Transportation laws
and its failure to overcome the presumption of
1. Everett Steamship Corp. vs CA
Petitioner Everett Steamship Corporation, through this
petition for review, seeks the reversal of the decision 1
of the Court of Appeals, dated June 14, 1995, in CA-
G.R. No. 428093, which affirmed the decision of the
Regional Trial Court of Kalookan City, Branch 126, in
Civil Case No. C-15532, finding petitioner liable to
private respondent Hernandez Trading Co., Inc. for the
value of the lost cargo.
Private respondent imported three crates of bus spare
parts marked as MARCO C/No. 12, MARCO C/No.
13 and MARCO C/No. 14, from its supplier, Maruman
Trading Company, Ltd. (Maruman Trading), a foreign
corporation based in Inazawa, Aichi, Japan. The crates
were shipped from Nagoya, Japan to Manila on board
"ADELFAEVERETTE," a vessel owned by
petitioner's principal, Everett Orient Lines. The said
crates were covered by Bill of Lading No. NGO53MN.
Upon arrival at the port of Manila, it was discovered
that the crate marked MARCO C/No. 14 was missing.
This was confirmed and admitted by petitioner in its
letter of January 13, 1992 addressed to private
respondent, which thereafter made a formal claim
upon petitioner for the value of the lost cargo
amounting to One Million Five Hundred Fifty Two
Thousand Five Hundred (Y1,552,500.00) Yen, the
amount shown in an Invoice No. MTM-941, dated
November 14, 1991. However, petitioner offered to
pay only One Hundred Thousand (Y100,000.00) Yen,
the maximum amount stipulated under Clause 18 of
the covering bill of lading which limits the liability of
petitioner.
Private respondent rejected the offer and thereafter
instituted a suit for collection docketed as Civil Case
No. C-15532, against petitioner before the Regional
Trial Court of Caloocan City, Branch 126.
At the pre-trial conference, both parties manifested
that they have no testimonial evidence to offer and
agreed instead to file their respective memoranda.
On July 16, 1993, the trial court rendered judgment 2
in favor of private respondent, ordering petitioner to
pay: (a) Y1,552,500.00; (b) Y20,000.00 or its peso
equivalent representing the actual value of the lost
cargo and the material and packaging cost; (c) 10% of
the total amount as an award for and as contingent
attorney's fees; and (d) to pay the cost of the suit. The
trial court ruled:
Considering defendant's categorical admission of loss
negligence and fault, the Court conclusively finds
defendant liable to the plaintiff. The next point of
inquiry the Court wants to resolve is the extent of the
liability of the defendant. As stated earlier, plaintiff
contends that defendant should be held liable for the
whole value for the loss of the goods in the amount of
Y1,552,500.00 because the terms appearing at the
back of the bill of lading was so written in fine prints
and that the same was not signed by plaintiff or shipper
thus, they are not bound by clause stated in paragraph
18 of the bill of lading. On the other hand, defendant
merely admitted that it lost the shipment but shall be
liable only up to the amount of Y100,000.00.
The Court subscribes to the provisions of Article 1750
of the New Civil Code
Art. 1750. "A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and has
been fairly and freely agreed upon."
It is required, however, that the contract must be
reasonable and just under the circumstances and has
been fairly and freely agreed upon. The requirements
provided in Art. 1750 of the New Civil Code must be
complied with before a common carrier can claim a
limitation of its pecuniary liability in case of loss,
destruction or deterioration of the goods it has
undertaken to transport.
In the case at bar, the Court is of the view that the
requirements of said article have not been met. The
fact that those conditions are printed at the back of the
bill of lading in letters so small that they are hard to
read would not warrant the presumption that the
plaintiff or its supplier was aware of these conditions
such that he had "fairly and freely agreed" to these
conditions. It can not be said that the plaintiff had
actually entered into a contract with the defendant,
embodying the conditions as printed at the back of the
bill of lading that was issued by the defendant to
plaintiff.
On appeal, the Court of Appeals deleted the award of
attorney's fees but affirmed the trial court's findings
with the additional observation that private respondent
can not be bound by the terms and conditions of the
bill of lading because it was not privy to the contract
of carriage. It said:
As to the amount of liability, no evidence appears on
record to show that the appellee (Hernandez Trading
Co.) consented to the terms of the Bill of Lading. The
shipper named in the Bill of Lading is Maruman
Trading Co., Ltd. whom the appellant (Everett
Steamship Corp.) contracted with for the
transportation of the lost goods.
Even assuming arguendo that the shipper Maruman
Trading Co., Ltd. accepted the terms of the bill of
lading when it delivered the cargo to the appellant, still
it does not necessarily follow that appellee Hernandez
Trading, Company as consignee is bound thereby
considering that the latter was never privy to the
shipping contract.
xxx xxx xxx
Never having entered into a contract with the
appellant, appellee should therefore not be bound by
any of the terms and conditions in the bill of lading.
Hence, it follows that the appellee may recover the full
value of the shipment lost, the basis of which is not the
breach of contract as appellee was never a privy to the
any contract with the appellant, but is based on Article
1735 of the New Civil Code, there being no evidence
to prove satisfactorily that the appellant has overcome
the presumption of negligence provided for in the law.
Petitioner now comes to us arguing that the Court of
Appeals erred (1) in ruling that the consent of the
consignee to the terms and conditions of the bill of
lading is necessary to make such stipulations binding
upon it; (2) in holding that the carrier's limited package
liability as stipulated in the bill of lading does not
apply in the instant case; and (3) in allowing private
respondent to fully recover the full alleged value of its
lost cargo.
We shall first resolve the validity of the limited
liability clause in the bill of lading.
A stipulation in the bill of lading limiting the common
carrier's liability for loss or destruction of a cargo to a
certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly
Articles 1749 and 1750 of the Civil Code which
provide:
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and has
been freely and fairly agreed upon.
Such limited-liability clause has also been consistently
upheld by this Court in a number of cases. 3 Thus, in
Sea Land Service, Inc. vs. Intermediate Appellate
Court 4, we ruled:
It seems clear that even if said section 4 (5) of the
Carriage of Goods by Sea Act did not exist, the validity
and binding effect of the liability limitation clause in
the bill of lading here are nevertheless fully sustainable
on the basis alone of the cited Civil Code Provisions.
That said stipulation is just and reasonable is arguable
from the fact that it echoes Art. 1750 itself in providing
a limit to liability only if a greater value is not declared
for the shipment in the bill of lading. To hold otherwise
would amount to questioning the justness and fairness
of the law itself, and this the private respondent does
not pretend to do. But over and above that
consideration, the just and reasonable character of
such stipulation is implicit in it giving the shipper or
owner the option of avoiding accrual of liability
limitation by the simple and surely far from onerous
expedient of declaring the nature and value of the
shipment in the bill of lading.
Pursuant to the afore-quoted provisions of law, it is
required that the stipulation limiting the common
carrier's liability for loss must be "reasonable and just
under the circumstances, and has been freely and fairly
agreed upon."
The bill of lading subject of the present controversy
specifically provides, among others:
18. All claims for which the carrier may be liable
shall be adjusted and settled on the basis of the
shipper's net invoice cost plus freight and insurance
premiums, if paid, and in no event shall the carrier be
liable for any loss of possible profits or any
consequential loss.
The carrier shall not be liable for any loss of or any
damage to or in any connection with, goods in an
amount exceeding One Hundred thousand Yen in
Japanese Currency (Y100,000.00) or its equivalent in
any other currency per package or customary freight
unit (whichever is least) unless the value of the goods
higher than this amount is declared in writing by the
shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight is paid
as required. (Emphasis supplied)
The above stipulations are, to our mind, reasonable
and just. In the bill of lading, the carrier made it clear
that its liability would only be up to One Hundred
Thousand (Y100,000.00) Yen. However, the shipper,
Maruman Trading, had the option to declare a higher
valuation if the value of its cargo was higher than the
limited liability of the carrier. Considering that the
shipper did not declare a higher valuation, it had itself
to blame for not complying with the stipulations.
The trial court's ratiocination that private respondent
could not have "fairly and freely" agreed to the limited
liability clause in the bill of lading because the said
conditions were printed in small letters does not make
the bill of lading invalid.
We ruled in PAL, Inc. vs. Court of Appeals 5 that the
"jurisprudence on the matter reveals the consistent
holding of the court that contracts of adhesion are not
invalid per se and that it has on numerous occasions
upheld the binding effect thereof." Also, in Philippine
American General Insurance Co., Inc. vs. Sweet Lines,
Inc. 6 this Court, speaking through the learned Justice
Florenz D. Regalado, held:
. . . Ong Yiu vs. Court of Appeals, et. al., instructs us
that "contracts of adhesion wherein one party imposes
a ready-made form of contract on the other . . . are
contracts not entirely prohibited. The one who adheres
to the contract is in reality free to reject it entirely; if
the adheres he gives his consent." In the present case,
not even an allegation of ignorance of a party excuses
non-compliance with the contractual stipulations since
the responsibility for ensuring full comprehension of
the provisions of a contract of carriage devolves not on
the carrier but on the owner, shipper, or consignee as
the case may be. (Emphasis supplied)
It was further explained in Ong Yiu vs. Court of
Appeals 7 that stipulations in contracts of adhesion are
valid and binding.
While it may be true that petitioner had not signed the
plane
ticket . . ., he is nevertheless bound by the provisions
thereof. "Such provisions have been held to be a part
of the contract of carriage, and valid and binding upon
the passenger regardless of the latter's lack of
knowledge or assent to the regulation." It is what is
known as a contract of "adhesion," in regards which it
has been said that contracts of adhesion wherein one
party imposes a ready-made form of contract on the
other, as the plane ticket in the case at bar, are contracts
not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he
adheres, he gives his consent. . . ., a contract limiting
liability upon an agreed valuation does not offend
against the policy of the law forbidding one from
contracting against his own negligence. (Emphasis
supplied)
Greater vigilance, however, is required of the courts
when dealing with contracts of adhesion in that the
said contracts must be carefully scrutinized "in order
to shield the unwary (or weaker party) from deceptive
schemes contained in ready-made covenants," 8 such
as the bill of lading in question. The stringent
requirement which the courts are enjoined to observe
is in recognition of Article 24 of the Civil Code which
mandates that "(i)n all contractual, property or other
relations, when one of the parties is at a disadvantage
on account of his moral dependence, ignorance,
indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his
protection."
The shipper, Maruman Trading, we assume, has been
extensively engaged in the trading business. It can not
be said to be ignorant of the business transactions it
entered into involving the shipment of its goods to its
customers. The shipper could not have known, or
should know the stipulations in the bill of lading and
there it should have declared a higher valuation of the
goods shipped. Moreover, Maruman Trading has not
been heard to complain that it has been deceived or
rushed into agreeing to ship the cargo in petitioner's
vessel. In fact, it was not even impleaded in this case.
The next issue to be resolved is whether or not private
respondent, as consignee, who is not a signatory to the
bill of lading is bound by the stipulations thereof.
Again, in Sea-Land Service, Inc. vs. Intermediate
Appellate Court (supra), we held that even if the
consignee was not a signatory to the contract of
carriage between the shipper and the carrier, the
consignee can still be bound by the contract. Speaking
through Mr. Chief Justice Narvasa, we ruled:
To begin with, there is no question of the right, in
principle, of a consignee in a bill of lading to recover
from the carrier or shipper for loss of, or damage to
goods being transported under said bill, although that
document may have been-as in practice it oftentimes
is-drawn up only by the consignor and the carrier
without the intervention of the
onsignee. . . . .
. . . the right of a party in the same situation as
respondent here, to recover for loss of a shipment
consigned to him under a bill of lading drawn up only
by and between the shipper and the carrier, springs
from either a relation of agency that may exist between
him and the shipper or consignor, or his status as
stranger in whose favor some stipulation is made in
said contract, and who becomes a party thereto when
he demands fulfillment of that stipulation, in this case
the delivery of the goods or cargo shipped. In neither
capacity can he assert personally, in bar to any
provision of the bill of lading, the alleged
circumstance that fair and free agreement to such
provision was vitiated by its being in such fine print as
to be hardly readable. Parenthetically, it may be
observed that in one comparatively recent case
(Phoenix Assurance Company vs. Macondray & Co.,
Inc., 64 SCRA 15) where this Court found that a
similar package limitation clause was "printed in the
smallest type on the back of the bill of lading," it
nonetheless ruled that the consignee was bound
thereby on the strength of authority holding that such
provisions on liability limitation are as much a part of
a bill of lading as through physically in it and as though
placed therein by agreement of the parties.
There can, therefore, be no doubt or equivocation
about the validity and enforceability of freely-agreed-
upon stipulations in a contract of carriage or bill of
lading limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value
and inserts it into said contract or bill. This
proposition, moreover, rests upon an almost uniform
weight of authority. (Emphasis supplied).
When private respondent formally claimed
reimbursement for the missing goods from petitioner
and subsequently filed a case against the latter based
on the very same bill of lading, it (private respondent)
accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court
to enforce it. 9 Thus, private respondent cannot now
reject or disregard the carrier's limited liability
stipulation in the bill of lading. In other words, private
respondent is bound by the whole stipulations in the
bill of lading and must respect the same.
Private respondent, however, insists that the carrier
should be liable for the full value of the lost cargo in
the amount of Y1,552,500.00, considering that the
shipper, Maruman Trading, had "fully declared the
shipment . . ., the contents of each crate, the
dimensions, weight and value of the contents," 10 as
shown in the commercial Invoice No. MTM-941.
This claim was denied by petitioner, contending that it
did not know of the contents, quantity and value of
"the shipment which consisted of three pre-packed
crates described in Bill of Lading No. NGO-53MN
merely as '3 CASES SPARE PARTS.'" 11
The bill of lading in question confirms petitioner's
contention. To defeat the carrier's limited liability, the
aforecited Clause 18 of the bill of lading requires that
the shipper should have declared in writing a higher
valuation of its goods before receipt thereof by the
carrier and insert the said declaration in the bill of
lading, with extra freight paid. These requirements in
the bill of lading were never complied with by the
shipper, hence, the liability of the carrier under the
limited liability clause stands. The commercial Invoice
No. MTM-941 does not in itself sufficiently and
convincingly show that petitioner has knowledge of
the value of the cargo as contended by private
respondent. No other evidence was proffered by
private respondent to support is contention. Thus, we
are convinced that petitioner should be liable for the
full value of the lost cargo.
In fine, the liability of petitioner for the loss of the
cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill
of lading.
WHEREFORE, the decision of the Court of Appeals
dated June 14, 1995 in C.A.-G.R. CV No. 42803 is
hereby REVERSED and SET ASIDE.
SO ORDERED.
2. MOF Company vs Shinyang Corp
The necessity of proving lies with the person who sues.
The refusal of the consignee named in the bill of lading
to pay the freightage on the claim that it is not privy to
the contract of affreightment propelled the shipper to
sue for collection of money, stressing that its sole
evidence, the bill of lading, suffices to prove that the
consignee is bound to pay. Petitioner now comes to us
by way of Petition for Review on Certiorari[1] under
Rule 45 praying for the reversal of the Court of
Appeals' (CA) judgment that dismissed its action for
sum of money for insufficiency of evidence.
Factual Antecedents
On October 25, 2001, Halla Trading Co., a company
based in Korea, shipped to Manila secondhand cars
and other articles on board the vessel Hanjin Busan
0238W. The bill of lading covering the shipment, i.e.,
Bill of Lading No. HJSCPUSI14168303,[2] which
was prepared by the carrier Hanjin Shipping Co., Ltd.
(Hanjin), named respondent Shin Yang Brokerage
Corp. (Shin Yang) as the consignee and indicated that
payment was on a Freight Collect basis, i.e., that the
consignee/receiver of the goods would be the one to
pay for the freight and other charges in the total
amount of P57,646.00.[3]
The shipment arrived in Manila on October 29, 2001.
Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjins exclusive general agent in the Philippines,
repeatedly demanded the payment of ocean freight,
documentation fee and terminal handling charges from
Shin Yang. The latter, however, failed and refused to
pay contending that it did not cause the importation of
the goods, that it is only the Consolidator of the said
shipment, that the ultimate consignee did not endorse
in its favor the original bill of lading and that the bill
of lading was prepared without its consent.
Thus, on March 19, 2003, MOF filed a case for sum of
money before the Metropolitan Trial Court of Pasay
City (MeTC Pasay) which was docketed as Civil Case
No. 206-03 and raffled to Branch 48. MOF alleged that
Shin Yang, a regular client, caused the importation and
shipment of the goods and assured it that ocean freight
and other charges would be paid upon arrival of the
goods in Manila. Yet, after Hanjin's compliance, Shin
Yang unjustly breached its obligation to pay. MOF
argued that Shin Yang, as the named consignee in the
bill of lading, entered itself as a party to the contract
and bound itself to the Freight Collect arrangement.
MOF thus prayed for the payment of P57,646.00
representing ocean freight, documentation fee and
terminal handling charges as well as damages and
attorneys fees.
Claiming that it is merely a consolidator/forwarder and
that Bill of Lading No. HJSCPUSI14168303 was not
endorsed to it by the ultimate consignee, Shin Yang
denied any involvement in shipping the goods or in
promising to shoulder the freightage. It asserted that it
never authorized Halla Trading Co. to ship the articles
or to have its name included in the bill of lading. Shin
Yang also alleged that MOF failed to present
supporting documents to prove that it was Shin Yang
that caused the importation or the one that assured
payment of the shipping charges upon arrival of the
goods in Manila.
Ruling of the Metropolitan Trial Court
On June 16, 2004, the MeTC of Pasay City, Branch 48
rendered its Decision[4] in favor of MOF. It ruled that
Shin Yang cannot disclaim being a party to the
contract of affreightment because:
x x x it would appear that defendant has business
transactions with plaintiff. This is evident from
defendants letters dated 09 May 2002 and 13 May
2002 (Exhibits 1 and 2, defendants Position Paper)
where it requested for the release of refund of
container deposits x x x. [In] the mind of the Court, by
analogy, a written contract need not be necessary; a
mutual understanding [would suffice]. Further,
plaintiff would have not included the name of the
defendant in the bill of lading, had there been no prior
agreement to that effect.
In sum, plaintiff has sufficiently proved its cause of
action against the defendant and the latter is obliged to
honor its agreement with plaintiff despite the absence
of a written contract.[5]
The dispositive portion of the MeTC Decision reads:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of plaintiff and against the
defendant, ordering the latter to pay plaintiff as
follows:
1. P57,646.00 plus legal interest from the date of
demand until fully paid,
2. P10,000.00 as and for attorneys fees and
3. the cost of suit.
SO ORDERED.
Ruling of the Regional Trial Court
The Regional Trial Court (RTC) of Pasay City, Branch
108 affirmed in toto the Decision of the MeTC. It held
that:
MOF and Shin Yang entered into a contract of
affreightment which Blacks Law Dictionary defined as
a contract with the ship owner to hire his ship or part
of it, for the carriage of goods and generally take the
form either of a charter party or a bill of lading.
The bill of lading contain[s] the information embodied
in the contract.
Article 652 of the Code of Commerce provides that the
charter party must be in writing; however, Article 653
says: If the cargo should be received without charter
party having been signed, the contract shall be
understood as executed in accordance with what
appears in the bill of lading, the sole evidence of title
with regard to the cargo for determining the rights and
obligations of the ship agent, of the captain and of the
charterer. Thus, the Supreme Court opined in the
Market Developers, Inc. (MADE) vs. Honorable
Intermediate Appellate Court and Gaudioso Uy, G.R.
No. 74978, September 8, 1989, this kind of contract
may be oral. In another case, Compania Maritima vs.
Insurance Company of North America, 12 SCRA 213
the contract of affreightment by telephone was
recognized where the oral agreement was later
confirmed by a formal booking.
xxxx
Defendant is liable to pay the sum of P57,646.00, with
interest until fully paid, attorneys fees of P10,000.00
[and] cost of suit.
Considering all the foregoing, this Court affirms in
toto the decision of the Court a quo.
SO ORDERED.[7]
Ruling of the Court of Appeals
Seeing the matter in a different light, the CA dismissed
MOFs complaint and refused to award any form of
damages or attorneys fees. It opined that MOF failed
to substantiate its claim that Shin Yang had a hand in
the importation of the articles to the Philippines or that
it gave its consent to be a consignee of the subject
goods. In its March 22, 2006 Decision,[8] the CA said:
This Court is persuaded [that except] for the Bill of
Lading, respondent has not presented any other
evidence to bolster its claim that petitioner has entered
[into] an agreement of affreightment with respondent,
be it verbal or written. It is noted that the Bill of Lading
was prepared by Hanjin Shipping, not the petitioner.
Hanjin is the principal while respondent is the formers
agent. (p. 43, rollo)
The conclusion of the court a quo, which was upheld
by the RTC Pasay City, Branch 108 xxx is purely
speculative and conjectural. A court cannot rely on
speculations, conjectures or guesswork, but must
depend upon competent proof and on the basis of the
best evidence obtainable under the circumstances.
Litigation cannot be properly resolved by
suppositions, deductions or even presumptions, with
no basis in evidence, for the truth must have to be
determined by the hard rules of admissibility and proof
(Lagon vs. Hooven Comalco Industries, Inc. 349
SCRA 363).
While it is true that a bill of lading serves two (2)
functions: first, it is a receipt for the goods shipped;
second, it is a contract by which three parties, namely,
the shipper, the carrier and the consignee who
undertake specific responsibilities and assume
stipulated obligations (Belgian Overseas Chartering
and Shipping N.V. vs. Phil. First Insurance Co., Inc.,
383 SCRA 23), x x x if the same is not accepted, it is
as if one party does not accept the contract. Said the
Supreme Court:
A bill of lading delivered and accepted constitutes the
contract of carriage[,] even though not signed, because
the acceptance of a paper containing the terms of a
proposed contract generally constitutes an acceptance
of the contract and of all its terms and conditions of
which the acceptor has actual or constructive notice
(Keng Hua Paper Products Co., Inc. vs. CA, 286
SCRA 257).
In the present case, petitioner did not only [refuse to]
accept the bill of lading, but it likewise disown[ed] the
shipment x x x. [Neither did it] authorize Halla
Trading Company or anyone to ship or export the same
on its behalf.
It is settled that a contract is upheld as long as there is
proof of consent, subject matter and cause (Sta. Clara
Homeowners Association vs. Gaston, 374 SCRA 396).
In the case at bar, there is not even any iota of evidence
to show that petitioner had given its consent.
He who alleges a fact has the burden of proving it and
a mere allegation is not evidence (Luxuria Homes Inc.
vs. CA, 302 SCRA 315).
The 40-footer van contains goods of substantial value.
It is highly improbable for petitioner not to pay the
charges, which is very minimal compared with the
value of the goods, in order that it could work on the
release thereof.
For failure to substantiate its claim by preponderance
of evidence, respondent has not established its case
against petitioner.[9]
Petitioners filed a motion for reconsideration but it was
denied in a Resolution[10] dated May 25, 2006.
Hence, this petition for review on certiorari.
Petitioners Arguments
In assailing the CAs Decision, MOF argues that the
factual findings of both the MeTC and RTC are
entitled to great weight and respect and should have
bound the CA. It stresses that the appellate court has
no justifiable reason to disturb the lower courts
judgments because their conclusions are well-
supported by the evidence on record.
MOF further argues that the CA erred in labeling the
findings of the lower courts as purely speculative and
conjectural. According to MOF, the bill of lading,
which expressly stated Shin Yang as the consignee, is
the best evidence of the latters actual participation in
the transportation of the goods. Such document,
validly entered, stands as the law among the shipper,
carrier and the consignee, who are all bound by the
terms stated therein. Besides, a carriers valid claim
after it fulfilled its obligation cannot just be rejected by
the named consignee upon a simple denial that it ever
consented to be a party in a contract of affreightment,
or that it ever participated in the preparation of the bill
of lading. As against Shin Yangs bare denials, the bill
of lading is the sufficient preponderance of evidence
required to prove MOFs claim. MOF maintains that
Shin Yang was the one that supplied all the details in
the bill of lading and acquiesced to be named
consignee of the shipment on a Freight Collect basis.
Lastly, MOF claims that even if Shin Yang never gave
its consent, it cannot avoid its obligation to pay,
because it never objected to being named as the
consignee in the bill of lading and that it only protested
when the shipment arrived in the Philippines,
presumably due to a botched transaction between it
and Halla Trading Co. Furthermore, Shin Yangs letters
asking for the refund of container deposits highlight
the fact that it was aware of the shipment and that it
undertook preparations for the intended release of the
shipment.
Respondents Arguments
Echoing the CA decision, Shin Yang insists that MOF
has no evidence to prove that it consented to take part
in the contract of affreightment. Shin Yang argues that
MOF miserably failed to present any evidence to prove
that it was the one that made preparations for the
subject shipment, or that it is an actual shipping
practice that forwarders/consolidators as consignees
are the ones that provide carriers details and
information on the bills of lading.
Shin Yang contends that a bill of lading is essentially
a contract between the shipper and the carrier and
ordinarily, the shipper is the one liable for the freight
charges. A consignee, on the other hand, is initially a
stranger to the bill of lading and can be liable only
when the bill of lading specifies that the charges are to
be paid by the consignee. This liability arises from
either a) the contract of agency between the
shipper/consignor and the consignee; or b) the
consignees availment of the stipulation pour autrui
drawn up by and between the shipper/ consignor and
carrier upon the consignees demand that the goods be
delivered to it. Shin Yang contends that the fact that its
name was mentioned as the consignee of the cargoes
did not make it automatically liable for the freightage
because it never benefited from the shipment. It never
claimed or accepted the goods, it was not the shippers
agent, it was not aware of its designation as consignee
and the original bill of lading was never endorsed to it.
Issue
The issue for resolution is whether a consignee, who is
not a signatory to the bill of lading, is bound by the
stipulations thereof. Corollarily, whether respondent
who was not an agent of the shipper and who did not
make any demand for the fulfillment of the stipulations
of the bill of lading drawn in its favor is liable to pay
the corresponding freight and handling charges.
Our Ruling
Since the CA and the trial courts arrived at different
conclusions, we are constrained to depart from the
general rule that only errors of law may be raised in a
Petition for Review on Certiorari under Rule 45 of the
Rules of Court and will review the evidence
presented.[11]
The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the
intervention of the consignee. However, the latter can
be bound by the stipulations of the bill of lading when
a) there is a relation of agency between the shipper or
consignor and the consignee or b) when the consignee
demands fulfillment of the stipulation of the bill of
lading which was drawn up in its favor.[12]
In Keng Hua Paper Products Co., Inc. v. Court of
Appeals,[13] we held that once the bill of lading is
received by the consignee who does not object to any
terms or stipulations contained therein, it constitutes as
an acceptance of the contract and of all of its terms and
conditions, of which the acceptor has actual or
constructive notice.
In Mendoza v. Philippine Air Lines, Inc.,[14] the
consignee sued the carrier for damages but
nevertheless claimed that he was never a party to the
contract of transportation and was a complete stranger
thereto. In debunking Mendozas contention, we held
that:
x x x First, he insists that the articles of the Code of
Commerce should be applied; that he invokes the
provisions of said Code governing the obligations of a
common carrier to make prompt delivery of goods
given to it under a contract of transportation. Later, as
already said, he says that he was never a party to the
contract of transportation and was a complete stranger
to it, and that he is now suing on a tort or a violation
of his rights as a stranger (culpa aquiliana). If he does
not invoke the contract of carriage entered into with
the defendant company, then he would hardly have
any leg to stand on. His right to prompt delivery of the
can of film at the Pili Air Port stems and is derived
from the contract of carriage under which contract, the
PAL undertook to carry the can of film safely and to
deliver it to him promptly. Take away or ignore that
contract and the obligation to carry and to deliver and
right to prompt delivery disappear. Common carriers
are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right
to prompt delivery, unless such common carriers
previously assume the obligation. Said rights and
obligations are created by a specific contract entered
into by the parties. In the present case, the findings of
the trial court which as already stated, are accepted by
the parties and which we must accept are to the effect
that the LVN Pictures Inc. and Jose Mendoza on one
side, and the defendant company on the other, entered
into a contract of transportation (p. 29, Rec. on
Appeal). One interpretation of said finding is that the
LVN Pictures Inc. through previous agreement with
Mendoza acted as the latter's agent. When he
negotiated with the LVN Pictures Inc. to rent the film
'Himala ng Birhen' and show it during the Naga town
fiesta, he most probably authorized and enjoined the
Picture Company to ship the film for him on the PAL
on September 17th. Another interpretation is that even
if the LVN Pictures Inc. as consignor of its own
initiative, and acting independently of Mendoza for the
time being, made Mendoza a consignee. [Mendoza
made himself a party to the contract of transportaion
when he appeared at the Pili Air Port armed with the
copy of the Air Way Bill (Exh. 1) demanding the
delivery of the shipment to him.] The very citation
made by appellant in his memorandum supports this
view. Speaking of the possibility of a conflict between
the order of the shipper on the one hand and the order
of the consignee on the other, as when the shipper
orders the shipping company to return or retain the
goods shipped while the consignee demands their
delivery, Malagarriga in his book Codigo de Comercio
Comentado, Vol. 1, p. 400, citing a decision of the
Argentina Court of Appeals on commercial matters,
cited by Tolentino in Vol. II of his book entitled
'Commentaries and Jurisprudence on the Commercial
Laws of the Philippines' p. 209, says that the right of
the shipper to countermand the shipment terminates
when the consignee or legitimate holder of the bill of
lading appears with such bill of lading before the
carrier and makes himself a party to the contract. Prior
to that time he is a stranger to the contract.
Still another view of this phase of the case is that
contemplated in Art. 1257, paragraph 2, of the old
Civil Code (now Art. 1311, second paragraph) which
reads thus:
Should the contract contain any stipulation in favor of
a third person, he may demand its fulfillment provided
he has given notice of his acceptance to the person
bound before the stipulation has been revoked.'
Here, the contract of carriage between the LVN
Pictures Inc. and the defendant carrier contains the
stipulations of delivery to Mendoza as consignee. His
demand for the delivery of the can of film to him at the
Pili Air Port may be regarded as a notice of his
acceptance of the stipulation of the delivery in his
favor contained in the contract of carriage and
delivery. In this case he also made himself a party to
the contract, or at least has come to court to enforce it.
His cause of action must necessarily be founded on its
breach.[15] (Emphasis Ours)
In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the
carrier, becomes a party to the contract by reason of
either a) the relationship of agency between the
consignee and the shipper/ consignor; b) the
unequivocal acceptance of the bill of lading delivered
to the consignee, with full knowledge of its contents or
c) availment of the stipulation pour autrui, i.e., when
the consignee, a third person, demands before the
carrier the fulfillment of the stipulation made by the
consignor/shipper in the consignees favor, specifically
the delivery of the goods/cargoes shipped.[16]
In the instant case, Shin Yang consistently denied in
all of its pleadings that it authorized Halla Trading, Co.
to ship the goods on its behalf; or that it got hold of the
bill of lading covering the shipment or that it
demanded the release of the cargo. Basic is the rule in
evidence that the burden of proof lies upon him who
asserts it, not upon him who denies, since, by the
nature of things, he who denies a fact cannot produce
any proof of it.[17] Thus, MOF has the burden to
controvert all these denials, it being insistent that Shin
Yang asserted itself as the consignee and the one that
caused the shipment of the goods to the Philippines.
In civil cases, the party having the burden of proof
must establish his case by preponderance of
evidence,[18] which means evidence which is of
greater weight, or more convincing than that which is
offered in opposition to it.[19] Here, MOF failed to
meet the required quantum of proof. Other than
presenting the bill of lading, which, at most, proves
that the carrier acknowledged receipt of the subject
cargo from the shipper and that the consignee named
is to shoulder the freightage, MOF has not adduced
any other credible evidence to strengthen its cause of
action. It did not even present any witness in support
of its allegation that it was Shin Yang which furnished
all the details indicated in the bill of lading and that
Shin Yang consented to shoulder the shipment costs.
There is also nothing in the records which would
indicate that Shin Yang was an agent of Halla Trading
Co. or that it exercised any act that would bind it as a
named consignee. Thus, the CA correctly dismissed
the suit for failure of petitioner to establish its cause
against respondent.
WHEREFORE, the petition is DENIED. The assailed
Decision of the Court of Appeals dated March 22,
2006 dismissing petitioners complaint and the
Resolution dated May 25, 2006 denying the motion for
reconsideration are AFFIRMED.
SO ORDERED.
3. Dangwa Transportation Co. INC vs CA
On May 13, 1985, private respondents filed a
complaint 1 for damages against petitioners for the
death of Pedrito Cudiamat as a result of a vehicular
accident which occurred on March 25, 1985 at
Marivic, Sapid, Mankayan, Benguet. Among others, it
was alleged that on said date, while petitioner
Theodore M. Lardizabal was driving a passenger bus
belonging to petitioner corporation in a reckless and
imprudent manner and without due regard to traffic
rules and regulations and safety to persons and
property, it ran over its passenger, Pedrito Cudiamat.
However, instead of bringing Pedrito immediately to
the nearest hospital, the said driver, in utter bad faith
and without regard to the welfare of the victim, first
brought his other passengers and cargo to their
respective destinations before banging said victim to
the Lepanto Hospital where he expired.
On the other hand, petitioners alleged that they had
observed and continued to observe the extraordinary
diligence required in the operation of the
transportation company and the supervision of the
employees, even as they add that they are not absolute
insurers of the safety of the public at large. Further, it
was alleged that it was the victim's own carelessness
and negligence which gave rise to the subject incident,
hence they prayed for the dismissal of the complaint
plus an award of damages in their favor by way of a
counterclaim.
On July 29, 1988, the trial court rendered a decision,
effectively in favor of petitioners, with this decretal
portion:
IN VIEW OF ALL THE FOREGOING, judgment is
hereby pronounced that Pedrito Cudiamat was
negligent, which negligence was the proximate cause
of his death. Nonetheless, defendants in equity, are
hereby ordered to pay the heirs of Pedrito Cudiamat
the sum of P10,000.00 which approximates the
amount defendants initially offered said heirs for the
amicable settlement of the case. No costs.
SO ORDERED. 2
Not satisfied therewith, private respondents appealed
to the Court of Appeals which, in a decision 3 in CA-
G.R. CV No. 19504 promulgated on August 14, 1990,
set aside the decision of the lower court, and ordered
petitioners to pay private respondents:
1. The sum of Thirty Thousand (P30,000.00)
Pesos by way of indemnity for death of the victim
Pedrito Cudiamat;
2. The sum of Twenty Thousand (P20,000.00)
by way of moral damages;
3. The sum of Two Hundred Eighty Eight
Thousand (P288,000.00) Pesos as actual and
compensatory damages;
4. The costs of this suit. 4
Petitioners' motion for reconsideration was denied by
the Court of Appeals in its resolution dated October 4,
1990, 5 hence this petition with the central issue herein
being whether respondent court erred in reversing the
decision of the trial court and in finding petitioners
negligent and liable for the damages claimed.
It is an established principle that the factual findings
of the Court of Appeals as a rule are final and may not
be reviewed by this Court on appeal. However, this is
subject to settled exceptions, one of which is when the
findings of the appellate court are contrary to those of
the trial court, in which case a reexamination of the
facts and evidence may be undertaken. 6
In the case at bar, the trial court and the Court of
Appeal have discordant positions as to who between
the petitioners an the victim is guilty of negligence.
Perforce, we have had to conduct an evaluation of the
evidence in this case for the prope calibration of their
conflicting factual findings and legal conclusions.
The lower court, in declaring that the victim was
negligent, made the following findings:
This Court is satisfied that Pedrito Cudiamat was
negligent in trying to board a moving vehicle,
especially with one of his hands holding an umbrella.
And, without having given the driver or the conductor
any indication that he wishes to board the bus. But
defendants can also be found wanting of the necessary
diligence. In this connection, it is safe to assume that
when the deceased Cudiamat attempted to board
defendants' bus, the vehicle's door was open instead of
being closed. This should be so, for it is hard to believe
that one would even attempt to board a vehicle (i)n
motion if the door of said vehicle is closed. Here lies
the defendant's lack of diligence. Under such
circumstances, equity demands that there must be
something given to the heirs of the victim to assuage
their feelings. This, also considering that initially,
defendant common carrier had made overtures to
amicably settle the case. It did offer a certain monetary
consideration to the victim's heirs. 7
However, respondent court, in arriving at a different
opinion, declares that:
From the testimony of appellees'own witness in the
person of Vitaliano Safarita, it is evident that the
subject bus was at full stop when the victim Pedrito
Cudiamat boarded the same as it was precisely on this
instance where a certain Miss Abenoja alighted from
the bus. Moreover, contrary to the assertion of the
appellees, the victim did indicate his intention to board
the bus as can be seen from the testimony of the said
witness when he declared that Pedrito Cudiamat was
no longer walking and made a sign to board the bus
when the latter was still at a distance from him. It was
at the instance when Pedrito Cudiamat was closing his
umbrella at the platform of the bus when the latter
made a sudden jerk movement (as) the driver
commenced to accelerate the bus.
Evidently, the incident took place due to the gross
negligence of the appellee-driver in prematurely
stepping on the accelerator and in not waiting for the
passenger to first secure his seat especially so when we
take into account that the platform of the bus was at
the time slippery and wet because of a drizzle. The
defendants-appellees utterly failed to observe their
duty and obligation as common carrier to the end that
they should observe extra-ordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them according to the
circumstances of each case (Article 1733, New Civil
Code). 8
After a careful review of the evidence on record, we
find no reason to disturb the above holding of the
Court of Appeals. Its aforesaid findings are supported
by the testimony of petitioners' own witnesses. One of
them, Virginia Abalos, testified on cross-examination
as follows:
Q It is not a fact Madam witness, that at bunkhouse 54,
that is before the place of the incident, there is a
crossing?
A The way going to the mines but it is not being
pass(ed) by the bus.
Q And the incident happened before bunkhouse 56, is
that not correct?
A It happened between 54 and 53 bunkhouses. 9
The bus conductor, Martin Anglog, also declared:
Q When you arrived at Lepanto on March 25, 1985,
will you please inform this Honorable Court if there
was anv unusual incident that occurred?
A When we delivered a baggage at Marivic because a
person alighted there between Bunkhouse 53 and 54.
Q What happened when you delivered this passenger
at this particular place in Lepanto?
A When we reached the place, a passenger alighted
and I signalled my driver. When we stopped we went
out because I saw an umbrella about a split second and
I signalled again the driver, so the driver stopped and
we went down and we saw Pedrito Cudiamat asking
for help because he was lying down.
Q How far away was this certain person, Pedrito
Cudiamat, when you saw him lying down from the
bus how far was he?
A It is about two to three meters.
Q On what direction of the bus was he found about
three meters from the bus, was it at the front or at the
back?
A At the back, sir. 10 (Emphasis supplied.)
The foregoing testimonies show that the place of the
accident and the place where one of the passengers
alighted were both between Bunkhouses 53 and 54,
hence the finding of the Court of Appeals that the bus
was at full stop when the victim boarded the same is
correct. They further confirm the conclusion that the
victim fell from the platform of the bus when it
suddenly accelerated forward and was run over by the
rear right tires of the vehicle, as shown by the physical
evidence on where he was thereafter found in relation
to the bus when it stopped. Under such circumstances,
it cannot be said that the deceased was guilty of
negligence.

The contention of petitioners that the driver and the
conductor had no knowledge that the victim would
ride on the bus, since the latter had supposedly not
manifested his intention to board the same, does not
merit consideration. When the bus is not in motion
there is no necessity for a person who wants to ride the
same to signal his intention to board. A public utility
bus, once it stops, is in effect making a continuous
offer to bus riders. Hence, it becomes the duty of the
driver and the conductor, every time the bus stops, to
do no act that would have the effect of increasing the
peril to a passenger while he was attempting to board
the same. The premature acceleration of the bus in this
case was a breach of such duty. 11
It is the duty of common carriers of passengers,
including common carriers by railroad train, streetcar,
or motorbus, to stop their conveyances a reasonable
length of time in order to afford passengers an
opportunity to board and enter, and they are liable for
injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their
conveyances while they are doing so. 12
Further, even assuming that the bus was moving, the
act of the victim in boarding the same cannot be
considered negligent under the circumstances. As
clearly explained in the testimony of the aforestated
witness for petitioners, Virginia Abalos, th bus had
"just started" and "was still in slow motion" at the point
where the victim had boarded and was on its platform.
13
It is not negligence per se, or as a matter of law, for
one attempt to board a train or streetcar which is
moving slowly. 14 An ordinarily prudent person
would have made the attempt board the moving
conveyance under the same or similar circumstances.
The fact that passengers board and alight from slowly
moving vehicle is a matter of common experience both
the driver and conductor in this case could not have
been unaware of such an ordinary practice.
The victim herein, by stepping and standing on the
platform of the bus, is already considered a passenger
and is entitled all the rights and protection pertaining
to such a contractual relation. Hence, it has been held
that the duty which the carrier passengers owes to its
patrons extends to persons boarding cars as well as to
those alighting therefrom. 15
Common carriers, from the nature of their business
and reasons of public policy, are bound to observe
extraordina diligence for the safety of the passengers
transported by the according to all the circumstances
of each case. 16 A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence very
cautious persons, with a due regard for all the
circumstances. 17
It has also been repeatedly held that in an action based
on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the
carrier in order to hold it responsible to pay the
damages sought by the passenger. By contract of
carriage, the carrier assumes the express obligation to
transport the passenger to his destination safely and
observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to
the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be
proved, and it is therefore incumbent upon the carrier
to prove that it has exercised extraordinary diligence
as prescribed in Articles 1733 and 1755 of the Civil
Code. 18
Moreover, the circumstances under which the driver
and the conductor failed to bring the gravely injured
victim immediately to the hospital for medical
treatment is a patent and incontrovertible proof of their
negligence. It defies understanding and can even be
stigmatized as callous indifference. The evidence
shows that after the accident the bus could have
forthwith turned at Bunk 56 and thence to the hospital,
but its driver instead opted to first proceed to Bunk 70
to allow a passenger to alight and to deliver a
refrigerator, despite the serious condition of the
victim. The vacuous reason given by petitioners that it
was the wife of the deceased who caused the delay was
tersely and correctly confuted by respondent court:
... The pretension of the appellees that the delay was
due to the fact that they had to wait for about twenty
minutes for Inocencia Cudiamat to get dressed
deserves scant consideration. It is rather scandalous
and deplorable for a wife whose husband is at the
verge of dying to have the luxury of dressing herself
up for about twenty minutes before attending to help
her distressed and helpless husband. 19
Further, it cannot be said that the main intention of
petitioner Lardizabal in going to Bunk 70 was to
inform the victim's family of the mishap, since it was
not said bus driver nor the conductor but the
companion of the victim who informed his family
thereof. 20 In fact, it was only after the refrigerator was
unloaded that one of the passengers thought of sending
somebody to the house of the victim, as shown by the
testimony of Virginia Abalos again, to wit:
Q Why, what happened to your refrigerator at
that particular time?
A I asked them to bring it down because that is
the nearest place to our house and when I went down
and asked somebody to bring down the refrigerator, I
also asked somebody to call the family of Mr.
Cudiamat.
COURT:
Q Why did you ask somebody to call the family
of Mr. Cudiamat?
A Because Mr. Cudiamat met an accident, so I
ask somebody to call for the family of Mr. Cudiamat.
Q But nobody ask(ed) you to call for the family
of Mr. Cudiamat?
A No sir. 21
With respect to the award of damages, an oversight
was, however, committed by respondent Court of
Appeals in computing the actual damages based on the
gross income of the victim. The rule is that the amount
recoverable by the heirs of a victim of a tort is not the
loss of the entire earnings, but rather the loss of that
portion of the earnings which the beneficiary would
have received. In other words, only net earnings, not
gross earnings, are to be considered, that is, the total
of the earnings less expenses necessary in the creation
of such earnings or income and minus living and other
incidental expenses. 22
We are of the opinion that the deductible living and
other expense of the deceased may fairly and
reasonably be fixed at P500.00 a month or P6,000.00
a year. In adjudicating the actual or compensatory
damages, respondent court found that the deceased
was 48 years old, in good health with a remaining
productive life expectancy of 12 years, and then
earning P24,000.00 a year. Using the gross annual
income as the basis, and multiplying the same by 12
years, it accordingly awarded P288,000. Applying the
aforestated rule on computation based on the net
earnings, said award must be, as it hereby is, rectified
and reduced to P216,000.00. However, in accordance
with prevailing jurisprudence, the death indemnity is
hereby increased to P50,000.00. 23
WHEREFORE, subject to the above modifications,
the challenged judgment and resolution of respondent
Court of Appeals are hereby AFFIRMED in all other
respects.
SO ORDERED.
4. Korean Airlines Co. vs CA
The case is of 1980 vintage. It originated from the
Regional Trial Court, appealed to the Court of
Appeals, then finally elevated to this Court. From the
Court's disposition of the case stemmed incidents
which are now the subjects for resolution. To
elaborate:
In an action for breach of contract of carriage, Korean
Airlines, Co., Ltd., (KAL) was ordered by the trial
court to pay actual/compensatory damages, with legal
interest, attorney's fees and costs of suit in favor of
plaintiff Juanito C. Lapuz. 1 Both parties appealed to
the Court of Appeals, but the trial court's judgment was
merely modified: the award of compensatory damages
reduced, an award for moral and exemplary damages
added, with 6% interest per annum from the date of
filing of the complaint, and the attorney's fees and
costs deleted.
The parties subsequently elevated the case to this
Court, docketed as G.R. No. 114061 and G.R. No.
113842. On August 3, 1994, the Court in a
consolidated decision affirmed the decision of the
Court of Appeals, modified only as to the
commencement date of the award of legal interest, i.e.,
from the date of the decision of the trial court and not
from the date of filing of the complaint. 2 The parties
filed their respective motions for reconsideration with
KAL, for the first time, assailing the Court's lack of
jurisdiction to impose legal interest as the complaint
allegedly failed to pray for its award. In a resolution
dated September 21, 1994, the Court resolved to deny
both motions for reconsideration with finality.
Notwithstanding, KAL filed subsequent pleadings
asking for reconsideration of the Court's consolidated
decision and again impugning the award of legal
interest. Lapuz, meanwhile, filed a motion for early
resolution of the case followed by a motion for
execution dated March 14, 1995, praying for the
issuance of a writ of execution. KAL, in response, filed
its Opposition and Supplemental Argument in Support
of the Opposition dated March 28, 1995, and March
30, 1995, respectively. Additionally, on May 3, 1995,
Lapuz filed another Urgent Motion for Early
Resolution stating that the case has been pending for
fifteen years which KAL admitted in its Comment
filed two days later, albeit stressing that its pleadings
were not intended for delay. 3
KAL's asseveration that the Court lacks jurisdiction to
award legal interest is devoid of merit. Both the
complaint and amended complaint against KAL dated
November 27, 1980, and January 5, 1981,
respectively, prayed for reliefs and remedies to which
Lapuz may be entitled in law and equity. The award of
legal interest is one such relief, as it is based on
equitable grounds duly sanctioned by Article 2210 of
the Civil Code which provides that: "[i]nterest may, in
the discretion of the Court, be allowed upon damages
awarded for breach of contract". 4
Furthermore, in its petition for review before the Court
of Appeals, KAL did not question the trial court's
imposition of legal interest. Likewise, in its appeal
before the Court, KAL never bewailed the award of
legal interest. In fact, KAL took exception only with
respect to the date when legal interest should
commence to run. 5 Indeed, it was only in its motion
for reconsideration when suddenly its imposition was
assailed for having been rendered without jurisdiction.
To strengthen its languid position, KAL's subsequent
pleadings clothed its attack with constitutional import
for alleged violation of its right to due process. There
is no cogent reason and none appears on record that
could sustain KAL's scheme as KAL was amply given,
in the courts below and in this Court, occasion to
ventilate its case. What is repugnant to due process is
the denial of opportunity to be heard 6 which
opportunity KAL was extensively afforded. While it is
a rule that jurisdictional question may be raised at any
time, this, however, admits of an exception where, as
in this case, estoppel has supervened. 7 This court has
time and again frowned upon the undesirable practice
of a party submitting his case for decision and then
accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction when adverse. 8
The Court shall not countenance KAL's undesirable
moves. What attenuates KAL's unmeritorious
importuning is that the assailed decision has long
acquired finality. It is a settled rule that a judgment
which has acquired finality becomes immutable and
unalterable, hence may no longer be modified in any
respect except only to correct clerical errors or
mistake. 9 Once a judgment becomes final, all the
issues between the parties are deemed resolved and
laid to rest.
KAL's filing of numerous pleadings delayed the
disposition of the case which for fifteen years
remained pending. This practice may constitute abuse
of the Court's processes for it tends to impede, obstruct
and degrade the administration of justice. In Li Kim
Tho v. Go Siu Ko, et al., 10 the Court gave this
reminder to litigants and lawyers' alike:
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 be not,
through a mere subterfuge, deprived of the fruits of the
verdict. Courts must therefore guard against any
scheme calculated to bring about the result.
Constituted as they are to put an end to controversies,
courts should frown upon any attempt to prolong them.
11
Likewise, in Banogan v. Zerna 12 the Court reminded
lawyers of their responsibility as officers of the court
in this manner:
As officers of the court, lawyers have a responsibility
to assist in the proper administration of justice. They
do not discharge this duty by filing pointless petitions
that only add to the workload of the judiciary,
especially this Court, which is burdened enough as it
is. A judicious study of the facts and the law should
advise them when a case, such as this, should not de
permitted to be filed to merely clutter the already
congested judicial dockets. They do not advance the
cause of law or their clients by commencing litigations
that for sheer lack of merit do not deserve the attention
of the courts. 13
A lawyer owes fidelity to the cause of his client, but
not at the expense of truth and the administration of
justice. 14 Counsel for KAL is reminded that it is his
duty not to unduly delay a case, impede the execution
of a judgment or misuse Court processes. 15
With respect to Lapuz' motion for execution, suffice to
state that the application for a writ of execution should
be addressed to the court of origin and not to this
Court. As the judgment has become final and
executory then all that is left of the trial court is the
ministerial act of ordering the execution thereof.
ACCORDINGLY, KAL's motion for reconsideration
is DENlED. Counsel for KAL is hereby warned that
repetition of his undesirable practice shall be dealt
with severely.
5. Light Rail Transit Authority vs Navidad
The case before the Court is an appeal from the
decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000,
respectively, in CA-G.R. CV No. 60720, entitled
"Marjorie Navidad and Heirs of the Late Nicanor
Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the
Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from
liability and finding Light Rail Transit Authority
(LRTA) and Rodolfo Roman liable for damages on
account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven
oclock in the evening, Nicanor Navidad, then drunk,
entered the EDSA LRT station after purchasing a
"token" (representing payment of the fare). While
Navidad was standing on the platform near the LRT
tracks, Junelito Escartin, the security guard assigned to
the area approached Navidad. A misunderstanding or
an altercation between the two apparently ensued that
led to a fist fight. No evidence, however, was adduced
to indicate how the fight started or who, between the
two, delivered the first blow or how Navidad later fell
on the LRT tracks. At the exact moment that Navidad
fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the
moving train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein
respondent Marjorie Navidad, along with her children,
filed a complaint for damages against Junelito
Escartin, Rodolfo Roman, the LRTA, the Metro
Transit Organization, Inc. (Metro Transit), and
Prudent for the death of her husband. LRTA and
Roman filed a counterclaim against Navidad and a
cross-claim against Escartin and Prudent. Prudent, in
its answer, denied liability and averred that it had
exercised due diligence in the selection and
supervision of its security guards.
The LRTA and Roman presented their evidence while
Prudent and Escartin, instead of presenting evidence,
filed a demurrer contending that Navidad had failed to
prove that Escartin was negligent in his assigned task.
On 11 August 1998, the trial court rendered its
decision; it adjudged:
"WHEREFORE, judgment is hereby rendered in favor
of the plaintiffs and against the defendants Prudent
Security and Junelito Escartin ordering the latter to pay
jointly and severally the plaintiffs the following:
"a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the
sum of P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorneys fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo
Roman are dismissed for lack of merit.
"The compulsory counterclaim of LRTA and Roman
are likewise dismissed."1
Prudent appealed to the Court of Appeals. On 27
August 2000, the appellate court promulgated its now
assailed decision exonerating Prudent from any
liability for the death of Nicanor Navidad and, instead,
holding the LRTA and Roman jointly and severally
liable thusly:
"WHEREFORE, the assailed judgment is hereby
MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead,
appellees Rodolfo Roman and the Light Rail Transit
Authority (LRTA) are held liable for his death and are
hereby directed to pay jointly and severally to the
plaintiffs-appellees, the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the
deceased; and
e) P20,000.00 as and for attorneys fees."2
The appellate court ratiocinated that while the
deceased might not have then as yet boarded the train,
a contract of carriage theretofore had already existed
when the victim entered the place where passengers
were supposed to be after paying the fare and getting
the corresponding token therefor. In exempting
Prudent from liability, the court stressed that there was
nothing to link the security agency to the death of
Navidad. It said that Navidad failed to show that
Escartin inflicted fist blows upon the victim and the
evidence merely established the fact of death of
Navidad by reason of his having been hit by the train
owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners
for their failure to present expert evidence to establish
the fact that the application of emergency brakes could
not have stopped the train.
The appellate court denied petitioners motion for
reconsideration in its resolution of 10 October 2000.
In their present recourse, petitioners recite alleged
errors on the part of the appellate court; viz:
"I.THE HONORABLE COURT OF APPEALS
GRAVELY ERRED BY DISREGARDING THE
FINDINGS OF FACTS BY THE TRIAL COURT
"II.THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT
PETITIONERS ARE LIABLE FOR THE DEATH OF
NICANOR NAVIDAD, JR.
"III.THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT RODOLFO
ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court
ignored the evidence and the factual findings of the
trial court by holding them liable on the basis of a
sweeping conclusion that the presumption of
negligence on the part of a common carrier was not
overcome. Petitioners would insist that Escartins
assault upon Navidad, which caused the latter to fall
on the tracks, was an act of a stranger that could not
have been foreseen or prevented. The LRTA would
add that the appellate courts conclusion on the
existence of an employer-employee relationship
between Roman and LRTA lacked basis because
Roman himself had testified being an employee of
Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate
court, contended that a contract of carriage was
deemed created from the moment Navidad paid the
fare at the LRT station and entered the premises of the
latter, entitling Navidad to all the rights and protection
under a contractual relation, and that the appellate
court had correctly held LRTA and Roman liable for
the death of Navidad in failing to exercise
extraordinary diligence imposed upon a common
carrier.
Law and jurisprudence dictate that a common carrier,
both from the nature of its business and for reasons of
public policy, is burdened with the duty of exercising
utmost diligence in ensuring the safety of passengers.4
The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers,
provides:
"Article 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances.
"Article 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the formers employees,
although such employees may have acted beyond the
scope of their authority or in violation of the orders of
the common carriers.
"This liability of the common carriers does not cease
upon proof that they exercised all the diligence of a
good father of a family in the selection and supervision
of their employees."
"Article 1763. A common carrier is responsible for
injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of
strangers, if the common carriers employees through
the exercise of the diligence of a good father of a
family could have prevented or stopped the act or
omission."
The law requires common carriers to carry passengers
safely using the utmost diligence of very cautious
persons with due regard for all circumstances.5 Such
duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of
the trip but for so long as the passengers are within its
premises and where they ought to be in pursuance to
the contract of carriage.6 The statutory provisions
render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of
its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the
common carriers employees through the exercise of
due diligence could have prevented or stopped the act
or omission.7 In case of such death or injury, a carrier
is presumed to have been at fault or been negligent,
and8 by simple proof of injury, the passenger is
relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the
burden shifts upon the carrier to prove that the injury
is due to an unforeseen event or to force majeure.9 In
the absence of satisfactory explanation by the carrier
on how the accident occurred, which petitioners,
according to the appellate court, have failed to show,
the presumption would be that it has been at fault,10
an exception from the general rule that negligence
must be proved.11
The foundation of LRTAs liability is the contract of
carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its
failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to
ensure the safety of passengers, a carrier may choose
to hire its own employees or avail itself of the services
of an outsider or an independent firm to undertake the
task. In either case, the common carrier is not relieved
of its responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that
liability could only be for tort under the provisions of
Article 217612 and related provisions, in conjunction
with Article 2180,13 of the Civil Code. The premise, and (b) petitioner Rodolfo Roman is absolved from
however, for the employers liability is negligence or liability. No costs.
fault on the part of the employee. Once such fault is
established, the employer can then be made liable on
the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris
families in the selection and supervision of its
employees. The liability is primary and can only be
negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has
not been shown. Absent such a showing, one might ask
further, how then must the liability of the common
carrier, on the one hand, and an independent
contractor, on the other hand, be described? It would
be solidary. A contractual obligation can be breached
by tort and when the same act or omission causes the
injury, one resulting in culpa contractual and the other
in culpa aquiliana, Article 219414 of the Civil Code
can well apply.15 In fine, a liability for tort may arise
even under a contract, where tort is that which
breaches the contract.16 Stated differently, when an
act which constitutes a breach of contract would have
itself constituted the source of a quasi-delictual
liability had no contract existed between the parties, Provisional Remedies
the contract can be said to have been breached by tort,
thereby allowing the rules on tort to apply.17 1. Calo vs Roldan

Regrettably for LRT, as well as perhaps the surviving
spouse and heirs of the late Nicanor Navidad, this
Court is concluded by the factual finding of the Court
of Appeals that "there is nothing to link (Prudent) to
the death of Nicanor (Navidad), for the reason that the
negligence of its employee, Escartin, has not been duly
proven x x x." This finding of the appellate court is not
without substantial justification in our own review of
the records of the case.
This is a petition for writ of certiorari against the
respondent Judge Arsenio C. Roldan of the Court First
Instance of Laguna, on the ground that the latter has
exceeded his jurisdiction or acted with grave abuse of
discretion in appointing a receiver of certain lands and
their fruits which, according to the complainant filed
by the other respondents, as plaintiffs, against
petitioners, as defendants, in case No. 7951, were in
the actual possession of and belong to said plaintiffs.

