metro Manila, Branch 152, dated March 19, 1987
entitled "Dalton B. King, et al. vs. Ortigas and Company, Limited Partnership" dated
March 19, 1987, which denied plaintiffs application for preliminary mandatory
injunction.
We deal in this case only with the matter of the issuance of the writ of preliminary
mandatory injunction to compel petitioners to reconnect the electrical service to
private respondents. We are not called upon to review the merits of the case, for
this has still to be tried and decided by the court a quo.
The antecedent facts are as follows:
In a letter agreement dated October 28, 1983, Ortigas and Company, Limited
Partnership (Ortigas for brevity) through its Greenhills Shopping Center (GSC)
Manager, Manuel Lozano, Jr., leased to Wellington Syquiatco a unit in Gondola alley
(Unit No. 8) at Greenhills Shopping Center, San Juan, Metro Manila for a period of
ten (10) years at a monthly rental of P1,500.00 starting December 1, 1983 and
increasing gradually every year thereafter. The subject unit was used for the
operation of a snack counter, known as "Pied Piper."
On May 10, 1984, Wellington Syquiatco, with the approval of Ortigas, subleased the
subject unit to herein respondent spouses (King spouses for brevity) who occupied
the premises effective May 15, 1984. Later, Wellington Syquiatco, for valuable
consideration (P97,000.00) sold to King spouses his leasehold rights and obligations
over the subject Gondola/unit. This transfer of rights was approved by Ortigas on
September 18, 1984.
In August, 1985, Ortigas dismissed its GSC Manager and undertook an audit of his
performance. Ortigas discovered that the letter-lease agreements signed by the
GSC Manager, allegedly without appropriate authority, uniformly included a clause
providing that "6. Electric and water bills shall be for our (i.e. Ortigas) account."
Ortigas also discovered later that the GSC Manager owned one Gondola unit (Unit
No. 1).

Ortigas' new manager, Jose Lim III, met with the Gondola lessees in March 1986 and
proposed to correct the inequities in the lease agreements. Individual electric
meters were to be installed in the respective units. A new contract for the Gondola
units was submitted to the lessees, which provided among others that "electric and
other utility costs" were for the lessees' account. The Kings did not sign the new
lease agreement.
The electricity bill for May and June, 1986, amounted to P3,480.02 (including cost of
meter installation) and P2,456.53, respectively, which Ortigas tried to collect from
the King spouses. In a letter dated July 28, 1986, the latter protested the bill, citing
paragraph No. 6 of the letter contract of October 28, 1983 which provided that
electric and water bills were for the account of Ortigas. prcd
The subsequent electricity bills for the months of July, August, September and
October amounted to P2,069.06, P2,097.74, P2,018.10 and P2,051.58, respectively,
which including the unpaid bills for May and June, totalled P14,174.03. When the
Kings refused to pay the bill, Ortigas disconnected the electricity supply to them. As
a consequence, the Kings filed on January 16, 1987, a complaint against Ortigas
with the Regional Trial Court of Pasig, Metro Manila, Branch 152, docketed as Civil
Case No. 54202, for specific performance and damages, with prayer for the
issuance of a writ of preliminary mandatory injunction to compel restoration and
reconnection of the electric power supply to plaintiff's Gondola unit. Ortigas filed an
opposition, dated February 9, 1987, to plaintiffs' application for a writ of preliminary
mandatory injunction, alleging among others that there was a typographical error in
Paragraph No. 6 of the letter agreement, consisting of the omission of the letter "y"
from the word "our;" that taking advantage of such typographical error, the
plaintiffs consumed electricity amounting to a monthly average of P2,362.17, while
paying a monthly rental initially at P1,500.00, thereby making Ortigas subsidize
their occupancy of the leased premises to the tune of more than P800 per month.
Ortigas further alleged that to grant the writ of preliminary mandatory injunction
would allow plaintiffs to enrich themselves unjustly at the expense of defendant.
After hearing the oral arguments of the parties and considering their pleadings, the
trial court on March 19, 1987 denied plaintiffs' application for a writ of preliminary
mandatory injunction.
The plaintiffs filed a petition with the respondent Court of Appeals for the annulment
of the order of the court a quo dated March 19, 1987, denying their application for a
writ of preliminary mandatory injunction. As stated above, the respondent appellate
court issued its questioned decision dated June 30, 1987, annulling the order of the
court a quo and issuing itself the writ of preliminary mandatory injunction prayed for
by the Kings upon the filing of a bond of P15,000.00.

The basic issue which we have to determine is whether the court a quo committed a
grave abuse of discretion in denying plaintiffs' application for a preliminary
mandatory injunction. Cdpr
We find no such grave abuse of discretion committed by the trial court which would
justify the setting aside of its order by the respondent appellate court and the
issuance by the latter of the writ of preliminary mandatory injunction.
The writ of preliminary injunction, in general, cannot be sought as a matter of right,
but its grant or refusal rests in the sound discretion of the court under the
circumstances and the facts of the particular case. The writ is the "strong arm of
equity" and therefore should not be used to sanction inequity.
The defendant in the case, the petitioner herein, was able to show that the
electricity consumed per month by the King spouses was way above the amount of
the monthly rentals which they were paying to the petitioner, thereby in effect
making the latter subsidize the business of the former in the leased premises. Such
an obviously inequitable situation by which private respondents enriched
themselves at the expense of petitioner cannot be ignored, as private respondents
wanted the trial court to do, by insisting on a strict adherence to the letter of the
contract, which petitioner questioned, alleging inter alia obvious mistake and
collusion, and non-approval of the contract by the principal of the signatory for the
lessor - defenses which must eventually be considered by the court a quo in
deciding the merits of the case. It is thus not a simple case of a contracting party
having made a bad bargain and who must be made to abide by it. The trial court,
considering the equities of the case, refused to issue the preliminary mandatory
injunction. We hold that in refusing to do so the trial court did not commit a grave
abuse of discretion. prcd
In general, courts should avoid issuing a writ of preliminary injunction which in
effect disposes of the main case without trial. This is precisely the effect of the writ
of preliminary mandatory injunction issued by the respondent appellate court.
Having granted through a writ of preliminary mandatory injunction the main prayer
of the complaint, there is practically nothing left for the trial court to try except the
plaintiffs' claim for damages.
WHEREFORE, the appealed decision of the respondent Court of Appeals dated June
30, 1987 is reversed and set aside.
SO ORDERED.
Melencio-Herrera, Paras and Sarmiento, JJ., concur.
Padilla., J., took no part.

[G.R. No. 82985. April 22, 1991.]

MERVILLE PARK HOMEOWNERS ASSOCIATION, INC., petitioner, vs. HON. FRANCISCO
X. VELEZ and EDGARDO M. SALANDANAN, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioner.
E.M. Salandanan, Linato and Associates for respondents. Nicanor T. Santos,
Bernadette G. Santos and Associates for Intervenor.
SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY MANDATORY
INJUNCTION; ISSUANCE THEREOF PENDENTE LITE, PROPER ONLY IN EXTREME
URGENCY. A preliminary mandatory injunction is not a proper remedy to take
property, possession of which is being disputed, out of the possession and control of
one party and to deliver the same to the other party. It may issue pendente lite only
in case of extreme urgency, where the right to the possession, during the pendency
of the main case, of the property involved is very clear; where considerations of
relative inconvenience bear strongly in favor of the complainant seeking the
possession pendente lite; where there was wilful and unlawful invasion of plaintiff's
rights, over his protest and remonstrance, the injury being a continuing one; where
the effect of the preliminary mandatory injunction is to re-establish and maintain a
pre-existing and continuing relationship between the parties, recently and arbitrarily
interrupted by the defendant, rather than to establish a new relationship during the
pendency of the principal case. Obviously, it is for the party requesting the writ to
demonstrate clearly the presence of one or more of the above grounds.
2.
ID.; ID.; ID.; NOT PROPER IN CASE AT BAR. Under the terms and conditions
of the amended contract of lease, private respondent Salandanan is entitled to
possess and manage the waterworks system for a period of ten (10) years
beginning 20 March 1981, unless, of course, the contract is judicially rescinded.
Petitioner's action for the rescission of the amended lease contract was pending
before the trial court at the time petitioner had recourse to the Supreme Court, and
that action, so far as the records before us show, remains pending to this date.
Petitioner has failed to show the existence of some extraordinary situation imposing

upon it irreparable injury and clearly calling for the issuance and maintenance of the
writ of preliminary mandatory injunction. Petitioner alleged that sometime in 1984,
the power supply of the water pumps had been cut off by Meralco for failure of
private respondent Salandanan to pay his electric bills, resulting in a severe water
shortage within the Subdivision. There was, however, no showing that this condition
remained subsisting three (3) years later, at the time respondent Judge's orders
here assailed were rendered (August 1987 and March 1988) and at the time the
Petition for Certiorari was filed (May 1988) before the Supreme Court. There was, in
other words, no showing that the severe water shortage had not been remedied at
or before the said material times and that a clear and present danger of the same
or similar default on Salandanan's part, threatening the same severe consequences
for the subdivision residents, persisted. On the contrary, it appears from the record
that the Metropolitan Waterworks and Sewerage System ("MWSS") had commenced
servicing the Subdivision before issuance of the respondent Judge's orders here
sought to be annulled, which circumstance surely reduced the probabilities of
recurrence of such breakdown of water supply. Succinctly put, petitioner has not
shown that the continued possession of the leased waterworks system by
respondent Salandanan created a continuing, clear and imminent danger that the
Subdivision would suffer from lack of adequate supply of potable water.
3.
ID.; SUPREME COURT; MAY REQUIRE THE POSTING OF ADDITIONAL CASH
DEPOSIT OR A SURETY BOND TO ENSURE THAT CONTRACTUAL OBLIGATIONS
BETWEEN PARTIES ARE COMPLIED WITH. It appears to the Court that the relations
between the petitioner MPHAI and private respondent Salandanan have been
strained and frayed by the controversies and litigation between them. In order to
protect the Subdivision residents from the hardships that would ensue from any
recurrence of the problems encountered in 1984 after delivery of the possession of
the waterworks system to private respondent Salandanan, private respondent
should be required to post either a cash deposit or a surety bond from a company of
indubitable solvency, in the amount of P100,000.00, conditioned upon the
continued and adequate supply of potable water to Subdivision residents by private
respondent and faithful compliance with his other obligations under existing
agreements with petitioner. This deposit or bond shall be in addition to any
performance bond required from private respondent under existing contractual
arrangements. Moreover, it goes without saying that the trial court has full authority
to issue such further order or orders as may become necessary to protect
adequately the Subdivision residents from disruption of water service within the
Subdivision, attributable to the failure of either petitioner MPHAI or private
respondent Salandanan to comply with any of their respective contractual
obligations during the pendency of the action for rescission of contract.
RESOLUTION
FELICIANO, J p:

Petitioner Merville Park Homeowners Association, Inc. ("MPHAI"), a non-stock, nonprofit corporation, became the owner of the pipelines and waterworks system
("waterworks system") of Merville Park Subdivision in Paraaque, Metro Manila, by
virtue of a deed of donation dated 24 February 1977 executed in its favor by
Merville Development Corporation.
On 19 December 1978, MPHAI, through its then President Ernesto N. Gonzales,
entered into a contract of lease with private respondent Edgardo Salandanan
covering its waterworks system to insure efficient water service within the Merville
Park Subdivision ("Subdivision"). That lease contract required respondent
Salandanan to construct additional wells, to put into full operational condition Wells
Nos. 4 and 5 as well as to rehabilitate Wells Nos. 1, 2 and 3. The contract also
allowed respondent Salandanan to increase annually the water rates but only to the
extent of ten percent (10%) of the preceding year's rates. The water rates set out in
the contract could be charged only upon completion of Well No. 5. The lease
contract was later on amended to provide for, inter alia, a period of ten (10) years
commencing from its signing on 20 July 1981. In that amended contract, the parties
agreed to increase the water rates which increase was in turn approved by the
National Water Resources Council. It was also there provided that each homeowner
shall pay a deposit in the amount of P300.00 which was to be used to pay for
respondent Salandanan's overdue electric bill with Meralco, and thereafter, to be
credited against the homeowner's future water bills.
Subsequently, respondent Salandanan again asked for an increase in water rates.
MPHAI was at first adamant to the point of filing a case in court against respondent
Salandanan. But sometime in 1982, MPHAI and respondent Salandanan arrived at a
compromise. In that compromise agreement, MPHAI consented to an increase in the
water rates as urged by respondent Salandanan but conditioned upon his
completion of Well No. 2 (New Madrid Well). The compromise agreement was later
amended and provided for a new water rate schedule effective 1 July 1984, but
similarly conditioned upon Salandanan's completion of Well No. 2
On 16 July 1985, MPHAI commenced an action, Civil Case No. 11124, before Branch
136 of the Regional Trial Court (RTC) of Makati, presided over by Judge Ricardo
Francisco, against respondent Salandanan. In this suit, MPHAI sought to rescind the
amended lease contract and the amended compromise agreement, and prayed for
issuance of a writ of preliminary mandatory injunction. MPHAI alleged in its
complaint that sometime in 1984 for failure of respondent Salandanan to pay his
electric bills amounting to P1,035,000.00, Meralco had cut off the electric power
supply of his rented water pumps resulting in a severe water shortage within the
Subdivision and thereby endangering the lives and health of the residents thereof;
that aside from respondent Salandanan's failure to pay his electric bills, he had
violated his contract with petitioner by neglecting to drill and complete new wells
and undertake immediate repairs of broken water pumps; that there was an

immediate need to issue a writ of preliminary mandatory injunction in its favor to

enable it to take possession and control of the water works system.
Judge Francisco, in an order dated 23 July 1985, granted MPHAI's prayer for a writ of
preliminary mandatory injunction and directed respondent Salandanan to turn over
to MPHAI the operation and control of the waterworks system. This prompted
respondent Salandanan to file an urgent motion for reconsideration stating, among
other things, that the regular courts had no jurisdiction over the subject matter of
the case, the same being under the jurisdiction of the National Water Resources
Council; and that the case was filed prematurely considering that MPHAI had not as
yet exhausted the available administrative remedies. llcd
After private respondent had filed an answer with counterclaim and third-party
complaint, the case was re-raffled to Branch 180 presided over by Judge Benigno M.
Puno, who in an order dated 12 August 1985, lifted the writ of preliminary
mandatory injunction. The case, however, was once more re-raffled and this time it
went to Branch 149 with Judge Manuel Yuzon presiding. Judge Yuzon, upon MPHAI's
motion for reconsideration and upon its filing of a surety bond in the amount of
P26,000.00, issued an order dated 11 August 1986 reinstating the writ of
preliminary mandatory injunction. Respondent Salandanan, however, in turn moved
for reconsideration on the ground that such a writ was not a proper remedy to
deliver property in the possession of one party to another. But, before Salandanan's
motion could be resolved, the case was, for the third time, re-raffled and transferred
this time to the sala of respondent Judge Francisco X. Velez. Judge Velez, on 6
August 1987, issued an order lifting and setting aside the writ, and on 30 March
1988, an order directing the Deputy Sheriff to return and restore to respondent
Salandanan the possession of the waterworks system.
And so the present Petition for Certiorari was filed.
The Court issued a Temporary Restraining Order on 6 May 1988 enjoining
respondent Judge Velez from enforcing his two (2) orders, ordering petitioner MPHAI
to file a bond in the amount of P50,000.00, and requiring private respondent
Salandanan to file a Comment on the Petition. After additional pleadings and
counter-pleadings, the Court granted due course to the Petition and required the
parties to file simultaneous Memoranda. The parties complied; private respondent
Salandanan also submitted a Supplemental Memorandum.
Deliberating on the instant Petition for Certiorari and after careful examination of
the record of this case, the Court considers that petitioner has failed to show any
grave abuse of discretion, or any act without or in excess of jurisdiction, on the part
of respondent Judge in issuing the orders dated 6 August 1987 and 30 March 1988,
lifting and setting aside the writ of preliminary mandatory injunction earlier issued
in Civil Case No. 11124, and ordering private respondent restored to the possession
of the waterworks system involved.

A preliminary mandatory injunction is not a proper remedy to take property,

possession of which is being disputed, out of the possession and control of one
party and to deliver the same to the other party. It may issue pendente lite only in
cases of extreme urgency, where the right to the possession, during the pendency
of the main case, of the property involved is very clear; where considerations of
relative inconvenience bear strongly in favor of the complainant seeking the
possession pendente lite; where there was willful and unlawful invasion of plaintiff's
rights, over his protest and remonstrance, the injury being a continuing one; where
the effect of the preliminary mandatory injunction is to re-establish and maintain a
pre-existing and continuing relationship between the parties, recently and arbitrarily
interrupted by the defendant, rather than to establish a new relationship during the
pendency of the principal case. 1 Obviously, it is for the party requesting the writ
to demonstrate clearly the presence of one or more of the above grounds. prLL
Under the terms and conditions of the amended contract of lease, private
respondent Salandanan is entitled to possess and manage the waterworks system
for a period of ten (10) years beginning 20 March 1981, unless, of course, the
contract is judicially rescinded. Petitioner's action for the rescission of the amended
lease contract was pending before the trial court at the time petitioner had recourse
to the Supreme Court, and that action, so far as the records before us show,
remains pending to this date. Petitioner has failed to show the existence of some
extraordinary situation imposing upon it irreparable injury and clearly calling for the
issuance and maintenance of the writ of preliminary mandatory injunction.
Petitioner alleged that sometime in 1984, the power supply of the water pumps had
been cut off by Meralco for failure of private respondent Salandanan to pay his
electric bills, resulting in a severe water shortage within the Subdivision. There was,
however, no showing that this condition remained subsisting three (3) years later,
at the time respondent Judge's orders here assailed were rendered (August 1987
and March 1988) and at the time the Petition for Certiorari was filed (May 1988)
before the Supreme Court. There was, in other words, no showing that the severe
water shortage had not been remedied at or before the said material times and that
a clear and present danger of the same or similar default on Salandanan's part,
threatening the same severe consequences for the subdivision residents, persisted.
On the contrary, it appears from the record that the Metropolitan Waterworks and
Sewerage System ("MWSS") had commenced servicing the Subdivision before
issuance of the respondent Judge's orders here sought to be annulled, which
circumstance surely reduced the probabilities of recurrence of such breakdown of
water supply. Succinctly put, petitioner has not shown that the continued possession
of the leased waterworks system by respondent Salandanan created a continuing,
clear and imminent danger that the Subdivision would suffer from lack of adequate
supply of potable water.
Accordingly, the Court believes that respondent Judge was not merely acting
arbitrarily and capriciously in holding that private respondent Salandanan was

entitled to be maintained in the possession of the leased waterworks system

pending resolution of the on-going action for rescission of the amended contract of
lease and amended compromise agreement. At the same time, it appears to the
Court that the relations between the petitioner MPHAI and private respondent
Salandanan have been strained and frayed by the controversies and litigation
between them. In order to protect the Subdivision residents from the hardships that
would ensue from any recurrence of the problems encountered in 1984 after
delivery of the possession of the waterworks system to private respondent
Salandanan, private respondent should be required to post either a cash deposit or
a surety bond from a surety company of indubitable solvency, in the amount of
P100,000.00, conditioned upon the continued and adequate supply of potable water
to Subdivision residents by private respondent and faithful compliance with his
other obligations under existing agreements with petitioner. This deposit or bond
shall be in addition to any performance bond required from private respondent
under existing contractual arrangements. Moreover, it goes without saying that the
trial court has full authority to issue such further order or orders may become
necessary to protect adequately the Subdivision residents from disruption of water
service within the Subdivision, attributable to the failure of either petitioner MPHAI
or private respondent Salandanan to comply with any of their respective contractual
obligations during the pendency of the action for rescission of contract. prcd
WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of merit.
Private respondent Salandanan is hereby REQUIRED to put up either a cash deposit
or a surety bond issued by a surety company of indubitable solvency acceptable to
this Court in the amount of P100,000.00, within a non-extendible period of ten (10)
days from notice hereof, to indemnify the members of petitioner MPHAI for any
damages or inconvenience they may suffer by reason of failure of private
respondent Salandanan to provide a continuous and adequate supply of potable
water and otherwise to comply faithfully with all of his obligations under the
amended contract of lease and amended compromise agreement. No
pronouncement as to costs. This Resolution is immediately executory.

[G.R. No. L-25407. August 29, 1969.]

PILAR M. NORMANDY, in her own behalf and of others similarly situated, as well as
of the World War II Veterans Enterprises, Inc., & LORENZO B. CAMINS, plaintiffsappellees, vs. CALIXTO DUQUE, CLARO P. LIZARDO, FLORENCIO SELGA, ALBERTO
RAMOS, MANUEL BUENAFE & FILIPINAS MERCHANDISING CORPORATION,
defendants-appellees, JOSE COCHINGYAN, SR., and SUSANA COCHINGYAN,
intervenors-appellees vs. RAMON E. SAURA, former first receiver-appellant.
Lino M. Patajo for defendants-appellees.
Encarnacion, Jr. & Clapano, Jr. for intervenors-appellees.
Saura, Magno & Associates for former first receiver-appellant.
SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; RECEIVERSHIP; NATURE;
RECEIVERSHIP COURT HAS AUTHORITY TO DETERMINE REASONABLENESS OF
EXPENDITURE. A receiver is a representative of the Court appointed for the
purpose of preserving and conserving the property in litigation and prevent its
possible destruction or dissipation, if it were left in the possession of any of the
parties. The receiver is not the representative of any of the parties but of all of them
to the end that their interests may be equally protected with the least possible
inconvenience and expense. It is inherent in the office of a receiver not only that he
should act at all times with the diligence and prudence of a good father of a family
but should also not incur any obligation or expenditure without leave of court to
supervise the receiver and see to it that he adheres to the above standard of his
trust and limits the expense of the receivership to the minimum. It is generally the
receivership court that is in a better position to determine whether a particular
expenditure is reasonable and justified or not and its ruling therein may not be
disturbed by this Court.
2.
ID.; ID.; ID.; ID.; ID.; CLERICAL SERVICES EMPLOYED BY RECEIVER MUST BE
WITH LEAVE OF COURT FOR REIMBURSEMENT TO BE PROPER. The receivership
court's reasons for withholding approval of the reimbursement in question are
precisely because "whatever amount he (the receiver now seeks in addition thereto
(P10,000.00) would be improper. Moreover, he is now estopped from claiming any
further amount as compensation for alleged clerical services employed by him as
such receiver without prior approval or authority of this Court." We find these
reasons to be cogent enough in the premises, especially because appellant's
alleged employment of a clerk was made without prior leave of court. In these
circumstances, it cannot be said that the court a quo abused its discretion, much
less gravely.
DECISION

BARREDO, J p:
Appeal from the order of the Court of First Instance of Manila Branch I), dated March
5, 1965, denying the motion of Ramon E. Saura, former First Receiver of the World
War II Veterans Enterprises, Inc. (hereinafter referred to merely as WARVETS), asking
for reimbursement of the sum of P5,236.00, representing the amount which he
allegedly paid in advance as compensation to a clerk whose services he availed of
while he was still a receiver.
On September 6, 1960, appellant was appointed receiver of the WARVETS by the
lower court in Civil Case No. 34998 1 "generally to do and perform such acts
respecting the property, assets and transactions" of the organization "as the court
may authorize." Upon filing a bond in the sum of fifty thousand (P50,000.00) pesos,
he entered upon the discharge of his functions.
During his term, appellant went to Japan by authority of the lower court's order
dated October 12, 1960 for the purpose of checking on the reported under valuation
of goods shipped to the WARVETS and of preparing the shipment of the goods which
had not yet been committed. For expenses incurred by him during this trip, which
amounted to P9,431.48, he was ordered reimbursed by the lower court on June 5,
1963. 2 The order authorizing reimbursement stated thus:
". . . The order permits the claim for reimbursement as part of the receiver's
compensation as such receiver. It does not prohibit the reimbursement of the
expenses before the payment of the receiver's compensation, and it is only fair and
just that at least the expenses which the receiver advanced, if found reasonable and
necessary, be reimbursed as soon as the funds of the WARVETS permit."
Except for this reimbursed amount, appellant received no other fee or
compensation from the WARVETS. In fact, for a continuous period of three (3) years,
he performed his duties as receiver without receiving any compensation as such.
Hence, on October 9, 1963, he filed a motion in the lower court to fix not only his
compensation but also that of his co-receiver, Macario Ofilada. 3 In his motion, he
prayed further for such amounts as attorney's fees and stenographer's fees as the
court may allow. After an opposition thereto had been duly interposed, the lower
court issued an "Omnibus Order" on January 22, 1964, the second paragraph of
which denied the motion of appellant. A reconsideration of the order of denial was
immediately sought by appellant.
Without awaiting action on his motion for reconsideration, appellant filed another
motion, on May 28, 1964, resigning from his post as receiver and praying that the
lower court accept it and at the same time fix the amount of his fees and
compensation as receiver.

On June 5, 1964, appellant was discharged as receiver and his compensation was
fixed at P10,000.00. The order of the lower court approving his discharge reads as
follows:
"Ramon E. Saura, first receiver, filed in his own behalf on May 28, 1964, his motion
to withdraw as first receiver and for fixing of his compensation. There being no
objection to this withdrawal, the same is hereby granted. Respecting his
compensation, neither is there objection thereto. In fact, per joint motion filed on
May 28, by defendants, except Filipinas Merchandising, which has been granted,
they asked the withdrawal of their joint motion dated March 31, 1961, for the
removal of Saura as receiver; and per manifestation of said defendants except
Filipinas Merchandising dated May 28, they recommend P10,000.00 as Saura's fee,
which Jose and Susana Cochingyan are willing to advance for the account of
WARVETS.
"WHEREFORE, Ramon E. Saura's withdrawal as receiver in this case is hereby
approved, and his fee as such is hereby fixed at P10,000.00, which Jose and Susana
Cochingyan shall advance for the account of WARVETS."
Subsequently, one Atty. Anacleto Magno, on his own behalf, presented before the
lower court a motion dated August 18, 1964, for the payment of attorney's fees to
him in the amount of P10,000.00 for his alleged services as legal counsel for the
appellant when he was still a receiver. Appellant, himself, filed another motion for
the payment and cancellation of his receiver' bond and for the reimbursement to
him of the sum of P2,030.00 which he paid out of his personal funds as premium for
said bond from September 9, 1960 to September 9, 1964. On September 24, 1964,
the lower court disposed of both motions in one order by allowing compensation to
Atty. Magno in the reduced amount of P1,000.00 and granting reimbursement to
appellant in the whole sum prayed for by him as premium on his bond. In granting
fee to the counsel of appellant, the lower court said:
"The motion, to the mind of the Court, is not well taken, because Ramon E. Saura is
himself a lawyer and he did not have to retain legal counsel. If he did, the matter
should be for his own account, particularly because it was a unilateral act on
Saura's part to get Magno as his lawyer in the receivership.
"Nevertheless, the Court is not unaware that Atty. Magno did in fact work for Saura,
for the former appeared in Court and signed pleadings for Saura as receiver.
"Wherefore, in fairness to Atty. Magno, it is hereby ordered that he be paid
P1,000.00 from the funds under receivership. If he is not satisfied with this amount,
he can go after Saura."
Barely two months after the issuance of the last-mentioned order, or on November
18, 1964, appellant filed another motion for reimbursement, this time for the
amount he allegedly paid as compensation of a clerk whom he employed when he

was still a receiver for the period September 9, 1960 to May 28, 1964, inclusive, at
the rate of P120.00 a month, or the total sum of P5,236.00. Appellant alleged that in
view of the voluminous paper and legal work which he had to attend to as receiver,
it was necessary for him to engage the service of a typist-stenographer, one
Melchor C. Ordono, who doubled as messenger, filing clerk, utility clerk and records
clerk.
On March 5, 1965, although no party registered any objection to appellant's last
motion for reimbursement, the lower court denied it in the appealed order,
reasoning thus:
"The record shows that the Court had previously ordered the payment of P10,000.00
as compensation for Ramon E. Saura for his services as first receiver in this case.
Therefore, whatever amount he now seeks in addition thereto would be improper.
Moreover, he is now estopped from claiming any further amount as compensation
for alleged clerical services employed by him as such receiver without prior
approval or authority of this Court."
The lone contention of appellant in this appeal is that the lower court committed an
error in holding that he is not entitled to reimbursement of the salaries paid by him
to his clerk as receiver of the WARVETS. None of the other parties filed any brief.
A receiver is a representative of the court appointed for the purpose of preserving
and conserving the property in litigation and prevent its possible destruction or
dissipation, if it were left in the possession of any of the parties. The receiver is not
the representative of any of the parties but of all of them to the end that their
interests may be equally protected with the least possible inconvenience and
expense. It is inherent in the office of a receiver not only that he should act at all
times with the diligence and prudence of a good father of a family but should also
not incur any obligation or expenditure without leave of the court and it is the
responsibility of the court to supervise the receiver and see to it that he adheres to
the above standard of his trust and limits the expenses of the receivership to the
minimum. For these reasons, it is generally the receivership court that is in a better
position to determine whether a particular expenditure is reasonable and justified or
not and its ruling thereon may not be disturbed by this Court.
It is true that in the case at bar, the motion m question of the receiver was not
opposed by any of the parties. It is to be observed, however, that the records show
that the court a quo had previously allowed or approved reimbursements to the
receiver of expenditures made by him in connection with the performance of his
duties, more particularly, for a trip made to Japan and for the fees of a lawyer who
had allegedly assisted him, notwithstanding, he is a lawyer himself. Besides, the
court a quo fixed the total compensation to the appellant receiver at P10,000.00 for
his services as such and said amount, from all appearances, is agreeable to
everyone, including appellant.

The receivership court's reasons for withholding approval of the reimbursement in

question are precisely because "whatever amount he (the receiver) now seeks in
addition thereto (P10,000) would be improper. Moreover, he is now estopped from
claiming any further amount as compensation for alleged clerical services employed
by him as such receiver without prior approval or authority of this Court." We find
these reasons to be cogent enough in the premises, specially because appellant's
alleged employment of a clerk was made without prior leave of court. In these
circumstances, it cannot be said that the court a quo abused its discretion, much
less gravely.
WHEREFORE, the order appealed from is affirmed, with costs against appellant.

[G.R. No. 125008. June 19, 1997.]

COMMODITIES STORAGE & ICE PLANT CORPORATION, SPOUSES VICTOR &
JOHANNAH TRINIDAD, petitioners, vs. COURT OF APPEALS, JUSTICE PEDRO A.
RAMIREZ, CHAIRMAN and FAR EAST BANK & TRUST COMPANY, respondents.
Nonette C. Mina for petitioners.
Siguion Reyna, Montecillo & Ongsiako for private respondents.
SYLLABUS
1.
REMEDIAL LAW; PROVISIONAL REMEDIES; RECEIVER OF PROPERTY;
DISCUSSED. A receiver of real or personal property may be appointed by the
court when it appears from the pleadings or such other proof as the judge may
require, that the party applying for such appointment has (1) an actual interest in it;
and (2) that (a) such property is in danger of being lost, removed or materially
injured; or (b) whenever it appears to be the most convenient and feasible means of
preserving or administering the property in litigation. A receiver is a person
appointed by the court in behalf of all the parties to the action for the purpose of
preserving and conserving the property in litigation and prevent its possible
destruction or dissipation, if it were left in the possession of any of the parties. The
appointment of a receiver is not a matter of absolute right. It depends upon the

sound discretion of the court and is based on facts and circumstances of each
particular case.
2.
ID.; ID.; ID.; NECESSITY THEREOF, REQUIRED; NOT PRESENT IN CASE AT BAR
A petition for receivership under Section 1 (b) of Rule 59 requires that the
property or fund which is the subject of the action must be in danger of loss,
removal or material injury which necessitates protection or preservation. The
guiding principle is the prevention of imminent danger to the property. If an action
by its nature, does not require such protection or preservation, said remedy cannot
be applied for and granted. Petitioners have not sufficiently shown that the Sta.
Maria Ice Plant is in danger of disappearing or being wasted and reduced to a "scrap
heap." Neither have they proven that the property has been materially injured
which necessitates its protection and preservation.
3.
ID.; ID.; ID.; APPOINTMENT THEREOF. Neither party to a litigation should be
appointed as receiver without the consent of the other because a receiver should be
a person indifferent to the parties and should be impartial and disinterested. The
receiver is not the representative of any of the parties but of all of them to the end
that their interests may be equally protected with the least possible inconvenience
and expense. The power to appoint a receiver must be exercised with extreme
caution. There must be a clear showing of necessity therefor in order to save the
plaintiff from grave and irremediable loss or damage. It is only when the
circumstances so demand, either because there is imminent danger that the
property sought to be placed in the hands of a receiver be lost or because they run
the risk of being impaired, endeavouring to avoid that the injury thereby caused be
greater than the one sought to be avoided. aEIcHA
4.
ID.; CIVIL PROCEDURE; ACTIONS; MOTION TO DISMISS; ON THE GROUND OF
IMPROPER VENUE; MAY BE CONSIDERED ALTHOUGH NOT SPECIFICALLY RAISED IN
APPELLATE COURT, IN A PETITION FOR RECEIVERSHIP. The motion to dismiss is
anchored on improper venue, lack of cause of action and forum-shopping. The
question of venue relates to the principal action and is prejudicial to the ancillary
issue of receivership. Although the grounds for dismissal were not specifically raised
before the appellate court, the said court may consider the same since the petition
for receivership depends upon a determination thereof. Under Section 2 of Rule 4 of
the Revised Rules of Court, where the action affects title to the property, it should
be instituted in the Regional Trial Court where the property is situated. The Sta.
Maria Ice Plant & Cold storage is located in Sta. Maria, Bulacan. The venue in Civil
Case No. 94-72076 was therefore laid improperly, having been instituted in Manila.
5.
ID.; ID.; REAL ACTIONS; MORTGAGE; FORECLOSURE; ACTION FOR
REDEMPTION; INVOLVES TITLE TO FORECLOSED PROPERTY. An action to redeem
by the mortgage debtor affects his title to the foreclosed property. If the action is
seasonably made, it seeks to erase from the title of the judgment or mortgage
debtor the lien created by registration of the mortgage and sale. If not made

seasonably, it may seek to recover ownership to the land since the purchaser's
inchoate title to the property becomes consolidated after expiration of the
redemption period. Either way, redemption involves the title to the foreclosed
property. It is a real action.
6.
ID.; ID.; PARTIES TO CIVIL ACTIONS; TRANSFER OF INTEREST PENDING
LITIGATION; ONLY UPON COURT ORDER. There is no merit in petitioners' claim
that the respondent bank is no longer the real party in interest after selling the ice
plant to a third person during the pendency of the case. Section 20 of Rule 3 of the
Revised Rules of Court provides that in a transfer of interest pending litigation, the
action may be continued by or against the original party, unless the court, upon
motion, directs the transferee to be substituted in the action or joined with the
original party. The court has not ordered the substitution of respondent bank.
DHIETc
DECISION
PUNO, J p:
In this petition for certiorari, petitioner seeks to annul and set aside the decision and
resolution of the Court of Appeals 1 in CA-G.R. SP No. 36032 dismissing the
complaint in Civil Case No. 94-72076 before the Regional Trial Court, Branch 9,
Manila.
The facts show that in 1990, petitioner spouses Victor and Johannah Trinidad
obtained a loan of P31,000,000.00 from respondent Far East Bank & Trust Company
to finance the purchase of the Sta. Maria Ice Plant & Cold Storage in Sta. Maria,
Bulacan. The loan was secured by a mortgage over the ice plant and the land on
which the ice plant stands. Petitioner spouses failed to pay their loan. The bank
extrajudicially foreclosed the mortgage and the ice plant was sold by public bidding
on March 22, 1993. Respondent bank was the highest bidder. It registered the
certificate of sale on September 22, 1993 and later took possession of the property.
On November 22, 1993, petitioner spouses filed Civil Case No. 956-M-93 against
respondent bank before the Regional Trial Court, Malolos, Bulacan for reformation of
the loan agreement, annulment of the foreclosure sale and damages. 2 The trial
court dismissed the complaint for petitioners' failure to pay the docket fees. The
dismissal was without prejudice to refiling of the complaint. 3
On October 28, 1994, petitioners filed Civil Case No. 94-72076 against respondent
bank before the Regional Trial Court, Branch 9, Manila for damages, accounting and
fixing of redemption period. 4 As a provisional remedy, petitioners filed on
November 16, 1994 an "Urgent Petition for Receivership." They alleged that
respondent bank took possession of the ice plant forcibly and without notice to
them; that their occupation resulted in the destruction of petitioners' financial and
accounting records making it impossible for them to pay their employees and

creditors; the bank has failed to take care of the ice plant with due diligence such
that the plant has started emitting ammonia and other toxic refrigerant chemicals
into the atmosphere and was posing a hazard to the health of the people in the
community; the spouses' attention had been called by several people in the
barangay who threatened to inform the Department of Environment and Natural
Resources should they fail to take action. Petitioners thus prayed for the
appointment of a receiver to save the ice plant, conduct its affairs and safeguard its
records during the pendency of the case. 5
Instead of an answer, respondent bank filed on November 25, 1994 a "Motion to
Dismiss and Opposition to Plaintiff's Petition for Receivership." It alleged that the
complaint states no cause of action and that venue had been improperly laid. It also
alleged that petitioners failed to pay the proper docket fees and violated the rule on
forum-shopping. 6
In an order dated December 13, 1994, the trial court granted the petition for
receivership and appointed petitioners' nominee, Ricardo Pesquera, as receiver. The
order disposed as follows:
"WHEREFORE, premises considered the Urgent Petition for Receivership is GRANTED
and Mr. Ricardo Pesquera to whose appointment no opposition was raised by the
defendant and who is an ice plant contractor, maintainer and installer is appointed
receiver. Accordingly, upon the filing and approval of the bond of TWO MILLION
(P2,000,000.00) pesos which shall answer for all damages defendant may sustain
by reason of the receivership, said Ricardo Pesquera is authorized to assume the
powers of a receiver as well as the obligation as provided for in Rule 59 of the Rules
of Court after taking his oath as such receiver.
SO ORDERED." 7
Respondent bank assailed this order before the Court of Appeals on a petition for
certiorari. On January 11, 1996, the Court of Appeals annulled the order for
receivership and dismissed petitioners' complaint for improper venue and lack of
cause of action. The dispositive portion of the decision reads:
"WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the assailed order
dated December 13, 1994 (Annex A, petition) is ANNULLED and SET ASIDE and
respondent's complaint in Civil Case No. 94-72076 in the respondent court (Annexes
F, petition; 4, comment), is DISMISSED. Costs against respondents except the court.
SO ORDERED."
Reconsideration was denied on May 23, 1996. 8 Hence, this petition.
Section 1 of Rule 59 of the Revised Rules of Court provides that:

"Sec. 1.
When and by whom receiver appointed. One or more receivers of
the property, real or personal, which is the subject of the action, may be appointed
by the judge of the Court of First Instance in which the action is pending, or by a
Justice of the Court of Appeals or of the Supreme Court, in the following cases:
(a)
When the corporation has been dissolved, or is insolvent, or is in imminent
danger of insolvency, or has forfeited its corporate rights;
(b)
When it appears from the complaint or answer, and such other proof as the
judge may require, that the party applying for the appointment of receiver has an
interest in the property or fund which is the subject of the action, and that such
property or fund is in danger of being lost, removed or materially injured unless a
receiver be appointed to guard and preserve it;
(c)
When it appears in an action by the mortgagee for the foreclosure of a
mortgage that the property is in danger of being wasted or materially injured, and
that its value is probably insufficient to discharge the mortgage debt, or that the
parties have so stipulated in the contract of mortgage;
(d)
After judgment, to preserve the property during the pendency of the appeal,
or to dispose of it according to the judgment, or to aid execution when the
execution has been returned unsatisfied or the judgment debtor refuses to apply his
property in satisfaction of the judgment, or otherwise carry the judgment into effect;
(e)
Whenever in other cases it appears that the appointment of a receiver is the
most convenient and feasible means of preserving, administering, or disposing of
the property in litigation."
A receiver of real or personal property, which is the subject of the action, may be
appointed by the court when it appears from the pleadings or such other proof as
the judge may require, that the party applying for such appointment has (1) an
actual interest in it; and (2) that (a) such property is in danger of being lost,
removed or materially injured; or (b) whenever it appears to be the most convenient
and feasible means of preserving or administering the property in litigation. 9
A receiver is a person appointed by the court in behalf of all the parties to the action
for the purpose of preserving and conserving the property in litigation and prevent
its possible destruction or dissipation, if it were left in the possession of any of the
parties. 10 The appointment of a receiver is not a matter of absolute right. It
depends upon the sound discretion of the court 11 and is based on facts and
circumstances of each particular case. 12
Petitioners claim that the appointment of a receiver is justified under Section 1 (b)
of Rule 59. They argue that the ice plant which is the subject of the action was in
danger of being lost, removed and materially injured because of the following
"imminent perils":

"6.1 Danger to the lives, health and peace of mind of the inhabitants living near
the Sta. Maria Ice Plant;
6.2
Drastic action or sanctions that could be brought against the plaintiff by
affected third persons, including workers who have claims against the plaintiff but
could not be paid due to the numbing manner by which the defendant took the Sta.
Maria Ice Plant;
6.3
The rapid reduction of the Ice Plant into a scrap heap because of evident
incompetence, neglect and vandalism." 13
A petition for receivership under Section 1 (b) of Rule 59 requires that the property
or fund which is the subject of the action must be in danger of loss, removal or
material injury which necessitates protection or preservation. The guiding principle
is the prevention of imminent danger to the property. If an action by its nature, does
not require such protection or preservation, said remedy cannot be applied for and
granted. 14
In the instant case, we do not find the necessity for the appointment of a receiver.
Petitioners have not sufficiently shown that the Sta. Maria Ice Plant is in danger of
disappearing or being wasted and reduced to a "scrap heap." Neither have they
proven that the property has been materially injured which necessitates its
protection and preservation. 15 In fact, at the hearing on respondent bank's motion
to dismiss, respondent bank, through counsel, manifested in open court that the
leak in the ice plant had already been remedied and that no other leakages had
been reported since. 16 This statement has not been disputed by petitioners.
At the time the trial court issued the order for receivership of the property, the
problem had been remedied and there was no imminent danger of another leakage.
Whatever danger there was to the community and the environment had already
been contained.
The "drastic sanctions" that may be brought against petitioners due to their inability
to pay their employees and creditors as a result of "the numbing manner by which
[respondent bank] took the ice plant" does not concern the ice plant itself. These
claims are the personal liabilities of petitioners themselves. They do not constitute
"material injury" to the ice plant.
Moreover, the receiver appointed by the court appears to be a representative of
petitioners. Respondent bank alleges that it was not aware that petitioners
nominated one Mr. Pesquera as receiver. 17 The general rule is that neither party to
a litigation should be appointed as receiver without the consent of the other
because a receiver should be a person indifferent to the parties and should be
impartial and disinterested. 18 The receiver is not the representative of any of the
parties but of all of them to the end that their interests may be equally protected
with the least possible inconvenience and expense. 19

The power to appoint a receiver must be exercised with extreme caution. There
must be a clear showing of necessity therefor in order to save the plaintiff from
grave and irremediable loss or damage. 20 It is only when the circumstances so
demand, either because there is imminent danger that the property sought to be
placed in the hands of a receiver be lost or because they run the risk of being
impaired, endeavouring to avoid that the injury thereby caused be greater than the
one sought to be avoided. 21
The Court of Appeals correctly found that the trial court gravely abused its
discretion in issuing the order for receivership. The respondent court, however, went
further and took cognizance of respondent bank's motion to dismiss. And finding
merit in the motion, it dismissed the complaint. Petitioners now claim that the
respondent court should have refrained from ruling on the motion to dismiss
because the motion itself was not before it. 22
Again, we reject petitioners' contention. The motion to dismiss is anchored on
improper venue, lack of cause of action and forum-shopping. We agree with the
respondent court that the question of venue relates to the principal action and is
prejudicial to the ancillary issue of receivership. Although the grounds for dismissal
were not specifically raised before the appellate court, the said court may consider
the same since the petition for receivership depends upon a determination thereof.
23
In their complaint, petitioners prayed for the following:
"WHEREFORE, in view of the foregoing, it is respectfully prayed that after trial on
the merits judgment be rendered:
1.
Ordering the Defendant to pay COMMODITIES actual and compensatory
damages in the amount of PESOS: TWO MILLION FIVE HUNDRED THOUSAND and
00/100 (P2,500,000.00);
2.
Ordering the Defendant to pay Plaintiffs moral damages in the amount of
PESOS: TWO MILLION and 00/100 (P2,000,000.00) to compensate the Plaintiffs for
the anxiety and besmirched reputation caused by the unjust actuations of the
Defendant;
3.
Ordering the Defendant to pay Plaintiffs nominal and exemplary damages in
the amount of PESOS: FIVE HUNDRED THOUSAND and 00/100 (P500,000.00) to
deter the repetition of such unjust and malicious actuations of the Defendant;
4.
In order to restore the legal right of the Plaintiff COMMODITIES to redeem its
foreclosed property, a right which COMMODITIES has been unjustly deprived of by
the malicious and bad faith machinations of the Defendant, compelling the
Defendant to produce the correct, lawful, official and honest statements of account
and application of payment. Concomitantly, ordering the Defendant to accept the

redemption of the foreclosed properties pursuant to Rule 39 of the Revised Rules of

Court in conjunction with Act 3135, within the prescribed period for redemption,
said period to commence from the date of receipt by the Plaintiff COMMODITIES of
the correct, lawful, official and honest statements of account and application of
payments;
5.
Ordering the Defendant to pay attorney's fees in the amount of PESOS:
THREE HUNDRED THOUSAND (P300,000.00); and costs of litigation.
Other reliefs and remedies just and equitable under the circumstances are likewise
prayed for." 24
Petitioners pray for two remedies: damages and redemption. The prayer for
damages is based on respondent bank's forcible occupation of the ice plant and its
malicious failure to furnish them their statements of account and application of
payments which prevented them from making a timely redemption. 25 Petitioners
also pray that respondent bank be compelled to furnish them said documents, and
upon receipt thereof, allow redemption of the property. They ultimately seek
redemption of the mortgaged property. This is explicit in paragraph 4 of their prayer.
An action to redeem by the mortgage debtor affects his title to the foreclosed
property. If the action is seasonably made, it seeks to erase from the title of the
judgment or mortgage debtor the lien created by registration of the mortgage and
sale. 26 If not made seasonably, it may seek to recover ownership to the land since
the purchaser's inchoate title to the property becomes consolidated after expiration
of the redemption period. 27 Either way, redemption involves the title to the
foreclosed property. It is a real action.
Section 2 of Rule 4 of the Revised Rules of Court provides:
"Sec. 2.
Venue in Courts of First Instance. (a) Real actions. Actions
affecting title to, or for recovery of possession, or for partition or condemnation of,
or foreclosure of mortgage on, real property, shall be commenced and tried in the
province where the property or any part thereof lies." 28
Where the action affects title to the property, it should be instituted in the Regional
Trial Court where the property is situated. The Sta. Maria Ice Plant & Cold Storage is
located in Sta. Maria, Bulacan. The venue in Civil Case No. 94-72076 was therefore
laid improperly. cdtai
Finally, there is no merit in petitioners' claim that the respondent bank is no longer
the real party in interest after selling the ice plant to a third person during the
pendency of the case. Section 20 of Rule 3 of the Revised Rules of Court provides
that in a transfer of interest pending litigation, the action may be continued by or
against the original party, unless the court, upon motion, directs the transferee to

be substituted in the action or joined with the original party. The court has not
ordered the substitution of respondent bank.
IN VIEW WHEREOF, the decision dated January 11, 1996 and resolution dated May
23, 1996 of the Court of Appeals in CA-G.R. SP No. 36032 are affirmed. Costs
against petitioners.
SO ORDERED.

[G.R. No. 61508. March 17, 1999.]

CITIBANK, N.A. (Formerly First National City Bank), petitioner, vs. THE HONORABLE
COURT OF APPEALS AND DOUGLAS F. ANAMA, respondents.
Agcaoili & Associates for petitioner.
Quasha Asperilla Ancheta Pena & Associates for private respondent.
SYNOPSIS
In consideration of a loan obtained from Citibank, N.A., Anama executed a
promissory note to pay the same and constituted a Chattel Mortgage in favor of the
Bank, on his various machineries and equipment. Later, for failure of Anama to pay
the promissory note despite demand, the Bank filed a complaint for the collection of
the unpaid balance, for the delivery and possession of the chattels preparatory to
the foreclosure thereof. An Order of Replevin over the properties covered by the
Chattel Mortgage was issued but the same was not immediately implemented in
view of an amicable settlement then being worked out. But when the same failed,
the lower court proceeded to try the case on the merits. The Bank filed a Motion for
the Issuance of an Alias Writ of Seizure, and the same was granted despite
opposition by Anama. Thereafter, the Bank took possession of the mortgaged
chattels and they were advertised for public auction. Anama then went to the Court
of Appeals, which ruled, among others, that there was no Affidavit of Merit
accompanying the Complaint for Replevin and the bond posted by Citibank was
insufficient. Hcnce, this petition for certiorari.
There is substantial compliance with the rule requiring an affidavit of merit to
support the complaint for replevin if the complaint itself contains a statement of
every fact required to be stated in the affidavit of merit and the complaint is verified
like an affidavit. Here, the Bank's complaint did not allege all the facts that should
be set forth in an affidavit of merit. At any rate, the defense of lack of affidavit of
merit was interposed only in the Reply to the Comment of the Bank on the Petition
for Certiorari which Anama filed with the Court of Appeals. Procedurally therefore,
such defense was no longer available for failure to plead the same in the Answer as
required by the omnibus motion rule.
The Bank also questioned the finding of the Court of Appeals that the bond posted
was insufficient. What was posted was merely an amount which was double the
probable value as declared by the Bank and, therefore, inadequate should there be
a finding that the actual value is actually greater. Since the valuation has been
disputed, actual value of the properties should have been determined first by the
lower court.
SYLLABUS

1.
REMEDIAL LAW; CIVIL ACTION; JUDGMENT ON THE MERITS; NOT MADE IN
CASE AT BAR. A judgment is on the merits when it determines the rights and
liabilities of the parties on the basis of the disclosed facts, irrespective of formal,
technical or dilatory objections, and it is not necessary that there should have been
a trial. The assailed decision of the Court of Appeals did not make any adjudication
on the rights and liabilities between Citibank and Douglas Anama. There was no
finding yet of the fact of default. The decision only ruled on the propriety of the
issuance of the writ of seizure by the trial court. In resolving the issue posed by the
petition, the Court of Appeals limited its disposition to a determination of whether or
not the assailed order of seizure was issued in accordance with law, that is, whether
the provisions of the Rules of Court on delivery of personal property or replevin as a
provisional remedy were followed. The Court of Appeals did not pass upon the issue
of who, as between Douglas Anama and Citibank, is entitled to the possession of
subject machineries, as asserted by the latter. When it ordered the restoration of
the said machineries to Douglas Anama (now the private respondent), it merely
brought the parties to a status quo, by restoring the defendant to the possession of
his properties, since there was a finding that the issuance of the writ was not in
accordance with the specific rules of the Rules of Court.
2.
ID.; PROVISIONAL REMEDIES; REPLEVIN; AFFIDAVIT OF MERIT; SUBSTANTIAL
COMPLIANCE THEREOF. There is substantial compliance with the rule requiring
that an affidavit of merit to support the complaint for replevin if the complaint itself
contains a statement of every fact required to be stated in the affidavit of merit and
the complaint is verified like an affidavit. And similarly, in the case of an attachment
which likewise requires an affidavit of merit, the Court held that the absence of an
affidavit of merit is not fatal where the petition itself, which is under oath, recites
the circumstances or facts constitutive of the grounds for the petition.
3.
ID.; ID.; ID.; ID.; FACTS THAT MUST BE SET FORTH. The facts that must be
set forth in the affidavit of merit are (1) that plaintiff owns the property particularly
describing the same, or that he is entitled to its possession; (2) wrongful detention
by defendant of said property; (3) that the property is not taken by virtue of a tax
assessment or fine pursuant to law or seized under execution or attachment or, if it
is so seized, that it is exempt from such seizure; and (4) the actual value of the
property.
4.
ID.; ID.; ID.; ID.; ACTUAL VALUE OF THE PROPERTY SUBJECT OF REPLEVIN.
Pertinent rules require that the affidavit of merit should state the actual value of the
property subject of a replevin suit and not just its probable value. Actual value (or
actual market value) means "the price which an article would command in the
ordinary course of business, that is to say, when offered for sale by one willing to
sell, but not under compulsion to sell, and purchased by another who is willing to
buy, but under no obligation to purchase it." It bears stressing that the actual value
of the properties subject of a replevin is, required to be stated in the affidavit
because such actual value will be the basis of the replevin bond required to be

posted by the plaintiff. Therefore, when the petitioner failed to declare the actual
value of the machineries and equipment subject of the replevin suit, there was noncompliance with Section 2, Rule 60 of the Revised Rules of Court.
5.
ID.; CIVIL ACTION; PLEADINGS; DEFENSES AND OBJECTIONS NOT PLEADED
DEEMED WAIVED. It should be noted, however, that the private respondent
interposed the defense of lack of affidavit of merit only in his Reply to the Comment
of Citibank on the Petition for Certiorari which respondent filed with the Court of
Appeals. Thus, although respondent's defense of lack of affidavit of merit is
meritorious, procedurally, such a defense is no longer available for failure to plead
the same in the Answer as required by the omnibus motion rule.
6.
ID.; PROVISIONAL REMEDIES; REPLEVIN; BOND; SHOULD BE DOUBLE THE
ACTUAL VALUE OF THE PROPERTIES INVOLVED. As there was a disagreement on
the valuation of the properties in the first place, proper determination of the value
of the bond to be posted by the plaintiff cannot be sufficiently arrived at. The Rules
of Court requires the plaintiff to "give a bond, executed to the defendant in double
the value of the property as stated in the affidavit . . . ." Hence, the bond should be
double the actual value of the properties involved. In this case, what was posted
was merely an amount which was double the probable value as declared by the
plaintiff and, therefore, inadequate should there be a finding that the actual value is
actually greater. Since the valuation made by the petitioner has been disputed by
the respondent, the lower court should have determined first the actual value of the
properties. It was thus an error for the said court to approve the bond, which was
based merely on the probable value of the properties.
7.
ID.; ID.; ID.; ID.; PURPOSE THEREOF. 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.
8.
ID.; ID.; ID.; POSTING OF COUNTERBOND OR REDELIVERY BOND; WHEN
PROPER; CASE AT BAR. The Court held in a prior case that the remedies provided
under Section 5, Rule 60, are alternative remedies. ". . . If a defendant in a replevin
action wishes to have the property taken by the sheriff restored to him, he should,
within five days from such taking, (1) post a counter-bond in double the value of
said property, and (2) serve plaintiff with a copy thereof, both requirements as
well as compliance therewith within the fve-day period mentioned being
mandatory." This course of action is available to the defendant for as long as he

does not object to the sufficiency of the plaintiff's bond. Conformably, a defendant
in a replevin suit may demand the return of possession of the property replevined
by filing a redelivery bond executed to the plaintiff in double the value of the
property as stated in the plaintiff's affidavit within the period specified in Sections 5
and 6. Alternatively, "the defendant may object to the sufficiency of the plaintiff's
bond, or of the surety or sureties thereon"; but if he does so, "he cannot require the
return of the property" by posting a counter-bond pursuant to Sections 5 and 6. In
the case under consideration, the private respondent did not opt to cause redelivery
of the properties to him by filing a counter-bond precisely because he objected to
the sufficiency of the bond posted by plaintiff. Therefore, he need not file a counterbond or redelivery bond. When such objection was not given due course in the court
below when, instead of requiring the plaintiff to post a new bond, the court
approved the bond claimed by respondent to be insufficient, and ordered the
seizure of the properties recourse to a petition for certiorari before the Court of
Appeals assailing such order is proper under the circumstances.
9.
ID.; RECEIVERSHIP; OATH AND BOND OF RECEIVER; CASE AT BAR. The
Court of Appeals found that the requirements of Section 5, Rule 59 on receivership
were not complied with by the petitioner, particularly the filing or posting of a bond
and the taking of an oath. It should be noted that under the old Rules of Court which
was in effect at the time this case was still at trial stage, a bond for the appointment
of a receiver was not generally required of the applicant, except when the
application was made ex parte. Therefore, petitioner was not absolutely required to
file a bond. Besides, as stipulated in the chattel mortgage contract between the
parties, petitioner, as the mortgagee, is entitled to the appointment of a receiver
without a bond. However, the Court of Appeals was right in finding a defect in such
assumption of receivership in that the requirement of taking an oath has not been
complied with. Consequently, the trial court erred in allowing the petitioner to
assume receivership over the machine shop of private respondent without requiring
the appointed receiver to take an oath.
10.
ID.; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE ABUSE OF DISCRETION,
COMMITTED BY THE TRIAL COURT. For erroneously issuing the alias writ of seizure
without inquiring into the sufficiency of the replevin bond and for allowing petitioner
to assume receivership without the requisite oath, the Court of Appeals aptly held
that the trial court acted with grave abuse of discretion in dealing with the situation.
Under the Revised Rules of Court, the property seized under a writ of replevin is not
to be delivered immediately to the plaintiff. This is because a possessor has every
right to be respected in its possession and may not be deprived of it without due
process.
DECISION
PURISIMA, J p:

At bar is a special civil action for certiorari with prayer for a temporary restraining
order faulting the Court of Appeals 1 with grave abuse of discretion for nullifying the
lower court's order of seizure of mortgaged properties subject of a case for sum of
money and replevin. llcd
The facts leading to the institution of the case are as follows:
In consideration for a loan obtained from Citibank, N.A. (formerly First National City
Bank), the defendant (private respondent herein) Douglas Anama executed a
promissory note, dated November 10, 1972, 2 to pay the plaintiff bank the sum of
P418,000.00 in sixty (60) equal successive monthly installments of P8,722.25,
starting on the 10th day of December 1972 and on the 10th of every month
thereafter. The said Promissory Note stipulated further that:
"(a)

the loan is subject to interest at the rate of twelve percent (12%) per annum;

(b)
the promissory note and the entire amount therein stated shall become
immediately due and payable without notice or demand upon
(aa) default in the payment of any installment of principal or interest at the time
when the same is due;
(bb) the occurrence of any change in the condition and affairs of the defendant,
which in the opinion of the plaintiff shall increase its credit risk;
(c)
the defendant agrees to pay all costs, expenses, handling and insurance
charges incurred in the granting of the loan;
(d)
in case the services of a lawyer is made necessary for collection, defendant
shall be liable for attorney's fees of at least ten percent (10%) of the total amount
due." 3
To secure payment of the loan, private respondent Anama also constituted a Chattel
Mortgage of even date in favor of petitioner, on various machineries and equipment
located at No. 1302 Epifanio delos Santos Avenue, Quezon City, under the following
terms and conditions:
"(a) The machineries and equipment, subject of the mortgage, stand as security
for defendant's account.
(b)
All replacements, substitutions, additions, increases and accretions to the
properties mortgaged shall also be subject to the mortgage.
(c)
The defendant appoints the plaintiff as his attorney-in-fact with authority to
enter the premises of the defendant and take actual possession of the mortgaged
chattels without any court order, to sell said property to any party.

(d)
All expenses in carrying into effect the stipulations therein shall be for the
account of the defendant and shall form part of the amount of the obligation
secured by the mortgage.
(e)
In case the plaintiff institutes proceedings for the foreclosure of the
mortgage, the plaintiff shall be entitled to the appointment of a receiver without a
bond.
(f)
In case of default, the defendant shall be liable for attorney's fees and cost of
collection in the sum equal to twenty-five percent (25%) of the total amount of the
indebtedness outstanding and unpaid." 4
On November 25, 1974, for failure and refusal of the private respondent to pay the
monthly installments due under the said promissory note since January 1974,
despite repeated demands, petitioner filed a verified complaint against private
respondent Anama for the collection of his unpaid balance of P405,820.52 on the
said promissory note, for the delivery and possession of the chattels covered by the
Chattel Mortgage preparatory to the foreclosure thereof as provided under Section
14 of the Chattel Mortgage Law, docketed as Civil Case No. 95991 before the then
Court of First Instance of Manila.
On February 20, 1975, the defendant Anama submitted his Answer with
Counterclaim, denying the material averments of the complaint, and averring, inter
alia (1) that the remedy of replevin was improper and the writ of seizure should be
vacated; (2) that he signed the promissory note for P418,000.00 without receiving
from plaintiff Citibank any amount, and was even required to pay the first
installment on the supposed loan in December 1974; (3) that the understanding
between him and the Citibank was for the latter to release to him the entire loan
applied for prior to and during the execution of his promissory note, but Citibank did
not do so and, instead, delayed the release of any amount on the loan even after
the execution of the promissory note thereby disrupting his timetable of plans and
causing him damages; (4) that the amount released by Citibank to him up to the
present was not the amount stated in the promissory note, and his alleged default
in paying the installments on the loan was due to the delay in releasing the full
amount of the loan as agreed upon; (5) that the machineries and equipment
described in the chattel mortgage executed by him are really worth more than
P1,000,000.00 but he merely acceded to the valuation thereof by Citibank in said
document because of the latter's representation that the same was necessary to
speed up the granting of the loan applied for by him; (6) that the properties covered
by said chattel mortgage are real properties installed in a more or less permanent
nature at his (defendant's) premises in Quezon City, as admitted by Citibank in said
mortgage document; (7) that the mortgage contract itself stipulated that the
manner and procedure for effecting the sale or redemption of the mortgaged
properties, if made extrajudicially, shall be governed by Act No. 1508 and other
pertinent laws which all pertain to real properties; and (8) that because of the filing

of this complaint without valid grounds therefor, he suffered damages and incurred
attorney's fees; the defendant, now private respondent, averred.
On December 2, 1974, the trial court, upon proof of default of the private
respondent in the payment of the said loan, issued an Order of Replevin over the
machineries and equipment covered by the Chattel Mortgage.
However, despite the issuance of the said order of seizure of subject chattels, actual
delivery of possession thereof to petitioner did not take place because negotiations
for an amicable settlement between the parties were encouraged by the trial court.
On March 24, 1975, a pre-trial conference was held and the lower court issued an
order for joint management by the petitioner and the private respondent of the
latter's business for ten (10) days, after which the former would be appointed
receiver for the said business.
On April 1, 1975, the petitioner took over private respondent's business as receiver.
When further proposals to settle the case amicably failed, the lower court
proceeded to try the case on the merits.
On January 29, 1977, petitioner presented a Motion for the Issuance of an Alias Writ
of Seizure, ordering the sheriff to seize the properties involved and dispose of them
in accordance with the Revised Rules of Court. The lower court then gave private
respondent five (5) days to oppose the said motion and on February 22, 1977, he
sent in his opposition thereto on the grounds: (1) that Citibank's P400,000 replevin
bond to answer for damages was grossly inadequate because the market value of
the properties involved is P1,710,000 and their replacement cost is P2,342,300.00
per the appraisal report of the Appraisal and Research Corp.; (2) that he was never
in default to justify the seizure; (3) that the Civil Case No. 18071 of the Court of First
Instance, entitled Hernandes vs. Anama, et al., which, according to Citibank,
supposedly increased its credit risk in the alleged obligation, had already been
dismissed as against him and the case terminated with the dismissal of the
complaint against the remaining defendant, First National City Bank, by the Court in
its orders of January 12, 1977 and February 7, 1977; (4) that his (defendant's)
supposed obligations with Citibank were fully secured and his mortgaged properties
are more than sufficient to secure payment thereof; and (5) that the writ of seizure
if issued would stop his business operations and contracts and expose him to
lawsuits from customers, and also dislocate his employees and their families
entirely dependent thereon for their livelihood.
On February 28, 1977, acting on the said Motion and private respondent's
opposition, the trial court issued an Order granting the Motion for Alias Writ of
Seizure, ruling thus:

"WHEREFORE, the motion for alias writ of seizure is hereby granted. At any rate, this
Order gives another opportunity for defendant and the intervenor who claims to be
a part owner to file a counterbond under Sec. 60 of Rules of Court." 5
Private respondent moved for reconsideration of the aforesaid order but the same
was denied by the Resolution of March 18, 1977, to wit:
"In view of the foregoing, the motion for reconsideration is hereby denied.
At any rate, as already stated, the defendant has still a remedy available which is to
file a bond executed to the plaintiff in double the value of the properties as stated in
the plaintiff's affidavit. The Court at this instance therefore has no authority to stop
or suspend the writ of seizure already ordered." 6
Accordingly, by virtue of the Alias Writ of Seizure, petitioner took possession of the
mortgaged chattels of private respondent. As a consequence, the sheriff seized
subject properties, dismantled and removed them from the premises where they
were installed, delivered them to petitioner's possession on March 17, 18 and 19,
1977 and advertised them for sale at public auction scheduled on March 22, 1977.
On March 21, 1977, private respondent filed with the Court of Appeals a Petition for
Certiorari and Prohibition 7 with Injunction to set aside and annul the questioned
resolutions of the trial court on the ground that they were issued "in excess of
jurisdiction and with grave abuse of discretion" because of the "lack of evidence and
clear cut right to possession of First National City Bank (herein petitioner)" to the
machineries subject of the Chattel Mortgage. cdasia
On July 30, 1982, finding that the trial court acted with grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing the assailed resolutions, the
Court of Appeals granted the petition, holding that the provisions of the Rules of
Court on Replevin and Receivership have not been complied with, in that (1) there
was no Affidavit of Merit accompanying the Complaint for Replevin; (2) the bond
posted by Citibank was insufficient; and (3) there was non-compliance with the
requirement of a receiver's bond and oath of office. The decretal portion of the
assailed decision of the Court of Appeals, reads:
"WHEREFORE, the petition is granted. The questioned resolutions issued by the
respondent judge in Civil Case No. 95991, dated February 28, 1977 and March 18,
1977, together with the writs and processes emanating or deriving therefrom, are
hereby declared null and void ab initio.
The respondent ex-officio sheriff of Quezon City and the respondent First National
City Bank are hereby ordered to return all the machineries and equipment with their
accessories seized, dismantled and hauled, to their original and respective places
and positions in the shop flooring of the petitioner's premises where these articles
were, before they were dismantled, seized and hauled at their own expense. The

said respondents are further ordered to cause the repair of the concrete foundations
destroyed by them including the repair of the electrical wiring and facilities affected
during the seizure, dismantling and hauling.
The writ of preliminary injunction heretofore in effect is hereby made permanent.
Costs against the private respondents.
SO ORDERED." 8
Therefrom, Citibank came to this Court via its present petition for certiorari,
ascribing grave abuse of discretion to the Court of Appeals and assigning as errors,
that:
I
THE RESPONDENT COURT ERRED IN PRACTICALLY AND IN EFFECT RENDERING
JUDGMENT ON THE MERITS AGAINST THE HEREIN PETITIONER BY ORDERING THE
RETURN OF THE MACHINERIES AND EQUIPMENT AND ITS ACCESSORIES TO THEIR
ORIGINAL AND RESPECTIVE PLACES AND POSITIONS.
II
THE RESPONDENT COURT ERRED IN FINDING THAT THE COMPLAINT OF THE
PETITIONER DID NOT COMPLY WITH THE PROVISIONS OF SEC. 2, RULE 60 OF THE
RULES OF COURT. LLpr
III
THAT THE RESPONDENT COURT ERRED IN FINDING THAT THE BOND POSTED BY THE
PETITIONER IS QUESTIONABLE AND/OR INSUFFICIENT.
IV
THE RESPONDENT COURT ERRED IN FINDING THAT THE PETITIONER DID NOT
COMPLY WITH THE PROVISIONS OF SEC. 5, RULE 59 BY FAILING TO POST A
RECEIVER'S BOND.
V
THE RESPONDENT ERRED IN FINDING THAT THE HON. JORGE R. COQUIA ACTED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF
JURISDICTION IN DEALING WITH THE SITUATION.
I
Anent the first assigned error, petitioner contends that the Court of Appeals, by
nullifying the writ of seizure issued below, in effect, rendered judgment on the
merits and adjudged private respondent Anama as the person lawfully entitled to
the possession of the properties subject of the replevin suit. It is theorized that the

same cannot be done, as the case before the court below was yet at trial stage and
the lower court still had to determine whether or not private respondent was in fact
in default in the payment of his obligation to petitioner Citibank, which default
would warrant the seizure of subject machineries and equipment.
The contention is untenable. A judgment is on the merits when it determines the
rights and liabilities of the parties on the basis of the disclosed facts, irrespective of
formal, technical or dilatory objections, and it is not necessary that there should
have been a trial. 9 The assailed decision of the Court of Appeals did not make any
adjudication on the rights and liabilities between Citibank and Douglas Anama.
There was no finding yet of the fact of default. The decision only ruled on the
propriety of the issuance of the writ of seizure by the trial court. As worded by the
respondent court itself, "the main issues to be resolved are whether there was lack
or excess of jurisdiction, or grave abuse of discretion, in the issuance of the orders
in question, and there is no appeal nor any plain, speedy, and adequate remedy in
the ordinary course of law." 10
In resolving the issue posed by the petition, the Court of Appeals limited its
disposition to a determination of whether or not the assailed order of seizure was
issued in accordance with law, that is, whether the provisions of the Rules of Court
on delivery of personal property or replevin as a provisional remedy were followed.
The Court of Appeals relied on Rule 60 of the Rules of Court, which prescribes the
procedure for the recovery of possession of personal property, which Rule, provides:
SECTION 2. Affidavit and Bond. Upon applying or such order the plaintiff must
show by his own affidavit or that of some other person who personally knows the
facts:
(a)
That the plaintiff 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 defendant, alleging the cause
of detention thereof according to his best of knowledge, information and belief;
(c)
That it has not been taken for a tax assessment or fine pursuant to law, or
seized under an execution, or an attachment against the property of the plaintiff, or
is so seized, that is exempt from such seizure; and
(d)

The actual value of the property.

The plaintiff must also give a bond, executed to the defendant in double of the
value of the property as stated in the affidavit aforementioned, for the return of the
property to the defendant of such sum as he may recover from the plaintiff in the
action.
The Court of Appeals did not pass upon the issue of who, as between Douglas
Anama and Citibank, is entitled to the possession of subject machineries, as

asserted by the latter. When it ordered the restoration of the said machineries to
Douglas Anama (now the private respondent), it merely brought the parties to a
status quo, by restoring the defendant to the possession of his properties, since
there was a finding that the issuance of the writ was not in accordance with the
specific rules of the Rules of Court.
II
In its second assignment of errors, petitioner theorizes that the Court of Appeals
erred in finding that it did not comply with Section 2, Rule 60 of the Rules of Court
requiring the replevin plaintiff to attach an affidavit of merit to the complaint.
Petitioner maintains that although there was no affidavit of merit accompanying its
complaint, there was nonetheless substantial compliance with the said rule as all
that is required to be alleged in the affidavit of merit was set forth in its verified
complaint. Petitioner argues further that assuming arguendo that there was noncompliance with the affidavit of merit requirement, such defense can no longer be
availed of by private respondent Anama as it was not alleged in his Answer and was
only belatedly interposed in his Reply to the Petitioner's Comment on the Petition for
Certiorari before the Court of Appeals.
Petitioner is correct insofar as it contends that substantial compliance with the
affidavit requirement may be permissible. There is substantial compliance with the
rule requiring that an affidavit of merit to support the complaint for replevin if the
complaint itself contains a statement of every fact required to be stated in the
affidavit of merit and the complaint is verified like an affidavit. On the matter of
replevin, Justice Vicente Francisco's Comment on the Rules of Court, states:
"Although the better practice is to keep the affidavit and pleading separate, if
plaintiff's pleading contains a statement of every fact which the statute requires to
be shown in the affidavit, and the pleading is verified by affidavit covering every
statement therein, this will be sufficient without a separate affidavit; but in no event
can the pleading supply the absence of the affidavit unless all that the affidavit is
required to contain is embodied in the pleading, and the pleading is verified in the
form required in the case of a separate affidavit." (77 CJS 65 cited in Francisco,
Rules of Court of the Philippines, Vol. IV-A, p. 383)
And similarly, in the case of an attachment which likewise requires an affidavit of
merit, the Court held that the absence of an affidavit of merit is not fatal where the
petition itself, which is under oath, recites the circumstances or facts constitutive of
the grounds for the petition. 11
The facts that must be set forth in the affidavit of merit are (1) that plaintiff owns
the property particularly describing the same, or that he is entitled to its
possession; (2) wrongful detention by defendant of said property; (3) that the
property is not taken by virtue of a tax assessment or fine pursuant to law or seized

under execution or attachment or, if it is so seized, that it is exempt from such

seizure; and the (4) the actual value of the property. 12
But, as correctly taken note of by the Court of Appeals, petitioner's complaint does
not allege all the facts that should be set forth in an affidavit of merit. Although the
complaint alleges that petitioner is entitled to the possession of subject properties
by virtue of the chattel mortgage executed by the private respondent, upon the
latter's default on its obligation, and the defendant's alleged "wrongful detention" of
the same, the said complaint does not state that subject properties were not taken
by virtue of a tax assessment or fine imposed pursuant to law or seized under
execution or attachment or, if they were so seized, that they are exempt from such
seizure.
Then too, petitioner stated the value of subject properties at a "probable value of
P200,000.00, more or less". Pertinent rules require that the affidavit of merit should
state the actual value of the property subject of a replevin suit and not just its
probable value. Actual value (or actual market value) means "the price which an
article would command in the ordinary course of business, that is to say, when
offered for sale by one willing to sell, but not under compulsion to sell, and
purchased by another who is willing to buy, but under no obligation to purchase it".
13 Petitioner alleged that the machineries and equipment involved are valued at
P200,000.00 while respondent denies the same, claiming that per the appraisal
report, the market value of the said properties is P1,710,000.00 and their
replacement cost is P2,342,300.00. Petitioner's assertion is belied by the fact that
upon taking possession of the aforesaid properties, it insured the same for
P610,593.74 and P450,000.00, separately. It bears stressing that the actual value of
the properties subject of a replevin is required to be stated in the affidavit because
such actual value will be the basis of the replevin bond required to be posted by the
plaintiff. Therefore, when the petitioner failed to declare the actual value of the
machineries and equipment subject of the replevin suit, there was non-compliance
with Section 2, Rule 60 of the Revised Rules of Court.
It should be noted, however, that the private respondent interposed the defense of
lack of affidavit of merit only in his Reply to the Comment of Citibank on the Petition
for Certiorari which respondent filed with the Court of Appeals. Section 2, Rule 9 of
the Revised Rules of Court, provides:
SECTION 2. Defenses and objections not pleaded deemed waived. Defenses and
objections not pleaded either in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action which may be alleged in a later
pleading, . . . .
This Rule has been revised and amended, as follows:
SECTION 1. Defenses and objections not pleaded. Defenses and objections not
pleaded 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.
Thus, although respondent's defense of lack of affidavit of merit is meritorious,
procedurally, such a defense is no longer available for failure to plead the same in
the Answer as required by the omnibus motion rule.
III
Petitioner also faults the Court of Appeals for finding that the bond posted by the
petitioner is questionable and/or insufficient. It is averred that, in compliance with
Section 2, Rule 60 requiring the replevin plaintiff to post a bond in double the value
of the properties involved, it filed a bond in the amount of P400,000.00 which is
twice the amount of P200,000.00 declared in its complaint.
The Court reiterates its findings on the second assignment of errors, particularly on
the issue of the actual value of subject properties as against their probable value.
Private respondent, at the onset, has put into issue the value of the said properties.
In the Special Defenses contained in his Answer, private respondent averred:
"That while defendant admits that he executed a Chattel Mortgage in favor of
plaintiff, he vigorously denies that the machineries covered therein are only worth
P200,000.00. The fact is that plaintiff knew fully well that said chattels are worth no
less than P1,000,000.00, said defendant having acceded to said valuation upon
plaintiff's representation that it would be necessary to speed up the granting of the
loan."
As there was a disagreement on the valuation of the properties in the first place,
proper determination of the value of the bond to be posted by the plaintiff cannot
be sufficiently arrived at. Though the rules specifically require that the needed bond
be double the value of the properties, since plaintiff merely denominated a probable
value of P200,000.00 and failed to aver the properties' actual value, which is
claimed to be much greater than that declared by plaintiff, the amount of
P400,000.00 would indeed be insufficient as found by the Court of Appeals. The
Rules of Court requires the plaintiff to "give a bond, executed to the defendant in
double the value of the property as stated in the affidavit . . . ." Hence, the bond
should be double the actual value of the properties involved. In this case, what was
posted was merely an amount which was double the probable value as declared by
the plaintiff and, therefore, inadequate should there be a finding that the actual
value is actually far greater than P200,000.00. Since the valuation made by the
petitioner has been disputed by the respondent, the lower court should have
determined first the actual value of the properties. It was thus an error for the said
court to approve the bond, which was based merely on the probable value of the
properties.

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. 14 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. 15 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.
Petitioner also maintains that, assuming for the sake of argument that its replevin
bond was grossly inadequate or insufficient, the recourse of the respondent should
be to post a counterbond or a redelivery bond as provided under Section 5 of Rule
60.
Sections 5 and 6, Rule 60 of the Rules of Court, read:
"SECTION 5.Return of property. If the defendant objects to the sufficiency of the
plaintiff's bond, or of the surety or sureties thereon, he cannot require the return of
the property as in this section provided; but if he does not so object, he may, at any
time before the delivery of the property to the plaintiff, if such delivery be adjudged,
and for the payment of such sum to him as may be recovered against the
defendant, and by serving a copy of such bond on the plaintiff or his attorney.
SECTION 6. Disposition of property by officer. If within five (5) days after the
taking of the property by the officer, the defendant does not object to the
sufficiency of the bond, or of the surety or sureties thereon, or require the return of
the property as provided in the last preceding section; or if the defendant so
objects, and the plaintiff's first or new bond is approved; or if the defendant so
requires, and his bond is objected to and found insufficient and he does not
forthwith file an approved bond, the property shall be delivered to the plaintiff, the
officer must return it to the defendant."
The Court held in a prior case 16 that the remedies provided under Section 5, Rule
60, are alternative remedies. ". . . If a defendant in a replevin action wishes to have
the property taken by the sheriff restored to him, he should, within five days from
such taking, (1) post a counter-bond in double the value of said property, and (2)
serve plaintiff with a copy thereof, both requirements as well as compliance
therewith within the five-day period mentioned being mandatory." 17 This course
of action is available to the defendant for as long as he does not object to the
sufficiency of the plaintiff's bond.
Conformably, a defendant in a replevin suit may demand the return of possession of
the property replevined by filing a redelivery bond executed to the plaintiff in double

the value of the property as stated in the plaintiff's affidavit within the period
specified in Sections 5 and 6. cdasia
Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond, or
of the surety or sureties thereon;" but if he does so, "he cannot require the return of
the property" by posting a counter-bond pursuant to Sections 5 and 6. 18
In the case under consideration, the private respondent did not opt to cause
redelivery of the properties to him by filing a counter-bond precisely because he
objected to the sufficiency of the bond posted by plaintiff. Therefore, he need not
file a counter-bond or redelivery bond. When such objection was not given due
course in the court below when, instead of requiring the plaintiff to post a new
bond, the court approved the bond in the amount of P400,000.00, claimed by
respondent to be insufficient, and ordered the seizure of the properties recourse
to a petition for certiorari before the Court of Appeals assailing such order is proper
under the circumstances.
IV
As its fourth assignment of errors, petitioner contends that the Court of Appeals
made an error of judgment in finding that the petitioner did not comply with the
provisions of Section 5, Rule 59 by failing to post a receiver's bond. Petitioner
contends that although it is in agreement with the Court of Appeals that a receiver's
bond is separate and distinct from a replevin bond, under the circumstances it was
not required to file a receiver's bond because it did not assume receivership over
the properties. It is further argued that assuming that it did assume receivership,
the Chattel Mortgage expressly provides, that:
"In case the MORTGAGEE institutes proceedings, judicially or otherwise, for the
foreclosure of this Chattel Mortgage, or to enforce any of its rights hereunder, the
MORTGAGEE shall be entitled as a matter of right to the appointment of a receiver,
without bond, of the mortgaged properties and of such other properties, real or
personal, claims and rights of the MORTGAGOR as shall be necessary or proper to
enable the said receiver to properly control and dispose of the mortgaged
properties." 19
The order of the trial court dated March 24, 1975 provided, among others, that the
properties shall be under joint management for a period of ten days, after which
period "the bank, by virtue of the stipulations under the chattel mortgage, becomes
the Receiver to perform all the obligations as such Receiver" and "in the event that
the bank decides not to take over the receivership, the joint management
continues." 20
From the evidence on record, it is palpably clear that petitioner Citibank did, in fact,
assume receivership. A letter 21 dated April 1, 1975 sent by petitioner to the
private respondent, reads:

April 1, 1975
Anama Engineering Service Group
114 R. Lagmay Street
San Juan, Rizal
Attention: Mr. Douglas Anama
Gentlemen:
Pursuant to the Court order, we have decided to take over your machine shop as
Receiver.
We are hereby appointing Mr. Artemio T. Gonzales as our representative.
Very truly yours,
FIRST NATIONAL CITY BANK
By:
P.R. REAL, JR.
Assistant Manager
Petitioner cannot therefore deny that nine days after the trial court issued the order
of receivership, it informed the private respondent that it would, as it did, assume
receivership.
The Court of Appeals found that the requirements of Section 5, Rule 59 on
receivership were not complied with by the petitioner, particularly the filing or
posting of a bond and the taking of an oath.
It should be noted that under the old Rules of Court which was in effect at the time
this case was still at trial stage, a bond for the appointment of a receiver was not
generally required of the applicant, except when the application was made ex parte.
22 Therefore, petitioner was not absolutely required to file a bond. Besides, as
stipulated in the chattel mortgage contract between the parties, petitioner, as the
mortgagee, is entitled to the appointment of a receiver without a bond.
However, the Court of Appeals was right in finding a defect in such assumption of
receivership in that the requirement of taking an oath has not been complied with.
Section 5, Rule 59, states:
"SECTION 5. Oath and bond of receiver. Before entering upon his duties, the
receiver must be sworn to perform them faithfully, and must file a bond, executed
to such person and in such sum as the court or judge may direct, to the effect that

he will faithfully discharge the duties of receiver in the action and obey the orders of
the court therein."
Consequently, the trial court erred in allowing the petitioner to assume receivership
over the machine shop of private respondent without requiring the appointed
receiver to take an oath.
V
In light of the foregoing, the answer to the fifth assignment of errors is in the
negative. For erroneously issuing the alias writ of seizure without inquiring into the
sufficiency of the replevin bond and for allowing petitioner to assume receivership
without the requisite oath, the Court of Appeals aptly held that the trial court acted
with grave abuse of discretion in dealing with the situation.
Under the Revised Rules of Court, the property seized under a writ of replevin is not
to be delivered immediately to the plaintiff. 23 This is because a possessor has
every right to be respected in its possession and may not be deprived of it without
due process. 24
As enunciated by this Court in the case of Filinvest Credit Corporation vs. Court of
Appeals, 25
"The reason why the law does not allow the creditor to possess himself of the
mortgaged property with violence and against the will of the debtor is to be found in
the fact that the creditor's right of possession is conditioned upon the fact of
default, and the existence of this fact may naturally be the subject of controversy.
The debtor, for instance, may claim in good faith, and rightly or wrongly, that the
debt is paid, or that for some other reason the alleged default is nonexistent. His
possession in this situation is as fully entitled to protection as that of any other
person, and in the language of Article 446 of the Civil Code, he must be respected
therein. To allow the creditor to seize the property against the will of the debtor
would make the former to a certain extent both judge and executioner in his own
cause a thing which is inadmissible in the absence of unequivocal agreement in
the contract itself or express provision to the effect in the statute."
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No pronouncement
as to costs.
SO ORDERED.

[G.R. No. 131283. October 7, 1999.]