There being, similarly, no showing that petitioner
Rodolfo Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability.
Needless to say, the contractual tie between the LRT
and Navidad is not itself a juridical relation between
the latter and Roman; thus, Roman can be made liable
only for his own fault or negligence.
The award of nominal damages in addition to actual
damages is untenable. Nominal damages are
adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
him.18 It is an established rule that nominal damages
cannot co-exist with compensatory damages.19
WHEREFORE, the assailed decision of the appellate
court is AFFIRMED with MODIFICATION but only
in that (a) the award of nominal damages is DELETED
The complaint filed by plaintiffs and respondents
against defendants and petitioners in the Court of First
Instance of Laguna reads as follows:
1. That the plaintiffs and the defendants are all of legal
age, Filipino citizens, and residents of Pila, Laguna;
the plaintiffs are husband and wife..
2. That the plaintiff spouses are the owners and the
possessors of the following described parcels of land,
to wit:.
xxx xxx xxx
3. That parcel No. (a) described above is now an
unplanted rice land and parcel No. (b) described in the
complaint is a coconut land, both under the possession
of the plaintiffs..
4. That the defendants, without any legal right
whatsoever and in connivance with each other,
through the use of force, stealth, threats and
intimidation, intend or are intending to enter and work
or harvest whatever existing fruits may now be found
in the lands above-mentioned in violation of plaintiff's
in this case ineffectual..
5. That unless defendants are barred, restrained,
enjoined, and prohibited from entering or harvesting
the lands or working therein through ex-parte
injunction, the plaintiffs will suffer injustice, damages
and irreparable injury to their great prejudice..
6. That the plaintiffs are offering a bond in their
application for ex-parte injunction in the amount of
P2,000, subject to the approval of this Hon. Court,
which bond is attached hereto marked as Annex A and
made an integral part of this complaint..
7. That on or about June 26, 1945, the defendants,
through force, destroyed and took away the madre-
cacao fencer, and barbed wires built on the
northwestern portion of the land designated as parcel
No. (b) of this complaint to the damage and prejudice
of the plaintiffs in the amount of at least P200..
Wherefore, it is respectfully prayed:.
(a) That the accompanying bond in the amount of
P2,000 be approved;
(b) That a writ of preliminary injunction be issued ex-
parte immediately restraining, enjoining and
prohibiting the defendants, their agents, servants,
representatives, attorneys, and, (or) other persons
acting for and in their behalf, from entering in,
interfering with and/or in any wise taking any
participation in the harvest of the lands belonging to
the plaintiffs; or in any wise working the lands above-
described;
(c) That judgment be rendered, after due hearing,
declaring the preliminary injunction final;.
(d) That the defendants be condemned jointly and
severally to pay the plaintiffs the sum of P200 as
damages; and.
(e) That plaintiffs be given such other and further relief
just and equitable with costs of suit to the defendants.
The defendants filed an opposition dated August 8,
1945, to the issuance of the writ of preliminary
injunction prayed for in the above-quoted complaint,
on the ground that they are owners of the lands and
have been in actual possession thereof since the year
1925; and their answer to the complaint filed on
August 14, 1945, they reiterate that they are the owners
and were then in actual possession of said property,
and that the plaintiffs have never been in possession
thereof.
The hearing of the petition for preliminary injunction
was held on August 9, 1945, at which evidence was
introduced by both parties. After the hearing, Judge
Rilloraza, then presiding over the Court of First
Instance of Laguna, denied the petition on the ground
that the defendants were in actual possession of said
lands. A motion for reconsideration was filed by
plaintiffs on August 20, 1945, but said motion had not
yet, up to the hearing of the present case, been decided
either by Judge Rilloraza, who was assigned to another
court, or by the respondent judge.
The plaintiffs (respondents) filed on September 4,
1945, a reply to defendants' answer in which, among
others, they reiterate their allegation in the complaint
that they are possessors in good faith of the properties
in question.
And on December 17, plaintiffs filed an urgent petition
ex-parte praying that plaintiffs' motion for
reconsideration of the order denying their petition for
preliminary injunction be granted and or for the
appointment of a receiver of the properties described
in the complaint, on the ground that (a) the plaintiffs
have an interest in the properties in question, and the
fruits thereof were in danger of being lost unless a
receiver was appointed; and that (b) the appointment
of a receiver was the most convenient and feasible
means of preserving, administering and or disposing
of the properties in litigation which included their
fruits. Respondents Judge Roldan, on the same date,
December 17, 1945, decided that the court would
consider the motion for reconsideration in due time,
and granted the petition for appointment of and
appointed a receiver in the case.
The question to be determined in the present special
civil action of certiorari is, whether or not the
respondent judge acted in excess of his jurisdiction or
with grave abuse of discretion in issuing the order
appointing a receiver in the case No. 7951 of the Court
of First Instance of Laguna; for it is evident that there
is no appeal or any other plain, speedy, and adequate
remedy in the ordinary course of the law against the
said order, which is an incidental or interlocutory one.
It is a truism in legal procedure that what determines
the nature of an action filed in the courts are the facts
alleged in the complaint as constituting the cause of
the action. The facts averred as a defense in the
defendant's answer do not and can not determine or
change the nature of the plaintiff's action. The theory
adopted by the plaintiff in his complaint is one thing,
and that of the defendant in his answer is another. The
plaintiff has to establish or prove his theory or cause
of action in order to obtain the remedy he prays for;
and the defendant his theory, if necessary, in order to
defeat the claim or action of the plaintiff..
According to the complaint filed in the said case No.
7951, the plaintiff's action is one of ordinary
injunction, for the plaintiffs allege that they are the
owners of the lands therein described, and were in
actual possession thereof, and that "the defendants
without any legal right whatever and in connivance
with each other, through the use of force, stealth, threat
and intimidation, intend or are intending to enter and
work or harvest whatever existing fruits may be found
in the lands above mentioned in violation of plaintiffs'
proprietary rights thereto;" and prays "that the
defendants, their agents, servants, representatives, and
other persons acting for or in their behalf, be
restrained, enjoined and prohibited from entering in,
interfering with, or in any way taking any participation
in the harvest of the lands above describe belonging to
the plaintiffs."
That this is the nature of plaintiffs' action corroborated
by the fact that they petitioned in the same complaint
for a preliminary prohibitory injunction, which was
denied by the court in its order dated August 17, 1945,
and that the plaintiffs, in their motion for
reconsideration of said order filed on August 20 of the
same year, and in their urgent petition dated December
17, moving the court to grant said motion for
reconsideration, reiterated that they were actual
possessors of the land in question.
The fact that plaintiffs, in their reply dated September
4, after reiterating their allegation or claim that they
are the owners in fee simple and possessors in good
faith of the properties in question, pray that they be
declared the owners in fee simple, has not changed the
nature of the action alleged in the complaint or added
a new cause of action thereto; because the allegations
in plaintiffs' reply were in answer to defendants'
defenses, and the nature of plaintiffs' cause of action,
as set forth in their complaint, was not and could not
be amended or changed by the reply, which plaintiffs
had the right to present as a matter of course. A
plaintiff can not, after defendant's answer, amend his
complaint by changing the cause of action or adding a
new one without previously obtaining leave of court
(section 2, Rule 17)..
Respondents' contention in paragraph I of their answer
that the action filed by them against petitioners in the
case No. 7951 of the Court of First Instance of Laguna
is not only for injunction, but also to quiet title over
the two parcels of land described in the complaint, is
untenable for the reasons stated in the previous
paragraph. Besides, an equitable action to quiet title,
in order to prevent harrassment by continued assertion
of adverse title, or to protect the plaintiff's legal title
and possession, may be filed in courts of equity (and
our courts are also of equity), only where no other
remedy at law exists or where the legal remedy
invokable would not afford adequate remedy (32 Cyc.,
1306, 1307). In the present case wherein plaintiffs
alleged that they are the owners and were in actual
possession of the lands described in the complaint and
their fruits, the action of injunction filed by them is the
proper and adequate remedy in law, for a judgment in
favor of plaintiffs would quiet their title to said lands..
The provisional remedies denominated attachment,
preliminary injunction, receivership, and delivery of
personal property, provided in Rules 59, 60, 61, and 62
of the Rules of Court, respectively, are remedies to
which parties litigant may resort for the preservation
or protection of their rights or interest, and for no other
purpose, during the pendency of the principal action.
If an action, by its nature, does not require such
protection or preservation, said remedies can not be
applied for and granted. To each kind of action or
actions a proper provisional remedy is provided for by
law. The Rules of Court clearly specify the case in
which they may be properly granted. .
Attachment may be issued only in the case or actions
specifically stated in section 1, Rule 59, in order that
the defendant may not dispose of his property
attached, and thus secure the satisfaction of any
judgment that may be recovered by plaintiff from
defendant. For that reason a property subject of
litigation between the parties, or claimed by plaintiff
as his, can not be attached upon motion of the same
plaintiff..
The special remedy of preliminary prohibitory
injunction lies when the plaintiff's principal action is
an ordinary action of injunction, that is, when the relief
demanded in the plaintiff's complaint consists in
restraining the commission or continuance of the act
complained of, either perpetually or for a limited
period, and the other conditions required by section 3
of Rule 60 are present. The purpose of this provisional
remedy is to preserve the status quo of the things
subject of the action or the relation between the parties,
in order to protect the rights of the plaintiff respecting
the subject of the action during the pendency of the
suit. Because, otherwise or if no preliminary
prohibition injunction were issued, the defendant may,
before final judgment, do or continue the doing of the
act which the plaintiff asks the court to restrain, and
thus make ineffectual the final judgment rendered
afterwards granting the relief sought by the plaintiff.
But, as this court has repeatedly held, a writ of
preliminary injunction should not be granted to take
the property out of the possession of one party to place
it in the hands of another whose title has not been
clearly established..
A receiver may be appointed to take charge of personal
or real property which is the subject of an ordinary
civil action, when it appears that the party applying for
the appointment of a receiver has an interest in the
property or fund which is the subject of the action or
litigation, and that such property or fund is in danger
of being lost, removed or materially injured unless a
receiver is appointed to guard and preserve it (section
1 [b], Rule 61); or when 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 (section 1 [e] of said Rule). The
property or fund must, therefore be in litigation
according to the allegations of the complaint, and the
object of appointing a receiver is to secure and
preserve the property or thing in controversy pending
the litigation. Of course, if it is not in litigation and is
in actual possession of the plaintiff, the latter can not
apply for and obtain the appointment of a receiver
thereof, for there would be no reason for such
appointment.
Delivery of personal property as a provisional remedy
consists in the delivery, by order of the court, of a
personal property by the defendant to the plaintiff,
who shall give a bond to assure the return thereof or
the payment of damages to the defendant in 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 damaging, destroying or disposing of the same
during the pendency of the suit.
Undoubtedly, according to law, the provisional
remedy proper to plaintiffs' action of injunction is a
preliminary prohibitory injunction, if plaintiff's theory,
as set forth in the complaint, that he is the owner and
in actual possession of the premises is correct. But as
the lower court found at the hearing of the said petition
for preliminary injunction that the defendants were in
possession of the lands, the lower court acted in
accordance with law in denying the petition, although
their motion for reconsideration, which was still
pending at the time the petition in the present case was
heard in this court, plaintiffs insist that they are in
actual possession of the lands and, therefore, of the
fruits thereof.
From the foregoing it appears evident that the
respondent judge acted in excess of his jurisdiction in
appointing a receiver in case No. 7951 of the Court of
First Instance of Laguna. Appointment of a receiver is
not proper or does not lie in an action of injunction
such as the one filed by the plaintiff. The petition for
appointment of a receiver filed by the plaintiffs
(Exhibit I of the petition) is based on the ground that it
is the most convenient and feasible means of
preserving, administering and disposing of the
properties in litigation; and according to plaintiffs'
theory or allegations in their complaint, neither the
lands nor the palay harvested therein, are in litigation.
The litigation or issue raised by plaintiffs in their
complaint is not the ownership or possession of the
lands and their fruits. It is whether or not defendants
intend or were intending to enter or work or harvest
whatever existing fruits could then be found in the
lands described in the complaint, alleged to be the
exclusive property and in the actual possession of the
plaintiffs. It is a matter not only of law but of plain
common sense that a plaintiff will not and legally can
not ask for the appointment or receiver of property
which he alleges to belong to him and to be actually in
his possession. For the owner and possessor of a
property is more interested than persons in preserving
and administering it.
Besides, even if the plaintiffs had amended their
complaint and alleged that the lands and palay
harvested therein are being claimed by the defendants,
and consequently the ownership and possession
thereof were in litigation, it appearing that the
defendants (now petitioners) were in possession of the
lands and had planted the crop or palay harvested
therein, as alleged in paragraph 6 (a) and (b) of the
petition filed in this court and not denied by the
respondent in paragraph 2 of his answer, the
respondent judge would have acted in excess of his
jurisdiction or with a grave abuse of discretion in
appointing a receiver thereof. Because relief by way of
receivership is equitable in nature, and a court of
equity will not ordinarily appoint a receiver where the
rights of the parties depend on the determination of
adverse claims of legal title to real property and one
party is in possession (53 C. J., p. 26). The present case
falls within this rule..
In the case of Mendoza vs. Arellano and B. de
Arellano, this court said:
Appointments of receivers of real estate in cases of this
kind lie largely in the sound discretion of the court, and
where the effect of such an appointment is to take real
estate out of the possession of the defendant before the
final adjudication of the rights of the parties, the
appointment should be made only in extreme cases and
on a clear showing of necessity therefor in order to
save the plaintiff from grave and irremediable loss or
damage. (34 Cyc., 51, and cases there cited.) No such
showing has been made in this case as would justify us
in interfering with the exercise by trial judge of his
discretion in denying the application for receiver. (36
Phil., 59, 63, 64.).
Although the petition is silent on the matter, as the
respondents in their answer allege that the Court of
First Instance of Laguna has appointed a receiver in
another case No. 7989 of said court, instituted by the
respondents Relova against Roberto Calo and his
brothers and sisters, children of Sofia de Oca and
Tranquilino Calo (petitioner in this case), and
submitted copy of the complaint filed by the plaintiffs
(now respondents) in case No. 7989 (Exhibit 9 of the
respondents' answer), we may properly express and do
hereby express here our opinion, in order to avoid
multiplicity of suits, that as the cause of action alleged
in the in the complaint filed by the respondents Relova
in the other case is substantially the same as the cause
of action averred in the complaint filed in the present
case, the order of the Court of First Instance of Laguna
appointing a receiver in said case No. 7989 was issued
in excess of its jurisdiction, and is therefore null and
void.
In view of all the foregoing, we hold that the
respondent Judge Arsenio C. Roldan of the Court of
First Instance of Laguna has exceeded his jurisdiction
in appointing a receiver in the present case, and
therefore the order of said respondent judge appointing
the receiver, as well as all other orders and proceedings
of the court presided over by said judge in connection
with the receivership, are null and void.
As to the petitioners' petition that respondents Relova
be punished for contempt of court for having
disobeyed the injunction issued by this court against
the respondents requiring them to desist and refrain
from enforcing the order of receivership and entering
the palay therein, it appearing from the evidence in the
record that the palay was harvested by the receiver and
not by said respondents, the petition for contempt of
court is denied. So ordered, with costs against the
respondents.
2. Lim v Lazaro
Assailed in this petition for review on certiorari1 are
the July 10, 2008 Decision2 and December 18, 2008
Resolution3 of the Court of Appeals (CA) in CA-G.R.
SP No. 100270, affirming the March 29, 2007 Order4
of the Regional Trial Court of Quezon City, Branch
223 (RTC), which lifted the writ of preliminary
attachment issued in favor of petitioner Alfredo C.
Lim, Jr. (Lim, Jr.).
The Facts
On August 22, 2005, Lim, Jr. filed a complaint5 for
sum of money with prayer for the issuance of a writ of
preliminary attachment before the RTC, seeking to
recover from respondents-spouses Tito S. Lazaro and
Carmen T. Lazaro (Sps. Lazaro) the sum of
P2,160,000.00, which represented the amounts stated
in several dishonored checks issued by the latter to the
former, as well as interests, attorneys fees, and costs.
The RTC granted the writ of preliminary attachment
application6 and upon the posting of the required
P2,160,000.00 bond,7 issued the corresponding writ
on October 14, 2005.8In this accord, three (3) parcels
of land situated in Bulacan, covered by Transfer
Certificates of Title (TCT) Nos. T-64940, T-64939,
and T-86369 (subject TCTs), registered in the names
of Sps. Lazaro, were levied upon.9
In their Answer with Counterclaim,10 Sps. Lazaro
averred, among others, that Lim, Jr. had no cause of
action against them since: (a) Colim Merchandise
(Colim), and not Lim, Jr., was the payee of the fifteen
(15) Metrobank checks; and (b) the PNB and Real
Bank checks were not drawn by them, but by Virgilio
Arcinas and Elizabeth Ramos, respectively. While
they admit their indebtedness to Colim, Sps. Lazaro
alleged that the same had already been substantially
reduced on account of previous payments which were
apparently misapplied. In this regard, they sought for
an accounting and reconciliation of records to
determine the actual amount due. They likewise
argued that no fraud should be imputed against them
as the aforesaid checks issued to Colim were merely
intended as a form of collateral.11 Hinged on the same
grounds, Sps. Lazaro equally opposed the issuance of
a writ of preliminary attachment.12
Nonetheless, on September 22, 2006, the parties
entered into a Compromise Agreement13 whereby
Sps. Lazaro agreed to pay Lim, Jr. the amount of
P2,351,064.80 on an installment basis, following a
schedule of payments covering the period from
September 2006 until October 2013, under the
following terms, among others: (a) that should the
financial condition of Sps. Lazaro improve, the
monthly installments shall be increased in order to
hasten the full payment of the entire obligation;14and
(b) that Sps. Lazaros failure to pay any installment
due or the dishonor of any of the postdated checks
delivered in payment thereof shall make the whole
obligation immediately due and demandable.
The aforesaid compromise agreement was approved
by the RTC in its October 31, 2006 Decision15and
January 5, 2007 Amended Decision.16
Subsequently, Sps. Lazaro filed an Omnibus
Motion,17 seeking to lift the writ of preliminary
attachment annotated on the subject TCTs, which the
RTC granted on March 29, 2007.18 It ruled that a writ
of preliminary attachment is a mere provisional or
ancillary remedy, resorted to by a litigant to protect
and preserve certain rights and interests pending final
judgment. Considering that the case had already been
considered closed and terminated by the rendition of
the January 5, 2007 Amended Decision on the basis of
the September 22, 2006 compromise agreement, the
writ of preliminary attachment should be lifted and
quashed. Consequently, it ordered the Registry of
Deeds of Bulacan to cancel the writs annotation on
the subject TCTs.
Lim, Jr. filed a motion for reconsideration19 which
was, however, denied on July 26, 2007,20prompting
him to file a petition for certiorari21 before the CA.
The CA Ruling
On July 10, 2008, the CA rendered the assailed
decision,22 finding no grave abuse of discretion on the
RTCs part. It observed that a writ of preliminary
attachment may only be issued at the commencement
of the action or at any time before entry of judgment.
Thus, since the principal cause of action had already
been declared closed and terminated by the RTC, the
provisional or ancillary remedy of preliminary
attachment would have no leg to stand on,
necessitating its discharge.23
Aggrieved, Lim, Jr. moved for reconsideration24
which was likewise denied by the CA in its December
18, 2008 Resolution.25
Hence, the instant petition.
The Issue Before the Court
The sole issue in this case is whether or not the writ of
preliminary attachment was properly lifted.
The Courts Ruling
The petition is meritorious.
By its nature, preliminary attachment, under Rule 57
of the Rules of Court (Rule 57), is an ancillary remedy
applied for not for its own sake but to enable the
attaching party to realize upon the relief sought and
expected to be granted in the main or principal action;
it is a measure auxiliary or incidental to the main
action. As such, it is available during its pendency
which may be resorted to by a litigant to preserve and
protect certain rights and interests during the interim,
awaiting the ultimate effects of a final judgment in the
case.26 In addition, attachment is also availed of in
order to acquire jurisdiction over the action by actual
or constructive seizure of the property in those
instances where personal or substituted service of
summons on the defendant cannot be effected.27
In this relation, while the provisions of Rule 57 are
silent on the length of time within which an attachment
lien shall continue to subsist after the rendition of a
final judgment, jurisprudence dictates that the said lien
continues until the debt is paid, or the sale is had under
execution issued on the judgment or until the judgment
is satisfied, or the attachment discharged or vacated in
the same manner provided by law.28
Applying these principles, the Court finds that the
discharge of the writ of preliminary attachment against
the properties of Sps. Lazaro was improper.
Records indicate that while the parties have entered
into a compromise agreement which had already been
approved by the RTC in its January 5, 2007 Amended
Decision, the obligations thereunder have yet to be
fully complied with particularly, the payment of the
total compromise amount of P2,351,064.80. Hence,
given that the foregoing debt remains unpaid, the
attachment of Sps. Lazaros properties should have
continued to subsist.
In Chemphil Export & Import Corporation v. CA,29
the Court pronounced that a writ of attachment is not
extinguished by the execution of a compromise
agreement between the parties,
viz:cralavvonlinelawlibrary
Did the compromise agreement between Antonio
Garcia and the consortium discharge the latters
attachment lien over the disputed shares?
CEIC argues that a writ of attachment is a mere
auxiliary remedy which, upon the dismissal of the
case, dies a natural death. Thus, when the consortium
entered into a compromise agreement, which resulted
in the termination of their case, the disputed shares
were released from garnishment.
We disagree. To subscribe to CEICs contentions
would be to totally disregard the concept and purpose
of a preliminary attachment.
xxxx
The case at bench admits of peculiar character in the
sense that it involves a compromise agreement.
Nonetheless, x x x. The parties to the compromise
agreement should not be deprived of the protection
provided by an attachment lien especially in an
instance where one reneges on his obligations under
the agreement, as in the case at bench, where Antonio
Garcia failed to hold up his own end of the deal, so to
speak.
xxxx
If we were to rule otherwise, we would in effect create
a back door by which a debtor can easily escape his
creditors. Consequently, we would be faced with an
anomalous situation where a debtor, in order to buy
time to dispose of his properties, would enter into a
compromise agreement he has no intention of
honoring in the first place. The purpose of the
provisional remedy of attachment would thus be lost.
It would become, in analogy, a declawed and toothless
tiger. (Emphasis and underscoring supplied; citations
omitted)
In fine, the Court holds that the writ of preliminary
attachment subject of this case should be restored and
its annotation revived in the subject TCTs, re-vesting
unto Lim, Jr. his preferential lien over the properties
covered by the same as it were before the cancellation
of the said writ. Lest it be misunderstood, the lien or
security obtained by an attachment even before
judgment, is in the nature of a vested interest which
affords specific security for the satisfaction of the debt
put in suit.30 Verily, the lifting of the attachment lien
would be tantamount to an abdication of Lim, Jr.s
rights over Sps. Lazaros properties which the Court,
absent any justifiable ground therefor, cannot allow.
WHEREFORE, the petition is GRANTED. The July
10, 2008 Decision and the December 18, 2008
Resolution of the Court of Appeals in CA-G.R. SP No.
100270 are REVERSED and SET ASIDE, and the
March 29, 2007 Order of the Regional Trial Court of
Quezon City, Branch 223 is NULLIFIED.
Accordingly, the trial court is directed to RESTORE
the attachment lien over Transfer Certificates of Title
Nos. T-64940, T-64939, and T-86369, in favor of
petitioner Alfredo C. Lim, Jr.
3. People vs Velasco
This case nudges the Court to revisit the doctrine on
double jeopardy, a revered constitutional safeguard
against exposing the accused to the risk of answering
twice for the same offense. In this case, after trial on
the merits, the accused was acquitted for insufficiency
of the evidence against him in the cases for murder and
frustrated murder (although his co-accused was
convicted), and finding in the illegal carrying of
firearm that the act charged did not constitute a
violation of law. But the State through this petition for
certiorari would want his acquittal reversed.
We narrate a brief factual backdrop.
The idyllic morning calm in San Ildefonso, Bulacan, a
small town north of Manila, was shattered by gunshots
fired in rapid succession. The shooting claimed the life
of young Alex Vinculado and seriously maimed his
twin brother Levi who permanently lost his left vision.
Their uncle, Miguel Vinculado, Jr. was also shot. A
slug tunneled through his right arm, pierced the right
side of his body and burrowed in his stomach where it
remained until extracted by surgical procedure.
As a consequence, three (3) criminal Informations -
one (1) for homicide and two (2) for frustrated
homicide - were originally filed before the Regional
Trial Court of Malolos, Bulacan, against Honorato
Galvez, Mayor of San Ildefonso, and Godofredo
Diego, a municipal employee and alleged bodyguard
of the mayor. On 14 December 1993, however, the
charges were withdrawn and a new set filed against the
same accused upgrading the crimes to murder (Crim.
Case No. 4004-M-93) and frustrated murder (Crim.
Cases Nos. 4005-M-93 and 4006-M-93). Mayor
Galvez was charged, in addition, with violation of PD
1866 (Crim. Case No. 4007-M-94) for unauthorized
carrying of firearm outside his residence; hence, a
fourth Information had to be filed.
After a series of legal maneuvers by the parties, venue
of the cases was transferred to the Regional Trial Court
of Quezon City, Metro Manila. There the cases were
stamped with new docket numbers (Nos. Q-94-55484,
Q-94-55485, Q-94-55486 and Q-94-55487,
respectively), and raffled to Branch 103 presided over
by Judge Jaime Salazar, Jr. In the course of the
proceedings, the judge inhibited himself and the cases
were re-raffled to respondent Judge Tirso D.C.
Velasco of Branch 89.
On 8 October 1996 a consolidated decision on the four
(4) cases was promulgated. The trial court found the
accused Godofredo Diego guilty beyond reasonable
doubt of the crimes of murder and double frustrated
murder. However, it acquitted Mayor Honorato
Galvez of the same charges due to insufficiency of
evidence. It also absolved him from the charge of
illegal carrying of firearm upon its finding that the act
was not a violation of law.
The acquittal of accused Honorato Galvez is now
vigorously challenged by the Government before this
Court in a Petition for Certiorari under Rule 65 of the
Rules of Court and Sec. 1, Art. VIII, of the
Constitution. It is the submission of petitioner that the
exculpation of the accused Galvez from all criminal
responsibility by respondent Judge Tirso Velasco
constitutes grave abuse of discretion amounting to lack
of jurisdiction. Allegedly, in holding in favor of
Galvez, the judge deliberately and wrongfully
disregarded certain facts and evidence on record
which, if judiciously considered, would have led to a
finding of guilt of the accused beyond reasonable
doubt. Petitioner proposes that this patently gross
judicial indiscretion and arbitrariness should be
rectified by a re-examination of the evidence by the
Court upon a determination that a review of the case
will not transgress the constitutional guarantee against
double jeopardy. It is urged that this is necessary
because the judgment of acquittal should be nullified
and substituted with a verdict of guilt.
The main hypothesis of the Government is that
elevating the issue of criminal culpability of private
respondent Galvez before this Tribunal despite
acquittal by the trial court should not be considered
violative of the constitutional right of the accused
against double jeopardy, for it is now settled
constitutional doctrine in the United States that the
Double Jeopardy Clause permits a review of acquittals
decreed by US trial magistrates where, as in this case,
no retrial is required should judgment be
overturned.[1] Since Philippine concepts on double
jeopardy have been sourced from American
constitutional principles, statutes and jurisprudence,
particularly the case of Kepner v. United States,[2] and
because similarly in this jurisdiction a retrial does not
follow in the event an acquittal on appeal is reversed,
double jeopardy should also be allowed to take the
same directional course. Petitioner in this regard urges
the Court to take a second look at Kepner, it being the
"cornerstone of the battlement of the Double Jeopardy
Clause" in the Philippines[3] and seriously examine
whether the precedents it established almost a century
ago are still germane and useful today in view of
certain modifications wrought on the doctrine by the
succeeding American cases of United States v.
Wilson[4] and United States v. Scott.[5]
Two (2) threshold issues therefore, interlocked as they
are, beg to be addressed. One is the propriety of
certiorari as an extraordinary mode of review under
Rule 65 of the Rules of Court where the result actually
intended is the reversal of the acquittal of private
respondent Galvez. The other is the permissibility of a
review by the Court of a judgment of acquittal in light
of the constitutional interdict against double jeopardy.
The recent untimely demise of respondent Galvez at
the hands of alleged assassins (not discounting too the
earlier dismissal of respondent judge from the service)
may arguably have rendered these matters moot and
academic, thus calling for a dismissal of the petition
on this basis alone. The Court however is not
insensitive to nor oblivious of the paramount nature
and object of the pleas forcefully presented by the
Government considering especially the alleged new
directions in American jurisprudence taken by the
doctrine of double jeopardy. We are thus impelled to
respond to the issues advanced by petitioner for these
bear unquestionably far-reaching contextual
significance and implications in Philippine juristic
philosophy and experience, demanding no less,
explicit and definitive rulings.
For it may be argued from a historico-analytical
perspective that perhaps none of the constitutionally
ensconced rights of men has followed a more
circuitous and tortuous route in the vast sea of
jurisprudence than the right of a person not to be tried
or prosecuted a second time for the same offense.[6]
This prohibition does not consist merely of one rule
but several, each rule applying to a different situation,
each rule marooned in a sea of exceptions.[7] It must
have been this unique transpiration that prompted even
the redoubtable Mr. Justice Rehnquist of the U.S.
Supreme Court to remark in Albernaz v. United
States[8] that "the decisional law (in the area of double
jeopardy) is a veritable Sargasso Sea which could not
fail to challenge the most intrepid judicial navigator."
It is therefore necessary that, in forming a correct
perspective and full understanding of the doctrine on
double jeopardy and the rules so far established
relative to the effect thereon of appeals of judgments
of acquittal, a compendious review of its historical
growth and development be undertaken. This
approach is particularly helpful in properly situating
and analyzing landmark interpretive applications of
the doctrine in light of the varying legal and factual
milieu under which it evolved.
Jeopardy, itself "a fine poetic word,"[9] derives from
the Latin "jocus" meaning joke, jest or game,[10] and
also from the French term "jeu perdre" which denotes
a game that one might lose. Similarly, the Middle
English word "iuparti" or "jupartie" means an
uncertain game.[11] The genesis of the concept itself
however rests deep in the ancient Grecian view of
tragedy and suffering and in the old Roman legal
concepts of punishment. Greek law bound prosecutor
and judge to the original verdict as can be seen in the
remark of Demosthenes in 355 B. C. that "the laws
forbid the same man to be tried twice on the same
issue."[12] The Justinian Digest[13] providing that
"(a) governor should not permit the same person to be
again accused of crime of which he has been
acquitted,"[14] suggests certain philosophical
underpinnings believed to have been influenced by
works of the great Greek tragedians of the 5th century
B.C. reflecting mans "tragic vision" or the tragic view
of life. For the ancient Greeks believed that man was
continuously pitted against a superior force that
dictated his own destiny. But this prevailing view was
not to be taken in the sense of man passing from one
misfortune to another without relief, as this idea was
repugnant to Greek sensibilities. Rather, it expressed a
universal concept of catharsis or vindication that
meant misfortune resolving itself into a final triumph,
and persecution, into freedom and liberation. To suffer
twice for the same misfortune was anathema to ancient
thought.
The 18th century B. C. Babylonian king and lawgiver
Hammurabi recognized that humans could err in
prosecuting and rendering judgment, thus limits were
needed on prosecutors and judges. A gruesome but
effective way of preventing a second trial by the same
prosecutor after an acquittal can be found in the first
law of the Hammurabic Code: "If a man has accused a
man and has charged him with manslaughter and then
has not proved [it against him], his accuser shall be put
to death."[15]
The repugnance to double trials strongly expressed by
the Catholic Church is consistent with the
interpretation by St. Jerome in 391 A. D. of the
promise by God to his people through the prophet
Nahum that "(a)ffliction shall not rise up the second
time"[16] and "(t)hough I have afflicted thee, I will
afflict thee no more."[17] Taken to mean that God does
not punish twice for the same act, the maxim
insinuated itself into canon law as early as 847 A. D.,
succintly phrased as "(n)ot even God judges twice for
the same act."[18]
The most famous cause clbre on double jeopardy in the
Middle Ages was the dispute between the English
King Henry II and his good friend, Thomas Becket,
Archbishop of Canterbury. Henry wished to continue
the observance of certain customs initiated by his
predecessors called "avitae consuetudines," one of the
known purposes of which was that clerics convicted of
crimes before Church courts be delivered to lay
tribunals for punishment. He asserted in the
Constitutions of Clarendon that the clergy were also
subject to the kings punishment. This was met with
stinging criticism and stiff opposition by the
Archbishop who believed that allowing this practice
would expose the clergy to double jeopardy. The issue
between the two erstwhile friends was never resolved
and remained open-ended, for Thomas was later on
mercilessly murdered in his cathedral, allegedly at the
instance of his king.[19]
It was in England though, a century ago, that double
jeopardy was formally institutionalized "as a maxim of
common law"[20] based on the universal principles of
reason, justice and conscience, about which the
Roman Cicero commented: "Nor is it one thing at
Rome and another at Athens, one now and another in
the future, but among all nations, it is the same."[21]
But even as early as the 15th century, the English
courts already began to use the term "jeopardy" in
connection with the doctrine against multiple
trials.[22] Thereafter, the principle appeared in the
writings of Hale (17th c.), Lord Coke (17th c.) and
Blackstone (18th c.).[23] Lord Coke for instance
described the protection afforded by the rule as a
function of three (3) related common law pleas:
autrefois acquit, autrefois convict and pardon.[24] In
Vauxs Case,[25] it was accepted as established that
"the life of a man shall not be twice put in jeopardy for
one and the same offense, and that is the reason and
cause that autrefois acquitted or convicted of the same
offense is a good plea x x x x" Blackstone likewise
observed that the plea of autrefois acquit or a formal
acquittal is grounded on the universal maxim of the
common law of England that "(n)o man is to be
brought into jeopardy of his life more than once for the
same offense. And hence, it is allowed as a
consequence that when a man is once fairly found not
guilty upon any indictment, or other prosecution
before any court having competent jurisdiction of the
offense, he may plead such acquittal in bar of any
subsequent accusation for the same crime.[26]
The English dogma on double jeopardy, recognized as
an indispensable requirement of a civilized criminal
procedure, became an integral part of the legal system
of the English colonies in America. The Massachusetts
Body of Liberties of 1641, an early compilation of
principles drawn from the statutes and common law of
England, grandly proclaimed that "(n)o man shall be
twise sentenced by Civill Justice for one and the same
crime, offence or Trespasse" and that "(e)verie Action
betweene partie and partie, and proceedings against
delinquents in Criminall causes shall be briefly and
destinctly entered on the Rolles of every Court by the
Recorder thereof."[27] Ineluctably, this
pronouncement became the springboard for the
proposal of the First Congress of the United States that
double jeopardy be included in the Bill of Rights. It
acknowledged that the tradition against placing an
individual twice in danger of a second prosecution for
the same offense followed ancient precedents in
English law and legislation derived from colonial
experiences and necessities. Providing abundant grist
for impassioned debate in the US Congress, the
proposal was subsequently ratified as part of the Fifth
Amendment to the Constitution.
In 1817 the Supreme Court of Tennessee dismissed an
appeal by the State after an acquittal from perjury,
declaring that: A writ of error, or appeal in the nature
of a writ of error, will not lie for the State in such a
case. It is a rule of common law that no one shall be
brought twice into jeopardy for one and the same
offense. Were it not for this salutary rule, one
obnoxious to the government might be harassed and
run down by repeated attempts to carry on a
prosecution against him. Because of this rule, a new
trial cannot be granted in a criminal case where the
defendant is acquitted. A writ of error will lie for the
defendant, but not against him.[28] Verily, these
concepts were founded upon that great fundamental
rule of common law, "Nemo debet bis vexari pro una
et eadem causa," in substance expressed in the
Constitution of the United States as: "Nor shall any
person be subject for the same offense, to be twice put
into jeopardy of life or limb." It is in the spirit of this
benign rule of the common law, embodied in the
Federal Constitution - a spirit of liberty and justice,
tempered with mercy - that, in several states of the
Union, in criminal cases, a writ of error has been
denied to the State.[29]
The relationship between the prohibition against
second jeopardy and the power to order a new trial
following conviction or dismissal stirred a no small
amount of controversy in United States v. Gibert.[30]
There, Mr. Justice Story, on circuit, declared that "the
court had no power to grant a new trial when the first
trial had been duly had on a valid indictment before a
court of competent jurisdiction." The opinion
formulated was that the prohibition against double
jeopardy applied equally whether the defendant had
been acquitted or convicted.
But it must be noted that even in those times, the power
to grant a new trial in the most serious cases was
already being exercised by many American courts, the
practice having been observed from an early date, in
spite of provisions of law against double jeopardy.[31]
For this reason, the rule in Gibert was stoutly
resisted.[32] As if to taunt Gibert, the 1839 case of
United States v. Keen[33] declared that the
constitutional provision did not prohibit a new trial on
defendants motion after a conviction. In Hopt v.
Utah,[34] the defendant was retried three (3) times
following reversals of his convictions.
Then in 1896 the U.S. Supreme Court in United States
v. Ball[35] affirmed that the double jeopardy rule did
not prevent a second trial when, on appeal, a
conviction had been set aside. It declared that a
defendant who procured on appeal a reversal of a
judgment against him could be tried anew upon the
same indictment or upon another indictment for the
same offense of which he had been convicted. This
principle of autrefois convict was expanded nine (9)
years later in Trono v. United States[36] where the
Court affirmed the judgment of the Supreme Court of
the Philippines by holding that "since the plaintiffs in
error had appealed their convictions of the lower
offense in order to secure a reversal, there was no bar
to convicting them of the higher offense in
proceedings in the appellate court that were
tantamount to a new trial." Mr. Justice Peckham,
holding for the Court, concluded that "the better
doctrine is that which does not limit the court or the
jury upon a new trial, to a consideration of the question
of guilt of the lower offense of which the accused was
convicted on the first trial, but that the reversal of the
judgment of conviction opens up the whole
controversy and acts upon the original judgment as if
it had never been."[37] It was ratiocinated that the
result was justified not only on the theory that the
accused had waived their right not to be retried but also
on the ground that "the constitutional provision was
really never intended to x x x cover the case of a
judgment x x x which has been annulled at the request
of the accused x x x x"
It must be stressed though that Ball also principally
ruled that it had long been settled under the Fifth
Amendment that a verdict of acquittal is final, ending
a defendants jeopardy, and, even when not followed
by any judgment, is a bar to a subsequent prosecution
for the same offense. It is one of the elemental
principles of our criminal law that the Government
cannot secure a new trial by means of an appeal, even
though an acquittal may appear to be erroneous.
In 1891 the United States Judiciary Act was passed
providing that appeals or writs of error may be taken
from the district court or from the existing circuit
courts direct to the Supreme Court in any case that
involved the construction of the Constitution. The
following year an issue was raised in United States v.
Sanges[38] on whether this Act conferred upon the
government the right to sue out a writ of error in any
criminal case. In that case, existing rules on double
jeopardy took a significant turn when the United States
Supreme Court observed that while English law was
vague on the matter, it had been settled by
overwhelming American authority that the State had
no right to sue out a writ of error upon a judgment in
favor of the defendant in a criminal case, except under
and in accordance with express statutes, whether that
judgment was rendered upon a verdict of acquittal, or
upon the determination by the court of a question of
law. The Court noted that in a few states, decisions
denying a writ of error to the State after a judgment for
the defendant on a verdict of acquittal proceeded upon
the ground that to grant it would be to put him twice in
jeopardy, in violation of the constitutional
provision.[39] Sanges therefore fixed the rule that
absent explicit legislative authority, the United States
Government had no right of appeal in criminal cases
in case of an acquittal as it would expose the defendant
twice to jeopardy.
Notably, however, in 1892 the Attorneys General of
the United States began to recommend the passage of
legislation allowing the Government to appeal in
criminal cases. Their primary objective was to resist
the power of a single district judge (under the law then
obtaining) by dismissing an indictment to defeat any
criminal prosecution instituted by the Government. No
action was taken on the proposal until 1906 when
President Theodore Roosevelt in his annual message
to the US Congress demanded the enactment of
legislation on the matter. Consequently, on 2 March
1907 such legislative authority was provided when the
Criminal Appeals Act became a law[40]40 Ch. 2564,
34 Stat. 1246.40 permitting the United States to seek a
writ of error from the Supreme Court from any
decision dismissing all indictment on the basis of the
"invalidity or construction of the statute upon which
the indictments is founded."[41] The law narrowed the
right to appeal by the Government to cases in which
the ground of the District Courts decision was
invalidity or construction of the statute upon which the
charge was founded, and that a verdict in favor of the
defendant based on evidence could not be set aside on
appeal no matter how erroneous the legal theory upon
which it may be based. For these purposes, it made no
difference whether the verdict be the result of the jurys
decision or that of the judge. In other words,
Government could appeal from a decision dismissing
an indictment or arresting judgment on the basis of the
statutory invalidity or misconstruction of the pertinent
criminal statute and from a decision sustaining a
special plea in bar, so long as the defendant would not
be put in jeopardy.[42]
On 10 December 1898 the Philippine Islands was
ceded by Spain to the United States by virtue of the
Treaty of Paris of 1898 which was ratified by the State
Parties on 11 April 1899. The Islands was placed under
military rule until the establishment of the Philippine
Commission in 1902. On 23 April 1900 the military
government issued General Order No. 58 which
amended the Code of Criminal Procedure then in force
by, among others, extending to the Islands the double
jeopardy provision under the Fifth Amendment of the
US Constitution. This was pursuant to the 7 April 1900
Instructions of President McKinley issued to the
Philippine Commission headed by William Howard
Taft. The Instructions read in part: x x x the
Commission should bear in mind, and the people of
the Islands should be made to understand, that there
are certain great principles of government which have
been made the basis of our governmental system,
which we deem essential to the rule of law x x x and
maintained in their islands for the sake of their liberty
and happiness, however much they may conflict with
the customs or laws of procedure with which they are
familiar x x x x Upon every division and branch of the
Government of the Philippines therefore must be
imposed these inviolable rules: x x x that x x x no
person shall be put twice in jeopardy for the same
offense x x x x"[43]
General Order No. 58 was amended by Act No. 194
which permitted an appeal by the government after
acquittal. The Philippine Civil Government Act of 1
July 1902 of the U.S. Congress repealed the Act,
adopted and restored the same principle in Gen. Order
No. 58 as enunciated in the Fifth Amendment and in
McKinleys Instructions by providing immunity from
second jeopardy for the same criminal offense. It did
not take long however for the meaning and
significance of the doctrine held forth in McKinleys
Instructions to be placed under severe test and
scrutiny.
In 1901 Mr. Thomas E. Kepner, a practicing lawyer in
Manila, Philippines, was charged with embezzlement
of funds (estafa). He was tried by a court of first
instance, minus a jury, and was acquitted of the crime.
The U.S. Government appealed to the Supreme Court
of the Philippine Islands and judgment was reversed.
Kepner was sentenced with imprisonment and
suspended from public office or place of trust.
Questioning his conviction before the US Supreme
Court, Kepner argued that the appeal by the US
government to the Philippine Supreme Court of his
judgment of acquittal constituted double jeopardy
construed in light of existing US jurisprudence. On the
other hand, the Attorney General for the Philippines
and the Solicitor General of the United States jointly
contended that the Philippine Bill of 1 July 1902 which
included the prohibition against double jeopardy
should be construed from the perspective of the system
of laws prevailing in the Philippines prior to its cession
to the United States. Under this system, the Audiencia
(Supreme Court) could entertain an appeal of a
judgment of acquittal since the proceedings before it
were regarded not as a new trial but an extension of
preliminary proceedings in the court of first instance.
The entire proceedings constituted one continuous trial
and the jeopardy that attached in the court of first
instance did not terminate until final judgment had
been rendered by the Audiencia. Double jeopardy was
described not only in the Spanish law Fuero Real[44]
as: After a man accused of any crime has been
acquitted by the court, no one can afterwards accuse
him of the same offense (except in certain specified
cases), but also in the Siete Partidas[45] which
provided that: If a man is acquitted by a valid judgment
of any offense of which he has been accused, no other
person can afterwards accuse him of the offense x x x
x Under this system of law, a person was not regarded
as jeopardized in the legal sense until there had been a
final judgment in the court of last resort. The lower
courts then were deemed examining courts, exercising
preliminary jurisdiction only, and the accused was not
finally convicted or acquitted until the case had been
passed upon in the Audiencia or Supreme Court,
whose judgment was subject to review by the Supreme
Court in Madrid (Spain) for errors of law, with power
to grant a new trial.
The U.S. Supreme Court however threw out the
Governments argument and held that the proceedings
after acquittal had placed the accused Kepner twice in
jeopardy. It declared in no uncertain terms that the
appeal of the judgment of conviction was in essence a
trial de novo and that, whatever the Spanish tradition
was, the purpose of Congress was to carry some at
least of the essential principles of American
constitutional jurisprudence to the Islands and to
engraft them upon the law of these people newly
subject to its jurisdiction. There was little question
therefore that Kepner soldered into American
jurisprudence the precedent that as to the defendant
who had been acquitted by the verdict duly returned
and received, the court could take no other action than
to order his discharge. x x x (I)t is then the settled law
of this court that former jeopardy includes one who has
been acquitted by a verdict duly rendered, although no
judgment be entered on the verdict, and it was found
upon a defective indictment. The protection is not x x
x against the peril of second punishment, but against
being tried again for the same offense."[46]
This doctrine was echoed in United States v. Wills[47]
where the Court further clarified that jeopardy implies
an exposure to a lawful conviction for an offense of
which a person has already been acquitted x x x x It
was reiterated in 1957 in Green v. United States[48] in
which Mr. Justice Black, writing for the Court,
professed that the constitutional prohibition against
double jeopardy was designed to protect an individual
from being subjected to the hazards of trial and
possible conviction more than once for an alleged
offense. Thus, under the Fifth Amendment, a verdict
of acquittal was considered final, ending the accuseds
jeopardy and that once a person has been acquitted of
an offense, he cannot be prosecuted again on the same
charge.
American jurisprudence on the effect of appealed
acquittals on double jeopardy since then sailed on,
following the main sea lanes charted by Kepner, but
not without encountering perturbance along the way.
For it may be mentioned, albeit en passant, that the
case of Bartkus v. Illinois[49] did cause some amount
of judicial soul-shaking in 1959 when it burst into the
scene. Alfonse Bartkus was tried before a federal
district court in Illinois and was later acquitted by the
jury. Less than a year later, Bartkus was indicted this
time by an Illinois grand jury on facts substantially
identical to those of the federal charge and was
subsequently convicted. His conviction was affirmed
by the Illinois Supreme Court.
On certiorari, the U.S. Supreme Court, by a close vote
of 5 to 4, affirmed the conviction. The Court, speaking
through Mr. Justice Frankfurter, declared that the Fifth
Amendments double jeopardy provision was
inapplicable to states so that an acquittal of a federal
indictment was no bar to a prosecution by a state based
on the same charge. Since there was no proof offered
to show that the participation of the federal authorities
in the Illinois state prosecution was of such nature as
to render the state proceedings a mere cover for a
federal prosecution to render the state indictment
essentially a constitutionally prohibited second
prosecution, no double jeopardy attached.
Mr. Justice Black dissented, joined in by Mr. Chief
Justice Warren and Mr. Justice Douglas, with Mr.
Justice Brennan writing a separate dissenting opinion.
Black rued that the Courts ruling by a majority of one
only resulted in "further limiting the already weakened
constitutional guarantees against double prosecution,"
citing the earlier case of United States v. Lanza,[50]
where the Court allowed the federal conviction and
punishment of a man previously convicted and
punished for identical acts by a state court. The dissent
called attention to the fact that in Bartkus, for the first
time in its history, the Court allowed the state
conviction of a defendant already acquitted of the
same offense in the federal court. This, Mr. Justice
Black asserted, was unacceptable, for as the Court
previously found in Palko v. Connecticut,[51] "double
prosecutions for the same offense are so contrary to the
spirit of our free country that they violate even the
prevailing view of the Fourteenth Amendment since
some of the privileges and immunities of the Bill of
Rights . . . have been taken over and brought within
the Fourteenth Amendment by process of absorption x
x x x One may infer, from the fewness of the cases,
that retrials after acquittal have been considered
particularly obnoxious, worse even, in the eyes of
many, than retrials after conviction."
Whether such forceful pronouncements steered back
into course meandering views on double jeopardy is
open to question. Nonetheless, the case of Fong Foo v.
United States,[52] decided per curiam, reaffirmed the
pronouncements in Ball and Kepner that "the verdict
of acquittal was final, and could not be reviewed x x x
without putting (the petitioners) twice in jeopardy, and
thereby violating the Constitution."
In the meantime, from 1907 up to 1970 the Criminal
Appeals Act underwent significant alterations. The
1942 amendment of its Section 682 permitted for the
first time appeals to the circuit appeals court from
orders sustaining demurrer to indictment in cases not
directly appealable to the Supreme Court.[53]
However, due to the many modifications the law was
subjected to, construction and interpretation became
more laborious, effectively transforming appeals into
highly technical procedures. As such, the Criminal
Appeals Act developed into a judicial bete noire, for
even the U.S. Supreme Court itself had "to struggle in
a number of occasions with the vagaries of the said
Act."[54] In one of those unhappy efforts, it concluded
that the Act was "a failure x x x a most unruly child
that has not improved with age."[55]
The U.S. Congress finally got rid of the dismal statute
in 1970 and replaced it with a new Criminal Appeals
Act intended to broaden the right of Government to
appeal whenever the Constitution would permit. It was
apparent that the legislative body left to the courts the
prerogative to draw the constitutional limits of double
jeopardy rather than define them itself. Since then,
pronouncements by the courts on the jouble jeopardy
guarantee of the Fifth Amendment focused on three (3)
related protections: against a second prosecution for
the same offense after acquittal; against a second
prosecution for the same offense after conviction; and,
against multiple punishments for the same
offense.[56]
In Wilson,[57] the Court expressed that the interests
underlying these three (3) protections are quite similar.
Thus, when a defendant has been once convicted and
punished for a particular crime, principles of fairness
and finality require that he be not subjected to the
possibility of further punishment by being tried or
sentenced for the same offense.[58] And when a
defendant has been acquitted of an offense, the Clause
guarantees that the State shall not be permitted to make
repeated attempts to convict him, "thereby subjecting
him to embarrassment, expense and ordeal and
compelling him to live in a continuing state of anxiety
and insecurity, as well as enhancing the possibility that
even though innocent he may be found guilty."[59] It
can thus be inferred from these cases that the policy of
avoiding multiple trials has been considered
paramount so that exceptions to the rule have been
permitted only in few instances and under rigid
conditions.
Accordingly, in United States v. Scott[60] the US
Supreme Court synthesized two (2) venerable
principles of double jeopardy jurisprudence: first, the
successful appeal of a judgment of conviction on any
ground other than the insufficiency of the evidence to
support the verdict poses no bar to further prosecution
on the same charge; and second, a judgment of
acquittal, whether based on a jury verdict of not guilty
or on a ruling by the court that the evidence is
insufficient to convict, may not be appealed and
terminates the prosecution when a second trial would
be necessitated by a reversal.[61] It would seem that
the conditionality of when a second trial would be
necessitated by a reversal was attached thereto because
ordinarily, the procedure obtaining was that if on
appeal a judgment of acquittal is reversed, i. e., a
finding is had against the defendant, a remand of the
case for another trial may be allowed if needed.
At this juncture, it must be explained that under
existing American law and jurisprudence, appeals may
be had not only from criminal convictions but also, in
some limited instances, from dismissals of criminal
charges, sometimes loosely termed "acquittals." But
this is so as long as the judgments of dismissals do not
involve determination of evidence, such as when the
judge: (a) issues a post-verdict acquittal, i.e., acquits
the defendant on a matter of law after a verdict of
guilty has been entered by a trier of facts (a jury); (b)
orders the dismissal on grounds other than
insufficiency of evidence, as when the statute upon
which the indictment was based is defective; (c)
conducts a judicial process that is defective or flawed
in some fundamental respect, such as incorrect receipt
or rejection of evidence, incorrect instructions, or
prosecutorial misconduct; (d) issues an order arresting
judgment, i.e., an act of a trial judge refusing to enter
judgment on the verdict because of an error appearing
on the face of the record that rendered the
judgment;[62] or, (e) pronounces judgment on a
special plea in bar (a non obstante plea) - one that does
not relate to the guilt or innocence of the defendant,
but which is set up as a special defense relating to an
outside matter but which may have been connected
with the case.[63] Interestingly, the common feature of
these instances of dismissal is that they all bear on
questions of law or matters unrelated to a factual
resolution of the case which consequently, on appeal,
will not involve a review of evidence. Its logical effect
in American law is to render appeals therefrom non-
repugnant to the Double Jeopardy Clause.
This contextual situation in which appeals from
dismissals of criminal cases are allowed under
American rules of procedure does not obtain in the
Philippines. To be sure, United States v. Scott
positively spelled out that if an acquittal was based on
an appreciation of the evidence adduced, no appeal
would lie. Mr. Justice Rehnquist explained that what
may seem superficially to be a "disparity in the rules
governing a defendants liability to be tried again"
refers to the underlying purposes of the Double
Jeopardy Clause. He elaborated that "(a)s Kepner and
Fong Foo illustrate, the law attaches particular
significance to an acquittal. To permit a second trial
after an acquittal however mistaken x x x would
present an unacceptably high risk that the
Government, with its vastly superior resources, might
wear down the defendant so that even though innocent
he may be found guilty. x x x x On the other hand, to
require a criminal defendant to stand trial again after
he has successfully invoked the statutory right of
appeal to upset his first conviction is not an act of
governmental oppression of the sort against which the
x x x Clause was intended to protect."
In proposing a re-evaluation of Philippine
jurisprudence on double jeopardy, petitioner insists
that Wilson and Scott have unquestionably altered the
seascape of double jeopardy previously navigated by
Kepner and Ball. Using as its flagship the
pronouncement in Wilson that appeals of acquittal are
possible provided the accused will not be subjected to
a second trial, it argues that this should apply to the
case at bar because, anyway, a review of the acquittal
of private respondent Honorato Galvez will not result
in another trial inasmuch as the Court will only have
to examine the evidence adduced below to pass final
judgment on the culpability of the accused.
Petitioners own hermeneutic sense of the phrase
"another trial" is that which solely adverts to a
proceeding before a competent trial court that rehears
the case and receives evidence anew to establish the
facts after the case has been finally disposed of by the
Supreme Court. Obviously, it adheres to the
Holmesian hypothesis in Kepner and, for that matter,
the concept under Spanish law then applicable in the
Philippines before the American colonization, that a
trial consists of one whole continuing process from
reception of evidence by a trier of facts up to its final
disposition by the Supreme Court. But petitioner
conveniently forgets that this theory has been
consistently spurned by both American and Philippine
jurisprudence that has faithfully adhered to the
doctrine that an appeal of a judgment after the
defendant had been acquitted by the court in a bench
trial is, quintessentially, a new trial. In Kepner, the
Court regarded the two (2) events, i. e., trial by the
lower court and the appellate proceedings, as
equivalent to two (2) separate trials, and the evil that
the Court saw in the procedure was plainly that of
multiple prosecutions.[64] Although Kepner
technically involved only one proceeding, the Court
deemed the second factfinding, that is, the review by
the appellate court, as the equivalent of a second trial.
Accordingly, in subsequent cases, the Court has
treated the Kepner principle as being addressed to the
evil of successive trials.[65]
No less than the case of Wilson,[66] petitioners main
anchor for its propositions, affirms this rule. There, the
Court emphasized that it has, up to the present, rejected
the theory espoused by the dissenting Mr. Justice
Holmes in Kepner that " a man cannot be said to be
more than once in jeopardy in the same cause however
often he may be tried. The jeopardy is one continuing
jeopardy, from its beginning to the end of the cause."
It declared unequivocally that "we continue to be of
the view that the policies underlying the Double
Jeopardy Clause militate against permitting the
Government to appeal after a verdict of acquittal."
Wilson therefore pronounced that if acquittal is
declared on the basis of evidence adduced, double
jeopardy attaches for that particular cause.
To explain further, Wilson involved an appeal by
Government of a post-verdict ruling of law issued by
the trial judge resulting in the acquittal of the
defendant due to pre-indictment delay (a delay
between the offense and the indictment prejudiced the
defendant) after a verdict of guilty had been entered by
the jury. But it was not an acquittal that involved
factual resolution. It was one anchored on an
extraneous cause. Factual resolution is defined in
United States v. Sorenson[67] following the rulings in
Ball, Fong Foo and Sisson as the finding that
government failed to prove all the elements of the
offense. It is clear therefore that the acquittal of
Wilson, not being based on evidence, could be
appealed. The rule therefore fixed in Wilson is that
where a judge holds for the defendant on a ruling of
law, and not on the basis of evidence, after a jury
entered a verdict of guilty, the prosecution may appeal
the acquittal without violating double jeopardy, as this
is allowed under the pertinent law.[68] This is so since
no second trial will ensue, as a reversal on appeal
would merely reinstate the jurys verdict.[69] And if
the prosecution is upheld, the case simply goes back to
the trial court for disposition of the remaining matters.
It bears emphasis that in Wilson, no double jeopardy
problem was presented because the appellate court,
upon reviewing the asserted legal errors of the trial
judge, could simply order the jurys guilty verdict
reinstated, no new factfinding would be necessary, and
the defendant would not be put twice in jeopardy.[70]
The case of Scott, also considerably relied upon by
petitioner, involved an accused who, having been
indicted for several offenses, himself moved for the
dismissal of two (2) counts of the charges on the
ground that his defense was prejudiced by pre-
indictment delay. The trial judge granted the motion.
Government appealed the dismissals but the appellate
court rejected the appeal on the basis of double
jeopardy. This time the US Supreme Court reversed,
holding that "(w)here a defendant himself seeks to
avoid his trial prior to its conclusion by a motion for a
mistrial, the Double Jeopardy Clause is not offended
by a second prosecution. Such a motion by the
defendant is deemed to be a deliberate election on his
part to forego his valued right to have his guilt or
innocence determined by the first trier of facts."
The inapplicability of this ruling to the case at bar is at
once discernible. The dismissal of the charges against
private respondent Galvez was not upon his own
instance; neither did he seek to avoid trial, as it was in
Scott, to be considered as having waived his right to
be adjudged guilty or innocent. Here, trial on the
merits was held during which both government and
accused had their respective day in court.
We are therefore insufficiently persuaded to adopt
petitioners concept of "another trial" because, as
discussed above, it disregards the contextual
interpretation of the term in light of the legal and
factual morphology of the double jeopardy principle
obtaining in Wilson and Scott. To sum up, in the cause
before us, the records show that respondent trial judge
based his finding of acquittal, no matter how erroneous
it might seem to petitioner, upon the evidence
presented by both parties. The judgment here was no
less than a factual resolution of the case. Thus, to the
extent that the post-verdict acquittal in Wilson was
based on a ruling of law and not on a resolution of
facts, Wilson is not, to reiterate, pertinent to nor
persuasive in the case at bar. The same observation
holds true for Scott. That it was the defendant who