OSCAR C. FERNANDEZ and NENITA P. FERNANDEZ, petitioners, vs. THE
INTERNATIONAL CORPORATE BANK, now UNION BANK OF THE PHILIPPINES and
PREMIERE INSURANCE & SURETY CORP., respondents.
Oscar C. Fernandez for petitioners.
Arnulfo V. Pelagio for The Premiere Insurance & Surety Corp.
Tomas R. Leonidas for the Union Bank of the Philippines.
SYNOPSIS
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
spouses Oscar and Nenita Fernandez challenging the decision and resolution of the
Court of Appeals in CA-G.R. SP No. 44409. In dismissing petitioners' suit for
certiorari and prohibition, the Court of Appeals ruled that the Metropolitan Trial
Court (MTC) of Pasay City had jurisdiction in the instant case. Furthermore, it
declared that the writ of replevin issued by the MTC of Pasay could validly be served
and executed anywhere in Metro Manila. EIAaDC
The Supreme Court found the petition devoid of merit. Under the Resolution of the
Supreme Court en banc dated January 11, 1983 providing for the interim rules and
guidelines relative to the implementation of BP 129, a writ of replevin may be
served anywhere in the Philippines. Thus the writ in question issued by Judge Paas
may be validly enforced anywhere in the Philippines. Moreover, the amount
tendered by the petitioners for the purpose of advance payment plus the redelivery
bond was insufficient to cover even just the required redelivery bond, hence, the
MTC's refusal to grant petitioners' motion for redelivery was correct, and the Court
of Appeals did not err in upholding it. Accordingly, the petition was denied and the
assailed decision was affirmed.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; PROVISIONAL REMEDIES; REPLEVIN; WRIT
OF REPLEVIN CAN BE SERVED ANYWHERE IN THE PHILIPPINES. Under the
Resolution of the Supreme Court en banc, dated January 11, 1983, providing for the
interim rules and guidelines relative to the implementation of BP 129, a writ of
replevin like the one issued in the present case may be served anywhere in the
Philippines. Specifically, the said Resolution states: "3. Writs and processes. (a)
Writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction issued by a regional trial court may be enforced in any part of the region.
(b) All other processes, whether issued by a regional trial court or a metropolitan
trial court, municipal trial court or municipal circuit trial court may be served
anywhere in the Philippines, and, in the last three cases, without a certification by
the judge of the regional trial court." Thus, the Writ of Replevin issued by Judge

Paas, which obviously does not fall under item "a" of the abovecited Rule, may be
validly enforced anywhere in the Philippines. Petitioners confused the jurisdiction of
a court to hear and decide a case on the one hand with, on the other, its power to
issue writs and processes pursuant to and in the exercise of said jurisdiction.
Applying the said Rule, Malaloan v. Court of Appeals reiterated the foregoing
distinction between the jurisdiction of the trial court and the administrative area in
which it could enforce its orders and processes pursuant to the jurisdiction conferred
on it: "We feel that the foregoing provision is too clear to be further belabored or
enmeshed in unwarranted polemics. The rule enumerates the writs and processes
which even if issued by a regional trial court, are enforceable only within its judicial
region. In contrast, it unqualifiedly provides that all other writs and processes,
regardless of which court issued the same, shall be enforceable anywhere in the
Philippines. No legal provision, statutory or reglementary, expressly or impliedly
provides a jurisdictional or territorial limit [to] its area, of enforceability. On the
contrary, the above-quoted provision of the interim Rules expressly authorizes its
enforcement anywhere in the country, since it is not among the processes specified
in paragraph (a) and there is no distinction or exception made regarding the
processes contemplated in paragraph (b)."
2.
ID.; ID.; ID.; ID.; REDELIVERY BOND; SHOULD BE IN AN AMOUNT DOUBLE
THAT OF THE CHATTEL. In their Petition for Review, petitioners plainly admit that
they issued a check for only P69,168 for the purpose of covering the advance
payments plus the redelivery bond. Clearly, that amount was insufficient to cover
even just the required redelivery bond alone, which should be in an amount double
that of the chattel. Hence, the MTC's refusal to grant petitioners' Motion for
redelivery was correct, and the Court of Appeals did not err in upholding it.
3.
ID.; ID.; MOTION TO DISMISS; VENUE; OBJECTION TO IMPROPER VENUE MUST
BE MADE BEFORE A RESPONSIVE PLEADING IS FILED. Under the Rules of Court
before the 1997 amendments, an objection to an improper venue must be made
before a responsive pleading is filed. Otherwise, it will be deemed waived. In Diaz v.
Adiong, the Court explained such requirement in this wise: ". . .. Indeed, the laying
of venue is procedural rather than substantive, relating as it does to jurisdiction of
the court over the person rather than the subject matter. Venue relates to trial and
not to jurisdiction. Finally, Sec. 1 of Rule 16 provides that objections to improper
venue must be made in a motion to dismiss before any responsive pleading is filed.
Responsive pleadings are those which seek affirmative relief and set up defenses.
Consequently, having already submitted his person to the jurisdiction of the trial
court, petitioner may no longer object to the venue which, although mandatory in
the instant case, is nevertheless waivable. As such, improper venue must be
seasonably raised, otherwise, it may be deemed waived." In the present case,
petitioners' objection to the venue of the case was raised for the first time in the
Answer itself. Not having been raised on time, their objection is therefore deemed
waived. In any event, petitioners had agreed to a stipulation in the Promissory Note

that a suit arising from their transaction may be filed in the proper court anywhere
in Metro Manila, at the sole option of respondent bank. Necessarily, Pasay City is
deemed included in the said stipulation. TIcAaH
DECISION
PANGANIBAN, J p:
A writ of replevin issued by the Metropolitan Trial Court of Pasay City may be served
and enforced anywhere in the Philippines. Moreover, the jurisdiction of a court is
determined by the amount of the claim alleged in the complaint, not by the value of
the chattel seized in ancillary proceedings. prLL
The Case
Spouses Oscar C. Fernandez and Nenita P. Fernandez challenge, via the instant
Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court, the
September 4, 1997 Decision 2 and the November 14, 1997 Resolution, 3 both
issued by the Court of Appeals 4 in CA-GR SP No. 44409.
The assailed Decision dismissed petitioners' suit for certiorari and prohibition
praying for the redelivery of the vehicle seized from them and for the declaration of
nullity of the Writ of Replevin, which had been issued by Judge Estelita M. Paas 5 of
the Metropolitan Trial Court of Pasay City, 6 and all other Orders subsequent thereto.
The challenged Resolution, on the other hand, denied reconsideration.
The Facts
In its assailed Decision, the Court of Appeals summarized the facts as follows:
". . . [O]n or about October 26, 1993, [petitioners] purchased a Nissan Sentra Sedan
through a financing scheme of the private respondent, the International Corporate
Bank, now Union Bank of the Philippines, and the chattel mortgage was executed in
favor of the financing institution on November 10, 1993. As borne out by the
Disclosure Statement in the credit transaction, the cash purchase price was
P492,000.00, minus the downpayment of P147,500.00, leaving the amount of P344,
[5]00.00 to be financed. The total amount to be paid for 48 monthly installments
would amount to P553,944.00.
"Petitioner added that due to the respondent bank's 'greedy desire' to unjustly
enrich itself at the expense of the petitioners, the former filed an unfounded
complaint for a sum of money with replevin (Case No. 983-96) before the
Metropolitan Trial Court, Branch 44, Pasay City.
"Considering that the principal amount involved was P553,944.00, petitioners filed
an Answer mentioning in the special and affirmative defenses a Motion to Dismiss,
for lack of jurisdiction, but this was denied on February 10, 1997 and was received

on February 20, 1997. A Motion for Reconsideration was then submitted on April 2,
1997.
"Aside from that, petitioners contested the venue considering that the principal
office of the respondent bank [was] in Makati, while their residence [was] in Quezon
City.
"The Motion for Reconsideration was denied on May 9, 1997 and received by them
on May 29, 1997.
"When the respondent bank filed its complaint with prayer for the issuance of a Writ
of Replevin on November 28, 1997, the monthly installments were almost fully paid;
[they] would have been fully paid on November 26, 1997. Furthermore, the car's
mileage at the time of illegal seizure was only 28,464 kilometers. They could not
have been considered in default at the time the complaint was filed, considering
that: (a) they attempted many times to pay the bank their installments for the
months of August, September, October, 1996, and up to the time of the filing of the
case, they ha[d] not received any statement of delinquency as mandated by R.A.
No. 3165, otherwise known as the Truth in Lending Act.
"If at all, petitioners added, the baseless filing of the case was deliberately done to
enrich the bank at the expense of the petitioners which [was] tantamount to simple
robbery. They even tried consigning the P69,168.00 through a Manager's Check
dated January 7, 1997 for the months of August to February, 1997, or beyond the
four months installment in advance but were similarly refused by the court for no
valid reason.
"Their petition for the outright dismissal of the complaint, as well as the lifting of the
Writ of Replevin was denied even if the amount of P553,344.00 representing the
value of the chattel was beyond the jurisdiction of the court. LLphil
"To be precise, the February 10, 1997 Order (Rollo, p. 17) states:
'For consideration before this court is the Urgent Motion to Re-deliver the Chattel
and the Motion to Dismiss by way of Special and Affirmative Defenses the following:
'that this Honorable Court has no jurisdiction to try the case and to issue the Writ of
Replevin, for the reason that the plaintiff's office is in Makati and defendant's
residence is in Quezon City and that the amount involved is P553,344.00 which is
beyond the jurisdiction of this Honorable Court.
xxx

xxx

xxx

'This Court has carefully reviewed the records of this case as well as the Sheriff's
Return which [show] that the subject value covered by the Writ of Replevin was
seized on January 7, 1997 by the branch sheriff of this court and thereafter turned
over to the plaintiff in this case.

'Under the Rules of Court, the defendant has a period of 5 days from January 7,
1997 to post a re-delivery bond, in order to secure the return of the subject vehicle
and to post a counter bond double the amount of the chattel.
'In this respect, defendants failed to exercise his right.
'As to the question of jurisdiction the complaint [shows] that the amount plaintiff
seeks to recover is P190,635.00, which is well within the jurisdiction of this
Honorable Court. Likewise the attached Promissory Note in the Complaint also
contains stipulation as to the venue agreed upon by the parties in case an action is
filed in court, in which case this court has jurisdiction.
'WHEREFORE, finding the Motion to Re-deliver chattel filed by the defendant to be
untenable, the same is hereby denied for lack of merit.
'The Motion to Dismiss on ground of lack of jurisdiction is likewise denied for being
unmeritorious.
'SO ORDERED.'" 7
Ruling of the Court of Appeals
The Court of Appeals ruled that the Metropolitan Trial Court (MTC) of Pasay City had
jurisdiction over civil cases in which the amount of the demand did not exceed
P200,000 exclusive of interest, damages and attorney's fees. The basic claim in the
present case was P190,635.90; hence, the MTC had jurisdiction.
The appellate court further held that the objection to the impropriety of the venue
should have been raised in a motion to dismiss before the filing of a responsive
pleading. The said issue, however, was raised for the first time only in petitioners'
Answer.
Lastly, the Court of Appeals agreed with the MTC that the Writ of Replevin could be
validly executed anywhere in Metro Manila because Section 27, Chapter III of B.P.
129, authorized the establishment of the Metropolitan Trial Court of Metro Manila
with eighty-two (82) branches. Therefore, any branch in this case, Branch 44
which was stationed in Pasay could issue writs and processes that could validly
be served and executed anywhere within Metro Manila.
Aggrieved, petitioners now seek the reversal of the foregoing rulings through this
recourse. 8
Issues
In their Memorandum, petitioners present the following issues:
"1.
The jurisdiction of the Metropolitan Trial Court of Pasay City is strictly limited
within the confines of the boundary limits of Pasay City, B.P. 129, Sec. 28.

2.
The Metropolitan Trial Court's jurisdiction is limited to not more than two
hundred thousand pesos.
3.
Assuming that the Metropolitan Trial Court of Pasay City has jurisdiction to try
and decide the case and to issue the ancillary writ of replevin, the Court of Appeals
grievously erred in sanctioning the order of [the] Metropolitan Trial Court of Pasay
City in denying Petitioners['] Motion for Redelivery of the vehicle which was filed
within five days after such seizure, which in essence [was] an outright departure
from the express provision of the law and the settled jurisprudence on the matter.
4.
The bank's Memorandum dated July 5, 1999 should be stricken off and
ordered expunged from the records for being fatally defective in form and
substance. No Annexes to said Memorandum were attached to petitioners' copy,
thereby making said memorandum fatally defective because the annexes [were]
integral part[s] of the memorandum itself. Up to this late date, respondent Premiere
Insurance and Surety Corporation has not submitted its memorandum and may now
therefore be deemed to have admitted the entire text of the Petition to be true,
valid and binding against it."
To resolve this case, this Court shall dispose of the following questions: (1) May the
Writ of Replevin issued by the MTC of Pasay City be enforced outside the city? (2)
Did the MTC have jurisdiction over the Complaint? (3) Were petitioners entitled to
the redelivery of the subject vehicle?
This Court's Ruling
The Petition has no merit. cdll
First Issue: Territorial Enforcement of the Writ of Replevin
Petitioners argue that the Writ of Replevin issued by the Metropolitan Trial Court of
Pasay could be enforced only within the confines of Pasay City. In support, they cite
Section 28 of Batas Pambansa (BP) 129, which states:
"SECTION 28.
Other Metropolitan Trial Courts. The Supreme Court shall
constitute Metropolitan Trial Courts in such other metropolitan areas as may be
established by law whose territorial jurisdiction shall be co-extensive with the cities
and municipalities comprising the metropolitan area.
Every Metropolitan Trial Judge shall be appointed to a metropolitan area which shall
be his permanent station and his appointment shall state the branch of the court
and the seat thereof to which he shall be originally assigned. A Metropolitan Trial
Judge may be assigned by the Supreme Court to any branch within said
metropolitan area as the interest of justice may require, and such assignment shall
not be deemed an assignment to another station within the meaning of this
section." 9

We are not convinced. Under the Resolution of the Supreme Court en banc, dated
January 11, 1983, providing for the interim rules and guidelines relative to the
implementation of BP 129, a writ of replevin like the one issued in the present case
may be served anywhere in the Philippines. Specifically, the said Resolution states:
"3.

Writs and processes.

(a)
Writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction issued by a regional trial court may be enforced in any part of the region.
(b)
All other processes, whether issued by a regional trial court or a metropolitan
trial court, municipal trial court or municipal circuit trial court may be served
anywhere in the Philippines, and, in the last three cases, without a certification by
the judge of the regional trial court." 10
Thus, the Writ of Replevin issued by Judge Paas, which obviously does not fall under
item "a" of the above-cited Rule, may be validly enforced anywhere in the
Philippines. Petitioners confused the jurisdiction of a court to hear and decide a case
on the one hand with, on the other, its power to issue writs and processes pursuant
to and in the exercise of said jurisdiction. Applying the said Rule, Malaloan v. Court
of Appeals 11 reiterated the foregoing distinction between the jurisdiction of the
trial court and the administrative area in which it could enforce its orders and
processes pursuant to the jurisdiction conferred on it:
"We feel that the foregoing provision is too clear to be further belabored or
enmeshed in unwarranted polemics. The rule enumerates the writs and processes
which, even if issued by a regional trial court, are enforceable only within its judicial
region. In contrast, it unqualifiedly provides that all other writs and processes,
regardless of which court issued the same, shall be enforceable anywhere in the
Philippines. No legal provision, statutory or reglementary, expressly or impliedly
provides a jurisdictional or territorial limit [to] its area of enforceability. On the
contrary, the above-quoted provision of the interim Rules expressly authorizes its
enforcement anywhere in the country, since it is not among the processes specified
in paragraph (a) and there is no distinction or exception made regarding the
processes contemplated in paragraph (b)."
Objection to Venue Too Late
Petitioners object to the filing of the Complaint in Pasay City, pointing out that their
residence is in Quezon City, while private respondent's principal place of business is
in Makati. Again, we are not persuaded. Under the Rules of Court before the 1997
amendments, 12 an objection to an improper venue must be made before a
responsive pleading is filed. Otherwise, it will be deemed waived. In Diaz v. Adiong,
13 the Court explained such requirement in this wise:

". . . . Indeed, the laying of venue is procedural rather than substantive, relating as
it does to jurisdiction of the court over the person rather than the subject matter.
Venue relates to trial and not to jurisdiction.
Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made
in a motion to dismiss before any responsive pleading is filed. Responsive pleadings
are those which seek affirmative relief and set up defenses. Consequently, having
already submitted his person to the jurisdiction of the trial court, petitioner may no
longer object to the venue which, although mandatory in the instant case, is
nevertheless waivable. As such, improper venue must be seasonably raised,
otherwise, it may be deemed waived." 14
In the present case, petitioners' objection to the venue of the case was raised for
the first time in the Answer itself. Not having been raised on time, their objection is
therefore deemed waived. LLpr
In any event, petitioners had agreed to a stipulation in the Promissory Note that a
suit arising from their transaction may be filed in the proper court anywhere in
Metro Manila, at the sole option of respondent bank. 15 Necessarily, Pasay City is
deemed included in the said stipulation.
Second Issue: MTC's Jurisdiction Over the Complaint
Petitioners argue that the value of the property seized is in excess of P200,000 and
thus outside the jurisdiction of the Metropolitan Trial Court. This argument has no
legal and factual basis. The fundamental claim in the main action against
petitioners, as shown in respondent bank's Complaint, is the collection of the sum of
P190,635.90, an amount that is clearly within the jurisdiction of the MTC. Although
the value of the vehicle seized pursuant to the Writ of Replevin may have exceeded
P200,000, that fact does not deprive the trial court of its jurisdiction over the case.
After all, the vehicle was merely the subject of a chattel mortgage that had been
used to secure petitioners' loan. In any case, private respondents are entitled only
to the amount owed them. Under Section 14 of the Chattel Mortgage Law, the
proceeds of the sale of the mortgaged property shall be used primarily to pay the
costs of the sale, the obligation that has been secured and other subsequent
obligations; and the balance will be turned over to the mortgagors, herein
petitioners.
Third Issue: Redelivery of Subject Vehicle
Petitioners assail the MTC's refusal to release the seized vehicle despite a Manager's
Check in the amount of P69,168 they issued for the redelivery of the vehicle within
five days from its seizure.
This argument is devoid of merit. As observed by the trial court, petitioners failed to
comply with the requisites for the redelivery of the vehicle seized:

"Under the Rules of Court, the defendant has a period of 5 days from January 7,
1997 to post a re-delivery bond, in order to secure the return of the subject vehicle
and to post a counter bond double the amount of the chattel. In this respect[,]
defendants failed to exercise his right." 16
Indeed, a careful perusal of the records shows that petitioners failed to comply with
the requirements prescribed by Rule 60 of the Rules of Court in effect at the time:
17
"SECTION 5. Return of Property. If the defendant objects to the sufficiency of the
plaintiff's bond, or of the surety or sureties thereon, he cannot require the return of
the property as in this section provided; but if he does not so object, he may, at any
time before the delivery of the property to the plaintiff, require the return thereof,
by filing with the clerk or judge of the court a bond executed to the plaintiff, in
double the value of the property as stated in the plaintiff's affidavit, for the delivery
of the property to the plaintiff, if such delivery be adjudged, and for the payment of
such sum to him as may be recovered against the defendant, and by serving a copy
of such bond on the plaintiff or his attorney.
SECTION 6. Disposition of property by officer. If within five (5) days after the
taking of the property by the officer, the defendant does not object to the
sufficiency of the bond, or of the surety or sureties thereon; or require the return of
the property as provided in the last preceding section; or if the defendant so
objects, and the plaintiff's first or new bond is approved; or if the defendant so
requires, and his bond is objected to and found insufficient and he does not
forthwith file an approved bond, the property shall be delivered to the plaintiff. If for
any reason the property is not delivered to the plaintiff, the officer must return it to
the defendant."
In their Petition for Review, petitioners plainly admit that they issued a check for
only P69,168 for the purpose of covering the advance payments plus the redelivery
bond. Clearly, that amount was insufficient to cover even just the required
redelivery bond alone, which should be in an amount double that of the chattel.
Hence, the MTC's refusal to grant petitioners' Motion for redelivery was correct, and
the Court of Appeals did not err in upholding it.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED.
Costs against petitioners.
SO ORDERED.

[G.R. No. 185595. January 9, 2013.]

MA. CARMINIA C. CALDERON, represented by her Attorney-in-Fact, Marycris V.
Baldevia, petitioner, vs. JOSE ANTONIO F. ROXAS and COURT OF APPEALS,
respondents.
DECISION
VILLARAMA, JR., J p:
Before us is a petition for review on certiorari under Rule 45 assailing the Decision 1
dated September 9, 2008 and Resolution 2 dated December 15, 2008 of the Court
of Appeals (CA) in CA-G.R. CV No. 85384. The CA affirmed the Orders dated March 7,
2005 and May 4, 2005 of the Regional Trial Court (RTC) of Paraaque City, Branch
260 in Civil Case No. 97-0608. ICASEH
Petitioner Ma. Carminia C. Calderon and private respondent Jose Antonio F. Roxas,
were married on December 4, 1985 and their union produced four children. On
January 16, 1998, petitioner filed an Amended Complaint 3 for the declaration of
nullity of their marriage on the ground of psychological incapacity under Art. 36 of
the Family Code of the Philippines.
On May 19, 1998, the trial court issued an Order 4 granting petitioner's application
for support pendente lite. Said order states in part:
. . . Accordingly, the defendant is hereby ordered to contribute to the support of the
above-named minors, (aside from 50% of their school tuition fees which the
defendant has agreed to defray, plus expenses for books and other school supplies),
the sum of P42,292.50 per month, effective May 1, 1998, as his share in the
monthly support of the children, until further orders from this Court. The first
monthly contribution, i.e., for the month of May 1998, shall be given by the
defendant to the plaintiff within five (5) days from receipt of a copy of this Order.
The succeeding monthly contributions of P42,292.50 shall be directly given by the
defendant to the plaintiff without need of any demand, within the first five (5) days
of each month beginning June 1998. All expenses for books and other school
supplies shall be shouldered by the plaintiff and the defendant, share and share
alike. Finally, it is understood that any claim for support-in-arrears prior to May 1,
1998, may be taken up later in the course of the proceedings proper. CHcTIA
xxx
SO ORDERED. 5

xxx

xxx

The aforesaid order and subsequent orders for support pendente lite were the
subject of G.R. No. 139337 entitled "Ma. Carminia C. Roxas v. Court of Appeals and
Jose Antonio F. Roxas" decided by this Court on August 15, 2001. 6 The Decision in
said case declared that "the proceedings and orders issued by the trial court in the
application for support pendente lite (and the main complaint for annulment of
marriage) in the re-filed case, that is, in Civil Case No. 97-0608 were not rendered
null and void by the omission of a statement in the certificate of non-forum
shopping regarding the prior filing and dismissal without prejudice of Civil Case No.
97-0523 which involves the same parties." The assailed orders for support pendente
lite were thus reinstated and the trial court resumed hearing the main case.
On motion of petitioner's counsel, the trial court issued an Order dated October 11,
2002 directing private respondent to give support in the amount of P42,292.50 per
month starting April 1, 1999 pursuant to the May 19, 1998 Order. 7 EAcCHI
On February 11, 2003, private respondent filed a Motion to Reduce Support citing,
among other grounds, that the P42,292.50 monthly support for the children as fixed
by the court was even higher than his then P20,800.00 monthly salary as city
councilor. 8

After hearing, the trial court issued an Order 9 dated March 7, 2005 granting the
motion to reduce support and denying petitioner's motion for spousal support,
increase of the children's monthly support pendente lite and support-in-arrears. The
trial court considered the following circumstances well-supported by documentary
and testimonial evidence: (1) the spouses' eldest child, Jose Antonio, Jr. is a
Sangguniang Kabataan Chairman and is already earning a monthly salary; (2) all the
children stay with private respondent on weekends in their house in Pasay City; (3)
private respondent has no source of income except his salary and benefits as City
Councilor; (4) the voluminous documents consisting of official receipts in payment
of various billings including school tuition fees, private tutorials and purchases of
children's school supplies, personal checks issued by private respondent, as well as
his own testimony in court, all of which substantiated his claim that he is fulfilling
his obligation of supporting his minor children during the pendency of the action; (5)
there is no proof presented by petitioner that she is not gainfully employed, the
spouses being both medical doctors; (6) the unrebutted allegation of private
respondent that petitioner is already in the United States; and (7) the alleged
arrearages of private respondent was not substantiated by petitioner with any
evidence while private respondent had duly complied with his obligation as ordered
by the court through his overpayments in other aspects such as the children's
school tuition fees, real estate taxes and other necessities. aHcACT
Petitioner's motion for partial reconsideration of the March 7, 2005 Order was
denied on May 4, 2005. 10

On May 16, 2005, the trial court rendered its Decision 11 in Civil Case No. 97-0608
decreeing thus:
WHEREFORE, judgment is hereby rendered declaring (sic):
1.
Declaring null and void the marriage between plaintiff [Ma.] Carmina C. Roxas
and defendant Jose Antonio Roxas solemnized on December 4, 1985 at San Agustin
Convent, in Manila. The Local Civil Registrar of Manila is hereby ordered to cancel
the marriage contract of the parties as appearing in the Registry of Marriage as the
same is void;
2.
Awarding the custody of the parties' minor children Maria Antoinette Roxas,
Julian Roxas and Richard Roxas to their mother herein petitioner, with the
respondent hereby given his visitorial and or custodial rights at [sic] the express
conformity of petitioner. DHCcST
3.
Ordering the respondent Jose Antonio Roxas to provide support to the
children in the amount of P30,000.00 a month, which support shall be given directly
to petitioner whenever the children are in her custody, otherwise, if the children are
in the provisional custody of respondent, said amount of support shall be recorded
properly as the amounts are being spent. For that purpose the respondent shall
then render a periodic report to petitioner and to the Court to show compliance and
for monitoring. In addition, the respondent is ordered to support the proper
schooling of the children providing for the payment of the tuition fees and other
school fees and charges including transportation expenses and allowances needed
by the children for their studies.
4.
Dissolving the community property or conjugal partnership property of the
parties as the case may be, in accordance with law.
Let copies of this decision be furnished the Office of the Solicitor General, the Office
of the City Prosecutor, Paraaque City, and the City Civil Registrar of Paraaque City
and Manila.
SO ORDERED. 12 CHATcE
On June 14, 2005, petitioner through counsel filed a Notice of Appeal from the
Orders dated March 7, 2005 and May 4, 2005.
In her appeal brief, petitioner emphasized that she is not appealing the Decision
dated May 16, 2005 which had become final as no appeal therefrom had been
brought by the parties or the City Prosecutor or the Solicitor General. Petitioner
pointed out that her appeal is "from the RTC Order dated March 7, 2005, issued prior
to the rendition of the decision in the main case", as well as the May 4, 2005 Order
denying her motion for partial reconsideration. 13

By Decision dated September 9, 2008, the CA dismissed the appeal on the ground
that granting the appeal would disturb the RTC Decision of May 16, 2005 which had
long become final and executory. The CA further noted that petitioner failed to avail
of the proper remedy to question an interlocutory order.
Petitioner's motion for reconsideration was likewise denied by the CA.
Hence, this petition raising the following issues:

ACTaDH

A.
DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or REVERSIBLE
ERROR WHEN IT RULED THAT THE RTC ORDERS DATED MARCH 7, 2005 AND MAY 4,
2005 ARE MERELY INTERLOCUTORY?
B.
DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or REVERSIBLE
ERROR WHEN IT DISMISSED OUTRIGHT THE APPEAL FROM SAID RTC ORDERS, WHEN
IT SHOULD HAVE DECIDED THE APPEAL ON THE MERITS? 14
The core issue presented is whether the March 7, 2005 and May 4, 2005 Orders on
the matter of support pendente lite are interlocutory or final.
This Court has laid down the distinction between interlocutory and final orders, as
follows:
. . . A "final" judgment or order is one that finally disposes of a case, leaving nothing
more to be done by the Court in respect thereto, e.g., an adjudication on the merits
which, on the basis of the evidence presented at the trial, declares categorically
what the rights and obligations of the parties are and which party is in the right; or
a judgment or order that dismisses an action on the ground, for instance, of res
judicata or prescription. Once rendered, the task of the Court is ended, as far as
deciding the controversy or determining the rights and liabilities of the litigants is
concerned. Nothing more remains to be done by the Court except to await the
parties' next move (which among others, may consist of the filing of a motion for
new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to
cause the execution of the judgment once it becomes "final" or, to use the
established and more distinctive term, "final and executory." aITECD
xxx

xxx

xxx

Conversely, an order that does not finally dispose of the case, and does not end the
Court's task of adjudicating the parties' contentions and determining their rights
and liabilities as regards each other, but obviously indicates that other things
remain to be done by the Court, is "interlocutory" e.g., an order denying a motion to
dismiss under Rule 16 of the Rules, or granting a motion for extension of time to file
a pleading, or authorizing amendment thereof, or granting or denying applications
for postponement, or production or inspection of documents or things, etc. Unlike a
"final" judgment or order, which is appealable, as above pointed out, an
"interlocutory" order may not be questioned on appeal except only as part of an

appeal that may eventually be taken from the final judgment rendered in the case.
15 [Emphasis supplied]
The assailed orders relative to the incident of support pendente lite and support in
arrears, as the term suggests, were issued pending the rendition of the decision on
the main action for declaration of nullity of marriage, and are therefore
interlocutory. They did not finally dispose of the case nor did they consist of a final
adjudication of the merits of petitioner's claims as to the ground of psychological
incapacity and other incidents as child custody, support and conjugal assets.
EATcHD
The Rules of Court provide for the provisional remedy of support pendente lite which
may be availed of at the commencement of the proper action or proceeding, or at
any time prior to the judgment or final order. 16 On March 4, 2003, this Court
promulgated the Rule on Provisional Orders 17 which shall govern the issuance of
provisional orders during the pendency of cases for the declaration of nullity of
marriage, annulment of voidable marriage and legal separation. These include
orders for spousal support, child support, child custody, visitation rights, hold
departure, protection and administration of common property.
Petitioner contends that the CA failed to recognize that the interlocutory aspect of
the assailed orders pertains only to private respondent's motion to reduce support
which was granted, and to her own motion to increase support, which was denied.
Petitioner points out that the ruling on support in arrears which have remained
unpaid, as well as her prayer for reimbursement/payment under the May 19, 1998
Order and related orders were in the nature of final orders assailable by ordinary
appeal considering that the orders referred to under Sections 1 and 4 of Rule 61 of
the Rules of Court can apply only prospectively. Thus, from the moment the accrued
amounts became due and demandable, the orders under which the amounts were
made payable by private respondent have ceased to be provisional and have
become final.
We disagree.
The word interlocutory refers to something intervening between the
commencement and the end of the suit which decides some point or matter but is
not a final decision of the whole controversy. 18 An interlocutory order merely
resolves incidental matters and leaves something more to be done to resolve the
merits of the case. In contrast, a judgment or order is considered final if the order
disposes of the action or proceeding completely, or terminates a particular stage of
the same action. 19 Clearly, whether an order or resolution is final or interlocutory is
not dependent on compliance or non-compliance by a party to its directive, as what
petitioner suggests. It is also important to emphasize the temporary or provisional
nature of the assailed orders. DECSIT

Provisional remedies are writs and processes available during the pendency of the
action which may be resorted to by a litigant to preserve and protect certain rights
and interests therein pending rendition, and for purposes of the ultimate effects, of
a final judgment in the case. They are provisional because they constitute
temporary measures availed of during the pendency of the action, and they are
ancillary because they are mere incidents in and are dependent upon the result of
the main action. 20 The subject orders on the matter of support pendente lite are
but an incident to the main action for declaration of nullity of marriage.
Moreover, private respondent's obligation to give monthly support in the amount
fixed by the RTC in the assailed orders may be enforced by the court itself, as what
transpired in the early stage of the proceedings when the court cited the private
respondent in contempt of court and ordered him arrested for his refusal/failure to
comply with the order granting support pendente lite. 21 A few years later, private
respondent filed a motion to reduce support while petitioner filed her own motion to
increase the same, and in addition sought spousal support and support in arrears.
This fact underscores the provisional character of the order granting support
pendente lite. Petitioner's theory that the assailed orders have ceased to be
provisional due to the arrearages incurred by private respondent is therefore
untenable. TCDHIc
Under Section 1, Rule 41 of the 1997 Revised Rules of Civil Procedure, as amended,
appeal from interlocutory orders is not allowed. Said provision reads:
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:
(a)

An order denying a motion for new trial or reconsideration;

(b)
An order denying a petition for relief or any similar motion seeking relief from
judgment;
(c)

An interlocutory order;

(d)

An order disallowing or dismissing an appeal;

SDEHCc

(e)
An order denying a motion to set aside a judgment by consent, confession or
compromise on the ground of fraud, mistake or duress, or any other ground vitiating
consent;
(f)

An order of execution;

(g)
A judgment or final order for or against one or more of several parties or in
separate claims, counterclaims, cross-claims and third-party complaints, while the
main case is pending, unless the court allows an appeal therefrom; and
(h)

An order dismissing an action without prejudice;

In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.
(Emphasis supplied.) CDEaAI
The remedy against an interlocutory order not subject of an appeal is an
appropriate special civil action under Rule 65 provided that the interlocutory order is
rendered without or in excess of jurisdiction or with grave abuse of discretion.
Having chosen the wrong remedy in questioning the subject interlocutory orders of
the RTC, petitioner's appeal was correctly dismissed by the CA.
WHEREFORE, the petition for review on certiorari is DENIED, for lack of merit. The
Decision dated September 9, 2008 and Resolution dated December 15, 2008 of the
Court of Appeals in CA-G.R. CV No. 85384 are AFFIRMED.
With costs against the petitioner.

TcSAaH

SO ORDERED

[G.R. No. L-23851. March 26, 1976.]

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff appellant, vs. LEE E. WON alias
RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.
Leonardo Abola for plaintiff-appellant.
B. A. Tan, Jr. for defendant-appellee B. A. Tan.
Alfonso V. Agcaoili and Ramon A. Barcelona for defendant-appellee Lee E. Won.
SYNOPSIS
Lee E. Won and Bienvenido Tan both claimed ownership over Wack Wack Golf and
Country Club's membership fee certificate 201, the former, by virtue of the decision

rendered in Civil Case 26044 of the Court of First Instance of Manila and of
membership fee certificate 201-serial No. 1478 issued pursuant to a court order in
said case, and the latter by virtue of membership fee certificate 201-serial No. 1199
issued to him in July 1950 pursuant to an assignment made in his favor by the
original owner and holder thereof. The corporation filed an action of interpleader in
the court a quo to have defendants litigate among themselves their conflicting
claims of ownership. In separate motions, the defendants moved to dismiss the
complaint upon the grounds of res judicata, failure of the complainant to state a
cause of action, and bar by prescription. Finding the first two grounds well taken,
the trial court dismissed the complain. Hence, this appeal, the determinative issue
of which is the timeless of the remedy of interpleader availed of by the Corporation.
The Supreme Court held that because the Corporation had allowed itself to be sued
to final judgment and be made independently liable in civil case 26044 and the
appellee Lee had already established in said case his rights to membership fee
certificate 201, its action of interpleader is barred by laches.
Order affirmed.
SYLLABUS
1.
SPECIAL CIVIL ACTION; INTERPLEADER; A REMEDY TO DETERMINE
CONFLICTING CLAIMS ON PROPERTY. The actions of interpleader under Section
120 of the Code of Civil Procedure is a remedy whereby a person who has personal
property in his posession, or an obligation to render wholly or partially, without
claiming any right to either, 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 other thing. The remedy is afforded to protect a
person not against double liability but against double vexation in respect of one
liability.
2.
ID.; ID.; PROCEDURE UNDER THE CODE OF CIVIL PROCEDURE AND NEW
RULES OF COURT DISTINGUISHED. The procedure under Section 1 of Rule 63 of
the Revised Rules of Court is the same as that under Section 120 of the Code of Civil
Procedure, except that under the former the remedy of interpleader is available
regardless of the nature of the subject-matter of the controversy, whereas under the
latter an interpleader suit is proper only if the subject-matter of the controversy is
personal property or relates to the performance of an obligation.
3.
ID.; ID.; ACTION TO BE FILED WITHIN A REASONABLE TIME AFTER A DISPUTE
ARISES. A stakeholder, meaning a person entrusted with the custody of property
or money that is subject of litigation or of contention between rival claimants in
which the holder claims no right or property interest, should use reasonable
diligence to hale the contending claimants to court. He need not await actual
institution of independent suits against him before filing a bill of interpleader. He

should file an action of interpleader within a reasonable time after a dispute has
arisen without waiting to be sued by either of the contending claimants. Otherwise,
he may be barred by laches or undue delay. But where he acts with reasonable
diligence in view of the environmental circumstances, the remedy is not barred.
4.
ID.; ID.; ACTION BARRED IF NOT TIMELY MADE. When a stakeholder's action
is filed after judgment has been rendered against him in favor of one of the
contending claimants, especially where he had notice of the conflicting claims prior
to the rendition of the judgment and neglected the opportunity to implead the
adverse claimants in the suit where judgment was entered, the interpleader suit is
too late and will be barred by laches or undue delay.
5.
ID.; ID.; ID.; ID.; INSTANT CASE. The Corporation was aware of the
conflicting claims of the parties with respect to the membership fee certificate 201
long before it filed its interpleader suit. It had been recognizing Tan as the lawful
owner thereof. It was sued by Lee who also claimed the same membership fee
certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation
(civil case 26004) and to defend itself therein. Final judgment was rendered against
it and said judgment has already been executed. It is now therefore too late for it to
invoke the remedy of interpleader.
6.
ID.; ID.; ID.; PARTY WHO HAS SUCCESSFULLY ESTABLISHED A RIGHT CANNOT
BE LATTER IMPLEADED. A successful litigant cannot later be impleaded by his
defeated adversary in an interpleader suit and compelled to prove his claim anew
against other adverse claimants, as that would in effect be a collateral attack upon
the judgment.
DECISION
CASTRO, J p:
This is an appeal from the order of the Court of First Instance of Rizal, in civil case
7656, dismissing the plaintiff-appellant's complaint of interpleader upon the
grounds of failure to state a cause of action and res judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack Wack
Golf & Country Club, Inc., a non-stock, civic and athletic corporation duly organized
under the laws of the Philippines, with principal office in Mandaluyong, Rizal
(hereinafter referred to as the Corporation), alleged, for its first cause of action, that
the defendant Lee E. Won claims ownership of its membership fee certificate 201,
by virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled
"Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club, Inc." and also by
virtue of membership fee certificate 201-serial no. 1478 issued on October 17, 1963
by Ponciano B. Jacinto, deputy clerk of court of the said CFI of Manila, for and in
behalf of the president and the secretary of the Corporation and of the People's
Bank & Trust Company as transfer agent of the said Corporation, pursuant to the

order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan,
on the other hand, claims to be lawful owner of its aforesaid membership fee
certificate 201 by virtue of membership fee certificate 201-serial no. 1199 issued to
him on July 24, 1950 pursuant to an assignment made in his favor by "Swan,
Culbertson and Fritz," the original owner and holder of membership fee certificate
201; that under its articles of incorporation and by-laws the Corporation is
authorized to issue a maximum of 400 membership fee certificates to persons duly
elected or admitted to proprietary membership, all of which have been issued as
early as December 30, 1939; that it claims no interest whatsoever in the said
membership fee certificate 201; that it has no means of determining who of the two
defendants is the lawful owner thereof; that it is without power to issue two
separate certificates for the same membership fee certificate 201, or to issue
another membership fee certificate to the defendant Lee, without violating its
articles of incorporation and by-laws; and that the membership fee certificate 201serial no. 1199 held by the defendant Tan and the membership fee certificate 201serial no. 1478 issued to the defendant Lee proceed from the same membership fee
certificate 201, originally issued in the name of "Swan, Culbertson and Fritz"
For its second cause of action, it alleged that the membership fee certificate 201serial no. 1478 issued by the deputy clerk of court of the CFI of Manila in behalf of
the Corporation is null and void because issued in violation of its by-laws, which
require the surrender and cancellation of the outstanding membership fee
certificate 201 before issuance may be made to the transferee of a new certificate
duly signed by its president and secretary, aside from the fact that the decision of
the CFI of Manila in civil case 26044 is not binding upon the defendant Tan, holder of
membership fee certificate 201-serial no. 1199; that Tan is made a party because of
his refusal to join it in this action or bring a separate action to protect his rights
despite the fact that he has a legal and beneficial interest in the subject-matter of
this litigation; and that he is made a party so that complete relief may be accorded
herein.
The Corporation prayed that (a) an order be issued requiring Lee and Tan to
interplead and litigate their conflicting claims; and (b) judgment be rendered, after
hearing, declaring who of the two is the lawful owner of membership fee certificate
201, and ordering the surrender and cancellation of membership fee certificate 201serial no. 1478 issued in the name of Lee.
In separate motions the defendants moved to dismiss the complaint upon the
grounds of res judicata, failure of the complaint to state a cause of action, and bar
by prescription. 1 These motions were duly opposed by the Corporation. Finding the
grounds of bar by prior judgment and failure to state a cause of action well taken,
the trial court dismissed the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred (1) in finding
that the allegations in its amended and supplemental complaint do not constitute a

valid ground for an action of interpleader, and in holding that "the principal motive
for the present action is to reopen the Manila Case and collaterally attack the
decision of the said Court"; (2) in finding that the decision in civil case 26044 of the
CFI of Manila constitutes res judicata and bars its present action; and (3) in
dismissing its action instead of compelling the appellees to interplead and litigate
between themselves their respective claims.
The Corporation's position may be stated elsewise as follows: The trial court erred in
dismissing the complaint, instead of compelling the appellees to interplead because
there actually are conflicting claims between the latter with respect to the
ownership of membership fee certificate 201, and, as there is no identity of parties,
of subject-matter, and of cause of action, between civil case 26044 of the CFI of
Manila and the present action, the complaint should not have been dismissed upon
the ground of res judicata.
On the other hand, the appellees argue that the trial court properly dismissed the
complaint, because, having the effect of reopening civil case 26044, the present
action is barred by res judicata.
Although res judicata or bar by a prior judgment was the principal ground availed of
by the appellees in moving for the dismissal of the complaint and upon which the
trial court actually dismissed the complaint, the determinative issue, as can be
gleaned from the pleadings of the parties, relates to the propriety and timeliness of
the remedy of the interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure, 2 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 to either, 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 to protect a person not against double
liability but against double vexation in respect of one liability. 3 The procedure
under the Rules of Court 4 is the same as that under the Code of Civil Procedure, 5
except that under the former the remedy of interpleader is available regardless of
the nature of the subject-matter of the controversy, whereas under the latter an
interpleader suit is proper only if the subject-matter of the controversy is personal
property or relates to the performance of an obligation.
There is no question that the subject-matter of the present controversy, i.e., the
membership fee certificate 201, is proper for an interpleader suit. What is here
disputed is the propriety and timeliness of the remedy in the light of the facts and
circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the contending claimants to
court. 7 He need not await actual institution of independent suits against him before

filing a bill of interpleader. 8 He should file an action of interpleader within a

reasonable time after a dispute has arisen without waiting to be sued by either of
the contending claimants. 9 Otherwise, he may be barred by laches 10 or undue
delay. 11 But where he acts with reasonable diligence in view of the environmental
circumstances, the remedy is not barred. 12
Has the Corporation in this case acted with diligence, in view of all the
circumstances, such that it may properly invoke the remedy of interpleader? We do
not think so. It was aware of the conflicting claims of the appellees with respect to
the membership fee certificate 201 long before it filed the present interpleader suit.
It had been recognizing Tan as the lawful owner thereof. It was sued by Lee who also
claimed the same membership fee certificate. Yet it did not interplead Tan. It
preferred to proceed with the litigation (civil case 26044) and to defend itself
therein. As a matter of fact, final judgment was rendered against it and said
judgment has already been executed. It is now therefore too late for it to invoke the
remedy of interpleader.
It has been held that a stakeholder's action of interpleader is too late when filed
after judgment has been rendered against him in favor of one of the contending
claimants, 13 especially where he had notice of the conflicting claims prior to the
rendition of the judgment and neglected the opportunity to implead the adverse
claimants in the suit where judgment was entered. This must be so, because once
judgment is obtained against him by one claimant he becomes liable to the latter.
14 In one case, 15 it was declared:
"The record here discloses that long before the rendition of the judgment in favor of
relators against the Hanover Fire Insurance Company the latter had notice of the
adverse claim of South to the proceeds of the policy. No reason is shown why the
Insurance Company did not implead South in the former suit and have the
conflicting claims there determined. The Insurance Company elected not to do so
and that suit proceeded to a final judgment in favor of relators. The Company
thereby became independently liable to relators. It was then too late for such
company to invoke the remedy of interpleader."
The Corporation has not shown any justifiable reason why it did not file an
application for interpleader in civil case 26044 to compel the appellees herein to
litigate between themselves their conflicting claims of ownership. It was only after
adverse final judgment was rendered against it that the remedy of interpleader was
invoked by it. By then it was too late, because to be entitled to this remedy the
applicant must be able to show that he has not been made independently liable to
any of the claimants. And since the Corporation is already liable to Lee under a final
judgment, the present interpleader suit is clearly improper and unavailing.
"It is the general rule that before a person will be deemed to be in a position to ask
for an order of interpleader, he must be prepared to show, among other

prerequisites, that he has not become independently liable to any of the claimants.
25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.
"It is also the general rule that a bill of interpleader comes too late when it is filed
after judgment has been rendered in favor of one of the claimants of the fund, this
being especially true when the holder of the funds had notice of the conflicting
claims prior to the rendition of the judgment and had an opportunity to implead the
adverse claimants in the suit in which the judgment was rendered. United Producers
Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74
S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note
5, p. 275." 16
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and
allows said suit to proceed to final judgment against him, he cannot later on have
that part of the litigation repeated in an interpleader suit. In the case at hand, the
Corporation allowed civil case 26044 to proceed to final judgment. And it offered no
satisfactory explanation for its failure to implead Tan in the same litigation. In this
factual situation, it is clear that this interpleader suit cannot prosper because it was
filed much too late.
"If a stakeholder defends a suit by one claimant and allows it to proceed so far as a
judgment against him without filing a bill of interpleader, it then becomes too late
for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86
Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one of
the main offices of a bill of interpleader to restrain a separate proceeding at law by
claimant so as to avoid the resulting partial judgment; and if the stakeholder
acquiesces in one claimant's trying out his claim and establishing it at law, he
cannot then have that part of the litigation repeated in an interpleader suit. 4
Pomeroy's Eq. Juris. # 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236;
Langdell's Summary of Eq. Pleading, # 162; De Zouche v. Carrison, 140 Pa. 430, 21
A. 450." 17
"It is the general rule that a bill of interpleader comes too late when application
therefor is delayed until after judgment has been rendered in favor of one of the
claimants of the fund, and that this is especially true where the holder of the fund
had notice of the conflicting claims prior to the rendition of such judgment and an
opportunity to implead the adverse claimants in the suit in which such judgment
was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598; also 5
Pomeroy's Eq. Juris. Sec. 41.).
"The evidence in the opinion of the majority shows beyond dispute that the
appellant permitted the Parker county suit to proceed to judgment in favor of Britton
with full notice of the adverse claims of the defendants in the present suit other
than the assignees of that judgment (the bank and Mrs. Pabb) and no excuse is
shown why he did not implead them in that suit." 18

To now permit the Corporation to bring Lee to court after the latter's successful
establishment of his rights in civil case 26044 to the membership fee certificate
201, is to increase instead of to diminish the number of suits, which is one of the
purposes of an action of interpleader, with the possibility that the latter would lose
the benefits of the favorable judgment. This cannot be done because having elected
to take its chances of success in said civil case 26044, with full knowledge of all the
facts, the Corporation must submit to the consequences of defeat.
"The act providing for the proceeding has nothing to say touching the right of one,
after contesting a claim of one of the claimants to final judgment unsuccessfully, to
involve the successful litigant in litigation anew by bringing an interpleader action.
The question seems to be one of first impression here, but, in other jurisdictions,
from which the substance of the act was apparently taken, the rule prevails that the
action cannot be resorted to after an unsuccessful trial against one of the claimants.
"'It is well settled, both by reasons and authority, that one who asks the
interposition of a court of equity to compel others, claiming property in his hands, to
interplead, must do so before putting them to the test of trials at law. Yarborough v.
Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer.
333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is
afforded to protect the party from the annoyance and hazard of two or more actions
touching the same property or demand; but one who, with knowledge of all the
facts, neglects to avail himself of the relief, or elects to take the chances for success
in the actions at law, ought to submit to the consequences of defeat. To permit an
unsuccessful defendant to compel the successful plaintiffs to interplead, is to
increase instead of to diminish the number of suits; to put upon the shoulders of
others the burden which he asks may be taken from his own . . .'
"It is urged, however, that the American Surety Company of New York was not in
position to file an interpleader until it had tested the claim of relatrix to final
judgment, and that, failing to meet with success, it promptly filed the interpleader.
The reason why, it urges, it was not in such position until then is that had it
succeeded before this court in sustaining its construction of the bond and the law
governing the bond, it would not have been called upon to file an interpleader, since
there would have been sufficient funds in its hands to have satisfied all lawful
claimants. It may be observed, however, that the surety company was acquainted
with all of the facts, and hence that it simply took its chances of meeting with
success by its own construction of the bond and the law. Having failed to sustain it,
it cannot now force relatrix into litigation anew with others, involving most likely a
repetition of what has been decided, or force her to accept a pro rata part of a fund,
which is far from benefits of the judgment." 19
Besides, a successful litigant cannot later be impleaded by his defeated adversary
in an interpleader suit and compelled to prove his claim anew against other adverse
claimants, as that would in effect be a collateral attack upon the judgment.

"The jurisprudence of this state and the common law states is well-settled that a
claimant who has been put to test of a trial by a surety, and has established his
claim, may not be impleaded later by the surety in an interpleader suit, and
compelled to prove his claim again with other adverse claimants. American Surety
Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company
of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas
v. N.Y. Casualty Co., 181 La. 322, 159 So. 572, 15 Ruling Case Law, 228; 33 Corpus
Juris, 477; 4 Pomeroy's Equity Jurisprudence (4th Ed.) 3172; 2 Lawrence on Equity
Jurisprudence, 1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565;
Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa.
430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81
S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
"There can be no doubt that relator's claim has been finally and definitely
established, because that matter was passed upon by three courts in definitive
judgments. The only remaining item is the value of the use of the land during the
time that relator occupied it. The case was remanded solely and only for the
purpose of determining the amount of that credit. In all other respects the judgment
is final." 20
"It is generally held by the cases it is the office of interpleader to protect a party,
not against double liability, but against double vexation on account of one liability.
Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late for
the remedy of interpleader if the party seeking this relief has contested the claim of
one of the parties and suffered judgment to be taken.
"In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576, 578, it was said: 'It is the
general rule that a bill of interpleader comes too late when application therefor is
delayed until after judgment has been rendered in favor of one of the claimants of
the fund, and this is especially true where the holder of the fund had notice of the
conflicting claims prior to the rendition of such judgment and an opportunity to
implead the adverse claimants in the suit in which such judgment was rendered.
See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's
Equity Jurisprudence # 41.'
"The principle thus stated has been recognized in many cases in other jurisdictions,
among which may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E.
787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761;
Yarborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also
33 C.J. p. 447, # 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047.
"It would seem that this rule should logically follow since, after the recovery of
judgment, the interpleading of the judgment creditor is in effect a collateral attack
upon the judgment." 21

In fine, the instant interpleader suit cannot prosper because the Corporation had
already been made independently liable in civil case 26044 and, therefore, its
present application for interpleader would in effect be a collateral attack upon the
final judgment in the said civil case; the appellee Lee had already established his
rights to membership fee certificate 201 in the aforesaid civil case and, therefore,
this interpleader suit would compel him to establish his rights anew, and thereby
increase instead of diminish litigations, which is one of the purposes of an
interpleader suit, with the possibility that the benefits of the final judgment in the
said civil case might eventually be taken away from him; and because the
Corporation allowed itself to be sued to final judgment in the said case, its action of
interpleader was filed inexcusably late, for which reason it is barred by laches or
unreasonable delay.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at
appellant's costs.

[G.R. No. 169466. May 9, 2007.]

DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO
L. NERI, PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL
ARTURO L. LOMIBAO, NATIONAL POLICE COMMISSION, represented by CHAIRMAN
ANGELO T. REYES, AND CIVIL SERVICE COMMISSION, represented by CHAIRPERSON
KARINA C. DAVID, petitioners, vs. MANILA'S FINEST RETIREES ASSOCIATION, INC.,
represented by P/COL. FELICISIMO G. LAZARO (RET.), AND ALL THE OTHER INP
RETIREES, respondents.
DECISION
GARCIA, J p:
Assailed and sought to be set aside in this petition for review on certiorari under
Rule 45 of the Rules of Court are the following issuances of the Court of Appeals
(CA) in CA-G.R. CV No. 78203, to wit:
1.
Decision 1 dated July 7, 2005 which affirmed in toto the decision of the
Regional Trial Court of Manila, Branch 32, in Civil Case No. 02-103702, a suit for
declaratory relief, declaring the herein respondents entitled to the same retirement
benefits accorded upon retirees of the Philippine National Police (PNP) under
Republic Act (R.A.) No. 6975, as amended by R.A. No. 8551, and ordering the herein
petitioners to implement the proper adjustments on respondents' retirement
benefits; and HIaAED
2.
Resolution 2 dated August 24, 2005 which denied the petitioners' motion for
reconsideration.
The antecedent facts:
In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated
National Police (INP) to be composed of the Philippine Constabulary (PC) as the
nucleus and the integrated police forces as components thereof. Complementing
P.D. No. 765 was P.D. No. 1184 3 dated August 26, 1977 (INP Law, hereinafter)
issued to professionalize the INP and promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT
ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER
PURPOSES," hereinafter referred to as PNP Law, was enacted. Under Section 23 of
said law, the Philippine National Police (PNP) would initially consist of the members
of the INP, created under P.D. No. 765, as well as the officers and enlisted personnel
of the PC. In part, Section 23 reads:
SEC. 23.
Composition. Subject to the limitation provided for in this Act, the
Philippine National Police, hereinafter referred to as the PNP, is hereby established,

initially consisting of the members of the police forces who were integrated into the
Integrated National Police (INP) pursuant to Presidential Decree No. 765, and the
officers and enlisted personnel of the Philippine Constabulary (PC). DaAISH
A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975 was
amended by R.A. No. 8551, otherwise known as the "PHILIPPINE NATIONAL POLICE
REFORM AND REORGANIZATION ACT OF 1998." Among other things, the
amendatory law reengineered the retirement scheme in the police organization.
Relevantly, PNP personnel, under the new law, stood to collect more retirement
benefits than what INP members of equivalent rank, who had retired under the INP
Law, received. HaAISC
The INP retirees illustrated the resulting disparity in the retirement benefits between
them and the PNP retirees as follows: 4
Retirement Rank

Monthly Pension

INP

PNP

PNP

INP

Corporal

SPO3 P3,225.00

Captain

P. Sr. Insp.

Brig. Gen.

P. Chief Supt.

Difference

P11,310.00 P8,095.00

P5,248.00

P15,976.00 P10,628.00

P10,054.24 P18,088.00 P8,033.76

Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees,
spearheaded by the Manila's Finest Retirees Association, Inc., or the MFRAI
(hereinafter collectively referred to as the INP Retirees), filed a petition for
declaratory relief, 5 thereunder impleading, as respondents, the Department of
Budget and Management (DBM), the PNP, the National Police Commission
(NAPOLCOM), the Civil Service Commission (CSC) and the Government Service
Insurance System (GSIS). Docketed in the RTC as Civil Case No. 02-103702, which
was raffled to Branch 22 thereof, the petition alleged in gist that INP retirees were
equally situated as the PNP retirees but whose retirement benefits prior to the
enactment of R.A. No. 6975, as amended by R.A. No. 8551, were unconscionably
and arbitrarily excepted from the higher rates and adjusted benefits accorded to the
PNP retirees. Accordingly, in their petition, the petitioning INP retirees pray that a
HDAECI
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that
they, as INP-retirees, are truly absorbed and equally considered as PNP-retirees and
thus, entitled to enjoy the SAME or IDENTICAL retirement benefits being bestowed
to PNP-retirees by virtue of said PNP Law or Republic Act No. 6975, as amended by
Republic Act 8551, with the corollary mandate for the respondents-government
agencies to effect the immediate adjustment on their previously received disparate
retirement benefits, retroactive to its effectivity, and with due payment thereof.

The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause
of action. On the other hand, the CSC, DBM, NAPOLCOM and PNP, in their respective
answers, asserted that the petitioners could not claim the more generous
retirement benefits under R.A. No. 6975 because at no time did they become PNP
members, having retired prior to the enactment of said law. DBM, NAPOLCOM and
PNP afterwards filed their respective pre-trial briefs. CIAHaT
The ensuing legal skirmish is not relevant to the disposition of the instant case. The
bottom line is that, on March 21, 2003, the RTC came out with its decision 6 holding
that R.A. No. 6975, as amended, did not abolish the INP but merely provided for the
absorption of its police functions by the PNP, and accordingly rendered judgment for
the INP retirees, to wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees
entitled to the same or identical retirement benefits and such other benefits being
granted, accorded and bestowed upon the PNP Retirees under the PNP Law (RA No.
6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT
and IMPLEMENT the proper adjustments on the INP Retirees' retirement and such
other benefits, RETROACTIVE to its date of effectivity, and RELEASE and PAY to the
INP Retirees the due payments of the amounts. cSaADC
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to the
Decision whereunder it granted the GSIS' motion to dismiss and thus considered the
basic petition as withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents, namely,
DBM, PNP, NAPOLCOM and CSC, interposed an appeal to the CA whereat their
appellate recourse was docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005, 7 affirmed
that of the trial court upholding the entitlement of the INP retirees to the same or
identical retirement benefits accorded upon PNP retirees under R.A. No. 6975, as
amended. aDCIHE
Their motion for reconsideration having been denied by the CA in its equally
assailed resolution of August 24, 2005, 8 herein petitioners are now with this Court
via the instant recourse on their singular submission that
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE
DECISION OF THE TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW
AND ESTABLISHED JURISPRUDENCE.
We DENY.

In the main, it is petitioners' posture that R.A. No. 6975 clearly abolished the INP
and created in its stead a new police force, the PNP. Prescinding therefrom,
petitioners contend that since the PNP is an organization entirely different from the
INP, it follows that INP retirees never became PNP members. Ergo, they cannot avail
themselves of the retirement benefits accorded to PNP members under R.A. No.
6975 and its amendatory law, R.A. No. 8551. HDIATS
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or
just about four (4) years after the 1986 Edsa Revolution toppled down the
dictatorship regime. Egged on by the current sentiment of the times generated by
the long period of martial rule during which the police force, the PC-INP, had a
military character, being then a major service of the Armed Forces of the
Philippines, and invariably moved by a fresh constitutional mandate for the
establishment of one police force which should be national in scope and, most
importantly, purely civilian in character, 9 Congress enacted R.A. No. 6975
establishing the PNP and placing it under the Department of Interior and Local
Government. To underscore the civilian character of the PNP, R.A. No. 6975 made it
emphatically clear in its declaration of policy the following:
Section 2.
Declaration of policy It is hereby declared to be the policy of the
State to promote peace and order, ensure public safety and further strengthen local
government capability aimed towards the effective delivery of the basic services to
the citizenry through the establishment of a highly efficient and competent police
force that is national in scope and civilian in character. . . . . HCaDIS
The police force shall be organized, trained and equipped primarily for the
performance of police functions. Its national scope and civilian character shall be
paramount. No element of the police force shall be military nor shall any position
thereof be occupied by active members of the [AFP]. (Emphasis and word in bracket
supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the
members of the police forces who were integrated into the INP by virtue of P.D. No.
765, while Section 86 10 of the same law provides for the assumption by the PNP of
the police functions of the INP and its absorption by the former, including its
appropriations, funds, records, equipment, etc., as well as its personnel. 11 And to
govern the statute's implementation, Section 85 of the Act spelled out the following
absorption phases: DACcIH
Phase I Exercise of option by the uniformed members of the [PC], the PC
elements assigned with the Narcotics Command, CIS, and the personnel of the
technical services of the AFP assigned with the PC to include the regular CIS
investigating agents and the operatives and agents of the NAPOLCOM Inspection.
Investigation and Intelligence Branch, and the personnel of the absorbed National

Action Committee on Anti-Hijacking (NACAH) of the Department of National Defense

to be completed within six (6) months from the date of the effectivity of this Act. At
the end of this phase, all personnel from the INP, PC, AFP Technical Services,
NACAH, and NAPOLCOM Inspection, Investigation and Intelligence Branch shall have
been covered by official orders assigning them to the PNP, Fire and Jail Forces by
their respective units.
Phase II Approval of the table of organization and equipment of all bureaus and
offices created under this Act, preparation and filling up of their staffing pattern,
transfer of assets to the [DILG] and organization of the Commission, to be
completed within twelve (12) months from the effectivity date hereof. At the end of
this phase, all personnel to be absorbed by the [DILG] shall have been issued
appointment papers, and the organized Commission and the PNP shall be fully
operational. DASEac
The PC officers and enlisted personnel who have not opted to join the PNP shall be
reassigned to the Army, Navy or Air Force, or shall be allowed to retire under
existing AFP rules and regulations. Any PC-INP officer or enlisted personnel may,
within the twelve-month period from the effectivity of this Act, retire and be paid
retirement benefits corresponding to a position two (2) ranks higher than his
present grade, subject to the conditions that at the time he applies for retirement,
he has rendered at least twenty (20) years of service and still has, at most, twentyfour (24) months of service remaining before the compulsory retirement age as
provided by existing law for his office.
Phase III Adjustment of ranks and establishment of one (1) lineal roster of officers
and another for non-officers, and the rationalization of compensation and retirement
systems; taking into consideration the existing compensation schemes and
retirement and separation benefit systems of the different components of the PNP,
to ensure that no member of the PNP shall suffer any diminution in basic longevity
and incentive pays, allowances and retirement benefits due them before the
creations of the PNP, to be completed within eighteen (18) months from the
effectivity of this Act. . . . .
Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative
supervision as well as operational control over the transferred, merged and/or
absorbed AFP and INP units. The incumbent Director General of the PC-INP shall
continue to act as Director General of the PNP until . . . replaced . . . . (Emphasis and
words in brackets supplied.) TAHCEc
From the foregoing, it appears clear to us that the INP was never, as posited by the
petitioners, abolished or terminated out of existence by R.A. No. 6975. For sure,
nowhere in R.A. No. 6975 does the words "abolish" or "terminate" appear in
reference to the INP. Instead, what the law provides is for the "absorption,"
"transfer," and/or "merger" of the INP, as well as the other offices comprising the

PC-INP, with the PNP. To "abolish" is to do away with, to annul, abrogate or destroy
completely; 12 to "absorb" is to assimilate, incorporate or to take in. 13 "Merge"
means to cause to combine or unite to become legally absorbed or extinguished by
merger 14 while "transfer" denotes movement from one position to another. Clearly,
"abolition" cannot be equated with "absorption." HaEcAC
True it is that Section 90 15 of R.A. No. 6975 speaks of the INP "[ceasing] to exist"
upon the effectivity of the law. It ought to be stressed, however, that such cessation
is but the logical consequence of the INP being absorbed by the PNP.
Far from being abolished then, the INP, at the most, was merely transformed to
become the PNP, minus of course its military character and complexion.
Even the petitioners' effort at disclosing the legislative intent behind the enactment
of R.A. No. 6975 cannot support their theory of abolition. Rather, the Senate and
House deliberations on the bill that eventually became R.A. No. 6975 reveal what
has correctly been held by the CA in its assailed decision: that the PNP was precisely
created to erase the stigma spawned by the militarization of the police force under
the PC-INP structure. The rationale behind the passage of R.A. No. 6975 was
adequately articulated by no less than the sponsor 16 of the corresponding House
bill in his sponsorship speech, thus:
By removing the police force from under the control and supervision of military
officers, the bill seeks to restore and underscore the civilian character of police work
an otherwise universal concept that was muddled up by the martial law years.
Indeed, were the legislative intent was for the INP's abolition such that nothing
would be left of it, the word "abolish" or what passes for it could have easily found
its way into the very text of the law itself, what with the abundant use of the word
during the legislative deliberations. But as can be gleaned from said deliberations,
the lawmakers' concern centered on the fact that if the entire PC-INP corps join the
PNP, then the PC-INP will necessarily be abolished, for who then would be its
members? Of more consequence, the lawmakers were one in saying that there
should never be two national police agencies at the same time. cIHSTC
With the conclusion herein reached that the INP was not in fact abolished but was
merely transformed to become the PNP, members of the INP which include the
herein respondents are, therefore, not excluded from availing themselves of the
retirement benefits accorded to PNP retirees under Sections 74 17 and 75 18 of R.A.
No. 6975, as amended by R.A. No. 8551. It may be that respondents were no longer
in the government service at the time of the enactment of R.A. No. 6975. This fact,
however, without more, would not pose as an impediment to the respondents'
entitlement to the new retirement scheme set forth under the aforecited sections.
As correctly ratiocinated by the CA to which we are in full accord:

For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new
obligation to pay the INP retirees the difference between what they received when
they retired and what would now be due to them after R.A. No. 6975 was enacted.
Even so, that did not render the RTC's interpretation of R.A. No. 6975 any less valid.
The [respondents'] retirement prior to the passage of R.A. No. 6975 did not exclude
them from the benefits provided by R.A. No. 6975, as amended by R.A. No. 8551,
since their membership in the INP was an antecedent fact that nonetheless allowed
them to avail themselves of the benefits of the subsequent laws. R.A. No. 6975
considered them as PNP members, always referring to their membership and
service in the INP in providing for their retirement benefits. 19 HScCEa
Petitioners maintain, however, that NAPOLCOM Resolution No. 8, 20 particularly
Section 11 21 thereof, bars the payment of any differential in retirement pay to
officers and non-officers who are already retired prior to the effectivity of R.A. No.
6975. SAHIaD
The contention does not commend itself for concurrence.
Under the amendatory law (R.A. No. 8551), the application of rationalized retirement
benefits to PNP members who have meanwhile retired before its (R.A. No. 8551)
enactment was not prohibited. In fact, its Section 38 22 explicitly states that the
rationalized retirement benefits schedule and program "shall have retroactive effect
in favor of PNP members and officers retired or separated from the time specified in
the law." To us, the aforesaid provision should be made applicable to INP members
who had retired prior to the effectivity of R.A. No. 6975. For, as afore-held, the INP
was, in effect, merely absorbed by the PNP and not abolished.
Indeed, to bar payment of retirement pay differential to INP members who were
already retired before R.A. No. 6975 became effective would even run counter to the
purpose of NAPOLCOM Resolution No. 8 itself, as expressed in its preambulatory
clause, which is to rationalize the retirement system of the PNP taking into
consideration existing retirement and benefit systems (including R.A. No. 6975 and
P.D. No. 1184) of the different components thereof "to ensure that no member of the
PNP shall suffer any diminution in the retirement benefits due them before the
creation of the PNP." 23
Most importantly, the perceived restriction could not plausibly preclude the
respondents from asserting their entitlement to retirement benefits adjusted to the
level when R.A. No. 6975 took effect. Such adjustment hews with the constitutional
warrant that "the State shall, from time to time, review to upgrade the pensions and
other benefits due to retirees of both the government and private sectors," 24 and
the implementing mandate under the Senior Citizen's Law 25 that "to the extent
practicable and feasible, retirement benefits . . . shall be upgraded to be at par with
the current scale enjoyed by those in actual service." EcAISC

Certainly going for the respondents in their bid to enjoy the same retirement
benefits granted to PNP retirees, either under R.A. No. 6975 or R.A. No. 8551, is
Section 34 of the latter law which amended Section 75 of R.A. No. 6975 by adding
thereto the following proviso:
Section 75. Retirement benefits. . . . : Provided, finally, That retirement pay of the
officers/non-officers of the PNP shall be subject to adjustments based on the
prevailing scale of base pay of police personnel in the active service. aCSEcA
Then, too, is the all familiar rule that:
Retirement laws should be liberally construed in favor of the retiree because their
intention is to provide for his sustenance and hopefully, even comfort, when he no
longer has the stamina to continue earning his livelihood. The liberal approach aims
to achieve the humanitarian purposes of the law in order that efficiency, security
and well-being of government employees may be enhanced. 26
The petitioners parlay the notion of prospective application of statutes, noting in
this regard that R.A. No. 6975, as amended, cannot be applied retroactively, there
being no provision to that effect.
We are not persuaded.
As correctly found by the appellate court, R.A. No. 6975 itself contextually provides
for its retroactive application to cover those who had retired prior to its effectivity. In
this regard, we invite attention to the three (3) phases of implementation under
Section 85 for the absorption and continuation in the service of, among others, the
INP members under the newly-established PNP. IHEDAT
In a further bid to scuttle respondents' entitlement to the desired retirement
benefits, the petitioners fault the trial court for ordering the immediate adjustments
of the respondents' retirement benefits when the basic petition filed before it was
one for declaratory relief. To the petitioners, such petition does not essentially entail
an executory process, the only relief proper under that setting being a declaration of
the parties' rights and duties.
Petitioners' above posture is valid to a point. However, the execution of judgments
in a petition for declaratory relief is not necessarily indefensible. In Philippine
Deposit Insurance Corporation[PDIC] v. Court of Appeals, 27 wherein the Court
affirmed the order for the petitioners therein to pay the balance of the deposit
insurance to the therein respondents, we categorically ruled:
Now, there is nothing in the nature of a special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the same transaction, deed or
contract subject of the complaint. A special civil action is after all not essentially
different from an ordinary civil action, which is generally governed by Rules 1 to 56
of the Rules of Court, except that the former deals with a special subject matter

which makes necessary some special regulation. But the identity between their
fundamental nature is such that the same rules governing ordinary civil suits may
and do apply to special civil actions if not inconsistent with or if they may serve to
supplement the provisions of the peculiar rules governing special civil actions. 28
IHEaAc
Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del
Sur: 29 the Court upheld the lower court's order for a party to refund the amounts
paid by the adverse party under the municipal ordinance therein questioned,
stating:
. . . Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into
an ordinary action and the parties allowed to file such pleadings as may be
necessary or proper, if before the final termination of the case "a breach or violation
of an . . . ordinance, should take place." In the present case, no breach or violation
of the ordinance occurred. The petitioner decided to pay "under protest" the fees
imposed by the ordinance. Such payment did not affect the case; the declaratory
relief action was still proper because the applicability of the ordinance to future
transactions still remained to be resolved, although the matter could also be
threshed out in an ordinary suit for the recovery of taxes paid . . . In its petition for
declaratory relief, petitioner-appellee alleged that by reason of the enforcement of
the municipal ordinance by respondents it was forced to pay under protest the fees
imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed
for by the petitioner was that the respondents be ordered to refund all the amounts
it paid to respondent Municipal Treasurer during the pendency of the case. The
inclusion of said allegation and prayer in the petition was not objected to by the
respondents in their answer. During the trial, evidence of the payments made by the
petitioner was introduced. Respondents were thus fully aware of the petitioner's
claim for refund and of what would happen if the ordinance were to be declared
invalid by the court. cTIESa
The Court sees no reason for treating this case differently from PDIC and Matalin.
This disposition becomes all the more appropriate considering that the respondents,
as petitioners in the RTC, pleaded for the immediate adjustment of their retirement
benefits which, significantly, the herein petitioners, as respondents in the same
court, did not object to. Being aware of said prayer, the petitioners then already
knew the logical consequence if, as it turned out, a declaratory judgment is
rendered in the respondents' favor.
At bottom then, the trial court's judgment forestalled multiplicity of suits which,
needless to stress, would only entail a long and arduous process. Considering their
obvious advanced years, the respondents can hardly afford another protracted
proceedings. It is thus for this Court to already write finis to this case.

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution
of the CA, respectively dated July 7, 2005 and August 24, 2005, are AFFIRMED.
EcIDaA
No costs.
SO ORDERED.

[G.R. No. 160208. June 30, 2008.]

RAFAEL R. MARTELINO, BARCHELECHU S. MORALES, ROSELYN S. CACHAPERO,
REYNALDO R. EVANGELISTA, CESAR B. YAPE, LEONORA R. PARAS, SEGUNDINA I.
IBARRA, RAQUEL G. HALNIN, ZAMORA I. DIAZ, and ARTHUR L. VEGA, * petitioners,
vs. NATIONAL HOME MORTGAGE FINANCE CORPORATION and HOME DEVELOPMENT
MUTUAL FUND, respondents.
DECISION
QUISUMBING, J p:
On appeal is the Decision 1 dated April 22, 2003 of the Court of Appeals in C.A.-G.R.
CV No. 70231, which had affirmed the March 12, 2001 Order 2 of the Regional Trial
Court (RTC), Branch 120, Caloocan City, dismissing Civil Case No. C-551 for
declaratory relief and prohibition. Also assailed is the appellate court's Resolution 3
dated September 25, 2003, denying petitioners' motion for reconsideration.
DaHSIT
The case stemmed from the petition for declaratory relief and prohibition with
urgent prayer for the issuance of a temporary restraining order and/or preliminary
injunction 4 filed before the RTC of Caloocan City, by petitioners against the
National Home Mortgage Finance Corporation (NHMFC) and the Home Development
Mutual Fund (HDMF), herein respondents, and Sheriff Alberto A. Castillo. 5
Petitioners alleged that they obtained housing loans from respondents who directly
released the proceeds thereof to the subdivision developer, Shelter Philippines, Inc.
(Shelter).
However, Shelter failed to complete the subdivision according to its representations
and the subdivision plan. They were thus compelled to spend their own resources to
improve the subdivision roads and alleys, and to install individual water facilities.
Respondents, on the other hand, failed to ensure Shelter's completion of the
subdivision. Instead, respondents ignored their right to suspend amortization
payments for Shelter's failure to complete the subdivision, charged interests and
penalties on their outstanding loans, threatened to foreclose their mortgages and
initiated foreclosure proceedings against petitioner Rafael Martelino. Hence, they
prayed that respondents be restrained from foreclosing their mortgages. CSHcDT
Moreover, petitioners specifically sought a declaration from the RTC (1) that their
right as house and lot buyers to suspend payment to Shelter for its failure to fully
develop the subdivision also applied to respondents who released their loans
directly to Shelter; and (2) that during the suspension of payment, respondents
should not assess them accrued interests and penalties. Petitioners further prayed
that they be allowed to pay their housing loans without interest and penalties.

In its June 17, 1998 Order, 6 the RTC set the preliminary injunction hearing, but said
order, including the summons and petition, were served only on the NHMFC and
Sheriff Castillo. 7 Despite notice, the NHMFC failed to attend the preliminary
injunction hearing. On July 9, 1998, the RTC ordered that a writ of preliminary
injunction be issued restraining the respondents from foreclosing the mortgages on
petitioners' houses. 8 The writ 9 was issued on July 14, 1998. aDcETC
On July 22, 1998, the NHMFC filed its Answer with Special and Affirmative Defenses.
10 Thereafter, the RTC ordered the parties to submit their pre-trial briefs and
scheduled the pre-trial conference. 11
On August 10, 1998, the NHMFC filed a Manifestation and Motion to Dismiss the
Petition on the ground that the RTC had no jurisdiction over its person or over the
subject matter of the case. 12
The next day, the HDMF moved to set aside the July 9, 1998 preliminary injunction
order on the ground that it was not notified of the hearing. The HDMF also stated
that the petition should have been filed with the Housing and Land Use Regulatory
Board (HLURB) as the case involved the developer's failure to complete the
subdivision. The HDMF alleged that the RTC had no jurisdiction over the case or
even to implead the HDMF which only financed petitioners' housing loans. 13
HICEca
Petitioners opposed the NHMFC's motion to dismiss and the HDMF's motion to set
aside the July 9, 1998 Order. 14 They said that the NHMFC stated no basis why the
RTC lacked jurisdiction. Since they sought a judicial declaration of their right to
suspend amortization payments to respondents, not to the subdivision developer,
the HLURB had no jurisdiction over the case. Petitioners also averred that the HDMF
cannot claim ignorance of the preliminary injunction hearing because the NHMFC
was duly notified. They claimed that the HDMF's motion constituted voluntary
submission to the RTC's jurisdiction which cured the lack of service of summons.
STIEHc
On February 10, 2000, petitioners moved to cite Atty. Florentino C. Delos Santos,
Manager of HDMF's Legal Department, in contempt for foreclosing the mortgage of
Rosella T. Rosete 15 and threatening to pursue similar actions against petitioners, in
defiance of the preliminary injunction order. 16
On March 12, 2001, the RTC, Branch 120, Caloocan City, issued an Order, decreeing
as follows:
WHEREFORE, premises considered:
1)
The motion to set aside [the] order of this Court dated July 9, 1998 is hereby
granted;
2)

The motion to cite defendant HDMF in contempt is denied; and

3)
The motion to dismiss is hereby granted and the herein petition is
DISMISSED. HICSaD
SO ORDERED. 17
The RTC held that the July 9, 1998 Order was not applicable to the HDMF since it
was not notified of the preliminary injunction hearing. Thus, no basis existed to
declare Atty. Delos Santos in contempt of court.
In dismissing the case, the RTC ruled that the issue of non-completion of the
subdivision should have been brought before the HLURB. It also ruled that no
judicial declaration can be made because the petition was vague. The RTC assumed
that the subject of the petition was Republic Act No. 8501 18 or the Housing Loan
Condonation Act of 1998 which was cited by petitioners. But the RTC pointed out
that petitioners failed to state which section of the law affected their rights and
needed judicial declaration. The RTC also noted that, as stated by petitioners,
respondents still foreclosed their mortgages, a breach of said law which rendered
the petition for declaratory relief improper. The proper remedy was an ordinary civil
action, the RTC concluded. HcDSaT
The Court of Appeals affirmed the RTC Order. First, the appellate court ruled that the
writ of preliminary injunction was not valid against the HDMF since under Section 5,
19 Rule 58 of the Rules of Court, no preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be enjoined. The HDMF
was not notified of the hearing and only appeared before the RTC to object to its
jurisdiction for non-service of summons. Second, the appellate court held that
petitioners were not denied due process because the motions to dismiss and to set
aside the July 9, 1998 Order both raised the issue of jurisdiction and were duly
heard. Petitioners even filed a memorandum. Third, the appellate court did not
entertain the issue of whether the petition for declaratory relief can be converted to
an ordinary action for it was not raised before the RTC. The Court of Appeals also
denied the motion for reconsideration.
In this appeal, petitioners contend that the Court of Appeals erred:
I.
. . . IN AFFIRMING THE ORDER OF DISMISSAL OF THE TRIAL COURT BASED ON A
GROUND NOT ALLEGED IN THE MOTION TO DISMISS; ICASEH
II.
. . . IN APPLYING THE RULING IN U. BAEZ ELECTRIC LIGHT CO., vs. ABRA ELECTRIC
COOPERATIVE[,] INC., (119 SCRA 90) TO SUPPORT THE ORDER OF DISMISSAL BY THE
TRIAL COURT;
III.

. . . IN NOT HOLDING THAT PETITIONERS WERE DENIED THEIR RIGHT TO DUE

PROCESS OF LAW WHEN THE TRIAL COURT FAVORABLY RESOLVED THE MOTION TO
DISMISS BASED ON A GROUND NOT RAISED IN THE MOTION TO DISMISS;
IV.
. . . IN NOT HOLDING THAT THE PETITION SHOULD BE CONVERTED INTO AN
ORDINARY ACTION ASSUMING THAT DECLARATORY RELIEF IS NOT THE PROPER
REMEDY;
V.
. . . IN NOT HOLDING THAT THE TRIAL COURT HAD COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR . . . EXCESS OF JURISDICTION IN GRANTING
THE MOTION TO DISMISS; HICATc
VI.
. . . IN SUSTAINING THE RTC ORDER SETTING ASIDE THE INJUNCTIVE ORDER BY NOT
HOLDING THAT THE HOME DEVELOPMENT MUTUAL FUND IS DEEMED TO HAVE
VOLUNTARILY SUBMITTED TO THE JURISDICTION OF THE LOWER COURT[.]20
In brief, the basic issues pertain (1) to the validity of the preliminary injunction order
against the HDMF and (2) the propriety of dismissing the petition for declaratory
relief and prohibition. aScIAC
Petitioners point out that, contrary to the finding of the Court of Appeals, the HDMF
did not question the lack of service of summons upon it nor did it raise the issue of
jurisdiction of the RTC over its person. What the HDMF protested, they say, were the
lack of notice of the preliminary injunction hearing and the RTC's lack of jurisdiction
over the subject matter. But by filing the motion to set aside the July 9, 1998 Order,
the HDMF voluntarily submitted to the RTC's jurisdiction. 21
In its comment, the HDMF maintains that it was not notified of the preliminary
injunction hearing and this fact is admitted by petitioners. Thus, the preliminary
injunction order is null and void. 22
We affirm the RTC and Court of Appeals ruling that the preliminary injunction order
is not valid against the HDMF. Section 5, Rule 58 of the Rules of Court expressly
states that "[n]o preliminary injunction shall be granted without hearing and prior
notice to the party or person sought to be enjoined". Here, petitioners even admit
that the HDMF was not notified of the preliminary injunction hearing. In fact,
petitioners do not contest the lower courts' ruling that the July 9, 1998 Order cannot
apply to the HDMF. They merely contend and insist that the HDMF voluntarily
submitted to the RTC's jurisdiction. Unfortunately, such contention is immaterial.
The issue involves the validity of the preliminary injunction order absent a notice of

hearing for its issuance to the HDMF, and not the HDMF's voluntary submission to
the RTC's jurisdiction. aIHSEc
Petitioners also argue that the Court of Appeals erred when it sustained the RTC's
dismissal of the petition on a ground not relied upon by respondents. They contend
that the RTC went beyond the issue of jurisdiction raised by respondents by
determining the sufficiency of the petition and ruling that it was vague and
improper. The basic issue petitioners raised is whether their right under Section 23
23 of Presidential Decree No. 957 24 to suspend amortization payments to the
subdivision developer is equally available against respondents.
In response, the NHMFC "reiterates and adheres" to the lower courts' ruling that the
petition for declaratory relief is a case of forum shopping considering consolidated
HLRB Cases Nos. REM-111585-4240 and REM-022690-4355 (HLRB cases) which
were decided allegedly in petitioners' favor. The NHMFC also maintains that the RTC
had no jurisdiction since petitioners' complaint of the developer's failure to
complete the subdivision is a case cognizable by the HLURB. EDHTAI
After a careful study of the case, we are in agreement to uphold the dismissal of the
petition for declaratory relief and prohibition.
I.
Worthy of recall, the RTC held that respondents' 25 act of initiating
foreclosure proceedings was in breach of Rep. Act No. 8501 and rendered the action
of declaratory relief improper. The RTC suggested that the proper remedy is an
ordinary civil action. Incidentally, this point is also related to petitioners' contention
that the Court of Appeals should have ordered the conversion of their petition filed
before the RTC to an ordinary civil action, under the provisions of Section 6, 26 Rule
63 of the Rules of Court. aSTAcH
We agree with the RTC but hasten to point out that the RTC had not ruled on
whether the petition was also improper as a petition for prohibition. Indeed, under
Section 1, 27 Rule 63, a person must file a petition for declaratory relief before
breach or violation of a deed, will, contract, other written instrument, statute,
executive order, regulation, ordinance or any other governmental regulation. In this
case, the petitioners had stated in their petition that respondents assessed them
interest and penalties on their outstanding loans, initiated foreclosure proceedings
against petitioner Rafael Martelino as evidenced by the notice of extra-judicial sale
28 and threatened to foreclose the mortgages of the other petitioners, all in
disregard of their right to suspend payment to Shelter for its failure to complete the
subdivision. Said statements clearly mean one thing: petitioners had already
suspended paying their amortization payments. Unfortunately, their actual
suspension of payments defeated the purpose of the action to secure an
authoritative declaration of their supposed right to suspend payment, for their
guidance. Thus, the RTC could no longer assume jurisdiction over the action for
declaratory relief because its subject initially unspecified, now identified as P.D. No.