secured the dismissal of the charges against him
without any submission to either judge or jury as to his
guilt or innocence, but on a ground totally outside
evidentiary considerations, i.e., pre-indictment delay,
definitely forecloses the applicability, if not relevance,
of Scott to the instant case.
Wilson, Scott and all other pertinent American case
law considered, it still behooves us to examine if at this
time there is need to rethink our juristic philosophy on
double jeopardy vis--vis acquittals. In this respect, it
would be instructive to see how Philippine law and
jurisprudence have behaved since Kepner. Has the
principle since then beneficially evolved, or has it
remained an "unruly child that has not improved with
age?"
The moorings of double jeopardy in the Philippines, as
Mr. Justice Manuel Moran observed in People v.
Tarok,[71] are not indigenous but are a matter of
constitutional or statutory history. Enunciated in the
Constitution of the United States, from there it found
its way into this country, first, in the Philippine Bill of
1902, then in the Jones Law of 1916, and finally, in the
1935 Philippine Constitution. Being thus a mere
recognition of the maxim of the common law, and
adopted from the Constitution of the United States, the
principle of double jeopardy followed in this
jurisdiction the same line of development - no
narrower nor wider - as in the Anglo-Saxon
jurisprudence.
While some reservations may be had about the
contemporary validity of this observation considering
the variety of offsprings begotten, at least in the United
States, by the mother rule since then, perhaps it is safer
to say that not much deviation has occurred from the
general rule laid out in Kepner. For Kepner may be
said to have been the lighthouse for the floundering
issues on the effect of acquittals on jeopardy as they
sail safely home. The cases of People v. Bringas,[72]
People v. Hernandez,[73] People v. Montemayor,[74]
City Fiscal of Cebu v. Kintanar,[75] Republic v. Court
of Appeals,[76] and Heirs of Tito Rillorta v.
Firme,[77] to name a few, are illustrative. Certainly,
the reason behind this has not been due to a stubborn
refusal or reluctance to keep up with the Joneses, in a
manner of speaking, but to maintain fidelity to the
principle carefully nurtured by our Constitution,
statutes and jurisprudence. As early as Julia v.
Sotto[78] the Court warned that without this safeguard
against double jeopardy secured in favor of the
accused, his fortune, safety and peace of mind would
be entirely at the mercy of the complaining witness
who might repeat his accusation as often as dismissed
by the court and whenever he might see fit, subject to
no other limitation or restriction than his own will and
pleasure.
The 1935 Philippine Constitution provided in its Sec.
20, Art. III, that "(n)o person shall be twice put in
jeopardy of punishment for the same offense. If an act
is punished by a law and an ordinance, conviction or
acquittal under either shall constitute a bar to another
prosecution for the same act." The discussions by the
members of the Constitutional Convention of 1934 on
the effect on double jeopardy of an appeal from a
judgment of acquittal are enlightening. Foreclosing
appeal on a judgment of acquittal was recognized by
the Convention and the proposal to make an appeal
from acquittal permissible even only "on questions of
law provided that a verdict in favor of the defendant
shall not be set aside by reason thereof" was strongly
voted down. Thus -
MR. GULLAS: Dear Colleagues x x x x I wish to
summarize our points. The amendment is
commendable, but we submit that the reason against
far outweighs the reason in favor of it. In the first
place, it would tend to multiplicity of suits and thus
increase the burden of the Supreme Court. Second,
suits will be expensive if we meet fiscals who have an
exaggerated opinion of themselves, who have more
ego than gray matter or more amor propio. In the third
place, as has been stated by a certain Gentleman, the
provision would convert the Supreme Court into a sort
of academy of consulting body. In the fourth place, as
pointed out by Mr. Sevilla, fights in the Supreme Court
would be one-sided. In the fifth place, as demonstrated
by Delegate Labrador, the matter should be procedural
rather than constitutional. And lastly, as explained by
Delegate Singson Encarnacion, should the Supreme
Court reverse the judgment of the lower court, the
defendant would suffer morally for the rest of his life.
He would walk around under a veil of humiliation,
carrying with him a stigma.
For all these reasons, Mr. President, we oppose the
amendment.
PRESIDENT: We can vote on the amendment.
(Various delegates: YES). Those who are in favor of
the amendment please say YES. (A minority: YES).
Those against the amendment say NO. (A majority:
NO). The amendment is rejected x x x x
(1934 Constitutional Convention Record, Journal No.
95, November 24, 1934, p. 361)
The case of People v. Bringas[79] was the first case to
be decided under this Constitution pertinent to the
matter at hand. There the Supreme Court, guided by
Kepner, cited its finding in United States v. Tam Yung
Way[80] against the right of appeal by the government
from a judgment discharging the defendant in a
criminal case after he has been brought to trial,
whether defendant was acquitted on the merits or
whether his discharge was based upon the trial courts
conclusion of law that the trial had failed for some
reason to establish his guilt as charged.
The Bill of Rights of the 1973 Constitution,
specifically Sec. 22, Art. IV thereof, reproduced
verbatim the same double jeopardy provision of the
1935 Constitution. So did the 1987 Freedom
Constitution drafted by the 1986 Constitutional
Commission.
Noteworthy is that during the deliberations by the
1986 Constitutional Commission attempts were made
to introduce into the Fundamental Law the right of
government to appeal verdicts of acquittal
promulgated by trial courts. The proposed text for Sec.
14, Art. VIII, on the Judicial Department read as
follows -
Sec. 12. - x x x x An appeal by the State and/or
offended party from a judgment of acquittal may be
allowed in the discretion of the Supreme Court by a
petition for review on certiorari on the ground that it is
manifestly against the evidence with grave abuse of
discretion amounting to lack of jurisdiction.[81]
This proposal was strongly opposed, the controlling
consideration as expressed by Commissioner Rustico
de los Reyes being the "inequality of the parties in
power, situation and advantage in criminal cases
where the government, with its unlimited resources,
trained detectives, willing officers and counsel learned
in the law, stands arrayed against a defendant
unfamiliar with the practice of the courts,
unacquainted with their officers or attorneys, often
without means and frequently too terrified to make a
defense, if he had one, while his character and his life,
liberty or property rested upon the result of the
trial."[82]
Commissioner Joaquin Bernas likewise articulated his
fear that we could be subjecting an accused individual
to a very serious danger of harassment from a
prosecutor x x x x The harm, however, which will
follow from waving this flag of possibility of appeal x
x x could be much more than letting a guilty person
go."[83] Put to a vote, the proposal was defeated.[84]
Then again, during the debates on double jeopardy
under Sec. 23, Art. III, on the Bill of Rights of the
Constitution, Commissioner Ambrosio B. Padilla
reopened the matter already settled at the deliberations
on the article on the Judiciary. The following
exchanges ensued:
MR. PADILLA. x x x On Section 23, on double
jeopardy, there was Davide resolution which allowed
an appeal in a judgment of acquittal in a criminal case
that states: An acquittal by a trial court is, however,
appealable provided that in such event, the accused
shall not be detained or put up bail. This has been
deleted by the Commission x x x x
FR. BERNAS. Yes.
MR. PADILLA. I recall that when this same idea, but
in different phraseology, was presented and approved
by the Committee on the Judiciary, the great objection
was that it would violate the immunity against double
jeopardy. But I recall, the sponsor admitted, after I had
explained the day before, that it did not violate double
jeopardy but it was unnecessary and harmful. What is
the real position, Mr. Presiding Officer? Is it in
violation of double jeopardy or is it just because it need
not be stated in the Bill of Rights nor in the Article on
the Judiciary?
FR. BERNAS: I explained my position on that, Mr.
Presiding Officer, when we considered the matter in
the Article on the Judiciary. The position I took was
that it was not a departure from existing jurisprudence.
In fact, it was more strict than existing jurisprudence
in that it required not just abuse of discretion but it also
required that the judgment be clearly against the
evidence.
MR. PADILLA. That is correct, Mr. Presiding Officer,
because we want to make the exercise of that right by
the state or offended party restrictive not only through
a petition for review on certiorari in the discretion of
the Supreme Court which may dismiss it outright, but
also on certain grounds that are really covered by "in
excess or lack of jurisdiction."
But my common impression, Mr. Presiding Officer, is
that most lawyers are of the opinion that when a
judgment of acquittal is rendered by a trial court, that
is final, executory and not appealable.
Does not the sponsor think, Mr. Presiding Officer, an
appeal from an arbitrary judgment of acquittal
rendered by a few corrupt judges of the offended party
or the state will improve the administration of justice?
FR. BERNAS. Mr. Presiding Officer, I have expressed
my position on this when we voted on Third Reading
on the Article on the Judiciary. But if the
Commissioner wants to raise the matter for
reconsideration, he can present a motion on the floor.
Padilla did not ask for a reconsideration.[85]
The Rules of Court on Criminal Procedure relative to
double jeopardy and the effect thereon of acquittals
adhere strictly to constitutional provisions. The
pertinent portions of Sec. 7 of Rule 117 thereof
provide -
Sec. 7. Former conviction or acquittal; double
jeopardy. - When an accused has been convicted or
acquitted, or the case against him dismissed or
otherwise terminated without his express consent by a
court of competent jurisdiction, upon a valid complaint
or information or other formal charge sufficient in
form and substance to sustain a conviction and after
the accused had pleaded to the charge, the conviction
or acquittal of the accused or the dismissal of the case
shall be a bar to another prosecution for the offense
charged, or for any attempt to commit the same or
frustration thereof, or for any offense which
necessarily includes or is necessarily included in the
offense charged in the former complaint or
information x x x x
From this procedural prescription alone, there can be
no mistaking the requisites for invoking double
jeopardy: (a) a valid complaint or information; (b)
before a competent court before which the same is
filed; (c) the defendant had pleaded to the charge; and,
(d) the defendant was acquitted, or convicted, or the
case against him dismissed or otherwise terminated
without his express consent.[86] It bears repeating that
where acquittal is concerned, the rules do not
distinguish whether it occurs at the level of the trial
court or on appeal from a judgment of conviction. This
firmly establishes the finality-of-acquittal rule in our
jurisdiction. Therefore, as mandated by our
Constitution, statutes and cognate jurisprudence, an
acquittal is final and unappealable on the ground of
double jeopardy, whether it happens at the trial court
level or before the Court of Appeals.
In general, the rule is that a remand to a trial court of a
judgment of acquittal brought before the Supreme
Court on certiorari cannot be had unless there is a
finding of mistrial, as in Galman v.
Sandiganbayan.[87] Condemning the trial before the
Sandiganbayan of the murder of former Senator
Benigno "Ninoy" Aquino, which resulted in the
acquittal of all the accused, as a sham, this Court
minced no words in declaring that "[i]t is settled
doctrine that double jeopardy cannot be invoked
against this Court's setting aside of the trial court's
judgment of acquittal where the prosecution which
represents the sovereign people in criminal cases is
denied due process x x x x [T]he sham trial was but a
mock trial where the authoritarian president ordered
respondents Sandiganbayan and Tanodbayan to rig the
trial, and closely monitored the entire proceedings to
assure the predetermined final outcome of acquittal
and absolution as innocent of all the respondent-
accused x x x x Manifestly, the prosecution and the
sovereign people were denied due process of law with
a partial court and biased Tanodbayan under the
constant and pervasive monitoring and pressure
exerted by the authoritarian president to assure the
carrying out of his instructions. A dictated, coerced
and scripted verdict of acquittal, such as that in the
case at bar, is a void judgment. In legal contemplation,
it is no judgment at all. It neither binds nor bars
anyone. Such a judgment is a lawless thing which can
be treated as an outlaw. It is a terrible and unspeakable
affront to the society and the people. 'To paraphrase
Brandeis: If the authoritarian head of government
becomes the lawbreaker, he breeds contempt for the
law; he invites every man to become a law unto
himself; he invites anarchy. The contention of
respondent-accused that the Sandiganbayan judgment
of acquittal ended the case and could not be appealed
or reopened without being put in double jeopardy was
forcefully disposed of by the Court in People v. Court
of Appeals:[88]
x x x x That is the general rule and presupposes a valid
judgment. As earlier pointed out, however, respondent
Court's Resolution of acquittal was a void judgment
for having been issued without jurisdiction. No double
jeopardy attaches, therefore. A void judgment is, in
legal effect, no judgment at all. By it no rights are
divested. Through it, no rights can be attained. Being
worthless, all proceedings founded upon it are equally
worthless. It neither binds nor bars anyone. All acts
performed under it and all claims flowing out of it are
void x x x x Private respondents invoke 'justice for the
innocent.' For justice to prevail the scales must
balance. It is not to be dispensed for the accused alone.
The interests of the society which they have wronged,
must also be equally considered. A judgment of
conviction is not necessarily a denial of justice. A
verdict of acquittal neither necessarily spells a triumph
of justice. To the party wronged, to the society
offended, it could also mean injustice. This is where
the Courts play a vital role. They render justice where
justice is due.
Thus, the doctrine that "double jeopardy may not be
invoked after trial" may apply only when the Court
finds that the criminal trial was a sham because the
prosecution representing the sovereign people in the
criminal case was denied due process.[89] The Court
in People v. Bocar[90] rationalized that the "remand of
the criminal case for further hearing and/or trial before
the lower courts amounts merely to a continuation of
the first jeopardy, and does not expose the accused to
a second jeopardy."[91]
The fundamental philosophy highlighting the finality
of an acquittal by the trial court cuts deep into "the
humanity of the laws and in a jealous watchfulness
over the rights of the citizen, when brought in unequal
contest with the State x x x x"[92] Thus Green
expressed the concern that "(t)he underlying idea, one
that is deeply ingrained in at least the Anglo-American
system of jurisprudence, is that the State with all its
resources and power should not be allowed to make
repeated attempts to convict an individual for an
alleged offense, thereby subjecting him to
embarrassment, expense and ordeal and compelling
him to live in a continuing state of anxiety and
insecurity, as well as enhancing the possibility that
even though innocent, he may be found guilty."[93]
It is axiomatic that on the basis of humanity, fairness
and justice, an acquitted defendant is entitled to the
right of repose as a direct consequence of the finality
of his acquittal. The philosophy underlying this rule
establishing the absolute nature of acquittals is "part of
the paramount importance criminal justice system
attaches to the protection of the innocent against
wrongful conviction."[94] The interest in the finality-
of-acquittal rule, confined exclusively to verdicts of
not guilty, is easy to understand: it is a need for
"repose," a desire to know the exact extent of one's
liability.[95] With this right of repose, the criminal
justice system has built in a protection to insure that
the innocent, even those whose innocence rests upon a
jurys leniency, will not be found guilty in a subsequent
proceeding.[96]
Related to his right of repose is the defendants interest
in his right to have his trial completed by a particular
tribunal.[97] This interest encompasses his right to
have his guilt or innocence determined in a single
proceeding by the initial jury empanelled to try him,
for societys awareness of the heavy personal strain
which the criminal trial represents for the individual
defendant is manifested in the willingness to limit
Government to a single criminal proceeding to
vindicate its very vital interest in enforcement of
criminal laws.[98] The ultimate goal is prevention of
government oppression; the goal finds its voice in the
finality of the initial proceeding.[99] As observed in
Lockhart v. Nelson,[100] "(t)he fundamental tenet
animating the Double Jeopardy Clause is that the State
should not be able to oppress individuals through the
abuse of the criminal process. Because the innocence
of the accused has been confirmed by a final judgment,
the Constitution conclusively presumes that a second
trial would be unfair.[101]
Petitioner resists the applicability of the finality-of-
acquittal doctrine to the Philippine adjudicative
process on the ground that the principle is endemic to
the American justice system as it has specific
application only to jury verdicts of acquittal, and thus
finds no valid use in our jurisdiction since the
underlying rationale of jury acquittals, a special
feature of American constitutional law, has no parallel
nor analogy in the Philippine legal system. This is a
rather strained if not facile approach to the issue at
hand, for it attempts to introduce the theory that insofar
as the objective of factfinding is concerned,
factfinding forming the core of the philosophy behind
double jeopardy, there exists a difference between a
jury acquittal and a judge acquittal, Philippine version.
To support its contention, petitioner sedulously
explains that in the United States there is an emerging
consensus to differentiate the constitutional impact of
jury verdicts of acquittal vis--vis judgments of
acquittal rendered by the bench. While this consensus
may have emerged in the United States, it is not
difficult to surmise that it must have been so because
of countless instances of conflict between jury verdicts
and judgments of trial judges in the same case.
Resultantly, procedural statutes and jurisprudence
have been wont to draw lines of distinction between
the two, hopefully to keep each other at bay. Since this
phenomenon does not occur in our jurisdiction, as we
have no juries to speak of, petitioners hypothesis is
inappropriate.
Be that as it may, the invalidity of petitioners argument
lies in its focus on the instrumentality empowered to
rule against the evidence, i.e., the American jury
versus the Philippine judge, no matter how emphatic it
qualifies its proposition with the phrase "underlying
rationale of jury acquittals," rather than on the
essential function of factfinding itself which consists
of reception, sifting and evaluation of evidence. Where
the main task of factfinding is concerned, there exists
no difference between the American jury and the
Philippine trial judge. Both are triers of facts. This
much petitioner has to concede. The attempt therefore
to close the door on the applicability of the finality rule
to our legal system abjectly fails when one considers
that, universally, the principal object of double
jeopardy is the protection from being tried for the
second time, whether by jury or judge. Thus,
"emerging American consensus on jury acquittals"
notwithstanding, on solid constitutional bedrock is
well engraved our own doctrine that acquittals by
judges on evidentiary considerations cannot be
appealed by government. The jurisprudential metes
and bounds of double jeopardy having been clearly
defined by both constitution and statute, the issue of
the effect of an appeal of a verdict of acquittal upon a
determination of the evidence on the constitutionally
guaranteed right of an accused against being twice
placed in jeopardy should now be finally put to rest.
Petitioner assails the decision rendered by the court a
quo as blatantly inconsistent with the material facts
and evidence on record, reason enough to charge
respondent judge with grave abuse of discretion
amounting to lack of jurisdiction resulting in a denial
of due process. Citing People v. Pablo,[102] it alleges
that "respondent aggravated his indiscretion by not x x
x reviewing the evidence already presented for a
proper assessment x x x x It is in completely ignoring
the evidence already presented x x x that the
respondent judge committed a grave abuse of
discretion." It adds that "discretion must be exercised
regularly, legally and within the confines of procedural
due process, i.e., after evaluation of the evidence
submitted by the prosecution. Any order issued in the
absence thereof is not a product of sound judicial
discretion but of whim and caprice and outright
arbitrariness."[103]
Private respondent remonstrates against the propriety
of petitioners certiorari as a mode of impugning the
judgment of acquittal not only as a strategy to
camouflage the issue of double jeopardy but also for
the fact that, contrary to petitioners assertions,
evidence in the case at bar was subjected to scrutiny,
review, assessment and evaluation by respondent trial
judge. By reason thereof, there cannot be perceived
grave abuse of discretion on the part of the judge to
warrant issuance of the great writ of certiorari.
We agree. The office of the common law writ of
certiorari is to bring before the court for inspection the
record of the proceedings of an inferior tribunal in
order that the superior court may determine from the
face of the record whether the inferior court has
exceeded its jurisdiction, or has not proceeded
according to the essential requirements of the law.
However, the original function and purpose of the writ
have been so modified by statutes and judicial
decisions. It is particularly so in the field of criminal
law when the state is applying for the writ and
problems arise concerning the right of the state to
appeal in a criminal case. As a general rule, the
prosecution cannot appeal or bring error proceedings
from a judgment in favor of the defendant in a criminal
case in the absence of a statute clearly conferring that
right. The problem comes into sharper focus when the
defendant contends, in effect, that the prosecution is
attempting to accomplish by the writ what it could not
do by appeal, and that his constitutional rights are
being thus encroached upon.[104]
Generally, under modern constitutions and statutes,
provisions are available as guides to the court in
determining the standing of the prosecution to secure
by certiorari a review of a lower court decision in a
criminal case which has favored the defendant. In most
instances, provisions setting forth the scope and
function of certiorari are found together with those
relating to the right of the state to appeal or bring error
in criminal matters. There is some indication that
courts view the writ of certiorari as an appeal in itself
where the applicant shows that there is no other
adequate remedy available,[105] and it is not
uncommon to find language in cases to the effect that
the state should not be permitted to accomplish by
certiorari what it cannot do by appeal.[106] Thus, if a
judgment sought to be reviewed was one entered after
an acquittal by a jury or the discharge of the accused
on the merits by the trial court, the standing of the
prosecution to review it by certiorari is far more likely
to be denied than if it were such an order as one
sustaining a demurrer to, or quashing the indictment,
or granting a motion for arrest of judgment after a
verdict of guilty.[107]
Philippine jurisprudence has been consistent in its
application of the Double Jeopardy Clause such that it
has viewed with suspicion, and not without good
reason, applications for the extraordinary writ
questioning decisions acquitting an accused on ground
of grave abuse of discretion.
The petition at hand which seeks to nullify the decision
of respondent judge acquitting the accused Honorato
Galvez goes deeply into the trial court's appreciation
and evaluation in esse of the evidence adduced by the
parties. A reading of the questioned decision shows
that respondent judge considered the evidence
received at trial. These consisted among others of the
testimonies relative to the positions of the victims vis-
-vis the accused and the trajectory, location and nature
of the gunshot wounds, and the opinion of the expert
witness for the prosecution. While the appreciation
thereof may have resulted in possible lapses in
evidence evaluation, it nevertheless does not detract
from the fact that the evidence was considered and
passed upon. This consequently exempts the act from
the writs limiting requirement of excess or lack of
jurisdiction. As such, it becomes an improper object of
and therefore non-reviewable by certiorari. To
reiterate, errors of judgment are not to be confused
with errors in the exercise of jurisdiction.
WHEREFORE, the instant petition for certiorari is
DISMISSED.
4. Ligon vs RTC
Assailed in this petition for review on certiorari1 is the
Decision2 dated October 30, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 106175, finding no
grave abuse of discretion on the part of the Regional
Trial Court of Makati City, Branch 56 (Makati City
RTC) in issuing the following orders (Assailed
Orders) in Civil Case No. 03-186:
(a) the Order3 dated February 9, 2007 which directed
the Register of Deeds of Muntinlupa City, respondent
Atty. Silverio Garing (Atty. Garing), to (1) register the
Officer's
Final Deed of Sale issued by respondent SheriffLucito
V. Alejo (Sheriff Alejo) on October 27, 2006 in favor
of the highest bidder, respondent Leonardo J. Ting
(Ting), (2) cancel Transfer Certificate of Title (TCT)
No. 8502/T44 in the name of Spouses Rosario and
Saturnino Baladjay (Sps. Baladjay), and (3) issue a
new certificate of title in favor of Ting, free from any
liens and encumbrances;
(b) the Order4 dated March 20, 2007 which directed
Atty. Garing to comply with the February 9, 2007
Order under pain of contempt of court; and
(c) the Order5 dated April 25, 2007 which reiterated
the directive to Atty. Garing to issue a new title in
favor of Ting after the latters payment of capital
gains, documentary and transfer taxes, as required.
The Facts
On November 20, 2002, petitioner Leticia P. Ligon
(Ligon) filed an amended complaint6 before the
Regional Trial Court of Quezon City, Branch 101
(Quezon City RTC) for collection of sum of money
and damages, rescission of contract, and nullification
of title with prayer for the issuance of a writ of
preliminary attachment, docketed as Civil Case No. Q-
10-48145 (Quezon City Case), against Sps. Baladjay,
a certain Olivia Marasigan (Marasigan), Polished
Arrow Holdings, Inc. (Polished Arrow), and its
incorporators,7 namely, Spouses Julius Gonzalo and
Charaine Doreece Anne Fuentebella (Sps.
Fuentebella), Ma. Linda Mendoza (Mendoza), Barbara
C. Clavo (Clavo), Bayani E. Arit, Jr. (Arit, Jr.), and
Peter M. Kairuz (Kairuz), as well as the latters
spouses (individual defendants).
In her complaint, Ligon alleged, inter alia, that Rosario
Baladjay (Rosario) enticed her to extend a short-term
loan in the amount of P3,000,000.00, payable in a
months time and secured by an Allied Bank post-
dated check for the same amount.8 Ligon likewise
claimed that Rosario, as further enticement for the loan
extension, represented that she and her husband
Saturnino were in the process of selling their property
in Ayala Alabang Village, Muntinlupa City (subject
property), covered by a clean title, i.e., TCT No. 85029
in the name of Rosario Baladjay, married to Saturnino
Baladjay, and that the proceeds of the said sale could
easily pay-off the loan.10Unfortunately, the Allied
Bank check was dishonored upon presentment and,
despite assurances to replace it with cash, Rosario
failed to do so. Moreover, Ligon discovered that the
subject property had already been transferred to
Polished Arrow, alleged to be a dummy corporation of
Sps. Baladjay and the individual defendants
(defendants). As a result, TCT No. 8502 was cancelled
and replaced on October 11, 2002 by TCT No. 927311
in the name of Polished Arrow. Thus, Ligon prayed
that all defendants be held solidarily liable to pay her
the amount of P3,000,000.00, with interest due, as well
as P1,000,000.00 as attorneys fees and another
P1,000,000.00 by way of moral and exemplary
damages. Asserting that the transfer of the subject
property to Polished Arrow was made in fraud of Sps.
Baladjays creditors, Ligon also prayed that the said
transfer be nullified, and that a writ of preliminary
attachment be issued in the interim against defendants
assets, including the subject property. Subsequently,
an Amended Writ of Preliminary Attachment12 was
issued on November 26, 2002, and annotated on the
dorsal portion13 of TCT No. 9273 on December 3,
2002 (December 3, 2002 attachment annotation).
On February 18, 2003, a similar complaint for
collection of sum of money, damages, and cancellation
of title with prayer for issuance of a writ of preliminary
attachment was lodged before the Makati City RTC,
docketed as Civil Case No. 03-186 (Makati City Case),
by Spouses Cecilia and Gil Vicente (Sps. Vicente)
against Sps. Baladjay, Polished Arrow, and other
corporations.14 In that case, it was established that
Sps. Baladjay solicited millions of pesos in
investments from Sps. Vicente using conduit
companies that were controlled by Rosario, as
President and Chairperson. During the proceedings
therein, a writ of preliminary attachment also against
the subject property was issued and annotated on the
dorsal portion of TCT No. 9273 on March 12, 2003.
Thereafter, but before the Quezon City Case was
concluded, the Makati City RTC rendered a
Decision15 dated December 9, 2004 (December 9,
2004 Decision), rescinding the transfer of the subject
property from Sps. Baladjay to Polished Arrow upon a
finding that the same was made in fraud of creditors.16
Consequently, the Makati City RTC directed the
Register of Deeds of Muntinlupa City to: (a) cancel
TCT No. 9273 in the name of Polished Arrow; and (b)
restore TCT No. 8502 "in its previous condition" in the
name of Rosario Baladjay, married to Saturnino
Baladjay.
Meanwhile, in the pending Quezon City Case,
Polished Arrow and the individual defendants (with
the exception of Marasigan) were successively
dropped17 as party-defendants, after it was established
that they, by themselves directly or through other
persons, had no more ownership, interest, title, or
claim over the subject property. The parties stipulated
on the existence of the December 9, 2004 Decision of
the Makati City RTC, and the fact that the same was
no longer questioned by defendants Sps. Fuentebella,
Arit, Jr., and Polished Arrow were made conditions for
their dropping as party-defendants in the case.18 In
view of the foregoing, the Quezon City Case
proceeded only against Sps. Baladjay and Marasigan
and, after due proceedings, the Quezon City RTC
rendered a Decision19 dated March 26, 2008 (March
26, 2008 Decision), directing Sps. Baladjay to pay
Ligon the amount of P3,000,000.00 with interest, as
well as attorneys fees and costs of suit.
On September 25, 2008, the March 26, 2008 Decision
of the Quezon City RTC became final and
executory.20However, when Ligon sought its
execution, she discovered that the December 3, 2002
attachment annotation had been deleted from TCT No.
9273 when the subject property was sold by way of
public auction on September 9, 2005 to the highest
bidder, respondent Ting, for the amount of
P9,000,000.00 during the execution proceedings in the
Makati City Case, as evidenced by the Officers Final
Deed of Sale21 dated October 27, 2006 (Officers
Final Deed of Sale) issued by Sheriff Alejo. In this
regard, Ligon learned that the Makati City RTC had
issued its first assailed Order22 dated February 9, 2007
(First Assailed Order), directing Atty. Garing, as the
Register of Deeds of Muntinlupa City, to: (a) register
the Officers Final Deed of Sale on the official Record
Book of the Register of Deeds of Muntinlupa City; and
(b) cancel TCT No. 8502 in the name of Sps. Baladjay
and issue a new title in the name of Ting, free from any
liens and encumbrances.
Atty. Garing manifested23 before the Makati City
RTC that it submitted the matter en consulta24 to the
Land Registration Authority (LRA) as he was
uncertain whether the annotations on TCT No. 9273
should be carried over to TCT No. 8502. In response
to the manifestation, the Makati City RTC issued its
second assailed Order25dated March 20, 2007
(Second Assailed Order), directing Atty. Garing to
comply with the First Assailed Order under pain of
contempt. It explained that it could not allow the LRA
to carry over all annotations previously annotated on
TCT No. 9273 in the name of Polished Arrow as said
course of action would run counter to its December 9,
2004 Decision which specifically ordered the
cancellation of said TCT and the restoration of TCT
No. 8502 in its previous condition. It further clarified
that:26
[I]f there were liens or encumbrances annotated on
TCT No. 8502 in the name of Rosario Baladjay when
the same was cancelled and TCT No. 9273 was issued
by the Register of Deeds of Muntinlupa City in favor
of Polished Arrow Holdings, Inc. based on the Deed
of Absolute Sale executed between the former and the
latter, only such liens or encumbrances will have to be
carried over to the new Transfer Certificate of Title
that he (Atty. Garing) is mandated to immediately
issue in favor of Leonardo J. Ting even as the Order of
the Court dated February 9, 2007 decreed that a new
TCT be issued in the name of Mr. Leonardo J. Ting,
free from any encumbrance. On the other hand, if TCT
No. 8502 in the name of Rosario Baladjay was free
from any liens or encumbrances when the same was
cancelled and TCT No. 9273 was issued by the
Register of Deeds of Muntinlupa City in favor of
Polished Arrow Holdings, Inc. by virtue of that Deed
of Absolute Sale executed between Rosario Baladjay
and Polished Arrow Holdings, Inc., it necessarily
follows that the new Transfer of Certificate of Title
that the said Registrar of Deeds is duty bound to issue
immediately in favor of Leonardo Ting will also be
freed from any liens and encumbrances, as simple as
that. (Emphases and underscoring supplied)
Based on the foregoing, it pronounced that it was Atty.
Garings ministerial duty "to promptly cancel TCT
No. 8502/T-44 in the name of defendant-spouses
Baladjay and to issue a new Transfer Certificate of
Title in the name of the highest bidder, Leonardo J.
Ting."27
Separately, Ting filed a motion before the Makati City
RTC on account of Atty. Garings letter28 dated
March 26, 2006 requiring him to comply with certain
documentary requirements and to pay the appropriate
capital gains, documentary stamp and transfer taxes
before a new title could be issued in his name. In its
third assailed Order29dated April 25, 2007 (Third
Assailed Order), the Makati City RTC directed Ting to
pay the aforesaid taxes and ordered Atty. Garing to
immediately cancel TCT No. 8502 and issue a new
title in the formers name.
On June 7, 2007, Atty. Garing issued TCT No.
1975630 in the name of Ting, free from any liens and
encumbrances. Later, Ting sold31 the subject property
to respondent Benito G. Techico (Techico), resulting
in the cancellation of TCT No. 19756 and the issuance
of TCT No. 3100132 in Techicos name.
In view of the preceding circumstances, Ligon filed,
inter alia, a certiorari petition33 against respondent
Presiding Judge Reynaldo Laigo (Judge Laigo),
Sheriff Alejo, Atty. Garing, Ting, and Techico
(respondents), alleging, among others, that the Makati
City RTC committed grave abuse of discretion in
issuing the Assailed Orders. In this relation, she prayed
that the said orders be declared null and void for
having been issued in violation of her right to due
process, and resulting in (a) the deletion of the
December 3, 2002 attachment annotation on TCT No.
9273 which evidences her prior attachment lien over
the subject property, and (b) the issuance of new titles
in the names of Ting and Techico.
Consolidated with Ligons certiorari petition is a
complaint for indirect contempt34 against
respondents, whereby it was alleged that the latter
unlawfully interfered with the court processes of the
Quezon City RTC, particularly by deleting the
December 3, 2002 attachment annotation on TCT No.
9273 which thereby prevented the execution of the
Quezon City RTCs March 26, 2008 Decision.
The CA Ruling
In a Decision35 dated October 30, 2009, the CA
dismissed Ligons certiorari petition, finding that the
Makati City RTC did not gravely abuse its discretion
in issuing the Assailed Orders, adding further that the
same was tantamount to a collateral attack against the
titles of both Ting and Techico, which is prohibited
under Section 4836of Presidential Decree No. (PD)
1529.37 Likewise, it dismissed the indirect contempt
charge for lack of sufficient basis, emphasizing that
the Assailed Orders were issued prior to the Quezon
City RTCs Decision, meaning that the said issuances
could not have been issued in disregard of the latter
decision.
Aggrieved, Ligon filed the present petition.
The Issues Before the Court
The Court resolves the following essential issues: (a)
whether or not the CA erred in ruling that the Makati
City RTC did not gravely abuse its discretion in
issuing the Assailed Orders; and (b) whether or not
Judge Laigo should be cited in contempt and penalized
administratively.
The Courts Ruling
The petition is partly meritorious.
A. Issuance of the Assailed Orders vis--vis
Grave Abuse of Discretion.
Attachment is defined as a provisional remedy by
which the property of an adverse party is taken into
legal custody, either at the commencement of an action
or at any time thereafter, as a security for the
satisfaction of any judgment that may be recovered by
the plaintiff or any proper party.38 Case law instructs
that an attachment is a proceeding in rem, and, hence,
is against the particular property, enforceable against
the whole world. Accordingly, the attaching creditor
acquires a specific lien on the attached property which
nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a
proceeding, in effect, means that the property attached
is an indebted thing and a virtual condemnation of it to
pay the owners debt. The lien continues until the debt
is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner
provided by law.39 Thus, a prior registration40 of an
attachment lien creates a preference,41 such that when
an attachment has been duly levied upon a property, a
purchaser thereof subsequent to the attachment takes
the property subject to the said attachment.42 As
provided under PD 1529, said registration operates as
a form of constructive notice to all persons.43
Applying these principles to this case, the Court finds
that the CA erred in holding that the RTC did not
gravely abuse its discretion in issuing the Assailed
Orders as these issuances essentially disregarded, inter
alia, Ligons prior attachment lien over the subject
property patently anathema to the nature of attachment
proceedings which is well-established in law and
jurisprudence.44 In this case, Ligon, in order to secure
the satisfaction of a favorable judgment in the Quezon
City Case, applied for and was eventually able to
secure a writ of preliminary attachment45 over the
subject property on November 25, 2002, which was
later annotated on the dorsal portion46of TCT No.
9273 in the name of Polished Arrow on December 3,
2002. Notwithstanding the subsequent cancellation of
TCT No. 9273 due to the Makati City RTCs
December 9, 2004 Decision rescinding the transfer of
the subject property from Sps. Baladjay to Polished
Arrow upon a finding that the same was made in fraud
of creditors, Ligons attachment lien over the subject
property continued to subsist since the attachment she
had earlier secured binds the property itself, and,
hence, continues until the judgment debt of Sps.
Baladjay to Ligon as adjudged in the Quezon City
Case is satisfied, or the attachment discharged or
vacated in some manner provided by law. The grave
abuse of discretion of the Makati City RTC lies with
its directive to issue a new certificate of title in the
name of Ting (i.e., TCT No. 19756),47 free from any
liens and encumbrances. This course of action clearly
negates the efficacy of Ligons attachment lien and,
also, defies the legal characterization of attachment
proceedings. It bears noting that Ligons claim,
secured by the aforesaid attachment, is against Sps.
Baladjay whose ownership over the subject property
had been effectively restored in view of the RTCs
rescission of the propertys previous sale to Polished
Arrow.48 Thus, Sps. Ligons attachment lien against
Sps. Baladjay as well as their successors-in-interest
should have been preserved, and the annotation thereof
carried over to any subsequent certificate of title,49 the
most recent of which as it appears on record is TCT
No. 31001 in the name of Techico, without prejudice
to the latters right to protect his own ownership
interest over the subject property.
That said, the Court now proceeds to resolve the
second and final issue on indirect contempt.
B. Indirect Contempt Charges.
While the Court agrees with Ligons position on the
issue of grave abuse of discretion, it holds an opposite
view anent its complaint for indirect contempt against
Judge Laigo and/or the respondents in this case.
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.50
Contempt of court is of two (2) kinds, namely: direct
and indirect contempt.1wphi1 Indirect contempt or
constructive contempt is that which is committed out
of the presence of the court. Any improper conduct
tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice would constitute
indirect contempt.51
The indirect contempt charges in this case involve an
invocation of paragraphs b, c, and d, Section 3, Rule
71 of the Rules of Court which read as follows:
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:
xxxx
(b) Disobedience of or resistance to a lawful writ, x x
x;
(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;
Examining the petition, the Court finds that Ligon
failed to sufficiently show how the acts of each of the
respondents, or more specifically, Judge Laigo,
constituted any of the acts punishable under the
foregoing section tending towards a wilful disregard or
disobedience of a public authority. In issuing the
Assailed Orders, Judge Laigo merely performed his
judicial functions pursuant to the December 9, 2004
Decision in the Makati City Case which had already
attained finality. Thus, without Ligon's proper
substantiation, considering too that Judge Laigo's
official acts are accorded with the presumption of
regularity,52 the Court is constrained to dismiss the
indirect contempt charges in this case.
WHEREFORE, the petition is PARTLY GRANTED.
The Decision dated October 30, 2009 of the Court of
Appeals in CA-G.R. SP No. 106175 is REVERSED
and SET ASIDE. Accordingly, the Assailed Orders
subject of this case are hereby declared NULL and
VOID only insofar as they relate to the issuance of
Transfer Certificate of Title No. 19756 in the name of
respondent Leonardo J. Ting free from any liens and
encumbrances. The Register of Deeds of Muntinlupa
City is DIRECTED to carry over and annotate on TCT
No. 31001 in the name of respondent Benito G.
Techico the original attachment lien of petitioner
Leticia P. Ligon as described in this Decision. The
indirect contempt charges are, however, DISMISSED.
5. Torres vs Satsatin
This is a petition for review on certiorari assailing the
Decision1 dated November 23, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 83595, and its
Resolution2 dated January 18, 2005, denying
petitioners motion for reconsideration.
The factual and procedural antecedents are as follows:
The siblings Sofia Torres (Sofia), Fructosa Torres
(Fructosa), and Mario Torres (Mario) each own
adjacent 20,000 square meters track of land situated at
Barrio Lankaan, Dasmarias, Cavite, covered by
Transfer Certificate of Title (TCT) Nos. 251267,3
251266,4 and 251265,5 respectively.
Sometime in 1997, Nicanor Satsatin (Nicanor) asked
petitioners mother, Agripina Aledia, if she wanted to
sell their lands. After consultation with her daughters,
daughter-in-law, and grandchildren, Agripina agreed
to sell the properties. Petitioners, thus, authorized
Nicanor, through a Special Power of Attorney, to
negotiate for the sale of the properties.6
Sometime in 1999, Nicanor offered to sell the
properties to Solar Resources, Inc. (Solar). Solar
allegedly agreed to purchase the three parcels of land,
together with the 10,000-square-meter property owned
by a certain Rustica Aledia, for P35,000,000.00.
Petitioners alleged that Nicanor was supposed to remit
to them the total amount of P28,000,000.00 or
P9,333,333.00 each to Sofia, Fructosa, and the heirs of
Mario.
Petitioners claimed that Solar has already paid the
entire purchase price of P35,000,000.00 to Nicanor in
Thirty-Two (32) post-dated checks which the latter
encashed/deposited on their respective due dates.
Petitioners added that they also learned that during the
period from January 2000 to April 2002, Nicanor
allegedly acquired a house and lot at Vista Grande BF
Resort Village, Las Pias City and a car, which he
registered in the names of his unemployed children,
Nikki Normel Satsatin and Nikki Norlin Satsatin.
However, notwithstanding the receipt of the entire
payment for the subject property, Nicanor only
remitted the total amount of P9,000,000.00, leaving an
unremitted balance of P19,000,000.00. Despite
repeated verbal and written demands, Nicanor failed to
remit to them the balance of P19,000,000.00.
Consequently, on October 25, 2002, petitioners filed
before the regional trial court (RTC) a Complaint7 for
sum of money and damages, against Nicanor,
Ermilinda Satsatin, Nikki Normel Satsatin, and Nikki
Norlin Satsatin. The case was docketed as Civil Case
No. 2694-02, and raffled to RTC, Branch 90,
Dasmarias, Cavite.
On October 30, 2002, petitioners filed an Ex-Parte
Motion for the Issuance of a Writ of Attachment,8
alleging among other things: that respondents are
about to depart the Philippines; that they have
properties, real and personal in Metro Manila and in
the nearby provinces; that the amount due them is
P19,000,000.00 above all other claims; that there is no
other sufficient security for the claim sought to be
enforced; and that they are willing to post a bond fixed
by the court to answer for all costs which may be
adjudged to the respondents and all damages which
respondents may sustain by reason of the attachment
prayed for, if it shall be finally adjudged that
petitioners are not entitled thereto.
On October 30, 2002, the trial court issued an Order9
directing the petitioners to post a bond in the amount
of P7,000,000.00 before the court issues the writ of
attachment, the dispositive portion of which reads as
follows:
WHEREFORE, premises considered, and finding the
present complaint and motion sufficient in form and
substance, this Court hereby directs the herein
plaintiffs to post a bond, pursuant to Section 3, Rule
57 of the 1997 Rules of Civil Procedure, in the amount
of Seven Million Pesos (P7,000,000.00), before the
Writ of Attachment issues.10
On November 15, 2002, petitioners filed a Motion for
Deputation of Sheriff,11 informing the court that they
have already filed an attachment bond. They also
prayed that a sheriff be deputized to serve the writ of
attachment that would be issued by the court.
In the Order12 dated November 15, 2002, the RTC
granted the above motion and deputized the sheriff,
together with police security assistance, to serve the
writ of attachment.
Thereafter, the RTC issued a Writ of Attachment13
dated November 15, 2002, directing the sheriff to
attach the estate, real or personal, of the respondents,
the decretal portion of which reads:
WE, THEREFORE, command you to attach the estate,
real or personal, not exempt from execution, of the said
defendants, in your province, to the value of said
demands, and that you safely keep the same according
to the said Rule, unless the defendants give security to
pay such judgment as may be recovered on the said
action, in the manner provided by the said Rule,
provided that your legal fees and all necessary
expenses are fully paid.
You shall return this writ with your proceedings
indorsed hereon within twenty (20) days from the date
of receipt hereof.
GIVEN UNDER MY HAND AND SEAL of this
Court, this 15th day of November, 2002, at Imus for
Dasmarias, Cavite, Philippines.14
On November 19, 2002, a copy of the writ of
attachment was served upon the respondents. On the
same date, the sheriff levied the real and personal
properties of the respondent, including household
appliances, cars, and a parcel of land located at Las
Pias, Manila.15
On November 21, 2002, summons, together with a
copy of the complaint, was served upon the
respondents.16
On November 29, 2002, respondents filed their
Answer.17
On the same day respondents filed their answer, they
also filed a Motion to Discharge Writ of
Attachment18anchored on the following grounds: the
bond was issued before the issuance of the writ of
attachment; the writ of attachment was issued before
the summons was received by the respondents; the
sheriff did not serve copies of the application for
attachment, order of attachment, plaintiffs affidavit,
and attachment bond, to the respondents; the sheriff
did not submit a sheriffs return in violation of the
Rules; and the grounds cited for the issuance of the
writ are baseless and devoid of merit. In the
alternative, respondents offered to post a counter-bond
for the lifting of the writ of attachment.19
On March 11, 2003, after the parties filed their
respective pleadings, the RTC issued an Order20
denying the motion, but at the same time, directing the
respondents to file a counter-bond, to wit:
WHEREFORE, premises considered, after the
pertinent pleadings of the parties have been taken into
account, the herein defendants are hereby directed to
file a counter-bond executed to the attaching party, in
the amount of Seven Million Pesos (P7,000,000.00),
to secure the payment of any judgment that the
attaching party may recover in the action, with notice
on the attaching party, whereas, the Motion to
Discharge Writ of Attachment is DENIED.
SO ORDERED.21
Thereafter, respondents filed a motion for
reconsideration and/or motion for clarification of the
above order. On April 3, 2003, the RTC issued another
Order22 which reads:
In view of the Urgent Motion For Reconsideration
And/Or Motion For Clarification of the Order of this
Court dated March 11, 2003, denying their Motion to
Discharge Writ of Attachment filed by the defendants
through counsel Atty. Franco L. Loyola, the Motion to
Discharge Writ of Attachment is denied until after the
defendants have posted the counter-bond in the
amount of Seven Million Pesos (P7,000,000.00).
The defendants, once again, is directed to file their
counter-bond of Seven Million Pesos (P7,000,000.00),
if it so desires, in order to discharge the Writ of
Attachment.
SO ORDERED.
On December 15, 2003, respondents filed an Urgent
Motion to Lift/Set Aside Order Dated March [11],
2003,23which the RTC denied in an Order24 of even
date, the dispositive portion of which reads:
WHEREFORE, premises considered, defendants
Urgent Motion to Lift/Set Aside Order Dated March
23, 2003 (With Manifestation to Dissolve Writ of
Attachment) is hereby DENIED for lack of Merit.
SO ORDERED.
Respondents filed an Urgent Motion for
Reconsideration,25 but it was denied in the Order26
dated March 3, 2004.
Aggrieved, respondents filed before the CA a Petition
for Certiorari, Mandamus and Prohibition with
Preliminary Injunction and Temporary Restraining
Order27 under Rule 65 of the Rules of Court, docketed
as CA-G.R. SP No. 83595, anchored on the following
grounds:
(1) public respondents committed grave abuse of
discretion amounting to lack of or in excess of
jurisdiction in failing to notice that the lower court has
no jurisdiction over the person and subject matter of
the complaint when the subject Writ of Attachment
was issued;
(2) public respondents committed grave abuse of
discretion amounting to lack of or in excess of
jurisdiction in granting the issuance of the Writ of
Attachment despite non-compliance with the formal
requisites for the issuance of the bond and the Writ of
Attachment.28
Respondents argued that the subject writ was improper
and irregular having been issued and enforced without
the lower court acquiring jurisdiction over the persons
of the respondents. They maintained that the writ of
attachment was implemented without serving upon
them the summons together with the complaint. They
also argued that the bond issued in favor of the
petitioners was defective, because the bonding
company failed to obtain the proper clearance that it
can transact business with the RTC of Dasmarias,
Cavite. They added that the various clearances which
were issued in favor of the bonding company were
applicable only in the courts of the cities of Pasay,
Pasig, Manila, and Makati, but not in the RTC, Imus,
Cavite.29
On November 23, 2003, the CA rendered the assailed
Decision in favor of the respondents, finding grave
abuse of discretion amounting to lack of or in excess
of jurisdiction on the part of the RTC in issuing the
Orders dated December 15, 2003 and March 3, 2004.
The decretal portion of the Decision reads:
WHEREFORE, the instant petition is hereby
GRANTED. Accordingly, the assailed Orders are
hereby nullified and set aside. The levy on the
properties of the petitioners pursuant to the Writ of
Attachment issued by the lower court is hereby
LIFTED.
SO ORDERED.30
Petitioners filed a Motion for Reconsideration,31 but
it was denied in the Resolution32 dated January 18,
2005.
Hence, this petition assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS ERRED
IN ORDERING THE LIFTING OF THE WRIT OF
ATTACHMENT PURSUANT TO SECTION 13,
RULE 57 OF THE REVISED RULES OF CIVIL
PROCEDURE.
II.
THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT PUBLIC RESPONDENT
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION IN GRANTING THE WRIT OF
ATTACHMENT DESPITE THE BOND BEING
INSUFFICIENT AND HAVING BEEN
IMPROPERLY ISSUED.
III.
THE HONORABLE COURT OF APPEALS ERRED
IN NOT DISMISSING THE PETITION BY
REASON OF ESTOPPEL, LACHES AND
PRESCRIPTION AND IN HOLDING THAT THE
WRIT OF ATTACHMENT WAS IMPROPERLY
AND IRREGULARLY ENFORCED IN
VIOLATION OF SECTION 5, RULE 57 OF THE
REVISED RULES OF COURT.
IV.
THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT THE PRINCIPLE OF
ESTOPPEL WILL NOT LIE AGAINST
RESPONDENTS.
Petitioners maintain that in the case at bar, as in the
case of FCY Construction Group, Inc. v. Court of
Appeals,33the only way the subject writ of attachment
can be dissolved is by a counter-bond. They claim that
the respondents are not allowed to file a motion to
dissolve the attachment under Section 13, Rule 57 of
the Rules of Court. Otherwise, the hearing on the
motion for the dissolution of the writ would be
tantamount to a trial on the merits, considering that the
writ of preliminary attachment was issued upon a
ground which is, at the same time, the applicants
cause of action.
Petitioners insist that the determination of the
existence of grounds to discharge a writ of attachment
rests in the sound discretion of the lower court. They
argue that the Certification34 issued by the Office of
the Administrator and the Certifications35 issued by
the clerks of court of the RTCs of Dasmarias and
Imus, Cavite, would show that the bonds offered by
Western Guaranty Corporation, the bonding company
which issued the bond, may be accepted by the RTCs
of Dasmarias and Imus, Cavite, and that the said
bonding company has no pending liability with the
government.
Petitioners contend that respondents are barred by
estoppel, laches, and prescription from questioning the
orders of the RTC issuing the writ of attachment. They
also maintain that the issue whether there was
impropriety or irregularity in the issuance of the orders
is moot and academic, considering that the attachment
bond questioned by the respondent had already
expired on November 14, 2003 and petitioners have
renewed the attachment bond covering the period from
November 14, 2003 to November 14, 2004, and
further renewed to cover the period of November 14,
2004 to November 14, 2005.
The petition is bereft of merit.
A writ of preliminary attachment is defined as a
provisional remedy issued upon order of the court
where an action is pending to be levied upon the
property or properties of the defendant therein, the
same to be held thereafter by the sheriff as security for
the satisfaction of whatever judgment that might be
secured in the said action by the attaching creditor
against the defendant.36
In the case at bar, the CA correctly found that there
was grave abuse of discretion amounting to lack of or
in excess of jurisdiction on the part of the trial court in
approving the bond posted by petitioners despite the
fact that not all the requisites for its approval were
complied with. In accepting a surety bond, it is
necessary that all the requisites for its approval are
met; otherwise, the bond should be rejected.37
Every bond should be accompanied by a clearance
from the Supreme Court showing that the company
concerned is qualified to transact business which is
valid only for thirty (30) days from the date of its
issuance.38However, it is apparent that the
Certification39 issued by the Office of the Court
Administrator (OCA) at the time the bond was issued
would clearly show that the bonds offered by Western
Guaranty Corporation may be accepted only in the
RTCs of the cities of Makati, Pasay, and Pasig.
Therefore, the surety bond issued by the bonding
company should not have been accepted by the RTC
of Dasmarias, Branch 90, since the certification
secured by the bonding company from the OCA at the
time of the issuance of the bond certified that it may
only be accepted in the above-mentioned cities. Thus,
the trial court acted with grave abuse of discretion
amounting to lack of or in excess of jurisdiction when
it issued the writ of attachment founded on the said
bond.
Moreover, in provisional remedies, particularly that of
preliminary attachment, the distinction between the
issuance and the implementation of the writ of
attachment is of utmost importance to the validity of
the writ. The distinction is indispensably necessary to
determine when jurisdiction over the person of the
defendant should be acquired in order to validly
implement the writ of attachment upon his person.
This Court has long put to rest the issue of when
jurisdiction over the person of the defendant should be
acquired in cases where a party resorts to provisional
remedies. A party to a suit may, at any time after filing
the complaint, avail of the provisional remedies under
the Rules of Court. Specifically, Rule 57 on
preliminary attachment speaks of the grant of the
remedy "at the commencement of the action or at any
time before entry of judgment."40 This phrase refers
to the date of the filing of the complaint, which is the
moment that marks "the commencement of the
action." The reference plainly is to a time before
summons is served on the defendant, or even before
summons issues.41
In Davao Light & Power Co., Inc. v. Court of
Appeals,42 this Court clarified the actual time when
jurisdiction should be had:
It goes without saying that whatever be the acts done
by the Court prior to the acquisition of jurisdiction
over the person of defendant x x x issuance of
summons, order of attachment and writ of attachment
x x x 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 courts 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
applicants 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 x x x.
(Emphasis supplied.)
In Cuartero v. Court of Appeals,43 this Court held that
the grant of the provisional remedy of attachment
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 be first obtained. However,
once the implementation of the writ commences, 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.44
Thus, it is indispensable not only for the acquisition of
jurisdiction over the person of the defendant, but also
upon consideration of fairness, to apprise the
defendant of the complaint against him and the
issuance of a writ of preliminary attachment and the
grounds therefor that prior or contemporaneously to
the serving of the writ of attachment, service of
summons, together with a copy of the complaint, the
application for attachment, the applicants affidavit
and bond, and the order must be served upon him.
In the instant case, assuming arguendo that the trial
court validly issued the writ of attachment on
November 15, 2002, which was implemented on
November 19, 2002, it is to be noted that the summons,
together with a copy of the complaint, was served only
on November 21, 2002.
At the time the trial court issued the writ of attachment
on November 15, 2002, it can validly to do so since the
motion for its issuance can be filed "at the
commencement of the action or at any time before
entry of judgment." However, at the time the writ was
implemented, the trial court has not acquired
jurisdiction over the persons of the respondent since
no summons was yet served upon them. The proper
officer should have previously or simultaneously with
the implementation of the writ of attachment, served a
copy of the summons upon the respondents in order for
the trial court to have acquired jurisdiction upon them
and for the writ to have binding effect. Consequently,
even if the writ of attachment was validly issued, it was
improperly or irregularly enforced and, therefore,
cannot bind and affect the respondents.
Moreover, although there is truth in the petitioners
contention that an attachment may not be dissolved by
a showing of its irregular or improper issuance if it is
upon a ground which is at the same time the
applicants cause of action in the main case, since an
anomalous situation would result if the issues of the
main case would be ventilated and resolved in a mere
hearing of a motion. However, the same is not
applicable in the case bar. It is clear from the
respondents pleadings that the grounds on which they
base the lifting of the writ of attachment are the
irregularities in its issuance and in the service of the
writ; not petitioners cause of action.1avvphi1
Further, petitioners contention that respondents are
barred by estoppel, laches, and prescription from
questioning the orders of the RTC issuing the writ of
attachment and that the issue has become moot and
academic by the renewal of the attachment bond
covering after its expiration, is devoid of merit. As
correctly held by the CA:
There are two ways of discharging the attachment.
First, to file a counter-bond in accordance with Section
12 of Rule 57. Second[,] [t]o quash the attachment on
the ground that it was irregularly or improvidently
issued, as provided for in Section 13 of the same rule.
Whether the attachment was discharged by either of
the two ways indicated in the law, 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. The filing of a counter-bond is
merely a speedier way of discharging the attachment
writ instead of the other way.45
Moreover, again assuming arguendo that the writ of
attachment was validly issued, although the trial court
later acquired jurisdiction over the respondents by
service of the summons upon them, such belated
service of summons on respondents cannot be deemed
to have cured the fatal defect in the enforcement of the
writ. The trial court cannot enforce such a coercive
process on respondents without first obtaining
jurisdiction over their person. The preliminary writ of
attachment must be served after or simultaneous with
the service of summons on the defendant whether by
personal service, substituted service or by publication
as warranted by the circumstances of the case. The
subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person
because the law does not allow for retroactivity of a
belated service.46
WHEREFORE, premises considered, the petition is
DENIED. The Decision and Resolution of the Court of
Appeals dated November 23, 2004 and January 18,
2005, respectively, in CA-G.R. SP No. 83595 are
AFFIRMED.
6. Borja vs Platon
Petitioner seeks the setting aside of an order of
preliminary attachment issued on November 6, 1940,
and reiterated on January 13, 1941, by the respondent
Judge of the Court of First Instance against petitioner's
properties.
On August 12, 1936, petitioner brought a civil action
in the Court of First Instance of Rizal against
Hermogena Romero, Francisco de Borja, Josefa
Tangco and Crisanto de Borja to annul a second sale
by Francisco de Borja to Hermogena Romero, of a
large estate known as the Hacienda Jalajala, and to
recover damages in the amount of P25,000. On August
29, 1936, Francisco de Borja and his wife Josefa
Tangco filed an answer with three counterclaims, and
on September 29, 1936, they presented two more
counterclaims. Trial began September 30, 1936. Under
date of August 4, 1937, defendants Francisco de Borja,
Josefa Tangco and Crisanto de Borja submitted their
amended answer, consisting of a general denial,
special defenses, and five counterclaims and cross-
complaints. In these causes for counter-claim and
cross-complaint, it was alleged that plaintiff, being a
son of defendants Francisco de Borja and Josefa
Tangco, had been entrusted with the administration of
the extensive interests of his parents, but had been
unfaithful to his trust. Said defendants, therefore,
prayed, inter alia, that the spouses Borja and Tangco
be declared owners of the Hacienda Jalajala in
question; that plaintiff be required to render an
accounting of the products of said hacienda that he had
received and to pay said spouses at least P100,000
illegally retained by him; that plaintiff be ordered to
account for the proceed of rice and bran and to pay at
least P700,000 unlawfully retained by him; that
plaintiff be made to deliver P20,000 which he had
collected from a debtor of said spouses; that plaintiff
be likewise ordered to pay another sum of P9,034
collected by him from the same debtor; and that
plaintiff be required to turn over to defendants
Francisco de Borja and Josefa Tangco the amount of
P40,000 collected by him as indemnity of an insurance
policy on property belonging to said spouses.
On July 27, 1940, Francisco de Borja and his wife filed
their petition for preliminary attachment to cover their
third, fourth, and fifth, grounds for cross-complaint,
involving a total of P69,035. In said motion, the
defendants Borja and wife stated that they did not
include the first and second causes for cross-complaint
because the visible property of plaintiff that could then
be attached was only worth about P2,000. On August
21, 1940, plaintiff presented an amended answer
setting up a counterclaim against defendants Borja and
wife in the sum of P99,175.46.
The order for preliminary attachment is questioned
upon several grounds, among which are: (1) that no
writ of attachment can be issued in favor of a
defendant who presents a counterclaim; (2) and the
defendants' affidavit was fatally defective.
On the first point, we believe a writ of preliminary
attachment may be issued in favor of a defendant who
sets up a counterclaim. For the purpose of the
protection afforded by such attachment, it is
immaterial whether the defendants Borja and wife
simply presented a counterclaim or brought a separate
civil action against Jose de Borja, plaintiff in the
previous case and petitioner herein. To lay down a
subtle distinction would be to sanction that formalism
and that technicality which are discountenanced by the
modern laws of procedure for the sake of speedy and
substantial justice. In the present case we see no reason
why the order of the trial court should be disturbed,
this question being a matter within its discretion and
we find no grave abuse of that discretion.
As to be the second objection of petitioner, his counsel
strenuously advances the theory that the affidavit
attached to the petition for a writ of preliminary
attachment was fatally defective because it failed to
allege that "the amount due to the plaintiff is as much
as the sum for which the order is granted above all
legal counterclaims" as required in section 426, Code
of Civil Procedure and section 3, Rule 59, Rules of
Court. Petitioner contends that his counterclaim
against that of Francisco de Borja and wife being
P99,175.46 whereas the latter's counterclaim totalled
only P69,035, the omission of the allegation referred
to is a serious defect. The trial court found, however,
that the counterclaim of Francisco de Borja and wife
exceed those of the petitioner Jose de Borja. It should
be borne in mind that the aggregate counterclaims of
Francisco de Borja and wife amounted to P869,000,
which exceeds petitioner's counterclaim by P769,000
in round figures. Moreover, as the trial court had
before it the evidence adduce by both sides, the
petition for a writ of preliminary attachment having
been filed four years after the trial had begun, we
presume that the lower court, having in mind such
evidence, ordered the attachment accordingly.
The order appealed from is hereby affirmed, with costs
against the petitioner. So ordered.
7. Professional Video Inc, vs TESDA
We resolve the petition filed by Professional Video,
Inc. (PROVI)1 to annul and set aside the Decision2 of
the Court of Appeals (CA) in CA-G.R. SP No. 67599,
and its subsequent Order denying PROVIs motion for
reconsideration.3 The assailed CA decision nullified:
a. the Order4 dated July 16, 2001 of the Regional Trial
Court (RTC), Pasig City, in Civil Case No. 68527,
directing the attachment/garnishment of the properties
of respondent Technical Education and Skills
Development Authority (TESDA) amounting to
Thirty Five Million Pesos (P35,000,000.00); and
b. the RTCs August 24, 2001 Order5 denying
respondent TESDAs motion to discharge/quash writ
of attachment.
THE FACTUAL BACKGROUND
PROVI is an entity engaged in the sale of high
technology equipment, information technology
products and broadcast devices, including the supply
of plastic card printing and security facilities.
TESDA is an instrumentality of the government
established under Republic Act (R.A.) No. 7796 (the
TESDA Act of 1994) and attached to the Department According to PROVI, it delivered the following items
of Labor and Employment (DOLE) to "develop and to TESDA on the dates indicated:
establish a national system of skills standardization,
testing, and certification in the country."6 To fulfill
this mandate, it sought to issue security-printed Date Particulars Amount
certification and/or identification polyvinyl (PVC)
cards to trainees who have passed the certification 26 April 48,500 pre-
P 2,764,500.00
process. 2000 printed cards

TESDAs Pre-Qualification Bids Award Committee 07 June 330,000 pre-

18,810,000.00
(PBAC) conducted two (2) public biddings on June 25, 2000 printed cards
1999 and July 22, 1999 for the printing and encoding
of PVC cards. A failure of bidding resulted in both 07
121,500 pre-
instances since only two (2) bidders PROVI and August 6,925,500.00
printed cards
Sirex Phils. Corp. submitted proposals. 2000

Due to the failed bidding, the PBAC recommended 100,000

that TESDA enter into a negotiated contract with
PROVI. On December 29, 1999, TESDA and PROVI
signed and executed their "Contract Agreement
Project: PVC ID Card Issuance" (the Contract
Agreement) for the provision of goods and services in
the printing and encoding of PVC cards.7 Under this
Contract Agreement, PROVI was to provide TESDA
with the system and equipment compliant with the
specifications defined in the Technical Proposal. In
return, TESDA would pay PROVI the amount of
Thirty-Nine Million Four Hundred and Seventy-Five
Thousand Pesos (P39,475,000) within fifteen (15)
days after TESDAs acceptance of the contracted
goods and services.
On August 24, 2000, TESDA and PROVI executed an
"Addendum to the Contract Agreement Project: PVC
ID Card Issuance" (Addendum),8 whose terms bound
PROVI to deliver one hundred percent (100%) of the
enumerated supplies to TESDA consisting of five
hundred thousand (500,000) pieces of security foil;
five (5) pieces of security die with TESDA seal; five
hundred thousand (500,000) pieces of pre-printed and
customized identification cards; one hundred thousand
(100,000) pieces of scannable answer sheets; and five
hundred thousand (500,000) customized TESDA
holographic laminate. In addition, PROVI would
install and maintain the following equipment: one (1)
unit of Micropoise, two (2) units of card printer, three
(3) units of flatbed scanner, one (1) unit of OMR
scanner, one (1) unit of Server, and seven (7) units of
personal computer.
TESDA in turn undertook to pay PROVI thirty percent
(30%) of the total cost of the supplies within thirty (30)
days after receipt and acceptance of the contracted
supplies, with the balance payable within thirty (30)
days after the initial payment.
26 April
scannable 600,000.00
2000
answer sheets
06 June 5 Micro-Poise
375,000.00
2000 customized die
13 June 35 boxes @ 10,000,000.00
2000 15,000
imp/box
Custom
hologram Foil
Total P 39,475,000.00
PROVI further alleged that out of TESDAs liability
of P39,475,000.00, TESDA paid PROVI only
P3,739,500.00, leaving an outstanding balance of
P35,735,500.00, as evidenced by PROVIs Statement
of Account.9 Despite the two demand letters dated
March 8 and April 27, 2001 that PROVI sent
TESDA,10 the outstanding balance remained unpaid.
On July 11, 2001, PROVI filed with the RTC a
complaint for sum of money with damages against
TESDA. PROVI additionally prayed for the issuance
of a writ of preliminary attachment/garnishment
against TESDA. The case was docketed as Civil Case
No. 68527. In an Order dated July 16, 2001, the RTC
granted PROVIs prayer and issued a writ of
preliminary attachment against the properties of
TESDA not exempt from execution in the amount of
P35,000,000.00.11
TESDA responded on July 24, 2001 by filing a Motion
to Discharge/Quash the Writ of Attachment, arguing
mainly that public funds cannot be the subject of
garnishment.12 The RTC denied TESDAs motion,
and subsequently ordered the manager of the Land
Bank of the Philippines to produce TESDAs bank
statement for the garnishment of the covered
amount.13
Faced with these rulings, TESDA filed a Petition for
Certiorari with the CA to question the RTC orders,
imputing grave abuse of discretion amounting to lack
or excess of jurisdiction on the trial court for issuing a
writ of preliminary attachment against TESDAs
public funds.14
The CA set aside the RTCs orders after finding that:
(a) TESDAs funds are public in nature and, therefore,
exempt from garnishment; and (b) TESDAs purchase
of the PVC cards was a necessary incident of its
governmental function; consequently, it ruled that
there was no legal basis for the issuance of a writ of
preliminary attachment/garnishment.15 The CA
subsequently denied PROVIs motion for
reconsideration;16 hence, the present petition.
THE PETITION
The petition submits to this Court the single issue of
whether or not the writ of attachment against TESDA
and its funds, to cover PROVIs claim against TESDA,
is valid. The issue involves a pure question of law and
requires us to determine whether the CA was correct
in ruling that the RTC gravely abused its discretion in
issuing a writ of attachment against TESDA.
PROVI argues that the CA should have dismissed
TESDAs petition for certiorari as the RTC did not
commit any grave abuse of discretion when it issued
the Orders dated July 16, 2001 and August 24, 2001.
According to PROVI, the RTC correctly found that
when TESDA entered into a purely commercial
contract with PROVI, TESDA went to the level of an
ordinary private citizen and could no longer use the
defense of state immunity from suit. PROVI further
contends that it has alleged sufficient ultimate facts in
the affidavit it submitted to support its application for
a writ of preliminary attachment. Lastly, PROVI
maintains that sufficient basis existed for the RTCs
grant of the writ of preliminary attachment, since
TESDA fraudulently misapplied or embezzled the
money earmarked for the payment of the contracted
supplies and services, as evidenced by the
Certification as to Availability of Funds.
TESDA claims that it entered the Contract Agreement
and Addendum in the performance of its governmental
function to develop and establish a national system of
skills standardization, testing, and certification; in the
performance of this governmental function, TESDA is
immune from suit. Even assuming that it had impliedly
consented to be sued by entering into a contract with
PROVI, TESDA posits that the RTC still did not have
the power to garnish or attach its funds since these are
public funds. Lastly, TESDA points out that PROVI
failed to comply with the elements for the valid
issuance of a writ of preliminary attachment, as set
forth in Section 1, Rule 57 of the 1997 Rules of Civil
Procedure.
THE COURTS RULING
We find, as the CA did, that the RTCs questioned
order involved a gross misreading of the law and
jurisprudence amounting to action in excess of its
jurisdiction. Hence, we resolve to DENY PROVIs
petition for lack of merit.
TESDA is an instrumentality of the government
undertaking governmental functions.
R.A. No. 7796 created the Technical Education and
Skills Development Authority or TESDA under the
declared "policy of the State to provide relevant,
accessible, high quality and efficient technical
education and skills development in support of the
development of high quality Filipino middle-level
manpower responsive to and in accordance with
Philippine development goals and priorities."17
TESDA replaced and absorbed the National
Manpower and Youth Council, the Bureau of
Technical and Vocational Education and the personnel
and functions pertaining to technical-vocational
education in the regional offices of the Department of
Education, Culture and Sports and the apprenticeship
program of the Bureau of Local Employment of the
DOLE.18 Thus, TESDA is an unincorporated
instrumentality of the government operating under its
own charter.
Among others, TESDA is empowered to: approve
trade skills standards and trade tests as established and
conducted by private industries; establish and
administer a system of accreditation of both public and
private institutions; establish, develop and support the
institutions' trainors' training and/or programs; exact
reasonable fees and charges for such tests and trainings
conducted, and retain such earnings for its own use,
subject to guidelines promulgated by the Authority;
and perform such other duties and functions necessary
to carry out the provisions of the Act, consistent with
the purposes of the creation of TESDA.19
Within TESDAs structure, as provided by R.A. No.
7769, is a Skills Standards and Certification Office
expressly tasked, among others, to develop and
establish a national system of skills standardization,
testing and certification in the country; and to conduct
research and development on various occupational
areas in order to recommend policies, rules and
regulations for effective and efficient skills
standardization, testing and certification system in the
country.20 The law likewise mandates that "[T]here
shall be national occupational skills standards to be
established by TESDA-accredited industry
committees. The TESDA shall develop and implement
a certification and accreditation program in which
private groups and trade associations are accredited to
conduct approved trade tests, and the local government
units to promote such trade testing activities in their
respective areas in accordance with the guidelines to
be set by the TESDA. The Secretary of Labor and
Employment shall determine the occupational trades
for mandatory certification. All certificates relating to
the national trade skills testing and certification system
shall be issued by the TESDA through its
Secretariat."21
All these measures are undertaken pursuant to the
constitutional command that "[T]he State affirms labor
as a primary social economic force," and shall "protect
the rights of workers and promote their welfare";22
that "[T]he State shall protect and promote the right of
all citizens to quality education at all levels, and shall
take appropriate steps to make such education
accessible to all";23 in order "to afford protection to
labor" and "promote full employment and equality of
employment opportunities for all."24
Under these terms, both constitutional and statutory,
we do not believe that the role and status of TESDA
can seriously be contested: it is an unincorporated
instrumentality of the government, directly attached to
the DOLE through the participation of the Secretary of
Labor as its Chairman, for the performance of
governmental functions i.e., the handling of formal
and non-formal education and training, and skills
development. As an unincorporated instrumentality
operating under a specific charter, it is equipped with
both express and implied powers,25 and all State
immunities fully apply to it.26
TESDA, as an agency of the State, cannot be sued
without its consent.
The rule that a state may not be sued without its
consent is embodied in Section 3, Article XVI of the
1987 Constitution and has been an established
principle that antedates this Constitution.27 It is as
well a universally recognized principle of international
law that exempts a state and its organs from the
jurisdiction of another state.28 The principle is based
on the very essence of sovereignty, and on the practical
ground that there can be no legal right as against the
authority that makes the law on which the right
depends.29 It also rests on reasons of public policy
that public service would be hindered, and the public
endangered, if the sovereign authority could be
subjected to law suits at the instance of every citizen
and, consequently, controlled in the uses and
dispositions of the means required for the proper
administration of the government.30
The proscribed suit that the state immunity principle
covers takes on various forms, namely: a suit against
the Republic by name; a suit against an unincorporated
government agency; a suit against a government
agency covered by a charter with respect to the
agencys performance of governmental functions; and
a suit that on its face is against a government officer,
but where the ultimate liability will fall on the
government. In the present case, the writ of attachment
was issued against a government agency covered by its
own charter. As discussed above, TESDA performs
governmental functions, and the issuance of
certifications is a task within its function of developing
and establishing a system of skills standardization,
testing, and certification in the country. From the
perspective of this function, the core reason for the
existence of state immunity applies i.e., the public
policy reason that the performance of governmental
function cannot be hindered or delayed by suits, nor
can these suits control the use and disposition of the
means for the performance of governmental functions.
In Providence Washington Insurance Co. v. Republic
of the Philippines,31 we said:
[A] continued adherence to the doctrine of non-
suability is not to be deplored for as against the
inconvenience that may be caused private parties, the
loss of governmental efficiency and the obstacle to the
performance of its multifarious functions are far
greater if such a fundamental principle were
abandoned and the availability of judicial remedy were
not thus restricted. With the well known propensity on
the part of our people to go to court, at the least
provocation, the loss of time and energy required to
defend against law suits, in the absence of such a basic
principle that constitutes such an effective obstacle,
could very well be imagined.
PROVI argues that TESDA can be sued because it has
effectively waived its immunity when it entered into a
contract with PROVI for a commercial purpose.
According to PROVI, since the purpose of its contract
with TESDA is to provide identification PVC cards
with security seal which TESDA will thereafter sell to
TESDA trainees, TESDA thereby engages in
commercial transactions not incidental to its
governmental functions.
TESDAs response to this position is to point out that
it is not engaged in business, and there is nothing in
the records to show that its purchase of the PVC cards
from PROVI is for a business purpose. While TESDA
admits that it will charge the trainees with a fee for the
PVC cards, it claims that this fee is only to recover
their costs and is not intended for profit.
We agree with TESDA. As the appellate court found,
the PVC cards purchased by TESDA from PROVI are
meant to properly identify the trainees who passed
TESDAs National Skills Certification Program the
program that immediately serves TESDAs mandated
function of developing and establishing a national
system of skills standardization, testing, and
certification in the country.32 Aside from the express
mention of this function in R.A. No. 7796, the details
of this function are provided under DOLE
Administrative Order No. 157, S. 1992, as
supplemented by Department Order Nos. 3 thru 3-F,
S. 1994 and Department Order No. 13, S. 1994.33
Admittedly, the certification and classification of
trainees may be undertaken in ways other than the
issuance of identification cards, as the RTC stated in
its assailed Order.34 How the mandated certification
is to be done, however, lies within the discretion of
TESDA as an incident of its mandated function, and is
a properly delegated authority that this Court cannot
inquire into, unless its exercise is attended by grave
abuse of discretion.
That TESDA sells the PVC cards to its trainees for a
fee does not characterize the transaction as industrial
or business; the sale, expressly authorized by the
TESDA Act,35 cannot be considered separately from
TESDAs general governmental functions, as they are
undertaken in the discharge of these functions. Along
this line of reasoning, we held in Mobil Philippines v.
Customs Arrastre Services:36
Now, the fact that a non-corporate government entity
performs a function proprietary in nature does not
necessarily result in its being suable. If said non-
governmental function is undertaken as an incident to
its governmental function, there is no waiver thereby
of the sovereign immunity from suit extended to such
government entity.
TESDAs funds are public in character, hence exempt
from attachment or garnishment.
Even assuming that TESDA entered into a proprietary
contract with PROVI and thereby gave its implied
consent to be sued, TESDAs funds are still public in
nature and, thus, cannot be the valid subject of a writ
of garnishment or attachment. Under Section 33 of the
TESDA Act, the TESDA budget for the
implementation of the Act shall be included in the
annual General Appropriation Act; hence, TESDA
funds, being sourced from the Treasury, are moneys
belonging to the government, or any of its
departments, in the hands of public officials.37 We
specifically spoke of the limits in dealing with this
fund in Republic v. Villasor38 when we said:
This fundamental postulate underlying the 1935
Constitution is now made explicit in the revised
charter. It is therein expressly provided, The State
may not be sued without its consent. A corollary, both
dictated by logic and sound sense, from such a basic
concept, is that public funds cannot be the object of
garnishment proceedings even if the consent to be sued
had been previously granted and the state liability
adjudged. Thus in the recent case of Commissioner of
Public Highways vs. San Diego, such a well-settled
doctrine was restated in the opinion of Justice
Teehankee:
The universal rule that where the State gives its
consent to be sued by private parties either by general
or special law, it may limit claimant's action 'only up
to the completion of proceedings anterior to the stage
of execution' and that the power of the Courts ends
when the judgment is rendered, since government
funds and properties may not be seized under writs of
execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy.
Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The
functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and
specific objects, as appropriated by law. [Emphasis
supplied.]
We reiterated this doctrine in Traders Royal Bank v.
Intermediate Appellate Court,39 where we said:
The NMPCs implied consent to be sued
notwithstanding, the trial court did not have the power
to garnish NMPC deposits to answer for any eventual
judgment against it. Being public funds, the deposits
are not within the reach of any garnishment or
attachment proceedings. [Emphasis supplied.]
As pointed out by TESDA in its Memorandum,40 the
garnished funds constitute TESDAs lifeblood in
government parlance, its MOOE41 whose
withholding via a writ of attachment, even on a
temporary basis, would paralyze TESDAs functions
and services. As well, these funds also include
TESDAs Personal Services funds from which salaries
of TESDA personnel are sourced. Again and for
obvious reasons, the release of these funds cannot be
delayed.
PROVI has not shown that it is entitled to the writ of
attachment.
Even without the benefit of any immunity from suit,
the attachment of TESDA funds should not have been
granted, as PROVI failed to prove that TESDA
"fraudulently misapplied or converted funds allocated
under the Certificate as to Availability of Funds."
Section 1, Rule 57 of the Rules of Court sets forth the
grounds for issuance of a writ of preliminary
attachment, as follows:
SECTION 1. Grounds upon which attachment may
issue. 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 in the following cases:
(a) In an action for recovery of a specified amount of
money or damages, other than moral and exemplary,
on a cause of action arising from law, contract, quasi-
contract, delict or quasi-delict against a party who is
about to depart from the Philippines with intent to
defraud his creditors;
(b) In an action for money or property embezzled or
fraudulently misapplied or converted to his 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;
(c) In an action to recover the possession of property
unjustly or fraudulently taken, detained or converted,
when the property or any part thereof, has been
concealed, removed or disposed of to prevent its being
found or taken by the applicant or an authorized
person;
(d) In 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;
(e) In an action against a party who has removed or
disposed of his property, or is about to do so, with
intent to defraud his creditors;
(f) In an action against a party who does not reside and
is not found in the Philippines, or on whom summons
may be served by publication. [Emphasis supplied.]
Jurisprudence teaches us that the rule on the issuance
of a writ of attachment must be construed strictly in
favor of the defendant. Attachment, a harsh remedy,
must be issued only on concrete and specific grounds
and not on general averments merely quoting the
words of the pertinent rules.42 Thus, the applicants
affidavit must contain statements clearly showing that
the ground relied upon for the attachment exists.
Section 1(b), Rule 57 of the Rules of Court, that
PROVI relied upon, applies only where money or
property has been embezzled or converted by a public
officer, an officer of a corporation, or some other
person who took advantage of his fiduciary position or
who willfully violated his duty.
PROVI, in this case, never entrusted any money or
property to TESDA. While the Contract Agreement is
supported by a Certificate as to Availability of Funds
(Certificate) issued by the Chief of TESDAs
Accounting Division, this Certificate does not
automatically confer ownership over the funds to
PROVI. Absent any actual disbursement, these funds
form part of TESDAs public funds, and TESDAs
failure to pay PROVI the amount stated in the
Certificate cannot be construed as an act of fraudulent
misapplication or embezzlement. In this regard,
Section 86 of Presidential Decree No. 1445 (The
Accounting Code) provides:
Section 86. Certificate showing appropriation to meet
contract. Except in a case of a contract for personal
service, for supplies for current consumption or to be
carried in stock not exceeding the estimated
consumption for three months, or banking transactions
of government-owned or controlled banks, no contract
involving the expenditure of public funds by any
government agency shall be entered into or authorized
unless the proper accounting official or the agency
concerned shall have certified to the officer entering
into the obligation that funds have been duly
appropriated for the purpose and that the amount
necessary to cover the proposed contract for the
current fiscal year is available for expenditure on
account thereof, subject to verification by the auditor
concerned. The certification signed by the proper
accounting official and the auditor who verified it,
shall be attached to and become an integral part of the
proposed contract, and the sum so certified shall not
thereafter be available for expenditure for any other
purpose until the obligation of the government agency
concerned under the contract is fully extinguished.
[Emphasis supplied.]
By law, therefore, the amount stated in the
Certification should be intact and remains devoted to
its purpose since its original appropriation. PROVI can
rebut the presumption that necessarily arises from the
cited provision only by evidence to the contrary. No
such evidence has been adduced.
Section 1 (d), Rule 57 of the Rules of Court applies
where a party is guilty of fraud in contracting a debt or
incurring an obligation, or in concealing or disposing
of the property for the taking, detention or conversion
of which the action is brought. In Wee v.
Tankiansee,43 we held that for a writ of attachment to
issue under this Rule, the applicant must sufficiently
show the factual circumstances of the alleged fraud
because fraudulent intent cannot be inferred from the
debtors mere non-payment of the debt or failure to
comply with his obligation. The affidavit, being the
foundation of the writ, must contain particulars
showing how the imputed fraud was committed for the
court to decide whether or not to issue the writ. To
reiterate, a writ of attachment can only be granted on
concrete and specific grounds and not on general
averments merely quoting the words of the rules.44
The affidavit filed by PROVI through Elmer Ramiro,
its President and Chief Executive Officer, only
contained a general allegation that TESDA had
fraudulent misapplied or converted the amount of
P10,975,000.00 that was allotted to it. Clearly, we
cannot infer any finding of fraud from PROVIs vague
assertion, and the CA correctly ruled that the lower
court acted with grave abuse of discretion in granting
the writ of attachment despite want of any valid ground
for its issuance.1avvphi1
For all these reasons, we support the appellate courts
conclusion that no valid ground exists to support the
grant of the writ of attachment against TESDA. The
CAs annulment and setting aside of the Orders of the
RTC were therefore fully in order.
WHEREFORE, premises considered, we hereby
DENY the petition filed by petitioner Professional
Video, Inc., and AFFIRM the Court of Appeals
Decision dated July 23, 2002, and Resolution of
September 27, 2002, in CA-G.R. SP No. 67599. Costs
against the petitioner.
8. Olsen Co vs Olsen
PRELIMINARY ATTACHMENT; DENIAL OF
ANNULMENT OF; APPEAL. An order denying a
motion or the annulment of a preliminary attachment
may be renewed is an appeal taken from the final
judgment rendered in the principal case.
CORPORATIONS; CIVIL FRAUD; ABUSE OF
CONFIDENCE OF OFFICERS. He who has
almost an exclusive control over the function of the
corporation and its funds on account of his triple
capacity as president, treasurer and general manager
must be very scrupulous in the application of the funds
of said corporation to his own use. The act of taking
money of the corporation for his personal use without
being duly authorized therefor constitutes such an
irregularity that, while it does not amount to a criminal
fraud, is undoubtedly a fraud of a civil character,
because it is an abuse of confidence to the damage of
the corporation and its stockholders and constitutes
one of the grounds enumerated in section 424, in
connection with 412, of the Code of Civil Procedure
for the issuance of a preliminary attachment.
DECISION
This is an appeal taken by the defendant from a
judgment of the Court of First Instance of Manila,
sentencing him to pay plaintiff corporation the sum of
P66,207.62 with legal interest thereon at the rate of 6
per cent per annum from February 1, 1923, the date of
the filing of the complaint, until full payment, and the
costs, and dismissing the cross-complaint and
counterclaim set up by him.
As ground of his appeal, the defendant assigns four
errors as committed by the trial court, to wit: (1) The
holding that the defendant-appellant contracted
fraudulently the debt which the plaintiff-appellee
seeks to recover in its complaint; (2) its failure to set
aside the writ of preliminary attachment issued by it ex
parte; (3) the fact of it not having absolved the
defendant from the complaint of the plaintiff
corporation and of not having given judgment for the
defendant and against the plaintiff for the amount of
his counterclaim, after deducting the debt due from
him to the plaintiff corporation in the sum of
P66,207.62; and (4) its action in denying the motion
for new trial of the defendant.
As the first two supposed errors are intimately
connected with each other, we will discuss them
jointly.
The first question that arises is whether or not an order
denying a motion for the annulment of a preliminary
attachment may be reviewed through an appeal.
The preliminary attachment is an auxiliary remedy the
granting of which lies within the sound discretion of
the judge taking cognizance of the principal case upon
whose existence it depends. The order of the judge
denying a motion for the annulment of a writ of
preliminary attachment, being of an incidental or
interlocutory and auxiliary character, cannot be the
subject of an appeal independently from the principal
case, because our procedural law now in force
authorizes an appeal only from a final judgment which
gives an end to the litigation. (Section 143, Act No.
190; 3 C. J., 549, par. 389.) This lack of ordinary
remedy through an appeal does not mean, however,
that any excess a lower court may commit in the
exercise of its jurisdiction is without remedy; because
there are the especial remedies, such as certiorari, for
the purpose. (Leung Ben v. OBrien, 38 Phil., 182.)
While it is true that an order denying a motion for the
annulment of a preliminary attachment is not subject
to review through an appeal independently from the
principal case, it not constituting a final order, yet
when the writ of preliminary attachment becomes final
by virtue of a final Judgment rendered in the principal
case, said writ is subject to review jointly with the
judgment rendered in the principal case through an
ordinary appeal. The appellate court has the power to
revoke or confirm said order, in like manner as a
judgment on the merits; because it is a ruling to which
an exception may be taken, and therefore is subject to
review in an appeal by bill of exceptions. (Secs. 141-
143, Act No. 190.) The fact that section 441 of the
Code of Civil Procedure does not provide any remedy
against the granting or denial of a motion for the
annulment of a writ of preliminary attachment, except
in case of excess of jurisdiction, does not confer upon
said order a final and irrevocable character, taking it
out from the general provisions as to appeal and
review, for a special provision is necessary for that
purpose.
Having arrived at the conclusion that an order denying
a motion for the annulment of a preliminary
attachment may be reviewed in an appeal taken from a
final judgment rendered in the principal case, in which
said order was entered as an auxiliary remedy, we will
now turn to consider the question whether or not the
trial court committed error in denying the motion for
the annulment of the preliminary attachment levied
upon the property of the defendant-appellant.
It is admitted by the defendant-appellant that he is
indebted to the plaintiff-appellee corporation in the
sum of P66,207.62, but denies that he has contracted
said debt fraudulently.
The evidence shows that the defendant-appellant was
president-treasurer and general manager of the
plaintiff-appellee corporation and exercised direct and
almost exclusive supervision over its function, funds
and books of account until about the month of August,
1921. During that time he has been taking money of
the corporation without being duly authorized to do so
either by the board of directors or by the by-laws, the
money taken by him having amounted to the
considerable sum of P66,207.62. Of this sum, P19,000
was invested in the purchase of the house and lot now
under attachment in this case, and P50,000 in the
purchase of 500 shares of stock of Prising at the price
of P100 per share for himself and Marker. A few days
afterwards he began to sell the ordinary shares of the
corporation for P430 each. The defendant-appellant
attempted to justify his conduct, alleging that the
withdrawal of the funds of the corporation for his
personal use was made in his current account with said
corporation, in whose treasury he deposited his own
money and the certificates of title of his shares, as well
as of his estate, and that at the first meeting of the
stockholders, which took place on February 1, 1919, a
statement of his account with a debit balance was
submitted and approved.
Having, as he had, absolute and almost exclusive
control over the function of the corporation and its
funds by virtue of his triple capacity as president,
treasurer and general manager, the defendant-
appellant should have been more scrupulous in the
application of the funds of said corporation to his own
use. As a trustee of said corporation, it was his duty to
see by all legal means possible that the interests of the
stockholders were protected, and should not abuse the
extraordinary opportunity which his triple position
offered him to dispose of the funds of the corporation
Ordinary delicacy required that in the disposition of
the funds of the corporation for his personal use, he
should be very careful, so as to do it in such a way as
would be compatible with the interests of the
stockholders and his fiduciary character. And let it not
be said that he did every thing openly and with the
security of his shares of stock, because as he could
dispose of the funds of the corporation so he could
dispose of his own shares and with greater freedom.
And let it not also be said that other officers of the
corporation, such as the vice-president, the secretary
and other chiefs and employees, were doing the same
thing, because that does not show but that his bad
example had spread among his subordinates and all
believed themselves with the same right as their chief
to dispose of the funds of the corporation for their
personal use, although it were merely by way of loan,
without any security of whatever kind of course. The
approval of his account at the first meeting of the
stockholders cannot be considered as a justification of
his conduct, nor does it remove every suspicion of bad
faith, because the corporation was constituted
exclusively by the defendant-appellant himself and his
cospeculator, Marker, and nothing else could be
expected from it. As to the debt he owed to the
corporation, Walter E. Olsen was in effect a lender and
a borrower at the same time. The conduct of the
defendant-appellant in connection with the funds of
the corporation he represented was more than an
irregularity; and while it is not sufficiently serious to
constitute a criminal fraud, it is undoubtedly a fraud of
a civil character, because it is an abuse of confidence
to the damage of the corporation and its stockholders,
and constitutes one of the grounds enumerated in
section 424, in connection with section 412, of the
Code of Civil Procedure for the issuance of a
preliminary attachment, and the order of the Court of
First Instance of Manila, denying the motion for the
annulment of the injunction in question, is in
accordance with law.
As to the counterclaim set up by the defendant-
appellant, we have nothing to add to the considerations
of the trial court which we make ours.
For the foregoing, and no error having been found in
the judgment appealed from, the same is hereby
affirmed, with the costs against the defendant-
appellant. So ordered.
9. Wee vs Tankiamsee
Before the Court is a petition for review on certiorari
under Rule 45 of the Rules of Court assailing the
September 14, 2005 Decision[1] of the Court of
Appeals (CA) in CA-G.R. SP No. 90130 and its
January 6, 2006 Resolution[2] denying the motion for
reconsideration thereof.
The facts are undisputed. Petitioner Alejandro Ng
Wee, a valued client of Westmont Bank (now United
Overseas Bank), made several money placements
totaling P210,595,991.62 with the banks affiliate,
Westmont Investment Corporation (Wincorp), a
domestic entity engaged in the business of an
investment house with the authority and license to
extend credit.[3]
Sometime in February 2000, petitioner received
disturbing news on Wincorps financial condition
prompting him to inquire about and investigate the
companys operations and transactions with its
borrowers. He then discovered that the company
extended a loan equal to his total money placement to
a corporation [Power Merge] with a subscribed capital
of only P37.5M. This credit facility originated from
another loan of about P1.5B extended by Wincorp to
another corporation [Hottick Holdings]. When the
latter defaulted in its obligation, Wincorp instituted a
case against it and its surety. Settlement was, however,
reached in which Hotticks president, Luis Juan L.
Virata (Virata), assumed the obligation of the
surety.[4]
Under the scheme agreed upon by Wincorp and
Hotticks president, petitioners money placements were
transferred without his knowledge and consent to the
loan account of Power Merge through an agreement
that virtually freed the latter of any liability. Allegedly,
through the false representations of Wincorp and its
officers and directors, petitioner was enticed to roll
over his placements so that Wincorp could loan the
same to Virata/Power Merge.[5]
Finding that Virata purportedly used Power Merge as
a conduit and connived with Wincorps officers and
directors to fraudulently obtain for his benefit without
any intention of paying the said placements, petitioner
instituted, on October 19, 2000, Civil Case No. 00-
99006 for damages with the Regional Trial Court
(RTC) of Manila.[6] One of the defendants impleaded
in the complaint is herein respondent Manuel
Tankiansee, Vice-Chairman and Director of
Wincorp.[7]
On October 26, 2000, on the basis of the allegations in
the complaint and the October 12, 2000 Affidavit[8] of
petitioner, the trial court ordered the issuance of a writ
of preliminary attachment against the properties not
exempt from execution of all the defendants in the civil
case subject, among others, to petitioners filing of a
P50M-bond.[9] The writ was, consequently, issued on
November 6, 2000.[10]
Arguing that the writ was improperly issued and that
the bond furnished was grossly insufficient,
respondent, on December 22, 2000, moved for the
discharge of the attachment.[11] The other defendants
likewise filed similar motions.[12] On October 23,
2001, the RTC, in an Omnibus Order,[13] denied all
the motions for the discharge of the attachment. The
defendants, including respondent herein, filed their
respective motions for reconsideration[14] but the trial
court denied the same on October 14, 2002.[15]
Incidentally, while respondent opted not to question
anymore the said orders, his co-defendants, Virata and
UEM-MARA Philippines Corporation (UEM-
MARA), assailed the same via certiorari under Rule 65
before the CA [docketed as CA-G.R. SP No. 74610].
The appellate court, however, denied the certiorari
petition on August 21, 2003,[16] and the motion for
reconsideration thereof on March 16, 2004.[17] In a
petition for review on certiorari before this Court, in
G.R. No. 162928, we denied the petition and affirmed
the CA rulings on May 19, 2004 for Viratas and UEM-
MARAs failure to sufficiently show that the appellate
court committed any reversible error.[18] We
subsequently denied the petition with finality on
August 23, 2004.[19]
On September 30, 2004, respondent filed before the
trial court another Motion to Discharge
Attachment,[20] re-pleading the grounds he raised in
his first motion but raising the following additional
grounds: (1) that he was not present in Wincorps board
meetings approving the questionable transactions;[21]
and (2) that he could not have connived with Wincorp
and the other defendants because he and Pearlbank
Securities, Inc., in which he is a major stockholder,
filed cases against the company as they were also
victimized by its fraudulent schemes.[22]
Ruling that the grounds raised were already passed
upon by it in the previous orders affirmed by the CA
and this Court, and that the additional grounds were
respondents affirmative defenses that properly
pertained to the merits of the case, the trial court
denied the motion in its January 6, 2005 Order.[23]
With the denial of its motion for reconsideration,[24]
respondent filed a certiorari petition before the CA
docketed as CA-G.R. SP No. 90130. On September
14, 2005, the appellate court rendered the assailed
Decision[25] reversing and setting aside the
aforementioned orders of the trial court and lifting the
November 6, 2000 Writ of Preliminary
Attachment[26] to the extent that it concerned
respondents properties. Petitioner moved for the
reconsideration of the said ruling, but the CA denied
the same in its January 6, 2006 Resolution.[27]
Thus, petitioner filed the instant petition on the
following grounds:
A.IT IS RESPECTFULLY SUBMITTED THAT THE
COURT OF APPEALS SHOULD NOT HAVE
GIVEN DUE COURSE TO THE PETITION FOR
CERTIORARI FILED BY RESPONDENT, SINCE
IT MERELY RAISED ERRORS IN JUDGMENT,
WHICH, UNDER PREVAILING
JURISPRUDENCE, ARE NOT THE PROPER
SUBJECTS OF A WRIT OF CERTIORARI.
B.MOREOVER, IT IS RESPECTFULLY
SUBMITTED THAT THE COURT OF APPEALS
COMMITTED SERIOUS LEGAL ERROR IN
RESOLVING FAVORABLY THE GROUNDS
ALLEGED BY RESPONDENT IN HIS PETITION
AND (SIC) LIFTING THE WRIT OF
PRELIMINARY ATTACHMENT, SINCE THESE
GROUNDS ALREADY RELATE TO THE MERITS
OF CIVIL CASE NO. 00-99006 WHICH, UNDER
PREVAILING JURISPRUDENCE, CANNOT BE
USED AS BASIS (SIC) FOR DISCHARGING A
WRIT OF PRELIMINARY ATTACHMENT.
C.LIKEWISE, IT IS RESPECTFULLY
SUBMITTED THAT THE COURT OF APPEALS
ERRED IN SUSTAINING THE ERRORS IN
JUDGMENT ALLEGED BY RESPONDENT, NOT
ONLY BECAUSE THESE ARE BELIED BY THE
VERY DOCUMENTS HE SUBMITTED AS PROOF
OF SUCH ERRORS, BUT ALSO BECAUSE THESE
HAD EARLIER BEEN RESOLVED WITH
FINALITY BY THE LOWER COURT.[28]
For his part, respondent counters, among others, that
the general and sweeping allegation of fraud against
respondent in petitioners affidavitrespondent as an
officer and director of Wincorp allegedly connived
with the other defendants to defraud petitioneris not
sufficient basis for the trial court to order the
attachment of respondents properties. Nowhere in the
said affidavit does petitioner mention the name of
respondent and any specific act committed by the latter
to defraud the former. 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. Connivance cannot also be based on mere
association but must be particularly alleged and
established as a fact. Respondent further contends that
the trial court, in resolving the Motion to Discharge
Attachment, need not actually delve into the merits of
the case. All that the court has to examine are the
allegations in the complaint and the supporting
affidavit. Petitioner cannot also rely on the decisions
of the appellate court in CA-G.R. SP No. 74610 and
this Court in G.R. No. 162928 to support his claim
because respondent is not a party to the said cases.[29]
We agree with respondents contentions and deny the
petition.
In the case at bench, the basis of petitioners application
for the issuance of the writ of preliminary attachment
against the properties of respondent is Section 1(d) of
Rule 57 of the Rules of Court which pertinently reads:
Section 1. Grounds upon which attachment may
issue.At the commencement of the action or at any
time before entry of judgment, a plaintiff or any proper
party may have the property of the adverse party
attached as security for the satisfaction of any
judgment that may be recovered in the following
cases:
xxxx
(d) In an action against a party who has been guilty of
a fraud in contracting the debt or incurring the
obligation upon which the action is brought, or in the
performance thereof.
For a writ of attachment to issue under this rule, the
applicant must sufficiently show the factual
circumstances of the alleged fraud because fraudulent
intent cannot be inferred from the debtors mere non-
payment of the debt or failure to comply with his
obligation.[30] The applicant must then be able to
demonstrate that the debtor has intended to defraud the
creditor.[31] In Liberty Insurance Corporation v.
Court of Appeals,[32] we explained as follows:
To sustain an attachment on this ground, it must be
shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the
agreement and must have been the reason which
induced the other party into giving consent which he
would not have otherwise given. To constitute a
ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to
pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be
inferred from the circumstances attendant in each
case.[33]
In the instant case, petitioners October 12, 2000
Affidavit[34] is bereft of any factual statement that
respondent committed a fraud. The affidavit narrated
only the alleged fraudulent transaction between
Wincorp and Virata and/or Power Merge, which, by
the way, explains why this Court, in G.R. No. 162928,
affirmed the writ of attachment issued against the
latter. As to the participation of respondent in the said
transaction, the affidavit merely states that respondent,
an officer and director of Wincorp, connived with the
other defendants in the civil case to defraud petitioner
of his money placements. No other factual averment or
circumstance details how respondent committed a
fraud or how he connived with the other defendants to
commit a fraud in the transaction sued upon. In other
words, petitioner has not shown any specific act or
deed to support the allegation that respondent is guilty
of fraud.
The affidavit, being the foundation of the writ,[35]
must contain such particulars as to how the fraud
imputed to respondent was committed for the court to
decide whether or not to issue the writ.[36] Absent any
statement of other factual circumstances to show that
respondent, at the time of contracting the obligation,
had a preconceived plan or intention not to pay, or
without any showing of how respondent committed
the alleged fraud, the general averment in the affidavit
that respondent is an officer and director of Wincorp
who allegedly connived with the other defendants to
commit a fraud, is insufficient to support the issuance
of a writ of preliminary attachment.[37] In the
application for the writ under the said ground,
compelling is the need to give a hint about what
constituted the fraud and how it was perpetrated[38]
because established is the rule that fraud is never
presumed.[39] Verily, the mere fact that respondent is
an officer and director of the company does not
necessarily give rise to the inference that he committed
a fraud or that he connived with the other defendants
to commit a fraud. While under certain circumstances,
courts may treat a corporation as a mere aggroupment
of persons, to whom liability will directly attach, this
is only done when the wrongdoing has been clearly
and convincingly established.[40]
Let it be stressed that the provisional remedy of
preliminary attachment is harsh and rigorous for it
exposes the debtor to humiliation and annoyance.[41]
The rules governing its issuance are, therefore, strictly
construed against the applicant,[42] such that if the
requisites for its grant are not shown to be all present,
the court shall refrain from issuing it, for, otherwise,
the court which issues it acts in excess of its
jurisdiction.[43] Likewise, the writ should not be
abused to cause unnecessary prejudice. If it is
wrongfully issued on the basis of false or insufficient
allegations, it should at once be corrected.[44]
Considering, therefore, that, in this case, petitioner has
not fully satisfied the legal obligation to show the
specific acts constitutive of the alleged fraud
committed by respondent, the trial court acted in
excess of its jurisdiction when it issued the writ of
preliminary attachment against the properties of
respondent.
We are not unmindful of the rule enunciated in G.B.
Inc., etc. v. Sanchez, et al.,[45] that
[t]he merits of the main action are not triable in a
motion to discharge an attachment otherwise an
applicant for the dissolution could force a trial of the
merits of the case on his motion.[46]
However, the principle finds no application here
because petitioner has not yet fulfilled the
requirements set by the Rules of Court for the issuance
of the writ against the properties of respondent.[47]
The evil sought to be prevented by the said ruling will
not arise, because the propriety or impropriety of the
issuance of the writ in this case can be determined by
simply reading the complaint and the affidavit in
support of the application.
Furthermore, our ruling in G.R. No. 162928, to the
effect that the writ of attachment is properly issued
insofar as it concerns the properties of Virata and
UEM-MARA, does not affect respondent herein, for,
as correctly ruled by the CA, respondent is never a
party thereto.[48] Also, he is not in the same situation
as Virata and UEM-MARA since, as aforesaid, while
petitioners affidavit detailed the alleged fraudulent
scheme perpetrated by Virata and/or Power Merge,
only a general allegation of fraud was made against
respondent.
We state, in closing, that our ruling herein deals only
with the writ of preliminary attachment issued against
the properties of respondentit does not concern the
other parties in the civil case, nor affect the trial courts
resolution on the merits of the aforesaid civil case.
WHEREFORE, premises considered, the petition is
DENIED. The September 14, 2005 Decision and the
January 6, 2006 Resolution of the Court of Appeals in
CA-G.R. SP No. 90130 are AFFIRMED.
10. Liberty Insurance Corp. vs CA
This is a petition for review on certiorari seeking to set
aside and to declare null and void the decision dated
September 17, 1991 of the respondent Court of
Appeals dismissing petitioner's petition for review and
its resolution dated February 7, 1992 denying
petitioner's Motion for Reconsideration.
On May 4, 1988 Jose H. Imperial Organizations, Pty.,
thru Atty. Jose H. Imperial entered into an agreement
with Coca-Cola Bottlers Philippines to promote two
concerts featuring a group known as "Earth, Wind and
Fire" on June 12 and 13, 1988 with Coca-Cola
sponsoring the concerts and the former promoting the
same.
To ensure compliance with the terms of the agreement,
Coca-Cola required Imperial Organizations to put up a
performance bond. Petitioner Liberty Insurance, upon
application of Imperial Organization put up the
performance bond in the amount of Three Million
Pesos (P3,000,000.00), the principal condition of
which was to "fully and faithfully guarantee the terms
and conditions" of the agreement dated May 24, 1988
entered into between Coca-Cola and Imperial
Organizations. More particularly, the bond was to
guarantee the return to Coca-Cola of "whatever
portion of the cash sponsorship and cash advances to
be made by Coca-Cola to finance the holding of the
concerts on the dates aforesaid . . . ." (Rollo, pp. 37)
In turn, and as a condition for the issuance of said
performance bond, petitioner required Imperial
Organizations, Jose H. Imperial, Atilla Arkin, and
Carmen Madlangbayan to execute an indemnity
agreement in its favor to indemnify it for any and all
damages including attorney's fees which the petitioner
may incur by reason of the issuance of the bond.
It appears that while the concerts took place, Imperial
Organizations and private respondents failed to
comply with their obligations to Coca Cola, as a result
of which petitioner became liable upon its
performance bond paying Coca-Cola Three Million
Pesos. Petitioner, demanded reimbursement from
Imperial, Arkin And Madlangbayan based on their
indemnity bond but to no avail.
On August 7, 1988 petitioner filed with the Regional
Trial Court, National Capital Region, Branch 2,
Manila a complaint for damages with application for
the issuance of a writ of preliminary attachment
against private respondents.
On September 20, 1988, the Trial Court thru the Hon.
Rosario A. de Leon, issued an order allowing the
issuance of the writ, stating that.:
. . . There could have been fraud committed by the
defendants Arkin and Madlangbayan in promising to
give as security or collateral to their Indemnity
Agreement, which caused the plaintiff to release the
security bond, when as it turned out, the Transfer
Certificate of Title of a parcel of land supposedly
issued by the Register of Deeds of Rizal turned out to
be fake, as the true land title number was issued over
a different parcel of land issued in the name of a person
other than defendant Madlangbayan, while defendant
Atilla Arkin delivered an official receipt in the name
of a third party but which vehicle was allegedly sold to
him free from lien and encumbrance, when it turned
out that the car was heavily mortgaged to a third party,
....
The conclusion of fraud is inevitable in view of the
above circumstances, for any (sic) rate fraud is a state
of mind that maybe inferred from the circumstances
extant in the case (Republic vs. Gonzales, 13 SCRA
633).
In addition to the fact that these
representations/promises of Arkin and Madlangbayan
were made prior to the release of the bond (the bond
by then had already been executed), it can still be said
that this fraud existed when the obligation was
contracted in line with Sec. 1, par (d), Rule 57, which
reads: An attachment may issue in an action against a
party who has been guilty of fraud in contracting or
incurring the obligation upon which the action is
brought.
A debt is fraudulently contracted if at the time of
contracting it, the debtor entertained an intention not
to pay, or an intention not to keep a collateral
agreement regarding the disposition of a property
purchased on credit. (Francisco, Rules of Court,
Second [1985] Edition, p. 21) . . . (Rollo, pp. 38-39)
On May 10, 1989 respondent Arkin filed a motion to
Quash/ Recall Writ of Attachment. On October 19,
1989, the trial court, this time presided by respondent
judge Napoleon K. Flojo, denied the motion, reasoning
out as follows:
Defendant Atilla Arkin posits that no ground existed
for the issuance of the preliminary attachment because
he was not guilty of fraud in incurring the obligation
under the indemnity agreement.
The Court granted the prayer for a writ of preliminary
attachment after a finding of fraud from the evidence
adduced by the parties. This conclusion was supported
by substantial evidence. There is no cogent reason
from the arguments posed by the movant to warrant
and/or recall of the writ.
Furthermore, the complaint invokes another ground
for the grant of the writ and that is, "in an action against
a party who has removed be (sic) disposed of his
property, or is about to do so, with the intent to defraud
his creditors," . . ., evidenced by three conveyances or
disposals of properties by defendant Atilla Arkin
though made before the institution of the action, is a
circumstance tending to show fraudulent conveyance
with intent to defraud his creditors. Especially so,
when the payment of herein claim which the action is
brought is not secured by any mortgage or pledge of
real (sic) personal property and plaintiff had no other
sufficient security for the enforcement of the claim.
(Rollo, p. 58; emphasis supplied).
After more than a year, or on December 14, 1990,
Arkin filed a Motion for Reconsideration of the
aforementioned order of denial.
On March 6, 1991, respondent judge reversed his
earlier ruling and instead issued two orders, (1)
granting Arkin's Motion for Reconsideration and
directing the lifting of the writ of preliminary
attachment earlier issued, and (2) ordering the deputy
sheriff assigned to said court to immediately discharge
or lift said writ. The first order, among other things,
states:
xxx xxx xxx
The Court, presided at the time by Judge Rosalio De
Leon, found that the defendant has been guilty of fraud
in inveigling the plaintiff to issue the surety bond by
offering false collaterals. The ground relied upon by
the Court to issue the attachment was based on Section
1 (d) of Rule 57 of the Rules of Court , which states:
"Sec. 1. Grounds upon which attachment may issue.
A plaintiff or any party may, at the commencement
of the action or at anytime thereafter, have the property
of the adverse party attached as security for the
satisfaction of any judgment that may be recovered in
the following cases:
xxx xxx xxx
(d) In action (sic) against a party who has been guilty
of fraud in contracting the obligation upon which the
action is brought, . . . ."
To constitute a ground for attachment, fraud should be
committed prior to or simultaneous with the birth of
the obligation sued upon, which in this case is the May
30, 1988 surety bond.
xxx xxx xxx
A close examination of the evidence on record shows
that the delivery of the fake collaterals were made to
Eduardo Cunanan on June 1, 1988, or two (2) days
after the issuance by the plaintiff of the surety bond.
Thus, the offering of the fake Transfer Certificate of
Title and encumbered Mercedes Benz car was not
prior to or simultaneous with the execution of the
Surety Bond. Such being the case, the offer of the
collaterals were not the cause which induced the
plaintiff to issue the surety bond. It is therefore clear
that the issuance of the surety bond on May 30, 1988
was not based on the alleged fraud of the defendant
Arkin offering the fake collaterals.
xxx xxx xxx
With regards (sic) to the allegations that the defendant
Arkin has removed or disposed of his property, with
intent to defraud his creditors, suffice it to say that
(when) the law authorizes the issuance of a writ
preliminary attachment (it) should be construed in
favor of the defendant and before issuing an Order to
that effect, the judge should require that all the
requisites prescribed by law be complied (with),
without which a judge acquires no jurisdiction to issue
the writ.
xxx xxx xxx
Furthermore, allegations that debtors were removing
or disposing some of the properties with intent to
defraud creditors must be specific.
xxx xxx xxx
In the present case the plaintiff did not prove the intent
of defendant Arkin to defraud creditors. Aside From
the fact that the alleged dispositions were made long
prior to the filing of the case, the alleged dispositions
were made of conjugal partnership property which
were then the subjects of partition between Arkin and
his estranged wife. . . . (Rollo, pp. 42-43).
Aggrieved, petitioner filed a special civil action for
certiorari with respondent Court of Appeals to set
aside the above orders of respondent judge.
Respondent court dismissed the petition on the ground
that the filing of the said petition was premature
considering that there was yet a remedy available in
the ordinary course of law, i.e., filing a motion for
reconsideration of the challenged orders. Hence, this
petition with the following assignment of errors:
I. A MOTION FOR RECONSIDERATION IS NOT
ALWAYS A CONDITION PRECEDENT TO THE
FILING OF A SPECIAL CIVIL ACTION FOR
CERTIORARI, AS THERE IS NO APPEAL OR
ANY PLAIN, SPEEDY AND ADEQUATE
REMEDY IN THE ORDINARY COURSE OF LAW
AVAILABLE TO HEREIN PETITIONER;
II. RESPONDENT HONORABLE COURT OF
APPEALS ERRED IN UPHOLDING THE
DISSOLUTION OF THE WRIT OF PRELIMINARY
ATTACHMENT ON THE BASIS OF SECTION 13,
RULE 57, OF THE RULES OF THE COURT
SUPPORTED (SIC) BY ANY EVIDENCE;
III. RESPONDENT COURT OF APPEALS
COMMITTED GRAVE ERROR OF LAW IN
CONCLUDING THAT HEREIN PETITIONER
FAILED TO RAISE AS AN ISSUE THE DELAYED
FILING OF PRIVATE RESPONDENT'S MOTION
FOR RECONSIDERATION DATED DECEMBER
14, 1990, IN PETITIONER'S OPPOSITION
THERETO.
IV. THE APPREHENSION OF THE HEREIN
PETITIONER REGARDING THE PROPENSITY
OF PRIVATE RESPONDENT TO DISPOSE OF HIS
PROPERTIES IN FRAUD OF HIS CREDITORS
TURNED OUT TO BE TRUE AND CORRECT.
(Rollo, pp. 24-26, 30).
In brief, the questions posited by the instant petition
may be consolidated into two issues, namely:
1) Whether or not the writ of preliminary attachment
in question was properly or regularly issued and 2)
Whether or not petitioner's failure to file a motion for
reconsideration of the questioned orders of the court a
quo bars the filing of a special civil action for certiorari
before the respondent court.
In 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, Section 1 (d) of Rule
57 authorizes the plaintiff or any proper party to have
the property of the adverse party attached as security
for the satisfaction of any judgment that may be
recovered therein. Thus:
Rule 57, Sec. 1. Grounds upon which attachment may
issue.
(d): In an action against a party who has been guilty of
a fraud of 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;
To sustain an attachment on this ground, it must be
shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the
agreement and must have been the reason which
induced the other party into giving consent which he
would not have otherwise given. To constitute a
ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to
pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be
inferred from the circumstances attendant in each case
(Republic v. Gonzales, 13 SCRA 633 [1965]).
Here, it has been established that all the collaterals
given by the respondent Arkin as security for the bond
were either fraudulent or heavily encumbered.
Records show that Transfer Certificate of Title No.
300011 supposedly issued by the Register of Deeds of
Rizal covering a parcel of land with an area of 25,750
square meters located at Muntinlupa, Las Pias, M.M.
and registered in the name of Carmen Madlangbayan,
used as one of the collaterals, turned out to be fake and
spurious as the genuine TCT No. 300011 of the Office
of the Register of Deeds of Rizal covers a parcel of
land located in
Angono, Rizal with an area of 514 square meters
registered in the name of persons other than
respondents Imperial, Arkin, and Madlangbayan.
Likewise, the supposed lien-free motor vehicle offered
as collateral turned out to be heavily mortgaged and
was even disposed of without informing petitioner.
Furthermore, it has also been proven that subsequent
to the issuance of the May 30, 1988 surety bond,
respondent Arkin started disposing of his other
properties. Prior to the filing of the complaint,
respondent not only had sold the motor vehicle given
as collateral but that his two other condominium units
were also alienated in favor of a company of which
respondent Arkin is the president. All these
circumstances unerringly point to the devious scheme
of respondent Arkin to defraud petitioner.
It is therefore clear that fraud was present when private
respondent, among others, entered into an indemnity
agreement with petitioner. The actuations of
respondent Arkin indubitably lead to the conclusion
that he never entertained the idea of fulfilling his
obligations under the agreement and was bent on
defrauding petitioner from the very beginning.
Under the circumstances, we perceive no impropriety
or irregularity in the issuance of the writ of attachment
especially so where petitioner has fully complied with
the requirements for the issuance thereof.
On the contrary, what we see as having been attended
by irregularity is the assailed order of respondent judge
lifting the writ of attachment based on grounds which
are contradicted by the evidence on record. It is a fact
that respondent Arkin gave fake land titles as
collaterals and even disposed of real properties in his
obvious attempt to defraud petitioner. And yet,
respondent judge concluded that petitioner's allegation
that respondent Arkin's fraudulent alienation of his
properties has no foundation in fact. This is plain
absurdity. As respondent judge himself noted in his
earlier order denying respondent Arkin's motion to
quash writ of attachment, the latter's three (3)
conveyances, "though made before the institution of
the action, is a circumstance tending to show
fraudulent conveyance with intent to defraud his
creditors. Especially so, when the payment of herein
claim upon which the action is brought is not secured
by any mortgage or pledge of real (or) personal
property and plaintiff had no other sufficient security
for the enforcement of the claim" (Rollo, p. 58). Such
being the case, respondent Arkin's claim that the writ
of attachment has been irregularly issued should not
have merited serious consideration by respondent
judge.
Be that as it may, the instant case being "an action
against a party who has been guilty of fraud in
contracting the obligation upon which the action is
brought", respondent Arkin is not allowed to file a
motion to dissolve the attachment on the ground that
the writ has been improperly or irregularly issued. As
we held in Mindanao Savings and Loan Assoc. vs.
Court of Appeals (172 SCRA 480 [1989]):
. . ., when the preliminary attachment is issued upon a
ground which is at the same time the applicant's cause
of action: e.g., . . . 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, 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 therein
had been improperly, or irregularly, issued the
reason being that the hearing on such motion for
dissolution of the writ would be tantamount to a trial
on the merits. In other words, the merits of the action
would be ventilated at a mere hearing of a motion,
instead of the regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can be
dissolved is by a counterbond.
Petitioner next contends that motion for
reconsideration need not at all times be resorted to
before a special civil action for certiorari may be
instituted before respondent court.
Ordinarily, certiorari will not lie unless an inferior
court, through a motion for reconsideration, had been
given an opportunity to correct the imputed errors.
However, this rule admits of exceptions such as 1)
when the issue raised is one purely, of law; 2) where
public interest is involved; 3) in cases of urgency
(Quirino vs. Grospe, 169 SCRA 702 [1989]); or 4)
where special circumstances warrant immediate or
more direct action (People vs. Dacudao, 170 SCRA
489 [1989]).
In the case at bar, petitioner's failure to file a motion
for reconsideration in the trial court before
commencing certiorari proceedings in the Court of
Appeals is not fatal considering the existence of
special circumstances that warrant immediate and
more direct action (Saldaa vs. CA, 190 SCRA 396
[1990]).
The indecent haste with which respondent Arkin had
been disposing of his properties demonstrates the
imperative need for a more adequate relief requiring
an immediate and more direct action. There was an
urgency which caused the present case to fall under
one of the exceptions thereby allowing petitioner to
file a petition for certiorari without the need of first
filing a motion for reconsideration.
Filing a motion for reconsideration would have served
no useful purpose nor can it be considered a plain,
speedy and adequate remedy since the order directing
the sheriff to discharge or lift the writ of attachment
was issued on the same day the order granting the
quashal was made. It would not have automatically
forestalled Arkin from further disposing of his
properties. It is rather disturbing how respondent
judge, after ruling in his order of October 19, 1989,
denying respondent's motion to quash, that the trial
court's finding of fraud in incurring the obligation
under the indemnity agreement was supported by
substantial evidence, would, in his order of March 6,
1991 granting the motion for reconsideration, based on
the same substantial evidence supporting a finding of
fraud, later reverse himself and declare that "the
plaintiff (petitioner herein) did not prove the intent of
defendant Arkin to defraud creditors."
Through the order for the "immediate" lifting of the
writ, respondent Judge, in one swift stroke, completely
subverted the valid order of attachment issued after a
finding of fraud, which finding he himself has declared
as supported by substantial evidence. We hold that
respondent judge in issuing the contested orders has
acted capriciously, whimsically and arbitrarily and
with grave abuse of discretion amounting to lack or in
excess of jurisdiction correctible by the special writ of
certiorari.
WHEREFORE, the petition is GRANTED. The
assailed order of respondent judge dated March 6,
1991 is SET ASIDE and the order dated October 19,
1989 is hereby REINSTATED. Costs against private
respondent.
11. FCY Construction Group Inc vs CA
On June 29, 1993, private respondent Ley
Construction and Development Corporation filed a
Complaint for collection of a sum of money with
application for preliminary attachment against
petitioner FCY Construction Group, Inc. and Francis
C. Yu with the Makati Regional Trial Court which was
docketed as Civil Case No. 93-2112. Private
respondent alleged that it had a joint venture
agreement with petitioner FCY Construction Group,
Inc. (wherein petitioner Francis C. Yu served as
President) over the Tandang Sora Commonwealth
Flyover government project for which it had provided
funds and construction materials. The Complaint was
filed in order to compel petitioners to pay its half share
in the collections received in the project as well as
those yet to be received therein. In support of its
application for a writ of attachment, private respondent
alleged that petitioners were guilty of fraud in
incurring the obligation and had fraudulently
misapplied or converted the money paid them, to
which it had an equal share.
On July 6, 1993, following an ex-parte hearing, the
lower court issued an Order for the issuance of a writ
of preliminary attachment, conditioned upon the filing
of a P7,000,000.00 attachment bond.
Petitioners moved for the lifting of the writ of
preliminary attachment on the following grounds: (1)
the attachment was heard, issued and implemented
even before service of summons upon them; (2) failure
of the attaching officer to serve a copy of the affidavit
of merit upon them; and (3) that there was no fraud in
incurring the obligation. As an alternative prayer in
their Motion, petitioners prayed that the attachment be
limited to their receivables with the Department of
Public Works and Highways. This alternative prayer
was later withdrawn by petitioners in a Manifestation
and Motion.
On May 25, 1994, the lower court issued another Order
denying petitioners' Motion to Lift Attachment.[1] It,
however, reduced and confined the attachment to
receivables due petitioners from the Tandang Sora
commonwealth Flyover project.
Subsequently, petitioners filed a Motion for
Reconsideration[2] as well as an Omnibus Motion for
Leave to file Amended Answer and/or to delete
Francis C. Yu as party-defendant.[3]
With the denial of both Motions by the lower court on
September 4, 1994,[4] petitioners filed a Petition for
Certiorari before the Court of Appeals on September
16, 1994.[5] The Petition was, however, denied on
July 31, 1995;[6] so was petitioners' Motion for
Reconsideration.[7]
Hence, the instant Petition.
It is evident that the questioned writ of attachment was
anchored upon Section 1(d), Rule 57 of the Revised
Rules of Court, to wit -
"SECTION 1. Grounds upon which attachment may
issue. - 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 in the following cases:
x x x x x x x x x.
(d) In an action against a party who has been guilty of
a 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;
x x x x x x x x x."
Petitioners, however, insist that the writ of preliminary
attachment was irregularly issued inasmuch as there
was no evidence of fraud in incurring the obligations
sued upon.
In support of their stand, petitioners alleged that
private respondent's principal witness admitted that it
was the Department of Public Works and Highways
(DPWH) that induced it to deliver materials and cash
for the Tandang Sora Commonwealth Flyover project,
to wit -
COURT: Now . . . as of January 5, 1993 you delivered
to him (referring to defendant FCY corporation) in
cash and in kind amounting to Fifteen Million Pesos
(P15,000,000.00), now why did you keep on
delivering cash and materials to him if you were not
paid a single centavo?
A Because of every need for the project, and the Public
Works official assured me that I will be given a new
project after the Tandang Sora will be finished.
Q Who is this public official that promised you?
A Director Pendosa, Teodoro Encarnacion and
Secretary de Jesus your Honor. (TSN, 6 July 1993, pp.
47-48)
xxxxxxxxx
Q What about these officials of the Department of
Public Highways, what would they do to project their
sub alleged project?
A Secretary de Jesus is no longer connected there, your
Honor.
Q At the time?
A At that time, he resigned.
Q Before he resigned.
A He gave me assurance that they will soon give
assurance, they will soon give me another project . . .
(TSN, 6 July 1993, p. 55)[8]
A cursory reading of the above-cited testimony,
however, readily shows that said reassurance from the
DPWH officials came, not at the inception of the
obligation or contract, but during its performance. On
the other hand, the fraud of which petitioners are
accused of and which was the basis for the issuance of
the questioned attachment, is fraud alleged to have
been committed upon contracting the obligation sued
upon. Thus, petitioners argument that "the inducement
was the mouth-watering temptation of a DPWH
promise of a 'new project after the Tandang Sora
Flyover project will be finished"' is clearly off-tangent
as such inducement, if any, came not at the inception
of the obligation.
Similarly, petitioners' arguments that it was private
respondent who admittedly prepared the letter
embodying the alleged joint venture agreement[9] and
had petitioner Francis Yu sign it must fail. The written
agreement referred to was signed by petitioner Francis
Yu only on January 5, 1993, long after the project had
commenced. Thus, It was only a written confirmation
of an arrangement that had already been existing and
operational. Similarly then, such written confirmation
did not occur at the inception of the obligation sued
upon.
In Liberty Insurance Corporation vs. Court of
Appeals,[10] this Court, discussing Section 1(d), Rule
57, cautioned as follows --
To sustain an attachment on this ground, it must be
shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the
agreement and must have been the reason which
induced the other party into giving consent which he
would not have otherwise given. To constitute a
ground for attachment in Section 1 (d), Rule 57 of the
Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to
pay, as it is in this case. Fraud is a state of mind and
need not be proved by direct evidence but may be
inferred from the circumstances attendant in each case.
(Republic v. Gonzales, 13 SCRA 633).
From the foregoing, therefore, the alleged inducement
by the DPWH officials upon private respondent as
well as the circumstances surrounding the execution of
the joint venture agreement, both appear immaterial as
they were not committed upon contracting the
obligation sued upon but occurred long after the
obligation has been established.
The fact that petitioners have paid a substantial amount
of money to private respondent cannot save the day for
them either. As per their own accounting, such
payments were for accounts payable for labor
supplied, construction materials and cash
advances.[11] It is not denied that no payment of
profits has been given to private respondent, which is
precisely what it is suing for.
Finally, considering that the writ of preliminary
attachment has been issued on account of allegations
of fraud in contracting the obligation upon which the
action is brought petitioners' efforts to have the writ of
preliminary attachment dissolved on the ground that it
was improperly or irregularly issued is in vain. Indeed,
in Liberty Insurance Corporation, supra, which cited
Mindanao Savings and Loan Assoc. vs. Court of
Appeals (172 SCRA 480), we ruled -
"x x x, when the preliminary attachment is issued upon
a ground which is at the same time the applicant's
cause of action: e.g., x x x 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, 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
therein had been improperly or irregularly issued - the
reason being that the hearing on such motion for
dissolution of the writ would be tantamount to a trial
on the merits. In other words, the merits of the action
would be ventilated at a mere hearing of a motion;
instead of the regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can be
dissolved is by a counterbond."
We now come to the issue of whether or not petitioner
Francis Yu should remain as party-defendant.
Petitioners argue that since the transactions were
corporation to corporation only, petitioner Francis Yu
should be dropped as party-defendant considering the
hornbook law that corporate personality is a shield
against personal liability of its officers. We agree that
petitioner Francis Yu cannot be made liable in his
individual capacity if he indeed entered into and
signed the contract in his official capacity as President,
in the absence of stipulation to that effect, due to the
personality of the corporation being separate and
distinct from the persons composing it.[12] However,
while we agree that petitioner Francis Yu cannot be
held solidarily liable with petitioner corporation
merely because he is the President thereof and was
involved in the transactions with private corporation,
we also note that there exists instances when corporate
officers may be held personally liable for corporate
acts. Such exceptions were outlined in Tramat
Mercantile, Inc. vs. Court of Appeals,[13] as follows -
"Personal liability of a corporate director, trustee or
officer along (although not necessarily) with the
corporation may so validly attach, as a rule, only when
1. He assents (a) to a patently unlawful act of the
corporation, or (b) for bad faith or gross negligence in
directing its affairs, or (c) for conflict of interest,
resulting in damages to the corporation, its
stockholders or other persons;
2. He consents to the issuance of watered down stocks
or who, having knowledge thereof, does not forthwith
file with the corporate secretary his written objection
thereto;
3. He agrees to hold himself personally and solidarily
liable with the corporation; or
4. He is made, by a specific provision of law, to
personally answer for his corporate action."
The attendance of these circumstances, however,
cannot be determined at this stage and should properly
be threshed out during the trial on the merits. Stated
differently, whether or not petitioner Francis Yu
should be held personally and solidarily liable with
petitioner corporation is a matter that should be left to
the trial court's discretion, dependent as it is on
evidence during trial.
WHEREFORE, in view of the foregoing, the instant
Petition is hereby DISMISSED. No pronouncement as
to costs.
12. Metro Inc vs Laras Gift
This is a petition for review[1] of the 29 September
2004 Decision[2] and 2 March 2006 Resolution[3] of
the Court of Appeals in CA-G.R. SP No. 79475. In its
29 September 2004 Decision, the Court of Appeals
granted the petition for certiorari of respondents Laras
Gifts and Decors, Inc., Luis Villafuerte, Jr., and Lara
Maria R. Villafuerte (respondents). In its 2 March
2006 Resolution, the Court of Appeals denied the
motion for reconsideration of petitioners Metro, Inc.,
Frederick Juan and Liza Juan (petitioners).
The Facts
Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are
corporations engaged in the business of
manufacturing, producing, selling and exporting
handicrafts. Luis Villafuerte, Jr. and Lara Maria R.
Villafuerte are the president and vice-president of
LGD respectively. Frederick Juan and Liza Juan are
the principal officers of Metro, Inc.
Sometime in 2001, petitioners and respondents agreed
that respondents would endorse to petitioners purchase
orders received by respondents from their buyers in the
United States of America in exchange for a 15%
commission, to be shared equally by respondents and
James R. Paddon (JRP), LGDs agent. The terms of the
agreement were later embodied in an e-mail labeled as
the 2001 Agreement.[4]
In May 2003, respondents filed with the Regional
Trial Court, Branch 197, Las Pias City (trial court) a
complaint against petitioners for sum of money and
damages with a prayer for the issuance of a writ of
preliminary attachment. Subsequently, respondents
filed an amended complaint[5] and alleged that, as of
July 2002, petitioners defrauded them in the amount of
$521,841.62. Respondents also prayed for P1,000,000
as moral damages, P1,000,000 as exemplary damages
and 10% of the judgment award as attorneys fees.
Respondents also prayed for the issuance of a writ of
preliminary attachment.
In its 23 June 2003 Order,[6] the trial court granted
respondents prayer and issued the writ of attachment
against the properties and assets of petitioners. The 23
June 2003 Order provides:
WHEREFORE, let a Writ of Preliminary Attachment
issue against the properties and assets of Defendant
METRO, INC. and against the properties and assets of
Defendant SPOUSES FREDERICK AND LIZA
JUAN not exempt from execution, as may be
sufficient to satisfy the applicants demand of
US$521,841.62 US Dollars or its equivalent in Pesos
upon actual attachment, which is about P27 Million,
unless such Defendants make a deposit or give a bond
in an amount equal to P27 Million to satisfy the
applicants demand exclusive of costs, upon posting by
the Plaintiffs of a Bond for Preliminary Attachment in
the amount of twenty five million pesos
(P25,000,000.00), subject to the approval of this
Court.
SO ORDERED.[7]
On 26 June 2003, petitioners filed a motion to
discharge the writ of attachment. Petitioners argued
that the writ of attachment should be discharged on the
following grounds: (1) that the 2001 agreement was
not a valid contract because it did not show that there
was a meeting of the minds between the parties; (2)
assuming that the 2001 agreement was a valid
contract, the same was inadmissible because
respondents failed to authenticate it in accordance with
the Rules on Electronic Evidence; (3) that respondents
failed to substantiate their allegations of fraud with
specific acts or deeds showing how petitioners
defrauded them; and (4) that respondents failed to
establish that the unpaid commissions were already
due and demandable.
After considering the arguments of the parties, the
trial court granted petitioners motion and lifted the writ
of attachment. The 12 August 2003 Order[8] of the
trial court provides:
Premises considered, after having taken a second hard
look at the Order dated June 23, 2003 granting
plaintiffs application for the issuance of a writ of
preliminary attachment, the Court holds that the
issuance of a writ of preliminary attachment in this
case is not justified.
WHEREFORE, the writ of preliminary attachment
issued in the instant case is hereby ordered
immediately discharged and/or lifted.
SO ORDERED.[9]
Respondents filed a motion for reconsideration. In its
10 September 2003 Order, the trial court denied the
motion.
Respondents filed a petition for certiorari before the
Court of Appeals. Respondents alleged that the trial
court gravely abused its discretion when it ordered the
discharge of the writ of attachment without requiring
petitioners to post a counter-bond.
In its 29 September 2004 Decision, the Court of
Appeals granted respondents petition. The 29
September 2004 Decision provides:
WHEREFORE, finding merit in the petition, We
GRANT the same. The assailed Orders are hereby
ANNULLED and SET ASIDE. However, the issued
Writ of Preliminary Attachment may be ordered
discharged upon the filing by the private respondents
of the proper counter-bond pursuant to Section 12,
Rule 57 of the Rules of Civil Procedure.
SO ORDERED.[10]
Petitioners filed a motion for reconsideration. In its 2
March 2006 Resolution, the Court of Appeals denied
the motion.
Hence, this petition.
The 12 August 2003 Order of the Trial Court
According to the trial court, respondents failed to
sufficiently show that petitioners were guilty of fraud
either in incurring the obligation upon which the action
was brought, or in the performance thereof. The trial
court found no proof that petitioners were motivated
by malice in entering into the 2001 agreement. The
trial court also declared that petitioners failure to fully
comply with their obligation, absent other facts or
circumstances to indicate evil intent, does not
automatically amount to fraud. Consequently, the trial
court ordered the discharge of the writ of attachment
for lack of evidence of fraud.
The 29 September 2004 Decision of the Court of
Appeals
According to the Court Appeals, the trial court
gravely abused its discretion when it ordered the
discharge of the writ of attachment without requiring
petitioners to post a counter-bond. The Court of
Appeals said that when the writ of attachment is issued
upon a ground which is at the same time also the
applicants cause of action, courts are precluded from
hearing the motion for dissolution of the writ when
such hearing would necessarily force a trial on the
merits of a case on a mere motion.[11] The Court of
Appeals pointed out that, in this case, fraud was not
only alleged as the ground for the issuance of the writ
of attachment, but was actually the core of respondents
complaint. The Court of Appeals declared that the only
way that the writ of attachment can be discharged is by
posting a counter-bond in accordance with Section
12,[12] Rule 57 of the Rules of Court.
The Issue
Petitioners raise the question of whether the writ of
attachment issued by the trial court was improperly
issued such that it may be discharged without the filing
of a counter-bond.
The Ruling of the Court
The petition has no merit.
Petitioners contend that the writ of attachment was
improperly issued because respondents amended
complaint failed to allege specific acts or
circumstances constitutive of fraud. Petitioners insist
that the improperly issued writ of attachment may be
discharged without the necessity of filing a counter-
bond. Petitioners also argue that respondents failed to
show that the writ of attachment was issued upon a
ground which is at the same time also respondents
cause of action. Petitioners maintain that respondents
amended complaint was not an action based on fraud
but was a simple case for collection of sum of money
plus damages.
On the other hand, respondents argue that the Court
of Appeals did not err in ruling that the writ of
attachment can only be discharged by filing a counter-
bond. According to respondents, petitioners cannot
avail of Section 13,[13] Rule 57 of the Rules of Court
to have the attachment set aside because the ground for
the issuance of the writ of attachment is also the basis
of respondents amended complaint. Respondents
assert that the amended complaint is a complaint for
damages for the breach of obligation and acts of fraud
committed by petitioners.
In this case, the basis of respondents application for
the issuance of a writ of preliminary attachment is
Section 1(d), Rule 57 of the Rules of Court which
provides:
SEC. 1. Grounds upon which attachment may issue.
At the commencement of the action or at any time
before entry of judgment, a plaintiff or any proper
party may have the property of the adverse party
attached as security for the satisfaction of any
judgment that maybe recovered in the following cases:
xxx
(d) In 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 the
performance thereof; x x x
In Liberty Insurance Corporation v. Court of
Appeals,[14] we explained:
To sustain an attachment on this ground, it must be
shown that the debtor in contracting the debt or
incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the
agreement and must have been the reason which
induced the other party into giving consent which he
would not have otherwise given. To constitute a
ground for attachment in Section 1(d), Rule 57 of the
Rules of Court, fraud should be committed upon
contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it
the debtor has a preconceived plan or intention not to
pay, as it is in this case.[15]
The applicant for a writ of preliminary attachment
must sufficiently show the factual circumstances of the
alleged fraud because fraudulent intent cannot be
inferred from the debtors mere non-payment of the
debt or failure to comply with his obligation.[16]
In their amended complaint, respondents alleged the
following in support of their prayer for a writ of
preliminary attachment:
5. Sometime in early 2001, defendant Frederick Juan
approached plaintiff spouses and asked them to help
defendants export business. Defendants enticed
plaintiffs to enter into a business deal. He proposed to
plaintiff spouses the following:
a. That plaintiffs transfer and endorse to defendant
Metro some of the Purchase Orders (POs) they will
receive from their US buyers;
b. That defendants will sell exclusively and only thru
plaintiffs for their US buyer;
xxx
6. After several discussions on the matter and further
inducement on the part of defendant spouses, plaintiff
spouses agreed. Thus, on April 21, 2001, defendant
spouses confirmed and finalized the agreement in a
letter-document entitled 2001 Agreement they emailed
to plaintiff spouses, a copy of which is hereto attached
as Annex A.
xxx
20. Defendants are guilty of fraud committed both at
the inception of the agreement and in the performance
of the obligation. Through machinations and schemes,
defendants successfully enticed plaintiffs to enter into
the 2001 Agreement. In order to secure plaintiffs full
trust in them and lure plaintiffs to endorse more POs
and increase the volume of the orders, defendants
during the early part, remitted to plaintiffs shares
under the Agreement.
21. However, soon thereafter, just when the orders
increased and the amount involved likewise increased,
defendants suddenly, without any justifiable reasons
and in pure bad faith and fraud, abandoned their
contractual obligations to remit to plaintiffs their
shares. And worse, defendants transacted directly with
plaintiffs foreign buyer to the latters exclusion and
damage. Clearly, defendants planned everything from
the beginning, employed ploy and machinations to
defraud plaintiffs, and consequently take from them a
valuable client.
22. Defendants are likewise guilty of fraud by
violating the trust and confidence reposed upon them
by plaintiffs. Defendants received the proceeds of
plaintiffs LCs with the clear obligation of remitting
15% thereof to the plaintiffs. Their refusal and failure
to remit the said amount despite demand constitutes a
breach of trust amounting to malice and fraud.[17]
(Emphasis and underscoring in the original)
(Boldfacing and italicization supplied)
We rule that respondents allegation that petitioners
undertook to sell exclusively and only through
JRP/LGD for Target Stores Corporation but that
petitioners transacted directly with respondents
foreign buyer is sufficient allegation of fraud to
support their application for a writ of preliminary
attachment. Since the writ of preliminary attachment
was properly issued, the only way it can be dissolved
is by filing a counter-bond in accordance with Section
12, Rule 57 of the Rules of Court.
Moreover, the reliance of the Court of Appeals in the
cases of Chuidian v. Sandiganbayan,[18] FCY
Construction Group, Inc. v. Court of Appeals,[19] and
Liberty Insurance Corporation v. Court of Appeals[20]
is proper. The rule that when the writ of attachment is
issued upon a ground which is at the same time the
applicants cause of action, the only other way the writ
can be lifted or dissolved is by a counter-bond[21] is
applicable in this case. It is clear that in respondents
amended complaint of fraud is not only alleged as a
ground for the issuance of the writ of preliminary
attachment, but it is also the core of respondents
complaint. The fear of the Court of Appeals that
petitioners could force a trial on the merits of the case
on the strength of a mere motion to dissolve the
attachment has a basis.
WHEREFORE, we DENY the petition. We AFFIRM
the 29 September 2004 Decision and 2 March 2006
Resolution of the Court of Appeals in CA-G.R. SP No.
79475.
13. Republic vs Estate of Lim
In this Petition for Certiorari under Rule 65, the
Republic of the Phiippines assails and seeks to nullify
the Resolution[1] dated March 28, 2003 of the
Sandiganbayan, as effectively reiterated in another
resolution of June 18, 2004, which denied petitioners
motion for the issuance of a writ of preliminary
attachment in Civil Case No. 0030, entitled Republic
v. Alfonso Lim, et al.,[2] a suit to recover ill-gotten or
unexplained wealth.
The Facts
On October 2, 1991, in Civil Case No. 0030, the
Republic, represented by the Presidential Commission
on Good Government (PCGG), filed before the
Sandiganbayan, Second Division, an Amended
Complaint for reconveyance, reversion, accounting,
restitution, and damages. In it, the Republic averred
that Alfonso Lim, Sr. (now deceased) and Alfonso
Lim, Jr., acting by themselves and/or in unlawful
collusion with Ferdinand E. Marcos and Imelda R.
Marcos, and taking undue advantage of their
relationship, influence, and connection with the latter,
embarked upon devices and stratagems to unjustly
enrich themselves at the expense of the Republic and
the Filipino people. Among other acts, the Lims were
alleged to have:
(a) actively solicited and obtained, upon the
personal behest of [the Marcoses], with the active
collaboration of Teodoro Q. Pea, who was then
Minister of Natural Resources, additional timber
concession in favor of Taggat Industries, Inc.
(TAGGAT) and Pamplona Redwood Veneer, Inc.
(PAMPLONA), corporations beneficially held and
controlled by Alfonso Lim and Alfonso Lim, Jr.,
which, in addition to other areas already awarded to
TAGGAT and PAMPLONA, resulted in their
concession holdings in excess of the allowable limits
prescribed under Section 11, Article XIV of the 1973
Constitution;
(b) actively solicited and obtained, upon the
personal behest of [the Marcoses], a management
contract in favor of TAGGAT to operate and manage
the logging concessions of Veterans Woodwork, Inc.
(VETERANS), Sierra Madre Wood Industries, Inc.
(SIERRA MADRE), and Tropical Philippines Wood
Industries, Inc. (TROPICAL) over and above the
objections of VETERANS;
(c) obtained a permit to cut down a certain
number of Narra and Amaciga trees, and, on the very
same day, was likewise given an authorization by
Ferdinand E. Marcos to export the same, in violation
of existing ban against cutting and export of the
aforesaid trees;
(d) obtained, in favor of PAMPLONA, a
syndicated loan in the amount of millions of US dollars
from a consortium of international banks, secured by
the guarantee of the National Investment and
Development Corporation (NIDC), a subsidiary of the
Philippine National Bank; and in view of the default
by PAMPLONA in the payment of its principal and/or
interest amortizations, the loan was converted, under
the debt rescheduling arrangement between Republic
and its foreign creditor banks, into a public sector
obligation of Republic, to the grave and irreparable
damage of the Republic and the Filipino people.
The Republic also alleged that the foregoing acts,
singly or collectively, constituted grave and gross
abuse of official position and authority, flagrant breach
of public trust and fiduciary obligations, brazen abuse
of right and power, unjust enrichment, and violation of
the Constitution and laws of the Republic to the grave
and irreparable damage to it and its citizens.
As its main prayer, the Republic asked for the
reconveyance of all funds and property impressed with
constructive trust in favor of the Republic and the
Filipino people, as well as funds and other property
acquired with [respondents] abuse of right and power
and through unjust enrichment, including but not
limited to the properties listed in Annex A of the
Complaint together with the accruing income or
increment from date of acquisition until final
judgment.
The properties listed in the said Annex A[3]
consistbesides the Lims assets sequestered in
accordance wth Executive Order Nos. 1 and 2, Series
of 1986of the assets and other properties of Lim, Sr.,
as follows:
1. a parcel of land with TCT No. 2981 (Lot
A), located at Barrio Birinayan, Talisay, Batangas;
2. a parcel of raw land with TCT No. 11750 (Lot 8-C-
53) located at Muzon, San Isidro, Angono, Rizal;
3. a parcel of raw land with TCT No. 11749
(Lot 8-C-51) located at Muzon, San Isidro, Angono.
Rizal; (etc)
Meanwhile, Lim, Sr. passed away. On June 22, 1998,
his estate filed a motion to lift the sequestration[4] over
certain real properties[5] contending that the PCGG
impleaded him owing to his alleged association with
former Pres. Marcos. The estate would add, however,
that Lim, Sr. secured title over almost all of his real
properties thus sequestered way back in 1948, long
before the Marcoses came to power.
To the motion to lift, the Republic interposed an
opposition, alleging that the sequestered lots and titles
stand as security for the satisfaction of any judgment
the Republic may obtain against the estate of Lim, Sr.,
his family, or his group of companies.
By Resolution[6] dated March 17, 2001, the
Sandiganbayan lifted the sequestration order in
question on the strength of the following pertinent
premises, to wit:
The sequestration of some of the real properties of
movant-defendant [estate of Lim, Sr.] is a remedial
measure resorted to in order to preserve these
properties along with others alleged to have taken
illegally x x x, and in order to prevent the same from
disappearance, destruction, loss or dissipation and /or
to foil acts that may render moot and academic the
efforts to recover the aforesaid alleged ill-gotten
wealth. However, the pertinent provisions of
Executive Order Nos. 1, 2 and 14 are explicit in saying
that the properties that are supposed to be sequestered
are those x x x amassed during the regime of the
deposed President Ferdinand E. Marcos and not before
or later thereto. x x x
In time, the Republic sought but was later denied
reconsideration of the sequestration-lifting resolution
of the Sandiganbayan.[7]
Meanwhile, after presenting its evidence in the main
case, the Republic filed its Formal Offer of Evidence
dated October 8, 2001.[8] On December 5, 2001, the
Sandiganbayan issued a terse order admitting all the
documentary exhibits of the Republic consisting of
Exhibits A to G, inclusive of their submarkings.[9]
The following incidents/events then transpired:
(1) Sometime in January 2002, the estate of Lim, Sr.,
Ruthie Lim, and two others, as defendants a quo, filed
a Demurrer to Evidence[10] dated January 14, 2002,
on the ground of either irrelevancy or immateriality of
the Republics evidence. As argued, the same evidence
did not prove or disprove that the demurring
defendants, on their own or in concert with the
Marcoses, amassed ill-gotten wealth. Lim, Jr. later
filed a Manifestation[11] adopting the demurrer to
evidence of the estate of Lim, Sr., et al.
(2) On July 4, 2002, the Sandiganbayan denied the
Republics motion for reconsideration of the graft
courts resolution lifting the sequestration order.[12]
(3) In an obvious bid to counter the effects of the lifting
of the sequestration, the Republic, on September 9,
2002, filed a Motion for the Issuance of a Writ of
Preliminary Attachment[13] against respondents in the
amount of its claim. The Republic alleged that
respondent Lims were guilty of fraud in incurring
various legal obligations which the present action has
been brought, by taking undue advantage of their
relationship, influence and connection with the
[Marcoses] to unjustly enriched themselves to the
prejudice of the Republic.
Except for one, all the other respondents belonging to
the Lim group filed their respective comment or
opposition to the Republics motion for a writ of
attachment.
(4) On March 28, 2003, the Sandiganbayan, stating
that bare allegations of the commission of fraud by
respondents in incurring the aforesaid obligations are
not sufficient for the granting of the writ of preliminary
attachment, denied, via a Resolution,[14] the
corresponding motion.
In due time, the Republic interposed a motion seeking
reconsideration of the Sandiganbayans March 28,
2003 denial action.[15]
(5) By Resolution dated July 17, 2003, the
Sandiganbayan denied respondents demurrer to
evidence.[16]
Forthwith, the estate of Lim, Sr., Taggat Industries,
Inc. (TAGGAT), and Pamplona Redwood Veneer, Inc.
(PAMPLONA), followed later by Lim, Jr.,
respectfully moved for reconsideration of the July 17,
2003 Resolution.
(6) On June 18, 2004, the Sandiganbayan resolved to
affirm the denial of the respondents demurrer to
evidence. It also denied in its March 28, 2003
resolution the Republics motion for the issuance of a
writ of preliminary attachment.[17]
Hence, this recourse is before us.
The Issues
The two interrelated issues petitioner Republic tenders
boils down to: whether the Sandiganbayan, in the light
of the denial of respondents demurrer to evidence,
acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in not considering that the
evidence already on record support the issuance of a
writ or preliminary attachment.
The Republic contends that the pieces of evidence
offered before and admitted by the Sandiganbayan
provide sufficient basis for the issuance of a writ of
preliminary attachment. Thus, the graft court, as the
Republic argues, committed grave abuse of discretion
amounting to excess of jurisdiction in denying the writ
of preliminary injunction by not considering the
evidence already on record and in ruling contrary to its
findings and conclusions when it denied respondents
demurrer to evidence.
Respondents, on the other hand, reiterate their
position on the absence of evidence of fraud, as
required under Section 1(d), Rule 57 of the Rules of
Court, which would justify the issuance of the desired
writ. In this regard, they reproduced what the
Sandiganbayan said in its March 28, 2003 resolution
on the matter of fraud, thus: These are general
averments devoid of the particulars of time, persons,
etc., in support of the serious allegation that
[respondents] are guilty of fraud in incurring these
alleged legal obligation. Bare allegations that
[respondents] have been guilty of fraud in incurring
the aforesaid obligations are not sufficient for the
granting of the writ of attachment.[18]
The Courts Ruling
An assiduous review of the antecedent facts and
factual findings and conclusions of the Sandiganbayan
relative to the denial of demurrer to evidence and the
writ of preliminary injunction compels this Court to
grant the instant petition.
Nature of Preliminary Attachment
Attachment is an ancillary remedy applied for not for
its own sake but to enable the attaching party to realize
upon relief sought and expected to be granted in the
main or principal action;[19] it is a measure auxiliary
or incidental to the main action. As such, it is 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. As a corollary proposition, an order granting
an application for a writ of preliminary attachment
cannot, owing to the incidental or auxiliary nature of
such order, be the subject of an appeal independently
of the main action.[20]
The instant case is one of those mentioned in Sec. 1,
Rule 57 of the Rules, specifically the sections
paragraph d, wherein a writ of preliminary attachment
may be issued. It provides
SECTION 1. Grounds upon which attachment may
issue.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 in the following cases:
xxxx
(d) In 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;
For a writ of attachment to issue under the above-
quoted rule, the applicant must sufficiently show the
factual circumstances of the alleged fraud.
Fraud may be defined as the voluntary execution of a
wrongful act, or a willful omission, knowing and
intending the effects which naturally and necessarily
arise from such act or omission.[21] In its general
sense, fraud is deemed to comprise anything calculated
to deceive, including all acts and omissions and
concealment involving a breach of legal or equitable
duty, trust, or confidence justly reposed, resulting in
damage to another, or by which an undue and
unconscientious advantage is taken of another.[22]
Fraud is also described as embracing all multifarious
means which human ingenuity can device, and which
are resorted to by one individual to secure an
advantage over another by false suggestions or by
suppression of truth and includes all surprise, trick,
cunning, dissembling, and any unfair way by which
another is cheated.[23] Fraudulent, on the other hand,
connotes intentionally wrongful, dishonest, or
unfair.[24]
In the case at bar, the Republic has, to us, sufficiently
discharged the burden of demonstrating the
commission of fraud committed by respondents Lims
as a condition sine qua non for the issuance of a writ
of preliminary attachment. The main supporting
proving document is the Republics Exhibit B which
the Sandiganbayan unqualifiedly admitted in
evidence. And the fraud or fraudulent scheme
principally came in the form of Lim, Sr. holding and/or
operating logging concessions which far exceeded the
allowable area prescribed under the 1973 Constitution.
A cursory evaluation of the Republics Exhibit Bthe
Decision dated November 20, 1986 of then Minister
Ernesto M. Maceda of the Ministry Natural Resources
(MNR)[25] in an unnumbered MNR case entitled IN
RE: VIOLATIONS OF VETERANS
WOODWORKS, INC. AND ALFONSO LIM, SR.
AND TAGGAT INDUSTRIES, INC., canceling the
logging concessions[26] enjoyed by the Lim
Groupyields the following undisputed relevant data:
(1) Lim, Sr., through the seven (7) respondent
corporations, had been holding/operating/managing
several timber concessions with a total area of 533,880
hectares, more or less, which was far in excess of the
100,000 hectares allowed in the 1973
Constitution;[27]
(2) Since a wide expanse of forest lands were in
between the different Lim concessions, the Lims had
effectively access to a total of 633,880 hectares of
forests; and
(3) Other violation of the constitutional prohibition
applies also to three (3) corporations (Acme Plywood
Co., Inc., Western Cagayan Lumber Co., Inc., and
Southern Plywood Corporation).
As is made abundantly clear in the aforesaid Maceda
decision, the MNR revoked or canceled the
concessions or timber license agreements (TLAs) of
Lim, Sr. on the principal ground that the timber award
was made in utter violation of the Constitutional
limitations on the granting of logging concessions.[28]
The same decision also indicated that Lim, Sr.s
influence, power and strong connection with the past
[i.e., Marcos] dispensation[29] explained his receipt of
special privileges and concessions unfettered by
constitutional constraints. So influential was Lim, Sr.
that he and TAGGAT and sister companies received
certain timber-related benefits without the knowledge,
let alone approval, of MNR.[30] Lim, Sr. doubtless
utilized to the hilt his closeness to the Marcoses to
amass what may prima facie be considered as illegal
wealth.
Scheme to Circumvent Constitutional Prohibition
Sec. 11 of Article XIV of the governing 1973
Constitution states that no private corporation or
association may hold by lease, concession, license, or
permit, timber or forest lands and other timber or forest
resources in excess of one hundred thousand hectares.
Complementing this provision was Chapter I, No. 3(e)
of Forestry Administrative Order (FAO) No. 11
prohibiting any individual, corporation, partnership, or
association from acquiring a timber license or license
agreement covering an area in excess of 100,000
hectares. Likewise, Chapter I, No. 3(d) of FAO No. 11
states that no individual corporation, partnership, or
association who is already a holder of an ordinary
timber license or license agreement nor any member
of the family, incorporator, director, stockholder, or
member of such individual, corporation, partnership,
or association shall be allowed to acquire a new timber
license or license agreement or any interest or
participation in it.
The constitutional and statutory limitations on
allowable area leases and concessions were obviously
meant to prevent the concentration of large tracts of
public land in the hands of a single individual. But as
the Office of the Solicitor General aptly observed,
citing the Maceda decision: For one Filipino out of 55
million to own, operate or in one form [or] another be
financially interested in more than 600,000 hectares
out of a total forest land of 14 million hectares is
certainly unfair, unacceptable and unconstitutional by
any standard.[31]
Lim, Sr., as earlier stated, had been
holding/operating/managing several timber
concessions through the seven (7) logging companies
for an aggregate area of 533,880 hectares, as follows:
The Maceda decision stressed that Lim, Sr. had one
share each in the three corporations, namely: (1) Acme
Plywood and Veneer Co., Inc. (ACME); (2) Western
Cagayan Lumber Co., Inc. (WESTERN); and (3)
Southern Plywood Corporation (SPC). These
corporations, the decision added, likewise violated the
Constitution considering that Lim, Sr. had control over
them as owner-founder. To cover the constitutional
violation, Lim, Jr. was used as a front and made to
appear as President of the mentioned three
corporations.[32]
There can be no quibbling that MNR correctly
revoked/canceled all the timber concessions of Lim,
Sr., namely: TLA No. 071 (TAGGAT), TLA No. 074
(PAMPLONA), TLA No. 321 (SPC), TLA No. 073
(WESTERN), and TLA No. 075 (ACME). As it were,
the TLAs of TAGGAT and PAMPLONA each
exceeded the 100,000-hectare threshold prescribed by
the 1973 Constitution. Initially, the execution and
granting of those timber license agreements were
already tainted with fraud. The Lims resorted to their
close connection with the Marcoses for the approval of
the timber license agreements and the Lims were given
access effectively to a total 633,880 hectares in
violation of the 1973 Constitution and FAO No. 11.
Indeed, the Lims availment and enjoyment of logging
concessions grossly in excess of constitutional limits
amount to a voluntary execution of a wrongful act, if
not a serious breach of legal duty. By their acts, the
Lims veritably defrauded and cheated the Filipino
peoplethe ultimate beneficiaries of the countrys
natural resources.
Denial of Demurrer to Evidence Indicative
of the Commission of Fraudulent Acts
The evidence that clearly supports the issuance of a
writ of preliminary attachment sought by Republic is
already on record before the Sandiganbayan. As a
matter of fact, the anti-graft court already ruled and
considered that the evidence so far presented by the
Republic had been sufficient to support a finding that
respondents had committed illegal and fraudulent acts
against the Republic and the Filipino people. This was
the tenor of the Sandiganbayans resolution denying the
respondents demurrer to evidence.
A demurrer to evidence is defined as an objection by
one of the parties in an action, to the effect that the
evidence which his adversary produced is insufficient
in point of law, whether true or not, to make out a case
or sustain the issue.[33] The party demurring
challenges the sufficiency of the whole evidence to
sustain a verdict.[34] In passing upon the sufficiency
of the evidence raised in a demurrer, the court is
merely required to ascertain whether there is
competent or sufficient proof to sustain the indictment
or to support a verdict of guilt.[35] And when the court
denies the demurrer, the defendant has to present
countervailing evidence against the evidence adduced
by the plaintiff.[36]
In the case at bar, when the Sandiganbayan denied
respondents demurrer to evidence, it in effect ruled
that the evidence presented by the prosecution is,
absent a countervailing evidence, prima facie
sufficient to support an adverse verdict against them
for amassing illegal wealth. The Sandiganbayan, in its
underlying resolution of July 17, 2003 denying the
demurrer, wrote:
The Demurrer is denied.
To support the charges, plaintiff introduced, among
others, Exhibit B, a decision dated November 20, 1986
by then DENR Secretary Ernesto Maceda which, after
hearing, revoked or cancelled the respective Timber
License Agreements (TLAs) of defendants Alfonso
Lim, Sr., Taggat Industries, Inc., Pamplona Redwood
Veneer, [etc.] after an investigation found that the
same entities held timber concessions in excess of
what was allowed by the Constitution. The same
decision likewise made certain findings of facts that x
x x Lim, Sr. enjoyed close association with former
President Ferdinand E. Marcos as a consequence of
which the latter granted x x x Lim, Sr. special
privileges and concessions in gross violation of the
Constitution. In addition, Exhibit E indicates that x x
x Taggat Industries, chiefly owned by defendant Lim
Sr., using his close association with then President
Marcos, acquired and controlled three (3) other
logging firms, namely Veteran Woodworks, Inc.,
Tropical Philippine Wood Industries, Inc., and Sierra
Madre Wood Industries, Inc. x x x. This resulted to the
acquisition of defendant Lim Sr. of excessive number
of timber concessions.
Given the circumstances, this Court cannot simply
brush aside the foregoing considering that what the
defendants-movants proffer are mere blanket denial of
the charges. In demurrer to evidence, the party
demurring challenges the sufficiency of the whole
evidence to sustain a verdict. The court, in passing
upon the sufficiency of the evidence raised in a
demurrer, is merely required to ascertain whether there
is competent or sufficient evidence to sustain the
indictment. Applying the said ruling in the instant
case, there exists prima facie evidence on record x x x
to support or sustain the charges against the
defendants-movants. There is therefore a further need
on the part of the defendants-movants to submit the
proof to the contrary other than their mere simple
disclaimer.[37]
Sandiganbayan Did Not Consider
Evidence in Denying Attachment
Given the foregoing pronouncement from the
Sandiganbayan, the Court is completely at a loss to
understand the graft courts denial of the Republics plea
for the ancillary remedy of preliminary attachment.
The wrongful actthe fraud perpetuated by Lim Sr.
and/or his corporations on the Republicis written over
or easily deducible from the adverted Maceda decision
and Exhibit E. While fraud cannot be presumed, it
need not be proved by direct evidence and it can well
be inferred from attendant circumstances.[38] Withal,
we cannot but agree with the Republics contention that
the Sandiganbayans denial of its motion for a writ of
preliminary attachment constitutes grave and patent
abuse of discretion amounting to lack or excess of
jurisdiction.
A scrutiny of the above-quoted July 17, 2003
Resolution readily shows that the Sandiganbayan
indeed considered the evidence presented and offered
by the Republic, specifically Exhibits B and E which
convincingly show the finding that respondents acts
were tainted with fraud in the acquisition of the
logging concessions due to their close association with
the Marcoses.
It is incongruous, therefore, for the Sandiganbayan to
deny the writ of preliminary attachment when the
pieces of evidence on record which it used and based
its findings and conclusions in denying the demurrer
to evidence were the same ones which demonstrate the
propriety of the writ of preliminary attachment.
Clearly, the Republic has complied with and satisfied
the legal obligation to show the specific acts
constitutive of the alleged fraud committed by
respondents. The denial of the prayed writ, thus,
evidently constitutes grave abuse of discretion on the
part of Sandiganbayan. After all, attachment is a mere
provisional remedy to ensure the safety and
preservation of the thing attached until the plaintiff
can, by appropriate proceedings, obtain a judgment
and have such property applied to its satisfaction.[39]
Indeed, the properties of respondents sought to be
subjected to the ancillary writ of preliminary
attachment are not only in danger of being lost but
should be placed under custodia legis to answer for any
liabilities that may be adjudged against them in the
instant case.
WHEREFORE, the Sandiganbayan Resolutions dated
March 28, 2003 and June 18, 2004 are hereby
REVERSED and SET ASIDE. Accordingly, the 2nd
Division of Sandiganbayan is hereby DIRECTED to
ISSUE the Writ of Preliminary Attachment prayed for
by the Republic. No costs.
14. Foundation Specialists vs Betonval
On separate dates, petitioner Foundation Specialists,
Inc. (FSI) and respondent Betonval Ready Concrete,
Inc. (Betonval) executed three contracts[1] for the
delivery of ready mixed concrete by Betonval to FSI.
The basic stipulations were: (a) for FSI to supply the
cement to be made into ready mixed concrete; (b) for
FSI to pay Betonval within seven days after
presentation of the invoices plus 30% interest p.a. in
case of overdue payments and (c) a credit limit of
P600,000 for FSI.
Betonval delivered the ready mixed concrete pursuant
to the contracts but FSI failed to pay its outstanding
balances starting January 1992. As an accommodation
to FSI, Betonval extended the seven day credit period
to 45 days.[2]
On September 1, 1992, Betonval demanded from FSI
its balance of P2,349,460.[3] Betonval informed FSI
that further defaults would leave it no other choice but
to impose the stipulated interest for late payments and
take appropriate legal action to protect its interest.[4]
While maintaining that it was still verifying the
correctness of Betonvals claims, FSI sent Betonval a
proposed schedule of payments devised with a liability
for late payments fixed at 24% p.a.[5]
Thereafter, FSI paid Betonval according to the terms
of its proposed schedule of payments. It was able to
reduce its debt to P1,114,203.34 as of July 1993,
inclusive of the 24% annual interest computed from
the due date of the invoices.[6] Nevertheless, it failed
to fully settle its obligation.
Betonval thereafter filed an action for sum of money
and damages in the Regional Trial Court (RTC).[7] It
also applied for the issuance of a writ of preliminary
attachment alleging that FSI employed fraud when it
contracted with Betonval and that it was disposing of
its assets in fraud of its creditors.
FSI denied Betonvals allegations and moved for the
dismissal of the complaint. The amount claimed was
allegedly not due and demandable because they were
still reconciling their respective records. FSI also filed
a counterclaim and prayed for actual damages,
alleging that its other projects were delayed when
Betonval attached its properties and garnished its bank
accounts. It likewise prayed for moral and exemplary
damages and attorneys fees.
The RTC issued a writ of preliminary attachment and
approved the P500,000 bond of respondent Stronghold
Insurance Co., Inc. (Stronghold). FSI filed a
counterbond of P500,000 thereby discharging the writ
of preliminary attachment, except with respect to FSIs
excavator, crawler crane and Isuzu pick-up truck,
which remained in custodia legis.[8] An additional
counterbond of P350,000 lifted the garnishment of
FSIs receivables from the Department of Public Works
and Highways.
On January 29, 1999, the RTC ruled for Betonval.[9]
However, it awarded P200,000 compensatory
damages to FSI on the ground that the attachment of
its properties was improper.[10]
FSI and Stronghold separately filed motions for
reconsideration while Betonval filed a motion for
clarification and reconsideration. In an order dated
May 19, 1999, the RTC denied the motions for
reconsideration of Betonval and Stronghold. However,
the January 29, 1999 decision was modified in that the
award of actual or compensatory damages to FSI was
increased to P1.5 million.[11]
All parties appealed to the Court of Appeals (CA).
However, only the respective appeals of Betonval and
Stronghold were given due course because FSIs appeal
was dismissed for nonpayment of the appellate docket
fees.[12]
In its appeal, Betonval assailed the award of actual
damages as well as the imposition of legal interest at
only 12%, instead of 24% as agreed on. Stronghold, on
the other hand, averred that the attachment was proper.
In its decision[13] dated January 20, 2005, the CA
upheld the May 19, 1999 RTC order with
modification. The CA held that FSI should pay
Betonval the value of unpaid ready mixed concrete at
24% p.a. interest plus legal interest at 12%. The CA,
however, reduced the award to FSI of actual and
compensatory damages, thus:
WHEREFORE, premises considered, the appealed
Order dated May 19, 1999 is MODIFIED as follows:
(a) to increase the rate of interest imposable on the
P1,114,203.34 awarded to appellant Betonval from
12% to 24% per annum, with the aggregate sum to
further earn an annual interest rate of 12% from the
finality of this decision, until full payment; (b) to
reduce the award of actual damages in favor of
appellee from P1,500,000.00 to P200,000.00; (c) to
hold both appellants jointly and severally liable to pay
said amount; and (d) to hold appellant Betonval liable
for whatever appellant surety may be held liable under
the attachment bond. The rest is AFFIRMED in toto.
FSIs motion for reconsideration was denied.[14]
In this petition for review on certiorari,[15] FSI prays
for the following:
(a) decrease the rate of imposable interest on
the P1,114,203.34 award to Betonval, from 12% to 6%
p.a. from date of judicial demand or filing of the
complaint until the full amount is paid;
(b) deduct [from the award to Betonval] the
cost or value of unused cement based on [its] invoice
stating 1,307.45 bags computed at the prevailing price;
(c) award actual and compensatory damages at
P3,242,771.29;
(d) hold Betonval and Stronghold jointly and
severally liable to pay such actual and compensatory
damages;
(e) hold Betonval liable for whatever Stronghold
may be held liable under the attachment bond and
(f) affirm in toto the rest of the order.[16]
The petition has no merit.
BETONVALS COMPLAINT
WAS NOT PREMATURE
FSI argues that Betonvals complaint was prematurely
filed. There was allegedly a need to reconcile
accounts, particularly with respect to the value of the
unused cement supplied by FSI, totaling 2,801.2
bags[17] which supposedly should have been deducted
from FSIs outstanding obligation. FSIs repeated
requests for reconciliation of accounts were allegedly
not heeded by Betonvals representatives.
FSIs contention is untenable. It neither alleged any
discrepancies in nor objected to the accounts within a
reasonable time.[18] As held by the RTC, FSI was
deemed to have admitted the truth and correctness of
the entries in the invoices since:
[N]o attempts were made to reconcile [FSIs] own
record with [Betonval] until after the filing of the
complaint, inspite of claims in [FSIs] Answer about its
significance, and despite having had plenty of
opportunity to do so from the time of receipt of the
invoices or demand letters from [Betonval]. [FSIs]
excuse that it was impractical to reconcile accounts
during the middle of transactions is defeated by the
absence of any showing on record that a formal request
to reconcile was issued to [Betonval] despite the
completion of deliveries or [FSIs] discovery of the
alleged discrepancies, as well as its failure to initiate
any meeting with [Betonval], including one which the
parties were directed to hold for that purpose by the
Court. Since [FSI] failed to prove the correctness of its
entries against those in [Betonvals] invoices, its record
is self-serving. xxx (emphasis supplied)
In view of FSIs failure to dispute this finding of the
RTC because of its failure to perfect its appeal, FSI is
now estopped from raising this issue. There is no
cogent reason to depart from the RTCs finding.
Undaunted, FSI retracts. Instead of claiming the
balance of the unused cement as reflected in its
records, it now bases its claim on the invoices of
Betonval. FSI relies on the RTCs statement in the May
19, 1999 order:
Still it can claim the cost of the balance of unused
cement based on [Betonvals] invoices,
notwithstanding its admission of the obligation in the
letter, as it neither expressed nor implied any intent to
waive that claim by said admission.
FSI contends that this declaration has become final
and executory and must be implemented in the name
of substantial justice. Betonval, however, avers that
that the issue on the alleged unused cement was never
raised as an affirmative defense in its answer or in its
motion for reconsideration to the January 29, 1999
decision. Neither was this issue raised in the CA.
Hence, FSI must not be allowed to broach it for the
first time in this Court. Betonval is correct.
It is well-settled that issues not raised in the trial court
may not be raised for the first time on appeal.
Furthermore, defenses and objections not pleaded
either in a motion to dismiss or in the answer are
deemed waived.[19]
More importantly, the portion of a decision that
becomes the subject of an execution is that ordained or
decreed in the dispositive portion.[20] In this case,
there was no award in favor of FSI of the value of the
balance of the unused cement as reflected in the
invoices.
THE APPLICABLE INTEREST
RATE IS 24% P.A.
There is no dispute that FSI and Betonval stipulated
the payment of a 30% p.a. interest in case of overdue
payments. There is likewise no doubt that FSI failed to
pay Betonval on time.
FSI acknowledged its indebtedness to Betonval in the
principal amount of P1,114,203.34. However, FSI
opposed the CAs imposition of a 24% p.a. interest on
the award to Betonval allegedly because: (a) the grant
to FSI of a 45-day credit extension novated the
contracts insofar as FSIs obligation to pay any interest
was concerned; (b) Betonval waived its right to
enforce the payment of the 30% p.a. interest when it
granted FSI a new credit term and (c) Betonvals prayer
for a 24% p.a. interest instead of 30%, resulted in a
situation where, in effect, no interest rate was
supposedly stipulated, thus necessitating the
imposition only of the legal interest rate of 6% p.a.
from judicial demand.
FSIs contentions have no merit.
Novation is one of the modes of extinguishing an
obligation.[21] It is done by the substitution or change
of the obligation by a subsequent one which
extinguishes the first, either by changing the object or
principal conditions, or by substituting the person of
the debtor, or by subrogating a third person in the
rights of the creditor.[22] Novation may:
[E]ither be extinctive or modificatory, much being
dependent on the nature of the change and the intention
of the parties. Extinctive novation is never presumed;
there must be an express intention to novate; in cases
where it is implied, the acts of the parties must clearly
demonstrate their intent to dissolve the old obligation
as the moving consideration for the emergence of the
new one. Implied novation necessitates that the
incompatibility between the old and new obligation be
total on every point such that the old obligation is
completely superceded by the new one. The test of
incompatibility is whether they can stand together,
each one having an independent existence; if they
cannot and are irreconcilable, the subsequent
obligation would also extinguish the first.
An extinctive novation would thus have the twin
effects of, first, extinguishing an existing obligation
and, second, creating a new one in its stead. This kind
of novation presupposes a confluence of four essential
requisites: (1) a previous valid obligation, (2) an
agreement of all parties concerned to a new contract,
(3) the extinguishment of the old obligation, and (4)
the birth of a valid new obligation. Novation is merely
modificatory where the change brought about by any
subsequent agreement is merely incidental to the main
obligation (e.g., a change in interest rates or an
extension of time to pay; in this instance, the new
agreement will not have the effect of extinguishing the
first but would merely supplement it or supplant some
but not all of its provisions.)[23]
The obligation to pay a sum of money is not novated
by an instrument that expressly recognizes the old,
changes only the terms of payment, adds other
obligations not incompatible with the old ones or the
new contract merely supplements the old one.[24]
The grant by Betonval to FSI of a 45-day credit
extension did not novate the contracts so as to
extinguish the latter. There was no incompatibility
between them. There was no intention by the parties to
supersede the obligations under the contracts. In fact,
the intention of the 45-day credit extension was
precisely to revive the old obligation after the original
period expired with the obligation unfulfilled. The
grant of a 45-day credit period merely modified the
contracts by extending the period within which FSI
was allowed to settle its obligation. Since the contracts
remained the source of FSIs obligation to Betonval,
the stipulation to pay 30% p.a. interest likewise
remained.
Obviously, the extension given to FSI was triggered
by its own request, to help it through its financial
difficulties. FSI would now want to take advantage of
that generous accommodation by claiming that its
liability for interest was extinguished by its creditors
benevolence.
Neither did Betonval waive the stipulated interest rate
of 30% p.a., as FSI erroneously claims. A waiver is a
voluntary and intentional relinquishment or
abandonment of a known legal right or privilege.[25]
A waiver must be couched in clear and unequivocal
terms which leave no doubt as to the intention of a
party to give up a right or benefit which legally
pertains to him.[26] FSI did not adduce proof that a
valid waiver was made by Betonval. FSIs claim is
therefore baseless.
Parties are bound by the express stipulations of their
contract as well as by what is required by the nature of
the obligation in keeping with good faith, usage and
law.[27] Corollarily, if parties to a contract expressly
provide for a particular rate of interest, then that
interest shall be applied.[28]
It is clear that Betonval and FSI agreed on the
payment of interest. It is beyond comprehension how
Betonvals prayer for a 24% interest on FSIs balance
could have resulted in a situation as if no interest rate
had been agreed upon. Besides, FSIs proposed
schedule of payments (September 3, 1992),[29]
referring to Betonvals statement of account,[30]
contained computations of FSIs arrears and billings
with 24% p.a. interest.
There can be no other conclusion but that Betonval
had reduced the imposable interest rate from 30% to
24% p.a. and this reduced interest rate was accepted,
albeit impliedly, by FSI when it proposed a new
schedule of payments and, in fact, actually made
payments to Betonval with 24% p.a. interest. By its
own actions, therefore, FSI is estopped from
questioning the imposable rate of interest.
We likewise hold that the imposition of a 12% p.a.
interest on the award to Betonval (in addition to the
24% p.a. interest) in the assailed judgment is proper.
When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest shall be 12% p.a. from such finality until its
satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.[31]
THERE WAS IMPROPER ATTACHMENT OF
FSIS PROPERTIES
Betonvals application for the issuance of the writ of
preliminary attachment was based on Section 1(d) and
(e), Rule 57 of the Rules of Court.[32] However, the
CA affirmed the RTCs factual findings that there was
improper attachment of FSIs properties. In debunking
FSIs claim for actual damages, respondents insist that
the attachment was proper and that Betonval was able
to sufficiently prove the existence of the grounds for
attachment. However, these are factual matters that
have been duly passed upon by the RTC and the CA
and which are inappropriate in a petition for review.
Moreover, we agree with the RTC and the CA that
FSIs properties were improperly attached. Betonval
was not able to sufficiently show the factual
circumstances of the alleged fraud because fraudulent
intent cannot be inferred from FSIs mere nonpayment
of the debt or failure to comply with its obligation. In
Ng Wee v. Tankiansee,[33] we held that the applicant
must be able to demonstrate that the debtor intended to
defraud the creditor. Furthermore:
The fraud must relate to the execution of the agreement
and must have been the reason which induced the other
party into giving consent which he would not have
otherwise given. To constitute a ground for attachment
in Section 1 (d), Rule 57 of the Rules of Court, fraud
should be committed upon contracting the obligation
sued upon. A debt is fraudulently contracted if at the
time of contracting it the debtor has a preconceived
plan or intention not to pay, as it is in this case. Fraud
is a state of mind and need not be proved by direct
evidence but may be inferred from the circumstances
attendant in each case.[34]
In other words, mere failure to pay its debt is, of and
by itself, not enough to justify an attachment of the
debtors properties. A fraudulent intention not to pay
(or not to comply with the obligation) must be present.