957 and relied upon correctly or otherwise by petitioners, and assumed by the
RTC to be Rep. Act No. 8501, was breached before filing the action. As we said in
Tambunting, Jr. v. Sumabat: 29 EaHDcS
. . . The purpose of the action [for declaratory relief] is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed,
contract, etc. for their guidance in its enforcement or compliance and not to settle
issues arising from its alleged breach. It may be entertained only before the breach
or violation of the statute, deed, contract, etc. to which it refers. Where the law or
contract has already been contravened prior to the filing of an action for declaratory
relief, the court can no longer assume jurisdiction over the action. . . . Under such
circumstances, inasmuch as a cause of action has already accrued in favor of one or
the other party, there is nothing more for the court to explain or clarify short of a
judgment or final order. 30
Under the circumstances, may the Court nonetheless allow the conversion of the
petition for declaratory relief and prohibition into an ordinary action? We are
constrained to say: no. Although Section 6, Rule 63 might allow such course of
action, the respondents did not argue the point, and we note petitioners' failure to
specify the ordinary action they desired. We also cannot reasonably assume that
they now seek annulment of the mortgages. Further, the records support the Court
of Appeals' finding that this issue was not raised before the RTC. 31 The Court of
Appeals therefore properly refused to entertain the issue as it cannot be raised for
the first time on appeal. 32 EIASDT
Relatedly, the Court had considered De La Llana, etc., et al. v. Alba, etc., et al., 33
where this Court considered a petition erroneously entitled Petition for Declaratory
Relief and/or for Prohibition as an action for prohibition. That case involved the
constitutionality of Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of
1980. Citing De La Llana, Justice Florenz D. Regalado opined in his book 34 that if
the petition has far-reaching implications and it raises questions that should be
resolved, it may be treated as one for prohibition.
Assuming the Court can also treat the Petition for Declaratory Relief and Prohibition
as an action for prohibition, we must still hold that prohibition is improper.
Prohibition is a remedy against proceedings that are without or in excess of
jurisdiction, or with grave abuse of discretion, there being no appeal or other plain,
speedy adequate remedy in the ordinary course of law. 35 But here, the petition did
not even impute lack of jurisdiction or grave abuse of discretion committed by
respondents and Sheriff Castillo regarding the foreclosure proceedings. Foreclosure
of mortgage is also the mortgagee's right in case of non-payment of a debt secured
by mortgage. The mortgagee can sell the encumbered property to satisfy the
outstanding debt. 36 Hence, the HDMF cannot be faulted for exercising its right to
foreclose the mortgages, 37 under the provisions of Act No. 3135 38 as amended by
Act No. 4118. 39 We are not saying, however, that the HDMF must exercise its right

at all cost, considering that Rep. Act No. 8501 allows condonation of loan penalties
when appropriate. DCcAIS
We note that Rep. Act No. 8501 not only allows condonation of loan penalties, 40 it
also grants to the HDMF Board of Trustees the power to condone penalties imposed
on loans of HDMF members-borrowers who for, justifiable reasons, failed to pay on
time any obligation due to the HDMF. 41 Notably, the law applies to borrowers who
failed or refused to pay their monthly amortizations due to structurally defective or
substandard housing units and/or subdivisions lacking in basic amenities such as
water, light, drainage, good roads and others as required by law. 42 And the rules
promulgated by the HDMF provide that such refusal shall be considered as a
justifiable reason for failure to pay the required amortization. 43 Furthermore, the
Board of Trustees of the HDMF may also consider other causes similarly justifiable.
44
Petitioners wanted to avail of the benefits of Rep. Act No. 8501 and said that "the
most that [respondents] should have done under the circumstances was to advise
[them] about the effectivity of said law and encourage them to apply thereunder."
45 But instead of applying for condonation of penalties and restructuring of their
loans, they filed an erroneous petition before the RTC. They need not wait for
encouragement because the HDMF, the assignee of petitioners' loans, had already
issued and published its rules according to the NHMFC. 46 Petitioners need only to
apply with the HDMF and squarely raise before the HDMF not only their refusal to
pay amortizations because of the defective subdivision a justifiable reason
according to the rules but also their implied imputation of negligence against
respondents who allegedly released the proceeds of their loans directly to Shelter,
despite its failure to complete the subdivision. cDCSTA
The HDMF could then determine if the latter ground is also a justifiable cause for
non-payment of amortization. Surely, respondents would not espouse a policy to go
after petitioners if they were found justified. Respondents could even enhance
administrative controls for releasing future loans to protect borrower-mortgagors
against subdivision developers who renege on their obligations.
II.
We cannot agree, however, with the RTC's ruling that the vagueness of the
petition furnished additional justification for its dismissal. If the petition for
declaratory relief and prohibition was vague, dismissal is not proper because the
respondents may ask for more particulars. 47 Notably, the NHMFC never assailed
the supposed vagueness of the petition in its motion to dismiss nor did it ask for
more particulars before filing its answer. When the RTC also set the pre-trial
conference and ordered the parties to submit their pre-trial briefs, it even noted that
the issues had already been joined. 48 Petitioners fairly stated also the necessary
ultimate facts, except that their action for declaratory relief was improper. aDSHIC

Moreover, the RTC made an assumption that Rep. Act No. 8501 was the subject
matter of the case. But while the petition mentioned the law, the declaration that
petitioners sought was not anchored on any of its provisions. The petition only
stated that despite the effectivity of said law, respondents still acted in bad faith
and with undue haste in threatening petitioners with foreclosures, instead of
encouraging them to avail of its benefits.
III.
On the matter of forum shopping, we find the claim unsubstantiated. The
NHMFC has not explained why there is forum shopping. 49 It failed to show the
elements of forum shopping, i.e., (1) identity of parties in the HLRB cases and this
case; (2) identity of rights asserted or relief prayed for; and (3) identity of the two
preceding particulars so that the judgment in the HLRB cases will be res judicata in
this case. 50 In any event, the decision in the HLRB cases, as affirmed with
modification by the HLURB Board of Commissioners, 51 ordered Shelter to complete
the subdivision roads, sidewalks, water, electrical and drainage systems. Thus,
there is no forum shopping since the petition for declaratory relief and prohibition
filed by petitioners against respondents is entirely different from the HLRB cases.
Involved were different parties, rights asserted and reliefs sought. Obviously, the
NHMFC invokes a ruling of the RTC and Court of Appeals that petitioners committed
forum shopping, when no such ruling exists. AEIHaS
IV.
Respondents' contention that the case should or could have been filed with
the HLURB lacks merit. The jurisdiction of the HLURB is defined under Section 1 of
P.D. No. 1344, 52 to wit:
SEC. 1.
In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority [now HLURB] shall have exclusive jurisdiction to hear
and decide cases of the following nature:
A.

Unsound real estate business practices;

B.
Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C.
Cases involving specific performance of contractual and statutory obligations
filed by buyers of subdivision lot or condominium unit against the owner, developer,
dealer, broker or salesman. ISAcHD
As we previously held, the jurisdiction of the HLURB to hear and decide cases is
determined by the nature of the cause of action, the subject matter or property
involved and the parties. 53 In this case, the petition for declaratory relief and
prohibition did not involve an unsound real estate business practice, or a refund
filed by subdivision buyers against the developer, or a specific performance case
filed by buyers against the developer. Rather, the petition specifically sought a

judicial declaration that petitioners' right to suspend payment to the developer for
failure to complete the subdivision also applies to respondents who provided them
housing loans and released the proceeds thereof to the developer although the
subdivision was not completed. Note also that the buyers (petitioners) are not suing
the developer but their creditor-mortgagees 54 (respondents).
WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and
Resolution of the appellate court are AFFIRMED. HTCAED
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 165001. January 31, 2007.]

NEW FRONTIER SUGAR CORPORATION, petitioner, vs. REGIONAL TRIAL COURT,
BRANCH 39, ILOILO CITY and EQUITABLE PCI BANK, respondents.
DECISION
AUSTRIA-MARTINEZ, J p:
In the present petition for review under Rule 45 of the Rules of Court, petitioner
assails the decision of the Court of Appeals (CA) 1 in CA-G.R. SP No. 78673,
dismissing its special civil action for certiorari and affirming the dismissal orders
dated January 13, 2003 and April 14, 2003 issued by the Regional Trial Court (RTC)
of Iloilo City, Branch 39, acting as a special commercial court, in Civil Case No. 0227278.
As borne by the records, New Frontier Sugar Corporation (petitioner) is a domestic
corporation engaged in the business of raw sugar milling. Foreseeing that it cannot
meet its obligations with its creditors as they fell due, petitioner filed a Petition for
the Declaration of State of Suspension of Payments with Approval of Proposed
Rehabilitation Plan under the Interim Rules of Procedure on Corporate Rehabilitation
(2000) some time in August 2002. 2 Finding the petition to be sufficient in form and
substance, the RTC issued a Stay Order dated August 20, 2002, appointing Manuel
B. Clemente as rehabilitation receiver, ordering the latter to put up a bond, and
setting the initial hearing on the petition. 3
One of petitioner's creditors, the Equitable PCI Bank (respondent bank), filed a
Comment/Opposition with Motion to Exclude Property, alleging that petitioner is not
qualified for corporate rehabilitation, as it can no longer operate because it has no
assets left. Respondent bank also alleged that the financial statements, schedule of
debts and liabilities, inventory of assets, affidavit of general financial condition, and
rehabilitation plan submitted by petitioner are misleading and inaccurate since its
properties have already been foreclosed and transferred to respondent bank before
the petition for rehabilitation was filed, and petitioner, in fact, still owes respondent
bank deficiency liability. 4
On January 13, 2003, the RTC issued an Omnibus Order terminating the proceedings
and dismissing the case. 5 Petitioner filed an Omnibus Motion but this was denied
by the RTC in its Order dated April 14, 2003. 6
Petitioner then filed with the CA a special civil action for certiorari, which was denied
by the CA per assailed Decision dated July 19, 2004, the dispositive portion of which
reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
DISMISSING the petition filed in this case and AFFIRMING the orders assailed by the
petitioner. HTCSDE

SO ORDERED. 7
In dismissing the petition, the CA sustained the findings of the RTC that since
petitioner no longer has sufficient assets and properties to continue with its
operations and answer its corresponding liabilities, it is no longer eligible for
rehabilitation. The CA also ruled that even if the RTC erred in dismissing the petition,
the same could not be corrected anymore because what petitioner filed before the
CA was a special civil action for certiorari under Rule 65 of the Rules of Court
instead of an ordinary appeal. 8
Hence, herein petition based on the following reasons:
(a)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN
UPHOLDING THE FINDINGS OF THE SPECIAL COMMERCIAL COURT (RTC BR. 39,
ILOILO CITY), PREMATURELY EXCLUDING THE FORECLOSED PROPERTY OF
PETITIONER AND DECLARING THAT PETITIONER HAS NO SUBSTANTIAL PROPERTY
LEFT TO MAKE CORPORATE REHABILITATION FEASIBLE AS THERE IS AN ONGOING
LITIGATION FOR THE ANNULMENT OF SUCH FORECLOSURE IN ANOTHER
PROCEEDING.
(b)
THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION FOR CERTIORARI FILED
BEFORE IT AS "IMPROPER," APPEAL BEING AN AVAILABLE REMEDY. 9
The Court denies the petition.
Rehabilitation 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. 10 Presently, the applicable law on rehabilitation petitions
filed by corporations, partnerships or associations, 11 including rehabilitation cases
transferred from the Securities and Exchange Commission to the RTCs pursuant to
Republic Act No. 8799 or the Securities Regulation Code, 12 is the Interim Rules of
Procedure on Corporate Rehabilitation (2000). SAEHaC
Under the Interim Rules, the RTC, within five (5) days from the filing of the petition
for rehabilitation and after finding that the petition is sufficient in form and
substance, shall issue a Stay Order appointing a Rehabilitation Receiver, suspending
enforcement of all claims, prohibiting transfers or encumbrances of the debtor's
properties, prohibiting payment of outstanding liabilities, and prohibiting the
withholding of supply of goods and services from the debtor. 13 Any transfer of
property or any other conveyance, sale, payment, or agreement made in violation
of the Stay Order or in violation of the Rules may be declared void by the court upon
motion or motu proprio. 14

Further, the Stay Order is effective both against secure and unsecured creditors.
This is in harmony with the principle of "equality is equity" first enunciated in
Alemar's Sibal & Sons, Inc. v. Elbinias, 15 thus:
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." 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. (Emphasis supplied) ISHaCD
Nevertheless, the suspension of the enforcement of all claims against the
corporation is subject to the rule that it shall commence only from the time the
Rehabilitation Receiver is appointed. Thus, in Rizal Commercial Banking Corporation
v. Intermediate Appellate Court, 16 the Court upheld the right of RCBC to
extrajudicially foreclose the mortgage on some of BF Homes' properties, and
reinstated the trial court's judgment ordering the sheriff to execute and deliver to
RCBC the certificate of auction sale involving the properties. The Court vacated its
previous Decision rendered on September 14, 1992 in the same case, finding that
RCBC can rightfully move for the extrajudicial foreclosure of the mortgage since it
was done on October 16, 1984, while the management committee was appointed
only on March 18, 1985. The Court also took note of the SEC's denial of the
petitioner's consolidated motion to cite the sheriff and RCBC for contempt and to
annul the auction proceedings and sale.
In this case, respondent bank instituted the foreclosure proceedings against
petitioner's properties on March 13, 2002 and a Certificate of Sale at Public Auction
was issued on May 6, 2002, with respondent bank as the highest bidder. The
mortgage on petitioner's chattels was likewise foreclosed and the Certificate of Sale
was issued on May 14, 2002. It also appears that titles over the properties have
already been transferred to respondent bank. 17
On the other hand, the petition for corporate rehabilitation was filed only on August
14, 2002 and the Rehabilitation Receiver appointed on August 20, 2002.
Respondent bank, therefore, acted within its prerogatives when it foreclosed and

bought the property, and had title transferred to it since it was made prior to the
appointment of a rehabilitation receiver. AacSTE
The fact that there is a pending case for the annulment of the foreclosure
proceedings and auction sales 18 is of no moment. Until a court of competent
jurisdiction, which in this case is the RTC of Dumangas, Iloilo, Branch 68, annuls the
foreclosure sale of the properties involved, petitioner is bereft of a valid title over
the properties. 19 In fact, it is the trial court's ministerial duty to grant a possessory
writ over the properties. 20
Consequently, the CA was correct in upholding the RTC's dismissal of the petition for
rehabilitation in view of the fact that the titles to petitioner's properties have
already passed on to respondent bank and petitioner has no more assets to speak
of, specially since petitioner does not dispute the fact that the properties which
were foreclosed by respondent bank comprise the bulk, if not the entirety, of its
assets.
It should be stressed that the Interim Rules was enacted to provide for a summary
and non-adversarial rehabilitation proceedings. 21 This is in consonance with the
commercial nature of a rehabilitation case, which is aimed to be resolved
expeditiously for the benefit of all the parties concerned and the economy in
general.
As provided in the Interim Rules, the basic procedure is as follows:
(1)

The petition is filed with the appropriate Regional Trial Court; 22

(2)
If the petition is found to be sufficient in form and substance, the trial court
shall issue a Stay Order, which shall provide, among others, for the appointment of
a Rehabilitation Receiver; the fixing of the initial hearing on the petition; a directive
to the petitioner to publish the Order in a newspaper of general circulation in the
Philippines once a week for two (2) consecutive weeks; and a directive to 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. 23
3)

Publication of the Stay Order;

4)
Initial hearing on any matter relating to the petition or on any comment
and/or opposition filed in connection therewith. If the trial court is satisfied that
there is merit in the petition, it shall give due course to the petition; 24
5)
Referral for evaluation of the rehabilitation plan to the rehabilitation receiver
who shall submit his recommendations to the court; 25
6)

Modifications or revisions of the rehabilitation plan as necessary; 26

7)

Submission of final rehabilitation plan to the trial court for approval; 27

8)

Approval/disapproval of rehabilitation plan by the trial court; 28

In the present case, the petition for rehabilitation did not run its full course but was
dismissed by the RTC after due consideration of the pleadings filed before it. On this
score, the RTC cannot be faulted for its summary dismissal, as it is tantamount to a
finding that there is no merit to the petition. This is in accord with the trial court's
authority to give due course to the petition or not under Rule 4, Section 9 of the
Interim Rules. Letting the petition go through the process only to be dismissed later
on because there are no assets to be conserved will not only defeat the reason for
the rules but will also be a waste of the trial court's time and resources. DIEACH
The CA also correctly ruled that petitioner availed of the wrong remedy when it filed
a special civil action for certiorari with the CA under Rule 65 of the Rules of Court.
Certiorari is a remedy for the correction of errors of jurisdiction, not errors of
judgment. It is an original and independent action that was not part of the trial that
had resulted in the rendition of the judgment or order complained of. More
importantly, since the issue is jurisdiction, an original action for certiorari may be
directed against an interlocutory order of the lower court prior to an appeal from the
judgment; or where there is no appeal or any plain, speedy or adequate remedy. A
petition for certiorari should be filed not later than sixty days from the notice of
judgment, order, or resolution, and a motion for reconsideration is generally
required prior to the filing of a petition for certiorari, in order to afford the tribunal
an opportunity to correct the alleged errors. 29
The Omnibus Order dated January 13, 2003 issued by the RTC is a final order since it
terminated the proceedings and dismissed the case before the trial court; it leaves
nothing more to be done. As such, petitioner's recourse is to file an appeal from the
Omnibus Order.
In this regard, A.M. No. 00-8-10-SC promulgated by the Court on September 4, 2001
provides that a petition for rehabilitation is considered a special proceeding given
that it seeks to establish the status of a party or a particular fact. Accordingly, the
period of appeal provided in paragraph 19 (b) of the Interim Rules Relative to the
Implementation of Batas Pambansa Blg. 129 for special proceedings shall apply.
Under said paragraph 19 (b), the period of appeal shall be thirty (30) days, a record
of appeal being required.
However, it should be noted that the Court issued A.M. No. 04-9-07-SC on
September 14, 2004, clarifying the proper mode of appeal in cases involving
corporate rehabilitation and intra-corporate controversies. It is provided therein that
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 appealed to the CA through a

petition for review under Rule 43 of the Rules of Court to be filed within fifteen (15)
days from notice of the decision or final order of the RTC. CIaDTE
In any event, as previously stated, since what petitioner filed was a petition for
certiorari under Rule 65 of the Rules, the CA rightly dismissed the petition and
affirmed the assailed Orders.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.

[G.R. No. 171545. December 19, 2007.]

EQUITABLE PCI BANK, * AIMEE YU and BEJAN LIONEL APAS, petitioners, vs. NG
SHEUNG NGOR ** doing business under the name and style "KEN MARKETING," KEN
APPLIANCE DIVISION, INC. and BENJAMIN E. GO, respondents.
DECISION
CORONA, J p:
This petition for review on certiorari 1 seeks to set aside the decision 2 of the Court
of Appeals (CA) in CA-G.R. SP No. 83112 and its resolution 3 denying
reconsideration.
On October 7, 2001, respondents Ng Sheung Ngor, 4 Ken Appliance Division, Inc.
and Benjamin E. Go filed an action for annulment and/or reformation of documents
and contracts 5 against petitioner Equitable PCI Bank (Equitable) and its employees,
Aimee Yu and Bejan Lionel Apas, in the Regional Trial Court (RTC), Branch 16 of Cebu
City. 6 They claimed that Equitable induced them to avail of its peso and dollar
credit facilities by offering low interest rates 7 so they accepted Equitable's proposal
and signed the bank's pre-printed promissory notes on various dates beginning
1996. They, however, were unaware that the documents contained identical
escalation clauses granting Equitable authority to increase interest rates without
their consent. 8 CTaSEI
Equitable, in its answer, asserted that respondents knowingly accepted all the terms
and conditions contained in the promissory notes. 9 In fact, they continuously
availed of and benefited from Equitable's credit facilities for five years. 10
After trial, the RTC upheld the validity of the promissory notes. It found that, in 2001
alone, Equitable restructured respondents' loans amounting to US$228,200 and
P1,000,000. 11 The trial court, however, invalidated the escalation clause contained
therein because it violated the principle of mutuality of contracts. 12 Nevertheless,
it took judicial notice of the steep depreciation of the peso during the intervening
period 13 and declared the existence of extraordinary deflation. 14 Consequently,
the RTC ordered the use of the 1996 dollar exchange rate in computing
respondents' dollar-denominated loans. 15 Lastly, because the business reputation
of respondents was (allegedly) severely damaged when Equitable froze their
accounts, 16 the trial court awarded moral and exemplary damages to them. 17
The dispositive portion of the February 5, 2004 RTC decision 18 provided:
WHEREFORE, premises considered, judgment is hereby rendered:

TcCDIS

A)
Ordering [Equitable] to reinstate and return the amount of [respondents']
deposit placed on hold status;

B)
Ordering [Equitable] to pay [respondents] the sum of P12 [m]illion [p]esos as
moral damages;
C)
Ordering [Equitable] to pay [respondents] the sum of P10 [m]illion [p]esos as
exemplary damages;
D)
Ordering defendants Aimee Yu and Bejan [Lionel] Apas to pay [respondents],
jointly and severally, the sum of [t]wo [m]illion [p]esos as moral and exemplary
damages;
E)
Ordering [Equitable, Aimee Yu and Bejan Lionel Apas], jointly and severally, to
pay [respondents'] attorney's fees in the sum of P300,000; litigation expenses in the
sum of P50,000 and the cost of suit;
F)
Directing plaintiffs Ng Sheung Ngor and Ken Marketing to pay [Equitable] the
unpaid principal obligation for the peso loan as well as the unpaid obligation for the
dollar denominated loan;
G)
Directing plaintiff Ng Sheung Ngor and Ken Marketing to pay [Equitable]
interest as follows: aEIADT
1)

12% per annum for the peso loans;

2)
8% per annum for the dollar loans. The basis for the payment of the dollar
obligation is the conversion rate of P26.50 per dollar availed of at the time of
incurring of the obligation in accordance with Article 1250 of the Civil Code of the
Philippines;
H)
Dismissing [Equitable's] counterclaim except the payment of the aforestated
unpaid principal loan obligations and interest.
SO ORDERED. 19
Equitable and respondents filed their respective notices of appeal. 20
In the March 1, 2004 order of the RTC, both notices were denied due course because
Equitable and respondents "failed to submit proof that they paid their respective
appeal fees." 21
WHEREFORE, premises considered, the appeal interposed by defendants from the
Decision in the above-entitled case is DENIED due course. As of February 27, 2004,
the Decision dated February 5, 2004, is considered final and executory in so far as
[Equitable, Aimee Yu and Bejan Lionel Apas] are concerned. 22 (emphasis supplied)
DIETcC
Equitable moved for the reconsideration of the March 1, 2004 order of the RTC 23 on
the ground that it did in fact pay the appeal fees. Respondents, on the other hand,
prayed for the issuance of a writ of execution. 24

On March 24, 2004, the RTC issued an omnibus order denying Equitable's motion for
reconsideration for lack of merit 25 and ordered the issuance of a writ of execution
in favor of respondents. 26 According to the RTC, because respondents did not move
for the reconsideration of the previous order (denying due course to the parties'
notices of appeal), 27 the February 5, 2004 decision became final and executory as
to both parties and a writ of execution against Equitable was in order. 28
A writ of execution was thereafter issued 29 and three real properties of Equitable
were levied upon. 30
On March 26, 2004, Equitable filed a petition for relief in the RTC from the March 1,
2004 order. 31 It, however, withdrew that petition on March 30, 2004 32 and instead
filed a petition for certiorari with an application for an injunction in the CA to enjoin
the implementation and execution of the March 24, 2004 omnibus order. 33
On June 16, 2004, the CA granted Equitable's application for injunction. A writ of
preliminary injunction was correspondingly issued. 34 HTAIcD
Notwithstanding the writ of injunction, the properties of Equitable previously levied
upon were sold in a public auction on July 1, 2004. Respondents were the highest
bidders and certificates of sale were issued to them. 35
On August 10, 2004, Equitable moved to annul the July 1, 2004 auction sale and to
cite the sheriffs who conducted the sale in contempt for proceeding with the auction
despite the injunction order of the CA. 36
On October 28, 2005, the CA dismissed the petition for certiorari. 37 It found
Equitable guilty of forum shopping because the bank filed its petition for certiorari in
the CA several hours before withdrawing its petition for relief in the RTC. 38
Moreover, Equitable failed to disclose, both in the statement of material dates and
certificate of non-forum shopping (attached to its petition for certiorari in the CA),
that it had a pending petition for relief in the RTC. 39
Equitable moved for reconsideration 40 but it was denied. 41 Thus, this petition.
IaEACT
Equitable asserts that it was not guilty of forum shopping because the petition for
relief was withdrawn on the same day the petition for certiorari was filed. 42 It
likewise avers that its petition for certiorari was meritorious because the RTC
committed grave abuse of discretion in issuing the March 24, 2004 omnibus order
which was based on an erroneous assumption. The March 1, 2004 order denying its
notice of appeal for non payment of appeal fees was erroneous because it had in
fact paid the required fees. 43 Thus, the RTC, by issuing its March 24, 2004 omnibus
order, effectively prevented Equitable from appealing the patently wrong February
5, 2004 decision. 44
This petition is meritorious.

EQUITABLE WAS NOT GUILTY

OF FORUM SHOPPING
Forum shopping exists when two or more actions involving the same transactions,
essential facts and circumstances are filed and those actions raise identical issues,
subject matter and causes of action. 45 The test is whether, in two or more pending
cases, there is identity of parties, rights or causes of actions and reliefs. 46
Equitable's petition for relief in the RTC and its petition for certiorari in the CA did
not have identical causes of action. The petition for relief from the denial of its
notice of appeal was based on the RTC's judgment or final order preventing it from
taking an appeal by "fraud, accident, mistake or excusable negligence." 47 On the
other hand, its petition for certiorari in the CA, a special civil action, sought to
correct the grave abuse of discretion amounting to lack of jurisdiction committed by
the RTC. 48 IEaCDH
In a petition for relief, the judgment or final order is rendered by a court with
competent jurisdiction. In a petition for certiorari, the order is rendered by a court
without or in excess of its jurisdiction.
Moreover, Equitable substantially complied with the rule on non-forum shopping
when it moved to withdraw its petition for relief in the RTC on the same day (in fact
just four hours and forty minutes after) it filed the petition for certiorari in the CA.
Even if Equitable failed to disclose that it had a pending petition for relief in the RTC,
it rectified what was doubtlessly a careless oversight by withdrawing the petition for
relief just a few hours after it filed its petition for certiorari in the CA a clear
indication that it had no intention of maintaining the two actions at the same time.
THE TRIAL COURT
COMMITTED GRAVE ABUSE
OF DISCRETION IN ISSUING
ITS MARCH 1, 2004 AND
MARCH 24, 2004 ORDERS
Section 1, Rule 65 of the Rules of Court provides:
Section 1.
Petition for Certiorari. When any tribunal, board or officer exercising
judicial or quasi-judicial function 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, nor any plain, speedy or 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. IEaHSD
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 certificate of non-forum shopping as provided in the
third paragraph of Section 3, Rule 46.
There are two substantial requirements in a petition for certiorari. These are:
1.
that the tribunal, board or officer exercising judicial or quasi-judicial functions
acted without or in excess of his or its jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and
2.
that there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law.
For a petition for certiorari premised on grave abuse of discretion to prosper,
petitioner must show that the public respondent patently and grossly abused his
discretion and that abuse amounted to an evasion of 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 was exercised in an arbitrary and despotic manner by reason of
passion or hostility. 49 cCTIaS
The March 1, 2004 order denied due course to the notices of appeal of both
Equitable and respondents. However, it declared that the February 5, 2004 decision
was final and executory only with respect to Equitable. 50 As expected, the March
24, 2004 omnibus order denied Equitable's motion for reconsideration and granted
respondents' motion for the issuance of a writ of execution. 51
The March 1, 2004 and March 24, 2004 orders of the RTC were obviously intended
to prevent Equitable, et al. from appealing the February 5, 2004 decision. Not only
that. The execution of the decision was undertaken with indecent haste, effectively
obviating or defeating Equitable's right to avail of possible legal remedies. No
matter how we look at it, the RTC committed grave abuse of discretion in rendering
those orders.
With regard to whether Equitable had a plain, speedy and adequate remedy in the
ordinary course of law, we hold that there was none. The RTC denied due course to
its notice of appeal in the March 1, 2004 order. It affirmed that denial in the March
24, 2004 omnibus order. Hence, there was no way Equitable could have possibly
appealed the February 5, 2004 decision. 52
Although Equitable filed a petition for relief from the March 24, 2004 order, that
petition was not a plain, speedy and adequate remedy in the ordinary course of law.
53 A petition for relief under Rule 38 is an equitable remedy allowed only in

exceptional circumstances or where there is no other available or adequate remedy.

54 cHDaEI
Thus, we grant Equitable's petition for certiorari and consequently give due course
to its appeal.
EQUITABLE RAISED PURE
QUESTIONS OF LAW IN ITS
PETITION FOR REVIEW
The jurisdiction of this Court in Rule 45 petitions is limited to questions of law. 55
There is a question of law "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 the probative value of the evidence presented, the truth or falsehood of
facts being admitted." 56
Equitable does not assail the factual findings of the trial court. Its arguments
essentially focus on the nullity of the RTC's February 5, 2004 decision. Equitable
points out that that decision was patently erroneous, specially the exorbitant award
of damages, as it was inconsistent with existing law and jurisprudence. 57 DcITaC
THE PROMISSORY NOTES
WERE VALID
The RTC upheld the validity of the promissory notes despite respondents' assertion
that those documents were contracts of adhesion.
A contract of adhesion is a contract whereby almost all of its provisions are drafted
by one party. 58 The participation of the other party is limited to affixing his
signature or his "adhesion" to the contract. 59 For this reason, contracts of adhesion
are strictly construed against the party who drafted it. 60
It is erroneous, however, to conclude that contracts of adhesion are invalid per se.
They are, on the contrary, as binding as ordinary contracts. A party is in reality free
to accept or reject it. A contract of adhesion becomes void only when the dominant
party takes advantage of the weakness of the other party, completely depriving the
latter of the opportunity to bargain on equal footing. 61
That was not the case here. As the trial court noted, if the terms and conditions
offered by Equitable had been truly prejudicial to respondents, they would have
walked out and negotiated with another bank at the first available instance. But
they did not. Instead, they continuously availed of Equitable's credit facilities for five
long years. AcIaST

While the RTC categorically found that respondents had outstanding dollar- and
peso-denominated loans with Equitable, it, however, failed to ascertain the total
amount due (principal, interest and penalties, if any) as of July 9, 2001. The trial
court did not explain how it arrived at the amounts of US$228,200 and P1,000,000.
62 In Metro Manila Transit Corporation v. D.M. Consunji, 63 we reiterated that this
Court is not a trier of facts and it shall pass upon them only for compelling reasons
which unfortunately are not present in this case. 64 Hence, we ordered the partial
remand of the case for the sole purpose of determining the amount of actual
damages. 65
ESCALATION CLAUSE
VIOLATED THE PRINCIPLE OF
MUTUALITY OF CONTRACTS
Escalation clauses are not void per se. However, one "which grants the creditor an
unbridled right to adjust the interest independently and upwardly, completely
depriving the debtor of the right to assent to an important modification in the
agreement" is void. Clauses of that nature violate the principle of mutuality of
contracts. 66 Article 1308 67 of the Civil Code holds that a contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of
them. 68
For this reason, we have consistently held that a valid escalation clause provides:
CSIDTc
1.
that the rate of interest will only be increased if the applicable maximum rate
of interest is increased by law or by the Monetary Board; and
2.
that the stipulated rate of interest will be reduced if the applicable maximum
rate of interest is reduced by law or by the Monetary Board (de-escalation clause).
69
The RTC found that Equitable's promissory notes uniformly stated:
If subject promissory note is extended, the interest for subsequent extensions shall
be at such rate as shall be determined by the bank. 70
Equitable dictated the interest rates if the term (or period for repayment) of the loan
was extended. Respondents had no choice but to accept them. This was a violation
of Article 1308 of the Civil Code. Furthermore, the assailed escalation clause did not
contain the necessary provisions for validity, that is, it neither provided that the rate
of interest would be increased only if allowed by law or the Monetary Board, nor
allowed de-escalation. For these reasons, the escalation clause was void.

With regard to the proper rate of interest, in New Sampaguita Builders v. Philippine
National Bank 71 we held that, because the escalation clause was annulled, the
principal amount of the loan was subject to the original or stipulated rate of interest.
Upon maturity, the amount due was subject to legal interest at the rate of 12% per
annum. 72 IDaEHS
Consequently, respondents should pay Equitable the interest rates of 12.66% p.a.
for their dollar-denominated loans and 20% p.a. for their peso-denominated loans
from January 10, 2001 to July 9, 2001. Thereafter, Equitable was entitled to legal
interest of 12% p.a. on all amounts due.
THERE WAS NO
EXTRAORDINARY DEFLATION
Extraordinary inflation exists when there is an unusual decrease in the purchasing
power of currency (that is, beyond the common fluctuation in the value of currency)
and such decrease could not be reasonably foreseen or was manifestly beyond the
contemplation of the parties at the time of the obligation. Extraordinary deflation,
on the other hand, involves an inverse situation. 73
Article 1250 of the Civil Code provides:
Article 1250. In case an extraordinary inflation or deflation of the currency stipulated
should intervene, the value of the currency at the time of the establishment of the
obligation shall be the basis of payment, unless there is an agreement to the
contrary.
For extraordinary inflation (or deflation) to affect an obligation, the following
requisites must be proven: HAcaCS
1.
that there was an official declaration of extraordinary inflation or deflation
from the Bangko Sentral ng Pilipinas (BSP); 74
2.

that the obligation was contractual in nature; 75 and

3.
that the parties expressly agreed to consider the effects of the extraordinary
inflation or deflation. 76
Despite the devaluation of the peso, the BSP never declared a situation of
extraordinary inflation. Moreover, although the obligation in this instance arose out
of a contract, the parties did not agree to recognize the effects of extraordinary
inflation (or deflation). 77 The RTC never mentioned that there was a such
stipulation either in the promissory note or loan agreement. Therefore, respondents
should pay their dollar-denominated loans at the exchange rate fixed by the BSP on
the date of maturity. 78

THE AWARD OF MORAL AND

EXEMPLARY DAMAGES LACKED
BASIS
Moral damages are in the category of an award designed to compensate the
claimant for actual injury suffered, not to impose a penalty to the wrongdoer. 79 To
be entitled to moral damages, a claimant must prove: aTADCE
1.
That he or she suffered besmirched reputation, or physical, mental or
psychological suffering sustained by the claimant;
2.

That the defendant committed a wrongful act or omission;

3.
That the wrongful act or omission was the proximate cause of the damages
the claimant sustained;
4.
The case is predicated on any of the instances expressed or envisioned by
Article 2219 80 and 2220 81 . 82
In culpa contractual or breach of contract, moral damages are recoverable only if
the defendant acted fraudulently or in bad faith or in wanton disregard of his
contractual obligations. 83 The breach must be wanton, reckless, malicious or in
bad faith, and oppressive or abusive. 84
The RTC found that respondents did not pay Equitable the interest due on February
9, 2001 (or any month thereafter prior to the maturity of the loan) 85 or the amount
due (principal plus interest) due on July 9, 2001. 86 Consequently, Equitable applied
respondents' deposits to their loans upon maturity.
The relationship between a bank and its depositor is that of creditor and debtor. 87
For this reason, a bank has the right to set-off the deposits in its hands for the
payment of a depositor's indebtedness. 88 cSaADC
Respondents indeed defaulted on their obligation. For this reason, Equitable had the
option to exercise its legal right to set-off or compensation. However, the RTC
mistakenly (or, as it now appears, deliberately) concluded that Equitable acted
"fraudulently or in bad faith or in wanton disregard" of its contractual obligations
despite the absence of proof. The undeniable fact was that, whatever damage
respondents sustained was purely the consequence of their failure to pay their
loans. There was therefore absolutely no basis for the award of moral damages to
them.
Neither was there reason to award exemplary damages. Since respondents were not
entitled to moral damages, neither should they be awarded exemplary damages. 89
And if respondents were not entitled to moral and exemplary damages, neither
could they be awarded attorney's fees and litigation expenses. 90

ACCORDINGLY, the petition is hereby GRANTED.

The October 28, 2005 decision and February 3, 2006 resolution of the Court of
Appeals in CA-G.R. SP No. 83112 are hereby REVERSED and SET ASIDE.
The March 24, 2004 omnibus order of the Regional Trial Court, Branch 16, Cebu City
in Civil Case No. CEB-26983 is hereby ANNULLED for being rendered with grave
abuse of discretion amounting to lack or excess of jurisdiction. All proceedings
undertaken pursuant thereto are likewise declared null and void. SDHTEC
The March 1, 2004 order of the Regional Trial Court, Branch 16 of Cebu City in Civil
Case No. CEB-26983 is hereby SET ASIDE. The appeal of petitioners Equitable PCI
Bank, Aimee Yu and Bejan Lionel Apas is therefore given due course.
The February 5, 2004 decision of the Regional Trial Court, Branch 16 of Cebu City in
Civil Case No. CEB-26983 is accordingly SET ASIDE. New judgment is hereby
entered:
1.
ordering respondents Ng Sheung Ngor, doing business under the name and
style of "Ken Marketing," Ken Appliance Division, Inc. and Benjamin E. Go to pay
petitioner Equitable PCI Bank the principal amount of their dollar- and pesodenominated loans;
2.
ordering respondents Ng Sheung Ngor, doing business under the name and
style of "Ken Marketing," Ken Appliance Division, Inc. and Benjamin E. Go to pay
petitioner Equitable PCI Bank interest at:
a)
12.66% p.a. with respect to their dollar-denominated loans from January 10,
2001 to July 9, 2001; aSTHDc
b)
20% p.a. with respect to their peso-denominated loans from January 10, 2001
to July 9, 2001; 91
c)
pursuant to our ruling in Eastern Shipping Lines v. Court of Appeals, 92 the
total amount due on July 9, 2001 shall earn legal interest at 12% p.a. from the time
petitioner Equitable PCI Bank demanded payment, whether judicially or extrajudicially; and
d)
after this Decision becomes final and executory, the applicable rate shall be
12% p.a. until full satisfaction;
3.

all other claims and counterclaims are dismissed.

As a starting point, the Regional Trial Court, Branch 16 of Cebu City shall compute
the exact amounts due on the respective dollar-denominated and pesodenominated loans, as of July 9, 2001, of respondents Ng Sheung Ngor, doing
business under the name and style of "Ken Marketing," Ken Appliance Division and
Benjamin E. Go. ACcEHI

SO ORDERED.

[G.R. No. 192908. August 22, 2012.]

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS
AND HIGHWAYS (DPWH), petitioner, vs. ST. VINCENT DE PAUL COLLEGES, INC.,
respondent.
DECISION
REYES, J p:
Before the Court is a petition for review on certiorari 1 under Rule 45 of the Rules of
Court, where petitioner Republic of the Philippines (Republic), represented by the
Department of Public Works and Highways through the Office of the Solicitor
General, questions the resolutions of the Court of Appeals (CA) in CA-G.R. SP No.
108499, to wit: acTDCI
1.
Resolution dated October 30, 2009 2 dismissing petitioner's petition for
certiorari under Rule 65 for being filed out of time; and
2.
Resolution dated July 15, 2010 3 denying petitioner's motion for
reconsideration.
Antecedent Facts
The instant case arose from two cases filed by the Republic seeking expropriation of
certain properties in the name of St. Vincent de Paul Colleges, Inc. (St. Vincent). In
Civil Case No. 0062-04, the Republic sought to expropriate 1,992 square meters out
of a total area of 6,068 square meters of land for the construction of the ManilaCavite Toll Expressway Project (MCTEP). Said property belongs to St. Vincent
covered by TCT No. T-821169 and located in Binakayan, Kawit, Cavite. In Civil Case
No. 0100-04, on the other hand, the Republic sought to expropriate 2,450 square
meters out of a total area of 9,039 square meters, also belonging to St. Vincent and
covered by TCT No. T-821170. Said property adjoins the property subject of Civil
Case No. 0062-04.

Subsequently, the Republic filed in both cases an amended complaint alleging that
the subject land originated from a free patent title and should be adjudicated to it
without payment of just compensation pursuant to Section 112 of Commonwealth
Act No. 141.
On August 9, 2005, the Republic filed in Civil Case No. 0062-04 a motion for the
issuance of an order of expropriation. 4 It was granted by the trial court per Order 5
dated August 16, 2005, ruling that the Republic has a lawful right to take the 1,992
square meters portion of the subject property, with "no pronouncement as to just
compensation" since the subject property originated from a free patent. 6 A motion
for the issuance of an order of expropriation was likewise filed by the Republic in
Civil Case No. 0100-04 but before this could be resolved, the Republic moved to
consolidate the two cases, which was granted by the trial court. 7
On November 16, 2006, the trial court denied St. Vincent's motion for
reconsideration of its Order dated August 16, 2005 granting expropriation. 8 As
alleged in the petition, no appeal was taken by St. Vincent from said orders. 9
After almost 2 years, or on July 28, 2008, St. Vincent filed a Manifestation with
Motion for Clarification of the Order dated August 16, 2005, 10 contending that
although it does not oppose the ruling regarding the determination of public
purpose and the Republic's right to expropriate the subject land, it, however, claims
that it is entitled to just compensation. EHCaDS
Meanwhile, the Republic attempted to implement the Order dated August 16, 2005
by entering the subject portion of St. Vincent's property. Aggrieved, the latter
demanded upon the Republic and its agents to immediately vacate, and remove
any and all equipment or structures they introduced on its property in a demandletter 11 dated October 3, 2008.
Due to St. Vincent's refusal to honor the order of expropriation, the Republic filed an
urgent motion for the issuance of a writ of possession, which was denied by the
lower court in its Order 12 dated November 25, 2006 [2008]. The lower court,
however, modified its Order dated August 16, 2005 and required the Republic to
immediately pay St. Vincent in an amount equivalent to one hundred percent
(100%) of the value of the property sought to be expropriated. The Republic moved
for reconsideration but it was denied by the lower court per Order 13 dated January
29, 2009 for lack of factual and legal basis.
Seeking to avail the extra ordinary remedy of certiorari under Rule 65 of the Rules
of Court, the Republic filed with the CA a motion for additional time of fifteen (15)
days within which to file its petition. The CA granted the motion in its Resolution 14
dated April 30, 2009 and the Republic was given a non-extensible period of fifteen
(15) days or until May 4, 2009 within which to file its petition for certiorari.

On April 30, 2009, the Republic filed its petition for certiorari assailing the lower
court's orders dated November 25, 2008 and January 29, 2009 for having been
issued with grave abuse of discretion amounting to lack or in excess of jurisdiction.
On June 19, 2009, the CA, motu proprio, issued a Resolution 15 ordering the
Republic to show cause why its petition for certiorari should not be dismissed for
being filed out of time, pursuant to A.M. No. 07-7-12-SC.
The Republic filed its Compliance with Explanation 16 dated July 1, 2009 pleading
for the relaxation of the rules by reason of the transcendental importance of the
issues involved in the case and in consideration of substantial justice. St. Vincent
filed its Comment/Opposition 17 dated July 15, 2009 alleging among others that the
said explanation is merely pro forma due to the Republic's failure to justify its
explanation. DIAcTE
On October 30, 2009, the CA rendered the assailed resolution dismissing the
Republic's petition for certiorari on the ground that the petition was filed out of time
inasmuch as extensions of time are now disallowed by A.M. No. 07-7-12-SC 18 and
as applied in Laguna Metts Corporation v. Court of Appeals. 19
On November 26, 2009, the Republic filed its motion for reconsideration alleging
that it merely relied in good faith on the appellate court's resolution granting the
former an additional period of fifteen (15) days within which to file the subject
petition.
On July 15, 2010, the CA rendered the assailed resolution denying the Republic's
motion for reconsideration, stating that it cannot disobey the ruling in Laguna Metts
Corporation. 20
Hence, this petition.
The Republic relies on the CA resolution granting its motion for extension of time
and upon the strength of the substantial merits of its petition. The Republic also
invokes Domdom v. Third and Fifth Divisions of the Sandiganbayan, 21 where the
Court ruled that absent a prohibition, motions for extensions are allowed, subject to
the Court's sound discretion.
St. Vincent, however, contends that the present petition fails to neither allege any
circumstance nor state any justification for the deliberate disregard of a very
elementary rule of procedure like Section 4 of Rule 65 of the Rules of Court. And in
the absence of any such circumstance or justification, the general rule on pro forma
motions/pleadings must apply.
The Issue
The Republic discussed the substantial merits of its case; however, the CA did no
more than include such matters in its narration of facts, and neither did St. Vincent

dwell on said issues. Hence, the only issue to be resolved in this petition is whether
the CA committed a reversible error when it dismissed the Republic's petition for
certiorari for being filed out of time, pursuant to A.M. No. 07-7-12-SC.
The Court's Ruling
We GRANT the petition.

CDHaET

The Court notes that the CA Resolution dated April 30, 2009, which initially granted
the Republic's motion for extension, was premised on the mistaken notion that the
petition filed by the latter was one for petition for review as a mode of appeal. The
CA resolution stated, among others: "[P]rovided that this Motion for Extension of
Time to File Petition for Review is seasonably filed, as prayed for, . . . ." 22 Thus, the
CA granted extension inasmuch as motions for this purpose are allowed by the
rules. 23 On this score alone, the CA should have admitted the petition filed by the
Republic since the latter merely relied on its Resolution dated April 30, 2009
granting the extension prayed for.
Nevertheless, the CA subsequently dismissed the petition filed by the Republic on
the ground that the same was filed out of time, following A.M. No. 07-7-12-SC. In its
Resolution dated July 15, 2010, which dismissed the Republic's motion for
reconsideration, the CA also relied on the ruling in Laguna Metts Corporation that
the sixty (60)-day period within which to file a petition for certiorari is nonextendible. The petitioner, however, insists that Domdom allows extensions of time
to file a petition.
In order to resolve the instant controversy, the Court deems it necessary to discuss
the relationship between its respective rulings in Laguna Metts Corporation and
Domdom with respect to the application of the amendment introduced by A.M. No.
07-7-12-SC to Section 4, Rule 65 of the Rules of Court.
Before said amendment, Section 4 of Rule 65 originally provides:
Sec. 4.
When and where petition filed. The petition shall be filed not later
than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the sixty (60) day period shall be counted from notice of the denial
of said motion.
The petition shall be filed 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
appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency,

unless otherwise provided by law or these rules, the petition shall be filed in and
cognizable only by the Court of Appeals. DCTSEA
No extension of time to file the petition shall be granted except for compelling
reason and in no case exceeding fifteen (15) days.
As amended by A.M. No. 07-7-12-SC, Section 4 of Rule 65 now reads:
Sec. 4.
When and where petition filed. The petition shall be filed not later
than sixty (60) days from notice of the judgment or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not,
the sixty (60) day period shall be counted from notice of the denial of said motion.
If the petition relates to an act or an omission of a municipal trial court or of a
corporation, a board, an officer or a person, it shall be filed with the Regional Trial
Court exercising jurisdiction over the territorial area as defined by the Supreme
Court. It may also be filed with the Court of Appeals or with the Sandiganbayan,
whether or not the same is in aid of the court's appellate jurisdiction. If the petition
involves an act or an omission of a quasi-judicial agency, unless otherwise provided
by law or these rules, the petition shall be filed with and be cognizable only by the
Court of Appeals.
In election cases involving an act or an omission of a municipal or a regional trial
court, the petition shall be filed exclusively with the Commission on Elections, in aid
of its appellate jurisdiction.
In interpreting said amendment, the Court, in Laguna Metts Corporation, held that:
As a rule, an amendment by the deletion of certain words or phrases indicates an
intention to change its meaning. It is presumed that the deletion would not have
been made if there had been no intention to effect a change in the meaning of the
law or rule. The amended law or rule should accordingly be given a construction
different from that previous to its amendment.
If the Court intended to retain the authority of the proper courts to grant extensions
under Section 4 of Rule 65, the paragraph providing for such authority would have
been preserved. The removal of the said paragraph under the amendment by A.M.
No. 07-7-12-SC of Section 4, Rule 65 simply meant that there can no longer be any
extension of the 60-day period within which to file a petition for certiorari. aESICD
The rationale for the amendments under A.M. No. 07-7-12-SC is essentially to
prevent the use (or abuse) of the petition for certiorari under Rule 65 to delay a
case or even defeat the ends of justice. Deleting the paragraph allowing extensions
to file petition on compelling grounds did away with the filing of such motions. As
the Rule now stands, petitions for certiorari must be filed strictly within 60 days
from notice of judgment or from the order denying a motion for reconsideration. 24
(Citation omitted and emphasis ours)

Nevertheless, Domdom later stated:

On the People's argument that a motion for extension of time to file a petition for
certiorari is no longer allowed, the same rests on shaky grounds. Supposedly, the
deletion of the following provision in Section 4 of Rule 65 by A.M. No. 07-7-12-SC
evinces an intention to absolutely prohibit motions for extension:
"No extension of time to file the petition shall be granted except for the most
compelling reason and in no case exceeding fifteen (15) days."
The full text of Section 4 of Rule 65, as amended by A.M. No. 07-7-12-SC, reads:
xxx

xxx

xxx

That no mention is made in the above-quoted amended Section 4 of Rule 65 of a

motion for extension, unlike in the previous for formulation, does not make the filing
of such pleading absolutely prohibited. If such were the intention, the deleted
portion could just have simply been reworded to state that "no extension of time to
file the petition shall be granted." Absent such prohibition, motions for extensions
are allowed, subject to the Court's sound discretion. The present petition may thus
be allowed, having been filed within the extension sought and, at all events, given
its merits. 25 (Citation omitted and emphasis and underscoring ours)
What seems to be a "conflict" is actually more apparent than real. A reading of the
foregoing rulings leads to the simple conclusion that Laguna Metts Corporation
involves a strict application of the general rule that petitions for certiorari must be
filed strictly within sixty (60) days from notice of judgment or from the order
denying a motion for reconsideration. Domdom, on the other hand, relaxed the rule
and allowed an extension of the sixty (60)-day period subject to the Court's sound
discretion. 26 DCESaI
Labao v. Flores 27 subsequently laid down some of the exceptions to the strict
application of the rule, viz.:
Under Section 4 of Rule 65 of the 1997 Rules of Civil Procedure, certiorari should be
instituted within a period of 60 days from notice of the judgment, order, or
resolution sought to be assailed. The 60-day period is inextendible to avoid any
unreasonable delay that would violate the constitutional rights of parties to a
speedy disposition of their case.
xxx

xxx

xxx

However, there are recognized exceptions to their strict observance, such as: (1)
most persuasive and weighty reasons; (2) to relieve a litigant from an injustice not
commensurate with his failure to comply with the prescribed procedure; (3) good
faith of the defaulting party by immediately paying within a reasonable time from
the time of the default; (4) the existence of special or compelling circumstances; (5)

the merits of the case; (6) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules; (7) a lack of any
showing that the review sought is merely frivolous and dilatory; (8) the other party
will not be unjustly prejudiced thereby; (9) fraud, accident, mistake or excusable
negligence without appellant's fault; (10) peculiar legal and equitable circumstances
attendant to each case; (11) in the name of substantial justice and fair play; (12)
importance of the issues involved; and (13) exercise of sound discretion by the
judge guided by all the attendant circumstances. Thus, there should be an effort on
the part of the party invoking liberality to advance a reasonable or meritorious
explanation for his/her failure to comply with the rules. 28 (Citations omitted and
emphasis ours)
Note that Labao explicitly recognized the general rule that the sixty (60)-day period
within which to file a petition for certiorari under Rule 65 is non-extendible, only that
there are certain exceptional circumstances, which may call for its non-observance.
Even more recently, in Mid-Islands Power Generation Corporation v. Court of
Appeals, 29 the Court, taking into consideration Laguna Metts Corporation and
Domdom, "relaxed the procedural technicalities introduced under A.M. No. 07-7-12SC in order to serve substantial justice and safeguard strong public interest" and
affirmed the extension granted by the CA to the respondent Power One Corporation
due to the exceptional nature of the case and the strong public interest involved.
STIcEA
In Laguna Metts Corporation v. Court of Appeals, we explained that the reason
behind the amendments under A.M. No. 07-7-12-SC was to prevent the use or abuse
of the remedy of petition for certiorari in order to delay a case or even defeat the
ends of justice. We thus deleted the clause that allowed an extension of the period
to file a Rule 65 petition for compelling reasons. Instead, we deemed the 60-day
period to file as reasonable and sufficient time for a party to mull over the case and
to prepare a petition that asserts grave abuse of discretion by a lower court. The
period was specifically set and limited in order to avoid any unreasonable delay in
the dispensation of justice, a delay that could violate the constitutional right of the
parties to a speedy disposition of their case. . . . .
Nevertheless, in the more recent case of Domdom v. Sandiganbayan, we ruled that
the deletion of the clause in Section 4, Rule 65 by A.M. No. 07-7-12-SC did not, ipso
facto, make the filing of a motion for extension to file a Rule 65 petition absolutely
prohibited. We held in Domdom that if absolute proscription were intended, the
deleted portion could have just simply been reworded to specifically prohibit an
extension of time to file such petition. Thus, because of the lack of an express
prohibition, we held that motions for extension may be allowed, subject to this
Court's sound discretion, and only under exceptional and meritorious cases.

Indeed, we have relaxed the procedural technicalities introduced under A.M. No. 077-12-SC in order to serve substantial justice and safeguard strong public
interest. . . .:
xxx

xxx

xxx

The present Petition involves one of those exceptional cases in which relaxing the
procedural rules would serve substantial justice and safeguard strong public
interest. . . . Consequently, in order to protect strong public interest, this Court
deems it appropriate and justifiable to relax the amendment of Section 4, Rule 65
under A.M. No. 07-7-12-SC, concerning the reglementary period for the filing of a
Rule 65 petition. Considering that the imminent power crisis is an exceptional and
meritorious circumstance, the parties herein should be allowed to litigate the issues
on the merits. Furthermore, we find no significant prejudice to the substantive rights
of the litigants as respondent was able to file the Petition before the CA within the
15-day extension it asked for. We therefore find no grave abuse of discretion
attributable to the CA when it granted respondent Power One's Motion for Extension
to file its Petition for Certiorari. 30 (Citations omitted and emphasis ours) aIcTCS
To reiterate, under Section 4, Rule 65 of the Rules of Court and as applied in Laguna
Metts Corporation, the general rule is that a petition for certiorari must be filed
within sixty (60) days from notice of the judgment, order, or resolution sought to be
assailed. Under exceptional circumstances, however, and subject to the sound
discretion of the Court, said period may be extended pursuant to Domdom, Labao
and Mid-Islands Power cases.
Accordingly, the CA should have admitted the Republic's petition: first, due to its
own lapse when it granted the extension sought by the Republic per Resolution
dated April 30, 2009; second, because of the public interest involved, i.e.,
expropriation of private property for public use (MCTEP); and finally, no undue
prejudice or delay will be caused to either party in admitting the petition.
WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated
October 30, 2009 and July 15, 2010 of the Court of Appeals in CA-G.R. SP No.
108499 are NULLIFIED. The Court of Appeals is hereby ORDERED to REINSTATE and
ADMIT the petition for certiorari filed by the Republic of the Philippines in CA-G.R. SP
No. 108499 and to proceed with the case with dispatch.
SO ORDERED.

[G.R. No. 154282. April 7, 2006.]

VANGIE BARRAZONA, petitioner, vs. REGIONAL TRIAL COURT, BRANCH 61, BAGUIO
CITY and SAN-AN REALTY AND DEVELOPMENT CORPORATION, herein represented by
RODRIGO CHUA TIU, respondents.
DECISION
SANDOVAL-GUTIERREZ, J p:
For our resolution is the instant Petition for Certiorari under Rule 65 of the 1997
Rules of Civil Procedure, as amended, assailing the Order dated June 19, 2002 of the
Regional Trial Court (RTC), Branch 61, Baguio City, denying petitioner's Motion to
Dismiss Civil Case No. 5238-R, entitled "SAN-AN REALTY and DEVELOPMENT
CORPORATION, herein represented by RODRIGO CHUA TIU, plaintiff, v. VANGIE
BARRAZONA, defendant." EITcaH
San-an Realty and Development Corporation, respondent, owns a building located
at Naguilian corner Asin Road, Baguio City. Vangie Barrazona, petitioner, has been
leasing portions of the building identified as Units 203 A and B at the second floor.
The period of the lease is for two (2) years, commencing July 15, 2001 and ending
June 30, 2003. The monthly rental is P400.00 per square meter for Unit 203 A and
P500.00 per square meter for Unit 203 B.
Starting August 2001, petitioner defaulted in the payment of the monthly rentals
and failed to pay despite demands by respondent. Thus, on May 14, 2002,
respondent filed with the RTC, Branch 61, Baguio City, a Complaint for Collection of
Sum of Money with Damages, docketed as Civil Case No. 5238-R.
On June 3, 2002, petitioner filed with the RTC a Motion to Dismiss on the ground,
among others, that the RTC has no jurisdiction over the complaint considering that
the allegations therein clearly indicate that the action is one for ejectment (illegal
detainer) which is under the exclusive jurisdiction of the Municipal Trial Court (MTC).
Petitioner pointed out the following allegations in paragraphs 4 and 5 of the
complaint showing that it is not for sum of money but for ejectment:
4.
That the defendant has failed to pay the rentals for the said leased premises
for the month of August 2001 up to the present;
5.
That the plaintiff has demanded the defendant to pay her overdue account,
now amounting to P971,838.15, the last demand to vacate and payment of arrears
having been made in writing on March 27, 2002 . . . .
In an Order dated June 19, 2002, the RTC denied the Motion to Dismiss for lack of
merit.

Forthwith, petitioner filed the instant Petition for Certiorari alleging that: (1) the RTC
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
denying her Motion to Dismiss; and (2) the Resolution denying her Motion to Dismiss
is unconstitutional as it does not state its legal basis.
On the other hand, respondent, in praying for the dismissal of the petition, contends
that (1) the complaint is for the collection of unpaid rentals as there is absolutely no
allegation that its intent is to eject petitioner from the premises; (2) petitioner
should have first filed a motion for reconsideration before resorting to the
extraordinary suit of certiorari; and (3) the assailed order denying petitioner's
motion to dismiss is interlocutory and, therefore, cannot be the subject of a petition
for certiorari.
We hold that in denying petitioner's motion to dismiss the complaint, the RTC acted
with grave abuse of discretion.
Petitioner's motion to dismiss the complaint for lack of jurisdiction is pursuant to
Section 1, Rule 16 of the 1997 Rules of Civil Procedure, as amended, which
provides:
Sec. 1.
Grounds. Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made on any of
the following grounds:
xxx

xxx

xxx

b.)
That the court has no jurisdiction over the subject matter of the claim.
AEIHCS
As mentioned earlier, petitioner stated in her motion that respondent's allegations
in its complaint show that it is one for ejectment cognizable, not by the RTC but, by
the MTC of Baguio City.
In Herrera, et al. v. Bollos, et al., 1 we emphasized the basic rule that jurisdiction of
the court over the subject matter of the action is determined by the allegations of
the complaint at the time of its filing, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. What determines
the jurisdiction of the court is the nature of the action pleaded as appearing from
the allegations in the complaint. The averments therein and the character of the
relief sought are the ones to be consulted.
It bears reiterating paragraph 5 of the complaint, thus:
5.
That the plaintiff has demanded the defendant to pay her overdue account,
now amounting to P971,838.15, the last demand to vacate and payment of arrears
having been made in writing on March 27, 2002 . . . .

This allegation clearly shows that respondent made several demands upon
petitioner to pay her overdue rentals and to vacate the premises; and that the last
demand to pay and vacate in writing was on March 27, 2002. Respondent thus
complied with Section 2, Rule 70 of the 1997 Rules of Civil Procedure, as amended,
which provides:
Sec. 2.
Lessor to proceed against lessee only after demand. Unless
otherwise stipulated, such action by the lessor shall be commenced only after
demand to pay or comply with the conditions of the lease and to vacate is made
upon the lessee, or by serving written notice of such demand upon the person found
on the premises, or by posting such notice on the premises if no person be found
thereon, and the lessee fails to comply therewith after fifteen (15) days in the case
of land or five (5) days in the case of buildings. (2a)
Indeed, while the complaint is captioned "Collection of Sum of Money with
Damages," the allegations therein show that respondent's action is for ejectment.
All ejectment cases are within the jurisdiction of the MTC. 2
Next, petitioner maintains that the Order of the RTC denying her Motion to Dismiss
violates the Constitution as it does not state the facts and the law on which it is
based. The challenged Order is reproduced as follows:
ORDER
This Court finds that the grounds stated in the Motion to Dismiss to be without
merit, hence, the same is denied.
SO ORDERED.
We have admonished the trial courts not to issue a minute order or resolution like
the one specified above. A trial court should state in its order the reasons for the
dismissal of the complaint so that when the order is appealed, the appellate court
can readily determine from a casual perusal thereof whether there is a prima facie
justification for the dismissal. 3
Under Section 3, Rule 16 of the 1997 Rules of Civil Procedure, as amended, we
require that resolutions disposing of a motion to dismiss shall state clearly and
distinctly the reasons therefor, thus:
Sec. 3.
Resolution of motion. After the hearing, the court may dismiss the
action or claim, deny the motion, or order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground
relied upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor.

This requirement proscribes the common practice of perfunctorily dismissing a

motion to dismiss for "lack of merit." Such cavalier dispositions can often pose
difficulty and misunderstanding on the part of the aggrieved party in taking
recourse therefrom and likewise on the higher court called upon to resolve the
same, usually on certiorari. 4
While an order denying a motion to dismiss is interlocutory and non-appealable,
however, if the denial is without or in excess of jurisdiction, certiorari and
prohibition are proper remedies from such order of denial. 5 In Time, Inc. v. Reyes, 6
this Court, speaking through Justice J.B. L. Reyes, held: The motion to dismiss was
predicated on the respondent court's lack of jurisdiction to entertain the action; and
the rulings of this Court are that writs of certiorari or prohibition, or both, may issue
in case of a denial or deferment of an action or on the basis of a motion to dismiss
for lack of jurisdiction. 7 Verily, the writ of certiorari is granted to keep an inferior
court within the bounds of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to lack or excess of jurisdiction. 8
Lastly, we cannot go along with respondent's contention that petitioner should have
first filed a motion for reconsideration before resorting to the remedy of certiorari.
While the rule is that before certiorari may be availed of, petitioner must first file a
motion for reconsideration with the lower court of the act or order complained of, 9
however, such rule is not without exception. We have, in several instances,
dispensed with the filing of a motion for reconsideration of a lower court's ruling,
such as: where the proceedings in which the error occurred is a patent nullity; 10
where the question is purely of law; when public interest is involved; where judicial
intervention is urgent or its application may cause great and irreparable damage;
11 and where the court a quo has no jurisdiction, 12 as in this case. SHECcD
WHEREFORE, the petition is GRANTED. The Order dated June 19, 2002 issued by the
RTC, Branch 61, Baguio City, in Civil Case No. 5238-R, is ANNULLED and SET ASIDE.
SO ORDERED.

[G.R. No. 149640. October 19, 2007.]

SAN MIGUEL CORPORATION, ANDRES SORIANO III, FRANCISCO C. EIZMENDI, JR., and
FAUSTINO F. GALANG, petitioners, vs. NUMERIANO LAYOC, JR., CARLOS APONESTO,
PAULINO BALDUGO, QUEZON BARIT, BONIFACIO BOTOR, HERMINIO CALINA, DANILO
CAMINGAL, JUAN DE MESA, REYNOLD DESEMBRANA, BERNARDITO DEUS, EDUARDO
FILLARTA, MAXIMIANO FRANCISCO, MARIO MARILIM, DEMETRIO MATEO, FILOMENO
MENDOZA, CONRADO NIEVA, FRANCISCO PALINES, FELIPE POLINTAN, MALCOLM
SATORRE, and ALEJANDRO TORRES, respondents.
DECISION
CARPIO, J p:
The Case
This is a petition for review 1 of the decision 2 promulgated on 29 August 2001 by
the Court of Appeals (appellate court) in CA-G.R. SP No. 55838. The appellate
court's decision set aside the decision 3 in NLRC NCR Case No. 00-12-08656-94
dated 23 March 1998, the decision 4 dated 27 November 1998, and the resolution 5
dated 31 August 1999 in NLRC CA No. 015710-98. The appellate court ordered San
Miguel Corporation (SMC), Andres Soriano III, Francisco C. Eizmendi, Jr., and Faustino
F. Galang (collectively, petitioners) to pay respondent Numeriano Layoc, Jr. (Layoc)
P125,000, representing overtime pay for services that he could have rendered from
January 1993 up to his retirement on 30 June 1997, and respondents Carlos
Aponesto, Paulino Baldugo, Quezon Barit, Bonifacio Botor, Herminio Calina, Danilo
Camingal, Juan de Mesa, Reynold Desembrana, Bernardito Deus, Eduardo Fillarta,
Maximiano Francisco, Mario Marilim, Demetrio Mateo, Filomeno Mendoza, Conrado
Nieva, Francisco Palines, Felipe Polintan, Malcolm Satorre, and Alejandro Torres
(collectively, respondents) P10,000 each as nominal damages. AHDaET
The Facts
The appellate court stated the facts as follows:
[Respondents] were among the "Supervisory Security Guards" of the Beer Division
of the San Miguel Corporation (p. 10, Rollo), a domestic corporation duly organized
and existing under and by virtue of the laws of the Republic of the Philippines with
offices at No. 40 San Miguel Avenue, Mandaluyong City. They started working as
guards with the petitioner San Miguel Corporation assigned to the Beer Division on
different dates until such time that they were promoted as supervising security
guards. The dates of their employment commenced as follows (Ibid., pp. 87-89):
As guards
a.

As supervising guards

Aponesto, Carlos

June 1970

February 1983

b.

Baldugo, Paulino

November 1978

May 1984

c.

Barit, Quezon

January 1969

May 1984

d.

Botor, Bonifacio

April 1980

e.

De Mesa, Juan

November 1977

May 1984

f.

Calina, Herminio

February 1976

May 1984

g.

Desembrana, Reynold

h.

Camingal, Danilo

December 1975

i.

Deus, Bernardito

July 1976

j.

Fillarta, Eduardo

January 1979

k.

Francisco, Maximiano

l.

Layoc, Numeriano June 1974

m.

Marilim, Mario

December 1977

June 1984

n.

Mateo, Demetrio

November 1976

March 1984

o.

Mendoza, Filomena March 1980 May 1983

p.

Palines, Francisco

May 1979

q.

Nieva, Conrado

January 1977

r.

Polintan, Felipe

June 1972

s.

Satorre, Malcolm

September 1970

May 1984

t.

Torres, Alejandro

January 1974

May 1984

January 1987

November 1976

April 1983

December 1985

May 1983
May 1989

October 1977

May 1984

January 1982

May 1985
June 1987

May 1983

As supervising security guards, the private respondents were performing the

following functions (Ibid., pp. 202-204):
1.

Supervises the facility security force under his shift;

2.
Inspects all company-owned firearms and ammunition and promptly submits
report as regards to discrepancy and/or state of doubtful/suspected serviceability;
3.
Receives and transfers from outgoing to incoming supervising security guard
all company property, all official papers, documents and/or cases investigated
including pieces of evidence properly labeled and secured;

4.
Physically checks and accounts for all company property within his area of
responsibility immediately upon assumption of duty;
5.
Updates compilation of local security rules, policies and regulations and
ensures that all his guards are posted thereon;
6.
Conducts regular and irregular inspection to determine his guards'
compliance with all guard force instructions, corporate security standards and
procedures; CEcaTH
7.
Passes on all official communications, requests, applications of leaves, etc.
and makes his comments and/or recommendations to his superior;
8.
Systematically and continuously screens the good performers from the
marginal or poor among his guards; concentrates on teaching and guiding the
latter; determines further what training and/or skills that should be learned and
submits appropriate report to superior;
9.
Corrects, on the spot, all deficiencies noted and institutes corrective
measures within his authority; recommends commendations for those guards who
deserves [sic] recognition for good work;
10.
Conducts an investigation of all cases coming to his attention and promptly
submits appropriate report to his superiors;
11.
Evaluates individual guard performance and renders efficiency reports in
accordance with standing instructions;
12.
Ensures that all his guards are courteous, respectful and accommodating at
all times;
13.
Ensures that even those who have been found violating the facility's policies,
rules and procedures are professionally treated with courtesy and understanding to
preclude embarrassment and humiliation; aEcTDI
14.
Ensures the maintenance of [a] logbook of all incidents, communications,
personnel and materials' movements;
15.

Responds to all calls for assistance;

16.
Conducts continuing physical checks of the facility's critical and vulnerable
areas;
17.

Obtains critical security information and passes it on to his superiors;

18.

Assesses the need for extra guard service requirements;

19.
Continuously monitors the personal needs and problems of his men to his
superiors;

20.

Acts as Detachment Commander in the latter's absence;

21.
Responds to emergencies and activates the Corporate Security Alerting
System as appropriate; and
22.
Performs such other duties as may be required by his Detachment
Commander/Plant Security Officer.
From the commencement of their employment, the private respondents were
required to punch their time cards for purposes of determining the time they would
come in and out of the company's work place. Corollary [sic], the private
respondents were availing the benefits for overtime, holiday and night premium
duty through time card punching (Rollo, p. 89). However, in the early 1990's, the
San Miguel Corporation embarked on a Decentralization Program aimed at enabling
the separate divisions of the San Miguel Corporation to pursue a more efficient and
effective management of their respective operations (Ibid., p. 99). HSIDTE
As a result of the Decentralization Program, the Beer Division of the San Miguel
Corporation implemented on January 1, 1993 a "no time card policy" whereby the
Supervisory I and II composing of the supervising security guards of the Beer
Division were no longer required to punch their time cards (Ibid., p. 100).
Consequently, on January 16, 1993, without prior consultation with the private
respondents, the time cards were ordered confiscated and the latter were no longer
allowed to render overtime work (Ibid., p. 117).
However, in lieu of the overtime pay and the premium pay, the personnel of the
Beer Division of the petitioner San Miguel Corporation affected by the "No Time
Card Policy" were given a 10% across-the-board increase on their basic pay while
the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were
given night shift allowance ranging from P2,000.00 to P2,500.00 a month (Rollo, p.
12). 6
On 1 December 1994, respondents filed a complaint for unfair labor practice,
violation of Article 100 of the Labor Code of the Philippines, and violation of the
equal protection clause and due process of law in relation to paragraphs 6 and 8 of
Article 32 of the New Civil Code of the Philippines. Respondents prayed for actual
damages for two years (1993-1994), moral damages, exemplary damages, and
overtime, holiday, and night premium pay.
In their position paper dated 28 February 1995, respondents stated that the Beer
Division of SMC maliciously and fraudulently refused payment of their overtime,
holiday, and night premium pay from 1 to 15 January 1993 because of the "no time
card policy." Moreover, petitioners had no written authority to stop respondents
from punching their time cards because the alleged memorandum authorizing such
stoppage did not include supervisory security guards. Thus, the respondents

suffered a diminution of benefits, making petitioners liable for non-payment of

overtime, holiday, and night premium pay. cCSEaA
In their position paper dated 23 February 1995, petitioners maintained that
respondents were supervisory security guards who were exempt from the provisions
of the Labor Code on hours of work, weekly rest periods, and rest days. The "no
time card policy" did not just prevent respondents from punching their time cards,
but it also granted respondents an across-the-board increase of 10% of basic salary
and either a P2,000 or P2,500 night shift allowance on top of their yearly merit
increase. Petitioners further asserted that the "no time card policy" was a valid
exercise of management prerogative and that all supervisors in the Beer Division
were covered by the "no time card policy," which classification was distinct and
separate from the other divisions within SMC.
Respondents filed their reply dated 15 March 1995 to petitioners' position paper.
Petitioners, on the other hand, filed their rejoinder dated 27 March 1995 to
respondents' reply. Respondents filed a request for admission dated 2 May 1995 to
which petitioners filed their reply dated 15 May 1995.
The Ruling of the Labor Arbiter
In his decision dated 23 March 1998, Labor Arbiter Potenciano S. Canizares, Jr.
(Arbiter Canizares) stated that the principal issue is whether petitioners can, in their
"no time card policy," remove the benefits that respondents have obtained through
overtime services. Arbiter Canizares then stated that the facts and the evidence are
in respondents' favor. Arbiter Canizares ruled that rendering services beyond the
regular eight-hour work day has become company practice. Moreover, petitioners
failed to show good faith in the exercise of their management prerogative in altering
company practice because petitioners changed the terms and conditions of
employment from "hours of work rendered" to "result" only with respect to
respondents and not with other supervisors in other departments. The dispositive
portion of Arbiter Canizares' decision reads: SECATH
WHEREFORE, the [petitioners] are hereby ordered to restore to the [respondents]
their right to earn for overtime services rendered as enjoyed by the other
employees.
The [petitioners] are further ordered to indemnify the [respondents] for lost
earnings after their terms and conditions of employment have been unilaterally
altered by the [petitioners], namely in the amount of P500,000.00 each as
computed by the [respondents], and the [petitioners] failed to refute.
[Petitioners] are furthermore ordered to pay the [respondents] P100,000.00 each as
moral and exemplary damages.
All other claims are hereby dismissed for lack of evidence.

SO ORDERED. 7
On 26 May 1998, petitioners filed their notice of appeal and memorandum of appeal
with the National Labor Relations Commission (NLRC).
The Ruling of the NLRC
On 27 November 1998, the NLRC affirmed with modification the ruling of Arbiter
Canizares that respondents suffered a diminution of benefits as a result of the
adoption of the "no time card policy." The NLRC cited a well-established rule that
employees have a vested right over existing benefits voluntarily granted to them by
their employer, who may not unilaterally withdraw, eliminate, or diminish such
benefits. In the present case, there was a company practice which allowed the
enjoyment of substantial additional remuneration. Furthermore, there is no rule
excluding managerial employees from the coverage of the principle of nondiminution of benefits. SIaHTD
The NLRC ruled thus:
WHEREFORE, the decision appealed from is hereby AFFIRMED, with slight
modification deleting the award of moral and exemplary damages.
SO ORDERED. 8
Both petitioners and respondents filed their respective motions for reconsideration.
Petitioners stated that the NLRC erred in sustaining the award of overtime pay
despite its finding that respondents were managerial personnel. Furthermore, there
was no evidence that respondents rendered overtime work and respondents
admitted that they never or seldom rendered overtime work. The award of overtime
pay was thus contrary to the principle of no work, no pay. For their part,
respondents stated that the NLRC erred in deleting the award of moral and
exemplary damages. The implementation of the "no time card policy," the
discrimination against them vis-a-vis the supervising security officers in other
divisions of SMC, and the execution of quitclaims and releases during the pendency
of the case were all attended with bad faith, thus warranting the award of moral and
exemplary damages.
On 31 August 1999, the NLRC further modified Arbiter Canizares' decision. The NLRC
ruled thus:
WHEREFORE, the November 27, 1998 Decision of this Commission is hereby
REITERATED with a slight modification to the effect that the computation of the
[respondents]' withdrawn benefits at P125,000.00 yearly from 1993 should
terminate in 1996 or the date of each complainant's retirement, whichever came
first. aTDcAH
SO ORDERED. 9

Petitioners then filed their petition for certiorari before the appellate court on 16
November 1999.
The Ruling of the Appellate Court
On 29 August 2001, the appellate court set aside the ruling of the NLRC and entered
a new judgment in favor of respondents. The appellate court stated that there is no
legal issue that respondents, being the supervisory security guards of the Beer
Division of SMC, were performing duties and responsibilities being performed by
those who were considered as officers or members of the managerial staff as
defined under Section 2, paragraph (c), Rule 1, Book III of the Implementing Rules of
the Labor Code. 10 The appellate court ruled that while the implementation of the
"no time card policy" was a valid exercise of management prerogative, the
rendering of overtime work by respondents was a long-accepted practice in SMC
which could not be peremptorily withdrawn without running afoul with the principles
of justice and equity. The appellate court affirmed the deletion of the award of
actual, moral, and exemplary damages. With the exception of Layoc, respondents
did not present proof of previous earnings from overtime work and were not
awarded with actual damages. Moreover, the appellate court did not find that the
implementation of the "no time card policy" caused any physical suffering, moral
shock, social humiliation, besmirched reputation, and similar injury to respondents
to justify the award of moral and exemplary damages. Nonetheless, in the absence
of competent proof on the specific amounts of actual damages suffered by
respondents, the appellate court awarded them nominal damages. SDEHCc
The dispositive portion of the appellate court's decision reads thus:
WHEREFORE, foregoing considered, the instant petition is hereby GIVEN DUE
COURSE and is GRANTED. The Decision issued in NLRC NCR CASE No. 00-12-0865694 dated March 23, 1998, the Decision issued in NLRC CA No. 015710-98 dated
November 27, 1998 and the Resolution dated August 31, 1999, are hereby
ANNULLED and SET ASIDE, and a new judgment is hereby entered ordering the
petitioners to pay as follows:
1)
the private respondent Numeriano Layoc, Jr., the amount of One Hundred
Twenty-Five Thousand (P125,000.00) Pesos per year, representing overtime pay for
overtime services that he could have rendered computed from the date of the
implementation of the "no time card policy" or on January 1993 and up to the date
of his retirement on June 30, 1997; and
2)
the other private respondents, the amount of Ten Thousand (P10,000.00)
Pesos each as nominal damages.
SO ORDERED. 11

Dissatisfied with the appellate court's ruling, petitioners filed a petition before this
Court.
The Issues
Petitioners ask whether the circumstances in the present case constitute an
exception to the rule that supervisory employees are not entitled to overtime pay.
CTSDAI
Respondents, on the other hand, question petitioners' procedure. Respondents
submit that the Court should dismiss the present petition because petitioners did
not file a motion for reconsideration before the appellate court.
The Ruling of the Court
The petition has merit.
Requirement of Prior Filing of a
Motion for Reconsideration
It appears that respondents confuse certiorari as a mode of appeal under Rule 45 of
the 1997 Rules of Civil Procedure with certiorari as an original special civil action
under Rule 65 of the same Rules. In Paa v. Court of Appeals, 12 we stated that:
There are, of course, settled distinctions between a petition for review as a mode of
appeal and a special civil action for certiorari, thus:
a.
In appeal by certiorari, the petition is based on questions of law which the
appellant desires the appellate court to resolve. In certiorari as an original action,
the petition raises the issue as to whether the lower court acted without or in excess
of jurisdiction or with grave abuse of discretion.
b.
Certiorari, as a mode of appeal, involves the review of the judgment, award
or final order on the merits. The original action for certiorari may be directed
against an interlocutory order of the court prior to appeal from the judgment or
where there is no appeal or any other plain, speedy or adequate remedy. SCIacA
c.
Appeal by certiorari must be made within the reglementary period for appeal.
An original action for certiorari may be filed not later than sixty (60) days from
notice of the judgment, order or resolution sought to be assailed.
d.
Appeal by certiorari stays the judgment, award or order appealed from. An
original action for certiorari, unless a writ of preliminary injunction or a temporary
restraining order shall have been issued, does not stay the challenged proceeding.
e.
In appeal by certiorari, the petitioner and respondent are the original parties
to the action, and the lower court or quasi-judicial agency is not to be impleaded. In

certiorari as an original action, the parties are the aggrieved party against the lower
court or quasi-judicial agency and the prevailing parties, who thereby respectively
become the petitioner and respondents.
f.
In certiorari for purposes of appeal, the prior filing of a motion for
reconsideration is not required (Sec. 1, Rule 45); while in certiorari as an original
action, a motion for reconsideration is a condition precedent (Villa-Rey Transit vs.
Bello, L-18957, April 23, 1963), subject to certain exceptions.
g.
In appeal by certiorari, the appellate court is in the exercise of its appellate
jurisdiction and power of review for, while in certiorari as an original action, the
higher court exercises original jurisdiction under its power of control and supervision
over the proceedings of lower courts. (Emphasis added) cdrep
Respondents' contention that the present petition should be denied for failure to file
a motion for reconsideration before the appellate court is, therefore, incorrect.
Overtime Work and Overtime Pay
for Supervisory Employees
Both petitioners and respondents agree that respondents are supervising security
guards and, thus, managerial employees. The dispute lies on whether respondents
are entitled to render overtime work and receive overtime pay despite the
institution of the "no time card policy" because (1) SMC previously allowed them to
render overtime work and paid them accordingly, and (2) supervising security
guards in other SMC divisions are allowed to render overtime work and receive the
corresponding overtime pay.
Article 82 13 of the Labor Code states that the provisions of the Labor Code on
working conditions and rest periods shall not apply to managerial employees. The
other provisions in the Title include normal hours of work (Article 83), hours worked
(Article 84), meal periods (Article 85), night shift differential (Article 86), overtime
work (Article 87), undertime not offset by overtime (Article 88), emergency
overtime work (Article 89), and computation of additional compensation (Article 90).
It is thus clear that, generally, managerial employees such as respondents are not
entitled to overtime pay for services rendered in excess of eight hours a day.
Respondents failed to show that the circumstances of the present case constitute an
exception to this general rule. DASEac
First, respondents assert that Article 100 14 of the Labor Code prohibits the
elimination or diminution of benefits. However, contrary to the nature of benefits,
petitioners did not freely give the payment for overtime work to respondents.
Petitioners paid respondents overtime pay as compensation for services rendered in
addition to the regular work hours. Respondents rendered overtime work only when
their services were needed after their regular working hours and only upon the

instructions of their superiors. Respondents even differ as to the amount of

overtime pay received on account of the difference in the additional hours of
services rendered. To illustrate, Layoc's records 15 show the varying number of
hours of overtime work he rendered and the varying amounts of overtime pay he
received from the years 1978 to 1981 and from 1983 to 1994:
Number of Hours

Overtime Pay

Worked Overtime

Received (in Pesos)

1974 Appointment

No record

No record

as guard
1975 No record

No record

1976 No record

No record

1977 No record

No record

1978 1,424.00

5,214.88

1979 1,312.56

5,189.30

1980 1,357.50

5,155.71

1981 474.00

1,781.81

1982 Appointment as No record

supervising security guard
1983 947.50

6,304.33

1984 889.00

8,937.00

1985 898.00

12,337.47

1986 1,086.60

18,085.34

1987 1,039.50

32,109.85

1988 633.00

29,126.10

1989 723.50

39,594.55

1990 376.50

21,873.33

1991 149.50

12,694.97

1992 144.00

17,403.38

No record

1993 0.50

47.69

1994 0.00

0.00

1995 0.00

0.00

Aside from their allegations, respondents were not able to present anything to prove
that petitioners were obliged to permit respondents to render overtime work and
give them the corresponding overtime pay. Even if petitioners did not institute a "no
time card policy," respondents could not demand overtime pay from petitioners if
respondents did not render overtime work. The requirement of rendering additional
service differentiates overtime pay from benefits such as thirteenth month pay or
yearly merit increase. These benefits do not require any additional service from
their beneficiaries. Thus, overtime pay does not fall within the definition of benefits
under Article 100 of the Labor Code. 16
Second, respondents allege that petitioners discriminated against them vis-a-vis
supervising security guards in other SMC divisions. Respondents state that they
should be treated in the same manner as supervising security guards in the
Packaging Products Division, who are allowed to render overtime work and thus
receive overtime pay. Petitioners counter by saying that the "no time card policy"
was applied to all supervisory personnel in the Beer Division. Petitioners further
assert that there would be discrimination if respondents were treated differently
from other supervising security guards within the Beer Division or if other
supervisors in the Beer Division are allowed to render overtime work and receive
overtime pay. The Beer Division merely exercised its management prerogative of
treating its supervisors differently from its rank-and-file employees, both as to
responsibilities and compensation, as they are not similarly situated. DHIaTS
We agree with petitioners' position that given the discretion granted to the various
divisions of SMC in the management and operation of their respective businesses
and in the formulation and implementation of policies affecting their operations and
their personnel, the "no time card policy" affecting all of the supervisory employees
of the Beer Division is a valid exercise of management prerogative. The "no time
card policy" undoubtedly caused pecuniary loss to respondents. 17 However,
petitioners granted to respondents and other supervisory employees a 10% acrossthe-board increase in pay and night shift allowance, in addition to their yearly merit
increase in basic salary, to cushion the impact of the loss. So long as a company's
management prerogatives are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights
of the employees under special laws or under valid agreements, this Court will
uphold them. 18
WHEREFORE, the petition is GRANTED. The Decision dated 29 August 2001 of the
Court of Appeals in CA-G.R. SP No. 55838 ordering petitioners San Miguel
Corporation, Andres Soriano III, Francisco C. Eizmendi, Jr., and Faustino F. Galang to

pay Numeriano Layoc, Jr. overtime pay and the other respondents nominal damages
is SET ASIDE. The complaint of respondents is DISMISSED.
SO ORDERED.

[G.R. No. 73155. July 11, 1986.]

PATRICIO TAN, FELIX FERRER, JUAN M. HAGAD, SERGIO HILADO, VIRGILIO GASTON,
CONCHITA MINAYA, TERESITA ESTACIO, DESIDERIO DEFERIA, ROMEO GAMBOA,
ALBERTO LACSON, FE HOFILENA, EMILY JISON, NIEVES LOPEZ AND CECILIA
MAGSAYSAY, petitioners, vs. THE COMMISSION ON ELECTIONS and THE PROVINCIAL
TREASURER OF NEGROS OCCIDENTAL, respondents.
Gamboa & Hofilea Law Office for petitioners.
DECISION
ALAMPAY, J p:
Prompted by the enactment of Batas Pambansa Blg. 885 An Act Creating a New
Province in the Island of Negros to be known as the Province of Negros del Norte,
which took effect on December 3, 1985, Petitioners herein, who are residents of the
Province of Negros Occidental, in the various cities and municipalities therein, on
December 23, 1985, filed with this Court a case for Prohibition for the purpose of
stopping respondents Commission on Elections from conducting the plebiscite
which, pursuant to and in implementation of the aforesaid law, was scheduled for
January 3, 1986. LLphil
Said law provides:
"SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of
Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.R. Magalona; and
Salvador Benedicto, all in the northern portion of the Island of Negros, are hereby
separated from the province to be known as the Province of Negros del Norte.
"SEC. 2.
The boundaries of the new province shall be the southern limits of the
City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on
the south and the territorial limits of the northern portion to the Island of Negros on
the west, north and east, comprising a territory of 4,019.95 square kilometers more
or less.
"SEC. 3.

The seat of government of the new province shall be the City of Cadiz.

"SEC. 4.
A plebiscite shall be conducted in the proposed new province which are
the areas affected within a period of one hundred and twenty days from the
approval of this Act. After the ratification of the creation of the Province of Negros
del Norte by a majority of the votes cast in such plebiscite, the President of the
Philippines shall appoint the first officials of the province.
"SEC. 5.
The Commission on Elections shall conduct and supervise the
plebiscite herein provided, the expenses for which shall be charged to local funds.
"SEC. 6.