PETITIONER IS NOT ENTITLED TO THE

AMOUNT OF ACTUAL DAMAGES PRAYED FOR
In its bid for a bigger award for actual damages it
allegedly suffered from the wrongful attachment of its
properties, FSI enumerates the standby costs of
equipment[35] and manpower standby costs[36] it
allegedly lost. We cannot grant FSIs prayer. FSI did
not pursue its appeal to the CA as shown by its failure
to pay the appellate docket fees. It is well-settled that
a party who does not appeal from the decision may not
obtain any affirmative relief from the appellate court
other than what he has obtained from the lower court
whose decision is brought up on appeal.[37]
WHEREFORE, the petition is hereby DENIED.

Public Corporation
1. Umali vs Comelec
Before the Court is the consolidated case for Petition
for Certiorari and Prohibition with prayer for
injunctive relief, docket as G.R. No. 203974, assailing
Minute Resolution No. 12-07971 and Minute
Resolution No. 12-09252 dated September 11, 2012
and October 16, 2012, respectively, both promulgated
by public respondent Commission on Elections
(COMELEC), and Petition for Mandamus, docketed
G.R. No. 204371, seeking to compel public respondent
to implement the same.
The Facts
On July 11, 2011, the Sangguniang Panglungsod of
Cabanatuan City passed Resolution No. 183-2011,
requesting the President to declare the conversion of
Cabanatuan City from a component city of the
province of Nueva Ecija into a highly urbanized city
(HUC). Acceding to the request, the President issued
Presidential Proclamation No. 418, Series of 2012,
proclaiming the City of Cabanatuan as an HUC subject
to "ratification in a plebiscite by the qualified voters
therein, as provided for in Section 453 of the Local
Government Code of 1991."
Respondent COMELEC, acting on the proclamation,
issued the assailed Minute Resolution No. 12-0797
which reads:
WHEREFORE, the Commission RESOLVED, as it
hereby RESOLVES, that for purposes of the plebiscite
for the conversion of Cabanatuan City from
component city to highly-urbanized city, only those
registered residents of Cabanatuan City should
participate in the said plebiscite.
The COMELEC based this resolution on Sec. 453 of
the Local Government Code of 1991 (LGC), citing
conversion cases involving Puerto Princesa City in
Palawan, Tacloban City in Southern Leyte, and Lapu-
Lapu City in Cebu, where only the residents of the city
proposed to be converted were allowed to vote in the
corresponding plebiscite.
In due time, petitioner Aurelio M. Umali, Governor of
Nueva Ecija, filed a Verified Motion for
Reconsideration, maintaining that the proposed
conversion in question will necessarily and directly
affect the mother province of Nueva Ecija. His main
argument is that Section 453 of the LGC should be
interpreted in conjunction with Sec. 10, Art. X of the
Constitution. He argues that while the conversion in
question does not involve the creation of a new or the
dissolution of an existing city, the spirit of the
Constitutional provision calls for the people of the
local government unit (LGU) directly affected to vote
in a plebiscite whenever there is a material change in
their rights and responsibilities. The phrase "qualified
voters therein" used in Sec. 453 of the LGC should
then be interpreted to refer to the qualified voters of
the units directly affected by the conversion and not
just those in the component city proposed to be
upgraded. Petitioner Umali justified his position by
enumerating the various adverse effects of the
Cabanatuan Citys conversion and how it will cause
material change not only in the political and economic
rights of the city and its residents but also of the
province as a whole.
To the Verified Motion for Reconsideration, private
respondent Julius Cesar Vergara, city mayor of
Cabanatuan, interposed an opposition on the ground
that Sec. 10, Art. X does not apply to conversions,
which is the meat of the matter. He likewise argues that
a specific provision of the LGC, Sec. 453, as couched,
allows only the qualified voters of Cabanatuan City to
vote in the plebiscite. Lastly, private respondent
pointed out that when Santiago City was converted in
1994 from a municipality to an independent
component city pursuant to Republic Act No. (RA)
7720, the plebiscite held was limited to the registered
voters of the then municipality of Santiago.
Following a hearing conducted on October 4, 2012,3
the COMELEC En Banc on October 16, 2012, in E.M
No. 12-045 (PLEB), by a vote of 5-24 ruled in favor
of respondent Vergara through the assailed Minute
Resolution 12-0925. The dispositive portion reads:
The Commission, taking into consideration the
arguments of counsels including the Reply-
memorandum of Oppositor, after due deliberation,
RESOLVED, as it hereby RESOLVES, as follows:
1) To DENY the Motion for Reconsideration of
oppositor Governor Aurelio M. Umali; and
2) To SCHEDULE the conduct of Plebiscite for the
conversion of Cabanatuan City from component city
into highly-urbanized city with registered residents
only of Cabanatuan City to participate in said
plebiscite.
Let the Deputy Executive Director for Operations
implement this resolution.
SO ORDERED.
Hence, the Petition for Certiorari with prayer for
injunctive relief, docketed as G.R. No. 203974, on
substantially the same arguments earlier taken by
petitioner Umali before the poll body. On the other
hand, public respondent COMELEC, through the
Office of the Solicitor General, maintained in its
Comment that Cabanatuan City is merely being
converted from a component city into an HUC and that
the political unit directly affected by the conversion
will only be the city itself. It argues that in this
instance, no political unit will be created, merged with
another, or will be removed from another LGU, and
that no boundaries will be altered. The conversion
would merely reinforce the powers and prerogatives
already being exercised by the city, with the political
units probable elevation to that of an HUC as
demanded by its compliance with the criteria
established under the LGC. Thus, the participation of
the voters of the entire province in the plebiscite will
not be necessary.
Private respondent will later manifest that it is
adopting the Comment of the COMELEC.
Meanwhile, on October 25, 2012, respondent
COMELEC promulgated Resolution No. 9543, which
adopted a calendar of activities and periods of
prohibited acts in connection with the conversion of
Cabanatuan City into an HUC. The Resolution set the
conduct of the plebiscite on December 1, 2012.
Thereafter, a certain Dr. Rodolfo B. Punzalan filed a
Petition for Declaratory Relief which was raffled to the
Regional Trial Court (RTC), Branch 40 in Palayan
City. In the said case, Punzalan prayed that Minute
Resolution No. 12-0797 be declared unconstitutional,
that the trial court decree that all qualified voters of the
province of Nueva Ecija be included in the plebiscite,
and that a Temporary Restraining Order (TRO) be
issued enjoining public respondent from implementing
the questioned resolution. On October 19, 2012, the
RTC granted the prayer for a TRO.
On November 6, 2012, public respondent through
Minute Resolution No. 12-0989 suspended the
preparations for the event in view of the TRO issued
by the RTC. On November 27, 2012, the plebiscite
was once again rescheduled to give way to the May 13,
2013 national, local and ARMM regional elections as
per Resolution No. 9563.
After this development, petitioner J.V. Bautista, on
December 3, 2012, filed a case before this Court for
Mandamus, docketed as G.R. No. 204371, praying that
public respondent be ordered to schedule the plebiscite
either on December 15 or 22, 2012. Petitioner Bautista
argued that since the TRO issued by the RTC has
already expired, the duty of the public respondent to
hold the plebiscite has become mandatory and
ministerial. Petitioner Bautista also alleged that the
delay in holding the plebiscite is inexcusable given the
requirement that it should be held within a period of
120 days form the date of the Presidents declaration.
In its Comment to the Bautista petition, public
respondent justified its position by arguing that
mandamus will not issue to enforce a right which is in
substantial dispute. With all the legal conflicts
surrounding the case, it cannot be said that there is a
clear showing of petitioner Bautistas entitlement to
the relief sought. Respondent COMELEC likewise
relied on Sec. 5 of the Omnibus Election Code to
justify the postponements, citing incidents of violence
that ensued in the locality during the plebiscite period.
After the conclusion of the 2013 elections, public
respondent issued Resolution No. 1353 scheduling the
plebiscite to January 25, 2014. However, a TRO was
issued by this Court on January 15, 2014 in G.R. No.
203974 to suspend the conduct of the plebiscite for
Cabanatuan Citys conversion. Given the intertwining
factual milieu of the two petitions before the Court,
both cases were consolidated on March 18, 2014.
The Issue
The bone of contention in the present controversy boils
down to whether the qualified registered voters of the
entire province of Nueva Ecija or only those in
Cabanatuan City can participate in the plebiscite called
for the conversion of Cabanatuan City from a
component city into an HUC.
Resolving the Petition for Certiorari either way will
necessarily render the Petition for Mandamus moot
and academic for ultimately, the public respondent
will be ordered to hold the plebiscite. The only
variation will be as regards its participants.
The Courts Ruling
The Petition for Certiorari is meritorious.
Sec. 453 of the LGC should be interpreted in
accordance with Sec. 10, Art. X of the Constitution
Petitioner Umali asseverates that Sec. 10, Art. X of the
Constitution should be the basis for determining the
qualified voters who will participate in the plebiscite
to resolve the issue. Sec. 10, Art. X reads:
Section 10, Article X. No province, city,
municipality, or barangay 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 approval by a majority of the votes cast in a
plebiscite in the political units directly affected.
(emphasis supplied)
Petitioner Umali elucidates that the phrase "political
units directly affected" necessarily encompasses not
only Cabanatuan City but the entire province of Nueva
Ecija. Hence, all the registered voters in the province
are qualified to cast their votes in resolving the
proposed conversion of Cabanatuan City.
On the other hand, respondents invoke Sec. 453 of the
LGC to support their claim that only the City of
Cabanatuan should be allowed to take part in the
voting. Sec. 453 states:
Section 453. Duty to Declare Highly Urbanized Status.
It shall be the duty of the President to declare a city
as highly urbanized within thirty (30) days after it shall
have met the minimum requirements prescribed in the
immediately preceding Section, upon proper
application therefor and ratification in a plebiscite by
the qualified voters therein. (emphasis supplied)
Respondents take the phrase "registered voters
therein" in Sec. 453 as referring only to the registered
voters in the city being converted, excluding in the
process the voters in the remaining towns and cities of
Nueva Ecija.
Before proceeding to unravel the seeming conflict
between the two provisions, it is but proper that we
ascertain first the relationship between Sec. 10, Art. X
of the Constitution and Sec. 453 of the LGC.
First of all, we have to restate the general principle that
legislative power cannot be delegated. Nonetheless,
the general rule barring delegation is subject to certain
exceptions allowed in the Constitution, namely:
(1) Delegation by Congress to the President of the
power to fix "tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or
imposts within the framework of the national
development program of the Government" under
Section 28(2) of Article VI of the Constitution; and
(2) Delegation of emergency powers by Congress to
the President "to exercise powers necessary and proper
to carry out a declared national policy" in times of war
and other national emergency under Section 23(2) of
Article VI of the Constitution.
The power to create, divide, merge, abolish or
substantially alter boundaries of provinces, cities,
municipalities or barangays, which is pertinent in the
case at bar, is essentially legislative in nature.5 The
framers of the Constitution have, however, allowed for
the delegation of such power in Sec. 10, Art. X of the
Constitution as long as (1) the criteria prescribed in the
LGC is met and (2) the creation, division, merger,
abolition or the substantial alteration of the boundaries
is subject to the approval by a majority vote in a
plebiscite.
True enough, Congress delegated such power to the
Sangguniang Panlalawigan or Sangguniang
Panlungsod to create barangays pursuant to Sec. 6 of
the LGC, which provides:
Section 6. Authority to Create Local Government
Units. - A local government unit may be created,
divided, merged, abolished, or its boundaries
substantially altered either by law enacted by Congress
in the case of a province, city, municipality, or any
other political subdivision, or by ordinance passed by
the sangguniang panlalawigan or sangguniang
panlungsod concerned in the case of a barangay
located within its territorial jurisdiction, subject to
such limitations and requirements prescribed in this
Code." (emphasis supplied)
The guidelines for the exercise of this authority have
sufficiently been outlined by the various LGC
provisions detailing the requirements for the creation
of barangays6, municipalities7, cities8, and
provinces9. Moreover, compliance with the plebiscite
requirement under the Constitution has also been
directed by the LGC under its Sec. 10, which reads:
Section 10. Plebiscite Requirement. No creation,
division, merger, abolition, or substantial alteration of
boundaries of local government units shall take effect
unless approved by a majority of the votes cast in a
plebiscite called for the purpose in the political unit or
units directly affected." (emphasis supplied)
With the twin criteria of standard and plebiscite
satisfied, the delegation to LGUs of the power to
create, divide, merge, abolish or substantially alter
boundaries has become a recognized exception to the
doctrine of non-delegation of legislative powers.
Likewise, legislative power was delegated to the
President under Sec. 453 of the LGC quoted earlier,
which states:
Section 453. Duty to Declare Highly Urbanized Status.
It shall be the duty of the President to declare a city
as highly urbanized within thirty (30) days after it shall
have met the minimum requirements prescribed in the
immediately preceding Section, upon proper
application therefor and ratification in a plebiscite by
the qualified voters therein.
In this case, the provision merely authorized the
President to make a determination on whether or not
the requirements under Sec. 45210 of the LGC are
complied with. The provision makes it ministerial for
the President, upon proper application, to declare a
component city as highly urbanized once the minimum
requirements, which are based on certifiable and
measurable indices under Sec. 452, are satisfied. The
mandatory language "shall" used in the provision
leaves the President with no room for discretion.
In so doing, Sec. 453, in effect, automatically calls for
the conduct of a plebiscite for purposes of conversions
once the requirements are met. No further legislation
is necessary before the city proposed to be converted
becomes eligible to become an HUC through
ratification, as the basis for the delegation of the
legislative authority is the very LGC.
In view of the foregoing considerations, the Court
concludes that the source of the delegation of power to
the LGUs under Sec. 6 of the LGC and to the President
under Sec. 453 of the same code is none other than Sec.
10, Art. X of the Constitution.
Respondents, however, posit that Sec. 453 of the LGC
is actually outside the ambit of Sec. 10, Art. X of the
Constitution, considering that the conversion of a
component city to an HUC is not "creation, division,
merge, abolition or substantial alternation of
boundaries" encompassed by the said constitutional
provision.
This proposition is bereft of merit.
First, the Courts pronouncement in Miranda vs.
Aguirre11 is apropos and may be applied by analogy.
While Miranda involves the downgrading, instead of
upgrading, as here, of an independent component city
into a component city, its application to the case at bar
is nonetheless material in ascertaining the proper
treatment of conversions. In that seminal case, the
Court held that the downgrading of an independent
component city into a component city comes within
the purview of Sec. 10, Art. X of the Constitution.
In Miranda, the rationale behind the afore-quoted
constitutional provision and its application to cases of
conversion were discussed thusly:
A close analysis of the said constitutional provision
will reveal that the creation, division, merger, abolition
or substantial alteration of boundaries of local
government units involve a common denominator - - -
material change in the political and economic rights of
the local government units directly affected as well as
the people therein. It is precisely for this reason that
the Constitution requires the approval of the people "in
the political units directly affected." It is not difficult
to appreciate the rationale of this constitutional
requirement. The 1987 Constitution, more than any of
our previous Constitutions, gave more reality to the
sovereignty of our people for it was borne out of the
people power in the 1986 EDSA revolution. Its
Section 10, Article X addressed the undesirable
practice in the past whereby local government units
were created, abolished, merged or divided on the
basis of the vagaries of politics and not of the welfare
of the people. Thus, the consent of the people of the
local government unit directly affected was required to
serve as a checking mechanism to any exercise of
legislative power creating, dividing, abolishing,
merging or altering the boundaries of local
government units. It is one instance where the people
in their sovereign capacity decide on a matter that
affects them - - - direct democracy of the people as
opposed to democracy thru peoples representatives.
This plebiscite requirement is also in accord with the
philosophy of the Constitution granting more
autonomy to local government units.12
It was determined in the case that the changes that will
result from the conversion are too substantial that there
is a necessity for the plurality of those that will be
affected to approve it. Similar to the enumerated acts
in the constitutional provision, conversions were
found to result in material changes in the economic and
political rights of the people and LGUs affected. Given
the far-reaching ramifications of converting the status
of a city, we held that the plebiscite requirement under
the constitutional provision should equally apply to
conversions as well. Thus, RA 852813 was declared
unconstitutional in Miranda on the ground that the law
downgraded Santiago City in Isabela without
submitting it for ratification in a plebiscite, in
contravention of Sec. 10, Art. X of the Constitution.
Second, while conversion to an HUC is not explicitly
provided in Sec. 10, Art. X of the Constitution we
nevertheless observe that the conversion of a
component city into an HUC is substantial alteration
of boundaries.
As the phrase implies, "substantial alteration of
boundaries" involves and necessarily entails a change
in the geographical configuration of a local
government unit or units. However, the phrase
"boundaries" should not be limited to the mere
physical one, referring to the metes and bounds of the
LGU, but also to its political boundaries. It also
connotes a modification of the demarcation lines
between political subdivisions, where the LGUs
exercise of corporate power ends and that of the other
begins. And as a qualifier, the alteration must be
"substantial" for it to be within the ambit of the
constitutional provision.
Pertinent is Art. 12(c) of the LGCs Implementing
Rules and Regulations, which reads:
Art. 12. Conversion of a Component City into a Highly
Urbanized City.
xxxx
(c) Effect of Conversion The conversion of a
component city into a highly-urbanized city shall
make it independent of the province where it is
geographically located. (emphasis added)
Verily, the upward conversion of a component city, in
this case Cabanatuan City, into an HUC will come at a
steep price. It can be gleaned from the above-cited rule
that the province will inevitably suffer a corresponding
decrease in territory brought about by Cabanatuan
Citys gain of independence. With the citys newfound
autonomy, it will be free from the oversight powers of
the province, which, in effect, reduces the territorial
jurisdiction of the latter. What once formed part of
Nueva Ecija will no longer be subject to supervision
by the province. In more concrete terms, Nueva Ecija
stands to lose 282.75 sq. km. of its territorial
jurisdiction with Cabanatuan Citys severance from its
mother province. This is equivalent to carving out
almost 5% of Nueva Ecijas 5,751.3 sq. km. area. This
sufficiently satisfies the requirement that the alteration
be "substantial."
Needless to stress, the alteration of boundaries would
necessarily follow Cabanatuan Citys conversion in
the same way that creations, divisions, mergers, and
abolitions generally cannot take place without
entailing the alteration. The enumerated acts, after all,
are not mutually exclusive, and more often than not, a
combination of these acts attends the reconfiguration
of LGUs.
In light of the foregoing disquisitions, the Court rules
that conversion to an HUC is substantial alternation of
boundaries governed by Sec. 10, Art. X and
resultantly, said provision applies, governs and
prevails over Sec. 453 of the LGC.
Moreover, the rules of statutory construction dictate
that a particular provision should be interpreted with
the other relevant provisions in the law The Court finds
that it is actually Sec. 10 of the LGC which is
undeniably the applicable provision on the conduct of
plebiscites. The title of the provision itself, "Plebiscite
Requirement", makes this obvious. It requires a
majority of the votes cast in a plebiscite called for the
purpose in the political unit or units directly affected.
On the other hand, Sec. 453 of the LGC, entitled "Duty
to Declare Highly Urbanized Status", is only on the
duty to declare a city as highly urbanized. It mandates
the Office of the President to make the declaration
after the city has met the requirements under Sec. 452,
and upon proper application and ratification in a
plebiscite. The conduct of a plebiscite is then a
requirement before a declaration can be made. Thus,
the Court finds that Sec. 10 of the LGC prevails over
Sec. 453 of the LGC on the plebiscite requirement.
We now take the bull by the horns and resolve the issue
whether Sec. 453 of the LGC trenches on Sec. 10, Art.
X of the Constitution.
Hornbook doctrine is that neither the legislative, the
executive, nor the judiciary has the power to act
beyond the Constitutions mandate. The Constitution
is supreme; any exercise of power beyond what is
circumscribed by the Constitution is ultra vires and a
nullity. As elucidated by former Chief Justice Enrique
Fernando in Fernandez v. Cuerva:14
Where the assailed legislative or executive act is found
by the judiciary to be contrary to the Constitution, it is
null and void. As the new Civil Code puts it: "When
the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter
shall govern." Administrative or executive acts, orders
and regulations shall be valid only when they are not
contrary to the laws or the Constitution. The above
provision of the civil Code reflects the orthodox view
that an unconstitutional act, whether legislative or
executive, is not a law, confers no rights, imposes no
duties, and affords no protection. x x x
Applying this orthodox view, a law should be
construed in harmony with and not in violation of the
Constitution.15In a long line of cases, the cardinal
principle of construction established is that a statute
should be interpreted to assure its being in consonance
with, rather than repugnant to, any constitutional
command or prescription.16 If there is doubt or
uncertainty as to the meaning of the legislative, if the
words or provisions are obscure or if the enactment is
fairly susceptible of two or more constitution, that
interpretation which will avoid the effect of
unconstitutionality will be adopted, even though it
may be necessary, for this purpose, to disregard the
more usual or apparent import of the language used.17
Pursuant to established jurisprudence, the phrase "by
the qualified voters therein" in Sec. 453 should be
construed in a manner that will avoid conflict with the
Constitution. If one takes the plain meaning of the
phrase in relation to the declaration by the President
that a city is an HUC, then, Sec. 453 of the LGC will
clash with the explicit provision under Sec. 10, Art. X
that the voters in the "political units directly affected"
shall participate in the plebiscite. Such construction
should be avoided in view of the supremacy of the
Constitution. Thus, the Court treats the phrase "by the
qualified voters therein" in Sec. 453 to mean the
qualified voters not only in the city proposed to be
converted to an HUC but also the voters of the political
units directly affected by such conversion in order to
harmonize Sec. 453 with Sec. 10, Art. X of the
Constitution.
The Court finds that respondents are mistaken in
construing Sec. 453 in a vacuum. Their interpretation
of Sec. 453 of the LGC runs afoul of Sec. 10, Art. X
of the Constitution which explicitly requires that all
residents in the "political units directly affected"
should be made to vote.
Respondents make much of the plebiscites conducted
in connection with the conversion of Puerto Princesa
City, Tacloban City and Lapu-Lapu City where the
ratification was made by the registered voters in said
cities alone. It is clear, however, that the issue of who
are entitled to vote in said plebiscites was not properly
raised or brought up in an actual controversy. The
issue on who will vote in a plebiscite involving a
conversion into an HUC is a novel issue, and this is the
first time that the Court is asked to resolve the
question. As such, the past plebiscites in the
aforementioned cities have no materiality or relevance
to the instant petition. Suffice it to say that conversion
of said cities prior to this judicial declaration will not
be affected or prejudiced in any manner following the
operative fact doctrinethat the actual existence of a
statute prior to such a determination is an operative
fact and may have consequences which cannot always
be erased by a new judicial declaration.18
The entire province of Nueva Ecija will be directly
affected by Cabanatuan Citys conversion
After the Court has resolved the seeming
irreconcilability of Sec. 10, Art. X of the Constitution
and Sec. 453 of the LGC, it is now time to elucidate
the meaning of the phrase "political units directly
affected" under Sec. 10, Art. X.
a. "Political units directly affected" defined
In identifying the LGU or LGUs that should be
allowed to take part in the plebiscite, what should
primarily be determined is whether or not the unit or
units that desire to participate will be "directly
affected" by the change. To interpret the phrase, Tan
v. COMELEC19 and Padilla v. COMELEC20 are
worth revisiting.
We have ruled in Tan, involving the division of Negros
Occidental for the creation of the new province of
Negros del Norte, that the LGUs whose boundaries are
to be altered and whose economy would be affected
are entitled to participate in the plebiscite. As held:
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.21
xxxx
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.22
(emphasis added)
Sec. 3, Art. XI of the 1973 Constitution, as invoked in
Tan, states:
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. (emphasis
added)
Despite the change in phraseology compared to what
is now Sec. 10, Art. X, we affirmed our ruling in Tan
in the latter case of Padilla. As held, the removal of the
phrase "unit or" only served to sustain the earlier
finding that what is contemplated by the phase
"political units directly affected" is the plurality of
political units which would participate in the
plebiscite. As reflected in the journal of the
Constitutional Commission:23
Mr. Maambong: While we have already approved the
deletion of "unit or," I would like to inform the
Committee that under the formulation in the present
Local Government Code, the words used are actually
"political unit or units." However, I do not know the
implication of the use of these words. Maybe there will
be no substantial difference, but I just want to inform
the Committee about this.
Mr. Nolledo: Can we not adhere to the original "unit
or units"? Will there be no objection on the part of the
two Gentlemen from the floor?
Mr. Davide: I would object. I precisely asked for the
deletion of the words "unit or" because in the plebiscite
to be conducted, it must involve all the units affected.
If it is the creation of a barangay plebiscite because it
is affected. It would mean a loss of a territory.
(emphasis added)
The same sentiment was shared by the Senate during
its deliberations on Senate Bill No. 155the
predecessor of the LGCthus:
Senator Guingona. Can we make that clearer by
example? Let us assume that a province has
municipalities and there is a merger of two
municipalities. Would this therefore mean that the
plebiscite will be conducted within the two merged
municipalities and not in the eight other
municipalities?
Senator Pimentel. The whole province, Mr. President,
will be affected, and that is the reason we probably
have to involve the entire province.
Senator Guingona. So the plebiscite will not be held
only in the two municipalities which are being merged,
but the entire province will now have to undergo.
Senator Pimentel. I suppose that was the ruling in the
Negros del Norte case.
Senator Guingona. Supposing it refers to barangays,
will the entire municipality have to vote? There are
two barangays being merged, say, out of 100
barangays. Would the entire municipality have to
participate in the plebiscite?
Senator Pimentel. Yes, Mr. President, because the
municipality is affected directly by the merger of two
of its barangay.
Senator Guingona. And, if, out of 100 barangay, 51 are
being merged, abolished, whatever, would the rest of
the municipality not participate in the plebiscite?
Senator Pimentel. Do all the 51 barangay that the
Gentleman mentioned, Mr. President, belong to one
municipality?
Senator Guingona. Yes.
Senator Pimentel. Then it will only involve the
municipality where the 51 barangays belong.
Senator Guingona. Yes. So, the entire municipality
will now have to undergo a plebiscite.
Senator Pimentel. That is correct, Mr. President.
Senator Guingona. In the earlier example, if it is only
a merger of two municipalities, let us say, in a province
with 10 municipalities the entire province will the
other municipalities although not affected also have to
participate in the plebiscite?
Senator Pimentel. Yes. The reason is that the
municipalities are within the territorial boundaries of
the province itself, it will have to be altered as a result
of the two municipalities that the Gentleman
mentioned.24
In the more recent case of Miranda, the interpretation
in Tan and Padilla was modified to include not only
changes in economic but also political rights in the
criteria for determining whether or not an LGU shall
be considered "directly affected." Nevertheless, the
requirement that the plebiscite be participated in by the
plurality of political units directly affected remained.
b. Impact on Economic Rights
To recall, it was held in Miranda that the changes that
will result in the downgrading of an LGU from an
independent component city to a component city
cannot be categorized as insubstantial, thereby
necessitating the conduct of a plebiscite for its
ratification. In a similar fashion, herein petitioner
Umali itemized the adverse effects of Cabanatuan
Citys conversion to the province of Nueva Ecija to
justify the provinces participation in the plebiscite to
be conducted.
Often raised is that Cabanatuan Citys conversion into
an HUC and its severance from Nueva Ecija will result
in the reduction of the Internal Revenue Allotment
(IRA) to the province based on Sec. 285 of the LGC.
The law states:
Section 285. Allocation to Local Government Units. -
The share of local government units in the internal
revenue allotment shall be collected in the following
manner:
(a) Provinces - Twenty-three percent (23%);
(b) Cities - Twenty-three percent (23%);
(c) Municipalities - Thirty-four percent (34%); and
(d) Barangays - Twenty percent (20%)
Provided, however, That the share of each province,
city, and municipality shall be determined on the basis
of the following formula:
(a) Population - Fifty percent (50%);
(b) Land Area - Twenty-five percent (25%); and
(c) Equal sharing - Twenty-five percent (25%)
In our earlier disquisitions, we have explained that the
conversion into an HUC carries the accessory of
substantial alteration of boundaries and that the
province of Nueva Ecija will, without a doubt, suffer a
reduction in territory because of the severance of
Cabanatuan City. The residents of the city will cease
to be political constituencies of the province,
effectively reducing the latters population. Taking
this decrease in territory and population in connection
with the above formula, it is conceded that Nueva
Ecija will indeed suffer a reduction in IRA given the
decrease of its multipliers values. As assessed by the
Regional Director of the Department of Budget and
Management (DBM) for Region III:25
Basis for IRA
Computation Province of
Nueva Ecija Cabanatuan
City Province of
Nueva Ecija Net
of Cabanatuan
City
No. of Population
CY 2007 Census 1,843,853 259,267 259,267
Land Area
(sq. km.) 5,751.33 282.75 5,468.58
IRA Share of
Nueva Ecija Actual IRA
Share Estimated IRA
share excluding
Cabanatuan
City Reduction
Based on
Population P800,772,618.45 P688,174,751.66
P112,597,866.79
Based on Land
Area P263,470,472.62 P250,517,594.56 P
12,952,878.06
Total P125,550,744.85
Clear as crystal is that the province of Nueva Ecija will
suffer a substantial reduction of its share in IRA once
Cabanatuan City attains autonomy. In view of the
economic impact of Cabanatuan Citys conversion,
petitioner Umalis contention, that its effect on the
province is not only direct but also adverse, deserves
merit.
Moreover, his claim that the province will lose shares
in provincial taxes imposed in Cabanatuan City is
well-founded. This is based on Sec. 151 of the LGC,
which states:
SECTION 151. Scope of Taxing Powers. Except as
otherwise provided in this Code, the city, may levy the
taxes, fees, and charges which the province or
municipality may impose: Provided, however, That
the taxes, fees and charges levied and collected by
highly urbanized and independent component cities
shall accrue to them and distributed in accordance with
the provisions of this Code. (emphasis added)
Once converted, the taxes imposed by the HUC will
accrue to itself. Prior to this, the province enjoys the
prerogative to impose and collect taxes such as those
on sand, gravel and other quarry resources,26
professional taxes,27 and amusement taxes28 over the
component city. While, it may be argued that this is
not a derogation of the provinces taxing power
because it is in no way deprived of its right to collect
the mentioned taxes from the rest of its territory, the
conversion will still reduce the provinces taxing
jurisdiction, and corollary to this, it will experience a
corresponding decrease in shares in local tax
collections. This reduction in both taxing jurisdiction
and shares poses a material and substantial change to
the provinces economic rights, warranting its
participation in the plebiscite.
To further exemplify the impact of these changes, a
perusal of Secs. 452(a) and 461(a) of the LGC is in
order, viz:
Section 452. Highly Urbanized Cities.
(a) Cities with a minimum population of two hundred
thousand (200,000) inhabitants as certified by the
National Statistics Office, and within the latest annual
income of at least Fifty Million Pesos
(P50,000,000.00) based on 1991 constant prices, as
certified by the city treasurer, shall be classified as
highly urbanized cities.
Section 461. Requisites for Creation.
(a) A province may be created if it has an average
annual income, as certified by the Department of
Finance, of not less than Twenty million pesos
(P20,000,000.00) based on 1991 constant prices and
either of the following requisites:
(i) a contiguous territory of at least two thousand
(2,000) square kilometers, as certified by the Lands
Management Bureau; or
(ii) a population of not less than two hundred fifty
thousand (250,000) inhabitants as certified by the
National Statistics Office:
Provided, That, the creation thereof shall not reduce
the land area, population, and income of the original
unit or units at the time of said creation to less than the
minimum requirements prescribed herein.
A component citys conversion into an HUC and its
resultant autonomy from the province is a threat to the
latters economic viability. Noteworthy is that the
income criterion for a component city to be converted
into an HUC is higher than the income requirement for
the creation of a province. The ensuing reduction in
income upon separation would clearly leave a
crippling effect on the provinces operations as there
would be less funding to finance infrastructure
projects and to defray overhead costs. Moreover, the
quality of services being offered by the province may
suffer because of looming austerity measures. These
are but a few of the social costs of the decline in the
provinces economic performance, which Nueva Ecija
is bound to experience once its most progressive city
of Cabanatuan attains independence.
c. Impact on Political Rights
Aside from the alteration of economic rights, the
political rights of Nueva Ecija and those of its residents
will also be affected by Cabanatuans conversion into
an HUC. Notably, the administrative supervision of
the province over the city will effectively be revoked
upon conversion. Secs. 4 and 12, Art. X of the
Constitution read:
Sec. 4. The President of the Philippines shall exercise
general supervision over local governments. Provinces
with respect to component cities and municipalities,
and cities and municipalities with respect to
component barangays shall ensure that the acts of their
component units are within the scope of their
prescribed powers and functions.
Sec 12. Cities that are highly urbanized, as determined
by law, and component cities whose charters prohibit
their voters from voting for provincial elective
officials, shall be independent of the province. The
voters of component cities within a province, whose
charters contain no such prohibition, shall not be
deprived of their right to vote for elective provincial
officials.
Duties, privileges and obligations appertaining to
HUCs will attach to Cabanatuan City if it is converted
into an HUC. This includes the right to be outside the
general supervision of the province and be under the
direct supervision of the President. An HUC is not
subject to provincial oversight because the complex
and varied problems in an HUC due to a bigger
population and greater economic activity require
greater autonomy.29 The provincial government
stands to lose the power to ensure that the local
government officials of Cabanatuan City act within the
scope of its prescribed powers and functions,30 to
review executive orders issued by the city mayor, and
to approve resolutions and ordinances enacted by the
city council.31 The province will also be divested of
jurisdiction over disciplinary cases concerning the
elected city officials of the new HUC, and the appeal
process for administrative case decisions against
barangay officials of the city will also be modified
accordingly.32 Likewise, the registered voters of the
city will no longer be entitled to vote for and be voted
upon as provincial officials.33
In cutting the umbilical cord between Cabanatuan City
and the province of Nueva Ecija, the city will be
separated from the territorial jurisdiction of the
province, as earlier explained. The provincial
government will no longer be responsible for
delivering basic services for the city residents benefit.
Ordinances and resolutions passed by the provincial
council will no longer cover the city. Projects queued
by the provincial government to be executed in the city
will also be suspended if not scrapped to prevent the
LGU from performing functions outside the bounds of
its territorial jurisdiction, and from expending its
limited resources for ventures that do not cater to its
constituents.1wphi1
In view of these changes in the economic and political
rights of the province of Nueva Ecija and its residents,
the entire province certainly stands to be directly
affected by the conversion of Cabanatuan City into an
HUC. Following the doctrines in Tan and Padilla, all
the qualified registered voters of Nueva Ecija should
then be allowed to participate in the plebiscite called
for that purpose.
Respondents apprehension that requiring the entire
province to participate in the plebiscite will set a
dangerous precedent leading to the failure of cities to
convert is unfounded. Their fear that provinces will
always be expected to oppose the conversion in order
to retain the citys dependence is speculative at best.
In any event, any vote of disapproval cast by those
directly affected by the conversion is a valid exercise
of their right to suffrage, and our democratic processes
are designed to uphold the decision of the majority,
regardless of the motive behind the vote. It is
unfathomable how the province can be deprived of the
opportunity to exercise the right of suffrage in a matter
that is potentially deleterious to its economic viability
and could diminish the rights of its constituents. 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.34
WHEREFORE, premises considered, the Petition for
Certiorari, docketed as G.R. No. 203974, is hereby
GRANTED. COMELEC Minute Resolution No. 12-
0797 dated September 11, 2012 and Minute
Resolution No. 12-0925 dated October 16, 2012 are
hereby declared NULL and VOID. Public respondent
COMELEC is hereby enjoined from implementing the
said Resolutions. Additionally, COMELEC is hereby
ordered to conduct a plebiscite for the purpose of
converting Cabanatuan City into a Highly Urbanized
City to be participated in by the qualified registered
voters of Nueva Ecij a within 120 days from the
finality of this Decision. The Petition for Mandamus,
docketed as G.R. No. 204371, is hereby DISMISSED.
2. Sema vs Comelec
These consolidated petitions[1] seek to annul
Resolution No. 7902, dated 10 May 2007, of the
Commission on Elections (COMELEC) treating
Cotabato City as part of the legislative district of the
Province of Shariff Kabunsuan.[2]
The Facts
The Ordinance appended to the 1987 Constitution
apportioned two legislative districts for the Province
of Maguindanao. The first legislative district consists
of Cotabato City and eight municipalities.[3]
Maguindanao forms part of the Autonomous Region
in Muslim Mindanao (ARMM), created under its
Organic Act, Republic Act No. 6734 (RA 6734), as
amended by Republic Act No. 9054 (RA 9054).[4]
Although under the Ordinance, Cotabato City forms
part of Maguindanaos first legislative district, it is not
part of the ARMM but of Region XII, having voted
against its inclusion in the ARMM in the plebiscite
held in November 1989.
On 28 August 2006, the ARMMs legislature, the
ARMM Regional Assembly, exercising its power to
create provinces under Section 19, Article VI of RA
9054,[5] enacted Muslim Mindanao Autonomy Act
No. 201 (MMA Act 201) creating the Province of
Shariff Kabunsuan composed of the eight
municipalities in the first district of Maguindanao.
MMA Act 201 provides:
Section 1. The Municipalities of Barira, Buldon, Datu
Odin Sinsuat, Kabuntalan, Matanog, Parang, Sultan
Kudarat, Sultan Mastura, and Upi are hereby separated
from the Province of Maguindanao and constituted
into a distinct and independent province, which is
hereby created, to be known as the Province of Shariff
Kabunsuan.
xxxx
Sec. 5. The corporate existence of this province shall
commence upon the appointment by the Regional
Governor or election of the governor and majority of
the regular members of the Sangguniang
Panlalawigan.
The incumbent elective provincial officials of the
Province of Maguindanao shall continue to serve their
unexpired terms in the province that they will choose
or where they are residents: Provided, that where an
elective position in both provinces becomes vacant as
a consequence of the creation of the Province of
Shariff Kabunsuan, all incumbent elective provincial
officials shall have preference for appointment to a
higher elective vacant position and for the time being
be appointed by the Regional Governor, and shall hold
office until their successors shall have been elected
and qualified in the next local elections; Provided,
further, that they shall continue to receive the salaries
they are receiving at the time of the approval of this
Act until the new readjustment of salaries in
accordance with law. Provided, furthermore, that there
shall be no diminution in the number of the members
of the Sangguniang Panlalawigan of the mother
province.
Except as may be provided by national law, the
existing legislative district, which includes Cotabato
as a part thereof, shall remain.
Later, three new municipalities[6] were carved out of
the original nine municipalities constituting Shariff
Kabunsuan, bringing its total number of municipalities
to 11. Thus, what was left of Maguindanao were the
municipalities constituting its second legislative
district. Cotabato City, although part of Maguindanaos
first legislative district, is not part of the Province of
Maguindanao.
The voters of Maguindanao ratified Shariff
Kabunsuans creation in a plebiscite held on 29 October
2006.
On 6 February 2007, the Sangguniang Panlungsod of
Cotabato City passed Resolution No. 3999 requesting
the COMELEC to clarify the status of Cotabato City
in view of the conversion of the First District of
Maguindanao into a regular province under MMA Act
201.
In answer to Cotabato Citys query, the COMELEC
issued Resolution No. 07-0407 on 6 March 2007
"maintaining the status quo with Cotabato City as part
of Shariff Kabunsuan in the First Legislative District
of Maguindanao. Resolution No. 07-0407, which
adopted the recommendation of the COMELECs Law
Department under a Memorandum dated 27 February
2007,[7] provides in pertinent parts:
Considering the foregoing, the Commission
RESOLVED, as it hereby resolves, to adopt the
recommendation of the Law Department that pending
the enactment of the appropriate law by Congress, to
maintain the status quo with Cotabato City as part of
Shariff Kabunsuan in the First Legislative District of
Maguindanao. (Emphasis supplied)
However, in preparation for the 14 May 2007
elections, the COMELEC promulgated on 29 March
2007 Resolution No. 7845 stating that Maguindanaos
first legislative district is composed only of Cotabato
City because of the enactment of MMA Act 201.[8]
On 10 May 2007, the COMELEC issued Resolution
No. 7902, subject of these petitions, amending
Resolution No. 07-0407 by renaming the legislative
district in question as Shariff Kabunsuan Province
with Cotabato City (formerly First District of
Maguindanao with Cotabato City).[9]
In G.R. No. 177597, Sema, who was a candidate in
the 14 May 2007 elections for Representative of
Shariff Kabunsuan with Cotabato City, prayed for the
nullification of COMELEC Resolution No. 7902 and
the exclusion from canvassing of the votes cast in
Cotabato City for that office. Sema contended that
Shariff Kabunsuan is entitled to one representative in
Congress under Section 5 (3), Article VI of the
Constitution[10] and Section 3 of the Ordinance
appended to the Constitution.[11] Thus, Sema asserted
that the COMELEC acted without or in excess of its
jurisdiction in issuing Resolution No. 7902 which
maintained the status quo in Maguindanaos first
legislative district despite the COMELECs earlier
directive in Resolution No. 7845 designating Cotabato
City as the lone component of Maguindanaos
reapportioned first legislative district.[12] Sema
further claimed that in issuing Resolution No. 7902,
the COMELEC usurped Congress power to create or
reapportion legislative districts.
In its Comment, the COMELEC, through the Office
of the Solicitor General (OSG), chose not to reach the
merits of the case and merely contended that (1) Sema
wrongly availed of the writ of certiorari to nullify
COMELEC Resolution No. 7902 because the
COMELEC issued the same in the exercise of its
administrative, not quasi-judicial, power and (2)
Semas prayer for the writ of prohibition in G.R. No.
177597 became moot with the proclamation of
respondent Didagen P. Dilangalen (respondent
Dilangalen) on 1 June 2007 as representative of the
legislative district of Shariff Kabunsuan Province with
Cotabato City.
In his Comment, respondent Dilangalen countered
that Sema is estopped from questioning COMELEC
Resolution No. 7902 because in her certificate of
candidacy filed on 29 March 2007, Sema indicated
that she was seeking election as representative of
Shariff Kabunsuan including Cotabato City.
Respondent Dilangalen added that COMELEC
Resolution No. 7902 is constitutional because it did
not apportion a legislative district for Shariff
Kabunsuan or reapportion the legislative districts in
Maguindanao but merely renamed Maguindanaos first
legislative district. Respondent Dilangalen further
claimed that the COMELEC could not reapportion
Maguindanaos first legislative district to make
Cotabato City its sole component unit as the power to
reapportion legislative districts lies exclusively with
Congress, not to mention that Cotabato City does not
meet the minimum population requirement under
Section 5 (3), Article VI of the Constitution for the
creation of a legislative district within a city.[13]
Sema filed a Consolidated Reply controverting the
matters raised in respondents Comments and
reiterating her claim that the COMELEC acted ultra
vires in issuing Resolution No. 7902.
In the Resolution of 4 September 2007, the Court
required the parties in G.R. No. 177597 to comment
on the issue of whether a province created by the
ARMM Regional Assembly under Section 19, Article
VI of RA 9054 is entitled to one representative in the
House of Representatives without need of a national
law creating a legislative district for such new
province. The parties submitted their compliance as
follows:
(1) Sema answered the issue in the affirmative on the
following grounds: (a) the Court in Felwa v. Salas[14]
stated that when a province is created by statute, the
corresponding representative district comes into
existence neither by authority of that statute which
cannot provide otherwise nor by apportionment, but by
operation of the Constitution, without a
reapportionment; (b) Section 462 of Republic Act No.
7160 (RA 7160) affirms the apportionment of a
legislative district incident to the creation of a
province; and (c) Section 5 (3), Article VI of the
Constitution and Section 3 of the Ordinance appended
to the Constitution mandate the apportionment of a
legislative district in newly created provinces.
(2) The COMELEC, again represented by the OSG,
apparently abandoned its earlier stance on the
propriety of issuing Resolution Nos. 07-0407 and 7902
and joined causes with Sema, contending that Section
5 (3), Article VI of the Constitution is self-executing.
Thus, every new province created by the ARMM
Regional Assembly is ipso facto entitled to one
representative in the House of Representatives even in
the absence of a national law; and
(3) Respondent Dilangalen answered the issue in the
negative on the following grounds: (a) the province
contemplated in Section 5 (3), Article VI of the
Constitution is one that is created by an act of
Congress taking into account the provisions in RA
7160 on the creation of provinces; (b) Section 3,
Article IV of RA 9054 withheld from the ARMM
Regional Assembly the power to enact measures
relating to national elections, which encompasses the
apportionment of legislative districts for members of
the House of Representatives; (c) recognizing a
legislative district in every province the ARMM
Regional Assembly creates will lead to the
disproportionate representation of the ARMM in the
House of Representatives as the Regional Assembly
can create provinces without regard to the
requirements in Section 461 of RA 7160; and (d)
Cotabato City, which has a population of less than
250,000, is not entitled to a representative in the House
of Representatives.
On 27 November 2007, the Court heard the parties in
G.R. No. 177597 in oral arguments on the following
issues: (1) whether Section 19, Article VI of RA 9054,
delegating to the ARMM Regional Assembly the
power to create provinces, is constitutional; and (2) if
in the affirmative, whether a province created under
Section 19, Article VI of RA 9054 is entitled to one
representative in the House of Representatives without
need of a national law creating a legislative district for
such new province.[15]
In compliance with the Resolution dated 27
November 2007, the parties in G.R. No. 177597 filed
their respective Memoranda on the issues raised in the
oral arguments.[16] On the question of the
constitutionality of Section 19, Article VI of RA 9054,
the parties in G.R. No. 177597 adopted the following
positions:
(1) Sema contended that Section 19, Article VI of RA
9054 is constitutional (a) as a valid delegation by
Congress to the ARMM of the power to create
provinces under Section 20 (9), Article X of the
Constitution granting to the autonomous regions,
through their organic acts, legislative powers over
other matters as may be authorized by law for the
promotion of the general welfare of the people of the
region and (b) as an amendment to Section 6 of RA
7160.[17] However, Sema concedes that, if taken
literally, the grant in Section 19, Article VI of RA 9054
to the ARMM Regional Assembly of the power to
prescribe standards lower than those mandated in RA
7160 in the creation of provinces contravenes Section
10, Article X of the Constitution.[18] Thus, Sema
proposed that Section 19 should be construed as
prohibiting the Regional Assembly from prescribing
standards x x x that do not comply with the minimum
criteria under RA 7160.[19]
(2) Respondent Dilangalen contended that Section 19,
Article VI of RA 9054 is unconstitutional on the
following grounds: (a) the power to create provinces
was not among those granted to the autonomous
regions under Section 20, Article X of the Constitution
and (b) the grant under Section 19, Article VI of RA
9054 to the ARMM Regional Assembly of the power
to prescribe standards lower than those mandated in
Section 461 of RA 7160 on the creation of provinces
contravenes Section 10, Article X of the Constitution
and the Equal Protection Clause; and
(3) The COMELEC, through the OSG, joined causes
with respondent Dilangalen (thus effectively
abandoning the position the COMELEC adopted in its
Compliance with the Resolution of 4 September 2007)
and contended that Section 19, Article VI of RA 9054
is unconstitutional because (a) it contravenes Section
10 and Section 6,[20] Article X of the Constitution and
(b) the power to create provinces was withheld from
the autonomous regions under Section 20, Article X of
the Constitution.
On the question of whether a province created under
Section 19, Article VI of RA 9054 is entitled to one
representative in the House of Representatives without
need of a national law creating a legislative district for
such new province, Sema and respondent Dilangalen
reiterated in their Memoranda the positions they
adopted in their Compliance with the Resolution of 4
September 2007. The COMELEC deemed it
unnecessary to submit its position on this issue
considering its stance that Section 19, Article VI of RA
9054 is unconstitutional.
The pendency of the petition in G.R. No. 178628 was
disclosed during the oral arguments on 27 November
2007. Thus, in the Resolution of 19 February 2008, the
Court ordered G.R. No. 178628 consolidated with
G.R. No. 177597. The petition in G.R. No. 178628
echoed Sema's contention that the COMELEC acted
ultra vires in issuing Resolution No. 7902 depriving
the voters of Cotabato City of a representative in the
House of Representatives. In its Comment to the
petition in G.R. No. 178628, the COMELEC, through
the OSG, maintained the validity of COMELEC
Resolution No. 7902 as a temporary measure pending
the enactment by Congress of the appropriate law.
The Issues
The petitions raise the following issues:
I. In G.R. No. 177597:
(A) Preliminarily
(1) whether the writs of Certiorari, Prohibition, and
Mandamus are proper to test the constitutionality of
COMELEC Resolution No. 7902; and
(2) whether the proclamation of respondent Dilangalen
as representative of Shariff Kabunsuan Province with
Cotabato City mooted the petition in G.R. No. 177597.
(B) On the merits
(1) whether Section 19, Article VI of RA 9054,
delegating to the ARMM Regional Assembly the
power to create provinces, cities, municipalities and
barangays, is constitutional; and
(2) if in the affirmative, whether a province created by
the ARMM Regional Assembly under MMA Act 201
pursuant to Section 19, Article VI of RA 9054 is
entitled to one representative in the House of
Representatives without need of a national law
creating a legislative district for such province.
II. In G.R No. 177597 and G.R No. 178628, whether
COMELEC Resolution No. 7902 is valid for
maintaining the status quo in the first legislative
district of Maguindanao (as Shariff Kabunsuan
Province with Cotabato City [formerly First District of
Maguindanao with Cotabato City]), despite the
creation of the Province of Shariff Kabunsuan out of
such district (excluding Cotabato City)
The Ruling of the Court
The petitions have no merit. We rule that (1) Section
19, Article VI of RA 9054 is unconstitutional insofar
as it grants to the ARMM Regional Assembly the
power to create provinces and cities; (2) MMA Act
201 creating the Province of Shariff Kabunsuan is
void; and (3) COMELEC Resolution No. 7902 is
valid.
On the Preliminary Matters
The Writ of Prohibition is Appropriate to Test the
Constitutionality of Election Laws, Rules and
Regulations
The purpose of the writ of Certiorari is to correct
grave abuse of discretion by any tribunal, board, or
officer exercising judicial or quasi-judicial
functions.[21] On the other hand, the writ of
Mandamus will issue to compel a tribunal,
corporation, board, officer, or person to perform an act
which the law specifically enjoins as a duty.[22] True,
the COMELEC did not issue Resolution No. 7902 in
the exercise of its judicial or quasi-judicial
functions.[23] Nor is there a law which specifically
enjoins the COMELEC to exclude from canvassing
the votes cast in Cotabato City for representative of
Shariff Kabunsuan Province with Cotabato City.
These, however, do not justify the outright dismissal
of the petition in G.R. No. 177597 because Sema also
prayed for the issuance of the writ of Prohibition and
we have long recognized this writ as proper for testing
the constitutionality of election laws, rules, and
regulations.[24]
Respondent Dilangalens Proclamation Does Not
Moot the Petition
There is also no merit in the claim that respondent
Dilangalens proclamation as winner in the 14 May
2007 elections for representative of Shariff Kabunsuan
Province with Cotabato City mooted this petition. This
case does not concern respondent Dilangalens
election. Rather, it involves an inquiry into the validity
of COMELEC Resolution No. 7902, as well as the
constitutionality of MMA Act 201 and Section 19,
Article VI of RA 9054. Admittedly, the outcome of
this petition, one way or another, determines whether
the votes cast in Cotabato City for representative of the
district of Shariff Kabunsuan Province with Cotabato
City will be included in the canvassing of ballots.
However, this incidental consequence is no reason for
us not to proceed with the resolution of the novel
issues raised here. The Courts ruling in these petitions
affects not only the recently concluded elections but
also all the other succeeding elections for the office in
question, as well as the power of the ARMM Regional
Assembly to create in the future additional provinces.
On the Main Issues
Whether the ARMM Regional Assembly
Can Create the Province of Shariff Kabunsuan
The creation of local government units is governed by
Section 10, Article X of the Constitution, which
provides:
Sec. 10. No province, city, municipality, or barangay
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 approval by a majority of the votes
cast in a plebiscite in the political units directly
affected.
Thus, the creation of any of the four local goernment
units province, city, municipality or barangay must
comply with three conditions. First, the creation of a
local government unit must follow the criteria fixed in
the Local Government Code. Second, such creation
must not conflict with any provision of the
Constitution. Third, there must be a plebiscite in the
political units affected.
There is neither an express prohibition nor an express
grant of authority in the Constitution for Congress to
delegate to regional or local legislative bodies the
power to create local government units. However,
under its plenary legislative powers, Congress can
delegate to local legislative bodies the power to create
local government units, subject to reasonable
standards and provided no conflict arises with any
provision of the Constitution. In fact, Congress has
delegated to provincial boards, and city and municipal
councils, the power to create barangays within their
jurisdiction,[25] subject to compliance with the
criteria established in the Local Government Code,
and the plebiscite requirement in Section 10, Article X
of the Constitution. However, under the Local
Government Code, only x x x an Act of Congress can
create provinces, cities or municipalities.[26]
Under Section 19, Article VI of RA 9054, Congress
delegated to the ARMM Regional Assembly the
power to create provinces, cities, municipalities and
barangays within the ARMM. Congress made the
delegation under its plenary legislative powers
because the power to create local government units is
not one of the express legislative powers granted by
the Constitution to regional legislative bodies.[27] In
the present case, the question arises whether the
delegation to the ARMM Regional Assembly of the
power to create provinces, cities, municipalities and
barangays conflicts with any provision of the
Constitution.
There is no provision in the Constitution that conflicts
with the delegation to regional legislative bodies of the
power to create municipalities and barangays,
provided Section 10, Article X of the Constitution is
followed. However, the creation of provinces and
cities is another matter. Section 5 (3), Article VI of the
Constitution provides, Each city with a population of
at least two hundred fifty thousand, or each province,
shall have at least one representative in the House of
Representatives. Similarly, Section 3 of the Ordinance
appended to the Constitution provides, Any province
that may hereafter be created, or any city whose
population may hereafter increase to more than two
hundred fifty thousand shall be entitled in the
immediately following election to at least one Member
x x x.
Clearly, a province cannot be created without a
legislative district because it will violate Section 5 (3),
Article VI of the Constitution as well as Section 3 of
the Ordinance appended to the Constitution. For the
same reason, a city with a population of 250,000 or
more cannot also be created without a legislative
district. Thus, the power to create a province, or a city
with a population of 250,000 or more, requires also the
power to create a legislative district. Even the creation
of a city with a population of less than 250,000
involves the power to create a legislative district
because once the citys population reaches 250,000, the
city automatically becomes entitled to one
representative under Section 5 (3), Article VI of the
Constitution and Section 3 of the Ordinance appended
to the Constitution. Thus, the power to create a
province or city inherently involves the power to
create a legislative district.
For Congress to delegate validly the power to create a
province or city, it must also validly delegate at the
same time the power to create a legislative district. The
threshold issue then is, can Congress validly delegate
to the ARMM Regional Assembly the power to create
legislative districts for the House of Representatives?
The answer is in the negative.
Legislative Districts are Created or Reapportioned
Only by an Act of Congress
Under the present Constitution, as well as in past[28]
Constitutions, the power to increase the allowable
membership in the House of Representatives, and to
reapportion legislative districts, is vested exclusively
in Congress. Section 5, Article VI of the Constitution
provides:
SECTION 5. (1) The House of Representatives shall
be composed of not more than two hundred and fifty
members, unless otherwise fixed by law, who shall be
elected from legislative districts apportioned among
the provinces, cities, and the Metropolitan Manila area
in accordance with the number of their respective
inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by law,
shall be elected through a party-list system of
registered national, regional, and sectoral parties or
organizations.
xxxx
(3) Each legislative district shall comprise, as far as
practicable, contiguous, compact, and adjacent
territory. Each city with a population of at least two
hundred fifty thousand, or each province, shall have at
least one representative.
(4) Within three years following the return of every
census, the Congress shall make a reapportionment of
legislative districts based on the standards provided in
this section. (Emphasis supplied)
Section 5 (1), Article VI of the Constitution vests in
Congress the power to increase, through a law, the
allowable membership in the House of
Representatives. Section 5 (4) empowers Congress to
reapportion legislative districts. The power to
reapportion legislative districts necessarily includes
the power to create legislative districts out of existing
ones. Congress exercises these powers through a law
that Congress itself enacts, and not through a law that
regional or local legislative bodies enact. The
allowable membership of the House of
Representatives can be increased, and new legislative
districts of Congress can be created, only through a
national law passed by Congress. In Montejo v.
COMELEC,[29] we held that the power of
redistricting x x x is traditionally regarded as part of
the power (of Congress) to make laws, and thus is
vested exclusively in Congress.
This textual commitment to Congress of the exclusive
power to create or reapportion legislative districts is
logical. Congress is a national legislature and any
increase in its allowable membership or in its
incumbent membership through the creation of
legislative districts must be embodied in a national
law. Only Congress can enact such a law. It would be
anomalous for regional or local legislative bodies to
create or reapportion legislative districts for a national
legislature like Congress. An inferior legislative body,
created by a superior legislative body, cannot change
the membership of the superior legislative body.
The creation of the ARMM, and the grant of
legislative powers to its Regional Assembly under its
organic act, did not divest Congress of its exclusive
authority to create legislative districts. This is clear
from the Constitution and the ARMM Organic Act, as
amended. Thus, Section 20, Article X of the
Constitution provides:
SECTION 20. Within its territorial jurisdiction and
subject to the provisions of this Constitution and
national laws, the organic act of autonomous regions
shall provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social, and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural
heritage; and
(9) Such other matters as may be authorized by law for
the promotion of the general welfare of the people of
the region.
Nothing in Section 20, Article X of the Constitution
authorizes autonomous regions, expressly or
impliedly, to create or reapportion legislative districts
for Congress.
On the other hand, Section 3, Article IV of RA 9054
amending the ARMM Organic Act, provides, The
Regional Assembly may exercise legislative power x
x x except on the following matters: x x x (k) National
elections. x x x. Since the ARMM Regional Assembly
has no legislative power to enact laws relating to
national elections, it cannot create a legislative district
whose representative is elected in national elections.
Whenever Congress enacts a law creating a legislative
district, the first representative is always elected in the
next national elections from the effectivity of the
law.[30]
Indeed, the office of a legislative district representative
to Congress is a national office, and its occupant, a
Member of the House of Representatives, is a national
official.[31] It would be incongruous for a regional
legislative body like the ARMM Regional Assembly
to create a national office when its legislative powers
extend only to its regional territory. The office of a
district representative is maintained by national funds
and the salary of its occupant is paid out of national
funds. It is a self-evident inherent limitation on the
legislative powers of every local or regional legislative
body that it can only create local or regional offices,
respectively, and it can never create a national office.
To allow the ARMM Regional Assembly to create a
national office is to allow its legislative powers to
operate outside the ARMMs territorial jurisdiction.
This violates Section 20, Article X of the Constitution
which expressly limits the coverage of the Regional
Assemblys legislative powers [w]ithin its territorial
jurisdiction x x x.
The ARMM Regional Assembly itself, in creating
Shariff Kabunsuan, recognized the exclusive nature of
Congress power to create or reapportion legislative
districts by abstaining from creating a legislative
district for Shariff Kabunsuan. Section 5 of MMA Act
201 provides that:
Except as may be provided by national law, the
existing legislative district, which includes Cotabato
City as a part thereof, shall remain. (Emphasis
supplied)
However, a province cannot legally be created
without a legislative district because the Constitution
mandates that each province shall have at least one
representative. Thus, the creation of the Province of
Shariff Kabunsuan without a legislative district is
unconstitutional.
Sema, petitioner in G.R. No. 177597, contends that
Section 5 (3), Article VI of the Constitution, which
provides:
Each legislative district shall comprise, as far as
practicable, contiguous, compact, and adjacent
territory. Each city with a population of at least two
hundred fifty thousand, or each province, shall have at
least one representative. (Emphasis supplied)
and Section 3 of the Ordinance appended to the
Constitution, which states:
Any province that may hereafter be created, or any city
whose population may hereafter increase to more than
two hundred fifty thousand shall be entitled in the
immediately following election to at least one Member
or such number of Members as it may be entitled to on
the basis of the number of its inhabitants and according
to the standards set forth in paragraph (3), Section 5 of
Article VI of the Constitution. The number of
Members apportioned to the province out of which
such new province was created or where the city,
whose population has so increased, is geographically
located shall be correspondingly adjusted by the
Commission on Elections but such adjustment shall
not be made within one hundred and twenty days
before the election. (Emphasis supplied)
serve as bases for the conclusion that the Province of
Shariff Kabunsuan, created on 29 October 2006, is
automatically entitled to one member in the House of
Representatives in the 14 May 2007 elections. As
further support for her stance, petitioner invokes the
statement in Felwa that when a province is created by
statute, the corresponding representative district
comes into existence neither by authority of that
statute which cannot provide otherwise nor by
apportionment, but by operation of the Constitution,
without a reapportionment.
The contention has no merit.
First. The issue in Felwa, among others, was whether
Republic Act No. 4695 (RA 4695), creating the
provinces of Benguet, Mountain Province, Ifugao, and
Kalinga-Apayao and providing for congressional
representation in the old and new provinces, was
unconstitutional for creati[ng] congressional districts
without the apportionment provided in the
Constitution. The Court answered in the negative,
thus:
The Constitution ordains:
The House of Representatives shall be composed of
not more than one hundred and twenty Members who
shall be apportioned among the several provinces as
nearly as may be according to the number of their
respective inhabitants, but each province shall have at
least one Member. The Congress shall by law make an
apportionment within three years after the return of
every enumeration, and not otherwise. Until such
apportionment shall have been made, the House of
Representatives shall have the same number of
Members as that fixed by law for the National
Assembly, who shall be elected by the qualified
electors from the present Assembly districts. Each
representative district shall comprise as far as
practicable, contiguous and compact territory.
Pursuant to this Section, a representative district may
come into existence: (a) indirectly, through the
creation of a province for each province shall have at
least one member in the House of Representatives; or
(b) by direct creation of several representative districts
within a province. The requirements concerning the
apportionment of representative districts and the
territory thereof refer only to the second method of
creation of representative districts, and do not apply to
those incidental to the creation of provinces, under the
first method. This is deducible, not only from the
general tenor of the provision above quoted, but, also,
from the fact that the apportionment therein alluded to
refers to that which is made by an Act of Congress.
Indeed, when a province is created by statute, the
corresponding representative district, comes into
existence neither by authority of that statute which
cannot provide otherwise nor by apportionment, but by
operation of the Constitution, without a
reapportionment.
There is no constitutional limitation as to the time
when, territory of, or other conditions under which a
province may be created, except, perhaps, if the
consequence thereof were to exceed the maximum of
120 representative districts prescribed in the
Constitution, which is not the effect of the legislation
under consideration. As a matter of fact, provinces
have been created or subdivided into other provinces,
with the consequent creation of additional
representative districts, without complying with the
aforementioned requirements.[32] (Emphasis
supplied)
Thus, the Court sustained the constitutionality of RA
4695 because (1) it validly created legislative districts
indirectly through a special law enacted by Congress
creating a province and (2) the creation of the
legislative districts will not result in breaching the
maximum number of legislative districts provided
under the 1935 Constitution. Felwa does not apply to
the present case because in Felwa the new provinces
were created by a national law enacted by Congress
itself. Here, the new province was created merely by a
regional law enacted by the ARMM Regional
Assembly.
What Felwa teaches is that the creation of a legislative
district by Congress does not emanate alone from
Congress power to reapportion legislative districts, but
also from Congress power to create provinces which
cannot be created without a legislative district. Thus,
when a province is created, a legislative district is
created by operation of the Constitution because the
Constitution provides that each province shall have at
least one representative in the House of
Representatives. This does not detract from the
constitutional principle that the power to create
legislative districts belongs exclusively to Congress. It
merely prevents any other legislative body, except
Congress, from creating provinces because for a
legislative body to create a province such legislative
body must have the power to create legislative
districts. In short, only an act of Congress can trigger
the creation of a legislative district by operation of the
Constitution. Thus, only Congress has the power to
create, or trigger the creation of, a legislative district.
Moreover, if as Sema claims MMA Act 201
apportioned a legislative district to Shariff Kabunsuan
upon its creation, this will leave Cotabato City as the
lone component of the first legislative district of
Maguindanao. However, Cotabato City cannot
constitute a legislative district by itself because as of
the census taken in 2000, it had a population of only
163,849. To constitute Cotabato City alone as the
surviving first legislative district of Maguindanao will
violate Section 5 (3), Article VI of the Constitution
which requires that [E]ach city with a population of at
least two hundred fifty thousand x x x, shall have at
least one representative.
Second. Semas theory also undermines the
composition and independence of the House of
Representatives. Under Section 19,[33] Article VI of
RA 9054, the ARMM Regional Assembly can create
provinces and cities within the ARMM with or without
regard to the criteria fixed in Section 461 of RA 7160,
namely: minimum annual income of P20,000,000, and
minimum contiguous territory of 2,000 square
kilometers or minimum population of 250,000.[34]
The following scenarios thus become distinct
possibilities:
(1) An inferior legislative body like the ARMM
Regional Assembly can create 100 or more provinces
and thus increase the membership of a superior
legislative body, the House of Representatives, beyond
the maximum limit of 250 fixed in the Constitution
(unless a national law provides otherwise);
(2) The proportional representation in the House of
Representatives based on one representative for at
least every 250,000 residents will be negated because
the ARMM Regional Assembly need not comply with
the requirement in Section 461(a)(ii) of RA 7160 that
every province created must have a population of at
least 250,000; and
(3) Representatives from the ARMM provinces can
become the majority in the House of Representatives
through the ARMM Regional Assemblys continuous
creation of provinces or cities within the ARMM.
The following exchange during the oral arguments of
the petition in G.R. No. 177597 highlights the
absurdity of Semas position that the ARMM Regional
Assembly can create provinces:
Justice Carpio: So, you mean to say [a] Local
Government can create legislative district[s] and pack
Congress with their own representatives [?]
Atty. Vistan II:[35] Yes, Your Honor, because the
Constitution allows that.
Justice Carpio: So, [the] Regional Assembly of [the]
ARMM can create and create x x x provinces x x x
and, therefore, they can have thirty-five (35) new
representatives in the House of Representatives
without Congress agreeing to it, is that what you are
saying? That can be done, under your theory[?]
Atty. Vistan II: Yes, Your Honor, under the correct
factual circumstances.
Justice Carpio: Under your theory, the ARMM
legislature can create thirty-five (35) new provinces,
there may be x x x [only] one hundred thousand
(100,000) [population], x x x, and they will each have
one representative x x x to Congress without any
national law, is that what you are saying?
Atty. Vistan II: Without law passed by Congress, yes,
Your Honor, that is what we are saying.
xxxx
Justice Carpio: So, they can also create one thousand
(1000) new provinces, sen[d] one thousand (1000)
representatives to the House of Representatives
without a national law[,] that is legally possible,
correct?
Atty. Vistan II: Yes, Your Honor.[36] (Emphasis
supplied)
Neither the framers of the 1987 Constitution in
adopting the provisions in Article X on regional
autonomy,[37] nor Congress in enacting RA 9054,
envisioned or intended these disastrous consequences
that certainly would wreck the tri-branch system of
government under our Constitution. Clearly, the power
to create or reapportion legislative districts cannot be
delegated by Congress but must be exercised by
Congress itself. Even the ARMM Regional Assembly
recognizes this.
The Constitution empowered Congress to create or
reapportion legislative districts, not the regional
assemblies. Section 3 of the Ordinance to the
Constitution which states, [A]ny province that may
hereafter be created x x x shall be entitled in the
immediately following election to at least one
Member, refers to a province created by Congress
itself through a national law. The reason is that the
creation of a province increases the actual membership
of the House of Representatives, an increase that only
Congress can decide. Incidentally, in the present 14th
Congress, there are 219[38] district representatives out
of the maximum 250 seats in the House of
Representatives. Since party-list members shall
constitute 20 percent of total membership of the
House, there should at least be 50 party-list seats
available in every election in case 50 party-list
candidates are proclaimed winners. This leaves only
200 seats for district representatives, much less than
the 219 incumbent district representatives. Thus, there
is a need now for Congress to increase by law the
allowable membership of the House, even before
Congress can create new provinces.
It is axiomatic that organic acts of autonomous
regions cannot prevail over the Constitution. Section
20, Article X of the Constitution expressly provides
that the legislative powers of regional assemblies are
limited [w]ithin its territorial jurisdiction and subject
to the provisions of the Constitution and national laws,
x x x. The Preamble of the ARMM Organic Act (RA
9054) itself states that the ARMM Government is
established within the framework of the Constitution.
This follows Section 15, Article X of the Constitution
which mandates that the ARMM shall be created x x x
within the framework of this Constitution and the
national sovereignty as well as territorial integrity of
the Republic of the Philippines.
The present case involves the creation of a local
government unit that necessarily involves also the
creation of a legislative district. The Court will not
pass upon the constitutionality of the creation of
municipalities and barangays that does not comply
with the criteria established in Section 461 of RA
7160, as mandated in Section 10, Article X of the
Constitution, because the creation of such
municipalities and barangays does not involve the
creation of legislative districts. We leave the resolution
of this issue to an appropriate case.
In summary, we rule that Section 19, Article VI of RA
9054, insofar as it grants to the ARMM Regional
Assembly the power to create provinces and cities, is
void for being contrary to Section 5 of Article VI and
Section 20 of Article X of the Constitution, as well as
Section 3 of the Ordinance appended to the
Constitution. Only Congress can create provinces and
cities because the creation of provinces and cities
necessarily includes the creation of legislative
districts, a power only Congress can exercise under
Section 5, Article VI of the Constitution and Section 3
of the Ordinance appended to the Constitution. The
ARMM Regional Assembly cannot create a province
without a legislative district because the Constitution
mandates that every province shall have a legislative
district. Moreover, the ARMM Regional Assembly
cannot enact a law creating a national office like the
office of a district representative of Congress because
the legislative powers of the ARMM Regional
Assembly operate only within its territorial
jurisdiction as provided in Section 20, Article X of the
Constitution. Thus, we rule that MMA Act 201,
enacted by the ARMM Regional Assembly and
creating the Province of Shariff Kabunsuan, is void.
Resolution No. 7902 Complies with the Constitution
Consequently, we hold that COMELEC Resolution
No. 7902, preserving the geographic and legislative
district of the First District of Maguindanao with
Cotabato City, is valid as it merely complies with
Section 5 of Article VI and Section 20 of Article X of
the Constitution, as well as Section 1 of the Ordinance
appended to the Constitution.
WHEREFORE, we declare Section 19, Article VI of
Republic Act No. 9054 UNCONSTITUTIONAL
insofar as it grants to the Regional Assembly of the
Autonomous Region in Muslim Mindanao the power
to create provinces and cities. Thus, we declare VOID
Muslim Mindanao Autonomy Act No. 201 creating the
Province of Shariff Kabunsuan. Consequently, we rule
that COMELEC Resolution No. 7902 is VALID.
Let a copy of this ruling be served on the President of
the Senate and the Speaker of the House of
Representatives.
3. Abbas vs Comelec
The present controversy relates to the plebiscite in
thirteen (13) provinces and nine (9) cities in Mindanao
and Palawan, 1 scheduled for November 19, 1989, in
implementation of Republic Act No. 6734, entitled
"An Act Providing for an Organic Act for the
Autonomous Region in Muslim Mindanao."
These consolidated petitions pray that the Court: (1)
enjoin the Commission on Elections (COMELEC)
from conducting the plebiscite and the Secretary of
Budget and Management from releasing funds to the
COMELEC for that purpose; and (2) declare R.A. No.
6734, or parts thereof, unconstitutional .
After a consolidated comment was filed by Solicitor
General for the respondents, which the Court
considered as the answer, the case was deemed
submitted for decision, the issues having been joined.
Subsequently, petitioner Mama-o filed a bodies. The organic act shall define the basic structure
"Manifestation with Motion for Leave to File Reply on
Respondents' Comment and to Open Oral Arguments,"
which the Court noted.
The arguments against R.A. 6734 raised by petitioners
may generally be categorized into either of the
following:
(a) that R.A. 6734, or parts thereof, violates the
Constitution, and
(b) that certain provisions of R.A. No. 6734 conflict
with the Tripoli Agreement.
The Tripoli Agreement, more specifically, the
Agreement Between the government of the Republic
of the Philippines of the Philippines and Moro
National Liberation Front with the Participation of the
Quadripartie Ministerial Commission Members of the
Islamic Conference and the Secretary General of the
Organization of Islamic Conference" took effect on
December 23, 1976. It provided for "[t]he
establishment of Autonomy in the southern
Philippines within the realm of the sovereignty and
territorial integrity of the Republic of the Philippines"
and enumerated the thirteen (13) provinces comprising
the "areas of autonomy." 2
In 1987, a new Constitution was ratified, which the for
the first time provided for regional autonomy, Article
X, section 15 of the charter provides that "[t]here shall
be created autonomous regions in Muslim Mindanao
and in the Cordilleras consisting of provinces, cities,
municipalities, and geographical areas sharing
common and distinctive historical and cultural
heritage, economic and social structures, and other
relevant characteristics within the framework of this
Constitution and the national sovereignty as well as
territorial integrity of the Republic of the Philippines."
To effectuate this mandate, the Constitution further
provides:
Sec. 16. The President shall exercise general
supervision over autonomous regions to ensure that
the laws are faithfully executed.
Sec. 17. All powers, functions, and responsibilities not
granted by this Constitution or by law to the
autonomous regions shall be vested in the National
Government.
Sec. 18. The Congress shall enact an organic act for
each autonomous region with the assistance and
participation of the regional consultative commission
composed of representatives appointed by the
President from a list of nominees from multisectoral
of government for the region consisting of the
executive and representative of the constituent
political units. The organic acts shall likewise provide
for special courts with personal, family, and property
law jurisdiction consistent with the provisions of this
Constitution and national laws.
The creation of the autonomous region shall be
effective when approved by majority of the votes cast
by the constituent units in a plebiscite called for the
purpose, provided that only the provinces, cities, and
geographic areas voting favorably in such plebiscite
shall be included in the autonomous region.
Sec. 19 The first Congress elected under this
Constitution shall, within eighteen months from the
time of organization of both Houses, pass the organic
acts for the autonomous regions in Muslim Mindanao
and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and subject
to the provisions of this Constitution and national
laws, the organic act of autonomous regions shall
provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural
heritage; and
(9) Such other matters as may be authorized by law for
the promotion of the general welfare of the people of
the region.
Sec. 21. The preservation of peace and order within the
regions shall be the responsibility of the local police
agencies which shall be organized, maintained,
supervised, and utilized in accordance with applicable
laws. The defense and security of the region shall be
the responsibility of the National Government.
Pursuant to the constitutional mandate, R.A. No. 6734
was enacted and signed into law on August 1, 1989.
1. The Court shall dispose first of the second category
of arguments raised by petitioners, i.e. that certain
provisions of R.A. No. 6734 conflict with the
provisions of the Tripoli Agreement.
Petitioners premise their arguments on the assumption
that the Tripoli Agreement is part of the law of the
land, being a binding international agreement . The
Solicitor General asserts that the Tripoli Agreement is
neither a binding treaty, not having been entered into
by the Republic of the Philippines with a sovereign
state and ratified according to the provisions of the
1973 or 1987 Constitutions, nor a binding international
agreement.
We find it neither necessary nor determinative of the
case to rule on the nature of the Tripoli Agreement and
its binding effect on the Philippine Government
whether under public international or internal
Philippine law. In the first place, it is now the
Constitution itself that provides for the creation of an
autonomous region in Muslim Mindanao. The
standard for any inquiry into the validity of R.A. No.
6734 would therefore be what is so provided in the
Constitution. Thus, any conflict between the
provisions of R.A. No. 6734 and the provisions of the
Tripoli Agreement will not have the effect of enjoining
the implementation of the Organic Act. Assuming for
the sake of argument that the Tripoli Agreement is a
binding treaty or international agreement, it would
then constitute part of the law of the land. But as
internal law it would not be superior to R.A. No. 6734,
an enactment of the Congress of the Philippines, rather
it would be in the same class as the latter [SALONGA,
PUBLIC INTERNATIONAL LAW 320 (4th ed.,
1974), citing Head Money Cases, 112 U.S. 580 (1884)
and Foster v. Nelson, 2 Pet. 253 (1829)]. Thus, if at all,
R.A. No. 6734 would be amendatory of the Tripoli
Agreement, being a subsequent law. Only a
determination by this Court that R.A. No. 6734
contravened the Constitution would result in the
granting of the reliefs sought. 3
2. The Court shall therefore only pass upon the
constitutional questions which have been raised by
petitioners.
Petitioner Abbas argues that R.A. No. 6734
unconditionally creates an autonomous region in
Mindanao, contrary to the aforequoted provisions of
the Constitution on the autonomous region which
make the creation of such region dependent upon the
outcome of the plebiscite.
In support of his argument, petitioner cites Article II,
section 1(1) of R.A. No. 6734 which declares that
"[t]here is hereby created the Autonomous Region in
Muslim Mindanao, to be composed of provinces and
cities voting favorably in the plebiscite called for the
purpose, in accordance with Section 18, Article X of
the Constitution." Petitioner contends that the tenor of
the above provision makes the creation of an
autonomous region absolute, such that even if only
two provinces vote in favor of autonomy, an
autonomous region would still be created composed of
the two provinces where the favorable votes were
obtained.
The matter of the creation of the autonomous region
and its composition needs to be clarified.
Firs, the questioned provision itself in R.A. No. 6734
refers to Section 18, Article X of the Constitution
which sets forth the conditions necessary for the
creation of the autonomous region. The reference to
the constitutional provision cannot be glossed over for
it clearly indicates that the creation of the autonomous
region shall take place only in accord with the
constitutional requirements. Second, there is a specific
provision in the Transitory Provisions (Article XIX) of
the Organic Act, which incorporates substantially the
same requirements embodied in the Constitution and
fills in the details, thus:
SEC. 13. The creation of the Autonomous Region in
Muslim Mindanao shall take effect when approved by
a majority of the votes cast by the constituent units
provided in paragraph (2) of Sec. 1 of Article II of this
Act in a plebiscite which shall be held not earlier than
ninety (90) days or later than one hundred twenty (120)
days after the approval of this Act: Provided, That only
the provinces and cities voting favorably in such
plebiscite shall be included in the Autonomous Region
in Muslim Mindanao. The provinces and cities which
in the plebiscite do not vote for inclusion in the
Autonomous Region shall remain the existing
administrative determination, merge the existing
regions.
Thus, under the Constitution and R.A. No 6734, the
creation of the autonomous region shall take effect
only when approved by a majority of the votes cast by
the constituent units in a plebiscite, and only those
provinces and cities where a majority vote in favor of
the Organic Act shall be included in the autonomous
region. The provinces and cities wherein such a
majority is not attained shall not be included in the
autonomous region. It may be that even if an
autonomous region is created, not all of the thirteen
(13) provinces and nine (9) cities mentioned in Article
II, section 1 (2) of R.A. No. 6734 shall be included
therein. The single plebiscite contemplated by the
Constitution and R.A. No. 6734 will therefore be
determinative of (1) whether there shall be an
autonomous region in Muslim Mindanao and (2)
which provinces and cities, among those enumerated
in R.A. No. 6734, shall compromise it. [See III
RECORD OF THE CONSTITUTIONAL
COMMISSION 482-492 (1986)].
As provided in the Constitution, the creation of the
Autonomous region in Muslim Mindanao is made
effective upon the approval "by majority of the votes
cast by the constituent units in a plebiscite called for
the purpose" [Art. X, sec. 18]. The question has been
raised as to what this majority means. Does it refer to
a majority of the total votes cast in the plebiscite in all
the constituent units, or a majority in each of the
constituent units, or both?
We need not go beyond the Constitution to resolve this
question.
If the framers of the Constitution intended to require
approval by a majority of all the votes cast in the
plebiscite they would have so indicated. Thus, in
Article XVIII, section 27, it is provided that "[t]his
Constitution shall take effect immediately upon its
ratification by a majority of the votes cast in a
plebiscite held for the purpose ... Comparing this with
the provision on the creation of the autonomous
region, which reads:
The creation of the autonomous region shall be
effective when approved by majority of the votes cast
by the constituent units in a plebiscite called for the
purpose, provided that only provinces, cities and
geographic areas voting favorably in such plebiscite
shall be included in the autonomous region. [Art. X,
sec, 18, para, 2].
it will readily be seen that the creation of the
autonomous region is made to depend, not on the total
majority vote in the plebiscite, but on the will of the
majority in each of the constituent units and the
proviso underscores this. for if the intention of the
framers of the Constitution was to get the majority of
the totality of the votes cast, they could have simply
adopted the same phraseology as that used for the
ratification of the Constitution, i.e. "the creation of the
autonomous region shall be effective when approved
by a majority of the votes cast in a plebiscite called for
the purpose."