This Act shall take effect upon its approval." (Rollo, pp. 23-24)

Petitioners contend that Batas Pambansa Blg. 885 is unconstitutional and it is not in
complete accord with the Local Government Code as in Article XI, Section 3 of our
Constitution, it is expressly mandated that
"Sec. 3.
No province, city, municipality or barrio may be created, divided,
merged, abolished, or its boundary substantially altered, except in accordance with
the criteria established in the local government code, and subject to the approval by
a majority of the votes in a plebiscite in the unit or units affected."
Section 197 of the Local Government Code enumerates the conditions which must
exist to provide the legal basis for the creation of a provincial unit and these
requisites are:
"SEC. 197. Requisites for Creation. A province may be created if it has a
territory of at least three thousand five hundred square kilometers, a population of
at least five hundred thousand persons, an average estimated annual income, as
certified by the Ministry of Finance, of not less than ten million pesos for the last
three consecutive years, and its creation shall not reduce the population and
income of the mother province or provinces at the time of said creation to less than
the minimum requirements under this section. The territory need not be contiguous
if it comprises two or more islands.
'The average estimated annual income shall include the income alloted for both the
general and infrastructural funds, exclusive of trust funds, transfers and
nonrecurring income. (Rollo, p. 6)
Due to the constraints brought about by the supervening Christmas holidays during
which the Court was in recess and unable to timely consider the petition, a
supplemental pleading was filed by petitioners on January 4, 1986, averring therein
that the plebiscite sought to be restrained by them was held on January 3, 1986 as
scheduled but that there are still serious issues raised in the instant case affecting
the legality, constitutionality and validity of such exercise which should properly be
passed upon and resolved by this Court.
The plebiscite was confined only to the inhabitants of the territory of Negros del
Norte, namely: the Cities of Silay, Cadiz, and San Carlos, and the municipalities of
Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.B. Magalona and Don
Salvador Benedicto. Because of the exclusions of the voters from the rest of the
province of Negros Occidental, petitioners found need to change the prayer of their
petition "to the end that the constitutional issues which they have raised in the
action will be ventilated and given final resolution." At the same time, they asked
that the effects of the plebiscite which they sought to stop be suspended until the
Supreme Court shall have rendered its decision on the very fundamental and farreaching questions that petitioners have brought out.

Acknowledging in their supplemental petition that supervening events rendered

moot the prayer in their initial petition that the plebiscite scheduled for January 3,
1986, be enjoined, petitioners plead, nevertheless, that
". . . a writ of Prohibition be issued directed to Respondent Commission on Elections
to desist from issuing official proclamation of the results of the plebiscite held on
January 3, 1986.
"Finding that the exclusion and non-participation of the voters of the Province of
Negros Occidental other than those living within the territory of the new province of
Negros del Norte to be not in accordance with the Constitution, that a writ of
Mandamus be issued, directed to the respondent Commission on Elections, to
schedule the holding of another plebiscite at which all the qualified voters of the
entire Province of Negros Occidental as now existing shall participate, at the same
time making pronouncement that the plebiscite held on January 3, 1986 has no
legal effect, being a patent legal nullity;
"And that a similar writ of Prohibition be issued, directed to the respondent
Provincial Treasurer, to desist from ordering the release of any local funds to answer
for expenses incurred in the holding of such plebiscite until ordered by the Court."
(Rollo, pp. 19-10).
Petitioners further prayed that the respondent COMELEC hold in abeyance the
issuance of any official proclamation of the results of the aforestated plebiscite.
dctai
During the pendency of this case, a motion that he be allowed to appear as amicus
curiae in this case (dated December 27, 1985 and filed with the Court on January 2,
1986) was submitted by former Senator Ambrosio Padilla. Said motion was granted
in Our resolution of January 2, 1986.
Acting on the petition, as well as on the supplemental petition for prohibition with
preliminary injunction with prayer for restraining order, the Court, on January 7,
1986 resolved, without giving due course to the same, to require respondents to
comment, not to file a motion to dismiss. Complying with said resolution, public
respondents, represented by the Office of the Solicitor General, on January 14,
1986, filed their Comment, arguing therein that the challenged statute Batas
Pambansa 885, should be accorded the presumption of legality. They submit that
the said law is not void on its face and that the petition does not show a clear,
categorical and undeniable demonstration of the supposed infringement of the
Constitution. Respondents state that the powers of the Batasang Pambansa to enact
the assailed law is beyond question. They claim that Batas Pambansa Blg. 885 does
not infringe the Constitution because the requisites of the Local Government Code
have been complied with. Furthermore, they submit that this case has now become
moot and academic with the proclamation of the new Province of Negros del Norte.

Respondents argue that the remaining cities and municipalities of the Province of
Negros Occidental not included in the area of the new Province of Negros del Norte,
do not fall within the meaning and scope of the term "unit or units affected", as
referred to in Section 3 of Art. XI of our Constitution. On this reasoning, respondents
maintain that Batas Pambansa Blg. 885 does not violate the Constitution, invoking
and citing the case of Governor Zosimo Paredes versus the Honorable Executive
Secretary to the President, et al. (G.R. No. 55628, March 2, 1984 (128 SCRA 61),
particularly the pronouncements therein, hereunder quoted:
"1.
Admittedly, this is one of those cases where the discretion of the Court is
allowed considerable leeway. There is indeed an element of ambiguity in the use of
the expression 'unit or units affected'. It is plausible to assert as petitioners do that
when certain Barangays are separated from a parent municipality to form a new
one, all the voters therein are affected. It is much more persuasive, however, to
contend as respondents do that the acceptable construction is for those voters, who
are not from the barangays to be separated, should be excluded in the plebiscite.
"2.
For one thing, it is in accordance with the settled doctrine that between two
possible constructions, one avoiding a finding of unconstitutionality and the other
yielding such a result, the former is to be preferred. That which will save, not that
which will destroy, commends itself for acceptance. After all, the basic presumption
all these years is one of validity. . . .
"3.
. . . Adherence to such philosophy compels the conclusion that when there
are indications that the inhabitants of several barangays are inclined to separate
from a parent municipality they should be allowed to do so. What is more logical
than to ascertain their will in a plebiscite called for that purpose. It is they, and they
alone, who shall constitute the new unit. New responsibilities will be assumed. New
burdens will be imposed. A new municipal corporation will come into existence. Its
birth will be a matter of choice their choice. They should be left alone then to
decide for themselves. To allow other voters to participate will not yield a true
expression of their will. They may even frustrate it. That certainly will be so if they
vote against it for selfish reasons, and they constitute the majority. That is not to
abide by the fundamental principle of the Constitution to promote local autonomy,
the preference being for smaller units. To rule as this Tribunal does is to follow an
accepted principle of constitutional construction, that in ascertaining the meaning of
a particular provision that may give rise to doubts, the intent of the framers and of
the people may be gleaned from provisions in pari materia."
Respondents submit that said ruling in the aforecited case applies equally with force
in the case at bar. Respondents also maintain that the requisites under the Local
Government Code (P.D. 337) for the creation of the new province of Negros del
Norte have all been duly complied with. Respondents discredit petitioners'
allegations that the requisite area of 3,500 square kilometers as so prescribed in the
Local Government Code for a new province to be created has not been satisfied.

Petitioners insist that the area which would comprise the new province of Negros del
Norte, would only be about 2,856.56 square kilometers and which evidently would
be lesser than the minimum area prescribed by the governing statute. Respondents,
in this regard, point out and stress that Section 2 of Batas Pambansa Blg. 885
creating said new province plainly declares that the territorial boundaries of Negros
del Norte comprise an area of 4,019.95 square kilometers, more or less. LLjur
As a final argument, respondents insist that instant petition has been rendered
moot and academic considering that a plebiscite has been already conducted on
January 3, 1986; that as a result thereof, the corresponding certificate of canvass
indicated that out of 195,134 total votes cast in said plebiscite, 164,734 were in
favor of the creation of Negros del Norte and 30,400 were against it; and because
"the affirmative votes cast represented a majority of the total votes cast in said
plebiscite, the Chairman of the Board of Canvassers proclaimed the new province
which shall be known as "Negros del Norte". Thus, respondents stress the fact that
following the proclamation of Negros del Norte province, the appointments of the
officials of said province created were announced. On these considerations,
respondents urge that this case should be dismissed for having been rendered moot
and academic as the creation of the new province is now a " fait accompli."
In resolving this case, it will be useful to note and emphasize the facts which appear
to be agreed to by the parties herein or stand unchallenged.
Firstly, there is no disagreement that the Provincial Treasurer of the Province of
Negros Occidental has not disbursed, nor was required to disburse any public funds
in connection with the plebiscite held on January 3, 1986 as so disclosed in the
Comment to the Petition filed by the respondent Provincial Treasurer of Negros
Occidental dated January 20, 1986 (Rollo, pp. 36-37). Thus, the prayer of the
petitioners that said Provincial Treasurer be directed by this Court to desist from
ordering the release of any public funds on account of such plebiscite should not
longer deserve further consideration.
Secondly, in Parliamentary Bill No. 3644 which led to the enactment of Batas
Pambansa Blg. 885 and the creation of the new Province of Negros del Norte, it
expressly declared in Sec. 2 of the aforementioned Parliamentary Bill, the following:
"SEC. 2.
The boundaries of the new province shall be the southern limits of the
City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on
the South and the natural boundaries of the northern portion of the Island of Negros
on the West, North and East, containing an area of 285,656 hectares more or less."
(Emphasis supplied).
However, when said Parliamentary Bill No. 3644 was very quickly enacted into Batas
Pambansa Blg. 885, the boundaries of the new Province of Negros del Norte were
defined therein and its boundaries then stated to be as follows:

"SEC 1.
The Cities of Silay, Cadiz, and San Carlos and the municipalities of
Calatrava, Toboso, Escalante. Sagay, Manapla, Victorias, E.R. Magalona; and
Salvador Benedicto, all in the northern portion of the Island of Negros, are hereby
separated from the Province of Negros Occidental and constituted into a new
province to be known as the Province of Negros del Norte.
"SEC. 1.
The boundaries of the new province shall be the southern limits of the
City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on
the south and the territorial limits of the northern portion of the Island of Negros on
the West, North and East, comprising a territory of 4,019.95 square kilometers more
or less."
Equally accepted by the parties is the fact that under the certification issued by
Provincial Treasurer Julian L. Ramirez of the Province of Negros Occidental, dated
July 16, 1985, it was therein certified as follows:
"xxx

xxx

xxx

"This is to certify that the following cities and municipalities of Negros Occidental
have the land area as indicated hereunder based on the Special Report No. 3,
Philippines 1980, Population, Land Area and Density: 1970, 1975 and 1980 by the
National Census and Statistics Office, Manila.
Land Area
(Sq. Km.)
"1.

Silay City

214.8

2.

E.B. Magalona

3.

Victorias

133.9

4.

Manapla

112.9

5.

Cadiz City

516.5

6.

Sagay

389.6

7.

Escalante

124.0

8.

Toboso

123.4

9.

Calatrava

504.5

10.

San Carlos City

11.

Don Salvador Benedicto

113.3

451.3
(not available)

"This certification is issued upon the request of Dr. Patricio Y. Tan for whatever
purpose it may serve him.
"(SGD.) JULIAN L. RAMIREZ
Provincial Treasurer" (Exh. "C" of Petition, Rollo, p. 90).
Although in the above certification it is stated that the land area of the relatively
new municipality of Don Salvador Benedicto is not available, it is an uncontradicted
fact that the area comprising Don Salvador municipality, one of the component
units of the new province, was derived from the City of San Carlos and from the
Municipality of Calatrava, Negros Occidental, and added thereto was a portion of
about one-fourth the land area of the town of Murcia, Negros Occidental. It is
significant to note the uncontroverted submission of petitioners that the total land
area of the entire municipality of Murcia, Negros Occidental is only 322.9 square
kilometers (Exh. "D", Rollo, p. 91). One-fourth of this total land area of Murcia that
was added to the portions derived from the land area of Calatrava, Negros
Occidental and San Carlos City (Negros Occidental) would constitute, therefore, only
80.2 square kilometers. This area of 80.2 square kilometers if then added to 2,685.2
square kilometers, representing the total land area of the Cities of Silay, San Carlos
and Cadiz and the Municipalities of E.R. Magalona, Victorias, Manapla, Sagay,
Escalante, Taboso and Calatrava, will result in approximately an area of only 2,765.4
square kilometers using as basis the Special Report, Philippines 1980, Population,
Land Area and Density: 1970, 1975 and 1980 of the National Census and Statistics
Office, Manila (see Exhibit "C", Rollo, p. 90).
No controversion has been made by respondent with respect to the allegations of
petitioners that the original provision in the draft legislation, Parliamentary Bill No.
3644, reads:
"SEC. 4.
A plebiscite shall be conducted in the areas affected within a period of
one hundred and twenty days from the approval of this Act. After the ratification of
the creation of the Province of Negros del Norte by a majority of the votes cast in
such plebiscite, the President shall appoint the first officials of the new province."
cdtai
However, when Batas Pambansa Blg. 885 was enacted, there was a significant
change in the above provision. The statute, as modified, provides that the requisite
plebiscite "shall be conducted in the proposed new province which are the areas
affected."
It is this legislative determination limiting the plebiscite exclusively to the cities and
towns which would comprise the new province that is assailed by the petitioners as
violative of the provisions of our Constitution. Petitioners submit that Sec. 3, ART XI
thereof, contemplates a plebiscite that would be held in the unit or units affected by
the creation of the new province as a result of the consequent division of and

substantial alteration of the boundaries of the existing province. In this instance, the
voters in the remaining areas of the province of Negros Occidental should have
been allowed to participate in the questioned plebiscite.
Considering that the legality of the plebiscite itself is challenged for non-compliance
with constitutional requisites, the fact that such plebiscite had been held and a new
province proclaimed and its officials appointed, the case before Us cannot truly be
viewed as already moot and academic. Continuation of the existence of this newly
proclaimed province which petitioners strongly profess to have been illegally born,
deserves to be inquired into by this Tribunal so that, if indeed, illegality attaches to
its creation, the commission of that error should not provide the very excuse for
perpetuation of such wrong. For this Court to yield to the respondents' urging that,
as there has been fait accompli, then this Court should passively accept and accede
to the prevailing situation is an unacceptable suggestion. Dismissal of the instant
petition, as respondents so propose is a proposition fraught with mischief.
Respondents' submission will create a dangerous precedent. Should this Court
decline now to perform its duty of interpreting and indicating what the law is and
should be, this might tempt again those who strut about in the corridors of power to
recklessly and with ulterior motives, create, merge, divide and/or alter the
boundaries of political subdivisions, either brazenly or stealthily, confident that this
Court will abstain from entertaining future challenges to their acts if they manage to
bring about a fait accompli.
In the light of the facts and circumstances alluded to by petitioners as attending to
the unusually rapid creation of the instant province of Negros del Norte after a
swiftly scheduled plebiscite, this Tribunal has the duty to repudiate and discourage
the commission of acts which run counter to the mandate of our fundamental law,
done by whatever branch of our government. This Court gives notice that it will not
look with favor upon those who may be hereafter inclined to ram through all sorts of
legislative measures and then implement the same with indecent haste, even if
such acts would violate the Constitution and the prevailing statutes of our land. It is
illogical to ask that this Tribunal be blind and deaf to protests on the ground that
what is already done is done. To such untenable argument the reply would be that,
be this so, the Court, nevertheless, still has the duty and right to correct and rectify
the wrong brought to its attention.
On the merits of the case.
Aside from the simpler factual issue relative to the land area of the new province of
Negros del Norte, the more significant and pivotal issue in the present case revolves
around in the interpretation and application in the case at bar of Article XI, Section 3
of the Constitution, which being brief and for convenience, We again quote:
"SEC. 3.
No province, city, municipality or barrio may be created, divided,
merged, abolished, or its boundary substantially altered, except in accordance with

the criteria established in the local government code, and subject to the approval by
a majority of the votes in a plebiscite in the unit or units affected."
It can be plainly seen that the aforecited constitutional provision makes it
imperative that there be first obtained "the approval of a majority of votes in the
plebiscite in the unit or units affected" whenever a province is created, divided or
merged and there is substantial alteration of the boundaries. It is thus inescapable
to conclude that the boundaries of the existing province of Negros Occidental would
necessarily be substantially altered by the division of its existing boundaries in
order that there can be created the proposed new province of Negros del Norte.
Plain and simple logic will demonstrate than that two political units would be
affected. The first would be the parent province of Negros Occidental because its
boundaries would be substantially altered. The other affected entity would be
composed of those in the area subtracted from the mother province to constitute
the proposed province of Negros del Norte.
We find no way to reconcile the holding of a plebiscite that should conform to said
constitutional requirement but eliminates the participation of either of these two
component political units. No amount of rhetorical flourishes can justify exclusion of
the parent province in the plebiscite because of an alleged intent on the part of the
authors and implementors of the challenged statute to carry out what is claimed to
be a mandate to guarantee and promote autonomy of local government units. The
alleged good intentions cannot prevail and overrule the cardinal precept that what
our Constitution categorically directs to be done or imposes as a requirement must
first be observed, respected and complied with. No one should be allowed to pay
homage to a supposed fundamental policy intended to guarantee and promote
autonomy of local government units but at the same time transgress, ignore and
disregard what the Constitution commands in Article XI Section 3 thereof.
Respondents would be no different from one who hurries to pray at the temple but
then spits at the idol therein.
We find no merit in the submission of the respondents that the petition should be
dismissed because the motive and wisdom in enacting the law may not be
challenged by petitioners. The principal point raised by the petitioners is not the
wisdom and motive in enacting the law but the infringement of the Constitution
which is a proper subject of judicial inquiry.
Petitioners' discussion regarding the motives behind the enactment of B.P. Blg. 885
to say the least, are most enlightening and provoking but are factual issues the
Court cannot properly pass upon in this case. Mention by petitioners of the
unexplained changes or differences in the proposed Parliamentary Bill No. 3644 and
the enacted Batas Pambansa Blg. 885; the swift and surreptitious manner of
passage and approval of said law; the abrupt scheduling of the plebiscite; the
reference to news articles regarding the questionable conduct of the said plebiscite

held on January 3, 1986; all serve as interesting reading but are not the decisive
matters which should be reckoned in the resolution of this case.
What the Court considers the only significant submissions lending a little support to
respondents' case is their reliance on the rulings and pronouncements made by this
Court in the case of Governor Zosimo Paredes versus The Honorable Executive
Secretary to the President, et al., G.R. No. 55628, March 2, 1984 (128 SCRA 6). In
said case relating to a plebiscite held to ratify the creation of a new municipality
from existing barangays, this Court upheld the legality of the plebiscite which was
participated in exclusively by the people of the barangay that would constitute the
new municipality. cda
This Court is not unmindful of this solitary case alluded to by respondents. What is,
however, highly significant are the prefatory statements therein stating that said
case is "one of those cases where the discretion of the Court is allowed considerable
leeway" and that "there is indeed an element of ambiguity in the use of the
expression "unit or units affected." The ruling rendered in said case was based on a
claimed prerogative of the Court then to exercise its discretion on the matter. It did
not resolve the question of how the pertinent provision of the Constitution should be
correctly interpreted.
The ruling in the aforestated case of Paredes vs. The Honorable Executive Secretary,
et al. (supra) should not be taken as a doctrinal or compelling precedent when it is
acknowledged therein that "it is plausible to assert, as petitioners do, that when
certain Barangays are separated from a parent municipality to form a new one, all
the voters therein are affected."
It is relevant and most proper to mention that in the aforecited case of Paredes vs.
Executive Secretary, invoked by respondents, We find very lucidly expressed the
strong dissenting view of Justice Vicente Abad Santos, a distinguished member of
this Court, as he therein voiced his opinion, which We hereunder quote:
"2.
. . . when the Constitution speaks of "the unit or units affected" it means all of
the people of the municipality if the municipality is to be divided such as in the case
at bar or all of the people of two or more municipalities if there be a merger. I see
no ambiguity in the Constitutional provision."
This dissenting opinion of Justice Vicente Abad Santos is the forerunner of the ruling
which We now consider applicable to the case at bar. In the analogous case of
Emilio C. Lopez, Jr., versus the Honorable Commission on Elections, L-56022, May
31, 1985, 136 SCRA 633, this dissent was reiterated by Justice Abad Santos as he
therein assailed as suffering from a constitutional infirmity a referendum which did
not include all the people of Bulacan and Rizal, when such referendum was intended
to ascertain if the people of said provinces were willing to give up some of their
towns to Metropolitan Manila. His dissenting opinion served as a useful guideline in
the instant case.

Opportunity to re-examine the views formerly held in said cases is now afforded the
present Court. The reasons in the mentioned cases invoked by respondents herein
were formerly considered acceptable because of the views then taken that local
autonomy would be better promoted. However, even this consideration no longer
retains persuasive value.
The environmental facts in the case before Us readily disclose that the subject
matter under consideration is of greater magnitude with concomitant multifarious
complicated problems. In the earlier case, what was involved was a division of a
barangay which is the smallest political unit in the Local Government Code.
Understandably, few and lesser problems are involved. In the case at bar, creation
of a new province relates to the largest political unit contemplated in Section 3, Art.
XI of the Constitution. To form the new province of Negros del Norte no less than
three cities and eight municipalities will be subtracted from the parent province of
Negros Occidental. This will result in the removal of approximately 2,768.4 square
kilometers from the land area of an existing province whose boundaries will be
consequently substantially altered. It becomes easy to realize that the consequent
effects of the division of the parent province necessarily will affect all the people
living in the separate areas of Negros Occidental and the proposed province of
Negros del Norte. The economy of the parent province as well as that of the new
province will be inevitably affected, either for the better or for the worse. Whatever
be the case, either or both of these political groups will be affected and they are,
therefore, the unit or units referred to in Section 3 of Article XI of the Constitution
which must be included in the plebiscite contemplated therein.
It is a well accepted rule that "in ascertaining the meaning of a particular provision
that may give rise to doubts, the intent of the framers and of the people, may be
gleaned from the provisions in pari materia." Parliamentary Bill No. 3644 which
proposed the creation of the new province of Negros del Norte recites in Sec. 4
thereof that "the plebiscite shall be conducted in the areas affected within a period
of one hundred and twenty days from the approval of this Act." As this draft
legislation speaks of "areas," what was contemplated evidently are plurality of areas
to participate in the plebiscite. Logically, those to be included in such plebiscite
would be the people living in the area of the proposed new province and those living
in the parent province. This assumption will be consistent with the requirements set
forth in the Constitution.
We fail to find any legal basis for the unexplained change made when Parliamentary
Bill No. 3644 was enacted into Batas Pambansa Blg. 885 so that it is now provided
in said enabling law that the plebiscite "shall be conducted in the proposed new
province which are the areas affected." We are not disposed to agree that by mere
legislative fiat the unit or units affected referred in the fundamental law can be
diminished or restricted by the Batasang Pambansa to cities and municipalities
comprising the new province, thereby ignoring the evident reality that there are
other people necessarily affected.

In the mind of the Court, the change made by those responsible for the enactment
of Batas Pambansa Blg. 885 betrays their own misgivings. They must have
entertained apprehensions that by holding the plebiscite only in the areas of the
new proposed province, this tactic will be tainted with illegality. In anticipation of a
possible strong challenge to the legality of such a plebiscite there was, therefore,
deliberately added in the enacted statute a self-serving phrase that the new
province constitutes the area affected. Such additional statement serves no useful
purpose for the same is misleading, erroneous and far from truth. The remaining
portion of the parent province is as much an area affected. The substantial
alteration of the boundaries of the parent province, not to mention the other
adverse economic effects it might suffer, eloquently argue the points raised by the
petitioners. LLpr
Petitioners have averred without contradiction that after the creation of Negros del
Norte, the province of Negros Occidental would be deprived of the long established
Cities of Silay, Cadiz, and San Carlos, as well as the municipality of Victorias. No
controversion has been made regarding petitioners' assertion that the areas of the
Province of Negros Occidental will be diminished by about 285,656 hectares and it
will lose seven of the fifteen sugar mills which contribute to the economy of the
whole province. In the language of petitioners, "to create Negros del Norte, the
existing territory and political subdivision known as Negros Occidental has to be
partitioned and dismembered. What was involved was no 'birth' but "amputation."
We agree with the petitioners that in the case of Negros what was involved was a
division, a separation; and consequently, as Sec. 3 of Article XI of the Constitution
anticipates, a substantial alteration of boundary.
As contended by petitioners,
"Indeed, the terms 'created', 'divided', 'merged', 'abolished' as used in the
constitutional provision do not contemplate distinct situation isolated from the
mutually exclusive to each other. A province may be created where an existing
province is divided or two provinces merged. Such cases necessarily will involve
existing unit or units abolished and definitely the boundary being substantially
altered.
"It would thus be inaccurate to state that where an existing political unit is divided
or its boundary substantially altered, as the Constitution provides, only some and
not all the voters in the whole unit which suffers dismemberment or substantial
alteration of its boundary are affected. Rather, the contrary is true."
It is also Our considered view that even hypothetically assuming that the merits of
this case can depend on the mere discretion that this Court may exercise,
nevertheless, it is the petitioners' case that deserve to be favored.
It is now time for this Court to set aside the equivocations and the indecisive
pronouncements in the adverted case of Paredes vs. the Honorable Executive

Secretary, et al. (supra). For the reasons already here expressed, We now state that
the ruling in the two mentioned cases sanctioning the exclusion of the voters
belonging to an existing political unit from which the new political unit will be
derived, from participating in the plebiscite conducted for the purpose of
determining the formation of another new political unit, is hereby abandoned.
In their supplemental petition, dated January 4, 1986, it is prayed for by petitioners
that a writ of mandamus be issued, directing the respondent Commission on
Elections, to schedule the holding of another plebiscite at which all the qualified
voters of the entire province of Negros Occidental as now existing shall participate
and that this Court make a pronouncement that the plebiscite held on January 3,
1986 has no legal effect for being a patent nullity.
The Court is prepared to declare the said plebiscite held on January 3, 1986 as null
and void and violative of the provisions of Sec. 3, Article XI of the Constitution. The
Court is not, however, disposed to direct the conduct of a new plebiscite, because
We find no legal basis to do so. With constitutional infirmity attaching to the subject
Batas Pambansa Blg. 885 and also because the creation of the new province of
Negros del Norte is not in accordance with the criteria established in the Local
Government Code, the factual and legal basis for the creation of such new province
which should justify the holding of another plebiscite does not exist.
Whatever claim it has to validity and whatever recognition has been gained by the
new province of Negros del Norte because of the appointment of the officials
thereof, must now be erased. That Negros del Norte is but a legal fiction should be
announced. Its existence should be put to an end as quickly as possible, if only to
settle the complications currently attending to its creation. As has been manifested,
the parent province of Negros del Norte has been impleaded as the defendant in a
suit filed by the new Province of Negros del Norte, before the Regional Trial Court of
Negros (del Norte), docketed as Civil Case No. 169-C, for the immediate allocation,
distribution and transfer of funds by the parent province to the new province, in an
amount claimed to be at least P10,000,000.00.
The final nail that puts to rest whatever pretension there is to the legality of the
province of Negros del Norte is the significant fact that this created province does
not even satisfy the area requirement prescribed in Section 197 of the Local
Government Code, as earlier discussed. prLL
It is of course claimed by the respondents in their Comment to the exhibits
submitted by the petitioners (Exhs. C and D, Rollo, pp. 19 and 91), that the new
province has a territory of 4,019.95 square kilometers, more or less. This assertion
is made to negate the proofs submitted, disclosing that the land area of the new
province cannot be more than 3,500 square kilometers because its land area would,
at most, be only about 2,856 square kilometers, taking into account government
statistics relative to the total area of the cities and municipalities constituting

Negros del Norte. Respondents insist that when Section 197 of the Local
Government Code speaks of the territory of the province to be created and requires
that such territory be at least 3,500 square kilometers, what is contemplated is not
only the land area but also the land and water over which the said province has
jurisdiction and control. It is even the submission of the respondents that in this
regard the marginal sea within the three mile limit should be considered in
determining the extent of the territory of the new province. Such an interpretation is
strained, incorrect, and fallacious.
The last sentence of the first paragraph of Section 197 is most revealing. As so
stated therein the "territory need not be contiguous if it comprises two or more
islands." The use of the word territory in this particular provision of the Local
Government Code and in the very last sentence thereof, clearly, reflects that
"territory" as therein used, has reference only to the mass of land area and excludes
the waters over which the political unit exercises control.
Said sentence states that the "territory need not be contiguous." Contiguous means
(a) in physical contact; (b) touching along all or most of one side; (c) near, text, or
adjacent (Webster's New World Dictionary, 1972 Ed., p. 307). "Contiguous", when
employed as an adjective, as in the above sentence, is only used when it describes
physical contact, or a touching of sides of two solid masses of matter. The meaning
of particular terms in a statute may be ascertained by reference to words associated
with or related to them in the statute (Animal Rescue League vs. Assessors, 138
A.L.R., p. 110). Therefore, in the context of the sentence above, what need not be
"contiguous" is the "territory" the physical mass of land area. There would arise
no need for the legislators to use the word contiguous if they had intended that the
term "territory" embrace not only land area but also territorial waters, It can be
safely concluded that the word territory in the first paragraph of Section 197 is
meant to be synonymous with "land area" only. The words and phrases used in a
statute should be given the meaning intended by the legislature (82 C.J.S., p. 636).
The sense in which the words are used furnished the rule of construction (In re
Winton Lumber Co., 63 p. 2d., p. 664).
The distinction between "territory" and "land area" which respondents make is an
artificial or strained construction of the disputed provision whereby the words of the
statute are arrested from their plain and obvious meaning and made to bear an
entirely different meaning to justify an absurd or unjust result. The plain meaning in
the language in a statute is the safest guide to follow in construing the statute. A
construction based on a forced or artificial meaning of its words and out of harmony
of the statutory scheme is not to be favored (Helvering vs. Hutchings, 85 L. Ed., p.
909).
It would be rather preposterous to maintain that a province with a small land area
but which has a long, narrow, extended coast line, (such as La Union province) can

be said to have a larger territory than a land-locked province (such as Ifugao or

Benguet) whose land area manifestly exceeds the province first mentioned.
Allegations have been made that the enactment of the questioned state was marred
by "dirty tricks", in the introduction and passing of Parliamentary Bill No. 3644 "in
secret haste" pursuant to sinister designs to achieve "pure and simple
gerrymandering"; "that recent happenings more than amply demonstrate that far
from guaranteeing its autonomy it (Negros del Norte) has become the fiefdom of a
local strongman" (Rollo, p. 43; parenthesis supplied).
It is not for this Court to affirm or reject such matters not only because the merits of
this case can be resolved without need of ascertaining the real motives and wisdom
in the making of the questioned law. No proper challenge on those grounds can also
be made by petitioners in this proceeding. Neither may this Court venture to guess
the motives or wisdom in the exercise of legislative powers. Repudiation of improper
or unwise actions taken by tools of a political machinery rests ultimately, as recent
events have shown, on the electorate and the power of a vigilant people. cdlex
Petitioners herein deserve and should receive the gratitude of the people of the
Province of Negros Occidental and even by our Nation. Commendable is the
patriotism displayed by them in daring to institute this case in order to preserve the
continued existence of their historic province. They were inspired undoubtedly by
their faithful commitment to our Constitution which they wish to be respected and
obeyed. Despite the setbacks and the hardships which petitioners aver confronted
them, they valiantly and unfalteringly pursued a worthy cause. A happy destiny for
our Nation is assured as long as among our people there would be exemplary
citizens such as the petitioners herein.
WHEREFORE, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The
proclamation of the new province of Negros del Norte, as well as the appointment of
the officials thereof are also declared null and void.
SO ORDERED.
Abad Santos, Feria, Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz and Paras, JJ ., concur.
Teehankee, C .J ., files a separate opinion congratulating his brethren for the Court's
unanimous decision striking down a manifestly unconstitutional Act and illegal
plebiscite and restoring the territorial integrity of the once premier province of
Negros Occidental.
Melencio-Herrera, J ., in the result.
Separate Opinions
TEEHANKEE, C .J ., concurring:

I congratulate my brethren for the unanimous decision we issue today striking down
an Act approved in "deep secrecy and inordinate haste" apparently on the last day
of session of the Batasang Pambansa on December 3, 1985 and signed on the same
day by the then President of the authoritarian regime. The Act provided for the
partitioning of the province of Negros Occidental and would substantially alter its
boundaries by lopping off the progressive cities of Silay, Cadiz and San Carlos and
municipality of Victorias with seven other municipalities to constitute the proposed
new province of Negros del Norte. Negros Occidental would thereby lose 4,019.95
square kilometers in area and seven of fifteen sugar mills which contribute to the
economic progress and welfare of the whole province. Cdpr
The discredited Commission on Elections of the time played its customary
subservient role by setting the plebiscite with equal "indecent haste" for January 3,
1986, notwithstanding that the Act itself provided for an ample period of 120 days
from its approval within which to inform the people of the proposed dismemberment
and allow them to freely express and discuss the momentous issue and cast their
vote intelligently. This was learned by petitioners through an item in the printed
media one day before they filed the present rush petition on December 23, 1985 to
seek a restraining order to atop the plebiscite, even as no printed copies of the Act
as finally enacted and approved were available to them and the Act had not been
published, as required by law, for its effectivity. As petitioners ruefully state: "it was
in vain hope" for everything had apparently been timed for the Christmas holidays;
the Court was in Christmas recess and "there was no chance to have their plea for a
restraining order acted upon speedily enough." In fact, it was only on January 7,
1986 that the Court took cognizance of the petition and required respondents'
comment.
The scenario, as petitioners urgently asserted, was "to have the creation of the new
Province a fait accompli by the time elections are held on February 7, 1986. The
transparent purpose is unmistakably so that the new Governor and other officials
shall by then have been installed in office, ready to function for purposes of the
election for President and Vice-President." Thus, the petitioners reported after the
event: "With indecent haste, the plebiscite was held; Negros del Norte was set up
and proclaimed by President Marcos as in existence; a new set of government
officials headed by Governor Armando Gustilo was appointed; and, by the time the
elections were held on February 7, 1986, the political machinery was in place to
deliver the 'solid North' to ex-President Marcos. The rest is history. What happened
in Negros del Norte during the elections the unashamed use of naked power and
resources contributed in no small way to arousing 'people's power' and steel the
ordinary citizen to perform deeds of courage and patriotism that makes one proud
to be a Filipino today." (Record, pp. 9, 41).
The challenged Act is manifestly void and unconstitutional. Consequently, all the
implementing acts complained of, viz. the plebiscite, the proclamation of a new
province of Negros del Norte and the appointment of its officials are equally void.

The limited holding of the plebiscite only in the areas of the proposed new province
(as provided by Section 4 of the Act) to the exclusion of the voters of the remaining
areas of the integral province of Negros Occidental (namely, the three cities of
Bacolod, Bago and La Carlota and the Municipalities of La Castellana, Isabela,
Moises Padilla, Pontevedra, Hinigaran, Himamaylan, Kabankalan, Murcia, Valladolid,
San Enrique, Ilog, Cauayan, Hinoba-an and Sipalay and Candoni), grossly
contravenes and disregards the mandate of Article XI, section 3 of the then
prevailing 1973 Constitution that no province may be created or divided or its
boundary substantially altered without "the approval of a majority of the votes in a
plebiscite in the unit or units affected. " It is plain that all the cities and
municipalities of the province of Negros Occidental, not merely those of the
proposed new province, comprise the units affected. It follows that the voters of the
whole and entire province of Negros Occidental have to participate and give their
approval in the plebiscite, because the whole province is affected by its proposed
division and substantial alteration of its boundary. To limit the plebiscite to only the
voters of the areas to be partitioned and seceded from the province is as absurd
and illogical as allowing only the secessionists to vote for the secession that they
demanded against the wishes of the majority and to nullify the basic principle of
majority rule.
The argument of fait accompli viz. that the railroaded plebiscite of January 3, 1986
was held and can no longer be enjoined and that the new province of Negros del
Norte has been constituted, begs the issue of invalidity of the challenged Act. This
Court has always held that it "does not look with favor upon parties 'racing to beat
an injunction or restraining order' which they have reason to believe might be
forthcoming from the Court by virtue of the filing and pendency of the appropriate
petition therefor. Where the restraining order or preliminary injunction are found to
have been properly issued, as in the case at bar, mandatory writs shall be issued by
the Court to restore matters to the status quo ante." (Banzon v. Cruz, 45 SCRA 475,
506 [1972]). Where, as in this case, there was somehow a failure to properly issue
the restraining order stopping the holding of the illegal plebiscite, the Court will
issue the mandatory writ or judgment to restore matters to the status quo ante and
restore the territorial integrity of the province of Negros Occidental by declaring the
unconstitutionality of the challenged Act and nullifying the invalid proclamation of
the proposed new province of Negros del Norte and the equally invalid appointment
of its officials. cdasia
Batas Pambansa Blg. 885 declared unconstitutional.

[G.R. No. 176831. January 15, 2010.]

UY KIAO ENG, petitioner, vs. NIXON LEE, respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the August 23, 2006 Amended Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 91725 and the February 23, 2007 Resolution, 2 denying the
motion for reconsideration thereof. CAScIH
The relevant facts and proceedings follow.
Alleging that his father passed away on June 22, 1992 in Manila and left a
holographic will, which is now in the custody of petitioner Uy Kiao Eng, his mother,
respondent Nixon Lee filed, on May 28, 2001, a petition for mandamus with
damages, docketed as Civil Case No. 01100939, before the Regional Trial Court
(RTC) of Manila, to compel petitioner to produce the will so that probate proceedings
for the allowance thereof could be instituted. Allegedly, respondent had already
requested his mother to settle and liquidate the patriarch's estate and to deliver to
the legal heirs their respective inheritance, but petitioner refused to do so without
any justifiable reason. 3
In her answer with counterclaim, petitioner traversed the allegations in the
complaint and posited that the same be dismissed for failure to state a cause of
action, for lack of cause of action, and for non-compliance with a condition
precedent for the filing thereof. Petitioner denied that she was in custody of the
original holographic will and that she knew of its whereabouts. She, moreover,
asserted that photocopies of the will were given to respondent and to his siblings.
As a matter of fact, respondent was able to introduce, as an exhibit, a copy of the
will in Civil Case No. 224-V-00 before the RTC of Valenzuela City. Petitioner further
contended that respondent should have first exerted earnest efforts to amicably
settle the controversy with her before he filed the suit. 4 DcHSEa
The RTC heard the case. After the presentation and formal offer of respondent's
evidence, petitioner demurred, contending that her son failed to prove that she had
in her custody the original holographic will. Importantly, she asserted that the
pieces of documentary evidence presented, aside from being hearsay, were all
immaterial and irrelevant to the issue involved in the petition they did not prove
or disprove that she unlawfully neglected the performance of an act which the law
specifically enjoined as a duty resulting from an office, trust or station, for the court
to issue the writ of mandamus. 5
The RTC, at first, denied the demurrer to evidence. 6 In its February 4, 2005 Order, 7
however, it granted the same on petitioner's motion for reconsideration.

Respondent's motion for reconsideration of this latter order was denied on

September 20, 2005. 8 Hence, the petition was dismissed.
Aggrieved, respondent sought review from the appellate court. On April 26, 2006,
the CA initially denied the appeal for lack of merit. It ruled that the writ of
mandamus would issue only in instances when no other remedy would be available
and sufficient to afford redress. Under Rule 76, in an action for the settlement of the
estate of his deceased father, respondent could ask for the presentation or
production and for the approval or probate of the holographic will. The CA further
ruled that respondent, in the proceedings before the trial court, failed to present
sufficient evidence to prove that his mother had in her custody the original copy of
the will. 9 TAECaD
Respondent moved for reconsideration. The appellate court, in the assailed August
23, 2006 Amended Decision, 10 granted the motion, set aside its earlier ruling,
issued the writ, and ordered the production of the will and the payment of
attorney's fees. It ruled this time that respondent was able to show by testimonial
evidence that his mother had in her possession the holographic will.
Dissatisfied with this turn of events, petitioner filed a motion for reconsideration.
The appellate court denied this motion in the further assailed February 23, 2007
Resolution. 11
Left with no other recourse, petitioner brought the matter before this Court,
contending in the main that the petition for mandamus is not the proper remedy
and that the testimonial evidence used by the appellate court as basis for its ruling
is inadmissible. 12
The Court cannot sustain the CA's issuance of the writ.
The first paragraph of Section 3 of Rule 65 of the Rules of Court pertinently provides
that SAEHaC
SEC. 3.
Petition for mandamus. When any tribunal, corporation, board,
officer or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully
excludes another from the use and enjoyment of a right or office to which such
other is entitled, and there is no other plain, speedy and adequate remedy in the
ordinary course of law, the person aggrieved thereby may file a verified petition in
the proper court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent, immediately or at some other time to be
specified by the court, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the
wrongful acts of the respondent. 13

Mandamus is a command issuing from a court of law of competent jurisdiction, in

the name of the state or the sovereign, directed to some inferior court, tribunal, or
board, or to some corporation or person requiring the performance of a particular
duty therein specified, which duty results from the official station of the party to
whom the writ is directed or from operation of law. 14 This definition recognizes the
public character of the remedy, and clearly excludes the idea that it may be
resorted to for the purpose of enforcing the performance of duties in which the
public has no interest. 15 The writ is a proper recourse for citizens who seek to
enforce a public right and to compel the performance of a public duty, most
especially when the public right involved is mandated by the Constitution. 16 As the
quoted provision instructs, mandamus will lie if the tribunal, corporation, board,
officer, or person unlawfully neglects the performance of an act which the law
enjoins as a duty resulting from an office, trust or station. 17 DTISaH
The writ of mandamus, however, will not issue to compel an official to do anything
which is not his duty to do or which it is his duty not to do, or to give to the
applicant anything to which he is not entitled by law. 18 Nor will mandamus issue to
enforce a right which is in substantial dispute or as to which a substantial doubt
exists, although objection raising a mere technical question will be disregarded if
the right is clear and the case is meritorious. 19 As a rule, mandamus will not lie in
the absence of any of the following grounds: [a] that the court, officer, board, or
person against whom the action is taken unlawfully neglected the performance of
an act which the law specifically enjoins as a duty resulting from office, trust, or
station; or [b] that such court, officer, board, or person has unlawfully excluded
petitioner/relator from the use and enjoyment of a right or office to which he is
entitled. 20 On the part of the relator, it is essential to the issuance of a writ of
mandamus that he should have a clear legal right to the thing demanded and it
must be the imperative duty of respondent to perform the act required. 21
Recognized further in this jurisdiction is the principle that mandamus cannot be
used to enforce contractual obligations. 22 Generally, mandamus will not lie to
enforce purely private contract rights, and will not lie against an individual unless
some obligation in the nature of a public or quasi-public duty is imposed. 23 The
writ is not appropriate to enforce a private right against an individual. 24 The writ of
mandamus lies to enforce the execution of an act, when, otherwise, justice would be
obstructed; and, regularly, issues only in cases relating to the public and to the
government; hence, it is called a prerogative writ. 25 To preserve its prerogative
character, mandamus is not used for the redress of private wrongs, but only in
matters relating to the public. 26 TEIHDa
Moreover, an important principle followed in the issuance of the writ is that there
should be no plain, speedy and adequate remedy in the ordinary course of law other
than the remedy of mandamus being invoked. 27 In other words, mandamus can be
issued only in cases where the usual modes of procedure and forms of remedy are
powerless to afford relief. 28 Although classified as a legal remedy, mandamus is

equitable in its nature and its issuance is generally controlled by equitable

principles. 29 Indeed, the grant of the writ of mandamus lies in the sound discretion
of the court.
In the instant case, the Court, without unnecessarily ascertaining whether the
obligation involved here the production of the original holographic will is in the
nature of a public or a private duty, rules that the remedy of mandamus cannot be
availed of by respondent Lee because there lies another plain, speedy and adequate
remedy in the ordinary course of law. Let it be noted that respondent has a
photocopy of the will and that he seeks the production of the original for purposes
of probate. The Rules of Court, however, does not prevent him from instituting
probate proceedings for the allowance of the will whether the same is in his
possession or not. Rule 76, Section 1 relevantly provides: CDcaSA
Section 1.
Who may petition for the allowance of will. Any executor, devisee, or
legatee named in a will, or any other person interested in the estate, may, at any
time, after the death of the testator, petition the court having jurisdiction to have
the will allowed, whether the same be in his possession or not, or is lost or
destroyed.
An adequate remedy is further provided by Rule 75, Sections 2 to 5, for the
production of the original holographic will. Thus
SEC. 2.
Custodian of will to deliver. The person who has custody of a will
shall, within twenty (20) days after he knows of the death of the testator, deliver the
will to the court having jurisdiction, or to the executor named in the will.
SEC. 3.
Executor to present will and accept or refuse trust. A person named
as executor in a will shall within twenty (20) days after he knows of the death of the
testator, or within twenty (20) days after he knows that he is named executor if he
obtained such knowledge after the death of the testator, present such will to the
court having jurisdiction, unless the will has reached the court in any other manner,
and shall, within such period, signify to the court in writing his acceptance of the
trust or his refusal to accept it. ADcHES
SEC. 4.
Custodian and executor subject to fine for neglect. A person who
neglects any of the duties required in the two last preceding sections without
excuse satisfactory to the court shall be fined not exceeding two thousand pesos.
SEC. 5.
Person retaining will may be committed. A person having custody of
a will after the death of the testator who neglects without reasonable cause to
deliver the same, when ordered so to do, to the court having jurisdiction, may be
committed to prison and there kept until he delivers the will. 30
There being a plain, speedy and adequate remedy in the ordinary course of law for
the production of the subject will, the remedy of mandamus cannot be availed of.

Suffice it to state that respondent Lee lacks a cause of action in his petition. Thus,
the Court grants the demurrer.
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED.
The August 23, 2006 Amended Decision and the February 23, 2007 Resolution of
the Court of Appeals in CA-G.R. SP No. 91725 are REVERSED and SET ASIDE. Civil
Case No. 01100939 before the Regional Trial Court of Manila is DISMISSED. HDTISa
SO ORDERED.

[G.R. Nos. 171947-48. December 18, 2008.]

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES, DEPARTMENT OF EDUCATION, CULTURE
AND SPORTS, 1 DEPARTMENT OF HEALTH, DEPARTMENT OF AGRICULTURE,
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, DEPARTMENT OF BUDGET AND
MANAGEMENT, PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL POLICE MARITIME
GROUP, and DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, petitioners,
vs. CONCERNED RESIDENTS OF MANILA BAY, represented and joined by DIVINA V.
ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEA, PAUL
DENNIS QUINTERO, MA. VICTORIA LLENOS, DONNA CALOZA, FATIMA QUITAIN,
VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS
BOBIS, FELIMON SANTIAGUEL, and JAIME AGUSTIN R. OPOSA, respondents.
DECISION
VELASCO, JR., J p:
The need to address environmental pollution, as a cause of climate change, has of
late gained the attention of the international community. Media have finally trained
their sights on the ill effects of pollution, the destruction of forests and other critical
habitats, oil spills, and the unabated improper disposal of garbage. And rightly so,
for the magnitude of environmental destruction is now on a scale few ever foresaw
and the wound no longer simply heals by itself. 2 But amidst hard evidence and
clear signs of a climate crisis that need bold action, the voice of cynicism,
naysayers, and procrastinators can still be heard. dctai
This case turns on government agencies and their officers who, by the nature of
their respective offices or by direct statutory command, are tasked to protect and
preserve, at the first instance, our internal waters, rivers, shores, and seas polluted
by human activities. To most of these agencies and their official complement, the

pollution menace does not seem to carry the high national priority it deserves, if
their track records are to be the norm. Their cavalier attitude towards solving, if not
mitigating, the environmental pollution problem, is a sad commentary on
bureaucratic efficiency and commitment.
At the core of the case is the Manila Bay, a place with a proud historic past, once
brimming with marine life and, for so many decades in the past, a spot for different
contact recreation activities, but now a dirty and slowly dying expanse mainly
because of the abject official indifference of people and institutions that could have
otherwise made a difference. HTCaAD
This case started when, on January 29, 1999, respondents Concerned Residents of
Manila Bay filed a complaint before the Regional Trial Court (RTC) in Imus, Cavite
against several government agencies, among them the petitioners, for the cleanup,
rehabilitation, and protection of the Manila Bay. Raffled to Branch 20 and docketed
as Civil Case No. 1851-99 of the RTC, the complaint alleged that the water quality of
the Manila Bay had fallen way below the allowable standards set by law, specifically
Presidential Decree No. (PD) 1152 or the Philippine Environment Code. This
environmental aberration, the complaint stated, stemmed from:
. . . [The] reckless, wholesale, accumulated and ongoing acts of omission or
commission [of the defendants] resulting in the clear and present danger to public
health and in the depletion and contamination of the marine life of Manila Bay, [for
which reason] ALL defendants must be held jointly and/or solidarily liable and be
collectively ordered to clean up Manila Bay and to restore its water quality to class B
waters fit for swimming, skin-diving, and other forms of contact recreation. 3
In their individual causes of action, respondents alleged that the continued neglect
of petitioners in abating the pollution of the Manila Bay constitutes a violation of,
among others: EHSADa
(1)

Respondents' constitutional right to life, health, and a balanced ecology;

(2)

The Environment Code (PD 1152);

(3)

The Pollution Control Law (PD 984);

(4)

The Water Code (PD 1067);

(5)

The Sanitation Code (PD 856);

(6)

The Illegal Disposal of Wastes Decree (PD 825);

(7)

The Marine Pollution Law (PD 979);

(8)

Executive Order No. 192;

(9)

The Toxic and Hazardous Wastes Law (Republic Act No. 6969);

(10)

Civil Code provisions on nuisance and human relations;

(11)

The Trust Doctrine and the Principle of Guardianship; and

(12)

International Law

ADCIca

Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to

clean the Manila Bay and submit to the RTC a concerted concrete plan of action for
the purpose.
The trial of the case started off with a hearing at the Manila Yacht Club followed by
an ocular inspection of the Manila Bay. Renato T. Cruz, the Chief of the Water Quality
Management Section, Environmental Management Bureau, Department of
Environment and Natural Resources (DENR), testifying for petitioners, stated that
water samples collected from different beaches around the Manila Bay showed that
the amount of fecal coliform content ranged from 50,000 to 80,000 most probable
number (MPN)/ml when what DENR Administrative Order No. 34-90 prescribed as a
safe level for bathing and other forms of contact recreational activities, or the "SB"
level, is one not exceeding 200 MPN/100 ml. 4 IaHCAD
Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in
behalf of other petitioners, testified about the MWSS' efforts to reduce pollution
along the Manila Bay through the Manila Second Sewerage Project. For its part, the
Philippine Ports Authority (PPA) presented, as part of its evidence, its memorandum
circulars on the study being conducted on ship-generated waste treatment and
disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes
accumulated or washed to shore.
The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay
On September 13, 2002, the RTC rendered a Decision 5 in favor of respondents. The
dispositive portion reads:
WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering
the abovenamed defendant-government agencies, jointly and solidarily, to clean up
and rehabilitate Manila Bay and restore its waters to SB classification to make it fit
for swimming, skin-diving and other forms of contact recreation. To attain this,
defendant-agencies, with defendant DENR as the lead agency, are directed, within
six (6) months from receipt hereof, to act and perform their respective duties by
devising a consolidated, coordinated and concerted scheme of action for the
rehabilitation and restoration of the bay. CaEIST
In particular:
Defendant MWSS is directed to install, operate and maintain adequate [sewerage]
treatment facilities in strategic places under its jurisdiction and increase their
capacities.

Defendant LWUA, to see to it that the water districts under its wings, provide,
construct and operate sewage facilities for the proper disposal of waste.
Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install,
operate and maintain waste facilities to rid the bay of toxic and hazardous
substances.
Defendant PPA, to prevent and also to treat the discharge not only of shipgenerated wastes but also of other solid and liquid wastes from docking vessels that
contribute to the pollution of the bay.
Defendant MMDA, to establish, operate and maintain an adequate and appropriate
sanitary landfill and/or adequate solid waste and liquid disposal as well as other
alternative garbage disposal system such as re-use or recycling of wastes. TACEDI
Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize
the marine life in Manila Bay and restock its waters with indigenous fish and other
aquatic animals.
Defendant DBM, to provide and set aside an adequate budget solely for the purpose
of cleaning up and rehabilitation of Manila Bay.
Defendant DPWH, to remove and demolish structures and other nuisances that
obstruct the free flow of waters to the bay. These nuisances discharge solid and
liquid wastes which eventually end up in Manila Bay. As the construction and
engineering arm of the government, DPWH is ordered to actively participate in
removing debris, such as carcass of sunken vessels, and other non-biodegradable
garbage in the bay.
Defendant DOH, to closely supervise and monitor the operations of septic and
sludge companies and require them to have proper facilities for the treatment and
disposal of fecal sludge and sewage coming from septic tanks. cCAaHD
Defendant DECS, to inculcate in the minds and hearts of the people through
education the importance of preserving and protecting the environment.
Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all
costs the Manila Bay from all forms of illegal fishing.
No pronouncement as to damages and costs.
SO ORDERED.
The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the
Court of Appeals (CA) individual Notices of Appeal which were eventually
consolidated and docketed as CA-G.R. CV No. 76528.

On the other hand, the DENR, Department of Public Works and Highways (DPWH),
Metropolitan Manila Development Authority (MMDA), Philippine Coast Guard (PCG),
Philippine National Police (PNP) Maritime Group, and five other executive
departments and agencies filed directly with this Court a petition for review under
Rule 45. The Court, in a Resolution of December 9, 2002, sent the said petition to
the CA for consolidation with the consolidated appeals of MWSS, LWUA, and PPA,
docketed as CA-G.R. SP No. 74944. TEHDIA
Petitioners, before the CA, were one in arguing in the main that the pertinent
provisions of the Environment Code (PD 1152) relate only to the cleaning of specific
pollution incidents and do not cover cleaning in general. And apart from raising
concerns about the lack of funds appropriated for cleaning purposes, petitioners
also asserted that the cleaning of the Manila Bay is not a ministerial act which can
be compelled by mandamus.
The CA Sustained the RTC
By a Decision 6 of September 28, 2005, the CA denied petitioners' appeal and
affirmed the Decision of the RTC in toto, stressing that the trial court's decision did
not require petitioners to do tasks outside of their usual basic functions under
existing laws. 7 IcHSCT
Petitioners are now before this Court praying for the allowance of their Rule 45
petition on the following ground and supporting arguments:
THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE PASSED UPON BY
THE HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL COURT'S DECISION
DECLARING THAT SECTION 20 OF [PD] 1152 REQUIRES CONCERNED GOVERNMENT
AGENCIES TO REMOVE ALL POLLUTANTS SPILLED AND DISCHARGED IN THE WATER
SUCH AS FECAL COLIFORMS.
ARGUMENTS
I
[SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF SPECIFIC
POLLUTION INCIDENTS AND [DO] NOT COVER CLEANING IN GENERAL SECATH
II
THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A MINISTERIAL ACT
OF PETITIONERS THAT CAN BE COMPELLED BY MANDAMUS.
The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the
headings, Upgrading of Water Quality and Clean-up Operations, envisage a cleanup
in general or are they limited only to the cleanup of specific pollution incidents? And

second, can petitioners be compelled by mandamus to clean up and rehabilitate the

Manila Bay?
On August 12, 2008, the Court conducted and heard the parties on oral arguments.
Our Ruling
We shall first dwell on the propriety of the issuance of mandamus under the
premises. AEDISC
The Cleaning or Rehabilitation of Manila Bay Can be Compelled by Mandamus
Generally, the writ of mandamus lies to require the execution of a ministerial duty. 8
A ministerial duty is one that "requires neither the exercise of official discretion nor
judgment." 9 It connotes an act in which nothing is left to the discretion of the
person executing it. It is a "simple, definite duty arising under conditions admitted
or proved to exist and imposed by law." 10 Mandamus is available to compel action,
when refused, on matters involving discretion, but not to direct the exercise of
judgment or discretion one way or the other.
Petitioners maintain that the MMDA's duty to take measures and maintain adequate
solid waste and liquid disposal systems necessarily involves policy evaluation and
the exercise of judgment on the part of the agency concerned. They argue that the
MMDA, in carrying out its mandate, has to make decisions, including choosing where
a landfill should be located by undertaking feasibility studies and cost estimates, all
of which entail the exercise of discretion. SaHTCE
Respondents, on the other hand, counter that the statutory command is clear and
that petitioners' duty to comply with and act according to the clear mandate of the
law does not require the exercise of discretion. According to respondents,
petitioners, the MMDA in particular, are without discretion, for example, to choose
which bodies of water they are to clean up, or which discharge or spill they are to
contain. By the same token, respondents maintain that petitioners are bereft of
discretion on whether or not to alleviate the problem of solid and liquid waste
disposal; in other words, it is the MMDA's ministerial duty to attend to such services.
We agree with respondents.
First off, we wish to state that petitioners' obligation to perform their duties as
defined by law, on one hand, and how they are to carry out such duties, on the
other, are two different concepts. While the implementation of the MMDA's
mandated tasks may entail a decision-making process, the enforcement of the law
or the very act of doing what the law exacts to be done is ministerial in nature and
may be compelled by mandamus. We said so in Social Justice Society v. Atienza 11
wherein the Court directed the City of Manila to enforce, as a matter of ministerial
duty, its Ordinance No. 8027 directing the three big local oil players to cease and
desist from operating their business in the so-called "Pandacan Terminals" within six

months from the effectivity of the ordinance. But to illustrate with respect to the
instant case, the MMDA's duty to put up an adequate and appropriate sanitary
landfill and solid waste and liquid disposal as well as other alternative garbage
disposal systems is ministerial, its duty being a statutory imposition. The MMDA's
duty in this regard is spelled out in Sec. 3 (c) of Republic Act No. (RA) 7924 creating
the MMDA. This section defines and delineates the scope of the MMDA's waste
disposal services to include: AHCaES
Solid waste disposal and management which include formulation and
implementation of policies, standards, programs and projects for proper and
sanitary waste disposal. It shall likewise include the establishment and operation of
sanitary land fill and related facilities and the implementation of other alternative
programs intended to reduce, reuse and recycle solid waste. (Emphasis added.)
The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste
Management Act (RA 9003) which prescribes the minimum criteria for the
establishment of sanitary landfills and Sec. 42 which provides the minimum
operating requirements that each site operator shall maintain in the operation of a
sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003, 12
enjoining the MMDA and local government units, among others, after the effectivity
of the law on February 15, 2001, from using and operating open dumps for solid
waste and disallowing, five years after such effectivity, the use of controlled dumps.
SHIETa
The MMDA's duty in the area of solid waste disposal, as may be noted, is set forth
not only in the Environment Code (PD 1152) and RA 9003, but in its charter as well.
This duty of putting up a proper waste disposal system cannot be characterized as
discretionary, for, as earlier stated, discretion presupposes the power or right given
by law to public functionaries to act officially according to their judgment or
conscience. 13 A discretionary duty is one that "allows a person to exercise
judgment and choose to perform or not to perform." 14 Any suggestion that the
MMDA has the option whether or not to perform its solid waste disposal-related
duties ought to be dismissed for want of legal basis.
A perusal of other petitioners' respective charters or like enabling statutes and
pertinent laws would yield this conclusion: these government agencies are enjoined,
as a matter of statutory obligation, to perform certain functions relating directly or
indirectly to the cleanup, rehabilitation, protection, and preservation of the Manila
Bay. They are precluded from choosing not to perform these duties. Consider:
TaDSHC
(1)
The DENR, under Executive Order No. (EO) 192, 15 is the primary agency
responsible for the conservation, management, development, and proper use of the
country's environment and natural resources. Sec. 19 of the Philippine Clean Water
Act of 2004 (RA 9275), on the other hand, designates the DENR as the primary

government agency responsible for its enforcement and implementation, more

particularly over all aspects of water quality management. On water pollution, the
DENR, under the Act's Sec. 19 (k), exercises jurisdiction "over all aspects of water
pollution, determine[s] its location, magnitude, extent, severity, causes and effects
and other pertinent information on pollution, and [takes] measures, using available
methods and technologies, to prevent and abate such pollution".
The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status
Report, an Integrated Water Quality Management Framework, and a 10-year Water
Quality Management Area Action Plan which is nationwide in scope covering the
Manila Bay and adjoining areas. Sec. 19 of RA 9275 provides: DEcSaI
Sec. 19.
Lead Agency. The [DENR] shall be the primary government agency
responsible for the implementation and enforcement of this Act . . . unless otherwise
provided herein. As such, it shall have the following functions, powers and
responsibilities:
a)
Prepare a National Water Quality Status report within twenty-four (24) months
from the effectivity of this Act: Provided, That the Department shall thereafter
review or revise and publish annually, or as the need arises, said report;
b)
Prepare an Integrated Water Quality Management Framework within twelve
(12) months following the completion of the status report;
c)
Prepare a ten (10) year Water Quality Management Area Action Plan within 12
months following the completion of the framework for each designated water
management area. Such action plan shall be reviewed by the water quality
management area governing board every five (5) years or as need arises. CScaDH
The DENR has prepared the status report for the period 2001 to 2005 and is in the
process of completing the preparation of the Integrated Water Quality Management
Framework. 16 Within twelve (12) months thereafter, it has to submit a final Water
Quality Management Area Action Plan. 17 Again, like the MMDA, the DENR should be
made to accomplish the tasks assigned to it under RA 9275.
Parenthetically, during the oral arguments, the DENR Secretary manifested that the
DENR, with the assistance of and in partnership with various government agencies
and non-government organizations, has completed, as of December 2005, the final
draft of a comprehensive action plan with estimated budget and time frame,
denominated as Operation Plan for the Manila Bay Coastal Strategy, for the
rehabilitation, restoration, and rehabilitation of the Manila Bay.
The completion of the said action plan and even the implementation of some of its
phases should more than ever prod the concerned agencies to fast track what are
assigned them under existing laws. HESCcA

(2)
The MWSS, under Sec. 3 of RA 6234, 18 is vested with jurisdiction,
supervision, and control over all waterworks and sewerage systems in the territory
comprising what is now the cities of Metro Manila and several towns of the
provinces of Rizal and Cavite, and charged with the duty:
(g)
To construct, maintain, and operate such sanitary sewerages as may be
necessary for the proper sanitation and other uses of the cities and towns
comprising the System; . . .
(3)
The LWUA under PD 198 has the power of supervision and control over local
water districts. It can prescribe the minimum standards and regulations for the
operations of these districts and shall monitor and evaluate local water standards.
The LWUA can direct these districts to construct, operate, and furnish facilities and
services for the collection, treatment, and disposal of sewerage, waste, and storm
water. Additionally, under RA 9275, the LWUA, as attached agency of the DPWH, is
tasked with providing sewerage and sanitation facilities, inclusive of the setting up
of efficient and safe collection, treatment, and sewage disposal system in the
different parts of the country. 19 In relation to the instant petition, the LWUA is
mandated to provide sewerage and sanitation facilities in Laguna, Cavite, Bulacan,
Pampanga, and Bataan to prevent pollution in the Manila Bay. ATICcS
(4)
The Department of Agriculture (DA), pursuant to the Administrative Code of
1987 (EO 292), 20 is designated as the agency tasked to promulgate and enforce all
laws and issuances respecting the conservation and proper utilization of agricultural
and fishery resources. Furthermore, the DA, under the Philippine Fisheries Code of
1998 (RA 8550), is, in coordination with local government units (LGUs) and other
concerned sectors, in charge of establishing a monitoring, control, and surveillance
system to ensure that fisheries and aquatic resources in Philippine waters are
judiciously utilized and managed on a sustainable basis. 21 Likewise under RA 9275,
the DA is charged with coordinating with the PCG and DENR for the enforcement of
water quality standards in marine waters. 22 More specifically, its Bureau of
Fisheries and Aquatic Resources (BFAR) under Sec. 22 (c) of RA 9275 shall primarily
be responsible for the prevention and control of water pollution for the
development, management, and conservation of the fisheries and aquatic
resources. aADSIc
(5)
The DPWH, as the engineering and construction arm of the national
government, is tasked under EO 292 23 to provide integrated planning, design, and
construction services for, among others, flood control and water resource
development systems in accordance with national development objectives and
approved government plans and specifications.
In Metro Manila, however, the MMDA is authorized by Sec. 3 (d), RA 7924 to perform
metro-wide services relating to "flood control and sewerage management which

include the formulation and implementation of policies, standards, programs and

projects for an integrated flood control, drainage and sewerage system."
On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH
and MMDA, whereby MMDA was made the agency primarily responsible for flood
control in Metro Manila. For the rest of the country, DPWH shall remain as the
implementing agency for flood control services. The mandate of the MMDA and
DPWH on flood control and drainage services shall include the removal of
structures, constructions, and encroachments built along rivers, waterways, and
esteros (drainages) in violation of RA 7279, PD 1067, and other pertinent laws.
ACTESI
(6)
The PCG, in accordance with Sec. 5 (p) of PD 601, or the Revised Coast Guard
Law of 1974, and Sec. 6 of PD 979, 24 or the Marine Pollution Decree of 1976, shall
have the primary responsibility of enforcing laws, rules, and regulations governing
marine pollution within the territorial waters of the Philippines. It shall promulgate
its own rules and regulations in accordance with the national rules and policies set
by the National Pollution Control Commission upon consultation with the latter for
the effective implementation and enforcement of PD 979. It shall, under Sec. 4 of
the law, apprehend violators who:
a.
discharge, dump . . . harmful substances from or out of any ship, vessel,
barge, or any other floating craft, or other man-made structures at sea, by any
method, means or manner, into or upon the territorial and inland navigable waters
of the Philippines;
b.
throw, discharge or deposit, dump, or cause, suffer or procure to be thrown,
discharged, or deposited either from or out of any ship, barge, or other floating craft
or vessel of any kind, or from the shore, wharf, manufacturing establishment, or mill
of any kind, any refuse matter of any kind or description whatever other than that
flowing from streets and sewers and passing therefrom in a liquid state into
tributary of any navigable water from which the same shall float or be washed into
such navigable water; and HAIaEc
c.
deposit . . . material of any kind in any place on the bank of any navigable
water or on the bank of any tributary of any navigable water, where the same shall
be liable to be washed into such navigable water, either by ordinary or high tides, or
by storms or floods, or otherwise, whereby navigation shall or may be impeded or
obstructed or increase the level of pollution of such water.
(7)
When RA 6975 or the Department of the Interior and Local Government
(DILG) Act of 1990 was signed into law on December 13, 1990, the PNP Maritime
Group was tasked to "perform all police functions over the Philippine territorial
waters and rivers." Under Sec. 86, RA 6975, the police functions of the PCG shall be
taken over by the PNP when the latter acquires the capability to perform such
functions. Since the PNP Maritime Group has not yet attained the capability to

assume and perform the police functions of PCG over marine pollution, the PCG and
PNP Maritime Group shall coordinate with regard to the enforcement of laws, rules,
and regulations governing marine pollution within the territorial waters of the
Philippines. This was made clear in Sec. 124, RA 8550 or the Philippine Fisheries
Code of 1998, in which both the PCG and PNP Maritime Group were authorized to
enforce said law and other fishery laws, rules, and regulations. 25 ISDHcT
(8)
In accordance with Sec. 2 of EO 513, the PPA is mandated "to establish,
develop, regulate, manage and operate a rationalized national port system in
support of trade and national development." 26 Moreover, Sec. 6-c of EO 513 states
that the PPA has police authority within the
ports administered by it as may be necessary to carry out its powers and functions
and attain its purposes and objectives, without prejudice to the exercise of the
functions of the Bureau of Customs and other law enforcement bodies within the
area. Such police authority shall include the following:
xxx

xxx

xxx

b)
To regulate the entry to, exit from, and movement within the port, of persons
and vehicles, as well as movement within the port of watercraft. 27 CASaEc
Lastly, as a member of the International Marine Organization and a signatory to the
International Convention for the Prevention of Pollution from Ships, as amended by
MARPOL 73/78, 28 the Philippines, through the PPA, must ensure the provision of
adequate reception facilities at ports and terminals for the reception of sewage from
the ships docking in Philippine ports. Thus, the PPA is tasked to adopt such
measures as are necessary to prevent the discharge and dumping of solid and liquid
wastes and other ship-generated wastes into the Manila Bay waters from vessels
docked at ports and apprehend the violators. When the vessels are not docked at
ports but within Philippine territorial waters, it is the PCG and PNP Maritime Group
that have jurisdiction over said vessels.
(9)
The MMDA, as earlier indicated, is duty-bound to put up and maintain
adequate sanitary landfill and solid waste and liquid disposal system as well as
other alternative garbage disposal systems. It is primarily responsible for the
implementation and enforcement of the provisions of RA 9003, which would
necessary include its penal provisions, within its area of jurisdiction. 29
Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently
violated are dumping of waste matters in public places, such as roads, canals or
esteros, open burning of solid waste, squatting in open dumps and landfills, open
dumping, burying of biodegradable or non-biodegradable materials in flood-prone
areas, establishment or operation of open dumps as enjoined in RA 9003, and
operation of waste management facilities without an environmental compliance
certificate. aEHIDT

Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279),
eviction or demolition may be allowed "when persons or entities occupy danger
areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines,
waterways, and other public places such as sidewalks, roads, parks and
playgrounds". The MMDA, as lead agency, in coordination with the DPWH, LGUs, and
concerned agencies, can dismantle and remove all structures, constructions, and
other encroachments built in breach of RA 7279 and other pertinent laws along the
rivers, waterways, and esteros in Metro Manila. With respect to rivers, waterways,
and esteros in Bulacan, Bataan, Pampanga, Cavite, and Laguna that discharge
wastewater directly or eventually into the Manila Bay, the DILG shall direct the
concerned LGUs to implement the demolition and removal of such structures,
constructions, and other encroachments built in violation of RA 7279 and other
applicable laws in coordination with the DPWH and concerned agencies. aSTECA
(10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water
Code), is tasked to promulgate rules and regulations for the establishment of waste
disposal areas that affect the source of a water supply or a reservoir for domestic or
municipal use. And under Sec. 8 of RA 9275, the DOH, in coordination with the
DENR, DPWH, and other concerned agencies, shall formulate guidelines and
standards for the collection, treatment, and disposal of sewage and the
establishment and operation of a centralized sewage treatment system. In areas not
considered as highly urbanized cities, septage or a mix sewerage-septage
management system shall be employed.
In accordance with Sec. 72 30 of PD 856, the Code of Sanitation of the Philippines,
and Sec. 5.1.1 31 of Chapter XVII of its implementing rules, the DOH is also ordered
to ensure the regulation and monitoring of the proper disposal of wastes by private
sludge companies through the strict enforcement of the requirement to obtain an
environmental sanitation clearance of sludge collection treatment and disposal
before these companies are issued their environmental sanitation permit. IDScTE
(11) The Department of Education (DepEd), under the Philippine Environment
Code (PD 1152), is mandated to integrate subjects on environmental education in
its school curricula at all levels. 32 Under Sec. 118 of RA 8550, the DepEd, in
collaboration with the DA, Commission on Higher Education, and Philippine
Information Agency, shall launch and pursue a nationwide educational campaign to
promote the development, management, conservation, and proper use of the
environment. Under the Ecological Solid Waste Management Act (RA 9003), on the
other hand, it is directed to strengthen the integration of environmental concerns in
school curricula at all levels, with an emphasis on waste management principles. 33
(12) The Department of Budget and Management (DBM) is tasked under Sec. 2,
Title XVII of the Administrative Code of 1987 to ensure the efficient and sound
utilization of government funds and revenues so as to effectively achieve the
country's development objectives. 34

One of the country's development objectives is enshrined in RA 9275 or the

Philippine Clean Water Act of 2004. This law stresses that the State shall pursue a
policy of economic growth in a manner consistent with the protection, preservation,
and revival of the quality of our fresh, brackish, and marine waters. It also provides
that it is the policy of the government, among others, to streamline processes and
procedures in the prevention, control, and abatement of pollution mechanisms for
the protection of water resources; to promote environmental strategies and use of
appropriate economic instruments and of control mechanisms for the protection of
water resources; to formulate a holistic national program of water quality
management that recognizes that issues related to this management cannot be
separated from concerns about water sources and ecological protection, water
supply, public health, and quality of life; and to provide a comprehensive
management program for water pollution focusing on pollution prevention. EICScD
Thus, the DBM shall then endeavor to provide an adequate budget to attain the
noble objectives of RA 9275 in line with the country's development objectives.
All told, the aforementioned enabling laws and issuances are in themselves clear,
categorical, and complete as to what are the obligations and mandate of each
agency/petitioner under the law. We need not belabor the issue that their tasks
include the cleanup of the Manila Bay.
Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code
encompass the cleanup of water pollution in general, not just specific pollution
incidents? ACSaHc
Secs. 17 and 20 of the Environment Code Include Cleaning in General
The disputed sections are quoted as follows:
Section 17. Upgrading of Water Quality. Where the quality of water has
deteriorated to a degree where its state will adversely affect its best usage, the
government agencies concerned shall take such measures as may be necessary to
upgrade the quality of such water to meet the prescribed water quality standards.
Section 20. Clean-up Operations. It shall be the responsibility of the polluter to
contain, remove and clean-up water pollution incidents at his own expense. In case
of his failure to do so, the government agencies concerned shall undertake
containment, removal and clean-up operations and expenses incurred in said
operations shall be charged against the persons and/or entities responsible for such
pollution.
When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, Cleanup
Operations, amended the counterpart provision (Sec. 20) of the Environment Code
(PD 1152). Sec. 17 of PD 1152 continues, however, to be operational. IaDTES
The amendatory Sec. 16 of RA 9275 reads:

SEC. 16.
Cleanup Operations. Notwithstanding the provisions of Sections 15
and 26 hereof, any person who causes pollution in or pollutes water bodies in
excess of the applicable and prevailing standards shall be responsible to contain,
remove and clean up any pollution incident at his own expense to the extent that
the same water bodies have been rendered unfit for utilization and beneficial use:
Provided, That in the event emergency cleanup operations are necessary and the
polluter fails to immediately undertake the same, the [DENR] in coordination with
other government agencies concerned, shall undertake containment, removal and
cleanup operations. Expenses incurred in said operations shall be reimbursed by the
persons found to have caused such pollution under proper administrative
determination . . . . Reimbursements of the cost incurred shall be made to the Water
Quality Management Fund or to such other funds where said disbursements were
sourced. TcIHDa
As may be noted, the amendment to Sec. 20 of the Environment Code is more
apparent than real since the amendment, insofar as it is relevant to this case,
merely consists in the designation of the DENR as lead agency in the cleanup
operations.
Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code
concern themselves only with the matter of cleaning up in specific pollution
incidents, as opposed to cleanup in general. They aver that the twin provisions
would have to be read alongside the succeeding Sec. 62 (g) and (h), which defines
the terms "cleanup operations" and "accidental spills", as follows:
g.
Clean-up Operations [refer] to activities conducted in removing the pollutants
discharged or spilled in water to restore it to pre-spill condition.
h.
Accidental Spills [refer] to spills of oil or other hazardous substances in water
that result from accidents such as collisions and groundings. aATEDS
Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the
government agencies concerned to undertake containment, removal, and cleaning
operations of a specific polluted portion or portions of the body of water concerned.
They maintain that the application of said Sec. 20 is limited only to "water pollution
incidents", which are situations that presuppose the occurrence of specific, isolated
pollution events requiring the corresponding containment, removal, and cleaning
operations. Pushing the point further, they argue that the aforequoted Sec. 62 (g)
requires "cleanup operations" to restore the body of water to pre-spill condition,
which means that there must have been a specific incident of either intentional or
accidental spillage of oil or other hazardous substances, as mentioned in Sec. 62
(h).
As a counterpoint, respondents argue that petitioners erroneously read Sec. 62 (g)
as delimiting the application of Sec. 20 to the containment, removal, and cleanup
operations for accidental spills only. Contrary to petitioners' posture, respondents

assert that Sec. 62 (g), in fact, even expanded the coverage of Sec. 20.
Respondents explain that without its Sec. 62 (g), PD 1152 may have indeed covered
only pollution accumulating from the day-to-day operations of businesses around
the Manila Bay and other sources of pollution that slowly accumulated in the bay.
Respondents, however, emphasize that Sec. 62 (g), far from being a delimiting
provision, in fact even enlarged the operational scope of Sec. 20, by including
accidental spills as among the water pollution incidents contemplated in Sec. 17 in
relation to Sec. 20 of PD 1152. CSHcDT
To respondents, petitioners' parochial view on environmental issues, coupled with
their narrow reading of their respective mandated roles, has contributed to the
worsening water quality of the Manila Bay. Assuming, respondents assert, that
petitioners are correct in saying that the cleanup coverage of Sec. 20 of PD 1152 is
constricted by the definition of the phrase "cleanup operations" embodied in Sec. 62
(g), Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases
"cleanup operations" and "accidental spills" do not appear in said Sec. 17, not even
in the chapter where said section is found.
Respondents are correct. For one thing, said Sec. 17 does not in any way state that
the government agencies concerned ought to confine themselves to the
containment, removal, and cleaning operations when a specific pollution incident
occurs. On the contrary, Sec. 17 requires them to act even in the absence of a
specific pollution incident, as long as water quality "has deteriorated to a degree
where its state will adversely affect its best usage". This section, to stress,
commands concerned government agencies, when appropriate, "to take such
measures as may be necessary to meet the prescribed water quality standards". In
fine, the underlying duty to upgrade the quality of water is not conditional on the
occurrence of any pollution incident. ACcTDS
For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates
that it is properly applicable to a specific situation in which the pollution is caused
by polluters who fail to clean up the mess they left behind. In such instance, the
concerned government agencies shall undertake the cleanup work for the polluters'
account. Petitioners' assertion, that they have to perform cleanup operations in the
Manila Bay only when there is a water pollution incident and the erring polluters do
not undertake the containment, removal, and cleanup operations, is quite off mark.
As earlier discussed, the complementary Sec. 17 of the Environment Code comes
into play and the specific duties of the agencies to clean up come in even if there
are no pollution incidents staring at them. Petitioners, thus, cannot plausibly invoke
and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that their
cleanup mandate depends on the happening of a specific pollution incident. In this
regard, what the CA said with respect to the impasse over Secs. 17 and 20 of PD
1152 is at once valid as it is practical. The appellate court wrote: "PD 1152 aims to
introduce a comprehensive program of environmental protection and management.

This is better served by making Secs. 17 & 20 of general application rather than
limiting them to specific pollution incidents." 35 EaISTD
Granting arguendo that petitioners' position thus described vis--vis the
implementation of Sec. 20 is correct, they seem to have overlooked the fact that the
pollution of the Manila Bay is of such magnitude and scope that it is well-nigh
impossible to draw the line between a specific and a general pollution incident. And
such impossibility extends to pinpointing with reasonable certainty who the
polluters are. We note that Sec. 20 of PD 1152 mentions "water pollution incidents"
which may be caused by polluters in the waters of the Manila Bay itself or by
polluters in adjoining lands and in water bodies or waterways that empty into the
bay. Sec. 16 of RA 9275, on the other hand, specifically adverts to "any person who
causes pollution in or pollutes water bodies", which may refer to an individual or an
establishment that pollutes the land mass near the Manila Bay or the waterways,
such that the contaminants eventually end up in the bay. In this situation, the water
pollution incidents are so numerous and involve nameless and faceless polluters
that they can validly be categorized as beyond the specific pollution incident level.
Not to be ignored of course is the reality that the government agencies concerned
are so undermanned that it would be almost impossible to apprehend the numerous
polluters of the Manila Bay. It may perhaps not be amiss to say that the
apprehension, if any, of the Manila Bay polluters has been few and far between.
Hence, practically nobody has been required to contain, remove, or clean up a given
water pollution incident. In this kind of setting, it behooves the Government to step
in and undertake cleanup operations. Thus, Sec. 16 of RA 9275, previously Sec. 20
of PD 1152, covers for all intents and purposes a general cleanup situation.
IDaEHC
The cleanup and/or restoration of the Manila Bay is only an aspect and the initial
stage of the long-term solution. The preservation of the water quality of the bay
after the rehabilitation process is as important as the cleaning phase. It is
imperative then that the wastes and contaminants found in the rivers, inland bays,
and other bodies of water be stopped from reaching the Manila Bay. Otherwise, any
cleanup effort would just be a futile, cosmetic exercise, for, in no time at all, the
Manila Bay water quality would again deteriorate below the ideal minimum
standards set by PD 1152, RA 9275, and other relevant laws. It thus behooves the
Court to put the heads of the petitioner-department-agencies and the bureaus and
offices under them on continuing notice about, and to enjoin them to perform, their
mandates and duties towards cleaning up the Manila Bay and preserving the quality
of its water to the ideal level. Under what other judicial discipline describes as
"continuing mandamus": 36 the Court may, under extraordinary circumstances,
issue directives with the end in view of ensuring that its decision would not be set to
naught by administrative inaction or indifference. In India, the doctrine of continuing
mandamus was used to enforce directives of the court to clean up the length of the
Ganges River from industrial and municipal pollution. 37 CAaEDH

The Court can take judicial notice of the presence of shanties and other
unauthorized structures which do not have septic tanks along the Pasig-MarikinaSan Juan Rivers, the National Capital Region (NCR) (Paraaque-Zapote, Las Pias)
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycuayan-MarilaoObando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the
Laguna De Bay, and other minor rivers and connecting waterways, river banks, and
esteros which discharge their waters, with all the accompanying filth, dirt, and
garbage, into the major rivers and eventually the Manila Bay. If there is one factor
responsible for the pollution of the major river systems and the Manila Bay, these
unauthorized structures would be on top of the list. And if the issue of illegal or
unauthorized structures is not seriously addressed with sustained resolve, then
practically all efforts to cleanse these important bodies of water would be for
naught. The DENR Secretary said as much. 38 cSTHaE
Giving urgent dimension to the necessity of removing these illegal structures is Art.
51 of PD 1067 or the Water Code, 39 which prohibits the building of structures
within a given length along banks of rivers and other waterways. Art. 51 reads:
The banks of rivers and streams and the shores of the seas and lakes throughout
their entire length and within a zone of three (3) meters in urban areas, twenty (20)
meters in agricultural areas and forty (40) meters in forest areas, along their
margins, are subject to the easement of public use in the interest of recreation,
navigation, floatage, fishing and salvage. No person shall be allowed to stay in this
zone longer than what is necessary for recreation, navigation, floatage, fishing or
salvage or to build structures of any kind. (Emphasis added.) AaCEDS
Judicial notice may likewise be taken of factories and other industrial establishments
standing along or near the banks of the Pasig River, other major rivers, and
connecting waterways. But while they may not be treated as unauthorized
constructions, some of these establishments undoubtedly contribute to the pollution
of the Pasig River and waterways. The DILG and the concerned LGUs, have,
accordingly, the duty to see to it that non-complying industrial establishments set
up, within a reasonable period, the necessary waste water treatment facilities and
infrastructure to prevent their industrial discharge, including their sewage waters,
from flowing into the Pasig River, other major rivers, and connecting waterways.
After such period, non-complying establishments shall be shut down or asked to
transfer their operations.
At this juncture, and if only to dramatize the urgency of the need for petitionersagencies to comply with their statutory tasks, we cite the Asian Development Bankcommissioned study on the garbage problem in Metro Manila, the results of which
are embodied in the The Garbage Book. As there reported, the garbage crisis in the
metropolitan area is as alarming as it is shocking. Some highlights of the report:
IcTCHD

1.
As early as 2003, three land-filled dumpsites in Metro Manila the Payatas,
Catmon and Rodriquez dumpsites generate an alarming quantity of lead and
leachate or liquid run-off. Leachate are toxic liquids that flow along the surface and
seep into the earth and poison the surface and groundwater that are used for
drinking, aquatic life, and the environment.
2.
The high level of fecal coliform confirms the presence of a large amount of
human waste in the dump sites and surrounding areas, which is presumably
generated by households that lack alternatives to sanitation. To say that Manila Bay
needs rehabilitation is an understatement.
3.
Most of the deadly leachate, lead and other dangerous contaminants and
possibly strains of pathogens seeps untreated into ground water and runs into the
Marikina and Pasig River systems and Manila Bay. 40 DAHaTc
Given the above perspective, sufficient sanitary landfills should now more than ever
be established as prescribed by the Ecological Solid Waste Management Act (RA
9003). Particular note should be taken of the blatant violations by some LGUs and
possibly the MMDA of Sec. 37, reproduced below:
Sec. 37.
Prohibition against the Use of Open Dumps for Solid Waste. No open
dumps shall be established and operated, nor any practice or disposal of solid waste
by any person, including LGUs which [constitute] the use of open dumps for solid
waste, be allowed after the effectivity of this Act: Provided, further that no
controlled dumps shall be allowed (5) years following the effectivity of this Act.
(Emphasis added.)
RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5)
years which ended on February 21, 2006 has come and gone, but no single sanitary
landfill which strictly complies with the prescribed standards under RA 9003 has yet
been set up. EaDATc
In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like
littering, dumping of waste matters in roads, canals, esteros, and other public
places, operation of open dumps, open burning of solid waste, and the like. Some
sludge companies which do not have proper disposal facilities simply discharge
sludge into the Metro Manila sewerage system that ends up in the Manila Bay.
Equally unabated are violations of Sec. 27 of RA 9275, which enjoins the pollution of
water bodies, groundwater pollution, disposal of infectious wastes from vessels, and
unauthorized transport or dumping into sea waters of sewage or solid waste and of
Secs. 4 and 102 of RA 8550 which proscribes the introduction by human or machine
of substances to the aquatic environment including "dumping/disposal of waste and
other marine litters, discharge of petroleum or residual products of petroleum of
carbonaceous materials/substances [and other] radioactive, noxious or harmful
liquid, gaseous or solid substances, from any water, land or air transport or other
human-made structure."

In the light of the ongoing environmental degradation, the Court wishes to

emphasize the extreme necessity for all concerned executive departments and
agencies to immediately act and discharge their respective official duties and
obligations. Indeed, time is of the essence; hence, there is a need to set timetables
for the performance and completion of the tasks, some of them as defined for them
by law and the nature of their respective offices and mandates. HAaDTE
The importance of the Manila Bay as a sea resource, playground, and as a historical
landmark cannot be over-emphasized. It is not yet too late in the day to restore the
Manila Bay to its former splendor and bring back the plants and sea life that once
thrived in its blue waters. But the tasks ahead, daunting as they may be, could only
be accomplished if those mandated, with the help and cooperation of all civicminded individuals, would put their minds to these tasks and take responsibility.
This means that the State, through petitioners, has to take the lead in the
preservation and protection of the Manila Bay.
The era of delays, procrastination, and ad hoc measures is over. Petitioners must
transcend their limitations, real or imaginary, and buckle down to work before the
problem at hand becomes unmanageable. Thus, we must reiterate that different
government agencies and instrumentalities cannot shirk from their mandates; they
must perform their basic functions in cleaning up and rehabilitating the Manila Bay.
We are disturbed by petitioners' hiding behind two untenable claims: (1) that there
ought to be a specific pollution incident before they are required to act; and (2) that
the cleanup of the bay is a discretionary duty. TacESD
RA 9003 is a sweeping piece of legislation enacted to radically transform and
improve waste management. It implements Sec. 16, Art. II of the 1987 Constitution,
which explicitly provides that the State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with the rhythm and harmony
of nature.
So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced
and healthful ecology need not even be written in the Constitution for it is assumed,
like other civil and political rights guaranteed in the Bill of Rights, to exist from the
inception of mankind and it is an issue of transcendental importance with
intergenerational implications. 41 Even assuming the absence of a categorical legal
provision specifically prodding petitioners to clean up the bay, they and the men
and women representing them cannot escape their obligation to future generations
of Filipinos to keep the waters of the Manila Bay clean and clear as humanly as
possible. Anything less would be a betrayal of the trust reposed in them. IEHTaA
WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in
CA-G.R. CV No. 76528 and SP No. 74944 and the September 13, 2002 Decision of
the RTC in Civil Case No. 1851-99 are AFFIRMED but with MODIFICATIONS in view of

subsequent developments or supervening events in the case. The fallo of the RTC
Decision shall now read:
WHEREFORE, judgment is hereby rendered ordering the abovenamed defendantgovernment agencies to clean up, rehabilitate, and preserve Manila Bay, and
restore and maintain its waters to SB level (Class B sea waters per Water
Classification Tables under DENR Administrative Order No. 34 [1990]) to make them
fit for swimming, skin-diving, and other forms of contact recreation.
In particular:
(1)
Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency
responsible for the conservation, management, development, and proper use of the
country's environment and natural resources, and Sec. 19 of RA 9275, designating
the DENR as the primary government agency responsible for its enforcement and
implementation, the DENR is directed to fully implement its Operational Plan for the
Manila Bay Coastal Strategy for the rehabilitation, restoration, and conservation of
the Manila Bay at the earliest possible time. It is ordered to call regular coordination
meetings with concerned government departments and agencies to ensure the
successful implementation of the aforesaid plan of action in accordance with its
indicated completion schedules. aEcADH
(2)
Pursuant to Title XII (Local Government) of the Administrative Code of 1987
and Sec. 25 of the Local Government Code of 1991, 42 the DILG, in exercising the
President's power of general supervision and its duty to promulgate guidelines in
establishing waste management programs under Sec. 43 of the Philippine
Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna,
Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial
establishments, and private homes along the banks of the major river systems in
their respective areas of jurisdiction, such as but not limited to the Pasig-MarikinaSan Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the NavotasMalabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and
other minor rivers and waterways that eventually discharge water into the Manila
Bay; and the lands abutting the bay, to determine whether they have wastewater
treatment facilities or hygienic septic tanks as prescribed by existing laws,
ordinances, and rules and regulations. If none be found, these LGUs shall be ordered
to require non-complying establishments and homes to set up said facilities or
septic tanks within a reasonable time to prevent industrial wastes, sewage water,
and human wastes from flowing into these rivers, waterways, esteros, and the
Manila Bay, under pain of closure or imposition of fines and other sanctions.
SaHTCE
(3)
As mandated by Sec. 8 of RA 9275, 43 the MWSS is directed to provide,
install, operate, and maintain the necessary adequate waste water treatment

facilities in Metro Manila, Rizal, and Cavite where needed at the earliest possible
time.
(4)
Pursuant to RA 9275, 44 the LWUA, through the local water districts and in
coordination with the DENR, is ordered to provide, install, operate, and maintain
sewerage and sanitation facilities and the efficient and safe collection, treatment,
and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga, and
Bataan where needed at the earliest possible time.
(5)
Pursuant to Sec. 65 of RA 8550, 45 the DA, through the BFAR, is ordered to
improve and restore the marine life of the Manila Bay. It is also directed to assist the
LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga, and Bataan in
developing, using recognized methods, the fisheries and aquatic resources in the
Manila Bay. ACHEaI
(6)
The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group,
in accordance with Sec. 124 of RA 8550, in coordination with each other, shall
apprehend violators of PD 979, RA 8550, and other existing laws and regulations
designed to prevent marine pollution in the Manila Bay.
(7)
Pursuant to Secs. 2 and 6-c of EO 513 46 and the International Convention for
the Prevention of Pollution from Ships, the PPA is ordered to immediately adopt such
measures to prevent the discharge and dumping of solid and liquid wastes and
other ship-generated wastes into the Manila Bay waters from vessels docked at
ports and apprehend the violators. EcDATH
(8)
The MMDA, as the lead agency and implementor of programs and projects for
flood control projects and drainage services in Metro Manila, in coordination with the
DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and Urban Development
Coordinating Council (HUDCC), and other agencies, shall dismantle and remove all
structures, constructions, and other encroachments established or built in violation
of RA 7279, and other applicable laws along the Pasig-Marikina-San Juan Rivers, the
NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-Tullahan-Tenejeros
Rivers, and connecting waterways and esteros in Metro Manila. The DPWH, as the
principal implementor of programs and projects for flood control services in the rest
of the country more particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna,
in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC, and
other concerned government agencies, shall remove and demolish all structures,
constructions, and other encroachments built in breach of RA 7279 and other
applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay
(Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other rivers,
connecting waterways, and esteros that discharge wastewater into the Manila Bay.
cTDIaC
In addition, the MMDA is ordered to establish, operate, and maintain a sanitary
landfill, as prescribed by RA 9003, within a period of one (1) year from finality of this

Decision. On matters within its territorial jurisdiction and in connection with the
discharge of its duties on the maintenance of sanitary landfills and like
undertakings, it is also ordered to cause the apprehension and filing of the
appropriate criminal cases against violators of the respective penal provisions of RA
9003, 47 Sec. 27 of RA 9275 (the Clean Water Act), and other existing laws on
pollution.
(9)
The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275,
within one (1) year from finality of this Decision, determine if all licensed septic and
sludge companies have the proper facilities for the treatment and disposal of fecal
sludge and sewage coming from septic tanks. The DOH shall give the companies, if
found to be non-complying, a reasonable time within which to set up the necessary
facilities under pain of cancellation of its environmental sanitation clearance.
(10) Pursuant to Sec. 53 of PD 1152, 48 Sec. 118 of RA 8550, and Sec. 56 of RA
9003, 49 the DepEd shall integrate lessons on pollution prevention, waste
management, environmental protection, and like subjects in the school curricula of
all levels to inculcate in the minds and hearts of students and, through them, their
parents and friends, the importance of their duty toward achieving and maintaining
a balanced and healthful ecosystem in the Manila Bay and the entire Philippine
archipelago. aSEHDA
(11) The DBM shall consider incorporating an adequate budget in the General
Appropriations Act of 2010 and succeeding years to cover the expenses relating to
the cleanup, restoration, and preservation of the water quality of the Manila Bay, in
line with the country's development objective to attain economic growth in a
manner consistent with the protection, preservation, and revival of our marine
waters.
(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH,
DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line
with the principle of "continuing mandamus", shall, from finality of this Decision,
each submit to the Court a quarterly progressive report of the activities undertaken
in accordance with this Decision. EHcaDT
No costs.
SO ORDERED.

[G.R. No. 103702. December 6, 1994.]

MUNICIPALITY OF SAN NARCISO, QUEZON; MAYOR JUAN K. UY; COUNCILORS:
DEOGRACIAS R. ARGOSINO III, BENITO T. CAPIO, EMMANUEL R. CORTEZ, NORMANDO
MONTILLA, LEONARDO C. UY, FIDEL C. AURELLANA, PEDRO C. CARABIT, LEONARDO
D. AURELLANA, FABIAN M. MEDENILLA, TRINIDAD F. CORTEZ, SALVADOR M.
MEDENILLA, CERELITO B. AUREADA and FRANCISCA A. BAMBA, petitioners, vs. HON.
ANTONIO V. MENDEZ, SR., Presiding Judge, Regional Trial Court, Branch 62, 4th
Judicial Region, Gumaca, Quezon; MUNICIPALITY OF SAN ANDRES, QUEZON; MAYOR
FRANCISCO DE LEON; COUNCILORS: FE LUPINAC, TOMAS AVERIA, MANUEL O. OSAS,
WILFREDO O. FONTANIL, ENRICO U. NADRES, RODELITO LUZOIR, LENAC, JOSE L.
CARABOT, DOMING AUSA, VIDAL BANQUELES and CORAZON M. MAXIMO,
respondents.
DECISION
VITUG, J p:
On 20 August 1959, President Carlos P. Garcia, issued, pursuant to the then Sections
68 and 2630 of the Revised Administrative Code, as amended, Executive Order No.
353 creating the municipal district of San Andres, Quezon, by segregating from the
municipality of San Narciso of the same province, the barrios of San Andres,
Mangero, Alibijaban, Pansoy, Camflora and Tala along with their respective sitios.
Cdpr
Executive Order No. 353 was issued upon the request, addressed to the President
and coursed through the Provincial Board of Quezon, of the municipal council of San
Narciso, Quezon, in its Resolution No. 8 of 24 May 1959. 1
By virtue of Executive Order No. 174, dated 05 October 1965, issued by President
Diosdado Macapagal, the municipal district of San Andres was later officially
recognized to have gained the status of a fifth class municipality beginning 01 July
1963 by operation of Section 2 of Republic Act No. 1515. 2 The executive order
added that "(t)he conversion of this municipal district into (a) municipality as
proposed in House Bill No. 4864 was approved by the House of Representatives."
On 05 June 1989, the Municipality of San Narciso filed a petition for quo warranto
with the Regional Trial Court, Branch 62, in Gumaca, Quezon, against the officials of
the Municipality of San Andres. Docketed Special Civil Action No. 2014-G, the
petition sought the declaration of nullity of Executive Order No. 353 and prayed that
the respondent local officials of the Municipality of San Andres be permanently
ordered to refrain from performing the duties and functions of their respective
offices. 3 Invoking the ruling of this Court in Pelaez v. Auditor General, 4 the
petitioning municipality contended that Executive Order No. 353, a presidential act,
was a clear usurpation of the inherent powers of the legislature and in violation of
the constitutional principle of separation of powers. Hence, petitioner municipality

argued, the officials of the Municipality or Municipal District of San Andres had no
right to exercise the duties and functions of their respective offices that rightfully
belonged to the corresponding officials of the Municipality of San Narciso.
In their answer, respondents asked for the dismissal of the petition, averring, by
way of affirmative and special defenses, that since it was at the instance of
petitioner municipality that the Municipality of San Andres was given life with the
issuance of Executive Order No. 353, it (petitioner municipality) should be deemed
estopped from questioning the creation of the new municipality; 5 that because the
Municipality of San Andred had been in existence since 1959, its corporate
personality could no longer be assailed; and that, considering the petition to be one
for quo warranto, petitioner municipality was not the proper party to bring the
action, that prerogative being reserved to the State acting through the Solicitor
General. 6
On 18 July 1991, after the parties had submitted their respective pre-trial briefs, the
trial court resolved to defer action on the motion to dismiss and to deny a judgment
on the pleadings. LexLib
On 27 November 1991, the Municipality of San Andres filed anew a motion to
dismiss alleging that the case had become moot and academic with the enactment
of Republic Act No. 7160, otherwise known as the Local Government Code of 1991,
which took effect on 01 January 1991. The movant municipality cited Section 442(d)
of the law, reading thusly:
Sec. 442.

Requisites for Creation. . . .

"(d) Municipalities existing as of the date of the effectivity of this Code shall
continue to exist and operate as such. Existing municipal districts organized
pursuant to presidential issuances or executive orders and which have their
respective set of elective municipal officials holding office at the time of the
effectivity of this Code shall henceforth be considered as regular municipalities."
The motion was opposed by petitioner municipality, contending that the above
provision of law was inapplicable to the Municipality of San Andres since the
enactment referred to legally existing municipalities and not to those whose mode
of creation had been void ab initio. 7
In its Order of 02 December 1991, the lower court 8 finally dismissed the petition 9
for lack of cause of action on what it felt was a matter that belonged to the State,
adding that "whatever defects (were) present in the creation of municipal districts
by the President pursuant to presidential issuances and executive orders, (were)
cured by the enactment of R. A. 7160, otherwise known as Local Government Code
of 1991." In an order, dated 17 January 1992, the same court denied petitioner
municipality's motion for reconsideration.

Hence, this petition "for review on certiorari." Petitioners 10 argue that in issuing
the orders of 02 December 1991 and 17 January 1992, the lower court has "acted
with grave abuse of discretion amounting to lack of or in excess of jurisdiction."
Petitioners assert that the existence of a municipality created by a null and void
presidential order may be attacked either directly or even collaterally by anyone
whose interests or rights are affected, and that an unconstitutional act is not a law,
creates no office and is inoperative such as though its has never been passed. 11
Petitioners consider the instant petition to be one for "review on certiorari" under
Rules 42 and 45 of the Rules of Court; at the same time, however, they question the
orders of the lower court for having been issued with "grave abuse of discretion
amounting to lack of or in excess of jurisdiction, and that there is no other plain ,
speedy and adequate remedy in the ordinary course of law available to petitioners
to correct said Orders, to protect their rights and to secure a final and definitive
interpretation of the legal issues involved." 12 Evidently, then, the petitioners
intend to submit their case in this instance under Rule 65. We shall disregard the
procedural incongruence.
The special civil action of quo warranto is a "prerogative writ by which the
Government can call upon any person to show by what warrant he holds a public
office or exercises a public franchise." 13 When the inquiry is focused on the legal
existence of a body politic, the action is reserved to the State in a proceeding for
quo warranto or any other credit proceeding. 14 It must be brought "in the name of
the Republic of the Philippines" 15 and commenced by the Solicitor General or the
fiscal "when directed by the President of the Philippines . . . ." 16 Such officers may,
under certain circumstances, bring such an action "at the request and upon the
relation of another person" with the permission of the court. 17 The Rules of Court
also allows an individual to commence an action for quo warranto in his own name
but this initiative can be done when he claims to be "entitled to a public office or
position usurped or unlawfully held or exercised by another." 18 While the quo
warranto proceedings filed below by petitioner municipality has so named only the
officials of the Municipality of San Andres as respondents, it is virtually, however, a
denunciation of the authority of the Municipality or Municipal District of San Andres
to exist and to act in that capacity.
At any rate, in the interest of resolving any further doubt on the legal status of the
Municipality of San Andres, the Court shall delve into the merits of the petition.
Cdpr
While petitioners would grant that the enactment of Republic Act No. 7160 may
have converted the Municipality of San Andres into a de facto municipality, they,
however, contend that since the petition for quo warranto had been filed prior to the
passage of said law, petitioner municipality had acquired a vested right to seek the
nullification of Executive Order No. 353, and any attempt to apply Section 442 of

Republic Act 7160 to the petition would perforce be violative of due process and the
equal protection clause of the Constitution.
Petitioners' theory might perhaps be a point to consider had the case been
seasonably brought. Executive Order No. 353 creating the municipal district of San
Andres was issued on 20 August 1959 but it was only after almost thirty (30) years,
or on 05 June 1989, that the municipality of San Narciso finally decided to challenge
the legality of the executive order. In the meantime, the Municipal District, and later
the Municipality, of San Andres, began and continued to exercise the powers and
authority of a duly created local government unit. In the same manner that the
failure of a public officer to question his ouster or the right of another to hold a
position within one-year period can abrogate an action belatedly filed, 19 so also, if
not indeed with greatest imperativeness, must a quo warranto proceeding assailing
the lawful authority of a political subdivision be timely raised. 20 Public interest
demands it.
Granting the Executive Order No. 353 was a complete nullity for being the result of
an unconstitutional delegation of legislative power, the peculiar circumstances
obtaining in this case hardly could offer a choice other than to consider the
Municipality of San Andres to have at least attained a status uniquely of its own
closely approximating, if not in fact attaining, that of a de facto municipal
corporation. Conventional wisdom cannot allow it to be otherwise. Created in 1959
by virtue of Executive Order No. 353, the Municipality of San Andres had been in
existence for more than six years when, on 24 December 1965, Pelaez v. Auditor
General was promulgated. The ruling could have sounded the call for a similar
declaration of the unconstitutionality of Executive Order No. 353 but it was not to be
the case. On the contrary, certain governmental acts all pointed to the State's
recognition of the continued existence of the Municipality of San Andres. Thus, after
more than five years as a municipal district, Executive Order No. 174 classified the
Municipality of San Andres as a fifth class municipality after having surpassed the
income requirement laid out in Republic Act No. 1515. Section 31 of Batas
Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980,
constituted as municipal circuits, in the establishment of Municipal Circuit Trial
Courts in the country, certain municipalities that comprised the municipal circuits
organized under Administrative Order No. 33, dated 13 June 1978, issued by this
Court pursuant to Presidential Decree No. 537. Under this administrative order, the
Municipality of San Andres had been covered by the 10th Municipal Circuit Court of
San Francisco-San Andres for the province of Quezon. Cdpr
At the present time, all doubts on the de jure standing of the municipality must be
dispelled. Under the Ordinance (adopted on 15 October 1986) apportioning the
seats of the House of Representatives, appended to the 1987 Constitution, the
Municipality of San Andres has been considered to be one of the twelve (12)
municipalities composing the Third District of the province of Quezon. Equally
significant is Section 442(d) of the Local Government Code to the effect that

municipal districts "organized pursuant to presidential issuances or executive orders

and which have their respective sets of elective municipal officials holding office at
the time of the effectivity of (the) Code shall henceforth be considered as regular
municipalities." No pretension of unconstitutionality per se of Section 442(d) of the
Local Government Code is preferred. It is doubtful whether such a pretext, even if
made, would succeed. The power to create political subdivisions is a function of the
legislature. Congress did just that when it has incorporated Section 442(d) in the
Code. Curative laws, which in essence are retrospective, 21 and aimed at giving
"validity to acts done that would have been invalid under existing laws, as if existing
laws have been complied with," are validly accepted in this jurisdiction, subject to
the usual qualification against impairment of vested rights. 22
All considered, the de jure status of the Municipality of San Andres in the province of
Quezon must now be conceded.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Costs against
petitioners.
SO ORDERED.

[G.R. No. 166429. December 19, 2005.]

REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo R.
Ermita, the DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), and
the MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), petitioners, vs. HON.
HENRICK F. GINGOYON, In his capacity as Presiding, and Judge of the Regional Trial
Court, Branch 117, Pasay City and PHILIPPINE INTERNATIONAL AIR TERMINALS CO.,
INC., respondents.
The Solicitor General for petitioner.
Romulo Mabanta Buenaventura Sayoc and Delos Angeles for PIATCO.
SYLLABUS
1.
POLITICAL LAW; CONSTITUTIONAL LAW; INHERENT RIGHTS OF THE STATE;
RIGHT OF EMINENT DOMAIN; EXTENDS TO PERSONAL AND REAL PROPERTY; CASE
AT BAR. The right of eminent domain extends to personal and real property, and
the NAIA 3 structures, adhered as they are to the soil, are considered as real
property. The public purpose for the expropriation is also beyond dispute. It should
also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility
that the property sought to be expropriated may be titled in the name of the
Republic of the Philippines, although occupied by private individuals, and in such
case an averment to that effect should be made in the complaint. The instant
expropriation complaint did aver that the NAIA 3 complex "stands on a parcel of
land owned by the Bases Conversion Development Authority, another agency of
[the Republic of the Philippines]." IaECcH
2.
ID.; ID.; STATUTES; REPUBLIC ACT NO. 8974; APPLIES IN INSTANCES WHEN
THE NATIONAL GOVERNMENT EXPROPRIATES PROPERTY FOR NATIONAL
GOVERNMENT INFRASTRUCTURE PROJECTS. Rep. Act No. 8974, which provides for
a procedure eminently more favorable to the property owner than Rule 67,
inescapably applies in instances when the national government expropriates
property "for national government infrastructure projects." Thus, if expropriation is
engaged in by the national government for purposes other than national
infrastructure projects, the assessed value standard and the deposit mode
prescribed in Rule 67 continues to apply.
3.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EXPROPRIATION; RULE 67 AND
REPUBLIC ACT NO. 8974, DISTINGUISHED. Under both Rule 67 and Rep. Act No.
8974, the Government commences expropriation proceedings through the filing of a
complaint. Unlike in the case of local governments which necessitate an authorizing
ordinance before expropriation may be accomplished, there is no need under Rule

67 or Rep. Act No. 8974 for legislative authorization before the Government may
proceed with a particular exercise of eminent domain. The most crucial difference
between Rule 67 and Rep. Act No. 8974 concerns the particular essential step the
Government has to undertake to be entitled to a writ of possession. . . . Rule 67
merely requires the Government to deposit with an authorized government
depositary the assessed value of the property for expropriation for it to be entitled
to a writ of possession. On the other hand, Rep. Act No. 8974 requires that the
Government make a direct payment to the property owner before the writ may
issue. Moreover, such payment is based on the zonal valuation of the BIR in the
case of land, the value of the improvements or structures under the replacement
cost method, or if no such valuation is available and in cases of utmost urgency, the
proffered value of the property to be seized. IEHaSc
4.
POLITICAL LAW; CONSTITUTIONAL LAW; STATUTES; REPUBLIC ACT NO. 8974;
NATIONAL GOVERNMENT PROJECTS, DEFINED. Rep. Act No. 8974 is entitled "An
Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National
Government Infrastructure Projects and for Other Purposes." Obviously, the law is
intended to cover expropriation proceedings intended for national government
infrastructure projects. Section 2 of Rep. Act No. 8974 explains what are considered
as "national government projects." "Sec. 2. National Government Projects. The
term "national government projects" shall refer to all national government
infrastructure, engineering works and service contracts, including projects
undertaken by government-owned and controlled corporations, all projects covered
by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise known
as the Build-Operate-and-Transfer Law, and other related and necessary activities,
such as site acquisition, supply and/or installation of equipment and materials,
implementation, construction, completion, operation, maintenance, improvement,
repair and rehabilitation, regardless of the source of funding."
5.
ID.; ID.; ID.; ID.; CONTEMPLATES WITHIN ITS COVERAGE REAL PROPERTY
ACQUIRED FOR NATIONAL INFRASTRUCTURE PROJECTS; CASE AT BAR. Since the
rights of PIATCO over the NAIA 3 facilities are established, the nature of these
facilities should now be determined. Under Section 415 (1) of the Civil Code, these
facilities are ineluctably immovable or real property, as they constitute buildings,
roads and constructions of all kinds adhered to the soil. Certainly, the NAIA 3
facilities are of such nature that they cannot just be packed up and transported by
PIATCO like a traveling circus caravan. Thus, the property subject of expropriation,
the NAIA 3 facilities, are real property owned by PIATCO. . . . Rep. Act No. 8974
contemplates within its coverage such real property constituting land, buildings,
roads and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No.
8974, which sets the declaration of the law's policy, refers to "real property acquired
for national government infrastructure projects are promptly paid just
compensation." Section 4 is quite explicit in stating that the scope of the law relates

to the acquisition of "real property," which under civil law includes buildings, roads
and constructions adhered to the soil. TaHDAS
6.
ID.; ID.; ID.; ID.; IN CASE THE COMPLETION OF A GOVERNMENT
INFRASTRUCTURE PROJECT IS OF UTMOST URGENCY AND THERE IS NO EXISTING
VALUATION OF THE AREA CONCERNED, THE IMPLEMENTING AGENCY SHALL
IMMEDIATELY PAY THE OWNER OF THE PROPERTY ITS PROFFERED VALUE.
Admittedly, there is no way, at least for the present, to immediately ascertain the
value of the improvements and structures since such valuation is a matter for
factual determination. Yet Rep. Act No. 8974 permits an expedited means by which
the Government can immediately take possession of the property without having to
await precise determination of the valuation. Section 4 (c) of Rep. Act No. 8974
states that "in case the completion of a government infrastructure project is of
utmost urgency and importance, and there is no existing valuation of the area
concerned, the implementing agency shall immediately pay the owner of the
property its proffered value, taking into consideration the standards prescribed in
Section 5 [of the law]." The "proffered value" may strike as a highly subjective
standard based solely on the intuition of the government, but Rep. Act No. 8974
does provide relevant standards by which "proffered value" should be based, as well
as the certainty of judicial determination of the propriety of the proffered value.
acCDSH
7.
ID.; ID.; ID.; ID.; MANDATES THE 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 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.

8.
ID.; ID.; ID.; ID.; PROVIDES FOR THE STANDARD THAT GOVERNS THE EXTENT
OF THE ACTS THE GOVERNMENT MAY BE AUTHORIZED TO PERFORM UPON THE
ISSUANCE OF THE WRIT OF POSSESSION; CASE AT BAR. Rep. Act No. 8974
provides the appropriate answer for the standard that governs the extent of the acts
the Government may be authorized to perform upon the issuance of the writ of
possession. Section 4 states that "the court shall immediately issue to the
implementing agency an order to take possession of the property and start the
implementation of the project." We hold that accordingly, once the Writ of
Possession is effective, the Government itself is authorized to perform the acts that
are essential to the operation of the NAIA 3 as an international airport terminal upon
the effectivity of the Writ of Possession. These would include the repair,
reconditioning and improvement of the complex, maintenance of the existing
facilities and equipment, installation of new facilities and equipment, provision of
services and facilities pertaining to the facilitation of air traffic and transport, and
other services that are integral to a modern-day international airport. ESCcaT
9.
ID.; ID.; ID.; ID.; FINAL DETERMINATION OF JUST COMPENSATION;
PROCEDURE; CASE AT BAR. Rep. Act No. 8974 mandates a speedy method by
which the final determination of just compensation may be had. Section 4 provides:
"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." We hold that this provision should apply
in this case. The sixty (60)-day period prescribed in Rep. Act No. 8974 gives teeth to
the law's avowed policy "to ensure that owners of real property acquired for
national government infrastructure projects are promptly paid just compensation."
In this case, there already has been irreversible delay in the prompt payment of
PIATCO of just compensation, and it is no longer possible for the RTC to determine
the just compensation due PIATCO within sixty (60) days from the filing of the
complaint last 21 December 2004, as contemplated by the law. Still, it is feasible to
effectuate the spirit of the law by requiring the trial court to make such
determination within sixty (60) days from finality of this decision, in accordance with
the guidelines laid down in Rep. Act No. 8974 and its Implementing Rules.
10.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EXPROPRIATION; THE APPOINTMENT
OF COMMISSIONERS UNDER RULE 67 MAY BE RESORTED TO EVEN IN
EXPROPRIATION PROCEEDINGS UNDER REPUBLIC ACT NO. 8974. Rep. Act No.
8974 is silent on the appointment of commissioners tasked with the ascertainment
of just compensation. This protocol though is sanctioned under Rule 67. We rule that
the appointment of commissioners under Rule 67 may be resorted to, even in
expropriation proceedings under Rep. Act No. 8974, since the application of the
provisions of Rule 67 in that regard do not conflict with the statute. As earlier

stated, Section 14 of the Implementing Rules does allow such other incidents
affecting the complaint to be resolved under the provisions on expropriation of Rule
67 of the Rules of Court. Even without Rule 67, reference during trial to a
commissioner of the examination of an issue of fact is sanctioned under Rule 32 of
the Rules of Court. But while the appointment of commissioners under the aegis of
Rule 67 may be sanctioned in expropriation proceedings under Rep. Act No. 8974,
the standards to be observed for the determination of just compensation are
provided not in Rule 67 but in the statute. In particular, the governing standards for
the determination of just compensation for the NAIA 3 facilities are found in Section
10 of the Implementing Rules for Rep. Act No. 8974, which provides for the
replacement cost method in the valuation of improvements and structures. IScaAE
11.
ID.; ID.; ID.; ID.; OBJECTIONS TO THE ORDER OF APPOINTMENT OF THE
COMMISSIONERS SHOULD BE FILED WITH THE TRIAL COURT. What Rule 67 does
allow though is for the parties to protest the appointment of any of these
commissioners, as provided under Section 5 of the Rule. These objections though
must be filed within ten (10) days from service of the order of appointment of the
commissioners. In this case, the proper recourse of the Government to challenge
the choice of the commissioners is to file an objection with the trial court,
conformably with Section 5, Rule 67, and not as it has done, assail the same
through a special civil action for certiorari. Considering that the expropriation
proceedings in this case were effectively halted seven (7) days after the Order
appointing the commissioners, it is permissible to allow the parties to file their
objections with the RTC within five (5) days from finality of this decision.
12.
JUDICIAL ETHICS; JUDGES; INHIBITION; DISQUALIFICATION OF A JUDGE IS A
DEPRIVATION OF HIS JUDICIAL POWER AND SHOULD NOT BE ALLOWED ON THE
BASIS OF MERE SPECULATIONS AND SURMISES. The disqualification of a judge is
a deprivation of his/her judicial power and should not be allowed on the basis of
mere speculations and surmises. It certainly cannot be predicated on the adverse
nature of the judge's rulings towards the movant for inhibition, especially if these
rulings are in accord with law. Neither could inhibition be justified merely on the
erroneous nature of the rulings of the judge.
13.
REMEDIAL LAW; COURTS; POWERS; COURTS HAVE THE INHERENT POWER TO
AMEND AND CONTROL ITS PROCESSES AND ORDERS SO AS TO MAKE THEM
CONFORMABLE TO LAW AND JUSTICE; CASE AT BAR. The motu proprio
amendment by a court of an erroneous order previously issued may be sanctioned
depending on the circumstances, in line with the long-recognized principle that
every court has inherent power to do all things reasonably necessary for the
administration of justice within the scope of its jurisdiction. Section 5 (g), Rule 135
of the Rules of Court further recognizes the inherent power of courts "to amend and
control its process and orders so as to make them conformable to law and justice," a
power which Hon. Gingoyon noted in his 10 January 2005 Omnibus Order. This
inherent power includes the right of the court to reverse itself, especially when in its

honest opinion it has committed an error or mistake in judgment, and that to adhere
to its decision will cause injustice to a party litigant.
14.
JUDICIAL ETHICS; JUDGES; INHIBITION; INCOMPETENCE MAY BE A GROUND
FOR ADMINISTRATIVE SANCTION, BUT NOT FOR INHIBITION. Incompetence may
be a ground for administrative sanction, but not for inhibition, which requires lack of
objectivity or impartiality to sit on a case. CDHAcI
PUNO, J., separate opinion:
POLITICAL LAW; CONSTITUTIONAL LAW; JUDICIAL DEPARTMENT; SUPREME COURT;
POWERS; THE POWER TO PROMULGATE RULES OF PLEADING, PRACTICE AND
PROCEDURE IS NO LONGER SHARED BY THE SUPREME COURT WITH CONGRESS;
CASE AT BAR. Article VIII, Sec. 5 of the 1987 Constitution gave the Supreme Court
the following powers: . . . (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. In Echegaray v. Secretary of Justice we emphasized that the
1987 Constitution strengthened the rule making power of this Court, thus: The 1987
Constitution molded an even stronger and more independent judiciary. Among
others, it enhanced the rule making power of this Court. . . . The rule making power
of this Court was expanded. This Court for the first time was given the power to
promulgate rules concerning the protection and enforcement of constitutional
rights. . . . But most importantly, the 1987 Constitution took away the power of
Congress to repeal, alter, or supplement rules concerning pleading, practice and
procedure. In fine, the power to promulgate rules of pleading, practice and
procedure is no longer shared by this Court with Congress . . . . Undoubtedly, Rule
67 is the rule this Court promulgated to govern the proceedings in expropriation
cases filed in court. It has been the undeviating rule for quite a length of time.
Following Article VIII, Section 5 (5) of the 1987 Constitution and the Echegaray
jurisprudence, Rule 67 cannot be repealed or amended by Congress. This prohibition
against non-repeal or non-amendment refers to any part of Rule 67 for Rule 67 is
pure procedural law. Consequently, the Court should not chop Rule 67 into pieces
and hold that some can be changed by Congress but others can be changed. The
stance will dilute the rule making power of this Court which can not be allowed for it
will weaken its institutional independence.
CARPIO, J., separate opinion:
POLITICAL LAW; CONSTITUTIONAL LAW; STATUTES; REPUBLIC ACT NO. 8974; THE
IMMEDIATE PAYMENT TO THE PROPERTY OWNER OF THE FULL ZONAL OR

PROFFERED VALUE PRIOR TO TAKEOVER BY THE GOVERNMENT MUST APPLY TO ALL

EXPROPRIATION CASES UNDER REPUBLIC ACT NO. 8974 INVOLVING THE
ACQUISITION OF REAL PROPERTY FOR NATIONAL GOVERNMENT PROJECTS; CASE AT
BAR. Congress has no power to amend or repeal rules of procedure adopted by
the Supreme Court. However, Congress can enact laws on substantive matters
which are the subject of court procedures. Thus, Congress can prescribe the initial
or minimum amount for just compensation in expropriation cases, and require
immediate payment of such initial or minimum amount as condition for the
immediate takeover of the property by the government. The rules of procedure, like
Rule 67 of the Rules of Court, must adjust automatically to such new laws on
substantive matters. Section 4 of Republic Act No. 8974, mandating immediate
payment to the property owner of the full zonal or proffered value prior to takeover
by the government, is a substantive requirement in expropriation cases. Thus,
Section 4 must apply to all expropriation cases under RA No. 8974 involving the
acquisition of real property, like the NAIA Terminal III, for "national government
projects." Even assuming, for the sake of argument, that Section 4 of RA 8974 is not
applicable to the expropriation of NAIA Terminal III, the Court must still apply the
substantive concept in Section 4 of RA 8974 to expropriation proceedings under
Rule 67 to insure equal protection of the law to property owners. There is no
substantial reason to discriminate against property owners in expropriation cases
under Rule 67. Under RA 8974, when private property is expropriated for a national
government project, the government must first pay the zonal or proffered value to
the property owner before the government can take over the property. In the
present case, private property is expropriated for an admittedly national
government project. Thus, the Court must extend the substantive benefits in
Section 4 of RA 8974 to expropriation cases under Rule 67 to prevent denial of the
equal protection of the law. cTIESa
CORONA, J., dissenting opinion:
1.
POLITICAL LAW; CONSTITUTIONAL LAW; INHERENT POWERS OF THE STATE;
EMINENT DOMAIN; LIMITATIONS. The exercise of eminent domain is circumscribed
by two limitations in the Constitution: (1) the taking must be for public use and (2)
just compensation must be paid to the owner of the private property. These twin
proscriptions are grounded on the necessity to achieve a balance between the
interests of the State, on the one hand, and the private rights of the individual, on
the other hand, by effectively restraining the former and affording protection to the
latter. "Public use" as a limitation to the power of eminent domain is not defined in
the Constitution. It is thus considered in its general notion of meeting a public need
or a public exigency. It is not restricted to clear cases of "use by the public" but
embraces whatever may be beneficially employed for the community. The concept
now covers uses which, while not directly available to the public, redound to their
indirect advantage or benefit. It is generally accepted that it is just as broad as
"public welfare."

2.
ID.; ID.; ID.; ID.; JUST COMPENSATION; DEFINED. Just compensation is the
just and complete equivalent of the loss which the owner of the thing expropriated
has to suffer by reason of the expropriation. The compensation given to the owner is
just if he receives for his property a sum equivalent to its market value at the time
of the taking. "Market value" is the price fixed by the buyer and the seller in the
open market in the usual and ordinary course of legal trade and competition.
3.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EXPROPRIATION; RULE 67 AND
REPUBLIC ACT 8974, DISTINGUISHED. Rule 67 and RA 8974 differ in the manner
of compensating the owner of the property under expropriation. Under Rule 67,
before the government can take possession of the property to be expropriated, the
deposit of an amount equivalent to the assessed value of the property for taxation
purposes is sufficient for the time being, that is, until the conclusion of the court
proceedings where both parties shall have proven their claims and the court shall
have made a factual determination of the price of the property. Under RA 8974, on
the other hand, immediate payment of the full zonal value (a much bigger sum than
the assessed value required by Rule 67) of the property and improvements and/or
structures as determined under Section 7 of the law is required before the
government can take possession of the property. caITAC
4.
ID.; CIVIL PROCEDURE; JUDGMENTS; LAW OF THE CASE; FINDS APPLICATION
ONLY IN THE SAME CASE BETWEEN THE PARTIES. It is incorrect to say that Agan
constitutes the law of the case. The "law of the case" doctrine is defined as a term
applied to an established rule that, when an appellate court passes on a question
and remands the case to the lower court for further proceedings, the question there
settled becomes the law of the case on subsequent appeal. Unlike the doctrine of
stare decisis, the doctrine of the law of the case operates only in the particular case.
The law of the case finds application only in the same case between the parties.
This case (which refers to the expropriation of NAIA IPT3) is irrefutably not the same
as Agan (which was about the validity of the so-called "PIATCO contracts"). Hence,
the pronouncements in Agan cannot constitute the law of the case here.
5.
ID.; SPECIAL CIVIL ACTIONS; EXPROPRIATION; RULE 67 IS APPLICABLE IN CASE
AT BAR. The application of Rule 67 in the expropriation proceedings of NAIA IPT3
is in consonance with Agan. The determination and payment of just compensation
pursuant to Rule 67 are in accordance with law. Under Rule 67, PIATCO will be given
FULL JUST COMPENSATION by the government for the taking of NAIA IPT3. That is
mandatory. The Constitution itself ordains it. Under Rule 67, there is no way the
government can unjustly enrich itself at the expense of PIATCO. Section 9 of Rule 67
ensures this by requiring the payment of interest from the time government takes
possession of the property.
6.
STATUTORY CONSTRUCTION; STATUTES; INTERPRETATION OF; IMPLIED
REPEALS ARE NOT FAVORED; CASE AT BAR. Respondent judge's theory about Rule
67's supposed repeal by RA 8974 was totally devoid of factual and legal basis. RA

8974 did not repeal Rule 67 at all. The Constitution will not allow it. In fact, neither
its repealing clause nor any of its provisions even mentioned or referred to the Rules
of Court, whether on expropriation or anything else. But even assuming (but not
conceding) that respondent judge's theory had been based on an implied repeal,
still there would have been no legal justification for it. Settled is the rule in statutory
construction that implied repeals are not favored. Thus: "The two laws must be
absolutely incompatible, and a clear finding thereof must surface, before the
inference of implied repeal may be drawn. The rule is expressed in the maxim,
interpretare et concordare legibus est optimus interpretendi, i.e., every statute must
be so interpreted and brought into accord with other laws as to form a uniform
system of jurisprudence. The fundament is that the legislature should be presumed
to have known the existing laws on the subject and not have enacted conflicting
statutes. Hence, all doubts must be resolved against any implied repeal, and all
efforts should be exerted in order to harmonize and give effect to all laws on the
subject." The foregoing becomes all the more significant when, as in this case, the
provisions of RA 8974 reveal no manifest intent to revoke Rule 67. In fact, Section
14 of the IRR of RA 8974 makes an explicit reference to Rule 67 and mandates its
applicability to all matters regarding defenses and objections to the complaint,
issues on uncertain ownership and conflicting claims, effects of appeal on the rights
of the parties and such other incidents affecting the complaint. If only for this
reason, respondent judge's "repeal theory" is totally erroneous. AIECSD
7.
POLITICAL LAW; CONSTITUTIONAL LAW; JUDICIAL DEPARTMENT; SUPREME
COURT; THE POWER TO PROMULGATE RULES OF PLEADING, PRACTICE AND
PROCEDURE IS NO LONGER SHARED BY THE SUPREME COURT WITH CONGRESS.
[A]ny talk of repeal (whether express or implied) by legislative enactment of the
rules of procedure duly promulgated by this Court goes against the Constitution
itself. The power to promulgate rules of pleading, practice and procedure was
granted by the Constitution to this Court to enhance its independence. It is no
longer shared by this Court with Congress. The legislature now has no power to
annul, modify or augment the Rules of Court. We expressly declared in Echegaray v.
Secretary of Justice that the 1987 Constitution took away the power of Congress to
repeal, alter or supplement rules concerning pleading, practice and procedure.
8.
ID.; ID.; ID.; ID.; ID.; CASE AT BAR. There is no question that the
appropriate standard of just compensation is a substantive matter, not procedural.
However, the manner of determining just compensation (including how it shall be
paid and under what conditions a writ of possession may be issued) is a matter of
procedure, not of substantive law. If a rule or statute creates a right or takes away a
vested right, it is substantive. If it operates as a means of implementing an existing
right, then it is procedural. The provisions of Rule 67 neither vest a new power on
the State nor create a new right in favor of the property owner. Rule 67 merely
provides the procedure for the State's exercise of eminent domain and, at the same
time, ensures the enforcement of the right of the private owner to receive just

compensation for the taking of his property. It is purely a matter of procedure. It is

therefore exclusively the domain of this Court. The Constitution prohibits Congress
from transgressing this sphere. Congress cannot legislate the manner of payment of
just compensation. Neither can Congress impose a condition on the issuance of a
writ of possession. Yet that is what RA 8974 precisely does.
9.
ID.; ID.; STATUTES; REPUBLIC ACT 8974; WHEN INAPPLICABLE. Section 1 of
the IRR of RA 8974 provides that the law covers: "[A]ll acquisition of private real
properties, including improvements therein, needed as right-of-way, site or location
for national government projects undertaken by any department, office or agency of
the national government, including any government-owned or controlled
corporation or state college or university, authorized by law or its respective charter
to undertake national government projects." From this, we can clearly infer that the
law does not apply to the following: (1) expropriation of private property which is
personal or movable property; (2) taking of private property, whether personal or
real, for a purpose other than for right-of-way, site or location of a national
government project; (3) appropriation of private property for right-of-way, site or
location of a project not classified as a national government project; (4) acquisition
of private property for right-of-way, site or location of a national government project
but to be undertaken by an entity not enumerated in Section 1 of the IRR of RA
8974. In the foregoing situations, it is Rule 67 of the Rules of Court or the relevant
special law (if any) that will apply. Here, the expropriation of NAIA IPT3 falls under
the second category since petitioners seek to take private property for a purpose
other than for a right-of-way, site or location for a national government project.
TAECaD
10.
ID.; ID.; ID.; ID.; INAPPLICABLE IN CASE AT BAR. [U]nder Section 2 (d) of the
IRR of RA 8974 defining "national government projects", an airport (which NAIA IPT3
essentially is) is specifically listed among the national government projects for
which expropriation proceedings may be initiated under the law. However, the law
and its IRR also provide that the expropriation should be for the purpose of
providing for a right of way, site or location for the intended national government
project. A national government project is separate and distinct from the purpose of
expropriation. Otherwise, there would have been no need to define them separately.
Thus, respondent judge erred when he equated one with the other and obliterated
the clear distinction made by the law. Moreover, under Section 2 (e) of the IRR, the
specific objects or purposes of expropriation were lumped as 'ROW' which is defined
as the "right-of-way, site or location, with defined physical boundaries, used for a
national government project." Obviously, the NAIA IPT3 is not a right of way, site or
location for any national government infrastructure project but the infrastructure
itself albeit still under construction. The construction (and now the completion) of
NAIA IPT3 never required the acquisition of private property for a right of way, site
or location since the terminal, including all its access roads, stands completely on
government land. Conformably, RA 8974 does not apply to the expropriation of NAIA

IPT3. And there being no special law on the matter, Rule 67 of the Rules of Court
governs the procedure for its expropriation.
11.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EXPROPRIATION; REQUISITES FOR
THE ISSUANCE OF THE WRIT OF POSSESSION; COMPLIED WITH IN CASE AT BAR.
Under Section 2 of Rule 67, the only requisites for authorizing immediate entry (that
is, for the issuance of the writ of possession) in expropriation proceedings are: (1)
the filing of a complaint for expropriation sufficient in form and substance, and (2) a
deposit equivalent to the assessed value for taxation purposes of the property
subject to expropriation. Upon compliance with these two requirements, the
issuance of a writ of possession becomes ministerial. Petitioners complied fully with
the requirements of Rule 67 pertaining to the issuance of the writ allowing entry
into the expropriated facility. First, they duly filed the verified complaint with the
court a quo. Second, PIATCO was served with and notified of the complaint. Third,
petitioners set aside and earmarked P3,022,125,000 as provisional deposit,
equivalent to the assessed value of the property for taxation purposes with the
depositary bank. From then on, it became the ministerial duty of the trial court
presided over by respondent judge to issue the writ of possession. Section 2 of Rule
67 categorically prescribes the amount to be deposited with the authorized
government depositary as the pre-condition for the issuance of a writ of possession.
This is the assessed value of the property for purposes of taxation. The figure is
exact and permits the court no discretion in determining what the provisional value
should be.
12.
POLITICAL LAW; CONSTITUTIONAL LAW; STATUTES; REPUBLIC ACT 8974;
WHERE THERE IS NO EXISTING VALUATION OF THE PROPERTY CONCERNED, ONLY
THE PROFFERED VALUE OF THE PROPERTY BY THE AGENCY REQUESTING
EXPROPRIATION IS REQUIRED TO BE PAID FOR THE ISSUANCE OF THE WRIT. Even
assuming for the sake of argument that it was RA 8974 that was applicable, still the
trial court could not order petitioners to increase their deposit and to immediately
pay the zonal value of NAIA IPT3. Section 4 (c) of the law states that, in cases where
there is no existing valuation of the property concerned, only the proffered value of
the property by the agency requesting expropriation is required to be paid for
issuance of the writ. So even if it had been RA 8974 that was applicable which
was not so the amount deposited by petitioners would have constituted the
proffered value estimated by them, based on comparative values made by the City
Assessor. In any case, the final determination of the total just compensation due the
owner will have to be made in accordance with Rule 67. The provisional deposit
shall then be deducted and petitioners shall pay the balance plus legal interest from
the time petitioners took possession of the property until PIATCO is fully paid.
CAIaHS
13.
ID.; ID.; INHERENT POWERS OF THE STATE; EMINENT DOMAIN; JUST
COMPENSATION; FULL PAYMENT THEREOF, THOUGH A CONDITION PRECEDENT FOR
THE TRANSFER OF TITLE OR OWNERSHIP, IS NOT A CONDITION PRECEDENT FOR

THE TAKING OF THE PROPERTY. In expropriation, private property is taken for

public use. What constitutes taking is well-settled in our jurisprudence. The owner is
ousted from his property and deprived of his beneficial enjoyment thereof. The
owner's right to possess and exploit the property (that is to say, his beneficial
ownership of it) is "destroyed". And it is only after the property is taken that the
court proceeds to determine just compensation, upon full payment of which shall
title pass on to the expropriator. . . . Full payment of just compensation, though a
condition precedent for the transfer of title or ownership, is not a condition
precedent for the taking of the property.
14.
ID.; ID.; ID.; ID.; THE RIGHT OF BENEFICIAL OWNERSHIP ENJOYED BY THE
EXPROPRIATOR INCLUDES THE RIGHT TO LEASE; CASE AT BAR. [A]n important
element of taking is that the owner's right to possess and exploit the land (in other
words, his beneficial ownership of it) is transferred to and thenceforth exercised by
the expropriator. . . . The question now is whether this right of beneficial ownership
enjoyed by the expropriator includes the right to lease out the property (or portions
thereof) and to award concessions within NAIA IPT3 to third parties. It does. . . . In
this case, petitioners aim to acquire the NAIA IPT3 as the site of a world-class
passenger terminal and airport, and to complete its construction and operate it for
the benefit of the Filipino people. This is the "public use" purpose of the
expropriation. On the other hand, the lease and concession contracts are the means
by which the public purpose of the expropriation can be attained. Since PIATCO
never challenged the "public use" purpose of the expropriation, the reasonable
implications of such public use, including the award of leases and concessions in the
terminal, are deemed admitted as necessary consequences of such expropriation.
Furthermore, in a contract of lease, only the use and enjoyment of the thing are
extended to the lessee. Thus, one need not be the legal owner of the property in
order to give it in lease. The same is true for the award of concessions which
petitioners, as beneficial owner of the property, can legally grant. Hence,
respondent judge committed grave abuse of discretion when he prohibited
petitioners from exercising acts of ownership in NAIA IPT3.
15.
REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EXPROPRIATION; ASCERTAINMENT
OF COMPENSATION; APPOINTMENT OF COMMISSIONERS; OBJECTION THERETO MUST
BE FILED WITH THE TRIAL COURT WITHIN THE PRESCRIBED PERIOD. . . . Rule 67
does not require consultation with the parties before the court appoints the
commissioners. Neither notice to the parties nor hearing is required for the
appointment of commissioners by the judge. However, in Municipality of Talisay v.
Ramirez, we held that "while it is true that, strictly speaking, it is the court that shall
appoint the said commissioners, there is nothing to prevent it from seeking the
recommendations of the parties on this matter . . . to ensure their fair
representation." This ruling was more or less integrated into the revised rules of
court as the latter now gives the parties ten days from the service of the order
appointing the commissioners to file their objections to any of the appointees. This,

in effect, allows them to protest the appointment of the commissioners while

providing them the opportunity to recommend their own choices. But the objection
must come after the appointment. This is apparent from the second paragraph of
Section 5, Rule 67: "[o]bjections to the appointment of any of the commissioners
shall be filed in court within ten (10) days from service, and shall be resolved within
thirty (30) days after all the commissioners shall have received copies of the
objections." Consequently, if petitioners are unable to accept the competence of
any of the commissioners, their remedy is to file an objection with the trial court
within the stated period. Initiating a certiorari proceeding on this issue is premature.
TAacCE
16.
ID.; ID.; ID.; ID.; ID.; THE COURT IS NOT BOUND BY THE FINDINGS OF THE
COMMISSIONERS. In any case, even if the commissioners are appointed by the
court, the latter is not bound by their findings. . . . The report of the commissioners
on the value of the condemned property is neither final nor conclusive. The court is
permitted to act on the report in any of several ways enumerated in the rules, at its
discretion. It may render such judgment as shall secure to the plaintiff the property
essential to the exercise of his right of condemnation and, to the defendant, just
compensation for the property expropriated. The court may substitute its own
estimate of the value as gathered from the records.
17.
JUDICIAL ETHICS; JUDGES; DISQUALIFICATION; COMPULSORY
DISQUALIFICATION AND VOLUNTARY INHIBITION, DISTINGUISHED. As a general
rule, judges are mandated to hear and decide cases, unless legally disqualified.
However, they may voluntarily excuse themselves, in the exercise of their sound
discretion, for just or valid reasons. The rule on disqualification of a judge to hear a
case finds its rationale in the principle that no judge should preside in a case in
which he is not wholly free, disinterested, impartial and independent. It is aimed at
preserving the people's faith and confidence in the courts of justice. In compulsory
disqualification, the law conclusively presumes that a judge cannot objectively or
impartially sit in a case. In voluntary inhibition, the law leaves it to the judge to
decide for himself whether he will desist from sitting in a case with only his
conscience to guide him.
18.
ID.; ID.; ID.; A JUDGE SHOULD INHIBIT HIMSELF FROM THE CASE AT THE VERY
FIRST SIGN OF LACK OF FAITH AND TRUST IN HIS ACTIONS; CASE AT BAR. A judge,
like Caesar's wife, must be above suspicion. He must hold himself above reproach
and suspicion. At the very first sign of lack of faith and trust in his actions, whether
well-grounded or not, the judge has no other alternative but to inhibit himself from
the case. That way, he avoids being misunderstood. His reputation for probity and
objectivity is maintained. Even more important, the ideal of an impartial
administration of justice is preserved. Justice must not merely be done but must
also be seen and perceived to be done. Besides, where a case has generated a
strained personal relationship, animosity and hostility between the party or his
counsel and the judge that the former has lost confidence in the judge's impartiality

or the latter is unable to display the cold neutrality of an impartial judge, it is a

violation of due process for the judge not to recuse himself from hearing the case.
Due process cannot be satisfied in the absence of that objectivity on the part of a
judge sufficient to reassure litigants of his being fair and just. Respondent judge
should have recused himself from hearing the case in the light of petitioners' patent
distrust: "The presiding judge's impartiality has been irreparably impaired. . . . [A]ny
decision, order or resolution he would make on the incidents of the case would now
be under a cloud of distrust and skepticism. The presiding judge is no longer
effective in dispensing justice to the parties herein." Clearly, it would have been
more prudent for respondent judge to inhibit himself instead of placing any of his
decisions, orders or resolutions under a cloud of distrust. It would have likewise
deprived petitioners or any one else of reason to cast doubt on the integrity of these
expropriation proceedings with national and international implications. ECDAcS
DECISION
TINGA, J p:
The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was
conceived, designed and constructed to serve as the country's show window to the
world. Regrettably, it has spawned controversies. Regrettably too, despite the
apparent completion of the terminal complex way back it has not yet been
operated. This has caused immeasurable economic damage to the country, not to
mention its deplorable discredit in the international community. aAcDSC
In the first case that reached this Court, Agan v. PIATCO, 1 the contracts which the
Government had with the contractor were voided for being contrary to law and
public policy. The second case now before the Court involves the matter of just
compensation due the contractor for the terminal complex it built. We decide the
case on the basis of fairness, the same norm that pervades both the Court's 2004
Resolution in the first case and the latest expropriation law.
The present controversy has its roots with the promulgation of the Court's decision
in Agan v. PIATCO, 2 promulgated in 2003 (2003 Decision). This decision nullified the
"Concession Agreement for the Build-Operate-and-Transfer Arrangement of the
Ninoy Aquino International Airport Passenger Terminal III" entered into between the
Philippine Government (Government) and the Philippine International Air Terminals
Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The
agreement had authorized PIATCO to build a new international airport terminal
(NAIA 3), as well as a franchise to operate and maintain the said terminal during the
concession period of 25 years. The contracts were nullified, among others, that
Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the agreement was
contrary to public policy. 3

At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had
already been built by PIATCO and were nearing completion. 4 However, the
ponencia was silent as to the legal status of the NAIA 3 facilities following the
nullification of the contracts, as well as whatever rights of PIATCO for
reimbursement for its expenses in the construction of the facilities. Still, in his
Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as follows:
Should government pay at all for reasonable expenses incurred in the construction
of the Terminal? Indeed it should, otherwise it will be unjustly enriching itself at the
expense of Piatco and, in particular, its funders, contractors and investors both
local and foreign. After all, there is no question that the State needs and will make
use of Terminal III, it being part and parcel of the critical infrastructure and
transportation-related programs of government. 5
PIATCO and several respondents-intervenors filed their respective motions for the
reconsideration of the 2003 Decision. These motions were denied by the Court in its
Resolution dated 21 January 2004 (2004 Resolution). 6 However, the Court this time
squarely addressed the issue of the rights of PIATCO to refund, compensation or
reimbursement for its expenses in the construction of the NAIA 3 facilities. The
holding of the Court on this crucial point follows:
This Court, however, is not unmindful of the reality that the structures comprising
the NAIA IPT III facility are almost complete and that funds have been spent by
PIATCO in their construction. For the government to take over the said facility, it has
to compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its investors.
7
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in
the possession of PIATCO, despite the avowed intent of the Government to put the
airport terminal into immediate operation. The Government and PIATCO conducted
several rounds of negotiation regarding the NAIA 3 facilities. 8 It also appears that
arbitral proceedings were commenced before the International Chamber of
Commerce International Court of Arbitration and the International Centre for the
Settlement of Investment Disputes, 9 although the Government has raised
jurisdictional questions before those two bodies. 10
Then, on 21 December 2004, the Government 11 filed a Complaint for expropriation
with the Pasay City Regional Trial Court (RTC), together with an Application for
Special Raffle seeking the immediate holding of a special raffle. The Government
sought upon the filing of the complaint the issuance of a writ of possession
authorizing it to take immediate possession and control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount of

P3,002,125,000.00 12 (3 Billion) 13 in Cash with the Land Bank of the Philippines,

representing the NAIA 3 terminal's assessed value for taxation purposes. 14
The case 15 was raffled to Branch 117 of the Pasay City RTC, presided by
respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that
the Complaint was filed, the RTC issued an Order 16 directing the issuance of a writ
of possession to the Government, authorizing it to "take or enter upon the
possession" of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano, 17
the RTC noted that it had the ministerial duty to issue the writ of possession upon
the filing of a complaint for expropriation sufficient in form and substance, and upon
deposit made by the government of the amount equivalent to the assessed value of
the property subject to expropriation. The RTC found these requisites present,
particularly noting that "[t]he case record shows that [the Government has]
deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the
Philippines, an authorized depositary, as shown by the certification attached to their
complaint." Also on the same day, the RTC issued a Writ of Possession. According to
PIATCO, the Government was able to take possession over the NAIA 3 facilities
immediately after the Writ of Possession was issued. 18
However, on 4 January 2005, the RTC issued another Order designed to supplement
its 21 December 2004 Order and the Writ of Possession. In the 4 January 2005
Order, now assailed in the present petition, the RTC noted that its earlier issuance of
its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil
Procedure. However, it was observed that Republic Act No. 8974 (Rep. 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"
and its Implementing Rules and Regulations (Implementing Rules) had amended
Rule 67 in many respects. CIAcSa
There are at least two crucial differences between the respective procedures under
Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to
make immediate payment to the property owner upon the filing of the complaint to
be entitled to a writ of possession, whereas in Rule 67, the Government is required
only to make an initial deposit with an authorized government depositary. Moreover,
Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the
property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the
relevant standard for initial compensation, the market value of the property as
stated in the tax declaration or the current relevant zonal valuation of the Bureau of
Internal Revenue (BIR), whichever is higher, and the value of the improvements
and/or structures using the replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of
the Implementing Rules, the RTC made key qualifications to its earlier issuances.
First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to
immediately release the amount of US$62,343,175.77 to PIATCO, an amount which

the RTC characterized as that which the Government "specifically made available for
the purpose of this expropriation;" and such amount to be deducted from the
amount of just compensation due PIATCO as eventually determined by the RTC.
Second, the Government was directed to submit to the RTC a Certificate of
Availability of Funds signed by authorized officials to cover the payment of just
compensation. Third, the Government was directed "to maintain, preserve and
safeguard" the NAIA 3 facilities or "perform such as acts or activities in preparation
for their direct operation" of the airport terminal, pending expropriation proceedings
and full payment of just compensation. However, the Government was prohibited
"from performing acts of ownership like awarding concessions or leasing any part of
[NAIA 3] to other parties." 19
The very next day after the issuance of the assailed 4 January 2005 Order, the
Government filed an Urgent Motion for Reconsideration, which was set for hearing
on 10 January 2005. On 7 January 2005, the RTC issued another Order, the second
now assailed before this Court, which appointed three (3) Commissioners to
ascertain the amount of just compensation for the NAIA 3 Complex. That same day,
the Government filed a Motion for Inhibition of Hon. Gingoyon. DCASEc
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10
January 2005. On the same day, it denied these motions in an Omnibus Order dated
10 January 2005. This is the third Order now assailed before this Court. Nonetheless,
while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005
Order, it excepted from affirmance "the superfluous part of the Order prohibiting the
plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other
parties." 20
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on
13 January 2005. The petition prayed for the nullification of the RTC orders dated 4
January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon.
Gingoyon from taking further action on the expropriation case. A concurrent prayer
for the issuance of a temporary restraining order and preliminary injunction was
granted by this Court in a Resolution dated 14 January 2005. 21
The Government, in imputing grave abuse of discretion to the acts of Hon.
Gingoyon, raises five general arguments, to wit:
(i)
that Rule 67, not Rep. Act No. 8974, governs the present expropriation
proceedings;
(ii)
that Hon. Gingoyon erred when he ordered the immediate release of the
amount of US$62.3 Million to PIATCO considering that the assessed value as alleged
in the complaint was only P3 Billion;
(iii)
that the RTC could not have prohibited the Government from enjoining the
performance of acts of ownership;

(iv)
that the appointment of the three commissioners was erroneous; and
IcCDAS
(v)
that Hon. Gingoyon should be compelled to inhibit himself from the
expropriation case. 22
Before we delve into the merits of the issues raised by the Government, it is
essential to consider the crucial holding of the Court in its 2004 Resolution in Agan,
which we repeat below:
This Court, however, is not unmindful of the reality that the structures comprising
the NAIA IPT III facility are almost complete and that funds have been spent by
PIATCO in their construction. For the government to take over the said facility, it has
to compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its investors.
23
This pronouncement contains the fundamental premises which permeate this
decision of the Court. Indeed, Agan, final and executory as it is, stands as governing
law in this case, and any disposition of the present petition must conform to the
conditions laid down by the Court in its 2004 Resolution.
The 2004 Resolution Which Is
Law of This Case Generally
Permits Expropriation
The pronouncement in the 2004 Resolution is especially significant to this case in
two aspects, namely: (i) that PIATCO must receive payment of just compensation
determined in accordance with law and equity; and (ii) that the government is
barred from taking over NAIA 3 until such just compensation is paid. The parties
cannot be allowed to evade the directives laid down by this Court through any mode
of judicial action, such as the complaint for eminent domain. TcAECH
It cannot be denied though that the Court in the 2004 Resolution prescribed
mandatory guidelines which the Government must observe before it could acquire
the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as
the arguments of the parties must, to merit affirmation, pass the threshold test of
whether such propositions are in accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement in the 2004
Resolution, 24 thus its application to the case at bar is not a matter of controversy.
Of course, questions such as what is the standard of "just compensation" and which
particular laws and equitable principles are applicable, remain in dispute and shall
be resolved forthwith.

The Government has chosen to resort to expropriation, a remedy available under

the law, which has the added benefit of an integrated process for the determination
of just compensation and the payment thereof to PIATCO. We appreciate that the
case at bar is a highly unusual case, whereby the Government seeks to expropriate
a building complex constructed on land which the State already owns. 25 There is
an inherent illogic in the resort to eminent domain on property already owned by
the State. At first blush, since the State already owns the property on which NAIA 3
stands, the proper remedy should be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation proceedings
is understandable in this case. The 2004 Resolution, in requiring the payment of just
compensation prior to the takeover by the Government of NAIA 3, effectively
precluded it from acquiring possession or ownership of the NAIA 3 through the
unilateral exercise of its rights as the owner of the ground on which the facilities
stood. Thus, as things stood after the 2004 Resolution, the right of the Government
to take over the NAIA 3 terminal was preconditioned by lawful order on the payment
of just compensation to PIATCO as builder of the structures. DCHaTc
The determination of just compensation could very well be agreed upon by the
parties without judicial intervention, and it appears that steps towards that direction
had been engaged in. Still, ultimately, the Government resorted to its inherent
power of eminent domain through expropriation proceedings. Is eminent domain
appropriate in the first place, with due regard not only to the law on expropriation
but also to the Court's 2004 Resolution in Agan?
The right of eminent domain extends to personal and real property, and the NAIA 3
structures, adhered as they are to the soil, are considered as real property. 26 The
public purpose for the expropriation is also beyond dispute. It should also be noted
that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the
property sought to be expropriated may be titled in the name of the Republic of the
Philippines, although occupied by private individuals, and in such case an averment
to that effect should be made in the complaint. The instant expropriation complaint
did aver that the NAIA 3 complex "stands on a parcel of land owned by the Bases
Conversion Development Authority, another agency of [the Republic of the
Philippines]." 27
Admittedly, eminent domain is not the sole judicial recourse by which the
Government may have acquired the NAIA 3 facilities while satisfying the requisites
in the 2004 Resolution. Eminent domain though may be the most effective, as well
as the speediest means by which such goals may be accomplished. Not only does it
enable immediate possession after satisfaction of the requisites under the law, it
also has a built-in procedure through which just compensation may be ascertained.
Thus, there should be no question as to the propriety of eminent domain
proceedings in this case.

Still, in applying the laws and rules on expropriation in the case at bar, we are
impelled to apply or construe these rules in accordance with the Court's
prescriptions in the 2004 Resolution to achieve the end effect that the Government
may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the
2004 Resolution is effective not only as a legal precedent, but as the source of
rights and prescriptions that must be guaranteed, if not enforced, in the resolution
of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will
be severely diminished. aDIHTE
It is from these premises that we resolve the first question, whether Rule 67 of the
Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings in this
case.
Application of Rule 67 Violates
the 2004 Agan Resolution
The Government insists that Rule 67 of the Rules of Court governs the expropriation
proceedings in this case to the exclusion of all other laws. On the other hand,
PIATCO claims that it is Rep. Act No. 8974 which does apply. Earlier, we had
adverted to the basic differences between the statute and the procedural rule.
Further elaboration is in order.
Rule 67 outlines the procedure under which eminent domain may be exercised by
the Government. Yet by no means does it serve at present as the solitary guideline
through which the State may expropriate private property. For example, Section 19
of the Local Government Code governs as to the exercise by local government units
of the power of eminent domain through an enabling ordinance. And then there is
Rep. Act No. 8974, which covers expropriation proceedings intended for national
government infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently more favorable to the
property owner than Rule 67, inescapably applies in instances when the national
government expropriates property "for national government infrastructure projects."
28 Thus, if expropriation is engaged in by the national government for purposes
other than national infrastructure projects, the assessed value standard and the
deposit mode prescribed in Rule 67 continues to apply. SCHcaT
Under both Rule 67 and Rep. Act No. 8974, the Government commences
expropriation proceedings through the filing of a complaint. Unlike in the case of
local governments which necessitate an authorizing ordinance before expropriation
may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for
legislative authorization before the Government may proceed with a particular
exercise of eminent domain. The most crucial difference between Rule 67 and Rep.
Act No. 8974 concerns the particular essential step the Government has to
undertake to be entitled to a writ of possession.

The first paragraph of Section 2 of Rule 67 provides:

SEC. 2.
Entry of plaintiff upon depositing value with authorized government
depository. Upon the filing of the complaint or at any time thereafter and after
due notice to the defendant, the plaintiff shall have the right to take or enter upon
the possession of the real property involved if he deposits with the authorized
government depositary an amount equivalent to the assessed value of the property
for purposes of taxation to be held by such bank subject to the orders of the court.
Such deposit shall be in money, unless in lieu thereof the court authorizes the
deposit of a certificate of deposit of a government bank of the Republic of the
Philippines payable on demand to the authorized government depositary.
In contrast, Section 4 of Rep. Act No. 8974 relevantly states:
SEC. 4.
Guidelines for Expropriation Proceedings. Whenever it is necessary
to acquire real property for the right-of-way, site or location for any national
government infrastructure project through expropriation, the appropriate
proceedings before the proper court under the following guidelines:
a)
Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of the Bureau of Internal
Revenue (BIR); and (2) the value of the improvements and/or structures as
determined under Section 7 hereof;
xxx

xxx

xxx

c)
In case the completion of a government infrastructure project is of utmost
urgency and importance, and there is no existing valuation of the area concerned,
the implementing agency shall immediately pay the owner of the property its
proffered value taking into consideration the standards prescribed in Section 5
hereof. ScAHTI
Upon completion 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.
xxx

xxx

xxx

As can be gleaned from the above-quoted texts, Rule 67 merely requires the
Government to deposit with an authorized government depositary the assessed
value of the property for expropriation for it to be entitled to a writ of possession.

On the other hand, Rep. Act No. 8974 requires that the Government make a direct
payment to the property owner before the writ may issue. Moreover, such payment
is based on the zonal valuation of the BIR in the case of land, the value of the
improvements or structures under the replacement cost method, 29 or if no such
valuation is available and in cases of utmost urgency, the proffered value of the
property to be seized.
It is quite apparent why the Government would prefer to apply Rule 67 in lieu of
Rep. Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any
amount to PIATCO before it can obtain the writ of possession since all it need do is
deposit the amount equivalent to the assessed value with an authorized
government depositary. Hence, it devotes considerable effort to point out that Rep.
Act No. 8974 does not apply in this case, notwithstanding the undeniable reality
that NAIA 3 is a national government project. Yet, these efforts fail, especially
considering the controlling effect of the 2004 Resolution in Agan on the adjudication
of this case. caHIAS
It is the finding of this Court that the staging of expropriation proceedings in this
case with the exclusive use of Rule 67 would allow for the Government to take over
the NAIA 3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan.
This Court cannot sanction deviation from its own final and executory orders.
Section 2 of Rule 67 provides that the State "shall have the right to take or enter
upon the possession of the real property involved if [the plaintiff] deposits with the
authorized government depositary an amount equivalent to the assessed value of
the property for purposes of taxation to be held by such bank subject to the orders
of the court." 30 It is thus apparent that under the provision, all the Government
need do to obtain a writ of possession is to deposit the amount equivalent to the
assessed value with an authorized government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in
the 2004 Resolution that "[f]or the government to take over the said facility, it has
to compensate respondent PIATCO as builder of the said structures"? Evidently not.
If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a
single centavo as just compensation before the Government takes over the NAIA 3
facility by virtue of a writ of possession. Such an injunction squarely contradicts the
letter and intent of the 2004 Resolution. Hence, the position of the Government
sanctions its own disregard or violation the prescription laid down by this Court that
there must first be just compensation paid to PIATCO before the Government may
take over the NAIA 3 facilities.
Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004
Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it
does not necessarily follow that Rule 67 should then apply. After all, adherence to
the letter of Section 2, Rule 67 would in turn violate the Court's requirement in the

2004 Resolution that there must first be payment of just compensation to PIATCO
before the Government may take over the property. aCcADT
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under
Rule 67 with the scheme of "immediate payment" in cases involving national
government infrastructure projects. The following portion of the Senate
deliberations, cited by PIATCO in its Memorandum, is worth quoting to cogitate on
the purpose behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). ". . . Because the Senate believes that, you know,
we have to pay the landowners immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, 'no, of possession, we
might as well pay them as much, 'no, hindi lang 50 percent.
xxx

xxx

xxx

THE CHAIRMAN (REP. VERGARA). Accepted.

xxx

xxx

xxx

THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the
landowners, e.
THE CHAIRMAN (REP. VERGARA). That's why we need to really secure the availability
of funds.
xxx

xxx

xxx

THE CHAIRMAN (SEN. CAYETANO). No, no. It's the same. It says here: iyong first
paragraph, diba? Iyong zonal talagang magbabayad muna. In other words, you
know, there must be a payment kaagad. (TSN, Bicameral Conference on the
Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000,
pp. 14-20)
xxx

xxx

xxx

THE CHAIRMAN (SEN. CAYETANO). Okay, okay, 'no. Unang-una, it is not deposit, 'no.
It's payment."
REP. BATERINA. It's payment, ho, payment." (Id., p. 63) 31
It likewise bears noting that the appropriate standard of just compensation is a
substantive matter. It is well within the province of the legislature to fix the
standard, which it did through the enactment of Rep. Act No. 8974. Specifically, this
prescribes the new standards in determining the amount of just compensation in
expropriation cases relating to national government infrastructure projects, as well
as the payment of the provisional value as a prerequisite to the issuance of a writ of

possession. Of course, rules of procedure, as distinguished from substantive

matters, remain the exclusive preserve of the Supreme Court by virtue of Section
5(5), Article VIII of the Constitution. Indeed, Section 14 of the Implementing Rules
recognizes the continued applicability of Rule 67 on procedural aspects when it
provides "all matters regarding defenses and objections to the complaint, issues on
uncertain ownership and conflicting claims, effects of appeal on the rights of the
parties, and such other incidents affecting the complaint shall be resolved under the
provisions on expropriation of Rule 67 of the Rules of Court." 32
Given that the 2004 Resolution militates against the continued use of the norm
under Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find that
it is, and moreover, its application in this case complements rather than
contravenes the prescriptions laid down in the 2004 Resolution. HIcTDE
Rep. Act No. 8974 Fits
to the Situation at Bar
and Complements the
2004 Agan Resolution
Rep. Act No. 8974 is entitled "An Act To Facilitate The Acquisition Of Right-Of-Way,
Site Or Location For National Government Infrastructure Projects And For Other
Purposes." Obviously, the law is intended to cover expropriation proceedings
intended for national government infrastructure projects. Section 2 of Rep. Act No.
8974 explains what are considered as "national government projects."
Sec. 2.
National Government Projects. The term "national government
projects" shall refer to all national government infrastructure, engineering works
and service contracts, including projects undertaken by government-owned and
controlled corporations, all projects covered by Republic Act No. 6957, as amended
by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law,
and other related and necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation, construction, completion,
operation, maintenance, improvement, repair and rehabilitation, regardless of the
source of funding.
As acknowledged in the 2003 Decision, the development of NAIA 3 was made
pursuant to a build-operate-and-transfer arrangement pursuant to Republic Act No.
6957, as amended, 33 which pertains to infrastructure or development projects
normally financed by the public sector but which are now wholly or partly
implemented by the private sector. 34 Under the build-operate-and-transfer
scheme, it is the project proponent which undertakes the construction, including the
financing, of a given infrastructure facility. 35 In Tatad v. Garcia, 36 the Court
acknowledged that the operator of the EDSA Light Rail Transit project under a BOT

scheme was the owner of the facilities such as "the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant." 37
There can be no doubt that PIATCO has ownership rights over the facilities which it
had financed and constructed. The 2004 Resolution squarely recognized that right
when it mandated the payment of just compensation to PIATCO prior to the takeover
by the Government of NAIA 3. The fact that the Government resorted to eminent
domain proceedings in the first place is a concession on its part of PIATCO's
ownership. Indeed, if no such right is recognized, then there should be no
impediment for the Government to seize control of NAIA 3 through ordinary
ejectment proceedings. cDTSHE
Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of
these facilities should now be determined. Under Section 415(1) of the Civil Code,
these facilities are ineluctably immovable or real property, as they constitute
buildings, roads and constructions of all kinds adhered to the soil. 38 Certainly, the
NAIA 3 facilities are of such nature that they cannot just be packed up and
transported by PIATCO like a traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property
owned by PIATCO. This point is critical, considering the Government's insistence that
the NAIA 3 facilities cannot be deemed as the "right-of-way", "site" or "location" of a
national government infrastructure project, within the coverage of Rep. Act No.
8974.
There is no doubt that the NAIA 3 is not, under any sensible contemplation, a "rightof-way." Yet we cannot agree with the Government's insistence that neither could
NAIA 3 be a "site" or "location". The petition quotes the definitions provided in
Black's Law Dictionary of "location'" as the specific place or position of a person or
thing and 'site' as pertaining to a place or location or a piece of property set aside
for specific use.'" 39 Yet even Black's Law Dictionary provides that "[t]he term [site]
does not of itself necessarily mean a place or tract of land fixed by definite
boundaries." 40 One would assume that the Government, to back up its contention,
would be able to point to a clear-cut rule that a "site" or "location" exclusively refers
to soil, grass, pebbles and weeds. There is none.
Indeed, we cannot accept the Government's proposition that the only properties
that may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No.
8974 contemplates within its coverage such real property constituting land,
buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep.
Act No. 8974, which sets the declaration of the law's policy, refers to "real property
acquired for national government infrastructure projects are promptly paid just
compensation." 41 Section 4 is quite explicit in stating that the scope of the law
relates to the acquisition of "real property," which under civil law includes buildings,
roads and constructions adhered to the soil. THaAEC

It is moreover apparent that the law and its implementing rules commonly provide
for a rule for the valuation of improvements and/or structures thereupon separate
from that of the land on which such are constructed. Section 2 of Rep. Act No. 8974
itself recognizes that the improvements or structures on the land may very well be
the subject of expropriation proceedings. Section 4(a), in relation to Section 7 of the
law provides for the guidelines for the valuation of the improvements or structures
to be expropriated. Indeed, nothing in the law would prohibit the application of
Section 7, which provides for the valuation method of the improvements and or
structures in the instances wherein it is necessary for the Government to
expropriate only the improvements or structures, as in this case.
The law classifies the NAIA 3 facilities as real properties just like the soil to which
they are adhered. Any sub-classifications of real property and divergent treatment
based thereupon for purposes of expropriation must be based on substantial
distinctions, otherwise the equal protection clause of the Constitution is violated.
There may be perhaps a molecular distinction between soil and the inorganic
improvements adhered thereto, yet there are no purposive distinctions that would
justify a variant treatment for purposes of expropriation. Both the land itself and the
improvements thereupon are susceptible to private ownership independent of each
other, capable of pecuniary estimation, and if taken from the owner, considered as a
deprivation of property. The owner of improvements seized through expropriation
suffers the same degree of loss as the owner of land seized through similar means.
Equal protection demands that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. For purposes
of expropriation, parcels of land are similarly situated as the buildings or
improvements constructed thereon, and a disparate treatment between those two
classes of real property infringes the equal protection clause. STcDIE
Even as the provisions of Rep. Act No. 8974 call for that law's application in this
case, the threshold test must still be met whether its implementation would
conform to the dictates of the Court in the 2004 Resolution. Unlike in the case of
Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004
Resolution, which requires the payment of just compensation before any takeover of
the NAIA 3 facilities by the Government. The 2004 Resolution does not particularize
the extent such payment must be effected before the takeover, but it
unquestionably requires at least some degree of payment to the private property
owner before a writ of possession may issue. The utilization of Rep. Act No. 8974
guarantees compliance with this bare minimum requirement, as it assures the
private property owner the payment of, at the very least, the proffered value of the
property to be seized. Such payment of the proffered value to the owner, followed
by the issuance of the writ of possession in favor of the Government, is precisely the
schematic under Rep. Act No. 8974, one which facially complies with the
prescription laid down in the 2004 Resolution.

Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No.
8974 governs the instant expropriation proceedings.
The Proper Amount to be Paid
under Rep. Act No. 8974
Then, there is the matter of the proper amount which should be paid to PIATCO by
the Government before the writ of possession may issue, consonant to Rep. Act No.
8974.
At this juncture, we must address the observation made by the Office of the Solicitor
General in behalf of the Government that there could be no "BIR zonal valuations"
on the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal valuations are
only for parcels of land, not for airport terminals. The Court agrees with this point,
yet does not see it as an impediment for the application of Rep. Act No. 8974.
AECDHS
It must be clarified that PIATCO cannot be reimbursed or justly compensated for the
value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the
land on which the NAIA 3 facility is constructed, and it should not be entitled to just
compensation that is inclusive of the value of the land itself. It would be highly
disingenuous to compensate PIATCO for the value of land it does not own. Its
entitlement to just compensation should be limited to the value of the
improvements and/or structures themselves. Thus, the determination of just
compensation cannot include the BIR zonal valuation under Section 4 of Rep. Act
No. 8974.
Under Rep. Act No. 8974, the Government is required to "immediately pay" the
owner of the property the amount equivalent to the sum of (1) one hundred percent
(100%) of the value of the property based on the current relevant zonal valuation of
the [BIR]; and (2) the value of the improvements and/or structures as determined
under Section 7. As stated above, the BIR zonal valuation cannot apply in this case,
thus the amount subject to immediate payment should be limited to "the value of
the improvements and/or structures as determined under Section 7," with Section 7
referring to the "implementing rules and regulations for the equitable valuation of
the improvements and/or structures on the land." Under the present implementing
rules in place, the valuation of the improvements/structures are to be based using
'the replacement cost method." 42 However, the replacement cost is only one of the
factors to be considered in determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that
the payment of just compensation should be in accordance with equity as well.
Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial
court is to ensure that such amount conforms not only to the law, such as Rep. Act
No. 8974, but to principles of equity as well. ATHCac

Admittedly, there is no way, at least for the present, to immediately ascertain the
value of the improvements and structures since such valuation is a matter for
factual determination. 43 Yet Rep. Act No. 8974 permits an expedited means by
which the Government can immediately take possession of the property without
having to await precise determination of the valuation. Section 4(c) of Rep. Act No.
8974 states that "in case the completion of a government infrastructure project is of
utmost urgency and importance, and there is no existing valuation of the area
concerned, the implementing agency shall immediately pay the owner of the
property its proffered value, taking into consideration the standards prescribed in
Section 5 [of the law]." 44 The "proffered value" may strike as a highly subjective
standard based solely on the intuition of the government, but Rep. Act No. 8974
does provide relevant standards by which "proffered value" should be based, 45 as
well as the certainty of judicial determination of the propriety of the proffered value.
46
In filing the complaint for expropriation, the Government alleged to have deposited
the amount of P3 Billion earmarked for expropriation, representing the assessed
value of the property. The making of the deposit, including the determination of the
amount of the deposit, was undertaken under the erroneous notion that Rule 67,
and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the
Court sees no impediment to recognize this sum of P3 Billion as the proffered value
under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the
proffered value, the Government is not strictly required to adhere to any
predetermined standards, although its proffered value may later be subjected to
judicial review using the standards enumerated under Section 5 of Rep. Act No.
8974.
How should we appreciate the questioned order of Hon. Gingoyon, which pegged
the amount to be immediately paid to PIATCO at around $62.3 Million? The Order
dated 4 January 2005, which mandated such amount, proves problematic in that
regard. While the initial sum of P3 Billion may have been based on the assessed
value, a standard which should not however apply in this case, the RTC cites without
qualification Section 4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3
Million, thus leaving the impression that the BIR zonal valuation may form part of
the basis for just compensation, which should not be the case. Moreover,
respondent judge made no attempt to apply the enumerated guidelines for
determination of just compensation under Section 5 of Rep. Act No. 8974, as
required for judicial review of the proffered value. ETaHCD
The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the
concessions agreement entered into between the Government and PIATCO stated
that the actual cost of building NAIA 3 was "not less than" US$350 Million. 47 The
RTC then proceeded to observe that while Rep. Act No. 8974 required the immediate
payment to PIATCO the amount equivalent to 100% of the value of NAIA 3, the
amount deposited by the Government constituted only 18% of this value. At this

point, no binding import should be given to this observation that the actual cost of
building NAIA 3 was "not less than" US$350 Million, as the final conclusions on the
amount of just compensation can come only after due ascertainment in accordance
with the standards set under Rep. Act No. 8974, not the declarations of the parties.
At the same time, the expressed linkage between the BIR zonal valuation and the
amount of just compensation in this case, is revelatory of erroneous thought on the
part of the RTC.
We have already pointed out the irrelevance of the BIR zonal valuation as an
appropriate basis for valuation in this case, PIATCO not being the owner of the land
on which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to
qualify that such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based on the certification
issued by the LBP-Baclaran that the Republic of the Philippines maintained a total
balance in that branch amounting to such amount. Yet the actual representation of
the $62.3 Million is not clear. The Land Bank Certification expressing such amount
does state that it was issued upon request of the Manila International Airport
Authority "purportedly as guaranty deposit for the expropriation complaint." 48 The
Government claims in its Memorandum that the entire amount was made available
as a guaranty fund for the final and executory judgment of the trial court, and not
merely for the issuance of the writ of possession. 49 One could readily conclude that
the entire amount of US$62.3 Million was intended by the Government to answer for
whatever guaranties may be required for the purpose of the expropriation
complaint. aIcTCS
Still, such intention the Government may have had as to the entire US$62.3 Million
is only inferentially established. In ascertaining the proffered value adduced by the
Government, the amount of P3 Billion as the amount deposited characterized in the
complaint as "to be held by [Land Bank] subject to the [RTC's] orders," 50 should be
deemed as controlling. There is no clear evidence that the Government intended to
offer US$62.3 Million as the initial payment of just compensation, the wording of the
Land Bank Certification notwithstanding, and credence should be given to the
consistent position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of US$62.3 Million to
PIATCO and not P3 Billion Pesos, he would have to establish that the higher amount
represents the valuation of the structures/improvements, and not the BIR zonal
valuation on the land wherein NAIA 3 is built. The Order dated 5 January 2005 fails
to establish such integral fact, and in the absence of contravening proof, the
proffered value of P3 Billion, as presented by the Government, should prevail.
Strikingly, the Government submits that assuming that Rep. Act No. 8974 is
applicable, the deposited amount of P3 Billion should be considered as the proffered
value, since the amount was based on comparative values made by the City

Assessor. 51 Accordingly, it should be deemed as having faithfully complied with the

requirements of the statute. 52 While the Court agrees that P3 Billion should be
considered as the correct proffered value, still we cannot deem the Government as
having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct
payment to the property owner, and not a mere deposit with the authorized
government depositary. Without such direct payment, no writ of possession may be
obtained. cHCIEA
Writ of Possession May Not
Be Implemented Until Actual
Receipt by PIATCO of Proffered
Value
The Court thus finds another error on the part of the RTC. The RTC authorized the
issuance of the writ of possession to the Government notwithstanding the fact that
no payment of any amount had yet been made to PIATCO, despite the clear
command of Rep. Act No. 8974 that there must first be payment before the writ of
possession can issue. While the RTC did direct the LBP-Baclaran to immediately
release the amount of US$62 Million to PIATCO, it should have likewise suspended
the writ of possession, nay, withdrawn it altogether, until the Government shall
have actually paid PIATCO. This is the inevitable consequence of the clear command
of Rep. Act No. 8974 that requires immediate payment of the initially determined
amount of just compensation should be effected. Otherwise, the overpowering
intention of Rep. Act No. 8974 of ensuring payment first before transfer of
repossession would be eviscerated.
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 53 antecedent to acquiring possession of the property with, respectively,
an authorized Government depositary 54 or the proper court. 55 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. AEHCDa
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.
While eminent domain lies as one of the inherent powers of the State, there is no
requirement that it undertake a prolonged procedure, or that the payment of the
private owner be protracted as far as practicable. In fact, the expedited procedure
of payment, as highlighted under Rep. Act No. 8974, is inherently more fair,
especially to the layperson who would be hard-pressed to fully comprehend the
social value of expropriation in the first place. Immediate payment placates to some
degree whatever ill-will that arises from expropriation, as well as satisfies the
demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct compliance
with the requirement of immediate payment in this case. Accordingly, the Writ of
Possession dated 21 December 2004 should be held in abeyance, pending proof of
actual payment by the Government to PIATCO of the proffered value of the NAIA 3
facilities, which totals P3,002,125,000.00.
Rights of the Government
upon Issuance of the Writ
of Possession
Once the Government pays PIATCO the amount of the proffered value of P3 Billion, it
will be entitled to the Writ of Possession. However, the Government questions the
qualification imposed by the RTC in its 4 January 2005 Order consisting of the
prohibition on the Government from performing acts of ownership such as awarding
concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in
its 10 January 2005 Omnibus Order, expressly stated that it was not affirming "the
superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from
awarding concessions or leasing any part of NAIA [3] to other parties." 56 Still, such
statement was predicated on the notion that since the Government was not yet the
owner of NAIA 3 until final payment of just compensation, it was obviously
incapacitated to perform such acts of ownership. CHEIcS
In deciding this question, the 2004 Resolution in Agan cannot be ignored,
particularly the declaration that "[f]or the government to take over the said facility,
it has to compensate respondent PIATCO as builder of the said structures." The
obvious import of this holding is that unless PIATCO is paid just compensation, the
Government is barred from "taking over," a phrase which in the strictest sense
could encompass even a bar of physical possession of NAIA 3, much less operation
of the facilities.