It is thus clear that what is required by the Constitution
is a simple majority of votes approving the organic Act
in individual constituent units and not a double
majority of the votes in all constituent units put
together, as well as in the individual constituent units.
More importantly, because of its categorical language,
this is also the sense in which the vote requirement in
the plebiscite provided under Article X, section 18
must have been understood by the people when they
ratified the Constitution.
Invoking the earlier cited constitutional provisions,
petitioner Mama-o, on the other hand, maintains that
only those areas which, to his view, share common and
distinctive historical and cultural heritage, economic
and social structures, and other relevant characteristics
should be properly included within the coverage of the
autonomous region. He insists that R.A. No. 6734 is
unconstitutional because only the provinces of
Basilan, Sulu, Tawi-Tawi, Lanao del Sur, Lanao del
Norte and Maguindanao and the cities of Marawi and
Cotabato, and not all of the thirteen (13) provinces and
nine (9) cities included in the Organic Act, possess
such concurrence in historical and cultural heritage
and other relevant characteristics. By including areas
which do not strictly share the same characteristics. By
including areas which do not strictly share the same
characteristic as the others, petitioner claims that
Congress has expanded the scope of the autonomous
region which the constitution itself has prescribed to
be limited.
Petitioner's argument is not tenable. The Constitution
lays down the standards by which Congress shall
determine which areas should constitute the
autonomous region. Guided by these constitutional
criteria, the ascertainment by Congress of the areas
that share common attributes is within the exclusive
realm of the legislature's discretion. Any review of this
ascertainment would have to go into the wisdom of the
law. This the Court cannot do without doing violence
to the separation of governmental powers. [Angara v.
Electoral Commission, 63 Phil 139 (1936); Morfe v.
Mutuc, G.R. No. L-20387, January 31, 1968, 22
SCRA 424].
After assailing the inclusion of non-Muslim areas in
the Organic Act for lack of basis, petitioner Mama-o
would then adopt the extreme view that other non-
Muslim areas in Mindanao should likewise be
covered. He argues that since the Organic Act covers
several non-Muslim areas, its scope should be further
broadened to include the rest of the non-Muslim areas
in Mindanao in order for the other non-Muslim areas
denies said areas equal protection of the law, and
therefore is violative of the Constitution.
Petitioner's contention runs counter to the very same
constitutional provision he had earlier invoked. Any
determination by Congress of what areas in Mindanao
should compromise the autonomous region, taking
into account shared historical and cultural heritage,
economic and social structures, and other relevant
characteristics, would necessarily carry with it the
exclusion of other areas. As earlier stated, such
determination by Congress of which areas should be
covered by the organic act for the autonomous region
constitutes a recognized legislative prerogative, whose
wisdom may not be inquired into by this Court.
Moreover, equal protection permits of reasonable
classification [People v. Vera, 65 Phil. 56 (1963);
Laurel v. Misa, 76 Phil. 372 (1946); J.M. Tuason and
Co. v. Land tenure Administration, G.R. No. L-21064,
February 18, 1970, 31 SCRA 413]. In Dumlao v.
Commission on Elections G.R. No. 52245, January 22,
1980, 95 SCRA 392], the Court ruled that once class
may be treated differently from another where the
groupings are based on reasonable and real
distinctions. The guarantee of equal protection is thus
not infringed in this case, the classification having
been made by Congress on the basis of substantial
distinctions as set forth by the Constitution itself.
Both petitions also question the validity of R.A. No.
6734 on the ground that it violates the constitutional
guarantee on free exercise of religion [Art. III, sec. 5].
The objection centers on a provision in the Organic
Act which mandates that should there be any conflict
between the Muslim Code [P.D. No. 1083] and the
Tribal Code (still be enacted) on the one had, and the
national law on the other hand, the Shari'ah courts
created under the same Act should apply national law.
Petitioners maintain that the islamic law (Shari'ah) is
derived from the Koran, which makes it part of divine
law. Thus it may not be subjected to any "man-made"
national law. Petitioner Abbas supports this objection
by enumerating possible instances of conflict between
provisions of the Muslim Code and national law,
wherein an application of national law might be
offensive to a Muslim's religious convictions.
As enshrined in the Constitution, judicial power
includes the duty to settle actual controversies
involving rights which are legally demandable and
enforceable. [Art. VIII, Sec. 11. As a condition
precedent for the power to be exercised, an actual
controversy between litigants must first exist [Angara
v. Electoral Commission, supra; Tan v. Macapagal,
G.R. No. L-34161, February 29, 1972, 43 SCRA 677].
In the present case, no actual controversy between real
litigants exists. There are no conflicting claims
involving the application of national law resulting in
an alleged violation of religious freedom. This being
so, the Court in this case may not be called upon to
resolve what is merely a perceived potential conflict
between the provisions the Muslim Code and national
law.
Petitioners also impugn the constitutionality of Article
XIX, section 13 of R.A. No. 6734 which, among
others, states:
. . . Provided, That only the provinces and cities voting
favorably in such plebiscite shall be included in the
Autonomous Region in Muslim Mindanao. The
provinces and cities which in the plebiscite do not vote
for inclusion in the Autonomous Region shall remain
in the existing administrative regions: Provided,
however, that the President may, by administrative
determination, merge the existing regions.
According to petitioners, said provision grants the
President the power to merge regions, a power which
is not conferred by the Constitution upon the
President. That the President may choose to merge
existing regions pursuant to the Organic Act is
challenged as being in conflict with Article X, Section
10 of the Constitution which provides:
No province, city, municipality, or barangay 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 approval by a majority of the votes cast in a
plebiscite in the political units directly affected.
It must be pointed out that what is referred to in R.A.
No. 6734 is the merger of administrative regions, i.e.
Regions I to XII and the National Capital Region,
which are mere groupings of contiguous provinces for
administrative purposes [Integrated Reorganization
Plan (1972), which was made as part of the law of the
land by Pres. dec. No. 1, Pres. Dec. No. 742].
Administrative regions are not territorial and political
subdivisions like provinces, cities, municipalities and
barangays [see Art. X, sec. 1 of the Constitution].
While the power to merge administrative regions is not
expressly provided for in the Constitution, it is a power
which has traditionally been lodged with the President
to facilitate the exercise of the power of general
supervision over local governments [see Art. X, sec. 4
of the Constitution]. There is no conflict between the
power of the President to merge administrative regions
with the constitutional provision requiring a plebiscite
in the merger of local government units because the
requirement of a plebiscite in a merger expressly
applies only to provinces, cities, municipalities or
barangays, not to administrative regions.
Petitioners likewise question the validity of provisions
in the Organic Act which create an Oversight
Committee to supervise the transfer to the autonomous
region of the powers, appropriations, and properties
vested upon the regional government by the organic
Act [Art. XIX, Secs. 3 and 4]. Said provisions mandate
that the transfer of certain national government offices
and their properties to the regional government shall
be made pursuant to a schedule prescribed by the
Oversight Committee, and that such transfer should be
accomplished within six (6) years from the
organization of the regional government.
It is asserted by petitioners that such provisions are
unconstitutional because while the Constitution states
that the creation of the autonomous region shall take
effect upon approval in a plebiscite, the requirement of
organizing an Oversight committee tasked with
supervising the transfer of powers and properties to the
regional government would in effect delay the creation
of the autonomous region.
Under the Constitution, the creation of the autonomous
region hinges only on the result of the plebiscite. if the
Organic Act is approved by majority of the votes cast
by constituent units in the scheduled plebiscite, the
creation of the autonomous region immediately takes
effect delay the creation of the autonomous region.
Under the constitution, the creation of the autonomous
region hinges only on the result of the plebiscite. if the
Organic Act is approved by majority of the votes cast
by constituent units in the scheduled plebiscite, the
creation of the autonomous region immediately takes
effect. The questioned provisions in R.A. No. 6734
requiring an oversight Committee to supervise the
transfer do not provide for a different date of
effectivity. Much less would the organization of the
Oversight Committee cause an impediment to the
operation of the Organic Act, for such is evidently
aimed at effecting a smooth transition period for the
regional government. The constitutional objection on
this point thus cannot be sustained as there is no bases
therefor.
Every law has in its favor the presumption of
constitutionality [Yu Cong Eng v. Trinidad, 47 Phil.
387 (1925); Salas v. Jarencio, G.R. No. L-29788,
August 30, 1979, 46 SCRA 734; Morfe v. Mutuc,
supra; Peralta v. COMELEC, G.R. No. L-47771,
March 11, 1978, 82 SCRA 30]. Those who petition
this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis for
such a declaration. otherwise, their petition must fail.
Based on the grounds raised by petitioners to challenge
the constitutionality of R.A. No. 6734, the Court finds
that petitioners have failed to overcome the
presumption. The dismissal of these two petitions is,
therefore, inevitable.
WHEREFORE, the petitions are DISMISSED for lack
of merit.
4. Miranda vs Aguirre
This is a petition for a writ of prohibition with prayer
for preliminary injunction assailing the
constitutionality of Republic Act No. 8528 converting
the city of Santiago, Isabela from an independent
component city to a component city.
On May 5, 1994, Republic Act No. 7720 which
converted the municipality of Santiago, Isabela into an
independent component city was signed into law. On
July 4, 1994, the people of Santiago ratified R.A. No.
7720 in a plebiscite.1
On February 14, 1998, Republic Act No. 8528 was
enacted. It amended R.A. No. 7720. Among others, it
changed the status of Santiago from an independent
component city to a component city, viz:
AN ACT AMENDING CERTAIN SECTIONS OF
REPUBLIC ACT NUMBERED 7720 AN ACT
CONVERTING THE MUNICIPALITY OF
SANTIAGO INTO AN INDEPENDENT
COMPONENT CITY TO BE KNOWN AS THE
CITY OF SANTIAGO.
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress
assembled:
SECTION 1. Section 2 of Republic Act No. 7720 is
hereby amended by deleting the words an independent
thereon so that said Section will read as follows:
SEC. 2. The City of Santiago. The Municipality of
Santiago shall be converted into a component city to
be known as the City of Santiago, hereinafter referred
to as the City, which shall comprise of the present
territory of the Municipality of Santiago, Isabela. The
territorial jurisdiction of the City shall be within the
present metes and bounds of the Municipality of
Santiago.
Sec. 2. Section 51 of Republic Act No. 7720 is hereby
amended deleting the entire section and in its stead
substitute the following:
SEC. 51. Election of Provincial Governor, Vice-
Governor, Sangguniang Panlalawigan Members, and
any Elective Provincial Position for the Province of
Isabela.- The voters of the City of Santiago shall be
qualified to vote in the elections of the Provincial
Governor, Vice-Governor, Sangguniang Panlalawigan
members and other elective provincial positions of the
Province of Isabela, and any such qualified voter can
be a candidate for such provincial positions and any
elective provincial office.
Sec. 3. Repealing Clause.- All existing laws or parts
thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.
Sec. 4. Effectivity.- This Act shall take effect upon its
approval.
Approved.
Petitioners assail the constitutionality of R.A. No.
8528.2 They alleged as ground the lack of provision in
R.A. No. 8528 submitting the law for ratification by
the people of Santiago City in a proper plebiscite.
Petitioner Miranda was the mayor of Santiago at the
time of the filing of the petition at bar. Petitioner
Afiado is the President of the Liga ng mga Barangay
ng Santiago City. Petitioners Dirige, Cabuyadao and
Babaran are residents of Santiago City.
In their Comment, respondent provincial officials of
Isabela defended the constitutionality of R.A. No.
8528. They assailed the standing of petitioners to file
the petition at bar. They also contend that the petition
raises a political question over which this Court lacks
jurisdiction.
Another Comment was filed by the Solicitor General
for the respondent public officials. The Solicitor
General also contends that petitioners are not real
parties in interest. More importantly, it is contended
that R.A. No. 8528 merely reclassified Santiago City
from an independent component city to a component
city. It allegedly did not involve any creation, division,
merger, abolition, or substantial alteration of
boundaries of local government units, hence, a
plebiscite of the people of Santiago is unnecessary.
A third Comment similar in tone was submitted by
intervenor Giorgidi B. Aggabao,3 a member of the
provincial board of Isabela.4 He contended that both
the Constitution and the Local Government Code of
1991 do not require a plebiscite to approve a law that
merely allowed qualified voters of a city to vote in
provincial elections. The rules implementing the Local
Government Code cannot require a plebiscite. He also
urged that petitioners lacked locus standi.
Petitioners filed a Reply to meet the arguments of the
respondents and the intervenor. They defended their
standing. They also stressed the changes that would
visit the city of Santiago as a result of its
reclassification.
We find merit in the petition.
First. The challenge to the locus standi of petitioners
cannot succeed. It is now an ancient rule that the
constitutionality of law can be challenged by one who
will sustain a direct injury as a result of its
enforcement.5 Petitioner Miranda was the mayor of
Santiago City when he filed the present petition in his
own right as mayor and not on behalf of the city,
hence, he did not need the consent of the city council
of Santiago City. It is also indubitable that the change
of status of the city of Santiago from independent
component city to a mere component city will affect
his powers as mayor, as will be shown hereafter. The
injury that he would sustain from the enforcement of
R.A. No. 8528 is direct and immediate and not a mere
generalized grievance shared with the people of
Santiago City. Similarly, the standing of the other
petitioners rests on a firm foundation. They are
residents and voters in the city of Santiago. They have
the right to be heard in the conversion of their city thru
a plebiscite to be conducted by the COMELEC. The
denial of this right in R.A. No. 8528 gives them proper
standing to strike the law as unconstitutional.
Second. The plea that this court back off from
assuming jurisdiction over the petition at bar on the
ground that it involves a political question has to be
brushed aside. This plea has long lost its appeal
especially in light of Section 1 of Article VIII of the
1987 Constitution which defines judicial power as
including the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine
whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the
government. To be sure, the cut between a political and
justiciable issue has been made by this Court in many
cases and need no longer mystify us. In Taada v.
Cuenco,6 we held:
xxx
The term political question connotes what it means in
ordinary parlance, namely, a question of policy. It
refers to those questions which under the Constitution
are to be decided by the people in their sovereign
capacity; or in regard to which full discretionary
authority has been delegated to the legislative or
executive branch of the government. It is concerned
with issues dependent upon the wisdom, not legality,
of a particular measure.
In Casibang v. Aquino,7 we defined a justiciable issue
as follows:
A purely justiciable issue implies a given right, legally
demandable and enforceable, an act or omission
violative of such right, and a remedy granted and
sanctioned by law, for said breach of right.
Clearly, the petition at bar presents a justiciable issue.
Petitioners claim that under Section 10, Article X of
the 1987 Constitution they have a right to approve or
disapprove R.A. No. 8528 in a plebiscite before it can
be enforced. It ought to be self-evident that whether or
not petitioners have the said right is a legal not a
political question. For whether or not laws passed by
Congress comply with the requirements of the
Constitution pose questions that this Court alone can
decide. The proposition that this Court is the ultimate
arbiter of the meaning and nuances of the Constitution
need not be the subject of a prolix explanation.
Third. The threshold issue is whether R.A. No. 8528 is
unconstitutional for its failure to provide that the
conversion of the city of Santiago from an independent
component city to a component city should be
submitted to its people in a proper plebiscite. We hold
that the Constitution requires a plebiscite. Section 10,
Article X of the 1987 Constitution provides:
No province, city, municipality, or barangay may be
created, or divided, merged, abolished, or its boundary
substantially altered except in accordance with the
criteria established in the local government code and
subject to approval by a majority of the votes cast in a
plebiscite in the political units directly affected.
This constitutional requirement is reiterated in Section
10, Chapter 2 of the Local Government Code (R.A.
No. 7160), thus:
Sec. 10. No province, city, municipality, or barangay
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 approval by a majority of the votes
cast in a plebiscite in the political units directly
affected.
The power to create, divide, merge, abolish or
substantially alter boundaries of local government
units belongs to Congress.8 This power is part of the
larger power to enact laws which the Constitution
vested in Congress.9 The exercise of the power must
be in accord with the mandate of the Constitution. In
the case at bar, the issue is whether the downgrading
of Santiago City from an independent component city
to a mere component city requires the approval of the
people of Santiago City in a plebiscite. The resolution
of the issue depends on whether or not the
downgrading falls within the meaning of creation,
division, merger, abolition or substantial alteration of
boundaries of municipalities per Section 10, Article X
of the Constitution. A close analysis of the said
constitutional provision will reveal that the creation,
division, merger, abolition or substantial alteration of
boundaries of local government units involve a
common denominator - - - material change in the
political and economic rights of the local government
units directly affected as well as the people therein. It
is precisely for this reason that the Constitution
requires the approval of the people in the political units
directly affected. It is not difficult to appreciate the
rationale of this constitutional requirement. The 1987
Constitution, more than any of our previous
Constitutions, gave more reality to the sovereignty of
our people for it was borne out of the people power in
the 1986 EDSA revolution. Its Section 10, Article X
addressed the undesirable practice in the past whereby
local government units were created, abolished,
merged or divided on the basis of the vagaries of
politics and not of the welfare of the people. Thus, the
consent of the people of the local government unit
directly affected was required to serve as a checking
mechanism to any exercise of legislative power
creating, dividing, abolishing, merging or altering the
boundaries of local government units. It is one
instance where the people in their sovereign capacity
decide on a matter that affects them - - - direct
democracy of the people as opposed to democracy thru
peoples representatives. This plebiscite requirement is
also in accord with the philosophy of the Constitution
granting more autonomy to local government units.
The changes that will result from the downgrading of
the city of Santiago from an independent component
city to a component city are many and cannot be
characterized as insubstantial. For one, the
independence of the city as a political unit will be
diminished. The city mayor will be placed under the
administrative supervision of the provincial governor.
The resolutions and ordinances of the city council of
Santiago will have to be reviewed by the Provincial
Board of Isabela. Taxes that will be collected by the
city will now have to be shared with the province.
Petitioners pointed out these far reaching changes on
the life of the people of the city of Santiago, viz:10
Although RESPONDENTS would like to make it
appear that R.A. No. 8528 had merely re-classified
Santiago City from an independent component city
into a component city, the effect when challenged (sic)
the Act were operational would be, actually, that of
conversion. Consequently, there would be substantial
changes in the political culture and administrative
responsibilities of Santiago City, and the Province of
Isabela. Santiago City from an independent
component city will revert to the Province of Isabela,
geographically, politically and administratively. Thus,
the territorial land area of Santiago City will be added
to the land area comprising the province of Isabela.
This will be to the benefit or advantage of the
Provincial Government of Isabela on account of the
subsequent increase of its share from the internal
revenue allotment (IRA) from the National
Government (Section 285, R.A. No. 7160 or the Local
Government Code of 1991). The IRA is based on land
area and population of local government units,
provinces included.
The nature or kinds, and magnitude of the taxes
collected by the City Government, and which taxes
shall accrue solely to the City Government, will be
redefined (Section 151, R.A. No. 7160), and may be
shared with the province such as taxes on sand, gravel
and other quarry resources (Section 138, R.A. No.
7160), professional taxes (Section 139, R.A. No.
7160), or amusement taxes (Section 140, R.A. No.
7160). The Provincial Government will allocate
operating funds for the City. Inarguably, there would
be a (sic) diminished funds for the local operations of
the City Government because of reduced shares of the
IRA in accordance with the schedule set forth by
Section 285 of the R.A. No. 7160. The City
Governments share in the proceeds in the development
and utilization of national wealth shall be diluted since
certain portions shall accrue to the Provincial
Government (Section 292, R.A. No.7160).
The registered voters of Santiago City will vote for and
can be voted as provincial officials (Section 451 and
452 [c], R.A. No. 7160).
The City Mayor will now be under the administrative
supervision of the Provincial Governor who is tasked
by law to ensure that every component city and
municipality within the territorial jurisdiction of the
province acts within the scope of its prescribed powers
and functions (Section 29 and 465 (b) (2) (i), R.A. No.
7160), and to review (Section 30, R.A. No. 7160) all
executive orders submitted by the former (Section 455
(b) (1) (xii), R.A. No. 7160) and (R)eportorial
requirements with respect to the local governance and
state of affairs of the city (Section 455 (b) (1) (xx),
R.A. No. 7160). Elective city officials will also be
effectively under the control of the Provincial
Governor (Section 63, R.A. No. 7160). Such will be
the great change in the state of the political autonomy
of what is now Santiago City where by virtue of R.A.
No. 7720, it is the Office of the President which has
supervisory authority over it as an independent
component city (Section 25, R.A. No. 7160; Section 4
(ARTICLE X), 1987 Constitution).
The resolutions and ordinances adopted and approved
by the Sangguniang Panlungsod will be subject to the
review of the Sangguniang Panlalawigan (Sections 56,
468 (a) (1) (i), 468 (a) (2) (vii), and 469 (c) (4), R.A.
No. 7160). Likewise, the decisions in administrative
cases by the former could be appealed and acted upon
by the latter (Section 67, R.A. No. 7160).
It is markworthy that when R.A. No. 7720 upgraded
the status of Santiago City from a municipality to an
independent component city, it required the approval
of its people thru a plebiscite called for the purpose.
There is neither rhyme nor reason why this plebiscite
should not be called to determine the will of the people
of Santiago City when R.A. No. 8528 downgrades the
status of their city. Indeed, there is more reason to
consult the people when a law substantially diminishes
their right. Rule II, Article 6, paragraph (f) (1) of the
Implementing Rules and Regulations of the Local
Government Code is in accord with the Constitution
when it provides that:
(f) Plebiscite - (1) no creation, conversion, division,
merger, abolition, or substantial alteration of
boundaries of LGUS shall take effect unless approved
by a majority of the votes cast in a plebiscite called for
the purpose in the LGU or LGUs affected. The
plebiscite shall be conducted by the Commission on
Elections (COMELEC) within one hundred twenty
(120) days from the effectivity of the law or ordinance
prescribing such action, unless said law or ordinance
fixes another date.
x x x.
The rules cover all conversions, whether upward or
downward in character, so long as they result in a
material change in the local government unit directly
affected, especially a change in the political and
economic rights of its people.
A word on the dissenting opinions of our esteemed
brethren. Mr. Justice Buena justifies R.A. No. 8528 on
the ground that Congress has the power to amend the
charter of Santiago City. This power of amendment,
however, is limited by Section 10, Article X of the
Constitution. Quite clearly, when an amendment of a
law involves the creation, merger, division, abolition
or substantial alteration of boundaries of local
government units, a plebiscite in the political units
directly affected is mandatory. He also contends that
the amendment merely caused a transition in the status
of Santiago as a city.Allegedly, it is a transition
because no new city was created nor was a former city
dissolved by R.A. No. 8528. As discussed above, the
spirit of Section 10, Article X of the Constitution calls
for the people of the local government unit directly
affected to vote in a plebiscite whenever there is a
material change in their rights and responsibilities.
They may call the downgrading of Santiago to a
component city as a mere transition but they cannot
blink away from the fact that the transition will
radically change its physical and political
configuration as well as the rights and responsibilities
of its people.
On the other hand, our esteemed colleague, Mr. Justice
Mendoza, posits the theory that "only if the
classification involves changes in income, population,
and land area of the local government unit is there a
need for such changes to be approved by the people x
x x."
With due respect, such an interpretation runs against
the letter and spirit of section 10, Article X of the 1987
Constitution which, to repeat, states: "No province,
city, municipality, or barangay 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 approval by a majority of the votes cast in a
plebiscite in the political units directly affected." It is
clear that the Constitution imposes two conditions - - -
first, the creation, division, merger, abolition or
substantial alteration of boundary of a local
government unit must meet the criteria fixed by the
Local Government Code on income, population and
land area and second, the law must be approved by the
people "by a majority of the votes cast in a plebiscite
in the political units directly affected."
In accord with the Constitution, sections 7, 8, and 9 of
the Local Government Code fixed the said criteria and
they involve requirements on income, population and
land area. These requirements, however, are imposed
to help assure the economic viability of the local
government unit concerned. They were not imposed to
determine the necessity for a plebiscite of the people.
Indeed, the Local Government Code does not state that
there will be no more plebiscite after its requirements
on income, population and land area have been
satisfied. On the contrary, section 10, Chapter 2 of the
Code provides: "No creation, division, merger,
abolition, or substantial alteration of boundaries of
local government units shall take effect unless
approved by a majority of the votes casts in a plebiscite
called for the purpose in the political unit or units
directly affected. Said plebiscite shall be conducted by
the COMELEC within one hundred twenty (120) days
from the date of the effectivity of the law or ordinance
effecting such action, unless said law or ordinance
fixes another date."11 Senator Aquilino Pimentel, the
principal author of the Local Government Code of
1991, opines that the plebiscite is absolute and
mandatory.12
It cannot be overstressed that the said two
requirements of the Constitution have different
purposes. The criteria fixed by the Local Government
Code on income, population and land area are
designed to achieve an economic purpose. They are to
be based on verified indicators, hence, section 7,
Chapter 2 of the Local Government Code requires that
these "indicators shall be attested by the Department
of Finance, the National Statistics Office, and the
Lands Management Bureau of the Department of
Environment and Natural Resources." In contrast, the
people's plebiscite is required to achieve a political
purpose --- to use the people's voice as a check against
the pernicious political practice of gerrymandering.
There is no better check against this excess committed
by the political representatives of the people
themselves than the exercise of direct people power.
As well-observed by one commentator, as the creation,
division, merger, abolition, or substantial alteration of
boundaries are "xxx basic to local government, it is
also imperative that these acts be done not only by
Congress but also be approved by the inhabitants of
the locality concerned. xxx By giving the inhabitants a
hand in their approval, the provision will also
eliminate the old practice of gerrymandering and
minimize legislative action designed for the benefit of
a few politicians. Hence, it promotes the autonomy of
local government units."13
The records show that the downgrading of Santiago
City was opposed by certain segments of its people. In
the debates in Congress, it was noted that at the time
R.A. No. 8528 was proposed, Santiago City has been
converted to an independent component city barely
two and a half (2 1/2) years ago and the conversion
was approved by a majority of 14,000 votes. Some
legislators expressed surprise for the sudden move to
downgrade the status of Santiago City as there had
been no significant change in its socio-economic-
political status. The only reason given for the
downgrading is to enable the people of the city to
aspire for the leadership of the province. To say the
least, the alleged reason is unconvincing for it is the
essence of an independent component city that its
people can no longer participate or be voted for in the
election of officials of the province. The people of
Santiago City were aware that they gave up that
privilege when they voted to be independent from the
province of Isabela. There was an attempt on the part
of the Committee on Local Government to submit the
downgrading of Santiago City to its people via a
plebiscite. The amendment to this effect was about to
be voted upon when a recess was called. After the
recess, the chairman of the Committee anounced the
withdrawal of the amendment "after a very
enlightening conversation with the elders of the
Body." We quote the debates, viz:14
"BILL ON SECOND READING
H.B. No. 8729 - City of Santiago
"Senator Tatad. Mr. President, I move that we consider
House Bill No. 8729 as reported out under Committee
Report No. 971.
"The President. Is there any objection? [Silence] there
being none, the motion is approved.
"Consideration of House Bill No. 8729 is now in order.
With the permission of the Body, the Secretary will
read only the title of the bill without prejudice to
inserting in the Record the whole text thereof.
"The Acting Secretary [Atty. Raval]. House Bill No.
8729, entitled
AN ACT AMENDING CERTAIN SECTIONS OF
R.A. NO. 7720 ENTITLED "AN ACT
CONVERTING THE MUNICIPALITY OF
SANTIAGO INTO AN INDEPENDENT
COMPONENT CITY TO BE KNOWN AS THE
CITY OF SANTIAGO
___________________________________________
____________
The following is the full text of H.B. No. 8729
Insert
___________________________________________
____________
"Senator Tatad. Mr. President, for the sponsorship, I
ask that the distinguished Chairman of the Committee
on Local Government be recognized.
"The President. Senator Sotto is recognized.
SPONSORSHIP SPEECH OF SENATOR SOTTO
"Mr. President. House Bill No. 8729, which was
introduced in the House by Congressman Antonio M.
Abaya as its principal author, is a simple measure
which merely seeks to convert the City of Santiago
into a component city of the Province of Isabela.
"The City of Santiago is geographically located
within, and is physically an integral part of the
Province of Isabela. As an independent component
city, however, it is completely detached and separate
from the said province as a local political unit. To use
the language of the Explanatory Note of the proposed
bill, the City of Santiago is an island in the provincial
milieu.
"The residents of the city no longer participate in the
elections, nor are they qualified to run for any elective
positions in the Province of Isabela.
"The Province of Isabela, on the other hand, is no
longer vested with the power and authority of general
supervision over the city and its officials, which power
and authority are now exercised by the Office of the
President, which is very far away from Santiago City.
Being geographically located within the Province of
Isabela, the City of Santiago is affected, one way or
the other, by the happenings in the said province, and
is benefited by its progress and development. Hence,
the proposed bill to convert the City of Santiago into a
component city of Isabela.
"Mr. President, it is my pleasure, therefore, to present
for consideration of this august Body Committee
Report No. 971 of the Committee on Local
Government , recommending approval, with our
proposed committee amendment, of House Bill No.
8729.
"Thank you, Mr. President.
"The President. The Majority Leader is recognized.
"Senator Tatad. Mr. President, I moved (sic) that we
close the period of interpellations.
"The President. Is there any objection? [Silence] There
being none, the period of interpellations is closed.
"Senator Tatad. I move that we now consider the
committee amendments.
"Senator Roco. Mr. President.
"The President. What is the pleasure of Senator Roco?
"Senator Roco. Mr. President, may I ask for a
reconsideration of the ruling on the motion to close the
period of interpellations just to be able to ask a few
questions?
"Senator Tatad. May I move for a reconsideration of
my motion, Mr. President.
"The President. Is there any objection to the
reconsideration of the closing of the period of
interpellations? [Silence] There being none, the
motion is approved.
"Senator Roco is recognized.
"Senator Roco. Will the distinguished gentleman yield
for some questions?
"Senator Sotto. Willingly, Mr. President.
"Senator Roco. Mr. President, together with the
Chairman of the Committee on Local Government, we
were with the sponsors when we approved this bill to
make Santiago a City. That was about two and a half
years ago. At that time, I remember it was the cry of
the city that it be independent. Now we are deleting
that word independent.
"Mr. President, only because I was a co-author and a
co-sponsor, for the Record, I want some explanation
on what happened between then and now that has
made us decide that the City of Santiago should cease
to be independent and should now become a
component city.
"Senator Sotto. Mr. President, the officials of the
province said during the public hearing that they are
no longer vested with the power and authority of
general supervision over the city. The power and
authority is now being exercised by the Office of the
President and it is quite far from the City of Santiago.
"In the public hearing, we also gathered that there is a
clamor from some sectors that they want to participate
in the provincial elections.
"Senator Roco. Mr. President, I did not mean to delay
this. I did want it on record, however. I think there was
a majority of 14,000 who approved the charter, and
maybe we owe it to those who voted for that charter
some degree of respect. But if there has been a change
of political will, there has been a change of political
will, then so be it.
"Thank you, Mr. President.
"Senator Sotto. Mr. President, to be very frank about
it, that was a very important point raised by Senator
Roco, and I will have to place it on the Record of the
Senate that the reason why we are proposing a
committee amendment is that, originally, there was an
objection on the part of the local officials and those
who oppose it by incorporating a plebiscite in this bill.
That was the solution. Because there were some
sectors in the City of Santiago who were opposing the
reclassification or reconversion of the city into a
component city.
"Senator Roco. All I wanted to say, Mr. President --
because the two of us had special pictures (sic) in the
city -- is that I thought it should be put on record that
we have supported originally the proposal to make it
an independent city. But now if it is their request, then,
on the manifestation of the Chairman, let it be so.
"Thank you.
"Senator Drilon. Mr. President.
"Senator Drilon. Will the gentleman yield for a few
questions, Mr. President?
"Senator Sotto. Yes, Mr. President.
"Senator Drilon. Mr. President, further to the
interpellation of our good friend, the Senator from
Bicol, on the matter of the opinion of the citizens of
Santiago City, there is a resolution passed by the
Sanggunian on January 30, 1997 opposing the
conversion of Santiago from an independent city.
"This opposition was placed on records during the
committee hearings. And that is the reason why, as
mentioned by the good sponsor, one of the
amendments is that a plebiscite be conducted before
the law takes effect.
"The question I would like to raise-- and I would like
to recall the statement of our Minority Leader -- is that,
at this time we should not be passing it for a particular
politician.
"In this particular case, it is obvious that this bill is
being passed in order that the additional territory be
added to the election of the provincial officials of the
province of Isabela.
"Now, is this for the benefit of any particular
politician, Mr. President.
"Senator Sotto. If it is, I am not aware of it, Mr.
President.
"Senator Alvarez. Mr. President.
"The President. With the permission of the two
gentlemen on the Floor, Senator Alvarez is
recognized.
"Senator Alvarez. As a born inbred citizen of this city,
Mr. President, may I share some information.
"Mr. President, if we open up the election of the city
to the provincial leadership, it will not be to the benefit
of the provincial leadership, because the provincial
leadership will then campaign in a bigger territory.
"As a matter of fact, the ones who will benefit from
this are the citizens of Santiago who will now be
enfranchised in the provincial electoral process, and
whose children will have the opportunity to grow into
provincial leadership. This is one of the prime reasons
why this amendment is being put forward.
"While it is true that there may have been a resolution
by the city council, those who signed the resolution
were not the whole of the council. This bill was
sponsored by the congressman of that district who
represents a constituency, the voice of the district.
"I think, Mr. President, in considering which interest
is paramount, whose voice must be heard, and if we
have to fathom the interest of the people, the law which
has been crafted here in accordance with the rules
should be given account, as we do give account to
many of the legislations coming from the House on
local issues.
"Senator Drilon. Mr. President, the reason why I am
raising this question is that, as Senator Roco said, just
two-and-a-half years ago we passed a bill which
indeed disenfranchized--if we want to use that phrase-
- the citizens of the City of Santiago in the matter of
the provincial election. Two-and-a-half years after, we
are changing the rule.
"In the original charter, the citizens of the City of
Santiago participated in a plebiscite in order to
approve the conversion of the city into an independent
city. I believe that the only way to resolve this issue
raised by Senator Roco is again to subject this issue to
another plebiscite as part of the provision of this
proposed bill and as will be proposed by the
Committee Chairman as an amendment.
"Thank you very much, Mr. President.
"Senator Alvarez. Mr. President, the Constitution does
not require that the change from an independent to a
component city be subjected to a plebiscite.
Sections 10, 11, 12 of Article X of the 1987
Constitution provides as follows:
Sec. 10. No province, city, municipality, or barangay
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 approval by a majority of the votes
cast in a plebiscite in the political units directly
affected.
This change from an independent city into a
component city is none of those enumerated. So the
proposal coming from the House is in adherence to this
constitutional mandate which does not require a
plebiscite.
Senator Sotto. Mr. President, the key word here is
conversion. The word conversion appears in that
provision wherein we must call a plebiscite. During
the public hearing, the representative of Congressman
Abaya was insisting that this is not a conversion; this
is merely a reclassification. But it is clear in the bill.
We are amending a bill that converts, and we are
converting it into a component city. That is how the
members of the committee felt. That is why we have
proposed an amendment to this, and this is to
incorporate a plebiscite in as much as there is no
provision on incorporating a plebiscite. Because we
would like not only to give the other people of
Santiago a chance or be enfranchised as far as the
leadership of the province is concerned, but also we
will give a chance to those who are opposing it. To
them, this is the best compromise. Let the people
decide, instead of the political leaders of Isabela
deciding for them.
"Senator Tatad. Mr. President.
"The President. The Majority Leader is recognized.
"Senator Tatad. At this point, Mr. President, I think we
can move to close the period of interpellations.
"The President. Is there any objection? [Silence] There
being none, the motion is approved.
"Senator Tatad. I move that we now consider the
committee amendments, Mr. President.
"The President. Is there any objection? Silence] There
being none, the motion is approved.
"Senator Sotto. On page 2, after line 13, insert a new
Section 3, as follows:
"SEC. 3. SECTION 49 OF REPUBLIC ACT NO.
7720 IS HEREBY AMENDED BY DELETING THE
ENTIRE SECTION AND IN ITS STEAD
SUBSTITUTE THE FOLLOWING:
"SEC. 49. PLEBISCITE. - THE CONVERSION OF
THE CITY OF SANTIAGO INTO A COMPONENT
CITY OF THE PROVINCE OF ISABELA SHALL
TAKE EFFECT UPON THE RATIFICATION OF
THIS ACT BY A MAJORITY OF THE PEOPLE OF
SAID CITY IN A PLEBISCITE WHICH SHALL BE
HELD FOR THE PURPOSE WITHIN SIXTY (60)
DAYS FROM THE APPROVAL OF THIS ACT.
THE COMMISSION ON ELECTIONS SHALL
CONDUCT AND SUPERVISE SUCH PLEBISCITE.
"The President. Is there any objection?
"Senator Enrile. Mr. President.
"The President. Senator Enrile is recognized.
"Senator Enrile. I object to this committee amendment,
Mr. President.
"SUSPENSION OF SESSION
"Senator Tatad. May I ask for a one-minute suspension
of the session.
"The President. The session is suspended for a few
minutes if there is no objection. [There was none]
"It was 7:54 p.m.
"RESUMPTION OF SESSION
"At 7:57 p.m., the session was resumed.
"The President. The session is resumed.
"Senator Sotto is recognized.
"Senator Sotto. Mr. President, after a very
enlightening conversation with the elders of the Body,
I withdraw my amendment.
"The President. The amendment is withdrawn.
"Senator Maceda. Mr. President.
"The President. Senator Maceda is recognized.
"Senator Maceda. We wish to thank the sponsor for the
withdrawal of the amendment.
"Mr. President, with due respect to the Senator from
Isabela -- I am no great fan of the Senator from Isabela
-- but it so happens that this is a local bill affecting not
only his province but his own city where he is a
resident and registered voter.
"So, unless the issue is really a matter of life and death
and of national importance, senatorial courtesy
demands that we, as much as possible, accommodate
the request of the Senator from Isabela as we have
done on matters affecting the district of other senators.
I need not remind them.
"Thank you anyway, Mr. President.
"Senator Alvarez. Mr. President.
"The President. Senator Alvarez is recognized.
"Senator Alvarez. Mr. President, may I express my
deepest appreciation for the statement of the
gentleman from Ilocos and Laguna. Whatever he may
have said, the feeling is not mutual. At least for now, I
have suddenly become his great fan for the evening.
"May I put on record, Mr. President, that I campaigned
against the cityhood of Santiago not because I do not
want it to be a city but because it had disenfranchised
the young men of my city from aspiring for the
leadership of the province. The town is the gem of the
province. How could we extricate the town from the
province?
"But I would like to thank the gentleman, Mr.
President, and also the Chairman of the Committee.
"Senator Tatad. Mr. President.
"The President. The Majority Leader is recognized.
"Senator Tatad. There being no committee
amendments, I move that the period of committee
amendments be closed.
"The President. Shall we amend the title of this bill by
removing the word independent preceding component
city?
"Senator Sotto. No, Mr. President. We are merely
citing the title. The main title of this House Bill No.
8729 is An Act Amending Certain Sections of
Republic Act 7720. The title is the title of Republic
Act 7720. So, I do not think that we should amend that
anymore.
"The President. What is the pending motion? Will the
gentleman kindly state the motion?
"Senator Tatad. I move that we close the period of
committee amendments.
"The President. Is there any objection? [Silence] There
being none, the motion is approved.
"Senator Tatad. Unless there are any individual
amendments, I move that we close the period of
individual amendments.
"The President. Is there any objection? [Silence] There
being none, the period of individual amendments is
closed.
"APPROVAL OF H.B. NO. 8729 ON SECOND
READING
"Senator Tatad. Mr. President, I move that we vote on
Second Reading on House Bill No. 8729.
"The President. Is there any objection? [Silence] There
being none, we shall now vote on Second Reading on
House Bill No. 8729.
"As many as are in favor of the bill, say aye.
"Several Members. Aye
As many as are against the bill, say nay. [Silence]
"House Bill No. 8729 is approved on Second
Reading."
The debates cannot but raise some quizzical eyebrows
on the real purpose for the downgrading of the city of
Santiago. There is all the reason to listen to the voice
of the people of the city via a plebiscite.
In the case of Tan, et al. vs. COMELEC,15 BP 885
was enacted partitioning the province of Negros
Occidental without consulting its people in a
plebiscite. In his concurring opinion striking down the
law as unconstitutional, Chief Justice Teehankee cited
the illicit political purpose behind its enactment, viz:
"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
peoples power and steel the ordinary citizen to perform
deeds of courage and patriotism that makes one proud
to be a Filipino today.
"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 Las
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.
Mr. Justice Mendoza and Mr. Justice Buena also cite
two instances when allegedly independent component
cities were downgraded into component cities without
need of a plebiscite. They cite the City of Oroquieta,
Misamis Occidental,16 and the City of San Carlos,
Pangasinan17 whose charters were amended to allow
their people to vote and be voted upon in the election
of officials of the province to which their city belongs
without submitting the amendment to a plebiscite.
With due respect, the cities of Oroquieta and San
Carlos are not similarly situated as the city of Santiago.
The said two cities then were not independent
component cities unlike the city of Santiago. The two
cities were chartered but were not independent
component cities for both were not highly urbanized
cities which alone were considered independent cities
at that time. Thus, when the case of San Carlos City
was under consideration by the Senate, Senator
Pimentel explained:18
"x x x Senator Pimentel. The bill under consideration,
Mr. President, merely empowers the voters of San
Carlos to vote in the elections of provincial officials.
There is no intention whatsoever to downgrade the
status of the City of San Carlos and there is no showing
whatsoever that the enactment of this bill will, in any
way, diminish the powers and prerogatives already
enjoyed by the City of San Carlos. In fact, the City of
San Carlos as of now, is a component city. It is not a
highly urbanized city. Therefore, this bill merely, as
we said earlier, grants the voters of the city, the power
to vote in provincial elections, without in any way
changing the character of its being a component city.
It is for this reason that I vote in favor of this bill.
It was Senator Pimentel who also sponsored the bill19
allowing qualified voters of the city of Oroquieta to
vote in provincial elections of the province of Misamis
Occidental. In his sponsorship speech, he explained
that the right to vote being given to the people of
Oroquieta City was consistent with its status as a
component city.20 Indeed, during the debates, former
Senator Neptali Gonzales pointed out the need to
remedy the anomalous situation then obtaining xxx
where voters of one component city can vote in the
provincial election while the voters of another
component city cannot vote simply because their
charters so provide.21 Thus, Congress amended other
charters of component cities prohibiting their people
from voting in provincial elections.
IN VIEW WHEREOF, the petition is granted.
Republic Act No. 8528 is declared unconstitutional
and the writ of prohibition is hereby issued
commanding the respondents to desist from
implementing said law.
SO ORDERED.
5. League of Cities vs Comelec
These are consolidated petitions for prohibition1 with
prayer for the issuance of a writ of preliminary
injunction or temporary restraining order filed by the
League of Cities of the Philippines, City of Iloilo, City
of Calbayog, and Jerry P. Treas2 assailing the
constitutionality of the subject Cityhood Laws and
enjoining the Commission on Elections (COMELEC)
and respondent municipalities from conducting
plebiscites pursuant to the Cityhood Laws.
The Facts
During the 11th Congress,3 Congress enacted into law
33 bills converting 33 municipalities into cities.
However, Congress did not act on bills converting 24
other municipalities into cities.
During the 12th Congress,4 Congress enacted into law
Republic Act No. 9009 (RA 9009),5 which took effect
on 30 June 2001. RA 9009 amended Section 450 of the
Local Government Code by increasing the annual
income requirement for conversion of a municipality
into a city from P20 million to P100 million. The
rationale for the amendment was to restrain, in the
words of Senator Aquilino Pimentel, "the mad rush" of
municipalities to convert into cities solely to secure a
larger share in the Internal Revenue Allotment despite
the fact that they are incapable of fiscal
independence.6
After the effectivity of RA 9009, the House of
Representatives of the 12th Congress7 adopted Joint
Resolution No. 29,8 which sought to exempt from the
P100 million income requirement in RA 9009 the 24
municipalities whose cityhood bills were not approved
in the 11th Congress. However, the 12th Congress
ended without the Senate approving Joint Resolution
No. 29.
During the 13th Congress,9 the House of
Representatives re-adopted Joint Resolution No. 29 as
Joint Resolution No. 1 and forwarded it to the Senate
for approval. However, the Senate again failed to
approve the Joint Resolution. Following the advice of
Senator Aquilino Pimentel, 16 municipalities filed,
through their respective sponsors, individual cityhood
bills. The 16 cityhood bills contained a common
provision exempting all the 16 municipalities from the
P100 million income requirement in RA 9009.
On 22 December 2006, the House of Representatives
approved the cityhood bills. The Senate also approved
the cityhood bills in February 2007, except that of
Naga, Cebu which was passed on 7 June 2007. The
cityhood bills lapsed into law (Cityhood Laws10) on
various dates from March to July 2007 without the
President's signature.11
The Cityhood Laws direct the COMELEC to hold
plebiscites to determine whether the voters in each
respondent municipality approve of the conversion of
their municipality into a city.
Petitioners filed the present petitions to declare the
Cityhood Laws unconstitutional for violation of
Section 10, Article X of the Constitution, as well as for
violation of the equal protection clause.12 Petitioners
also lament that the wholesale conversion of
municipalities into cities will reduce the share of
existing cities in the Internal Revenue Allotment
because more cities will share the same amount of
internal revenue set aside for all cities under Section
285 of the Local Government Code.13
The Issues
The petitions raise the following fundamental issues:
1. Whether the Cityhood Laws violate Section 10,
Article X of the Constitution; and
2. Whether the Cityhood Laws violate the equal
protection clause.
The Ruling of the Court
We grant the petitions.
The Cityhood Laws violate Sections 6 and 10, Article
X of the Constitution, and are thus unconstitutional.
First, applying the P100 million income requirement
in RA 9009 to the present case is a prospective, not a
retroactive application, because RA 9009 took effect
in 2001 while the cityhood bills became law more than
five years later.
Second, the Constitution requires that Congress shall
prescribe all the criteria for the creation of a city in the
Local Government Code and not in any other law,
including the Cityhood Laws.
Third, the Cityhood Laws violate Section 6, Article X
of the Constitution because they prevent a fair and just
distribution of the national taxes to local government
units.
Fourth, the criteria prescribed in Section 450 of the
Local Government Code, as amended by RA 9009, for
converting a municipality into a city are clear, plain
and unambiguous, needing no resort to any statutory
construction.
Fifth, the intent of members of the 11th Congress to
exempt certain municipalities from the coverage of
RA 9009 remained an intent and was never written into
Section 450 of the Local Government Code.
Sixth, the deliberations of the 11th or 12th Congress
on unapproved bills or resolutions are not extrinsic
aids in interpreting a law passed in the 13th Congress.
Seventh, even if the exemption in the Cityhood Laws
were written in Section 450 of the Local Government
Code, the exemption would still be unconstitutional
for violation of the equal protection clause.
Preliminary Matters
Prohibition is the proper action for testing the
constitutionality of laws administered by the
COMELEC,14 like the Cityhood Laws, which direct
the COMELEC to hold plebiscites in implementation
of the Cityhood Laws. Petitioner League of Cities of
the Philippines has legal standing because Section 499
of the Local Government Code tasks the League with
the "primary purpose of ventilating, articulating and
crystallizing issues affecting city government
administration and securing, through proper and legal
means, solutions thereto."15 Petitioners-in-
intervention,16 which are existing cities, have legal
standing because their Internal Revenue Allotment
will be reduced if the Cityhood Laws are declared
constitutional. Mayor Jerry P. Treas has legal
standing because as Mayor of Iloilo City and as a
taxpayer he has sufficient interest to prevent the
unlawful expenditure of public funds, like the release
of more Internal Revenue Allotment to political units
than what the law allows.
Applying RA 9009 is a Prospective Application of the
Law
RA 9009 became effective on 30 June 2001 during the
11th Congress. This law specifically amended Section
450 of the Local Government Code, which now
provides:
Section 450. Requisites for Creation. (a) A
municipality or a cluster of barangays may be
converted into a component city if it has a locally
generated average annual income, as certified by the
Department of Finance, of at least One hundred
million pesos (P100,000,000.00) for the last two (2)
consecutive years based on 2000 constant prices, and
if it has either of the following requisites:
(i) a contiguous territory of at least one hundred (100)
square kilometers, as certified by the Land
Management Bureau; or
(ii) a population of not less than one hundred fifty
thousand (150,000) inhabitants, as certified by the
National Statistics Office.
The creation thereof shall not reduce the land area,
population and income of the original unit or units at
the time of said creation to less than the minimum
requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created city
shall be properly identified by metes and bounds. The
requirement on land area shall not apply where the city
proposed to be created is composed of one (1) or more
islands. The territory need not be contiguous if it
comprises two (2) or more islands.
(c) The average annual income shall include the
income accruing to the general fund, exclusive of
special funds, transfers, and non-recurring income.
(Emphasis supplied)
Thus, RA 9009 increased the income requirement for
conversion of a municipality into a city from P20
million to P100 million. Section 450 of the Local
Government Code, as amended by RA 9009, does not
provide any exemption from the increased income
requirement.
Prior to the enactment of RA 9009, a total of 57
municipalities had cityhood bills pending in Congress.
Thirty-three cityhood bills became law before the
enactment of RA 9009. Congress did not act on 24
cityhood bills during the 11th Congress.
During the 12th Congress, the House of
Representatives adopted Joint Resolution No. 29,
exempting from the income requirement of P100
million in RA 9009 the 24 municipalities whose
cityhood bills were not acted upon during the 11th
Congress. This Resolution reached the Senate.
However, the 12th Congress adjourned without the
Senate approving Joint Resolution No. 29.
During the 13th Congress, 16 of the 24 municipalities
mentioned in the unapproved Joint Resolution No. 29
filed between November and December of 2006,
through their respective sponsors in Congress,
individual cityhood bills containing a common
provision, as follows:
Exemption from Republic Act No. 9009. - The City of
x x x shall be exempted from the income requirement
prescribed under Republic Act No. 9009.
This common provision exempted each of the 16
municipalities from the income requirement of P100
million prescribed in Section 450 of the Local
Government Code, as amended by RA 9009. These
cityhood bills lapsed into law on various dates from
March to July 2007 after President Gloria Macapagal-
Arroyo failed to sign them.
Indisputably, Congress passed the Cityhood Laws
long after the effectivity of RA 9009. RA 9009 became
effective on 30 June 2001 or during the 11th Congress.
The 13th Congress passed in December 2006 the
cityhood bills which became law only in 2007. Thus,
respondent municipalities cannot invoke the principle
of non-retroactivity of laws.17 This basic rule has no
application because RA 9009, an earlier law to the
Cityhood Laws, is not being applied retroactively but
prospectively.
Congress Must Prescribe in the Local Government
Code All Criteria
Section 10, Article X of the 1987 Constitution
provides:
No province, city, municipality, or barangay shall 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 approval by a majority of the votes cast in a
plebiscite in the political units directly affected.
(Emphasis supplied)
The Constitution is clear. The creation of local
government units must follow the criteria established
in the Local Government Code and not in any other
law. There is only one Local Government Code.18 The
Constitution requires Congress to stipulate in the
Local Government Code all the criteria necessary for
the creation of a city, including the conversion of a
municipality into a city. Congress cannot write such
criteria in any other law, like the Cityhood Laws.
The criteria prescribed in the Local Government Code
govern exclusively the creation of a city. No other law,
not even the charter of the city, can govern such
creation. The clear intent of the Constitution is to
insure that the creation of cities and other political
units must follow the same uniform, non-
discriminatory criteria found solely in the Local
Government Code. Any derogation or deviation from
the criteria prescribed in the Local Government Code
violates Section 10, Article X of the Constitution.
RA 9009 amended Section 450 of the Local
Government Code to increase the income requirement
from P20 million to P100 million for the creation of a
city. This took effect on 30 June 2001. Hence, from
that moment the Local Government Code required that
any municipality desiring to become a city must satisfy
the P100 million income requirement. Section 450 of
the Local Government Code, as amended by RA 9009,
does not contain any exemption from this income
requirement.
In enacting RA 9009, Congress did not grant any
exemption to respondent municipalities, even though
their cityhood bills were pending in Congress when
Congress passed RA 9009. The Cityhood Laws, all
enacted after the effectivity of RA 9009, explicitly
exempt respondent municipalities from the increased
income requirement in Section 450 of the Local
Government Code, as amended by RA 9009. Such
exemption clearly violates Section 10, Article X of the
Constitution and is thus patently unconstitutional. To
be valid, such exemption must be written in the Local
Government Code and not in any other law, including
the Cityhood Laws.
Cityhood Laws Violate Section 6, Article X of the
Constitution
Uniform and non-discriminatory criteria as prescribed
in the Local Government Code are essential to
implement a fair and equitable distribution of national
taxes to all local government units. Section 6, Article
X of the Constitution provides:
Local government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them. (Emphasis supplied)
If the criteria in creating local government units are not
uniform and discriminatory, there can be no fair and
just distribution of the national taxes to local
government units.
A city with an annual income of only P20 million, all
other criteria being equal, should not receive the same
share in national taxes as a city with an annual income
of P100 million or more. The criteria of land area,
population and income, as prescribed in Section 450 of
the Local Government Code, must be strictly followed
because such criteria, prescribed by law, are material
in determining the "just share" of local government
units in national taxes. Since the Cityhood Laws do not
follow the income criterion in Section 450 of the Local
Government Code, they prevent the fair and just
distribution of the Internal Revenue Allotment in
violation of Section 6, Article X of the Constitution.
Section 450 of the Local Government Code is Clear,
Plain and Unambiguous
There can be no resort to extrinsic aids like
deliberations of Congress if the language of the law
is plain, clear and unambiguous. Courts determine the
intent of the law from the literal language of the law,
within the law's four corners.19 If the language of the
law is plain, clear and unambiguous, courts simply
apply the law according to its express terms. If a literal
application of the law results in absurdity,
impossibility or injustice, then courts may resort to
extrinsic aids of statutory construction like the
legislative history of the law.20
Congress, in enacting RA 9009 to amend Section 450
of the Local Government Code, did not provide any
exemption from the increased income requirement, not
even to respondent municipalities whose cityhood bills
were then pending when Congress passed RA 9009.
Section 450 of the Local Government Code, as
amended by RA 9009, contains no exemption
whatsoever. Since the law is clear, plain and
unambiguous that any municipality desiring to convert
into a city must meet the increased income
requirement, there is no reason to go beyond the letter
of the law in applying Section 450 of the Local
Government Code, as amended by RA 9009.
The 11th Congress' Intent was not Written into the
Local Government Code
True, members of Congress discussed exempting
respondent municipalities from RA 9009, as shown by
the various deliberations on the matter during the 11th
Congress. However, Congress did not write this
intended exemption into law. Congress could have
easily included such exemption in RA 9009 but
Congress did not. This is fatal to the cause of
respondent municipalities because such exemption
must appear in RA 9009 as an amendment to Section
450 of the Local Government Code. The Constitution
requires that the criteria for the conversion of a
municipality into a city, including any exemption from
such criteria, must all be written in the Local
Government Code. Congress cannot prescribe such
criteria or exemption from such criteria in any other
law. In short, Congress cannot create a city through a
law that does not comply with the criteria or exemption
found in the Local Government Code.
Section 10 of Article X is similar to Section 16, Article
XII of the Constitution prohibiting Congress from
creating private corporations except by a general law.
Section 16 of Article XII provides:
The Congress shall not, except by general law, provide
for the formation, organization, or regulation of
private corporations. Government-owned or
controlled corporations may be created or established
by special charters in the interest of the common good
and subject to the test of economic viability.
(Emphasis supplied)
Thus, Congress must prescribe all the criteria for the
"formation, organization, or regulation" of private
corporations in a general law applicable to all without
discrimination.21 Congress cannot create a private
corporation through a special law or charter.
Deliberations of the 11th Congress on Unapproved
Bills Inapplicable
Congress is not a continuing body.22 The unapproved
cityhood bills filed during the 11th Congress became
mere scraps of paper upon the adjournment of the 11th
Congress. All the hearings and deliberations
conducted during the 11th Congress on unapproved
bills also became worthless upon the adjournment of
the 11th Congress. These hearings and deliberations
cannot be used to interpret bills enacted into law in the
13th or subsequent Congresses.
The members and officers of each Congress are
different. All unapproved bills filed in one Congress
become functus officio upon adjournment of that
Congress and must be re-filed anew in order to be
taken up in the next Congress. When their respective
authors re-filed the cityhood bills in 2006 during the
13th Congress, the bills had to start from square one
again, going through the legislative mill just like bills
taken up for the first time, from the filing to the
approval. Section 123, Rule XLIV of the Rules of the
Senate, on Unfinished Business, provides:
Sec. 123. x x x
All pending matters and proceedings shall terminate
upon the expiration of one (1) Congress, but may be
taken by the succeeding Congress as if presented for
the first time. (Emphasis supplied)
Similarly, Section 78 of the Rules of the House of
Representatives, on Unfinished Business, states:
Section 78. Calendar of Business. The Calendar of
Business shall consist of the following:
a. Unfinished Business. This is business being
considered by the House at the time of its last
adjournment. Its consideration shall be resumed until
it is disposed of. The Unfinished Business at the end
of a session shall be resumed at the commencement of
the next session as if no adjournment has taken place.
At the end of the term of a Congress, all Unfinished
Business are deemed terminated. (Emphasis supplied)
Thus, the deliberations during the 11th Congress on
the unapproved cityhood bills, as well as the
deliberations during the 12th and 13th Congresses on
the unapproved resolution exempting from RA 9009
certain municipalities, have no legal significance.
They do not qualify as extrinsic aids in construing laws
passed by subsequent Congresses.
Applicability of Equal Protection Clause
If Section 450 of the Local Government Code, as
amended by RA 9009, contained an exemption to the
P100 million annual income requirement, the criteria
for such exemption could be scrutinized for possible
violation of the equal protection clause. Thus, the
criteria for the exemption, if found in the Local
Government Code, could be assailed on the ground of
absence of a valid classification. However, Section
450 of the Local Government Code, as amended by
RA 9009, does not contain any exemption. The
exemption is contained in the Cityhood Laws, which
are unconstitutional because such exemption must be
prescribed in the Local Government Code as mandated
in Section 10, Article X of the Constitution.
Even if the exemption provision in the Cityhood Laws
were written in Section 450 of the Local Government
Code, as amended by RA 9009, such exemption would
still be unconstitutional for violation of the equal
protection clause. The exemption provision merely
states, "Exemption from Republic Act No. 9009 The
City of x x x shall be exempted from the income
requirement prescribed under Republic Act No. 9009."
This one sentence exemption provision contains no
classification standards or guidelines differentiating
the exempted municipalities from those that are not
exempted.
Even if we take into account the deliberations in the
11th Congress that municipalities with pending
cityhood bills should be exempt from the P100 million
income requirement, there is still no valid
classification to satisfy the equal protection clause.
The exemption will be based solely on the fact that the
16 municipalities had cityhood bills pending in the
11th Congress when RA 9009 was enacted. This is not
a valid classification between those entitled and those
not entitled to exemption from the P100 million
income requirement.
To be valid, the classification in the present case must
be based on substantial distinctions, rationally related
to a legitimate government objective which is the
purpose of the law,23 not limited to existing
conditions only, and applicable to all similarly
situated. Thus, this Court has ruled:
The equal protection clause of the 1987 Constitution
permits a valid classification under the following
conditions:
1. The classification must rest on substantial
distinctions;
2. The classification must be germane to the purpose
of the law;
3. The classification must not be limited to existing
conditions only; and
4. The classification must apply equally to all
members of the same class.24
There is no substantial distinction between
municipalities with pending cityhood bills in the 11th
Congress and municipalities that did not have pending
bills. The mere pendency of a cityhood bill in the 11th
Congress is not a material difference to distinguish one
municipality from another for the purpose of the
income requirement. The pendency of a cityhood bill
in the 11th Congress does not affect or determine the
level of income of a municipality. Municipalities with
pending cityhood bills in the 11th Congress might
even have lower annual income than municipalities
that did not have pending cityhood bills. In short, the
classification criterion mere pendency of a cityhood
bill in the 11th Congress is not rationally related to
the purpose of the law which is to prevent fiscally non-
viable municipalities from converting into cities.
Municipalities that did not have pending cityhood bills
were not informed that a pending cityhood bill in the
11th Congress would be a condition for exemption
from the increased P100 million income requirement.
Had they been informed, many municipalities would
have caused the filing of their own cityhood bills.
These municipalities, even if they have bigger annual
income than the 16 respondent municipalities, cannot
now convert into cities if their income is less than P100
million.
The fact of pendency of a cityhood bill in the 11th
Congress limits the exemption to a specific condition
existing at the time of passage of RA 9009. That
specific condition will never happen again. This
violates the requirement that a valid classification
must not be limited to existing conditions only. This
requirement is illustrated in Mayflower Farms, Inc. v.
Ten Eyck,25 where the challenged law allowed milk
dealers engaged in business prior to a fixed date to sell
at a price lower than that allowed to newcomers in the
same business. In Mayflower, the U.S. Supreme Court
held:
We are referred to a host of decisions to the effect that
a regulatory law may be prospective in operation and
may except from its sweep those presently engaged in
the calling or activity to which it is directed. Examples
are statutes licensing physicians and dentists, which
apply only to those entering the profession subsequent
to the passage of the act and exempt those then in
practice, or zoning laws which exempt existing
buildings, or laws forbidding slaughterhouses within
certain areas, but excepting existing establishments.
The challenged provision is unlike such laws, since, on
its face, it is not a regulation of a business or an activity
in the interest of, or for the protection of, the public,
but an attempt to give an economic advantage to those
engaged in a given business at an arbitrary date as
against all those who enter the industry after that date.
The appellees do not intimate that the classification
bears any relation to the public health or welfare
generally; that the provision will discourage
monopoly; or that it was aimed at any abuse,
cognizable by law, in the milk business. In the absence
of any such showing, we have no right to conjure up
possible situations which might justify the
discrimination. The classification is arbitrary and
unreasonable and denies the appellant the equal
protection of the law. (Emphasis supplied)
In the same vein, the exemption provision in the
Cityhood Laws gives the 16 municipalities a unique
advantage based on an arbitrary date the filing of
their cityhood bills before the end of the 11th Congress
- as against all other municipalities that want to convert
into cities after the effectivity of RA 9009.
Furthermore, limiting the exemption only to the 16
municipalities violates the requirement that the
classification must apply to all similarly situated.
Municipalities with the same income as the 16
respondent municipalities cannot convert into cities,
while the 16 respondent municipalities can. Clearly, as
worded the exemption provision found in the Cityhood
Laws, even if it were written in Section 450 of the
Local Government Code, would still be
unconstitutional for violation of the equal protection
clause.
WHEREFORE, we GRANT the petitions and declare
UNCONSTITUTIONAL the Cityhood Laws, namely:
Republic Act Nos. 9389, 9390, 9391, 9392, 9393,
9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434,
9435, 9436, and 9491.
6. Latasa vs Comelec
This is a petition for certiorari under Rule 65 of the
Rules of Court which seeks to challenge the resolution
issued by the First Division of the Commission on
Elections (COMELEC) dated April 27, 2001 in SPA
Case No. 01-059 entitled, Romeo M. Sunga,
petitioner, versus Arsenio A. Latasa, respondent, and
the Resolution of the COMELEC en banc denying
herein petitioners Motion for Reconsideration. The
assailed Resolution denied due course to the certificate
of candidacy of petitioner Arsenio A. Latasa, declaring
him disqualified to run for mayor of Digos City, Davao
del Sur Province in the May 14, 2001 elections,
ordering that all votes cast in his favor shall not be
counted, and if he has been proclaimed winner,
declaring said proclamation null and void.
The facts are fairly simple.
Petitioner Arsenio A. Latasa, was elected mayor of the
Municipality of Digos, Davao del Sur in the elections
of 1992, 1995, and 1998. During petitioners third term,
the Municipality of Digos was declared a component
city, to be known as the City of Digos. A plebiscite
conducted on September 8, 2000 ratified Republic Act
No. 8798 entitled, An Act Converting the Municipality
of Digos, Davao del Sur Province into a Component
City to be known as the City of Digos or the Charter
of the City of Digos. This event also marked the end
of petitioners tenure as mayor of the Municipality of
Digos. However, under Section 53, Article IX of the
Charter, petitioner was mandated to serve in a hold-
over capacity as mayor of the new City of Digos.
Hence, he took his oath as the city mayor.
On February 28, 2001, petitioner filed his certificate of
candidacy for city mayor for the May 14, 2001
elections. He stated therein that he is eligible therefor,
and likewise disclosed that he had already served for
three consecutive terms as mayor of the Municipality
of Digos and is now running for the first time for the
position of city mayor.
On March 1, 2001, private respondent Romeo M.
Sunga, also a candidate for city mayor in the said
elections, filed before the COMELEC a Petition to
Deny Due Course, Cancel Certificate of Candidacy
and/ or For Disqualification[1] against petitioner
Latasa. Respondent Sunga alleged therein that
petitioner falsely represented in his certificate of
candidacy that he is eligible to run as mayor of Digos
City since petitioner had already been elected and
served for three consecutive terms as mayor from 1992
to 2001.
On March 5, 2001, petitioner Latasa filed his
Answer,[2] arguing that he did not make any false
representation in his certificate of candidacy since he
fully disclosed therein that he had served as mayor of
the Municipality of Digos for three consecutive terms.
Moreover, he argued that this fact does not bar him
from filing a certificate of candidacy for the May 14,
2001 elections since this will be the first time that he
will be running for the post of city mayor.
Both parties submitted their position papers on March
19, 2001.[3]
On April 27, 2001, respondent COMELECs First
Division issued a Resolution, the dispositive portion of
which reads, as follows:
Wherefore, premises considered, the respondents
certificate of candidacy should be cancelled for being
a violation of the three (3)-term rule proscribed by the
1987 Constitution and the Local Government Code of
1991.[4]
Petitioner filed his Motion for Reconsideration dated
May 4, 2001,[5] which remained unacted upon until
the day of the elections, May 14, 2001. On May 16,
2001, private respondent Sunga filed an Ex Parte
Motion for Issuance of Temporary Restraining Order
Enjoining the City Board of Canvassers From
Canvassing or Tabulating Respondents Votes, and
From Proclaiming Him as the Duly Elected Mayor if
He Wins the Elections.[6] Despite this, however,
petitioner Latasa was still proclaimed winner on May
17, 2001, having garnered the most number of votes.
Consequently, private respondent Sunga filed, on May
27, 2001, a Supplemental Motion[7] which essentially
sought the annulment of petitioners proclamation and
the suspension of its effects.
On July 1, 2001, petitioner was sworn into and
assumed his office as the newly elected mayor of
Digos City. It was only on August 27, 2002 that the
COMELEC en banc issued a Resolution denying
petitioners Motion for Reconsideration.
Hence, this petition.
It cannot be denied that the Court has previously held
in Mamba-Perez v. COMELEC[8] that after an
elective official has been proclaimed as winner of the
elections, the COMELEC has no jurisdiction to pass
upon his qualifications. An opposing partys remedies
after proclamation would be to file a petition for quo
warranto within ten days after the proclamation.
On the other hand, certain peculiarities in the present
case reveal the fact that its very heart is something
which this Court considers of paramount interest. This
Court notes from the very beginning that petitioner
himself was already entertaining some doubt as to
whether or not he is indeed eligible to run for city
mayor in the May 14, 2001 elections. In his certificate
of candidacy, after the phrase I am eligible, petitioner
inserted a footnote and indicated:
*Having served three (3) term[s] as municipal mayor
and now running for the first time as city mayor.[9]
Time and again, this Court has held that rules of
procedure are only tools designed to facilitate the
attainment of justice, such that when rigid application
of the rules tend to frustrate rather than promote
substantial justice, this Court is empowered to suspend
their operation. We will not hesitate to set aside
technicalities in favor of what is fair and just.[10]
The spirit embodied in a Constitutional provision must
not be attenuated by a rigid application of procedural
rules.
The present case raises a novel issue with respect to an
explicit Constitutional mandate: whether or not
petitioner Latasa is eligible to run as candidate for the
position of mayor of the newly-created City of Digos
immediately after he served for three consecutive
terms as mayor of the Municipality of Digos.
As a rule, in a representative democracy, the people
should be allowed freely to choose those who will
govern them. Article X, Section 8 of the Constitution
is an exception to this rule, in that it limits the range of
choice of the people.
Section 8. The term of office of elective local officials,
except barangay officials, which shall be determined
by law, shall be three years and no such official shall
serve for more than three consecutive terms. Voluntary
renunciation of the office for any length of time shall
not be considered as an interruption in the continuity
of his service for the full term for which he was
elected.
An examination of the historical background of the
subject Constitutional provision reveals that the
members of the Constitutional Commission were as
much concerned with preserving the freedom of
choice of the people as they were with preventing the
monopolization of political power. In fact, they
rejected a proposal set forth by Commissioner
Edmundo Garcia that after serving three consecutive
terms or nine years, there should be no further re-
election for local and legislative officials.[11] The
members, instead, adopted the alternative proposal of
Commissioner Christian Monsod that such officials be
simply barred from running for the same position in
the succeeding election following the expiration of the
third consecutive term:
MR. MONSOD: Madam President, I was reflecting on
this issue earlier and I asked to speak because in this
draft Constitution, we are recognizing peoples power.
We have said that now there is a new awareness, a new
kind of voter, a new kind of Filipino. And yet at the
same time, we are prescreening candidates among
whom they will choose. We are saying that this 48-
member Constitutional Commission has decreed that
those who have served for a period of nine years are
barred from running for the same position.
The argument is that there may be other positions. But
there are some people who are very skilled and good
at legislation, and yet are not of a national stature to be
Senators. They may be perfectly honest, perfectly
competent and with integrity. They get voted into
office at the age of 25, which is the age we provide for
Congressmen. And at 34 years old we put them into
pasture.
Second, we say that we want to broaden the choices of
the people. We are talking here only of congressional
or senatorial seats. We want to broaden the peoples
choice but we are making prejudgment today because
we exclude a certain number of people. We are, in
effect, putting an additional qualification for office
that the officials must have not have served a total of
more than a number of years in their lifetime.
Third, we are saying that by putting people to pasture,
we are creating a reserve of statesmen, but the future
participation of these statesmen is limited. Their skills
may be only in some areas, but we are saying that they
are going to be barred from running for the same
position.
Madam President, the ability and capacity of a
statesman depend as well on the day-to-day honing of
his skills and competence, in intellectual combat, in
concern and contact with the people, and here we are
saying that he is going to be barred from the same kind
of public service.
I do not think it is in our place today to make such a
very important and momentous decision with respect
to many of our countrymen in the future who may have
a lot more years ahead of them in the service of their
country.
If we agree that we will make sure that these people do
not set up structures that will perpetuate them, then let
us give them this rest period of three years or whatever
it is. Maybe during that time, we would even agree that
their fathers or mothers or relatives of the second
degree should not run. But let us not bar them for life
after serving the public for number of years.[12]
The framers of the Constitution, by including this
exception, wanted to establish some safeguards
against the excessive accumulation of power as a result
of consecutive terms. As Commissioner Blas Ople
stated during the deliberations:
x x x I think we want to prevent future situations
where, as a result of continuous service and frequent
re-elections, officials from the President down to the
municipal mayor tend to develop a proprietary interest
in their positions and to accumulate these powers and
perquisites that permit them to stay on indefinitely or
to transfer these posts to members of their families in
a subsequent election. x x x [13]
An elective local official, therefore, is not barred from
running again in for same local government post,
unless two conditions concur: 1.) that the official
concerned has been elected for three consecutive terms
to the same local government post, and 2.) that he has
fully served three consecutive terms.[14]
In the present case, petitioner states that a city and a
municipality have separate and distinct personalities.
Thus they cannot be treated as a single entity and must
be accorded different treatment consistent with
specific provisions of the Local Government Code. He
does not deny the fact that he has already served for
three consecutive terms as municipal mayor. However,
he asserts that when Digos was converted from a
municipality to a city, it attained a different juridical
personality. Therefore, when he filed his certificate of
candidacy for city mayor, he cannot be construed as
vying for the same local government post.
For a municipality to be converted into a city, the
Local Government Code provides:
SECTION 450. Requisites for Creation. - (a) A
municipality or a cluster of barangays may be
converted into a component city it has an average
annual income, as certified by the Department of
Finance, of at least Twenty million pesos
(20,000,000.00) for the last two (2) consecutive years
based on 1991 constant prices, and if it has either of
the following requisites:
(i) a contiguous territory of at least one hundred (100)
square kilometers, as certified by the Land
Management Bureau; or,
(ii) a population of not less than one hundred fifty
thousand (150,000) inhabitants, as certified by the
National Statistics Office.
Provided, That, the creation thereof shall not reduce
the land area, population, and income of the original
unit or units at the time of said creation to less than the
minimum requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created city
shall be properly identified by metes and bounds. The
requirement on land are shall not apply where the city
proposed to be created is composed of one (1) or more
island. The territory need not be contiguous if it
comprises two (2) or more islands.
(c) The average annual income shall include the
income accruing to the general fund, exclusive of
special funds, transfers, and non-recurring
income.[15]
Substantial differences do exist between a
municipality and a city. For one, there is a material
change in the political and economic rights of the local
government unit when it is converted from a
municipality to a city and undoubtedly, these changes
affect the people as well.[16] It is precisely for this
reason why Section 10, Article X of the Constitution
mandates that no province, city, municipality, or
barangay may be created, divided, merged, abolished,
or its boundary substantially altered, without the
approval by a majority of the votes cast in a plebiscite
in the political units directly affected.
As may be gleaned from the Local Government Code,
the creation or conversion of a local government unit
is done mainly to help assure its economic viability.
Such creation or conversion is based on verified
indicators:
Section 7. Creation and Conversion. --- As a general
rule, the creation of a local government unit or its
conversion from one level to another shall be based on
verifiable indicators or viability and projected capacity
to provide services, to wit:
(a) Income. --- It must be sufficient, based on
acceptable standards, to provide for all essential
government facilities and services and special
functions commensurate with the size of its
population, as expected of the local government unit
concerned;
(b) Population. --- It shall be determined as the total
number of inhabitants within the territorial jurisdiction
of the local government unit concerned; and
(c) Land Area. --- It must be contiguous, unless it
comprises two (2) or more islands or is separated by a
local government unit independent of the others;
properly identified by metes and bounds with technical
descriptions; and sufficient to provide for such basic
services and facilities to meet the requirements of its
populace.
Compliance with the foregoing indicators shall be
attested to by the Department of Finance (DOF), the
National Statistics Office (NSO), and the Lands
Management Bureau (LMB) of the Department of
Environment and Natural Resources (DENR).[17]
On the other hand, Section 2 of the Charter of the City
of Digos provides:
Section 2. The City of Digos --- The Municipality of
Digos shall be converted into a component city to be
known as the City of Digos, hereinafter referred to as
the City, which shall comprise the present territory of
the Municipality of Digos, Davao del Sur Province.
The territorial jurisdiction of the City shall be within
the present metes and bounds of the Municipality of
Digos. x x x
Moreover, Section 53 of the said Charter further states:
Section 53. Officials of the City of Digos. --- The
present elective officials of the Municipality of Digos
shall continue to exercise their powers and functions
until such a time that a new election is held and the
duly-elected officials shall have already qualified and
assumed their offices. x x x.
As seen in the aforementioned provisions, this Court
notes that the delineation of the metes and bounds of
the City of Digos did not change even by an inch the
land area previously covered by the Municipality of
Digos. This Court also notes that the elective officials
of the Municipality of Digos continued to exercise
their powers and functions until elections were held for
the new city officials.
True, the new city acquired a new corporate existence
separate and distinct from that of the municipality.
This does not mean, however, that for the purpose of
applying the subject Constitutional provision, the
office of the municipal mayor would now be construed
as a different local government post as that of the
office of the city mayor. As stated earlier, the territorial
jurisdiction of the City of Digos is the same as that of
the municipality. Consequently, the inhabitants of the
municipality are the same as those in the city. These
inhabitants are the same group of voters who elected
petitioner Latasa to be their municipal mayor for three
consecutive terms. These are also the same inhabitants
over whom he held power and authority as their chief
executive for nine years.
This Court must distinguish the present case from
previous cases ruled upon this Court involving the
same Constitutional provision.
In Borja, Jr. v. COMELEC,[18] the issue therein was
whether a vice-mayor who became the mayor by
operation of law and who served the remainder of the
mayors term should be considered to have served a
term in that office for the purpose of the three-term
limit under the Constitution. Private respondent in that
case was first elected as vice-mayor, but upon the
death of the incumbent mayor, he occupied the latters
post for the unexpired term. He was, thereafter, elected
for two more terms. This Court therein held that when
private respondent occupied the post of the mayor
upon the incumbents death and served for the
remainder of the term, he cannot be construed as
having served a full term as contemplated under the
subject constitutional provision. The term served must
be one for which [the official concerned] was elected.
It must also be noted that in Borja, the private
respondent therein, before he assumed the position of
mayor, first served as the vice-mayor of his local
government unit. The nature of the responsibilities and
duties of the vice-mayor is wholly different from that
of the mayor. The vice-mayor does not hold office as
chief executive over his local government unit. In the
present case, petitioner, upon ratification of the law
converting the municipality to a city, continued to hold
office as chief executive of the same territorial
jurisdiction. There were changes in the political and
economic rights of Digos as local government unit, but
no substantial change occurred as to petitioners
authority as chief executive over the inhabitants of
Digos.
In Lonzanida v. COMELEC,[19] petitioner was
elected and served two consecutive terms as mayor
from 1988 to 1995. He then ran again for the same
position in the May 1995 elections, won and
discharged his duties as mayor. However, his
opponent contested his proclamation and filed an
election protest before the Regional Trial Court, which
ruled that there was a failure of elections and declared
the position of mayor vacant. The COMELEC
affirmed this ruling and petitioner acceded to the order
to vacate the post. During the May 1998 elections,
petitioner therein again filed his certificate of
candidacy for mayor. A petition to disqualify him was
filed on the ground that he had already served three
consecutive terms. This Court ruled, however, that
petitioner therein cannot be considered as having been
duly elected to the post in the May 1995 elections, and
that said petitioner did not fully serve the 1995-1998
mayoral term by reason of involuntary relinquishment
of office.
In the present case, petitioner Latasa was, without a
doubt, duly elected as mayor in the May 1998
elections. Can he then be construed as having
involuntarily relinquished his office by reason of the
conversion of Digos from municipality to city? This
Court believes that he did involuntarily relinquish his
office as municipal mayor since the said office has
been deemed abolished due to the conversion.
However, the very instant he vacated his office as
municipal mayor, he also assumed office as city
mayor. Unlike in Lonzanida, where petitioner therein,
for even just a short period of time, stepped down from
office, petitioner Latasa never ceased from acting as
chief executive of the local government unit. He never
ceased from discharging his duties and responsibilities
as chief executive of Digos.