There are critical reasons for the Court to view the 2004 Resolution less stringently,
and thus allow the operation by the Government of NAIA 3 upon the effectivity of
the Writ of Possession. For one, the national prestige is diminished every day that
passes with the NAIA 3 remaining mothballed. For another, the continued non-use of
the facilities contributes to its physical deterioration, if it has not already. And still
for another, the economic benefits to the Government and the country at large are
beyond dispute once the NAIA 3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the standard that governs
the extent of the acts the Government may be authorized to perform upon the
issuance of the writ of possession. Section 4 states that "the court shall immediately
issue to the implementing agency an order to take possession of the property and
start the implementation of the project." We hold that accordingly, once the Writ of
Possession is effective, the Government itself is authorized to perform the acts that
are essential to the operation of the NAIA 3 as an international airport terminal upon
the effectivity of the Writ of Possession. These would include the repair,
reconditioning and improvement of the complex, maintenance of the existing
facilities and equipment, installation of new facilities and equipment, provision of
services and facilities pertaining to the facilitation of air traffic and transport, and
other services that are integral to a modern-day international airport. AHSEaD
The Government's position is more expansive than that adopted by the Court. It
argues that with the writ of possession, it is enabled to perform acts de jure on the
expropriated property. It cites Republic v. Tagle, 57 as well as the statement therein
that "the expropriation of real property does not include mere physical entry or
occupation of land," and from them concludes that "its mere physical entry and
occupation of the property fall short of the taking of title, which includes all the
rights that may be exercised by an owner over the subject property."
This conclusion is indeed lifted directly from statements in Tagle, 58 but not from
the ratio decidendi of that case. Tagle concerned whether a writ of possession in
favor of the Government was still necessary in light of the fact that it was already in
actual possession of the property. In ruling that the Government was entitled to the
writ of possession, the Court in Tagle explains that such writ vested not only
physical possession, but also the legal right to possess the property. Continues the
Court, such legal right to possess was particularly important in the case, as there
was a pending suit against the Republic for unlawful detainer, and the writ of
possession would serve to safeguard the Government from eviction. 59
At the same time, Tagle conforms to the obvious, that there is no transfer of
ownership as of yet by virtue of the writ of possession. Tagle may concede that the
Government is entitled to exercise more than just the right of possession by virtue
of the writ of possession, yet it cannot be construed to grant the Government the
entire panoply of rights that are available to the owner. Certainly, neither Tagle nor
any other case or law, lends support to the Government's proposition that it

acquires beneficial or equitable ownership of the expropriated property merely

through the writ of possession. HETDAa
Indeed, this Court has been vigilant in defense of the rights of the property owner
who has been validly deprived of possession, yet retains legal title over the
expropriated property pending payment of just compensation. We reiterated the
various doctrines of such import in our recent holding in Republic v. Lim: 60
The recognized rule is that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other
democratic jurisdictions. In Association of Small Landowners in the Philippines, Inc.
et al., vs. Secretary of Agrarian Reform [61 ], thus:
"Title to property which is the subject of condemnation proceedings does not vest
the condemnor until the judgment fixing just compensation is entered and paid, but
the condemnor's title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioner's report under the Local Improvement
Act, is filed.
. . . Although the right to appropriate and use land taken for a canal is complete at
the time of entry, title to the property taken remains in the owner until payment is
actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had
actually been made. In fact, the decisions appear to be uniform to this effect. As
early as 1838, in Rubottom v. McLure, it was held that 'actual payment to the owner
of the condemned property was a condition precedent to the investment of the title
to the property in the State' albeit 'not to the appropriation of it to public use.' In
Rexford v. Knight, the Court of Appeals of New York said that the construction upon
the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that 'both on principle and
authority the rule is . . . that the right to enter on and use the property is complete,
as soon as the property is actually appropriated under the authority of law for a
public use, but that the title does not pass from the owner without his consent, until
just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
that:
'If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted in
this jurisdiction is such as to afford absolute reassurance that no piece of land can

be finally and irrevocably taken from an unwilling owner until compensation is paid .
. .'"(Emphasis supplied.) IEaCDH
Clearly, without full payment of just compensation, there can be no transfer of title
from the landowner to the expropriator. Otherwise stated, the Republic's acquisition
of ownership is conditioned upon the full payment of just compensation within a
reasonable time.
Significantly, in Municipality of Bian v. Garcia[62 ] this Court ruled that the
expropriation of lands consists of two stages, to wit:
". . . The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the
context of the facts involved in the suit. It ends with an order, if not of dismissal of
the action, "of condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint" . . . .
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property sought to be
taken." This is done by the court with the assistance of not more than three (3)
commissioners. . . . .
It is only upon the completion of these two stages that expropriation is said to have
been completed. In Republic v. Salem Investment Corporation[63 ], we ruled that,
"the process is not completed until payment of just compensation." Thus, here, the
failure of the Republic to pay respondent and his predecessors-in-interest for a
period of 57 years rendered the expropriation process incomplete. IEAacT
Lim serves fair warning to the Government and its agencies who consistently refuse
to pay just compensation due to the private property owner whose property had
been expropriated. At the same time, Lim emphasizes the fragility of the rights of
the Government as possessor pending the final payment of just compensation,
without diminishing the potency of such rights. Indeed, the public policy, enshrined
foremost in the Constitution, mandates that the Government must pay for the
private property it expropriates. Consequently, the proper judicial attitude is to
guarantee compliance with this primordial right to just compensation.
Final Determination of Just
Compensation Within 60 Days
The issuance of the writ of possession does not write finis to the expropriation
proceedings. As earlier pointed out, expropriation is not completed until payment to
the property owner of just compensation. The proffered value stands as merely a
provisional determination of the amount of just compensation, the payment of

which is sufficient to transfer possession of the property to the Government.

However, to effectuate the transfer of ownership, it is necessary for the Government
to pay the property owner the final just compensation.
In Lim, the Court went as far as to countenance, given the exceptional
circumstances of that case, the reversion of the validly expropriated property to
private ownership due to the failure of the Government to pay just compensation in
that case. 64 It was noted in that case that the Government deliberately refused to
pay just compensation. The Court went on to rule that "in cases where the
government failed to pay just compensation within five (5) years from the finality of
the judgment in the expropriation proceedings, the owners concerned shall have the
right to recover possession of their property." 65
Rep. Act No. 8974 mandates a speedy method by which the final determination of
just compensation may be had. Section 4 provides:
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. ATHCac
We hold that this provision should apply in this case. The sixty (60)-day period
prescribed in Rep. Act No. 8974 gives teeth to the law's avowed policy "to ensure
that owners of real property acquired for national government infrastructure
projects are promptly paid just compensation." 66 In this case, there already has
been irreversible delay in the prompt payment of PIATCO of just compensation, and
it is no longer possible for the RTC to determine the just compensation due PIATCO
within sixty (60) days from the filing of the complaint last 21 December 2004, as
contemplated by the law. Still, it is feasible to effectuate the spirit of the law by
requiring the trial court to make such determination within sixty (60) days from
finality of this decision, in accordance with the guidelines laid down in Rep. Act No.
8974 and its Implementing Rules.
Of course, once the amount of just compensation has been finally determined, the
Government is obliged to pay PIATCO the said amount. As shown in Lim and other
like-minded cases, the Government's refusal to make such payment is indubitably
actionable in court.
Appointment of Commissioners
The next argument for consideration is the claim of the Government that the RTC
erred in appointing the three commissioners in its 7 January 2005 Order without
prior consultation with either the Government or PIATCO, or without affording the

Government the opportunity to object to the appointment of these commissioners.

We can dispose of this argument without complication.
It must be noted that Rep. Act No. 8974 is silent on the appointment of
commissioners tasked with the ascertainment of just compensation. 67 This
protocol though is sanctioned under Rule 67. We rule that the appointment of
commissioners under Rule 67 may be resorted to, even in expropriation proceedings
under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that
regard do not conflict with the statute. As earlier stated, Section 14 of the
Implementing Rules does allow such other incidents affecting the complaint to be
resolved under the provisions on expropriation of Rule 67 of the Rules of Court. Even
without Rule 67, reference during trial to a commissioner of the examination of an
issue of fact is sanctioned under Rule 32 of the Rules of Court. DTAHEC
But while the appointment of commissioners under the aegis of Rule 67 may be
sanctioned in expropriation proceedings under Rep. Act No. 8974, the standards to
be observed for the determination of just compensation are provided not in Rule 67
but in the statute. In particular, the governing standards for the determination of
just compensation for the NAIA 3 facilities are found in Section 10 of the
Implementing Rules for Rep. Act No. 8974, which provides for the replacement cost
method in the valuation of improvements and structures. 68
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the
parties in the expropriation case on who should be appointed as commissioners.
Neither does the Court feel that such a requirement should be imposed in this case.
We did rule in Municipality of Talisay v. Ramirez 69 that "there is nothing to prevent
[the trial court] from seeking the recommendations of the parties on [the] matter [of
appointment of commissioners], the better to ensure their fair representation." 70
At the same time, such solicitation of recommendations is not obligatory on the part
of the court, hence we cannot impute error on the part of the RTC in its exercise of
solitary discretion in the appointment of the commissioners.
What Rule 67 does allow though is for the parties to protest the appointment of any
of these commissioners, as provided under Section 5 of the Rule. These objections
though must be filed within ten (10) days from service of the order of appointment
of the commissioners. 71 In this case, the proper recourse of the Government to
challenge the choice of the commissioners is to file an objection with the trial court,
conformably with Section 5, Rule 67, and not as it has done, assail the same
through a special civil action for certiorari. Considering that the expropriation
proceedings in this case were effectively halted seven (7) days after the Order
appointing the commissioners, 72 it is permissible to allow the parties to file their
objections with the RTC within five (5) days from finality of this decision. AEIHCS
Insufficient Ground for Inhibition
of Respondent Judge

The final argument for disposition is the claim of the Government is that Hon.
Gingoyon has prejudged the expropriation case against the Government's cause
and, thus, should be required to inhibit himself. This grave charge is predicated on
facts which the Government characterizes as "undeniable." In particular, the
Government notes that the 4 January 2005 Order was issued motu proprio, without
any preceding motion, notice or hearing. Further, such order, which directed the
payment of US$62 Million to PIATCO, was attended with error in the computation of
just compensation. The Government also notes that the said Order was issued even
before summons had been served on PIATCO.
The disqualification of a judge is a deprivation of his/her judicial power 73 and
should not be allowed on the basis of mere speculations and surmises. It certainly
cannot be predicated on the adverse nature of the judge's rulings towards the
movant for inhibition, especially if these rulings are in accord with law. Neither could
inhibition be justified merely on the erroneous nature of the rulings of the judge. We
emphasized in Webb v. People: 74
To prove bias and prejudice on the part of respondent judge, petitioners harp on the
alleged adverse and erroneous rulings of respondent judge on their various motions.
By themselves, however, they do not sufficiently prove bias and prejudice to
disqualify respondent judge. To be disqualifying, the bias and prejudice must be
shown to have stemmed from an extrajudicial source and result in an opinion on the
merits on some basis other than what the judge learned from his participation in the
case. Opinions formed in the course of judicial proceedings, although erroneous, as
long as they are based on the evidence presented and conduct observed by the
judge, do not prove personal bias or prejudice on the part of the judge. As a general
rule, repeated rulings against a litigant, no matter how erroneous and vigorously
and consistently expressed, are not a basis for disqualification of a judge on
grounds of bias and prejudice. Extrinsic evidence is required to establish bias, bad
faith, malice or corrupt purpose, in addition to the palpable error which may be
inferred from the decision or order itself. Although the decision may seem so
erroneous as to raise doubts concerning a judge's integrity, absent extrinsic
evidence, the decision itself would be insufficient to establish a case against the
judge. The only exception to the rule is when the error is so gross and patent as to
produce an ineluctable inference of bad faith or malice. 75
The Government's contentions against Hon. Gingoyon are severely undercut by the
fact that the 21 December 2004 Order, which the 4 January 2005 Order sought to
rectify, was indeed severely flawed as it erroneously applied the provisions of Rule
67 of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance
with the requisites for the issuance of the writ of possession. The 4 January 2005
Order, which according to the Government establishes Hon. Gingoyon's bias, was
promulgated precisely to correct the previous error by applying the correct
provisions of law. It would not speak well of the Court if it sanctions a judge for

wanting or even attempting to correct a previous erroneous order which precisely is

the right move to take. CacHES
Neither are we convinced that the motu proprio issuance of the 4 January 2005
Order, without the benefit of notice or hearing, sufficiently evinces bias on the part
of Hon. Gingoyon. The motu proprio amendment by a court of an erroneous order
previously issued may be sanctioned depending on the circumstances, in line with
the long-recognized principle that every court has inherent power to do all things
reasonably necessary for the administration of justice within the scope of its
jurisdiction. 76 Section 5(g), Rule 135 of the Rules of Court further recognizes the
inherent power of courts "to amend and control its process and orders so as to
make them conformable to law and justice," 77 a power which Hon. Gingoyon noted
in his 10 January 2005 Omnibus Order. 78 This inherent power includes the right of
the court to reverse itself, especially when in its honest opinion it has committed an
error or mistake in judgment, and that to adhere to its decision will cause injustice
to a party litigant. 79
Certainly, the 4 January 2005 Order was designed to make the RTC's previous order
conformable to law and justice, particularly to apply the correct law of the case. Of
course, as earlier established, this effort proved incomplete, as the 4 January 2005
Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at least,
the 4 January 2005 Order correctly reformed the most basic premise of the case
that Rep. Act No. 8974 governs the expropriation proceedings.
Nonetheless, the Government belittles Hon. Gingoyon's invocation of Section 5(g),
Rule 135 as "patently without merit". Certainly merit can be seen by the fact that
the 4 January 2005 Order reoriented the expropriation proceedings towards the
correct governing law. Still, the Government claims that the unilateral act of the RTC
did not conform to law or justice, as it was not afforded the right to be heard.
IDAEHT
The Court would be more charitably disposed towards this argument if not for the
fact that the earlier order with the 4 January 2005 Order sought to correct was itself
issued without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep.
Act No. 8975 requires the conduct of a hearing prior to the issuance of the writ of
possession, which by design is available immediately upon the filing of the
complaint provided that the requisites attaching thereto are present. Indeed, this
expedited process for the obtention of a writ of possession in expropriation cases
comes at the expense of the rights of the property owner to be heard or to be
deprived of possession. Considering these predicates, it would be highly awry to
demand that an order modifying the earlier issuance of a writ of possession in an
expropriation case be barred until the staging of a hearing, when the issuance of
the writ of possession itself is not subject to hearing. Perhaps the conduct of a
hearing under these circumstances would be prudent. However, hearing is not

mandatory, and the failure to conduct one does not establish the manifest bias
required for the inhibition of the judge.
The Government likewise faults Hon. Gingoyon for using the amount of US$350
Million as the basis for the 100% deposit under Rep. Act No. 8974. The Court has
noted that this statement was predicated on the erroneous belief that the BIR zonal
valuation applies as a standard for determination of just compensation in this case.
Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed,
the Government was not the only victim of the errors of the RTC in the assailed
orders. PIATCO itself was injured by the issuance by the RTC of the writ of
possession, even though the former had yet to be paid any amount of just
compensation. At the same time, the Government was also prejudiced by the
erroneous ruling of the RTC that the amount of US$62.3 Million, and not P3 Billion,
should be released to PIATCO. EAcIST
The Court has not been remiss in pointing out the multiple errors committed by the
RTC in its assailed orders, to the prejudice of both parties. This attitude of error
towards all does not ipso facto negate the charge of bias. Still, great care should be
had in requiring the inhibition of judges simply because the magistrate did err.
Incompetence may be a ground for administrative sanction, but not for inhibition,
which requires lack of objectivity or impartiality to sit on a case.
The Court should necessarily guard against adopting a standard that a judge should
be inhibited from hearing the case if one litigant loses trust in the judge. Such loss
of trust on the part of the Government may be palpable, yet inhibition cannot be
grounded merely on the feelings of the party-litigants. Indeed, every losing litigant
in any case can resort to claiming that the judge was biased, and he/she will gain a
sympathetic ear from friends, family, and people who do not understand the judicial
process. The test in believing such a proposition should not be the vehemence of
the litigant's claim of bias, but the Court's judicious estimation, as people who know
better than to believe any old cry of "wolf!", whether such bias has been irrefutably
exhibited.
The Court acknowledges that it had been previously held that "at the very first sign
of lack of faith and trust in his actions, whether well-grounded or not, the judge has
no other alternative but to inhibit himself from the case." 80 But this doctrine is
qualified by the entrenched rule that "a judge may not be legally prohibited from
sitting in a litigation, but when circumstances appear that will induce doubt to his
honest actuations and probity in favor of either party, or incite such 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." 81 And a selfassessment by the judge that he/she is not impaired to hear the case will be
respected by the Court absent any evidence to the contrary. As held in Chin v. Court
of Appeals:

An allegation of prejudgment, without more, constitutes mere conjecture and is not

one of the "just and valid reasons" contemplated in the second paragraph of Rule
137 of the Rules of Court for which a judge may inhibit himself from hearing the
case. We have repeatedly held that mere suspicion that a judge is partial to a party
is not enough. Bare allegations of partiality and prejudgment will not suffice in the
absence of clear and convincing evidence to overcome the presumption that the
judge will undertake his noble role to dispense justice according to law and evidence
and without fear or favor. There should be adequate evidence to prove the
allegations, and there must be showing that the judge had an interest, personal or
otherwise, in the prosecution of the case. To be a disqualifying circumstance, the
bias and prejudice must be shown to have stemmed from an extrajudicial source
and result in an opinion on the merits on some basis other than what the judge
learned from his participation in the case. 82
The mere vehemence of the Government's claim of bias does not translate to clear
and convincing evidence of impairing bias. There is no sufficient ground to direct
the inhibition of Hon. Gingoyon from hearing the expropriation case. CDcaSA
In conclusion, the Court summarizes its rulings as follows:
(1)
The 2004 Resolution in Agan sets the base requirement that has to be
observed before the Government may take over the NAIA 3, that there must be
payment to PIATCO of just compensation in accordance with law and equity. Any
ruling in the present expropriation case must be conformable to the dictates of the
Court as pronounced in the Agan cases.
(2)
Rep. Act No. 8974 applies in this case, particularly insofar as it requires the
immediate payment by the Government of at least the proffered value of the NAIA 3
facilities to PIATCO and provides certain valuation standards or methods for the
determination of just compensation.
(3)
Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor
of the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the
amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c)
of the law.
(4)
Applying Rep. Act No. 8974, the Government is authorized to effectuate the
operation of the Ninoy Aquino International Airport Passenger Terminal III (NAIA 3)
by performing the acts that are essential to its functioning as such upon the
effectivity of the Writ of Possession, subject to the conditions above-stated. As
prescribed by the Court, such authority encompasses "the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment,
installation of new facilities and equipment, provision of services and facilities
pertaining to the facilitation of air traffic and transport, and other services that are
integral to a modern-day international airport." 83

(5)
The RTC is mandated to determine the just compensation within sixty (60)
days from finality of this Decision. In doing so, the RTC is obliged to comply with
"law and equity" as ordained in Again and the standard set under Implementing
Rules of Rep. Act No. 8974 which is the "replacement cost method" as the standard
of valuation of structures and improvements. cHAIES
(6)
There was no grave abuse of discretion attending the RTC Order appointing
the commissioners for the purpose of determining just compensation. The
provisions on commissioners under Rule 67 shall apply insofar as they are not
inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the
Court in Agan.
(7)
The Government shall pay the just compensation fixed in the decision of the
trial court to PIATCO immediately upon the finality of the said decision.
(8)

There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

All told, the Court finds no grave abuse of discretion on the part of the RTC to
warrant the nullification of the questioned orders. Nonetheless, portions of these
orders should be modified to conform with law and the pronouncements made by
the Court herein.
WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4
January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED
with the following MODIFICATIONS:
1)
The implementation of the Writ of Possession dated 21 December 2005 is
HELD IN ABEYANCE, pending payment by petitioners to PIATCO of the amount of
Three Billion Two Million One Hundred Twenty Five Thousand Pesos
(P3,002,125,000.00), representing the proffered value of the NAIA 3 facilities;
2)
Petitioners, upon the effectivity of the Writ of Possession, are authorized to
start the implementation of the Ninoy Aquino International Airport Passenger
Terminal III project by performing the acts that are essential to the operation of the
said International Airport Passenger Terminal project;
3)
RTC Branch 117 is hereby directed, within sixty (60) days from finality of this
Decision, to determine the just compensation to be paid to PIATCO by the
Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the
qualification that the parties are given ten (10) days from finality of this Decision to
file, if they so choose, objections to the appointment of the commissioners decreed
therein.

The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.

No pronouncement as to costs.
SO ORDERED.
Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, Callejo, Sr.,
Azcuna, Chico-Nazario and Garcia., JJ., concur.
Davide, Jr., C.J., I join Mr. Justice Corona in his dissent.
Puno, J., Pls see separate opinion.
Panganiban, J., I join the dissent of Mr. Justice Renato C. Corona.
Carpio, J., See separate opinion. In the result.
Corona, J., Please see dissenting opinion.
Carpio-Morales, J., I join the dissent of J. Corona.
Separate Opinions
PUNO, J.:
I join the exhaustive Dissent of Mr. Justice Corona. In addition, I proffer the following
thoughts:
I
Agan case did not preclude
right of State to expropriate
The majority opinion took excruciating pains to reconcile our Decision in Agan and
the inherent right of the State to expropriate private property. With due respect, the
effort is strained and unnecessary for there nothing in Agan where it can be
deduced that the right of the State to expropriate the subject property has been
impaired or diminished. In Agan, we simply held:
xxx

xxx

xxx

This Court, however, is not unmindful of the reality that the structures comprising
the NAIA IPT III facility are almost complete and that funds have been spent by
PIATCO in their construction. For the government to take over the said facility, it has
to compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government cannot unjustly enrich itself at the expense of PIATCO and its investors.

Agan involved solely the issue of the validity of THE PIATCO contracts. After striking
down the contracts as void, we ruled that the State must pay just compensation to
PIATCO before it could exercise the right to take over considering the undeniable
fact that the latter spent a considerable sum of money to build the structures
comprising the NAIA IPT III. The Court, however, did not spell out a rigid formula for
just compensation to be paid to PIATCO except to say that it must be according to
law and equity. The Court's language was carefully crafted to give the trial court
sufficient flexibility in determining just compensation considering the exchange of
charges and countercharges that the cost in building the said structures was
unreasonably bloated. It ought to be stressed again that in Agan, we did not rule
that the State cannot expropriate the said structures. Necessarily, we did not also
set the procedure on how the expropriation proceedings should be conducted if the
State would opt to expropriate said structures. We need not, therefore, strain in
attempting to square our ruling in Agan with our ruling in the case at bar. If at all,
Agan will later be relevant in fixing just compensation but not in determining which
procedure to follow in the expropriation of NAIA IPT III. EDATSI
II
R.A. No. 8974 cannot
amend Rule 67
Article VIII, sec. 5 of the 1987 Constitution gave the Supreme Court the following
powers:
xxx

xxx

xxx

(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.
In Echegaray v. Secretary of Justice 1 we emphasized that the 1987 Constitution
strengthened the rule making power of this Court, thus:
The 1987 Constitution molded an even stronger and more independent judiciary.
Among others, it enhanced the rule making power of this Court. . . .
The rule making power of this Court was expanded. This Court for the first time was
given the power to promulgate rules concerning the protection and enforcement of
constitutional rights. . . . But most importantly, the 1987 Constitution took away the
power of Congress to repeal, alter, or supplement rules concerning pleading,

practice and procedure. In fine, the power to promulgate rules of pleading, practice
and procedure is no longer shared by this Court with Congress . . . . DTAHSI
Undoubtedly, Rule 67 is the rule this Court promulgated to govern the proceedings
in expropriation cases filed in court. It has been the undeviating rule for quite a
length of time. Following Article VIII, section 5(5) of the 1987 Constitution and the
Echegaray jurisprudence, Rule 67 cannot be repealed or amended by Congress. This
prohibition against non-repeal or non-amendment refers to any part of Rule 67 for
Rule 67 is pure procedural law. Consequently, the Court should not chop Rule 67
into pieces and hold that some can be changed by Congress but others can be
changed. The stance will dilute the rule making power of this Court which can not
be allowed for it will weaken its institutional independence.
III
On December 12, 2005, the Solicitor General filed a Supplemental Manifestation
and Motion. The Solicitor General informed the Court about an Order dated
December 2, 2005 of the High Court of Justice, Queen's Bench Division, London
which reads:
Claim No.: HT-05-269
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
MR. JUSTICE RAMSEY
BETWEEN:
TAKENAKA CORPORATION (PHILIPPINE BRANCH)
First Claimant
ASAHIKOSAN CORPORATION
Second Claimant
- vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.
Defendant
ORDER DATED 2 DECEMBER 2005
UPON Judgment in default of Defence having been entered on 28 November 2005.

AND UPON READING the Application Notice of the Claimants dated 28 November
2005 and the evidence referred to in Part C.
AND UPON HEARING the solicitors for the Claimants and the solicitors for the
Defendant appearing.
IT IS ORDERED THAT:
1.
Judgment be entered for the First Claimant in the sum of 21,688,012.18
United States dollars, together with interest in the sum of 6,052,805.83 United
States dollars.
2.
Judgment be entered for the Second Claimant in the sum of 30,319,284.36
United States dollars, together with interest in the sum of 5,442,628.26 United
States dollars.
3.
The Defendant do pay the Claimants' costs in the action, to be subject to
detailed assessment if not agreed.
DATED this 2 day of December 2005.
To be sure, the said Order is not yet final. Be that as it may, the Court cannot turn a
blind eye to this new wrinkle of the case at bar. It is of judicial notice that despite
Agan, the subject case has reached the international arbitral tribunals where the
government and the private respondent have filed charges and countercharges.
There is evident need to avoid the issues pestering the parties from further
multiplying and for new proceedings to be started in other courts, lest public
interest suffer further irretrievable prejudice. Towards this end, it is respectfully
submitted that the Court should exercise its power to compel the parties to
interplead pursuant to Rule 62 and invoke the need for orderly administration of
justice. The parties may be given reasonable time to amend their pleadings in the
trial court. HTScEI
IN VIEW WHEREOF, I join the Opinion of Mr. Justice Corona except the part calling for
the inhibition of the respondent judge. The issues resolved by the respondent judge
are not the run of the mill variety. Indeed, their novelty and complexity have divided
even the members of this Court. There may have been lapses by the respondent
judge but they do not bespeak of a biased predisposition.
CARPIO, J.:
I concur in the result of the majority opinion.
Congress has no power to amend or repeal rules of procedure adopted by the
Supreme Court. 1 However, Congress can enact laws on substantive matters which
are the subject of court procedures. Thus, Congress can prescribe the initial or
minimum amount for just compensation in expropriation cases, and require

immediate payment of such initial or minimum amount as condition for the

immediate takeover of the property by the government. The rules of procedure, like
Rule 67 of the Rules of Court, must adjust automatically to such new laws on
substantive matters.
Section 4 of Republic Act No. 8974, mandating immediate payment to the property
owner of the full zonal or proffered value prior to takeover by the government, is a
substantive requirement in expropriation cases. Thus, Section 4 must apply to all
expropriation cases under RA No. 8974 involving the acquisition of real property,
like the NAIA Terminal III, for "national government projects."
Even assuming, for the sake of argument, that Section 4 of RA 8974 is not
applicable to the expropriation of NAIA Terminal III, the Court must still apply the
substantive concept in Section 4 of RA 8974 to expropriation proceedings under
Rule 67 to insure equal protection of the law to property owners. 2 There is no
substantial reason to discriminate against property owners in expropriation cases
under Rule 67. Under RA 8974, when private property is expropriated for a national
government project, the government must first pay the zonal or proffered value to
the property owner before the government can take over the property. In the
present case, private property is expropriated for an admittedly national
government project. Thus, the Court must extend the substantive benefits in
Section 4 of RA 8974 to expropriation cases under Rule 67 to prevent denial of the
equal protection of the law. aAEHCI
Accordingly, I join in the result of the majority opinion.
CORONA, J., dissenting:
The 1987 Constitution molded an even stronger and more independent judiciary.
Among others, it enhanced the rule making power of this Court. . . .
The rule making power of this Court was expanded. This Court for the first time was
given the power to promulgate rules concerning the protection and enforcement of
constitutional rights. . . . But most importantly, the 1987 Constitution took away the
power of Congress to repeal, alter, or supplement rules concerning pleading,
practice and procedure. In fine, the power to promulgate rules of pleading, practice
and procedure is no longer shared by this Court with Congress . . . . (emphasis
supplied)
Echegaray v. Secretary of Justice, 361 Phil. 76 (1999)
xxx

xxx

xxx

Senator [Miriam] Santiago. Mr. President, will the gentleman yield for clarificatory
interpellation considering that I support the bill?
xxx

xxx

xxx

. . . I would now like to proceed with the clarificatory questions. I would like to go
through the pages chronologically. I will refer to Section 4 on page 2 of [Senate Bill
No. 2038]. This is the Section which sets out the procedures for acquisition of land
or other real property, including expropriation.
We all know in the legal profession that expropriation proceedings are covered by
Rule 67 of the Rules of Court. I think it is self-evident that Section 4 seeks to revise
Rule 67 of the Rules of Court.
. . . Is this section intended to amend Rules of Procedure promulgated by the
Supreme Court? . . .
Senator [Renato] Cayetano. . . .
Yes, Mr. President, to a certain extent, Section 4 would amend the provisions of the
Rules of Court vis--vis expropriation . . . .
xxx

xxx

xxx

. . . Section 4 of this bill . . . effectively amends certain portions of the Rules of Court
on expropriation.

Senate deliberations on July 25, 2000 on Senate Bill (SB) No. 2038 which later
became SB No. 2117. SB No. 2117 was consolidated with House Bill No. 1422 and
enacted by Congress as RA 8974. ISDCHA
This case involves the exercise by the national government of the power of eminent
domain over the Ninoy Aquino International Airport International Passenger Terminal
III (NAIA IPT3). From the start, there was never any doubt about the Republic's
position to exercise the power of eminent domain. The discussions within the Court
focused on which procedure shall govern the determination of the just
compensation due to PIATCO for the NAIA IPT3 facilities whether it would be Rule
67 of the Rules of Court or RA 8974.
The majority ruled that RA 8974 should apply. It ordered the national government
and its co-petitioners to immediately pay the just compensation for NAIA IPT3
before taking over the facility. In so doing, the majority may have unwittingly further
delayed, if not virtually foreclosed, the expropriation of NAIA IPT3.
I submit it erroneously allowed the procedure set forth in an unconstitutional law.
The majority allowed Congress to encroach upon the rule-making power 1 which the
Constitution has reserved exclusively to this Court. And it may have created another
white elephant as a result.
Hence, I respectfully dissent.

Before us is a petition for certiorari and prohibition with urgent prayer for
preliminary injunction and temporary restraining order filed by the Republic of the
Philippines (Republic), the Department of Transportation and Communications
(DOTC) and the Manila International Airport Authority (MIAA). The petition seeks to
nullify and set aside the January 4, 2005, January 7, 2005 and January 10, 2005
orders of the public respondent, Hon. Henrick F. Gingoyon, presiding judge of the
Regional Trial Court of Pasay City, Branch 117, in RTC Civil Case No. 04-0876.
SDTcAH
The main case here is one of expropriation 2 and is an offshoot of the decision 3 and
resolution 4 of this Court in the consolidated cases of Agan v. PIATCO, Baterina v.
PIATCO and Lopez v. PIATCO. The object of the expropriation proceedings is the NAIA
IPT3. 5
PETITIONERS' CASE
The actual construction and development of the NAIA IPT3 were undertaken by
PIATCO as contractor of a build-operate-transfer project 6 pursuant to the following
contracts: (1) Concession Agreement signed on July 12, 1997; (2) Amended and
Restated Concession Agreement (ARCA) dated November 26, 1998; (3) First
Supplement to the ARCA dated August 27, 1999; (4) Second Supplement to the
ARCA dated September 4, 2000; and (5) Third Supplement to the ARCA dated June
22, 2001 [collectively, the PIATCO Contracts]. 7
At the end of a 25-year concession, PIATCO will transfer the operation of the
terminal to the MIAA. 8 PIATCO commenced but did not complete the construction of
NAIA IPT3 because of certain developments which will be taken up in detail later.
NAIA IPT3 stands on a parcel of land owned by the Bases Conversion Development
Authority (BCDA), an agency of the Republic. 9
By way of a brief background, this Court ruled in Agan that in view of the absence of
the required financial capacity of PIATCO's predecessor, the Paircargo Consortium,
10 the award to it by the Prequalification Bids and Awards Committee (PBAC) of the
contract for the construction, operation and maintenance of the NAIA IPT3 was null
and void. 11 Moreover, the 1997 Concession Agreement was nullified for being a
substantially different agreement from the contract bidded upon. It also contained a
provision constituting a direct government guarantee which was expressly
prohibited by RA 6957 or the Build-Operate-Transfer (B-O-T) Law and its
implementing rules. The 1999 ARCA and its supplements, being mere accessory
contracts, were all similarly voided. SEIacA
After invalidating all the PIATCO Contracts, the Court declared in a resolution dated
January 21, 2004 (2004 resolution):

[that this] Court, however, is not unmindful of the reality that the structures
comprising the NAIA [IPT3] facility are almost complete and that funds have been
spent by PIATCO in their construction. For the government to take over the facility, it
has to compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its investors.
12 (emphasis supplied)
More than a year later, however, the Republic still had not moved any closer to
opening and operating a modern international airport. Petitioners allegedly exerted
efforts, unfortunately to no avail, to negotiate with PIATCO and its foreign
stockholder and lender, Fraport AG Frankfurt Airport Services Worldwide (Fraport),
for the resolution of the stalemate. Petitioners claimed that their request for a
"walk-through" to arrive at a preliminary determination of the safety and structural
integrity of the terminal as well as their appeal for the submission of construction
plans and related documents were denied.
On the ground that, under the Constitution, (1) private property can be taken for
public use under certain conditions and (2) the State has the inherent power of
eminent domain, the Republic resorted to an action for expropriation on December
21, 2004. 13
Upon filing the complaint for expropriation, petitioners made a cash deposit of
P3,002,125,000 (NAIA IPT3's assessed value for taxation purposes) at the Baclaran
Branch of the Land Bank of the Philippines (LBP-Baclaran). The amount, roughly
equivalent to US$53 million, was subject to the orders of the trial court. A writ of
possession was thereafter issued, enabling petitioner to gain its first access to the
terminal 14 after the promulgation of Agan. With the writ, petitioners entered and
took possession of the NAIA IPT3. 15
Meanwhile, the sheriff was not able to serve summons at the indicated address of
PIATCO since it apparently no longer held office there. 16 Petitioners claim that, as
of January 3, 2005, the sheriff still had been unable to serve summons on PIATCO.
17
On January 4, 2005, respondent judge issued the first assailed order:
In view of the foregoing, this court hereby issues the following orders to supplement
its Order dated 21 December 2004 and the writ of possession issued on the same
date:
(a)
The Land Bank of the Philippines, Baclaran Branch, is hereby directed to
immediately, upon receipt of this Order, release the amount of US$62,343,175.77
that plaintiffs specifically made available for the purpose of expropriation, to and in
favor of PIATCO. This amount shall be deducted from the amount of just

compensation due PIATCO that shall be determined by this court pursuant to

Section 4 of R.A. No. 8974. CSHEca
(b)
The plaintiffs are hereby directed to submit to this court a Certificate of
Availability of Funds signed by authorized officials to cover the payment of just
compensation.
(c)
Pending expropriation proceedings and full payment of just compensation to
PIATCO, the plaintiffs are directed to maintain, preserve and safeguard NAIA IPT3, or
perform such acts or activities in preparation for their direct operation of NAIA IPT3.
Plaintiffs, however, are prohibited from performing acts of ownership like awarding
concessions or leasing any part of NAIA IPT3 to other parties.
SO ORDERED. 18
Petitioners filed an urgent motion for reconsideration on January 5, 2005, asserting
that the amount ordered released by the court (approximately US$ 62.3+ million)
was excessive. The LBP-Baclaran had certified that the Republic had a total deposit
of approximately US$ 62.3+ 19 million with it. Apparently, it was this whole amount
the trial court wanted released to PIATCO.
On the other hand, petitioner Republic objected to the order of the court because,
as could be allegedly concluded from the documents it filed with the expropriation
complaint, since there were no comparable values for the expropriated property,
"reasonable basis" should determine what the provisional value 20 of NAIA IPT3
ought to be. Using "reasonable basis" as a guide, the Republic arrived at a
provisional value of P3,002,125,000 or about US$53 million which actually
represented the assessed value of the property for taxation purposes. 21 The
amount Judge Gingoyon wanted to be released immediately to PIATCO was about
US$9 million more or US$63.2+ million. Hence, the Republic's objection on the
ground of excessiveness.
Petitioners contended that it was likewise erroneous for the trial court to order the
release of the deposit motu propio (that is, without any motion therefor) since just
compensation was yet undetermined and the deposit itself was being claimed by
other parties. 22 According to petitioners, since they had not been granted "full and
relevant access to the NAIA IPT3," it was impossible for them to fully assess its
safety, structural integrity and real value after just one perfunctory guided tour of
the facility. 23 As there was no opportunity to thoroughly inspect the property being
expropriated, the expenditure of public funds could not be legally justified. 24
Hence, it was error for the trial court to order the release of any part of the
Republic's deposits in LBP-Baclaran to PIATCO. cTCaEA
Petitioners also questioned why the court a quo applied RA 8974 25 instead of Rule
67 26 of the 1997 Rules of Court to the expropriation proceedings. They argued that
the title of RA 8974 itself defined its limited application: only for the acquisition of a

right of way, site or location for a national infrastructure project. NAIA IPT3 was not
a right-of-way, site or location for any national government infrastructure project. It
was the national government infrastructure project itself. 27
Furthermore, petitioners considered the trial court's prohibition against "acts of
ownership like awarding concessions or leasing any part of NAIA IPT3 to other
parties" as, in effect, an injunction or restraining order against a government
infrastructure project and therefore a violation of RA 8975 28 which prohibits the
issuance of an injunction (except by the Supreme Court) against government
infrastructure projects. 29 In total disregard of due process, the injunction was
issued by the trial court without notice and hearing. 30 Petitioners argued that
preventing them from exercising the rights of a beneficial owner of NAIA IPT3 would
negate the very purpose for which the writ of possession was issued 31 and the
expropriation itself was being pursued. TaCDcE
Respondent judge, finding that petitioners had the legal right to expropriate NAIA
IPT3, issued the second assailed order on January 7, 2005.
WHEREFORE, finding plaintiffs to have the right to expropriate NAIA IPT3, this court
hereby orders:
1.
The EXPROPRIATION of NAIA IPT3, which is particularly described in the Writ
of Possession issued by this court on December 21, 2004;
2.
The appointment of DR. FIORELLO R. ESTUAR, SOFRONIO B. URSAL and
ANGELO I. PANGANIBAN as commissioners to ascertain and report to this court the
just compensation for the taking of NAIA IPT3. They shall appear before this court
within three (3) days from receipt hereof to take and subscribe an oath that they will
faithfully perform their duties as commissioners under Section 6, Rule 67 of the
1997 Rules of Civil Procedure.
a.
The first session of the hearing to be held by the aforesaid commissioners
shall be on January 14, 2005 at 10:00 A.M. at the NAIA International Passenger
Terminal 3, Villamor Airbase, Pasay City.
b.

Thereafter, the commissioners shall hold session at least twice a week.

c.
The commissioners shall make a full and accurate report to the court of all
their proceedings on or before February 28, 2005.
d.
The commissioners shall be paid reasonable fees that shall be taxed as part
of the costs of the proceedings.
SO ORDERED. 32

On January 10, 2005, the trial court denied the urgent motion for reconsideration of
its January 4, 2005 order and petitioners' urgent motion for inhibition of respondent
judge filed on January 7, 2005. 33
WHEREFORE, plaintiffs['] Motion for Reconsideration of the Order dated January 4,
2005, and Urgent Motion for Inhibition are DENIED. IDaEHS
Accordingly, except for the superfluous part of the Order prohibiting the plaintiffs
from awarding concession or leasing any part of NAIA IPT3 to other parties, the
order sought to be reconsidered stands: (1) The Land Bank of the Philippines,
Baclaran Branch, must release the sum of US$62,343,175.77 in favor of PIATCO; (2)
The Plaintiffs must submit a certificate of availability of funds; and (3) Pending
expropriation proceedings and full payment of just compensation to PIATCO, the
plaintiffs are directed to maintain, preserve and safeguard NAIA IPT3, or perform
such acts or activities in preparation for their direct operation of NAIA IPT3.
SO ORDERED.
RESPONDENT PIATCO's VERSION OF EVENTS
On October 5, 1994, petitioners received an unsolicited offer from Asia's Emerging
Dragons Corporation (AEDC) to construct, operate and maintain a state-of-the-art
international passenger terminal under Section 4(a) of RA 6957 (the B-O-T Law), 34
Section 4(a) because the government did not have the funds nor the expertise to do
the same. 35 The project was considered an unsolicited proposal because it was not
a government priority project. 36 Paircargo Consortium, which eventually
incorporated with other investors under the name PIATCO, submitted a
counterproposal:
to construct IPT-3 at a cost of not less than US$ 350 Million, operate, such terminal
at no cost to the Government, pay Government a total of at least P17.5 Billion in
annual guaranteed payments over twenty-five (25) years and thereafter transfer
title over IPT-3 to the Government for P1.00. 37
The government, considering Paircargo Consortium's counterproposal more
beneficial, gave AEDC thirty days to match it; this, AEDC failed to do. 38 The DOTC
then issued the notice of award for the NAIA IPT3 project to PIATCO's predecessor,
Paircargo Consortium. The government, through then DOTC Secretary Arturo T.
Enrile, and PIATCO, through its President, Henry T. Go, executed the so-called
PIATCO Contracts whereby PIATCO was granted a 25-year concession to operate
NAIA IPT3, after which title was to pass on to the government. 39
The 1997 Concession Agreement was signed during former President Fidel V. Ramos'
administration while the ARCA and the first two supplements were executed during
the tenure of former President Joseph Ejercito Estrada. 40 In January 2001, the
Estrada administration was overthrown by mass political action popularly known as

EDSA People Power II. Six months into the new administration of President Gloria
Macapagal-Arroyo, on June 22, 2001, the third supplement to the ARCA was signed.
Since then, the NAIA IPT3 project has been beset by seemingly interminable
difficulties on all fronts. HIETAc
According to PIATCO, long-term loans from Asian Development Bank, Kreditanstalt
fr Wiederaufbau, International Finance Corporation and Dresdner Bank could not
be drawn on because of the refusal of the government to cooperate in the
fulfillment of conditions precedent demanded by the lenders. 41 Undaunted, PIATCO
nevertheless continued the construction of NAIA IPT3 through advances from
stockholders and interim financing. It would have completed NAIA IPT3 by now had
it not been for the alleged lack of cooperation of the Macapagal-Arroyo
administration and the obstacles it allegedly put up. 42 (In her speech at the 2002
Golden Shell Export Awards at Malacaang Palace, President Macapagal-Arroyo
stated that she could not honor the PIATCO Contracts denounced by government
lawyers 43 as null and void. 44 )
Furthermore, while the government defended the validity of the PIATCO Contracts in
the past, it suddenly made a volte face and joined the parties who sought their
nullification. 45 On September 17, 2002, various petitions were filed before this
Court to annul the PIATCO Contracts and prohibit the DOTC and MIAA from
implementing them. Agan was promulgated on May 5, 2003. Although this Court
voided the PIATCO Contracts because PIATCO was, among other reasons,
unqualified, this Court did not actually find private respondent to have acted
fraudulently. 46
Moreover, the Court required the government to pay PIATCO a fair and just
compensation for NAIA IPT3 as a prerequisite for any takeover of the terminal. 47
According to PIATCO, since the nullification of the PIATCO Contracts in 2003,
petitioners have not shown any interest in the completion, opening and operation of
NAIA IPT3. Instead of directing its resources and efforts to actually take over and
operate NAIA IPT3 and to compensate PIATCO as builder of the structures, the
government allegedly prepared to develop the Diosdado Macapagal International
Airport in Clark Field, Pampanga. 48
Contrary to petitioners' assertion that they were not being given access to NAIA
IPT3, PIATCO alleged that invitations to view and inspect the terminal were in fact
extended to them on several occasions. According to private respondent, the
following were actually able to inspect NAIA IPT3:
(a)

Secretary Leandro Mendoza;

(b)

Solicitor General Alfredo Benipayo;

(c)

Former Executive Secretary, now Foreign Affairs Secretary Alberto Romulo;

(d)

Former MIAA General Manager Edgardo Manda;

(e)

MIAA General Manager Alfonso Cusi;

(f)

Former Immigration Commissioner Andrea Domingo;

(g)
Congressmen Alfonso Umali Jr., Raul Villareal, Joseph Santiago, Roberto Cajes,
Corazon Malanyaon, Josephine Ramirez, Charity Leviste, Jacinto Paras, Prospero
Pichay, Prospero Nograles, Willie Villarama, Perpetuo Ylagan, Eduardo Zialcita,
Carmen Cari, Jose Solis, Consuelo Dy, Aleta Suarez, Rodolfo Bacani, Aurelio Umali,
Augusto Syjuco Jr., Generoso Tulagan and Harlin Cast Abayon;
(h)
Senators Ramon Revilla Jr., Alfredo Lim, Juan Ponce Enrile, Edgardo Angara,
Panfilo Lacson and Tessie Aquino-Oreta. 49
PIATCO is convinced that the government's intentions vis--vis NAIA IPT3 are
suspect. "They did not negotiate. They dictated." 50 The government, with police
assistance, allegedly seized control of NAIA IPT3 late in the afternoon of December
21, 2004 on the basis of a writ of possession issued by the trial court after no more
than a unilateral assessment of the value of the facility. 51
THE ISSUES
In fine, petitioners seek the resolution of the following issues:
I.
WHETHER OR NOT RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION
AND ACTED IN EXCESS OF JURISDICTION WHEN HE HELD THAT RA 8974, NOT RULE
67 OF THE RULES OF COURT, IS APPLICABLE IN THE EXPROPRIATION PROCEEDINGS.
DIcSHE
II.
WHETHER OR NOT RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION
AND ACTED IN EXCESS OF HIS JURISDICTION WHEN HE MOTU PROPIO ISSUED THE
ORDER DIRECTING THE DEPOSITARY BANK TO IMMEDIATELY RELEASE PETITIONERS'
DEPOSIT IN THE AMOUNT OF US$ 62,343,175.77 WHEN NAIA IPT3'S ASSESSED
VALUE FOR THE PURPOSE OF THE ISSUANCE OF THE WRIT AS ALLEGED IN THE
COMPLAINT FOR EXPROPRIATION IS ONLY P3,002,125,000 (APPROXIMATELY US$ 53
MILLION).
III.
WHETHER OR NOT RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION
AND ACTED IN EXCESS OF HIS JURISDICTION WHEN HE PROHIBITED PETITIONERS
FROM PERFORMING "ACTS OF OWNERSHIP" SUCH AS AWARDING CONCESSIONS OR
LEASING ANY PART OF NAIA IPT3 TO OTHER PARTIES.

IV.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED IN MOTU PROPIO ISSUING
THE JANUARY 7, 2005 ORDER APPOINTING THREE COMMISSIONERS TO DETERMINE
THE TERMINAL'S JUST COMPENSATION.
V.
WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION IN
REFUSING TO INHIBIT HIMSELF FROM THE EXPROPRIATION CASE.
Parallel to the resolution of the foregoing issues, petitioners also sought: (1) a TRO
commanding respondent judge to cease and desist from implementing his orders
dated January 4, 2005, January 7, 2005 and January 10, 2005 in RTC Civil Case No.
04-876; (2) the nullification of the orders dated January 4, 2005; January 7, 2005;
and January 10, 2005; and (3) an order to respondent judge in his capacity as
presiding judge of the Regional Trial Court, Branch 117, Pasay City to inhibit himself
from further actions on the subject case. HDTSCc
The Court issued the TRO, as prayed for, on January 14, 2005. 52
I shall discuss the issues in seriatim.
THE CONSTITUTIONAL REQUIREMENT OF PUBLIC USE
This case essentially pertains to the exercise by the Republic of its inherent power
of eminent domain or the right of the sovereign authority to acquire private
property for public use upon payment of just compensation. It refers to the right to
take or reassert dominion over property within the state for public use or to meet a
public exigency. 53 The constitutional requirement of due process lays down a rule
of procedure to be observed in the exercise of such power. 54 This rule of procedure
is more familiarly known as expropriation, 55 a term used interchangeably with
eminent domain.
The exercise of eminent domain is circumscribed by two limitations in the
Constitution: (1) the taking must be for public use and (2) just compensation must
be paid to the owner of the private property. 56 These twin proscriptions are
grounded on the necessity to achieve a balance between the interests of the State,
on the one hand, and the private rights of the individual, on the other hand, by
effectively restraining the former and affording protection to the latter. 57
"Public use" as a limitation to the power of eminent domain is not defined in the
Constitution. It is thus considered in its general notion of meeting a public need or a
public exigency. 58 It is not restricted to clear cases of "use by the public" 59 but
embraces whatever may be beneficially employed for the community. 60 The
concept now covers uses which, while not directly available to the public, redound

to their indirect advantage or benefit. 61 It is generally accepted that it is just as

broad as "public welfare." 62
Viewed in this light, the "public use" dimension of a modern international airport
need not be belabored. For it is inextricably linked to air transport which, in turn, is
vital to the economy, to business and to tourism. It enhances the movement of
goods, services and people across international borders. It serves as the country's
main gateway to the world and as its major link to its neighbors in the global village.
Hardly anyone can doubt the public need for a modern international airport and the
immeasurable boost it will give the country's economy. 63
WHY EXPROPRIATE NAIA IPT3 IN THE FIRST PLACE?
In Manotok v. National Housing Authority, 64 we ruled that the exercise of the power
of eminent domain should be based on necessity. Is there such a necessity for the
expropriation of NAIA IPT3?
First, in today's global market governed by the hard-hearted rules of business
dominance and competitiveness, time has become a precious resource and a critical
determinant of either failure or success. Indeed, not only time but also resources
are at stake in the expropriation of NAIA IPT3, an infrastructure project that needs
only to be completed to become fully operational, instead of building an entirely
new facility from scratch. cHDaEI
Second, NAIA IPT3 sits on 65 hectares (161 acres) of prime government land located
in one of the most expensive commercial areas in the country. But that valuable
land will be completely laid to waste if NAIA IPT3 does not become operational,
either because government does not allow it to operate or petitioners decide to
build, operate or develop an entirely new international airport. In either case, both
sides will only succeed in stalemating each other and NAIA IPT3 will be absolutely of
no use to both petitioners and private respondent PIATCO. The land will just lie idle
and unproductive while a white elephant abjectly sits on it. A repeat of the
mothballed Bataan Nuclear Power Plant? Certainly. On the other hand, will not
expropriating NAIA IPT3, putting it to good use and paying off its owner(s) redound
to the benefit of the entire country and all parties concerned?
Third, there is no denying that a project like NAIA IPT3 is long overdue, such that the
prestige of the entire country before the international community is at stake. Politics
and narrow vested interests have a peculiar way of extirpating the most salutary
and beneficial ventures in this country. The undertaking appears headed for the
same fate unless this Court intervenes and exercises its judicial discretion to settle
the destructive impasse. Shall this Court watch in silence while the parties claw at
each other before international arbitration bodies?
The majority opinion effectively disregarded this necessity.

PUBLIC USE AND JUST COMPENSATION

None of the parties actually questioned the public purpose of the expropriation
not the petitioners of course, not the respondent judge, not even private respondent
PIATCO. In fact, petitioners exerted special effort to show that the taking was
intended to encourage and promote international air traffic as well as to develop an
airport with facilities, accommodations and services meeting international
standards. As for PIATCO, the records do not show that it questioned the public
purpose of the expropriation at all. The respondent judge, for his part, recognized
that the NAIA IPT3 was undoubtedly a structure for a well-defined public purpose,
being of critical importance to the Philippine economy in terms of the carriage of
goods, services and people. 65 Thus, there was never any question that the
expropriation of NAIA IPT3 was for a public purpose.
The policy underlying the constitutional provision for eminent domain is to make the
private owner "whole" after his property is taken. 66 Thus, private property cannot
be taken in any way for public use without adequate compensation. 67
Just compensation is the just and complete equivalent of the loss which the owner
of the thing expropriated has to suffer by reason of the expropriation. 68 The
compensation given to the owner is just if he receives for his property a sum
equivalent to its market value at the time of the taking. 69 "Market value" is the
price fixed by the buyer and the seller in the open market in the usual and ordinary
course of legal trade and competition. 70
RA 8974 OR RULE 67 OF THE RULES OF COURT?
At bottom, the bone of contention is the procedure that should govern the
determination and payment of just compensation, i.e., whether it should be that
under RA 8974 71 or that under Rule 67 of the Rules of Court.
Under the relevant provisions of Rule 67 of the Rules of Court, possession is given to
the condemnor and just compensation is determined in accordance with the
following procedures:
xxx

xxx

xxx

SECTION 2.
Entry of plaintiff upon depositing value with authorized
government depositary. Upon the filing of the complaint or at any time thereafter
and after due notice to the defendant, the plaintiff shall have the right to take or
enter upon the possession of the real property involved if he deposits with the
authorized government depositary an amount equivalent to the assessed value of
the property for purposes of taxation to be held by such bank subject to the orders
of the court. . . . HSCATc
xxx

xxx

xxx

After such deposit is made the court shall order the sheriff or other proper officer to
forthwith place the plaintiff in possession of the property involved and promptly
submit a report thereof to the court with service of copies to the parties.
SECTION 3.
xxx

Defenses and objections.

xxx

xxx

If a defendant has any objection to the filing of or the allegations in the complaint,
or any objection or defense to the taking of his property, he shall serve his answer
within the time stated in the summons. The answer shall specifically designate or
identify the property in which he claims to have an interest, state the nature and
extent of the interest claimed, and adduce all his objections and defenses to the
taking of his property. . . .
. . . However, at the trial of the issue of just compensation, whether or not a
defendant has previously appeared or answered, he may present evidence as to the
amount of the compensation to be paid for his property, and he may share in the
distribution of the award.
SECTION 4.
Order of expropriation. If the objections to and the defenses
against the right of the plaintiff to expropriate the property are overruled, or when
no party appears to defend as required by this Rule, the court may issue an order of
expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the
taking of the property or the filing of the complaint, whichever came first. aTADCE
xxx

xxx

xxx

SECTION 5.
Ascertainment of compensation. Upon the rendition of the
order of expropriation, the court shall appoint not more than three (3) competent
and disinterested persons as commissioners to ascertain and report to the court the
just compensation for the property sought to be taken. The order of appointment
shall designate the time and place of the first session of the hearing to be held by
the commissioners and specify the time within which their report shall be submitted
to the court.
Copies of the order shall be served on the parties. Objections to the appointment of
any of the commissioners shall be filed with the court within ten (10) days from
service, and shall be resolved within thirty (30) days after all the commissioners
shall have received copies of the objections. (emphasis supplied)
On the other hand, RA 8974 provides for the observance of the following guidelines:
xxx

xxx

xxx

SECTION 4.
Guidelines for Expropriation Proceedings. Whenever it is
necessary to acquire real property for the right-of-way, site 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
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of the Bureau of Internal
Revenue (BIR); and (2) the value of the improvements and/or structures as
determined under Section 7 hereof;
xxx

xxx

xxx

(c)
In case the completion of a government infrastructure project is of utmost
urgency and importance, and there is no existing valuation of the area concerned,
the implementing agency shall immediately pay the owner of the property its
proffered value taking into consideration the standards prescribed in Section 5
hereof. aEHTSc
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. (emphasis supplied)
To implement the above "guidelines", the Implementing Rules and Regulations (IRR)
of RA 8974 provide:
xxx

xxx

xxx

SECTION 8. Expropriation. If the owner of a private property needed by the

government implementing agency does not agree to convey his property to the
government by any of the foregoing modes of acquiring and/or transferring
ownership of the property, then the government shall exercise its right of eminent
domain by filing a complaint with the proper Court for the expropriation of the
private property.

The verified complaint shall state with certainty the right and purpose of
expropriation, describe the real or personal property sought to be expropriated, and
join as defendants all persons owning or claiming to own, or occupying, any part
thereof or interest therein, showing as far as practicable, the interest of each
defendant separately. If the title of any property sought to be condemned appears
to be in the name of the Republic of the Philippines, although occupied by private
individuals, or if the title is otherwise obscure or doubtful so that the plaintiff cannot
with accuracy or certainty specify the real owners, averment to the effect may be
made in the complaint. aSAHCE
Pursuant to Section 4 of the Act, the Implementing Agency shall comply with the
following guidelines:
a.
Upon the filing of the complaint, and after due notice to the
defendant/property owner, the Implementing Agency shall immediately pay the
property owner the amount equivalent to the sum of (1) one hundred percent
(100%) of the value of the property based on the current zonal valuation of the BIR;
and (2) the value of the improvements and/or structures as determined by the
Implementing Agency, in accordance with Section 10 hereof, pursuant to Section 7
of the Act.
xxx

xxx

xxx

c.
In case the completion of a national government project is of utmost urgency
and importance, and there is no existing valuation of the area concerned, the
Implementing Agency shall immediately pay the owner of the property its proffered
value taking into consideration the standards stated in the second paragraph of
Section 8 hereof, pursuant to Section 5 of the Act.
xxx

xxx

xxx

SECTION 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/structures, 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. SaIEcA
SECTION 11. Engagement of Appraisers. The Implementing Agency may, if it
deems necessary, engage the services of government financing institutions and/or

private appraisers duly accredited by the said institutions to undertake the appraisal
of the property, i.e., the land and/or improvements/structures, and to determine its
fair market value. The Implementing Agency concerned shall consider the
recommendations of the said appraisers in deciding on the purchase price of or just
compensation for the property.
SECTION 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 of 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 the foregoing requirements, the
Court shall immediately issue the Writ of Possession to the complainant
Implementing Agency.
SECTION 13. Payment of Compensation. Should the property owner concerned
contest the proffered value of the Implementing Agency, the Court shall determine
the just compensation to be paid to the owner within sixty (60) days from the date
of the filling of the expropriation case, considering the standards set out in Sections
8, 9 and 10 hereof, pursuant to Section 5 of the Act. When the decision of the Court
becomes final and executory, the Implementing Agency shall pay the owner the
difference between the amount already paid as provided in Section 8 (a) hereof and
the just compensation determined by the court, pursuant to Section 4 of the Act.
IEcaHS
SECTION 14. Trial Proceedings. Within the sixty (60)-day period prescribed by the
Act, all matters regarding defenses and objections to the complaint, issues on
uncertain ownership and conflicting claims, effects of appeal on the rights of the
parties, and such other incidents affecting the complaint shall be resolved under the
provisions on expropriation of Rule 67 of the Rules of Court. (emphasis supplied)
Petitioners assert that the provisions on expropriation of Rule 67 of the Rules of
Court should apply. The trial court and respondent PIATCO opine that it should be RA
8974.
Rule 67 and RA 8974 differ in the manner of compensating the owner of the
property under expropriation. Under Rule 67, before the government can take
possession of the property to be expropriated, the deposit of an amount equivalent
to the assessed value of the property for taxation purposes is sufficient for the time
being, that is, until the conclusion of the court proceedings where both parties shall
have proven their claims and the court shall have made a factual determination of
the price of the property. Under RA 8974, on the other hand, immediate payment of

the full zonal value (a much bigger sum than the assessed value required by Rule
67) of the property and improvements and/or structures as determined under
Section 7 of the law is required before the government can take possession of the
property.
Petitioners maintain that the very title of RA 8974 states that it only covers the
acquisition of right of way, site or location for government infrastructure projects.
Thus, the law itself defines the limits of its application.
Obviously, according to petitioners, an airport is not a right of way because a "right
of way" refers to the right to pass through property owned by another, which is not
so in this case. Neither is it a "site or location" because "location" is the specific
place or position of a person or thing and "site" pertains to a place or location or a
piece of property set aside for a specific use. They further aver that even the
bicameral deliberations on the law reveal that the legislature never contemplated
the use of this special law for the acquisition of land for a purpose other than a right
of way, site or location for government infrastructure projects. 72
Moreover, the provisions 73 of RA 8974 cited by respondent judge speak of
"relevant current zonal valuation of the [Bureau of Internal Revenue (BIR)]" as the
amount of deposit necessary for the issuance of a writ of possession. BIR zonal
valuations are only for parcels of land, not for airport facilities. There is no BIR zonal
valuation for an airport terminal precisely because the latter is not land. cTIESD
The majority opinion ruled that RA 8974 applies in this case. It premised its
conclusion on the argument that the application of Rule 67 will violate this Court's
2004 resolution in Agan, the alleged governing law of the case.
The ruling is basically flawed as it is grounded on a wrong premise.
It is incorrect to say that Agan constitutes the law of the case. The "law of the case"
doctrine is defined as a term applied to an established rule that, when an appellate
court passes on a question and remands the case to the lower court for further
proceedings, the question there settled becomes the law of the case on subsequent
appeal. 74 Unlike the doctrine of stare decisis, the doctrine of the law of the case
operates only in the particular case. 75
The law of the case finds application only in the same case between the parties.
This case (which refers to the expropriation of NAIA IPT3) is irrefutably not the same
as Agan (which was about the validity of the so-called "PIATCO contracts"). Hence,
the pronouncements. in Agan cannot constitute the law of the case here.
The majority opinion claims that "the staging of expropriation proceedings in this
case with the exclusive use of Rule 67 would allow for the government to take over
the NAIA 3 facilities in a fashion that directly rebukes our 2004 resolution in Agan
(which) mandated that there must be first payment of just compensation before the

Government could take over the NAIA IPT3 facilities." This is very misleading.
ESacHC
The full text of the relevant statement of the Court in its 2004 resolution in Agan is
as follows:
This Court, however, is not unmindful of the reality that the structures comprising
the NAIA [IPT3] facility are almost complete and that funds have been spent by
PIATCO in their construction. For the government to take over the facility, it has to
compensate respondent PIATCO as builder of the said structures. The compensation
must be just and in accordance with law and equity for the government can not
unjustly enrich itself at the expense of PIATCO and its investors. (emphasis supplied)
Clearly, the resolution only requires that PIATCO be given just compensation as a
condition for any government take-over of NAIA IPT3. The just compensation should
be in accordance with law and equity. There is something seriously wrong with the
argument that RA 8974 is the only legal and equitable way to compensate PIATCO in
accordance with our 2004 resolution.
The application of Rule 67 in the expropriation proceedings of NAIA IPT3 is in
consonance with Agan. The determination and payment of just compensation
pursuant to Rule 67 are in accordance with law. Under Rule 67, PIATCO will be given
FULL JUST COMPENSATION by the government for the taking of NAIA IPT3. That is
mandatory. The Constitution itself ordains it.
Under Rule 67, there is no way the government can unjustly enrich itself at the
expense of PIATCO. Section 9 of Rule 67 ensures this by requiring the payment of
interest from the time government takes possession of the property.
Moreover, I dare say the majority opinion actually got caught up in a selfcontradiction. At first, it claimed that the 2004 resolution in Agan laid down the
following directives: (1) PIATCO must receive payment of just compensation
determined in accordance with law and equity, and (2) the government is barred
from taking over NAIA IPT3 until such just compensation is paid. It continued to
argue that the 2004 resolution requires the payment of just compensation before
the takeover of NAIA IPT3 facilities. Subsequently, however, it backtracked and
stated that "the 2004 resolution does not particularize the extent such payment
must be effected before the takeover, but it actually requires at least some degree
of payment to the private owner before a writ of possession may issue." However,
neither the proffered value nor the zonal valuation under RA 8974 is equivalent to
just compensation. If the majority opinion were to pursue its argument to its logical
conclusion, no takeover can be had without payment of the just compensation itself,
not merely of a value corresponding to what it vaguely referred to as "some degree
of payment". SaICcT

The requirement to pay the proffered value was a strained and belabored way of
establishing that the application of RA 8974 is in consonance with the 2004
resolution in Agan. If the majority opinion were to be true to its pronouncement that
the 2004 resolution demands payment of just compensation prior to the take over
of NAIA IPT3, then payment of the proffered value is not enough. The proffered
value is definitely not equivalent to just compensation.
The majority failed to realize that respondent judge gravely abuse his discretion
when he issued his January 10, 2005 order. Respondent judge precipitately ruled
that Rule 67 of the Rules of Court and all the laws on expropriation involving
infrastructure projects had been expressly repealed by RA 8974 and its
implementing rules and regulations. Worse, respondent judge justified his
conclusion by erroneously invoking a footnote in City of Iloilo v. Legaspi 76 . His
order read:
xxx

xxx

xxx

[Petitioners] relied solely and this court initially went along with their reliance
on Rule 67 on Expropriation (an perchance of P.D. Nos. 42 and 1533) as the
applicable authority on the instant case for expropriation. But this court did not
know then that Rule [67] and all the laws on expropriation involving infrastructure
projects have been expressly repealed by R.A. No. 8974 and its Implementing Rules
and Regulations insofar as they are inconsistent with said Act. In the footnote of the
recent case of City of Iloilo vs. Judge Legaspi (G.R. No. 154614, November 25,
2004), the Supreme Court recognized that:
"Section 4 of Rep. Act No. 8974 (An Act To Facilitate The Acquisition of Right-Of-Way,
Site Or Location For National Government Infrastructure Projects and For Other
Purposes) provides for the guidelines for expropriation proceedings." ESCcaT
Plaintiff's argument that R.A. No. 8974 is not applicable because NAIA IPT3 is "not
right-of-way, site or location" for a national infrastructure project "but the
infrastructure itself " is absurd. It is very plain to see, and this court hereby holds,
that the NAIA IPT3 is itself the very right-of-way, the site or location of the national
government's infrastructure project; it is the very right-of-way, site or location of an
airport that will make them attain their "goal of encouraging and promoting
international and domestic air traffic as well as developing an internationally
acceptable airport accommodation and service." 77 (emphasis supplied)
Respondent judge's theory about Rule 67's supposed repeal by RA 8974 was totally
devoid of factual and legal basis. RA 8974 did not repeal Rule 67 at all. The
Constitution will not allow it. In fact, neither its repealing clause nor any of its
provisions even mentioned or referred to the Rules of Court, whether on
expropriation or anything else. But even assuming (but not conceding) that
respondent judge's theory had been based on an implied repeal, still there would
have been no legal justification for it.

Settled is the rule in statutory construction that implied repeals are not favored.
Thus:
The two laws must be absolutely incompatible, and a clear finding thereof must
surface, before the inference of implied repeal may be drawn. The rule is expressed
in the maxim, interpretare et concordare legibus est optimus interpretendi, i.e.,
every statute must be so interpreted and brought into accord with other laws as to
form a uniform system of jurisprudence. The fundament is that the legislature
should be presumed to have known the existing laws on the subject and not have
enacted conflicting statutes. Hence, all doubts must be resolved against any implied
repeal, and all efforts should be exerted in order to harmonize and give effect to all
laws on the subject. 78
The foregoing becomes all the more significant when, as in this case, the provisions
of RA 8974 reveal no manifest intent to revoke Rule 67. In fact, Section 14 of the IRR
of RA 8974 makes an explicit reference to Rule 67 and mandates its applicability to
all matters regarding defenses and objections to the complaint, issues on uncertain
ownership and conflicting claims, effects of appeal on the rights of the parties and
such other incidents affecting the complaint. If only for this reason, respondent
judge's "repeal theory" is totally erroneous. ECaSIT
The footnote in City of Iloilo 79 was not in any way necessary to resolve any of the
issues in that case. Thus, it was merely part of an obiter dictum. Respondent judge
should be reminded of our pronouncement in City of Manila v. Entote 80 that a
remark made or opinion expressed by a judge in a decision upon a cause,
incidentally or collaterally, and not directly upon the question before the court, or
upon a point not necessarily involved in the determination of the cause, is obiter
dictum lacking the force of an adjudication. An obiter dictum is an opinion entirely
unnecessary for the decision of the case and is not binding as precedent. 81
Not only was there no pronouncement from us in City of Iloilo about Rule 67's repeal
by RA 8974, we in fact applied Rule 67 in that case. The Court invoked Section 1 of
Rule 67 in resolving the issue of the sufficiency in form and substance of the
amended complaint for expropriation and Section 2 of the same Rule in holding that
the City of Iloilo was not in estoppel since it simply followed the procedure that a
prior hearing was not required before a writ of possession could be issued. Indeed,
the Court could not even have applied RA 8974 in City of Iloilo because it did not
involve a project of the national government but that of a local government unit, 82
thus requiring the application of RA 7160 (the Local Government Code). 83
More importantly, any talk of repeal (whether express or implied) by legislative
enactment of the rules of procedure duly promulgated by this Court goes against
the Constitution itself. The power to promulgate rules of pleading, practice and
procedure was granted by the Constitution to this Court to enhance its
independence. 84 It is no longer shared by this Court with Congress. 85 The

legislature now has no power to annul, modify or augment the Rules of Court. We
expressly declared in Echegaray v. Secretary of Justice 86 that the 1987
Constitution took away the power of Congress to repeal, alter or supplement rules
concerning pleading, practice and procedure. 87
The majority properly recognized that Rule 67 governs the procedure undertaken for
eminent domain. It is thus surprising when they unequivocally declared that, as a
rule of procedure, Rule 67 can be superseded by statutory enactment. TAacCE
A perusal of the so-called "Guidelines for Expropriation Proceedings" provided for
under Section 4 of RA 8974 shows that the "guidelines" radically alter the rules for
expropriation under Rule 67. The majority even declared that "RA 8974 represents a
significant change from previous expropriation laws such as Rule 67 . . . ." The
majority however failed to realize that such change brought about by a legislative
enactment subverts the fundamental law and defeats the constitutional intent to
strengthen the independence of this Court.
There is no question that the appropriate standard of just compensation is a
substantive matter, not procedural. However, the manner of determining just
compensation (including how it shall be paid and under what conditions a writ of
possession may be issued) is a matter of procedure, not of substantive law.
If a rule or statute creates a right or takes away a vested right, it is substantive. If it
operates as a means of implementing an existing right, then it is procedural. 88
The provisions of Rule 67 neither vest a new power on the State nor create a new
right in favor of the property owner. Rule 67 merely provides the procedure for the
State's exercise of eminent domain and, at the same time, ensures the enforcement
of the right of the private owner to receive just compensation for the taking of his
property. It is purely a matter of procedure. It is therefore exclusively the domain of
this Court. The Constitution prohibits Congress from transgressing this sphere.
Congress cannot legislate the manner of payment of just compensation. Neither can
Congress impose a condition on the issuance of a writ of possession. Yet that is what
RA 8974 precisely does.
The records of the 11th Congress which enacted RA 8974 reveal that Congress
intended to revise and amend Rule 67. The Senate deliberations quoted at the
beginning of this dissenting opinion show this legislative intent. 89 I am therefore
disheartened that the majority opinion is in effect sanctioning the arrogation of
judicial power by Congress. DHcSIT
In denying the petition, the majority effectively sustained respondent judge's repeal
theory. Thus, they allowed Congress to infringe on the Court's rule-making power, a
power vested by the Constitution exclusively on this Court.

Assuming ex gratia argumenti that the procedure outlined under RA 8974 does not
constitute an impermissible encroachment on the Court's rule-making power, the
law still does not apply here. Section 1 of the IRR of RA 8974 provides that the law
covers:
[A]ll acquisition of private real properties, including improvements therein, needed
as right-of-way, site or location for national government projects undertaken by any
department, office or agency of the national government, including any
government-owned or controlled corporation or state college or university,
authorized by law or its respective charter to undertake national government
projects.
From this, we can clearly infer that the law does not apply to the following:
(1)

expropriation of private property which is personal or movable property;

(2)
taking of private property, whether personal or real, for a purpose other than
for right-of-way, site or location of a national government project;
(3)
appropriation of private property for right-of-way, site or location of a project
not classified as a national government project;
(4)
acquisition of private property for right-of-way, site or location of a national
government project but to be undertaken by an entity not enumerated in Section 1
of the IRR of RA 8974. CAIaDT
In the foregoing situations, it is Rule 67 of the Rules of Court or the relevant special
law (if any) 90 that will apply.
Here, the expropriation of NAIA IPT3 falls under the second category since
petitioners seek to take private property for a purpose other than for a right-of-way,
site or location for a national government project.
Unfortunately, the majority sided with respondent judge and completely disregarded
the fact that NAIA IPT3 was the national government infrastructure project itself and
ruled instead that it was the right-of-way, site or location of a national government
project. That was wrong and the reasoning was even more difficult to understand.
True, under Section 2(d) of the IRR of RA 8974 defining "national government
projects", an airport (which NAIA IPT3 essentially is) is specifically listed among the
national government projects for which expropriation proceedings may be initiated
under the law. However, the law and its IRR also provide that the expropriation
should be for the purpose of providing for a right of way, site or location for the
intended national government project. A national government project is separate
and distinct from the purpose of expropriation. Otherwise, there would have been
no need to define them separately. Thus, respondent judge erred when he equated
one with the other and obliterated the clear distinction made by the law.

Moreover, under Section 2(e) of the IRR, the specific objects or purposes of
expropriation were lumped as 'ROW' which is defined as the "right-of-way, site or
location, with defined physical boundaries, used for a national government project."
Obviously, the NAIA IPT3 is not a right of way, site or location for any national
government infrastructure project but the infrastructure itself albeit still under
construction. The construction (and now the completion) of NAIA IPT3 never
required the acquisition of private property for a right of way, site or location since
the terminal, including all its access roads, stands completely on government land.
caIACE
Conformably, RA 8974 does not apply to the expropriation of NAIA IPT3. And there
being no special law on the matter, Rule 67 of the Rules of Court governs the
procedure for its expropriation.
AMOUNT ORDERED TO BE RELEASED
Having determined Rule 67 to be the applicable procedure to follow in this
expropriation case, I now turn to the other issues.
In its complaint 91 for the expropriation of NAIA IPT3, petitioners prayed for the
immediate issuance of a writ of possession of the airport terminal and deposited the
amount of P3,002,125,00 (about $53 million) at LBP-Baclaran for this purpose. This
amount was based on the assessed value of NAIA IPT3 for taxation purposes. 92 As
requested by petitioners and in support of their complaint for expropriation, LBPBaclaran issued a certification of deposit, 93 which was in effect the functional
equivalent of a certificate of availability of said funds. aHECST
In his January 4, 2005 order, 94 respondent judge without any motion by PIATCO
ordered petitioners to immediately pay PIATCO US$62,343,175.77, the total
balance of MIAA's deposits in LBP-Baclaran. Respondent judge reiterated the above
directive in his January 10, 2005 omnibus order. 95 The amount directed to be
released was about US$ 9 million (or P500 million) more than the provisional value
required by Rule 67 for issuance of the writ of possession.
I refuse to join the majority who turned a blind eye on respondent judge's orders
which were issued with grave abuse of discretion.
Respondent judge should not have issued his disputed orders without any motion by
PIATCO. There were very compelling reasons why. Considering that respondent
judge knew or should have known how extremely controversial NAIA IPT3 had
become, he should have granted the parties unimpeded opportunity to confront
each other on the propriety of releasing such a huge amount to the owner of the
property under expropriation. There were in fact still so many pending contentious
issues on which the parties had taken radically opposite positions, such as whether
it was respondent PIATCO alone that was entitled to payment or whether there were
other parties like Takenaka Corporation (to be discussed later in this decision) that

had valid claims thereon and, if so, how much each was entitled to. Furthermore,
inasmuch as petitioners had been vigorously complaining that they were never
really able to inspect and evaluate the structural integrity and real worth of NAIA
IPT3, respondent judge should have at least tried to determine the reasonableness
of petitioners' provisional deposit and therefore, he ought not to have been in such
a hurry to order the release of petitioners' funds to PIATCO which was not even
asking for it. In other words, all the foregoing warning signs considered, he should
have been more circumspect, deliberate and careful in handling the case. DIEAHc
On a more academic note, however, and as already quoted previously, one
significant difference between RA 8974 and Rule 67 is that, under RA 8974,
immediate payment of the full zonal value of the land and improvements/structures
is required before the writ of possession is issued. On the other hand, under Rule 67,
the deposit of an amount equivalent to the assessed value of the property for
taxation purposes is enough.
Under Section 2 of Rule 67, the only requisites for authorizing immediate entry (that
is, for the issuance of the writ of possession) in expropriation proceedings are: (1)
the filing of a complaint for expropriation sufficient in form and substance, and (2) a
deposit equivalent to the assessed value for taxation purposes of the property
subject to expropriation. Upon compliance with these two requirements, the
issuance of a writ of possession becomes ministerial. 96
Petitioners complied fully with the requirements of Rule 67 pertaining to the
issuance of the writ allowing entry into the expropriated facility. First, they duly filed
the verified complaint with the court a quo. Second, PIATCO was served with and
notified of the complaint. Third, petitioners set aside and earmarked P3,022,125,000
as provisional deposit, equivalent to the assessed value of the property for taxation
purposes with the depositary bank. From then on, it became the ministerial duty of
the trial court presided over by respondent judge to issue the writ of possession.
Section 2 of Rule 67 categorically prescribes the amount to be deposited with the
authorized government depositary as the pre-condition for the issuance of a writ of
possession. This is the assessed value of the property for purposes of taxation. The
figure is exact and permits the court no discretion in determining what the
provisional value should be. 97
Respondent judge committed grave abuse of discretion when he ordered the
release not only of the provisional deposit (as computed under Rule 67) but also of
the entire bank balance of petitioner MIAA. He exercised discretion in a matter
where no discretion was allowed. SCHIcT
Respondent judge thus disregarded established rules by unilaterally increasing the
amount of the provisional deposit required for the issuance of the writ of
possession. This Court has had occasions in the past where we denounced the acts
of trial courts in unilaterally increasing such provisional deposits. After issuing the

writ of possession, the provisional deposit is fixed and the court can no longer
change it. As the Court ruled in National Power Corporation v. Jocson 98 :
After having fixed these provisional values, . . . and upon deposit by petitioner of the
said amounts, respondent Judge lost, as was held in Manila Railroad Company vs.
Paredes, "plenary control over the order fixing the amount of the deposit, and has
no power to annul, amend or modify it in matters of substance pending the course
of the condemnation proceedings." The reason for this rule is that a contrary ruling
would defeat the very purpose of the law which is to provide a speedy and summary
procedure whereby the peaceable possession of the property subject of the
expropriation proceedings "may be secured without the delays incident to
prolonged and vexatious litigation touching the ownership and value of such lands,
which should not be permitted to delay the progress of work."
Even assuming for the sake of argument that it was RA 8974 that was applicable,
still the trial court could not order petitioners to increase their deposit and to
immediately pay the zonal value of NAIA IPT3. Section 4(c) of the law 99 states that,
in cases where there is no existing valuation of the property concerned, only the
proffered value of the property by the agency requesting expropriation is required
to be paid for issuance of the writ.
So even if it had been RA 8974 that was applicable which was not so the
amount deposited by petitioners would have constituted the proffered value
estimated by them, based on comparative values made by the City Assessor. In any
case, the final determination of the total just compensation due the owner will have
to be made in accordance with Rule 67. The provisional deposit shall then be
deducted and petitioners shall pay the balance plus legal interest from the time
petitioners took possession of the property until PIATCO is fully paid. EHcaDT
The majority opinion asserted that the determination of the amount of just
compensation to be made pursuant to RA 8974 is limited to the value of the
improvements/structures that constitute the NAIA IPT3 complex and cannot include
the BIR zonal valuation which serves as one of the bases for just compensation
under the law. This is, however, based on the assumption that the law is valid and
Congress can substantially amend the rules of practice and procedure duly
promulgated by this Court. It cannot.
Even assuming that RA 8974 is valid, it still does not support the conclusions of the
majority opinion.
The law makes clear the distinction between the valuation of the land itself, and the
improvements and structures constructed therein. While PIATCO is not entitled to
the valuation that is inclusive of the value of the land, it is entitled to just
compensation limited to the value of the improvements and/or structures.