In Adormeo v. COMELEC,[20] this Court was
confronted with the issue of whether or not an
assumption to office through a recall election should
be considered as one term in applying the three-term
limit rule. Private respondent, in that case, was elected
and served for two consecutive terms as mayor. He
then ran for his third term in the May 1998 elections,
but lost to his opponent. In June 1998, his opponent
faced recall proceedings and in the recall elections of
May 2000, private respondent won and served for the
unexpired term. For the May 2001 elections, private
respondent filed his certificate of candidacy for the
office of mayor. This was questioned on the ground
that he had already served as mayor for three
consecutive terms. This Court held therein that private
respondent cannot be construed as having been elected
and served for three consecutive terms. His loss in the
May 1998 elections was considered by this Court as an
interruption in the continuity of his service as mayor.
For nearly two years, private respondent therein lived
as a private citizen. The same, however, cannot be said
of petitioner Latasa in the present case.
Finally, in Socrates v. COMELEC,[21] the principal
issue was whether or not private respondent Edward
M. Hagedorn was qualified to run during the recall
elections. Therein respondent Hagedorn had already
served for three consecutive terms as mayor from 1992
until 2001 and did not run in the immediately
following regular elections. On July 2, 2002, the
barangay officials of Puerto Princesa convened
themselves into a Preparatory Recall Assembly to
initiate the recall of the incumbent mayor, Victorino
Dennis M. Socrates. On August 23, 2002, respondent
Hagedorn filed his certificate of candidacy for mayor
in the recall election. A petition for his disqualification
was filed on the ground that he cannot run for the said
post during the recall elections for he was disqualified
from running for a fourth consecutive term. This
Court, however, ruled in favor of respondent
Hagedorn, holding that the principle behind the three-
term limit rule is to prevent consecutiveness of the
service of terms, and that there was in his case a break
in such consecutiveness after the end of his third term
and before the recall election.
It is evident that in the abovementioned cases, there
exists a rest period or a break in the service of the local
elective official. In Lonzanida, petitioner therein was
a private citizen a few months before the next mayoral
elections. Similarly, in Adormeo and Socrates, the
private respondents therein lived as private citizens for
two years and fifteen months respectively. Indeed, the
law contemplates a rest period during which the local
elective official steps down from office and ceases to
exercise power or authority over the inhabitants of the
territorial jurisdiction of a particular local government
unit.
This Court reiterates that the framers of the
Constitution specifically included an exception to the
peoples freedom to choose those who will govern them
in order to avoid the evil of a single person
accumulating excessive power over a particular
territorial jurisdiction as a result of a prolonged stay in
the same office. To allow petitioner Latasa to vie for
the position of city mayor after having served for three
consecutive terms as a municipal mayor would
obviously defeat the very intent of the framers when
they wrote this exception. Should he be allowed
another three consecutive terms as mayor of the City
of Digos, petitioner would then be possibly holding
office as chief executive over the same territorial
jurisdiction and inhabitants for a total of eighteen
consecutive years. This is the very scenario sought to
be avoided by the Constitution, if not abhorred by it.
Finally, respondent Sunga claims that applying the
principle in Labo v. COMELEC,[22] he should be
deemed the mayoralty candidate with the highest
number of votes. On the contrary, this Court held in
Labo that the disqualification of a winning candidate
does not necessarily entitle the candidate with the
highest number of votes to proclamation as the winner
of the elections. As an obiter, the Court merely
mentioned that the rule would have been different if
the electorate, fully aware in fact and in law of a
candidates disqualification so as to bring such
awareness within the realm of notoriety, would
nonetheless cast their votes in favor of the ineligible
candidate. In such case, the electorate may be said to
have waived the validity and efficacy of their votes by
notoriously misapplying their franchise or throwing
away their votes, in which case, the eligible candidate
obtaining the next higher number of votes may be
deemed elected. The same, however, cannot be said of
the present case.
This Court has consistently ruled that the fact that a
plurality or a majority of the votes are cast for an
ineligible candidate at a popular election, or that a
candidate is later declared to be disqualified to hold
office, does not entitle the candidate who garnered the
second highest number of votes to be declared elected.
The same merely results in making the winning
candidates election a nullity.[23] In the present case,
moreover, 13,650 votes were cast for private
respondent Sunga as against the 25,335 votes cast for
petitioner Latasa.[24] The second placer is obviously
not the choice of the people in that particular election.
In any event, a permanent vacancy in the contested
office is thereby created which should be filled by
succession.[25]
WHEREFORE, the petition is DISMISSED. No
pronouncement as to costs.
7. Cawaling vs Comelec
Before us are two (2) separate petitions challenging the
constitutionality of Republic Act No. 8806 which
created the City of Sorsogon and the validity of the
plebiscite conducted pursuant thereto.
On August 16, 2000, former President Joseph E.
Estrada signed into law R.A. No. 8806, an Act
Creating The City Of Sorsogon By Merging The
Municipalities Of Bacon And Sorsogon In The
Province Of Sorsogon, And Appropriating Funds
Therefor.[1]
Pursuant to Section 10, Article X of the
Constitution,[2] the Commission on Elections
(COMELEC), on December 16, 2000, conducted a
plebiscite in the Municipalities of Bacon and Sorsogon
and submitted the matter for ratification.
On December 17, 2000, the Plebiscite City Board of
Canvassers (PCBC) proclaimed[3] the creation of the
City of Sorsogon as having been ratified and approved
by the majority of the votes cast in the plebiscite.[4]
Invoking his right as a resident and taxpayer of the
former Municipality of Sorsorgon, Benjamin E.
Cawaling, Jr. filed on January 2, 2001 the present
petition for certiorari (G.R. No. 146319) seeking the
annulment of the plebiscite on the following grounds:
A. The December 16, 2000 plebiscite was conducted
beyond the required 120-day period from the approval
of R.A. 8806, in violation of Section 54 thereof; and
B. Respondent COMELEC failed to observe the legal
requirement of twenty (20) day extensive information
campaign in the Municipalities of Bacon and Sorsogon
before conducting the plebiscite.
Two days after filing the said action, or on January 4,
2001, petitioner instituted another petition (G.R. No.
146342), this time for prohibition, seeking to enjoin
the further implementation of R.A. No. 8806 for being
unconstitutional, contending, in essence, that:
1. The creation of Sorsogon City by merging two
municipalities violates Section 450(a) of the Local
Government Code of 1991 (in relation to Section 10,
Article X of the Constitution) which requires that only
a municipality or a cluster of barangays may be
converted into a component city; and
2. R.A. No. 8806 contains two (2) subjects, namely,
the (a) creation of the City of Sorsogon and the (b)
abolition of the Municipalities of Bacon and Sorsogon,
thereby violating the one subject-one bill rule
prescribed by Section 26(1), Article VI of the
Constitution.
Hence, the present petitions which were later
consolidated.[5]
Significantly, during the pendency of these cases,
specifically during the May 14, 2001 elections, the
newly-created Sorsogon City had the first election of
its officials. Since then, the City Government of
Sorsogon has been regularly discharging its corporate
and political powers pursuant to its charter, R.A. No.
8806.
We shall first delve on petitioners constitutional
challenge against R.A. No. 8806 in G.R. No. 146342.
Every statute has in its favor the presumption of
constitutionality.[6] This presumption is rooted in the
doctrine of separation of powers which enjoins upon
the three coordinate departments of the Government a
becoming courtesy for each others acts.[7] The theory
is that every law, being the joint act of the Legislature
and the Executive, has passed careful scrutiny to
ensure that it is in accord with the fundamental law.[8]
This Court, however, may declare a law, or portions
thereof, unconstitutional, where a petitioner has shown
a clear and unequivocal breach of the Constitution, not
merely a doubtful or argumentative one.[9] In other
words, the grounds for nullity must be beyond
reasonable doubt,[10] for to doubt is to sustain.[11]
Petitioner initially rejects R.A. No. 8806 because it
violates Section 10, Article X of the Constitution
which provides, inter alia:
Section 10. No province, city, municipality, or
barangay 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 approval by a majority
of the votes cast in a plebiscite in the political units
directly affected. (Emphasis ours)
The criteria for the creation of a city is prescribed in
Section 450 of the Local Government Code of 1991
(the Code), thus:
Section 450. Requisites for Creation. (a) A
municipality or a cluster of barangays may be
converted into a component city if it has an average
annual income, as certified by the Department of
Finance, of at least Twenty million (P20,000,000.00)
for the last two (2) consecutive years based on 1991
constant prices, and if it has either of the following
requisites:
(i) a contiguous territory of at least one hundred (100)
square kilometers, as certified by the Lands
Management Bureau; or
(ii) a population of not less than one hundred fifty
thousand (150,000) inhabitants, as certified by the
National Statistics Office:
Provided, That, the creation thereof shall not reduce
the land area, population, and income of the original
unit or units at the time of said creation to less than the
minimum requirements prescribed herein.
(b) The territorial jurisdiction of a newly-created city
shall be properly identified by metes and bounds. The
requirement on land area shall not apply where the city
proposed to be created is composed of one (1) or more
islands. The territory need not be contiguous if it
comprises two (2) or more islands.
(c) The average annual income shall include the
income accruing to the general fund, exclusive of
specific funds, transfers, and non-recurring income.
(Emphasis ours)
Petitioner is not concerned whether the creation of
Sorsogon City through R.A. No. 8806 complied with
the criteria set by the Code as to income, population
and land area. What he is assailing is its mode of
creation. He contends that under Section 450(a) of the
Code, a component city may be created only by
converting a municipality or a cluster of barangays,
not by merging two municipalities, as what R.A. No.
8806 has done.
This contention is devoid of merit.
Petitioners constricted reading of Section 450(a) of the
Code is erroneous. The phrase A municipality or a
cluster of barangays may be converted into a
component city is not a criterion but simply one of the
modes by which a city may be created. Section 10,
Article X of the Constitution, quoted earlier and which
petitioner cited in support of his posture, allows the
merger of local government units to create a province,
city, municipality or barangay in accordance with the
criteria established by the Code. Thus, Section 8 of the
Code distinctly provides:
Section 8. Division and Merger. Division and merger
of existing local government units shall comply with
the same requirements herein prescribed for their
creation: Provided, however, That such division shall
not reduce the income, population, or land area of the
local government unit or units concerned to less than
the minimum requirements prescribed in this Code:
Provided, further, That the income classification of the
original local government unit or units shall not fall
below its current income classification prior to such
division. x x x. (Emphasis ours)
Verily, the creation of an entirely new local
government unit through a division or a merger of
existing local government units is recognized under
the Constitution, provided that such merger or division
shall comply with the requirements prescribed by the
Code.
Petitioner further submits that, in any case, there is no
compelling reason for merging the Municipalities of
Bacon and Sorsogon in order to create the City of
Sorsogon considering that the Municipality of
Sorsogon alone already qualifies to be upgraded to a
component city. This argument goes into the wisdom
of R.A. No. 8806, a matter which we are not competent
to rule. In Angara v. Electoral Commission,[12] this
Court, through Justice Jose P. Laurel, made it clear that
the judiciary does not pass upon questions of wisdom,
justice or expediency of legislation. In the exercise of
judicial power, we are allowed only to settle actual
controversies involving rights which are legally
demandable and enforceable,[13] and may not annul
an act of the political departments simply because we
feel it is unwise or impractical.[14]
Next, petitioner assails R.A. No. 8806 since it
contravenes the one subject-one bill rule enunciated in
Section 26 (1), Article VI of the Constitution, to wit:
Section 26 (1). Every bill passed by the Congress shall
embrace only one subject which shall be expressed in
the title thereof. (emphasis ours)
Petitioner contends that R.A. No. 8806 actually
embraces two principal subjects which are: (1) the
creation of the City of Sorsogon, and (2) the abolition
of the Municipalities of Bacon and Sorsogon.While
the title of the Act sufficiently informs the public about
the creation of Sorsogon City, petitioner claims that no
such information has been provided on the abolition of
the Municipalities of Bacon and Sorsogon.
The argument is far from persuasive. Contrary to
petitioners assertion, there is only one subject
embraced in the title of the law, that is, the creation of
the City of Sorsogon. The abolition/cessation of the
corporate existence of the Municipalities of Bacon and
Sorsogon due to their merger is not a subject separate
and distinct from the creation of Sorsogon City. Such
abolition/cessation was but the logical, natural and
inevitable consequence of the merger. Otherwise put,
it is the necessary means by which the City of
Sorsogon was created. Hence, the title of the law, An
Act Creating the City of Sorsogon by Merging the
Municipalities of Bacon and Sorsogon in the Province
of Sorsogon, and Appropriating Funds Therefor,
cannot be said to exclude the incidental effect of
abolishing the two municipalities, nor can it be
considered to have deprived the public of fair
information on this consequence.
It is well-settled that the one title-one subject rule does
not require the Congress to employ in the title of the
enactment language of such precision as to mirror,
fully index or catalogue all the contents and the minute
details therein.[15] The rule is sufficiently complied
with if the title is comprehensive enough as to include
the general object which the statute seeks to effect,[16]
and where, as here, the persons interested are informed
of the nature, scope and consequences of the proposed
law and its operation.[17] Moreover, this Court has
invariably adopted a liberal rather than technical
construction of the rule so as not to cripple or impede
legislation.[18]
Consequently, we hold that petitioner has failed to
present clear and convincing proof to defeat the
presumption of constitutionality of R.A. No. 8806.
We now turn to G.R. No. 146319 wherein petitioner
assails the validity of the plebiscite conducted by the
COMELEC for the ratification of the creation of
Sorsogon City.
Petitioner asserts that the plebiscite required by R.A.
No. 8806 should be conducted within 120 days from
the approval of said Act per express provision of its
Section 54, viz:
Sec. 54. Plebiscite. The City of Sorsogon shall acquire
corporate existence upon the ratification of its creation
by a majority of the votes cast by the qualified voters
in a plebiscite to be conducted in the present
municipalities of Bacon and Sorsogon within one
hundred twenty (120) days from the approval of this
Act. x x x. (Emphasis ours)
The Act was approved on August 16, 2000 by former
President Joseph E. Estrada. Thus, petitioner claims,
the December 16, 2000 plebiscite was conducted one
(1) day late from the expiration of the 120-day period
after the approval of the Act. This 120-day period
having expired without a plebiscite being conducted,
the Act itself expired and could no longer be ratified
and approved in the plebiscite held on December 16,
2000.
In its comment, the COMELEC asserts that it
scheduled the plebiscite on December 16, 2000 based
on the date of the effectivity of the Act. Section 65 of
the Act states:
Sec. 65. Effectivity. - This Act shall take effect upon
its publication in at least two (2) newspapers of general
and local circulation.
The law was first published in the August 25, 2000
issue of TODAY, a newspaper of general circulation.
Then on September 01, 2000, it was published in a
newspaper of local circulation in the Province of
Sorsogon. Thus, the publication of the law was
completed on September 1, 2000, which date,
according to the COMELEC, should be the reckoning
point in determining the 120-day period within which
to conduct the plebiscite, not from the date of its
approval (August 16, 2000) when the law had not yet
been published. The COMELEC argues that since
publication is indispensable for the effectivity of a law,
citing the landmark case of Taada vs. Tuvera,[19] it
could only schedule the plebiscite after the Act took
effect. Thus, the COMELEC concludes, the December
16, 2000 plebiscite was well within the 120-day period
from the effectivity of the law on September 1, 2000.
The COMELEC is correct.
In addition, Section 10 of the Code provides:
Section 10. Plebiscite Requirement. No creation,
division, merger, abolition, or substantial alteration of
boundaries of local government units shall take effect
unless approved by a majority of the votes cast in a
plebiscite called for the purpose in the political unit or
units directly affected. Such plebiscite shall be
conducted by the Commission on Elections within one
hundred twenty (120) days from the date of the
effectivity of the law or ordinance affecting such
action, unless said law or ordinance fixes another date.
(Emphasis ours)
Quite plainly, the last sentence of Section 10 mandates
that the plebiscite shall be conducted within 120 days
from the date of the effectivity of the law, not from its
approval. While the same provision allows a law or
ordinance to fix another date for conducting a
plebiscite, still such date must be reckoned from the
date of the effectivity of the law.
Consequently, the word approval in Section 54 of R.A.
No. 8806, which should be read together with Section
65 (effectivity of the Act) thereof, could only mean
effectivity as used and contemplated in Section 10 of
the Code. This construction is in accord with the
fundamental rule that all provisions of the laws
relating to the same subject should be read together
and reconciled to avoid inconsistency or repugnancy
to established jurisprudence. As we stated in Taada:
Art. 2. Laws shall take effect after fifteen days
following the completion of their publication in the
Official Gazette, unless it is otherwise provided. This
Code shall take effect one year after such publication.
After a careful study of this provision and of the
arguments of the parties, both on the original petition
and on the instant motion, we have come to the
conclusion, and so hold, that the clause unless it is
otherwise provided refers to the date of effectivity and
not to the requirement of publication itself, which
cannot in any event be omitted. This clause does not
mean that the legislature may make the law effective
immediately upon approval, or on any other date,
without its previous publication. (Emphasis supplied)
To give section 54 a literal and strict interpretation
would in effect make the Act effective even before its
publication, which scenario is precisely abhorred in
Taada.
Lastly, petitioner alleges that the COMELEC failed to
conduct an extensive information campaign on the
proposed Sorsogon cityhood 20 days prior to the
scheduled plebiscite as required by Article 11 (b.4.ii),
Rule II of the Rules and Regulations Implementing the
Code. However, no proof whatsoever was presented
by petitioner to substantiate his allegation.
Consequently, we sustain the presumption[20]that the
COMELEC regularly performed or complied with its
duty under the law in conducting the plebiscite.
WHEREFORE, the instant petitions are DISMISSED
for lack of merit. Costs against petitioner.
Wills and Successions
1. Calalang- Parulan vs Garcia
Before us is a petition for review on certiorari assailing
the Decision1 dated December 21, 2007 and
Resolution2dated July 25, 2008 of the Thirteenth
Division of the Court of Appeals (CA) in CA-G.R. CV
No. 72531. The CA modified the Decision3 dated July
10, 2001 of the Regional Trial Court (RTC), Branch
21, of Malolos, Bulacan, in Civil Case No. 370-M-91.
The facts, as culled from the records, follow:
In a Complaint4 for Annulment of Sale and
Reconveyance of Property filed with the RTC of
Malolos, Bulacan on June 10, 1991, the respondents
Rosario Calalang-Garcia, Leonora Calalang-Sabile,
and Carlito S. Calalang asserted their ownership over
a certain parcel of land against the petitioners Nora B.
Calalang-Parulan and Elvira B. Calalang. The said lot
with an area of 1,266 square meters and specifically
identified as Lot 1132, CPad. 333, Bigaa Cadastre
situated in Brgy. Burol 2nd, Municipality of Balagtas,
Province of Bulacan, was allegedly acquired by the
respondents from their mother Encarnacion Silverio,
through succession as the latters compulsory heirs.
According to the respondents, their father, Pedro
Calalang contracted two marriages during his lifetime.
The first marriage was with their mother Encarnacion
Silverio. During the subsistence of this marriage, their
parents acquired the above-mentioned parcel of land
from their maternal grandmother Francisca Silverio.
Despite enjoying continuous possession of the land,
however, their parents failed to register the same. On
June 7, 1942, the first marriage was dissolved with the
death of Encarnacion Silverio.
On November 6, 1967, Pedro Calalang entered into a
second marriage with Elvira B. Calalang who then
gave birth to Nora B. Calalang-Parulan and Rolando
Calalang. According to the respondents, it was only
during this time that Pedro Calalang filed an
application for free patent over the parcel of land with
the Bureau of Lands. Pedro Calalang committed fraud
in such application by claiming sole and exclusive
ownership over the land since 1935 and concealing the
fact that he had three children with his first spouse. As
a result, on September 22, 1974, the Register of Deeds
of Bulacan issued Original Certificate of Title (OCT)
No. P-28715 in favor of Pedro Calalang only.
On February 17, 1984, Pedro Calalang sold the said
parcel of land to Nora B. Calalang-Parulan as
evidenced by a Deed of Sale6 executed by both Pedro
Calalang and Elvira B. Calalang. Accordingly, the
Register of Deeds of Bulacan cancelled OCT No. P-
2871 and issued Transfer Certificate of Title (TCT)
No. 283321 in the name of Nora B. Calalang-Parulan.
On December 27, 1989,7 Pedro Calalang died.
The respondents assailed the validity of TCT No.
283321 on two grounds. First, the respondents argued
that the sale of the land was void because Pedro
Calalang failed to obtain the consent of the
respondents who were co-owners of the same. As
compulsory heirs upon the death of Encarnacion
Silverio, the respondents claimed that they acquired
successional rights over the land. Thus, in alienating
the land without their consent, Pedro Calalang
allegedly deprived them of their pro indiviso share in
the property. Second, the respondents claimed that the
sale was absolutely simulated as Nora B. Calalang-
Parulan did not have the capacity to pay for the
consideration stated in the Deed of Sale.
In their Answer,8 the petitioners argued that the parcel
of land was acquired during the second marriage of
Pedro Calalang with Elvira B. Calalang. They stressed
that OCT No. P-2871 itself stated that it was issued in
the name of "Pedro Calalang, married to Elvira Berba
[Calalang]." Thus, the property belonged to the
conjugal partnership of the spouses Pedro Calalang
and Elvira B. Calalang. The petitioners likewise
denied the allegation that the sale of the land was
absolutely simulated as Nora B. Calalang-Parulan was
gainfully employed in Spain at the time of the sale.
Moreover, they alleged that the respondents did not
have a valid cause of action against them and that their
cause of action, if any, was already barred by laches,
estoppel and prescription. By way of counterclaim, the
petitioners also sought the payment to them of moral
and exemplary damages plus costs of suit for the filing
of the clearly unfounded suit.
On July 10, 2001, the trial court rendered decision in
favor of the respondents. The dispositive portion of the
RTC decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor
of the plaintiffs and against the defendants in the
following manner:
1. Ordering the defendants to reconvey in favor of the
plaintiffs, their rightful share to three-fourth (3/4) of
one-half (1/2) or a total of 474.75 square meters at
158.25 square meters for each of the three plaintiffs,
namely: Rosario, Leonora, and Juanito all surname[d]
Calalang, of the real property covered by TCT No.
283321 of the Registry of Deeds of Bulacan
corresponding to their shares in the conjugal estate of
the late Encarnacion S. Calalang [sic];
2. Ordering defendants to pay plaintiffs the amount of
P50,000.00 for moral damages; P50,000.00 for
attorneys fees and another P50,000.00 for litigation
expenses.
3. Dismissing the defendants counterclaims.
With costs against the defendants.
SO ORDERED.9
The trial court declared that the parcel of land was
jointly acquired by the spouses Pedro Calalang and
Encarnacion Silverio from the parents of the latter.
Thus, it was part of the conjugal property of the first
marriage of Pedro Calalang. When this marriage was
dissolved upon the death of Encarnacion Silverio on
June 7, 1942,the corresponding shares to the disputed
property were acquired by the heirs of the decedent
according to the laws of succession. In particular, the
trial court allocated half of the disputed property to
Pedro Calalang as his share in the conjugal partnership
and allocated the other half to the three respondents
and Pedro Calalang to be divided equally among them.
The trial court then ordered all of Pedros share to be
given to Nora B. Calalang-Parulan on account of the
sale. The trial court also ruled that because the
application for free patent filed by Pedro Calalang was
attended by fraud and misrepresentation, Pedro
Calalang should be considered as a trustee of an
implied trust.
Aggrieved by the adverse ruling, the petitioners
appealed the case to the CA which rendered the
assailed Decision on December 21, 2007. The
dispositive portion of the CA decision reads,
WHEREFORE, in light of the foregoing premises, the
Decision dated July 10, 2001of the Regional Trial
Court of Malolos, Bulacan is hereby MODIFIED to
read as follows:
"WHEREFORE, judgment is hereby rendered in favor
of the plaintiffs, and against the defendants in the
following manner:
1. Ordering the defendants to reconvey in favor of the
plaintiffs, their rightful share to the property owned by
their common father Pedro Calalang, equivalent to one
half(1/2) portion of the whole area or 633 square
meters to be divided equally by the three plaintiffs,
namely:
Rosario, Leonora and Carlito, all surnamed Calalang,
each getting an area of 211 square meters of the
property covered by TCT No. 2883321 of the Registry
of Deeds of Bulacan corresponding to their shares in
the property of their late father Pedro Calalang;
2. Ordering defendants to pay plaintiffs the amount of
P50,000.00 for moral damages; P50,000.00 for
attorneys fees and another P50,000.00 for litigation
expenses.
3. Dismissing the defendants counterclaims.
With costs against the defendants.
SO ORDERED.
SO ORDERED.10
The CA reversed the factual findings of the trial court
and held that Pedro Calalang was the sole and
exclusive owner of the subject parcel of land. Firstly,
it held that there was insufficient evidence to prove
that the disputed property was indeed jointly acquired
from the parents of Encarnacion Silverio during the
first marriage. Secondly, the CA upheld the
indefeasibility of OCT No. P-2871. It held that
although the free patent was issued in the name of
"Pedro Calalang, married to Elvira Berba [Calalang]"
this phrase was merely descriptive of the civil status of
Pedro Calalang at the time of the registration of the
disputed property. Thus, contrary to the ruling of the
trial court, upon the death of Encarnacion Silverio on
June 7, 1942, the respondents did not acquire any
successional rights to the parcel of land which was
exclusively owned by Pedro Calalang. However,
applying the rules of succession, Pedros heirs namely,
Rosario Calalang-Garcia, Leonora Calalang-Sabile,
Carlito Calalang, Nora B. Calalang-Parulan, Elvira B.
Calalang, and Rolando Calalang, succeeded Pedro to
the land in equal shares upon his death. Thus, the CA
ordered the petitioners to reconvey in favor of the
respondents their rightful shares to the land. The CA
ruled that the sale by Pedro Calalang to Nora B.
Calalang-Parulan was fraudulent and fictitious as the
vendee was in bad faith and the respondents were
unlawfully deprived of their pro indiviso shares over
the disputed property. As regards the issue of
prescription, the CA ruled that the prescriptive period
for reconveyance of fraudulently registered real
property is ten years. Since the property was registered
in the name of Nora in1984 and the action for
reconveyance was filed in 1991, the action has not yet
prescribed.
On January 23, 2008, petitioners filed their Motion for
Reconsideration. The CA, however, denied their
motion in its Resolution dated July 25, 2008.
Hence, this petition raising the sole issue:
Whether or not the court a quo gravely erred in
rendering its December 21, 2007 Decision modifying
the July 10, 2001 Decision of the trial court, and in
issuing its July 25, 2008 Resolution denying
petitioners Motion for Reconsideration dated January
23, 2008.11
Essentially, the only issue in this case is whether Pedro
Calalang was the exclusive owner of the disputed
property prior to its transfer to his daughter Nora B.
Calalang-Parulan.
The petitioners argue that the disputed property
belonged to the conjugal partnership of the second
marriage of Pedro Calalang with Elvira B. Calalang as
evidenced by OCT No. P-2871 which was issued to
Pedro Calalang during the subsistence of his marriage
to Elvira B. Calalang. On the other hand, the
respondents claim that the disputed property was
transferred by their maternal grandmother, Francisca
Silverio, to their parents, Pedro Calalang and
Encarnacion Silverio, during the latters marriage.
Thus, the respondents argue that it belonged to the
conjugal partnership of the first marriage of Pedro
Calalang with Encarnacion Silverio.
The petition is meritorious.
Preliminarily, we note that the resolution of the issue
in this case requires a reevaluation of the probative
value of the evidence presented by the parties in order
to trace the title of the disputed property. What is
involved is indeed a question of fact which is generally
beyond the jurisdiction of this Court to resolve in a
petition for review on certiorari.12 However, a
recognized exception to the rule is when the RTC and
CA have conflicting findings of fact as in this case.13
Here, while the trial court ruled that the disputed
property belonged to the conjugal partnership of the
first marriage of Pedro Calalang with Encarnacion
Silverio, the court a quo declared that the evidence
proved the sole and exclusive ownership of the
disputed property of Pedro Calalang.
We have carefully reviewed the records of this case
and sustain the finding of the CA that Pedro Calalang
is the sole and exclusive owner of the disputed
property.
The trial court ruled that the respondents were able to
establish that Lot 1132, Cad. 333 originated from the
parents of Encarnacion, and therefore said property
"either became property of Encarnacion in her own
right or jointly with her husband Pedro Calalang in
1936." In so ruling, the trial court relied on the
testimony of Rosario Calalang-Garcia that her parents
built a nipa house on the subject lot and lived there
before and after World War II. The trial court further
noted that Rosarios testimony was corroborated by
her cousin and adjacent neighbor Manolo Calalang.14
However, as correctly pointed out by the CA, a close
perusal of the records of this case would show that the
records are bereft of any concrete proof to show that
the subject property indeed belonged to respondents
maternal grandparents. The evidence respondents
adduced merely consisted of testimonial evidence such
as the declaration of Rosario Calalang-Garcia that they
have been staying on the property as far as she can
remember and that the property was acquired by her
parents through purchase from her maternal
grandparents. However, she was unable to produce
any document to evidence the said sale, nor was she
able to present any documentary evidence such as the
tax declaration issued in the name of either of her
parents. Moreover, we note that the free patent was
issued solely in the name of Pedro Calalang and that it
was issued more than 30 years after the death of
Encarnacion and the dissolution of the conjugal
partnership of gains of the first marriage. Thus, we
cannot subscribe to respondents submission that the
subject property originally belonged to the parents of
Encarnacion and was acquired by Pedro Calalang and
Encarnacion.
We likewise cannot sustain the argument of the
petitioners that the disputed property belongs to the
conjugal partnership of the second marriage of Pedro
Calalang with Elvira B. Calalang on the ground that
the title was issued in the name of "Pedro Calalang,
married to Elvira Berba [Calalang]."
The contents of a certificate of title are enumerated by
Section 45 of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree:
SEC. 45. Statement of personal circumstances in the
certificate. Every certificate of title shall set forth the
full names of all persons whose interests make up the
full ownership in the whole land, including their civil
status, and the names of their respective spouses, if
married, as well as their citizenship, residence and
postal address. If the property covered belongs to the
conjugal partnership, it shall be issued in the names of
both spouses.1wphi1
A plain reading of the above provision would clearly
reveal that the phrase "Pedro Calalang, married to
Elvira Berba [Calalang]" merely describes the civil
status and identifies the spouse of the registered owner
Pedro Calalang. Evidently, this does not mean that the
property is conjugal. In Litam v. Rivera,15 we
declared:
Further strong proofs that the properties in question are
the paraphernal properties of Marcosa Rivera, are the
very Torrens Titles covering said properties. All the
said properties are registered in the name of "Marcosa
Rivera, married to Rafael Litam." This circumstance
indicates that the properties in question belong to the
registered owner, Marcosa Rivera, as her paraphernal
properties, for if they were conjugal, the titles covering
the same should have been issued in the names of
Rafael Litam and Marcosa Rivera. The words "married
to Rafael Litam" written after the name of Marcosa
Rivera, in each of the above mentioned titles are
merely descriptive of the civil status of Marcosa
Rivera, the registered owner of the properties covered
by said titles.
It must likewise be noted that in his application for free
patent,16 applicant Pedro Calalang averred that the
land was first occupied and cultivated by him since
1935 and that he had planted mango trees, coconut
plants, caimito trees, banana plants and seasonal crops
and built his house on the subject lot. But he applied
for free patent only in 1974 and was issued a free
patent while already married to Elvira B. Calalang.
Thus, having possessed the subject land in the manner
and for the period required by law after the dissolution
of the first marriage and before the second marriage,
the subject property ipso jure became private property
and formed part of Pedro Calalangs exclusive
property.17 It was therefore excluded from the
conjugal partnership of gains of the second
marriage.18
As the sole and exclusive owner, Pedro Calalang had
the right to convey his property in favor of Nora B.
Calalang-Parulan by executing a Deed of Sale on
February 17, 1984. The CA therefore erred in ruling
that Pedro Calalang deprived his heirs of their
respective shares over the disputed property when he
alienated the same.
It is hornbook doctrine that successional rights are
vested only at the time of death. Article 777 of the New
Civil Code provides that "[t]he rights to the succession
are transmitted from the moment of the death of the
decedent." In Butte v. Manuel Uy and Sons, Inc.,19 we
proclaimed the fundamental tenets of succession:
The principle of transmission as of the time of the
predecessor's death is basic in our Civil Code, and is
supported by other related articles. Thus, the capacity
of the heir is determined as of the time the decedent
died (Art. 1034); the legitime is to be computed as of
the same moment (Art. 908), and so is the in
officiousness of the donation inter vivas (Art. 771).
Similarly, the legacies of credit and remission are valid
only in the amount due and outstanding at the death of
the testator (Art. 935), and the fruits accruing after that
instant are deemed to pertain to the legatee (Art. 948).
Thus, it is only upon the death of Pedro Calalang on
December 27, 1989 that his heirs acquired their
respective inheritances, entitling them to their pro
indiviso shares to his whole estate. At the time of the
sale of the disputed property, the rights to the
succession were not yet bestowed upon the heirs of
Pedro Calalang. And absent clear and convincing
evidence that the sale was fraudulent or not duly
supported by valuable consideration (in effect an in
officious donation inter vivas), the respondents have
no right to question the sale of the disputed property
on the ground that their father deprived them of their
respective shares. Well to remember, fraud must be
established by clear and convincing evidence. Mere
preponderance of evidence is not even adequate to
prove fraud.20 The Complaint for Annulment of Sale
and Reconveyance of Property must therefore be
dismissed.
WHEREFORE, the petition for review on certiorari is
GRANTED. The Decision dated December 21, 2007
and Resolution dated July 25, 2008 of the Thirteenth
Division of the Court of Appeals in CA-G.R. CV No.
72531 are REVERSED and SET ASIDE. Civil Case
No. 370-M-91, or the Complaint for Annulment of
Sale and Reconveyance of Property filed by the
respondents with the Regional Trial Court, Branch 21
of Malolos, Bulacan, on June 10, 1991, is hereby
DISMISSED for lack of merit.
2. Hacbang vs Alo
This petition for review on certiorari seeks to reverse
the 13 October 2009 Decision and the 21 January 2010
resolution of the Court of Appeals (CA) in CA-G.R
CV No. 83137.1 The CA affirmed the Quezon City
Regional Trial Court's (RTC) dismissal of the
petitioners' complaint in Civil Case No. Q 99-366602
for lack of cause of action.
ANTECEDENTS
On 3 April 1937, Bishop Sofronio Hacbang (Bishop
Sofronio) died leaving several properties behind.
Among these was Lot No. 8-A of subdivision Plan
Psd-6227 located at Espaa Street, San Juan, Rizal,3
covered by Transfer Certificate of Title (TCT) No.
(19896) 227644 (the subject lot).
Bishop Sofronio was survived by his parents, Basilio
and Maria Hacbang, and his siblings: Perfecto
Hacbang, Joaquin Hacbang, Lucia Teresita Hacbang,
and Dolores Hacbang Alo. Petitioner Dolores L.
Hacbang is the grandchild of Perfecto while petitioner
Bernardo Hacbang (Bernardo) is a son of Joaquin. The
respondent Basilio Alo is the son of Dolores.H
Bishop Sofronio left a will denominated as Ultima
Voluntad y Testamento. He left one-half of his
properties to his parents and devised the other half -
including the subject lot - to his sister Dolores. The
pertinent portions of his will read:cralawlawlibrary
FOURTH: By these presents I give, name, declare and
institute as heirs my parents BASILIO HACBANG
and MARIA GABORNY DE HACBANG of one-half
of all my properties, whether real, personal or mixed,
in whatever place they may be found, whether they
were acquired before or after the execution of this
testament, including all the properties that at the time
of my death I may have the power to dispose of by will,
and which properties consist of the
following:chanRoblesvirtualLawlibrary
Fifty (50) percent of the shares of stock that I own in
the "SAMAR NAVIGATION CO. INC."
A parcel of land with its camarin situated in the
Municipality of Carigara, Province of Leyte.
A parcel of land in the Barrio of Pinamopuan, of the
Municipality of Capoocan, Province of Leyte.
A parcel of land with house and planted to coconuts in
the Barrio of Sorsogon, Municipality of Sta.
Margarita, Province of Samar.
FIFTH: The other remaining half of my properties
wherever they may be located, by these presents I give,
cede and hand over to my sister Dolores Hacbang,
which properties are more particularly described as
follows:chanRoblesvirtualLawlibrary
Fifty (50) percent of my stockholdings in the
"SAMAR NAVIGATION CO. INC."
A piece of land with one house where the Botica San
Antonio is located, in the Municipality of Calbayog,
Province of Samar.
A piece of land with house in Acedillo St.,
Municipality of Calbayog, Province of Samar.
A piece of land with 1 camarin in the barrio of
Sorsogon, Municipality of Sta. Margarita, Province of
Samar.
Six (6) Parcels of land located in "NEW MANILA,"
Municipality of San Juan, Province of Rizal, in 7th St.,
described as follows: Block 7, Lots 16, 18, 20 and 22,
and in 3rd Street, Block 3, Lots 4 and 6.
A piece of land situated in Espana St., Municipality of
San Juan del Monte of the Province of Rizal, marked
as Lot 8-A, Block 17, of 1,403 square meters in
area.4chanrobleslaw
On 16 April 1937, a petition for the probate of Bishop
Sofronio's will and the settlement of his estate was
filed before the then Court of First Instance (CFI) of
Manila. The petition was docketed as SP. PROC. No.
51199.
On 21 May 1937, the CFI admitted Bishop Sofronio's
will to probate.5
The records are bare with respect to what happened
next. They show, however, that the CFI ordered the
proceedings to be archived on 2 November 1957.
On 24 September 1971, the Register of Deeds of
Quezon City appears to have issued TCT No. 169342
over the subject lot in the name of respondent Basilio
H. Alo. TCT No. 169342 cancelled TCT No.
117322/T-500. However, this Court cannot determine
the circumstances surrounding the issuance of TCT
No. 169342 or the relationship between TCT No.
117322/T-500 and TCT No. (19896) 227644 due to
the inadequacy of the documents on record.
On 17 March 1975, Dolores Hacbang Alo moved to
revive the settlement proceedings because the CFI had
not yet completed adjudicating the properties.

On 23 May 1975, the CFI denied the motion for revival
because the order to archive "had long become final
and executory."6
On 1 February 1999, petitioners Dolores L. Hacbang
and Bernardo filed a petition to cancel TCT No.
169342 on the ground that it was fraudulently secured.
In support of their allegations, they submitted the 5
March 1997 Investigation Report of Land Registration
Authority (LRA) Investigator Rodrigo I. Del Rosario.
The report concluded that TCT No. 117322 was of
"doubtful authenticity" and was neither derived from
TCT No. 117322 nor issued by the Registry of Deeds
of Quezon City on 24 September 1971 at 2:30 PM.
In his Answer dated 18 August 1999, Basilio denied
all allegations of irregularity and wrongdoing. He also
moved to dismiss the petition because the petitioners
were neither heirs nor devisees of Bishop Sofronio and
had no legal interest in the subject lot.
On 7 January 2003, the RTC dismissed the petition
because the petitioners had no right to prosecute the
case on the subject lot. The RTC noted that Bishop
Sofronio's will had already been admitted into probate
in 1937; thus, the intrinsic validity of the will is no
longer in question. Though the settlement proceedings
were archived, Bishop Sofronio already designated his
heirs: Bishop Sofronio's parents were compulsory
heirs entitled to half of his estate while the
respondent's mother, Dolores Hacbang Alo, was
devised the remaining half (the free portion). Thus, the
petitioners, who are neither compulsory nor
testamentary heirs, are not real parties in interest.
The petitioners moved for reconsideration which the
RTC denied on 19 August 2003.
The petitioners appealed to the CA, arguing that: (1)
Bishop Sofronio's will did not validly transfer the
subject property to Dolores Hacbang Alo; (2) the
probate of the will is not conclusive as to the validity
of its intrinsic provisions; and (3) only a final decree
of distribution of the estate vests title on the properties
from the estate on the distributees.7 The appeal was
docketed as CA-G.R CV No. 83137.
They further argued that the distribution of the estate
should be governed by intestate succession because:
(1) the subject property was not adjudicated; and (2)
the settlement proceedings were archived and
dismissed. Thus, all the properties passed on to and
became part of the estate of Bishop Sofronio's parents.
The petitioners concluded that they had legal interest
in the subject lot as representatives of their ascendants,
the other children of Bishop Sofronio's parents.
In his appeal brief, the respondent insisted that the
petitioners do not have a clear legal right to maintain
the suit because: (1) as collateral relatives, they cannot
invoke the right of representation to the estate of
Bishop Sofronio; and (2) they are not real parties in
interest and have no right of action over the subject lot.
On 13 October 2009, the CA affirmed the RTC's order
of dismissal. The CA held that the admission of Bishop
Sofronio's will to probate precluded intestate
succession unless the will was intrinsically invalid or
failed to completely dispose of his estate. Contrary to
the petitioners' contention, the settlement proceedings
were not dismissed but archived; the will did not lose
its validity merely because the proceedings were
archived. Undoubtedly, Bishop Sofronio did not die
intestate.
The CA denied the petitioners' claim to a right of
inheritance by representation. It held that the presence
of Bishop Sofronio's parents during his death excluded
his brothers and sisters from being compulsory heirs;
the petitioners cannot represent those who are hot
entitled to succeed. Considering that they are neither
compulsory nor testamentary heirs, petitioners have no
legal interest in the subject property.
The petitioners moved for reconsideration which the
CA denied on 21 January 2010. The denial paved the
way for the petitioners to file the present petition for
review on certiorari.
THE PETITION
The petitioners argue: (1) that the CA erred when it
failed to rule on the validity of TCT No. 169342; (2)
that the probate proceedings of the estate was
dismissed, not archived; and (3) that the CA erred
when it used Bishop Sofronio's will as basis to declare
that they are not real parties in interest.
In his Comment, the respondent maintained that the
petitioners had no right over the property and moved
to dismiss the present petition.
OUR RULING
At the outset, this Court observes that the parties and
even the lower courts erroneously applied the
provisions of the present Civil Code to the will and the
estate of Bishop Sofronio. The law in force at the time
of the decedent's death determines the applicable law
over the settlement of his estate.8Bishop Sofronio died
in 1937 before the enactment of the Civil Code in
1949. Therefore, the correct applicable laws to the
settlement of his estate are the 1889 Spanish Civil
Code and the 1901 Code of Civil Procedure.
In any case, under both the Spanish Code and our Civil
Code, successional rights are vested at the precise
moment of the death of the decedent. Section 657 of
the Spanish code provides:cralawlawlibrary
Art. 657. Los derechos a la sucesion de una persona se
transmiten desde el momento de su
muerte.9chanrobleslaw
The inheritance vests immediately upon the decedent's
death without a moment's interruption. This provision
was later on translated and adopted as Article 777 of
our Civil Code.10
As a consequence of this principle, ownership over the
inheritance passes to the heirs at the precise moment
of death - not at the time the heirs are declared, nor at
the time of the partition, nor at the distribution of the
properties. There is no interruption between the end of
the decedent's ownership and the start of the
heir/legatee/devisee's ownership.
For intestate heirs, this means that they are
immediately entitled to their hereditary shares in the
estate even though they may not be entitled to any
particular properties yet. For legatees and devisees
granted specific properties, this means that they
acquire ownership over the legacies and devises at that
immediate moment without prejudice to the legitimes
of compulsory heirs.
Undoubtedly, Bishop Sofronio did not die intestate.
He left a will that was probated in 1937. He left half of
his properties to his parents and the remaining half to
his sister Dolores Hacbang Alo. The admission of his
will to probate is conclusive with respect to its due
execution and extrinsic validity.11
Unfortunately, the settlement proceedings were never
concluded; the case was archived without any
pronouncement as to the intrinsic validity of the will
or an adjudication of the properties. Because of this,
the petitioners posit that intestate succession should
govern. They maintain that the entire inheritance
should have gone to Bishop Sofronio's parents, the
petitioners' ascendants. Thus, they claim to have a
legal interest in the subject lot as representatives of the
other children of Bishop Sofronio's parents.
We do not find the petitioners' argument meritorious.
Our jurisdiction has always respected a decedent's
freedom to dispose of his estate, whether under the
Spanish Civil Code or under the present Civil Code.
Article 763 of the Spanish Code
provides:cralawlawlibrary
Art. 763. El que no tuviere herederos forzosos puede
disponer por testamento de todos sus bienes o de parte
de ellos en favor de cualquiera persona que tenga
capacidad para adquirirlos. El que tuviere herederos
forzosos solo podra disponer de sus bienes en la forma
y con las limitaciones que se establecen en la section
quinta de este capitulo.chanrobleslaw
This provision states that a person without compulsory
heirs may dispose of his estate, either in part or in its
entirety, in favor of anyone capacitated to succeed
him; if the testator has compulsory heirs, he can
dispose of his property provided he does not impair
their legitimes. This provision was later translated and
adopted as Article 842 of our Civil Code.12
Our jurisdiction accords great respect to the testator's
freedom of disposition. Hence, testate succession has
always been preferred over intestacy.13 As much as
possible, a testator's will is treated and interpreted in a
way that would render all of its provisions
operative.14 Hence, there is no basis to apply the
provisions on intestacy when testate succession
evidently applies.
Even though the CFI archived the settlement
proceedings, there is no indication that it declared any
of the dispositions in the will invalid. The records are
understandably bare considering the probate
proceedings were initiated as early as 1937.
Nonetheless, we find no reason to doubt the intrinsic
validity of the will.
Bishop Sofronio was free to dispose of his estate
without prejudice to the legitimes of his compulsory
heirs. Bishop Sofronio's only compulsory heirs were
his parents.15 Their legitime was one-half of Bishop
Sofronio's estate.16 Considering that Bishop Sofronio
gave his parents half of his estate, then he was free to
dispose of the free portion of his estate in favor of his
sister, Dolores Hacbang Alo. Thus, his will was
intrinsically valid.
However, heirs, legatees, and devisees bequeathed
specific properties do not require Court adjudication to
identify which particular properties become theirs; the
testator had already identified these. From the very
moment of the testator's death, title over these
particular properties vests on the heir, legatee, or
devisee.
On 3 April 1937, title over the subject lot passed on to
the respondent's mother, Dolores Hacbang Alo, at the
exact moment of her brother's death. From that
moment on, she was free to dispose of the subject lot
as a consequence of her ownership.
On the other hand, Bishop Sofronio's parents, Basilio
and Maria Gaborny Hacbang, never acquired the title
over the subject lot. Thus, it never became part of their
estate. Clearly, the petitioners - who claim to represent
the children of Basilio and Maria Gaborny in the
spouses' estate -have no legal right or interest over the
subject lot.

The CFPs failure to adjudicate the specific properties Every ordinary civil action must be based on a cause
is irrelevant because Bishop Sofronio did not just of action - an act or omission that violates the rights of
name his heirs; he also identified the specific the plaintiff.17 A cause of action
properties forming part of their inheritance. The requires:chanRoblesvirtualLawlibrary
dispositions in the will rendered court adjudication and
distribution unnecessary.
(1) a legal right in favor of the
plaintiff;ChanRoblesVirtualawlibrary
The petitioners' contention that only a final decree of
distribution of the estate vests title to the land of the
estate in the distributees is also incorrect. Again, (2) a correlative duty of the defendant to respect the
ownership over the inheritance vests upon the heirs, plaintiffs right; and
legatees, and devisees immediately upon the death of
the decedent.
(3) an act or omission of the defendant in violation of
the plaintiffs right.18
At the precise moment of death, the heirs become
owners of the estate pro-indiviso. They become
absolute owners of their undivided aliquot share but
Every action must also be prosecuted or defended in
with respect to the individual properties of the estate,
the name of the real party in interest: the party who
they become co-owners. This co-ownership remains
stands to be benefited or injured by the judgment.19
until partition and distribution. Until then, the
These fundamental requirements are not merely
individual heirs cannot claim any rights over a specific
technical matters; they go into the very substance of
property from the estate. This is because the heirs do
every suit.
not know which properties will be adjudicated to them
yet. Hence, there is a need for a partition before title
over particular properties vest in the distributee-heirs.
The petitioners came to the courts praying for the
annulment of the respondent's title yet they failed to
show that they are entitled to even ask for such relief.
They have no right over the subject lot and the
respondent has no legal obligation to them with respect
to the subject lot. Even if we assume that the
respondent fraudulently or irregularly secured his
certificate of title, the bottom-line is that the
petitioners have no legal standing to sue for the
cancellation of this title. This right only belongs to the
rightful owner of the subject lot.

Judicial power is the duty of the courts to settle actual

controversies involving rights which are legally
demandable and enforceable.20 Courts settle real legal
disputes involving the rights and obligations between
parties. If either of the parties is not the real party in
interest, the Court cannot grant the reliefs prayed for
because that party has no legal right or duty with
respect to his opponent. Further litigation becomes an
academic exercise in legal theory that eventually
settles nothing - a waste of time that could have been
spent resolving actual justiciable controversies.

WHEREFORE, premises considered, the petition is

DENIED for lack of merit. Costs against the
petitioners.