True, Section 4 distinguishes between the valuations of the land itself and of the
improvements and structures constructed therein. However, it is erroneous to infer
that such difference in the manner of valuation justifies the application of RA 8974
to the expropriation of improvements and structures alone, i.e., separate from the
land. The language of the law itself does not warrant the conclusion made in the
majority opinion.
Section 4 of RA 8974 on the valuation of improvements and structures expressly
refers to Section 7 of the law. Section 4 is therefore to be construed in the light of
Section 7. The latter provision (Section 7) speaks of "improvements and/or
structures on the land to be expropriated." Hence, the expropriation of the
improvements and structures under RA 8974 should be properly viewed not in
isolation from but in connection with (or as an incident of) the expropriation of land.
HIaTCc
Moreover, any discussion of the expropriation under RA 8974 cannot be divorced
from (1) the purpose of the expropriation and (2) the nature or character of the
project. Here, the expropriation does not meet the first requisite. Hence, assuming
the validity of RA 8974, its provisions still cannot be applied.
Even the reference to the proffered value by the majority opinion is inappropriate.
The law is clear that such proffered value applies only "[i]n case the completion of a
national government project is of utmost urgency and importance, and there is no
existing valuation of the area concerned." The majority opinion recognizes the
correctness of the position of the Solicitor General that zonal valuations are only for
parcels of land and, hence, there can be no zonal valuation for improvements or
structures such as an airport terminal like NAIA IPT3. Since it is impossible for
improvements or structures to have an existing valuation, then there can be no
proffered value for NAIA IPT 3 to speak of.
The fact that the proffered value does not apply to improvements is buttressed by
the provisions of RA 8974. The law provides that in the determination of the
proffered value, the standards prescribed in Section 5 of RA 8974 shall be taken into
consideration. Section 5 expressly refers to "Standards for the Assessment of the
Value of the Land Subject of Expropriation Proceedings or Negotiated Sale." On the
other hand, the valuation of improvements and/or structures is separately governed
by Section 7 of the law. EDACSa
To reiterate, the determination of the proffered value categorically refers to Section
5 on the valuation of the land, not to valuation of improvements or structures under
Section 7. Thus, the majority opinion unduly enlarged the concept of proffered value
when it extended the same to improvements or structures.
PERFORMANCE OF ACTS OF OWNERSHIP

Petitioners contend that respondent judge committed grave abuse of discretion

when he prohibited petitioners in his January 4, 2005 order from performing "acts of
ownership". Although six days later, in his January 10, 2005 omnibus order,
respondent judge removed this prohibition, it was only because he thought it to be a
"superfluity" inasmuch as petitioners were not yet the owners of the terminal. 100
Petitioners allege that the order of respondent judge unduly limited them to mere
physical entry to the property without, however, affording them the means to
accomplish the public purpose of the expropriation. They argue that a writ of
possession in an expropriation proceeding carries with it the right to perform acts de
jure which are necessary to attain the purpose for which the expropriation is
intended. In deciding to exercise the power of eminent domain, petitioners intended
to acquire not only physical possession but also ownership of the property
ultimately. By NAIA IPT3's very nature as an international airport terminal, awarding
concessions and leasing space to third parties are necessary and related activities
in its operation. 101 Petitioners assert that, upon the issuance of the writ of
possession, they acquired equitable or beneficial ownership of NAIA IPT3. What
PIATCO retained until full payment of just compensation was the mere legal
title to the terminal. 102
PIATCO, on the other hand, alleges that petitioners, not being the owners of NAIA
IPT3, cannot exercise rights of ownership. It cites the doctrine that title to the
property does not transfer to the expropriating authority until full payment of the
just compensation. 103
I agree with petitioners.
In expropriation, private property is taken for public use. 104 What constitutes
taking is well-settled in our jurisprudence. The owner is ousted from his property
and deprived of his beneficial enjoyment thereof. 105 The owner's right to possess
and exploit the property (that is to say, his beneficial ownership of it) is "destroyed".
106 And it is only after the property is taken that the court proceeds to determine
just compensation, 107 upon full payment of which shall title pass on to the
expropriator. SHTEaA
Citing the case of Association of Small Landowners in the Phils., Inc. v. Secretary of
Agrarian Reform, 108 PIATCO contends that title to the property expropriated can
only cede from the owner to the expropriator only upon full payment of just
compensation. The citation is incomplete, however. We actually held that:
(T)he right to enter on and use the property is complete, as soon as the property is
actually appropriated under the authority of law for a public use, but (the) title does
not pass from the owner without his consent, until just compensation has been
made to him. 109 (emphasis supplied)

True, title remains with the owner until just compensation is fully paid. This is only
proper to protect the rights of the property owner. But that is not the point here. The
issue is whether or not the expropriating authority has the right to enter and use
the property even prior to full payment. 110 In other words, can the property be
taken and used even before full payment of just compensation? Yes. Full payment of
just compensation, though a condition precedent for the transfer of title or
ownership, is not a condition precedent for the taking of the property. As discussed
earlier, an important element of taking is that the owner's right to possess and
exploit the land (in other words, his beneficial ownership of it) is transferred to and
thenceforth exercised by the expropriator. TSHcIa
This is consistent with our ruling in Republic v. Tagle 111 where the issue was
whether the quashal of the writ of possession, on the ground that the Republic was
already occupying the property sought to be expropriated, was proper. We held
there that it was not and that the expropriation of real property was not limited to
mere physical entry or occupation:
. . . (I)t is manifest that the petitioner, in pursuit of an objective beneficial to public
interest, seeks to realize the same through its power of eminent domain. In
exercising this power, petitioner intended to acquire not only physical possession
but also the legal right to possess and ultimately to own the subject property.
Hence, its mere physical entry and occupation of the property fall short of the
taking of title, which includes all the rights that may be exercised by an owner over
the subject property.
xxx

xxx

xxx

. . . Ineludibly, said writ (of possession) is both necessary and practical, because
mere physical possession that is gained by entering the property is not equivalent
to expropriating it with the aim of acquiring ownership over, or even the right to
possess, the expropriated property. 112 (emphasis supplied)
The question now is whether this right of beneficial ownership enjoyed by the
expropriator includes the right to lease out the property (or portions thereof) and to
award concessions within NAIA IPT3 to third parties. It does.
In Estate of Salud Jimenez v. Philippine Export Processing Zone (PEZA), 113 we
allowed the lease by the PEZA of the property under expropriation to third parties
even before payment of just compensation. PEZA's charter provided it "substantial
leeway in deciding for what public use the expropriated property would be utilized."
114 Thus, the Court declared that it would not question the lease because it was in
furtherance of the public purpose of the expropriation. 115
In this case, petitioners aim to acquire the NAIA IPT3 as the site of a world-class
passenger terminal and airport, and to complete its construction and operate it for
the benefit of the Filipino people. 116 This is the "public use" purpose of the

expropriation. On the other hand, the lease and concession contracts are the means
by which the public purpose of the expropriation can be attained. Since PIATCO
never challenged the "public use" purpose of the expropriation, the reasonable
implications of such public use, including the award of leases and concessions in the
terminal, are deemed admitted as necessary consequences of such expropriation.
IcSADC
Furthermore, in a contract of lease, only the use and enjoyment of the thing are
extended to the lessee. 117 Thus, one need not be the legal owner of the property
in order to give it in lease. 118 The same is true for the award of concessions which
petitioners, as beneficial owner of the property, can legally grant.
Hence, respondent judge committed grave abuse of discretion when he prohibited
petitioners from exercising acts of ownership in NAIA IPT3.
APPOINTMENT OF COMMISSIONERS
In petitioners' complaint for expropriation, they prayed inter alia for the
appointment of commissioners to determine the terminal's just compensation. 119
Respondent judge, in the assailed order dated January 7, 2005, granted petitioners'
prayer and appointed three commissioners. 120
Petitioners now assail the appointment because it was allegedly issued by
respondent judge without prior consultation, notice and hearing to all parties who
claim an interest in the just compensation to be determined. Respondent judge also
disregarded petitioners' right to object to any of the appointed commissioners
within ten days from notice under Section 5, Rule 67 of the Rules of Court.
Petitioners question as well the competence of the appointed commissioners.
HSaIET
Petitioners' contentions are untenable.
Section 5 of Rule 67 provides:
Section 5.
Ascertainment of Compensation. Upon the rendition of the order of
expropriation, the court shall appoint not more than three (3) competent and
disinterested persons as commissioners to ascertain and report to the court the just
compensation for the property sought to be taken. The order of appointment shall
designate the time and place of the first session of the hearing to be held by the
commissioners and specify the time within which their report shall be submitted to
the court.
Copies of the order shall be served on the parties. Objections to the appointment of
any of the commissioners shall be filed with the court within ten (10) days from
service, and shall be resolved within thirty (30) days after all the commissioners
shall have received copies of the objections.

Contrary to petitioners' position, Rule 67 does not require consultation with the
parties before the court appoints the commissioners. Neither notice to the parties
nor hearing is required for the appointment of commissioners by the judge.
However, in Municipality of Talisay v. Ramirez, 121 we held that "while it is true that,
strictly speaking, it is the court that shall appoint the said commissioners, there is
nothing to prevent it from seeking the recommendations of the parties on this
matter . . . to ensure their fair representation."
This ruling was more or less integrated into the revised rules of court as the latter
now gives the parties ten days from the service of the order appointing the
commissioners to file their objections to any of the appointees. This, in effect, allows
them to protest the appointment of the commissioners while providing them the
opportunity to recommend their own choices. AaCcST
But the objection must come after the appointment. This is apparent from the
second paragraph of Section 5, Rule 67:
"[o]bjections to the appointment of any of the commissioners shall be filed in court
within ten (10) days from service, and shall be resolved within thirty (30) days after
all the commissioners shall have received copies of the objections." (emphasis
supplied)
Consequently, if petitioners are unable to accept the competence of any of the
commissioners, their remedy is to file an objection with the trial court within the
stated period. Initiating a certiorari proceeding on this issue is premature.
In any case, even if the commissioners are appointed by the court, the latter is not
bound by their findings. 122 Section 8 of Rule 67 provides:
Section 8.
Action upon the Commissioner's Report. Upon the expiration of the
period of ten (10) days referred to in the preceding section 123 , but after all the
interested parties have filed their objections to the report or their statement of
agreement therewith, the court may, after hearing, accept the report and render
judgment in accordance therewith; or, for cause shown, it may recommit the same
to the commissioners for further report of facts; or it may set aside the report and
appoint new commissioners; or it may accept the report in part and reject it in part;
and it may make such order or render such judgment as shall secure to the plaintiff
the property essential to the exercise of his right of expropriation, and to the
defendant just compensation for the property so taken.
The report of the commissioners on the value of the condemned property is neither
final nor conclusive. The court is permitted to act on the report in any of several
ways enumerated in the rules, at its discretion. 124 It may render such judgment as
shall secure to the plaintiff the property essential to the exercise of his right of
condemnation and, to the defendant, just compensation for the property

expropriated. The court may substitute its own estimate of the value as gathered
from the records. 125
I therefore find no abuse of discretion on the part of respondent judge in the
appointment of the three commissioners. cTDECH
However, to ensure the parties' fair representation, they should be allowed to
object, if they so desire, to any of the appointed commissioners within ten days
from receipt of this decision.
INHIBITION OF RESPONDENT JUDGE
According to petitioners, respondent judge should have inhibited himself from the
expropriation case because he had already prejudged it and was extremely biased
against their cause.
Petitioners charge that respondent judge's January 4, 2005 order authorizing PIATCO
to immediately withdraw the sum of US$62,343,175.77 was irregularly and unfairly
issued. Apart from the fact that the amount was in excess 126 of what petitioners
proffered, no motion or notice preceded the order. In other words, PIATCO was not
even asking for what the judge granted. To petitioners, respondent judge's extreme
diligence and assiduousness were uncalled for. The swiftness by which the order
was issued could only mean collusion between respondent judge and PIATCO. This
explained why PIATCO did not bother to file any motion or pleading as even without
it, the orders of respondent judge were always in its favor.
In seeking respondent judge's recusation, petitioners aver that they are "not
shopping for a sympathetic judge." 127 They ask for his inhibition in order to have a
competent judge who can hear the parties impartially and with an open mind.
As a general rule, judges are mandated to hear and decide cases, unless legally
disqualified. 128 However, they may voluntarily excuse themselves, in the exercise
of their sound discretion, for just or valid reasons. 129
The rule on disqualification of a judge to hear a case finds its rationale in the
principle that no judge should preside in a case in which he is not wholly free,
disinterested, impartial and independent. It is aimed at preserving the people's faith
and confidence in the courts of justice. HaAIES
In compulsory disqualification, the law conclusively presumes that a judge cannot
objectively or impartially sit in a case. 130 In voluntary inhibition, the law leaves it
to the judge to decide for himself whether he will desist from sitting in a case with
only his conscience to guide him. 131
In Pimentel v. Salanga, 132 the Court provided guidance in case a judge's capacity
to try and decide a case fairly and judiciously is challenged by any 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 selfexamination. 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 is a man, subject to the
frailties of other men. He should, therefore, exercise great care and caution before
making up his mind to act 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 decisions 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 substance to the second paragraph of Section 1, Rule 137. He
serves the cause of the law who forestalls miscarriage of justice. cIECaS
Here, petitioners' skepticism of respondent judge's ability to display the cold
neutrality of an impartial judge was evident:
Respondent judge ought to have inhibited himself from the expropriation case. . . .
[H]e lacks the competence and more importantly, the impartiality necessary for
justice to prevail.
xxx

xxx

xxx

[I]f respondent judge did not ambush petitioners with his Orders dated January 4
and 10, 2005, petitioners would have had the restraint and patience to contest in
the ordinary course of law the Order dated January 7, 2005 hastily appointing three
commissioners for the determination of just compensation. But the pattern of fraud
and deception has become too obvious and too dangerous to be ignored. Petitioners
have had enough of respondent judge's onslaught. Three successive orders of
incredible implications have raised the levels of concern to a tsunami. This was no
longer a matter for polite presumptions; hostile facts were already staring
petitioners in the face. Thus, before the die could be cast, the Republic was
constrained to act deliberately and decisively by bringing the matter to this
Honorable Court. Otherwise, the expropriation case would irreversibly become the
plaything of one who had lost the virtues of a good magistrate. 133 (emphasis
supplied) DCSETa

A judge, like Caesar's wife, must be above suspicion. 134 He must hold himself
above reproach and suspicion. At the very first sign of lack of faith and trust in his
actions, whether well-grounded or not, the judge has no other alternative but to
inhibit himself from the case. That way, he avoids being misunderstood. His
reputation for probity and objectivity is maintained. Even more important, the ideal
of an impartial administration of justice is preserved. 135 Justice must not merely be
done but must also be seen and perceived to be done. 136
Besides, where a case has generated a strained personal relationship, animosity
and hostility between the party or his counsel and the judge that the former has lost
confidence in the judge's impartiality or the latter is unable to display the cold
neutrality of an impartial judge, 137 it is a violation of due process for the judge not
to recuse himself from hearing the case. Due process cannot be satisfied in the
absence of that objectivity on the part of a judge sufficient to reassure litigants of
his being fair and just. 138
Respondent judge should have recused himself from hearing the case in the light of
petitioners' patent distrust:
The presiding judge's impartiality has been irreparably impaired. . . . [A]ny decision,
order or resolution he would make on the incidents of the case would now be under
a cloud of distrust and skepticism. The presiding judge is no longer effective in
dispensing justice to the parties herein. 139
Clearly, it would have been more prudent for respondent judge to inhibit himself
instead of placing any of his decisions, orders or resolutions under a cloud of
distrust. It would have likewise deprived petitioners or any one else of reason to
cast doubt on the integrity of these expropriation proceedings with national and
international implications.
One final note.
The complaint for expropriation before the RTC named PIATCO as the sole
defendant. However, both petitioners and PIATCO claim that there are other parties
who assert an interest in NAIA IPT3. According to the parties, one of these parties is
Takenaka Corporation, PIATCO's contractor for the construction of NAIA IPT3.
Petitioners are aware that all the parties who claim an interest in the just
compensation should be notified and heard on the matter. They have even signified
their intention to file an amended complaint impleading Takenaka Corporation as a
necessary party so that complete relief may be accorded to all interested parties.
140
Section 1, Rule 67 of the Rules of Court provides:
Section 1.
The complaint. The right of eminent domain shall be exercised by
the filing of a verified complaint which shall state with certainty the right and

purpose of expropriation, describe the real or personal property sought to be

expropriated, and join as defendants all persons owning or claiming to own, or
occupying, any part thereof or interest therein, showing as far as practicable, the
separate interest of each defendant. If the title to any property sought to be
expropriated appears to be in the name of the Republic of the Philippines, although
occupied by private individuals, or if the title is otherwise obscure or doubtful so
that the plaintiff cannot with accuracy or certainty specify who are the real owners,
averment to the effect may be made in the complaint. (Emphasis supplied) SDEHIa
Just compensation is not due to the owner alone: 141
The defendants in an expropriation case are not limited to the owners of the
property condemned. They include all other persons owning occupying, or claiming
to own the property. When [property] is taken by eminent domain, the owner . . . is
not necessarily the only person who is entitled to compensation. In American
jurisdiction, the term 'owner' when employed in statutes relating to eminent domain
to designate the persons who are to be made parties to the proceeding, refer, as is
the rule in respect of those entitled to compensation, to all those who have lawful
interest in the property to be condemned, including a mortgagee, a lessee and a
vendee in possession under an executory contract. Every person having an estate
or interest at law or in equity in the land taken is entitled to share in the award. If a
person claiming an interest in the land is not made a party, he is given the right to
intervene and lay claim to the compensation. 142
In accordance with the foregoing rule, petitioners should be ordered to amend their
complaint for expropriation to include as defendants Takenaka Corporation and all
other parties who occupy, own or claim to own any part of or interest in NAIA IPT3.
EPILOGUE
The government got entangled in the present legal controversy as a result of its
decision to resort to expropriation proceedings for the take-over of NAIA IPT3. It
could have avoided this imbroglio had it pursued the options available to it under
the 2004 resolution in Agan. Among these options was the filing in this Court of a
motion for the determination of just compensation. Immediately after the 2004
resolution was promulgated, the right, purpose and propriety of expropriation could
not have been seriously contested. The sole issue that remained was the amount of
just compensation to be paid. Thus, a motion could have easily been filed to
determine the just compensation for the facility. The Court could have then
appointed a panel of commissioners in accordance with Section 5 of Rule 67 and the
problem could have been completely resolved. caSDCA
Another option the government could have taken at that time was to take over NAIA
IPT3 in the exercise of its police power. Thereafter, it could have bidded out the
facility's operations. PIATCO could have then been paid from the revenues from the
winning bidder.

Nonetheless, the present expropriation proceedings are proper. Even the majority
opinion recognizes this. The government has all the right to institute the
proceedings where Rule 67 should be applied.
Rule 67 is designed to expedite expropriation proceedings as well as to strike the
needed balance between the interests of the State and that of the private owner.
Applying its provisions here is grounded not only in law but also in reality.
The provisional deposit having been paid, petitioners can take possession of NAIA
IPT3. They can also perform acts of ownership over the property. NAIA IPT3 can then
be made operational and the public purpose for its expropriation will be satisfied.
PIATCO, on the other hand, will receive full and just compensation after the court
finally determines the fair market value of the property.
RA 8974 provides that there should be immediate payment direct to the property
owner prior to the take over of the property. Pursuant thereto, the majority opinion
ordered the payment of the proffered value to PIATCO as a condition for the
implementation of the writ of possession earlier issued by respondent judge. On the
other hand, Rule 67 requires only the making of a down payment in the form of a
provisional deposit. It cannot be withdrawn without further orders from the court,
i.e., until just compensation is finally determined. THCSEA
It is disturbing that the majority opinion allows PIATCO to take hold of the money
without giving the government the opportunity to first inspect the facility thoroughly
to ascertain its structural integrity and to make a preliminary valuation. With the
money already in its possession, PIATCO may make use of the same in whatever
way it may see fit. I dread to think what will happen if the government later on
decides to back out after finding either irremediable structural defects or an
excessively bloated valuation, such that it will cost more to put NAIA IPT3 in
operational readiness than to build (or develop) and operate another airport. What
happens then? Will not the government be left holding an empty bag losing no
less than US$ 53 million for an inoperable facility?
Furthermore, the exchange of opinion between Senator Renato Cayetano and
Congressman Salacnib Baterina quoted by the majority opinion reveals that there
should be a legislative appropriation of funds to finance the acquisition of right of
way, site or location for a national government project. Based on PIATCO's estimate,
the value of the NAIA IPT3 may well be $400 million. This amount may be fair or it
may be bloated. Nonetheless, in the event the trial court determines the just
compensation after 60 days from finality of the decision in this case, the
government cannot just release the amount, assuming that it has the necessary
funds. The release of that huge amount in one shot should have congressional fiat
for it is Congress after all which holds the purse under our system of government.
Given the foregoing, while the procedure under RA 8974 is (as the majority opinion
describes it) "eminently more favorable to the property owner than Rule 67," it is

clearly onerous to the government. In contrast, Rule 67 will be advantageous to the

government without being cumbersome to the private owner. It provides a
procedure that is sensitive to the government's financial condition and, at the same
time, fair and just to the owner of the property. SEIDAC
In ordering the application of RA 8974, the majority opinion favors the interests of
PIATCO over that of the government. Rather than striking the desired balance
between legitimate State interests and private rights, it sacrifices public interest in
favor of individual benefit.
The majority opinion constantly and unabashedly proclaims the objectives of RA
8974 to benefit the property owner and to expedite expropriation proceedings for
national government projects. The majority opinion tilted the balance in favor of
private interest to the prejudice of the common good. Moreover, besides being
erroneous, resort to RA 8974 will be counter-productive and self-defeating.
The national government operates on a "collection-for-payment" system. It has to
collect money first before it can make payments to its creditors. If the government
is allowed to undertake acts of ownership over NAIA IPT3, the facility can be utilized
not only to serve the public but also to contribute to the collections needed by the
government. Payment of just compensation to PIATCO will then come "easier and
sooner."
Applying RA 8974, on the other hand, will bring about the exact opposite result.
Considering the limited funds and scarce resources of the national government, it
will not be able to come up with the amount equivalent to the full just compensation
within the short period envisioned in the majority opinion. It is absurd to expect or
require the government to pay the full just compensation for NAIA IPT3 allegedly
worth several hundred million dollars in one shot. The expropriation proceedings will
grind to a halt. The hands of the government will be tied. The public interest sought
to be met by the expropriation will be adversely affected. NAIA IPT3 will remain idle
and the prime government property on which it stands will be a complete waste. In
such a case, nobody wins. Everybody loses PIATCO, the government, the Filipino
people and our national prestige. Indeed, another mothballed white elephant!
ACSaHc
Accordingly, I vote to grant the petition except insofar as it assails the January 7,
2005 order directing the appointment of three commissioners to assist the trial
court in determining just compensation.

[G.R. No. 150936. August 18, 2004.]

NATIONAL POWER CORPORATION, petitioner, vs. MANUBAY AGRO-INDUSTRIAL
DEVELOPMENT CORPORATION, respondent.
The Solicitor General for petitioner.
Michael G. Jornales for respondent.
SYNOPSIS
The question to be answered in this case is how much just compensation should be
paid for an easement of a right of way over a parcel of land that will be traversed by
high-powered transmission lines? The petitioner filed the instant petition for review
on certiorari under Rule 45 of the Rules of Court, contending that the valuation of
the expropriated property fixed by the trial court and the Court of Appeals was too
high a price for the acquisition of an easement of a mere aerial right of way,
because respondent would continue to own and use the subject land anyway.
DCISAE
The Supreme Court denied the petition. The Court upheld the Court of Appeals in
affirming the amount fixed by the trial as just compensation for the expropriated
property. The appellate court correctly considered the effect of the installation of the
power lines on the land and the limitations it would impose on the use of the land
for an indefinite period thereby depriving respondent of normal use of the property.
Said reasons justify the payment of just compensation to respondent which must be
neither more nor less than the monetary equivalent of the land. The Court also
found no reason to disturb the factual findings as to the valuation of the property.
Both the Report of Commissioner Bulao and the commissioners' majority Report
were based on uncontroverted facts supported by documentary evidence and
confirmed by their ocular inspection of the property.
SYLLABUS
1.
CONSTITUTIONAL LAW; BILL OF RIGHTS; EMINENT DOMAIN; ACQUISITION OF
EASEMENT FALLS WITHIN THE PURVIEW OF THE POWER OF EMINENT DOMAIN; CASE
AT BAR. Granting arguendo that what petitioner acquired over respondent's
property was purely an easement of a right of way, still, we cannot sustain its view
that it should pay only an easement fee, and not the full value of the property. The
acquisition of such an easement falls within the purview of the power of eminent
domain. This conclusion finds support in similar cases in which the Supreme Court
sustained the award of just compensation for private property condemned for public
use. IHaCDE
2.
ID.; ID.; ID.; PAYMENT OF JUST COMPENSATION JUSTIFIED CONSIDERING THE
NATURE AND EFFECT OF THE INSTALLATION AND THE LIMITATIONS ON THE USE OF
THE LAND FOR AN INDEFINITE PERIOD WOULD DEPRIVE RESPONDENT OF NORMAL

USE OF THE PROPERTY. An easement of a right of way transmits no rights except

the easement itself, and respondent retains full ownership of the property. The
acquisition of such easement is, nevertheless, not gratis. As correctly observed by
the CA, considering the nature and the effect of the installation power lines, the
limitations on the use of the land for an indefinite period would deprive respondent
of normal use of the property. For this reason, the latter is entitled to payment of a
just compensation, which must be neither more nor less than the monetary
equivalent of the land.
3.
ID.; ID.; ID.; JUST COMPENSATION. In eminent domain or expropriation
proceedings, the just compensation to which the owner of a condemned property is
entitled is generally the market value. Market value is "that sum of money which a
person desirous but not compelled to buy, and an owner willing but not compelled
to sell, would agree on as a price to be given and received therefor". Such amount is
not limited to the assessed value of the property or to the schedule of market
values determined by the provincial or city appraisal committee. However, these
values may serve as factors to be considered in the judicial valuation of the
property. The nature and character of the land at the time of its taking is the
principal criterion for determining how much just compensation should be given to
the landowner. All the facts as to the condition of the property and its surroundings,
as well as its improvements and capabilities, should be considered. AcEIHC
4.
REMEDIAL LAW; EMINENT DOMAIN; FACTUAL FINDINGS AS TO VALUATION OF
THE PROPERTY, UPHELD. The price of P550 per square meter appears to be the
closest approximation of the market value of the lots in the adjoining, fully
developed San Francisco Village Subdivision. Considering that the parcels of land in
question are still undeveloped raw land, it appears to the Court that the just
compensation of P550 per square meter is justified. Inasmuch as the determination
of just compensation in eminent domain cases is a judicial function, and the trial
court apparently did not act capriciously or arbitrarily in setting the price at P550
per square meter an award affirmed by the CA we see no reason to disturb the
factual findings as to the valuation of the property. Both the Report of Commissioner
Bulao and the commissioners' majority Report were based on uncontroverted facts
supported by documentary evidence and confirmed by their ocular inspection of the
property. As can be gleaned from the records, they did not abuse their authority in
evaluating the evidence submitted to them; neither did they misappreciate the
clear preponderance of evidence. The amount fixed and agreed to by the trial court
and respondent appellate court has not been grossly exorbitant or otherwise
unjustified.
5.
ID.; ID.; REPORTS OF COMMISSIONERS ARE MERELY ADVISORY AND
RECOMMENDATORY IN CHARACTER. Under Section 8 of Rule 67 of the Rules of
Court, the court may "accept the report and render judgment in accordance
therewith; or for cause shown, it may recommit the same to the commissioners for
further report of facts, or it may set aside the report and appoint new

commissioners, or it may accept the report in part and reject it in part; . . ." In other
words, the reports of commissioners are merely advisory and recommendatory in
character, as far as the courts are concerned. Thus, it hardly matters whether the
commissioners have unanimously agreed on their recommended valuation of the
property. It has been held that the report of only two commissioners may suffice,
even if the third commissioner dissents. As a court is not bound by commissioners'
reports it may make such order or render such judgment as shall secure for the
plaintiff the property essential to the exercise of the latter's right of condemnation;
and for the defendant, just compensation for the property expropriated. For that
matter, the court may even substitute its own estimate of the value as gathered
from the evidence on record. cAaETS
DECISION
PANGANIBAN, J p:
How much just compensation should be paid for an easement of a right of way over
a parcel of land that will be traversed by high-powered transmission lines? Should
such compensation be a simple easement fee or the full value of the property? This
is the question to be answered in this case.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to
reverse and set aside the November 23, 2001 Decision 2 of the Court of Appeals
(CA) in CA-GR CV No. 60515. The CA affirmed the June 24, 1998 Decision 3 of the
Regional Trial Court 4 (RTC) of Naga City (Branch 26), directing the National Power
Corporation (NPC) to pay the value of the land expropriated from respondent for the
use thereof in NPCs Leyte-Luzon HVDC Power Transmission Project. cSTHaE
The Facts
The CA summarized the antecedents of the case as follows:
In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-owned and
controlled corporation created for the purpose of undertaking the development and
generation of hydroelectric power, commenced its 350 KV Leyte-Luzon HVDC Power
Transmission Project. The project aims to transmit the excess electrical generating
capacity coming from Leyte Geothermal Plant to Luzon and various load centers in
its vision to interconnect the entire country into a single power grid. Apparently, the
project is for a public purpose.
In order to carry out this project, it is imperative for the [petitioners] transmission
lines to cross over certain lands owned by private individuals and entities. One of
these lands, [where] only a portion will be traversed by the transmission lines, is
owned by [respondent] MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION.
CAIHTE

Hence, on 03 December 1996, [petitioner] filed a complaint for expropriation

before the Regional Trial Court of Naga City against [respondent] in order to acquire
an easement of right of way over the land which the latter owns. The said land is
situated at Km. 8, Barangay Pacol, Naga City, Camarines Sur and described with
more particularity, as follows:
TCT/OCT NO. TOTAL AREA AFFECTED AREA
IN SQ.M.

IN SQ. M.

OF LAND

17795490,232

21,386.16

Agri.

1779740,848

1,358.17

Agri.

177985,279 217.38

CLASS.

Agri.

TOTAL22,961.71
On 02 January 1997, [respondent] filed its answer. Thereafter, the court a quo
issued an order dated 20 January 1997 authorizing the immediate issuance of a writ
of possession and directing Ex-Officio Provincial Sheriff to immediately place
[petitioner] in possession of the subject land.
Subsequently, the court a quo directed the issuance of a writ of condemnation in
favor of [petitioner] through an order dated 14 February 1997. Likewise, for the
purpose of determining the fair and just compensation due to [respondent], the
court appointed three commissioners composed of one representative of the
petitioner, one for the respondent and the other from the court, namely: OIC-Branch
Clerk of Court Minda B. Teoxon as Chairperson and Philippine National Bank-Naga
City Loan Appraiser Mr. Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus
as members. cITAaD
On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus and Isidro
Bulao, Jr. took their oath of office before OIC Branch Clerk of Court and Chairperson
Minda B. Teoxon.
Accordingly, the commissioners submitted their individual appraisal/valuation
reports. The commissioner for the [petitioner], Commissioner Albeus, finding the
subject land irregular and sloppy, classified the same as low density residential zone
and recommended the price of P115.00 per square meter. On the other hand,
Commissioner Bulao, commissioner for the [respondent], recommended the price of
P550.00 per square meter. The courts Commissioner and Chairperson of the Board
Minda Teoxon, on the other hand, found Commissioner Albeus appraisal low as
compared to the BIR Zonal Valuation and opted to adopt the price recommended by

Commissioner Bulao. On the assumption that the subject land will be developed into
a first class subdivision, she recommended the amount of P550.00 per square meter
as just compensation for the subject property, or the total amount of
P12,628,940.50 for the entire area affected. 5
Taking into consideration the condition, the surroundings and the potentials of
respondents expropriated property, the RTC approved Chairperson Minda B.
Teoxons recommended amount of P550 per square meter as just compensation for
the property. The trial court opined that the installation thereon of the 350 KV LeyteLuzon HVDC Power Transmission Project would impose a limitation on the use of the
land for an indefinite period of time, thereby justifying the payment of the full value
of the property.
Further, the RTC held that it was not bound by the provision cited by petitioner
Section 3-A 6 of Republic Act 63957, as amended by Presidential Decree 938. This
law prescribes as just compensation for the acquired easement of a right of way
over an expropriated property an easement fee in an amount not exceeding 10
percent of the market value of such property. The trial court relied on the earlier
pronouncements of this Court that the determination of just compensation in
eminent domain cases is a judicial function. Thus, valuations made by the executive
branch or the legislature are at best initial or preliminary only.
Ruling of the Court of Appeals
Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not
preclude expropriation. Section 3-A thereof allowed the power company to acquire
not just an easement of a right of way, but even the land itself. Such easement was
deemed by the appellate court to be a taking under the power of eminent
domain. aScIAC
The CA observed that, given their nature, high-powered electric lines traversing
respondents property would necessarily diminish if not damage entirely the
value and the use of the affected property; as well as endanger lives and limbs
because of the high-tension current conveyed through the lines. Respondent was
therefore deemed entitled to a just compensation, which should be neither more nor
less than the monetary equivalent of the property taken. Accordingly, the appellate
found the award of P550 per square meter to be proper and reasonable.
Hence, this Petition. 8
Issues
In its Memorandum, petitioner submits this lone issue for our consideration:
Whether or not the Honorable Court of Appeals gravely erred in affirming the
Decision dated June 24, 1998 of the Regional Trial Court, Branch 26, Naga City

considering that its Decision dated November 23, 2001 is not in accord with law and
the applicable decisions of this Honorable Court. 9
The Courts Ruling
The Petition is devoid of merit.
Sole Issue:
Just Compensation
Petitioner contends that the valuation of the expropriated property fixed by the
trial court and affirmed by the CA was too high a price for the acquisition of an
easement of a mere aerial right of way, because respondent would continue to own
and use the subject land anyway. Petitioner argues that in a strict sense, there is no
taking of property, but merely an imposition of an encumbrance or a personal
easement/servitude under Article 614 10 of the Civil Code. Such encumbrance will
not result in ousting or depriving respondent of the beneficial enjoyment of the
property. And even if there was a taking, petitioner points out that the loss is
limited only to a portion of the aerial domain above the property of respondent.
Hence, the latter should be compensated only for what it would actually lose.
We are not persuaded. TDCcAE
Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought
to acquire an easement of a right of way over portions of respondents land a
total area of 22,961.71 square meters. 11 In its prayer, however, it also sought
authority to enter the property and demolish all improvements existing thereon, in
order to commence and undertake the construction of its Power Transmission
Project.
In other words, the expropriation was not to be limited to an easement of a right of
way. In its Answer, respondent alleged that it had already authorized petitioner to
take possession of the affected portions of the property and to install electric towers
thereon. 12 The latter did not controvert this material allegation.
Granting arguendo that what petitioner acquired over respondents property was
purely an easement of a right of way, still, we cannot sustain its view that it should
pay only an easement fee, and not the full value of the property. The acquisition of
such an easement falls within the purview of the power of eminent domain. This
conclusion finds support in similar cases in which the Supreme Court sustained the
award of just compensation for private property condemned for public use. 13
Republic v. PLDT 14 held thus:
. . . 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. 15
True, an easement of a right of way transmits no rights except the easement itself,
and respondent retains full ownership of the property. The acquisition of such
easement is, nevertheless, not gratis. As correctly observed by the CA, considering
the nature and the effect of the installation power lines, the limitations on the use of
the land for an indefinite period would deprive respondent of normal use of the
property. For this reason, the latter is entitled to payment of a just compensation,
which must be neither more nor less than the monetary equivalent of the land. 16
Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the takers gain, but the
owners loss. 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. 17
In eminent domain or expropriation proceedings, the just compensation to which
the owner of a condemned property is entitled is generally the market value. Market
value is that sum of money which a person desirous but not compelled to buy, and
an owner willing but not compelled to sell, would agree on as a price to be given
and received therefor. 18 Such amount is not limited to the assessed value of the
property or to the schedule of market values determined by the provincial or city
appraisal committee. However, these values may serve as factors to be considered
in the judicial valuation of the property. 19
The parcels of land sought to be expropriated are undeniably undeveloped, raw
agricultural land. But a dominant portion thereof has been reclassified by the
Sangguniang Panlungsod ng Naga per Zoning Ordinance No. 94-076 dated
August 10, 1994 as residential, per the August 8, 1996 certification of Zoning
Administrator Juan O. Villegas Jr. 20 The property is also covered by Naga City Mayor
Jesse M. Robredos favorable endorsement of the issuance of a certification for land
use conversion by the Department of Agrarian Reform (DAR) on the ground that the
locality where the property was located had become highly urbanized and would
have greater economic value for residential or commercial use. 21
The nature and character of the land at the time of its taking is the principal
criterion for determining how much just compensation should be given to the
landowner. 22 All the facts as to the condition of the property and its surroundings,
as well as its improvements and capabilities, should be considered. 23
In fixing the valuation at P550 per square meter, the trial court had considered the
Report of the commissioners and the proofs submitted by the parties. These
documents included the following: (1) the established fact that the property of
respondent was located along the Naga-Carolina provincial road; (2) the fact that it

was about 500 meters from the Kayumanggi Resort and 8 kilometers from the Naga
City Central Business District; and a half kilometer from the main entrance of the
fully developed Naga City Sports Complex used as the site of the Palarong
Pambansa and the San Francisco Village Subdivision, a first class subdivision
where lots were priced at P2,500 per square meter; (3) the fair market value of
P650 per square meter proffered by respondent, citing its recently concluded sale of
a portion of the same property to Metro Naga Water District at a fixed price of P800
per square meter; (4) the BIR zonal valuation of residential lots in Barangay Pacol,
Naga City, fixed at a price of P220 per square meter as of 1997; and (5) the fact
that the price of P430 per square meter had been determined by the RTC of Naga
City (Branch 21) 24 as just compensation for the Mercados adjoining property,
which had been expropriated by NPC for the same power transmission project.
SECAHa
The chairperson of the Board of Commissioners, in adopting the recommendation of
Commissioner Bulaos, made a careful study of the property. Factors considered in
arriving at a reasonable estimate of just compensation for respondent were the
location; the most profitable likely use of the remaining area; and the size, shape,
accessibility as well as listings of other properties within the vicinity. Averments
pertaining to these factors were supported by documentary evidence.
On the other hand, the commissioner for petitioner City Assessor Albeus
recommended a price of P115 per square meter in his Report dated June 30, 1997.
No documentary evidence, however, was attached to substantiate the opinions of
the banks and the realtors, indicated in the commissioners Report and computation
of the market value of the property.
The price of P550 per square meter appears to be the closest approximation of the
market value of the lots in the adjoining, fully developed San Francisco Village
Subdivision. Considering that the parcels of land in question are still undeveloped
raw land, it appears to the Court that the just compensation of P550 per square
meter is justified.
Inasmuch as the determination of just compensation in eminent domain cases is a
judicial function, 25 and the trial court apparently did not act capriciously or
arbitrarily in setting the price at P550 per square meter an award affirmed by the
CA we see no reason to disturb the factual findings as to the valuation of the
property. Both the Report of Commissioner Bulao and the commissioners majority
Report were based on uncontroverted facts supported by documentary evidence
and confirmed by their ocular inspection of the property. As can be gleaned from the
records, they did not abuse their authority in evaluating the evidence submitted to
them; neither did they misappreciate the clear preponderance of evidence. The
amount fixed and agreed to by the trial court and respondent appellate court has
not been grossly exorbitant or otherwise unjustified. 26

Majority Report of
Commissioners Sufficient
Deserving scant consideration is petitioners contention that the Report adopted by
the RTC and affirmed by the CA was not the same one submitted by the board of
commissioners, but was only that of its chairperson. As correctly pointed out by the
trial court, the commissioners Report was actually a decision of the majority of the
board. Note that after reviewing the Reports of the other commissioners,
Chairperson Teoxon opted to adopt the recommendation of Commissioner Bulao.
There has been no claim that fraud or prejudice tainted the majority Report. In fact,
on December 19, 1997, the trial court admitted the commissioners Report without
objection from any of the parties. 27
Under Section 8 of Rule 67 of the Rules of Court, the court may accept the report
and render judgment in accordance therewith; or for cause shown, it may recommit
the same to the commissioners for further report of facts, or it may set aside the
report and appoint new commissioners, or it may accept the report in part and
reject it in part; . . . In other words, the reports of commissioners are merely
advisory and recommendatory in character, as far as the courts are concerned. 28
Thus, it hardly matters whether the commissioners have unanimously agreed on
their recommended valuation of the property. It has been held that the report of
only two commissioners may suffice, even if the third commissioner dissents. 29 As
a court is not bound by commissioners reports it may make such order or render
such judgment as shall secure for the plaintiff the property essential to the exercise
of the latters right of condemnation; and for the defendant, just compensation for
the property expropriated. For that matter, the court may even substitute its own
estimate of the value as gathered from the evidence on record. 30
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No
pronouncement as to costs.
SO ORDERED. CTDHSE

[G.R. No. 70987. September 29, 1988.]

GREGORIO Y. LIMPIN, and ROGELIO M. SARMIENTO, petitioners, vs. INTERMEDIATE
APPELLATE COURT and GUILLERMO PONCE, respondents.
Danilo A. Basa for petitioner Gregorio Y. Limpin, Jr.
Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner Rogelio
Sarmiento.
Sycip, Salazar, Hernandez & Gatmaitan Law Offices and Eugenio C. Lindo for
respondent Guillermo Ponce.
SYLLABUS
1.
CIVIL LAW; CIVIL CODE; CREDIT TRANSACTIONS; MORTGAGE RIGHT OF
REDEMPTION EXISTS IN EXTRAJUDICIAL FORECLOSURE. Under Act 3135, after an
extrajudicial foreclosure, a mortgager has the right of redemption which he may
exercise within one year from the registration of the sheriff's certificate of sale.
2.
SPECIAL LAW; SPECIAL CIVIL ACTION; FORECLOSURE OF MORTGAGE; NO
RIGHT OF REDEMPTION EXISTS; EXCEPTION. There is no right of redemption in
judicial foreclosure, except where the mortgagee is the Philippine National Bank, or
a bank or banking institution (Rule 68, Sec. 3, Rules of Court; Acts Nos. 2747 and
2938; Republic Act No. 337).
3.
ID.; ID.; ID.; ID.; EQUITY REDEMPTION, IN JUDICIAL FORECLOSURE; PERIOD TO
REDEEM. While there is no right of redemption in judicial foreclosure, there is in
favor of the mortgagor an equity of redemption. An equity of redemption is the right
of the mortgagor to extinguish the mortgage and retain ownership of the property
by paying the secured debt within the 90-day period after the judgment becomes
final, in accordance with Rule 68, or even after the foreclosure sale but prior to its
confirmation.
4.
ID.; ID.; ID.; ID.; JUNIOR ENCUMBRANCES HAVE RIGHT OF EQUITY OF
REDEMPTION. The equity of redemption pertaining to the mortgagor is the same
right that may be exercised by the mortgagor's successor in interest or third
persons acquiring rights over the mortgaged property subordinate to the
mortgagee's lien.
5.
ID.; ID.; ID.; ID.; ID.; UNFORECLOSED EQUITY OF REDEMPTION, RETAINED BY
PARTIES NOT IMPLEADED. Where a subsequent or junior lienholder is not
impleaded in the foreclosure proceedings, any judgment in favor of the mortgagee
is not binding upon him, he retains what is known as an unforeclosed equity of
redemption and a separate foreclosure proceeding should be brought to require him
to redeem from the first mortgagee or the party acquiring title to the mortgaged

property at the foreclosure sale within 90 days under penalty of losing said
prerogative.
6.
ID.; ID.; ID.; EQUITY OF REDEMPTION; GRANT OF EXTENSION MUST BE CLEAR
AND UNEQUIVOCAL. The fact that private respondent recognized petitioners'
equity of redemption does not prevent the redemption from lapsing where such
recognition was made when there was as yet no order confirming the sale and
private respondent's equity of redemption still existed. Moreover, even assuming
that a period to redeem may be extended by the act of the party who would have
been benefited by the expiration, the grant of such extension must be clear and
unequivocal.
7.
CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; PETITIONER WHO
APPEALED THE QUESTIONED DECISION CANNOT CLAIM DENIAL OF DUE PROCESS.
Since petitioner has appealed to this court the decision of the court of appeals
ordering the trial court to confirm the judicial foreclosure, he cannot now claim that
he was denied due process for alleged lack of notice. The denial of the appeal
sufficiently alerted him that confirmation could come at any time after the finality of
this Court's decision.
RESOLUTION
NARVASA, J p:
Once again the parties are before this Court; this time, for a determination of
whether or not the equity of redemption recognized in favor of petitioner Rogelio M.
Sarmiento in this Court's judgment promulgated on January 30, 1987, still subsists
and may be exercised, more than a year after that judgment had become final and
executory. LLjur
The proceedings concern two (2) lots, then covered by TCTs Nos. 92836 and 92837,
which, together with two (2) others, were originally mortgaged in 1973 to herein
private respondent Ponce by their former owners, the Spouses Jose and Marcelina
Aquino. These two lots were afterwards sold in 1978 by the same Aquino Spouses to
Butuan Bay Wood Export Corporation. Against this corporation herein petitioner
Limpin obtained a money judgment in 1979; and to satisfy the judgment, the two
lots were levied on and sold at public auction in 1980, Limpin being the highest
bidder. Limpin later sold the lots to his co-petitioner, Sarmiento.
Earlier however or a day before levy was made on the two lots in execution of the
judgment against Butuan Bay Wood Export Corporation Ponce had initiated
judicial proceedings for the foreclosure of the mortgage over said two (2) lots
(together with the two (2) others mortgaged to him). Judgment was rendered in his
favor and became final; and at the ensuing foreclosure sale, the lots were acquired
by Ponce himself as highest bidder. Ponce then moved for confirmation of the
foreclosure sale, but the Court confirmed the sale of only two lots, refusing to do so

as regards the two which had been subject of the execution sale in Limpin's favor
(i.e., those covered by TCTs Nos. 92836 and 92837).LLphil
It was to resolve the resulting dispute that Ponce instituted a special civil action in
the Intermediate Appellate Court, impleading Limpin and Sarmiento as
indispensable parties respondents. That Court rendered judgment on February 28,
1985 in Ponce's favor; Limpin and Sarmiento appealed; this Court denied their
appeal.
The judgment of this Court of January 30, 1987 dismissed Sarmiento's and Limpin's
petition for review on certiorari of the Appellate Court's decision of February 28,
1985. It in effect affirmed the latter's decision which inter alia ordered the Trial
Court "to confirm the sale (of the lots formerly covered by TCT Nos. 92836 and
92837) and issue a writ of possession to . . . (Guillermo Ponce) with respect to the
aforesaid lots, subject to the equity of redemption of the respondent Rogelio V.
Sarmiento," 1 Applying the doctrine laid down in Santiago v. Dionisio, a 1953
decision of this Court, 2 the Intermediate Appellate Court's decision declared that
"the sale to Ponce, as the highest bidder in the foreclosure sale of the two lots in
question should have been confirmed, subject to Limpin's (and now Sarmiento's)
equity of redemption."
This Court's aforesaid judgment also clearly and categorically sustained the exercise
by the Appellate Court of jurisdiction over the persons of Rogelio M. Sarmiento and
Gregorio Limpin. 3 There can thus be no question that the petitioners herein, said
Rogelio Sarmiento and Gregorio Limpin, were affected and are bound by the
decision of the Intermediate Appellate Court, and that of this Court affirming it.
cdrep
Rogelio M. Sarmiento, particularly, was aware that the Trial Court had the ministerial
duty to execute the Appellate Court's decision, i.e., to confirm the sale and issue a
writ of possession as regards the aforesaid lots, subject to the equity of redemption
explicitly recognized in his favor in the decisions mentioned. He knew that he had
the prerogative to exercise his equity of redemption, if not from the moment that
the judgment of this Court became final and executory, 4 at least until the Court a
quo, presided over by Hon. Antonio Solano, subsequently confirmed the sale and
issued a writ of possession in favor of Guillermo Ponce in June, 1987. 5
He did not try to exercise that right before, at or about the time of the confirmation
of the foreclosure sale by Judge Solano. Instead, he instituted no less than two (2)
actions in the same Regional Trial Court which were assigned to another branch,
presided over by Hon. Teodoro Beltran attempting to relitigate precisely the same
issues which this Court and the Intermediate Appellate Court had already passed
upon and resolved adversely to him. For doing so for trifling with and abusing the
processes of the courts, and thus unwarrantedly delaying execution of the final and
executory judgment against him he and his counsel were both found guilty of

contempt and correspondingly punished by this Court, by Resolution dated May 5,

1988. The same resolution also decreed the dismissal of the complaints in both
cases and the nullification and setting aside of the restraining or injunctive orders of
Judge Beltran. LibLex
It was not until March 11, 1988 nine months or so after entry of the judgment
recognizing his equity of redemption as successor-in-interest of the original
mortgagors that Sarmiento finally bestirred himself to attempt to exercise his
unforeclosed equity of redemption. On that day he filed a motion with the Court
presided over by Hon. Judge Antonio Solano, manifesting that he would exercise the
right and asked the Court to fix the redemption price. 6 The Court opined that "this
should be the subject of the agreement between Ponce and Sarmiento." 7
Sarmiento then wrote to Ponce on March 23, 1988 offering "P2.6 million as
redemption price for the two lots originally covered by TCTs Nos. 92836 and 92837,
now 307100 and 307124." 8 Ponce's answer, dated March 25, 1988, rejected the
offer and averred "that the period within which x x (Sarmiento) could have exercised
such right . . . (had) lapsed." 9 Sarmiento reacted by filing a motion with the Solano
Court, dated March 29, 1988, asking it to "fix the redemption price . . . and that the
implementation of the writ of possession be provisionally deferred." 10 An
opposition was promptly filed by Ponce under date of May 4, 1988 11 in which he
argued that "Sarmiento's right to exercise his equity of redemption over those lots
had long expired," the opportunity to exercise it having presented itself but not
availed of "(i) after . . . default in the performance of the conditions of the mortgage
and (ii) before the Sheriff's sale of the property and the judicial confirmation
thereof" According to Ponce, "from October 17, 1982, . . . (when) Sarmiento's
predecessors-in-interest defaulted in their obligations over the mortgaged
properties, up to June 17, 1987, when this . . . (Trial) Court confirmed the auction
sale of those properties, Sarmiento could (and should) have exercised his 'equity of
redemption.'" Judge Solano did not share this view, and ruled accordingly. 12
The issue has been brought to this Court for resolution by Ponce's "Motion for
Clarification" dated May 27, 1988 and "Supplemental Motion . ." dated June 13,
1988, as to which Sarmiento has submitted a Comment dated June 17, 1988. To the
comment a reply has been presented by Ponce under date of August 3, 1988.
Ponce states 13 that the term, equity of redemption, means "the right of the
mortgagor to redeem the mortgaged property after his default in the performance
of the conditions of the mortgage but before the sale of the property or the (judicial)
confirmation of the (Sheriff's) sale," citing Top Rate International Services, Inc. v.
I.A.C., 142 SCRA 473 [1976], or "the right to redeem mortgaged property by paying
the amount ordered by the court within a period of ninety days, or, even thereafter
but before the confirmation of the sale, invoking Sun Life Assurance Co. of Canada
v. Diez, 52 Phil. 275 [1928]. 14 On this premise, he postulates that "from October
17, 1982, the date Sarmiento's predecessors-in-interest defaulted in their

obligations over the mortgaged properties, up to June 17, 1987, when the lower
court confirmed the auction sale of those properties, Sarmiento could have
exercised his 'equity of redemption." Not having done so within that time, his equity
of redemption had been extinguished; indeed, by opting to file "new suits against
Ponce . . . seeking to annul Ponce's titles over those properties" instead of
redeeming the same, he had "waived his equity of redemption (assuming such right
existed at the time the suits were commenced)."
It is Sarmiento's position, on the other hand, 15 that the "17 June 1987
confirmation of the sale of the two lots could not have cut off . . . (his) equity of
redemption;" in fact, "Ponce himself, in his 'Urgent Motion' dated 1 June 1987,
precisely prayed for the issuance of a writ of possession 'subject to the equity of
redemption of Rogelio M. Sarmiento' thereby recognizing Sarmiento's equity of
redemption beyond confirmation date," 16 He also argues that he had not been
informed of the time when his right of redemption would be cut-off, 17 because he
"never received a copy of any Motion for Confirmation, much less notice of hearing
thereon in violation of his right to due process;" that to hold otherwise would
"render nugatory the decision of the Court of Appeals and this . . . Court on the
issue;" and that he is entitled to a reasonable time, e.g., a year, for the exercise of
his equity of redemption. 18
The equity of redemption is, to be sure, different from and should not be confused
with the right of redemption. 19
The right of redemption in relation to a mortgage understood in the sense of a
prerogative to re-acquire mortgaged property after registration of the foreclosure
sale exists only in the case of the extrajudicial foreclosure of the mortgage. No
such right is recognized in a judicial foreclosure except only where the mortgagee is
the Philippine National Bank or a bank or banking institution.
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor
the right of redemption within one (1) year from the registration of the sheriff's
certificate of foreclosure sale. 20
Where the foreclosure is judicially effected, however, no equivalent right of
redemption exists. The law 21 declares that a judicial foreclosure sale, "when
confirmed by an order of the court, . . . shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such rights
of redemption as may be allowed by law." 22 Such rights exceptionally "allowed by
law" (i.e., even after confirmation by an order of the court) are those granted by the
charter of the Philippine National Bank (Acts No. 2747 and 2938), and the General
Banking Act (R.A. 337). 23 These laws confer on the mortgagor, his successors in
interest or any judgment creditor of the mortgagor, the right to redeem the property
sold on foreclosure after confirmation by the court of the foreclosure sale

which right may be exercised within a period of one (1) year, counted from the date
of registration of the certificate of sale in the Registry of Property. LLphil
But, to repeat, no such right of redemption exists in case of judicial foreclosure of a
mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a
case, the foreclosure sale, "when confirmed by an order of the court . . . shall
operate to divest the rights of all the parties to the action and to vest their rights in
the purchaser." There then exists only what is known as the equity of redemption.
This is simply the right of the defendant mortgagor to extinguish the mortgage and
retain ownership of the property by paying the secured debt within the 90-day
period after the judgment becomes final, in accordance with Rule 68, or even after
the foreclosure sale but prior to its confirmation.
Section 2, Rule 68 provides that
". . . If upon the trial . . . the court shall find the facts set forth in the complaint to be
true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or
obligation, including interest and costs, and shall render judgment for the sum so
found due and order the same to be paid into court within a period of not less than
ninety (90) days from the date of the service of such order, and that in default of
such payment the property be sold to realize the mortgage debt and costs." 24
This is the mortgagor's equity (not right) of redemption which, as above stated, may
be exercised by him even beyond the 90-day period "from the date of service of the
order," and even after the foreclosure sale itself, provided it be before the order of
confirmation of the sale. 25 After such order of confirmation, no redemption can be
effected any longer.
It is this same equity of redemption that is conferred by law on the mortgagor's
successors-in-interest, or third persons acquiring rights over the mortgaged
property subsequent, and therefore subordinate, to the mortgagee's lien. 26 If
these subsequent or junior lien-holders be not joined in the foreclosure action, the
judgment in the mortgagor's favor is ineffective as to them, of course. In that case,
they retain what is known as the "unforeclosed equity of redemption," and a
separate foreclosure proceeding should be brought to require them to redeem from
the first mortgagee, or the party acquiring title to the mortgaged property at the
foreclosure sale, within 90 days, 27 under penalty of losing that prerogative to
redeem. In the case at bar, however, there is no occasion to speak of any
"unforeclosed equity of redemption" in Sarmiento's favor since he was properly
impleaded in the judicial proceeding where his and Ponce's rights over the
mortgaged property were ventilated and specifically adjudicated. prcd
Under the circumstances obtaining in this case, the plain intendment of the
Intermediate Appellate Court was to give to Sarmiento, not the unforeclosed equity
of redemption pertaining to a stranger to the foreclosure suit, but the same equity
of redemption possessed by the mortgagor himself. The judgment cannot be

construed as contemplating or requiring the institution of a separate suit by Ponce

to compel Sarmiento to exercise his unforeclosed equity of redemption, or as
granting Sarmiento the option to redeem at any time that he pleases, subject only
to prescription. This would give rise to that multiplicity of proceedings which the law
eschews. The judgment plainly intended that Sarmiento exercise his option to
redeem, as successor of the mortgagor.
Upon the facts on record, Sarmiento cannot be heard to complain of denial of due
process for alleged lack of notice of any motion or hearing for confirmation of sale.
The Decision of the Intermediate Appellate Court which he and his predecessor,
Limpin, had appealed to this Court specifically ordered the Trial Court to confirm 28
the judicial foreclosure sale in favor of Ponce over the two lots, in these terms: 29
"WHEREFORE, the orders dated October 16, 1983 and December 19, 1983 of the
respondent court, so far as they deny the confirmation of the sale of the lots
formerly covered by TCT Nos. 92836 and 92837, are SET ASIDE, and the respondent
court is hereby ORDERED to confirm the sale and issue a writ of possession to the
petitioner with respect to the aforesaid lots, subject to the equity of redemption of
the respondent Rogelio V. Sarmiento. Without costs."
Given the fact that said appealed orders of the Trial Court had been issued upon
motion for confirmation earlier made by Ponce which was duly served and heard
the aforecited Decision of the Intermediate Appellate Court can be construed in
no wise than as a peremptory command to the Trial Court to confirm the sale as
directed, motu proprio, and without the need of any further motion or other action
on the part of Ponce. The rejection by this Court of Sarmiento's and Limpin's appeal
in its own Decision of January 30, 1987, which imported nothing less than a total
affirmance of the Decision of the Appellate Court, should therefore have sufficiently
alerted Sarmiento that confirmation could come at any time after this Court's
Decision became final, with or without any action from Ponce. He cannot, in the
circumstances, claim unfair surprise. He should, upon being notified of this Court's
Decision, have taken steps to redeem the properties in question or, at the very
least, served the Trial Court and Ponce with notice of his intention to exercise his
equity of redemption. There was certainly time enough to do this the order
confirming the foreclosure sale issuing only on June 17, 1987 had he not occupied
himself with the fruitless maneuverings to re-litigate the issues already recounted.
Indeed, had he made an attempt to redeem, even belatedly but within a reasonable
period of time after learning of the order of confirmation (the record shows he did
learn of it within three [3] days after its issuance), 30 he might perhaps have given
the Court some reason to consider his bid on equitable grounds. He did not. He let
nine (9) months pass, to repeat, in carrying out improper (and contumacious)
stratagems to negate the judgments against him, before making any such move.
LLpr

Neither can Sarmiento acceptably claim that Ponce, by moving for a writ of
possession subject to his (Sarmiento's) equity of redemption, recognized the
existence and enforceability of that prerogative beyond the prescribed cut-off date
of confirmation of the sale. Such an interpretation of the motion is totally
unwarranted, given the fact that said motion was made at a time (June 1, 1987)
when there was as yet no order confirming the sale and, since Sarmiento's equity of
redemption then still unquestionably existed, there was hardly occasion or for that
matter, any reason as far as Ponce was concerned, to provide against its lapsing.
Moreover, assuming for the sake of argument that a resolutory period fixed by law
may be extended by act of the party in whose favor its expiration would operate,
that act must bespeak a clear and unequivocal intent to grant such an extension.
No such clear grant can be inferred from the terms of Ponce's motion, which can,
and in fact should be, read as a mere affirmation that there existed at the time an
equity of redemption in Sarmiento's favor. LexLib
WHEREFORE, the Court hereby rules that the equity of redemption claimed and
invoked by Rogelio M. Sarmiento over the properties originally covered by Transfer
Certificates of Title Nos. 92836 and 92837 (now by TCTs Numbered 307100 and
307124), Registry of Deeds of Quezon City, subject of this case, lapsed and ceased
to exist without having been properly exercised, on June 17, 1987, with the issuance
by the Trial Court of the Order confirming the sheriff's sale (on judicial foreclosure)
of said, properties in favor of Guillermo Ponce.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

[G.R. No. 141974. August 9, 2004.]

BPI FAMILY SAVINGS BANK, INC., petitioner, vs. SPS. JANUARIO ANTONIO VELOSO
AND NATIVIDAD VELOSO, respondents.
Labaguis Loyola Atienza Felipe Sanchez & Associates for petitioner.
Santiago, Cruz & Sarte for respondents.
SYNOPSIS

The trial court upheld the validity of the extra-judicial foreclosure of the mortgaged
properties of respondents which secured its loan with petitioner's predecessor-ininterest, Family Bank and Trust Company (Family Bank), but allowed the
respondents to redeem the same properties at a redemption price of P2,140,000.00.
On appeal by petitioner, the Court of Appeals (CA) affirmed the trial court's decision.
Hence, this petition.
The Supreme Court ruled the right to repurchase to have been properly exercised
when there is an unequivocal tender of payment for the full amount of the
repurchase price. Otherwise, the offer to redeem is ineffectual. In this case, the offer
by respondents to redeem the foreclosed properties for P1,872,935 and the
subsequent consignation in court of P1,500,000, while made within the period of
redemption, was ineffective since the amount offered and actually consigned not
only did not include the interest but was in fact also way below the P2,782,554.66
paid by the highest bidder/purchaser of the properties during the auction sale. Thus,
the Court reversed the appealed decision of the CA. TAESDH
SYLLABUS
1.
CIVIL LAW; OBLIGATIONS AND CONTRACTS; MORTGAGE; FORECLOSURE IS
PROPER IF THE DEBTOR IS IN DEFAULT IN THE PAYMENT OF HIS OBLIGATION. In a
real estate mortgage, when the principal obligation is not paid when due, the
mortgagee has the right to foreclose on the mortgage and to have the property
seized and sold, and to apply the proceeds to the obligation. Foreclosure is proper if
the debtor is in default in the payment of his obligation. And in this case, the
validity of the extra-judicial foreclosure on July 1, 1985 was confirmed by both the
trial court and the Court of Appeals. We find no reason to question it.
2.
ID.; ID.; ID.; ID.; RIGHT TO REPURCHASE; PROPERLY EXERCISED WHEN THERE
IS AN UNEQUIVOCAL TENDER OF PAYMENT FOR THE FULL AMOUNT OF THE
REPURCHASE PRICE. The general rule in redemption is that it is not sufficient that
a person offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender of payment.
This constitutes the exercise of the right to repurchase. In several cases decided by
the Court where the right to repurchase was held to have been properly exercised,
there was an unequivocal tender of payment for the full amount of the repurchase
price. Otherwise, the offer to redeem is ineffectual. Bona fide redemption
necessarily implies a reasonable and valid tender of the entire repurchase price,
otherwise the rule on the redemption period fixed by law can easily be
circumvented. HScDIC
3.
ID.; ID.; ID.; ID.; ID.; OFFER TO REDEEM IN CASE AT BAR IS INVALID AND
INEFFECTIVE. [I]n this case, the offer by respondents on July 24, 1986 to redeem
the foreclosed properties for P1,872,935 and the subsequent consignation in court
of P1,500,000 on August 27, 1986, while made within the period of redemption, was

ineffective since the amount offered and actually consigned not only did not include
the interest but was in fact also way below the P2,782,554.66 paid by the highest
bidder/purchaser of the properties during the auction sale. . . . The law granted
respondents the right of redemption. But in so granting that right, the law intended
that their offer to redeem be valid and effective, accompanied by an actual tender
of the redemption price. Fixing a definite term within which the property should be
redeemed is meant to avoid prolonged economic uncertainty over the ownership of
the thing sold. In the case at bar, the offer was not a legal and effective exercise of
the right of redemption contemplated by law, hence, refusal of the offer by
petitioner was completely justified.
DECISION
CORONA, J p:
Before us is a petition for review of the decision 1 dated February 14, 2000 of the
Court of Appeals affirming the decision of the Regional Trial Court, Branch 94,
Quezon City, 2 which upheld the validity of the extra-judicial foreclosure
proceedings initiated by Family Bank and Trust Company (Family Bank) on the
mortgaged properties of respondent spouses Januario Antonio Veloso and Natividad
Veloso but allowed the latter to redeem the same properties. aHATDI
On January 8, 1983, respondent spouses obtained a loan of P1,300,000 from
petitioners predecessor-in-interest Family Bank and Trust Company. To secure
payment of the loan, respondent spouses executed in favor of the bank a deed of
mortgage over three parcels of land, with improvements, registered in their names
under TCT Nos. 272227, 272228 and 272229 of the Registry of Deeds of Quezon
City.
On February 9, 1983, respondents, for value received, executed a promissory note
for P1,300,000. Subsequently, however, respondents defaulted in the monthly
installments due on their loan. When efforts to update the account failed, Family
Bank instituted extra-judicial foreclosure proceedings on the respondents
mortgaged properties.
On July 1, 1985, the properties were sold at public auction with Family Bank as the
highest bidder for P2,782,554.66.
On August 5, 1985, Family Bank assigned all its rights and interests in the
foreclosed properties to petitioner BPI Family Bank, Inc. (BPI).
On August 28, 1985, the sheriffs certificate of sale was registered with the Registry
of Deeds of Quezon City.
On July 24, 1986, respondents, through counsel, wrote BPI offering to redeem the
foreclosed properties for P1,872,935. This was, however, rejected by petitioner.

On August 27, 1986, respondents filed in the RTC of Quezon City, Branch 94, a
complaint for annulment of foreclosure, with consignation and prayer for damages.
On motion of respondents, the trial court, in an order dated August 27, 1986,
allowed respondents to deposit with the clerk of court the sum of P1,500,000
representing the redemption price. Thereafter, trial on the merits ensued.
Meanwhile, in Branch 76 of the Regional Trial Court of Quezon City, BPI was able to
secure a writ of possession over the foreclosed properties. This prompted
respondents to file with the Court of Appeals a petition for certiorari with
preliminary injunction docketed as CA-G.R. SP No. 22681. On October 8, 1990, the
Court of Appeals resolved to grant respondents motion for preliminary mandatory
injunction.
Eventually, however, in a decision promulgated on May 31, 1991, the Court of
Appeals, in CA-G.R. SP No. 22681, resolved the issue of possession in favor of BPI
and accordingly lifted the preliminary mandatory injunction it had earlier issued,
denying altogether respondents petition. From this decision, respondents came to
this Court via a petition for review which was, however, denied in a resolution dated
January 13, 1992. The resolution affirmed, in effect, petitioners right to the
possession of the subject properties.
On December 16, 1992, upon motion of respondents and despite the opposition of
petitioner, Branch 94 ordered the release of P1,400,000 of the consigned amount to
respondents, with the balance of P100,000 to take the place of the injunction bond
to answer for whatever damages petitioner might suffer because of the issuance of
the preliminary injunction (previously issued and later lifted) in favor of
respondents.
Finally, on August 18, 1995, after almost a decade of protracted litigation, the trial
court rendered a decision declaring the validity of the extra-judicial foreclosure of
the mortgaged properties of respondents but allowed the redemption of the same at
a redemption price of P2,140,000.
BPI elevated the matter to the Court of Appeals which affirmed the trial courts
decision, with modification:
WHEREFORE, subject to the modification declaring P2,678,639.80 as the redemption
price due the appellant, the decision appealed from is hereby AFFIRMED in all other
respects. 3
Hence, the instant petition based on the following assigned errors:
I
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THIS

HONORABLE COURT WHEN IT AFFIRMED THE DECISION OF THE TRIAL COURT AND
ALLOWED THE RESPONDENTS TO REDEEM THE FORECLOSED PROPERTY.
II
ASSUMING FOR THE SAKE OF ARGUMENT, BUT WITHOUT ADMITTING, THAT THE
HONORABLE COURT OF APPEALS DID NOT ERR IN AFFIRMING THE DECISION OF THE
TRIAL COURT, NEVERTHELESS IT DECIDED A QUESTION OF SUBSTANCE IN A WAY
NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THIS HONORABLE
COURT WHEN IT FIXED THE REDEMPTION PRICE TO BE PAID BY RESPONDENTS TO
PETITIONER AT ONLY P2,678,639.80 AND SHALL ONLY EARN 1% PER MONTH UNDER
SECTION 28, RULE 39 OF THE 1997 RULES OF CIVIL PROCEDURE.
The fact is that, at the time of the foreclosure sale on July 1, 1985, respondent
spouses Veloso had already defaulted on their loan to petitioners predecessor-ininterest Family Bank. In a real estate mortgage, when the principal obligation is not
paid when due, the mortgagee has the right to foreclose on the mortgage and to
have the property seized and sold, and to apply the proceeds to the obligation. 4
Foreclosure is proper if the debtor is in default in the payment of his obligation. 5
And in this case, the validity of the extra-judicial foreclosure on July 1, 1985 was
confirmed by both the trial court and the Court of Appeals. We find no reason to
question it.
The sole question therefore that remains to be resolved is: did respondent spouses
comply with all the requirements for the redemption of the subject properties?
We answer in the negative.
The general rule in redemption is that it is not sufficient that a person offering to
redeem manifests his desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender of payment. This constitutes
the exercise of the right to repurchase. 6
In several cases 7 decided by the Court where the right to repurchase was held to
have been properly exercised, there was an unequivocal tender of payment for the
full amount of the repurchase price. Otherwise, the offer to redeem is ineffectual. 8
Bona fide redemption necessarily implies a reasonable and valid tender of the entire
repurchase price, otherwise the rule on the redemption period fixed by law can
easily be circumvented. As explained by this Court in Basbas vs. Entena: 9
. . . the existence of the right of redemption operates to depress the market value of
the land until the period expires, and to render that period indefinite by permitting
the tenant to file a suit for redemption, with either party unable to foresee when
final judgment will terminate the action, would render nugatory the period of two
years fixed by the statute for making the redemption and virtually paralyze any
efforts of the landowner to realize the value of his land. No buyer can be expected

to acquire it without any certainty as to the amount for which it may be redeemed,
so that he can recover at least his investment in case of redemption. In the
meantime, the landowners needs and obligations cannot be met. It is doubtful if
any such result was intended by the statute, absent clear wording to that effect.
CIHAED
Consequently, in this case, the offer by respondents on July 24, 1986 to redeem the
foreclosed properties for P1,872,935 and the subsequent consignation in court of
P1,500,000 on August 27, 1986, while made within the period 10 of redemption,
was ineffective since the amount offered and actually consigned not only did not
include the interest but was in fact also way below the P2,782,554.66 paid by the
highest bidder/purchaser of the properties during the auction sale.
In Bodiongan vs. Court of Appeals, 11 we held:
In order to effect a redemption, the judgment debtor must pay the purchaser the
redemption price composed of the following: (1) the price which the purchaser paid
for the property; (2) interest of 1% per month on the purchase price; (3) the amount
of any assessments or taxes which the purchaser may have paid on the property
after the purchase; and (4) interest of 1% per month on such assessments and
taxes . . .
Furthermore, Article 1616 of the Civil Code of the Philippines provides:
The vendor cannot avail himself of the right to repurchase without returning to the
vendee the price of the sale . . .
It is not difficult to understand why the redemption price should either be fully
offered in legal tender or else validly consigned in court. Only by such means can
the auction winner be assured that the offer to redeem is being made in good faith.
The sum of P1,400,000 consigned by respondents in Branch 94 was subsequently
withdrawn by them, leaving only P100,000 to take the place of the injunction bond.
This would have been tantamount to requiring petitioner to accept payment by
installments as there would have necessarily been an indefinite extension of the
redemption period. 12 If a partial payment can bind the winning bidder or purchaser
in an auction sale, by what rule can the payment of the balance be determined?
Petitioner could not be expected to entertain an offer of redemption without any
assurance that respondents could pay the repurchase price immediately. A contrary
rule would leave the buyers at foreclosure sales open to harassment by expectedly
angry debtors and cause unnecessary prolongation of the redemption period,
contrary to the policy of the law.
Whether or not respondents were diligent in asserting their willingness to pay is
irrelevant. Redemption within the period allowed by law is not a matter of intent but
a question of payment or valid tender of the full redemption price within said period.

The disposition of the instant case in the trial court unnecessarily dragged for
almost a decade. Now, it is on its 18th year and still respondents have not tendered
the full redemption price. Nor have they consigned the full amount, if only to prove
their willingness and ability to pay. This would have evidenced their good faith.
The law granted respondents the right of redemption. But in so granting that right,
the law intended that their offer to redeem be valid and effective, accompanied by
an actual tender of the redemption price. Fixing a definite term within which the
property should be redeemed is meant to avoid prolonged economic uncertainty
over the ownership of the thing sold. In the case at bar, the offer was not a legal
and effective exercise of the right of redemption contemplated by law, hence,
refusal of the offer by petitioner was completely justified.
Finally, respondents cannot argue that the law on equity should prevail. Equity
applies only in the absence of, and never against, statutory law or judicial rules of
procedure. 13
WHEREFORE, the appealed decision of the Court of Appeals is hereby REVERSED
and SET ASIDE. The complaint filed by respondents, the spouses Veloso, is hereby
dismissed.
SO ORDERED.

[G.R. No. 132424. May 4, 2006.]

SPOUSES BONIFACIO R. VALDEZ, JR. and VENIDA M. VALDEZ, petitioners, vs. HON.
COURT OF APPEALS, SPOUSES GABRIEL FABELLA and FRANCISCA FABELLA,
respondents.
DECISION
CHICO-NAZARIO, J p:
This petition for review under Rule 45 of the Rules of Court, filed by petitioners
spouses Bonifacio R. Valdez, Jr. and Venida M. Valdez, seeks to nullify and set aside
the 22 April 1997 decision 1 and 30 January 1998 resolution of the Court of Appeals
in CA-G.R. SP No. 43492, which reversed the judgment, dated 8 January 1997, of the
Regional Trial Court of Antipolo, Rizal, Branch 74, in Civil Case No. 3607, which, in
turn, affirmed in toto the decision rendered by the Municipal Trial Court of Antipolo,
Rizal, Branch II, in Civil Case No. 2547. aESIDH
This case originated from a complaint for unlawful detainer filed by petitioners
Bonifacio and Venida Valdez against private respondents Gabriel and Francisca
Fabella before the Municipal Trial Court of Antipolo, Rizal. The complaint alleges
these material facts:
2.
That plaintiffs are the registered owner[s] of a piece of residential lot
denominated as Lot [N]o. 3 Blk 19 located at Carolina Executive Village, Brgy. Sta.
Cruz, Antipolo, Rizal which [they] acquired from Carolina Realty, Inc. Sometime [i]n
November 1992 by virtue of Sales Contract, xerox copy of which is hereto attached
marked as Annex "A" and the xerox copy of the Torrens Certificate of Title in her
name marked as Annex "B";
3.
That defendants, without any color of title whatsoever occupie[d] the said lot
by building their house in the said lot thereby depriving the herein plaintiffs rightful
possession thereof; SHDAEC
4.
That for several times, plaintiffs orally asked the herein defendants to
peacefully surrender the premises to them, but the latter stubbornly refused to
vacate the lot they unlawfully occupied;
5.
That despite plaintiffs' referral of the matter to the Barangay, defendants still
refused to heed the plea of the former to surrender the lot peacefully;
6.
That because of the unfounded refusal of the herein defendants to settle the
case amicably, the Barangay Captain was forced to issue the necessary Certification
to File Action in favor of the herein plaintiffs in order that the necessary cause of
action be taken before the proper court, xerox copy of which is hereto attached
marked as Annex "C";

7.
That by reason of the deliberate, malicious and unfounded refusal of the
defendants to vacate/surrender the premises in question, the herein plaintiffs were
constrained to engage the professional services of counsel thus incurring expenses
amounting to TEN THOUSAND PESOS (P10,000.00) representing acceptance fee and
additional ONE THOUSAND PESOS (P1,000.00) per appearance, who on July 12,
1994 sent a formal demand was likewise ignored, (sic) copy of which is hereto
attached as Annex "D";
8.
That likewise by virtue of the adamant refusal of the defendants to
vacate/surrender the said premises in question, plaintiff[s] suffered serious anxiety,
sleepless nights, mental torture and moral erosion; . . . 2
In their answer, private respondents contended that the complaint failed to state
that petitioners had prior physical possession of the property or that they were the
lessors of the former. In the alternative, private respondents claimed ownership
over the land on the ground that they had been in open, continuous, and adverse
possession thereof for more than thirty years, as attested by an ocular inspection
report from the Department of Environment and Natural Resources. They also
stressed that the complaint failed to comply with Supreme Court Circular No. 28-91
regarding affidavits against non-forum shopping. DCHIAS
The Municipal Trial Court (MTC) rendered a decision in favor of the petitioners,
ordering private respondents to vacate the property and to pay rent for the use and
occupation of the same plus attorney's fees.
Private respondents appealed the MTC's decision to the Regional Trial Court (RTC).
The RTC, in a decision dated 8 January 1997, affirmed in toto the decision of the
MTC.
Undeterred, the private respondents filed a petition for review with the Court of
Appeals on 10 March 1997 questioning the decision of the RTC.
In a decision dated 22 April 1997, the Court of Appeals reversed and set aside the
decision of the RTC. It held that petitioners failed to make a case for unlawful
detainer because they failed to show that they had given the private respondents
the right to occupy the premises or that they had tolerated private respondents'
possession of the same, which is a requirement in unlawful detainer cases. It added
that the allegations in petitioners' complaint lack jurisdictional elements for forcible
entry which requires an allegation of prior material possession. The Court of Appeals
ratiocinated thus:
An examination of the complaint reveals that key jurisdictional allegations that will
support an action for ejectment are conspicuously lacking. In particular, an
allegation of prior material possession is mandatory in forcible entry, . . . and the
complaint is deficient in this respect. On the other hand, neither does there appear
to be a case of unlawful detainer, since the private respondents failed to show that

they had given the petitioners the right to occupy the premises, which right has now
[been] extinguished.
xxx

xxx

xxx

In light of the foregoing, the conclusion is inevitable that the Municipal Trial Court
before which the action for ejectment was filed had no jurisdiction over the case.
Consequently, the dismissal thereof is in order. HCDAcE
WHEREFORE, the Petition is hereby GIVEN DUE COURSE, and GRANTED. The
decision dated 08 January 1997 rendered by the respondent court is hereby
REVERSED and SET ASIDE, and judgment is hereby rendered DISMISSING the
complaint in Civil Case No. 2547 of the Municipal Trial Court of Antipolo, Rizal for
lack of jurisdiction. 3
Petitioners filed a motion for reconsideration which was denied in a resolution dated
30 January 1998. 4
Hence, the instant petition.
Petitioners submit the following issues for the Court's consideration 5 :
A.
WHETHER OR NOT THE ALLEGATIONS OF THE COMPLAINT CLEARLY MADE
OUT A CASE FOR UNLAWFUL DETAINER.
B.
WHETHER OR NOT BASED ON THE ALLEGATION(S) OF THE COMPLAINT, THE
MUNICIPAL TRIAL COURT OF ANTIPOLO, RIZAL, CLEARLY HAS ORIGINAL
JURISDICTION OVER THE INSTANT COMPLAINT FILED BEFORE IT.
Since the two issues are closely intertwined, they shall be discussed together.
In the main, petitioners claim that the averments of their complaint make out a case
for unlawful detainer having alleged that private respondents unlawfully withheld
from them the possession of the property in question, which allegation is sufficient
to establish a case for unlawful detainer. They further contend that the summary
action for ejectment is the proper remedy available to the owner if another occupies
the land at the former's tolerance or permission without any contract between the
two as the latter is bound by an implied promise to vacate the land upon demand
by the owner.
The petition is not meritorious. ITCcAD
Under existing law and jurisprudence, there are three kinds of actions available to
recover possession of real property: (a) accion interdictal; (b) accion publiciana; and
(c) accion reivindicatoria. 6
Accion interdictal comprises two distinct causes of action, namely, forcible entry
(detentacion) and unlawful detainer (desahucio). 7 In forcible entry, one is deprived

of physical possession of real property by means of force, intimidation, strategy,

threats, or stealth whereas in unlawful detainer, one illegally withholds possession
after the expiration or termination of his right to hold possession under any
contract, express or implied. 8 The two are distinguished from each other in that in
forcible entry, the possession of the defendant is illegal from the beginning, and
that the issue is which party has prior de facto possession while in unlawful
detainer, possession of the defendant is originally legal but became illegal due to
the expiration or termination of the right to possess. 9
The jurisdiction of these two actions, which are summary in nature, lies in the
proper municipal trial court or metropolitan trial court. 10 Both actions must be
brought within one year from the date of actual entry on the land, in case of forcible
entry, and from the date of last demand, in case of unlawful detainer. 11 The issue
in said cases is the right to physical possession.
Accion publiciana is the plenary action to recover the right of possession which
should be brought in the proper regional trial court when dispossession has lasted
for more than one year. 12 It is an ordinary civil proceeding to determine the better
right of possession of realty independently of title. 13 In other words, if at the time
of the filing of the complaint more than one year had elapsed since defendant had
turned plaintiff out of possession or defendant's possession had become illegal, the
action will be, not one of the forcible entry or illegal detainer, but an accion
publiciana. On the other hand, accion reivindicatoria is an action to recover
ownership also brought in the proper regional trial court in an ordinary civil
proceeding. 14
To justify an action for unlawful detainer, it is essential that the plaintiff's supposed
acts of tolerance must have been present right from the start of the possession
which is later sought to be recovered. 15 Otherwise, if the possession was unlawful
from the start, an action for unlawful detainer would be an improper remedy. 16 As
explained in Sarona v. Villegas 17 :
But even where possession preceding the suit is by tolerance of the owner, still,
distinction should be made. DHTCaI
If right at the incipiency defendant's possession was with plaintiff's tolerance, we do
not doubt that the latter may require him to vacate the premises and sue before the
inferior court under Section 1 of Rule 70, within one year from the date of the
demand to vacate.
xxx

xxx

xxx

A close assessment of the law and the concept of the word "tolerance" confirms our
view heretofore expressed that such tolerance must be present right from the start
of possession sought to be recovered, to categorize a cause of action as one of
unlawful detainer not of forcible entry. Indeed, to hold otherwise would espouse a

dangerous doctrine. And for two reasons: First. Forcible entry into the land is an
open challenge to the right of the possessor. Violation of that right authorizes the
speedy redress in the inferior court provided for in the rules. If one year from
the forcible entry is allowed to lapse before suit is filed, then the remedy ceases to
be speedy; and the possessor is deemed to have waived his right to seek relief in
the inferior court. Second, if a forcible entry action in the inferior court is allowed
after the lapse of a number of years, then the result may well be that no action of
forcible entry can really prescribe. No matter how long such defendant is in physical
possession, plaintiff will merely make a demand, bring suit in the inferior court
upon a plea of tolerance to prevent prescription to set in and summarily throw
him out of the land. Such a conclusion is unreasonable. Especially if we bear in mind
the postulates that proceedings of forcible entry and unlawful detainer are summary
in nature, and that the one year time-bar to suit is but in pursuance of the summary
nature of the action. 18 (Underlining supplied)
It is the nature of defendant's entry into the land which determines the cause of
action, whether it is forcible entry or unlawful detainer. If the entry is illegal, then
the action which may be filed against the intruder is forcible entry. If, however, the
entry is legal but the possession thereafter becomes illegal, the case is unlawful
detainer. DAEIHT
Indeed, to vest the court jurisdiction to effect the ejectment of an occupant, it is
necessary that the complaint should embody such a statement of facts as brings
the party clearly within the class of cases for which the statutes provide a remedy,
as these proceedings are summary in nature. 19 The complaint must show enough
on its face the court jurisdiction without resort to parol testimony. 20
The jurisdictional facts must appear on the face of the complaint. When the
complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as
where it does not state how entry was affected or how and when dispossession
started, the remedy should either be an accion publiciana or an accion
reivindicatoria in the proper regional trial court. 21 Thus, in Go, Jr. v. Court of
Appeals, 22 petitioners filed an unlawful detainer case against respondent alleging
that they were the owners of the parcel of land through intestate succession which
was occupied by respondent by mere tolerance of petitioners as well as their
deceased mother. Resolving the issue on whether or not petitioners' case for
unlawful detainer will prosper, the court ruled 23 :

Petitioners alleged in their complaint that they inherited the property registered
under TCT No. C-32110 from their parents; that possession thereof by private
respondent was by tolerance of their mother, and after her death, by their own
tolerance; and that they had served written demand on December, 1994, but that
private respondent refused to vacate the property. . . .

It is settled that one whose stay is merely tolerated becomes a deforciant illegally
occupying the land the moment he is required to leave. It is essential in unlawful
detainer cases of this kind, that plaintiff's supposed acts of tolerance must have
been present right from the start of the possession which is later sought to be
recovered. This is where petitioners' cause of action fails. The appellate court, in full
agreement with the MTC made the conclusion that the alleged tolerance by their
mother and after her death, by them, was unsubstantiated. . . .
The evidence revealed that the possession of defendant was illegal at the inception
and not merely tolerated as alleged in the complaint, considering that defendant
started to occupy the subject lot and then built a house thereon without the
permission and consent of petitioners and before them, their mother. . . . Clearly,
defendant's entry into the land was effected clandestinely, without the knowledge
of the owners, consequently, it is categorized as possession by stealth which is
forcible entry. As explained in Sarona vs. Villegas, cited in Muoz vs. Court of
Appeals [224 SCRA 216 (1992)] tolerance must be present right from the start of
possession sought to be recovered, to categorize a cause of action as one of
unlawful detainer not of forcible entry . . . .
And in the case of Ten Forty Realty and Development Corp. v. Cruz, 24 petitioner's
complaint for unlawful detainer merely contained the bare allegations that (1)
respondent immediately occupied the subject property after its sale to her, an
action merely tolerated by petitioner; and (2) her allegedly illegal occupation of the
premises was by mere tolerance. The court, in finding that the alleged tolerance did
not justify the action for unlawful detainer, held:
To justify an action for unlawful detainer, the permission or tolerance must have
been present at the beginning of the possession. . . .
xxx

xxx

xxx

In this case, the Complaint and the other pleadings do not recite any averment of
fact that would substantiate the claim of petitioner that it permitted or tolerated the
occupation of the property by Respondent Cruz. The complaint contains only bare
allegations that 1) respondent immediately occupied the subject property after its
sale to her, an action merely tolerated by petitioner; and 2) her allegedly illegal
occupation of the premises was by mere tolerance. DTEAHI
These allegations contradict, rather than support, petitioner's theory that its cause
of action is for unlawful detainer. First, these arguments advance the view that
respondent's occupation of the property was unlawful at its inception. Second, they
counter the essential requirement in unlawful detainer cases that petitioner's
supposed act of sufferance or tolerance must be present right from the start of a
possession that is later sought to be recovered. 25

In the instant case, the allegations in the complaint do not contain any averment of
fact that would substantiate petitioners' claim that they permitted or tolerated the
occupation of the property by respondents. The complaint contains only bare
allegations that "respondents without any color of title whatsoever occupies the
land in question by building their house in the said land thereby depriving
petitioners the possession thereof." Nothing has been said on how respondents'
entry was effected or how and when dispossession started. Admittedly, no express
contract existed between the parties. This failure of petitioners to allege the key
jurisdictional facts constitutive of unlawful detainer is fatal. 26 Since the complaint
did not satisfy the jurisdictional requirement of a valid cause for unlawful detainer,
the municipal trial court had no jurisdiction over the case. 27 It is in this light that
this Court finds that the Court of Appeals correctly found that the municipal trial
court had no jurisdiction over the complaint.
WHEREFORE, the petition is DENIED and the judgment of the Court of Appeals
dismissing the complaint in Civil Case No. 2547 of the MTC Antipolo, Rizal for lack of
jurisdiction is hereby AFFIRMED.
No pronouncement as to costs. ASDCaI
SO ORDERED.

[G.R. No. 156360. January 14, 2005.]

CESAR SAMPAYAN, petitioner, vs. THE HONORABLE COURT OF APPEALS, CRISPULO
VASQUEZ and FLORENCIA VASQUEZ GILSANO, respondents.
Rafael V. Ybanez for petitioner.
Dollfuss R. Go & Associates Law Office for respondents.
SYLLABUS
1.
REMEDIAL LAW; APPEAL; APPEAL TO THE SUPREME COURT; FINDINGS OF
FACTS OF THE COURT OF APPEALS ARE GENERALLY BINDING UPON THE SUPREME
COURT; EXCEPTIONS. Undoubtedly, the issue of prior physical possession is one
of fact, and settled is the rule that this Court is not a trier of facts and does not
normally embark on a re-examination of the evidence adduced by the parties during
trial. Of course, the rule admits of exceptions. So it is that in Insular Life Assurance
Company, Ltd. vs. CA, we wrote: "[i]t is a settled rule that in the exercise of the
Supreme Court's power of review, the Court is not a trier of facts and does not
normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of facts
of the CA are conclusive and binding on the Court. However, the Court had
recognized several exceptions to this rule, to wit: (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." To our mind,
exceptions (5) and (11) are present in this case. aDHCAE
2.
ID.; COURTS; JURISDICTION; PROPERLY ACQUIRED WHEN THE COMPLAINT
AVERS THE REQUIRED JURISDICTIONAL FACTS; PRESENT IN CASE AT BAR. In
Sarmiento vs. CA, we held: "[t]o give the court jurisdiction to effect the ejectment of
an occupant or deforciant on the land, it is necessary that the complaint should
embody such a statement of facts as brings the party clearly within the class of
cases for which the statutes provide a remedy, as these proceedings are summary
in nature. The complaint must show enough on its face to give the court jurisdiction
without resort to parol testimony. The jurisdictional facts must appear on the face of

the complaint. . . ." Clear it is from the above that for the MCTC to acquire
jurisdiction over a forcible entry case, it is enough that the complaint avers the
jurisdictional facts, i.e. that the plaintiff had prior physical possession and that he
was deprived thereof by the defendant through force, intimidation, threats, strategy
and stealth. The complaint in this case makes such an averment. Hence, the
irrelevant circumstance that the evidence adduced during the hearing rendered
improper an action for forcible entry is of no moment and cannot deprive the MCTC
of its jurisdiction over the case. The MCTC continues to have that jurisdiction.
DECISION
GARCIA, J p:
In this verified petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Cesar Sampayan seeks the annulment and setting aside of the following
issuances of the Court of Appeals in CA-G.R. SP No. 43557, to wit: DCaSHI
1.
Decision dated May 16, 2002, denying his petition for review and affirming an
earlier decision of the Regional Trial Court at Agusan del Sur, Branch VII, which in
turn reversed on appeal a favorable judgment of the Municipal Circuit Trial Court
(MCTC) of Bayugan and Sibagat, Agusan del Sur in a forcible entry case thereat
commenced against him by herein private respondents, the brother-and-sister
Crispulo Vasquez and Florencia Vasquez-Gilsano; and
2.
Resolution dated November 7, 2002, which denied his motion for
reconsideration. ScCDET
From the pleadings and memoranda respectively filed by the parties, the Court
gathers the following factual antecedents:
On July 8, 1992, in the MCTC of Bayugan and Sibagat, Agusan del Sur, the siblings
Crispulo Vasquez and Florencia Vasquez-Gilsano filed complaint for forcible entry
against Cesar Sampayan for allegedly having entered and occupied a parcel of land,
identified as Lot No. 1959, PLS-225, and built a house thereon without their
knowledge, consent or authority, the entry having been supposedly effected
through strategy and stealth.
In their complaint, the plaintiffs (now private respondents), substantially alleged
that their mother Cristita Quita was the owner and actual possessor of Lot No. 1959;
that after their mother's death on January 11, 1984, they became co-owners proindiviso and lawful possessors of the same lot; that on June 1, 1992, while they were
temporarily absent from the lot in question, defendant Cesar Sampayan, through
strategy and stealth, entered the lot and built a house thereon, to their exclusion;
and that, despite their repeated demands for Sampayan to vacate the lot and
surrender the possession thereof to them, the latter failed and refused to do so.
aATEDS

In his answer, defendant Sampayan denied the material allegations of the complaint
and averred that neither the plaintiffs nor their mother have ever been in
possession of Lot No. 1959 and that he does not even know plaintiffs' identities or
their places of residence. He claimed that he did not enter the subject lot by stealth
or strategy because he asked and was given permission therefor by Maria Ybaez,
the overseer of the lot's true owners, Mr. and Mrs. Anastacio Terrado who were then
temporarily residing in Cebu City for business purposes. In the same answer,
Sampayan alleged that the plaintiffs' claim has long prescribed for the reason that
the lot in dispute had been possessed and declared for taxation purposes by the
spouses Felicisimo Oriol and Concordia Balida-Oriol in 1960, and that in 1978, the
Oriol spouses sold one-half (1/2) of the lot to the spouses Mr. and Mrs. Anastacio
Terrado, while the other half, to the couple Manolito Occida and Juliana SambaleOccida in 1979. Both vendees, so Sampayan averred, have actually possessed the
respective portions purchased by them up to the present. He thus prayed for the
dismissal of the complaint.
In the ensuing proceedings following the joinder of issues, the plaintiffs, to prove
that they have been in actual possession of Lot No. 1959 when defendant
Sampayan effected his entry thereto, submitted in evidence the following
documents: HTCIcE
1.

Tax Declaration No. 3180 in the name of Cristita Quita;

2.
Certificate of Death showing the date of death of Cristita Quita on January 11,
1984;
3.
Certificate issued by Fermina R. Labonete, Land Management Officer-III of
CENRO X-3-E, DENR-X-3-9, Bayugan, Agusan del Sur showing that Lot 1959, PLS-225
is covered by a Miscellaneous Sales Application of Cristita Quita; jurcda2005
4.
Affidavit of one Emiliano G. Gatillo to the effect that he was the one who gave
the lot in question to Cristita Quita sometime in 1957 and that since then the latter
had been occupying the lot; EACIaT
Plaintiffs also filed a Supplemental Position Paper dated July 13, 1994 for the
purpose of showing that Cristita Quita is one of the oppositors in Cadastral Case No.
149. Together with said position paper, they submitted a copy of the
Answer/Opposition earlier filed in Cadastral Case No. 149. In said cadastral case,
Cristita Quita was claiming Lot 1959, thus her name appeared in the list of
oppositors therein.
5.
The decision in the said Cadastral Case No. 149 showing that the then Court
of First Instance of Agusan del Sur declared Lot No. 1959 as one of the lots subject
of the same cadastral case.

For his part, defendant Sampayan, to prove the allegations in his answer, offered in
evidence the following:
1.
Tax Declaration No. A-11698 in the name of Felicisimo Oriol, which cancels
Tax Declaration 8103; DIEACH
2.
Tax Declaration No. GRB-01-930 in the name of Felicisimo Oriol which cancels
Tax Declaration No. A-11698;
3.
Deed of Absolute Sale of Portion of Land, dated April 30, 1979, executed by
Jesus Oriol for and in behalf of the spouses Felicisimo Oriol and Concordia BalidaOriol, conveying the one-half (1/2) portion of Lot No. 1959 to the couple Manolito
Occida and Juliana Sambale-Occida who possessed the one-half (1/2) portion and
introduced improvements thereon, such as coconut and caimito trees;
4.
Deed of Relinquishment of Rights of Portion of Land, executed by the spouses
Oriol in favor of the same couple Manolito Occida and Juliana Sambale-Occida, to
further strengthen the transfer of possession and whatever possessory rights the
Oriols had in the lot in question; THADEI
5.
Deed of Absolute Sale of Land executed by Concordia Balida-Oriol with the
conformity of Teodosio Mosquito (another claimant), to prove that the other half of
Lot No. 1959 was sold in 1978 to Mr. and Mrs. Anastacio Terrado whose overseer
allowed Sampayan to enter and occupy the premises;
6.
Protest filed with the CENRO, Agusan del Sur by the vendee Juliana SambaleOccida against the Miscellaneous Sales Application of Cristita Quita;
7.
Affidavit of Dionesia Noynay attesting to the fact that she is residing in Lot
No. 1957, a lot adjacent to the lot in question, since 1960 up to the present. In the
same affidavit, Dionisia claimed that neither Cristita Quita, much less the plaintiffs,
had ever possessed Lot No. 1959. She claimed that it was the Occida couple who
possessed said lot and introduced improvements thereon; and
8.
Affidavit of Juliana Occida and Maria Ybaez to show the impossibility of
plaintiffs' possession of the same lot. aCTADI
Meanwhile, on March 21, 1996, while the case was pending with the MCTC, the
presiding judge thereof personally conducted an ocular inspection of the contested
lot in the presence of the parties and/or their counsels. Among those found in the
area during the inspection are: the house of defendant Sampayan; the dilapidated
house of a certain Peter Siscon; and a portion of the house of Macario Noynay,
husband of Dionisia Noynay, one of Sampayan's witnesses.
Based on his ocular findings, the judge concluded that the improvements he saw in
the premises could never have been introduced by the plaintiffs nor by their mother
Cristita Quita but by the vendees of the same lot. Reproduced by petitioner Jose

Sampayan in the instant petition as well as in the Memorandum he subsequently

filed with this Court, the MCTC judge's findings and observations during the ocular
inspection, about which the herein private respondents took no exception
whatsoever, are hereunder quoted, as follows: AHTICD
"Noted inside the land are the house of the defendant, Cesar Sampayan, of Peter
Siscon, which appears to be dilapidated, and part of the house of Macario Noynay
which encroached to the land in question. Planted on the land are five (5) coconut
trees, fruit bearing, three (3) not fruit bearing coconut trees, and three (3) star
apple or caimito trees. Defendant Sampayan admitted that he started occupying
the land since 1992. It is admitted by the parties during the ocular inspection that
one-half (1/2) portion of the land was bought by a certain Occida from certain Mr.
and Mrs. Felicisimo Oriol.
The findings in the ocular inspection have confirmed the allegation of the defendant
that his predecessors-in-interest have introduced improvements by planting caimito
trees, coconut trees, and others on the land in question.
Nothing can be seen on the land that plaintiffs had once upon a time been in
possession of the land. The allegation that Cristita Quita, the predecessor-in-interest
of the plaintiffs had been in possession of the said property since 1957, openly,
exclusively, continuously, adversely and in the concept of an owner is a naked
claim, unsupported by any evidence. ADHaTC
Clearly, from the appearance of the improvements introduced by the predecessorsin-interest of the defendant, it is showed that they have been in possession of the
land for more than one(1) year. Hence, the action of the plaintiffs, if any, is accion
publiciana or plenaria de possession" 1 (Emphasis supplied).
In time, the MCTC rendered judgment dismissing the complaint "for lack of merit".
Therefrom, the plaintiffs appealed to the Regional Trial Court (RTC) at Agusan del
Sur, which appeal was raffled to Branch VII thereof. In a decision dated December 5,
1996, said court reversed that of the MCTC, taking note of the fact that Cristita
Quita was among the oppositors in Cadastral Case No. 149 and that she filed a
Miscellaneous Sales Application over the lot. On the basis of such finding, the RTC
concluded that it was Cristita Quita, predecessor-in-interest of the herein private
respondents, who was in actual prior physical possession of Lot No. 1959. cIECTH
Unable to accept the RTC judgment, Sampayan went to the Court of Appeals on a
petition for review, thereat docketed as CA-G.R. SP No. 43557.
As stated at the threshold hereof, the Court of Appeals, in the herein assailed
Decision dated May 16, 2002, 2 denied Sampayan's petition. His motion for
reconsideration having been similarly denied by that court in its Resolution of

November 7, 2002, 3 Sampayan is now with us via the present recourse, it being his
submissions
"I.
THAT THE COURT OF APPEALS ERRED IN RULING THAT THE MUNICIPAL CIRCUIT
TRIAL COURT OF BAYUGAN, AGUSAN DEL SUR, HAS JURISDICTION OVER THE CASE,
CONSIDERING THAT DURING THE HEARING THEREOF IT WAS FOUND OUT BY THE
SAID MUNICIPAL COURT THAT ACCION PUBLICIANA OR PLENARIA DE POSESION, AND
NOT FORCIBLE ENTRY, IS THE PROPER ACTION; EDcIAC
II.
THAT THE CONCLUSION OF THE HONORABLE COURT OF APPEALS THAT PRIVATE
RESPONDENTS HAVE BEEN IN PRIOR ACTUAL POSSESSION IS CONTRADICTED BY
EVIDENCE ON RECORD, AND CONSIDERING THAT THE POSSESSION TO BE LEGALLY
SUFFICIENT, CONSIST (SIC) IN THE EXERCISE OF DOMINIUM OVER IT, SUCH AS
FENCING, CULTIVATING OR OTHER UNMISTAKABLE ACTS OF EXCLUSIVE CUSTODY
AND CONTROL FACTS WHICH THE PRIVATE RESPONDENTS HAVE NEVER DONE
IS CONTRARY TO LAW". 4
In the main, petitioner maintains that based on the pieces of evidence on record, he
had sufficiently proven his prior physical possession of the subject lot. Upon this
premise, he argues that private respondents' complaint for forcible entry has no leg
to stand on, adding that the proper remedy available to the latter is accion
publiciana or plenaria de posesion which falls under the original jurisdiction of
Regional Trial Courts and not of Municipal Circuit Trial Courts. SAHEIc
As we see it, the arguments put forward by the petitioner crystallize to one pivotal
question: will the complaint for forcible entry in this case prosper? To resolve this,
however, we must first determine as to who between the herein parties was in prior
actual physical possession of the subject lot at the time the complaint was filed in
the MCTC. For, as we have said in Gaza vs. Lim 5 ,
". . . In an action for forcible entry, the plaintiff must prove that he was in prior
possession of the land or building and that he was deprived thereof by means of
force, intimidation, threat, strategy or stealth. . . ."
We emphasize, absence of prior physical possession by the plaintiff in a forcible
entry case warrants the dismissal of his complaint. ISaCTE
Undoubtedly, the issue of prior physical possession is one of fact, and settled is the
rule that this Court is not a trier of facts and does not normally embark on a reexamination of the evidence adduced by the parties during trial. Of course, the rule
admits of exceptions. So it is that in Insular Life Assurance Company, Ltd. vs. CA, 6
we wrote:

"[i]t is a settled rule that in the exercise of the Supreme Court's power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of
the evidence presented by the contending parties' during the trial of the case
considering that the findings of facts of the CA are conclusive and binding on the
Court. However, the Court had recognized several exceptions to this rule, to wit: (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." cHSIDa
To our mind, exceptions (5) and (11) are present in this case.
However, before delving into the question of who as between the petitioner and
private respondents had prior physical possession of the subject lot, we deem it
best to first resolve the issue of whether or not the MCTC had jurisdiction over the
complaint filed in this case, an issue also raised by the petitioner.
Relying on the conclusion of the MCTC that private respondents' proper remedy is
accion publiciana or plenaria de posesion, and not forcible entry, petitioner would
deny the MCTC's jurisdiction over the case.
Petitioner is in error. aEcHCD
In Sarmiento vs. CA 7 , we held:
"[t]o give the court jurisdiction to effect the ejectment of an occupant or deforciant
on the land, it is necessary that the complaint should embody such a statement of
facts as brings the party clearly within the class of cases for which the statutes
provide a remedy, as these proceedings are summary in nature. The complaint
must show enough on its face to give the court jurisdiction without resort to parol
testimony. The jurisdictional facts must appear on the face of the complaint. . . ."
Clear it is from the above that for the MCTC to acquire jurisdiction over a forcible
entry case, it is enough that the complaint avers the jurisdictional facts, i.e. that the
plaintiff had prior physical possession and that he was deprived thereof by the
defendant through force, intimidation, threats, strategy and stealth. 8 The

complaint in this case makes such an averment. Hence, the irrelevant circumstance
that the evidence adduced during the hearing rendered improper an action for
forcible entry is of no moment and cannot deprive the MCTC of its jurisdiction over
the case. The MCTC continues to have that jurisdiction. TASCEc
We shall now address the more decisive question of prior physical possession.
After a careful evaluation of the evidence at hand, we find for the petitioner.
To begin with, we are at once confronted by the uncontested findings of the MCTC
judge himself during his ocular inspection of the premises in dispute that what he
saw thereat "confirmed the allegations of the defendant [now petitioner Sampayan]
that his predecessors-in-interest have introduced improvements by planting caimito
trees, coconut trees, and others on the land in question", adding that "[N]othing can
be seen on the land that plaintiff had once upon a time been in possession of the
land", and categorically stating that "[T]he allegation that Cristita Quita, the
predecessor-in-interest of the plaintiffs had been in possession of the said property
since 1957, openly, exclusively, continuously, adversely and in the concept of an
owner is a naked claim, unsupported by any evidence". aETAHD
Then, too, there is the sworn affidavit of Dionesia Noynay to the effect that she had
been residing since 1960 onward on Lot No. 1957, the lot adjacent to Lot No. 1959,
and that neither the private respondents nor their mother had ever possessed Lot
No. 1959. Coming as it does from an immediate neighbor, Dionesia's statement
commands great weight and respect. Incidentally, the MCTC judge himself found
during the ocular inspection that a portion of the house of Macario Noynay, husband
of Dionesia, protruded on Lot No. 1959.
We note that in the herein assailed decision, the Court of Appeals attached much
significance to the fact that private respondents' mother Cristita Quita was an
oppositor in Cadastral Case No. 149. We rule and so hold that the mother's being an
oppositor in said cadastral case does not, by itself, establish prior physical
possession because not all oppositors in cadastral cases are actual possessors of
the lots or lands subject thereof. HaSEcA
WHEREFORE, the instant petition is hereby GRANTED and the Decision and
Resolution, respectively dated May 16, 2002 and November 7, 2002, of the Court of
Appeals REVERSED and SET ASIDE.
SO ORDERED.

[G.R. No. 194880. June 20, 2012.]

REPUBLIC OF THE PHILIPPINES and NATIONAL POWER CORPORATION, both
represented by the PRIVATIZATION MANAGEMENT OFFICE, petitioners, vs. SUNVAR
REALTY DEVELOPMENT CORPORATION, respondent.
DECISION
SERENO, J p:
This is a Rule 45 Petition questioning the Decision of the Regional Trial Court (RTC) of
Makati City, which ordered the dismissal of the Complaint for unlawful detainer filed
by petitioners herein with the Metropolitan Trial Court.
Petitioners Republic of the Philippines (Republic) and National Power Corporation
(NPC) are registered co-owners of several parcels of land located along Pasong Tamo
Extension and Vito Cruz in Makati City, and covered by four Transfer Certificates of
Title (TCTs). 1 The main subject matter of the instant Petition is one of these four
parcels of land covered by TCT No. 458365, with an area of approximately 22,294
square meters (hereinafter, the subject property). Eighty percent (80%) of the
subject property is owned by petitioner Republic, while the remaining twenty
percent (20%) belongs to petitioner NPC. 2 Petitioners are being represented in this
case by the Privatization Management Office (PMO), which is the agency tasked with
the administration and disposal of government assets. 3 Meanwhile, respondent
Sunvar Realty Development Corporation (Sunvar) occupied the subject property by
virtue of sublease agreements, which had in the meantime expired.
The factual antecedents of the case are straightforward. On 26 December 1977, 4
petitioners leased the four parcels of land, including the subject property, to the
Technology Resource Center Foundation, Inc., (TRCFI) for a period of 25 years
beginning 01 January 1978 and ending on 31 December 2002. 5 Under the Contract
of Lease (the main lease contract), petitioners granted TRCFI the right to sublease
any portion of the four parcels of land. 6 aATHES
Exercising its right, TRCFI consequently subleased a majority of the subject property
to respondent Sunvar through several sublease agreements (the sublease
agreements). 7 Although these agreements commenced on different dates, all of
them contained common provisions on the terms of the sublease and were
altogether set to expire on 31 December 2002, the expiration date of TRCFI's main
lease contract with petitioners, but subject to renewal at the option of respondent: 8
The term of the sublease shall be for an initial period of [variable] years and
[variable] months commencing on [variable], renewable for another twenty-five (25)
years at SUNVAR's exclusive option. 9
According to petitioners, in all the sublease agreements, respondent Sunvar agreed
"to return or surrender the subleased land, without any delay whatsoever upon the

termination or expiration of the sublease contract or any renewal or extension

thereof." 10
During the period of its sublease, respondent Sunvar introduced useful
improvements, consisting of several commercial buildings, and leased out the
spaces therein. 11 It also profitably utilized the other open spaces on the subject
property as parking areas for customers and guests. 12 AICDSa
In 1987, following a reorganization of the government, TRCFI was dissolved. In its
stead, the Philippine Development Alternatives Foundation (PDAF) was created,
assuming the functions previously performed by TRCFI. 13
On 26 April 2002, less than a year before the expiration of the main lease contract
and the sublease agreements, respondent Sunvar wrote to PDAF as successor of
TRCFI. Respondent expressed its desire to exercise the option to renew the sublease
over the subject property and proposed an increased rental rate and a renewal
period of another 25 years. 14 On even date, it also wrote to the Office of the
President, Department of Environment and Natural Resources and petitioner NPC.
The letters expressed the same desire to renew the lease over the subject property
under the new rental rate and renewal period. 15
On 10 May 2002, PDAF informed respondent that the notice of renewal of the lease
had already been sent to petitioners, but that it had yet to receive a response. 16 It
further explained that the proposal of respondent for the renewal of the sublease
could not yet be acted upon, and neither could the proposed rental payments be
accepted. 17 Respondent acknowledged receipt of the letter and requested PDAF to
apprise the former of any specific actions undertaken with respect to the said lease
arrangement over the subject property. 18
On 03 June 2002, six months before the main contract of lease was to expire,
petitioner NPC through Atty. Rainer B. Butalid, Vice-President and General
Counsel notified PDAF of the former's decision not to renew the contract of lease.
19 In turn, PDAF notified respondent of NPC's decision. 20
On the other hand, petitioner Republic through then Senior Deputy Executive
Secretary Waldo Q. Flores likewise notified PDAF of the former's decision not to
renew the lease contract. 21 The Republic reasoned that the parties had earlier
agreed to shorten the corporate life of PDAF and to transfer the latter's assets to the
former for the purpose of selling them to raise funds. 22 On 25 June 2002, PDAF
duly informed respondent Sunvar of petitioner Republic's decision not to renew the
lease and quoted the Memorandum of Senior Deputy Executive Secretary Flores. 23
CaASIc
On 31 December 2002, the main lease contract with PDAF, as well as its sublease
agreements with respondent Sunvar, all expired. Hence, petitioners recovered from
PDAF all the rights over the subject property and the three other parcels of land.

Thereafter, petitioner Republic transferred the subject property to the PMO for
disposition. Nevertheless, respondent Sunvar continued to occupy the property.
On 22 February 2008, or six years after the main lease contract expired, petitioner
Republic, through the Office of the Solicitor General (OSG), advised respondent
Sunvar to completely vacate the subject property within thirty (30) days. 24 The
latter duly received the Notice from the OSG through registered mail, 25 but failed
to vacate and remained on the property. 26
On 03 February 2009, respondent Sunvar received from respondent OSG a final
notice to vacate within 15 days. 27 When the period lapsed, respondent Sunvar
again refused to vacate the property and continued to occupy it.
On 02 April 2009, the PMO issued an Inspection and Appraisal Report to determine
the fair rental value of the subject property and petitioners' lost income a loss
arising from the refusal of respondent Sunvar to vacate the property after the
expiration of the main lease contract and sublease agreements. 28 Using the
market comparison approach, the PMO determined that the fair rental value of the
subject property was P10,364,000 per month, and that respondent Sunvar owed
petitioners a total of P630,123,700 from 01 January 2002 to 31 March 2009. 29
HAaDTE
On 23 July 2009, petitioners filed the Complaint dated 26 May 2009 for unlawful
detainer with the Metropolitan Trial Court (MeTC) of Makati City. Petitioners prayed
that respondent Sunvar be ordered to vacate the subject property and to pay
damages for the illegal use and lost income owing to them:
WHEREFORE, PREMISES CONSIDERED, it is most respectfully prayed that after
proper proceedings, judgment be rendered:
1.
Ordering defendant SUNVAR REALTY DEVELOPMENT CORPORATION and all
persons, natural and juridical, claiming rights under it, to vacate the subject
property and peacefully surrender the same, with the useful improvements therein,
to the plaintiffs or to their authorized representative; and
2.
Ordering defendant SUNVAR REALTY DEVELOPMENT CORPORATION to pay
plaintiffs damages in the amount of SIX HUNDRED THIRTY MILLION ONE HUNDRED
TWENTY THREE THOUSAND SEVEN HUNDRED PESOS (P630,123,700.00) for the
illegal and unauthorized use and occupation of the subject property from January 1,
2003 to March 31, 2009, and the amount of TEN MILLION THREE HUNDRED SIXTYFOUR THOUSAND PESOS (P10,364,000.00) per month from April 1, 2008 until the
subject property, together with its improvements, are completely vacated and
peacefully surrendered to the plaintiffs or to their authorized representative. 30
Respondent Sunvar moved to dismiss the Complaint and argued that the allegations
of petitioners in the Complaint did not constitute an action for unlawful detainer,

since no privity of contract existed between them. 31 In the alternative, it also

argued that petitioners' cause of action was more properly an accion publiciana,
which fell within the jurisdiction of the RTC, and not the MeTC, considering that the
petitioners' supposed dispossession of the subject property by respondent had
already lasted for more than one year. DHCSTa
In its Order dated 16 September 2009, the MeTC denied the Motion to Dismiss and
directed respondent Sunvar to file an answer to petitioners' Complaint. 32 The lower
court likewise denied the Motion for Reconsideration 33 filed by respondent. 34
Respondent later on filed its Answer 35 to the Complaint. 36
Despite the filing of its Answer in the summary proceedings for ejectment,
respondent Sunvar filed a Rule 65 Petition for Certiorari with the RTC of Makati City
to assail the denial by the MeTC of respondent's Motion to Dismiss. 37
In answer to the Rule 65 Petition of respondent, petitioners placed in issue the
jurisdiction of the RTC and reasoned that the Rules on Summary Procedure expressly
prohibited the filing of a petition for certiorari against the interlocutory orders of the
MeTC. 38 Hence, they prayed for the outright dismissal of the certiorari Petition of
respondent Sunvar.
The RTC denied the motion for dismissal and ruled that extraordinary circumstances
called for an exception to the general rule on summary proceedings. 39 Petitioners
filed a Motion for Reconsideration, 40 which was subsequently denied by the RTC.
41 Hence, the hearing on the certiorari Petition of respondent proceeded, and the
parties filed their respective Memoranda. 42
In the assailed Order dated 01 December 2010, which discussed the merits of the
certiorari Petition, the RTC granted the Rule 65 Petition and directed the MeTC to
dismiss the Complaint for unlawful detainer for lack of jurisdiction. 43 The RTC
reasoned that the one-year period for the filing of an unlawful detainer case was
reckoned from the expiration of the main lease contract and the sublease
agreements on 31 December 2002. Petitioners should have then filed an accion
publiciana with the RTC in 2009, instead of an unlawful detainer suit. cAHDES
Hence, the instant Rule 45 Petition filed by petitioners. 44
I
Petitioners' Resort to a Rule 45 Petition
Before the Court proceeds with the legal questions in this case, there are procedural
issues that merit preliminary attention.
Respondent Sunvar argued that petitioners' resort to a Rule 45 Petition for Review
on Certiorari before this Court is an improper mode of review of the assailed RTC
Decision. Allegedly, petitioners should have availed themselves of a Rule 65 Petition

instead, since the RTC Decision was an order of dismissal of the Complaint, from
which no appeal can be taken except by a certiorari petition.
The Court is unconvinced of the arguments of respondent Sunvar and holds that the
resort by petitioners to the present Rule 45 Petition is perfectly within the bounds of
our procedural rules.
As respondent Sunvar explained, no appeal may be taken from an order of the RTC
dismissing an action without prejudice, 45 but the aggrieved party may file a
certiorari petition under Rule 65. 46 Nevertheless, the Rules do not prohibit any of
the parties from filing a Rule 45 Petition with this Court, in case only questions of
law are raised or involved. 47 This latter situation was one that petitioners found
themselves in when they filed the instant Petition to raise only questions of law.
AcaEDC
In Republic v. Malabanan, 48 the Court clarified the three modes of appeal from
decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under
Rule 41, whereby judgment was rendered in a civil or criminal action by the RTC in
the exercise of its original jurisdiction; (2) by a petition for review under Rule 42,
whereby judgment was rendered by the RTC in the exercise of its appellate
jurisdiction; and (3) by a petition for review on certiorari before the Supreme Court
under Rule 45. "The first mode of appeal is taken to the [Court of Appeals] on
questions of fact or mixed questions of fact and law. The second mode of appeal is
brought to the CA on questions of fact, of law, or mixed questions of fact and law.
The third mode of appeal is elevated to the Supreme Court only on questions of
law." 49 (Emphasis supplied.)
There is a question of law when the issue does not call for an examination of the
probative value of the evidence presented or of the truth or falsehood of the facts
being admitted, and the doubt concerns the correct application of law and
jurisprudence on the matter. 50 The resolution of the issue must rest solely on what
the law provides on the given set of circumstances. 51
In the instant case, petitioners raise only questions of law with respect to the
jurisdiction of the RTC to entertain a certiorari petition filed against the interlocutory
order of the MeTC in an unlawful detainer suit. At issue in the present case is the
correct application of the Rules on Summary Procedure; or, more specifically,
whether the RTC violated the Rules when it took cognizance and granted the
certiorari petition against the denial by the MeTC of the Motion to Dismiss filed by
respondent Sunvar. This is clearly a question of law that involves the proper
interpretation of the Rules on Summary Procedure. Therefore, the instant Rule 45
Petition has been properly lodged with this Court. cTCADI
II
Propriety of a Rule 65 Petition in Summary Proceedings

Proceeding now to determine that very question of law, the Court finds that it was
erroneous for the RTC to have taken cognizance of the Rule 65 Petition of
respondent Sunvar, since the Rules on Summary Procedure expressly prohibit this
relief for unfavorable interlocutory orders of the MeTC. Consequently, the assailed
RTC Decision is annulled.
Under the Rules on Summary Procedure, a certiorari petition under Rule 65 against
an interlocutory order issued by the court in a summary proceeding is a prohibited
pleading. 52 The prohibition is plain enough, and its further exposition is
unnecessary verbiage. 53 The RTC should have dismissed outright respondent
Sunvar's Rule 65 Petition, considering that it is a prohibited pleading. Petitioners
have already alerted the RTC of this legal bar and immediately prayed for the
dismissal of the certiorari Petition. 54 Yet, the RTC not only refused to dismiss the
certiorari Petition, 55 but even proceeded to hear the Rule 65 Petition on the merits.
Respondent Sunvar's reliance on Bayog v. Natino 56 and Go v. Court of Appeals 57
to justify a certiorari review by the RTC owing to "extraordinary circumstances" is
misplaced. In both cases, there were peculiar and specific circumstances that
justified the filing of the mentioned prohibited pleadings under the Revised Rules on
Summary Procedure conditions that are not availing in the case of respondent
Sunvar. IDSaEA
In Bayog, Alejandro Bayog filed with the Municipal Circuit Trial Court (MCTC) of
Patnongon-Bugasong-Valderama, Antique an ejectment case against Alberto
Magdato, an agricultural tenant-lessee who had built a house over his property.
When Magdato, an illiterate farmer, received the Summons from the MCTC to file his
answer within 10 days, he was stricken with pulmonary tuberculosis and was able to
consult a lawyer in San Jose, Antique only after the reglementary period. Hence,
when the Answer of Magdato was filed three days after the lapse of the 10-day
period, the MCTC ruled that it could no longer take cognizance of his Answer and,
hence, ordered his ejectment from Bayog's land. When his house was demolished in
January 1994, Magdato filed a Petition for Relief with the RTC-San Jose, Antique,
claiming that he was a duly instituted tenant in the agricultural property, and that
he was deprived of due process. Bayog, the landowner, moved to dismiss the
Petition on the ground of lack of jurisdiction on the part of the RTC, since a petition
for relief from judgment covering a summary proceeding was a prohibited pleading.
The RTC, however, denied his Motion to Dismiss and remanded the case to the
MCTC for proper disposal.
In resolving the Rule 65 Petition, we ruled that although a petition for relief from
judgment was a prohibited pleading under the Revised Rules on Summary
Procedure, the Court nevertheless allowed the filing of the Petition pro hac vice,
since Magdato would otherwise suffer grave injustice and irreparable injury:
TIaCAc

We disagree with the RTC's holding that a petition for relief from judgment (Civil
Case No. 2708) is not prohibited under the Revised Rule on Summary Procedure, in
light of the Jakihaca ruling. When Section 19 of the Revised Rule on Summary
Procedure bars a petition for relief from judgment, or a petition for certiorari,
mandamus, or prohibition against any interlocutory order issued by the court, it has
in mind no other than Section 1, Rule 38 regarding petitions for relief from
judgment, and Rule 65 regarding petitions for certiorari, mandamus, or prohibition,
of the Rules of Court, respectively. These petitions are cognizable by Regional Trial
Courts, and not by Metropolitan Trial Courts, Municipal Trial Courts, or Municipal
Circuit Trial Courts. If Section 19 of the Revised Rule on Summary Procedure and
Rules 38 and 65 of the Rules of Court are juxtaposed, the conclusion is inevitable
that no petition for relief from judgment nor a special civil action of certiorari,
prohibition, or mandamus arising from cases covered by the Revised Rule on
Summary Procedure may be filed with a superior court. This is but consistent with
the mandate of Section 36 of B.P. Blg. 129 to achieve an expeditious and
inexpensive determination of the cases subject of summary procedure.
Nevertheless, in view of the unusual and peculiar circumstances of this case, unless
some form of relief is made available to MAGDATO, the grave injustice and
irreparable injury that visited him through no fault or negligence on his part will only
be perpetuated. Thus, the petition for relief from judgment which he filed may be
allowed or treated, pro hac vice, either as an exception to the rule, or a regular
appeal to the RTC, or even an action to annul the order (decision) of the MCTC of 20
September 1993. As an exception, the RTC correctly held that the circumstances
alleged therein and the justification pleaded worked in favor of MAGDATO, and that
the motion to dismiss Civil Case No. 2708 was without merit. . . . 58 (Emphasis
supplied.) CTEacH
On the other hand, in Go v. Court of Appeals, the Court was confronted with a
procedural void in the Revised Rules of Summary Procedure that justified the resort
to a Rule 65 Petition in the RTC. In that case, the preliminary conference in the
subject ejectment suit was held in abeyance by the Municipal Trial Court in Cities
(MTCC) of Iloilo City until after the case for specific performance involving the same
parties shall have been finally decided by the RTC. The affected party appealed the
suspension order to the RTC. In response, the adverse party moved to dismiss the
appeal on the ground that it concerned an interlocutory order in a summary
proceeding that was not the subject of an appeal. The RTC denied the Motion to
Dismiss and subsequently directed the MTCC to proceed with the hearing of the
ejectment suit, a ruling that was upheld by the appellate court.
In affirming the Decisions of the RTC and CA, the Supreme Court allowed the filing of
a petition for certiorari against an interlocutory order in an ejectment suit,
considering that the affected party was deprived of any recourse to the MTCC's
erroneous suspension of a summary proceeding. Retired Chief Justice Artemio V.
Panganiban eloquently explained the procedural void in this wise:

Indisputably, the appealed [suspension] order is interlocutory, for "it does not
dispose of the case but leaves something else to be done by the trial court on the
merits of the case." It is axiomatic that an interlocutory order cannot be challenged
by an appeal. Thus, it has been held that "the proper remedy in such cases is an
ordinary appeal from an adverse judgment on the merits incorporating in said
appeal the grounds for assailing the interlocutory order. Allowing appeals from
interlocutory orders would result in the 'sorry spectacle' of a case being subject of a
counterproductive ping-pong to and from the appellate court as often as a trial
court is perceived to have made an error in any of its interlocutory rulings. However,
where the assailed interlocutory order is patently erroneous and the remedy of
appeal would not afford adequate and expeditious relief, the Court may allow
certiorari as a mode of redress." ACIESH
Clearly, private respondent cannot appeal the order, being interlocutory. But neither
can it file a petition for certiorari, because ejectment suits fall under the Revised
Rules on Summary Procedure, Section 19(g) of which considers petitions for
certiorari prohibited pleadings:
xxx

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xxx

Based on the foregoing, private respondent was literally caught "between Scylla and
Charybdis" in the procedural void observed by the Court of Appeals and the RTC.
Under these extraordinary circumstances, the Court is constrained to provide it with
a remedy consistent with the objective of speedy resolution of cases.
As correctly held by Respondent Court of Appeals, "the purpose of the Rules on
Summary Procedure is 'to achieve an expeditious and inexpensive determination of
cases without regard to technical rules.' (Section 36, Chapter III, BP Blg. 129)"
Pursuant to this objective, the Rules prohibit petitions for certiorari, like a number of
other pleadings, in order to prevent unnecessary delays and to expedite the
disposition of cases. In this case, however, private respondent challenged the MTCC
order delaying the ejectment suit, precisely to avoid the mischief envisioned by the
Rules.
Thus, this Court holds that in situations wherein a summary proceeding is
suspended indefinitely, a petition for certiorari alleging grave abuse of discretion
may be allowed. Because of the extraordinary circumstances in this case, a petition
for certiorari, in fact, gives spirit and life to the Rules on Summary Procedure. A
contrary ruling would unduly delay the disposition of the case and negate the
rationale of the said Rules. 59 (Emphasis supplied.) aDSHCc
Contrary to the assertion of respondent Sunvar, the factual circumstances in these
two cases are not comparable with respondents' situation, and our rulings therein
are inapplicable to its cause of action in the present suit. As this Court explained in
Bayog, the general rule is that no special civil action for certiorari may be filed with
a superior court from cases covered by the Revised Rules on Summary Procedure.

Respondent Sunvar filed a certiorari Petition in an ejectment suit pending before the
MeTC. Worse, the subject matter of the Petition was the denial of respondent's
Motion to Dismiss, which was necessarily an interlocutory order, which is generally
not the subject of an appeal. No circumstances similar to the situation of the
agricultural tenant-lessee in Bayog are present to support the relaxation of the
general rule in the instant case. Respondent cannot claim to have been deprived of
reasonable opportunities to argue its case before a summary judicial proceeding.
Moreover, there exists no procedural void akin to that in Go v. Court of Appeals that
would justify respondent's resort to a certiorari Petition before the RTC. When
confronted with the MeTC's adverse denial of its Motion to Dismiss in the ejectment
case, the expeditious and proper remedy for respondent should have been to
proceed with the summary hearings and to file its answer. Indeed, its resort to a
certiorari Petition in the RTC over an interlocutory order in a summary ejectment
proceeding was not only prohibited. The certiorari Petition was already a superfluity
on account of respondent's having already taken advantage of a speedy and
available remedy by filing an Answer with the MeTC. HCaDET
Respondent Sunvar failed to substantiate its claim of extraordinary circumstances
that would constrain this Court to apply the exceptions obtaining in Bayog and Go.
The Court hesitates to liberally dispense the benefits of these two judicial
precedents to litigants in summary proceedings, lest these exceptions be regularly
abused and freely availed of to defeat the very goal of an expeditious and
inexpensive determination of an unlawful detainer suit. If the Court were to relax
the interpretation of the prohibition against the filing of certiorari petitions under
the Revised Rules on Summary Procedure, the RTCs may be inundated with similar
prayers from adversely affected parties questioning every order of the lower court
and completely dispensing with the goal of summary proceedings in forcible entry
or unlawful detainer suits.
III
Reckoning the One-Year Period in Unlawful Detainer Cases
We now come to another legal issue underlying the present Petition whether the
Complaint filed by petitioners is properly an action for unlawful detainer within the
jurisdiction of the MeTC or an accion publiciana lodged with the RTC. At the heart of
the controversy is the reckoning period of the one-year requirement for unlawful
detainer suits. aDACcH
Whether or not petitioners' action for unlawful detainer was brought within one year
after the unlawful withholding of possession will determine whether it was properly
filed with the MeTC. If, as petitioners argue, the one-year period should be counted
from respondent Sunvar's receipt on 03 February 2009 of the Final Notice to Vacate,
then their Complaint was timely filed within the one-year period and appropriately
taken cognizance of by the MeTC. However, if the reckoning period is pegged from

the expiration of the main lease contract and/or sublease agreement, then
petitioners' proper remedy should have been an accion publiciana to be filed with
the RTC.
The Court finds that petitioners correctly availed themselves of an action for
unlawful detainer and, hence, reverses the ruling of the RTC.
Under the Rules of Court, lessors against whom possession of any land is unlawfully
withheld after the expiration of the right to hold possession may by virtue of any
express or implied contract, and within one year after the unlawful deprivation
bring an action in the municipal trial court against the person unlawfully withholding
possession, for restitution of possession with damages and costs. 60 Unless
otherwise stipulated, the action of the lessor shall commence only after a demand
to pay or to comply with the conditions of the lease and to vacate is made upon the
lessee; or after a written notice of that demand is served upon the person found on
the premises, and the lessee fails to comply therewith within 15 days in the case of
land or 5 days in the case of buildings. 61
In Delos Reyes v. Spouses Odenes, 62 the Court recently defined the nature and
scope of an unlawful detainer suit, as follows: HAECID
Unlawful detainer is an action to recover possession of real property from one who
illegally withholds possession after the expiration or termination of his right to hold
possession under any contract, express or implied. The possession by the defendant
in unlawful detainer is originally legal but became illegal due to the expiration or
termination of the right to possess. The proceeding is summary in nature,
jurisdiction over which lies with the proper MTC or metropolitan trial court. The
action must be brought up within one year from the date of last demand, and the
issue in the case must be the right to physical possession. (Emphasis supplied.)
Hence, a complaint sufficiently alleges a cause of action for unlawful detainer if it
states the following elements:
1.
Initially, the possession of the property by the defendant was by contract with
or by tolerance of the plaintiff.
2.
Eventually, the possession became illegal upon the plaintiff's notice to the
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 latter's enjoyment.
4.
Within one year from the making of the last demand on the defendant to
vacate the property, the plaintiff instituted the Complaint for ejectment. 63 TCaSAH
"On the other hand, accion publiciana is the plenary action to recover the right of
possession which should be brought in the proper regional trial court when

dispossession has lasted for more than one year. It is an ordinary civil proceeding to
determine the better right of possession of realty independently of title. In other
words, if at the time of the filing of the complaint, more than one year had elapsed
since defendant had turned plaintiff out of possession or defendant's possession
had become illegal, the action will be, not one of forcible entry or illegal detainer,
but an accion publiciana." 64
There are no substantial disagreements with respect to the first three requisites for
an action for unlawful detainer. Respondent Sunvar initially derived its right to
possess the subject property from its sublease agreements with TRCFI and later on
with PDAF. However, with the expiration of the lease agreements on 31 December
2002, respondent lost possessory rights over the subject property. Nevertheless, it
continued occupying the property for almost seven years thereafter. It was only on
03 February 2009 that petitioners made a final demand upon respondent Sunvar to
turn over the property. What is disputed, however, is the fourth requisite of an
unlawful detainer suit.
The Court rules that the final requisite is likewise availing in this case, and that the
one-year period should be counted from the final demand made on 03 February
2009. cDCSET
Contrary to the reasoning of the RTC, 65 the one-year period to file an unlawful
detainer case is not counted from the expiration of the lease contract on 31
December 2002. Indeed, the last demand for petitioners to vacate is the reckoning
period for determining the one-year period in an action for unlawful detainer. "Such
one year period should be counted from the date of plaintiff's last demand on
defendant to vacate the real property, because only upon the lapse of that period
does the possession become unlawful." 66
In case several demands to vacate are made, the period is reckoned from the date
of the last demand. 67 In Leonin v. Court of Appeals, 68 the Court, speaking through
Justice Conchita Carpio Morales, reckoned the one-year period to file the unlawful
detainer Complaint filed on 25 February 1997 from the latest demand letter
dated 24 October 1996, and not from the earlier demand letter dated 03 July 1995:
Prospero Leonin (Prospero) and five others were co-owners of a 400-square meter
property located at K-J Street, East Kamias, Quezon City whereon was constructed a
two-storey house and a three-door apartment identified as No. 1-A, B, and C.
Prospero and his co-owners allowed his siblings, herein petitioners, to occupy
Apartment C without paying any rentals.
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Petitioners further contend that respondent's remedy is accion publiciana because

their possession is not de facto, they having been authorized by the true and lawful

owners of the property; and that one year had elapsed from respondent's demand
given on "July 3, 1995" when the unlawful detainer complaint was filed. DTAcIa
The petition fails.
Contrary to petitioners' contention, the allegations in the complaint make out a case
for unlawful detainer. Thus, respondent alleged, inter alia, that she is the registered
owner of the property and that petitioners, who are tenants by tolerance, refused to
vacate the premises despite the notice to vacate sent to them.
Likewise, contrary to petitioners' contention, the one-year period for filing a
complaint for unlawful detainer is reckoned from the date of the last demand, in this
case October 24, 1996, the reason being that the lessor has the right to waive his
right of action based on previous demands and let the lessee remain meanwhile in
the premises. Thus, the filing of the complaint on February 25, 1997 was well within
the one year reglementary period. 69 (Emphasis supplied.)
From the time that the main lease contract and sublease agreements expired (01
January 2003), respondent Sunvar no longer had any possessory right over the
subject property. Absent any express contractual renewal of the sublease
agreement or any separate lease contract, it illegally occupied the land or, at best,
was allowed to do so by mere tolerance of the registered owners petitioners
herein. Thus, respondent Sunvar's possession became unlawful upon service of the
final notice on 03 February 2009. Hence, as an unlawful occupant of the land of
petitioners, and without any contract between them, respondent is "necessarily
bound by an implied promise" that it "will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against them." 70 Upon service
of the final notice of demand, respondent Sunvar should have vacated the property
and, consequently, petitioners had one year or until 02 February 2010 in which to
resort to the summary action for unlawful detainer. In the instant case, their
Complaint was filed with the MeTC on 23 July 2009, which was well within the oneyear period.
The Court is aware that petitioners had earlier served a Notice to Vacate on 22
February 2008, which could have possibly tolled the one-year period for filing an
unlawful detainer suit. Nevertheless, they can be deemed to have waived their right
of action against respondent Sunvar and continued to tolerate its occupation of the
subject property. That they sent a final Notice to Vacate almost a year later gave
respondent another opportunity to comply with their implied promise as occupants
by mere tolerance. Consequently, the one-year period for filing a summary action
for unlawful detainer with the MeTC must be reckoned from the latest demand to
vacate. ASHaTc
In the past, the Court ruled that subsequent demands that are merely in the nature
of reminders of the original demand do not operate to renew the one-year period
within which to commence an ejectment suit, considering that the period will still be

reckoned from the date of the original demand. 71 If the subsequent demands were
merely in the nature of reminders of the original demand, the one-year period to
commence an ejectment suit would be counted from the first demand. 72 However,
respondent failed to raise in any of the proceedings below this question of fact as to
the nature of the second demand issued by the OSG. It is now too late in the
proceedings for them to argue that the 2009 Notice to Vacate was a mere
reiteration or reminder of the 2008 Notice to Vacate. In any event, this factual
determination is beyond the scope of the present Rule 45 Petition, which is limited
to resolving questions of law.
The Court notes that respondent Sunvar has continued to occupy the subject
property since the expiration of its sublease on 31 December 2002. The factual
issue of whether respondent has paid rentals to petitioners from the expiration of
the sublease to the present was never raised or sufficiently argued before this
Court. Nevertheless, it has not escaped the Court's attention that almost a decade
has passed without any resolution of this controversy regarding respondent's
possession of the subject property, contrary to the aim of expeditious proceedings
under the Revised Rules on Summary Procedure. With the grant of the instant
Petition and the remand of the case to the MeTC for continued hearing, the Court
emphasizes the duty of the lower court to speedily resolve this matter once and for
all, especially since this case involves a prime property of the government located
in the country's business district and the various opportunities for petitioners to
gain public revenues from the property.
WHEREFORE, the Court GRANTS the Petition for Review on Certiorari dated 14
February 2011, filed by petitioners Republic and National Power Corporation, which
are represented here by the Privatization Management Office. The assailed Decision
dated 01 December 2010 of the Regional Trial Court of Makati City, Branch 134, is
hereby REVERSED and SET ASIDE. The Metropolitan Trial Court of Makati City,
Branch 63, is DIRECTED to proceed with the summary proceedings for the unlawful
detainer case in Civil Case No. 98708. ESacHC
SO ORDERED.

[G.R. No. 116192. November 16, 1995.]

EUFEMIA SARMIENTO, petitioner, vs. COURT OF APPEALS and GENEROSA S. CRUZ,
respondents.
De Guzman, Florentino, Celis, Moncupa & Torio for petitioner.
David G. Paguio for private respondent.
SYLLABUS
1.
REMEDIAL LAW; JURISDICTION; AVERMENTS SET FORTH IN THE COMPLAINT
DETERMINE JURISDICTION. Well-settled is the rule that the jurisdiction of the
court, as well as the nature of the action, are determined by the averments in the
complaint. Accordingly, the issue in the instant case can only be properly resolved
by an examination and evaluation of the allegations in the complaint in Civil Case
No. 899 of said trial court.
2.
ID.; SPECIAL CIVIL ACTIONS; FORCIBLE ENTRY AND UNLAWFUL DETAINER;
DISTINGUISHED. Forcible entry and unlawful detainer cases are two distinct
actions defined in Section 1, Rule 70 of the Rules of Court. In forcible entry, one is
deprived of physical possession of land or building by means of force, intimidation,
threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds
possession thereof after the expiration or termination of his right to hold possession
under any contract, express or implied. In forcible entry, the possession is illegal
from the beginning and the basic inquiry centers on who has the prior possession de
facto. In unlawful detainer, the possession was originally lawful but became
unlawful by the expiration or termination of the right to possess, hence the issue of
rightful possession is decisive for, in such action, the defendant is in actual
possession and the plaintiff's cause of action is the termination of the defendant's
right to continue in possession. CDta
3.
ID.; ID.; ID.; NATURE OF ENTRY INTO THE LAND DETERMINES THE PROPER
CAUSE OF ACTION. What determines the cause of action is the nature of
defendant's entry into the land. If the entry is illegal, then the action which may be
filed against the intruder within one year therefrom is forcible entry. If, on the other
hand, the entry is legal but the possession thereafter became illegal, the case is one
unlawful detainer which must be filed within one year from the date of the last
demand.
4.
ID.; ID.; ID.; SUMMARY NATURE; REASON THEREFOR. First. Forcible entry
into the land is an open challenge to the right of the lawful possessor, the violation
of which right authorizes the speedy redress in the inferior court provided for in the
Rules. If a period of one year from the forcible entry is allowed to lapse before suit is
filed, then the remedy ceases to be speedy and the aggrieved possessor is deemed
to have waived his right to seek relief in the inferior court. Second. If a forcible entry

action in the inferior court is allowed after the lapse of a number of years, then the
result may well be that no action of forcible entry can really prescribe. No matter
how long such defendant is in physical possession, plaintiff will merely make a
demand, bring suit in the inferior court upon a plea of tolerance to prevent
prescription from setting in and summarily throw him out of the land. Such a
conclusion is unreasonable, especially if we bear in mind the postulates that
proceedings of forcible entry and unlawful detainer are summary in nature, and that
the one year time-bar to the suit is but in pursuance of the summary nature of the
action.
5.
ID.; ID.; ID.; JURISDICTIONAL FACTS MUST APPEAR ON THE FACE OF THE
COMPLAINT. To give the court jurisdiction to effect the ejectment of an occupant
or deforciant on the land, it is necessary that the complaint should embody such a
statement of facts as brings the party clearly within the class of cases for which the
statutes provide a remedy, as these proceedings are summary in nature. The
complaint must show enough on its face to give the court jurisdiction without resort
to parol testimony. The jurisdictional facts must appear on the face of the complaint.
When the complaint fails to aver facts constitutive of forcible entry or unlawful
detainer, as where it does not state how entry was effected or how and when
dispossession started, as in the case at bar, the remedy should either be an accion
publiciana or an accion reivindicatoria in the proper regional trial court.
6.
ID.; ID.; ID.; PURPOSE OF THE LAW. We have held that in giving recognition
to the action of forcible entry and unlawful detainer, the purpose of the law is to
protect the person who in fact has actual possession; and in case of a controverted
proprietary right, the law requires the parties to preserve the status quo until one or
the other sees fit to invoke the decision of a court of competent jurisdiction upon
the question of ownership.
DECISION
REGALADO, J p:
The judgment promulgated on February 28, 1994 by respondent Court of Appeals in
CA-G.R. SP No. 32263 1 reversing the decision of the regional trial court, as well as
its resolution of June 29, 1994 denying herein petitioner's motion for
reconsideration, are assailed in this petition for review on certiorari.
This case originated from a complaint for ejectment with damages filed by herein
private respondent Generosa S. Cruz, as plaintiff, against herein petitioner Eufemia
Sarmiento, as defendant, in the Municipal Circuit Trial Court of DinalupihanHermosa, Bataan as Civil Case No. 899, which complaint alleges these material
facts:
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2.
That the plaintiff acquired by purchase a parcel of land known as Lot No. 2-A
of the subd. plan, Psd-03-0345 being a portion of Lot 2, covered by TCT No. T147219, located at Bo. Mabuco, Hermosa, Bataan, containing an area of 280 square
meters, xerox copy of the title is hereto attached as Annex "A" hereof and for
taxation purposes, the same is declared in the name of the plaintiff, xerox copy of
the tax declaration is hereto attached as Annex "B" of this complaint;
3.
That the adjacent lot of plaintiff is still owned by the family of Atty. Gonzalo
Nuguid but the same is being used and occupied by the defendant where a house
was constructed thereon;
4.
That when the plaintiff caused the relocation of her lot herein mentioned, it
was found out by the Geodetic Engineer that the defendant is encroaching on her
lot for about 71 square meters, copy of the relocation sketch by said surveyor is
hereto attached as Annex "C" hereof;
5.
That when the plaintiff talked to the defendant that she would like to remove
the old fence so that she could construct a new fence which will cover the true area
of her property, the defendant vehemently refused to let the plaintiff remov(e) the
said fence and menacingly alleged that if plaintiff remove(d) the said fence to
construct a new one, she would take action against the plaintiff legally or otherwise;
6.
For fear that plaintiff may be charged in court should she insist on removing
the fence encroaching on her property, plaintiff now seeks judicial relief;
7.
That plaintiff refer(red) this matter to the Katarungang Pambarangay of
Mabuco for settlement, however, the efforts of the Lupon Tagapamayapa turned
futile, as evidenced by a certification to file action issued by the Lupon secretary
and attested by the Lupon Chairman, copy of the certification to file action is hereto
attached as Annex "D" hereof;
8.
Plaintiff as much as possible would like to avoid court litigation because she is
poor but nevertheless she consulted the undersigned counsel and a demand letter
was sent to the defendant for conference and/or settlement but the defendant stood
pat that she will not allow the removal of the fence, thus depriving the plaintiff of
the use and possession of the said portion of her lot (71 square meters) which is
being occupied by the defendant for several years, xerox copy of the demand letter
is hereto attached as Annex "E" of this complaint.
9.
That by virtue of the willful refusal of the defendant to allow the plaintiff to
have the fence dismantled and/or to be removed, the plaintiff is deprived of the
possession and she was forced to hire the services of counsel for which she
contracted to pay the sum of P2,000.00 plus acceptance of P1,000.00 until the
termination of this case before this Honorable Court. 2
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On January 21, 1993, the trial court, on motion, issued an order giving the
defendant therein an extension of five days within which to file her answer to the
complaint. 3 This was opposed by the plaintiff therein on the ground that Section
15(e) of the Rule on Summary Procedure does not allow the filing of motions for
extension of time to file pleadings, affidavits or any other papers. 4 Nonetheless,
defendant filed on January 29, 1993 her "Answer with Motion to Dismiss." 5 Plaintiff
filed an ex parte motion reiterating her contention that the filing by defendant of
her aforesaid answer with motion was barred for the reason that her preceding
motion for extension of time to file an answer is a prohibited pleading. 6 On
February 4, 1993, the trial court, finding merit in plaintiff's ex parte motion, ordered
that defendant's answer be stricken from the records for having been filed out of
time. 7 The case was then submitted for decision.
On February 18, 1993, the trial court rendered its decision, with the following
decretal portion:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter:
1.
To vacate the area being encroached (upon) by the defendant and allowing
the plaintiff to remove the old fence permanently and (to) make the necessary
enclosure of the area pertaining to the herein plaintiff containing an area of 280
square meters, more or less;
2.
Ordering the defendant to pay the plaintiff the sum of P1,500.00 as attorney's
fees. No pronouncement as to damages;
3.

To pay the cost(s) of this suit. 8 (Corrections in parentheses supplied.)

Defendant filed a motion for the reconsideration of said judgment, but the same
was denied by the trial court for lack of merit in its order dated March 2, 1993. 9
On appeal to the Regional Trial Court of Dinalupihan Bataan, Branch 5, in Civil Case
No. DH-121-93, defendant assailed the jurisdiction of the court a quo. On June 21,
1993, said lower appellate court rendered judgment, stating in part as follows:
A perusal of the records of the case and the memorandum of appeal of the
adversaries led this court to the opinion that the court a quo did not acquire
jurisdiction to hear, try and decide the instant appealed case based on (the) reason
that the said case should be one of question of ownership or accion rei(vin)dicatoria
rather than that of forcible entry as the(re) was no allegation of prior possession by
the plaintiff (of) the disputed lot as required by law and jurisprudence. Absence of
allegations and proof by the plaintiff in forcible entry of prior possession of the
disputed lot (sic) cannot be said that defendant dispossesses her of the same, thus,
the legal remedy sought by the plaintiff is not the proper one as it should have been

accion publiciana or accion rei(vin)dicatoria, as the case may be, and the forum of
which is the Regional Trial Court.
This Court declines to venture into other issues raised by the defendant/appellant
considering that the resolution on jurisdiction renders the same moot and
academic." 10 (Corrections in parentheses ours.)
Therein plaintiff's motion for reconsideration having been denied in said lower
court's order dated August 12, 1993, 11 she elevated the case to the Supreme
Court through a petition for review on certiorari, purportedly on pure questions of
law. This Court, treating the petition as a special civil action for certiorari, referred
the case to respondent Court of Appeals for proper determination and disposition
pursuant to Section 9(1) of Batas Pambansa Blg. 129. 12
On February 28, 1994, the Court of Appeals rendered judgment in CA-G.R. SP No.
32263 13 reversing the decision of the regional trial court and reinstating that of the
municipal circuit trial court, hence the present petition.
The chief issue for our resolution is whether or not the court of origin had
jurisdiction over the ejectment case. Well-settled is the rule that the jurisdiction of
the court, as well as the nature of the action, are determined by the averments in
the complaint. 14 Accordingly, the issue in the instant case can only be properly
resolved by an examination and evaluation of the allegations in the complaint in
Civil Case No. 899 of said trial court.
A careful reading of the facts averred in said complaint filed by herein private
respondent reveals that the action is neither one of forcible entry nor unlawful
detainer but essentially involves a boundary dispute which must be resolved in an
accion reivindicatoria on the issue of ownership over the disputed 71 square meters
involved.
Forcible entry and unlawfully detainer cases are two distinct actions defined in
Section 1, Rule 70 of the Rules of Court. In forcible entry, one is deprived of physical
possession of land or building by means of force, intimidation, threat, strategy, or
stealth. In unlawful detainer, one unlawfully withholds possession thereof after the
expiration or termination of his right to hold possession under any contract, express
or implied. In forcible entry, the possession is illegal from the beginning and the
basic inquiry centers on who has the prior possession de facto. In unlawful detainer,
the possession was originally lawful but became unlawful by the expiration or
termination of the right to possess, hence the issue of rightful possession is decisive
for, in such action, the defendant is in actual possession and the plaintiff's cause of
action is the termination of the defendant's right to continue in possession. 15
What determines the cause of action in the nature of defendant's entry into the
land. If the entry is illegal, then the action which may be filed against the intruder
within one year therefrom is forcible entry. If, on the other hand, the entry is legal

but the possession thereafter became illegal, the case is one of unlawful detainer
which must be filed within one year from the date of the last demand. 16
In the case at bar, the complaint does not characterize herein petitioner's alleged
entry into the land, that is, whether the same was legal or illegal. It does not state
how petitioner entered upon the land and constructed the house and the fence
thereon. It is also silent on whether petitioner's possession became legal before
private respondent made a demand on her to remove the fence. The complaint
merely avers that the lot being occupied by petitioner is owned by a third person,
not a party to the case, and that said lot is enclosed by a fence which private
respondent claims is an encroachment on the adjacent lot belonging to her.
Furthermore, it is also alleged and admitted in the complaint that the said fence was
already in existence on that lot at the time private respondent bought her own lot
and it was only after a relocation survey was made that it was found out that
petitioner is allegedly encroaching on the lot of the former. Consequently, there is
here no contract, express or implied, between petitioner and private respondent as
would qualify it as a case of unlawful detainer. Neither was it alleged that the
possession of the disputed portion of said lot was acquired by petitioner through
force, intimidation, threat, strategy or stealth to make out a case of forcible entry.
Private respondent cannot now belatedly claim that petitioner's possession of the
controverted portion was by mere tolerance since that fact was never alleged in the
former's basic complaint, and this argument was raised in her later pleadings more
as an afterthought. Also, it would be absurd to argue that private respondent
tolerated a state of affairs of which she was not even then aware. Finally, to
categorize a cause of action as one constitutive of unlawful detainer, plaintiff's
supposed acts of tolerance must have been present right from the start of the
possession which is later sought to be recovered. 17
Indeed, and this was definitely not the situation that obtained in and gave rise to
the ejectment suit, to hold otherwise would espouse a dangerous doctrine, for two
reasons: First. Forcible entry into the land is an open challenge to the right of the
lawful possessor, the violation of which right authorizes the speedy redress in the
inferior court provided for in the Rules. If a period of one year from the forcible entry
is allowed to lapse before suit is filed, then the remedy ceases to be speedy and the
aggrieved possessor is deemed to have waived his right to seek relief in the inferior
court. Second. If a forcible entry action in the inferior court is allowed after the lapse
of a number of years, then the result may well be that no action of forcible entry
can really prescribe. No matter how long such defendant is in physical possession,
plaintiff will merely make a demand, bring suit in the inferior court upon a plea of
tolerance to prevent prescription from setting in and summarily throw him out of
the land. Such a conclusion is unreasonable, especially if we bear in mind the
postulates that proceedings of forcible entry and unlawful detainer are summary in

nature, and that the one year time-bar to the suit is but in pursuance of the
summary nature of the action. 18
To give the court jurisdiction to effect the ejectment of an occupant or deforciant on
the land, it is necessary that the complaint should embody such a statement of
facts as brings the party clearly within the class of cases for which the statutes
provide a remedy, as these proceedings are summary in nature. 19 The complaint
must show enough on its face to give the court jurisdiction without resort to parol
testimony. 20
The jurisdictional facts must appear on the face of the complaint. When the
complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as
where it does not state how entry was effected or how and when dispossession
started, as in the case at bar, the remedy should either be an accion publiciana or
an accion reivindicatoria in the proper regional trial court. 21
If private respondent is indeed the owner of the premises subject of this suit and
she was unlawfully deprived of the real right of possession or the ownership thereof,
she should present her claim before the regional trial court in an accion publiciana
or an accion reivindicatoria, and not before the municipal trial court in a summary
proceeding of unlawful detainer or forcible entry. For even if one is the owner of the
property, the possession thereof cannot be wrested from another who had been in
the physical or material possession of the same for more than one year by resorting
to a summary action for ejectment. This is especially true where his possession
thereof was not obtained through the means or held under the circumstances
contemplated by the rules on summary ejectment.
We have held that in giving recognition to the action of forcible entry and unlawful
detainer, the purpose of the law is to protect the person who in fact has actual
possession; and in case of a controverted propriety right, the law requires the
parties to preserve the status quo until one or the other sees fit to invoke the
decision of a court of competent jurisdiction upon the question of ownership. 22
On the foregoing premises and with these conclusions, it is unnecessary to pass
upon the other issues raised in the petition at bar.
ACCORDINGLY, the instant petition is GRANTED, and the judgment of the Court of
Appeals in CA-G.R. SP No. 32263 is hereby REVERSED and SET ASIDE. The judgment
of the Regional Trial Court of Dinalupihan, Bataan, Branch 5, in Civil Case No. DH121-93 is REINSTATED, without pronouncement as to costs.
SO ORDERED. Cdll
|

[G.R. No. 155849. August 31, 2011.]

LORENZO SHIPPING CORPORATION, OCEANIC CONTAINER LINES, INC., SOLID
SHIPPING LINES CORPORATION, SULPICIO LINES, INC., ET AL., petitioners, vs.
DISTRIBUTION MANAGEMENT ASSOCIATION OF THE PHILIPPINES, LORENZO CINCO,
and CORA CURAY, respondents.
DECISION
BERSAMIN, J p:
The petitioners filed this petition to charge the respondents with indirect contempt
of court for including allegedly contemptuous statements in their so-called Sea
Transport Update concerning the Court's resolutions dated June 5, 2002 and August
12, 2002 issued in G.R. No. 152914 entitled Distribution Management Association of
the Philippines, et al. v. Administrator Oscar Sevilla, Maritime Industry Authority, et
al. TcHDIA
Antecedents
On June 4, 2001, the Maritime Industry Authority (MARINA) issued a LetterResolution, 1 advising respondent Distribution Management Association of the
Philippines (DMAP) that a computation of the required freight rate adjustment by
MARINA was no longer required for freight rates officially considered or declared
deregulated in accordance with MARINA Memorandum Circular No. 153 (MC 153).
For clarity, MARINA issued MC 153 pursuant to Executive Order No. 213 (EO 213)
entitled Deregulating Domestic Shipping Rates promulgated by President Fidel V.
Ramos on November 24, 1994. 2
On July 2, 2001, in order to challenge the constitutionality of EO 213, MC 153, and
the Letter-Resolution dated June 4, 2001, DMAP commenced in the Court of Appeals
(CA) a special civil action for certiorari and prohibition, with prayer for preliminary
mandatory injunction or temporary restraining order (CA-G.R. SP No. 65463). On
November 29, 2001, 3 however, the CA dismissed the petition for certiorari and
prohibition and upheld the constitutionality of EO 213, MC 153, and the LetterResolution dated June 4, 2001. 4 Later, on April 10, 2002, the CA denied DMAP's
motion for reconsideration. 5
DMAP appealed to the Court (G.R. No. 152914), but on June 5, 2002, 6 the Court
denied DMAP's petition for review on certiorari "for petitioners' failure to: (a) take
the appeal within the reglementary period of fifteen (15) days in accordance with
Section 2, Rule 45 in relation to Section 5 (a), Rule 56, in view of the foregoing
denial of petitioners' motion for extension of time to file the petition; and (b) pay
the deposit for sheriff's fee and clerk's commission in the total amount of P202.00 in
accordance with Sections 2 and 3, Rule 45 in relation to Section [c], Rule 56 and
paragraph 1 of Revised Circular No. 1-88 of this Court."

On August 12, 2002, 7 the Court denied with finality DMAP's motion for
reconsideration. IcHTCS
In October 2002, DMAP held a general membership meeting (GMM) on the occasion
of which DMAP, acting through its co-respondents Lorenzo Cinco, its President, and
Cora Curay, a consultant/adviser to Cinco, publicly circulated the Sea Transport
Update, 8 which is reproduced as follows:
SEA TRANSPORT UPDATE
Oct. 2002 GMM
20% GRI RATE INCREASE ISSUE
1.
The Motion for Reconsideration filed with the Supreme Court was denied
based on technicalities and not on the legal issue DMAP presented.
Small technical matter which should not be a cause for denial (like the amount of
filing fee lacking & failure to indicate date of receipt of court resolution)
>

Some technical matters that could cause denial

Failure to file on time and to file necessary pleadings

Failure to provide copies to respondents.

>

Legal issue DMAP presented

Public Service Act

Regulated or Deregulated

MC 153

Supreme Court ruling issued in one month only, normal leadtime is at least 3
to 6 months.
WHAT TO EXPECT?
1.

Liners will pressure members to pay the 20% GRI

WHAT TO DO?

ScHADI

1.

As advised by DMAP counsel, use the following arguments:

DMAP case was denied based on technicalities and not on merits of the case

Court of Appeals has ruled that computation of reasonableness of freight is

not under their jurisdiction but with MARINA

DSA's argument that DMAP's case prematurely (sic) file (sic) as there is a
pending case filed before MARINA.
-

Therefore, DSA & DMAP will be going back to MARINA for resolution

2.

Meantime, DMAP members enjoined not to pay until resolved by MARINA

3.
However, continue collaboration with liners so shipping service may not
suffer
NEXT MOVE
Another group (most likely consumers) or any party will file the same case and may
be using the same arguments. (emphasis supplied)
Thereupon, the petitioners brought this special civil action for contempt against the
respondents, insisting that the publication of the Sea Transport Update constituted
indirect contempt of court for patently, unjustly and baselessly insinuating that the
petitioners were privy to some illegal act, and, worse, that the publication unfairly
debased the Supreme Court by making "scurrilous, malicious, tasteless, and
baseless innuendo" 9 to the effect that the Supreme Court had allowed itself to be
influenced by the petitioners as to lead the respondents to conclude that the
"Supreme Court ruling issued in one month only, normal lead time is at least 3 to 6
months." 10 They averred that the respondents' purpose, taken in the context of the
entire publication, was to "defy the decision, for it was based on technicalities, and
the Supreme Court was influenced!" 11 HDTCSI
In their comment dated January 20, 2003, 12 the respondents denied any intention
to malign, discredit, or criticize the Court. 13 They explained that their statement
that the "Supreme Court ruling issued in one month time only, normal lead time is
at least three to six months" 14 was not per se contemptuous, because the normal
and appropriate time frame for the resolution of petitions by the Court was either
less than a month, if the petition was to be denied on technicality, and more or less
from three to six months, if the petition was to be given due course; that what made
the petitioners describe the statement as contemptuous was not the real or actual
intention of the author but rather the petitioners' false, malicious, scurrilous and
tasteless insinuations and interpretation; and that the petitioners, not being
themselves present during the GMM, had no basis to assert that the DMAP's
presentor, the author of the material, or any of the speakers during the GMM had
any evil intention or made any malicious insinuations. 15
The respondents further stated that the term time frame was layman's parlance to
explain to DMAP members that the petition had been dismissed due to a
technicality, considering that the appeals process in the case before the Court had
taken only a month instead of the expected three to six months; 16 that the term
lead time, although not the proper legal term to describe the process that the

respondents' petition had undergone in the Court, was common parlance in the
business sector in which the respondents belonged; that the discussions during the
presentation focused on the legal options of DMAP with respect to the 20% increase,
i.e., to go back to MARINA for the resolution of the propriety and reasonableness of
the 20% increase; 17 that a lead time was indicated in the presentation material
simply to tell DMAP members that the lead time to go back to MARINA had been cut
short in view of the denial of the petition for review; and that, on the other hand,
had the Court given due course to the petition, the expected time for the Court to
resolve the appeal on the merits would have been from three to six months, a
normal expectation. 18
Lastly, the respondents submitted that a serious study and analysis of the decision
of the CA, which the Court affirmed, revealed that the decision of the CA centered
only on the constitutionality of the assailed executive issuances, and did not include
any determination of the reasonableness and propriety of the 20% increase; that,
accordingly, the discussion of the recourse with respect to the 20% increase, which
was to go back to MARINA for the resolution on the matter, could not be considered
as a defiance of the order of the Court because the CA itself decreed that the
propriety and reasonableness of the 20% increase should be brought to and
resolved by MARINA; 19 and that considering that there was yet no entry of
judgment in relation to the denial of the petition at the time of the GMM on October
17, 2002, the respondents were not defying any final order or writ of the Court and
thereby commit any act of indirect contempt. 20 CTaIHE
Issue
Did the statements contained in the Sea Transport Update constitute or amount to
indirect contempt of court?
Ruling
We dismiss the petition.
I
Contempt of Court: Concept and Classes
Contempt of court has been defined as a willful disregard or disobedience of a
public authority. In its broad sense, contempt is a disregard of, or disobedience to,
the rules or orders of a legislative or judicial body or an interruption of, its
proceedings by disorderly behavior or insolent language in its presence or so near
thereto as to disturb its proceedings or to impair the respect due to such a body. In
its restricted and more usual sense, contempt comprehends a despising of the
authority, justice, or dignity of a court. 21 The phrase contempt of court is generic,
embracing within its legal signification a variety of different acts. 22

The power to punish for contempt is inherent in all Courts, 23 and need not be
specifically granted by statute. 24 It lies at the core of the administration of a
judicial system. 25 Indeed, there ought to be no question that courts have the
power by virtue of their very creation to impose silence, respect, and decorum in
their presence, submission to their lawful mandates, and to preserve themselves
and their officers from the approach and insults of pollution. 26 The power to punish
for contempt essentially exists for the preservation of order in judicial proceedings
and for the enforcement of judgments, orders, and mandates of the courts, and,
consequently, for the due administration of justice. 27 The reason behind the power
to punish for contempt is that respect of the courts guarantees the stability of their
institution; without such guarantee, the institution of the courts would be resting on
a very shaky foundation. 28 IDEScC
Contempt of court is of two kinds, namely: direct contempt, which is committed in
the presence of or so near the judge as to obstruct him in the administration of
justice; and constructive or indirect contempt, which consists of willful disobedience
of the lawful process or order of the court. 29
The punishment for the first is generally summary and immediate, and no process
or evidence is necessary because the act is committed in facie curiae. 30 The
inherent power of courts to punish contempt of court committed in the presence of
the courts without further proof of facts and without aid of a trial is not open to
question, considering that this power is essential to preserve their authority and to
prevent the administration of justice from falling into disrepute; such summary
conviction and punishment accord with due process of law. 31 There is authority for
the view, however, that an act, to constitute direct contempt punishable by
summary proceeding, need not be committed in the immediate presence of the
court, if it tends to obstruct justice or to interfere with the actions of the court in the
courtroom itself. 32 Also, contemptuous acts committed out of the presence of the
court, if admitted by the contemnor in open court, may be punished summarily as a
direct contempt, 33 although it is advisable to proceed by requiring the person
charged to appear and show cause why he should not be punished when the judge
is without personal knowledge of the misbehavior and is informed of it only by a
confession of the contemnor or by testimony under oath of other persons. 34
In contrast, the second usually requires proceedings less summary than the first.
The proceedings for the punishment of the contumacious act committed outside the
personal knowledge of the judge generally need the observance of all the elements
of due process of law, that is, notice, written charges, and an opportunity to deny
and to defend such charges before guilt is adjudged and sentence imposed. 35
Plainly, therefore, the word summary with respect to the punishment for contempt
refers not to the timing of the action with reference to the offense but to the
procedure that dispenses with the formality, delay, and digression that result from
the issuance of process, service of complaint and answer, holding hearings, taking

evidence, listening to arguments, awaiting briefs, submission of findings, and all

that goes with a conventional court trial. 36
A distinction between in-court contempts, which disrupt court proceedings and for
which a hearing and formal presentation of evidence are dispensed with, and out-ofcourt contempts, which require normal adversary procedures, is drawn for the
purpose of prescribing what procedures must attend the exercise of a court's
authority to deal with contempt. The distinction does not limit the ability of courts to
initiate contempt prosecutions to the summary punishment of in-court contempts
that interfere with the judicial process. 37 DSATCI
The court may proceed upon its own knowledge of the facts without further proof
and without issue or trial in any form to punish a contempt committed directly
under its eye or within its view. 38 But there must be adequate facts to support a
summary order for contempt in the presence of the court. 39 The exercise of the
summary power to imprison for contempt is a delicate one and care is needed to
avoid arbitrary or oppressive conclusions. 40 The reason for the extraordinary
power to punish criminal contempt in summary proceedings is that the necessities
of the administration of justice require such summary dealing with obstructions to it,
being a mode of vindicating the majesty of the law, in its active manifestation,
against obstruction and outrage. 41
Proceedings for contempt are sui generis, in nature criminal, but may be resorted to
in civil as well as criminal actions, and independently of any action. 42 They are of
two classes, the criminal or punitive, and the civil or remedial. A criminal contempt
consists in conduct that is directed against the authority and dignity of a court or of
a judge acting judicially, as in unlawfully assailing or discrediting the authority and
dignity of the court or judge, or in doing a duly forbidden act. A civil contempt
consists in the failure to do something ordered to be done by a court or judge in a
civil case for the benefit of the opposing party therein. 43 It is at times difficult to
determine whether the proceedings are civil or criminal. In general, the character of
the contempt of whether it is criminal or civil is determined by the nature of the
contempt involved, regardless of the cause in which the contempt arose, and by the
relief sought or dominant purpose. 44 The proceedings are to be regarded as
criminal when the purpose is primarily punishment, and civil when the purpose is
primarily compensatory or remedial. 45 Where the dominant purpose is to enforce
compliance with an order of a court for the benefit of a party in whose favor the
order runs, the contempt is civil; where the dominant purpose is to vindicate the
dignity and authority of the court, and to protect the interests of the general public,
the contempt is criminal. 46 Indeed, the criminal proceedings vindicate the dignity
of the courts, but the civil proceedings protect, preserve, and enforce the rights of
private parties and compel obedience to orders, judgments and decrees made to
enforce such rights. 47

Indirect contempt is defined by and punished under Section 3, Rule 71 of the Rules
of Court, which provides: ADETca
Section 3.
Indirect contempt to be punished after charge and hearing. After a
charge in writing has been filed, and an opportunity given to the respondent to
comment thereon within such period as may be fixed by the court and to be heard
by himself or counsel, a person guilty of any of the following acts may be punished
for indirect contempt:
(a)
Misbehavior of an officer of a court in the performance of his official duties or
in his official transactions;
(b)
Disobedience of or resistance to a lawful writ, process, order, or judgment of
a court, including the act of a person who, after being dispossessed or ejected from
any real property by the judgment or process of any court of competent jurisdiction,
enters or attempts or induces another to enter into or upon such real property, for
the purpose of executing acts of ownership or possession, or in any manner disturbs
the possession given to the person adjudged to be entitled thereto;
(c)
Any abuse of or any unlawful interference with the processes or proceedings
of a court not constituting direct contempt under section 1 of this Rule;
(d)
Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice;
(e)
Assuming to be an attorney or an officer of a court, and acting as such
without authority;
(f)

Failure to obey a subpoena duly served;

(g)
The rescue, or attempted rescue, of a person or property in the custody of an
officer by virtue of an order or process of a court held by him.
But nothing in this section shall be so construed as to prevent the court from issuing
process to bring the respondent into court, or from holding him in custody pending
such proceedings. (3a) AIaDcH
Misbehavior means something more than adverse comment or disrespect. 48 There
is no question that in contempt the intent goes to the gravamen of the offense. 49
Thus, the good faith, or lack of it, of the alleged contemnor should be considered.
50 Where the act complained of is ambiguous or does not clearly show on its face
that it is contempt, and is one which, if the party is acting in good faith, is within his
rights, the presence or absence of a contumacious intent is, in some instances, held
to be determinative of its character. 51 A person should not be condemned for
contempt where he contends for what he believes to be right and in good faith
institutes proceedings for the purpose, however erroneous may be his conclusion as

to his rights. 52 To constitute contempt, the act must be done willfully and for an
illegitimate or improper purpose. 53
Unfounded accusations or allegations or words tending to embarrass the court or to
bring it into disrepute have no place in a pleading. Their employment serves no
useful purpose. On the contrary, they constitute direct contempt of court or
contempt in facie curiae and, when committed by a lawyer, a violation of the
lawyer's oath and a transgression of the Code of Professional Responsibility.
II.
Utterances in Sea Transport Update,
Not Contemptuous
The petitioners did not sufficiently show how the respondents' publication of the Sea
Transport Update constituted any of the acts punishable as indirect contempt of
court under Section 3 of Rule 71, supra.
The petitioners' mere allegation, that "said publication unfairly debases the
Supreme Court because of the scurrilous, malicious, tasteless, and baseless
innuendo therein that the Court allowed itself to be influenced by the petitioners as
concocted in the evil minds of the respondents thus leading said respondents to
unjustly conclude: Supreme Court ruling issued in one month only, normal lead time
is at least 3 to 6 months," 54 was insufficient, without more, to sustain the charge of
indirect contempt. DHaECI
Nor do we consider contemptuous either the phrase contained in the Sea Transport
Update stating: "The Motion for Reconsideration filed with the Supreme Court was
denied based on technicalities and not on the legal issue DMAP presented", 55 or
the phrase in the Sea Transport Update reading "Supreme Court ruling issued in one
month only, normal leadtime is at least 3 to 6 months." Contrary to the petitioners'
urging that such phrases be considered as "scurrilous, malicious, tasteless and
baseless innuendo" 56 and as indicative that "the Court allowed itself to be
influenced by the petitioners" 57 or that "the point that respondents wanted to
convey was crystal clear: 'defy the decision, for it was based on technicalities, and
the Supreme Court was influenced!"', 58 we find the phrases as not critical of the
Court and how fast the resolutions in G.R. No. 152914 were issued, or as inciting
DMAP's members to defy the resolutions. The unmistakable intent behind the
phrases was to inform DMAP's members of the developments in the case, and on
the taking of the next viable move of going back to MARINA on the issues, as the
ruling of the Court of Appeals instructed.
We have long recognized and respected the right of a lawyer, or of any other
person, for that matter, to be critical of the courts and their judges as long as the
criticism is made in respectful terms and through legitimate channels. We have no

cause or reason to depart from such recognition and respect, for the Court has long
adhered to the sentiment aptly given expression to in the leading case of In re:
Almacen: 59
. . . every citizen has the right to comment upon and criticize the actuations of
public officers. This right is not diminished by the fact that the criticism is aimed at
a judicial authority, or that it is articulated by a lawyer. Such right is especially
recognized where the criticism concerns a concluded litigation, because then the
court's actuation are thrown open to public consumption.
xxx

xxx

xxx

Courts and judges are not sacrosanct. They should and expect critical evaluation of
their performance. For like the executive and the legislative branches, the judiciary
is rooted in the soil of democratic society, nourished by the periodic appraisal of the
citizens whom it is expected to serve. EHSTcC
Well-recognized therefore is the right of a lawyer, both as an officer of the court and
as a citizen, to criticize in properly respectful terms and through legitimate channels
the acts of courts and judges. . . .
xxx

xxx

xxx

Hence, as a citizen and as officer of the court, a lawyer is expected not only to
exercise the right, but also to consider it his duty to avail of such right. No law may
abridge this right. Nor is he "professionally answerable for a scrutiny into the official
conduct of the judges, which would not expose him to legal animadversion as a
citizen." . . .
xxx

xxx

xxx

But it is the cardinal condition of all such criticism that it shall be bona fide, and
shall not spill over the walls of decency and propriety. A wide chasm exists between
fair criticism, on the one hand, and abuse and slander of courts and the judges
thereof, on the other. Intemperate and unfair criticism is a gross violation of the
duty of respect to courts. It is such a misconduct that subjects a lawyer to
disciplinary action. (bold emphasis supplied) 60
The test for criticizing a judge's decision is, therefore, whether or not the criticism is
bona fide or done in good faith, and does not spill over the walls of decency and
propriety. Viewed through the prism of the test, the Sea Transport Update was not
disrespectful, abusive, or slanderous, and did not spill over the walls of decency and
propriety. Thereby, the respondents were not guilty of indirect contempt of court. In
this regard, then, we need to remind that the power to punish for contempt of court
is exercised on the preservative and not on the vindictive principle, and only
occasionally should a court invoke its inherent power in order to retain that respect
without which the administration of justice must falter or fail. 61 As judges we ought

to exercise our power to punish contempt judiciously and sparingly, with utmost
restraint, and with the end in view of utilizing the power for the correction and
preservation of the dignity of the Court, not for retaliation or vindictiveness. 62
HcISTE
WHEREFORE, the petition for indirect contempt is DISMISSED.
Costs of suit to be paid by the petitioners.
SO ORDERED.